Digital Markets, Competition and Consumers Bill

Kevin Hollinrake Excerpts

2nd reading
Wednesday 17th May 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move, That the Bill be now read a Second time.

Digital technologies are a 21st-century miracle. They bring us closer together and connect us to the world. Today it is difficult to remember a time without answers at our fingertips, or the ability to buy goods and services from across the globe in just a few clicks. Technology has hugely increased our choices of goods and services and how they are delivered to us. It allows us to work in entirely new ways when we are on the move or in far-flung places abroad.

Just as digital technologies have profoundly altered our lives, they have also transformed the UK economy. We now have more tech unicorns than any other country in Europe: indeed, we have more than France and Germany combined. Eight cities in the UK are home to at least one unicorn, and this success continues. Last year, our tech start-ups and scale-ups also attracted more investment than those of France and Germany combined, creating jobs and opportunities throughout the United Kingdom. It is clear that tech will be key to achieving the Prime Minister’s priority of driving economic growth across the UK. Our figures forecast that the digital sector could expand by an additional £41 billion by 2025. However, the UK’s continued tech success depends on markets that are fiercely competitive, where the best companies can thrive and create innovations that spur growth.

Over the last decade, the UK’s digital markets have developed at an exponential rate, but our competition framework has failed to keep up. Its last legislative overhaul took place nearly a quarter of a century ago, when the internet was in its infancy and smartphones had not yet been invented. Since then competition across the broader economy has declined, and in the tech sector a small number of firms exert immense control across strategically critical services with practices such as self-preferencing, restricting operability, and exclusivity requirements.

Competitive markets are, of course, the best way to provide the best outcomes for consumers, and Governments and regulators should step in only when we see market failure or excessive market power. The International Monetary Fund has found that market power in the tech industry increased significantly between 1995 and 2016, which included increases of more than 30% in mark-ups and more than 10% in concentration globally. The Competition and Markets Authority estimates that in 2021 alone, Google and Apple made excess profits of more than £4 billion in the UK. Apple and Google determine which apps are in the App Store, how they are ranked and how they are discovered. They often charge significant levels of commission, up to 30% of revenue, and require all transactions to be made through in-app systems—which, as we all know, means that at the end of the day, all charges, commissions and taxes are paid for by consumers.

Dominance of display ads for Facebook and Google cost UK consumers about £2.4 billion a year. Between 2009 and 2019, GAFAM—Google, Apple, Facebook, Amazon and Microsoft—made more than 400 acquisitions without any regulatory intervention or referral through the voluntary mechanisms. This is why in recent years there has been an increasing acceptance of the need for new legislation that is fit for these dynamic and rapidly evolving markets. The Digital Competition Expert Panel, led by Harvard’s Professor Jason Furman, and the Digital Markets Taskforce have conducted independent assessments of how digital markets operate, noting that they have specific features which can allow them to tip in favour of one particular firm.

Colleagues on both sides of the House, including my hon. Friend the Member for Weston-super-Mare (John Penrose) and the hon. Member for Bristol North West (Darren Jones), have called for more to be done to allow consumers to benefit from greater competition in these markets. However, there is also a growing consensus that in a market which functions well, competition must work hand in hand with consumer protections. People must know that they can spend their money with confidence, safe in the knowledge that they have the right information and support if something goes wrong. That is critical, because when consumers feel that they risk losing their hard-earned cash, they also risk losing trust in markets as a whole. The Bill seeks to achieve all these goals and unleash the full opportunities of digital markets for the UK, so that every part of the country can reap the rewards. All told, under these measures we expect consumers to benefit to the tune of almost £10 billion over the next 10 years.

My right hon. Friend the Chancellor of the Exchequer recognises this legislation’s significance to the UK economy and its importance to consumers, particularly during a cost of living crisis, which is why he announced the earlier introduction of the Bill in his autumn statement. I should remind the House, however, that the majority of the Bill’s measures have been thoroughly scrutinised and analysed by experts and businesses over a number of years. This included a consultation in 2021 and a careful consideration of the responses.

I will now speak to the Bill’s measures in greater depth. Part 1 sets up a new pro-competition regime for digital markets, which will be overseen and enforced by the Competition and Markets Authority’s Digital Markets Unit. This legislation gives the DMU the ability to tackle the causes and consequences of market power, ensuring that people and businesses large and small are treated fairly by the most powerful tech firms. By encouraging greater competition, this work will lead to lower prices for everyday online goods and services and give consumers more choice and control.

The measures in part 2 will refine the CMA’s competition enforcement work so that it is better targeted, faster and more effective, allowing the free market to operate more efficiently.

[Damian Collins (Folkestone and Hythe) (Con)]

My hon. Friend got through part 1 a bit quicker than I thought he would—I have a question relating to part 1. Clause 38 creates a final offer mechanism for dispute resolution. The news media industry has been waiting for this legislation for a long time but it is not expressly referenced in the Bill. Can he confirm that the news industry and other industries could benefit from this final offer mechanism?

[Kevin Hollinrake]

My hon. Friend makes a good point. I wish him the best of luck in the election this afternoon. It is for a very important Committee that will scrutinise this legislation. The final offer mechanism is innovative and represents a positive way forward, in that it will bring parties to the table and they will both have to make sensible offers relating to how they see a fair resolution. This will avoid them putting unrealistic claims on the table, and it could well help the news industry and many other sectors.

[John Penrose (Weston-super-Mare) (Con)]

Like my hon. Friend the Member for Folkestone and Hythe (Damian Collins), I was concerned that the Minister might be moving on from part 1 a fraction early. This is a welcome Bill that will do an enormous amount of good, and it has allowed me to tick off a large number of the recommendations that I made in my report, which he referenced earlier. The concern about the Digital Markets Unit’s powers is not that they are not good enough; it is that they might over time add more and more of a regulatory burden as ex ante powers build up over the years. Does he have thoughts on how he can ensure that, after those ex ante powers have been in place for a couple of years as regulations, the CMA can analyse whether they could perhaps be replaced by pro-market reforms?

[Kevin Hollinrake]

I am grateful to my hon. Friend for his engagement on this. We have discussed this at length many times, both in my role as a Minister and in my previous role as a Back Bencher, when we looked at the best form of regulation. I think we both agree that ex post regulation is preferable to ex ante regulation, as is a pro-competitive environment, as I said earlier. We should step in only when there is market failure. Of course we should look at the powers and ensure that they are being used wisely, and I have confidence that the CMA will do that. There are a number of checks and balances on the CMA and the DMU, not least through the competition appeal tribunal and the courts, which ensure that decisions are valid and worthwhile, but we should also have a good debate on how we scrutinise the DMU and CMA generally. Obviously they report to Parliament every year, and the Select Committee work is also important. I think that my hon. Friend and I would agree that the best way to regulate markets is through competitive environments, and that is what we should always favour in this discussion.

[Andy Carter (Warrington South) (Con)]

I echo the comments of my colleagues who have welcomed the Bill. The Minister will know that the DMU will be regulating a highly specialised area and that detailed knowledge of the sector will be critically important. Can he assure me that the DMU will have sufficient powers to recruit people who really understand the sector? Will it be able to pay accordingly in order to recruit those people, and not be bound by civil service contracts and pay bands that might limit its ability to recruit very experienced people?

[Kevin Hollinrake]

My hon. Friend makes an important point. The tech industry is clearly very powerful in terms of its resources and its ability to recruit the best people. My experience of the CMA is that there are good people within it, and I expect that to be reflected in the DMU as well. People who have been connected to the CMA, including former chairs, have spoken highly of its abilities, but my hon. Friend makes the important point that we need to have the best people so that we can hold those powerful entities to account.

The legislation will be delivered through making market inquiries more efficient, focused and proportionate, updating the merger regime and amending existing legislation concerning anti-competitive conduct and abuse of a dominant position. The measures in parts 3 and 4 make important updates and improvements to consumer law. The UK is currently the only G7 country without civil penalties for common breaches of consumer protection such as unfair trading. Part 3 creates a new model that will allow the CMA to act faster, tackle more cases and protect consumers’ interests while creating a level playing field for businesses.

Part 4 tackles the subscription traps that cost consumers £1.6 billion a year. We expect there to be a £400 million saving for consumers as a result of the measures we have proposed. I am sure that many Members know constituents—

[Craig Whittaker (Calder Valley) (Con)]

rose—

[Kevin Hollinrake]

I think I am going to hear about one in a moment. Many Members will know constituents who have received shock charges for a subscription or faced difficulties when trying to cancel one. The Bill contains new rights to subscription reminders and easier cancellations, so that those who want out can get out.

[Craig Whittaker]

The Minister is not going to hear about a constituent, but I would like to point out that charities’ lotteries, which are great fundraisers for great causes that put so much back into all our communities, are already heavily regulated by the Gambling Commission. Will my hon. Friend look at schedule 19 to see whether subscription-based charity lotteries can be excluded?

[Kevin Hollinrake]

That is an interesting point and I would be happy to look at the matter in detail. It is not something that I have considered thus far but perhaps we can have a discussion about it at a later stage. We will certainly pick it up if we can and make sure that it does not cut us across anything that my hon. Friend is concerned about.

This legislation includes other measures to help consumers to keep more of their hard-earned cash, including a power to add to the list of banned practices. We intend to use this power first to tackle the wild west of fake reviews, which can dupe customers into buying shoddy goods and services. There are also new protections for consumer prepayments to consumer saving schemes, so that devastating cases such as the collapse of the Farepak Christmas savings club, which left vulnerable consumers out of pocket, can never be repeated. Together, these measures deliver on our manifesto commitment to tackle consumer rip-offs and bad business practices, demonstrating that this is a Government who back consumers.

[Alun Cairns (Vale of Glamorgan) (Con)]

I recognise that the Bill would introduce enhanced competition and protect significant areas of consumer policy, but it would also extend the powers of the CMA significantly. May I draw my hon. Friend’s attention to the regulatory reform group that my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) and other hon. and right hon. Members have sat on, which is seeking a cultural change among regulators to ensure that they have an interest in the wider industry as well as in consumers? For business and industry to be sustainable, the CMA must be able to respond in a proactive, business-friendly way.

[Kevin Hollinrake]

My right hon. Friend makes a strong point, and it is one reason why we are reviewing the economic regulators. The work has been ongoing for 18 months, and we are due to produce our thoughts this spring. It is important that regulators focus on consumer outcomes and, as others have said, a more competitive environment produces the best outcomes, so he is right to draw attention to that issue.

[John Redwood (Wokingham) (Con)]

Briefly, what will be the direct impact of the Bill on the cost to the state and to business?

[Kevin Hollinrake]

The annual cost to business is £178 million, which we must consider carefully when we bring forward new regulatory burdens, but most people will think that the measures are needed because there is a huge consumer benefit of roughly £1 billion a year over 10 years, so it is important that we strike that balance. I am not aware that the cost to the state has been calculated, but my right hon. Friend and I are probably most concerned about the cost to business.

[John Penrose]

I thank the Minister for his generosity in giving way again.

The Minister’s response to the question about regulatory burden mentioned the welcome, necessary and important review of economic regulators. However, he will understand that enormous regulatory burden is created by other regulators. There are only eight economic regulators, but there are dozens of other regulators, many of which create vastly more regulatory burden than the economic regulators, although the economic regulators are not exempt. What plans does he have to address those regulatory burdens, which are much broader and cover much more of the economy?

[Kevin Hollinrake]

My hon. Friend makes a very good point, and it is why only a few days ago we published a framework for better regulation to look at these things in the round and to make sure we have regulators that serve the public, rather than the interests of the regulator. We do not want to see regulatory creep for any purpose other than consumer benefit, and he and I will continue to have significant dialogue on those issues.

Some Members will argue that we should legislate more like the EU’s Digital Markets Act, by using this Bill to create sweeping, one-size-fits-all measures. However, our Brexit freedoms mean we can draft legislation that drives innovation without placing blanket obligations on firms or creating unnecessary regulatory burdens. Some will respond to the Bill by saying that we should go harder against big tech, but I remind them that the Bill’s primary purpose is to reduce economic harms, to boost competition, to create a fair and level playing field, and to give consumers greater choice and better prices.

We need to act, but we must act proportionally because tech firms make a valuable contribution to the economy and our lives. Big does not equal bad. A war on tech will not create growth. It has already been argued in this debate that the CMA has enough power, and my response is that technology is changing rapidly and our watchdogs need to be equipped to fully support businesses and consumers in this competitive world.

I look forward to engaging with colleagues as the Bill makes its way through the House, and I hope Members will give it their backing so that the Government can continue our work of protecting consumers, increasing competition in all markets and growing the UK economy.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Minister.

--- Later in debate ---

[Richard Thomson]

The right hon. Member is absolutely right that it is not easy, but that does not mean it is something that we should avoid trying to tackle, or that we should not try to come up with a way of improving the competitive environment. I am certainly more than happy to engage on an open and constructive basis with anyone about how we might do so.

[Kevin Hollinrake]

Will the hon. Gentleman therefore support our approach, which is to consult in parallel with the passage of the Bill through both Houses about things like drip pricing and fake reviews, so that we can have that open dialogue and make sure that we get the answers right, including to the questions posed by my right hon. Friend the Member for Wokingham (John Redwood)?

[Richard Thomson]

I thank the Minister for his intervention. Indeed, I would be quite happy to see what comes back from that consultation, because there are areas of real concern. If we can find consensus on how those matters can best be tackled—we might not be able to please everybody, but we can address them as best we can—that would be a welcome step forward.

In closing, the Bill is important for growth and competition, but also for consumer protection. The exchange that we collectively had just now on those matters was encouraging, and I would certainly like that spirit to continue in Committee. I do not think I have ever managed to successfully get something passed in Committee; I look forward to that changing.

--- Later in debate ---

[Matt Warman (Boston and Skegness) (Con)]

I enjoyed the Minister’s opening gambit about how much the internet has changed our lives over many years. He is right, but the House has now been regulating the internet and its effects for many years as well, and this is in some ways a long-overdue Bill. When I was the Minister, my great fear was that Back Benchers would treat it like a Christmas tree and try to add many great ideas of their own. Now that I am on the Back Benches, that is precisely the approach that I intend to take.

I hope that the Minister—and you, Mr Deputy Speaker—will indulge me on a few issues that are somewhat in the weeds of the Bill as well as on two broader points. This is fundamentally a welcome Bill. It is hugely consequential in the effects that it will have on the digital landscape and Britain’s ability to regulate in a new and different, fundamentally pro-competition way in an age that will be affected by markets that operate very differently online from those that we have been used to regulating.

There are a couple of relatively small issues. First, on subscription traps, we have heard a little from other hon. Members about auto-renewal. I think that it should simply not be the default. That is worth looking at. The Minister may take the view that it is for the CMA or the DMU to look at that rather than for the Government to take a view, but that fundamentally could protect consumers.

Secondly, the Minister has made really welcome moves on protecting consumers from online scams. Such scams operate fundamentally differently from the scams of the past, so his new approach is welcome. There is, however, a key interaction in scams and unsafe goods. People who knowingly sell unsafe goods online are surely, by some definition, scammers, yet the Bill does not appear to do quite the whole job. He may be able to offer reassurance on that.

[Kevin Hollinrake]

My hon. Friend raised a fair point. A fair and level playing field is important for our wider economy and opportunity. Alongside the Bill, we are keen to bring forward the product safety review, which looks at online marketplaces and how they sell and distribute products compared with our normal high-street locations, which have far more stringent product safety requirements. So a body of work is going on alongside this one.

[Matt Warman]

I welcome that. The Minister will know that that body of work has been going on in parallel with this one for some time. It is welcome, and I hope that its results will be presented relatively quickly.

The new judicial review standards for CMA and DMU decisions have been welcomed by the Coalition for App Fairness, which is a good and credible group. But, simultaneously, this is a big shift and we need to be confident that it will genuinely protect both larger operators in the right way and smaller operators. I think we will hear more about that from hon. Members in this place as well as in the House of Lords.

I have two larger points. First, it is DMU mission creep, which we heard about briefly from my hon. Friend the Member for Weston-super-Mare (John Penrose), that we should fundamentally be most nervous about. It was certainly my concern a little while ago that the Bill gives the regulator the flexibility it needs to deal with the modern world in the right way. That is absolutely the right approach and I am pleased that it has persisted, but it is important that it is appropriately regulated—if I can use that word about a regulator—so that it does not end up potentially going further than any Minister or Government might wish. It is important that the CMA and the DMU operate in the way that this House intends, with all the independence that this House also intends.

My final broader point is that the Bill does some excellent work on interoperability of software. What it does not do, at least on the face of the Bill, is consider that interoperable software is fundamentally linked to interoperable harm. If I can try to turn that into real terms, it is obviously great that operators such as Apple are able to build their own superb and unique ecosystems. The same goes for Android and so on—there are other equivalent versions. What would be useful to try to guard against, probably via the DMU rather than directly via Government, is the current situation whereby, to take one example, the way we use iMessage or video calls is fundamentally limited if we seek to do it on a different platform. We have all seen the different blue and green bubbles on Apple iMessage. That is partly because of the interoperability of hardware and software. I am somewhat conflicted about whether that should be a point of differentiation for Apple, Android, WhatsApp or other operators, or whether we see it as part of a problem within emerging monopolies. I therefore suggest it is exactly the sort of thing that an independent regulator might wish to take a view on.

We heard, furthermore, about the metaverse. What we do not want, surely, is a series of emerging and conflicting metaverses—if that were to be the case—that fundamentally embed monopolistic behaviour, because they will be some of the largest economies of the future. Again, it is potentially hugely beneficial to have a unique and brilliant metaverse under the personal command of Mark Zuckerberg and one under the personal command of Tim Cook, as a competitor. However, a regulator may take a different view and it is important that we think through these emerging opportunities. The Bill is a place where we may start some of that work. It is right that it seeks to be future-proofed against some of those interesting challenges, but at the moment there are a small number of potential opportunities that the Minister may yet seek to seize—shall we put it like that?—rather than allow them to pass by and have to address them later on.

Fundamentally, I welcome the Bill. It already embodies some huge opportunities to make real progress and there are some more that we may be able to take forward. I look forward to supporting its passage through the House.

--- Later in debate ---

[Kevin Hollinrake]

I certainly do not ask for any bragging rights. May I thank the hon. Lady for the work she does on the all-party parliamentary group on ticket abuse? On the case she refers to, she is right to say that it is three years since the conviction took place, but the confiscation order, which was for £6.1 million, took place only in December last year. Does she think that sends a strong message to the cohort of people she refers to that there are strict and strong penalties for people who engage in that kind of activity?

[Mrs Hodgson]

We would all like to think that it would with right-minded people, but I do not think professional touts think like the Minister or any of us in this House, so they probably have not seen it as a deterrent. From what I am hearing from the experts I work with, it is still going on—it is business as usual for the touts. We really need more enforcement in this area. More laws are good, but laws without enforcement just do not work.

The UK is rightly proud of its live event industry, but do the Government really know what the consumer experience often is? I would be interested to learn which experts, campaigners or live music representatives the Government worked with or consulted when they rejected the CMA’s advice so firmly. I have written to the Minister to ask him that, so he can respond in writing if he does not have that information to hand or in his memory from those meetings.

The Minister rejected the advice on this area, saying that resale sites like Viagogo may

“still provide a service of value to some consumers”.

The many tens of thousands of victims of Viagogo may disagree. That misses the point entirely. Resale sites allow touts to commit fraud every single day and permit them to charge inexplicably high prices for such tickets. Illegal activity is happening on those sites right now, as we sit here discussing the issue. Such sites are profiting from that, and the CMA has no power to do anything about it, which is why the Bill needs additional measures. I hope the Department for Science, Innovation and Technology will take a different approach to its forerunner Department, because the Bill is a perfect and timely opportunity to rectify the situation.

If, as the Minister has said, broader changes to consumer law are the priority, I look forward to learning what changes to the proposed legislation his Government will allow. At present, despite the enhanced consumer protection in the Bill, which he spoke of in his opening remarks, it will not be able to tackle all the problems in the online secondary ticketing market, as the enforcement is just not there. Speak to any National Trading Standards officer: they want to go after the touts, but their budget of circa £16 million is for everything they need to do and is not sufficient. I am sure they could spend that on enforcement against illegal ticket touting alone.

The Bill looks to provide the CMA with stronger tools to investigate competition problems and take faster, more effective action, including where companies collude to bump up prices at the expense of UK consumers. Is that not exactly the case in the secondary ticketing market, where sites like Viagogo allow individuals, as well as themselves, to profiteer from a manner of resale that contradicts legislation? As part of the Bill, will the Government take the necessary steps to make sure that laws, including those in the Bill, are upheld and enforced properly?

I look forward to hearing the Minister’s response on this matter. Our cross-party group, the all-party parliamentary group on ticket abuse, would be delighted to work with him and his Department to strengthen the legislation and to protect consumers from the abomination of ticket abuse.

--- Later in debate ---

[Paul Scully]

Many of the regulators will be under the remit of the Under-Secretary of State for Business and Trade, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake). Indeed, that is something that I did—

[Kevin Hollinrake]

indicated assent.

[Paul Scully]

I just heard the verbal nod from him to say that he continues to do that.

I will come to the CMA in a second. In answer to the hon. Member for Washington and Sunderland West, whom I congratulate for the APPG’s work, the CMA is continuing to monitor the online secondary ticketing market, including the issues that have been reported about refunds and cancellations as a result of the pandemic. The Government welcome the CMA’s report, but we believe that we have the measures in place to ensure that consumers have the information that they need to make informed decisions on ticket resales. The Bill will give the CMA significant new civil powers to tackle bad businesses ripping off consumers, so we do not see the need for additional regulatory powers. However, I agree with her that enforcing the existing regulations is key. I thank her for her work in this area.

I will briefly cover some of the other issues. On judicial review, which was raised by my hon. Friend the Member for Hitchin and Harpenden, we have heard that the entire purpose of the Bill is to ensure that we tackle an area where a small number of companies have dominance in many parts of our lives. That is not necessarily a bad thing, so this is not an attack on big tech. None the less, some of the challenger firms mentioned by the hon. Member for Pontypridd, although they may be household names, are rightly scared because of the relationship they have with big tech. We must get the balance right by ensuring that there can be an appeal on judicial review standards, but it must not be something that a company with deep pockets can extend and extend. Because the harms happen so quickly in a tech business, the remediation needs to take place as quickly as possible.

Digital Markets, Competition and Consumers Bill (First sitting)

Kevin Hollinrake Excerpts

Committee stage
Tuesday 13th June 2023 Public Bill Committees

[Alex Davies-Jones (Pontypridd) (Lab)]

Q Good morning. We have talked a lot this morning about accountability to Parliament. That was highlighted quite heavily on Second Reading by Members from across the House. One of the other things that we have already discussed is the need for the CMA’s strategic priorities to be directed and advised by Parliament. Could you expand on your thoughts on that point? Also, where do you see the priorities for the Digital Markets Bill? That is not intended to be a loaded question.

Sarah Cardell: I will give a high-level response, and Will might come in on some of the specific priorities for the DMU. It is really important to highlight the difference between accountability and independence. The CMA is independent when we take our individual decisions, but, as you say, it is absolutely accountable for those decisions, both to Parliament and to the courts. That is accountability for the choices that we make about where we set our priorities, accountability for the decisions that we take when we are exercising our functions, and accountability for the way that we go about doing that work. I think it is important to have accountability across all three areas.

On the strategic priorities, since I came into the role as chief executive and our new chair, Marcus Bokkerink, came into post, we have put a lot of focus on really setting out very clearly what our strategic priorities are, looking at impact and beneficial outcomes for people, businesses and the economy as a whole. We see those as a trio of objectives that are fundamentally reinforcing, rather than in tension with one another.

We also take account of the Government’s strategic steer. That is in draft at the moment. You can see that there is a lot of commonality between our own strategic priorities that we set out in our annual plan and in the Government’s strategic steer. That sets a very clear framework for our prioritisation.

Will might want to come in on how we will set the priorities for the DMU.

Will Hayter: We are obviously thinking very carefully about where to prioritise action under the strategic market status regime. We cannot jump too far ahead with that, because Parliament is going through this process now and we have to see where the Bill comes out, but, as Sarah says, we will be targeting our effort very firmly at those areas where the biggest problems and the biggest current harmful impacts on people, businesses and the economy are likely to be.

You can get a bit of a sense of what those areas might be from the areas we have looked at already, particularly the digital advertising market, search, social media, interactions between the platforms and news publishers, and also mobile ecosystems. We did a big study there, where we see a range of problems stemming from the market power of the two big operating systems.

We will continue to update our thinking as we go through the next year-plus, building on our horizon-scanning work and understanding of how developments in the markets are shaping up and what that might mean for where the problems are.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

Q First, thank you for the work that you do. You are obviously an independent body and you make difficult decisions. You receive more scrutiny than we have ever seen before, with the CMA’s higher profile, and at times that must put you under quite a lot of strain. I appreciate the work that you do. You make the decisions as you see fit, of course, but those often come with criticisms, so thank you.

My question is about innovation. If you speak to some of those who are likely to be designated SMS—strategic market status—businesses, many of them might say, “Well, this will inhibit innovation from our businesses.” I think part of that is about the power to look ahead at where this may take us. What do you say to that? If one of those platforms was opening a new type of supermarket, for example, it might be claimed that this would limit innovation. How would you respond to that?

Sarah Cardell: I have a couple of points, and Will might come in. The general point is that this regime is very much pro-competition and pro-innovation, both from the major platforms, which are likely to be designated in relation to some of their activities, and across the economy. It is important that we encourage innovation that supports competing businesses, large and small. You can have innovation that supports an incumbent by allowing that incumbent to offer additional services, but sometimes at the cost of entrenching their market position. We want to ensure that we have an environment that enables those major players to continue to innovate, sparked and incentivised by the competitive pressure that they are facing, but equally allows smaller competitors to thrive and innovate too. That is the broad point.

As we have said, it is a very targeted and bespoke regime. We will be focusing only on areas where there is substantial and entrenched market power already. Therefore, the principal point is that businesses, large and small, will continue to be free to innovate and to develop their products and services. Of course we want to ensure that that happens in a way that does not reinforce positions of market power. Will, you might want to come in on that.

Will Hayter: As Sarah says, this is all about creating a fertile environment for innovation, and you can think about that at at least three levels. First, it might be that those companies are innovating on top of the platforms that we are talking about here—in mobile ecosystems, through app stores, mobile browsers, and so on. Secondly, there are companies that are seeking to compete directly against some of the big platforms, and we want to ensure that there is a possibility that the current incumbents will be knocked off their perch by tomorrow’s innovators. Finally, increasing competition should increase the pressure on the incumbents—the most powerful firms—to innovate further themselves, in a way that delivers the greatest benefits for people, businesses and the economy.

[Kevin Hollinrake]

Q Would you therefore say that those kinds of worries are ill-founded and that that is not something that would prohibit an SMS organisation from innovating?

Sarah Cardell: I do not think that there is anything in the Bill that prohibits innovation. The fundamental design, and certainly the way that we would intend to operate it, is entirely pro-innovation. We want to ensure that, as the designated companies continue to seek to develop and grow their businesses—of course they will want to, and that brings many benefits—that happens in a way that does not entrench their position, which is disadvantageous either to consumers or to competing businesses. That does not inhibit innovation, but it puts some guardrails around that innovation to ensure that the impact of that is beneficial and positive.

[The Chair]

We now come to a quick-fire round. We have six minutes left and four Members seeking to ask questions, so we want quick questions and quick answers.

--- Later in debate ---

[Seema Malhotra]

Q Thank you very much. This question may be more for Mr Upton. The Bill goes some way towards tackling the problem of subscription traps, but it does not go as far as what Citizens Advice has called for, or indeed the Labour party’s policy of making subscription renewals opt in rather than opt out. Why do you think that the legislation needs further safeguards? Why, in the light of your experience, is that important for protecting consumers from harm?

Matthew Upton: We have been asking for action on subscription traps for a long time. Any action is positive, but we are seeing this in the context of a cost of living crisis, where anything that takes cash out of people’s pockets stops them getting by from day to day. To be honest, we think that the intent is right, but this is potentially a huge missed opportunity for action on subscription traps. We have to understand how high the incentive is for firms to trap people in subscriptions. There is a huge amount of money to be made, to the extent that it changes the whole incentive structure so that for many firms, rather than thinking about how to provide a quality subscription, the rational thing to do is think about how to design the worst possible customer journey and to trap someone, whether through an online process that makes it difficult to cancel something—you will all have experience of this—or, to give a slightly facetious example, a process whereby you can cancel only when you ring between 2 and 2.30 on a Tuesday and you have wait for 45 minutes in the queue.

Obviously, we want to change that incentive structure so that we have a flourishing subscription economy, which should be encouraged, where consumers want to stay in subscriptions and firms focus on providing quality subscriptions. We do not think that the Bill as it stands will do that. For example, it says that exit has to be timely and straightforward. We do not think that that will work. We have been here before, if we think back to utility bills four or five years ago, when there was a big push to stop people rolling on to expensive contracts and to get them to switch. Regulators were focused on trying to dictate what went into letters to consumers about their renewals. Firms could make so much money by obeying the letter but not the spirit of the regulation that they would find ways round it, and switching rates did not go up. We think that the same will happen here.

The specific change that would make a huge difference and is legislatively straightforward is to provide that, at the end of an annual trial subscription, the default is that the consumer opts out. That is not about things like car insurance, where there is a detriment to people opting out, but for basic subscriptions, opt-out should be the default. That would allow firms to use all their ingenuity, power and influence to persuade consumers to stay in. They could go for it—send as many reminders as they wanted; that is absolutely fine. If the subscription is good, a consumer will stay in. That change will make the difference. We have done some polling on this and about 80% of people agree that that should happen. We think that it will put millions of pounds back in people’s pockets, that it is proportionate and that it will encourage a flourishing subscription economy.

[Kevin Hollinrake]

Q Rocio, on your point about including fake reviews on the face of the Bill, our intention is to legislate in this area. I do not know whether you have seen the evidence from Trustpilot, which was submitted as written evidence. It rightly points to the fact that most of the discussion around fake reviews thus far has been about products rather than services. Does not that illustrate that we need to consult properly about that to ensure that we get the legislation right? Isn’t there a risk that we could get it wrong by rushing to stick this on the face of the Bill?

Rocio Concha: A provision on fake reviews in the Bill should apply to both products and services. There is evidence to show that fake reviews also harm services. I do not think that there is a major risk. We and the CMA have produced a lot of evidence about how fake reviews are endemic on some sites. We have demonstrated the harm that they cause. It is clear what is needed. We know that we need to look at selling, buying and hosting. I do not see a risk to including such a provision on the face of the Bill. Then, in secondary legislation—

[Kevin Hollinrake]

Q Even though there might be some things we have not thought about at this point in time. That would be a good example in terms of Trustpilot’s evidence.

Rocio Concha: If there is something that needs to be improved, you can always do it with the Secretary of State’s power later. There is quite clear evidence to provide a clear steer on what is an unfair practice. Obviously, as with anything in schedule 18, you have that power to modify, to add to the practice as more evidence comes in. We will provide enough evidence to the Committee to show that it can be introduced on the face of the Bill.

[Kevin Hollinrake]

Q Sure, okay. Mr Upton, on subscription traps, do you not feel that the powers that the Bill affords the CMA on civil penalties will address some of the concerns you highlight of people trying to get around the rules, for example? Would that not be something it could act on when it sees gratuitous behaviour such as what you describe?

Matthew Upton: I think it could, but we worry that it will not in reality. It is quite difficult to decide, for example, what constitutes easy and timely exit from a contract. You cannot necessarily measure it incredibly specifically, and I could imagine enforcement being really complicated. I could imagine firms dragging their feet, despite the way powers would speed up the ability of the CMA to act, as I say, because the incentive structure is so great.

One reason for the growth of the subscription economy is that it is a great way to provide services, but another is that it is such an easy way to make money by trapping people in. That is our firm belief and what our evidence shows. I just think a simple default would be much more effective than basically having the CMA chasing its tail and chasing firms. It would not be of any detriment to good firms who want to provide really solid subscriptions that people should want to stay in.

[Richard Thomson (Gordon) (SNP)]

Q The EU has a right to redress for consumers, and there is a schedule in the Bill that would allow the Secretary of State to introduce that again in future through secondary legislation. Do either of you have any sort of sense of the extent to which UK consumers might be at risk of being at detriment compared with their EU counterparts while that secondary legislation is not in place?

Rocio Concha: Our view is that it should be on the face of the Bill. We do not know why the right to redress has not been transposed into the Bill. From our perspective, we do not want to leave it for the Secretary of State to decide once we have an Act. It should be included.

The other thing is that the right of redress does not cover all the practice in schedule 18, only misleading practice and aggressive practice. It does not really cover all the list of unfair practice in schedule 18. I think that the right to redress should also cover that.

Digital Markets, Competition and Consumers Bill (Second sitting)

Kevin Hollinrake Excerpts

Committee stage
Tuesday 13th June 2023 Public Bill Committees

[Alex Davies-Jones]

Q Professor Fletcher?

Professor Fletcher: I fully endorse that. When we did the review, we spoke to a lot of firms that were seeking to innovate in the digital space but were struggling. We heard that they really needed access to a whole number of things such as data. They needed access to customers and to be interoperable with systems out there. They needed access to finance. They found, essentially—some of them, at least—that the way in which the biggest platforms were working was making all that very difficult. They were concerned that although there had been a huge amount of innovation, at that point—and still, I think—firms’ ability to innovate was being gradually increasingly stymied by the conduct of the biggest tech platforms. We very much saw the Bill as a pro-innovation piece of regulation.

Professor Furman: This question is so fundamental. This legislation would have benefits for consumers in terms of price and choice, but far and away the most important benefit would be innovation. It was designed with that in mind; our recommendations, which the legislation took on, established firms with strategic market status. They would fall under these rules, which would give a lot of leeway to small and medium-sized UK businesses to really innovate and come up with their own models rather than being constrained. More competition would help innovation by the large platforms as well.

The other thing that is so important is that the speed in the digital sector is just so much faster than in other parts of the economy, so traditional anti-trust rules just take too long: by the time a case is settled or decided, everyone has moved on. Getting there at the front end and having something that is much more flexible and faster is critical in this sector.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

Q Thank you very much for your answers. Amazon has recently said the complete opposite of what you are saying. It has said that the Bill will stop it from innovating. It has started these new stores where you can go and shop and there are no staff—people just go in, take the stuff off the shelf and walk out. Amazon says that this Bill would have stopped it from taking forward that kind of innovation. What particular areas in the Bill is Amazon referring to? Do you recognise those as valid concerns?

Professor Fletcher: Amazon would have to be more precise about what it thought in the Bill would stop that. I think the Bill has trod a very careful, innovation- focused line between stopping the biggest tech platforms from inhibiting innovation by third parties and facilitating them to innovate themselves. The Bill is designed to only address the very biggest platforms in the first place, but also only to address the elements of their business where they have very strong market positions and entrenched market power. I think that way is the right way. As far as I know, Amazon would not be inhibited by the Bill from setting up those stores.

[Kevin Hollinrake]

Q There is a forward-looking provision, is there not, for the CMA to look five years into the future and decide whether a company will have entrenched market power then? Is that what Amazon is referring to? Is that their concern, and would that be valid?

Professor Fletcher: I think the concern is to ensure that it is entrenched market power that we are addressing. The CMA recognises, as do we, that these are intrusive measures and you do not want to do them unless you are trying to address entrenched market power.

Professor Marsden: Personally, I agree that there is an aspect where the five-year period, which I find a bit too long, can be gamed by some of the potentially SMS—strategic market status—firms, but I understand why it is in there. I probably would have been more comfortable with a two or three-year period, because that is traditional for competition authorities and as far as they can look ahead in terms of crystal ball gazing. But I understand why it is there.

[Kevin Hollinrake]

Q How would they game the system, Professor Marsden? What do you mean by that?

Professor Marsden: They could game the system in the sense of one thing being done by just slowly walking backwards, for example—“We are introducing so many innovations and having so many thoughts and thanks from various small businesses.” They could drown the CMA with a range of evidence that actually does not go to the point, which is: who is being excluded, who is being locked out and what are we as consumers and citizens missing by relying only on three or four types of seed in the environment, as opposed to a whole globe of seeds? That is the metaphor I would like to use.

Professor Fletcher: It is worth highlighting that if you compare the UK regulation with the equivalent in the EU, the EU has taken a less bespoke, less evidence-based approach. It basically gets a quantitative presumption, and that presumption is going to be relatively hard to shake. What we have done is much more evidence-based, bespoke and proportionate. Whenever you do that, it makes it slightly less administrable and slightly harder to actually make stick.

Again, I think a very delicate balance has been trodden, and it is the right balance. I think all of us would agree on that, and on the fact that Brussels has made it easier for itself, but it is arguably then not proportionate nor sufficiently bespoke. It is a very delicate thing, but I think it is in the right place.

[Kevin Hollinrake]

Q Professor Furman, I saw your hand up. Do you have any comments?

Professor Furman: Look at the tools that the Digital Markets Unit would have under these provisions; the conduct requirements, such as fair dealing and open choices, are not brand new inventions. They largely draw on existing roles under anti-trust measures. It is just that they would be more explicit and clearer up front, and enforced more quickly. To some degree, at least in terms of the conduct requirements, this is not about imposing some brand new set of rules; a lot of it is about taking existing things and ensuring that they can be enforced in a clear and transparent manner.

[The Chair]

I call shadow Minister Seema Malhotra.

--- Later in debate ---

[Seema Malhotra]

Q In the interests of time, I will move on to Ms Reilly. What is your view of how this will affect/benefit consumers in Scotland? Are there any other specific issues that we should consider in relation to Scotland?

