Digital Markets, Competition and Consumers Bill (Fifth sitting)

Debate between Jerome Mayhew and Paul Scully

Committee stage
Tuesday 20th June 2023 Public Bill Committees

[Paul Scully]

Amendments 55 to 57 relate to ensuring that the DMU will be able to use, in its digital markets investigation, evidence that was gathered and consultations that were undertaken before the Bill becomes an Act. I am grateful for the opportunity to explain this really important aspect of the regime.

To provide some context, clause 2 will give the DMU the power to designate undertakings with strategic market status with regard to a specific digital activity. It sets out that, to designate a firm with SMS in respect of a digital activity, the DMU will need to be satisfied that a number of conditions detailed in clauses 3 to 8 are met. SMS designation is the gateway into the digital markets regime. Only the very small number of firms that are designated will be subject to the rules of the regime. The DMU will only be able to designate a firm following an evidence-based SMS investigation, which must include a public consultation that allows the firm itself and wider stakeholders to provide input on the designation decision. I explained earlier that I would use “firm” and “undertaking” interchangeably. Accordingly, when I say a “firm with SMS” or an “SMS firm”, that is the same thing as a “designated undertaking”.

Turning to amendment 55, 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, provided that it acts in accordance with general public law principles, which would, for example, require it to ensure that evidence remained relevant. As such, I do not believe this amendment is necessary to ensure the DMU can reflect its existing evidence, understanding and expertise in its designation investigations. Further, the amendment could restrict the DMU’s ability to draw on analysis that had not been the subject of consultation, even if the DMU considered that analysis to be relevant to an investigation.

Amendments 56 and 57 relate specifically to consultations on proposed decisions as part of the DMU’s SMS and pro-competition intervention investigations respectively. The DMU can launch PCI investigations into suspected adverse effects on competition. We will return to PCIs when debating the clauses in chapter 4.

Consultation is a fundamental feature of the regime. It ensures that the decisions are based on the best available evidence and that the regime is transparent. For SMS and PCI investigations, the DMU must consult on the specific decisions that it intends to take at the end of its investigation. That will ensure that all relevant parties have an opportunity to feed in views and perspectives on what the DMU is proposing on the decision at hand, not simply on the general operation of the market.

As I have highlighted, it is absolutely right that the DMU will be able to draw on broader knowledge during the course of its investigations, but it should not be able to do away with the consultations entirely. The consultations are a necessary part of the procedural safeguards that ensure good decision making. I know that the Coalition for App Fairness said that it would raise that in its evidence. I am grateful for its evidence. I totally agree with it that the consumer should not start with a blank piece of paper, but I do not think that it is necessary to amend the Bill in order to be able to be able to use that existing analysis where it is there.

I will now turn to clause 2, which will give the DMU the power to designate undertakings with SMS with regard to a specific digital activity. To do that, the DMU will need to be satisfied that a number of conditions are met. The concept of “digital activities” is detailed in clause 3. To be in scope of the regime, the turnover condition must be met. That is explained in clauses 7 and 8.

The DMU must also consider that the digital activity is linked to the UK, and that the undertakings meet the SMS conditions in respect of the digital activity. That is to say that the firm has, in respect of the digital activity, substantial and entrenched market power, and a position of strategic significance.

[Jerome Mayhew]

It is a pleasure to serve under your chairmanship, Dame Maria. I will deal first with whether clause 2 should stand part of the Bill. It is of course axiomatic. Right at the heart of the purpose of the Bill is the designation of undertaking. Importantly, it references clause 7, which deals with the turnover of an undertaking. I am looking forward to what the Minister has to say about clause 7, particularly with reference to the levels of revenue or turnover for an undertaking. The Minister has given definitions for “undertaking” and “firm”. I look forward to his further comments about those definitions, particularly when it comes to the classification of worldwide turnover and the revenue being undertaken within the United Kingdom. I am straying slightly into clause 7, but because there is reference to it in clause 2, I hope that is acceptable.

I am just flagging that there may be consideration under clause 7 as to the possibility of the manipulation of turnover where there is a global undertaking with global turnover of less than £25 billion, but where the turnover associated with the United Kingdom is approaching the £1 billion mark. It is foreseeable that we could start to have economically significant manipulation associated with the definition of turnover—I flag that because it is referred to in clause 2. Of course, the main body of clause 2 is right at the heart of the Bill. I welcome the constructive opening comments from the hon. Member for Pontypridd, and I look forward to engaging with her and the other Members of the Committee on that basis over the coming days and, I am afraid to say, probably weeks. [Laughter.]

I turn to amendment 55. This Bill is already hundreds of pages long, and it was often noted in my former career at the Bar that legislation gets longer and longer as it seeks to become more and more specific. However, there is a risk with seeking to list all the elements that we wish to cover. By having a list, we encourage exemptions and the seeking out of elements that are not quite on the list. Through that mechanism, undertakings can avoid the intention while complying with the letter. In my submission, the approach taken by the Government in the current drafting of clause 2 is the right one, because, as the Minister has already mentioned, it gives the DMU the wide scope it needs to take account of work that has already been done without constraining it by having a specific list, as amendment 55 would require. Proposed subsection (5), which the amendment would insert, says that an SMS investigation

“may take account of analysis undertaken by the CMA, on similar issues, that has been the subject of public consultation, within the five years prior to Royal Assent of this Act.”

