Motion A Moved by Viscount Camrose That this House do not insist on
its Amendments 9 and 19, to which the Commons have disagreed for
their Reason 19A. 19A: Because it is appropriate for the CMA to be
required to act proportionately in relation to conduct requirements
and pro-competition interventions. The Parliamentary
Under-Secretary of State, Department for Science, Innovation and
Technology (Viscount Camrose) (Con) My Lords, I will also speak
to...Request free trial
Motion A
Moved by
That this House do not insist on its Amendments 9 and 19, to
which the Commons have disagreed for their Reason 19A.
19A: Because it is appropriate for the CMA to be required to act
proportionately in relation to conduct requirements and
pro-competition interventions.
The Parliamentary Under-Secretary of State, Department for
Science, Innovation and Technology () (Con)
My Lords, I will also speak to Motions A1, B, B1, C, C1, C2 and
D.
I start by thanking noble Lords for their constructive input and
careful scrutiny during the passage of the Bill. We have created
legislation that will drive innovation and deliver better
outcomes for consumers across the UK by addressing barriers to
competition in digital markets and tackling consumer
rip-offs.
The Bill has been strengthened in many places in this House.
However, today, I will speak to Motions A to D, which address
amendments that remain to be agreed across the Bill. The
Government ask that this House does not insist on the amendments
rejected in the other place and that it agrees to the amendment
proposed in lieu of changes proposed by noble Lords.
3.30pm
Noble Lords will be aware that the digital markets issues relate
to amendments made in the other place. This House has debated
those in detail, and I have had the pleasure to meet noble Lords
to discuss them subsequently. The Government have made an
important amendment in lieu in this area, which I will come to
shortly. However, the other amendments, as made in the other
place, strike the right balance between vigorously promoting
competition in the interests of consumers and healthy challenge
of the CMA's decisions. I will take these in turn to discuss why
we encourage the House not to insist on these amendments to
revert the Bill to its original wording.
I will first speak to Motion A, relating to Amendments 9 and 19,
tabled by the noble Lord, . I am grateful for the noble
Lord's contributions and experience on this matter. It has been
my pleasure to engage with him on his view that proportionality
in this context would create a novel legal standard for appeals
regarding the CMA's decision to impose obligations. The CMA will
have significant new powers and discretion under this ex ante
regime and it is right that there are safe- guards which ensure
that it designs its interventions proportionately. This will
strengthen the UK's position as one of the best places in the
world to do business.
I hope that noble Lords on all sides can agree that
overregulation is undesirable, and this threshold provides an
important safeguard to prevent that. The Government expect that
the courts and the Competition Appeal Tribunal, or CAT, will
interpret proportionality by taking an approach consistent with
their approach to proportionality in ECHR challenges. We also
expect that ECHR considerations on proportionality will be
directly relevant in most cases anyway.
Moving to Motion C, relating to Amendments 26 to 28, 31 and 32,
on penalty appeals, tabled by the noble Lord, Lord Bassam, and
the noble Baroness, Lady Jones of Whitchurch, I appreciate the
concerns of noble Lords about the potential of full merits
appeals to lead to what has been termed “bleed back” into
regulatory decisions and we have reflected closely on previous
case law on similar issues. Given the CMA's ability to impose
considerable fines, a merits-based approach will allow the CAT to
take a more thorough view on whether any penalties have been
properly applied.
Having considered the approach of the courts to appeals decisions
in competition cases under similar legislative frameworks, the
Government are confident that the courts will have no problem in
finding that appeals on the merits relating to penalties must be
restricted to challenges about the penalty itself and will not be
extended to any earlier breach decisions. Appeals against all
other digital markets decisions will be under judicial review
principles. I hope that this provides reassurance to noble Lords
that there is little risk of “bleed back”.
(Non-Afl)
Does the Minister not agree that since, with a merits appeal, a
fine could be reduced to nugatory amounts, that what would be
considered equivalent to a full merits review of the substantive
decision?
(Con)
That would be in respect only of the fine itself. Any other
element of the decision, such as the imposition of new conduct
requirements or other actions taken to correct anti-competitive
effects in the market, would stand and would have been standing
throughout the appeal in any event.
I turn to Motion B, which addresses Amendments 12 and 13, on the
countervailing benefits exemption, moved by the noble Baroness,
Lady Jones of Whitchurch. The amendment looks to revert the
clause back to its original wording of
“the conduct is indispensable ... to … those benefits”.
The Government's revised wording, which replaces “indispensable”,
does not change the effect of the clause. It still requires the
same high threshold to be met and has the same safeguards. To
qualify for the exemption, SMS firms must establish that all the
criteria are met. There must be no other reasonable, practicable
way to achieve the same benefits to consumers with a less
anti-competitive effect. I hope that noble Lords feel reassured
that the Government's drafting maintains the same robust
threshold and keeps consumers at the heart of the pro-competition
regime.
Your Lordships will remember Amendment 38, tabled by my noble
friend , which sought to place in the
Bill a 40-day timeframe for the Secretary of State's approval of
CMA guidance. The Government listened carefully to concerns led
by my noble friend relating to a risk of delay in the digital
markets regime. We are absolutely committed to getting this
regime up and running to start fixing competition problems and
deliver greater consumer benefit.
To reinforce this commitment, the Government have tabled
Amendment 38A in lieu. This takes the spirit of my noble friend's
amendment and merely adjusts the time limit to working days to
align with other timelines in the Bill. It also asks for reasons
if guidance is not approved within the time limit. I hope that
this provides reassurances to noble Lords about our commitment to
the digital markets regime. I thank my noble friend for
championing this matter in earlier debates and for his support
for the amendment in lieu.
Once again, I thank noble Lords for their contributions during
the Bill's passage and I look forward to others during this
debate. Across this House, we are all committed to making the
DMCC Bill the best and most effective legislation it can be. I
therefore invite noble Lords to agree the government Motions
before them. I beg to move.
Motion A1 (as an amendment to Motion A)
Moved by
Leave out from “House” to end and insert “do insist on its
Amendments 9 and 19.”
(Non-Afl)
Many of your Lordships will be familiar with the arguments we
have had on the Bill. The important point to stress is that there
has been a general welcome of this legislation. I would also like
to stress that a measure of cross-party co-operation was the
hallmark of the scrutiny of the Bill during its passage through
your Lordships' House. Ministers and officials have given their
time generously in meetings and have responded promptly and
helpfully to the issues that scrutiny has thrown up.
At the heart of the Bill is the regulation of the internet in a
way that should prevent market abuse, in particular by big tech.
Helpful though the Government have been, they have not provided
answers to some important questions, hence amendments being
passing on Report. These have been sent back to us by the House
of Commons without the Government—save in one respect—making
concessions.
One of the areas that gave noble Lords particular concern is the
inclusion of amendments in the House of Commons at a late stage,
following lobbying of the Government by big tech. A prospective
intervention by the regulator is unlikely to be welcomed by big
tech companies and, given their enormous legal budgets, will
inevitably be challenged. The change of wording from
“appropriate” to “proportionate” will make such challenges
easier. A reversion to the Bill's original wording will help to
restore balance, and it is hoped that the amendments in my name
and those in the name of the noble Baroness, Lady Jones, on
appeals against interventions, will achieve that. Our amendments
on Motion C are intended to prevent a seepage of arguments on
penalty, which involves a merits test, into the judicial review
test, which applies to the intervention itself.