Tracey Reilly: Broadly speaking, we welcome the Bill. As your previous panellists said, it has lots of good stuff in it. It should provide the CMA with more flexible powers, which can be used in a more responsive and timely way to prevent detriment. On how the Bill will affect individual consumers, we hope that it will lead to consumers experiencing lower levels of detriment and being less subject to unfair, misleading or aggressive trade practices so that if and when such practices occur, they can be stamped out more quickly and easily, and it is easier for consumers to seek redress through ADR systems that are appropriately regulated and standardised.

In terms of how the Bill will affect Scottish interests, in many ways the level of detriment experienced by consumers across the UK is similar. The consumer protection survey is UK-wide and the patterns of detriment for Scottish consumers are generally not hugely different from those experienced in the rest of the UK. That said, there are obviously differences between the two nations in the regulatory enforcement and judicial landscapes, and it is important that we understand and pay attention to them. Equally, I understand that the Department has been engaging with Scottish stakeholders. We welcome that and would obviously like that to continue through the implementation process.

Some markets operate differently in Scotland, either because they are entirely devolved because there are fewer providers and therefore lower levels of competition, or because consumers access services differently, for example, due to geography. It is important that, within the overall UK framework, the system can respond to those regional differences or local issues. We hope that the additional levels of flexibility granted to the CMA under the Bill will allow for a more flexible and targeted response, particularly if any local practices cause detriment. We look forward to liaising with the CMA on that. Noyona may wish to make additional comments, given that she is in Northern Ireland.

[Kevin Hollinrake]

Q Noyona, you mentioned that you felt that the CMA should not be the only enforcement body that oversees the legislation. Who else do you think has the experience and expertise to perform some of those significant obligations?

Noyona Chundur: There is a heightened risk, Minister, if the new direct enforcement powers sit only with the CMA. Ultimately, the purpose of those powers is to be much more agile, flexible and responsive to consumer detriment in the market. Is there a heightened risk that enforcement will default to the CMA because perhaps it may deliver a solution that is much more agile and responsive and much more in keeping with the pace of detriment in the marketplace compared with a courts-based system? The sector regulators and trading standards could therefore have the same or similar powers. The question is about agility and responsiveness to detriment, which is exploding in the marketplace. We see it increasingly, particularly in digital markets, which evolve so quickly. That is our perspective.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

Q The Bill aims to protect consumers and challenge unfair competition online, but one significant disadvantage for British companies and consumers is counterfeit goods sold on platforms such as Amazon. For example, the British company that holds a licence to make Peppa Pig toys has the trademark and the patent, and meets the standards, including safety standards, but counterfeit goods, particularly those imported from other countries such as China, are dangerous and do not meet safety conditions. Will the Bill help end that situation for consumers and companies here? Is it an opportunity to do so or, if not, is it amendable to achieve that?

Peter Eisenegger: The Bill has clauses that allow us to address that in terms of, “Has the information put before the consumer been complete and accurate?” If something does not comply with safety standards, that has been omitted. It is a question of interpretation that we would have to nail down and make clear.

--- Later in debate ---

[Alex Davies-Jones]

Q Finally, the other thing we have heard a lot around this Bill is the length of time it has taken us to get to this place. We had the digital competition expert panel set up in 2018, and the Bill’s impact assessment now suggests that the provisions in the Bill will not be fully operational until 2025 at the earliest. Can our digital economy wait that long?

Professor Myers: I do not think I have seen that full timeline to 2025, but I guess what I would say in that respect is that, yes, this legislation has taken a while to come to fruition. At one point the UK looked like it was going to legislate before the European Union, but the CMA has done a lot of preparatory work, and I am sure that it recognises that it needs to hit the ground running as soon as this legislation is passed. It is doing market studies and other work now. It is a well-resourced regulator in this area. The digital markets unit is up and running and doing active work, and obviously my digital expert role is trying to assist them in that work. There will undoubtedly be a time for implementation, but the CMA is well aware of the need to get on with it.

[Kevin Hollinrake]

Q You may have heard my question earlier. Some of the firms that are likely to be designated as SMS might argue that this Bill will prevent them from innovating. Do you see any chance of that? Are there any areas within the Bill that make it likely that innovation will be inhibited?

Professor Myers: I do not think it is that likely. It would be interesting to hear specific examples. As for the one that was commented on earlier, I did not quite see why this Bill would prevent that, as Professor Fletcher outlined. It may be that I have not heard the full set of reasons as to why it might prevent Amazon’s innovation in the very different area of retail outlets. The reason, which again goes back to the targeted and tailored approach in the UK, is that when the CMA designates specific digital activities where there is substantial entrenched market power and indeed a position of strategic significance, that is not going to include peripheral areas. It is going to be focused on what some people call the core areas of market power of the large tech companies, because that is where the market power concerns are largest. There is significant freedom outside that.

There are concerns about leveraging market power in the core markets into other markets, and it is appropriate for there to be an ability to address that through things like conduct requirements. However, you cannot introduce a new regulatory regime without some risk around how the incumbents—the regulated companies—are going to respond. Obviously you are looking for good responses, but it is almost impossible to avoid some undesirable effects. The way this Bill is set up, however, looks to minimise those adverse effects.

[Kevin Hollinrake]

Q I know you are an expert in ex ante regulation. Obviously the way in which people can appeal any intervention by the CMA or the DMU would be only by JR, rather than on the merits method. Is that the right standard?

Professor Myers: Again, I think the Bill strikes quite a good balance with the judicial review approach. To bring in some practical experience from my days at Ofcom, I have had a role as an expert witness in quite a number of appeals of Ofcom decisions, in front of both the Competition Appeal Tribunal and the High Court. At the Competition Appeal Tribunal, those have been under different standards: there used to be a full-merits review, but recently that was changed to a judicial review.

I think what matters, as well as the legal standard of review as laid out in this legislation, is the nature of the appeal body. In this case, it is the Competition Appeal Tribunal. Compared with the High Court, these are specialists—both judges and lay members—with specialist knowledge and experience of dealing with both competition and regulatory cases. They have a greater appetite to get into the detail and merit issues, to the extent that that is compatible with the judicial review standard, than the High Court would. Having appeared in front of the Competition Appeal Tribunal under a judicial review standard, I can say, as I think Professor Fletcher did, that that is not a walk in the park for the regulator. You get a thorough testing, and what the Competition Appeal Tribunal is looking to identify is clear errors of either law or reasoning. I think that that is an appropriate way to strike a balance here.

[Seema Malhotra]

Q I want to pick up on the answers you gave earlier when my hon. Friend the Member for Pontypridd was talking about the delays in reaching this point and the length of time it will take for the Bill to go through. If there are any further delays, particularly if we reach 2025 before this is operational, what do you see some of the risks being in the meantime?

Professor Myers: You heard some evidence earlier this afternoon about the relationship between jurisdictions in different countries. Clearly, the Digital Markets Act in the European Union is being implemented at the moment and the effects of that will come in. The longer the UK legislation takes, the more that will condition the context within which the CMA will have to operate in implementing this regime. That is probably the most likely thing. There are obviously some other countries that are looking into that, but that is probably the main issue I would point to.

--- Later in debate ---

[Seema Malhotra]

Q In your view, should more powers be given to trading standards as well? I was not quite clear on where you saw a role for the CMA and trading standards together.

Graham Wynn: I think it is important that they co-operate and that there is a clear line of responsibility for each and a clear demarcation. The real problem with trading standards is not so much their powers but their lack of resources. One business with over 2,000 stores —not a supermarket—said the other day that the number of inspections and the number of times they see a trading standards officer has come down dramatically in the last few years. It makes it very difficult for those who are responsible for compliance in the business to persuade those who are responsible for, say, marketing and promotions to keep in line. The lack of trading standards activity makes that more difficult and also leads to a playing field that is not totally level. The problem is resources.

[Kevin Hollinrake]

Q Mr Wynn, you mentioned schedule 18 and not adding to the list without proper evidence. Is it your position then that we should not at this point in time add fake reviews to that list and that we should go through a proper process of consultation before we decide what to do about that?

Graham Wynn: The view is, as I said, that we do not want to see what I call knee-jerk reactions to Daily Mail items that are politically sensitive or are political problems. The obvious answer is to say, “Let’s add it to schedule 18 as a banned practice.” It really is important that the schedule and what is in it is clear, clearly understood and that we do not add or subtract from it just on the basis of needing to get over a political problem, for example.

You can make sure that you do proper consultation and all that sort of thing, but we can understand why the Government would want to be able to add to it more quickly—obviously, primary legislation takes a while. In Europe, we certainly argued against Governments or the Commission being able to add to it willy-nilly. We were keen to keep it as something that had to be put in the directive originally. On balance, we would rather it was debated fully and that it amended legislation. Alternatively, you could decide to make changes once a year, say, rather than as you go along. That might be an alternative answer to the danger of a knee-jerk reaction.

[Neil Coyle]

Q I want to see the wild west tackled. As the Bill is drafted, will the consumer detriment provisions be sufficient to tackle producers or suppliers of products that reach UK consumers via platforms such as Amazon, or do the platforms need tackling for responsibility and enforcement action?

Graham Wynn: I should say that Amazon is a member of the BRC, so I preface my comments with that. Amazon does tell me that it is using AI and other means of ensuring there are not fake reviews, and that it takes as much responsibility as it can for product safety on its sites and for illegal products. Clearly others have a different view and think that it would be possible to go further and Amazon should be legally obliged to take more responsibility.

Again, throughout the Bill, the issue will be resources for enforcement, as it is in general. Be it fake reviews, subscription traps or the responsibilities of marketplaces and platforms, unless there is real, effective enforcement, people get the impression that something has been done without really having the rights that the Government say they have—when I say people, I mean consumers.

[Kevin Hollinrake]

Q On that very point, it is something that we are keen to tackle—and Mr Coyle is right to raise it, as he has done several times today. You have talked about an evidence-based approach to this. You will be aware that we will shortly launch the product safety review, which will tackle some of these issues, including the clarification of online marketplaces’ responsibilities in terms of ensuring the safety of products. Do you think that is the right place to deal with this, rather than the Bill?

Graham Wynn: Yes. I think it needs to be done, but without committing us, we would expect it to be done in the context of a product safety review and how you are going to deal with product safety issues in the future. It needs a thorough examination, including the role of marketplaces, their general obligations and what is practical and proportionate. I would not add that to this Bill now, because it requires more of an assessment and consideration than would be possible.

[Seema Malhotra]

Q An area that we have not covered is much is alternative dispute resolution. Part 4 of the Bill would make accreditation of ADR providers compulsory unless an exception applies. How effective do you think that provision will in protecting consumers, and do you think it is the right approach?

Graham Wynn: ADR is not something that our members are exercised about in the same way as some other people are. Those who are responsible for selling high-value items tend to be members of ADR schemes. Their criticism of the current arrangement has been that they are not convinced that there is a full assessment of the ADR providers, so everything that is necessary to give them the confidence to use the systems. They believe that that perhaps has held back ADR schemes from really taking off in some places.

Those who sell high-value items—kitchens, some white goods and furniture items—generally are members of ADR schemes. Those who sell groceries, as they are generally called these days, including food and non-food, tend to feel that it is not really appropriate for them because of the cost. When dealing with something worth only a few pounds, it is much cheaper and much more sensible to just deal with the consumer and, ideally, give them their money back if there is a problem, rather than take everyone through ADR. It is not necessarily the best approach. However, the accreditation system and making sure that companies abide by what they are supposed to do in ADR is vital to have confidence in general.

--- Later in debate ---

[Andy Carter]

Q You wrote an article in The Times recently about fast-growing British tech firms seeing acquisition by the US giants as a viable exit route. Do you think the Bill might change any of that?

Max von Thun: Yes, to an extent. The merger requirements for SMS firms are really just about reporting. They require SMS firms to let the CMA know if they are acquiring companies that meet certain thresholds. That will allow the CMA to avoid things slipping under its radar. Another part of the Bill is about what is called an acquirer-focused threshold, which is basically designed to prevent what have often been called killer acquisitions from taking place. Those are acquisitions that do not meet the UK’s merger control thresholds when it comes to turnover or market share, because they are very small start-ups that do not generate much revenue but that often produce very innovative technology.

The tech giants buy them up either to prevent eventual rivals from emerging or to use that technology to extend their dominance into new markets. The Bill will prevent some of that. That means, to an extent, that in some cases involving very large platforms it will be harder to be bought up if you are a start-up. It is important to acknowledge that to an individual founder being bought up by a big tech firm can often be attractive. Big tech firms can pay a lot of money to acquire you. They can offer all sorts of technical and logistical expertise to help you to grow, but if we look at the wider ecosystem, those deals can be very harmful, essentially by eliminating competition.

Think of what Instagram might have become had it not been bought up by Facebook. Rather than just being part of Meta’s business model, it could be challenging Facebook. To take a more local example, DeepMind, a leading AI company, was bought by Google in 2014. Had it not been, it would be an independent AI company. That would have put the UK at the forefront of a lot of the development in general AI. Obviously, the UK is already doing well in AI, but now DeepMind is part of Google’s empire and subordinate to Google’s business objectives. Those are some of the reasons we should care about this.

Also, if you make it a little harder for these companies to buy up start-ups, the market will respond. The UK already has a lot of alternatives. It has a very healthy venture capital scene—I think the best in Europe. If it is harder for big tech purchases to take place, investors will partly fill that space. I am sure that there are things that the Government can do as well to incentivise private investment—maybe investing themselves in some cases, as they did with the Future Fund, and so on. There are a lot of other routes that, in the long run, are better for the tech sector than these types of deals.

[Kevin Hollinrake]

Q Thank you for your evidence. You probably heard my questions from earlier. We are very keen to ensure that innovation continues, not just in terms of the start-ups and scale-ups but with our big tech firms. Do you see anything in the Bill that will inhibit that?

Max von Thun: Honestly, not really. If I look at what is in the legislation, focusing on the conduct requirements and the PCIs that the large firms will have to comply with, what I see is something that says, “You’re allowed to operate in the UK. You’re allowed to grow in the UK. You’re allowed to invest. You just have to play by the rules. You can’t use your dominance to unfairly exploit small businesses or prevent rivals from emerging.” It does not stop them investing lots of money in R&D or hiring top talent. We are seeing all the innovation that they are doing now, and I do not see anything in the Bill that will stop that.

More broadly, there is quite a lot of evidence, not just in tech but in other sectors, that more competitive and less concentrated markets are better for innovation because challengers invest a lot of money in trying to take on the incumbents because they believe that they can replace them. The dominant firms have to defend themselves, and they invest more to protect themselves. The Bill will have that effect.

Lastly, particularly since the whole debate around Microsoft and Activision, we have seen to an extent an attempt to conflate the interests of a small subset of dominant firms with the wider tech sector. That is often a mistake. What is good for a large majority of tech start-ups may not necessarily be good for big tech firms. It may be, but it is important to separate out the two.

[The Chair]

Are there any further questions? In that case, on behalf of the Committee, thank you very much for coming to give evidence.

Examination of Witnesses

John Herriman and David MacKenzie gave evidence.

--- Later in debate ---

[Seema Malhotra]

Q Sorry, in the interests of time—we may have to go to a vote shortly—I have just one small question, and then I will hand over to colleagues. You said in your evidence that it is important that more is done, because there is nothing requiring online marketplaces and other collaborative platforms to make buyers aware of who the seller is—whether it is a business or a private seller—and that that has implications for consumer rights. Could you explain a bit more about what you think needs to happen that is not in the Bill?

David MacKenzie: Absolutely. A lot of the stuff in the Bill that replaces the consumer protection regulations is really good, and we really welcome it. There is still some stuff around the definition of “trader” that we think is a little bit of a missed opportunity.

There are two angles. When does a consumer become a trader? How many things do you have to sell in an online marketplace before you become a trader? That is a difficult judgment for us to make and we feel that some work should be done on that. The point you have made is equally important: the status of the seller in an online marketplace. We think there should be a requirement for the online marketplace to declare whether the seller is a consumer or a business because that makes a massive difference to the consumer rights of the buyer and it also makes a difference to what we do.

If someone is a business seller, they have to comply with all consumer law; if they are a private seller, they do not really have to comply with anything, so this is for both consumers and for us. To be fair to other businesses that operate on the site, we think this is a necessary change that is not in the Bill.

[Kevin Hollinrake]

Q You make some important points that we seek to deal with in creating a fair and level playing field and protecting consumers at the same time. There is the whole point about whether an online marketplace is a distributor, retailer or whatever else. Do you think those questions are best resolved in this legislation or in the product safety review, which we have committed to do and brings in many other things that you have referenced already?

John Herriman: That was another point that we wanted to make. This is not the only legislation that impacts on the landscape: the product safety review is fundamentally important in this space. The key point there is being clear on where those boundaries are.

We will be contributing to the product safety review. It is fundamentally important that it should come out quickly, so that we can address it and respond to the consultation. We can then look at that in the context of this Bill and others that it might impact on as well. We think that some things would be best placed in the product safety review—anything to do with legislation there—and would not appear here. But it is important that those provisions work hand in hand over a similar period, so that we can make sure that there are not any gaps. Consumers will then be better protected and businesses will have the clarity that they need, which is really important for them.

David MacKenzie: I agree with everything John said, but if we leave all these issues to the product safety review, presumably that would apply only to unsafe products. There is a wider range of situations for which we need these take-down powers when it comes to fair trading—scams and so on.

[Kevin Hollinrake]

Q And the Online Safety Bill does not deal with that?

David MacKenzie: No.

[The Chair]

If there are no other brief questions, I bring this session to a close. I thank the panel on behalf of the Committee. This is perfectly timed as there will be votes shortly and we will be away for quite a long time. Thank you very much. We have spared you having to wait an hour or so.

Examination of Witnesses

Owen Meredith, Peter Wright and Dan Conway gave evidence.

--- Later in debate ---

[Alex Davies-Jones]

Q You answered my question, but are you concerned that by that point the tech companies will use this as a delaying mechanism, which will help proliferate disinformation and misinformation online by people who claim to be journalists? Provisions in the Online Safety Bill enable anybody to be a journalist, and will prevent that information or fake news—for want of a better phrase—from being taken down.

Peter Wright: The crossover between the two Bills is not that great. The real risk regarding fake news is that the most expensive news to produce is the high-quality public interest journalism that I am sure everybody in this room wants to encourage. If you cannot fund it, and at the moment it is a great struggle to fund it, the space will be taken by people who are not proper journalists and are not working for responsible news organisations with complaints procedures and people you can sue if you get it wrong.

The really serious danger is that because the online platforms have over the last 20 years sucked billions of pounds out of the news production in this country, the internet will be filled with conspiracy theorists and people producing cheap, easy-to-manufacture news, largely copied from other outlets.

[Kevin Hollinrake]

Q In your organisation’s written evidence, you took a different view from some of our earlier witnesses, who think we are not going far enough in terms of making it easy for people to exit a subscription only to opt back in. Yours said that actually we should make it slightly more difficult, for example, by taking away the cooling off periods and making the exit subscription slightly different in terms of allowing people to take advantage of other offers, which might confuse the process of unsubscribing. I am interested to hear your views on that.

Owen Meredith: We broadly support the Government’s policy and intent as I understand it in terms of helping consumers to manage subscriptions, particularly subscriptions that they are not aware they are in or for services they are not using. My concern and our organisational concern is that currently it is set out in the Bill too prescriptively, and there is a real danger that you end up in a situation where consumers are being bombarded by subscription notices and they become blind to them.

I would put the analogy out there of the cookie banner, which I think they are hoping to get rid of through different legislation before the House at the moment. There is a danger that consumers are just blinded by the amount of information they are being presented with as stand-alone notices, with the frequency and nature in which they have been spelt out in legislation. While I do not fundamentally disagree with the Government’s policy intent, I do not think how it has been crafted in the Bill at the moment necessarily achieves that in the way we would need it to.

[Kevin Hollinrake]

Q I get that, but if you are in a situation where you are subscribed to just one service and there is not a forest of different emails coming in saying your subscription is ending, the effects of your suggestions would make it more difficult for people to exit contracts.

Owen Meredith: It would not make it more difficult for people to exit contracts; it would ensure that consumers still have access—

[Kevin Hollinrake]

The cooling off period was—

Owen Meredith: It would ensure that consumers still have access to the offers that would be available to them in the current system of processing. If you subscribe to a service that you are using and you wish to terminate it, there are multiple ways you can do that, either via online touchpoints for most of our subscribed services at the moment or via a call centre. If a call centre phoned you and said, “You’ve been using this service for 12 months. We can identify through data that you have been reading the content. Can we ask you what the reason for cancelling is and if we can retain you as a customer with the right promotion?”, I think that would be in the consumer’s interest.

[Kevin Hollinrake]

Q But the removal of the cooling off period would make it more difficult for some people to exit a contract, wouldn’t it?

Owen Meredith: The removal of the cooling off period for us is a concern around how that technically applies and whether consumers have had benefit that they are then seeking to be refunded for, despite having engaged with and received the benefit.

[Dean Russell]

Q We live in an era where we talk about consumers, who might be consuming services or products—but they also might be consuming news. How will the consumers of journalism benefit from or be impacted by the Bill?

Peter Wright: They will benefit through the quality of the journalism they are offered. Every news organisation —we are no exception; we went through a period of redundancies earlier this year—is having to trim their editorial budgets, because you cannot make sufficient revenue in the present digital advertising market to support the scale of editorial resource that you would really like.

Commercial news publishers have seen revenues falling, despite inflation, over the last two decades. At some point, we need to have a mechanism that gives us—this particularly applies to smaller and regional publishers—a level playing field and levers we can pull to bargain with these vast companies. I have colleagues who work at not inconsiderable regional publishing companies, who do not even have a telephone number they can ring at Google, so they just have to accept whatever terms Google offers. We are slightly more fortunate in that we can ring Google, but we do not necessarily get an answer.

Digital Markets, Competition and Consumers Bill (Third sitting)

Kevin Hollinrake Excerpts

Committee stage
Thursday 15th June 2023 Public Bill Committees

[Alex Davies-Jones]

Q Thank you—you actually outlined my final question, which was on that point. One of the things we have heard as legislators looking at the Bill is about those risks around confidentiality and how some of the smaller firms have wanted to submit evidence, but have felt unable to do so, due to commercial sensitivities, for example. Will you outline that a bit further? How does the Bill need to ensure that safeguarding is in place to protect those smaller firms with commercial sensitivities so that they are not disproportionately disadvantaged?

Neil Ross: We have seen this throughout the process of consultation on the Bill and in submitting evidence to the Committee. We have found that smaller and challenger firms, which often have very tight commercial relationships with the larger companies and often rely on and benefit from them for scale and various things, are very sensitive about what they can and cannot submit. The Bill says very little about confidentiality requirements, so the DMU will have to set out in a lot of detail how that is going to work. We really encourage it to ensure that it consults those firms closely, to make sure that there are clear guardrails around what confidentiality marks are put on evidence that is submitted, what could be shared in summaries, and so on. That is going to be absolutely critical to make sure that the DMU can actually gather the information it needs to do its job.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

Q I think I am right in saying that you said in your opening remarks that you may have concerns about the appeal standard. If we move to a full merits system, what is to stop huge tech giants, with almost endless resources, being able to tie up any actions that the DMU takes in the courts for a long time and, in doing so, providing a big deterrent to the DMU taking action in the first place?

Neil Ross: There is a risk of that, so we have put forward a position that aligns with what the Government want, which is an appeal standard that is principally based on judicial review principles, but has the flexibility to consider the different requirements of the case. Both techUK and the Government have pointed to the standard used by Ofcom as one that would be suitable in this case. The issue is that we are not sure that with the way the Government are applying the standard in the Bill, it will actually meet that test. As far as I understand it, the Government have set out a legal position that the appeal standard will be flexible because the Competition Appeal Tribunal will be able to look at human rights law, as well as private property rights, to consider how that standard will flex. We have tested that legal argument very widely with members—in-house legal counsel as well as other lawyers—and, to be blunt, a very limited number of people share that view.

Ultimately, what we want to do is work with the Government to see where we can go further to provide additional clarity on how that appeal standard would work—what the flex would look like. Ultimately, the standard will have to principally sit in JR principles, but have that flex higher up.

The point you made about speed is also hugely important. We set out a position saying we would like to see a standard that makes sure that any appeals are limited to about six months in length, because these are very fast-moving markets. If the standard means that things are bogged down, you know that the market might move on and the benefits might not be conferred across. We understand why hard limits might not be possible as part of the regime, but you could take steps in the Bill to try to encourage the courts to move a bit quicker, especially in more dynamic or high-impact cases.

[Kevin Hollinrake]

Q But you do accept that there is a risk of a greater deterrent to the DMU being able to take action against these big companies.

Neil Ross: Yes.

[Kevin Hollinrake]

Q Thank you for the brevity of your answer. The other thing that we have heard from some of the people likely to be affected by SMS status is about the impact on innovation, for example. It has been said to us that they feel that they would have to go to the DMU or the Competition and Markets Authority for permission to innovate. Is that something you recognise from reading the Bill?

Neil Ross: It is a concern that has been raised. There is nothing in the legislation that would mean that that was what happened. It is going to rely much more on how the digital markets unit itself exercises its powers. I think that if we can make sure that the regime is proportionate, is accountable to Parliament and has a pro-innovation focus, we can get over that. But it could happen. It is just that it is much more dependent on the subsequent guidance and the role that the DMU itself plays.

[Kevin Hollinrake]

Q Sure, but the criterion that it can intervene really only where there is entrenched market power should be a protection against those worries about innovation.

Neil Ross: If the digital markets unit, as I think the Government and the CMA intend, is focusing on a small number of firms with very significant market share in a select number of markets, then yes, that will be the case. However, some concerns have been brought by other companies, which are perhaps leading in their market but would not consider themselves as having a strategic position or causing serious consumer harms and which look at the Bill and think, “At its widest possible scope, I could be included.” That is why we have to make sure that, in exercising the powers, the regime is being held to account.

[Kevin Hollinrake]

Thank you for your answers.

[The Chair]

Mr Ross, we will now have a quickfire round, because we have you for only another five minutes and there are three Members seeking to ask questions. It will be one question each and one answer each.

--- Later in debate ---

[Alex Davies-Jones]

Brilliant, thank you.

[Rushanara Ali in the Chair]

[Kevin Hollinrake]

Q Mr Burrus, some concerns have been raised with us that the subscription traps requirements in the Bill might be too onerous for some people who work on a subscription basis to comply with. Do you think those are valid concerns?

Gene Burrus: I am not sure that those concerns are really valid. There is a consultation process in place. I agree with the prior witness that it is important for third-party input to be part of that process with the DMU, so it can fully understand what it is implementing and the ways in which it is doing that. We have seen problems emerge in the past in competition law cases with respect to trying to craft orders without sufficient input from industry, and those have fallen on the rocks as being ineffective or unwise. We saw that, for instance, when the European Commission attempted to settle cases with Google long ago. They would reach a settlement, then finally market test that settlement that they thought was great, and industry would pan it. I think that is why, with sufficient third-party input into the process with the DMU, those concerns can be addressed

[Kevin Hollinrake]

Q Thank you. On the innovation point, do you see anything in the Bill that would inhibit companies designated as SMS or make them think twice about innovating in any particular space?

Gene Burrus: Quite the opposite. I think it will drive their innovation as well. Right now they are in a position where they are not often faced with competitive constraints with respect to innovating on things such as the privacy and security of their app stores and features that they need to put out. Or, when they self-reference their own products, sometimes that means that they do not have to make the best product; they just have to make the product that they can ensure users will get whether they want it or not.

The Bill will not only unleash innovation for third parties, but force the SMS firms to innovate more in order to keep up. I think history proves that is true. I will go back again to that point in time 25 years ago. Even with all the constraints that were put on Microsoft, nothing has prevented it from innovating. In fact, Microsoft is still a great innovative company today.

[Kevin Hollinrake]

Q Sure. That is very useful, thank you. Mr Smith, I do not need to ask you any questions. I think you were very clear on the appeal standard; I was very comfortable with your answer.

Tom Smith: May I add something quickly on the JR-plus proposal? I think it is strange to come up with a whole new appeal standard when we have perfectly good ones already. Also, the JR-plus standard came in, as far as I understand it, to comply with an EU telecoms directive. It is strange in this period in our country’s history to start putting that standard in place again. The direction of travel is in fact the opposite—to go from merits to JR—and another place in the Bill actually does that. It is the same for Ofcom; that went from merits to JR in the Digital Economy Act. I really do not see the JR-plus standard working.

Also, it is all very well putting a deadline on an appeal, but you need to explain how you will complete the process in that time. It will not work if you just put a deadline on it, then expect everyone to do 18 months’ work in six months. I think you need to explain how on earth that would work, because I do not see it working.

[Kevin Hollinrake]

Very useful. Thank you.

[Andy Carter]

Q Mr Burrus, could I just put to you something that I suspect some of the platforms might say? They have spent billions and billions and billions developing their platforms. Is it not reasonable that they make charges for app users to access those platforms? What they are doing is just recouping their costs, so making a reasonable profit from your members who get access to these fantastic platforms.

Gene Burrus: I think that ignores and rewrites the history of how these platforms got to be as powerful as they are today. If you go back in time to 2008, for example, when there was intense competition among mobile platforms to be your phone, right? There were dozens of firms that you barely know exist any more, like Blackberry, like Nokia, like Microsoft. There were lots of firms competing in that space. And the game then was actually to be as attractive as possible to developers, to the point where those platforms were paying developers to be on their platform, because they were going to recoup that investment through the sale—in Apple’s case—of very expensive mobile devices. And that is where they have recouped—handsomely recouped. It is probably the best business in human history, actually. It is only after they gained a degree of market power that they then began to use that power to try to flip the game and try to extract. Once they had developers in a place where they could not leave, that is when they attempted to go and extract those rents from developers.

I think that argument is a false argument. Apple has recouped its investment in these markets through the sale of very expensive hardware, and Google has recouped its investment in Android through billions and billions of dollars in ad revenue that it has continued to generate. The recoupment argument is a false one, I think.

--- Later in debate ---

[Jerome Mayhew]

Q You are buying a service to reach the same number of eyeballs. The process does not have greater reach. You said that, to achieve the same outcome as a facilitating business, they charge 30% to 40% more. Why doesn’t everyone use Bing?

Tom Smith: You may have seen yesterday that the European Commission is threatening to break up Google in the ad-tech business. The European Commission is formally alleging that Google is abusing its dominant position in ad tech. That is on the display side of the business. On the search side, Google has a 90%-plus market share in this country. It is a must-have product, and people are buying that product. There are lots of allegations about why it should be able to sustain such prices, but I do not want to make an unfounded allegation.

[Kevin Hollinrake]

Q We have put subscription traps in the Bill. I will ask the same question I asked Mr Burrus earlier: do you see anything in the legislation that would make it difficult for companies that currently operate on a subscription basis to comply with what we have set out?

Tom Smith: No, I do not think so. In fact, one of the problems with subscriptions that are operated through mobile devices is that Apple inserts itself and Google inserts itself in between the developer and the customer. If you are a British person who subscribes to an app and then something goes wrong or you want to cancel your subscription, quite naturally you might want to contact the developer, such as Tinder or whatever other developer—you are talking to Mr Buse later. At that point the developer has to say, “I’m terribly sorry; you might think you are dealing with us, but you have a contract with Apple,” and that is a major source of complaints. It is pretty confusing for consumers.

[Kevin Hollinrake]

Q On the innovation point, there are concerns that if you are designated SMS you will have to go to the CMA or DMU to seek permission to enter a new marketplace or bring forward a new product. Is that something you see anywhere in the legislation?

Tom Smith: No, it is nowhere in the legislation. The idea that the CMA wants to stop SMS firms innovating is not based in any evidence that I can see anywhere. There is a leveraging principle in clause 20, which is extremely narrowly written and I think should be made slightly wider, but that is the only thing that could touch a non-SMS activity.

[Kevin Hollinrake]

Thank you.

[The Chair]

I thank our witnesses for their evidence. If there are no further questions, we will move on to the next panel.

Examination of Witnesses

Tom Fish, Richard Stables and Mark Buse gave evidence.

--- Later in debate ---

[Mary Kelly Foy]

Q Tom, do you want to add anything?

Tom Fish: You certainly cannot blame the companies for wanting to put their points across to politicians who are potentially radically transforming their markets. I certainly echo the point about being wary of supposed bodies that represent small businesses in these areas. If you receive views from those types of organisation, think carefully about who they are really speaking for.

The one thing I would add is that knowing that those big companies will be lobbying hard is why companies such as Gener8 and others are willing to take the risk to speak out publicly and share our experience, because it is just so important that you hear both sides of the argument.

[Kevin Hollinrake]

Q Mr Buse, I think you will be pleased to know that everybody in the Committee has now moved their subscription for Tinder from the app store to the website to get cheaper subscriptions, so thank you for that—[Laughter.]

You are a very successful company. You own plenty of brands—Plenty Of Fish, as well as Tinder and the like. What do you make of the argument that, actually, far from inhibiting investment, these companies have encouraged investment by giving you a platform that can access lots of customers around the world?

Mark Buse: We do not deny, first, that what they have created is revolutionary and, secondly, that they should be paid for their intellectual property and their ongoing work. We have always stated that we support their ability to recoup and to profit off of this. There is no issue on that for Match. What causes us so much concern is that they make their decisions arbitrarily in a black box, with no transparency.

If you look at Tinder’s algorithm and Uber’s algorithm, they operate, at the base level, almost identically. We connect two strangers in real time for the purpose of a date. Uber connects two strangers in real time for the purpose of a ride. Uber does not own the car and it does not employ the driver; we encourage you to use an Uber, to not meet somebody in a dark alley in their car. Essentially, it works the same. Yet, on Uber, Uber pays nothing. We and our users have to only use Apple or Google and have to pay 30%. So there is a fundamental problem here.

Some of that is just due to a historical anomaly back when there was a competitive marketplace, but that competitive marketplace no longer exists. Again, we think this Bill gives flexibility, in that it does not have the CMA declare these companies as regulated utilities. Recently, a Minister in the Netherlands said that he believes Apple and Google should be treated like regulated utilities, such as a bank. That is not for me to decide; it is up to parliamentarians to decide. We would have concerns about that, just for precedent, but we think this Bill balances that and creates a flexible marketplace where, as long as Apple and Google are treating entities in a fair and transparent manner, they are entitled to earn profit.

[Kevin Hollinrake]

Q Would you say that the situation has hampered your willingness to invest and the growth of your company?

Mark Buse: Absolutely. It has hampered it in an actual way, in that 30% of the money we should bring in goes to Apple and Google. To put it into context, we do a little over $3 billion a year in revenue. Last year we paid Apple and Google around $700 million, which we could be investing in employees, research and lowering prices. The question is, $700 million for what? What are we paying for? Are we subsidising Uber? We would say yes, in fact we are. What do our users get from that? To show you how the stores recognise the value, Apple buys ads within the app store search for Tinder. We do not buy ads for Tinder; Apple buys ads for Tinder. You might ask why. It is because Apple knows that the average user of an online dating product will have four or five different dating apps on their phone—us and all our competitors—and will bounce back and forth between them all non-stop. That is just the way the user behaviour is. Once you meet somebody, you do not use any of them, so it is a high-churn business.

With Tinder being the most well-known brand, Apple knows that if it can convince a 19-year-old to open a Tinder account, that 19-year-old will also then open a Bumble account, an OkCupid account, a Grindr account or whatever. Apple knows that they are going to start subscribing to all of them, so that is all free money. The system is already built. Uber is using it, Walmart is using it and Tesco is using it, but 16% of the companies are paying the extra 30%, which is subsidising all of this and enriching Google and Apple’s profits, so there are issues there.

[The Chair]

Minister Scully, do you want to come in on any of the points that have been made?

Digital Markets, Competition and Consumers Bill (Fourth sitting)

Kevin Hollinrake Excerpts

Committee stage
Thursday 15th June 2023 Public Bill Committees

[The Chair]

Minister Hollinrake?

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I have no further questions.

[Vicky Ford (Chelmsford) (Con)]

Q Do you see Google and Apple acting in collusion and taking similar moves, or are they different moves? Do you see examples where they are putting similar blocks against businesses?

Kelli Fairbrother: Yes. It is interesting, because there are differences between the two ecosystems. Whereas I do get transaction-level data from Google, for example, I do not get it from Apple. Apple moved first to lower the price points from 30% to 15%, and Google took at least another six or 12 months after Apple moved to create that small business tier. Generally, they seem to be both on this path of using their dominant market positions to extract as much value from me. The question I would love to hear Google answer when they come in later is that these are our customers; my customers are also your customers. I just do not really understand why, if you can see that there is actual consumer harm happening, you are not working yourselves to address it.

--- Later in debate ---

[Kevin Hollinrake]

Q No doubt you are right that there are consumer and business benefits from what Google does, so thank you for the investment you made to ensure that that is the case. We will always intervene—or we should intervene—where there is market failure. We believe that there is market failure in certain areas here, so this is in that context.

On innovation, we are keen that you continue your R&D spend and innovate. Is there anything in the Bill that will make you think twice about innovation? We asked other witnesses and they cannot see any issue, but some concerns have been raised with us. Do you feel that you might have to talk to the regulator or CMA before you develop a new product? Is that a rational concern that you have?

Tom Morrison-Bell: The Privacy Sandbox is probably the best example of perhaps any company, as far as I am aware. That is the only model to date that could be a bit like the participative approach. That is a really good example of where we were able to come to the regulator to say, “Look, when it comes to competition, there are trade-offs. In this case, it is privacy, with us phasing out cookies, with competition, because maybe you have to use different Google advertising technologies.” We would like the competition authority and the privacy authority to make sure that both their concerns are met before we roll things out. That is good, because it prevents costly roll-outs that might have to be rolled back, and regulators are aware, consumers have clarity and other businesses in the ecosystem have clarity as well. It is true that that required numerous months of consultation with the regulator, but I think there is the opportunity for the participative approach to work well. Again, because you have this open-ended and flexible system, it is important that there are checks and balances in place.

[Kevin Hollinrake]

Q I think the question I am trying to ask is: you are not honestly saying that you are going to stop innovating because of this Bill, if becomes an Act?

