Penrose Review: UK Competition and Consumer Policy

Debate between Seema Malhotra and John Penrose

Tuesday 8th March 2022 Westminster Hall

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Mr Efford. I thank the hon. Member for Weston-super-Mare (John Penrose) for initiating this debate, and for his work on this issue. His very important “Power to the People” report was published around a year ago. In his opening remarks, he clearly laid out the sentiments and recommendations of the report, as well as, importantly, the context of declining competitiveness, the productivity challenge we face and the importance of making sure that we can act against the non-compliance of companies that do not play their part, so that we can ensure a fair regime for all businesses and for consumers. He rightly raised points about the vested interests that distort our markets.

Competition law seeks to curb practices that undermine or restrict competition to the detriment of consumers. Those practices can include a firm’s abuse of its dominant market position, anti-competitive practices, and mergers or takeovers that, if allowed, would result in a substantial lessening of competition. There has been a rapid increase in takeovers and mergers, particularly during the pandemic lockdowns, so that is an area that needs further work. I will come back to that.

Labour welcomed the Penrose report, and also highlighted where it needed to go further. UK markets are becoming more concentrated, and that hits consumers and workers, and stops small businesses in their tracks and prevents them from progressing. are stopping small businesses in their tracks. We want a re-evaluation of the role of the Competition and Markets Authority to ensure that it has the tools to tackle the growing concentration of market power.

We may disagree on rolling back economic regulation, but the issue is not necessarily the principle; it is more about asking whether we have the regulations we need for effective regulation of markets for consumers. That may not be about quantity; I think it is about quality. That is where the debate needs to start. I am not interested in regulation for regulation’s sake. For me, regulation is about purpose; it is about making sure that it will be effective and deliver the outcomes that we believe are necessary. We need more robust competition policy; we need to crack down on tax avoidance, and challenge mergers and acquisitions that mean taking on unsustainable debt, or that are not in Britain’s long-term strategic interests.

I thank all hon. Members who have contributed; they have made important and distinct contributions highlighted different areas of the subject. We in this House have long known about the work that my hon. Friend the Member for Makerfield (Yvonne Fovargue) does on consumer protection. She raised important issues around fake reviews—reviews are part of how consumers are informed—and around how action can be taken when consumers are misinformed. She also raised the important point that consumers and businesses have a common interest in making sure that markets work effectively and fairly. She highlighted the importance of ensuring that reform is based on how consumers behave today, how the market works and how consumers receive their goods and services. Many of those issues are interconnected. She rightly alluded to the important work of Which? in this area, and I thank it for its contribution.

The hon. Member for Truro and Falmouth (Cherilyn Mackrory) shared a rich picture of her constituency, the opportunities and sectoral issues in her local economy and the challenges in taking forward some of those opportunities. The hon. Member for Folkestone and Hythe (Damian Collins) highlighted clearly the dominance of power of the social media companies, which is an important backdrop to the digital markets reform that we have discussed. The hon. Member for North Ayrshire and Arran (Patricia Gibson) talked about the importance of value for money and consumer protection. Some of the issues that she raised, like those raised by my hon. Friend the Member for Makerfield, were very powerful.

Focusing on consumer interest has never been more important given the cost of living crisis that consumers face. Inflation is out of control, with energy, food and petrol prices rocketing. It is not just about global factors; we know that poor Government economic management has left us uniquely exposed. We have a buy now, pay later loan scheme for energy bills, rather than dealing with the problems in our energy market. We are very worried about raising taxes on working people and businesses at the worst possible time. In parallel to our debate, an Opposition day debate is taking place to call on the Government, again, to stop the national insurance rise in April.

There has been a long journey of reform. Hon. Members will be aware than when Labour was in power, we argued strongly that UK regulation of anti-competitive practices was weak. That led to one of our first pieces of legislation, the Competition Act 1998. That recent journey is worth noting, because, as my hon. Friend the Member for Makerfield said, it has been four years since the Secretary of State for Business, Energy and Industrial Strategy asked the CMA for proposals to better protect consumers in the digital economy and improve public trust in markets.

The then CMA chairman, Lord Tyrie, outlined his proposals to the Secretary of State in a letter in 2019. The Penrose review followed in February 2021. Last summer, the Government published two consultation documents—the first on reforming competition and consumer policy and the second on a pro-competition regime for digital markets. Both sets of proposals would require legislation to take forward some of the challenges raised, but the Government have yet to publish their response to either of those consultations.

I recognise that both the Penrose review and the Government’s consultation represent some progress in addressing the rules governing the UK’s companies and markets, not least as they recognise that reform is necessary. They are also vehicles for reforming the UK anti-trust regime post covid and post Brexit. The Penrose review is very important in that respect. The existing system, however, is no longer serving consumers appropriately, and is not fit for purpose in a digital age. It could lead to new monopolies created at any time in new markets.

[John Penrose]

It sounds as though the hon. Lady is joining other Members in saying that we need a new competition and consumer Act to fix some of those things. Could she confirm that that is the Labour party’s position? I think that is what she is saying, but I do not want to put words in her mouth.

Subsidy Control Bill

Debate between Seema Malhotra and John Penrose

3rd reading
Monday 13th December 2021 Commons Chamber

[John Penrose]

I am listening carefully to the hon. Lady. I am sure everybody here would agree with the principle of trying to level up, particularly in parts of the UK outside London and the south-east, but can she address the point I was making about politicians having a long and really pretty awful record in picking losers? How does she think that, under her proposal, things are going to be different this time?

[Seema Malhotra]

I do not think it is about us picking losers or winners at all. This is about us using the data, understanding where there are areas of greatest need and having that as part of a data-led levelling-up agenda. Given that the Government have created a specific Department for levelling up, Labour is surprised that that mandate is not clear and that the hon. Gentleman does not have the answers he needs to have a framework that gives confidence that we are applying resources to areas of greatest need. To be frank, the Government’s record on that is not very strong. The Bill should be explicit that supporting areas of deprivation should fall squarely within the subsidy control principles.

On improving the way the new regime will operate, there is a serious lack of transparency in the Bill on how public money is spent and how value for money can be assessed.