 Rhaid, ac rwy'n Scottish News wrth dda ni'n gwybod â'u cyfryddiadau, na allan hwyl. Rwy'n gwybod â'u cyryddiad, a i gael hyn, yn ymd bugsig yn gweithio. Rwy'n gwybod â'r cyryddiad, oherwydd bynnag mae'n ddigwydd i gblifon. Parfwg rwy'n iawn i gyffin i'r Gw��ifordd Huarmi, i ddigwydd薜ol i'r gweithio arall, i ddigwydd i'r adeg playlistau â'u gweithio? Gweithio ddych chi'n gallu hynny'n myg pwylo sydd i'r cysylltu amdano i gwybodaeth Cymreibbwys iawn o ddygu. Rwy'n cyfnodd i ddim yn eu ddwydynniad ar gyfer i ddechrau, ac mae'r ddeton i'r DEG-Cymru, mae'r Ddiw Llywodraeth Fylltadol, ac yn ôl gyda Os Van. Mae'n wedi bwyd. Rwy'n ei fwyaf am eitem 2 ar y dyfodig yn ni, ac mae'n gwaith yma o'r dziwledig am y cwmparau syddi, ac mae'n rhai i'n cael ei fod yn sicr mewn i'r refugr. Mae Llywodraeth David Currie, Lord Currie, of mylləl, yng nghymru. mae'r sylwm, dywed i gyfnodau a'r bobl sydd i ymwneud i'w sgolwyd, a'r bobl sydd i'w sgolwyd, dywed i'w sgolwyd, a'i ddim yn dweud i ddweud i ddaf, ac mae'n ddweud i'w sgolwyd yn dweud i ddweud i'w sgolwyd ar y cyfnodau oherwydd i ddweud i gydigolio'n rhai. Mae'r ddiwethaf y byw yn ardal, yn gweithio'r ddweud oherwydd, yn y dyfodol i ddweud i gydigolio'n dweud i gydigolio'n dweud, a we have done a number of pieces of work ourselves in recent times that directly overlap some of your own forward work programme, particularly in the areas of energy policy and in relation to banking. I wonder if I could just start off, Lord Currie, by asking yourself and feel free to bring your colleagues in as you wish to comment on this. If you could maybe just outline for us, given that the CMA is a new organisation, how you intend to take forward your work streams generally, but perhaps specifically in relation to these two matters, which I know will be of interest to committee members? Well, thank you very much and we're very pleased to be here today. This is a formal hearing, but we've had a number of conversations over the last year with you, and others here in Scotland, and it's great to have this opportunity to give formal evidence. We are a new agency formed from the Office of Fair Trading and the Competition Commission, and we want to ensure that our work is done even better than the work of the previous organisations, and therefore we very much welcome views that the committee may have on how we should do things, because we are still establishing the ways in which we proceed. We are an agency of the whole of the United Kingdom, and that does mean that we have to understand very much the concerns here in Scotland and other parts of the United Kingdom, and this type of hearing is one opportunity for us to do that, one of only a number of ways in which we seek to establish ourselves as really understanding the concerns of Scottish consumers and Scottish people, and we really do want to make a difference to the operation of those markets that clearly aren't delivering satisfactorily for consumers here in Scotland and in other parts of the United Kingdom, and that's why we early on, as a result of the off-gen reference, we have the investigation, phase two investigation into the energy market. We inherited an investigation into the payday lending market, which is also, I know, of concern to this committee, and we're consulting currently on whether we should be doing a phase two investigation into the banking sector, and we'll make that decision fairly shortly. So those are clearly areas that you as a committee have been concerned with, and people in Scotland are concerned about the modes of operations. If I may hand over to my chief executive just to say a little more about the specifics of energy banking and payday lending, and then we can proceed into questions. Thanks very much, and good morning to you all, it's great to be here. So just to add a little bit of detail to what David was just saying there about this particular market inquiries that we're doing. In our various visits to Two Scotland and consultations of people, we've talked about which are the key sectors of concern to consumers here, and energy and banking and payday loans within the financial services sector have been three of the ones that have constantly come up, and so we have given real priority to those. Although the CMA only came into existence the first of October last year, and only took on our powers the first of April of this year, even before we formally started in April, we did a lot of work in the energy market, working closely with the Office of Fair Trading and with Ofgem, and published a state of the market assessment in March, really showing that the market wasn't performing very well for consumers, there wasn't enough competition and choice, there was a lot of concentration, very noticeable here in the Scottish market, and that the dynamics of the market didn't seem to be delivering at all well for consumers, and there was a lot of extreme dissatisfaction, I think around about 40% of people didn't trust their energy supply, which we thought was a very bad figure and also a figure that had been growing over time, so we were very pleased when Ofgem made a formal market investigation reference to us in June, and we've been working very intensely on that. It's an 18-month inquiry that's compared to previous 24-month inquiries, so we need to up our game and work faster, and the inquiry group has been very active just this week, actually, I think they've been in Perth and also visiting the power station in Longannet, so talking to I think SSE when they were in Perth, and also we've been in touch with Scottish Power and Spark Energy and with a number of the consumer groups as well, so that's been a very important part of our work, one of our flagship projects. Turning to banking, banking is in a different situation in that we haven't, at this stage, made a market investigation reference, but again, soon after we started in April, we pulled together the existing work we inherited from the Office of Fair Trading in relation to the SME market, the small and medium-sized enterprise market, the concerns that this committee and others had raised with us, and we saw and very much appreciated the report that you did about access to finance. Again, as with the energy market, Scott was probably a bit of an outlier in the sense that very high concentration levels were noticeable in the market here, with many small businesses particularly feeling they had a choice really of two firms for most practical purposes, and that was true to some extent in the retail market as well, so what we proposed in July was that there should be a full market investigation reference of the whole of retail banking, both SMEs and personal current accounts, reflecting the concerns we had again there about competition and consumer interests not being well served at this stage. Before making a final reference, you have to consult and so we have been consulting, we've had the responses back just a couple of weeks ago and intend to bring that to a point of final decision in the next month or so. Finally, in relation to Payday, which David also mentioned, and again has been a very problematic sector and one which again from many dealings in Scotland have been very strongly emphasised, particularly I suppose in the urban areas in Glasgow and Edinburgh. The reference group there again have been very actively both doing direct consumer research particularly in those cities, but also talking to experts here in Scotland, the money advice Scotland, the citizens advice service, the trading standards bodies and many others about how best to deal with the problems in the Payday sector. They feel they are close to a point now of being able to put out final remedies which they plan to do over the next few weeks with a final report due around about the end of the year. That gives you a bit of an overview about where we are in those particular