Amendment 1

Digital Markets, Competition and Consumers Bill - Report (1st Day) – in the House of Lords am 3:31 pm ar 11 Mawrth 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Viscount Camrose:

Moved by Viscount Camrose

1: Clause 6, page 4, line 3, leave out subsections (2) and (3)Member's explanatory statementThis amendment would remove the power for the Secretary of State to amend the conditions in subsection (1) by statutory instrument.

Photo of Viscount Camrose Viscount Camrose Parliamentary Under Secretary of State (Department for Science, Innovation and Technology)

My Lords, I am delighted that we have made it to Report and look forward to today’s debate. Before we get under way, I express my sincere thanks to all noble Lords who took part in Committee and to those with whom I have had the pleasure of discussing a number of issues that have arisen since then. I am extremely grateful for the constructive, collaborative nature of those discussions. It is clear to me that the broad support for this Bill across the House and the desire to see it pass swiftly remain undiminished, which is great to see.

The Government have tabled a number of amendments to improve the clarity and accountability of the regime. I turn first to the amendment to the Henry VIII power in Clause 6. This clause would originally have given the Secretary of State the power to amend by regulations the position of strategic significance conditions in the Bill, to allow them to be updated to account for future changes to digital markets. The Government recognise that Henry VIII powers should be used only where absolutely necessary. I noted the strength of feeling on this issue in Committee and the concerns that the power could be used to introduce broad changes to the framework of the regime. The DPRRC also noted this point in its report on the Bill, for which my noble friend Lord Offord and I were very grateful. Reflecting that strategic significance criteria have been designed to be suitably broad and technology agnostic, we are content to remove this power. Amendment 1 will do that, so I hope that noble Lords will support it.

Amendment 42 ensures that non-commercial organisations acting in a non-commercial capacity will be subject to fines with the same fixed statutory maximum amounts and/or maximum daily amounts as individuals. We expect it to be extremely rare that the CMA would ever need to fine these organisations, but the Bill should provide for all circumstances. These organisations could be subject to financial penalties for investigative breaches—for example, providing false or misleading information to the CMA.

Amendment 40 clarifies that all individuals—including, for example, sole proprietors—will be subject to penalties with fixed statutory maximum amounts and/or maximum daily amounts. Amendment 41 removes a superfluous subsection in the same clause. I hope noble Lords will support these amendments.

Amendment 48 will ensure that private actions relating to the digital markets regime can be transferred between the Competition Appeal Tribunal and the relevant court. This will reflect current practice for competition cases. Effective co-operation and information sharing between regulators is vital to ensuring efficient and coherent interventions under the digital markets regime.

Amendments 160 and 161, under the Wireless Telegraphy Act 2006 and the Postal Services Act 2011 respectively, will allow Ofcom to share information it holds with the CMA where it is necessary for the CMA to discharge its digital markets functions. Ofcom is likely to hold relevant information under these Acts that would be valuable to support work relating to, for example, mobile ecosystems and e-commerce. The amendments will also help prevent unnecessary and duplicative information requests by the CMA. The Government have also put forward Amendments 50, 53 and 159 to improve the Bill’s clarity.

Amendment 58 will ensure that the existing provision in Clause 116—which prevents information the CMA holds as part of an investigation being subject to a disclosure order—cannot be circumvented by instead seeking disclosure from another party that holds the same information.

I hope that, for the reasons I have set out, noble Lords will support the government amendments. I beg to move.

Photo of Lord Faulks Lord Faulks Non-affiliated

My Lords, Amendments 13 and 35 are in my name and those of the noble Baronesses, Lady Stowell and Lady Jones of Whitchurch, and the noble Lord, Lord Clement-Jones.

The Bill has been welcomed across the House and it represents a crucial step forward in regulating the digital market. I pay tribute to the level of engagement that has taken place with Ministers and officials. We have had some excellent and well-informed debates in Grand Committee. However, good though this Bill is, it is capable of improvement. I refer to my interests in the register. I am not a competition lawyer, but I do have experience of judicial review and of the operation of the Human Rights Act. I was also chair of the Independent Review of Administrative Law, which reported a few years ago.

My Amendment 13 is concerned with the use in the Bill of the word “proportionate”. Despite some heavy lobbying of the Government by big tech, the right to appeal against an intervention by the CMA will engage the judicial review test, rather than a merits test, except as to penalty. Later amendments will probe the appeal test further.

The original adjective in the Bill was “appropriate”. The word “proportionate” replaced it at a late stage of the Bill’s progress through the Commons. Why? I am afraid I have yet to receive a satisfactory answer. In Grand Committee, the noble Lord, Lord Lansley, referred to a letter from the Minister about the change. However, it did nothing to allay concerns that the change was a response to lobbying by big tech.

According to one view, it is an innocuous change; indeed, one would expect an intervention to be proportionate. The word also has a reasonable legal pedigree: for example, you can defend yourself against attack providing your response is proportionate to the attack. Whether your response is proportionate will be a question of fact, or for a jury to decide.

Judicial review, however, is not primarily concerned with the facts of a decision but with the process whereby the decision is made. Classically, the courts got involved only if a decision was so unreasonable that no reasonable public body could have reached it. The scope of judicial review has expanded to include challenges based on, for example, irrationality or failure to take into account relevant considerations. There are other grounds, but all are concerned with how the decision is reached rather than whether the court agrees with the factual findings.

Since the enactment of the Human Rights Act, the concept of proportionality has entered the law in relation to judicial review, but only in limited circumstances. I will quote the most recent addition of De Smith’s Judicial Review, as I did in Committee, which is generally regarded as the leading textbook in this area:

“Domestic courts are required to review the proportionality of decisions and enactments in two main categories of case: cases involving prima facie infringements of Convention rights and cases involving EU law”.

There are those who think that proportionality should be the test in all cases of judicial review, but that is not the law.

