The Competition and Markets Authority (CMA) has welcomed new legislation, which is anticipated to pass into law next year, that may alarm tech giants Amazon and Google over the prospect of strict fines for anticompetitive conduct.

Under the Digital Markets, Competition and Consumers (DMCC) bill, the CMA will be granted new powers to fine companies, like Google, deemed to have Strategic Market Status – a designation for companies with “substantial and entrenched” market power in an activity – up to 10 per cent of their annual global turnover if found in breach of new “market dominance” rules.

With its stated aim of promoting “free and vigorous” competition among businesses, the bill will also bestow upon the CMA new enforcement powers to tackle issues including fake reviews that mislead customers, pressure selling, and digital subscription services which are “difficult to quit”.

A recent study by Which? found that Facebook is being infiltrated by "fake review factories" despite the anticipated legislation to make the activity illegal. The consumer champion investigated the social media site, finding that over a dozen Facebook groups are trading fake positive reviews for sites including Amazon on the platform in exchange for either free products or payment.

Adherence to such rules will be overseen by the Digital Markets Unit (DMU), a new department within the CMA, which will in part prevent firms with Strategic Market Status from using their size and power to limit digital innovation or market access.

Sarah Cardell, chief executive of the CMA said the DMCC could prove to be a “watershed moment” to the way in which consumers are protected in the UK.

“People rely on free and fair markets to get the best deal possible, but also expect that rules are in place to protect them when things go wrong,” she said. “Proposals to give the CMA stronger enforcement powers when firms break consumer law – including the ability to directly impose fines for the first time – are crucial to ensure we can continue cracking down on rip-offs and underhand deals, helping to deter firms from taking advantage of people.”

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