Overview of the CMA's Provisional Approach to Implement the New Digital Markets Competition Regime

Overview of the CMA’s
provisional approach to
implement the new
Digital Markets
competition regime

[Publish Date]

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Contents
Page
1. Summary ........................................................................................................................ 3
2. Context and purpose of this document ........................................................................... 5
3. The purpose of the new Digital Markets competition regime .......................................... 6
4. Target outcomes ............................................................................................................ 7
5. Key elements of the Digital Markets competition regime .............................................. 11
6. How the CMA’s actions will be reviewed and it held to account ................................... 17
7. How we will carry out our Digital Markets competition functions: operating principles . 20
8. How we will work with SMS firms and other stakeholders ............................................ 24
9. Operational readiness to take on our new role ............................................................. 26
10. Indicative timeline ......................................................................................................... 27

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1. Summary
1.1 This document sets out the CMA’s provisional thinking on how we will implement
Part 1 of the Digital Markets, Competition and Consumers Bill (the DMCC Bill). Our
preparations will evolve as the DMCC Bill progresses through Parliament.
Purpose and target outcomes
1.2 The Government has set out that the DMCC Bill will provide the CMA with new,
more effective tools to address barriers to competition in digital markets. The DMCC
Bill will give us the power to designate firms as having Strategic Market Status
(SMS) in relation to a digital activity. Strict criteria ensure designations will be
targeted at a small number of firms. We will then be able to set requirements for
how these firms should conduct themselves in relation to that activity. We will also
be able to investigate whether there are factors undermining competition that we
could remedy through ‘Pro-Competition Interventions’ (PCIs).
1.3 Our new role supports the CMA’s overall purpose – to help people, businesses and
the UK economy by protecting competition and tackling unfair behaviour. The
positive outcomes we will pursue in digital markets are that people can be confident
they are getting great choices and fair deals; that competitive, fair-dealing
businesses can innovate and thrive; and that dynamic competition stimulates
investment and competitive innovation, driving economic growth and productivity.
1.4 Our digital markets work to date has highlighted potential harms we may need to
prevent or address in order to assure these benefits, including prospective SMS
firms blocking innovation, exploiting their market power, or seeking to reinforce and
extend their market power. Which harms we tackle will be driven by the CMA’s
prioritisation principles.
Accountability
1.5 The CMA Board is directly accountable to Parliament and receives a Strategic Steer
from the Government. We will also continue to provide evidence to, appear before,
and engage with Parliamentary committees and Parliamentarians interested in our
work.
1.6 The DMCC Bill includes five mechanisms to hold the CMA to account for our
decisions under Part 1. Significant decisions must be taken by the Board itself or a
Board Committee with at least half of its members being non-executives or
members of the CMA’s panel. We will consult publicly on guidance on how we will
exercise our digital markets functions, as well as on our decisions. Firms will be
able to appeal our decisions under judicial review standards, as they are under our
existing markets and mergers functions. Designated firms will be able to appeal on

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the merits the imposition and size of any fines we decide to impose for breaches of
the requirement placed on them.
How we will carry out our Digital Markets functions: operating principles
1 We will tailor our actions to the specific problems we identify, considering their proportionality
and likely effectiveness.
2 We will focus our actions where we can have the most impact for people, businesses and the
economy.
3 We will measure our impact, outcomes and outputs. We will learn from experience and use
this to inform future decisions.
4 We will stay abreast of developments and seek to deal with harm quickly.
5 We will promote competition as the primary lever to deliver better outcomes for users.
6 Where steps to improve competition alone will not deliver the outcomes to the extent or pace
we seek, we will prevent abuses of market power more directly.
7 We will seek to intervene in a technology-neutral way.
8 We will ensure the Digital Markets competition regime complements other CMA tools.
9 We will engage throughout with a wide range of stakeholders who are affected by or have an
interest in our work.
10 We will operate with transparency.
11 We will work with our domestic and international counterparts to minimise unnecessary
duplication.
Readiness for our role
1.7 We have built up considerable experience and expertise in digital markets in recent
years and are continuing to recruit. We will have around 200 people working on our
digital markets functions by commencement. This includes data scientists and data
engineers, technologists, behavioural scientists, digital forensics specialists,
economists, lawyers, and policy officials. In addition, we have appointed nine Digital
Experts as independent advisors.
Indicative timeline (subject to Parliamentary process)

