Digital Markets, Competition and Consumers Bill

Debate between Baroness Stowell of Beeston and Lord Black of Brentwood

Report stage
Monday 11th March 2024 Lords Chamber

[Lord Black of Brentwood (Con)]

My Lords, I refer to my entry in the register of interests. I will speak to my Amendment 34, the effect of which would be to allow the final offer mechanism to be initiated by the CMA after a conduct requirement of the type allowed under Clause 20(2)(a)—to

“trade on fair and reasonable terms”—

has first been breached and the other conditions in Clause 38 are met. This includes the condition that

“the CMA could not satisfactorily address the breach within a reasonable time frame by exercising any of its other digital markets functions”.

I am very grateful to noble Lords who have added their names to my amendment.

As I explained in Committee, I am concerned that the final offer mechanism must be a credible incentive to negotiate rather than such a distant prospect that the big tech firms can delay and frustrate enforcement. The whole point of the Bill is to reduce the limitless ability of big tech to leverage its huge market power and financial and legal clout. Yet, if Google or Meta believes that the FOM will never be reached, they will happily offer publishers and content creators suboptimal deals and elongate the negotiation process, and publishers—I think particularly of the hard-pressed local press—may well be compelled to accept suboptimal deals out of commercial necessity.

It is important to note that the amendment would not rush a publisher or platform into the FOM unnecessarily. If the CMA judges that its other enforcement mechanisms would bring a swift resolution to any dispute on commercial terms, it could proceed with those remedies. Therefore, the amendment seeks merely to give the CMA a wider range of tools at an earlier stage, rather than mandating which tools it should select.

We need only to look to Australia, the first country to introduce final offer arbitration, to see just how determined some firms are to avoid fair commercial deals for the trusted content that is the antidote to a new wave of AI-generated disinformation. Less than two weeks ago, Meta, with weary inevitability, announced that it would close Facebook’s news tab feature in Australia and would not renew any of the deals made with publishers after the news media bargaining code was put on to the statute book.

At a minimum, there must be assurances that the CMA will be able rapidly to move through the enforcement stages prior to the FOM, setting short deadlines for compliance and being ready to swiftly set new or more prescriptive conduct requirements of the type allowed in Clause 20(2)(a) if the initial requirements are inadequate.

We must also be sure that, under Clause 20(2)(a), the CMA will be able to require SMS firms to share information necessary for publishers to calculate the value of their content. Without this information, publishers will inevitably be at a severe disadvantage in initial negotiations, making it nigh on impossible for “fair and reasonable terms” to be agreed. In parts of the Bill dealing with the FOM itself, it is explicitly stated that the CMA can use an information notice to require an SMS firm to give information to the CMA, and for that information to be shared with a third party, such as a publisher. Although this precise mechanism may not be appropriate for negotiations outside the FOM, if the CMA’s conduct requirements were not able to encompass a requirement for the necessary information to be shared, we would end up in a situation where the FOM was the only means to facilitate “fair and reasonable” commercial terms. Robust reassurances on this matter from my noble friend the Minister would be most welcome; I am waiting to see whether he writes “robust” down.

Finally on my amendment, I note that although this legislation ultimately cannot prevent global monopolies denying their users access to all trusted news content, the conduct requirement in Clause 20(3)(a) prevents SMS firms

“applying discriminatory terms, conditions or policies”.

We must have clarity that the CMA would be able to use this requirement to prevent the withdrawal of a service by an SMS firm—including ending the hosting of news content—if it is done in a discriminatory manner. Such discriminatory behaviour could include the removal of news content from UK news publishers in an effort to avoid payment while promoting news content from English-language titles based in other jurisdictions. That must not happen. Again, I hope the Minister can provide reassurance.

I will say very briefly that I support Amendments 23 and 24, in the name of the noble Baroness, Lady Jones, which would reintroduce the indispensability standard to the countervailing benefits exemption. When the Bill was first published, the committee chaired by my noble friend Lady Stowell found that this exemption, as drafted, constituted a “proportionate backstop”, provided that the threshold for its use remained high, and stated explicitly that the Government should not lower the threshold.

We have been told by the Minister before that the changes made in the Commons do not lower the threshold but are an effort to add clarity. Yet, Cleary Gottlieb, a law firm which has represented Google in competition cases, has itself admitted that the new standard “is arguably lower”. Unfortunately, if these amendments are not adopted, it seems highly likely that the courts will reach the conclusion that Parliament explicitly moved away from one set of words to another, the clear implication being that it wishes to create a new and novel standard, and one which would seriously undermine the whole purpose of the legislation.

On the issue of precision, it is hard to see how a move away from a well-established and understood legal concept can add clarity in this area. Since its adoption in the Competition Act 1998, as my noble friend Lord Lansley said, the indispensability standard has been tested extensively, meaning that designated firms, third parties and the CMA alike would have a huge amount of precedent to draw on if it was reintroduced into the legislation. Why on earth would we tamper with that?

As my noble friend Lord Lansley’s amendments demonstrate, it is questionable whether the stand-alone exemption is necessary at all. Therefore, given that the changes made in the Commons may well have lowered the threshold required to access the exemption and the fact that they only reduced clarity—neither of which was the Government’s stated intention—there seems no sound policy reasons not to return Clause 29 to its original form, and I will support the amendments from the noble Baroness, Lady Jones.

