The Digital Markets, Competition and Consumer Act 2024: A consumer lens

In this article, we focus on the consumer protection reforms being introduced by the Digital Markets, Competition and Consumer Act 2024 (DMCCA) specifically discussing the following:

• Unfair Commercial Practices (UCP) under the DMCCA
• The CMA's enforcement rights
• The potential liability of both businesses and individuals

Key changes, enforcement, and personal liability

The Digital Markets, Competition and Consumer Act 2024 (DMCCA) was enacted on 24 May 2024. The legislation aims to overhaul competition and consumer protection laws, reworking the UK regulatory framework to address the requirements and complexities of the digital era.

Provisions are to come into effect in phases, through further secondary legislation. Consumer law provisions are due into effect in April 2025 and will mark a major shift in UK consumer law.

Key amends to UCP

UCPs are already prohibited in the UK under existing legislation. Broadly, retailers are prohibited from acting aggressively, unfairly or in a way which would mislead consumers. The DMCCA contains a range of amendments to these rules, which we have outlined below.

The prohibition of drip-pricing

Retailers will be required to give customers the 'total' price of products upfront, which must include any mandatory charges. Mandatory charges are defined as unavoidable costs the customer will incur in order to purchase, receive and/or use a product. Examples provided by the CMA include the following:

• A one-time broadband installation fee will need to be included in the total price for the broadband package, as will delivery costs, local taxes and administrative fees. In its simplest form, retailers will need to give customers the figure which they will see leave their account from the outset.
• Where customers could, in theory, avoid an additional charge (e.g. by using a free click and collect service) but in reality, such an option isn't practicable (e.g. there is a limited number of stores offering that service), that charge should still be flagged to consumers.
• Where the nature of a product means that mandatory charges cannot be reasonably calculated in advance, information about how these charges will be calculated must be provided to the customer to enable them to make the necessary calculations.
• The DMCCA also requires all pricing information to be set out with equal prominence as other information.

Additional rules around fake reviews

The DMCCA imposes several prohibitions in relation to fake reviews, the concealment of incentivised reviews, using or commissioning fake reviews, and publishing customer reviews in a misleading way. Whilst there is no absolute prohibition on incentivising a review, a review needs to make clear that it was incentivised.

Retailers will also be subject to a proactive obligation to take reasonable and proportionate steps to prevent and remove fake/concealed incentivised reviews or misleading consumer review information.

Fake reviews will become a banned practice under the DMCCA, once in effect, and a civil (not criminal) offence.

These two key amendments are expected to come into force in April 2025. Conduct taking place on or after this date will be governed / monitored / assessed against the DMCCA and all conduct before this will be governed under the existing law.

On 11 December 2024, the CMA opened a consultation on its draft guidance on the governance of UCPs under the DMCCA. This closes on 22 January 2025. The CMA are encouraging retailers, businesses, and representative bodies to submit formal responses before this date to enhance the quality and clarity of the final guidance.

The CMA's enforcement rights

Part 3 of the DMCCA goes much further than just granting the CMA enforcement rights in addition to the pre-existing court-based regime. It creates a new enforcement regime to be administered solely by the CMA and strengthens its current investigatory powers. Both enforcement systems will operate in parallel.

Although in parallel, the two regimes will not operate in silos. CMA involvement in the court-based process will also include the following:

1. Any enforcers using the judicial regime must notify the CMA before taking action through the usual court process.
2. Once notified, the CMA can decide to step in and assume responsibility for the investigation itself.

The CMA's enforcement rights will include the ability to:

• Impose civil sanctions, including monetary penalties without first requiring a court order.
• Serve Provisional Infringement Notices (PINS) on any party who may be involved in a relevant infringement.
• Use written information notices to require a party to provide information during a CMA investigation and impose monetary penalties on those who do not comply with an information notice.
• Serve Final Infringement Notices (FINs) to any party who has engaged, is engaging or is likely to engage in a relevant infringement.
• Resolve cases through the use of undertakings (a legally binding promise offered by parties to amend their practices, avoiding the need to admit to any misconduct).
• Resolve cases through the use of settlement agreements.

FINs will set out the grounds of the infringement in question and the remedies and/or penalties the party will be subject to. When a FIN is issued to a party, the CMA can issue a press announcement publicising this and publish details of the decisions on its website.

Potential liability of businesses and individuals

Under the DMCCA, the CMA will have the power to impose monetary penalties on businesses directly:

• Up to £300,000 or 10% of their worldwide turnover (whichever is higher) for substantive breaches of any consumer protection rules set out in Schedule 16 of the DMCCA 2024.
• Up to £30,000 or 1% of their worldwide turnover (whichever is higher) for investigatory breaches (i.e. failing to comply with a CMA information notice).
• Up to £150,000 or 5% of their worldwide turnover (whichever is higher) for serious administrative breaches in relation to remedy requirements (i.e. failing to comply with an undertaking, CMA direction or order).

Most notably, directors and senior managers, as individuals, could each face monetary penalties of up to £300,000 if they were an 'accessory' to substantive consumer law breaches. An individual is an accessory where they have a special relationship with a company, that company has infringed or is infringing consumer law, and the commercial practice took place with the consent or connivance of the individual in question.

Akin to the above-mentioned penalties on business, individuals may also face monetary penalties for procedural breaches. This is up to £150,000 for a failure to comply with undertakings, CMA directions and/or orders. In relation to breaches of investigatory requirements, penalties of up to £30,000 may be imposed.

CMA consultation

The CMA has opened a consultation on its draft guidance, which details how the DMCCA regime will operate from the pre-launch of investigation right through to the calculation and imposition of penalties.

With changes not due under the DMCCA until spring 2025, retailers still have some time to prepare and bring their consumer practices into compliance. This is particularly prevalent for businesses who host customer reviews. Additionally, businesses may face increased pressures due to the strengthened enforcement powers of the CMA. The draft guidance linked above explains the CMA's approach to its regulatory rights.

Businesses (including retailers and their professional representatives) may wish to:

• Familiarise themselves with the draft guidance.
• Submit a formal response to clarify/confirm points of interest or uncertainty.
• Review the final guidance once published by the CMA.

If you would like support reviewing the draft guidance or with preparing for the DMCCA's 2024 reforms more generally, please contact a member of the team below.