Online Safety Act 2023 (Priority Offences) (Amendment) Regulations 2024

Lord Clement-Jones Excerpts

Monday 28th October 2024 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

My Lords, these regulations were laid before the House on 12 September this year. The Government stated in their manifesto that they would

“use every government tool available to target perpetrators and address the root causes of abuse and violence”

in order to achieve their

“landmark mission to halve violence against women and girls in a decade”.

Through this statutory instrument, we are broadening online platforms’ and search engines’ responsibilities for tackling intimate image abuse under the Online Safety Act. More than one in three women have experienced abuse online. The rise in intimate image abuse is not only devastating for victims but also spreads misogyny on social media that can develop into potentially dangerous relationships offline. One in 14 adults in England and Wales has experienced threats to share intimate images, rising to one in seven young women aged 18 to 34.

It is crucial that we tackle these crimes from every angle, including online, and ensure that tech companies step up and play their part. That is why we are laying this statutory instrument. Through it, we will widen online platforms’ and search engines’ obligations to tackle intimate image abuse under the Online Safety Act. As noble Lords will know, the Act received Royal Assent on 26 October 2023. It places strong new duties on online user-to-user platforms and search services to protect their users from harm.

As part of this, the Act gives service providers new “illegal content duties”. Under these duties, online platforms need to assess the risk that their services will allow users to encounter illegal content or be

“used for the commission or facilitation of a priority offence”.

They then need to take steps to mitigate identified risks. These will include implementing safety-by-design measures to reduce risks and content moderation systems to remove illegal content where it appears.

The Online Safety Act sets out a list of priority offences for the purposes of providers’ illegal content duties. These offences reflect the most serious and prevalent online illegal content and activity. They are set out in schedules to the Act. Platforms will need to take additional steps to tackle these kinds of illegal activities under their illegal content duties.

The priority offences list currently includes certain intimate image abuse offences. Through this statutory instrument, we are adding new intimate image abuse offences to the priority list. This replaces an old intimate image abuse offence, which has now been repealed. These new offences are in the Sexual Offences Act 2003. They took effect earlier this year. The older offence was in the Criminal Justice and Courts Act 2015. The repealed offence covered sharing intimate images where the intent was to cause distress. The new offences are broader; they criminalise sharing intimate images without having a reasonable belief that the subject would consent to sharing the images. These offences include the sharing of manufactured or manipulated images, including so-called deepfakes.

Since these new offences are more expansive, adding them as priority offences means online platforms will be required to tackle more intimate image abuse on their services. This means that we are broadening the scope of what constitutes illegal intimate image content in the Online Safety Act. It also makes it clear that platforms’ priority illegal content duties extend to AI-generated deepfakes and other manufactured intimate images. This is because the new offences that we are adding explicitly cover this content.

As I have set out above, these changes affect the illegal content duties in the Online Safety Act. They will ensure that tech companies play their part in kicking this content off social media. These are just part of a range of wider protections coming into force next spring through the Online Safety Act that will mean that social media companies have to remove the most harmful illegal content, a lot of which disproportionately affects women and girls, such as through harassment and controlling or coercive behaviour.

Ofcom will set out the specific steps that providers can take to fulfil their illegal content duties for intimate image abuse and other illegal content in codes of practice and guidance documentation. It is currently producing this documentation. We anticipate that the new duties will start to be enforced from spring next year once Ofcom has issued these codes of practice and they have come into force. Providers will also need to have done their risk assessment for illegal content by then. We anticipate that Ofcom will recommend that providers should take action in a number of areas. These include content moderation, reporting and complaints procedures, and safety-by-design steps, such as testing their algorithm systems to see whether illegal content is being recommended to users. We are committed to working with Ofcom to get these protections in place as quickly as possible. We are focused on delivering.

Where companies are not removing and proactively stopping this vile material appearing on their platforms, Ofcom will have robust powers to take enforcement action against them. This includes imposing fines of up to £18 million or 10% of qualifying worldwide revenue, whichever is highest.

In conclusion, through this statutory instrument we are broadening providers’ duties for intimate image abuse content. Service providers will need to take proactive steps to search for, remove and limit people’s exposure to this harmful kind of illegal content, including where it has been manufactured or manipulated. I hope noble Lords will commend these further steps that we have taken that take the provisions in the Online Safety Act a useful further step forward. I commend these regulations to the Committee, and I beg to move.

[Lord Clement-Jones (LD)]

My Lords, I thank the Minister for her introduction. I endorse everything she said about intimate image abuse and the importance of legislation to make sure that the perpetrators are penalised and that social media outlets have additional duties under Schedule 7 for priority offences. I am absolutely on the same page as the Minister on this, and I very much welcome what she said. It is interesting that we are dealing with another 2003 Act that, again, is showing itself fit for purpose and able to be amended; perhaps there is some cause to take comfort from our legislative process.

I was interested to hear what the Minister said about the coverage of the offences introduced by the Online Safety Act. She considered that the sharing of sexually explicit material included deepfakes. There was a promise—the noble Viscount will remember it—that the Criminal Justice Bill, which was not passed in the end, would cover that element. It included intent, like the current offence—the one that has been incorporated into Schedule 7. The Private Member’s Bill of the noble Baroness, Lady Owen—I have it in my hand—explicitly introduces an offence that does not require intent, and I very much support that.

I do not believe that this is the last word to be said on the kinds of IIA offence that need to be incorporated as priority offences under Schedule 7. I would very much like to hear what the noble Baroness has to say about why we require intent when, quite frankly, the creation of these deepfakes requires activity that is clearly harmful. We clearly should make sure that the perpetrators are caught. Given the history of this, I am slightly surprised that the Government’s current interpretation of the new offence in the Online Safety Act includes deepfakes. It is gratifying, but the Government nevertheless need to go further.

[Baroness Owen of Alderley Edge (Con)]

My Lords, I welcome the Minister’s remarks and the Government’s step to introduce this SI. I have concerns that it misses the wider problems. The powers given to Ofcom in the Online Safety Act require a lengthy process to implement and are not able to respond quickly. They also do not provide individuals with any redress. Therefore, this SI adding to the list of priority offences, while necessary, does not give victims the recourse they need.

My concern is that Ofcom is approaching this digital problem in an analogue way. It has the power to fine and even disrupt business but, in a digital space—where, when one website is blocked, another can open immediately—Ofcom would, in this scenario, have to restart its process all over again. These powers are not nimble or rapid enough, and they do not reflect the nature of the online space. They leave victims open and exposed to continuing distress. I would be grateful if the Government offered some assurances in this area.

The changes miss the wider problem of non-compliance by host websites outside the UK. As I have previously discussed in your Lordships’ House, the Revenge Porn Helpline has a removal rate of 90% of reported non-consensual sexually explicit content, both real and deepfake. However, in 10% of cases, the host website will not comply with the removal of the content. These sites are often hosted in countries such as Russia or those in Latin America. In cases of non-compliance by host websites, the victims continue to suffer, even where there has been a successful conviction.

If we take the example of a man who was convicted in the UK of blackmailing 200 women, the Revenge Porn Helpline successfully removed 161,000 images but 4,000 still remain online three years later, with platforms continuing to ignore the take-down requests. I would be grateful if the Government could outline how they are seeking to tackle the removal of this content, featuring British citizens, hosted in jurisdictions where host sites are not complying with removal.

Communications Act 2003 (Disclosure of Information) Order 2024

Lord Clement-Jones Excerpts

Monday 28th October 2024 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

My Lords, this order was laid before the House on 9 September this year. The Online Safety Act lays the foundations of strong protection for children and adults online. I am grateful to noble Lords for their continued interest in the Online Safety Act and its implementation. It is critical that the Act is made fully operational as soon as possible, and the Government are committed to ensuring that its protections are delivered as soon as possible. This statutory instrument will further support the implementation of the Act by Ofcom.

This statutory instrument concerns Ofcom’s ability to share business information with Ministers for the purpose of fulfilling functions under the Online Safety Act 2023, under Section 393 of the Communications Act 2003. This corrects an oversight in the original Online Safety Act that was identified following its passage.

Section 393 of the Communications Act 2003 contains a general restriction on Ofcom disclosing information about particular businesses without consent from the affected businesses, but with exemptions, including where this facilitates Ofcom in carrying out its regulatory functions and facilitates other specified persons in carrying out specific functions. However, this section does not currently enable Ofcom to share information with Ministers for the purpose of fulfilling functions under the Online Safety Act. This means that, were Ofcom to disclose information about businesses to the Secretary of State, it may be in breach of the law.

It is important that a gateway exists for sharing information for these purposes so that the Secretary of State can carry out functions under the Online Safety Act, such as setting the fee threshold for the online safety regime in 2025 or carrying out post-implementation reviews of the Act required under Section 178. This statutory instrument will therefore amend the Communications Act 2003 to allow Ofcom to share information with the Secretary of State and other Ministers, strictly for the purpose of fulfilling functions under the Online Safety Act 2023.

There are strong legislative safeguards and limitations on the disclosure of this information, and Ofcom is experienced in handling confidential and sensitive information obtained from the services it regulates. Ofcom must comply with UK data protection law and would need to show that the processing of any personal data was necessary for a lawful purpose. As a public body, Ofcom is also required to act compatibly with the Article 8 right of privacy under the European Convention on Human Rights.

We will therefore continue to review the Online Safety Act, so that Ofcom is able to support the delivery of functions under the Act where it is appropriate. That is a brief but detailed summary of why this instrument is necessary. I should stress that it contains a technical amendment to deal with a very small legal aspect. Nevertheless, I will be interested to hear noble Lords’ comments on the SI. I beg to move.

[Lord Clement-Jones (LD)]

My Lords, I thank the Minister for her introduction and for explaining the essence of the SI. We all have a bit of pride of creation in the Online Safety Act; there are one or two of us around today who clearly have a continuing interest in it. This is one of the smaller outcomes of the Act and, as the Minister says, it is an essentially an oversight. I would say that a tidying-up operation is involved here. It is rather gratifying to see that the Communications Act still has such importance, 21 years after it was passed. It is somewhat extraordinary for legislation to be invoked after that period of time in an area such as communications, which is so fast-moving.

My question for the Minister is whether the examples that she gave or which were contained in the Explanatory Memorandum, regarding the need for information to be obtained by the Secretary of State in respect of Section 178, on reviewing the regulatory framework, and Section 86, on the threshold for payment of fees, are exclusive. Are there other aspects of the Online Safety Act where the Secretary of State requires that legislation?

We are always wary of the powers given to Secretaries of State, as the noble Viscount, Lord Camrose, will probably remember to his cost. But at every point, the tyres on legislation need to be kicked to make sure that the Secretary of State has just the powers that they need—and that we do not go further than we need to or have a skeleton Bill, et cetera—so the usual mantra will apply: we want to make sure that the Secretary of State’s powers are proportionate.

It would be very useful to hear from the Minister what other powers are involved. Is it quite a number, were these two just the most plausible or are there six other sets of powers which might not be so attractive? That is the only caveat I would make in this respect.

Independent Pornography Review

Lord Clement-Jones Excerpts

Monday 14th October 2024 Lords Chamber

[Baroness Jones of Whitchurch (Lab)]

The noble Lord is absolutely right. The scale of violent images featuring women and girls in our country is intolerable, and this Government will treat it as the national emergency it is. The noble Lord will be pleased to hear that the Government have set out an unprecedented mission to halve violence against women and girls within a decade. We are using every government tool we have to target the perpetrators and address the root cause of violence. That involves many legislative and non-legislative measures, as the noble Lord will appreciate, including tackling the education issue. However, ultimately, we have to make sure that the legislation is robust and that we take action, which we intend to do.

[Lord Clement-Jones (LD)]

My Lords, as the Minister and others have mentioned, there is considerable and increasing concern about deepfake pornographic material, particularly the so-called nudification apps, which can be easily accessed by users of any age. What action will the Government be taking against this unacceptable technology, and will an offence be included in the forthcoming crime and policing Bill?

[Baroness Jones of Whitchurch (Lab)]

The noble Lord raises an important point. Where nudification apps and other material do not come under the remit of the Online Safety Act, we will look at other legislative tools to make sure that all new forms of technology—including AI and its implications for online images —are included in robust legislation, in whatever form it takes. Our priority is to implement the Online Safety Act, but we are also looking at what other tools might be necessary going forward. As the Secretary of State has said, this is an iterative process; the Online Safety Act is not the end of the game. We are looking at what further steps we need to take, and I hope the noble Lord will bear with us.

Watchdogs (Industry and Regulators Committee Report)

Lord Clement-Jones Excerpts

Monday 9th September 2024 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, it is a pleasure to follow the noble Lord, Lord Hunt, and a particular pleasure to follow so closely the comprehensive introduction by our excellent former chair, the noble Lord, Lord Hollick.

As the noble Lord alluded to, the Grenfell report and today’s Statement have been an extremely sobering reminder of the importance of effective regulation and the effective oversight of regulators. The principal job of regulation is to ensure societal safety and benefit—in essence, mitigating risk. In that context, the performance of the UK regulators, as well as the nature of regulation, is crucial.

In the early part of this year, the spotlight was on regulation and the effectiveness of our regulators. Our report was followed by a major contribution to the debate from the Institute for Government. We then had the Government’s own White Paper, Smarter Regulation, which seemed designed principally to take the growth duty established in 2015 even further with a more permissive approach to risk and a “service mindset”, and risked creating less clarity with yet another set of regulatory principles going beyond those in the Better Regulation Framework and the Regulators’ Code.

Our report was, however, described as excellent by the Minister for Investment and Regulatory Reform in the Department for Business and Trade under the previous Government, the noble Lord, Lord Johnson of Lainston, whom I am pleased to see taking part in the debate today. I hope that the new Government will agree with that assessment and take our recommendations further forward.

Both we and the Institute for Government identified a worrying lack of scrutiny of our regulators—indeed, a worrying lack of even identifying who our regulators are. The NAO puts the number of regulators at around 90 and the Institute for Government at 116, but some believe that there are as many as 200 that we need to take account of. So it is welcome that the previous Government’s response said that a register of regulators, detailing all UK regulators, their roles, duties and sponsor departments, was in the offing. Is this ready to be launched?

The crux of our report was to address performance, strategic independence and oversight of UK regulators. In exploring existing oversight, accountability measures and the effectiveness of parliamentary oversight, it was clear that we needed to improve self-reporting by regulators. However, a growth duty performance framework, as proposed in the White Paper, does not fit the bill.

Regulators should also be subject to regular performance evaluations, as we recommended; these reviews should be made public to ensure transparency and accountability. To ensure that these are effective, we recommended, as the noble Lord, Lord Hollick mentioned, establishing a new office for regulatory performance—an independent statutory body analogous to the National Audit Office—to undertake regular performance reviews of regulators and to report to Parliament. It was good to see that, similar to our proposal, the Institute for Government called for a regulatory oversight support unit in its subsequent report, Parliament and Regulators.

As regards independence, we had concerns about the potential politicisation of regulatory appointments. Appointment processes for regulators should be transparent and merit-based, with greater parliamentary scrutiny to avoid politicisation. Although strategic guidance from the Government is necessary, it should not compromise the operational independence of regulators.

What is the new Government’s approach to this? Labour’s general election manifesto emphasised fostering innovation and improving regulation to support economic growth, with a key proposal to establish a regulatory innovation office in order to streamline regulatory processes for new technologies and set targets for tech regulators. I hope that that does not take us down the same trajectory as the previous Government. Regulation is not the enemy of innovation, or indeed growth, but can in fact, by providing certainty of standards, be the platform for it.

At the time of our report, the IfG rightly said:

“It would be a mistake for the committee to consider its work complete … new members can build on its agenda in their future work, including by fleshing out its proposals for how ‘Ofreg’ would work in practice”.


We should take that to heart. There is still a great deal of work to do to make sure that our regulators are clearly independent of government, are able to work effectively, and are properly resourced and scrutinised. I hope that the new Government will engage closely with the committee in their work.

AI Technology Regulations

Lord Clement-Jones Excerpts

Tuesday 30th July 2024 Lords Chamber

[Baroness Jones of Whitchurch (Lab)]

I thank my noble friend for those good wishes. Of course, he is raising a really important issue of great concern to all of us. During the last election, we felt that the Government were well prepared to ensure the democratic integrity of our UK elections. We did have robust systems in place to protect against interference, through the Defending Democracy Taskforce and the Joint Election and Security Preparedness unit. We continue to work with the Home Office and the security services to assess the impact of that work. Going forward, the Online Safety Act goes further by putting new requirements on social media platforms to swiftly remove illegal misinformation and disinformation, including where it is AI-generated, as soon as it becomes available. We are still assessing the need for further legislation in the light of the latest intelligence, but I assure my noble friend that we take this issue extremely seriously. It affects the future of our democratic process, which I know is vital to all of us.

[Lord Clement-Jones (LD)]

My Lords, I welcome the creation of an AI opportunities plan, announced by the Government, but, as the noble Lord, Lord Knight, says, we must also tackle the risks. In other jurisdictions across the world, including the EU, AI-driven live facial recognition technology is considered to seriously infringe the right to privacy and have issues with accuracy and bias, and is being banned or restricted for both law enforcement and business use. Will the Government, in their planned AI legislation, provide equivalent safeguards for UK citizens and ensure their trust in new technology?

[Baroness Jones of Whitchurch (Lab)]

I thank the noble Lord for that question and for all the work he has done on the AI issue, including his new book, which I am sure is essential reading over the summer for everybody. I should say that several noble Lords in this Chamber have written books on AI, so noble Lords might want to consider that for their holiday reading.

The noble Lord will know that the use and regulation of live facial recognition is for each country to decide. We already have some regulations about it, but it is already governed by data protection, equality and human rights legislation, supplemented by specific police guidance. It is absolutely vital that its use is only when it is necessary, proportionate and fair. We will continue to look at the legislation and at whether privacy is being sufficiently protected. That is an issue that will come forward when the future legislation is being prepared.

Digital Markets, Competition and Consumers Bill

Lord Clement-Jones Excerpts

Consideration of Commons amendments
Thursday 23rd May 2024 Lords Chamber

[Lord Moynihan (Con)]

My Lords, I thank the Minister for his work on my amendments. As he rightly pointed out, they are the last amendments outstanding on this Bill. I thank the usual channels for their assiduous consideration of whether this should go further at this stage. We have seen some concessions from the Government, which are much appreciated. There is a huge amount of additional work still to be done, and obviously I am sorry that the amendments tabled originally were not accepted in full, but I am very grateful to the Minister for taking some action in the new clause which was agreed in another place the day before yesterday.

I conclude by saying that I will do everything in my power to return to this campaign on behalf of the true fans of sport, music festivals and music events in what I hope will be just a matter of months. In the meantime, I thank the Minister and his outstanding civil servants for all the hard work they have done, not least with the CMA in recent months, and express my gratitude to the whole House for its support.

[Lord Clement-Jones (LD)]

My Lords, I do not propose to go over old competition ground, but like the noble Lord, Lord Moynihan, our attitude to Motion A is not to oppose it but to be somewhat disappointed at the Government’s response; on the other hand, we welcome the fact that they have added new enforcement proposals and provisions and the promised review. I think it is quite unaccountable that they have resisted the almost irresistible force of the noble Lord, Lord Moynihan; it has been a sight to behold his persistence throughout not only this Bill but previous Bills. I am quite confident that eventually his campaigning will bear fruit because, when we look at the terms of the amendments that were not agreed to by the Commons on providing evidence of proof of purchase and of title to tickets, among other things they are only common sense and very good consumer protection.