sectors, but I'm very pleased to try and do with any questions or observations you might have. Thank you very much both for that introduction and you've touched on a range of issues which I'm sure members will want to tease out some detail on. I'm hoping we will run this for about an hour and give members a chance to ask what they can with and remind members if they would to keep their questions short and to the point and answers that are as focused as possible would be helpful just getting through the topics and the time available. Just before I bring in Dennis Robertson, I just want to ask one follow-up question if I can. Lord Cuddy, you were talking a bit about the committee's or relationship with Scotland, your UK body, but do you want to say a bit more and maybe you want to bring Sheila Scobian at this point to say a bit more about how you see the authority engaging specifically with the Scottish interest in making sure that the Scottish viewpoint is properly reflected in your work? I think that's a very important aspect of our work. Sheila has responsibility for the Scottish office and in a sense is one source of information into the organisation and a source of information back as to what we are doing, but that's only one part of it. What we are ensuring, as Alex has already indicated, is that all our inquiries, we actually take explicit account of the Scottish dimension in the work, hence the visits, the site visits, and coming to Scotland to talk to people here. Of course, the board itself needs to have an appreciation of the Scottish concerns, Scottish interests, and that's why we met in June up here in Edinburgh as a board and had a range of meetings with representative bodies. I have to say that doing that was incredibly valuable. All board members said how useful it was, and it is something that will be a regular feature of our board meetings. A variety of ways of engagement, and we're making sure that the executive in their work do actually make sure that they are explicitly thinking about the Scottish and, of course, Welsh and Northern Irish interests and building that into the way in which the work is conducted. Shall I say a few words about what I consider my role to be here in Scotland? I was appointed in January very much with the view that CMA is a UK-wide organisation and needed some form of representation here in Scotland. I very much see my role as being about the face of Scotland within the CMA, helping colleagues in London understand what the economic and political dynamics are here and understand what is of concern to consumer groups and politicians and policy thinkers here, but also here to represent the CMA in Scotland and provide opportunities for colleagues with expertise and knowledge from the CMA to be visible in Scotland at events and meetings and opportunities like this here to talk to Parliamentarians. I'll bring in Dennis Robertson. Good morning. Can I come back on the energy aspect again? With your inquiry that's on-going within the energy markets, do you think that that has any impact on, for instance, Government decisions within Westminster, for instance, on EMR and taking that forward? Obviously, we don't want to pre-empt any outcomes from your report, but whilst you're actually going through the sort of investigative aspect, do you think that that prevents any movement, either from Government or indeed from the industries themselves? I might try and respond to that. First of all, it's an excellent question. I think that oftentimes we do get asked when we've got a big inquiry that on, does that create a kind of a pause in the market where both from the firm's point of view and indeed from the Government and or the rest of the Government in the regulators perspective, should they hold back on initiatives that they had in mind? Our message back to them is always and is in this case, no, you shouldn't hold back what you're trying to do. So there's no pause in the market. So if you're looking to invest in building a new power plant or coming up with some new scheme that you think will be advantageous to consumers or indeed from the regulators perspective pursuing a necessary change in their approach, we don't want them to hold back from that because we're doing this big wide inquiry. In a market as big and complex as energy, there's always things happening and so it's unrealistic and unhelpful for us to expect people to stop that. What is important is that the reference group that's been appointed pay attention to the continuing evolution in the market and that's very much what they're bent on doing. In relation to the policy framework that stands, they obviously need to take full account of the important European dimension to this with the energy directors that are in place and the requirement for an internal energy market, also the role of interconnectedness and things within that and from the Government policy perspective the EMR, the electricity market reforms are really essential to the Government's objectives in delivering both reliable and affordable and low carbon energy for the period ahead. So I think that's a very important policy context which the reference group will want to take account of. If when they look at the policy context or indeed the regulatory frameworks have been established, if they see things which are diminishing the prospects for competition then I would expect them to try and address them and to make recommendations or observations but it's as you rightly say very early days at this stage in the inquiry. They have themselves the reference group, it's an independent reference group I should say that we're now into the second phase so that that moves outside of the control if you like of myself as due executive or David as a chair or indeed Sheeter as well to an independent appointed reference group in this case chaired by Roger Wickham and that group published in July an issue statement of some of the key points there that they saw as being worthy of further inquiry and that does include things like vertical integration, includes things like the potential for market power in electricity generation which I think would probably touch on some of the areas covered by electricity market reform. Do you believe there's enough confidence then within the markets at the moment to proceed with any investment or do you think really that because the inquiry is ongoing that some of the markets and again perhaps we maybe primarily see within the renewable sectors are actually holding back? So I think that there is an issue of confidence there both in the consumer market with a degree of distrust there and very likely in the supply side and investment thing the the government has been looking to establish the MRs to provide that that that that confidence in the investment scenario the we read in the papers that the European Commission is close to finalising its decision in relation to Hinkley point which I think will be very important to understanding the framework for future investment in nuclear not just in the UK but right across Europe. Clearly there must be some uncertainty associated with our inquiry for any all of the players within that but what we have found and observed is that people actually in the industry have a degree of confidence in this as a very objective and very independent and very evidence-based process one in which the views of industry players and consumer groups and everybody else are very carefully considered and there's ample opportunities to to correct any errors of fact or analysis and furthermore that ultimately the reference group anything that it chooses to recommend by or to put in place by way of remedies is subject to full legal scrutiny so I think that there are a number of safeguards there to make sure that whatever the reference group finds and comes up with will be something which is proportionate which