Competition (Amendment etc.) (EU Exit) Regulations 2020
(4 years ago)
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Lord Callanan
That the Grand Committee do consider the Competition (Amendment etc.) (EU Exit) Regulations 2020.
Relevant document: 30th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, the Competition (Amendment etc.) (EU Exit) Regulations 2020 were laid before the House on 30 September 2020.
From 1 January 2021, the UK’s competition regime will no longer be integrated with the EU’s competition system. Instead, it will function on a stand-alone basis as provided for by the Competition (Amendment etc.) (EU Exit) Regulations 2019, which were approved by Parliament in 2019 to prepare for EU withdrawal. Those regulations will come into force at the end of the transition period, but first they require amendment to reflect the terms of the withdrawal agreement. The purpose of the regulations put before your Lordships today is to implement the UK’s obligations on competition law under the withdrawal agreement and to deliver a separate and sovereign UK competition regime at the end of the transition period. The content of the regulations is therefore separate from both ongoing trade negotiations with the EU and the Government’s consideration of ways to enhance competition in the UK.
So what do the regulations do? They address three broad topics. The first two topics relate to the jurisdiction of anti-trust and merger cases at the end of the transition period. While the UK was a member state of the European Union, the European Commission had jurisdiction to investigate the UK effects of certain anti-trust and merger cases instead of UK competition authorities. This system has continued during the transition period. This means that there will be a limited set of anti-trust and merger cases that relate to the UK which were opened by the European Commission but not completed before the end of the transition period. These cases are dealt with by Article 92 of the withdrawal agreement. I shall refer to them collectively as live EU cases. Article 92 gives the European Commission competence to conclude live EU cases. These cases will be completed under the law that applied to them when they were opened. This arrangement ensures that competition cases which straddle the end of the transition period will be brought to an orderly conclusion, in turn giving legal certainty to UK businesses, regulatory authorities and courts.
The third topic addressed by the regulations relates to commitments accepted and remedies imposed by the European Commission in connection with its anti-trust and merger cases. These commitments and remedies often relate to multiple EU member states, including the UK, and the European Commission is normally best placed to secure compliance with them. In accordance with Article 95 of the withdrawal agreement, the European Commission will remain responsible for the monitoring and enforcement of the UK aspects of such commitments and remedies. However, this responsibility can, by mutual agreement, be transferred from the European Commission to the UK’s competition authorities.
I will now briefly explain the main changes made by the regulations in relation to these three topics. First, with respect to the European Commission’s investigations of live EU anti-trust cases, the regulations amend transitional arrangements made in 2019 to reflect the Commission’s continued jurisdiction over these cases. The amendments ensure that the Competition and Markets Authority can assist the Commission in its investigations of live EU anti-trust cases in the way it currently can under the Competition Act. To implement fully the legal effect of the withdrawal agreement, the regulations restrict the CMA from investigating the UK aspects of a live EU anti-trust case until the Commission’s case has concluded. This reproduces an effect similar to that which arises currently under EU law. The CMA will of course be free to investigate the UK aspects of any anti-competitive behaviour that occurs after the end of the transition period.
Decisions of the European Commission and the Court of Justice of the European Union made in relation to live EU anti-trust cases will be binding in the UK for the purposes of private claims seeking follow-on damages for a breach of competition law. The regulations ensure that UK authorities must consider any relevant penalty issued by an EU body in a live EU anti-trust case when deciding the amount of a penalty to be issued under UK law.
Secondly, the European Commission will continue to have exclusive competence over live EU merger cases, including in relation to any UK elements of the case. This means that, except in certain circumstances, the CMA will not have jurisdiction to review a merger after the end of the transition period if the European Commission began its own review of the merger on behalf of the UK before the end of the transition period. The exception to this rule is where the European Commission is re-examining a merger case following a successful appeal but is not considering the UK aspects of the merger in its re-examination. To prevent an enforcement gap emerging in the UK, the regulations ensure that the CMA can investigate the merger in these circumstances. The regulations amend the transitional arrangements made in 2019 to reflect the European Commission’s jurisdiction over live EU merger cases.
With respect to the transferred UK aspects of EU commitments and remedies, the regulations give to the CMA monitoring and enforcement powers to secure continued compliance with them. These powers are modelled on the CMA’s existing powers to monitor and enforce domestic commitments and remedies. The powers will apply also to sector regulators that enforce competition law concurrently with the CMA.
