How the UK’s digital markets competition regime works
How the digital markets competition regime will promote competition in digital markets.
The digital markets competition regime
The digital markets competition regime enables the CMA to promote competition in fast-moving digital markets, while protecting UK consumers and businesses from unfair or harmful practices by the very largest technology firms.
The regime creates opportunities for more innovation and economic growth across the UK tech sector, benefitting companies of all shapes and sizes – along with the investors who back them. It also helps people and businesses across the UK, who rely on access to critical digital markets, to get a fair deal.
This page gives a summary of the regime. For more information:
- read the full guidance
- learn how the CMA uses the the 4Ps framework (pace, predictability, proportionality and process) in the regime
- find the latest updates on the CMA’s work in digital markets
Criteria for strategic market status
The regime is designed to apply only to the very largest firms. If certain conditions are met, these firms can be designated with strategic market status (SMS) in relation to a particular digital activity.
The CMA carries out investigations within a 9 month statutory timeframe to consider whether to designate a firm with SMS.
To assess whether the conditions for an SMS designation are met, the CMA will carry out evidence-based investigations, consulting and engaging with a wide range of stakeholders.
The conditions are:
- UK turnover of more than £1 billion or global turnover of more than £25 billion
- substantial and entrenched market power in relation to the digital activity
- a position of strategic significance
The CMA must carry out a forward-looking, five-year assessment to decide whether a firm has ‘substantial and entrenched’ market power in a particular digital activity. To make sure the regime keeps up with developments in fast-moving digital markets, SMS designations are time-bound for review every 5 years.
A firm has a position of strategic significance if it has at least 1 of the following:
- significant size or scale in the digital activity
- a significant number of other firms use the digital activity to carry out business it can extend its market power to a range of other activities
- it can substantially influence how other firms behave, in respect of the digital activity or otherwise
Stages of an SMS investigation
An SMS investigation usually lasts 9 months. The stages are:
- launch of the designation investigation
- consultation period
- proposed decision
- consultation period
- final decision
At least 9 months before the end of the five-year designation period, the CMA must open a new SMS investigation to re-assess the firm’s status.
What happens after an SMS investigation
If the CMA designates a firm with SMS, it will have 2 key tools: Conduct Requirements and Pro-Competition Interventions.
Through Conduct Requirements, the CMA will be able to guide the behaviour of SMS firms, tackling conduct that could undermine fair competition, or exploit people and businesses.
Through Pro-Competition Interventions, the CMA will be able to address specific competition problems arising from a firm’s market power in a particular digital activity.
The regime also provides for additional merger reporting requirements on SMS firms, to make sure the CMA has earlier sight of mergers and acquisitions that could harm competition in digital markets.
Conduct requirements
The CMA may put in place one or more tailored rules for SMS firms - steps that require them to take certain action or to stop a specific activity. These requirements may be put in place where doing so would be proportionate to achieve specific positive outcomes for users (or potential users) of the digital activity. These are fair dealing, open choices, or trust and transparency.
Pro-competition interventions
Once a firm has been designated with strategic market status, the CMA may investigate whether anything relating to the designated digital activity (for example, the behaviour of a firm or the structure of a sector) is harming competition.
If the CMA finds an adverse effect on competition, it can design and test interventions to address these competition problems and any harmful effects on users. This might include giving people the power to transfer their data easily between providers; or requiring firms to make sure different products and services work smoothly together (‘interoperability’), so businesses can more easily innovate and compete.
Merger reporting requirements
SMS firms must report mergers with a UK connection, and a value of £25 million or more, to the CMA before their completion. Where the CMA is concerned a merger might cause competition problems, it will launch a merger investigation under its normal merger review process.
Read the full merger reporting requirements for SMS firms.
Benefits of the regime for the UK
The regime provides opportunities to:
- harness the benefits of continued investment and innovation by the very largest firms
- unlock expanded opportunities for investment and innovation by creating a level playing field for start-ups and scale-ups (many UK-based) to succeed
- strengthen opportunities for UK consumers and business customers, those who rely on key platform services, to benefit from greater choice, more innovation and lower prices
People can:
- make informed choices, with defaults and choice architecture aiding decision-making
- use the products and services that best meet their needs, regardless of what other products and services they use and who they are provided by
- easily switch providers, without losing access to their data and content
- be protected from exploitation and unfair or misleading practices
To ensure that businesses:
- that rely on SMS firms do not face exploitation or anti-competitive behaviour by those firms
- have a fair chance to compete with SMS firms, including through appropriate access to data and functionality
Driving economic growth and improved productivity by:
- harnessing the benefits of continued investment and innovation by the very largest firms
- expanding opportunities for investment and innovation by creating a level playing field for start-ups and scale-ups (many UK-based) to succeed
Administering the regime
The CMA actively monitor interventions to make sure they are effective, avoid unintended consequences, and are targeted where they can have the most positive impact.
The most significant decisions under the regime will be taken by the CMA Board and a new Digital Markets Board Committee.
The CMA will coordinate with other regulators domestically and set out arrangements for doing this in published memoranda of understanding.
Many of the issues the CMA will tackle are cross-border in nature, so it is also working closely with international partners to help shape a regulatory landscape that supports investment and innovation in the UK.
Updates to this page
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Detail of mobile SMS investigations added.
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Details of the first SMS investigation added.
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First published.