I add my thank you valedictory to the Minister, his colleague the noble Viscount, Lord Camrose, who I see is riding shotgun today, and the noble Lord, Lord Parkinson, who made a cameo appearance on the Bill and was the Minister involved very heavily in the Online Safety Bill proceedings. Both Ministers have always been willing to engage. They have not always conceded, but they have always listened, so I thank them very much indeed for all their service. It has been a pretty long ride when one looks back to the beginning of the suite of digital Bills in the past two years, starting with the Online Safety Bill, then the digital markets Bill, and now the non-lamented data protection Bill, and I look forward to further digital legislation in the autumn or the beginning of next year.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I add my thanks, first, to the Ministers. As the noble Lord, Lord Clement-Jones, said, they have worked assiduously, and we have felt as if we were constantly in their company over the past six months or so. They have always been courteous and had a listening ear, and I thank them for that. I, too, add my thanks to the members of the Bill team for all their hard work in preparing the Bill and the quite substantial amendments on occasions that have been agreed on concession. I particularly thank the stakeholders in the wider scope of the Bill, the challenger firms and the consumers who have been so active in helping us shape what is becoming a good Bill.

I am sorry that the Government did not see the sense of what I thought was an extremely reasonable amendment from the noble Lord, Lord Moynihan. We remain hugely disappointed in Motion A for the reasons that we have ready rehearsed which I do not need to repeat. I particularly thank the noble Lord, Lord Moynihan, and Sharon Hodgson who have campaigned on this issue for many years. I hope that in due course they will get their reward.

I have to say that, if elected, a Labour Government would strengthen consumer rights legislation to protect fans from fraudulent ticket practices, to restrict the sale of more tickets than permissible and to ensure that anyone buying a ticket on the secondary market can see clearly the original price and where it comes from. We will put the interests of the fans and the public first on this. Nevertheless, we believe overall that this is a good Bill that takes the first steps to regulating the behaviour of the big tech companies, which is long overdue, giving a bit more security to challenger firms and adding protection to consumer rights. We are grateful for the concessions made along the way that have indeed improved the Bill. At this stage in the proceedings, we think it is right that the Bill do now pass and that we do not need to debate it any further.

Digital Markets, Competition and Consumers Bill

Lord Clement-Jones Excerpts

3rd reading
Tuesday 26th March 2024 Lords Chamber

[Lord Lansley (Con)]

My Lords, I intervene just briefly. I am very pleased to take the opportunity to follow what the noble Lord, Lord Faulks, was just saying because it touches directly on the points I was going to make.

First, I am very grateful for the conversations I have had with the noble Lord and Minister Lopez in his department. I look forward to further debate about the extension to online news services. It will certainly be my intention to table amendments to the Media Bill to enable us to consider how the media public interest test is to be applied in relation to this wider definition of news providers, since the definitions are clearly now out of date—I can say that, having been part of the Puttnam committee on the 2003 legislation.

My noble friend has done an amazing piece of legislative work. I just have to ask, as I did on Report, why it would not have sufficed to have added a new specified consideration to Section 58 of the Enterprise Act 2002, in effect on the need to prevent the acquisition, control of, or influence over newspapers or newspaper periodicals by any defined foreign power. As my noble friend says, we have 16 pages; frankly, we could have done it in about three lines, but clearly there are differences in terms of the bar that has to be crossed and the requirement on the Secretary of State. As the noble Lord, Lord Faulks, said, the Secretary of State must do these things, as opposed to the discretion under the current merger regime, but it seems to me that, with a new specified consideration, the current merger regime would provide the necessary powers. For example, it was sufficient for the purpose of meeting the capability to deal with a public health emergency in Section 58 as a specified consideration, or to maintain the stability of our financial system, as specified after the financial crisis, in Section 58. I am not at all clear why we have departed from the same approach in this case. There is a risk that we end up with overlapping and very complex provisions relating to one type of merger situation as opposed to other merger situations, but we will come on to discuss that.

On Report, I raised with my noble friend the question of broadcasting. We can return to that in the Media Bill, but, of course, where broadcasters are concerned, we have the benefit of the relationship to the Ofcom standards code, which does not apply in relation to newspapers. I hope we can revisit that when we come to the Media Bill.

[Lord Clement-Jones (LD)]

My Lords, I want to revert very briefly, and thank the noble Lord, Lord Offord, for his statement about the status of the Bill in Northern Ireland, before commenting on Amendment 1. I very much hope that those discussions go as quickly as possible in the circumstances. I also welcome the noble Lord, Lord Leong, back to the Opposition Front Benches, and hope that he is in much better form.

I start by congratulating the noble Baroness, Lady Stowell, and the noble Lords, Lord Forsyth, Lord Robertson, and Lord Anderson, on what is really a triumph. I thank the Minister, in particular, the noble Lord, Lord Parkinson, for producing something so comprehensive, and perhaps complicated. As someone who is rather used to replies such as “in due course” or “we’re going to produce guidance”, it just shows what government can do swiftly and decisively when it really gets the bit between its teeth. It means that we are not going to take many more excuses in future.

I very much hope that, as the noble Lords, Lord Faulks and Lord Lansley, said, we will not lose sight of the digital news media agenda as well, because it just demonstrates what is possible through this change to the Enterprise Act. There is a broader agenda, and that needs addressing. I very much hope that, as other noble Lords have said, the secondary legislation really is consistent with the intent demonstrated today, both in what the Minister had to say and in the intent of the proposers of the original amendment. It is very good that the Minister has, in a sense, confirmed that it will impact on the RedBird proposal, if that proposal is still current on the effective date, given the circumstances. I entirely agree with the noble Baroness, Lady Stowell, that this is a matter of principle; it is not about the particular country. However, I do feel strongly about the particular country, so in these circumstances, we are entitled to be pleased that this is going to be the case in terms of this particular transaction.

The noble Baroness raised questions about the threshold, and I very much hope that the Minister can answer them. I thank him, and I think there is general satisfaction across the House. This demonstrates what the Government can do when they get the bit between their teeth.

--- Later in debate ---

[Lord Clement-Jones (LD)]

My Lords, I am delighted that the Minister has come back at Third Reading as he undertook to and that he has produced this amendment. I am only sorry that the noble Lord, Lord Lucas, is not present to be able to take the credit for it.

[Baroness Jones of Whitchurch (Lab)]

My Lords, we welcome the Government’s amendment on subscription reminder notices. As has been said, the noble Lord, Lord Lucas, made a very sensible intervention when we debated this in Committee and on Report, and it provides a helpful clarification to service providers. I hope that this amendment and the other changes that we made on Report have now struck a much better balance between businesses’ needs and consumer interests.

We look forward to hearing details of the department’s further work on implementing the gift aid protections and other work on cancellation methods, but, for now, we are pleased with the progress that has been made on the Bill and we wish it a speedy onward passage.

--- Later in debate ---

[Baroness Stowell of Beeston (Con)]

I hesitate to rise, because I realise I am probably testing the patience of the House, having already spoken in Third Reading. I just wanted to say a couple of things.

I thank my noble friends Lord Camrose and Lord Offord on the Front Bench for their work on this Bill. As they will know, this is legislation for which the Communications and Digital Committee has been calling for several years—it started under the chairmanship of my predecessor, my noble friend Lord Gilbert. It is something that I have been pleased to take a very active involvement in, and I am very pleased to support it passing.

As we think about what this Bill is trying to achieve and why, it is worth also remembering why we in the UK are forging a different path from the ones that Europe and the US are on. In the last few days, we have seen the US DoJ launch a major anti-trust lawsuit against Apple. In the EU, the Commission is taking serious measures against some of the big tech firms to make them comply with the spirit and letter of its new Digital Markets Act. Both situations have an ominous sense of being exactly the kind of lengthy legal battles that favour big tech, which we are trying to avoid.

The House has rightly voted on a number of measures to try to ensure that our regulation can work as it is meant to, in a timely, proportionate and less confrontational manner. That is what the Government are seeking to do with this legislation.

As the Bill leaves here and enters its final stage, I emphasise two measures from among the amendments passed by this House. First, the deadline for the Secretary of State to approve CMA guidance is key in keeping things on track and avoiding concerning delays. Secondly, if the Government and the Commons cannot accept the amendments to revert the appeals process on fines back to JR standard, I hope that my noble friends within government will consider putting a clarification in the Bill that the appeals process on fines cannot be changed in ways that undermine the JR standard or open up avenues for more expansive and protracted legal challenge.

That aside, I am grateful to the Government for bringing forward this important legislation. It will mark out our regulatory regime as different from those in other parts of the world that are having such a big impact—and not necessarily in good ways.

[Lord Clement-Jones (LD)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Stowell. I agree with a huge amount of what she said.

I reiterate the welcome that we on these Benches gave to the Bill at Second Reading. We believe it is vital to tackle the dominance of big tech and to enhance the powers of our competition regulators to tackle it, in particular through the new flexible pro-competition powers and the ability to act ex ante and on an interim basis.

We were of the view, and still are, that the Bill needs strengthening in a number of respects. We have been particularly concerned about the countervailing benefits exemption under Clause 29. This must not be used by big tech as a major loophole to avoid regulatory action. A number of other aspects were inserted into the Bill on Report in the Commons about appeals standards and proportionality. During the passage of the Bill, we added a fourth amendment to ensure that the Secretary of State’s power to approve CMA guidance will not unduly delay the regime coming into effect.

As the noble Baroness, Lady Stowell, said, we are already seeing big tech take an aggressive approach to the EU Digital Markets Act. We therefore believe the Bill needs to be more robust in this respect. In this light, it is essential to retain the four key amendments passed on Report and that they are not reversed through ping-pong when the Bill returns to the Commons.

I thank both Ministers and the Bill team. They have shown great flexibility in a number of other areas, such as online trading standards powers, fake reviews, drip pricing, litigation, funding, cooling-off periods, subscriptions and, above all, press ownership, as we have seen today. They have been assiduous in their correspondence throughout the passage of the Bill, and I thank them very much for that, but in the crucial area of digital markets we have seen no signs of movement. This is regrettable and gives the impression that the Government are unwilling to move because of pressure from big tech. If the Government want to dispel that impression, they should agree with these amendments, which passed with such strong cross-party support on Report.

In closing, I thank a number of outside organisations that have been so helpful during the passage of the Bill—in particular, the Coalition for App Fairness, the Public Interest News Foundation, Which?, Preiskel & Co, Foxglove, the Open Markets Institute and the News Media Association. I also thank Sarah Pughe and Mohamed-Ali Souidi in our own Whips’ Office. Last, but certainly not least, I thank my noble friend Lord Fox for his support and—how shall I put it?—his interoperability.

Given the coalition of interest that has been steadily building across the House during the debates on the Online Safety Bill and now this Bill, I thank all noble Lords on other Benches who have made common cause and, consequently, had such a positive impact on the passage of this Bill. As with the Online Safety Act, this has been a real collaborative effort in a very complex area.

[Baroness Jones of Whitchurch (Lab)]

My Lords, before the Bill passes, I put on record my thanks to the Ministers—the noble Viscount, Lord Camrose, and the noble Lord, Lord Offord—as well as the noble Lord, Lord Parkinson, who made a guest appearance. I also put on record my huge appreciation for the Bill team for their timely letters and briefings, and their immense good humour when we asked for even more information.

The whole experience has been a good illustration that, when we fully engage in discussion on a Bill, we can deliver genuine improvements that have broad support. I hope that our colleagues in the Commons appreciate the careful thought and hard work that is behind these changes. I hope that we do not have to be here again on this Bill, but I reiterate that our door is always open if further discussions would help. For now, I hope that the Bill will soon be on the statute book and I look forward to its progress.

Digital Markets, Competition and Consumers Bill

Lord Clement-Jones Excerpts

Report stage
Wednesday 13th March 2024 Lords Chamber

Moved by

[Lord Clement-Jones]

64: After Clause 141, insert the following new Clause—
“Amendment of section 58 of the Enterprise Act 2002After section 58(2A) of the Enterprise Act 2002 insert—“(2AA) The need for free expression of opinion and plurality of ownership of media enterprises in user-to -user and search services.(2AB) Media enterprises include—(a) newspapers,(b) broadcasters, and(c) providers of video on demand and audio on demand.(2AC) For the purposes of this section “user-to-user service” and “search service” are defined in Part 2 of the Online Safety Act 2023.””Member’s explanatory statement
This amendment updates the specified considerations that the Secretary of State can use to issue a public interest notice that reflect modern market conditions where new media may give rise to such concerns.

[Lord Clement-Jones (LD)]

My Lords, with only one amendment in this group, I have the mixed blessing of having the Minister’s undivided attention. I will be very brief as I want to give way to heavier oncoming traffic, in the form of Amendments 67 and 158. My intention in retabling this amendment on Report is to probe further the Government’s intentions as regards amending the Enterprise Act 2002, in respect of mergers of digital media.

In Committee, I pointed out that the Online Safety Bill—now Act—sets great store by the importance of freedom of expression on digital media and, in the context of competition in the media, we believe that the protection of the public interest needs bringing up to date, alongside the collective consumer interest. This was on the basis that digital media now play a significant role in the national discourse, and public interest considerations could emerge from permutations of takeovers or mergers.

In Committee, I described how Section 58 of the Enterprise Act is limited in scope, and that we should add the need for free expression of opinion and plurality of ownership of media enterprises in user-to-user and search services to the existing public interest considerations that the Secretary of State can take into account. The reply of the Minister—the noble Lord, Lord Offord—was sufficiently encouraging for me to bring the amendment back for further and better particulars. He said:

“The Government are currently reviewing the recommendations on changes to the media public interest test in Ofcom’s 2021 statement on media plurality. Ofcom did not recommend that online intermediaries or video and audio on-demand services should fall within the scope of the media mergers regime, which this amendment would provide for”.


There is always hope. The Minister went on:

“We are considering Ofcom’s recommendations carefully and, as we do that, we will look closely at the wider implications on the industry. The Government have not proposed pursuing substantive changes to the grounds for public interest interventions in mergers in this Bill. The changes recommended in Ofcom’s review can be addressed directly via secondary legislation under the made affirmative procedure, if appropriate”.—[Official Report, 29/1/24; col. GC 291.]


The Minister did not offer any detailed timetable, so this is a brazen attempt to push the Minister further in telling us what the Government really have in mind, even if it is going to be included in secondary legislation. It is quite clear, in general, that changes to the Enterprise Act are needed and should be in contemplation. I very much hope the Minister can go rather further than he did in Committee. Indeed, it may be that there is a vehicle available, in the form of the Media Bill, which could take the position further. I beg to move.

[Lord Lansley (Con)]

My Lords, I intervene very briefly to support the noble Lord, Lord Clement-Jones, in the intentions of his amendment. A number of noble Lords will recall that, about eight years ago, we sought that the Government would use secondary legislation to extend the definition of media enterprises under the Enterprise Act.

The point that the noble Lord, Lord Clement-Jones, is making is in this territory. Clearly, if media enterprises for these purposes were defined more widely, it would capture some of the providers that the noble Lord, Lord Clement-Jones, was talking about. At the moment, media enterprises basically consist of print newspapers or broadcasters—and broadcasters are only those that are licensed under the Broadcasting Acts.

I hope it will be evident to noble Lords that there are now many more news creators and aggregators, and sources of news, that make up the news landscape and are not comprised within the definition of print newspapers or of broadcasters under the Broadcasting Act. So we need to make sure that the specified considerations under Section 58, about free expression, accurate presentation and plurality, are applied in relation to this wider definition of media enterprises.

This was something that Ofcom said to Ministers in pursuance of the consultation about the media public interest test, I think as far back as 2021, or maybe at the end of 2022. So I suppose what I am asking is to share in the urging of the noble Lord, Lord Clement-Jones, that Ministers might take this on, and to give advance notice that—from my point of view—we should address this in the Media Bill quite soon, in order to give them further encouragement for this purpose.

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[Lord Clement-Jones (LD)]

My Lords, I can barely contain my excitement. It is very good to see the noble Lord, Lord Parkinson, in his place, and I very much look forward to hearing what he has to say in the debate on the next group. There is a difference in principle, though, between the amendments in the next group tabled by the noble Baroness, Lady Stowell, on ownership by foreign Governments and the future-proofing that my amendment seeks for digital media.

I very much appreciate what the noble Lords, Lord Lansley and Lord Bassam, said about the need to encompass this type of media. Whatever the content of the Minister’s response, I believe that if we do not deal with digital media in this Bill, we will need to deal with it in the Media Bill. It is a current issue; the Minister used the phrase “current market conditions”, which was a slightly odd way of describing the fact that we now have an incredibly lively digital media. After all, why do we have the final offer mechanism in the digital markets Bill? It recognises the issues related to news media and the need to make sure that there is a proper negotiation on the use of, and links to, news media. We need to make progress on this, but I will give way to the oncoming traffic of the next group. I beg leave to withdraw my amendment.

Amendment 64 withdrawn.

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[Lord Kamall (Con)]

My Lords, a number of principles have been spoken about. I believe firmly in the principle that no Government, British or foreign, should be allowed to own a UK media outlet. When my noble friend Lady Stowell asked me whether I would support her amendment I initially declined, because I told her it did not go far enough. I apologise for that, because, as my noble friend said, the UK Government do not own any media outlet; why, therefore, should any foreign Government be allowed to do so?

We should also be absolutely clear that this is not anti-foreigner sentiment. I and, I am sure, many other noble Lords have no objection to foreign private companies owning UK news media outlets. Indeed, in my years in the European Parliament we used to refer to the Financial Times as the in-house paper of the European Commission, only to find that it was owned by a Japanese company.

There are clearly some tricky issues here in drafting the relevant law that the clever lawyers will have to navigate. For example, it is well known that Chinese non-state-owned enterprises often have strong links to the leadership of the Chinese Communist Party. Indeed, some China analysts claim that there is little difference between the Chinese Government’s influence over state-owned and non-state-owned companies, so were a non-state-owned Chinese company to bid for a UK media outlet there would also be a number of questions. That is possibly a debate for another day.

In short, like many noble Lords, I am against any government ownership of UK media organisations, whether it be the UK Government or a foreign Government. For these reasons, I support Amendments 67 and 158 in the name of my noble friend Lady Stowell.

[Lord Clement-Jones (LD)]

My Lords, despite the shortness of this debate, we have had some very fine and inspiring speeches. We on these Benches wholly support the amendment moved by the noble Baroness, Lady Stowell. Indeed, like the noble Lord, Lord Robertson, I find it extraordinary that we do not have this already on the statute book. Given the importance of pluralism and freedom of speech in our media, the thought of foreign Governments impacting on our media in the way that is currently threatened seems quite extraordinary.

My main purpose is to associate myself with the remarks of the noble Lord, Lord Forsyth. When he moved his regret amendment, he talked about the ownership by the UAE of a UK quality newspaper. I have spent the last 10 years campaigning for the release of Ryan Cornelius from a Dubai jail. He was unjustly imprisoned on trumped-up fraud charges, and his sentence was arbitrarily extended by 20 years in 2018, just as he was due to be released. He now faces the prospect of many more years in jail. I am all too aware of the reality that lies behind the pleasant-looking tourist Dubai. Parliament should definitely have its say before a UK newspaper falls into the hands of such a Government. All this is a result of the activities of a member of the royal court of Dubai, so it very close to home in the UAE. Not only do we as a party on these Benches wholly support this amendment, but I personally feel very strongly about the need for it.

[Lord Bassam of Brighton (Lab)]

My Lords, I think the whole House is grateful to the noble Baroness, Lady Stowell, for the way in which she set out the arguments behind her amendment, and for the clarity, force and power of her voice in putting those arguments forward. We are also grateful to the noble Lord, Lord Forsyth, for the way in which he has argued his case—not once, but twice, and several other times too, when he has been given the opportunity; I always enjoy his interventions. I am enormously grateful to the noble Lord, Lord Robertson, for bringing breaking news to your Lordships’ House.

It might seem slightly ironic to some that we on the Labour Benches are trying to come to the rescue of the Daily Telegraph, but there is a much more important principle at stake here. It is an obvious place to start but let me begin with first principles: Labour believes in a free and fair press without state interference. We also believe in the accurate presentation of news and in freedom of expression, which is particularly important in the context of RedBird’s attempted takeover. Our view on this matter is not shaped just by the Telegraph Media Group takeover proposal currently being considered by the Secretary of State; we would have similar concerns if other titles were subject to bids from other states. When the Minister explains to the House the Government’s intention, can he clarify the position, too, of not just newspapers but other publications? That is not to say that we do not have real concerns about the proposed sale of the Telegraph Media Group. We very much welcomed the Secretary of State initiating the investigations by the regulators. Now that their reports have been submitted, we hope that a decision will be taken in a timely way and as soon as possible, and in a way that is consistent with the quasi-judicial nature of the process.

