A leading industry lawyer has described new powers the government proposes to give the Competition and Markets Authority (CMA) to enforce consumer law as “draconian”.
The CMA will be able to fine companies up to 10% of their global annual turnover for failing to comply with the Package Travel Regulations (PTRs) and other consumer protection laws. At present, the CMA can’t impose fines for breaches of consumer law without going to court.
Rhys Griffiths, partner and head of travel at law firm Fox Williams, warned use of the powers would be “intended to send a message to the entire industry”.
More: Comment: Firms should beware new CMA powers
The powers are laid out in the government’s ‘Reforming Competition and Consumer Policy’ paper published by the Department for Business (BEIS) in April in response to a consultation last year.
Yet the radical enhancement of CMA powers is not matched by reform of the PTRs, which BEIS states will be limited to changing the PTR information requirements, “improving the flexibility of insolvency protection provisions”
for non-flight packages and simplifying the definition of a Linked Travel Arrangement (LTA) – something few businesses sell.
BEIS notes the consultation workshops held with the industry last year “highlighted the main problem causing delays in consumers receiving refunds” during Covid was that “many organisers struggled to get money back from suppliers”. But it does not address the issue.
Instead, the CMA will be able “to decide for itself where consumer protection law has been breached” and “when a business breaks the law, be able to impose a penalty of up to 10% of global annual turnover”.
The CMA will also gain new powers to sanction companies that breach undertakings they give or fail to provide information to the CMA.
Writing in this week’s Travel Weekly, Griffiths notes: “The CMA has become increasingly active in the travel sector [and] took enforcement action against various travel companies.
“The next time the CMA takes action, it will have significantly more draconian powers to impose penalties on travel companies without having to go to court.”
He warned: “Non-compliance will bring significant and painful enforcement.”