ALERTER
Part 3 of the Digital Markets, Competition and Consumers Act 2024 Now in Force
By William Hibbert, Nazeer Chowdhury & Thomas Samuels

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Part 3 of the Digital Markets, Competition and Consumers Act 2024 (the “Act”) came into force on 6 April 2025. It consolidates and enhances the consumer protection regime under Part 8 of the Enterprise Act 2002 (“EA 2002”). In particular, Chapter 4 gives the Competition and Markets Authority (“CMA”) extensive direct enforcement powers including the power to impose monetary penalties based upon the trader’s global turnover.

OVERVIEW

Following the coming into force of Parts 1 and 2 on 1 January 2025 (see Chambers’ previous Alerter here), Part 3 of the Act was brought into force with effect from 6 April 2025.

Headed “Enforcement of Consumer Protection Law”, Part 3 confers enforcement powers on the Courts and the CMA and makes provision about remedies in connection with infringements of consumer protection legislation. It simplifies and enhances the previous enforcement regime provided for by Part 8 EA 2002 and, for the first time, empowers the CMA to undertake direct enforcement activity.

Chapter 2 of Part 3 defines the scope of the Part 3 enforcement regime; Chapter 3 confers powers on the Court to make enforcement orders and, in the alternative, to accept undertakings; Chapter 4 confers powers on the CMA to enforce in respect of certain infringements, including the power to impose monetary penalties; Chapter 5 sets out general provision about monetary penalties imposed by the Courts or the CMA under Chapters 3 and 4; Chapter 6 sets out consequential amendments to Schedule 5 to the Consumer Rights Act 2015 (“CRA 2015”); and Chapters 7 & 8 deal with miscellaneous matters and interpretation.

This Alerter offers an overview of the essential features of Part 3, concentrating particularly on the powers of the court and direct enforcement by the CMA.

SCOPE

Under s.148(1), the powers conferred on the courts and the CMA by Chapters 3 and 4 of Part 3 apply only in relation to “relevant infringements”. These include any “commercial practice” – being an act or omission by a trader relating to the promotion or supply of goods, services or digital content by it or another trader to a consumer, or by a consumer to the trader – which satisfies three conditions:

1. It “harms the collective interests of consumers”, for which purpose the practice in question may include “a single act or omission” which impacts on those who “may become consumers in the future” as well as individuals already so defined.
2. It meets the “UK connection condition” specified by s.149 of the Act. Namely, that the trader either “has a place of business” or “carries on business”, or the commercial practice “occurs in the carrying on of activities by the trader that are, by any means, directed to consumers”, in the UK.
3. It meets the “specified prohibition condition” as defined by s.150, being a breach of an enactment listed in Part 1 of Schedule 15 to the Act or a rule/obligation listed in Part 2 thereof. Enactments specified by Part 1 include the Consumer Credit Act 1974, Parts 1 and 2 of the CRA 2015, the Misrepresentation Act 1967 and the Unfair Contract Terms Act 1977. Broader rules/obligations in Part 2 of Schedule 15 include any breach of “contract for the supply of goods, services or digital content” and/or “duty of care owed to consumer under law of tort”. Further commercial practices are specified for the purposes of Chapter 4 of Part 3 (direct enforcement by the CMA) by Schedule 16 to the Act. It is, therefore, necessarily a more limited list.

An example of a commercial practice which meets each of these criteria might be failure by a trader to give customers information about their cancellation rights, as required by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. Such failure would not only have potentially caused harm to the trader’s existing customers, but also to any individuals who may in the future wish to engage with it.

COURT ORDERS AND UNDERTAKINGS

Pursuant to s.153(1) of the Act, an “enforcer” may apply to the court for an enforcement or interim enforcement order if it considers that a person (the “respondent”) has “engaged in, or is engaging in or is likely to engage in… a relevant infringement” or “is an accessory to such a practice.” An “enforcer” for that purpose can be either a public or private enforcer as designated by s.149 of the Act, which restates and updates s.213 of Part 8 EA 2002.

Pursuant to s.153(4) only a public enforcer may include within their application for the respondent to “pay a monetary penalty.” The CMA is the first-named public designated enforcer and, by s.154(2), is empowered to direct any other such enforcer that only it may apply to the court for an order in respect of a particular infringement. This power serves to coordinate enforcement activities to avoid traders facing multiple enforcement applications enforcement orders in respect of the same alleged infringing practice.

