The £4.2m CMA sledgehammer over drip pricing that is totally out of proportion
There’s a particular kind of institutional vanity that mistakes noise for impact.
It’s particularly prevalent in Whitehall and abundant especially in those – like many in our government today – who have only ever worked in the bureaucratic state or legal profession.
The CMA’s triumphant announcement this week — it’s very first fine under the new Digital Markets, Competition and Consumers Act (DMCCA) — has that feel about it.
The offence? A £3 booking fee added at checkout rather than displayed upfront by the AA and BSM driving schools. The penalty: £4.2m, a press release, and the unmistakable satisfaction of a regulator road-testing its new powers on a famous name.
Drip pricing is genuinely irritating. A bit like all the stealth taxes government itself levies. I’m not here to defend sloppy website architecture. But irritating is not the same as harmful, and not all harms are created equal. There must still be a role for the free-will of consenting adults and the legal doctrine of caveat emptor (buyer beware).
The CMA has secured a refund for around 80,000 learner drivers. Nine pounds. Barely sufficient for one of Rachel Reeves’ expensive pints of beer and a packet of crisps. Not nothing — but not the systemic exploitation that warrants a multimillion-pound public flogging either.
What makes this harder to dismiss as routine enforcement is how the AA apparently behaved when challenged. They admitted the fault, fixed the website and agreed to automatic refunds — no hoops, no claim forms, no small print. Quietly and quickly sorted. Harm remedied.
But that’s not how bureaucracy works. The quest for more powers, more staff and more money requires a constant stream of headlines. Scalps to be gathered, never mind the unintended consequences.
I am aware this argument is uncomfortable in certain company. Drip pricing may have real victims elsewhere — the hidden resort fees, the insurance bolt-ons that appear only when you’re already late for a flight. The CMA’s instinct to use its new powers early is perhaps predictable.
But instinct and the execution are different things, and the execution here was to reach for the loudest available instrument against the most cooperative available target.
Business-bashing culture
Capital is not sentimental, but it is attentive. Investors — particularly the overseas investors the flatlining UK desperately needs to court — are not reading the detail of the DMCCA. They are seeing the public admonishments and a culture (to be fair not entirely unique to this government) of business-bashing.
When a 120-year-old household brand, having cooperated fully, receives a nine-figure headline penalty for a £3 checkout process flaw, the message that travels is not that the UK enforces its consumer laws but that any sense of proportion is in the far distance of the rear-view mirror.
Fast-moving businesses — particularly the fast-scaling, disruptive enterprises we need — run on velocity. Mistakes happen. The question is whether the regulatory environment treats mistakes as things to be corrected or as opportunities to be prosecuted. The government have made much of reforming the culture of the CMA to promote the UK’s competitiveness. Many would argue they have failed that fence at its first hurdle.
Proportionality isn’t a loophole. It isn’t leniency dressed up in polite language. It is the difference between regulation that shapes behaviour and regulation that seeks to perform virtue. The CMA has demonstrated, quite capably, that it can issue a large fine. What it hasn’t demonstrated is judgment — the harder, quieter quality that actually builds the trust between regulators and markets that makes an economy function well.
Four point two million pounds in penalties. Somewhere in that arithmetic is a question about what this exercise was actually for. And I’m not sure the CMA has an answer that speaks to the challenges that we face in Britain today.
Andrew Griffith is the Conservative Shadow Business Secretary