Clarity incoming – compliance advice and enforcement priorities become clearer as the UK's CMA prepares for direct consumer enforcement powers

This week’s new compliance advice for trade recommendation platforms (TRPs) and the launch of a project to explore dynamic pricing across different sectors provide greater clarity for businesses on the CMA’s likely priorities for its new consumer enforcement powers. 

These announcements arrive before the commencement of the consumer aspects of the Digital Markets, Competition and Consumers Act (DMCC Act) which are expected in Spring 2025 and will bring direct enforcement powers for the CMA, including the ability to impose significant penalties for non-compliance with consumer protection law. 

TRPs – a niche scope with significant read-across

The CMA has issued guidance to platforms that (1) operate an app (or website) that customers may use to find a trader (through matchmaking / database / search engine / listing functionalities), and (2) make recommendations (implicitly or explicitly) that traders are of a particular quality, trustworthy, reliable or suitable for customers’ requirements. 

Whilst the guidance relates explicitly to TRPs, there is significant read-across to how the CMA could consider future enforcement against fake reviews and hidden advertisements, and the vetting processes which the CMA consider reasonable and proportionate for businesses to take.

The guidance reiterates many of the principles which the CMA has already provided as part of its guidance following its social media endorsements consumer investigation. Both TRPs and social media platforms are expected to take steps to take steps to:

• Prevent consumer exposure to misleading conduct: whether via fake reviews, or hidden advertisements
• Monitor compliance of third parties across the platform be this vetting traders and tracking negative trader reviews on TRPs, or implementing algorithms to identify unlabelled social media endorsements on social media platforms
• Introduce complaints procedures to allow consumers to notify platforms of potential fake reviews, or hidden advertisements as the case may be
• Remove non-compliant content: both TRPs and social media sites are expected to take a proactive role in removing content which is considered misleading.

The guidance underlines the CMA’s expectation that platforms will take proactive steps (which likely includes the implementation of technology) to prevent, monitor and take down content which does not comply with consumer protection regulations. 

Dynamic pricing – enforcement priorities become clearer

The CMA’s recently announced project to consider the use and impact of dynamic pricing demonstrates that the CMA is considering this practice in all contexts and not just in relation to large technology platforms.

Whilst dynamic pricing is by no means new, the digitalisation of commerce has increased the prevalence and complexity of dynamic pricing. We expect this to be an area of continued focus for the CMA as part of its focus on online choice architecture (OCA) more broadly, online pricing practices and the algorithms which underpin them.

A rebrand for consumer protection

Consumer protection is often considered in the context of retailers and manufacturers, but recent years have seen a shift towards regulators (in the UK and beyond) using their consumer powers to regulate behaviour in the other sectors, including in the digital sphere. New guidance reiterates the CMA’s existing thinking on platform responsibilities, the role of AI and the importance of designing appropriate OCA to ensure that consumers are not exposed to misleading messaging – be this in regard to pricing, advertising, or quality. 

Consumer protection continues to grow in importance as part of the patchwork of privacy, online safety, AI and data protection regulations which businesses now need to navigate.