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The proposals, which are set out in the consultation paper Reforming Competition and Consumer Policy, cover three areas: competition policy, consumer rights, and consumer law enforcement. The ambitious reforms “seize the opportunity of the UK being able to chart its own way” post Brexit and deliver on the ambitions set out in both the 2018 Consumer Green Paper and the more recent Penrose report on competition policy.
As anticipated, BEIS proposes handing beefed-up enforcement powers to the CMA, which would enable it to impose huge administrative fines (up to 10% of global turnover) on businesses that breach consumer protection laws. This would bring the CMA’s consumer law enforcement powers in line with its powerful antitrust enforcement toolkit, and is seen by many as a ‘game changer’ that would greatly increase the risk of retailers and other consumer brands facing multi-million pound fines in cases where they are deemed to have misled consumers.
Beyond this, there are a series of potentially significant reforms spanning both consumer and competition law enforcement. In the coming weeks we will be unpacking these changes in a 3-part series of articles. For now, the headline changes are summarised below.
Although the consultation paper acknowledges that the current system generally works well, it identifies certain weaknesses, which it says are undermining consumer confidence and exposing traders to unfair competition. In particular, the CMA does not have the powers to act quickly to seek solutions for consumers and only weak sanctions are available to deter breaches of the law.
The package of proposed reforms include:
BEIS is concerned that consumer rights may not be keeping pace with market developments, in particular the rise of online shopping (accelerated by the pandemic) and the increase in online subscriptions. The Government is proposing a series of updates, including:
BEIS also expresses concerns that competition in the economy has weakened over the last 20 years. The consultation proposes that a more active pro-competition strategy is now required to deliver more targeted and effective pro-competitive interventions capable of driving new growth and innovation. To deliver this, the consultation sets out the following five-point plan:
Alongside this consultation, the Government has also launched a consultation on a new pro-competition regime for digital markets to tackle the unique challenges in this sector and provide the new Digital Markets Unit with appropriate powers to address the root causes of market power.
There is much to consider within these proposals and we shall be exploring the detail of each of the areas outlined above in a series of subsequent updates. In the meantime, should you wish to discuss the proposals or should you like us to assist you in influencing the competition and consumer protection rules of the future by responding to the consultation, please get in touch. The closing date for responses is 1st October 2021.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at July 2021. Specific advice should be sought for specific cases. For more information see our terms & conditions.
26 July 2021