Digital Markets, Competition and Consumers Bill

Committee (2nd Day)

Clause 19: Power to impose conduct requirements

Amendment 16

16: Clause 19, page 11, line 3, leave out “proportionate” and insert “appropriate” Member’s explanatory statement This amendment would restore the Bill’s original wording in relation to Clause 19.

My Lords, I begin by apologising for not taking part at Second Reading. I have read the excellent debate, including the helpful introduction by the Minister. I also had the privilege of sitting through the first day in Committee, during which I learned a great deal. I refer to my interests in the register. I am not a competition lawyer, but I have experience of judicial review and of the operation of the Human Rights Act. I was chair of the Independent Review of Administrative Law, which reported a couple of years ago and resulted in the Judicial Review and Courts Act.

My amendment, which has the support of the noble Baroness, Lady Stowell, and the noble Lord, Lord Black of Brentwood, concerns the use of the word “proportionate” in Clause 19. I also have a similar amendment in this group, Amendment 53, which concerns Clause 46.

Despite some heavy lobbying of the Government by big tech, the right to appeal against an intervention by the CMA will engage the judicial review test, rather than a merits test, except as to penalty. Later amendments will carefully probe this latter aspect and I look forward to hearing the debate.

The original adjective in Clause 19 was “appropriate”. The word “proportionate” replaced it at a relatively late stage in the Bill’s progress through the Commons. Why? In one view, it is an innocuous change. Indeed, one would expect an intervention by the Digital Markets Unit to be proportionate. The word also has a respectable legal pedigree. For example, you can defend yourself against attack, provided that your response is proportionate to the attack. Whether that response is proportionate will be a question of fact, often for a jury to decide.

But judicial review is primarily concerned not with the facts of a decision but with the process by which the decision is made. Classically, the courts got involved only if a decision was so unreasonable that no reasonable public body could have reached it. The scope of judicial review has expanded somewhat to include challenges based on, for example, irrationality or the failure to take into account relevant considerations. There are other grounds, but all are effectively concerned with the process rather than with factual findings, although I readily concede that there are occasions when these distinctions can be somewhat opaque.

I add at this point that, if Amendment 16 were to be agreed, I could not call Amendment 17 by reason of pre-emption.

My Lords, I am hugely grateful to my noble friend Lord Faulks, if I can still call him that—in real life, he is my friend, even if he now sits on another Bench—both for tabling his amendments and for the incredibly comprehensive and thoughtful way in which he has introduced this group. To have the noble Lord’s expertise on this topic is incredibly valuable. I have signed his Amendments 16 and 53 but have also tabled my own in this group: Amendments 17 and 54. I am grateful to the noble Lords who have signed mine.

By way of some background to add to what the noble Lord has said, as I mentioned on the first day in Committee, and indeed at Second Reading, the Communications and Digital Select Committee held hearings on the Digital Markets, Competition and Consumers Bill during the summer of last year. We took evidence from the large tech firms as well as a range of challenger firms. We focused on Parts 1 and 2 of the Bill, which is what we are discussing at this time.

As my noble friend the Minister acknowledged when he spoke at Second Reading, we as a committee found that the Bill as it stood at that time—as introduced to Parliament—struck a careful balance. We felt that, overall, it was proportionate and would deliver on the outcomes that we were seeking to achieve and all felt were necessary for this legislation—namely, a level playing field for the various different businesses that now seek to operate in digital markets. We were careful to acknowledge that striking that balance was hard to achieve; it was not an easy thing. We commended the Government for that. We were also clear, however, that any further changes, particularly to some contentious areas, such as the appeals process, could cause significant problems.

As the noble Lord, Lord Faulks, said, we will come on to the question of appeals in a later group. The insertion of the word “proportionate” in the Bill, in the context of the conduct requirements that the CMA may impose, or the specific pro-competition interventions, has the potential to create a question and introduce a loophole that could be exploited during the appeals process. This is making people nervous—it is certainly making me nervous.

My Lords, it is an honour to follow such an esteemed legal brain and parliamentary brain. I am neither, but I have put my name to my noble friend Lady Stowell’s two amendments and I want to make two points in support of her arguments.

The common-law concept of proportionality is important in this legislation. I am not supporting these amendments in any spirit other than wanting to make sure that we are proportionate in the way we regulate the technology sector. After our first day in Committee, I was reflecting a little that perhaps all of us got a bit carried away—certainly I did—with some of our oratory about the importance of mitigating the downsides of the technology sector. I want to put it on the record that I recognise the upsides, too. Therefore, a proportionate path is important. I sit on the Communications and Digital Select Committee that my noble friend so ably chairs and, as she said, we felt that the Bill as introduced into the Commons got that proportional balance right.

