Draft Competition (Amendment etc.) (EU Exit) Regulations 2020

Chi Onwurah Excerpts

Wednesday 4th November 2020 General Committees

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

It is a great pleasure to serve under your chairmanship, Mr Gray.

I thank the Minister for his opening remarks and emphasise that the Opposition believe that open and competitive markets promote consumer welfare, that healthy competition is a fundamental part of a prosperous economy, and that effective competition law is an absolute prerequisite of achieving that. Well-balanced legislation in this area can bring down prices, encourage product innovation and lead to better quality service delivery.

As a member of the European Union, the UK has benefited from harmonised competition standards across the single market for decades.  Those rules have protected UK businesses and consumers from the negative effects of so-called abusive practices from large corporations based elsewhere.  They have been developed at EU level by UK representatives in our own national interest. I am sure that the Minister agrees that European competition law was primarily instigated and driven by UK competitive ideas, practices and regulators. To a certain extent, we have left the EU with our competition law framework. Unfortunately, we are not so clear how the sovereign competition framework that the Minister mentioned will look and where it is going. Perhaps he can provide greater clarity on that.

It is certain that the weight of 600 million consumers that the European Union brings to the table has given it great clout on the international stage. The EU’s robust competition framework has been used to take on tech giants, curb unhealthy market dominance and push for consumers to be able to migrate their personal data from platform to platform. So even though the UK has technically left the European Union, in reality we continue to benefit from EU rules now. 

Today’s instrument is being laid partly to amend legislation to reflect the fact that the UK will be covered by EU protections right up until the end of the transition period, as the Minister said.  It formalises the European Commission’s ability to carry out its agreed functions under Title X of part three of the withdrawal agreement in the UK during the transition.  As the Minister set out, that includes the European Commission continuing to have the jurisdiction it needs to make final decisions on merger referrals made to it before the end of the transition period.  Of course, the retention of those rules during the transition period makes absolute sense. It limits disruption at an already difficult time and keeps our markets functioning harmoniously with our nearest neighbours. 

We will not oppose the instrument, although we have some concerns. The transition period comes to an end at the end of this year, in less than two months. Businesses with a base in the UK will continue to be subject to European Union frameworks insofar as any of their actions affect competition within the European Union, even after the transition period ends, but the UK will no longer be able to have a say in drawing up the rules. We will effectively be a rule taker rather than a rule maker. In fact, the UK courts will no longer have the facility to refer questions of interpretation of European Union law to the European Court of Justice after Brexit, which could see damaging divergences between UK and European Union competition rules that may leave businesses confused and over-burdened.

Business leaders continue to warn that we could see more red tape, not less, after the transition period because, as I have suggested, businesses operating in both the UK and the European Union—this applies to many businesses operating across Europe—will be required to deal with both the CMA and the European Union competition authorities simultaneously on mergers and competition investigations. Will the Minister confirm that that will be the case and that they will have to have regard to those authorities’ regulations? Can he offer any assurances that UK businesses will not be burdened with red tape, and will he outline how the CMA will keep that in mind?

Finally, I hope the Minister will use this opportunity to lay out how he and his Government will make sure that businesses and the public will continue to be safeguarded against unscrupulous competition practices in future. As I have suggested, the European Union has used its competition powers, and looks to do so even more in the future to address the lack of competition in data, digital and platform markets. Although we see the European Union making progress in that area, we have had no indication from the competition Minister as to whether the UK will also address the unhealthy lack of competition in platform, data and digital markets.

[Paul Scully]

I thank the hon. Member for her considered comments and for agreeing that these regulations are the way forward. As I have said, they are needed to give effect to the provisions that we have already agreed in the withdrawal agreement, so they very much relate to a specific set of cases. I will try to cover the areas that the hon. Lady talked about. We have the Penrose review into the competition regime in the UK. As soon as that comes back, we will consider it and come up with the changes and improvements that we need. We both agree that healthy markets need to function well together to ensure a fair deal for other competitors, and consumers as well. It is really important that consumers are at the heart of what we do.

[Chi Onwurah]

Will the Minister indicate when the Penrose review will be completed?

[Paul Scully]

The review is working at pace. I cannot give a timescale at the moment, but as soon as the review comes back we will consider it quickly, because we want to make sure that we have the best competition regime. As the hon. Lady stated at the beginning of her speech, UK competition specialists were at the heart of the EU regime. We are leaving the regime, but we are leaving with our competition experts, so they will be at the heart of what we do. We have made it clear in our published proposal for the comprehensive free trade agreement with the EU that we intend to maintain international co-operation on competition enforcement. The EU has expressed a desire to maintain UK-EU co-operation on competition law matters in its own proposals as well. We want to make sure that the CMA continues to participate in multilateral networks such as the international competition network and the OECD.

Without the regulations the UK would fail to implement its obligations in competition law under the withdrawal agreement. Inconsistencies between the withdrawal agreement and competition law would cause significant uncertainty for UK businesses, the CMA and UK courts. The changes that I have described today are required to complete the process of preparing the UK statute book for the transition. I hope the Committee approves the regulations.

Question put and agreed to.