Orders of the Day — Competition Bill [Lords]

House of Commons, 8 July 1998.

EXCLUDED AGREEMENTS

John Redwood (Conservative, Wokingham)

I beg to move amendment No. 2, in page 2, line 42, at end insert 'or— (e) resale price maintenance for over-the-counter medicines'.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

With this, it will be convenient to discuss new clause 4—Exempted goods— '() The Chapter I prohibition does not apply to an agreement relating to the resale price of goods of a class which are the subject of an order made under section 14 of the Resale Prices Act 1976 (exemption of goods by the court).'.

John Redwood (Conservative, Wokingham)

I am grateful for this opportunity to speak on amendment No. 2 and comment on the rather good new clause tabled by my hon. Friend the Member for South Cambridgeshire (Mr. Lansley), which directly bears on the same problem. In many of the debates on the Bill, the Opposition have pointed out that one of its unfortunate consequences—which I trust was unforeseen by those who drafted it—will be the closure of many smaller pharmacies. We have continually argued that the Bill makes it more likely that resale price maintenance will have to go. We have had confirmation of that view and various explanations from Ministers in Committee. Ministers would like the nation to believe that the threat comes from Brussels rather than from their actions and legislation. However, we will seek to show that pharmacies are threatened by the Bill and the Government, as well as by the possible threat from Brussels to which Ministers like to refer. There are some agreed matters in this debate. It is agreed that, if resale price maintenance is abolished, some pharmacies will close. Indeed, Ministers have suggested that hundreds will close. It is common ground for about 170 Labour Members and for Opposition Members that that would be extremely damaging.

Tim Boswell (Conservative, Daventry)

Where are they?

John Redwood (Conservative, Wokingham)

My hon. Friend asks where all those Labour Members are. It would be good to have them here expressing concern about their local pharmacies. However, the Whip on duty, who is now going through contortions trying to show that he has a sense of humour, has done a good job of ensuring that there will be no dissent and no expression of opinion or strong views by Labour Members in defence of the pharmacies that they know will close.

Nigel Griffiths (Labour, Edinburgh South)

Perhaps the right hon. Gentleman can tell us why the Community Pharmacy Action Group does not support the amendments.

John Redwood (Conservative, Wokingham)

I trust that the Minister will restrain his impatience a little, because it will give me great pleasure later in my analysis to take the House through the position of the Community Pharmacy Action Group and its advisers, Lawson Lucas Mendelsohn. It is agreed that there is a substantial threat of closure, and that it comes from the abolition of resale price maintenance. It is also agreed, I think, that we can go this far in asserting agreement—that some combination of possible Brussels investigation and this legislation will cause the end of resale price maintenance. The Minister will doubtless say, as he did in Committee, that there is an investigation under the existing system, but he should remember that there have been investigations before. The most recent concluded that the arrangements were in the public interest. If the Bill did not change the law, it would be possible for the retail pharmacies to win their case under existing law and arrangements as they did before, and continue thereafter to benefit from the advantages that resale price maintenance brings them. It may help the House to remember why RPM is important to pharmacies, and why there are sensible alternatives for customers who rate price above service. This is important, because the typical local or rural pharmacy provides service and advice. That is often expensive. The number of customers may be limited, but they appreciate the whole service—not just the ability to purchase the goods once the right one has been identified. To sustain the considerable costs of this service, there is a system of recommended and maintained prices which enable pharmacies to recoup the costs of providing the full service and advice through a slightly higher margin than would otherwise be the case.

David Chidgey (Liberal Democrat, Eastleigh)

Does the right hon. Gentleman agree that retail price maintenance would become insignificant if the professional services provided by pharmacists were properly rewarded? Should not the President of the Board of Trade talk to her Cabinet colleagues about getting the Department of Health to pay properly on time, rather than keeping chemists waiting 90 days to pay bills?

John Redwood (Conservative, Wokingham)

The hon. Gentleman makes an excellent suggestion. It is a pity that the President of the Board of Trade is not present to hear that advice. I trust that her Minister of State or the Minister for Competition and Consumer Affairs will pass it on. I do not wish to repeat the allegation made outside this House that she is insignificant. She holds an important office of state, and I hope that she will consider that kind suggestion from her allies in government, the Liberals. I associate the official Opposition with the idea that the NHS should pay its bills on time. That would help the cash flow of many small and larger pharmacies. Pharmacies need something more than the NHS paying its bills on time. They have traditionally enjoyed the protection of slightly higher prices, which provide them with extra money. That has been found to be in the public interest under the law that the Government are trying to replace.

Stephen Ladyman (Labour, South Thanet)

Given the right hon. Gentleman's comments about the presence of my right hon. and Friends and the powerful case that he is making for community pharmacies, has he wondered where the hon. Member for Tunbridge Wells (Mr. Norman) is this afternoon? As the chairman of the Asda supermarket chain, he launched the complaint against resale price maintenance with the restrictive trade practices court. Why is he not here to debate these important matters?

John Redwood (Conservative, Wokingham)

It shows my hon. Friend's strong sense of conflict of interest that he does not wish to be here to make the business case that is firmly held by Asda. He knows that the official Opposition strongly disagree on this occasion with Asda, fine company though it is. We will vote in favour of support for retail pharmacies. I am not a spokesman for my hon. Friend the Member for Tunbridge Wells (Mr. Norman). He is wisely not here tonight because he has other important business. Although the case is now being taken forward by the executive management of Asda and not by my hon. Friend, his absence shows how sensitive he is on this important point. I should have thought that Labour Members would want to give him credit for that, rather than trying to coax him into making a statement that they would doubtless misconstrue against him.

Stephen Ladyman (Labour, South Thanet)

I am grateful to the right hon. Gentleman for his continued patience. I understand the conflict of interest that has been created. Does he have any information about which Lobby the hon. Member for Tunbridge Wells will join this evening?

John Redwood (Conservative, Wokingham)

I have already made it clear that I do not speak on this occasion for my hon. Friend the Member for Tunbridge Wells. I speak for the Opposition, and I am making our position clear. I suggest that we move on to more weighty matters that relate to the future of many of retail pharmacies. [Laughter.] Many Labour Members think it is amusing and that the only interesting thing is the position of my my hon. Friend the Member for Tunbridge Wells, who is a fine Member of this House. They should concentrate on what worries their constituents, who are not asking about my hon. Friend's position. They are asking what, if anything, the Government will do to help community pharmacies. Will they tonight, by their inaction and vague statements, sign the death warrant of hundreds of small pharmacies, as I think they will; or will they listen to the urging of the Opposition, and, for a change, do something that might help those businesses?

Nigel Griffiths (Labour, Edinburgh South)

The right hon. Gentleman promised the House that he would answer the question I put to him: why is the Community Pharmacy Action Group not supporting the amendment? It is because it supports us.

John Redwood (Conservative, Wokingham)

Life is not that simple. I must again ask the Minister to contain his impatience. His hon. Friend the Member for South Thanet (Dr. Ladyman) has been interrupting on less important matters, and I have been extending to him the courtesy of answering his point. The Minister makes a more important point that is worthy of a longer reply, which I shall give at the right point in my argument; but it is right that I first explain the general position: the threat of closures, the sort of services that the pharmacies offer, and why they are important in local communities. If someone, even in one of those local communities, thinks that price is far more important than service and the branded medicine, that person can travel to the nearest large supermarket and take advantage of the excellent goods sold in, for example, the supermarket that used to be run by my hon. Friend the Member for Tunbridge Wells. There, and in other, rival and equally competitive, supermarkets—I do not wish to recommend any particular supermarket—can be found cheaper medicines, equivalent to the branded goods, sold on price. We are not trying to stifle choice in the marketplace, or to prevent people from buying cheap medicines if price is important to them, but we think that, in this unique situation—we do not recommend similar measures for other industries—it is worth preserving the system of RPM that has served local communities so well in the past and could do so in future. The House will want to know how we propose to achieve that. There are two mechanisms on offer, in amendment No. 2 and in new clause 4. The amendment tabled in my name on behalf of the official Opposition does the job in a straightforward way, providing that, if the competition authorities wished to change their minds on the issue, Ministers would have to come back to the House to amend the legislation. It is an old technique and a democratic one. I know that such things are going out of fashion with the Government, but I recommend it to the House, as it would ensure that the matter would be under democratic control and properly debated. The amendment provides a lock on the door, unless and until a majority party in future wished to change the arrangements. It works simply, by adding resale price maintenance for over-the-counter medicines to the list of exemptions in clause 3, which sets out the main prohibition regime and exemptions to it. If the House finds the amendment a little too dramatic, because it would clearly do the job, there is an alternative in the form of new clause 4, standing in the name of my hon. Friend the Member for South Cambridgeshire. If the Government chose to accept that instead of the really strong version, it would enable the Government to continue to exempt those goods which are the subject of an order made under section 14 of the Resale Prices Act 1976". The new clause would preserve the exemption all the time that the court exemption is in existence; and the court would still have to satisfy itself about the particular case. That, too, would receive the blessing of the official Opposition, if that is the best that the Government are prepared to accept in order to get themselves out of the hole of their own making. Ministers argued in Committee—as doubtless the Minister will argue tonight—that there is no point in taking such action in British law, because Brussels is determined to end the system of RPM, and that we must allow Brussels to have its way. However, instead of leaving it to Brussels to do that, Ministers say that the issue must be examined by the courts here: if the courts find in favour of the current practice, it will go, albeit over some longer period; and if the courts find against it, the courts will impose their own timetable for its removal. It is not much fun for the retail pharmacies fighting the case before the court to know that, either way, they will lose, but there may be some debate about how quickly the system is phased out. I find it quite extraordinary that the Government take such a view of Brussels as they have done on this subject. In the fine soundbites to which we are often treated, we are told that the Government intend to be influential in Brussels. We are told that, by having made so many concessions to Brussels—on the social chapter and the treaty of Amsterdam, to name but two occasions—they are now in an extremely good position to get all sorts of free gifts back from Brussels. Therefore, we ask the Minister to put up on this matter, and take a trip to Brussels. So generous am I in this respect that I should be happy to see public expenditure rise by the price of a return air fare to Brussels, if only the Minister could promise me that he would use that trip to insist on a better answer for the British retail pharmacy sector from Brussels. The Minister must by now have had enough dealings with Brussels to know that, in Brussels, matters are often more in the nature of a negotiation than of a legal construct. Although they have legal form under treaties and court procedures, in practice many matters are settled, not in the normal judicial way as we would understand it, but behind closed doors by bargains between politicians and/or senior officials. The matter before us is clearly a case in which the Government could use their influence—if they have any—to try to get Brussels to agree that RPM for retail pharmacies in this country is in the public interest, as was found under the previous Government, and that Brussels should recognise that, and not be too crass in its application of competition law.

Stephen Ladyman (Labour, South Thanet)

Will the right hon. Gentleman clarify his remarks? Is he telling the House that he would prefer, and that we and our community pharmacies should put our trust in a deal struck behind closed doors with civil servants in Brussels, rather than in a British court, the restrictive practices court, and the current arrangements?

John Redwood (Conservative, Wokingham)

No—the hon. Gentleman is being uncharacteristically slow-witted. I have made it clear that I want British parliamentary democracy to settle the issue. As proof that the Government have influence in Brussels—I do not believe they do, but I am always willing to be proved wrong—I want them to go there and tell Brussels to get its tanks off the lawns of our retail pharmacies. That is a simple proposition, and I am explaining, for the benefit of the Minister, how Brussels works. I am not saying that I approve of that system; I am saying that that is the system, that it is the one within which the Government must work, and that, on this occasion, they should do so in the interests of British democracy—so that we can settle the matter here—and the interests of our constituents, who would clearly like the RPM system to be maintained. I believe that the Government's influence in Brussels would be greatly strengthened if they accepted either amendment No. 2 or new clause 4—the position would be clearest if the official Opposition's amendment were accepted. They could go to Brussels and say, "That is the will of the whole House of Commons," because not only would they carry with them tonight all the Opposition Members, as far as I know, but they would have all the Government Members' votes, if the Minister asked the Whip to get people to stand on their heads again and vote more in line with their conscience. The whole House of Commons could be united for once, in defence of a good public service and a good British interest. Surely that would have some sway with those in Brussels when trying to judge both the political mood in this country and how much rope they would have to change our minds for us. Making the amendment would give a strong signal, and I recommend it strongly to the Government. We know that the United Kingdom authorities are investigating, and I dare say the Minister will say that that cannot be stopped, but there is more chance of that investigation coming to the right conclusion from the pharmacies' point of view if the House clearly expresses its views.

Nigel Griffiths (Labour, Edinburgh South)

I am not going to argue that that investigation cannot be stopped. I suspect that it could be stopped if the vice-chairman of the Conservative party were persuaded to withdraw the complaint that he lodged on behalf of his company. Will the right hon. Gentleman support me in making such a request?

John Redwood (Conservative, Wokingham)

I am suggesting that the complaint could be stopped by changing the law, which is what is on offer this evening. I have no doubt that I would not be able to persuade the Asda company, which has moved on from the days when my hon. Friend the Member for Tunbridge Wells was in sole charge and has new executive management, to drop its complaint. The executive board members would meet and say, no, they want to pursue the complaint, because it is in their business interests so to do. I do not object to that, because I believe in a free society in which people can pursue their legitimate interests. All I ask is that we know where people are coming from, just as the House asks hon. Members to reveal whether they are coming from a particular position in cases where people should be aware of their interest. I am saying that, on this occasion, we can change the process if we wish by primary legislation. We could do so tonight and that would send a clear signal to the investigating authorities or it could even overturn the investigation itself. The Government have the power to do something if they wish. That is all I am trying to establish at this stage in my argument. 5.30 pm I shall now deal with the issue that has been the passion of the Under-Secretary—the attitude of the Community Pharmacy Action Group. As he has asked about it, perhaps the House will give me leave to go into some detail about the different positions that it has adopted during the passage of the legislation. When the Community Pharmacy Action Group first alighted on the issue, it considered it carefully and drafted a comprehensive paper on the changes it thought were needed to the Bill in order to protect the interests of its members. It wrote to Mr. Mark Hickson of the Competition Bill team at the Department of Trade and Industry—I believe that that letter has been circulated to all interested Members. The action group stated that it was campaigning for the continuance of resale price maintenance on over-the-counter medicines. It said that its response seeks to make the case for the retention of RPM on OTC medicines and proposes amendments to the draft Bill that we believe will be necessary if the present agreement is to have any chance of surviving…we have made it clear in the submission that our preferred option would be the inclusion in the new Competition Bill of a specific exemption for the present agreement based on contemporary public interest grounds. We have sought to be constructive and hope that you will incorporate this in the final version of the Bill. I agree with that advice. I think that the action group was sensible, and I told it so when I was in touch. The group did not tell me or my staff at the time that it was working in conjunction with LLM, the lobby firm. I dealt directly with the action group, and the telephone number that I had was the telephone number of the Royal Pharmaceutical Society of Great Britain. The letterhead made it clear that the Community Pharmacy Action Group was extremely well supported, and that it consisted of the Royal Pharmaceutical Society, the National Pharmaceutical Association, the Pharmaceutical Services Negotiating Committee, the Scottish Pharmaceutical General Council, the Company Chemists Association, the Proprietary Articles Trade Association, the British Association of Pharmaceutical Wholesalers, the Proprietary Association of Great Britain, and the Co-operative Pharmacy Technical Panel. The action group led me to believe that it spoke for all those bodies, which in turn spoke for all their members. I believed that it was an extremely wide-ranging and broadly based alliance. I and my office continued to be in touch with the action group through the Royal Pharmaceutical Society. Today, I received a letter dated 6 July which changed the line that the action group was recommending in some respects, although not as much as the Under-Secretary is suggesting. For example, it says that it is continuing to oppose the action of the European Community on all this. The letter says: I have seen the letter from the Commission, and the Community Pharmacy Action Group is appalled at this threat of legal action"— that is, from the Commission. The EU appears to be seeking, whether of its own motion or at the request of the OFT is unknown, to interfere in the UK's internal market. The effect of the threat from the Commission is that we have been presented with a choice: fight in the UK courts or in Europe. The letter goes on to say that it firmly believes that resale price maintenance serves the British public well, particularly those who depend on the local chemist. The action group does not believe that Europe has a role in deciding its future, and would prefer UK to European jurisdiction. At the end of the letter, it says, rather surprisingly, that the action group no longer supports or seeks further amendments to the Bill. I decided to telephone the action group today to seek clarification on that amazing change of heart from the strong and sensible position that was adopted as long ago as September, and which had continued throughout the Committee stage of the Bill. I was surprised to find that the telephone number under the letterhead of the Community Pharmacy Action Group was that of LLM. When I asked to speak to the chairman of the action group, I was told that he was not there, but that I could talk to the account executive who was handling the case. I was happy to do so. However, the account executive became rather shy, and said that, since it was me, perhaps it would be better if I continued talking to the chairman with whom I had dealt in the past. As soon as I put down the telephone from the account executive at LLM, I received a telephone call from the chairman, Mr. David Sharpe, trying to explain the change of heart. I have serious questions for the Under-Secretary in the light of these extraordinary exchanges. I should like to know whether the meetings with the President of the Board of Trade and the Under-Secretary were arranged by LLM. Was LLM present at the meetings.

Ian Bruce (Conservative, South Dorset)

The Under-Secretary is not listening.

John Redwood (Conservative, Wokingham)

I do not mind whether or not he is listening. He has some questions to answer and, one way or another, he will have to answer them, for the House and for the benefit of the nation. Was LLM present at the meetings? Did the Under-Secretary have private meetings or telephone calls with LLM, and did he tell LLM that it would be helpful to get that group of small pharmacies to back off from pursuing what is obviously an embarrassing amendment for the Government? I do not know whether that happened, but we have a right to know whether there were any such conversations or private meetings or telephone calls between the Under-Secretary and LLM on this issue without the client, the Community Pharmacy Action Group, being present. We should like to know whether there was any sort of deal. We see in the newspapers that lobbyists believe that one can do deals with the Government. Was there a deal? If so, can we please know its terms, so that we can judge whether it was a good deal?

Stephen Ladyman (Labour, South Thanet)

I wonder what point the right hon. Gentleman is making. Is there not a fraction of possibility that the action group, which has been represented all along by people supporting its interests and helping it to present its case, has considered the facts and concluded that the Government are right and have been right all along? Could it be that the group believes that the Government have been advising it correctly throughout, and has now decided to support the Government's position?

John Redwood (Conservative, Wokingham)

That is a theoretical possibility, but there are many other more interesting ones that are considerably more likely, and I shall explain why. There is an inaccuracy in the comments of the hon. Member for South Thanet. Mrs. Sharpe, the wife of the chairman of the group, confirmed on the telephone to me this afternoon that she and Mr. Sharp had never informed me or my staff that LLM was involved in the case. I was not aware that that was the position. I prefer to see people directly. I do not like the intermediary of a lobbyist. I take the view that we are all paid to represent good causes in the House, and that we are the natural channels for a good case. A good case should go directly to the Minister and persuade him, or it should come through me and my hon. Friends or through the constituency Member, so that we can make our judgments about whether it is a good case, which we wish to back without remuneration, or whether it is not a good case, which should be politely referred to someone else, or that those involved should be told that we are not in agreement. That is the purpose of the House. We must make sure that people can get redress for legitimate grievances. I do not like to feel that I have been in any way misled about who is acting for different people, and what sort of game is being played. I want to get back to the Government's involvement. We need to know how much the Government knew and how they were able to persuade either the advisers or the Community Pharmacy Action Group, or both, that this was not the appropriate way to proceed. The letter from the action group, and my subsequent discussions with it, have made it clear that something changed, and that it came to believe that Brussels would pursue this case even if the United Kingdom protected the position in legislation. That is not a new fact. I have known that that was a possibility for months, ever since I began handling this Bill. I believe that the Under-Secretary made that clear in his defence of the Government's position in Committee. The Under-Secretary has not suddenly come to the view that Brussels might take this up independently. It has been a well-known threat for a long time. All my planning to help the community pharmacies, which I wish to do, has been predicated on the fact that Brussels could interfere. I have constantly urged the Government to take Brussels seriously, and to go there to try to sort it out.

Nigel Griffiths (Labour, Edinburgh South)

The letter to which the right hon. Gentleman refers specifically says that the author, David Sharp, has seen the letter from the Commission. That is the letter of 8 May, which I believe changed things. Has the right hon. Gentleman seen the letter because it has been available?

John Redwood (Conservative, Wokingham)

That letter certainly did not change my view, because, since last year, when I first examined the Bill, I have of course been aware that Brussels might well pursue the case separately, or that there could be separate complaints to Brussels. I thought that the aim of the Bill was to sort out double jeopardy. We have been telling Ministers that it will be very difficult to do so, and, as the Under-Secretary will remember, I have been urging the Government to go to Brussels expressly to sort out that point. It is clear from his attitude tonight that he has not done so. He is not about to say, "The right hon. Gentleman is wasting his breath, because I have solved the problem. I have been to Brussels, and there is agreement that Britain should be able to settle this issue in the interests of retail pharmacists by maintaining resale price maintenance." The Government have given us fine words, saying that they support small pharmacists, as do the rest of us, that RPM would help, and that some pharmacists will close if it is not maintained. However, they say to the pharmacists, "Pity us, because wicked Brussels will sort out the problem in a way that we do not want, so you should back off and not embarrass us in the House by backing amendments that would solve your problem."

Oliver Letwin (Conservative, West Dorset)

Does my right hon. Friend agree that it would be interesting to know also what conversations between the Minister, his colleagues and the Commission preceded the emission of the letter from the Commission? It would be interesting to know precisely what requests were or were not made to the Commission, formally or informally, for assistance to get the Government off the hook by issuing such a letter, which was, as my right hon. Friend has pointed out, always a possibility. Should not the Minister give us a travelogue to make it clear exactly what contact he had?

John Redwood (Conservative, Wokingham)

As always, my hon. Friend has put his finger on an extremely important point. It is possible that the Under-Secretary went to Brussels and implied that it would be very helpful to Britain if such a letter were written, because it would get him off the hook and avoid a potential large Government Back-Bench rebellion. He clearly has a vested interest in trying to explain to his hon. Friends and the nation that he has no power to do anything, that he is only the Minister and cannot be expected to sort out the problem, and that it is all the fault of Brussels. Now that he has a letter, he is able, directly or with the help of friends—perhaps another part of the magic crony circle is at work—to get decent people to back off because the Government are misinforming them about the true state of play of the relative powers of the House and Brussels.

Ian Bruce (Conservative, South Dorset)

I want the Minister to have the full question put to him. Although my hon. Friend the Member for West Dorset (Mr. Letwin) was very forensic, he did not mention that, when deals are done for the Department of Trade and Industry in Brussels or anywhere else, they are normally conducted by people from the Treasury or No. 10, or possibly by "Tony's cronies". We ought to know exactly who, if anybody, has been to the Commission to ask about these matters.

John Redwood (Conservative, Wokingham)

My hon. Friend is absolutely right, and he has enlarged the question in a way that will further embarrass the Government. We should like to know more about the web of influence and lobbyism that seems to have been working. Perhaps we have here the first case of cash for no influence. This might be the first case of a group being asked to pay money to a lobby group only to be told that it should obey the Government and not influence them for the better. I feel rather sorry for those who thought that their interests were being looked after, who now find that that is not being done properly in the way that they would expect. We need to know rather more about their change of heart. Suffice it to say that Her Majesty's Opposition—and, I trust, other Opposition Members—wish to give proper support to community pharmacists. This is a problem which the Government could solve by using British law if they wanted to. Ministers should go to Brussels and argue the case for our businesses and the services in our communities, instead of using Brussels in an attempt to stifle a Back-Bench rebellion that would be very embarrassing for them. The Government should understand that community pharmacies in this country, as Health Ministers recognise, provide an extremely important service, which is now at risk, not just because of Brussels, but because of the Government's actions and inactions. There are many questions that the Under-Secretary should answer before we finish the debate.

Nigel Beard (Labour, Bexleyheath and Crayford)

This argument is not new. There is no division in the House about the wish to help retail pharmacies and maintain them in their role, which is invaluable to the communities they serve. At issue are the two approaches to safeguarding their position. The approach outlined by the Government is to let the appeal to the Office of Fair Trading continue because, if it is successful, the Bill will allow the agreement to be maintained for five years. The appeal is highly likely to be successful, given that the Office of Fair Trading has previously adjudicated on the agreement and found it to be in the public interest. The proposed line would protect retail pharmacies' position for about five years, during which they could adjust to the new climate imposed by Brussels and the Bill. 5.45 pm The right hon. Member for Wokingham (Mr. Redwood), however, proposes to hard-wire into the Bill perpetual protection for resale price maintenance for retail pharmacies. He tabled the amendment knowing that it is in breach of, or counter to, the principles of the legislation—articles 85 and 86—with which the Bill harmonises UK law. It is known also that the only outcome of pursuing the right hon. Gentleman's approach is that, if it were successful, Brussels would take over, investigate and, very likely, decide that resale price maintenance should be stopped. The pharmaceutical industry would then be in far greater jeopardy than if the Government's course were followed. We came to the nub of the issue in the right hon. Gentleman's winding up. He is challenging the Government to go to Brussels and demand that the law is changed, knowing very well what the answer would be. What marks out the true obsessive is that, whatever the issue, he returns to the point of obsession, which in the right hon. Gentleman's case is Europe. We realise the true nature of the Opposition: the amendment has nothing to do with helping retail pharmacies; it is an attempt, yet again, to stage a confrontation with Europe to demonstrate the likely infringement of the sovereignty of British law. We have heard that case before and it is being rehearsed in exactly the same form tonight. At issue is an attempt to dupe the retail pharmacies.

