Digital Markets, Competition and Consumers Bill

Written evidence submitted by News UK (DMCCB53)

News UK welcomes the opportunity to provide comments to the Committee scrutinising the Digital Markets, Competition and Consumer Bill (‘the Bill’). Our comments in this submission relate to the consumer rights provisions in Part 4. However, as a general point, News UK is supportive of the design of Part 1 of the Bill, to place the Digital Markets Unit on a statutory footing. The design of the regime has been meticulously worked through, on the basis of advice of the Digital Markets Taskforce and significant supporting evidence gathered through CMA market studies and investigations in digital markets. We strongly believe the UK should become a world leader in tech innovation by fostering a competitive digital environment, to the benefit of all consumers, businesses and society at large.

As regards Part 4 of the Bill, we support the policy objectives of empowering consumers to take greater control over their subscriptions and of addressing poor practices where they arise. At the outset, the Committee should recognise that subscriptions and membership models are an important and legitimate tool which are used by many different types of organisations for business certainty. Such certainty allows organisations to plan ahead effectively, to invest in product development and innovation. It also helps to facilitate a relationship with the consumer beyond a purely transactional one, which over time builds loyalty. From the consumer’s point of view, subscriptions tend to be more convenient and

cheaper than buying each element of a package separately.

The use of digital subscriptions in the news publisher market is relatively novel, though subscriptions to receive printed papers are well established. As stated in the government-commissioned Cairncross Review into the sustainability of journalism, there have been a number of barriers to publishers being able to build revenues in the digital age, meaning direct reader revenues are incredibly important for publishers. Cairncross identified that there is an expectation amongst many UK citizens that news is ‘free’ online, when indeed the cost of journalism (and particularly investigative journalism) is high. This notion has been supported by the prevalence of a wide variety of English-speaking titles online, including free-to-use services. UK publishers have to work extremely hard to demonstrate value to consumers who take out subscriptions or membership, given the relative ease of cancellation and competition for attention from free services.

At 31 March 2023, The Times and The Sunday Times (including the Times Literary Supplement) had 494,000 digital subscribers, which was up from 421,000 in the previous year and more than double since 2018. As well as access to the journalism of these mastheads, our subscription offer includes community-supporting activities such as events, discounts to brands and competitions. The business certainty provided by a steady stream of income, allows our titles to make editorial decisions to investigate stories in the public interest, which are often costly and time-consuming, and often with unclear outcomes at the outset. Subscriptions therefore play an ongoing instrumental role in the provision of independent and high-quality journalism.

Our understanding is that it is the government’s intention through this legislation that businesses should take steps to ensure that consumers are reasonably informed about the status of their subscriptions in order to make informed decisions about them; that processes should be simplified to allow them to exit unused or unwanted subscriptions; and those acting in bad faith - who seek to lock consumers into unwanted subscriptions - should be disincentivised from predatory practices. These broad aims are to be welcomed. However a balance should be struck between consumer empowerment and creating the right conditions for legitimate businesses to thrive. In our view, the execution of the well-meaning aims tips too far out of balance, creating an overly prescriptive, unreasonably burdensome and restrictive set of rules for businesses to comply with. As a consequence, we do not believe that the measures in Part 4 of the Bill are fully in the interests of consumers, as a number of unintended consequences are likely to follow. These include increased costs and a significantly higher volume of communications to be received. We have also identified that the provisions create the potential for fraudulent activity, and would add considerable compliance burdens to businesses as a result. Indeed we noted the concerns raised by the Regulatory Policy Committee, about the evidence provided for the government’s impact assessment for this part of the Bill.

We set out further comments in relation to each particular aspect below and would support amendments to the following provisions:

Reminder notices

Clauses 250 and 251

The volume of prescribed reminders for monthly, biannual and annual subscriptions varies significantly and in our analysis is hugely complex. We are concerned that the prescriptive nature of the volume and types of customer comms set out in the legislation will inhibit usual customer communications because we will not want to overwhelm our customers with too many emails or letters. Too many communications would potentially irritate customers and risk greater churn, or even lead to customers beginning to ignore communications. Our internal research suggests that if customers feel they are receiving too many emails, they start to ignore communications. We support clause 251(1), which mandates the provision of all the relevant information in one communication. However, following the same logic of consolidating the number of communications that our customers receive, we see no justification for clause 251(2)(b), which prohibits the provision of a reminder notice along with any other information. We believe many of our customers will prefer not to receive lots of separate communications from us, and information about the value of a subscription is helpful information which should be permissible.

