Digital Markets, Competition and Consumers Bill

Lord Bassam of Brighton Excerpts

3rd reading
Tuesday 26th March 2024 Lords Chamber

[Lord Bassam of Brighton (Lab)]

My Lords, this has been a fascinating and illuminating series of speeches on the potential foreign ownership of UK news titles, particularly the Telegraph and the Spectator, by RedBird IMI. I echo the words of the noble Baroness, Lady Stowell: this is a much larger issue than that newspaper group. There is a fundamental principle involved here, which is why all sides of the House wanted to rally round the issue.

We have witnessed not only the magical transformation of the noble Lord, Lord Forsyth, from agent provocateur, but the Government moving at a speed we would welcome elsewhere in public policy; it is something to behold for the future. We have come to understand better just how complicated the terms of international trade are and how careful we need to be when legislating to prevent the law of unintended circumstances kicking in.

Protecting the freedom of the press—and our politics—from foreign state interference is an important issue. That is why we supported the calls for government action, an issue I raised in January, and for decisive intervention. As I carefully explained to your Lordships’ House last week, we supported the spirit of the amendment tabled by the noble Baroness, Lady Stowell, but not its detail. We on these Benches were genuinely concerned about security and the need to have a more comprehensive solution to the difficulties the Government face in tackling this issue. We can fairly say that those concerns have been more than adequately met with 16 pages of complex legislation, drafted magically by lawyers working at great pace; I congratulate them on that, and the officials in the Box. In particular, I congratulate the noble Baroness, Lady Stowell, and the noble Lord, Lord Forsyth, on his advocacy for this issue and his intelligence; both have applied pressure to secure a desirable outcome.

Most of the questions I wanted to ask have already been put, but I do have a few concerns, some of which have already been rehearsed in part. First, does the exemption referenced in the amendment cover just passive investments, and what would that mean in this context? Secondly, does it fully cover sovereign wealth funds and pension funds held by them, and what is their relationship with banks? Will there be a capping regime, and what will its thresholds be? Thirdly, will there be a 100% block on foreign state ownership, notwithstanding the 5% threshold the noble Baroness, Lady Stowell, mentioned? What action can the Minister spell out for us on online publications such as the Independent and online-only magazine titles? I liked the suggestion from the noble Lord, Lord Faulks, that this might be picked up in the Media Bill. Whether the Media Bill will enable that, given its long title et cetera, is obviously a question for the clerks, but one that we should certainly ask.

We on these Benches have been more than happy to lend our support to this issue because of the importance in our political landscape of protecting a free and independent press that is not handcuffed by our state. On such issues, it is vital that there is cross-party unanimity. I am sure that noble Lords opposite will, in the future, want to do all they can to protect the integrity of that position, should a paper perceived to be of a different political colour come under a similar threat, whenever that might be. With that said, we await the Minister’s reply to the questions asked, which need a response. I congratulate all those concerned on bringing this difficult situation to a happy conclusion.

[Lord Parkinson of Whitley Bay (Con)]

My Lords, I am grateful to noble Lords for their support for these amendments and the work undertaken. I thank my noble friend Lady Stowell for commending the work of Julia Lopez, the media Minister, and indeed the department and the officials more broadly. My noble friend also acknowledged the specific quasi-judicial role of the Secretary of State in her ongoing determination of the case before her, but acknowledged that she obviously has a role in all this. On the broader question of media mergers, my right honourable friend the Secretary of State of course remains very much involved as well, but I thank my noble friend for her appreciation for both. I agree with my noble friend Lord Forsyth in his praise for the civil servants who worked thoroughly and quickly on this matter, including over Mother’s Day weekend. I am grateful for that recognition.

My noble friend Lord Forsyth rightly pointed out that he has not moved since tabling his regret amendment to the Media Bill. The Government have made explicit and put beyond doubt what was implicit and possible in the existing regime, as I set out on Report. We are very happy to take the opportunity to do that clearly, in the way that we do through these amendments, and, indeed, to set out now the new lower threshold. My noble friend Lady Stowell is right: we will set it at 5%, which is considerably lower than the existing threshold. I am glad that my noble friend welcomes that. She is right in the characterisation of what I said: anyone blocked at what she calls stage 1—the new automatic block on foreign state investment—will not be able to be exempted at what she calls stage 2. She is right, as well, to make the distinction between foreign investment and foreign state investment, and to make it clear, as I was very happy to, that the UK remains open for business. This is a discrete area and an important one in our national life, which is why we are acting in the way we have.

My noble friend Lord Faulks and the noble Lord, Lord Bassam, asked about the role of banks. We do not think that, in the ordinary course of events, debt and debt refinancing from foreign banks which have a state interest should be captured, unless the structure of the transaction gives rise to concerns about influence. We are considering precisely how debt and debt refinancing should be treated in cases where the structure of debt may give rise to concerns about foreign state investment organisations. But as I say, as we bring these provisions forward in secondary legislation, I am very happy to continue conversations with noble Lords and, indeed, to have conversations with those who will be directly affected.

My noble friend Lord Faulks invited me to set out what we are doing in consulting shortly on expanding the existing media mergers regime and the foreign state ownership provisions, to include online news websites. That will enable us to make changes that ensure that online news, whether from an established newspaper group or an online publisher, is covered by the media regime and the new measures we are introducing for foreign state media ownership.

The Secretary of State will maintain a quasi-judicial role in media mergers. The public interest regime will remain as it is, but we are adding a new parallel foreign state intervention regime. The Secretary of State will not have discretion under that; she will have to follow the report of the Competition and Markets Authority, both on whether there is a foreign state merger and an exemption. She would need to lay an order before Parliament to block a transaction, which would be under the negative procedure. We will debate what I have announced in the provisions that we will bring forward after Royal Assent, setting out an exemption for investments where the stake is below 5%, and noble Lords will have the opportunity to scrutinise that under the affirmative procedure.

I am grateful to noble Lords who have engaged with us and our officials in recent days as we work on these amendments. I am glad that they have your Lordships’ support. I beg to move.

[Baroness Stowell of Beeston (Con)]

Can I ask a question as well, to save the Minister from getting up several times? I do not think that he said anything about broadcasting. Where is the department on reviewing policy in that area?

[Lord Bassam of Brighton (Lab)]

Can the Minister also clarify the point about online publications? Will these be included within the statutory instrument?

[Lord Parkinson of Whitley Bay (Con)]

We will shortly consult on expanding the existing media mergers to look at online. The new regime will not cover TV and radio broadcasts at this time, but we will continue to consider that in our broader work on the media mergers regime. As my noble friend Lord Lansley pointed out, there are specific additional protections through the regime to which they are subject under Ofcom.

My noble friend Lord Forsyth rightly asks when we will bring in the secondary legislation. We want to do it after Royal Assent of this Bill, which is in the control of Parliament, not just the Government. Officials are working on it already. I cannot commit to a date for its introduction, but I am happy to commit to continuing our conversations as we work on it and before we introduce it after Royal Assent.

Digital Markets, Competition and Consumers Bill

Lord Bassam of Brighton Excerpts

Report stage
Wednesday 13th March 2024 Lords Chamber

[Lord Lansley (Con)]

My Lords, I intervene very briefly to support the noble Lord, Lord Clement-Jones, in the intentions of his amendment. A number of noble Lords will recall that, about eight years ago, we sought that the Government would use secondary legislation to extend the definition of media enterprises under the Enterprise Act.

The point that the noble Lord, Lord Clement-Jones, is making is in this territory. Clearly, if media enterprises for these purposes were defined more widely, it would capture some of the providers that the noble Lord, Lord Clement-Jones, was talking about. At the moment, media enterprises basically consist of print newspapers or broadcasters—and broadcasters are only those that are licensed under the Broadcasting Acts.

I hope it will be evident to noble Lords that there are now many more news creators and aggregators, and sources of news, that make up the news landscape and are not comprised within the definition of print newspapers or of broadcasters under the Broadcasting Act. So we need to make sure that the specified considerations under Section 58, about free expression, accurate presentation and plurality, are applied in relation to this wider definition of media enterprises.

This was something that Ofcom said to Ministers in pursuance of the consultation about the media public interest test, I think as far back as 2021, or maybe at the end of 2022. So I suppose what I am asking is to share in the urging of the noble Lord, Lord Clement-Jones, that Ministers might take this on, and to give advance notice that—from my point of view—we should address this in the Media Bill quite soon, in order to give them further encouragement for this purpose.

[Lord Bassam of Brighton (Lab)]

My Lords, we are very grateful—we are always very grateful, actually—to the noble Lord, Lord Clement-Jones, for tabling this amendment, which raises a valid concern around the suitability of the current provisions in Section 58 of the Enterprise Act.

We take the view that the world has changed significantly since that legislation was put on the statute book. It was changed as a result of the passage of the National Security and Investment Act, but not in a way that addressed the points that have been properly raised by the noble Lord. Some aspects of this debate featured during the passage of the Online Safety Bill, and I strongly suspect we will revisit this on other occasions in the future, as the noble Lord, Lord Lansley, has invited us to with the Media Bill.

The noble Lord, Lord Clement-Jones, described this as a “brazen attempt” on his part. Well, I hope the Government will be open-minded about looking at whether and how the public interest notice regime could be revised in the future, to take account of different types of media provider. However, because I know that noble Lords would like to progress on to another interesting group on a similar topic, I will hand the Floor to the Minister.

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

I thank the noble Lord, Lord Clement-Jones, for Amendment 64. It would expand the list of media merger public interest considerations to include:

“The need for free expression of opinion and plurality of ownership of media enterprises in user-to-user and search services”.


I previously addressed this issue in Committee, when I referred to the Government’s ongoing consideration of Ofcom’s recommendations. As suggested by the noble Lord, ensuring that our regime is updated to reflect current market conditions remains important.

My noble friend Lady Stowell of Beeston has been engaging extensively with government on changes to the wider media merger regime, and I understand that discussions have been constructive. My noble friend Lord Parkinson of Whitley Bay, who is in his place, is the Lords Minister responsible for media mergers. To avoid repetition, I will not speak to the detail of these discussions now but will leave it to my noble friend, who will return to the substance of this in the next debate. I hope the noble Lord will be able to withdraw his amendment and allow us to discuss this further when the next group is debated.

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[Lord Clement-Jones (LD)]

My Lords, despite the shortness of this debate, we have had some very fine and inspiring speeches. We on these Benches wholly support the amendment moved by the noble Baroness, Lady Stowell. Indeed, like the noble Lord, Lord Robertson, I find it extraordinary that we do not have this already on the statute book. Given the importance of pluralism and freedom of speech in our media, the thought of foreign Governments impacting on our media in the way that is currently threatened seems quite extraordinary.

