A new year, a new role: CMA to house new UK digital regulator

Ending months of speculation about which UK regulator would take on this responsibility, on Friday, the government announced that the new Digital Markets Unit (or DMU) will be housed within the CMA from April 2021.   The DMU will have its work cut out, as it takes responsibility for introducing and enforcing a new Code of Conduct for firms with enduring market power.  The CMA’s market study report has also recommended additional powers for the DMU to introduce pro-competition interventions to tackle sources of market power.

The form and function of the DMU is still far from settled however.  This will be informed by the recommendations of the Digital Markets Taskforce (expected by end of year).  The government will also start its own consultations early in the new year.

This announcement comes as part of the government’s response to the CMA market study report.  While this response recognises the value that online platforms bring to businesses, consumers and the economy, it also expresses concerns about the impact of concentrated market power in the tech sector on innovation and consumers. The government largely takes on-board the CMA’s recommendations, and puts its weight behind proposals for a new pro-competition ex ante regime.  But it calls for caution in designing new powers to implement pro-competition interventions as these are “complex” and come with “significant policy and intervention risks”. 

In response, CMA Chief Executive Andrea Coscelli has “welcome[d] the government’s response to the findings of our digital advertising market study”.

The government recognises the need to take “urgent action” to address the issues identified by the CMA.  It has pledged to legislate to establish the DMU as soon as parliamentary time allows.