Digital Markets, Competition and Consumers Bill

Lord Stevenson of Balmacara Excerpts

Report stage
Wednesday 13th March 2024 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, it is very good to see the full team back on the trading standards amendments. I congratulate all three noble Lords on their championing of trading standards. They need the powers that are being argued for in these amendments; they are the unsung champions of the consumer, and we should support them.

My main purpose in rising is to speak to Amendments 69, 91, 92 and 152. As regards Amendment 69, on misleadingly similar parasitic packaging, it was encouraging to hear the Minister confirm in Committee that the prohibition of misleading actions in Clause 224 and the banned practice in paragraph 14 of Schedule 19 will address the long-standing unaddressed practice of misleadingly similar packaging.

However, those provisions matter little if they are not enforced. During consultations and the debate on the Consumer Protection from Unfair Trading Regulations 2008, the then Government stressed that public enforcement would be effective and efficient. This has not proved to be the case, with just one enforcement action by trading standards in 2008—albeit a successful one. If shoppers are to be protected from this misleading practice, there must be a realistic expectation that the Bill’s provisions will be enforced.

Historically, the Government have placed the duty on public enforcers. That is unrealistic, as trading standards face diminishing resources. The CMA stated clearly that misleadingly similar packaging is a consumer protection, not an IP, issue, following its investigation of the groceries market in 2008. Yet is has undertaken no hard or soft enforcement and did not include it in its recent scrutiny of the grocery sector; there is no sign that it will take a different approach in the future. There are no other realistic public enforcement options available. For the Bill to make a difference, it is essential that affected branded companies are granted powers to bring civil cases using the Bill’s provisions on the specific practice of misleadingly similar packaging alone. It has been ignored by public enforcers for the last 15 years, despite the many examples that appear year on year. Granting affected brand owners such powers would mean that shoppers would have the protection envisaged by the Bill, and affected brand owners would have more effective redress at no cost to the taxpayer.

Amendments 91 and 92 concern an area of concern for the retail industry, expressed by its representative body, the British Retail Consortium, in which I was an active participant more years ago than I care to remember. The well-established and well-used primary authority system enables a business to request assured advice from a primary authority that it has appointed. Provided that the business follows the advice, it cannot be prosecuted by any local authority for its actions. Under the Bill, the CMA will receive additional powers on consumer protection, whereby it will move to administrative fines that are potentially very high. I am informed that the CMA currently refuses either to provide assured advice of its own or to accept primary authority advice. It says that it may not agree with the advice and that it would be too costly, ignoring the fact that it is at a cost to the business. That undermines the primary authority system and will do so even further when the CMA receives its new fining powers because businesses will feel unable to rely totally on primary authority advice for what they are doing in the overlapping areas.

The amendments attempt to deal with that, either by requiring the CMA to provide assured advice itself, as set out in Amendment 91, or, perhaps more practically, by accepting primary authority advice as binding up to the point that it may be repealed if it is shown to be inaccurate, as set out in Amendment 92. That would mean that a business could rely on it for anything it does up to any repeal. It should also be remembered that the CMA can, if it wishes, act as a supporting regulator, whereby it can be called on to provide its view to a primary authority when that authority is looking at providing advice in an area of relevance and overlap to the CMA.

Finally, it should be noted that the CMA has decided to provide what is, in effect, assured advice on competition matters in the sustainability area; namely, it has agreed not to prosecute a business that seeks its advice and follows it in a small area on the competition side. This means that, in principle, the CMA does not seem to be opposed to such an approach. Green claims on the consumer side are a key area of uncertainty for business, an area where assured advice would in fact be most useful.

I turn to my final amendment, Amendment 152. As I explained in Committee, standard essential patents are patents that are necessary to implement an industry standard, such as wifi or 5G. Because the market is locked into a standard, and to prevent abuse of the market power that this situation conveys, SEP owners are required to license their SEPs on fair terms. Unfortunately, there is widespread abuse of this monopoly power by SEP holders. The principal issue raised with me by the Fair Standards Alliance is the threat of injunctions; the costs to many businesses can be ruinous. This tactic not only threatens innovation by UK businesses but represents a strategic risk for UK priorities, such as 5G infrastructure diversification and smart energy network security, by limiting the competing players. The availability of injunctions for SEPs gives foreign SEP holders the ability to prevent others in the UK from entering, succeeding and innovating in those markets.

The Minister, the noble Lord, Lord Offord, gave a somewhat encouraging response in Committee—I keep using the word “encouraging” about his responses, although I keep hoping for better—to the effect that the Government would set out their thinking in the very near future, and that that would include the question of injunctions.

After many months of consultation, the IPO has published its 2024 forward look on this issue. It has reported its findings to Ministers and has agreed key objectives concerning SEPs. Those are

“helping implementers, especially SMEs, navigate and better understand the SEPs ecosystem and Fair Reasonable and Non-Discriminatory (FRAND) licensing … improving transparency in the ecosystem, both pricing and essentiality; and … achieving greater efficiency in respect of dispute resolution, including arbitration and mediation”.

Although the IPO has confirmed that SMEs are especially disadvantaged by the current SEP regulations, it states, disappointingly, on injunctions that

“we have concluded that we will not be consulting on making legislative changes to narrow the use of injunctions in SEPs disputes”,

with very limited justification for the decision, saying simply that it was taken after

“careful consideration of the evidence, operation of relevant legal frameworks and international obligations”.