My main purpose is to associate myself with the remarks of the noble Lord, Lord Forsyth. When he moved his regret amendment, he talked about the ownership by the UAE of a UK quality newspaper. I have spent the last 10 years campaigning for the release of Ryan Cornelius from a Dubai jail. He was unjustly imprisoned on trumped-up fraud charges, and his sentence was arbitrarily extended by 20 years in 2018, just as he was due to be released. He now faces the prospect of many more years in jail. I am all too aware of the reality that lies behind the pleasant-looking tourist Dubai. Parliament should definitely have its say before a UK newspaper falls into the hands of such a Government. All this is a result of the activities of a member of the royal court of Dubai, so it very close to home in the UAE. Not only do we as a party on these Benches wholly support this amendment, but I personally feel very strongly about the need for it.

[Lord Bassam of Brighton (Lab)]

My Lords, I think the whole House is grateful to the noble Baroness, Lady Stowell, for the way in which she set out the arguments behind her amendment, and for the clarity, force and power of her voice in putting those arguments forward. We are also grateful to the noble Lord, Lord Forsyth, for the way in which he has argued his case—not once, but twice, and several other times too, when he has been given the opportunity; I always enjoy his interventions. I am enormously grateful to the noble Lord, Lord Robertson, for bringing breaking news to your Lordships’ House.

It might seem slightly ironic to some that we on the Labour Benches are trying to come to the rescue of the Daily Telegraph, but there is a much more important principle at stake here. It is an obvious place to start but let me begin with first principles: Labour believes in a free and fair press without state interference. We also believe in the accurate presentation of news and in freedom of expression, which is particularly important in the context of RedBird’s attempted takeover. Our view on this matter is not shaped just by the Telegraph Media Group takeover proposal currently being considered by the Secretary of State; we would have similar concerns if other titles were subject to bids from other states. When the Minister explains to the House the Government’s intention, can he clarify the position, too, of not just newspapers but other publications? That is not to say that we do not have real concerns about the proposed sale of the Telegraph Media Group. We very much welcomed the Secretary of State initiating the investigations by the regulators. Now that their reports have been submitted, we hope that a decision will be taken in a timely way and as soon as possible, and in a way that is consistent with the quasi-judicial nature of the process.

For the avoidance of doubt, this is not to say that we oppose foreign investment in this country; we believe that inward investment in our economy is vital. The noble Baroness, Lady Stowell, spoke eloquently on that point, as did the noble Lord, Lord Kamall. However, foreign ownership of UK media organisations raises broader questions around the accurate presentation of news and, in certain cases, the free expression of opinion. Both of these, as many noble Lords have said, are vital to the long-term health of the print media sector and, more importantly, to our democracy.

I listened very carefully to the noble Baroness’s introduction and the other speeches. We have to give them all credit for the way in which they addressed the issue. I listened particularly to the noble Lord, Lord Robertson, because of his expertise, and his former role and continuing interest in security matters. While I am giving out thanks, I also thank the Minister, who helpfully found the time to meet me and my noble friend Lady Jones of Whitchurch this afternoon to discuss this important issue.

As we have seen with other legislation, most progress is often made when groups from across your Lordships’ House have open, frank discussions and then work together to agree solutions. I understand that for various reasons the text of Amendment 67 is not necessarily what all its supporters would have wanted. For that reason, and for a number of others that I will set out, we are not convinced that it presents the right response to this serious matter. Our view is that a free and fair press should be without state interference, which means without undue influence from our own state as well as others.

It is correct that the Secretary of State should take an interest in cases which raise concern on competition and plurality grounds, but her responsibilities are rightly constrained by legislation, and her ability to comment is limited by the quasi-judicial role she is playing. Where security concerns may arise, the Secretary of State will no doubt receive confidential briefings on the potential implications of different outcomes. In our view, that process must be allowed to play out. That the CMA and Ofcom have reported to the Secretary of State this week points to the well-established merger regime that has been in place in this country for some time. As part of their investigations, those independent regulators draw on expert advice and are able to obtain appropriately handled confidential information, including material that may be highly commercially sensitive. On the basis of all that information, they may then come to a judgment regarding the suitability of a takeover proposal and advise the Secretary of State accordingly. Parliament has empowered the Secretary of State and those regulators. In our view, that is an appropriate level of state interest in sensitive matters.

Amendment 67 proposes that once the regulators have carried out their work and the Secretary of State has come to a decision, it should be for Parliament to approve that decision. While we generally support parliamentary scrutiny of the Executive and their decisions, we are not convinced that the mechanism envisaged by the amendment is suitable in the light of the sensitive security and commercial information that would have to be shared to inform debate and determine the outcome of votes in both Houses.

My impression from earlier discussions with the Minister and his colleagues in other departments is that a better approach would be for the Government to acknowledge the strength of feeling in this House and commit to bringing back their own text at Third Reading. If the Minister is able to make that commitment, I hope that colleagues on all Benches will be minded to accept that offer and work with Ministers, as we will offer to do, in the coming weeks to find a satisfactory outcome.

We have enormous sympathy with the noble Baroness, Lady Stowell, on this issue. We do not feel able to support her proposition in the form it is with us today. We know it has been brought forward with the very best of intentions, intentions we support, and because we share those, we urge the Minister to respond positively to finding a way forward over the next few weeks.

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[Lord Forsyth of Drumlean (Con)]

I am very grateful for what my noble friend has said. Could he clarify the position on minority stakeholders? He used the word influence. Would that mean having a small number of shares?

[Lord Bassam of Brighton (Lab)]

My Lords, in order to help, can we be absolutely clear that this covers minority ownership and control? We need clarity on that. The noble Lord, Lord Moore, made that point. It would help the House for the avoidance of doubt.

[Lord Parkinson of Whitley Bay (Con)]

The noble Lords have intervened at a helpful point, because I was about to outline that we want to ensure that the new measures do not have undesired effects on wider foreign business investment in the UK media, or on purely passive investments made by established investment funds.

In the amendment we will bring forward at Third Reading, it will be necessary to take a power to make secondary legislation to set out two points clearly: first, what limited types of established investment funds we mean, which could be split out of the general prohibition on foreign state ownership provided for by this regime; secondly, the very low threshold up to which they may be permitted to invest, which we intend to be considerably lower than the current thresholds for material influence in the Enterprise Act.

As we bring this forward ahead of Third Reading, we would be very happy to discuss the drafting with noble Lords before it is tabled so that we can discuss the detail. We will set that out in the provisions at Third Reading.

Digital Markets, Competition and Consumers Bill

Lord Bassam of Brighton Excerpts

Report stage
Monday 11th March 2024 Lords Chamber

[Viscount Camrose (Con)]

My Lords, the Government fundamentally believe that public transparency is vital for the new digital markets regime. We noted the strength of feeling on this issue from noble Lords in Committee, which is why the Government have tabled amendments to enhance the transparency of the regime. The amendments will require the Digital Markets Unit to publish the full notices relating to SMS designation, conduct requirements and PCIs, so that all interested parties can access them. Amendment 54 makes it explicit that the DMU may make redactions for confidentiality purposes when publishing notices or other documents.

Finally, as a consequence of the other amendments in this group, Amendment 3 will require the DMU to send other regulators a full copy of an SMS investigation notice provided to the firm under investigation, rather than a summary. I hope that noble Lords will support these amendments, which address concerns raised in Committee on the transparency of DMU decisions. I beg to move.

[Lord Bassam of Brighton (Lab)]

My Lords, as the Minister described, this group has government amendments, from Amendment 2 to Amendment 38, which add greater transparency to the process adopted by the CMA in disclosing information about cases involving SMS status firms where the challenger companies have an interest. We are pleased with the Minister’s amendments and, broadly speaking, happy to give them our support, as they respond to points that a number of noble Lords made at earlier stages of the Bill about the need for greater transparency and openness.

The SMS companies are in a position of significant market strength vis-à-vis the challenger firms and have a clear interest in seeing the bigger picture when disclosure is made of information that is of material interest. By obliging the publication of the notices and orders, rather than summaries of the documents, we feel that challenger companies will have greater access to key information that may impact on their market performance. Our amendments, from Amendment 4 to Amendment 39, attempt to achieve a similar result; I suspect that Ministers will argue that their amendments have greater elegance and a similar effect.

I turn to government Amendment 54 and our own Amendment 5. We are clearly of a similar mind and share concerns about commercial confidentiality so that, where reasonable, the redaction of documents can take place. We differ in our approach simply by suggesting that there should be a system for registering the documents that are relevant; the Minister might like to think about that at a later date. In essence, this is an operational issue so, to satisfy our concerns, perhaps he can put on record that there will be an effective system for the registration of documents and a notification process that enables the challenger firms to understand better what information has been disclosed to the CMA in the course of its inquiries. On that basis, we will be content not to move our amendments, and we thank the Government for responding to the concerns behind them.

[Lord Clement-Jones (LD)]

My Lords, this is a very straightforward group, and I congratulate the noble Baroness, Lady Jones, and the noble Lord, Lord Bassam, on having persuaded the Government to move further on the transparency agenda. I like the description given by the noble Lord, Lord Bassam, of the government amendment being more elegant. It is nice to think of amendments being elegant; it is not often that we think in those terms. We very much support the new amendments with some of the caveats that he made.

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Moved by

[Lord Bassam of Brighton]

44: Clause 89, page 55, line 34, at end insert—
“(1A) Section 114 of EA 2002 (appeals) applies in relation to—(a) a penalty imposed under section 85(4), and(b) a penalty imposed under section 87 in connection with a function of the CMA under Chapter 5 (mergers), as it applies in relation to a penalty imposed under section 110(1) of that Act (and see section 103 of this Act for provision about applications for a review relating to other penalties imposed under section 85(1) or (3) or section 87).”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.

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Moved by

[Lord Bassam of Brighton]

46: Clause 89, page 55, line 35, leave out subsection (2) and insert—
“(2) For the purposes of subsections (1) and (1A), sections 112 to 115 of EA 2002 are to be read as if references to “the appropriate authority” were references to “the CMA” only.(3) For the purposes of subsection (1A), section 114(5A) of EA 2002 is to be read as if the words “In the case of a penalty imposed on a person by the CMA or OFCOM,” were omitted.(4) For the purposes of subsection (1A), section 114(12) of EA 2002 is to be read as if, for paragraph (b), there were substituted—“(b) “the relevant guidance” means the statement of policy which was most recently published under section 90 of the Digital Markets, Competition and Consumers Act 2024 at the time of the act or omission giving rise to the penalty.””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.

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Moved by

[Lord Bassam of Brighton]

51: Clause 103, page 62, line 13, leave out paragraph (b) and insert—
“(b) a decision about the imposition of a penalty under section 85(1) or (3) or section 87 (but see subsection (3A) and section 89(1A));(c) a decision about the imposition of a penalty under section 85(4) (but see section 89(1A)).”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.

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[Baroness Kramer (LD)]

My Lords, I very much support Amendment 61 moved by my noble friend and colleague Lord Clement-Jones. I am very much a believer in equality of arms. The issue of exemplary damages speaks exactly to that. I hope very much that the Government will take that on board, because it is a fundamental principle that makes a great deal of practical difference as well when wrong has happened and when people seek redress.

