The Digital Markets, Competition and Consumers Act 2024: Article 1 – Scope, Key Changes and Enforcement
Thursday 16th January 2025
Introduction & Key Changes
In this four-part mini-series, we will be exploring the consumer protection elements of the game-changing Digital Markets, Competition and Consumers Act 2024 (DMCCA), which will radically reform the landscape for businesses selling products to consumers in the UK. Most of the changes will take effect in April 2025. New rules relating to subscription traps will be effective from April 2026.
The key changes relate to enforcement, and for the most part consumer protection law has only been subtly (but importantly) reformed. Given the historical absence of substantive enforcement, businesses are likely to find themselves waking up to a much more hostile environment, with the realistic prospect of seven figure fines for large organisations deemed to be in breach of consumer law.
This article will summarise key changes. The next articles in this series will explore those change in more detail, and highlight some of the highest risk areas for B2C businesses.
CMA’s new enforcement regime
Until now, the Competition and Markets Authority (CMA) (unlike the FCA) has not had the power to enforce consumer law against companies that operate in non-regulated sectors, such as retail and FMCG (fast-moving consumer goods). The CMA has tended to focus on voluntary undertakings and High Court enforcement orders to force behavioural change. Trading Standards can prosecute businesses for consumer law breaches, but priorities and resources have meant that limited enforcement has been brought against anything other than archetypal “rogue traders”.
The new regime will radically change this. Under the DMCCA, the CMA will be given new direct consumer enforcement powers including the power to impose civil penalties of up to 10% of global turnover (Part 3 of the DMCCA) where organisations engage in unfair commercial practices or otherwise breach consumer law (e.g. the Consumer Rights Act 2015, the Consumer Contracts Regulation 2013). The CMA will be able to do this where it is satisfied following its own investigation that there has been such a breach, and without recourse to court proceedings. It is anticipated that penalties will be placed on the same level as competition law with million-pound fines becoming the new norm.
New Investigation Powers
While the CMA currently has powers to issue Information Notices ordering companies to hand over relevant internal documents, where there is dispute over relevance, the CMA’s only real means of compelling disclosure is a court order. Under its new powers, the CMA can directly and unilaterally impose a penalty of up to 1% of global turnover on companies that fail to provide documents requested without reasonable excuse (and 5% of global daily turnover for continuing breaches).
Substantive changes to consumer law
Part 4 of the DMCCA recasts the Consumer Protection from Unfair Trading Regulations 2008 (CPUT) with amendments to simplify and widen the scope of Unfair Commercial Practices (UCP) to ensure increased protection for consumers.
A commercial practice (broadly any behaviour relating to the promotion or supply of a product to a consumer) is unfair if it is a misleading action, omission, an aggressive practice, or a contravention of professional diligence which is likely to cause a consumer to take a transactional decision it would not otherwise have taken,. Specific listed banned practices remain automatically unfair.
Under previous law, a contravention of professional diligence were only considered to be unfair where it materially distorted (or was likely to materially distort) the behaviour of the average consumer in instances where a trader did not exercise special care and skill. An offence will now be made out where it is likely to cause a consumer to take a transactional decision it would not otherwise have taken, in instances where the trader does not exercise reasonable care. It is this element of consumer law that the CMA has used in recent undertakings in the fashion sector.
Examples of failing to act in a professionally diligent manner could include ignoring complaints, emails and calls, as this could hinder consumers from securing redress in a timely manner, or carrying out work which falls short of the expected standard of care and skill, which may require the consumer to pay for the work to be corrected by another trader.
Material Information and Drip Pricing
Omitting ‘material information’ from an invitation to purchase is now effectively a strict liability offence. The CMA need not demonstrate any potential impact on consumer behaviour. There is an extensive list of information regarded as material. This brings “drip pricing” within the scope of quasi-banned practices. Businesses will no longer be able to offer a “headline” price to consumers that does not incorporate any mandatory fees, or at least disclose that there are mandatory fees payable.
Crackdown on Fake Reviews
The DMCCA contains a new banned practice in relation to fake or misleading consumer reviews. It will be unlawful for businesses to write or commission fake reviews or host reviews known to be false. These obligations are also proactive in nature – with an emphasis on businesses taking ‘reasonable and proportionate’ steps to prevent and remove misleading consumer reviews.
Banning “Subscription Traps”
From April 2026, businesses offering subscription-based services must make cancellation processes as straightforward as sign-up. Specific information about the subscription, including the frequency of payments, cooling-off period, and cancellation steps, will also need to be presented to consumers before they enter into the contract. The new subscription contract rules are the subject of an ongoing DBT consultation.
Time Limited Offers and Vulnerable Consumers
Under the DMCCA, the ban on time-limited practices has been widened to now capture those available for a “limited time”, as opposed to those for a very limited time. The CMA has taken recent enforcement action against Emma Sleep and Wowcher in relation to the use of (very) time-limited promotions such as urgency claims and countdown clocks.
In addition, consumers can now be considered vulnerable due to a wide range of life circumstances.
Conclusions
Given the increased likelihood of enforcement and the prospect of very large penalties, any compliance efforts will be well worth the investment in time and resources. Ultimately, the best way to manage the risk going forward is to design compliance into technology and ensure that people and processes assess and mitigate the risk of consumer protection breaches.
The CMA is likely to maintain its focus on misleading environmental/green claims, price promotions, and online choice architecture, and businesses should address any compliance issues in these areas as an absolute priority in the next quarter.
Our further articles will explore some of the nuances of the substantive consumer law changes brought about by the DMCCA and where businesses should focus their compliance efforts.
- Examples of Unfair Commercial Practices – Misleading Acts and Omissions.
- The New Professional Diligence Test & Invitations to Purchase
- Green Claims