Who could object to that? However, the Minister made the point that it is already encompassed within the powers of the DMU under the current drafting of the Bill. If we say that this is specifically included in the body of text, it prompts the question: what if someone is just outside that but would otherwise properly be within the consideration of the DMU? It raises arguments that will be explored via litigation, particularly by organisations that have substantial turnover and considerable economic interests to defend, as we heard in oral evidence over the past week.

The last thing we want is to have legislation that invites clarification by the courts. Although I and the Minister are very sympathetic to the intentions behind amendment 55, I fear that it might have the unintended consequence of increasing the chances of prolonged litigation as we seek to explore what exactly is and is not within scope of the DMU. For that reason, I do not support the amendment.

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[Jerome Mayhew]

I briefly made mention of clause 7 in my earlier remarks. I am interested in the Minister’s view, particularly on clause 7(2)(b) and the definition of UK-related turnover being £1 billion or more. There is a legitimate question to be asked, because while that is a substantial amount of money, it is not that great in terms of global business. As I mentioned, I could foresee a situation whereby when a global undertaking’s global turnover is substantially less than £25 billion and its UK-related turnover is approaching the billion-pound mark, there might be a perverse incentive to direct investment and activity away from the United Kingdom because of that cliff-edge definition. I would love to propose a better alternative—it is above my pay grade—but I highlight that as being an issue we might need to take into account.

[Paul Scully]

I will cover most of the points in my main speech, but the reasons for designation of SMS status will be published, so that will be public. I will cover the points on the Secretary of State and on turnover. Clause 3 sets out what constitutes a digital activity for the purposes of the digital markets regime. Digital activities are defined as the provision of digital content, such as software, operating systems or applications; services provided by means of the internet, such as an e-commerce platform; and any other activity carried out for the purposes of providing digital content or internet services, such as background processes.

A firm can only be designated with SMS in respect of a digital activity. The restriction to digital activities is appropriate for the new regime, which responds to the specific characteristics of digital markets, such as network effects and data consolidation, which makes them extremely fast-changing as well as prone to tip in favour of a few firms. With all of this, the definition of digital activities has been designed so that our regime will be able to handle the complexities of different and fast-evolving digital business models, and that is reflected in the powers given to the Secretary of State.

Clause 4 sets out when the DMU will be able to consider a digital activity as being linked to the UK for the purposes of designation. As we have heard, the global nature of digital markets means that business actions in other countries can impact on consumers and businesses in the UK, so it is important to allow the DMU to address harm to competition in the UK, even when all or part of a firm’s physical operations are located elsewhere.

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[Paul Scully]

I have talked about the fact that the CMA will publish on a regular basis—on an annual basis—its report about what it is doing and how it is working. The Under-Secretary of State for Business and Trade, my hon. Friend the Member for Thirsk and Malton, has regular meetings with the CMA and with the Competition Appeal Tribunal as well. We will meet regularly the digital markets unit to talk through the issues of capacity and its decision making, but it is not just for us to be talking to it “behind closed doors”, within the Department. The regular reports from the CMA and the decision-making reports, which will be published as well, will absolutely highlight why the decisions have been taken and how they have been taken, and therefore we can take a judgment on what resources it needs and whether it is under-resourced.

Over the three years of my ministerial career, I seem to have been giving the CMA jobs to do. I say that having done the Bills that became the United Kingdom Internal Market Act 2020 and the Subsidy Control Act 2022 and now this. The hon. Member for Bermondsey and Old Southwark is right to say that the CMA has expanded. But it has expanded in accordance with the expertise that it has.

[Jerome Mayhew]

We had three days of oral evidence last week and were lucky enough to have the chief executive of the CMA come and give evidence to us. I do not have a copy of Hansard with me, so I stand to be corrected, but I believe that I am right in saying that Ms Cardell, when she gave her evidence, was directly questioned about the level of resource that the CMA had and her degree of confidence as to whether it would be sufficient to carry out the tasks anticipated in the Bill. The words that stick in my mind and that I ascribe to Ms Cardell—again, I stand to be corrected—were that the CMA is well resourced and more than capable of undertaking these activities.

[Paul Scully]

I thank my hon. Friend.

Sub-Postmasters: Compensation

Debate between Jerome Mayhew and Paul Scully

Tuesday 22nd March 2022 Commons Chamber

[Paul Scully]

I thank the hon. Gentleman for his kind words. In terms of loss of liberty, that comes up with the overturned convictions. In terms of the overall losses, as I said, the HSS works by looking at the past losses as well as what is ongoing and making an assessment of that with an independent panel behind it. I envisage that there will be the same scheme for the 555 so that there will be parity in their compensation.