I support the two amendments tabled by the noble Lord, Lord Tyrie. Briefly, on Amendment 153, regarding the five-year review, I had the privilege of serving under the noble Lord’s chairmanship on the Parliamentary Commission on Banking Standards. In many ways that was similar to this Bill, but our proposals were exceedingly radical. They required very substantial change by the financial services industry. We very much wanted them to be reviewed after a period of time. We did not manage to trap that into legislation; it did not happen. Instead, when issues became evident where we had made changes—for example, on presumptions of guilt and in areas where there was intense lobbying on ring-fencing and whatever else—changes happened but not in a coherent and sensible way that benefited from that overarching focus that we had had during the original review. That has been a real weakness. We finally have a new committee in this House, the Financial Services Regulation Committee, providing some accountability to regulators, but that is an issue that we would have picked up on much earlier had we been in the process of doing a comprehensive review. That underscores many of the points that have been made about this issue.

We live in changing times. The idea that things stand still and you can do everything piecemeal is really not appropriate. However, I will speak most on the issue of whistleblowing. I have not otherwise participated on the Bill but, when I see the word “whistleblowing”, I am afraid that I suddenly find myself lured on to the Benches.

I very much ask the Government to take this issue on board, because I agree with the noble Lord, Lord Tyrie, and others: we will never get to grips with wrongdoing in any of the areas covered by the Bill, particularly with all the new complexities and the constant change within the digital and competitive arena, until we have an effective whistleblowing regime. We need a system that leads to the follow-up of valid tips from whistleblowers. Currently, looking at different regulators in many different fields is clearly completely haphazard. Some tips are followed up, some are dismissed and some are ignored. Secondly, and just as importantly, we need a proper arrangement to protect whistleblowers from retaliation, so they will not suffer detriment by coming forward.

Our current system depends on the Public Interest Disclosure Act 1998, which was a Private Member’s Bill that was brought forward then as part of employment law. It was ground-breaking at the time but has long been shown to be utterly inadequate compared with more recent schemes, particularly in the United States. Those US schemes have had an astonishing success rate in disclosing wrongdoing, leading to prosecutions, convictions and financial penalties.

I will use an example not from the anti-trust field but from a field that I know best and with which many will be familiar—the Securities and Exchange Commission. Since it brought in its whistleblowing scheme in 2011 under the then new Dodd-Frank legislation, by the end of fiscal year 2022, it had received over 83,000 tips from whistleblowers and collected in excess of $6 billion in financial penalties. In fact, there has been so much activity in the following years that those numbers would be significantly higher if we brought them up to date.

It is also fair to assume that billions of dollars of wrongdoing have been deterred by the fear of disclosure under such an effective whistleblowing regime. Not just the SEC but a number of entities use whistle- blowing legislation within the financial field; the Commodity Futures Trading Commission—CFTC—is another example that has had the same kind of success as the SEC. I find it rather disturbing that the CFTC is now doing road trips in the UK to encourage whistleblowers who are aware of financial wrongdoing with any US connection to contact it directly. In fact, something close to a quarter of the cases it is currently pursuing have a UK-based whistleblower somewhere within them, because finance is so international. Now the people at the CFTC are very careful not to criticise any UK regulators, but it is not a compliment that they feel it is necessary to be here to get their independent message across to anyone who has come across wrong-doing, with a US connection, in the financial field.

The Public Interest Disclosure Act is inadequate for at least four reasons, some of which were mentioned by the noble Lord, Lord Tyrie. It does not require any follow-up on a tip, even if it is acknowledged to be valid. It covers only employees and not the many others, such as contractors or clients—all kinds of people come forward—who blow the whistle when they see wrongdoing. They are not covered at all and have zero protection at present. All it provides is anonymity for disclosures that are made to a prescribed group of people—basically, the regulators and MPs. Most whistleblowers are not anonymous; they will have raised issues with management, companies, employers, suppliers and clients. When they see something wrong, they do not instinctively think of themselves as whistleblowers in need of protection, and when they do, their identity is then known.

No regulator in the UK has ever acted to protect a whistleblower from retaliation. That retaliation is usually years spent in an employment tribunal or in the courts. For many whistleblowers, it is a loss of career. There is a wide scheme of informal blacklisting—we know of case after case. Many whistleblowers have to use their own resources because there is no legal aid to fight this process, so they run into financial ruin. You can imagine the mental health costs and the frequency with which families break down.

However, I have spoken to pretty much every UK regulator and typically—there are a few exceptions—they regard their own monitoring and supervision as entirely sufficient, with whistleblowing a mere marginal assistance. They also believe that whistleblowers should act out of duty and altruism, and not because there is protection from retaliation available or compensation for harm.

I have talked about the SEC and the CFTC and, prior to the Dodd-Frank legislation in the United States, which put in the strict whistleblowing rules and made them mandatory, US regulators had exactly the same attitude as the current UK regulators and the same failure to create a pattern of whistleblowing and to follow up cases. The change came with legislation.

In the sectors covered by the Bill, the rewards for wrongdoing are a huge temptation and require highly sophisticated expertise and knowledge. We can see why that is tough for a regulator to manage, unless it has a really effective whistleblowing programme. In its recent directive, the EU is now catching up with the United States in recognising whistleblowing as a key tool to expose wrongdoing early and to deter wrongful behaviour. It is time that we did the same.

I hope that the Minister takes back this message to those who are working on the reform of the whistleblowing framework, as it is really important. Sometimes one hears rumours that they are looking just to tweak existing legislation, but what is needed is a radical change that meets the needs and gives us the opportunity that an active whistleblowing community can deliver. I hope the Government will take on board that message.

[Lord Bassam of Brighton (Lab)]

My Lords, I promise that I am not going to stand for too long between this session and people’s desire to have supper. I have a few words to say, but I will try to keep them as brief as I can. This group of amendments deals with the interaction of the courts with regulation and redress, and we obviously support Amendment 61, in the name of the noble Lord, Lord Clement-Jones, on exemplary damages in class action cases. We will listen to the Minister’s explanation carefully and try to understand why the Government are continuing to resist this approach.

We recognise that government Amendment 62 is part of a wider initiative to put right the fallout from the Supreme Court judgment in the PACCAR case, which acted as an inhibition to litigation fee agreements that enable collective actions such as those involving the postmasters and postmistresses. If we have learned anything from Committee, it is that Ministers should live in dread of the experience of the former Lord Chief Justice, at all times. The noble and learned Lord, Lord Thomas, offered us some wise words on that occasion and I am glad—delighted, actually—to see the Government finally acting with some speed to bring forward a Bill from the Ministry of Justice that covers a wider range of cases than the current Clause 127 achieves. If the noble Lord, Lord Clement-Jones, had not quoted Alan Bates, I would have done, because I thought it was a ringing endorsement of what was necessary.

Perhaps I could task the Minister and tire him a little to put a bit more on the record about the detail, nature and extent of the short Bill when he sums up. Can he give us a clue about its introduction date?

Digital Markets, Competition and Consumers Bill

Lord Bassam of Brighton Excerpts

Committee stage
Wednesday 7th February 2024 Grand Committee

[Lord Vaizey of Didcot (Con)]

I will briefly speak to my noble friend’s amendments. I declare an interest as a broadcaster on Times Radio, which is owned by News UK. The point is clear: the Government’s intentions are perfectly honourable. They seek to protect consumers and give them a simpler way to enter into a subscription contract and to cancel one.

However, as I hope my noble friend has made clear in his excellent and detailed speech, things are never quite that simple. From the 2013 consumer contracts regulations, it is clear that, 10 years ago, the Government recognised the changing nature of the services, particularly digital ones, that consumers are now using. It is also clear that the savvy consumer, dare I put it that way, will potentially be intelligent enough to work out that they could take out a contract with a subscription service —it could be a video service through which they want to watch a particular series, or a content service such as the Times if they want to read a particular article—take advantage of the cooling-off period and not pay for that content.

For service contracts such as these, it is important that Parliament support both sides of the equation. We do not take the contribution that content services make to our economy nearly seriously enough, and we still live in a climate where too many people believe that content should be free. As content providers have struggled with how to cope with delivering digital content, moving from free ad-supported models to subscription models, it is important that the Government take into account the pressures they face and reach a reasonable compromise in order to do so.

I fully support the arguments put forward by my noble friend Lord Black. They have been well rehearsed by a coalition of people, ranging from the video games trade body to the technology trade body, the news trade body, the film trade body, the commercial broadcasters’ trade body and even the online dating app trade body, which has got in on the act as well. They are all perfectly reputable organisations whose case deserves to be heard by the Government. It is my understanding that the Government recognise the problem, and we hope that the Minister will come back on Report, as he was so co-operative in our last Committee, with a genuine solution to this conundrum.

[Lord Bassam of Brighton (Lab)]

My Lords, this is the starter before the main course on subscription contracts, but it is important none the less. I can reveal to the Committee that our Amendments 169 and 193 are mere probing amendments designed to test whether the Government have confidence in the Bill’s subscription provisions providing sufficient protection for digital platforms that host copyrighted content, mainly on-demand videos. A number of companies have raised this issue with us, arguing that they will be seriously out of pocket if they have fully to reimburse those who have accessed paid-for content during a cooling-off period. It is our feeling, and a view widely shared, that, although the Bill restates a lot of current consumer law on subscriptions, it does not restate many of the obvious and probably necessary exemptions that the noble Lord, Lord Black, clearly identified. We need to cover those.

At present, if I sign up to a streaming service, it is made apparent that, the moment I consume content, my statutory rights change. The Bill appears to restate some principles but not others, and it creates a lack of certainty for both sides. Some of the companies argue that they will have to pay out refunds in cases where they would not under current law. This runs the risk of creating unrealistic expectations for consumers.

The amendments in the name of the noble Lord, Lord Lucas, ask similar questions of the Minister and seek to explore how the subscription contract is paid for if it is used during the cooling-off period and then cancelled. They also seek to understand what information a trader must publish in those circumstances. The noble Lord made a good point about charging.

Turning to the amendments in the name of the noble Lord, Lord Black, he skilfully highlighted for the Committee the problems that will be caused by the way the legislation is phrased. Having heard the noble Lord, I am more on his side than I was at the outset. I am not a regular Daily Telegraph reader, nor a great fan, and this is the second time in a week I have had to plead on its behalf—this is becoming rather strange politically. I am a Guardian person, and I can see the problem replicated across the whole news world. I do not think the onerousness of the burden is justified in this case. It could be an endemic problem.

I want to hear what the Minister has to say because we need some light and dark, some nuanced thinking, about the way subscriptions work. This is not the way to bear down on the subscription trap, which I think we are all keen to deal with. This does not help us at all in that regard.

