Enterprise Bill

Public Bill Committee, 7 May 2002.

Standing Committee B

Clause 126 - Questions to be decided on market investigation references

Derek Conway (Conservative, Old Bexley and Sidcup)

We were debating the amendment when we adjourned on Thursday. Mr. Lansley was just about to sit down when I suspended the Committee, so unless any other member of the Committee wishes to speak, I shall call on the Under-Secretary to reply to the debate.

Melanie Johnson (Labour, Welwyn Hatfield)

As you have just said, Mr. Conway, at the end of our previous sitting, the hon. Member for South Cambridgeshire (Mr. Lansley) suggested that the amendment should be adopted because it would bring the wording of subsection (8) into line with article 81(3) of the EC treaty. I shall explain why the clause has not followed the drafting of the article.

It is common ground in the Committee that while, by and large, firms are more efficient and customers are better served when the markets are more rather than less competitive, circumstances arise in some markets in which an aspect of the market structure or conduct that has an adverse effect on competition nevertheless gives rise to economic benefits that offset prevention, restriction or distortion of competition.

The question raised by the amendment is whether the alternative drafting approach under article 81(3) would be a more effective or appropriate way of making allowances for such "countervailing benefits" in the context of market investigation than subsection (8), as presently drafted. The White Paper stated that the article 81(3) criteria reproduced in the amendment were broader than the set of customer benefits that we have adopted both in the clause and for merger investigations and, in one sense, that is true. The two sets of criteria are fundamentally the same.

I can reassure Conservative Members about any benefits that accrue from improvements in

production or distribution, or in technical or economic progress, are passed on to customers in a United Kingdom market, not just in the market concerned. Those benefits can be in the form of lower prices, higher quality or greater choice of goods or services, or greater innovation in relation to such goods or services that already fall within the subsection (8) definition of customer benefits, provided that they fall within the criteria under subsection (8)(b) that the benefit has accrued or may be expected to accrue within a reasonable time and that it is unlikely to accrue without any aspect of market structure or conduct concerned.

Conversely, if benefits in improvements, production or distribution arise from aspects of market structure or conduct and have an adverse effect on competition that do not fulfil the criteria set out in subsection (8)(b) or which are not passed on to customers, we would not fulfil the requirements of article 81(3) either. Article 81(3) requires, for example, that customers must enjoy a fair share of the benefits of improvements in production or distribution if an exemption from an article 81 prohibition is to be granted. Thus, although article 81(3) and clause 126(8) are drafted differently, their aims are essentially the same. Given that we are not out of keeping with the spirit of article 81(3), we see no advantage in following it to the letter because the market investigations under article 81 do not have the same focus. Article 81 is concerned with agreements and arrangements consciously entered into by competitors; market investigations are concerned mainly either with structural competition problems or with parallel, but non-collusive, conduct by competing firms.

Moreover, unlike chapter 1 of the Competition Act 1998, the market investigations regime is not based on European Union law and there is no more reason for us to adopt the concepts from article 81(3) than there would be for us to use the European Commission merger regulation dominance test under part 3 of the Bill rather than the substantial lessening of competition test which, as members of the Committee know, we have already chosen. I hope that I have answered the question of the hon. Member for South Cambridgeshire about why we have so drafted subsection (8) and not done so in the terms of article 81(3) and that, as a result, the amendment will be withdrawn.

Jonathan Djanogly (Conservative, Huntingdon)

We have argued why the provision should be aligned with the Competition Act 1998 and article 81. I thank the Under-Secretary for explaining why the provision is not out of keeping with article 81. However, she acknowledged that there are differences.

As my hon. Friend the Member for South Cambridgeshire said last week, on consultation, the majority of businesses said that they thought that an article 1-type approach would be most appropriate. However, I appreciate the fair point that the Under-Secretary made about the fact that we are dealing with structural issues, which is not the article 81

approach. I am concerned that there has been some confusion about the difference in the approaches taken to the competition issue and the consumer law provisions of the Bill. It would have been nice to have had the time to discuss those issues when we considered the consumer law provisions; however, we did not.

