Digital Markets, Competition and Consumers Bill

Roger Gale Excerpts

Report stage
Monday 20th November 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Sir Roger Gale)]

With this it will be convenient to discuss the following:

Government new clause 8—Use of damages-based agreements in opt-out collective proceedings.

Government new clause 9—Mergers of energy network enterprises.

Government new clause 10—Power to make a reference after previously deciding not to do so.

Government new clause 11—Taking action in relation to regulated markets.

Government new clause 12—Meaning of “working day” in Parts 3 and 4 of EA 2002.

Government new clause 13—ADR fees regulations.

Government new clause 14—Power to require information about competition in connection with motor fuel.

Government new clause 15—Penalties for failure to comply with notices under section (Power to require information about competition in connection with motor fuel.

Government new clause 16—Procedure and appeals.

Government new clause 17—Statement of policy on penalties.

Government new clause 18—Offences etc.

Government new clause 19—Penalties under section (Penalties for failure to comply with notices under section (Power to require information about competition in connection with motor fuel)) and offences under section (Offences etc).

Government new clause 20—Information sharing.

Government new clause 21—Expiry of this Chapter.

Government new clause 22—Removal of limit on the tenure of a chair of the Competition Appeal Tribunal.

New clause 1—Meaning of “payment account” and related terms—

“(1) ‘Payment account’ means an account held in the name of one or more consumers through which consumers are able to—

(a) place funds;

(b) withdraw cash; and

(c) execute and receive payment transactions to and from third parties, including over any designated payment system.

(2) ‘Payment account’ also includes the following types of account—

(a) savings accounts;

(b) credit card accounts;

(c) current account mortgages; and

(d) e-money accounts.

(3) ‘Designated payment system’ has the same meaning as within the Financial Services (Banking Reform) Act 2013.

(4) ‘Relevant institution’ means—

(a) any bank which has permission under Part 4A of the Financial Services and Markets Act 2000 to carry out the regulated activity of accepting deposits (within the meaning of section 22 of that Act, taken with Schedule 2 and any order under section 22);

(b) any building society within the meaning of section 119 of the Building Societies Act 1986;

(c) any credit institution within the meaning of the Payment Services Regulations 2017;

(d) any authorised payment institution within the meaning of the Payment Service Regulations 2017; and

(e) any small payment institution within the meaning of the Payment Services Regulations 2017.

(5) ‘Discriminate’ means that a relevant institution acts in a way which, were that relevant institution a public authority, would constitute a breach of its obligations under section 6(1) of the Human Rights Act 1998, in so far as those obligations relate to—

(a) Article 8 of the European Convention on Human Rights;

(b) Article 9 of the European Convention on Human Rights;

(c) Article 10 of the European Convention on Human Rights;

(d) Article 11 of the European Convention of Human Rights; and

(e) any of the Articles listed in paragraphs (a) to (d) when read with Article 14 of the European Convention on Human Rights.”

This new clause defines relevant terms for the purposes of NC2.

New clause 2—Rights of consumers in relation to payment accounts—

“(1) A relevant institution must not discriminate against a consumer when deciding—

(a) whether to offer a consumer a payment account;

(b) whether to alter, or vary in any way, the terms of an existing payment account in use by a consumer; or

(c) whether to terminate or otherwise restrict a consumer’s access to their payment account.

(2) A relevant institution, within 30 days of deciding to alter, vary, terminate, or otherwise restrict a consumer’s access to their payment account, or deciding not to offer a consumer a payment account, must provide the consumer with a written statement of reasons explaining their decision.

(3) A written statement of reasons under subsection (2) must clearly specify—

(a) the basis upon which such a decision was taken, including reference to any terms and conditions within the consumer’s contract upon which the relevant institution relies, or reference to any legal obligations placed upon the relevant institution;

(b) all evidence taken into account by the relevant institution in reaching its decision; and

(c) any other matters that had bearing on the relevant institution’s decision.”

This new clause would place a duty on banks, building societies and similar institutions not to discriminate against consumers when offering retail banking services.

New clause 3—Rights of redress—

“Where a relevant institution has acted in breach of its obligations under section [Rights of consumers in relation to payment accounts] (1), the consumer shall have a right to damages in respect of any—

(a) financial loss;

(b) emotional distress; and

(c) physical inconvenience and discomfort.”

