The UK government introduced its Digital Markets, Competition and Consumers Bill to Parliament for approval on April 25, 2023. The bill establishes a “pro-competition framework” for digital markets, specifically targeting a small number of tech firms with significant market power that will receive a “Strategic Market Status” (SMS) designation.
According to the bill, the Digital Markets Unit (DMU) within the Competition and Markets Authority (CMA) will enforce the new framework. The DMU will have the power to impose tailored conduct requirements on SMS firms and pursue “pro-competition interventions” to remedy competition issues. In addition, SMS firms will be required to report contemplated mergers and acquisitions (M&A) transactions above certain thresholds to the CMA, which will in turn determine whether to launch a merger investigation.
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The UK bill follows the general regulatory trend of limiting the market power of dominant players in the digital markets. The EU Digital Markets Act (DMA) that came into force in November 2022 and received implementing regulations on May 2, 2023 is another example of this trend. The EU DMA also provides for designations of dominant players (“gatekeepers”) and control measures over their M&A activities.