For the avoidance of doubt, this is not to say that we oppose foreign investment in this country; we believe that inward investment in our economy is vital. The noble Baroness, Lady Stowell, spoke eloquently on that point, as did the noble Lord, Lord Kamall. However, foreign ownership of UK media organisations raises broader questions around the accurate presentation of news and, in certain cases, the free expression of opinion. Both of these, as many noble Lords have said, are vital to the long-term health of the print media sector and, more importantly, to our democracy.

I listened very carefully to the noble Baroness’s introduction and the other speeches. We have to give them all credit for the way in which they addressed the issue. I listened particularly to the noble Lord, Lord Robertson, because of his expertise, and his former role and continuing interest in security matters. While I am giving out thanks, I also thank the Minister, who helpfully found the time to meet me and my noble friend Lady Jones of Whitchurch this afternoon to discuss this important issue.

As we have seen with other legislation, most progress is often made when groups from across your Lordships’ House have open, frank discussions and then work together to agree solutions. I understand that for various reasons the text of Amendment 67 is not necessarily what all its supporters would have wanted. For that reason, and for a number of others that I will set out, we are not convinced that it presents the right response to this serious matter. Our view is that a free and fair press should be without state interference, which means without undue influence from our own state as well as others.

It is correct that the Secretary of State should take an interest in cases which raise concern on competition and plurality grounds, but her responsibilities are rightly constrained by legislation, and her ability to comment is limited by the quasi-judicial role she is playing. Where security concerns may arise, the Secretary of State will no doubt receive confidential briefings on the potential implications of different outcomes. In our view, that process must be allowed to play out. That the CMA and Ofcom have reported to the Secretary of State this week points to the well-established merger regime that has been in place in this country for some time. As part of their investigations, those independent regulators draw on expert advice and are able to obtain appropriately handled confidential information, including material that may be highly commercially sensitive. On the basis of all that information, they may then come to a judgment regarding the suitability of a takeover proposal and advise the Secretary of State accordingly. Parliament has empowered the Secretary of State and those regulators. In our view, that is an appropriate level of state interest in sensitive matters.

Amendment 67 proposes that once the regulators have carried out their work and the Secretary of State has come to a decision, it should be for Parliament to approve that decision. While we generally support parliamentary scrutiny of the Executive and their decisions, we are not convinced that the mechanism envisaged by the amendment is suitable in the light of the sensitive security and commercial information that would have to be shared to inform debate and determine the outcome of votes in both Houses.

My impression from earlier discussions with the Minister and his colleagues in other departments is that a better approach would be for the Government to acknowledge the strength of feeling in this House and commit to bringing back their own text at Third Reading. If the Minister is able to make that commitment, I hope that colleagues on all Benches will be minded to accept that offer and work with Ministers, as we will offer to do, in the coming weeks to find a satisfactory outcome.

We have enormous sympathy with the noble Baroness, Lady Stowell, on this issue. We do not feel able to support her proposition in the form it is with us today. We know it has been brought forward with the very best of intentions, intentions we support, and because we share those, we urge the Minister to respond positively to finding a way forward over the next few weeks.

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[Lord Parkinson of Whitley Bay (Con)]

The provisions we will bring forward at Third Reading will relate to newspapers and periodical news magazines, as I have set out. It will not cover television and radio broadcasters at this time, but that is something we will continue to consider. We have already been considering it as part of our broader work on the media mergers regime. That work will continue. I am happy to speak with my noble friend Lord Lansley and others about it.

[Lord Clement-Jones (LD)]

Could the noble Lord go through again what will happen to an existing merger, which is subject to existing procedure? He seemed to be saying that, as soon the new provision comes in when the Bill passes, it will be subject to the new procedure as well as the old. Is that what he was saying, and how will that work?

[Lord Parkinson of Whitley Bay (Con)]

That is what I was saying, but it depends on when the Bill gets Royal Assent. That is in the hands of noble Lords and not just the Government. If any live case is still ongoing at the time of Royal Assent—we intend for the new provisions to come into effect at Royal Assent—then the Secretary of State will obviously follow the provisions as set out in other Acts of Parliament as decided by Parliament previously, and follow the law as enacted after Royal Assent.

[Lord Clement-Jones (LD)]

I have a second question. I am assuming that internet digital news media—not a newspaper—will not be covered by these provisions.

[Lord Parkinson of Whitley Bay (Con)]

No. I am grateful that we have separated the debate on the noble Lord’s previous amendment from this so that I can respond directly to the amendment brought by my noble friend Lady Stowell. I am grateful for his understanding of that.

The Government are focused on the reforms to media ownership rules, which were suggested in Ofcom’s 2021 review. It did not recommend that online inter- mediaries, including social media platforms, search and video/audio-on-demand services should fall in scope of that. I heard what the noble Lord said about having this debate in the Media Bill, and I look forward to doing so.

The secondary legislation provisions that I have outlined will be subject to the affirmative procedure in Parliament. Until such time as those regulations are laid and approved by Parliament, the whole regime applies to everybody caught by the general foreign state prohibition.

We have always believed that the trustworthiness of our news and the lack of government interference in it, whether domestic or foreign, is of paramount importance, which is why we are setting out today our plan to make that more explicit in the regulatory regime that exists. As my noble friend Lady Stowell is aware, work is already under way to update the media mergers regime more broadly, and I touched on that in my responses to noble Lords. We will continue to take that work forward. I hope that, on that basis, my noble friend is able to withdraw her amendment today. With renewed thanks to her and a renewed commitment to work with those who have supported her, I am grateful for the opportunity to speak today.

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[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I wish to speak briefly to support Amendments 99 to 101 in this group, to which I have added my name. The noble Earl, Lord Lindsay, and the noble Baroness, Lady Crawley, have very clearly set out the arguments and the rationale for our amendments, so I will not go into the same detail.

I thank the Minister for his time and that of his officials in meeting with those of us who have signed these amendments, and for his letters clarifying the position. We are grateful for the Government’s movement on several of the issues we raised in Committee. They were not actually raised by us—because of other circumstances, none of us was able to be here—but they were ably covered by the noble Lord, Lord Bassam, and my colleague, the noble Lord, Lord Clement-Jones.

Amendments 99 and 100 raise the issue of how trading standards operate across borders throughout the country. This is causing them considerable concern, and I will not repeat what has already been said, except to say that trading standards are a vital local authority service, but not one that attracts the same level of support as children’s services or disability services. I declare my interest as a vice-president of the LGA.

Local authority budgets are stretched beyond what is needed to make many vital services safe for the consumer. On Amendment 101, trading standards needs support in order to operate as effectively and efficiently as it can to protect the public. Requesting documents by post is more cost effective than going to the trouble of crossing the country to fetch documents. Trading standards needs to be able to operate effectively across the whole UK, and I support this amendment.

[Lord Clement-Jones (LD)]

My Lords, it is very good to see the full team back on the trading standards amendments. I congratulate all three noble Lords on their championing of trading standards. They need the powers that are being argued for in these amendments; they are the unsung champions of the consumer, and we should support them.

My main purpose in rising is to speak to Amendments 69, 91, 92 and 152. As regards Amendment 69, on misleadingly similar parasitic packaging, it was encouraging to hear the Minister confirm in Committee that the prohibition of misleading actions in Clause 224 and the banned practice in paragraph 14 of Schedule 19 will address the long-standing unaddressed practice of misleadingly similar packaging.

However, those provisions matter little if they are not enforced. During consultations and the debate on the Consumer Protection from Unfair Trading Regulations 2008, the then Government stressed that public enforcement would be effective and efficient. This has not proved to be the case, with just one enforcement action by trading standards in 2008—albeit a successful one. If shoppers are to be protected from this misleading practice, there must be a realistic expectation that the Bill’s provisions will be enforced.

Historically, the Government have placed the duty on public enforcers. That is unrealistic, as trading standards face diminishing resources. The CMA stated clearly that misleadingly similar packaging is a consumer protection, not an IP, issue, following its investigation of the groceries market in 2008. Yet is has undertaken no hard or soft enforcement and did not include it in its recent scrutiny of the grocery sector; there is no sign that it will take a different approach in the future. There are no other realistic public enforcement options available. For the Bill to make a difference, it is essential that affected branded companies are granted powers to bring civil cases using the Bill’s provisions on the specific practice of misleadingly similar packaging alone. It has been ignored by public enforcers for the last 15 years, despite the many examples that appear year on year. Granting affected brand owners such powers would mean that shoppers would have the protection envisaged by the Bill, and affected brand owners would have more effective redress at no cost to the taxpayer.

Amendments 91 and 92 concern an area of concern for the retail industry, expressed by its representative body, the British Retail Consortium, in which I was an active participant more years ago than I care to remember. The well-established and well-used primary authority system enables a business to request assured advice from a primary authority that it has appointed. Provided that the business follows the advice, it cannot be prosecuted by any local authority for its actions. Under the Bill, the CMA will receive additional powers on consumer protection, whereby it will move to administrative fines that are potentially very high. I am informed that the CMA currently refuses either to provide assured advice of its own or to accept primary authority advice. It says that it may not agree with the advice and that it would be too costly, ignoring the fact that it is at a cost to the business. That undermines the primary authority system and will do so even further when the CMA receives its new fining powers because businesses will feel unable to rely totally on primary authority advice for what they are doing in the overlapping areas.

The amendments attempt to deal with that, either by requiring the CMA to provide assured advice itself, as set out in Amendment 91, or, perhaps more practically, by accepting primary authority advice as binding up to the point that it may be repealed if it is shown to be inaccurate, as set out in Amendment 92. That would mean that a business could rely on it for anything it does up to any repeal. It should also be remembered that the CMA can, if it wishes, act as a supporting regulator, whereby it can be called on to provide its view to a primary authority when that authority is looking at providing advice in an area of relevance and overlap to the CMA.

Finally, it should be noted that the CMA has decided to provide what is, in effect, assured advice on competition matters in the sustainability area; namely, it has agreed not to prosecute a business that seeks its advice and follows it in a small area on the competition side. This means that, in principle, the CMA does not seem to be opposed to such an approach. Green claims on the consumer side are a key area of uncertainty for business, an area where assured advice would in fact be most useful.

I turn to my final amendment, Amendment 152. As I explained in Committee, standard essential patents are patents that are necessary to implement an industry standard, such as wifi or 5G. Because the market is locked into a standard, and to prevent abuse of the market power that this situation conveys, SEP owners are required to license their SEPs on fair terms. Unfortunately, there is widespread abuse of this monopoly power by SEP holders. The principal issue raised with me by the Fair Standards Alliance is the threat of injunctions; the costs to many businesses can be ruinous. This tactic not only threatens innovation by UK businesses but represents a strategic risk for UK priorities, such as 5G infrastructure diversification and smart energy network security, by limiting the competing players. The availability of injunctions for SEPs gives foreign SEP holders the ability to prevent others in the UK from entering, succeeding and innovating in those markets.

The Minister, the noble Lord, Lord Offord, gave a somewhat encouraging response in Committee—I keep using the word “encouraging” about his responses, although I keep hoping for better—to the effect that the Government would set out their thinking in the very near future, and that that would include the question of injunctions.

After many months of consultation, the IPO has published its 2024 forward look on this issue. It has reported its findings to Ministers and has agreed key objectives concerning SEPs. Those are

“helping implementers, especially SMEs, navigate and better understand the SEPs ecosystem and Fair Reasonable and Non-Discriminatory (FRAND) licensing … improving transparency in the ecosystem, both pricing and essentiality; and … achieving greater efficiency in respect of dispute resolution, including arbitration and mediation”.

Although the IPO has confirmed that SMEs are especially disadvantaged by the current SEP regulations, it states, disappointingly, on injunctions that

“we have concluded that we will not be consulting on making legislative changes to narrow the use of injunctions in SEPs disputes”,

with very limited justification for the decision, saying simply that it was taken after

“careful consideration of the evidence, operation of relevant legal frameworks and international obligations”.

The Coalition for App Fairness has pointed out to me that a day after the IPO announcement, the European Parliament voted by a large majority to approve its own SEP regulation. The EU framework will include the creation of an SEP register, database and essentiality checks; a defined maximum total royalty for an SEP; and an independent, expert-led conciliation process to establish the fair price for SEPs, which, crucially, will block the use of injunctions while the process is taking place. That seems entirely appropriate. The EU has proved that such a regulatory regime can be delivered; why cannot the UK Government, with all the freedom of Brexit? What is the basis for the IPO decision? What evidence, legal frameworks and international obligations prevent it from dealing with and legislating on injunctions? Why cannot the IPO likewise establish a truly fair SEP licensing ecosystem?

The least the Government can do is give more detail to the many SMEs affected by this decision. The forward look states, rather lamely:

“The IPO will continue engagement with relevant industry and institutions to continue to inform our ongoing policy development and implementation of those actions set out above”.


What on earth does that entail? That is pretty mealy-mouthed. What benefit will there be from that?

[Lord Stevenson of Balmacara (Lab)]

My Lords, this is a wide-ranging group; there is good news hidden in the middle of it, and bad news—we will have to wait for the Minister to respond to get a full picture. Others have spoken in some depth and so I will not try to repeat what has been said. I certainly will not try to follow the noble Lord, Lord Clement-Jones, whose expertise exceeds the combination of everybody’s in the Chamber at present. On SEPs, I can only stand back in amazement that he has been able to understand what is being recommended by the IPO, let alone to have come forward with a plan that might take us a bit further down the track that we clearly ought to have gone down.

I turn first to the questions the noble Baroness, Lady Bennett, raised, which cut to the heart of what, is in some senses, the purpose of the Bill. I am afraid that she rather weakened her case at the end by saying that it was a much broader basis for debate and discussion than could be encompassed within this Bill; I think she saw it primarily as a way of continuing a much larger battle, and I wish her well with that. In that sense, we do not need to take this forward. However, I hope that the Government are taking note of the impacts that some of the provisions in the Bill are having, in the sense that it is not achieving the aims and objectives, which I think we all share, of making sure that we reduce carbon and try to meet targets which have been set for us in the long term on this. Therefore, greenwashing will continue, but we hope that it will be better in scope and that the focus will be more across the range of government activity.

On imitation packaging, as the noble Lord, Lord Clement- Jones, said, we have also been discussing this for a number of years in various Bills as they have come forward, and it is good that the assertion now is that in Clause 224 and Schedule 19, there will be help. However, the question is, of course, enforcement. I would be grateful if, when the Minister comes to respond, he could give us a bit more information about how that might happen in practice.

The questions raised by the noble Earl, Lord Lindsay, and supported by “the team”, as it was described, are a continuation of debates and discussions we have been having in this House for as long as I have been here—and I certainly have participated in them. It is good to see the government amendments in as far as they go, but the three remaining questions, as raised in Amendments 99, 100 and 101, need answers. I hope the Minister will expand on where the Government have taken us so far and give us some assurances.

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[Lord Clement-Jones (LD)]

My Lords, that is a bit terse, even by the Minister’s standards. I think we need to hear a little more about the form of enforcement, because the amendment is about the unsatisfactory nature of current enforcement. I referred to there having been only one enforcement since 2008, despite the fact that it was successful. What guarantee do the welcome recipients of the provisions in paragraph 14 of Schedule 19 have that there will be an effective enforcement regime?

[Lord Offord of Garvel (Con)]

The view of the Government in this legislation is that the banned commercial practice is banned already, as set out in Schedule 19, and that a strict civil enforcement regime is already in place, strengthened by Part 3. It is down to enforcers to tackle these misleading replica goods; our view is that it is up to the enforcement regimes to enforce under the current law.

[Lord Clement-Jones (LD)]

My Lords, I am not sure that the Minister has a full brief about the nature of the available enforcement. Will he write to me to provide a few more particulars and give more assurance in this respect?

[Lord Stevenson of Balmacara (Lab)]

My Lords, it is important that we unpick the point made by the noble Lord, Lord Clement-Jones, which I think was touched on but not addressed by the Minister. If we rely on civil remedies, we are not really addressing the problem that there is, in effect, an opportunity, for those who wish to, to exercise criminality; this surely cannot be left to the civil courts.

[Lord Offord of Garvel (Con)]

As some clarification is required, I am happy to write further on the matter.

Amendments 70, 71 and 93 to 98 are technical government amendments. The Bill empowers the courts to impose monetary penalties for a breach of consumer law and procedures. To accommodate the different processes by which court orders are served or enforced in Scotland and Northern Ireland, the amendments provide that prescribed penalty information may accompany an order in a separate notice, as well as being contained within it.

On government Amendments 72 to 90, on online interface and the powers of consumer law enforcers to tackle illegal content, I thank noble Lords who have contributed on this important issue. I am pleased to bring forward government Amendments 72 to 90 to give all public designated enforcers take-down powers to tackle infringing online content. The amendments enact the commitment made by the Government in their recent consultation response.

I thank the noble Lord, Lord Clement-Jones, for Amendments 91 and 92. Amendment 91 would require the CMA to provide advice on a business’s compliance with consumer law on request. It would also prevent enforcement action by any enforcer if the advice were complied with. The CMA already provides general guidance and advice on compliance. It is businesses’ responsibility to comply with the law, referring to guidance and seeking independent legal advice where necessary. It would not be appropriate to transform the CMA into a bespoke legal advice service. The amendment would also drain CMA resources from much-needed enforcement activity. Moreover, Amendment 92 compels the CMA to accept primary authority advice received by a business where that advice has been complied with. It is common practice for the CMA to consult the primary authority before taking action; this strikes the right balance and avoids binding the CMA to such advice, thus inappropriately neutering its discretion. I hope the noble Lord will agree that the purpose of a direct enforcement regime is for the CMA to enforce faster and more frequently; these amendments would diminish this objective and remove the deterrent effects of the regime.

[Lord Clement-Jones (LD)]

My Lords, does the noble Lord understand the need for certainty of advice when it is given by a primary authority and that the primary authority must feel, when it gives that advice, that it has the full backing of the CMA? There seems to be no assurance that this is under consideration or even a matter of concern.

[Lord Offord of Garvel (Con)]

We are clear that the CMA provides general guidance and advice, but it is the responsibility of businesses to comply with the law. If the CMA is transformed into a bespoke legal advice service, it will not be doing the work it is meant to do, which is focusing on enforcement. Therefore, we believe the balance is right in the mechanism put forward.

Turning to trading standards and Amendments 99, 100 and 101, I am grateful to my noble friend Lord Lindsay and the noble Baronesses, Lady Bakewell and Lady Crawley, for their continued advocacy for trading standards departments and for meeting with me on these issues. I very much enjoyed meeting the case officers in this place. Amendment 101 would end the prohibition on enforcers using information that a person has been compelled to provide under broad information notice powers in criminal proceedings against that person. This prohibition safeguards a person’s right not to self-incriminate—a long-established right protected by the common law and the Human Rights Act. The courts have held that material which exists independently of the will of the suspect, such as pre-existing data obtained during a search of the suspect’s premises, may be admissible in a criminal trial against them. By contrast, to comply with an information notice, a person will likely be required to generate documents. Legislation already permits trading standards departments to exercise their investigatory powers outside their local authority boundaries, including by carrying out in-person inspections of business premises. We have been informed that trading standards departments have used these on-site powers to secure documents from traders suspected of an offence and then relied successfully upon such documents in prosecutions against them.

