Digital Markets, Competition and Consumers Bill

Baroness Jones of Whitchurch Excerpts

2nd reading
Tuesday 5th December 2023 Lords Chamber

[Baroness Jones of Whitchurch (Lab)]

My Lords, we have had an excellent debate, with enormous expertise and some powerful themes emerging from around the Chamber. I look forward to exploring them in more detail when we roll up our sleeves and focus on the specifics in Committee. However, it is already clear that we start from a common belief that the essence of the Bill is important and necessary.

I will not repeat the points well made by my noble friend Lord Bassam about the history of delays and distraction. We could have had this Bill on the statute book much sooner, but we have to deal with the reality of where we are now. As noble Lords have said, the digital world is developing and expanding at an incredible pace and the dominance of the major players continues to rise. As a result, consumers and businesses feel increasingly powerless in the online market. The Bill has an important role to play in resetting the balance, so that we can concentrate on the undoubted benefits that can accrue from greater innovation, access and competition in the sector.

Of course, we still have an important role to play in scrutinising the Bill, but our job has been made so much more difficult by the last-minute amendments tabled by the Government. I share the concerns that many noble Lords have raised during the debate; the warm glow of agreement identified by the noble Baroness, Lady Kidron, has united us, but not in quite the way that the ministerial team hoped. There are considerable concerns about the latest amendments tabled.

Evidence was given during Committee in the Commons from a wide range of stakeholders. They seemed broadly happy with the basic architecture of the procedures, conduct requirements and appeals systems set out in the original Bill. The main concern raised, if there was one, was the length of time it would take to complete the designation of strategic market status, including appeals. I listened carefully to the attempt of the noble Lord, Lord Offord, to provide reassurance on the changes but, like many noble Lords, I was not convinced as to why the Government felt they were really necessary.

For example, we share the concern of a number of noble Lords about the late amendment to switch appeals against CMA penalty decisions from a judicial review to a merits-based system. This is widely perceived as an attempt to water down the Bill, which opens the door to lengthy wrangling and long delays in finally resolving issues. This goes against the overriding desire for these cases to be heard and resolved in a timely manner.

When asked about this issue in the Commons Committee hearing back in June, the CEO of the CMA made it clear that the authority wanted the JR standard to be applied to its decisions at appeal. She said:

“It is critical that the CMA faces effective judicial scrutiny for our work. That should go on the record. We think that the JR standard achieves that”.


She went on to say that her experience of merits appeals was that they result “in very protracted litigation”, making it

“a lot harder to reach constructive, collaborative outcomes”

because

“all eyes are on that litigation process”.—[Official Report, Commons, Digital Markets, Competition and Consumers Bill Committee, 13/06/23; cols. 7-8.]

We agree with this analysis and, like many noble Lords, I will want to explore further in Committee why the Government felt that this change was necessary.

We also share noble Lords’ concerns about the watering down of the powers of the CMA through the countervailing benefits exemption, which would allow SMS-designated firms to argue that the benefits of their market domination outweigh the damage. This has been further weakened by the deliberate fudging of the definitions of consumer benefit. Similarly, the Government’s late amendment requiring the CMA to apply a proportionality test on conduct requirements gives a whole new raft of legal loopholes, which will no doubt, as we have heard in the debate, be exploited mercilessly by the vast legal companies employed to protect the big tech firms.

We do not believe that these new amendments are necessary. They will drag down the work of the CMA, undermine its independence and tie it up in endless court battles. We want to return to all these issues in Committee.

In the Commons, our Front Bench also tabled an important amendment to improve the consultation rights of challenger firms when the CMA is investigating the strategic market status of big tech firms. As we know, challenger firms are those that are being squeezed out of the market by the anti-competitive actions of those that currently dominate the market. We have heard numerous examples of these behaviours, such as restrictions on booksellers’ access to Amazon listings, the prohibitively high charges for apps developers to appear on Apple products and the domination of Google searches by those prepared to pay for the space. The challenger firms deserve the right to be formally consulted when a CMA investigation is taking place and to give evidence in any subsequent hearings. I hope we can work with the Government to be assured that these protections will be in place.

A great many noble Lords have eloquently expressed the need for greater protection for intellectual property and content creators, which needs to be at the heart of the Bill. It is crucial that we use the Bill to defend our news media, whose content is routinely absorbed by digital platforms without compensation.

Noble Lords made a powerful case for tackling platforms that take advertising revenue without investing in the original content. Similarly, artists, publishers and broadcasters need to be paid properly and fairly. We believe that an interest of citizens duty could widen the remedies available in the arbitration process and open the door to collective actions on cases such as this. We also want to ensure that the total value of repeat visits to online sites is properly captured. This is hugely important for the health of our creative economy and our access to informed journalism. We want to work with the Government and colleagues to get this regime right, and we want to explore my noble friend Lord Knight’s point about who owns our personal data and whether we can get it back once it has been published. We very much support the argument of the noble Lord, Lord Holmes, and the noble Baroness, Lady Uddin, that it is essential that accessibility is designed into all online platforms.

I am pleased that the noble and learned Lord, Lord Etherton, raised the need to reform alternative dispute resolution and the right of redress. We welcome the strengthening of ADR provisions, but we believe that it could have gone further. ADR has the capacity to be a simple, low-cost way of consumers raising complaints, and having an independent ruling by an ombudsman and a speedy form of redress. Unfortunately, the ADR landscape continues to be muddled and confused, with multiple providers, lack of clear signposting and refusenik companies that will not participate in the schemes. We believe that there is a strong case for single, mandatory ADR providers to operate in each sector, and we want to explore how this can be achieved in Committee.

The noble Baroness, Lady Hayman, will be pleased to hear that we also wish to explore whether the right to redress should include the right to repair for electronic equipment, with spare parts easily available, as happens in many other jurisdictions.

A number of specific consumer rights issues were tabled in the Commons to which we will want to return. First, subscription traps have been raised by many noble Lords and we do not feel that the current wording in the Bill goes far enough. This is a widespread problem, with Citizens Advice estimating that some £300 million a year is spent on unwanted subscriptions, often by those who can least afford them and with limited digital skills. While we were all tempted by the suggestion of the noble Viscount, Lord Colville, of a “terminate now” button, having listened to the debate, I have realised how much more complicated this is. Until now, we have argued for the provision to opt into, rather than opt out of, renewals. There is still a lot to be said for that principle, but we also need to recognise, as we heard today, that this cannot be a one-size-fits-all regime. Charity subscriptions and Gift Aid are some examples and noble Lords have made powerful cases for others.

Secondly, one of the most pernicious anti-competitive activities in the digital marketplace is fake reviews. They are damaging to huge numbers of legitimate businesses in the UK, big and small. The Government have made the commitment to deal with hosting fake reviews at a later date, via Schedule 18. We do not believe that it is necessary to wait for action on this issue and we will be tabling amendments to go into the Bill.

Thirdly and similarly, the Government have recognised that drip pricing is an issue but have not explicitly included it as a banned practice in the Bill. Drip pricing is where consumers are tempted into an online purchase by low advertised prices, only to find that the final price they have to pay is hugely inflated. We have all fallen victim to this, with some notable sinners such as the airline industry, which daily seems to find new and novel ways to increase total ticket prices. The CMA reported that enforcement against drip pricing is restricted by a lack of an explicit ban, so we want to address this in the Bill.

Fourthly, I pay tribute to the work of my Commons colleague, Sharon Hodgson, on ticket touting in the primary and secondary online markets. It is proving more and more difficult to pay the standard advertised price for sport, concert and festival tickets. The current legislation on this is not proving fit for purpose. We need stronger laws to tackle illegal ticket resale. The CMA gave evidence that, when it tried to take Viagogo to court, it came up with inherent weaknesses in the existing consumer protection toolkit. We will want to address this in Committee.

Finally, the noble Baroness, Lady Bennett, and my noble friend Lady Ritchie will be pleased to hear that we want to address the increasing propensity of firms to make extravagant claims about their environmental credentials through greenwashing. We will want to explore a specific prohibition in Schedule 19 on claims about environmental benefits or sustainable products which are not based on evidence. We will also want to explore whether consumers misled on this basis could have the right of redress for goods and services which knowingly do not meet the suppliers’ claims.

I am aware that I have not been able to cover all the issues, and I do not want to test the patience of the House any further. As we have heard, many of these issues have cross-party support, and we hope the Government might favour our proposals, as we believe they will improve the Bill. We want to get the Bill on to the statute book as soon as practical, as it is long overdue. With this in mind, I underscore to the Government that any further attempts to water down the Bill will be met with huge resistance, so I hope the Minister can confirm that the Government have no further plans to do this. I look forward to his response.

Digital Markets, Competition and Consumers Bill

Baroness Jones of Whitchurch Excerpts

Committee stage
Monday 22nd January 2024 Grand Committee

Moved by

[Baroness Jones of Whitchurch]

1: Clause 2, page 2, line 25, after “Chapter” insert “, taking account of analysis undertaken by the CMA on similar issues that have been the subject of public consultation.”
Member’s explanatory statement
This amendment aims to ensure that the CMA are able to draw on previous analysis on issues relevant to the regulatory regime.

[Baroness Jones of Whitchurch (Lab)]

My Lords, we have also added our names to Amendment 7. At the outset, I should say that we are in broad agreement with all the amendments in this group.

Before I explain the detail of our amendment, and without wishing to rerun the Second Reading debate, I would just like to say that we believe that the essence of the Bill is important and necessary. Our concerns, where we have them, are about some of the details in the Bill and we will give them proper challenge and scrutiny. However, it is not in the interests of consumers or businesses for the Bill to be unduly delayed and we hope to get it on the statute book in an improved form and in a timely manner.

Part 1 of necessity gives the CMA considerable new powers. We support the model that is being proposed, with priority being given to identifying the big tech players that have strategic market status. However, it is important that those new powers are carried out with clarity and with transparency and a number of our amendments in this and other groups address this issue. Our Amendment 1 is a simple but important amendment. It would enable the CMA to draw on its analysis and consultations that have taken place before the passing of the Bill.

Those of us who attended the briefings with the CMA last week will have heard the amount of detailed preparation that it has carried out in anticipation of the Bill being passed. We believe that it is important that it can draw on this wealth of knowledge without starting from scratch and having to do it all again. This will strengthen its effectiveness going forward, as it can reflect on the lessons learned and the outcomes of the various consultations that have already been undertaken.

When this issue came up in the Commons, the Minister, Paul Scully, said:

“I strongly support the point that the CMA should not have to repeat work that it has already done. It is for the DMU to decide what is and is not relevant analysis to its investigations, and it should be able to draw on insight from previous analysis or consultations when carrying out an SMS investigation where it is appropriate and lawful to do so. I am happy to confirm that the Bill does not prevent the DMU from doing that”.—[Official Report, Commons, Digital Markets, Competition and Consumers Bill Committee, 20/6/23; col. 116.]


However, this is our concern. The Bill as it currently stands is silent on the issue. It does not make it clear either way and, specifically, it does not make it clear that this retrospection is within the powers of the CMA. We want to put this clarity in the Bill to avoid the potential for any legal challenges about the way the CMA is going about its investigation. Noble Lords will be familiar with this argument, as it will be a running theme during our scrutiny of the Bill. We want the rules to be watertight and we want to close any legal loopholes from those who stand to lose if the CMA rules against them. Therefore, we believe that this amendment is important in shoring up the CMA’s powers to act and I beg to move.

[Lord Clement-Jones (LD)]

My Lords, at the opening of this Committee stage, I want to repeat, rather in the same way as the noble Baroness, Lady, Jones, what I said on Second Reading: we broadly welcome this Bill. In fact, since the Furman report was set up five years ago, we have been rather impatient for competition law in the digital space to be reformed and for the DMU to be created.

At the outset, I also want to thank a number of organisations—largely because I cannot reference them every time I quote them—for their help in preparing for the digital markets aspects of the Bill: the Coalition for App Fairness, the Public Interest News Foundation, Which?, Preiskel & Co, Foxglove, the Open Markets Institute and the News Media Association. They have all inputted helpfully into the consideration of the Bill.

The ability to impose conduct requirements and pro-competition interventions on undertakings designated as having strategic market status is just about the most powerful feature of the Bill. One of the Bill’s main strengths is its flexible approach, whereby once a platform is designated as having SMS, the CMA is able to tailor regulatory measures to its individual business model in the form of conduct requirements and pro-competition interventions, including through remedies not exhaustively defined in the Bill.

However, a forward-looking assessment of strategic market status makes the process vulnerable to being gamed by dominant platforms. The current five-year period does not account for dynamic digital markets that will not have evidence of the position in the market in five years’ time. It enables challengers to rebut the enforcer’s claim that they enjoy substantial and entrenched market power, even where their dominance has yet to be meaningfully threatened. Clause 5 of the Bill needs to be amended so that substantial and entrenched market power is based on past data rather than a forward-looking assessment. There should also be greater rights to consultation of businesses that are not of SMS under the Bill. As the noble Baroness, Lady Jones, said, this will be discussed later, under another group of amendments.

The provisions of Clause 5, as it is currently worded, risk causing problems for the CMA in practice. Part of the problem is the need for evidence to support a decision by the CMA of a market position over the entire five-year period. The five-year period requires current evidence of the position in the market in five years’ time. In dynamic digital markets such as these, no such evidence is likely to exist today. The CMA needs evidence to underpin its administrative findings. Where no such evidence exists, it cannot designate an SMS firm.

The CMA will have evidence that exists up to the date of the decision—evidence of the current entrenched position, market shares, barriers to entry, intellectual property rights and so on. In that respect, we support the noble Baroness, Lady Jones, with her Amendment 1, because it should of course include earlier investigations by the CMA. All that evidence exists today in 2024, but what the position will be in 2028 will need to be found and it has to be credible evidence to support a CMA decision under Clause 5. Particularly in fast-moving technology markets, the prediction of future trends is not a simple matter, so lack of sufficient evidence of the entrenched nature of a player at year 5 or over the entire period would prevent a rational decision-maker from being able to make a decision that the player will have SMS over the five-year period, as demanded by the Bill. Every designation and subsequent requirement or investigation imposed on the designated undertaking risks being subject to challenge on the basis of insufficient evidence.

As the Open Markets Institute says,

“the inevitably speculative nature of a forward-looking assessment makes the process vulnerable to being gamed by dominant platforms. For example, such firms may use the emergence—and even hypothetical emergence—of potential challengers to rebut the enforcer’s claim that they enjoy substantial and entrenched market power, even where their dominance has yet to be meaningfully threatened by those challengers”.

It gives the example of the rise of TikTok, which Meta has used in arguments to push back against anti-trust scrutiny:

“Yet while experiencing rapid growth in terms of user numbers, TikTok has so far failed to seriously challenge the economic dominance of Meta in online advertising (the basis of Meta’s market power), generating less”


than

“a tenth of the latter’s global revenues. Dominant platforms will also use emerging technologies—such as generative AI—to claim that their dominance is transitory, claims that will be difficult for the CMA to rebut given future uncertainty”.


Our Amendments 3, 4, 5 and 6—here I thank the noble Lord, Lord Vaux, for his support for them, and sympathise with him because I gather that his presence here today has been delayed by Storm Isha—suggest that the number of years should be removed and the provision clarified so that the assessment is made based on current evidence and facts. If the market position changes, the CMA has the power to revoke such designation in any event, on application from the SMS business, as provided for by Clause 16.

That is the argument for Amendments 3, 4, 5 and 6 in Clause 5. I look forward to hearing what the noble Viscount, Lord Colville, has to say on Amendment 7, which we very much support as well.

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[Viscount Camrose (Con)]

I take note of my noble friend’s point. There may be many areas on which all of us in this Committee end up disagreeing, but one that I doubt we will disagree on is the need for absolute clarity in all these measures. I am very happy to commit to taking that away and seeing whether there is an appropriate form of words that can deliver the clarity that noble Lords are seeking.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have spoken. I very much echo the thanks expressed by the noble Baroness, Lady Harding, to all the companies and business that have given evidence and come forward to speak to us. It is true that, for a number of them, they have taken risks to do that. It is a sad fact of life now that their very survival could be at stake if some of their concerns become public. That is why we are here today, I suppose. That is where the market has left us and there is a need to address that.

To pick up on the points made by the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Harding, about the CMA’s assessment, I think that we have had a useful discussion with the Minister around all that. I certainly want to look at Hansard and at the reassurances that the Minister has tried to give on this. I very much take the point, incidentally—as mentioned by the noble Viscount, Lord Colville, in moving his amendment—that SMS status does not mean that they have done anything wrong, so I do not want to get too hung up about giving that status in the first instance. What is important is how we follow that up and look at their behaviour going forward. As the noble Lord, Lord Clement-Jones, spelled out, there is a danger that, if we are not careful, those who are given that category will game the system. That is what we are all anxious about.

I am not sure that the wording achieves what the Minister wants. I think that we are all genuinely clear on the outcomes that we want, as the Minister said, but the current wording does not achieve that. The five-year forward plan is playing into the hands of the wrong people, and we will not come out with the outcomes that we want if we stick with the current wording, so I very much welcome the chance to have further discussion about that.

[Lord Tyrie (Non-Afl)]

Before the noble Baroness leaves that point, I strongly endorse what she says. I make the point that we are here debating a set of powers that we would, in most contexts, otherwise consider extremely draconian, because there has already been abuse and market power has already been exercised in ways that we all consider unacceptable. That is why we need clarity on this point. We do not need to look into the crystal ball—we can read the book.

[Baroness Jones of Whitchurch (Lab)]

I thank the noble Lord very much for that insight. He is absolutely right, of course. We all understand his wealth of experience; it is very helpful to have his support on that issue.

I pick up on the amendment tabled by the noble Viscount, Lord Colville, to which the noble Lord, Lord Clement-Jones, and I have added our names. He rightly raised that the significant powers given to the Secretary of State to vary the conditions would lead to tech companies being considered to have strategic market status. As my noble friend Lord Knight said, the list in Clause 6 is quite generic. In a sense, that should be enough for us. None of the things in Clause 6 is time limited, so it should be enough for the CMA and the DMU to do their work.

There is concern, therefore, about how the Bill is currently worded, as it does not give any constraints to the Secretary of State to change the conditions, apart from the affirmative SI—and we can all rehearse the arguments about what that means for parliamentary accountability. The Minister might say that it is necessary to add new conditions if new anti-competitive practices come to light, but I feel that the current wording—and I think that the noble Viscount feels this, too—allows not just for new anti-competitive practices but for the current conditions to be watered down. That is our real concern. The noble Viscount gave an example about specifying particular forms of market practice, such as online sales and delivery, which would then apply to only one or two companies and not the ones that, as I think we all understand, should be in the frame. I was not absolutely convinced by what the Minister said on this issue. It is a bit of a running theme and, as several noble Lords said, we will come back to the issue of parliamentary scrutiny. Perhaps we can look at that in the round at a future point.

The Minister will be pleased to know that I support the government amendments. They make good sense and give clarification in the Bill, which we always like.

We continue to believe that Amendment 1 is necessary to enable the CMA to proceed with speed once the Bill is on the statute book. Nothing the Minister has said so far has persuaded me that the silence in the Bill on this issue is sufficiently reassuring. I hope that we can find a form of words—if not ours then a different form of words—that will allow the CMA to look backwards, giving it absolute reassurance that it can do so and that it will not have to repeat any of its activities. This is all about tightening up the wording. We will reflect on what the Minister said, and I hope that we can talk about this some more. In the meantime, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

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Moved by

[Baroness Jones of Whitchurch]

8: Clause 11, page 6, line 36, at end insert “, and
(c) give a copy of the statement to those undertakings that have not been designated as having SMS that are most directly affected.”Member’s explanatory statement
This amendment is one of a series that would ensure that challenger firms are able to access information about the regulatory framework on an equal basis to designated firms.