Why have the Government made this late change of “appropriate” to
“proportionate”? They have been rather coy about this. There has
been some waffle—I am afraid I must describe it as such—about
increased clarity and the need for a regulator to act in a
proportionate manner. That is quite so but, on further probing,
the reasoning was revealed: it is intended to reflect the level
of challenge derived from jurisprudence from the European Court
of Human Rights and the CJEU, where human rights issues are
engaged. I remain bewildered as to why big tech has human rights.
This is not what the framers of the convention had in mind.
But if—and it is a big “if”—a convention right is engaged,
proportionality is the test, or at least part of it. This is a
much lower bar than the normal judicial review test. If the Bill
remains unamended, this lower bar will apply to challenges
whether or not a convention right is engaged. This is good news
for big tech and its lawyers, but not for the Bill and its
primary purpose.
I ask the Minister this specific question: if the convention
right is engaged, proportionality comes into the analysis anyway,
but what if a court were to decide that A1P1—the relevant “human
right”—was not engaged? With the Bill unamended, proportionality
would apply to a non-convention case, greatly to the advantage of
big tech. Is my understanding correct?
It seems that big tech has got its way and that litigation wars
can commence—a great pity, most specifically for the smaller
players and for the ostensible rationale behind the
legislation.
On Motion C1, the test for appeals on penalty is to be a
merits-based one, rather than the higher bar that a judicial
review standard would, or should, involve. The amendments before
your Lordships' House are intended to prevent seepage from one
test to another. His Majesty's Government say that the courts are
well used, in different contexts, to applying different tests as
part of an analysis. This is true—in theory. My concern is that
if I were advising Meta or Google about an intervention and a
consequent hefty fine—this is not an advertisement—it is
inevitable that I would advise in favour of appealing both
aspects of the intervention: against conviction and sentence, as
it were.
It is relatively easy to insulate arguments in criminal cases.
One question is, was the conviction unsafe? Another is, was the
sentence too long? In the emerging world of internet regulation,
however, it is likely to be far more difficult in practice. The
question of whether an intervention was
disproportionate—disproportionate to what?—will inevitably be
closely allied to that of whether the penalty was excessive or
disproportionate: another win for big tech, and a successful
piece of lobbying on its part.
I look forward to words of reassurance from the Minister. In the
meantime, I beg to move.
(LD)
My Lords, I will speak to Motion B1 and briefly in support of
other motions in this group.
Last December, at Second Reading, I said that we on these Benches
want to see the Bill and the new competition and consumer powers
make a real difference, but that they can do so only with some
key changes. On Third Reading, I pointed out that we were already
seeing big tech take an aggressive approach to the EU's Digital
Markets Act, and we therefore believed that the Bill needed to be
more robust and that it was essential to retain the four key
competition amendments passed on Report. That remains our
position, and I echo the words of the noble Lord, : that the degree of cross-party
agreement has been quite exemplary.
As we heard on Report, noble Lords made four crucial amendments
to Part 1 of the digital markets Bill: first, an amendment
whereby, when the Competition and Markets Authority seeks
approval of its guidance, the Secretary of State is required
within 40 days to approve the guidance or to refuse to approve it
and refer it back to the CMA; secondly, an amendment reverting
the countervailing benefits exemption to the version originally
in the Bill, which included the “indispensable” standard;
thirdly, amendments reverting the requirement for the CMA's
conduct requirement and pro-competitive interventions to be
“proportionate” back to “appropriate”; and fourthly, amendments
reverting the appeals standard to judicial review for
penalties.
We welcome the fact that the Government have proposed, through
Motion D, Amendment 38A in lieu, which effectively achieves the
same aims, ensuring that the approval of the CMA guidance by the
Secretary of State does not unduly hold up the operationalisation
of the new regime. However, the Government's Motions A, B and C
disagree with the other Lords amendments.
3.45pm
In Europe, where the Digital Markets Act is now in force, we have
seen big tech gatekeepers frustrate enforcement by evading the
spirit, and in some cases ignoring the letter, of the law. They
continue to use their market power to twist their obligations
under the Act to maintain their stranglehold. The amendments
passed by the Lords and put forward today offer the solution to
minimise the chance of this happening in the UK and to ensure
that the CMA's new powers are sufficiently robust to hold big
tech to account.
As regards the countervailing benefits exemption—Motion B1 in my
name—in the Commons on Report the Government moved away from
requiring a big tech firm's conduct to be “indispensable” to the
realisation of consumer benefits to access the exemption. A new
form of words was inserted:
“those benefits could not be realised without the conduct”.
The countervailing benefits Clause 29 in the Bill provides a
defence to a designated strategic market status entity if it can
show its actions provide consumer benefit. The House of Lords
amendments were intended to reinstate the higher bar, which would
have required the designated firm's conduct to be “indispensable”
to realise such consumer benefit. The “indispensable” standard is
a well-understood concept in UK competition law, used in the
Competition Act 1998. Nothing could give greater clarity than
reinstating this wording, as the Lords amendments seek to do. It
is likely that courts would interpret Parliament's deliberate
move away from an existing well-understood standard as intending
to create a new, novel threshold. This inevitably will allow big
tech firms greater scope to access the exemption and launch
complex legal challenges.
The Government have claimed that the change was made to add
“clarity”, and that the new wording maintains “the same high
threshold”. In response to the concerns that the change in
wording will make it easier for SMS firms to evade compliance or
appeal, Minister Hollinrake in the Commons on consideration of
Lords amendments stated:
“The revised wording about the countervailing benefits exemption
did not change the effects of the clause and did not change the
guidance in the explanatory notes[”.—[Official Report, Commons,
30/4/24; col.
208.]](/search/column?VolumeNumber=&ColumnNumber=208&House=1&ExternalId=4AC65706-5763-49B4-AD70-3783610E7369)
and that the position has not been materially changed in any way.
But we need to query why, if the Government wish to maintain the
same high standard but add clarity, they do not simply combine
the “indispensable” standard with the new wording in the Bill.
The current wording in the Explanatory Notes—that there are
“similarities”—is far too weak. If the Government will not
reinstate the “indispensable” wording, then the Minister today
should clarify at the Dispatch Box and in the Bill's Explanatory
Notes that the “indispensable” standard and the new form of
words—that
“those benefits could not be realised without the conduct”—
are equivalent.
None of this debate about wording is academic, as activity by big
tech companies in the US and EU already shows. Back in December
last year, on Second Reading of the Bill, the noble Viscount,
, used the example of privacy
and security as a potential benefit to the user under Clause 29
as a countervailing benefit. He said:
“The firm could claim that the ban was to protect user security
and privacy … the DMU would close its investigation only if the
SMS firm provided sufficient evidence, such as an independent
report from security experts[”.—[Official Report, 5/12/23; col.
1450.]](/search/column?VolumeNumber=&ColumnNumber=1450&House=2&ExternalId=2DFF9C16-2A5F-40AA-9C54-3A46AD29D95E)
There is already litigation running in the USA where Apple is
seeking to justify its anti-competitive acts on the basis that it
is justified in protecting the privacy and security of its users.
In US v Apple this year, the Department of Justice has been
explicit in saying that such justifications are spurious, and the
real motivation is that of restricting competition. It would be
extraordinarily unfortunate if the Minister's language was
referred to in subsequent litigation about the meaning of Clause
29 as being an indication of the Government's support for the
position adopted by Apple.
