Digital Markets, Competition and Consumers Bill

Lord Clement-Jones Excerpts

Committee stage
Monday 5th February 2024 Grand Committee

[Lord Lucas (Con)]

My Lords, I have one amendment in this group, Amendment 110A, which will be echoed in subsequent groups as part of a general concern about making sure that trading standards are an effective body in the UK and are able to do what they are supposed to do to look after consumers.

As the Minister will know, because we were part of the same conversation, the CMA is concerned that trading standards may have been reduced to the point where they are not as effective as they ought to be. Looking at some of the local cuts—in Enfield, for instance, four officers have been cut down to one—and listening to various people involved in trading standards, there is a general concern that, as they are set up and funded at the moment, they are not able to perform the role that they should be. Given the importance that enforcers have in the structure that the Government are putting together, I am asking in this amendment that the Government review that effectiveness, take a serious look at the structures that they have created and their capability of performing as they would wish under the Bill and report within a reasonable period.

[Lord Clement-Jones (LD)]

My Lords, I entirely support what the noble Baroness, Lady Morgan, had to say in her probing amendment. It takes us back to the Online Safety Bill debate. The final question that she asked is crucial: if not here, where? We must have a means of being able to prevent the sale of these products. She has highlighted it and I hope that the Minister has a satisfactory reply, so that, in short order, we can make sure that these products are not for sale in these online marketplaces.

I also entirely support the amendment tabled by the noble Lord, Lord Lucas. It will become clearer and clearer as we move through the groups that adequate resources are required for trading standards. We impose a large number of duties on them, yet we appear not to give them the resources. In fact, their resources have dwindled over the years, as I know that the noble Earl, Lord Lindsay, and my noble friend Lady Bakewell would have outlined if they had been present. In respect of their amendments, which I will come on to later, I am the understudy’s understudy, because the noble Earl, Lord Lindsay, cannot be here today, I gather, nor can my noble friend Lady Bakewell. It falls to me to make a fist of talking to Amendments 112 all the way through to 127, which I will attempt. The noble Lord, Lord Bassam, will be making an even better attempt in the name of the noble Baroness, Lady Crawley, as I understand. Hopefully, the Minister will take on board what we have to say when the time comes.

Very briefly, I want to speak to Amendments 111 and 122, which relate to increasing the scope of the monetary penalties under the Bill. Amendment 111 applies this to Clause 157 for court enforcement orders when the public designated enforcer, such as the CMA, considers that a person is engaged or is likely to engage in a commercial practice that constitutes a relevant infringement and the court makes such an enforcement order on the public designated enforcer’s application. Amendment 222 applies this to CMA final infringement notices under Clause 181, for when the CMA imposes an infringement notice after an investigation into suspected infringements.

Current drafting limits the penalties to

“£300,000 or, if higher, 10% of the total value of the turnover (if any) of the respondent”.

However, a respondent may have made a huge profit as a result of infringements. Fines of a mere £300,000 are unlikely to incentivise good behaviour. In circumstances where 10% of the total value of the turnover is higher, our legal advice is that the UK would typically follow current EU practice, unless something in UK legislation specifically allowed it not to do so, such as we propose in these amendments. In the EU, the fine has to relate to the turnover of the activity in issue and its duration, which, in practice, makes it a much smaller number. To get to group worldwide turnover requires evidence of head office involvement. It should be made clear that to calculate the penalty amount the CMA and the court are able to take into account the profit made by the respondent.

Penalties are supposed to provide an incentive not to break the law, which raises the real question: why are fines related to turnover at all? To ensure good behaviour, they should strip the lawbreaker of the profits gained from lawbreaking. Where a platform can harm millions and only a few take it to task if it pays off the fee, breaking the law pays back handsomely. Authorities could be given the power to directly award exemplary damages of this type in these circumstances. In practice, fines are a fraction of turnover and profits. The largest fine to date was the €4.3 billion imposed on Google in respect of its Android device restriction, which is a long way ahead of other recent fines, but Google makes something of the order of $70 billion a quarter in turnover.

This amendment would also focus on the abusive practice, not the abuse only in relation to effects in one market. For example, Google changed its algorithm in 2007 to promote its own products at the top of its search results. It does so for news, maps, images, shopping and things such as flight booking. That pushes more relevant and better businesses down the rankings so that they get less business and competition is distorted. The practice is governed by an algorithm called universal search. The EU Commission had the resource only to investigate shopping; the fine was €204 billion. Google carries on discriminating in all areas but shopping. A fine could and should be calculated in relation to the abusive practice, of which shopping is an example; otherwise, breaking the law pays and behaviour does not change. Seeing the fine in relation to the profit gained from the practice would be fair. It would deprive the wrongdoer of the gains from breaking the law and is likely to change behaviour. An account of profits could easily be done.

I turn to Amendments 112 to 120 in the names of the noble Earl, Lord Lindsay, my noble friend Lady Bakewell and the noble Baroness, Lady Crawley. As I said, unfortunately none of those proposers is able to be present today, but all their amendments relate to widening the scope of how appropriate court action can take place and they all come under the banner of consumer protection and enforcement, especially for a level playing field to operate in the current marketplace.

Amendments 112, 113 and 114 are about consumer protection orders and undertakings under Clause 159 and cover applications to the appropriate court for an online interface order or an interim online interface order. Clause 159 extends the court’s online interface powers to the enactments, obligations and rules of law categorised as domestic infringements and it is to be welcomed. The Explanatory Notes to the Bill give examples of where online interface orders could be useful, especially in the area of underage sales products. This has been thrown into sharp relief by the Government’s proposals on banning the selling of vapes to underage children and young people. In relation to weights and measures, it is possible that, in order to avoid local inspection systems in the UK, an online supply of short-weight goods would need urgent follow-up with an application for an online interface order against the third-party overseas website where rogue traders are mis-selling to UK consumers.

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I therefore once again thank my noble friend for highlighting the importance of keeping the consumer enforcement regime under review and I hope that my remarks have reassured him.