In addition to the changes made in relation to these three topics, the regulations make technical amendments to the 2019 regulations so that appropriate reference is made to the end of the transition period. Finally, as with the approach taken by the 2019 regulations, the regulations revoke a recent EU regulation on investment screening, which will have no practical effect on the UK beyond the end of the transition period because it relates to information-sharing between EU member states.
The provisions on competition law contained in the withdrawal agreement mean that the UK will move smoothly to a separate and sovereign competition regime. The regulations make only those changes which are necessary to give effect to these provisions and to ensure that the UK’s competition regime functions as intended by the regulations that Parliament approved in 2019. The regulations will provide legal certainty for the UK’s businesses, the CMA and the UK courts. I therefore commend the regulations to the Grand Committee.
Lord Lansley (Con) [V]
I thank my noble friend for his clear and full explanation of these regulations. Perhaps I may start with a little reminiscence. It feels slightly as if I have come full circle because I was a member of the Standing Committee on the Competition Bill in the Commons in 1998. I remember being in opposition at that time and tabling amendments for the purpose of defining the approach to vertical agreements in what became the Competition Act. Nigel Griffiths, who was then the Labour Parliamentary Under-Secretary in the Department of Trade and Industry, said that he thought the amendments were very interesting and might even agree with them. However, he could not possibly accept them because the Government had not yet been told by the European Commission what the structure of vertical agreements would be in the EU regulations. Instead of being rule makers, we were rule takers at that point. We will become rule makers where this is concerned in the wake of our departure from the EU.
Like their predecessors a year or so ago, these regulations set out a comprehensive set of mechanisms for ensuring that there is a transition, without falling through the gaps between EU competition responsibilities and the UK responsibilities being assumed. I will resist the temptation to ask my noble friend about the competition policy aspects of our negotiations with the European Union, albeit that they might in some specific circumstances impact upon how these regulations are interpreted or whether they will survive the deal itself, when we come to legislate for that.
I will make a couple of points, though. For my first, the best example is given by the question of block exemptions for vertical agreements. A number of definitions have to be understood in relation to that, but the one that illustrates the nature of the point I want to make is the threshold of market share for the assumption that a vertical agreement might—not does—have anti-competitive impacts. In the EU regulation, that is a 30% market share.
The issue is: what is the market? Defining the relevant market is very important. There is a whole raft of circumstances in which defining the relevant market when we leave the EU—that is, from 1 January next year—will be a different and potentially debatable proposition. For example, is Northern Ireland in the relevant market for United Kingdom purposes or in the single market? If it is in both, the calculation of the 30% market threshold would be distorted in potentially both jurisdictions. Determining what the relevant market is for a range of different circumstances leads to my first question: what are the Government’s and the Competition and Markets Authority’s intentions relating to the definition of markets in a range of contexts?
My noble friend referred to my second point: the regulations revoke EU regulation 2019/452, which sets up a screening mechanism for foreign direct investment. Appropriately, they revoke it because it will not apply in the United Kingdom. Indeed, as we discovered in recent weeks, it does not apply to the United Kingdom now. It was not introduced in the United Kingdom on 11 October, as it was, in theory, introduced across the EU, but of course in practice only in those member states that have chosen to implement it. Some have; many have not yet. There is a wider move across many EU member states to try to screen for foreign direct investment. It is part of a broader push on the part of the European Commission to understand how far foreign investment and foreign ownership impact on strategic value chains as part of what it describes as strategic autonomy.
In our context, tomorrow the House of Commons will debate at Second Reading the National Security and Investment Bill. What is the point of my referring to this? It is that I wonder whether my noble friend might be able to tell us a little more. It is clearly not the case that the National Security and Investment Bill creates a directly comparable structure to that revoked in these regulations; it is potentially more interventionist than the screening process in the EU regulation, but it is also in its way much less broad in its application. For example, comparing the list of sectors affected, the EU regulation refers to water infrastructure, which is not mentioned in the 17 sectors in the NS&I Bill. The EU refers to elections infrastructure, food security, sensitive information—I am not quite sure what sensitive information is in this context, but the regulation includes it—and freedom and pluralism of the media.
