Draft Competition (Amendment etc.) (EU Exit) Regulations 2019

Bob Blackman Excerpts

Wednesday 5th December 2018 General Committees

[Bob Blackman (Harrow East) (Con)]

It is a pleasure to serve under your chairmanship once again, Sir Christopher. I am not a lawyer, but before I came to this place, I worked for BT for some 19 years. During that time, I developed the training for 100,000 people on the consequences of the Competition Act 1998 and the Enterprise Act 2002 for the company.

The consideration I ask of my hon. Friend the Minister is twofold. The legislation should protect consumers from anti-competitive behaviour and also ensure that we do not get companies merging together to create monopolies that damage the rights of the consumer. As we leave the European Union, the companies involved in that potential behaviour are large corporate companies across the world. As we are passing this legislation, what is there to protect us? What rights will there be in our courts to prevent large companies across the world from damaging our economy? What protections will there be for consumers to prevent that from happening?

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[Kelly Tolhurst]

The hon. Gentleman is right: if we enter a no-deal situation, we will not have a deal with the European Union. However, our world-respected bodies, such as the CMA and other regulators, are communicating on a daily and weekly basis with their counterparts in not only Europe but other parts of the world. There is nothing to suggest that that co-operation, communication and co-working would change, and we would seek for it to be continued. We still want to co-operate with our international partners, and I cannot foresee a situation, with or without a deal, where that would not happen. That is my understanding.

With regard to the hon. Gentleman’s question about whether it is right that we are debating this big SI in a short Committee, I highlight that the SI changes two big pieces of legislation. Remember that we are retaining EU law, so the SI is not a change in policy; it is about retaining what we have, to make it fit so that on day one, were we to leave the European Union without a deal, our statute book would function.

The first piece of legislation is the Competition Act 1998, and the SIs that sit under it. We have all sat through a number of SI Committees. In the years I have been a Member of Parliament, many small statutory instruments have altered larger pieces of legislation. The second piece of legislation is the Enterprise Act 2002, and other SIs that have been introduced that relate to the EU, and to the block exemption that I mentioned. The “etc.” refers to the other pieces of legislation, consideration of which we have all sat through. From looking at a hard copy of the Bill, a number of minor changes are clearly being made. That gives Members an idea of why we are discussing this matter in Committee, as opposed to having a wider debate.

With regard to whether the CMA is capable of continuing to do its job given the potential increase of work in a no-deal scenario, we expect that the CMA might have an increased case load of between five and seven antitrust cases in a year. We have also assessed—working with the CMA, obviously—that the CMA might have to deal with between 15 and 30 extra merger cases over a year.[Official Report, 17 December 2018, Vol. 651, c. 4MC.] The National Audit Office has looked at the CMA and believes that it has robust plans in place to operate and function after we leave the EU.

As Members will know, in 2017 in the spring statement the Chancellor put £3 billion aside over a two-year period for funding our EU exit. In the spring statement of this year, the Chancellor announced just under £24 million extra for the CMA. The CMA is going through a recruitment process to increase its number of workers. That will constitute a substantial increase in the size of the CMA, and I am reliably informed that the CMA is working to plan, and recruitment is on target at the moment.

State aid is not part of today’s SI, but I am sure that the hon. Member for Sefton Central will be pleased to hear that the Government will soon lay an SI on that issue. I look forward to having greater conversations with him about the merits—or not—of state aid, and what he would like to see in the future.

Regarding divergence, as the hon. Gentleman explained and as I understand it, post-exit decisions in the European courts will be notable by UK courts, but not binding on UK courts. The idea that previous case law becomes part of UK case law history has come about because businesses need certainty and decision makers need to be able to look at that: it is quite right that pre-exit case law remains the bank of case law. However, as we have determined, UK courts will not be bound by that case law, although they will obviously have regard to it. Going forward, we need businesses to have assurance that previous case law has set the precedent, but as we have outlined in the SI, UK courts can diverge from it.

As regards the guidance that we will be giving on that point, it is case law: obviously, it will be defined by judgments. As the hon. Gentleman knows, markets, competition and things are changing all the time, so the guidance will also change over time. At that point, if necessary, we will give guidance to the relevant individuals. The hon. Gentleman mentioned bringing claims in the UK for things happening within the jurisdiction of the European Union. That is true: they will be brought here in the UK. I believe we can do so under UK law in UK courts. Also on that point, there is an ability to bring a civil, private claim in the UK under foreign tort law anyway.

My hon. Friend the Member for Harrow East asked what we will do to make sure that the UK protects its consumers from the big corporate organisations that are perceived to potentially cause restrictions and competition issues in the UK. As I outlined, our competition law in the UK is world renowned; we are respected internationally for the way we deal with such cases, and we already have great co-operation with international organisations.

To give one example, in the Google investigation a UK market was one of the main ones being investigated, and most of the claimants came from the UK market. I hope that gives my hon. Friend some comfort that, even if we are in a no-deal situation, if this SI is agreed we will be more than ready to take on those challenges and we will continue to maintain co-operation with our international partners and the European Union to make sure that the protection of UK consumers is at the heart of what they are doing.

[Bob Blackman]

I thank my hon. Friend for the explanation she has given. One aspect of European competition law is the economic assessment of what constitutes a monopoly. We could be in a position where something would not constitute a monopoly in the UK, but would be a direct threat to UK consumer interests, and would still be a monopoly in the European Union. What would be the position under the SI for consumers to gain protection as a result?

[Kelly Tolhurst]

My hon. Friend is right when he talks about the thresholds. Obviously, for the UK to take a particular action, the monopoly would have to meet our threshold abilities. It would, however, be down to the CMA to take forward cases, based on a number of different assessments. We do not expect—I do not expect—that the regulations will put the UK in a worse place. In fact, we could argue that there are benefits: under the regulations, the UK will make those decisions directly for UK consumers, rather than the decisions being taken at a distance. I hope that reassures my hon. Friend.

I thank the Committee for its consideration of the regulations. I thank the hon. Member for Sefton Central for his contribution and for the questions that he has asked me. He is absolutely right to do so, because it is an important debate and we are talking about the protection of UK consumers.

The amendments in the regulations are essential. If they were not passed, businesses would lack clarity as to how to act, and the CMA’s decisions would face a considerable litigation risk. It is vital that consumers continue to be protected from anti-competitive behaviour in the event of no deal.

As I have outlined several times, the UK has a world-renowned competition system. The regulations make no change to that system beyond correcting the deficiencies in retained EU law. We can all agree that it is essential that the regulations are in place in the event of a no-deal outcome. The amendments will ensure legal clarity for businesses, reduce litigation and protect consumers. They will also provide a smooth transition from the current system in the EU to a stand-alone UK competition regime in the event of a no-deal exit. I trust that I have answered all the Committee’s questions and I hope the Committee approves the regulations.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Competition (Amendment etc.) (EU Exit) Regulations 2019.