Amendments 99 and 100 would permit any trading standards department based in Great Britain to carry out investigations across national borders. As I committed to my noble friends in writing, I have asked government officials to work further with trading standards to identify practical measures supporting greater cross-border co-ordination. To clarify, if an infringer is based in Scotland and the offence has caused harm in England, the English enforcer can pursue a prosecution through the English courts and vice versa—the procurator fiscal can prosecute a case where a trader is based in England but the infringement was committed in Scotland. All court orders in respect of consumer protection breaches have effect in all parts of the United Kingdom, regardless of where they have been made. We are open to exploring a variety of options, for example, exploring how best to facilitate local authorities across the country to exercise investigatory powers on behalf of each other. I have asked them to consult with trading standards when developing guidance on this legislation to ensure clarity on what it provides for. Once again, I thank my noble friend and the noble Baronesses for their engagement on this issue.

Government Amendments 102 and 103 make further consequential amendments to the Estate Agents Act 1979. They achieve consistency in how the Act applies to non-compliance with obligations under the court-based and the CMA direct enforcement regime.

Turning to standard essential patents, raised by the noble Lord, Lord Clement-Jones, through Amendment 152, I can confirm that the Government have now published their key objectives on SEPs and a forward look at work to be conducted in 2024. This follows input received in 2023 from key stakeholders from industry. The Government will first take forward non-regulatory interventions where action can be taken now. Later in 2024, the Government will launch a technical consultation on other potential interventions. On the question of injunctions, the Government believe that other measures, such as guidance, information on SEP licensing and how to respond to SEP disputes, is a proportionate government response at this stage. A resource hub will provide guidance that will enable businesses to better understand the SEP licensing system and the UK courts’ approach to the remedies available for patent infringement and existing services available for dispute resolution. The IPO will also continue engagement with relevant industry and institutions to continue to inform our ongoing policy development and interventions. My noble friend Lord Camrose has confirmed that his department will be making steps in what the noble Lord, Lord Stevenson, has described as a very complicated area.

I hope that this will—

[Lord Clement-Jones (LD)]

I am sorry to intervene again. The Minister is really confirming what the IPO has advised in its forward look. The Minister is saying, “Yes, this is important, but we are not going to do anything about injunctions”. Does he recognise the asymmetry in all this? This is why SMEs need enforcement to be looked at much more carefully in terms of the amendment that I have tabled. What is the essential objection to going forward with some kind of change, given that the rest of the proposals from the IPO seem to be pretty satisfactory?

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[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise very briefly. I spoke on these important subjects in Committee, and I am not going to repeat everything I said. I want to speak specifically on Amendment 104 on the right to repair, which the noble Baroness, Lady Hayman, so powerfully introduced, just to make a couple of additional points. She said that we are per capita the second-highest producer of e-waste in the world. It is interesting that we were talking about the security implications of this Bill in an earlier group on media ownership. With the incredible amount of e-waste in the world—53 million tonnes in 2022—and the need for rare earth minerals and the other minerals that go into these replacement products, it is worth saying there is a security implication to this that people may well not have thought of.

The noble Baroness, Lady Hayman, said that the Minister said that things were heading in the right direction. It is worth noting that there are a couple of areas where it very clearly is not. Increasingly, producers of devices, particularly phones, are hard-coding error messages into their product, so that if a third party tries to repair it, there is an error message and the device will not work any more. That has very clearly got worse, not better. There is also an increased amount of parts pairing, in which individual parts are tied to the device they are shipped with using a unique serial number, so you cannot get a replacement part put in. Again, the device will stop working. I think that was a really important point to make.

I have two points to make about how much further other parts of the world have gone. First, it was EU regulations that forced the latest iPhone to include a USB-C charging point rather than a proprietary one. That has both saved resources and saved people money, because the cost is about 1/10th of the proprietary charger, so this is also a cost of living issue. Secondly, I note that Germany and Austria have subsidies for repairs to allow low-income people to get electronic devices repaired when they would not be able to afford to do so otherwise. Please let us get some progress here.

[Lord Clement-Jones (LD)]

My Lords, my noble friend Lady Bakewell has clearly set out our support for Amendment 104 by the noble Baroness, Lady Hayman, and Amendments 109 and 115 by the noble Earl, Lord Lindsay, so I will not repeat what she has said. I shall speak to Amendments 107A and 107B relating to fake reviews, Amendments 105, 106, 110 and 111 regarding electrical safety and Amendment 108 on package travel.

The issue of electronic safety is a relatively new entrant in our discussions on the Bill, for which I apologise, but charities such as Electrical Safety First and Which? as well as the Government’s own Office for Product Safety and Standards have repeatedly found unsafe goods listed on online marketplaces. For instance, one investigation undertaken by Electrical Safety First found that 93% of products bought from online marketplaces were unsafe.

The Government have made a series of commitments on both online safety and product safety, included committing to ensuring that only safe products could be placed on the market now and in future, ensuring that the product safety framework was fit for purpose and making the UK the safest place in the world to be online. In my view, failing to address the sale of unsafe goods within the Bill means that they will fail to achieve their objectives in protecting consumers and promoting competition, and in addition will continue to fail in achieving their objective of ensuring that the UK is the safest place in the world to be online and that only safe products are placed on the market. By not including the sale of unsafe products within the scope of the Bill, it seems that the Government are allowing the UK to become what has been described as a Wild West for unsafe products.

There is a clear interrelationship between scams and unsafe products. For instance, Electrical Safety First found unsafe devices claiming to save consumers energy being sold on the online marketplace eBay. Not only were these devices ineffective at saving consumers energy, but they were also unsafe, placing consumers and their homes at the risk of electrical shock and fire. By not including unsafe products in the Bill, the Government therefore continue to place consumers at risk on a daily basis.

Consumers shopping on online marketplaces in other jurisdictions are better protected than UK consumers —in the EU, Australia and the USA, to name but three. The UK is clearly not moving at the same pace as comparable countries when it comes to regulating online marketplaces. The Bill is an opportunity to address that, but in its current form it is a missed opportunity to protect consumers.

I turn to Amendments 107A and 107B. In September 2023, as we know, the Government consulted on adding fake reviews to the unfair commercial practices list via Schedule 19 to the digital markets Bill, and now we have the government amendments to the Bill to reflect that. They are welcome so far as they go, but it is perplexing—informed organisations such as Trustpilot are perplexed—as to why the Government are not placing a stronger duty on social media firms and ISPs that host the sale of fake reviews. The wording does not expressly bring social media and internet service provider sites within scope where these are used by review sellers and brokers to offer their services. That seems extremely unsatisfactory, given that the Bill is so far through its scrutiny, and it is only on Report here in the Lords that we are seeing the wording that the Government intend to use to ensure that fake reviews are included in Schedule 19 on commercial practices.

Amendment 107A seeks to ensure that there is no loophole in the application of new paragraph 12A(4) inserted by Amendment 107. The inclusion of the words “for the facilitating of” in paragraph 12A(4)(b) could be read narrowly to suggest that the purpose of the service is relevant. In our view, providers of certain services such as social media sites that host the sale of fake reviews could potentially use that as a technicality through which to avoid liability by claiming that the purpose of the service they offer is not for doing anything covered by sub-paragraphs (1) and (2), and therefore this provision is not applicable in the event of abuse.

Is the Minister of the view that the facilitation of the sale of fake reviews by social media and internet service providers will be in the scope of this legislation under paragraph 12A(4), given the integral role that such services can play in enabling fake reviews to find customers? If not, why is such a gap being left in the legislation? Apparently, the Government are citing the legal scope constraints that act to limit their ability to tackle activity that happens upstream. I do not know what discussions have taken place between Trustpilot and the Government, but that sounds rather extraordinary.

I turn to Amendment 108. Since our discussions in Committee, it seems that Ryanair has started to work with some online travel agents. That definitely sounds like a win for our debates if we can take it as such, but other low-cost airlines are still resisting booking through agents, causing various harms to consumer protection, as we have discussed. The Minister’s statement about the package travel restrictions call for evidence is welcome, but the matter under discussion has always been a wider point regarding the use of third-party agents. Hence I have come back with one of the amendments that I tabled in Committee.

The Minister made one or two points in Committee that are worth picking up. He said that

“the contract is between the trader and the consumer, and therefore the consumer benefits from the relevant consumer rights”.

He also said that whether the transactional decision

“is carried out by the consumer themselves or a third party is not relevant. The consumer that the contract is with will receive the relevant consumer rights”.

Yes, the consumer is entitled to protection, but where an agent is involved this requires either the trader to pay the agent or the agent to stump up the refund themselves. That position also does not reflect the regrettable truth that consumers are being discriminated against because they choose to book through third parties.

The Minister brought up the question of the consumer-to-trader relationship and whether or not traders would

“become consumers in the eyes of the law”.

However, the issue is not that the agent becomes the consumer but that consumers who book directly through a third party are equally protected.

The Minister said that

“the Government have ensured that the CMA has significant powers to investigate and act if it finds that businesses are behaving anti- competitively in a market”.

It is not the CMA’s market powers that are in dispute; the problem is that the CMA is not acting to use those powers to investigate key consumer markets, despite clear evidence that competition is not working well.

The Minister also said:

“The operation of airlines and travel agents is governed by PTRs and ATOL. Those are being reviewed. That is the appropriate way to consider these issues”.—[Official Report, 31/1/24; cols. GC 394-95.]


Although important, neither of those addresses the misuse of market power and the damage that this is causing to consumer protection and to the viability of the market. Neither the PTR or ATOL regimes protect consumer choice or promote competition. The loss of that is the real threat, which can be addressed only through a CMA market review.

Finally, as regards ticketing, I very strongly support the amendment in the name of the noble Lord, Lord Moynihan. I salute him and Sharon Hodgson MP for their work through the all-party ticketing group throughout the years. In Committee, the noble Lord, Lord Offord, said that the Government do not wish to prevent consumers having choice in respect to secondary ticketing, but surely it should be an informed choice, in the way that the noble Lord outlined in his amendment. The Minister talked about the fact that the Government have legislated to give consumers fuller information on tickets that they are buying on the secondary market, but that is still not full information.

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[Lord Black of Brentwood (Con)]

My Lords, I refer to my earlier declarations of interest.

I raised a significant number of issues relating to subscription contracts in Committee. I am very grateful to both my noble friends on the Front Bench for listening to those arguments, and for bringing forward amendments to deal with them, and I strongly support them. They help fulfil the Government’s aims without placing unacceptable burdens on business.

There is only one remaining issue that we dealt with in Committee, and that is why I am supporting the amendment in the name of my noble friend Lord Lucas. His amendment would remove the prescriptive wording that is currently in the Bill and allow for traders to provide notices

“in a clear and prominent manner:”

His wording simply recognises that the prescribed renewal information is at the heart of the notice and must not be skewed out of view, while allowing for other beneficial information to be included, if desired. I am sure all noble Lords will be very happy that it ensures notices do not become a GDPR-style irritant, but something which is actually helpful to consumers. It would certainly be counterproductive if consumers experienced information fatigue and stopped opening communications from traders or simply opted out of them all together.

Equally, it will alleviate the burdens on traders, who may feel obliged to send emails around the time of renewal notices, to provide information on alternative deals, packages and so on, which could otherwise be dealt with in one communication. As my noble friend said, there may be other ways of dealing with it, or other wording, and I look forward to hearing what the Minister has to say about this amendment, which I support.

[Lord Clement-Jones (LD)]

My Lords, I am going to be extremely brief as I think we are all anxious to move towards seeing whether the noble Lord, Lord Moynihan, will move his previous amendment to a vote.

There is a common factor here; all these amendments were designed to flush out the Minister to give more assurance and information, and in large part that has been successful. There are still some outliers in terms of reminder notices; the Minister is well aware that there are some players, like Adobe, who will find, when they work it out, that they are going to have to give five notices for an annual contract. I do not know whether the Minister has looked at that and has answers to it.

Digital Markets, Competition and Consumers Bill

Lord Clement-Jones Excerpts

Report stage
Monday 11th March 2024 Lords Chamber

[Lord Wolfson of Tredegar (Con)]

My Lords, I added my name to Amendment 49, which was opened in detail by the noble and learned Lord, Lord Etherton. Therefore, and also because we are on Report, I can be extremely brief. I declare my interest as a barrister. I practise, among other places, in the Competition Appeal Tribunal, for both applicants and respondents. I will make two short points, although they are linked.

First, Clause 101, particularly subsection (1), provides individual rights to consumers. Having done so, we must find an effective method to enable those consumers to vindicate those legal rights. There is no point Parliament passing laws that provide people with individual rights if there is no effective real-world mechanism for those people to vindicate and enforce those rights. Not only is that a basic proposition of the rule of law, as the noble learned Lord, Lord Etherton, said, but this otherwise risks us engaging in a legislative form of Tantalus, where we place rights just in front of people: they can see the rights, but they cannot grasp and actually use them. I submit that that would be wrong in principle. If we are going to enable people to vindicate their rights, the obvious place—in fact, the only place in our current legal system—is the Competition Appeal Tribunal, where, as the House has heard, there is already experience in both opt-in and opt-out collective proceedings.

Secondly, in Committee, it was suggested that perhaps all these rights should be exercised through the regulator, and there is therefore no need for the collective proceedings. Sometimes the law does that: sometimes we pass laws that mean that people have to go through a regulator, or sometimes an officeholder, in order to vindicate their individual positions. But we have taken that decision of principle in Clause 101(1): we have given rights to individuals and consumers in the Bill. Given that, it seems to me that the only sensible course is to provide an effective mechanism for people to vindicate their rights.

Finally, while I am on my feet, I add my voice to Amendment 13, proposed by the noble Lord, Lord Faulks. I certainly agree with what he said about proportionality. I add only this, as the sort of person who might be making this argument in future. It would be all the more easy and attractive for counsel if “proportionate” was left in the legislation, having had this debate, and for them then to say, “Oh well, Parliament must have meant a merits review, because it went into it with its eyes open”. The noble Lord, Lord Faulks, and my noble friend Lord Lansley eloquently set out the consequences of leaving the word in. Therefore, if we now leave the word in, it will be even easier for counsel—I declare again the obvious interest—to make the ingenious argument. Having had that amendment explained, it seems to me all the more important that we take the right decision in relation to it.

[Lord Clement-Jones (LD)]

My Lords, it is a pleasure to follow that piece of logic. I do not need to speak for very long in support of the many important amendments that have been spoken to in this group. The Minister, in Committee and in his welcome letters and meetings, has attempted to rebut the need for them—but I am afraid that, in all cases, their proponents have been rather more persuasive in wishing to see the CMA unambiguously able to exercise its powers.

In a different context, the Communications and Digital Committee, chaired by the noble Baroness, Lady Stowell of Beeston, in its report on large language models, said that there was a considerable “risk of regulatory capture”. Mindful of that, we need to make sure that the CMA has those powers.

I turn to the amendment proposed by the noble Lord, Lord Faulks, and his argument about the dangers of introducing proportionality, also spoken to by the noble Lord, Lord Wolfson. On these Benches, we fully support having that provision in the Bill, as in the noble Lord’s Amendment 13. Human rights for big tech is not really a slogan that I am prepared to campaign on.

The noble Baroness, Lady Jones, will no doubt introduce her Amendments 43, 46, 51 and 52 on appeal mechanisms for penalties, which differ from all the other decisions of the CMA. We very much support her in those amendments, and we have signed them. I also support the noble Baroness’s Amendment 59. The Minister took the trouble to write, explaining why the Government did not consider including a duty to citizens, but sometimes such clarification, as in this case, makes us only more enthusiastic for change. I am afraid that citing overlap and the creation and operation of the DRCF is not enough; nor is citing the risk of regulatory overreach, given its inclusion 20 years ago in the Communications Act. We agree with the conclusions of the original task force.

We also support the noble Lord, Lord Lansley, on the importance of placing time limits on the Secretary of State in approving the CMA guidance under the digital markets provisions of the Bill, in Amendment 56. Although I believe that the noble Baroness, Lady Stowell of Beeston, will not be pressing it to a vote, we very much support her in her relentless campaign for improved parliamentary scrutiny. This has been identified by so many parliamentary committees, not least by the Industry and Regulators Committee on which I sit. It seems extraordinary that we are still waiting to implement the kind of solution that she is putting forward, and I hope very much that the House will take forward her suggestion.

We also very much support in principle the amendment proposed by the noble and learned Lord, Lord Etherton, on collective proceedings. He may not press the amendment to a Division today, but this is a vital change that we should make to ensure that rights in this area can be properly exercised and enforced. If the noble Lord, Lord Faulks, seeks the opinion of the House on his Amendment 13, the noble Baroness, Lady Jones, on her Amendment 43, and the noble Lord, Lord Lansley, on his Amendment 56, we will support them.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have contributed this afternoon to what is a very important group of amendments. I add my thanks to the Ministers and officials for their time in the run-up to this debate in trying to resolve the many issues that we have tabled today.

I thank the Minister for tabling Amendment 1 and for listening to our concerns about the Secretary of State’s power to amend the conditions that would determine whether a tech company has a position of strategic significance. I am glad that the Minister has listened to our concerns, and we are happy to say that we accept the new proposals.

Our Amendments 43, 44, 46, 51, and 52 would reinstate judicial review principles as the means by which penalty decisions are heard, rather than being determined on the merits. I thank all noble Lords who have spoken this afternoon, and indeed those who have added their names to these amendments, for their support. As we debated in Committee and again today, these amendments are among the several we are debating in which the original balance between big tech companies and challenger firms was distorted by late government amendments on Report in the Commons. The Minister has already admitted that the changes came about as a result of lobbying by the big tech companies to No. 10. They clearly would not have done this unless they were expecting to benefit from those changes.

The debate around the appeals mechanism goes to the heart of those concerns. We know that penalties such as fines are the most significant deterrent in preventing SMS companies breaking the conduct requirements established by the CMA. There is a real concern that a merits appeals process would allow the SMS firms to deliberately delay implementation of the fines and open up the judgment of the CMA right back to square one. This is why the CMA has itself argued that it prefers the judicial review process, which is widely used elsewhere and avoids protracted litigation. We agree with the CMA and believe that appeals through judicial review will deliver swifter and more effective outcomes. We want to close down the opportunities for unnecessary litigation from huge corporate lawyers with time on their side and deep pockets to fund their activities.

As the noble Lord, Lord Black, and the noble Baroness, Lady Kidron, have said, the worrying news from Europe as to the responses so far from Apple and the other tech companies to their fines for anti-competitive behaviour underlines why it is so important to have robust and legally watertight regulation in place in the UK.

I do not think that the Minister, in Committee or in subsequent discussions, has been able to persuade us that a merits review process will not open the door to lengthy litigation designed to frustrate the whole process. If we remain unpersuaded by his arguments this afternoon, I give notice that I will wish to test the opinion of the House on Amendment 43.

These concerns also apply to Amendments 13 and 35 in the name of the noble Lord, Lord Faulks. In this case, replacing the word “appropriate” with “proportionate” has particular legal implications, which the noble Lord, Lord Faulks, has described extremely eloquently. We know that the CMA already has a duty to act proportionality, so repeating it in the Bill takes on a new legal emphasis that might lead a court to widen the scope of a judicial review challenge. In our view, “appropriate” has a much more common-sense meaning of rationality, whereas “proportionate” is a matter of judgment and is more easily disputed.

The Minister has argued that there is a need for extra clarity to reassure the tech companies on the intent of the clause. The amendment from the noble Lord, Lord Faulks, would require the CMA to act proportionately, as its current duty requires, and also appropriately. This is a win-win, which should provide the clarity that tech companies are seeking. I look forward to hearing the Minister’s further clarification on these issues, but, unless there is any new, compelling justification for the changes, we would support the noble Lord, Lord Faulks, if he chooses to test the opinion of the House.

Throughout our deliberations, the noble Baroness, Lady Stowell, has raised important questions about the need to strengthen parliamentary oversight of the CMA’s activities. Her Amendments 55 and 57 provide an excellent route to addressing these concerns. Like other noble Lords, I am sorry that they have not yet found favour with the Government and I very much hope that she will continue to pursue them.

Meanwhile, Amendment 49 from the noble and learned Lord, Lord Etherton, raises the right of consumers to bring collective proceedings where they have suffered the same harm or loss from a breach of conduct requirements. As he has argued, this is a vital lifeline for individuals or small businesses that cannot afford to finance legal proceedings alone. His amendment would create a means of effective enforcement of existing rights once a breach has occurred. We agree that we ought to find a mechanism to allow these class actions to occur in specific circumstances.

