What next for the UK DMCC? Expert report published with the Legatum Institute

As Parliament returns from its festive break, many competition law eyes will be on the Digital Markets, Competition and Consumers (DMCC) Bill – at the moment “Just a Bill” but probably not so for much longer…

The DMCC: “Just a Bill”but for how much longer?

There are many rich questions as the Bill heads over to the Lords for critical scrutiny. This is the major audience for due process concerns, and the place where technocracy often meets accountability. Critical questions are up for debate including how to frame the relevant evidence rules, the extent to which existing rules should change given developments in online business, and how best to ensure high quality regulation over time. Essentially, the forward-looking question is all about the evidence requirements for future interventions.

As the UK Competition and Markets Authority has become increasingly active in global business in recent years, the law will be relevant well beyond the UK. For example, recent Commitments with Google apply on a worldwide basis. There is also clear global impact from recent merger reviews such as Facebook/Giphy, Microsoft/Activision and Adobe/Figma – not to mention the new investigations into OpenAI, and cloud computing.

Dnes & Felver provided an expert report on the relevant issues to the Legatum Institute, a leading London-based think tank seeking to promote prosperity in the UK.

Stephen Dnes’ co-author, Fred de Fossard, recently commented on Politics Home:

“The last decade has seen the world’s leading antitrust regulators, the CMA, the European Commission, and the Federal Trade Commission in the USA, take a much more interventionist approach to digital markets … even if businesses with large market shares continue to innovate and provide their users and customers with new and improved services, today’s regulators may decide to prosecute them for occupying too great a position in the market… 

This has caused great discord in the digital economy, where entrepreneurs often build businesses with the intention of selling them to a large acquirer, who can take the company and its products to a bigger audience. After all, not all founders are born managers of global companies: their skills often lie in establishing new businesses and new ideas.”

The core point is essential for growth: if large and small businesses sometimes complement each other, then the law must have a mechanism for answering a very difficult question:

When is big bad, and when is big beautiful?

The same theme was noted by Diginomica journalist Chris Middleton, who commented:

“To see ‘digital markets’ as something separate and distinct in 2023 seems almost quaint – a Web 1.0 perspective, three decades too late. What about AI, decentralized services, complex supply chains, cloud, and mobility? Will some Bill address those in 2053?

“While well intentioned, I would argue that the Bill is both 25 years too late and fundamentally misconceived. To see a handful of Big Tech titans as being of ‘strategic market importance’ (SMS), based largely on their size, ignores an obvious problem. Namely, that it is often smaller players, such as OpenAI and Spotify, which are really shaping what the future looks like”

The recommendations in the expert report correspond closely to several of the amendments introduced before Parliament. This complements earlier work with the Institute, which is now reflected in the strategic steer to the UK CMA.

Getting involved

How exactly the law sifts worthy from unworthy cases for intervention may well be the critical competition policy question of the year. For the UK, it will be a once-in-a-generation reform. Moreover, how the DMCC approaches this will have ramifications well beyond the UK – so this is not so much one to watch as one to get involved with.

The Report is available online.

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