Agenda item

Report of the Service Director, Economy Innovation and Growth

The Government are looking to reform and strengthen how they intervene in markets by extending power to the Competition and Markets Authority (CMA).  A very lengthy consultation document was circulated to Trading Standards Authorities including the Regional Trading Standards Authority.  A regional response was submitted to the consultation.

The UK generally has an internationally respected consumer and competition authorities.  The Competition and Markets Authority in particular have delivered billions of pounds of benefits to consumers through generating lower prices, better products and services and a firm commitment to upholding consumer rights.

There is increasing evidence that competition and consumer policies are failing to keep pace with the challenges of the 21^st century.  The leading firms in some markets have increased their market power in recent years.  There is evidence both internationally from the International Monetary Fund and domestically from the CMA which shows that overall levels of competition have declined in the decades since our legislative framework was last overhauled in 1998 and further since the financial crisis in 2008,

Now the UK has full autonomy to decide how we promote competition in our markets for the benefit of our citizens.  This provides the competition authorities with a newfound freedom to decide what markets or conduct to investigate and what the best outcomes are for UK markets specifically.

Government recognises that the new autonomy brings opportunities but its also brings additional challenges, especially for the enforcement of competition law in the UK.  The CMA will now be conducting more investigations.  These will not only be more strategically significant to the UKs economy, but they are also likely to be more complex than many of the investigations previously undertaken by the CMA.  So the CMA must have the right resources, powers and procedures to deal with these cases effectively and efficiently to deliver the best outcomes for the UK.

The Government views competition as at the core of innovative well-functioning markets. Promoting healthy competition in markets creates the right incentives for traders to innovate to offer the best deal for consumers to win the most custom, for example by reducing barriers to entry for new firms with new ideas.

The UK’s internationally well-regarded competition regime seeks to keep markets competitive by:

·         Preventing businesses from restricting  competition

·         Screening mergers to prevent anti-competitive consolidation and maintain rivalry

·         Intervening in markets to unblock competition

·         Advising government on how its policies will affect competition

Despite the actions that the UK has taken to promote competition, there is evidence from the CMA that competition in the economy may have weakened over the last 20 years.  It is therefore essential that the competition regime does more to encourage and maintain competitive markets.

For consumer rights to have an impact on and improve the function of markets, traders must comply with the law and consumers must have confidence that their rights will be respected.  To address this, traders must have sufficient understanding of the law that they do not accidentally breach the law in a way that harms consumers, and consumers must have the confidence to engage themselves, and state enforcers must have the right powers to step in where consumers and traders cannot resolve disputes.

The Government is proposing a package of reforms to the enforcement of consumer law to address these issues. This would allow the CMA to decide for itself where consumer law has been breached, which is an approach mirroring their abilities in competition law enforcement.

·         Government is seeking view on the scope, decision-making process, and appeals process of this system, including appropriate safeguards to traders.

·         Testing the case for extending these powers and abilities to economic regulators

·         Fines of up to 10% of global turnover for traders that breach consumer protection law

·         Sanctions for traders that seek to frustrate, delay or otherwise not comply with the enforcement process including flouting information gathering powers and breaching undertakings.  Supporting consumers and traders to resolve more disputes independently

·         Providing more support to consumers in individual disputes with traders by improving consumers’ access to arbitration and mediations services, thus avoiding the need to go to court.  This includes a proposal to make arbitration/mediation compulsory in the used car and home improvement sectors where consumer detriment is relatively high

·         Improving the quality and oversight of alternative dispute resolution services

·         Improving consumer awareness and signposting

·         Seeking views on making it easier for consumers to band together to seek redress collectively from traders

·         How national and local enforcement can work together to tackle national scams.  Giving businesses the right support to comply with consumer protection law

·         Seeking views on whether the current business education offer meets businesses’ needs and how it can be improved.

RESOLVED -  That the information be noted.