United Kingdom Internal Market Bill

Lord Tyrie Excerpts

Committee stage & Committee: 4th sitting (Hansard) & Committee: 4th sitting (Hansard): House of Lords
Wednesday 4th November 2020 Lords Chamber

[The Deputy Chairman of Committees (Baroness Henig) (Lab)]

I am assuming that the noble Lord, Lord Naseby, has scratched from this group, so I call the noble Lord, Lord Tyrie.

[Lord Tyrie (Non-Afl)]

Some very interesting points have just been made that bear serious consideration, and the concerns we have just heard are reasoned, particularly on SMEs. At the very least, the Government may wish to offer a review of the CMA’s use of these powers, after an interval, to give us the assurance that they are being proportionately deployed and to see whether they need some amendment. The argument that they were derived from legislation the purpose of which was very different is well taken and might point to further amendment.

Overall, I support the Government in what they are trying to do here, having decided to create the OIM. It is true that the powers are robust, but they will need to be. If the CMA is to be expected to offer timely and high-quality advice, it will need to secure information quickly, without being given the runaround by devolved Administrations or parts of the private sector.

The penalties proposed are a weakness, though. Crown immunity will be in play for the devolved Administrations. I would be interested to know what thought the Government have given to the penalties that can be imposed for non-compliance in those cases. Public censure might help; on the other hand, a devolved Administration standing up to nasty Westminster might win local plaudits, resulting in the opposite effect. A lot of careful thought needs to be put into this issue if these measures are to be made effective. The proposed fines on the private sector are capped at £30,000. I simply do not see that sum troubling a recalcitrant or determined large third party. Has the Minister considered larger fines in certain circumstances?

It might be helpful to make one more general point. The CMA’s existing arrangements for securing compliance and information gathering across all its other functions are manifestly inadequate, as I saw it during my time there. They should not be used as a benchmark. Incidentally, the £30,000 figure comes from the merger regime. Something has to be done. The European Commission recently fined Facebook £1.6 million for not supplying information, while the CMA recently fined Amazon £30,000 over the merger with Deliveroo for not supplying information. That should give some idea of the disparity.

In February 2019, the CMA put proposals to the Government for improvements to information-gathering powers across all its functions. First, it needs to be able to gather information from a much wider range of sources to reflect the increasingly digital nature of the information that it is trying to collect: iCloud, machine-learning algorithms and so on spring to mind. These are not at all easy to capture with existing legislation. Secondly, and even more importantly, subject to safeguards, the CMA needs a general information- gathering power outside the context of a formal investigation. I do not like giving general powers, but I think the CMA now needs this to find out what is really going on in markets and enable it to think through much better than it can at present. It needs to be able to use the full range of tools to best bear down on consumer detriment. It is struggling to do that at present, and increasingly so with the growth of rip-off culture.

When the Minister returns to his department, he will find the proposals, of which I am just touching the surface, have been fully developed by the CMA and are sitting with his officials. Will he agree to take another look at those proposals to see what might usefully be drawn from them? For improving the ones we are discussing today, quite a lot of what is in there is likely to be relevant. Will he agree to report back to the House on what he has found?

I have been following this Bill closely, particularly Part 4, which I have an interest in because of my previous job. Some very important points have been made across the Committee, not least in Monday’s relatively brief debate on Clause 28 about whether the CMA is the appropriate body in the beginning to have responsibly for these functions. Those points are sufficiently important for us to have another look at them on Report. I hope the House will find a way to enable us to do this.

[Baroness Neville-Rolfe (Con)]

My Lords, this Committee is nearing its end, apart from Part 5. I support the noble Baroness, Lady Bowles, in her forensic efforts to probe the purpose of Clauses 38 to 40. I welcome my noble friend Lord Tyrie to today’s debate. Although I do not agree with him on fines or general powers, he makes a very good point about digital information. I am sorry he was not here for the debate on where the OIM sits. As he says, that is something we hope to debate again on Report.

On the plus side, these clauses give a great deal of detail. I usually complain to the Minister that EU exit Bills fail to do just that and leave too much to regulations. On the minus side, these are extremely strong powers of enforcement with very high penalties—for example, fixed fines of up to £30,000 would make many a small company bankrupt. There is no due diligence defence that I can see or provision allowing a reasonable excuse. The CMA can use its own discretion to decide whether a request for information has been complied with and can impose a financial penalty if it thinks there has been obstruction or delay. Such powers are fiercer than those of the police. The Minister will be able to tell us whether the CMA has those powers in relation to competition law and perhaps explain in each case why they are justified in the internal market Bill which, as many have said, is a little different from competition law.

