CMA using ‘bad PR’, not just fines, to enforce consumer law

The Competition and Markets Authority (CMA) is using bad PR “as an enforcement tool”, according to leading industry lawyer Rhys Griffiths.

The CMA has new powers to rule on breaches of competition or consumer law, including price transparency, and Griffiths, partner and head of travel at Fox Williams, suggested the CMA is also using ‘soft’ tools to do this.

He noted the CMA has been issuing warning letters to businesses telling them they may be out of compliance, “then announcing this publicly”. 

“They know consumer-facing businesses don’t want negative publicity, so they ‘name and shame’,” he said.

Griffiths told the recent Abta Travel Law Seminar in London: “PR is being used as an enforcement tool.”

He described enforcement by the regulator as “a reputational event as well as a regulatory issue” and argued: “The CMA uses adverse publicity very effectively and it can be painful for travel companies.” 

Griffiths advised any business subject to a CMA investigation to try to avoid “suspicion that you’re being unhelpful”.

When the CMA opens an investigation, he noted: “It has powers to require you to provide information. It will want a lot of information and want it quickly. 

“A lot of companies have document destruction policies. You need to make sure you don’t routinely destroy documents the CMA may request.”

He warned: “You will probably feel stretched.”

Griffiths advised: “There are two ways to short circuit a CMA investigation – the first is to offer undertakings, to promise to stop doing the thing the CMA has started an action against.

"There is no formal admission of liability, but that may not be acceptable to the CMA because it does not get a fine and it won’t have a deterrent effect.”

He also noted: “If you breach your undertakings, the CMA can fine you.”

Griffiths added: “The second way is to offer a formal settlement – admit the breach. If the CMA accepts the settlement, it will give you a discount on the penalty depending how soon you offered it.”

Abta director of legal affairs Simon Bunce suggested: “This use of naming and shaming is a pretty blunt weapon.”