Tom Morrison-Bell: No. We are really committed to the UK, which is a special market for us. We employ 6,500 people here. But those checks and balances are important to make sure that you know that your decision is right or wrong, not just whether due process has been followed.

[Anna Firth (Southend West) (Con)]

Q I am sure we all agree that we want to put consumers at the heart of the regime. I want to put to you the very specific and powerful example that we have heard this afternoon, which I do not think you have really answered, from a British start-up in Cornwall selling electronic books. If it does it on an app, it will have to pay up to 30% in payment processing charges, and the payments can be delayed by as much as two months. If it does it with a web-based approach, where there is competition for payment processing—it uses Stripe, for example—it will pay 3% to 4% in processing charges and receive those payments within seven days. How can it possibly be in the best interests of my residents and businesses in Southend-on-Sea not to address that huge distortion in the market, with a huge monopoly and another system where there is more free competition?

Tom Morrison-Bell: With respect, I think that if you look at the broader Play system as a whole, 99% of all users of the Play store—those developers—pay 15% or less on their fees. By and large, the fees are staggered. That means that companies that make less money get to enjoy the benefits of the ecosystem in the same way as larger companies, which may pay larger fees.

On the payments point specifically, we are in discussions with the CMA, as I said. There are two different billing models, which are being agreed on and are out for market testing, so there is ongoing discussion in a constructive way with the CMA that will bring forward those two new payment methods.

Digital Markets, Competition and Consumers Bill (Eleventh sitting)

Kevin Hollinrake Excerpts

Committee stage
Thursday 29th June 2023 Public Bill Committees

[The Chair]

With this it will be convenient to discuss the following:

Clauses 166 to 168 stand part.

Clauses 170 and 171 stand part.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

It is a pleasure to see you in the Chair, Dame Maria. The clauses restate and update the Enterprise Act 2002. Clause 165 sets out which courts in the UK have jurisdiction to hear and determine applications for consumer protection orders. The globalised nature of modern business means that a trader with UK consumers may well not have a place of business or carry on business in any part of the UK. The clause provides that in those circumstances the relevant consumer’s place of domicile will determine which UK court has jurisdiction.

Clause 166 will extend the effect of consumer protection orders made by a court with jurisdiction in one part of the UK to other parts of the UK, as if the order were made in those other parts. That eliminates any jurisdictional gap within the UK and restates and consolidates relevant sections of the Enterprise Act 2002.

Clause 167 will allow evidence from previous court proceedings to be admitted in evidence for the purpose of proving that infringing conduct has occurred under this part. Convictions in the criminal courts and any relevant findings in the civil courts are admissible to prove that a person has engaged in an infringing practice or has been an accessory to such a practice.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

I wonder whether the Minister could pinpoint where in the Bill’s impact assessment documents the estimates are for the number of cases that the Government expect under this legislation, the average time for a case to be heard and the amount that the Government will be resourcing courts?

--- Later in debate ---

[Kevin Hollinrake]

What a helpful question. I do not have those figures to hand, but I am happy to write to the hon. Member if we cannot find the information for him today. I am grateful for his intervention.

Clause 168 will give the court a discretionary power to make some or all of the requirements of a consumer protection order, including monetary penalties, binding on other members of the interconnected corporate group of the infringer. This power will prevent complex corporate structures from frustrating the ability of enforcement interventions to protect consumers and law-abiding traders. The exercise of the power is subject to two important conditions: first, that the infringing company meets the definition of a member of an interconnected corporate group at the time the order is made or at any time when the order is in force, and secondly that the court may make an order binding on other members of the same corporate group only if it considers it just, reasonable and proportionate. That will require an objective assessment on the facts of each case.

Clause 170 will apply where the court is considering an application for a consumer protection order made in relation to a suspected breach of unfair trading prohibitions. It will empower the court to compel traders to substantiate any factual claim made as part of their commercial practices. The burden of proving the accuracy of claims is on the trader. The clause is crucial to stopping unscrupulous traders making wild promises or getting the enforcer bogged down in disproving claims that should be backed up by evidence.

Clause 171 makes an exception to exempt the Crown from the monetary penalties that the court may impose under chapter 3 when it is engaging as a trader in commercial transactions with consumers.

I commend the clauses to the Committee.

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

It is a pleasure to serve under your chairship today, Dame Maria. I thank the Minister for his opening remarks.

The Opposition recognise that clauses 165 to 167 are technical clauses. Clause 165 will provide the criteria to determine which courts within the UK have jurisdiction to hear and determine applications for consumer protection orders. It provides that where the respondent does not have a place of business in the UK, the appropriate court is where a relevant consumer is domiciled. This is a common-sense clause, and we support its inclusion in the Bill.

Clause 166 will have the effect of enabling a consumer protection order made in a court in England and Wales, Scotland or Northern Ireland to have effect in each of the constituent nations of the UK. This is a technical clause that the Opposition support.

Clause 167 will allow convictions in criminal courts and findings in civil courts to be admitted in evidence for the purpose of proving that infringing conduct has occurred. The explanatory notes confirm that it will still be necessary to prove that the conduct harmed the collective interests of consumers.

We recognise that these technical clauses are important for the implementation and operation of the new consumer protection regime enacted by this part of the Bill. We therefore support their inclusion.

My hon. Friend the Member for Bermondsey and Old Southwark made a point about case numbers and court resourcing. We expect demand on the courts to increase. The last thing that the Minister will want to see is the effective implementation of the regime, or confidence in it, being undermined because the courts cannot take on cases at speed when they might need to do so. I would welcome the Minister’s response on the issue of court capacity, support and resources.

Clause 168 will introduce provisions such that when a court makes a consumer protection order against a corporate body that is or becomes a member of a group of interconnected bodies corporate, the court has a discretionary power to direct that the order is binding upon one or more other members of the same corporate group. Subsection (6) defines two or more bodies corporate as interconnected bodies corporate

“if one of them is a subsidiary of the other, or…if both of them are subsidiaries of the same body corporate.”

Under the clause, a court would be able to make part or all of the order binding on other members of the group where the court considers it just, reasonable and proportionate to do so. The explanatory notes state that when considering whether to extend an order to another group member, the court might take into consideration whether the other member was the brains behind or benefited from the infringement, and whether the extension would help to ensure that financial penalties are paid.

Clause 168 will provide a more robust consumer enforcement regime, helping to prevent companies from restructuring to avoid liabilities and ensuring that significant deterrents are in place to prevent companies from infringing regulations of the new regime. We support the clause.

Clause 169, “Enhanced consumer measures: private designated enforcers”, sets out two conditions that must be met before enhanced consumer measures can be included in an undertaking either given to a private designated enforcer or given through the court via an application from a private enforcer.

The first condition

“is that the private designated enforcer is specified…in regulations made by the Secretary of State”

to act as a private enforcer. In our debates on clauses 143 and 144, I raised questions with the Minister’s colleague the hon. Member for Sutton and Cheam about the process of becoming a private designated enforcer. However, I would welcome further clarification from the Minister of how he envisages the process of a private enforcer working in practice. I am not very clear on whether that is through an application or via the discretion of the Secretary of State; it would be helpful and important to clarify that point to ensure that clause 169 is effective in enabling private designated enforcers, so we can be sure we know who they may be in future, and to include enhanced consumer measures in an undertaking.

The second condition, rightly,

“is that the enhanced consumer measures do not directly benefit the private designated enforcer or an associated undertaking.”

Will the Minister clarify some matters in relation to subsections (7) and (8)? Private designated enforcers must have regard to any relevant advice or guidance given by a primary authority. Could he perhaps illustrate that with an example of a primary authority within the meaning of subsection (7)(a) and a situation in which that may occur, so we are clear about the intentions for how the clause will be used?

Clause 170, “Substantiation of claims”, will enable the court to require evidence from traders to substantiate the factual claims used in their commercial practices with consumers when an application for a consumer protection order has been made against those traders. Under subsection (3), it is for the court to decide whether any evidence provided is adequate. If the court decides that it is not, or if no evidence is produced, the court can determine that the claim is inaccurate. This provision will ensure that the burden of proof regarding the accuracy of claims rests with the trader. In effect, claims must be based on evidence that can be verified by the court.

The explanatory notes specifically mention environmental claims—sometimes referred to as greenwashing—and claims about the health benefits of goods as examples where substantiation of claims may be required. Greenwashing generally refers to claims made about the positive impact of a product or service on the environment that could be seen as misleading or untrue. This is a growing area of concern under competition law. We have not tabled amendments at this point, but it is an important area in this and other legislation.

The Government and the EU have announced proposals to introduce new legal instruments to address alleged greenwashing. Ultimately, legislation to regulate claims that businesses in Europe can make in their consumer communications would come into force, as is already the case in France. A European Commission study in 2020 highlighted that 53.3% of examined environmental claims in the EU were found to be vague, misleading or unfounded, and 40% were unsubstantiated. This policy issue has highlighted the absence of common rules for companies making voluntary green claims, which, in a sense, leads to greenwashing. The uneven playing field in the market is to the disadvantage of genuinely sustainable companies. It also has an impact on how effectively consumers can make their purchase decisions.

EU proposals for the green claims directive outline that before companies communicate any of the covered types of green claims to consumers, any such claims would need to be independently verified and proven with scientific evidence. As part of scientific analysis, companies would identify the environmental impacts that are actually relevant to their products, as well as any possible trade-offs, in order to give a full and accurate picture.

There have been calls to review how comparisons between products and organisations should be made, based on equivalent information and data. There have also been calls to look at regulating environmental labels, outlining the fact that there are over 230 different labels, which, according to evidence, leads to consumer confusion and distrust. The Competition and Markets Authority published the green claims code in September 2021. It has also been investigating the sustainability claims of major household brands, and how products and services claiming to be eco-friendly are marketed.

This is a newer area, and as we move towards achieving our net zero targets it is going to become increasingly important to how the marketplace is defined. It is important to know and be ahead of where consumers might be being misled. Some of the work in the run-up to COP26 and since has been welcome, but we cannot take our foot off the accelerator.

--- Later in debate ---

[Neil Coyle]

I did not intend to speak, but I want to press the Minister on the approach that the Government are choosing to adopt in this group of clauses. What the Bill intends is welcome, as we have heard from witnesses and from elsewhere. Fundamentally, customers want quick redress, and businesses want justice and the removal of counterfeit or fake products that undermine their licences and appropriate trading. The Government’s approach—specifically in these clauses, heading for the courts—ignores the backlog that my hon. Friend the Member for Feltham and Heston has spoken about.

On Tuesday, we heard from the Minister for London that the Government did not have an agreement with Citizens Advice, or funding set aside for Citizens Advice, to support people to take a case through the courts. I was promised some further information that has not arrived yet; I do not know whether it is in the snail mail or the Minister’s crayons ran out or something, but I hope it is coming.

As has been raised this morning, there is no information yet from the Government about their expectations for how many cases will be taken to court, how that will have an impact on the backlog, or what the cost will be to Government or individuals. The reason people will end up at Citizens Advice is that they are seeking legal information; Citizens Advice needs to be resourced to support people and to take cases. In connection with this group of clauses, we are not hearing what the Government intend to do to support cases that need to be taken.

And, of course, it takes time. In the time that someone is going through the process—potentially for months and months—products that are dangerous to individuals might still be online. I am keen to hear from the Minister what will happen in the interim. What is to stop sellers and online marketplaces continuing to retail products that are dangerous to individuals or are counterfeit goods?

We will come to this next week, I think, but there is an alternative: the take-down power suggested by trading standards. With what is out there currently and what the Bill intends, we hear lots of analogies about the wild west, but it all feels a bit as if, instead of getting a Clint Eastwood figure to address the problems, we are getting a Deputy Dawg. Will the Minister say why the Government chose a costly court process—costly to Government and to individuals, as well as more time-consuming—rather than a specific measure that allows for a body already set out in a schedule to require the removal of information on products that are known to be faulty or counterfeit?

[Kevin Hollinrake]

On resourcing, the hon. Members for Feltham and Heston and for Bermondsey and Old Southwark were both right to mention the courts backlog. If my ministerial colleague, the Under-Secretary of State for Science, Innovation and Technology, the hon. Member for Sutton and Cheam, committed to write to the hon. Gentleman, I am sure that he will do that. It has not come across my desk yet, but there will be no delay when it does, short of ensuring that it answers the hon. Gentleman’s questions.

One thing to say about that, of course, is that the fact that we are putting in place a direct enforcement regime may well ease the pressures on the courts, because the CMA can take action without recourse to them. That should help by ensuring that not all such cases need to go to court.

On private enforcement, and how it would work, it could happen on the basis of an enforcer’s application, or on the Secretary of State’s initiative after consultation with a proposed enforcer. I think that the only private designated enforcer currently is Which?. I hope that that answers the question of the hon. Member for Feltham and Heston.

On the hon. Lady’s points about a primary authority, a primary authority can be a local authority, it could provide information about the business to enforcing authorities and help direct their efforts to improve regulatory efficiencies.

On greenwashing, she is right that the CMA is conducting an investigation into ASOS, Boohoo and Asda. We have the green claims code to try to ensure that there are standards in this area. The Government policy in this area, of course, is that misleading information is already a breach of existing consumer laws. The CMA has issued guidance to help businesses to comply with existing obligations in that green claims code.

The hon. Member for Bermondsey and Old Southwark asked about product safety. Rather than Deputy Dawg, I would use the analogy of Clint Eastwood in “The Good, the Bad and the Ugly”. We are working very hard on this, in terms of product safety. The Office for Product Safety and Standards, which I work very closely with, comes under my remit. It has put a huge amount of time and effort into market surveillance and ensuring that products online are safe.

We have real concerns over whether that is the case, of course, and we recently met with Amazon to discuss that issue. We have also met with eBay, Wish and other platforms to point out their responsibilities. As far as we are concerned, as distributors they have responsibilities to proactively remove unsafe content. As the hon. Gentleman knows—I have said this to him before—we intend to look at that again through the product safety review, which we are about to announce, and that should clarify those responsibilities and ensure that unsafe products do not hit the marketplace in the first place.

I take the points on takedown powers very seriously, and I heard the same evidence from trading standards that the hon. Gentleman heard. We are keen to look at that matter and, again, it might involve another layer of enforcement so that we can then try to prevent those unsafe products from hitting marketplaces across the UK. Trading standards has the capacity to do that for individual websites, but I understand that there are wider concerns regarding other areas of online activity that we are keen to address.

[Seema Malhotra]

I thank the Minister for his comments relating to the calls from trading standards to strengthen the legislation, which I also support. Could the Minister perhaps clarify a couple of points?

On greenwashing, my point was about how robust our regime will be in making sure that the green claims code, and how that is implemented, will be sufficient to ensure more compliance—either with the code or with any other ways in which we are going to be taking forward legislation on this—so that we do not have to do a lot more by way of enforcement. That would clearly not be the best outcome in the long term for consumers. Having the information up front and ensuring that labelling and other matters are much more robust is better than having challenges later on, with the associated costs of taking things through the courts. My question was more about how this all sits together, and whether the Government have an overall strategy, which I think is quite important.

Finally, on the product safety review, it has been “about to be published shortly” for quite a long time. Is it coming shortly?

[Kevin Hollinrake]

Yes, it is coming shortly.

Turning to greenwashing, we take the matter very seriously, and there are two ways to deal with it. We can do ex ante regulation, which involves building a huge bureaucracy around a certain system and people checking everything, or we can put in an ex post regulation deterrent regime, which involves a code or set of standards that companies should adhere to, and then an enforcement regime that takes breaches of the code very seriously and applies penalties to organisations that do not meet the standards. The latter is a more efficient and effective way to regulate, and that is the approach we are taking. That should prove a deterrent and prevent people from doing the wrong thing in the first place.

Question put and agreed to.

Clause 165 accordingly ordered to stand part of the Bill.

Clauses 166 to 171 ordered to stand part of the Bill.

Clause 172

Power of CMA to investigate suspected infringements

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss that clauses 173 to 176 stand part.

[Kevin Hollinrake]

Clauses 172 to 176 set out a range of new enforcement powers for the CMA to determine whether certain consumer laws have been breached and, if so, to direct compliance and impose remedies and penalties. These powers correspond to powers available to the civil courts under chapter 3 of this part of the Bill to make consumer protection orders, but are available in relation to certain consumer protection laws only.

Clause 172 gives power to the CMA to conduct an investigation into suspected infringements under its direct enforcement regime. This acts as a trigger for the use of the CMA’s direct enforcement powers under chapter 4 of part 3. To use its direct enforcement powers, the CMA must have reasonable grounds for suspecting an infringing practice has occurred, is occurring, or is likely to occur.

Clause 173 allows the CMA to issue provisional infringement notices to enforcement subjects. It provides that enforcement subjects have a right to know the claims against them and be given an opportunity to make representations in a meaningful manner before a final decision is taken by the CMA. That ensures that the direct enforcement process is fair, with appropriate safeguards to protect the legitimate rights of the enforcement subject.

Clause 174 is fundamental to the direct enforcement regime and gives the CMA a discretionary power to issue a final infringement notice. To do so, the CMA must be satisfied that the infringing conduct has occurred, is occurring or is likely to occur. As well as giving directions to prevent or stop infringing practices or require enhanced consumer measures, a final infringement order may impose monetary penalties. That may be up to £300,000 or, if it is higher, 10% of the subject’s total turnover, in relation to past or ongoing infringing conduct.

Clause 175 empowers the CMA to include enhanced consumer measures as part of a final infringement notice if it considers them to be just, reasonable and proportionate.

Clause 176 empowers the CMA to issue an online interface notice to avoid the risk of serious harm to the collective interest of consumers. To exercise that power, the CMA needs to be satisfied that no other tools under the direct enforcement regime, nor the court’s power to make interim online interface orders, would be wholly effective.

An online interface notice may be given to the infringer or to any relevant third party. For example, an online interface notice may require a third party to remove, modify or restrict access to content that can be found on an online interface, such as a website. An online interface notice may be given to an overseas third party if the third party satisfies the UK connection test at subsection (3)(c). This clause therefore takes into account the global nature of online commerce, but does not give the CMA unfettered extraterritorial jurisdiction. I hope hon. Members will agree that it is appropriate that this provision has cross-border reach to websites, platforms and applications that direct their business activities to consumers in the United Kingdom.

[Seema Malhotra]

Clause 172 introduces provisions empowering the CMA to begin an investigation where it has reasonable grounds for expecting that a person has engaged, is engaging or is likely to engage in a commercial practice that would be considered a relevant infringement. That power acts as a trigger for the use of the CMA’s direct enforcement powers. Under subsection (3), the CMA would be able to publish a notice of investigations setting out what and whom it is investigating and indicating the investigation timetable. If, after giving such a notice, the CMA decides to close the investigation, it would be required to publish a notice of termination.

The clause is welcome. It is a vital part of the new consumer protection regime, and we need to ensure is properly enforced. While I am glad the provisions are being introduced, I note again that it will be a long time before they are in operation. It is not until 2025 that some of the provisions come into force.

It does not appear that publishing of the notice of investigation would be mandatory in all cases. Are there any times or examples of when a notice should not be published? If so, could the Minister share those with the Committee?

Under clause 173, the CMA would be empowered to give an enforcement subject a provisional infringement notice where the CMA has started an investigation under clause 172, which continues. The provisional infringement notice would need to contain certain information, including the grounds on which it is given and the enforcement subject’s acts or omissions that give rise to the CMA belief that there has been an infringement. It must also include the CMA’s proposed directions specifying the conduct required to ensure compliance. If the proposed directions include enhanced consumer measures considered by the CMA to be just, reasonable and proportionate, the notice will also need to state that and include details of those measures.

The notice must also include the process for the enforcement subject to make representations to the CMA about the notice, including the means by which and the time by which representations must be made by the enforcement subject. That must also include a hearing if the enforcement subject decides to make an oral representation and, if the CMA is considering monetary penalties, the detail of that penalty.

This is an important clause in enabling co-operation through the enforcement regime, but I would welcome clarification in a few areas. Subsection (3) sets out how the CMA may give the respondent a notice. Are there any scenarios in which the CMA will not need to give the respondent an infringement notice? If not, is this intended to be a power rather than a duty?

Subsection (4) states that the infringement notice must specify the time by which representations must be made. Does the Minister have in mind an expected time range for those representations to be made? I am sure that there is an intention that this all happens as quickly as possible, but there is no specification or guidance as to what some of the timelines might be. It would be helpful to understand the Minister’s intentions on that further.

Clause 174 grants the CMA a discretionary power to issue a final infringement notice to the enforcement subject. In deciding whether to issue a final infringement notice, the CMA will be required, under the clause, to consider whether an undertaking has been given and, if so, whether the enforcement subject has complied with its terms. A final infringement notice may impose on the enforcement subject a requirement to comply with such directions as the CMA considers appropriate to rectify an infringement and achieve compliance, and/or a requirement to pay a monetary penalty. Subsection (6) sets out that the monetary penalty must be a fixed amount not exceeding £300,000—I think that was described in earlier discussions as the middle of the pack—or, if higher, 10% of the total value of the enforcement subject’s turnover.

Under subsection (8), a final infringement notice could require the enforcement subject to publish the notice and a corrective statement. I ask the Minister—again, in the interests of transparency—why this subsection says “may require” rather than “will require”. I ask in the interests of consistency and transparency for consumers, so I would be grateful for the Minister’s response.

Clause 175 empowers the CMA to include in a final infringement notice enhanced consumer measures that it considers to be just, reasonable and proportionate. This clause is welcomed by the Opposition as an important part of the consumer protection regime.

Under clause 176, the CMA will be able to issue an online interface notice to any person whom the CMA believes has engaged, is engaging or is likely to engage in a relevant infringement. This includes third parties with a connection to the UK—for example, UK nationals and residents, UK-established businesses, and businesses carrying on business in the UK or targeting UK consumers. The purpose of this notice would be to prevent serious harm to consumers where there has been or is likely to be an infringing practice. In effect, the notice would force the infringer or any third party to take down content that is harmful to consumers. Subsection (4) sets out what the directions could include: removing content from, or modifying content on, an online interface; disabling or restricting access to an online interface; displaying a warning to consumers accessing an online interface; and deleting a fully qualified domain name.

Use of those powers has been described as a last resort. Will the Minister clarify whether this would therefore be after a period of notices and whether there is a timeline in which it might be undertaken? If a business was not responsive, would the Minister expect relatively quick use of the powers in order to protect consumers and to deter any further consumer detriment? Also, is it the Minister’s intention that the powers are just for the CMA? Considering some of the discussion that we have been having in relation to trading standards, I wonder whether use of the powers may be open in the future to other enforcers.

[Kevin Hollinrake]

In terms of publication of a notice, I think that that is a judgment for the CMA. There may be public interest in making a notice public—for example, to inform traders or consumers about practices of concern. Why would it not publish a notice? Well, it might be, for example, that that might prejudice the CMA’s investigation, which is clearly not something that we would want to happen.

The hon. Lady asked about the timescale for response. That will be something that the CMA consults on, in terms of how the process will happen, and stakeholders will be able to input into that consultation. However, we expect clear timelines to be set for responses.

Why would the CMA not give an infringement notice? Well, it might be that it decides, for example, that another enforcer might be better placed to take forward enforcement in that area. Circumstances will vary widely from case to case, and the CMA will be the best judge of whether publication is desirable in any given situation.

What about other consumer enforcers? We believe that the CMA has a leading and co-ordinating role in both the public enforcement of consumer law and in tackling market-wide practices that hinder consumer choice. The new direct enforcement model will enable the CMA to act faster and take on more cases on behalf of the public, resulting in an estimated further tens of millions—or potentially hundreds of millions—of pounds of direct benefit to consumers. Improving the speed and responsiveness of the CMA’s interventions has the greatest potential to safeguard the wider interests of consumers right across the economy.

Question put and agreed to.

Clause 172 accordingly ordered to stand part of the Bill.

Clauses 173 to 176 ordered to stand part of the Bill.

Clause 177

Undertakings

[Kevin Hollinrake]

I beg to move amendment 60, in clause 177, page 118, line 12, at end insert—

“(2A) Subsections (1) to (6) of section 156 (inclusion of enhanced consumer measures in undertakings) apply to an undertaking under this section as they apply to an undertaking under section 155(2).”

This amendment ensures that requirements imposed by undertakings given under clause 177 may include the taking of enhanced consumer measures (as defined by clause 213).

[The Chair]

With this it will be convenient to discuss the following:

Clauses 177 to 180 stand part.

Government amendment 61.

Clauses 181 and 182 stand part.

[Kevin Hollinrake]

Government amendments 60 and 61, and clauses 177 to 182, govern the acceptance and enforcement of undertakings by the CMA under its direct enforcement regime. Clause 177 provides a framework for the CMA to accept an undertaking as an alternative to giving a final infringement notice or online interface notice. The CMA may not accept undertakings unless they include provisions that effectively stop the conduct of concern. The more co-operative nature of the undertakings procedure can lead to faster resolution of consumer protection concerns and shorten the enforcement process.

Government amendment 60 adds a provision to clause 177 empowering the CMA to include enhanced consumer measures—or ECMs—in undertakings that it accepts under its direct enforcement powers. The power to add ECMs to undertakings is available to the CMA, and other enforcers in the court-based regime, under clauses 155(3) and 156 of the Bill. The inclusion of ECMs in undertakings has been a valuable part of the toolkit available under the court-based regime. The amendment makes it expressly clear that the power already available in the court-based regime is also available to the CMA under its direct enforcement powers under chapter 4 of part 3.

Clause 178 prevents the CMA, once it accepts an undertaking under clause 177, from giving a final infringement notice or an online interface notice to the same enforcement subject in relation to the same matter. The CMA can still give those notices if they relate to matters or persons not addressed in the undertaking, if circumstances have materially changed since the undertaking was accepted, or if the CMA suspects the undertaking has been breached or was based on false or misleading information.

Clause 179 sets out the process that the CMA must follow to make a material variation or to release a person from an undertaking once it has been accepted. The clause is important for procedural fairness, and ensures that the CMA cannot significantly modify or release persons from undertakings without giving notice to the other party and considering their views. Clause 180 allows the CMA to start a process to enforce compliance if it has reasonable grounds to believe that a person has breached at least one term of an undertaking. As with the majority of the CMA’s direct enforcement powers under this part, any assertion or sanctions for wrongdoing must be preceded by a provisional notice. That includes, for example, proposed directions and proposed penalties, and an invitation to make representations.

--- Later in debate ---

[Neil Coyle]

Within clause 181 there is the option for someone who is potentially identified as selling rogue or dangerous products to use a reasonable excuse. Can the Minister better define what a reasonable excuse might be? Companies and individuals could choose to prolong the timeframe involved in order to sell more goods that are hooky while the process is followed.

[Kevin Hollinrake]

As I said earlier, there are measures to ensure that any representations are given earnestly. A reasonable excuse might be that the trader was not aware of some of the difficulties surrounding the product. There may be various circumstances. When implementing and enforcing legislation, we always try to ensure that the CMA can apply discretion in different circumstances where an honest mistake has occurred.

[Neil Coyle]

To be clear, I am not looking for a list of what companies or individuals might use as an excuse for selling dangerous goods; I wondered whether the Minister would set out the timeframe, as the clause, and associated clauses, are not clear about how long companies and individuals get to provide information or remove dangerous products. What is there to prevent someone from saying, for example, “We have this product on our online marketplace, but it is manufactured in another country. We have been trying to contact the manufacturer, and it has taken some time to identify the specific individual.”? In that time, of course, the individual could have sold more counterfeit and dangerous goods, or have changed their email and other addresses in order to avoid the removal of their products online.

[Kevin Hollinrake]

We are now getting into the weeds of this. We have similar views about online marketplaces and their responsibilities. In our view, their responsibility as a distributor requires them to ensure that products are safe before they are placed on the marketplace in the first place. There should be no excuse for a distributor not checking the validity of a standards marking, for example. That is a responsibility that I have discussed with various platforms. We want to get to the position where products are verified before they enter the marketplace, through checks and balances. Rather than working reactively, platforms should work proactively in such instances, but part of that crosses over into work that we are doing in the product safety review, which we have discussed previously and will, I am sure, discuss again.

If the CMA is satisfied that a breach occurred without a reasonable excuse it can impose a penalty. That ensures that there are meaningful consequences to breaching an undertaking, to deter unscrupulous traders. Clause 182 states the types of penalties and the maximum penalty amounts that can be imposed by the CMA through a final breach of undertakings enforcement notice. The penalty imposed can be the higher of a fixed amount up to £150,000 or 5% of total turnover. A daily rate penalty can be up to £15,000 or 5% of the total value of the daily turnover, whichever is higher, accruing over the days in which non-compliance continues. Both a fixed amount and a daily rate penalty may be imposed, but they must not exceed the fixed amounts that I have just referenced. I hope that hon. Members will support Government amendment 60, and clauses 177 to 182 standing part of the Bill.

[Seema Malhotra]

The Opposition support the inclusion of clause 177. We welcome any measures that enable co-operation between enforcement bodies and subjects. I will, however, ask the Minister about timescales. The legislation as it stands contains little in the way of specifying timescales. The Minister might tell me again that this might be relevant for the consultation that the CMA undertakes on the process, but I think this will end up being relevant also for the resources that are in place, the expectations of how quickly all the procedures will be able to operate, and certainly how long it could take during the course of an initial infringement notice and a final infringement notice to reach an undertaking.

Although the inclusion of these provisions is necessary to make the regime a co-operative one, it is important that their inclusion in the Bill does not lead to unnecessary delay by enforcement subjects who might have no genuine intention to reach a commitment with the CMA. I would welcome the Minister explaining how he believes that will operate effectively.

Government amendment 60 ensures that the requirements imposed by undertakings given under clause 177 may include the taking of enhanced consumer measures, as defined by clause 213. We welcome this amendment, which should bring further consistency in the enforcement regime.

Clause 178 is consequential on clause 177. It prevents the CMA, once it has accepted an undertaking under clause 177, from giving a final infringement notice or an online interface notice to the same enforcement subject in relation to the same matter. The explanatory notes explain that the underlying policy intent is that undertakings are an alternative to final infringement or online interface notices and therefore the effect is that a person cannot be subjected to multiple enforcement resolutions of the same matter. Subsection (3) provides the necessary flexibility for the CMA. The CMA can still give a final infringement notice or an online interface notice to the extent that it deals with different matters from the undertaking. We welcome the clause.

Clause 179 sets out the process to be followed when the CMA needs to change or end an undertaking. Where the CMA proposes to accept a material variation of an undertaking or to discharge an undertaking, under this clause the CMA would be required to first give notice to the enforcement subject. If, after considering any representations made in accordance with the notice the CMA decides to take the proposed action, it would have to give further notice to the enforcement subject of that decision. We think this is an important clause.

Under clause 180, the CMA would be able to give a provisional breach of the undertakings enforcement notice where it has reasonable grounds to believe that the enforcement subject has failed to comply with one or more of the terms of the undertaking. It also sets out what the provisional breach of an enforcement notice must include. We welcome this clause as an important provision. It is important for the CMA to be clear on its intentions, for the enforcement subject to have no means of saying it was a misunderstanding, and for transparency for consumers.

Clause 181 introduces provisions enabling the CMA to issue a final breach of undertakings enforcement notice in circumstances where the deadline for the enforcement subject to make representations to the CMA in accordance with the first notice has expired, and if, after considering representations, the CMA is satisfied that the enforcement subject has committed an infringement. The clause also lists what must be included in the enforcement notice.

Subsection (4) lays out the threshold for a monetary penalty. It states that the penalty

“may be imposed only if the CMA is satisfied that the failure in question is without reasonable excuse.”

Like my hon. Friend the Member for Bermondsey and Old Southwark, I want the Minister to expand on the word “reasonable”. Will further definition be required? Does he think there will be some case law or further guidance? This is an important matter, because it can lead to questions about whether the CMA’s interpretation of “reasonable” is reasonable. We do not want to go down that route; we want a clear regime that provides less wriggle room for enforcement subjects that have no intention of complying and will use any excuse not to do so. I hope the Minister will look at that further and will give the House confidence that the apparent vagueness of the term will not enable companies that are in breach of their undertaking to escape the monetary penalties that, under the regime, they ought to pay.

Government amendment 61 requires that the information contained in a final breach of undertakings enforcement notice includes information about rights of appeal. We welcome it as a common-sense addition to what must be included in the final breach notice.

Clause 182 sets out the maximum monetary penalty that can be imposed for a breach of undertakings notice under clause 181. It amounts to a fixed amount of £150,000 or, if higher, 5% of the total value of the enforcement subject’s turnover. In the case of a daily rate, it is £15,000 or, if higher, 5% of the total value of the daily turnover of the enforcement subject. We have debated that previously. I assume that that amount relates to this being an enforcement penalty. Will the CMA continue to be the only body that has such fining powers? Will other enforcers, such as trading standards, be able to pursue penalties only through other routes? I would appreciate clarification from the Minister on that.

[Kevin Hollinrake]

The Opposition make a reasonable point about the reasonable excuse. We have left the threshold pretty broad to reflect the range of situations that could prevent compliance. We feel that a closed list on the face of the Bill would bind the CMA’s hands and make the measure less effective. As hon. Members know, the Bill requires the CMA, in the guidance on exercising its direct enforcement functions that it produces under clause 205, to provide information about the factors it takes into account in determining whether a reasonable excuse exists, and that will include examples.

The hon. Lady asked how soon after a provisional notice the CMA will issue a final breach of undertakings enforcement notice. She pre-empted my response to that: it will, again, be subject to consultation. Of course, it is at the discretion of the CMA. The CMA will set out its approach to determining the period within which representations have to be made in forthcoming guidance, preceded by the public consultation.

[Seema Malhotra]

I will take what the Minister said on reasonableness, and we will have a look at it. We may return to this matter, in order to ensure that there is not a gap between what an enforcement subject could argue and what the CMA intends, but I thank him for his response.

[Kevin Hollinrake]

It is perfectly reasonable that we have that debate, but we will do so we when we discuss clause 205. It is right that the Opposition challenge us and the CMA to ensure that the guidance is clear, and covers all bases.

Amendment 60 agreed to.

Clause 177, as amended, ordered to stand part of the Bill.

Clauses 178 to 180 ordered to stand part of the Bill.

Clause 181

Final breach of undertakings enforcement notice

Amendment made: 61, in clause 181, page 121, line 28, at end insert—

“(e) state that the respondent has a right to appeal against the notice and the main details of that right (so far as not stated in accordance with paragraph (d)).”—(Kevin Hollinrake.)

This amendment requires that the information contained in a final breach of undertakings enforcement notice includes information about rights of appeal.

Clause 181, as amended, ordered to stand part of the Bill.

Clause 182 ordered to stand part of the Bill.

Clause 183

Provisional breach of directions enforcement notice

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss that clauses 184 to 188 stand part.

[Kevin Hollinrake]

Clauses 183 to 188 principally deal with the enforcement of directions imposed by the CMA in its final infringement notices, online interface notices, and final breach of undertakings enforcement notices. Clause 183 empowers the CMA to enforce compliance with enforcement directions by giving a provisional breach of directions enforcement notice. That allows the enforcement subject to know the case against them and to make representations.

Clause 184 allows the CMA to give a final breach of directions enforcement notice, if it is satisfied that a direction has been fully or partially breached without a reasonable excuse. The notice must follow a provisional breach of directions enforcement notice and can be given only after the period to make representations has expired and the CMA has considered any representations received. Given the seriousness of the situation and the late stage in the process of enforcing compliance with consumer protection law, the Bill sets out that the CMA will impose a monetary penalty each time it gives a final notice under the clause.

Clause 185 provides for the types of penalties and the maximum penalty amounts that can be imposed by the CMA through a final breach of directions enforcement notice. The total penalty amount can be a fixed amount up to £150,000 or 5% of total turnover, whichever is higher. It can also be a daily rate penalty up to £15,000 or 5% of the total value of the daily turnover, whichever is higher, and accruing over the days while non-compliance continues. It can also be a combination of both, but that must not exceed the maximum penalty amounts in both separate cases.

Clause 186 gives the CMA an alternative means of enforcing compliance with directions given in final infringement notices, online interface notices and final breach of undertakings enforcement notices by enabling applications to court for an order to require compliance. It also provides a backstop power for the CMA to apply for a court order where it considers a person has failed to comply with a direction given in a final breach of directions enforcement notice.

Clause 187 gives the CMA the power to require evidence from the enforcement subject to substantiate factual claims made as part of its commercial practices under investigation. This applies where the CMA gives a provisional notice concerning a suspected breach of the unfair trading prohibitions in chapter 1 of part 4 of the Bill. By placing the burden of proving the accuracy of claims on the trader, the clause is crucial in stopping unscrupulous traders from spreading wild promises or getting the CMA bogged down in disproving claims that should be backed up by evidence.

Clause 188 sets out the process that the CMA must follow for proposing to materially vary or revoke any directions. The clause gives flexibility to the CMA to direct compliance while requiring it to provide a sufficient notice period and clear information to guarantee fairness to the person involved.

[Seema Malhotra]

Clause 183, in conjunction with clause 184, sets out the CMA’s powers to enforce compliance with enforcement directions. It introduces provisions enabling the CMA to issue a provisional breach of directions enforcement notice where it has reasonable grounds to believe that the enforcement subject has without reasonable excuse failed to comply with the direction. We support the clause.

Under clause 184, the CMA would be able issue a final breach of directions enforcement notice requiring the payment of a monetary penalty upon completion of the process laid out in the clause. We support this clause. Clause 185 is consequential on clause 184 and sets out the maximum monetary penalty that the CMA may impose for a breach under clause 184. Again, we support the clause.

Clause 186 provides the CMA with the power to apply to an appropriate court when a person or company has failed to comply with a direction given under clause 184. Under the clause, the CMA would be able to apply to the court for an enforcement order, an interim enforcement order, an online interface order or an interim online interface order. That would enable the court to act in respect of any practice or conduct that would amount to a “relevant infringement” by making a consumer protection order in addition to or instead of making an order in respect of the breach of directions. We welcome this clause, as it provides a necessary backstop for the CMA to enforce its judgments and penalties.