--- Later in debate ---

[Baroness Jones of Whitchurch (Lab)]

My Lords, in moving Amendment 8, I will also speak to my Amendments 9, 10, 13, 35, 37, 42, 45, 46, 57 and 58. I thank my noble friend Lady Ritchie, the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Harding, for adding their names. The noble Lords, Lord Clement-Jones and Lord Tyrie, have some other amendments in this group to which I will respond at the end of this debate. However, I can confirm that we support the thrust of the noble Lords’ amendments and look forward to hearing their more detailed arguments in due course.

As I made clear at the outset, our concerns with this Bill are mainly about the detail, in particular the changes made by the Government at the very last minute on Report in the Commons. We support the model that is being proposed, although we share some of the concerns that will come up in this debate and in later ones about the extent of the widespread powers that have been given to the CMA and the DMU in respect of the big tech players, in particular their application to those being given strategic market status. The corollary to the decision to introduce this new approach is that the new power should be set out clearly in statute, which is the point that we have made, and that when it is used the DMU will need to be open and transparent to all those who have a legitimate interest.

There must be no question that the smaller challenger firms which—for various understandable reasons—may not be fully informed about discussions and negotiations between the DMU and potential SMS firms need to be able to access information about the regulatory framework and potential changes to it on an equal basis as the firms being considered for SMS status. How else will we achieve the balance that we are all aiming for in this Bill? Our amendments in this and other groups address this issue.

When this came up in the Commons, Minister Saqib Bhatti said:

“the Government agree that it is important that the DMU’s regulatory decisions are transparent and that the right information is available to the public”. —[Official Report, Commons, 20/11/23; col. 74.]

We agree with that. With respect, however, the DMU publishing summaries of decisions reached completely misses the point we are trying to make. The DMU must ensure that it has all the information it needs, including all the information held by challenger firms, before it makes decisions about SMS status and related matters. Challenger firms may have a different view of what SMS means to their businesses and consumers and it is unlikely that they will have perfect information about the DMU’s thinking. They will, however, certainly want to be engaged in the issues if they are made aware of them at the right time.

Many of us attended a helpful meeting with the CMA last week, where this issue was raised. It became clear that it already has good relations with a number of the bigger challenger firms. However, given that it is investigating anti-competitive behaviour, it is also clear that there will be many smaller start-up companies that will never be given a chance to get established because of the behaviour of the big players. We have a real concern about how we can make their voices heard too. We run the danger that the DMU will contact only the people it already knows about and will not hear from those who are perhaps most squeezed out of the process being investigated.

Our suggestion is that the DMU should have a statutory duty to send decision notices to third parties that it assesses are likely to be most affected by such a decision. To us, this does not seem to be unduly burdensome to the DMU. One could argue that a failure to know which challenger firms are likely to be affected could be very injurious to consumers and the economy at large. In the Commons, the Minister said he thought there would be “limited benefits” to introducing this requirement. I do not think the Government have made the case on this point and I hope they will think again. I also hope that they and the Minister will listen carefully to the points made in this debate.

In the last few weeks, we have met and received submissions from many challenger firms concerned about the Government’s position on the issue. They support the Bill but worry about the imbalance, as they fear it will have a deleterious effect on the regime. They have all made it clear that they support our amendments. I hope the Minister will be able to agree with our arguments. We think there is a strong case for involving the challenger firms at an earlier stage and giving them far more information. I would like to hear how and when the Government intend to do that. I beg to move.

[Lord Tyrie (Non-Afl)]

I declare a number of general interests with respect to this Bill. I am on the advisory board of BSV, a consumer class action being taken against crypto exchanges; I act as a consultant to DLA Piper; I have also had contact with many companies, several platforms and their advisors and many consumer groups about the Bill. As a former chairman of the CMA, I had a significant hand in constructing large parts of it. It is important that others bear in mind that anything I say on this is from the perspective of having been there for enough time to have taken too many of its ideas to heart. In fact, I have been lobbied in all directions on this Bill and for so long that I am losing count of which direction the lobbies all come from.

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[Viscount Camrose (Con)]

Indeed, and I apologise for getting slightly sidetracked on the issue. I think the outcomes we want are that challenger tech firms should be duly informed about the information they need, whether to rebut claims set out by an SMS or to understand the implications and contribute to the process of determining what interventions the regulator should need to make. In the Bill, we are trying to develop the machinery that balances both sides of that equation most effectively, and I remain concerned that we need to manage the workload requirements of the regulator so that it is optimally focused on delivering the right outcomes based on the right information.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have spoken. We have had an excellent debate. I very much respect the experience of the noble Lord, Lord Tyrie, on this issue. I agree that there is a challenge for us in building trust in the new regime. It is a leap in the dark and, undoubtedly, we are giving the CMA/DMU considerable new powers, so it must prove its worth and prove that our faith in it is justified. I agree that there is a danger of getting that balance wrong. During the passage of the Bill, we will look at other ways of getting parliamentary and other oversight of its activities, to ensure that we get the balance in check.

I also agree that it is important that we maintain commercial confidentiality. This is an issue about sharing information, which we were just talking about. However much information is shared, we must ensure that those who are sharing it—sometimes it is very much core to their business model—respect it and do not put it in the public domain. All that must underpin our debate.

I agreed with the noble Lord, Lord Clement-Jones, that the proposals from the noble Lord, Lord Tyrie, were a curate’s egg; I was not sure either about the independent case reviewer. I worry that it would be another loophole, or hurdle, that would allow the lawyers a field day. The noble Lord, Lord Tyrie, put it there with the very best intentions, and I am happy that we talk about it, but I am not sure about it. It worries me that we are being too prescriptive by setting it out in so much detail in the Bill, but let us get that right because there will, I hope, be other opportunities to debate this.

I thank the noble Baronesses, Lady Harding and Lady Kidron, and the noble Lord, Lord Vaizey, for their support on my amendments. The noble Baroness, Lady Harding, said it very well: the amendments illustrate the inequality of arms between the SMS and the challenger firm. There will be a wealth of evidence that the CMA needs to consider. That will be a whole lot of major anti-competitive practices, a lot of which it already knows about, but there will also be some of the more minor inconveniences that are put upon some of the challenger firms. We have met with a lot of the stakeholders; sometimes what is so annoying is the irritating, almost vindictive little actions, because you have the temerity to put your hand up and say that you do not agree with the major companies. We must ensure that we capture all of that in the round, and that it is not just the major known knowns that the CMA considers.

The noble Baroness, Lady Kidron, made the point very well: there is a danger that, based on what it knows, the CMA will make assumptions about what it can win, rather than getting under the skin of what is really going on and what is right for the consumer in all this. To get under the skin, the CMA will need a lot of information, so we must ensure that it gets the right information, at the right time, from the right people. The noble Baroness and the noble Lord, Lord Clement-Jones, made the point that, as it is set out at the moment, the incumbents have all the cards. We need transparency of information to rebalance the scales in all this.

I have listened carefully to the Minister’s response. He said that the DMU is required to consult publicly before decisions are implemented, but that is probably too late to influence the outcome. By the time that it is consulting publicly, it has already made its mind up. I am not sure that that is the right point at which that major flow of new information needs to take place. The Minister argued that the burden of sending notices to thousands of parties, et cetera, would outweigh the benefit. That is exactly the information that it needs, and the noble Baroness, Lady Harding, made that point. If we have to bite that bullet, let us bite that bullet. If that is what it takes to rebalance the scales then we need to do that.

I fully admit that we might not have got the wording right to achieve that, but I think the principle is right and I am prepared to dig in on that principle. I hope we can have a further discussion on it. I think we know what we want to do. Nobody wants the SMS companies to flood the CMA with so much information that everybody drowns. We have to get it right so that it gets the right information. I do not think we have the balance right at this time, but let us talk about it some more. In the meantime, I beg leave to withdraw my amendment.

Amendment 8 withdrawn.

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[Baroness Kidron (CB)]

My Lords, I am sorry to break the Conservative bus pattern but I, too, will speak to Amendments 26 and 27, to which I have added my name, and to Amendment 30. Before I do, I was very taken by the amendments spoken to by the noble Lord, Lord Lansley, and I support them. I feel somewhat sheepish that I had not seen the relationship between data and the Bill, having spent most of the past few months with my head in the data Bill. That connection is hugely important, and I am very grateful to the noble Lord for making such a clear case. In supporting Amendments 26 and 27, I recognise the value of Amendment 25, tabled by the noble Lord, Lord Vaizey, and put on record my support for the noble Lord, Lord Holmes, on Amendment 24. So much has been said that we have managed to change the name of the leveraging principle to the whack-a-mole principle and everything that has been said has been said very well.

The only point I want to make on these two amendments, apart from to echo the profound importance that other noble Lords have already spoken of, is that the ingenuity of the sector has always struck me as being equally divided between its incredible creativity in creating new products and things for us to do and services that it can provide, and an equal ingenuity in avoiding regulation of all kinds in all parts of the world. Without having not only the designated activity but the activities the sector controls that are adjacent to the activity, we do not have the core purpose of the Bill. At one point I thought it might help the Minister to see that the argument he made in relation to Clause 6(2) and (3), which was in defence of some flexibility for the Secretary of State, might equally be made on behalf of the regulator in this case.

Turning briefly to Amendment 30 in the name of the noble Lord, Lord Clement-Jones, I first have to make a slightly unusual declaration in that my husband was one of the Hollywood writers who went on strike and won a historic settlement to be a human being in charge of their AI rather than at the behest of the AI. Not only in the creative industries but in academia, I have seen first-hand the impact of scraping information. Not only is the life’s work of an academic taken without permission, but then regurgitating it as an inaccurate mere guess undermines the very purpose of academic distinctions. There is clearly a copyright issue that requires an ability both to opt out and correct, and to share in the upside, as the noble Lord pointed out.

I suggest that the LLMs and general AI firms have taken the axiom “it’s better to ask forgiveness than permission” to unbelievable new heights. Our role during the passage of this Bill may be to turn that around and say that it is better to ask permission than forgiveness.

[Baroness Jones of Whitchurch (Lab)]

My Lords, we have had a wonderfully eclectic debate. I am sorry if we gave some of the amendments more attention than others, because we have a number of very important issues here. Even in my response I may not be giving some colleagues due deference for their hard work and the good arguments they have put forward.

As noble Lords have commented, Amendments 26, 27 and 34 are in my name. As we have discussed, Amendments 26 and 27 would ensure that the CMA can tackle anti-competitive conduct in non-designated activity, provided that this conduct is related to designated activity. This would ensure, for example, that a designated company facing conduct requirements could not simply shift the resources of its business into another similar business venture, which would have a similar outcome of anti-competitive behaviour.

I am very grateful to the noble Baroness, Lady Stowell, for her support. The example she gave of Apple resonates with all of us and has obviously been in the news. It was one of the behaviours I described as rather vindictive in the last debate. I am not sure how much extra money Apple is going to make from it, but it is a question of rubbing someone’s nose in it because you do not like the decision that has been made. I feel that we need to address this issue.

The noble Lord, Lord Vaizey, in his Amendment 25, made a very similar point about the leveraging principle. We have all signed up to “the whack-a-mole principle”; I think we will call it that from now on. As the noble Baroness, Lady Harding, made clear, this is about addressing the leveraging of SMS markets to enter adjoining markets. She gave the example of travel price comparison. I feel that is a lazy innovation; if you get so big, you stop innovating—you copy the competing firms and taking their best ideas without innovating any more. It is in all our interests to get a grip on this, so that these companies that have great resources and great capacity for innovation innovate in a creative way rather than just copying other people’s ideas.

Amendment 34, which is also in our names, would enable the CMA to keep conduct requirements under review and take account of whether those requirements are having their intended effects or if further steps of pro-competition intervention is necessary. It would provide a clearer link between the measures available to the CMA. As the noble Lord, Lord Clement-Jones, and others have said, it underpins the importance of interoperability in CMA decisions. We believe that the amendments help to clarify and reinforce the powers available to the CMA.

I listened carefully to the noble Lord, Lord Holmes, who, as ever, provided enormous insight into the tech world and the consequences of the legislation. We share his objective of getting the powers of the CMA in the right balance. His amendment challenges the Government to explain why the CMA can only impose a conduct requirement to achieve the fair dealing, open choice or trust and transparency objectives—which seems to be overly restrictive and open to legal challenge. We look forward to hearing the Minister’s explanation of why those restrictions were felt necessary. The noble Lord, Lord Holmes, also raised an important point in his Amendment 24, which we have not given sufficient weight to, about the need for those conduct requirements to deliver proper accessibility in line with previous legislation. We absolutely support him in that quest.

The amendments from the noble Lords, Lord Clement-Jones and Lord Lansley, raise important points about transparency and improved data. They stress the importance of portability and interoperability and put data firmly into the conduct requirements. We support those arguments and look forward to the Minister’s response to what we feel are common-sense proposals.

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[Viscount Camrose (Con)]

There is a much broader set of work looking at issues of copyright, intellectual property and artificial intelligence together—a hugely complex piece of work with many stakeholders pulling in a range of different directions. The goal of this Bill is to address that in so far as it affects competitive markets. We may debate this, but the design of the Bill is such that, in so far as competition is affected by the misuse of intellectual property or intellectual property infringements, the CMA is empowered to intervene to drive greater competition or address issues that limit competition. It is targeted only at addressing competitive issues but, in so far as they affect competitive issues, it is empowered to address IP infringement issues, as set out here.

Existing permitted types of conduct requirements already allow the CMA to set requirements for unfair and unreasonable terms, which can include payment terms. The Government are committed to our world-leading IP regime. Copyright legislation already provides a robust framework for rights holders to enforce against copyright infringement. We will take a balanced approach to the use of AI across the press sector and departments across government are working together closely to consider the impact of AI, ensuring that AI innovators and our world-leading creators can continue to flourish.

I turn to Amendments 26, 27 and 25. I thank noble Lords for their thoughtful and considered contributions on these amendments. Amendments 26 and 27 are intended to expand the ability of the CMA to intervene outside the designated digital activity. Amendment 25 also seeks to expand this power specifically in relation to self-preferencing behaviour that takes place outside the designated activity. We agree with noble Lords that it is crucial that the CMA can deal with anti-competitive behaviour outside the designated activity where appropriate. My noble friend Lord Offord and I have had a number of representations giving further examples of this kind of behaviour and we are committed to finding the right means of addressing it.

Our current drafting has sought to balance the need for proportionate intervention with clear regulatory perimeters. The regime is designed to address the issues that result from strategic market status and is therefore designed to address competition issues specifically in activities where competition concerns have already been identified. This recognises that SMS firms are likely to be active in a wide range of activities and will face healthy competition from other firms in many of them.

I assure noble Lords that the power to prevent self-preferencing is already sufficiently broad. It can apply where an SMS firm is using its power in the designated activity inappropriately to treat its own products more favourably, but without a need for those products to be linked to the designated activity. In addition, the existing power outlined in Clause 20(3)(c) to intervene in non-designated activities, which noble Lords are referring to as the whack-a-mole principle, has been carefully calibrated. It is available only where the conduct has a material impact on the strategic market status in respect of the designated activity.

The same conduct in respect of a different activity may not have the same impact on the market. It will not always be anti-competitive and may instead form a part of normal business practice in a more contestable market. The DMU will therefore take a targeted, evidence-based approach when considering intervention. The DMU can intervene via conduct requirements outside the designated activity to prevent leveraging into the designated activity or via PCIs to address an adverse effect on competition in a designated activity. Therefore, the Government’s view is that broadening the CMA’s powers would risk over-intervention, creating uncertainty for businesses and risks to innovation and investment.

[Baroness Jones of Whitchurch (Lab)]

Before the Minister moves on, do I understand from the beginning of that contribution that he is still looking at the wording—in other words, that he not wedded to the wording and is there some scope for either the amendment from the noble Lord, Lord Vaizey, or our amendment, or to work with him to see if we can achieve what we are trying to achieve through this or other means?

[Viscount Camrose (Con)]

Throughout this group, I am convinced that we are trying to achieve the same thing. I remain concerned that we have to design safeguards against regulatory overreach to enter into markets that are currently healthy, but beyond that I am very happy to explore the right form of wording or design that achieves the end that all sides are keen to establish.

Amendment 24 is intended to clarify the meaning of information being accessible. I thank my noble friend Lord Holmes for the amendment, and for the rigour and passion he demonstrated when making his points. I agree that the question of online accessibility is of great importance. All kinds of technology should be for everyone. I can provide assurance that the CMA can already consider the concept of accessibility in the broadest sense, and in a way that includes—but is not limited to—compatibility with assistive technology. I agree that it is crucial that all members of our society have the right to accessible information. The Bill as drafted provides for this and can encompass, for example, a requirement to have terms and conditions that are easily accessible on a website, in easy-to-understand language, and compatible with assistive technology.

Amendments 32 and 22 would remove the power that enables the Secretary of State to update the list of permitted types of conduct requirement and replace it with an additional open-ended type of conduct requirement. I thank noble Lords for their amendments and agree that digital markets are fast-moving and unpredictable. Future innovations are hard to foresee and will likely give rise to a range of new behaviours and ensuing harms. Although the Government have endeavoured to make the list of permitted types of conduct requirements fully comprehensive, it could become out of date in the future. The noble Viscount’s proposal to add an open-ended type of conduct requirement would, we feel, grant too wide a power to the CMA and undermine the safeguards we have set by creating a clear framework for the CMA to operate within.

It is right that both government and Parliament have appropriate oversight and scrutiny over the significant powers being granted to the CMA. Therefore, the delegated power to allow the Secretary of State, subject to parliamentary scrutiny, to update the legislation provides the most appropriate way to future-proof the regime, ensuring that it can intervene effectively and promptly on the right issues. In addition, I note that the Delegated Powers and Regulatory Reform Committee has not queried the need for this power.

Digital Markets, Competition and Consumers Bill

Baroness Jones of Whitchurch Excerpts

Committee stage
Wednesday 24th January 2024 Grand Committee

Moved by

[Baroness Jones of Whitchurch]

36: Clause 27, page 15, line 24, at end insert—
“(2) The CMA may have regard to any significant benefits to users or potential users that the CMA considers have resulted, or may be expected to result, from a factor or combination of factors resulting from a breach of a conduct requirement.”Member's explanatory statement
This amendment would ensure that the CMA considers any significant benefits to users resulting from the breach of a Conduct Requirement when it is considering representations from designated undertakings as part of a Conduct Investigation.

[Baroness Jones of Whitchurch (Lab)]

My Lords, in moving this amendment I will also speak to Amendments 39, 40 and 48 and the Clause 29 stand part notice, all in my name. I thank all noble Lords who have added their names.

These amendments follow on from our earlier debate about the proportionality of the CMA’s judgments and our desire across the Room not to create unforeseen legal loopholes. They address the new wording in Clause 29, which the Government introduced at a late stage in the Commons. They also address the countervailing benefit exemption, in which companies can argue that their conduct gives rise to benefits to consumers that outweigh the detrimental impact of competition that their conduct would otherwise breach. This clause then goes further and makes it clear that the CMA “must” close a conduct investigation in these circumstances.

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[Viscount Camrose (Con)]

Yes, indeed. I thank my noble friend for repeating the question and I apologise that I did not get to it earlier. I would be delighted to write and provide such examples.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who spoke in support of our amendments. It is worth saying at the outset that it sounds like we are being very critical of the potential SMS firms. This is not about being critical but about getting the balance right. That is what we are aiming to do. A lot of the discussion that we have had in Committee today has been about feeling that that has become out of kilter. We are trying to get the very careful balance that the noble Baroness, Lady Stowell, talked about. Her committee felt, having agonised over it, that the original wording was about right. A lot of us feel that, which is why we are so anxious and testing of the changes that have come along more recently.

As we debated and identified in the previous discussion, the CMA already has a responsibility to act proportionately. This ought to apply to its judgments about countervailing benefits as well. The noble Baroness, Lady Stowell, said that it is designed as a backstop. It is important that the threshold remains high; that is one of the key issues.

