The Government is committed to ensuring that fair and open competition drives growth and innovation in the AI ecosystem. The Digital Markets, Competition and Consumers Act equips the Competition and Markets Authority (CMA) with new, faster and more effective tools to address significant competition issues in AI markets, as well as in broader digital markets where AI plays a role. The regime allows the CMA to impose significant penalties on firms that fail to comply, ensuring robust accountability. Additionally, Strategic Market Status (SMS) firms will be subject to new merger reporting requirements, which will enable proactive oversight of market consolidation and maintain competitive dynamics. The CMA, as an independent regulator, will determine how, when, and if to exercise these new powers. The Government is working closely with the CMA to ensure the digital markets measures commence in January 2025. The CMA is using its existing markets and mergers tools to analyse AI markets and assess competition impacts with this emerging sector. Government response to Committee conclusions and recommendations 42 and 43