14/02/2022

House of Lords Select Committee publish report covering the regulation of online marketplaces

The House of Lords Communications and Digital Select Committee (the Committee) has recently published a report in response to an inquiry they launched in September 2021 into the effectiveness of digital regulation.

This report leads on from an earlier report by the Committee in March 2019 which found that there were gaps in the regulation of the digital environment such as online marketplaces. The Committee recommended a new digital authority that would help address this by instructing and co-ordinating existing regulators of the digital environment.

Although the focus of the September 2021 report is not directly relevant to the products industry, the key recommendation that could impact product manufacturers and online platforms selling products concerns the current composition of regulators of online platforms.

The Digital Regulation Co-operation Forum

The Digital Regulation Co-operation Forum (DRCF) was formed in 2020 to encourage cooperation in regulating digital markets.

Its current members are Ofcom, the Competition and Markets Authority (CMA), the Information Commissioner’s Office (ICO), and the Financial Conduct Authority (FCA). It has no formal legal powers, but aims to utilise its collective expertise and legal powers to cover all areas of the digital markets that the regulators currently regulate.

Committee recommendations

Following recommendations by the Committee for a digital authority, the DRCF voiced its rejection of this pointing to a lack of need for an extra authority when the DRCF can deliver on the intended purposes for said proposed authority.

The Committee have suggested that full DRCF membership should, as soon as possible, be extended to other statutory regulators with ‘significant interests and expertise in the digital sphere’. This suggests, therefore, that should recommendations be adopted, the OPSS could become full members given their role as regulators of product safety covering online marketplaces as a primary platform for consumers to purchase products.

This could spell greater involvement by the OPSS in online platforms using the expertise and knowledge from other regulators in the DRCF to assist. This may, in turn, translate to regulations put in place should gaps in regulation of online platforms be identified.

Here at Kennedys, we continue to monitor the progression of this recommendation and its effect on product manufacturers and online marketplaces.