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2. Context and purpose of this document
2.1 The Parliamentary Under Secretaries of State at the Department for Business and
Trade and the Department for Science, Innovation and Technology requested on 4
January 2024 that the CMA publishes a high-level plan for implementing the
proposed new Digital Markets competition regime. They asked us to include
indicative timelines for certain milestones such as consulting on guidance as well as
how we envisage working with stakeholders.
2.2 This document responds to that request. Its purpose is to support scrutiny of Part 1
of the Digital Markets, Competition and Consumers Bill (the DMCC Bill) by
Parliamentarians, as well as assist stakeholders preparing for the new regime. It is
based on the latest draft of the DMCC Bill, the insights we have gained from our
extensive work in digital markets to date and our engagement with a broad range of
stakeholders.
2.3 However, the DMCC Bill may be further amended through the Parliamentary
process. This document, therefore, represents a provisional overview and we will
refine and detail our approach as we engage further with stakeholders and continue
to prepare for our new responsibilities. We will publish a more detailed document
setting out our intended approach following Royal Assent. At that point we will also
consult on our draft guidance for the regime covering each of the key provisions in
Part 1 of the DMCC Bill. While this document does not cover other Parts of the Bill,
we will separately consult on guidance for our new functions within the direct
enforcement model of consumer law created by Part 3, as well as on new or revised
guidance for our wider competition functions as necessary.
2.4 This document therefore covers:
• the purpose of the new Digital Markets competition regime
• the positive outcomes we will seek to achieve and the types of harms we will
seek to prevent or address
• the key elements of the Digital Markets competition regime
• how the CMA will be held to account for its actions
• how we will carry out our new Digital Markets competition functions
• how we will work with potential SMS firms and other stakeholders
• our operational readiness to take on our new role
• an indicative timeline, as we prepare for the start of the Digital Markets
competition regime.

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3. The purpose of the new Digital Markets competition
regime
3.1 The new powers under Part 1 of the DMCC Bill complement our existing powers
and together enable the CMA to fulfil its statutory duty to promote competition, both
within and outside the UK, for the benefit of consumers.
3.2 While recognising the many benefits digital markets bring to people and
businesses, the Government has set out that the new pro-competition regime
should address the far-reaching market power of a small number of technology
firms by enabling the CMA to proactively drive more dynamic digital markets and
prevent harmful practices that hold back innovation and growth. It has recognised
that there are specific features of fast-moving digital markets that can lead to a
small number of firms establishing entrenched and substantial market power, which
the existing competition framework is not set up to address.
3.3 Across the world, other jurisdictions are also recognising the need for competition
authorities to have additional tools to enable the positive benefits of digital markets
while addressing harms. For instance, the EU, Germany and Australia have taken
or are taking similar steps to the UK.

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4. Target outcomes
4.1 The CMA’s purpose is to help people, businesses and the UK economy by
promoting competitive markets and tackling unfair behaviour. We do this by
delivering outcomes where:
• people can be confident they are getting great choices and fair deals;
• competitive, fair-dealing businesses can innovate and thrive;
• the whole UK economy can grow productively and sustainably.
Benefits we will seek to enable in digital markets
4.2 As set out in Table 1 below, this aligns with the positive outcomes we will deliver
under the Digital Markets competition regime.
Table 1: CMA purpose and desired outcomes for the Digital Markets competition regime
Purpose
To help people, businesses and the UK economy by promoting competitive digital
markets and ensuring fair behaviour by those firms we designate as having
Strategic Market Status (SMS).
Outcomes and benefits
People can be
confident they are
getting great choices
and fair deals
• People can make informed choices, with defaults and
choice architecture aiding decision-making.
• People can use the products and services that best
meet their needs regardless of what other products and
services they use and who they are provided by.
• People can easily switch providers, without losing
access to their data and content.
• People are protected from exploitation and unfair or
misleading practices.
Competitive, fair-
dealing businesses
can innovate and
thrive
• Businesses that rely on SMS firms do not face
exploitation or anti-competitive behaviour by the SMS
firm.
• Businesses have a fair chance to compete with SMS
firms, including through having appropriate access to
data and functionality.
The whole UK
economy can grow
productively and
sustainably
• Dynamic competition in digital markets stimulates
investment, and competitive innovation, driving
economic growth and improved productivity.

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Potential harms we will seek to prevent or address
4.3 Through our work to date on digital markets we have identified several features of
digital markets that can lead to substantial and entrenched market power, for
example:
• Digital products and services are more valuable the more users they have;
• Switching costs mean users tend to use one version of a product or service
because if they switch to another one they lose their data, for example their
contacts;
• Costs fall as output rises;
• Access to lots of data is disproportionately valuable for improving products and
services.
4.4 In some circumstances, firms with such market power can act in ways that make it
harder for other innovative firms to compete and grow effectively, and as a result
further reinforce or extend their market power. And firms with such market power
can, in some cases, engage in behaviours that cause harm directly to consumers.
We have identified several categories of potential harm that can arise from market
power in digital markets as summarised in Table 2:

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Table 2: Categories of potential harm in digital markets
Categories of harm Examples
Behaviours that
reinforce core
market power
• Sophisticated use of online design to lock in customers.
• Firms restrict competitors’ access to data in a way which
stops the smaller firms being able to compete fairly.
• Firms prevent different services from working together e.g.
users can’t access digital content outside the platform they
bought them on.
Behaviours that
extend market
power into related
markets
• Promoting a platform’s own products/services ahead of
competing firms, in a way that disadvantages competitors.
• Selling products and services in a bundle to prevent rivals
competing on one product/service.
• Using data in an anti-competitive way to disadvantage
competitors.
Behaviours to
block or restrict
new markets and
innovation
• Preventing competitors’ access to the software needed to
create complementary products/services.
• Preventing competitors’ access to hardware e.g. near-field
communication chips to provide complementary services.
Behaviours that
harm consumers
• Providing false/poor quality information which distorts
consumer decision-making.
• Using online design to mislead consumers into e.g. buying
products they do not want or signing up for subscriptions
without realising.
Exploitation of
market power
• Charging excessively high prices (including to business users
on two-sided platforms).
• Collecting excessive amounts of data (particularly where
users have no choice to opt out of data-sharing).
• Setting exploitative T&Cs for businesses that rely on their
platforms to access their customers.

4.5 Examples of what we could do to tackle market power in digital markets and
associated harms include:
• Ensure markets stay open. For example, by (where appropriate and
proportionate) preventing SMS firms from engaging in anti-competitive tying,
bundling or self-preferencing of products and services, or by mandating SMS
firms provide competitors with greater access to data or functionality controlled
by SMS firms.
• Seek ways to increase competition in the core platform markets where this
is feasible. For example, by (where appropriate and proportionate) requiring
SMS firms to allow the products and services of other firms to interoperate with
their own, or ensuring SMS firms provide their users with effective choice
screens.

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• Tackle misuse of market power more directly where competition does not
provide an adequate constraint. For example, by (where appropriate and
proportionate) requiring SMS firms to trade on fair terms or requiring them to
increase transparency with respect to aspects of their algorithms.
4.6 Whether and how we address or prevent harms will be driven by the CMA’s
prioritisation principles. While we have not taken any decisions on what digital
activities or harms we will tackle first, we clearly have a stronger understanding and
evidence base in respect of markets and activities we have already studied, such as
platforms funded by digital advertising (including search and social media) and
mobile ecosystems. We therefore anticipate that our early work will include building
on and leveraging that experience.

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5. Key elements of the Digital Markets competition regime
5.1 The Digital Markets competition regime has five key elements: Strategic Market
Status, Conduct Requirements, Pro-Competition Interventions, Enforcement, and
Merger reporting.
Strategic Market Status (SMS)
5.2 The Digital Markets competition regime will apply to firms designated by the CMA
as having Strategic Market Status (SMS) in relation to one or more digital activities.
The DMCC Bill sets out that a digital activity is the provision of a service by means
of the internet, the provision of digital content (which includes software), or any
activity which is being carried out for the purposes of providing an internet service
or digital content. Although this is broadly framed, in reality the CMA expects the
number of firms designated as having SMS to be very limited, for the reasons set
out below.
5.3 Before we designate a firm as having SMS we must undertake a thorough,
evidence-based investigation with a time limit of nine months. This will involve the
gathering of evidence from a range of stakeholders, analysis and consultation.
5.4 Under the DMCC Bill, for a firm to have SMS, it must have:
• substantial and entrenched market power in a digital activity which is linked to
the United Kingdom
• a position of strategic significance
• global turnover of more than £25 billion or UK turnover of more than £1 billion.
5.5 Taken together, these criteria ensure the regime is targeted at a small number of
firms.
5.6 Following Royal Assent, the CMA will publish draft guidance for consultation setting
out how we will assess substantial and entrenched market power and how we will
determine whether a firm has a position of strategic significance. The guidance will
also set out how we will identify what a digital activity is and our procedural
approach to SMS investigations.
5.7 Designating a firm as having SMS is the gateway into the regime but does not
involve a finding of any wrongdoing.
5.8 Once we designate a firm with SMS, we will then have two key tools: Conduct
Requirements (CRs) and Pro-Competition Interventions (PCIs). Through CRs we
will be able to guide the behaviour of SMS firms and through PCIs we will be able to

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address factors underpinning these firms’ market power in a particular activity.
Additional merger reporting requirements on SMS firms will ensure we have sight of
mergers and acquisitions involving SMS firms that could harm competition before
they are completed.
Conduct Requirements (CRs)
5.9 CRs will set out how the SMS firm must conduct itself in relation to the digital
activity for which it has been designated. CRs are intended to guide the practices of
SMS firms in ways that address not only existing issues but also prevent them from
taking advantage of their powerful positions in ways that would exploit consumers
and businesses or undermine fair competition.
5.10 We will only be able to impose CRs if we consider doing so would be proportionate
for one or more of three legislative objectives. Those objectives are:
• fair dealing: this is to ensure users are treated fairly and able to interact with the
SMS firm on reasonable terms;
• open choices: this is to ensure users are able to choose freely and easily
between services or content provided by the SMS firm and other firms;
• trust and transparency: this is to ensure users have the information they require
to understand the services or digital content being provided by the SMS firm and
are able to make informed decisions about them.
5.11 The DMCC Bill also requires that CRs must be for one or more of the following
permitted purposes:
(a) To oblige a designated firm to:
• trade on fair and reasonable terms;
• have effective processes for handling complaints by and disputes with users or
potential users;
• provide clear, relevant, accurate and accessible information about the relevant
digital activity to users or potential users;
• give explanations, and a reasonable period of notice, to users or potential users
of the relevant digital activity, before making changes in relation to the relevant
digital activity where those changes are likely to have a material impact on the
users or potential users;
• present to users or potential users any options or default settings in relation to
the relevant digital activity in a way that allows those users or potential users to

