CMA COVID-19 Update: Recent Measures to Protect Consumers

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Latham & Watkins LLPThe CMA’s efforts include investigations into the package holiday and hand sanitizer industries.

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.

In addition to announcing the opening of its investigation into the package holiday sector, the CMA has published an open letter to the package travel sector (see here). The CMA’s letter expresses concerns about the harm that consumers may be suffering in the package travel sector and notes that, since the launch of the Taskforce, it has received more than 17,500 complaints from consumers about businesses in the package travel sector. Based on the complaints, the CMA surmises that:

  1. Businesses have not been meeting the requirements of the Package Travel and Linked Travel Arrangements Regulations 2018, which provide a statutory requirement to issue refunds without undue delay and, in any event, no later than 14 days from termination.
  2. Businesses have been engaging in unfair commercial practices, for example, by providing inadequate or misleading information to consumers about their statutory rights. The CMA considers these practices to be in potential breach of the Consumer Protection from Unfair Trading Regulations 2008.

The alleged harmful conduct consists of:

  1. Consumers not being offered and/or provided full cash refunds in accordance with their statutory rights
  2. Consumers losing their deposits and/or being charged cancellation fees when exercising their statutory right to terminate a package holiday contract, and when they are entitled to a full refund
  3. Consumers not being provided with clear information and/or being otherwise misled about their statutory rights
  4. Consumers facing significant barriers when trying to exercise their statutory rights (e.g., consumers being asked to request a refund on their terminated package booking by telephone, but being unable to readily contact businesses in this way)
  5. Consumers being unable to contact businesses effectively to discuss other concerns, such as wanting to pay their balance in order not to forfeit their deposit as a result of late payment

The CMA ends its letter by noting that businesses in the package holiday sector risk enforcement action by the CMA under its consumer protection powers and/or the risk of individual claims in small claims court by consumers.

CMA investigation into suspected charging of excessive and unfair practices for hand sanitiser products

As reported in a recent post, 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. The four investigations related to the suspected charging of excessive and unfair prices for hand sanitiser products during the COVID-19 pandemic.

On 13 July, the CMA published an update noting that it had decided to close three of the investigations, as the CMA considers that the retailers’ prices do not, or are unlikely to, infringe competition law. One investigation was closed as the CMA concluded that there were no grounds for action with respect to the relevant party’s pricing of hand sanitiser. The decision was reached following the CMA’s review of evidence, which indicated that the price the party had charged for hand sanitiser was not excessive for the purposes of competition law. The CMA closed the other two investigations in accordance with its Prioritisation Principles. On the basis of the evidence gathered (e.g., wholesale costs, volume of hand sanitiser sold, etc.), the CMA considered that it was unlikely that the retailers’ prices infringed competition law, and that any further investigation to reach a definitive view would deliver limited, if any, consumer benefits.

The fourth investigation, however, remains ongoing. The CMA notes that this investigation is still at an early stage and that it has not yet reached a view on whether there is sufficient evidence of competition law infringement for the CMA to issue a statement of objections to the party under investigation.

CMA updates register of competition law exclusion orders relating to COVID-19

As noted in an earlier update, the CMA has published a register containing links to each public policy exclusion order and notified agreement related to COVID-19 in the UK. A public policy exclusion order is a legislative tool used by the Secretary of State for Business, Energy and Industrial Strategy to relax UK competition law for certain agreements that may normally be considered anti-competitive. On 10 July 2020, the Department for Business, Energy and Industrial Strategy published an updated register of agreements — including five new notified agreements in the grocery sector, as well as notified agreements in the dairy sector.

The agreements in the grocery sector relate to: (i) the delivery of emergency food boxes to vulnerable consumers, and (ii) co-ordination among supermarkets to assist particular groups of consumers. These groups include critical workers, the most clinically vulnerable and socially isolated groups of consumers. For example, the agreements state that the grocery sector should prioritise deliveries or open stores to these groups at specific times, or otherwise assist them.

The agreements in the dairy sector concern the conduct of a dairy processing trade association in collecting and sharing information on day-to-day surplus milk quantities, commissioning surveys of forecast milk disposals, and spare capacity. The purpose of the information sharing was to assess whether there was under-utilised capacity available to absorb milk from the out of home market.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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