New regulatory regime for tech giants from the Competition and Markets Authority.

New regulatory regime

New regulatory regime for tech giants from the Competition and Markets Authority on the UK’s new pro-competition regime for digital markets.

 

The new advice issued to the UK government today, includes an outline of the design and implementation of the new pro-competition regime for digital markets. This forward-looking, targeted advice was produced by the Digital Markets Taskforce, and led by the Competition and Markets Authority (CMA), working together with Ofcom, the ICO and the FCA. It was commissioned by the government in March, and outlines a modern regulatory regime fit for the digital age. It enables quick results, harnessing the full potential of digital markets, and driving more and better competition and innovation.

 

“We welcome the publication of the Digital Markets Taskforce Advice and we have been pleased to support the work of the Taskforce. The dominance of a few major players in digital market impacts on people’s data protection rights when they use these platforms. Our involvement with the Taskforce reflects the importance of safeguarding these rights and ensuring individuals have greater control over their personal information.” Information Commissioner, Elizabeth Denham expressed, on this new regulatory regime.

 

This new regulatory regime will govern those powerful tech firms with ‘strategic market status’ or SMS.

 

If this new regime is implemented, it will govern those powerful tech firms, with ‘strategic market status’ (SMS). This refers to those with substantial, entrenched market power and where there are particularly widespread or significant effects of that market power. There is also a new ‘Digital Markets Unit’ (DMU), which will ensure that the rules and guidelines are clear up-front, and will work with powerful tech firms to ensure their compliance

 

The regime proposes three key pillars for firms with strategic market status, including a legally binding code of conduct.

 

The three key proposed pillars of the regime for SMS firms are a new legally binding code of conduct, pro-competitive interventions, and enhanced merger rules. The new code of conduct will be tailored to each firm and designed and overseen by the DMU in cases where problems might occur. It is expected to help to shape the behaviour of powerful digital firms, and govern elements of their business to business and business to consumer relations. The DMU will have a range of powers to address concerns, including the power to enforce significant penalties. 

 

Pro-competitive interventions, like interoperability requirements on tech firms, will be used to address the sources of market power, allow for more and better competition, and allow the potential for transformative innovation by others in the market to flourish. The enhanced merger rules, which would also be implemented, would enable the CMA to apply more effectively scrutinize transactions involving SMS firms. This would include mandatory notification of a transaction to the CMA, a block on completing deals before investigation by the CMA, and a more cautious legal test for the likelihood of harm to consumers. The latter would address concerns about historic under-enforcement of mergers involving big tech firms.

 

The Digital Markets Unit will sit within the CMA and form part of a wider regulatory framework for digital markets.

 

The DMU will form part of the CMA, which is now working with Ofcom, the ICO and FCA through the Digital Regulation Cooperation Forum, to consider all the steps that should be taken to ensure there is proper coordination, capability and clarity for all digital regulation. This taskforce has urged the government to move this legislation forward quickly, taking advantage of the clear opportunity for the UK to lead a modern pro-competition, pro-innovation regime. The UK government has committed to consult on proposals for a new pro-competition regime in early 2021 and to legislate to put the DMU on a statutory footing once parliamentary time allows. 

 

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