Digital Markets, Competition and Consumers Bill

Damian Collins Excerpts

Consideration of Lords amendments
Tuesday 30th April 2024 Commons Chamber

[Kevin Hollinrake]

I thank my right hon. and learned Friend for his intervention and his earlier engagement, when he made his position on that point clear. He is right to say that penalties can be significant—up to 10% of global turnover—so it is fair that we allow organisations to challenge penalties on the merits of the case, but maintain the ability to impose pro-competition interventions and conduct requirements on platforms. The amendments made in the other place risk undermining that careful balance. For example, amendments to revert the appeals standard for fines to judicial review principles, to which my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland) referred, would remove a valuable safeguard on the significant new powers that the Bill gives the CMA, as would the removal of the requirement on the CMA to act proportionately. Meanwhile, amendments to the countervailing benefits exemption risk making the exemption less clear for stakeholders. Consequently, the Government have tabled a motion to disagree with those amendments.

[Damian Collins (Folkestone and Hythe) (Con)]

The point about a “proportionate” response is relevant. In the original drafting of the Bill, the word used was “appropriate.” The Government changed that to “proportionate” on Report in this House, and the Lords have sought to reverse that change. What does the Minister think was disproportionate, if you like, about the word “appropriate”? What about it struck the wrong balance? Ministers keep saying that they think things strike the right balance, but they never really explain why.

[Kevin Hollinrake]

We have engaged significantly, throughout the Bill’s passage and before it was introduced, with large tech and challenger tech. Our understanding is that all those cohorts are happy with where the Bill is today. Certainly, during that engagement, concerns were raised about the term “appropriate,” but the clear position that we expressed to those who raised that concern was, “Of course, there is a requirement on the CMA to act proportionately.” Putting that in the Bill does not undermine its basic principles. In fact, we understand from the situation in the European Court of Human Rights, and the property rights emanating from it, that all those things are baked in anyway, so we do not feel that the wording weakens the legislation at all, but it does strike the right balance between those two different courts.

--- Later in debate ---

I will draw my remarks to a close. I hope that this is the last time we see this Bill coming through this Chamber. As I say, we support the Bill, but it is not beyond improvement, even at this late stage. In our view, it could certainly be improved, were the Government simply to do the right thing and accept the amendments before us today.

[Damian Collins]

I will speak briefly on the question that I raised earlier in the debate about the change of language from “appropriate” to “proportionate” and follow on from the remarks of my hon. Friend the Member for Weston-super-Mare (John Penrose). On one level, what the Minister is saying now—similar to what the Minister in the House of Lords, Lord Camrose, said in the debates there—is that proportionality is implicit in the law anyway and that the rights an organisation would have under article 1 of the European convention on human rights would apply anyway. Ministers are saying that bringing this language into the Bill is therefore a tidying-up exercise that re-emphasises rights that people already have. On another level, Ministers are also saying that this change creates a better balance, which means that there will be some change in how things work. It is important at this point that the House is clear about what is intended with this change.

There is a concern that the change effectively opens up a full merits appeal basis, which we have been keen to avoid doing in all the debates on this Bill as it has gone through both Houses. The Government have rightly resisted calls from big tech companies to bring that in, because it is a recipe for multiple and lengthy litigations, just as with every single measure of tech regulation that exists as a whole. That is not the intention.

Let us say that a company may be guilty of overcharging in an app store, but the cost to the consumer is relatively low. Would an intervention from the CMA be proportionate? Overcharging in the mobile app market may exist, but ultimately companies are happy to pay it and it is a relatively small charge. Would a big intervention by the CMA be a proportionate response? There are so many competing priorities, and often the individual consumer cost of some of these measures would be low, but there is the business significance of a company self-preferencing a service to the exclusion of other companies from the market. The company might say, “There is no particular consumer detriment to this, because the price is relatively low”, but it drives strategic market status. We have already seen in the European Union with the Digital Markets Act that the companies are challenging the designation of strategic market status, and they are looking for grounds to challenge at every opportunity, and we must expect that they will do the same thing here as well. That is why we should be clear that we are clear about what we mean.

My hon. Friend the Member for Weston-super-Mare invited the Minister to say that effectively, in terms of enforcement and how the courts should interpret it, the change should not make any difference from the original drafting. He invites the Minister to say that we should not be concerned that moving from “appropriate” to “proportionate” is moving from saying that the regulator should do what is within its rights to do—it is appropriate because it has the power to do it and it has made an intervention based on that power—to saying, “Even if it was appropriate for it to do it, it should not have done it, because it was disproportionate.” What would the grounds for that disproportionality be?

It is really important that the guidance to the legislation makes clear what we should expect on how the CMA can determine to find what it believes are proportionate responses, with that not being easy to dismiss on the grounds that the cost to consumers may be relatively low or the impact limited to a certain area of business.

[Sir Jeremy Wright]

My hon. Friend is, as ever, making a good case. As he knows, I agree with him about the need for the Government to be clear about what these terms really mean. One thing that we are not talking about today but which is linked to the question of definitions is what we mean by “consumer benefit”. Does he agree that there may be a difference between benefit to the current consumer and a benefit to the future consumer and that we should be clear in the Bill, should we not, that “consumer benefit” includes future consumers as well as current ones?