Clause 187 would enable the CMA to require evidence from traders substantiating the factual claims used in their commercial practices with consumers, which are at issue in a provisional notice involving alleged contravention of the new consumer protection regime. Where the CMA has issued a provisional notice to an enforcement subject and the enforcement subject makes representations to the CMA in response to that notice, the CMA may require the enforcement subject to provide evidence as to the accuracy of any claim made. For the reasons that we debated earlier, we welcome this clause and this power as they will enable the CMA to carry out its functions more effectively on behalf of consumers.

Clause 188 introduces provisions enabling the CMA to make a material variation of, or to revoke, directions that it has given under other clauses as specified. We support the inclusion of clause 188 in the Bill. I hope that what the clause provides for will be able to be done at speed and that we do not see any delays in the use of these powers where needed.

Question put and agreed to.

Clause 183 accordingly ordered to stand part of the Bill.

Clauses 184 to 188 ordered to stand part of the Bill.

Clause 189

Provisional false information enforcement notice

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss clause 190 stand part.

[Kevin Hollinrake]

I notice that England just bowled Australia out, which is very good news.

[The Chair]

Let us stick to the important information.

[Kevin Hollinrake]

Of course—sorry, Dame Maria.

Clauses 189 and 190 empower the CMA to give a provisional false information enforcement notice, followed by a final notice imposing a monetary penalty of up to £30,000 or, if higher, 1% of total turnover. They allow the CMA to enforce against, and penalise, the provision of materially false or misleading information to the CMA without reasonable excuse.

[Seema Malhotra]

Clause 189 introduces provisions granting the CMA a discretionary power to issue a provisional false information enforcement notice if it has reasonable grounds to believe that a person has provided to the CMA materially false or misleading information. It also lists what would be included in this enforcement notice. It would obviously be a really serious matter if false or misleading information was provided to the CMA. We therefore support this clause.

Clause 190 enables the CMA to issue a final false information enforcement notice. This clause is consequent on clause 189 and we therefore welcome its inclusion in the Bill. Clause 190(4) sets out the maximum monetary penalty for a false information infringement. It is important that there is a sufficient deterrent and also the ability for significant enforcement where it is found that false information has been provided to the CMA and that has been proven.

Question put and agreed to.

Clause 189 accordingly ordered to stand part of the Bill.

Clause 190 ordered to stand part of the Bill.

Clause 191

Statement of policy in relation to monetary penalties

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss clauses 192 to 199 stand part.

[Kevin Hollinrake]

Clauses 191 to 194 cover appeal rights and other requirements for the CMA that will ensure that it exercises its direct enforcement powers proportionately and transparently. I will also discuss clauses 195 to 199, which make supplementary provision for the monetary penalties imposable by the CMA and the civil courts under part 3 of the Bill.

Clause 191 requires the CMA to produce and publish a statement of policy relating to its exercise of powers to impose monetary penalties. The statement of policy must cover the considerations relevant to whether to impose a penalty and the nature and amount of the penalty. When preparing or revising that statement, the CMA must consult the Secretary of State and other relevant stakeholders. The statement, or its revised form, cannot be published without the Secretary of State’s approval. Finally, the CMA will be required to have regard to the most recent published statement approved by the Secretary of State when deciding whether to impose penalties under this chapter, as well as deciding the penalty’s nature and amount.

--- Later in debate ---

[Kevin Hollinrake]

I fear that I may have missed one or two of the hon. Lady’s points, but I think I got most of them. Guidance under clause 191 will be publicly consulted on, giving those potentially affected by it an opportunity to comment directly. That consultation will happen post Royal Assent, and when finalised it will be published on the CMA’s website. On the Secretary of State requesting reports, clearly we do not know what we do not know. The Secretary of State has flexibility on when they might consider that a report is required under clause 193. The CMA already publishes regular impact assessments and other public reports, including its annual report to Parliament, and scrutiny will continue by traditional means, such as through Select Committees.

[Seema Malhotra]

The Minister will know that so much has gone to the Business and Trade Committee that there will be great concern about how frequently, and in what level of detail, it will be able to scrutinise all the work done under the regime. It will be a pretty tall order to do that job. I have a question for the Minister that I think is important. We have heard in previous debates about the frequency of reporting and what would be in the CMA’s report for all the new regimes and units that it will undertake. We obviously do not want to overload the CMA with unnecessary reporting, but there should be an expectation about what might be in the annual report, and there should be clarity on what the Secretary of State might expect in a report on the new regime.

Surely Ministers will want to have confidence in what is happening under the regime, and to have some data reported to them if the CMA is collecting it. Will the Secretary of State expect a, perhaps annual, report on the new regime, perhaps for a few years, to know whether it is operating effectively? Secondly, will clause 193(2) give the Secretary of State the ability to request additional or more detailed reports if there are concerns about aspects of the regime’s implementation? I understand the power to ask for more reports, but not having any report requested through the course of the implementation of the operations strikes me as a serious gap, particularly—

[The Chair]

Order. Shall we get the Minister to reply?

[Kevin Hollinrake]

I thought that perhaps I had to intervene on the hon. Lady.

[Seema Malhotra]

Particularly in relation to the early implementation of the regime—I was on my last sentence.

[Kevin Hollinrake]

That was a very comprehensive intervention. I think that we are saying the same thing. Of course the CMA will continue to report annually, and of course we would expect it to report on the new powers that it has been granted through the Bill. In addition to that, the Bill gives the Secretary of State the power to request additional reports as he or she sees fit. We think that that achieves an appropriate balance. We do not think that it is right to get in the way of the CMA doing its job by obliging it to report on a more frequent basis. Of course, as part of my role, or my successor’s role if I move from this position back to the Back Benches or wherever, we regularly have meetings with the CMA to discuss its activities and where it is using its powers. Indeed, we write an annual letter to the CMA, which sets out where we expect its focus to lie.

The hon. Lady asked a fair question about the appeals timelines. They will not be consulted on, but they will be subject to the civil procedure rules, and relevant rules in other UK jurisdictions. The civil procedure rules will be amended as part of the implementation of the provisions through the Civil Procedure Rule Committee in the usual way. Of course, we will want appeals to take place as expeditiously as possible, provided that they are fair.

Question put and agreed to.

Clause 191 accordingly ordered to stand part of the Bill.

Clauses 192 to 199 ordered to stand part of the Bill.

Clause 200

Investigatory powers of enforcers

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss that schedule 15 be the Fifteenth schedule to the Bill.

[Kevin Hollinrake]

Clause 200 introduces schedule 15 to the Bill, which contains amendments to schedule 5 to the Consumer Rights Act 2015, relating to the investigatory powers of consumer protection enforcers. Schedule 15 amends provisions in schedule 5 to the Consumer Rights Act to ensure the enforceability of statutory information notices given to a person under paragraph 14 of schedule 5.

The amendments made through schedule 15 come in two parts. First, we are providing the courts with a new power to impose a civil monetary penalty where the court finds there has been non-compliance, without reasonable excuse, with an information notice given by any consumer enforcer. Secondly, we are providing a new direct enforcement power for the CMA to decide whether an enforcement notice it has issued has been complied with and, if not, to impose a civil monetary penalty for any non-compliance without reasonable excuse.

The schedule also sets out the extraterritorial reach of enforcers’ power to request information by notice. We are legislating to ensure that enforcers can obtain all the necessary information from parties in and outside the UK to inform their analysis and ascertain breaches of the law, subject to certain conditions. The schedule also ensures that a warrant may be granted in relation to material that may be remotely stored in the cloud but still be accessible from the premises. I hope hon. Members agree that the schedule completes the largely successful modernisation of the investigatory powers of consumer law enforcers made by the Consumer Rights Act in 2015.

[Seema Malhotra]

Clause 200 introduces schedule 15 to the Bill, which amends schedule 5 of the Consumer Rights Act 2015, which in turn details the information-gathering powers available to consumer enforcers for the purposes of civil enforcement of consumer protection law. We support the clause, but I will make a few more remarks on schedule 15.

Schedule 15 makes limited amendments to schedule 5 of the Consumer Rights Act 2015 so that an enforcement notice would have to specify the circumstances in which non-compliance with the enforcement notice could result in a financial penalty. The amendments would apply where an enforcer has given an information notice to a person and the enforcer considers that the respondent has, without reasonable excuse, failed to comply with the notice. In such circumstances, the enforcer would be able to make an application to the court.

The Opposition welcome the schedule, but there are questions related to those we have asked in relation to other clauses, specifically around the absence in the Bill of the updating of trading standards authorities’ powers for the digital economy and the 21st century. That is important. We have raised before the ability for trading standards to obtain information online and so on. Can the Minister have a look at that in more detail? In the course of further clauses next week, we may come on to some other amendments as well, but I would be grateful for the Minister’s response.

[Kevin Hollinrake]

It is our contention that trading standards do have the powers that they need to access information. There are concerns; I have concerns—I want to ensure that trading standards have sufficient powers in terms of take-down powers. That is something that we are looking at and, as the hon. Lady says, is probably something that we will discuss as the Bill proceeds.

Question put and agreed to.

Clause 200 accordingly ordered to stand part of the Bill.

Schedule 15 agreed to.

Clause 201 ordered to stand part of the Bill.

Clause 202

Notices under this Part

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Clauses 203 to 207 stand part.

Government amendments 62 to 64.

That schedule 16 be the Sixteenth schedule to the Bill.

Clause 208 stand part.

Government amendment 65.

That schedule 17 be the Seventeenth schedule to the Bill.

Clauses 209 to 215 stand part.

[Kevin Hollinrake]

Clause 202 provides for the practicalities of giving notices. It sets out the permissible means for the CMA and other enforcers to give a notice: by delivering it to the person; by leaving it at the person’s address; by post; or by email.

Clause 203 empowers the CMA to make rules about procedural and other matters in connection with its direct enforcement functions. This clause expressly permits the CMA to delegate decision making for its direct enforcement functions to its board, panel and/or staff. The clause provides the CMA with a vital tool with which it can establish the technical details of a robust and predictable direct enforcement process that will achieve the stronger enforcement that we need without compromising fair process or certainty for traders.

Clause 204 requires that the CMA’s rules must be publicly consulted on, and given the approval of the Secretary of State through regulations, before coming into force. Public consultation will ensure that the views of all stakeholders, including consumer groups and traders, are adequately considered as rules are prepared. The Secretary of State also has the ongoing power to vary or revoke rules, which will ensure that the wider needs of the economy continue to be reflected in the operation of the direct enforcement regime. This clause ensures that the CMA’s discretion to make technical rules governing its direct enforcement functions is exercised in a balanced way that serves the needs of the economy.

Clause 205 requires the CMA to prepare and publish guidance about its general approach to the carrying out of its direct enforcement functions, and to keep under review the guidance, which it may update from time to time. The CMA is required to publicly consult, and obtain the Secretary of State’s approval, before issuing its first guidance.

Clause 206 provides that, for the purposes of the law of defamation, absolute privilege applies to anything done by the CMA in the exercise of its direct enforcement functions. There are strong precedents for that approach: judicial or tribunal proceedings are protected from defamation. There is also protection from defamation for the CMA’s direct enforcement regime for competition law and its merger and market investigation powers. Those suspected of infringing are not unfairly prejudiced by this clause, which merely reflects the long-standing principle that the exercise of regulatory and judicial functions should not give rise to defamation claims.

Clause 207 formally introduces schedule 16 and its contents within the body of the Bill. Schedule 16 makes numerous minor and consequential amendments to other legislation. This schedule is important to provide for the smooth functioning of the enforcement regimes and to ensure legislative consistency.

Government amendments 62 and 63 add a reference to chapters 3 and 4 of part 3 of the Bill to schedule 14 to the Enterprise Act 2002. These amendments will ensure legislative consistency.

Government amendment 64 is a consequential amendment. It includes part 4 of the Bill in the list of enactments in respect of which investigatory powers under schedule 5 to the Consumer Rights Act 2015 are conferred.

Clause 208 introduces schedule 17, which makes transitional and saving provision in relation to the court-based and CMA direct enforcement regimes. Schedule 17 provides for the general rule that the new law will apply to conduct that takes place on or after the commencement date of chapters 3 and 4 of part 3 of the Bill. Conversely, as a general rule, the “old law”—that is, part 8 of the Enterprise Act 2002 and related provisions—will continue to apply to conduct that takes place before the commencement date of chapters 3 and 4 in part 3 of the Bill.

Schedule 17 also makes specific rules for continuing conduct that is essentially an act or omission that starts before the new law has commenced but is repeated or continues after the new law’s commencement. In such a scenario, as well as applying to the post-commencement conduct, the new law will apply to the pre-commencement conduct for the purpose of enabling enforcement action under part 3 of the Bill.

However, no requirements or penalties can be imposed on a person for the pre-commencement parts of the continuing conduct, unless such a requirement is already imposable under part 8 of the Enterprise Act 2002. Similarly, the court and the CMA will not be able to use their new powers to impose penalties for breaches of any undertakings given under part 8 of the 2002 Act.

--- Later in debate ---

[Seema Malhotra]

Clause 202 sets out the process for giving notices under part 3 to persons within and outside of the UK, including business entities registered or operating outside the UK. It defines acceptable means of service and the meaning of a recipient’s proper address. We welcome the clause.

Clause 203 allows the CMA to make rules, subject to approval by the Secretary of State through secondary legislation, to set out the procedural administrative details of the CMA’s enforcement regime. The rules supplement the framework provided in chapter 4 of part 3. We welcome the clause and the clarification, and also the important points made in the explanatory notes, including the point that the rules will cover “arrangements for complaints’ handling”. The clause is a common-sense provision.

Clause 204 sets out the process for the exercise of the rule-making power under clause 203. We welcome the fact that the CMA will be required to consult with stakeholders during the preparation of the rules, and we discussed that in relation to earlier clauses. The CMA will also be required to obtain the Secretary of State’s approval before bringing any rule into operation or varying a rule. We welcome that measure too.

Under 204(5), the Secretary of State will be empowered to vary or revoke rules or to direct the CMA to vary or revoke rules, and regulations made under the clause will be subject to the negative parliamentary procedure. Although we welcome the clause, will the Minister clarify why that has been left to the negative procedure? The inclusion of affirmative and negative procedures in the Bill seems to be slightly random, so I would be grateful for that clarification.

Under clause 205, the CMA will be required to prepare and publish guidance about its general approach to carrying out its direct enforcement functions. The guidance will provide more detailed information to traders and other stakeholders about how the direct enforcement regime would work in practice. The Opposition welcome the clause because it introduces more transparency and clarity into the regime, but will the Minister tell the Committee what timeframe is considered appropriate for the publication of the guidance? He said that he saw publication happening after Royal Assent, but does he expect it to happen within a certain period of time? I am sure that he wants the legislation to be implemented as soon as possible, as do I.

Clause 206 would protect the CMA against actions for defamation as a result of the exercise of functions under part 3. We welcome the clause. It is important that the CMA is protected in carrying out its job as the co-ordinating enforcement authority.

Clause 207 introduces schedule 16, which contains minor and consequential amendment in relation to part 3. We support schedule 16 and do not consider the consequential amendments contentious. We also support Government amendments 62 and 63.

Clause 208 introduces schedule 17, which provides transitional and saving provisions in connection with part 3. Those provisions concern the operation of the new law introduced by chapter 3 and CMA direct enforcement powers under chapter 4 of part 3. They also relate to the operation of the old law, which constitutes part 8 of the Enterprise Act 2002. It lays out how the new law would apply to conduct that takes place on or after the commencement date of the Bill, and to conduct of concern that a person is likely to engage in, where such conduct is likely to take place on or after the commencement date. The old law would continue to apply to conduct that takes place before the commencement date, as well as to various other forms of conduct. We welcome this technical schedule and clarification, and we support amendment 65.

Clause 209 introduces definitions for references to supply of goods or digital content as used across part 3 and we support the clause. Clause 210 defines how references to the supply of services should be construed across part 3 and we support the clause. Clause 211 defines what is meant by an accessory to the commercial practice of a body corporate. Will the Minister clarify whether he is confident the clause adequately captures anyone who may act as an accessory and how the definition was brought together? Was it through consultation? That will provide full clarity on what constitutes an accessory.

Clause 212 defines what constitutes having a special relationship with a body corporate, covering two scenarios outlined by the Minister. As such, we support its inclusion in the Bill. Clause 213 defines three types of enhanced consumer measures, referred to as redress, compliance and choice measures. I am grateful to the Minister for outlining some detail on that and the definitions, so that those set out in subsections (2) to (4) are straightforward and clear, and that that also applies to their interpretation by consumers. We thus welcome the clause’s inclusion in the Bill.

Clause 214 defines other terms for the purposes of this part, including the definitions of “businesses”, “goods”, “enforcement orders”, “subsidiary” and “supply”, which are important, and we support their inclusion. Further, clause 215 sets out an index of defined expressions and we welcome and support it.

[Kevin Hollinrake]

I will make a couple of points, the first of which is on the negative procedure. On regulations, there is a combination in clause 204 of public consultation followed by review by the Secretary of State, which will allow for a significant level of scrutiny. On that basis, we feel the negative procedure is justified and appropriate.

On the guidance, the CMA must undertake several actions, including a public consultation on the practices. This may take some time, and we expect that the guidance may be ready by autumn 2024, but that will depend upon a number of factors. We clearly want it in place as quickly as possible, but we must ensure that it is fit for purpose.

The definition of “accessory” in clause 211 is consistent with, and restates with minor clarifications, the current definition in part 8 of the Enterprise Act 2002.

Question put and agreed to.

Clause 202 accordingly ordered to stand part of the Bill.

Clauses 203 to 207 ordered to stand part of the Bill.

Schedule 16

Part 3: minor and consequential amendments

Amendments made: 62, in schedule 16, page 329, line 17, leave out sub-paragraph (b).

See explanatory statement for Amendment 63.

Amendment 63, in schedule 16, page 329, line 23, at end insert—

“5A In Schedule 14 (provisions about disclosure of information) at the appropriate place insert—

‘Chapters 3 and 4 of Part 3 of the Digital Markets, Competition and Consumers Act 2023.’”.

This amendment, which is made for drafting consistency, inserts a reference to Chapters 3 and 4 of Part 3 of the Bill into Schedule 14 to the Enterprise Act 2002 instead of achieving the same effect by adding that reference into section 238(1) of that Act.

Amendment 64, in schedule 16, page 337, line 2, at end insert—

“Part 4 of the Digital Markets, Competition and Consumers Act 2023.”.—(Kevin Hollinrake.)

This amendment adds Part 4 of the Bill to the list of enactments in the new paragraph 20A of Schedule 5 to the Consumer Rights Act 2015 (inserted by paragraph 8(10) of Schedule 16), with the effect that authorised enforcers will be able to exercise the investigatory powers conferred by Part 4 of Schedule 5 to CRA 2015 in connection with infringements of Part 4 of the Bill.

Schedule 16, as amended, agreed to.

Clause 208 ordered to stand part of the Bill.

Schedule 17

Part 3: transitional and saving provisions in relation to Part 3

Amendment made: 65, in schedule 17, page 338, line 1, leave out from “means” to end of line 11 and insert “—

(a) Part 8 of EA 2002, as that Part had effect immediately before the commencement date, and

(b) any provisions of law (including in particular Schedule 5 to CRA 2015) relating to Part 8 of EA 2002, as those provisions had effect immediately before the commencement date.”.—(Kevin Hollinrake.)

This amendment clarifies that the definition of “the old law” for the purposes of the transitional provisions in Schedule 17 to the Bill includes Schedule 5 to the Consumer Rights Act 2015 (which confers investigatory powers on enforcers).

Schedule 17, as amended, agreed to.

Clauses 209 to 215 ordered to stand part of the Bill.

Ordered,

That the Order of the Committee of 13 June be varied by the omission from paragraph 1(f) of “and 2.00 pm”.—(Mike Wood.)

Ordered, That further consideration be now adjourned. —(Mike Wood.)

Digital Markets, Competition and Consumers Bill (Twelfth sitting)

Kevin Hollinrake Excerpts

Committee stage
Tuesday 4th July 2023 Public Bill Committees

[The Chair]

Okay, we will take it later. That is fine.

Clause 216 ordered to stand part of the Bill.

Clause 217

Prohibition of unfair commercial practices

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move amendment 71, in clause 217, page 146, line 5, leave out second “trader” and insert “person”.

This amendment ensures that the definition of “commercial practice” for the purposes of Chapter 1 of Part 4 of the Bill includes an act or omission by a trader relating to the promotion or supply of a consumer’s product to another consumer.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Clauses 218 to 222 stand part.

[Kevin Hollinrake]

It is a pleasure to serve with you in the Chair, Mr McCabe.

Clause 217 sets out the unfair commercial practices that are prohibited. Those include misleading actions, misleading omissions, aggressive practices, contravention of the requirements of professional diligence, the omission of material information from an invitation to purchase, and the practices listed in schedule 18.

The clause also defines important terms for the purpose of this chapter, including “commercial practice”, “consumer” and “trader”. Commercial practice is defined as any act or omission by a trader relating to the promotion or supply of any trader’s product to a consumer or of a consumer’s product to another person. As such, a business providing a platform on which products are promoted or supplied may fall within the scope of this chapter.

Government amendment 71 is a technical amendment to clause 217. It ensures that the Bill reflects acts or omissions by traders that are currently covered by the Consumer Protection from Unfair Trading Regulations 2008, or the CPRs for short. It ensures that traders that enable private individuals to sell products to each other are within the scope of this chapter, reflecting the scope of current law.

Clause 218 defines and prohibits commercial practices that are misleading actions and restates the equivalent provisions from the CPRs. It protects consumers from traders who deceive through the provision of false and misleading information.

Clause 219 defines and prohibits commercial practices that are misleading omissions. It requires traders to provide consumers with the information they need in an up front, clear and timely manner to make an informed transactional decision.

Clause 220 defines and prohibits commercial practices that are aggressive and restates the equivalent provisions from the CPRs.

Clause 221 defines and prohibits commercial practices that contravene the requirements of professional diligence and restates the equivalent provisions from the CPRs. It requires that traders do not engage in practices that fall below the standard of skill and care they may be reasonably expected to have provided.

Clause 222 lists what information must be provided to consumers when a commercial practice is an invitation to purchase. The information is deemed material.

I hope hon. Members will support Government amendment 71, and I propose that clauses 217 to 222 stand part of the Bill.

[The Chair]

I call Neil Coyle.

--- Later in debate ---

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

It is a pleasure to serve under your chairship, Mr McCabe.

Before we turn to the group led by amendment 118, I will make some brief remarks on clause 217 stand part and speak to Government amendment 71. Clause 217 sets out a general prohibition on unfair commercial practices. As the Minister has outlined, it defines commercial practice as

“any act or omission by a trader relating to the promotion or supply of—

the trader’s product to a consumer

another trader’s product to a consumer, or,

a consumer’s product to the trader or another trader”.

Subsection (4) introduces provisions outlining what constitutes an unfair commercial practice, which may include a misleading action, a misleading omission or an aggressive practice, and those are dealt with in the following clauses. In addition, the subsection states that a commercial practice is unfair if it is listed in schedule 18, which we will debate in detail shortly.

We welcome the clause as a necessary provision in prohibiting unfair commercial practice, and I reiterate that we look forward to working with the Minister, including in today’s debate. If there are ways in which we can improve the Bill, we are very happy to work collaboratively so that it is as robust as possible. The amendments tabled by my hon. Friend the Member for Bermondsey and Old Southwark in the light of our discussions with stakeholders will play an important part in those deliberations.

Amendment 71 ensures that the definition of commercial practice for the purposes of chapter 1 of part 4 of the Bill includes an act or omission by a trader relating to the promotion or supply of a consumer’s product to another consumer. We welcome this amendment, which importantly ensures that the actions of rogue traders still fall under the definition of commercial practice and supports the integrity of the regime.

Clause 218 introduces provisions defining commercial practices that are misleading actions. We welcome the clause, which provides a necessary definition of a misleading action, and support its inclusion in the Bill.

Clause 219 introduces a definition of commercial practices that count as misleading omissions. Under the clause, a misleading omission would constitute the omission of material information and information that the trader is required by another enactment to provide. As with clause 218, it is a common-sense, straightforward clause and we support it.

Clause 220 sets out how an aggressive practice could constitute harassment, coercion or undue influence. That can involve behaviour before a contract or purchase is made, but it can also occur after a transaction has taken place. We support the definition’s inclusion in the Bill, but I ask for clarification. I draw the Minister’s attention to subsection (3)(a), where the Bill states that

“‘coercion’ includes the use or threat of physical force”.

Does the Minister intend that coercion includes many other threats, be they financial or personal blackmail, to suggest just a couple? Is there a wider definition or guidance on interpretation that would be helpful in providing clarification for the consumer as well as for those making a decision under the clause? I would welcome clarity from the Minister on that.

Clause 221 defines commercial practices that contravene the requirements of professional diligence. That includes practices that fall short of the standard of skill and care that a trader may reasonably be expected to exercise towards consumers and that is commensurate in the trader’s field with honest market practice or the general principle of good faith. That is important for rooting out rogue traders who may not be qualified for their profession, whether they are builders, electricians or other experts. We welcome the definition.

Clause 222 sets out where a commercial practice would be considered to have omitted material information. Subsection (2) lists what would constitute an omission, including the main characteristics of a product, the business address and the delivery price, among other things. Although we support the list of omissions and welcome its inclusion in the Bill, elements of the clause could go further to provide more protection to consumers, as reflected in amendment 127, tabled by Opposition Front Benchers, and amendment 126, tabled by my hon. Friend the Member for Bermondsey and Old Southwark, which we will come to.

[Kevin Hollinrake]

I think there is just one key point that the hon. Lady asked me to address, which is about other types of coercion. Looking at the definition with regard to practices, clause 220 talks about “coercion or undue influence”. Under subsection (3),

“‘undue influence’ means exploiting a position of power in relation to consumers so as to apply pressure in any way”.

I think that covers the definition, as she requested.

Amendment 71 agreed to.

[Neil Coyle]

I beg to move amendment 118, in clause 217, page 146, line 11, at end insert—

“(c) a person marketing P’s goods for sale online.”

This amendment makes a person marketing goods online a trader, for the purposes of this Act.

--- Later in debate ---

I hope that we will hear something more concrete about when the product safety review will be published. The Minister will know that, as long as Ministers delay action on product safety in online marketplaces, and delay assistance to all stakeholders involved in keeping our consumers safe, their work is made harder. They need the strategy, and the direction that it will bring. The amendments, while not expediting the necessary Government action, would nevertheless provide extra safeguards in the meantime against unsafe products being sold on online marketplaces. It is important that the Government respond to the amendments, either today or during the course of the Bill, and particularly to the takedown power, which is very much needed.

[Kevin Hollinrake]

I appreciate the continued spaghetti western analogies. In my case, “Pale Rider” might be a more apt example, as obviously my demographics mean that I am pale, stale and male, but we are keen to ensure that we have a proper shoot-out with the people the hon. Member for Bermondsey and Old Southwark describes. I am totally onside with the vast majority of what he says. He knows we need to make sure we take the right kind of action in this area, and his amendments would add provisions related to product safety to regulate the sale of dangerous and counterfeit goods in online marketplaces. Existing UK product law is clear: all products must be safe, including those sold online. However, we recognise the challenge the growth of online marketplaces has created for how we deliver product safety in a global economy. I gently say to the hon. Gentleman: these are not just UK-based problems: this is a global problem. As he knows, marketplaces operate around the globe and other jurisdictions are also seeking to tackle the issue.

I hosted a roundtable with major online marketplaces in April and was clear that, in addition to their current duties, they must do much more to keep unsafe products off their sites, including removing third-party sellers who supply unsafe goods. That point was mentioned on Second Reading of the Online Sale of Goods (Safety) Bill, as the hon. Gentleman referenced just now. The Office for Product Safety and Standards, which I visited in Teddington, is following up with a programme of test purchases. There I saw at first hand some of the potential products sold online, such as toy magnets that do not comply with UK product standards. My hon. Friend the Member for Stoke-on-Trent Central (Jo Gideon) has done fantastic campaigning in that area on button batteries. There is much we need to do. This is not just a consumer safety problem: it is about creating a fair and level playing field for UK retailers. The hon. Gentleman mentioned Argos and Amazon, but I would add our local high-street electrical stores, which have also been disadvantaged by online marketplaces being able to operate in the way they do.

[Neil Coyle]

I do not remember any western in which a sheriff held a roundtable. In terms of the outcome, what is the pace at which counterfeit or dangerous goods will be removed? That is the concern for consumers. Even if I buy something, discover that it is shoddy and report it through the process in the Bill, there is still a significant gap in time before something is taken off. The takedown power is crucial to prevent further hundreds, thousands or millions of that product being sold or marketed to people when it is known to be dangerous or faulty and could put lives at risk.

[Kevin Hollinrake]

I entirely agree. We do not think the marketplaces are going far enough. It is a key phrase that the likes of Amazon, Wish and so on just see themselves as marketplaces rather than distributors. Our point is that they are distributors. The key thing is making sure that is properly defined in law. The hon. Gentleman is right to point out some of the percentages. That is the work done by the OPSS, defining that between 60% and 80% of the products it sampled were unsafe. That is clearly and completely wrong.

[Neil Coyle]

There is no answer in that as to the timespan.

[Kevin Hollinrake]

I am coming to that.

[Neil Coyle]

The Minister is coming to it, but the takedown power is the crucial bit to do that and it is what the OPSS, which he refers to, says it wants.

[Kevin Hollinrake]

Perhaps if the hon. Gentleman allows me to go through my speech, I might be able to give some answers to his points. We are on exactly the same page on this and we have to get this right. He talks about getting the analysis right and raised a different analogy of where he considers we may have got that wrong in the past. It is important we get this right. From our perspective, the product safety route is the right way to do this. The whole product safety framework will be reformed, including online sales, and that holistic review of product safety, taking existing obligations into account—we believe there are distributor obligations—is the most appropriate vehicle for meeting concerns about unsafe goods sold online.

[Neil Coyle]

The shadow Minister also asked when the product safety review will take place.

[Kevin Hollinrake]

Very shortly. I just answered the shadow Minister; there is no prolonging this issue from my perspective. We are keen to get on with this but want to make sure the review is in the right place and the right shape when it happens. We want it to happen very soon.

The forthcoming consultation will include proposals to ensure that shopping online is as safe as on the high street and that there is a fairer playing field for law-abiding businesses. We anticipate publishing these proposals soon and look forward to continuing engagement with our stakeholders to inform and shape our proposals.

Amendment 124 would give powers to the Competition and Markets Authority and trading standards to require the removal of marketing material for counterfeit and dangerous products online. We believe, however, that extensive enforcement powers are already available. For example, when a trader markets misleading or faulty goods online, enforcers including the CMA and trading standards can apply to the court for an enforcement order to stop and prohibit the marketing and sale of the offending goods under part 3 of the Bill. [Interruption.] If the hon. Gentleman will let me get to the point where I think he wants me to get to, that will be the point made in the letter.

Part 3 of the Bill gives the CMA the power to impose an online interface order against the infringer or a third party. That type of order or notice may require the removal or alteration of online content on a website that gives access to or promotes the offending goods. The hon. Gentleman’s point was about similar powers for other enforcement bodies such as trading standards. As I said to him, however, in a letter that I think he received yesterday, that is something I am keen to explore, and will do so over the summer. I will give him a final chance to intervene, if he wants, and then I will conclude.

[Neil Coyle]

I am grateful to the Minister for giving way and for his reassurance that this will be looked at over the summer. As things stand, the Government are saying—the Minister has just said—that a product could cause a fire and potentially a fatality, but still the process would be to report it through a particular agency and possibly take court action, rather than what the regulators want to do and customers want to see, which is the take-down of the item to prevent any further dangerous incident or potential fatalities. I hope that the Minister gets to a point where that immediate power will be available.

[Kevin Hollinrake]

I totally understand the hon. Gentleman’s point, which is why I will look at it over the summer. It is not provided for in the Bill, but he makes a good point and I am keen to explore the options. We will come back to the House at some point to report what we will do in this space. I therefore very much hope that he will withdraw his amendments.

[Neil Coyle]

With that reassurance of looking at this further over the summer and to improve on where things stand, I will take the Minister at his word. The idea that we can support everything in a product safety review that will start we know not when feels a bit like missing the bus—or missing the stagecoach, to stick with the analogy. The powers need to be in the Bill to ensure that when the product safety review is done, the vehicle is already available to enable dangerous or counterfeit goods to be removed, but given his reassurance, I beg to ask to leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 217, as amended, ordered to stand part of the Bill.

Schedule 18

Commercial practices which are in all circumstances considered unfair

--- Later in debate ---

[Seema Malhotra]

That is fine. I have one line, but it can come later.

Amendment 68 would ban the practice of greenwashing. Making unsubstantiated claims about the sustainability of products and services would be an unfair commercial practice. Amendment 69 is consequential on amendment 68 and would require the Government to define which products and services can be labelled “sustainable”, and requires that the definition complies with international standards.

I support the principle of the amendments tabled and the arguments made. They are along the lines of the discussion that we had in Committee last week when I spoke to the issues around greenwashing, our standards and support for evidence. I asked the Minister what overall strategy he has to ensure that green claims are accurate and evidenced, and I asked that we have a strategy for the prevention of false claims as well as a mechanism for enforcement against them. As has been argued, that issue is on the increase, particularly for younger people.

Research has shown that those under 35 across the world make decisions about products, services and even their employment on how much they trust the information that they see in relation to sustainability and climate responsibility. If we do not tackle that issue, we will see a further increase in people misleadingly marketing products because they know that those issues drive consumer purchases. They have great influence on consumer purchases and decisions.

The Minister might refer to the green claims code introduced by the CMA. Important work has been done, but in the absence of any real leadership or strategy from the Government I want to ask the Minister whether they intend to put the green claims code, or its successor, on a statutory footing. Making sure that we have a robust legislative underpinning and strategy for such issues is increasingly important, because many stakeholders see a gap.

Greenwashing was also mentioned by consumer groups in the Committee’s evidence sessions. I would press the Minister on whether the Government have plans to introduce amendments on the issue, and to strengthen voluntary or other codes relating to green claims and expectations. In an increasingly green economy, consumers are at risk of falling victim to misleading green advertising, and legislation needs to catch up.

[Kevin Hollinrake]

Amendments 68 and 69 would add the practice of greenwashing to the list of banned practices in schedule 18, and would introduce a requirement for the Government to consult on the matter. I thank the hon. Member for Gordon for his amendments, and I absolutely agree that consumers should not be misled. I admire his commitment to recycling, which is admirable. I wondered whether I should touch on that, given the difficulties that the SNP has got into with its deposit return scheme, but—

[Richard Thomson]

I thank the Minister for that sideswipe, but it would be a great deal easier for the Scottish Government to comply with an English-designed scheme if that scheme was actually in existence for us to emulate. Absent our deposit return scheme, we are stuck with the recycling schemes that we have, and I wonder whether the Minister will get to the point.

[Kevin Hollinrake]

I was just referring to the hon. Gentleman’s point. I will briefly say that our perspective is that a nationwide scheme would be best for business.

Misleading consumers about the environmental qualities or impact of goods and services in a way that causes, or would likely cause, consumers to take a different decision is already against the law. Furthermore, under clause 187, when the CMA gives a provisional notice to a person in respect of an infringement of the unfair trading provisions, the CMA can require the respondent to provide evidence to substantiate the claims that they make to consumers. That meets the shadow Minister’s requirement. It is against the law to mislead, and as she says, the CMA’s draft guidance on sustainability agreements between businesses, which aim to ensure that environmental goals are achieved, will give greater clarity on these issues. Those interventions are already significant. The Government’s priority is to ensure that interventions support our environmental goals; we would then observe their impact before taking further steps. I hope the hon. Member will withdraw amendment 68 on that basis.

[Richard Thomson]

I am sorry to disappoint the Minister, but this is an issue of fundamental importance, and if I withdrew the amendment, it would be an opportunity missed. Of course, we could go through any number of proposed amendments to the Bill and say that there is already legislation in place that in some way tackles that issue. Of course it is true that there are measures on this issue, but there is still a proliferation of claims out there that have not been tackled by existing legislation. I know the Minister is a keen advocate for ensuring that markets work as effectively as they can, and for allowing markets to reach conclusions. The amendment is simply a tool that would allow Ministers to act in the interests of consumers. It would be a missed opportunity not to push it to a vote, and not to include it in the Bill.

Question put, That the amendment be made.

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[Seema Malhotra]

I beg to move amendment 115, in schedule 18, page 343, line 2, at end insert—

“32 At any stage of a purchase process, presenting a price for a product which omits obligatory charges or fees (or an estimate thereof) which are payable by the majority of consumers, which are not revealed to the consumer until later in the purchase process.”

This amendment adds the practice of “drip-pricing”, a pricing technique in which traders advertise only part of a product’s price and reveal other obligatory charges later as the customer goes through the buying process, to the list of unfair commercial practices.

Amendment 115 would add the practice of drip pricing to the list of unfair commercial practices. Drip pricing is a pricing technique whereby traders advertise only part of a product’s price and reveal other obligatory charges later as the customer goes through the buying process. For example, an airline may advertise a flight abroad at a certain cost that does not include an obligatory seat charge. That is added only later in the purchasing process, by which point the consumer has already prepared to purchase the product and is less likely to stop the purchase. The argument that this practice should be included in the Bill was well documented during the Committee’s evidence sessions. The consumer group Which? stated:

“We think that drip pricing is another practice that is very harmful. There is a lot of evidence that that is the case, and it should be included on the face of the Bill.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 13, Q16.]

