United Kingdom Internal Market Bill

Baroness Bowles of Berkhamsted Excerpts

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

[Baroness McIntosh of Pickering (Con)]

My Lords, I will speak to Amendment 149. It will not surprise the House to learn that I am very grateful to the Law Society of Scotland for its help in briefing me and preparing this amendment. I state once again for the record, as on the register, that I am a non-practising member of the Faculty of Advocates, so have had cause in the past to be deeply grateful to solicitors in Scotland.

Amendment 149 amends Clause 38, which relates to information-gathering powers, setting out the powers the CMA will have to gather information in support of its functions in this part; under subsections (2) and (3), it will be able to provide an information notice or require the production of a document by an individual business or public authority. The notice must describe the type of information required and when and how it is expected to be relayed. Under subsection (6), the notice must make clear which precise function of the CMA is relevant, as well as the legal and financial consequences of non-compliance. Subsection (8) sets out that no information can be requested if it could not be compelled to be given in the course of civil judicial proceedings before the court, and that a notice may not require a person to go more than 10 miles from their residence without having their travelling expenses paid or offered to them.

This begs a question, which has been identified. Through this amendment, I would make explicit reference to “legal professional privilege” in Clause 38(8), for the very simple reason that a person should not be compelled, as I just stated, under subsection (8),

“to produce or provide any document or information which the person could not be compelled to produce, or give in evidence, in civil proceedings before the court”.

This provision may apply to legal representatives, but that should be made clear by a reference to “legal professional privilege” in the clause. My direct question to the Minister is this: why is it specifically not referred to? I am sure he will say that it is implicitly relied on, but I pray in aid that legal professional privilege is the client’s privilege, not the lawyer’s privilege. It is an essential aspect of the rule of law which enables clients to consult freely with their lawyers and is widely recognised in statute. I would like it in this Bill, unless I hear extremely good reasons from my noble friend why it is not already there. I beg to move.

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I have two amendments in this group. I also support the amendment just explained by the noble Baroness, Lady McIntosh.

This group concerns the information-gathering powers in Clause 38; it applies to Clause 31, under which requests for a report from the CMA may be made by anyone, and to Clauses 32, 33 and 34, under which administrations may request, respectively, advice on proposed regulatory provisions, reporting on the impact of a regulatory provision and reporting on a regulatory provision that is or may be detrimental to the market.

To prepare reports, information needs to be gathered. The powers enable the CMA to ask any person for any document in their possession or to require any person who carries on a business to provide estimates, forecasts, returns or other information as may be specified. As the noble Baroness, Lady McIntosh, has already highlighted, it can further specify the time and place at which, and the form and manner in which, the information is to be provided. It may also require conversion of a non-legible record into a legible and intelligible copy of information. There is no acknowledgment of how onerous this may be other than in subsection (8)(b), which says that travel expenses must be offered if a person has to go more than 10 miles from their place of residence. This could impose significant burdens on individuals or small businesses, to whom time is money.

It does not indicate that the information sought is only that which is readily available; it seems there is nothing to stop it requiring the preparation of estimates rather than, say, just the forwarding of those that might have been given to customers in the course of business. Many businesses may well be happy to assist in what is tantamount to a survey about the effects of regulation, just as many respond to consultations, but for small businesses it could be a burden. For sole traders it may mean a significant loss if income is dependent on work, whether that is as a plumber, lawyer, childminder, shopkeeper or anything else.

I am aware that the template of CMA market study investigations and Section 174 of the Enterprise Act have been followed, but are we truly looking at comparable circumstances? Market studies have more statutory requirements and guidance around them, such as the requirement of a market study notice and all the defined stages and practices. That does not seem to have been transposed into this. Nor are the circumstances those of known market deterioration caused by market participants—for example, it may just be about proposed or enacted regulation, with any flaws caused by administrations, which is completely different from when businesses, collectively or individually, have themselves created oligopolies, monopolies or concentrations.