This new clause would give consumers a right to redress if discriminated against under NC2.

New clause 4—Enforcement of rights of redress—

“(1) A consumer with a right to damages by virtue of section [Rights of redress](1) may bring a claim in civil proceedings to enforce that right.

(2) The Limitation Act 1980 applies to a claim under this section in England and Wales as if it were an action founded on simple contract.

(3) The Limitation (Northern Ireland) Order 1989 (S.I. 1989/1339 (N.I. 11)) applies to a claim under this section in Northern Ireland as if it were an action founded on simple contract.”

This new clause makes provision for the enforcement of redress under NC3.

New clause 24—Review of Competition Appeal Tribunal—

“(1) The Secretary of State must, as soon the Secretary of State considers reasonable practicable after this Act has been passed, commission a review of all processes involving the Competition Appeal Tribunal.

(2) The Secretary of State must ensure that the review is conducted independently of the Digital Markets Unit and the CMA.

(3) The Secretary of State must lay a report of the review before Parliament.”

This new clause would require the Secretary of State to commission an independent review of the Competition Appeals Tribunal processes.

New clause 25—Duty to treat consumer interests as paramount—

“(1) In applying the provisions of this Act, the CMA and the Courts have an overriding duty to treat consumer interests as paramount.

(2) The duty set out in subsection (1) includes a duty to—

(a) address consumer detriment, including the protection of vulnerable consumers;

(b) expedite investigations that give rise to consumer detriment; and

(c) narrow points of challenge in appeals to CMA decisions that engage consumer detriment.”

This new clause would impose a duty on the CMA and the Courts to treat consumer issues as paramount.

New clause 26—Proceedings before the Tribunal: claim for damages—

“(1) The Competition Act 1998 is amended as follows.

(2) In section 47A, after subsection (2)(b) insert—

“(c) Part 4 of the Digital Markets Act 2023””

This new clause would allow claims for damages in respect of infringements of the provisions of Part 4 of this Bill.

New clause 29—Contract renewal: option to opt in—

“(1) Before a trader enters into a subscription contract with a consumer where section 247(2) applies, the trader must ask the consumer whether they wish to opt-in to an arrangement under which the contract renews automatically at one or more of the following times—

(a) after a period of six months and every six months thereafter, or

(b) if the period between the consumer being charged for the first and second time is longer than six months, each time payment is due.

(2) If the consumer does not opt-in to such an arrangement, the trader must provide a date by which the consumer must notify the trader of the consumer’s intention to renew the contract, which must be no earlier than 28 days before the renewal date.

(3) If the consumer has not—

(a) opted into an arrangement under subsection (1), or

(b) given notification of the consumer’s intention to renew by the date specified under subsection (2),

the contract will lapse on the renewal date.”

This new clause would allow the consumer to opt-out of their subscription auto-renewing every six months, or if the period between payments is longer than six months, before every payment. If the consumer does not opt-in to auto-renewal, they would be required to notify the trader manually about renewing.

New clause 30—Contract renewal: variable rate contracts—

“(1) Before a trader enters into a subscription contract with a consumer where section 247(3) applies, the trader must ask the consumer whether they wish to opt into an arrangement under which the contract renews automatically on the date the consumer becomes liable for the first charge or the first higher charge.

(2) If the consumer does not opt into an arrangement under subsection (1), the trader must provide a date by which the consumer must notify the trader of the consumer’s intention to renew the contract, which must be no earlier than five days before the renewal date.

(3) The trader must also ask the consumer whether they wish to opt into an arrangement under which the contract renews automatically—

(a) after a period of either six months from the first charge or higher charge and every six months thereafter, or

(b) if the period between the consumer being charged for the first and second time is longer than six months, each time payment is due.

(4) If the consumer does not opt into an arrangement under subsection (3), the trader must provide a date by which the consumer must notify the trader of the consumer’s intention to renew the contract, which must be no earlier than 28 days before the renewal date.

(5) If the consumer has not—

(a) opted into an arrangement under subsection (1) or subsection (3), or

(b) given notification of the consumer’s intention to renew by the date specified under (as the case may be) subsection (2) or subsection (4),

the contract will lapse on the next renewal date.”