I cannot immediately see why an appeal in the context of the Bill should involve a convention right, but they have a habit of appearing in all sorts of places. If convention rights are engaged, proportionality comes into the analysis anyway. I understand that the Government consider that an appeal may well involve A1P1Article 1 of the first protocol of the ECHR—which is concerned with the arbitrary inference with property rights.

To speak of human rights in the context of enormous companies such as Google, Apple or Meta is certainly counterintuitive; I do not think that that is what the framers of the European convention had in mind after the Second World War. Last week, Apple was fined €1.8 billion under the European Union’s regulation on market abuse, and there is an appeal. That perhaps gives us an idea of the context of human rights in this area.

If—and this is a big “if”—the courts consider that the convention is engaged, there will be considerations of proportionality. Amendment 35, which I believe is consequential to Amendment 13, raises precisely the same point in a further context. In choosing to put the word “proportionality” into the legislation, a court might well conclude that Parliament had deliberately used the word to widen the scope of judicial review challenge, even when no convention right is engaged. For my part, that is a risk that I do not think should be taken. Your Lordships’ House is well aware of the expensive and time-consuming nature of appeals, which of course favour larger organisations with a large legal spend. The noble Lord, Lord Vaizey, spoke at Second Reading of long and expensive battles and death by lever arch files—although he did not quite put it that way. Large companies have the resources.

A proportionality test is far closer to an appeal on the facts than one based on conventional judicial review principles. The issue as to whether an intervention is proportionate or not gives the court much greater scope for looking at those facts at greater length and greater expense and with a more uncertain outcome. I would therefore much prefer to revert to the word “appropriate”, as was originally in the Bill, which does not carry the same legal charge and does not risk expanding the basis of appeal.

In the Media Bill, criticism has been made of the use of the word “appropriate”, but, as many judges have said before, context is everything, and here it is the right word. I look forward to hearing the Minister’s response and explanation behind the change in wording.

Photo of Baroness Stowell of Beeston Baroness Stowell of Beeston Chair, Communications and Digital Committee, Chair, Communications and Digital Committee

Now that my friend the noble Lord, Lord Faulks, has spoken, I am happy to stand, because I hoped that he would cover all the technical aspects of his amendment, to which I have put my name.

Before I turn to the amendment, at the start of Report it is worth me reminding noble Lords and my noble friends the Ministers of something, because there are an awful lot of amendments in this group and they cover quite a bit of ground. The Communications and Digital Select Committee, which I have the privilege to chair, endorsed the Digital Markets, Competition and Consumers Bill as it was introduced in the Commons. We held quite a few hearings on the Bill last year, which came after a long period of campaigning for this legislation, and so it was one that we cared deeply about. Indeed, we applauded the Government for striking the right, careful balance on some difficult issues covered in Part 1 of the Bill, especially the appeals process, the countervailing benefits and the leveraging principle.

However, we did give one word of caution, knowing that the Government would be subject to intense pressure from the big tech firms as the Bill progressed through Parliament. We said: do not dilute the Bill. It is the job of Parliament to scrutinise and improve legislation, and by doing that we refine it. It is not a job that should mean that nothing ever changes, but it is also our job to protect the Bill from being weakened in a way that might diminish its effectiveness or make it harder for those responsible for delivering it to meet the original objectives and purpose of the Bill. A lot of what I am going to be arguing for—or, sadly, voting for—will be because I think the Government got it right the first time, and I regret some of their decisions to amend parts of the Bill in those areas that I have just identified.

I start with the appeals process. The Government have held their ground in maintaining the judicial review process for appeals against substantive rulings by the CMA, and I welcome this. However, I am concerned about the Government’s decision to swap the word “appropriate” for “proportionate” in Clauses 13 and 46, as my friend the noble Lord, Lord Faulks, has just described, as this could provide a loophole or opportunity for the SMS firms to argue against CMA remedies or conduct requirements, perhaps by proposing alternative solutions that serve their interests but might not necessarily increase competition. That is why I have added my name to the amendments of the noble Lord, Lord Faulks, and will join him if he decides to divide the House.

As to appeals against fines and penalties, where the Government have changed the procedure from the original judicial review process to full merits my concern is the opportunity for the SMS firms to use this procedure to re-open the substantive rulings. I have retabled my own Amendment 45, which would put in the Bill that there must not be any read-across from appeals and fines, which are proposed to be by the merits procedure, to substantive rulings, which are restricted to the judicial review process.

In Committee, I said that I was trying to be constructive and avoid overturning what the Government have done in the Commons. I am disappointed that they did not consider my amendment as a suitable compromise, although I must say at this point that my noble friends on the Front Bench and their officials have been very generous with their time, meeting not just me but other noble Lords and talking to us about these issues. I am hugely grateful to them for that. I will, of course, wait to hear what my noble friend says when he comes to wind up.

The amendments in the name of the noble Baroness, Lady Jones, would revert the appeals process on fines back to the JR procedure away from merits. I will wait to hear what my noble friend says on that, but, because the Government have not moved on this in the way that I had hoped they might, at the moment I am minded to support the noble Baroness, Lady Jones.

I now move to what I might describe as private actions. This is quite technical. I am referring to Amendment 47, in the name of my noble friend Lady Harding, to which I have added my name. My noble friend apologises for not being able to be here to speak to her amendment today, but she is caught up in other responsibilities away from Parliament.

The problem this seeks to address is that, as things currently stand, there is an opportunity for legal action to be taken against an SMS firm via the courts, which could lead to the courts ruling on matters that the CMA is also looking at, the result therefore being two conflicting outcomes from two competing regulatory regimes at the same time. Our concern about this situation is that it could lead to some of the SMS firms not wanting to participate constructively with the CMA in this new ex-ante regime. The whole point of this new regime is for us to cultivate this participatory approach, so this could be quite counterproductive.

The amendment would place a requirement on the courts to avoid judgments that conflict with contemplated CMA decisions regarding a potential breach, and stay civil proceedings that overlap with the CMA’s ongoing forthcoming investigations. It would ensure that the courts have appropriate regard to and avoid pre-empting the CMA processes and decisions, while not preventing private action after decisions have been made, therefore minimising this risk of conflict. The amendment certainly preserves the rights of redress. It does not prevent stand-alone private enforcement either, where the CMA has not opened its own investigation or does not anticipate doing so, or follow-on damages where the CMA has already established a breach.

