22 September 2023

Handing yet more power to unaccountable regulators betrays the spirit of Brexit


Brexiteers have long-argued for the need to restore control over Britain’s laws to the British Parliament and British courts. For too long, the Leavers argued, bureaucrats in Brussels had been tightening their grip on the UK statute book without rigorous accountability from the British people. Leaving the EU was supposed to change that.

The Digital Markets, Competition and Consumers Bill [DMCC] threatens to betray that promise. The DMCC would give the Competition and Markets Authority [CMA] sweeping powers to regulate digital markets. This includes the broad authority to choose who it regulates and to tailor bespoke interventions at every stage of regulated companies’ decision-making processes. Any large company would be at risk of regulation if the DMCC becomes law. Because of the vague parameters within which the CMA can regulate, that even includes supermarkets, who have an extensive online presence.

A new paper published by the Institute of Economic Affairs and International Center for Law and Economics argues that this could impose tangible harms on UK consumers. Regulated firms – as many as 530 companies employing 3.9m workers – will inevitably seek to avoid the risks posed by arbitrary rulemaking and the possibility of being fined up to 10% of their global turnover. ‘In practical terms, this could mean new products will not be developed in the UK and that new features could be delayed or not introduced for British users,’ the authors write.

The CMA already has a reputation for being ‘the world’s most zealous regulator’ according to The Economist. Sir Jim Ratcliffe, one of Britain’s leading businessmen, claims that it is becoming ‘increasingly hostile to business’. This only seems to be getting worse, with the CMA blocking 57% of mergers in the last six years, up from 30% between 2013 and 2017. This trend was starkly highlighted by the CMA’s decision to block Microsoft’s acquisition of Activision/Blizzard earlier this year, despite the deal’s approval in, among others, the EU, China, and Japan. Giving the CMA ill-defined powers with little accountability cannot be squared with Rishi Sunak’s desire to make Britain a ‘science and tech superpower’.

The DMCC and an emboldened CMA pose a significant threat to innovation and investment. But as, if not more, concerning is the possibility that the DMCC could undermine the rule of law. Under the DMCC’s judicial review standard, it will only be possible to challenge the CMA’s far-reaching decisions on procedural grounds, precluding a review of their merits. Taking into account the regulatory discretion and enforcement powers delegated to the CMA by the DMCC, it is clear that the legislation gives regulators the power of ‘legislator, jury, and executioner’. This is bad for ‘big tech’ and smaller players alike. 

The lack of checks and balances on the CMA should concern us all. This is not only because the regulations impact a dynamic, innovative sector but also the indication that Parliament seems hellbent on abdicating even more of its fundamental responsibilities to largely unaccountable bureaucrats. The key principle underlying Brexit is that laws affecting Brits should be made by Parliamentarians accountable to us. This type of delegation flies in the face of that principle.

Anticipating objections from pernickety constitutional experts, it is of course true that a sovereign parliament can delegate powers as it wishes. However, parliamentary sovereignty in the strictly constitutional sense was not the main factor at play during the referendum – after all, Parliament was always sovereign insofar as it could legislate to leave the EU. The main consideration was that laws should be made by accountable decision makers.

The DMCC is yet more evidence that Parliament has no intention of practising that principle. Despite well over 400 regulatory agencies, quangos, and committees already influencing policy in an array of areas, our sovereign Parliament seems intent on strengthening them at the expense of accountable, responsible lawmaking. Indeed even the EU’s equivalent legislation – which has attracted similar criticism – does at least clearly enumerate the scope of its tech competition regulator’s powers and allows courts to enforce those limitations.

The difference between unaccountable bureaucracy in the CMA’s Canary Wharf HQ and unaccountable bureaucracy in Brussels is utterly trivial. Parliament must take responsibility for its role as the UK’s primary law making body, rather than delegating dangerous amounts of power to those who do not have to answer for how they choose to wield it.

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Harrison Griffiths is Communications Officer at the Institute of Economic Affairs

Columns are the author's own opinion and do not necessarily reflect the views of CapX.