John Redwood (Conservative, Wokingham)

Will the hon. Gentleman explain what is wrong with the idea of Ministers going to Brussels to try to achieve a sensible exemption for a British industry that will otherwise be damaged?

Nigel Beard (Labour, Bexleyheath and Crayford)

What is wrong is that the right hon. Gentleman knows that that is inconsistent with the Brussels legislation under which the Bill falls. The Bill tries to harmonise British legislation with that of Brussels so that—this is the precise point that the right hon. Gentleman made earlier—companies will not face double jeopardy and the uncertainties and expense of two legislative regimes. The right hon. Gentleman knows that, and all the legal advice that he has been given must have told him that, yet he persists with his amendment, knowing that it could lead only to a confrontation that cannot be won. Retail pharmacies would be damaged by the amendment, and if they adopted the right hon. Gentleman as a friend they would have a false friend. However, they are more sensible, which is why they sent the right hon. Gentleman the letter he read out earlier. They will not be duped by this attempt to use them to stage a stunt that goes against Brussels and highlights the issue of European legislation and British sovereignty. I am thankful that the pharmaceutical industry has more sense than to listen to Opposition Members.

Andrew Lansley (Conservative, South Cambridgeshire)

I am grateful for the opportunity to support amendment No. 2 and to speak to new clause 4, which stands in my name. My right hon. Friend the Member for Wokingham (Mr. Redwood) was right to emphasise the desirability of basing one's arguments, in the first instance, on what may be learned by talking to community pharmacists. As members of the Committee know, I was at pains to talk to staff of community pharmacies in my constituency and I instanced one in particular, in the village of Gamlingay. The pharmacy in Gamlingay fully illustrates the predicament of community pharmacies. They often have a limited catchment area that does not give them a very high rate of return, but instrumental in that rate of return is the mark-up they are able to achieve on over-the-counter medicines, given their difficulty—to which the hon. Member for Eastleigh (Mr. Chidgey) rightly drew attention—in securing an adequate rate of return on the provision of prescription medicines and the valuable advice service that pharmacists provide. In the example I offered, the pharmacist gave 15 consultations a day. Each of those 15 consultations would have resulted in a general practice consultation but for the presence of a pharmacist. It is the only opportunity many people in the village have to access to a local pharmacy. The suggested alternative of a visit to a large, multiple superstore is not available within seven or eight miles. There is every reason, therefore, to support community pharmacies. I understand from our debate in Committee that support for community pharmacies is not confined to the Opposition; Labour Members' support is evident. I shall not detain the House by quoting them, but Second Reading speeches by the hon. Member for South Thanet (Dr. Ladyman) and others gave particular support to community pharmacies. The question is whether, in Committee, and especially in relation to the schedule introduced by the Under-Secretary to provide for new transitional provisions, the Government have provided the protection the House seeks for community pharmacies and for resale price maintenance on over-the-counter medicines in the long run. I say "in the long run" because it seems to me that when the other place made amendments and they were, initially, considered by the Committee, what was proposed presented a problem. At that stage, the case before the restrictive trade practices court would have been stayed and there would have been an accusation to be made to the Commission. This is at the heart of the problem. There would have been an accusation to be made to the Commission that the case had not been considered on its merits, including the public interest and general public health interests additional to the competition considerations; that the legislation had simply obviated—circumvented—proper consideration of those issues; and that, therefore, the Commission should take it upon itself to consider the issues. For that reason, it was probably right for the amendments made in another place to be overturned in Committee and to be substituted by measures designed to give direct effect in the Bill to the House's intention to support resale price maintenance on over-the-counter medicines. However, the Government have gone about it in a way that has limitations, which were clear in Committee. Although the Government rest upon the question of the court considering the issue, if the court considers the issue and concludes that resale price maintenance does not act against the public interest, a protection is built into the Bill—a protection, through transitional provisions, for five years. However, there is no provision in the schedule to extend the transitional period further. That brings us back to the letter that the Under-Secretary was at pains to speak about, and on which my right hon. Friend the Member for Wokingham rightly responded. The letter from the Community Pharmacy Action Group illustrates the point. The CPAG has been presented with two unpalatable options. The more unpalatable of the two is that the court goes ahead and comes to a conclusion without Government support for community pharmacies before the court—or, indeed, without the Government going to the Commission and saying, "You should rest on the court's decision". On the other hand, the action group is told, "Do not press the amendments; do not look for anything else; do not embarrass the Government on Report. Say that the Government have done what is required, and you will get Government support"—presumably by way of evidence, or whatever, before the restrictive trade practices court—"and you will subsequently benefit from the five-year transitional provision." I say that with the evidence that, in the letter referred to, Mr. David Sharpe, chairman of the CPAG, says: On the understanding that the Government will continue to support retaining the network of community pharmacies, we will not seek further amendments to the Bill". When the Under-Secretary replies to the debate, will he tell us the meaning of the phrase, On the understanding that the Government will continue to support retaining the network of community pharmacies"? That is the key question.

John Redwood (Conservative, Wokingham)

My hon. Friend is right. Does he agree that the Under-Secretary would be more convincing if he published the letter or evidence that he sent to Brussels in defence of our pharmacists before he received the letter giving him a rather dusty answer, and if he published the evidence that he intends to give the court, also defending our pharmacies?

Andrew Lansley (Conservative, South Cambridgeshire)

I am grateful to my right hon. Friend. I hope that the Under-Secretary takes up that challenge; it would be very enlightening if he did. However, the response from the Commission—the Under-Secretary may interrupt me if I am wrong—referred to on 8 May, is essentially about whether the Commission would intervene if the legislation were amended, as happened in another place, to stay proceedings before the restrictive trade practices court. That is not the question before us now, which is: will the Commission seek to intervene if the House legislates on the basis of resting on the decision of the restrictive trade practices court? The view that the Under-Secretary expressed in Committee was pretty clear on that point. He said: I reached the conclusion…that the Commission is looking to the restrictive practices court to examine the evidence and to make a ruling."—[Official Report, Standing Committee G, 23 June 1998; c. 608.] That is in the context of a conclusion reached by Richard Whish, an eminent competition lawyer, that the Commission is capable of taking into account general public health interests in its examination of a case under article 85 of the treaty on European Union. The proposition seems to be, therefore, that the Commission would be able to rest upon the public interest test applied by the restrictive trade practices court and, on that basis, not pursue an article 85 investigation if that court concluded that RPM was not acting against the public interest. That brings us back to amendment No. 2 and new clause 4. They differ from what the Government propose in the following important respect. The Government are proposing that community pharmacies should be protected for five years. I do not understand it to be the intention of the House that community pharmacies should be given a stay of execution. My understanding of the debate, including the contributions made on Second Reading and in Committee by Labour Members, was that we had concluded that, subject to an examination of the evidence by the court, there was a belief in the House that the process of resale price maintenance on over-the-counter medicines acted in the public interest—that it was not necessarily anti-competitive in any case, but that, in addition, it was justified on general public interest grounds. We had concluded that, if we moved to an article 85-style or chapter 1 prohibition-style investigation, the narrower gateway—moving from a public interest examination to a simply competition examination without taking broader public interest criteria into account in this instance—might well lead to a narrower conclusion that was prejudicial to community pharmacies. We concluded that that was undesirable. The House therefore wished to move toward protection for community pharmacies and to vest that in the legislation. The Government are offering only five years' protection, but the wish of the House is to go further. Devices are available to achieve that: amendment No. 2 and new clause 4 would be perfectly adequate for the purpose. The proposition before the House is that we should not limit the protection of community pharmacies by a stay of execution but should rest on the court's decision that RPM on over-the-counter medicines is not against the public interest. I hope that the Government will respond positively to the amendment and the new clause.

Phyllis Starkey (Labour, Milton Keynes South West)

I shall expand on the points that were made by my hon. Friend the Member for Bexleyheath and Crayford (Mr. Beard). The amendment's stated aim, which was outlined by the right hon. Member for Wokingham (Mr. Redwood) is to protect community pharmacies. It is interesting to note that there seems to be a slight split in the Tory party in that there are alternative proposals, but I shall pass over that. As I understand it, the amendment also aims to ensure that resale price maintenance continues for ever. As my hon. Friend said, it has several aims. One is to distract attention from the unfortunate fact that in a former life the hon. Member for Tunbridge Wells (Mr. Norman) initiated the attack on RPM. 6 pm Until the Bill started its passage through Parliament, the Tories took no action to protect pharmacies. An early-day motion has been widely cited, but that is a two-edged sword because I understand that although only three Conservative Members signed it, the Conservative party now says that it is wonderful and does not go far enough. The reason for the smokescreen was evident in the speech made by the right hon. Member for Wokingham: the amendment is an opportunity for yet further Euro-bashing. The constant talk about Brussels is revealing. It is as if Europe is over there in Brussels and not a community of which we are a part. To speak about Europe as if it were separate is ridiculous and demonstrates a certain mind set. I congratulate the right hon. Gentleman on his ingenuity in dragging the issue of lobbying into the debate.

John Redwood (Conservative, Wokingham)

Amendment No. 2 does not seek anything in perpetuity. Parliament can change its mind and change legislation at the drop of a hat if there is a will to do that, and that freedom is in my amendment. New clause 4, which my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) has tabled, would allow the court to come to a different judgment at some future time. There is no split between us, and we are aware that we would need Labour votes to pass either. We offer Labour Members a choice and we would be happy with either. The hon. Lady spoke about the early-day motion. My right hon. and hon. Friends and I voted for its wording on Second Reading—and we should have liked Labour Members to join us on that.

Phyllis Starkey (Labour, Milton Keynes South West)

I accept the correction: of course Parliament can undo what it has done and, to that extent, nothing need continue for ever. I dissent from the right hon. Gentleman's analysis of the effect of the amendment and the new clause. They would expose RPM to abolition by the Commission within years, whereas the Government proposals give at least five years of protection. Another point that has arisen in the debate was also made in Committee. The Opposition have made great play about being the protectors of community pharmacies, but they have slightly narrowed the definition of such pharmacies. Judging from how they speak about them, they have been recruited to their rather spurious notion of country life and occur only in the countryside. I appreciate that such pharmacies are incredibly important to rural communities, but they are also important to urban communities, and the dichotomy between supermarkets and independent pharmacies is not quite as strong as the Opposition make out. In my constituency, some small pharmacies are independent and others are branches of a large national chain. There is also an excellent pharmacy inside a Tesco supermarket. It is extremely active in co-operating with local GPs and has run health education campaigns on asthma, diabetes, antenatal care and emergency contraception services. There is no argument between us about the need for an extensive network of pharmacies in all communities; I merely ask the Opposition to accept that community pharmacies are not simply small independent ones. Pharmacies serve all sorts of communities and include those in large supermarkets as well as the independents. I look forward to the Government's plans to ensure that all pharmacists, whether they are independent, in community pharmacies or in shops or supermarkets, are used more effectively. However, I do not think that such a debate should form part of the discussion on this part of the Bill. The Opposition are engaging in a cynical exercise. Under the guise of the protection of community pharmacies, they are addressing an entirely academic point. They know that their amendment would provoke the end of RPM, although they say that they are trying to protect it.

Colin Breed (Liberal Democrat, South East Cornwall)

I shall not reiterate what has been said because I agree with much on both sides of the argument. We all support community pharmacists, large or small, urban or rural, and we want them to be able to function with some security. The people who use them should have access to them not just for the next five years, but beyond. The proposals that we are debating will lead to a lack of security. If resale price maintenance fails the public interest test, that could be the end of many community pharmacists. The alternative is a five-year stay of execution. We would have more sympathy for the Government's proposals if, during the five years, they offered an opportunity to look at ways in which to fund pharmacists and provide them with security. However, after five years, pharmacists will be left to the marketplace, and that would not provide the security that they seek or leave the communities that they serve with the feeling that such pharmacies will remain. If the five-year transition period were used positively to prepare plans for the funding of pharmacists, that might enable us to support the proposal. Pharmacists in my constituency feel that convenient access to medicines for people who have been to their doctors is a vital part of primary health care. It is an anomaly of the health care system that that one part is not included in health care operations. That is because we regard pharmacists as small chemists and take the view that resale price maintenance is the best and only way to fund them. Many pharmacists feel that their qualifications and experience, and the valued support that they provide to GPs by way of health education and even diagnosis are worth more than just the protection of RPM on over-the-counter medicines. They should be considered as part of primary health care. Resale price maintenance has served pharmacists and their communities well. We will support the amendment because it would ensure, at least in the short term, the continuance of RPM and, therefore, the protection of pharmacists. RPM will be under constant commercial attack, and those challenges may be the pathfinders for many more. Such insecurity may prompt some pharmacists to give up. Pharmacists who are thinking of retiring in the not-too-distant future may be feeling fearful about their ability to sell their businesses. Pharmacists who have received their qualifications and are looking for new opportunities may feel distinctly uncomfortable about taking on positions in small chemist shops that may be under threat in only a few years. That insecurity is the reason for this debate. Although the Minister has provided good protection for a short period of years, if it is needed, he has not looked in the long term—at the long-term provision of pharmacists and access to them, which is at the heart of what we are looking for. On this occasion, we support the Opposition amendment.

John Redwood (Conservative, Wokingham)

I hope that the Liberal Democrat party will make it clear how it wishes to help the pharmacists, if it does not wish to support either the amendment or new clause tonight. We think that they are the best way in which to do it.

Colin Breed (Liberal Democrat, South East Cornwall)

I did say that we would support the Opposition's amendment as I was about to sit down.

Oliver Letwin (Conservative, West Dorset)

I want to discuss the substantive issue—community pharmacies—and move to an issue of much wider significance, which arose from the exchange between my right hon. Friend the Member for Wokingham (Mr. Redwood) and the Minister for Competition and Consumer Affairs, where matters have reached a serious pitch. In common, I suspect, with many hon. Members on both sides of the House and certainly with many of the Liberal Democrat Members who are present, I represent a seat that is perhaps the archetype of the problem. It is inconceivable that there should be available in the smaller towns of West Dorset sufficiently elaborate national health service provision to meet all the needs of the ordinary citizen, who is often unable to move around easily because of necessarily limited rural transport. The Government's persistent attack on rural transport by car through short-sighted actions with environmental aims has limited it even more. It is of the essence that such citizens in West Dorset should have available to them what has been available to them for a long time, and will, if the amendment is passed, continue to be available to them—access to a rural pharmacy. That will not continue to be available for much longer if the amendment is not passed. Our pharmacies in West Dorset depend on the amendment. I speak not speculatively, but on the basis of intensive discussions with each of the principal rural pharmacies in each of the smaller towns in my constituency, of which there are not very many; it is possible to cover them all because their number is small. The number of villages is, of course, great and, again, that is an archetype. There are some 55 larger villages in West Dorset, each clustered around the towns. They, too, depend on the rural pharmacist. In discussions with rural pharmacists—in many cases, I have gone to the trouble of asking them specific questions about their turnover, margins and current profitability—it has become clear that their existence depends on resale price maintenance or some equivalent. I thought that the interjection of my right hon. Friend the Member for Wokingham during the remarks of the hon. Member for South-East Cornwall (Mr. Breed), who spoke for the Liberal Democrats, was highly pertinent. It is possible to imagine—it has always been possible to imagine—that the Government would seek to introduce alternative means of supporting rural pharmacies. There may even be, theoretically, preferable alternate means of supporting such pharmacies. I have a worry, which I suspect is shared by many hon. Members who represent seats such as mine, which is not a theoretical worry; it is substantive, practical and based on a knowledge that I suspect all hon. Members have of how Government and, in particular, the Treasury, under any Administration, work. If grants, subsidies or special arrangements are introduced to support a particular cause when there is a ferment about that cause—this would be one such case, potentially—they are always a soft target for any Chief Secretary to the Treasury when he comes in the spending round to look at what might be eliminated. For all the dangers that the hon. Member for South-East Cornwall pointed out, resale price maintenance has at least persisted for a long time and is difficult to dislodge, because it requires action in the courts and may take time. At least that system is not as likely to suffer from the vicissitudes of the attentions of a Chief Secretary which, alas, can quickly be brought to bear on any grant system. 6.15 pm Essentially, if the amendment is not passed, the access of many of my constituents to what is effectively the only source of help and advice available to them other than GPs, many of whom they find it difficult to reach on many occasions, will depend on the hope that the Government will introduce an as yet unknown mechanism—there is no certainty that they will do so—and that no future Chief Secretary will remove the mechanism. There is a ready remedy, which is to extend the provision of NHS services in rural areas. That takes us way outside the scope of the amendment and anything, I suspect, that the Government are willing to guarantee. The costs of doing that vastly exceed the economic cost of resale price maintenance in this sector. That point is of great interest. I was, alas, unable to continue as a member of the Committee during the stages when these matters were considered, but I have had the opportunity to read the official record. I find to my intense surprise that the Minister for Competition and Consumer Affairs has not brought forward any analysis of the economic cost of continuing with resale price maintenance for rural pharmacies. There is a good reason why he has not. It is extremely difficult to identify a significant economic cost in that case. If one looks at the cost of providing alternative NHS services, the economic and, in particular, fiscal gain of having these pharmacies is fairly easy to ascertain. A cost-benefit analysis of the amendment, so to speak, could easily identify the costs of not having the amendment, but trying to identify the benefits of not having the amendment—the economic gain to the country from abolishing RPM—is quite a task. Alas, we discovered at a much earlier stage in the proceedings of the Committee that the President of the Board of Trade had conducted a compliance cost assessment that was probably wrong by some magnitude. Therefore, it is not surprising that the Minister has been reluctant to conduct any economic analysis in this particular case, but, if he had done, he would probably have found that the figures would have worked against him. This is a remarkable case. We have a system, which is theoretically imperfect, but nevertheless produces what I think is by universal accord a practically beneficial result, with probably a low economic cost—it has certainly not been ascertained—almost certainly a high fiscal gain and hence an economic gain. There is no certainty about any replacement and there is an extreme danger that, if there were to be a replacement, it would come under attack from a future Chief Secretary. That chain of argument suggests that there is a strong reason for seeking to retain the ability for this industry to engage in resale price maintenance. That is the substance of the matter. In rising, my main intention was not to address that issue.

Andrew Lansley (Conservative, South Cambridgeshire)

Before my hon. Friend moves on to a separate argument, does he agree that, in this respect, it is not so much the compliance cost assessment that is the mechanism through which the Government should assess what the costs and benefits of proceeding through legislation are, but the regulatory appraisal? While he was speaking, I have taken the opportunity to look at the regulatory appraisal and it is silent on the issue of the economic costs and benefits that might result from the abolition of a number of pharmacies as a result of the Bill.

Oliver Letwin (Conservative, West Dorset)

It was one of the abiding sadnesses of being removed from the Committee that I was no longer able to benefit from the shafts of wisdom that my hon. Friend so often cast on aspects of the Bill. He is right to remind me that it is not the compliance cost assessment, but the regulatory appraisal that should have contained the information. To say that the regulatory appraisal is silent on this issue is, in the now immortal words of Mr. Draper, the understatement of the century. The regulatory appraisal is silent on almost every issue. It is a document of such extreme gnomic quality that it is rather like the holy Roman empire, which was neither holy nor Roman nor an empire. The regulatory appraisal is to do neither with regulation nor with appraisal; it is a piece of paper. However, it would have been possible for the Under-Secretary to produce a serious analysis in Committee, had he wished to do so. I have no doubt that he did not do so because he would not have liked the results.

John Redwood (Conservative, Wokingham)

Will my hon. Friend also think about the plight of the retail pharmacist? He will also need reassurance from the Government that the complicated arrangements to remunerate him for his NHS work will not fall foul of the Bill. Presumably, the Government will have to make use of the public policy provision or the general economic service provisions to exempt retail pharmacists. Would not it be helpful to the pharmacists to be reassured at least about one of their strands of income? Otherwise, they might find that all their income was under threat from the Bill.

Oliver Letwin (Conservative, West Dorset)

My right hon. Friend is absolutely right. He will recall, as I do very poignantly, that both the Under-Secretary and the Minister were wholly unable to deliver to the Committee the slightest remnant of a definition of general economic service that would illuminate the question whether that point would actually apply. Manifestly, there are serious issues about whether the Bill will allow provisions to be made to support rural pharmacies. That has wider implications because it is not just rural pharmacies or even pharmacies generally with which we are concerned; it is the general principle of whether a Competition Bill ought simply to take into account the narrow focus of industrial economics, or whether some kind of social cost or social benefit—especially when there are fiscal consequences—should be taken into account. I come now to the major topic that I want to discuss. I am afraid that I shall make a very grave accusation. I hope that it can be rebutted; I hope that the Under-Secretary will produce evidence to show that I am wrong. No one would be happier than I to withdraw my accusation, in an open and fulsome way, if it turns out that it is false. My accusation has to do with the character of government. It is raised, in particular, by the response to this amendment and by the interchange between my right hon. Friend the Member for Wokingham and the Under-Secretary earlier. I begin with a question. What was the treaty base upon which the Commission was operating when it produced the letter to which the Under-Secretary referred? I stand open to correction. The hon. Gentleman has vast legal resources at his command, while mine are negligible. It may be that I am, therefore, wholly misled, but I imagine that the treaty base was article 85—subject to the Under-Secretary's correction. I should be grateful if he would save me and himself from further embarrassment, and intervene at any stage of my argument if he feels that something that I am saying is incorrect. Article 85 is very clear, unlike its transposition into English law in the Bill, which is very unclear. It states in its first clause: The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decisions by associations of undertakings and concerted practices"— I have not the slightest doubt that resale price maintenance falls into those categories— which may affect trade between Member States. Alas, Mr. Deputy Speaker, you were not the Chairman of our Committee. Those who were present during our sittings will remember that on many occasions during the deliberations of the Committee—and I find on reading the Official Report that this persisted beyond the time when I ceased to be a member—points were made about the contrast between the specific clause which may affect trade between Member States and its transposition into UK law in the Bill. We frequently pointed out the clarity of the statement in article 85 and the fact that it made it clear that the Commission, in applying the article, was to restrict itself to those sorts of action that affected interstate trade. We drew attention to the difference between that and the lack of clarity about the Commission's scope for action within the United Kingdom. The Under-Secretary and the Minister had ample opportunity to challenge us on that point in Committee. They had ample opportunity to say that they or their legal advisers thought that we were misinterpreting article 85. In short, they had ample opportunity to tell us that article 85 was not restricted to interstate trade. However, I would have found it odd if they had said that because if we look back through the legislative history of article 85 to the early writings of Monnet and Schuman on the origins of the competition sections of the treaty of Rome, it is clear that in the minds of those who formed the treaty, it should restrict itself—admirably to my mind, and, I suspect, that of my right hon. Friend the Member for Wokingham—to interstate trade.

John Redwood (Conservative, Wokingham)

The two Ministers, both by their silence throughout my hon. Friend's remarks and by what they said in Committee, have to accept that the treaty is about interstate trade. That is why we are debating a law for Britain to deal with intrastate trade. The treaty does not directly act on intrastate trade—if it did, we would not need all this rigmarole tonight and we could just let Brussels get on with it.

Oliver Letwin (Conservative, West Dorset)

One of the annoyances of dealing with a Bill on which my right hon. Friend leads is that he is inevitably one and a half steps ahead of me. He precisely anticipates the next leg of my argument. It is not simply that we would have been surprised if the Under-Secretary or the Minister had told us that article 85 applied more widely than to interstate trade—had they done so, we would have told them that the Bill was not required as it would not be necessary to have the prohibition if it already existed and applied to intrastate trade. Therefore, it must be the case that Ministers accept that article 85 does not provide a treaty base for intervention by the Commission in matters such as resale price maintenance, unless the Commission can satisfy itself that the practice concerned may affect trade between Member States. This is where I have to make a grave accusation. If the Commission were to satisfy itself that resale price maintenance in pharmacies—and I think in particular of rural pharmacies—in this country might affect "trade between Member States", the Commission would have to be on some sort of elaborate hallucinogenic drug. I cannot think of a single reason why RPM, desirable or undesirable as hon. Members may think it to be, between the suppliers and a pharmacy in, for example, Beaminster in my constituency, may affect trade between Member States. I cannot imagine that the pharmacist in Beaminster spends much time shopping around for arbitrage possibilities in buying his supplies from a wide range of European suppliers. I cannot suppose that he much affects the balance of trade between member states. It would require the most extraordinarily tenuous logic for the Commission to have argued to itself convincingly—or to be able to argue to anyone else convincingly—that RMP, in this particular case, may affect trade between Member States. The Under-Secretary has already had, and will again have in his reply, the opportunity to challenge each leg of my argument. I hope that he will tell me that I am wrong about article 85 being the supposed treaty base. I hope that if he cannot tell us that, he will tell me that I am wrong to suppose that there is no good argument for supposing that such resale price maintenance may affect trade between Member States". However, if he cannot say either of those things, we have to ask why the Commission wrote that letter. I genuinely believe—again I make it abundantly clear that, if I am wrong, I should be happy to be disproved by evidence to the contrary—that the Commission wrote the letter because someone in the United Kingdom Government, acting via the agencies of the UK Government in Brussels—presumably the UK permanent representative in Brussels—made it known by formal or informal means to the Commission that it would be helpful to the UK Government if the Commission wrote that letter and told, or suggested or halt-hinted to, the Commission that it did not too much matter whether there was a treaty base for the letter and that, in the meanwhile, a letter might solve a parliamentary problem. Moreover, it may have been suggested that if the letter did solve that problem, there would, regardless, be UK legislation preventing such resale price maintenance. Therefore, the Commission, having written the letter, would never be subject to legal challenge, as the letter would never become an effective one. I repeat that I should be happy to have those assertions disproved. However, if proved, they are very grave.

