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The CMA’s efforts include investigations into the package holiday and hand sanitizer industries.

By John D. Colahan and Anuj Ghai

CMA announces package holiday sector investigation

On 10 July, the CMA announced that it was investigating suspected breaches of consumer protection law in the package holiday sector. The investigation was launched on the back of work carried out by the CMA’s COVID-19 Taskforce. As noted in previous updates (see here), the Taskforce received a number of complaints about allegedly unfair practices concerning cancellations and refunds, including in relation to package holidays. The investigation specifically relates to concerns that businesses have not been respecting customers’ statutory rights to a refund for package holidays that were cancelled by either party due to lockdown restrictions. Notably, the CMA is carrying out the investigation under its consumer protection powers, rather than under competition law.

The CMA continues to field COVID-19 complaints concerning refunds and previously widespread excessive prices on day-to-day products.

By John D. Colahan and Anuj Ghai

The CMA continues to respond to complaints from consumers on COVID-19-related issues. Consumers submitted more than 80,000 complaints through 28 June 2020, with the volume decreasing from 7,000 a week in May to 3,500 a week in June.

The investigation is being carried out under the CMA’s competition law powers rather than under its consumer protection functions.

By John D. Colahan and Anuj Ghai

On 18 June, the CMA released an update noting that it had launched an investigation under Chapter II of the Competition Act 1998 into suspected breaches of competition law by four pharmacies and convenience stores. In particular, the investigations relate to suspected charging of excessive and unfair prices for hand sanitiser products during the COVID-19 pandemic.

As noted in a prior blog post, the CMA believed that there was a significant risk that prices would rise above justifiable levels in a number of sectors because of the COVID-19 outbreak, coupled with the restrictions on businesses and people. As of 17 May, the CMA had written to more than 200 traders about this issue. In its communication, the CMA asked for more information or expressed concern about what the CMA considered may be unjustifiable price increases.

The taskforce continues to receive and monitor complaints about unfair practices in relation to cancellations and refunds and potentially unjustifiable price rises.

By John D. Colahan and Anuj Ghai

On 21 May, the CMA released a further update setting out the work of its COVID-19 Taskforce in responding to complaints regarding competition and consumer protection problems arising from the novel coronavirus and measures taken to contain it. This follows a 30 April report (summarised here) which set out the programme of work the CMA intended to undertake to deal with complaints about unfair practices in relation to cancellations and refunds.

Based on the complaints received and additional information received from consumer bodies, such as Which? and Citizens Advice, the CMA’s principal concerns continue to relate to unfair practices in relation to cancellations and refunds and unjustifiable price increases, particularly for essential goods. The CMA notes that from 10 March to 17 May it was contacted more than 60,000 times about coronavirus-related issues; further, the rate at which consumers are contacting the CMA has increased in recent weeks suggesting that problems continue to persist.

The CMA has launched a programme of work to investigate reports of businesses failing to respect cancellation rights during the COVID-19 pandemic.

By John D. Colahan and Anuj Ghai

The CMA’s COVID-19 Taskforce Update on 24 April 2020 noted that its COVID-19 Taskforce had received a significant volume of complaints about unfair practices in relation to cancellations and refunds. On 30 April, the CMA released a further update setting out the programme of work it intends to undertake to deal with the issues raised. The CMA will act under its consumer protection powers, rather than under competition law, to deal with unfair practices relating to cancellations and refunds.

The CMA has launched a programme of work to investigate reports of businesses failing to respect cancellation rights during the COVID-19 pandemic.

By John D. Colahan and Anuj Ghai

The CMA’s COVID-19 Taskforce Update on 24 April 2020 noted that its COVID-19 Taskforce had received a significant volume of complaints about unfair practices in relation to cancellations and refunds. On 30 April, the CMA released a further update setting out the programme of work it intends to undertake to deal with the issues raised. The CMA will act under its consumer protection powers, rather than under competition law, to deal with unfair practices relating to cancellations and refunds.

The CMA is concerned that businesses may be engaging in unfair practices in relation to cancellations and refunds, and unjustifiable price increases.

 By John D. Colahan and Anuj Ghai

Background

On 24 April 2020, the Competition and Markets Authority (CMA) published an update on the work of its COVID-19 Taskforce (the Taskforce) (the Update Report). Shortly after establishing the Taskforce, the CMA launched an online service to allow businesses and consumers to report “unfair practices” related to COVID-19. The  Update Report summarises the nature and volume of complaints that the CMA has received so far and the actions it has taken in response. The CMA intends to publish additional reports while unfair practices related to COVID-19 persist.

The new service encourages UK consumers to report exploitative sales and pricing practices.

By John D. Colahan and Anuj Ghai

On 4 April 2020, the Competition and Markets Authority (CMA) launched an online service called “Report a business behaving unfairly during the Coronavirus (COVID-19) outbreak” (the Online Service) to allow businesses and consumers to report unfair practices related to COVID-19.

The Online Service launch follows the CMA’s recent guidance warning businesses against exploitative sales and pricing practices. In particular, the CMA cautioned traders to behave responsibly and not charge inflated prices or make misleading claims, for example about the efficacy of protective equipment. The CMA noted that members of the public who resell goods, including on online marketplaces, may be subject to the same restrictions. In terms of enforcement, the CMA indicated that it will consider any evidence of breaches of competition and consumer protection law, take direct enforcement action in appropriate cases, and assess whether it should advise the UK government to take direct action to regulate prices.

The rules will echo ESMA’s temporary measures, however the FCA will extend the CFD restriction to capture closely substitutable products (such as turbo certificates). 

By Rob Moulton, David Berman, Charlotte Collins, and Gabriel Lakeman

The FCA has launched two consultations on:

  • Banning the sale, marketing, and distribution of binary options to retail consumers (CP18/37)
  • Restricting the sale, marketing, and distribution of contracts for difference (CFDs) and similar products to retail customers (CP18/38 and Annex)

These measures are largely the same as ESMA’s temporary product intervention measures in relation to CFDs and binary options, which were first announced in March 2018 (see Latham’s related blog post for more detail). The ESMA measures, which apply for a maximum of three months at a time, but can be extended by ESMA, have already been renewed twice. At the time ESMA’s measures were first announced, the FCA stated that it expected to consult on whether to apply them in the UK on a permanent basis.

Given that the ESMA measures will fall away due to Brexit (although the timing will depend on whether or not a transitional period is agreed), it makes sense for the FCA to act now to ensure that the measures will continue to apply if the UK leaves the EU without a deal.

By Paul Davies and Michael Green

In August 2015, the French government amended the French Energy Transition Law to include provisions rendering “planned obsolescence” a misdemeanour. In the latest wording of the provisions, article L.441-2 of the Consumer Protection Code (Code de la consommation) defines planned obsolescence as “… resorting to techniques whereby the entity responsible for the placement of a product on the market deliberately intends to shorten [that product’s] life span in order to increase its rate of replacement”. Interestingly, this is the French government’s second attempt to define planned obsolescence since introducing the provision two years ago.

Violation of the prohibition on planned obsolescence carries a potential two-year prison sentence and a criminal fine of up to €300,000. As an added deterrent, the law further provides that the courts may increase the fine to up to 5% of the annual turnover of the entity concerned (based on the average of the entity’s turnover in the three years prior to the date of the offence). The courts will therefore have the option of increasing a fine, provided the fine is proportionate to the infringing party’s gain (see Consumer Protection Code, art. L.454-6).