Response to the Working Group on consumer and competition policy

Competition

The Working Group report identified a clear need for a credible competition policy in Scotland: one that is capable of taking account of Scotland's geographical, cultural and economic circumstances.

The Working Group recommended that the Scottish Government should develop a competition policy for Scotland which sets out how it differs from that of the UK and the outcomes it seeks to achieve. It also recommended that the Scottish Government should make clear how its role and responsibilities align with those of the CMA.

The Working Group recommended that the Scottish Government should explore how to increase engagement and participation by Scottish stakeholders in market investigations and develop proposals for delivering competition advocacy - assessing the competition impact of Scottish policy and legislation.

The Working Group recommended that Consumer Scotland should take forward work to analyse public and private Scottish markets to enable market studies and investigations with the aim of increasing the focus on and prioritisation of Scottish work, including influencing CMA priorities.

Scottish Government's response

We recognise that Scotland's size and its rurality and peripherality may give rise to a different scale or range of issues than exists across the UK as a whole. We are already working, with the CMA, on a strategic assessment of Scottish markets that will identify areas of competition concern in Scotland and prioritise how we and other stakeholders will work together to address these market failures.

The recommendations of the Working Group are an important first step towards developing a Scottish approach to competition policy, shining a light on where a lack of competition may be causing significant detriment to consumers in Scotland. This will require all stakeholders in the consumer and competition landscape - from Scottish Government to consumer bodies, business organisations, and the CMA - to acknowledge the importance of gathering robust and credible evidence and the value of engaging in market studies and investigations, particularly where there is a specific Scottish interest. Our overarching aim is to support economic growth by safeguarding consumer interests and preventing anti-competitive behaviour.

Competition on its own may not always be the best tool for ensuring markets work well, and there is a need to strike the right balance between competition and regulation. Where required, we will ensure that regulatory initiatives recognise consumer priorities in Scotland. In doing so, we will exploit the synergies and differences between regulation and competition so that the right tools can be used under the right circumstances.

Increased engagement in this area offers the Scottish Government a clear opportunity to promote open and competitive markets, which improve productivity by encouraging innovative and efficient Scottish businesses, and to harness the role that a different kind of regulation can play in influencing business behaviour.

We are working closely with Professor Chris Hodges, Professor of Justice Systems at Oxford University, whose work focuses on use of collaboration and behavioural insights to create open, ethical cultures that deliver more profound and sustainable organisational change than traditional regulatory methods. We will use this thinking to develop a regulatory approach that supports businesses to treat consumers fairly, and works with them to put matters right when they go wrong, thereby building trust between consumers, regulators and businesses.

This approach aligns itself well to our drive for fairness and access to justice in Scotland and will ensure the right tools will be used under the right circumstances to benefit both consumers and business, ensuring markets work efficiently.

Next steps

• In considering the possible form and functions of a dedicated consumer protection body, we will take account of the Working Group's recommendation that it should contribute to analysis of Scottish markets with potential to cause consumer detriment or potential competition concerns.
• We will shortly publish our assessment of Scottish markets and outline the next steps for addressing the issues highlighted.
• We will develop a competition policy for Scotland that recognises the overarching competition framework set out in European and UK law whilst also taking account of Scotland's areas of economic, social and industrial importance.
• We will develop a strategic steer on competition, which will set out the Scottish Government's priorities for competition policy and provide policy direction to the CMA to consider particular market concerns of importance to Scotland.
• We will outline an action plan to strengthen engagement and participation by all stakeholders in market studies and investigations, particularly those with significant Scottish content.
• We will explore with the CMA proposals for increasing its engagement in the delivery of Scotland's competition policy, which will build on the establishment of its representative office in Scotland.
• We will establish an advisory forum to oversee delivery of competition policy in Scotland, with strong links to the Scottish consumer protection partnership.
• We will ensure that competition advocacy - including understanding where new policy proposals may have unintended consequences on competition - is built into the policy-making process.
• We will develop a policy on ethical regulation to spur economic growth by increasing consumer trust and rewarding ethical businesses.