- 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.
- 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.