Understanding the DMCC Bill: A Guide for Small Business Owners in the UK

Businesses of all sizes may be affected by the upcoming Digital Markets, Competition and Consumers (DMCC) Bill.

While much of the attention has fallen on the DMCC Bill’s lot of attention attempt to tackle the Big Tech power of multinational enterprises, the bill will also affect SMEs in the UK, particularly in relation to its consumer-centric measures.

The bill places the onus squarely on businesses to protect customers’ data and transparently outline the sales and marketing tactics that they use. It also gives regulators much more power to safeguard the protection of consumer rights.

What is the DMCC Bill?

Introduced to the UK parliament on 25 April 2023, the DMCC bill is set to pass into law early in 2024, according to Eversheds Sutherland.¹

The bill addresses three main areas:

1. Competition in digital markets: Introducing new competition rules that are aimed at curbing the influence and power of large technology firms.
2. Changes to wider competition rules: This will apply across all industry sectors.
3. Enhanced consumer protection in the digital space: Strengthening enforcement powers and tightening of consumer rights laws.

The impact of the DMCC bill on small businesses

While the tighter control, enforcement and compliance requirements of consumer protection measures will affect SMEs directly, there are also concerns that the bill’s Big Tech competition rules will filter through and impact them.

As reported by TechUK, the UK boasts the world’s third-largest tech sector, which is worth more than £182 billion to its economy each year. Of this, SMEs contribute £101.7 billion, which is 56% of the total.²

There is understandable concern that the proposed regulation of Big Tech companies could, if not implemented carefully, have unintended consequences for the whole digital economy.

More directly, the bill’s provisions will affect all SMEs selling or marketing online, through stricter compliance requirements surrounding consumer rights.

Those who understand and implement these new compliance requirements will be in a better place to secure better ongoing customer relations. Meanwhile, those who do not meet the demands could risk sanctions, fines and the loss of trust in their business.

Compliance and its relation to the DMCC Bill

The bill aims to make notable changes to the UK's consumer law, strengthening legal protection and granting new powers and enforcement abilities to the Competition and Markets Authority (CMA).

At present, the CMA’s only recourse to action has been via the courts. Now, it will be able to issue fines directly in the event of consumer law breaches.

These fines can be as much as 10% of a company’s global annual turnover for breaches of consumer law, and 5% of this for breaches of CMA directions or non-compliance.

For small businesses, this means that a much stricter watch is going to held over their compliance with data and consumer protection laws. This is why it is critical that SMEs in the digital space understand what these new laws are and implement changes that will ensure compliance.

New regulations to be aware of

The DMCC bill introduces stricter regulations in digital markets, including identifying acceptable digital marketing practices.

These include further provisions related to data privacy and consumer protection that will affect the way that businesses collect and use data, target their advertising, and apply algorithms for personalisation. Here are some aspects that could have a direct impact:

• Consumers will have extended rights: They can unwind any contract with a business whose conduct falls outside of the requirements.
• Inertia selling is no longer acceptable: If a product received was never requested, then consumers can treat this as a gift. Businesses can no longer demand the return, payment or safe storage of this product.
• "Subscription traps" are now clearly identified and targeted: The bill requires businesses to supply clear pre-contractual information to consumers setting out the nature of any subscription. They must also ensure consumers can terminate these easily. Businesses also must provide customers with reminders that introductory offers, such as a free trial, are soon coming to an end.
• Consumers are to be protected from risks involved in “saving schemes": This is when money is paid into an account with a business to create funds that can be used later. Such funds must now be fully safeguarded through insurance.
• Alternative dispute resolution (ADR) obligations are strengthened: ADR refers to the methods used to resolve disputes outside of traditional litigation. These processes are typically less formal, more flexible, and often more cost-effective than resolving disputes through the court system. Using a third party to mediate is an example of this. Under the bill, businesses are obliged to tell consumers of the availability of any ADR scheme when dealing with complaints.
• Fake reviews will be actively combatted: The legislation includes provisions prohibiting the commission of fake online reviews or the posting of these without taking steps to ensure that they are genuine.

The DMCC’s consumer-centric approach

At the heart of the bill is a consumer-centric approach to businesses operating in the digital economy. It encourages a greater need for transparency and honesty, with the onus now on businesses to actively ensure such values are central to their operations and marketing.

There are many ways that SMEs can implement practices that foster such values within the fabric of their business. A few that all businesses can review are:

• Transparency and communication: Clear and accessible privacy policies, responsive customer support, and accessible feedback mechanisms may help reduce friction.
• Data security measures: Robust data protection and the provision of visible compliance assurance may also help reduce complaints.
• Personalisation with consent: Opt-in permission for content-based personalisation should always be explicitly sought.
• Ethical use of consumer data: Responsible data usage includes collecting only what is required and anonymising data to protect customer identities.

The new path forward under the DMCC bill

The DMCC bill demands a sharper focus on the use of consumer data and the placing of customer rights and experience at the centre of service provision. This is introduced alongside tighter rules and the equipping of a regulator with new enforcement capabilities.

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