I am concerned that we are considering current, rather than future, consumers, as would be more appropriate in a competition debate. There is a risk that if we ignore the proposed amendments, a short-term approach will be taken, rather than the more strategic approach that we argued would be more relevant to the competition provisions. However, I have listened to what the Under-Secretary said, and beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 126 ordered to stand part of the Bill.

Clause 127 - Variation of market investigation references

Jonathan Djanogly (Conservative, Huntingdon)

The Competition Commission must end its investigation within two years. That is a long time for a business to undergo an investigation, given the investigation's impact on costs, the potential fall in the company's share price on the stock market and other impacts caused by market uncertainty as to where the business is heading. In particular, foreign competitors who are not bound by the investigation may take over a company's activities while it is subject to an investigation and is stuck in a rut.

Let us imagine that, after one year, the Competition Commission says, "We have got it all wrong. We've been barking up the wrong tree for the past year. I'm sorry that your share price fell, that a foreign company has taken away your business and that, as a result, jobs that would have been made available in this country have gone abroad." That could happen, given the possibility of a variation. What if the Commission then says, "Okay, we got that wrong, but we've considered it a bit further and have decided that we investigated the wrong thing. We are going to restart the investigation, but this time we will consider a different set of criteria."?

I am sure that we all appreciate that businesses might be fearful of such circumstances arising; of not knowing what was going on, of not being able to plan and of having their strategy turned on its head. They might worry that their share price would be re-affected by the terms of the new investigation. Under the variation provisions of the clause, there is a great possibility that businesses will be dramatically affected.

Can the Under-Secretary give business some comfort about how the variations will happen?

What remedy would business have if a variation were called? Would business be able to complain if, after a year, the investigation failed? In those circumstances, it would be unfair to be suddenly faced with a whole new set of guidelines.

Will there be a limit to the number of investigations that could be carried out, or can the Commission change the rules of the game as it goes along, willy-nilly? We shall discuss the cost of the investigation later on in our proceedings. In the meantime I would be interested to hear the Under-Secretary's views.

Melanie Johnson (Labour, Welwyn Hatfield)

Perhaps I can reassure the hon. Gentleman. The point of the statutory timetable is to give certainty to business. There is real value in having such a timetable because it provides a full stop to proceedings and it is important that that is not undermined. Of course, variations could narrow as well as broaden the scope of a pre-existing inquiry; the hon. Gentleman assumes that it would always be broadened. The amended reference will build on work already done by the Competition Commission; a new inquiry will not be started. In fact, clause 161 requires that parties be given time to comment. It is unlikely that the reference would be varied significantly late in the day, as the Competition Commission would not have enough time to complete its inquiry, especially if it was to be broadened.

Mark Field (Conservative, Cities of London and Westminster)

Will the Under-Secretary confirm that under no circumstances would the clock be turned back to zero with the two-year timetable effectively starting again? That key concern was mentioned by my hon. Friend the Member for Huntingdon (Mr. Djanogly) and it obviously would be a concern for businesses if the uncertainty were to hang over them for a long period.

Melanie Johnson (Labour, Welwyn Hatfield)

I can assure the hon. Gentleman that I do not envisage any circumstance in which the clock would be turned back to zero during the process. The decisions taken must be reasoned, and any decision to vary a market investigation would be open to appeal by the Competition Appeal Tribunal. I accept that questions raised by the Opposition on the matter are utterly reasonable, but I would argue that the clause and related provisions already meet all of their objectives.

Question put and agreed to.

Clause 127 ordered to stand part of the Bill.

Clause 128 ordered to stand part of the Bill.

Clause 129 - Time-limits for market investigations and reports

Jonathan Djanogly (Conservative, Huntingdon)

I support the amendment. Two years is too long; 12 months would be more appropriate, as that is the cycle of one trading year. My hon. Friend the Member for Cities of London and Westminster (Mr. Field) has mentioned the risk to companies during the more lengthy period, so I will not go over that again.

Subsection (3) allows the Secretary of State to reduce the period from two years, but that is looking at the matter the wrong way round. It would be better to start off with a shorter period—for example, twelve months—and to allow the Competition Commission to apply for extensions on a case by case basis. That would be fairer, and would allow the realities of each individual situation to be addressed in an appropriate manner as time goes on.

