Commons Reasons and Amendments
Northern Ireland Legislative Consent sought.
Motion A
Moved by
Viscount Camrose Portrait Viscount Camrose
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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.
Viscount Camrose Portrait The Parliamentary Under-Secretary of State, Department for Science, Innovation and Technology (Viscount Camrose) (Con)
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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.

Noble Lords will be aware that the digital markets issues relate to amendments made in the other place. This House has debated those in detail, and I have had the pleasure to meet noble Lords to discuss them subsequently. The Government have made an important amendment in lieu in this area, which I will come to shortly. However, the other amendments, as made in the other place, strike the right balance between vigorously promoting competition in the interests of consumers and healthy challenge of the CMA’s decisions. I will take these in turn to discuss why we encourage the House not to insist on these amendments to revert the Bill to its original wording.
I will first speak to Motion A, relating to Amendments 9 and 19, tabled by the noble Lord, Lord Faulks. I am grateful for the noble Lord’s contributions and experience on this matter. It has been my pleasure to engage with him on his view that proportionality in this context would create a novel legal standard for appeals regarding the CMA’s decision to impose obligations. The CMA will have significant new powers and discretion under this ex ante regime and it is right that there are safe- guards which ensure that it designs its interventions proportionately. This will strengthen the UK’s position as one of the best places in the world to do business.
I hope that noble Lords on all sides can agree that overregulation is undesirable, and this threshold provides an important safeguard to prevent that. The Government expect that the courts and the Competition Appeal Tribunal, or CAT, will interpret proportionality by taking an approach consistent with their approach to proportionality in ECHR challenges. We also expect that ECHR considerations on proportionality will be directly relevant in most cases anyway.
Moving to Motion C, relating to Amendments 26 to 28, 31 and 32, on penalty appeals, tabled by the noble Lord, Lord Bassam, and the noble Baroness, Lady Jones of Whitchurch, I appreciate the concerns of noble Lords about the potential of full merits appeals to lead to what has been termed “bleed back” into regulatory decisions and we have reflected closely on previous case law on similar issues. Given the CMA’s ability to impose considerable fines, a merits-based approach will allow the CAT to take a more thorough view on whether any penalties have been properly applied.
Having considered the approach of the courts to appeals decisions in competition cases under similar legislative frameworks, the Government are confident that the courts will have no problem in finding that appeals on the merits relating to penalties must be restricted to challenges about the penalty itself and will not be extended to any earlier breach decisions. Appeals against all other digital markets decisions will be under judicial review principles. I hope that this provides reassurance to noble Lords that there is little risk of “bleed back”.
Lord Tyrie Portrait Lord Tyrie (Non-Afl)
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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 Portrait Viscount Camrose (Con)
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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
Lord Faulks Portrait Lord Faulks
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Leave out from “House” to end and insert “do insist on its Amendments 9 and 19.”

Lord Faulks Portrait Lord Faulks (Non-Afl)
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Many of your Lordships will be familiar with the arguments we have had on the Bill. The important point to stress is that there has been a general welcome of this legislation. I would also like to stress that a measure of cross-party co-operation was the hallmark of the scrutiny of the Bill during its passage through your Lordships’ House. Ministers and officials have given their time generously in meetings and have responded promptly and helpfully to the issues that scrutiny has thrown up.

At the heart of the Bill is the regulation of the internet in a way that should prevent market abuse, in particular by big tech. Helpful though the Government have been, they have not provided answers to some important questions, hence amendments being passing on Report. These have been sent back to us by the House of Commons without the Government—save in one respect—making concessions.

One of the areas that gave noble Lords particular concern is the inclusion of amendments in the House of Commons at a late stage, following lobbying of the Government by big tech. A prospective intervention by the regulator is unlikely to be welcomed by big tech companies and, given their enormous legal budgets, will inevitably be challenged. The change of wording from “appropriate” to “proportionate” will make such challenges easier. A reversion to the Bill’s original wording will help to restore balance, and it is hoped that the amendments in my name and those in the name of the noble Baroness, Lady Jones, on appeals against interventions, will achieve that. Our amendments on Motion C are intended to prevent a seepage of arguments on penalty, which involves a merits test, into the judicial review test, which applies to the intervention itself.

Why have the Government made this late change of “appropriate” to “proportionate”? They have been rather coy about this. There has been some waffle—I am afraid I must describe it as such—about increased clarity and the need for a regulator to act in a proportionate manner. That is quite so but, on further probing, the reasoning was revealed: it is intended to reflect the level of challenge derived from jurisprudence from the European Court of Human Rights and the CJEU, where human rights issues are engaged. I remain bewildered as to why big tech has human rights. This is not what the framers of the convention had in mind.

But if—and it is a big “if”—a convention right is engaged, proportionality is the test, or at least part of it. This is a much lower bar than the normal judicial review test. If the Bill remains unamended, this lower bar will apply to challenges whether or not a convention right is engaged. This is good news for big tech and its lawyers, but not for the Bill and its primary purpose.

I ask the Minister this specific question: if the convention right is engaged, proportionality comes into the analysis anyway, but what if a court were to decide that A1P1—the relevant “human right”—was not engaged? With the Bill unamended, proportionality would apply to a non-convention case, greatly to the advantage of big tech. Is my understanding correct?

It seems that big tech has got its way and that litigation wars can commence—a great pity, most specifically for the smaller players and for the ostensible rationale behind the legislation.

On Motion C1, the test for appeals on penalty is to be a merits-based one, rather than the higher bar that a judicial review standard would, or should, involve. The amendments before your Lordships’ House are intended to prevent seepage from one test to another. His Majesty’s Government say that the courts are well used, in different contexts, to applying different tests as part of an analysis. This is true—in theory. My concern is that if I were advising Meta or Google about an intervention and a consequent hefty fine—this is not an advertisement—it is inevitable that I would advise in favour of appealing both aspects of the intervention: against conviction and sentence, as it were.