One or two of these issues continue to be covered by the public interest notifications under the Enterprise Act, with which I was involved. Those will continue and will give us potential remedies, but others will not. Indeed, in my view the Enterprise Act needs some amendment for public interest grounds for the media. I hope we will find an early opportunity to do that. So my second and final question to my noble friend is: are the Government considering any further measures to try to screen foreign direct investment and its impact on our critical infrastructure more generally?
Baroness Bennett of Manor Castle (GP) [V]
My Lords, as the Minister outlined, today we are bringing over EU competition regulations into UK law. With only a few score days until the end of the transition period—whatever that is going to look like—there is little chance to make anything other than the fairly minimal and technical arrangements described, although plenty of complications remain, and may well be added to by future legislation, as the noble Lord, Lord Lansley, clearly outlined.
The debate on this SI is also a chance to think about the place of competition in our society. Competition law—or anti-trust law, as the Americans call it—traditionally seeks to maximise competition. In that our current law is clearly failing, with the dominance of a handful of internet companies in cyberspace; the dominance of the great parasite, Amazon, in cybercommerce; and the oligopolistic place of a handful of companies at each stage of our food chain, from seeds and fertiliser supplies to manufacturing fast food.
There is also the fast-growing issue of common ownership—the way in which trading practices and the dominance of a few hedge funds and financial players mean that those companies are owned by a handful of financial firms with no real interest in seeing competition between each of their shareholdings. I would be interested in any comments the Minister is able to make on what plans the Government have to tackle that issue, which has been raised by the OECD, among others, as a growing concern. Small independent businesses, innovators, inventors and creatives are swept up by the logic of our “might is right” business world—bought out, possibly at considerable financial benefit to themselves but at great cost to the rest of us, who are left with a handful of companies dictating what we watch, read, eat and wear, albeit that they might be carefully differentiated by brand into different segments.
If we go to systems thinking, to ecological thinking, what we have is a poor, degraded business environment, lacking in the diversity that brings colour, taste and richness, and resilience—something that Covid-19 has made only too clear. We clearly need different kinds of laws and arrangements.
Yet when we go to other elements of our society, there is far too much competition. The privatisation of public services has led to the cutting of the pay and conditions of workers, a reduction in the quality of provision and the pumping of public money into private hands. The competition is played out in the race to the bottom of provision. I take as an example the report last week from the Children’s Commissioner. The commissioner—a commendably brave and stalwart public servant—noted in a tweet that the “market” in residential care homes was broken. I would like to step back and say that this is an area in which the market—competition—should have no place at all. Competition has been and continues to be unable to work out how to provide the best possible provision for mistreated suffering children. It requires co-operation from all those involved, all along the line, from social workers to residential homes to foster carers. To set up a system designed to make profits from this is nothing short of obscene.
We might look to the United States for another area where competition is entirely inappropriate: the provision of prison places. This is also true here in the UK, where private prisons are demonstrably worse than their public counterparts. Privatising—seeking to make profit out of—the coercive power of the state, setting up the companies providing this in competition, can never be right and can lead only to perverse incentives, such as encouraging more imprisonment, however much the individuals in the system might be there for entirely right, humanitarian reasons, as the vast majority are.
We have a society both lacking in competition and with far too much competition, but behind that is a monolith: no competition at all, financialisation, the turning of everything from the water we drink and bathe in to the council houses that were once public assets and the social care that supports our frail elderly and disabled into a source of profits—profits that all too often are sucked out of our society into the nearest handy tax haven, something supported by the same financial sector, the same City of London, that services and supports that tax haven.
We have seen the destruction of a balanced, mixed, healthy and economic ecosystem, with some things working by good competition, such as local market gardeners seeking to produce the freshest, tastiest and most interesting vegetables, local tailors being the best at reviving and updating your wardrobe, and carpenters producing solid, useful and attractive furniture—and other things, such as schools, carers and housing, which are built not on competition but on co-operation, being regarded as the solid foundations of a decent society.
There is no choice at this moment but to support this SI and go forward from where we are but, as the Government keep talking about building back better and levelling up, we need to look at far more foundational issues and laws for our society.
