Digital Markets, Competition and Consumers Bill

Sarah Olney Excerpts

2nd reading
Wednesday 17th May 2023 Commons Chamber

[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats warmly welcome the measures in this Bill that will enable the Competition and Markets Authority to counter the dominance of big tech firms and encourage real competition and dynamism across the sector. It is a real pleasure to speak in such a good debate on well-drafted legislation that has broad support from across the House. Credit is due not only to the hon. Member for Weston-super-Mare (John Penrose) and the hon. Member for Bristol North West (Darren Jones), who are not in their places but who have worked very hard on this Bill, but to the Competition and Markets Authority for all its work throughout the consultation stages and in designing this pro-competition regime.

I am pleased the Government have acted on the CMA’s recommendations and are introducing this Bill to the House. The Liberal Democrats want to see a thriving British tech sector, where start-ups can innovate, create good jobs and launch new products that will benefit consumers, and a strong competition framework that pushes back on the dominance of the tech giants is essential for that.

For too long, smaller, dynamic start-up companies have been driven out of the market or swallowed up by big tech firms that see the existence of other players in the market as a potential threat. We are therefore pleased to see greater powers awarded to the CMA to investigate the takeover of small but promising start-ups that do not meet the usual merger control thresholds, as well as the other key pro-competition interventions. The update to the competition framework provided for in the Bill is also particularly important for growth industries such as artificial intelligence and virtual reality, which are in their infancy but have great potential both for positive contributions to our economy and for competition disadvantage.

Consumer protections form another part of the Bill; the new rules and powers awarded to the CMA to protect consumers in parts 3 and 4 of the Bill are well overdue and will benefit many of our constituents. In particular, like many hon. Members who have spoken already, the Liberal Democrats are pleased to see the measures designed to tackle subscription traps by increasing transparency, making it easier for consumers to end those sorts of contracts and clamping down on fake reviews.

While we are glad that most of the CMA’s recommendations are included in the Bill, we have concerns over certain aspects that would benefit from further consideration and clarification. I think I join with the hon. Members for Warrington South (Andy Carter) and for Salford and Eccles (Rebecca Long Bailey) —we have proper cross-party agreement here—when I say that I am very concerned about the Bill’s countervailing benefits exemption. It might allow some large tech firms to get away with anti-competitive practices and to evade conduct requirements by arguing that the benefits to users outweigh the negative consequences for competition. The broad nature of the exemption risks significantly undermining the entire regime by limiting the efficacy of the conduct requirements. We will therefore seek to tighten the definition of what benefits are valid as the Bill progresses through the House.

The Liberal Democrats are also concerned that the Digital Markets Unit will designate firms as having strategic market status based on an assessment of their entrenched market dominance five years into the future. Future dominance is hard to predict and we have seen rapid change in the tech sector over the past 20 years. We would never have imagined in the late ’80s or early ’90s the dominance that firms such as Google and Apple would have in the market at the turn of the century.

We are concerned that that ambiguity could allow firms wide scope to challenge their SMS designation and fall outside the Digital Markets Unit’s regulatory framework. Above all, we urge the Government to resist pressure to water down the measures in the Bill, which could allow tech giants to continue anti-competitive behaviour. In other countries such as Canada and Australia, we have seen how firms such as Google have responded to tougher regulation of big tech by restricting access to domestic news on their platforms. It is imperative that the UK Government do not bend to any such pressure and reject attempts to water down legislation or weaken it through loopholes.

As the Bill progresses, we must also ensure that there is no ambiguity in its drafting that could be open to exploitation. It is important to remember that it is not only tech companies that require a level playing field to operate in the digital economy; small businesses across the country are increasingly moving their operations online, and many now rely on digital platforms such as online marketplaces, yet current unfair market practices mean that many find themselves vulnerable to exploitation, causing economic harm and stifling innovation. Unlike larger firms, many small and microbusinesses do not have the resources to take action when they are treated badly, and Trading Standards is powerless to act on their behalf due to a significant lack of resource and an outdated operating model still based on local authorities.