Alistair Carmichael (Liberal Democrat, Orkney and Shetland)

Further to what the hon. Member for Cities of London and Westminster said, I have received a briefing from a very distinguished trade union—a closed shop, in fact—known as the Law Society, which indicates that it also supports the amendment.

It appears that our colleagues in the Law Society are also prepared to go to the barricades on this matter. As the hon. Gentleman said, the Law Society's point is that the majority of complex monopoly investigations can be handled within nine months. In my experience, if such investigations are allowed to take two years, it is likely that, henceforth, they will take two years.

Subsection (4) limits any orders, so that they can vary the period only to two years. With regard to that, there is not a consequential amendment, so I presume that somebody clever at the Law Society has thought that they can keep the possibility of an extended period. As the hon. Member for Huntingdon said, allowing extensions on a case by case basis makes more sense than the blanket provision.

Melanie Johnson (Labour, Welwyn Hatfield)

I do not for a moment expect that the majority of market investigations will take the Competition Commission two years to deal with. This provision is a long stop; it is not an assumption of an average time, or the likely time or even the time that exceptional cases might take.

By way of comparison, Opposition members talked about monopoly inquiries. Over the past four years, these have taken the Commission 13 months, on average, from the date of reference to the publication of report. Therefore, twelve months would reduce that period. Of course, that is not an exact precedent, and I accept the points made by Opposition members because there will be differences between market investigations and monopoly inquiries, but I can see no reason why the average market investigation should take twice as long as the average monopoly inquiry.

I share the concern of Opposition Members that market investigations should not take any longer than they have to, especially as it is clear that they place burdens on the businesses that are under investigation. The statutory maximum is a long stop, rather than a norm. For each inquiry, the Competition Commission will set a detailed administrative timetable as soon as possible after the reference is made. If an inquiry does not warrant a two-year investigation—I do not expect that most of them will—that will be reflected in the administrative timetable, which will be published early on. However, the fact that many investigations can and will be conducted in less than two years does not justify the amendment—notwithstanding the support for it from that well-known militant trade union, the Law Society—because it would impose on the Competition Commission a statutory maximum that is shorter than the average length of current monopoly inquiries. In other cases, the amendment would destroy the Competition Commission's ability to conduct a market investigation effectively.

We want a predictable framework so that people know what length of time inquiries are likely to take. We cannot tell at the moment, but we know that, like monopoly inquiries, the inquiries will often involve

enormous quantities of data, complex legal, regulatory and economic issues, and many parties. We believe that it would be dangerous to set the initial statutory maximum at less than two years, although I emphasise that we hope that most investigations will be concluded in a considerably shorter period.

Obviously, as hon. Members suggest, in the light of new experience, it might be appropriate for the Secretary of State to exercise her power under subsection (3) to reduce the statutory maximum. We want a quality process that fits. We are dealing with a horses for courses situation, and the time frame needs to be right for each investigation. In the final analysis, fairness is more important than speed. We believe that our proposal strikes a proper balance between thoroughness and urgency. I hope that I have persuaded the hon. Member for Cities of London and Westminster to withdraw the amendment.

Mark Field (Conservative, Cities of London and Westminster)

I confess that I remain uncomfortable with the limit. The Under-Secretary provides some comfort and says that, all too often, the investigation will not take two years. However, there is a danger in any bureaucracy of an instinctive mentality. Once an investigation starts, those involved will know that they have two years, notwithstanding the provisional timetable to which the Under-Secretary refers. The mentality may be that they have 24 months, and, therefore, things will drag on for a prolonged period.

Melanie Johnson (Labour, Welwyn Hatfield)

The hon. Gentleman does not seem to be taking on board my point about early timetabling of the conduct of the inquiry, which will provide the timeframe within which the entire investigation will take place.

Mark Field (Conservative, Cities of London and Westminster)

I appreciate that, but the early timetabling will take place within the confines of the two-year maximum, however much we try to introduce a discipline in timetabling.

