Recommendation 9

HM Government Acknowledged

The Digital Markets, Competition and Consumers Bill was introduced to Parliament on Tuesday 25 April 2023. This will give new powers to the Digital Markets Unit (DMU) in the CMA to help rebalance the relationship between major platforms and the consumers and businesses who rely on them, including press publishers. This will make an important contribution to the sustainability of the press. The new measures will be targeted at a small number of firms that exert significant control over digital markets. Those firms will be designated as having ‘Strategic Market Status’ (SMS) in respect of specific digital activities. The DMU will consider whether the firm has substantial and entrenched market power and holds a position of strategic significance in respect of one or more digital activities. Once a firm is designated, the DMU will be able to set tailored rules known as conduct requirements for each firm on how they should treat consumers and other businesses in relation to their designated digital activities. For example, the DMU could introduce conduct requirements on SMS firms to give third parties, such as news publishers, transparency over the algorithms that drive traffic and revenue, or it could oblige designated firms to offer third parties fair and reasonable payment terms for the use of their content. These requirements will vary from case to case, according to the activity and SMS firm that is designated. Meanwhile, longer-term ‘pro-competition interventions’ may be introduced to address the underlying causes of market power and open up digital markets to greater competition. For example, they might require designated firms to allow greater interoperability or data access. There will be a robust toolkit to enforce these interventions, including a backstop tool known as the final offer mechanism (FOM). FOM will be available to resolve particularly complex breaches of conduct requirements that require firms to offer fair and reasonable payment terms. It is designed to allow for, and to incentivise, sincere private negotiations between the two parties, and as such the DMU may only use it where there is sustained non-compliance by an SMS firm and the DMU ’s other tools are unlikely to resolve the breach in a reasonable timeframe. Like all the DMU’s tools, it will be sector-neutral, reflecting the DMU’s broad remit to promote competition for the benefit of consumers. In evolving digital markets, we do not know where future payment disputes may arise as a result of bargaining power imbalances. We are aware that one of the main disadvantages facing smaller parties when dealing with major platforms is their lack of access to key commercial information and the imbalances in bargaining power that result from this. The DMU will be able to impose conduct requirements to require greater transparency and data-sharing from designated firms. In cases where FOM is used, the DMU will require additional information sharing between parties, ensuring all can make properly-informed offers and negotiate on an even footing. The legislation also explicitly allows for organisations to choose to pursue collective bargaining if they are involved in the FOM process, ensuring smaller parties can negotiate as part of a collective where appropriate.