Digital firms with deep-rooted market power to be subject to mandatory code to drive up competition
- New powers proposed for watchdog to suspend, block and reverse decisions by tech giants, and issue fines of up to 10% of turnover for serious breaches
- Watchdog to boost UK startup scene by creating level playing field
Proposals have been set out for a new pro-competition regime for digital markets that will support the UK’s growing tech sector and protect consumers.
The Digital Markets Unit (DMU) will be given the power to designate tech firms that hold substantial and entrenched market power with ‘Strategic Market Status’ (SMS). This will require them to follow new rules of acceptable behaviour with competitors and customers in a move that will benefit the public and drive growth and innovation across the economy.
The DMU, launched in non-statutory form within the Competition and Markets Authority (CMA) in April, will work alongside firms to inject stronger competition into the digital tech sector resulting in more innovation and fairer terms for UK businesses, including startups, news publishers and advertisers. It will bring better consumer choice and control, making it easier for people to take their business elsewhere.
The proposed new powers are expected to help British startups and scaleups to compete more fairly against those tech giants that have powerful positions in the market.
The consultation seeks views on the objectives and powers of the DMU and details a new mandatory code of conduct, which will set out what is expected of firms for fair trading, open choices and trust and transparency. This could include tech platforms not pushing their customers into using default or mandatory associated services, or ensuring third party companies that depend on them aren’t blocked from doing business with competitors.
The code will be underpinned by robust investigation and enforcement powers. These may include imposing fines of a maximum of 10 per cent of a firm’s turnover for the most serious breaches.
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