Penrose Review: UK Competition and Consumer Policy — [Clive Efford in the Chair]

Part of the debate – in Westminster Hall at 3:26 pm on 8th March 2022.

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Photo of Seema Malhotra Seema Malhotra Shadow Minister (Business, Energy and Industrial Strategy) 3:26 pm, 8th March 2022

I will come on to that, but I think we need legislation. We hope that will be announced in the next Queen’s Speech, but I will come back to that.

There seems to be broad consensus for providing the regulators, including the CMA and the Competition Appeal Tribunal, with more powers to protect consumers and hold companies accountable if they are not found to be playing by the rules. That is a positive step. However, so far—I say this gently—the Penrose review and the Government’s consultation are a missed opportunity for a more fundamental review and reform of the UK marketplace. Even the CMA, which is now responsible for all anti-competitive practices that affect UK markets and consumers, has said that comments in the Government’s consultation on reforming competition and consumer policy amounted to

“incremental, rather than radical, change to the competition regime.”

Let me mention resources, which are needed to make any regime effective, an issue that was raised yesterday in the debate on economic crime. Powers and resources for investigation and enforcement are absolutely critical. They are the other side of the coin to policy, and are about how we make sure that any regime is implemented effectively.

I want to focus on four areas to which I hope the Minister will respond. In large part, they reflect the comments already made, with one or two extra points.

First, on digital competition and regulation, digital is changing our economy. It is changing how the economy works, the products we have, how we receive services, how consumers purchase those services and how businesses trade with each other. There is a huge concentration of power in the big digital firms, with consequences for monopolisation, consumer rights and prices, as well as access to markets for new firms, as has been mentioned already. We know that tackling these issues needs international co-operation.

The Government have embarked on the creation of a digital markets unit in the CMA, which was set up on a non-statutory basis last April. I hope we will hear when that will be moved to a statutory footing and be given the teeth it needs.

Will Bills on competition and consumer law reform and on digital markets be in the Queen’s Speech? Perhaps the Minister can share with us in this Chamber—we will take it no further; it will stay within these four walls—whether that legislation will come forward.

Secondly, on powers for the CMA and the speeding up of investigations, the Penrose review made a recommendation for a taskforce on how we can make sure that CMA investigations are more effective. It is important to get justice for consumers, as the hon. Member for Weston-super-Mare said. What more are the Government planning to do in that area? There are other instances of unfairness and questionable policy. One example really struck me before Christmas. Royal Mail highlighted 23 areas that would see a reduction in service pre-Christmas, but that came on the back of £400 million in dividends being announced the month before. It does not seem right that there is no accountability for that sort of decision making.

There is some positive news. In its response to the Penrose review, the CMA announced that it is creating a dedicated microeconomic unit, which the hon. Member for Weston-super-Mare called for, and which I understand will be based in Darlington at the Treasury campus.

Thirdly, on the public interest test, Labour has proposed the introduction of a broad public interest test for mergers and acquisitions. That would give the Government powers to review transactions, impose conditions and block transactions where they could have negative, long-term implications for the UK’s industrial strategy, economy and jobs. The Government have powers under the Enterprise Act 2002 to intervene in mergers and acquisitions where they raise issues of national security, stability of the UK financial system, media plurality or maintaining in the UK the ability to combat and mitigate the effects of public health emergencies.

We are calling for the Enterprise Act 2016 to be expanded to include a public interest test where an acquisition may have long-term implications for the UK’s industrial strategy. In our view, that goes further than the Penrose review in strengthening the interests of consumers, and we believe that we need a debate on how the CMA should move past narrow competition and consumer interests to public interest. On takeovers and mergers, that could apply to consumer interest but also to the impact on supply chains, employees and the public interest more generally, which has implications for consumer interests. As is consistent with the approach that the Minister will know we took on the Subsidy Control Bill, we need the CMA to have more diverse voices in its leadership, including reforms to the authority to make it more representative of the nations and regions of the UK.

I will just comment briefly on hollowed-out local enforcement. Our consumer protection regime has been weakened by 10 years of degradation of local authority trading standards teams. That is a serious issue. The number of LATS officers has been cut by more than 50% since 2010, while 45% of local authority trading standards teams say they do not have the resources to deal with consumer issues in their area. I note that the Penrose review has called for action on that and I would be grateful for the Minister’s confirmation that some of the recommendations in the review will form part of his package of reforms later this year.

In conclusion, Labour welcomes competition and consumer choice in the UK as a sign of a healthy, functioning market economy. We are committed to making the UK the best place in the world to start and grow a business, and we believe that that is important as part of a pro-business, pro-society, pro-worker agenda to be built for Britain. We are ready and waiting for Parliament to have the opportunity to act and to build on the Penrose review. We believe that the Government have been a little too slow, so I hope that the Minister will give us confidence that things will be speeded up. I look forward to working with him and with colleagues from across the House on this important agenda as it moves forward.