Assessing the DMCCA: Against stricter consumer enforcement, economics is the best defence

Operating in this new legal context, businesses will need a better understanding of how their sales practices influence customer decisions, and what constitutes consumer harm.

Here, we look at how economic analysis can help companies stay one step ahead.

How the law has changed and why it matters

New legislation, the Digital Markets, Competition and Consumers Act (DMCCA), came into force in April this year. The DMCCA strengthens consumer protection rules in several areas, including a ban on fake reviews and ‘drip pricing’.

The DMCCA has also granted the CMA new powers to enforce consumer law. The regulator can now impose fines of up to 10% of a company’s global annual turnover, as well as personal fines of up to £300,000 for senior executives.

This marks a shift in how consumer law is enforced. Previously, the CMA could only do this by taking companies to court. Now, the regulator can impose fines directly, without the need for litigation, meaning swifter and more substantial consequences for non-compliant businesses. 

Navigating risk, demonstrating fairness

The DMCCA ushers in a more aggressive enforcement era. For businesses, understanding how customers make decisions, and how design choices influence them, will be central.

Consumer protection infringements often hinge on whether a sales practice caused the ‘average consumer’ to make a different ‘transactional decision’. But that test can be complex. What counts as a transactional decision, and how do you prove its distortion? It’s not as simple as a customer buying a product – even joining an online queue or clicking through to a site could count.

Given the CMA’s new powers, it’s more important than ever for businesses to understand how a transactional decision might be defined in their market, and what constitutes ‘the average consumer’. What’s more, with further new rules on subscription contracts and ‘buy now pay later’ services, coming into force in 2026, now is the time to start thinking ahead.

The role of economic analysis

Economic analysis can be a powerful tool for defence in the event of an investigation by the CMA. But its value goes beyond this. It can help businesses anticipate the effects of regulatory changes, build compliance into their strategies early, and demonstrate that their practices support fair consumer outcomes. Behavioural economics and data science can help companies:

• Define and evidence the transactional decision. Online behavioural data such as session data and funnel analysis, along with survey triangulation, can map how consumers move through a journey, where they drop out, and what influenced their decisions.
  For example, a countdown timer might encourage a consumer to buy an item earlier than planned. Perhaps that person was going to wait until payday, but seeing the timer prompted an immediate purchase. No money was lost – they were eventually going to buy the item anyway – but the sense of urgency may not have been justified. Was there harm?
•  Assess the impacts of online choice architecture. Revealed preference models or discrete choice models, as well as A/B testing and experimentation, can analyse how consumer decisions change with different choice architectures. Businesses can test alternative interface designs to understand how they impact user behaviour, in terms of conversion, churn, and drop-out. This type of analysis also helps businesses test their online choice architecture for disproportionate impacts on vulnerable groups.
• Quantify harm and assess redress. Economists can model the counterfactual: what would have happened if the alleged infringement hadn’t taken place? That means comparing actual outcomes to realistic alternatives, and the ability to quantify seemingly intangible benefits or costs, like ‘inconvenience’ or ‘time wasted’. This can be vital to businesses in understanding the value of their customers’ decisions, and in challenging the extent of CMA’s assessments or redress schemes.
• Assess business impacts. If companies have to make changes to website designs or sales processes, either proactively or because of a CMA decision, economic analysis can model how these changes will affect the business commercially. Companies can use analysis to test alternative designs that meet regulatory expectations without harming business.

Why this matters for companies

In this stricter environment, businesses should be ready to demonstrate, with evidence, how their practices affect consumer behaviour. Unlike legal compliance, economic analysis focuses on the real-world effects of those practices. Are consumers misled? Are they harmed, and if so, what was the realistic cost of that harm? Could changes to a business model mitigate the harm? These are questions economists are well placed to answer, particularly through the tools of behavioural economics and data science.

In the new landscape, this kind of analysis could make the difference between a damaging fine and a more proportionate outcome.

To speak to our Consumer Regulation team about navigating the impact of the DMCCA, contact Tara Chapman .