The Competition and Markets Authority (CMA) has set forth its initial plans for the newly established digital markets competition regime, which aims to enhance innovation, investment, and growth within the UK tech sector. This regime is designed to ensure that consumers and businesses can access fair deals in critical digital markets.

The Digital Markets, Competition and Consumers Act received Royal Assent in May 2024, with the new regime officially coming into effect on January 1, 2025. The CMA published guidance for businesses and stakeholders on December 19, 2024, along with a simplified explainer guide to help navigate the new regulations.

Under this regime, the CMA has the authority to designate firms with “Strategic Market Status” (SMS) for specific digital activities. Once designated, the CMA can impose conduct requirements or implement pro-competition measures to benefit UK consumers and businesses.

The CMA has outlined its planned activities for the first six months, including the launch of SMS designation investigations in two areas of digital activity starting in January. A brief pause is expected before the next investigation into a third area, allowing the CMA to manage resources effectively while maintaining a fair process for stakeholders.

Each designation investigation must be completed within a statutory timeframe of nine months, and the CMA plans to consult on proposed conduct requirements concurrently with these investigations. This approach aims to ensure timely action and benefits for UK consumers and businesses.

The new regime is expected to prevent large firms from favoring their own services, facilitate easier switching between digital service providers, and ensure that businesses reliant on major digital ecosystems can access necessary data and functionality. Ultimately, the regime aims to stimulate investment and innovation, fostering effective competition among both SMS firms and smaller UK businesses.

Sarah Cardell, Chief Executive of the CMA, emphasized the regime's potential to balance the benefits of investment and innovation from large digital firms while ensuring a level playing field for startups and scale-ups in the UK tech sector. The CMA is committed to delivering benefits for UK consumers and businesses while promoting growth and innovation in the digital market.