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Will deterrents against firms that rip off consumers and businesses work without sharper teeth?

Dear Rocio,

What will new competition and consumer laws mean for businesses and consumers?

Name and address supplied.

Rocio Says: One third of people in the UK experience at least one problem with a product or service every year. These problems can take many forms, although some of the most common Which? hears about include being duped by fake reviews which artificially inflate a product or service’s quality, getting stuck in subscription traps with no easy exit, and lacking an effective avenue of complaint or redress when things go wrong.

The consequence isn’t just potential financial loss, but stress and frustration and a weakening of trust between the businesses and their customers.

Encouragingly, the Government put legislation before parliament this week to try to put those harmful practices to an end. The Digital Markets, Competition and Consumer Bill is a pivotal step towards making markets in the UK work better for consumers and businesses, and to support the UK economy.

New laws will hand the regulator, the Competition and Markets Authority (CMA), tougher powers, including stricter enforcement and, crucially, the ability to fine firms up to 10 per cent of their annual turnover if they break the rules. Without sharper teeth, the deterrent against firms ripping off consumers doesn’t work.

Take the example of Viagogo. The secondary ticketing site brazenly broke consumer law by misleading customers over the availability of tickets. The CMA’s lack of effective powers were illustrated by the lengthy court proceedings it needed to embark on just to get Viagogo to back down. This took nearly six years and a lot of the CMA’s time and resources.

Consumers and businesses are also impacted by a lack of competition in digital markets that are now central to all our lives. At present, a handful of powerful tech giants, such as Google and Meta, dominate, which reduces customer choice by shutting out smaller businesses vying for a slice of the pie. Too often, new and innovative companies are bought by tech giants in so-called killer acquisitions. This can not be good for consumers or the wider economy.

For businesses, new regulation is needed to help them compete on terms not dictated by the biggest tech firms. Where the likes of Amazon, Apple, Google and Meta were once disruptors, they are now entrenched stalwarts, growing their share of markets evermore. A Digital Markets Unit, which will operate out of the CMA, will get much needed new powers to clip tech giants’ wings where it’s needed to create a fairer economy for SMEs.

A fairer economy, too, for consumers. After all, it is all of us who help businesses thrive by buying their products and services, and who support the growth of new firms by trying innovative products and services. Shoppers are much more likely to part with their hard-earned money if they can see a safety net beneath them.

Which? has long campaigned for our consumer protections and competition law to be fit for a digital age. New laws have the potential to be genuinely world-leading. We will be following developments in Parliament closely to ensure regulators are given the powers they need to hold businesses that break the law accountable, and ensure effective competition in digital markets.

Rocio Concha is Which? director of policy and advocacy. To have your question featured on this page, email [email protected]

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