In Amendment 150, I put forward that there should be provision for loss of earnings—why not, if the circumstance is that the expertise of the business is being sought? An alternative way to collect this kind of information is through consultations or by commissioning research. The CMA is empowered already under Section 5 of the Enterprise Act to commission such reports without resorting to enforced business responses. The members of the panel that will prepare the reports are being paid for their expertise, so why not those others who are being harvested for information?

My Amendment 156, would insert a new clause:

“The CMA must take account of the effects of additional duties imposed on small business in its approach to the exercise of its functions under sections 31 to 34, and its powers under sections 38, 39 and 40.”


This is not a strong amendment, but at least it makes the point, as otherwise there is no guidance. I am sure that MPs would interest themselves in the sorry stories they will be sent if there are burdensome requirements but, absent something like this, they have nothing to point to when overstepping has taken place. I will return to this matter in the context of penalties in the next group, but when there has been no wrongdoing that brings about the request for information—possibly burdensome requests, enforceable through fines rather than encouragement—it seems a wholly disproportionate measure. As I have said, I do not believe the cause is comparable with current CMA market studies.

Whither now the comply or explain principle—I have always been more of a “make them comply” person, as my track record will show, but these measures offend me in principle and seem to come from the department against business. I can see the matter is different if the business is under investigation for their own doings, but there is no distinction made in the clause. Clause 39 has a “without reasonable excuse” provision and I intend to probe that in the next group but, for now, can the Minister clarify the limits to the burden that can be put upon small businesses and the circumstances envisaged? Something of record has to be made.

As a final related point, there are also circumstances, of course, where much more has been opened up for challenges by businesses through Clause 31, giving the CMA reach into both administrative decisions and to other companies. My noble friend Lord Fox will say more on that.

[Baroness Jones of Moulsecoomb (GP) [V]]

My Lords, I will be very brief, as the noble Baronesses, Lady McIntosh and Lady Bowles, have explained this group extremely clearly. As the noble Baroness, Lady Bowles, said, these measures just offend me in principle. The Government seem, time and again, to understand big business, and are happy to give very large amounts of money and all sorts of leeway to such businesses and organisations but, at the same time, quite often miss the point on small businesses, which often struggle to survive—particularly during lockdown.

Small businesses can be the creative heart of our society at times—creating jobs for a lot of local people and, indeed, more widely. Will the Minister listen and understand that such intrusive and burdensome measures really do impact on small businesses that are already struggling to survive? I know it is very difficult for the Minister to commit to anything, but surely he is prepared to discuss this sort of issue with noble Lords and perhaps come to some sort of agreement.

--- Later in debate ---

Debate on whether Clause 38 should stand part of the Bill.

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, the previous group has already set the scene on Clause 38, where I propose some changes to help small businesses, at least. The point remains that the CMA, or OIM, is an opining body, often for the benefit of Administrations, even if most of those are not happy with how it is set up. I also clarify that I am not against the CMA per se. I have responded to its consultations, been quoted by it and would give it more powers in competition matters. Even if it were the chosen body, I would still consider the same procedures and culture not right for monitoring the internal market, so to copy and paste legislation created for the competition field is not appropriate. I mention again the different approaches of DG COMP and DG Internal Market as an illustration.

In this group, I am further probing the constraints on information-gathering powers. As I have said, they often apply to individuals and businesses that have not done anything wrong, nor have their actions, individually or collectively, distorted the market. If the regulations are amiss, that is created by Administrations. With all due respect to the response the Minister gave on the previous group, that is different from competition matters, which the businesses and their actions have brought forward. I find it alarming that there is no understanding of the fundamental difference between applying competition law and monitoring an internal market, but it is early days and this is all new.