[Lord Clement-Jones (LD)]

Before the Minister moves on, would he be so kind as to point out which bit of the Long Title prevents the amendment of the noble Baroness, Lady Morgan, from being incorporated into the Bill? This is an important issue and he gave us no real comfort about what other powers might be available to remedy the kind of situation that the noble Baroness talked about. Secondly—I sound like a taxi driver—Amendment 110A talks about resources for trading standards but, as the Minister well knows, local authorities are in dire straits. It is not just a question of saying that their funding is not ring-fenced; it is also about the Government making sure that trading standards are adequately resourced for consumer protection. How are they going to ensure that?

[Lord Offord of Garvel (Con)]

I thank the noble Lord for his intervention. As I said on my noble friend Lady Morgan’s Amendment 110, we are dealing with a serious issue. I took great pains to run through the various layers of protection currently on the statute book and outlined why the Government believe that this is covered elsewhere and is not within the scope of the Bill. I have also said that I will meet my noble friend and look at this in more detail to see whether we need to look further at the Long Title, to which the noble Lord referred.

[Lord Offord of Garvel (Con)]

We are saying that there is extensive protection built up around this sensitive issue and that there should not be further legislation made within the scope of the Bill, but that, if we need to look at it further, we can do so before Report.

Every local authority always wants more money. It is a feature of UK public life and it is up to local authorities to decide how to spend their money appropriately. As we all know, some are better run than others. Funding is not ring-fenced and it is up to local authorities to make sure that standards are maintained in their area.

Amendments 111 and 122, tabled by the noble Lord, Lord Clement-Jones, pertain to profits from infringements and the calculation of penalties. They would ensure that profits made from engaging in an infringing commercial practice can be expressly reflected in the calculation of a monetary penalty imposed through an enforcement order made by the court or a final infringement notice given by the CMA. I thank the noble Lord for his amendments and I absolutely agree with the intent behind them. In fact, work is under way to produce a comprehensive set of regulations, which could be made under Clause 203, to set out the amounts that are to be treated as comprising a person’s turnover when calculating the maximum penalty that can be levied.

Our intention is that any profits accruing from the relevant infringement will be captured by this methodology, but we consider that this maximum penalty calculation will be a technical exercise that needs to be supported by robust and detailed methodology, which is therefore better suited to secondary legislation. I hope that the noble Lord is sufficiently reassured that this important issue will be addressed.

[Lord Clement-Jones (LD)]

My Lords, I am sorry to keep interrupting the Minister, but this is quite an important factor. Is he saying that secondary legislation can expand the way that the primary legislation is interpreted? I was talking in my amendment about trying to get hold of the profits of abuse, so that the penalties should include a profit-based penalty, but the Minister seems to be saying, “Yes, we can do that with secondary legislation”. Is that really what he is saying?

[Lord Offord of Garvel (Con)]

Yes, that is exactly what I am saying. In order to get a profit, one has to start with turnover. A detailed mechanism is required to look at how these P&Ls work and, rather than being in the Bill, this needs to be examined as a technical exercise. There needs to be a methodology put together for it; we will therefore do that in secondary legislation.

Amendments 112 to 120 relate to online content take-down powers and were tabled by my noble friend Lord Lindsay but presented by the noble Lord, Lord Clement-Jones. These amendments would give trading standards departments in Great Britain the power to apply to a court for online interface orders and interim online interface orders to modify, restrict or take down illegal content displayed online.

We welcome the spirit of my noble friend’s amendments. Indeed, the Government have published their consultation response on proposals to empower additional enforcers, besides the CMA, to apply to a court for online interface orders. We have committed to give this additional power to public designated enforcers. These enforcers include, but go beyond, trading standards departments—for example, sector regulators such as Ofcom, which already have consumer enforcement powers under Part 3 of the Bill. We would be pleased to discuss with noble Lords how best to enact these important changes to ensure that the use of this power is governed by adequate procedures.

[Lord Bassam of Brighton (Lab)]

Is it therefore envisaged that the Government will give extra support to local trading standards officers, so that they will have these take-down powers? That seems to be the implication of what the Minister is saying—that it is not just Ofcom or the CMA but that there will be local enforcement as well, so there will be that combination.

[Lord Clement-Jones (LD)]

Just to add to that question, is the Minister saying, “It’s going to happen but we just need to get the procedures right and add them”? Is that really all we are waiting for?

[Lord Offord of Garvel (Con)]

I thank the noble Lords. That is indeed the spirit of what we are saying. We are, in the Bill, giving a power to the courts that will contain the online interface orders. The Government have published a consultation to enable additional enforcers, including the CMA, to apply to a court for these online orders. We are saying that, within the current architecture, we believe that we have the power to do what is required, but that we can make changes after the fact to ensure that the power is governed by adequate procedures.

[Lord Clement-Jones (LD)]

My Lords, that is slightly eliding the situation. The Minister was talking about the CMA but, earlier, I understood him to be talking about trading standards. Are trading standards going to get those powers and is it just a question of ensuring that we get the procedures sorted out?

[Lord Offord of Garvel (Con)]

I thank the noble Lord. There is obviously a little confusion about this, so we will need to set it out, which we will do between Committee and Report, to ensure that we know precisely the order of events here.

[Lord Offord of Garvel (Con)]

I am happy to do that. We will look at that in a bit more detail and write accordingly.

We come to some minor technical government amendments, Amendments 121, 123, 124 and 128, which in the main are minor and consequential. They are intended to provide clarity on how the relevant provisions function and on continuity between the current consumer enforcement regime and the reformed regime under Part 3. I hope these government amendments will be supported. I thank noble Lords once again for their amendments and for their considered remarks on this group.

[Lord Clement-Jones (LD)]

My Lords, before the Minister sits down, I wonder if he will take another look at Clause 157(5) regarding the amount of monetary penalty that can be imposed. The limitations seem to be there in black and white, yet the Minister is saying that secondary legislation can change that subsection in due course. If he cannot give me an answer now, would he be able to write to all of us? This is an important point.

