On Dec. 2, UK GVT issued rules on digital market turnover and control.
UK GVT issued the Digital Markets, Competition and Consumers Act 2024 and Consumer Rights Act 2015 (Turnover and Control) Regulations 2024 (StIn 2024/1243).
Follows Jul. 2024 UK GVT proposed DMCCA turnover, control rules, see #221361.
Purpose
Set out how UK CMA, civil courts, other enforcers will estimate/calculate turnover for purposes of assessing if an undertaking should be designated as having Strategic Market Status (SMS); or to determine statutory maximum for penalties non-compliant entities may have to pay under Digital Markets, Competition and Consumers Act 2024.
These penalties relate to Digital Markets, Competition and Consumers Act 2024 (DMCCA 2024 (UK)) provisions relating to digital markets, and to enforcement of consumer protection law and the motor fuel regime; consumer penalties regime requires an assessment to be made as to when a person controls another person.
The regulations also set out the circumstances in which a person is considered to have such control over another person; DMCCA 2024 (UK) sets out that only those businesses designated as having SMS, following an evidence-based investigation that determines they meet certain criteria, will be subject to the digital markets regime.
One of these criteria is the turnover condition; CMA can only designate a firm with SMS if it estimates the undertaking under investigation or, where the undertaking is part of a group, that group, has either UK turnover of +£1bn or global turnover of +£25bn.
Instrument makes regulations for estimating turnover for SMS designation purposes.
DMCCA 2024 (UK) allows CMA or other enforcers or courts to impose an appropriate turnover-based penalty on undertakings for failure to comply with a regulatory requirement or investigatory measure imposed under part 1 of the DMCCA 2024 (UK).
For failure to comply with regulatory requirements under digital markets regime, CMA can impose penalties of a fixed amount, amount calculated by reference to a daily rate.
Or it can impose a penalty that is a combination of a fixed amount and a daily rate.
The penalties for fixed amount can be up to 10% of worldwide turnover, and for a daily rate up to 5% of the daily worldwide turnover for each day a breach continues.
UK CMA may also impose penalties on an undertaking - other than individuals - for failure to comply with an investigative measure under the digital markets regime.
Maximum penalty is 1% of undertaking’s worldwide turnover for fixed amount, 5% undertaking’s global daily turnover for amount calculated by reference to daily rate.
The instrument makes regulations for calculation of turnover to determining digital markets penalties; DMCCA 2024 (UK), part 3 restates, updates current court-based consumer law enforcement framework contained in part 8 of the Enterprise Act 2002.
It also introduces monetary penalties of up to 10% of worldwide turnover for breaches of consumer law, with lower penalties for breaches of procedural steps.
UK CMA is granted direct enforcement powers for consumer law and is empowered to impose monetary penalties at same level; instrument makes regulations for calculation of turnover for the purpose of determining consumer enforcement penalties.
DMCCA 2024 (UK), part 3 defines turnover as including not only turnover of the infringing person, but also turnover of any persons that control/are controlled by them.
These regulations set out a definition of control for those purposes.
Under the motor fuels regime, UK CMA can impose a penalty on an undertaking for non-compliance with an information notice, falsification or concealment of information, or provision of false or misleading information in response to a request for information.
The maximum penalty which may be imposed is a fixed penalty of up to 1% of worldwide turnover and/or a daily penalty of up to 5% of daily turnover; this rule makes regulations for calculation of turnover to determining motor fuels penalties.
New Provisions
Reg. 2 and Schedule 1 provide for estimating total value of global turnover or UK turnover of undertaking/group for purposes of turnover condition in DMCCA 2024, S. 7.
Reg. 3 and Schedule 2 provide for determining turnover and daily turnover of an undertaking/group for purposes of sections 86(4), (5), 88(3), (4) of DMCCA 2024.
In respect of calculating the maximum penalties imposed under sections 85 and 87 for failure to comply with certain competition and investigative requirements.
Reg. 4 provides for determining when a person is to be treated as controlled by another person, to calculate turnover of a person under DMCCA 2024, S. 204(1)(b),(c).
Reg. 5 and Schedule 3 make provision for determining the turnover and daily turnover of a person for the purposes of the following sections of DMCCA 2024.
S. 158(5), in respect of calculating maximum penalties imposed under S. 158(2).
S. 168(3)(a), (b), for calculating maximum penalties under S. 166(5)(b), 167(4)(b).
S. 182(6), for calculating the maximum penalties imposed under section 182(4)(b).
S. 190(3), for calculating maximum penalties imposed under section 189(3)(b).
Section 193(3), for calculating maximum penalties imposed under section 192(3).
S. 198(4), for calculating the maximum penalties imposed under section 198(3).
Regulations 6 and 7 and Schedule 3 apply in the context of consumer protection law, imposition of monetary penalties under Consumer Rights Act 2015 (CRA 2015 (UK)).
Regulation 6 provides for determining when a person is to be treated as controlled by another person, for purposes of calculating turnover of a person under Consumer Rights Act 2015, Schedule 5, paragraph 16H(1)(b), (c), which is will be inserted by paragraph 2 of Schedule 17 of DMCCA 2024 on a date to be appointed.
Reg. 7 and Schedule 3 provide for determining turnover and daily turnover of a person for purposes of CRA 2015 (UK), Schedule 5, para. 16H(1), for calculating maximum penalties imposed under paragraphs 16A(3) and 16C(2) of that Schedule for failure to comply with notices which require the provision of specified information.
Reg. 8 and Schedule 4 apply in context of competition in connection with motor fuel.
Make provision for determining the turnover and daily turnover of an undertaking for the purposes of section 312(4) of the DMCCA 2024, in respect of calculating the maximum penalties imposed under section 312(1) of DMCCA 2024 for failure to comply with notices requiring provision of information and other related infringements.
Effectiveness
Parts 1, 2 and 4 are in force Jan. 1, 2025; part 3 is in force on Apr. 6, 2025.