This new clause would introduce an option for the consumer to opt-out of their subscription auto-renewing after their free or discounted trial. Otherwise, they would have to notify the trader manually about the subscription continuing. It also introduces an option for the consumer to opt-out of their subscription auto-renewing.

New clause 31—Regulatory burdens arising from competition and consumer regulation—

“(1) The CMA must, at least once a year, publish a report setting out its assessment of the economic cost of regulatory burdens that have been created and removed over the previous year through the exercise by public bodies of—

(a) competition and consumer powers; and

(b) the following activities, as far as they relate to competition and consumer matters—

(i) the imposition of conduct requirements;

(ii) dispute resolution and public enforcement activities;

(iii) the monitoring of undertakings, and

(iv) the issuing of regulatory orders.

(2) The Secretary of State must ensure that public bodies provide the CMA with information the CMA considers is necessary for completion of the report.

(3) The Secretary of State must ensure that the net economic cost of regulatory burdens set out in the report is zero or less in every year.

(4) In this section a “regulatory burden” means a burden as defined in section 1(3) of the Legislative and Regulatory Reform Act 2006.”

This new clause places on Ministers a permanent duty to ensure that the net economic cost of burdens from competition and consumer regulation is zero or less each year.

Government amendment 69.

Amendment 207, in clause 141, page 89, line 13, at end insert—

“(c) the collective interests of consumers include avoiding any detriment that might be incurred by consumers if the United Kingdom does not reach a level of net zero carbon emissions by 2030.”

This amendment would mean that part of the test of whether a commercial practice had committed an infringement would be whether the commercial practice had failed to protect consumers from any detrimental effects arising from a failure to achieve net zero by 2030.

Government amendments 70 to 79, 81, 82 and 85.

Amendment 226, in clause 224, page 150, line 27, at end insert—

“(4A) Where a commercial practice has been found to be unfair under paragraph 32 of Schedule 18 of this Act, any body listed as a public designated enforcer in section 144(1) of this Act may require the removal of the relevant online marketing from the internet.”

This amendment allows enforcement bodies to remove the marketing of fake or counterfeit products from the internet.

Amendment 208, page 150, line 29, at end insert—

“(6) An established means used to encourage control of unfair commercial practices must include the following measures—

(a) investigation and determination on a timely basis—

(i) in accordance with a pre-determined process which has been published on the internet,

(ii) by people who are independent of any organisation undertaking commercial practices, and

(iii) with the outcome of any decision published.

(b) the appointment of a board to oversee the investigation and determination process, with the majority of the members of the board independent of any organisation undertaking commercial practices;

(c) provision for the suspension of a commercial practice during an investigation and prior to a determination being made;

(d) provision for guidance to be issued, by the CMA, the relevant weights and measures authority or, if the established means is an organisation, the established means itself, about the lawfulness of a commercial practice;

(e) publication of statistical and other information about the operation of, and compliance with, the established means to enable the CMA or weights and measures authority in question to assess on an annual basis the continuing appropriateness of using the established means.”

This amendment sets out conditions, including in relation to independence and transparency, for the means by which the control of unfair commercial practices will be encouraged.

Government amendments 86 to 93.

Amendment 210, in clause 251, page 166, line 24, leave out “six” and insert “twelve”.

This amendment would provide for traders to have to issue reminder notices to consumers about ongoing subscription contracts only every twelve months, rather than every six.

Amendment 211, page 166, line 36, leave out subsection (5) and insert—

“(5) The Secretary of State may, by regulations, make reasonable provision for the content and timing of reminder notices.”

This amendment, together with Amendments 212 and 213, would remove the detailed provision about the content and timing of reminder notices from the face of the Bill and instead give the Secretary of State the power to make such provision by regulation.

Government amendment 94.

Amendment 212, page 167, line 1, leave out Clause 252.

See explanatory statement to Amendment 211.

Government amendments 95 to 98.

Amendment 214, in clause 253, page 168, line 7, leave out “in a single communication” and insert

“in a manner that is straightforward, timely and does not impose unreasonable cost on a consumer”.

