Event round-up
03 Nov 2023

Event summary: Taking stock of the UK Digital Markets, Competition and Consumer Bill: the Pro-competition regime for Digital Markets

On Wednesday 25 October, techUK hosted a panel to discuss the Digital Market, Competition and Consumer Bill. Joining Neil Ross, techUK’s Associate Director of Policy, on the panel were:

  • Verity Egerton-Doyle, UK Tech Sector Leader and Antitrust and Foreign Investment Counsel, Linklaters LLP
  • Vic Wilkinson, Taso Advisory 
  • Francesco Versace, Senior Manager, Government Affairs, Spotify
  • Iain Wood – Director of Digital Policy, Amazon

The broad conversation saw a greater deal of alignment than media coverage of the Bill typically suggests. It was generally agreed in opening remarks that the underlying principles of the regulatory regime proposed in the Bill, namely the need for a flexible, proportionate, and focused regime to tackle entrenched market positions, was solid. Neil Ross added that among the different international approaches being taken, techUK believed the UK’s was the most promising on paper.

Panelists further agreed that ensuring the regime was workable, stable and effective was critical to ensuring good faith engagement and regulatory certainty. However, there was debate about how the Bill would operate in practice, as well as the accountability mechanisms and checks and balances on the CMA.

You can find a link to a recording of the event below, as well as a full summary with timestamps

Implementation of the Bill in practice (20:53)

Neil Ross began by asking about how the panel would like to see the Bill in practice. There was common emphasis that the regime should remain focused on where the CMA can show with evidence there is clear strategic and entrenched market power and that interventions were centred around consumers.

Francesco Versace from Spotify and Verity Egerton-Doyle of Linklaters outlined the need for a focused regime that could act swiftly, whereas antitrust investigations have showed themselves inadequate given the pace and nature of digital markets. Francesco added that any regime needed to ensure space for good faith discussion and trust between the affected parties. Verity added that the regime’s nature as ‘ex-ante’ regulation would mean a different set of motivations for engagement with the regulator than in traditional CMA enforcement, as SMS firms would have to maintain an ongoing relationship with the CMA.

When asked how the regime could build trust, Vic Wilkinson of Taso Advisory outlined that the regime had to strike the right balance to ensure its goals were fulfilled without overregulation of small businesses with undue costs, which would damage competition and consumer choice. Iain Wood from Amazon outlined the importance of certainty for this kind of engagement, especially about what the regime will look like from day one and in the long term, which is largely left to the CMA’s discretion instead of being spelled out in legislation.

Accountability (36:56)

It was agreed that there was potential for the Bill to lose focus on promoting its goals amongst a narrow set of firms, and that there needed to be guardrails on the regime to prevent this.

Iain Wood set out how guardrails and increasing the evidentiary threshold for action could prevent regulatory overreach, with Francesco Versace outlining that the CMA’s guidance itself could work to keep the regime focused.

When asked to suggest measures that may help the regime remain focused and accountable, Vic Wilkinson suggested regular reporting of the regime’s effectiveness akin to the Communication Act of 2003’s obligations on Ofcom. Verity Egerton-Doyle reminded the panel meanwhile that the CMA’s board is accountable to Parliament the Digital Markets Unit itself is not, and that the CMA board is only envisaged to have direct involvement in a very small number of DMU decisions.

Checks and balances & appeals (42:11)

The discussion then moved onto the checks and balances in the regime, including the standard of appeals.

Overall panellists felt that there had been a lot of noise and focus on this issue compared with other parts of the Bill and that this was not necessarily helpful.

Verity outlined that the focus of this debate has been on appeals by SMS firms, not by third parties, and fears have surrounded over-intervention by the CMA rather than the real possibility of under-regulation. Verity further outlined how a broader appeals standard beyond, basic Judicial Review – which she said would be more aligned with other similar regulatory regimes – may provide challenger a route to challenge the CMA where the CMA has either chosen not to intervene or the intervention was not suitable.  Verity has expanded upon her arguments in a guest blog for techUK.

Francesco Versace said that any appeals mechanism had to ensure that appealing decisions was not seen as a more attractive alternative that engaging with the CMA in good faith and the participative approach in the regime must be maintained to ensure that it works effectively. He also set out that he believed the current standard provided the basis for some on the merit reviews, particularly for example when defining the digital activities to be covered and setting out initial conduct requirements. He emphasised that the JR standard has significant precedents in the UK framework and that it is the preferred approach for Spotify given the goals of the DMCC.

Iain said that the debate had become skewed and often presented as a binary choice between two appeals standards, JR and full merits. He stressed that this was not really the case and that the Government could look at checks and balances in the round including up front guardrails, not just at appeals.

Similarly to Francesco Iain said that the ideal scenario is that the regime should be structured so that appeals were avoided as much as possible with the participative approach being key.

Summary (1:05:39)

To summarise the discussion Neil Ross set out where the panel had agreed and disagreed on key issues.

On the whole the panel saw the UK’s proposed pro-competition regime as needed and that of the various international options it remained the best example on paper.

Significant questions were raised by the panel over how the CMA is going to put the regime into practice with open questions about when guidance will be set out and how it will be consulted on. Panellists also stressed the need for the regime to be held accountable, so that it remains focused on a few highly concentrated markets.

While the appeals standard remains a divisive issue the discussion on the panel was more rounded than is often portrayed in the media. With panellists focused on how to ensure that appeals and broader checks and balances provided safeguards for both SMS and challenger firms and that in general appeals should be seen as a last resort and be less attractive than engaging with the regime in good faith. Taking advantage of the participative approach that is envisaged by the legislation and seen as a key strength by the panel.

Finally given the diversity of views on the panel and in the audience techUK stressed the need for any further work on the Bill by the Government to include the voices of all stakeholders.

However, concerns were raised that currently the Government appears not to be engaging with a broad range of companies and stakeholders with the panel unsighted on proposed changes to the Bill.

Neil Ross

Neil Ross

Associate Director, Policy, techUK

Archie Breare

Archie Breare

Public Affairs Manager, techUK

 

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