The view of the CMA will be crucial. Does the Minister expect the
CMA to take the same attitude to security and privacy claims as
they have in their Google privacy sandbox investigation—being
sceptical of privacy claims and making clear that they are not a
justification to allow unduly negative impacts on competition?
The implementation of privacy sandbox has been delayed for some
years globally because of the CMA's intervention, protecting
consumers from adverse impacts.
As regards the situation in the EU, 16 major trade associations
and consumer organisations wrote to the Secretary of State on 24
April, saying:
“We have observed designated companies' (‘gatekeeper') efforts to
frustrate enforcement of the EU's Digital Markets Act … The
solutions required to prevent this scenario being replicated in
the UK are to keep grounds of appeal and challenge as narrow as
possible; and preserve the latitude and efficiency with which the
CMA can act. Consumers will not reap the benefits of the
increased competition if the CMA's work can be delayed by the
designated companies”.
Noble Lords may have seen a recent piece in the Independent by
the renowned business journalist, Chris Blackhurst, pointing out
that we may become a competition regulatory outlier because:
“Other jurisdictions, including the US and EU, are moving hard
against Big Tech, stepping up several gears in their drive to
curb their growing dominance”.
Our fears and suspicions are widely shared outside this House.
Are the Government in thrall to big tech? I hope the Minister can
allay these fears today.
For the avoidance of doubt about the consequences if Motion B1
goes to a vote, we have received advice on these Benches from the
Public Bill Office that, because the House has not considered the
Government's new wording in paragraph (c), alongside the
indispensability test as inserted by Amendment 13, insisting on
Amendment 13 but not Amendment 12 represents a new package of
amendments. It is therefore the view of the clerks that any
Motion would not risk double insistence in the Commons if the
Lords agree to send back Amendment 13.
As regards proportionality, for all the reasons stated by the
noble Lord, , we support his Motion A1. The
Bill originally required the CMA to ensure that its interventions
were appropriate to the realisation of fair dealing, open choices
or trust and transparency of objectives. In the Commons, the
Government changed the requirement from “appropriate” to
“proportionate”, as we have heard. As described by the noble
Lord, , while seemingly innocuous,
this change will have a significant impact on the scope that big
tech firms have to challenge CMA decisions under judicial
review.
The Government have claimed that, even absent this specific
requirement, the regulator would need to ensure that its
interventions are proportionate because Article 1 of Protocol 1
to the European Convention on Human Rights would apply to
interventions that affect the property rights of big tech firms.
But, as the noble Lord has explained so clearly, courts are
likely to interpret this as providing new, broader grounds for
judicial review appeals of CMA decisions, and this will provide
big tech firms with limitless legal budgets with even more scope
to tie up the CMA in lengthy legal wrangling. The Bill should be
returned to its original form in this area.
We also support Motion C2 regarding the appeal standard, which
the noble Baroness, Lady Jones, will speak to. The Bill
originally had judicial review as the appeal standard for all CMA
decisions under Part 1, but in the Commons the Government moved
to merits appeals for penalty decisions. This is dangerous, as it
is ultimately the threat of fines that will incentivise big tech
firms to comply with the CMA's decisions. There is even greater
danger that merits appeals on penalty decisions, as the noble
Lord, , has said, bleed back across
the Bill into regulatory decisions, giving big tech firms greater
scope to frustrate and challenge CMA decisions. Minister Kevin
Hollinrake's statement in the Commons that
“the Bill draws a clear distinction between infringement
decisions and penalty decisions[”.—[Official Report, Commons,
30/4/24; col.
188.]](/search/column?VolumeNumber=&ColumnNumber=188-89&House=1&ExternalId=7BD1F86F-87BA-4230-93E8-46BEE77F0905)
does not eliminate the concern about the two bleeding into each
other, especially if the two streams take place together in the
same case. All this means that we should revert to the judicial
review standard for penalty appeals as well.
(Lab)
My Lords, I am pleased to support the Motions in the names of the
noble Lords, and . My Motion C2, which
proposes Amendments 32B and 32C in lieu, is in this group.
Throughout the course of the Bill, we have been grateful to the
Ministers for their engagement and willingness to reconsider its
provisions. We are pleased with a number of concessions which
have considerably strengthened the consumer protections within
it.
However, the issues at the core of the Bill, which are the ones
we are dealing with in this group, remain unresolved. This is the
Bill that was meant to even out the balance of interests between
the big tech companies and the challenger firms. We heard
numerous examples of why this was necessary, why challenger firms
were being squeezed out of the market and why the CMA needed to
have new powers to create a fair and balanced regime. We
originally had a Bill that did just that. This was before the big
tech companies intervened and objected to the Government's
proposals. The new version we have in front of us now weighs the
scales very much in their interests again.
In the Commons, Minister claimed that the
Government had engaged significantly with both large tech
companies and the challenger firms on these changes and that,
“all those cohorts are happy with where the Bill is
today[”.—[Official Report, Commons, 30/4/24; col.
178.]](/search/column?VolumeNumber=&ColumnNumber=1178&House=1&ExternalId=271B38C1-C3DA-4264-B992-75706698523E)
I have to tell the noble Viscount the Minister that this simply
is not the case. Many firms remain unhappy with the changes
introduced to the original Bill and that they have not been
matched by the necessary assurances on the practical and legal
consequences that will follow, so our objective all along in
framing our amendments was to make the Bill legally watertight,
to take out ambiguity and to give the CMA the best chance of
assessing and moderating the conduct of the tech companies deemed
to have strategic market status.
We have been keen to use the wording that is already legally
recognised and does not increase the scope for the lengthy,
costly and often strategic legal cases which we sometimes see in
this field, challenges which could be used delay or undermine the
CMA's attempts to level the playing field. Clarity has to be of
the essence. We and the noble Lord, , have amendments to Motion C,
and he has eloquently raised the legal concerns which continue to
concern us as well.
Our Amendments 32B and 32C address an area of ambiguity that may
give lawyers an open door to revisit CMA decisions to impose a
penalty when conduct requirements have been breached. This
concern was also raised in the Commons debate. For example,
Conservative MP described the possible impact
of the government changes, such that
“clever lawyers working for big tech firms may effectively be
able to broaden the scope through clever use of legal techniques
to prolong their attempts to walk backwards slowly and prevent
justice from being done[”.—[Official Report, Commons, 30/4/24;
col.
188.]](/search/column?VolumeNumber=&ColumnNumber=189&House=1&ExternalId=BC00ACBD-7E37-4342-8166-A4156A661E59)
I could not have put it any better myself. To address this
concern, our amendment makes it clear that appeals on penalties
in such cases cannot revisit the original decision, whether to
impose conduct requirements or that such requirements have not
been complied with. Rather than leaving it to ministerial
assurances or non-binding additions to the Explanatory Notes, our
amendments would make it absolutely clear that merits appeals on
penalties are on only the amounts and other points of detail and
not the CMA's decision to act, something that colleagues have
referred to as “bleed back” at previous stages. This amendment
represents a compromise. We would have preferred a switch back to
the use of judicial review on all aspects of appeals, as
preferred by the CMA, but in the absence of such a concession I
hope noble Lords will see the value of our proposals.
We are not convinced by the assurances offered in the Commons by
Minister Hollinrake that the courts will understand how the rules
should be applied; the noble Viscount the Minister repeated this
today. As the noble Lord, , ably demonstrated, there are
conflicting legal views on this and few precedents on which we
can rely. There is also a remaining concern that where a number
of issues are dealt with by the CMA concurrently, the evidence
may overlap, which would impact on a merits decision on appeals.
