UK Competition and Markets Authority getting power boost with new consumer protection bill

June 10, 2024

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By Chris Occleshaw, Recall Consultant

On 23 May 2024, the UK Government passed its final Digital Markets, Competition and Consumers Bill (the Bill) which is intended to strengthen consumer protection enforcement and modernise regulations for digital markets.

However, one component of the Bill is of particular interest to consumer product manufacturers and retailers. The Bill introduces a direct enforcement regime where the UK Competition and Markets Authority (CMA) will have the regulatory power to enforce consumer laws through the imposition of monetary penalties. Currently, the CMA can only enforce consumer law through the courts and is not able to impose fines on businesses for violating consumer law.

As part of this new “administrative enforcement model,” the CMA will have the power to investigate suspected infringements and issue infringement notices to businesses where the CMA determines it is in violation of consumer law. Notably, the CMA will also have the power to impose fines of up to 10% of a business’s global annual turnover for any breach of UK consumer law.

Key components of the new bill

The Bill, which introduces a “pro-competition” regime, will also enable the CMA’s Digital Markets Unit (DMU) to designate certain technology companies with Strategic Market Status (SMS) and to establish enforceable ‘conduct requirements’ for those companies. The CMA has published draft guidance for consultation, which companies should review whether they believe they will receive SMS or not.

The Bill also addresses several other issues consumers commonly face on digital platforms. These include:

  • Unfair commercial practices. The Bill revokes and replaces the Consumer Protection from Unfair Trading Regulations 2008 (CPR), a retained EU law. In its place, the Bill establishes regulations to protect consumers from misleading actions, omissions or aggressive practices relating to the marketing and sale of products to consumers. In addition, the Bill generally replicates the CPR’s list of specific banned practices and creates a power to make regulations that add to the list.
  • Prohibit fake reviews. Under the new regulatory power created by the Bill, the UK government will prohibit fake reviews. The Bill also prohibits any invitation to purchase that omits material information, which includes practices such as “drip-pricing.”
  • Tackle “subscription traps.” Subscription traps describe practices where businesses make it difficult for consumers to get out of subscription contracts. The Bill imposes new duties on businesses “to give specific pre-contract information to consumers, send reminders to consumers before a contract rolls over or motor-renews into a new term, provide rights for consumers to cancel subscription contracts during cooling-off periods, and ensure that consumers have a straight-forward mechanism to terminate the subscription contract.”

Next steps for businesses

Now that the Bill has received Royal Assent, the CMA will draft guidance on how it will utilise its new authority. Businesses who have online operations – especially those who offer subscriptions and other digital services to consumers – should closely review the Bill and ensure they are in compliance with any new regulations.

With the CMA taking on enhanced enforcement powers, businesses should also review and update their recall and communications plans to ensure that they are prepared for any new kinds of product-related in-market events and are able to communicate effectively with customers. It is also important to continue engaging third party experts who can support in the preparing for and handling of product-related crises.

Trusted by the world’s leading brands, Sedgwick brand protection has managed more than 7,000 of the most time-critical and sensitive product recalls in 100+ countries and 50+ languages, over 25 years. To find out more about our product recall and remediation solutions, visit our website here.

Tags: brand management, Brand protection, brand protection and recall, brand recall, Brands, Compliance, consumer products, consumer recall, consumer safety, Preserving brands, Product recall, recall, regulation, regulations, Regulatory, UK, United Kingdom