That sentiment was reflected in Committee by Citizens Advice, the National Consumers Federation and Consumer Scotland, all of which argued that schedule 18 could be improved by adding the practice of drip pricing. Which? provided evidence of consumer detriment in its written submission, which states:

“We know that in many online markets people overpay for products and services because only part of an item’s price is initially shown and the total amount to be paid is revealed only at the end of the buying process. For example, multiple hotel booking firms were shown to have failed to have displayed compulsory charges such as taxes, booking or resort fees in the headline price. However, while the use of these practices is common, the CMA has found its enforcement against drip pricing has been inhibited by the absence of an explicit ban.”

In its 2021 paper, “Reforming Competition and Consumer Policy”, the CMA notes:

“Drip pricing causes real detriment to consumers...Advertising of Prices market study concluded that of a series of different price framing practices, drip pricing was clearly the most harmful frame for consumers in terms of purchasing and search errors, and that raised levels of consumer learning did not fully mitigate issues with the practice. Lengthy transaction processes associated with drip pricing can ensure consumers gain a greater sense of ownership of a product and are less likely consider other offers once additional costs are revealed.”

It is clear that the introduction of drip pricing to the list of unfair commercial practices would be supported by consumer groups and the CMA, so I urge the Minister to consider supporting the amendment. I look forward to his response.

[Kevin Hollinrake]

I share the hon. Member’s concerns. That is why we commissioned research earlier this year, which we will publish shortly. It will detail how widespread and harmful the practice is. The Prime Minister has already said that we will gather evidence on what steps the Government should take to tackle drip pricing, so I think we are aligned in our commitment to tackling the issue.

One of the key challenges, which I do not think the hon. Lady addressed, is distinguishing drip pricing that is harmful or anti-competitive from practices that may offer greater value to the consumer—for example, a company offering optional extras such as faster postage or insurance. We will consult during the passage of the Bill on which elements of drip pricing might need tackling, and on whether further action is required. We believe it is important to conduct that exercise first, so that we have a proper, evidence-driven policy. I hope the hon. Member will withdraw the amendment.

[Seema Malhotra]

I thank the Minister for his comments. There are issues to consider in relation to the amendment, but I think the broad thrust of the argument for taking action is clear. The Minister says that the findings of the research will be published shortly; I am assuming that “shortly” is not in more than a year’s time. We need to clarify that with the Government. If shortly means shortly, however, then I would be grateful for confirmation that, on the basis of the research, the Minister intends to address drip pricing; that may determine the wording in the Bill. Can the Minister confirm that there is an intention to address the issue during the passage of the Bill, perhaps through a Government amendment? The Opposition are very willing to work with the Government on that.

[Kevin Hollinrake]

I am keen to make a commitment to work with the hon. Member on the issue, and to ensure that a measure is brought forward as quickly as possible. I cannot give a precise date, but it will be very shortly.

[Seema Malhotra]

On the basis that shortly means shortly, I am willing to withdraw the amendment. Will the Minister clarify that he expects the research to come forward before Report, so that we have time to look at it? That would be a good point at which to bring forward an amendment on the issue.

--- Later in debate ---

[Kevin Hollinrake]

I cannot say when Report will be, and I do not have the timetable for that, or for the consultation on the work that we may need to do on the issue. I cannot make that precise commitment, but we are very committed to delivering on drip pricing. As the hon. Member knows, the Prime Minister spoke on it, so I cannot imagine that there will be any undue delay.

[Seema Malhotra]

On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Neil Coyle]

My hon. Friend the Member for Feltham and Heston and the hon. Member for Gordon have already made some excellent points, so I will be brief.

Amendment 125 would add fake reviews to the list of banned practices. No customer should be hoodwinked by the deceitful practice of submitting a fake review. Fundamentally, many customers see fake reviews as fraud, which is the fastest-growing crime. Our police services are overstretched and sadly, under this Government, they do not have the resources to tackle fraud. The amendment examines alternative routes to securing action to tackle a problem that is leading to dangerous circumstances, as has been outlined.

Amendment 125 would provide a stronger power than the one proposed, and it has been called for by organisations representing British customers and responsible British businesses. It would be better for good business, better for customers and better for ensuring that standards were upheld. The charity Electrical Safety First, which is based in Bermondsey and Old Southwark, has said that in one of its investigations 93% of products bought from online marketplaces were unsafe—93%! In some significant part, that is down to fake reviews imposing a false legitimacy on goods. People buy because they believe other people have bought and have had an enjoyable experience or got the product they sought.

My hon. Friend the Member for Feltham and Heston has already provided examples of the need to protect consumers, and I draw the attention of the Committee these live examples, which are happening right now. “A portable heater” was on eBay and people were saying it was fine, but it had

“easy access to live parts with 240 volts running through the heating element, posing”

what ESF called

“an imminent risk to life.”

Another example is a

“‘water-proof’ extension lead… on Amazon.”

Guess what? There are

“no water-proof capabilities”

and this

“presents a significant risk of electric shock. This item has already been recalled as unsafe by the Office for Product Safety and Standards”.

A combination of the takedown power and the removal of fake reviews that claimed that these products were okay and good to use would be a significant step forward—one that, sadly, is not in the Bill.

One last example is the bargain beauty products—not something I buy often for myself—on eBay that had no fuse in the plugs. That is how dangerous they were. Those goods, known to be dangerous, are still online. Removing fake reviews might help to prevent people from buying such shoddy items, but removing the goods altogether should be the fundamental aim. I politely suggest that the Minister adds ESF and specific consumer groups such as Which? to his round of pending meetings, to ensure that the Bill is improved—and to tackle the problem that he previously acknowledged existed. He likened himself earlier to “Pale Rider”. He may think he is “Pale Rider”, but I am not convinced that he has turned up on a horse, or even on a pony. Given that there is no baron here, it is more as though he is on a rocking horse.

[Kevin Hollinrake]

I am not sure that I can take that analogy any further. I think we are all in agreement. They say that the art of originality is to remember what you have heard but forget where you heard it. The Opposition say that we are stealing their good ideas, but obviously we committed some time ago to taking action in this area. I am not averse to taking some of the good ideas that we hear from the Opposition from time to time, but we also have to ensure that we reject the many bad ideas we hear from them in debates.

The Government agree that legislation to tackle fake reviews should be strengthened. We anticipate doing so by adding to the list of banned practices. However, it is important to get the details of those proposals right. That includes defining what we mean by fake reviews and how “reasonable and proportionate” steps will be understood. Similarly, we want those rules to encompass the manipulation of reviews that may harm consumers, which also needs detailed work with stakeholders to define. For example, the issue is not just about people trying to boost reviews, as the hon. Member for Feltham and Heston stated; it is also to do with people removing negative reviews inappropriately, which might affect ratings on review sites. The Government will therefore be consulting on fake reviews during the passage of the Bill to ensure that these rules work as intended and are clear for businesses. We will be doing that shortly, in the autumn.

The hon. Member for Bermondsey and Old Southwark talked about ESF and Which?. I have spoken to both organisations and met them regularly. In fact, one of my first jobs in my ministerial role was to speak at an Electrical Safety First conference. On that note, I hope that hon. Members will withdraw their amendments.

[Seema Malhotra]

I am slightly disappointed by the Minister’s response; it does not sound as if there is anything other than long grass here. Significant groundwork has been done, both within Government and with stakeholders. Having another consultation in the autumn is like long grass: it is designed to spin things out until we reach 2025 and then there is something to add to the schedule. Unless the Minister wants to tell me that there is an intention to do more during the course of the Bill, we will be pushing this to a vote.

--- Later in debate ---

[Seema Malhotra]

Schedule 18 introduces a list of commercial practices that will automatically be considered unfair in all circumstances and will be prohibited. The list is long and comprehensive, and the Opposition welcome every practice listed, including a seller’s claiming to be a signatory to a code of conduct when they are not, falsely claiming that a product is able to prevent disease, providing inaccurate information about the availability of a product, and threatening a consumer if they do not buy a product.

However, we are concerned that there are significant omissions, which we addressed during our debates on the amendments. We will be happy to consider alternative wording, but we will continue to pursue additions that we believe would strengthen the Bill and its implementation. Nevertheless, we support the inclusion of this important schedule in the Bill.

[Kevin Hollinrake]

As has been said, the schedule protects consumers from the most prevalent and harmful commercial practices engaged in by deceitful traders. It largely replicates schedule 1 to the Consumer Protection from Unfair Trading Regulations 2008 and provides a list of 31 commercial practices that are banned in all circumstances due to their inherently unfair nature. Among those practices are operating pyramid promotional schemes, displaying trust marks without obtaining the necessary authorisation, and stating that a product can be legally sold when it cannot.

Question put and agreed to.

Schedule 18 accordingly agreed to.

Clauses 218 to 221 ordered to stand part of the Bill.

--- Later in debate ---

[Neil Coyle]

I have a few brief supplementary comments, further to the excellent speech of my hon. Friend the Member for Feltham and Heston. I just want to point out an anomaly and the problematic nature of the wording of the Bill, which I hope the Government will re-examine before they go further.

Amendment 126 would expand the definition of “invitation to purchase” to cases in which the information provided to a consumer covers the characteristics of a product, but not its price. That might sound counterintuitive, as it did to me when I first went through this with organisations, but it would expand the goods and services covered by the legislation. That is important, because the use of “price” in the wording of the Bill could prohibit action against a rogue trader. The existing wording might stop the Government meeting the aims that they are setting out to achieve.

The suggestion is that the specific requirement that the price be covered, if that is not the price paid, will potentially prevent action from being taken against a trader who deliberately advertises a price, but then changes it. An example might be where someone arranges for a person to come and fix a car part, a boiler or a pipe leak, and that person then arrives and says, “The product you’ve looked at online is not compatible with your boiler,”—or their fittings, their car or whatever it might be—“but guess what: I’ve got a different one in the van that’s a bit cheaper,” or a bit more expensive, “but will do the job better for you.”

By making a slight change to the wording of the Bill to remove the words “and its price” on page 150, amendment 126 would deal with that kind of rogue practice, which is out there and which has been raised by trading standards. The fear among the bodies that are trying to secure greater action against rogue traders is that the existing wording of the Bill allows wiggle room and will let the dodgy practices continue. I hope that airing that specific, possibly niche concern today will give us greater time to capture it and ensure that the Bill does not preclude action against rogue traders where specific prices are agreed up front but that is not the deal that takes place, because someone pays for a cheaper or even a more expensive alternative that does the same job.

Having flagged that concern, I hope that the Government will look again at the wording and at how they will meet their overall aim, which I support.

[Kevin Hollinrake]

It is an interesting point. We took the decision to strengthen the existing provisions in the Consumer Protection from Unfair Trading Regulations 2008 in relation to invitations to purchase by removing the need for enforcers to prove that the transactional decision test has been met. This significantly increases the criminal liability of unscrupulous traders.

Amendment 126 would expand the definition of an invitation to purchase still further to cases in which information about products is presented to consumers without a price shown. We are concerned that that would expand the definition too far. Moreover, other provisions in chapter 1 of the Bill will achieve a similar aim: they will prohibit traders from making misleading statements or omissions in respect of all commercial practices. We feel that that covers this issue. However, I am happy to have further conversations with the hon. Member for Bermondsey and Old Southwark, certainly based on the evidence he has received, which I am happy to look at.

Amendment 127 would require that information as to whether a third-party seller or online marketplace is a trader or a consumer be added to the list of material information in an invitation to purchase. We have the same aim. Clause 222(2)(c) will require

“the identity of the trader and the identity of any other person on whose behalf the trader is acting”

to be disclosed. Moreover, subsections (2)(d) and (e) will require a range of contact details to be provided to consumers about who they may be buying from.

Accordingly, I hope that hon. Members will not press their amendments.

[Seema Malhotra]

I thank the Minister for his comments. We still take the view that this needs to be tighter. In the light of his intentions, which we understand, we will take it away and look at it again. I do not want to lose our amendment, but we will not press it to a vote today. Perhaps we can come back to it at a future stage of the Bill.

[Seema Malhotra]

I beg to ask leave to withdraw amendment 127.

Amendment, by leave, withdrawn.

Clause 222 ordered to stand part of the Bill.

Clause 223

Public enforcement

Question proposed, That the clause stand part of the Bill.

[Kevin Hollinrake]

Clause 223 sets out who is responsible for enforcing the prohibition on unfair commercial practices. Trading standards have a duty to enforce the prohibitions in their areas across Great Britain. The Department for the Economy in Northern Ireland has a duty to enforce the prohibitions in Northern Ireland. The CMA has the power to enforce the prohibitions on a civil and criminal basis in the UK.

[Seema Malhotra]

We welcome clause 223. As the Minister states, it introduces provisions relating to the enforcement of the prohibition of unfair commercial practices, setting out how local weights and measures authorities—trading standards—will have a duty to enforce the prohibitions. The CMA will also have enforcement powers. We have talked several times in this Committee about the importance of trading standards in enforcing the regime. How involved have the CMA and trading standards been in the discussion around the powers in the Bill?

Is the Minister confident that local trading standards officers have the resources to enforce the regulations, especially after 13 years of what can only be described as a managed decline of local trading standards authorities, with local services facing a 52% reduction in service capacity under the Government’s watch since 2010? It is important to know that, because where increased expectations are coming through in legislation the question is whether there will be capacity to deliver on the new demands. I would be grateful for his response.

[Kevin Hollinrake]

I have meetings with the national teams of trading standards, and indeed the CMA, on a regular basis. We have had numerous discussions about the legislation, if the hon. Lady means her question broadly. Indeed, she was able to question some of those witnesses in the recent evidence sessions. Clearly, resources for trading standards are a matter for local authorities, not central Government. It is for local authorities to determine where those resources are committed.

Question put and agreed to.

Clause 223 accordingly ordered to stand part of the Bill.

Clause 224

Rights of redress

Question proposed, That the clause stand part of the Bill.

[Kevin Hollinrake]

Clause 224 sets out the conditions under which consumers may exercise redress rights. The main condition is that misleading actions or aggressive practices must play a significant factor in the consumer’s decision to make payment for the supply of a good or enter a contract. Without the clause, victims of rogue traders who engage in lies and aggressive selling practices would be left with no private right of redress.

--- Later in debate ---

[Seema Malhotra]

I am pleased to speak to amendment 114, which stands in my name and that of my hon. Friend the Member for Pontypridd. I will also make reference to amendment 67, tabled by the hon. Member for Gordon.

Amendment 114 would require that the Secretary of State prepare and lay before Parliament a report on the merits of introducing a consumer right to individual and collective redress through secondary legislation, as is the case in EU member states. Amendment 67 would ensure that the consumer rights to redress set out in secondary legislation cannot offer less protection than the Consumer Protection from Unfair Trading Regulations 2008. We support the principle of amendment 67, which would have a similar effect to amendment 114 by ensuring a more robust consumer right to redress.

More specifically on amendment 114, I refer the Minister to the written evidence of Which?, which notes that

“the Bill states that ‘Consumer Rights to Redress’ may be provided for in future secondary legislation, so it will give the Secretary of State powers to amend these rights. These rights are fundamentally important, as they include payment of damages when a trader misleads a consumer. We want assurances that they will not be downgraded as a result of this process, and a commitment from the Government to strengthen redress procedures when these new regulations are drafted.”

Amendment 114 would require a commitment from the Government to report on doing that, aiding the process of strengthening redress procedures when new regulations are drafted. I urge the Government to support amendments 114 and 67, and to ensure that consumer rights to redress are as strong as they can be, particularly in an increasingly digital economy.

[Kevin Hollinrake]

Amendments 67 and 114 deal with consumers’ private rights to redress. I agree with the hon. Members for Feltham and Heston and for Gordon that it is vital that consumers have robust private rights of redress.

Amendment 67 would limit changes by regulation to the consumer rights of redress to those that are equivalent to the remedies in the CPRs—the Consumer Protection from Unfair Trading Regulations 2008. The Bill includes powers to amend rights of redress. That could include how such rights are exercised; the powers could also be used to make those rights clearer and simpler. Those would be positive changes for consumers that might not meet the test of equivalence to the current regulations that the amendment would impose. We would like to retain the ability to exceed the existing private redress provisions, if appropriate, which may encourage more consumers to make use of these rights. The first regulations made using the power will be to create the new regime to replace the current private redress provisions in the CPRs. Accordingly, those regulations will be subject to parliamentary approval via the affirmative procedure, thereby providing for appropriate parliamentary oversight of use of the power.

I turn to amendment 114. The courts already have the power to make an enforcement order against an infringer, or to accept undertakings from them to provide redress to affected consumers, through the measures in part 3. Enforcers can also accept undertakings from infringers to provide redress to affected consumers. For example, in 2021 the CMA secured an undertaking from Teletext Holidays to pay over £7 million in outstanding refunds from package travel trips cancelled due to covid-19.

The Bill will make the power to require enhanced consumer measures directly available to the CMA. Consumers also already have individual private rights of redress. In the “Reforming competition and consumer policy” consultation, we consulted on whether to introduce a right for consumers to bring collective redress. Responses were mixed, with concerns raised about unintended consequences such as the creation of a claims culture and inadvertently disincentivising the bringing of proceedings by consumer groups.

The hon. Member for Feltham and Heston referred to the EU situation. The outcome, however, is similar to the desired situation under the EU’s directive on collective redress, which requires member states to designate entities, such as consumer organisations, that can bring actions for collective redress on consumers’ behalf. The EU does not mandate that member states introduce direct rights for individual consumers to bring an action for collective redress.

We will keep the evidence under review, but our priority is to embed the CMA direct enforcement regime and understand the impact that it makes. On that basis, I hope that hon. Members will not press their amendments.

[Richard Thomson]

With regret, I am not minded to withdraw amendment 67. I hear what the Minister says about how the Government may wish to go beyond existing levels of consumer protection. That is welcome where appropriate, but I do not see anything in the amendment that would prevent Ministers from doing that. The key element in the amendment is to capture a baseline level of protection, equivalent to what was in the 2008 regulations, to ensure that there is nothing that dips below that without a conscious decision to do so having been taken and debated. On the basis that there is nothing that would prevent the Government from enhancing the levels of protection at any time, I am keen to divide the Committee.

Question put, That the amendment be made.

Digital Markets, Competition and Consumers Bill (Fourteenth sitting)

Kevin Hollinrake Excerpts

Committee stage
Tuesday 11th July 2023 Public Bill Committees

[The Chair]

Before we begin, I have a few reminders. Clearly, given the heat, please feel free to remove jackets. Please switch electronic devices to silent. No food or drink is permitted during the sitting, except for water. Any notes can be passed to Hansard colleagues.

Clause 283

Meaning of “ADR” and related terms

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move amendment 83, in clause 283, page 189, line 5, leave out subsection (9) and insert—

“(9) For the meaning of “exempt ADR provider” and “exempt redress scheme” see section 287.”

The amendment provides a signpost for the reader to clause 287, which identifies who are exempt ADR providers for the purposes of Chapter 4.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Government amendments 84 to 89.

Clauses 284 and 285 stand part.

Government amendments 90 and 91.

Clause 286 stand part.

[Kevin Hollinrake]

It is a pleasure to serve under your chairmanship on hopefully the last day of this Bill Committee, Dame Maria. Chapter 4 of part 4 of the Bill aims to strengthen the quality of alternative dispute resolution available to consumers. The chapter replaces EU-derived regulations on ADR with a stronger regime that requires ADR providers to be accredited. Clause 283 defines ADR, which includes mediation, arbitration, early neutral evaluation and action under an ombudsman scheme, and who is an ADR provider. It applies only where ADR is provided in the context of a consumer contract dispute.

Government amendment 83 makes a consequential change to clause 283 in connection with amendments to clause 287. Clause 284 defines consumer contracts and consumer contract disputes. Consumer contracts include suppliers of electricity, gas, water and heat. Government amendments 84 to 88 add references to Scottish and Northern Irish legislation in relation to the supply of those utilities, which were omitted on introduction. Government amendment 89 removes a superfluous definition. Clause 285 prohibits ADR providers from carrying out ADR unless they are accredited or acting for someone who is. That is subject to the exemptions provided in clause 287. It also prohibits ADR providers arranging for third parties to carry out ADR on their behalf unless their accreditation or exemption permits that.

Clause 286 restricts the fees that accredited ADR providers may charge consumers to fees approved by the Secretary of State and those that are published. That will prevent excessive fees and ensure transparency in fee charging. Government amendments 90 and 91 clarify that the limited conditions under which fees may be charged apply only to accredited ADR providers. I commend the clauses to the Committee.

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

It is a pleasure to serve under your chairship, Dame Maria. I thank the Minister for his opening remarks. This is an important part of the Bill. Clause 283 defines ADR and related terms for the purposes of the chapter. Part 4 makes accreditation of ADR providers compulsory unless an exception applies. It includes examples of ADR, such as mediation, arbitration, early neutral evaluation and action under an ombudsman scheme. In her evidence, Tracey Reilly from Consumer Scotland welcomed measures in the Bill as making it

“easier for consumers to seek redress through ADR systems that are appropriately regulated and standardised.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 36, Q49.]

We welcome the straightforward definitions, as well as the broader chapter, which will hopefully increase trust in and use of ADR services in disputes between businesses and consumers. The Government’s policy paper on ADR released in April highlights that

“46% of consumers using alternative dispute resolution had problems including concerns over the time the process took, customer service or a perception that the process favoured the business. 54% of cases took longer to resolve than the 3 months allowed—16% of consumers who went to court did so because the business refused to comply with a previous alternative dispute resolution decision.”

That demonstrates the scale of the challenge that we face in reforming ADR provisions so that they work for consumers. We welcome this chapter as a first step in seeking to meet that challenge.

As Graham Wynn, of the British Retail Consortium, noted in his evidence,

“the accreditation system and making sure that companies abide by what they are supposed to do in ADR is vital to have confidence in general.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 51, Q84.]

Not having a full assessment of ADR providers has been an issue with the current arrangements.

Amendment 83 provides a signpost to clause 287, which identifies who are the exempt ADR providers for the purposes of chapter 4. We recognise that this amendment provides greater clarity in the legislation.

Clause 284 defines other terms for the purposes of this chapter, and they include “Consumer contract” and “Consumer contract dispute”. We welcome these definitions, and we support amendments 84 to 89.

Clause 285 introduces provisions prohibiting a person from carrying out alternative dispute resolution in relation to a consumer contract dispute unless they are accredited or exempt, or acting under “special ADR arrangements”. The explanatory notes state:

“Special ADR arrangements are designed to cover ADR schemes under which the ADR is provided through persons who might, for instance, be styled as ‘case handlers’, ‘adjudicators’ or ‘ombudsmen’”—or women—

“who are employed, or engaged by, or on behalf of, an ADR provider running the scheme. In that case, the person providing the ADR would not need accreditation, so long as the ADR provider running the scheme is accredited or exempt and is permitted to make special ADR arrangements.”

We will need to ensure that there is clarity in distinction and that there is cover in terms of regulatory cover and also expectations of quality, and we recognise that this clarity about special ADR arrangements will be important for that purpose. This is a welcome clause, ensuring that ADR providers are accredited and not liable to act against the interest of a consumer seeking redress. With regard to the exemptions, I will make a few remarks on clause 287.

Clause 286 limits the fees that accredited ADR providers may charge consumers to those charged in accordance with provisions approved by the Secretary of State, and published in a way likely to come to the attention of consumers. Although the Opposition welcome the provisions limiting the fees that consumers can be charged, I would welcome the Minister expanding on this clause slightly. I would, for example, welcome further explanation of the process by which the fees will be approved by the Secretary of State, and their transparency. It is important that there is predictability, fairness, consistency and transparency for consumers when it comes to any fees around ADR, so it will be important to have clarity from the Minister in this regard.

Finally, we support amendments 90 and 91.

[Kevin Hollinrake]

Clearly, the Bill sets out the fact that ADR providers are restricted in what they can charge for. It is therefore very much the assumption that the fees that they charge will be fair and transparent; that is the basis of this. I am not sure what clarification the hon. Lady might be seeking other than on those particular points.

[Seema Malhotra]

This is more about ensuring that there is a fair process and that it is clear, so that we do not have a situation in which consumers are being charged more than they ought to be because there has not been clarity about the Government expectations as to how those fees will be set. I was just seeking clarity on that.

[Kevin Hollinrake]

I do not have anything further to add. Perhaps we can have a discussion about this offline.

Amendment 83 agreed to.

Clause 283, as amended, ordered to stand part of the Bill.

Clause 284

Other definitions

Amendments made: 84, in clause 284, page 189, line 34, leave out “(the gas code)” and insert “, or by section 12(1) or (2) of the Energy Act (Northern Ireland) 2011 (2011 c. 6),”.

The provisions of the Gas Act 1986 referred to in clause 284(3)(b) do not extend to Northern Ireland. This amendment would add a reference to the corresponding legislation in Northern Ireland.

Amendment 85, in clause 284, page 189, line 39, leave out “(the electricity code”) and insert “or by paragraph 3(1) or (2) of Schedule 6 to the Electricity (Northern Ireland) Order 1992 (S.I.1992/231 (N.I.1))”.

The provisions of the Electricity Act 1989 referred to in clause 284(3)(d) do not extend to Northern Ireland. This amendment would add a reference to the corresponding legislation in Northern Ireland.

Amendment 86, in clause 284, page 190, line 4, at end insert “or Part 2 of the Electricity (Northern Ireland) Order 1992”.

Part 1 of the Electricity Act 1989 does not extend to Northern Ireland. This amendment would add a reference to the corresponding legislation in Northern Ireland.

Amendment 87, in clause 284, page 190, line 6, at end insert “or Part 2 of the Gas (Northern Ireland) Order 1996 (S.I.1996/275 (N.I.2))”.

Part 1 of the Gas Act 1986 does not extend to Northern Ireland. This amendment would add a reference to the corresponding legislation in Northern Ireland.

Amendment 88, in clause 284, page 190, line 8, at end insert—

“(b) a person supplying water under a water services licence within the meaning of the Water Services etc. (Scotland) Act 2005 (asp 3), or

(c) a water undertaker within the meaning of the Water and Sewerage Services (Northern Ireland) Order 2006 (S.I.2006/3336 (N.I.21)).”

The definition of “water supplier” in Part 1 of the Water Industry Act 1991 only extends to England and Wales. This amendment would add references to the corresponding suppliers in Scotland and Northern Ireland. In the current text of the definition, the words after “means” will become paragraph (a).

Amendment 89, in clause 284, page 191, leave out line 4.—(Kevin Hollinrake.)

The amendment deletes an unnecessary word: the term “business” does not need to be defined as it is not used in Chapter 4 of Part 4 of the Bill.

Clause 284, as amended, ordered to stand part of the Bill.

Clause 285 ordered to stand part of the Bill.

Clause 286

Prohibitions relating to acting as ADR provider

Amendments made: 90, in clause 286, page 191, line 39, after “the” insert “accredited”.

This is a drafting amendment to clarify which ADR provider is referred to in clause 286(2)(a).

Amendment 91, in clause 286, page 192, line 4, after “the” insert “accredited”.—(Kevin Hollinrake.)

This is a drafting amendment to clarify which ADR provider is referred to in clause 286(2)(c).

Clause 286, as amended, ordered to stand part of the Bill.

Clause 287

Exempt ADR providers

[Kevin Hollinrake]

I beg to move amendment 92, in clause 287, page 192, line 11, leave out subsection (1) and insert—

“(1) In this Chapter—

“exempt ADR provider” means a person who—

(a) is listed (or of a description of persons listed) in Part 1 of Schedule 22, or

(b) is (when carrying out ADR or making special ADR arrangements) acting under or for the purposes of an exempt redress scheme;

“exempt redress scheme” means a scheme or other similar arrangement which is listed (or of a description listed) in Part 1A of Schedule 22.”

The amendment reflects the approach proposed by the government amendments to Schedule 22 to have two lists: Part 1 will list particular authorities (or descriptions of authorities) who are (if and to the extent they carry out ADR or make special ADR arrangements) exempt ADR providers. Part 1A will list “exempt redress schemes”. A person who carries out ADR or makes ADR arrangements under or for the purposes of an exempt redress scheme will be an exempt ADR provider.

[The Chair]

With this it will be convenient to discuss the following:

Government amendments 93 to 96.

Clause stand part.

Government amendments 108 to 111.

That schedule 22 be the Twenty-second schedule to the Bill.

[Kevin Hollinrake]

Clause 287 and schedule 22 exempt various bodies that, so far as they provide ADR, it is not considered appropriate to regulate, and also exempt ADR under statutory redress schemes regulated by other legislation. Clause 287 allows the exemptions to be reviewed and updated.

Government amendments 92 to 96 amend clause 287, and Government amendments 108 to 111 amend schedule 22. They distinguish more clearly between the two categories of exemption. They also add exemptions for the local government and social care ombudsman, the Independent Adjudicator for Higher Education, the Parliamentary Commissioner for Administration and redress schemes for social housing, lettings agencies and property management.

[Seema Malhotra]

Clause 287 introduces schedule 22 into the Bill, which sets out the persons exempt from ADR provisions. I will also make a few remarks on schedule 22. Clause 287 also introduces a provision for the Secretary of State to add or remove from the list of exemptions. I want to clarify with the Minister why this delegated power has been left to the negative procedure. There may be a good reason for that decision, but it would be helpful to understand that.

We support amendments 92 to 96; the Minister has spoken to them. Schedule 22 sets out the list of ADR providers exempt from the regulations. As the explanatory notes explain and the Minister said:

“These include persons or bodies providing, or administering, dispute resolution services which are regulated under other legislation, who are exempted in order to avoid duplication or conflict between statutory regimes”.

That is important because obviously we do not want to have over-regulation or confusion between different parts of statute.

I ask the Minister for assurances that consumers using exempt providers will be able to expect the same level of protection from those that are non-exempt ADR providers. We do not have time in Committee to go through all the comparable regulations that exempt providers will be subject to, but from a consumer perspective the expectation should be that the protections, in terms of expectations of service and the regulations, will be comparable. I would be grateful for the Minister’s confirmation of that, and an assurance that the analysis has been done, because legislation is passed at different times and we want to be sure of that consistency.

Amendment 108 alters the list of persons in part 1 of schedule 22. There are other changes within amendments 108 to 111. We have no issue with any of those amendments, and we support them.

[Kevin Hollinrake]

On the use of the negative procedure, we feel that these are technical and mechanical changes, just to ensure that the statute remains up to date and clear, and to prevent excessive use of parliamentary time. Clearly, ADR providers are regulated by other means. We see no duplication in their regulation. The Financial Ombudsman Service, for example, is already regulated and overseen by the Financial Conduct Authority. We think that it would be needless to duplicate that kind of oversight.

Amendment 92 agreed to.

Amendments made: 93, in clause 287, page 192, line 19, leave out subsection (3) and insert—

“(3) Regulations under subsection (2) may, in particular—

(a) provide for an entry in Part 1 of Schedule 22 to apply to a specified person or to any person of a specified description;

(b) provide for an entry in Part 1A of that Schedule to apply to a specified scheme or any scheme of a specified description;

(c) limit the scope of the exemption given to a person by virtue of an entry in Part 1 or IA of that Schedule, whether in relation to carrying out ADR or making special ADR arrangements (or both).”

This amendment clarifies the scope of the power to make regulations under clause 287(2). The effect of the exemption given to a person by an entry in Part 1 or 1A of Schedule may be limited, for example by reference to the purposes for which an otherwise prohibited activity is carried out or to the kinds of otherwise prohibited activity that are (or are not) exempt.

Amendment 94, in clause 287, page 192, line 34, leave out subsection (5) and insert—

“(5) Subject to any limitation on its scope provided for by Schedule 22—

(a) an exemption given to a person by virtue of an entry in Part 1 of that Schedule covers anything done by the person in the exercise of the person’s functions that would otherwise be prohibited, and

(b) an exemption given to a person by virtue of an entry in Part 1A of that Schedule covers anything done under or for the purposes of an exempted redress scheme that would otherwise be prohibited.”

The amendment clarifies the general scope of an exemption that will apply by default, unless there is provision in the Schedule for it to be more limited.

Amendment 95, in clause 287, page 192, line 37, after “section” insert

“—

‘prohibited’ means prohibited by section 285(1) or (2);”.

The amendment defines “prohibited” for the purposes of the clause by reference to clause 285.

Amendment 96, in clause 287, page 193, line 1, leave out subsection (8).—(Kevin Hollinrake.)

The amendment omits a subsection that is no longer needed as a result of the other government amendments to clause 287 and Schedule 22.

Clause 287, as amended, ordered to stand part of the Bill.

[Seema Malhotra]

On a point of order, Dame Maria. I would be grateful for your guidance. The Minister made some remarks in response to my questions and I did not get the chance to intervene on him. I know that we have moved on, so is it best that I write to him on the questions that he did not answer on comparable regulation?

--- Later in debate ---

[Kevin Hollinrake]

Clauses 288 to 292 and schedule 23 cover the accreditation process for ADR providers, which ensures that standards are high and providers perform well. Clause 288 covers the application process and application requirements, including fees, must be published.

Clause 289 covers the outcome of those applications. Applicants will be accredited only if they satisfy the accreditation criteria, which I will explain in the context of clause 292. The Secretary of State can reject, limit or impose conditions on an accreditation, and the applicant must be told why.

Government amendments 97, 98 and 99 clarify that, in extending a limited accreditation at a later date, the Secretary of State can impose new conditions or alter existing ones. Government amendment 100 provides that conditions can be imposed to make an ADR provider responsible for the acts of a third party carrying out ADR on its behalf.

Clause 290 sets out how non-compliant ADR providers can be suspended, or their accreditation limited or revoked. It contains safeguards, including the right for ADR providers to make representations before these sanctions are imposed. Clause 291 allows the Secretary of State to charge accredited ADR providers for the cost of their ongoing accreditation.

Government amendment 101 corrects a drafting error regarding those fee provisions. Clause 292 and schedule 23 specify the accreditation criteria. These encompass standards relating to accessibility, expertise, fairness, independence, impartiality and transparency. Clause 292 allows the criteria to be kept under review and, if necessary, modified.

Clause 293 empowers the Secretary of State to issue enforcement notices to ADR providers who operate without accreditation or violate key obligations. Non-compliance with that notice can be enforced as if it were a court order. The clause contains safeguards, including giving the ADR provider an opportunity to make representations before an enforcement notice is issued.

Clause 294 allows the Secretary of State to make regulations requiring ADR providers and others to provide information about ADR to the Secretary of State or publish it for consumer awareness. The clause limits the purposes for which the Secretary of State can require provision of information. Government amendments 102 to 105 ensure that those limits will apply if the Secretary of State’s functions are conferred on another person under clause 298.

Clause 295 allows the Secretary of State to direct ADR providers and regulators to provide information. This allows the provision of specific information from a person when circumstances require it.

Government amendment 106 removes a definition of data protection legislation that is not needed as it is defined elsewhere. Clause 296 allows the Secretary of State to publish or disclose information they hold in relation to this chapter, subject to data protection.

Government amendment 107 is a drafting improvement to recognise that clause 296 contains several disclosure powers. Clause 297 defines terms used in clauses 294 to 296.

Clause 298 allows regulations to confer functions on persons other than the Secretary of State. This might, for instance, be used to confer accreditation functions on a regulator within the sphere of its regulatory activities.

Clause 299 requires traders, when responding to a consumer contract complaint, to inform consumers about any ADR or dispute resolution arrangements in which that trader is required to participate. Clause 300 and schedule 24 revoke the EU-derived ADR regulations of 2015 and amend other legislation.

Government amendment 112 is a drafting amendment to ensure there is an accurate description of the content of paragraph 11 of schedule 5 to the Consumer Rights Act 2015. Clause 301 makes transitional arrangements, including to ensure that chapter 4 does not apply to ADR already in progress when it comes into force.

I hope that hon. Members will support Government amendments 97 to 107 and Government amendment 112. I commend the clauses and schedules to the Committee.

--- Later in debate ---

Government amendment 112 is a drafting amendment, and clause 301 is a technical clause. We support them both.

[Kevin Hollinrake]

The hon. Member for Feltham and Heston has raised a number of points for me to respond to. As an overarching point, we are moving from a voluntary to a mandatory system of ADR regulation, so we should not look at it as if we were starting from scratch. We are improving an existing system, which should give us some assurance that this is an improvement, not a step back from improving standards in this area.

One of the hon. Lady’s principal points was about the criteria that we apply for accrediting an ADR provider. They have to be kept high-level, because there are a wide variety of different providers, so it would be wrong to be too specific about the criteria we apply. However, clause 292 and schedule 23 both set out the principles behind what accreditation will look like at every scheme level, including standards on accessibility, expertise, fairness, independence, impartiality and transparency. Clause 292 will allow the criteria to be kept under review and to be modified if necessary and appropriate. On the public record, yes, there will be a list of ADR providers.

[Seema Malhotra]

I recognise what the Minister says about moving to a mandatory system and the improvements being made, which is why it is important that we do not leave gaps. However, I want to push him on my point about expertise.

[Kevin Hollinrake]

I will come to that. Criterion 3 in schedule 23 clearly sets out that a provider will be required to have the relevant expertise. Has the hon. Lady read that criterion?

[Seema Malhotra]

I have, and I quoted it to the Minister. What I asked him was how he will determine expertise, because in other legislation on ADR that we have debated, there has been some process. Have the providers been accredited? Is it based on experience? Do they have particular qualifications? Otherwise, expertise can be very subjective. That was the question I asked.

[Kevin Hollinrake]

And that was the question I answered. In response to the hon. Lady’s points, I said that the criteria have to be kept high-level. It would be wrong to be too specific about how we judge “expertise”, because of the wide variety of different ADR providers. What we all need to do is trust the process, which the Secretary of State oversees, of trying to make sure that each provider has the relevant expertise in each scheme area. As I said, there are schemes already in place that we are now putting under the mandatory regime. Of course, expertise will be judged on a scheme-by-scheme basis, but it is difficult to set out exactly what expertise we will require in any particular scheme, other than that we would expect the person to have the relevant experience and expertise.

--- Later in debate ---

[Kevin Hollinrake]

I am happy to continue the debate with the hon. Lady and to correspond with her on the matter.

