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In a news release announcing the Bill, the government boasts that the CMA will have the authority to punish companies up to 10% of their annual global revenue for mistreating customers.
On its website, the British Retail Consortium forewarns of "sharper teeth" for the CMA and expresses concern that the watchdog will soon have authority resembling that of the Information Commissioner's Office (ICO).
Even The Guardian was astounded by the idea that significant internet shops and international technology companies could be hit with "hefty," "multibillion-pound" fines.
Following up on our recent summary of the Bill, we examine if these headlines have actually overlooked the Bill's more potent powers.
Do all the fines in the bill?
The Bill gives the CMA the authority to impose financial penalties on rogue retailers directly, and the CMA has a wide range of different sorts and degrees of penalties at its disposal. In fact, there were so many fines that the government produced a table listing them all.
To name a few, there is a fine of up to £300,000 or, if greater, 10% of global turnover for violating consumer protection legislation. If undertakings granted to the CMA are broken, there is a penalty of up to £150,000 or, if higher, up to 5% of a company's annual global revenue.
Businesses can accrue additional daily fines akin to taxi fares in addition to fixed penalties for some violations.Pound signs are scattered throughout.
You're out of (pocket) money after a few strikes (and months) have passed!
There is undoubtedly a chance that businesses will receive a substantial fine, but only those that continue their non-compliant behavior in spite of the CMA's warnings are likely to experience fines that are on par with those levied by the ICO - and possibly not for months.
Consider the punishment for violating consumer protection laws. The CMA has to clear a number of hurdles before it can impose a penalty.
The CMA must, first and foremost, have a good basis to believe that a company has violated consumer protection rules in the past, is doing so now, or is likely to do so in the future.
The CMA will then probably launch an inquiry. The CMA can only issue the company a provisional infringement notice after this inquiry has begun and after it has established reasonable reasons.
The business has the opportunity to convey its own perspective by making representations to the CMA following the issuance of the provisional infringement notice. By altering its behavior, the company has the chance to lessen the likelihood that the CMA will impose a penalty or the severity of any penalty.
The CMA can only issue the business with a final infringement notice once the window for making submissions has passed. Even then, the business is protected by having a 60-day window in which to file an appeal with the High Court.
Therefore, consumers shouldn't anticipate sanctions to be implemented immediately.
What additional powers would be consistent with the Bill?
The ability to seek to the court for an online interface order or to directly issue an online interface notice to enterprises are two new CMA authorities that have not drawn much attention. When the CMA thinks a company has committed, is committing, or is likely to commit a relevant infringement, these powers are available.
The CMA can employ takedown requests known as online interface notifications to compel companies to take down their websites, edit or remove certain online content, display warning messages, or even confiscate their domain names.
The CMA has very little authority to publish web interface notices. There cannot be any other 'wholly effective' way to halt or forbid the business from breaking the law that is now accessible. The notice must also be essential, in the opinion of the CMA, to prevent the risk of substantial harm to the interests of all consumers.
It appears likely that the CMA will only have the option of issuing an online interface notice in extreme cases where a company's noncompliance necessitates fast and urgent action to stop a pervasive consumer rip-off.
The CMA will typically need to request an online interface order from the court. As a result, the courts, not the watchdog, still have the final say about any use of these powers.
Should companies be ready for the closure of their online stores?
Businesses may have good reason to worry about how the Bill may affect their regular internet operations.
On the basis of a few consumer complaints, it seems unlikely that the CMA will request orders to address specific instances of noncompliance or to stop online shops from operating under unfair terms and conditions.
Before actually asking for the order or levying a fine, the CMA is more likely to threaten such orders as a means of pressuring non-compliant enterprises to alter their behavior.
Focus is placed on unfair business activities that are prohibited by the Consumer Protection from Unfair Trading Regulations of 2008. Could customers seek the removal of "lots of people are looking at this" type messages from internet shops if they feel that they are pressuring customers?
As part of its focus on "problem" sectors, the CMA may also submit an application for web interface orders. Could the CMA use such orders as part of a crackdown on "greenwashing" to require FMCG and fashion companies to remove false environmental claims?
The time has come for companies who do business with customers online to do an inventory. Businesses that want to reduce risk should examine every aspect of their online presence, paying special attention to statements made on their website, in promotional emails, on social media, and during the online consumer sales process.
