Regulation protects the weak and vulnerable.
The Sharing Economy, Competition and Regulation
Regulation protects the environment. But regulation costs time and money. And it makes illegal that which would otherwise be legal. Regulation is therefore always controversial, and it can be very complex. The United Kingdom has a well-deserved reputation for sensible regulation. It was an innovator in deregulation and economic regulation, and it is now home to tough no-nonsense regulators who nevertheless deploy sensible discretion about who to punish and when.
There have however been some dreadful regulatory failures - the financial crisis, Stafford hospital, Grenfell Tower. And the burden of regulation is getting heavier, not only for business but also for the police, teachers etc. Are we over-protecting our children? And is 'the regulatory state' now too powerful? Regulation is also a huge part of government, but it hardly features in civil service training.
This website accordingly explores current regulatory issues and describes current best practice. Those interested in other aspects of government might like to investigate other Understanding Government websites which look at the UK civil service, policy making, and 'speaking truth to power'.
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Are you a regulator, or an academic , or maybe concerned about a current regulatory issue? If so then the menus immediately below this text should help you find the information and analysis that you need. If not, there are then several more detailed menus focusing on. We also identified other aspects of regulation including building regulations and leasehold and tenancy arrangements which need to be updated to deal with the shortcomings we identified in this market.
The online secondary ticketing market websites which allow users to re-sell previously purchased tickets for entertainment such as concerts and sporting events is one which we have identified as having unsatisfactory outcomes for consumers, despite at first sight seeming a good way in which to open up an additional market to sellers and buyers. This is a market which has been under review for quite some time, by the CMA and our predecessor the Office of Fair Trading OFT , using our consumer protection law powers.
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Enforcement action for suspected breaches of consumer protection law was launched by the CMA in December This has so far resulted in commitments from three secondary ticketing websites to ensure that consumers get a better deal and we have just launched enforcement action in the courts against a fourth, viagogo, since it refused to make the changes the CMA considers necessary There is also ongoing enforcement action being taken in a number of other jurisdictions including Australia, France, Germany and Switzerland.
We hope and believe that good outcomes can be achieved in a timely way through consumer protection enforcement. If that were not the case, it may well be a need for the Government to impose specific regulation on the sector for instance a licensing regime. Another example is app-based cab services, such as those offered by firms like Uber, Lyft and others: these technology-enabled business models have transformed private hire vehicle markets in many cities across the world but have raised concerns over passenger safety, congestion and employee rights.
More competition is generally good, opening up the possibility of innovative services and often more affordable services, particularly benefiting the less well-off. But it seems clear that there are multifaceted consequences emerging from these new business models and regulation must be consistent and appropriate across the board.
Many will ask: why should traditional business models adhere to regulations that new ones can circumvent?
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Recently the CMA has been represented on a group of experts advising the UK Government on the future regulation of taxis and private hire vehicles. Our advice to the government recognised that regulation is necessary across the operators, for example to protect the safety of passengers and drivers, but we insisted that it should not be disproportionate or excessive. Otherwise it may unnecessarily create barriers to competition and to new market entry and ultimately be counter-productive for passengers, for example by making taxi rides unaffordable for some with possibly increased safety risk if they then choose other ways to get home which might be less safe.
In addition, a plethora of existing regulation can inadvertently cause problems for businesses and for competition, especially in new markets which the regulations were not designed for.
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On the one hand, loopholes in regulation can allow a new entrant harnessing a new technology to take hold of the emerging market while established players are hamstrung by regulation. On the other hand, regulation can be a barrier to entry, stifling experimentation and innovation. For example, there is currently debate in the UK as to whether there is a level playing field in taxation between bricks and mortar stores and Amazon, or between independent coffee shops and Starbucks if Amazon and Starbucks are able to engage in complex international tax planning to reduce their corporate tax rate that is not available to smaller, domestic companies?
Or as to whether there is a level playing field between independent hotels and Airbnb if hosts on the latter are illegally sub-letting their properties without proper enforcement? All these examples highlight that existing laws in a number of sectors may not be well designed to deal with a new business model.
Public bodies around the world have applied clunky and temporary solutions using various property regulations to deal with Airbnb hosts and users on the site taking advantage of loopholes and lack of enforcement to run professional letting operations, without the costs imposed by regulations on competing hotels. This risks inconsistency in dealing with a market and uncertainty for the consumers who are finding their holiday booking cancelled at the last minute and those who are listing their property on Airbnb in good faith.