There is a broader picture here, which I am trying to set out in my response to the hon. Lady. There will certainly be the public list of ADR providers that she referred to. Where people are most likely to find that list will be in dealing with a particular trader in a particular scheme, regarding the requirement set out in clause 299 for a trader responding to a consumer contract complaint to inform consumers about the ADR process. That is where we expect people to be most likely to find the ADR scheme available.

The hon. Lady asked how somebody can complain about ADR schemes. That ties in with a broader point about how we manage the whole process, and to other points that she made. People can, of course, complain directly to the Secretary of State if they are dissatisfied with an ADR provider. However, I think a complaint is more likely to come through other routes such as Citizens Advice, which is largely funded by the Government, through trading standards or through letters to Government Ministers from Members of this House; I often respond to such letters that raise concerns. That is how we build a picture of the efficacy or otherwise of a particular ADR scheme. We would expect that at that point, if there are a number of complaints about an ADR provider, the Secretary of State will intervene and use their capabilities under the Bill.

As the hon. Lady set out, the Bill provides for ADR providers to pay fees to cover the cost of processing applications and their ongoing accreditation. Under the existing accreditation regime, the Department for Business and Trade charges fees at a pro rata daily rate of £750. That is the context in which we expect fees to be set.

The hon. Lady asked what we will do about ADR providers who do not do the right thing and do not provide the proper service. Revocation is available to the Secretary of State. The accreditation criteria will ensure, among other things, that ADR providers meet standards of expertise, fairness and impartiality. If ADR providers do not meet those standards, their accreditation may be revoked or suspended, or additional conditions may be put in place to improve their performance. We have tackled the issue of sufficient expertise, on which we may agree to differ.

The hon. Lady raised clause 294, which allows the Secretary of State to make regulations requiring the provision of information about ADR. As clause 294 sets out, that can be for the benefit of consumers, but it can also be with regard to the operation of particular schemes. Again, that is a reason why the information might be requested. It might not be suitable for public consumption, or there could be other reasons, such as commercial sensitivity or data protection, why that information might not be published, but it can be published if the Secretary of State sees fit.

The hon. Lady referred to clause 298, which allows regulation to confer functions on persons other than the Secretary of State. That provision might be used, for instance, to confer accreditation functions on a regulator. It gives broad oversight of other areas of the ADR regime that are not directly covered by this legislation.

Question put and agreed to.

Clause 288 accordingly ordered to stand part of the Bill.

Clause 289

Determination of applications for accreditation or extension of accreditation

Amendments made: 97, in clause 289, page 195, line 3, leave out “as extended”.

This is a drafting amendment to make clear that new accreditation conditions imposed when extending an accreditation are not limited to any particular part of the extended accreditation.

Amendment 98, in clause 289, page 195, line 4, leave out “condition on the existing” and insert “existing condition on the”.

This amendment and Amendment 99 are drafting amendments to clarify which accreditation conditions can be varied or removed by the Secretary of State when extending an accreditation.

Amendment 99, in clause 289, page 195, line 21, leave out “condition on the existing” and insert “existing condition on the”.

See the member’s explanatory statement for Amendment 98.

Amendment 100, in clause 289, page 195, line 26, at end insert—

“(14) Where an accreditation covers the making of special ADR arrangements, conditions on the accreditation may be framed so as to secure that the accredited ADR provider is responsible for acts or omissions of other ADR providers who carry out ADR under special ADR arrangements made by the accredited ADR provider.”—(Kevin Hollinrake.)

This amendment would clarify that accreditation conditions can be worded so as to make an accredited ADR provider directly responsible for things done by another ADR provider who carries out ADR under special ADR arrangements made by the accredited provider under its accreditation. This could enable regulatory action under clause 290 or 293 to be taken against the accredited ADR provider in relation to acts of the other ADR provider.

Clause 289, as amended, ordered to stand part of the Bill.

Clause 290 ordered to stand part of the Bill.

Clause 291

Fees payable by accredited ADR providers

Amendment made: 101, in clause 291, page 197, line 9, leave out “potential applicants for accreditation” and insert “accredited ADR providers”.—(Kevin Hollinrake.)

The amendment would correct a mistake in clause 291(3) which should refer to accredited ADR providers, as they are the persons who pay fees under the clause.

Clause 291, as amended, ordered to stand part of the Bill.

Clause 292 ordered to stand part of the Bill.

Schedule 23 agreed to.

Clause 293 ordered to stand part of the Bill.

Clause 294

ADR information regulations

Amendments made: 102, in clause 294, page 199, line 1, after “(1)(a)” insert “or (b)”.

This amendment, with Amendments 103 to 105, would ensure that the power in subsection (1)(b) of clause 294 is subject to similar constraints to those currently provided for by subsection (3) in relation to the power in subsection (1)(a). The regulation making powers in clause 294(1) are not to be available for imposing requirements to provide information for purposes other than those set out in subsection (3)(a) to (c).

Amendment 103, in clause 294, page 199, line 3, leave out from “following” to end of line 4.

See the explanatory statement for Amendment 102.

Amendment 104, in clause 294, page 199, line 5, leave out

“provided to the Secretary of State”.

See the explanatory statement for Amendment 102.

Amendment 105, in clause 294, page 199, line 10, at end insert—

“(3A) It is immaterial for the purposes of subsection (3) whether the publication, monitoring or evaluation is carried out by the Secretary of State, by a person with functions conferred by regulations under section 298 or by any other person acting under arrangements made with that other person by the Secretary of State or a person with such functions.”—(Kevin Hollinrake.)

See the explanatory statement for Amendment 102.

Clause 294, as amended, ordered to stand part of the Bill.

Clause 295

ADR information directions

Amendment made: 106, in clause 295, page 200, line 13, leave out from “legislation” to end of line 14.—(Kevin Hollinrake.)

The amendment would omit words that unnecessarily duplicate a definition in clause 297(6).

Clause 295, as amended, ordered to stand part of the Bill.

Clause 296

Disclosure of ADR information by the Secretary of State

Amendment made: 107, in clause 296, page 200, line 35, leave out

“power conferred by this section is”

and insert

“powers conferred by this section are”.—(Kevin Hollinrake.)

The amendment would clarify that the words at the end of subsection (4) apply to both of the powers conferred by the clause.

Clause 296, as amended, ordered to stand part of the Bill.

Clauses 297 to 300 ordered to stand part of the Bill.

Schedule 24

Chapter 4 of Part 4: consequential amendments etc

Amendment made: 112, in schedule 24, page 360, line 22, leave out “duties and powers” and insert “legislation”.—(Kevin Hollinrake.)

This is a drafting amendment to ensure there is an accurate description of the content of paragraph 11 of Schedule 5 to the Consumer Rights Act 2015.

Schedule 24, as amended, agreed to.

Clause 301 ordered to stand part of the Bill.

Clause 302

Provision of investigative assistance to overseas regulators

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Clauses 303 to 308 stand part.

That schedule 25 be the Twenty-fifth schedule to the Bill.

[Kevin Hollinrake]

Chapter 1 of part 5 of the Bill enhances the UK’s ability to co-operate internationally on competition and consumer matters, as open and fair competition globally ensures the best opportunities for UK businesses and consumers. Clause 302 would introduce a new power for the Competition and Markets Authority and certain consumer protection regulators to provide investigative assistance to an overseas regulator. This power will apply to civil investigations or proceedings related to competition and digital markets and consumer protection.

The clause sets out three core requirements that must be met before investigative assistance is provided. First, the overseas regulator requesting assistance must be carrying out a function that corresponds to a function that the UK regulator has under UK law. Secondly, the UK regulator must assess whether it would be appropriate to provide the assistance requested by the overseas regulator, using the conditions set out in clause 304. Thirdly, the Secretary of State must have authorised the UK regulator to provide the assistance in accordance with clause 305.

Clause 303 sets out that the request must be made in writing by the overseas authority, describe the matter for which assistance is requested, and detail any potential penalties that might be imposed following the overseas investigation. Clause 304 provides a framework for UK authorities to assess whether it is appropriate to provide the investigative assistance requested by an overseas authority; it also sets out the circumstances in which a UK authority has no discretion and must reject an incoming request for investigative assistance—for example, if there is no reciprocity and no overriding public benefit to the UK in providing the assistance in any event.

Clause 305 outlines the factors that the Secretary of State must consider in deciding whether to approve a request for assistance. For example, the Secretary of State may reject a request for assistance where they consider that it would be more appropriate for any investigation to be carried out by the UK authority solely for its own purposes. Clause 306 requires the UK authority to notify the Secretary of State where it has received for assistance and considers it appropriate to provide the requested assistance.

Clause 307 places a duty on the CMA to publish guidance in connection with requests for investigative assistance and the provision of that assistance. Any regulator with the powers to provide investigative assistance must have regard to that guidance, which must be approved by the Secretary of State. Clause 308 and schedule 25 amend the existing legislative framework to ensure that the new investigative assistance regime slots in properly and runs smoothly. For example, the usual time limits for the CMA to be able to impose civil penalties for failures to comply with merger information notices would not work in cases where the CMA is providing assistance, so schedule 25 creates a bespoke time limit specifically for such cases.

[Seema Malhotra]

Clause 302 acts as a gateway to investigative assistance provisions. This is an important provision, enabling regulators in the UK to assist an overseas regulator. The Minister outlined the conditions under which the UK regulator may assist. We understand that the issues around consumer protection and competition must increasingly be dealt with internationally, because they are increasingly digital in nature and when they arise abroad can impact consumers here, as well as the other way around. As we have gone through these matters with short remarks today, my overall comment is that while we need this provision, the safeguards that might be needed and what is or is not to be published are less apparent.

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Clause 308 introduces schedule 25 into the Bill, which amends other legislation in connection with the chapter. We welcome those technical provisions to ensure clarity and consistency throughout this and other related legislation. I look forward to the Minister’s response.

[Kevin Hollinrake]

There are just a couple of points to make, I think. On clause 302, the hon. Lady asked whether the police would be involved in any of the investigations. The clause sets out clearly that those are civil matters, not criminal matters. The overseas regulator requesting system is supposed to carry out a function that corresponds to a function that the UK regulator has under UK law.

[Seema Malhotra]

Either I was not clear, or the Minister mistook me. I was not talking about the police being involved. I was asking whether there are processes of sharing information akin to the way that information is shared with police, so that it can be done in more confidence. The question was about what will be known to those whose information may be shared, if there is that request.

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[Kevin Hollinrake]

In the course of anybody’s work, if there is evidence of criminal activity, we would expect an enforcement agency or regulator to share that with the relevant enforcement authorities, including the police. Was that the point the hon. Member was trying to make?

[Seema Malhotra]

If I can put it a bit more simply, my question was about how the information will be shared, who will know that the information is being shared, and what that information is being shared about?

[Kevin Hollinrake]

If the hon. Lady has any further points that she wants clarified, perhaps she will write to me, as I am not quite sure what she is referring to.

The hon. Lady asked about safeguards and the considerations to be taken into account when agreeing to requests for assistance. The clauses provide significant safeguards with regard to the conditions that the authority itself needs to consider and, when it comes to the authorisation by a Secretary of State, consideration of appropriate protections, for example, around confidentiality and other considerations set out in the Bill.

Further details about the process and how investigative assistance will work in practice will be set out in detailed guidance. That is another point that the hon. Lady referred to—discussions between the regulator and the Secretary of State—that we expect to see in guidance. We expect the regulators and the Secretary of State to engage closely in considering whether to provide assistance. Guidance will be put in place and agreed between the regulators and the Secretary of State to set out how the measure will work in practice.

Question put and agreed to.

Clause 302 accordingly ordered to stand part of the Bill.

Clauses 303 to 308 ordered to stand part of the Bill.

Schedule 25 agreed to.

Clause 309

Disclosing information overseas

Question proposed, That the clause stand part of the Bill.

[Kevin Hollinrake]

Clause 309 provides clearer rules and more efficient gateways for information sharing between UK authorities and their overseas counterparts. The powers will apply to all UK public authorities covered by part 9 of the Enterprise Act 2002—primarily authorities with functions in connection with competition and consumer protection law. The existing overseas disclosure gateway in part 9 will be replaced with three new gateways. Under the first, a relevant UK authority may share information with an overseas authority for the joint purpose of facilitating both its own statutory functions and the functions of the overseas authority.

Under the second new gateway, a relevant UK authority can share information only to facilitate the functions of an overseas authority. When deciding whether to make a disclosure under the two gateways, the UK public authority will need to have regard to a number of factors, such as whether the laws and the practices of the other country can ensure that confidential information is appropriately stored and protected.

When deciding whether to make a disclosure to facilitate the functions of the overseas public authority only, the UK authority must give due regard to an additional layer of considerations. That includes whether the reason for the request is sufficiently serious to justify the disclosure of information. The Secretary of State will retain a power to modify, add to, or remove any of the considerations for each gateway. That is to ensure that the list of considerations remains balanced and appropriate.

There are restrictions that apply to the use and further disclosure of any information that is shared under the two gateways. The restrictions mean that, unless the disclosing authority provides its consent, information disclosed must not be used by the overseas authority for any purpose other than the one for which the information was originally disclosed; nor may the information be passed on to a third party. The Secretary of State will retain the existing power to prevent overseas disclosure of information if they consider the relevant proceedings or investigation would be more appropriately brought or carried out by authorities in the UK or in another country.

Finally, the clause introduces a new gateway for overseas disclosures by a UK public authority for the purposes of facilitating the terms of a designated co-operation arrangement. The Secretary of State will have a power to designate suitable co-operation arrangements in regulations if they are satisfied that they meet the safeguards set out in the legislation.

[Seema Malhotra]

I thank the Minister for his detailed remarks on clause 309. I will keep my remarks brief. I have concerns about some of the detail. The clause deals with disclosing information overseas. It will amend part 9 of the Enterprise Act by replacing the current overseas disclosure gateway in section 243 with new provisions governing the ability of the CMA and other UK public authorities to exchange information with overseas public authorities.

As the Minister outlined, there will be three new gateways that allow for overseas disclosures in defined circumstances, with safeguards to protect specified information. We welcome the clause. It will be important to see how it is taken forward in the guidance. It is important to have this provision in legislation, not least because tackling competition issues requires us to play an active role in global competition and consumer protection policy.

Question put and agreed to.

Clause 309 accordingly ordered to stand part of the Bill.

Clause 310

Duty of expedition on the CMA and sectoral regulators

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[Kevin Hollinrake]

Clause 310 introduces a statutory duty of expedition in relation to the CMA’s competition and consumer law functions, including the functions relating to the new digital competition regime. Schedule 26 makes changes to the legislation that empower the sector regulators to exercise their concurrent competition powers so that they are under an equivalent duty when they do so. The new duty will require the CMA to have regard to the need for making a decision, or taking action, as soon as is reasonably practicable. It will apply to casework functions and decision making, but will exclude auxiliary functions such as the publication of guidance.

The impact of the new duty of expedition will vary on a case-by-case basis. For example, if a business asks for repeated extensions to deadlines for providing information, the duty will bolster the CMA’s ability to move the investigation along. The CMA will need to continue to ensure fair process and make evidence-based robust decisions. Parties will continue to have a right to appeal against decisions made by the CMA.

[Seema Malhotra]

The Minister has outlined the detail of the clause. Again, I will keep my remarks brief. Clause 310 would insert a new schedule into the Enterprise and Regulatory Reform Act 2013 to provide for a statutory duty of expedition in relation to specified CMA competition, consumer law and digital markets functions. The new provisions expand and replace the duty that previously applied in relation to the CMA’s functions. A new provision inserted by the clause specifies that, in making any decision or taking any action for the purposes of any of its functions within the new schedule, the CMA must have regard to the need to do so as soon as is reasonably practicable. That obligation would apply to all steps of the relevant investigatory, regulatory or enforcement process. The clause also introduces schedule 26, which imposes a duty of expedition on sectoral regulators in respect of their competition functions that are exercisable concurrently with the CMA. We support the schedule.

Question put and agreed to.

Clause 310 accordingly ordered to stand part of the Bill.

Schedule 26 agreed to.

Clause 311

Interpretation

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss clauses 312 to 315 stand part.

[Kevin Hollinrake]

Clause 311 defines various terms used throughout the Bill, such as “digital content” and “firm”.

Clause 312 provides that expenditure incurred by the Secretary of State or CMA as a result of the Bill is to be met from funds provided by Parliament.

Clause 313 gives the Secretary of State a power by regulations to make any provision that is consequential on the Bill or any provision made under it. The power can be used to amend any legislation, but it is limited to primary legislation passed or made before the end of the parliamentary Session in which this Bill is passed. This limitation also applies to any secondary legislation made under the primary legislation.

Clause 314 makes further provision in relation to powers to make regulations under the Bill, including interpretative provisions about the relevant parliamentary procedures. This clause does not apply to commencement regulations.

Clause 315 sets out that the Bill will apply to England, Wales, Scotland and Northern Ireland.

[Alex Davies-Jones (Pontypridd) (Lab)]

As we know and as the Minister said, the clause sets out the meanings of various terms used in the Bill. Throughout the debates in Committee, we have raised fundamental questions on several points where we feel that the interpretation of the Bill requires further confirmation. I welcome the Minister’s clarity on a number of those issues. In the rest of the clauses in the group, we see clarity around financial provisions, regulation, extent and the short title—all as is fairly standard.

We all understand the need for this Bill and welcome many of the provisions. That is why Labour has been generally supportive as we have proceeded through Committee. I hope we can also agree that the measures in the Bill must come into force as soon as is reasonably possible. That is particularly important when we know that the digital markets unit has essentially been operating in shadow form for a number of years. It must be compelled to draw on the lessons learned and able to act meaningfully from day one. All things said, we obviously support this grouping, and we look forward to the Third Reading of the Bill before supporting its progression to the other place.

Question put and agreed to.

Clause 311 accordingly ordered to stand part of the Bill.

Clauses 312 to 315 ordered to stand part of the Bill.

Clause 316

Commencement

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

I beg to move amendment 136, in clause 316, page 221, line 25, at end insert—

“(3) Sections 245 to 273 come into force from April 2026.”

This amendment provides an explicit implementation period for the subscription contract provisions.

The amendment suggests the need for an explicit implementation period for the subscription contract provisions debated earlier in clauses 245 to 273. That comes about for several reasons. The Government say and Ministers tell us that they have consulted businesses, but I note that the Federation of Small Businesses has raised concerns about the provisions in the Bill, including timing and coverage, as have Sky and other larger organisations. There seems to be a concern that there is no specific time or date. In an earlier sitting, we heard the Minister tell us that some provisions would be immediate and some provisions would be for new contracts, not for existing contracts, but business organisations and representative organisations were unaware of the Government’s plans, despite the need to prepare to implement provisions and allow for the costs of new regulations to take effect on businesses.

Businesses have said that the Bill goes further than the Government’s initial consultation expected, including on things such as clauses 245 to 273 and reminders. I think that this correspondence went to all members of the Committee, but Sky suggests that

“measures have shifted away from a high level, principles-based approach”—

which was in the consultation initially—

“with government opting instead for highly prescriptive requirements on the face of the Bill itself. This change was made without any substantive consultation with businesses, despite the material difference such an approach makes to compliance and implementation costs.”

That is from Sky, which has 12,000 jobs focused on this issue, so it is in a better position than smaller companies to get on with that work. Its concern is that the Bill does not do what the Government said it would do, and that new costs will be imposed.

It is not just the FSB that has raised concerns about the costs. Sky said that the Government’s impact assessment suggests that the new requirements

“will cost UK business £400 million to set up and £1.2 billion in the first year alone.”

This is not a benign set of requirements in legislation; it is a costly endeavour. The amendment seeks to give UK businesses space to prepare to implement the provisions and absorb some of the costs, which would not have been in their business plans if they were set some time ago.

In an earlier sitting, I asked the Minister about the timeframe, and the amendment attempts to achieve some clarity about that. It would be good to hear how the Government will address the concerns of the business community, which has been surprised—let me put it that way—by what the Government have come forward with, in terms of the level of the measures, the fact that the requirements are on the face of the Bill, and the lack of a timeframe to prepare to deliver them.

I politely suggest that Ministers take a bit more time to work with the business community before the Bill goes any further to ensure UK businesses are ready, are not hit with further costs, and are prepared to implement the provisions of the Bill.

[Kevin Hollinrake]

I thank the hon. Gentleman for his amendment, which is very sensibly thought out. It proposes that the new rules for subscription contracts come into effect from April 2026. I very much admire his wish to balance the needs of businesses and consumers; that is exactly what we should be doing. Competitive markets that rely on business investment are good for consumers too, so there is a delicate balance to strike.

The hon. Gentleman seeks to ensure that businesses have clarity about the start date and know when the new rules will come into effect so they can make appropriate preparations. We have listened very closely to the needs of business. I met Sky and others that will be affected by the change to hear their concerns.

The hon. Gentleman said that the proposal goes further than other measures set out previously. They do not go as far as his Front-Bench colleagues would like them to go, in terms of cost to business. We believe we have struck the right balance.

Our opinion about notifications differs from that of the various providers that have made submissions. We think notifications are important because we want users to understand the contracts they are in and the methods of exiting them. The basic principle is that it should be as easy to exit a contract as it is to enter one. Some providers still want to require the customer to ring a call centre. We are having discussions, but we think we have struck a reasonable balance.

There are certainly issues relating to cooling-off periods, which the hon. Gentleman and I have discussed previously. We want to ensure that consumers cannot game the system by entering a contract, benefiting from it by downloading lots of information or content, watching it, and then cancelling without paying. We are dealing with that through secondary legislation.

The hon. Gentleman talks about the cost to business. Yes, there is a cost to business: the expectation is that the annual business impact will be about £170 million a year, but there are establishment costs too. It is not exactly a zero-sum game, because we want competition to develop through the provisions in the Bill. That will be good for consumers and businesses, so we believe there will be a net gain from this legislation. We want to ensure that consumers are treated fairly. Businesses should do well, but not at the expense of unfairly treated consumers. We seek to strike that balance.

[Neil Coyle]

If this is about balance and fairness, businesses are right to say that there is an annual reminder system for other regulated services, such as broadband and telephones. The Bill proposes a six-monthly reminder system for new services, so is the Minister saying that other services should be better regulated and that the reminder system should be more frequent to help consumers get fairness, or is he saying that businesses are being treated better in some circumstances than the Bill will allow? I am confused about which bit of Government policy he does not support in that domain.

[Kevin Hollinrake]

I think there are differences in different sectors, and the hon. Gentleman referred to things such as mobile phone contracts. Lots of people subscribe to things they do not know about, as set out in the impact assessments and the various different evidence we have had from different parties. There are differences, and we believe it is right to have slightly more frequent requirements, such as six-monthly notifications, but we are continuing to discuss these issues. Yesterday we met a representative of the media industry, who raised similar concerns, and we are listening to them. We certainly hope to strike the balance that the hon. Gentleman seeks, but we think it is wrong to put a commencement date on the face of the Bill, given that there is quite a lot of work to do to get it to pass through both Houses.

Again, the balance we need to strike must not delay the commencement of the Bill, because it will benefit consumers, and we are also making sure that stakeholders, including businesses, have time to understand and implement the new rules. We will continue to engage to make sure that both we and they fully understand the operationalised impact of the new rules. I hope the hon. Member will withdraw his amendment on the basis that we will keep those conversations ongoing.

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[The Chair]

With this it will be convenient to discuss clause 317 stand part.

[Kevin Hollinrake]

Clause 316 makes provision regarding commencement of the Bill. Part 6 and powers to make regulations will commence at Royal Assent, and all other parts will commence by way of regulations made by the Secretary of State. Clause 317 establishes the short title.

[Alex Davies-Jones]

We have no further comments, Chair.

Question put and agreed to.

Clause 316 accordingly ordered to stand part of the Bill.

Clause 317 ordered to stand part of the Bill.

New Clause 1

Decision not to make final offer order

“(1) The CMA may decide not to make a final offer order in relation to the transaction where it has reasonable grounds to believe that there has been a material change of circumstances since the final offer initiation notice was given.

(2) For the purposes of this section and section 42(3) a material change of circumstances includes an agreement between the designated undertaking and the third party with respect to terms as to payment in relation to the transaction.

(3) Where the CMA decides not to make a final offer order, it must give a notice to that effect to the designated undertaking and the third party.

(4) The notice must include the reasonable grounds referred to in subsection (1).

(5) As soon as reasonably practicable after giving a notice under subsection (3), the CMA must publish a statement summarising the contents of the notice.”—(Kevin Hollinrake.)

This new clause, together with Amendment 10, ensures that the CMA can end the final offer mechanism without making a final offer order at any time after giving a final offer initiation notice. It would appear after clause 41.

Brought up, read the First and Second time, and added to the Bill.

New Clause 8

Limit on secondary ticketing

“(1) The Consumer Rights Act 2015 is amended as follows.

(2) After section 91 (prohibition on cancellation or blacklisting) insert—

‘91A Limit on secondary ticketing

(1) This section applies where a person (‘the seller’) re-sells a ticket for a recreational, sporting or cultural event in the United Kingdom through a secondary ticketing facility.

(2) The operator of the facility must—

(a) identify the maximum number of tickets available for a consumer to buy from the primary market for any event for which tickets are being re-sold through their facility; and

(b) check that the seller has not bought more tickets than they are permitted to buy as set out in subsection (2)(a) with the intention to re-sell, unless the seller provides proof that they have bought more tickets than they are permitted to buy from the primary market with the consent of the event organiser.

(3) The operator of the facility must not allow the seller or any associate of the seller to list more tickets for an event than can be bought by a consumer through the primary market.

(4) If the operator breaches its duties in subsections (2) and (3), they are jointly liable with the seller for enforcement action against them as set out in section 93’”.—(Seema Malhotra.)

This new clause would amend the Consumer Rights Act 2015 to introduce provisions banning sellers on secondary ticketing sites from selling more tickets than can be bought by consumers on the primary market.

Brought up, and read the First time.

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[Seema Malhotra]

These new clauses all relate to the secondary ticketing market. In particular, they aim to further regulate the market in order to protect consumers in a sector where they are all too often left to fend for themselves. I do not plan to press these new clauses to a vote today, but I do want to speak to them. The Minister’s response will determine how we choose to move forward on Report or in further stages, because this is an important issue.

New clause 8 would amend the Consumer Rights Act 2015 to introduce provisions banning sellers on secondary ticketing sites from selling from more tickets than can be bought by consumers on the primary market. That is a direct recommendation from the CMA’s August 2021 “Secondary ticketing” report. The intent is simple: it would filter out sellers who have obtained tickets through the use of illegal bots with the intention to sell them on at a significantly inflated price. It would also reduce the risk of consumers being sold fake tickets.

New clause 9 would amend the Consumer Rights Act 2015 to impose a duty on secondary ticketing platforms to verify details from the sellers who use them. That would make it harder for bad actors who intend to scam or rip off consumers to use secondary ticketing platforms, as it would be far easier to track their details. That is also a direct recommendation from the CMA’s 2021 report. New clause 10 would introduce a requirement on the Secretary of State to produce a report on the merits of introducing a new regulatory function in the secondary ticketing sector, as recommended by the CMA in its report.

I will take a step back from the specifics of the new clauses to briefly address the broader picture of the secondary ticketing market, where consumers are continually ripped off or put at risk of falling victim to a scam. I am sure that many Committee members, and those who may be watching our proceedings, will have either had their own experiences or heard of constituents being ripped off or scammed for tickets to musical or sporting events. That is not to say that every person who resells on the secondary ticketing market is attempting to scam or rip off consumers—far from it. However, the Minister will know that when those scams and rip-offs occur, there is little in the way of enforcement against either the seller or the platforms that host and legitimise them.

The CMA’s 2021 report helpfully outlined the major areas of concern in the current secondary ticketing market. It said:

“We are concerned that some approaches used by professional resellers to buy up tickets may be illegal – involving committing fraud and/or breaching legislation introduced to prevent the bulk purchase of tickets using computer bots...Such illegal activity will reduce the number of tickets available at face value on the primary market – and increase the number of tickets advertised through secondary ticket platforms at significantly higher prices. The CMA often receives complaints about these practices but does not have the powers to tackle them.”

It went on to say:

“We are concerned that professional resellers may be i) speculatively advertising tickets that they do not own and ii) advertising tickets with inaccurate information about the ticket or the seller’s identity, which sellers are required to provide, by law, when listing tickets for sale. The CMA’s recent enforcement cases required viagogo and StubHub to put in place certain safeguards to ensure key information was gathered and displayed to consumers and that where such information was being displayed inaccurately this could be addressed. However, even if platforms comply in full with these obligations, speculative listings and inaccurate information may still appear if the resellers do not provide correct information to the platforms about themselves and/or the tickets they are listing.”

In each of those cases, there is a clear risk of consumer detriment, through being scammed or ripped off. As a result, the CMA in the same report made a series of recommendations to Government that would enable more robust enforcement in the sector. But shortly before the Bill was introduced, the Minister wrote to the CMA, stating that the Government would not adopt its recommendations. Specifically, and as part of what seems to be the quite weak rationale by the Government for not adopting those proposals, there was the suggestion that the conviction of just two ticket touts three years ago acts as a robust enough deterrent to bad actors. That seems more like the Government kicking the can down the road and failing to act in the interests of consumers, which was so powerfully highlighted by my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) on Second Reading.

I urge the Government to consider seriously these new clauses. This need not be party political; in fact, it is far from that. They are direct recommendations from the CMA, given the work that it has done and that it does. It is a regulator whose judgment we all clearly and rightly value, considering the increased powers—and expectations for its work—granted in the Bill. The new clauses are cost free and would significantly increase the protections available to consumers using the secondary ticketing market in the UK—they would dramatically increase protections for all consumers. I look forward to the Minister’s response.

[Kevin Hollinrake]

Two of these new clauses seek to add further regulation on secondary ticketing and platforms. The third would provide for a report on the introduction of a new regulatory function for the secondary ticketing market, to be prepared within 12 months of the Bill receiving Royal Assent. I thank the hon. Member for these new clauses. I am also grateful for the work of her colleague, the hon. Member for Washington and Sunderland West, who has worked so hard in this space.

The new clauses reflect the recommendations made by the CMA in its secondary ticketing report from 2021, as the hon. Member for Feltham and Heston said. She also referred to our position, which we set out on 10 May 2023. At this point, it is too early, we believe, to bring forward further regulation on secondary ticketing.

One overarching point that I think it is fair to make here is that we should all encourage the primary market to do more to inhibit touting and report breaches of existing law. If anybody went to Glastonbury recently, they would have found great difficulty in—in fact, the impossibility of—selling on tickets, because they are limited to the person who bought the tickets in the first place, so it is clear that primary markets can do more to clamp down on secondary ticketing malpractice where it exists.

The Bill, under part 3, will itself give more powers to the CMA and other public enforcers to enforce existing consumer protection law, which includes legislation applicable to the secondary tickets sector. The shadow Minister referred to good work that is going on in this area, including existing laws. As she said, the National Trading Standards eCrime Team successfully prosecuted two ticket touts for fraud and consumer law breaches. They received prison sentences of four years and two and a half years and were subject to a £6.2 million confiscation order. Despite the imposition of additional regulation by the Breaching of Limits on Ticket Sales Regulations 2018, it is those general consumer protection law powers that the regulators have tended to use most effectively.

New clause 8 would make the platform liable where the number of tickets resold on a platform by an individual seller exceeded the maximum set by the event organiser in the primary market. It is already an offence to use automated software to buy more tickets for events than permitted, with a view to financial gain. If the rules are applied, there should be no need for further action on the secondary market, such as that proposed. However, we will work with the CMA to monitor the market and technological developments to assess whether the measure is both practical and necessary.

New clause 9 seeks to put a strict obligation on a secondary ticketing facility to verify certain information provided to it by a seller. The CMA acknowledges that placing a strict liability on platforms in this way would be an unprecedented step. Moreover, thanks to previous enforcement work of the CMA and others in the secondary ticketing market, choices and associated costs are more transparent than they were five years ago. Therefore, it is not clear to me that the proposal would amount to proportionate regulation.

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[Seema Malhotra]

I beg to move, That the clause be read a Second time.

New clause 11 would introduce an annual reporting requirement on the CMA to report to Parliament on the operation of their functions under parts 2 and 3 of the Act, complementing the new clause debated earlier in Committee that would have introduced such a report in relation to part 1 of the Bill. Specifically, the report under new clause 11 would need to include the effectiveness of the operation of the CMA’s functions under parts 2 and 3 and the impact of the operation of those functions on maintaining competition in digital markets and on the enforcement of consumer protection law.

The report would have to be laid before both Houses of Parliament and be produced annually. The core principles behind the new clause—principles I would hope the Minister agrees with—are transparency and scrutiny. The legislation rightly confers significant powers on various regulatory bodies in the UK, not least the CMA. However, to ensure those powers are used as effectively and as fairly as possible, Parliament must be able to fully scrutinise their use and effectiveness in achieving their aims.

There is also the question of where the report goes and who scrutinises it on behalf of Parliament and the public. While I appreciate and recognise that the CMA will have frequent communication and contact with various Departments and Secretaries of State, opportunities for scrutiny are more disparate. With the former Regulatory Reform Committee being subsumed by the Business and Trade Committee, much of the opportunity for scrutiny is supposed to lie there. However, House of Commons Library research highlights that in the past five years, the CMA has appeared before the Committee just five times, and three times since 2021. The CMA does an incredibly significant job in our economy. While an average of one Select Committee appearance a year is appreciated, with the new functions granted by the Bill, one cannot help but feel that the oversight and scrutiny need to become more frequent and detailed to ensure parliamentarians and the public are as informed of the CMA’s work as possible.

I note the Regulatory Reform Group, made up of MPs from the Minister’s own party, has recently called for a cross-party Committee to oversee the performance of regulators and to offer a systematic appraisal of the UK’s regulators that cover key economic sectors. Its members are not the only ones concerned by the overall lack of transparency and scrutiny of the performance of regulators and competition authorities. There is a need for better mechanisms to allow issues to be identified earlier and reforms to be made.

Clearly, there is appetite in Parliament for further scrutiny of our regulators, not least the CMA. That is not to criticise the regulators in any way, but it is a reflection of their increased importance, our increased responsibility and the growing impact of their work in a digital economy, subject to that greater scrutiny. As a result, I hope the Minister agrees that parliamentary scrutiny of the kind that the new clause would provide is important for the effective operation of this new regulatory regime. I urge him to consider supporting the new clause—I know he has been sympathetic to similar clauses in earlier parts of the Bill—so that we see reports and discussion on the scrutiny measures of this House.

[Kevin Hollinrake]

I wholeheartedly agree that the CMA should be firmly accountable to Parliament across its digital competition and consumer functions. However, that is already the case. The CMA is already required to present an annual report to Parliament. That includes a survey of developments relating to its functions, assessments of its performance against its objectives and enforcement activity, and a summary of key decisions and financial expenditure. The CEO and chair of the CMA regularly appear before the relevant Select Committee—five times as the hon. Member said. Most recently, they appeared before the House of Lords Communications and Digital Committee. Indeed, they meet me on a regular basis, and we also provide an annual strategy steer.

In relation to the CMA’s new consumer direct enforcement functions under part 3 of the Bill, clause 193 gives the Secretary of State the power to request a report from the CMA from time to time on the effectiveness of interventions. Such a report must also be published by the CMA, so that it is available to parliamentarians and the public. I noted her points on the Regulatory Reform Group. I met Lord Tyrie and my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami). They made some interesting points, which I am sure the wider House will have heard. These matters should be kept under review, but for these reasons, I hope the hon. Lady will withdraw the new clause.

[Seema Malhotra]

I thank the Minister for his remarks. New clause 11 was inspired by new clauses with a similar purpose in the United Kingdom Internal Market Act 2020, so there is an important precedent. I will not press the new clause to a vote, but we will keep the matter under review. I take this opportunity to thank all the Clerks who have been involved in the Committee. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

[Kevin Hollinrake]

On a point of order, Dame Maria. I put on the record my thanks to all the Clerks and the many people who worked on the Bill, including all the officials and my private office, for doing a tremendous job. I thank Opposition Members for their constructive dialogue.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

Further to that point of order, Dame Maria. The Under-Secretary of State for Science, Innovation and Technology, the hon. Member for Sutton and Cheam agreed in our proceedings to send a letter and told the Committee that a letter had been sent. No letter has been received and no letter is in the Library. Will the Minister please send the letter as promised?

Digital Markets, Competition and Consumers Bill

Kevin Hollinrake Excerpts

Report stage
Monday 20th November 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Sir Roger Gale)]

With this it will be convenient to discuss the following:

Government new clause 8—Use of damages-based agreements in opt-out collective proceedings.

Government new clause 9—Mergers of energy network enterprises.

Government new clause 10—Power to make a reference after previously deciding not to do so.

Government new clause 11—Taking action in relation to regulated markets.

Government new clause 12—Meaning of “working day” in Parts 3 and 4 of EA 2002.

Government new clause 13—ADR fees regulations.

Government new clause 14—Power to require information about competition in connection with motor fuel.

Government new clause 15—Penalties for failure to comply with notices under section (Power to require information about competition in connection with motor fuel.

Government new clause 16—Procedure and appeals.

Government new clause 17—Statement of policy on penalties.

Government new clause 18—Offences etc.

Government new clause 19—Penalties under section (Penalties for failure to comply with notices under section (Power to require information about competition in connection with motor fuel)) and offences under section (Offences etc).

Government new clause 20—Information sharing.

Government new clause 21—Expiry of this Chapter.

Government new clause 22—Removal of limit on the tenure of a chair of the Competition Appeal Tribunal.

New clause 1—Meaning of “payment account” and related terms—

“(1) ‘Payment account’ means an account held in the name of one or more consumers through which consumers are able to—

(a) place funds;

(b) withdraw cash; and

(c) execute and receive payment transactions to and from third parties, including over any designated payment system.

(2) ‘Payment account’ also includes the following types of account—

(a) savings accounts;

(b) credit card accounts;

(c) current account mortgages; and

(d) e-money accounts.