I was originally going to say of the last two amendments in the name of the noble Lord, Lord Black, which seek to create a two-year implementation period, that I was not particularly convinced, but having heard the argument, I have reversed my view. If we do not have a solution, I suspect those two amendments could be very helpful in trying to resolve some of the problems this is creating. There is merit in those amendments.

We need to approach this issue in more forensic detail. I want to hear what the Minister has to say, because I do not want us to further undermine the news market. We live in a time when there is less ability and facility to report than we are used to. Moving from broadsheets to online content is changing the way in which the news world operates. My son works in the news world, and he understands these things far better than I do. We need solutions, and the way the legislation is currently phrased does not provide us with one that protects the value and importance of news in an open democracy such as ours.

[Lord Clement-Jones (LD)]

My Lords, this has been very interesting debate. There is a common theme—that these clauses are a very blunt instrument. At one end of the spectrum, we have the amendments in the name of the noble Baroness, Lady Jones, which attempt to get to grips with what this is all about and whether these clauses are fit for purpose; and at the other end we have had clear demonstrations that they are not. I am very grateful to the noble Lord, Lord Black, in particular, for his comprehensive and persuasive introduction. I started off fairly convinced of the case—I did not sign all his amendments, but I signed two clause stand part notices—but, like the noble Lord, Lord Bassam, I am now pretty convinced that the clauses are not quite fit for purpose. For the digital economy, we need to be much more wary about how the prescribed cooling- off period works.

I started off thinking that this is an issue that only the subscription and video-on-demand side should be concerned about, but having listened to the noble Lord, Lord Black, I realised that there is a much wider set of interests. The noble Lords, Lord Lucas, Lord Vaizey and Lord Bassam, described a much wider landscape that should be concerned.

I started by considering the disruption to subscription video-on-demand services—the so-called streamers. That is why I signed the notice from the noble Lord, Lord Black, opposing Clause 262 standing part. All the representations I received pointed out that this is really business-critical for UK operators such as Netflix and Disney+. I think the noble Lord, Lord Vaizey, used the expression binge-watch; if you can do that and get a refund, why bother keeping your subscription? We need to make sure that those services are safeguarded.

A number of noble Lords pointed out that Ministers in both the Commons and this place have expressed concern, saying that they understand the issue and are going to consult; but in the meantime, there is a huge amount of uncertainty. We potentially have it in black-letter law that the cooling-off periods are as set out in the Bill. We do not know what kind of consultation will take place, what kind of flexibility might be operated, and so on. In the meantime, we have a perfectly workable set of consumer contract regulations, which the parties would be happy to apply. That was very much the case the noble Lord, Lord Black, rightly made.

Important principles are set out in the CCRs, such as that consumers can request that the supply of digital content begins before the end of the 14-day cancellation period. So it is perfectly possible to have a provision that safeguards both the service provider and the consumer in these circumstances, but that principle is not imported into the Bill. I do not know why. On Monday, I asked the Minister what consultation had taken place. I have used the expression “blunt instrument”, but these are really important new provisions. The noble Lord, Lord Bassam, was absolutely right: they are based on the best of intentions, but they are so blunt that they will be a real problem for some of our digital services.

I hope the Minister will not regard our proposals as “not invented here”, and that the Government will not motor on with these provisions without taking a long, hard look at them. This is one of those circumstances where we would all be a lot happier if we reverted to a regulation-making power, got rid of some of these clauses and had a proper super-affirmative provision in the Bill, for example, enabling a discussion about all these aspects of subscription contracts. We heard about the absolute unhappiness with the impact on charities and gift aid when discussing the previous group; that demonstrates the total bluntness of these provisions. I do not think anybody will be very happy with them —the charities, the streaming businesses, the subscription media services or the dating services. There is a huge amount of unhappiness, which I hope the Minister will respond to.

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[Lord Clement-Jones (LD)]

My Lords, I apologise. If the Minister is undertaking this consultation and looking at a provision of that description, can he also describe which power, in the part of the Bill we are dealing with, will give the Secretary of State the ability to do that, as well as the process by which it would be introduced and the timing?

[Lord Bassam of Brighton (Lab)]

The noble Lord, Lord Clement-Jones, partly covered the point that I was going to ask about. I want some more detail about how this waiver will operate. That is where the noble Lord and I are coming from. Perhaps the Minister can flesh that out a bit more, because it is important. I am delighted that the notion of a waiver will be consulted on, but the question of how it works will be important, too.

[Lord Clement-Jones (LD)]

My Lords, it could answer the Regulation 37 question.

Digital Markets, Competition and Consumers Bill

Lord Bassam of Brighton Excerpts

Committee stage
Monday 5th February 2024 Grand Committee

[Lord Bassam of Brighton (Lab)]

My Lords, I was initially going to say that this is a disparate group of amendments but, as I have heard the arguments adduced, I have realised that it has more coherence to it.

The Committee should pass a vote of thanks to the noble Baroness, Lady Morgan, for tabling her amendment. This is an incredibly sensitive issue and one that in spirit we completely support—why wouldn’t you? If I were in the noble Baroness’s position, having dealt with cases of the sort that she has, I, too, would probably be mounting a campaign on this. We should be grateful to the Mental Health Foundation for the support that it has given. It cannot be right that usually harmless algorithms are used for another purpose like this and it would be helpful if we could get some clarity to the law.

This issue raises highly sensitive issues about online purchases. It is hard to envisage that any commercial undertaking, whether online or trading on our high streets, would deliberately market a product knowing that it was likely to be used for acts of self-harm and far worse. I will listen carefully to what the Minister has to say on this. If there is something that can usefully be done in legislation and there is an opportunity to do it here, we should take that opportunity.

I turn to the amendment tabled by the noble Lord, Lord Lucas, which initially I thought put the cart before the horse, but I do not think so any more. It is a neat amendment that is usefully placed. The noble Lord is looking at how the effectiveness of trading standards is measured and looking at their resource and support.

About 20 or 30 years ago, I was a trading standards national officer. I was not a trading standards officer, but I used to lobby government for resources on behalf of trading standards, which always used to say they did not have enough resource. The answer from the Government at the time was pretty much the same as I am expecting the answer to be this afternoon: that the Government are resourcing trading standards well and that they do a very good job. However, there is a good case for reviewing their effectiveness, particularly in the light of the other amendments in this group.

I will come back to Amendment 111 in a moment, but Amendments 112 to 120 relate very neatly to the scope and jurisdiction of weights and measures—ie, trading standards. They would significantly broaden the responsibilities of trading standards officers, who presumably would take on investigatory and enforcement responsibilities on a shared basis with the CMA. We have sympathy with these amendments because there is a strong case for local enforcement. I understand that people living in a locality might want to go to their local authority trading standards officers for advice, support and encouragement in seeking enforcement against rogue online traders. If we embark on this route there will need to be protocols in place so that duplication does not occur and so that there is good advice and information from officers locally working in tandem with CMA officials, and of course there would be a question of resource and support for local trading standards officers. Ministers and the Government may think that this is a valuable route, but the relationship between central and local enforcement needs to be explored. These amendments valuably focus light on that, because people in any community anywhere in the country will want to know how they can access their rights as consumers dealing as much online as in the high street and offline. We have a lot of sympathy for the amendments in the name of my noble friend Lady Crawley, the noble Earl, Lord Lindsay, and the noble Baroness, Lady Bakewell.

I will go back to Amendment 111. As the noble Lord, Lord Clement-Jones, argued, it is really about the detail of the enforcement of penalties and their range and scope. In general terms, we support the notion that penalties should take account of the profitability of the company which is in breach of enforcement orders—breaking the law. Again, it will be interesting to hear the Minister set out the Government’s policy in this field and explain to us how it is going to work. I 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)]

My Lords, I am extremely grateful to noble Lords for their amendments in this group and for their valuable contributions on these important issues. I will start by discussing Amendment 110. moved by my noble friend Lady Morgan, whose continued leadership on this very serious and hugely important topic is commendable. Amendment 110 would make the marketing of products intended to be used to take one’s own life a specified prohibition, which would therefore be enforceable under Part 3. Like everyone who spoke, I—and the Government—recognise the tragic consequences of suicide and how so many lives and families have been devastated by it. The Government do not underestimate the gravity of this issue, and that is reflected by the measures already in place around suicide prevention and, indeed, the steps we have taken to clamp down on the advertising and supply of pro-suicide materials.

First, we have strong, well-defined laws in relation to complicity in another person’s suicide, such as the Suicide Act 1961. Building on that, where content on the internet reaches the threshold for a criminal offence under the Suicide Act 1961, the Online Safety Act will place new duties on all in-scope user-to-user services proactively to tackle it.

Under the Online Safety Act, search services have targeted duties that focus on minimising the presentation of illegal search results to users, and protecting children from such search content. These duties will play a key role in reducing traffic directed to websites with content that encourages or assists suicide, reducing the likelihood of users encountering this content. The Act also places duties on providers to protect children from harmful content that encourages, promotes or provides instructions for suicide but that does not meet the criminal threshold. Separately, the independent Advertising Standards Authority bans adverts that may cause harm or serious or widespread offence, including adverts containing references to suicide.

These approaches are supported by the Government’s suicide prevention strategy for England. As part of that, the Department of Health and Social Care leads a cross-government and cross-sector group established to rapidly identify and proactively tackle emerging methods of suicide. Through this group’s close working, there are currently over 30 live actions and interventions to reduce public access to, and limit awareness of, emerging methods, with further commitments made in the strategy. These include seeking to tackle at source the suppliers of harmful substances for the purposes of suicide, and the development of a new national process that both captures intelligence and subsequently issues alerts to relevant parts of the health, care, education and justice systems on any emerging methods or risks to be aware of.

Amendment 110 is set against this background. Its laudable intent does not fit with the purpose of Clause 149 and, by extension, Part 3. This amendment would use Part 3, which is merely an enforcement vehicle for existing duties, prohibitions or restrictions, to define and impose on traders a substantive legal prohibition. Once again, I am extremely grateful for my noble friend’s amendment. I applaud her passionate sponsorship of this vital issue and would be delighted to meet, as requested. However, at this moment, I hope she feels reassured enough by existing measures to withdraw the amendment.

I am grateful to my noble friend Lord Lucas for Amendment 110A. The Government fully agree with him that, as with any statute, Part 3 needs to be kept under review to ensure that it achieves its intended real-world impacts. However, it is important to note that the court-based consumer enforcement regime under Chapter 3 of Part 3 is not new. In general, it updates and simplifies the current court-based enforcement regime in Part 8 of the Enterprise Act 2002. There are therefore existing mechanisms for reviewing the effectiveness of consumer enforcement, which we believe to be sufficient.