Baroness McIntosh of Pickering (Con) [V]
My Lords, the role of competition in the economy and in protecting consumer choice is extremely important, and the EU competition rules have done so for a defining period of time. I must declare my interests: in the late 1970s, I spent six happy months as an intern—a stagiaire—in DG IV, now DG COMP. I saw a great future for myself as a competition lawyer; sadly, that was not to be.
I thank my noble friend the Minister for introducing these regulations, but a number of questions arise. It is clear that great uncertainty lies ahead for companies under the regime set out in the regulations. As my noble friend Lord Lansley alluded to, there are many unanswered questions on state aid and subsidies, which are still part of the negotiations. In the context of these regulations, what will the definition of “dominant position” be for merger policies once the CMA takes over, as regards any UK company wishing to continue to do business in the EU? If my understanding is correct, there will be a period of time when a UK company is subject to two different regimes, as my noble friend the Minister set out earlier. Obviously, that could lead to a degree of confusion.
On the ongoing rights of the European Commission in looking at live cases, what will be the position for an appeal to be made under any decision taken in those cases? Will it still have the right to appeal to the European Court of Justice or will it have to rely on entirely UK-based remedies? Which body should it apply to in this regard?
I echo what the noble Baronesses, Lady Bowles and Lady Bennett, said about the current unhealthy state of competition and the UK’s ability sufficiently to ensure a level playing field and protection for consumers against giant tech firms. This area concerns me greatly going forward, so I would be interested to know what proposals my noble friend has in that regard. In this brave new world of leaving the protections of the EU’s competition policies, how can he reassure British consumers that their rights will be protected? Does he at least have an update on what the situation will be regarding roaming charges from 1 January 2021? Will roaming charges revert to UK providers being able to charge fantastic amounts for our use? Obviously no one is going anywhere at the moment but, when travel resumes, will they be able to charge what they deem to be reasonable but others might deem extortionate?
If under the regulations before us today the UK courts no longer have the facility to refer questions of interpretation of competition policy in European Union law to the European Court of Justice, what protection will businesses have from potential unfair competition for their products in the rest of the European Union? It would be helpful to understand what that would be. Can my noble friend assure me also that there is no possibility of a double penalty being imposed under the two regimes appearing to run in parallel for an interim period? I know that the Explanatory Memorandum states clearly that the CMA will “have regard to” penalties that might have been imposed by the European Commission, but it would be helpful to have clarification in that regard.
Can my noble friend also reassure me that businesses that continue to operate in the EU will not face more red tape as a result of the regulations before us than is currently the case? I do not oppose the regulations, but I am deeply concerned about some of their implications.
Baroness Neville-Rolfe (Con)
My Lords, I start by supporting an intelligent policy on competition. As Ovid, one of my favourite classical writers, said:
“A horse never runs so fast as when he has other horses to catch up and outpace.”
When one gets fed up with the sheer scale of Amazon, one ought to remember this wisdom.
I will always be grateful to the CMA in its previous guise as the Office of Fair Trading, because it took a case that brought us over-the-counter medicines. These have been a huge boon that we would never have had without its brave fight against the medical and pharmaceutical vested interests—a huge consumer benefit worth billions in recent years.
However, over the years, the competition authorities, using the existing powers to which my noble friend the Minister referred, have had a tedious obsession with the inequities of the latest tall poppy, usually shortly after the temporary period of monopoly profits has passed. I have seen that in my life several times—with the brewing sector, now a fraction of its one-time status thanks in part to the counterproductive beer orders; in ice cream; in dairy, where we still struggle to compete with European cheese and yoghurt manufacturers; and in supermarkets where, during repeated inquiries, the shops’ profits were shown to be a fraction of those in regulated industries such as utilities and/or in banks before the crash. True to form, the banks were finally investigated after the devastation of the financial crisis. Even so, I believe that small banks still operate at a disadvantage, although I am glad to see that Sam Woods, deputy governor at the Bank of England, is examining ways of lightening their burden.
I should refer to the register and my interest as a director of a small bank and a shareholder in Tesco and Amazon, although I am better known for my passion for small business dynamism, fuelled by competition, because it underpins a strong economy. I like to speak up for business when I can, because it pays and collects the taxes that nearly all pay and which in turn pay for almost everything in the public sector, and it provides many productive jobs.