The noble Lord, Lord Fox, said that because of the word “must”—that the CMA must desist if there are countervailing benefits—it becomes almost mandatory, so there will be no opportunities for the CMA to make balanced judgments. We agree that it is far too prescriptive.

I rather liked the canter through all the preceding clauses from the noble Lord, Lord Lansley, before he concluded: why do we need Clause 29, because all those provisions are already there? He made an important point about all of that.

I listened carefully to the Minister. He repeated what he said at Second Reading: that this clause on countervailing benefits is only to pick up new, unknown consumer benefits that have not been identified before. Try as I might, I have looked at the wording of Clause 29 and I do not see that it says that there. As the noble Baroness, Lady Kidron, quite rightly pointed out, as it is worded there is a danger that the SMS companies could hold back evidence to that last backstop and then start challenging at that point. It would then be very difficult for the challenger firms to come forward with different evidence. The current wording opens up a disturbing void.

We have had a really good discussion about whether the previous wording or the new wording maintains the high threshold. I think most of us remain unclear about that. I think it was the noble Baroness, Lady Harding, who said that this new wording has not been tested in the courts, so it gives us not more certainty but more uncertainty. That is the last thing that we want at this point.

The Minister said that this was put in partly because stakeholders were confused. I would push back and say that the Select Committee chaired by the noble Baroness, Lady Stowell, looked at this in a lot more detail than some of those stakeholders have and concluded that the original wording is clearer and more robust than anything he has come back with. I hope the Minister will take that point away. I do not think he was particularly convincing about why that new wording was necessary.

On Clause 48, I have considerable sympathy with the case made by the noble Lord, Lord Black, and very much support his arguments. We do not want companies to be put in a situation where they have to accept suboptimal deals because they are running out of time and money when, if we are not careful, it could take many years for the process to be completed.

The Minister tried to reassure us, because if there was an anxiety about the time we could have interim enforcement orders, for example. However, the difference is that the final offer mechanism is more of a collaborative process. When we met with representatives from the CMA, they said that that is how they like to work: they do not want to go to court, they want to reach collaborative agreements. I feel that that our Amendment 48 would allow some of that collaboration to work along the system before it gets to the final, final offer. Again, I am not convinced by the Minister’s response on all of that. We want to keep it out of court as much as we can but he is tying the hands of the CMA too much in the way this is worded at the moment.

I am sure I have not picked up all the points but I think the Minister gets the idea that he is not really taking us with him. I therefore hope that he will reflect on these issues again but, in the meantime, I beg leave to withdraw the amendment.

Amendment 36 withdrawn.

Digital Markets, Competition and Consumers Bill

Baroness Jones of Whitchurch Excerpts

Committee stage
Monday 29th January 2024 Grand Committee

Moved by

[Baroness Jones of Whitchurch]

64: Clause 89, page 55, line 18, leave out “, 114 (appeals)”
Member's explanatory statement
This amendment, alongside others in my name to Clauses 89 and 103, would revert the relevant Clauses back to the ones first introduced in the House of Commons. This would reinstate judicial review principles as the means by which appeals against penalty decisions are heard, rather than such decisions being determined on the merits.

[Baroness Jones of Whitchurch (Lab)]

My Lords, in rising to move Amendment 64, I will also speak to Amendments 65, 67, 71 and 72. I thank the noble Lord, Lord Clement-Jones, and the noble Baronesses, Lady Harding and Lady Kidron, for their support. The noble Baroness, Lady Kidron, cannot be here and sends her apologies, but she asked me to stress her absolute support for this amendment. I have added my name to Amendment 66, in the name of the noble Baroness, Lady Stowell, and I look forward to hearing from the noble Lords, Lord Holmes and Lord Tyrie, who, I am sure, will make important contributions shortly in support of their amendments. All our amendments would revert the appeals process back to judicial review principles for resolving appeals against penalty decisions, unlike the late government amendments, which substituted merit reviews.

This debate follows on from last week’s excellent debate on the impact of making CMA decisions proportionate and strengthening the right of SMS firms to argue for countervailing benefits to be taken into account. The issue of judicial review versus merit appeals goes to the heart of the argument about achieving the right balance between the rights of SMS and challenger firms. Of all the many submissions we have received on the Bill, this has received the most attention—from those on both sides of the argument—and we have taken note of all those views.

The Government’s amendments matter, because penalties such as fines are the most significant deterrent in preventing strategic market status companies breaking the conduct requirements established by the CMA. There is real concern that, under the new wording, SMS firms will use the appeals process to delay implementation of the fines and thereby reduce their incentives to comply with the order. Also, as the fines do not have to be paid until any legal challenges are finally resolved, there is an incentive to drag out the final decision through the courts. The fact that they have lobbied for these changes raises real questions about their motivation in pursuing this.

When we met with one of the potential SMS firms recently, it argued that the new regime gave the CMA too much power and that a merit appeal process was the only way to provide a check against misguided or ill-informed decisions. It has also been argued that the Furman review recommended that any loss of the right to merit reviews should be coupled with an enhanced role for independent decision-making to protect against executive overreach. We accept that this new regime does give the CMA significant new powers, and this has already been a theme of our debates, but we would argue that the scrutiny of whether it is carrying out its duties effectively should be through Parliament, not through individual costly legal cases going to merit review.

We are supporting several amendments to the Bill that would enhance Parliament’s oversight of the CMA’s activities. In addition, it is important that the CMA explain its decisions in detailed written reports and disclose its underlying data to interested parties in order to allow them to identify errors. All this would help to shore up scrutiny of its decisions.

As the CMA itself argued in giving evidence to the Commons committee, judicial review is the established system for much of its work, including merger control and market investigations. It also applies to a number of other regulators. The advantage is that it avoids protracted litigation and encourages engagement early on, with constructive and collaborative outcomes. We agree with this approach, which is why we believe that appeals through judicial review will deliver swifter and more effective outcomes. 

In his response at Second Reading, the Minister made the point that appeals on full merit bring the regime into line with the Enterprise Act 2002. So far, this seems to be the only justification the Government have made but, as we have made clear, it is not the only comparator. Many other regulators, including Ofcom’s role under the Online Safety Act, do not use merits reviews on appeal. We do not believe that the case has been made for this change; we believe that both sides benefit from a prompt resolution of the issues which a JR process will deliver.

In the meantime, noble Lords have submitted other amendments in this group that seek to limit the application for any merits review. We would argue that the cleanest way to achieve our objective is to revert to the original wording, but I very much look forward to hearing their views and having this debate. I therefore beg to move Amendment 64.

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[Viscount Camrose (Con)]

I suggest that I set out a comparison in writing and perform the analysis as to the differences, should there be any, between the two.

Noble Lords expressed a concern on the second day in Committee that there should not be ambiguity in how appeals will be conducted. Introducing a requirement in a new domestic regime that requires an analysis of unrelated retained EU law to be able to understand how an appeal should be decided risks creating that kind of ambiguity. Complicating the appeals standard with EU case law would slow down appeals while the boundaries of what is captured by JR-plus are agreed.

Regarding decision-making, the noble Lord, Lord Tyrie, mentioned the CMA independent panel. Our approach to internal decision-making balances accountability and independence. Launching major market-shaping investigations under the regime will be reserved for the board. A board committee will oversee the regime’s regulatory interventions. At least half the members of the committee will be non-executive directors and members of the CMA’s independent panel. This make-up will ensure an independent perspective and the ability to develop deep expertise over time.

I hope that the reasoning I have put forward provides the necessary reassurances to noble Lords and that they will feel able not to press their amendments.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have spoken. Again, in the vast majority of the contributions, we seem to have reached a wide degree of consensus, although not totally, in the light of that from the noble Lord, Lord Tyrie.

Noble Lords have made a number of important points. The noble Baroness, Lady Stowell, was quite right to take us back to the practicality of appeals on a merits basis; I will come back to the Minister’s response on all that because things are still not clear. How can we be sure that such an appeal will not open the whole case up again? That is at the heart of what we are debating here.

The noble Lord, Lord Holmes, said that we do not really understand why this must be different. Why is it such a special case? It has not been explained to us why this exception has been made.

I very much appreciate the point made by noble Lord, Lord Faulks: at the heart of this issue is whether we want regulation by the DMU or by the courts. There is a real danger of us drifting towards the latter with the Government’s amendments.

The noble Baroness, Lady Harding, rightly reminded us that regulators cannot afford to take too many risks. There is a fundamental imbalance, with regulators perhaps being forced to be risk-averse because they do not have the budgets of the big tech companies. We understand the danger of the David and Goliath situation that we are in here. It is all too easy to create a system where big tech companies’ lawyers can rule the roost.

The Minister said that decisions on penalties will address what an SMS firm has or has not done. He said that a decision will address not whether a breach has occurred but what led to the breach. Our concern is that we are going to go back over all the evidence of what led to a breach, whereas the fine at the end of it represents the end of the decision-making and is meant to be the deterrent. Again, I will look at Hansard and the Minister’s subsequent letter, but it seems to me from his explanation that he risks opening the whole case up again.

I listened carefully to the noble Lord, Lord Tyrie. I understand his experience in all this. Importantly, he said that there is not just one model here—that is, we have a number of regulators that do things differently. As he pointed out, the Government have previously supported the JR model; we must be reminded of that. The noble Lord also raised his concern about what happens if mistakes are made. If mistakes are made, they would be made in the process leading up to the decision, not the subsequent fines. A merits appeal on the fine would not really help if the decisions had happened further up the decision-making process.

I agree with the noble Lord, Lord Vaizey, that the regulators are not perfect. However, as we have discussed and will discuss again, we need stronger regulatory oversight. That will come—indeed, it needs to come—from stronger parliamentary oversight, which we will continue to debate in our discussions on this Bill.

I come back to the fundamental point made by the Minister. I listened to him carefully but I am still not clear how he will keep the stages separate. How will he keep the decision-making separate from the decision on the penalty? If SMS firms argue that the penalty is too high, they will have to revisit the evidence leading to the decision.

[Lord Faulks (Non-Afl)]

Can the noble Baroness confirm that, in her understanding, there is nothing in the Bill itself that makes that separation clear?

[Baroness Jones of Whitchurch (Lab)]

I thank the noble Lord, Lord Faulks; he is absolutely right. Again, we look forward to the Minister’s letter that will try to explain how these are two separate processes and that there is a clear cut-off point between one and the other, because I am not sure that that was really what he said in his reply. To be honest, I do not see how they can be separate, as that is not how the systems work. The appeal will be, as I think the Minister said, on what the SMS firm did to lead up to that penalty; therefore, the whole case would have to be revisited.

I do not know that the Minister persuaded many people on this matter. I am sure that we will continue to debate this, and we look forward to reading his letter, which I am sure will explain things in a little more detail. In the meantime, I beg leave to withdraw my amendment.

Digital Markets, Competition and Consumers Bill

Baroness Jones of Whitchurch Excerpts

Committee stage
Wednesday 31st January 2024 Grand Committee

Moved by

[Baroness Jones of Whitchurch]

80: After Clause 115, insert the following new Clause—
“Duty of the CMA: Citizens interest provisions(1) The Enterprise and Regulatory Reform Act 2013 is amended as follows.(2) After section 25(3) insert—“(3A) When carrying out its functions in relation to the regulation of competition in digital markets under Part 1 of the Digital Markets, Competition and Consumers Act 2024, the CMA must seek to promote competition, both within and outside the United Kingdom, for the benefit of consumers and citizens.””Member’s explanatory statement
This new Clause would give the CMA a duty to further the interests of citizens—as well as consumers—when carrying out its digital markets functions under Part 1 of the Bill.

[Baroness Jones of Whitchurch (Lab)]

My Lords, Amendment 80 raises the particular issue that was raised at Second Reading: whose interest is the CMA defending? Is it just the users of the product or service, or is there a wider citizens’ interest that needs to be taken into account? I am grateful to the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Kidron, for adding their names to this amendment and I look forward to hearing from the noble Lord, Lord Tyrie, on his amendment.

Part 1 has a specific focus on identifying the big tech companies that are so large and powerful that they can be categorised as having “strategic market status”. From the CMA’s operational plan, we know that it aims to identify three or four of these companies, in the first instance, for deep scrutiny about their behaviours and anti-competitive practices. We have a good idea which companies are likely to be in the frame for all this. They are increasingly fundamental to our lives: they help to run our public services, they store our personal data, they shape our purchase choices and social activities, they underpin our research and innovation, and they help to determine the health of our economy. Their wealth is bigger than that of many of the UK’s trading partners and, if they took their business elsewhere, our economy would certainly suffer.

When Part 1 talks about the CMA having regard

“in particular to the benefits for consumers”

that its conduct requirements will bring, you begin to wonder how it will identify the consumer interest, because, in this context, we are all consumers. We argue that this is no longer a transactional process where an individual consumer buys a product or service from one of these companies. Whether we like it or not, the behaviour of these companies influences all our lives, even if, as individuals, we do not engage in the digital world. Of course, this impact will be magnified as the AI applications speed up across our lives and as public services become digitalised.

Our amendment poses the challenge of why the CMA is acting only for consumers when it should be acting in the interests of all our citizens to ensure protection of the greater good. We raised this issue with Ministers when we met them recently and they helpfully sent a follow-up letter, conceding that the DMU taskforce had recommended that the DMU’s overarching statutory duty should be

“to further the interests of consumers and citizens in digital markets”.

It was recognised that competition in digital markets had deep interactions with a range of other issues, such as data privacy and media plurality.

However, the Government rejected the citizens’ interest proposal on the basis that it created some unhelpful overlaps with other regulators. We accept that there is some overlap with the other regulators, particularly Ofcom, but we argue that there are also large swathes of digital competition that do not easily fit under the remits of other regulators. As such, in many digital activities, no one is protecting the interests of citizens as a whole. Also, there is already a requirement for the DMU to consult key regulators before it makes an intervention, which would enable any overlap to be addressed at that point. While the Government are concerned not to make the remit of the DMU too broad, we counterargue that they risk making it too narrow if they do not add in a citizens’ interest provision.

This is clearly a probing amendment and we may well not have found the right wording, but I would be interested to hear the views of other noble Lords about whether these definitions should be broadened to encompass the interests of all citizens in the deliberation of the CMA. I beg to move.

[Lord Tyrie (Non-Afl)]

My Lords, as well as speaking to Amendment 80, I will say a few words about Amendment 83A in my name, which is in some ways related.

The point just made was extremely important and correct: in whose interests are these bodies acting? The answer should always be people—all of us. Commissioner Vestager, responsible for competition in Brussels, made exactly this point in evidence on several occasions and in a couple of major speeches. She is a far-sighted and bold competition Commissioner. In practice, we are all consumers, so the word “consumer” should probably catch it, but it may not convey quite as much to the public as we would like.

My amendment was triggered by an exchange that I had with the noble Lord, Lord Vaizey, earlier in the scrutiny of the Bill. In response to a question of his to the Minister, I suggested that the CMA always operates under a duty to be proportionate. When I said that, I had in mind not so much the implications of the Human Rights Act for its effect on proportionality but a more general duty to respect best regulatory practice, under which specialist regulators operate, as far as I know. Usually, this is understood to mean transparency, accountability, proportionality, consistency and, where relevant, action targeted only at cases that really require it. Some people talk about efficiency and economy in the same breath. Although I have not found that in any statute, I expect that it is to be found in various statutes.

I have subsequently checked some of this out with the House of Commons Library and others. First, a duty such as I describe is written into the Water Act, the Gas Act, the Electricity Act and the Communications Act, among others, with very similar wording to that which I have just cited. In other words, Ofwat, Ofgem and Ofcom are all subject to such a duty. I have also checked that these duties are justiciable.

Secondly, I made another, unexpected, discovery. As a result of this legislation, the CMA will become an outlier among these specialist regulators. By this legislation, we are giving the CMA specific specialist responsibilities for the digital sector. In other words, it becomes a sector regulator. But, unlike with the other specialist regulators that I have just listed, no such statutory duty to adhere to the principles of best regulatory practice will be required of it. My amendment would correct that omission.

Late last week I discovered that the City of London Law Society had made roughly the same point in its submission on the Bill. The wording in my amendment is pretty much taken from that submission. At the time I tabled it, I had not discussed it with the City of London Law Society and, since then, I have had time only for a couple of minutes with it on the phone. I cannot think of a good reason for not applying this duty to the CMA, but I can think of plenty of reasons why it should be applied.

These duties on public bodies can appear to be little more than motherhood and apple pie but, as I have discovered over the years, they can influence behaviour in powerful public bodies in quite a big way, and usually for the better. I will illustrate that. Take an accounting officer who comes under pressure to do something that he or she considers inappropriate. That happens not infrequently, as those of us who have been on the inside, or on both sides, of the public body fence will know. With a statutory duty in place, the accounting officer is much better protected and placed to be able to say, “I’m not going to go ahead with that”. That is no doubt one of several reasons why these specialist regulators have these duties imposed on them: they serve as a reminder, a backstop, for securing good conduct from those at the top of organisations, particularly those with a high degree of statutory independence.

Now, the Government—on advice, no doubt—will point in response, probably in just a moment, to codes of conduct, guidelines and other documents that already require good regulatory practice. I can see the Minister smiling. I know most of these documents quite well—as a matter of fact, I contemplated reading them out myself, but I will spare the Committee that pain and leave it to him to take the flak. The department’s impact assessments should work, in principle, to provide some of the heavy lifting as well, and they are audited by the NAO. I have seen that scrutiny in action, and it does far less to improve behaviour than a statutory obligation. It is the latter that really concentrates the mind.

More and more as we examine the Bill, the absence of a general duty on the CMA seems to be of a piece with the approach taken right across the draft legislation. We are creating a body with unprecedented powers and unprecedentedly feeble avenues for the securing of accountability. We are creating ideal conditions for executive overreach. All the necessary ingredients are being put in place as we legislate here.

First, there is the long history of patchy to poor scrutiny by Parliament, particularly by the Commons, of the CMA. As I may have pointed out on more than one occasion, I was its very first chairman ever to appear before the BEIS Select Committee, and I secured my audience by request—I said that I really would like to come along—which gives you an idea of the distance between the committee and the activities of the CMA. Of course—and I do not mean this disparagingly to anybody in this House—it is the Commons Select Committee that really counts when it comes to delivering punchy cross-examination and accountability, or at least counts most.

Parliament could do a better job, which I think was the point that the noble Baroness, Lady Stowell, made on Monday, but it would be a profound mistake, even if we got the improvements that she is proposing, to rely exclusively on Parliament to do the heavy lifting.

The first reason why we need this amendment is that we do not have much parliamentary scrutiny. Secondly, we have a body with a historically weak board, with most of the important decisions already delegated to the most senior executives, mixed-quality governance at best and a history of patchy to poor non-executive challenge of executive decisions. I realise that it is concerning that an ex-chairman should feel the need to put that on record, but it is necessary. Thirdly, as things stand, we are protecting the CMA from any substantive review at all of decisions on digital, which is a discussion we had earlier with respect to JR.

A fourth reason why this amendment is needed is that it now seems that the body is to be exempted from the core duties to conform to best regulatory practice which have been considered essential for all other sector regulators that I have checked out. My amendment would rectify that problem at least. I hope that the Minister will look favourably on the suggestion.

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[Viscount Camrose (Con)]

I will actively seek a counterexample and consider the implications of my results.

The CMA has a strong track record of following best regulatory practice across all its functions as an experienced regulator. The Government’s view is therefore that it makes sense to legislate only when it is necessary to do so, and that here there does not appear to be a problem that requires a legislative solution. For these reasons, I hope the noble Baroness feels able to withdraw her amendment.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have spoken in support of my amendment. I am very grateful. A number of passionate contributions were made. Once again, I was impressed by the knowledge of the noble Lord, Lord Tyrie, and his doggedness in pursuing and getting to the heart of some of these issues. We always appreciate his contributions and the learning we get from them. We have described a couple of his previous contributions as a bit of a curate’s egg, but not this one. I agreed with every word he said and I thank him for that. He made his point extremely well.

