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In our regular feature Professor Henry Blair, Senior Counsel at Motor Industry Legal Services (MILS), answers your questions. In this month’s edition he looks at the impact of the Digital Markets, Competition and Consumers Act (DMCCA) on the motor sector
Q: What is the Digital Markets, Competition and Consumers Act, and how important will it be?
A: Sarah Cardell, the Chief Executive of the Competition and Markets Authority (CMA) has heralded the DMCCA, which became law on 24 May 2024, as “a watershed moment in the way we protect consumers in the UK and the way we ensure digital markets work for the UK economy.” So, it’s not an overstatement to say that it’s the most significant reform of competition and consumer protection in decades.
In a nutshell, the Act seeks to ensure “free and vigorous competition amongst businesses—both online and on the high street” and to empower the CMA to “crack down on unfair practices.”
The first aim probably isn’t relevant to the daily operations of the motor industry. The digital markets stuff focuses on large technology companies. The competition law adjustments will impact mergers and acquisitions, but they shouldn’t have much to do with everyday business.
Changes to consumer protection, however, are monumental.
Most importantly, the CMA may now take direct enforcement action against businesses that breach consumer protection rules, without having to go to court. The CMA will have wide-ranging information-gathering powers, and it can fine businesses that fail to cooperate with an investigation 1% of their global annual turnover or £30,000. If the CMA finds that consumer protection laws have been broken, it may give directions and impose fines, mirroring its competition powers. These fines can be as high as 10% of a business’s annual turnover or £300,000.
When the Act comes online this autumn, we expect the CMA to flex its new muscles. There will almost certainly be an escalation of enforcement actions with hefty fines following, particularly with respect to hidden fees and fake reviews. Details are still in development—the CMA is currently consulting with interested parties and will likely issue supporting guidance on the Act’s implementation and intended effects very soon.
Q: With Labour now in power, what new rules can the motor industry expect with respect to employment law?
A: It might have been Niels Bohr or Yogi Berra who said it, but it remains true either way: “Prognostication is hard, especially about the future.” Still, we have a general direction of travel based on comments made leading up to and during the election cycle. I’m going to focus on what may be the two most significant changes (hat tip to my colleague, Paul Carroll, for these insights).
First, Labour has suggested that it will seek to give full employment law rights to employees on day one of a new job. Currently, an employee does not benefit from full employment protections until they’ve been on the job for a period of two years or more. Prior to that, an employer can dismiss an employee without fear that they can pursue a claim for ordinary unfair termination. This is true even if the employer does not have a “potentially fair” reason for the dismissal.
The UK has never provided employees with the sort of expansive protection that the Labour Party has suggested. If employees are given full employment law protections out of the starting gate, employers are going to need to adjust quickly and implement a defined and robust performance management process. They’ll need to ensure that prior to any dismissal they have undertaken a fair disciplinary process, including a face-to-face meeting with a right to be accompanied.
Second, the Labour Party has stated a strong desire to include tougher penalties on employers who breach tribunal orders, including instituting a personal liability for Company Directors. This suggestion has received surprisingly little popular press attention, but it could mark a fundamental change in the way that law practically functions.
Q: How important is it to consider alternative dispute resolution (ADR)?
A: Once upon a time, ADR, like mediation, was merely an “alternative” to courts. It was an entirely optional process that gave parties flexibility. Times they are a changin’, as Bob Dylan might say.
It has long been true that a court could deny a successful party their costs if they unreasonably refused to participate in mediation. Over a decade ago, Lord Briggs put it this way: “the constraints which now affect the provision of state resources for the conduct of civil litigation . . . call for an ever-increasing focus on means of ensuring that court time, both for trial and for case management, is proportionately directed towards those disputes which really need it, with an ever-increasing responsibility thrown on the parties to civil litigation to engage in ADR.”
Law on the books and law in practice aren’t always the same. But several recent cases this year suggest that courts are getting more and more serious about funnelling parties into ADR. The bottom line: if you’re in a legal battle, you simply must consider mediation before barrelling forward with the matter in court.
Professor Henry Blair, Senior Counsel, MILS