This amendment, together with Amendments 215 to 218, would remove from the Bill the existing detailed provisions for ending a subscription contract, intending that they should be covered by provision made in secondary legislation under the provisions of clause 270(1)(c), and instead set principles for how a contract may be ended.

Amendment 215, page 168, line 10, leave out subsection (2).

See explanatory statement to Amendment 214.

Amendment 216, page 168, line 15, leave out subsection (4).

See explanatory statement to Amendment 214.

Amendment 217, page 168, line 23, leave out subsection (6).

See explanatory statement to Amendment 214.

Amendment 218, in clause 254, page 168, line 37, leave out subsections (3) to (5).

See explanatory statement to Amendment 214.

Government amendments 99 and 100.

Amendment 219, page 170, line 25, leave out clause 257.

This amendment, together with Amendments 220 to 222, would remove the provision for a mandatory cooling-off period for a subscription contract.

Amendment 220, page 171, line 19, leave out clause 258.

See explanatory statement to Amendment 219.

Amendment 221, page 172, line 18, leave out clause 259.

See explanatory statement to Amendment 219.

Government amendments 101 to 103.

Amendment 222, in clause 272, page 180, line 25, leave out subsection (5).

See explanatory statement to Amendment 219.

Government amendments 104, 105, 107, 109, 110, 112 to 147 and 150 to 152.

Amendment 223, in clause 317, page 221, line 35 leave out “subsection (2)” and insert “subsections (2) and (2B)”.

This amendment and Amendment 224 would provide for an implementation period of two years before the provision in the Bill relating to subscription contracts comes into force.

Government amendments 153 and 154.

Amendment 224, page 222, line 6, at end insert—

“(2B) Chapter 2 of Part 4 comes into force two years after the day on which this Act is passed.”

See explanatory statement to Amendment 223.

Government new schedule 1—Mergers of energy network enterprises.

Government amendments 155 to 163.

Amendment 225, in schedule 18, page 343, line 42, at end insert—

“32 At any stage of a purchase process, presenting a price for a product which omits obligatory charges or fees (or an estimate thereof) which are payable by the majority of consumers, which are not revealed to the consumer until later in the purchase process.”

This amendment adds the practice of “drip-pricing”, a pricing technique in which traders advertise only part of a product’s price and reveal other obligatory charges later as the customer goes through the buying process, to the list of unfair commercial practices.

Amendment 227, page 343, line 42, at end insert—

“32 Marketing online products that are either—

(a) counterfeit; or

(b) dangerous.”

This amendment would add marketing counterfeit and dangerous online products to the list of banned practices.

Government amendments 164 to 170.

Amendment 228, in schedule 19, page 350, line 30, at end insert—

“Non-commercial society lotteries

13 (1) A contract under which a lottery ticket or tickets are purchased for one or more non-commercial society lotteries.

(2) In sub-paragraph (1), “non-commercial society” has the meaning given by section 19 of the Gambling Act 2005, and “lottery ticket” has the meaning given by section 253 of that Act.”

This amendment seeks to exclude lottery tickets purchased for non-commercial society lotteries from the scope of the provisions on subscription contracts.

Government amendment 171.

Amendment 213, in schedule 20, page 354, line 19, leave out paragraphs 28 to 38.

See explanatory statement to Amendment 211.

Government amendments 172 to 175.

[Kevin Hollinrake]

May I first echo the remarks about the excellent address by the Under-Secretary of State for Science, Innovation and Technology, my hon. Friend the Member for Meriden (Saqib Bhatti)? I welcome him to his place—he did a fine job on his first outing in such a complex debate.

I, too, am delighted to bring the Digital Markets, Competition and Consumers Bill to the House on Report. May I express my gratitude to colleagues across the House for their contributions to Second Reading and Committee stages, and for their continued engagement throughout its passage? I thank in particular the hon. Members for Pontypridd (Alex Davies-Jones) and for Feltham and Heston (Seema Malhotra) for their constructive engagement and commitment to seeing the Bill delivered quickly so that its benefits can be realised. I also thank my hon. Friend the Member for Weston-super-Mare (John Penrose) for his excellent engagement—over the weekend in particular—and my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland) for his many important and relevant amendments.