Having listened to the noble Lord, it is hard not to agree that the CMA should have the responsibility to have regard to the principles of best regulatory practice. We were just debating why the CMA has to be an outlier, given that other regulators already have this duty. The Minister said that he will try to find a counterexample. The challenge to the Minister is, if he cannot find one among the 500 or so that could be there, will he agree to take this away again and have another look at the Government’s position on this? I was certainly persuaded by the noble Lord, Lord Tyrie, and I think other noble Lords were as well.

I thank the noble Baroness, Lady Kidron, who made a very thoughtful speech. She has been in this field a lot longer than me. As she said, consumers and citizens are two sides of the same coin and, unlike consumers, citizens have a long-term interest. That is the big difference. We need to take that long-term view. She also rightly asked who is defending the interests of future consumers—that is, children. I am not sure that the Minister addressed that issue. I hope that the CMA would have a responsibility to do that. Both she and the noble Lord, Lord Clement-Jones, made the point that Ofcom already has a duty to further the interests of citizens, so I hope that the Minister bears that precedent in mind.

I listened to the Minister and we agree that the CMA needs clear objectives—it has been a theme running through all our earlier debates—but then we get to how to distinguish between the interests of consumers and citizens. In the digital world, in particular, they run into each other. It is not a simple buyer-and-seller market, but a lot more complicated, as a number of noble Lords have said. It is not clear who are consumers, rather than citizens, and what impact the CMA’s decision is having on them. We argue that we need to revisit this issue in the digital world.

I tried to head off the Minister before he spoke about the problem of regulators’ overlap. The fact is that a lot of the business that we are dealing with is not traditionally covered by other regulators, so there is a regulatory gap and it needs to be addressed.

I can see that I have not persuaded the Minister, but I have not given up. I think we are right and that we will probably carry on pursuing the issue but, as I said at the outset, I am not sure I got the wording of my amendment right. We will reflect on what the Minister said and may come back to this later but, meanwhile, I beg leave to withdraw my amendment.

Amendment 80 withdrawn.

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Whether the solution is the one put forward by my noble friend Lord Holmes in Amendment 106 or there is another solution, perhaps in amendments not yet tabled, my noble friend the Minister needs to revisit this to see whether there is a way forward that meets everybody’s needs and allows the Bill to achieve our genuinely shared objectives.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have spoken in this debate. I have added my name to Amendment 85 in the name of the noble Lord, Lord Clement-Jones. He raised an important point about the loss of exemplary damages which could otherwise be awarded for those involved in collective proceedings. In the cases that will be considered under these regulations there may be thousands of small businesses harmed, but only those which prove that harm was done and losses were incurred would be compensated, as the Bill stands. However, it may well be that smaller players cannot afford to take a case, so there needs to be an overarching remedy to ensure compliance with the law, otherwise the defendant may profit from their own wrongdoing. The noble Lord gave some powerful examples to illustrate that. An amendment along these lines should be considered to incentivise the defendants to uphold the rule of law.

The amendment in the name of the noble Lord, Lord Holmes, raises an interesting challenge about the oversight of claims. We agree that it is important that the regulators continue to have a say on the merits of private cases that go to court. They can already intervene in private actions by submitting written observations to the tribunal. The tribunal itself has a role in which it grants a collective proceedings order before a case can go ahead. However, in recent years there has been an increase in the number of private actions brought to court, often by litigation funding firms. These tend to focus on cases where the funders anticipate the largest returns.

In the meantime, the CMA is still trying to focus its public enforcement on cases that will generate the greatest strategic significance and the widest benefit, but its resources are being stretched as the scope of its enforcement power widens. We have to find the right balance between public and private actions to achieve the widest public benefit. We need to take into account the capacity of the Competition Appeal Tribunal to deal with the increased burden of cases. The noble Baroness, Lady Stowell, pointed out that there is a solution to this: the model that Ofcom already uses, which could be used in this case. There may be other solutions, but we need to find a way forward to get this balance right.

At a recent conference Sarah Cardell, the CEO of the CMA, said that the CMA sees public and private enforcement as two complementary parts of a single overall regime. We agree with this approach and, while we are sympathetic to the proposal of the noble Lord, Lord Holmes, we would like to consider the wider functioning of the CAT first.

This leads to the amendments of the noble Lord, Lord Tyrie, who raised significant issues about the workings of the Competition Appeal Tribunal. He obviously has first-hand knowledge of this issue, and I listened carefully to what he said. He shared with us a very deep understanding of the workings of the CAT and the challenges that it faces but, the more that I listened to him, the more that I felt that trying to resolve this with two amendments to this Bill did not seem the right way forward. It felt that this was a bigger issue for another day. Just as the noble Baroness, Lady Stowell, made a fantastic exposition about the issues at stake, I did not want to put my name to those amendments, as I felt that they were too superficial to address the issues that the noble Lord, Lord Tyrie, raised.

Having said that, it might be that a fundamental review of the CAT is necessary or that another way could be found to address this in the Bill. I hope that the Minister listened carefully to the noble Lord’s concern and can offer a way to progress the issues raised by him and others in the debate to ensure that they are addressed. I therefore look forward to the Minister’s response.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

I thank noble Lords for their thoughtful amendments and considered remarks during this debate. I start by speaking to Amendments 85, 86 and 87 tabled by the noble Lord, Lord Clement-Jones, which would enable the CAT to award exemplary damages in collective proceedings.

Clause 125 amends the Competition Act 1998 to allow the courts and the Competition Appeal Tribunal to award exemplary damages in private competition claims involving individual claimants, but not in collective proceedings before it. The competition collective proceedings regime was introduced in 2015. This is an important mechanism allowing redress to be sought on behalf of large groups of customers. The bar on the availability of exemplary damages in collective actions was one of the many safeguards put in place when the Consumer Rights Act 2015 was enacted, to ensure a balanced system of collective actions before the CAT which will not lead to a culture of undue litigation and US-style class actions. These safeguards ensure that defendants are protected by avoiding vexatious and unmeritorious claims—or fishing expeditions—while allowing legitimate claims for redress to proceed, without defendants feeling pressurised to settle, despite the likelihood of a strong defence.

While Clause 125 reverses the complete ban on exemplary damages introduced by an EU directive in 2017, keeping the bar in place for collective proceedings before the Competition Appeal Tribunal remains appropriate for the same reasons that it was put in place when the regime was introduced in 2015. I thank the noble Lord and the noble Baroness, Lady Jones, for Amendment 85 and I hope that he feels reassured and comfortable in withdrawing it.

I turn to Amendment 106 on private enforcement, tabled by my noble friend Lord Holmes of Richmond. I thank him and my noble friend Lady Stowell for their contributions. This amendment would require complainants in private enforcement claims to obtain prior approval from the CMA to bring their cases in front of the CAT or High Court.

The ability to bring private enforcement claims through the CAT is an important mechanism for consumers to seek redress. This amendment would add an extra hurdle for claimants and might therefore reduce their ability to access redress and potentially limit their access to justice. Adopting an Ofcom-style approach would provide a very broad power to the CMA, which would unnecessarily add to the existing range of functions that it currently discharges. While this approach may exist in other jurisdictions, the complexity and size of competition private actions and the well-established jurisprudence of the CAT mean that it would not be appropriate in this context.

The CAT already has a specialised, well-established legal framework through which it manages cases, including certifying collective actions. This amendment would risk overcomplicating the existing framework and unnecessarily bring the CMA into highly complex and contentious litigation. I hope that my remarks have helped to address the concerns of my noble friend Lord Holmes of Richmond and that, as a consequence, he does not press his amendment.

I move now to the review of the CAT and the two amendments put down by the noble Lord, Lord Tyrie. Amendment 107A would require the Secretary of State to conduct and publish a review of the performance, governance and operation of the CAT. I thank him for his amendment and for the expertise and wisdom he brings to our debates. The CAT plays an important role in the UK’s competition regime and in providing avenues for consumers collectively to seek redress. It is right that we consider how the CAT operates to ensure that it effectively fulfils these important roles.

The CAT is already subject to significant review and scrutiny. Under the Competition Appeal Tribunal Rules 2015, which govern proceedings in front of the tribunal, the Secretary of State has a duty to review the CAT rules, including making an assessment of how the rules meet the objectives they are intended to achieve. Indeed, the Competition Appeal Tribunal Rules 2015 are currently under review following a post-implementation review in 2021. This process will ensure that the CAT continues to deliver first-class justice expeditiously.

The CAT is also in scope for the public bodies review programme, which assesses the governance, accountability, efficacy and efficiency of arm’s-length bodies. Moreover, the CAT is already subject to a variety of forms of scrutiny by Parliament and the Government. This includes laying its annual report and accounts before Parliament, ministerial appointments to the Competition Service board and regular ministerial oversight as part of departmental sponsorship arrangements.

Given the crucial role it plays in the competition system, it is right that the CAT is sponsored by the Department for Business and Trade. However, the DBT recognises the important commonalities with tribunals under the purview of the Ministry of Justice, and the CAT president and chairman are appointed by the Lord Chancellor through the judicial appointments process. We also continue to encourage the CAT to engage with its counterparts in other tribunals to continue to develop best operational practice. The scrutiny currently in place ensures that it continues to function effectively and deliver a world-class competition regime. For these reasons, I hope that the noble Lord will not move this amendment.

The noble Lord’s second amendment, Amendment 128ZA, concerns

“Economic interests of consumers duty”.


It would place a new duty on the CMA and the CAT when carrying out their functions to ensure that the economic interests of consumers and their protection from detriment are paramount. This amendment also places a duty of expedition on the CAT. The Government considered this issue when the noble Lord, Lord Tyrie, proposed such a duty in his recommendations to the BEIS Secretary of State in 2019 and concluded that this would not lead to improved consumer outcomes. There was no compelling evidence that an overarching consumer duty would allow the CMA to do anything it could not already achieve within its existing remit or that it would increase enforcement levels.

I thank the noble Lord for raising this important issue. We are in full agreement on the importance of protecting consumers, and the Bill stands testament to the Government’s commitment. The Bill will support consumers through new and improved rights, as well as enhanced powers for the CMA and the civil courts to enforce these rights. New measures will protect consumers’ hard-earned cash, boosting consumers’ rights so they have confidence in businesses and markets. However, we do not believe that placing a further statutory duty on the CMA is the right approach.

The CMA’s existing primary duty is to promote competition for the benefit of consumers. This places a clear, unambiguous and paramount duty on the CMA to deliver with consumer benefit as the end goal. We can see the impact of this work: in the three years to 2021-22, the CMA’s competition work delivered £2.1 billion in average annual consumer savings. This is important to the Government, and we have given the CMA a strategic steer to prioritise action in its discretionary activities that addresses cost of living challenges to deliver better value for businesses and individual consumers.

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[Lord Fox (LD)]

My Lords, I congratulate the Deputy Chairman of Committees, who once again did a magnificent job. I speak on behalf of my noble friend Lord Clement-Jones to move Amendment 108 and speak to all the other amendments in this group that are in his name—seven in total. Talk has rightly centred on the CMA’s role in standing up for consumers. This whole group focuses on an important area where consumers are in danger of not getting the best possible treatment as a result of the flexing of market power. The amendments are designed to probe the competitive relationship between providers of a service and legitimate third-party agents who sell those services on.

Online intermediaries in marketplaces can serve a valuable role, helping consumers exercise choice and explore a wider range of options for their needs, ultimately supporting competition and innovation, as long as this is done in a transparent manner. Perhaps the most obvious arena for this sort of activity is the travel industry: flights and hotel bookings. There is of course a natural struggle between the provider of services—the airline, for example—online travel agencies or OTAs, and the third player, which is the platform. This is usually Google.

The question that this group poses is: what is the CMA’s role in the competition between these parts of the industry? It also asks: how is consumer choice maintained or enhanced in that activity? My noble friend’s amendments are designed either to explore the need to protect consumers who make bookings through a third-party agent, or to ban activity that could mislead consumers about the merits of booking through a third-party agent. There are of course other elements to these relationships, and I hope this debate can flesh those out as well.

There is certainly evidence that some low-cost airlines are extensively using their market power to advance their own commercial gain while potentially eroding protection and choice and inflating prices for millions of UK holidaymakers. For example, since December 2023, most OTAs have been prevented by Ryanair from booking flights on behalf of consumers. This rendered the OTAs unable to fulfil holidays that include a Ryanair flight. I understand that a consequence of this is that it is almost impossible for consumers to book an ATOL-protected package holiday that includes a Ryanair flight. I do not have full confirmation of that, but that is my belief. It is difficult not to conclude that this blocking was designed to push customers towards booking hotels as well as flights through Ryanair, rather than as part of a package holiday through an OTA. It is easy to conclude that Ryanair was able to do this because of the market power it holds over its routes.

For its part, in a regulatory announcement Ryanair welcomed the removal of its flights from OTA websites, promising lower fares “where necessary” to encourage all passengers to book directly on ryanair.com. The fact that it did not reference the fact that it had caused the removal of the OTAs in the first place, and its use of the phrase “where necessary” regarding pricing, are clear indications of its instinct in this move. I use this example to demonstrate how serious and real things are for this sector and the consumers it serves.

The question for debate here is: how could and should the CMA act to balance the relationships that surround service providers and third-party agents? The relevant provisions here are in Clause 223, on the prohibition of unfair commercial practices, and Schedule 19, on

“Commercial practices which are in all circumstances considered unfair”.


Together, these provisions set out a list of conduct to which the consumer protections in Part 4 will apply automatically in all cases.

The list in Schedule 19 is relatively granular, so it can be extended in scope easily to deal with these issues. For example, as set out in Amendment 136, Schedule 19 could include:

“Refusing to enter into (or otherwise blocking) a transaction with a consumer on the basis that the consumer is acquiring the trader’s product through a third party acting on its behalf”.


Secondly, it could include:

“Refusing (or otherwise blocking) third party agents, acting on a consumer’s behalf, the necessary means to make or manage the consumer’s purchase”,


thereby degrading the consumer experience. Thirdly, it could include:

“Making a materially inaccurate or disparaging claim about third party alternatives through which a consumer could otherwise acquire the trader’s product”.


Fourthly, it could include:

“Imposing higher prices for a consumer who chooses to acquire a trader’s product through a third party acting on its behalf than for a consumer who acquires that product directly, in particular without providing such consumer with a clear, accurate and complete explanation as to the reason for such a price increase”.


Fifthly, it could include:

“Any act or omission which deprives a consumer of sufficient freedom to make an informed choice as to whether to purchase a product directly from a trader or to engage a third party to make such purchase on their behalf”.


We then need to ensure that the protections afforded by Part 3, on enforcement of consumer protection law, and Part 4, on consumer rights and disputes, apply equally to consumers irrespective of whether, for example, they have made flight bookings through OTAs acting as consumers’ agents or they have booked directly with the airline. The relevant provisions of the Bill relating to the definition of a “consumer” are in Clause 147, on relevant infringements, and Clause 223, on the prohibition of unfair commercial practices.

In both cases, the definition of “trader” is already explicitly extended to circumstances in which a person is acting personally or through another third party on their behalf. This concept of indirect consumer-trader relationships should be extended to the definition of “consumer”. A new paragraph should be introduced in Clauses 147 and 223 to make it explicit that it is immaterial for the purposes of that definition whether a consumer chooses to engage with a trader directly or through a third party acting on the individual’s behalf as an agent. These proposed changes are set out in Amendments 108 and 129.

Other references to indirect booking need to be provided for—again, to include the provision that it is immaterial whether a consumer engages with a trader directly or through a third-party agent. The relevant clauses here are Clause 230, on rights of redress, and Clause 243, on the meaning of “transactional decision”. Amendments 145 and 146 would make it explicit that the protections in Part 4 apply to contracts entered into by the consumer with traders, both directly and indirectly.

Given the sort of behaviour already in the market, we also need to introduce the concept of misleading or aggressive commercial practices by a trader, which are designed either to deter consumers from booking through third parties—including OTAs, which book flights on consumers’ behalf as their agents—and/or to prevent such third parties from making such bookings. In other words, we need to outlaw those practices.

This time, the relevant provisions of the Bill are in Clause 224, “Misleading actions”, and Clause 226, “Aggressive practices”. These clauses deem commercial practices to be unfair if they involve misleading actions or aggressive practices that cause the average consumer to take a transactional decision they would not have taken otherwise. A new subsection should be introduced in each of Clauses 224 and 226 to make explicit that, for the purposes of Clause 224(1)(a), “misleading information” includes

“an action where the overall effect is to deter the average consumer from using third party agents to conclude transactions on their behalf, including disparagement relating to such third parties”.

For the purposes of Clause 226, in the context of determining whether a commercial practice uses harassment, coercion or undue influence, account should be taken of

“whether the practice significantly impedes the average consumer’s freedom of choice in respect of whether they choose to make a booking directly with a trader or to use a third-party agent to conclude transactions on their behalf”.

This is the effect of Amendments 139 and 141. The Minister will understand that this is an important example of the potential misuse of market power, to the detriment of consumers. We await his response.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank the noble Lord, Lord Fox, for that introduction. He made an excellent argument about why we should include third parties working on behalf of consumers in the remit of the Bill. As he described, this particularly relates to package travel firms.

Whether using a legacy airline or a low-cost carrier, all of us will have booked flights online. These days we have unprecedented freedom to fit our travel arrangements to our specific requirements and then pay for them at home, at the office or on our phones. But how many of us have had the far less welcome experience of discovering, a few minutes later, that our deal was not as good as we thought and that there were cheaper fares for the same flight? This is frustrating and unfair, and, unfortunately, it is due to deliberate anti-competitive practices, many of which the noble Lord described.

Low-cost airlines—LCAs—have transformed the aviation landscape. They have disrupted the market, offering travellers unprecedented choice and competition. Their rise in the UK has empowered consumers, democratising air travel and making it affordable for a much broader demographic than used to be the case. The greater availability and lower cost of flights to and from the United Kingdom has, in turn, led to the rise of online travel agencies and tour operators, known as OTAs. These offer travellers a wide array of pre-packaged holiday options, which include flights, accommodation and add-on activities. The convenience of being able to plan and book an entire trip from the comfort of one’s home has fuelled the popularity of online package travel. OTAs are becoming extremely popular and convenient ways for families to plan, book and pay for their holidays.

However, in recent years the low-cost airlines, themselves once the industry disruptors, have felt threatened by the newer online travel agencies. The industry is witnessing a growing trend of complex anti-competitive actions aimed at stifling competition. One such tactic is curtailing seat availability to specific destinations, which renders them inaccessible through OTAs or individual bookings unless bundled as airline packages. Another anti-competitive tactic is to introduce cumbersome verification procedures for passengers who book through OTAs rather than directly with the airlines, adversely affecting the consumer experience. Unfortunately, in this battle for market share between the LCAs and the OTAs, the consumers are often the casualties.

The situation is made still more opaque for consumers by the existence of 13 different types of airfare. I am grateful to my noble friend Lord Leong, who has looked into this. He tells me—I will mention only the most common six—that there are normal fares, point-to-point fares, excursion fares, APEX fares, PEX and super-PEX fares, and branded fares. Additionally, some come with specific restrictions, some are non-refundable, others cannot be exchanged or transferred, and none of these restrictions is immediately obvious or consistent with ticket types.

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Moved by

[Baroness Jones of Whitchurch]

109: Clause 147, page 93, line 25, at end insert—
“(c) the collective interests of consumers include avoiding any detriment that might be incurred by consumers if the United Kingdom does not reach a level of net zero carbon emissions by the year specified in section 1 of the Climate Change Act 2008.”Member’s explanatory statement
This amendment would mean that part of the test of whether a commercial practice had committed an infringement would be whether the commercial practice had failed to protect consumers from any detrimental effects arising from a failure to achieve net zero by the year specified in the Climate Change Act 2008 (currently 2050).

