Legislation that will give the Digital Markets Unit (DMU) a range of new powers to regulate the largest tech companies, or so-called “strategic market status” (SMS) firms is expected to be laid before the UK Parliament imminently. Among other things, the legislation is expected to empower the DMU to designate SMS firms, design a bespoke code of conduct for each SMS firm, and enforce those codes. Decisions taken by the DMU have the potential to force SMS firms to significantly alter their business models and give rise to scope for significant financial penalties.
The DMU is an entirely new regulator, and will be administering an entirely new regime, with broad and flexible powers. So what oversight will there be of DMU decisions? The materials put out by the UK Government suggest that all DMU decisions are likely to be reviewable only on a judicial review standard. This is a high threshold that does not - absent clear legislative intent - allow full review of the merits of a decision. Additionally, a court carrying out judicial review can't substitute its own decision for that of the regulator - it can only send the decision back to be made again.
The DMU will have power to decide who it is going to regulate, set the rules that apply to them, and then enforce those rules. This makes the DMU the effective legislator, investigator and executioner. It is therefore critical that DMU decisions are subject to proper judicial oversight.
In an article in Competition Law Insight, we have argued that there is a case for ensuring that DMU decisions are subject to a standard of appeal that allows the Competition Appeal Tribunal (the planned forum for appeals of DMU decisions) to determine whether the decision is “materially wrong”.
We argue that with good legislative drafting, this can be achieved while still ensuring deference to DMU's status as a specialist regulator, and ensuring there is not undue delay in use of the DMU's powers (two of the UK Government's stated objectives). But as we explain, this will only be the case if the text of the legislation discloses a clear Parliamentary intention for what is sometimes termed "JR plus" - a more expansive kind of judicial review which applies in certain other specific contexts (or indeed, full merits review of at least some decisions - e.g. those imposing significant financial penalties - as was suggested earlier in the consultation process) .
decisions taken by the DMU have the potential to force SMS firms to significantly alter their business models and give rise to scope for significant financial penalties