The reforms to the competition and consumer regimes contained in parts 2 to 5 of the Bill will grow the economy and deliver better outcomes for consumers and bona fide businesses. Consumers will have more choice and protection, and pay lower prices. Businesses will operate on a fairer and more level playing field. The reforms will do that by enhancing the wider competition regime, strengthening the enforcement of consumer protection law, and putting in place new consumer rights and more transparency.

It is a simple fact that the way in which we buy products and services today very often involves a digital process. The opportunities that follow are vast—more accessibility, flexibility and choice for consumers—but there is also a greater risk of consumer harm, including, for example, consumers being trapped in a subscription contract that they no longer want or purchasing goods that may not be up to scratch because they unknowingly relied on a fake review. We must ensure that consumers and their cash are protected.

Swifter interventions to tackle bad business practices against consumers are expected to deliver a consumer benefit of £9.7 billion over 10 years, as UK consumers benefit from new rights, stronger law enforcement and more competition through merger control. Importantly, the reforms will also grow the economy by boosting competition, better placing the UK to succeed in export markets. It will allow the Competition and Markets Authority to more effectively deter, prevent, and, where necessary, enforce against monopolistic behaviours. That will ensure that the free market can operate effectively.

The Government amendments to parts 2 to 5 of the Bill will provide greater clarity, ensure coherence with related legislation, and make sure the Bill’s measures meet their intended aims. Almost all the amendments are technical in nature. I will address them across four categories: competition, consumer enforcement, consumer rights and cross-cutting provisions.

First, the competition measures in the Bill will give the CMA new powers to enable it to tackle anti-competitive activity swiftly and effectively, meaning that it can focus its work on the areas of greatest potential harm. The competition environment is complex and ever evolving. We must respond carefully but decisively to changes in the judicial and legislative landscape to provide certainty and to avoid any unintended detrimental consequences of wider developments.

New clause 8 amends the Competition Act 1998 so that the absolute bar on damages-based agreements being relied on in opt-out collective actions will not apply to third-party litigation funding agreements, which are the main source of funding for that type of action. That responds to a recent Supreme Court judgment, and effectively restores the previously held understanding of the status of litigation funding agreements under the 1998 Act. Accordingly, it will have retrospective effect.

In response to a recent Competition Appeal Tribunal judgment, we are specifying the circumstances in which a market investigation reference may be made in relation to an area that has already been the subject of a market study but was not referred for further investigation at that time. We are also bringing forward a series of amendments to ensure alignment between this Bill and the Energy Act 2023, which introduced the energy network merger regime, and to make minor corrections to provisions relating to that regime. Separately, we are repealing paragraph 8 of schedule 3 to the 1998 Act to remove a redundant reference to the treaty establishing the European Coal and Steel Community. To ensure that the implementation trials for market remedies introduced by the Bill are as effective as possible, we are introducing new powers for the Secretary of State to extend the scope of implementation trials in the markets regime to include regulatory conditions.

I will now address the new direct consumer enforcement model. That model will enable the CMA to act faster and take on more consumer cases on behalf of the public, resulting in a further estimated direct benefit to consumers of tens, or potentially hundreds, of millions of pounds. The Government have tabled a series of technical amendments to increase certainty in respect of the CMA’s operational duties. They include aligning the definition of “business” in part 3 of the Bill with that in part 4 of chapter 1 to ensure that any breaches of unfair trading prohibitions can be enforced through the regime; and making provision about information-sharing between public authorities so that enforcers can obtain the information that they need to take enforcement action under part 3 of the Bill.

On appeals, we are adding a requirement for the CMA to include information about applicable appeal rights in a final breach-of-directions enforcement notice, as well as empowering the appeal court to send issues back to the CMA for decision on certain notices. We are also empowering the Secretary of State to update through regulations the specified maximum amounts for fixed and daily penalties imposable by a court or the CMA when a business breaches a formal information request.

Moving on to consumer rights—I am sure this will interest many Members across the House—the purpose of the Bill is simple: to empower consumers to get the deal that is right for them, and to increase their confidence in the products they buy and the services they use. The new rights on subscription traps will give consumers more control over their spending. Such traps have been the subject of some debate during the passage of the Bill, and the Government are introducing amendments to remove unintended consequences.