Britain’s competition watchdog will be given new post-Brexit powers to protect online consumers from rip-offs and levy huge fines to companies in breach of regulations.
The proposals seek to streamline and strengthen the powers of the Competition and Markets Authority (CMA), as well as seeking to drive innovation and growth in the UK markets.
The CMA will be able to conclude investigations faster and impose stronger penalties on companies breaking the law, with new powers to hit traders in breach of consumer law with fines of up to 10% of their global turnover.
Businesses that refuse or give misleading information to enforcers could face civil fines and directors who make false declarations to regulators could be disqualified.
The CMA will also be able to bypass the courts to enforce consumer law, speeding up the process and it will also be able to block a wider range of harmful mergers, where businesses buy rivals before launching new products.
But smaller businesses could be shielded, with the government proposing that mergers between companies whose turnover is less than £10 million would be removed from the CMA’s merger control.
The government said it would provide the CMA with regular steers on which areas of the economy to focus investigations on and the CMA will be required to provide regular reports on the state of competition in the UK.
Business Secretary Kwasi Kwarteng said: “The UK’s economic recovery relies on the strength of our open markets and consumers’ faith in them.
“By delivering on our commitment to bolster our competition regime, we’re giving businesses confidence that they’re competing on fair terms, and the public confidence they’re getting a good deal.”
The reforms will target the “consumer catfishes” behind phoney online ratings, with the new rules making it automatically illegal to pay someone to write or host a review.
Businesses offering subscription-based services will be required to make it clear what shoppers are signing up for and allow them to cancel easily.
The government will also introduce a change in law, which will mean customers are safeguarded from prepayment schemes such as Christmas savings clubs.
This change is intended to prevent a repeat of scandals such as Farepak, where people on low incomes lost Christmas savings when the company collapsed, the government said.
In the used car and home improvement sectors, where people often make a big one-off purchase, it will become mandatory for businesses to take part in arbitration or mediation where disputes arise over a transaction, helping avoid consumer gripes being dragged through the courts.
A consultation has also been launched seeking views on the objectives and powers of the Digital Market Authority.
Proposals include placing a mandatory code of conduct on tech giants with deep-rooted market power to drive up competition and new powers to issue fines of up to 10% of turnover for serious breaches.
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It said the proposed new measures are expected to help British start-ups compete more fairly against big tech firms.
Rocio Concha, Which? director of policy and advocacy, said: “The pandemic has highlighted weaknesses in UK consumer protections that have allowed unscrupulous businesses to exploit customers, while our competition regime has been in need of an update to deal with the challenges of digital markets.
“The Government must now ensure that these proposals are swiftly implemented, and are underpinned by the right resources at a local and national level so that consumer protection is strengthened.”