First, public designated enforcers already review and report on the enforcement interventions they undertake. For example, since 2019, the Association of Chief Trading Standards Officers has produced annual impacts and outcomes reports that show the impact of local authority trading standards services in England and Wales. Both the Chartered Trading Standards Institute and the Society of Chief Officers of Trading Standards in Scotland conduct workforce surveys and publish reports that cover issues such as staffing and enforcement actions. Regulators such as the CMA, the Financial Conduct Authority and Ofcom provide transparent statements about their enforcement work and publish annual reports that evaluate their past year’s performance. These regulators are accountable to Parliament and subject to scrutiny by parliamentary Select Committees.

This ongoing reporting is complemented by dialogue with government about enforcement priorities and capability. For example, the CMA, which has a central co-ordination role in the network of public designated enforcers, already has a statutory role to provide advice to government on matters relating to its functions, including consumer enforcement. The Government may therefore request the CMA to provide information or advice on any gaps in enforcers’ powers or capabilities. The Government have committed to respond publicly to such advice within 90 days, clearly indicating the steps we will take in response.

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[Lord Offord of Garvel (Con)]

I thank the noble Lord for his intervention. As I said on my noble friend Lady Morgan’s Amendment 110, we are dealing with a serious issue. I took great pains to run through the various layers of protection currently on the statute book and outlined why the Government believe that this is covered elsewhere and is not within the scope of the Bill. I have also said that I will meet my noble friend and look at this in more detail to see whether we need to look further at the Long Title, to which the noble Lord referred.

[Lord Bassam of Brighton (Lab)]

Is the noble Lord saying that it is not outside the scope of the Bill?

[Lord Offord of Garvel (Con)]

We are saying that there is extensive protection built up around this sensitive issue and that there should not be further legislation made within the scope of the Bill, but that, if we need to look at it further, we can do so before Report.

Every local authority always wants more money. It is a feature of UK public life and it is up to local authorities to decide how to spend their money appropriately. As we all know, some are better run than others. Funding is not ring-fenced and it is up to local authorities to make sure that standards are maintained in their area.

Amendments 111 and 122, tabled by the noble Lord, Lord Clement-Jones, pertain to profits from infringements and the calculation of penalties. They would ensure that profits made from engaging in an infringing commercial practice can be expressly reflected in the calculation of a monetary penalty imposed through an enforcement order made by the court or a final infringement notice given by the CMA. I thank the noble Lord for his amendments and I absolutely agree with the intent behind them. In fact, work is under way to produce a comprehensive set of regulations, which could be made under Clause 203, to set out the amounts that are to be treated as comprising a person’s turnover when calculating the maximum penalty that can be levied.

Our intention is that any profits accruing from the relevant infringement will be captured by this methodology, but we consider that this maximum penalty calculation will be a technical exercise that needs to be supported by robust and detailed methodology, which is therefore better suited to secondary legislation. I hope that the noble Lord is sufficiently reassured that this important issue will be addressed.

[Lord Offord of Garvel (Con)]

Yes, that is exactly what I am saying. In order to get a profit, one has to start with turnover. A detailed mechanism is required to look at how these P&Ls work and, rather than being in the Bill, this needs to be examined as a technical exercise. There needs to be a methodology put together for it; we will therefore do that in secondary legislation.

Amendments 112 to 120 relate to online content take-down powers and were tabled by my noble friend Lord Lindsay but presented by the noble Lord, Lord Clement-Jones. These amendments would give trading standards departments in Great Britain the power to apply to a court for online interface orders and interim online interface orders to modify, restrict or take down illegal content displayed online.

We welcome the spirit of my noble friend’s amendments. Indeed, the Government have published their consultation response on proposals to empower additional enforcers, besides the CMA, to apply to a court for online interface orders. We have committed to give this additional power to public designated enforcers. These enforcers include, but go beyond, trading standards departments—for example, sector regulators such as Ofcom, which already have consumer enforcement powers under Part 3 of the Bill. We would be pleased to discuss with noble Lords how best to enact these important changes to ensure that the use of this power is governed by adequate procedures.

[Lord Bassam of Brighton (Lab)]

Is it therefore envisaged that the Government will give extra support to local trading standards officers, so that they will have these take-down powers? That seems to be the implication of what the Minister is saying—that it is not just Ofcom or the CMA but that there will be local enforcement as well, so there will be that combination.

[Lord Clement-Jones (LD)]

Just to add to that question, is the Minister saying, “It’s going to happen but we just need to get the procedures right and add them”? Is that really all we are waiting for?

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[Lord Offord of Garvel (Con)]

I thank the noble Lord. There is obviously a little confusion about this, so we will need to set it out, which we will do between Committee and Report, to ensure that we know precisely the order of events here.

[Lord Bassam of Brighton (Lab)]

That is important, because the Minister was talking about the actions in the court while the noble Lord, Lord Clement-Jones, and I were concerned not just with that but with where the enforcement law is going to come from. In the Minister’s letter to us, it would be most helpful if he could set out who will have those enforcement powers and how the mechanisms will work, given the interface between the different enforcing agencies. That would give consumers a degree of comfort.

[Lord Offord of Garvel (Con)]

I am happy to do that. We will look at that in a bit more detail and write accordingly.

We come to some minor technical government amendments, Amendments 121, 123, 124 and 128, which in the main are minor and consequential. They are intended to provide clarity on how the relevant provisions function and on continuity between the current consumer enforcement regime and the reformed regime under Part 3. I hope these government amendments will be supported. I thank noble Lords once again for their amendments and for their considered remarks on this group.

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[Lord Offord of Garvel (Con)]

This says that the Government have the overarching legislative position, but the trading standards departments operate locally, and it is important that central government listens to local government. That consultation listened carefully to the trading standards departments and has come back saying that they believe that removing this prohibition would enable them to gather evidence better and more easily for consumer protection. We follow the local authorities in their requirements.

I turn to the use of investigatory powers across the UK. Amendments 126 and 127, again tabled by my noble friend Lord Lindsay and presented by the noble Lord, Lord Clement-Jones, would permit any trading standards department based anywhere in Great Britain to carry out investigations anywhere in the UK. Current law already allows English and Welsh trading standards departments to use their investigatory powers in parts of England and Wales outside that department’s local area. The same is true for trading standards departments in Scotland, which can already use their investigatory powers anywhere in Scotland.

Extending the powers to investigate across the UK fails to recognise that Scotland has its own legal jurisdiction separate from the single legal jurisdiction of England and Wales. I draw noble Lords’ attention to the fact that consumer protection is a transferred matter in Northern Ireland, where trading standards are a central government function, in contrast to Great Britain’s local authority model. These differences across the UK’s nations provide examples that I hope will persuade the noble Lord not to move Amendments 126 and 127.

[Lord Bassam of Brighton (Lab)]

I want to tempt the noble Lord to give us a bit more explanation on this. If I understood what he said rightly, it is quite in order for trading standards officers to begin an investigation in their local authority areas and, because it is clearly a broader issue and a company they are looking at operates nationally, it is okay for them to go after it elsewhere. But, when an English trading standards authority wishes to pursue someone in Scotland, is the Minister really saying that, because the Scottish law is different and so on, they could not mount an investigation that had to take place partly in Scotland because that is where the company is operating or trading from? That seems a bit of a gap in provision if it is the case and, if it is not, I would have thought that there needs to be some form of understanding and set of protocols between and across the authorities operating on each side of the border. I am thinking particularly of border authorities in Northumbria and Cumbria working with trading standards authorities in the lowlands. This must be an issue there quite regularly.

[Lord Offord of Garvel (Con)]

What we are referring to here is that, within these legal jurisdictions, there are differences, not least of all the way prosecutions are conducted in England and Wales versus Scotland and Northern Ireland. Each of those jurisdictions can operate holistically within these jurisdictions. I will write to clarify, but I am pretty sure that the UK remains a united kingdom and, if there is a requirement for someone in England to speak to someone in Scotland, that can still happen. I will find out exactly how it does.

[Lord Bassam of Brighton (Lab)]

The noble Lord is such a strong unionist that I would be surprised if that were not the case.

[Lord Fox (LD)]

When the Minister writes that letter, perhaps he could extend it to include the United Kingdom Internal Market Act because that seems not to have been taken into consideration. Some of us here today—at least two of us—participated in the lengthy discussions about differing standards across borders and how they might be enforced, and this seems to fall well into that territory. What consideration has been made of that Act in drawing up the terms of the Bill? It would be helpful if the letter set out the various positions within the internal market Act and how they have been represented in the Bill.

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[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise to speak briefly on Amendment 133 in the name of the noble Baroness, Lady Jones of Whitchurch, to which the noble Baroness, Lady Kidron, and I have attached our names. I express support in passing to the attempts to restrict fake reviews, which are clearly an absolute plague online and a cause for considerable concern. I, like many other consumers, very much rely on reviews these days. I am also interested in the amendment of the noble Lord, Lord Lucas. I very much oppose the whole structure by which students are regarded as consumers. The Green Party’s position is that education is a public good, which should be provided for free, but his point raises some interesting questions, on which I would be interested in the Minister’s answers.

Amendment 133 is about so-called drip pricing. I found various government surveys producing different figures on the cost of this to consumers, ranging from £1.6 billion to £2.2 billion each year. We are all familiar with this, unsurprisingly, given that more than half of entertainment providers, transport providers and communications businesses use this as a regular practice: “Get this bargain price. Get in now. Click here: it will cost you only £10”. Mysteriously, as you go through the process, the price keeps going up and up. People fill in all the steps in the forms, fill in their names, tick to say that they have read the terms and conditions—even though they have not—and spend all that time and energy, but suddenly the price is three times what it started as. They feel as though they have spent all that time, so it is worth going hunting around again? Do they have that time?

What we are seeing is very much a change in what might have been considered service businesses; consumers are instead servicing them, with their time, energy and efforts. This is an important area, on which people need transparency. In the cost of living crisis, it is worth noting that so-called budget airlines are particular offenders. Most people think, particularly for a long-distance journey, that luggage is not an optional extra, not to mention that a family travelling should not have to pay extra for seats together. Amendment 133 is a particularly important amendment and I look forward to the Minister’s response.

[Lord Bassam of Brighton (Lab)]

My Lords, my noble friend has added her name to that of the noble Lord, Lord Clement-Jones, on his Amendment 130. We share his concern that online marketing should not be used to promote products or services by mimicking particular brands. In some ways, it is much easier to fool consumers online into thinking that a particular product has the same characteristics and spec as a branded product. As the noble Lord argued very well, we are all familiar with how cheaper and sometimes inferior products on the shelves are designed to mislead the purchaser. This simple amendment is worth supporting for that reason alone.

I was thinking back to an incident not that long ago, when I was misled into buying a product like Lemsip, simply because the colour of the packaging was almost identical. It was so simple and easy to take the thing off the shelf and put it into the basket but, when I got home, the product was inferior. This is about not just price but quality. This amendment is well worth our support.

