Competition and Markets Authority: Legislative and Institutional Reforms

Baroness Crawley Excerpts

Wednesday 8th May 2019 Lords Chamber

[Baroness Crawley (Lab)]

My Lords, it is a pleasure to follow the noble Baroness, especially in her enthusiasm for trading standards. As a past president of the Chartered Trading Standards Institute, I am pleased to be taking part in this timely QSD and delighted to be supporting my noble friend Lady Hayter, whose expertise in this area is highly respected across the House.

The publication of the letter from the noble Lord, Lord Tyrie, chairman of the CMA, to the Secretary of State for BEIS on 21 February was greeted, if not with the champagne-popping excitement seen in Royal Windsor this week, then at least with extremely positive and encouraging responses from the competition and consumer protection community in the UK, including trading standards. I repeat my noble friend’s Question: what is the Government’s response to the letter from the noble Lord, Lord Tyrie?

These proposals for reform of the competition and consumer protection regimes of the CMA are far-reaching and considerable, significantly seeking to place an overriding statutory duty to treat the interests of consumers as paramount. So say all of us. In particular, the proposals wish to align powers and penalties in consumer cases with those of competition law, such that the CMA itself can order the cessation of activities without the need for court action and, in tandem, give the CMA the ability to administratively fine firms up to 10% of turnover where required.

The proposals also give the CMA the power to order the cessation of practices that harm consumers, on an interim basis, subject to legal review. As the noble Lord, Lord Tyrie, says in his letter:

“The central challenge is that, despite relatively recent legislative changes, the UK has an analogue system of competition and consumer law in a digital age”.


The letter goes on to seek statutorily to enshrine the post-2012 landscape arrangements for the division of responsibilities for consumer law enforcement between the CMA and trading standards. I was involved in that division of responsibilities as chair of the Consumer Codes Approval Scheme, which took over those responsibilities from the OFT; it certainly seemed to make sense at the time to use that process to alleviate consumer detriment.

Having spoken to colleagues at the Chartered Trading Standards Institute, I know that they strongly support the proposals in front of us from the CMA to have, as a statutory duty, the interests of consumers as paramount in its decision-making. They also support the statutory enshrinement of the distinction of current roles in the national enforcement framework between the CMA and trading standards. However, the tricky bit for the Chartered Trading Standards Institute comes with the proposal for aligning the CMA’s current powers on competition issues with its consumer enforcement role—in particular, the powers to fine and seek cessation of practices on an administrative basis.

I believe that the CTSI’s concerns arise from the fact that there are distinct differences between the CMA’s competition and consumer roles, especially as, on the consumer side, there currently exists a system of local and national enforcement through trading standards. This is not the case for competition law, and the Tyrie letter does not make clear what the impact of CMA administrative actions and decisions for consumer enforcement would be on trading standards’ decision-making and enforcement choices. Perhaps the Minister could write to me on how the Government see this working out, especially in the light of the highly overstretched and underfinanced workforce within local authority trading standards departments.

While welcoming these proposals, I cannot help but think that, in drawing up the CMA’s future architecture, the one issue that will impact it more than anything else is hardly mentioned. This is the dog that does not bark at the elephant in the room—which is, of course, Brexit. Page 1 of the letter states that:

“The UK is widely held to be an excellent place to do business”.


I would add, “Yes, of course, certainly until Brexit”. On page 2, the letter exhorts business not to engage in anti-competitive or unfair trading practices. I would add that it will be much more difficult to clamp down on that bad practice—an example is given in the letter of “gaming the system”—when businesses in the post-Brexit world, if we come to that, will be obliged to do everything in their power to attract new trade opportunities to make up for leaving the EU.

On page 3 of the letter Brexit is again only a footnote, as it reminds us:

“Brexit, too, poses challenges for the CMA, not least from a greater workload of large, complex cases previously reserved to the European Commission, and the assumption of responsibility for monitoring and enforcing State aid rules”.


To say that Brexit is a “challenge” for the CMA is rather like saying that climbing Everest in stilettos is a challenge. As Carl Mortished said in his piece on 6 March in the Evening Standard,

“the EU competition commissioner … was able to resist powerful politicians”—

I presume he means national politicians.

“However, standing alone and outside the EU, Tyrie may not find it easy to attack monopolists when our Brexited government is desperate to persuade foreign mega-bucks to invest more in Britain”.


And of course we live in “Trump trade” times, which does not help these reforms either.

The CMA, in another understated footnote on page 8, suggests:

“The CMA’s capacity to give priority to this”,


reforming,

“work would be impeded by a ‘no deal’ Brexit”.

Well, so say all of us. Do the Government agree with the CMA in this regard?

In conclusion, these are excellent proposals, launched at a uniquely uncertain time for the country and its place in the world. While I wish the CMA well in its necessary future planning, I am sure that none of us, especially the noble Lord, Lord Tyrie, underestimates the scale of the economic and trade duress that UK business and consumers will face in the near future if we are outside the European Union.