It is relatively easy to insulate arguments in criminal cases. One question is, was the conviction unsafe? Another is, was the sentence too long? In the emerging world of internet regulation, however, it is likely to be far more difficult in practice. The question of whether an intervention was disproportionate—disproportionate to what?—will inevitably be closely allied to that of whether the penalty was excessive or disproportionate: another win for big tech, and a successful piece of lobbying on its part.

I look forward to words of reassurance from the Minister. In the meantime, I beg to move.

Lord Clement-Jones Portrait Lord Clement-Jones (LD)
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My Lords, I will speak to Motion B1 and briefly in support of other motions in this group.

Last December, at Second Reading, I said that we on these Benches want to see the Bill and the new competition and consumer powers make a real difference, but that they can do so only with some key changes. On Third Reading, I pointed out that we were already seeing big tech take an aggressive approach to the EU’s Digital Markets Act, and we therefore believed that the Bill needed to be more robust and that it was essential to retain the four key competition amendments passed on Report. That remains our position, and I echo the words of the noble Lord, Lord Faulks: that the degree of cross-party agreement has been quite exemplary.

As we heard on Report, noble Lords made four crucial amendments to Part 1 of the digital markets Bill: first, an amendment whereby, when the Competition and Markets Authority seeks approval of its guidance, the Secretary of State is required within 40 days to approve the guidance or to refuse to approve it and refer it back to the CMA; secondly, an amendment reverting the countervailing benefits exemption to the version originally in the Bill, which included the “indispensable” standard; thirdly, amendments reverting the requirement for the CMA’s conduct requirement and pro-competitive interventions to be “proportionate” back to “appropriate”; and fourthly, amendments reverting the appeals standard to judicial review for penalties.

We welcome the fact that the Government have proposed, through Motion D, Amendment 38A in lieu, which effectively achieves the same aims, ensuring that the approval of the CMA guidance by the Secretary of State does not unduly hold up the operationalisation of the new regime. However, the Government’s Motions A, B and C disagree with the other Lords amendments.

In Europe, where the Digital Markets Act is now in force, we have seen big tech gatekeepers frustrate enforcement by evading the spirit, and in some cases ignoring the letter, of the law. They continue to use their market power to twist their obligations under the Act to maintain their stranglehold. The amendments passed by the Lords and put forward today offer the solution to minimise the chance of this happening in the UK and to ensure that the CMA’s new powers are sufficiently robust to hold big tech to account.
As regards the countervailing benefits exemption—Motion B1 in my name—in the Commons on Report the Government moved away from requiring a big tech firm’s conduct to be “indispensable” to the realisation of consumer benefits to access the exemption. A new form of words was inserted:
“those benefits could not be realised without the conduct”.
The countervailing benefits Clause 29 in the Bill provides a defence to a designated strategic market status entity if it can show its actions provide consumer benefit. The House of Lords amendments were intended to reinstate the higher bar, which would have required the designated firm’s conduct to be “indispensable” to realise such consumer benefit. The “indispensable” standard is a well-understood concept in UK competition law, used in the Competition Act 1998. Nothing could give greater clarity than reinstating this wording, as the Lords amendments seek to do. It is likely that courts would interpret Parliament’s deliberate move away from an existing well-understood standard as intending to create a new, novel threshold. This inevitably will allow big tech firms greater scope to access the exemption and launch complex legal challenges.
The Government have claimed that the change was made to add “clarity”, and that the new wording maintains “the same high threshold”. In response to the concerns that the change in wording will make it easier for SMS firms to evade compliance or appeal, Minister Hollinrake in the Commons on consideration of Lords amendments stated:
“The revised wording about the countervailing benefits exemption did not change the effects of the clause and did not change the guidance in the explanatory notes”.—[Official Report, Commons, 30/4/24; col. 208.]
and that the position has not been materially changed in any way. But we need to query why, if the Government wish to maintain the same high standard but add clarity, they do not simply combine the “indispensable” standard with the new wording in the Bill. The current wording in the Explanatory Notes—that there are “similarities”—is far too weak. If the Government will not reinstate the “indispensable” wording, then the Minister today should clarify at the Dispatch Box and in the Bill’s Explanatory Notes that the “indispensable” standard and the new form of words—that
“those benefits could not be realised without the conduct”—
are equivalent.
None of this debate about wording is academic, as activity by big tech companies in the US and EU already shows. Back in December last year, on Second Reading of the Bill, the noble Viscount, Lord Camrose, used the example of privacy and security as a potential benefit to the user under Clause 29 as a countervailing benefit. He said:
“The firm could claim that the ban was to protect user security and privacy … the DMU would close its investigation only if the SMS firm provided sufficient evidence, such as an independent report from security experts”.—[Official Report, 5/12/23; col. 1450.]
There is already litigation running in the USA where Apple is seeking to justify its anti-competitive acts on the basis that it is justified in protecting the privacy and security of its users. In US v Apple this year, the Department of Justice has been explicit in saying that such justifications are spurious, and the real motivation is that of restricting competition. It would be extraordinarily unfortunate if the Minister’s language was referred to in subsequent litigation about the meaning of Clause 29 as being an indication of the Government’s support for the position adopted by Apple.
The view of the CMA will be crucial. Does the Minister expect the CMA to take the same attitude to security and privacy claims as they have in their Google privacy sandbox investigation—being sceptical of privacy claims and making clear that they are not a justification to allow unduly negative impacts on competition? The implementation of privacy sandbox has been delayed for some years globally because of the CMA’s intervention, protecting consumers from adverse impacts.
As regards the situation in the EU, 16 major trade associations and consumer organisations wrote to the Secretary of State on 24 April, saying:
“We have observed designated companies’ (‘gatekeeper’) efforts to frustrate enforcement of the EU’s Digital Markets Act … The solutions required to prevent this scenario being replicated in the UK are to keep grounds of appeal and challenge as narrow as possible; and preserve the latitude and efficiency with which the CMA can act. Consumers will not reap the benefits of the increased competition if the CMA’s work can be delayed by the designated companies”.
Noble Lords may have seen a recent piece in the Independent by the renowned business journalist, Chris Blackhurst, pointing out that we may become a competition regulatory outlier because:
“Other jurisdictions, including the US and EU, are moving hard against Big Tech, stepping up several gears in their drive to curb their growing dominance”.
Our fears and suspicions are widely shared outside this House. Are the Government in thrall to big tech? I hope the Minister can allay these fears today.
For the avoidance of doubt about the consequences if Motion B1 goes to a vote, we have received advice on these Benches from the Public Bill Office that, because the House has not considered the Government’s new wording in paragraph (c), alongside the indispensability test as inserted by Amendment 13, insisting on Amendment 13 but not Amendment 12 represents a new package of amendments. It is therefore the view of the clerks that any Motion would not risk double insistence in the Commons if the Lords agree to send back Amendment 13.
As regards proportionality, for all the reasons stated by the noble Lord, Lord Faulks, we support his Motion A1. The Bill originally required the CMA to ensure that its interventions were appropriate to the realisation of fair dealing, open choices or trust and transparency of objectives. In the Commons, the Government changed the requirement from “appropriate” to “proportionate”, as we have heard. As described by the noble Lord, Lord Faulks, while seemingly innocuous, this change will have a significant impact on the scope that big tech firms have to challenge CMA decisions under judicial review.
The Government have claimed that, even absent this specific requirement, the regulator would need to ensure that its interventions are proportionate because Article 1 of Protocol 1 to the European Convention on Human Rights would apply to interventions that affect the property rights of big tech firms. But, as the noble Lord has explained so clearly, courts are likely to interpret this as providing new, broader grounds for judicial review appeals of CMA decisions, and this will provide big tech firms with limitless legal budgets with even more scope to tie up the CMA in lengthy legal wrangling. The Bill should be returned to its original form in this area.
We also support Motion C2 regarding the appeal standard, which the noble Baroness, Lady Jones, will speak to. The Bill originally had judicial review as the appeal standard for all CMA decisions under Part 1, but in the Commons the Government moved to merits appeals for penalty decisions. This is dangerous, as it is ultimately the threat of fines that will incentivise big tech firms to comply with the CMA’s decisions. There is even greater danger that merits appeals on penalty decisions, as the noble Lord, Lord Faulks, has said, bleed back across the Bill into regulatory decisions, giving big tech firms greater scope to frustrate and challenge CMA decisions. Minister Kevin Hollinrake’s statement in the Commons that
“the Bill draws a clear distinction between infringement decisions and penalty decisions”.—[Official Report, Commons, 30/4/24; col. 188.]
does not eliminate the concern about the two bleeding into each other, especially if the two streams take place together in the same case. All this means that we should revert to the judicial review standard for penalty appeals as well.
Baroness Jones of Whitchurch Portrait Baroness Jones of Whitchurch (Lab)
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My Lords, I am pleased to support the Motions in the names of the noble Lords, Lord Faulks and Lord Clement-Jones. My Motion C2, which proposes Amendments 32B and 32C in lieu, is in this group.

