In April 2023, the Digital Markets, Competition and Consumers Bill (DMCC) was introduced to UK Parliament, outlining proposals to further update relevant legislation and powers in line with the ever-evolving digital market. The Bill is expected to be in force sometime in 2024.
Of particular significance is the intention to ‘strengthen’ the enforcement of consumer protection law by increasing powers afforded to the Competition and Markets Authority (CMA). This article defines these powers and assesses how influencers and relative businesses are impacted as a result.
What is the CMA?
The Competition and Markets Authority (CMA) are the competition regulators in the United Kingdom. Their ambition is to promote the fair dealing and competition of businesses and help tackle unfair markets in a number of ways, which are discussed below further.
What powers does the CMA have already?
At present, the CMA has the power to enforce consumer protection law, albeit to a limited extent. Whilst, under the Enterprise Act 2002, they have the power to investigate if they suspect a breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). However, the CMA must apply to the court for the power to compel compliance with its investigation. For a summary of the CMA powers (prior to the forthcoming Bill), please check out this article (Influencer Marketing Rules).
Enhanced powers under the Bill
Enable the CMA to:
- directly investigate suspected infringements of the CPRs without going to court as well as any practice they believe may harm the wider interests of consumers in the UK;
- issue ‘enforcement notices’ without the prior need for court approval, making it the only regulatory authority with such power; and
- impose significant (GDPR style) fines to those who infringe regulations.
The fines outlined start from £15,000 or 5% of daily global turnover (whichever is higher) and soar to £300,000 or 10% of annual global turnover (whichever is higher).
The Secretary of State has also been provided with greater powers under the DMCC Bill. Secretary of State will now have the power to add the list of unfair practices.
How does this reflect the wider intentions of the DMCC Bill?
The enhancement of the role of the CMA in enforcing the consumer protection regime is likely to reflect the government’s intention to be able to adapt quickly to modern consumer needs, being especially pivotal in rapidly evolving industries like the influencer marketing industry.
The CMA regulatory movement is also intensively cracking down on unfair practices in the “Online Choice Architecture” (OCA). OCA is essentially how businesses present information and choices to users on websites and other services. The CMA considers practices such as pressure selling, hidden charges, subscription traps and fake reviews to be harmful online practices. With CMA already working to challenge OCA, we can expect to see that the CMA utilise their enhanced powers to dismantle these unfair practices further. Therefore, it is important that brands are mindful as to how they market their products and are up to date with CMA regulations.
What are the impacts on Influencers and relative businesses?
The CMA already works together with the Advertising Standards Agency (ASA) to regulate and clarify influencer practices on social media, including contributing to the influencer guidance note to making clear that ads are ads.
This is a new era in the realm of consumer protection, with the potential for further banned practices to follow in the future; now that the CMA is likely to gain greater powers to clamp down on unfair practices sometime in 2024, we expect to see enforcement action flowing from this.
There is likely to be less room for mistakes by influencers and businesses using and/or engaging influencers. With the introduction of the GDPR style fining system, individuals, influencers, and businesses should reassess their position and ensure they have a strategy for compliance – including being able to demonstrate the “due diligence defence” as detailed in another of our articles.
Our expert lawyers are at the forefront of this area of the law and provide training on the appropriate social media marketing practices and ensure compliance with these regulations. If you have any questions in relation to this article, please get in touch.
This article was co-written by Amy Ralston, associate, and Joey Medway, paralegal, in our Intellectual Property, Data Protection and Technology team. If you require further information or assistance regarding the Digital Markets, Competition and Consumers Bill 2023, please contact us by phone on 0345 450 5558 or by email at email@example.com