Moreover, we do not know to which regulations these various measures and penalties will apply. Can the Minister kindly take us through some examples of their proposed use? He may have done this elsewhere; if so, I am sorry if I missed that. Perhaps more importantly, could he lay some sample regulations for us to review before Report, as his predecessor did so helpfully on the Bill relating to nuclear issues on EU exit?

I worry that both Houses of Parliament have been distracted by unease with Part 5 of the Bill into agreeing wide-ranging, open-ended and burdensome powers in these clauses and, for the first time, on services, the beating heart of the economies in all four nations of the UK. All this has been relatively lightly scrutinised despite our efforts, and experience shows that some nasty surprises might be in store. I am keen to work with others to minimise those while generally supporting the Bill’s direction of travel.

[Lord Fox (LD)]

My Lords, once again this has been a short but important debate. I congratulate noble Lords on speaking on this. Once again, I find myself in complete agreement with the noble Baroness, Lady Neville-Rolfe, and my noble friend Lady Bowles. It was good to hear from the noble Lord, Lord Tyrie, whose experience is important.

During her speech, my noble friend Lady Bowles sought to characterise the difference between getting information from potential recalcitrants—people who are suspected of or known to have distorted the market—and getting information from people to create a picture of a market. I hope the noble Lord, Lord Tyrie, will not mind me saying that the sort of language used about needing more sanctions and similar issues is coming from the mindset of dealing with recalcitrants. That is where the experience of the CMA has lain to date. There is a real concern that in creating this new role the culture of having to fight to get what you need is transferred into this second activity, and that is not appropriate.

I was interested to hear the point of the noble Lord, Lord Tyrie, about Clause 28 and looking again at the positioning of the OIM and CMA. I would be very keen to hear what he has to say.

[Lord Tyrie (Non-Afl)]

My Lords—

[Noble Lords]

Oh!

--- Later in debate ---

[Lord Tyrie (Non-Afl)]

May I not respond? What a shame.

[Lord Fox (LD)]

Perhaps the noble Lord can put his point in writing, or speak after the Minister if it is a question to him.

Enormous care is needed, at the very least, but it is not clear in the Bill where that care is and how careful the Bill is; it seems quite careless. We come back to whether the Bill is deliberately underwritten or accidentally underwritten because there was not enough time. There is plenty of scope for the Minister to answer the questions set out by my noble friend Lady Bowles, the noble Baroness, Lady Neville-Rolfe, and the noble Lord, Lord Tyrie, and to nail how this will work, what it is for and how small and medium-sized businesses in particular will be protected from an overzealous information-gathering process.

Covid-19: Businesses and the Private Sector

Lord Tyrie Excerpts

Thursday 21st May 2020 Lords Chamber

[Lord Tyrie (Non-Afl)]

I declare an interest as chairman of the CMA. I will say a few words about what the CMA is doing to try to assist in this crisis. In a nutshell, the CMA has three jobs during the crisis. First, it needs to ensure that competition law does not get in the way of necessary co-operation between firms in the crisis, especially to ensure the maintenance of essential medical and food supplies. I am pleased that the Government have acted on CMA advice to exclude a number of agreements between firms on competition law that would otherwise have been prohibited.

The second thing we can do is to act rapidly and robustly against the small minority of traders that may have been exploiting consumers’ vulnerability. The CMA’s statutory base contains no provisions for emergency action of that type but we have a taskforce for exactly that job. We have sent over 250 letters to firms asking for an explanation of their conduct. To address price gouging, deterrence is essential in the long term, and even in the next few months, as are time-limited emergency powers, like those introduced in many other countries, especially where they have been put in place as part of the emergency. Something like that in the UK would boost deterrence further. We have offered the Government advice on this.

The third point, and the most important in the long term, is the contribution that the CMA can make to post-crisis reconstruction. The starting point will not be good. Big recessions usually weaken competition, as market concentration rises. Legislation is going to be needed and, as a number of noble Lords have pointed out, to play a full role we will need a stronger legislative base.

[The Deputy Speaker]

Do we have the Earl of Shrewsbury? I think he still does not have a signal, by the look of it. I call the noble Lord, Lord Fox.

