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As we outlined in our previous blog post, the Competition and Markets Authority (“CMA”) now has direct enforcement powers in consumer protection law under the Digital Markets Competition and Consumers Act (“DMCC Act”). This means that the potential consequences of non-compliance with consumer law have materially increased, with the CMA having the ability to impose penalties of up to 10% of global turnover alongside other measures, including issuing directions (which can include consumer redress requirements). At the same time, the scope of the rules regarding unfair commercial practices has expanded (sometimes significantly) from the former rules under the Consumer Protection from Unfair Trading Regulations (2008) (“CPUTRs”).
In the first of a series of consumer deep dives, we explore the new rules on unfair commercial practices, including a detailed breakdown of the relevant tests, risk areas, and compliance tips for businesses.
Under the DMCC Act, as was the case under the CPUTRs, some commercial practices are always considered unfair, whilst others will only be unfair if they impact a consumer’s commercial decision-making.
There are three types of practice which are always deemed unfair, regardless of their impact on consumer decision-making:
The introduction of fake reviews and omissions of material information in an invitation to purchase mark new additions to the suite of “banned practices” under the DMCC Act. Under the new consumer regime, these practices will always be considered unfair, in contrast to the position under the CPUTRs, when enforcement against such practices was subject to the transactional decision test.
We will cover new rules on fake reviews and drip pricing in detail in future deep dives and, as most businesses will be familiar with the other banned practices under the DMCC Act, will focus the rest of this blog on commercial practices which may be considered unfair in certain circumstances.
There are four types of commercial practice which may be considered “unfair” if they impact consumer decision-making:
Businesses need to consider how practices impact different types of consumers. The DMCC Act identifies three separate categories of consumer specifically:
The CPUTRs provided that a decision to purchase goods or services, or to vary the terms of the contract was a transactional decision. Dictum from the Care UK judgment (23 July 2021) further indicated that whilst a transactional decision was not confined to a final “go/no go” decision under the CPUTRs, the concept shouldn’t expand beyond decisions “directly related” to that decision. For example, “information gathering” steps (such as taking a decision to visit a care home, or accepting a tour of a care home) were considered in that case to precede a transactional decision.
Under the DMCC Act, however, the concept of the transactional decision has expanded to capture the decisions “related” (i.e. leading up) to a decision to purchase a good or service. CMA guidance confirms that this concept now captures, for example, clicking through a website or making the decision to view a property. As a consequence, businesses will likely need to undertake more diligence to ensure compliance throughout the customer journey.
As was the case under the CPUTRs, under the DMCC Act, there is no need for actual customers to be affected by a commercial practice. There is no prescribed way to determine whether consumer behaviour has been impacted by a commercial practice, however, it bears note that the threshold for finding a commercial practice “unfair” has been reframed in more general terms under the DMCC Act.
Under the CPUTRs, a commercial practice was unfair if it “materially distorted” or was “likely to materially distort” the economic behaviour of the average consumer. Under the DMCC Act, a commercial practice need only have “likely” impacted a consumer’s transactional decision-making.
CMA guidance is relatively quiet on the subject of how the CMA will approach its assessment of whether and how consumers are impacted by commercial practices. A/B testing, surveys, reviews of internal documents, online testing and reviews of sales patterns against changes in commercial practices may be used in the CMA’s assessment. In practice, determining whether a consumer would have taken the transactional decision they did absent the commercial practice in question is a challenging exercise in detective work.
25 April 2025
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