John Redwood (Conservative, Wokingham)

I fear that my hon. Friend may be on to something, that there is a pattern and that the Government may be hoping to avoid embarrassment—and not only in this case. Has he thought about the recent allegations on the "Panorama" programme—that Mercedes and Volkswagen are arranging their prices in the United Kingdom in an anti-competitive manner? Is he aware that the Government have said that they want nothing to do with that, but would rather that Brussels investigated the whole matter on their behalf? Is it not another case in which Ministers seem to wish not to take responsibility for anything in United Kingdom competition competence?

Oliver Letwin (Conservative, West Dorset)

I agree with my right hon. Friend that it may be part of a pattern. It is a bad pattern if it is an overt one. It is bad because the United Kingdom Government should not rely on the Commission to take action on matters in which—for UK policy reasons, especially when the Government agree with the action—the Government not only have the capacity to act, but should be acting. My right hon. Friend's example of the automobile industry is pertinent. I regret to say that, in this debate, we may be dealing with something that is far worse and far more insidious—a covert attempt to have the Commission do the Government's work. Moreover, it would be a covert attempt by the Government to have the Commission do a piece of political work for them. If that is what has happened, it would be an attempt by the Government to have the Commission spare the Government a political embarrassment because of a division within the Labour party's own ranks. That is not a way in which it would be reasonable or decent for the Government to use the Commission.

Nigel Beard (Labour, Bexleyheath and Crayford)

Does the hon. Gentleman have a shred of evidence for that conspiracy theory?

Oliver Letwin (Conservative, West Dorset)

I have been at pains—I do not want to be irresponsible—to point out that every leg of my argument is something that I believe may be the case, but is open to rebuttal. I have suggested to the Minister that, by intervention or in reply, he can rebut any part of the argument. If he does so, I shall fulsomely withdraw. I am making an allegation for which I realise I currently have no proof. However, the Minister has so far been notably silent. I hope that, in his reply, he will challenge one or another part of the argument. I make the accusation not recklessly, but because I cannot myself find another explanation for a letter that seems to be based on so thin a treaty basis.

Nigel Beard (Labour, Bexleyheath and Crayford)

Is not the nature of reckless allegation such that it has absolutely no evidence behind it?

Oliver Letwin (Conservative, West Dorset)

No, it is not. It is the purpose of Parliament to expose arguments and to have answers. I think that it is a reasonable proceeding for an hon. Member conscientiously to make an argument that would have a devastating effect if it were true, to pose it for the Minister and to allow the Minister there and then to refute it. It would, of course, not be reasonable for me to repeat the allegation if the Minister had disproved it. However, the allegation has to be answered.

John Redwood (Conservative, Wokingham)

My hon. Friend is generous in giving way again. If he was wrong, should not Ministers have leapt to their feet and produced evidence that they have been trying to lobby Brussels in the right direction rather than the wrong one?

Oliver Letwin (Conservative, West Dorset)

Again, my right hon. Friend takes me to the next leg of my argument. It will not be enough for the Government to establish that they did not engage in the piece of shady dealing that I am alleging that they might have engaged in and that I am asking the Minister to disprove. They will have to show that they tried to avoid production of the letter, because it is ill-based on treaty—unless they can show that the Commission is not basing it on article 85. If the letter is ill-based, and if many hon. Members agree that it would have a bad effect on an important part of our social fabric, which they do, it behoves the United Kingdom Government to argue the case against the letter, and then to take their own domestic action.

Andrew Lansley (Conservative, South Cambridgeshire)

I am following my hon. Friend's comments with interest, and realise that he is arguing from circumstantial evidence. Will he add to that circumstantial evidence the fact that the Minister parades a letter—which he says is dated 8 May—that was, presumably fortuitously or coincidentally, received by Ministers before Second Reading, on 11 May? Therefore, the proposition that the letter was related to the Government's pursuit of the legislation's passage is not an idle point, but is backed by circumstantial evidence.

Oliver Letwin (Conservative, West Dorset)

I agree entirely with my hon. Friend that the circumstantial evidence is, if not compelling, quite considerable. His point about the timing makes it all the greater. The problem goes one stage deeper. We are dealing not merely with the possibility—I admit it to be a possibility rather than a certainty—that the Government covertly prayed in aid the Commission to issue a letter on a frail treaty basis that, if it were true, would have undermined the whole of the Government's logic in their Bill. The Government have also brought pressure to bear through a lobbyist, who is intimately—as we now fortuitously discover—connected with the Government, upon a group of people who should, at least in my view, be representing those whom they purport to represent and who should be making that argument. We have reached the point at which there is a connection between the first and second legs of my remarks. If the case for maintenance of RPM were not so very strong substantively, one could well understand that representatives of rural pharmacies might have been in two minds on the subject and might have been wavering between results. One could also understand those representatives taking their own view on the matter. One might also understand that they might have been influenced by a letter, however frail, from the Commission. However, when a substantive case for retention of RPM for rural pharmacies is not only in itself so strong but—as so many hon. Members on both sides of the House know—is also felt to be so strong by very many or, I speculate, almost all, of those whom that body is meant to be representing; when the letter in question is based on a treaty basis that is so frail; and when the Government must have known how frail the basis was—or they would not have introduced the Bill in its current form, as they would have had to take the view that article 85 had a scope wider than merely interstate trade—one is driven to the conclusion that it must have been by heavy-armed tactics that the Government used the offices of that lobbyist to persuade that group of representatives to change their minds in the light of the letter. Mr. Deputy Speaker, at the beginning of my rather—I regret to say—over-lengthy speech, I said to your predecessor in the Chair that I had a grave accusation to make. I have made it in good faith—[Interruption.] I have made it in utterly good faith. I believe that it probably is true. It may not be true—I have admitted that, and I admit it now. It now falls to the Minister, in replying to this debate, to go through the logic—as I did not see him do in most of the Committee stage—of the allegation, to take it seriously, and to show that I have got wrong one of my propositions. Have I got it wrong that the treaty basis of the letter from the Commission is article 85?

Michael Martin (Deputy Speaker, Glasgow Springburn)

Order. As the hon. Gentleman said, I have just taken the Chair. However, I should draw it to his attention that we are considering narrow amendments. The hon. Gentleman appears to be referring to a treaty. Can he explain what that treaty has to do with the two amendments before us?

Oliver Letwin (Conservative, West Dorset)

I was not interrupted by your predecessor, Mr. Deputy Speaker, because I explained the relevance of the treaty at the beginning of my speech. So as not to try your patience, let me briefly repeat the logic of my argument; it is very straightforward. The amendment seeks to protect resale price maintenance, which was being advocated by a particular group. That group has withdrawn part of its advocacy of that on the basis of a letter from the Commission to which the Minister has referred. The letter is meant to have some treaty basis, which I believe is article 85. I have been asserting that the Minister concocted the letter from the Commission in order to change the attitude of that group to resale price maintenance—and hence the necessity of the amendment. That is the structure of my argument. In conclusion, I repeat that if any leg of my argument is false, it falls to the Minister to show it. It is for him to show that article 85 is not the treaty base, that I have misinterpreted its scope or effect, or that the Commission genuinely acted on its own initiative and is at fault because he can show that he tried to get the letter withdrawn.

Nigel Griffiths (Labour, Edinburgh South)

It is, indeed, unusual to hear the Opposition filibustering on their own amendment, but the amendment relates to a subject that is particularly embarrassing to them. It is a subject that they ignored for years—the plight of community pharmacists. Indeed, when the right hon. Member for Wokingham (Mr. Redwood) was in the Cabinet, 178 pharmacists ceased trading. The Opposition have had no long-standing dialogue with community pharmacists, and, in speaking to the amendment and the new clause, cannot command their support. They asked us about representations and I shall be happy to deal with that, along with the treaty basis for what is happening. The right hon. Member for Wokingham made no representations to the Director General of Fair Trading about the complaint. In 1996, when the Commission was liaising with the Office of Fair Trading in respect of the Asda complaint, the right hon. Gentleman was too busy with the downfall of his own Government to make any representations to Brussels. I understand that he has made no representations on the matter, either to the Office of Fair Trading or to the Commission, during the passage of the Bill or previously. We will take no lessons from the Opposition about commitments to community pharmacists. As my right hon. Friend the President of the Board of Trade told the House: My right hon. Friend the Secretary of State for Health has made it clear how important community pharmacies are to his vision of health in the next century."—[Official Report, 11 May 1998; Vol. 312, c. 34.] The amendment and the new clause put at risk all the representations made to the OFT and the Commission. The right hon. Member for Wokingham does not care whether amendment No. 2, which is, after all, a political stunt, puts at risk all that community pharmacists have been fighting for. It would disapply the prohibition and effectively pre-empt the findings of the restrictive practices court. It is carelessly drafted in that it does not distinguish between retail price maintenance agreements in the over-the-counter medicine sector which are exempt under section 14 of the Resale Prices Act 1976 and all other retail price maintenance agreements. New clause 4 refers to agreements that have been exempted from section 14. Both proposals would have the effect of stopping proceedings in the United Kingdom and handing them over to Brussels—coming from the right hon. Member for Wokingham, that is a paradox. The Commission has made it perfectly clear that article 85 is directly applicable in the United Kingdom, irrespective of the Bill. On several occasions in Committee, Opposition Members highlighted the fact that an agreement of conduct must have an appreciable effect on trade between member states if articles 85 and 86 are to apply. They went on to argue—as they have this evening—that that requirement somehow makes the competition test for the application of the domestic prohibition different from that for the application of article 85. The right hon. Member for Wokingham nods in agreement, but that view is mistaken. The hon. Member for West Dorset (Mr. Letwin) asked whether he was wrong and I can confirm that he is wrong on that and most of the other matters that he raised.

Oliver Letwin (Conservative, West Dorset)

Will the Minister give way?

Nigel Griffiths (Labour, Edinburgh South)

I shall give way in a moment, with great pleasure. The requirement that the application of article 85 would affect interstate trade is a jurisdictional hurdle. It does not affect the meaning of the prohibition itself in the sense of determining whether or not an agreement is anti-competitive. Nor does it affect the meaning of the prohibition in determining whether conduct is abusive of a dominant position.

Oliver Letwin (Conservative, West Dorset)

The Minister has made some quite remarkable statements. First, he has admitted that article 85 is the treaty base. Secondly, does he agree that if article 85 has the scope that he claims for it, the reason for the clause that creates a prohibition under English law is nullified? He has undermined the whole purpose of his own legislation.

Nigel Griffiths (Labour, Edinburgh South)

The hon. Gentleman had left the Standing Committee at that stage, as he put his career before chemists. He also sought to spare the Opposition the embarrassment of the publication in the 1980s that he and the right hon. Member for Wokingham produced on financing the health service. Their report is germane to today's debate on community pharmacists, as it advocated a pill tax. They wanted to ensure that the prescriptions that are the life-blood of so many chemists were operated, if not for profit, at least by charging enough to ensure that demand matched supply. So the hon. Gentleman's history is certainly not in support of community pharmacists—which is why Opposition Members have shown absolutely no interest in the issue for so long.

Oliver Letwin (Conservative, West Dorset)

Will the Minister give way?

Nigel Griffiths (Labour, Edinburgh South)

I shall make some progress, but I shall give way to the hon. Gentleman before I sit down. It is important to be aware that the proposals would stop proceedings in the United Kingdom. The Commission has made it clear—not just to the Government but to the Director General of Fair Trading, with whom it has been liaising for more than two years on the matter—that if that happened, it would have to take action. It did so under the previous Administration, without a finger being lifted by Ministers or Conservative Back Benchers at the time to support community pharmacists. I can confirm, as I have it here, that a letter from the Commission was sent to the Director General of Fair Trading. I am sure that it is part of one of a number of dialogues over the past two years since Asda lodged its complaint in 1995. Amendment No.2 would have dire consequences. The Commission has made it clear that if the restrictive practices court were not looking at the issue, it would take lock, stock and barrel the evidence that the Office of Fair Trading has collected over a long time. Let us look at just how long it can take for the Commission to act. A recent investigation into the Italian tobacco sector took around two years. The decision on Volkswagen took around three years. That means that the present arrangements could unravel alarmingly quickly for community pharmacists. The Bill provides a five-year transitional period if the court decides that there should be an exemption for over-the-counter medicines. I urge my hon. Friends to reject the amendment and the new clause.

Andrew Lansley (Conservative, South Cambridgeshire)

The Minister will know that the letter from the Commission on 8 May related to whether proceedings before the court were stayed under the previous amendment tabled in another place. When the court's proceedings continue, will the Commission investigate and intervene on RPM on over-the-counter medicines if the chapter I prohibition in this country is not applied but the court's decision is sustained?

Nigel Griffiths (Labour, Edinburgh South)

The Commission has made it very clear that, if the court comes to a decision that the community pharmacies deem favourable—the same decision at which it arrived, having weighed up the evidence, the last time that it considered the matter—and if due processes have been followed, it should be satisfied. That is an important point. We went into this matter in some detail in Committee.

Andrew Lansley (Conservative, South Cambridgeshire)

rose—

Nigel Griffiths (Labour, Edinburgh South)

I shall not let the hon. Gentleman detain the House further, given that his questions as a member of the Committee that considered the Bill were answered. The do-nothings when they were in government are lecturing us about doing something. Owing to the inadequacies of Opposition Members' explanations in favour of the amendment and the new clause and the patent lack of support from the Community Pharmacy Action Group, I urge the House to reject the amendments.

Oliver Letwin (Conservative, West Dorset)

I hope that the Minister will answer this question. If he is saying that article 85 extends into activities that do not affect interstate trade, how can the prohibition clause that he is enacting be necessary?

Nigel Griffiths (Labour, Edinburgh South)

The hon. Gentleman was honest enough to say to the House that he might be wrong. He is completely and utterly wrong in this matter. I wonder whether his lack of a grasp of these issues was the reason why he was moved off the Committee. There is no support for the amendments. Indeed, I have a card—I suspect that the right hon. Member for Wokingham does not have one—from David Sharpe of the Community Pharmacy Action Group, thanking me for my support for community pharmacies. The number that I rang this morning was that of the group's legal adviser, Sue Sharpe. We have support for our policy; no one supports the Opposition's amendment and new clause.

John Redwood (Conservative, Wokingham)

What a dreadful statement from the Minister. He ended with a strange statement that no one supports the amendments. We are shortly to show that quite a few Members support them. Many people outside the House want a solution to the problem, and the Government have left them without one. I shall deal briefly with the Minister's attempt at a response. He said that I have made no representations to Brussels or to British competition authorities. I have made endless representations through debates on this Bill. As the shadow spokesman responsible for such matters, I believe that the right way in which to make representations is through the House, when parliamentary opportunity presents itself. I know that the Government do not like the House—but we do. This is a proper way in which to proceed. The Minister said that a certain number of pharmacies closed while I was in the Cabinet, and that that proves that the outgoing Government did not care. It is not possible to prevent some pharmacies closing for commercial reasons. We are debating not whether the Minister can prevent commercial closures—I am sure that he will not be able to do so—but whether he can prevent deliberate closures on top of those that will be forced through as a result of the Bill and his inability to sort things out in Brussels. He has not confirmed the figures that have been bandied about in the trade, suggesting that perhaps 3,000 pharmacies will close as a result of the legislation and of the Brussels decision that he fears. The Minister asked why I have not made representations to Brussels. There is no need to do so at the moment because, at the moment, the issue can and should be sorted out here, in the United Kingdom—either at the restrictive practices court or in the House by suitable amendment to legislation. The Minister and I agree on one thing: community pharmacies will be very important to health care and health services in the next century. That makes the Government's attitude even more stunning. As my hon. Friend the Member for West Dorset (Mr. Letwin) said, pharmacies provide a very important service in smaller market towns and the suburbs. If they are removed or destroyed by the Government, Brussels or some combination of the two, considerably more cost will fall directly on the health service as it struggles to replace the services. Neither my hon. Friend the Member for West Dorset nor I come easily to defending practices which, in all other industries and areas, we are happy to see go—and which, at times, we have helped to go. Normally, we prefer open, competitive markets, where prices and services are determined in the marketplace by people spending their money as they see fit. We make an exception for this issue. I urge the House, knowing, as it does, that both my hon. Friend and I nearly always come down on the side of free markets and complete choice, to think very carefully before rejecting the amendment. I stressed to the House—and shall do so again—that we are satisfied of two things: first, that there is quite enough price choice in the market for those who think that price is the most crucial aspect. Secondly, such community services are important and would be much more expensive to provide at the taxpayer's expense if they are demolished as a result of this ill-considered legislation. I shall pass over the Minister calling our actions a political stunt; that is not worthy of him or of the Government whom he serves. We are seriously arguing a case for many small businesses in our communities that need some help and are looking to the Government for it—the Government whom they thought might represent them. I agree with the Minister that the effect of the amendment would be to stop proceedings in the court. That is the point; the idea of the amendment is to settle the matter following democratic debate in the House of Commons. We could always return to it if we had second thoughts, if the commercial and service argument had moved on.

Andrew Lansley (Conservative, South Cambridgeshire)

Does my right hon. Friend agree that if the Government object to the amendment on the ground that it would stop proceedings in the court and would lead to intervention by the Commission, they could take the route of new clause 4, which would not stop proceedings in the court?

John Redwood (Conservative, Wokingham)

Indeed; I am grateful to my hon. Friend for clarifying that point. That was my understanding of his new clause. The Minister seems to have a different view of it. I gave the Minister due notice in Committee of the problems with Brussels and how I, on behalf of many people, expected the Government to go to Brussels to try to get a better deal for our pharmacies and to sort the matter out for them. I did not want the House to be left with Hobson's choice—either accepting my amendment then worrying about what Brussels might do as a results of our actions, or not being able to do anything at all to help community pharmacies. The inaction of the Minister and his colleagues places us in such a position. If the Minister had taken my advice in Committee, he would by now have had productive discussions in Brussels. He would have explained that the practice has not driven a coach and horses through Brussels competition law during our membership of the Community. He would have explained that the practice matters to people in Britain—and that, for once, he could swing the will of the whole Parliament in favour of keeping our community pharmacies. He could surely have pleaded for some special treatment—an exemption, an agreement that the practice was in the public interest, not against it. Evidence from the previous Restrictive Trade Practices Act case in Britain and the previous RTPA finding were already available. There was a most extraordinary dialogue on the Government Benches on the legal position of article 85 and direct action under the treaty. Of course my hon. Friend the Member for West Dorset is right: the idea of the treaty, as set out by the founding fathers and in the debates when we joined the European Community, was to regulate competition between states and between firms in different member states. There was no presumption at all that the organisation also had to interfere in intrastate trading. We wish to make clear that we believe that the measure is an extension of jurisdiction from Brussels and that it is about intrastate trade. The Minister needs to propose new legislation because the European Community should not have that power to start with. There is, as has been said, a jurisdictional hurdle, which we are addressing. The Government have got it wrong, and have misinterpreted the matter. They should not allow Brussels to intervene in this case and they should accept our amendment. We urge the House tonight to do something decent for the retail pharmacies and for health care in our country. The only way to do that now is to accept the Opposition amendment.

ABUSE OF DOMINANT POSITION

Andrew Lansley (Conservative, South Cambridgeshire)

I beg to move amendment No. 48, in page 10, line 38, at end insert— '(2A) For the purposes of this section "market" means a market the whole or part of which is in the United Kingdom but in relation to the abuse of a dominant position in a market which extends beyond the United Kingdom the prohibition imposed by subsection (1) shall not be regarded as infringed unless that abuse occurs in the United Kingdom.'. Clause 18 outlines the chapter II prohibition on an abuse of dominant position in a market, which is one of the two key prohibitions contained in the Bill. In Committee, we did not debate an amendment that had the same purpose as amendment No. 48, but we discussed some of the related issues—indeed, I tabled the amendment in the light of some of our discussions. In the execution of the prohibition, it is obviously necessary to define a market, but that is done neither in clause 18 nor elsewhere in the Bill. The draft guidance issued by the Director General of Fair Trading makes it clear, in paragraph 2.12, that a market definition comprises two dimensions: "a product and a geographic area". It cites the example of the Commission's consideration of a complaint about ice cream cabinets in Ireland. The Commission defined as the relevant market impulse ice cream in Ireland"— that contains a product and a geographic definition. 7.15 pm In paragraph 4.9, the director general makes it clear that, where there are significant imports of a product, the relevant market is international. The contrary is not necessarily implied where there is a lack of imports; the example cited is that of the bus market in Germany, on which the Commission decided that, although imports were low, there were no significant barriers to entry to the market, so that one could substitute domestic German providers with imports. Again, the definition of the market was held to be international. In paragraph 6.7, the director general states: If the market is international, market shares should be calculated to cover the whole geographic market. That makes it clear that he intends, under the Bill, to use a definition of a market that, if the evidence demanded, extended beyond the United Kingdom. Similarly, in Committee, the Minister for Competition and Consumer Affairs, responding to some of my remarks, said: I entirely agree with the point made by the hon. Member for South Cambridgeshire that the relevant, geographic market should not be limited to the United Kingdom."—[Official Report, Standing Committee G, 4 June 1998; c. 235.] The intention, which seems to be shared by the Government and the Opposition, is that the relevant market should extend beyond the United Kingdom. How will the market be defined under clause 18? I tabled the amendment not to provide a substitute for the Government's intentions, but to fulfil them. One of the problems of earlier competition legislation was that, from time to time, the market was construed too narrowly. A market that was considered for public interest purposes may have been a regional market inside the United Kingdom, even though that regional market was capable of substitution from beyond its boundaries. It is important to look beyond the boundaries not only of any region but of the United Kingdom itself. Subsection (3) says that a dominant position means a dominant position within the United Kingdom". That is the problem, because it is the only place in the clause where "market" is arguably defined. The director general and the Minister may believe that they can look beyond the United Kingdom to define the relevant market, but I am not sure that the clause allows that to happen. Taking account of such markets may be open to challenge. It is possible that, on the question of dominance, the boundaries will move back within the United Kingdom, so that the director general's decision will be made in relation not to the relevant market but to some subsection of that market. It is important to avoid that. The amendment would allow the definition of "market" to extend beyond the United Kingdom, when the evidence requires that, and would avoid the problem of extraterritoriality by showing straightforwardly that, for the prohibition to come into effect, the abuse of the dominance would have to occur within the United Kingdom. It would helpfully create a clear hierarchy. For example, someone could be dominant in the market for ice cream cabinets in the whole of Ireland, but the dominance could occur only in the Republic, and not in Northern Ireland. The market would include Northern Ireland, but if the abuse occurred only in the Republic, it would not be subject to the prohibition. I commend the amendment to the Minister as a positive attempt to give appropriate effect to the Government's intentions.

John Redwood (Conservative, Wokingham)

The Opposition support the amendment. We have found many examples of poor, misleading or inadequate drafting in the Bill. In this case, we have produced a form of words to clarify the meaning for the sake of business. Our general worry about the Bill is that it is badly drafted and loose, and will be a lawyers' charter, enabling many lawyers to do well and many businesses to do badly, because of the enormous fees that will be demanded. The amendment would clarify the meaning and give business greater certainty. We think—as did Ministers in Committee—that penalties should be limited to a fine on the turnover in the affected market in the United Kingdom in which the offence has occurred. That is part of our process of trying to refine the legislation and make it a bit more realistic.

