Competition (Amendment etc.) (EU Exit) Regulations 2020

Lord Lansley Excerpts

Monday 16th November 2020 Grand Committee

[Lord Lansley (Con) [V]]

I thank my noble friend for his clear and full explanation of these regulations. Perhaps I may start with a little reminiscence. It feels slightly as if I have come full circle because I was a member of the Standing Committee on the Competition Bill in the Commons in 1998. I remember being in opposition at that time and tabling amendments for the purpose of defining the approach to vertical agreements in what became the Competition Act. Nigel Griffiths, who was then the Labour Parliamentary Under-Secretary in the Department of Trade and Industry, said that he thought the amendments were very interesting and might even agree with them. However, he could not possibly accept them because the Government had not yet been told by the European Commission what the structure of vertical agreements would be in the EU regulations. Instead of being rule makers, we were rule takers at that point. We will become rule makers where this is concerned in the wake of our departure from the EU.

Like their predecessors a year or so ago, these regulations set out a comprehensive set of mechanisms for ensuring that there is a transition, without falling through the gaps between EU competition responsibilities and the UK responsibilities being assumed. I will resist the temptation to ask my noble friend about the competition policy aspects of our negotiations with the European Union, albeit that they might in some specific circumstances impact upon how these regulations are interpreted or whether they will survive the deal itself, when we come to legislate for that.

I will make a couple of points, though. For my first, the best example is given by the question of block exemptions for vertical agreements. A number of definitions have to be understood in relation to that, but the one that illustrates the nature of the point I want to make is the threshold of market share for the assumption that a vertical agreement might—not does—have anti-competitive impacts. In the EU regulation, that is a 30% market share.

The issue is: what is the market? Defining the relevant market is very important. There is a whole raft of circumstances in which defining the relevant market when we leave the EU—that is, from 1 January next year—will be a different and potentially debatable proposition. For example, is Northern Ireland in the relevant market for United Kingdom purposes or in the single market? If it is in both, the calculation of the 30% market threshold would be distorted in potentially both jurisdictions. Determining what the relevant market is for a range of different circumstances leads to my first question: what are the Government’s and the Competition and Markets Authority’s intentions relating to the definition of markets in a range of contexts?

My noble friend referred to my second point: the regulations revoke EU regulation 2019/452, which sets up a screening mechanism for foreign direct investment. Appropriately, they revoke it because it will not apply in the United Kingdom. Indeed, as we discovered in recent weeks, it does not apply to the United Kingdom now. It was not introduced in the United Kingdom on 11 October, as it was, in theory, introduced across the EU, but of course in practice only in those member states that have chosen to implement it. Some have; many have not yet. There is a wider move across many EU member states to try to screen for foreign direct investment. It is part of a broader push on the part of the European Commission to understand how far foreign investment and foreign ownership impact on strategic value chains as part of what it describes as strategic autonomy.

In our context, tomorrow the House of Commons will debate at Second Reading the National Security and Investment Bill. What is the point of my referring to this? It is that I wonder whether my noble friend might be able to tell us a little more. It is clearly not the case that the National Security and Investment Bill creates a directly comparable structure to that revoked in these regulations; it is potentially more interventionist than the screening process in the EU regulation, but it is also in its way much less broad in its application. For example, comparing the list of sectors affected, the EU regulation refers to water infrastructure, which is not mentioned in the 17 sectors in the NS&I Bill. The EU refers to elections infrastructure, food security, sensitive information—I am not quite sure what sensitive information is in this context, but the regulation includes it—and freedom and pluralism of the media.

One or two of these issues continue to be covered by the public interest notifications under the Enterprise Act, with which I was involved. Those will continue and will give us potential remedies, but others will not. Indeed, in my view the Enterprise Act needs some amendment for public interest grounds for the media. I hope we will find an early opportunity to do that. So my second and final question to my noble friend is: are the Government considering any further measures to try to screen foreign direct investment and its impact on our critical infrastructure more generally?