Digital Markets, Competition and Consumers Bill

Lord Wolfson of Tredegar Excerpts
Lord Etherton Portrait Lord Etherton (CB)
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My Lords, I thank the Minister for his comments on Amendment 70 in my name. As he indicated, it would enable consumers to bring collective proceedings where there has been breach of requirements specified in Clause 101. The amendment would also require the Secretary of State to conduct a review to ascertain whether there are any other types of claim appropriate for collective proceedings.

Under current procedural rules of the court in England and Wales, there are very limited circumstances in which more than one person can bring proceedings, even though they may have suffered harm or loss from the same defective product or conduct. A single set of proceedings with multiple claimants could not be brought, for example, where the harm or loss was suffered on different occasions and in different circumstances. Representative proceedings—or class actions, as they are usually called—would overcome these limitations.

Chapter 7 of Part 1 of the Bill, dealing with enforcement and appeals, makes provision for individual claims in the Competition Appeal Tribunal or to a court for breaches of requirements, such as conduct requirements and pro-competition orders following pro-competition interventions. There is no provision in the Bill or elsewhere enabling consumers and businesses to make collective redress where multiple parties have been harmed by the same breach. In many cases, individual consumers and small businesses will be unable to finance proceedings. Furthermore, the knowledge of the likelihood of such a difficulty will be a disincentive to those who are subject to conduct requirements and pro-competition interventions to comply with their obligations.

Provision for collective proceedings, or class actions, is made in the Competition Act 1998, as amended by the Consumer Rights Act 2015. However, that provision applies only to breaches of competition law. The Bill provides an excellent opportunity to extend the availability of such proceedings to cases where numerous consumers have suffered from the same defective goods or conduct. The Competition Appeal Tribunal is now well used to representative proceedings in competition cases and is well aware of how best to handle them. This is an important opportunity for the Government to increase accessibility to justice to those who would otherwise not have the financial ability to bring proceedings, especially against large and well-funded entities. The Government should grasp it.

Lord Wolfson of Tredegar Portrait Lord Wolfson of Tredegar (Con)
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My Lords, it is a pleasure to support the noble and learned Lord, Lord Etherton, in this amendment, which he has proposed extremely clearly; I can therefore be relatively brief. However, I probably have the most difficult feat of advocacy ahead of me. Normally in these circumstances one is trying to persuade the Minister to depart from the written brief in front of him, but now I have to persuade him to depart from the written brief which he has already read out, so I feel as though we know the answer to the question I am about to pose. None the less, I will proceed. I refer to my interests in the register as a practising barrister, including, as I will mention in a moment, practising in the Competition Appeal Tribunal, popularly known as the CAT.

It is a fundamental principle of the rule of law that there ought to be an effective means for legal rights to be vindicated. Having a legal right without the ability to vindicate it is not of much use. There are areas of law where a breach of legal duty may affect many consumers, but it is likely to affect each of them minimally. Although such affected consumers can in theory bring a claim for damages, it is rarely worth their while because of the small amount of each individual claim. The irrecoverable legal costs—I again declare my interest—will swamp any damages recovered, even if the claim is successful. There is also the risk of an adverse costs order if the claim fails. The real-world effect is that these claims are brought only by large claimants who have suffered large losses. That means that legal rights are not in practice vindicated. That is, in effect, a gap in our justice system.

In order to make access to justice possible for consumers in these cases, and to create a means of effectively enforcing competition law, a class action regime was introduced into the Competition Act 1998, in Section 47B. That section does not create any new rights; it creates a new process for the more effective enforcement of existing rights. It does this by enabling individual claimants to pool their claims and have them brought by a class representative. The class representative does the running in terms of preparing, funding, and bringing the action. The individual class members tend to have very little to do, other than to receive their damages when they are awarded. Importantly, there is no exposure to adverse costs orders.

This regime has been very successful. There is a high degree of expertise, both procedural and economic, in bringing such claims, and for that reason, the Competition Appeal Tribunal is the only forum in which such claims can be brought. I am instructed in such cases in the CAT, both for potential claimants, through the class representative, and also for defendants. While there are a few rough points which need to be smoothed out, as in any new jurisdiction, there is no doubt that the jurisdiction is bedding down extremely well. There are specialist judges sitting in the CAT, and there is now a range of specialist practitioners, in London and elsewhere, who appear in it.

