Regulation

Digital Markets Unit (non-statutory) - terms of reference

Published 7 April 2021

1. Purpose of terms of reference

Government intends to set up a statutory body known as the Digital Markets Unit (DMU). This document sets out the objectives, key deliverables, governance and structure of the non-statutory Digital Markets Unit until its functions and objectives are finalised (in statute). The statutory Digital Markets Unit will oversee the new pro-competition regime, following legislation.

2. Background

Digital technologies are transforming the world as we know it. They are affecting every aspect of our economy and society and creating extraordinary opportunities for growth.

Ensuring digital markets are dynamic and competitive is central to the government’s vision of building a world-leading digital economy. In November 2020, the government announced a new pro-competition regime for digital markets, which will feature: an enforceable code of conduct to govern the behaviour of companies with ‘strategic market status’ (SMS); pro-competition interventions to tackle the sources of market power; and a Digital Markets Unit to maintain and enforce these new measures.

The government is committed to making rapid progress to establish the new, pro-competition regime to boost competition and innovation in digital markets. To ensure progress, funding was announced through the Spending Review to set up the non-statutory Digital Markets Unit in the CMA, ahead of legislation putting it on a statutory footing.

3. The role of the non-statutory Digital Markets Unit

The non-statutory Digital Markets Unit will have the following role:

1. Carrying out preparatory work to implement the statutory regime. For example, building teams with the relevant capabilities and preparing draft guidance (closer to the statutory Digital Markets Unit’s launch and once decisions on the shape of the regime have been taken), to maximise operational readiness of the Digital Markets Unit in time for the implementation of legislation.

2. Supporting and advising government on establishing the statutory regime. Advice will provide key insights to inform decisions about the shape of the regime. The content of this workstream will be agreed in collaboration with government. For example, the government has asked the Unit to begin looking at how codes of conduct could work in practice to govern the relationship between digital platforms and groups such as small businesses which rely on them to advertise or use their services to reach their customers.

3. Evidence-gathering on digital markets. The CMA will continue to use its existing powers, where appropriate, to investigate harm to competition in digital markets. This will ultimately inform the work of the statutory Digital Markets Unit.

4. Engaging stakeholders across industry, academia, other regulators and government. Building close relationships with other experts in the UK and abroad will ensure diverse insights underpin the new regime and will build the foundations for international regulatory coordination. The non-statutory Digital Markets Unit will also work closely with industry to prepare for a smooth transition following legislation.

The CMA has recently published a digital markets strategy refresh, which sets out the CMA’s work to establish the non-statutory Digital Markets Unit.

4. Steering of work to establish the non-statutory Digital Markets Unit

A forum will be established for the Digital Markets Unit to update government on its work. It will bring together officials from the CMA, DCMS, BEIS and HMT, to agree a work programme for the non-statutory Digital Markets Unit on its advice to government, and monitor progress against this. ICO, Ofcom and the FCA will also join this forum to inform the work programme on relevant areas as required.

5. Structure of the non-statutory Digital Markets Unit

The Digital Markets Unit will be housed in the CMA and will be headed by a senior CMA official. The government considers it important that the non-statutory Digital Markets Unit can access a broad range of expertise including in ex ante regulation and data rights.

6. Next steps

The government is considering the final form and the function of the Digital Markets Unit and will consult on final proposals, along with other key features of the regime, in the first half of 2021. We will legislate to put the body on a statutory footing as soon as parliamentary time allows.

The provisions of this document apply until the relevant legislation to establish a Digital Markets Unit takes effect, but may be updated as necessary where it is agreed by BEIS, DCMS, HMT and the CMA.