Consultation and enforcement

Sections 155 to 158 are the core provisions of Chapter 3 of Part 3 of the Act. These broadly consolidate and restate existing requirements under Part 8 EA 2002. In summary:

• Prior to the issue of any application to the court, the enforcer in question must engage in “appropriate consultation” with the proposed respondent. In doing so it must seek to achieve cessation or prevention of the practice in question and that the proposed respondent is aware of any potential monetary penalty. The only exception to this step is where, upon notification of proposed enforcement action under s.169, the CMA waives the requirement.
• In the event that the court finds there has been a relevant infringement, it may either “make an enforcement order” or, alternatively, “accept an undertaking.” In considering which course to adopt it must have regard to any prior undertakings offered by the respondent and its compliance with them. Both enforcement orders and undertakings will direct the respondent to cease and desist from either engaging or consenting/conniving in the infringing practice. Orders and undertakings in such terms offer important anti-avoidance protections by ensuring that the individuals behind the respondent business do not simply continue as before under a new corporate identity.
• Furthermore, the court may include “enhanced consumer measures” in any such order or undertaking if it considers it “just and reasonable” to do so. For the purposes of Part 3 generally, “enhanced consumer measures” are the “redress” (e.g. compensation), “compliance” (e.g. the prevention of infringement) and “choice” (e.g. measures intended to enable consumers to choose more effectively between persons supplying goods, services or digital content) measures defined by s.221 of the Act. In deciding whether to impose such measures, the court must consider whether they are proportionate having regard to their likely benefit for consumers, and their likely costs to both the respondent and consumers.
• The court’s jurisdiction to impose a monetary penalty is more limited. It may only do so if found that “the respondent has engaged, or is engaging, in a commercial practice constituting a relevant infringement (and not in respect of a practice that the court finds that the person is likely to engage in).” In other words, a monetary penalty cannot be made on a pre-emptive application to prevent likely future conduct by the respondent. The amount of such penalties must have a deterrent effect. Thus, the court can impose a fixed penalty of up to £300,000 or, if higher, 10% of the total value of the respondent’s turnover.
• As with other forms of injunctive relief, the court is empowered to make interim enforcement orders and accept interim undertakings where it appears that an application “would be likely to be granted” and it is “expedient that the infringing practice is prohibited or prevented immediately.” An example may be where the enforcer becomes aware that a trader intends to commit a serious breach which can be restrained only by immediate enforcement action. The court’s power to do so is entirely discretionary and can likewise be varied or discharged on application by the respondent. Such order can be made without notice to the respondent, but “only if [the court] considers it appropriate”.

Online interface orders

Sections 160-62 of the Act deal with “online interface orders” and “interim online interface orders”. Such an order is one which directs the respondent to “do, or to co-operate with another person so that person can do, one or more” of the following: (i) “remove content from, or modify content on, an online interface”; (ii) “disable or restrict access to an online interface”; (iii) “display a warning to consumers accessing an online interface”; and (iv) delete a registered domain and facilitate its registration with the enforcer in question: s.161(2). An “online interface” means “any software, including a website, or part of a website” operated by a person for the purposes of a business carried on by them or by another acting in their name or on their behalf for the purposes of accessing or promoting goods, services or digital content supplied by either person: s.161(5).

The requirements as to online interface orders expand upon the prior requirements in ss.218ZA–218ZD EA 2002 in two respects. First, by expanding the court’s powers in this regard from infringements of EU-derived consumer law to what were previously considered domestic issues. Secondly, by expanding the right to apply from the CMA to any public designated enforcer.

Undertakings

Sections 163-4 provide for enforcers to accept undertakings from traders in lieu of applications to the court for enforcement orders or undertakings. As with the court’s jurisdiction to do so, such an undertaking can only include a requirement to take such enhanced consumer measures as the enforcer “considers just and reasonable.”

Enforcement of orders/undertakings

In the event that a trader fails to comply with any court order or undertaking, an application may be made back to the court either by the original enforcer or any other publicly designated enforcer. The Court is then empowered either to (i) make a consumer protection order (in place of a previous undertaking), or (ii) impose a monetary penalty. Monetary penalties for breach can be either a fixed amount, a daily rate or a combination of the two. Fixed penalties cannot exceed £150,000 or, if higher, 5% of the total value of the respondent’s annual turnover; daily rates cannot be more than £15,000 or, if higher, 5% of the total value of the respondent’s daily turnover.