[Lord Offord of Garvel (Con)]

I am happy to clarify that in writing.

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[Lord Lucas (Con)]

My Lords, I beg to move Amendment 124A and to speak to Amendments 124B and 124C. These are all small amendments aimed at making trading standards a bit more effective in practice. Amendment 124A would allow trading standards to seize, as well as the suspected counterfeit goods, articles—for instance, clothing used by the trader that puts them at the scene of the crime. At the moment, trading standards do not have the right to seize such articles of evidential value and they would very much like to have it, since it would make it easier to convict rogues.

As for Amendment 124B, at the moment, trading standards are not allowed to open a vehicle if that is where the goods are being stored, because it does not fall within the definition currently used in the Bill—or at least they believe that is the case. They would like, should all the goods concerned be in a van, to be able to open the van.

As for Amendment 124C, sometimes these can be big crimes of hundreds of thousands of pounds. Level 3 just does not meet the case; it is just a bit off the profit. They would like to see the judge able to set the level of the fine to accord to the crime—Gilbert and Sullivan would have approved.

[Lord Clement-Jones (LD)]

My Lords, once again, with the indulgence of the Committee, I will speak on behalf of my noble friend Lady Bakewell to Amendments 125, 126 and 127.

Before doing so, I say that I support the amendments of the noble Lord, Lord Lucas, which strike me as extremely practical. It must be extremely frustrating when faced with some of the restrictions. This point about vehicles seems to me a particular irritant for trading standards officers—a vehicle being defined as premises. What era are we living in?

We need to bring the powers of trading standards officers up to the 21st century, which is very much the spirit in which Amendments 125, 126 and 127 have been tabled by the noble Earl, Lord Lindsay, my noble friend Lady Bakewell and the noble Baroness, Lady Crawley. Amendment 125 would delete paragraph 17 of Schedule 5 to the Consumer Rights Act, which at present requires trading standards officers to exercise physical powers of entry to premises—this is in the digital age—before accessing information and the seizing of documents that may be needed in criminal proceedings. Accepting this amendment would be an opportunity to finally update the powers of trading standards in this respect. It would have the effect of changing their information-gathering powers to enable documents requested in writing without the need for physical entry to be used in criminal proceedings. This means also relieving the undue burdens placed on businesses and trading standards officers.

For legitimate businesses there is presently the burden of having to interrupt their normal business to provide the requested documents there and then, whereas, under what is proposed in this amendment, if the request is made in writing rather than physically, they will have more time to source the required documents and even seek legal advice should they wish to. For the small band of trading standards officers, the requirement to exercise physical powers of entry across the country to seize documents they may need to use in criminal proceedings is not cost-effective for their cash-strapped local authorities. If a local authority in, say, my noble friend’s Somerset had to deal with a case in Cumbria, it would simply not be viable for this to happen. The criminal activity could go unpunished and the public and consumer would still be at risk from rogue-trader activity.

In the impact assessment for the Bill, it is accepted that:

“Consumer rights must keep pace with market innovations, so that consumers remain confident engaging with businesses offering new products and services”.


That is a good statement, but for this sort of consumer confidence to become more robust, the enforcement powers of trading standards need to be seriously updated and not inhibited by the present inflexibility.

Amendments 126 and 127 propose to substitute the words “England or Wales” and “Scotland” for the words “United Kingdom” in paragraph 44(3) and 44(2) of Schedule 5 to the Consumer Rights Act. The effect of these amendments would be to add a new paragraph to Schedule 16 to the Bill, which would give new powers to trading standards officers to operate across UK national borders where necessary. Cross-border activities should be included in the Bill; current legislation does not make it clear that trading standards officers in England and Wales can exercise their powers across the border with Scotland, or vice versa, even though consumer protection is a reserved power. In fact, the current legislation implies that this cross-border enforcement activity is not permitted, and we are told that, currently, trading standards officers err on the side of caution. Who can blame them in the circumstances? For the success of these new powers and the Bill to take root, trading standards officers should be able to pursue and enforce across the whole of the United Kingdom.

[Lord Leong (Lab)]

My Lords, I thank all noble Lords who have spoken. We are grateful to the noble Lord, Lord Lucas, the noble Earl, Lord Lindsay, the noble Baroness, Lady Bakewell, and my noble friend Lady Crawley for bringing forward this group of amendments relating to Schedule 16, which is introduced by Chapter 6, Clause 207. They seek to amend Schedule 5 to the Consumer Rights Act 2015.

Amendments 124A and 124B appear to add clarity without altering the intention of the Bill as written. Having said that, we would be interested to hear from the Minister whether there is any reason these changes should not be enacted.

Amendment 124C would make a more substantial change to financial penalties. The current level 3 is no deterrent or obstruction. A mere £1,000 is just petty cash for most businesses, whereas level 5, which is an unlimited fine, would serve as a deterrent and perhaps support some co-operation in investigation. We would like to hear from the Minister whether there has been any assessment of the suitability of obstruction being a level 3 fine since the Consumer Rights Act came into law in 2015. We also seek clarification on whether this is the right place to make such a change, given that its impact would be much wider.

Amendments 125, 126 and 127, tabled by the noble Earl, Lord Lindsay, with the support of my noble friend Lady Crawley and the noble Baroness, Lady Bakewell, make a lot of sense in pursuing investigations in all parts of the United Kingdom, not just England and Wales. That was succinctly explained by the noble Lord, Lord Clement-Jones, so I shall not repeat the point. This would obviously be a matter for the Scottish Government. If the Government agree on the merits, is this something they have discussed with their Scottish counterparts?

The amendments in this group are sensible and designed to be helpful. They should be supported. We look forward to the Minister’s response.

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[Lord Clement-Jones (LD)]

My Lords, the Minister seems to have said two directly conflicting things—that you cannot do something, but that he hopes that his noble friend is convinced that the powers are wide enough. Did we mishear him?