Is any guidance provided with respect to the nine-month timetable for monopolies inquiries? If most such monopoly investigations take seven or eight months—in other words, nine months provides a strict discipline—that suggests having a lesser timetable, rather than merely relying on the fact that the two years is a long stop and that the investigation may take less time.

Jonathan Djanogly (Conservative, Huntingdon)

What if the commission asks for a variation, and the original timetable goes out of the window? The company involved would be in a much worse position.

Mark Field (Conservative, Cities of London and Westminster)

Yes, there would be a concern, notwithstanding the initial timetabling plan, that a variation would throw out the timetable. However, the Under-Secretary encouraged us earlier when she said that in no circumstances, notwithstanding a variation, would the entire investigation take more than two years, on the basis that the clock would not be put back to zero.

We are uncomfortable with the proposal. We have all made our comments fairly plain, and I hope that the Under-Secretary will give the matter some thought. I appreciate that provision has been made for her to consider reducing the timetable once the Bill is up and running and in view of investigations that have taken place.

I hope that plenty of attention will be brought to bear on the matter. It is important not simply in terms of the awkwardness involved for a company that is subject to a market investigation. The provision runs counter to the intention behind the Bill and may lead to less innovation and, therefore, less customer value.

Melanie Johnson (Labour, Welwyn Hatfield)

I am listening carefully to Opposition Members. However, for the many reasons that I have given, they are failing to alarm me. In addition, in respect of monopolies investigations—about which there was a further question—there is no outer limit under the current regime. The Office of Fair Trading, or the Minister making a reference, sets the Commission a deadline for producing its report, which is typically between nine and 15 months. However, nine months is quite unusual and has been given on only a couple of occasions. It is parallel to the provision that will exist for a timetable to be published setting out the new arrangements. Overall, the fact that there has been no outer limit has not led to the inquiries being conducted over a long time.

Ken Purchase (Labour/Co-operative, Wolverhampton North East)

Does my hon. Friend accept that companies could be of great help to themselves if they approached the Office of Fair Trading inquiry in an open and transparent way, rather than introducing the complicated obfuscation that frequently accompanies OFT inquiries and prolongs the work unnecessarily? As the hon. Member for Cities of London and Westminster suggested, that sometimes prevents product development. Does my hon. Friend accept that companies may help themselves in those matters?

Melanie Johnson (Labour, Welwyn Hatfield)

I certainly agree that companies can, and should, help themselves. Unfortunately, as everybody would accept, there are occasionally complex situations that require complex information. That is the reason, as I said earlier, why the 12-month long stop is untenable. I want to re-emphasise the fact that a nine-month period is very unusual, 15 months is not common and 12 months does not seem to be sensible. We are committed to ensuring that investigations are completed in a good deal less than 24 months and we have the power to vary that if we need to. We are talking about a quality process and that is why we want to get the balance right. We do not want to curtail investigations that involve complex data and analysis of incoming information. We do not want to carry out a botched-up job by imposing a 12-month period. I hope that Opposition members will understand that—although we are coming from a similar position in terms of what we want to achieve and

the period in which we would envisage that normally being achieved—the decrease in the time limit would not be sensible.

Mark Field (Conservative, Cities of London and Westminster)

This has been a worthwhile debate. I am assured by the Under-Secretary that attention will be paid to the time limit if it were believed to have deleterious effects on business. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 129 ordered to stand part of the Bill.

Clause 130 - Duty to remedy adverse effects

Ken Purchase (Labour/Co-operative, Wolverhampton North East)

It concerns me that amendments demanding payment for investigations should have been tabled. I accept that an investigation may ultimately show that there were no problems with a company. However, the Conservatives are suggesting that the taxpayer should foot the bill for proper inquiries into industrial monopolies, anti-competition and so on. That could lead to considerable costs. Their method of probing the Bill is to suggest that the OFT will act capriciously on almost every occasion. In past sittings, I have noted the number of times that the Conservatives have concocted circumstances in which there will be capricious action by the OFT.

In many cases, it is fair enough to probe and to try to understand the Bill's intention and effects. However, it is an amendment too far to call upon the taxpayer to pay for investigations that turn up blank and give a company a clean bill of health. The

Under-Secretary should rebut that idea as quickly as possible. It is not the Committee's duty to impose additional costs on the taxpayer.

