Brexit: Competition and State Aid (EUC Report)

Viscount Chandos Excerpts

Thursday 24th May 2018 Lords Chamber

[Viscount Chandos (Lab)]

My Lords, I thank my noble friend Lord Whitty and the other committee members for this important and interesting report. I also thank the Government for their response which, as my noble friend pointed out, was rather more prompt than we are seeing on many other reports. Indeed, last week I spoke in a debate on one report where, after 13 months, there had been no response at all. I draw your Lordships’ attention to my entry in the register of interests.

Anti-trust, merger and state aid policies are hugely important to the workings of a social market economy and, for that reason, I very much agree with what the noble Lord, Lord Inglewood, has just said. They are at the heart of balancing the benefits of the markets for employment, growth, prosperity and tax revenues with the specific interests of consumers, over and above their participation in a successful and efficient economy. Under the EU regime, these policies have generally been applied well but, not surprisingly, not perfectly. In the area of anti-trust and mergers, for instance, Res Publica gave evidence to the committee and said:

“Something has gone wrong with our markets and something has gone wrong with our competition law”.


That view is held, within reason, across the ideological spectrum.

We should ask whether it would have been better if we had been outside the EU throughout this period. Today is literally the eve of the implementation of GDPR. Admittedly it is around privacy and data, but none the less it is a great example of the European Commission’s initiatives relating to the largest internet and data companies and it has also taken energetic and vigorous action against them in the areas of competition and tax.

What then should be the future in this area after we have left the EU? It seems important that there should be active co-operation, as the committee recommended, for instance through a relationship with the European competition network, and renewed and rigorous focus by the CMA. Should that include a change to broader public interest rather than narrower competition issues? In the speech that other noble Lords have referred to, Michael Grenfell of the CMA posed that question. I recognise that that is outside the scope of the committee, but it is inevitably a live and important topic. As the movie would have it, “It’s Complicated”. In 2005, there was a proposal for Pepsi to take over Danone. The Anglo-Saxon financial community mocked the French for treating yoghurt and mineral water as strategic assets, but five years later we found that cream eggs and tonic water were perhaps as strategic to us as yoghurt and mineral water were to the French. More recently, issues surrounding the hostile take of GKN by Melrose have brought renewed focus on this issue. I hope that there will be continuing debate over the months to come as we fine-tune, I hope, competition policy in the UK post Brexit.

In the area of state aid, there is no doubt that the EU regime has caused problems and issues, but however complex and important they may have been to local government, devolved Administrations and others, it is fair to say that they are minor in the scheme of things. Other noble Lords have highlighted the extent to which we have been modest investors of state aid in industry and the economy. One of the leaders of the leave campaign said to me, before the referendum, that the reason for leaving the EU was that the UK just did not know how to play the EU game. That may to some extent account for the relatively modest deployment of state aid and the tendency to see the EU as the constraint on greater exploitation of it. That comment rather begs the question: if the UK did not understand how to play the EU game while it was a member, why would it understand how to play that game during its negotiations to leave?

I believe it is right that there should be a formal regime after Brexit and that responsibility for it should be assigned to the CMA. The Secretary of State for Exiting the EU, in a speech in Vienna at the end of February, when I suspect he was taking his sensible pills, said:

“It cannot be right that a company situated in the European Union would be able to be heavily subsidised by the state but still have unfettered access to the United Kingdom market. And vice versa”.


None the less, harnessing the power of the state in a careful and selective way on the economic stage is an important and valid ambition. It need not and should not involve massive nationalisation; rather, it should involve targeted and discriminating initiatives.

The CMA and, before its formation, the Office of Fair Trading and the Monopolies and Mergers Commission have always needed unimpeachable independence. Arguably, the addition of state aid to the CMA’s remit reinforces the importance of that. Therefore, it seems all the more surprising that the newly appointed chair of the CMA should be appointed as, initially, a Conservative Life Peer. While the noble Lord, Lord Young of Cookham, clarified on Tuesday that he would sit as a non-affiliated Peer, it should not have needed the Institute for Government and the noble Lord, Lord Newby, to flush this issue out. That is a regrettable start to the new regime at the CMA.

I commend this excellent report to your Lordships and hope that the Government, in addressing the vital issues raised by the committee, will be more sure-footed than they have been to date.