Ian McCartney (Labour, Makerfield)

I agree with the hon. Member for South Cambridgeshire (Mr. Lansley) that the clause is an extremely important part of the Bill. I reject the view of the right hon. Member for Wokingham (Mr. Redwood), expressed in his usual manner, that our drafting has been poor and misleading. That is entirely without foundation. We made it entirely clear in the other place and in Committee that our intention was that the Committee stage should be used to assess and improve the Bill. That is not an admission of poor or misleading drafting; it is evidence of a co-operative, partnership approach with those who will be directly affected by the provisions. The right hon. Gentleman's comment was entirely unacceptable and, inadvertently I assume, damaged the case of the hon. Member for South Cambridgeshire. It is clear that, in the modern commercial world and, indeed, in the single market in the European Union, many economic markets will extend beyond the United Kingdom. That may be true for a wide range of goods and services, from banking and financial services to air transport, the sale of aeroplanes, computer software, engineering products—the list is almost endless. We entirely agree that the relevant geographic market should not be limited to the UK under the Bill, but that is already the effect of the Bill as drafted, and we believe that the amendment is unnecessary. In fact, amendments designed to clarify the drafting of the clause on exactly this point were accepted in another place. In moving those amendments, my noble Friend Lord Simon of Highbury stated clearly that their purpose was to ensure that subsection (3) would not be read as limiting the relevant geographic market for assessing dominance to the United Kingdom. Clearly, there will be many circumstances in which the relevant market includes, but is wider than, the United Kingdom. The drafting of the clause does not cut across that in any way. We see no reason to revise the drafting. The issue is important, and I accept that the hon. Member for South Cambridgeshire raises it because he genuinely wants confirmation and clarification, so I should like to explain in a little more detail why we do not think that the amendment is needed. Any analysis of whether there has been an abuse must start with an analysis of the relevant market in terms of both the relevant products and the relevant geographical area. Under the Bill, the relevant market will have to be determined according to the economic circumstances in the case concerned, as it would be in applying articles 85 and 86. The Director General of Fair Trading will issue advice and information to provide further guidance on that point. He has already published a draft of his guidance on market definition for consultation. I will ensure that the hon. Gentleman's remarks are sent to him so that they can become part of the consultation process. Subsection (1) requires that there must be dominance in a market. Subsection (3) provides that that dominance must exist within the United Kingdom or any part of it. There is a two-stage process. Once the relevant market has been identified, it must be established whether the undertaking is dominant in the UK or a part of it. It is plainly right that both those elements should be present. We are not interested here in dominance that exists elsewhere, but does not extend to the United Kingdom. The clause does not require that the market that must be considered when the prohibition is being applied must be entirely contained within the United Kingdom. Should the courts consider that the meaning of the clause is ambiguous or obscure in that respect, they will be entitled to consider the statements that Lord Simon made in another place, and those that I have made here. That follows the decision in the case of Pepper v. Hart that reference can be made to statements in Hansard in certain circumstances to clarify the meaning of legislation. However, we do not believe that there is any ambiguity in the current drafting or that the amendment would represent an improvement. I hope that those detailed comments will assist the hon. Gentleman and that he will withdraw the amendment.

Andrew Lansley (Conservative, South Cambridgeshire)

I am grateful to the Minister for responding so positively and sympathetically to the amendment. I confess that I am still uncertain whether in practice when a court is asked, presumably by way of judicial review, to consider the phrase, "dominant position" in this context, meaning within the United Kingdom, it will look for the legislative means by which the director was empowered to consider the relevant market as subsisting beyond the United Kingdom or to consider dominance within the United Kingdom as a self-contained matter. I take the point that if such matters are not set out in the legislation, the courts can consider them on a Pepper v. Hart basis. On that basis, and given the Minister's comments, I am happy to beg to ask leave to withdraw the amendment.

Giles Radice (Labour, North Durham)

I beg to move amendment No. 1, in page 10, leave out lines 40 and 41 and insert dominant position" means a position of economic strength which enables an undertaking to act independently of competition, customers and ultimately consumers within the United Kingdom; and'.

Giles Radice (Labour, North Durham)

I must remind the Minister and hon. Members what was said on this subject on Second Reading. Many hon. Members, including myself, believe that there is a prima facie case showing predatory pricing by The Times in the broadsheet market. In the past five years, the newspaper has consistently been priced below cost—often considerably below. At the moment, one has to pay only 30p for a copy. Apparently, that is a special offer for the world cup, or so we are told by the editor. That is not merely a marketing ploy, but a deliberate predatory pricing strategy, the purpose of which is not only to win extra readers but to put The Independent out of business and attract at least some of its readers, so that The Times can get closer to its objective of overhauling The Daily Telegraph. I said that there was a prima facie case, because we cannot prove it until we have all the facts and figures. It is up to the Office of Fair Trading to prove it. At the moment, the pricing practices of The Times are being investigated by the OFT, although that is under the existing and not the new law. I am not claiming that other newspapers do not employ some types of predatory pricing, although I would argue that, in most cases, it is a reaction to what The Times has done. Such predatory behaviour is dangerous for the newspaper market. If one paper is knocked out, the market will be less diverse. The practice has an impact on other newspapers in the broadsheet market as most feel the need to react to the actions of The Times, which takes money out of the market, which means that there is less profit and less money to spend on journalists and improving the quality of the newspaper.

John Redwood (Conservative, Wokingham)

The hon. Gentleman said that the price of The Times was below cost. What are the costs of The Times?

Giles Radice (Labour, North Durham)

If the right hon. Gentleman knows, he knows more than I do. There have been a number of estimates, but The Times has told us that it is making considerable losses, so I assume that the price is below cost. It is widely thought to be, and that is precisely the purpose of the investigation. I should have thought that the right hon. Gentleman would know that, and I am surprised at his intervention.

Stephen Ladyman (Labour, South Thanet)

When The Times was previously investigated, the question upon which the case hinged was not whether it had a dominant position, which was being abused. It was understood that the newspaper could be investigated and that it had satisfied that criterion. It was let off the hook because it could not be proved that it was selling below cost. My hon. Friend's amendment would reduce the threshold at which it is necessary to prove dominance, but that was never the question. How will it help with the need to prove that The Times is selling below cost?

Giles Radice (Labour, North Durham)

I will come to that. My hon. Friend is an expert on the matter, having been a member of the Standing Committee.

Stephen Ladyman (Labour, South Thanet)

I would hardly say that I am an expert. The right hon. Member for Wokingham (Mr. Redwood) was a member of the Committee, and I would not call him an expert.

David Winnick (Labour, Walsall North)

It is not the purpose to have experts in Committee.

Giles Radice (Labour, North Durham)

It makes it more difficult. I was about to point out that such below-cost pricing makes it more difficult for new newspapers to enter the market, because they have to pay the extra cost of pricing below their costs, which is bad for competition. The question for us—it also relates to the other amendments in the group—is whether the Bill will enable the Office of Fair Trading to deal effectively with predatory pricing in the newspaper industry. The Lords did not believe that it would: hence clause 19, which was taken out of the Bill in Committee and which dealt with that industry. The Government's case, which they made on Second Reading—they did not make it strongly in the Lords, which is probably why there was such a special clause—was set out by the President of the Board of Trade. I have also read the excellent statement by the Minister of State in Committee. Their case was that the Bill would introduce a tough regime on predatory pricing. Clause 18 sets out certain conducts, including predatory pricing, which would amount to an abuse of dominant position, and clause 60 sets out various ways in which the principles of European legislation—perhaps this is the point of the intervention by my hon. Friend the Member for South Thanet (Dr. Ladyman)—are to be introduced into British law. Those principles are laid down by treaty and by the European Court of Justice. Any decision of that court must be taken into account by the Office of Fair Trading and British courts, which also have to take into account any relevant decision or statement by the Commission. As I understand it, that means that we have to consider cases in Europe. One famous case was that of Tetra Pak in 1994, which I am sure my hon. Friend the Member for South Thanet knows all about. It said that, if pricing by a dominant firm was below the average variable cost of production, predation should be presumed, and the proof of intent was not required. It also defined "dominant position". One problem is that The Times has only 28 per cent. of the market, and one could argue that that is not a dominant position. However, the Commissioners have made it clear that a dominant position is one in which a firm can act independently of competition, and that it does not specifically relate to market share, so that is a stronger position than we have at present.

Stephen Ladyman (Labour, South Thanet)

The case to which my hon. Friend refers, which covers freedom to act independently, is that of United Brands v. the Commission, which includes almost identical language to that in his amendment, which makes it superfluous, because that language will be in the Competition Bill as it stands and as the Government propose it to be.

Giles Radice (Labour, North Durham)

If my hon. Friend would listen to my argument before he knocks me down, I should be most grateful.

John Redwood (Conservative, Wokingham)

He already has.

Giles Radice (Labour, North Durham)

We shall see. He thinks so. He is acting in a predatory manner.

Stephen Ladyman (Labour, South Thanet)

Not, unfortunately, from a dominant position.

Giles Radice (Labour, North Durham)

No, from a sitting position. My hon. Friend argues that the Bill as it stands provides a powerful mechanism for dealing with predatory pricing. I said on Second Reading that I was impressed by that case, and that I would consider it seriously. I said that I would take the best legal advice. Having spoken to a considerable number of lawyers, I find that, like economists, they have different opinions. There has been some support for the Government's interpretation of the Bill, but also some dissent. The hon. Member for Eastleigh (Mr. Chidgey) is aware of the advice of Richard Fowler QC, the lawyer used by The Independent. Some may say that one can hire one's lawyer to suit the case, but I do not make that point.

David Chidgey (Liberal Democrat, Eastleigh)

I note the hon. Gentleman's feeling that The Independent has a particular line to pursue, but does he agree that an eminent QC's opinion is an independent opinion? There would be no other point in seeking it.

Giles Radice (Labour, North Durham)

Let me cite Mr. Fowler. He said that it is unlikely to be possible to establish a relative dominant position as that concept is defined in Community jurisprudence. He is concerned that that will not do the job. Lord Borrie, a person respected by the whole House, shares that view. I want to strengthen the Bill by adding to it the words of the President of the Board of Trade and the Minister of State. There are conflicting views of what the Bill will do, and my amendment would make the position more certain by saying that a 'dominant position' means a position of economic strength which enables an undertaking to act independently of competition, customers and ultimately consumers within the United Kingdom". That is a good description of the dominant position of The Times, which is able to use the profits of the Sunday Times, and perhaps other undertakings owned by the Murdoch empire, to persist in a policy that it could not otherwise afford.

Andrew Bennett (Labour, Denton and Reddish)

I understand what my hon. Friend is getting at, but I do not understand why he did not go along with amendment No. 8, which is more specific to the newspaper industry. It makes the point that, in buying peas or Tetra Paks, one does not need much choice. However, buying ideas, which is what newspapers are about, is another matter.

Giles Radice (Labour, North Durham)

I am sympathetic to amendment No. 8, but one would have to define "substantial", and that would lead to a circular argument, because there is no definition—certainly there is none in the Bill—of that word. Amendment No. 8 would throw us back to European legislation. I am sympathetic to my hon. Friend's idea, and I consider that we are trying to do the same thing, but I think that my way is perhaps better, despite the criticisms offered by my hon. Friend the Member for South Thanet.

Stephen Ladyman (Labour, South Thanet)

rose—

Giles Radice (Labour, North Durham)

Does he want to criticise me a third time?

Stephen Ladyman (Labour, South Thanet)

My hon. Friend seems to minimise the impact of European legislation on the Bill. Clause 60 makes that legislation central to the Bill, so that all European jurisprudence can be used. As my hon. Friend's amendment contains the same wording as European case law, what is its purpose?

Giles Radice (Labour, North Durham)

My purpose is to put the position beyond peradventure. I am interested in listening to the Minister, and to my hon. Friend, and I may well be persuaded by them, but I want to try to tease out a strong definition that can be used in the courts.

Robert Marshall-Andrews (Labour, Medway)

May I helpfully suggest an answer that my hon. Friend might have given? European case law as adumbrated in the Bill by clause 60 may change, and that is one reason for enshrining the principle in our own legislation, to set it in stone.

Giles Radice (Labour, North Durham)

I am most grateful to my hon. and learned Friend. I sense another helpful intervention.

David Winnick (Labour, Walsall North)

If Mr. Murdoch had a vote tonight, he would certainly vote against the amendment and new clause 1. The Murdoch empire and the media do not want to see them carried.

Giles Radice (Labour, North Durham)

They might even vote against the Bill.

David Winnick (Labour, Walsall North)

More so against the amendment.

Giles Radice (Labour, North Durham)

Probably. I have covered my amendment, which is about predatory pricing and a dominant position in the national newspaper market. It is not about the Murdoch press, or about the fact that The Times is no longer a paper of record. It is not about the fact that The Sun is sometimes disgracefully xenophobic. Nor is it about the fact that News International has perhaps too big a share of the United Kingdom newspaper market. This is not the place in which to express my concern about how an unelected Australian-American media owner interferes, through The Sun, in British politics. [HON. MEMBERS: "Go on."] I am having a good try, but I might be ruled out of order.

Giles Radice (Labour, North Durham)

Lord Beaverbrook once said, "What I want is power: kiss 'em one day, kick 'em the next." Rudyard Kipling, whose words were later quoted by his cousin Stanley Baldwin, said: Power without responsibility—the prerogative of the harlot throughout the ages. Those words still apply. I shall not ask the Minister for his views on them or on their relevance today.

Ian McCartney (Labour, Makerfield)

For the record, the last gentleman that tried to kiss me one day and kick me the next, spent 12 months at Her Majesty's pleasure.

Giles Radice (Labour, North Durham)

I congratulate my hon. Friend on his robust attitude. I ask him either to accept my amendment, or to reassure me that the Bill will enable us to take tough action against predatory pricing wherever it occurs, including in the newspaper industry.

David Chidgey (Liberal Democrat, Eastleigh)

Most hon. Members know that, during the Bill's passage, we have had several opportunities to debate the issues before us. It stands out from our deliberations in Committee and on Second Reading that Ministers have been accused several times—not by me, I hasten to add—of altering course and changing their position. At times, they have argued that an action should be ruled out in the interests of avoiding putting undue burdens on business. At other times, they have said that action is unnecessary. The one thing in which the Government have been constant throughout our proceedings is opposing any additional safeguards on predatory behaviour in the national newspaper business. The Government's position is surprising, because, when Labour was in opposition, it was boisterous and vigorous in promising action. It is surprising that, in office, it appears less interested in that promise; some might say that it has betrayed it. The Government seem determined that no one should have the opportunity to help them with it. That is the nub of this debate. I want to discuss some of the issues raised in Committee, and some of the objections that Ministers made to amendments in Committee, particularly in respect of new clause 1 and amendment No. 8, which was tabled by the hon. Member for Sunderland, South (Mr. Mullin) and which I have signed, which would take us some way forward. There is a need for a clause specific to the newspaper press. I strongly believe that competition law should contain specific, and stricter, provisions on the press. Ministers have argued that it is wrong in principle to have different prohibitions in different sectors, but perhaps they forget that schedules 2 to 4 are devoted to excluding certain sectors from the Bill altogether. There is an inconsistency there. With the press, diversity of provision, and hence of expression of comment, are necessities in their own right. That need goes beyond the need for competition in the supply of goods and services. Competition is a means to an economic end, but a diverse press is an end in itself. Where the diversity of the press is concerned, competition law must go further than it does for ordinary goods and services. That need has always been recognised in mergers policy. I think that sections 57 and 62 of the Fair Trading Act 1973 are devoted entirely to establishing stricter criteria to apply to newspaper mergers alone. The Government should recognise that the same need exists in other areas of competition law—notably the control of anti-competitive conduct, which is the subject of the Bill. That is the gap that new clause 1 and amendment No. 8 seek to fill. Is the chapter II prohibition sufficient in the case of predatory behaviour in the newspaper business? Ministers have argued that it is enough to rely on the Bill as it stands. They point to clause 18, which prohibits the abuse of a dominant position, to clause 60, which imports European jurisprudence into the interpretation of that prohibition, and to European case law on predatory pricing. I agree with the hon. Member for North Durham (Mr. Radice) that those claims have been exploded by the recent opinion of leading counsel, in particular that of Mr. Richard Fowler, QC. He has shown that European jurisprudence sets a very high threshold before dominance can be established. That is unsustainable when the diversity of the press is at issue. Such diversity could easily be threatened by anti-competitive conduct long before a newspaper reached the point of dominance set out in the jurisprudence. Ministers also argue that clause 18 will make predatory pricing easier to establish than it is under present competition legislation. They point again to European case law, which says that predation should be presumed whenever prices are below the average variable cost of production. Mr. Fowler has again made it clear that, for newspapers, with their reliance on advertising revenue, that precedent would not run. Another ministerial reassurance is thus undermined, if not negated.

Stephen Ladyman (Labour, South Thanet)

Will the hon. Gentleman give way?

David Chidgey (Liberal Democrat, Eastleigh)

I could see the hon. Gentleman's enthusiasm mounting. In a spirit of generosity, I am delighted to give way.

Stephen Ladyman (Labour, South Thanet)

Far be it from me to suggest that the learned gentleman whom the hon. Gentleman quotes was talking poppycock, but he claims that in Europe there is a high threshold for establishing a dominant position. It is clear from what the Commissioners have said that, under some circumstances, they would regard a 20 per cent. market share as dominance. Does the hon. Gentleman seriously suggest that less than 20 per cent. should still be considered dominant?

David Chidgey (Liberal Democrat, Eastleigh)

I am somewhat confused by that question. I think that the hon. Gentleman referred to me as learned, or perhaps it was to someone else. He accused a leading counsel with an international reputation of talking poppycock. I cannot comment on that, but the opinion is on the record. It differs from the Government's legal opinion, but where there is conflicting legal opinion, there is a problem with legislation. If he contains his enthusiasm while I continue my remarks, I think that I shall be able to demonstrate why that is important.

John Hayes (Conservative, South Holland and The Deepings)

Will the hon. Gentleman give way?

David Chidgey (Liberal Democrat, Eastleigh)

We have a new face in the Chamber. What a pity the hon. Gentleman was not here for the opening remarks. Nevertheless, I shall be generous and allow him to contribute.

John Hayes (Conservative, South Holland and The Deepings)

The hon. Gentleman's generosity is clearly not matched by his courtesy. My point supports what he said. He will be pleased to learn that not only leading counsel but European case law supports his argument and not that of the hon. Member for South Thanet (Dr. Ladyman).

David Chidgey (Liberal Democrat, Eastleigh)

I am grateful for that point. I quickly withdraw any discourtesy. I was perhaps momentarily excited; it was meant merely as part of the usual cut and thrust of our friendly behaviour in the Chamber, particularly at this hour. I contend that counsel's advice is clear. The comfort that Ministers have held out on the adequacy of clause 18 is illusory. It will leave untouched a range of anti-competitive practices that could threaten the diversity of the press. Those threats will remain unless the House enacts specific safeguards against them. It has been argued that it is wrong to use legislation to target a particular case—an issue addressed several times in Committee. Ministers argued that legislation should provide a general framework, and should not be used to target individual abuses by individual companies or even against individual companies. That is clearly right. A vital aspect of press diversity is that the market should be open to newcomers. The amendments are couched sufficiently generally not to prejudge the facts of any particular case. Findings of fact are for the relevant enforcement authorities, not the legislators. The purpose of the amendments is to establish a general safeguard for press diversity and make it a new and free-standing responsibility of the Director General of Fair Trading, and, as necessary, the new Competition Commission. I am concerned about how the Minister may respond on new clause 1. I trust that the House will welcome its provisions. Its purpose is to stand in place of, and improve on, the clause 19 that was added to the Bill in another place before it reached Committee here and the Government were able to remove it through their votes there. New clause 1 would prohibit any anti-competitive practice that threatens to reduce the diversity of the national newspaper press, but only if the author of that practice enjoys a monopoly situation. Both "anti-competitive practice" and "monopoly situation" have existing statutory definitions, in the Competition Act 1980 and the Fair Trading Act 1973 respectively. Therefore, their meaning will already be familiar to the business community affected by the Bill. Let me deal with the question of dominant position and monopoly situations. On Second Reading and in Committee, Ministers criticised the original clause 19, because, it was claimed, it relied on a special definition of a dominant position, including any substantial degree of market power". Ministers claimed that the clause was too wide, because, they said, practically any established newspaper will hold substantial market power. The new clause meets that criticism by confining its reach to monopoly situations as defined in the Fair Trading Act, which entails a market share of 25 per cent., which is common knowledge. The scope of the new clause is thus confined within existing strategy limits. Surely nobody would argue that practically any established national newspaper company will hold a market share of 25 per cent. 8 pm Turning to the definition of the abuse that will be prohibited, the old clause 19 was also criticised by Ministers because it prohibited any conduct, within certain limits, which might reduce the diversity of the national newspaper press. It was thought that the clause would throw the baby out with the bath water, because it applied, or could be seen to apply, to any conduct, legitimate or illegitimate, that might reduce the diversity of the national newspaper press; it could even condemn good journalism. However, in new clause 1, anti-competitive practices are defined in the same way as in section 2 of the Competition Act 1980, which I believes overcomes the problem. Let me now turn to advertising revenues of newspapers. Much has been of the costs of producing The Times, and the accounting procedures of News International. In our debate on the old clause 19, we focused on its reference to "selling prices", which was thought to imply that a low cover price could be an abuse regardless of advertising revenues. Obviously, that argument on its own is unsustainable, because no one would be able to support a principle that prohibited the publication of free sheets. Therefore, the issue is not selling price, but overall costs. The new clause meets that criticism by eliminating all reference to selling price; instead, it deals only with anti-competitive practices that threaten to reduce the diversity of the national newspaper press. It would be for the competition authorities—the Director General of Fair Trading and the new Competition Commission—to identify such anti-competitive practices, according to their practised judgment. If accepted, the new clause would leave them entirely free to consider advertising revenues in whatever way they thought right. Ministers should recognise and acknowledge that all their objections have been heard, heeded and fully catered for in new clause 1. The new clause now applies only where there is a monopoly situation, and only to actions that constitute an anti-competitive practice. It prohibits such practices when they may reduce the diversity of the national newspaper press. Surely nobody could doubt the justification for that.