is required to do by law and really justified by the facts and I think that whenever we get the chance to speak with investor groups we do rather emphasise those points and they seem to find it reassuring. Thank you and finally convener for me just on the confidence aspect how do you how do you try in terms of the consumer market the customer based market how do you try and get the confidence back there that you are working towards an outcome that will be beneficial to them? I think Laura Cunningham wanted to respond to your previous question first so maybe I'll let you do that. Just to add the point that I think one of the factors in the reference by Ofgem was the fact that there was a lot of uncertainty in the energy market anyway so the inquiry is just one aspect of that and therefore it's not obvious that the inquiry in any way adds to the uncertainty that was facing investors and therefore it's not a dampener on investment prospects. Appreciate that. Just to begin to try and answer the other question that you ask in relation to consumer confidence and I think that's really a key issue in the inquiry and as I say I'm not a member of the inquiry group myself so I don't want to say too much about it but I mean some things which I suspect will be very relevant will be first of all from the point of view of consumers understanding what actually goes into what they pay for so understanding what their bills, how their bills are calculated, how the information is presented, understanding what their choices are, what options are open to them there, having confidence in the mechanisms for switching between one supplier and another, having confidence in the sources of information about how to switch including very likely price comparison websites and things which obviously play an important part but also other intermediary channels. I think probably having confidence in the underlying dynamic of the market there's a questions have been raised about whether or not there is a really fully effective competition between the so-called big six operators and that undoubtedly has I think contributed to this degree of consumer distrust so we would hope that our inquiry would help to settle that matter one way or the other and also for people to see if action is justified that that's actually being taken so I think that these will all be contributory factors it's probably no silver bullet to consume the confidence it's taken a while to degrade if you like it's going to take a while to build back up again but I think it is very very necessary especially for such an essential utility as energy okay thank you okay um check rody morning excuse me you've alluded to a european dimension in terms of the impact that would have on their directors have on allegedly on competition I just wonder in terms of the wider international impact of me for example with the new a transaction system coming down the pike from agreement between the states and and Europe and there are in various industries with a dual tax arrangements and there are transfer pricing accommodations which one might suggest mitigates against the consumer interests how wide is your remit to be with regard to international activities I have to say fairly fairly narrow I think that you raise a very interesting and important point that in the the global economy as we stand there there are very likely quite considerable distortions in trade flows and investment associated with tax regimes and there's probably you know in fairness an ongoing debate about whether or not that that process of competition between countries based on tax is a is a welcome one or a harmful one um and the um the the way in which the tax codes have developed have not been in a fully coordinated way and there is obviously considerable overlaps and tensions between them which does create some scope for individual firms to um to end up paying very low levels of taxation um it is an international issue I think it's you know it's a it's a g7 type type issue to try and bring about a coordinated action to reduce these distortions it's not something where quite honestly the competition of markets authority has much influence or say but I think you're you're right um to draw attention to the impact that it can have on investment um we you've probably seen um that the um the european commission have been making sounds very recently in relation to the um Irish tax arrangements in relation to apple so that's clearly an area where the and that's that's that's the competition director of the european commission who are responsible for state aides as well so that would suggest to me that they see some potential for some distortion there so we'll have to watch that one carefully so I think there is scope probably at the european level to see if there are um things which distorting trade within the internal market but probably to really grasp this this natl I think is going to require a lot of international coordination thank you in the um the briefing the you mentioned the mission is to make markets worth well for consumers and your task with delivering benefits to UK consumers of at least 10 times its cost well over half a billion pounds every year in in consumers pockets how would these outcomes arrived at I mean interaction of consumer needs and wants are different clearly cost of ownership is different I mean how how is the number arrived at the this 10 times cost and also searing well over half a billion pounds every year or putting them in back in consumers pockets established methodology that's been applied to the work of the office of fair trading competition commission in the past is based on academic research it is clearly an estimate but it is a methodology that's not controlled by us in other words we're audited in a sense by others and I think it's a it does attempt as best one can to estimate real benefits to real consumers I'm not going to try and articulate how it's done because it is rather a complex process inevitably but it is the benchmark that we've been set to achieve and interestingly the office of fair trading in its last year of operation did achieve that 10 to 1 ratio which makes it a pretty good investment in in in terms of investing in the competition work that we are are doing as an authority and that may have been the reason why the UK government decided to increase our budget by something like 30 percent to enhance the work and the effectiveness of what we do yes and I mean just just add to that in fact the the UK has been a leader in the effort to try and develop robust methods for calculating the impact of interventions by competition authorities and the work done I think it was it was led out of the university of east anglia the competition consumer group there has now been adopted by the OECD basically as the kind of international standard for that so again I think that probably should give some comfort to people that this is a fairly robust and reliable method of calculating these impacts it's also based on so-called direct benefits so if you make a market intervention and you for example put in place a price control or transparency measure which you can then see has some impact on prices thereafter then that that gets calculated what we haven't yet found out a good way to do is to calculate indirect benefits so so for example from achieving a high level of confidence in the on the investor community or on the consumer community in the marketplace or when you bring in an individual compliance action we measure the direct effect of that compliance action not the knock-on effect in deterring other people so probably even the 10 to 1 is quite a conservative figure in terms of what the total impact of for the economy is of competition authorities such as ourselves thank you thank you convener um just to follow on the the question really about the the nature of the