The curious case of the Penrose Report – ‘Power to the People’

22 Feb

You may, or may not, have seen this referred to in the press last week – it appeared in the Guardian but, as far as I can see from a quick Google search, was not reported elsewhere. The report by John Penrose MP focuses on how to improve the workings of UK competition policy, so that, as the report says on its front page, ‘markets work for people and not the other way round.’ (see http://bit.ly/3dA46fG).

As this was a report commissioned last September by the Chancellor, Rishi Sunak, the failure of the government’s publicity machine to make more noise about might seem odd, but perhaps no odder than the report itself. I was introduced to it last week via an online seminar hosted by the Regulatory Policy Institute (see rpieurope.org). John has clearly been an industrious chap. Without (it would appear) much research help, he has produced over 40 recommendations in his 70 pages.

The report shares many of the themes of Andrew Tyrie’s letter to the then Business Secretary, Greg Clark, in February 2019, although it adds its own spin on ‘cutting red tape’ (more of that anon). But unlike that report, which clearly drew on the resources of the CMA, which Tyrie then chaired, or the Furman Review on Digital Competition, it is short on its description of process. One suspects that this is because there wasn’t one – the report (and his presentation of it to the RPI) gives the impression that John has had a few chats, read the existing reports, and added a few thoughts of his own.

If that is right, it might serve as a useful ‘tract for the times’, perhaps designed to get the Tyrie letter back from the wpb and back on the agenda. The themes both raise are important ones – does competition law place enough emphasis on consumer interests?; do the competition authorities act rapidly enough with their current legislative powers in the new digital, global economy? – but it is not clear that the Penrose solutions have been fully thought through.

To focus on one example: the report correctly notes ‘too much red tape slows businesses down.’ But in the course of its 40-odd recommendations, it manages to add quite a few pieces of red tape of its own: it wants to ban price discrimination between existing and new customers; it wants ‘supercomplainers’ to be able to trigger a request to transfer sector regulator powers to the CMA; it wants an entirely new branch of the judiciary – County Competition Courts’; and it wants protection against ‘sludge’ – consumers who are exploited by ‘nudge theory’ (or plain old inertia). No cost benefit justification is offered for any of these.

Perhaps it’s less of a report, more of a nudge that the UK’s competition laws need a post-Brexit update? If government reads it and says ‘we can’t possibly do that’ perhaps it will spur them to think what they can do. If it achieves that, it will have performed a useful service.

One Response to “The curious case of the Penrose Report – ‘Power to the People’”

  1. HANSA EMZIVAT March 1, 2021 at 3:10 pm #

    Thank you for your insights.

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