New legislation aimed at stamping out unfair practices and promoting competition in digital markets is set to come into effect later this year, after moving to committee stage in the House of Lords.

The Digital Markets, Competition and Consumers Bill, which is expected to receive Royal Assent this spring, will enhance the power of the Competition and Markets Authority (CMA) to crack down on breaches of consumer protection law. This will include, for the first time, the ability to directly impose fines. Firms that break the law could be fined up to 10 per cent of their global turnover.

The Bill will also outlaw a number of widespread digital business practices, including the use of fake reviews and ‘dripped fees’, where consumers are shown an initial price for a good or service while additional fees are revealed later in the checkout process. Research commissioned by the Department for Business and Trade suggests that the practice is prevalent across the entertainment, hospitality, transport and communication sectors.

According to the CMA, the new legislation will establish a tailored, evidence-based and proportionate approach to regulating the largest and most powerful digital firms to ensure effective competition that benefits everyone.

A new ‘targeted regime built for the digital age’ will be overseen by the Digital Markets Unit in the CMA and will use a proportionate approach to hold digital firms accountable for their actions. The regime will set rules to prevent firms with Strategic Market Status – those with substantial and entrenched market power, in at least one digital activity – from using their size and power to limit digital innovation or market access.

The CMA will be endowed with bolstered investigative and enforcement powers aimed at identifying and stopping unlawful anti-competitive conduct more quickly. Changes to the competition framework are also being introduced, in a bid to make it easier for the CMA to take action against mergers which are deemed harmful to UK consumers and businesses.