The Digital Markets, Competition and Consumer Act, in force from 6 April 2025, introduces landmark reforms to the UK's competition and consumer laws to ensure a fairer and more competitive market environment. The act expands the consumer protection regime, regulates digital markets, and promotes greater competition.
The new provisions acknowledge the unique risks consumers face online, including ones arising from the design of online choice architecture which can harm people and competition. The Act aims to promote a more transparent and equitable environment to support better decision making.
Consumer protection law changes include updates to the existing court-based enforcement regime, and a new direct enforcement power for the CMA, giving it the ability to issue fines to firms, and individuals, for breaches. This is one of the most significant changes introduced by the act because penalties can now be up to 10% of a firm’s worldwide turnover, bringing consumer protection in line with the competition law regime.
What are ‘unfair commercial practices’?
The unfair commercial practices regime is potentially the most significant change to be aware of.
They encompass a range of deceptive and unethical behaviours which can harm consumers. The provisions set out in the Act replace and update the Consumer Protection from Unfair Trading Regulations 2008. The CMA has set out the following focus areas:
- Aggressive sales practices that prey on vulnerability
- Providing information to consumers that is objectively false
- Contract terms which are very obviously imbalanced and unfair
- Behaviour where the CMA has already put down a clear marker through its previous enforcement work
- Where the law tells us that a practice is always unfair
Actions specifically prohibited include the omission of essential information from purchase invitations, for example the 'drip pricing' of mandatory charges. A further 32 ‘unfair’ commercial practices will be banned, including fake consumer reviews.
Behavioural economics: the science behind ‘nudges’ and ‘sludges’
Much of the conduct that the CMA is pushing back on can be explained by behavioural economic theory. Some companies may leverage people’s different modes of thinking to encourage potential consumers to make purchase decisions that they may not have otherwise made.
- Slow or System 1 thinking: when people can use their full cognitive abilities to make choices
- Fast or System 2 thinking: deploys ‘rules of thumb’ or, in some cases, avoids a decision at all.
The marketing activities related to these systems are sometimes called ‘nudges’ and ‘sludges’.
What is a ‘nudge’?
A nudge uses positive reinforcement or indirect suggestions to influence behaviour. Harmful nudges exploit quick, instinctive decision making to steer users towards choices that may not align with their preferences or welfare. For example, websites often set the default option to share non-essential information, making it easy for users to consent with a single click.
What is a ‘sludge’?
Sludges are unnecessarily effortful processes which can slow down the consumer and prevent them from accessing important information, such as the terms and conditions, or make them jump over several hurdles to cancel a subscription. This can compound the vulnerability of consumers who may already be lacking the mental bandwidth to make good choices, for example during times of stress.
Both nudges and sludges can lead to negative consequences which may reduce consumer choice and harm their welfare. For instance, there may be data protection concerns where consumers share information that they don’t want to or may not know they’re sharing. This undermines free user choice and normalises lower levels of privacy. Under the UK’s General Data Protection Regulation (GDPR), these practices may infringe principles of fairness and transparency and may not produce informed or otherwise valid consent. By collecting more consumer data, dominant firms may have the ability, in some cases, to leverage network effects and strengthen their market position, lock customers in, and create barriers to entry and expansion.
Which practices are the CMA pushing back on?
Ghost subscriptions
Unwanted subscriptions are estimated to cost families £14 per month per service and £1.6 billion a year in total.[1] Subscription traps (or ghost subscriptions) occur when consumers sign up for one through a free trial or reduced-price offer, but if the consumer doesn’t cancel the trial within a set period, they’re often automatically transferred to a costly subscription plan without notification. This can continue for several billing cycles until the consumer notices and cancels the contract.
How will the DMCC change behaviour?
The Act introduces a new regime to help prevent these subscription traps, with new information requirements and cooling-off periods.
Although the obligations relating to subscription contracts don’t come into force until Spring 2026, it will be important for firms to review existing contracts to ensure that there are clear cancellation options and cooling-off periods. There will also be additional requirements to provide pre-contract information, reminder notices for renewal payments, and renewal cooling-off periods.
Drip pricing
Drip pricing exemplifies how behavioural science insights are exploited to influence consumer decision making. This practice involves presenting an initial headline price for a product or service, with additional mandatory charges gradually revealed as the transaction progresses. Essentially, consumers are ‘drip-fed’ the final price.
Drip pricing harms both consumers and fair-dealing businesses by obstructing effective price competition at the headline price level. For instance, in the airline industry, a firm might advertise a low fare but later add fees for baggage, seat selection, and other services. This makes it challenging for consumers to compare the true cost across different airlines, reducing competitive pressure on firms to lower their overall prices. As a result, consumers may end up paying more than anticipated, while some firms maintain higher profit margins without transparent price competition.
Several large online hotel booking sites, Expedia, Booking.com, Agoda, Hotels.com, ebookers, and trivago, have previously faced investigation by the CMA due to concerns that included compulsory hidden charges, such as taxes or booking fees, not included in the upfront price. The CMA’s investigation also highlighted issues with pressure selling (where there was a false impression of urgency to book quickly), discount claims, and search result rankings being prioritised due to commission paid by a hotel.[2]
How will the DMCC change behaviour?