authorities priorities its purposes um chick brody mentioned the the briefing we've got it actually says that the cma's mission is to make markets work well for consumers business and the economy but the legislation that creates you and i confess i haven't read every dot and comma it's it's fairly clear that the um the purpose is to seek to promote competition within and outside the uk for the benefit of consumers what happens when there's a conflict between the interests of consumers and the interests of GDP growth or the interests of business in any particular sector or is the the phrase consumers business and the economy a sort of article of faith that these things are always the same well i think our view is that in general they are the same i'm first to be clear our primary duty is to consumers and delivering consumers benefit now and into the future um we think that making markets work well is also good for business good businesses not the ones that want to do dirty deeds but the good good businesses thrive in open competitive markets and therefore on the whole what is good for consumers is also good for the innovative dynamic business and on the whole the evidence is the empirical evidence is that competition open markets effective competition is also good for growth not short term but long longer term growth and therefore we do think the three things fit together consumer interests at the heart of what we do businesses thrive in open markets if they're if they're innovative and that's all good for the overall growth of the economy but where there was an example where you if you were looking at a particular sector of the economy or a particular industry uh if there was clear evidence that consumer interests were not being protected even though businesses were doing well and GDP growth was doing well your legal duty would be to focus on the consumer absolutely absolutely i mean to give one example the um the the um high interest loans the issue you mentioned uh earlier uh the briefing also suggests that your concern is that that's happening because of a lack of competition now if if some intervention was made and we had greater competition but some consumers were still paying exploitative rates of interest that would clearly not be in the interests of those consumers even though it's a more competitive market uh businesses can sell rubbish products with big marketing budgets with clever gimmicks and so on we only need to look around the world and see that these things are possible so having healthy competition doesn't guarantee that consumers interests are being promoted no i think that's an excellent point that you make and it's also a good good market to look at from that perspective because if you consider really the the interventions that we're making they they make most sense i think seen alongside the that the uh responsibilities and interventions that the financial conduct authority are doing as well so if you i mean obviously there's there's an issue about potentially unscrupulous firms getting into the market and exploiting consumers so that is an issue that's probably best um addressed by regulation for a licensing scheme to make sure that that for market but already being there or indeed being in the market absolutely point made and that's something which the fca the financial conduct authority have been who are responsible for for regulating this market and for licensing firms have been very very clear on themselves and they are considerably tightening up i think the requirements for being in this market and quite a number of firms as a consequence are exiting from the market so that's one important element of regulation the second important element of regulation it seems here in this market and this has been a government initiative for being implemented by the financial conduct authority is to put in place a price cap um a maximum rate that can be charged um which as you know will take effect from January of next year so we're really the the third leg of the stool by saying well even even though this is a price cap um or can sometimes happen with caps which are intended as um as ceilings as that they also become flaws and that becomes the going rate we would actually like to see some competition even below the level of the cap for people saying well look this is a better this is the the terms that i'm offering offer better value to consumers which ultimately it's a financial product the cost the financial product is very very important and and the the work of the the CMA reference group here again this is a second stage inquiry it's done by an independent group has really focused on how um when consumers are making choices in this market they seem to be at the moment very much driven by the convenience it's mainly for the digital channels and very you know sort of two or three clicks and you're there to making a loan however you've got the money but the cost of that is sometimes extraordinarily high so um um they believe that it's important to try and um promote uh the the cost of the loan alongside its convenience as a relevant as a relevant choice characteristic for consumers and to give people better information on that more prompting to consider what it's actually going to cost you um and also uh to try and um uh to improve the role of the intermediaries such as price comparison websites in this regard particularly making it clear that um if someone is holding out to you um a choice of alternative suppliers are they really offering kind of um a a true brokering service for you or are they actually working on behalf of the the providers of credit where in effect your details and applying for a loan of being sold to the highest bidder and we've been very concerned by some of the misrepresentation going on there it's just just finally on this this question what i'm really keen to to explore is the the nature of the authority and the the various interests that it's there to represent rather than the the detail of this particular industry which i'm sure there'll be other time to to explore if somebody from my political leanings was to to frame legislation to give you a a legal purpose i might have talked about protecting the the benefit of people or the common good rather than necessarily consumers that seems to imply that it's only in that consumer relationship uh that the impacts of of market activity is is relevant to your responsibility what role do you have or what role could you have in in a market for example where social and environmental costs were being externalised they weren't being born by the businesses involved they weren't being born by those businesses customers either but by wider society waste management energy transport the whole host of you could probably should make a shorter list of the the examples where that isn't the case what role do you have where those those kind of costs those kind of impacts of market activity are not being born by consumers as consumers but by people as citizens i think in in general where there are those externalities the mechanisms best for best dealing with them are forms of taxes and levels of various kinds rather than the instruments that are in our control because we obviously don't have those powers having said that i think if we had them if we were doing a marketing inquiry into a sector and we felt that there were those external effects that is something that the inquiry group could look at and could take account of in in their recommendations and just coming back on the previous question i think it is important to emphasise that although we're called the competition markets authority in addition to our competition role we have a very important consumer protection role which we play with trading standards trading standards of scotland citizens advice of scotland and working the consumer protection working together