Competition and Markets Authority: Legislative and Institutional Reforms

Lord Henley Excerpts

Wednesday 8th May 2019 Lords Chamber

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

My Lords, I thank the noble Baroness, Lady Hayter, for introducing this timely debate. Like the noble Lord, Lord Turnbull, I was intrigued as to which Lady Hayter we would see but, as my noble friend Lord Tyrie stressed, we are happy that it is the Lady Hayter who wishes to look to the consumer benefit, does not look at state intervention, as some of her colleagues in another place might want, and generally goes along with the broad thrust of the suggestions put forward by my noble friend, if I may call him that—I appreciate that he no longer sits on our Benches.

Noble Lords will be pleased to hear that although they will have noticed a large number of yellow notes coming to me, I will not respond in detail to every single point made in this debate; time does not allow me to do so. However, in responding I can to some extent give the broad thrust of some of the Government’s views about where we should go and what we should be doing. I shall take the four questions that my noble friend Lord Tyrie put towards the end of his speech, when he asked whether far-reaching reform is necessary and whether the letter is a step in the right direction. Crucially, he then asked “when?”, which is always one of the hardest questions to respond to at the Dispatch Box, and whether we should do more to do this with cross-party consensus. Following the debate, I think my noble friend will agree that there is a considerable degree of cross-party consensus on his letter. My noble friend himself referred to the letter, as did many other noble Lords, and I do not think anyone said that it was going down the completely wrong track. However, as my noble friend said in the second paragraph of his letter:

“The attached provides preliminary advice. Work is continuing at the CMA on a number of these proposals”.


He described the letter as long; I think it is six pages long, but a further 30 or 40 pages were attached to it. There is a great deal to do there but a great deal more for the CMA, the department, government and others to do. We want to look at that in due course and we certainly want to respond in the proper way.

Just as my noble friends Lady Neville-Rolfe and Lady Altmann said, we believe that competition is crucial and that it should be the lifeblood of our economy. It brings clear benefits for consumers. Businesses that have to compete against each other are incentivised to offer goods and services to consumers that provide greater choice, better quality and lower prices. Consumers themselves benefit from strong markets subject to healthy competition and effective consumer protection rules, and that is what we want to see.

With the Competition and Markets Authority, we have a well-developed set of consumer rights, which are some of the strongest in the world. They have been developed over the years with a degree of cross-party support—I appreciate what the noble Baroness and the noble Lord, Lord Whitty, both of whom were involved in the passage of the 2015 Act—had to say. It was recognised in 2015 that the United Kingdom was ahead of the rest of the European Union in introducing specific rights and remedies for a great many services, particularly on digital content. I shall say a little more about that.

As my noble friend said, any system that regulates markets needs to ensure that it keeps pace with developments in that market, and a dynamic market requires a dynamic competition regime. We have been at the forefront of global reforms, promoting open markets that enable growth and improve consumer outcomes, and we intend to remain on the front foot. That is why we acted, first by publishing the consumer Green Paper last year to which my noble friend Lady Neville-Rolfe referred, which raised fundamental questions about how the Government could ensure that markets work for all consumers, following that up with the consumer White Paper to be issued later this year, focusing on loyalty penalties, and the independent review of digital competition, which reported in March, seeking the views of my noble friend Lord Tyrie on strengthening the competition and consumer enforcement regime.

Following that, and given the Government’s ambition to ensure that we have a competition regime fit for the future, my right honourable friend the Secretary of State asked my noble friend to suggest reforms to the competition and consumer enforcement regime. He responded with the letter dated 21 February, published on 25 February, which we in government welcome as an encouraging step in the right direction that provides a firm basis for further work by both the CMA and the Government.

As all noble Lords who have read the letter and the attachment know, the proposals are wide-ranging and ambitious. They include a greater focus on consumers by introducing a new statutory duty on the CMA to treat the economic interests of consumers and their protection from detriment as paramount; swifter investigation through a new statutory requirement on the CMA to conduct its investigations swiftly, while respecting parties’ rights of defence; stronger powers on competition and consumer enforcement; and a wider set of suggestions, including civil fines for individuals, board-level responsibility for competition and added duties for auditors.

I give an assurance that we intend to consult in due course. The debate introduced by the noble Baroness, Lady Hayter, is a useful start in that direction.

We are also committed to ensuring that those markets work for all. That is why we published the Green Paper last year, looking at how to modernise the approach taken by the CMA and regulators to safeguard consumer rights and protect vulnerable consumers. We want to ensure that our regulatory, competition and enforcement regimes are suitable for the modern economy and the modern consumer. The consumer Green Paper announced that review of alternative dispute resolution, including proposals to strengthen enforcement nationally while maintaining the strong local protections that the noble Baroness, Lady Crawley, with her experience of trading standards, and the noble Lord, Lord Whitty, both believe are important. It announced the smart data review to consider giving consumers more control over their usage data to help them get better deals; performance metrics for consumers in each sector, including information on price differentials; and the creation of a consumer forum comprising Ministers and regulators to ensure joined-up working while respecting regulatory independence.

The consumer White Paper will also set out proposals for the next phase of action to strengthen the consumer regime. The proposals we will set out in our White Paper are based on a clear set of principles. Competition should be central to our approach—the Government should always look to intervene to remove barriers to competition where they arise—but consumers should be able to get redress when things go wrong, so consumer rights should be enforced effectively. Consumers should benefit from new technology and new business models, with competition and regulation working in the consumer interest.

I am running out of time but I wanted to touch on what the noble Baroness, Lady Crawley, referred to as the dog not barking at the elephant in the room—a rather confusing picture but there we are. To touch briefly on EU exit, perhaps I may make clear how we believe that our competition regime would operate post exit.

We will leave the European competition regime at the point of EU exit. The CMA and other regulators will take on responsibility for all anti-trust and merger cases that affect UK markets. Subject to parliamentary approval, the CMA will also take on the role of the UK’s state aid regulator.

In a deal scenario, the current withdrawal agreement makes provision for an implementation period, during which the status quo in competition will be preserved. This means that the CMA and the European Commission will continue to share jurisdiction for the enforcement of anti-trust and merger rules. During the implementation period, we would seek to negotiate comprehensive co-operation arrangements with the EU as part of the future economic partnership, alongside commitments to maintain and enforce effective competition laws. In a no-deal scenario, which we do not believe will happen, the CMA would immediately take jurisdiction over all cases affecting the UK.

My time is running out so I end by thanking the noble Baroness, Lady Hayter, and, more importantly, my noble friend Lord Tyrie for his letter and for what he described as preliminary advice. I assure him that we received that letter; as he knows, my right honourable friend was at its launch, and he and other colleagues in the department take it seriously. We will consider it and, as I said, we intend to consult on it.