Clause 27 - Public interest interventions in markets investigations

Part of Enterprise and Regulatory Reform Bill – in a Public Bill Committee at 4:30 pm on 10 July 2012.

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Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Innovation and Skills) 4:30, 10 July 2012

I believe it was the Labour Government. The regime is internationally recognised, and our international competitors seek to emulate it. One reason is the unrelenting focus on promoting competition for the benefit of consumers. The Opposition are not convinced that the Competition Commission has the expertise to take public interest decisions into account during market investigations.

We discussed at some length concerns that the new CMA might not be properly resourced or skilled to carry out its functions. The Minister has sought repeatedly to assure us that that will indeed be the case. However, had the proposed arrangements been in place in 2010, it  is likely that the Independent Commission on Banking would have been put in place by the CMA. Although I accept that such investigations are relatively rare, would the CMA really have had the same resources to devote, and would it have attracted the same level of public interest?

Will the Minister explain how the CMA will absorb or attract the necessary expertise to deal with all the additional considerations to which the public interest requirements will give rise, or will it outsource all those requirements to new members? What additional costs will be associated if the CMA rather than the Secretary of State takes public interest considerations?

I am sure that the Minister will be able to offer assurances, but even if he can, I wonder whether he should. The CMA will, I hope, retain the OFT and CC focus on competition. We have yet to be convinced that broadening the focus will not compromise the CMA’s primary function of promoting competition in the interest of the consumer. Of course, there will be occasions when there will be overriding public interest concerns, but surely that is a matter for the Secretary of State. Has he become so out of touch with the public that he feels the need to give away public interest powers to a regulator—a process-focused competition regulator with no experience of public interest tests in market investigations? That brings me to my next point.

The CMA will be tightly focused on competition. We have established that it will focus on enforcing the well-written UK competition laws, but as the Minister made clear in an earlier debate, public interest is a rather vague term, and introducing it in this area is likely to cloud a process we are trying to streamline. He emphasised in an earlier debate the need to focus on competition and competition law, but is the clause not introducing a new, complex and broad area of public interest? We are told that one of the main objectives of this part of the Bill is to speed up the timetable of a highly regarded system. How will adding this test affect that? If we are trying to speed up the market investigation process, we should ensure that the CMA’s sole priority is competition, and let the Secretary of State worry about the public interest.

That point was made forcefully by the CBI in our evidence sessions. Katja Hall said:

“Our concern is about the risk of blurring the responsibility of the new Competition and Markets Authority. What is the benefit of giving the CMA the right to look at wider public interest issues rather than just leaving those with the Secretary of State? That would be our concern: why is that change necessary and is there a risk that it would blur the duties of the CMA?”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 7, Q12.]

The CBI made a wider point in its written submission to the Committee when it said that it was clear that the CMA should have

“a clear focus on competition”.

There is also concern that introducing the fuzzy public interest test in market investigations could undermine confidence in our competition laws. As the CBI said:

The UK has one of the most highly regarded competition regimes in the world, being robust and free from political interference. Outcomes based on clearly-drafted competition law are more predictable than subjective tests and underpin business confidence and investment. The CBI supports the objective of eliminating duplication and overlap between the”

OFT and the CC

“by establishing the CMA: speedier and more efficient processes will reduce costs to business. However, the Bill proposes that in certain cases the CMA will be able to consider the public interest in addition to effects on competition, which could blur what should be the CMA’s clear focus on competition. Business will be concerned that this does not mark a retrograde step and believes public interest tests should remain a decision for the Secretary of State.”

The phrase “retrograde step” was echoed by the in-house Competition Law Association. We know from earlier sittings that Government Members seem to have developed a dislike of lawyers, or at least they limit the company they keep with lawyers.