The UK government is consulting on three draft regulations under the Digital Markets, Competition and Consumers (DMCC) Act 2024. They set out:
- how turnover should be estimated or calculated; and
- the circumstances in which a person is considered to have control over an enterprise.
The DMCC Act received Royal Assent on 24 May 2024. It contains provisions requiring the CMA, the courts and other enforcers to estimate or calculate a business’s turnover. This is to assess if a business should be designated as having strategic market status (SMS), or to determine the statutory maximum for penalties that non-compliant entities or individuals may be required to pay. These penalties relate to the Act’s provisions relating to digital markets, and to the enforcement of competition and consumer law, including the motor fuel regime. The introduction of turnover based penalties enables the issuing of penalties proportionate to the size of the business involved, with a view to providing a more effective deterrent for businesses not complying with investigative measures or breaching the remedies, conduct requirements or other measures imposed by regulators.
The consumer protection regime, and the amendments made by the DMCC Act to the Enterprise Act 2002, require an assessment to be made as to whether a person controls an enterprise. These draft regulations also provide for the circumstances in which a person is considered to have control.
In particular, the regulations deal with:
- how the turnover will be estimated or determined, including what sums should be taken into account for that purpose;
- what factors the CMA must take into account when determining whether turnover is relating to UK users or UK customers for the purposes of section 8(3) of the DMCC Act;
- the period for the determination of turnover;
- the trigger event for determining the period of turnover;
- how turnover should be calculated in relation to financial institutions credit institutions, and insurance undertakings;
- the application of exchange rates where sums are not in sterling; and
- the circumstances in which a person will be treated as having control of an enterprise or business.
The consultation ends on 10 September 2024.