[Lord Offord of Garvel (Con)]

I hope that the noble Lord did not misunderstand me. I think we said that this is already covered in legislation. The definition is capable of including a vehicle that is or may be being used to store goods that may disclose a breach of legislation. We are being clear that the definition of “goods” is sufficiently broad to include goods or vehicles. I was coming on to say that an enforcer may inspect products under paragraph 25 of Schedule 5 for the purposes of checking the compliance of those products with relevant legislation, so we are tying this back to the relevant legislation. We believe that the definitions are already sufficiently wide and therefore there is no need to further legislate.

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[Lord Clement-Jones (LD)]

Are the Government really saying, more or less, that they do not recognise that the world has gone digital? Will the Minister spell out the principles of common law that prohibit them from allowing trading standards officers to do what we set out in the amendments?

[Lord Offord of Garvel (Con)]

This says that the Government have the overarching legislative position, but the trading standards departments operate locally, and it is important that central government listens to local government. That consultation listened carefully to the trading standards departments and has come back saying that they believe that removing this prohibition would enable them to gather evidence better and more easily for consumer protection. We follow the local authorities in their requirements.

I turn to the use of investigatory powers across the UK. Amendments 126 and 127, again tabled by my noble friend Lord Lindsay and presented by the noble Lord, Lord Clement-Jones, would permit any trading standards department based anywhere in Great Britain to carry out investigations anywhere in the UK. Current law already allows English and Welsh trading standards departments to use their investigatory powers in parts of England and Wales outside that department’s local area. The same is true for trading standards departments in Scotland, which can already use their investigatory powers anywhere in Scotland.

Extending the powers to investigate across the UK fails to recognise that Scotland has its own legal jurisdiction separate from the single legal jurisdiction of England and Wales. I draw noble Lords’ attention to the fact that consumer protection is a transferred matter in Northern Ireland, where trading standards are a central government function, in contrast to Great Britain’s local authority model. These differences across the UK’s nations provide examples that I hope will persuade the noble Lord not to move Amendments 126 and 127.

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Moved by

[Lord Clement-Jones]

130: Schedule 19, page 360, line 41, at end insert “or in a manner that is likely to mislead the consumer into believing that the product has the same specifications or has characteristics that are the equivalent of a product made by a particular manufacturer when it does not.”
Member’s explanatory statement
This amendment seeks to prevent confusion amongst consumers about packaging that is designed to mimic a well-known brand.

[Lord Clement-Jones (LD)]

My Lords, in moving Amendment 130 I will speak also to Amendment 135, which is another amendment in the names of the noble Earl, Lord Lindsay, my noble friend Lady Bakewell and the noble Baroness, Lady Crawley. This is an opportunity to remedy the long-standing, unaddressed market practice of misleadingly similar packaging of consumer products—that is, packaging which mimics that of familiar branded products. Amendment 130 would introduce a strengthened brand practice in Schedule 19.

Misleadingly similar parasitic packaging, otherwise known as copycats or lookalikes, adopts the distinctive features of familiar branded products to dupe shoppers into believing that it has the same qualities, reputation and/or origin as the brand when it does not. Shoppers buy the copy based on these mistaken assumptions and can pay more than they would were the product distinctively packaged. Such packaging is extremely prevalent in the grocery market. It inflates consumer prices and prevent shoppers making informed, accurate decisions.

The evidence I have seen is convincing that packaging mimicry misleads consumers in substantial numbers and distorts buying decisions. The similar packaging plays on shoppers, exploiting the fact that they self-select products from the shelf. Stores stock so many products that decision-making must be, and is, fast—typically around two seconds per choice. Labels are not studied closely. Colour and shape are more powerful stimuli than words and prompt shoppers to buy a product that they did not intend to buy, to pay more and to believe that products have similarities. I have a whole string of assessments here from research such as a UK IPO study, neuroscience research and a 2023 study called The Psychology of Lookalikes.

In 2008, the Competition Commission considered such packaging an issue for consumer protection. During consultations and the debate on the Consumer Protection from Unfair Trading Regulations 2008, the then Government stressed that public enforcement would be effective. This has not proved to be the case. There has been only one successful enforcement action by trading standards in the past 15 years—in 2008 itself—and no enforcement by the CMA.

IP rights are insufficient. Copiers tend to design around registered IP rights, such as trademarks, designs and copyright, to avoid infringement. A passing-off action is impractical, as proving consumer confusion to a court’s satisfaction is complex, particularly when a copier argues that the use of a different product name avoids misrepresentation. The evidence that IP rights are ineffective can be seen in the persistent prevalence of such copies on the market, with two large retailers adopting it as a business strategy largely unchallenged. Affected branded businesses are unprotected, as there is a gap in IP protection. The original copied brand is no longer distinctive; it is devalued, sales are lost and costs increase. Overall, return on investment in innovation, reputation and quality is reduced. Other products in the same category may lose sales if shoppers switch to the copy, assuming leading brand quality at a lower price, potentially leading to delisting.

For the unlawful copier, sales are boosted as shoppers buy their products by mistake or trust them unduly. They can also charge higher prices; the evidence shows that this could be by as much as 10%. The ultimate solution, of course, is not for offending products to be removed from the market, just that they be repackaged distinctively. This would preserve shopper choice, strengthen competition and reduce prices. Amendment 130, as proposed, would benefit many thousands of shoppers and branded companies of all sizes, particularly SMEs, wherever in the UK they are based.

I now turn to Amendment 135 and should say that the next group contains an amendment, Amendment 137, that is also on fake reviews, so this is a bit of a foretaste of what is coming down the track in the next group. Amendment 135 would add two more practices to the list in Schedule 19 of 31 commercial practices that are in all circumstances considered unfair and bad practice. The two additions are, first, a new paragraph 32:

“Stating or otherwise creating the impression that reviews of a product are submitted by consumers who have actually used or purchased the product without taking reasonable and proportionate steps to check that they originate from such consumers”;


and, secondly, a new paragraph 33:

“Submitting, or commissioning another legal or natural person to submit, false consumer reviews or endorsements, or misrepresenting consumer reviews or social endorsements, in order to promote products”.


