Ready… set… Date set for the CMA's new consumer enforcement powers

The Digital Markets, Competition and Consumers Act 2024 (DMCC Act) enables the Competition and Markets Authority (CMA) to directly enforce consumer protection laws through administrative enforcement in a manner similar to its Competition Act powers. These new powers will come into force on 6 April 2025. Businesses should therefore review and refresh their internal practices and processes in advance of 6 April 2025, including in relation to staff training, establishing appropriate internal policies, and conducting internal reviews of business practices

What you need to know

• The CMA's direct enforcement powers under the new consumer regime as set out in the DMCC 2024 will come into force on the 6 April 2025.
• A busy calendar of guidance publication and business outreach by the CMA will precede and follow the commencement of the direct consumer enforcement powers.
• Further consultations on parts of the regime guidance are expected to occur during the summer of 2025.

New powers come into force 6 April

The Government has confirmed that the CMA's new powers to directly enforce consumer protection laws (as set out in the DMCC Act) will come into force on 6 April 2025. As a result, from 6 April, the CMA will be able to investigate and impose fines of up to 10% of a company's global turnover for breaches of consumer law. The commencement order and the CMA Rules which will apply to consumer law enforcement have also been published. 

On 10 March 2025, the CEO of the CMA, Sarah Cardell, provided an update on the CMA's plans for the new consumer enforcement regime, including the steps to be taken in preparation for commencement and how the CMA will approach enforcement in the first months. As with any new regime, the CMA's actions will be watched closely in the coming months, in particular in light of the more business-friendly approach set out by the Government in the draft Strategic Steer it has given to the CMA.

Timeline

Early enforcement to focus on "egregious breaches"

The CMA has noted that, whilst the underlying law has not changed materially, the risks for businesses of getting it wrong "are changing substantially" and it is therefore aware that there will be a period of adjustment following 6 April 2025. The CMA has therefore emphasised that it will "support the vast majority of well-intentioned businesses who want to do the right thing but may be unclear on exactly what is needed to ensure compliance". As a result, the CMA indicates that it expects to increase its engagement with businesses to provide support with achieving compliance, particularly where a company can demonstrate the compliance steps it has taken.

The CMA's early enforcement action will instead focus on "egregious breaches", including:

• aggressive sales practices that prey on vulnerability;
• providing information to consumers that is objectively false;
• contract terms that are very obviously imbalanced and unfair;
• behaviour where the CMA has already put down a clear marker through its previous enforcement work; and
• where the law says that a practice is always unfair.

The CMA's previous enforcement work provides indications of what the CMA may consider to be an "egregious breach". For example, in the past year the CMA has:

• taken action against Simba Sleep, Emma Group (see our December 2024 update) and Wowcher in relation to urgency and price reduction claims;
• challenged Google for taking insufficient action to protect consumers from fake reviews;
• obtained undertakings from ASOS, Boohoo and George at Asda to ensure that environmental claims are accurate and not misleading (see our September 2024 update).

What businesses should do now 

In advance of 6 April 2025, businesses should be actively ensuring that they comply with the consumer law regime. Steps to ensure compliance could include:

• Arranging regular staff training, including briefing staff on changes to the UK consumer law regime and the importance of ensuring compliance given the CMA's new powers to directly enforce consumer law.
• Establishing appropriate internal policies relating to consumer law obligations, including in respect of representations and promises made to consumers. These should be reviewed and updated regularly.
• Implementing governance systems and compliance programmes to monitor the business' compliance with the consumer law regime in line with consumer law legislation and existing CMA guidance. For example, this could include monitoring pricing comparisons to ensure that they adhere to the CMA's guidance on volume and duration requirements (see its discount and reference pricing principles: selling mattresses online) or inspecting a sample of goods to ensure that they are accurately described and are of a satisfactory quality (see Groupon undertakings).
• Reviewing green / environmental claims to ensure that any claims, including those made on the business' website, social media pages and/or the product itself, adhere to the CMA's Green Claims Code. This also relates to claims for third-party products which the business sells. The CMA's investigation into the fashion sector shows that the CMA will take enforcement action if green claims are inaccurate and misleading (see our September 2024 update).
• Ensuring that customers can exercise their statutory rights, are not misled and are given all necessary information about their rights when making a purchase (see for example the Wowcher undertakings). Recent sweeps undertaken by the European Commission, the Australian Competition and Consumer Commission and other national consumer protection authorities in these areas suggest this is likely to be a growing area of focus.
• Ensuring that effective systems are in place for customers to raise queries or complaints, in particular that consumers can access appropriate customer service systems to swiftly and effectively raise a query, concern or complaint with a customer services team (see Groupon undertakings).

Comment

The CMA's announcement emphasises the importance it ascribes to ensuring that early enforcement action is proportionate, which will provide comfort to businesses taking steps to comply with the regime. Businesses should therefore familiarise themselves with the CMA's existing guidance and its new enforcement powers to ensure that they have implemented the necessary processes and procedures to ensure compliance. This will be aided by the CMA's publication of a streamlined and simplified version of its unfair commercial practices guidance.

Businesses should also monitor anticipated developments, including publication of the final version of the CMA's guidance and the proposed consultation on the aspects of drip pricing that have created uncertainty, as well as the CMA's initial enforcement action.  

Overall, the announcement indicates that the CMA is focused on supporting businesses that are actively working towards complying with consumer protection laws (consistent with the more business-friendly and growth-focused approach set by the Government in the draft Strategic Steer it has given to the CMA). However, the CMA also makes reference to early enforcement action and we anticipate it will not shy away from using its new fining powers where it identifies serious breaches. We expect that the CMA will be considering a number of precedent-setting cases to establish the new regime and the announcement therefore provides an early warning in advance of the new fining powers coming into effect next month.

Want to know more

• DMCC Act: CMA consultation on direct consumer enforcement guidance, 08 November 2024 (https://www.ashurst.com/en/insights/dmcc-act-cma-consultation-on-direct-consumer-enforcement-guidance/). The Draft CMA200 guidance sets out the CMA's general approach to the exercise of its direct enforcement powers under the DMCC Act and contains statements of policy as to how it will exercise its powers to impose monetary penalties.
• DMCC Act: Overhaul of UK consumer law, 10 July 2024 (https://www.ashurst.com/en/insights/dmcc-act-overhaul-of-uk-consumer-law/). The DMCC Act enables the CMA to directly enforce consumer law through administrative proceedings in a step change in consumer law enforcement in the UK.

Authors: Olivia Spong, Associate; Jamie Walker, Trainee Solicitor; Aanya Verma, Solicitor Apprentice