In this article, Travlaw discuss The Digital Markets, Competition and Consumers Act 2024 (“the DMCC”) which is set to affect businesses in all sectors.
Background
The DMCC has been a long time coming – the Act was first introduced to the UK parliament on 25 April 2023, following a Green Paper back in 2018 and a consultation in 2021.
The overall aim of the Act is to protect consumers by strengthening the enforcement of consumer protection law (including by giving the Competition & Markets Authority (“CMA”) significant new powers and the prospect of GDPR style fines) and introducing new consumer rights. Indeed, as the CMA noted in its 2024/25 Annual Plan, the DMCC Act will “place consumer protection law on a par with competition law”. The Act was finalised during the ‘wash-up’ preceding the 2024 General Election and received Royal Assent on 24 May 2024.
Our view is that this really is a landmark piece of legislation that has the potential to affect businesses across a wide variety of sectors, obviously including our own.
Key Points
As already mentioned, this is not a travel specific piece of legislation. That being said, there are plenty of aspects, which have at least one eye on our sector or can be seen as likely having a direct impact dependent upon your business model. Whilst there is a lot to get into, here are a flavour of the key points to know and consider:
- On timescales – there is going to be a phased implementation over the next 18 months (it is December 2024 at the time of writing), starting with the rules on enforcement and unfair trading coming into force in 2025; enforcement of financial penalties will be April 2025; and the subscriptions rules in the spring of 2026 “at the earliest”.
- A new department within the CMA is being created – the ‘Digital Markets Unit’ – who are tasked with promoting fair, digital markets and ensuring the most powerful tech firms treat consumers and business fairly.
- A core aspect of the Act is to expand the CMA’s existing investigation and enforcement powers in respect of competition issues. More on that later;
- The DMCC is, to a degree, re-stating previous laws in this area and strengthening them. It is another consumer focused piece of legislation;
- There is an attempt to crack down on the long running issue of fake reviews of any kind – own or third party.
- Another general issue being tackled by the DMCC that has relevance to travel and leisure is that of drip pricing – i.e. where only part of an end price is displayed at the outset, and then the final, total amount is revealed at or near the end of the transaction. However, there was some surprise that the new rules will not apply to “optional fees”, which effectively means that many of the commonly cited examples drip pricing such as airline seat reservation fees will not come in scope.
- Coming back to the enforcement point, the DMCC greatly enhances the CMA’s existing powers. To a degree the main change here is that up to now the CMA has had to instigate formal court proceedings to enforce any breaches of consumer protection law it perceives to have occurred. Usually that is after a period of correspondence and discussion with the relevant business. Under the new regime, the CMA will be able to seek Undertakings after their investigations and after any issue final enforcement notice. The affected business will still have the power to challenge such action – but now it is they that must start Court action to do so.
- The CMA will also have the power to impose fines, the potential for which is really quite notable. They can be up to £300,000 or 10% of annual global turnover (whichever is higher) in relation to final infringement notices, with various other fines available in some other circumstances.
Summary & Practical Steps
This really is a notable change that travel businesses need to think about irrespective of size or shape. Not every aspect of the DMCC will affect all businesses, but the potential ramifications for getting caught out is there. Over the years Travlaw have acted for all kinds of businesses – ranging from top ATOL holders right down to smaller SMEs – with approaches and enforcement action from the CMA. The whole change to the “burden of proof” could prove to be a game changer – the resources needed to challenge the CMA could prove to be simply too much for many businesses to justify, leading to acquiesce where that is neither right, fair nor reasonable. At the other end of the scale larger businesses could see significant actions brought against them which whilst ostensibly they have the resources to challenge will nevertheless not welcome and could be huge burdens to deal with.
One practical step now is to conduct a review of your businesses practices in respect of any and all of the above points that the DMCC will cover. Only you can say how reliant you are on, say, reviews, or whether there is any potential for drip pricing to be a factor. The good news is that performing such a review should not only identify areas that can be improved upon but is in itself a piece of potential due diligence for the business and its Directors.
On that last note – there is little about exactly how individuals may fall under the scope of fining powers, but again this is a situation better avoided entirely by making sure that the overall business does not come under any kind of investigation by having a robust and commercially well thought through set of processes in place.
Travlaw are a niche law firm who for more than two decades have been relied upon by the travel & leisure industry on legal, regulatory and compliance matters. See www.Travlaw.co.uk for more on their services and the thought leadership they have to offer.