with our competition powers is actually a powerful combination so we're not purely focused on the competition aspects we are concerned about the impacts of on individuals particularly that of firms that are behaving inappropriately specifically impacts of on individuals as consumers rather than as people in the wider sense yes okay thank you John McAven do you have a follow-up on this there was a specific supplementary on that that that conflict that mr harvey outlined and the example that i was going to use was nuisance calling you're probably aware that consumer which had a survey that found 85% of consumers have received nuisance calls and as a result almost half of the people surveyed didn't like picking up their home phone now the scottish government had they had the powers over this matter had already outlined what they would do which would have been an effective enforcement regime with penalties and a code of practice what are you proposing to do about nuisance calls it's a matter of comedy and you can have responsibility first to also the information commissioners office that's that that's the combination and they are developing it's like our proposal was to have a much more integrated system of regulation which would have meant that we could have put effective protection in place i think those issues are very much an issue for off-con to to take and in a sense the integration of regulation is already there for consumer protection that's you know consumers are being affected and there is data has been solved and so on there is a concurrency arrangement in particular in the regulated sectors and so but in in in the case of nuisance calls and that sort of thing i think the primary consumer protection role would fall to off-con so i think they are the people who should think that that perhaps highlights some of the problems with the fragmented nature of regulation in the UK i don't think so i mean we coordinate quite effectively with many different bodies i mean i mentioned our relationship with trading standard scotland trading standards more generally um but i mean the primary role is is quite clear in this particular case it's not for us it's for it is a matter for off-con and that's not just passing the buck i think you know it is a serious a serious issue which is based in causula has actually looked at this particular issue and um you know are working with local local authorities to consider whether their interventions they can that can take place locally so um you know certainly if you would like i'd put you in contact with trading standard scotland to see what they're doing okay thank you um Mike Mackenzie thank you convener and good morning i'm very delighted to hear that you're taking such a keen interest in scotland and that you believe that the challenges for you are somewhat different in scotland perhaps than the rest of the uk i'd be very interested to hear what you think those differences are what are the special challenges that you find in scotland in terms of your remit well let me have a first go at that and then ask alex to continue i mean one issue which is is important clearly is the is the urban rural uh uh balance that's an issue within england and wales but we have a very conscious of the fact that scotland has urban concentrations but also very significant rural rural communities and that poses issues in a number of different markets um and also the nature of uh concentration we've already referred to the fact that the energy market here is more concentrated than it is in other parts of the united kingdom and that's relevant to our our investigations so those are two particular things that we would be very conscious of it i mean one shouldn't overemphasise the differences what's important for us is that we are in touch with scot with the interest in scotland but also in wales northern ireland the north of england various parts of the united kingdom and that's an important part of our remit yeah just just to add to that i think that um that's absolutely right david that what we shouldn't sometimes people misdiagnose differences between different parts of the uk according to the nations or the regions but actually the differences are more to do with high population density versus low population density urban versus rural but i think having said that um in scotland so um uh the i suppose one of the the kind of guiding lights that we'd say to all of our groups carrying out these inquiries pair attention to these differences and look for differences so in relation to for example the payday sector they paid a lot of attention over the course of the last year to potential differences in in in scotland along with other parts of the uk that was one of the reasons why they conducted a lot of consumer market research here and also interviewed all the main players here both on the supply side and the consumer side they did find i believe some some differences in structure so particularly in the the high street for example um one of the the larger high street lenders called speedy cash does not operate at all in scotland but is very active in england um other main high street chains such as the money shop are operating right across the uk so they have to pay attention to see whether or not the the differences because they're always going to be differences whether they make a whether they make enough of a difference to to justify looking at scotland as a separate market always part of the uk market that's also a feature of um the work that um has been going on recently in relation to other sectors such as private motor insurance we haven't talked about yet but again looking for differences at the national level there they found actually the the northern island market was quite distinct in some respects from the uk one um and uh again reflecting probably some differences in uh in industry structure and links with the the republic of ireland um it's it's probably unwise to generalize too much about scotland consumers and their differences compared to any other part of the uk but um maybe just to make one observation and that is that um from the research that we've done and from contacts we've had with consumer groups here we have noticed that quite a number of scotland consumers would have quite a high level of loyalty for scotland brands um including in relation to um energy and banking and that this actually reduces their likelihood of switching to an alternative provider from elsewhere in the uk so when we look at high concentration levels on the supply side we see that those are to some extent being reinforced by consumer loyalty or if you put it um less positively inertia of staying with established brands through thick and thin even where sometimes the performance and the service has not been as good as as consumers would have wished they still don't change so i think that's that's one one characteristic that we've noticed in some some segments but again i wouldn't try and generalize right across the economy thank you um i would you know i'd like to just move on slightly in as much as and it's no secret i represent highlands and islands region of scotland um an area that i can only characterise is suffering from multiple market failure and i hope that you'll spend a bit more time in scotland and come to the highlands and islands and see the effects of that for yourself and if i could just very quickly run through some of the mean ones um postal and delivery charges that are disproportionate um a service that's sometimes just not available at all on some of our islands um mobile broadband um no 3g to speak of very little in a worsening situation with 2 2g uh desperate telephone signal but i'm describing i'm describing our instances of clear market failure and please tell me if that's not at all of interest to you um high fuel costs high food costs um that you made an