We have been in this place before, having a very similar argument. A number of us here today are part of the Online Safety Act gang. I had a look at Hansard and on 19 July, during the last group on Report on the Online Safety Bill, I proposed a group of amendments in the name of the noble Baroness, Lady Kidron, which sought to clarify how non-content-related harms would be captured in the Bill. The argument made by the Minister, my noble friend Lord Parkinson of Whitley Bay, was that, by trying to define it in the Bill, we would create legal uncertainty because that concept was already defined. Now we find ourselves on the opposite sides of the same argument, where I think I am hearing the Government say that there is no intention to bring in any different definition of proportionality than that which already exists—that the CMA is already mandated to give significant consideration to proportionality—yet they want to put the word back in the Bill in the way that they resisted firmly in the Online Safety Bill, when a number of us were seeking a different form of clarification. I do not think that you can have it both ways quite so quickly in related legislation. Either the Government mean something different from the existing requirements of proportionality that the CMA is under, or we should simply take out this additional complexity and reduce the risk of further legal disputes once the Bill is enacted.

My Lords, I have had a number of arguments about “proportionate” in the decade that I have been in this House. In fact, I remember that the very first time I walked into the Chamber the noble Lord, Lord Pannick, was having a serious argument with another noble Lord over a particular word. It went on for about 40 minutes and I remember thinking, “There is no place for me in this House”. Ten years later, I stand to talk about “proportionate”, which has played such a big part in my time here in the Lords.

During the passage of the DPA 2018, many of us tried to get “proportionate” into the Bill on the basis that we were trying to give comfort to people who thought data protection was in fact government surveillance of individuals. The Government said—quite rightly, as it turned out—that all regulators have to be

“proportionate, accountable, consistent, transparent, and targeted”

in the way in which they discharge their responsibilities and they pushed us back. The same thing happened on the age-appropriate design code with the ICO, and the same point was made again. As the noble Baroness, Lady Harding, just set out, we tried once more during the passage of the Online Safety Bill. Yet this morning I read this sentence in some draft consultation documents coming out of the Online Safety Act:

“Provisionally, we consider that a measure recommending that users that share CSAM”—

that is, for the uninitiated, child sexual abuse material—

“have their accounts blocked may be proportionate, given the severity of the harm. We need to do more work to develop the detail of any such measure and therefore aim to consult on it”.

This is a way in which “proportionate” has been weaponised in favour of the tech companies in one environment and it is what I am concerned about here.

I wonder if I can just slip in before Members on the Front Bench speak, particularly those who have signed the amendment. I refer again to my register of interests.

I support the principle that lies behind these amendments and want to reinforce the point that I made at Second Reading and that I sort of made on the first day in Committee. Any stray word in the Bill when enacted will be used by those with the deepest pockets—that is, the platforms—to hold up action against them by the regulator. I read this morning that the CMA has resumed its inquiry into the UK cloud market after an eight-month hiatus based on a legal argument put by Apple about the nature of the investigation.

It seems to me that Clause 19(5) is there to show the parameters on which the CMA can impose an obligation to do with fair dealing and open choices, and so on. It therefore seems that “proportionate”—or indeed perhaps even “appropriate”—is unnecessary because the CMA will be subject to judicial review on common-law principles if it makes an irrational or excessive decision and it may be subject to a legal appeal if people can argue that it has not applied the remedy within the parameters set by paragraphs (a), (b) and (c) of Clause 19(5). I am particularly concerned about whether there is anything in the Bill once enacted that allows either some uncertainty, which can be latched on to, or appeals—people refer to “judicial review plus” or appeals on the full merits, which are far more time-consuming and expensive and which will tie the regulator up in knots.

My Lords, it is a pleasure to take part in day two of Committee on the DMCC Bill. Again, I declare my interest as an adviser to Boston Limited.

It is a pleasure to follow the introduction from my noble friend Lord Faulks. I think is highly appropriate that we discuss proportionality. I have a number of amendments in my name in this group: Amendments 33, 52 and 220, and then the rather beautifully double Nelsonian, Amendment 222. Essentially, a considerable amount of work needs to be done before we can have proportionality going through the Bill in its current form. My amendments suggest not only addressing that but looking at counter- vailing benefits exemptions and financial penalties.

Agreeing with pretty much everything that has been said, and with the tone and spirit of all the amendments that have been introduced thus far, I will limit my remarks to Amendment 222. It suggests that regulations bringing into force Clauses 19, 21, 46 and 86

“may not be made until the Secretary of State has published guidance”

going into the detail of how all this will operate in reality.

Proportionality is obviously a key element, as has already been discussed, this is just as important, as we will come on to in the next group. My Amendment 222 straddles the groups a bit, under the vagaries of grouping amendments, but it is nevertheless all the better for it.

