Digital Markets, Competition and Consumers Bill

Lord Holmes of Richmond Excerpts

Committee stage
Wednesday 31st January 2024 Grand Committee

[Lord Tyrie (Non-Afl)]

I have to ask the noble Baroness to bear with me for just a short while. I am being asked to speak to two amendments simultaneously, both of which are quite important, particularly the one that we are on now.

I said a moment ago that I would address some of the objections that Ministers may have heard from the department. One will have been that the CMA’s mission statement and underlying purpose implant a focus on consumers into its bloodstream. It is true that the consumer interest forms part of the CMA’s mission statement—it was found on the walls of its offices when I joined—but it is certainly not in its bloodstream. Few organisations with a responsibility to protect consumers have ever been more remote from consumers than the CMA. The intellectual framework behind the statute that it is trying to enforce is similarly abstract and technical. A consumer duty will put the consumers’ interests firmly into the CMA’s bloodstream.

A second argument against the duty that I think the Ministers will have heard will no doubt be that if the CMA takes action on competition, the consumer will always pick up the benefit. In its pure form, this is straight back to the Chicago school justification for competition policy—the approach rolled out across the world 25 years ago. A heap of academic work has now cast doubt on it. In any case, we do not need the academics, as the evidence is all around us that acting on competition alone has not been enough to stop a growth of consumer detriment and a rise in concentration ratios.

A third argument that no doubt will have been put to Ministers is that a consumer duty will get in the way of the Government’s growth objective, but that is based on the mistaken assumption that there is a trade-off between consumer protection and growth—between a healthy, functioning market with caveat emptor and a nanny state. One might characterise this as the free marketeer case against the consumer duty. I am a free marketeer. Many of our markets are not free at the moment; that is the problem. We have a massive and growing asymmetric power in many markets. Nudge, sludge, drip pricing, loyalty penalties and other rip-offs are on the rise everywhere. It is true that we can reduce these abuses by bringing more competition to these markets and that action is overdue, but it has not been strong enough so far to quell the detriment. On the contrary, abuses of market power, both digital and otherwise, have been growing.

The arguments for some form of consumer duty have been set out over the years by those at the sharp end of dealing with detriment for a very long time, not least the consumer groups. I recognise—this will be a relief to the noble Baroness—that the case I have put has touched on only a very small proportion of the arguments that they have developed in great detail over the years. I am strongly tempted, now I have been provoked, to supply her orally with a few of these, but I will resist the temptation. In any case, I have set out a summary of those arguments in numerous forms in writing in 2019-20, and then again just over two years ago. Not much has changed since then, so I will not rehearse those arguments, but I will end by summarising them.

First, a duty will greatly bolster and increase the effectiveness of the duty of expedition and the scope for interim measures that other parts of the Bill will give the CMA. The effect of all three acting together will be much greater than the sum of the parts. Secondly, it will facilitate a change of mindset that is essential for many of our competition regulators, including the CMA. The mindset of the last quarter of a century—that the CMA should restrict itself to acting directly only on competition—was a lot better than nothing, but it has also caused a lot of problems and been partly responsible for the rise in detriment that we can now see around us. Thirdly, a consumer duty will force the courts, particularly the CAT, to give the CMA more scope to act quickly and directly in the consumer interest. Fourthly, unlike most of what we are doing here, it would give us a better prospect of enabling the Government, of whatever political complexion, to have an opportunity to send a clear message to the public that they can expect powerful, independent bodies such as the CMA to act on their behalf.

[Lord Holmes of Richmond (Con)]

My Lord, it is a pleasure to follow the noble Lord, Lord Tyrie. The Committee certainly benefits from his expertise and experience and he is certainly never hypertrophic.

I shall speak briefly to my Amendment 106, which proposes a new clause entitled: “CMA permission for private enforcement claims”. It is a fairly simple and straightforward amendment and does exactly what the title says. Claimants have to seek permission from the CMA to bring private enforcement claims to the CAT or the High Court. The reason is clear. It is so that when we get to the end of our deliberations the operation of which forum, at what time and by whom is clear and does exactly what Parliament intended. Without this amendment there is potential to bring actions in various fora with different approaches at the same time, potentially muddying the waters and steaming up the windows and not bringing the clarity of procedure which we are seeking to achieve with the Bill.

It is a very clear amendment to have clarity and certainty about which forum at which time and to give the CMA the right to ensure that there is not muddying within the procedure, which is completely avoidable at this stage. I look forward to the Minister’s response.

[Baroness Stowell of Beeston (Con)]

I shall speak to Amendment 106 in the name of my noble friend Lord Holmes. Before I do, I should just reinforce my sincerity in saying that I think the noble Lord, Lord Tyrie, is making some really important points in his amendments. My concern was only to make sure that he did not lose us in his exposition, which was brilliant. I felt that some noble Lords were starting to drift away, and I did not think that was doing him any service. I want him to know that I am very interested and was tuned in the whole way through.

The reason I want to speak on Amendment 106 is that last week I raised the issue of private litigation and asked why the so-called Ofcom model had not been adopted for the Bill. Just to recap, I point out that the Ofcom model is a measure in the Communications Act which requires private litigants to seek Ofcom’s permission before making a claim to the courts or a tribunal. Its purpose is to avoid the regulator and the courts considering the same issues simultaneously and reaching conflicting findings, as my noble friend Lord Holmes has just colourfully described.