Throughout the course of the Bill, we have been grateful to the Ministers for their engagement and willingness to reconsider its provisions. We are pleased with a number of concessions which have considerably strengthened the consumer protections within it.

However, the issues at the core of the Bill, which are the ones we are dealing with in this group, remain unresolved. This is the Bill that was meant to even out the balance of interests between the big tech companies and the challenger firms. We heard numerous examples of why this was necessary, why challenger firms were being squeezed out of the market and why the CMA needed to have new powers to create a fair and balanced regime. We originally had a Bill that did just that. This was before the big tech companies intervened and objected to the Government’s proposals. The new version we have in front of us now weighs the scales very much in their interests again.

In the Commons, Minister Kevin Hollinrake claimed that the Government had engaged significantly with both large tech companies and the challenger firms on these changes and that,

“all those cohorts are happy with where the Bill is today”.—[Official Report, Commons, 30/4/24; col. 178.]

I have to tell the noble Viscount the Minister that this simply is not the case. Many firms remain unhappy with the changes introduced to the original Bill and that they have not been matched by the necessary assurances on the practical and legal consequences that will follow, so our objective all along in framing our amendments was to make the Bill legally watertight, to take out ambiguity and to give the CMA the best chance of assessing and moderating the conduct of the tech companies deemed to have strategic market status.

We have been keen to use the wording that is already legally recognised and does not increase the scope for the lengthy, costly and often strategic legal cases which we sometimes see in this field, challenges which could be used delay or undermine the CMA’s attempts to level the playing field. Clarity has to be of the essence. We and the noble Lord, Lord Faulks, have amendments to Motion C, and he has eloquently raised the legal concerns which continue to concern us as well.

Our Amendments 32B and 32C address an area of ambiguity that may give lawyers an open door to revisit CMA decisions to impose a penalty when conduct requirements have been breached. This concern was also raised in the Commons debate. For example, Conservative MP John Penrose described the possible impact of the government changes, such that

“clever lawyers working for big tech firms may effectively be able to broaden the scope through clever use of legal techniques to prolong their attempts to walk backwards slowly and prevent justice from being done”.—[Official Report, Commons, 30/4/24; col. 188.]

I could not have put it any better myself. To address this concern, our amendment makes it clear that appeals on penalties in such cases cannot revisit the original decision, whether to impose conduct requirements or that such requirements have not been complied with. Rather than leaving it to ministerial assurances or non-binding additions to the Explanatory Notes, our amendments would make it absolutely clear that merits appeals on penalties are on only the amounts and other points of detail and not the CMA’s decision to act, something that colleagues have referred to as “bleed back” at previous stages. This amendment represents a compromise. We would have preferred a switch back to the use of judicial review on all aspects of appeals, as preferred by the CMA, but in the absence of such a concession I hope noble Lords will see the value of our proposals.

