Amendment 12

Part of Digital Markets, Competition and Consumers Bill - Report (1st Day) – in the House of Lords am 5:30 pm ar 11 Mawrth 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Lord Black of Brentwood Lord Black of Brentwood Ceidwadwyr 5:30, 11 Mawrth 2024

My Lords, I refer to my entry in the register of interests. I will speak to my Amendment 34, the effect of which would be to allow the final offer mechanism to be initiated by the CMA after a conduct requirement of the type allowed under Clause 20(2)(a)—to

“trade on fair and reasonable terms”— has first been breached and the other conditions in Clause 38 are met. This includes the condition that

“the CMA could not satisfactorily address the breach within a reasonable time frame by exercising any of its other digital markets functions”.

I am very grateful to noble Lords who have added their names to my amendment.

As I explained in Committee, I am concerned that the final offer mechanism must be a credible incentive to negotiate rather than such a distant prospect that the big tech firms can delay and frustrate enforcement. The whole point of the Bill is to reduce the limitless ability of big tech to leverage its huge market power and financial and legal clout. Yet, if Google or Meta believes that the FOM will never be reached, they will happily offer publishers and content creators suboptimal deals and elongate the negotiation process, and publishers—I think particularly of the hard-pressed local press—may well be compelled to accept suboptimal deals out of commercial necessity.

It is important to note that the amendment would not rush a publisher or platform into the FOM unnecessarily. If the CMA judges that its other enforcement mechanisms would bring a swift resolution to any dispute on commercial terms, it could proceed with those remedies. Therefore, the amendment seeks merely to give the CMA a wider range of tools at an earlier stage, rather than mandating which tools it should select.

We need only to look to Australia, the first country to introduce final offer arbitration, to see just how determined some firms are to avoid fair commercial deals for the trusted content that is the antidote to a new wave of AI-generated disinformation. Less than two weeks ago, Meta, with weary inevitability, announced that it would close Facebook’s news tab feature in Australia and would not renew any of the deals made with publishers after the news media bargaining code was put on to the statute book.

At a minimum, there must be assurances that the CMA will be able rapidly to move through the enforcement stages prior to the FOM, setting short deadlines for compliance and being ready to swiftly set new or more prescriptive conduct requirements of the type allowed in Clause 20(2)(a) if the initial requirements are inadequate.

We must also be sure that, under Clause 20(2)(a), the CMA will be able to require SMS firms to share information necessary for publishers to calculate the value of their content. Without this information, publishers will inevitably be at a severe disadvantage in initial negotiations, making it nigh on impossible for “fair and reasonable terms” to be agreed. In parts of the Bill dealing with the FOM itself, it is explicitly stated that the CMA can use an information notice to require an SMS firm to give information to the CMA, and for that information to be shared with a third party, such as a publisher. Although this precise mechanism may not be appropriate for negotiations outside the FOM, if the CMA’s conduct requirements were not able to encompass a requirement for the necessary information to be shared, we would end up in a situation where the FOM was the only means to facilitate “fair and reasonable” commercial terms. Robust reassurances on this matter from my noble friend the Minister would be most welcome; I am waiting to see whether he writes “robust” down.

Finally on my amendment, I note that although this legislation ultimately cannot prevent global monopolies denying their users access to all trusted news content, the conduct requirement in Clause 20(3)(a) prevents SMS firms

“applying discriminatory terms, conditions or policies”.

We must have clarity that the CMA would be able to use this requirement to prevent the withdrawal of a service by an SMS firm—including ending the hosting of news content—if it is done in a discriminatory manner. Such discriminatory behaviour could include the removal of news content from UK news publishers in an effort to avoid payment while promoting news content from English-language titles based in other jurisdictions. That must not happen. Again, I hope the Minister can provide reassurance.

I will say very briefly that I support Amendments 23 and 24, in the name of the noble Baroness, Lady Jones, which would reintroduce the indispensability standard to the countervailing benefits exemption. When the Bill was first published, the committee chaired by my noble friend Lady Stowell found that this exemption, as drafted, constituted a “proportionate backstop”, provided that the threshold for its use remained high, and stated explicitly that the Government should not lower the threshold.

We have been told by the Minister before that the changes made in the Commons do not lower the threshold but are an effort to add clarity. Yet, Cleary Gottlieb, a law firm which has represented Google in competition cases, has itself admitted that the new standard “is arguably lower”. Unfortunately, if these amendments are not adopted, it seems highly likely that the courts will reach the conclusion that Parliament explicitly moved away from one set of words to another, the clear implication being that it wishes to create a new and novel standard, and one which would seriously undermine the whole purpose of the legislation.

On the issue of precision, it is hard to see how a move away from a well-established and understood legal concept can add clarity in this area. Since its adoption in the Competition Act 1998, as my noble friend Lord Lansley said, the indispensability standard has been tested extensively, meaning that designated firms, third parties and the CMA alike would have a huge amount of precedent to draw on if it was reintroduced into the legislation. Why on earth would we tamper with that?

As my noble friend Lord Lansley’s amendments demonstrate, it is questionable whether the stand-alone exemption is necessary at all. Therefore, given that the changes made in the Commons may well have lowered the threshold required to access the exemption and the fact that they only reduced clarity—neither of which was the Government’s stated intention—there seems no sound policy reasons not to return Clause 29 to its original form, and I will support the amendments from the noble Baroness, Lady Jones.