interesting point about you know brand loyalty if you like but it's a fact that ssc for instance are one of the very few few energy supply companies that offer a storage heater tariff um and in off gas grid areas people depend much more highly on storage heaters than they do in other parts of the country um and yet they're not able to change uh supplier because ssc are pretty much the only company offering an appropriate tariff there seems to me to be a very very clear uh case for intervention and then again in terms of fuel poverty uh you know um manifest in itself in scotland's islands over 50% and yet we can't access smart meters because those depend on a 2g signal so it seems to me the islands and islands suffer from a whole basket of market failures could you you know explain to me please if that comes under your remit at all um and if it does are you able to to do anything about it okay um so just um to try and both to describe what what is within our remit and what is not and what we're doing about it those areas that are within our remit um uh first of all for regulation of um energy tariffs um and also of um uh the universal service in telephony um and also the uh coverage requirements for mobile signals uh all of those are the responsibility of sexual regulators the obviously energy the the um the office for um for gas electricity and uh off gem and uh off com for the communications market um they they would have within their own rules um uh a lot of responsibility written in to make sure that vulnerable consumers are not disadvantaged by the the provision of the postal service the telephony service um and and obviously uh electricity supply as well um the built into that their schemes is inherently a cross subsidy because the cost of providing those types of utilities is much higher proportionately in low population density areas than it is in high population density areas so for reasons of of public policy and social cohesion the the fundamental schemes like that do involve a cross subsidy which obviously is beneficial for people in um in more remote communities um if i could just highlight two areas where we've been active in trying to address um the issues that you mention uh particularly for people in highlands and islands um one is that the the OFTR predecessor body or one of the two um carried out a very detailed study of remote communities and from that um used that as a kind of um platform for trying to bring about change in a number of areas and one of the issues that certainly came through very strongly through that study was the cost of delivery um and i think the um a set of principles for retailers were developed partly as a consequence of this OFTR initiative uh were developed by the Scottish Government here and then i think have now been um effectively sort of copied and applied right across the UK um by the Department for Business Innovation and Skills um so that has been something to try and make sure that there is a a clear sense of responsibility and a fair deal available from retailers for people um living in rural communities so far as delivery charges apply um something which we've been very active with in the last um year and more um has been a an enforcement action that we took in relation to supply of um of of road fuels in the western aisles of Scotland um and i think we spoke about this when we were last um David and myself were last meeting with with yourself uh in Edinburgh and the at that stage we didn't uh we hadn't bought the case to a conclusion but that has now um uh finally concluded and the um what we've been able to achieve there is both to break a number of the exclusive agreements which were tying in a lot of the garages to one supplier which meant it very hard for any alternative supplier to come into the market or for any real price you know competition to come in um secondly we've managed to um achieve by negotiation a set of legal commitments which mean that the dominant provider in that market of firm called GB oils um are now obliged to uh make their facility for landing fuel um the depot available to alternative suppliers and also on a short term so we think that is going to be very positive for the again the competitive dynamic in the market because we really do understand that in island communities the cost of access to fuel is really critical and we which is why we gave real attention to that uh case and we're very pleased with the result we've been able to achieve following a lot of local consultation over two rounds over the last few months so can i take it from what you were saying earlier on that um you really only operate um when you're not treading on another regulator's turf so to speak or are you more generally concerned with market failures that other regulators are quite manifest manifestly failing to deal with so i think that the the notion of the regime we have which uh david right described as concurrency means that we have competition and consumer powers and so do the sexual regulators like any other agency we have to make sure that we make the best possible use of our resource we're actually not a very big agency it may seem like we have 600 staff which may seem quite substantial but actually that's very that's smaller than off com smaller than off gem a lot smaller than the financial conduct authority and others so that and we're responsible right across the economy so we need to make sure that we put our our limited resource where we think we can achieve the best possible result and again keeping in mind that 10 to 1 ratio discussed earlier so in in in essence if we feel that they they have the responsibility they have the mandate and they're fulfilling it then there's no particular need for us to get involved if on the other hand as you were suggesting if we felt that they had failed to do something and it was clear that was the case then that we do have the power to step in yes right you can't that's interesting you can't tread in there tough i mean because it you know you talked about pd lending and there are other regulators that regulate financial services so um i'm a wee based truck as well i mean sure sure one more question can you yeah no i'm happy to finish it right thank you um Dennis want to come in with a brief supplementary just a very brief supplementary um i'm interested in the fact that you're mentioning the the Scottish brands and the loyalty to maybe two Scottish brands where people living in Scotland here um is it not slightly misleading that whether it be in the energy or the banking sectors there's two main ones actually continue to use that sort of Scottish brand to Scottish consumers when they're actually owned by a um their parent companies are not indeed um Scottish from Scotland is that not i mean we'll look at consumer protection or we'll look at the competition but basically you're saying you know whether big banking or energy you know they're promoting this up scotland bit but actually it's not scottish i think that's an issue much more generally if one asks what's the nationality of any particular international company very hard to define you know aspirant okay we can leave that one to stick to the wall for the time being i think okay um Richard Becker my question touches on this national issues as well though i know you've got a very limited role in that but response to mr brody earlier um you talked about European issues and clearly OECD numbers are doing a lot of work on unfair tax competition is that work that you can feed into at all or do you just observe that from a distance or would you have any kind of remit within that we were looking at a particular market where we felt that unfair tax competition was really distorting that market then that's something that we would like to share with the OECD yes market law quarry may be referred to so there as well if you felt in terms of