New UK Digital Markets Legislation

On 25th April 2023 the UK government introduced the UK Digital Markets, Competition and Consumers Bill to parliament.  This was the formal first reading, it has yet to be debated and the details of its legislation will probably change.   Even now it is a snappy 388 pages including details on enforcement, penalties and adjustments to other existing laws.

The new bill has a wide remit to protect the shopper and encourage competition on-line at the expense of the small number of ‘big players’.

Sites will be banned from enabling the hosting of fake reviews unless reasonable steps are taken to ensure that these are genuine.   Customers are used to posting and reading reviews of products on sales and service sites.  Although some reviews are clearly fake the scammers have resorted to increasingly cunning methods to get their views published.  4% of 1,839 people in a ‘Which’ survey reported that they had received goods that they had not ordered from Amazon.  This ‘brushing scam’ increases the reported number of sales for an item.  A sophisticated variant links the ‘genuine’ sale to a fake account resulting in the review being marked as from a verified buyer.  With the increasing use of AI generated text this would be a timely move against a threat that could be become more sophisticated and harder to spot.

Rolling subscriptions will also be easier for customers to exit and businesses will be required to give timely notice when any offer or introductory period ends.  The target is legitimate subscriptions where an initial recurring fee can jump significantly with little notice.  An example would be services offering a monthly free trial but requiring bank details to activate leading to funds being withdrawn if the customer does not opt out within the trial period.  Some industries already have a code or regulation to cover this sort of situation. In the UK this is enforced for broadband and land-line provision where fees can jump substantially when a fixed contract ends.   The new legislation is not specifically directed at subscription scams where the customer is deliberately misled into signing up for a service or where there is no service at all behind the scam.  A BBC ‘File on 4’ report estimated that in 2022 in the UK there are in the region of 300,000 such victims each year and they are each losing on average around £250.

The third and possibly trickiest to define pillar of the new legislation is to investigate and work against a small number of enterprises controlling a market with their ability to control prices either alone or through collusion between themselves.  These organisations are defined as having a Strategic Market Status (SMS).  It is envisaged that such bodies will have a global turnover in excess of £25 billion or a UK turnover of over £1 billion.

It is planned that the Bill will be monitored and enforced by the Digital Markets Unit.  This body already exists as part of the Competition and Markets Authority.  With debateable foresight the DMA was established in 2021 to oversee legislation that did not and still does not exist.  It has not been entirely idle as its role at present is to prepare for any new legislation (such as this Bill), to gather evidence and work with stakeholders in the on-line markets field. It should be able to ensure that any new legislation keeps up with technology changes and sets boundaries that can be reasonably enforced.

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