The United Kingdom’s (UK’s) Digital Markets, Competition and Consumers Act 2024 (the Act) expands the Competition and Markets Authority’s (CMA’s) jurisdiction in merger control, regulates major tech platforms with “strategic market status” (SMS), strengthens the CMA’s investigative and enforcement powers in competition investigations and gives the CMA fining powers in consumer protection matters.
The extensive new rules relating to merger control, digital markets and investigation processes will come into force on 1 January 2025, with new merger control thresholds potentially impacting transactions that have signed but not yet completed by that date. The new consumer enforcement powers are expected to take effect in April 2025, although the exact timeline has not yet been specified. Before the end of the year, the CMA will likely be working towards finalising the suite of guidance required to take account of amendments made in the Act.
This briefing summarises the main changes to UK competition law introduced under the Act. For more detail, see our 28 May 2024 client alerts “UK Revamps Merger Control, Expanding CMA’s Jurisdiction and Making Procedures More Flexible” and “UK Enacts a New Digital Regime Regulating the Conduct of Major Tech Platforms”.
Revamped Merger Control Regime
- Higher jurisdictional thresholds that (i) raise the UK turnover threshold from £70 million to £100 million and (ii) exempt transactions between small businesses (where each party's UK turnover does not exceed £10 million) from the application of the share-of-supply test.
- New alternative jurisdictional threshold to catch transactions not involving direct competitors, such as “killer acquisitions” where one party has an existing share of supply of at least 33% in the UK and a UK turnover exceeding £350 million, provided the other party has a UK nexus.
- Procedural changes, including the option for parties to progress directly to a Phase 2 review and to agree with the CMA to extend the statutory Phase 2 timeline.
- Procedural changes, including the option for parties to request a fast-track referral to Phase 2 at any point (including during pre-notification) and the option to agree an extension to the statutory Phase 2 timeline with the CMA.
The new merger control thresholds apply to transactions that have not completed by 1 January (unless the CMA has launched a Phase 1 merger review into, or the secretary of state has given notice to intervene in, the transaction before 1 January).
New Digital Markets Regime
- CMA is empowered to designate a small number of firms with SMS in the UK.
- SMS firms are required to follow tailored conduct requirements based on principles of fair trading, open choices, and trust and transparency.
- CMA can conduct pro-competition interventions on SMS firms, potentially mandating structural changes such as separation or behavioural changes such as improving interoperability or data access.
- SMS firms must report certain transactions exceeding £25 million to the CMA, which it may then investigate using its merger powers.
- Equips the CMA with enforcement powers to tackle noncompliance with the digital regime, including fines up to 10% of global turnover and director disqualification.
The CMA expects to initiate approximately three to four SMS investigations in the first year of the regime (some of which may relate to the same SMS firm) and to carry out SMS designation and conduct requirement consultations in parallel. The first SMS investigations are expected to follow very promptly after 1 January, meaning that some businesses could be subject to bespoke conduct rules by the start of October 2025 at the earliest. While the CMA is yet to decide which areas to prioritise for investigation, it has indicated that digital activities that have recently been examined in UK market studies and investigations, such as mobile ecosystems, could be targeted as a priority.
Enhanced Antitrust Investigative and Enforcement Powers
- CMA can take enforcement action against anticompetitive collusion that takes place outside the UK but affects trade in the UK.
- CMA gains stronger evidence-gathering powers, including a new duty on businesses to preserve documents where they consider a UK competition investigation likely, the ability to remove documents for off-site examination when inspecting domestic premises and the power to interview any individual, including those not connected with the business under investigation.
Procedural Changes Affecting Both Merger Control and Antitrust Enforcement
- Codification of recent case law that enables the CMA to require the production of documents held outside the UK under certain conditions.
- Enhanced penalties for failure to comply with investigative measures such as information requests, with fines on businesses of up to 1% of global turnover (up from a £30,000 cap) and/or daily penalties of up to 5% of daily global turnover (up from a £15,000 cap) where noncompliance continues. The new penalty levels will not be applied retrospectively.
- Breaching an undertaking, order or commitment can result in fines of up to 5% of global turnover and/or 5% of global daily turnover where noncompliance continues. These new penalty levels will similarly not be applied retrospectively.
Professional support lawyer Elizabeth Malik contributed to this article.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.