One key concern of small businesses operating online, and the best example of that power imbalance, is infringement of intellectual property rights. Intellectual property rights are absolutely central to the success of small businesses and individual creators, protecting the integrity of original work and ensuring that individuals are fairly compensated. However, IP theft is all too common in the digital environment, which causes significant economic harm.

Yasemin Guzeler, a constituent of mine, has been a victim of such infringement and has allowed me to share her story. Yasemin owns her own small business, Blooms of London, which sells bespoke umbrellas featuring trademarked designs. Around October last year, Yasemin noticed that the manufacturer of her products, based in China, had copied her designs and was selling the items directly via online platforms at half the price of the original items. Yasemin has since faced a momentous battle with online platforms such as Amazon to try to remove counterfeit links. After months of emails, complaints, referrals and untold financial and emotional distress, there remain almost 40 counterfeit links on Amazon. Yasemin’s business is now facing bankruptcy, and there is seemingly nowhere else she can turn for help and no mechanism through which she can effectively enforce her rights against Amazon.

I am therefore pleased to see

“effective processes for handling complaints and disputes with users”

listed under

“Permitted types of conduct requirements”

for SMS firms, but much more must be done to protect our small businesses and individual creators and uphold their intellectual property rights when they engage in digital activity. I would like an explicit reference to “intellectual property theft” in the Bill, and for reducing economic harm on their service to be included in the list of permitted types of conduct requirements for SMS firms in clause 20. I would also welcome further comment from, and engagement with, the Minister on how we can best protect small business owners such as Yasemin when they operate online. It is essential that we get this right to support our entrepreneurs and small businesses, and allow them to remain competitive in the digital economy.

The Liberal Democrats are pleased that the Government are finally acting on the CMA’s recommendation and bringing forward measures that will allow the regulator to prevent tech giants from putting our digital sector in a stranglehold. We hope that the Government will be robust in their defence of the Bill against lobbying by tech giants, and we hope to see the Bill progress through the House without being watered down or weakened through the addition of loopholes that might be ripe for exploitation. I hope that the Minister will also reflect on my comments about the additional measures needed to support small businesses online. I would welcome further opportunity to engage with the Government on that. Although competition is crucial for Britain’s tech sector, we hope that the Government will move to tackle the fundamental issues that are holding it back, such as the skills gap, a shortage of skilled workers and weak investment.

Digital Markets, Competition and Consumers Bill

Sarah Olney Excerpts

Report stage
Monday 20th November 2023 Commons Chamber

Overall, I think we need to make sure, as my right hon. and learned Friend has said, that we put the consumer first and foremost. It should all be about that. There is huge competition in the tech sector not just on market share, but on the fundamentals of the technology that changes and evolves in a way that leaves companies that do not keep up out of business. That is not like supermarkets, whose shares may go up 1% or 2% over a year. This is about going from having the predominant market share to hardly existing as companies. That is how rapidly the sector has changed over recent years and, indeed, over recent decades, so we should not be too worried about a lack of competition. However, we should always be worried about the difficulties of the over-mighty regulator that is unaccountable to this place or to Ministers. That is why I have put my name to my right hon. and learned Friend’s amendments, and why I urge the Government, as this Bill progresses, to keep on thinking hard about why we should put faith in a regulator to have any lower standard than full merits for any review, because surely the rule of law requires that people’s interests are properly protected and that they are not subject to arbitrary law.

[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats welcome many aspects of this Bill. We are pleased that the Government are finally acting on the Competition and Markets Authority’s recommendations in bringing forward measures to prevent the tech giants from putting our digital sector in a stranglehold. We want to see a thriving British tech sector in which start-ups can innovate, create good jobs and launch innovative products that will benefit consumers. A strong competition framework that pushes back on the tech giants’ dominance is essential for that.

For too long a small number of big tech firms have been allowed to dominate the market, while smaller, dynamic start-up companies are too often driven out of the market or swallowed up by the tech giants. New rules designed by the CMA will ensure that these large companies will have to refrain from some of their unfair practices, and they give the regulator a power to ensure that the market is open to smaller challenger companies. The Liberal Democrats are pleased to see changes to the competition framework, which will allow the CMA to investigate the takeover of small but promising start-ups that do not meet the usual merger control thresholds. This change is particularly important for sectors such as artificial intelligence and virtual reality while they are in their infancy. The benefits of these changes will filter down to the end users, the consumers, in the form of more choice over products and services, better prices and more innovative start-ups coming to the fore.