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make informed and effective decisions in their own best interests about those
options or settings.
(b) Or to prevent a designated firm from:
• applying discriminatory terms, conditions or policies to certain users or potential
users or certain descriptions of users or potential users;
• using its position in relation to the relevant digital activity, including its access to
data relating to that activity, to treat its own products more favourably than those
of other undertakings;
• carrying on activities other than the relevant digital activity in a way that is likely
to materially increase the undertaking’s market power, or materially strengthen
its position of strategic significance, in relation to the relevant digital activity;
• requiring or incentivising users or potential users of one of the designated
undertaking’s products to use one or more of the undertaking’s other products
alongside services or digital content the provision of which is, or is comprised in,
the relevant digital activity;
• restricting interoperability between the relevant service or digital content and
products offered by other undertakings;
• restricting whether or how users or potential users can use the relevant digital
activity;
• using data unfairly;
• restricting the ability of users or potential users to use products of other
undertakings.
5.12 The DMCC Bill requires that, when setting CRs, we publish a notice explaining our
reasoning, including why we consider it proportionate to impose the CR, and the
benefits we consider would likely result from it.
5.13 Following Royal Assent, the CMA will publish draft guidance for consultation setting
out our proposed approach to imposing and monitoring compliance with CRs.
5.14 The form and content of CRs that the CMA imposes on SMS firms will likely vary
across firms and digital activities. A CR may specify the outcome the SMS firm must
achieve (outcome focussed CR) or include actions the firm must take to achieve
that outcome (action focussed CR). CRs may also be set as higher-level
requirements which SMS firms may be able to comply with in a number of ways, or
contain more detailed and directive requirements.

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5.15 Across this potential for tailoring CRs, we recognise the importance of a coherent
and principled approach across the regime. To ensure a coherent approach, we
expect to apply the following four principles when setting a CR or combination of
CRs on an SMS firm:
• CR Principle 1: We start by identifying the outcome we intend the CR(s) to
achieve. This outcome will be consistent with the overarching legislative
objectives (fair dealing, open choices, trust and transparency), but may be more
specific. Where the outcome is measurable, and compliance with the outcome
will be relatively easy for the CMA - and ideally third parties - to assess, we are
more likely to impose an outcome focused CR. This will provide the SMS firm
with a clear outcome it must achieve, while allowing the firm to determine for
itself how to do so. This should incentivise compliance and minimise the risk of
regulatory failure.
• CR Principle 2: Where an outcome focused CR is not appropriate or sufficient
to achieve the intended aim, including because compliance against the relevant
outcome cannot be clearly assessed, we will impose a CR (or CRs) specifying
the actions a firm must take. In these circumstances, an action focused CR may
provide greater certainty to both the SMS firm and other market participants as
to what precisely the firm must do to comply with the CR. However, even where
we formulate the CR based on the actions a firm must take, we will still regularly
monitor and assess whether the CR is delivering the outcome it is intended to
achieve.
• CR Principle 3: When setting action focused CRs, we will, at a minimum,
generally set higher-level requirements, based on the permitted types set out in
the legislation. Higher-level requirements will allow for greater flexibility in the
specific steps the firm needs to take to comply, which may support innovation
and involve less risk of unintended consequences.
• CR Principle 4: Where necessary to achieve the intended outcome, we may
build on these higher-level requirements by also imposing a CR (or CRs) with
more detailed requirements. This is most likely to apply where a firm has failed
to comply effectively with higher-level requirements. The CMA may also impose
more detailed CRs in circumstances where we have identified clear and
persistent existing harms which need to be corrected and specific steps the
SMS firm needs to take to do this.
5.16 In some cases, it may be that higher-level requirements need to be supplemented
over time with more detailed requirements - depending on how effectively SMS
firms comply with higher-level requirements. In addition, whilst in some cases it may
be appropriate to move sequentially through the principles set out above, there may
be situations where a more directive approach is merited from the outset.