Having said all that, my noble friend does not intend to move her amendment to a Division—and I certainly do not intend to do it in her absence. However, my noble friend the Minister and officials have indicated from the discussions we have had that there is a recognition within government of the problem, and I think there is a view that the Government would rather deal with it through court rules. Can my noble friend the Minister, when he comes to wind up, set out from the Dispatch Box how the Government intend to address this problem via whatever procedure or process is available to them which is not about legislation? Whether it is the regulator or the various firms that will be potentially designated SMS, people need to know that this matter will be resolved.

Finally, I turn to CMA guidance, the role of the Secretary of State in approving that guidance, and the question of a new Select Committee for Parliament. I certainly will not repeat all that I said in Committee. In simple terms, I agree with the Government that the CMA must be subject to strong oversight as it implements this new regime. However, my view is that this should be Parliament’s job, not the job of the Secretary of State. On several occasions, I have made the case for a new Joint Committee of both Houses to oversee not just the CMA but Ofcom and the Information Commissioner’s Office. We are giving them, by way of new legislation, significant new powers and responsibilities, whether it is by the Online Safety Bill, this Bill or the data Bill, but we are not giving ourselves in Parliament the same capacity to oversee what we are delegating to these regulators. There is widespread support in both Houses for a new Joint Committee, as it is obvious that our current Select Committee regime, however great it is—I say that as somebody who has the privilege of chairing one of the Select Committees—does not have the capacity or expertise in terms of the support that we receive to oversee the regulators in the way that they need to be overseen.

However, sadly, the Government have not given their support to that change. It is not vital for the Government to support the construction of a new committee, and it is certainly not something that we need to lay out in legislation. However, it is important that we all recognise the complementary and distinctive responsibilities between the Executive and Parliament in overseeing regulators, and for these new Select Committees to be successful, we need to act in a united way. In addition to that, at this point in the parliamentary cycle, the practicalities of getting a new Joint Committee established just will not be given the attention they need from colleagues in the other place.

Therefore, I will not be pressing my Amendments 55 and 57. Amendment 55 would have removed the power from the Secretary of State to approve the guidance from the CMA and introduce some role for the relevant Select Committees. However, we cannot keep leaving this matter unresolved, so I urge my noble friend the Leader of the House and the Senior Deputy Speaker to consider this matter as still ongoing and one for us to return to at a later date. If the Secretary of State is to retain the power to approve CMA guidance and any amendments to it, there has to be a deadline for her to work to. The moment that she receives the CMA’s guidance, she will be subject to the most intense lobbying pressure. Not having a cut-off point for when the Secretary of State must decide opens the prospect of things changing in a way that I do not think would be consistent with what we are trying to achieve through this legislation.

Both Secretaries of State who are currently involved in this legislation, for DSIT and the Department for Business and Trade, are very strong individuals. I am not concerned about them being anything other than resolute in the face of great pressure. However, unfortunately we are legislating for a situation that goes way beyond the current personalities in these different posts. It is important, regardless of who is in the post, that there is a deadline. Therefore, if my noble friend Lord Lansley pushes his Amendment 56 to a Division, I will support him.

Photo of Lord Lansley Lord Lansley Ceidwadwyr 3:45, 11 Mawrth 2024

My Lords, with that lead-in I will say a few words about Amendment 56 and Amendments 13 and 35 in the name of my noble friend Lord Faulks, which were discussed very intensively in Committee. We are all very grateful to my noble friend Lord Offord for the extent of his response to that debate as Minister, but I fear that it gave us information on which to work but not sufficient reassurance to hold back, as my noble friend Lord Faulks has continued to press the argument.

Let me make a point about that. In the course of that debate, as the noble Lord, Lord Faulks, said, the Government’s intention seemed to be that either Article 1, Protocol 1, of the ECHR is engaged in relation to an appeal, using the arguments for the peaceful enjoyment of possessions and therefore, as the noble Lord, Lord Faulks, said, proportionality would be engaged as a consequence of that, or the ECHR is not engaged but it is the Government’s intention, by introducing this provision in the Bill, that the same test would apply. However, I fear that we need to say, as the Minister quite reasonably said in response in Committee, that there are expectations that proportionality would form part of the decision-making process of the Competition and Markets Authority as a responsible regulator. It would be expected, as the Minister said, to apply that principle in the terms on which it was done in the Bank Mellat v Her Majesty’s Treasury (No. 2) case.

The Minister referred to the “four limbs” of Lord Reed and Lord Sumption. I spent a bit of my life which I will not get back now reading some of these judgments, though it was quite interesting. It led me to go a little beyond the cases that were cited by my noble friend to the case of Pham v Secretary of State for the Home Department, where there was a really interesting discussion demonstrating that, although there was some development of the use of proportionality alongside reasonableness in determining administrative law cases, in the decisions that were being handed down there was a clear distinction between that proportionality which is linked to the reasonableness test—that is, that this was something so disproportionate that no reasonable regulator would have made this decision—and what they described as an intense review of the merits of the decision on proportionality.

We can add that to another case, in which the Supreme Court said that it expects Parliament, when legislating, to be aware of the common-law principles that would be applied. If we know what common-law principles would be applied and that does not suffice, Parliament is, by definition, looking to go beyond that. That leads one to the situation outlined by the noble Lord, Lord Faulks, where we would be opening the door to an intense review, by the courts, of the merits of the proportionality of the decision made by the regulator. Although the Minister said that “due deference” would be given to the regulator, I am afraid that that does not mean that it will not be challenged and that the courts will not begin to push that door further open. They will do so because Parliament has legislated for proportionality to be an explicit part of these decisions. For that reason, I support the noble Lord, Lord Faulks, in his Amendments 13 and 35. They are very important for us to pursue.

