Legislation designed to curb the activities of tech giants offers a blank cheque to the Competition and Markets Authority and would put quasi-legislative powers in the hands of regulators, a free markets thinktank has warned. ‘The Unregulated Regulator’, published by the Policy Studies Institute, calls on the government to abandon the Digital Markets, Competition and Consumers Bill, currently at committee stage in the House of Commons.
According to the author, economist Matthew Sinclair, the ubiquity of digital platforms means that the legislation would give the Competition and Markets Authority powers to intervene in almost any market. 'Indeed, given that the CMA will be subject to much less external oversight when using its digital competition powers, there will be an outright incentive for it to intervene in a broad range of markets via digital platforms to achieve all kinds of potential objectives,' he concludes.
For example powers to insist on 'fair and reasonable' terms will enable the CMA to influence markets 'in the same way as if a government had created new taxes and subsidies'.
The report cites antitrust specialist Verity Egerton-Doyle at magic circle firm Linklaters as stating that the bill 'hands enormous, almost quasi-legislative power', to the CMA and its Digital Markets Unit (DMU). The UK’s regime will be 'among the most powerful forces' in global tech regulation, Egerton-Doyle states.
Under the legislation, rights of appeal to CMA decisions would be limited, with the Competition Appeal Tribunal able to rule only on whether the correct process has been followed rathert than the merits of a case. The report quotes a former chair of the tribunal as saying: 'The lack of full-merits appeal is likely to lead to CMA errors going unchallenged – and indeed will undermine the incentive for the CMA to act cautiously in the first place.’
The report argues that proceeding with the bill as planned would mean worse digital services for consumers and weaken investment. If ministers are not willing to abandon the bill, they could limit the damage by introducing checks and balances or by pausing the legislation to watch developments elsewhere, Sinclair concludes.
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