Our amendments address these concerns. I hope the Minister sees
the sense in our proposal. It merely reflects what the Government
say they want to achieve, but which they are refusing to put in
legislation. Challenger firms and other interested parties cannot
grow and compete with warm words alone, so I give notice that I
am minded to test the opinion of the House on this important
issue.
The noble Lord, , also made a compelling case on
his Motion Al with regard to proportionality. We have debated
this issue before; I do not need to repeat the arguments. We
continue to believe that the original wording that the CMA's
conduct in regulating digital markets should be “appropriate”
rather than “proportionate” sets the right standard. I hope the
Minister will be able to confirm that the Explanatory Notes will
be amended to make it clear that the use of “proportionate” is
not intended to set a heightened standard for appeals
grounds.4.00pm
Finally, I am grateful to the noble Lord, Lord Clement- Jones,
for setting out his case so clearly on countervailing benefits.
Again, this is a helpful compromise wording, which seeks to
combine our preferred wording on the “indispensable” standard—a
well-understood concept in UK competition law—with the
Government's new wording, which they claim helps to provide
clarity. If the Minister is not minded to accept that amendment,
could he please not only assure the House of this today but agree
to change the Explanatory Notes to make it clear that the
“indispensable” standard of countervailing benefits is the same
as the Government's preferred wording that
“those benefits could not be realised without the conduct”?
If we are not able to make progress on this, and if the noble
Lord, , wishes to test the
opinion of the House, we will support him. I look forward to the
Minister's response on all these issues.
(Con)
My Lords, I thank all noble Lords who have contributed to the
debate today and, of course, throughout the development of this
legislation. It has been a characteristically brilliant debate; I
want to thank all noble Lords for their various and valuable
views.
I turn first to the Motions tabled by the noble Lord, , in relation to appeals and
proportionality. I thank him for his continued engagement and
constructive debate on these issues. We of course expect the CMA
to behave in a proportionate manner at all times as it operates
the digital market regime. However, today we are considering
specifically the statutory requirement for proportionality in the
Bill. We are making it clear that the DMU must design conduct
requirements and PCIs to place as little burden as possible on
firms, while still effectively addressing competition issues. The
proposed amendments would not remove the reference to
proportionality in Clause 21 and so, we feel, do not achieve
their intended aim, but I shall set out the Government's position
on why proportionality is required.
On the question of the wording of “appropriate” versus
“proportionate”, proportionality is a well-understood and
precedented concept with a long history of case law.
“Appropriate” would be a more subjective threshold, giving the
CMA broader discretion. The Government's position is that
proportionality is the right threshold to be met in legislation
due to the fact that it applies, in the vast majority of cases,
because of ECHR considerations. It is the Government's view that
the same requirement for proportionality should apply whether or
not ECHR rights are engaged.
As Article 1 of Protocol 1—A1P1—of the European Convention on
Human Rights will apply to the vast majority of conduct
requirements and PCIs imposed by the CMA, with the result that
the courts will apply a proportionality requirement, we consider
it important that it should be explicit that there is a statutory
proportionality requirement for all conduct requirements and
PCIs. We believe that proportionality should be considered beyond
just those cases where A1P1 may apply, in particular when a
conduct requirement or PCI would impact future contracts of an
SMS firm.
The courts' approach to proportionality in relation to
consideration of ECHR rights has been set out by the Supreme
Court, and we do not expect them to take a different approach
here. Furthermore, the CAT will accord respect to the expert
judgments of the regulator and will not seek to overturn its
judgments lightly. I hope this answers the question put by the
noble Lord, .
On appeals, I thank noble Lords for their engagement on this
matter, and in particular the noble Baroness, Lady Jones of
Whitchurch, for setting out the rationale for her Amendments 32B
and 32C, which seek to provide further clarity about where on the
merits appeals apply. I want to be clear that the Government's
intention is that only penalty decisions will be appealable on
the merits and that this should not extend to earlier decisions
about whether an infringement occurred. I do not consider these
amendments necessary, for the following reasons.
The Bill draws a clear distinction between penalty decisions and
those about infringements, with these being covered by separate
Clauses 89 and 103. There is a Court of Appeal precedent in BCL v
BASF 2009 that, in considering a similar competition framework,
draws a clear distinction between infringement decisions and
penalty decisions. The Government consider that the CAT and the
higher courts will have no difficulty in making this distinction
for digital markets appeals to give effect to the legislation as
drafted.
I now turn to the Motion tabled by the noble Lord, , in respect of the
countervailing benefits exemption. I thank the noble Lord for his
engagement with me and the Bill team on this important topic. The
noble Lord has asked for clarification that the
“indispensability” standard in Section 9 of the Competition Act
1998, and the wording,
“those benefits could not be realised without the conduct”,
are equivalent to each other. I want to be clear that the
exemption within this regime and the exemption in Section 9 of
the Competition Act 1998 are different. This is because they
operate in wholly different contexts, with different criteria and
processes. This would be the case however the exemption is worded
in this Bill. That is why the Explanatory Notes refer to a
“similar” exemption, because saying it is “equivalent” would be
technically incorrect.
Having said that, the “indispensability” standard and the
threshold of the Government's wording,
“those benefits could not be realised without the conduct”,
are equally high. While the exemptions themselves are different,
I hope I can reassure noble Lords that the Government's view is
that the standard—the height of the threshold—is, indeed,
equivalent. The Government still believe that the clarity
provided by simplifying the language provides greater certainty
to all businesses, while ensuring that consumers get the best
outcomes.
I thank the noble Lord, , for his question in
relation to the Google privacy sandbox case. The CMA considers a
range of consumer benefits under its existing consumer objective.
This can include the privacy of consumers. It worked closely with
the ICO to assess data privacy concerns in its Google privacy
sandbox investigation and we expect it would take a similar
approach under this regime.
I urge all noble Lords to consider carefully the Motions put
forward by the Government and hope all Members will feel
able—
(LD)
Will the Government update the Explanatory Notes?
(Con)
Indeed. In principle I am very happy to update the Explanatory
Notes, but I need to engage with ministerial colleagues. However,
I see no reason why that would not be possible.
Meanwhile, I hope all noble Lords will feel able to support the
Government's position.
(CB)
My Lords, before the Minister sits down, may I just press him on
proportionality? I understand the argument to be that a
proportionality test should be applied in this context even
though it is not required in all cases by the European Convention
on Human Rights. I see the Minister nodding. Will that now be the
general position of the Government, because it is not the law in
relation to judicial review generally that there is a
proportionality test? If that is to the position of the
Government, it would be a very significant development which some
of us would welcome and some of us would not. I declare an
interest, of course, as one of those lawyers referred to by the
noble Baroness, Lady Jones, as looking to take advantage on
behalf of their clients. It is a very real issue; how far does
this go?
(Con)
It goes only so far as its application to the Bill now. I am not
aware of any further measures to take it into other Bills and
would not expect to see any.
(Non-Afl)
My Lords, I am grateful for the Minister's response on that
issue. I asked him the same question that I have asked throughout
these proceedings—it is the same question posed by the noble
Lord, Lord Pannick—and there does not seem, with great respect,
to be an answer to it. The Minister has mostly allowed, to use a
cricketing metaphor, the matter to go past the off stump without
playing a shot. What really seems to be the position is that he
says that proportionality will apply, even if the Human Rights
Act or a convention right is not involved. But I think that, in
answer to the noble Lord, , the Minister is saying, “But
only in the case of this Bill”. What that means is that big tech
is getting a special privilege not afforded to any other litigant
in any other context. I ask noble Lords, “Is that a good look?” I
do not think that it is.