How often do we all look to see what people have said about a product or service or, indeed, a bed and breakfast before we commit to buying? I suspect that young people are particularly vulnerable to wanting to participate in something that has a good review and appears to be popular.

The Government propose adding fake reviews to the list of practices in the future, but there is no logical reason why they should not be included now. Adding fake reviews to this important list would make them both criminal and civil breaches, as we understand it. Trading standards see the widespread practice of giving fake reviews as clearly fraudulent in nature, and therefore it should be a criminal offence. Fake reviews appear to be particularly prevalent for health supplements, where a single course of some miracle ingredient will cure your arthritis for ever—that resonates with me. Large sums of money can be invested by those suffering constant pain in an effort to get some relief, only to find that they have wasted their money.

I understand that there is a proposal. The Smarter Regulation response was quite clear that there is considerable demand for this. That response contains a great deal of other material as well and is very useful. I think the latest version is dated 24 January this year, so it is hot off the press, essentially. There is this proposal to add fake reviews in the future via a separate statutory instrument, but why should they not be included in the Bill at this stage? The language has been proposed by the Government. This is a growing distortion of the online marketplace. It is unfair to legitimate businesses and completely deceives consumers who may rely on accurate information to validate their choices. I very much hope that the Minister will say that on Report it will be perfectly viable to include language on fake reviews in the Bill. I beg to move.

[Lord Lucas (Con)]

My Lords, I have Amendment 131 in this group. It is my understanding, and of course the Minister may correct me, that the investment that a student makes in their university course comes under the Bill—that the relationship is one between consumer and provider. Indeed, since this is the largest purchase that a student will make before they buy a house, it seems entirely appropriate that the sort of safeguards in this Bill should apply to university courses. If that is the case, then paragraph 29 on page 362 forbids universities marketing their courses to children, and that does not seem quite right. I would like to understand how the Government see the confluence of those two factors.

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[Lord Clement-Jones (LD)]

My Lords, I thank the Minister for that almost totally positive response. There is quite a lot to take away from it. I thank the noble Lord, Lord Bassam, for his supportive remarks on Amendment 130 and the noble Baroness, Lady Jones, for signing it.

That was a useful walkthrough of the Government’s response on smarter regulation. What we all want to see is it translated into the Bill at the earliest possible opportunity. Earlier in our discussion, we talked about the need for speed, but we have here the ideal opportunity to enshrine in Schedule 19 the provisions on both drip pricing and fake reviews in the way we have talked about. Indeed, I am pleased that the Minister talked about further discussions between Committee and Report on some of the other aspects in amendments put forward here by the noble Baroness, Lady Jones. The Ministers seem to be beckoning us through an open door; I hope that that is the case and that we do not find it slammed suddenly when we come to Report. Honing the wording between Committee and Report could produce a good result. I am pleased that the Minister was so positive in almost all respects. In one case, he said that it could already be covered, but this Bill is the ideal vehicle to get these things, which were promised in the consultation response, absolutely enshrined.

The one really interesting area—it struck me immediately when I saw the Government’s response—concerns the difference between “obligatory” and “optional” in terms of the drip pricing arguments. We need to get to grips with this because we do not want to see, by a technicality, companies such as airlines—we have talked about airlines before in Committee—escape liability because we have not got the wording quite right. The noble Baroness was absolutely right to raise this issue because the language that the Government used in their response was a bit ominous in that respect.

I look forward to those discussions. In the meantime, I beg leave to withdraw the amendment.

Amendment 130 withdrawn.

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Moved by

[Lord Clement-Jones]

137: Schedule 19, page 362, line 18, at end insert—
“32 Submitting a fake review, or commissioning or incentivising any person to write or submit a fake review of products or traders.33 Offering or advertising to submit, commission or facilitate a fake review, or hosting offers or advertisements for fake reviews without taking reasonable and proportionate steps to remove them.34 Publishing or providing access to reviews of products or traders without taking reasonable and proportionate steps to prevent consumers from encountering fake reviews.35 Presenting reviews or information about reviews in ways which will mislead average consumers about the reviews that a product or trader has received.”Member’s explanatory statement
This amendment would introduce measures to protect consumers from fake reviews.

[Lord Clement-Jones (LD)]

My Lords, the Committee may get a slight feeling of déjà vu when it comes to my Amendment 137 but we were assured that it covers a different topic and it is therefore perfectly legitimate to have it in a different group. However, there are other aspects—in particular Amendment 143, which I want to speak to in moving Amendment 137. I will be brief.

As we have heard, the Minister is positive about discussions on how we will enshrine fake reviews. As we know, the Government’s response was designed to improve consumer price transparency and product information for consumers. We very much share that intent. They have highlighted how legislation will tackle fake reviews. Any lack of criminal enforcement would be a major concern so I hope that that will be part of the subject we will discuss.

Of course, we know the impact of fake reviews. Amendment 137 is a different way of dealing with the issues. Fake reviews have been identified by the Federation of Small Businesses as one of the three primary problems experienced by smaller firms when trading on digital marketplaces, so preventing the proliferation of fake reviews will support both consumers and businesses; that is a point we should make. This should be added to the Bill.

The one question I have is this: have the Government had discussions with Trustpilot? It would like to see the Government’s proposed wording extended, particularly to the hosting issue. I do not know whether the Minister has a brief on that. I was quite impressed by the Trustpilot briefing and the evidence it gave. It has concerns about other parts of the wording but, for me, the most powerful aspect is making sure that those who host fake reviews are penalised. I hope that the Minister has an answer to that.

Amendment 143 is where I am again the sorcerer’s apprentice. This is an amendment to Clause 288. It seeks further to protect consumers from rogue traders and their unfair practices. It is something that I know the Chartered Trading Standards Institute is keen to see put into practice. It is a breach of Clause 225 of the Bill for a trader to engage in a commercial practice that is a misleading omission, meaning the practice omits material information. That is defined as

“information that the average consumer needs in order to take an informed transactional decision”.

