Business Responses to Changes in the Legal Environment (AQA A Level Business): Revision Note

Legal change: consumer protection

The new CMA fining powers

• The Competition and Markets Authority (CMA) is the UK government body responsible for ensuring that markets work fairly and competitively

  • It investigates mergers, cartels, and practices that may harm consumers or restrict competition

• From April 2025, the Digital Markets, Competition and Consumers Act 2024 gave the CMA the power to investigate and fine businesses directly for breaching consumer law, without needing to go through the courts first

  • Fines of up to 10% of a business's global turnover could be applied

• Businesses could no longer assume a lengthy court process would give them time to adjust or negotiate

  • Enforcement became faster and more direct

  • It raised the financial and reputational stakes of getting pricing and marketing practices wrong

Example

In April 2026, the CMA issued its first fine - of more than £4 million - under these new powers to the Automobile Association (AA) for drip pricing.

The case forced the AA and other businesses across the sector to review and simplify how the full cost of a product is shown to customers upfront, rather than risk a similarly fast, direct penalty.

Legal change: employee protection

The Employment Rights Act 2025

• The Employment Rights Act 2025 included a right for zero-hours workers to

  • Be offered a contract reflecting the hours they actually work

  • Have reasonable notice of shifts

  • Receive compensation if a shift is cancelled or cut short at short notice

• Businesses in sectors that rely heavily on zero-hours staff, such as hospitality and retail, now have to predict and guarantee hours in a way that may conflict with unpredictable customer demand

• If shifts are cancelled late, they also need to compensate workers, paying a fair proportion of their lost earnings

• Implementation of the law was phased through 2026 and 2027

  • Many hospitality and retail employers reviewed their scheduling practices and staff contracts ahead of time

  • This included

    • Auditing how many hours their zero-hours staff typically work so they can offer legally-compliant contracts

    • Budgeting for shift-cancellation compensation, rather than waiting until the law takes effect to act

Example

Almost 90% of McDonald's 170,000 UK staff are on zero-hours contracts.

The company's CEO has said he supports the new law, believing it will make things fairer across the industry.

However, because so many of its staff are on these contracts, McDonald's faces a big job checking how many hours people actually work and redesigning its scheduling before the new rules start in 2027.

Legal change: competition policy

The Fuel Finder scheme

• After finding that fuel retailers were not always passing on savings to drivers, the CMA recently introduced the Fuel Finder scheme

  • This required every UK petrol station to report any price change within 30 minutes

  • From May 2026 fines were issued to petrol stations that did not comply

• Petrol station chains had to build new systems to report price changes instantly, rather than updating prices whenever suited them

  • This meant losing the ability to quietly keep prices high, since comparison apps and sat-navs would now show real-time prices from every nearby station

• Fuel retailers registered for the scheme and connected their till systems to the new open data network, so that customers could compare live prices before choosing where to fill up

  • This created direct pressure on petrol stations to compete on price

Example

Motor Fuel Group (MFG) runs hundreds of petrol stations across the UK - more than almost any other fuel retailer. Because it has so many sites, rolling out a system to report live prices at every single one was a much bigger job for MFG than it would be for a business with just a few petrol stations

Legal change: environmental protection

The UK's ZEV Mandate

• Since January 2024, the UK's Zero Emission Vehicle (ZEV) Mandate has legally required a rising share of every manufacturer's new car sales to be zero-emission

  • This was 22% in 2024, rising to 28% in 2025

  • A £15,000 fine for every non-compliant petrol or diesel car sold above the allowance can be applied

• Ford's electric car sales made up just 3.5% of what it sold in early 2024, far below the 22% target, and Nissan's were around 12%

  • Several major manufacturers were at real risk of missing the target and facing huge fines

• Rather than paying fines, manufacturers used flexibilities built into the scheme

  • They bought spare credits from manufacturers who had sold more electric cars than required, such as Tesla, or traded allowances with each other

  • Across the whole industry, this helped carmakers reach an average of 24.3% zero-emission sales in 2024, just above the target, without most individual manufacturers paying a single fine