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5.17 While responsibility for complying with CRs will lie with SMS firms, it is crucial that
the CMA is able to effectively monitor both compliance with and the effectiveness of
CRs. We recognise the important role wider stakeholders will play in providing us
with intelligence to help us to do this. We envisage working closely with all
stakeholders from the start to build confidence in an effective, transparent, and
participative regime that works with the grain of competition.
5.18 In situations where an SMS firm is unable to agree fair and reasonable terms with
another party following a breach of a CR to trade on fair and reasonable payment
terms, the DMCC Bill provides that the CMA may initiate a Final Offer Mechanism.
Through this the CMA can mediate between the parties by selecting what we regard
as being the most suitable best and final offer put forward by either side. This
mechanism could only be initiated if the CMA considers that there is no other way to
satisfactorily resolve the breach in a reasonable timeframe.
5.19 The draft guidance we consult on after Royal Assent will set out more information
on our approach to CRs.
Pro-Competition Interventions (PCIs)
5.20 Pro-Competition Interventions (PCIs) will enable the CMA to address factors
relating to a digital activity which are preventing, restricting or distorting competition.
PCIs might include giving people the power to easily transfer their data from one
provider to another, or requiring different products and services to work with each
other (known as interoperability). They will therefore tackle the factors that are the
source of a firm’s market power in a digital activity for which it is designated with
SMS. The aim of PCIs is to create longer-term dynamic changes in these activities,
opening up opportunities for greater competition and innovation.
5.21 To make a PCI the DMCC Bill requires that we first undertake an investigation,
within a 9-month timeline, to determine whether there are any factors relating to an
SMS firms’ designated digital activity that are having an adverse effect on
competition. Through this we will build a detailed understanding as to how the
market operates and the factors leading to any competition problems. We will also
determine whether an intervention is required, what it should be, and whether it
would be effective and proportionate in dealing with the problem. We can directly
order an SMS firm to take (or not take) certain action and have the power to require
them to undertake testing or trialling to help determine the most effective remedy.
5.22 Following Royal Assent, the draft guidance we publish for consultation will set out
our how we will undertake this assessment.

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Merger reporting
5.23 SMS firms will have to report mergers to us before their completion, where they
have a value of £25 million or more and a UK connection. Where we think a merger
might cause competition problems, the CMA will then be able to launch a merger
investigation under our normal merger review powers.
Enforcement
5.24 We intend to operate the Digital Markets competition regime adopting a participative
approach in which we will engage constructively with both SMS firms and other
stakeholders. This will ensure we identify the most important issues to address,
design the most effective interventions, and have the best insight on their impact. It
will also enable us to seek to solve problems and resolve issues faster and in a
more agile way than simply using our formal enforcement powers.
5.25 However, this must be complemented by formal enforcement action where needed.
The DMCC Bill provides for a range of enforcement mechanisms where an SMS
firm fails, without a reasonable excuse, to comply with CRs or PCIs. These include
disqualification of directors, and financial penalties of up to 10% of the undertaking’s
turnover.
5.26 The draft guidance we publish for consultation following Royal Assent will set out
our approach to enforcement.

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6. How the CMA’s actions will be reviewed and it held to
account
6.1 The DMCC Bill gives the CMA significant new powers in relation to digital markets.
The CMA Board is directly accountable to Parliament for all its work. However, with
greater responsibility comes greater accountability and the DMCC Bill includes five
important mechanisms that will hold the CMA to account for our actions.
Guidance
6.2 The DMCC Bill requires us to consult on and then publish guidance on how we will
exercise the functions given to us under Part 1. We will consult on such draft
guidance as soon as possible following Royal Assent. As with all of the CMA’s
guidance, we will keep this guidance under review and update where it is
appropriate to do so in light of our experience operating the regime.
6.3 Further, before publishing our guidance or any update to it, the DMCC Bill requires
that we obtain the approval of the Secretary of State.
Consultation and coordination
6.4 The DMCC Bill requires the CMA to undertake public consultations on key
decisions, including making an SMS designation, imposing CRs, and making a PCI.
These are minimum requirements. In line with our participative approach, we will
undertake fair, inclusive, and transparent engagement throughout the Digital
Markets competition regime. We discuss this further in the section below explaining
how we will work with SMS firms and other stakeholders.
6.5 Competition and consumer issues in digital markets sit alongside wider issues such
as security, privacy, media plurality, and financial stability. With our new Digital
Markets competition responsibilities, the need for regulatory coordination will only
grow. The DMCC Bill requires that we consult with other regulators when making
decisions relevant to their remits. This includes Ofcom, the Information
Commissioner, the Financial Conduct Authority, the Prudential Regulation Authority
and the Bank of England. These are minimum requirements; we will continue to
engage closely with other regulators.
Decision-making
6.6 The CMA Board is directly accountable to Parliament for all CMA decisions
regardless of whether they are taken by the Board itself or delegated to CMA staff.
6.7 However, the DMCC Bill specifies that several of the decisions taken by the CMA
under the Digital Markets competition regime must be made by the CMA Board or a

