Let’s talk antitrust - UK competition regime in need of reform? The role of consumer detriment

Video | May 2019 | 06:52

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Let’s talk antitrust - UK competition regime in need of reform? The role of consumer detriment
Jason Logendra Thank you, Richard, for coming today to talk about Lord Tyrie’s letter to the Secretary of State for Business, Energy & Industrial Strategy. Particularly, Lord Tyrie’s proposals to introduce more powers in relation to consumer protection. As you are aware, at the moment, the CMA has a primary duty to promote competition both in and outside the UK for the benefit of consumers, but Lord Tyrie has expressed a concern that maybe that does not go far enough and they should have a primary duty to protect consumers. Would you see that sort of duty changing where the CMA could take action?
Richard Whish QC Well, I think it’s an interesting idea and it certainly merits careful consideration. The OFT before it, and the CMA, has a variety of different powers. It does under the Competition Act, the Enterprise Act, Consumer Rights Act, unfair trading conditions regulations, misleading advertising. There is a question of do these all fit together under some overarching philosophy? And, yes the CMA has a duty to promote competition, but you know competition isn’t the only story here. All of these powers in some way presumably are intended to look after the interests of the consumers, and I can see the case for having an overarching obligation to promote consumers rather than just focusing, if you like, narrowly on competition. Competition is terribly important, but it is not the whole story.
Jason Logendra Do you think that change in duty would go beyond a change in mindset and perhaps administrative priorities for the CMA, or could it go to something further and more substantive changes in the way that the law is applied?
Richard Whish QC Well, I think that, I can imagine substantive changes that there could be. For example, let’s take the MIR, the market investigation reference, and there have been lots of MIRs over the years, things like storecards, and home collected credit and retail banking, insurance etc. And in order for remedies to be imposed there has to be an adverse effect on competition. Fine, and most reports have found an AEC. But sometimes one wonders, is that really quite the right examination? Might the examination not be better if it was, say, is this market working well for consumers? Why should we obsess with the competition things? I mean, you get market failures and it is not necessarily because of a cartel or abuse of dominance. It might be because of oligopolistic market structures or asymmetry of information, but it becomes progressively more difficult to find the AEC and without the AEC then you can’t impose remedies. So, I could imagine how one could restructure the law, but doing so, of course, would mean that more things became subject to the possibility of legal change as a result.
Jason Logendra One of the things that seems to be driving this approach, at least as set out in Lord Tyrie’s letter, is changes as a result of digitalisation which appear to be creating new forms of consumer detriment.
Richard Whish QC I have always been a believer that the existing competition law tools are capable of adaptation and they are always being adapted and applied to new situations. So, I have been hesitant to believe that we need to change the law, but I can begin to see that with some of the issues that are going on in the digital world, I really do wonder if our existing tools are quite the right ones. For example, when it comes to this business of, if you like, individual price discrimination, possibly of course exploiting the most vulnerable of consumers. But what is that, is that an abuse of a dominant position? It’s tricky, and yet there is something going on there that I don’t feel comfortable with at all. So, that would be an example of something in the digital world for which perhaps the existing completion tools are ill-adapted.
Jason Logendra With the increased focus on consumer protection, I don’t know if there is a risk that we could see a move away from the consumer welfare standard to a less evidence-based regime than we have at the moment.
Richard Whish QC Well, this is an interesting one, the consumer welfare standard, and over many years we have moved towards a so-called consumer welfare standard. But, of course, it begs the question, what is the consumer welfare standard? It can be interpreted and applied in different ways. If the consumer welfare standard means that the only issue is whether conduct, agreements etc lead to higher prices, if we are talking about consumer welfare in that sense, then I think we should move away from it. If, on the other hand, we are saying we are interested in the welfare of consumers, using that in a non-technical, non-economic sense, well then I am much happier. But, of course, the point is that not everything that causes detriment to consumers is to do with price.
Jason Logendra You can imagine it would take some time for some of these changes to come through, but perhaps with some inventive thinking these issues could be addressed actually quite quickly using the existing tools.
Richard Whish QC Well, indeed, there are existing tools and one of the issues dealt with in this letter in one of the sections is this business of the use of interim powers and the OFT/CMA has had the power to adopt interim measures under competition law since 2000. And has done it once and the measure in question lasted a weekend and was revoked the following Monday, so it wasn’t a glittering success. And it does seem to me that if the point here is that sometimes markets evolve very quickly, with the possibility of tipping towards monopoly, and the case is difficult and is going to take a long time to investigate, I really do see the case for having easier access, let’s put it that way, to the interim measures tool than appears to be the case at the moment.
Jason Logendra Thank you very much for those insights, Richard.