[Damian Collins]

My right hon. and learned Friend makes an important point. We could have a digital service provided for free, self-preferenced by a big company, offering a new service to its customers—how could there be a consumer detriment in that? But a consequence of that could be constriction of the market and the driving out of other businesses. The mobile mapping market is a really good example: Google Maps and Apple Maps totally dominate a market that used to have multiple competing companies in it. Now it does not, and there could be future consumer detriment in that.

That is why it is important that this is an ex-ante regime, which anticipates not just the detriment that may exist now, but future consequences. That is such an important principle for digital markets, which have tended to see the consolidation of market power in the hands of a relatively small number of players, who often do not compete against each other directly but dominate certain sections of the market, be it through the mobile ad market, search and retail.

There are only in effect two app stores, and given the lack of interoperability, they are virtually monopolies. We see those things already, and the development of large language model systems and the massive acquisition of data required for AI to run them is consolidating that market largely into the hands of the five or six companies that have enough data to be effective operators within it. That means that, in the future digital market world, any challenger tech developer will have to access its market and customers through the services provided by a relatively small number of companies. That is important.

I would be grateful if the Minister said in winding up whether he believes that the Bill offers a better balance. Has that balance changed, or has it not, and it is just a question of language and interpretation of meaning? What does it mean? I hope we all agree that, through making this change, we are not seeking to open up the legislation to wider judicial challenge, with more ruling through the courts, more lengthy delays and costs to try to bring forward the CMA’s interventions.

[Barbara Keeley]

I rise to speak against the Government motion to disagree with Lords amendment 104. As we have already heard, the amendment seeks to safeguard fans from fraudulent abuse, which is rife in the secondary ticketing market. It is an important amendment on an issue that, as we have heard—it is worth saying again—has had much work invested in it by my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) and her colleagues on the all-party parliamentary group on ticket abuse. It also had great attention in the music industry, which is loud in its support for tackling ticket touting. Anyone who has tried to buy a ticket for a popular concert knows the frustration of losing out on tickets, only then to see the same tickets at 10 times the price on the secondary market.

Touting goes deeper than mere frustrations: it prices fans out of attending music, cultural and sports events; it damages the relationship between venue, artist and fan; and it undermines confidence in our live music industry. Yet, despite the calls of major UK music industry bodies, including UK Music and Live music Industry Venues & Entertainment, the Government have consistently failed to act.

Last year, the Government rejected the recommendations of the Competition and Markets Authority to strengthen legislation and protect UK consumers from illegal practices in the secondary ticketing market. At the time, the CMA warned that unless there was reform, illegal reselling prices would become worse. Lords amendment 104 would implement the recommendations of the Competition and Markets Authority to provide safeguards for consumers. Those are basic protections, such as ensuring that a reseller cannot sell more tickets than they can legally purchase on the primary market, and ensuring that tickets cannot be sold without proof of purchase. It is deeply disappointing that the Government cannot commit even to those basic safeguards.

Under the Government’s watch, the situation has become much worse. In 2007, there were an estimated 150 full-time ticket touts in the UK. Now there are about 4,000 touts attacking ticket systems for UK events, using bots to harvest tickets in bulk. Instead of being used as a resale platform for fans who can no longer make it to an event, ticketing websites are increasingly being used by large-scale touts who harvest tickets on the primary platform—using bots to skip the queue—and sell them on at many times the original price, sometimes speculatively. Ordinary fans do not stand a chance against that; they are the ones who are losing out. The situation has become so bad that police forces in some areas are having to launch public awareness campaigns warning about ticket touts after hundreds of reports of ticket fraud.

Lloyds Banking Group was recently forced to issue a warning to its customers about the risk of buying resold tickets after 600 of its customers reported being scammed when they tried to buy resale tickets for Taylor Swift’s Eras tour. It has been estimated that resale for the UK leg of that tour alone has led to more than £1 million being lost to fraudsters so far. That is happening despite clear messaging from the promoters of the tour that resale tickets bought outside approved channels will be turned away at the door.

As I said earlier, the Government can claim that they are doing enough, and the Minister seems happy with that, but he should look again at those secondary ticketing sites, where he will see three tickets for Taylor Swift’s show on 21 June going for over £72,000. That obviously shows a completely malfunctioning, dysfunctional market.

The Minister cannot claim that the market is functioning for fans and artists—it is actually functioning for touts and the platforms they use. Lords amendment 104 is just one measure that would begin to counter the damage done by ticket touts. I am glad to say that Labour has now committed to going a step further.

Labour would significantly strengthen consumer rights legislation to restrict the resale of tickets at more than a small set percentage over the price the original purchaser paid for it, including fees. Labour would limit the number of tickets that individual resellers can list to the number that individuals can legitimately buy via the original platform. Labour would make platforms accountable for the accuracy of information about the tickets they list for sale, and would ensure that the Competition and Markets Authority has the powers it needs to take swift and decisive action against platforms and touts in order to protect consumers.

The Minister cannot keep sticking his head in the sand. As the Competition and Markets Authority warned in 2021, illegal reselling practices have become worse due to a lack of action. We are now getting to a situation where artists and venues are on the cusp of losing the ability to sell tickets to genuine fans at an affordable price, and working families are being priced out of seeing their favourite artists or their favourite sports team.

Music, culture and sports events must not just be for the elite—the people who can afford thousands of pounds. How can the Government and the Minister justify their opposition to Lords amendments that would keep open access for fans to sport, to arts and to culture? I hope that he will listen to Opposition Members and not press the motion to disagree with this reasonable and modest amendment.