The Competition and Markets Authority (CMA) has been quizzed about its readiness to deploy new digital markets powers in an evidence session before the House of Lords Communications and Digital Committee.

The meeting was the first attended by the regulator since taking powers under the Digital Markets, Consumer and Competition Act, which came into force on 1 January. The new legislation is aimed at regulating competition in digital markets and boosting consumer protection.

The Act gives the CMA new powers and responsibilities to regulate competition in digital markets and make pro-competition interventions, when necessary, with the regulator appointed to regulate firms with ‘strategic market status’ (SMS), similarly to the European Union’s Digital Markets Act.

The legislation also aims to reinforce consumer protection laws including banning subscription traps, fake reviews, and drip pricing, with amendments made during the legislative process also banning foreign states from having control or influence over UK media.

During the meeting on Tuesday afternoon, CMA chief executive officer Sarah Cardell said that the final version of the regulator’s guidance, which outlines how it intends to implement and manage the new regime, had received the approval of the Secretary of State.

Stategic market status investigations

She told Committee members that the regulator plans to launch strategic market status (SMS) investigations across three areas of digital activity over the coming six months.

The new legislation allows the CMA to investigate and then designate a firm as having SMS in relation to a particular digital activity.

Once designated, the CMA can impose conduct requirements or introduce pro-competition interventions.

In the Committee evidence session, Cardell said that the regulator will launch SMS designation probes in two digital business areas in January, while another investigation in a third area will be launched towards the beginning of summer.

The CMA’s chief executive did not confirm the specific digital activities the regulator plans to include as part of its first SMS investigations, explaining that announcements will come in due course as each investigation is launched, with the CMA planning to take a “reasonably broad approach” in examining digital activities as a whole.

“The new regime is intended to drive growth, investment, and innovation not just in the UK tech sector, but across the whole UK economy, given how critically important digital markets are to so many consumers and businesses who rely on those products and services,” said Cardell. “It will be characterised by an approach that is participative, proportionate, predictable, and we seek to move with pace, but also balance that against appropriate process.”

She assured members that the new regime will drive benefits for consumers and businesses whilst stimulating investment, innovation and growth across the UK tech sector.

Cardell continued: “The regime has been carefully designed to ensure that the UK keeps pace with future developments and maximises its international attractiveness to innovators and investors in these dynamic markets.”

The chief exec explained that more details on the scope of the investigations will be provided at a later stage, adding that the staggering is intended to balance the impact on stakeholders and the CMA's own operational capacity.

“The CMA is aiming for a broad, expedited approach to the initial SMS designation investigations, while also working in parallel on potential conduct requirements to address any competition concerns identified,” she added.

The CMA’s annual plan

The competition watchdog added that it will present its draft annual plan for the period 2025-2026 to Parliament next week.

“In this annual plan, the CMA will have a clear and central focus on framing our role as promoting competition and protecting consumers, in order to drive growth, opportunity, and prosperity for all,” Cardell said. “You will see in that draft annual plan an absolutely clear and central focus on how to promote competition and protect consumers, to drive growth opportunity and prosperity for all.”

While the CMA will provide more details on how individual designations can improve outcomes for businesses and consumers when it launches its investigations, it did say that the new regime could, for example, prevent large companies from favouring their own services or using access to customer data to gain an unfair advantage by excluding smaller competing companies.

It will also seek to make it easier for people to switch digital service providers without losing access to data or content, and to ensure that businesses that depend on major digital ecosystems have access to the data and functionality they need to innovate and bring new products and services to market.

The uncertainties of the EU digital markets regime

When asked about recent comments by technology companies on the uncertainties of the EU regime, Cardell replied that it is not the CMA's role to comment on its predictability or certainty.

However, she emphasised that it is the CMA's responsibility to ensure that it offers as much certainty and predictability as possible in all cases of the UK regime, noting that when Apple described its approach to Apple Intelligence deployment, it spoke of regulatory uncertainties, particularly with regard to the interoperability requirement of the EU's Digital Markets Act (DMA).

Similarly, when Meta made announcements about its artificial intelligence products, it spoke more generally of regulatory uncertainties in the EU.

“I can’t foresee a scenario where the UK would end up with a rule that looks anything like the EU's interoperability requirement, the CMA is focused on providing a predictable and participative process, in contrast to the perceived uncertainties around the EU's regime as described by some tech firms,” she said.

Unlocking barriers to innovation

Cardell said that the CMA has a broader market function that doesn’t solely comprise digital markets, adding that the organisation will be focusing on areas where it can take action to unlock barriers to investment and innovation.

“For example, we will be really drilling down and focusing on those areas where we can take action to unlock barriers to investment and innovation: for example, in critical infrastructure markets, or in core enabling markets which are so central to driving growth” she continued.

The chief executive added that the regime would not be based on broad, blanket rules that apply across the entire sector by default.

“Instead, the CMA has to designate individual firms in relation to specific digital activities, and then design bespoke, targeted interventions to address particular harms,” she told the Lords Committee.

According to the Authority, a targeted, tailored approach, informed by extensive stakeholder engagement, means that its interventions will open up opportunities, rather than inadvertently reinforce a "chilling effect" that could close off innovation or divert it outside of the UK.

When asked about the regulator’s approach to the M&A landscape, the CMA said it will take a more holistic, contextual approach, while also recognising the importance of addressing a broader set of barriers to scale-up opportunities beyond just competition issues.

Cardell emphasised the CMA is making concerted efforts to ensure they are hearing from a wide range of stakeholders, including smaller firms and organisations, as they implement the new regime.

“In the testing and trialling they've done, such as on the Privacy Sandbox project, they have included not just the larger firms like Google, but also ad tech providers at the smaller end of the spectrum,” Cardell said.

Preparations for effectively delivering on the new digital markets competition regime include strengthening its Digital Markets Unit (DMU) team, bringing in legal and economic advisors and building up a strong data unit with tech specialists, data engineers, data scientists, and behavioural scientists.

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