Clause 101 creates a new data right, which is unlikely to see much use, I suggest, unless it is collectivised—in other words, brought subject to the same regime so that right can be vindicated in the same way. The main thrust of the amendment to which I have added my name is that the class action regime in Section 47B be expanded to include such claims, which would benefit from better access to justice, and, really importantly, would avoid leaving claimants with a right but with no effective remedy.

Baroness Stowell of Beeston Portrait Baroness Stowell of Beeston (Con)
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I wanted to intervene briefly. I do not have an amendment in the group, I have not signed my name to any, but I wanted to piggyback on the introduction of the issue of private litigation to ask a question that has been put to me by one of the big tech firms. I thought it was a reasonable question, even though it was not one I felt moved to table an amendment on. I suggest to my noble friend the Minister that he might find it easier to reply by means of a letter to me that he can put in the Library of the House, rather than taking up time.

The question is why, in this Bill, if somebody wants to bring a private litigation, there is no provision for the CMA to be required to give consent before an action can be taken by way of private litigation. In contrast, in the Communications Act 2003, Ofcom’s consent is required before private litigation is taken on a matter that refers to conditions imposed on the various companies that come under its auspices. The relevant part of the Communications Act is Section 104, where claimants must obtain permission from Ofcom to bring private enforcement claims alleging a breach of the conditions that have been set by Ofcom: they cannot simply file a claim whenever they wish. The Act says:

“The consent of OFCOM is required for the bringing of proceedings by virtue of subsection (1)(a)”.

The purpose of this is to give Ofcom a sort of gatekeeping role and prevent overlapping, or private litigation happening while something is being carried out by the regulator.

I thought it was a worthwhile question and I am happy to ask it. The other issue that has been raised with me is that in these private litigations, the contentious countervailing exemption that we discussed in an earlier group is not available to the big tech firms in the same way that it is available to them in the procedure that is set out in the Bill.

I have given the Bill team notice of these questions. I know that they have some very good answers, and I suggest to my noble friend that he asks his officials to convert that into a letter that he can put into the public domain.

Digital Markets, Competition and Consumers Bill Debate

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Department: Department for Business and Trade

Digital Markets, Competition and Consumers Bill

Lord Wolfson of Tredegar Excerpts
If I had been quicker off the mark, I would have added my name to Amendment 59, in the name of the noble Baroness, Lady Jones. This would give the CMA a duty to further the interest of citizens as well as consumers. I am deeply concerned that, across all Bills in this policy area, the Government are failing to raise their gaze to the future. We can take one certainty from the last decade or two: what may be okay for today’s consumer may not be okay for tomorrow’s citizen. We have seen this in the past when a decade and a half of untrammelled exploitation of children by social media companies was allowed. We will see it in the near future, as the battle for the water and energy needed for large computational models hots up. Neither the market nor the business model is yet a settled fact, and AI will certainly change the gatekeepers and the market hugely. Adding “citizen” would allow the CMA to take a more sophisticated approach to market analysis. It protects the UK public, many of whom are impacted by these markets even when not directly engaging.
Lord Wolfson of Tredegar Portrait Lord Wolfson of Tredegar (Con)
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My Lords, I added my name to Amendment 49, which was opened in detail by the noble and learned Lord, Lord Etherton. Therefore, and also because we are on Report, I can be extremely brief. I declare my interest as a barrister. I practise, among other places, in the Competition Appeal Tribunal, for both applicants and respondents. I will make two short points, although they are linked.

First, Clause 101, particularly subsection (1), provides individual rights to consumers. Having done so, we must find an effective method to enable those consumers to vindicate those legal rights. There is no point Parliament passing laws that provide people with individual rights if there is no effective real-world mechanism for those people to vindicate and enforce those rights. Not only is that a basic proposition of the rule of law, as the noble learned Lord, Lord Etherton, said, but this otherwise risks us engaging in a legislative form of Tantalus, where we place rights just in front of people: they can see the rights, but they cannot grasp and actually use them. I submit that that would be wrong in principle. If we are going to enable people to vindicate their rights, the obvious place—in fact, the only place in our current legal system—is the Competition Appeal Tribunal, where, as the House has heard, there is already experience in both opt-in and opt-out collective proceedings.