Against this background, I thank the Minister for his clear explanation of the amending SI, including the way current EU cases will be treated and any follow-on damages. I look forward to his answer to my noble friend Lord Lansley’s question about vertical agreements, market share and the National Security and Investment Bill—though I think that is for another day—and my noble friend Lady McIntosh’s question on roaming charges.
As a result of an SI last year, and this one, the CMA will have even more powers than before Brexit, and in theory will be able to exercise a chilling effect in even more areas. I worry that it will be able to impose its huge fines in relation to even more aspects of competition law. We are talking here about British businesses trying to make a living and get through Covid without sacking too many staff.
Although this is not directly relevant today, perhaps I could say in passing that I do not agree that some fines should be increased, as the noble Lord, Lord Tyrie, hinted in Committee on the United Kingdom Internal Market Bill. I suspect he has less experience than I do of being on the business side of an argument with the regulator, and has little idea how terrifying it can be and how distracting for management.
I believe in competition, so in the round I support the CMA, but it has to have the right culture. Can the Minister comment on how best we can achieve that in the new post-Brexit era? The new chair will also be important, and perhaps he can update us on that appointment.
Further, does the Minister accept that we need to look at competition matters through the prism of the national interest? I have been struck by how other member states do this, and I am sure we will see more protectionist competition policies in Brussels now that we have left. I used to have tussles in the Competitiveness Council on the drift to protectionism, which I opposed. That was especially so with the French—their representative was usually a young, good-looking and very persuasive sometime banker called Emmanuel Macron—and with the German Minister, who represented one of the socialist elements in the German coalition. They were keen to erect barriers to help their tech and telecoms sectors. History shows that that is an ineffective strategy.
Finally, does my noble friend agree that we need officials who are skilled and well motivated at the CMA, and who understand the importance of not being both judge and jury? We need a good mix of talent with the right values, objectivity, economic awareness and understanding of data—and not too many from magic circle legal firms here, and their equivalent overseas, bringing their MoJ-style ways, sometimes making a mess and then moving quickly back to private practice.
I do not object to the regulations, but I would like to know how the Government will ensure that all parts of the CMA are well run and effective and, as I said earlier, operate in the national interest in the post-Brexit world. As the Minister said in his opening remarks, we will have a sovereign regime, and we must make a success of it.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, there is quite a lot going on with competition because of Brexit. This instrument deals with investigations that are, or will be, ongoing at the end of the transition period, and potential future monitoring in the UK of EU remedies. It also revokes EU regulation 2019/452 relating to screening in foreign direct investments.
The National Security and Investment Bill will replace at least part of the revoked EU regulation, and that Bill has started its passage through Parliament. Then there is the published draft regulation on state aid, which we have not yet considered, which deals with the change of emphasis of this Government compared with the previous direction under Theresa May.
Additionally, the United Kingdom Internal Market Bill, which we shall return to on Wednesday on Report, reserves powers on state aid to the UK and creates a landscape where the UK internal market rules may have to be taken into account, but it does not really solve how that will happen, or clarify its relationship with other aspects of trade and competition policy.
So many things are up in the air because of Brexit negotiations or because they are awaiting consultation. We live in the Pirandello-like state of characters in search of a policy, holding jig-saw pieces of legislation that we hope will one day mesh with other bits that have not yet been cut. Against that background, I thank the Minister for introducing this statutory instrument. As has been said, it modifies the no-deal version of legislation. Reading through the Explanatory Memorandum, it all seems logical, at least for this bit of the jig-saw—even if we do not know the full picture.
The questions that I have focus on whether, or how much, we will end up with enforcement systems for some decisions that are different from those applicable to others, and what practical differences that will make in terms of the strength of powers available.
As I understand it, cases that are decided by the EU, or fall to be decided by the EU under continued competence, can, after decision, either stay with the EU for monitoring and enforcement or by mutual agreement be transferred to the UK. Therefore, my first question is this: what are the likely reasons for choosing whether it stays with the EU or comes to the UK? What reasons would the UK see for that and does the EU have similar or different views? Does it depend on the size or importance of the case or only, as the Minister has already mentioned, on whether it is part of an interconnected set? Is it likely to cause disputes?
Broadly speaking, the European Commission has greater enforcement powers than the CMA—notably very significant fining powers—and the CMA is seeking greater powers, finding those that it has inadequate. As the noble Baroness, Lady Neville-Rolfe, mentioned, the noble Lord, Lord Tyrie, drew some of that to our attention in debate on 16 November on the United Kingdom Internal Market Bill.