While we are glad that most of the CMA’s recommendations are in this Bill, we have concerns about certain aspects, such as the forward-looking designation of SMS firms and the definition of countervailing benefits that SMS firms are able to claim. The countervailing benefits exemption allows the CMA to close an investigation into a conduct breach if an SMS firm can demonstrate that its anti-competitive practices produce benefits for users that outweigh the harms. There is some concern that big tech may seek to exploit this exemption to evade compliance with conduct requirements and continue with unfair, anti-competitive practices. It could also create scope for tech firms to inundate the CMA with an excessive number of claims of countervailing benefits, diverting the CMA’s limited resources away from essential tasks. Amendment 209, tabled in my name, seeks to strengthen the Bill and to curtail the power of large tech firms to evade compliance by tightening the definition in the Bill of what kind of benefits are valid.

The Liberal Democrats also have concerns about several of the Government amendments, particularly those relating to the appeals standard, as they risk watering down some of the CMA’s most powerful tools. There is now a real danger that powerful incumbents will use their vast resources to bog down and delay the process, leaving smaller competitors at a disadvantage. These amendments show that the Government are taking the side of these established firms at the expense of smaller, growing firms, and at the expense of economic growth and innovation as a whole.

The Liberal Democrats are keen to ensure that big tech is prevented from putting the British tech sector in a stranglehold. We hope that the Government will be robust on the defensive measures in the Bill. It is important that they reject any attempt to water down or weaken this Bill with loopholes, and that they ensure there is no ambiguity that could be exploited. Although competition is crucial for Britain’s tech sector, we hope the Government also move to tackle some of the fundamental issues holding it back, such as the skills gap, the shortage of skilled workers and weak investment.

[Saqib Bhatti]

With the leave of the House, I would like to address some of the points that have been made today.

I am grateful to Members across the House for their contributions to this debate and, of course, throughout the development of this legislation. I am similarly grateful for the cross-party support commanded by the digital markets measures. Members will find that I agree with points raised on both sides of the House, and I am confident that this Bill addresses those points.

I thank the hon. Member for Pontypridd (Alex Davies-Jones) for kindly welcoming me to the Treasury Bench, for her amendments and for her commitment to getting this legislation right. She asked about the countervailing benefits exemption, and I reassure her that the wording change maintains the same high threshold. SMS firms must still prove that there is no other reasonable, practical way to achieve the same benefits for consumers with less anti-competitive effect. This makes sure consumers get the best outcomes, whether through the benefits provided or through more competitive markets.

The hon. Lady also asked about appeals, and it is important that decisions made by the CMA can be properly and appropriately reviewed to ensure that they are fair, rigorous and evidence-based. We have considered strong and differing views about appeals from a range of stakeholders, and judicial review principles are the appropriate standard for the majority of decisions under the regime, as we have maintained with the additional clarification on the DMU’s requirement to act proportionately. We have, however, aligned the appeal of penalty decisions with appeals under the Enterprise Act 2002, so that parties can challenge these decisions on their merits to ensure that the value of a penalty is suitable. Penalty decisions have less direct impact on third parties, and the amendment will provide additional reassurance without affecting the regime’s effectiveness.

The significant changes we are making will provide more clarity and assurance to firms on the need for the DMU to act proportionately. They also bring the regime in line with the relevant CMA precedent. Parties will have greater scope to challenge whether the interventions imposed on them are proportionate or could have been achieved in a less burdensome way. When financial penalties are imposed, parties will have access to a full merits review to provide reassurance that the value of the fine is appropriate.

The hon. Lady also asked about the implementation of guidance, and I can assure her that we are working at pace to ensure the regime is operational as soon as possible after Royal Assent. Guidance must be in place for the regime to go live, and the Government will be working with the CMA to ensure timely implementation. The Secretary of State will, of course, review all guidance for all future iterations.