However, we also agree with the amendment of the noble Baroness, Lady Harding, that the courts need to avoid proceedings which conflict with or overlap the CMA’s ongoing investigations. We hope the Minister can provide some reassurance that the Government recognise the importance of these issues and will carry out a review. I hope this will provide sufficient reassurance to the noble Lord, Lord Etherton, that a vote on his amendment is not necessary.

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[Lord Bassam of Brighton (Lab)]

My Lords, as the Minister described, this group has government amendments, from Amendment 2 to Amendment 38, which add greater transparency to the process adopted by the CMA in disclosing information about cases involving SMS status firms where the challenger companies have an interest. We are pleased with the Minister’s amendments and, broadly speaking, happy to give them our support, as they respond to points that a number of noble Lords made at earlier stages of the Bill about the need for greater transparency and openness.

The SMS companies are in a position of significant market strength vis-à-vis the challenger firms and have a clear interest in seeing the bigger picture when disclosure is made of information that is of material interest. By obliging the publication of the notices and orders, rather than summaries of the documents, we feel that challenger companies will have greater access to key information that may impact on their market performance. Our amendments, from Amendment 4 to Amendment 39, attempt to achieve a similar result; I suspect that Ministers will argue that their amendments have greater elegance and a similar effect.

I turn to government Amendment 54 and our own Amendment 5. We are clearly of a similar mind and share concerns about commercial confidentiality so that, where reasonable, the redaction of documents can take place. We differ in our approach simply by suggesting that there should be a system for registering the documents that are relevant; the Minister might like to think about that at a later date. In essence, this is an operational issue so, to satisfy our concerns, perhaps he can put on record that there will be an effective system for the registration of documents and a notification process that enables the challenger firms to understand better what information has been disclosed to the CMA in the course of its inquiries. On that basis, we will be content not to move our amendments, and we thank the Government for responding to the concerns behind them.

[Lord Clement-Jones (LD)]

My Lords, this is a very straightforward group, and I congratulate the noble Baroness, Lady Jones, and the noble Lord, Lord Bassam, on having persuaded the Government to move further on the transparency agenda. I like the description given by the noble Lord, Lord Bassam, of the government amendment being more elegant. It is nice to think of amendments being elegant; it is not often that we think in those terms. We very much support the new amendments with some of the caveats that he made.

[Viscount Camrose (Con)]

I thank both noble Lords for speaking so eloquently—indeed, so briefly and elegantly—and the noble Baroness, Lady Jones, for tabling her amendments, which would require the DMU to establish a process for non-SMS firms to register themselves with the DMU as an interested party. The DMU would then be required to send certain notices to these challenger firms.

The Government agree that it is important that affected parties should have access to appropriate information related to DMU investigations. That is why the Government amendments go further, we feel. They will ensure that, subject to confidentiality, the DMU is required to publish all its SMS conduct requirements and PCI notices online, where they are accessible to everyone and not just specific firms that have registered their interest, or those who might not be considered challenger firms. The noble Lord, Lord Bassam, made a point about being informed of these things: while we would prefer not to put any such mechanism in the Bill, it is straightforward to imagine mechanisms that the DMU could employ to automate that.

The CMA has already been updating its approach to identifying and seeking input from third parties, including outside of formal consultations—making calls for evidence when launching investigations, web submission portals, and information requests for businesses, among others It will be able to use these approaches to inform decisions under the new regime.

I agree very much with the spirit of the noble Baroness’s amendments, which is why these government amendments will go further, to promote transparency across the regime. I therefore welcome the statement of the noble Lord, Lord Bassam, that he feels sufficiently reassured to not press the opposition amendments at this time.

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Moved by

[Lord Clement-Jones]

12: Clause 19, page 10, line 36, after “activity” insert “or another digital activity under its control that is affected by the relevant digital activity”
Member's explanatory statement
This amendment would widen the conduct requirements for designated undertakings to include an undertaking’s conduct with respect to any other digital activity that is impacted by its designated activity.

[Lord Clement-Jones (LD)]

My Lords, I rise to speak to Amendment 12 and support Amendments 14, 23, 34 and 60, which will no doubt be spoken to in more detail by their proponents.

Last week, several things took place. First, the European Commission issued Apple with a fine of €1.8 billion. The fine was increased due to Apple providing the Commission with misinformation during the investigation. Secondly, as many noble Lords have noted, the Digital Markets Act came into force in the EU. Thirdly, Apple took the decision last week to terminate Epic Games’s developer account, in retaliation for previous comments criticising Apple’s approach to managing the App Store.

Fourthly, Apple introduced a new core technology fee, which it announced in January. It proposes to charge any developer who takes advantage of the DMA’s benefits. In practice, it means that any developer wishing to list their app on an alternative store, or offer consumers an alternative payment method, is confronted with a new fee, despite not using any Apple service. This does not send a signal that Apple is ready to comply with new competition regulations. Such anti-competitive behaviour and the efforts of big tech to avoid meaningful regulation is exactly why the UK needs a strong digital markets regime, and a very good illustration of the tactics that some big tech operators are using.

The amendments being put forward today as regards digital markets are crucial to ensuring that the UK’s regulatory regime is fully equipped to meaningfully tackle big tech’s anti-competitive practices and prevent its circumvention and delaying tactics, and that, wittingly or unwittingly, we have not given it the ability to drive several coaches and horses through the CMA’s powers in the Bill. Equipping the CMA with a strong leveraging principle—which, thanks to the noble Lord, Lord Vaizey, we must now call the whack-a-mole principle—is therefore critical to ensure that it keeps up with such attempts to move illegal practices and fees around its ecosystems. I am not quite sure whether my Amendment 12 is belt or braces to the amendment being put forward by the noble Baroness, Lady Jones, but it is designed to ensure that what is called the leveraging principle has full play in the CMA’s powers.

The noble Viscount, Lord Camrose, said in Committee:

“We agree with noble Lords that it is crucial that the CMA can deal with anti-competitive behaviour outside the designated activity where appropriate”—


note the “where appropriate”. He went on:

“Our current drafting has sought to balance the need for proportionate intervention with clear regulatory perimeters. The regime is designed to address the issues that result from strategic market status and is therefore designed to address competition issues specifically in activities where competition concerns have already been identified. This recognises that SMS firms are likely to be active in a wide range of activities and will face healthy competition from other firms in many of them”.—[Official Report, 22/1/24; col. GC 164.]


However, the Government’s subsequent note on leveraging lays bare their limited approach to leveraging.

We need a much more comprehensive approach to the use of market power in non-designated activities, especially where activities are those such as operated by Google and Apple. For instance, Google runs Search, YouTube, its ad network, Ad Exchange and products such as Google Maps, Images, News and Shopping. All share operating systems and a browser, and fixed and common costs, and all operating system and browser costs are recovered from advertising. All search and browser and operating systems are integrated. All benefit from economies of scale, scope and network externalities. Apple, Amazon and Meta are all the same. They can account for everything as stand-alone businesses, but it is entirely their choice whether they do so; they can move costs around at will. Amendments are consequently needed to tighten up the provisions of Clauses 19 and 20—as particularly set out in Amendment 14 from the noble Baroness, Lady Jones—and ideally in Clause 29 as well.

I have signed amendments relating to countervailing benefits. Since the introduction of the Bill, we have been strongly of the view that Clause 29 could be a major loophole and that the long-term interests of the consumer could be ignored in favour of the short-term interests. On this basis, we strongly support returning to the form of the clauses as they were before Report in the Commons, as proposed by the noble Baroness, Lady Jones, in her amendments. I have sympathy with the amendment in the name of the noble Lord, Lord Lansley, too, and would support it if we felt there was sufficient support across the House.

Finally, I turn to Amendment 34 and the final offer mechanism, which is due to be spoken to by the noble Lord, Lord Black. The aim must surely be to ensure that the final offer mechanism is a credible incentive to negotiate, so that designated undertakings are not able to frustrate the enforcement process over many months or even years. The final offer mechanism would remain a last resort, used only when good faith negotiations had completely broken down but made a more credible incentive.

In closing, I should say that, if the noble Baroness, Lady Jones, wishes to test the opinion of the House on her Amendments 14 and 23, we will support her.

--- Later in debate ---

[Viscount Camrose (Con)]

To address the concerns of the noble Lord, Lord Leong, that the current wording deviates from legal precedent, I note that, since this is a new regime, existing exemptions in different competition regimes would not be directly applicable. It is highly likely that the application of the exemption will be tested, no matter the wording.

Finally, Amendment 34, tabled by my noble friend Lord Black of Brentwood, would allow the final offer mechanism to be used after the breach of a conduct requirement, rather than after a breach of an enforcement order. This novel tool has been designed as a backstop to normal enforcement processes. It is a last resort to incentivise sincere negotiations concerning fair and reasonable payment terms between the SMS firm and third parties. I wholeheartedly agree with my noble friend that these incentives must be both compelling and credible. It is clearly preferable for parties to reach a privately agreed settlement rather than one chosen by the regulator. That is why we must ensure due consideration of less interventionist options before turning to the final offer mechanism.

However, if SMS firms try to frustrate the process or drag it out to the detriment of third parties, I agree that the DMU should be able to accelerate stages before the final offer mechanism is invoked. That is why we have ensured that the DMU will be able to set urgent deadlines for compliance with enforcement orders, supported by significant penalties where appropriate, in cases of non-compliance.

I can robustly reassure my noble friend that the CMA can, via conduct requirements and enforcement orders as well as the final offer mechanism, gather and share key information with third parties.

Finally, to his comment on the forced withdrawal of content, the Bill is able where appropriate to tackle this issue. A conduct requirement could, for example, prevent an SMS firm withdrawing a service in a discriminatory way or treating users more favourably if they purchase the SMS firm’s other products.

The Government have worked hard to strike a balanced approach to intervention. This includes ensuring that firms cannot undermine regulation, and prioritising benefits to consumers at the heart of the regime. I believe the tools, as drafted, achieve these goals, so I hope that noble Lords will not press their amendments.

[Lord Clement-Jones (LD)]

My Lords, I thank the Minister for his response to the various amendments. I will be extremely brief; there will probably be quite a few votes now. I thank him for a full reassurance on Amendment 60, tabled by my noble friend, on standards and interoperability. I was looking closely at the noble Lord, Lord Black, when the Minister talked about Amendment 34, and I think there was a half-reassurance there—so that is one and a half so far.

It is clear to me, having discussed countervailing benefits further on Report, that this is, if anything, more dangerous than it appeared in Committee. I am sure that the noble Baroness, Lady Jones, will have noted the mood of the House as we discussed that.

On leveraging, the Minister made a valiant attempt to go through some points where the CMA might take more into account in terms of non-designated activities and so on. But the Minister sent through the technical note, and I am afraid that, if you look at it with care, it makes quite clear the circumscribed nature of the CMA’s powers under the Bill as currently drafted. It will be very important that we take a view on that. I am sure the noble Baroness, Lady Jones, has been alert to that as well. I withdraw my Amendment 12.

Amendment 12 withdrawn.

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Moved by

[Lord Clement-Jones]

61: Clause 126, page 80, leave out lines 4 and 5 and insert—
““(1) The Tribunal may award exemplary damages in any collective proceedings.””Member's explanatory statement
This amendment would allow exemplary damages in collective proceedings, which the bill as drafted seeks to prevent.

--- Later in debate ---

[Lord Clement-Jones (LD)]

My Lords, the Minister gave a disappointing response in Committee to my amendment on exemplary damages in collective proceedings. In explaining the Government’s decision, he said:

“The bar on the availability of exemplary damages in collective actions was one of the many safeguards put in place when the Consumer Rights Act 2015 was enacted, to ensure a balanced system of collective actions before the CAT which will not lead to a culture of undue litigation and US-style class actions”.—[Official Report, 31/1/24; col. GC 371.]


That is not a particularly helpful way of describing a legitimate assertion of consumer rights in a collective fashion, given the imbalance of power that is there so often in these proceedings. We have heard about asymmetry, and this is precisely that kind of area. Why should they be denied exemplary damages when in an individual case they would have been awarded, for instance where the illegal action has been deliberate?

I thank the Minister for his letter of 27 February. In it, he says:

“These safeguards were put in place when the Consumer Rights Act 2015 was taken through the House to ensure a balanced system of collective actions before the CAT. These safeguards ensure that defendants are protected by avoiding vexatious and unmeritorious claims—or fishing expeditions—while allowing legitimate claims for redress to proceed”—


this is the point where I took a deep breath—

“without defendants feeling pressured to settle despite the likelihood of a strong defence”.

Let us consider who we are thinking of as defendants: quite often in these circumstances, they will be extremely large companies. Is it not time that we reviewed the Consumer Rights Act 2015 in that respect? Surely, in these circumstances, we are talking about big tech, which has all the market power and the ability to finance litigation till kingdom come. Have the Government engaged in any recent consultation on that? As far as I can see, the last consultation they conducted was 10 years ago. I hope that the Minister has some slightly better answers this time around than both those in his letter and in Committee.

I look forward to hearing from the noble Lord, Lord Tyrie, and I encourage him to retable his Amendment 65 on whistleblowing. The government response in Committee and in their letter of 27 February—in contrast to what I have just said—demonstrated a real interest in expanding the regime set out in the Public Interest Disclosure Act 1998. The Government now say that they are currently reviewing the effectiveness of the whistleblowing framework in meeting its original objectives. I very much hope that the Minister can give us a foretaste of the conclusions of that review. I also look forward to hearing from my noble friend Lady Kramer, who has been a champion of whistleblowing rights.

Without anticipating what the noble and learned Lord, Lord Thomas, may say, I welcome government Amendment 62, but the timescale is crucial. We on these Benches will help to facilitate a Bill putting those rights on the statute book in any way that we can. We have received a letter from the Association of Litigation Funders. Without putting too fine a point on it, it says: “This vital role of litigation funding has been highlighted recently following the increased and long-overdue coverage of the Horizon scandal. Alan Bates, the lead claimant against the Post Office, has said that the backing of litigation funders helped him and his colleagues secure justice, expose the truth and clear their names and reputations”. I cannot think of a better reason to make sure that we get the Bill on the statute book as soon as possible. I beg to move.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I have Amendment 63 in this group, which is an updated and slightly amended version of Amendment 89A that I tabled in Committee. As the title of the proposed new clause says, the amendment calls for the Government to undertake a review of the third-party litigation funding industry. We discussed my earlier amendment on 31 January, and a lot has happened since. I have been blowing the trumpet since March 2017, and suddenly it appears that the walls of Jericho have fallen down.

I thank the noble and learned Lord, Lord Thomas of Cwmgiedd, who has been kind enough to send me a copy of the draft report by the European Law Institute on the principles that should govern third-party funding. The draft report contained a great deal of intellectual heavy lifting, from which I have benefited greatly.

Most importantly and significantly, I thank my noble friend the Minister and, through him, the Lord Chancellor and the Ministry of Justice for the announcement on 4 March that a review of third-party litigation funding would be undertaken. I am also grateful to my noble friend and his officials for giving me the chance to see some early draft terms of reference and for the opportunity to discuss them with him. I have a handful of points about them that I would like to put on record tonight, and I hope he will be good enough to pass them on to the MoJ, so that they may be taken into consideration as the terms of reference are firmed up.

First, in Committee I explained that I was a very strong supporter of the concept of access to justice, but that we needed to know what sort of justice was being accessed. The noble Lord, Lord Fox—I am sad that he is not in his place, but I did say I was going to mention him this evening—got after me, not entirely unfairly, saying that all my remarks were, as he put it, of second-rate importance and that, without third-party litigation funding, there was no justice at all, to which I reply: up to a point, Lord Copper.

We—and I hope the review—must not forget that the funders are profit-making entities. This in itself is entirely understandable, but a profit-making entity marches to the beat of a different drum. All I am saying is that the plaintiffs—whose interests, after all, the funders are supposed to represent—are entitled to know about the beat of that drum, the waterfall of the distribution of the proceeds, who pays costs, and all those sorts of issues. If obfuscation takes place, there should be a body—the courts, perhaps—that can step in. Equality of arms demands no less.

My second point is that I hope the review will be prepared to get down into the real practical detail of what is happening in the industry today. High-flown legal principles are really important to provide the right structure but, to be effective and worth while, the review will need people with experience of the third-party litigation funding industry and those with a preparedness to get into the detail and turn over all the stones.

Thirdly, I hope the review will examine the consequences of grouping claims together, in the way that they are put together for funding via a single investment pot. In particular, the review will need to consider the position where firms of solicitors are undertaking the grouping. As I explained in Committee, where several cases are included in a single pot, there is a danger of too early a close-out, from a plaintiff’s point of view, of the remaining case or so, when the funder would like to round up the pot and return the money to its investors. By contrast, when matters are not going so well, it may be in the funder’s interest to prolong the proceedings—not in the interests of the plaintiffs—in the hope that a greater result will come from the last few cases, and the result will be a much more satisfactory outcome. The key differentiation is that the plaintiffs have an interest in the outcome of a single case, whereas the funders have an interest in the outcome of a group of cases.

Fourth is any unwitting exposure to costs. Under the opt-in regime, individuals took their chances when they signed in—not so under the opt-out regime. I think I am right in saying that there is nothing to stop my noble friend the Minister, me, or Members of your Lordships’ House suddenly getting communications saying, “Please send us £100 for your share of unfunded costs of bringing this case”. That seems to be not a likely but a possible situation, and not a very satisfactory one.

Fifthly, for those Members of your Lordships’ House who sat through Committee and other stages of the National Security and Investment Act, when we were seeking to achieve a reasonable balance among interested parties, there is a read-across to this review. It is surely not in our national interest to have unknown funders—perhaps backed by foreign Governments—able to press for litigation claims against high-tech UK companies. Such actions can disrupt the management and development of the company or damage its reputation, and could in some cases give access to its technology. An ability for the Government and/or the courts to require disclosure of beneficial ownership could be of great advantage in the future.

Finally, we are promised a preliminary report this summer and a final report in summer 2025. This will presumably mean that the earliest we can accept draft legislation, if there is any, will be in the 2026-27 legislative programme, leading to stuff on the statute book in 2028. That is quite a long way away, and I hope we are not going to see any slippage in that timetable. I hope that I have been over-pessimistic about what might be achieved, and that my noble friend can reassure us on that.

I end as I began, by thanking my noble friend and the Government for this important development. I hope they will feel able to pass these remarks on to the MoJ and I ask whether those of us who have taken a long-standing interest in TPLF can be kept informed as matters develop, and that we shall have the opportunity to give evidence to the review in due course.

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[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

I thank all noble Lords who have contributed to the final group this evening, group 4.

Amendment 61 tabled by the noble Lord, Lord Clement-Jones, would enable the Competition Appeal Tribunal to award exemplary damages in collective proceedings. He is familiar with the Government’s position on this matter. I have been pleased to have the opportunity to discuss it with him further since Committee, and have written.

The Government consulted before introducing the collective action regime in 2015. The great majority of respondents said that exemplary damages should not be available in collective actions to ensure that firms were not unduly pressured to settle claims due to just the risk of punitive damages. Introducing exemplary damages in collective actions could also act as a disincentive to leniency applications—these are critical to the detection and enforcement of infringements by public regulatory authorities. Without effective leniency programmes and public enforcement, it could be far more difficult for private parties to pursue redress.

This view was shared by both businesses and consumer groups, including the consumer group Which?, which did not consider extending exemplary damages to collective actions to be necessary. I am sure that this will be of particular interest to the noble Lord, Lord Clement-Jones, given his commendable focus on ensuring consumers are at the centre of our thinking. The Government believe the current provisions in the Bill reflect the right approach on this matter.

Government Amendments 62 and 157 relate to litigation funding. The Government have recognised the challenge posed by the PACCAR judgment and the impact on access to justice. Furthermore, it has always been the Government’s intention to address the impact of the PACCAR judgment in full at the earliest opportunity. Since Committee, the Government have announced that it will quickly bring forward a separate Bill to enable this. I am sure that noble Lords across the House will welcome this news.

