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Competition & antitrust

The CMA’s Digital Markets Strategy: refreshed

The Competition and Markets Authority has updated its Digital Markets Strategy, with the overarching ambition to support the establishment of a Digital Markets Unit overseeing a pro-competition regime for digital platforms.

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The Competition and Markets Authority (CMA) has now released a refreshed version of its Digital Markets Strategy (February 2021, refresh), first published in July 2019. The updated strategy is a result of significant developments in the political and regulatory landscape of digital markets, one of which is the Government’s announcement in November 2020 that it would set up a Digital Markets Unit (DMU) within the CMA to oversee a pro-competition regime for digital platforms.

Developments in the last 18-months

In the 18 months since the CMA first published their Digital Markets Strategy, they have accomplished a significant amount of the work they set out to achieve. Among the long list of accomplishments include:

CMA’s updated strategy

The CMA has updated their Digital Markets Strategy, with the overarching ambition to support the establishment of the DMU. In the interim, while waiting for the introduction of new legislation, the work of the CMA to establish the DMU will focus on the following revised strategic aims:

  • Using the existing tools to maximum effect
  • Building knowledge and capability
  • Establish the regulatory framework and function
  • Adapt existing tools to digital markets

The CMA’s strategic aims are supported by seven priorities areas of focus in its wider work in digital markets.

1.      Establishing the DMU’s pro-competition regulatory framework and function

The CMA seeks to establish the DMU building on the CMA’s existing knowledge and experience in digital markets. The activities will include the following:

  • Work jointly with the Government to consider and operationalise the DMU, including its funding, governance, and decision-making structures, and how it will interact with the CMA’s existing functions.
  • Support the Government as it considers the CMA’s advice on the design and implementation of the new pro-competition regulatory regime for digital markets, and its work to develop the legislative framework.
  • Collect evidence using its existing powers, to assess which firms should be designated with Strategic Market Status (SMS), which activities this should relate to, and to develop a code of conduct to govern their behaviour.

2.      Using the CMA’s exiting tools to maximum effect

Although the CMA has expressed the need for reforms in the form of pro-competition digital regulation, they still plan to use their existing powers to its fullest extent. This includes using their consumer protection law enforcement powers to tackle such issues as fake online reviews, assessing the impact of mergers in digital markets, using competition law to tackle anti-competitive activity in digital markets, and using other market powers, including the ability to make Market Investigation References. They expect to be a more active enforcer in digital markets, in part, because of having to take on digital enforcement cases and mergers that would have previously fallen within the jurisdiction of the European Commission, pre-Brexit.  An example of this would be the CMA’s recently launched investigation into possible abuse of dominance arising from Google’s “Privacy Sandbox” browser changes.

3.      The work of the Data Technology and Analytics (DaTA) unit

The DaTA unit is now fully operational and plays a crucial part across the CMA’s digital markets work. The unit provides analytical and data management expertise to support CMA’s work in specific cases. The Unit also carries out research and policy work. Notably, the CMA released a research paper on 19 January 2021, identifying the potential harms to competition and consumers from the use of algorithms. They are currently seeking public consultation on the matter, with the call for information due to close on 16 March 2021.

4.      Digital Regulation Cooperation Forum

The CMA will continue to work closely with Ofcom and the ICO through the DRCF on digital work of mutual importance, as well as other regulators with relevant responsibilities in digital markets. The DRCF plans to roll out an ambitious work plan intended to deliver a significant change in policy to improve and increase cooperation across their work on digital markets.

5.      International Cooperation

Given the global scale of digital markets, the CMA sees the need for regulators to work together to understand the issues and devise solutions. The CMA plans to achieve this through coordination within its international affiliates. Their affiliations include the Multilateral Assistance and Cooperation Framework[1], the Organisation for Economic Cooperation and Development (OECD), International Competition Network (ICN) and the International Consumer Protection and Enforcement Network (ICPEN), as well as the G7 group of nations, where the UK has taken on the Presidency this year.

6.      Support the Government on reform proposals of existing tools

In early-2019, the CMA proposed several legislative reforms to their existing competition, consumer, markets and mergers tools which will continue to be relevant to their work in digital markets. The CMA will continue to work with the Government on the existing proposals while continuing to monitor the evolving landscape of digital markets in case further reform is required.

7.      Update existing CMA guidance

The CMA will soon publish revised Merger Guidelines, resulting from its recent consultation, and will continue to keep this guidance under review.

The CMA is clearly determined to equip itself for this digital age. In the coming months, we will see further progress in this area most notably with the establishment of the DMU in April 2021 and its intended use of the proposed new tools to help bolster competition enforcement and merger review within digital markets.

[1] This comprises Australia, Canada, New Zealand, and the United States.

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