The CMA’s draft guidance sets out expectations around presenting headline prices, including any fixed mandatory fees, such as taxes and booking fees, and disclosing how variable mandatory fees are calculated. This may require changes to websites and advertising policies. However, following substantial feedback in this area, the CMA will be taking a phased approach to compliance, with further guidance regarding “genuinely unexpected and untrailed mandatory charges” being issued in April 2025. Revised draft guidance for areas of drip pricing causing more uncertainty will be put out for consultation in the summer.
Fake reviews and misleading advertisements
Fake reviews and misleading advertisements are banned under the Act. Firms are now expected to verify that reviews are genuine and that all paid endorsements; whether collaborations with social-media influencers, product placements, or review incentives, must be explicitly disclosed.
Reviews play a critical role for consumers, where people are often presented with a lot of information and have limited time to make decisions. Time-poor consumers often rely on reviews as shortcuts for quick decision making – ‘fast thinking’. Fake reviews can lead to consumer harm as individuals may make choices based on misleading information, bypassing more careful research or consideration associated with ‘slow thinking’.
How will the DMCC change behaviour?
The draft guidance made it clear that firms must take action to comply with the requirements relating to fake reviews. It isn’t enough for a firm to just refrain from them. Therefore, it’s important to have policies for the prevention and removal of fake reviews; ensuring incentivised ones are clearly identifiable; and regularly monitoring them for suspicious activity. The CMA has acknowledged the feedback received in the consultation phase, recognising that firms need longer to embed their new policies, and has confirmed that for the first three months of the new regime, it will focus on supporting compliance efforts, rather than enforcement.
Why do firms need to be wary of potential investigations?
The CMA is generally open about its enforcement work and will typically issue a press release when it starts an investigation, which does bring potential reputational and financial risks to firms. The headlines on the investigation into Emma Mattresses over concerns about its online selling practices, including that it was being “taken to court for ‘misleading shoppers’” and facing “legal steps for deceptive online selling practices” may have been uncomfortable reading for the owners and investors.
CMA investigations incur substantial costs for firms, regardless of the eventual outcome. This includes internal time spent by management, legal and PR teams, the cost of external counsel and other consultants, and a potential impact on revenues due to negative customer perceptions. The pressure faced by directors and employees involved in the conduct under investigation can also have a detrimental effect on wellbeing.
Where an investigation does result in an adverse finding, firms and their directors may face significant fines. The CMA has shown a strong appetite for issuing fines for breaches in other areas of competition law, particularly in cases of negligence or egregious breaches of obligations.
The Act also enables the CMA to obtain undertakings from a firm to behave in a particular way, and/or may seek enhanced consumer measures, such as redress and compensation, and early termination of contracts. Notably, it also has the power to pursue criminal prosecutions and director disqualification.
What are the available defences?
Section 238 of the Act provides a defence for firms if they can demonstrate they’ve taken reasonable precautions and exercised due diligence to avoid the commission of an offence. This would include demonstrating that it was due to an accident or mistake, reliance on information provided by another person, the act or omission of another person, or other causes beyond its control.
However, it's not enough to show that there are procedures in place to prevent an offence; the firm must be able to demonstrate that the policies are applied in practice.
In the first instance, firms should review the CMA’s draft guidance on unfair commercial practices (discussed below) and assess whether existing commercial practices align with it, focusing on the customer sales journey, whether in person or online, and ensure policies are implemented to address all areas of heightened risk. They also need to ensure that they demonstrate compliance. This might include conducting customer research to test the design and presentation of choices on websites, to ensure any ‘nudges’ or ‘sludges’ aren’t inherently harmful.
Navigating the UK’s DMCC: How can firms prepare?
How can firms ensure compliance?
An active compliance and monitoring process is important to make sure that policies are being applied in practice. If you have an existing competition compliance programme in place, then you may wish to enhance it. However, if you don’t, then now may be a good time to consider implementing one which could cover the following areas:
Governance
Assign responsibility for overseeing compliance to senior individuals. This may involve day-to-day management led, for example, by the legal team, with oversight from general counsel.
Policies
Create or update policies relevant to your trading practices. It’s important to ensure that consequences for breaches of the policies are serious enough to act as deterrents. It’s also important to review commission structures to avoid incentivising sales practices which are at odds with the CMA’s guidance.
Communications
If you already have policies in place, then make sure changes arising from the updated guidance are clear. For new policies, it’s important that everyone in your firm knows the basics of what’s required. However, you may want to share more detailed communications with the parts of it that are customer-facing. The tone from the top in any messaging should emphasise the importance of compliance. Share written communications rather than relying on messages being cascaded down and misunderstood. And it’s important to designate a contact for any queries, and keep evidence of communications to employees.
Training
Provide enhanced training on trading policies for commercial and tech teams, making sure you keep records of completion, and include compliance training programmes in new employee onboarding.
Ongoing monitoring
Conduct regular spot checks of trading practices relevant to your firm, for example review of contracts, websites, customer calls, and online reviews. Look at complaints and external review sites like Trustpilot for general themes. Confirm that employees have a good understanding of the policies and provide regular refreshers on communications and training.
Given the increased risk of non-compliance, the CMA has signaled it will support firms who want to do the right thing, and focus on the most egregious breaches first. Take this time to understand the potential impact of the DMCC on your business, and the processes required to demonstrate compliance and take the steps to prevent consumer harm.
For more insight and guidance, get in touch with Tom Middleton or Helen Trusler.
Learn more about how our Regulatory economics and finance services can help you
[2] New measures unveiled to crack down on subscription traps - GOV.UK
[1] Hotel booking sites to make major changes after CMA probe - GOV.UK
