Britain's New Digital Markets Act Could Cost Business Billions

Uploaded on 2024-01-30 in GOVERNMENT-National, FREE TO VIEW, BUSINESS-Services-Law

Britain's business regulator, the Competition and Markets Authority (CMA) has recently published an overview of how it intends to operate the new digital markets competition regime as currently proposed by the Digital Markets, Competition and Consumers (DMCC) Bill.

But according to expert analysis, the proposed DMCC legislation could cost consumers up to £160 billion and have a serious detrimental impact on businesses across the country, critics have warned.

The intention of the Bill is to provide regulations of competition in digital markets and to amend the Competition Act 1998 and the Enterprise Act 2002 and to make other provision about competition law. The aim to make provisions relating the protection of consumer rights and to confer further such rights and also for connected purposes.

However research from Europe Economics, commissioned by the Computer & Communications Industry Association (CCIA), has found that the legislation, currently being considered in the House of Lords, could impose large costs on both consumers and businesses.

Furthermore, British consumers and businesses are likely to receive poorer services as a result of the legislation, the CCIA study found and that the UK could become a less attractive destination for investment.

The CCIA Report demonstrates that, particularly without proper procedural checks and balances (including those introduced by the Government through amendments in the Commons), premature or overly broad regulation could delay the introduction of new services and deter investment in new digital networks.

It provides a high level estimate of these costs, providing an indicative estimate for impacts not quantified in the Impact Assessment, and suggests a shocking potential scale of impact on consumers and investment in new digital services:

A whopping £55bn - £160bn net present value impact on consumer welfare resulting from delays over 10 years, reaching £8bn-£35bn a year by year 10.

A loss in investment in digital services of 4% to 8%.

Recently, the Competition and Markets Authority (CMA) set out its plans for implementing the bill, which is set to apply to firms designated as having a Strategic Market Status in relation to one or more digital activities.

The CCIA report argues that appropriate amendments can mitigate those costs by promoting restraint in the CMA’s implementation including ensuring that consumer impacts are fully-considered at each stage of the process, allowing greater consideration of merits in appeals and managing the extent of conduct requirements.

If the CMA finds that businesses are using their status to gain an unfair competitive advantage, it will take action to prevent them from giving preference to their own products and services, requiring them to allow the products and services of other firms to work with their own, or order them to trade on fairer terms or increase transparency.

The CCIA argues that these forecast costs could best be mitigated through restraint in the way the bill is implemented, including ensuring that the impact on consumers is fully considered at each stage of the process, allowing greater consideration of merits in appeals and managing the extent of conduct requirements.

Gov.UK: Gov.UK: Westmisnter Parliament: Linklaters: Mills & Reeves: ITPro: CCIA: CCIA:

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