Amendment 131 from the noble Lord, Lord Lucas, asks an important question. It is a niche issue for this legislation, but I am nevertheless looking forward to hearing the Minister clearly explain that universities can or cannot continue to market themselves to pupils and parents. All parents, along with their children, want to receive accurate information that is easily accessible and, more importantly, verifiable so that informed choices can be made. As the noble Lord argued, this is one of the more expensive areas of parents’ expenditure on their child’s education and it is only right that we set high standards for the content of the material that is made available to those making applications, and that it is verifiable.

I now turn to Amendments 132, 133 and 144 in the name of my noble friend Lady Jones. Amendments 132 and 144 should be taken together. They would insert into Schedule 19, which deals with commercial practices, the circumstances considered where there is an unfair reference to the marketing of a counterfeit or dangerous good and would empower enforcement officers to require the removal of relevant listings from the internet. We think that this is a fairly self-explanatory process, which should provide protection for consumers from shoddy goods. If the Minister insists that this is not the place for these amendments, perhaps he can explain how else consumers are to be protected and how else this false marketing is to be tackled.

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[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.

[Lord Bassam of Brighton (Lab)]

I want to persist a bit more on that. We are now almost at the end of Committee, and Report is probably two or three weeks away. That is not a lengthy period in which to get the drafting right and for us to have that discussion, so I ask that we get a really early draft of these amendments. The wording is important and that will help my noble friend Lady Jones to form a view about whether it covers what we are after here.

[Baroness Bennett of Manor Castle (GP)]

This is of great concern to many consumer groups, so it is important to publish and make it publicly available so that people are able to examine, think about and get legal advice on it. It is not just the people in this Committee but broader society that really needs to have the chance to input into this crucial issue.

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[Lord Clement-Jones (LD)]

My Lords, I cannot think of a better introduction to an amendment than the different speeches we have heard. I belong to many of the organisations that have been mentioned. We all have a personal interest in so many of the organisations that depend on subscriptions.

The noble Lord, Lord Mendoza, talked about the impact of the possible loss of gift aid; the noble Lord, Lord Harris, on the issue of why gift aid could be lost; the noble Lord, Lord Vaizey, about the importance of subscriptions going forward; and the noble Baroness, Lady Young, about the different kinds of relationship this represents. To round it off, the noble Baroness, Lady Harding, started to hold the Minister’s feet to the fire with the questions that need asking. This amendment has been comprehensively and extremely well spoken to.

We have all had the NCVO briefing, which has a galaxy of different organisations all making the point that the Government really need to create an exemption. This is a very elegant solution that I hope the Government will adopt but, as the noble Baroness, Lady Harding, said, the Government need to reassure us that this was not intended as part of the new subscription regime. I very much hope that, at this moment, the Minister and the department are cooking up a solution as good as the one that the noble Lord, Lord Mendoza, has put forward, or that they are simply going to accept this. In terms of the arguments made, this has been a slam dunk. I would have thought that accepting the amendment of the noble Lord, Lord Mendoza, is a total no-brainer, otherwise I can see Report stage being carnage.

[Lord Bassam of Brighton (Lab)]

My Lords, I congratulate the noble Lord, Lord Mendoza, for scripting such a simple and clear amendment. We are acting as co-signatories, and it seeks, very simply, to exempt third sector charities from the effective limitations on subscription contracts in the Bill.

I appreciate that there have already been several attempts to find a solution to this conundrum, including amendments in the Commons. I understood that Ministers were not particularly attracted to this solution, which seeks to list charity membership subscriptions which qualify for gift aid as an excluded contract pursuant to Clause 253. We were a bit reassured by the letter that Kevin Hollinrake, the Minister in another place, wrote to the National Trust, setting out the Government’s position. He said that it was not their intention to create uncertainty about how different legislation might apply. His letter, dated 23 November, also said that cross-departmental work was being undertaken to consider whether clarification would be beneficial. Having listened to everybody this evening, it is pretty clear that it would be beneficial.

If this approach does not meet the happiness threshold for Ministers, this debate is the opportunity for the Minister to explain where the Government’s internal departmental thinking has got to and what other solutions might be available. The Minister argued in his letter to the National Trust that Chapter 3 of Part 4 is unlikely to apply because there is no contract to be deemed a subscription contract. Given the net value of gift aid to charities—for the National Trust it is £47 million, English Heritage is £100 million et cetera—we think there needs to be clarity. We cannot leave a degree of uncertainty. It certainly does not appeal to us to do that at this stage, given the law of unintended consequences. We cannot rely on an assurance that it is deemed unlikely that the legislation would have the effect that many of the charities that we have been talking to have said it would. The charities need certainty and clarity as well.

If it is not this amendment, what amendment will be brought forward? As the noble Lord, Lord Clement-Jones, said, carnage could definitely occur on Report if we do not get a ready-made solution. It needs to be put right and put right now.

[Lord Offord of Garvel (Con)]

I am extremely grateful to my noble friend Lord Mendoza for moving this amendment and for his compelling speech. I also thank other noble Lords who spoke so passionately on this issue.

Amendment 149 would exclude charity membership subscription contracts eligible for gift aid from the scope of the Bill’s subscription contracts chapter. Many of us have heard strong representations from stakeholders on this matter and it has been valuable to hear the contributions from noble Lords today. It is clear that a number of charitable organisations have concerns about the interaction between the Bill, the existing gift aid rules and the potential implications for their operating models.

Like everyone who spoke, I fully understand the valuable additional income that gift aid provides to charities; as my noble friend Lord Vaizey put it, we are absolutely on the same page as far as that is concerned. Moreover, I assure your Lordships that it is absolutely not the Government’s intention to undermine this critical income for charities.

--- Later in debate ---

[Lord Clement-Jones (LD)]

I want to clarify what the Minister just said. Does he plan to come back with a solution on Report? Otherwise there is going to be jeopardy. If the Bill goes through and the Government anticipate doing something after that, charities are going to be in a really difficult position. Presumably the Minister is pledging to come back with a full solution on Report.

[Lord Bassam of Brighton (Lab)]

Before the Minister replies to that point, what is it about the amendment moved by the noble Lord, Lord Mendoza, that is so objectionable? I heard the Minister say that charities are not usually excluded from the effects of legislation in the way that the amendment suggests, but I do not see why they could not be made exempt for this particular purpose.

[Lord Offord of Garvel (Con)]

I thank both noble Lords for their interventions. To take the latter point first, it is absolutely the case that charities are required to live within the statute book generally and are not given exclusions. To take the point made by the noble Baroness, Lady Young, I accept that there are commercial elements to these donations. That may not be the primary purpose but they are commercial none the less, and there are examples where benefits are given to donors in return for donations.

[Baroness Young of Old Scone (Lab)]

That is the exact opposite of what I was trying to get across, so obviously I was not being very clear. The point is that the vast majority of donors give donations to an organisation for the good work that it carries out, rather than because it is a subscription to a particular service. It is therefore not a transactional relationship. It is not, “I will pay you to get this delivered”; it is, “I will pay you because you do really good stuff and I want you to keep doing it”. It is a non-transactional relationship, while subscription contracts are a very transactional relationship. That is the point I was trying to get across.

[Lord Bassam of Brighton (Lab)]

I have another point that the Minister might like to think about. Interestingly, the noble Lord, Lord Mott, was arguing for an exemption for micro-businesses. The Minister said earlier that he would be interested to discuss ways in which that might be practicable. Why can we not have a similar discussion on the point about an exemption for charities?

Digital Markets, Competition and Consumers Bill

Lord Bassam of Brighton Excerpts

Committee stage
Wednesday 31st January 2024 Grand Committee

[Lord Fox (LD)]

My Lords, I know the Minister is a big fan of innovation, so the introduction of some innovative procedure by the noble and learned Lord, Lord Thomas, will no doubt have filled him with delight. We all look forward to seeing how that wheels out.

It is a pleasure to follow the noble Lord, Lord Hodgson, who seemed, if he does not mind me saying so, to list second-order problems. How much split of the award you get depends on whether you can bring the case in the first place. If there is no case, there is no 50:50 or 75:25. Earlier, as memory serves, we talked about individual litigants and their ability to form groups, and the Government were set against that process. Here, we are again talking about a system that avoids or stops people getting together to fight the fight. We should remember clearly the power balance that we are talking about here. In the digital field, I used the example of the top five platforms. Their revenue is on the level of that of nation states. In order to fight battles with people, companies and organisations such as that, there needs to be some ability to come together and find the funding.

I am not a lawyer, but I am persuaded by the arguments advanced by the noble Lord, Lord Sandhurst, and the noble and learned Lord, Lord Thomas. When it comes to what the noble Lord, Lord Hodgson, said, there are of course code of conduct issues; generally speaking, when I have been involved in legislation, things such as codes of conduct arrive in secondary legislation, not as part of the primary legislation. I hope that he can join in debating the principle. He is right that the details of the principle are important, but I suggest that they are a second-order issue. With that in mind, what the noble Lord, Lord Hodgson, said, combined with his amendment, looks a little like long grass—

“Make me pure, Lord, but not yet”.


We need to have the debate that will be initiated by the noble and learned Lord, and others, before we start worrying about the industry code of conduct that comes behind it.

[Lord Bassam of Brighton (Lab)]

My Lords, the Committee should be enormously grateful to the noble Lords, Lord Sandhurst, Lord Arbuthnot and Lord Carlile, and to the noble and learned Lord, Lord Thomas, for bringing forward this group of amendments dealing with litigation costs in group actions. There is real and practical importance for those who will potentially benefit from this when seeking redress. The noble Lords have persuasively argued the case for the amendments in their names. Indeed, the noble Lord, Lord Sandhurst, gave notice that he would bring forward such an amendment with others at Second Reading. He has been good to his word.

At the time, the Minister, the noble Viscount, Lord Camrose, argued that the Government had,

“urgently addressed the potential implications of the judgment”,—[Official Report, 5/12/23; col. GC 1452.]

in the PACCAR case, which had then recently been decided by the Supreme Court. However, the Government’s solution to the problem is, as we have heard from noble Lords this evening, limited to addressing the issue for some claims in the Competition Appeal Tribunal, leaving a big problem for litigation funding agreements—LFAs—used in other proceedings. We note the Government’s view that the Bill is not the right place to deal with the wider issues, but, as currently drafted, this will create a two-tier system in the UK, whereby claimants would have different rights and different access to financial backing, and therefore different legal support, depending on the court in which they pursued their claims. Having listened to noble Lords, that cannot be right if we are to ensure equal access to justice. As the noble and learned Lord, Lord Thomas, argued, the proposed amendment to Clause 126 goes some way to addressing the issue, by widening the scope of agreements that will be placed in the pre-PACCAR position, but it does not solve the problem for cases outside the CAT.

Of course, back in early December, few of us understood the true import of LFAs, but that was before the TV drama, “Mr Bates vs The Post Office”. Now, of course, we are far more conversant with them, and so are the public. Without such arrangements, the sub-postmasters and sub-postmistresses would not have been able to challenge the Post Office in the courts, and that cannot be right.