Clause 127 was introduced previously to mitigate the impact of PACCAR by enabling PACCAR-compliant funding agreements to be applied to opt-out collective actions. This clause will no longer be required, and these amendments effect its removal. I hope that noble Lords will support these amendments, along with government Amendment 66, which is a tidying-up amendment to remove a redundant cross-reference in Schedule 13.

[Lord Clement-Jones (LD)]

My Lords, I am sorry to interrupt the Minister but the noble Lord, Lord Bassam, and I would be keen—despite the dinner hour approaching—to know a bit more about the Minister’s plans as regards the short Bill. We want a bit more specific information about timing and what is happening. Is there a period of consultation, or can we go straight to legislation. What is the plan? With the best will in the world, we are delighted to hear what the Minister has to say, but can we have some specifics?

[Lord Offord of Garvel (Con)]

Yes, this will be happening quickly.

[Lord Clement-Jones (LD)]

My Lords, that is rather better than the ministerial “in due course”. That is all I can say.

[Lord Offord of Garvel (Con)]

I thought the noble Lord would appreciate that clarity.

Amendment 63 was tabled by my noble friend Lord Hodgson and I thank him and the noble and learned Lord, Lord Thomas, for their contributions to the debate. While the Government recognise the important role that litigation funding can play in facilitating access to justice, we are not blind to some of the challenges and opportunities to reform and improve the funding system. That is why, in recent days, the Lord Chancellor has written to the Civil Justice Council, inviting it to undertake a review of the sector. This work will ensure that claimants can get the best deal and it will expressly consider the need for further regulation or safeguards. Its terms of reference will be announced in the coming days.

[Lord Clement-Jones (LD)]

I am sorry my Lords; I regret to keep interrogating the Minister, but there is a clear separation, I assume, between a review as to whether or not regulation is required, in the form that the noble Lord, Lord Hodgson, talked about, and re-establishing the basis for litigation funding following the PACCAR case. I assume there is a clear distinction between the two activities.

[Lord Offord of Garvel (Con)]

That is correct.

Colleagues from the Ministry of Justice will be following this debate closely and will have heard the points made by my noble friend Lord Hodgson regarding the need for momentum for this review. Therefore, it would not be right to have a statutory review that would duplicate this work.

Amendment 65, tabled by the noble Lord, Lord Tyrie, is about whistleblowing. I thank the noble Lord and the noble Baroness, Lady Kramer, for their passionate contributions on this topic this evening. As I made clear in Committee, the Government recognise how important it is that whistleblowers are supported to shine a light on wrongdoing and believe that they should be able to do so without fear of recriminations. In 2023, the CMA increased the cap on rewards for illegal cartel whistleblowers from £100,000 to £250,000 to strengthen its enforcement work. Additionally, the Government are undertaking a wider review of the effectiveness of the whistleblowing framework in meeting its original objectives to facilitate whistleblowing, protect whistleblowers against detriment and dismissal, and to facilitate wider cultural change around whistleblowing.

My colleague the Minister for Enterprise, Markets and Small Business has recently mentioned in the other place that the research for the review is near completion. The Government intend to provide an update on this shortly.

--- Later in debate ---

[Lord Tyrie (Non-Afl)]

Can the Minister say whether “shortly” is the same as “quickly”, and whether it will be a comprehensive examination of the subjects or just picking off a small number of areas? What exactly is it looking at?

[Lord Clement-Jones (LD)]

Before the Minister stands up, I will add to that. The Minister used the word “research”, which I thought was extraordinary. “Research” is a flabby kind of expression in these circumstances. Do the Government intend to review the current state of whistleblowing with a view to ensuring there is a more comprehensive approach to it, or is this just some nice-to-have academic exercise?

[Lord Offord of Garvel (Con)]

I thank both noble Lords for that. The update will be provided shortly. I agree with the noble Lord, Lord Clement-Jones, on the beauty of the wording that the “research” for the review is near completion. It does perhaps need some clarification, so let us get the timetable and I will provide that as soon as possible.

The noble Lord’s continued engagement is greatly welcomed as we undertake this important work. However, we do not think it appropriate to place a new and binding obligation for a further review to be conducted within a specific timeframe. I will come back to him with exactly what the timeframe is.

Amendment 153 from the noble Lord, Lord Tyrie, would require the measures in the Bill to be reviewed at five-year intervals by an individual appointed with the consent of the relevant parliamentary Select Committee. I thank the noble Lords, Lord Tyrie and Lord Kamall, and the noble Baroness, Lady Kramer, for their contributions to the debate on this amendment. I commend its intent. However, the Government have already committed to carrying out an evidence-led post-implementation review to assess how the Bill is delivering on its aims. The CMA has also engaged constructively with parliamentary committees to support their scrutiny of its activities. This will continue in the future. Noble Lords will be aware that the CMA is also required to present and lay its annual report in Parliament, covering its operation and effectiveness.

I thank the noble Lords, Lord Clement-Jones and Lord Tyrie, and my noble friend Lord Hodgson for their amendments. I hope that they are sufficiently reassured by what I have said and do not feel the need to press them.

[Lord Clement-Jones (LD)]

My Lords, I thank the Minister for that response. Even on an empty stomach, there are things to be taken away from what the Minister said. I score him two and a half out of four as far as this is concerned. What he said on exemplary damages was disappointing. I cannot see why the Government do not understand that using a review that took place in 2013 as a stick to beat us with by saying that we cannot have exemplary damages for collective proceedings seems a bit perverse. Time has moved on. The whistleblowing side is the half—so nul points for exemplary damages and half a point for whistleblowing, but if there had been more than just research it might have been full marks. As regards the other two points, the fact that there will be a post-implementation review is sensible. The Minister did not say much more about the post-PACCAR pledge, but we take a little bit on trust, particularly at this time of day. In the meantime, I beg leave to withdraw Amendment 61.

Amendment 61 withdrawn.

Digital Markets, Competition and Consumers Bill

Lord Clement-Jones Excerpts

Committee stage
Wednesday 7th February 2024 Grand Committee

[Lord Bassam of Brighton (Lab)]

My Lords, this is the starter before the main course on subscription contracts, but it is important none the less. I can reveal to the Committee that our Amendments 169 and 193 are mere probing amendments designed to test whether the Government have confidence in the Bill’s subscription provisions providing sufficient protection for digital platforms that host copyrighted content, mainly on-demand videos. A number of companies have raised this issue with us, arguing that they will be seriously out of pocket if they have fully to reimburse those who have accessed paid-for content during a cooling-off period. It is our feeling, and a view widely shared, that, although the Bill restates a lot of current consumer law on subscriptions, it does not restate many of the obvious and probably necessary exemptions that the noble Lord, Lord Black, clearly identified. We need to cover those.

At present, if I sign up to a streaming service, it is made apparent that, the moment I consume content, my statutory rights change. The Bill appears to restate some principles but not others, and it creates a lack of certainty for both sides. Some of the companies argue that they will have to pay out refunds in cases where they would not under current law. This runs the risk of creating unrealistic expectations for consumers.

The amendments in the name of the noble Lord, Lord Lucas, ask similar questions of the Minister and seek to explore how the subscription contract is paid for if it is used during the cooling-off period and then cancelled. They also seek to understand what information a trader must publish in those circumstances. The noble Lord made a good point about charging.

Turning to the amendments in the name of the noble Lord, Lord Black, he skilfully highlighted for the Committee the problems that will be caused by the way the legislation is phrased. Having heard the noble Lord, I am more on his side than I was at the outset. I am not a regular Daily Telegraph reader, nor a great fan, and this is the second time in a week I have had to plead on its behalf—this is becoming rather strange politically. I am a Guardian person, and I can see the problem replicated across the whole news world. I do not think the onerousness of the burden is justified in this case. It could be an endemic problem.

I want to hear what the Minister has to say because we need some light and dark, some nuanced thinking, about the way subscriptions work. This is not the way to bear down on the subscription trap, which I think we are all keen to deal with. This does not help us at all in that regard.

I was originally going to say of the last two amendments in the name of the noble Lord, Lord Black, which seek to create a two-year implementation period, that I was not particularly convinced, but having heard the argument, I have reversed my view. If we do not have a solution, I suspect those two amendments could be very helpful in trying to resolve some of the problems this is creating. There is merit in those amendments.

We need to approach this issue in more forensic detail. I want to hear what the Minister has to say, because I do not want us to further undermine the news market. We live in a time when there is less ability and facility to report than we are used to. Moving from broadsheets to online content is changing the way in which the news world operates. My son works in the news world, and he understands these things far better than I do. We need solutions, and the way the legislation is currently phrased does not provide us with one that protects the value and importance of news in an open democracy such as ours.

[Lord Clement-Jones (LD)]

My Lords, this has been very interesting debate. There is a common theme—that these clauses are a very blunt instrument. At one end of the spectrum, we have the amendments in the name of the noble Baroness, Lady Jones, which attempt to get to grips with what this is all about and whether these clauses are fit for purpose; and at the other end we have had clear demonstrations that they are not. I am very grateful to the noble Lord, Lord Black, in particular, for his comprehensive and persuasive introduction. I started off fairly convinced of the case—I did not sign all his amendments, but I signed two clause stand part notices—but, like the noble Lord, Lord Bassam, I am now pretty convinced that the clauses are not quite fit for purpose. For the digital economy, we need to be much more wary about how the prescribed cooling- off period works.

I started off thinking that this is an issue that only the subscription and video-on-demand side should be concerned about, but having listened to the noble Lord, Lord Black, I realised that there is a much wider set of interests. The noble Lords, Lord Lucas, Lord Vaizey and Lord Bassam, described a much wider landscape that should be concerned.

I started by considering the disruption to subscription video-on-demand services—the so-called streamers. That is why I signed the notice from the noble Lord, Lord Black, opposing Clause 262 standing part. All the representations I received pointed out that this is really business-critical for UK operators such as Netflix and Disney+. I think the noble Lord, Lord Vaizey, used the expression binge-watch; if you can do that and get a refund, why bother keeping your subscription? We need to make sure that those services are safeguarded.

A number of noble Lords pointed out that Ministers in both the Commons and this place have expressed concern, saying that they understand the issue and are going to consult; but in the meantime, there is a huge amount of uncertainty. We potentially have it in black-letter law that the cooling-off periods are as set out in the Bill. We do not know what kind of consultation will take place, what kind of flexibility might be operated, and so on. In the meantime, we have a perfectly workable set of consumer contract regulations, which the parties would be happy to apply. That was very much the case the noble Lord, Lord Black, rightly made.

Important principles are set out in the CCRs, such as that consumers can request that the supply of digital content begins before the end of the 14-day cancellation period. So it is perfectly possible to have a provision that safeguards both the service provider and the consumer in these circumstances, but that principle is not imported into the Bill. I do not know why. On Monday, I asked the Minister what consultation had taken place. I have used the expression “blunt instrument”, but these are really important new provisions. The noble Lord, Lord Bassam, was absolutely right: they are based on the best of intentions, but they are so blunt that they will be a real problem for some of our digital services.

I hope the Minister will not regard our proposals as “not invented here”, and that the Government will not motor on with these provisions without taking a long, hard look at them. This is one of those circumstances where we would all be a lot happier if we reverted to a regulation-making power, got rid of some of these clauses and had a proper super-affirmative provision in the Bill, for example, enabling a discussion about all these aspects of subscription contracts. We heard about the absolute unhappiness with the impact on charities and gift aid when discussing the previous group; that demonstrates the total bluntness of these provisions. I do not think anybody will be very happy with them —the charities, the streaming businesses, the subscription media services or the dating services. There is a huge amount of unhappiness, which I hope the Minister will respond to.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)]

I thank noble Lords and noble Baronesses for their amendments and their interesting and informed contributions to the debate on this first group of amendments, on subscription contracts.

I will first address the amendments tabled by my noble friend Lord Lucas, which relate to the cooling-off period. Amendments 168 and 191 would create an additional requirement for businesses to inform consumers of the charges they may incur if they use a subscription but later cancel their contract during a cooling-off period. I agree that it is important for consumers to know what charges they could incur when they exercise a right to cancel during a cooling-off period. However, I assure my noble friend that the Bill already makes sufficient provision for this. The full pre-contract information listed in Schedule 21 provides information on the consequences of a consumer exercising their right to cancel during a cooling-off period. This includes information on any refund the consumer may be entitled to and any reason why that refund might be diminished. That information must be given or made available to consumers as close in time as is practicable to a consumer entering into the contract. Therefore, although I appreciate the intent behind my noble friend’s amendments, I hope he is reassured that sufficient provision is already made in the Bill.

--- Later in debate ---

While Amendment 192 would help to ensure that consumers know about this important right, having the renewal cooling-off period end only after a consumer acknowledges that their contract is up for renewal would make it difficult for businesses to plan and automate their operations. For example, what happens if a consumer does not acknowledge that their contract is due for renewal? The implication is that they could retain the right to cancel the contract and secure a refund indefinitely. That cannot be right. We believe that our approach strikes the right balance between ensuring that consumers have the information that they need to exercise their renewal cooling-off rights while also respecting the legitimate interests of businesses.

[Lord Clement-Jones (LD)]

My Lords, I am sorry to interrupt the Minister, but it might give the Box a chance to answer the question before the end of his response. Do the current provisions in the Bill contain the principle that I mentioned, which was set out in Regulation 37 of the consumer contracts regulations, where consumers can request that the supply of digital content begins before the end of the 14-day cancellation period, acknowledging that they would then cease to have the right to cancel from that point of supply? If not, why not, as that would be the ultimate protector of these digital services?

[Lord Offord of Garvel (Con)]

I will come to that once I have some input from behind me. This is obviously a key part of the group.

Amendments 169 and 193, tabled by the noble Baroness, Lady Jones of Whitchurch, address the provision of information in relation to the consumption of digital content during the renewal cooling-off period. I understand that the noble Baroness wishes to ensure that the Bill provides sufficient protection for digital streaming platforms if a consumer has accessed digital content and then cancels their contract during the renewal cooling-off period. The Government will consult on the relevant return and refund rules that apply in this situation and other similar circumstances. This will ensure that rules are fair and practical for businesses and consumers. It will also enable consideration of any specific issues for particular industries or circumstances if needed—for example, digital content, perishable goods or bespoke products.

As part of that consultation, we will include a policy proposal of introducing an explicit waiver from refund rules for digital content, recognising the circumstances that the noble Baroness set out. We aim to consult before the end of the year. This is directly to avoid the scenario that these digital steaming firms fear. It is also important that those rules can be reviewed—

[Lord Clement-Jones (LD)]

My Lords, I apologise. If the Minister is undertaking this consultation and looking at a provision of that description, can he also describe which power, in the part of the Bill we are dealing with, will give the Secretary of State the ability to do that, as well as the process by which it would be introduced and the timing?

[Lord Bassam of Brighton (Lab)]

The noble Lord, Lord Clement-Jones, partly covered the point that I was going to ask about. I want some more detail about how this waiver will operate. That is where the noble Lord and I are coming from. Perhaps the Minister can flesh that out a bit more, because it is important. I am delighted that the notion of a waiver will be consulted on, but the question of how it works will be important, too.

[Lord Clement-Jones (LD)]

My Lords, it could answer the Regulation 37 question.

[Lord Offord of Garvel (Con)]

The point is that we have to consult on this. The matter has been raised by all sides of the Committee and there are specific reasons for it. The consultation is as it says. Rather than trying to go through this line-by-line at the Dispatch Box, I will try to set it out in writing for everyone, so that we can see exactly what we mean by it. If I have any input in the meantime from behind me, I will share it with noble Lords.

I turn now to the clause stand part notices tabled by my noble friend Lord Black—that Clauses 262, 263 and 264 should not stand part of the Bill—and his consequential Amendment 194. The net effect of these changes would be to reverse the cooling-off period in the Bill to the status quo established by the 2013 consumer contracts regulations. In particular, the cooling-off period for consumers after a free trial or year-long subscription automatically renews, introduced by this Bill, would be removed. The Government’s objective is to protect consumers from the specific harms associated with subscription contracts, while also considering the needs of businesses. We believe that the Bill correctly finds that balance. The Government expect that the protections provided through the Bill will have £400 million- worth of consumer benefit per year.

This measure protects consumers who have signed up to a trial period that then rolls into a higher-cost term. It also applies when contracts automatically renew on to a period of 12 months or longer, which usually, by definition, incurs a substantial financial outlay. Indeed, our consultation showed that many people forget to end their subscriptions before they automatically renew, especially after a trial, so we view this as an important provision that must remain in the Bill.

We understand that some businesses, particularly digital streaming services, are concerned about how the cooling-off periods will work in practice. As I mentioned, noble Lords should be assured that we will publicly consult on the cancellation return and refund rules to make sure that we get this right and—to be clear—to avoid refunds being payable to consumers exploiting the cooling-off period. The Bill allows for the Secretary of State to make the necessary regulations by affirmative procedure. That will be done before the subscription rules come into operation, following the consultation. I hope that this reassures the noble Lords on these points.

I turn now to the final amendments in this group, Amendments 221 and 224, also tabled by my noble friend Lord Black. The amendments would mean that the subscription contract provisions in the Bill come into force two years after the day on which the Act receives Royal Assent. The Government fully understand that businesses need clarity about when the new rules will come into effect and that they need sufficient time to make appropriate preparations. I am pleased to assure noble Lords that the subscription regulations will commence no earlier than October 2025. In the meantime, we will continue to engage with stakeholders to understand the impact of implementing the new rules and to ensure that businesses have enough time to adapt their operations accordingly.

The detail on return and refund rules will be set out in secondary legislation and the Government have committed to consult publicly on those rules. Clause 265 gives the Secretary of State the power by regulations to make further provision in connection with the consumer’s cooling-off right. Those regulations are subject to affirmative procedure, which I hope will assure my noble friend. I am grateful for my noble friend’s amendments and I hope that he feels reassured by my remarks.

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[Lord Lucas (Con)]

My Lords, I wanted to wait until the noble Baroness, Lady Jones, had spoken, because I wanted the chance to agree with her amendment, which raises the same question that I was raising in Amendment 192. Why do you have to be locked into these subs? Why can you not be asked to resubscribe, if that is what you want to do? Why can we not give consumers a right to approach things that way and get to know a product before they know that they want it every year?

I echo what my noble friend Lady Stowell of Beeston said on newspapers. I would want to get to know the Daily Telegraph well enough to know that I want to pay for it every day. To be able to buy it once a week would be nice, but that is not an offer at the moment. Allowing consumers to get used to a product benefits business. As the noble Baroness demonstrates in her amendment, it also benefits the consumer. It should not just be a year’s subscription or nothing. We should encourage businesses to provide something in between. We certainly should not make renewal the only option that businesses look for. We should make them earn that renewal by providing a good product for a year so that customers do not want to have to be bothered with renewing it every year. That is a situation that one happily gets into with a number of charities. You know that you want to support them. They provide a good service and you just let it tick over. I do not think that anyone should be entitled to that position. They have to earn it; they have to prove it. To have a system where you do not have to tie yourself in at the beginning is estimable.

That said, I have a great deal of sympathy for what my noble friend Lord Black said. I would prefer to see a lot of this in secondary legislation. I understand that when someone cancels a subscription, the business wants a chance to correspond with them and have an argument, although I find it a huge irritant in my relationship with a business when I suddenly discover that it would do business with me on much better terms but only if I threaten to withdraw. I wish it would value me as a continuing customer and offer me good terms, rather than only benefiting discontented customers.

I think that there is a lot of good in all the amendments in this group. I echo what the noble Baroness, Lady Jones, said about the amendment tabled by the noble Viscount, Lord Colville. I look forward to seeing that in the next Bill. I just draw his attention to the likes of Ancestry.com. Its business is the accumulation of everything that everyone has added to it. You subscribe to it, but all the time you are adding information that is then available to other people. Businesses should be allowed to retain the information that you have added, if that is appropriate. I can quite see that you might want your photographs returned from Flickr, but something like Ancestry or an app about building up information about history, ecology or whatever else it might be properly retains information that individuals have contributed and it ought to be possible for an app to have that in its terms.

