Digital Markets, Competition and Consumers Act 2024

Part 1 — Digital Markets

Chapter 1 — Overview

Overview

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• (1) This Part—

• (a) confers functions on the CMA in relation to the regulation of competition in digital markets, and

• (b) makes related provision.

• (2) Chapter 2 makes provision about the designation of undertakings as having strategic market status in respect of a digital activity.

• (3) Chapter 3 provides for the CMA to be able to impose conduct requirements on a designated undertaking.

• (4) Chapter 4 provides for the CMA to take steps to promote competition where it considers that activities of a designated undertaking are having an adverse effect on competition.

• (5) Chapter 5 makes provision about a duty to report certain possible mergers involving a designated undertaking.

• (6) Chapter 6 makes provision about investigatory powers and compliance reports in relation to a designated undertaking.

• (7) Chapter 7 makes provision about enforcement and appeals in relation to functions of the CMA under this Part.

• (8) Chapter 8 makes provision about administration and other matters in relation to functions of the CMA under this Part.

Chapter 2 — Strategic Market Status

Power to designate undertaking as having SMS

Designation of undertaking

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• (1) The CMA may designate an undertaking as having strategic market status (“SMS”) in respect of a digital activity carried out by the undertaking where the CMA considers that—

• (a) the digital activity is linked to the United Kingdom (see section 4), and

• (b) the undertaking meets the SMS conditions in respect of the digital activity.

• (2) The SMS conditions are that the undertaking has—

• (a) substantial and entrenched market power (see section 5), and

• (b) a position of strategic significance (see section 6),

in respect of the digital activity.

• (3) Subsection (1) is subject to section 7 (the turnover condition).

• (4) The CMA may only designate an undertaking as having SMS in respect of a digital activity after carrying out an SMS investigation in accordance with this Chapter.

Digital activities

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• (1) For the purposes of this Part, the following are “digital activities”—

• (a) the provision of a service by means of the internet, whether for consideration or otherwise;

• (b) the provision of one or more pieces of digital content, whether for consideration or otherwise;

• (c) any other activity carried out for the purposes of an activity within paragraph (a) or (b).

• (2) For the purposes of this section, a service is provided by means of the internet even where it is provided by means of a combination of—

• (a) the internet, and

• (b) an electronic communications service (within the meaning given by section 32(2) of the Communications Act 2003).

• (3) The CMA may treat two or more activities within subsection (1) that are carried out by a single undertaking as a single digital activity where—

• (a) the activities have substantially the same or similar purposes, or

• (b) the activities can be carried out in combination with each other to fulfil a specific purpose.

• (4) In any notice or other document that the CMA is required to give or publish under or by virtue of this Part, the CMA may describe a digital activity by reference to the nature of the activity, brand names or both.

Link to the United Kingdom

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A digital activity is linked to the United Kingdom for the purposes of section 2(1)(a) if—

• (a) the digital activity has a significant number of UK users,

• (b) the undertaking that carries out the digital activity carries on business in the United Kingdom in relation to the digital activity, or

• (c) the digital activity or the way in which the undertaking carries on the digital activity is likely to have an immediate, substantial and foreseeable effect on trade in the United Kingdom.

Substantial and entrenched market power

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In order to assess whether an undertaking has substantial and entrenched market power in respect of a digital activity for the purposes of section 2(2)(a), the CMA must carry out a forward-looking assessment of a period of at least 5 years, taking into account developments that—

• (a) would be expected or foreseeable if the CMA did not designate the undertaking as having SMS in respect of the digital activity, and

• (b) may affect the undertaking’s conduct in carrying out the digital activity.

Position of strategic significance

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An undertaking has a position of strategic significance in respect of a digital activity for the purposes of section 2(2)(b) where one or more of the following conditions is met—

• (a) the undertaking has achieved a position of significant size or scale in respect of the digital activity;

• (b) a significant number of other undertakings use the digital activity as carried out by the undertaking in carrying on their business;

• (c) the undertaking’s position in respect of the digital activity would allow it to extend its market power to a range of other activities;

• (d) the undertaking’s position in respect of the digital activity allows it to determine or substantially influence the ways in which other undertakings conduct themselves, in respect of the digital activity or otherwise.

The turnover condition

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• (1) The CMA may not designate an undertaking as having SMS in respect of a digital activity unless the turnover condition is met in relation to the undertaking.

• (2) The turnover condition is met in relation to an undertaking if the CMA estimates that—

• (a) the total value of the global turnover of an undertaking or, where the undertaking is part of a group, the global turnover of that group in the relevant period exceeds £25 billion, or

• (b) the total value of the UK turnover of an undertaking or, where the undertaking is part of a group, the UK turnover of that group in the relevant period exceeds £1 billion.

• (3) The Secretary of State may by regulations amend either of the sums mentioned in subsection (2).

• (4) Regulations under subsection (3) are subject to the affirmative procedure.