[Baroness Stowell of Beeston (Con)]

My Lords, I assure noble Lords that, having spoken at length in the first group, I will be very brief in this group, not least because my noble friend Lord Black has made my argument for me on the countervailing benefits issue, which Amendment 23, in the name of the noble Baroness, Lady Jones, addresses. I support that amendment because, as my noble friend just said and as I referred to in my remarks on the first group, there were several issues in the Bill that your Lordships’ Communications and Digital Select Committee was clear were important and should not be changed, one of which was countervailing benefits. I therefore support the amendment, which would reverse what has been changed in the Bill back to its original wording. As has been said, we know from the evidence of the last few weeks since the Digital Markets Act has been in force in Europe, and other cases have been brought against some of the respective large tech firms, that those firms will take any and every opportunity there is to exploit potential weaknesses or loopholes in legislation. That is why it is important that the language remains in its original wording.

I also support my noble friend Lord Black’s remarks about his Amendment 34. I too look forward to my noble friend the Minister giving him some assurance in robust terms.

Digital Markets, Competition and Consumers Bill

Debate between Baroness Stowell of Beeston and Lord Black of Brentwood

Committee stage
Monday 29th January 2024 Grand Committee

[Baroness Stowell of Beeston (Con)]

My Lords, I speak to my Amendment 77 in this group. I thank the noble Lords, Lord Tyrie and Lord Clement-Jones, and the noble Baroness, Lady Jones of Whitchurch, for adding their names to it.

I do not support what the Government did in the Commons, which the noble Viscount, Lord Colville, described and which his amendment seeks to overturn. However, I think that I understand why they did it, and I have some sympathy with their reasoning, if it is, as I assume, about increasing oversight of the CMA. Where I differ is that I do not believe that this is a job for the Secretary of State. In saying that, it is important to add that this is not just about a turf battle, for want of a better expression, between the Executive and Parliament. It is quite dangerous for the Secretary of State to position herself in this way, because she will become the subject of intense lobbying if she has the power to approve the CMA guidance on how Part 1 of the Bill will operate. That lobbying will be done in private—it could go on for weeks, as the noble Viscount said—and any change made as a result of that activity would be subject to massive rows, if not legal challenge. For me, nothing makes sense about the solution to the problem with which I have some sympathy.

As I have said on several occasions, the need for regulators to be independent can sometimes be over-argued. I very much believe that their regulatory decisions should be made independently without fear or favour or any kind of political interference. What I am most concerned about is that they must be accountable, even though they are independent. We are giving the CMA substantial new powers, so we must also ensure that we—Parliament—oversee its use of them properly.

I will come to parliamentary accountability and how we might improve on that in another amendment in my name, which relates to this group but is in another, for the reasons that the noble Viscount set out. But here, my Amendment 77 proposes that, instead of the Secretary of State approving the CMA guidance, the CMA must

“consult the relevant Parliamentary committees … and publish its response to any recommendations”

made by the committee at the same time that it publishes the final version of its guidance. That approach would ensure oversight of the guidance before it is implemented. It would also make sure that there is scrutiny of the CMA, that the CMA is properly accountable to Parliament and that any debate about the guidance happens in the open and not behind closed doors.

I am pleased to say that I have received widespread support for my proposal from many stakeholders and trade bodies, from all angles. I am not exaggerating when I say that what is proposed by way of Amendment 77 serves everyone’s needs and shared objectives, whether that is big tech, challenger tech, Parliament or the Government. I am grateful to my noble friends—both the Ministers—for our meeting to discuss this matter, which we had a couple of weeks ago. When my noble friend comes to respond—having already, I hope, discussed my amendment with colleagues in Whitehall—I hope he is able to express some support for what is proposed here. This is an important amendment to the Bill and I hope very much that he, speaking for the Government, feels able to accept it and make it their own.

[Lord Black of Brentwood (Con)]

My Lords, I want to support Amendment 76, to which I have added my name, with some brief remarks because the noble Viscount, Lord Colville, has put the case with great power and eloquence. I also support Amendment 77 in the name of my noble friend Lady Stowell, which is a clever solution to the issue of accountability.

I support Amendment 76 in particular, both because I do not believe the requirement is necessary and because—this is a consistent theme in our Committee debates—it builds into the legislation a completely avoidable delay and poses a very real threat to the rapid enforcement of it. Quite apart from the issues of principle, which are significant, this is also intensely practical. The CMA’s guidance on the Bill, published earlier this month, set out the expected timetable for the consultation phase on the Bill’s implementation, running through to October 2024, which could be a very busy month. It is almost certainly when we will have a general election or be in the midst of one.

It seems highly unlikely that the Secretary of State will be able to approve guidance during the purdah of an election campaign and if, after the election—whoever wins it—we have a new Secretary of State, there will inevitably be a further delay while he or she considers the guidance before approving it. The Bill therefore ought to be amended to remove the requirement for the Secretary of State’s approval, or, at the very least, set a strict timetable for it, such as the draft guidance being automatically approved after 30 days unless it is specifically rejected. That would ensure that there is not unnecessary delay, which could run into many months, before the new regime takes effect—especially if there is, as a number of noble Lords have made clear, intense lobbying of the Secretary of State behind the scenes.