What the DMCCA means for your business

The Digital Markets, Competition and Consumers Act 2024 (“DMCCA”) introduces a landmark enforcement regime for UK consumer law and important changes to the UK’s subscription contract regime. Key new provisions include empowering the Consumer and Markets Authority (“CMA”) to impose fines based on group annual turnover and the discretion to offer businesses the opportunity to settle by admitting the relevant consumer law infringement for reduced penalties. 

At Bird & Bird’s Annual Retail and Consumer Update event, Robert Turner (Partner) spoke with Jason Freeman, Director for Consumer Law at the CMA, and Lee Finch, barrister at Gough Square Chambers, to unpack what businesses need to know before the DMCCA comes into effect (in part) in April 2025. The new regime governing business to consumer subscription contracts is not expected to come into effect until April 2026 at the earliest, but businesses offering these services should be preparing for the upcoming changes now.  

Understand the new unfair commercial practice rules

If your business deals with consumer goods or services (including digital services), you must be aware of key changes to the unfair commercial practices regime. Significantly, the new law contains new express prohibitions on certain commercial practices that are considered unfair. This includes: (1) a prohibition on publishing or commissioning fake reviews, and the requirement for businesses to take reasonable and proportionate steps to prevent fake reviews from appearing on their website; and (2) new rules around drip pricing, which prohibits traders from presenting a headline price which does not incorporate all mandatory fixed fees that must be paid by all consumers (and requires the disclosure of any variable mandatory fees and how these will be calculated). 

Act quickly

To minimise protracted negotiations between the CMA and traders alleged to have infringed consumer protection law, the new enforcement system is designed to resolve matters – fast. If you receive an information notice from the CMA, then your business is under serious investigation. Businesses that may have previously pursued delay tactics after receiving an information notice should now consider whether this is still the best approach for the business, given the new regime empowers the CMA to fine businesses based on information notices. Following receipt of an information notice, immediate action is now needed: businesses should proactively audit their practices to ensure full compliance with consumer law, and then swiftly decide how to best engage with and respond to the CMA. Our international business to consumer team have significant experience in assisting businesses with CMA investigations and can guide you on the most suitable approach.   

Settle early to reduce fines

As part of its new enforcement regime, the CMA may seek to shift away from offering or accepting undertakings, whereby businesses voluntarily commit to change practices without admitting infringement or paying a penalty. Rather, the new regime includes settlement with the CMA as a potential option (which involves an admission of infringement and a penalty fine), which may mean the ability for traders to engage with the CMA in relation to undertakings is a less common option going forwards.

If you do receive an information notice, the CMA has the discretion to enter into settlement discussions. Settling early can significantly reduce the fine a business may have to pay. Businesses which are willing to admit infringement and settle before the CMA has completed its full investigative work could receive a potentially significant discount on the fine to reflect the administrative costs saved by settling early.

Know your appeal rights 

If you disagree with the CMA’s decision, you can appeal to the High Court within 60 days. The High Court may confirm, vary or quash the decision or remit the notice back to the CMA in certain situations. Grounds for appeal are limited to errors of law, errors of fact, unreasonable fine sums or any other reasonable reason. 

Competitor practices are no defence

Previously, businesses may have been somewhat uneasy about being the first to stringently adhere to updated consumer laws ahead of their competitors depending, in part, on the business’s attitude to risk as well as market forces. Now, there is a higher risk profile for each business that is not compliant, and the CMA will not accept a defence argument based on the fact another business or competitor is also non-compliant. This significant risk is set to incentivise strict compliance – even in the most competitive of markets. 

Home or abroad, the CMA can reach you

The DMCCA also introduces the UK connection test, which means the new consumer rules have extra-territorial effect. Under the UK connection test, any business which targets UK consumers or has a UK trading address could face penalties. To bring foreign businesses into compliance, the CMA can enforce penalties as a civil debt, seize UK-based assets or take down websites. Please get in touch with us if you would like to explore the elements of the new UK connection test further. 

If you have any questions relating to the topics raised in this article, Bird & Bird’s market-leading international Business-to-Consumer team will be delighted to assist you. Please contact Graeme Payne (Partner), Robert Turner (Partner) or Amy Cole (Associate).