Jonathan Djanogly (Conservative, Huntingdon)

It is, of course, correct that there should be investigations, and that the Competition Commission should have effective remedies to prevent an adverse impact on competition. However, we must realise that even when no remedial action is required after an investigation, a company will still have suffered costs, and will have spent a lot of management time on the issue. Its share price may have been affected. It may also have lost jobs, because a foreign competitor might have acted while the company stalled. Companies could be affected in many ways.

The hon. Member for Wolverhampton, North-East (Mr. Purchase) made the point that the public should not pay companies' costs but, in other cases, that is the case. The example that immediately comes to my mind is taken from my time on a planning committee. I remember that, frequently, when we were considering turning down an application that the officers had recommended for approval, the officers would say, "If you turn this down, the decision will be appealed, and costs will be awarded against the council." Under the hon. Gentleman's argument, one might say that that should not be allowed. However, it is allowed; quite rightly, too, because it puts in place a discipline. Public bodies, and those who serve on them, should be just as disciplined as companies or anyone else. That is what we are trying to say through the amendment.

With all due respect to the civil service, its members are paid to do their jobs, and the more creative they are and the better they are at their jobs, the more likely they are to find possibilities for referral. There should be a balance. Just as in my local government example, when a decision is made, the Minister concerned or the Competition Commission should realise that costs might be awarded against them if they were to take an action and lose it. I support the amendment because it seeks to achieve a fair balance.

Melanie Johnson (Labour, Welwyn Hatfield)

I do not believe that the amendment seeks to achieve a fair balance.

We acknowledge that market investigations can be time-consuming and costly for the parties concerned, but the proper application of competition law ultimately benefits businesses and consumers. I should correct a possible misapprehension; if a market investigation concludes without any remedial action being taken that should not be taken to mean that it was all a big mistake, which seems to be an underlying assumption of Conservative members.

Jonathan Djanogly (Conservative, Huntingdon)

The Under-Secretary makes a fair and important point; such an investigation might serve the public interest by raising significant issues, and connected matters. However, a different point is being made here. Should the company have to pay for that public benefit?

Melanie Johnson (Labour, Welwyn Hatfield)

I understand the point that is being made; it is obvious.

Under certain circumstances, although the Competition Commission might find serious competition problems, it might not be reasonable or practicable to impose a remedy, for a variety of reasons. The Competition Commission will not spend its time undertaking frivolous investigations, and I take on board the point that my hon. Friend the Member for Wolverhampton, North-East made so well.

Gareth Thomas (Labour, Harrow West)

A parallel can be drawn with the actions of the police. They might investigate a company but decide not to take remedial action against it, such as to take it to court. In such situations, we do not ask the company to pay the costs of the lawyers whom it has appointed to deal with the police investigation. That is another reason to reject the amendment.

Melanie Johnson (Labour, Welwyn Hatfield)

Indeed. My hon. Friend is right to support the remarks of my hon. Friend the Member for Wolverhampton, North-East. There are several reasons why it would not be a good idea to accept the amendment.

The OFT has a duty to use its reference powers in a reasonable manner, and it will issue guidance on how it plans to use them. As I have said, in the unlikely event of the OFT using its powers unreasonably, unfairly or illegally, or basing a reference decision on material errors of fact, aggrieved parties will be able to apply to the Competition Appeal Tribunal for a review, and to seek to quash a reference decision. In situations in which the OFT's suspicion of competition problems in a market are reasonable, but the Competition Commission finds that that is not the case, the Competition Commission's investigation is unlikely to be long or costly.

Committee members might be interested to learn that only once has such an investigation led to a finding of no harm; an investigation into Scottish estate agents. Although it led to a finding of no harm, the investigation had merit and the public did not jump up and down and say that taxpayers' money should be paid to Scottish estate agencies as a result of that single instance of the finding of no harm.

Jonathan Djanogly (Conservative, Huntingdon)

In circumstances where an issue is appealed to the Competition Appeal Tribunal, will that tribunal be able to award costs?