Secondly, in Committee, it was suggested that perhaps all these rights should be exercised through the regulator, and there is therefore no need for the collective proceedings. Sometimes the law does that: sometimes we pass laws that mean that people have to go through a regulator, or sometimes an officeholder, in order to vindicate their individual positions. But we have taken that decision of principle in Clause 101(1): we have given rights to individuals and consumers in the Bill. Given that, it seems to me that the only sensible course is to provide an effective mechanism for people to vindicate their rights.

Finally, while I am on my feet, I add my voice to Amendment 13, proposed by the noble Lord, Lord Faulks. I certainly agree with what he said about proportionality. I add only this, as the sort of person who might be making this argument in future. It would be all the more easy and attractive for counsel if “proportionate” was left in the legislation, having had this debate, and for them then to say, “Oh well, Parliament must have meant a merits review, because it went into it with its eyes open”. The noble Lord, Lord Faulks, and my noble friend Lord Lansley eloquently set out the consequences of leaving the word in. Therefore, if we now leave the word in, it will be even easier for counsel—I declare again the obvious interest—to make the ingenious argument. Having had that amendment explained, it seems to me all the more important that we take the right decision in relation to it.

Lord Clement-Jones Portrait Lord Clement-Jones (LD)
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My Lords, it is a pleasure to follow that piece of logic. I do not need to speak for very long in support of the many important amendments that have been spoken to in this group. The Minister, in Committee and in his welcome letters and meetings, has attempted to rebut the need for them—but I am afraid that, in all cases, their proponents have been rather more persuasive in wishing to see the CMA unambiguously able to exercise its powers.

In a different context, the Communications and Digital Committee, chaired by the noble Baroness, Lady Stowell of Beeston, in its report on large language models, said that there was a considerable “risk of regulatory capture”. Mindful of that, we need to make sure that the CMA has those powers.

I turn to the amendment proposed by the noble Lord, Lord Faulks, and his argument about the dangers of introducing proportionality, also spoken to by the noble Lord, Lord Wolfson. On these Benches, we fully support having that provision in the Bill, as in the noble Lord’s Amendment 13. Human rights for big tech is not really a slogan that I am prepared to campaign on.

The noble Baroness, Lady Jones, will no doubt introduce her Amendments 43, 46, 51 and 52 on appeal mechanisms for penalties, which differ from all the other decisions of the CMA. We very much support her in those amendments, and we have signed them. I also support the noble Baroness’s Amendment 59. The Minister took the trouble to write, explaining why the Government did not consider including a duty to citizens, but sometimes such clarification, as in this case, makes us only more enthusiastic for change. I am afraid that citing overlap and the creation and operation of the DRCF is not enough; nor is citing the risk of regulatory overreach, given its inclusion 20 years ago in the Communications Act. We agree with the conclusions of the original task force.

We also support the noble Lord, Lord Lansley, on the importance of placing time limits on the Secretary of State in approving the CMA guidance under the digital markets provisions of the Bill, in Amendment 56. Although I believe that the noble Baroness, Lady Stowell of Beeston, will not be pressing it to a vote, we very much support her in her relentless campaign for improved parliamentary scrutiny. This has been identified by so many parliamentary committees, not least by the Industry and Regulators Committee on which I sit. It seems extraordinary that we are still waiting to implement the kind of solution that she is putting forward, and I hope very much that the House will take forward her suggestion.

We also very much support in principle the amendment proposed by the noble and learned Lord, Lord Etherton, on collective proceedings. He may not press the amendment to a Division today, but this is a vital change that we should make to ensure that rights in this area can be properly exercised and enforced. If the noble Lord, Lord Faulks, seeks the opinion of the House on his Amendment 13, the noble Baroness, Lady Jones, on her Amendment 43, and the noble Lord, Lord Lansley, on his Amendment 56, we will support them.