The Commons reason for preferring “proportionate” to
“appropriate” reads as follows:
“Because it is appropriate for the CMA to be required to act
proportionately in relation to conduct requirements and
pro-competition interventions”.
I do not know whether that was supposed to be a joke, but it is
profoundly unsatisfactory. The Government have missed a trick—or
rather, they have succumbed to considerable pressure. I welcome
the Bill because there is a great deal about it which is good.
Having thought very carefully, and with considerable reluctance,
I propose to withdraw my amendment.
Motion A1 withdrawn.
Motion A agreed.
Motion B
Moved by
That this House do not insist on its Amendments 12 and 13, to
which the Commons have disagreed for their Reason 13A.
13A: Because it is clearer for proportionality to appear as a
separate consideration in the countervailing benefits
exemption.
(Con)
My Lords, I have already spoken to Motion B. I beg to move.
Motion B1 (as an amendment to Motion B)
Tabled by
Leave out from “House” to end and insert “do not insist on its
Amendment 12, to which the Commons have disagreed for their
Reason 13A, and do insist on its Amendment 13.”
(LD)
My Lords, if this is not a non-parliamentary expression, I will
say that the Minister has come within a gnat's whisker of where
we need to be. I rely on his assurances about Explanatory Notes,
because they will be important, but I do not move Motion B1.
Motion B1 not moved.
Motion B agreed.
Motion C
Moved by
That this House do not insist on its Amendments 26, 27, 28, 31
and 32, to which the Commons have disagreed for their Reason
32A.
32A: Because it is appropriate for all appeals about the
imposition of a penalty under Chapter 7 of Part 1 to be
determined on the merits.
(Con)
My Lords, I have already spoken to Motion C. I beg to move.
Motion C1 not moved.
Motion C2 (as an amendment to Motion C)
Moved by
At end insert “, and do propose Amendments 32B and 32C in
lieu—
32B: Clause 89, page 55, line 20, at end insert— “(1A) Appeals
(or parts of appeals) to a penalty imposed under section 85
(penalties for failure to comply with competition requirements)
through the application of section 114 of the EA 2002 do not
apply to— (a) the CMA's original decision to impose the
requirements as set out in section 85(2), or (b) the original
finding that an undertaking has failed to comply with a conduct
requirement as set out in section 85(3). (1B) Appeals (or parts
of appeals) relating to the decisions listed in subsection (1A)
must be determined in accordance with the requirement in section
103(4).”
32C: Clause 103, page 62, line 4, after “89(1)” insert “to
(1B)””
(Lab)
My Lords, the Minister said more or less that he agreed with our
position but did not see the need for the amendments to be on the
face of the Bill. The argument he gave was that the courts would
have no difficulty in distinguishing the penalties from the
earlier elements of the case—but, as we have already heard this
afternoon, some of those legal disputes are just beginning. It is
not as clear-cut as we would like, legally, and therefore we do
feel the need for that clarification to be in the Bill. I
therefore wish to test the opinion of the House on Motion C2.
[Division 1
Division on Motion C2
Content
221
Not Content
222
Motion C2 disagreed.
Held on 14 May 2024 at
4.13pm](/Lords/2024-05-14/division/1599FAEE-A8B5-4ADE-B111-5B19B92E721E/LordsChamber?outputType=Names)
Motion C agreed.
4.25pm
Motion D
Moved by
That this House do not insist on its Amendment 38, and do agree
with the Commons in their Amendment 38A in lieu.
38A: Page 70, line 37, at end insert—
“(5) When the CMA seek the approval of the Secretary of State for
guidance, the Secretary of State must— (a) approve the guidance,
or
(b) give reasons to the CMA for not approving it.
(6) The Secretary of State must comply with subsection (5) before
the end of the 30th working day after the day on which the CMA
seek the Secretary of State's approval.”
Motion D agreed.
Motion E
Moved by
of Garvel
That this House do not insist on its Amendment 104, to which the
Commons have disagreed for their Reason 104A.
104A: Because protections for consumers in relation to secondary
ticketing are adequately provided for under existing legislation
(in particular Chapter 5 of Part 3 of the Consumer Rights Act
2015 and the Breaching of Limits on Ticket Sales Regulations 2018
(S.I. 2018/735)).
The Parliamentary Under-Secretary of State, Department for
Business and Trade ( of Garvel) (Con)
My Lords, I too thank noble Lords for their constructive
engagement and debate during the passage of this Bill and echo
the remarks of my noble friend on the importance of this
legislation. Since noble Lords last discussed secondary
ticketing, the Government have given further thought to
addressing the concerns raised in both Houses. We still do not
see the merit in more or duplicative regulation at this stage.
Enforcement action using the existing rules has already resulted
in jail sentences for two touts as well as a confiscation order
of £6.1 million. We are also awaiting sentencing on four recent
prosecutions later this month.
Crucially, there have been rapid changes in the ticketing market
in the last few years. Greater use of app-based verification and
staggered ticket releases mean that businesses in the primary
market can, if they wish, easily manage secondary ticketing.
However, it is evident that good practice must go further and
wider. That is why the Government are committing to carry out a
review of the ticketing market as a whole, including primary
sellers, so that good practice can be spread further. The most
recent review by the CMA examined only the secondary market, but
it is our belief that seeking to address benefits and protections
purely through action in the secondary market will not deliver
the best outcomes for consumers. For this reason, the review will
consider issues such as why some primary sellers seem to be more
successful than others at getting tickets directly into the hands
of genuine fans, and what we can learn from that. The review will
take place over nine months, after which the Government will
consider any appropriate further action.
The Department for Business and Trade is ready to work with DCMS
and start the review as soon as possible after the Bill receives
Royal Assent. We will welcome input, expertise and views from
this House and the other place, as well as from venues, artists,
promoters, ticket sellers and resellers, enforcers and consumers.
I encourage noble Lords to back the Government's review to ensure
meaningful and evidence-based recommendations following its
conclusion. I invite noble Lords to agree the Motion and I beg to
move.
Motion E1 (as an amendment to Motion E)
Moved by
At end insert “, and do propose Amendment 104B in lieu—
104B: After Clause 308, insert the following new Clause—
“Secondary ticketing facilities
(1) After section 92 of the Consumer Rights Act 2015 insert—
“92A Requirements on secondary ticketing facilities
(1) A secondary ticketing facility must not—
(a) permit a trader or business to list tickets for resale unless
the trader or business has provided evidence of proof of purchase
to the ticketing facility, or evidence of title to the tickets
offered for resale, or
(b) permit a reseller to sell more tickets to an event than they
can legally purchase from the primary market.
(2) A secondary ticketing facility must ensure that the face
value of any ticket listed for resale, and the trader or
business's name and trading address are clearly visible, in full,
on the first page on which a purchaser can view the ticket.
(3) The Secretary of State may by regulations made by statutory
instrument—
(a) add or amend conditions on secondary ticketing
facilities,
(b) specify appropriate forms of proof of purchase for the
purposes of subsection (1)(a), and
(c) specify the form or forms in which the name and trading
address required under subsection (2) must be displayed.