Currently, for an LFA to be enforceable by the funder for opt-in and opt-out cases, it must comply with the Damages-Based Agreements Regulations 2013. Those regulations were introduced to deal with contingent fee agreements between claimants and lawyers, not funding arrangements with third-party funders. As I have already said, Clause 126 deals with only CAT opt- out cases. I am persuaded that we need a comprehensive solution to the problem.

We understand, as the noble and learned Lord, Lord Thomas, explained, that the noble Lords who have tabled these amendments were unable to bring forward a more comprehensive solution to the PACCAR ruling at this stage of the Bill. I was very interested in what he said because he referenced the Standing Orders of the House and the ability of your Lordships’ House to determine a Bill’s scope. It is, as he said, done rarely but we certainly did it once or possibly twice in my time as Opposition Chief Whip, to the benefit of the House. On those occasions, we sought counsel’s legal opinion, which we posted in the Library of the House. I do not think that we need counsel’s opinion on this case, having a former Lord Chief Justice and other eminent lawyers making the argument.

Assuming that the Minister is unable to offer a solution today, I assure the noble Lords behind this amendment that we will willingly support amendments brought forward to resolve the issue. Since the “Mr Bates vs The Post Office” drama, government Ministers have suddenly woken up to the salience of the issue. There is surely enough goodwill in the political system for colleagues to agree a way forward on this. Legislative time is at a premium, as the Minister will no doubt tell us, and we see this as an opportunity not to be missed and to be used.

I turn to the amendment in the name of the noble Lord, Lord Hodgson, on which he gave a very brilliant exposition. I tried to follow most of it, but I can see the force of his argument. His amendment is eminently supportable. As the noble Lord, Lord Fox, points out, it has the upside for the Government of kicking the issue into the long grass, but there is clearly a need for some review at some stage. However, I hope that the amendment in the name of the noble Lord, Lord Hodgson, becomes otiose if we can see a way forward with the route that has been pointed out by the noble Lord, Lord Sandhurst, and the noble and learned Lord, Lord Thomas, this afternoon. We should be very grateful for those noble Lords, and it is nice to know that, in the noble Lord, Lord Arbuthnot, we have a star of the silver screen in our midst. I am sorry that he is not here to hear the arguments put to his benefit. With that, I look forward to the Minister’s response.

Digital Markets, Competition and Consumers Bill

Lord Bassam of Brighton Excerpts

Committee stage
Monday 29th January 2024 Grand Committee

[Lord Clement-Jones (LD)]

My Lords, it has been very interesting to listen to noble Lords on this amendment. I am getting a strong sense of déjà vu from our debates on the then Online Safety Bill.

The noble Viscount, Lord Colville, made a devastating case for the deletion of the Secretary of State’s power, and the noble Baroness, Lady Stowell, made a superb case for the inclusion of parliamentary oversight over the guidance. The fact is that, just as we argued in our debates on the then Online Safety Bill, there is far too much power for the Secretary of State in this Bill. This example is the most egregious, but there are so many other aspects that one could argue with, and have argued with—the noble Viscount reminded us of his earlier amendments—such as the conditions for an undertaking to have an SMS designation; the turnover condition; the permitted types of conduct requirements; the period during which the DMU must decide which terms to include in the final transaction under the final offer mechanism; the amount of penalties imposed by the DMU on individual undertakings; and the DMU’s statement of policy on penalties. That is a heck of a lot of different powers for the Secretary of State and, as I say, power over guidance is the most egregious of them.

The way in which the noble Baroness, Lady Stowell, expressed this was exactly right. We will come on to parliamentary scrutiny in our debate on the next group, but the word “accountability” is crucial. Of course the regulator should be independent but, at the same time, it should be accountable. This is not just a licence to roam beyond the bounds; it is the right and duty of Parliament to have oversight of the regulator, which is exactly what this amendment would provide for. You have only to look at the draft that was put together of the Overview of the CMA’s Provisional Approach to Implement the New Digital Markets Competition Regime to see just how broad the Secretary of State’s powers over the way in which the CMA carries out its functions will be. That is why this is such an important amendment.

I very much hope that the Minister will hear our voices. This is a really important area of the Bill. As the Minister can see, it is something about which, having had the experience of the then Online Safety Bill, we feel very exercised.

[Lord Bassam of Brighton (Lab)]

My Lords, this is the beginning of an important couple of debates about accountability. The breadth and the import of what noble Lords have said so far underlines how much we value that. We on the Labour Benches are co-signatories to both amendments in this group—the first, Amendment 76 in the name of the noble Viscount, Lord Colville, and the second, led by the noble Baroness, Lady Stowell.

Put simply, if the CMA is to be a regulator genuinely independent of government and accountable to Parliament, these amendments should stand. As it is, the legislation seems to suggest that, before the CMA can take any initiative on guidance, it first has to receive the approval of the Secretary of State. This is surely not only a time-consuming process but a wholly inefficient way of conducting business. I can well understand and appreciate why the Government desire to understand how the CMA intends to implement its regulatory policy, but do they really require such a firm and strong hand in the process? As it is, the CMA will be in constant consultation, discussion and interaction with government Ministers, and I do not see why, in the final analysis, approval has to come from the Secretary of State.

Can the Minister tell us how the regulatory regime compares with others? Do regulators like the Charity Commission, Ofcom, Ofwat, the Electoral Commission et cetera all require approval from the Secretary of State before issuing guidance? How does this process contrast with these other regulators? Is there a standard practice, or does it vary across regulatory frameworks? We need something that will work for this particular part of our economy, and it has to be built on trust and understanding and not reliant on the heavy hand of the centre of government coming in and ruling things in or out of guidance which the experts, in the form of the CMA and the DMU, have reflected and consulted on.

We obviously support the amendment of the noble Baroness, Lady Stowell, which, as I said, we co-signed. Consulting the relevant parliamentary committees seems a wholly sensible solution and step. These committees are powerful entities, as we know, full of expertise and insight, and they provide a layer of accountability that Parliament rightly expects. After all, the CMA is a creature of Parliament and of legislation that we will put through this House.

I am sure there are plenty of examples of where legislation, particularly secondary legislation, has benefited from the input and oversight of Select Committees and other committees of both Houses. The points made about lobbying the Secretary of State were important and powerful. We need maximum transparency, and we need openness in this process; otherwise, suspicion will abound, and we will always have cynics who say that Secretaries of State are very much in the pockets of business and commercial interests. We do not want that in this legislation; we want something that works for the market, for the competitive interests in the digital world, and particularly for consumers.

Ministers would do well to listen carefully to what the noble Baroness, Lady Stowell, said. She is an experienced parliamentarian, but, more than that, she was the chair of a regulator, so she understands exactly the import of the pressure that can come from central government and how it can best be managed.

These amendments are important for us in order to secure accountability in this market and in the way in which the various institutions work and operate together. I happily lend my support to both of them.

[Viscount Camrose (Con)]

I start by thanking my noble friends Lord Black, Lady Harding and Lady Stowell, the noble Viscount, Lord Colville, the noble Baroness, Lady Kidron, and the noble Lords, Lord Clement-Jones and Lord Bassam, for their thoughtful and valuable contributions. I absolutely recognise the seriousness of this part of the debate and look forward to setting out the Government’s position on it. I will address each amendment in turn.

I thank the noble Viscount, Lord Colville, and my noble friend Lady Stowell of Beeston for highlighting the subject of accountability to government and Parliament. As I said, I am aware of the importance of the topic, and I welcome the chance to speak to it now. Amendment 76, from the noble Viscount, Lord Colville, would remove the requirement that the Secretary of State must approve guidance produced by the CMA in relation to the digital markets regime. Amendment 77, from my noble friend Lady Stowell of Beeston, would also have this effect. Additionally, Amendment 77 would add a requirement for the CMA to consult certain parliamentary committees about proposed guidance and publish responses to any committee recommendations.

--- Later in debate ---

Moved by

[Lord Bassam of Brighton]

79: After Clause 115, insert the following new Clause—
“Digital Markets Unit and CMA: annual statement to Parliament (1) The Secretary of State must, at least once each year, lay before Parliament a statement containing the Secretary of State’s assessment of the conduct and operation of—(a) the Digital Markets Unit, and(b) the CMA as a whole.(2) The first statement must be laid before 31 October 2024.(3) Each further statement must be laid before 1 February of each subsequent year.”Member's explanatory statement
This new Clause would require the Secretary of State to lay before Parliament each year a written statement about the conduct and operation of the DMU and CMA.

[Lord Bassam of Brighton (Lab)]

My Lords, we now move on to the second debate about accountability. We have two amendments in this group—in moving this amendment, I will speak also to the other—relating to the accountability in various forms of the CMA, the Secretary of State and Parliament. With these amendments, we seek to strengthen parliamentary oversight over the CMA by obliging the Secretary of State to bring before Parliament an annual report on the work of the DMU and the CMA. We are grateful to the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Bennett, for their support for this amendment.

This is a common device exercised by parliamentarians to try to improve the quality of accountability to Parliament. I have almost lost count of the number of times I have seen similar amendments moved by Members on either side of the House—from a Labour Government and from a Conservative Government—but they are nevertheless important because they remind us all of the value of Parliament and why we are here. They also oblige the Secretary of State to make it clear in their annual reporting how the work of a particular regulator is progressing and the content of that work.

Additionally, we want Parliament to have an opportunity to debate and discuss the workings of the DMU. We also want to ensure that the DMU has sufficient financial support and staff to do that work—that is, the work that Parliament has ultimately asked it to do in protecting the public interest and promoting competition that is beneficial to consumers. There are already some concerns that both the CMA and the DMU might lack the resource and clout to undertake their work in tackling the giants that dominate the digital marketplace. That is why we have tabled Amendment 83: to focus attention on this concern.

The question of resources is important because, unlike many other regulators, the CMA is funded not by a levy on the firms it regulates but by a grant. We are not seeking to change this with our amendment, but does the Minister have any concerns that the CMA and the DMU may lack the certainty enjoyed by other bodies such as Ofcom? Does he have any worries that the CMA’s funding arrangements could have an impact on its ability to scale up certain operations and ensure that investigations take place as quickly and efficiently as possible?

We argue that this must be a primary concern from the outset. The history of regulators is littered with examples of underpowered institutions lacking the ability to tackle the big issues of the day. The water industry is a critical example of what can go badly wrong when an infrastructure regulator cannot cope. Digital infrastructure is key to the nation’s future economic success and prosperity, so this is every bit as important. For those reasons, I beg to move Amendment 79.

While I am on my feet, I would like to address Amendment 81 in the name of the noble Baroness, Lady Stowell. It goes to the heart of the issue in requiring the regulator or regulators to report to the relevant parliamentary committees; this is consistent with the noble Baroness’s Amendment 77 in the previous group. For the reasons argued in our debate on that group, we support Amendment 81.