We are not convinced by the assurances offered in the Commons by Minister Hollinrake that the courts will understand how the rules should be applied; the noble Viscount the Minister repeated this today. As the noble Lord, Lord Faulks, ably demonstrated, there are conflicting legal views on this and few precedents on which we can rely. There is also a remaining concern that where a number of issues are dealt with by the CMA concurrently, the evidence may overlap, which would impact on a merits decision on appeals. Our amendments address these concerns. I hope the Minister sees the sense in our proposal. It merely reflects what the Government say they want to achieve, but which they are refusing to put in legislation. Challenger firms and other interested parties cannot grow and compete with warm words alone, so I give notice that I am minded to test the opinion of the House on this important issue.

The noble Lord, Lord Faulks, also made a compelling case on his Motion Al with regard to proportionality. We have debated this issue before; I do not need to repeat the arguments. We continue to believe that the original wording that the CMA’s conduct in regulating digital markets should be “appropriate” rather than “proportionate” sets the right standard. I hope the Minister will be able to confirm that the Explanatory Notes will be amended to make it clear that the use of “proportionate” is not intended to set a heightened standard for appeals grounds.

Finally, I am grateful to the noble Lord, Lord Clement- Jones, for setting out his case so clearly on countervailing benefits. Again, this is a helpful compromise wording, which seeks to combine our preferred wording on the “indispensable” standard—a well-understood concept in UK competition law—with the Government’s new wording, which they claim helps to provide clarity. If the Minister is not minded to accept that amendment, could he please not only assure the House of this today but agree to change the Explanatory Notes to make it clear that the “indispensable” standard of countervailing benefits is the same as the Government’s preferred wording that
“those benefits could not be realised without the conduct”?
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 Portrait Viscount Camrose (Con)
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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 Portrait Lord Clement-Jones (LD)
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Will the Government update the Explanatory Notes?

Viscount Camrose Portrait Viscount Camrose (Con)
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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 Portrait Lord Pannick (CB)
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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 Portrait Viscount Camrose (Con)
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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 Portrait Lord Faulks (Non-Afl)
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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.

Motion A1 withdrawn.
Motion A agreed.
Motion B
Moved by
Viscount Camrose Portrait Viscount Camrose
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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 Portrait Viscount Camrose (Con)
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My Lords, I have already spoken to Motion B. I beg to move.

Motion B1 (as an amendment to Motion B)

Lord Clement-Jones Portrait Lord Clement-Jones
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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.”

Lord Clement-Jones Portrait Lord Clement-Jones (LD)
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My Lords, if this is not a non-parliamentary expression, I will say that the Minister has come within a gnat’s whisker of where we need to be. I rely on his assurances about Explanatory Notes, because they will be important, but I do not move Motion B1.

Motion B1 not moved.
Motion B agreed.
Motion C
Moved by
Viscount Camrose Portrait Viscount Camrose
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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 Portrait Viscount Camrose (Con)
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My Lords, I have already spoken to Motion C. I beg to move.

Motion C1 not moved.
Motion C2 (as an amendment to Motion C)
Baroness Jones of Whitchurch Portrait Baroness Jones of Whitchurch
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Moved by

At end insert “, and do propose Amendments 32B and 32C in lieu—

32B: Clause 89, page 55, line 20, at end insert— “(1A) Appeals (or parts of appeals) to a penalty imposed under section 85 (penalties for failure to comply with competition requirements) through the application of section 114 of the EA 2002 do not apply to— (a) the CMA’s original decision to impose the requirements as set out in section 85(2), or (b) the original finding that an undertaking has failed to comply with a conduct requirement as set out in section 85(3). (1B) Appeals (or parts of appeals) relating to the decisions listed in subsection (1A) must be determined in accordance with the requirement in section 103(4).”
32C: Clause 103, page 62, line 4, after “89(1)” insert “to (1B)””
Baroness Jones of Whitchurch Portrait Baroness Jones of Whitchurch (Lab)
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My Lords, the Minister said more or less that he agreed with our position but did not see the need for the amendments to be on the face of the Bill. The argument he gave was that the courts would have no difficulty in distinguishing the penalties from the earlier elements of the case—but, as we have already heard this afternoon, some of those legal disputes are just beginning. It is not as clear-cut as we would like, legally, and therefore we do feel the need for that clarification to be in the Bill. I therefore wish to test the opinion of the House on Motion C2.


Division 1

Ayes: 221

Labour: 121
Liberal Democrat: 59
Crossbench: 32
Non-affiliated: 5
Plaid Cymru: 2
Green Party: 1
Bishops: 1

Noes: 222

Conservative: 197
Crossbench: 11
Non-affiliated: 6
Democratic Unionist Party: 4
Bishops: 1
Ulster Unionist Party: 1
Labour: 1
Independent: 1

Motion C agreed.
Motion D
Moved by
Viscount Camrose Portrait Viscount Camrose
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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.”
Motion D agreed.
Motion E
Moved by
Lord Offord of Garvel Portrait Lord Offord of Garvel
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That this House do not insist on its Amendment 104, to which the Commons have disagreed for their Reason 104A.

104A: Because protections for consumers in relation to secondary ticketing are adequately provided for under existing legislation (in particular Chapter 5 of Part 3 of the Consumer Rights Act 2015 and the Breaching of Limits on Ticket Sales Regulations 2018 (S.I. 2018/735)).
Lord Offord of Garvel Portrait The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Offord of Garvel) (Con)
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My Lords, I too thank noble Lords for their constructive engagement and debate during the passage of this Bill and echo the remarks of my noble friend Lord Camrose on the importance of this legislation. Since noble Lords last discussed secondary ticketing, the Government have given further thought to addressing the concerns raised in both Houses. We still do not see the merit in more or duplicative regulation at this stage. Enforcement action using the existing rules has already resulted in jail sentences for two touts as well as a confiscation order of £6.1 million. We are also awaiting sentencing on four recent prosecutions later this month.