[Jerome Mayhew (Broadland) (Con)]

As Back Benchers, we often ask Ministers for action and get absolutely nowhere, but today is different. I join the tributes to the Minister for how hard and how successfully he has been working in Government to get to a solution. I also put on record my recognition of Therium’s decision not to seek its extra compensation. This week of all weeks, it is nice to have a business doing the right thing. Can he give some indication to my constituents and others of the rough timeframe for receipt of the compensation payment?

[Paul Scully]

I thank my hon. Friend for his kind words. It is difficult for me to say, because it depends on what scheme we come up with. If it is the scheme that I am envisaging, which is similar to the HSS and runs alongside it, I expect those payments to be largely out of the door and in people’s pockets by the end of the year. I do not see there being a long time delay from adding the 555 to that, because we know so much about them and can include them in that scheme or something similar.

Employment and Trade Union Rights (Dismissal and Re-engagement) Bill

Debate between Jerome Mayhew and Paul Scully

Friday 22nd October 2021 Commons Chamber

[Paul Scully]

The hon. Lady raises very important points about the situation facing ethnic minority employees, but that is why we are acting. It is why we sought quantitative evidence from ACAS. It is why we charged ACAS to come up with guidance in the first instance. There are plenty of other things we can look at, but as well as giving employers certainty in knowing how they should approach the situation, the guidance allows employment tribunal judges to make sure they are consistent with their judgments, too.

We receive lots of correspondence—I get a lot, not least from Members of this House sharing their constituents’ concerns—and I can see how deeply distressing it is for those who face changes to their pay, working hours, sick pay or other benefits. That may happen after years of service to their employer or to those new to the world of work. Losing one’s job through redundancy and dismissal is clearly something everybody wants to avoid. I speak to businesses every day and I know the vast majority of employers want to do the right thing by their employees. For most employers, decisions to change terms and conditions are not taken lightly, nor is the choice to let members of their workforce go. Good employers know that investing in their workforce and not treating them badly is the best way to increase productivity.

[Jerome Mayhew (Broadland) (Con)]

We have heard in the debate, from right across the House, that the Bill is aimed at bad employers and at removing this as a negotiation tactic. The problem with the Bill, however, is that it would actually damage the ability of every single company—every good company—to survive when faced with an emergency. It would lead to higher unemployment, as this has where it has been tried, both in Ireland and in Spain. Does the Minister agree that the high youth unemployment in Ireland of 31.7%—[Hon. Members: “Speech!”]

Post Office Court of Appeal Judgment

Debate between Jerome Mayhew and Paul Scully

Tuesday 27th April 2021 Commons Chamber

[Paul Scully]

The hon. Lady makes a crucial point: each and every single one of these people, whether they were prosecuted or “just” suffered a shortfall, is a human being. I see the anger on social media and the tears in some of the interviews following the quashing of the convictions; we cannot fail to realise that these people have suffered so tragically and terribly over so long a period. The Government and I will absolutely treat everybody as individuals. This has come at human cost.

[Jerome Mayhew (Broadland) (Con)]

The group litigation of 2019 performed an enormous public service by bringing this miscarriage of justice to light, but although successful, those involved paid an enormous price for that public service, because most of their compensation was diverted away into legal fees, leaving just £15,000 per victim. That is grossly unfair. The Minister has referred a couple of times to the full and final settlement that has been reached for them, and it is true that that is the contractual position, but it is open to the Government to look behind the contractual position and actively compensate these people in full. Is that something that the Minister will consider?

[Paul Scully]

Before we look at wider compensation, I want first to understand and make sure that we can learn the lessons and find out exactly what happened and when. This happened over a 20-year period and we need to unwind those 20 years, but we want to do that as quickly as possible so that we can get a timely response and justice for those people, rather than waiting for the three, four or five years that a statutory inquiry might take.

Horizon: Sub-Postmaster Convictions

Debate between Jerome Mayhew and Paul Scully

Wednesday 10th June 2020 Commons Chamber

[Paul Scully]

I agree that so many people have suffered. Indeed, some people have taken their lives, as well as losing their livelihoods; that is not to be forgotten. I was pleased that a settlement was reached by both sides of this agreement and, as I say, sub-postmasters caught within shortfalls in the past who were not part of that agreement are able to claim under the historical shortfall scheme.

[Jerome Mayhew (Broadland) (Con)]

One of the great frustrations to date has been the refusal of the former senior management of the Post Office to answer detailed questions on this issue and to be held to account. That is the least that is owed to those who have been wrongly convicted, including my constituent Siobhan Sayer. Will my hon. Friend confirm that individual culpability of senior management figures within the Post Office will be part of this review?

[Paul Scully]

I totally empathise with the suffering of my hon. Friend’s constituent, Siobhan Sayer. The chairman, who is independent of the Post Office, and the Government need to look at exactly what went wrong, which will by necessity mean looking at who took what decisions when. It will be complicated, because this happened over a period of 20 years, but none the less, they must get to the bottom of it.