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Committee of the Board. For the Committee, the DMCC Bill also requires that at
least two members must be Non-Executive Board members and at least half of the
members must be Non-Executive Board members or CMA panel members. These
requirements will ensure that a range of experience and objective perspectives
guide the most significant decisions in the regime to improve the quality of decision-
making and further guard against the risk of regulatory capture and confirmation
bias.
6.8 The Department for Business and Trade is in the process of appointing new CMA
Non-Executive Board members with skills in a range of areas, including digital and
technology. This will help ensure the CMA Board has sufficient capacity to
discharge its new decision-making responsibilities.
6.9 We will be transparent with respect to our decisions across the regime. For certain
decisions under the Digital Markets competition regime, the DMCC Bill requires that
the CMA publishes a notice explaining our reasoning. This is a minimum
requirement, however. We outline below that one of our principles for operating the
regime is to act with transparency. We are also cognisant of the Government's
recent Strategic Steer to the CMA where it sets out its expectation for the CMA to
be as open as possible about the Board’s priorities and decision-making.
Review by the courts
6.10 It is important that affected parties have access to robust, effective and timely
appeal mechanisms. Part 1 of the DMCC Bill establishes that (with the exception of
decisions on fines noted below) all CMA decisions taken in the Digital Markets
competition regime will be subject to an appeal applying judicial review principles.
This includes CMA decisions on whether a firm has SMS, the imposition of CRs, the
imposition of a PCI and the decision on whether a CR has been breached.
6.11 Judicial reviews are a challenge to the way in which a decision has been made: that
is, whether the public body acted rationally, within its powers, and in line with proper
procedures. This standard is already used for the CMA’s markets and mergers
decisions and widely applied elsewhere in relation to decisions by other public
bodies. It includes reviewing the approach to analysis and evaluation of evidence
and ensuring that, in reaching its decision, the public body took all relevant factors
into account (and that it did not rely on irrelevant factors). For the Digital Markets
competition regime any appeal would be made to the Competition Appeal Tribunal,
as is the case for most of the CMA's existing competition functions.
6.12 The DMCC Bill allows firms separately to challenge – on the merits – the imposition,
and size, of any fines we impose following a breach of regulatory requirements.
This means the Competition Appeal Tribunal can substitute its own view on the
appropriate level of any fine.

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Reporting and Parliamentary oversight
6.13 The CMA is directly accountable to Parliament for all its work and this is the case
also for the new Digital Markets competition regime. As part of the CMA’s Annual
Plan, we will set out the areas where we plan to focus our Digital Markets
competition work. In the CMA’s Annual Report, which is laid before Parliament, we
will describe our work under the Digital Markets competition regime. This will report
our progress against a range of indicators to enable us to be held to account. Our
provisional thinking is that these indicators will include:
• Outputs: This will capture the work we have undertaken in each year, for
example: SMS investigations undertaken and CRs imposed.
• Outcomes: This will capture case-specific benefits that have resulted from our
actions, for example: pro-consumer or pro-competition changes in terms and
conditions; number of services available. The indicators we will track will be
specified during the design process for CRs and PCIs.
• Impact: Each year the CMA Annual Report includes an estimate of the direct
financial benefit of our work for consumers. Once established, our Digital
Markets competition regime will contribute to these estimates.
• Health of UK digital markets: We will keep track of broader developments in
UK digital markets, such as levels of growth and investment, drawing on a range
of data sources.
6.14 The CMA takes its accountability to Parliament very seriously. We will, of course,
continue to provide evidence to, appear before, and engage with the various
Parliamentary committees and Parliamentarians with an interest in our work. This
already does, and will continue to, include our Digital Markets work.

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7. How we will carry out our Digital Markets competition
functions: operating principles
7.1 We will have to take decisions about how we operate the regime. This includes
where we focus our resources and how we undertake our role. Whilst our thinking
on how best to carry out the new functions will continue to develop ahead of Royal
Assent and commencement, we have developed an initial set of proposed
principles to help inform our stakeholder engagement and refine our proposed
approach over that period.
Targeted and proportionate
Principle 1 – we will tailor our actions to the specific problems we identify, considering their
proportionality and likely effectiveness
7.2 There is great diversity across digital markets as well as the harms that can arise.
We will be open-minded as to the appropriate solution and be led by the evidence,
including feedback from market participants of all kinds. As part of this, we will
consider the impact of any intervention on affected stakeholders, including
consumers vulnerable in that context.
Focused on positive outcomes
Principle 2 – we will focus our actions where we can have the most impact for people,
businesses and the economy
7.3 We will make decisions on which digital activities to prioritise for designation, and
where and how to act in relation to those activities, in line with the CMA’s existing
prioritisation principles. This means we will consider:
• How substantial the likely positive impact of our intervention would be in each
case including direct benefits for consumers as well as benefits for businesses
and the economy through, for example, encouraging more competitive markets
and greater innovation.
• Whether the CMA is best placed to act. In particular, we will consider the actions
of other regulators in digital markets both within the UK and internationally. We
will also consider how well we understand the markets, technologies and
business models – the better we understand, the quicker and more likely our
positive impact will be.
• The resourcing requirements of our actions and whether we have the right
capacity in place to act effectively.