Crucially, there have been rapid changes in the ticketing market in the last few years. Greater use of app-based verification and staggered ticket releases mean that businesses in the primary market can, if they wish, easily manage secondary ticketing. However, it is evident that good practice must go further and wider. That is why the Government are committing to carry out a review of the ticketing market as a whole, including primary sellers, so that good practice can be spread further. The most recent review by the CMA examined only the secondary market, but it is our belief that seeking to address benefits and protections purely through action in the secondary market will not deliver the best outcomes for consumers. For this reason, the review will consider issues such as why some primary sellers seem to be more successful than others at getting tickets directly into the hands of genuine fans, and what we can learn from that. The review will take place over nine months, after which the Government will consider any appropriate further action.

The Department for Business and Trade is ready to work with DCMS and start the review as soon as possible after the Bill receives Royal Assent. We will welcome input, expertise and views from this House and the other place, as well as from venues, artists, promoters, ticket sellers and resellers, enforcers and consumers. I encourage noble Lords to back the Government’s review to ensure meaningful and evidence-based recommendations following its conclusion. I invite noble Lords to agree the Motion and I beg to move.

Motion E1 (as an amendment to Motion E)

Moved by
Lord Moynihan Portrait Lord Moynihan
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At end insert “, and do propose Amendment 104B in lieu—

104B: After Clause 308, insert the following new Clause—
“Secondary ticketing facilities
(1) After section 92 of the Consumer Rights Act 2015 insert—
“92A Requirements on secondary ticketing facilities
(1) A secondary ticketing facility must not—
(a) permit a trader or business to list tickets for resale unless the trader or business has provided evidence of proof of purchase to the ticketing facility, or evidence of title to the tickets offered for resale, or
(b) permit a reseller to sell more tickets to an event than they can legally purchase from the primary market.
(2) A secondary ticketing facility must ensure that the face value of any ticket listed for resale, and the trader or business’s name and trading address are clearly visible, in full, on the first page on which a purchaser can view the ticket.
(3) The Secretary of State may by regulations made by statutory instrument—
(a) add or amend conditions on secondary ticketing facilities,
(b) specify appropriate forms of proof of purchase for the purposes of subsection (1)(a), and
(c) specify the form or forms in which the name and trading address required under subsection (2) must be displayed.
(4) Regulations under subsection (3) may not revoke conditions on secondary ticketing facilities.
(5) Regulations under subsection (3) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”
(2) Within the period of nine months beginning with the day on which this Act is passed, the Secretary of State must lay before Parliament the outcomes of a review of the impact of subsection (1) on the operation of the secondary ticketing market.
(3) In preparing the review under subsection (2), the Secretary of State must consult—
(a) ticket sellers and resellers,
(b) artists and performers, or their representatives,
(c) consumers and representative organisations, and
(d) any other persons the Secretary of State deems appropriate.
(4) The review under subsection (2) may, if the Secretary of State deems it appropriate, consult on or specify new conditions to be placed on secondary ticketing facilities under the powers in section 92A of the Consumer Rights Act 2015.
(5) The obligation under subsection (2) may be met by a review begun before the passing of this Act.””
Lord Moynihan Portrait Lord Moynihan (Con)
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My Lords, I declare an interest in having been co-chair of the APPG on Ticket Abuse, my fellow co-chair being Sharon Hodgson MP. We worked together to protect sport fans and concert- goers from abuse in the secondary market for decades. I start by thanking my noble friend the Minister for the interest he has taken in the subject and for arranging the opportunity to talk through the issues concerned. I also stress the cross-party support and co-operation on this issue. I believe we have reached a degree of consensus about what we are trying to achieve with this amendment in lieu, and I hope we will continue, during the exchanges this afternoon, to reach agreement.

Put simply, this amendment covers two aspects: a review, as requested by the Government, which was the main outcome of the proceedings in another place; and two small but critical amendments. The first is that anybody should have to provide evidence of proof of purchase to the secondary market if they intend to sell tickets, just as you would in any other secondary market, which would avoid the extensive fraud in the UK under the current legislation. The second is to make sure that the trader’s name and the face value of the ticket listed for resale are clearly visible on the ticket. That would bring us up to date with modern technology and the changes in law and technology over the last 10 years.

