Digital Markets, Competition and Consumers Bill

Lord Tyrie Excerpts

Committee stage
Monday 22nd January 2024 Grand Committee

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have spoken. I very much echo the thanks expressed by the noble Baroness, Lady Harding, to all the companies and business that have given evidence and come forward to speak to us. It is true that, for a number of them, they have taken risks to do that. It is a sad fact of life now that their very survival could be at stake if some of their concerns become public. That is why we are here today, I suppose. That is where the market has left us and there is a need to address that.

To pick up on the points made by the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Harding, about the CMA’s assessment, I think that we have had a useful discussion with the Minister around all that. I certainly want to look at Hansard and at the reassurances that the Minister has tried to give on this. I very much take the point, incidentally—as mentioned by the noble Viscount, Lord Colville, in moving his amendment—that SMS status does not mean that they have done anything wrong, so I do not want to get too hung up about giving that status in the first instance. What is important is how we follow that up and look at their behaviour going forward. As the noble Lord, Lord Clement-Jones, spelled out, there is a danger that, if we are not careful, those who are given that category will game the system. That is what we are all anxious about.

I am not sure that the wording achieves what the Minister wants. I think that we are all genuinely clear on the outcomes that we want, as the Minister said, but the current wording does not achieve that. The five-year forward plan is playing into the hands of the wrong people, and we will not come out with the outcomes that we want if we stick with the current wording, so I very much welcome the chance to have further discussion about that.

[Lord Tyrie (Non-Afl)]

Before the noble Baroness leaves that point, I strongly endorse what she says. I make the point that we are here debating a set of powers that we would, in most contexts, otherwise consider extremely draconian, because there has already been abuse and market power has already been exercised in ways that we all consider unacceptable. That is why we need clarity on this point. We do not need to look into the crystal ball—we can read the book.

[Baroness Jones of Whitchurch (Lab)]

I thank the noble Lord very much for that insight. He is absolutely right, of course. We all understand his wealth of experience; it is very helpful to have his support on that issue.

I pick up on the amendment tabled by the noble Viscount, Lord Colville, to which the noble Lord, Lord Clement-Jones, and I have added our names. He rightly raised that the significant powers given to the Secretary of State to vary the conditions would lead to tech companies being considered to have strategic market status. As my noble friend Lord Knight said, the list in Clause 6 is quite generic. In a sense, that should be enough for us. None of the things in Clause 6 is time limited, so it should be enough for the CMA and the DMU to do their work.

There is concern, therefore, about how the Bill is currently worded, as it does not give any constraints to the Secretary of State to change the conditions, apart from the affirmative SI—and we can all rehearse the arguments about what that means for parliamentary accountability. The Minister might say that it is necessary to add new conditions if new anti-competitive practices come to light, but I feel that the current wording—and I think that the noble Viscount feels this, too—allows not just for new anti-competitive practices but for the current conditions to be watered down. That is our real concern. The noble Viscount gave an example about specifying particular forms of market practice, such as online sales and delivery, which would then apply to only one or two companies and not the ones that, as I think we all understand, should be in the frame. I was not absolutely convinced by what the Minister said on this issue. It is a bit of a running theme and, as several noble Lords said, we will come back to the issue of parliamentary scrutiny. Perhaps we can look at that in the round at a future point.

The Minister will be pleased to know that I support the government amendments. They make good sense and give clarification in the Bill, which we always like.

We continue to believe that Amendment 1 is necessary to enable the CMA to proceed with speed once the Bill is on the statute book. Nothing the Minister has said so far has persuaded me that the silence in the Bill on this issue is sufficiently reassuring. I hope that we can find a form of words—if not ours then a different form of words—that will allow the CMA to look backwards, giving it absolute reassurance that it can do so and that it will not have to repeat any of its activities. This is all about tightening up the wording. We will reflect on what the Minister said, and I hope that we can talk about this some more. In the meantime, I beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Jones of Whitchurch (Lab)]

My Lords, in moving Amendment 8, I will also speak to my Amendments 9, 10, 13, 35, 37, 42, 45, 46, 57 and 58. I thank my noble friend Lady Ritchie, the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Harding, for adding their names. The noble Lords, Lord Clement-Jones and Lord Tyrie, have some other amendments in this group to which I will respond at the end of this debate. However, I can confirm that we support the thrust of the noble Lords’ amendments and look forward to hearing their more detailed arguments in due course.

