On 7 November 2024, the Competition and Markets Authority (CMA) updated its website to publish a letter to the Secretary of State (SoS) for Business and Trade on 5 November 2024, seeking formal approval for publication of the CMA’s guidance on the Digital Markets Competition Regime, as it is required to do under the Digital Markets, Competition and Consumers Act 2024 (DMCCA). The letter ‘states’ that it attaches the ‘guidance’, but in line with the DMCCA, this will only be published after approval of the SoS is given.

The DMCCA requires the CMA to consult on and publish guidance on how it will exercise its functions under the recently enacted DMCCA, in order to provide clarity and legal certainty on the CMA’s approach to enforcing new regulatory powers aimed at fostering a more competitive digital market landscape in the UK. The CMA published its consultation on the draft Guidance on 24 May 2024, which closed on 12 July 2024.

In her letter to the Secretary of State, CMA Chief Executive Sarah Cardell emphasised the importance of the Act, noting that the new framework, combined with the guidance, will empower the CMA to address significant barriers to investment and innovation. Ms Cardell highlighted the anticipated benefits for consumers, including greater flexibility and choice in digital services, as well as the creation of conditions conducive to the success of UK tech firms and a more level playing field for emerging businesses.

In its letter to the SoS, the CMA states that it further developed the draft guidance through the consultation process held in May this year, engaging with stakeholders from industry, academia, and consumer groups. The CMA believes the guidance will deliver the necessary clarity for stakeholders on how the regime will operate. Ms Cardell noted, however, that the guidance would be kept under continuous review, with adjustments made based on experience and ongoing stakeholder feedback as the regime is implemented. We think it quite unlikely that there will be any material changes to the draft guidance the CMA consulted on in the final version.

The CMA notes, separately on its website, that the final guidance will be published following approval by the Secretary of State, in line with the Act. It also states there and in the consultation that it will publish a summary of the responses and non-confidential versions of the responses to the consultation. But these have not been published. We would have hoped that if regulatory best practices were followed, the CMA would have published the non-confidential versions of the responses and a summary of the responses including how it intends to take the responses into account in the final guidance before (or at least at the same time) seeking the approval of the SoS approval. Unfortunately, this hasn’t happened.

The SoS must now either approve the guidance or give reasons for not approving it on the 30^th working day after the CMA seeks the SoS approval. On that basis, we can expect the SoS’ deadline for approval (we aren’t seriously expecting the SoS to ‘not approve’) to be 17 December and the DMCCA to come into effect (read: DMCCA provisions start to bite on firms providing ‘digital activities’ within scope) in parallel or shortly thereafter in the new year.

Core Aspects of the Digital Markets Competition Regime

As a reminder, the DMCCA empowers the CMA to take action to promote fair competition in digital markets. Key aspects of the regime include:

• Strategic Market Status (SMS) Designation: Allows the CMA to designate firms with substantial market power in specific digital activities as having SMS, thereby subjecting them to tailored conduct requirements.
• Conduct Requirements: Enables the CMA to impose obligations on SMS firms to ensure fair dealings, open choices, and transparency, protecting consumers and businesses from exploitative practices.
• Mergers Reporting Requirement: Mandates SMS firms to report qualifying mergers and acquisitions, facilitating oversight to prevent anti-competitive consolidation.
• Pro-Competition Interventions (PCIs): Authorises the CMA to intervene where it finds factors within a digital activity that it believes adversely affect competition.