There is much discussion in the consumer field about what information is needed by a consumer and what is merely desired. For instance, there is no specific requirement for a trader to give his or her name and address. Clause 228 adds an additional breach of omitting material information from an invitation to purchase; it states that there are a number of specific matters that are considered to be material and where it could be an offence if the information is not provided to the consumer, so surely things can only get better. However, an invitation to purchase is currently defined in the Bill as

“a commercial practice involving the provision of information to a consumer … which indicates the characteristics of a product and its price, and … which enables, or purports to enable, the consumer to decide whether to purchase the product or take another transactional decision in relation to the product”.

The point that the Chartered Trading Standards Institute and trading standards officers are making in this context is that, in their day-to-day experience, many rogue traders targeting vulnerable consumers, often in their own homes, do not give a price when offering to do work. If they do not give a price, they will not come under this new obligation in the legislation and will get away with their shoddy work or criminal activity, hence the opportunity in this amendment to remove price from the definition of an invitation to purchase. It would automatically mean that the practice is not an invitation to purchase and, therefore, that the information listed in Clause 228 is not considered material information.

To sum up, removal of price in the definition of invitation to purchase would increase consumer protection, as it would automatically make such things as price, the identity of the trader and his or her address become material information. It would therefore be a breach to provide this information to the consumer. I look forward to what the Minister has to say in respect of those two amendments.

[Lord Lucas (Con)]

My Lords, I have a clutch of amendments in this group. Amendment 138A continues the series of improvements to trading standards regulations. Before we came under EU regulation, we had considerable freedom to deal with pricing abuses. As one of the many advantages from Brexit, I do not see why we should not go back to the situation we used to have.

Amendment 138B looks at the rights that consumers have and what happens when a business ignores them. At the moment, if a business is denying or ignoring rights, trading standards has to take action under the Enterprise Act 2002 by way of a court injunction. It is slow and expensive, so I cannot see why that should not be dealt with under the scope of this Bill.

I hope that Amendment 140 will draw out from the Government an understanding of what information ought not to be omitted. If, for instance, a trader knows that a particular product has a series of adverse and well-informed reviews or has resulted in poor consumer experience, do they have to share that information? If they have it, they will probably be disinclined to be open with it, but do they have to provide it? How far should a trader go to share information of which they are aware and which they know exists but which they would not normally include in marketing their product? Some elucidation of the limits of this would be much appreciated.

Amendment 145B comes back to trading standards. At the moment, the time limit in the Bill is one year. Trading standards operates an intelligence-led approach: it lets information build up for a while before it takes action to make sure that it is acting in cases of consistent abuse rather than one-off problems. Time is then taken to investigate and it takes more time to get to court, so it is very easy to exceed that one-year time limit—particularly in relation to the earlier offences in a group of offences. Two years would be a better expression of the practical length of time that it takes trading standards to bring cases to court.

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[Lord Lucas (Con)]

I shall be clearer after reading my noble friend’s remarks.

[Lord Clement-Jones (LD)]

I thank the Minister for his reply to this disparate group of amendments. I thought the discussion about information raised by the noble Lord, Lord Lucas, was crucial because this is so important to the consumer, particularly the vulnerable consumer. I look forward to seeing the Minister’s letter of clarification, or whatever it is that he will come up with, in due course.

I thank the Minister for his response to Amendment 137, which was, in a sense, rehearsed in the previous group. I thank the noble Baroness, Lady Jones, for her support. She raised some important aspects about timescale and criminal offences. I am assuming that how the whole fake review aspect is dealt with predicates whether we can also have criminal liability. If it is added to Schedule 19, it gets criminal liability, but if it is dealt with in another way, it may not. Clarification of this is important because only two areas, I think, in Schedule 19 are excluded from criminal liability. All the rest get criminal liability. Therefore, it is important that the Minister can give that assurance when we have these discussions that that will be the case.

On the guidance that the noble Lord, Lord Lucas, talked about, I hope the Minister’s reply was that that will be part of what we deliver. The unfair practices guidance will be really important. Just today, the Minister clarified, for example, the brands issue, saying that it is covered by paragraph 14, or whatever it was, of Schedule 19, and that it is not necessary to add that wording. This is all part of important guidance, I suspect, in the end. Expecting people to read the Minister’s words in Committee in the House of Lords might be slightly unreasonable, so I hope that the guidance will nail down the interpretation of some of these aspects of Schedule 19, which will clearly be important legislation.

I think there will be great disappointment about the response to Amendment 143. There was a kind of circular argument that it is going too far—but going too far in what respect? The classic “unintended consequences” were raised as well. There is a set of buzz phrases that one can produce in these circumstances, and “unintended consequences” is one of them, but I did not hear a convincing reason why pricing should not be excluded from an offer to purchase. It strikes me that trading standards officers are correct that this could be a potential loophole. There was perhaps a bit of “not invented here” as well, particularly regarding the amendments tabled by the noble Lord, Lord Lucas, on “properly inform”, which I thought were rather good compared to the existing wording. However, we will, no doubt, continue these discussions. In the meantime, I beg leave to withdraw the amendment.

Amendment 137 withdrawn.

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[Lord Mott (Con)]

My Lords, it is a pleasure to take part in this fifth day of Committee. I will speak to Amendments 148A and 148B, which pertain to an exclusion to the subscriptions chapter. Subscription contracts are becoming increasingly popular in our society. I support the Government’s ambition to ensure that consumers are given strengthened protections in these contracts. However, I wish to ensure that we target the right kinds of contracts and businesses with the new subscription requirements.

Schedule 20 has an exclusion for foodstuffs delivered by an unincorporated trader; to my reading, this appears to target certain micro-businesses. To qualify for this exclusion, a trader must deliver foodstuffs on its own behalf and must not be a body corporate. I support the need for a narrow, targeted exclusion for micro-businesses providing local goods and services, but I worry that the requirement not to be a body corporate will unfairly impact on incorporated micro-businesses that have similar characteristics to unincorporated ones.