The UK firepower relating to refusal to supply information is capped at £30,000, which is plenty for an individual or smaller business but can be inadequate for a recalcitrant large business. It may easily be less than the cost of preparing the disclosure if lawyers are involved; for example, the EU fined Facebook €1.6 million for failing to provide information, while we fined Amazon £30,000. That does not look very comparable.
The UK also has a poor track record on undertakings given to the CMA on mergers—for example, about not closing down establishments or not removing research—despite attempts to strengthen legislation. That legislation and associated undertakings have always ended up legally weak—about as strong as a wet paper bag. I have my theories as to why that is the case, but for now it raises the question whether there will be a stricter regime for cases retained by the EU for enforcement than for those it is mutually agreed to transfer to the UK. That would appear to be the case, as the Explanatory Memorandum states, and the Minister clarified, that the UK monitoring procedures are modelled on existing CMA procedures—that means not the more powerful EU versions.
The cases that are transferred are done so only for monitoring purposes; the EU retains the rights to review, vary and substitute the decisions. If the UK has a weak enforcement system, does that mean that the EU could make up for that when it comes to review or substitution? However, if it is about preservation of jobs or research which have already gone due to weak enforcement, nothing will bring those back.
The big question is not what is happening in this piece of legislation, but when domestic competition policy and domestic enforcement against large companies will become more substantial.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, I join others in thanking the Minister for a very clear and comprehensive exposition of the SI before us. The SI is very logical and I do not have much detail to raise on it, which is surprising, but I am sure the Minister will be delighted to hear that. I will instead raise three points from the rather good discussion we have had on competition matters more generally, and possibly in the light of future changes.
First is the shadow thrown on all our work in this area by the continuing, drawn-out EU FTA discussions, with particular reference to what would happen if the rumours are to believed—one never listens to rumours, of course—that there will need to be some form of independent competition authority looking at the UK’s competition regime to make sure that the EU has confidence that we are operating a level playing field. Can the Minister give us any detail on this? Is this in some sense a way of replacing the CMA, or is the CMA secure in the hands of the Government as we currently view it?
The second point is the shadow that is also cast by the National Security and Investment Bill. I have had the benefit of an introduction from one of its co-sponsors at the Department for International Trade—the Minister, the noble Lord, Lord Grimstone—so I do not need to ask for details at this stage. However, as the noble Lord, Lord Lansley, pointed out, the rather odd situation that we are in—the enormous irony—is that, after the National Security and Investment Bill is introduced, as I am sure it will be shortly, the country will probably have a more interventionist competition authority, but, as he said, one that is more limited in terms of the issues defined in the Bill as “national security”. He pointed out the difference between that and our present situation, particularly the concern about whether issues to do with elections, food and media interests will qualify as being considerations under this new legislation. That is something that I think we will have to return to when the Bill reaches your Lordships’ House. In passing, I agree with the noble Lord, Lord Lansley, that there are areas of the Enterprise Act in relation to media that need to be updated sooner rather than later.
My final point is the one made by the noble Baroness, Lady Neville-Rolfe. In a very interesting speech, she drew attention to the wider ramifications of the culture created by the CMA and the dangers that that poses for small businesses, which I know are close to her heart: the freezing effect of an investigation on the ability of small enterprises to carry on working and to recruit the specialist staff they might need to fight off any question of their behaviour being in any way in jeopardy. The whole question about how that works and the economy as a whole is beyond the scope of this statutory instrument, but I hope that it is something that we will come back to.
We place a lot of faith in the CMA, most of which is adequately repaid by the skills and stability it has brought to the sector over the years, but it is a judge and jury in its own court and we have to be very concerned about that in the long run. With that, I am very happy to support the SI.
Lord Callanan (Con)
First, I thank all noble Lords for their contributions to the debate. I remind everyone who contributed that these regulations are required to give full and operable effect to a policy that Parliament has already approved in the form of both the withdrawal agreement and the Competition (Amendment etc.) (EU Exit) Regulations 2019.