domestic taxation to you looking into a market and somebody's getting an advantage there because of their taxation practices that's something you'd also bring up to to government in the UK something we can we don't have powers to deal with taxation but there are things that we could bring to the tension of government we could write about or we could talk about it publicly i mean just in terms of our international work generally i mean we cooperate through the european competition network that's close cooperation amongst the competition authorities in the EU we then also input into what is called the international competition network which is a network of something like 230 countries where there's a lot of cooperation between the competition authorities internationally partly to help developing countries to develop their competition powers and and bring them up to international standards and we also do similar collaboration with the competition part of the OECD so there is a great deal you know our reference the reference in our duty to looking after the interests of consumers both in the UK and internationally our international dimension of our work is an important aspect and having a fair global regime in terms of tax competition must be part of that overemphasise our past and of course i understand that thank you thank you okay mark will be at you a lot of the examples that were referred to in the briefing in some of the materials we've had have been about where there are a small number of companies operating in a way that doesn't doesn't work terribly well but largely it seems to come from the the number when you're looking at possible competitive distortions do you look as well at things like barriers to entry for new firms and also transparency of information for example i can think of two markets that are quite healthy in terms of number of providers mortgages and telecommunications but where the terms are not very easily comparable and where there might be market distortions there is that something you think about and how much of a weight does that sort of issue take i think it's very much something that we think about so i think you hit on one of the sort of core analytical areas for us when we we don't have it if you like it what we regard as a slightly old-fashioned structuralist approach to just saying how many players are there in the market that'll tell you whether it's a problem or not because we find it depends on the dynamic so just to expand a little bit on that so you could look at a market such as the global market for for mobile devices smartphones um and uh and if you'd looked uh say 10 years ago no about eight years ago you'd have seen that 98% of the profits in that market were made by just two firms apple and samson the if you look at what's happened since there's been a lot of change in that if you go back 15 years you'd find that most of the profits are made by Nokia so in fact at any particular point in time you might say that one or two firms seem to be very strong but it's actually if you look it keeps changing and there is there's a huge amount of dynamism within that market so that's a very global market it's a very valuable market but it would be difficult to say that one firm was very dominant in it at least it might appear so for a moment but it changes so by purely looking at a single point in time and saying what's the market shares is probably not going to help you very much in other markets where we see much less fluidity much less development much less dynamism then it's much more of a problem to to see a kind of a situation where for example ones with high fixed costs large industrial markets which have been very very unchanging for long periods of time particularly in commodity areas the two firm structure there is often very bad for competition or the free firm structure so I think it you know we we really pay attention not just to the the current distributional concentration levels but also to the fundamentals as you rightly say around entry barriers you know how many people can come into this market and also what's the consumer dynamic what's the amount of pressure getting from the from from from big retailers in that market or from consumers directly absolutely one of the areas that we are most active thinking about in our economic analysis also briefly if I might just say I think you touched on a really interesting and good point around there are markets with lots of players in where nevertheless the competitive dynamic doesn't seem very good payday is certainly one where there are a lot of players the mortgage market insurance markets are all ones where there is scope for we feel a poor competitive dynamic notwithstanding a large number of players and if we do do a market inquiry into banking which of course we haven't yet decided a key question we'll be asking all these the inquiry group will be asking is are there barriers to entry are there ways in which new players can can come in with new technology new new new techniques or are there barriers that really make it very difficult for them to get in and some really interesting questions around that thank you Margaret we do thank you and good morning I really in the strategic goals which you've mentioned in the briefing you speak about developing new resources to help businesses understand law and so forth could you perhaps say tell us a little about that having greater appreciation in the board rooms around around the country to to understand what the law is in respect of competition law notably collusive behaviour and cartels and so on making sure that people understand that there are things that are not legitimate that are illegal and can be can lead to prosecution as we've prosecuted in the past having that awareness in the board room I think is very important we think is very important we want to put resource into making people understand what the law is what is permissible business behaviour and what is not you can't go around all the board rooms no but we can we can find as many forums as we can and find ways of communicating effectively with with business clearly it's a challenge and we won't be perfect in it we want to we want to put more resource into it though because we think it is a very important aspect of our work yes and and we we find that we're trying to to increase our direct links with business bodies in fact this week our meeting with the institute directors but also working with the professional advisors to businesses so last week i've met with the church institute of internal auditors we've worked in scotland a lot with Scottish competition law forum and with the law society as well we find that a joint approach often works very well so given that our criminal powers don't extend right across the country and for criminal prosecutions we need to work very closely obviously in scotland with the crown office and procurator physical service so um we just two months ago actually published a a joint article between ourselves and the crown office um in the uh journal of the law society in scotland about uh the new the new powers there are how we cooperate and the the legal changes that have been made so we do work very hard to make sure that both firms directly get sources of information from their uh from their representative groups but also that the advisers two firms whether they'd be lawyers or auditors or in some cases financial advisers are well informed about competition and consumer law and understand the consequences if you break it but also the the merits of of complying with with law with the law fully can i just add in terms of the Scottish context we've got a number of events that we've got planned between now and the end of the year specifically aimed at business organisations perhaps public sector organisations procurement organisations to help them understand a