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LONDON — A major shakeup to U.K. competition law is coming – and Big Tech’s not happy.
The British government will on Tuesday unveil a wide-ranging Digital Markets, Competition and Consumer Bill that’s been subject to a frantic behind-the-scenes lobbying by major tech players. They already appear to have lost the opening battle.
The legislation aims to rein in Big Tech’s dominance of digital markets, giving regulators powers to impose a new code of conduct on the largest firms. A newly-created Digital Markets Unit will be able to fine tech companies up to 10 percent of global turnover and disqualify directors who don’t comply with the rules.
It will take months to get through parliament and become law. Yet industry lobbyists have already hit a wall in their bid to tweak the planned system for appealing decisions they don’t like.
The tech giants were hoping to appeal decisions made by the regulator on the basis of whether or not those decisions were correct, known as a merits appeal. But their lobbying prompted pushback from ministers who are now holding fast to a tougher standard of appeal called judicial review.
That means companies can only appeal if the regulator, a branch of the Competition and Markets Authority, hasn’t followed processes correctly — giving companies fewer ways to overturn a decision or drag out the appeals process.
The government’s move, first reported by POLITICO, came as a surprise to the tech giants who negotiated a compromise earlier this month alongside other companies through trade association TechUK. Those compromise plans would have limited the time appeals can take to six months, pleasing challenger firms, but would also have allowed Big Tech firms to appeal “significant” DMU decisions on merit.
The government points out that it’s using the same appeal standard already deployed by another powerful regulator, Ofcom. But tech companies are continuing to push against it, arguing it is unfair and anti-business — and highlighting how other U.K. regulators use a merits appeal standard.
In TechUK’s position paper on the bill, it said it was looking for checks and balances on the DMU. Neil Ross, associate director of the trade body, said the bill represented a “vital piece of legislation” — but urged an appeals process that allows “quick resolutions to disputes while allowing the full facts of a case to be taken into account for the most significant regulatory decisions.”
The largest companies, with a turnover of either £25 billion globally or £1 billion in the U.K. can be designated by the DMU as having “strategic market status.” It means they will have to abide by a specific code of conduct in the sectors they dominate. The government has said the code aims to prevent firms from use their “market power and strategic position to distort or undermine competition” between users of their services.
Paul Scully, minister for tech and the digital economy, said the bill sought to “open up new opportunities for all firms, however small or large they are, while empowering consumers.”
Protecting consumers
The bill will also aim to reform consumer law for the digital age by banning fake reviews and so-called “subscription traps,”which the government says cost consumers £1.6 billion a year. Ministers want to make it easier for consumers to opt out of subscriptions.
Rocio Concha, director of policy and advocacy at consumer group Which?, said a “properly equipped Digital Markets Unit will support a more competitive economy by breaking up the dominance of a handful of tech giants, whose entrenched market power holds smaller firms back and reduces choice for consumers.”
Nick Breen, a partner at legal firm Reed Smith, warned that this was not just a “Big Tech bill.” “The proposals that have been put forward are extensive and wide-reaching,” he said. “Every business offering a subscription model to consumers needs to play close attention to how this plays out in parliament over the coming months.”
