Digital Markets Unit set up in Competition and Markets Authority

The Government has confirmed the ‘shadow’ launch of the Digital Markets Unit based in the Competition and Markets Authority to start looking at how codes of conduct would work in practice to promote competition in digital markets.

This announcement is part of the UK Government’s ongoing commitment to take pro-competition measures to 'unlock digital market power, protect businesses and users, boost innovation and drive economic growth'. It follows the November 2020 Government response to the market study into online advertising, which outlined how the Digital Markets Unit will be set up in the CMA to build on the advice of the Digital Markets Taskforce by designating companies with ‘strategic market status’ (SMS) and enforcing a code of conduct for SMS firms.

Although the DMU is not yet on statutory footing, meaning there is no legislation granting the regulator full enforcement powers, this announcement gives some direction for the Unit to continue their preparation as part of the UK Government’s pro-competition regime. 

The non-statutory DMU has the following duties:

  • Carrying out preparatory work to implement the statutory regime
  • Supporting and advising government on establishing the statutory regime
  • Evidence gathering on digital markets
  • Engaging stakeholders across industry, academic and other regulators

As part of its first work programme, the Government has asked the DMU to address how ‘codes of conduct will work in practice to govern the relationship between digital platforms and groups, such as small businesses which rely on advertising to reach customers.’

The Digital Secretary has specifically requested that the Unit works closely with Ofcom on this, to see how ‘codes will govern relationships between platforms and content providers, such as news publishers, including to ensure they are as fair and reasonable as possible’.

When examining the role of platforms in digital markets, the Government has advised that the Unit will take a ‘sector neutral approach with a view to promoting competition’ and although initial work will be in partnership with Ofcom, the DMU will also work closely with other regulators, such as the ICO and FCA.

techUK welcomes this announcement as an important step in the formation of the UK’s pro-competitive regime which aims to promote competition and innovation.

We are pleased to see some clarity on the initial workplan for the DMU, although we would encourage further transparency and engagement on how regulators, such as Ofcom, the ICO the CMA and the FCA, plan to work together in practice and whether this will bear an influence on respective regulatory regimes.

The sequencing and coordination of digital regulation is particularly important to achieve effective outcomes for consumers and businesses alike and we look forward to continuing our work with the CMA and Government as the DMU develops.