DMCC Act: The CMA gets a boost with a raft of competition law changes

The DMCC Act has been in the limelight since receiving royal assent on 24 May 2024. Much of the focus has been on the new digital markets competition regime, which we have explored in our previous articles in this Spotlight series. In this article, we look at the less eye-catching – but still important – changes that the DMCC Act introduces to UK competition law. These changes are expected to come into force later this year following the necessary secondary legislation. Several themes emerge: 

• A focus on extra-territorial and flexible powers with a view to ensuring that the CMA remains an effective regulator against a backdrop of fast-paced technological change and globalised markets.  
• A need for international regulatory collaboration, even though the UK’s competition regime may now diverge from that of the EU.  
• A drive for efficiency as the CMA’s workload increases.  

Boosting the CMA’s extra-territorial reach 

The DMCC Act widens the CMA’s extra-territorial jurisdiction in relation to the Chapter I prohibition. The CMA will now be able to investigate agreements implemented outside the UK that are “likely to have an immediate, substantial and foreseeable effect on trade within the UK”. This change comes shortly after the Court of Appeal’s ruling in CMA v Volkswagen AG & BMW AG Kingdom, which confirmed that in the context of a Competition Act 1998 investigation the CMA can compel overseas companies to produce documents and information under section 26 of the Act (rebutting the interpretive presumption against extra-territoriality).  

Both developments reflect the reality that, for the CMA to be an effective regulator, it may sometimes need to exercise its powers extra-territorially. As Sarah Cardell, Chief Executive of the CMA, noted in response to the Court of Appeal’s judgment: “Our cases increasingly involve cross-border, multi-national businesses and information requests are a key tool by which we can investigate whether those businesses have been engaged in unlawful conduct”. 

Exemplary damages and regulatory divergence 

The DMCC Act provides that the High Court and the Competition Appeal Tribunal can award exemplary damages in competition cases which relate to an infringement that takes place after the coming into force of the relevant provisions of the Act. Such damages are intended to be punitive to deter companies from breaching competition law. Notably, the Act provides that exemplary damages cannot be awarded in collective proceedings or against immunity recipients. 

This development is an example of the UK’s post-Brexit divergence from the EU’s competition law regime, since the EU Damages Directive (which the UK itself implemented in 2017) prevents exemplary damages from being awarded in competition law cases.  

Increasing ‘efficiency’ through the judicial review appeals standard  

The DMCC Act makes it more challenging to appeal against interim measures decisions in competition cases, since appeals will be determined by reference to principles of judicial review rather than a full merits review. This is expected to reduce the time the CMA spends on defending appeals, which will be particularly welcome given the CMA’s expanding workload. The tougher standard of review may also mean that the CMA will impose interim measures more frequently without fear of being subjected to lengthy appeals.  

Market study and market investigation updates  

The CMA will have the power to use its market study and market investigation powers more flexibly under the DMCC Act. The CMA will be able to: 

• accept undertakings under Part 4 of the Enterprise Act 2002 at any stage during a market study or market investigation; 
• make a market investigation reference after previously deciding not to do so; and  
• conduct trials to assess the likely effectiveness of potential undertakings.  

The CMA may take advantage of this increased flexibility, particularly when engaging with novel, fast-changing markets. The CMA’s 2024 – 2025 Annual Plan indicates that it intends to take “an explicitly more forward-looking approach in nascent markets, to help these markets develop in a positive direction for competition and consumer protection”. 

Promoting cooperation with overseas regulators  

Finally, the DMCC Act provides for greater international cooperation as the CMA may assist an overseas regulator in carrying out its functions in competition cases, cartels, mergers and digital markets.