Reforms to shield the public from rip-offs and boost competition have been announced by the government today (Wednesday 20 April).
Plans include making it clearly illegal to pay someone to write or host a fake review, so people are not cheated by bogus ratings, and clearer rules for businesses to make it easier for consumers to opt out of subscriptions so they are not stuck paying for things they no longer want.
Consumer Minister Paul Scully said: We’re making sure consumer protections keep pace with a modern, digitised economy.
No longer will you visit a 5 star-reviewed restaurant only to find a burnt lasagne or get caught in a subscription in which there’s no end in sight. Consumers deserve better and the majority of businesses out there doing the right thing deserve protection from rogue traders undermining them.
The average UK household spends around £900 each year influenced by online reviews and spends £60 on unwanted subscriptions. The new measures will apply in England, Scotland and Wales. Consumer protection is devolved in Northern Ireland.
Illegal anticompetitive conduct will be tackled through new measures including strengthening the CMA’s evidence-gathering powers and ensuring competition law protects UK consumers from anticompetitive conduct wherever it is carried out, such as companies colluding to bump up prices. Government is also increasing the ability for the CMA to fine businesses abusing their market position, even in smaller markets, by reducing the minimum turnover threshold for immunity from financial penalties from £50 million to £20 million.
On mergers, to reduce bureaucracy and keep the burden on smaller businesses to a minimum, government will exclude mergers between small businesses – where each party’s UK turnover is less than £10 million – from the CMA’s merger control altogether. The government is also improving the CMA’s ability to review ‘killer acquisitions’ where big businesses snap up prospective rivals before they can launch new services or products.
The government is giving the CMA greater powers to sanction companies refusing to comply with investigations and remedies. Penalties worth up to 1% of a business’ annual worldwide turnover can be imposed for non-compliance with the CMA’s investigative measures, and up to 5% of annual turnover for non-compliance with remedies. Additional daily penalties can be applied if non-compliance continues.
UKHospitality Chief Executive, Kate Nicholls, said: “We welcome these moves, which will help create a more level playing field for both businesses and consumers. In particular, we recognise that enhanced powers for the Competition and Markets Authority (CMA) will help stamp out the practice of fake reviews, which do irreparable damage to businesses. We therefore believe it is imperative that online review platforms be required to act and remove malicious and false reviews where appropriate.
“As ever, the devil will be in the detail and so we will be actively engaging in the consultation process in order that consumers are safeguarded without placing any further unnecessary burdens on businesses. We need also be satisfied that the new CMA powers will not unfairly punish businesses and, as 70% of hospitality businesses are SMEs, that a clear right of appeal is put in place that is accessible to operators big and small.
“Fairness for both businesses and consumers, particularly when it comes to offering refunds, will be crucial and any new measures must also be made in the context of a sector facing an onslaught of challenges after a difficult two years. Soaring costs, chronic staff shortages and plunging consumer confidence continue to affect the sector, which needs ongoing support if it is to play its full role in the UK’s recovery.”