The one-size fits all approach prescribed would also potentially lead to consumers receiving reminder notices at odd times. For example, our print subscribers receive a new booklet of vouchers every quarter through the post. Receiving a reminder notice at six months may be confusing to them. Not least because the existence of these voucher booklets is itself a reminder that they have a contract with us.

Right to exercise end of contract

Clause 252 (1) (a) and Clause 252 (6) (a)

The Bill allows a consumer to end a contract with ‘a single communication’, and ‘by any means’. This would stop businesses from being able to engage the customer to understand whether a simple change in their subscription might be of benefit to them. In many cases,

this is what the customer actually intends, rather than expecting the subscription to be

immediately cancelled.

This provision would also create significant burdens for businesses in identifying whether someone contacting to cancel a subscription is indeed the account holder. For example, if a customer contacted an employee of a business via a social network. It would create a situation where businesses would be expected to gather more information about customers to identify whether someone is indeed a customer.

Cooling off period

Clauses 258 and 253

We noted the Minister’s commitment to review the cooling off provisions related to digital subscriptions. However physical goods will also be affected and should also be considered in any amendment. A customer taking out a subscription to receive our printed titles will receive a booklet of vouchers. These vouchers can then be spent by the customer with their chosen retailer (such as a local newsagent). As currently drafted, a customer could spend the vouchers with the retailers at a cost of hundreds of pounds to us and then cancel the contract. As the customer would have used the vouchers with the retailer, it would be very difficult for us to recoup the cost and would potentially open us up to significant fraud. This would lead us to creating technical solutions to attempt to counter fraud, which would add additional cost to our business. It is possible that additional compliance burdens may also pass to retailers, which may mean that some opt not to take papers anymore, depriving citizens of newspapers and impacting the newspaper supply chain.

If a customer uses and benefits from a good or service, it is our view that they shouldn't be able to then benefit from the cooling off right to cancel a subscription and receive a refund. This should only apply when a customer decides they have made an error in taking out a subscription but can demonstrate they have not used it.

Sanctions for non-compliance

Clauses 150 183-190, 229-233, 260-and 263 (1)

The level of fine and other sanctions associated with non-compliance will now be very

high, so great care needs to be taken to ensure that firms and individuals are not penalised

unfairly. Further guidance should be given to ensure that fines and sanctions are not

disproportionate to the level of consumer harm. We look forward to detailed guidance from

the CMA, which we hope will ensure that fines and sanctions are not disproportionate to the

level of consumer harm caused in each case.

It is a serious step to make individual employees responsible for a company’s actions and

we expect this to be a real concern amongst our colleagues. We believe the provisions

setting out which members of staff would qualify as an ‘officer’ of the company for the

purposes of the offences under clauses 231 and 262 are too vague and could include a

large number of staff. It is not clear whether the offence would apply only to board-level staff

or also to other senior, or even mid-level, staff. We consider it should only be executive-level staff as they can appropriately be held responsible for a company’s strategy and policies.

We therefore propose that the word ‘manager’ is deleted from clauses 231(8) and 262(2) as it is a vague term that could be applied to relatively junior staff who manage small teams. We would also like to see specific examples of what constitutes ‘consent or connivance’ and

‘neglect’ (clauses 231(5) and 262(1)), not least as ‘officers’ will need to know the extent of

their obligation to be closely involved in the wording of customer communications.

Opt-in subscription provisions proposed during committee scrutiny

We note that some members of the Committee have suggested amendments should be made to create an opt-in for continuing subscriptions. We believe that this additional friction is unnecessary given the enhanced consumer rights in this Bill. We are concerned that this would have a significant deleterious impact on businesses and would also risk pushing consumer prices up. Therefore the inclusion of such a measure should be subject to an impact assessment to understand the cost to UK business.

News UK proposal for a further amendment to include an implementation period

In our view the Bill should be amended to include a formal implementation period for the subscription elements. Where such significant contractual changes have been introduced in regulated sectors, businesses have been given a lead-in period to ensure that they are able to comply. Given the complexity of these new rules, the breadth of businesses which will be impacted, and the work that will need to be undertaken to implement the provisions, it would be unreasonable to expect that companies large and small could be compliant on Royal Assent. A lead-in period of at least 12 months would assist businesses to develop processes and to share industry good practice.

July 2023