Chris Mullin (Labour, Sunderland South)

I rise to speak to amendment No. 8, which stands in my name and those of several colleagues, including the hon. Member for Eastleigh (Mr. Chidgey). Let me say out the outset that I welcome the Bill. It contains many desirable measures and I shall have no difficulty voting for it on Third Reading. However, the acid test is the one that I mentioned on Second Reading, during an intervention on the Secretary of State: whether the Bill deals with predatory pricing in the national newspaper market, which is the worst example of predatory pricing and abuse of the market and is all the more serious because, unlike predatory pricing in other sectors, it has implications for the democratic process. The Bill as drafted does not pass that test; therefore, the purpose of my amendment is to bring predatory pricing in the newspaper industry within its scope. The issue is one in which my hon. Friend the Member for North Durham (Mr. Radice) and I have taken a serious interest. It will be evident from the signatures of seven Select Committee Chairmen to amendment No. 8 and that of the distinguished Chairman of the Liaison Committee to amendment No. 1 that our concern is widely shared. We have not tabled the amendments lightly. We have talked to the Secretary of State, who has listened courteously to our concerns, to Lord Borrie and to representatives of the industry—including the editor of The Times and the chairman of News International—and we have taken advice from experts. I had an open mind on Second Reading, after the effect of clause 60 was belatedly explained to us, but I have been impressed by two things: first, that Lord Borrie, a former Director General of Fair Trading, is of the opinion that the Bill as drafted will not catch what is going on in the newspaper industry and, secondly, the opinion of Richard Fowler QC, who shares that view. They are both of the view that the Bill will be ineffective against the five-year war of attrition conducted by News International against its rivals, which is the fundamental reason why I tabled the amendment. The background to the problem has been outlined by my hon. Friend the Member for North Durham. For the past five years, News International has been selling The Times and occasionally The Sun for far less than the cost of production. That is not a temporary promotional activity; it has been going on for five years. It is dragging down other newspapers: for example, The Daily Telegraph and the Daily Mirror have felt obliged to respond in order to compete. It is having an extremely damaging effect on our national newspaper market, especially the broadsheet market. Be under no illusions, The Times is making huge losses. When the chairman of News International came to see my hon. Friend the Member for North Durham and me, we asked him how much it had cost the company so far. Although he was the chairman, he did not appear to know the exact figure, but "under £75 million" was the figure he mentioned. It is unclear whether that comes from the profits of The Sunday Times or from other parts of the empire. Subsequent to our meeting, I wrote to the chairman asking whether the profits of The Sunday Times over the same period exceed the subsidy to The Times and, if so, by how much. Mr. Hinton replied: We do not break out the profit and loss of The Times and Sunday Times separately so there is no way of telling. News International argues that the increase in advertising revenue resulting from the increase in sales of The Times should be taken into account, and I agree—that is a perfectly reasonable point—but I am assuming that the £75 million loss Mr. Hinton talked about already takes account of that. The figure is in addition to any increase in advertising revenue. Let us not be distracted: it is clear that News International's war of attrition could be sustained only by a corporation with huge resources. Those are the facts so far as we are able to discover them. The result is that hundreds of millions of pounds, much of which might otherwise have been invested, has been drained out of the national newspaper industry. The Independent, which I accept has other problems, has been forced to the brink of extinction. It is bogus to describe what has been going on as normal promotional activity—it is not normal; no other national newspaper engages in such sustained price cutting. If the purpose was to make The Times the market leader, the strategy has not succeeded; nor has it succeeded, after five years, in making the newspaper profitable, even when advertising revenue is taken into account. However, it is no defence to say that the strategy has not worked. As to whether the strategy has worked and what was the goal of the strategy, the jury is still out. It could go on for years with consequences on which we can only speculate. Who knows where it will end? There is another possibility—a different interpretation from the one that News International would like us to believe is the purpose of its activity—and that is to inflict damage on or to sink rivals. Mr. Murdoch has said in public that by the early part of the next century there will be only three national daily newspapers left—The Times, The Sun and the Daily Mail. He did not say whether that was a desirable target or an inevitable and regrettable fact of life. Whatever view one takes, were it to come to pass—I hope that it will not—it would mean that the British public would be left with a choice of lie machines, either the Harmsworth or the Murdoch lie machine. I do not want that day to arrive. Happily, there is no shortage of ex-Murdoch executives. A fax may arrive from Los Angeles or New York and they are here today and gone tomorrow. Who knows, that fate may yet overtake one or two of those who are giving us the lavish assurances about how this is just a normal promotional activity. If that fate does overtake them, perhaps they will be in a position to be more frank with us about what it is all about. As I have said, even now there is no shortage of ex-Murdoch executives. One such person told me that he was in the presence of the man and heard him ask, "How do we sink The Daily Star?" As he said, Murdoch does not need to do that. It is almost an irrelevance to his interests, but he cannot resist the challenge. That is a little glimpse of his mind set. Another former senior executive of News International has been overheard talking in similar terms about how to sink The Mirror. The strategy has certainly inflicted some damage on that paper over the years. I do not want to get bogged down by arguing about the purpose of all this. If it is any help, for the purposes of argument, I am willing to assume that Mr. Murdoch's motives are purely honourable and commercial. I want to concentrate on the effect. It is deeply damaging to our democracy to limit or threaten to limit the diversity of our national press. So far there have been three investigations by the Office of Fair Trading and a fourth is under way. As my hon. Friend the Member for North Durham said, since it is taking place under the existing competition regime, we should not have any high hopes of it. That is the background. As my hon. Friend ably explained, amendment No. 1 makes explicit what is at present implicit. It is welcome, but, in my view, it is not sufficient to solve the problem. As the Bill stands, it is necessary to demonstrate that there is an abuse and that the abuser has a dominant position in the market. New clause 1, tabled by the Liberal Democrats, attempts to address both those points by lowering the test for national newspapers. I believe that it is not difficult to prove an abuse. After five years, it is surely no longer possible to argue that News International is engaged in a temporary promotional activity. I have concentrated on lowering the test of dominance in relation to national newspapers. That is the purpose of amendment No. 8. European law is based on cases where a company such as Tetra Pak, having 80 or 90 per cent. of the market, seeks by means of artificially low pricing to squeeze rivals out of the remaining 10 or 20 per cent. It is true that the Commission has indicated that it might be willing to look at cases where the alleged abuser has a much lower percentage of the market, but, in those circumstances, market dominance is a hurdle which will prove difficult to cross in the national newspaper industry. Depending on which definition one takes, News International has somewhere between 28 and 33 per cent. of the market. I was interested to hear the chairman of News International say on the "Today" programme that News International has only 19 per cent. of the market. That is evidence of how much reliance we can place on News International figures because, as I have said, the true figure is somewhere between 28 and 33 per cent. Lord Borrie and Mr. Fowler, an expert on competition law, take the view that market dominance is a hurdle which will prove difficult to cross in the national newspaper industry. In an opinion commissioned by The Independent, Mr. Fowler says: whether the relevant market is defined as broadsheet newspapers or national newspapers generally, it is unlikely in my opinion that the position of The Times, or of News International, would meet the European Court of Justice tests for dominance. So, we could sit back and say that nothing can be done about predatory pricing until one of the abusers—it is likely to be Murdoch—has, by fair means or foul, obtained a 50, 60 or 70 per cent. share of our national newspaper market. What Government would dare to take on a corporation with that percentage of the market? Heaven knows, it is difficult enough to get anyone in high places to think sensibly about Murdoch when he has only one third of the market. Instead of waiting for a bad situation to get worse, I am seeking to rectify the matter now. My amendment does that by lowering the test for national newspapers from dominance to a substantial degree of market power". 8.15 pm The Government have two principal objections to my proposal. First, they say that they are not in the business of singling out Rupert Murdoch or any other proprietor. My amendment does not do that. It seeks to outlaw predatory pricing among national newspapers regardless of the identity of the proprietor. As we have seen, The Daily Telegraph and The Mirror would also be affected. Any newspaper corporation that attempts to subvert the market by predatory pricing would be caught by my amendment. Mr. Murdoch's name crops up more than most because he is the greatest living practitioner of predatory pricing. I am sorry about that, but it is an unavoidable fact of life. My amendment makes no mention of Mr. Murdoch or News International. It would apply across the market. Secondly, the Government object to singling out national newspapers. That is the key issue—it is the core difference between us. It is a difference of principle and we should not shy away from it. I am grateful to Ministers for not arguing that my amendment is technically defective—it is not. We are discussing a straight issue of principle and my argument is simple. The free flow of information is the life blood of democracy. A diverse media is a precondition of democracy. Any practice that, by accident or design, is likely seriously to limit newspaper diversity therefore threatens democracy. That is why newspapers are a special case. As the hon. Member for Eastleigh said, previous Governments have accepted that in relation to merger policy and other aspects of competition law. Clauses 57 to 62 of the Fair Trading Act 1973 are devoted to establishing stricter criteria for newspaper mergers. That Act was passed by a Conservative Government. It is disappointing to see so few Conservative Members today. I saw a poll which suggested that 95 per cent. of Conservative Members thought that the Government were too close to Murdoch. If they really thought that and were concerned about it—

Giles Radice (Labour, North Durham)

They want to be close to Murdoch.

Chris Mullin (Labour, Sunderland South)

My hon. Friend is right; it is jealousy. I had hoped that one or two Conservative Members would come to the House to express their concern on this issue. Alas, that is not the case. In case anybody thinks that the Government have changed their mind, I can say that that is not so. In the consultation document that preceded the Bill, the President of the Board of Trade said: We do not propose to use the Bill to amend the Fair Trading Act newspaper merger provisions. The original rationale for these provisions was that increasing concentration of newspaper ownership could threaten freedom and variety of expression in the press. We consider this rationale remains valid. Those are the words of the President of the Board of Trade within the past 12 months. In other words, when it suits them, the Government accept that newspapers are a special case. I could not put it better myself. However hard I try, I am unable to distinguish between a threat to newspaper diversity caused when a large corporation seeks to take over its rivals and a threat to diversity caused by a corporation that already has an enormous share of the market seeking to expand its share by a practice so blatantly unfair as predatory pricing. In any case, it is not strictly true that the Bill applies across the market. As the hon. Member for Eastleigh pointed out, schedules 2, 3 and 4—no doubt for good reasons, which I do not dispute—list all sorts of areas to which the new competition regime will not apply. It would be a simple matter to make an exception for newspapers. The Fair Trading Act is a healthy precedent. All that is required is the political will, which is the purpose of my amendment. In the absence of a miracle, I intend later to put the amendment to the vote.

Robert Marshall-Andrews (Labour, Medway)

I support the amendment, which is not specifically anti-Murdoch or anti-News International. I declare an interest: I write reasonably regularly for The Sunday Times, which is, of course, part of News International. In the past few weeks, I have written about the potential catastrophic effects of the third way, the vulgarity and vast waste of the millennium dome and the abolition of the Lord Chancellor. I very much hope that I shall in future be given the opportunity to write other articles that are helpful to the Government. I do not attack News International or Rupert Murdoch and I am very happy to write for his newspapers and take his shilling. The point needs to be made that this is a commercial Bill, the purpose of which is to regulate commercial dealings and promote the purifying oxygen of competition. It is a perfect Bill. It is strong and good in every respect except one: it fails to address the unique commercial position of the newspaper industry, which is worth £700 million a year and, notwithstanding that, succeeds in making an aggregate net loss of £50 million. Why is it unique? That question is essentially the argument that the Government have against the amendment. Why single out the newspaper industry? I shall attempt to answer that in one sentence. No other major commercial undertaking is owned for the express and specific purpose of obtaining and using political power and influence. That is the difference between the newspaper industry and any other. Protestations to the contrary are not worth even considering. The Sun did not run a banner headline, "It Was The Sun Wot Won It" because of mere vulgar braggadocio, but because it believed that it was true. The Prodi incident caused consternation not because it was an unedifying example of politicians operating at the behest of business men, but because the business man was Rupert Murdoch, who is, in effect, a strong and established politician. What is the effect of that single difference between the newspaper industry and every other? I suggest that it has two effects. First, we have a legitimate interest in debating the industry in the House because it affects politics and democracy. The second effect, which is far more important in the context of the amendment, is that the political power that is wielded within the industry, which it conceals, distorts the commercial strategies of the market. The Bill deals with those commercial strategies and is predicated on commercial reality. In normal commercial considerations, no commercial entity can or does afford, for a long period, to trade at a loss. It can do so only for a limited period to drive its competitors to the wall. That does not apply in the newspaper industry. The normal capitalist impulse to destroy one's competition is based always on the desire to obtain a monopoly position to manipulate price. That is not the motive in the newspaper industry, where the impulse is to destroy one's competitors to obtain a monopoly of power. That imports into the industry completely different commercial realities. One has only to test that against what has recently happened in the industry to realise that it is true. Nobody but a commercial lunatic would have purchased The Independent for commercial reasons. It was purchased not because it is a commercial concern but because it is a newspaper and is likely, let us face it, to make a loss for a considerable period. Precisely the same may be said—topically—of the New Statesman. Nobody but a commercial lunatic would have purchased that, but it was purchased by a gentlemen of enormous commercial acuity, not because it would make a profit but because it is a newspaper. The difference in the commercial considerations imported into the industry by the reason people use, purchase and run newspapers is extremely important for the purposes of clause 18. As we know, one must break two separate rules to transgress clause 18. The first relates to predatory pricing, which is set by Tetra Pak because of the European provisions of clause 60. There is no problem in the House with the conditions that Tetra Pak lays down. If one applies those rules there is a near certainty that Rupert Murdoch has been predatorily pricing with News International and, in particular, with The Times. I cannot tell the House that that is true because I am not privy to the inner workings of News International, but every objective test suggests that Rupert Murdoch has transgressed the Tetra Pak principle. That is not the problem, which is why amendment No. 8, which bears my name, does not even contemplate examining predatory pricing. The single issue here is what is domination in the market, and, on that issue, the newspaper industry is different from others. The reason the Bill and European legislation and jurisprudence apply only to dominance in the marketplace is that that is the only place where it matters. No one who is not dominant in the marketplace will predatorily price. If they do, it will not be for long because if they do not hold a dominant position in the marketplace, predatory pricing is commercial suicide. Ultimately, if such a war is started, the person who holds the dominant position will always win on the well-known General Haig principle that there will always be one man left standing at the end. That is why legislation, in commercial terms, applies itself to the dominant position in the marketplace. That does not apply to newspapers because the reasons for using and owning them mean that those with a substantial share in the marketplace will sustain losses for years, as News International has done, to break their competitors not commercially but politically and to gain a greater political share. The implicit danger is commercial. News International holds 33 per cent. of the market. I have to say to my hon. Friend the Member for North Durham (Mr. Radice) that, under any test, 33 per cent. will not be enough to guarantee that a court or the Office of Fair Trading will find that a company holds a dominant position in the marketplace. A little law that I know proves that that is the case. The United Brands or Michelin test, which began its life in the ninth or 10th version of the Commission's report on competition, is that dominance exists if the nature and structure of the market enable a company to act independently of competition. I shall not bore hon. Members to tears with the reasons, but my view, which coincides with those of other silks who have been quoted, is that that test will not guarantee a finding of a dominant market position for Murdoch's empire or any other newspaper empire in this country. If the House is to safeguard the principles that my hon. Friend the Member for Sunderland, South (Mr. Mullin) articulated so well—the democracy of the House and the continuation of a healthy, democratic newspaper industry to support it—the only way for it to do so is for the House, united, one hopes, without party, to vote for the amendment.

David Winnick (Labour, Walsall North)

It has been said that amendments Nos. 1 and 8 and new clause 1 do not refer to Mr. Murdoch, but we all know that we are debating the Murdoch clauses, and there is no doubt whom we have in mind. I do not regard Mr. Murdoch as being responsible for all, or necessarily most, of the ills of the media world. If, for example, we looked at The Independent, we would probably conclude that it had been an excellent newspaper and that, unfortunately, a decline took place. The Independent started as a very good newspaper—it was highly welcome—but, in the past two or three years, it was undoubtedly the author of its own decline. I am pleased that, as a result of a change of editor, there now seems to be a good prospect that The Independent will be the type of newspaper that one wants to see, and will provide honest competition for the other broadsheets. One need only compare The Independent with what it was under some previous editors and my point is made. 8.30 pm I might be accused of making a wrong point, but I do not believe so, when I say that some of the anti-Murdoch sentiments come from those who dislike the political line that he—or at least his newspapers—is advancing on the single currency and against economic and monetary union. I support amendment No. 1, despite the question that I shall now pose. If the Murdoch newspapers—The Times and The Sun—were very pro economic and monetary union, and were in favour of Britain joining the single currency at the first opportunity, would there be the same amount of criticism? Undoubtedly, my hon. Friend the Member for Sunderland, South (Mr. Mullin) would not change his opinion—he would be making the speech that he has just made, and doing very well indeed—but I wonder whether some of the critics are motivated by the line on the European Union that Mr. Murdoch or at least his newspapers are advancing. The other broadsheets, The Guardian and The Daily Telegraph which have also been mentioned, are excellent newspapers, well able to look after their own, and one hopes that that continues to be the position, even if I would not tend to support the politics of those newspapers—especially, of course, of The Daily Telegraph. There are three main reasons why I believe that new clause 1 and amendments Nos. 1 and 8 are necessary. First, the point has been made, and cannot be reiterated too often in the debate, that the pricing of The Times is unfair—that the purpose of such pricing arrangements is to drive competitors out of business. When recently I had a meeting—with one other colleague—with the editor of The Times, the fact that such pricing arrangements would drive competitors, especially The Independent, out of business was hotly denied, as though the thought had never come into the mind of those who control the Murdoch newspapers in this country. We know that that is nonsense. We know that the sole purpose—perhaps it is unfair to say that, but one of the main purposes—of the pricing of The Times as it is at the moment in comparison to its broadsheet rivals is to drive at least one, perhaps two, of those rivals out of business. We also know—the point was made by my hon. Friend the Member for North Durham (Mr. Radice) when he moved amendment No. 1—that if The Times was not so heavily subsidised by all the other Murdoch outlets, it would simply not be possible to have such a pricing arrangement. That is the first reason why I am, and have been for some time, very critical of what is happening. If The Independent were forced out of business, that would undoubtedly be a serious blow to the broadsheet market, to British politics and to British democracy. The letter that we have received from the executives of The Daily Telegraph and The Guardian, containing the views of the lawyer, Mr. Fowler, has been mentioned. I agree that the executives have an interest, but Mr. Fowler's views should be noted. The second reason why I am opposed to the present situation regarding the Murdoch media empire is that far too much media power is undoubtedly concentrated in the ownership of Mr. Murdoch—in Britain, as has been stated, in Australia and in the United States. I do not believe that that is desirable, or that it is healthy in a democracy. The danger is that if other broadsheets went out of business—certainly if The Independent did so— that would give the Murdoch press empire even more power than it has. That is why I say that that concentration of media outlets in the hands of Mr. Murdoch, not only in the press, but very much in television, is undesirable. One would hope that the Government would recognise that and act accordingly. My third reason is somewhat different. In my view, Mr. Murdoch believes that he has any Government in Britain in his pocket and that his power—that word is very appropriate in this context—is such that no one in the main stream of British politics or, to put it more clearly, the two main parties, whether in government or not, is likely to take any position that will endanger his press empire. Although I appreciate what the Liberal Democrats have done in another place and here, I nevertheless have to say that, if they stood a realistic chance of forming the next Government, it is not likely, although I may be wrong, that they would be pushing new clause 1 with as much enthusiasm as they have been, and it is more than likely that they would be adopting the same position as the Conservative Opposition.

David Chidgey (Liberal Democrat, Eastleigh)

I am grateful to the hon. Gentleman for giving way; he realises that he has offered me a bait that I cannot refuse. I was not aware that he had some magical orb in his hand with which he could predict the future electoral success of any political party in this country. Perhaps he would reveal the secret.

David Winnick (Labour, Walsall North)

I am merely saying that it is interesting to note the attitudes of political parties. The Conservative Opposition, for example, are staying silent. They certainly will not vote for the amendments; that was made clear at a previous stage of the Bill's passage. The reason is pretty obvious: they do not want to give Mr. Murdoch the impression that they will act, or vote, in any way that will cause him offence. That is the sort of power that Mr. Murdoch has. His feeling is that, with all the media power that he already possesses, he has the Government in his pocket. I do not believe that my Government are in his pocket at all, but I do believe that there is a feeling—I am speaking as frankly as I can on the Floor of the House—that, in order to be re-elected, we should not do anything by way of legislation that will give offence to the person who owns so much of the media in this country. I think that that feeling is highly undesirable, and that it is not—I hope that it is not—the purpose of British democracy for one person virtually to decide who should be the Government of the day. It is not for one person, be it through The Sun or The Times—but especially the tabloid Sun—to say, in effect, that if the Government displease Mr. Murdoch, he will campaign to get them out of office. At the moment—I am being as frank as I can—both the Government, whom I enthusiastically support, and the main alternative Government give the impression that they do not want to take any action that would offend Mr. Murdoch. I conclude by saying that in a democracy, there are bound to be—there always have been in this country, I suppose—powerful people in the media world, such as the late Lord Beaverbrook who was mentioned, who hold a good deal of power. I suppose that, by the very nature of capitalism, that is bound to be the case. Mr. Murdoch is somewhat exceptional in that he has more power than previous media tycoons. He would like to concentrate even more power in his empire and the time has come for the Government, and certainly for Parliament, to say that enough is enough. The most effective way in which to do that is to accept the amendments and the new clause.

Austin Mitchell (Labour, Great Grimsby)

Unusually, I want to support the Government's line and oppose the amendments. I cannot support the amendments because the Government's definition of predatory pricing in the Bill is perfectly adequate to deal with the situation. What has been added to that is an explosion of impotent anger against Rupert Murdoch, and the reasons for that are many and varied. My hon. Friend the Member for North Durham (Mr. Radice) is obviously upset because Rupert Murdoch is voicing the views of British people on the euro. Others do not like The Sun on taste grounds and some, particularly on the left, do not like Rupert Murdoch's politics. As we spent more than 20 years attacking the politics of The Sun and have now come to accept so many of them, that is a rather curious ground on which to attack Mr. Murdoch. Some hon. Members, such as my hon. Friend the Member for Walsall, North (Mr. Winnick) and the Liberal Democrats, do not like the fact that Rupert Murdoch is so close to the Government. The Liberal Democrats would rather that the right hon. Member for Yeovil (Mr. Ashdown) was close to the Government. I do not agree with any of those notions because they do not seem to do anybody any credit. I certainly do not come to praise Rupert Murdoch, but I certainly do not intend to bury him. I admire him as a stirrer and a brilliant newspaper man, many of whose actions have been good for the newspaper industry. I also admire him as a risk-taker and innovator who successfully gave us Sky television. When I say that I admire him, I do so with no implication of vested interests.

Giles Radice (Labour, North Durham)

My hon. Friend used to do a television programme for him.

Austin Mitchell (Labour, Great Grimsby)

As my hon. Friend reminds us, I used to do a television programme for Rupert Murdoch but, thanks to one of his many commercial mistakes, my programme was dropped. That shows that even Rupert Murdoch is capable of bad judgment. The Sky television management have gone flabby because they took off the best current affairs programme on the network. I am trying to look at the matter in the light of the arguments, decide on the facts, and do myself a little credit with the Government. A reshuffle is coming and my hopes are strong. I have not yet received any word from Downing street, although I sit at home every night waiting for the phone not to ring. I hope that my speech will encourage the process. I want the Newcastle Brown award for meritorious conduct in this matter.

Ian McCartney (Labour, Makerfield)

On the grounds of clarification and job insecurity, may I ask my hon. Friend whether he is after my job?

Austin Mitchell (Labour, Great Grimsby)

Certainly not. I could not do it anything like as well as my hon. Friend after all those conversations we had. We should oppose the amendments for a number of reasons, the first of which is that it is wrong to use a Bill that deals with competition to reduce competition and increase prices. What on earth will we achieve by increasing prices? That is a distortion of the Bill's role. If there is a problem about Murdoch's share of the market, let us have the guts to tackle it directly rather than in a back-door, covert way.

Chris Mullin (Labour, Sunderland South)

Will my hon. Friend give way?

Austin Mitchell (Labour, Great Grimsby)

No. We can all whinge about Rupert Murdoch. I am slightly embarrassed because I differ from my hon. Friend the Member for Sunderland, South (Mr. Mullin). Like him, I am on the extreme left of the party. I am there because the party has moved so far to the right behind me. My hon. Friend and I are all that is left and I am a Gaitskellite. Murdoch has been successful: The Sun is a success. He kept it alive and boosted it to a mass circulation newspaper. He kept Today alive far longer than would have been the case under any other management. The Times and The Sunday Times have been built up into successful papers. It is true that there is a threat to The Independent, but that is The Independent's fault, not Rupert Murdoch's. If The Independent has gone off, it is because it is no longer independent, has lost its way and has been a wandering, bad paper. It has pulled itself together and enormously improved, but the fault lies with The Independent, not with the attack on it by predatory pricing. I did not notice The Independent being particularly squeamish, when it set up The Independent On Sunday, about deliberately smashing The Sunday Correspondent, which it duly did; The Sunday Correspondent sank. We did not get this concern and desire for protection then. I do not notice The Daily Telegraph avoiding predatory pricing. About a quarter of its circulation is sold on much-reduced subscription rates and it gives away 33,000 copies. I love it, but I much prefer reading it for free and I am happy to be deluged with free copies wherever I go. However, that is another form of unfair, unreasonable competition. Why is the paper whingeing about predatory pricing when it gives copies away on that scale? 8.45 pm Competition is endemic in the newspaper industry. My hon. and learned Friend the Member for Medway (Mr. Marshall-Andrews) is wrong to say that we are talking about a lust for power. We are talking about someone's pride in their product—in their newspaper. Does my hon. Friend not want his articles to be read by the maximum number of readers? Is that not what journalism is all about—competition? If we suppress competition in terms of pricing, will it not come back in all sorts of other ways? I grew up in a home that was weighed down with encyclopaedias because predatory-pricing newspapers had been going from door to door, giving encyclopaedias away with a subscription to this and that newspaper. We never read any of them. We never read the papers, but we were festooned with encyclopaedias.

Robert Marshall-Andrews (Labour, Medway)

rose—

Austin Mitchell (Labour, Great Grimsby)

I know that my hon. and learned Friend is going to say that I should have read the newspapers and encyclopaedias, and that I would not be making this speech if I had done so. I am not going to give way. In any case, what has predatory pricing done for Rupert Murdoch? He has the same proportion of sales now that he had in 1988. The only newspaper that has gone under in the intervening period is his own paper, Today, so what has predatory pricing done for him? Is it such a powerful threat? To go on in this fashion about predatory pricing assumes that people are stupid. Price is only a marginal factor in buying newspapers. Most people buy a newspaper because they identify with it. They feel that it expresses their character.

Lynne Jones (Labour, Birmingham, Selly Oak)

My hon. Friend has just said that he got The Daily Telegraph for free.

Austin Mitchell (Labour, Great Grimsby)

In my case, I hope to buy more newspapers than that. My point is that getting them for free does not kill newspapers. It widens the circulation of quality newspapers. However, in the main, people buy a newspaper because they feel comfortable with it and it expresses their personality. They have an empathy and bond with it; that is what it is all about. It is not about the price being reduced one day a week. People look for quality. A symptom is that red-top newspapers are all losing circulation while that of the quality papers is increasing, a helpful and hopeful sign. However, the Daily Express lost circulation when it lost its way. Fortunately, it has pulled itself together recently, but it is the fault of newspapers when they lose circulation. They cannot establish that empathy with their readers any longer because they do not have a personality with which readers can identify. That point is what we need to emphasise, not predatory pricing, which is a marginal factor in such decisions. My hon. Friend the Member for Sunderland, South says that he wants diversity. So do I, but I do not want it at the expense of closing other newspapers. The enemy is bad newspapers and newspapers without character or identity, not predatory pricing. That is a failure of the newspapers. Therefore, I cannot support the amendments. They are mostly an expression of anger at Rupert Murdoch—an impotent and somewhat pathetic rage against the man—which does not become us. I say loyally that the amendments are not a critique of our leader, who is on close terms with Rupert Murdoch. I am not going to put myself in the position of criticising our leader in any way, but, more importantly for practical purposes, what is proposed will not work. I do not think that my hon. Friend the Member for North Durham will even vote for his amendment because he will not want to rebel against the Government, so why are we wasting our time with this futility?

