EU Consumers in the Digital Era
Speech given by CMA Chairman David Currie to the European Consumer Summit in Brussels on 1 April 2014
It is very timely for me to speak at this consumer summit since today the new UK competition and consumer authority of which I am Chair, the Competition and Markets Authority (CMA), takes its powers.
The establishment of the CMA represents a significant evolution and strengthening of the UK’s already well respected competition regime. The CMA has come into being by bringing together the Office of Fair Trading and the Competition Commission. The CMA, like the OFT before it, has competition and consumer protection powers under one roof, a combination that allows both to work more powerfully to the benefit of consumers. And like the OFT before us, we will be the UK lead in cooperating internationally with our partners in Europe and elsewhere.
So it is an exciting day for all of us in the CMA, and we have important challenges ahead in ensuring key economic markets work well. The single most important measure of how the CMA does its job will be the results that it achieves for consumers, and that will remain the key focus for us in everything that we do. We will be assessing the impact of our work, to make sure we deliver at least £10 of benefit to consumers for every £1 we cost. For example, the CMA today announced a project to understand more about how over-indebtedness affects consumers’ decisions and choices in the goods and services that they purchase.
Online markets, the focus of today’s summit, will be a major CMA priority. The development of online commerce is fundamental to the EU and global trade, facilitating consumer choice and empowerment through a better flow of information and driving competition, new entrants, access to markets and economic growth. Think of the transformation in how consumers book their travel, buy a new novel to read or renew their car insurance.
This welcome trend carries two risks. First, alongside huge benefits for consumers there is the risk of new sources of consumer detriment emerging. For example, fake reviews, undisclosed commercial blogging, misleading search results or concealed recurring payments can all harm consumers’ interests and distort competition.
Second, there is a risk that incumbent firms in ‘bricks and mortar’ industries use their advantage in the market to block the emergence of online business models and competition. That is why the CMA has today announced a ground breaking new research project. This will use ‘big data’ techniques to identify sectors of the economy where online commerce is developing more slowly than might be expected, so it can investigate whether this is because incumbents have acted anti-competitively to block entry or innovation by online competitors or innovators.
Because the online market is growing and changing so fast, legislation always plays catch-up and it is challenging to stay on top of technological and market developments. But the CMA is absolutely committed to doing so by building on the past work of the OFT in personalised pricing, children’s mobile apps and online targeted advertising. And, of course, since the infrastructure underpinning internet trade is international, cooperation with our international partners is essential. Indeed working as part of the international community to tackle consumer issues is built into the CMA’s DNA; our statutory objective is to promote competition, both within and outside the United Kingdom, for the benefit of consumers.
An excellent example of how this should work is provided by the OFT work on children’s apps, which we will take forward. The freemium model led to children spending money without parental approval, and in a market with many developers and a few key industry players, notably the platforms, there has been widespread ignorance of how consumer protection law applies. To tackle this, the OFT developed principles to summarise its interpretation of the law in a user friendly way and set deadlines for compliance. Consultation with industry secured consensus on a set of workable principles, and we consulted with international partners to ensure these principles work across frontiers and represent the considered view of the wider enforcement network. Collaboration in joint enforcement through the CPC ensures consistent application in all Member States, leading to a common front and driving effective change. This is a model of how we want to work in stamping out online consumer detriment and making online markets work well for consumers, businesses and the economy.
New and better ways of working
Because of the importance and cross border nature of many online markets, it is essential that we find new and better ways of working together internationally to identify and tackle emerging problems. We also need to ensure that we have the capability to do this. For example, the CMA is committed to continuing the work of the OFT in making the new CPC E-enforcement Expert Group a success. And we will go on building our technical expertise and capability, maintaining the momentum of the three OFT-led common activities on internet enforcement. We are more effective in bringing about change when we work together, and so it is important that we prioritise and target EU resources in the best way possible. That is why the CMA will continue to play an active role in the CPC Priorities Working Group. And we look forward to more joint CPC enforcement initiatives such as the current work on children’s apps and on car hire.
So in conclusion, the digital space is a crucial but challenging environment. Working together on common goals, we can have an enormous impact Together we can ensure competition and growth are driven forward in the European economy for the benefit of all our consumers. Thank you.