[Baroness Jones of Whitchurch (Lab)]

My Lords, I shall also speak to Amendment 134 in my name. I am grateful for the support from the noble Lord, Lord Clement-Jones, and the noble Baronesses, Lady Kidron and Lady Bennett, in doing so. I also support the amendments in the name of the noble Baroness, Lady Hayman, and the noble Lord, Lord Holmes, on the issue of the right to repair, and I look forward to hearing their contributions shortly.

Amendment 109 focuses on Part 3 of the Bill, which addresses the enforcement of consumer protection law. It sets out what would be a relevant infringement of the law by a commercial practice or trader. Our amendment would add a simple but important addition to that list. It says that the collective interest of consumers would be harmed by a company if by their actions they prevented the UK from reaching net zero emissions by 2050 as defined by the Climate Change Act.

We know from the latest reports of the Committee on Climate Change and the Office for Environmental Protection that the Government are missing a number of the key targets that would get us to net zero in an organised and timely manner. There are numerous missed opportunities for action, such as slowing down the rollout of electric vehicles and the failure to retrofit homes to save energy. This has not been helped by the decision to create new gas drilling licences in the North Sea.

However, it is not just a government responsibility to deliver net zero; it falls to companies to play their part. For example, every fossil fuel company that ignores its responsibility to move towards renewable energy, and every company that sells products created by the destruction of the Amazon rainforest, is contributing to consumer detriment as global warming impacts the planet. All the advertising companies that promote these products have a responsibility to protect consumer interests too.

In the UK, we are already seeing the adverse impact of global warming, as more extreme weather events become commonplace. Communities that might have been flooded once in a generation now face the heartbreak of properties being flooded every couple of years. Farm crops are being destroyed by drought or flooding, losing farmers their livelihoods. Of course, there are many other examples.

My point is that individuals and communities should have some redress under consumer law for the detriment caused by the companies and traders that deliberately delay or reverse our progress to net zero. This is what our Amendment 109 would go some way to achieve. It may be that we have not got the wording right—this is a probing amendment—but it nevertheless raises a fundamental issue about consumer rights that needs to be addressed.

Amendment 134 adds to the list in Schedule 19, which covers commercial practices which are, in all circumstances, considered to be unfair. It specifies that greenwashing actions, such as those giving the impression that a product is sustainable, is recyclable or has a low carbon footprint when these claims are not supported by evidence, should be considered unfair.

This continues to be a widespread practice. Consumers, particularly young people, want to do the right thing, but they are given no help in making informed choices. The EU has already identified around 230 separate sustainability labels and 100 green energy labels, half of which have weak or non-existent verification. The situation in the UK is no different.

Meanwhile, the Advertising Standards Authority has been slow to act and has ruled against only a tiny number of adverts. Many complaints of greenwashing are not investigated and the barrage of spurious environmental claims is falsely persuading consumers that corporations have embraced their environmental concerns. This greenwashing is all around us and we are not convinced that the existing regulators, including the Adverting Standards Authority, have the resources or the determination to hold the perpetrators to account.

When this issue was raised at Second Reading, the Minister replied:

“This is indeed an important issue, which we hope is already covered by existing regulations”.—[Official Report, 5/12/23; col. 1453.]


This is our point: if it is covered by existing regulations, they are not effective. Therefore, adding greenwashing to the list of banned practices would give consumers new opportunities to challenge the misleading product descriptions and adverts that are commonplace.

I look forward to hearing from other noble Lords who have amendments in this group but, in the meantime, I beg to move Amendment 109.

[Baroness Hayman (CB)]

My Lords, I declare my interest as chair of Peers for the Planet. I have Amendments 128A and 145A in this group but, before I speak to them, I will say just a couple of words about Amendments 109 and 134, on which the noble Baroness, Lady Jones of Whitchurch, just spoke. I very much support them both. I would certainly have added my name to that on greenwashing, had I not been later to the party than others. Along with the taxonomy for green investments, this is something that the Government have to take seriously if people are to be given the right choices and not deceived about the choices that they make.

My Amendments 128A and 145A cover the right to repair, an issue that Amendment 201, in the name of the noble Lord, Lord Holmes of Richmond, also addresses. They are cross-party amendments, and I am grateful to the noble Baronesses, Lady Ritchie of Downpatrick, Lady Harding of Winscombe, and Lady Bakewell of Hardington Mandeville, for their support. The intent of these amendments is to set a timetable for government to ensure that consumers can more easily and affordably repair their electrical and electronic devices by ending the practices that cause premature and planned obsolescence and ensuring that repair information and affordable spare parts are made available.

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[Lord Offord of Garvel (Con)]

I thank the noble Baroness for that. This is not a perfect science. We are on a journey to net zero and will get there by 2050. We have been very clear on the milestones that we need to hit along the way. As far as the UK is concerned, there is absolutely no going back on our commitment to hit that target, but it is a transition, and it will take a generation. I am very clear that we will get there.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords for their support for my amendments on achieving net zero, tackling those who get in the way of it and tackling greenwashing. I must say that the noble Baroness, Lady Bennett, had a wider interpretation of my Amendment 109 than I had intended. As I said at the outset, it was only a probing amendment, and she has given me good cause to go away and look at the wording of all that again, because it certainly was not going that far. It has provoked a good debate, and we had some genuine issues out on the table on it.

I also thank the noble Baroness, Lady Hayman, the noble Lord, Lord Holmes, and others for making the case so eloquently on the right of repair. We have had a really good debate on this, and I cannot possibly hope to acknowledge all the important points that noble Lords made. Those who know me will know that I have long been an advocate for the circular economy and for the right of repair as an essential part of that strategy, but it feels that action is painfully slow: it is estimated that there are enough unused cables in UK households to go around the world five times, along with 20 unused or redundant electronic items in each. But, instead of having a policy to repair and reuse, electronics manufacturers continue to use up the earth’s scarce resources producing new products, the latest models, which often replace perfectly functioning earlier models.

We cannot go on consuming at this level, as we will run out of the materials needed to produce the goods in the first place, so we need to go back to the design phase and product manufacturing, tackle the scourge of built-in obsolescence, and make spare parts and repair services the norm rather than the exception. The Government’s latest eco-design standards are a step forward, but they deal with only one part of the market. That is why a more comprehensive action plan is needed.

On this issue and others, the Minister said not to worry as they are already covered by current legislation. But it is obvious to all of us that, whatever the wording in the legislation, this is not working in practice. He gave the example of Defra having a policy on, or aiming for, the circular economy, but it has been aiming for this for a long time now. What it needs is action to ban the practice of firms deliberately preventing repair. Consultation, which is what is being proposed, is really not enough. I hope that the Minister can understand our frustration on this. These issues have been around for a long time. They are not new, and it does not feel that sufficient action is being taken.

The Minister said that this is a burden on business, but I do not think it is. It is an opportunity for innovation and new jobs, and an opportunity to save materials and money. We need to ensure that we do not have more waste and that we use the resources we have to best effect. A lot of businesses understand that but not all, and that is the problem.

I also thank the Minister for his response to my amendments. I genuinely believe that he understands and supports the environmental challenge but, again, that is not enough: we need to address the regulatory failings that are allowing greenwashing and global warming to continue. Whatever the current regulations and laws, it is quite clear that those regimes are not properly addressing their responsibility in these areas. Again, we need to look further at that. There is huge frustration that policies are not being translated into action and leading to enforcement. Where are the examples of these policies being enforced?

Digital Markets, Competition and Consumers Bill

Baroness Jones of Whitchurch Excerpts

Committee stage
Monday 5th February 2024 Grand Committee

[Lord Offord of Garvel (Con)]

I thank noble Lords for the amendments in this third group, concerning banned practices. I will take them not necessarily in numerical order.

I start with Amendment 132, tabled by the noble Baroness, Lady Jones of Whitchurch. It would ban in all circumstances the marketing of counterfeit and dangerous products online. Misleading claims in marketing are already offences under consumer protection law and, for unsafe products, product safety law. The Bill makes it clear that online marketplaces, which can facilitate the sale of these products, must act with professional diligence. This can include taking appropriate steps to ensure that counterfeit and dangerous products are not sold or promoted in a marketplace.

The Government recently consulted on strengthening the public understanding of those duties. Our response to that consultation committed us to undertake further work with stakeholders, including platforms, other business stakeholders and consumer groups, in order to identify the scope and content of further guidance in this area and how that work should best be communicated and set out; I would welcome the noble Baroness’s input into that work. Further, the product safety review includes proposals specifically aimed at tackling the sale of unsafe goods online. The Government will publish a response to that consultation in due course; again, I look forward to being able to share that with the noble Baroness and to discussing next steps.

Ultimately, online platforms have brought huge consumer benefits, including by vastly increasing the range of products available to consumers. The Government are committed to ensuring that platforms bear appropriate responsibility for ensuring that unsafe or counterfeit products do not reach consumers, but we seek to do so thoughtfully and in consultation with the public and industry to ensure that any new regulation does not jeopardise those consumer benefits or harm economic growth. I hope that the noble Baroness, having heard this, will feel able not to move her amendment.

Amendment 144, also in the name of the noble Baroness, Lady Jones, would give public enforcers a tailored power to require that the marketing of fake or counterfeit products was removed from the internet. The Government consultation response that I just mentioned also includes a commitment to empower additional enforcers to apply to court for interim and final online interface orders under Chapter 3 of Part 3 of the Bill. These orders facilitate the removal of online content that breaches consumer law. In that context, I assure the noble Baroness that we welcome and intend to honour the spirit of the amendment. I look forward to further discussion on this matter with noble Lords. I hope that, with this reassurance, the noble Baroness will not move Amendment -144.

I thank my noble friend Lord Lindsay for Amendment 135 and his input on this matter of fake reviews. Amendment 135 would add commercial practices related to fake reviews to the list of banned practices in Schedule 19. The Government agree that the law against fake reviews should be strengthened. Following our recent consultation on proposals to tackle fake reviews, and recognising the strong parliamentary interest in this issue, the Government have set out in their response our intention to add the relevant practices to Schedule 19 to the Bill.

It is important to get the details right. I would like to work with your Lordships to ensure that the new rules meet our shared aims of reducing the number of fake reviews that customers encounter online and being clear to businesses on what their duties are when publishing reviews. I would be delighted if noble Lords would meet me to discuss this further. I hope that what I have just set out will mean that my noble friend Lord Lindsay feels comfortable not to move his amendment.

I thank the noble Baroness, Lady Jones, for Amendment 133. It would add drip pricing to the list of banned practices in Schedule 19 to prevent traders adding mandatory fees to the price of a product during the purchasing process. Likewise, the Government agree that the law should be strengthened to protect consumers from hidden fees that can cause them to pay more than they have been led to expect. As we set out in our response to the consultation on improving price transparency, published on 24 January, it is the Government’s intention expressly to prohibit the drip pricing of mandatory fees in this Bill. I would be delighted to discuss this with noble Lords. I hope this means that the noble Baroness will feel comfortable not to move her amendment.

[Baroness Jones of Whitchurch (Lab)]

My Lords, all these messages about being prepared to talk further are very welcome; I am sure that we will take the Minister up on them.

Part of the issue about drip pricing and the Government’s response to it is the distinction that they have now made between mandatory extra charges and optional ones. I have a horrible feeling that most of the examples we can think of, such as the airline example, will be classified as optional extra charges, which will not be covered by Schedule 19. Can the Minister say more about that?

I think we are all on the same page but a lot of optional charges are misleading in the sense that they are really charges; the noble Baroness, Lady Bennett of Manor Castle, talked about families sitting together or your luggage going on a long-haul flight. I am sorry that we keep quoting flights, because there are many other areas where this applies, but it seems to me that the Government have made a false distinction here between things that you have to pay, which are mandatory and which the Minister is saying will go under Schedule 19, and the rest, which are most people’s experience of drip pricing; as the Minister was explaining, that will not be covered—but I might have misunderstood what he was saying.

[Lord Offord of Garvel (Con)]

I thank the noble Baroness for that. A distinction has been made as per that wording. As the consultation has come back, there has been a view on the distinction between those two areas, but the whole point of consulting noble Lords between Committee and Report is to allow further investigation, discussion and/or justification of that.

--- Later in debate ---

[Lord Holmes of Richmond (Con)]

My Lords, I rise briefly to speak to Amendment 140 in my name to add some more fuel to this already well-stoked fire and to set out exactly what we mean in the Bill when we talk about good faith and indeed the lack thereof where a trader does not take into account the interests of the consumer in terms of product design or information about the product or seeks to exploit the consumer because of their biases or particular views to induce a purchase or a desire for a particular product. Amendment 140 merely adds to the excellent amendment, as already set out. I look forward to the Minister’s response.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have spoken in this debate. I am pleased to have added my name to Amendment 137 in the name of the noble Lord, Lord Clement-Jones, which deals with the issue of submitting or creating fake reviews by adding it to the list in Schedule 19 of commercial practices which would always be considered unfair. This is the issue that we touched on in the earlier debate. I am pleased that we have the chance to raise this today because it has been an issue of concern for some time. It is good to get the chance to debate and pursue this, and it is good to hear that the Government are also keen to do that.

We argue that this is not just about the effect fake reviews have on consumers; they affect businesses as well. They damage the livelihoods of many small traders—restaurants and hotels, for example—when their business is deliberately targeted by damaging reviews, or the local competition down the road receives glowing fake reviews which take trade away from the legitimate trader, so this has a business element as well as a consumer element. At the same time, Which? reports that the proliferation of fake reviews for online product sales results in consumers being more than twice as likely to choose poor quality products. We heard a little bit about how that works in the earlier debate.

Urgent action is undoubtedly needed to bring quality standards back into online sales and marketing so that people are not duped. As we have heard, since the amendment was tabled, the Government have produced their response to the consultation on improving price transparency and product information for consumers. It proposes that the Government will add fake reviews to the list of banned practices in Schedule 19. I am grateful to the Minister for hosting a meeting last week where we had a chance to discuss this. It is good to hear that the Government have finally decided to act on it.

However, there are still some outstanding concerns. Concerns have been raised by Trustpilot and others that the fact that the proposed wording lacks clarity. The Government saying that they will work with the Office of the Parliamentary Counsel to clarify the wording is a sign that they have not yet got this quite right. Can the Minister clarify the timescale for that additional work? When will we see the outcome of it?

Concern has also been raised that the Government’s proposals do not address the role played by internet service providers and social media in promoting fake reviews. The noble Lord, Lord Clement-Jones, raised this issue. What action will we take against those who host and reproduce these fake reviews, often knowingly?

Concern has been expressed that the penalty for promoting fake reviews is subject only to civil, not criminal, enforcement. Can the Minister explain a bit more about why that decision was taken? In the meantime, we argue that our Amendment 137 addresses those concerns. We look forward to further talks along the lines that the Minister has proposed, and we hope that he will agree to work with us and the Committee to produce a government amendment that is both clear and comprehensive.

The noble Lords, Lord Lucas and Lord Holmes, helpfully sought greater clarity on consumer rights to prevent consumers being misled or manipulated. The noble Lord, Lord Clement-Jones, rightly mentioned the additional measures needed to protect us from rogue traders. I am grateful to the noble Lord, Lord Lucas, for asking a series of small but important questions around his almost probing amendments. It is important to have clarification on the record, and I hope that the Minister will be able to give it.

The noble Lord, Lord Holmes, helpfully raised the issue of good faith and asked how we can bring some standards back into trading and the exchange of information. Again, I hope that the Minister will be able to clarify that.

We have had a positive discussion on these important points. It is good to hear that there will be further discussion. In the meantime, I look forward to hearing what the Minister has to say.

[Lord Offord of Garvel (Con)]

My Lords, I turn now to the fourth group of amendments, which concern unfair commercial practices.

I thank the noble Lord, Lord Clement-Jones, for Amendment 137, which would add commercial practices related to fake reviews to the list of banned practices in Schedule 19. The Government agree that the law against fake reviews should be strengthened. Following our recent consultation on proposals to tackle fake reviews and recognising the parliamentary interest in this topic, the Government have set out their intention to add the relevant practices to Schedule 19. It is important that we get the details right.

The noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Jones, mentioned the concerns raised by Trustpilot around the hosting of fake reviews as well as the hosting and facilitation of fake review training. The Government are sympathetic to these issues. My ministerial colleagues have previously met Trustpilot to discuss such matters. I assure both noble Lords that the hosting of fake reviews is already addressed by our proposals; that said, I would be happy to meet them to discuss this topic further. For the time being, I hope that the noble Lord, Lord Clement-Jones, will feel comfortable to withdraw his amendment.

I again thank my noble friend Lord Lucas for his amendments. Amendment 138A specifically references “pricing” when considering whether a trader is misleading the average consumer. Clause 224 already states that

“an overall presentation which is likely to deceive the average consumer”

is a misleading action. Price clearly forms a part of this overall presentation. I understand the importance of the regulations being robust and clear and I greatly appreciate my noble friend’s close scrutiny of these clauses, which was very much apparent in his remarks. We believe, however, that such a point is better reflected in the accompanying guidance to the Bill. I will ensure that my noble friend’s point is reflected as such.

Amendment 138B specifically seeks to add ignoring or denying consumer rights to the definition of a misleading action. Should a trader make a false or misleading claim about the rights that the consumer has, with a view to denying, ignoring or misinforming them, the existing wording in Clause 224(1)(a), which prohibits the provision of “misleading information” on a

“matter relevant to a transactional decision”,

would apply.

Amendment 140 on misleading omissions would in effect require information that is relevant to a decision about the purchase of a good or service to be provided to the consumer. I believe that the current Clause 225 is an appropriate requirement for information that a consumer needs to be provided. As this requirement is well established in law, it gives traders and consumers certainty on what the information requirements are. The amendment could also give rise to uncertainty in the legislation, which may place additional burdens on traders, such as the potential costs of gathering such information. Although I understand and appreciate what my noble friend is trying to achieve with this amendment, I believe that the Bill as drafted strikes the right balance between consumer protection and not overburdening traders.

Amendment 142 would add examples of where a trader is not acting in good faith to the definition of professional diligence in this chapter. I am grateful to my noble friend Lord Holmes for raising these issues. Misleading consumers in any way that may cause them to take a different transactional decision is already prohibited. Furthermore, there are specific provisions that protect consumers against undue influence and prohibit exploiting vulnerabilities. Clause 226, for example, protects consumers against aggressive practices that exploit any vulnerability. Given the nature of these exploitative practices, we consider that they would be better explained in guidance accompanying the Bill. I would be happy to discuss this with my noble friend ahead of that new guidance being prepared.

I thank my noble friend Lord Lindsay for tabling Amendment 143 to change what constitutes an invitation to purchase. Actions that are considered an invitation to purchase attract specific consumer rights. For example, traders making an invitation to purchase must provide the individual with the information listed in Clause 228. The Government believe that the changes proposed by this amendment would expand the definition too far; it therefore has the possibility of bringing with it unintended consequences. We are of course committed to protecting consumers. Provisions in Chapter 1 of this part of the Bill already achieve a similar aim to this amendment, prohibiting traders from making misleading statements or omissions in respect of all commercial practices.

Amendment 145B, tabled by my noble friend Lord Lucas, seeks to extend the discovery period of an offence under Chapter 1 of Part 4 of the Bill from one year to two years. Again, I understand his rationale for this. It can often take time for trading standards to gather the evidence to pursue a prosecution against a trader who is breaking the law. However, it is also a key principle of our justice system that investigations should be carried out efficiently and in a timely manner. This is important in protecting the rights of both consumers and those accused of criminal offences. We believe that one year to bring criminal proceedings following discovery is the right balance between expedience and giving authorities the time that they need to carry out investigations.