Melanie Johnson (Labour, Welwyn Hatfield)

It would be possible to appeal against the decision of the Competition Commission, but it is unlikely that the costs of the appeal would be recovered, just as that would be unlikely with regard to an aggrieved party in a planning case. The parallel that the hon. Gentleman drew with planning applications was not terribly persuasive, given that, in his case, members turned down the advice of officers of the council, which is usually powerful and technical, in my experience. In such cases, there can be no parallel. There are

other aspects of disjointedness between the parallel that the hon. Gentleman seeks to make and the present situation.

The costs awarded would only cover those incurred in bringing the appeal itself when the appeal finds against the parties. We are striking the right balance, as my hon. Friends clearly agree. It would be wrong to accept such a course of action because there would be an incentive for parties to gold-plate their legal cover, which would lead to a massive increase in the overall costs of an investigation.

It could be perceived that the Competition Commission had a natural bias against deciding that no remedial action was taken in a market, potentially leading it to impose unnecessary remedies as a way of avoiding paying parties' costs. All of that would be unattractive. We have the right balance; the one most commonly struck, as some of my hon. Friends have said. I urge hon. Members to reject the amendment.

Mark Field (Conservative, Cities of London and Westminster)

We have had a debate and, clearly, the Under-Secretary will not budge to any great degree. I was not impressed by the comparison made by the hon. Member for Harrow, West (Mr. Thomas) in relation to the police force. There are strong differences between a criminal investigation and the nature of Competition Commission investigations, not least because of the whole issue of compromise and openness to which we have already referred.

Ken Purchase (Labour/Co-operative, Wolverhampton North East)

Does the hon. Gentleman agree that the direct comparison made earlier between planning and OFT law is also odious, because planning law is based upon the premise that one must have a presumption in favour of the applicant?

Mark Field (Conservative, Cities of London and Westminster)

My hon. Friend the Member for Huntingdon was a councillor in Westminster prior to entering Parliament. My own background was in the London borough of Kensington and Chelsea. I sat on planning committees for several years, and debates took place in which strong pressure was brought to bear by the planning committee upon members of the planning department. I speak from the basis of one who has little time for planning professionals; I have never been terribly impressed by the advice given. We should draw a veil over the issue of planning before I am ruled out of order. Suffice it to say, with great respect to my hon. Friend and to the hon. Member for Harrow, West, I suspect that neither example was other than a cul-de-sac in relation to the matter at hand.

I am comfortable about withdrawing the amendment, although the debate about it was deliberately narrowly focused. There were few instances in which no remedial matters were brought to bear. Indeed, the Under-Secretary had only one example, which related to Scottish estate agents, in which a fully-fledged market investigation resulted in no remedy being required.

It would be sensible for the Under-Secretary to reconsider the matter, and we will no doubt revisit on

Report the question of costs imposed upon business. The amendment was couched within a very narrow focus, although I accept the concern that somewhat cosmetic remedial suggestions may be made in order to by-pass the point about costs.

Tony McWalter (Labour/Co-operative, Hemel Hempstead)

Does the hon. Gentleman accept that his amendment may have been more suitable if the action taken by the OFT was malevolent, as it were? That would give rise to an issue about compensation.

Mark Field (Conservative, Cities of London and Westminster)

I sincerely hope that there would be no question of frivolous or malevolent intent from the OFT, not least because there will be such strong ministerial control that there is no chance of such a thing happening. On balance, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Jonathan Djanogly (Conservative, Huntingdon)

I want to speak a little more about the clause as a whole and subsection (3), in particular. It starts off well, but then goes rapidly down hill. It states:

"The decisions of the Commission ... shall be consistent with its decisions as included in its report".

I should be grateful for the Under-Secretary's comments on some points. First, what would be material in such circumstances? Secondly, the circumstances of the company may be such that the causation is beyond its control. Would that make a difference? Thirdly, would any change to the Competition Commission's decision be only to take no action or less action, or could it decide to take more action? If it took more action—action that would be tougher on the company concerned—would the company be asked for its input or be able to comment on the altered circumstances that led to a change in the commission's decision? Could the company take that change of mind to the CAT as an issue in itself? Finally, can the Under-Secretary elaborate on what constitutes special reasons? Is she or her Department planning to issue guidance on the matter?