[Lord Clement-Jones (LD)]

My Lords, I am glad to follow the noble Lord, Lord Lucas, because having supported a number of amendments in this group I saw harmony rather than discord. The noble Baroness, Lady Stowell, had it absolutely right: the provisions here are both too vague and too detailed. Where the Bill should be detailed, it is vague; where it is vague, it should be—and so on. That is the essence of it.

Between us, we have a pretty good idea—I hope that it does not involve sitting in a locked room thrashing this out—of what good looks like. That is the important thing. The problem is that in this group we are debating the beginning of a contract, the reminder and the termination in one fell swoop, so it is easy to misunderstand exactly what we are talking about. The amendments tabled by the noble Baroness, Lady Jones, are extremely good, because this is all about having information at the beginning of the contract. What you do not want is too much elaboration. As long as you know up front what to expect and the kind of contract that you going to enter into, that seems to me to a sensible way forward. It is about getting the basics right and I do not think that the Government have got the basics right.

Many people think that the process by which the original consumer regulations were put together was perfectly sensible, so I disagree with the noble Baroness about whether secondary legislation would be appropriate after consultation. I think that that would be a perfectly proper way forward, rather than this rather clunky way of doing it with secondary legislation and schedules setting out so much detail. That seems a rather extraordinary way of going forward. It also seems to clash somewhat with the Government’s reluctance in other areas. No doubt the noble Lord, Lord Holmes, will speak in the next group about a lack of regulation in certain quarters—which way is a matter of mutual interest. That seems a bit paradoxical. We have to get the basics right.

The noble Lord, Lord Vaizey, made an interesting speech. He was almost suggesting that there needs to be friction at the end of a contract so that there is an excuse to engage. I am not entirely convinced by that. Luckly, he did not put an amendment down, so I do not have to disagree with that at the end of the day.

The amendments tabled by the noble Lord, Lord Black, are sensible. There is an issue about how many communications a consumer sees, but the important amendment is the one regarding qualification of “by any means”. Clause 258 is pretty extraordinary. What if a trader gets a Twitter message but they are not on Twitter? How are we expected to accept a notice given “by any means”? The qualification suggested by the noble Lord seems entirely sensible.

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[Lord Offord of Garvel (Con)]

My Lords, we come to the second group of amendments, on subscription contracts and reminder notices. Again, I thank all noble Lords for their amendments and interventions. I appreciate that there is a lot of interest in this area of the Bill and I look forward to continuing this discussion with noble Lords between now and Report.

I will first address the amendments tabled by my noble friend Lord Black of Brentwood, for which I am most grateful. Amendments 170 and 175 to 184 relate to reminder notices. The requirement to send reminder notices is one of the targeted duties that we are placing on traders to ensure that consumers pay only for subscription contracts that they want or need. Of course, we recognise that there is a balance to be struck and we have listened to views from a range of stake- holders to ensure that we get this right. Indeed, the Government made changes to the reminder notice provisions in the other place following further consultation with industry. The Bill reflects the Government’s commitment to delivering proportionate regulation, ensuring that consumers are suitably protected from the harms of subscription traps without overburdening businesses.

I wish to reassure my noble friend that for an average monthly subscription contract, a trader will have to send only one reminder notice within a six-month period. We believe that this strikes the right balance between informing consumers about their subscriptions and not overburdening businesses.

Reducing the frequency of reminder notices, as my noble friend’s amendment seeks to do, would increase the risk that consumers end up paying for unwanted subscriptions for longer periods. To be clear, the Bill already allows for the Secretary of State to make regulations to update or modify these provisions in a number of ways, including the frequency, content and timing of reminder notices. This ensures that the Government can adapt the reminder notice requirements in future if evidence about consumer behaviour or operational practice indicates that adjustments are necessary.

Amendment 189 relates to end-of-contract notices, which a trader must send when a consumer has ended or cancelled their contract. In a similar way to my noble friend’s other amendments, Amendment 189 seeks to remove detail from the Bill. However, as with reminder notices, we think that the requirements for end-of-contract notices strike the right balance between informing consumers and not overburdening businesses.

Amendments 185 to 188, which relate to contract cancellations, were also tabled by my noble friend Lord Black. The Government are committed to the principle that consumers should be able to easily exit their subscriptions if they wish and businesses should not place undue barriers to doing so. Consumers should not, for example, be hindered when trying to leave a subscription contract or when stopping its renewal. Those are the principles behind these provisions.

However, I can assure my noble friend that we are continuing to listen to businesses and other stakeholders. We are absolutely committed to ensuring that this legislation gets the balance right between protecting consumers and supporting businesses. We of course appreciate that any communication to end a contract must be clear to a business. That is why, in the event of a dispute, the onus is on a consumer to prove that their method of ending the contract or cancelling it is sufficiently clear to the business for these purposes.

I hope that this lays to rest any concerns that your Lordships might have that a single tweet into the ether or a message via carrier pigeon, as suggested by my noble friend Lord Vaizey, could be an acceptable means of a consumer leaving a contract. We will also provide clarification through guidance for these kinds of scenarios and engage with stakeholders as we develop it. Furthermore, the Government are clear that nothing in the easy-exiting principle should prevent a trader from requesting voluntary feedback from a consumer who wants to end their subscription or from offering to give the consumer information on other products. However, these must not unduly hinder the consumer from ending their contract.

For the reasons that I have set out, including our commitment to continue to get feedback from all stakeholders on these issues, I hope that my noble friend will feel able not to press his amendments and that noble Lords who spoke to the amendments feel suitably reassured.

Amendments 173 and 174 were tabled by noble Baroness, Lady Jones of Whitchurch. Amendment 173 would impose a requirement on traders to ask their customers to agree, before entering the contract, that their subscription will renew automatically every six months or, if the period between renewal payments is longer than six months, agree each time payment is due. Amendment 174 would apply equivalent requirements but would also accommodate contracts that renew automatically after a free or low-cost trial.

I agree wholeheartedly that consumers must be protected from getting trapped in unwanted subscriptions. However, as I mentioned, the Government’s position is that the Bill currently strikes the right balance of protecting consumers without overburdening businesses and potentially reducing consumer choice. Requiring opt-ins would burden businesses and consumers with emails requiring them to confirm that the subscription can continue. Consumers who forget could inadvertently see their favourite subscriptions lapse.

I turn now to Amendment 190 in the name of the noble Viscount, Lord Colville of Culross, which would ensure that consumers can have their non-personal data returned to them after they cancel their subscription contract and would stop traders continuing to use this data. I thank the noble Baroness, Lady Jones, the noble Lord, Lord Clement-Jones, and my noble friend Lord Lucas for their contributions on this issue. I assure the noble Viscount that, where data can be used to identify a living individual, this information is already protected by the UK GDPR regime; statutory provisions therefore exist for it to be returned to a consumer. This includes data that is directly identifiable to an individual, or indirectly identifiable from that data in combination with other information.

For information that may be considered non-personal or anonymised, the Data Protection and Digital Information Bill will create a test in legislation to help organisations understand whether information is personal or anonymous. This will help bring clarity to businesses as to how to process the type of information the noble Viscount discussed. I am grateful to the noble Viscount for his amendment and hope he feels satisfied with my explanation.

Finally, I turn to the points made by my noble friend Lady Stowell. I assure her that the Government consulted on the principles of the Bill in 2021 and will publicly consult on the details of the return and refund rules. The purpose of consulting on those rules is to take account of a wide range of products, including perishable and bespoke products and services, that have been used during the cooling-off period; that is why we think it appropriate to set out this detail in secondary legislation following the consultation. I am grateful to my noble friend for her remarks and hope she feels satisfied with my explanation.

[Lord Clement-Jones (LD)]

Can the Minister reassure me that he will write to say how these provisions were consulted on? There is further work to be done, clearly, but it would be good to know what baseline consultation was carried out for all these extremely new, comprehensive, detailed—and sometimes vague—provisions. That is an important part of the knowledge we need to have going forward.

[Lord Offord of Garvel (Con)]

I thank the noble Lord and agree that it would be helpful for all of us if this were written down so we could examine it in more detail.

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[Lord Lucas (Con)]

My Lords, we move from a very new problem to a very old problem. My Amendment 215B asks that the Government restore to us the protection we used to have from double-glazing salesmen. There used to be a cooling-off period. That got swept away by EU regulations. Now that we have Brexit, we have the opportunity to give consumers back the protection that they once had. At the moment, double-glazing can claim to be made to the consumer’s specification but, actually, it is not. It is a standard product, and you just tweak it a bit. There is plenty of room when you are providing double glazing, fitted kitchens or anything like that to allow consumers proper time to step back and ask themselves whether they want to go in for such an expense and whether it is something they really want to do. We ought to restore that to consumers, there being no good reason not to.

[Lord Clement-Jones (LD)]

My Lords, I will speak first to Amendment 215C and then come to Amendment 202. I am very much indebted to the Fair Standards Alliance for raising the issue of standard-essential patents. I thought I knew a fair bit about intellectual property and the digital world, but I was in a state of relative ignorance when the world of standard-essential patents came to me. I have had quite an extensive briefing from the Fair Standards Alliance, which has revealed the importance of standard-essential patents, particularly in the context of competition and licensing.

These patents are necessary to implement an industry standard, such as for wifi or 5G. As the market is locked into a standard, to prevent abuse of the market power, SEP owners are required to license their SEPs on fair terms. Unfortunately, there is widespread abuse of this monopoly power by SEP holders that often, I am told, do not abide by their voluntary commitments and instead seek to abuse their market dominance to force product manufacturers to sign up to unfair terms. SEP holders are regularly seeking and securing excessive licence fees from technological innovators by leveraging the threat of injunctions, which forces firms in the UK either to accept high licence fees or to exit the market. This is to the detriment of those businesses and to the wider UK economy.

Most prospective licensees cannot afford the cost of litigation or exclusion from the UK market. The recent High Court decisions in InterDigital v Lenovo and Optis v Apple demonstrate how SEP owners exploit SMEs and make excessive royalty demands that only large, well-resourced litigants can afford to challenge. Apparently, the costs of the recent SEP licensing trial in the InterDigital case were over £31 million. That is pretty breathtaking, even to one with my background as a commercial lawyer.

The costs can be ruinous to many businesses. This tactic not only threatens innovation by UK businesses but represents a strategic risk for UK priorities, such as 5G infrastructure, diversification and smart energy network security, by limiting the competing players. The availability of injunctions for SEPs gives foreign SEP holders the ability to prevent others in the UK entering, succeeding and innovating in those markets.

The Government have been considering SEP reform— I noticed the Minister nodding vigorously, earlier—for several years and have received evidence showing the abuse that businesses in the UK face. The Intellectual Property Office’s SME survey suggests that UK businesses face excessive licence fees for SEPs. SMEs are concerned by the threat of market exclusion by court-ordered injunctions and a lack of transparency about the cost of and need for the SEPs being offered.

British companies are predominantly SEP licensees. The majority of SEPs are held by companies from China, the EU and the US, with no major SEP licensors based in the UK. This means that, when SEP holders hold up innovative UK manufacturers during licence negotiations and extract excessive licensing fees, they are taking value that would otherwise be available to fund further innovative developments in the UK and are increasing costs to UK consumers.

The UK’s innovative SMEs are especially affected across all sectors, as they cannot afford expensive legal battles against large, international SEP holders. As I said, the costs were over £31 million in the InterDigital case. The problem is widespread and the Government themselves have already accepted that SEPs are an issue; for instance, in their 5G Supply Chain Diversification Strategy of 2020 and in DSIT’s wireless infrastructure strategy last year. Recent High Court decisions have independently confirmed that position. A court determined that licence rates have been significantly lower than those demanded by the SEP holders. Our judges have concluded that SEP holders are able to exert significant unfair pressure to get the deal they want.

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[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords who have spoken. This truly is a miscellaneous group of amendments and I will add to the miscellany of all this, because my Amendment 215A addresses the ambiguity that arises from the current laws on marketing infant formula.

Perhaps I may briefly explain the background as to why this is before us today. The Infant Formula and Follow-on Formula (England) Regulations 2007 were designed to prevent supermarkets promoting infant formula over breastfeeding. They arose because, prior to that, aggressive marketing and advertising techniques had been used by the milk formula industry to mislead parents over the best way in which to feed their babies. The current rules state that infant formula should not be advertised or promoted in a shop. They also say that no coupons, special sales offers, discounts or gifts should be offered to mothers or their families.

Meanwhile, noble Lords will be aware that the cost of infant formula has risen recently and is a huge extra burden on families, who are particularly suffering in the cost of living crisis. It is estimated that the cost increased by 22% in the past year alone. But because of the current regulations, supermarkets still cannot accept vouchers, even those provided by food banks and local authorities to purchase that infant formula. There have therefore been calls for the marketing rules to be reviewed to allow, for example, retailers to accept loyalty points, grocery vouchers and store gift cards, as well as free vouchers, for infant formula.

Our amendment addresses the current ambiguity in the regulations and calls for a review to clarify the marketing rules and their impact on the pricing and affordability of infant formula. This Bill is seen as the best mechanism to get this review under way. I should stress that our aims are to clarify the law and to tackle the unfair pricing currently taking place. However, we want to ensure that parents remain protected from the aggressive advertising that has misled them in the past. I hope that noble Lords and the Minister will see the sense of this amendment.

On a completely different issue, I listened carefully to the noble Lord, Lord Lucas, about double- glazing. I agree that he made an important point. I did not know that there were still double-glazing salesmen, but he raised them so I am sure there must be. I agree with him that, if they still exist, they should be regulated.

I turn to a completely different issue again. I am grateful to the noble Lords, Lord Holmes and Lord Clement-Jones, for their amendments on AI. We look forward to debating the Private Member’s Bill of the noble Lord, Lord Holmes, on AI regulation in the coming weeks. These Benches take this issue hugely seriously. We recognise that AI has the potential to deliver life-changing benefits for working people, from early cancer diagnosis to relieving traffic congestion, but these benefits must be set firmly in new standards and new regulation to keep people safe and their data protected. The EU and the US are speeding ahead on this while the UK is dragging its heels, so we believe that new regulations on the control of AI are essential.

I listened carefully to the noble Lords. I do not disagree with what they are trying to achieve but I query whether this is the right place to pursue these amendments. The data protection Bill will come before the House shortly; that will give us a much greater opportunity to address the impact of AI on the lives of consumers and citizens. I hope that we will have a really detailed exploration of the protections needed in that Bill at that time. However, having listened to the noble Lord, Lord Clement-Jones, on music labelling just now, I realise that I cannot just pass this issue on to the data protection Bill in the way I wanted to, because he made an important point about the consumer issues arising. Again, I have some sympathy with the noble Lord, Lord Lucas, who challenged this and asked, “How can we know? What percentage of music is AI?”

[Lord Clement-Jones (LD)]

I entirely agree that it is a question to be asked. Of course, there is the general principle of transparency. If you look at the amendment, you will see that it talks about content “whether assisted or generated” by AI. It could be partly or wholly generated by AI but, in transparency terms, just the knowledge that at least some of the elements were created by AI is important. The consumer can then take it or leave it, basically. If they like the sound of AI music—believe me, some of it is pretty dreadful—that is fine, but it is an acquired taste.

[Lord Lucas (Con)]

Will we have musicians confessing on stage that the electronics under the stage are adjusting the sound of their voice?

[Lord Clement-Jones (LD)]

It all depends on how sober the audience is, I suspect.

[Baroness Jones of Whitchurch (Lab)]

Gosh—I cannot help feeling that this is the beginning of a much longer conversation. We may not want to have that conversation now, but this is an important issue; I absolutely understand why the noble Lord, Lord Clement-Jones, is raising it. We need to find a way to ensure that consumers are properly informed.

On standard-essential patents, I am grateful to the noble Lord, Lord Clement-Jones, for explaining the background to his amendment. Again, this is an issue with which I was not familiar, but the noble Lord spoke persuasively. I hope that the Minister will agree to follow up on the Intellectual Property Office’s review and provide some reassurance that the issue is in hand.

The Minister will be pleased to hear that we support his Amendment 195. With that, I look forward to hearing his response to the various issues that we raised in this group.

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The IPO has been actively working over the past two years better to understand how the SEPs framework is functioning to support innovation and establish where intervention is needed. Governments around the globe are also considering the effectiveness of their own SEPs frameworks. It is important that government and regulators consider the issues carefully to ensure that the balance between innovation and competition is effectively struck. I confirm that the IPO has presented its recommendations to Ministers, who will provide an update on these issues in due course.

[Lord Clement-Jones (LD)]

Can the Minister do any better than “in due course”? Perhaps he can say “shortly”.

[Lord Offord of Garvel (Con)]

In a matter of time. Why do we not get the Box to define “in due course”?

I therefore assure the noble Lord that the Government’s position on what interventions may be appropriate in respect of standard-essential patents, including specifically on injunctions, will be set out more clearly in the very near future. As the Government are already addressing this issue and are due to make their policy position public soon and separately, I hope the noble Lord feels able not to move his amendment.

For the reasons set out, I hope noble Lords will not move their amendments.

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The live events market makes a significant contribution to our economy and cultural life. As legislators, we have the responsibility to ensure that genuine fans get tickets rather than those who want to turn a profit. The CMA has been clear that further action is needed. Performers want further action. We believe that if the Secretary of State were to commission a consultation it would come to the same conclusion. We believe that the cleanest way to achieve our objective would be to give the CMA the legislation it requires to do the job in this area. Of course we cannot resolve all ticketing issues with this Bill, but we believe that our amendment will get things heading in the right direction. I very much look forward to hearing noble Lords’ views on this debate. I beg to move.

[Lord Clement-Jones (LD)]

It is a pleasure to follow the noble Lord, Lord Leong, who gave an excellent introduction to Amendment 196, which I signed and very much support. All the amendments in this group are of a piece; we are very much on the same page. This arises from the fact that, despite a series of very long-running investigations—we had the Waterson report, which ran to 225 pages, back in 2016 and the Secondary Ticketing report, which the noble Lord, Lord Leong, mentioned—it is widely recognised that these platforms continue to benefit from large-scale ticket touts, many of whom acquire tickets through unlawful means.

I have not buried my head in the sand. I have had conversations with some of the secondary ticket sellers, but I am unconvinced by the story they tell. I am very grateful to FanFair Alliance, which has campaigned on this issue for many years, and I pay tribute to the noble Lord, Lord Moynihan, and Sharon Hodgson MP, who has been a tower of strength in her all-party group on this subject over many years. It is clear, as FanFair Alliance has uncovered, that there is substantial evidence of speculative listings on secondary websites, where sellers list hundreds and even thousands of tickets they do not possess. You have only to look at one or two headlines, such as:

“Viagogo accused of listing non-existent tickets on behalf of seller linked to firm”.


A 2022 report by ITV detailed how the vast majority of UK festival tickets listed on the same site were fraudulently advertised by just three people. We have some egregious behaviour there. These three sellers are still actively trading on that website.

Meanwhile, in March 2023, reporters for BBC Radio 4’s “You and Yours” highlighted how a new generation of touts are exploiting ticket systems with increasingly sophisticated software and bots. I am sure that the noble Lord, Lord Moynihan, is conscious of all this. It is one of the issues that we have failed to tackle over the years.

As the noble Lord, Lord Leong, mentioned, the CMA published a series of recommendations in August 2021 that aimed to strengthen existing laws around ticket resale in order to protect consumers, including a ban on platforms allowing resellers to sell more tickets for an event than they can legally buy from the primary market and ensuring that platforms are fully responsible for incorrect information about tickets that are listed for sale on their websites. Regrettably, BEIS—actually, in May 2023 it was probably the Department for Business and Trade; it is hard to keep up with these changes in department names—opted to prioritise the

“power of competitive markets to give consumers choice and flexibility”.