--- Later in debate ---

[Lord Clement-Jones (LD)]

My Lords, I will speak to Amendments 150 and 151 and Amendments 153 to 167. This is a rather voluminous set of amendments, but they are all designed to try to bring the pre-contract information requirement for subscription contracts back to some of the language of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. The theme for these provisions is: if it ain’t broke, why fix it?

These amendments seek to maintain the flexibility for traders currently provided by those regulations by taking account of the limited time and space available for providing pre-contract information for certain formats and connected devices, and by recognising that certain key pre-contract information may be apparent from the context. The new clauses—Clauses 254 and 255—together with Schedule 21 are designed to replace the pre-contract information requirements for subscription contracts set out in the regulations. The clauses establish two sets of pre-contract information: a long set of full pre-contract information that must be given or made available to consumers before they sign a contract and a shorter set of key pre-contract information that must be given to the consumer all together, separately to any other information. The latter set must be displayed in such a way that it does not require the consumer to take any steps, such as clicking a link, and it must be displayed prior to the consumer entering into the contract.

But the Bill does not provide for the limited time and space allowances established by Regulation 13(4) of the CCR, which are necessary for certain formats and connected devices. In addition, the Bill does not reflect the flexibility provided by the CCR in terms of recognising key pre-contract information that is apparent from the context. This one-size-fits-all approach is not appropriate, given the many different types of subscription contract and consumer journey that the Bill is intended to cover, and given the varying screen sizes that consumers may use to enter into a contract, particularly on mobile devices.

These amendments are designed to amend Clauses 254 and 255 and Schedule 21 to provide more flexibility for the presentation of pre-contract information. They would import a standard of reasonableness to a trader’s assessment of whether information is apparent from the context. They would distinguish between the timing of pre-contract information and full pre-contract information, in line with the current approach of the CCR. They would enable traders to choose the most appropriate techniques to bring the pre-contract information to the attention of the consumer. They would add a new clause to reflect the limited time and space allowances provided by Regulation 13(4) of the CCR—this is necessary for certain screen formats and connected devices. They would enable traders to choose how best to present pre-contract information in a clear and comprehensible manner, on the basis that providing information all at once will not always be the most effective or transparent approach. They would simplify information about cancellation and avoid duplication. They would remove the pro-rated monthly price from the key information about a subscription, as this may confuse consumers, and they would make clear that certain information should be presented only if applicable.

In summary, it is not clear why we are going so much further than the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations, which, in the view of many, have worked quite well. Of course, we will deal with the difference in the cooling-off requirements—also covered by the CCR—when we debate the amendments of the noble Lord, Lord Black, in a few groups’ time. In the meantime, I very much hope that the Government will adopt a rather more flexible approach than they seem to have in the Bill as it stands.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I will speak briefly on this group because I am very aware that we will have a more substantive debate on subscriptions in the coming groups, so forgive me if I am very brief on some of the issues raised.

I am very grateful to the noble Lord, Lord Lucas, for his amendment. We have consistently argued for clarity, and he is right to hold our feet to the fire over the meaning of the consumer bringing the contract to the end. I am grateful for him probing a little more on what that actually means, and I look forward to hearing the Minister’s clarification on this.

I was concerned when I first read the amendments of the noble Lord, Lord Clement-Jones, that they seemed to be an unnecessary watering down of the rights of consumers under the consumer contracts regulations and introduced some ambiguity where there had previously been clarity. He has gone some way to clarifying what he meant by this. It is very unusual for me to be at odds with him. He might know far more about the subject than I did, because I was just going on what I was reading. I would be happy to talk to him more about it.

I of course understand that some mobile devices are too small to display complex pre-contract information. I am sure that we have all been guilty of ticking the box to say that we accept the terms and conditions when we have not actually read them. However, there should be a responsibility on traders to publish the pre-contract details in a simpler form, using better digital design, rather than being given more legal flexibility about how that information is communicated, which rather lets them off the hook. Maybe this is a discussion that we could carry on outside this debate.

Meanwhile, I am grateful to the noble Lord, Lord Mott, for raising the question of microbusinesses and what conditions should apply before the subscription contract regime kicks in. He raised a very interesting question which I have some sympathy with, about very local traders in a locality such as a farmer’s vineyard. I would be interested to hear what the Minister has to say on this, because we need to protect against the unintended consequences of what he is saying. We need to double check that we are not encouraging rogue businesses to re-describe themselves to get through the loophole, but I am sure that he will address that point when he replies.

As noble Lords can see, I am sitting on the fence on most of these amendments, and I am happy to stay there for the time being. I look forward to hearing what the Minister says, which might persuade me either way.

[Lord Offord of Garvel (Con)]

I thank noble Lords for their contribution to the group of amendments, which is concerned with subscription contracts. I again thank my noble friend Lord Lucas for introducing this topic and for his amendment. Amendment 148 would alter the definition of a subscription contract, meaning that contracts where a consumer does not have the right to bring a contract to an end would be brought within the scope of the chapter.

If we were to expand the definition in this way, many parts of the chapter would serve no purpose. For example, if a consumer were to enter a one-year contract for a service which had fixed payments spaced throughout the year, but the contract expires automatically at the end of the year and no further payment would be taken, the consumer would not need regular reminder notices about their contract as they would not have the right to end that contract before it expires. If, however, the contract automatically renews at the end of the year, rolling over into to another year-long contract, then the consumer has an opportunity to bring a contract to an end and therefore would benefit from being reminded that they can end their contract before it auto-renews.

I will give another example, as my noble friend requested, which may illustrate the point more clearly. If a consumer were to enter a contract with a builder for house renovations and pays in instalments, the consumer would rightly not have a right to cancel the contract before the payment period ends. The provision in the Bill would therefore not apply. Of course, where contracts do not contain a right to be brought to an end, they will continue to be regulated by the existing consumer contracts regulations 2013, where applicable. I hope that my noble friend finds this explanation satisfactory, and that he will therefore feel comfortable withdrawing his amendment.

Digital Markets, Competition and Consumers Bill

Baroness Jones of Whitchurch Excerpts

Committee stage
Wednesday 7th February 2024 Grand Committee

[Lord Offord of Garvel (Con)]

The point is that we have to consult on this. The matter has been raised by all sides of the Committee and there are specific reasons for it. The consultation is as it says. Rather than trying to go through this line-by-line at the Dispatch Box, I will try to set it out in writing for everyone, so that we can see exactly what we mean by it. If I have any input in the meantime from behind me, I will share it with noble Lords.

I turn now to the clause stand part notices tabled by my noble friend Lord Black—that Clauses 262, 263 and 264 should not stand part of the Bill—and his consequential Amendment 194. The net effect of these changes would be to reverse the cooling-off period in the Bill to the status quo established by the 2013 consumer contracts regulations. In particular, the cooling-off period for consumers after a free trial or year-long subscription automatically renews, introduced by this Bill, would be removed. The Government’s objective is to protect consumers from the specific harms associated with subscription contracts, while also considering the needs of businesses. We believe that the Bill correctly finds that balance. The Government expect that the protections provided through the Bill will have £400 million- worth of consumer benefit per year.

This measure protects consumers who have signed up to a trial period that then rolls into a higher-cost term. It also applies when contracts automatically renew on to a period of 12 months or longer, which usually, by definition, incurs a substantial financial outlay. Indeed, our consultation showed that many people forget to end their subscriptions before they automatically renew, especially after a trial, so we view this as an important provision that must remain in the Bill.

We understand that some businesses, particularly digital streaming services, are concerned about how the cooling-off periods will work in practice. As I mentioned, noble Lords should be assured that we will publicly consult on the cancellation return and refund rules to make sure that we get this right and—to be clear—to avoid refunds being payable to consumers exploiting the cooling-off period. The Bill allows for the Secretary of State to make the necessary regulations by affirmative procedure. That will be done before the subscription rules come into operation, following the consultation. I hope that this reassures the noble Lords on these points.

I turn now to the final amendments in this group, Amendments 221 and 224, also tabled by my noble friend Lord Black. The amendments would mean that the subscription contract provisions in the Bill come into force two years after the day on which the Act receives Royal Assent. The Government fully understand that businesses need clarity about when the new rules will come into effect and that they need sufficient time to make appropriate preparations. I am pleased to assure noble Lords that the subscription regulations will commence no earlier than October 2025. In the meantime, we will continue to engage with stakeholders to understand the impact of implementing the new rules and to ensure that businesses have enough time to adapt their operations accordingly.

The detail on return and refund rules will be set out in secondary legislation and the Government have committed to consult publicly on those rules. Clause 265 gives the Secretary of State the power by regulations to make further provision in connection with the consumer’s cooling-off right. Those regulations are subject to affirmative procedure, which I hope will assure my noble friend. I am grateful for my noble friend’s amendments and I hope that he feels reassured by my remarks.

[Baroness Jones of Whitchurch (Lab)]

Did the noble Lord get a response from the Box?

[Lord Offord of Garvel (Con)]

The Box feels that the point has been covered—but I will write to noble Lords and cover it with them.

--- Later in debate ---

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have spoken in this debate. We are grappling with some important issues at the heart of Part 4 of the Bill. This group of amendments follows on quite neatly from our earlier debate, and it gives me a chance to put the other side of the problem. I have to say, the noble Lord, Lord Black, seemed to downgrade the scale of the problem we foresee. He also seemed to suggest that most businesses mean well and do well, but there are other things at stake here, such as the issues many consumers experience. I am not talking about the publishing world when I say that.

I have two amendments in this group, Amendments 173 and 174. Both are designed to address the concerns raised by consumer groups, including Which? and Citizens Advice: the problems with automatic contract renewals, such as whether somebody has satisfied the original minimum term of a phone contract, or completed a free trial in signing up to a streaming service. As the noble Baroness, Lady Stowell, said, all too often consumers are not given sufficient notice to bring their contracts to an end without incurring additional charges, or find that they face a time-consuming and confusing cancellation process.

The noble Lord, Lord Black, said that the Government’s proposals are predicated on an erroneous assumption that consumers do not know what subscriptions they have. I take issue with that too. In the last year alone, people in the UK spent £500 million on subscriptions that auto-renewed without them realising, while unused or unwanted subscriptions cost people more than £306 million a year. The fact is that contracts are being renewed and prices increased with minimum notice and without clear opt-outs. Of course, this has more of an impact on marginal groups and those on low incomes.

We welcome the Government’s attempts to address these issues in Chapter 2, obviously, but we do not feel that these measures go far enough. Our Amendment 173 would allow the consumer to opt out of their subscription auto-renewing every six months, while Amendment 174 would allow the consumer to opt out of their subscription after a discounted trial. As has been said, the fact is that many people do not realise that they are entering into a long-term auto-renewing contract with a business or service, and it is often not in the interests of the trader to make that clear when the consumer signs up, or to help the consumer make a conscious decision to continue with the subscription once it is active. We need to ensure that the initial rush of enthusiasm for a purchase does not become a long-term financial burden.

In addition, the consumer may discover after a short time that the subscription does not live up to the hype they were sold when the contract was first signed. Again, we need to ensure that they can extract themselves, and their money, from paying for something they no longer want. Our amendments would achieve this, and I hope that noble Lords will consider supporting them.

I now turn to the amendments in the name of the noble Lord, Lord Black. He made an impassioned speech about the future of the publishing sector, and we have every sympathy with what he had to say. What is clear to me is that we are talking about two different things. I am concerned that the noble Lord is forming some generalised conclusions, when there is no one-size-fits-all answer. Our amendments address the types of subscription that trap consumers—he says he does not agree with that—into paying for something they may no longer want or need. The subscriptions in the publishing world that he described are long-term ones freely given to a magazine or newspaper. They are akin to loyalty or membership subscriptions, which create, if you like, group awareness and consciousness. Of course, the same can be said for charity subscriptions to the National Trust, for example—consumers taking out a subscription for altruistic reasons, a topic we debated when we discussed gift aid on Monday.

We do not want to sabotage those freely given regular payments. However, although we are sympathetic to the general case made by the noble Lord, we do not necessarily agree that the way forward is to remove the provisions from the Bill and give the Secretary of State the power to regulate on this instead. That could mean putting at risk the hard-won protections from subscription traps that are already in the Bill. Similarly, while we are open to further discussion on this point, we are not convinced that a default 12-month period would benefit consumers.

However, I agree with the noble Lord, Lord Black, in his Amendment 185, that the reference to notifying a business that a subscription should cease

“in a single communication”

is oblique and could cause genuine confusion as to whether and how the communication is received. Therefore, we urge the Minister to address this issue and find a new form of words. There are a number of different models to choose from, but the key consideration will be whether and how we design businesses following good digital design processes to make it clear that people can communicate in a clear way.

As we know, too many traders make cancelling a contract more difficult than it should be, whether by forbidding online cancellations, putting customers on hold for extended periods or having multi-step cancellation processes, where a user is steered towards retaining the services. Whether we end up with a prominent button on a website, a dedicated email address or some other system, we must ensure an appropriate balance to make it easier for consumers to cancel a contract. Traders should have an opportunity to retain customers, perhaps through price reductions, but customers should not be placed under undue pressure or have to go through half a dozen steps to extract themselves from a contract. If the Bill were to say more about some basic design principles, some of these issues might be overcome. We would certainly welcome further discussions on this issue.

Finally, I have added my name to Amendment 190, tabled by the noble Viscount, Lord Colville. I will speak on this only briefly. He makes an important point. We will return to this question of who owns our non-personal data and our right to have it returned once businesses no longer need it in much more detail on the data protection Bill. I hope to have a longer debate with him on that basis, but I hope that the Minister can provide some reassurance that the Government are prepared to act on this issue.

In our earlier discussions, we had a huge amount of consensus, but we have gone in opposite directions on this issue. I think that we all want the same thing but are finding different words to deliver it. If we were locked in a room for half a day, we could probably come up with a solution. It might be quicker than writing lots of letters, which the Minister might otherwise have to do. I hope that we can find a way through this. We are not being deliberately awkward, but it is important that we get this right. I look forward to the Minister’s response.

[Lord Lucas (Con)]

My Lords, I wanted to wait until the noble Baroness, Lady Jones, had spoken, because I wanted the chance to agree with her amendment, which raises the same question that I was raising in Amendment 192. Why do you have to be locked into these subs? Why can you not be asked to resubscribe, if that is what you want to do? Why can we not give consumers a right to approach things that way and get to know a product before they know that they want it every year?

I echo what my noble friend Lady Stowell of Beeston said on newspapers. I would want to get to know the Daily Telegraph well enough to know that I want to pay for it every day. To be able to buy it once a week would be nice, but that is not an offer at the moment. Allowing consumers to get used to a product benefits business. As the noble Baroness demonstrates in her amendment, it also benefits the consumer. It should not just be a year’s subscription or nothing. We should encourage businesses to provide something in between. We certainly should not make renewal the only option that businesses look for. We should make them earn that renewal by providing a good product for a year so that customers do not want to have to be bothered with renewing it every year. That is a situation that one happily gets into with a number of charities. You know that you want to support them. They provide a good service and you just let it tick over. I do not think that anyone should be entitled to that position. They have to earn it; they have to prove it. To have a system where you do not have to tie yourself in at the beginning is estimable.

That said, I have a great deal of sympathy for what my noble friend Lord Black said. I would prefer to see a lot of this in secondary legislation. I understand that when someone cancels a subscription, the business wants a chance to correspond with them and have an argument, although I find it a huge irritant in my relationship with a business when I suddenly discover that it would do business with me on much better terms but only if I threaten to withdraw. I wish it would value me as a continuing customer and offer me good terms, rather than only benefiting discontented customers.

I think that there is a lot of good in all the amendments in this group. I echo what the noble Baroness, Lady Jones, said about the amendment tabled by the noble Viscount, Lord Colville. I look forward to seeing that in the next Bill. I just draw his attention to the likes of Ancestry.com. Its business is the accumulation of everything that everyone has added to it. You subscribe to it, but all the time you are adding information that is then available to other people. Businesses should be allowed to retain the information that you have added, if that is appropriate. I can quite see that you might want your photographs returned from Flickr, but something like Ancestry or an app about building up information about history, ecology or whatever else it might be properly retains information that individuals have contributed and it ought to be possible for an app to have that in its terms.

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[Lord Lucas (Con)]

My Lords, to pick up the noble Lord, Lord Clement-Jones, on his two amendments, I can absolutely see where he is coming from on standard-essential patents. This reflects quite a long-term failure by successive Governments to support British participation in standards setting. If one looks at the history of the telecommunications industry from when I was young, when the British were dominant, to where they are now, which is nowhere, one of the great failures and one reason why things have not located or started in the UK has been that we have not committed sufficiently high-powered, consistent energy into standards setting. We have never quite been abreast of what is happening next or been the place where people want to locate a business. It is enormously important and I made a point on this in the Automated Vehicles Bill. It applies to a lot of technical areas and we must get behind standards setting.

In relation to Amendment 202 of the noble Lord, Lord Clement-Jones, how does one know how much is AI-generated? It is rather like asking how much of a Reynolds painting is by Reynolds. Did he just touch in the eyebrow and leave the rest to his servants? Does an AI grammar checker count as AI-generated content? If the AI has made suggestions of things that one might look at, is that AI-generated? I imagine that a lot of journalists now use AI to help fill out the column inches after a hard day’s doing something else. As the noble Lord knows, given his connections with academia, this is becoming common on both sides—the teachers and the taught—so what does finding a way in which to define “AI-generated” mean? Is it AI-supported or no involvement at all? Is it not using any of the tools at hand? This is a difficult concept to go at. Surely, at the end of the day, what matters with a piece of music is how good it is, not where it came from.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have spoken. This truly is a miscellaneous group of amendments and I will add to the miscellany of all this, because my Amendment 215A addresses the ambiguity that arises from the current laws on marketing infant formula.

Perhaps I may briefly explain the background as to why this is before us today. The Infant Formula and Follow-on Formula (England) Regulations 2007 were designed to prevent supermarkets promoting infant formula over breastfeeding. They arose because, prior to that, aggressive marketing and advertising techniques had been used by the milk formula industry to mislead parents over the best way in which to feed their babies. The current rules state that infant formula should not be advertised or promoted in a shop. They also say that no coupons, special sales offers, discounts or gifts should be offered to mothers or their families.

Meanwhile, noble Lords will be aware that the cost of infant formula has risen recently and is a huge extra burden on families, who are particularly suffering in the cost of living crisis. It is estimated that the cost increased by 22% in the past year alone. But because of the current regulations, supermarkets still cannot accept vouchers, even those provided by food banks and local authorities to purchase that infant formula. There have therefore been calls for the marketing rules to be reviewed to allow, for example, retailers to accept loyalty points, grocery vouchers and store gift cards, as well as free vouchers, for infant formula.

Our amendment addresses the current ambiguity in the regulations and calls for a review to clarify the marketing rules and their impact on the pricing and affordability of infant formula. This Bill is seen as the best mechanism to get this review under way. I should stress that our aims are to clarify the law and to tackle the unfair pricing currently taking place. However, we want to ensure that parents remain protected from the aggressive advertising that has misled them in the past. I hope that noble Lords and the Minister will see the sense of this amendment.

On a completely different issue, I listened carefully to the noble Lord, Lord Lucas, about double- glazing. I agree that he made an important point. I did not know that there were still double-glazing salesmen, but he raised them so I am sure there must be. I agree with him that, if they still exist, they should be regulated.

I turn to a completely different issue again. I am grateful to the noble Lords, Lord Holmes and Lord Clement-Jones, for their amendments on AI. We look forward to debating the Private Member’s Bill of the noble Lord, Lord Holmes, on AI regulation in the coming weeks. These Benches take this issue hugely seriously. We recognise that AI has the potential to deliver life-changing benefits for working people, from early cancer diagnosis to relieving traffic congestion, but these benefits must be set firmly in new standards and new regulation to keep people safe and their data protected. The EU and the US are speeding ahead on this while the UK is dragging its heels, so we believe that new regulations on the control of AI are essential.