The hon. Lady also talked about amendments 187 and 188, which seek to replace the countervailing benefits exemption with a power for the CMA to consider benefits to users before finding a breach of a conduct requirement. The exemption will ensure that there is a rigorous process to secure the best outcomes for consumers, and removing it would jeopardise clear regulatory expectations and predictable outcomes. In turn, this would make it more likely that consumers lose out on the innovations developed by SMS firms, such as privacy or security benefits. Government amendments 13 and 14 clarify the exemption while, crucially, maintaining the same high threshold and clear process.

The hon. Lady also mentioned amendments 194 and 196, and 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. We understand that these amendments would require the DMU to send decision notices to third parties that it assesses to be most affected by those decisions. However, under the current drafting, the DMU is already required to publish the summaries of key decisions. Requiring the DMU to identify appropriate third parties and send them notices would introduce a significant burden on the DMU, to limited benefit, and I argue that it would undermine the flexibility and quick pace that we expect from the DMU. We believe the current drafting strikes the right balance, providing transparency and public accountability on DMU decisions.

Digital Markets, Competition and Consumers Bill

Sarah Olney Excerpts

Consideration of Lords amendments
Tuesday 30th April 2024 Commons Chamber

[Kevin Hollinrake]

It is a pleasure to bring this groundbreaking Bill back to the House. It will drive innovation and deliver better outcomes for consumers across the UK by addressing barriers to competition in digital markets and tackling consumer rip-offs. We believe it strikes the right balance, not deterring investment from big tech while encouraging investment from challenger tech. I thank Members of both Houses for their careful scrutiny and I commend the collaborative cross-party approach taken during the Bill’s passage to date.

I will start with the amendments that the Government made in the other place. They add vital new provisions to the Bill and I hope hon. Members will agree to them. Part 1 of the Bill establishes a new pro-competition regime for digital markets, which will be overseen and enforced by the Competition and Markets Authority’s digital markets unit. Following engagement with Members in the other place, we have bolstered transparency provisions to require the CMA to publish more of the notices provided to firms designated with strategic market status, or SMS.

All interested parties will now be able to access the information contained in those notices, ensuring that there is greater clarity on the DMU’s decisions relating to SMS designation, conduct requirements and pro-competition interventions. A number of hon. Members have called for provisions addressing asymmetry of information to be introduced to the Bill, so we hope this change will be welcomed.

On part 2 of the Bill, which deals with wider competition reforms, hon. Members will recall that on Report the Government added a provision on litigation funding, whose purpose was to restore the previously held understanding of the status of litigation funding agreements under the Competition Act 1998. Those provisions were important in providing a route to justice for groups with limited resources—for example, our sub-postmasters.

That step was taken in response to an earlier Supreme Court judgment that had made litigation funding agreements unenforceable. The Government have since acted by introducing the Litigation Funding Agreements (Enforceability) Bill, which will deliver on our commitment to addressing the impacts of that judgment in all types of proceedings. Consequently, the provisions in this Bill have been removed, as they are no longer required.

We also introduced new measures to part 2 to address concerns about the potential ownership of UK newspapers and news magazines by foreign states, as we heard very recently from the Secretary of State for Culture, Media and Sport. The Government know that we cannot overstate the importance of those publications to our democracy and have therefore taken decisive action to preserve the freedom of the press. By establishing a new regime within the Enterprise Act 2002, the Bill will prevent foreign states from having ownership of, or control or influence over, a UK newspaper or news magazine.

The Government are extremely grateful for the support offered by Members of both Houses in the development of these new measures. In particular, we thank Baroness Stowell of Beeston and Lord Forsyth of Drumlean for their engagement, and my hon. Friend the Member for Rutland and Melton (Alicia Kearns), who first secured a debate on the issue in January.

Parts 3 and 4 make important updates and improvements to UK consumer law. Having consulted on a series of reforms at the end of last year, the Government amended the Bill in the other place to introduce new measures that address fake reviews and drip pricing. Many hon. Members called for the Government to address those harms through the Bill, and I am pleased to say that we have been able to do so, following our public consultation.

