• The Competition & Markets Authority’s (CMA) new bill to regulate the digital industry is a step in the right direction. However, large caveats prevent effective regulation.

• Inflexible ex-ante regulation will not survive the dynamism of digital industries

• Ambiguous definitions within the bill are shown to allow for inefficiencies in regulation

• A proven lack of safeguards and accountability measures are included within the bill

While not beyond salvation, the CMA’s DMCC bill isn’t fit for purpose in its current form

New research from Leeds Policy Institute (LPI) finds that the CMA’s new ‘Digital Market, Competition, and Consumers Bill’ (DMCC) has issues that prevent it from adequately policing expanding digital markets. It also provides an overview of the bill and what can be addressed to fix it by following precedent from the EU market authority.

“The DMCC Bill, while designed with the best intentions, could inadvertently hinder innovation within the UK’s digital sector. By furnishing the CMA with extensive powers to regulate digital markets, it introduces a degree of regulatory uncertainty that could dissuade investment. This is particularly concerning for firms identified as having strategic market status, who may become cautious about innovating due to potential regulatory costs and risks.”

The paper also provides novel solutions to fix the proposed bill by closing the gaps left in its current form by following the precedent left by the EU’s markets authority.

“The DMCC bill should take inspiration from its EU counterpart, the DMA, which provides a more thorough and robust definitional approach. We thus conclude that the DMCC should include a quantitative value to define ‘Strategic Market Status’ and that it should abandon ex-ante regulation in favour of ex-post regulation. We are confident that such an amendment would help to avoid market failure, the stifling of innovation, and administrative issues while promoting healthy market conduct and competition,”  the report states. 

LPI’s Market Interventions paper author, River Wajiya, said:

“The recent investigation into big tech firms by the UK Competition and Markets Authority underscores the need for the proposed Digital Markets, Competition and Consumers Bill to effectively fulfil its regulatory role.

“Microsoft and Amazon’s bids for extensive integration of artificial intelligence in their products and services warrant regulatory oversight. Yet, as the CMA’s attempts at intervention fall short, the upcoming proposed legislation to boost its regulatory power has never been more important. Through improved flexibility and discretionary power, the CMA can overcome the administrative roadblocks it currently faces.

“However, its experimental ex-ante approach may prove difficult in a sector that has seen transformational growth over a short period. Our paper recommends that the CMA reviews their 5-year forward-looking assessment to a more traditional and tested method.”

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Notes to Editors

• ‘Investigating the UK Digital Markets Regime: Is the DMCC Bill Fit for Purpose?’’ is the first paper to be published by Leeds Policy Institute’s Market Interventions division.

• We write our paper at a time when digital markets are exploding in size and complexity. Regulators will need to adapt quickly and efficiently while planning for the future at every step.

• With AI proving that digital can change on a whim, regulators are forced to look for novel and robust methods for classifying such a tumultuous industry.

CONTACT: thinktank@luu.group / 07895 958710

A full copy of ‘Investigating the UK Digital Markets Regime: Is the DMCC Bill Fit for Purpose?’, can be read here.

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About Leeds Policy Institute

Leeds Policy Institute (LPI) is a UK-based and student-led Think Tank affiliated with Leeds University Union (a registered UK charity). It is dedicated to undertaking empirically driven and non-partisan policy research that centres on both local and national issues. 

Our 6 Policy Areas for 2024 are: 

• Macro Policy 

• Energy and Environment

• Urban Planning and Transport 

• Social Policy 

• Market Interventions 

• Financial Regulation 

Established in April 2023, the Leeds Policy Institute (LPI) endeavours to facilitate the engagement of young individuals in ongoing policy dialogues. Through initiatives encompassing funding for informative speaker engagements, publication of student-authored articles, and collaborative delivery of skill-enhancing workshops in conjunction with the university, LPI seeks to empower its student members and contribute to the betterment of society.