Digital Markets, Competition and Consumers Bill

Lord Black of Brentwood Excerpts

Committee stage
Wednesday 7th February 2024 Grand Committee

[Lord Black of Brentwood (Con)]

My Lords, I will speak to the stand part notices in my name on Clauses 262, 263 and 264. I am grateful to the noble Lord, Lord Clement- Jones, for adding his name to the stand part notices on Clauses 262 and 264. I will also speak to Amendments 221 and 224, in my name. As these and other amendments in the next group have a special relevance to media businesses, I remind noble Lords of my interest, declared at the start of Committee, as deputy chairman of the Telegraph Media Group, which is a member of the News Media Association.

I hope noble Lords will forgive me if I make just a few general remarks about the issue of subscriptions, to set my amendments in this group and the next in context. I applaud the aim of tackling the nuisance of subscription traps. It is imperative to make sure, however, that the day-to-day operations of reputable traders are not adversely impacted by the measures designed to achieve this. This is important for businesses in many industries that benefit from a degree of commercial certainty in their operations as a result of subscriptions. In the creative economy, it is especially so for hard-pressed publishers that are painstakingly building sustainable business models through subscriptions at a time of considerable economic challenge. Concern has been expressed across the creative sector and beyond, as demonstrated by the briefing documents I have received, and other noble Lords may have, from the News Media Association, techUK, the Federation of Small Businesses, the Online Dating and Discovery Association, the Professional Publishers Association, the Motion Picture Association, the Association for UK Interactive Entertainment and the Commercial On-Demand and Broadcasting Association.

All noble Lords will know that the impact of digital has brought about the destruction of the old print-based business model that for generations supported our free press at a national and local level. Publishers have had to reinvent themselves, and subscriptions are a key part of that new commercial reality. In a world of infinitely free content, it is remarkable that many publishers have begun to turn the tide on the notion that news provision, which is very expensive to create, should be free at the point of access. A business like the Telegraph, which I work for, now has over 1 million subscribers across print and digital. That is the key to the future, because the business of high-quality journalism is an expensive one. This Bill must help, not hinder.

We all feel passionately about the democratic importance of a thriving press—the noble Lord, Lord Clement-Jones, spoke about it movingly in Committee last week—but we have to give publishers the freedom to survive and grow. As it stands, the Bill endangers that because of the unintended consequences of the measures within it, which will introduce onerous and unnecessary new requirements on all types of subscriptions. This will drive up costs, stifle innovation and, paradoxically, reduce consumer choice. The Bill is supposed to be about helping consumers, but it does not achieve that. As I have observed in Committee on other areas, we are willing the ends but not the means.

The issue is that the Bill treats all subscriptions as though they were an endemic problem and unwanted by consumers, but that is not the case. By the Government’s analysis, four out of five adults in the UK have at least one subscription, often many more, providing them with convenience, consistency and choice. Only 5% of subscriptions are unwanted. There is a danger that we are creating a sledgehammer to crack a nut and are doing so in a way that significantly undermines all the good done by the rest of the Bill, in ushering payment for content and more equitable terms by the dominant tech platforms. It is about giving with one hand and taking away with the other.

The Government’s own impact assessment suggests that the package of measures will cost businesses £1.2 billion in the first year alone, with SMEs the hardest hit. The Government are supposed to be committed to reducing regulatory burdens on business, using regulation only as a last resort. Here, it seems to be the first resort and it has not been thought through, with no proper consultation.

The problems with subscriptions fall into four areas. This group covers cooling-off periods and the implementation period for the legislation. We will come to reminder notices and cancellation rights in the next group. The amendments that I have tabled tackle the issues brought about by the Bill’s well-intended but overly prescriptive subscription provisions. I hope that the Government will support them and bring forward their own amendments on Report.