The Coalition for App Fairness has pointed out to me that a day after the IPO announcement, the European Parliament voted by a large majority to approve its own SEP regulation. The EU framework will include the creation of an SEP register, database and essentiality checks; a defined maximum total royalty for an SEP; and an independent, expert-led conciliation process to establish the fair price for SEPs, which, crucially, will block the use of injunctions while the process is taking place. That seems entirely appropriate. The EU has proved that such a regulatory regime can be delivered; why cannot the UK Government, with all the freedom of Brexit? What is the basis for the IPO decision? What evidence, legal frameworks and international obligations prevent it from dealing with and legislating on injunctions? Why cannot the IPO likewise establish a truly fair SEP licensing ecosystem?

The least the Government can do is give more detail to the many SMEs affected by this decision. The forward look states, rather lamely:

“The IPO will continue engagement with relevant industry and institutions to continue to inform our ongoing policy development and implementation of those actions set out above”.


What on earth does that entail? That is pretty mealy-mouthed. What benefit will there be from that?

[Lord Stevenson of Balmacara (Lab)]

My Lords, this is a wide-ranging group; there is good news hidden in the middle of it, and bad news—we will have to wait for the Minister to respond to get a full picture. Others have spoken in some depth and so I will not try to repeat what has been said. I certainly will not try to follow the noble Lord, Lord Clement-Jones, whose expertise exceeds the combination of everybody’s in the Chamber at present. On SEPs, I can only stand back in amazement that he has been able to understand what is being recommended by the IPO, let alone to have come forward with a plan that might take us a bit further down the track that we clearly ought to have gone down.

I turn first to the questions the noble Baroness, Lady Bennett, raised, which cut to the heart of what, is in some senses, the purpose of the Bill. I am afraid that she rather weakened her case at the end by saying that it was a much broader basis for debate and discussion than could be encompassed within this Bill; I think she saw it primarily as a way of continuing a much larger battle, and I wish her well with that. In that sense, we do not need to take this forward. However, I hope that the Government are taking note of the impacts that some of the provisions in the Bill are having, in the sense that it is not achieving the aims and objectives, which I think we all share, of making sure that we reduce carbon and try to meet targets which have been set for us in the long term on this. Therefore, greenwashing will continue, but we hope that it will be better in scope and that the focus will be more across the range of government activity.

On imitation packaging, as the noble Lord, Lord Clement- Jones, said, we have also been discussing this for a number of years in various Bills as they have come forward, and it is good that the assertion now is that in Clause 224 and Schedule 19, there will be help. However, the question is, of course, enforcement. I would be grateful if, when the Minister comes to respond, he could give us a bit more information about how that might happen in practice.

The questions raised by the noble Earl, Lord Lindsay, and supported by “the team”, as it was described, are a continuation of debates and discussions we have been having in this House for as long as I have been here—and I certainly have participated in them. It is good to see the government amendments in as far as they go, but the three remaining questions, as raised in Amendments 99, 100 and 101, need answers. I hope the Minister will expand on where the Government have taken us so far and give us some assurances.

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[Lord Clement-Jones (LD)]

My Lords, I am not sure that the Minister has a full brief about the nature of the available enforcement. Will he write to me to provide a few more particulars and give more assurance in this respect?

[Lord Stevenson of Balmacara (Lab)]

My Lords, it is important that we unpick the point made by the noble Lord, Lord Clement-Jones, which I think was touched on but not addressed by the Minister. If we rely on civil remedies, we are not really addressing the problem that there is, in effect, an opportunity, for those who wish to, to exercise criminality; this surely cannot be left to the civil courts.

[Lord Offord of Garvel (Con)]

As some clarification is required, I am happy to write further on the matter.

Amendments 70, 71 and 93 to 98 are technical government amendments. The Bill empowers the courts to impose monetary penalties for a breach of consumer law and procedures. To accommodate the different processes by which court orders are served or enforced in Scotland and Northern Ireland, the amendments provide that prescribed penalty information may accompany an order in a separate notice, as well as being contained within it.

On government Amendments 72 to 90, on online interface and the powers of consumer law enforcers to tackle illegal content, I thank noble Lords who have contributed on this important issue. I am pleased to bring forward government Amendments 72 to 90 to give all public designated enforcers take-down powers to tackle infringing online content. The amendments enact the commitment made by the Government in their recent consultation response.

I thank the noble Lord, Lord Clement-Jones, for Amendments 91 and 92. Amendment 91 would require the CMA to provide advice on a business’s compliance with consumer law on request. It would also prevent enforcement action by any enforcer if the advice were complied with. The CMA already provides general guidance and advice on compliance. It is businesses’ responsibility to comply with the law, referring to guidance and seeking independent legal advice where necessary. It would not be appropriate to transform the CMA into a bespoke legal advice service. The amendment would also drain CMA resources from much-needed enforcement activity. Moreover, Amendment 92 compels the CMA to accept primary authority advice received by a business where that advice has been complied with. It is common practice for the CMA to consult the primary authority before taking action; this strikes the right balance and avoids binding the CMA to such advice, thus inappropriately neutering its discretion. I hope the noble Lord will agree that the purpose of a direct enforcement regime is for the CMA to enforce faster and more frequently; these amendments would diminish this objective and remove the deterrent effects of the regime.