(4) Regulations under subsection (3) may not revoke conditions on
secondary ticketing facilities.
(5) Regulations under subsection (3) may not be made unless a
draft of the instrument has been laid before, and approved by a
resolution of, each House of Parliament.”
(2) Within the period of nine months beginning with the day on
which this Act is passed, the Secretary of State must lay before
Parliament the outcomes of a review of the impact of subsection
(1) on the operation of the secondary ticketing market.
(3) In preparing the review under subsection (2), the Secretary
of State must consult—
(a) ticket sellers and resellers,
(b) artists and performers, or their representatives,
(c) consumers and representative organisations, and
(d) any other persons the Secretary of State deems
appropriate.
(4) The review under subsection (2) may, if the Secretary of
State deems it appropriate, consult on or specify new conditions
to be placed on secondary ticketing facilities under the powers
in section 92A of the Consumer Rights Act 2015.
(5) The obligation under subsection (2) may be met by a review
begun before the passing of this Act.””
(Con)
My Lords, I declare an interest in having been co-chair of the
APPG on Ticket Abuse, my fellow co-chair being MP. We worked together to
protect sport fans and concert- goers from abuse in the secondary
market for decades. I start by thanking my noble friend the
Minister for the interest he has taken in the subject and for
arranging the opportunity to talk through the issues concerned. I
also stress the cross-party support and co-operation on this
issue. I believe we have reached a degree of consensus about what
we are trying to achieve with this amendment in lieu, and I hope
we will continue, during the exchanges this afternoon, to reach
agreement.
Put simply, this amendment covers two aspects: a review, as
requested by the Government, which was the main outcome of the
proceedings in another place; and two small but critical
amendments. The first is that anybody should have to provide
evidence of proof of purchase to the secondary market if they
intend to sell tickets, just as you would in any other secondary
market, which would avoid the extensive fraud in the UK under the
current legislation. The second is to make sure that the trader's
name and the face value of the ticket listed for resale are
clearly visible on the ticket. That would bring us up to date
with modern technology and the changes in law and technology over
the last 10 years.
4.30pm
As my noble friend the Minister mentioned, the Minister in the
other place offered a review of the primary and secondary ticket
markets, saying that
“we recognise the strength of feeling on this matter, which has
been expressed by Members of the other place and in certain
quarters of this House, so we commit today to undertaking a
review of ticketing practices and how they impact on
consumers[”.—[Official Report, Commons, 30/4/24; col.
180.]](/search/column?VolumeNumber=&ColumnNumber=180&House=1&ExternalId=10A756DD-2944-4B08-AC35-5EE279662CAE)
I think a further review is not needed at this time. When we
debated this issue on the Consumer Rights Bill, the Government
commissioned an independent inquiry undertaken by Professor
Waterson. That led to yet another inquiry by the CMA, which
reported under 1,000 days ago in a substantial document of some
60 pages. Its findings and recommendations, which are reflected
in the two proposals in my amendment, came after nearly six years
of detailed review, as opposed to the six months of further
review that the Government are offering today. Another review
would push us further down the road, while the world of sport and
entertainment faces an exponential rise in the abuses caused by
manipulation of the secondary market.
Astute Members of your Lordships' House will have noted that, in
a spirit of co-operation and progress, as I believe it is
important for the House to accommodate as far as possible the
wishes of another place, a further time-limited review has been
placed in this amendment. However, the clerks have informed me
that it has to be within the scope of Amendment 104, since the
original amendment referred only to the secondary ticket
facilities. It would be inconceivable if we did not consider the
primary and secondary ticket markets in the terms of reference
for the review, because they rely on each other. While a further
review is unnecessary, the work of the primary market would in
any event be a key aspect of any independent review since the two
markets are inextricably linked. I am happy, in that context, to
recommend a further review.
I am not against the secondary market and nothing in my amendment
would impact the effective working of its transparent and legal
operation. If you cannot go to an event, you should be able to
sell back your ticket. Virtually every leading primary market
supplier makes that possible. My amendment focuses on the much
narrower abusive use of the secondary market—exactly the type of
market that this House criminalised at the time of the Olympic
Games in the legislation that we passed for London 2012. This
market has become so corrosive that it has been completely
criminalised in a number of countries, not least recently in
Ireland, and this Chamber has criminalised it in
football—although, as I will demonstrate, existing legislation is
being circumvented by the likes of viagogo. My amendment is
exclusively about the illegal, corrupt black market in evidence
in parts of the secondary market. My minor but important changes
are directly supported by the report and recommendations of the
CMA, which we recognise as an expert in this area and which has
been pushing hard for the sort of changes before your Lordships'
House today. This would make the life of modern-day ticket touts
more difficult and protect the tens of thousands of consumers who
are exposed to the criminality of the market on a daily
basis.
Two examples were mentioned by my noble friend the Minister when
the House last considered this amendment and sent it to another
place. First, my noble friend said about Six Nations rugby
that
“I go to Murrayfield and my ticket is a personal ticket with my
name and seat number on it. If I am found to have sold it on to
someone else at a higher price, I will lose any right to further
tickets[”.—[Official Report, 13/3/24; col.
2078.]](/search/column?VolumeNumber=&ColumnNumber=2078&House=2&ExternalId=2C5FE4A8-8CC4-4DAF-A15F-BD6B500EDCF9)
During our meeting last Thursday, I suggested that the officials
who attended should go online, where they would see—in direct
contravention of the terms and conditions of Scottish
Rugby—viagogo already listing significant numbers of tickets for
2025's Six Nations matches, including a game at Murrayfield, in
flagrant breach of the terms and conditions of the Consumer
Protection Act. Without my amendments, it is made more difficult
for the Scottish Rugby Union to stop what could be fraudulent
tickets.
All the listings on viagogo are from traders, and most appear to
be advertised in breach of the Consumer Rights Act, since they
fail to specify seat details. The locations they quote are
general, such as “west section, upper tier”, “bronze” or “event
restrictions”. The screen- grabs are all hidden behind CAPTCHA,
which was originally meant to protect consumers but is widely
used by viagogo and others to make it incredibly difficult for
the casual buyer to locate.
The Minister is right when he says that the Scottish Rugby Union
has strong terms and conditions in place to protect fans from
exploitation. Scottish Rugby knows that the laws and regulations
in place are not sufficiently comprehensive in stopping
irresponsible secondary sites ignoring their terms and conditions
to make a profit exclusively from their suppliers—the modern-day
ticket touts using bots. Sadly, it happens more every month of
every year.
The secondary market relies on suppliers. They become a preferred
supplier by using bots: computer software that can store
thousands of credit card details. When you or I go online to buy
a ticket for a popular concert and add in our details, by the
time we complete the request we are in a long queue. In the
meantime, the modern-day tout—the preferred supplier—has swept
the market and sold the tickets on to viagogo and others, which
then have them up for sale on their websites before we even
finish our application. If the preferred supplier cannot sweep
the number of tickets he has promised to the secondary market,
which ignores the promoter's terms and conditions, he will forge
them and deliver them all to the secondary market to retain his
preferred supplier status. This amendment would require proof of
purchase. Why would anyone not welcome rules and regulations
being tightened up to protect consumers?
My noble friend the Minister used a second example relating to
the opening of Euro 2024, the Scotland v Germany game, in Munich,
saying that
“in that particular case I do not have a named ticket. Indeed, I
was not able to get a ticket, and I have in fact accessed the
secondary market—and I will not be able to tell your Lordships'
House until the day before whether those tickets are legal or
not[”.—[Official Report, 13/3/24; col.
