Increased powers of CMA under DMCC Act 2024

Strengthening enforcement

The DMCC Act introduces a dual-track enforcement system that greatly enhances the CMA’s ability to take action against consumer law violations. The pre-existing court-based regime under Part 8 of the Enterprise Act 2002 has been restated and remains a valid enforcement route. However, the key innovation lies in the creation of a new direct enforcement regime, exclusive to the CMA. This system bypasses the need for lengthy and costly court proceedings, allowing the CMA to investigate and impose penalties directly on businesses or individuals suspected of consumer law infringements.

One of the most significant changes under the new legislation is the CMA’s ability to impose substantial civil penalties without requiring a court order. If the CMA suspects that a business or individual has engaged or is likely to engage in a practice that violates consumer law, it can issue fines of up to £300,000 or 10% of global annual turnover – mirroring the CMA’s existing power under competition law, streamlining enforcement and elevating the risks of non-compliance.

Penalties and remedies for non-compliance

The CMA’s ability to impose penalties under the DMCC Act extends to both substantive and procedural breaches of consumer law. For substantive infringements, the maximum penalty can be as high as up to £300,000 or 10% of a company’s global annual turnover (whichever is higher), aligning with the penalties for competition law breaches.

For procedural or administrative breaches, such as failing to comply with a CMA investigation or respond to mandatory information requests, or providing false information, penalties can range from £30,000 to £150,000, or up to 5% of a company’s global annual turnover (whichever is higher), based on the scale and severity of the violation. If non-compliance continues, businesses may face daily fine of up to £15,000 or 5% of daily worldwide turnover. This daily penalty applies to procedural breaches, with the exception of cases involving provision of false or misleading information for which daily penalties are not applicable.

The CMA also has the authority to issue remedies to address consumer harm. Enhanced Consumer Measures can be imposed, which may require businesses to compensate consumers, improve their compliance procedures, or provide clearer market information to help consumers make informed choices. Additionally, Online Interface Notices can be issued, enabling the CMA to require changes to the digital content or platforms used to promote goods and services to UK consumers.

Impact of the Act

So, what does this mean for businesses? The DMCC Act signals a paradigm shift for businesses operating in the UK consumer market. With the CMA now possessing powers that rival its competition law enforcement capabilities, businesses must prioritise compliance to avoid substantial fines and reputational damage. The heightened penalties, coupled with the CMA’s expanded investigatory powers, mean that companies can no longer rely on slow-moving legal proceedings as a buffer against enforcement actions.

For the travel industry, this translates to stricter scrutiny over customer reviews, price marketing and, potentially, subscription contracts, savings schemes, and secondary ticketing. Travel companies must prioritise transparent communication with their customers, particularly around pricing and contract terms, to avoid substantial fine and reputational damage.

Ultimately, businesses should prepare for more rigorous enforcement and adjust their practice to align with these enhanced regulations, ensuring compliance is at the forefront of their operations. By doing so, they can safeguard themselves from potential legal repercussions and maintain consumer trust in a competitive market.

This article was first published in the Autumn 2024 edition of ABTA’s Travel Law Today.