As my noble friend Lady Stowell said, my Amendment 56 is, I am happy to say, a simpler proposition. The Competition and Markets Authority has to produce guidance. We should not forget that, in doing so, it is required to consult—so there will be draft guidance and a consultation. At the conclusion of that process, under Clause 114, the CMA is required to obtain the approval of the Secretary of State. Amendment 56 does not change any of that; the Secretary of State’s approval is still required.

So, after the consultation has been completed, the guidance has been prepared and the CMA is ready for it to be published, it has to submit it to the Secretary of State. Under the legislation as it stands, if the Secretary of State declined to approve that guidance, it could not be published. The Minister might say that the Secretary of State will respond in some way. I hope that is true, as the idea that the Secretary of State would respond to the CMA by doing nothing for a long time is something we would want to avoid. But writing legislation is like writing contracts: you do not write them on the basis that everybody does what is reasonable; you write legislation that entertains the possibility that people, including Secretaries of State, will sometimes not do what they are supposed to do.

So let us at least be clear about what the Secretary of State should do under those circumstances; they should either approve the guidance or send it back within a reasonable time, and 40 days is the time in my amendment. Within 40 days, they should refer it back to the CMA with a statement of reasons for not approving it. By that stage, the department should be clear about that, because it would have had ample opportunity to look at the guidance during the consultation process. The Minister might say, “Ah, but 40 days doesn’t seem very long for the process of decision-making to be constrained”, but it follows a consultation. I think that 40 days is a perfectly ample and sufficient time for the department and the Secretary of State to respond to the CMA, either to approve or refer back.

The Minister, like others, has been very generous with his time and that of officials in discussing these matters. I hope that he none the less recognises that this Amendment 56 is a necessary safeguard that does absolutely no harm to the purposes of the Bill. When the time comes, I hope that he will accept it, but, if he does not, I fear that we will have to press it.

Photo of Lord Etherton Lord Etherton Crossbench 4:00, 11 Mawrth 2024

My Lords, I speak to my Amendment 49. I am grateful to those across the House who have supported it. This amendment is about the fundamental right of access to justice for consumers who have suffered from breaches of requirements and directions by the CMA, as the regulator, or commitments given to the CMA. The persons against whom the requirements and directions are imposed—those who have given the commitments—may be broadly described as the “big players” in digital markets. Their definition is a complicated one, but it indicates that these are the big players. We are talking here about those such as Amazon, Apple, Meta, Google, Samsung, Nokia and more.

In addition to remedies available to the CMA for breach of such requirements, directions and commitments, as has already been mentioned, such as imposing financial penalties, or the bringing of criminal proceedings and disqualification of directors, Clause 101 of the Bill grants those, whether businesses or individuals, who have suffered loss or damage, the right to bring their own civil proceedings for damages, or an injunction, or any other appropriate relief or remedy.

In the real world, one has to ask who has the financial ability or time to take on the large players in digital markets. The answer is, only billionaires and other wealthy businesses. This is true, critically, for the purposes of my amendment, which is directed to where large numbers of individuals or businesses have been harmed by the same improper or unlawful conduct. That situation of multiple complainants is the situation to which my amendment is directed. Under the current procedural rules of the courts in England and Wales, there are very limited circumstances where more than one person can join in the same proceedings, even though they may have suffered harm or loss from the same wrongful conduct of a big player. Multiple claimants could not, for example, bring one set of proceedings where the harm or loss has been suffered on different occasions, and in different circumstances.

Representative proceedings—or, as they are usually called, class actions—would overcome the procedural limitations. These class actions can be conducted, and usually are, on an opt-out basis, so that the proceedings would embrace everyone who has suffered from the same breach, whether or not they are aware of their right to damages or other relief, unless they take steps to opt out. Provision for collective proceedings, or class actions, already exists in the Competition Act 1998, as amended by the Consumer Rights Act 2015, for breaches of competition law. My Amendment 49 would extend that provision to the rights of civil action given to consumers under Clause 101 of the Bill.

In Committee, the Minister rejected that proposal. In Hansard of 24 January 2024, he is reported as saying that

“it is also important that the CMA can take a clear lead in imposing and enforcing requirements to bring effective change in digital markets ... We want the regime to be collaborative, but not litigious. This is why we have made provision for a public-led enforcement approach, which will ensure the CMA’s central role in ensuring the consistent application and enforcement of the regime, while still making explicit provision for parties to seek redress”.

He then said:

“Lengthy and complex litigation in the early years of the regime in particular would run the risk of creating uncertainty for all stakeholders and could undermine the delivery of the regime as a whole”.—[Official Report, 24/1/24; col. GC 255.]

I am afraid that that response to a perfectly reasonable procedural improvement for the benefit of consumers is illogical and unconvincing.

The position is that, in addition to a market regulator scheme, the Bill expressly confers a civil right of action. To say that, although such a civil right exists, the Government do not want many or possibly anybody to enforce it is to grant a right without an effective remedy. That is a basic breach of the right of access to the courts.

The leading case on this is the 2017 Supreme Court decision in what is known as the UNISON case. In that case, the Lord Chancellor decided to impose fees for claims to employment tribunals. The number of claims dropped by around 66%. The Supreme Court, having found that the fees were unaffordable for most of those people to whom the courts were a proper means of recourse, quashed the fees order on the basis that it impeded access to justice.

As I said, civil claims against the big digital market players will be unaffordable, save for a very few people. The right to an opt-out class action in the most serious cases of damage or loss suffered by multiple businesses and individuals from the same wrongful conduct will provide a practical remedy, enabling such claims to be enforced.

The Government have recently announced that they will introduce in this parliamentary Session legislation that will make third-party litigation funding lawful in order to promote access to justice. Accordingly, my amendment, together with third-party litigation funding, will provide all the necessary practical ingredients for collective enforcement of the civil rights confirmed by Clause 101.

Further, the Minister’s observation that lengthy and complex litigation is undesirable is contrary to the grant of the civil remedy in Clause 101, expressly given to those who have suffered loss or damage. Where multiple people have incurred loss or damage as a result of the same wrongful conduct specified in Clause 101, litigation would inevitably be lengthy and complex, even if brought by a single person who has the time and money to bring the proceedings.