2079.]](/search/column?VolumeNumber=&ColumnNumber=2079&House=2&ExternalId=2C5FE4A8-8CC4-4DAF-A15F-BD6B500EDCF9)
If I Google “Euro 2024 Germany v Scotland tickets”, the top
sponsored results are the following websites: Live Football
Tickets, Ticombo, viagogo and Seatsnet. All claim in their
adverts that tickets are 100% guaranteed or 100% secure, and all
too have very dubious operators. For example, Ticombo is owned
and operated by Barlaup, the same person who failed to deliver
over 20,000 tickets for the London 2012 Olympics, leaving the
majority of victims without a refund. I told my noble friend the
Minister that he had literally no idea who he was buying from or
where he would be seated, and that he could well be handling
stolen goods.
As well as breaching Section 166 of the Criminal Justice and
Public Order Act 1994, these listings all breach UK consumer
protection legislation by failing to provide seat or trader
details and information about restrictions on use. The official
event terms and conditions for Euro 2024 clearly state that
resale for profit is not allowed, although you can resell for
face value or transfer to another fan for personal use. This
amendment in lieu recognises that the existing rules and
legislation are not working effectively. It would add two
provisions to make it more difficult to circumvent the law, which
would help Scottish Rugby and Euro 2024 go after the scalpers and
protect the consumers.
In my view, it is absolutely vital that we consider carefully the
outcome of what the CMA has reviewed over nearly six years of
detailed investigation, including its call to this House to
implement new legislation to bring us up to speed with what is
happening in the market. The CMA went further than requiring the
secondary market to put face value, the business name and the
trading addresses on the face of the tickets; it wants a
licensing system. That may be required, but my amendment achieves
the same result without the cost of that new system.
The CMA was simply asking for clear and coherent information on
the ticket—and that is all I am asking the House for today. Yet
my amendment has moved with the times. We are now 10 years on
from the Consumer Rights Act. That time, when we first asked for
this, was before the secondary market had the technology to hide
behind icons and hyperlinks, requiring customers to dig
interminably deeper into wormholes on their websites before they
find the information that was then—and still often is—translated
into a foreign language. This amendment seeks a clear
requirement, requested from the CMA, that the reseller cannot
sell more than they can legally purchase.
It is with a heavy heart that I say that, throughout the
proceedings of this legislation, Ministers in both Houses, either
on the record or in discussion with me, have not put forward one
argument as to why the amendment would not work. I am in favour
of a free market, but one that obeys the law. From time to time,
we need to make a small amendment to update the law to avoid
unscrupulous traders abusing it, as with hiding information
behind near impenetrable icons. There is no difference between my
noble friend the Minister saying that he is in favour of auction
houses but will turn one blind eye to the provenance of what they
are auctioning and another blind eye to the contract entered into
between the seller and the auction house and him recommending
exactly that in the secondary market by rejecting the amendment.
All that we have had in response is that it is time for another
review—and a nine-month review, not a nearly six-year review, to
which we have not responded in law.
It is time to listen to the CMA and to protect the consumers. It
is time to stop the many examples of people, genuinely thinking
that they have acquired tickets from the secondary market,
travelling with their families for a special occasion to a major
pop concert or sporting event only to be turned away. The market
is not operating as efficiently as it should be and there is deep
corruption in many aspects of it, which would be addressed by the
amendment. That is why the CMA has called for action on this and
why we should protect the consumers. I beg to move.
(LD)
My Lords, I support Motion E1 and pay fulsome tribute to the
noble Lord, , for his expertise and
tenacity. Thanks to his efforts and those of MP, and after a long
campaign with the All-Party Group on Ticket Abuse, we were able
to include certain consumer protections in the ticketing market
in the Consumer Rights Act 2015. The noble Lord's amendment on
Report sought to introduce additional regulatory requirements on
secondary ticketing sites for proof of purchase, ticket limits
and the provision of information on the face of tickets. That
would have secured greater protection for consumers and avoided
market exploitation, which is currently exponentially growing on
platforms such as viagogo.
As we have heard, the Ministers—the noble Lord, , and the noble Viscount, Lord
Camrose—in their letter of 1 May to noble Lords, offered a review
that would take place over nine months, which would make
recommendations for Ministers to consider. But that is simply not
enough, as the noble Lord, , has demonstrated. The
Minister, the noble Lord, , seems to believe from his own
experience—unlike the rest of us—that everything is fine with the
secondary market and that the answer to any problem lies in the
hands of the primary ticket sellers. However, the noble Lord,
, in his brilliantly expert
way, demonstrated extremely cogently how that is absolutely not
the case for the Minister's favourite sports of rugby and
football, where the secondary resellers are flagrantly breaking
the law.
4.45pm
Furthermore, the Minister has used the examples both in debate
and in correspondence—I thank him for taking the time to meet
other noble Lords—of Ed Sheeran, Mumford & Sons, Iron Maiden
and Glastonbury as putting in place restrictions on primary
market sales to suggest that we should focus our attention on
putting pressure on the organisers of these events to use
existing legislation to prevent the unfair secondary market.
However, apart from anything else, why is it solely the
responsibility of artists and promoters to prevent secondary
ticketing websites and their suppliers breaking the law? Surely
they also deserve greater support. Most other artists do not have
the resources to put in place these controls.
As the noble Lord, , said, all the UK's main
primary ticketing operators offer capped, consumer-friendly
resale at the price originally paid or less. All can guarantee
the tickets being resold. This model has become standard in the
UK market, and such services are now widely publicised at venues.
But the growth of this genuine consumer-to-consumer market is
being held back by the black market of uncapped ticket
resale.
By implementing this amendment in lieu, the Government have an
opportunity to fix many of these issues in one fell swoop. It
would ensure that touts could not resell vast quantities of
criminally acquired tickets through websites such as viagogo, and
fans could purchase tickets at face value as intended. After all,
something along these lines, as the noble Lord explained, was
proposed also by the CMA. We should support it.
(Lab)
My Lords, I will speak to Motion E1 in the name of the noble
Lord, . Like the noble Lord, , I thank him and my
honourable friend the Member for Washington and Sunderland West
for their relentless campaigning and enduring diligence on this
issue.
The current system is not working. It is not strong enough to
stop a shadowy oligopoly of parasites on talent: unscrupulous
people who are profiteering from genuine fans who want to see
their heroes perform live. Tickets for many high-profile events,
which by their very nature are extremely limited in supply, are
being resold for many times their face value. Genuine sports
supporters and music fans are being ripped off.
I will give just one example. The original price of the most
expensive seated tickets for Taylor Swift in Edinburgh next month
was £194 each. I went online to book mine last night, dedicated
Swiftie fan that I am, and the cheapest seated tickets with
unrestricted views were more than £500 each for two together. The
most expensive pairs were £3,646 each—more than 19 times the
original price. If I were to buy them, I would wonder to whom
that additional money, almost £7,000, was going. It is obviously
not going to Taylor Swift—or Tay Tay, as we fans call her.
Sports clubs and artists pitch their prices at a level which they
think is fair and which enables them to make a profit: a price
that allows their fans to enjoy their work—often a special
occasion that will be remembered for a lifetime. When they see
their fans charged excessive prices, they are right to believe
that their hard work, talent and reputations are being exploited.