Ideally, we should look at the market as a whole and consider where, on the one hand, there are old regulations not fit for purpose and, on the other, where there are loop-holes being exploited by new business models. Recently, the European Commission and EU consumer authorities, including the CMA, contributed to a call for Airbnb to align its terms and conditions with EU consumer rules and increase transparency in their presentation of prices.
To develop effective regulation, you must understand the dynamics of competition and to truly enhance competition you must help to build level playing fields where efficient and innovative players can thrive. That is why competition authorities need to be at the heart of this work. I would like to demonstrate three ways in which the CMA tries to achieve this position. First, we are making sure that how we set our priorities, as well as our institutional design, reflect the core principles of competitive markets.
Consumers drive competition when they have the ability and confidence to exercise informed choices. This is particularly the case in digital commerce, where new business models that could benefit consumers will only grow if they are trusted and used by consumers. Consumers are wary of new technology and if they put their trust in and are let down by one company in an emerging sector, they are likely to be less willing to adopt the products of other start-ups in the same or related sectors. We will therefore be focusing some of our consumer protection work in the next year on conduct which could damage consumer trust.
We have also established, within the CMA, a new Digital, Data and Technology team and are building our digital forensics capability to enhance our understanding of the digital economy and make sure our practices, interventions and capabilities keep pace with the evolution of business models and practices. The fast pace of change can be particularly challenging for those who are most vulnerable in society, such as people on low incomes and the elderly, and we consider it especially important to understand and help to solve the particular difficulties facing them.
The CMA is undertaking a programme of work on vulnerable consumers, which includes both market-specific aspects of vulnerability that is, when it is the characteristics of the market itself which means that users are inherently vulnerable and may not be able to engage effectively, for example when we need to make a purchase at a stressful time such as choosing a funeral provider , or if we feel under pressure to make a choice with limited time to consider other options.
The work will develop our thinking and inform our prioritisation of projects, analysis of markets, and design and implementation of remedies. As part of this work, to date, we have co-hosted three stakeholder roundtables with relevant partner organisations on different dimensions of vulnerability: with Citizens Advice on consumer vulnerability in digital markets, with the Joseph Rowntree Foundation on low income consumers, and with the Money and Mental Health Policy Institute on consumer vulnerability associated with mental health problems.
We have also recently hosted a symposium with many national and international experts to capture insights for our work in this area. Secondly, we take direct action against anti-competitive behaviour using our powers to intervene in suspected antitrust breaches, investigate proposed and completed mergers and conduct wide-ranging market studies.
As I mentioned, such work is targeted and complementary to our wider engagement with other public agencies to create the right conditions for dynamic competition. We make sure knowledge and experience of the ways different markets are working is used effectively in the agency. For example, merger cases may be the source of an antitrust investigation if we discover certain agreements or understandings between parties see Cleanroom laundry services and products: anti-competitive arrangement s.
We also need to select the right cases to launch, using the right tools at our disposal. The probe by the U. See which stocks are posting big moves after the bell on Monday. That means Facebook, Amazon , Google. The hearings are a first step in determining the need for increased regulation in the tech sector following the Cambridge Analytica scandal, which revealed that data from approximately 87 million Facebook users was improperly used.
Facebook is not currently regulated by the government, but Zuckerberg said during Wednesday's testimony that he is open to regulation. The two-day hearing "revealed a knowledge gap," said Rep. Ro Khanna, D-Calif. Several members of Congress "don't fully have a grasp on how social media works," he said Wednesday on " Closing Bell.
Khanna pointed out that Europe has the General Data Protection Regulation, a regulatory framework to protect individuals. The best results would come if Zuckerberg implemented new regulation himself. But while many politicians may not understand how to use Facebook, said Ryan Radia, research fellow and regulatory counsel at the Competitive Enterprise Institute, they may still regulate it. Radia said some "have indicated that they might be open to creating new rulemaking authority for agencies like the Federal Trade Commission , which could, under a more proactive approach, do a lot to regulate in the space or to punish companies for behavior they've already entered into.
A "hyper-regulated tech sector would look a lot drearier," he said Wednesday on "Power Lunch. When regulators "impose strict rules, you don't get the same sort of innovation, risk-taking and dynamism that you see in the tech sector," Radia said. But the need for politicians to educate themselves on new technology is nothing new, said Franklin Foer, a staff writer for The Atlantic magazine and political commentator.
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