Digital Markets, Competition and Consumers Bill

Viscount Camrose Excerpts

Consideration of Commons amendments
Tuesday 14th May 2024 Lords Chamber

Moved by

[Viscount Camrose]

That this House do not insist on its Amendments 9 and 19, to which the Commons have disagreed for their Reason 19A.

19A: Because it is appropriate for the CMA to be required to act proportionately in relation to conduct requirements and pro-competition interventions.

[The Parliamentary Under-Secretary of State, Department for Science, Innovation and Technology (Viscount Camrose) (Con)]

My Lords, I will also speak to Motions A1, B, B1, C, C1, C2 and D.

I start by thanking noble Lords for their constructive input and careful scrutiny during the passage of the Bill. We have created legislation that 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.

The Bill has been strengthened in many places in this House. However, today, I will speak to Motions A to D, which address amendments that remain to be agreed across the Bill. The Government ask that this House does not insist on the amendments rejected in the other place and that it agrees to the amendment proposed in lieu of changes proposed by noble Lords.

--- Later in debate ---

[Lord Tyrie (Non-Afl)]

Does the Minister not agree that since, with a merits appeal, a fine could be reduced to nugatory amounts, that what would be considered equivalent to a full merits review of the substantive decision?

[Viscount Camrose (Con)]

That would be in respect only of the fine itself. Any other element of the decision, such as the imposition of new conduct requirements or other actions taken to correct anti-competitive effects in the market, would stand and would have been standing throughout the appeal in any event.

I turn to Motion B, which addresses Amendments 12 and 13, on the countervailing benefits exemption, moved by the noble Baroness, Lady Jones of Whitchurch. The amendment looks to revert the clause back to its original wording of

“the conduct is indispensable ... to … those benefits”.

The Government’s revised wording, which replaces “indispensable”, does not change the effect of the clause. It still requires the same high threshold to be met and has the same safeguards. To qualify for the exemption, SMS firms must establish that all the criteria are met. There must be no other reasonable, practicable way to achieve the same benefits to consumers with a less anti-competitive effect. I hope that noble Lords feel reassured that the Government’s drafting maintains the same robust threshold and keeps consumers at the heart of the pro-competition regime.

Your Lordships will remember Amendment 38, tabled by my noble friend Lord Lansley, which sought to place in the Bill a 40-day timeframe for the Secretary of State’s approval of CMA guidance. The Government listened carefully to concerns led by my noble friend relating to a risk of delay in the digital markets regime. We are absolutely committed to getting this regime up and running to start fixing competition problems and deliver greater consumer benefit.

To reinforce this commitment, the Government have tabled Amendment 38A in lieu. This takes the spirit of my noble friend’s amendment and merely adjusts the time limit to working days to align with other timelines in the Bill. It also asks for reasons if guidance is not approved within the time limit. I hope that this provides reassurances to noble Lords about our commitment to the digital markets regime. I thank my noble friend for championing this matter in earlier debates and for his support for the amendment in lieu.

Once again, I thank noble Lords for their contributions during the Bill’s passage and I look forward to others during this debate. Across this House, we are all committed to making the DMCC Bill the best and most effective legislation it can be. I therefore invite noble Lords to agree the government Motions before them. I beg to move.

Motion A1 (as an amendment to Motion A)

Moved by

--- Later in debate ---

If we are not able to make progress on this, and if the noble Lord, Lord Clement-Jones, wishes to test the opinion of the House, we will support him. I look forward to the Minister’s response on all these issues.

[Viscount Camrose (Con)]

My Lords, I thank all noble Lords who have contributed to the debate today and, of course, throughout the development of this legislation. It has been a characteristically brilliant debate; I want to thank all noble Lords for their various and valuable views.