(3) ‘Designated payment system’ has the same meaning as within the Financial Services (Banking Reform) Act 2013.

(4) ‘Relevant institution’ means—

(a) any bank which has permission under Part 4A of the Financial Services and Markets Act 2000 to carry out the regulated activity of accepting deposits (within the meaning of section 22 of that Act, taken with Schedule 2 and any order under section 22);

(b) any building society within the meaning of section 119 of the Building Societies Act 1986;

(c) any credit institution within the meaning of the Payment Services Regulations 2017;

(d) any authorised payment institution within the meaning of the Payment Service Regulations 2017; and

(e) any small payment institution within the meaning of the Payment Services Regulations 2017.

(5) ‘Discriminate’ means that a relevant institution acts in a way which, were that relevant institution a public authority, would constitute a breach of its obligations under section 6(1) of the Human Rights Act 1998, in so far as those obligations relate to—

(a) Article 8 of the European Convention on Human Rights;

(b) Article 9 of the European Convention on Human Rights;

(c) Article 10 of the European Convention on Human Rights;

(d) Article 11 of the European Convention of Human Rights; and

(e) any of the Articles listed in paragraphs (a) to (d) when read with Article 14 of the European Convention on Human Rights.”

This new clause defines relevant terms for the purposes of NC2.

New clause 2—Rights of consumers in relation to payment accounts—

“(1) A relevant institution must not discriminate against a consumer when deciding—

(a) whether to offer a consumer a payment account;

(b) whether to alter, or vary in any way, the terms of an existing payment account in use by a consumer; or

(c) whether to terminate or otherwise restrict a consumer’s access to their payment account.

(2) A relevant institution, within 30 days of deciding to alter, vary, terminate, or otherwise restrict a consumer’s access to their payment account, or deciding not to offer a consumer a payment account, must provide the consumer with a written statement of reasons explaining their decision.

(3) A written statement of reasons under subsection (2) must clearly specify—

(a) the basis upon which such a decision was taken, including reference to any terms and conditions within the consumer’s contract upon which the relevant institution relies, or reference to any legal obligations placed upon the relevant institution;

(b) all evidence taken into account by the relevant institution in reaching its decision; and

(c) any other matters that had bearing on the relevant institution’s decision.”

This new clause would place a duty on banks, building societies and similar institutions not to discriminate against consumers when offering retail banking services.

New clause 3—Rights of redress—

“Where a relevant institution has acted in breach of its obligations under section [Rights of consumers in relation to payment accounts] (1), the consumer shall have a right to damages in respect of any—

(a) financial loss;

(b) emotional distress; and

(c) physical inconvenience and discomfort.”

This new clause would give consumers a right to redress if discriminated against under NC2.

New clause 4—Enforcement of rights of redress—

“(1) A consumer with a right to damages by virtue of section [Rights of redress](1) may bring a claim in civil proceedings to enforce that right.

(2) The Limitation Act 1980 applies to a claim under this section in England and Wales as if it were an action founded on simple contract.

(3) The Limitation (Northern Ireland) Order 1989 (S.I. 1989/1339 (N.I. 11)) applies to a claim under this section in Northern Ireland as if it were an action founded on simple contract.”

This new clause makes provision for the enforcement of redress under NC3.

New clause 24—Review of Competition Appeal Tribunal—

“(1) The Secretary of State must, as soon the Secretary of State considers reasonable practicable after this Act has been passed, commission a review of all processes involving the Competition Appeal Tribunal.

(2) The Secretary of State must ensure that the review is conducted independently of the Digital Markets Unit and the CMA.

(3) The Secretary of State must lay a report of the review before Parliament.”

This new clause would require the Secretary of State to commission an independent review of the Competition Appeals Tribunal processes.

New clause 25—Duty to treat consumer interests as paramount—

“(1) In applying the provisions of this Act, the CMA and the Courts have an overriding duty to treat consumer interests as paramount.

(2) The duty set out in subsection (1) includes a duty to—

(a) address consumer detriment, including the protection of vulnerable consumers;

(b) expedite investigations that give rise to consumer detriment; and

(c) narrow points of challenge in appeals to CMA decisions that engage consumer detriment.”

This new clause would impose a duty on the CMA and the Courts to treat consumer issues as paramount.

New clause 26—Proceedings before the Tribunal: claim for damages—

“(1) The Competition Act 1998 is amended as follows.

(2) In section 47A, after subsection (2)(b) insert—

“(c) Part 4 of the Digital Markets Act 2023””

This new clause would allow claims for damages in respect of infringements of the provisions of Part 4 of this Bill.

New clause 29—Contract renewal: option to opt in—

“(1) Before a trader enters into a subscription contract with a consumer where section 247(2) applies, the trader must ask the consumer whether they wish to opt-in to an arrangement under which the contract renews automatically at one or more of the following times—

(a) after a period of six months and every six months thereafter, or

(b) if the period between the consumer being charged for the first and second time is longer than six months, each time payment is due.

(2) If the consumer does not opt-in to such an arrangement, the trader must provide a date by which the consumer must notify the trader of the consumer’s intention to renew the contract, which must be no earlier than 28 days before the renewal date.

(3) If the consumer has not—

(a) opted into an arrangement under subsection (1), or

(b) given notification of the consumer’s intention to renew by the date specified under subsection (2),

the contract will lapse on the renewal date.”

This new clause would allow the consumer to opt-out of their subscription auto-renewing every six months, or if the period between payments is longer than six months, before every payment. If the consumer does not opt-in to auto-renewal, they would be required to notify the trader manually about renewing.

New clause 30—Contract renewal: variable rate contracts—

“(1) Before a trader enters into a subscription contract with a consumer where section 247(3) applies, the trader must ask the consumer whether they wish to opt into an arrangement under which the contract renews automatically on the date the consumer becomes liable for the first charge or the first higher charge.

(2) If the consumer does not opt into an arrangement under subsection (1), the trader must provide a date by which the consumer must notify the trader of the consumer’s intention to renew the contract, which must be no earlier than five days before the renewal date.

(3) The trader must also ask the consumer whether they wish to opt into an arrangement under which the contract renews automatically—

(a) after a period of either six months from the first charge or higher charge and every six months thereafter, or

(b) if the period between the consumer being charged for the first and second time is longer than six months, each time payment is due.

(4) If the consumer does not opt into an arrangement under subsection (3), the trader must provide a date by which the consumer must notify the trader of the consumer’s intention to renew the contract, which must be no earlier than 28 days before the renewal date.

(5) If the consumer has not—

(a) opted into an arrangement under subsection (1) or subsection (3), or

(b) given notification of the consumer’s intention to renew by the date specified under (as the case may be) subsection (2) or subsection (4),

the contract will lapse on the next renewal date.”

This new clause would introduce an option for the consumer to opt-out of their subscription auto-renewing after their free or discounted trial. Otherwise, they would have to notify the trader manually about the subscription continuing. It also introduces an option for the consumer to opt-out of their subscription auto-renewing.

New clause 31—Regulatory burdens arising from competition and consumer regulation—

“(1) The CMA must, at least once a year, publish a report setting out its assessment of the economic cost of regulatory burdens that have been created and removed over the previous year through the exercise by public bodies of—

(a) competition and consumer powers; and

(b) the following activities, as far as they relate to competition and consumer matters—

(i) the imposition of conduct requirements;

(ii) dispute resolution and public enforcement activities;

(iii) the monitoring of undertakings, and

(iv) the issuing of regulatory orders.

(2) The Secretary of State must ensure that public bodies provide the CMA with information the CMA considers is necessary for completion of the report.

(3) The Secretary of State must ensure that the net economic cost of regulatory burdens set out in the report is zero or less in every year.

(4) In this section a “regulatory burden” means a burden as defined in section 1(3) of the Legislative and Regulatory Reform Act 2006.”

This new clause places on Ministers a permanent duty to ensure that the net economic cost of burdens from competition and consumer regulation is zero or less each year.

Government amendment 69.

Amendment 207, in clause 141, page 89, line 13, at end insert—

“(c) the collective interests of consumers include avoiding any detriment that might be incurred by consumers if the United Kingdom does not reach a level of net zero carbon emissions by 2030.”

This amendment would mean that part of the test of whether a commercial practice had committed an infringement would be whether the commercial practice had failed to protect consumers from any detrimental effects arising from a failure to achieve net zero by 2030.

Government amendments 70 to 79, 81, 82 and 85.

Amendment 226, in clause 224, page 150, line 27, at end insert—

“(4A) Where a commercial practice has been found to be unfair under paragraph 32 of Schedule 18 of this Act, any body listed as a public designated enforcer in section 144(1) of this Act may require the removal of the relevant online marketing from the internet.”

This amendment allows enforcement bodies to remove the marketing of fake or counterfeit products from the internet.

Amendment 208, page 150, line 29, at end insert—

“(6) An established means used to encourage control of unfair commercial practices must include the following measures—

(a) investigation and determination on a timely basis—

(i) in accordance with a pre-determined process which has been published on the internet,

(ii) by people who are independent of any organisation undertaking commercial practices, and

(iii) with the outcome of any decision published.

(b) the appointment of a board to oversee the investigation and determination process, with the majority of the members of the board independent of any organisation undertaking commercial practices;

(c) provision for the suspension of a commercial practice during an investigation and prior to a determination being made;

(d) provision for guidance to be issued, by the CMA, the relevant weights and measures authority or, if the established means is an organisation, the established means itself, about the lawfulness of a commercial practice;

(e) publication of statistical and other information about the operation of, and compliance with, the established means to enable the CMA or weights and measures authority in question to assess on an annual basis the continuing appropriateness of using the established means.”

This amendment sets out conditions, including in relation to independence and transparency, for the means by which the control of unfair commercial practices will be encouraged.

Government amendments 86 to 93.

Amendment 210, in clause 251, page 166, line 24, leave out “six” and insert “twelve”.

This amendment would provide for traders to have to issue reminder notices to consumers about ongoing subscription contracts only every twelve months, rather than every six.

Amendment 211, page 166, line 36, leave out subsection (5) and insert—

“(5) The Secretary of State may, by regulations, make reasonable provision for the content and timing of reminder notices.”

This amendment, together with Amendments 212 and 213, would remove the detailed provision about the content and timing of reminder notices from the face of the Bill and instead give the Secretary of State the power to make such provision by regulation.

Government amendment 94.

Amendment 212, page 167, line 1, leave out Clause 252.

See explanatory statement to Amendment 211.

Government amendments 95 to 98.

Amendment 214, in clause 253, page 168, line 7, leave out “in a single communication” and insert

“in a manner that is straightforward, timely and does not impose unreasonable cost on a consumer”.

This amendment, together with Amendments 215 to 218, would remove from the Bill the existing detailed provisions for ending a subscription contract, intending that they should be covered by provision made in secondary legislation under the provisions of clause 270(1)(c), and instead set principles for how a contract may be ended.

Amendment 215, page 168, line 10, leave out subsection (2).

See explanatory statement to Amendment 214.

Amendment 216, page 168, line 15, leave out subsection (4).

See explanatory statement to Amendment 214.

Amendment 217, page 168, line 23, leave out subsection (6).

See explanatory statement to Amendment 214.

Amendment 218, in clause 254, page 168, line 37, leave out subsections (3) to (5).

See explanatory statement to Amendment 214.

Government amendments 99 and 100.

Amendment 219, page 170, line 25, leave out clause 257.

This amendment, together with Amendments 220 to 222, would remove the provision for a mandatory cooling-off period for a subscription contract.

Amendment 220, page 171, line 19, leave out clause 258.

See explanatory statement to Amendment 219.

Amendment 221, page 172, line 18, leave out clause 259.

See explanatory statement to Amendment 219.

Government amendments 101 to 103.

Amendment 222, in clause 272, page 180, line 25, leave out subsection (5).

See explanatory statement to Amendment 219.

Government amendments 104, 105, 107, 109, 110, 112 to 147 and 150 to 152.

Amendment 223, in clause 317, page 221, line 35 leave out “subsection (2)” and insert “subsections (2) and (2B)”.

This amendment and Amendment 224 would provide for an implementation period of two years before the provision in the Bill relating to subscription contracts comes into force.

Government amendments 153 and 154.

Amendment 224, page 222, line 6, at end insert—

“(2B) Chapter 2 of Part 4 comes into force two years after the day on which this Act is passed.”

See explanatory statement to Amendment 223.

Government new schedule 1—Mergers of energy network enterprises.

Government amendments 155 to 163.

Amendment 225, in schedule 18, page 343, line 42, at end insert—

“32 At any stage of a purchase process, presenting a price for a product which omits obligatory charges or fees (or an estimate thereof) which are payable by the majority of consumers, which are not revealed to the consumer until later in the purchase process.”

This amendment adds the practice of “drip-pricing”, a pricing technique in which traders advertise only part of a product’s price and reveal other obligatory charges later as the customer goes through the buying process, to the list of unfair commercial practices.

Amendment 227, page 343, line 42, at end insert—

“32 Marketing online products that are either—

(a) counterfeit; or

(b) dangerous.”

This amendment would add marketing counterfeit and dangerous online products to the list of banned practices.

Government amendments 164 to 170.

Amendment 228, in schedule 19, page 350, line 30, at end insert—

“Non-commercial society lotteries

13 (1) A contract under which a lottery ticket or tickets are purchased for one or more non-commercial society lotteries.

(2) In sub-paragraph (1), “non-commercial society” has the meaning given by section 19 of the Gambling Act 2005, and “lottery ticket” has the meaning given by section 253 of that Act.”

This amendment seeks to exclude lottery tickets purchased for non-commercial society lotteries from the scope of the provisions on subscription contracts.

Government amendment 171.

Amendment 213, in schedule 20, page 354, line 19, leave out paragraphs 28 to 38.

See explanatory statement to Amendment 211.

Government amendments 172 to 175.

[Kevin Hollinrake]

May I first echo the remarks about the excellent address by the Under-Secretary of State for Science, Innovation and Technology, my hon. Friend the Member for Meriden (Saqib Bhatti)? I welcome him to his place—he did a fine job on his first outing in such a complex debate.

I, too, am delighted to bring the Digital Markets, Competition and Consumers Bill to the House on Report. May I express my gratitude to colleagues across the House for their contributions to Second Reading and Committee stages, and for their continued engagement throughout its passage? I thank in particular the hon. Members for Pontypridd (Alex Davies-Jones) and for Feltham and Heston (Seema Malhotra) for their constructive engagement and commitment to seeing the Bill delivered quickly so that its benefits can be realised. I also thank my hon. Friend the Member for Weston-super-Mare (John Penrose) for his excellent engagement—over the weekend in particular—and my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland) for his many important and relevant amendments.

The reforms to the competition and consumer regimes contained in parts 2 to 5 of the Bill will grow the economy and deliver better outcomes for consumers and bona fide businesses. Consumers will have more choice and protection, and pay lower prices. Businesses will operate on a fairer and more level playing field. The reforms will do that by enhancing the wider competition regime, strengthening the enforcement of consumer protection law, and putting in place new consumer rights and more transparency.

It is a simple fact that the way in which we buy products and services today very often involves a digital process. The opportunities that follow are vast—more accessibility, flexibility and choice for consumers—but there is also a greater risk of consumer harm, including, for example, consumers being trapped in a subscription contract that they no longer want or purchasing goods that may not be up to scratch because they unknowingly relied on a fake review. We must ensure that consumers and their cash are protected.

Swifter interventions to tackle bad business practices against consumers are expected to deliver a consumer benefit of £9.7 billion over 10 years, as UK consumers benefit from new rights, stronger law enforcement and more competition through merger control. Importantly, the reforms will also grow the economy by boosting competition, better placing the UK to succeed in export markets. It will allow the Competition and Markets Authority to more effectively deter, prevent, and, where necessary, enforce against monopolistic behaviours. That will ensure that the free market can operate effectively.

The Government amendments to parts 2 to 5 of the Bill will provide greater clarity, ensure coherence with related legislation, and make sure the Bill’s measures meet their intended aims. Almost all the amendments are technical in nature. I will address them across four categories: competition, consumer enforcement, consumer rights and cross-cutting provisions.

First, the competition measures in the Bill will give the CMA new powers to enable it to tackle anti-competitive activity swiftly and effectively, meaning that it can focus its work on the areas of greatest potential harm. The competition environment is complex and ever evolving. We must respond carefully but decisively to changes in the judicial and legislative landscape to provide certainty and to avoid any unintended detrimental consequences of wider developments.

New clause 8 amends the Competition Act 1998 so that the absolute bar on damages-based agreements being relied on in opt-out collective actions will not apply to third-party litigation funding agreements, which are the main source of funding for that type of action. That responds to a recent Supreme Court judgment, and effectively restores the previously held understanding of the status of litigation funding agreements under the 1998 Act. Accordingly, it will have retrospective effect.

In response to a recent Competition Appeal Tribunal judgment, we are specifying the circumstances in which a market investigation reference may be made in relation to an area that has already been the subject of a market study but was not referred for further investigation at that time. We are also bringing forward a series of amendments to ensure alignment between this Bill and the Energy Act 2023, which introduced the energy network merger regime, and to make minor corrections to provisions relating to that regime. Separately, we are repealing paragraph 8 of schedule 3 to the 1998 Act to remove a redundant reference to the treaty establishing the European Coal and Steel Community. To ensure that the implementation trials for market remedies introduced by the Bill are as effective as possible, we are introducing new powers for the Secretary of State to extend the scope of implementation trials in the markets regime to include regulatory conditions.

I will now address the new direct consumer enforcement model. That model will enable the CMA to act faster and take on more consumer cases on behalf of the public, resulting in a further estimated direct benefit to consumers of tens, or potentially hundreds, of millions of pounds. The Government have tabled a series of technical amendments to increase certainty in respect of the CMA’s operational duties. They include aligning the definition of “business” in part 3 of the Bill with that in part 4 of chapter 1 to ensure that any breaches of unfair trading prohibitions can be enforced through the regime; and making provision about information-sharing between public authorities so that enforcers can obtain the information that they need to take enforcement action under part 3 of the Bill.

On appeals, we are adding a requirement for the CMA to include information about applicable appeal rights in a final breach-of-directions enforcement notice, as well as empowering the appeal court to send issues back to the CMA for decision on certain notices. We are also empowering the Secretary of State to update through regulations the specified maximum amounts for fixed and daily penalties imposable by a court or the CMA when a business breaches a formal information request.

Moving on to consumer rights—I am sure this will interest many Members across the House—the purpose of the Bill is simple: to empower consumers to get the deal that is right for them, and to increase their confidence in the products they buy and the services they use. The new rights on subscription traps will give consumers more control over their spending. Such traps have been the subject of some debate during the passage of the Bill, and the Government are introducing amendments to remove unintended consequences.

[Edward Timpson (Eddisbury) (Con)]

I welcome the introduction of consumer rights on subscriptions, which have become a real minefield for many people of all ages. Why do the Government feel it necessary to have this provision in the Bill and in primary legislation, when if it was in secondary legislation it could have more flexibility with changing circumstances?

[Kevin Hollinrake]

We think it is a sufficiently important issue and something we consulted on previously. We have a good idea of the kind of measures we would like to put in place, and we are adding more flexibility—my hon. Friend will have seen some of the Government amendments that have been tabled in response to concerns raised by Members of the House, including my right hon. and learned Friend the Member for South Swindon. We want that flexibility, yet we want to move on quickly with this important reform. There is about £1.6 billion of potential benefit to consumers through this Bill.

[Jim Shannon (Strangford) (DUP)]

I commend the Minister who is putting forward ideas that I, and perhaps my party, feel we can subscribe to and support. I always ask this question, because I think it is important that the general public have an access point if they have a question on something to do with consumer rights. Do the Government intend to ensure that there is some methodology—a phone call, an email address or contact person—who the public can contact if they have a question?

[Kevin Hollinrake]

Our position is that we do not intervene in the practices of businesses unless there is a necessity to do so. We leave those channels open for decisions by businesses in the services that they offer to consumers, rather than dictating to them how they should communicate with their consumers. It is absolutely right that those channels are open and freely available. One important thing we are doing in the Bill is making it much easier to terminate a contract. A person should be able to end a contract as easily as they enter into it, and that is an important part of the Bill.

The Government are bringing forward a series of amendments that remove the requirement for businesses that offer subscription contracts to send a reminder notice ahead of the first renewal notice in instances where there is no free trial. For businesses that offer those contract types, the amendments will see their regulatory burden decrease as they will be required to send only two reminder notices per year instead of three. That also ensures that consumers do not receive too many notices at the start of their contract. The requirement to send a reminder notice before a free or low-cost trial rolls over to a full contract will remain in place.

In addition, we are creating a new power for the Secretary of State to disapply or modify reminder notice requirements in respect of particular entities or contracts, and amend the timeframes in which a business must send a reminder notice to a consumer. The amendments provide greater flexibility and clarity on when reminder notices should be sent, allowing for adaptability post implementation. A further amendment clarifies that, in the event of a dispute about the cancellation of a contract, the onus is on the consumer to prove that the method in which they sent a notification to cancel their subscription contract was sufficiently clear. That intends to rectify the concern that businesses will be subject to enforcement action if a consumer attempts to cancel their subscription contract through unconventional means, for example through a tweet.

I thank my right hon. Friend the Member for Calder Valley (Craig Whittaker) and the hon. Member for Gordon (Richard Thomson) for their continued engagement on Second Reading and in Committee on the issue of whether society lotteries are captured under the subscription measures. As I said in Committee, it is certainly not our intention to capture those contracts. We are therefore introducing an amendment to clarify that gambling contracts, which are already regulated under gambling laws, are excluded from the scope of the subscription contract measures. I trust that that amendment will offer them, and those in the industry, clarity on the matter.

Let me turn to a series of technical Government amendments in relation to protections for consumer savings schemes. Such schemes involve making deposits to save towards a specified event such as Christmas or back-to-school shopping, and they are a vital means for British families to budget for those big occasions. The Bill is not designed to capture routine advance payments for services. In order to avoid possible uncertainty, we are introducing amendments that will exclude contracts regulated by Ofcom, such as prepaid pay-as-you-go mobile phone contracts, as well as contracts for prepaid passenger transport services, such as prepaid Transport for London Oyster cards, from the list of what constitutes a consumer savings scheme. Finally, we are introducing two amendments to maintain the effect of the Consumer Protection: Unfair Trading Regulations 2008, which the Bill repeals and largely restates. The first relates to the application of disclosure of information provisions in part 9 of the Enterprise Act 2002, and the second relates to the information requirement placed on a trader in certain circumstances. Two technical amendments are also being introduced.

--- Later in debate ---

To conclude, I am pleased that the Bill addresses so many of the issues that our constituents experience, but these matters must continue to be highlighted. I think we have all mentioned some examples. I ask the Minister to engage regionally with Northern Ireland Departments to ensure that the laws around consumer rights apply to Northern Ireland at the same time as they do to the mainland. I look forward to hearing about that in due course, and also about how we can all take advantage equally of the issues that have been raised in the House tonight, so that across this great United Kingdom of Great Britain and Northern Ireland, we can all be equal citizens—equal under the law and equally subject to the law.

[Kevin Hollinrake]

I thank right hon. and hon. Members for their contributions to the debate and for their ongoing engagement.

First, let me speak to the amendments tabled by the hon. Member for Pontypridd (Alex Davies-Jones), who has thoroughly enjoyed our engagements over the weeks that we have been studying the Bill. New clause 29 would impose a requirement on traders to ask their customers whether they want their subscription to renew automatically every six months when they sign up to a subscription contract. If they do not choose this auto-renewal option, the contract would end after six months, unless the customer expressly asked for it to continue. New clause 30 would apply equivalent requirements to contracts that renew automatically after a free or low-cost trial.

The Government agree that consumers must be protected from getting trapped in unwanted subscriptions. However, we do not think the new clauses would deliver this in the right way, and such an approach could end up inconveniencing many consumers. For example, if a consumer had not initially opted into an auto-renewing contract, but later decided that they wanted to keep the subscription, they would have to repeatedly communicate that they wanted to continue their subscription or risk its unintentionally lapsing. That risk could be multiplied across each subscription they held.

The new clauses would also impose undue additional costs on businesses. As my right hon. Friend the Member for North East Somerset (Sir Jacob Rees-Mogg) rightly stated, all regulatory costs end up being borne by consumers, so we must approach regulation with extreme care. The Government’s approach strikes the balance of protecting consumers without compromising the benefits of rolling subscriptions and the convenience they provide.

On amendment 225, the Government recently consulted on tackling the practice of drip pricing, and we will shortly set out the next steps, following an assessment of the responses. It would be premature to amend the Bill in advance of that.

Turning to my hon. Friend the Member for Weston-super-Mare (John Penrose), I agree with the instincts behind his ideas to control the costs of red tape and regulatory burdens in new clause 31, and with many of the points made about this issue in his Government-commissioned report on competition policy and the subsequent 18-month update that he published. I suggest that together, we can do better than what is set out in the new clause. He too knows that, as my right hon. Friend the Member for North East Somerset said, all regulations are ultimately paid for by consumers. It is absolutely right that we look to minimise regulation and that we also recognise that the best form of regulation is competition, which is what we are here to promote.

In his “Power To The People” report, my hon. Friend the Member for Weston-super-Mare recommends a one in, two out solution. It will be interesting to see where we can go with that. Everybody, certainly on the Government Benches, is concerned about regulation and the increasing burden on businesses. However, if we look at some of the regulations that we imposed on business in 2021-22—this is from “Better Regulation: Government’s Annual Report”—significant regulations were put in place covering things such as making our telecommunications more secure against foreign actors, climate-related financial disclosures and making homes more efficient, which I think most people would acknowledge we should do, as well as sanctions against Russian oligarchs and the rest. Those regulations are not necessarily the burdens that many Members might consider them to be.

When we look at regulation, we have to decide what is the right thing to do—the right things to leave, the right things to take out and the right things to amend. We have made a start by updating the better regulation framework, with earlier scrutiny of regulatory proposals by the Regulatory Policy Committee so that its advice can be applied before a legislative solution has been settled on. The updated framework focuses on designing the least burdensome policies, avoiding regulation completely where possible, and minimising costs and administrative burdens where regulation is required. In parallel to our call for evidence and forthcoming consultations, we are seeking to change the culture of regulation in the UK to be more pro-growth and business friendly.

New clause 31 proposes some important further measures. It would create much stronger accountability for any future Government who failed to control red tape costs properly. It would plug an important historical loophole by including economic regulators in the better regulation framework, and it would provide extra independence for the accountancy sector in reporting on changes in regulatory burdens, so that Governments cannot be accused of marking their own homework, as my hon. Friend puts it. However, the new clause is constrained by the scope of the Bill, so it cannot plug all the historical gaps in the better regulation framework, and it makes the CMA a successor to the RPC, when there may be better ways to ensure enhanced independence.

As a result, I would suggest a better alternative approach. Any regime should recognise the economic benefits as well as costs of any changes to regulation. Accounting for them is complex: some are indirect, some are externalities and some take years to manifest or come to fruition. Individual regulators should take responsibility for reporting on their activities, including what they have done to support the growth of the businesses they regulate, as well as what additional burdens they have created or removed, and why. In each case, I agree that we will need to establish targets and metrics to monitor the success of our regulators and of Government Departments in promoting growth.

There are a few legitimate exceptions from the RPC’s scrutiny process, such as urgent or civil emergency measures, but that should not mean whole areas of the economy are exempt from its scrutiny, otherwise we would leave loopholes that mean costs are still not scrutinised and potential benefits are ignored.

Although the RPC is already an independent scrutiny body, I agree that we should find ways to ensure even stronger and more independent measurement and reporting of changes in regulatory benefits and burdens, without assuming that the best or only answer is for the CMA to take over this function, as the new clause proposes. Finally, there must be stronger accountability than at present for any Government who fail to control regulatory burdens properly.

Although we do not think it is right to accept the new clause as it stands, I accept and agree with many of the things it tries to achieve. I therefore invite my hon. Friend to work with officials and me to develop a better, stronger way of achieving his four aims through a mixture of potential Government amendments to the Bill and other measures or statements of Government policy to be released publicly before Royal Assent, where the changes fall outside the Bill’s scope. I hope these proposals are acceptable and that he will not press the new clause.

Amendment 228, which was tabled by the hon. Member for Gordon (Richard Thomson), seeks to exclude lottery tickets purchased from non-commercial society lotteries from the scope of the provisions on subscription contracts. We agree with him on this, which is why we tabled a Government amendment to that effect. I thank him for his contribution.

New clause 24, which was tabled by my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland), would require the Secretary of State to commission a review of the Competition Appeal Tribunal’s processes, independent of the CMA and the DMU. I am grateful for his focus on this important matter and for the legal knowledge he brings to bear.

The Competition Appeal Tribunal Rules 2015, which set out the tribunal’s procedures, require the Secretary of State to carry out a regular review of the rules and to publish their conclusions, which last happened in April 2022. New clause 24 would unnecessarily duplicate this work.

Turning to new clause 25, the CMA’s overarching objective is to promote competition for the benefit of consumers, and this must shape the design of its interventions and how it prioritises its work. A consumer duty would overlap with that objective and is, in our view, unnecessary.

New clause 26 would extend the right to seek damages at the Competition Appeal Tribunal to all infringements of part 4. The Bill already provides for consumer redress in respect of some provisions of part 4. Additionally, the private redress provisions in part 3 include the power for public enforcers to seek enhanced consumer measures, including financial redress for consumers.

Amendment 210 would reduce the frequency with which a trader must send reminder notices. We share the intention of my right hon. and learned Friend the Member for South Swindon to ensure that businesses and consumers are not overburdened by reminder notices. However, we believe that this amendment would negatively impact consumers by increasing the risk that they end up paying longer for unwanted subscriptions. We think that requiring traders to send reminders every six months strikes the right balance.

Amendment 211 would create a new power for the Secretary of State to make reasonable provision relating to the content and timing of reminder notices. Amendments 212 and 213 would then remove existing provisions relating to such matters from clause 252 and schedule 20. As my right hon. and learned Friend recognises, we have tabled an amendment that provides a power to amend these details through regulations, enabling the Government to respond should evidence of consumer behaviour or operational practice indicate that adjustments are necessary.

Amendments 214 to 217 would remove requirements that are designed to ensure traders provide easy and accessible means for consumers to end their subscription contracts. Instead, principles would be set out to guide the arrangements put in place by traders, and relevant provisions would be made in secondary legislation. The Government are committed to ensuring that consumers are not hindered when trying to leave a subscription contract or when trying to stop a subscription renewing—the hon. Member for Strangford (Jim Shannon) also raised that point. That is the objective behind these provisions, and it is vital that they remain in the Bill. It is also critical that consumers have flexibility when ending their contract, rather than businesses dictating the communication channel, such as a phone cancellation only. We appreciate that any communication to end a contract must be sufficiently clear to a business, as is underlined by Government amendment 102. That amendment makes it clear that the onus is on the consumer to prove that their communication was sufficiently clear.

Amendments 219 to 222 would remove the mandatory cooling-off period for subscription contracts. It is important to retain those provisions as they provide essential protections for consumers. The renewal cooling-off period protects consumers who have signed up to trials or longer term contracts. That is particularly important since our consultation showed that many people forget to cancel those subscriptions before they automatically renew. We understand, however, that some businesses are concerned about how the cooling-off period will work in practice, particularly for digital streaming services. This is an important issue to get right, so the Government will publicly consult on the return and refund rules to ensure that they are fair and practical for businesses and consumers. That will include consulting on a waiver of cooling-off rights for some products.

Amendments 223 and 224 would apply a two-year implementation period to the subscription contract provisions in the Bill. The Government fully understand that clarity is important so that businesses know when the new rules will come into effect and can make the appropriate preparations. That is why we will continue to engage with stakeholders to understand the impact of implementing these new rules.

Let me move on to the hon. Member for Bermondsey and Old Southwark (Neil Coyle)—he and I have been walking these streets for so long. Amendment 227 would ban in all circumstances the marketing of counterfeit and dangerous products online, which are already offences under current consumer protection and product safety law. The Government are committed to strengthening enforcement of these laws through the reforms in part 3 of the Bill, and recently consulted on a number of proposals in the product safety review.

Amendment 226 would confer on public enforcers the power to require removal of such material from the internet. The Government have consulted on this issue, with proposals to extend the power to apply for online interface orders to all public enforcers. The Government will publish their response shortly. Finally, the public safety review includes proposals specifically aimed at tackling the sale of unsafe goods online. We will publish a response in due course.

The amendment tabled by my right hon. Friend the Member for North East Somerset (Sir Jacob Rees-Mogg) seeks to add further anti-discrimination laws related to payment account provisions. The Government have been clear about the importance of protecting lawful free speech. It is unacceptable for banks and payment service providers to discriminate on the basis of lawfully held political views, and others such as pawnbrokers, as he mentioned. Consequently, the Government support the spirit of the amendment, but do not believe that it is necessary, principally because the Government have taken significant action to build on existing protections to resolve this issue since the amendment was tabled.

On 2 October, the Chancellor committed to amend the threshold conditions that financial services firms must meet in order to be authorised and to consult on how to deliver that. It will ensure that banks uphold their current legal duties, including requirements not to discriminate on the basis of political opinion, therefore ensuring freedom of speech. Safeguards will also be put in place to protect consumers. Banks will be required to put in place safeguards to protect consumer rights, including free speech, and regulators will be required to act when they are not complied with. In addition, the Government announced that the legal notice period for payment service contract terminations will increase to 90 days, and payment service providers will be legally required to give consumers clear, tailored explanations detailing why they closed their accounts.

I thank the hon. Member for Washington and Sunderland West (Mrs Hodgson) for all her work on the all-party parliamentary group on ticket abuse. She raised the point about the secondary ticket market. We have taken action in this area; I know she is not content with where we are today, but the CMA has new powers in the Bill to fine businesses up to 10% of turnover, which will include ticket touts. Indeed, it has already taken action against two touts, with confiscation orders of £6.1 million in 2022.

On amendment 207, tabled by the hon. Member for Brighton, Pavilion (Caroline Lucas), enforcers can already take action under the Bill to protect consumers during the transition to net zero. For example, they have powers to tackle misleading green claims. We are already making strong progress towards net zero by 2050. The UK has reduced its emissions further and faster than any other major economy.

On amendment 208, established means have long played an important, cost-effective and proportionate role in tackling and stopping unfair commercial practices. Particularly in the field of misleading advertising, bodies such as the ASA have played a key role in expanding the reach of consumer protection law compliance.

In closing—[Hon. Members: “Hurray!”] I have gone on longer than I would have liked to, but an awful lot of amendments were tabled. In closing, I hope that right hon. and hon. Members will see from the Government’s amendments that we have listened to the concerns raised during the passage of the Bill, and that we are determined that it will deliver better outcomes for consumers and small businesses.

Question put and agreed to.

New clause 7 accordingly read a Second time, and added to the Bill.

New Clause 8

Use of damages-based agreements in opt-out collective proceedings

“(1) In section 47C(9) of CA 1998 (collective proceedings: damages and costs), for paragraph (c) substitute—

‘(c) “damages-based agreement” has the same meaning as in section 58AA of the Courts of Legal Services Act 1990 but as if in subsection (3)(a) of that section, in the words before sub-paragraph (i), for “, litigation services or claims management services” there were substituted “or litigation services”.’

(2) The amendment made by subsection (1) is treated as always having had effect.”—(Kevin Hollinrake.)

This new clause (which would be inserted into Chapter 1 of Part 2 of the Bill) responds to the Supreme Court judgment in R (PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28. It provides that a damages-based agreement is only unenforceable in opt-out collective proceedings before the Competition Appeal Tribunal if the agreement is with a provider of advocacy or litigation services.

Brought up, read the First and Second time, and added to the Bill.

New Clause 9

Mergers of energy network enterprises

“Schedule (Mergers of energy network enterprises) makes provision amending Part 3 of EA 2002 and Schedule 16 to the Energy Act 2023 in relation to mergers involving energy network enterprises.”—(Kevin Hollinrake.)

This new clause (which would be inserted into Chapter 2 of Part 2 of the Bill) introduces the Schedule inserted by NS1 which amends Part 3 of the Enterprise Act 2002 to facilitate the investigation of mergers involving energy networks enterprises under sections 68B or 68C of that Act and under section 22 or 33 of that Act by the same CMA Group, and to make other minor amendments to provisions relating to mergers involving energy network enterprises.

Brought up, read the First and Second time, and added to the Bill.

New Clause 10

Power to make a reference after previously deciding not to do so

“(1) Section 131B of EA 2002 (market studies and the making of decisions to refer: time limits) is amended as follows.

(2) In the heading, after ‘time-limits’ insert ‘etc’.

(3) In subsection (7), for ‘This section is’ substitute ‘Subsections (4) to (6) are’.

(4) After subsection (7) insert—

‘(8) Where the CMA—

(a) has published a market study notice, and

(b) has decided not to make a reference under section 131 in relation to the matter specified in the notice,

the CMA may subsequently make a reference under section 131 in relation to the matter (without first publishing a market study notice in relation to the matter) only where subsection (9) applies.

(9) This subsection applies where—

(a) the reference under section 131 is made two years or more after the publication of the market study report in relation to the market study notice, or

(b) there has been a material change in circumstances since the preparation of the report.’”—(Kevin Hollinrake.)

This new clause (which would be inserted into Chapter 3 of Part 2 of the Bill) responds to the decision of the Competition Appeal Tribunal in Apple v CMA [2023] CAT 2. It allows the CMA to make a reference under section 131 of the Enterprise Act 2002, if it has previously made a decision not to do so, in the two cases mentioned in what will be new subsection (9) of section 131B of that Act.

Brought up, read the First and Second time, and added to the Bill.

New Clause 11

Taking action in relation to regulated markets

“(1) In Chapter 4 of Part 4 of EA 2002 (market studies and market investigations: supplementary), section 168 (regulated markets) is amended as follows.

(2) In subsection (3) omit paragraph (j).

