Competition Act 1998 (Coronavirus) (Public Policy Exclusions) (Revocations) Order 2021

Lord Callanan Excerpts

Monday 1st November 2021 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I thank all those who have contributed to the debate. I especially thank the noble Lord, Lord Bassam, who came along to discuss the subject I thought we were coming here to debate: the revocation of the SI.

As I listened to the speeches of the noble Lord, Lord Berkeley, and the noble Baroness, Lady Randerson, I thought there was a sense of déjà vu about them, and of course there was. Perhaps the noble Lord and the noble Baroness will remember that we actually discussed this subject in 2017, when I had the privilege of being a transport Minister: we had a take note debate on remote island communities in England. I hope the noble Lord refreshed his speech before he made it again; I have not looked it up to see whether he has made the same one. So we have been here before and discussed the topic, and I gently suggest to the noble Lord that if he wants to have a debate about ferry services and their role in transport policy, perhaps he might want to go through the channels that would secure that properly rather than trying to shoehorn it into a debate on competition policy and the revocation of a particular SI. I will be very happy to explain to him the subject of his regret Motion—that is, why we revoked the SI. If other noble Lords are not interested in that, at least the noble Lord, Lord Bassam, will be.

I thank the noble Lord, Lord Teverson, for his concern for my welfare and my brief. I can tell the noble Lord that I will be travelling up to COP. In fact, I suppose I should be grateful to the noble Lord, Lord Berkeley, for detaining me in the House today; looking at some of the transport issues that have occurred to people travelling up to COP in the last two days, maybe I was better off staying here after all. I will be going for the buildings day next week.

To respond to the subject of the debate—I will come to some of the points made by the noble Lord, Lord Berkeley, later—last year, in response to the unprecedented challenge posed by the coronavirus pandemic, the Government responded with unprecedented rapidity to support businesses and people, and to enable a co-ordinated response to coronavirus. As part of the Government’s action, six public policy exclusion orders were made. These orders were intended to disapply elements of UK competition law temporarily in order to help businesses co-ordinate specific activities in certain sectors, and to support lifeline services during a period of disruption related to coronavirus. The Solent maritime crossings order was one such measure.

As the noble Lord is no doubt aware, more than 140,000 people live on the Isle of Wight. Residents rely on essential lifeline services to get access to medical supplies and essential healthcare or to facilitate the journeys of NHS staff, emergency services and other key workers. These services are all supported by ferry operators—I think there are currently three—without which residents would be isolated and with limited resources.

In response to the outbreak, and at the request of the local MP, the Government acted swiftly and suspended competition law temporarily for the Solent ferry operators to ensure that they could co-operate to continue to provide essential transportation despite the effects of lockdown. The order permitted three kinds of agreements between the Solent crossing operators to co-ordinate during the period of disruption: the use of timetables, the routes operated by any Solent operator, and the deployment of labour or facilities.

Of course, such measures are usually prohibited by competition law as in normal times co-ordination of this sort can lead to higher prices, less choice and lower quality of service for consumers. However, given the exceptional circumstances, it was not clear that any of the companies would be able to maintain a service without co-operation, and that therefore, without this order, lifeline services may well have ceased. The measure was therefore an important part of a wider support package to safeguard the vital transport links to the mainland.

In response to the questions from the noble Lord, Lord Berkeley, and the noble Baroness, Lady Randerson, I can tell the House that the Government also made available £22.4 million-worth of funding for the Isle of Wight and the Isles of Scilly between April 2020 and April 2021.

Operating together, the Solent maritime crossings order and the financial support scheme enabled the maintenance of lifeline connections to the Isle of Wight. Key services were retained despite temporarily not being economical to run. The Solent ferry operators were altogether able to transport passengers and passenger vehicles representing nearly 50% and 64% of their pre-pandemic baseline. They also saw an increase of 23% in the transportation of commercial vehicles. Without the temporary suspension of competition law and the funding provided, services would likely have stopped running, thus creating significant issues for islanders during the pandemic.