For example, businesses such as a farm shop or corner shop providing local food subscriptions, or a vineyard providing locally produced wine on subscription, will be caught by the subscriptions chapter if they are incorporated, but not if they are unincorporated. To me, this appears to be an unfair technicality impacting these businesses; many small micro-businesses may fall through the cracks of the exclusion. That is why Amendments 148A and 148B in my name would change the requirement for a business not to be a body corporate to a requirement for a business to be a micro-business, as defined by Section 33 of the Small Business, Enterprise and Employment Act 2015.

These amendments would ensure that micro-businesses delivering foodstuffs locally benefit from the exclusion even if they are incorporated. They would retain all the other requirements so that the exclusion rightly remains targeted on only the smallest businesses. I hope that the Government understand the need for tweaks to this exclusion and are therefore minded to support these amendments.

[Lord Clement-Jones (LD)]

My Lords, I will speak to Amendments 150 and 151 and Amendments 153 to 167. This is a rather voluminous set of amendments, but they are all designed to try to bring the pre-contract information requirement for subscription contracts back to some of the language of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. The theme for these provisions is: if it ain’t broke, why fix it?

These amendments seek to maintain the flexibility for traders currently provided by those regulations by taking account of the limited time and space available for providing pre-contract information for certain formats and connected devices, and by recognising that certain key pre-contract information may be apparent from the context. The new clauses—Clauses 254 and 255—together with Schedule 21 are designed to replace the pre-contract information requirements for subscription contracts set out in the regulations. The clauses establish two sets of pre-contract information: a long set of full pre-contract information that must be given or made available to consumers before they sign a contract and a shorter set of key pre-contract information that must be given to the consumer all together, separately to any other information. The latter set must be displayed in such a way that it does not require the consumer to take any steps, such as clicking a link, and it must be displayed prior to the consumer entering into the contract.

But the Bill does not provide for the limited time and space allowances established by Regulation 13(4) of the CCR, which are necessary for certain formats and connected devices. In addition, the Bill does not reflect the flexibility provided by the CCR in terms of recognising key pre-contract information that is apparent from the context. This one-size-fits-all approach is not appropriate, given the many different types of subscription contract and consumer journey that the Bill is intended to cover, and given the varying screen sizes that consumers may use to enter into a contract, particularly on mobile devices.

These amendments are designed to amend Clauses 254 and 255 and Schedule 21 to provide more flexibility for the presentation of pre-contract information. They would import a standard of reasonableness to a trader’s assessment of whether information is apparent from the context. They would distinguish between the timing of pre-contract information and full pre-contract information, in line with the current approach of the CCR. They would enable traders to choose the most appropriate techniques to bring the pre-contract information to the attention of the consumer. They would add a new clause to reflect the limited time and space allowances provided by Regulation 13(4) of the CCR—this is necessary for certain screen formats and connected devices. They would enable traders to choose how best to present pre-contract information in a clear and comprehensible manner, on the basis that providing information all at once will not always be the most effective or transparent approach. They would simplify information about cancellation and avoid duplication. They would remove the pro-rated monthly price from the key information about a subscription, as this may confuse consumers, and they would make clear that certain information should be presented only if applicable.

In summary, it is not clear why we are going so much further than the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations, which, in the view of many, have worked quite well. Of course, we will deal with the difference in the cooling-off requirements—also covered by the CCR—when we debate the amendments of the noble Lord, Lord Black, in a few groups’ time. In the meantime, I very much hope that the Government will adopt a rather more flexible approach than they seem to have in the Bill as it stands.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I will speak briefly on this group because I am very aware that we will have a more substantive debate on subscriptions in the coming groups, so forgive me if I am very brief on some of the issues raised.

I am very grateful to the noble Lord, Lord Lucas, for his amendment. We have consistently argued for clarity, and he is right to hold our feet to the fire over the meaning of the consumer bringing the contract to the end. I am grateful for him probing a little more on what that actually means, and I look forward to hearing the Minister’s clarification on this.

I was concerned when I first read the amendments of the noble Lord, Lord Clement-Jones, that they seemed to be an unnecessary watering down of the rights of consumers under the consumer contracts regulations and introduced some ambiguity where there had previously been clarity. He has gone some way to clarifying what he meant by this. It is very unusual for me to be at odds with him. He might know far more about the subject than I did, because I was just going on what I was reading. I would be happy to talk to him more about it.

I of course understand that some mobile devices are too small to display complex pre-contract information. I am sure that we have all been guilty of ticking the box to say that we accept the terms and conditions when we have not actually read them. However, there should be a responsibility on traders to publish the pre-contract details in a simpler form, using better digital design, rather than being given more legal flexibility about how that information is communicated, which rather lets them off the hook. Maybe this is a discussion that we could carry on outside this debate.

Meanwhile, I am grateful to the noble Lord, Lord Mott, for raising the question of microbusinesses and what conditions should apply before the subscription contract regime kicks in. He raised a very interesting question which I have some sympathy with, about very local traders in a locality such as a farmer’s vineyard. I would be interested to hear what the Minister has to say on this, because we need to protect against the unintended consequences of what he is saying. We need to double check that we are not encouraging rogue businesses to re-describe themselves to get through the loophole, but I am sure that he will address that point when he replies.

As noble Lords can see, I am sitting on the fence on most of these amendments, and I am happy to stay there for the time being. I look forward to hearing what the Minister says, which might persuade me either way.

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On Amendment 160, I share the noble Lord’s ambition to ensure that these new requirements are practicable for traders, especially given modern purchasing habits, where things are often facilitated through ever-smaller devices and screens. However, Clause 275 already grants the Secretary of State powers to dictate how pre-contract information must be given. We will work with businesses to develop regulations that suitably reflect the practical considerations of implementing these requirements. We will also set out best practice examples in government guidance. I thank the noble Lord again for his considered amendments, and I hope he is reassured by my remarks.

[Lord Clement-Jones (LD)]

I thank the Minister for the way he has set that out. Will he explain how much consultation there was and the nature of it over the introduction of Schedule 21?