I accept that an investigation into and report on the activities of companies that are causing distortion, as could be the case under Clause 31, is different. Then, it is perhaps reasonable to use the existing CMA powers and scope. But I can assure the noble Lord, Lord Stevenson, that the format of these enforcement powers is copied and pasted from the CMA in its role dealing with companies that potentially threaten the public interest, where there is at least a suspicion that competition laws or norms, such as market concentration or fair pricing, are being challenged. In the Bill, individuals or companies are being used as sources of information for things that they have not brought on themselves, and that is the difference. It is why having the same laws is not appropriate. For this reason, I object to the compulsory scope of Clause 38 for all circumstances, and the same applies to the enforcement and penalty powers in Clauses 39 and 40.

Clause 38(6) states that the notice will be sent with

“information about the … consequences of not complying”.

That is a frightener. Is that the way to treat business? Was it consulted upon? We challenged the Minister on Monday about the information he had been given to say to us, stating that using the CMA was consulted upon. Even if there were a few throwaway lines like “such as the CMA” in response, was any consultation conducted on whether CMA market study legislation fits the rather different circumstance of investigating Administrations’ actions? If businesses or individuals decide that they do not wish to or cannot provide information, and the CMA decides, under its own rules, that their excuse is not reasonable, they can be dealt with as obstructing and fined.

There was an interesting exchange on fines on Monday, when the noble Baroness, Lady Finlay, asked whether a Member of the Senedd could be fined. The Minister said that they could be asked for information, but not fined. Now we see another way to get some of that information: turn any business that had been in discussions with the Senedd into the informer. Who knows? Perhaps one day we might even get some of the unpublished consultation responses that the Government sit on.

--- Later in debate ---

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

Does the noble Baroness, Lady Bowles, wish to respond to any of the points made?

[Baroness Bowles of Berkhamsted (LD) [V]]

Yes. My Lords, I thank all noble Lords who have spoken in this debate; I think that it will be even more interesting when we read it in Hansard.

I think that there is still a sticking point, which was exemplified by one of the Minister’s comments. He said that he did not want there to be disparity between procedures in the CMA. The point that I have been making, which seems to have been supported by all the speakers in this debate, is that they are for different things. The noble Lord, Lord Tyrie, acknowledged that it was for a different purpose. My noble friend Lord Fox referred to people being recalcitrant rather than doing nothing. I was trying to say that, within competition policy, the Government are pursuing miscreants, but they are pursuing innocent people for information. In fact, at the beginning of his response, the Minister said that the purpose is to gain the assistance of third parties. That was the first time I had heard a reasonable word about this. The Government are asking the private sector to give assistance. They can go to the devolved Administrations but there is complete asymmetry: the Government cannot fine them but people who find it too difficult to give assistance are at risk of a fine.

Of course we expect reasonable behaviour, but we do not always get it. I point to that wonderful machinery of HMRC on loan charges and ask whether we have evidence that we always get reasonableness where we want it. I am not yet satisfied. There have been some interesting suggestions about reviewing how it has gone, that we can have sight of the regulations, or that we can examine procedures that are likely to be implemented. Surely we could do some of these things between now and Report.

I still think that where we are essentially sampling and wanting views from people in the market, the burden is on the sampler, not the samplee. This is therefore a matter I wish to return to on Report, but I hope it is something we can solve. On Monday on our first group, people said that patent attorneys were vital for the country, so I had a smile on my face. Maybe now noble Lords actually know where I learned to be a nerdy pedant.

The point is that we have to have protections in the Bill where, if something unjust happens, somebody can say, “Hang on a minute, look, it says here that that excuse was reasonable,” or, “You can’t make me do this because I haven’t done anything wrong.” You cannot go around arresting people without reasonable suspicion. I do not think we should fine people without reasonable suspicion that something wrong was done in the first place. We cannot just invent a wrongness by saying, “I wanted you to give me some information and you said no”, which is basically what the powers in the Bill do.

I thank noble Lords. I look forward to a letter with some more answers to my questions from the Minister. I do not think there is anything to withdraw because this is a stand part debate, but obviously I will not call a vote.

Clause 38 agreed.