As I made clear at the outset, our concerns with this Bill are mainly about the detail, in particular the changes made by the Government at the very last minute on Report in the Commons. We support the model that is being proposed, although we share some of the concerns that will come up in this debate and in later ones about the extent of the widespread powers that have been given to the CMA and the DMU in respect of the big tech players, in particular their application to those being given strategic market status. The corollary to the decision to introduce this new approach is that the new power should be set out clearly in statute, which is the point that we have made, and that when it is used the DMU will need to be open and transparent to all those who have a legitimate interest.

There must be no question that the smaller challenger firms which—for various understandable reasons—may not be fully informed about discussions and negotiations between the DMU and potential SMS firms need to be able to access information about the regulatory framework and potential changes to it on an equal basis as the firms being considered for SMS status. How else will we achieve the balance that we are all aiming for in this Bill? Our amendments in this and other groups address this issue.

When this came up in the Commons, Minister Saqib Bhatti said:

“the Government agree that it is important that the DMU’s regulatory decisions are transparent and that the right information is available to the public”. —[Official Report, Commons, 20/11/23; col. 74.]

We agree with that. With respect, however, the DMU publishing summaries of decisions reached completely misses the point we are trying to make. The DMU must ensure that it has all the information it needs, including all the information held by challenger firms, before it makes decisions about SMS status and related matters. Challenger firms may have a different view of what SMS means to their businesses and consumers and it is unlikely that they will have perfect information about the DMU’s thinking. They will, however, certainly want to be engaged in the issues if they are made aware of them at the right time.

Many of us attended a helpful meeting with the CMA last week, where this issue was raised. It became clear that it already has good relations with a number of the bigger challenger firms. However, given that it is investigating anti-competitive behaviour, it is also clear that there will be many smaller start-up companies that will never be given a chance to get established because of the behaviour of the big players. We have a real concern about how we can make their voices heard too. We run the danger that the DMU will contact only the people it already knows about and will not hear from those who are perhaps most squeezed out of the process being investigated.

Our suggestion is that the DMU should have a statutory duty to send decision notices to third parties that it assesses are likely to be most affected by such a decision. To us, this does not seem to be unduly burdensome to the DMU. One could argue that a failure to know which challenger firms are likely to be affected could be very injurious to consumers and the economy at large. In the Commons, the Minister said he thought there would be “limited benefits” to introducing this requirement. I do not think the Government have made the case on this point and I hope they will think again. I also hope that they and the Minister will listen carefully to the points made in this debate.

In the last few weeks, we have met and received submissions from many challenger firms concerned about the Government’s position on the issue. They support the Bill but worry about the imbalance, as they fear it will have a deleterious effect on the regime. They have all made it clear that they support our amendments. I hope the Minister will be able to agree with our arguments. We think there is a strong case for involving the challenger firms at an earlier stage and giving them far more information. I would like to hear how and when the Government intend to do that. I beg to move.

[Lord Tyrie (Non-Afl)]

I declare a number of general interests with respect to this Bill. I am on the advisory board of BSV, a consumer class action being taken against crypto exchanges; I act as a consultant to DLA Piper; I have also had contact with many companies, several platforms and their advisors and many consumer groups about the Bill. As a former chairman of the CMA, I had a significant hand in constructing large parts of it. It is important that others bear in mind that anything I say on this is from the perspective of having been there for enough time to have taken too many of its ideas to heart. In fact, I have been lobbied in all directions on this Bill and for so long that I am losing count of which direction the lobbies all come from.