The noble Baroness, Lady Stowell, in referring to Amendment 47, tabled by the noble Baroness, Lady Harding of Winscombe, says that it is undesirable that there should be any way in which the CMA undertakes investigations into breaches of undertakings, requirements or commitments at the same time as someone who has been harmed by the wrongful conduct brings civil proceedings. Amendment 47 specifies the circumstances in which, among other things, a court must stay proceedings.

The difficulty here, I am afraid, is twofold. In the first place, no example has been given as to where the overlap would occur. The regulatory provisions in Chapter 7 of Part 1 available to the CMA include

“Penalties for failure to comply with competition requirements”,

the imposition of criminal offences, and provision for director disqualification, but there is no provision for payment of damages to small businesses that, or individuals who, have suffered loss or damage.

Furthermore, some of the provisions in Amendment 47 are extremely vague. Take, for example, one of the situations in which it is said that there should be a stay of civil proceedings: where

“the CMA gives notice to the appropriate court or Tribunal that it is investigating the conduct to which the civil proceedings relate under this Part, or is intending to open a breach investigation … into such conduct within a reasonable time”.

What is a reasonable time? These investigations could go on for years, funded by very large, wealthy and determined players in the market. In the meantime, those who have suffered the loss will be out of pocket and will remain so. This is an opportunity to increase access to justice for those who have been given a right to recover damages or loss in a civil action against large, powerful players in the digital markets who would otherwise have no practical and efficient way of enforcing that right. We should embrace this opportunity.

Finally, the amendment also requires the Secretary of State to conduct a review in order to ascertain whether there are any other types of claim that might be appropriate for collective proceedings. No response has been given to that proposal, which I suggest is also eminently reasonable.

Photo of Viscount Colville of Culross Viscount Colville of Culross Deputy Chairman of Committees 4:15, 11 Mawrth 2024

I have added my name to the Minister’s Amendment 1 with great pleasure, because the Government agree that the power in Clause 6 is one the Secretary of State does not need. I have also added my name to Amendment 56 as it aims to curtail an even greater Secretary of State power. In Committee, I tabled a series of amendments to limit the Secretary of State’s powers over various stages of the Part 1 conduct requirement process. At the time, we were told that these powers were needed to ensure that the regime could respond to the fast evolution and unpredictability of digital markets. I grateful to the Minister for changing his mind on one of these powers in Clause 6 and for tabling the amendment to leave out subsections (2) and (3), which, even with the affirmative procedure, were going to give the Secretary of State unnecessary powers. It is a sensible move, as the criteria for deciding whether a digital activity should be deemed of strategic significance are, as he said, broad and well set out in subsection (1).

My concern was that the powerful tech companies, whose market dominance will be investigated in the Part 1 process, might put pressure on Ministers to amend the four criteria in Clause 6 to dilute the range of company activities under consideration for SMS positions. I am satisfied that this amendment will stop that happening. I hope that the Minister will now listen favourably to other amendments, which will be debated today, to ensure that the conduct requirement process is as swift as possible and that the Secretary of State does not have overmighty powers to intervene in the process.

I am grateful to the noble Lord, Lord Lansley, for tabling Amendment 56, to which I have added my name, to Clause 114. Subsection (4)(a) as it stands gives too much power to the Secretary of State to approve these guidelines. As I said in Committee, it was pointed out that the guidelines are the most important part of the SMS process. They set out the framework for the conduct requirement process and allow implementation of the new powers the Bill gives to the CMA to examine market-dominant activities by big tech companies.

One of the reasons for my fear of the Minister’s powers is that she might be subject to lobbying by tech companies, as the noble Baroness, Lady Stowell, pointed out, either to change the guidelines or to slow down implementation. At the moment, the Secretary of State has the power to delay approval indefinitely, and, looking to the future, when the guidelines need to be updated or revised, she or her successor could do the same thing. I am grateful to the Minister and his officials for meeting me twice to talk about this issue. I appreciate his time and attention, but I am disappointed that he and the Bill team felt unable to do anything to fetter the Secretary of State’s powers with a time limit on delay for approval. The Minister feels that a time limit would make the process brittle, and fears that an election or some big political event could cause the process to time out. I ask noble Lords to bear in mind that the amendment deals with the Secretary of State’s powers of approval of the guidelines only, not the entire procedure for setting up the guidelines. If there were an election, ministerial work would stop. However, once the new Government were in place, the time limit could kick in and start again. The Secretary of State could then approve the guidelines in 40 days or send them back to the CMA with reasons.

In my meeting with the Minister, he kindly offered to publish letters exchanged between the Secretary of State and the CMA as the guidelines were created. This seemed a wonderful offer that would go far towards ensuring transparency in the process and allay fears of backstage lobbying, and go some way towards assuaging Members’ concerns about the process of creating guidelines. Unfortunately, the Minister rescinded that offer. I ask him in the name of the openness and transparency of the Part 1 process to reinstate it.

Such a move would complement the second part of Amendment 56, whereby if the Minister does not approve of the guidelines—which would surely be the only reason for delay—an open statement of reasons as to why the guidelines could not be approved would be published. Surely noble Lords agree that transparency in the guidelines process would go far in calming any fears of it being influenced by the big tech companies.

I want very much to see this Bill on the statue book, but the Secretary of State’s powers in Clause 114 are detrimental to the Part 1 process and need to be looked at again. I hope the Minister will accept Amendment 56. If not, I will support the noble Lord, Lord Lansley, should he decide to test the opinion of the House.

Photo of Lord Black of Brentwood Lord Black of Brentwood Ceidwadwyr

My Lords, I declare my interest as deputy chair of the Telegraph Media Group and my other interests as set out in the register. I will focus briefly on three crucial amendments in this group—on proportionality, the appeals standard, and the Secretary of State’s powers—echoing points that have already been made strongly in this debate.