Competition and Markets Authority: Legislative and Institutional Reforms

Lord Tyrie Excerpts

Wednesday 8th May 2019 Lords Chamber

[Lord Tyrie (Non-Afl)]

I am extremely grateful for the support that I have just received from the noble Lord and from a number of other noble Lords around the House. I congratulate the noble Baroness, Lady Hayter, on securing the debate and also of course declare significant interests, both as chair of the CMA and as author of the letter to the Secretary of State to which her Question on the Order Paper refers. It will not surprise anybody if I say that I agree with everything that I have said in my letter—just for the avoidance of doubt. I also want to apologise to the House for missing the opening few moments of the debate.

Some interesting comments have been made, some of which require further thought. There have also been some points of disagreement. Where it is warranted, rather than address those points directly now, I shall come back to them—to the noble Baroness on one, and there may be one or two others.

I think that there is widespread and growing cross-party consensus that competition law and policy are in need of some reform. The legal framework appears to be letting ordinary consumers down. Since the Competition Act was passed more than 20 years ago—here is some of the evidence of the need for reform—profit margins have risen from 20% to 60%; the turnover share of the UK’s largest businesses has risen from 21% to 28%; loyalty penalties for customers in telecoms and financial services alone stand at more than £4 billion a year; and there is price discrimination against the vulnerable in essential services and price gouging by pharmaceutical firms—that much is scarcely in dispute.

Meanwhile, the growth of the digital economy is bringing huge benefits, but it is also making competition and consumer law look increasingly out of date and at risk of being unable to address anti-competitive behaviour before the market moves on and identifies new areas. The existing framework is at risk of being unable to protect millions of previously quite capable and competent consumers who are now vulnerable to exploitation, many of whom are simply time poor and do not have time to address and absorb the huge amount of information on the web required to make good decisions.

When the Secretary of State asked me to undertake this work—he is not a long way away from me at the moment, as a matter of fact—I am sure that it was with some of the points that I have just made in mind. The proposals that I have made are aimed ultimately at preserving, not replacing, an independent competition framework and adapting it to make it more fit for the future and responsive to developments in fast-moving markets and to problems faced by ordinary consumers. There are a large number of proposals in the 44 pages of the letter—it might be the longest letter that I have ever written—and I am very impressed by the number of noble Lords and noble Baronesses around the House who have clearly read it.

In the interests of time, I shall draw noble Lords’ attention to just four of the proposals. First, several new duties are proposed; I shall highlight two in particular. It is proposed that a new duty be imposed on the CMA to ensure that the economic interests of consumers are paramount—several contributions referred to that—and to act more swiftly than we currently do. That should affect the way in which our work is scrutinised in the courts.

Secondly, on the markets regime, changes are proposed that would allow the CMA to order legally binding remedies in markets where competition has been compromised. The scope of that regime needs to be broadened so that it can address a wider range of consumer harm. And it needs teeth, in the form of financial penalties for those who fail to comply with CMA rulings—I think that there was a good deal of support for that.

Thirdly—I think this is an area where there is already widespread agreement in principle—consumer law enforcement needs to be strengthened significantly. When companies break consumer law and rip off consumers with unfair trading practices, or exploit them through unfair contract terms, the CMA currently has to apply to the courts to request them to order the practice to stop. Firms do not get fined and they are no worse off for having broken the law. So, just as it does when it takes on firms engaged in anti-competitive practices, the CMA should be able to decide itself that a firm is breaking consumer law and to order it to stop. It should also be able to fine firms that then flout the law.

The fourth area that I will refer to has also been mentioned by one or two noble Lords. More needs to be done to promote personal responsibility for complying with competition and consumer law. Individuals are far less likely to break the law if they know that they may be held liable for it. The public rightly expect personal responsibility for serious wrongdoing by firms. With that in mind, the proposals include measures to increase board-level responsibility for complying with the law so that both competition and consumer protection are in the minds of company directors. It is also proposed that, for serious breaches of consumer protection law, director disqualification should be a possibility, just as it is for competition law offences.

I have only a couple more points to make, as I have already had the opportunity to make so many points in the letter. All regulators accumulate vested interests; they cluster around regulators. Sometimes they make crucial points. They are also often very effective at getting at Parliament. It is extremely important that we at the CMA all listen to those vested interests, but it is just as important that regulators avoid being captured by them. Certainly, we do not intend to be captured by vested interests in competition law.