As my noble friend the Minister mentioned, the Minister in the other place offered a review of the primary and secondary ticket markets, saying that
“we recognise the strength of feeling on this matter, which has been expressed by Members of the other place and in certain quarters of this House, so we commit today to undertaking a review of ticketing practices and how they impact on consumers”.—[Official Report, Commons, 30/4/24; col. 180.]
I think a further review is not needed at this time. When we debated this issue on the Consumer Rights Bill, the Government commissioned an independent inquiry undertaken by Professor Waterson. That led to yet another inquiry by the CMA, which reported under 1,000 days ago in a substantial document of some 60 pages. Its findings and recommendations, which are reflected in the two proposals in my amendment, came after nearly six years of detailed review, as opposed to the six months of further review that the Government are offering today. Another review would push us further down the road, while the world of sport and entertainment faces an exponential rise in the abuses caused by manipulation of the secondary market.
Astute Members of your Lordships’ House will have noted that, in a spirit of co-operation and progress, as I believe it is important for the House to accommodate as far as possible the wishes of another place, a further time-limited review has been placed in this amendment. However, the clerks have informed me that it has to be within the scope of Amendment 104, since the original amendment referred only to the secondary ticket facilities. It would be inconceivable if we did not consider the primary and secondary ticket markets in the terms of reference for the review, because they rely on each other. While a further review is unnecessary, the work of the primary market would in any event be a key aspect of any independent review since the two markets are inextricably linked. I am happy, in that context, to recommend a further review.
I am not against the secondary market and nothing in my amendment would impact the effective working of its transparent and legal operation. If you cannot go to an event, you should be able to sell back your ticket. Virtually every leading primary market supplier makes that possible. My amendment focuses on the much narrower abusive use of the secondary market—exactly the type of market that this House criminalised at the time of the Olympic Games in the legislation that we passed for London 2012. This market has become so corrosive that it has been completely criminalised in a number of countries, not least recently in Ireland, and this Chamber has criminalised it in football—although, as I will demonstrate, existing legislation is being circumvented by the likes of viagogo. My amendment is exclusively about the illegal, corrupt black market in evidence in parts of the secondary market. My minor but important changes are directly supported by the report and recommendations of the CMA, which we recognise as an expert in this area and which has been pushing hard for the sort of changes before your Lordships’ House today. This would make the life of modern-day ticket touts more difficult and protect the tens of thousands of consumers who are exposed to the criminality of the market on a daily basis.
Two examples were mentioned by my noble friend the Minister when the House last considered this amendment and sent it to another place. First, my noble friend said about Six Nations rugby that
“I go to Murrayfield and my ticket is a personal ticket with my name and seat number on it. If I am found to have sold it on to someone else at a higher price, I will lose any right to further tickets”.—[Official Report, 13/3/24; col. 2078.]
During our meeting last Thursday, I suggested that the officials who attended should go online, where they would see—in direct contravention of the terms and conditions of Scottish Rugby—viagogo already listing significant numbers of tickets for 2025’s Six Nations matches, including a game at Murrayfield, in flagrant breach of the terms and conditions of the Consumer Protection Act. Without my amendments, it is made more difficult for the Scottish Rugby Union to stop what could be fraudulent tickets.
All the listings on viagogo are from traders, and most appear to be advertised in breach of the Consumer Rights Act, since they fail to specify seat details. The locations they quote are general, such as “west section, upper tier”, “bronze” or “event restrictions”. The screen- grabs are all hidden behind CAPTCHA, which was originally meant to protect consumers but is widely used by viagogo and others to make it incredibly difficult for the casual buyer to locate.
The Minister is right when he says that the Scottish Rugby Union has strong terms and conditions in place to protect fans from exploitation. Scottish Rugby knows that the laws and regulations in place are not sufficiently comprehensive in stopping irresponsible secondary sites ignoring their terms and conditions to make a profit exclusively from their suppliers—the modern-day ticket touts using bots. Sadly, it happens more every month of every year.
The secondary market relies on suppliers. They become a preferred supplier by using bots: computer software that can store thousands of credit card details. When you or I go online to buy a ticket for a popular concert and add in our details, by the time we complete the request we are in a long queue. In the meantime, the modern-day tout—the preferred supplier—has swept the market and sold the tickets on to viagogo and others, which then have them up for sale on their websites before we even finish our application. If the preferred supplier cannot sweep the number of tickets he has promised to the secondary market, which ignores the promoter’s terms and conditions, he will forge them and deliver them all to the secondary market to retain his preferred supplier status. This amendment would require proof of purchase. Why would anyone not welcome rules and regulations being tightened up to protect consumers?
My noble friend the Minister used a second example relating to the opening of Euro 2024, the Scotland v Germany game, in Munich, saying that
“in that particular case I do not have a named ticket. Indeed, I was not able to get a ticket, and I have in fact accessed the secondary market—and I will not be able to tell your Lordships’ House until the day before whether those tickets are legal or not”.—[Official Report, 13/3/24; col. 2079.]
If I Google “Euro 2024 Germany v Scotland tickets”, the top sponsored results are the following websites: Live Football Tickets, Ticombo, viagogo and Seatsnet. All claim in their adverts that tickets are 100% guaranteed or 100% secure, and all too have very dubious operators. For example, Ticombo is owned and operated by Barlaup, the same person who failed to deliver over 20,000 tickets for the London 2012 Olympics, leaving the majority of victims without a refund. I told my noble friend the Minister that he had literally no idea who he was buying from or where he would be seated, and that he could well be handling stolen goods.
As well as breaching Section 166 of the Criminal Justice and Public Order Act 1994, these listings all breach UK consumer protection legislation by failing to provide seat or trader details and information about restrictions on use. The official event terms and conditions for Euro 2024 clearly state that resale for profit is not allowed, although you can resell for face value or transfer to another fan for personal use. This amendment in lieu recognises that the existing rules and legislation are not working effectively. It would add two provisions to make it more difficult to circumvent the law, which would help Scottish Rugby and Euro 2024 go after the scalpers and protect the consumers.
In my view, it is absolutely vital that we consider carefully the outcome of what the CMA has reviewed over nearly six years of detailed investigation, including its call to this House to implement new legislation to bring us up to speed with what is happening in the market. The CMA went further than requiring the secondary market to put face value, the business name and the trading addresses on the face of the tickets; it wants a licensing system. That may be required, but my amendment achieves the same result without the cost of that new system.
The CMA was simply asking for clear and coherent information on the ticket—and that is all I am asking the House for today. Yet my amendment has moved with the times. We are now 10 years on from the Consumer Rights Act. That time, when we first asked for this, was before the secondary market had the technology to hide behind icons and hyperlinks, requiring customers to dig interminably deeper into wormholes on their websites before they find the information that was then—and still often is—translated into a foreign language. This amendment seeks a clear requirement, requested from the CMA, that the reseller cannot sell more than they can legally purchase.
It is with a heavy heart that I say that, throughout the proceedings of this legislation, Ministers in both Houses, either on the record or in discussion with me, have not put forward one argument as to why the amendment would not work. I am in favour of a free market, but one that obeys the law. From time to time, we need to make a small amendment to update the law to avoid unscrupulous traders abusing it, as with hiding information behind near impenetrable icons. There is no difference between my noble friend the Minister saying that he is in favour of auction houses but will turn one blind eye to the provenance of what they are auctioning and another blind eye to the contract entered into between the seller and the auction house and him recommending exactly that in the secondary market by rejecting the amendment. All that we have had in response is that it is time for another review—and a nine-month review, not a nearly six-year review, to which we have not responded in law.
It is time to listen to the CMA and to protect the consumers. It is time to stop the many examples of people, genuinely thinking that they have acquired tickets from the secondary market, travelling with their families for a special occasion to a major pop concert or sporting event only to be turned away. The market is not operating as efficiently as it should be and there is deep corruption in many aspects of it, which would be addressed by the amendment. That is why the CMA has called for action on this and why we should protect the consumers. I beg to move.
Lord Clement-Jones Portrait Lord Clement-Jones (LD)
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My Lords, I support Motion E1 and pay fulsome tribute to the noble Lord, Lord Moynihan, for his expertise and tenacity. Thanks to his efforts and those of Sharon Hodgson MP, and after a long campaign with the All-Party Group on Ticket Abuse, we were able to include certain consumer protections in the ticketing market in the Consumer Rights Act 2015. The noble Lord’s amendment on Report sought to introduce additional regulatory requirements on secondary ticketing sites for proof of purchase, ticket limits and the provision of information on the face of tickets. That would have secured greater protection for consumers and avoided market exploitation, which is currently exponentially growing on platforms such as viagogo.