Under the Competition Act, exclusion orders may be applied only to situations where there are exceptional and compelling reasons of public policy. The Solent maritime crossings order was intended to address the effects of coronavirus on the Isle of Wight’s transport system. We were clear when making the order that it would remain in place only until the Secretary of State determined that there was no longer a significant disruption or a threat of significant disruption to the operation of Solent crossings.

I reassure the noble Lord, Lord Bassam, that the Government’s decision to revoke the order was made following consultation with the Isle of Wight Council and the ferry operators and with the confidence that the ferry operators were financially secure enough to return to normal services. The response strategy reopened the economy and, with the lifting of restrictions and the vaccine deployment, measures such as the Solent maritime crossings order became unnecessary.

The noble Lord, Lord Berkeley, also asked why the revocations SI does not provide a continuing review of competition issues by the Competition and Markets Authority on these routes. The CMA, as the UK’s independent competition authority, continues to be responsible for monitoring markets and enforcing competition law across the economy. Now that the Solent ferry crossings are back under competition law, they are indeed back under the auspices of the CMA. The CMA has significant powers and expertise to investigate markets and anti-competitive behaviour and to take remedial action where necessary. Complaints of anti-competitive behaviour can be made directly to the CMA. As the noble Lord knows, the Government do not determine which cases the CMA decides to act on.

I will add a note about the wider use of competition law exclusion orders. They have proven to be an effective instrument to provide a safety net—and at times more considerable security and support—to industries which need to collaborate in order to address exceptional circumstances. However, it is not a power that should be or can be used without careful consideration. The Government have recently made use of the instrument again. We temporarily exempted companies operating in the oil industry from the Competition Act for the purpose of sharing information and optimising fuel supply in the event of disruption. Earlier this month, the Secretary of State also announced a temporary exemption for parts of the CO₂ industry to help provide further security of CO₂ supplies and businesses. Finally, we have agreed to make an exclusion order for Premier League broadcasting rights to provide stability for the football pyramid, including for grass-roots football, women’s football and lower league clubs.

In each case, the use of exclusion orders was a proportionate and limited measure informed by the Government’s engagement with industry and intended to give companies a bit of breathing space to resolve the wider issues. However, we should be clear that business practices that undermine or restrict competition in markets are a threat to consumer interests, productivity and the wider economy. Suspending competition law longer than necessary could be harmful to consumers and to the economy and the Government will continue to use such measures only where necessary and appropriate.

The Solent maritime crossings order and all the other public policy exclusion orders revoked in July fulfilled their purpose. That there is no longer a need for this order is a testament to the success of the road map and the effectiveness of the Government’s response to Covid-19.

[Lord Berkeley (Lab)]

My Lords, I am very grateful to all noble Lords who have taken part in this short debate—the noble Baroness, Lady Randerson, the noble Lord, Lord Teverson, and my noble friend Lord Bassam—and of course to the Minister for his response. I do not regret tabling this Motion because, as the Minister said, it is four years since we last debated the order and quite a few things have happened since then, including Covid. I certainly want to put on the record the thanks of people I have spoken to on both islands for the grant the Government gave to keep the services going during Covid—otherwise they would have stopped; they had very little income because there were no passengers.

The noble Lord, Lord Teverson, mentioned that the Covid problems are still here and asked whether it was too soon. I can inform him that twice in the last six months there has been a week’s shortage of meat for people to eat on the Isles of Scilly. Whether that is due to Covid, transport or whatever we can debate.

I agree with the Minister that it is time to have this particular order withdrawn, but the concerns of residents and businesses on these islands will not go away. It is something that will need further thought, but it is good to know that the competition is still around, and that we can talk to the CMA if we want to and see where it goes. Again, I am very grateful to all noble Lords who have spoken in this very short debate and beg leave to withdraw my motion.