I turn first to the Motions tabled by the noble Lord, Lord Faulks, in relation to appeals and proportionality. I thank him for his continued engagement and constructive debate on these issues. We of course expect the CMA to behave in a proportionate manner at all times as it operates the digital market regime. However, today we are considering specifically the statutory requirement for proportionality in the Bill. We are making it clear that the DMU must design conduct requirements and PCIs to place as little burden as possible on firms, while still effectively addressing competition issues. The proposed amendments would not remove the reference to proportionality in Clause 21 and so, we feel, do not achieve their intended aim, but I shall set out the Government’s position on why proportionality is required.

On the question of the wording of “appropriate” versus “proportionate”, proportionality is a well-understood and precedented concept with a long history of case law. “Appropriate” would be a more subjective threshold, giving the CMA broader discretion. The Government’s position is that proportionality is the right threshold to be met in legislation due to the fact that it applies, in the vast majority of cases, because of ECHR considerations. It is the Government’s view that the same requirement for proportionality should apply whether or not ECHR rights are engaged.

As Article 1 of Protocol 1—A1P1—of the European Convention on Human Rights will apply to the vast majority of conduct requirements and PCIs imposed by the CMA, with the result that the courts will apply a proportionality requirement, we consider it important that it should be explicit that there is a statutory proportionality requirement for all conduct requirements and PCIs. We believe that proportionality should be considered beyond just those cases where A1P1 may apply, in particular when a conduct requirement or PCI would impact future contracts of an SMS firm.

The courts’ approach to proportionality in relation to consideration of ECHR rights has been set out by the Supreme Court, and we do not expect them to take a different approach here. Furthermore, the CAT will accord respect to the expert judgments of the regulator and will not seek to overturn its judgments lightly. I hope this answers the question put by the noble Lord, Lord Faulks.

On appeals, I thank noble Lords for their engagement on this matter, and in particular the noble Baroness, Lady Jones of Whitchurch, for setting out the rationale for her Amendments 32B and 32C, which seek to provide further clarity about where on the merits appeals apply. I want to be clear that the Government’s intention is that only penalty decisions will be appealable on the merits and that this should not extend to earlier decisions about whether an infringement occurred. I do not consider these amendments necessary, for the following reasons.

The Bill draws a clear distinction between penalty decisions and those about infringements, with these being covered by separate Clauses 89 and 103. There is a Court of Appeal precedent in BCL v BASF 2009 that, in considering a similar competition framework, draws a clear distinction between infringement decisions and penalty decisions. The Government consider that the CAT and the higher courts will have no difficulty in making this distinction for digital markets appeals to give effect to the legislation as drafted.

I now turn to the Motion tabled by the noble Lord, Lord Clement-Jones, in respect of the countervailing benefits exemption. I thank the noble Lord for his engagement with me and the Bill team on this important topic. The noble Lord has asked for clarification that the “indispensability” standard in Section 9 of the Competition Act 1998, and the wording,

“those benefits could not be realised without the conduct”,

are equivalent to each other. I want to be clear that the exemption within this regime and the exemption in Section 9 of the Competition Act 1998 are different. This is because they operate in wholly different contexts, with different criteria and processes. This would be the case however the exemption is worded in this Bill. That is why the Explanatory Notes refer to a “similar” exemption, because saying it is “equivalent” would be technically incorrect.

Having said that, the “indispensability” standard and the threshold of the Government’s wording,

“those benefits could not be realised without the conduct”,

are equally high. While the exemptions themselves are different, I hope I can reassure noble Lords that the Government’s view is that the standard—the height of the threshold—is, indeed, equivalent. The Government still believe that the clarity provided by simplifying the language provides greater certainty to all businesses, while ensuring that consumers get the best outcomes.

I thank the noble Lord, Lord Clement-Jones, for his question in relation to the Google privacy sandbox case. The CMA considers a range of consumer benefits under its existing consumer objective. This can include the privacy of consumers. It worked closely with the ICO to assess data privacy concerns in its Google privacy sandbox investigation and we expect it would take a similar approach under this regime.

