Digital Markets, Competition and Consumers Bill

Debate between Lord Clement-Jones and Baroness Bakewell of Hardington Mandeville

Report stage
Wednesday 13th March 2024 Lords Chamber

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I wish to speak briefly to support Amendments 99 to 101 in this group, to which I have added my name. The noble Earl, Lord Lindsay, and the noble Baroness, Lady Crawley, have very clearly set out the arguments and the rationale for our amendments, so I will not go into the same detail.

I thank the Minister for his time and that of his officials in meeting with those of us who have signed these amendments, and for his letters clarifying the position. We are grateful for the Government’s movement on several of the issues we raised in Committee. They were not actually raised by us—because of other circumstances, none of us was able to be here—but they were ably covered by the noble Lord, Lord Bassam, and my colleague, the noble Lord, Lord Clement-Jones.

Amendments 99 and 100 raise the issue of how trading standards operate across borders throughout the country. This is causing them considerable concern, and I will not repeat what has already been said, except to say that trading standards are a vital local authority service, but not one that attracts the same level of support as children’s services or disability services. I declare my interest as a vice-president of the LGA.

Local authority budgets are stretched beyond what is needed to make many vital services safe for the consumer. On Amendment 101, trading standards needs support in order to operate as effectively and efficiently as it can to protect the public. Requesting documents by post is more cost effective than going to the trouble of crossing the country to fetch documents. Trading standards needs to be able to operate effectively across the whole UK, and I support this amendment.

[Lord Clement-Jones (LD)]

My Lords, it is very good to see the full team back on the trading standards amendments. I congratulate all three noble Lords on their championing of trading standards. They need the powers that are being argued for in these amendments; they are the unsung champions of the consumer, and we should support them.

My main purpose in rising is to speak to Amendments 69, 91, 92 and 152. As regards Amendment 69, on misleadingly similar parasitic packaging, it was encouraging to hear the Minister confirm in Committee that the prohibition of misleading actions in Clause 224 and the banned practice in paragraph 14 of Schedule 19 will address the long-standing unaddressed practice of misleadingly similar packaging.

However, those provisions matter little if they are not enforced. During consultations and the debate on the Consumer Protection from Unfair Trading Regulations 2008, the then Government stressed that public enforcement would be effective and efficient. This has not proved to be the case, with just one enforcement action by trading standards in 2008—albeit a successful one. If shoppers are to be protected from this misleading practice, there must be a realistic expectation that the Bill’s provisions will be enforced.

Historically, the Government have placed the duty on public enforcers. That is unrealistic, as trading standards face diminishing resources. The CMA stated clearly that misleadingly similar packaging is a consumer protection, not an IP, issue, following its investigation of the groceries market in 2008. Yet is has undertaken no hard or soft enforcement and did not include it in its recent scrutiny of the grocery sector; there is no sign that it will take a different approach in the future. There are no other realistic public enforcement options available. For the Bill to make a difference, it is essential that affected branded companies are granted powers to bring civil cases using the Bill’s provisions on the specific practice of misleadingly similar packaging alone. It has been ignored by public enforcers for the last 15 years, despite the many examples that appear year on year. Granting affected brand owners such powers would mean that shoppers would have the protection envisaged by the Bill, and affected brand owners would have more effective redress at no cost to the taxpayer.

Amendments 91 and 92 concern an area of concern for the retail industry, expressed by its representative body, the British Retail Consortium, in which I was an active participant more years ago than I care to remember. The well-established and well-used primary authority system enables a business to request assured advice from a primary authority that it has appointed. Provided that the business follows the advice, it cannot be prosecuted by any local authority for its actions. Under the Bill, the CMA will receive additional powers on consumer protection, whereby it will move to administrative fines that are potentially very high. I am informed that the CMA currently refuses either to provide assured advice of its own or to accept primary authority advice. It says that it may not agree with the advice and that it would be too costly, ignoring the fact that it is at a cost to the business. That undermines the primary authority system and will do so even further when the CMA receives its new fining powers because businesses will feel unable to rely totally on primary authority advice for what they are doing in the overlapping areas.