[Lord Offord of Garvel (Con)]

I think I should write to the noble Lord to give that in detail.

I turn to the exclusion for microbusinesses. Amendments 148A and 148B, tabled by my noble friend Lord Mott, would replace the requirement for a business to be unincorporated in order to benefit from the delivery of foodstuffs exclusion, with the requirement to be a microbusiness as per Section 33 of the Small Business, Enterprise and Employment Act 2015. The purpose of the unincorporated aspect of the exclusion is to safeguard against larger businesses restructuring in such a way as to benefit from the exclusion, ensuring that only microbusinesses benefit and that there is greater consumer protection in the food subscriptions market.

My noble friend has raised an interesting point about the application of this chapter to certain incorporated microbusinesses, such as local farm shops, that I am keen to explore. However, the amendment as drafted may not work as intended. That is because Section 33 of the Small Business, Enterprise and Employment Act sets out only broad criteria by which microbusinesses should be defined and defers much of the detail to regulations that have yet to be made. With that said, I am happy to work with my noble friend further to understand his concerns and to ensure that the exclusion captures the right businesses. I therefore hope he is suitably reassured.

In her remarks, the noble Baroness, Lady Jones, raised the important point about ensuring that the exclusion for microbusinesses remains narrow and well-targeted to ensure maximum consumer protection. I wholeheartedly agree with her on this matter, and I assure her that that is the Government’s intention. I thank noble Lords once again for their amendments and for their valuable contributions to this debate.

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[Baroness Harding of Winscombe (Con)]

My Lords, I fear that sometimes it is not enough that everything on an issue has been said; we have to make sure that everyone has said everything that needs to be said. I will be extremely brief but, as I raised this at Second Reading, I lend my voice in support of my noble friend Lord Mendoza’s amendment.

Can the Minister straightforwardly assure us that it is not the Government’s intention to prevent charities being able to access gift aid on membership subscriptions? If he can make that assurance, I expect him, as does the noble Lord, Lord Harris, either to accept this amendment or explain to us the Government’s alternative cunning plan to achieve the goal that I hope everyone in the Committee has.

[Lord Clement-Jones (LD)]

My Lords, I cannot think of a better introduction to an amendment than the different speeches we have heard. I belong to many of the organisations that have been mentioned. We all have a personal interest in so many of the organisations that depend on subscriptions.

The noble Lord, Lord Mendoza, talked about the impact of the possible loss of gift aid; the noble Lord, Lord Harris, on the issue of why gift aid could be lost; the noble Lord, Lord Vaizey, about the importance of subscriptions going forward; and the noble Baroness, Lady Young, about the different kinds of relationship this represents. To round it off, the noble Baroness, Lady Harding, started to hold the Minister’s feet to the fire with the questions that need asking. This amendment has been comprehensively and extremely well spoken to.

We have all had the NCVO briefing, which has a galaxy of different organisations all making the point that the Government really need to create an exemption. This is a very elegant solution that I hope the Government will adopt but, as the noble Baroness, Lady Harding, said, the Government need to reassure us that this was not intended as part of the new subscription regime. I very much hope that, at this moment, the Minister and the department are cooking up a solution as good as the one that the noble Lord, Lord Mendoza, has put forward, or that they are simply going to accept this. In terms of the arguments made, this has been a slam dunk. I would have thought that accepting the amendment of the noble Lord, Lord Mendoza, is a total no-brainer, otherwise I can see Report stage being carnage.

[Lord Bassam of Brighton (Lab)]

My Lords, I congratulate the noble Lord, Lord Mendoza, for scripting such a simple and clear amendment. We are acting as co-signatories, and it seeks, very simply, to exempt third sector charities from the effective limitations on subscription contracts in the Bill.

I appreciate that there have already been several attempts to find a solution to this conundrum, including amendments in the Commons. I understood that Ministers were not particularly attracted to this solution, which seeks to list charity membership subscriptions which qualify for gift aid as an excluded contract pursuant to Clause 253. We were a bit reassured by the letter that Kevin Hollinrake, the Minister in another place, wrote to the National Trust, setting out the Government’s position. He said that it was not their intention to create uncertainty about how different legislation might apply. His letter, dated 23 November, also said that cross-departmental work was being undertaken to consider whether clarification would be beneficial. Having listened to everybody this evening, it is pretty clear that it would be beneficial.

If this approach does not meet the happiness threshold for Ministers, this debate is the opportunity for the Minister to explain where the Government’s internal departmental thinking has got to and what other solutions might be available. The Minister argued in his letter to the National Trust that Chapter 3 of Part 4 is unlikely to apply because there is no contract to be deemed a subscription contract. Given the net value of gift aid to charities—for the National Trust it is £47 million, English Heritage is £100 million et cetera—we think there needs to be clarity. We cannot leave a degree of uncertainty. It certainly does not appeal to us to do that at this stage, given the law of unintended consequences. We cannot rely on an assurance that it is deemed unlikely that the legislation would have the effect that many of the charities that we have been talking to have said it would. The charities need certainty and clarity as well.

If it is not this amendment, what amendment will be brought forward? As the noble Lord, Lord Clement-Jones, said, carnage could definitely occur on Report if we do not get a ready-made solution. It needs to be put right and put right now.

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I will provide a further update on Report on any legislative or other policy changes that we propose. In the meantime, I would be happy to meet my noble friend should he wish to discuss this issue further ahead of Report, as I know it is of keen interest to him.

[Lord Clement-Jones (LD)]

I want to clarify what the Minister just said. Does he plan to come back with a solution on Report? Otherwise there is going to be jeopardy. If the Bill goes through and the Government anticipate doing something after that, charities are going to be in a really difficult position. Presumably the Minister is pledging to come back with a full solution on Report.

[Lord Bassam of Brighton (Lab)]

Before the Minister replies to that point, what is it about the amendment moved by the noble Lord, Lord Mendoza, that is so objectionable? I heard the Minister say that charities are not usually excluded from the effects of legislation in the way that the amendment suggests, but I do not see why they could not be made exempt for this particular purpose.