As we have heard, the Ministers—the noble Lord, Lord Offord, and the noble Viscount, Lord Camrose—in their letter of 1 May to noble Lords, offered a review that would take place over nine months, which would make recommendations for Ministers to consider. But that is simply not enough, as the noble Lord, Lord Moynihan, has demonstrated. The Minister, the noble Lord, Lord Offord, seems to believe from his own experience—unlike the rest of us—that everything is fine with the secondary market and that the answer to any problem lies in the hands of the primary ticket sellers. However, the noble Lord, Lord Moynihan, in his brilliantly expert way, demonstrated extremely cogently how that is absolutely not the case for the Minister’s favourite sports of rugby and football, where the secondary resellers are flagrantly breaking the law.

Furthermore, the Minister has used the examples both in debate and in correspondence—I thank him for taking the time to meet other noble Lords—of Ed Sheeran, Mumford & Sons, Iron Maiden and Glastonbury as putting in place restrictions on primary market sales to suggest that we should focus our attention on putting pressure on the organisers of these events to use existing legislation to prevent the unfair secondary market. However, apart from anything else, why is it solely the responsibility of artists and promoters to prevent secondary ticketing websites and their suppliers breaking the law? Surely they also deserve greater support. Most other artists do not have the resources to put in place these controls.
As the noble Lord, Lord Moynihan, said, all the UK’s main primary ticketing operators offer capped, consumer-friendly resale at the price originally paid or less. All can guarantee the tickets being resold. This model has become standard in the UK market, and such services are now widely publicised at venues. But the growth of this genuine consumer-to-consumer market is being held back by the black market of uncapped ticket resale.
By implementing this amendment in lieu, the Government have an opportunity to fix many of these issues in one fell swoop. It would ensure that touts could not resell vast quantities of criminally acquired tickets through websites such as viagogo, and fans could purchase tickets at face value as intended. After all, something along these lines, as the noble Lord explained, was proposed also by the CMA. We should support it.
Lord Leong Portrait Lord Leong (Lab)
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My Lords, I will speak to Motion E1 in the name of the noble Lord, Lord Moynihan. Like the noble Lord, Lord Clement-Jones, I thank him and my honourable friend the Member for Washington and Sunderland West for their relentless campaigning and enduring diligence on this issue.

The current system is not working. It is not strong enough to stop a shadowy oligopoly of parasites on talent: unscrupulous people who are profiteering from genuine fans who want to see their heroes perform live. Tickets for many high-profile events, which by their very nature are extremely limited in supply, are being resold for many times their face value. Genuine sports supporters and music fans are being ripped off.

I will give just one example. The original price of the most expensive seated tickets for Taylor Swift in Edinburgh next month was £194 each. I went online to book mine last night, dedicated Swiftie fan that I am, and the cheapest seated tickets with unrestricted views were more than £500 each for two together. The most expensive pairs were £3,646 each—more than 19 times the original price. If I were to buy them, I would wonder to whom that additional money, almost £7,000, was going. It is obviously not going to Taylor Swift—or Tay Tay, as we fans call her.

Sports clubs and artists pitch their prices at a level which they think is fair and which enables them to make a profit: a price that allows their fans to enjoy their work—often a special occasion that will be remembered for a lifetime. When they see their fans charged excessive prices, they are right to believe that their hard work, talent and reputations are being exploited. These excess profits are not going to those who have worked hard to develop sporting prowess or exceptional skills as a performer; they are going to unscrupulous organisations which are often difficult to track and prosecute and which are prepared to exploit existing loopholes and take risks by breaking the law, knowing that they are unlikely to be caught. Such organisations employ sophisticated technology to distort a necessarily restricted market. In his response on day 2 of our debate, on 13 March, the Minister argued his case for not accepting amendments on this issue. The noble Lord, Lord Moynihan, has, with characteristic persistence and diligence, convincingly rebutted those arguments and perhaps alerted the Minister, as he set out earlier, to just how easy it is to be misled, overcharged and ripped off by the various online sites which operate in the secondary market, perhaps even saving him from an expensive mistake the next time he chooses to see an international rugby or football match or even a pop concert.

The CMA made recommendations in relation to secondary ticketing that are covered by this amendment, as the noble Lord set out earlier. The first was to ensure that secondary tickets can be sold only with proof of purchase of the original ticket, to avoid speculative sales of tickets which may not have been bought and might not be provided—a recipe for rip-offs. The second was to limit the number of resales by a single reseller to the amount that can legally be purchased on the primary market. If a reseller is offering tickets in groups larger than this, that must indicate that the additional tickets have been misdescribed or misappropriated and potentially that the purchaser could unknowingly be receiving stolen goods. The amendment also requires that secondary sellers make the original face value of the ticket clearly visible to the purchaser. Subsection (3) of the new clause inserted by the amendment gives the Secretary of State powers to impose or amend conditions for resellers in response to further loopholes being found by resellers to get around these reasonable and legal restrictions, if any emerge in the future.