That is not the same as consumer protection. As the noble Lord, Lord Leong, said, it is out of tune with public opinion in that respect.

Compounding this decision, it remains a source of immense frustration that Google and YouTube continue to permit ticket touting websites to buy themselves to the top of search results, signposting fans away from official sources of tickets. As a result, FanFair Alliance believes that it is now imperative for the UK to adopt legislation similar to that of many other countries—France, Italy, Belgium, Japan and Australia—outlawing the resale of tickets for profit while ensuring that customers who can no longer attend an event are provided with viable services to resell at the price that they paid or less. We agree.

The prime example of this is on our doorstep. In Ireland, a comprehensive piece of legislation to ban ticket-touting was introduced in 2021. Dublin shows for artists including Taylor Swift, Coldplay and Arctic Monkeys appear to be delisted by US-owned websites such as viagogo and StubHub as a result of this legislation.

A powerful and compelling case is being made for Amendment 196. I hope for this amendment. The third amendment, Amendment 198, ties some of this together. Given the situation that I have outlined and the situation that the Competition and Markets Authority has been in—its recommendations still have not been taken on board—we need a clause that would mandate the Secretary of State to submit an annual report to Parliament on the secondary ticketing market, specifically evaluating the adequacy of consumer protection against exploitative prices and other practices. As well as Amendments 196 and 197, we need to have that information and give the CMA the teeth to do this and report to the Secretary of State, who would then report to Parliament. That would allow Parliament to evaluate the functionality of the market and determine the most effective solutions to address issues related to secondary ticketing.

I very much hope that the Government will agree that they need to make a great deal more progress. Their views were expressed in May 2023, but the abuse continues. We need to do something about it.

[Lord Moynihan (Con)]

My Lords, I will speak to Amendments 196 and 197 in the names of the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Jones, so ably moved by the noble Lord, Lord Leong, whose speech was exemplary in this context, well researched and absolutely right. I declare an interest as co-chair, with Sharon Hodgson MP, of the All-Party Group on Ticket Abuse. I echo what the noble Lord, Lord Clement-Jones, said on the tireless work that Sharon Hodgson has undertaken over the years on this. She shares my deep disappointment that the Government have failed to act on this.

It is such an obvious and sensible legislative move to stamp out the abuse that takes place in the secondary market, which does not benefit any of the sports men and women who entertain us or any of the artists. It simply puts money in the pockets of those modern-day touts who, particularly in this day and age, use bots. I will move on to explain how they do that to our disadvantage and that of the true fans of sport and music.

Those who were in the House when we last had a major competition and consumers Bill will recall that we made significant changes. There was good all-party support at that point to see significant changes to ticket sales in the secondary market in what became the 2015 Act, but nothing has happened since then, and it is high time that we take action. In fact, since then we have seen a tsunami of rip-offs by the modern-day online ticket touts, at the expense of genuine music and sports fans.

The number of professional ticket touts who have migrated from the dirty mac brigade on street corners to the use of computer bots has moved from some hundreds to 3,000 to 3,500 in the UK at the moment. When Sharon Hodgson and I started work on this, the numbers were, as I say, just in three figures. As she said in another place when speaking to the Bill, professional touts

“are attacking everywhere, from stadium gigs to local venues and, increasingly, football games”.

Touting tickets for professional football fixtures is the one area of sport where that is illegal—yet it carries on. She went on:

“Yet according to Home Office figures, the yearly arrests of football ticket touts have been decreasing, dropping from 107 in 2011-12 to only 28 in the 2019-20 season”.—[Official Report, Commons, 20/11/23; col. 122.]


That is despite a rapid rise in the number of touts. There is simply not the resource available to track down these people. Criminalisation in the law is the only way that we are going to tackle this problem.

It is not as if we have not looked at it and said, “This works”. We introduced legislation for the 2012 Olympic and Paralympic Games to ban the use of secondary markets for the sale of tickets. If that was brought before all politicians of all party persuasions and agreed, as an important measure, to make sure that we had a fair ticketing policy at those Games, why is it not appropriate for all sports and arts activities?

These amendments propose the further action that is necessary to restrict secondary ticket sites from listing tickets for sale where the seller has not provided proof that they are able to sell them, which happens quite frequently. There is many an occasion when tickets go on sale before the formal tickets are launched in the market, because the ticket touts are confident that they will be able to get them and then, as preferred buyers, sell them on to the secondary market sites.

These amendments in themselves will be welcome and are very important measures for consumer protection. Think of the family that gets a forged ticket because a preferred buyer cannot get the tickets that he has promised, maybe to viagogo, but who then goes out and has the money to forge those tickets and sell them. The family comes down from the north of England or potentially from abroad and is not let in, because the ticket is fraudulent. The family might eventually get only some of its money back from the credit card company—but after much fighting and difficulty, while trying to rescue something from the sadness and tragedy that are the non-financial aspects of the effects of this secondary market.

These measures would go some way to implementing the recommendations made by the CMA to tighten up the measures focused on restricting abuse in the secondary ticket market—measures that the Government pushed deep into the long grass. The noble Lord, Lord Leong, quoted from the letter of 10 May from the Minister, in response to the CMA. Paragraph after paragraph were just kicking this into the long grass, despite the fact that, as we have heard, Professor Waterson’s independent report was absolutely significant in advising the Government on a whole series of measures to take action against the abuses in this market.

We have the work of Sharon Hodgson, which I have spoken of, and the CMA has called for legislative action in this area. We have heard from UK Music, top sportsmen and music industry leaders—yet it was all too easy to say

“it is too soon to conclude that the only way forward is further legislation focused on this market”.

What will it take? I know that the Minister will be in agreement, because he knows about this economically from his days at Lazard. He knows from his young days, when he was up in Greenock, about the power of sport in that wonderful town—how much people love it and how they hate being fleeced by the secondary market abuses that go on.

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[Lord Offord of Garvel (Con)]

My Lords, I thank the noble Baroness, Lady Jones of Whitchurch, for her amendment, which the noble Lord, Lord Leong, spoke to so eloquently. I also thank the noble Lord, Lord Clement-Jones, for his amendment and my noble friend Lord Moynihan for adding his contribution on a subject he speaks about with great passion. I recognise that many noble Lords have a great interest in ticketing an on a personal level, as an avid sports fan, I share a lot of their frustration.

Buying on the secondary market is a matter of consumer choice. So long as consumer rights are complied with, the Government do not wish to prevent consumers having that choice. In recent years, the Government have further strengthened those rights with respect to secondary ticketing. In 2015, we legislated to ensure that consumers received fuller information on tickets they were buying on the secondary market. In 2016, we commissioned an independent study of consumer protection in the secondary ticketing market under an economist, Professor Waterson. He concluded that, providing they were enforced, the measures in the Consumer Rights Act 2015 should be sufficient to protect consumers. He also noted that there was more the primary market could do to help consumers get tickets there.

Since then, enforcement work undertaken by the CMA and trading standards has resulted in better information being provided by platforms, and the successful prosecution and fining of a number of ticket touts. We have also added further clarifications to the CRA and introduced legislation outlawing the use of bots to buy tickets for profit, on which I know my noble friend Lord Moynihan was very influential. I thank him for his work in this area. The current legislative framework is producing successful enforcement action. It will be strengthened further by the provisions in Part 3 of the Bill.

I turn to the amendment in the name of the noble Lord, Lord Clement-Jones, on ticket limits. In the last year, the Government have consulted further with the industry on applying limits on ticket purchases in the primary market to sales in the secondary market, in line with the commitments in the response to the CMA recommendations. However, we continue to believe that this will be difficult in practice. The Government’s approach—

[Lord Clement-Jones (LD)]

My Lords, I am sorry to interrupt the Minister. How often do the Government turn down very firm recommendations from a regulator that knows the market, such as those made in the secondary ticketing report? It is quite unusual and rather like they are second-guessing the regulator. The Minister said that it is impractical, but is the regulator not in the best position to decide whether that is the case and whether it can be enforced?

[Lord Offord of Garvel (Con)]

I thank the noble Lord. Yes, the Government absolutely expect the CMA to do its job but in the consultation which comes from that, there are other voices to be heard and other stakeholders to be listened to. As I said, in 2016 we had an independent study on the secondary ticketing market and we went to an economist, Professor Waterson, to give us his opinion on these matters. There is a balance to be struck.

[Lord Clement-Jones (LD)]

I am sorry, but Professor Waterson could not have been clearer in his 225 pages—and that was in 2016, so we have had quite a long time to chew over his recommendations.

[Lord Offord of Garvel (Con)]

I thank the noble Lord. The Government’s approach is definitely always to protect consumers, where necessary, and to ensure that business regulation is proportionate. We do not believe that the evidence to date justifies new and onerous secondary ticketing measures. Indeed, it may drive sellers to try to avoid compliance by selling on social media or platforms beyond the reach of UK enforcers, making buying riskier. Banning resales or resale for profit altogether risks reducing consumer protection. For example, Ireland has banned resales, yet Taylor Swift tickets for Dublin are on offer for similar prices to those at Wembley.

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[Baroness Jones of Whitchurch (Lab)]

My Lords, it gives me great pleasure to speak to this group, partly because, for many years, I was on the board of a very good ombudsman scheme. I suppose I should own up to it being very ably chaired, at the time, by the noble Lord, Lord Clement-Jones. But that was some time ago, so I should not have to declare it as a current conflict of interest.

As a result, I have seen how the best models of ADR can work and provide quick, free, independent consumer redress without having to go anywhere near a court, which was exactly the point made by the noble and learned Lord, Lord Etherton. But, sadly, not all ADR schemes are so responsive, which is why we have tabled Amendments 208A, 209A and 209B, and why I was pleased to add my name to Amendment 209, in the name of the noble and learned Lord, Lord Etherton. He provided a very good introduction and analysis of why a review of ADR provision in the UK needs urgently to be carried out. As he rightly pointed out, this is business-friendly; it actually reduces the cost for consumers and businesses, in many ways, so what is not to like about it?

First, I should say that we welcome the measures in the Bill as far as they go. We need an improved verification system for ADR schemes. I hope that this measure will help root out misleading company schemes that masquerade as ombudsmen but, in truth, are a different branch of the same business; they lack independence and have no real incentive either to resolve consumers’ complaints or to provide appropriate redress. They have been giving ombudsman schemes a bad name. We hope that a review will tackle the more fundamental faults in the current landscape. In some sectors, there are multiple ombudsman schemes; in others, the majority of traders refuse to participate in such schemes.

Even knowledgeable consumers find it difficult to navigate the variety of schemes on offer. The information and signposting are often notoriously poor. Why would a trader notify a consumer that they have the right to go to an ombudsman when that trader may incur the cost or inconvenience of a judgment that goes against them? The bad actors—there are many of them—do not have any incentive to provide this important information. Yet the best ombudsman schemes help to improve overall service standards and breed customer loyalty for the longer term by dealing with complaints efficiently and, as I say, free of cost.

Our Amendment 209B is a case in point. The aviation sector has been plagued by stories of poor service and a lack of refunds. There is no compulsion for airlines to be part of an ombudsman scheme. The aviation ADR scheme, which exists, is not recognised by the Ombudsman Association because it did not meet its criteria for independence, fairness and transparency. It provides consumer redress for easyJet and Ryanair, among others. It once took me about 18 months of doggedness and perseverance to get a refund for a cancelled flight from Ryanair; this is not how ombudsman schemes are meant to work.

Our amendment calls for a detailed, time-limited review of ADR in the aviation sector, consulting consumers and passenger organisations in the sector as well as looking at what further regulatory measures are necessary to bring the aviation sector in line with the standards expected in the best ombudsman schemes elsewhere. I hope that noble Lords and the Minister will feel able to support our amendment, which will help bring well-overdue reform to consumer rights in this sector.

Our Amendment 208A addresses another concern around ADR schemes: how do consumers find out about them in the first place? It is crucial that details of an ADR provider are prominently displayed to consumers who have a complaint. It is not clear why the requirement to display a name and website has been taken out of the regulations; I look forward to the Minister’s explanation for this.

Our Amendment 209A addresses the issue of traders refusing to pay money awards made against them by an ADR provider. It is hugely frustrating for consumers who fight and win a case then to find that they have limited powers to enforce the compensation. This amendment would give them greater powers to have a payment enforced by a court, as would have been the case had the judgment been made in a court in the first place. Again, I hope that noble Lords see the sense of this amendment.

All these amendments complement the proposal of the noble and learned Lord, Lord Etherton, that there should be a review. I hope the Minister confirms that the Government are prepared to carry out this long-overdue ADR review; I therefore look forward to his response.

[Lord Clement-Jones (LD)]

My Lords, I rise to speak briefly in support of all the amendments in this group. I say “briefly” because I have a strong interest to declare as chair of the board of the Trust Alliance Group, which runs the energy and telecoms ombudsman schemes. The noble Baroness, Lady Jones, is entirely right: she was a valued and knowledgeable member of the board of what was then called Ombudsman Services. In everything she says, she speaks with a great deal of experience of the delivery of ombudsman services.

I will be extremely brief because it would not be right for me to extol the virtues of ombudsman services overly. In many ways, they speak for themselves in terms of the alternative dispute resolution process described by the noble and learned Lord, Lord Etherton. However, they are an extremely effective way for consumers to resolve complaints that they have been unable to address directly with the businesses involved.

In this context, I commend a very good House of Commons Library briefing, Consumer Disputes: Alternative Dispute Resolution (ADR), of May 2022. It describes the pros of ADR, but it also fairly describes the cons and what the dispute resolver is able to do. I regret that the ADR directive, which came into force in 2014 or 2015, was not more comprehensively adopted; otherwise, we would not be in this position. The noble and learned Lord, Lord Etherton, is entirely right: it needs extension across a much greater variety of sectors.

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I view this amendment as an important element in restoring health to capitalism, using artificial intelligence. We need the flow of data. It is a really empowering amendment and I very much recommend it to the Government.

[Lord Clement-Jones (LD)]

My Lords, it is a pleasure to follow the noble Lord, Lord Lucas, with all his experience as a fund manager, and particularly to hear what he forecast for the future: the ability of AI to deliver information in a new format that is of much greater interest and use to a consumer. I must admit, I had not really thought about that.

It is also a pleasure to follow my noble friend Lady Sheehan, and in particular to support the noble Baroness, Lady Wheatcroft, on her amendment. We are obviously saving the best for last in contributing to our final group in Committee. As a former company secretary, I well remember the noble Baroness as a financial journalist and an absolute champion of corporate governance. This appears to be an absolutely crucial part of it. In a sense, it is the other side of the coin from what you expect of the corporate; it is what you expect of those who invest in the corporate, in terms of exercising their voting rights. The noble Baroness illustrated the sorry history of the voluntary approach put forward by the FCA. I could loosely describe her amendment as trying to put some lead in the FCA’s pencil, which seems wholly needed.

The noble Baroness asked a number of further questions. A really interesting and important question is: how on earth can the US, with its relatively unregulated systems compared to ours and its culture of not regulating on a federal basis, do it on a compulsory basis when we have not? Particularly from what the noble Lord, Lord Lucas, said, it sounds as though it will be eminently possible to do this, as the technology improves, without overly imposing costs on investment managers. Indeed, it is already being done for those operating in the states. There seems absolutely no reason why the Government should not move forward in the way that the noble Baroness suggests.

[Lord Leong (Lab)]

My Lords, I thank the noble Baroness, Lady Wheatcroft, for tabling Amendment 212, and I thank all noble Lords who have spoken. I will be brief.

In 2019, the European Union introduced the second shareholder rights directive, which sets out stipulations regarding the utilisation of specific shareholder privileges linked to voting shares during general meetings of companies that are headquartered in a member state and have their shares traded on a regulated market located or functioning within a member state. It was brought into UK law by secondary legislation, amending the occupational pension schemes regulations of 2005, and it has now been assimilated into UK law. As per the Explanatory Notes to the regulations, they encourage investors to be transparent about how they invest and approach their engagement as shareholders. It was a negative statutory instrument, so no debates were tabled.

The amendment of the noble Baroness, Lady Wheatcroft, carries greater weight than the shareholder rights directive. It would mandate the FCA to establish regulations necessitating investment managers and life insurers to furnish standardised reports concerning company voting activities upon request. Furthermore, it would instruct the FCA to offer guidance to firms on the specific format for such reporting.

We agree in principle with the amendment that it is right for shareholders to be more transparent. The noble Baroness, Lady Sheehan, mentioned being transparent about where investments are made, which we need to know if we are to achieve net zero. This was fully supported by the noble Lord, Lord Lucas. Fund managers need to be more transparent about informing where their funds are invested.

I ask the Minister: what impact has there been on investor transparency in the four and a half years that the SRD has been in UK law? I look forward to his response.

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It is lazy thinking to decide that high streets no longer have a function and that the future is destined to be online retail. This is not what consumers want. They want a mixture of online convenience and retail shop personal service and social interaction. Our amendment would be the first step towards balancing tax burdens and delivering that model. I hope that noble Lords will support it. I beg to move.

[Lord Clement-Jones (LD)]

My Lords, I will speak very briefly in support of the amendment in the name of the noble Baroness, Lady Jones.

It is unfortunate that this comes at the end of our debate rather than the beginning, as it is a really important aspect of it. We have been talking about the digital world throughout our six sessions, but it is increasingly apparent that the digital world cannot meet all the emotional needs of society. It is not the perfect substitute for everything that we do in person in the physical world—for our social, shopping and other needs. If we try to make it so, it will have considerable impact on mental health.

We must strive to keep a lively, prosperous physical world in front of us on the high street, as the noble Baroness outlined. Much of this talk about taxation is above my pay grade—you always get wrapped on the knuckles by your spokesperson if you start proposing tax reform or whatever it may be—but there is no doubt that my party certainly supports business rates reforms in a variety of different ways. It also believes that the settlement on the digital taxation side through the OECD agreements has been far too modest in its impact on the major digital players. The imbalance between physical and digital traders has been far too great and has advantaged the digital players far too much. I am in total sympathy with what the noble Baroness said.

[Lord Lucas (Con)]

My Lords, I entirely agree with the noble Lord, Lord Clement-Jones, on that last point. It is really important that we keep at the question of how we tax digital businesses. One can no longer rely on the Irish national statistics because they are so distorted by profit shifting, a lot of it from this country—profit going abroad and being taxed at a very low rate in Ireland when it should be taxed here.

I know that this is an international matter, but we absolutely must keep the pressure up. We are getting more and more digital, so we need to have an international tax system where profits are taxed where they arise and not where Governments wish to shift them to. I know that this is hard, but I am unimpressed by the progress that the world has made in this direction. I really hope that the Government will get behind the continued efforts on this. We suffer a great deal from it.

At the other end of the scale, the Government could also do a lot better. I am sure that my noble friends will remember that HMRC made a horrendous mess of VAT in the Channel Islands in the early 2000s. Whole businesses grew up in the Channel Islands on the idea that you could ship records out to them, then they would come back VAT-free to the person in the UK who bought them because the consignment was under a certain value.

HMRC eventually dealt with that, but now there is monstrous and recurring fraud through the likes of Amazon and eBay, involving “Chinese” sellers—there is no reason to think that they are of that nationality in particular, but they are certainly Far Eastern—who HMRC does not pursue. HMRC does not effectively collect the tax that is due. It says, “Oh, it’s too hard. Oh, it’s in lots of little bits. Oh, these people move around with great velocity”. Yes, they do, but by not collecting it, HMRC not only does not get the tax but damages the UK businesses that should be able to compete on a level playing field with those overseas sellers. It is delinquent; it is an issue at the root of HMCR that we have never managed to deal with effectively, but we really must.

It is so important that HMRC realises that it should focus not only on operational efficiency in terms of how much it costs to do things and whether it gets the money back that it is investing in this, or a sufficient multiplier of it, but on whether it is doing its bit for the structure of the UK economy and the ability of businesses to start and flourish here. I pay great credit to Retailers Against VAT Abuse Schemes, which has been active these last 20 years. I hope that it will eventually be successful, but golly, it could do with more help.