Since I raised this last week, I am very grateful for the Minister’s letter, which has been circulated to all Peers and is now in the Library, which outlined the Government’s reasoning for not adopting the measure in this digital markets regime for the CMA. As noble Lords will have seen from that letter, the Government argue that it would risk politicising the CMA because decisions about whether to approve someone taking a case to the tribunal or the courts would be appealable through judicial review, in the Government’s mind reducing certainty and clarity for stakeholders. They also argue that these issues are less prevalent for breaches of requirements imposed by Ofcom, as the primary route for redress is through the Communications Ombudsman and there is no equivalent function in the digital regime.

The Minister may make the same arguments in response to my noble friend Lord Holmes’s Amendment 106. The reason why I want to raise this again and am taking the opportunity today of doing so is because, even after getting his letter and having further conversations, I remain concerned that leaving the Bill as it stands threatens the participatory approach of the firms designated SMS, because it would disincentivise them to co-operate with the CMA. That participatory approach is critical to the success of the new regime and one of the ways in which it is considered better than the European model. It is also worth knowing that the Digital Markets Act—in other words, the European Commission’s version of this regime—includes a provision to avoid conflict between national courts and Commission rulings.

--- Later in debate ---

I hope that the Minister will be able to respond positively both to reduce waste and to ensure that all of us can more easily and affordably repair electronic devices on which we all depend.

[Lord Holmes of Richmond (Con)]

My Lords, it is a real pleasure to follow the noble Baroness and agree with every word that she said. I particularly applaud the specificity around software and hardware becoming obsolete by software not being maintained by the manufacturers who, in effect, make obsolete well before its time the hardware that sits alongside that.

I rise to speak to my Amendment 201. In many ways, the only build I would put on what the noble Baroness has said is around expanding to broader sectors the whole concept of right to repair. Perhaps before my time, or perhaps not, there used to be a symbol, a mark of quality, on many products: “Made in Britain; built to last”. That can go well beyond these shores, but it is not a bad line to consider when we think about right to repair.

All that my Amendment 201 seeks is for products to have their proper, natural and appropriate life cycle. We are in the middle of an environmental emergency, with difficult macroeconomic headwinds and a cost of living crisis. Right to repair speaks to all these issues. In no sense is it the silver bullet, but it is an important part of what we can practically and effectively and should do. It is not increased, burdensome regulation; it is taking a very British approach to a particular problem and with very little difficulty solving it within this Bill.

Amendment 201 proposes changing the Consumer Rights Act 2015 by inserting a right to repair so that, before a purchase is made, information must be provided on the repairability of a good, including whether it has been produced with repairability in mind, whether there are spare parts and how to access them, and the likely cost involved. Similarly, in situations where repairs can be performed safely by the purchaser, the information required includes whether information exists on how to do so, and, if so, how the purchaser can get their hands on it. It is straightforward and it makes economic, environmental and social sense.

To echo what the noble Baroness said, it is—this is positive—a particularly British way of going about things. We can cut those piles of unnecessary electric waste, change how technology operates and have a positive impact across so many sectors of our economy, positively benefiting our society. I look forward to the Minister’s response; this would be a good amendment to accept.

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to follow the noble Lord, Lord Holmes; I agree with the intent if not exactly the detail of his amendment—I will come back to that. It is also a great pleasure to take part in the debate on this group of amendments, so ably introduced by the noble Baroness, Lady Jones, and following the powerful arguments presented by the noble Baroness, Lady Hayman. As at Second Reading, much of what she said about right to repair is exactly what I would have said, so I will not say it again; I will just cross-reference her speech, as I did at Second Reading on the same subject.

I have attached my name to Amendment 109 in the name of the noble Baroness, Lady Jones, as well as her Amendment 134 on greenwashing. Had there been space, I would also have attached my name to the amendments on right to repair. The noble Baroness, Lady Hayman, and I have been having a little race in various groups.

I start with Amendment 109. It is worth reflecting for a moment on the fact that, as a country, we have legally binding climate and emissions targets. The Committee on Climate Change has been awaiting a new chair for 18 months—reports suggest that at least two Members of your Lordships’ House are in line for that and waiting to find out their fate—and its chief executive has just stood down. Despite all that, it put out a statement yesterday—handily, given the timing of today’s Committee—stressing strongly that, following COP 28,

“the obligation on every country is now to push even harder”

on climate action. It said that the UK needs

“even greater domestic climate ambition to reinforce the UK’s international standing”—

something that the Government are often concerned about. Crucially, it noted

“a significant delivery gap to the UK’s Nationally Determined Contribution (NDC) of reducing emissions by 68% by 2030”.

The independent Committee on Climate Change is saying that we are not doing enough, what we have now is not sufficient and we are not meeting the international obligations that we have signed up to. It is in that context that we need to look at Amendment 109, which could be hugely powerful. We are talking about commercial practices failing to protect consumers in the promotion and supply of goods and services by digital means. This relates to the detailed discussion we had on the previous group of amendments about flights and package holidays and the ways in which they are promoted and people are given information about their environmental impacts.

Since our conference in Brighton last autumn, the Green Party has been calling for a ban on high-carbon advertising. The noble Baroness, Lady Jones, may not entirely thank me for this, but I suggest that this amendment, in essence, implies a ban on high-carbon advertising. For the avoidance of doubt, this is a suggestion not that we should stop anyone flying or taking any action that they need to, but about whether we should allow expensive, continual bombardment—on the internet, from digital screens everywhere we go, on public transport and from every quarter—to purchase things that we might not otherwise have purchased.