The interpretation of a 'Strategic Market Status': A Response response to the public consultation by the UK Government on 'A new pro-competition regime for digital markets'

On 1 October 2021, the UK Government’s consultation on ‘a new pro-competition regime for digital markets’ closed. In this consultation, the government set out its proposals for new regime applicable to digital markets and sought feedback on these proposals. Under the proposed new regime a ‘Digital Markets Unit’ (DMU) within the Competition and Markets Authority (CMA) would strive to promote competition, including competitive outcomes, in digital markets. To achieve this aim, the regime would target firms and activities which are considered to cause the greatest harm, the so-called digital firms with a ‘Strategic Market Status’ (SMS). In a the first instance, the DMU would identify firms with SMS, who would then be subject to a code of conduct aimed. The DMU could also intervene, where necessary, through ‘pro-competition interventions’. The Government is also considering the introduction of a merger regime specific to digital firms with SMS.

Through this consultation, the Government sought the views of the public on a range of elements of the proposed regime. It identified a serious of questions under specific themes: ‘the Digital Markets Unit’, ‘Strategic Market Status’, ‘an enforceable code of conduct’, ‘pro-competitive interventions’, ‘regulatory framework’, and ‘merger reform’.

Dr Magali Eben, Competition Lead in at CREATe, submitted a response to the UK Government’s consultation. In her submission, she focused on the proposals related to the identification of firms with a ‘Strategic Market Status’, reflecting indirectly on the questions raised by the UK Government and providing further consideration of issues not directly raised in the Government’s list of questions. It is essential that the notion of a ‘Strategic Market Status’ (SMS) be more clearly defined, and its relationship to the notion of dominance in competition law expressly set out, for the regime to be effective.