The second part of the amendment is equally important. It formalises the Government’s non-legislative commitment to undertake a review over the next nine months, as mentioned earlier by noble Lords. By the time that review finishes, the Consumer Rights Act 2015 will be 10 years old. It is already showing its age in the face of the rapid technological advances allowing unscrupulous companies to exploit fans and performers. The review will enable the Secretary of State to identify emerging risks—the unknown unknowns—and respond to rapidly changing technology as touts inevitably seek to exploit the loopholes of the future.

Every year, fans spend millions of pounds of their hard-earned money on these special occasions. It should not go to touts or resellers who exploit the system and play fast and loose with consumer law. The devil is in the detail here and it is also in delay. The time to act is now. The combined weight of the concerns and arguments of the noble Lord, Lord Moynihan, the CMA, the entertainment and sports industries, consumer groups and ordinary fans is difficult to resist. I am impressed by the Minister’s resolve in the face of this tsunami, but I hope that he will now support this amendment. If the noble Lord, Lord Moynihan, wishes to test the will of the House, we on this side will support him.

Lord Offord of Garvel Portrait Lord Offord of Garvel (Con)
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My Lords, I thank all noble Lords who have debated the topic of secondary ticketing today. It has been an interesting and constructive discussion on a very important topic.

Turning to Motion E1, tabled by my noble friend Lord Moynihan and regarding secondary ticketing, I thank the noble Lords, Lord Clement-Jones and Lord Leong, for their contributions. I also thank my noble friend for his thoughtful engagement on issues in the secondary ticketing market and his commitment to work with the Government on solutions. As he will know, following our meeting last week and engagement since then, we share many of these concerns—although we differ slightly in our judgment of the best means of addressing them.

This Government have already brought in extensive and successful legislative protections for consumers buying on the secondary ticketing market. These go above and beyond standard consumer rights and require both ticket resellers and platforms to provide ticket information to buyers.

It is appropriate to consider the amendment in Motion E1 in detail. Proposed new subsection (1)(a) requires that a platform seeks confirmation of proof of purchase or evidence of title before allowing a ticket to be listed. It does not set out what might satisfy such requirements, so this is likely to come down to a question of due diligence as a platform to be challenged.

Moreover, it is already a criminal offence, as unfair trading or fraud for traders, to offer for sale a product that cannot be legally sold. Recent prosecutions included breaches of the Fraud Act as part of their basis. Similarly, speculative selling is something that the CMA has sought to address through enforcement, because actions such as that mentioned in relation to the SRU—selling tickets not even issued yet—are not allowed under current law.

Proposed new subsection (1)(b) seeks to apply primary sale ticket limits to the secondary market but, having consulted primary agents, we feel that this is impractical. The number of tickets that a person can purchase depends on the event. It would be difficult for a platform to know what, if any, limits there were for each event, especially when tickets are sold through multiple primary agents.

Proposed new subsection (2) imposes requirements to make clearly visible information about the face value of the ticket, and the trader’s name and business address. Both these elements are already required by UK law; existing legislation requires this information to be “clear and comprehensible”. This is a clear general provision, its application in the circumstances being one for regulators and the courts. There is a greater risk of loopholes if certain practices are specifically provided for but others are not.

In his review, Professor Waterson recommended that enforcement action be taken to drive compliance. That has happened with CMA action, and we have seen successful prosecution of ticket touts, as evidenced by the case of R v Hunter and Smith, which resulted in prison sentences and financial confiscations. However, at that time, the CMA review did not look at the primary market.

During the passage of the Bill, we listened to arguments by noble Lords opposite about the merits of a review of the market as a whole, looking not just at what happens on the secondary market, but at how tickets flow from the primary market. We can better establish the practice and interventions that will deliver benefits and protections for consumers and support events going on in the UK.

I admire my noble friend Lord Moynihan’s dogged commitment to this issue. He wants to beef up the existing rules, but we already have extensive rules in this area. This issue will not be solved simply by adding more and more legislation; it will be solved by better implementation. We have started by radically boosting enforcement powers in Part 3; the next step is to understand how tickets move from primary sale to the secondary market, for different events, in different venues.

On that basis, I urge noble Lords to support the review that we have set out today, and to consider carefully the Motion put forward by the Government. I hope that all Members feel able to support our position.

Lord Moynihan Portrait Lord Moynihan (Con)
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My Lords, I thank noble Lords from across the House. We have covered the ground extensively again. I particularly thank the Minister; I think it is the first time, in the whole process, that he has engaged in the detail of the amendment while accepting with me the need to take action. If he had done that somewhat earlier in the process, we might have made progress, but it gives me significant confidence that he has done it today. We now have the opportunity to consider improving the wording, and we can do so by passing the Motion that is in front of your Lordships’ House. We will see whether we can take practical steps, rather than make an outright rejection, and a request, as happened in the other place, for a further six-month review.

I very much welcome what the Minister said, but I was not convinced, primarily because what he said was that we needed clear and comprehensible information on the front of the tickets, yet we do not have that. They are impenetrable because they are hidden behind icons, and that is the very purpose of the key amendment. Had he therefore accepted the principle, he would have accepted the amendment.

We have made significant progress today. We can and should continue this debate, so I ask noble Lords to support consumers, sports fans, and those attending major music events, against the corruption that currently exists. I do so with a strong belief that we can get this right and put into legislation in this country the necessary steps and protections to make life a lot easier for those—not just the two cases that have come to court—who night after night, throughout the United Kingdom, are turned away from major events because of the fraudulent abuse of the secondary market. With that in mind, I would like to test the will of the House.


Division 2

Ayes: 228

Labour: 124
Liberal Democrat: 59
Crossbench: 31
Non-affiliated: 7
Conservative: 3
Plaid Cymru: 2
Bishops: 1
Green Party: 1

Noes: 213

Conservative: 195
Crossbench: 6
Non-affiliated: 5
Democratic Unionist Party: 3
Ulster Unionist Party: 2
Labour: 1
Independent: 1