Diane Abbott (Labour, Hackney North and Stoke Newington)

This is an excellent Bill, which will be even further improved if the Government find it in their heart to accept the amendments. I want to deal with the particular point that the Government have made: they see no case for creating a special clause to deal with circumstances in the newspaper industry. It has been put to the House this afternoon that the newspaper industry is a special case, for a number of reasons. The first is that newspapers are, above all else, a means of circulation of information—a free, unfettered and generally competitive circulation of information, which is vital to a healthy civil society. The Government are committed to recasting civil society—we want more people to be volunteers, to be aware of their rights, to be involved in local authorities and so on. We cannot shape a healthy civil society without the freest possible flow of information. A monopoly in newspapers, predatory pricing by newspapers, or an unhealthy dominance by any individual newspaper proprietor fatally hinders the free flow of information. That is the first reason why the newspaper industry is different and why specific measures are needed to deal with undue dominance and monopoly. The second reason, which has been touched on by my hon. Friends, is the relationship between newspapers and politics. It is nonsense to argue, as some of my hon. Friends have done, that people go into newspapers because they want to make a profit. Beaverbrook, the archetypal proprietor, said it clearest and said it best—as he said so many things—when he said that he owned his newspapers to make propaganda. People become newspaper proprietors not because of profit—there are easier ways to make a return on their money—but for political and social influence and power. It must be unhealthy in politics for there to be undue dominance and monopoly in political and social power and influence. Because of the importance of freedom of information and the free flow of information, and because of the relationship between newspapers and politics, it is all too easy to make a special case for dealing with monopoly and undue dominance in the newspaper industry. I declare an interest as one of the few remaining members of the parliamentary Labour party who will admit to having picketed Wapping by candlelight at the beginning of the 1980s. My point is not an ad hominem point about Murdoch—it is that twice in recent times the Murdoch empire has driven a coach and horses through the clear intentions of monopoly legislation. The first time was when Murdoch acquired The Times. Anyone who doubts me needs only to read Harold Evans's book about that acquisition. Harold Evans is one of the legion of ex-Murdoch executives. He makes it perfectly clear in his very carefully documented book—as one might expect from one of the leading journalists of our generation—that the way Murdoch acquired The Times was wrong, was in breach of the legislation, and was based on a phoney presentation of statistics and undue pressure on the politicians of the time. Murdoch drove a coach and horses through the clear intentions of politicians when he acquired The Times. The second time was Murdoch's acquisition of Sky, on top of his control of the newspaper and magazine market. I served on the Committee that shaped the regulations covering Sky and other outlets. It was clear to me that, for a second time, Murdoch was being allowed to get away with it—through his power, through politicians' fear of him and through the need not to be seen to cross Rupert Murdoch. Now, at the beginning of this Administration, we have a Competition Bill and an opportunity to deal with the issue of undue dominance and monopoly in the media. Many people outside the House will not understand if we do not do something. We do not need to look in the crystal ball; we can read the book. Time after time, in Britain, Australia and America, Murdoch has driven his way through the intentions of the people and the legislators on the issue of monopolies. We have an opportunity, which will not come again, to deal with the issue. I urge my hon. Friend the Minister to consider accepting the amendment, even at this late hour.

Nigel Beard (Labour, Bexleyheath and Crayford)

It must make bad legislation first to find a villain and then to find the legislation by which to condemn him. We are in danger of doing just that if we follow some of the arguments that have been deployed in this debate. The real issue is whether the rules that apply in a vast range of industries to abuse of a dominant position—or anti-competitive behaviour—apply also to the newspaper industry, or whether that industry requires special treatment. The Standing Committee considered the clause that had been included by the other place—which deemed that special treatment was required—and removed it from the Bill for very good reasons. The first reason was that the clause did not meet certain of the Bill's principles—such as that it should be universally applicable right across industry, thereby giving it greater clarity. The second was that the Bill should be consistent with European legislation, so that the two legislative regimes could evolve in harmony. The third was that the clause introduced absurdities. The fourth was that the clause introduced a test for predatory pricing that was completely inappropriate and at odds with European precedent. Each of the proposals in this group falls for one or more of those reasons. New clause 1—taking the proposals in reverse order—like the clause from the other place, speaks of any activity that reduces diversity. Applying that definition produces some absurd examples. Is a newspaper that recruits many gifted writers and attracts readers towards it and away from another newspaper, thereby endangering that other newspaper's existence, to stop recruiting talented writers? Of course not. Many other examples can be concocted to demonstrate the absurdity of the definition. Amendment No. 8 would reduce the threshold in distinguishing whether there is a dominant position. However, when the matter is analysed and considered within the European context, it is doubtful whether there is such a distinction to be made. The European regime introduces a definition of dominant position that can catch abuse of dominant position in the newspaper industry if there is such a dominant position. In many of the examples cited in this debate, there seems to be an assumption that there is a dominant position for The Times, although very few facts and figures have been quoted to demonstrate it. Currently, a dominant position will be interpreted as one in which anyone can operate without regard to competition or customers. That definition may very well apply to someone who is using cross-subsidisation from another business to operate predatory pricing. The solution for such practice is for the Director General of Fair Trading to investigate the matter according to the precepts that are already included in clause 18, to reach a conclusion and to operate accordingly. There is no evident reason why newspapers require a special definition of dominant position that is any different from that applying to any other part of industry. Amendment No. 1 is very close to the likely definition in European legislation of dominant position. The weakness of including that specific definition in the Bill is that we would freeze the definition at the time when the legislation is passed, whereas European definition of dominant position might evolve and diverge from the Bill's definition. There is therefore a weakness that we will end up with two divergent pieces of legislation, whereas the intention was to have them in close harmony. I do not think that any of the cases that have been cited in this debate justify a belief that clause 18 cannot deal with abuses and anti-competitive behaviour in the newspaper industry. The amendments are also in danger of introducing absurdities and breaking from some of the Bill's very basic principles—such as its universality and consistency with Europe. I do not believe that the situation has changed since the Committee considered the Bill. I therefore believe that all three proposals in this group should be rejected, and that the principles applying in the newspaper world should be those stated in clause 18.

Stephen Ladyman (Labour, South Thanet)

Some of my hon. Friends have railed against Mr. Murdoch and that is fine by me. I hold no candle for Mr. Murdoch and—short of my growing mammaries—I doubt whether he will ever say anything nice about me. I certainly hold no brief to defend his position. Nevertheless, I do not believe that my hon. Friends have shown that the Bill does not deal unamended with the position as they perceive it. Let me reiterate how the Bill works. Clause 18 defines what cannot be done and who cannot do it. Clause 60 pulls in all European case law in order to define what is not allowed and who cannot do it. As a result of clause 60, anything that we can scrape out of European case law can be used. The provision is not optional. It does not say, "You may," or "You can if you want to." There is no choice in the matter. The Bill provides that European case law must be used in interpreting the Bill. 9 pm As my hon. and learned Friend the Member for Medway (Mr. Marshall-Andrews) said earlier, that includes the Tetra Pak judgment, which provides a mechanistic definition of what predatory pricing involves. Under a mechanistic definition it is not necessary to prove intent. Previous investigations into what Mr. Murdoch and The Times have been doing failed because at the moment it is necessary to prove intent. When that is no longer necessary, as my hon. and learned Friend said, given what everyone is alleging about Mr. Murdoch's predatory pricing activity, if the figures can be demonstrated to prove that, he will be found guilty and prevented from predatory pricing. I do not know whether the figures will prove that or whether the arguments used by The Times are true and the newspaper is not selling below cost. If it is selling below cost, it will be dead meat. The only question arises in respect of dominant position. As I said earlier, European case law in United Brands v. the Commission says that organisations or individuals may be acting from a dominant position if they can influence the market and have the power from other sources to act independently. It uses almost identical language to amendment No. 1, so in my view amendment No.1 is superfluous. If that is the case and my hon. Friend the Minister confirms my interpretation when he replies to the debate, I assume that my hon. Friend the Member for North Durham (Mr. Radice) will not find it necessary to press the amendment to a vote as the provision is already in the Bill. Amendment No.8 seeks to introduce a new definition of dominant position in respect of newspapers, including the word "substantial". Under European case law, it is not necessary to have 80 per cent. of a holding in a marketplace to be dominant. European case law specifically says that a holding of 40 to 45 per cent. is almost certainly dominant and that a holding of as little as 20 per cent. might be dominant given the right circumstances. If we interpret "substantial" as being different from "dominant" and representing a lower threshold—otherwise the amendment would have no purpose—the amendment is saying that a holding of less than 20 per cent. of the market might represent a "substantial" position and could therefore result in anti-competitive practice. I am sorry to say that that would bring in not only The Times but all the other broadsheet newspapers that would be in a "substantial" position.

Chris Mullin (Labour, Sunderland South)

My hon. Friend makes my point for me. The amendment is not an anti-Murdoch amendment, as it would apply to anyone—including The Daily Telegraph or the Daily Mirror—who attempted to engage in predatory pricing.

Stephen Ladyman (Labour, South Thanet)

My hon. Friend is certainly right, but if the definition of predatory pricing according to the Tetra Pak judgment is selling below the cost of production and making a loss on a consistent basis, that is doubly the definition of The Independent. The day we knock on Mr. Murdoch's door and say, "You must stop doing this because you are breaking the law," he will say, "If you bring me to court, I want The Independent taken to court with me because it is also making a loss. It has a substantial holding in the marketplace and is every bit as covered by amendment No.8 as I am." That is why amendment No.8 is dangerous as well as unnecessary. My hon. Friend the Member for Bexleyheath and Crayford (Mr. Beard) described the absurdities that the new clause would introduce. Under new clause 1, an attempt by The Independent or The Guardian to hire new and better journalists to improve their newspapers could be defined as acting to try to close down competitors. That makes a nonsense of the Bill. The Bill, as the Government have defined it, is strong enough to deal with Murdoch and The Times if it can be shown that Murdoch is selling below the cost of production. If my hon. Friends who fear that that is what he is doing are right, the Bill as it stands is already perfectly adequate to deal with such behaviour. I call on my hon. Friends to reject the amendments and the new clause.

Tim Boswell (Conservative, Daventry)

I rise with some diffidence on behalf of Her Majesty's Opposition to intrude on what is clearly the Labour party's private grief. This has certainly been an interesting and illuminating debate, perhaps characterised more by heat than light. It has been characterised more precisely by hon. Members' vain attempts to distil their dislike of a particular individual—Rupert Murdoch—and his empire into a series of penal measures that would be imposed on that empire. I should make it clear from the start that the Conservative party is not against competition. Indeed, we Conservatives favour vigorous competition. Our reservations about the Bill more generally reflect the fact that it does not always achieve the objectives that it claims to seek. As a party, we are not in favour of predatory pricing or the abuse of a dominant position. As the hon. Member for South Thanet (Dr. Ladyman) made fairly clear, the issue is whether the measures proposed in the clutch of amendments are appropriate to the ills that are seen. I should like to make it clear, as my right hon. Friend the Member for Wokingham (Mr. Redwood) did in Committee, that we accept that, in certain specific cases, competition legislation, as it has operated in this country over the years under different Governments, may be required to address some specific problems concerning the newspaper industry. It is clearly appropriate to legislation on mergers and the allocation of titles. Although I do not have a detailed knowledge of the genesis of legislation, it is fair to say that one of the major concerns was that titles might disappear or be bought for the purpose of closing them down. Regardless of whether that is the intention of any individual in the present scene, we have clearly not failed to secure vigorous competition among broadsheets and tabloids—as well as, increasingly, dare I say, between them—and a wide range of differing titles. That may change. One reason for such a change, to pick up a point made earlier, may be the falling away of the propensity of persons to buy titles that are making losses, in order to advocate a particular position. At the moment, however, we have a very lively newspaper scene and must therefore identify what specific ill the amendments address. We look forward to the Minister's remarks. I agree with recent comments that a case has not yet been made that any problem can be tackled in the way that is suggested. I apologise to the hon. Member for North Durham (Mr. Radice) for picking up only a few of his latter remarks. I turn particularly to the remarks of the hon. Member for Sunderland, South (Mr. Mullin), who clearly dislikes Murdoch—an opinion to which he is entitled. He moved round several different ways in which the Murdoch problem, as he sees it, could be addressed. It could be predatory pricing, the abuse of a dominant position, something done in the past, motive or effect. It was difficult to pin down how it was to be tackled. I wish to refer to the most likely of the candidates—the predatory pricing test. As my right hon. Friend the Member for Wokingham pointed out in Committee, it is very difficult in practice to differentiate that consideration from ordinary commercial pricing and keen marketing. As has been mentioned—I declare an interest in this—many of us benefit from subscription arrangements, either to daily newspapers or periodicals which are priced at a considerably lower figure than would apply if we were to buy them day-by-day at the newsagents. Other people may be able to intercept a copy given away on their way to work. There is a wide variety of effective pricing arrangements. How on earth can we find what is predatory and what is not? That is still not clear to me. It is clear that if one seeks a remedy along those lines, it could be encompassed by the Bill as drafted and it should be possible to do so by generality, rather than by a specific case. Another possibility would be to look at predatory pricing in terms of cost, and that was addressed. However, it is clear that most national newspapers, by definition, price themselves at below the cost of production or at an uneconomic level. They make that up by advertising, or they may run at a loss from time to time. One should look at another test, which is that of a formerly dominant position, I was interested in the exchanges that have just taken place, because it is possible to synthesise the situation in which—to take the case of the argument by the hon. Member for South Thanet—a newspaper might have a substantial position in the market; shall we say The Times. However, The Daily Telegraph, which sells many more copies, might have, within the terms of the Bill, a dominant position—so those two newspapers could be subsisting. However, it is not clear whether they would be subjected to the same or different tests. I mention those examples because I feel that it is difficult to pick our way through to a fungible solution to what I am far from convinced is an actual problem, given the strength and diversity of the press and the weapons that the Bill will give the Government as part of their general approach to competition legislation. This is essentially an argument between the soul and the head of the Labour party as to the way forward. We shall look forward to the Minister of State's effort to wrestle with what are, in the words of the preacher, "doots" among his colleagues. In conclusion—this is in no sense an attempt to subvert Government Back Benchers, or to discourage them from supporting the Minister; that is a matter for them—in declining to oppose the Government's position, as I anticipate it to be, I would commend the Government on a strange phenomenon. Their characteristic phenomenon is to find a public ill—or, if they cannot find one, to invent one or make a fuss about one—and then to tackle it with a great flourish. People are named and shamed, and action is taken, or threatened to be taken. Something is done about it, particularly if the focus groups say that something should be done. Quite exceptionally, unusually and, in this case, sensibly, the Government have not bowed to the pressure to produce a specific remedy for a specific ill. They are relying, wisely, on principles of general application. We shall listen to the Minister of State with interest, and I am sure that, his hon. Friends will be listening with even greater interest. We shall—as they say in the history books—then await events.

Ian McCartney (Labour, Makerfield)

My hon. Friend the Member for Hackney, North and Stoke Newington (Ms Abbott) asked me to find it in my heart to support the amendments. No one can accuse me of being anything but a big-hearted person, but tonight I am not going to let my heart rule my head. We want intelligent decision making. The Bill is not about ownership; it is about dealing with abuses of dominance and other anti-competitive behaviour. It will provide much stronger powers to deal with such behaviour. The media industry will continue to be subject to the existing merger control and newspaper merger regimes under the Fair Trading Act 1973 and to media ownership regulations under the Broadcasting Act 1990. The Government have made clear their belief in the importance of a strong, diverse and independent press. That is why we are keeping the special merger provisions for newspapers in the Fair Trading Act, which protect plurality of ownership and diversity of content. The Bill deals with anti-competitive practices, which are wrong wherever they occur. The Government believe that abuses of dominance, such as predatory pricing, should be stamped out whatever the market. Clause 18 clearly covers firms that abuse their dominance by predatory pricing, which is vital. 9.15 pm The principles established in European case law will apply under the Bill by virtue of clause 60(2) which makes it clear that there must be no inconsistency between the principles applied by courts in applying a domestic prohibition and those laid down by the European Court, and any relevant decision of that Court". The principles on predatory pricing established in AKZO and Tetra Pak will apply under the Bill. Hon. Members have referred to briefings sent to them by executives of The Independent and The Daily Telegraph newspapers and to the opinion of the Queen's counsel that those briefings quote. It is important to distinguish between allegations about The Times and questions of principle about the interpretation of the Bill, but The Independent and The Daily Telegraph executives mix them together to suit themselves. The briefings entirely wrongly imply that what the Government have said about the European Court case law is dubious. I do not accept the assertion that many lawyers disagree with this interpretation". I have seen nothing to back up that assertion, and no hon. Member has said anything tonight to persuade me that it is right. On the contrary, even those who have tabled the amendments have, in their arguments, accepted that the European Court case law is very clear on the relevant points. The suggestion in the briefings that Rupert Murdoch can operate with immunity from competition law should be treated with the disdain that it deserves. I take exception to the fact that hon. Members have said that the Government are in the pocket of Rupert Murdoch. The socialist Member for Makerfield in Rupert Murdoch's pocket? No one can say that I have ever worn a Sun lover's T-shirt. Hon. Members should consider what the Government have done in the past few weeks: we have introduced automatic recognition, removing Wilson and Palmer—which allowed the newspaper industry to discriminate against employees on the ground of their trade union membership—and permitting those sacked for taking part in lawful industrial action to claim unfair dismissal. Moreover, we have introduced a national minimum wage, against which The Times has campaigned, and continues to campaign, vigorously. This is a Government of fairness, not favours. No one can suggest that a Government in the pocket of Rupert Murdoch could introduce such workers' rights legislation. It is nonsense, and Labour Members should not claim that the Government are in the pocket of a vested interest. The Government are in the pocket of no vested interest. We were elected to tackle vested interests, which is precisely what we are doing in the Bill.

David Winnick (Labour, Walsall North)

I did not say that the Government were in the pocket of Murdoch. I said the opposite: that Murdoch believes that he has in his pocket the Government and the Conservative party, which is a highly undesirable state of affairs. That does not in any way mean that the Government, whom I support, are in Murdoch's pocket. Will my hon. Friend say whether he believes that the Murdoch empire has too much power and, if so, what steps should be taken to deal with that?

Ian McCartney (Labour, Makerfield)

I thank my hon. Friend for that clarification. I think that I made the Government's position on dealing with vested interests absolutely clear. I accept what I believe was an attempted apology, but it is invidious to give the impression, inside or outside the House, that the Government are treating anyone differently. That is not the case. We are a Government of fairness, not favours. Much has been said about the actions of News International and The Times. It would be wrong of me to comment on whether the actions of an individual undertaking are or are not anti-competitive, as that is a matter for the competition authorities, both under the Bill and under existing legislation. The House should note, however, that the director general has asked News International to provide detailed information about The Times, to enable him to assess the impact on its competitors of its trading strategy. I am surprised that that was not mentioned in the debate, especially by those who spoke in favour of new clause 1. This is the proper way forward. I do not accept the arguments of those who are out to get The Times and who say that, if its actions are not caught by the legislation, we must alter it to catch them. That is not the purpose of the Bill or of the legislative programme. If someone has a case against Murdoch or any other individual, he can pursue that case, but we cannot distort the Bill as has been suggested. That would undermine the concept of the Bill, and our ability to prevent abusive and anti-competitive behaviour in the marketplace. Let us remember that, when such abuse takes place, small, medium and large enterprises suffer, and it is the responsibility of the House to improve legislation to prevent that from happening and to ensure that, if it does happen, we have the capacity to stop it and to take action to ensure that any loss is recognised.

Clive Efford (Labour, Eltham)

Does my hon. Friend accept that there is a problem in the newspaper industry that should be dealt with in the Bill? If the Bill were to fail to deal with the problem, what action would he take to remedy it?

Ian McCartney (Labour, Makerfield)

I thought that I made it clear that such matters are for the competition authorities. We are responsible for providing a legislative framework, and we have not only done that but improved on the existing framework. We oppose the amendments and the new clause because we do not believe that the framework is inadequate; we believe that it is rigorous and that it is constituted in the context of European jurisprudence, taking account of articles 85 and 86. It has been recognised from the outset as the only way of ensuring that we have an effective regime to deal with anti-competitive behaviour, including predatory pricing. I want to make it clear from the outset that I sympathise with the thinking behind amendment No. 1. I entirely appreciate the fact that the object is to clarify what is meant by dominance under the Bill, drawing on the relevant EC jurisprudence. I and other Ministers have defined dominance in similar terms in debates in Parliament. We have no quarrel with the definition itself. I have no objection to the description of dominance set out in the amendment, as far as it goes. It is consistent with the explanations that I and other Ministers have given. I am grateful to my hon. Friend the Member for North Durham (Mr. Radice) for highlighting these important principles of interpretation. There is common ground between us on the substance, but the amendment itself is unacceptable. It could inadvertently do serious damage to the central policy of the Bill, which is to align the domestic prohibition of abuse with that of article 86. European jurisprudence is clear that dominance means a position of economic strength that enables an undertaking to hinder the maintenance of effective competition on the relevant market by allowing it to behave to an appreciable extent independently of its competitors, of its customers and, ultimately, of the consumer. That test is laid down in case law, for example in the Michelin case. Those EC principles of interpretation will apply under the Bill, by virtue of clause 60. Subsection (2) makes it clear that there must be no inconsistency between the principles applied by the courts in applying the domestic prohibition, and those laid down by the European Court, and any relevant decision of that Court. Market share is not determinative of dominance, but it is an important factor. The Commission has expressed the view that while, in general, companies with market shares below 40 per cent. are unlikely to be regarded as dominant, undertakings with market shares as low as 20 per cent. may none the less be dominant if the nature and structure of the market enable them to act independently of competition. Clause 60(3) requires our courts to have regard to relevant statements of the Commission, such as this one, in applying the domestic prohibition. Therefore, the assessment of dominance under the Bill will need to have regard to the Commission's statements. In short, the principles of interpretation on dominance, which are established in EC case law, will apply under the Bill. Either the words of the amendment correctly define what is a dominant position under Community law, in which case they are unnecessary because that definition is already supplied through clause 60, or the words do not set out the test correctly and fully, in which case they should not be included. Where unnecessary provisions are inserted in legislation, they tend to go septic—that is to say that the courts look for some meaning to give them, rather than accept that they were not intended to have any effect of substance. In that way, in time they are likely to have effects that were entirely unintended. That uncertainty could cause business a major problem. If the latter interpretation were to prevail, it could lead to a UK prohibition being interpreted significantly differently to article 86. The amendment would freeze the position in domestic legislation. That would carry the risk of the application of the domestic law diverging from that of EC law in an important area. As we stressed many times in Committee, we should not seek to specify or alter how the prohibitions themselves apply, but should rely on the governing principles clause. So, while I sympathise with the thinking behind the amendment, I hope that my hon. Friend will accept that it would be seriously counterproductive in practice. Having heard my assurances on the meaning of dominance under the Bill, and the principles of EC jurisprudence on the matter, I hope that he will be prepared to withdraw the amendment. Amendment No. 8 tackles the issue by lowering the threshold of what is "dominant" in the national newspaper market. I see no justification for treating newspapers differently in that respect. Frankly, it smacks of fixing the legislation to catch The Times regardless of the proper merits of the case. I have explained carefully what is meant by dominance in the Bill. That is a soundly based test drawing on established European jurisprudence. It would be wrong to replace that with a different test which would in any case be highly uncertain.

John Redwood (Conservative, Wokingham)

Is the Minister saying that under the definition that he prefers The Times clearly is not dominant?

Ian McCartney (Labour, Makerfield)

The right hon. Gentleman is trying to be far too clever by half, as is his nature. I set out clearly what the Bill does, which is to provide a legal framework to deal with abuse of dominance in the marketplace, including predatory pricing. Whether someone is abusing the marketplace through predatory pricing is a matter for evidence, which should be taken properly by the competition authorities. If the right hon. Gentleman has any bottle and if he thinks that the Government's policy is correct, he should go through the Lobby and support us on that basis. I assume that he will not do so, not because he wants to curry favour with News International, but because he believes that the Government's policies in that area are far too tough. He wants to be weak on competition policy and to allow abuses of dominance on occasions. Throughout the passage of the Bill, he has been at great pains to find ways out of dealing with those types of abuses in the marketplace. It is no surprise to me, even at this late hour, that he is still attempting in a few weasel words to place the Government in an unfavourable position. Once again, he has failed spectacularly—well, that got that out of the way. New clause 1 introduces a press diversity prohibition and is similar to the clause that was thrown out in Committee. The earlier clause was wholly unworkable. I am glad to say that the supporters of new clause 1 have half met the criticisms that I made in Committee. They could have met my criticisms fully by withdrawing the proposed clause altogether. They have replaced the earlier threshold of a substantial degree of market power with the Fair Trading Act 1973 threshold, broadly at 25 per cent. of market share. I have already explained that there is no justification for a lower threshold to apply solely in the newspaper sector. We said that the previous clause was too wide ranging and that any conduct—legitimate or illegitimate—may reduce the diversity of national newspapers by reducing competition. Now it is suggested that the concept of anti-competitive behaviour should be built in. That might be an improvement, but I have yet to hear a proper justification for applying tests to the newspaper market that are different from the tests in the economy at large. If conduct is anti-competitive and constitutes an abuse, it should be dealt with, whatever the sector. That is what the Bill does, and I urge the House to reject the amendments.

