Land Registry privatisation: competition watchdog raises monopoly fears

Competition and Markets Authority says privatised Land Registry could “degrade the terms of access to its monopoly data in order to weaken competition to its own commercial products”

By matt.foster

24 May 2016

The UK’s competition watchdog has become the latest organisation to warn ministers of the risks of privatising the Land Registry.

The government is looking to move the Land Registry — which keeps an up-to-date register of land ownership in England and Wales — to the private sector by 2017, as part of wider plans to raise £5bn from government asset sales.

The planned move – which comes after an attempt at part-privatisation was shelved in the last parliament – makes clear that the organisation’s registers would continue to be owned by government, but argues that “there is no need for the core functions” of the Land Registry to be delivered by its more than 4,500 civil service staff. 

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The government argues that privatisation will bring “new knowledge and investment into the organisation” and help to ensure the body “accelerates its transformation into a more efficient and effective service delivery organisation”.

But the plans have already drawn fire from trade unions, the Open Data Institute, and former chief Land Registrar John Manthorpe, who have warned that private ownership could introduce conflicts of interest into the wide range of transactions that Land Registry information underpins.

Now the Competition and Markets Authority — a non-ministerial department set up to oversee the proper working of markets — has joined those urging caution over the proposals.

In its response to the privatisation consultation being run by the Department for Business, Innovation and Skills (BIS), the CMA says  there are major benefits to the current Land Registry model, which it says allows “the innovative re-use of public information in digital products that benefit consumers, improve productivity, and support economic growth”.

And it warns that the government’s preferred model of a “privatised, vertically-integrated” Land Registry would be unlikely to promote “wide access to Land Registry data at cost-reflective prices”, regardless of any regulatory safeguards that may be built into the government’s contract with a private organisation.

The CMA says there is a “significant risk” that the government’s preferred “NewCo” model, which it notes would be “engaged in both the supply of monopoly data and the supply of
commercial products” would not “maintain or improve access to the monopoly data”.

And the NewCo could, it adds, “degrade the terms of access to its monopoly data in order to weaken competition to its own commercial products”.

The watchdog also draws on the history of government privatisations to warn that it “can be very difficult and time-consuming to solve problems arising from privatisations that give rise to anti-competitive market structures”.

According to the BIS consultation, a dedicated contract management team could remain in government to ensure the new company sticks to agreed service standards, retaining “auditing and monitoring rights” over the organisation. 

The CMA calls for tougher safeguards, however, saying a privatised Land Registry would need to be broken up into two separate “monopoly and commercial” division, with the monopoly side of the organisation prevented from developing commercial products to cut the risk of it abusing its market position.

There should also be an “enforced obligation on NewCo to provide Fair, Reasonable and Non-Discriminatory (FRAND) access to all monopoly data, not just data that are part of government’s open data policy,” the CMA adds.

And the watchdog recommends that any privatised Land Registry  be subject to full, independent economic regulation rather than the contract management model which the government has set its sights on.

“In particular, an independent economic regulator would be better placed than government to manage comprehensive regulatory pricing controls including powers to test for margin squeeze,”  the CMA says.

The government's consultation on the Land Registry plans runs until Thursday.

The Public and Commercial Services (PCS) union plans to mark the ending of the consultation by handing a petition against Land Registry privatisation — signed by more than 220,000 people — to business secretary Sajid Javid. PCS representatives will be joined by MPs and the petition’s author James Ferguson, the union said.

CMA Response to BIS Land Registry Consultation by CivilServiceWorld

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