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• The prevalence, and significance, of risks associated with each action we take.
• The balance of our portfolio of cases across firms, markets, and technologies.
7.4 In assessing the likely impact of potential action, we will take account of our impact
over time, recognising there may be trade-offs between the short and long term
benefits from our intervention. For instance, disrupting anti-competitive business
models could entail short-term costs but lead to longer-term benefits through
increased competition and innovation.
7.5 We will think broadly about consumer benefits. As well as the price of goods and
services (which in some digital markets is zero), consumers may also value choice,
security, privacy, innovation, and their overall experience (for example, how much
advertising they are exposed to).
7.6 Harmful practices and effects may have a disproportionate impact on people that
need help the most. Given that vulnerability is often context-specific, we will
consider this as part of our prioritisation of digital activities to target.
Principle 3 – we will measure our impact, outcomes and outputs. We will learn from
experience and use this to inform future decisions
7.7 We are an evidence-driven organisation. We will use a wide combination of
quantitative and qualitative evidence to understand how we are affecting digital
markets, how effective our specific actions are, and to what extent we are delivering
better outcomes for users. This will inform what we choose to do in future, as well
as whether and how we refine our interventions.
Address and prevent harms quickly and sustainably, primarily through competition
Principle 4 – we will stay abreast of developments and seek to deal with harm quickly
7.8 Digital markets can develop at dramatic pace. We will therefore ensure we
understand how they are changing and where future problems could arise. Where
we identify risks, we will consider what the most appropriate action is to avoid
harms while balancing the benefits of innovation.
Principle 5 – we will promote competition as the primary lever to deliver better outcomes
for users
7.9 The new Digital Markets competition responsibilities are designed for us to promote
competition to improve outcomes for users. This can be on both the supply side (for
example, removing barriers to entry like ensuring access to key inputs) and demand

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side (for example, facilitating informed consumer choices or enabling
interoperability) of markets.
Principle 6 – where steps to improve competition alone will not deliver the outcomes to the
desired extent or pace we seek, we will prevent abuses of market power more directly
7.10 Effective competition leads to better market outcomes. In some digital markets
effective competition may take time, and, in some cases, may be difficult to achieve
to a sufficient extent or on an appropriate timeframe. Where this is the case, we will
aim to ensure good outcomes by preventing abuses of market power directly.
Principle 7 – we will seek to intervene in a technology-neutral way
7.11 Where we need to take action, we will seek to adopt a technology-neutral approach.
This means that the effectiveness of the interventions should not rely on the use of
current technology or supply chain structures. This will help future proof our actions,
allowing the market to decide what technology is best suited for achieving a
particular goal.
Principle 8 – we will ensure the Digital Markets competition regime complements other
CMA tools
7.12 The Digital Markets competition regime is focussed on firms with SMS, but will
constitute one part of the CMA’s broader toolkit to fulfil its statutory duty to promote
competition. We will consider which of our tools is most suited to the issue we seek
to address. We will continue to use our existing powers where they are better suited
to dealing with harmful conduct by SMS firms, for instance to tackle certain types of
anti-competitive agreements which may fall outside the scope of the regime. And
where issues arise in digital markets as a result of behaviour by non-SMS firms, we
will continue to use our existing competition, markets, consumer, and mergers
powers in the best interests of people, businesses and the economy.
Participative, transparent and coherent with other regulations
Principle 9 – we will engage with a wide range of stakeholders who are affected by or have
an interest in our work
7.13 We will only be able to deliver positive outcomes if we use insights and experience
from a wide range of market participants. To prioritise our activity and take
decisions about our actions, we will need to understand markets, technologies,
business models and the impacts of particular conduct. We will also need to hear
from interested parties about the effectiveness of our interventions and how they
can be improved. We will ensure our engagement is wide-reaching, fair, and
inclusive.

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Principle 10 – we will operate with transparency
7.14 We will exercise our functions as transparently as possible by providing appropriate
information about our activities and decisions to the range of stakeholders with an
interest in and who are affected by our work, whilst working to protect the
confidentiality of those who provide us with sensitive information. We will work to
encourage SMS firms to be more transparent in their actions, acknowledging the
far-reaching impact their actions often have.
Principle 11 – we will work with our domestic and international counterparts to coordinate
and minimise unnecessary duplication
7.15 Some issues in digital markets cross regulatory boundaries. We will continue to
work closely with a range of UK regulators, including the members of the Digital
Regulation Cooperation Forum to ensure regulatory coherence, work collaboratively
on areas of common interest, and jointly develop capabilities. Some aspects of
digital markets, and the biggest firms, are international. We will continue to work
closely with counterpart authorities around the world to share learning and align on
outcomes, where possible and appropriate.