I end by asking the Minister to update the House on the Government’s view by responding to a few questions. Does he agree that far-reaching reform to the framework for competition and consumer law is now required? Does he agree that the proposals outlined in the letter are a step in the right direction? If he does, will he tell us how and when the Government will take them forward? Finally, does he agree that we should try to continue with reform to competition law as far as possible on the basis of the cross-party consensus for the legislation that has been in place pretty much since the Labour Government’s introduction of the Enterprise Act a little over 20 years ago? I hope that he can give us some encouragement on that. I certainly think that he has had some encouragement on that last point from a good number of contributions around the House this evening.

Vauxhall/Opel: Proposed Takeover

Lord Tyrie Excerpts

Monday 20th February 2017 Commons Chamber

[Greg Clark]

I would say to the right hon. Gentleman what I said to the Chair of the Select Committee: he should reflect on the competitiveness of our automotive industry. Companies choose to invest in Britain because we are a competitive place from which to do business, we have a skilled and flexible workforce, and we have fantastic research and development facilities. We have been absolutely clear in the industrial strategy consultation that these strengths will be extended so that we continue to be a beacon of success in this and other industries.

[Mr Andrew Tyrie (Chichester) (Con)]

The Secretary of State has clearly made some reassuring noises to the firm. We need transparency on those, so will he now respond to the Treasury Committee request to publish the letter he sent to Nissan on 21 October giving reassurances to that company?

[Greg Clark]

My right hon. Friend may not have noticed that, some time ago, I said that of course we would release the letter sent to Nissan at the time when it is no longer commercially confidential.

Corporate Governance

Lord Tyrie Excerpts

1st reading: House of Commons
Tuesday 29th November 2016 Commons Chamber

[Greg Clark]

There are two Labour Back Benchers here. If one compares that with the number of my hon. Friends who are in the Chamber, there is scant evidence of Labour’s enthusiasm for these reforms. The hon. Member for Norwich South (Clive Lewis) tried to imply that Labour is the party of working people, but the difference in interest in this statement between the parties shows the opposite. I hope that the hon. Member for Eltham (Clive Efford) welcomes the measures that the Prime Minister and I are proposing to give not only employees but customers a voice in the boardroom. The hon. Gentleman is a big football fan and a fan of greater involvement of enthusiasts in football, and I hope that he will contribute positively to the consultation and back our proposals.

[Mr Andrew Tyrie (Chichester) (Con)]

Good pay structures encourage wealth creation, but the financial crisis showed that poorly constructed remuneration schemes contribute to catastrophic failures in corporate governance. In response, the Parliamentary Commission on Banking Standards recommended, among other things, longer deferral for bonuses and clawback for serious misconduct in some cases. Has the Minister examined whether those recommendations have any relevance to his Green Paper and whether they may, with particular regard to large firms, have a bearing on ways to militate against serious harm to customers, employees and the wider public?

[Greg Clark]

My right hon. Friend is right that good corporate governance can stop corporate failure and the effects of contamination that his commission was set up to investigate. The commission made some valuable recommendations, many of which have been enacted. When he comes to look at the Green Paper, he will see further proposals for how incentive schemes for executives can be better aligned with the long-term interests of the company and made more transparent.

Nissan: Sunderland

Lord Tyrie Excerpts

Monday 31st October 2016 Commons Chamber

[Greg Clark]

The right hon. Gentleman, for whom I have a high personal regard, exemplifies what my right hon. Friend the Member for Surrey Heath (Michael Gove) was saying: he looks so glum at this news. What I set out to the House, to Nissan and to any firm that is in this country is what my colleagues have said repeatedly: there is a great common interest among other European Union nations and ourselves in having a deal following the negotiations that maximises the benefit to both sides. That seems so obvious that it is hardly worthy emphasising. That is the demeanour with which we will approach the negotiations. It is the approach that I have always taken in negotiations, and it seems as though that is something that people are glad to hear.

[Mr Andrew Tyrie (Chichester) (Con)]

I congratulate the Secretary of State on providing a great deal for the north-east. His clarification that the Government wanted continued access to the single market without bureaucratic impediments is a significant extension and exposure of the Government’s negotiating position. Does the Secretary of State agree that the rules of origin that the UK would face outside the customs union would certainly constitute bureaucratic impediments?

[Greg Clark]

This goes beyond any discussions that I have had with any company here. Why would we not aim to avoid bureaucratic impediments as a matter of negotiation? That seems to be common sense and that is what I set out.