The DMCCA’s consumer regime: a new anti-greenwashing toolkit?
On 6 April 2025, the consumer-focused parts of the Digital Markets, Competition and Consumers Act 2024 (“DMCCA”) came into effect, implementing a significant change in the UK’s consumer law regime. Most notably, it gives the Competition and Markets Authority (“CMA”) substantial new investigatory powers, including the ability to impose fines of up to 10% of a company’s global turnover for breaches of consumer laws.
In this Perspective, we consider how the regime will apply in particular to business making false or misleading environmental claims (also known as greenwashing) and the importance to the CMA of combatting such greenwashing.
Key changes
Part 3 of the DMCCA introduces new direct enforcement powers for the CMA in respect of specified consumer regulations, including under the new regime introduced by Part 4 of the DMCCA (effective from 6 April 2025) as well as the predecessor regulations provided in the Consumer Protection from Unfair Trading Regulations 2008 (“CPUTRs”), which will continue to apply to relevant actions (such as misleading statements and omissions) occurring before that date.
The CMA will be able to investigate potential breaches of consumer protection law and, where it finds a breach, require companies to comply with directions (such as removing offending statements from public materials) and/or issue a fine of up to 10% of a company’s worldwide turnover, including the turnover of any parent company or subsidiaries. Additionally, during an investigation, the CMA will have the power to require undertakings from a company, for example to prohibit it from making statements or engage in practices which may constitute an infringement. The CMA is also subject to a new duty of expedition, requiring it to have regard to the need to make a decision or take action as soon as reasonably practicable, including in relation to breaches of consumer law.
This is a significant change, aligning the CMA’s powers in respect of consumer law more closely with its powers under competition law, and a departure from the previous court-based enforcement regime (which is also replaced under Part 3). These new powers will apply to conduct from 6 April 2025 onwards. For conduct before 6 April 2025, the old law (including the CPUTR) will continue to apply.
Greenwashing under the DMCCA
While the DMCCA does not contain specific provisions relating to greenwashing, it is clear that practices amounting to greenwashing may infringe the consumer protection elements of the law. Indeed, a proposed amendment which would have made greenwashing an automatically unfair practice was rejected by Parliament on the basis that such practices were already covered by the prohibition on misleading consumers.
The CMA has a broad regulatory remit and, in recent years, greenwashing has been a particular focus for it. The CMA has already published several pieces of guidance on greenwashing, including the Green Claims Code and, following its investigation of and enforcement against three fashion labels, specific guidance in relation to the fashion industry (in respect of which, see our Perspectives blog: Making environmental greenwashing less fashionable: CMA guidance). These documents are based on the existing CPUTRs, but businesses would be prudent to assume that the rules and guidance provided will continue to apply to the materially similar regime under the DMCCA, only now buttressed by the CMA’s new enforcement powers.
In addition, following a consultation, on 4 April 2025 the CMA published guidance on unfair commercial practices, which includes several examples of practices which would constitute ‘greenwashing’, such as marketing a product as being ‘greener’ while omitting material information as to what qualifies the product for that description. The guidance on unfair commercial practices also refers to the Green Claims Code for a definition of misleading environmental claims, which “occur where a business makes claims about its products, services, processes, brands or its operations as a whole, or omits or hides information, to give the impression they are less harmful or more beneficial to the environment than they really are.”
According to the guidance on unfair commercial practices, the types of information which may impact on a consumer’s purchasing decision if it is false includes the products benefits or risks, which the CMA notes also encompasses the environmental impact of a product. Further, assessing whether a commercial practice breaches (amongst other things) the prohibition of misleading practices will be judged, where appropriate, by reference to how it affected the ‘average member’ of a vulnerable group of consumers. The CMA notes that consumers who are particularly concerned about the environment may be vulnerable, as they may be more susceptible to misleading environmental claims.
Comment
Greenwashing does not appear to have decreased as an issue in the UK. A large proportion of greenwashing complaints in the UK have been ruled on by the Advertising Standards Authority (“ASA”), and this is likely to continue. The ASA has generally found against companies in respect of advertisements which mislead consumers on sustainability issues, including recent rulings regarding travel and banking services. Further, on 10 March 2025, the CMA’s Chief Executive Sarah Cardell indicated that early enforcement actions following commencement of the DMCC would likely focus on “more egregious breaches”, including “providing information to consumers that is objectively false”. Lastly, on 27 March 2025, the CMA noted in its Annual Plan 2025 to 2026 that it will enforce consumer protection law to safeguard people from harmful and unfair treatment, and noted in this context its work in the previous year on tackling misleading green claims. The CMA may therefore find that greenwashing issues remain plentiful and use its new enforcement powers appropriately.