I fully support Amendments 13 and 35 in the name of the noble Lord, Lord Faulks. The amendment made to the Bill in the Commons replacing “appropriate” with “proportionate” will significantly expand the scope for SMS firms to appeal the CMA’s decision to create conduct requirements and initiate pro-competitive interventions.

As we have already heard, the Government have sought to argue that, even absent the “proportionality” wording, in most cases the SMS firms will be able to argue that their ECHR rights will be engaged, therefore allowing them to appeal on the basis of proportionality. The question arises: why then introduce the “proportionality” standard for intervention at all, particularly when the CMA has never had the scope to act disproportionately at law?

In this context, it is clear that the main potential impact of the Bill as it now stands is that a court may believe that Parliament was seeking to create a new, heightened standard of judicial review. As the Government have rightly chosen to retain judicial review as the standard of appeals for regulatory decisions in Part 1, they should ensure that this decision is not undermined by giving big tech the scope to launch expensive, lengthy legal cases. All experience suggests that that is exactly what would happen by it arguing that the Government have sought to create a new, expansive iteration of JR. I fear that, if the amendments from the noble Lord, Lord Faulks, are not adopted, we may find in a few years’ time that we introduced full merits reviews by the back door, totally undermining the purpose of this Act.

Amendments 43, 44, 46, 51 and 52 in the name of the noble Baroness, Lady Jones, are also concerned with ensuring that we do not allow full merits appeals to undermine the CMA’s ability to regulate fast-moving digital markets. Even though full merits are confined to penalty decisions, financial penalties are, after all, as we have heard, the ultimate incentive to comply with the CMA’s requirements. We know that the Government want this to be a collaborative regime but, without there being a real prospect of meaningful financial penalties, an SMS firm will have little reason to engage with the CMA. Therefore, there seems little logic in making it easier for SMS firms to delay and frustrate the imposition of penalties.

There is also a danger that full merits appeals of penalty decisions will bleed back into regulatory decisions. The giant tech platforms will undoubtedly seek to argue that a finding of a breach of a conduct requirement, and the CMA’s consideration that an undertaking has failed to comply with a conduct requirement when issuing a penalty, are both fundamentally concerned with the same decision: “the imposition” of a penalty, with the common factor being a finding that a conduct requirement has been breached. The cleanest way to deal with this is to reinstate the merits appeals for all digital markets decisions. That is why, if the noble Baroness, Lady Jones, presses her amendments, I will support them.

Finally, I strongly support Amendment 56 in the name of my noble friend Lord Lansley, which would ensure that the Secretary of State must approve CMA guidance within a 40-day deadline. This would allow the Government to retain oversight of the pro-competition regime’s operations, while also ensuring that the operationalisation of the regime is not unduly delayed. It will also be important in ensuring that updates to the guidance are made promptly; such updates are bound to be necessary to iron out unforeseen snags or to react to rapidly developing digital markets. Absent a deadline for approval, there is a possibility that the regulation of big tech firms will grind to a halt mid-stream. That would be a disaster for a sector in which new technologies and business models are developed almost daily. I strongly support my noble friend and will back him if he presses his amendment to a vote.

With the deadline to comply with the Digital Markets Act in Europe passing only last week, big tech’s machinations in the EU have provided us with a window into our future if we do not make this legislation watertight. As one noble Lord said in Committee—I think it was the noble Lord, Lord Tyrie—we do not need a crystal ball when we can read the book. We have the book, and we do not like what we see in it. We must ensure that firms with an incredibly valuable monopoly to defend and limitless legal budgets with which to do so are not able to evade compliance in our own pro-competition regime.

Photo of Baroness Kidron Baroness Kidron Crossbench

My Lords, I will speak to Amendments 43, 44, 46, 51 and 52, to which I have added my name, and Amendment 59. Before I do, I register my support for Amendments 13 and 35, which were brilliantly set out by my noble friend Lord Faulks and added to by others. I too shall support them if they choose to ask the opinion of the House.

I also support Amendment 56 in the name of the noble Lord, Lord Lansley. I have lived experience of waiting too long for the code to come back from the Secretary of State. Even without being a bad actor, it is in the nature of Secretaries of State to have a burgeoning in-tray, and it is in the nature of codes to be on a subject that politicians have moved on from by the time they arrive. I fully support him, and 40 days seems like a modest ask given the importance of the Bill overall.

I turn to the amendments in the name of the noble Baroness, Lady Jones. I look forward to her setting them out after I have supported them. They would reinstate judicial review as the appeal standard for penalty decisions. I thank the Minister for the generosity of his time; I know he spoke not only to me but to a number of noble Lords. However, the thing I have taken away from discussions with government and during Committee is the persistent drumbeat that asserts that we are giving huge new and untested powers to the CMA. Here, we can fill in as we like: full merits on penalty, countervailing benefits, proportionality, and Secretary of State powers have been introduced simply to give a little balance. I find that unacceptable given the power of the companies and the asymmetry we are trying to address.

The reality is that the powers given to the CMA, while much needed, are dwarfed by the power of the companies they seek to regulate. The resources available to the CMA, while welcome, are dwarfed by the resources available to a single brand of a single SMS. Most of all, the CMA’s experience of regulating digital companies is dwarfed by the experience of digital companies in dodging regulation. I am struggling to understand the imbalance of power that the Government are seeking to address.

I was in Brussels on Wednesday last week and there is a certain regret about the balancing that the EU allowed to the DMA in face of the tech lobby, only to see Apple, TikTok and Meta gleefully heading to the courts and snarling up the possibility of being regulated as intended for many years—or perhaps at all. This issue was raised by the noble Lord, Lord Black. Adding a full merits appeal on penalty will embolden the sector to use the threat of appeal to negotiate their position at earlier points in the process. It will undermine the regulator’s strength in coming to a decision. Very possibly, as other noble Lords have said, it could bleed backwards into areas of compliance and conduct requirements. It is, as the noble Baroness, Lady Harding, said, creating a hole for water to get in. The companies lobbied furiously for full merits on penalties. This is not an administrative point; it goes to the heart of the regime. Full merits give the regulated leverage over the regulator.