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8. How we will work with SMS firms and other stakeholders
8.1 In implementing our new responsibilities, it is essential that we engage fully and
deeply with a wide range of stakeholders and market participants. We anticipate
doing this in a variety of ways, tailored to what is most appropriate for the
stakeholder and the situation.
SMS firms
8.2 We want to build productive relationships with the firms we designate as having
SMS. While we have a good level of existing knowledge about digital markets, we
will need to develop an excellent understanding of how SMS firms operate in
relation to the digital activity for which they are designated as having SMS, both
technically and in terms of their business models. The greater our understanding of
an SMS firm’s digital activities, the better able we will be to design effective and
proportionate interventions. In many cases it will be for the SMS firms to decide on
the actions they take to comply with any requirements we place on them. Improving
our understanding will make us better able to scrutinise these to ensure they deliver
the intended outcomes.
Other businesses, consumer and industry bodies, and civil society
8.3 Input from consumers, businesses, investors and wider third parties will be crucial
in helping us deliver in our role. We want to ensure we understand the concerns
businesses and consumers have about (potential) SMS firms. We will need insight
from such stakeholders as we design our interventions, when we monitor SMS
firms’ compliance, and assess whether our interventions are leading to the
outcomes we want. To support this, we plan on establishing two representative
panels, one for consumers and civil society, and one for businesses and investors.
8.4 Some stakeholders may have concerns about sharing information or experiences
with us for fear of retaliation by SMS firms. The CMA is subject to various legal
obligations to protect both the confidentiality of information we receive and the
identity of whistleblowers. We have established processes for handling such
information and maintaining the anonymity of those providing us with evidence,
which we will follow for our new functions.
Regulators and other authorities
8.5 In addition to our interaction with other UK regulators, we also regularly interact with
counterparts across the world, including the US Federal Trade Commission and
Department of Justice, the European Commission, the Australian Competition and
Consumer Commission, and many others. And we are actively involved in
multilateral cooperation forums such as the Organisation for Economic Cooperation

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and Development, the G7, the International Competition Network and the
International Consumer Protection and Enforcement Network.
8.6 As we and other authorities continue in our efforts to promote competition in digital
markets, including making use of our respective pro-competition digital markets
regimes where they exist, we will continue to work closely together to maximise
synergies, and minimise unnecessary regulatory divergence.

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9. Operational readiness to take on our new role
9.1 Over the past few years, we have worked hard to develop our understanding of
digital markets and to ensure the benefits they bring can continue. For example, we
have undertaken in-depth market studies on mobile ecosystems and online
platforms and digital advertising. In September 2023 we published an initial review
of AI foundation models. We also have a number of competition and consumer law
enforcement cases related to digital markets and firms under our existing legal
frameworks. For example, we currently have open cases investigating: fake reviews
on online platforms; mobile browsers and cloud gaming; the terms and conditions
governing app developers’ access to mobile app stores; competition issues in cloud
computing; and a variety of issues in digital advertising. A full list can be found on
the case page of our website.
9.2 Alongside Ofcom, the Information Commissioner’s Office, and the Financial
Conduct Authority, we are part of the Digital Regulation Cooperation Forum through
which we have collectively published comprehensive research on a range of topics
including Online Choice Architecture, Online Safety and Competition in Digital
Markets, and The Benefits and Harms of Algorithms, among others.
9.3 This range of activity, as well as our extensive international and stakeholder
engagement, has given us deep insights and expertise in digital markets.
9.4 We have also grown our capacity and skills. Our specialist Data, Technology and
Analytics unit now has over 60 people including data scientists and data engineers,
technologists, behavioural scientists, and digital forensics specialists. Our
economics and legal teams have built up significant experience working on digital
market issues. And we already have around 60 people in the Digital Markets Unit
we have set up to deliver the Digital Markets competition regime.
9.5 Overall, we have a phased recruitment plan to build up to a total of around 200
people working across the CMA to implement the Digital Markets competition
regime from the point of commencement. In addition, we have appointed nine
Digital Experts as independent advisors.

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10. Indicative timeline
10.1 Our working assumption is that the Parliamentary process will conclude in Spring
2024 and that our new responsibilities will commence in Autumn 2024. The precise
timing is, of course, subject to Parliament and the passage of necessary secondary
legislation.
10.2 In advance of Royal Assent, we will carry on our preparations. This includes:
• continuing to engage with government and Parliament as helpful,
• our ongoing engagement with stakeholders,
• continuing to further our understanding of key markets and issues,
• developing the guidance for the regime,
• the next stage of recruitment.
10.3 Soon after Royal Assent we will consult on draft guidance relating to the main
components of the regime and intend to reach a wide range of stakeholders. At this
point we also expect to set out more details of our proposed approach to operating
the new regime.
10.4 On commencement of our new responsibilities, we will publish our guidance having
considered the feedback during our consultation process and having obtained the
approval of the Secretary of State. We anticipate launching the first SMS
investigations very soon after commencement. In the first year we would expect to
initiate approximately 3-4 SMS investigations.