(3) In subsection (4)—

(a) in paragraph (g), for ‘the duty of the Director General of Electricity Supply for Northern Ireland under article 6 of that Order’ substitute ‘the objective and duties of the Northern Ireland Authority for Utility Regulation under Article 12 of the Energy (Northern Ireland) Order 2003 (S.I. 2003/419 (N.I. 6))’;

(b) omit paragraph (l);

(c) in paragraph (m), for ‘the duties of the Director General of Gas for Northern Ireland under article 5 of that Order’ substitute ‘the objective and duties of the Northern Ireland Authority for Utility Regulation under Article 14 of the Energy (Northern Ireland) Order 2003’;

(d) in paragraph (r), for ‘Monitor’ substitute ‘NHS England’.

(4) In subsection (5), in paragraph (ia), for ‘Monitor’ substitute ‘NHS England’.”—(Kevin Hollinrake.)

This new clause (which would be inserted into Chapter 3 of Part 2 of the Bill) tidies up section 168 of the Enterprise Act 2002 to remove spent references and to correct references that have become out of date.

Brought up, read the First and Second time, and added to the Bill.

New Clause 12

Meaning of “working day” in Parts 3 and 4 of EA 2002

“(1) Part 3 of EA 2002 (mergers) is amended as follows.

(2) In Chapter 1 (duty to make references)—

(a) in section 25 (extension of time limits)—

(i) in subsection (1), after ‘20’ insert ‘working’;

(ii) in subsection (5), in paragraph (b), after ‘10’ insert ‘working’;

(b) omit section 32 (supplementary provision for the purposes of section 25);

(c) in section 34ZA(3) (time limits for decisions about references) omit the definition of ‘working day’;

(d) in section 34ZB (extension of time limits) omit subsection (9);

(e) in section 34ZC (sections 34ZA and 34ZB: supplementary) omit subsection (9).

(3) In Chapter 2 (public interest cases)—

(a) in section 54 (decision of Secretary of State in public interest cases)—

(i) in subsection (5), after ‘30’ insert ‘working’;

(ii) omit subsection (8);

(b) in section 56 (competition cases where intervention on public interest grounds ceases)—

(i) in subsection (4), in paragraph (b), after ‘20’ insert ‘working’;

(ii) omit subsection (5).

(4) In Chapter 4 (enforcement), in section 73A (time limits for consideration of undertakings) omit subsection (12).

(5) In Chapter 5 (supplementary)—

(a) in section 129(1) (other interpretative provisions), at the appropriate place insert—

‘“working day” means any day other than—

(a) a Saturday or Sunday, or

(b) a day that is a bank holiday in any part of the United Kingdom under the Banking and Financial Dealings Act 1971.’;

(b) in section 130 (index of defined expressions), at the appropriate place insert—

--- Later in debate ---

[Kevin Hollinrake]

I beg to move, That the Bill be now read the Third time.

The UK’s continued tech success depends on markets that are fiercely competitive, and where the best companies can flourish and create the innovations that spur growth. With this Bill, we will establish new, more effective tools to address the unique barriers to competition in digital markets, allowing the CMA to proactively drive more dynamic markets and prevent harmful practices, such as making it difficult to switch between operating systems. With this Bill, we will help the UK technology industry to grow, creating room for small businesses with great ideas to flourish. This Bill will deliver tangible benefits to British consumers and British businesses alike.

The Bill was welcomed on both sides of the House on Second Reading. The Select Committee Chairs from this House and the other place, as well as hon. Members from a number of parties, including the hon. Member for Pontypridd (Alex Davies-Jones) and my hon. Friend the Member for Weston-super-Mare (John Penrose), have repeatedly spoken of the Bill’s importance. I thank them for their work and for working with us so constructively. On Report, the Government made a number of amendments to the Bill, reflecting the important discussions between stakeholders and Members of this House. I thank Members from across the House for their contributions during the passage of the Bill.

I will conclude by thanking all my predecessors who have taken the Bill from consultation to this House, my officials, the Clerks, and the Chairs and members of the Public Bill Committee for their line-by-line scrutiny, and for their collaborative and constructive approach.

Digital Markets, Competition and Consumers Bill

Kevin Hollinrake Excerpts

Consideration of Lords amendments
Tuesday 30th April 2024 Commons Chamber

[The Minister of State, Department for Business and Trade (Kevin Hollinrake)]

I beg to move, That this House disagrees with Lords amendment 9.

[Mr Deputy Speaker]

With this it will be convenient to discuss:

Lords amendment 12, and Government motion to disagree.

Lords amendment 13, and Government motion to disagree.

Lords amendment 19, and Government motion to disagree.

Lords amendment 26, and Government motion to disagree.

Lords amendment 27, and Government motion to disagree.

Lords amendment 28, and Government motion to disagree.

Lords amendment 31, and Government motion to disagree.

Lords amendment 32, and Government motion to disagree.

Lords amendment 38, Government motion to disagree, and Government amendment (a) in lieu.

Lords amendment 104, and Government motion to disagree.

Lords amendments 1 to 8, 10, 11, 14 to 18, 20 to 25, 29 to 30, 33 to 37, 39 to 103 and 105 to 148.

[Kevin Hollinrake]

It is a pleasure to bring this groundbreaking Bill back to the House. It will drive innovation and deliver better outcomes for consumers across the UK by addressing barriers to competition in digital markets and tackling consumer rip-offs. We believe it strikes the right balance, not deterring investment from big tech while encouraging investment from challenger tech. I thank Members of both Houses for their careful scrutiny and I commend the collaborative cross-party approach taken during the Bill’s passage to date.

I will start with the amendments that the Government made in the other place. They add vital new provisions to the Bill and I hope hon. Members will agree to them. Part 1 of the Bill establishes a new pro-competition regime for digital markets, which will be overseen and enforced by the Competition and Markets Authority’s digital markets unit. Following engagement with Members in the other place, we have bolstered transparency provisions to require the CMA to publish more of the notices provided to firms designated with strategic market status, or SMS.

All interested parties will now be able to access the information contained in those notices, ensuring that there is greater clarity on the DMU’s decisions relating to SMS designation, conduct requirements and pro-competition interventions. A number of hon. Members have called for provisions addressing asymmetry of information to be introduced to the Bill, so we hope this change will be welcomed.

On part 2 of the Bill, which deals with wider competition reforms, hon. Members will recall that on Report the Government added a provision on litigation funding, whose purpose was to restore the previously held understanding of the status of litigation funding agreements under the Competition Act 1998. Those provisions were important in providing a route to justice for groups with limited resources—for example, our sub-postmasters.

That step was taken in response to an earlier Supreme Court judgment that had made litigation funding agreements unenforceable. The Government have since acted by introducing the Litigation Funding Agreements (Enforceability) Bill, which will deliver on our commitment to addressing the impacts of that judgment in all types of proceedings. Consequently, the provisions in this Bill have been removed, as they are no longer required.

We also introduced new measures to part 2 to address concerns about the potential ownership of UK newspapers and news magazines by foreign states, as we heard very recently from the Secretary of State for Culture, Media and Sport. The Government know that we cannot overstate the importance of those publications to our democracy and have therefore taken decisive action to preserve the freedom of the press. By establishing a new regime within the Enterprise Act 2002, the Bill will prevent foreign states from having ownership of, or control or influence over, a UK newspaper or news magazine.

The Government are extremely grateful for the support offered by Members of both Houses in the development of these new measures. In particular, we thank Baroness Stowell of Beeston and Lord Forsyth of Drumlean for their engagement, and my hon. Friend the Member for Rutland and Melton (Alicia Kearns), who first secured a debate on the issue in January.

Parts 3 and 4 make important updates and improvements to UK consumer law. Having consulted on a series of reforms at the end of last year, the Government amended the Bill in the other place to introduce new measures that address fake reviews and drip pricing. Many hon. Members called for the Government to address those harms through the Bill, and I am pleased to say that we have been able to do so, following our public consultation.

We have also made amendments to further strengthen the ability of public bodies to enforce consumer law. We did so by extending so-called take-down powers to a wider range of enforcers. There has been a healthy debate in both Houses about the measures in the Bill aimed at tackling subscription traps. We listened carefully to the concerns expressed in the other place about the potential impact of those measures on charities and their ability to claim gift aid. In response, the Government amended the Bill to enable the Treasury to update gift aid rules. That mitigates any concerns about the Bill’s impact on charities. We are grateful to Lord Mendoza for highlighting the issue and for his engagement.

We also made a series of amendments to provide greater assurance and clarity for businesses about the new subscription measures, including addressing concerns about exiting contracts, cancellations, reminder notices and cooling-off periods. I hope that hon. Members agree that the amendments improve the Bill.

[Sarah Olney (Richmond Park) (LD)]

The Liberal Democrats welcome the fact that the Government are finally acting on the CMA’s recommendation, but will the Government support amendment 104, which is backed by the Liberal Democrats? It is about imposing requirements on secondary ticket sites. Often, people purchasing tickets from the sites do so at huge mark-ups on the face value of the ticket, and the ticket in question does not actually exist. The amendment would address those issues, reducing the risk of fraud by requiring proof of purchase. Does the Minister agree that we must do everything we can to ensure that this legislation is as robust as possible, to crack down on this type of fraud?

[Kevin Hollinrake]

I thank the hon. Lady for her intervention and for the amendment, which I will speak to in a moment. The Government have agreed to undertake a review of both primary and secondary markets, and I will deal with those issues later in my remarks. [Interruption.] I hear from the shadow Front-Bench spokespeople, but I think that is something that Labour proposed in earlier amendments, so obviously they have changed their position on that issue—not for the first time.

Finally, the Government made a number of minor amendments to the Bill in the other place. The majority are tidying-up measures, or otherwise small tweaks to the Bill, to ensure that it achieves its policy intent as effectively as possible.

I will now set out the Government’s position on the 11 non-Government amendments that were made to the Bill in the other place. The majority of the amendments seek to reverse or alter amendments made to the digital markets part of the Bill on Report in this House. There were three aims behind the Government’s package of amendments on Report in the Commons: first, to provide greater clarity to parties interacting with the regime; secondly, to strengthen the regime’s safeguards for the extensive new regulatory powers; and thirdly, to enhance the accountability of the regulator. The Government tabled the amendments following careful consideration of the views expressed by hon. Members across the House. We remain convinced that our amendments struck the right balance between the accountability of the CMA’s regulatory decisions and the flexibility to allow for targeted and proportionate action that tackles the unique competition challenges in digital markets.

[Sir Robert Buckland (South Swindon) (Con)]

My hon. Friend is right that the amendments that were agreed on Report in this House struck the right balance, and I am afraid that on this occasion I wholly disagree with the way their lordships characterised the matter in their debate. We are not arguing for a wholesale replication of the telecoms regime; we are simply making sure that, particularly with regard to penalties, which will be pretty onerous—and rightly so—there is proper discretion to allow a reviewing tribunal and reviewing court to consider the matter carefully, in a way that balances out the need for rigour and for temper when it comes to the power of the regulator.

[Kevin Hollinrake]

I thank my right hon. and learned Friend for his intervention and his earlier engagement, when he made his position on that point clear. He is right to say that penalties can be significant—up to 10% of global turnover—so it is fair that we allow organisations to challenge penalties on the merits of the case, but maintain the ability to impose pro-competition interventions and conduct requirements on platforms. The amendments made in the other place risk undermining that careful balance. For example, amendments to revert the appeals standard for fines to judicial review principles, to which my right hon. and learned Friend the Member for South Swindon (Sir Robert Buckland) referred, would remove a valuable safeguard on the significant new powers that the Bill gives the CMA, as would the removal of the requirement on the CMA to act proportionately. Meanwhile, amendments to the countervailing benefits exemption risk making the exemption less clear for stakeholders. Consequently, the Government have tabled a motion to disagree with those amendments.

[Damian Collins (Folkestone and Hythe) (Con)]

The point about a “proportionate” response is relevant. In the original drafting of the Bill, the word used was “appropriate.” The Government changed that to “proportionate” on Report in this House, and the Lords have sought to reverse that change. What does the Minister think was disproportionate, if you like, about the word “appropriate”? What about it struck the wrong balance? Ministers keep saying that they think things strike the right balance, but they never really explain why.

[Kevin Hollinrake]

We have engaged significantly, throughout the Bill’s passage and before it was introduced, with large tech and challenger tech. Our understanding is that all those cohorts are happy with where the Bill is today. Certainly, during that engagement, concerns were raised about the term “appropriate,” but the clear position that we expressed to those who raised that concern was, “Of course, there is a requirement on the CMA to act proportionately.” Putting that in the Bill does not undermine its basic principles. In fact, we understand from the situation in the European Court of Human Rights, and the property rights emanating from it, that all those things are baked in anyway, so we do not feel that the wording weakens the legislation at all, but it does strike the right balance between those two different courts.

[Sir Jeremy Wright (Kenilworth and Southam) (Con)]

It is clearly important that we understand what “proportionate” means in this context. Is the Government’s position that proportionality implies that there is more for the CMA to think about than just how effectively the imposition of a conduct requirement would fulfil the CMA’s requirements? If so, what can the Government do to make that clear, so that courts and tribunals that consider such cases do not fill in the gaps themselves? The words “appropriate” and “proportionate” could be interpreted quite widely if the Government are not clear about what they mean by them.

[Kevin Hollinrake]

My right hon. and learned Friend will know from his legal background that the term “proportionate” is well established in law. Of course, the courts play an important part here. We do not prescribe everything in our legislation; there is quite rightly the opportunity for people to challenge certain decisions by the CMA. Clearly, we are trying to reduce the ability of large tech to prevent investment from smaller tech. That is the balance that we are striking, but we do not want to discourage investment from big tech, so the requirement for the CMA to act proportionately is reasonable.

[Sir John Whittingdale (Maldon) (Con)]

The Minister suggested that stakeholders were now satisfied with the Bill. I can tell him that there is concern about the change from “appropriate” to “proportionate.” The fear is that it will enable the courts to look more broadly, and will allow more scope for challenge than was intended when the term “appropriate” was used. Can he confirm that that is not the Government’s intention?

[Kevin Hollinrake]

It is not our intention. Our intention is to strike a balance. As I have said, the courts’ approach to proportionality was set out by the Supreme Court in Bank Mellat v. Her Majesty’s Treasury (No. 2), when the Court described the elements to be considered, including, most notably,

“whether a less intrusive measure could have been used”

and whether there is a fair balance between the intended objectives of the measure and the effects on the business that the measure applies to. That is a sensible balance to strike. Of course, some stakeholders want to go further in certain directions, while others do not want us to go as far, and we are trying to strike that balance. We welcome big tech’s investment in the UK, but we also welcome investment by challenger tech, and through this groundbreaking Bill—the only one of its kind in the world—we are striking that balance.

We have listened carefully to arguments relating to the Secretary of State’s approval of CMA guidance. Lords amendment 38, which was tabled by Lord Lansley, adds a timeline for the Secretary of State approving CMA guidance relating to the new regime. In response, we have tabled amendment (a) in lieu, which would achieve a similar effect by introducing a statutory 30-working-day timeline for the Secretary of State to approve the necessary guidance. We believe that that addresses concerns about the ability of the digital markets regime to start tackling competition problems without delay. We hope that hon. Members will support amendment (a).

On secondary ticketing, a non-Government amendment —to which the hon. Member for Richmond Park (Sarah Olney) referred—was made in the other place to the consumer part of the Bill. Amendment 104, which was tabled by Lord Moynihan, seeks to introduce additional regulatory requirements on ticket resale sites. Those requirements would cover proof of purchase, ticket limits and the visibility of certain required information, such as the face value of a ticket. Both Lord Moynihan and the hon. Member for Washington and Sunderland West (Mrs Hodgson) have spoken passionately on that topic during proceedings on the Bill. We are hugely grateful for their work highlighting the malpractice in the resale market.

To be clear, the Government are absolutely committed to protecting consumers from fraudulent activity in the secondary ticketing market. However, it is our view that protections for consumers are already provided by existing consumer law. The law imposes specific information requirements in relation to secondary ticketing that go above and beyond those in general consumer law. That includes the requirement for all resellers—be they traders or consumers—and secondary ticketing platforms to inform a buyer about the face value of a ticket and the restrictions on its use. The Government’s position is therefore that the secondary ticketing market is already suitably regulated. That said, we recognise the strength of feeling on this matter, which has been expressed by Members of the other place and in certain quarters of this House, so we commit today to undertaking a review of ticketing practices and how they impact on consumers. The review will look at both primary and secondary markets—in other words, sellers and resellers. We believe it important to consider both markets together.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

I am very grateful to the Minister for giving way. I know that we have debated this point before, and I will discuss it further in my contribution, but I make the point again that there may be legislation, but it is not working. There have been only two prosecutions in all the time since the Consumer Rights Act 2015 was passed. If further legislation was not needed, why did we bring in legislation to protect tickets for the Olympics?

[Kevin Hollinrake]

It is not right to say that there have been only two prosecutions—

[Mrs Hodgson]

rose—

[Kevin Hollinrake]

I will just finish this answer. There have been two sentences. Two people got a £6.1 million fine. There were four more successful prosecutions in Leeds Crown court only very recently, and sentence is due to be imposed on those individuals. The hon. Lady raises important points, and did great work on the all-party parliamentary group, and I will always listen to her. We are undertaking a review looking at primary and secondary markets, and she will have every chance to give her input to that review, just as anybody else will. I look forward to hearing her representations.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

The Government claim that they are doing enough, but that is just not the case. Here is an example for the Minister: on secondary ticketing sites, three tickets for the Taylor Swift show on 21 June are going for £72,000. They had a face value of £170 each. How is the market working?

[Kevin Hollinrake]

I agree that some of the examples are shocking. The key question is what measures we will put in place to address them. Ireland, for example, completely banned secondary sales, yet the prices seen on the internet are equivalent to what the hon. Lady describes, so there is no perfect solution that has already been tried. However, we are very happy to look at the evidence, look at what might be done, and do something that is effective, rather than crowd-pleasing. That is what we are committed to doing.

The reality is that some organisers are simply much more successful than others at preventing large-scale unauthorised resales. The ticket market is clearly evolving rapidly. Our review will therefore consider evidence from businesses and platforms operating in ticketing and resale markets, as well as venues, artists, enforcers and consumers. The Government intend the review to take place over nine months, after which we will consider any appropriate further action. [Hon. Members: “You won’t be there.”] Members who are commenting from a sedentary position should beware of overconfidence.

I very much hope that hon. Members will support the Government’s position today. I especially hope that Members in both Houses will note our movement in two important areas: the Secretary of State’s approval of CMA guidance for the new digital markets regime, and secondary ticketing. These changes are considered and balanced, and I urge Members in the other place to consider their position on the other amendments that our motions today seek to reject. Throughout the Bill’s passage, the Government have listened carefully to the arguments presented, and in response, we have made a series of significant changes where we recognise that improvements could be made. It is important that we now reach full consensus on the Bill’s final form, so that it reaches the statute book without further delay.

[Sir Chris Bryant (Rhondda) (Lab)]

First, I pay tribute to my much-loved neighbour, my hon. Friend the Member for Pontypridd (Alex Davies-Jones), who led for Labour during the last round of proceedings on the Bill, and to my hon. Friend the Member for Feltham and Heston (Seema Malhotra), who led for us when the Bill was introduced.

Might I say a few words about the Minister? I do love the Minister. Members sitting on the Government Back Benches will not have been able to see the little wry smile playing on his face as he made his speech. Unfortunately, Hansard is not able to record that element of the way he presented his case. I will let the House into a secret: there are two versions of the Minister, or rather the Member. There is the Back-Bench Member, who I passionately agree with on nearly everything, and then there is the Government Minister, who has the Back-Bench Member sitting inside him somewhere, but has managed to lose him while taking on corporate and shared responsibility on the Government Front Benches. I bet that if he were in the Parliament that follows the next general election, and we debated these matters all over again, he would be articulating what I am about to say almost word for word, but today, he has articulated the Government position.

--- Later in debate ---

If the Conservative Government refuse to act, Labour will. We will bring these measures in and go further, restricting the resale of tickets at more than a small set percentage over the price the original purchaser paid, including fees. Fans have been waiting for far too long. A Labour Government would end the pernicious and predatory ticket touting and put fans back at the heart of music, cultural and sporting events, where they belong. And if I might just say so, the idea of a review—

[Kevin Hollinrake]

It was your idea.

[Sir Chris Bryant]

Well, we have moved on and it is about time the Government moved on—in fact I look forward to the day when the Minister moves on from Government Benches to here on the Opposition Benches. The idea of a review at the dog end of a Parliament and at the end of the regime is absolutely pathetic, and I am glad the Minister is laughing at himself for even presenting the suggestion today.

Let me end with an area of agreement. We were glad that the Government, under pressure, tabled Lords amendment 117 on mergers involving newspaper enterprises and foreign powers along the lines of measures that we and others, including a large number of Conservative MPs and peers, had called for. Of course the UK must remain an open economy; we welcome foreign investment in many sectors in the UK. But we agree that in this limited area, the state ownership of UK newspaper and media companies must be a matter for concern, which is why we support the Lords amendment. We will need to make sure in future years that it is adequate to the situation we find, not least bearing in mind many of the comments made earlier by Members on both sides of the House regarding the rather fluid world we are moving into, where newspapers are a rather outdated concept and social media and other forms of online media are far more significant. We will keep that under review, therefore, but we welcome the amendment the Government have tabled.

This long-delayed Bill could go forward with strong, unanimous support if the Government abandoned their tilt towards the few potentially monopolistic companies and set aside their objections to the Lords amendments. Those objections are either completely otiose or they are dangerous. The Minister says they make no difference, I say they do, but on either grounds they should go, so we support their lordships in their amendments.

[John Penrose (Weston-super-Mare) (Con)]

May I start by saying that this was and still is a good Bill? It does an enormous number of very important things and I am glad to see that it has broad acceptance and agreement on both sides of the House, although with some minor points of disagreement. It contains many of the measures that I personally called for in my Government-commissioned review of competition policy called “Power to the people” a little while ago, and it definitely updates and makes some much-needed changes to our competition and consumer laws. However, I share some of the concerns raised today about the Government’s opposition to four of the amendments that have come back from the Lords.

I do not have worries about the Lords amendments themselves because, as we have just heard from the Opposition Front-Bench spokesperson the hon. Member for Rhondda (Sir Chris Bryant), they mainly seek to restore the effect of clauses that were in the Bill when it originally came to this House. What worries me is that the wrong people are clapping. The changes that the Government have made, in many cases by seeking to resist Lords amendments, seem to many people to be on the side of the big tech firms rather than on the side of consumers, of sharper competition, of more consumer choice and of standing up for the man and woman in the street. I therefore earnestly hope that the Minister will be able to channel his historical zeal for these things in his closing remarks and reassure me, and I am sure others as well, that that is not the Government’s intention and that they remain committed to those things—that the fire still burns brightly in his eyes to make them happen.

I start by saying that the Government have already done some of that work with amendment (a) in lieu of Lords amendment 38—they have replaced the Lansley amendment with a version of their own—dealing with the amount of time that the Secretary of State can take in dealing with guidance put forward by the CMA to make sure it is not unduly delayed. That is extremely welcome and a very good measure, and I enthusiastically support it. However, we have already heard about two other things in particular. One is the role of judicial review in dealing with penalties. I share the concern that in moving away from a judicial review standard for penalties to a full merits review we may get bleed-across—that clever lawyers working for big tech firms may effectively be able to broaden the scope through clever use of legal techniques to prolong their attempts to walk backwards slowly and prevent justice from being done. I therefore devoutly hope that my good friend the Minister will be able to clarify that he expects to be able to show to us—either from the Dispatch Box now, or in guidance or another kind of clarification in due course—that it will not be possible for bleed-across to happen and he will be able to take any steps that may be needed.

[Kevin Hollinrake]

I am very happy to make that commitment. We believe the Bill draws a clear distinction between infringement decisions and penalty decisions. After taking legal advice on this matter and looking at previous competition case law considering similar issues, the Government consider that neither the Competition Appeal Tribunal nor the higher courts will have any trouble making that distinction for digital markets appeals. We have clarified that in the explanatory notes, which I hope provides reassurance that there is little risk of bleed-back from the merits appeal standard for penalty appeals to appeals on other types of decisions.

[John Penrose]

I thank the Minister for that intervention and, emboldened by my success so far in getting him to front up, I move on to my second point, which has similar concerns around it: the issue of countervailing benefits. We have heard from the Opposition spokesman about that, so I will not go through it all again, but it would be enormously helpful if, either now in a further intervention or in his closing remarks, the Minister could be clear about the new wording, which we have already heard about in his speech. I hope he will make it clear—again, either through clarifications now or in guidance—that it is not intended to be in any way a lower standard than what we had before when this Bill first came to the House, and that it is either the same or tougher. I am pausing just briefly to see whether he wants to intervene.

[Kevin Hollinrake]

rose—

[John Penrose]

He does, which is marvellous.

[Kevin Hollinrake]

The revised wording did not change the effects of the clause. Strategic market status firms will still have to prove that there is no other reasonable and practicable way to achieve the same benefits for consumers with less competitive effect.

[John Penrose]

We are making marvellous progress and ending up with changes being confirmed on the Floor of the House in a way I do not think I have seen before, so let us keep going.

--- Later in debate ---

[John Penrose]

I am sure the Minister will grab that opportunity in his closing remarks, if he so wishes. At least he has taken the opportunity to stand up and give us public reassurances on the record about the standard that is intended. It is clear that it is no lower than it originally was, which is an important change.

[Kevin Hollinrake]

rose—

[John Penrose]

And again.

[Kevin Hollinrake]

The shadow Minister and I are having this debate vicariously, but I just note that the wording in the explanatory notes has not changed.

[John Penrose]

I am on a roll here.

The final of the four issues in question is proportionality. We have had the debate already, so I do not propose to repeat the concerns, but it would be helpful if the Minister, either now or in his closing remarks, clarified that the new and amended standard that is to be applied is no lower. I think he said something to that effect earlier to the former Attorney General, my right hon. and learned Friend the Member for Kenilworth and Southam (Sir Jeremy Wright), but it would be helpful just to nail that one down and drive the nail home, if the Minister can. It is important for everybody to understand whether that new standard is any lower at all; it should be the same or higher.

[Kevin Hollinrake]

indicated assent.

[John Penrose]

The Minister is nodding, but I do not know whether he intends to intervene again.

[Kevin Hollinrake]

indicated dissent.

[John Penrose]

We will have to preserve our souls in patience for the Minister’s closing remarks. I will declare victory very shortly. It has been a helpful set of interventions, and I thank him for that.

My final point is not related to these Lords amendments, but to a commitment that the Minister made at the Dispatch Box on Report in response to an amendment on better regulation that I had tabled with the support of a great number of parliamentary colleagues. He made a commitment that a set of conclusions, matching a set of standards whose wording he and I had agreed in advance, would be in place before the Bill receives Royal Assent. Clearly we are getting close to that date—I hope very close—and I understand that a Government White Paper may be in the offing, but I am not sure whether that will arrive before Royal Assent. My point is intended not to delay Royal Assent, but to bring forward the White Paper or whatever document the Government may be thinking of.

Based on conversations I have had so far, I am also concerned that not all the commitments the Minister made from the Dispatch Box may be in that White Paper. I therefore urge him to make sure that between now and Royal Assent, he works assiduously with his fellow Ministers to make sure they have got the memo that should gone round after he made those commitments.

--- Later in debate ---

I am not entirely happy with everything in this Bill. I remain seriously disappointed by the Government’s inaction on ticket touting. I hope that the Minister will look again and find it in his heart to support amendment 104. I echo many of the comments of my hon. Friend the Member for Rhondda about some of the ways in which the general enforcement and appeals provision in the Bill have been weakened. I fear that there has been some heavy lobbying of the Government by big tech companies, which has had an impact. The people of West Ham will not be pleased to hear that, as it generates understandable concern that the provision might prove too weak and riven with loopholes to do the job that Members on both sides of this House want to see, although the Bill has been improved in other areas by hon. Friends and colleagues here and in the other place. It contains welcome provisions that will help to protect my constituents from exploitation online. I hope we will see it in force as soon as possible.

[Kevin Hollinrake]

With the leave of the House, I will respond to some of the points raised in this fruitful, constructive debate. I reassure the shadow Minister that I have lost none of my mojo or ambition to ensure a fair and level playing field for businesses. That is a vital part of this legislation. At times I may smile when I am at the Dispatch Box and there are a couple of reasons for that; not only am I generally a happy guy but I am pleased to see this groundbreaking legislation being brought into effect. It is probably one of only two major pieces of legislation around the world that does what it does. We should welcome that and the fair and level playing field that will result from it.

I do not accept what the shadow Minister says about the Government having caved in and weakened some of the Bill’s provisions. It is fair to say that some of the platforms would like us to have changed the Bill radically from how it was when it was presented to Parliament. We think we have very much held the line on its provisions and how it will ensure that consumers and smaller businesses get a better deal. We do not accept that it will bring about “bleed back”, as he puts it, between the on-the-merits provisions of penalties and other regulatory decisions. We have been clear on that and our legal advice is of the same mind.

Secondary ticketing is a key part of the debate, having been raised by various Members. We absolutely see that there is good practice in some primary markets, where there is control as to resales. We should learn from best practice, such as ID requirements on the resale of tickets. That is within the gift of those in the primary markets, so we are keen to develop the review to ensure that we look at both the primary and secondary markets, as the Opposition called for in an amendment tabled earlier in the Bill’s progress.

[Sir Chris Bryant]

I am grateful to the Cheshire cat for giving way. Does he oppose the Lords amendment on ticket touts because of the proposed new subsection stating that there needs to be “proof of purchase” for secondary ticket marketing, or because details of the “face value” of the ticket have to be provided? It is difficult to determine why the Minister opposes the Lords amendment other than because it is an inconvenience to government.

[Kevin Hollinrake]

We believe that those measures, such as on the face value of the ticket, are already covered by the current legislation and enforcement. The Government have certainly gone a lot further than previous regimes have: we strengthened the terms and guidance in 2017; we banned ticketing bots—the hon. Gentleman mentioned that but did not seem to understand that it had been outlawed in 2018; and we improved enforcement action by the regulators, as we have seen six successful prosecutions under the new regime. I remind him that where other jurisdictions have supposedly gone further in banning resale, such as in Ireland, no prosecutions have taken place. We are trying to ensure that we have a balance and that our provisions work well.

[Mrs Hodgson]

rose—

[Kevin Hollinrake]

I will address the hon. Lady’s points in a moment, as I am keen to respond to some of them.

[Sir Chris Bryant]

If the Minister goes to the Viagogo website and tries to buy a ticket, he will see on the first page that it says the ticket is £420 or whatever. Can he see the original value of the ticket? No. Can he see whether it is a validly purchased ticket? No. That is the problem that the amendment would solve. It would be simple for the Government to agree to the amendment and then we can get the Bill through.

[Kevin Hollinrake]

We believe those provisions are already there. I have quite happily used Viagogo on many occasions, as other people have when reselling tickets. Of course we will keep looking at the primary and secondary markets, and at the interaction between the two, so that we can develop the right way to regulate the market, in a future Parliament.

[Barbara Keeley]

On that point, will the Minister give way?

[Kevin Hollinrake]

I will come to the hon. Lady’s points in a moment.

On the things we are doing to hold big tech to account, I can assure my hon. Friend the Member for Weston-super-Mare (John Penrose) that the fire burns brightly in me. I do not think we have moved away in any material way from ensuring that this legislation is fit for purpose and does what it sets out to do. As I said in response to his earlier intervention, we do not believe there is any bleed-across between the merits-based approach to penalties and other regulatory interventions. The revised wording about the countervailing benefits exemption did not change the effects of the clause and did not change the guidance in the explanatory notes.

As my hon. Friend is aware, we are doing a lot of work on regulation. We have engaged on regular occasions to ensure that gets to where he wants. On costs and benefits, he will have noticed we brought forward the growth duty for our economic regulators quite recently, as well as the smart data road map. I know he waits with bated breath for the White Paper that will come forward shortly.

I thank the hon. Member for Gordon (Richard Thomson) for his support for the legislation. We do not think the change from conduct is indispensable to the benefits; benefits could not be realised without the conduct materially changing the position in any way.

My hon. Friend the Member for Folkestone and Hythe (Damian Collins) said that we had moved to a different balance. I do not think I said that; I am happy to clarify my remarks about proportionality. We have provided more certainty and clarity around that position, which we always thought was part of the way the CMA would make its decisions. He made points about how the regulator would view, for example, the significant charges made across the Xbox platforms, which both charge 30% to the people who have e-commerce through those payment systems. As he said, businesses might not think that is too much, but we both know that it is not businesses that pay that ultimately, but consumers. The requirement for the CMA to make interventions for the benefit of consumers is in its very DNA, so I think it would act in those situations.

The hon. Member for Worsley and Eccles South (Barbara Keeley) talked about the secondary ticketing position. I hear her points, and the points raised by the hon. Member for Washington and Sunderland West (Mrs Hodgson), very clearly.

[Barbara Keeley]

I counsel the Minister against what he is doing. As his colleague in the Department for Culture, Media and Sport team did recently at oral questions, he is repeating the arguments that the platforms use. It is sad to hear Ministers repeating the same lines that a global chief officer of Viagogo came out with when they were over here. In Ireland, fraud activity has not increased—because the legislation is working., and that is why there are no prosecutions in Ireland. We would be in that situation if we had that legislation. As my hon. Friend the Member for Washington and Sunderland West probably wants to point out, it is alright to say that the use of bots is illegal, but nobody is being prosecuted for the illegal use of bots to wholesale-buy tickets; it is happening, so I counsel the Minister and his ministerial colleagues’ against their constant repetitions, which are not plausible to anybody outside.

[Kevin Hollinrake]

The hon. Lady is right to say that there is a difference between legislation and enforcement. We urge the authorities that have responsibility to enforce those provisions to make use of them. In Ireland, where the resale of tickets has been banned, inflated prices are still a feature of the ticket markets. Tickets for Taylor Swift’s Dublin shows are selling well in excess of their face price on the internet in Ireland, but no prosecutions have been made.

[Mrs Hodgson]

rose—

[Kevin Hollinrake]

May I make it clear that I was not accusing the hon. Member for Worsley and Eccles South of crowd pleasing? As I said in my earlier remarks, and as I will say to the hon. Member for Washington and Sunderland West before she intervenes, we should not simply take measures that are crowd pleasing in the hope they will work but they are ineffective. That is not to say that we do not think further measures are required.

[Mrs Hodgson]

On the point about Taylor Swift and whether any of her tickets have been sold on the secondary market in Ireland, I challenge the Minister to take another look at that rather than taking the word of his officials or whoever has told him. I have been told that no Taylor Swift tickets are on sale on Viagogo in Ireland. She has stated that her tickets will not be valid if they are resold on a secondary platform, so they will not be found on a secondary platform in Ireland.

[Kevin Hollinrake]

Yes, I have just googled sellers of tickets in Dublin, and people can buy tickets well in excess of face value on the platform. I could not find them on Viagogo, but other platforms are selling those tickets. We are trying to do something that is effective. I am very happy to continue to engage with the hon. Lady, as she makes a very compelling case. I shall continue to look at what she says and continue to engage with her. I am very keen to ensure that we get to the right place, so that we protect consumers, but allow a fair, free market to work properly.

[Andrew Gwynne]

I am very grateful to the Minister for giving way. I want to take him back to his comment that what was needed was not new legislation, but better enforcement. The enforcement authorities would presumably be trading standards. What is the reason there are not the prosecutions that we would all like to see? Is it because trading standards has been run into the ground and does not have the capacity to do the job that he is expecting it to do? Is it because of the complexity of the market? And which trading standards is responsible: the one where the platforms are based, the one where the person who bought the ticked is based, or the one where the concert is being held? That makes enforcing this measure really difficult.

[Kevin Hollinrake]

I thank the hon. Member for his points. I said not that legislation was not needed, but that there was no point in having legislation without enforcement. There have been six successful prosecutions by trading standards, but is he saying that he wants to fund trading standards to a greater degree? I understand some of the pressures on local authorities across the country; there are pressures on the public finances generally. If he has a solution to that and can provide lots more money to local authorities, he should have a word with his Front-Bench team, because that has not been Labour’s policy.

[Gen Kitchen (Wellingborough) (Lab)]

Unlike with trading standards, many cash-strapped families and young people fall for online scams, because they are on the hunt for bargains on Facebook Marketplace and, to a lesser extent, on eBay and Vinted. They are often at the mercy of being ripped off with very little protection and little to no help from local trading standards because of that confusion over whether it is where the buyer is or where the seller is. In particular, that is because they are for more casual and lower-value transactions. Can the Minister confirm whether that will be in the review as well?

[Kevin Hollinrake]

I thank the hon. Lady for her intervention. She makes a very good point. I am happy to look at the concerns that she raises. We will look at the concerns raised by all stakeholders, Members of this House and people further afield to ensure that, when we carry out this review, we get to the right place.

The hon. Member for Pontypridd (Alex Davies-Jones) seems to think EU legislation is stronger than ours. Let me point out that appeal standards consider the merits across the piece in the European Union; they do not in the UK, as they are confined to a very small element of it.

Finally, I am pleased that the hon. Member for West Ham (Ms Brown) supports the Bill and very pleased that she supports freedom of speech. Digital inclusion is very important. The Under-Secretary of State for Science, Innovation and Technology, my hon. Friend the Member for Meriden (Saqib Bhatti) is working very hard on social inclusion and social tariffs of broadband through the cross-ministerial group. We are very keen to ensure that reminder notices for subscriptions are very clear for all our consumers.

To conclude, I urge all Members on both sides of the House to carefully consider the amendment that I have proposed in lieu of those made in the other place. I hope that all Members will feel able to support our position.

[Mr Deputy Speaker (Mr Nigel Evans)]

Taylor Swift seems to be everywhere, even in the House of Commons, doesn’t she?

Question put, That this House disagrees with Lords amendment 9.