Digital Markets, Competition and Consumers Bill

Lord Lansley Excerpts

2nd reading
Tuesday 5th December 2023 Lords Chamber

[Lord Lansley (Con)]

My Lords, I am very glad to follow the noble Lord, who made another of the many very valuable contributions we have listened to already in this debate. I will try not to repeat some of the important points that have already been made, which we will have an opportunity to consider in Committee in detail.

From my point of view, it is an illustration of the nature of how competition has changed in our markets. I was on the Standing Committee in another place of the Competition Act 1998, on the Standing Committee of the Enterprise Act 2002, and the Standing Committee of the Communications Act 2003, many of which are aspects of the legislation that we will be amending in this. If we had understood then the extent to which digitisation and digital markets had led to concentration of market power in relatively few hands, we would have thought that the competition regime we were establishing would have intervened to stop it.

Of course, it has not. I will come back to this in a moment, but we look at the Furman review, reporting in I think 2018 that there had previously been 400 acquisitions of nascent tech companies without any effective intervention by competition authorities anywhere. Even today, we are looking back very recently at the Competition and Markets Authority’s intervention in Microsoft’s acquisition of Activision Blizzard, which the noble Lord, Lord Fox, rightly referenced and, I think, praised its actions. But, of course, it affects only a small part of Activision Blizzard’s market penetration. It may be important in the long run—cloud computing may grow significantly—but it is not that significant yet.

It is important for us to recall that we are dealing with very large tech companies that are essentially American. The FTC tried to stop it and failed. My noble friend Lord Tyrie—he is not in his place at the moment, but will no doubt read this—was absolutely right; it is not simply the legal framework we create for our competition authorities but the manner in which the competition authorities deploy those powers that is absolutely vital. Of course, there is the consequential question of whether those competition authorities are properly accountable, and not simply whether they are doing their job well but whether we support them to do their job well—that they feel confident that the political class, as it were, will back them up.

At the time, we would have thought that the ex post interventions would have been sufficient. In the last few years, we have now realised that it will require a combination of ex ante rules and ex post interventions, and the Bill reflects that. With others, I was quite hopeful that we would make faster progress on the introduction of legislation following the Furman review. We are now over four and a half years on from the publication of that, but credit goes to our present Prime Minister for pushing things forward since he came to office. In this respect, he is a contrast to his immediate predecessor, who one might have imagined was pro competition, but who did not actually proceed apace with pro-competition legislation. Be that as it may, the Prime Minister is doing what is right to be done.

From my point of view, there are clearly many benefits that will be derived if this legislation is effective in diminishing the opportunity for self-preferencing by large digital players. I did think—this was a very good point made by, not least, the noble Lord, Lord Fox, and my noble friend Lord Vaizey—that we must ensure fair return to intellectual property. That is linked to making sure there is transparency and choice for consumers; the relationship between those two is really important.

I will be interested to see, as we proceed, the relationship between this legislation and the European Union’s. It is not a direct relationship, but we might do a bit of “compare and contrast”, not least in relation to definitions. The noble Lord, Lord Knight of Weymouth, was talking about that. The approaches are a little different, but some of the definitions, and how they are reached, will be really important. When we look at turnover, the number of consumers and users of digital technologies, the extent to which individual players or undertakings exercise power and control over those users’ access to digital markets, and indeed the extent to which they have control over business users of those markets, the definitions are already out there in the implementing regulations of the Digital Markets Act from the European Commission. So we ourselves should look very carefully at that.

I share, and will not repeat, the points that have been made very well, not least by my noble friend Lady Stowell of Beeston, about ensuring that we maintain the clarity of the appeals standard. As far as I understand it, a JR standard includes a test of proportionality. For it to be further added in the legislation in the way that is currently proposed—I think it is in Clause 46—runs the risk that the courts will say: “Well, it must have been added for a further reason, for an additional and distinct test other than we would have understood to be normal in JR”.

The same applies to the point made about indispensability. I suggest that my noble friend looks very hard at whether the countervailing benefits exemption serves any valuable purpose or opens a very dangerous door to long litigation. We know that some big companies such as Apple have $1 billion available for their legal costs in a year; we know that it is a cost of doing business; we know they have succeeded on several occasions in delaying interventions by other competition authorities for years through legal challenges. We have to be very aware that we do not create exactly that opportunity.

I will finish with a final point on killer acquisitions. The Bill includes a requirement for notification of mergers by undertakings with significant market status. However, the Furman review went on to give a recommendation that there needed to be a specific test of

“whether a merger is expected to be on balance beneficial or harmful, taking into account the scale of impacts as well as their likelihood”.

That test is not included in the merger regime in relation to these markets in the way that the Furman review recommended. I hope that, in the course of our scrutiny of the Bill, we might look at whether we should indeed come to look at that forward-looking review of mergers, taking into account that balance; giving, as a consequence of changing the legislative framework for merger control, an opportunity for competition authorities to intervene more regularly and effectively; and ensuring that there is more opportunity for entry into these competitive markets, because these markets cannot be expected to become as competitive as we wish and need them to be without real opportunities for market entry by new entrants.

Notwithstanding that, I very much support the Bill. I look forward to what I think will be a very non-partisan approach across the House to try to ensure that the Bill achieves the purposes which the Government clearly intend and Parliament intends that it should.