I will deal first with cooling-off periods in Clauses 262 to 264. The Bill as it stands retains the 14-day cooling-off period under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, referred to as the CCRs. It starts once a contract is entered into or the consumer has taken physical possession of goods. However, the Bill amplifies the CCRs by introducing the concept of a renewal cooling-off period, which would apply at the point that a consumer transitions from a free trial or discounted introductory offer period to a contract charged at full price and each time a contract renews on to a term of 12 months or more.

While I have no problem with the existing 14-day cooling-off period under the CCRs, the renewal cooling-off period is a deeply harmful expansion of regulation, based on burdensome, EU-derived consumer law. I thought, perhaps mistakenly, that we were supposed to be making the most of the so-called Brexit freedoms rather than, ironically, gold-plating restrictions that have been manufactured in Brussels.

This is particularly true when viewed alongside the other provisions on subscriptions that the Bill introduces. For example, the new and detailed pre-contract information will ensure awareness of the product costs and renewals. Reminder notices will then reinforce awareness of a consumer’s ongoing contract. Furthermore, when transitioning from a free trial or discount period to a full-price-paid contract, or when renewing a subscription, a sufficient opportunity to establish the nature, characteristics and functioning of the product will already have been made available to the customers, which frankly makes these provisions redundant, creating harm and doing no good.

We should seek to retain the concept of a cooling-off period, as a grace period, applicable where a contract has been taken out erroneously—but not apply it at each and every renewal point. Consumers will be very aware that they have a subscription, given that they will be inundated with reminder notifications and will therefore have plenty of notice to cancel a subscription before it renews. Although they will do nothing to tackle the problem of subscription traps, which are at the heart of this Bill, the terms of this Bill will undermine a legitimate commercial strategy of discounted prices and trial periods, from which consumers can exit, in a way that puts unnecessary and burdensome constraints on businesses to grow and acquire new customers. Those discounted offers are important for consumers, especially at the time of a cost-of-living crisis.

Think what this would mean for a digital broadcaster or video-on-demand provider. Each time a customer entered into a subscription contract, they would receive a cooling-off period. This would allow them, for example, to binge on a specific series—as I am sure we have all done—or watch a sports event, and then withdraw immediately and receive a refund. The Bill does not put any limit on how many times a customer can enter into a contract and then exit using the cooling-off period. In effect, therefore, it will make trial periods redundant because it would make little commercial sense to provide customers with a trial period and a cooling-off period.

The point is that CCRs already tackle this issue by allowing consumers to request immediate access to digital content by acknowledging that the 14-day cooling-off period would no longer apply upon the supply of that content. It seems quite wrong to me that this Bill does not expressly retain this principle. I am sure that the Minister will tell us that the Government have said that they will consult on how the new cooling-off period in this Bill will work in practice, including whether a waiver of the rights should apply to certain types of subscription contracts.

Although that is encouraging and I am grateful for it, it still leaves the additional unnecessary cooling-off provisions on the statute book, meaning huge uncertainty for subscription-based businesses. Also, we have yet to see any detail on the scope of the promised consultation on a potential waiver for this provision, which gives little comfort. Far better to remove these provisions entirely—that is the point of these amendments—especially as their aims are already achieved elsewhere, in Part 4 of the Bill, and enshrined in the existing CCRs. This would still protect customers but would allow digital businesses, which are the future of the creative economy, the opportunity to expand and flourish.

I will speak briefly on Amendments 221 and 224 to Clause 334. The changes proposed in this legislation are very significant, even if the amendments in this group and the next are accepted, and will have many implications for British businesses. However, the Bill currently makes no explicit provision setting out how long businesses will have to implement these changes, which will be very onerous for many traders to implement. The Government will introduce a commencement order in due course, but there is obviously a clear benefit to giving the businesses that will be impacted—particularly SMEs, as the Federation of Small Businesses has pointed out—time to implement the changes effectively.

For legislation that brought in changes of a similar scope, such as that implementing the GDPR requirements, businesses were given more than two years to prepare for substantial change. The Government have delayed the implementation of the Health and Care Act’s advertising restrictions for two and a half years, until October 2025, in order to allow the sector to prepare for them. One business I spoke to estimated that it will take at least 10 months of development work to ready its systems for compliance with the Bill as it stands.