My noble friends Lord Lansley and Lady Neville-Rolfe asked about the threshold for market shares in vertical agreements. At the end of the transition period, the Secretary of State will have the power to make regulations to vary or revoke a retained block exemption or to replace it with a block exemption order under the Competition Act, acting in consultation with the CMA, of course. In each case, it will be for the CMA to consider what the relevant geographic and product market will be, and it will have guidance on the factors that it needs to consider.
My noble friend Lord Lansley also asked about the position on foreign investment screening in comparison to the NSI Bill. He also asked whether the Government were considering further measures on foreign investment screening, especially with regard to national security. The answer is that the EU regulation revoked by these regulations relates principally to co-operation between member states on the screening of foreign direct investments. The NSI Bill relates to powers to protect national security in investments, and of course there will be ample opportunity to discuss that Bill in much greater detail when it comes to your Lordships’ House.
As always, I listened with great interest to the noble Baroness, Lady Bennett. She ranged far and wide over whether or not the market economy is right, prisons, care homes and council houses. It was all extremely interesting but totally irrelevant to this SI.
My noble friend Lady McIntosh asked about proposals to protect consumer rights after the end of the transition period. The issues of roaming charges and so on are also interesting but are not covered by these regulations. She also asked about positions on appeals under live cases after the transition period—will UK companies be able to rely on the CJEU or on UK bodies? The answer to that question is yes; currently EU law will continue to apply in relation to all live EU cases, and this regulation concerns only the small number of cases that are live at the end of the transition period. UK companies that are subject to merger or anti-trust investigations and decisions in those cases will, of course, be able to appeal any decisions to the CJEU.
My noble friend also asked about UK companies facing red tape, as I think she referred to it, at the end of the transition period. Of course, the UK has left the European Union and, at the end of the transition period, will cease to be part of the EU’s competition system. This means that there will be some instances of parallel scrutiny by both UK and EU competition authorities, as is normal in any sovereign competition regime. The same thing would happen with companies that are jointly operable also in the United States. The regulations and the withdrawal agreement set out clearly whether the CMA or the European Commission has jurisdiction over a particular case.
My noble friend Lady McIntosh asked about assurances that UK companies will not be doubly penalised. With respect to those few live cases, the CMA will take into account any penalties issued by the Commission in these cases, which reflect the position which applies during the UK’s membership of the EU in relation to a case examined by the Commission and also, lately, after that considered by the CMA.
My noble friend Lady Neville-Rolfe asked about the position of the CMA’s chair. She will be aware that Jonathan Scott was appointed as the interim chair on 9 October, and shortly my department will launch a recruitment process for a new permanent chair. She also asked whether a variety of skills are required in the CMA. Of course, the CMA is a highly regarded competition body and will continue to play an important role in fulfilling its statutory function of promoting competition for the benefit of consumers, drawing on its already wide-ranging and broad set of skills from across the public and private sectors.
The noble Baroness, Lady Bowles, asked about the likely reasons for choosing whether enforcement of EU commitments and remedies will stay with the EU or the UK. Of course, it will be for the European Commission and the UK’s competition authorities to discuss between them whether it might be suitable to transfer responsibilities to monitor and enforce any EU remedies and commitments.
Lastly, the noble Lord, Lord Stevenson, asked about the status of the CMA under the EU CFTA. These regulations are about the handling of those few live cases at the end of the transition period. Of course, they are not negotiations; negotiations are ongoing, and the noble Lord will quite understand that I am currently unable to comment on the status of those discussions and on the future relationship but, suffice to say, the CMA exists in UK statute and is a world-renowned regulator and functions as our independent competition regulator.
The changes I have described today will give legal clarity to UK businesses and those authorities that enforce competition law in the UK. I reiterate again that these regulations do not bring forward new competition policy, but rather ensure that policy which has already been agreed by Parliament functions in the way that Parliament intended. While, of course, these regulations are technical in nature, without them the UK would fail to implement its obligations on competition law under the withdrawal agreement. The regulations made in 2019 to create a stand-alone competition regime would also contain references that are now inaccurate in light of the withdrawal agreement. Therefore, those inconsistencies between provisions on competition law in the withdrawal agreement and UK competition law would cause significant uncertainty for UK business, the CMA and the UK courts. These regulations will complete the process of preparing the UK’s statute book for this purpose, and, therefore, I commend these draft regulations to the Committee.