We have also made amendments to further strengthen the ability of public bodies to enforce consumer law. We did so by extending so-called take-down powers to a wider range of enforcers. There has been a healthy debate in both Houses about the measures in the Bill aimed at tackling subscription traps. We listened carefully to the concerns expressed in the other place about the potential impact of those measures on charities and their ability to claim gift aid. In response, the Government amended the Bill to enable the Treasury to update gift aid rules. That mitigates any concerns about the Bill’s impact on charities. We are grateful to Lord Mendoza for highlighting the issue and for his engagement.

We also made a series of amendments to provide greater assurance and clarity for businesses about the new subscription measures, including addressing concerns about exiting contracts, cancellations, reminder notices and cooling-off periods. I hope that hon. Members agree that the amendments improve the Bill.

[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats welcome the fact that the Government are finally acting on the CMA’s recommendation, but will the Government support amendment 104, which is backed by the Liberal Democrats? It is about imposing requirements on secondary ticket sites. Often, people purchasing tickets from the sites do so at huge mark-ups on the face value of the ticket, and the ticket in question does not actually exist. The amendment would address those issues, reducing the risk of fraud by requiring proof of purchase. Does the Minister agree that we must do everything we can to ensure that this legislation is as robust as possible, to crack down on this type of fraud?

[Kevin Hollinrake]

I thank the hon. Lady for her intervention and for the amendment, which I will speak to in a moment. The Government have agreed to undertake a review of both primary and secondary markets, and I will deal with those issues later in my remarks. [Interruption.] I hear from the shadow Front-Bench spokespeople, but I think that is something that Labour proposed in earlier amendments, so obviously they have changed their position on that issue—not for the first time.

Finally, the Government made a number of minor amendments to the Bill in the other place. The majority are tidying-up measures, or otherwise small tweaks to the Bill, to ensure that it achieves its policy intent as effectively as possible.

I will now set out the Government’s position on the 11 non-Government amendments that were made to the Bill in the other place. The majority of the amendments seek to reverse or alter amendments made to the digital markets part of the Bill on Report in this House. There were three aims behind the Government’s package of amendments on Report in the Commons: first, to provide greater clarity to parties interacting with the regime; secondly, to strengthen the regime’s safeguards for the extensive new regulatory powers; and thirdly, to enhance the accountability of the regulator. The Government tabled the amendments following careful consideration of the views expressed by hon. Members across the House. We remain convinced that our amendments struck the right balance between the accountability of the CMA’s regulatory decisions and the flexibility to allow for targeted and proportionate action that tackles the unique competition challenges in digital markets.

Digital Markets, Competition and Consumers Bill

Sarah Olney Excerpts

Consideration of Lords message
Tuesday 21st May 2024 Commons Chamber

[Kevin Hollinrake]

We believe that the problem is about enforcement, not regulations. The reason why the CMA has not prosecuted anybody is that it does not have the responsibility or the right to prosecute sellers on ticketing sites. It has jurisdiction over the platforms, but not the sellers. We are giving the CMA that opportunity and those powers, which we think will make a profound difference.

Secondly, the Lords amendment requires that the ticket’s face value and trader’s details be clearly visible to the consumer, but likewise, existing legislation already provides that traders must make that information clear and comprehensible. The amendment would also prevent resellers from selling more tickets than can be legally purchased from the primary market. We agree with the principle, but believe that to be unenforceable. Many sources on the primary market sell tickets, and each has their own ticket limit.

[Sarah Olney (Richmond Park) (LD)]

The Bill could have such a significant impact in tackling the issues associated with secondary ticket sites, and could reduce instances of fraud and online scams. I do not understand why the Minister is so reluctant to commit to the recommendations made by the CMA. That is all we want implemented through the Lords amendment.

[Kevin Hollinrake]

The CMA report differs from the amendment proposed by the Lords. We believe that Lord Moynihan’s requirements relating to face value and the address of the trader are already covered. What is missing from the amendment is the ability to enforce regulations. There have been prosecutions only recently, a couple of months ago; there has been a four-year sentence and a £6 million confiscation order, so we are seeing prosecutions by National Trading Standards, but we believe that the CMA will have a more profound effect if it can tackle this issue.