Amendments 221 and 224 would introduce a two-year implementation period after the passage of the Bill and a start date broadly in line with similar precedents. This period would allow businesses sufficient time to adapt their practices and systems in order to comply with the new regulations, reducing the burden of immediate changes and facilitating a smoother transition. I look forward to hearing what my noble friend the Minister has to say on these points.

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Moved by

[Lord Black of Brentwood]

170: Schedule 21, page 373, line 29, leave out paragraphs 29 to 39
Member’s explanatory statement
See explanatory statement to amendment at Clause 256, page 170, line 28 in the name of Lord Black of Brentwood.

[Lord Black of Brentwood (Con)]

My Lords, what a start. I shall also speak to Amendments 175 to 189, and to the stand part notice on Clause 257. I am again grateful to the noble Lord, Lord Clement-Jones, for adding his name to Amendments 170 and 185 to 188. The amendments in this group relate to reminder notices and cancellation rights.

Let me deal first with those amendments that relate to Clause 256. I support the Government’s intent to ensure that businesses send more regular reminders to customers. These can play an important role in ensuring that customers are not trapped in unwanted or forgotten subscriptions and, indeed, ensure that they can get the best deals on offer, which is important for consumers facing cost of living pressures. But such measures need to be proportionate and targeted at the practices of bad actors that cause consumers the greatest level of harm, not at the entire sector.

At present, the Bill requires traders to provide six-monthly reminders to all customers with subscriptions and sets out in painstaking detail what the reminders need to include. This is predicated on what I think is an erroneous assumption that the majority of customers do not know to what they are subscribed and are not actively using those services on a daily or weekly basis. It would also prohibit the trader from bundling in potentially useful information as they see fit, such as how much of a service a consumer has used during the period or the benefits of the subscription being missed by the customer, to assist the customer to make informed decisions. The prescription in the measure seems to be a missed opportunity to do something that would be genuinely useful for both businesses and customers. Indeed, these prescribed communications risk becoming a GDPR-style irritant and therefore ignored.

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[Lord Lucas (Con)]

My Lords, I get the impression from my noble friend that this is not an area of the Bill that the Government want to move on, but I get the impression from the Committee that we would very much like to see some changes. I hope that, between now and Report, there may be some constructive conversations between me, my noble friends and noble Lords opposite to see whether we can make some consolidated suggestions to the Government that we need not argue about, so we can focus the argument on them.

[Lord Black of Brentwood (Con)]

I thank all noble Lords for what have proved to be good and constructive debates on both groups of amendments.

I say to the noble Baroness, Lady Jones, that I think we pretty much have a consensus. There may be some issues at the margins, but we all agree, partly because, as my noble friend Lord Vaizey said, we are not hostile to any of these intentions. We support the intentions, but we recognise that we need to support business while protecting customers. This is important because, in many ways, it goes to the heart of the creative economy and the media ecosystem. The key point that has come across from many of the excellent contributions today is that this is a rapidly evolving environment and, as my noble friend Lady Stowell said, a highly competitive one.

The whole question about digital subs is that they are a new model for the way businesses are operating. For many, that model is becoming business-critical and should therefore not be dealt with, with what the noble Lord, Lord Clement-Jones, rightly said is a blunt instrument. We should therefore not write things into the Bill that we will regret in subsequent days. I agree with a lot of what the noble Baroness, Lady Jones, said: of course there are some bad actors in this space. All we are saying is that we should not be putting into regulations things to deal just with those bad actors that would damage the much wider economy.

I hope that the Government will think again about a lot of these things. I am grateful to my noble friend the Minister for saying that we will continue discussions between now and Report. That is very important, as I think he will have the mood of the Grand Committee: that we will want to return to this area. In the meantime, I beg leave to withdraw the amendment.