A major reform of competition and consumer protection law is coming soon to the UK. The long-awaited Digital Markets, Competition and Consumers Bill will make major changes to the way consumer protection law is enforced. The reforms will impact almost any business selling to consumers, including those in the food and drink sector. While the draft law is being discussed in Parliament now and some details could change, the fundamentals of the Bill are reasonably settled and likely to be reflected in the final law when it comes into force.
We have summarised four key things food and drink businesses need to know about the reforms:
Competition and Markets Authority (CMA) – A regulator with teeth
The CMA is the UK's competition enforcement authority and has a mandate to enforce consumer protection law. At present, the CMA's powers in this area are weak – it must take businesses to court in order to take enforcement for breaches of consumer protection law.
The Bill will enhance the CMA's powers to directly enforce consumer protection law, similar to the extensive powers it exercises for competition law enforcement. That means the potential for substantial fines, enforcement orders, painstaking investigatory powers, and a well-resourced and capable regulator.
The CMA has already been leveraging its existing powers to extract behavioural change in various sectors, including fast-moving consumer goods and the fast fashion sector. Enforcement risk for breaching the consumer protection laws will only increase when the Bill becomes law.
The CMA is increasingly focused on greenwashing, and on businesses making misleading environmental claims – and how these activities may be in breach of consumer protection laws. The CMA has published guidance on the subject, and has already started taking investigatory action against companies.
Greenwashing will continue to be a focus for the CMA. Businesses will need to take even more care when claiming green benefits for their products and services – for instance, relating to the carbon intensities and relative 'environmental friendliness' of food and drink products.
Collective action against UK water companies and the oil and gas sector shows that legal risk is increasing for companies in respect of their environmental activities. The enhanced powers of the CMA will only add to that risk.
Updated requirements for contracts
The Bill will restate and re-organise a lot of the existing consumer protection law provisions, including the Protection of Unfair Trading Regulations 2008, which are restated in the Bill with largely the same effect.
New duties will be introduced for traders in relation to 'subscription contracts', consumer savings schemes and Alternative Dispute Resolution provisions in consumer contracts.
Food and Drink sector businesses will need to review their contracts to ensure compliance with these new requirements.
Fake reviews to be tackled
Fake reviews have been in the news recently – with increasing concern around businesses using services that post fake reviews on popular platforms such as Google or Facebook, ultimately misleading consumers.
The Bill introduces powers for the Government to make secondary legislation (i.e. new regulations) which could deal with fake reviews. Unlike the Bill, new regulations would not need to go through the full Parliamentary process. The Government has signalled a willingness to intervene to tackle fake reviews and will consult on a further law to address this issue, so we can expect further developments in this space.
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