Giles Radice (Labour, North Durham)

I beg to ask leave to withdraw the amendment.

GENERAL EXCLUSIONS

Nigel Griffiths (Labour, Edinburgh South)

I beg to move amendment No. 69, in page 53, line 38, leave out 'which'.

Alan Haselhurst (Deputy Speaker, Saffron Walden)

With this, it will be convenient to discuss Government amendments Nos. 70 to 72, 11, 16, 26, 15, 28 to 32, and 38.

Nigel Griffiths (Labour, Edinburgh South)

These are minor and tidying amendments. Government amendments Nos. 69, 70, 71 and 72 tighten the definition of "trading practices" in relation to the European economic area regulated markets, and bring it into line with the definition of practices in relation to recognised investment exchanges in the Financial Services Act 1986. Government amendments Nos. 11 and 15 tidy up a matter which was dealt with in Committee. Clause 50, which was inserted in Committee, enables the Secretary of State by order to provide for any provision of part I to apply in relation to land or vertical agreements, with such modifications as may be prescribed. Government amendments Nos. 16, 26, 28 to 32 and 38 are minor, and are part of the overhaul of the transitional provisions. I hope that the House will accept the amendments.

John Redwood (Conservative, Wokingham)

I beg to move amendment No. 6, in page 53, leave out lines 44 to 49.

Alan Haselhurst (Deputy Speaker, Saffron Walden)

With this, it will be convenient to discuss amendment No. 51, in page 54, line 37, leave out from beginning of line to end of line 6 on page 55.

John Redwood (Conservative, Wokingham)

It was a pity that the Minister of State, in responding to my intervention in the previous debate, chose to make a crude and inaccurate political point during what was meant to be a civilised exchange to elicit information about whether The Times was in a dominant position under different definitions. The Minister of State alleged that the Opposition are keen to water down the competition legislation, and that, by implication, we favour anti-competitive practices. One of the principal purposes of this amendment is to show that the contrary is true. As we argued in Committee, so we argue on the Floor of the House; we believe that, in several important respects, the Bill is sadly lacking. It does not have sufficient bite to deal with potential abuses of the marketplace by monopolies. Indeed, the Bill could be more accurately called the competition and protection of monopolies Bill, particularly if one looks at schedule 3 and the enormous loophole it contains. That is what we are trying to excise with our amendment. The House will know that I have declared two interests and my wife's interest in the Register of Members' Interests. The House should know that I am not furthering those interests by anything that I say or do in these debates.

Nigel Griffiths (Labour, Edinburgh South)

The right hon. Gentleman must clarify the statement he made in Committee on 21 May. He said: The Minister must know that our case against the Bill is that it is either unnecessary or premature …we are against it in principle."—[Official Report, Standing Committee G, 21 May 1998; c. 48.]

John Redwood (Conservative, Wokingham)

That is quite right. We made it clear that we are against the Bill because we do not think that it fulfils what the Government say is a joint aim, which is to have a strong and fair competition policy in our country. We have said that we do not think that the Bill can fulfil the Government's aim of clarifying between European and British law and avoiding double jeopardy. We do not think that it would sharpen the attack of the British competition authorities on those revenue-producing monopolies that are most undesirable. I am conscious, Mr. Deputy Speaker, that at this relatively late hour you will want me to keep strictly in order. With the Under-Secretary's agreement, I shall deal with the words that we are seeking to excise from the schedule. We wish to leave out paragraph 4 of schedule 3 on page 53. It might be for the convenience of the House, since not all hon. Members have the schedule before them, to remind the House of the words. It is headed: Services of general economic interest etc. It states: Neither the Chapter I prohibition nor the Chapter II prohibition"— the two effective prohibitions that the legislation is about— applies to an undertaking entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly in so far as the prohibition would obstruct the performance, in law or in fact, of the particular tasks assigned to that undertaking. I accept that the last line and a half offers some limitation on what is otherwise a breathtakingly wide definition of exceptions. However, I think that it would be possible for clever lawyers operating for revenue monopolies or even companies with a dominant position who claim that they have a general economic interest that they are delivering through their services, to draw the attention of the courts to the big loophole in the legislation. Some will doubtless use it to good effect. In Committee, we moved a specific amendment to try to improve competition in the water industry. The Opposition are strongly committed to the idea that water services could be improved, and that water prices could be lowered if proper competition was introduced into the industry. We had an interesting debate in Committee, and I was delighted that the Under-Secretary expressed some sympathy for the general thrust of my argument about the need for more competition in the industry. It is well known that the Labour Government have been critical of the standards and practices of some in that industry, and of some companies in the industry. The Opposition are no friend of poor services or of anti-competitive practices. We would like to see rapid progress in the case of water. It is one very big example where we think that paragraph 4 of schedule 3 would make the Under-Secretary's task more difficult in the courts, and perhaps in persuading his colleagues in the Government that some action should be taken. Indeed, with the Bill before the House, this is the obvious time, and the Bill is the obvious vehicle, to make the water industry more competitive, but the Government seem to want to throw away that heaven-sent opportunity, and they voted against our amendment accordingly. I urge the Under-Secretary, even at this late stage, to see the wisdom of removing the words that we seek to excise from the Bill, or tabling another amendment so that the words will not be as damaging as I fear they could be. We must think again.

Stephen Ladyman (Labour, South Thanet)

How nice it is to be arguing with the right hon. Gentleman again, rather than with my hon. Friends. The right hon. Gentleman said that the last line and a half of paragraph 4 provide some limitation. If he means the words beginning "in so far as", they provide an absolute limitation on the schedule. Why does he not believe that?

John Redwood (Conservative, Wokingham)

There is nothing absolute about those words. They provide limited circumstances for the competition authorities to counter-argue that a monopoly is going too far. They are limited, because the monopoly could always say that, if it were not allowed to continue with its price fixing or special agreement or deal, it could no longer fulfil the tasks assigned to it. If a water company wanted to defend a particular agreement or pricing practice, it would argue that it could no longer supply clean water in the required quantities to all households. That would be a serious threat, and the court might believe the company, because it is the monopoly producer. It presumably has some credibility, and knows whether it can provide water on different bases. The court might judge that the company was right, and allow it to continue its anti-competitive practice. How much better it would be if there were a market test for that practice. If another company could enter the market and provide a better service without such a restriction, it would be allowed to do so, and it would not be possible to argue through the courts in defence of the restrictive practice or the special agreement. I was pleased, after my recent discussion of the subject in Committee, to discover that some leading companies in the water industry agree that more competition could be introduced, and that they might benefit because they are active and innovative. They believe that if there were more freedom in the market, they might be beneficiaries. That is a good sign that there would be an entirely positive response to more competition. In that case—I could think of many others—we should like the words in the amendment removed, or modified by the Government's statements, so that there is scope for introducing competition. Before the House votes on whether to retain the words, we should also learn a little from the Government about what services they have it in mind to exempt under this wide-ranging paragraph. They must have had something in mind when they drafted it. In Committee, it was suggested that such words are found in the treaty, so they had to be found in the Bill, but I am sure that the Government have done a little more research and thinking than that. The Bill creates a British law for British markets, as we have often argued, so we need the Government to tell us what would be permissible by way of a general economic interest service or a revenue-producing monopoly to exempt companies from the otherwise sensible provisions of the Bill and earlier competition legislation. I am sure that my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) will eloquently argue the case on his amendment No. 51, which attempts to test out or achieve something similar on the Bill's other substantial loophole, which relates to public policy. The House is owed an explanation of how often the public policy rubric would be used, and why we need it as well as the conditions of revenue-producing monopoly and general economic services, which might cover similar cases. Certainly the cases that I have in mind could be covered by either of those conditions. I am sure that my hon. Friend has tabled his amendment partly to test out the exclusion and how wide it will be. The competition authority and the Bill will be very weak if those large loopholes remain and are generally used, so we shall urge the House to vote for the amendments.

Andrew Lansley (Conservative, South Cambridgeshire)

I am grateful for the opportunity to support my right hon. Friend the Member for Wokingham (Mr. Redwood) on amendment No. 6, and to speak briefly to amendment No. 51, which would delete from schedule 3 paragraph 7, relating to issues of public policy. I want to add a few points in relation to paragraph 4, which relates to services of general economic interest. My right hon. Friend is right to say that, in Committee, there was speculation about the purposes for which the Government were proposing paragraph 4. It was suggested—I confess that I cannot remember by whom—that the paragraph was inserted at the request, or at the behest, of the Post Office, which, in United Kingdom circumstances, may be regarded as both a service "of general economic interest" and "a revenue-producing monopoly". That raises the question whether, in any case, the Post Office would be allowed to carry on its activity without infringing a chapter 1 prohibition by virtue of paragraph (5), which relates to a legal requirement, as, if the Post Office is obliged by legal requirement to provide a universal service at a uniform tariff, it might be exempted for that reason. My right hon. Friend is right to say that the Government have taken that path ostensibly, as argued in Committee, because there is parallel text in the treaty on European Union: article 90. However, we should reconsider the matter, not only to repeat the argument that my right hon. Friend eloquently made about the desirability of promoting competition and not giving the Government a let-out to protect monopolies when it suits them, but to question in this context—as I believe was not done in Committee—whether, even in their terms, the Government have gone about the process of introducing article 90 into the UK context appropriately. I question that, for three reasons. First, it is obvious that the Government have not gone about the process appropriately in the context of article 90, which consists of three limbs. Limb 1 makes it clear that one is talking about public undertakings and undertakings to which member states grant special or exclusive rights. That rubric, which introduces article 90 and makes clear the circumstances in which article 90 and questions of services of general economic interest are to be interpreted, is not carried through into schedule 3 or paragraph (4). As a result, it is not obvious, in the context of the language used in paragraph (4), that we are dealing with essentially public undertakings, or those that exercise public functions. We are simply talking about services of general economic interest or revenue-producing monopolies, entrusted—the paragraph does not say by whom—with the operation of those services, and where the "particular tasks" are "assigned to that undertaking." Again, the paragraph does not say who assigns those particular tasks. It is all implied that it is the state that assigns those tasks. In the context of the treaty, it is perfectly clear, under article 90, that the tasks are assigned by the state, but that is not carried through into the Bill. The second problem is the manner in which the Bill is constructed. It would be tedious of me to go on about the form of the language, but essentially there is a difference between the form of article 90, which effectively applies the rules except in so far as that would obstruct the performance of the duties, and that of paragraph 4, which disapplies the rules except in so far as the prohibition would obstruct the performance of those tasks. It is not simply a case of asking whether the bottle is half full or half empty. It is important in law that the prohibitions are applied, but with limits—as distinct from the prohibitions being disapplied, except in so far as they could be reapplied, as it were. That may, in practice, come to be quite a different distinction, and the Minister did not address that in Committee. A third matter is that, in the context of article 90, the paragraph has a final sentence, which is not carried through into paragraph 4. That sentence reads: The development of trade must not be affected to such an extent as would be contrary to the interests of the Community. I understand why the Government have not tried to carry that sentence through into the Bill: it would not make sense, in the context of UK domestic legislation, to talk about the interests of the Community. They could have left that out, and said that the development of trade must not be affected to an extent that would be contrary to the public interest. They could apply an overall public interest test. In the Community context, the protection that is offered to member states should not be allowed to go so far as to hinder trade unduly, but the Government have not taken that important factor into account. I appreciate that the Government should not look at the widespread application of the measure in the way that, for example, the EU contemplates the protection of tobacco or alcohol monopolies in some member states. However, it is important to know under what circumstances the Government wish to proceed. Amendment No. 51, which deals with public policy, is more straightforward. By their own admission, the Government have introduced paragraph 7 as a catch-all, or perhaps I should say a catch-nothing, because in Committee—

BUSINESS OF THE HOUSE

Andrew Lansley (Conservative, South Cambridgeshire)

In Committee, Ministers said that they had no intention of using the paragraph 7 provision, and two questions arise in relation to that. First, if there is no intention to use the provision, why have it? Secondly, if it is intended to be used, under what circumstances will it be used? I was struck by the debate on "exceptional and compelling". Ministers took great pains to stress how high the test of exceptional and compelling would have to be before Ministers were convinced that it would be right to use the provision—and they said that they had no intention of using it. About two weeks ago, during debate on the Human Rights Bill, there was a question about the circumstances under which Ministers should use a statutory instrument to amend primary legislation rather than waiting for an opportunity to change it by primary legislation. There were two competing arguments about the circumstances in which Ministers should resort to this Henry VIII measure. The first was under compelling reasons, and the second was under exceptional reasons. As we had recently debated "exceptional and compelling", I told the Home Secretary that Ministers in the Department of Trade and Industry had used the phrase "exceptional and compelling" and regarded it as the appropriate high test. I asked whether it would be an appropriate test in that context. The Home Secretary has no function to defend Trade and Industry Ministers and, with his customary perspicacity, asked why, if their intention was not to use it, they were proposing it. That is precisely the question. The paragraph 7 provision has no parallel in the treaty on European union, so under what circumstances do Ministers propose to use it? If they do not intend to use it, why not accept the amendment and delete it?

Nigel Griffiths (Labour, Edinburgh South)

I cannot accept amendment No. 6 to delete paragraph 4 of schedule 3, which contains a limited exclusion that is drawn from article 90 (2) of the EC treaty. Including article 92 will mean that the activities that benefit from that article in relation to articles 85 and 86 will not be put in a less favourable position with respect to domestic prohibitions. It is important to appreciate that article 90 (2) has been interpreted as providing only a limited derogation from the competition rules, and that its definitions are to be strictly interpreted. By virtue of clause 60, we are applying that jurisprudence, which means that the same will be true of the exclusion in paragraph 4 of schedule 3. Revenue-producing monopolies are undertakings that have been granted monopolies by the state to raise money for the state. When this matter was raised in Committee, we mentioned some European countries that have such monopolies, and we agreed with the hon. Member for Daventry (Mr. Boswell) that tobacco was one instance and alcohol was another. In that instance, it is clear that the application of the exclusion will be limited. In such circumstances, we believe that it is entirely right that the prohibitions should be disapplied. Otherwise, the purpose of the act of public authority that entrusted the undertaking with the service would be frustrated. Let me give some examples of the services that a vote on the amendments would put in jeopardy. They include not just some of the public utility networks, but uniform letter pricing. Is it the real intention of the Opposition to threaten uniform postal pricing and to make it very difficult for many people living in rural and remote areas to post a letter at the same price that people enjoy in the capital city and in major conurbations? That is the effect of amendment No. 6. I hardly think that that can have escaped the notice of the right hon. Member for Wokingham (Mr. Redwood). I believe that that is a hidden way in which to try to drive a coach and horses through uniform letter pricing and to open it to the private sector, which could greatly damage rural and other areas that require uniform letter pricing. It must be a viable service. I wish just that he had come clean on that. On amendment No. 51, by its nature the power in paragraph 7 could be exercised only in rare circumstances. Before its exercise, the Secretary of State must be satisfied that there are "exceptional and compelling" reasons of public policy for her to act. That is a high hurdle to surmount. The power is, in that sense, a "reserve" power. Not surprisingly, we have no present plans to exercise the power. However, if there are grounds to exercise the power, it should be available to us. The hon. Member for South Cambridgeshire (Mr. Lansley) may at some point feel that there are exceptional and compelling reasons of public policy why the prohibitions should not be applied, but this amendment would ensure that they would nevertheless apply. That cannot be right. The power in paragraph 7 is a necessary safeguard. I note that the previous Administration also considered the power necessary, as it was included in the draft Bill that they published in August 1996. I urge the right hon. Member for Wokingham to withdraw his amendment.

John Redwood (Conservative, Wokingham)

The Minister should know that the Opposition's policy is to maintain a uniform tariff for a national postal service. We have made that clear, and we have no intention tonight of undermining or destroying that. We believe that it is possible to guarantee that system, which I believe is favoured by hon. Members on both sides of the House, by a director general exemption, or even perhaps by using the public policy power; I am sure that my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) will not wish to press his amendment to a vote. It is our case that having both the public policy power and this rubric about services of general economic interest weakens the Bill too much, and that this could be handled easily by one or the other. The Minister has to agree that if the postal system cannot be accommodated under other parts of the Bill where we think that it can, it could certainly be accommodated under the public policy power, and should be accommodated as quickly as possible, so that there is no doubt.

Nigel Griffiths (Labour, Edinburgh South)

If that is the case, why did the right hon. Gentleman and his hon. Friends not table an amendment that would protect our uniform letter pricing service? They have not done so, and passing the amendment would threaten that vital service.

John Redwood (Conservative, Wokingham)

I have just told the Minister how it is very easy to accommodate our mutual wish. He is a member of the Government, for heaven's sake. He is the one who has to sort out all the consequences of our important debates on the big principles of the Bill. I have told him that the Opposition would give a fair wind to anything that did that. Given his majority, I think that he could probably do it even without that Opposition guarantee, but it has been and remains Opposition policy to support the current national tariff for the postal system. There are many ways in which to accommodate it under the Bill—through director general rules or other exemption powers in the Bill—without needing this enormous blockbuster of paragraph 4 to schedule 3. I am not persuaded by what the Under-Secretary has said. I find it odd that British legislation should be framed to exempt a continental tobacco monopoly. We do not have tobacco monopolies in this country, so there is no need to make special provision for them in British law. However, we do have other types of services of general economic interest or revenue-producing monopolies. The Under-Secretary cannot be sure how the courts will construe these phrases. Despite clause 60, there is always the danger that they will be construed in other ways. It would be much safer, and would produce better competition legislation, if this very general clause were struck out. If it is only about continental tobacco monopolies, nothing will be lost; if it is there to protect real monopolies in Britain, we do not want it. I have already told the House how the one example that the Under-Secretary has produced, where we are in agreement, can be accommodated in other ways With the permission of my hon. Friend the Member for South Cambridgeshire, I suggest that we do not press his amendment to a vote, but that we should vote on this fundamental issue of whether the Bill should be heavily diluted by paragraph 4 of schedule 3.

NOTIFICATION FOR GUIDANCE

NOTIFICATION FOR A DECISION

POWERS WHEN CONDUCTING INVESTIGATIONS

Colin Breed (Liberal Democrat, South East Cornwall)

I beg to move amendment No. 76, in page 14, line 2, at end insert— '(7) In exercising the powers conferred by subsection (6)(a)(ii) above, the Director shall afford the undertaking under investigation a reasonable opportunity for its legal or other representative to be present when the employee or officer is required to provide an explanation of the document.'.

Colin Breed (Liberal Democrat, South East Cornwall)

I do not want to detain the House too long at this late hour. It is widely accepted that the powers proposed in the Bill are extensive. We ought, therefore, to consider for a few moments amendments Nos. 76 and 77, which seek to introduce a couple of safeguards that are vital to the protection of companies that may find themselves under investigation. Although I fully accept that powers currently available to the director general are insufficient and that the Government feel, as I do, that they should be strengthened, it is important to ensure that companies receive fair treatment when they are under investigation and subject to the Bill's extensive powers. Powers to question employees and officers both past and present of any company are critical to the effective enforcement of action, particularly if a company has been committing an infringement over a long time. Although it is not disputed that it is appropriate that there should be power to seek information from employees and officers who have since left the company, it is surely sensible and in a spirit of natural justice to afford a company at least a brief—I emphasise brief—opportunity to comment on the role of any employee or officer who is to be questioned and on the appropriateness of so doing, and allow a company to have a representative present at any interview. The proposed powers are extraordinarily extensive in their force and reach. Before the director or his or her staff exercise any investigatory powers, they should be balanced by some safeguards. Let us consider potential ex-employees or officers who may be interviewed in the process of an investigation. First, an ex-employee or officer may have been made redundant or been dismissed and may have a grudge or be prejudiced against the company personally or through sympathy for a former colleague. Secondly, an ex-employee may be working for a competitor and under contractual agreements that prevent them from disclosing information to anyone. They would find it difficult under such questioning. Thirdly, an ex-employee or officer may wish not to answer any questions because they feel that it may incriminate them or someone else, or because they are not certain of information. That should not be seen automatically as casting any doubt on the activities or motives of the company under investigation. Finally, an ex-employee or officer may genuinely have forgotten—or at least not remembered well enough—all the facts or information for which they are asked, but may feel obliged to give opinions rather than facts and knowledge. Those are practical examples. I recognise that the Bill provides a right of challenge, albeit only at the appellant stage, which is rather too late. I also recognise—[Interruption.]

Colin Breed (Liberal Democrat, South East Cornwall)

I recognise that speed is important in such investigations. The Government have made it clear on several occasions that they want the investigations to progress and not be bogged down. In some cases, however, it might be wise to allow a company a brief opportunity to comment and to have a representative present, not to influence, control or make any decision on whether the investigation should go ahead but simply to help avoid the time and expense of future challenges, which can certainly arise on appeal. If the Government accepted the amendments, they would slightly redress the balance on behalf of companies that find themselves under the significant powers of the investigations, which are heavy and extensive. If the Bill proceeds unamended, companies may well find that those powers are so extensive as to be difficult for them to comply with—even if they want to.

Nigel Griffiths (Labour, Edinburgh South)

I have listened carefully to the speech of the hon. Member for South-East Cornwall (Mr. Breed) on a matter to which we have given considerable thought. I hope that he may consider withdrawing the amendment in the light of assurances that I can give him. The matter of legal advice being available during an investigation has arisen in various ways and has been debated at length in this House and the other place. In relation to clause 27, the Government gave an assurance in Committee that the right to legal advice was an important matter and would be covered by the director's rules under clause 50. Those rules are subject to the Secretary of State's approval and annulment by vote of either House. The amendment, if I have understood it correctly, is rather different. Investigations under clause 26, and under the Fair Trading Act 1973 as strengthened by clause 66, are "off-site" in character—that is to say they will not involve entry to premises. 10.30 pm The Office of Fair Trading expects generally to exercise those powers by correspondence and therefore will allow time for legal advice to be sought. If the powers are exercised by requiring the production of documents at a specified time and place, the employee or officer concerned could be accompanied by a legal adviser. The right of an employee or officer to be accompanied by a legal adviser should be dealt with in the director's rules, and I am happy to give that assurance.

Colin Breed (Liberal Democrat, South East Cornwall)

I am happy with what the Minister has said so far, but I ask him to clarify one point. If the matter is conducted in correspondence with an ex-employee, will the company be advised that such correspondence is in operation?

Nigel Griffiths (Labour, Edinburgh South)

In terms of the effectiveness of the investigation, it is for the director general to weigh up whether the employee is likely to be the subject of any undue pressure, but being always mindful that, with an established appeals procedure, any actions of the director general that are not considered to be within the competence of the new Act would give people some recourse to justice and review. It is clear that the director's rule will cover the issue of access to legal advice. I hope that, in the light of my explanation, the hon. Gentleman will feel able to withdraw the amendment. I am grateful to him for raising this important issue.

Colin Breed (Liberal Democrat, South East Cornwall)

The Minister has addressed part of the problem. The amendments seek to ensure that companies have notice that ex-employees are to be approached, thus giving them the opportunity to comment early in the investigation on the appropriateness of the background information concerned with the employee, which would perhaps provide helpful information to the director general and staff anyway. However, I accept the Minister's assurances that the matters will be worked out only in practice as cases happen. On that basis, I beg to ask leave to withdraw the amendment.

THE COMPETITION COMMISSION

Andrew Lansley (Conservative, South Cambridgeshire)

I beg to move amendment No. 49, in page 64, line 8, leave out from 'person' to end of line 16 and insert 'is— (a) a puisne judge of the High Court; (b) a judge of the Court of Session; or (c) a judge of the Supreme Court of Northern Ireland, and before appointing as a member of the appeal tribunal any person who holds the judicial office mentioned in paragraph (a), (b) or (c) he shall consult the Lord Chancellor, the President of the Court of Session or the Lord Chief Justice of Northern Ireland, as he considers appropriate.'.

Andrew Lansley (Conservative, South Cambridgeshire)

The amendments work together in the sense that amendment No. 50 leaves out the requirement for consultation with the Lord Chancellor and other Law Officers, since that is incorporated into the proposed structure of amendment No. 49. The purpose of amendment No. 49 is to replace the requirement laid upon the Secretary of State in the existing paragraph 4 of schedule 7 to appoint someone with legal qualifications. It would make explicit that the person to be appointed was a High Court judge. In a similar debate in Committee, it was made clear that the Government intended that the person to be appointed would be not a High Court judge, but equivalent to a High Court judge. The appeal panel will represent the Competition Commission in considering appeals against the decisions of the director general. It was certainly understood in Committee that the Government intended to be free to appoint to the panel members who had not only suitable legal qualifications, but the ability to assess the economic character of the judgments. Those who bring appeals will believe that it is in their interests regularly to go to the courts rather than to rest on the decisions of the panel if they feel that the panel does not have the necessary legal credibility to give robust judgments that are likely only in the most exceptional cases—such as where high principles are at stake—to be overturned by the courts in a further appeal. We were at pains to make that point in Committee, but I do not feel that it was sufficiently taken on board. To ensure that the appeal panel functions in the best way, the panel and the president of the appeal tribunals should bring the maximum legal credibility to their judgments, but that will not be achieved if the president is appointed on the ground of his or her economic credibility. The director general and other members of the commission are likely to have economic credibility, but those who appeal against the director general's decisions must have sufficient faith in the legal credibility of the system not to make a further appeal or even to circumvent the procedure.

