The UK Competition and Markets Authority (CMA) has taken two steps under the Digital Markets, Competition and Consumers Act 2024 (DMCC Act), marking an escalation in UK consumer enforcement risk for businesses.
For the first time, the CMA has:
- Imposed a financial penalty directly for a breach of consumer protection law under the DMCC Act; and
- Used the DMCC Act’s new formal settlement mechanism to conclude a consumer investigation.
Case Overview
The action concerns The AA, a UK roadside assistance provider. The CMA investigated how The AA presented certain mandatory fees to consumers. It concluded that these fees were not displayed prominently as part of the total price for driving lesson services and instead appeared later in the purchasing journey. The CMA considered this to constitute “drip pricing,” now expressly prohibited under the DMCC Act.
The investigation was resolved using the Act’s formal settlement procedure. As part of the settlement, The AA agreed to:
- Pay a £4.2 million financial penalty; and
- Repay more than £760,000 to affected consumers.
Why This Matters
This case is noteworthy for three reasons.
- First use of the CMA’s new fining powers. The CMA has argued that its ability to enforce consumer protection law was constrained by limited sanctioning powers. The DMCC Act represents a major expansion of those powers, enabling the CMA to impose fines directly on businesses it finds to be infringing consumer law. This case is the first time those powers have been exercised and signals that noncompliance will be met with sanctions. Consumer‑facing businesses — including those taking a risk‑based approach to compliance or targeting UK consumers from overseas — may want to reassess their exposure in light of this enforcement regime.
- Enforcement focus on “drip pricing.” The DMCC Act introduced an offence targeting drip pricing, where mandatory fees are not included in the upfront price and are instead revealed incrementally during the purchasing process. The CMA has noted that this is an enforcement priority, and it is notable that its first use of its new fining powers targets this practice.
- First use of the formal settlement mechanism. This is also the first example of the CMA using the DMCC Act’s formal settlement route, which allows investigations to be resolved more swiftly. While settlement can reduce management time and uncertainty, it involves an admission of infringement and can attract negative publicity. Businesses subject to investigation may wish to seek legal counsel when considering whether settlement is the right approach.