The House of Lords Communications and Digital Committee has today
written to , Secretary of State for
Business and Trade to set out its recommendations on the Digital
Markets, Competition and Consumers Bill.
The letter follows a short inquiry which saw the Committee take
evidence from consumer groups, UK tech start-up, big tech firms,
the Competition and Markets Authority (CMA) and ministers.
The Committee welcomes the Digital Markets Bill, saying its
objectives are sound and its measures proportionate, but stresses
that timely implementation is crucial as the UK is falling behind
the EU in regulating the digital space and this is having a
negative effect on consumers and British businesses. The
Committee states that there is insufficient competition in
digital markets and successful implementation of the Bill will
help UK businesses to thrive and ensure consumers benefit from
more choice and lower prices. The Committee urges the Government
to pursue swift passage of the Bill through Parliament.
The letter sets out some areas where further action would
be beneficial, alongside recommendations to resist pressure to
weaken some of the Bill’s measures.
Judicial review
The Committee concluded that the balance of evidence clearly
shows judicial review is the appropriate standard for appeals
against CMA regulatory decisions and should not be changed to
full merits appeals or Judicial Review+.
The Committee heard wide-ranging evidence to suggest a full
merits or JR+ system would undermine the viability of the
proposed regulatory regime and incentivise big tech firms to take
an adversarial approach to the regulators. It would also slow
down the regulatory process which would undermine the central
objective of the legislation, which is a regulatory approach fit
for an increasingly fast-changing digital world. The
Committee says the judicial review standard in the Bill ‘must be
maintained’ and the Government should resist any move to change
to a full merits process.
Countervailing benefits
The countervailing benefits clause in the Bill provides a defence
to a firm accused of breaching the rules if it can show its
actions provide a significant consumer benefit.
Some concerns have been raised that this will give big tech firms
a loophole to avoid compliance with competition regulations.
Others argued that the test for application of this exemption was
set suitably high and would not be regularly used. The
Committee concludes that the exemption is a ‘proportionate
backstop’ as long as the threshold for its use remains high, and
the Government should resist proposals to lower that
threshold.
CMA accountability
The CMA is receiving substantial new powers: transparency and
accountability will be crucial in ensuring public and industry
confidence in its work. The Committee calls on the CMA to be
proactive in ensuring its new powers are accompanied by clear and
open communication with relevant businesses and organisations
affected by its work. The Committee also says it expects
Parliament to play a key role in keeping the work of the CMA
under review and holding its leadership to account.
Baroness Stowell, Chair of the House of Lords
Communications and Digital Committee, said:
“The UK has fallen behind other jurisdictions in tackling digital
competition, so we are pleased the Government has brought forward
the Digital Markets Bill. Broadly, we think the Bill strikes the
right balance. This is about promoting innovation and a level
playing field that benefits the UK economy and British consumers
– it’s not about bashing big tech.
“Some firms and policymakers have concerns about the new regime,
and the powers being handed to the new regulator. We reviewed
these issues carefully because we understand the significance of
changing our regulatory framework. But those concerns are not an
argument for weakening the Bill, particularly on the judicial
review standard, because the case for change is clear and has
been made. The Government should resist any proposals that would
risk weaker enforcement measures and endless appeals processes.
“We therefore urge the Government to resist pressure to muddy the
waters with a full merits or JR+ appeals process which would
undermine the regulatory regime and add unnecessary delays.
“The proposals in the Digital Markets Bill will give the CMA
significant new powers and a much wider role. The CMA itself must
be held accountable for its performance and outcomes. Parliament
has a key role to play here, and we look forward to continuing to
engage on this matter further.”
Notes to Editors
- The full letter can be found online here