Tim Boswell (Conservative, Daventry)

I am grateful to my hon. Friend for giving way, as I want to deal with the matter by way of intervention, not in a substantive speech. Does he agree that there is a real risk that there will be a much higher incidence of appeals against a tribunal's decision to a higher court and that it would be counter-productive not to incorporate into the Bill a provision such as the one suggested in the amendments?

Andrew Lansley (Conservative, South Cambridgeshire)

I agree. Our intention is to make the process work in the best interests of British industry, but industry will not be well served if it finds that, because of tribunals' lack of legal credibility, it regularly has to have recourse to the higher courts. The tribunals must provide a forum in which economically and legally credible decisions can be made straightforwardly and inexpensively. It is difficult to see how that could be achieved without a High Court judge as president of the tribunals.

Ian McCartney (Labour, Makerfield)

Like the hon. Member for South Cambridgeshire (Mr. Lansley), I am convinced that we need robust decision-making processes that have clarity as their central focus. I also believe that the membership of the panels must be credible in terms of the law, of business practice and of economics. The panels will be similar to the restrictive practice courts, where all three key pillars are consistent throughout the membership. That is very important. If the process is to work, there must be a clear understanding from the outset that the membership must have a quality and credibility that ensure that people can accept a tribunal's decisions. We can all agree that access to full and independent appeal on the merits of the case is essential in ensuring that the new regime is fair and transparent. The Bill provides for precisely such a right of appeal. Our proposals provide a clear separation between the body that has the investigative and original decision-making function and the body that hears appeals. Such a separation is essential to ensure a fair, independent and transparent appeals process. We achieve the separation by making the appeals tribunal a completely separate body from the Office of Fair Trading, which has the primary responsibility for investigating and dealing with infringements. In its response to the consultation document, the Confederation of British Industry said: We are pleased that the Government has taken into account the suggestions put forward by the CBI and has chosen to preserve an independent body with the power to conduct a full review of the DGFT's decisions. Fairness demands that appeals can be dealt with efficiently and by people with the necessary expertise and experience. We believe that our proposals for a specialised tribunal will best achieve that aim. We are clear that the person appointed to be president of the tribunal will be a senior figure, with status at least equivalent to that of a High Court judge. The tribunal itself will have equivalent status to the High Court and appeals from its decisions on points of law or levels of penalty will be direct to the Court of Appeal. It is clearly essential that the president should have appropriate legal qualifications, experience and standing, and strict minimum requirements are set out in schedules to the Bill. We do not think that it would be right to limit further the range of people and expertise available to fill this vital post, as the amendments would do. General legal standing is vital, but so are special knowledge and experience of competition matters. We do not believe that it would be in the interests of the users of the appeal tribunal to limit the field of potential candidates to High Court judges alone, as the amendments propose. Our proposals will open up a much wider range of potential candidates. We believe that that is very important in what is, after all, a complex and specialist field. I hope that, having heard that explanation of our position, the hon. Gentleman will be prepared to withdraw the amendment.

Andrew Lansley (Conservative, South Cambridgeshire)

I am grateful to the Minister for that reply. He has made clear the Government's intention to meet the tests of legal credibility that were implicit in the amendment, rather than limiting the tests to other kinds of credibility that will be vested elsewhere, in the activities of the director general and the commission. I therefore beg to ask leave to withdraw the amendment.

VERTICAL AGREEMENTS AND LAND AGREEMENTS

Andrew Lansley (Conservative, South Cambridgeshire)

I beg to move amendment No. 41, in page 26, line 4, at beginning insert 'Subject to subsection (1A)'.

Andrew Lansley (Conservative, South Cambridgeshire)

The amendments are designed to clarify the characteristics of vertical agreements and to restructure the clause to give effect to the Government's apparent intentions. I think that it is common ground on both sides of the House that, like any other aspect of the activity, one has to judge whether the impact of vertical agreements on competition and consumer benefits is beneficial. Whereas one would judge many other classes of agreement simply on their effects, there is more of a presumption that vertical agreements are benign, and the President of the Board of Trade stated earlier that she would try to find a mechanism by which such agreements could be excluded from the scope of the prohibition. 10.45 pm The difficulty is that, throughout the passage of the Bill, we have been waiting for the Government to tell us by what means they propose to exclude vertical agreements. We have been awaiting the views of the task force established between the Government, the Confederation of British Industry and other bodies to look into the matter. In Committee, we were told that there was a further reason for delay because we had to take on board the Commission's final view of the matter. When we began to understand the thinking behind the Commission's approach, there was all the more reason to amend the legislation so that the House could lead the Commission to an appropriate definition of vertical agreements, rather than simply wait for what it would tell us. I will not dwell on all the other incidental matters, but, for me, what gave rise to most concern in Committee was the Under-Secretary of State making it clear that the Commission was considering a definition of vertical agreements that would encompass operations at different economic levels. Rather, therefore, than having an effects-based approach, we would have a narrow, form-based approach to the exclusion for vertical agreements. It seemed an unhappy precedent for the Commission to go down that path as it would be perfectly possible to define such agreements differently. Indeed, the purpose of the amendments is to undertake that definition. For example, price-fixing agreements will clearly be excluded from the vertical agreements that should obtain the benefit of exclusion from the prohibition; one amendment would achieve that. Clearly, there must be a proper clawback provision. If the director feels that a vertical agreement that has the benefit of the exclusion would infringe the prohibition, he must have the right to take that agreement back under the terms of the prohibition. All that is set out in the amendments, including the requirement that vertical agreements should relate to two or more unconnected undertakings. There are a number of benefits, on which I will not dwell at great length as they were set out well in Committee. However, it is important to recognise that, the vertical agreements that the Commission seems to be moving towards are necessarily those that operate at different economic levels, whereas those that we meet in practice often have horizontal aspects. One instance weighs heavily on my thinking and that is that, where a franchise agreement forms the vertical agreement, the franchise holder will often have a small number of units in his own control at a particular level to protect the brand, demonstrate the franchise and show how the agreement should be manifested. The sort of definition that the Commission is considering would exclude such vertical agreements. We do not have the benefit of its final document, so it is not clear how it will disinter such an agreement to separate out the vertical and horizontal aspects. If Ministers intend, as they stated at the outset, to provide an exclusion for vertical agreements, we should give effect to that provision, but with suitable safeguards and definitions. The amendments pick up on those points and would give effect to them. In contrast to their stated intention to exclude vertical agreements, all that Ministers have come up with—in months—is a bold enabling power, with no specifics. Nor have they, as yet, given us any clear definition of the terms on which they would be likely to produce statutory instruments to give effect to their intentions. The amendments have two purposes. They challenge Ministers to tell us, even at this late stage, the basis on which they propose to handle vertical agreements, and they ask the Government to incorporate in the Bill an exclusion and subsequent definitions of the kind they ought to have proposed in the first place.

David Chidgey (Liberal Democrat, Eastleigh)

Amendments Nos. 53 to 58 attempt to address concerns raised in parts of the British music industry. Vertical agreements are vital to the industry, particularly for songwriters, composers, music publishers, record companies and collecting societies. The success of the music business depends on its ability to license musical works effectively and efficiently to parties who wish to use them. The important point is the variety of agreements concerned, and I hope that the Minister can clarify the position. One-off agreements may allow use of a piece of music in specific circumstances, such as for television advertisements. Agreements may comprise collective licences, allowing frequent music users, such as television or satellite broadcasters, to play a licence holder's repertoire without seeking authorisation for each composition. Vertical agreements concerning copyright are different from other vertical agreements, for several reasons. Unlike transactions involving other types of property, copyright licences do not transfer ownership from one party to another. They merely give permission for use of copyright work. It is right that such agreements should specify the circumstances in which the licensee is permitted to use the work. Anything else would render rights worthless. European Commission case law already recognises that intellectual property contracts must contain conditions of use. Regardless of specific terms and conditions, licences grant freedom to those who wish to use music. Should the Bill result in uncertainty for rights holders about whether licence agreements are valid, they may choose not to enter into such agreements rather than risk losing control of their work, the source of their income. Members of British Music Rights, songwriters, composers and music publishers need certainty in their business relationships. We want the Government to assure rights holders that they do not consider agreements to be restrictive, and that the Director General of Fair Trading will not regard agreements as falling within the Bill's scope. The National Consumer Council is concerned about clause 50. A balance needs to be struck between ensuring that the Office of Fair Trading is not overwhelmed by dealing with vertical agreements, and making sure that the director general has adequate powers to act against malign vertical agreements. The NCC feels that that balance is not struck sufficiently in favour of consumers. Broadly, we are concerned that the powers will not be sufficiently robust to deal with vertical agreements and anxious about the use of the clawback power in clause 50(3), which is the key to protecting consumers from malign agreements. We are worried that, unless the director general has sufficient powers to consider all vertical agreements that have been exempted or excluded, the provision will fail. Our amendments are designed to probe the operation of clause 50. The purpose of amendments Nos. 53 and 54 is to probe why it should be the Secretary of State who makes the relevant order. Why should it not be the director general, or even the Secretary of State on the advice of the director general? Will the director general have any role in making the order? Those questions have been raised in the context of the other powers in the Bill, particularly the Secretary of State's exclusion powers in clause 3, the director general's power to make individual exemptions under clause 4 and the block exemptions under clause 6 that may be made by the Secretary of State at the director general's recommendation. In clauses 3, 4, and 6, there is a clear distinction between the roles of the Secretary of State and the director general, but it has been lost in clause 50. In the past, the National Consumer Council has feared that there has been too much scope for unfettered Executive action on competition policy. The director general should have the final say on competition issues while the Secretary of State should have it when broader economic issues must be considered. Clause 50 confuses that distinction. We look to the Minister for clarity. Amendment No. 56 provides that, before making an order, the Secretary of State should justify why vertical agreements should be excluded or exempted from the prohibition. In doing so, he should assess the benefits to consumers of the order. The assessment should be published as part of the consultation process. That should make the process of making the order as open and accountable as possible. Openness is important because clause 50(1) does not specify the criteria for making exclusions or exemptions. The situation in the Bill is different from what has been proposed in the European Union document, "Draft communication on the application of the EC competition rules to vertical restraints". The EU proposals, by comparison, are based largely on market share triggering the blacklisting of prescribed practices. The main thrust of amendments Nos. 55, 57 and 58 is to ensure that the director general's clawback power is not too limited. As currently drafted, clause 50 means that the order will have to specify whether the director general has such a power or not. We believe that he should be able to use it whenever he considers it appropriate and not only when specified in the Secretary of State's order. The worst case scenario is that the Secretary of State could exclude or exempt all vertical agreements under clause 50(1) without empowering the director general to use any clawback power at all. Should that happen, no vertical agreement would be exposed to competition scrutiny. That would be unacceptable and we do not believe that that is the meaning of the legislation. Amendment No. 57 would ensure that the director general does not have to be too constrained in his use of the clawback power. Clause 50(3) limits the use of the power to "prescribed circumstances". What are the prescribed circumstances likely to be? If such circumstances were confined to a merger inquiry identifying problems, it would be far too restrictive. The director general should have the power to consider any vertical agreement brought to his attention as being potentially malign. He should then be able to assess it, judge its anti-competitive effects and, if necessary, use the clawback power under clause 50(3) to bring it within the chapter I prohibition. I have set out as clearly as I can our concerns about clause 50 by tabling probing amendments and providing background information on the specific concerns of the National Consumer Council and of the music rights fraternity, in particular British Music Rights. I expect the Minister to address the issues seriously and I hope that he will give some words of encouragement when he winds up the debate.

Oliver Letwin (Conservative, West Dorset)

I should begin by reassuring hon. Members that I do not intend to dwell on this matter at the length at which I dwelt on a previous matter this evening. Clearly, at some point after I found myself dislodged from the Committee, my hon. Friends had an attack of extreme moderation, for they have tabled amendments that are minimalist. From an early stage in the Bill's progress, we were assured by the Secretary of State that action of a firm and decisive nature would be taken to remove vertical agreements from the scope of the Bill. We were assured repeatedly throughout the Committee stage—I have checked the Official Report of the later part of the Committee's proceedings—that we would be given a judgment of Solomon, if not something better, on the issue as a result of the prolonged deliberations of the Government and their chosen parties that would tell us exactly how that would be done. Yet what do we find? We find provisions in the Bill that are simply a replication of the Government's general tendency to insert clauses that either are, or bear a striking resemblance to, Henry VIII clauses—clauses that give the widest possible discretion under regulation. My hon. Friends have tabled amendments that would make provisions that might be described as presumptive—they would still allow a considerable degree of discretion. The Minister owes it to the House to explain how he intends to use clause 50 as it stands; and why he would not be prepared to accept amendments that slightly constrain that regulation-making power. I shall go further, because there is a point here that connects with proceedings earlier this evening. If my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) is right and the reason why the Government have wholly failed to bring forward a clear and concrete definition of the sorts of vertical agreement that will be exempt and those that will not is that they await the views of the Commission on the matter, the Government are once again guilty of entirely failing to distinguish between interstate and intrastate commerce. The views of the Commission on this matter are of exactly the same academic interest as might be the views of a range of economists: if the Commission has superior economists, its views are of greater interest; if inferior, as is all too often the case, its views are of less interest. The Commission has no jurisdictional interest whatever in this matter. As we have been repeatedly assured, it is precisely the purport of the Bill to deal with intrastate commerce. In such matters, the Government cannot hide behind the views of the Commission. Therefore, we have before us the straightforward spectacle of the Government having spent many months considering an issue only to bring before the House something that they could perfectly well have brought before the House six months ago—provisions that enable the Government to decide in due time what the Government want to do. I would venture to say that my hon. Friend the Member for Daventry (Mr. Boswell) could have drafted such provisions immediately—indeed, his research assistant or secretary could have done so. The clauses tell us nothing, so, if the Minister intends to reject the amendments, he owes it to the House to tell us exactly why he is doing so. He owes it to the House to tell us how he will go about exercising the wide latitude given to him; and why he would not be able to exercise sufficient latitude if he accepted the amendments tabled by my hon. Friend the Member for South Cambridgeshire. If the Minister cannot give that explanation, we owe it to the country to explain that this is yet another case in which the Government intend to abrogate responsibility over intrastate trade to an external power that ought not to have jurisdiction in that matter.

Ian McCartney (Labour, Makerfield)

The issue of vertical agreements was considered at length in Committee. Clause 50 was added to the Bill at that stage to allow additional flexibility in the treatment of vertical agreements. Since that time, the CBI has written to hon. Members—and specifically to members of the Committee. The letter was dated 7 July. I shall quote the CBI's views on the clause added in Committee. The letter states: The Government amended the Bill at Standing Committee to allow for an exclusion to be brought in at a later stage—the CBI supported this. The CBI supports the position the Government have taken in respect of these matters.

Ian Bruce (Conservative, South Dorset)

Will the Minister give way?

Ian McCartney (Labour, Makerfield)

On that specific point?

Ian Bruce (Conservative, South Dorset)

Yes. I had intended to make a speech, but an intervention is simpler. I sat through the debate on Second Reading and tried to find out from the Government what they were trying to achieve with the Bill. Can the Minister give us one or two examples of cases in which he feels that vertical agreements are not working and tell us what the Government intend to do about it so that we can judge whether the clauses will do what they intend?

Ian McCartney (Labour, Makerfield)

With all due respect, we are trying to achieve a fair and effective competition regime, which includes the capacity to exclude vertical agreements. The vast majority of vertical agreements are benign, but there are circumstances in which a vertical agreement may not be benign. We must have provisions in place to deal with that. That is why the Government, after discussion with interested parties, came forward with clause 50. I repeat that that is why the CBI went out of its way to write to hon. Members saying that it supports the way in which the Government are proceeding.

David Chidgey (Liberal Democrat, Eastleigh)

The Minister is quoting a letter from the CBI, dated 7 July, which, as he rightly said, has been circulated to members of the Committee and others. The hon. Gentleman has given the House the impression—I am sure he did not mean to—that the letter contains a complete endorsement of the Bill. The Minister knows that it does not. There are seven points in the letter which express the concerns that the CBI still has. I am not saying that I agree with those concerns, but it is only right and proper that the record should show that, although the CBI welcomes the Bill in principle, it does still have seven specific concerns.

Ian McCartney (Labour, Makerfield)

With all due respect, I thought that I had made it absolutely clear that I quoted the CBI's view of what has happened on vertical agreements since the Committee stage. I quoted it accurately. I made no attempt, either generally or specifically, to attribute to the CBI any other remark—nor would I attempt to do so. I was trying to be helpful to the House. I have been dealing specifically with the issue around clause 50. I did that because that clause came about as a result of the consultations that took place. I believe that it was legitimate for me to quote the CBI's view. I assume that the CBI sent that note to hon. Members so that they could be clear about the process involved in achieving clause 50.

Oliver Letwin (Conservative, West Dorset)

rose—

Ian McCartney (Labour, Makerfield)

I cannot think for a moment what the hon. Gentleman wants to add to that. Perhaps he will wait until I get a little further into the body of my speech. We have said on a number of occasions that we believe that there is significant merit in recognising the special features of vertical agreements as a whole under the chapter I prohibition. The prevailing view among economists is that vertical agreements do not normally give rise to competition concerns, except where one of the parties holds market power or there exists a large network of agreements. In recognition of that, using the powers under clause 50 will reduce the burden on business of unnecessary notification. That will enable the better concentration of regulatory resources on areas of competition concern. As hon. Members may be aware, the European Commission has been conducting a review of the treatment of vertical restraints. Papers that we have received recently from the Commission contain possible definitions of vertical agreements which could form the basis of a description for the purposes of the chapter I prohibition. There is, of course, great merit in using the same language as proposed by the Commission, if possible. Many UK businesses are already subject to EC competition law and it might be burdensome to apply two different tests at EC and UK level when deciding how they will fall to be treated under the UK and EC prohibitions. This is a matter we are actively considering with the vertical agreements task force, which includes representatives from the CBI, the Monopolies and Mergers Commission and the Office of Fair Trading. Nevertheless, we recognise that some vertical agreements can cause serious competition concerns that might not be readily dealt with by reliance on the chapter II prohibition or the complex monopoly provisions of the Fair Trading Act. Clever lawyers—there are a few in the House—may also test the terms of the special treatment and squeeze agreements within it which were not intended to benefit. In particular, we do not propose to give special treatment to price-fixing vertical agreements. It is essential that the director general is able to claw back individual agreements to examine them. That is a quid pro quo of a wide-ranging exclusion. We have discussed our approach in detail with representatives of the CBI and it has their support, as I noted earlier when I quoted the body's parliamentary briefing. I turn now to the specific amendments proposed by the hon. Member for South Cambridgeshire (Mr. Lansley). True to his tradition, he spoke to them in a reasonable and cogent manner. That sounds trite, but he understands what I mean. The definition suggested in amendment No. 45 for a vertical agreement is at odds with that suggested by the European Commission in its papers. As I have said, businesses may find it burdensome to have two different tests that they have to apply. Our approach in this area, as in many others, is to assist businesses by introducing a prohibition that is consistent with article 85.

Oliver Letwin (Conservative, West Dorset)

I want to press the Minister on the point about the CBI. Opposition Members entirely accept that the CBI prefers the current position to the original position, in which vertical agreements might have been entirely prohibited. Does the Minister not accept that, if the CBI was offered the alternative of total or possible total prohibition, compared to what is currently in the Bill, it would be very likely to favour the latter? He has not addressed the question whether it might favour over that the amendments in the name of my hon. Friend the Member for South Cambridgeshire (Mr. Lansley).

Ian McCartney (Labour, Makerfield)

I cannot say what the CBI thinks about the amendments. I suppose that, having read them, it decided to say in its briefing that it agreed with the Government's position on the matter, which would indicate that, on reflection and consideration, and after discussions with others who are stakeholders, it believes that the Government's proposal is the best way forward. If that was not the CBI's view, it would have told hon. Members so in no uncertain terms in its note to us, because this issue is as important to the CBI and its members as it is to other businesses. Even without the objection that I described, I am concerned that the definition provided in the amendment may allow anti-competitive horizontal agreements to slip through by masquerading as vertical agreements. For example, two parties at the same level of trade could enter into reciprocal agreements for the supply of a particular good, setting conditions that relate to the supply of the good to consumers. The amendments do not allow flexibility to amend the definition of vertical agreements over time. That is the key difference between the Government's approach and that of the hon. Member for South Cambridgeshire. Amendment No. 45 would limit our ability to make adjustments to ensure consistency with the European regime. It would also preclude amendments to the definition if it proved to be defective. Some flexibility of that nature is desirable to ensure that special treatment remains of real value to businesses but does not open a loophole in the operation of the prohibition. Hence, clause 50 allows the special treatment to be altered, but only by affirmative resolution.

Andrew Lansley (Conservative, South Cambridgeshire)

I acknowledge that the route that I suggest might lead, in the initial stages, to a contest between a definition derived here and one proposed by the Commission. I want to tax the Minister on whether he believes that the definition towards which the Commission is moving is one with which he is content. Is it acceptable for the Commission to have a definition that includes operating on different economic levels, since that is more about form than effect and may have a significant adverse effect for franchise holders?

Michael Martin (Deputy Speaker, Glasgow Springburn)

Ian.

Ian McCartney (Labour, Makerfield)

Thank you, Mr. Deputy Speaker. You call me that because we have known each other since childhood—I was the child. I would not have prefaced my remarks on the necessity to provide the opportunity in clause 50 to use the wording of the Commission's proposals as I did if the Government were unhappy or thought that the proposals would not work as we want them to. The fact that we are rejecting the hon. Gentleman's amendments means that, as I have said, we believe that the proposals from discussions in Europe will meet the objectives of the Government and business for vertical agreements. I understand that the hon. Gentleman will not accept that. Although I understand his reasons, there is a genuine disagreement between us. I hope that the judgment that I am making will prove to be correct. I spent a great deal of time discussing it with the CBI and others, to ensure that the decisions that we took, in relation to the principle of clause 50 and in relation to what comes out of it, genuinely met the requirements of business. There would be no point in the Government dealing with the matter in any other way. The amendments proposed by the hon. Member for Eastleigh (Mr. Chidgey) tackle the issue of vertical agreements from a different perspective. Amendments Nos. 53 and 54 give the Director General of Fair Trading a role in the making of an order for vertical agreements. Amendment No. 58 also gives the director general power in relation to the scope of the prohibition, allowing him to remove the benefits of an order from a category of agreements. 11.15 pm As my hon. Friend the Minister for Competition and Consumer Affairs said in Committee, where a power extends to the scope of the prohibition, it is right that it be subject to affirmative resolution of both Houses of Parliament. Equally, it is right that a Minister, rather than the director general, is responsible for making orders. Amendments Nos. 55 and 57 would both give the director general an ability to exercise clawback whenever he wishes to do so. As we have said, we think it right that the director general be able to exercise clawback, but only when he considers that an agreement would, if clawed back, infringe the chapter I prohibition, and that he would not be likely to grant it an unconditional exemption. That test will allow him to exercise clawback when an agreement is seriously anti-competitive, while giving businesses that enter into benign vertical agreements the proper certainty that they require. By removing a test for clawback, the amendments could undermine the purpose of clause 50. If businesses are not given reasonable confidence that there is an appropriately high threshold before clawback, they may well seek to notify benign vertical agreements that are covered by an order to obtain that greater certainty. I fully accept the sentiment that gave rise to amendment No. 56, but do not view it as necessary. We intend to consult widely with consumer groups, such as the National Consumer Council, as well as business before making an order under clause 50. The hon. Member for Eastleigh raised the issue of intellectual property. We do not believe that there is a need to cover such agreements in the special treatment proposed. The licensing of intellectual property rights has been subject to article 85 in the United Kingdom for more than 25 years, and a licence to use intellectual property rights as such is not restrictive; it is granting a freedom. Other copyright issues are covered by the Copyright, Designs and Patents Act 1988 and recent European Community directives. I shall send the hon. Gentleman copies of the recent directive, because discussions of it took place upstairs. I do not think that the hon. Member for Daventry (Mr. Boswell) had quite joined the DTI team from the Treasury at the time—one of his hon. Friends dealt with it—so, if that would helpful, I shall send the hon. Gentleman a copy too, so that both Front-Bench Teams are aware of the position. Let me return to amendment No. 56. The Department would expect as a matter of course to conduct an assessment of the costs and benefits for all legislation—primary or secondary. That assessment is placed in the Library when legislation is introduced to Parliament. In addition, my right hon. Friend the Chancellor of the Duchy of Lancaster has undertaken to issue guidance requiring Government Departments to publish such an assessment when a proposal is consulted on. That new guidance is likely to be in place by September this year. On that basis, I invite the hon. Members for South Cambridgeshire and for Eastleigh not to press their amendments.

The rest of the debate is in Hansard.