The amendments attempt to deal with that, either by requiring the CMA to provide assured advice itself, as set out in Amendment 91, or, perhaps more practically, by accepting primary authority advice as binding up to the point that it may be repealed if it is shown to be inaccurate, as set out in Amendment 92. That would mean that a business could rely on it for anything it does up to any repeal. It should also be remembered that the CMA can, if it wishes, act as a supporting regulator, whereby it can be called on to provide its view to a primary authority when that authority is looking at providing advice in an area of relevance and overlap to the CMA.

Finally, it should be noted that the CMA has decided to provide what is, in effect, assured advice on competition matters in the sustainability area; namely, it has agreed not to prosecute a business that seeks its advice and follows it in a small area on the competition side. This means that, in principle, the CMA does not seem to be opposed to such an approach. Green claims on the consumer side are a key area of uncertainty for business, an area where assured advice would in fact be most useful.

I turn to my final amendment, Amendment 152. As I explained in Committee, standard essential patents are patents that are necessary to implement an industry standard, such as wifi or 5G. Because the market is locked into a standard, and to prevent abuse of the market power that this situation conveys, SEP owners are required to license their SEPs on fair terms. Unfortunately, there is widespread abuse of this monopoly power by SEP holders. The principal issue raised with me by the Fair Standards Alliance is the threat of injunctions; the costs to many businesses can be ruinous. This tactic not only threatens innovation by UK businesses but represents a strategic risk for UK priorities, such as 5G infrastructure diversification and smart energy network security, by limiting the competing players. The availability of injunctions for SEPs gives foreign SEP holders the ability to prevent others in the UK from entering, succeeding and innovating in those markets.

The Minister, the noble Lord, Lord Offord, gave a somewhat encouraging response in Committee—I keep using the word “encouraging” about his responses, although I keep hoping for better—to the effect that the Government would set out their thinking in the very near future, and that that would include the question of injunctions.

After many months of consultation, the IPO has published its 2024 forward look on this issue. It has reported its findings to Ministers and has agreed key objectives concerning SEPs. Those are

“helping implementers, especially SMEs, navigate and better understand the SEPs ecosystem and Fair Reasonable and Non-Discriminatory (FRAND) licensing … improving transparency in the ecosystem, both pricing and essentiality; and … achieving greater efficiency in respect of dispute resolution, including arbitration and mediation”.

Although the IPO has confirmed that SMEs are especially disadvantaged by the current SEP regulations, it states, disappointingly, on injunctions that

“we have concluded that we will not be consulting on making legislative changes to narrow the use of injunctions in SEPs disputes”,

with very limited justification for the decision, saying simply that it was taken after

“careful consideration of the evidence, operation of relevant legal frameworks and international obligations”.

The Coalition for App Fairness has pointed out to me that a day after the IPO announcement, the European Parliament voted by a large majority to approve its own SEP regulation. The EU framework will include the creation of an SEP register, database and essentiality checks; a defined maximum total royalty for an SEP; and an independent, expert-led conciliation process to establish the fair price for SEPs, which, crucially, will block the use of injunctions while the process is taking place. That seems entirely appropriate. The EU has proved that such a regulatory regime can be delivered; why cannot the UK Government, with all the freedom of Brexit? What is the basis for the IPO decision? What evidence, legal frameworks and international obligations prevent it from dealing with and legislating on injunctions? Why cannot the IPO likewise establish a truly fair SEP licensing ecosystem?

The least the Government can do is give more detail to the many SMEs affected by this decision. The forward look states, rather lamely:

“The IPO will continue engagement with relevant industry and institutions to continue to inform our ongoing policy development and implementation of those actions set out above”.


What on earth does that entail? That is pretty mealy-mouthed. What benefit will there be from that?