Department for Business and Trade consultation on the UK’s competition regime (HTML)

Consumer Scotland is the statutory body for consumers in Scotland. Established by the Consumer Scotland Act 2020, we are accountable to the Scottish Parliament. The Act defines consumers as individuals and small businesses that purchase, use or receive in Scotland goods or services supplied by a business, profession, not for profit enterprise, or public body.

Our purpose is to improve outcomes for current and future consumers, and our strategic objectives are:

• • to enhance understanding and awareness of consumer issues by strengthening the evidence base
  • to serve the needs and aspirations of current and future consumers by inspiring and influencing the public, private and third sectors
  • to enable the active participation of consumers in a fairer economy by improving access to information and support

Consumer Scotland uses data, research and analysis to inform our work on the key issues facing consumers in Scotland. In conjunction with that evidence base we seek a consumer perspective through the application of the consumer principles of access, choice, safety, information, fairness, representation, sustainability and redress.

The Consumer Principles are a set of principles developed by consumer organisations in the UK and overseas.

Consumer Scotland uses the Consumer Principles as a framework through which to analyse the evidence on markets and related issues from a consumer perspective.

The Consumer Principles are:

• • Access: Can people get the goods or services they need or want?
  • Choice: Is there any?
  • Safety: Are the goods or services dangerous to health or welfare?
  • Information: Is it available, accurate and useful?
  • Fairness: Are some or all consumers unfairly discriminated against?
  • Representation: Do consumers have a say in how goods or services are provided?
  • Redress: If things go wrong, is there a system for making things right?
  • Sustainability: Are consumers enabled to make sustainable choices?

We have identified access, choice and fairness as being particularly relevant to the consultation proposal that we are responding to.

This consultation seeks views on a package of reform proposals to improve the pace, predictability, proportionality and process of the UK’s competition regime. The stated aim is to ensure that the framework continues to promote effective competition, support economic growth, and deliver benefits for consumers and businesses, while maintaining the independence of the CMA.

Enhancing accountability in decision-making

Question 1. What impact do you think the proposed reform would have on the consistency and predictability of decision-making in merger and markets cases?

Question 2. Would the proposed reform for greater accountability for the CMA Board for merger and markets decision-making be something you would welcome?

Yes

Question 3. Do you support the proposed membership requirements for the mergers and markets sub-committees/committees?

Yes

Consumer Scotland broadly supports these proposals. Adopting systems which are broadly comparable with those set out under the newer Digital Markets (DMCCA) regime will allow them to be more easily understood by both external scrutiny bodies, consumer bodies and businesses subject to these regimes.

As the CMA is accountable to the UK Parliament for decisions made under these regimes, it is desirable that there is clarity and transparency around who makes and has influenced decisions, and how and when these powers can be appropriately delegated to ensure speed and proportionality of decision making. Providing greater alignment with the functions of the Board should facilitate consistency for consumers in decisions across various regimes. We welcome the continued role for subject matter experts in the process to ensure that decisions are informed by the work of those with relevant expertise. It is also important that experts appointed for this purpose have sufficient expertise in identifying causes and the potential impact of detriment for consumers.

Markets Work and Markets Remedies

Question 4. Do you agree the existing market study and market investigation model should be replaced with a new single-phase market review tool?

Yes

Question 5. Do you agree the statutory time-limit for market reviews should be 24 months, with a possibility to extend by a maximum of 6 months?

Yes

Question 6. Do you agree there should be a single legal test for single-phase market reviews?

Yes

Question 7. If so, should this be the adverse effect on consumers test?

Yes

Consumer Scotland notes the significant work already ongoing in this area, with the implementation of the DMCCA reforms and the strategic review of market remedies. We agree that more can be done to streamline the process of market studies and investigations. In particular, we agree that having to choose whether to launch a market study, or investigation, without being in receipt of full evidence to allow diagnosis of the issues, and consideration of the right tools to resolve them, is undesirable. Consumer Scotland therefore supports replacing the existing market study and market investigation system with a new single-phase market review tool. This should allow for a smoother, quicker process, with earlier identification and consideration of remedies. We also support the retention of the existing procedural safeguards, including evidential thresholds, statutory consultation requirements and parties’ rights to appeal.

We consider that 24 months, with the possibility of extension by 6 months, should be the outer limit of this timeframe, bearing in mind that consumer harms may be continuing during this timeframe.

We agree that there should be a single test of adverse effect on consumers. Removing harm for consumers is also at the heart of the current “adverse effect on competition” test, as competition is ultimately intended to benefit consumers by driving up quality and driving down price. However, harms to consumers can be wider than simply those caused by a lack of competition and we favour the wider and more consumer focussed test being employed.

Markets Remedies

Question 8. Do you agree the CMA should consider sunset clauses when designing remedies?

Not sure

Question 9. Do you agree the CMA should review market remedies at least once every 10 years?

Not sure. 

Question 10. Should the CMA be able to delay reviews beyond 10 years in exceptional circumstances, providing it publishes its reasons for doing so?  

Not sure. 

While we agree that markets remedies should only remain in force so long as they are relevant, necessary and proportionate, we do have a concern that regular review requirements can in themselves become burdensome and resource consuming for regulators, and will take time away from conducting fresh market reviews to address current harms to consumers.

Concurrency

Question 11. Should sector regulators be able to oversee market remedies imposed or accepted by the CMA?

Yes. 

Question 12. Do you support the proposed consultative approach, where the CMA must consider undertaking a single-phase review following a request from sector regulators? 

Yes.

Question 13. We welcome any other views or evidence on improving the concurrency framework

We agree that sector regulators should be able to oversee market remedies, as they may already have monitoring regimes in place that will allow them to determine whether remedies are still effective. They will also have regular and ongoing contact with providers, often in a supervisory role. However, it will be critical that there is clarity amongst regulators and regulated providers as to who has responsibility to oversee the implementation of any given remedy. There must also be transparency about how this is being conducted to allow consumers and consumer bodies to scrutinise the adoption and enforcement of remedies.

The same clarity is also required in relation to market studies. If a study is being undertaken by a regulator as a precursor to a review, it is important that this is designed and carried out in close collaboration with the CMA to ensure that the CMA can use the output to guide its own processes. While the CMA is entitled to make its own prioritisation decisions, it would unacceptable for consumer harms identified by a sector regulator to remain unaddressed.

Mergers (Questions 14- 22)

Consumer Scotland has no comments on these sections.

Cross Cutting Changes

Algorithms

Question 23. Should the CMA be granted enhanced powers to investigate algorithms in its competition and consumer protection functions?

Yes. Consumer Scotland strongly support the proposed extension of these powers to allow the CMA to understand how algorithms are being employed and how consumers will respond to certain changes. Such powers are essential in order to be able to demonstrate that certain practices have effects on consumers, for example, influencing purchase decisions and causing harm due to the exploitation of vulnerabilities or behavioural traits.

The Secretary of State’s role in CMA guidance

Question 24. Should the Secretary of State have a formal role in a wider range of key guidance documents?  

Not sure. Consumer Scotland questions whether this role might undermine the operational independence of the CMA or result in a longer timeframe for the production and approval of such guidance – which would not be in the interests of certainty and predictability for businesses or consumers. While we do not express a definitive view, we consider that other oversight mechanisms, whether regular contact between the Board and Minsters or the provision of a Strategic Steer informed by wider national priorities, might provide other more proportionate, consistent and transparent ways to achieve the same end.