Clause 27 - Public interest interventions in markets investigations

Part of Enterprise and Regulatory Reform Bill – in a Public Bill Committee at 4:15 pm on 10 July 2012.

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Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Innovation and Skills) 4:15, 10 July 2012

Clause 27 refers to public interest interventions in markets investigations. The thrust of the clause is to give the CMA powers to report on public interest issues. Currently, the Secretary of State  has the power to call in market inquiries that affect defined public interests. The Competition Commission reports to the Secretary of State on competition matters, which is its area of expertise, and the Secretary of State considers public interest matters, where he or she, being an elected representative and in touch with his or her constituents, supposedly has the expertise. The Secretary of State must accept the CC’s competition ruling, but makes his or her own mind up about possible public interest remedies. The Opposition believe that is entirely right, but of course it was the Labour Government who put those highly regarded rules in place.

The Government’s response to the consultation said:

“Opinion on proposals to enable the CMA to provide independent reports to Government on public interest issues” alongside competition issues “was divided.”

I have not read every response, but I have had a good look through a lot of the ones relating to this particular issue, and I suggest that that statement is slightly disingenuous. Few of the responses welcoming the proposed idea argued much in favour of it, whereas those opposed expressed a number of concerns that have not been addressed by the Government at all.

The idea behind the change seems to be to bring it into line with the merger regime. Given the Secretary of State’s experience with the public interest test in the merger regime during the proposed BSkyB takeover, I am surprised that he wants to emulate it with market investigations. However, mergers and market investigations are different. There is a reason why Labour left the public interest test with the Secretary of State when we designed the regime. As one consultation response put it, in a merger case,

“as a matter of necessity, competition and public interest issues need to be considered at the same time and having regard to the same facts. In a market context, the justification for joint consideration of public interest issues and competition issues is much less and the risks greater.”

To put it another way, public interest issues are relatively simpler to spot and investigate in a merger investigation than in a market investigation. The public interest considerations in a market investigation are numerous and varied. The Government should not simply copy something that works well in one area of competition law and apply it somewhere else.

The Competition Commission is a highly regarded institution. I never miss an opportunity to remind the Government which party designed the current regime.