- The Digital Markets, Competition and Consumers (DMCC) Bill, currently progressing through the House of Commons, would give the Competition and Markets Authority (CMA) new, extensive and unchecked powers to reshape digital markets and regulate outcomes across the economy
- As currently drafted, the Bill undermines parliamentary sovereignty and removes democratic accountability by handing such expansive ‘quasi-legislative’ powers to bureaucrats
- The CMA would have the power to act in ways which undermine the Government’s aim of making the UK a science and technology superpower, instead creating a hostile and inflexible regulatory environment with huge risks for companies creating new digital services
- The changes would create uncertainty for businesses at a time of poor economic growth, put the UK at the back of the queue for new digital services and investment, and risk undermining constructive relationships with the United States and other allies
- The Government should scrap the Bill, pause and learn from the results of the EU’s incoming Digital Markets Act or at least mitigate the risk with checks and balances
The Digital Markets, Competition and Consumers Bill offers a blank cheque, putting quasi-legislative powers in the hands of regulators rather than ministers, according to a new report from the Centre for Policy Studies. The Bill hands vast amounts of power to unelected bureaucrats at the Competition and Markets Authority without the normal parliamentary checks and balances or requirements to fully consider consumers’ interests.
‘The Unregulated Regulator’ by economist Matthew Sinclair highlights why the dynamic nature of digital markets means they have already outpaced the analysis behind this legislation. For example, the market share of the biggest two digital advertising firms is falling in the face of competition from newer entrants, such as Amazon and TikTok. This trend is only likely to continue, driven by streaming platforms, such as Disney and Netflix, and other e-commerce businesses.
While the government has said it wants the UK to become a ‘tech superpower’, the Bill directly undermines that ambition. Giving the CMA power to in effect legislate will not only unnerve existing firms, but dissuade ambitious, growing businesses from basing themselves in the UK or entering the UK market early. At a time when the UK needs to be encouraging investment to promote growth and deliver on the Government’s pro-tech, pro-investment rhetoric, this Bill is a step in the opposite direction.
The report argues that proceeding as planned would mean worse digital services for consumers and weaken investment. If ministers want to go ahead, and are not willing to scrap the Bill, they could limit the damage by:
- Introducing checks and balances, such as a competition appeals process and making sure consumer benefits are taken into account properly.
Or
- Pausing the Bill and watching the EU’s Digital Markets Act launch. Now the UK Bill cannot launch before the DMA, the UK will maximise its international influence by learning (and being seen to learn) from the EU’s experience.
Matthew Sinclair, report author, said:
‘The DMCC is an expansive blank cheque for the CMA to rewrite digital markets, which will create real harms for consumers and ruin the UK’s reputation as a great place to build exciting new digital services. Digital markets have shown their dynamism recently. There is a huge risk that regulators charge in with draconian restrictions, backed up by big fines, and undermine that innovation. Ministers should scrap the Bill. If they want to go ahead, they can mitigate a lot of the risks by including checks and balances and making sure consumer benefits are fully considered, or pausing to learn from the EU’s experience.’
Matthew Feeney, CPS Head of Tech and Innovation, said:
‘This analysis offers a much-needed warning. The DMCC would give broad powers to the CMA that threaten to undermine the dynamism of digital markets that affect every feature of our lives. Fortunately, the report shows us that there are other options available to the Government.’
END
NOTES TO EDITORS
- ‘The Unregulated Regulator’ is available to download here.
- Matthew Sinclair is an economist and a media and technology consultant
- For further information and media requests, please contact Emma Revell on 07931 698246 and [email protected] or Josh Coupland on 07912 485655 and [email protected]
- The Centre for Policy Studies is one of the oldest and most influential think tanks in Westminster. With a focus on taxation, economic growth, business, welfare, education, housing and green growth, its goal is to develop policies that widen enterprise, ownership and opportunity.
Date Added: Thursday 29th June 2023
