What's the issue?
Following the end of the Brexit transition period, the UK is now able to go its own way in areas of law which had previously been decided at EU level. The government promised a 'bonfire of red tape' on exit but, of course, it's not that simple.
Over the course of the year, the government has been consulting on proposed changes to consumer protection law, data protection and competition law. BEIS and the Law Commission have also consulted more widely on post-Brexit reforms.
What's the development?
Over the last month, we've seen a variety of responses to the consultations which give an indication as to how they will be received and possible directions of travel.
Better regulation
BEIS consulted on reforming the framework for better regulation. It sought views on a range of options including:
- the adoption of a less codified common law approach to regulation
- a review of the role of regulators
- delegation of more discretion to regulators
- streamlining the process of assessments of impact
- considering options for measuring the impact of regulation
- re-introducing regulatory offsetting and establishing a baseline of the UK's regulatory burden.
In its response, the CMA commented that the issue is not how much regulation there is, but whether the regulation we have promotes or inhibits well-functioning competitive markets. It has no view on areas of law (particularly retained EU law) that would benefit from reform to a less codified, more common-law approach.
Consumer protection law
In July, the government published a consultation on Reforming Competition and Consumer Policy which contained the long-awaited proposals for reform of UK consumer protection law. Some of these were first set out in a 2018 Green Paper and some recommendations were made in the Penrose report. As we discussed, fake online reviews and subscription terms are an important focus of the proposals.
Interestingly, in its response to the consultation the CMA suggested the government should go further in certain areas including by adopting most of the changes being made to EU consumer protection law where they would improve UK consumer protection. It also recommended:
- giving online intermediaries including platforms, a new explicit legal duty to minimise consumer harm, including by taking more responsibility for monitoring and removing content, and banning sellers that breach consumer law on their sites
- introducing new powers for the Secretary of State or CMA to add to the list of banned practices in Schedule 1 of the CPUT Regulations including banning manipulation of consumers through the presentation of information, drip pricing and unlabelled paid-for search advertising
- engaging with the EC's proposals around digital markets
- giving sectoral regulators an expanded role and giving the CMA more scope to create guidance for businesses and reform ADR rules.
The Chartered Trading Standards Institute also published its response to the consultation. Many of its comments relate to its stretched resources which limit its ability to operate effectively. Other suggestions include:
- Consumer law should require platforms to check and declare whether or not a seller is a trader – the rules under the CPUT Regulations do not go far enough.
- Specific legislation is needed to tackle online fraud from scams which are outside the scope of the Online Safety Bill.
- Recommendations for steps traders might take to verify that consumer reviews are genuine, including use of AI.
- Suggestions for additional banned practices under the CPUT Regs including requiring significant personal information before quoting for delivery, failure to quote VAT inclusive prices, and restaurants quoting prices exclusive of mandatory service charges.
Data protection
In September, we covered the DCMS consultation on reform of the UK's data protection regime. The ICO published its response in October.
The ICO is broadly supportive of the review but says "the devil will be in the detail". The main message of the response seems to be that more information would be needed about the plans to enable an assessment.
The ICO, unsurprisingly, emphasises maintaining current privacy standards and, on the issue of data transfers, underlines the importance of maintaining EU adequacy. At the same time she is supportive, in principle, of measures which would increase flexibility and reduce administrative and regulatory obligations providing that does not result in a fall in standards.
The strongest language is used in response to the government's proposals to reform the ICO. While the ICO supports a regulatory governance model involving a supervisory board with separate Chair and CEO, she says "there are specific proposals where I have strong concerns because of their risk to regulatory independence".
Competition regime
BEIS consulted on reforming competition law, making a range of proposals including:
- making the market inquiry process more flexible and efficient
- revising the jurisdictional threshold for mergers to £100m
- revising certain merger procedures
- revising the size, composition and role of the CMA panel
- strengthening competition enforcement and giving the CMA more effective investigative and enforcement powers.
In its response published in October, The CMA said it did not think that, for the most part, there is a need to strengthen the existing competition duties of sector regulators.
The CMA also published its response to the DCMS consultation on a new pro-competition regime for digital markets which was broadly positive about attempts to reform the competition regime for digital markets. The CMA did, however, suggest some changes to the proposals including that:
- Codes of Conduct will be important but will need to be tailored and the DMU should be given the power to place legal obligations on firms tailored to individual requirements.
- Pro-competitive interventions will be required, for example, requiring interoperability between platforms.
The CMA is recommending that the UK replace the retained EU Vertical Block Exemption Regulation with a UK Vertical Agreements Block Exemption Order when the former expires on 31 May 2022. In its initial proposals, it concluded that largescale changes would be inappropriate but planned to make some changes to the current rules on hardcore restrictions. These included:
- clarifying the boundary between passive and active sales in relation to territorial and customer restrictions
- removing the prohibition on dual pricing and the requirement for overall equivalence from the list of hardcore restrictions
- adding wide parity obligations (most favoured nation clauses) to the list of hardcore restrictions.
The UK Order would expire after six years.
The CMA published further recommendations in November, concluding that the current rules on hardcore restrictions remain largely appropriate but suggesting some additional clarifications including:
- Definitions of active and passive sales should be added to territorial and customer restrictions which should continue to be treated as "hardcore".
- The CMA recommends the removal of the prohibition of dual pricing and the requirement for overall equivalence from the list of hardcore restrictions where these are indirect measures restricting online sales.
What does this mean for you?
It seems that changes in all these areas will happen in the short to medium term and that will involve everyone having to get to grips with new laws. For cross-border businesses operating in the UK and EU, we could see a more complex regulatory landscape, but we may also find that a lighter touch regime in the UK brings investment and innovation. It will be important to keep watching developments closely as 2022 progresses.