Interconnection conditions

One further feature of Chapter 3 calls for particular attention: the availability and use of “interconnection conditions” by the court when making orders against corporate respondents. Where any order is made against a respondent which is or becomes “a member of a group of interconnected bodies corporate” an “interconnection condition” may be applied. Pursuant to s.176(3), where it considers it “just and reasonable” to do so, the court may provide for the requirements of any order “to be binding upon all members of the group (in addition to the respondent) as if each of them were the respondent.” This serves as an anti-avoidance provision to ensure that any order made – including one imposing monetary penalties – cannot be circumvented merely by corporate restructuring.

DIRECT ENFORCEMENT BY THE CMA

Chapter 4 of the Act clothes the CMA with significant new powers. Pursuant to s.180, if the CMA has “reasonable grounds for suspecting” that any person “has engaged, is engaging or is likely to engage” in a practice constituting a relevant infringement or is “an accessory” to such a practice, it “may conduct an investigation into the matter.”

Infringement notices

A four-stage enforcement process then applies:

1. If during the investigation, the CMA remains satisfied that it has reasonable grounds for suspecting a past, ongoing or future infringement it may issue a “provisional infringement notice” under s.181. Such a notice must: (i) set out the grounds on which it is issued; (ii) give proposed directions for cessation or prevention of the infringement or consent/connivance in it; (iii) invite the respondent to make representations about the giving of the notice; and (iv) specify the means by which such representations are to be made. If the CMA is, at the time of issuing the provisional notice, considering imposing a monetary penalty in any final notice, it must state its intention, the proposed amount and its justification for doing so: s.181(8).
2. If, having issued a provisional notice, the CMA remains satisfied of the respondent’s involvement in any actual or likely infringement, it may issue a “final infringement notice” under s.182. In considering whether to do so, it must have particular regard to whether the respondent has previously given an undertaking in respect of the relevant acts/omissions to which the final notice would relate. A final infringement notice may either give enforcement directions to ensure the respondent’s compliance or, alternatively, impose a monetary penalty. The CMA’s new power to impose monetary penalties are significant. It can do so in the same amounts as a court under Chapter 3, namely fixed penalties of up to £300,000 or, if higher, 10% of the total value of the turnover of the respondent: s.182(6). Moreover, a final infringement notice may impose enhanced consumer measures on a respondent if the CMA considers it “just and reasonable” to do so: s.183(1).
3. Where a respondent has been issued, but failed to comply, with a final enforcement notice including enforcement directions the CMA has the power to issue further notices in respect of such breach. Again, pursuant to ss.191-2, a two-stage procedure requiring the issue of provisional and final breach of directions enforcement notices applies.
4. Ultimately, if a respondent has failed to comply with either an enforcement direction in a final infringement notice or a final breach of directions enforcement notice, the CMA can apply to the court under s.194. If satisfied that the respondent has indeed failed to comply, the court “may make an order imposing such requirements on the respondent as the court considers appropriate for the purpose of remedying the failure”, as well requiring it to pay all costs and expenses “of, and incidental to, the application…” (ss.194(3)-(4)).

Further, the CMA is also now able to directly issue an online interface notice on the same basis as a court under Chapter 3: s.184.

Undertakings

Alternatively, pursuant to s.185, the CMA may accept an undertaking from a respondent in respect of any matter under investigation in lieu of a final infringement or an online interface notice. However, accepting such an undertaking does not prevent the CMA from imposing notices on the following grounds:

1. In respect of matters not covered by the undertaking.
2. If it considers that there “has been a material change in circumstances since the undertaking was accepted”. Given (a.) and (c.) this ground apparently does not include either continuing or additional infringements. However, one obvious example of such a “material change” is a change in senior management meaning that those who were previously overseeing the respondent’s compliance with the undertaking have left the business.
3. If it has reasonable grounds for suspecting breach of one or more terms of the undertaking. Where is the case the CMA is further empowered to issue a “provisional breach of undertakings notice” under s.190. If, having done so, the respondent continues to be in breach of the undertaking, a “final breach of undertakings notice” can issued under s.189. Such final notice can do “either or both of” (i) requiring the respondent to “comply with such directions as the CMA considers appropriate for the purpose of securing that the respondent complies” with the undertaking, and/or (ii) payment of a monetary penalty in respect of the breach: s.189(3). Pursuant to s.190(3), any such monetary penalty can be either of a fixed amount, a daily rate or a combination of the two and is subject to the same limits as apply in the event of breach of a court undertaking under s.168 (see ¶13 above).
4. If it has reasonable grounds for suspecting that the “information which led it to accept the undertaking was incomplete, false or misleading in a material way.”