I listened carefully to the noble Lords. I do not disagree with what they are trying to achieve but I query whether this is the right place to pursue these amendments. The data protection Bill will come before the House shortly; that will give us a much greater opportunity to address the impact of AI on the lives of consumers and citizens. I hope that we will have a really detailed exploration of the protections needed in that Bill at that time. However, having listened to the noble Lord, Lord Clement-Jones, on music labelling just now, I realise that I cannot just pass this issue on to the data protection Bill in the way I wanted to, because he made an important point about the consumer issues arising. Again, I have some sympathy with the noble Lord, Lord Lucas, who challenged this and asked, “How can we know? What percentage of music is AI?”

[Lord Clement-Jones (LD)]

I entirely agree that it is a question to be asked. Of course, there is the general principle of transparency. If you look at the amendment, you will see that it talks about content “whether assisted or generated” by AI. It could be partly or wholly generated by AI but, in transparency terms, just the knowledge that at least some of the elements were created by AI is important. The consumer can then take it or leave it, basically. If they like the sound of AI music—believe me, some of it is pretty dreadful—that is fine, but it is an acquired taste.

[Lord Clement-Jones (LD)]

It all depends on how sober the audience is, I suspect.

[Baroness Jones of Whitchurch (Lab)]

Gosh—I cannot help feeling that this is the beginning of a much longer conversation. We may not want to have that conversation now, but this is an important issue; I absolutely understand why the noble Lord, Lord Clement-Jones, is raising it. We need to find a way to ensure that consumers are properly informed.

On standard-essential patents, I am grateful to the noble Lord, Lord Clement-Jones, for explaining the background to his amendment. Again, this is an issue with which I was not familiar, but the noble Lord spoke persuasively. I hope that the Minister will agree to follow up on the Intellectual Property Office’s review and provide some reassurance that the issue is in hand.

The Minister will be pleased to hear that we support his Amendment 195. With that, I look forward to hearing his response to the various issues that we raised in this group.

[Lord Offord of Garvel (Con)]

My Lords, I thank noble Lords for their valuable contributions on the amendments in this group. I will address each one in turn.

I thank my noble friend Lord Holmes of Richmond for his Amendments 199 and 200, relating to consumers and artificial intelligence. I also thank the noble Lord, Lord Clement-Jones, for his remarks on this matter.

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[Lord Etherton (CB)]

My Lords, I draw attention to my Amendment 209 in this group. It would require the Secretary of State, within 12 months of the commencement of Chapter 4 of Part 4, to complete a review of the provision of alternative dispute resolution—ADR—in relation to consumer contract disputes in each relevant sector. It would also require the Secretary of State to publish a report on the steps the Government intend to take to ensure the provision in each sector of accessible and affordable ADR for the resolution of consumer contract disputes.

Chapter 4 of Part 4 addresses the issue of ADR, subject to the government amendments currently being proposed. Essentially, these provisions are concerned with the terms of accreditation of ADR providers. What is lacking is any provision for making ADR schemes more available and accessible for the resolution of disputes, or even any provision for a review of potential ADR arrangements for inexpensive, speedy and efficient disposal of consumer disputes.

The noble Baroness, Lady Jones of Whitchurch, has two amendments in this group that would improve the position. One relates to a money award under ADR that is enforceable in the ordinary courts and the other seeks a review of ADR in the aviation sector. I support both those amendments, but my provision is much wider; it calls for a more general review, by the Government, of appropriate arrangements for ADR across the various economic sectors.

Earlier in Committee, I tabled my amendment on the introduction of class actions for consumer disputes, under Chapter 7 of Part 1. The Minister, the noble Viscount, Lord Camrose, said that the Government opposed anything that would provide complexity of litigation at this stage. ADR is at the other end: it provides a very accessible, simple and straightforward means to resolve consumer disputes that should be relatively inexpensive. Resorting to court proceedings is always expensive and time-consuming. They can also be intimidating for consumers. The current delays in the delivery of civil justice are well known.

It is significant that the Government are well aware of the desirability of ADR in other areas that may, in policy terms, be broadly described as those that concern consumers. In the Renters (Reform) Bill, currently in the other place, there are provisions for landlord redress schemes in the private rental sector. It is likely that all private landlords will be required by regulations to join such schemes, which will, in effect, provide an ombudsman service for tenants in the private rental sector. These schemes will provide a swift, inexpensive and accessible means to resolve disputes and pay compensation to tenants who have suffered from landlords’ wrongful action. Joined-up government policy strongly supports the extension of that kind of redress mechanism to consumer disputes generally.

For those reasons, I suggest that the Bill should provide for a government review of ADR for consumer disputes to make it more readily available as a means of accessible, inclusive, swift and appropriate resolution of consumer disputes that is appropriate for the needs of all consumers, regardless of age, income, educational level and vulnerabilities.

[Baroness Jones of Whitchurch (Lab)]

My Lords, it gives me great pleasure to speak to this group, partly because, for many years, I was on the board of a very good ombudsman scheme. I suppose I should own up to it being very ably chaired, at the time, by the noble Lord, Lord Clement-Jones. But that was some time ago, so I should not have to declare it as a current conflict of interest.

As a result, I have seen how the best models of ADR can work and provide quick, free, independent consumer redress without having to go anywhere near a court, which was exactly the point made by the noble and learned Lord, Lord Etherton. But, sadly, not all ADR schemes are so responsive, which is why we have tabled Amendments 208A, 209A and 209B, and why I was pleased to add my name to Amendment 209, in the name of the noble and learned Lord, Lord Etherton. He provided a very good introduction and analysis of why a review of ADR provision in the UK needs urgently to be carried out. As he rightly pointed out, this is business-friendly; it actually reduces the cost for consumers and businesses, in many ways, so what is not to like about it?

First, I should say that we welcome the measures in the Bill as far as they go. We need an improved verification system for ADR schemes. I hope that this measure will help root out misleading company schemes that masquerade as ombudsmen but, in truth, are a different branch of the same business; they lack independence and have no real incentive either to resolve consumers’ complaints or to provide appropriate redress. They have been giving ombudsman schemes a bad name. We hope that a review will tackle the more fundamental faults in the current landscape. In some sectors, there are multiple ombudsman schemes; in others, the majority of traders refuse to participate in such schemes.

Even knowledgeable consumers find it difficult to navigate the variety of schemes on offer. The information and signposting are often notoriously poor. Why would a trader notify a consumer that they have the right to go to an ombudsman when that trader may incur the cost or inconvenience of a judgment that goes against them? The bad actors—there are many of them—do not have any incentive to provide this important information. Yet the best ombudsman schemes help to improve overall service standards and breed customer loyalty for the longer term by dealing with complaints efficiently and, as I say, free of cost.

Our Amendment 209B is a case in point. The aviation sector has been plagued by stories of poor service and a lack of refunds. There is no compulsion for airlines to be part of an ombudsman scheme. The aviation ADR scheme, which exists, is not recognised by the Ombudsman Association because it did not meet its criteria for independence, fairness and transparency. It provides consumer redress for easyJet and Ryanair, among others. It once took me about 18 months of doggedness and perseverance to get a refund for a cancelled flight from Ryanair; this is not how ombudsman schemes are meant to work.

Our amendment calls for a detailed, time-limited review of ADR in the aviation sector, consulting consumers and passenger organisations in the sector as well as looking at what further regulatory measures are necessary to bring the aviation sector in line with the standards expected in the best ombudsman schemes elsewhere. I hope that noble Lords and the Minister will feel able to support our amendment, which will help bring well-overdue reform to consumer rights in this sector.

Our Amendment 208A addresses another concern around ADR schemes: how do consumers find out about them in the first place? It is crucial that details of an ADR provider are prominently displayed to consumers who have a complaint. It is not clear why the requirement to display a name and website has been taken out of the regulations; I look forward to the Minister’s explanation for this.

Our Amendment 209A addresses the issue of traders refusing to pay money awards made against them by an ADR provider. It is hugely frustrating for consumers who fight and win a case then to find that they have limited powers to enforce the compensation. This amendment would give them greater powers to have a payment enforced by a court, as would have been the case had the judgment been made in a court in the first place. Again, I hope that noble Lords see the sense of this amendment.

All these amendments complement the proposal of the noble and learned Lord, Lord Etherton, that there should be a review. I hope the Minister confirms that the Government are prepared to carry out this long-overdue ADR review; I therefore look forward to his response.

[Lord Clement-Jones (LD)]

My Lords, I rise to speak briefly in support of all the amendments in this group. I say “briefly” because I have a strong interest to declare as chair of the board of the Trust Alliance Group, which runs the energy and telecoms ombudsman schemes. The noble Baroness, Lady Jones, is entirely right: she was a valued and knowledgeable member of the board of what was then called Ombudsman Services. In everything she says, she speaks with a great deal of experience of the delivery of ombudsman services.

I will be extremely brief because it would not be right for me to extol the virtues of ombudsman services overly. In many ways, they speak for themselves in terms of the alternative dispute resolution process described by the noble and learned Lord, Lord Etherton. However, they are an extremely effective way for consumers to resolve complaints that they have been unable to address directly with the businesses involved.

In this context, I commend a very good House of Commons Library briefing, Consumer Disputes: Alternative Dispute Resolution (ADR), of May 2022. It describes the pros of ADR, but it also fairly describes the cons and what the dispute resolver is able to do. I regret that the ADR directive, which came into force in 2014 or 2015, was not more comprehensively adopted; otherwise, we would not be in this position. The noble and learned Lord, Lord Etherton, is entirely right: it needs extension across a much greater variety of sectors.

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Moved by

[Baroness Jones of Whitchurch]

215: After Clause 327, insert the following new Clause—
“Review: tax rates for digital and high street businesses(1) Within the period of 6 months beginning with the day on which this Act is passed, the Secretary of State must undertake a review of the implications for competition of tax rates paid by business which operate—(a) wholly online,(b) wholly through physical premises, and(c) both online and through physical premises.(2) In undertaking the review under subsection (1), the Secretary of State must—(a) identify the number of high street shop closures in each of the last three years, (b) calculate an indicative average tax rate for each of the business categories mentioned in subsection (1),(c) consider the consequences of any differences in the average tax rates mentioned in paragraph (b) on competition, and(d) if there are significant differences between the average tax rates mentioned in paragraph (b), consider the case for reforming different forms of business taxation to reduce such differences.(3) In undertaking the review under subsection (1), the Secretary of State may carry out specific sectoral case studies which consider the particular impacts of differences in tax rates on businesses operating in those sectors.(4) Upon completion of the review, the Secretary of State must lay its findings before Parliament.”Member's explanatory statement
This new Clause, which would require the Secretary of State to carry out a review of the implications for competition of effective tax rates of digital and high street businesses, is designed to probe the Government’s plans for balancing the economic opportunities presented by firms operating in digital markets with the ongoing health of established brick-and-mortar businesses.

[Baroness Jones of Whitchurch (Lab)]

My Lords, this amendment comes at the end of a long debate but is none the less important. It addresses one of the main factors leading to the long and sad decline of many of Britain’s high streets: the huge disparity in costs for businesses having a physical presence in the high street compared to the cost of equivalent businesses trading online. Bricks-and-mortar businesses are now paying disproportionately more than their online competitors, which is hitting small businesses and our high streets hard.

The result is boarded-up shops that landlords have given up trying to let and an increase in anti-social behaviour as the streets become ghost towns. Yet we know that small businesses are crucial to thriving high streets, providing goods and services that are central to people’s everyday lives. More than that, they provide a community focus for people to socialise, eat and relax, helping to tackle loneliness and increasing a sense of well-being.

It is not just small businesses that have been squeezed out. Well-known chain stores such as Debenhams and Wilko, which provided core high street essentials, have failed to survive on the high street. Instead, their naming rights have been bought out by new businesses operating exclusively online.

Vibrant high streets are not just good for communities; they are vital for boosting local economic growth, creating increased demand and jobs in the retail and service sectors. The fact is that the UK’s business rates system is no longer fit for purpose. As our economy has moved more online, our tax system has failed to keep up, so there is an urgent need to rebalance the costs. High street businesses should not face huge business rate charges while their big online marketplace competitors are let off the hook.

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[Lord Offord of Garvel (Con)]

Once again, I am grateful to the noble Baroness, Lady Jones, for raising this important issue, and for the remarks of the noble Lord, Lord Clement-Jones, and my noble friend Lord Lucas.

The Government are wholeheartedly committed to protecting the country’s high streets and town centres, and supporting them as they adapt to changing consumer demands. Indeed, the Government revalued business rates in 2023, with the retail sector being the biggest beneficiary. We have also provided long-term investment in our high streets and small businesses, including £2.35 billion-worth of town deals, the £830 million future high streets fund and the £4.8 billion levelling up fund. New legislation in the Levelling-up and Regeneration Act 2023 will play an important role in reviving our high streets by introducing high street rental auctions, which will empower places to tackle decline by bringing vacant units back into use, and seek to increase co-operation between landlords and local authorities and make town centre tenancies more accessible and affordable for tenants, especially for SMEs, local businesses and community groups.

The Government also launched the new £2.5 million high street accelerators pilot programme, which will empower and incentivise local people to work in partnership to develop ambitious plans to reinvent the high streets so that they are fit for the future. Accelerators will bring residents, businesses and community organisations together with their local authorities to develop a long-term vision for revitalising high streets. The pilot will run in 10 areas across England until March 2025.

We consulted in 2022 on an online sales tax, and after careful consideration we decided not to introduce it. That decision reflected concerns raised on the risk of creating unfair outcomes and complexities in defining the boundaries between online and in-store retail, including click-and-collect orders. The Government therefore do propose to pursue further changes to business rates or sales tax at this time. I hope that the noble Baroness will feel sufficiently reassured to withdraw her amendment.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I realise that it is late in the day and that I am raising a fundamental issue at a late point. Perhaps it is straying a little beyond the main intent of the Bill; nevertheless, it is a fundamental issue, and it is important that we have aired it. I am grateful to the noble Lord, Lord Clement-Jones; as he said, our high streets are far too important to lose. As both he and the noble Lord, Lord Lucas, said, the digital world cannot meet all the needs of society, and high streets still have a fundamental role to play. We absolutely need to ensure that the community focus in high streets is revitalised. I am grateful that the noble Lord, Lord Lucas, said that we should look at other models of funding and taxation; it was a point well made.

I listened carefully to what the Minister said. It is easy to say that he is wholeheartedly committed to revitalising the high streets; that is great—we all are—and I have no doubt that initiatives such as levelling up and the pilots will have some impact, but none of those addresses the fundamental fact that it is the economic costs for the shops that is at heart here. You can make a high street look lovely, provide better police and tackle anti-social behaviour, but if the shops cannot afford to trade because they are being undercut by their online competitors, they will not stay around. Unless we take more fundamental actions on that basis and face up to what is happening at the moment, sadly, we will face continuing long-term decline.

I hear what the Minister says. I realise that this is a much bigger debate, but I really feel that the Government do not have a grip on this. They have had 14 years to sort it out but there has been a long decline on their watch. I am sorry to end on such a negative note. As I said, I am sure we will have a further chance to debate this, but I really think that our policy on reforming business rates will make a fundamental difference. Nevertheless, I beg move to withdraw my amendment.

Amendment 215 withdrawn.

Digital Markets, Competition and Consumers Bill

Baroness Jones of Whitchurch Excerpts

Report stage
Monday 11th March 2024 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, it is a pleasure to follow that piece of logic. I do not need to speak for very long in support of the many important amendments that have been spoken to in this group. The Minister, in Committee and in his welcome letters and meetings, has attempted to rebut the need for them—but I am afraid that, in all cases, their proponents have been rather more persuasive in wishing to see the CMA unambiguously able to exercise its powers.

In a different context, the Communications and Digital Committee, chaired by the noble Baroness, Lady Stowell of Beeston, in its report on large language models, said that there was a considerable “risk of regulatory capture”. Mindful of that, we need to make sure that the CMA has those powers.

I turn to the amendment proposed by the noble Lord, Lord Faulks, and his argument about the dangers of introducing proportionality, also spoken to by the noble Lord, Lord Wolfson. On these Benches, we fully support having that provision in the Bill, as in the noble Lord’s Amendment 13. Human rights for big tech is not really a slogan that I am prepared to campaign on.

The noble Baroness, Lady Jones, will no doubt introduce her Amendments 43, 46, 51 and 52 on appeal mechanisms for penalties, which differ from all the other decisions of the CMA. We very much support her in those amendments, and we have signed them. I also support the noble Baroness’s Amendment 59. The Minister took the trouble to write, explaining why the Government did not consider including a duty to citizens, but sometimes such clarification, as in this case, makes us only more enthusiastic for change. I am afraid that citing overlap and the creation and operation of the DRCF is not enough; nor is citing the risk of regulatory overreach, given its inclusion 20 years ago in the Communications Act. We agree with the conclusions of the original task force.

We also support the noble Lord, Lord Lansley, on the importance of placing time limits on the Secretary of State in approving the CMA guidance under the digital markets provisions of the Bill, in Amendment 56. Although I believe that the noble Baroness, Lady Stowell of Beeston, will not be pressing it to a vote, we very much support her in her relentless campaign for improved parliamentary scrutiny. This has been identified by so many parliamentary committees, not least by the Industry and Regulators Committee on which I sit. It seems extraordinary that we are still waiting to implement the kind of solution that she is putting forward, and I hope very much that the House will take forward her suggestion.

We also very much support in principle the amendment proposed by the noble and learned Lord, Lord Etherton, on collective proceedings. He may not press the amendment to a Division today, but this is a vital change that we should make to ensure that rights in this area can be properly exercised and enforced. If the noble Lord, Lord Faulks, seeks the opinion of the House on his Amendment 13, the noble Baroness, Lady Jones, on her Amendment 43, and the noble Lord, Lord Lansley, on his Amendment 56, we will support them.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have contributed this afternoon to what is a very important group of amendments. I add my thanks to the Ministers and officials for their time in the run-up to this debate in trying to resolve the many issues that we have tabled today.

I thank the Minister for tabling Amendment 1 and for listening to our concerns about the Secretary of State’s power to amend the conditions that would determine whether a tech company has a position of strategic significance. I am glad that the Minister has listened to our concerns, and we are happy to say that we accept the new proposals.

Our Amendments 43, 44, 46, 51, and 52 would reinstate judicial review principles as the means by which penalty decisions are heard, rather than being determined on the merits. I thank all noble Lords who have spoken this afternoon, and indeed those who have added their names to these amendments, for their support. As we debated in Committee and again today, these amendments are among the several we are debating in which the original balance between big tech companies and challenger firms was distorted by late government amendments on Report in the Commons. The Minister has already admitted that the changes came about as a result of lobbying by the big tech companies to No. 10. They clearly would not have done this unless they were expecting to benefit from those changes.

The debate around the appeals mechanism goes to the heart of those concerns. We know that penalties such as fines are the most significant deterrent in preventing SMS companies breaking the conduct requirements established by the CMA. There is a real concern that a merits appeals process would allow the SMS firms to deliberately delay implementation of the fines and open up the judgment of the CMA right back to square one. This is why the CMA has itself argued that it prefers the judicial review process, which is widely used elsewhere and avoids protracted litigation. We agree with the CMA and believe that appeals through judicial review will deliver swifter and more effective outcomes. We want to close down the opportunities for unnecessary litigation from huge corporate lawyers with time on their side and deep pockets to fund their activities.

As the noble Lord, Lord Black, and the noble Baroness, Lady Kidron, have said, the worrying news from Europe as to the responses so far from Apple and the other tech companies to their fines for anti-competitive behaviour underlines why it is so important to have robust and legally watertight regulation in place in the UK.

I do not think that the Minister, in Committee or in subsequent discussions, has been able to persuade us that a merits review process will not open the door to lengthy litigation designed to frustrate the whole process. If we remain unpersuaded by his arguments this afternoon, I give notice that I will wish to test the opinion of the House on Amendment 43.