The most straightforward way of ensuring that the regulator does not abuse its new, enhanced power, as the Government appear to fear, is to make it accountable to Parliament, as the noble Baroness, Lady Stowell, set out in full, repeatedly and with great eloquence. I am sorry that we will not have an opportunity to make our feelings on that issue felt today, but I strongly support her saying that we should not drop this issue just because it is inconvenient to deal with at this point in the electoral cycle.

If I had been quicker off the mark, I would have added my name to Amendment 59, in the name of the noble Baroness, Lady Jones. This would give the CMA a duty to further the interest of citizens as well as consumers. I am deeply concerned that, across all Bills in this policy area, the Government are failing to raise their gaze to the future. We can take one certainty from the last decade or two: what may be okay for today’s consumer may not be okay for tomorrow’s citizen. We have seen this in the past when a decade and a half of untrammelled exploitation of children by social media companies was allowed. We will see it in the near future, as the battle for the water and energy needed for large computational models hots up. Neither the market nor the business model is yet a settled fact, and AI will certainly change the gatekeepers and the market hugely. Adding “citizen” would allow the CMA to take a more sophisticated approach to market analysis. It protects the UK public, many of whom are impacted by these markets even when not directly engaging.

Photo of Lord Wolfson of Tredegar Lord Wolfson of Tredegar Ceidwadwyr 4:30, 11 Mawrth 2024

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

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

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

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

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat Lords Spokesperson (Science, Innovation and Technology)

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

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

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

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

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

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

Photo of Baroness Jones of Whitchurch Baroness Jones of Whitchurch Shadow Spokesperson (Science, Innovation and Technology)

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

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

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

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

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

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

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

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

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

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

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

Finally, I reiterate that, despite our misgivings about the wording of the Bill, we support its central aim and would like to see it on the statute book as soon as practical. However, it can come into effect only once the CMA guidance is produced and signed off by the Secretary of State. We have been concerned throughout this process that there is no deadline for this sign-off to occur. This is why we very much support the amendment in the name of the noble Lord, Lord Lansley, that there should be a 40-day deadline for this approval. We will support him if he wishes to test the opinion of the House on this issue. I look forward to the Minister’s response.

Photo of Viscount Camrose Viscount Camrose Parliamentary Under Secretary of State (Department for Science, Innovation and Technology) 4:45, 11 Mawrth 2024

As ever, I start by thanking all noble Lords who spoke so compellingly during what has been a fascinating debate.

Amendments 13 and 35, tabled by the noble Lord, Lord Faulks, seek to remove the explicit statutory requirement for conduct requirements and PCIs to be proportionate. I appreciate that this is an issue about which many noble Lords have expressed themselves strongly, and I am grateful for the thoughtful discussions I have had with noble Lords about this, both in Committee and since. I thank my noble friends Lord Black, Lord Wolfson and Lady Stowell for their comments on this today.

We are, as has been observed, giving extensive new powers to the CMA. It is important therefore that we also include safeguards around those new powers. A proportionate approach to regulation supports a pro-innovation regulatory environment and investor confidence. That is why we have decided to make the requirement to act proportionately explicit in the Bill. This requirement reinforces the Government’s expectations on the CMA to design conduct requirements and PCIs to place as little burden as possible on firms while still effectively addressing competition issues. The Government’s view is that, for the vast majority of interventions, the DMU would have needed to ensure that they were proportionate even without this explicit provision, as Article 1 of Protocol 1 to the European Convention on Human Rights will apply to interventions that affect property rights of SMS firms, regardless of their size.

The proportionality provisions both make this explicit and ensure that it will apply in all cases, not just those where A1P1 applies, such as when future contracts are affected. The Government have considered case law about the standard of review when proportionality is under consideration by the CAT in competition cases. We do not share the view that the inclusion of these two requirements will raise the standard of review in a way that makes it materially easier for SMS firms to successfully challenge CMA decisions.

As my department has shared with the noble Lord, Lord Faulks, the CAT has held, in BAA v Competition Commission, that it must show particular restraint in second-guessing the CMA’s judgment, and also give a wide margin of appreciation to the CMA. The Supreme Court has also stressed the caution that appellate courts must take before overturning the expert economic judgments of the CMA. We remain of the view that the courts will accord respect to expert judgments of the competition regulator in relation to economic matters and will not seek to overturn DMU judgments lightly.

I hope and believe that all of us, regardless of which Benches we sit on, agree that the UK being a place of proportionate regulation, where it is attractive to start and grow businesses, should be an aim of the Bill. I hope the noble Lord and my noble friend agree and will not press their amendments.

Amendments 43, 44, 46, 52 and 51 from the noble Baroness, Lady Jones, seek to revert the appeals standard of digital markets penalties back to judicial review principles. As I outlined in Committee, the Government believe it is important that the CAT can consider the value of a fine and change it if necessary, as the penalties that the CMA can impose are likely to be significant. Parties should be able to have penalty decisions reviewed to ensure that they are fair and properly applied. Additionally, only the requirement to pay a penalty is automatically suspended on an appeal. Any other remedies put in place by the CMA would remain in place, addressing the competition harm right away. An SMS firm would be expected to comply with them regardless of the outcome of the penalty appeal.

Amendment 45 from my noble friend Lady Stowell seeks to clarify that only penalties, not the decision to impose the competition requirement or the decision that a breach has been made, would be heard on their merits. I appreciate that the intent of this amendment is to improve clarity, but we feel that its drafting does not currently address what I understand my noble friend seeks to achieve. It would currently address only breaches of conduct requirements and not PCIs or enforcement orders. Amendment 55, also from my noble friend—

Photo of Baroness Stowell of Beeston Baroness Stowell of Beeston Chair, Communications and Digital Committee, Chair, Communications and Digital Committee

I am grateful to my noble friend for giving way—I hope he will forgive me for interrupting him at a critical moment as he was about to say something about another of my amendments. He said that my Amendment 45 was inadequate because it did not cover sufficient bases. Would the Government consider it as a way forward if they were to expand it in a way that did cover all the bases?