The test of materiality is an important brake on the CMA’s power to impose notices under (b.) and (d.) above. What is “material” is a question of fact, albeit one which is for the CMA to assess as the primary decision-maker.

In any event, the CMA is entitled to vary or release a person from an undertaking after giving notice including its reasons for doing so: s.187.

False/misleading information

Under ss.197-8, a similar two-stage process for the issue of provisional and final notices applies where the CMA “has reasonable grounds to believe that a [respondent] has, without reasonable excuse, provided information to the CMA that is materially false or misleading” in connection with “the carrying out by the CMA of a direct enforcement function.” A “final false information enforcement notice” is solely to impose a monetary penalty on the respondent: s.198(3). The amount of such penalty must be fixed in a sum not exceeding £30,000 or, if higher, 1% of the total value of the turnover of the respondent.

It would appear that the words “without reasonable excuse” are intended to operate akin to a due diligence defence. In other words, where a respondent has inadvertently or despite its best efforts to ensure accuracy given false or misleading information, the sections are unlikely to be engaged. Where, however, a respondent has knowingly or recklessly done so, the CMA would be entitled to proceed under those provisions.

Miscellaneous and appeals

Two further provisions in Chapter 4 call for attention:

• S.199 requires the CMA to publish a “statement of policy in relation to the exercise of powers to impose a monetary penalty” under Chapter 4 of Part 3 of the Act. Such statement must include a statement about the considerations relevant to the determination of whether the impose a penalty and the nature/amount of such penalty. Such guidance has been incorporated into §7 of the CMA’s “Direct Consumer Enforcement Guidance” (CMA200), published 24 March 2025.
• S.202 provides for a right of appeal by any person served with a “relevant notice” under Chapter 4. Specific grounds of appeal are provided for by subs.(2)-(3), aimed at appeals on the merits based upon some material error by the CMA. The final ground in both subsections – that the decision “was unreasonable or wrong for any other reason” – is very broad and is intended to permit the appellate court to hear fresh evidence. Thus, the court might conclude that the CMA’s decision was reasonable on the information before it but that, in light of new evidence before the court, it was nonetheless wrong. See, for example, Competition and Markets Authority v Flynn Pharma [2020] EWCA Civ 339, [146]. Any such appeal must be brought within the “applicable period”, being 28 days in respect of a final false information enforcement notice and 60 days in respect of any other relevant notice: subss.(6) & (9).

MONETARY PENALTIES

Chapter 5 of Part 3 of the Act contains general provisions about monetary penalties. The requirements set out are therefore important for the powers of both the court and the CMA to impose fixed and pro rata financial penalties under Chapters 3 & 4.

Any order or notice imposing a monetary penalty on a respondent must set out the information prescribed by s.203(1). This includes the amount of the penalty, the basis on which it is imposed and justified, how it has been calculated and the respondent’s rights in respect of it. In particular, the latter includes a right under ss.203(3)-(4) to apply to court or CMA (as applicable) to vary or the date(s) by which the penalty must be paid.

Given the potential for substantial financial penalties, the basis of calculation of “turnover” for the purposes of Chapters 3 and 4 may become an important ground of challenge. To that end, s.204(1) confirms that “turnover” means the respondent’s worldwide turnover, as well as that of any controlling or subsidiary entity (as further prescribed in regulations to be made by the Secretary of State). Accordingly, the right to impose monetary penalties represents a very significant weapon in the consumer protection armoury.

CONCLUSION

The CMA’s new direct enforcement powers mean that it will be able to decide whether key consumer protection laws have been breached without having to take businesses to court, and it will be able to take direct action to tackle these breaches including through fines and redress.

The CMA’s approach to consumer protection is set out here. This document shows a clear intention from the CMA to make extensive use of its new powers. The document is expressed with a sense of urgency to ensure that (a) consumers are protected for their benefit and (b) businesses feel confident that their competitors are playing by the same rules and cannot gain an advantage by breaking the law.

The CMA has committed to applying its prioritisation principles, during the first 12 months of the new regime. It has made clear that it will:

• target conduct which is more harmful to consumers, and which represent clear infringements of the law;
• continue to prioritise areas of essential spend to help people struggling with pressure on household budgets;
• carry out extensive engagement with businesses and develop further accessible materials to help businesses to comply with the law.

Notwithstanding its wish to engage with business, the CMA plainly has a keen appetite to utilise its new-found powers. The next 12 months is likely to see some high profile enforcement action by the CMA and, in turn, appeals by businesses.

William Hibbert
Nazeer Chowdhury
Thomas Samuels
13 May 2025

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