I urge all noble Lords to consider carefully the Motions put forward by the Government and hope all Members will feel able—

[Lord Clement-Jones (LD)]

Will the Government update the Explanatory Notes?

[Viscount Camrose (Con)]

Indeed. In principle I am very happy to update the Explanatory Notes, but I need to engage with ministerial colleagues. However, I see no reason why that would not be possible.

Meanwhile, I hope all noble Lords will feel able to support the Government’s position.

[Lord Pannick (CB)]

My Lords, before the Minister sits down, may I just press him on proportionality? I understand the argument to be that a proportionality test should be applied in this context even though it is not required in all cases by the European Convention on Human Rights. I see the Minister nodding. Will that now be the general position of the Government, because it is not the law in relation to judicial review generally that there is a proportionality test? If that is to the position of the Government, it would be a very significant development which some of us would welcome and some of us would not. I declare an interest, of course, as one of those lawyers referred to by the noble Baroness, Lady Jones, as looking to take advantage on behalf of their clients. It is a very real issue; how far does this go?

[Viscount Camrose (Con)]

It goes only so far as its application to the Bill now. I am not aware of any further measures to take it into other Bills and would not expect to see any.

[Lord Faulks (Non-Afl)]

My Lords, I am grateful for the Minister’s response on that issue. I asked him the same question that I have asked throughout these proceedings—it is the same question posed by the noble Lord, Lord Pannick—and there does not seem, with great respect, to be an answer to it. The Minister has mostly allowed, to use a cricketing metaphor, the matter to go past the off stump without playing a shot. What really seems to be the position is that he says that proportionality will apply, even if the Human Rights Act or a convention right is not involved. But I think that, in answer to the noble Lord, Lord Pannick, the Minister is saying, “But only in the case of this Bill”. What that means is that big tech is getting a special privilege not afforded to any other litigant in any other context. I ask noble Lords, “Is that a good look?” I do not think that it is.

The Commons reason for preferring “proportionate” to “appropriate” reads as follows:

“Because it is appropriate for the CMA to be required to act proportionately in relation to conduct requirements and pro-competition interventions”.


I do not know whether that was supposed to be a joke, but it is profoundly unsatisfactory. The Government have missed a trick—or rather, they have succumbed to considerable pressure. I welcome the Bill because there is a great deal about it which is good. Having thought very carefully, and with considerable reluctance, I propose to withdraw my amendment.

--- Later in debate ---

Moved by

[Viscount Camrose]

That this House do not insist on its Amendments 12 and 13, to which the Commons have disagreed for their Reason 13A.

13A: Because it is clearer for proportionality to appear as a separate consideration in the countervailing benefits exemption.

[Viscount Camrose (Con)]

My Lords, I have already spoken to Motion B. I beg to move.

Motion B1 (as an amendment to Motion B)

[Lord Clement-Jones]

Tabled by

Leave out from “House” to end and insert “do not insist on its Amendment 12, to which the Commons have disagreed for their Reason 13A, and do insist on its Amendment 13.”

--- Later in debate ---

Moved by

[Viscount Camrose]

That this House do not insist on its Amendments 26, 27, 28, 31 and 32, to which the Commons have disagreed for their Reason 32A.

32A: Because it is appropriate for all appeals about the imposition of a penalty under Chapter 7 of Part 1 to be determined on the merits.

[Viscount Camrose (Con)]

My Lords, I have already spoken to Motion C. I beg to move.

Motion C1 not moved.

--- Later in debate ---

Moved by

[Viscount Camrose]

That this House do not insist on its Amendment 38, and do agree with the Commons in their Amendment 38A in lieu.

38A: Page 70, line 37, at end insert—
“(5) When the CMA seek the approval of the Secretary of State for guidance, the Secretary of State must— (a) approve the guidance, or
(b) give reasons to the CMA for not approving it.
(6) The Secretary of State must comply with subsection (5) before the end of the 30th working day after the day on which the CMA seek the Secretary of State’s approval.”