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Competition watchdog proposes regulatory regime for tech giants

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The UK Competition and Markets Authority (CMA) has issued advice to the Government on the design and implementation of a new regime to ensure that smaller companies can compete with powerful tech giants.

The advice was produced by the Digital Markets Taskforce, which brought together the CMA, Ofcom, the Information Commissioner’s Office, and the Financial Conduct Authority.

If implemented, the new regulatory regime will govern tech firms such as Google, Apple, Facebook and Amazon which have “strategic market status” - substantial, widespread and entrenched market power. A new Digital Markets Unit within the CMA will work with tech giants to ensure that they understand and comply with the rules.

There are three pillars of the proposed regime. The first is a legally binding code of conduct, tailored to each company, which governs their conduct regarding their users and other companies; the Digital Markets Unit will have an unspecified set of powers to address any concerns, including the potential to impose “significant penalties”.

The second pillar will be pro-competition interventions to address the sources of market power and unlock the potential for genuine innovation by competitors. An example of an intervention could be imposing interoperability requirements on tech companies.

The third pillar will be enhanced merger rules, allowing the CMA to more closely scrutinise transactions involving tech giants and suspend deals in order to carry out investigations into the potential harm to consumers.

“To ensure the UK can continue to enjoy a thriving tech sector, consumers and businesses who rely on tech giants like Google and Facebook should be treated fairly, and competitors should face a level playing field – enabling them to deliver more of the innovative products and services we value so highly,” said CMA CEO Andrea Coscelli. “For that to happen, the UK needs new powers and a new approach.”

“In short, we need a modern regulatory regime that can enable innovation to thrive, while taking swift action to prevent problems. To meet the new challenges of the digital age, it is essential that regulators work together.”

The Information Commissioner, Elizabeth Denham, commented: “We welcome the publication of the Digital Markets Taskforce advice and we have been pleased to support the work of the Taskforce. The dominance of a few major players in digital market impact on people’s data protection rights when they use these platforms. Our involvement with the Taskforce reflects the importance of safeguarding these rights and ensuring individuals have greater control over their personal information.”

If adopted by the Government, the new competition regulations will form one facet of a wider regulatory framework for digital markets, spanning areas such as online harms and data protection.

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