• (5) The CMA must—

• (a) keep under review the sums mentioned in subsection (2), and

• (b) from time to time advise the Secretary of State as to whether the sums are still appropriate.

• (6) In this section—

• (a) the “relevant period” means—

• (i) the most recent period of 12 months (“period A”) in respect of which the CMA considers that it is able to make an estimate of the total value of the relevant turnover of the undertaking or group, or

• (ii) if the CMA estimates that the relevant turnover of the undertaking or group in the period of 12 months ending immediately before period A was higher than the relevant turnover of the undertaking or group in period A, that earlier period of 12 months;

• (b) the “relevant turnover” of the undertaking or group is the UK turnover or, as the case may be, global turnover of the undertaking or group.

Turnover of an undertaking

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• (1) This section applies for the purposes of the turnover condition.

• (2) The total value of the global turnover of an undertaking or group in the relevant period (as defined in section 7(6)) is, subject to regulations under subsection (4), the total value of the turnover of the undertaking or group arising in connection with any of its activities.

• (3) The total value of the UK turnover of an undertaking or group in the relevant period is, subject to regulations under subsection (4), the total value of the turnover of the undertaking or group—

• (a) arising in connection with any of its activities, and

• (b) relating to UK users or UK customers.

• (4) The Secretary of State may by regulations make provision about how the total value of the global turnover or UK turnover of an undertaking or group in a period is to be estimated for the purposes of the turnover condition.

• (5) Regulations under subsection (4) may (among other things)—

• (a) make provision about amounts which are, or are not, to be regarded as comprising the turnover of an undertaking or group;

• (b) confer on the CMA the power to determine matters specified in the regulations (including the matter mentioned in paragraph (a)).

• (6) Regulations under subsection (4) are subject to the negative procedure.

Procedure

Initial SMS investigations

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• (1) The CMA may begin an initial SMS investigation where it has reasonable grounds to consider that it may be able to designate an undertaking as having SMS in respect of a digital activity in accordance with section 2.

• (2) An “initial SMS investigation” is an investigation into whether to designate an undertaking as having SMS in respect of a digital activity where the undertaking is not already designated in respect of that activity (subject to section 10(4)).

• (3) The CMA may begin an initial SMS investigation into whether to designate an undertaking as having SMS in respect of a digital activity even if it has previously made a decision not to designate the undertaking as having SMS in respect of that activity.

Further SMS investigations

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• (1) The CMA may begin a further SMS investigation in relation to the designation of a designated undertaking in respect of a relevant digital activity at any time during the designation period (see section 18) relating to that designation.

• (2) The CMA must begin a further SMS investigation in relation to the designation of a designated undertaking in respect of a relevant digital activity not later than 9 months before the end of the designation period relating to that designation, if it is not already carrying one out at that time under subsection (1).

• (3) A “further SMS investigation” is an investigation into whether—

• (a) to revoke a designated undertaking’s designation in respect of the relevant digital activity or to designate the undertaking again in respect of that activity, and

• (b) to make provision under section 17 (existing obligations).

• (4) A further SMS investigation may also include an investigation into whether to designate the designated undertaking in respect of a digital activity that the CMA considers to be similar or connected to the relevant digital activity (whether instead of, or in addition to, the relevant digital activity).

Procedure relating to SMS investigations

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• (1) When the CMA begins an SMS investigation it must give the undertaking to which the investigation relates a notice (an “SMS investigation notice”).

• (2) The SMS investigation notice must state—

• (a) in the case of an initial SMS investigation—

• (i) the reasonable grounds mentioned in section 9(1);

• (ii) that the CMA may close the investigation in accordance with section 12;

• (b) the purpose and scope of the SMS investigation;

• (c) the period by the end of which the CMA must give the undertaking a notice setting out its decisions as a result of the investigation (see section 14(2));

• (d) the circumstances in which that period may be extended (see section 104).

• (3) The statement of the purpose and scope of the investigation must include a description of the undertaking and digital activities to which the investigation relates.

• (4) The CMA must give the undertaking one or more revised versions of the SMS investigation notice if it changes its view of the purpose and scope of the investigation.

• (5) As soon as reasonably practicable after giving an SMS investigation notice or a revised version of an SMS investigation notice, the CMA must—

• (a) publish the notice, and

• (b) give a copy of the notice to the FCA, OFCOM, the Information Commissioner, the Bank of England and the PRA.

Closing an initial SMS investigation without a decision

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• (1) The CMA may close an initial SMS investigation at any time before it has reached a final view on the matters mentioned in paragraphs (a) and (b) of section 2(1).

• (2) When the CMA decides to close an initial SMS investigation, the CMA must give the undertaking to which the investigation related a notice to that effect.

• (3) The notice must include the CMA’s reasons for closing the investigation.

• (4) As soon as reasonably practicable after giving a notice under subsection (2), the CMA must publish the notice.

Consultation on proposed decision

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• (1) The CMA must—