Amendment 82 in the name of the noble Lord, Lord Fox, seeks to inquire whether the CMA will be able

“to play a proactive role in promoting international standards of digital market regulation”.

It would be most odd if it were prevented doing so. Although this amendment is of interest for good trade reasons, I would also be interested to hear from the Minister how the Government view the international regulatory field and the CMA’s role, part and place in it.

I look forward to the Minister answering some of those questions and points.

[Baroness Stowell of Beeston (Con)]

My Lords, I speak to my Amendment 81 in this group. I am very grateful to the noble Lords, Lord Tyrie and Lord Clement-Jones, and the noble Baroness, Lady Jones of Whitchurch, for adding their names. My amendment reflects the increasing power of some of our most important regulators in the context of digital markets and online activity; and the need for greater parliamentary oversight as a result.

--- Later in debate ---

I hope this has addressed the concerns of noble Lords who spoke so powerfully and eloquently on this subject and that, consequently, the noble Baroness, Lady Jones, will feel able to withdraw her amendment.

[Lord Bassam of Brighton (Lab)]

Noble Lords will be pleased to know that I, too, intend to be brief. I am grateful to the Minister for his response: there was more detail than I thought we would get. I am also grateful to the other Members of the Committee who supported the two amendments in the name of my noble friend Lady Jones. We should congratulate the noble Baroness, Lady Stowell, for her sterling efforts in arguing her case for better regulation through specific committees of both Houses.

I assume we will return to the issue of accountability. There has been sufficient concern expressed this afternoon about the shortcomings of where we currently are. I heard what the Minister said about annual reporting to Parliament, and we all need to think more about how we can make that much more effective.

A number of noble Lords made the killer point that there is a lot coming down the line, including the CMA, online safety and data protection. All those topics demand further scrutiny to make sure that we get the very best from regulation and legislation.

Collectively, our amendments address two issues: the accountability of the Secretary of State to Parliament, and the accountability of the regulator to Parliament. They are two very important things with important principles behind them.

I was interested and impressed by what the Minister said about the staffing details; it is something we should regularly debate in your Lordships’ House. Have we got it right? Have we got the balance right? Where are the staff coming from? Have they got the right skill set?

It was a very useful debate, and I beg leave to withdraw the amendment.

Amendment 79 withdrawn.

Digital Markets, Competition and Consumers Bill

Lord Bassam of Brighton Excerpts

2nd reading
Tuesday 5th December 2023 Lords Chamber

[Lord Bassam of Brighton (Lab)]

My Lords, it is a great pleasure to follow the Minister, who has very ably set out the purposes behind this much-needed and long-awaited Bill. I hope he has not given it a fake review or indulged in any drip pricing in his opening salvo.

Our Labour colleagues in the Commons made it clear during the passage of the Bill in another place that we are fully behind the intents of the Bill. Indeed, if anything, we wish to strengthen it—a comment that will no doubt be echoed many times during today’s debate. We are at one with its direction of travel, even if we have a slightly different destination. There are, for us, issues of continuing concern, and we will focus on these when we go through its detail in Committee and on Report.

I know the Government argue that the Bill delivers on a manifesto commitment, but the truth is that it has been much longer in the making. It was as far back as 2018 when the Government set up their Digital Competition Expert Panel, and it is nearly three years since the CMA set up the Digital Markets Unit. Even with a speedy passage through your Lordships’ House in 2024, this Bill will have little impact much before 2025—a full six years after the Furman report concluded that digital markets required a new approach. Of course, we were promised the Bill in 2022, the year of extreme chaos in government and a time when Ministers were not sure if they favoured any regulation at all. All the while, we have been falling further and further behind our European neighbours and other jurisdictions and playing catch-up.

Thankfully, wiser heads have now prevailed and we have a workable, if not fully formed, piece of legislation. We should be grateful to the CMA, UKHospitality, the Chartered Trading Standards Institute, the CAB, Which? and others in the tech sector who have through their persistence helped make this happen. The sector and market are, as we know, dominated by a small number of large companies and the truth is that the lack of competition and regulation is acting as a barrier to market entry and expansion. This in turn impacts on consumers, their interests and the health of the market and our digital economy. Five years ago, the OECD reported that digital markets were exhibiting

“certain characteristics, such as low variable costs, high fixed costs and strong network effects, that result in high market shares for a small number of firms”,

so that:

“Firms in these concentrated markets may possess market power, the ability to unilaterally and profitably raise prices or reduce quality beyond a level that would prevail under competition”.


The ONS has reported that between 2008 and 2020 the percentage of adults reporting shopping online had risen from 53% to 87%. Those figures would have been given an extra twist since the impact of Covid. This trend will undoubtedly have led to greater exposure to the downsides of the digital economy, in particular the misuse of consumer data, misleading information and unrestrained marketing. We need, as our Labour colleague Seema Malhotra argued in the Commons, to deliver

“a pro-competition, pro-consumer, pro-growth Bill”.—[Official Report, Commons, 17/5/23; col. 886.]

For that reason, we need to recognise the harm that can come from the creation of monopolies in a digital economy and ensure that innovation is fostered. This will enable us all to share in the benefits of new and emerging technologies and use them to grow the economy and promote economic and social progress.

The challenge is to get the balance right in the framing of the legislation. On these Benches, we seek assurances that the Government will not resile from the current drafting of the Bill and the commitments made in another place. So, first, in terms of our asks today, I say no watering down of the Bill’s original intent. We will be seeking reassurance on that point and would like to hear that commitment on the record today. Secondly, while it is clear that the CMA and the DMU have the capability to deliver the Bill’s aims, we wonder whether they have the capacity. Can they, for example, communicate their policies, programmes and priorities effectively to stakeholders and legislators? Will they be sufficiently independent of the sponsoring department to be able to get on with the job? Furthermore, will they have the tools to undertake the necessary enforcement work to make the regulatory function effective?

On these Benches, we worry that, as with other regulators, they are hobbled from the start by a lack of the forensic investigatory skills necessary and trained personnel required. Can the Minister assure us that the CMA will have staff in place fully trained for the job and resourced to make it work? Perhaps he can outline the growth plan for staffing and put on record some details today demonstrating a workforce strategy. It is of little value to have a regulator with all the necessary powers if it cannot effectively exercise them—a quick look at the water industry makes that plain.

Earlier, I referenced our concerns about the potential dilution of the Bill. Two examples readily come to mind and I have no doubt other noble Lords will pick up on them. First, the changes to the appeals test on the penalties regime will surely undermine the DMU’s primary purpose, which is to protect competition in the UK. Secondly, we are concerned that the addition of explicit proportionality obligations will create uncertainty in terms of the impact on the enforcement regime. Why have these changes been introduced so late in the legislative process and who asked for them?

Moving on from concerns about the weakening of the Bill’s measures, we want to make it clear that we have a long list of areas where we and, no doubt, other noble Lords want to see the Bill strengthened, so we give notice today that we will be tabling amendments to tackle the Bill’s most egregious omissions.

I am sure it will come as no surprise that we will be seeking amendments to the subscription contracts arrangement—moving from the opt-out principle to opt in—and seeking to tighten up the approach to fake reviews, drip-pricing and greenwashing. We cannot understand why the Government are reluctant to do more on product safety to ensure that fake products and counterfeits are fully covered. We also wonder why Ministers are so reluctant to use the Bill as a way of tackling the forever issue of ticket touts, digital fraud and the theft of creative content.

Tech platforms benefit enormously from the work of creatives, so why is it that platforms in particular are able to avoid properly and fairly paying them? Few of the rewards to the platforms themselves get passed on. That cannot be right or fair. It begs the question: should we be looking again at the law surrounding copyright in this context?

We will also want to revisit the countervailing benefit exemption issue. Currently, the exemption surely benefits the big tech companies with monopoly power more than it does consumers, even where some short-term benefit is claimed. By claiming an exemption, the platforms can easily evade conduct requirements and obligations. Perhaps the Minister can provide instances of anti-competitive behaviour where there are more benefits than harms; we have yet to find any of great significance. It might be the case that there is a need to develop a more rigorous test of the countervailing benefit claims made, and a measure of consultation with the public to ensure their validity. In this light, we will want to discuss the need for an interests of citizens duty to be inserted into the Bill to strengthen the hand of consumers.

Finally, there are issues that relate to how the CMA operates. Is there not a case for more to be made of the CMA’s co-ordinating role as an enforcer? It is not the only body that will exercise the powers contained in the Bill, but it is the lead regulatory agency. Could more be done to recognise that, so that best use is made of the enforcement regime and regulatory leadership is entrenched?

This is a large Bill, almost too big to summarise and with many issues hidden and tucked away within it. We will listen carefully to the debate today, particularly on subjects such as final-offer arbitration, the alternative disputes resolution scheme, the potential vulnerabilities of the “strategic market status” designation, and the need for a takedown power for trading standards officers to enable them to provide for swifter remedies where there is self-evident harm to consumers and a need to act.

This Bill is much needed and has been for much of the lifetime of this Government. As I said at the outset, we support its direction of travel, but that does not mean that it is not capable of improvement through challenge, or that we will give it an easy passage.

Electric Cars: Export to EU

Lord Bassam of Brighton Excerpts

Thursday 2nd March 2023 Lords Chamber

[Lord Johnson of Lainston (Con)]

My noble friend is clearly hoping to upgrade his car from his 23 year-old Range Rover. We are very aware of the need, as we are as individuals in this House, to ensure that the infrastructure is there. It takes time, it is very costly, there has been government investment, but he is absolutely right that further focus is required, and I am very happy to write to him on the specifics, because it is important that everything fits together.

[Lord Bassam of Brighton (Lab)]

My Lords, it is all well and good the Minister telling us all this, but a new report from the Energy & Climate Intelligence Unit warns that UK motorists could miss out on £9 billion-worth of savings on electric vehicles due to the shrunken second-hand car market, which could be as many as 2.1 million vehicles smaller by 2033, if the Government continue to fail to boost EV take-up. This will be bad for drivers, bad for the country and bad for the environment, with low-income drivers forced to continue running petrol cars. What positive steps will the Government now take to buck this trend and ensure a viable second-hand car market for EV vehicles?

[Lord Johnson of Lainston (Con)]

It strikes me that, if you want to have a second-hand car market in EVs in this country, you need to build more new EVs in the first place. That is why we are investing heavily in making sure both that we have the facilities and capacity to procure critical minerals to enable us to make batteries, which are the core component in such cars, and that we have the partners in this country to develop the battery technology. We are not simply looking at manufacturing; we are also investing heavily in the R&D around battery design. Our real strength and core defence against the future are our brains. The investment that we have made in concepts, such as our investment of more than £500 million in the Faraday Institution in Coventry, is a good representation of the work that we are trying to do. This does not happen overnight. It is truly a national endeavour. I hope that the noble Lord is reassured that the Government’s focus is on this incredibly important and topical subject.