These excess profits are not going to those who have worked hard
to develop sporting prowess or exceptional skills as a performer;
they are going to unscrupulous organisations which are often
difficult to track and prosecute and which are prepared to
exploit existing loopholes and take risks by breaking the law,
knowing that they are unlikely to be caught. Such organisations
employ sophisticated technology to distort a necessarily
restricted market. In his response on day 2 of our debate, on 13
March, the Minister argued his case for not accepting amendments
on this issue. The noble Lord, , has, with characteristic
persistence and diligence, convincingly rebutted those arguments
and perhaps alerted the Minister, as he set out earlier, to just
how easy it is to be misled, overcharged and ripped off by the
various online sites which operate in the secondary market,
perhaps even saving him from an expensive mistake the next time
he chooses to see an international rugby or football match or
even a pop concert.
The CMA made recommendations in relation to secondary ticketing
that are covered by this amendment, as the noble Lord set out
earlier. The first was to ensure that secondary tickets can be
sold only with proof of purchase of the original ticket, to avoid
speculative sales of tickets which may not have been bought and
might not be provided—a recipe for rip-offs. The second was to
limit the number of resales by a single reseller to the amount
that can legally be purchased on the primary market. If a
reseller is offering tickets in groups larger than this, that
must indicate that the additional tickets have been misdescribed
or misappropriated and potentially that the purchaser could
unknowingly be receiving stolen goods. The amendment also
requires that secondary sellers make the original face value of
the ticket clearly visible to the purchaser. Subsection (3) of
the new clause inserted by the amendment gives the Secretary of
State powers to impose or amend conditions for resellers in
response to further loopholes being found by resellers to get
around these reasonable and legal restrictions, if any emerge in
the future.
The second part of the amendment is equally important. It
formalises the Government's non-legislative commitment to
undertake a review over the next nine months, as mentioned
earlier by noble Lords. By the time that review finishes, the
Consumer Rights Act 2015 will be 10 years old. It is already
showing its age in the face of the rapid technological advances
allowing unscrupulous companies to exploit fans and performers.
The review will enable the Secretary of State to identify
emerging risks—the unknown unknowns—and respond to rapidly
changing technology as touts inevitably seek to exploit the
loopholes of the future.
Every year, fans spend millions of pounds of their hard-earned
money on these special occasions. It should not go to touts or
resellers who exploit the system and play fast and loose with
consumer law. The devil is in the detail here and it is also in
delay. The time to act is now. The combined weight of the
concerns and arguments of the noble Lord, , the CMA, the entertainment
and sports industries, consumer groups and ordinary fans is
difficult to resist. I am impressed by the Minister's resolve in
the face of this tsunami, but I hope that he will now support
this amendment. If the noble Lord, , wishes to test the will of
the House, we on this side will support him.
of Garvel (Con)
My Lords, I thank all noble Lords who have debated the topic of
secondary ticketing today. It has been an interesting and
constructive discussion on a very important topic.
Turning to Motion E1, tabled by my noble friend and regarding secondary
ticketing, I thank the noble Lords, and , for their contributions. I
also thank my noble friend for his thoughtful engagement on
issues in the secondary ticketing market and his commitment to
work with the Government on solutions. As he will know, following
our meeting last week and engagement since then, we share many of
these concerns—although we differ slightly in our judgment of the
best means of addressing them.
This Government have already brought in extensive and successful
legislative protections for consumers buying on the secondary
ticketing market. These go above and beyond standard consumer
rights and require both ticket resellers and platforms to provide
ticket information to buyers.
It is appropriate to consider the amendment in Motion E1 in
detail. Proposed new subsection (1)(a) requires that a platform
seeks confirmation of proof of purchase or evidence of title
before allowing a ticket to be listed. It does not set out what
might satisfy such requirements, so this is likely to come down
to a question of due diligence as a platform to be
challenged.
Moreover, it is already a criminal offence, as unfair trading or
fraud for traders, to offer for sale a product that cannot be
legally sold. Recent prosecutions included breaches of the Fraud
Act as part of their basis. Similarly, speculative selling is
something that the CMA has sought to address through enforcement,
because actions such as that mentioned in relation to the
SRU—selling tickets not even issued yet—are not allowed under
current law.
Proposed new subsection (1)(b) seeks to apply primary sale ticket
limits to the secondary market but, having consulted primary
agents, we feel that this is impractical. The number of tickets
that a person can purchase depends on the event. It would be
difficult for a platform to know what, if any, limits there were
for each event, especially when tickets are sold through multiple
primary agents.
Proposed new subsection (2) imposes requirements to make clearly
visible information about the face value of the ticket, and the
trader's name and business address. Both these elements are
already required by UK law; existing legislation requires this
information to be “clear and comprehensible”. This is a clear
general provision, its application in the circumstances being one
for regulators and the courts. There is a greater risk of
loopholes if certain practices are specifically provided for but
others are not.
In his review, Professor Waterson recommended that enforcement
action be taken to drive compliance. That has happened with CMA
action, and we have seen successful prosecution of ticket touts,
as evidenced by the case of R v Hunter and Smith, which resulted
in prison sentences and financial confiscations. However, at that
time, the CMA review did not look at the primary market.
During the passage of the Bill, we listened to arguments by noble
Lords opposite about the merits of a review of the market as a
whole, looking not just at what happens on the secondary market,
but at how tickets flow from the primary market. We can better
establish the practice and interventions that will deliver
benefits and protections for consumers and support events going
on in the UK.
I admire my noble friend Lord Moynihan's dogged commitment to
this issue. He wants to beef up the existing rules, but we
already have extensive rules in this area. This issue will not be
solved simply by adding more and more legislation; it will be
solved by better implementation. We have started by radically
boosting enforcement powers in Part 3; the next step is to
understand how tickets move from primary sale to the secondary
market, for different events, in different venues.
On that basis, I urge noble Lords to support the review that we
have set out today, and to consider carefully the Motion put
forward by the Government. I hope that all Members feel able to
support our position.
(Con)
My Lords, I thank noble Lords from across the House. We have
covered the ground extensively again. I particularly thank the
Minister; I think it is the first time, in the whole process,
that he has engaged in the detail of the amendment while
accepting with me the need to take action. If he had done that
somewhat earlier in the process, we might have made progress, but
it gives me significant confidence that he has done it today. We
now have the opportunity to consider improving the wording, and
we can do so by passing the Motion that is in front of your
Lordships' House. We will see whether we can take practical
steps, rather than make an outright rejection, and a request, as
happened in the other place, for a further six-month review.
I very much welcome what the Minister said, but I was not
convinced, primarily because what he said was that we needed
clear and comprehensible information on the front of the tickets,
yet we do not have that. They are impenetrable because they are
hidden behind icons, and that is the very purpose of the key
amendment. Had he therefore accepted the principle, he would have
accepted the amendment.
We have made significant progress today. We can and should
continue this debate, so I ask noble Lords to support consumers,
sports fans, and those attending major music events, against the
corruption that currently exists. I do so with a strong belief
that we can get this right and put into legislation in this
country the necessary steps and protections to make life a lot
easier for those—not just the two cases that have come to
court—who night after night, throughout the United Kingdom, are
turned away from major events because of the fraudulent abuse of
the secondary market. With that in mind, I would like to test the
will of the House.
[Division 2
Division on Motion E1 (as an amendment to Motion E)
Content
228
Not Content
213
Motion E1 agreed.
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