Photo of Viscount Camrose Viscount Camrose Parliamentary Under Secretary of State (Department for Science, Innovation and Technology)

Yes, we very much understand the spirit and intent of the amendment, so I would be very happy to consider that if we could expand it to cover the bases, as my noble friend sets out.

Amendment 55, also from my noble friend, would remove the role of the Secretary of State in approving the CMA’s guidance on the regime and replace it with consultation with certain parliamentary committees. I agree with her that oversight of regulators by both government and Parliament is vital, but the Government have responsibility for the effectiveness of regulators and the policy framework that they operate in. As such, it is appropriate that the Secretary of State approves the guidance under which the CMA will deliver the regime. The CMA must already consult during the production of guidance and parliamentarians can respond to these consultations as they see fit. The Government therefore believe that this amendment is not necessary to permit parliamentary engagement with the drafting of guidance.

My noble friend Lady Stowell’s Amendment 57, also discussed in Committee, requires additional reporting from a number of regulators, including the CMA, on the impact of the digital markets regime on their activities. As each of these regulators already provides annual reporting to Parliament detailing its operations and effectiveness, we feel that additional reporting would be duplicative and create unnecessary administrative burden for regulators. The named regulators also participate in the Digital Regulation Cooperation Forum, which also produces reporting on digital regulatory issues.

Amendment 56 from my noble friend Lord Lansley would add a statutory timeframe to the approval of guidance by the Secretary of State, requiring a response within 40 days. I thank the noble Viscount, Lord Colville, the noble Baroness, Lady Kidron, and my noble friend Lord Black for their remarks and our conversations on this issue. While the Government agree that it is important that the approval of guidance takes place in a timely manner and are committed to the prompt implementation of the regime, we do not think it is necessary to amend the Bill to achieve this outcome. The Government are committed to the prompt implementation of the regime. The introduction of a deadline for the approval of guidance, while supporting this objective, could cut short productive discussion and reduce its quality.

Amendment 59, tabled by the noble Baroness, Lady Jones, introduces a duty on the CMA to further the interests of citizens as well as consumers when carrying out digital markets functions. I thank the noble Baroness, Lady Kidron, for her remarks on this. As I outlined in Committee, the Government believe that the CMA’s existing statutory duty provides the greatest clarity for the regime, people, businesses and the wider economy. The CMA already manages the interactions between competition in digital markets and wider policy on societal issues under its existing duty and through its work with the Digital Regulation Cooperation Forum.

For example, the CMA’s market study into online platforms and digital advertising considered press sustainability and media plurality among the broader social harms to consumers. The CMA and Ofcom have also published joint advice on how the new regime could govern the relationship between online platforms and news publishers.

The Bill incentivises close co-operation with key digital regulators through the explicit regulatory co-ordination provisions. The CMA will have a duty to consult Ofcom on any proposed interventions that might affect Ofcom’s competition functions for the sectors for which it has responsibility, such as broadcasting and telecoms. It would allow Ofcom to raise wider implications for media plurality.

The CMA has a clear mandate to act for the benefit of consumers in the broadest sense. The meaning of citizens in this context is unclear and risks reducing the clarity of the CMA’s core competition remit and its role in the wider regulatory landscape.

Amendment 49, in the name of the noble and learned Lord, Lord Etherton, would enable private actions relating to breaches of the digital markets regime to be brought on a collective basis. It would also require the Secretary of State to produce a report on other types of claims which might be brought on a collective basis. We commit to reviewing the provision of collective claims in a post-implementation review. It is likely they will play an important role in protecting individuals and incentivising compliance in time.

I agree that, in time, collective actions would also help increase access to redress, recognising the significant legal resources SMS firms will have at their disposal and the costs involved in bringing private actions. However, our view is that making further procedural provision for claims will not bring the best outcomes for consumers and businesses while the regime is bedding in. Consumers and small businesses will benefit most from a public-led enforcement approach.

Under the digital markets regime, the CMA—

Photo of Lord Etherton Lord Etherton Crossbench

Does the Minister accept what I said? In the Bill, currently there is no provision under the regulatory regime for the regulator to award damages for losses suffered by individual consumers.

Photo of Viscount Camrose Viscount Camrose Parliamentary Under Secretary of State (Department for Science, Innovation and Technology)

Yes, I believe that is the case and I accept that. But, as I said, I will commit to carrying out a review in the future to understand how best to implement a collective action basis.

Under the digital markets regime, the CMA will be—

Photo of Viscount Camrose Viscount Camrose Parliamentary Under Secretary of State (Department for Science, Innovation and Technology)

I intend for it to be part of the post-implementation review of the Bill.

Under the digital markets regime, the CMA will be devising novel requirements designed to address the particular circumstances of individual firms and market conditions. The DMU will need time to establish a broad set of precedents on the new rules and their enforcement. Introducing collective actions after the regime has bedded in would mirror the approach taken to the wider competition regime, which similarly had limited provision for redress when it was first established. Collective claims would also reduce incentives for firms to engage co-operatively if there is increased concern around litigation.

Amendment 47, in the name of my noble friend Lady Harding, and spoken to by my noble friend Lady Stowell, would prevent relevant courts or the CAT issuing any judgment or remedy that would conflict with a CMA decision. It would also require any private action to be stayed for CMA investigations into the same or similar breaches. The CMA is already permitted to provide evidence and opinions to the courts in competition cases through provisions in the Civil Procedure Rules and the CAT rules. I agree that the CMA may need a greater role in providing evidence and expertise to the courts in cases relating to the digital markets regime.

The Government intend to look at the issue in more detail, as we propose updates to the Civil Procedure Rules and the CAT rules. We will consider whether the courts’ case management powers and other provisions are sufficient to ensure that the CMA can make representations to the courts.

Amendment 1 agreed.

Clause 11: Procedure relating to SMS investigations