These concerns also apply to Amendments 13 and 35 in the name of the noble Lord, Lord Faulks. In this case, replacing the word “appropriate” with “proportionate” has particular legal implications, which the noble Lord, Lord Faulks, has described extremely eloquently. We know that the CMA already has a duty to act proportionality, so repeating it in the Bill takes on a new legal emphasis that might lead a court to widen the scope of a judicial review challenge. In our view, “appropriate” has a much more common-sense meaning of rationality, whereas “proportionate” is a matter of judgment and is more easily disputed.

The Minister has argued that there is a need for extra clarity to reassure the tech companies on the intent of the clause. The amendment from the noble Lord, Lord Faulks, would require the CMA to act proportionately, as its current duty requires, and also appropriately. This is a win-win, which should provide the clarity that tech companies are seeking. I look forward to hearing the Minister’s further clarification on these issues, but, unless there is any new, compelling justification for the changes, we would support the noble Lord, Lord Faulks, if he chooses to test the opinion of the House.

Throughout our deliberations, the noble Baroness, Lady Stowell, has raised important questions about the need to strengthen parliamentary oversight of the CMA’s activities. Her Amendments 55 and 57 provide an excellent route to addressing these concerns. Like other noble Lords, I am sorry that they have not yet found favour with the Government and I very much hope that she will continue to pursue them.

Meanwhile, Amendment 49 from the noble and learned Lord, Lord Etherton, raises the right of consumers to bring collective proceedings where they have suffered the same harm or loss from a breach of conduct requirements. As he has argued, this is a vital lifeline for individuals or small businesses that cannot afford to finance legal proceedings alone. His amendment would create a means of effective enforcement of existing rights once a breach has occurred. We agree that we ought to find a mechanism to allow these class actions to occur in specific circumstances.

However, we also agree with the amendment of the noble Baroness, Lady Harding, that the courts need to avoid proceedings which conflict with or overlap the CMA’s ongoing investigations. We hope the Minister can provide some reassurance that the Government recognise the importance of these issues and will carry out a review. I hope this will provide sufficient reassurance to the noble Lord, Lord Etherton, that a vote on his amendment is not necessary.

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Moved by

[Baroness Jones of Whitchurch]

24: Clause 29, page 16, line 14, after “is” insert “indispensable and”
Member’s explanatory statement
This amendment, alongside another in my name to Clause 29, would revert the Clause back to the one first introduced in the House of Commons. This would narrow the ability of bigger platforms to claim their anti-competitive behaviour presents countervailing benefits.

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Moved by

[Baroness Jones of Whitchurch]

43: Clause 89, page 55, line 32, leave out “, 114 (appeals)”
Member’s explanatory statement
This amendment, alongside others in my name to Clauses 89 and 103, would revert the relevant Clauses back to the ones first introduced in the House of Commons. This would reinstate judicial review principles as the means by which appeals against penalty decisions are heard, rather than such decisions being determined on the merits.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I listened carefully to the Minister’s response. This amendment to the way that appeals are processed goes to the heart of our concerns about the Bill. It would revert the wording to the much more sensible wording that the Government had initially in the Commons. We feel that, without our amendment, the corporate lawyers will run rings around the CMA and postpone any delays in the implementation of CMA decisions. This is an important amendment and I therefore wish to test the opinion of the House.

Digital Markets, Competition and Consumers Bill

Baroness Jones of Whitchurch Excerpts

Report stage
Wednesday 13th March 2024 Lords Chamber

The amendments I put down are pretty self-explanatory, and I hope the Minister will respond.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I hope that I too can be brief. When we discussed the provisions on subscription contracts in Committee, there were a number of concerns raised about the original wording. There was, at the time, a recognition that some consumers were being trapped into subscription contracts from which they could not easily withdraw. There was a further issue of subscription auto-renewing without people realising, which cost individuals an estimated £500 million a year.

However, against that, there was a strong case made for the many regular subscriptions for the goods and services which were genuinely wanted and loved, and for the many other subscriptions to good causes and charities on which those organisations depended. There was a growing consensus among noble Lords that we had not got that balance right, so I am very pleased that the Minister has listened and engaged with these concerns and we are pleased with the Government’s amendments now tabled.

First, we welcome the decision to exclude micro-entities, such as milkmen and farm shops, from the provisions.

Secondly, it is helpful that the new amendments clarify the way that consumers should notify the business that they wish to end a contract. We would have welcomed a clearer provision for a simple on/off toggle button to end subscriptions; we hope that the Government will keep that option under review.

Thirdly, we welcome the new government proposals to prevent binge-watching of digital content for free during the cooling-off period. The noble Lord, Lord Clement-Jones, has further amendments on this issue which provide helpful clarification on those outstanding issues. I hope the Minister can provide some reassurance that these issues will be kept under review.

We are pleased that the Government have addressed the very real concerns from the charity sector that gift aid claims would be lost under the new regulations. The Government have explained that this requires a change to the Treasury regulations and have given an assurance that these changes will be implemented before this section of the Bill comes into force in October 2025. I pay tribute to the persistence shown by the noble Lord, Lord Mendoza, in trying to resolve this issue, which we have been pleased to support. His Amendment 126 pursues this issue, and I know that there are many in the charity sector who would like further clarity and certainty on how those assurances can be delivered in practice. I was pleased to hear from the Minister that they will be subject to further engagement with stakeholders to get this right, and I think that is the way forward.

The amendments proposed by the noble Lord, Lord Clement-Jones, helpfully set out a route that could be taken to bring about a successful resolution, and I hope the Minister can confirm that those principles will underlie any ongoing discussions.

Finally, Amendment 127 from the noble Lord, Lord Lucas, raises the need for reminder notices to be prominent in any correspondence, and we very much support the intent behind his amendment. We hope the Minister will feel able to give the reassurances that the noble Lord, Lord Lucas, seeks, that these issues will be addressed.

Overall, the provision in the Bill has made good progress, but it is not the end of the matter. I hope the Minister can assure us that the operation of these changes will be kept under review and, if necessary, brought back to the House for further attention. I look forward to the Minister’s response.

Digital Markets, Competition and Consumers Bill

Baroness Jones of Whitchurch Excerpts

3rd reading
Tuesday 26th March 2024 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, I am delighted that the Minister has come back at Third Reading as he undertook to and that he has produced this amendment. I am only sorry that the noble Lord, Lord Lucas, is not present to be able to take the credit for it.

[Baroness Jones of Whitchurch (Lab)]

My Lords, we welcome the Government’s amendment on subscription reminder notices. As has been said, the noble Lord, Lord Lucas, made a very sensible intervention when we debated this in Committee and on Report, and it provides a helpful clarification to service providers. I hope that this amendment and the other changes that we made on Report have now struck a much better balance between businesses’ needs and consumer interests.

We look forward to hearing details of the department’s further work on implementing the gift aid protections and other work on cancellation methods, but, for now, we are pleased with the progress that has been made on the Bill and we wish it a speedy onward passage.

[Lord Offord of Garvel (Con)]

I thank my noble friends Lord Black and Lord Lucas, and today the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Jones, for their continuing engagement on this topic and on the Bill more broadly. I am pleased they agree that the Government have achieved the right balance between business and consumers on reminder notices and that we have ensured that businesses’ communications with customers can be more streamlined.

--- Later in debate ---

[Lord Clement-Jones (LD)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Stowell. I agree with a huge amount of what she said.

I reiterate the welcome that we on these Benches gave to the Bill at Second Reading. We believe it is vital to tackle the dominance of big tech and to enhance the powers of our competition regulators to tackle it, in particular through the new flexible pro-competition powers and the ability to act ex ante and on an interim basis.

We were of the view, and still are, that the Bill needs strengthening in a number of respects. We have been particularly concerned about the countervailing benefits exemption under Clause 29. This must not be used by big tech as a major loophole to avoid regulatory action. A number of other aspects were inserted into the Bill on Report in the Commons about appeals standards and proportionality. During the passage of the Bill, we added a fourth amendment to ensure that the Secretary of State’s power to approve CMA guidance will not unduly delay the regime coming into effect.

As the noble Baroness, Lady Stowell, said, we are already seeing big tech take an aggressive approach to the EU Digital Markets Act. We therefore believe the Bill needs to be more robust in this respect. In this light, it is essential to retain the four key amendments passed on Report and that they are not reversed through ping-pong when the Bill returns to the Commons.

I thank both Ministers and the Bill team. They have shown great flexibility in a number of other areas, such as online trading standards powers, fake reviews, drip pricing, litigation, funding, cooling-off periods, subscriptions and, above all, press ownership, as we have seen today. They have been assiduous in their correspondence throughout the passage of the Bill, and I thank them very much for that, but in the crucial area of digital markets we have seen no signs of movement. This is regrettable and gives the impression that the Government are unwilling to move because of pressure from big tech. If the Government want to dispel that impression, they should agree with these amendments, which passed with such strong cross-party support on Report.

In closing, I thank a number of outside organisations that have been so helpful during the passage of the Bill—in particular, the Coalition for App Fairness, the Public Interest News Foundation, Which?, Preiskel & Co, Foxglove, the Open Markets Institute and the News Media Association. I also thank Sarah Pughe and Mohamed-Ali Souidi in our own Whips’ Office. Last, but certainly not least, I thank my noble friend Lord Fox for his support and—how shall I put it?—his interoperability.

Given the coalition of interest that has been steadily building across the House during the debates on the Online Safety Bill and now this Bill, I thank all noble Lords on other Benches who have made common cause and, consequently, had such a positive impact on the passage of this Bill. As with the Online Safety Act, this has been a real collaborative effort in a very complex area.

[Baroness Jones of Whitchurch (Lab)]

My Lords, before the Bill passes, I put on record my thanks to the Ministers—the noble Viscount, Lord Camrose, and the noble Lord, Lord Offord—as well as the noble Lord, Lord Parkinson, who made a guest appearance. I also put on record my huge appreciation for the Bill team for their timely letters and briefings, and their immense good humour when we asked for even more information.

The whole experience has been a good illustration that, when we fully engage in discussion on a Bill, we can deliver genuine improvements that have broad support. I hope that our colleagues in the Commons appreciate the careful thought and hard work that is behind these changes. I hope that we do not have to be here again on this Bill, but I reiterate that our door is always open if further discussions would help. For now, I hope that the Bill will soon be on the statute book and I look forward to its progress.

Bill passed and returned to the Commons with amendments.

Digital Markets, Competition and Consumers Bill

Baroness Jones of Whitchurch Excerpts

Consideration of Commons amendments
Tuesday 14th May 2024 Lords Chamber

does not eliminate the concern about the two bleeding into each other, especially if the two streams take place together in the same case. All this means that we should revert to the judicial review standard for penalty appeals as well.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I am pleased to support the Motions in the names of the noble Lords, Lord Faulks and Lord Clement-Jones. My Motion C2, which proposes Amendments 32B and 32C in lieu, is in this group.

Throughout the course of the Bill, we have been grateful to the Ministers for their engagement and willingness to reconsider its provisions. We are pleased with a number of concessions which have considerably strengthened the consumer protections within it.

However, the issues at the core of the Bill, which are the ones we are dealing with in this group, remain unresolved. This is the Bill that was meant to even out the balance of interests between the big tech companies and the challenger firms. We heard numerous examples of why this was necessary, why challenger firms were being squeezed out of the market and why the CMA needed to have new powers to create a fair and balanced regime. We originally had a Bill that did just that. This was before the big tech companies intervened and objected to the Government’s proposals. The new version we have in front of us now weighs the scales very much in their interests again.

In the Commons, Minister Kevin Hollinrake claimed that the Government had engaged significantly with both large tech companies and the challenger firms on these changes and that,

“all those cohorts are happy with where the Bill is today”.—[Official Report, Commons, 30/4/24; col. 178.]

I have to tell the noble Viscount the Minister that this simply is not the case. Many firms remain unhappy with the changes introduced to the original Bill and that they have not been matched by the necessary assurances on the practical and legal consequences that will follow, so our objective all along in framing our amendments was to make the Bill legally watertight, to take out ambiguity and to give the CMA the best chance of assessing and moderating the conduct of the tech companies deemed to have strategic market status.

We have been keen to use the wording that is already legally recognised and does not increase the scope for the lengthy, costly and often strategic legal cases which we sometimes see in this field, challenges which could be used delay or undermine the CMA’s attempts to level the playing field. Clarity has to be of the essence. We and the noble Lord, Lord Faulks, have amendments to Motion C, and he has eloquently raised the legal concerns which continue to concern us as well.

Our Amendments 32B and 32C address an area of ambiguity that may give lawyers an open door to revisit CMA decisions to impose a penalty when conduct requirements have been breached. This concern was also raised in the Commons debate. For example, Conservative MP John Penrose described the possible impact of the government changes, such that

“clever lawyers working for big tech firms may effectively be able to broaden the scope through clever use of legal techniques to prolong their attempts to walk backwards slowly and prevent justice from being done”.—[Official Report, Commons, 30/4/24; col. 188.]

I could not have put it any better myself. To address this concern, our amendment makes it clear that appeals on penalties in such cases cannot revisit the original decision, whether to impose conduct requirements or that such requirements have not been complied with. Rather than leaving it to ministerial assurances or non-binding additions to the Explanatory Notes, our amendments would make it absolutely clear that merits appeals on penalties are on only the amounts and other points of detail and not the CMA’s decision to act, something that colleagues have referred to as “bleed back” at previous stages. This amendment represents a compromise. We would have preferred a switch back to the use of judicial review on all aspects of appeals, as preferred by the CMA, but in the absence of such a concession I hope noble Lords will see the value of our proposals.

We are not convinced by the assurances offered in the Commons by Minister Hollinrake that the courts will understand how the rules should be applied; the noble Viscount the Minister repeated this today. As the noble Lord, Lord Faulks, ably demonstrated, there are conflicting legal views on this and few precedents on which we can rely. There is also a remaining concern that where a number of issues are dealt with by the CMA concurrently, the evidence may overlap, which would impact on a merits decision on appeals. Our amendments address these concerns. I hope the Minister sees the sense in our proposal. It merely reflects what the Government say they want to achieve, but which they are refusing to put in legislation. Challenger firms and other interested parties cannot grow and compete with warm words alone, so I give notice that I am minded to test the opinion of the House on this important issue.

The noble Lord, Lord Faulks, also made a compelling case on his Motion Al with regard to proportionality. We have debated this issue before; I do not need to repeat the arguments. We continue to believe that the original wording that the CMA’s conduct in regulating digital markets should be “appropriate” rather than “proportionate” sets the right standard. I hope the Minister will be able to confirm that the Explanatory Notes will be amended to make it clear that the use of “proportionate” is not intended to set a heightened standard for appeals grounds.

--- Later in debate ---

Motion C2 (as an amendment to Motion C)

[Baroness Jones of Whitchurch]

Moved by

At end insert “, and do propose Amendments 32B and 32C in lieu—

32B: Clause 89, page 55, line 20, at end insert— “(1A) Appeals (or parts of appeals) to a penalty imposed under section 85 (penalties for failure to comply with competition requirements) through the application of section 114 of the EA 2002 do not apply to— (a) the CMA’s original decision to impose the requirements as set out in section 85(2), or (b) the original finding that an undertaking has failed to comply with a conduct requirement as set out in section 85(3). (1B) Appeals (or parts of appeals) relating to the decisions listed in subsection (1A) must be determined in accordance with the requirement in section 103(4).”

32C: Clause 103, page 62, line 4, after “89(1)” insert “to (1B)””

[Baroness Jones of Whitchurch (Lab)]

My Lords, the Minister said more or less that he agreed with our position but did not see the need for the amendments to be on the face of the Bill. The argument he gave was that the courts would have no difficulty in distinguishing the penalties from the earlier elements of the case—but, as we have already heard this afternoon, some of those legal disputes are just beginning. It is not as clear-cut as we would like, legally, and therefore we do feel the need for that clarification to be in the Bill. I therefore wish to test the opinion of the House on Motion C2.

Digital Markets, Competition and Consumers Bill

Baroness Jones of Whitchurch Excerpts

Consideration of Commons amendments
Thursday 23rd May 2024 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, I do not propose to go over old competition ground, but like the noble Lord, Lord Moynihan, our attitude to Motion A is not to oppose it but to be somewhat disappointed at the Government’s response; on the other hand, we welcome the fact that they have added new enforcement proposals and provisions and the promised review. I think it is quite unaccountable that they have resisted the almost irresistible force of the noble Lord, Lord Moynihan; it has been a sight to behold his persistence throughout not only this Bill but previous Bills. I am quite confident that eventually his campaigning will bear fruit because, when we look at the terms of the amendments that were not agreed to by the Commons on providing evidence of proof of purchase and of title to tickets, among other things they are only common sense and very good consumer protection.

I add my thank you valedictory to the Minister, his colleague the noble Viscount, Lord Camrose, who I see is riding shotgun today, and the noble Lord, Lord Parkinson, who made a cameo appearance on the Bill and was the Minister involved very heavily in the Online Safety Bill proceedings. Both Ministers have always been willing to engage. They have not always conceded, but they have always listened, so I thank them very much indeed for all their service. It has been a pretty long ride when one looks back to the beginning of the suite of digital Bills in the past two years, starting with the Online Safety Bill, then the digital markets Bill, and now the non-lamented data protection Bill, and I look forward to further digital legislation in the autumn or the beginning of next year.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I add my thanks, first, to the Ministers. As the noble Lord, Lord Clement-Jones, said, they have worked assiduously, and we have felt as if we were constantly in their company over the past six months or so. They have always been courteous and had a listening ear, and I thank them for that. I, too, add my thanks to the members of the Bill team for all their hard work in preparing the Bill and the quite substantial amendments on occasions that have been agreed on concession. I particularly thank the stakeholders in the wider scope of the Bill, the challenger firms and the consumers who have been so active in helping us shape what is becoming a good Bill.

I am sorry that the Government did not see the sense of what I thought was an extremely reasonable amendment from the noble Lord, Lord Moynihan. We remain hugely disappointed in Motion A for the reasons that we have ready rehearsed which I do not need to repeat. I particularly thank the noble Lord, Lord Moynihan, and Sharon Hodgson who have campaigned on this issue for many years. I hope that in due course they will get their reward.

I have to say that, if elected, a Labour Government would strengthen consumer rights legislation to protect fans from fraudulent ticket practices, to restrict the sale of more tickets than permissible and to ensure that anyone buying a ticket on the secondary market can see clearly the original price and where it comes from. We will put the interests of the fans and the public first on this. Nevertheless, we believe overall that this is a good Bill that takes the first steps to regulating the behaviour of the big tech companies, which is long overdue, giving a bit more security to challenger firms and adding protection to consumer rights. We are grateful for the concessions made along the way that have indeed improved the Bill. At this stage in the proceedings, we think it is right that the Bill do now pass and that we do not need to debate it any further.

[Lord Offord of Garvel (Con)]

I am very grateful to noble Lords for their contributions today and throughout the passage of the Bill. I commend especially my noble friend Lord Moynihan for his dogged determination on this issue and the sentiments that he has expressed consistently throughout the passage of the Bill. I also pay tribute to my noble friend Lord Camrose, who has done more than ride shotgun; he has done the heavy lifting on the digital markets piece of this legislation, and I thank him for that contribution. I thank the Opposition Benches led by the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Jones, for a consistently collaborative approach on these matters. The engagement we have had has been comprehensive.

I also thank all those who have helped us get to this place, including the clerks, officials and, of course, the Bill team led by Georgie Clarke, for their hard work on this legislation. This Bill will be vital in driving growth, innovation and productivity and in protecting consumers. I am honoured to see it through its final stage today, and I look forward to it becoming an Act of Parliament. The Bill has benefited from widespread support from across both Houses as well as detailed scrutiny from many noble Lords and Members in the other place. I thank all noble Lords for supporting our position and wishing the Bill well.

Motion A agreed.