DCMS publishes policy paper on digital competition regulation

The question

How does the Government plan to drive growth and innovation in digital technologies? 

The key takeaway

The Government’s principles outlined in its policy paper highlight the light touch approach it wishes to take with regard to the regulation of digital technologies. Intervention is likely to only occur on the most pressing issues of the future. 

The background

On 6 July 2021, the Department for Digital, Culture, Media and Sports (DCMS) published a policy paper Plan for Digital Regulation, setting out the UK Government’s principles for digital regulation in relation to the continued growth of this sector as well as ensuring a continued positive effect on the UK economy. The Government also indicated that it will consult on digital competition regulation regime proposals in summer 2021 in order to facilitate competition in the industry. 

The development

The policy paper outlines the Government’s overall vision for ensuring effective regulation of the digital technological landscape. The paper sets out new principles which will guide how the Government will design and implement the regulation of digital technologies as well as some practical proposals for how it will ensure a clearer and more streamlined regulatory landscape with the aim of encouraging innovation and competition. 
The Government explains that by “digital regulation” it is referring to the range of regulatory tools available that are used to manage the impact of digital technologies on people, businesses and the economy. The plan sets out practical proposals to support a more streamlined regulatory landscape, including options to improve information sharing between regulators to reduce duplicate requests on industry and looking at whether additional duties for digital regulators to consult and cooperate with each other are needed.

The plan sets out three guiding principles policymakers must follow, and states that the Government should only regulate when absolutely necessary and do so in a proportionate way. These principles are: 

• actively promote innovation: policymakers must work to back innovation where possible by removing unnecessary regulation and burdens. Where intervention may be necessary, regulators will take a light touch approach utilising non-regulatory measures such as technical standards first
• achieve forward-looking and coherent outcomes: the digital landscape is constantly evolving and can have a profound effect on different elements of the socio-economic landscape. Policymakers therefore must make sure that new regulations complement existing and planned legislation to ensure seamlessness in the introduction of additional regulation with very little impact on businesses, and
• exploit opportunities and address challenges in the international arena: digital technologies have an international reach; therefore, policymakers should take into account international considerations when forming regulations including existing international obligations (including trade deals), expected future agreements, and the impact of regulations developed by other nations.

Furthermore, in order to actively encourage competition, which has been identified as critical to the long term sustainability of the UK digital technologies landscape, the Government has established the Digital Markets Unit (DMU), which is to be equipped for proactive oversight and swift action on competition issues before they become significant issues. The Competition and Markets Authority (CMA) will also be supporting the DMU. Additionally, the Government consulted on digital competition regulation regime proposals this summer. This consultation closed on 1 October 2021. 

Why is this important?

The policy paper and the overarching principles demonstrate the Government’s commitment to creating a proportionate, innovation-focused regulatory system that will allow for continued, unencumbered growth of the digital technology sector. 

Any practical tips?

While the encouragement of competition is positive, larger technology organisations will need to be mindful of their market power and position. Keeping updated on how the regulators will assess competition and when they assess that intervention is necessary will be key. As well as this, being mindful generally of how the Government applies these principles will help companies ensure they are operating within the desired remit.