little bit more about our work and to support that we've recently published a number of little summaries um which we intend sort of circulating and getting into some of the business press just to help people understand in a fairly simple way what what things they are they should be looking out for and and also explaining how they can get in touch with us to tell us about what's what's happening in their area 60 second summaries that's right because we know how busy people are okay and you mentioned earlier in a response to i think it was mr mckenzie's question that you have 600 staff so how many of them are based in scotland at the moment we have uh two based in scotland the um the agencies that we were a merger as david was saying at the outset and uh we were a merger of the officer fair trade and competition commission both of whom were headquartered in london and uh for um we had the responsibility both to take on the existing staff but also um to take on one of the two offices and that decision was taken by uh biz ministers in fact before um we got underway and they chose one of those two offices as our future main base of operations so clearly in our initial formative stage we were very much concerned about bringing together those two bodies in a efficient way um to make sure that we were able to fulfil our statutory functions but as david said one thing that we gave absolute priority to um within the first month of uh getting started was to establish a network of offices uh right across the UK um which we didn't inherit so both in northern ireland uh in belfast in cardiff and here in edinburgh and um and we haven't tried to take an approach to say that um it's only in the regional or national offices that we get um uh the views about what is happening in in scotland or in wales or northern ireland we we want to say to all of the 600 make sure that you pay attention in your projects in your analysis in your work on the important differences that that do exist throughout the UK in times of how markets really function so we haven't rather than saying it's just this team the responsibility it's everybody's responsibility and we couldn't have been clearer or more consistent internally and emphasising that and i have to say you know staff have responded extremely positively and well to that it's too staff for scotland doesn't seem sufficient to cover all you know what you're talking about doing getting out to businesses and and you know providing all that information i see the role of uh the scotland office as being a door to the rest of the organisation and you know our role is to help colleagues in london um make the contacts that they need for the pieces of work that they're doing for tees of what's happening in scotland i mean that's my concern well i mean our our role in scotland is to help them with the expertise and put them in contact with the consumer bodies the business organizations we were talking about banking we had a team came up recently to talk to Scottish financial enterprise specifically about our banking work and you know i think that face to face contact between experts and people with knowledge is is is equally important as you know establishing a larger team who may really still only be able to skate along the surface of the volume of work that we do what i think is important is getting people up here being visible up here and our role in the scotland office is to provide the events and opportunities for them to do that and i mean our basic mode of work is to gather evidence and do and carry out analysis and our evidence gathering is absolutely right across the uk both from obviously written representations which are very important thing as well but also from the face to face meetings and site visits um and from market research as i was describing in our relation to to energy and banking and payday sectors there's been you know a real focus on on scotland within that and so i don't think that the the way in which institutionally we're we're structured um from a point of view of geographical location of staff doesn't really describe the amount of involvement that we have with with scotland as a market which is which is very heavy and constant okay thank you okay thank you i'm chick broody on the follow-up just very briefly um i'm glad to hear that um you're going to propagate your uh enterprise to businesses i'm sure uh a couple of high profile legal cases would help concentrate the minds of some who don't abide by the rules i wonder in terms of you've talked about the consumer benefit but of course the consumer can benefit if um there's more efficiency in government i just wonder i know you're very busy with it but i just wonder what thought you've given to uh looking at competition in in supply of products say medical products or defense products uh on your agenda are you going to look at that and see what impact hopefully more than you know half a billion pounds are you going to look at that at some stage in the future look at competition as it affects prices to government answer is is yes we do get the opportunity to to do that um and we take it wherever we can so sometimes that comes up in mergers um so to give a couple of examples we recently did a a merger case in relation to um health technology products which are used by the nhs um we also have uh two ongoing enforcement cases in relation to pharmaceuticals which have a huge cost for the nhs in scotland as well as other parts of the uk um and uh we uh we're also doing a merger case recently in relation to um some quarry businesses here uh the supply of asphalt um and our aggregates which obviously is a massive cost um for um for the public person really and um roads um we've done a uh a market inquiry in relation to aggregates as a whole which again had a strong Scottish dimension to it um so those uh would be some examples that come to mind of trying to i suppose look at at supply markets in those cases health care and um building materials um which end up being born by uh the public sector um the cost we're also um looking at uh rolling out a scheme now with the uh national audit office and audit scotland to try and help give better advice to people about how to conduct procurement and in particular what are signs of inclusive tendering which obviously isn't a you know is a hardcore criminal offence from the cartel law perspective um and to try and make sure that they both design their procurement in a way that's efficient and gives you know good good good incentives for players but also that they themselves are very alive to the possibility of this kind of inclusive tendering and that we're able to um get in involved in dealing with that um maybe the last one to mention that comes to mind is the um construction industry where the one of our predecessor bodies coft bought a very substantial cartel case involving 102 firms uh within the construction industry engaged in what's called cover pricing where people put a kind of a phony bid in effectively um and uh that resulted in substantial fines which um i hope will meet the the test you set for us which i appreciate of high profile legal cases to concentrate people's minds okay great okay thank you very much um i think our our time is up uh on behalf of the committee and i just say thank you to you all for coming along and answering our questions and i hope um maybe some of the questions given you you know a flavor of some of the interests the committee has and i hope we can continue with the level of engagement that some of us have had with with with Chilas Colby so far and you know we can perhaps get you back here on a future occasion to discuss how the various inquiries are are proceeding so thank you very much and at this point we'll suspend briefly and going to private session useful and we're delighted to come back on future occasions thank you thank you