I look forward to hearing my noble friend the Minister’s response on proportionality, countervailing benefits exemptions and financial penalties, and on the need for clear, detailed guidance to come from the Secretary of State before any moves are made in any and all of these areas.

My Lords, I am afraid I am going to play the role of Little Sir Echo here. I hope that the unanimity expressed so far will send a strong message to my noble friend the Minister. I support Amendment 16 in the name of the noble Lord, Lord Faulks, to which I have added my name, and Amendments 17, 53 and 54. I note my interests as declared at the start of Committee.

As I made clear in my remarks on Second Reading, we must, throughout the consideration of the Bill, steadfastly avoid importing anything into the CMA and DMU procedures that would allow the platforms to deploy delaying tactics and tie up the regulators in endless legal knots. Long legal wrangling will destroy the very essence of the Bill, and it is not mere speculation to suggest that this might happen. As we have seen elsewhere in the world, and indeed in publishers’ own existing dealings with the platforms, we do not need to gaze into a crystal ball; we can, as the noble Lord, Lord Tyrie, put it the other day, read the book.

In that light, as we have heard consistently this afternoon, I fear that the government amendments made in the other place, requiring the conduct requirements and PCIs to be proportionate rather than appropriate, do just that. They impose significant restrictions on the work of the CMA and, as an extremely helpful briefing—which I think all Members have had—from Which? put it, produce “a legal quagmire” that would allow the unaccountable platforms

“with their vast legal budgets … to push back against each and every decision the regulator takes”.

It is simply counterintuitive to the design of the flexible and participatory framework the legislation portends. As my noble friend Lady Stowell said, it certainly makes me very nervous.

The key point is that introducing the concept of proportionality is, frankly, totally otiose, as the noble Lord, Lord Faulks, put it so well, as proportionality is already tested by judicial review—something the CMA itself has already reiterated. The courts, in this novel area of legislation, will rely on Parliament clearly to state its intentions. Introducing the concept of proportionality not only is unnecessary but in fact muddies the waters and creates confusion that will be mercilessly used by the platforms. It certainly does not produce clarity. The Government really must think again.

My Lords, I do not know whether I am the sole dissenting voice—I do not think I am—but I want to make one preliminary point. I never thought I would make a point in defence of lawyers, but not all legal challenge or scrutiny will necessarily be wrong as this Bill proceeds or as the CMA takes its decisions. It is extremely important that we bear in mind, as we will come on to later on in the Bill, that we need to have a sense of balance about all this, so that we do not allow quite reasonable discontent with some of the shocking practices we have seen from platforms to lead us to a place that we might subsequently regret and which could lead to injustices or damage to British interests through loss of innovation or inward investment.

I listened very carefully to what the noble Lord, Lord Faulks, said. It seemed to boil down to very few things. Are convention rights engaged? They probably are, or if they are not then they will be. Even if they are not, the courts will find a way of getting them in eventually. If they are, what have the Government added? That is why I think I might be with the amenders here. I think very little, if anything at all, has been added. Was this a piece of window dressing, supplied by the Government to satisfy the intense lobbying that has taken place, particularly of No. 10? It had a whiff of that about it for me when I first saw it—I see one or two nods of assent. If it is, I am particularly wary of this change, which is what leads me to think that the amenders might be right. If it is more than this—if something very substantive has been added—then I think we would all like to hear from the Minister what exactly it is that, as a result of the adding of “proportionality”, will be considered for legal scrutiny when this Bill is on the statute book.

My Lords, I will briefly intervene. I have not signed the amendments but I am rather supportive of what the noble Lord, Lord Faulks, said in support of his amendment.

In thinking about this, among other thing I had the benefit of seeing a letter that the Parliamentary Under-Secretary at the department sent to my friends in another place, Robert Buckland and Damian Collins, after Report in the Commons; other noble Lords may have seen it. In that letter, he set out why he was building proportionality into Clause 19. He said:

“Our intention for this amendment is to allow a firm to appeal a decision by arguing that the DMU made public law errors in its consideration of proportionality under normal JR principles—without establishing that their rights under the European Convention on Human Rights are engaged”,

for example, the right to peaceful enjoyment of possessions. So that would not bring convention rights on board. The letter continues: “For example”— it is always helpful to have an example—

“the firm could argue that the DMU failed to take a relevant consideration into account, made a material error of fact or otherwise acted unreasonably”—

so JR principles—

“when deciding against an intervention that would have been less burdensome on the firm while still achieving the same outcome”.

So the outcome has to be achieved, but is it proportionate to impose this particular conduct requirement or pro-competitive intervention?

The Parliamentary Under-Secretary goes on to say:

“In practice this means that firms will be able to challenge whether the DMU could have achieved its purpose for intervention through less onerous requirements”.