Melanie Johnson (Labour, Welwyn Hatfield)

The hon. Gentleman is particularly exercised by subsection (3). As he said, it requires that, unless there has been a material change of circumstances or a special reason for the Competition Commission taking a different course of action, its action must be consistent with its report on a market

investigation reference. The clause specifies that the Competition Commission should achieve as comprehensive a remedy as is reasonable and practicable to the adverse effect that it has identified and any detrimental effects on customers that arise from it.

As I explained when discussing clause 126, effectively, the provision creates a presumption in favour of directly remedying the adverse effects on competition, though it does not mean that the Competition Commission cannot implement a remedy that completely removes the detrimental effects on customers over one that only partly mitigates the adverse effect on competition. It also means that the Competition Commission must consider whether the adverse effects that each remedy is designed to address are sufficiently serious to justify the costs of implementing that remedy.

As I said, the Competition Commission still has a duty to consult on a new remedy if the change is significant, and that process will take time. For example, the market could change between the publication of the report and the finalisation of the remedy.

Jonathan Djanogly (Conservative, Huntingdon)

If the change were due to the marketplace, as the Under-Secretary has described, rather than due to the company or because of its action, why should it necessarily suffer as a result of circumstances that were beyond its control?

Melanie Johnson (Labour, Welwyn Hatfield)

Any change will still be subject to reasonable and practical requirements. The company would be consulted, and circumstances could vary in either direction—the hon. Gentleman assumed only one direction. However, regulations or laws that cause a competition problem might take something beyond a company's control, so there might be reasons for new remedies.

I am sure that the hon. Gentleman does not want to deprive business or the Competition Commission of appropriate flexibility in responding to changes in circumstances. Indeed, the point of the provision is to specify that the commission may have regard to any customer benefits in any UK market—not only the market involved—which arise from features of the market that have led to an adverse effect on competition. To do so, it must be confident that the benefit has been accrued partly or wholly as a result of the feature or features involved and that it may be expected to accrue within a reasonable period. I hope that I have reassured the hon. Gentleman that in some circumstances the provision is appropriate and that, therefore, the clause should stand part of the Bill.

Jonathan Djanogly (Conservative, Huntingdon)

I am not wholly convinced. When is such a provision likely to be used, in particular that which refers to when the commission otherwise has a special reason? Clearly, that could mean anything. Does the Department intend to consult or issue guidance on that, or will that be based on precedent

to date? It would be helpful if the Under-Secretary expanded on that.

Melanie Johnson (Labour, Welwyn Hatfield)

We do not propose to consult on the circumstances and reasons. I sketched out several examples of circumstances in which the provision may be necessary. There are reasons for the provision to do with causation beyond control. I have given illustrative examples. We cannot give a definitive list, and it would be foolish to do so. That is probably what the hon. Gentleman is trying to tempt me to give. I hope that the illustrations that I have given meet the point about the sort of circumstances in which we envisage the provision operating.

Jonathan Djanogly (Conservative, Huntingdon)

I hope that the Under-Secretary understands where I am coming from. At the end of two years, when the Competition Commission is in the process of deciding what to do after a long investigation, the company merely wants to know that there will be certainty and that, after a two-year report, the Competition Commission will not merely turn around and say that it has special reasons in the circumstances. I asked for an elaboration of what might constitute special reasons. The Under-Secretary has not suggested what might constitute special circumstances. I am asking not for a specific case study but merely an indication of what might lead to special reason and, therefore, indecision and uncertainty for business.

Question put and agreed to.

Clause 130 ordered to stand part of the Bill.

Clauses 131 and 132 ordered to stand part of the Bill.

Clause 133 - Questions to be decided by Commission

Nigel Waterson (Conservative, Eastbourne)

I tabled amendments Nos. 308 and 309 to clause 133 because it seemed to us as though a draftsman's error had been made in two respects. I hope that they are reasonably clear. Amendment No. 308 would have inserted a reference to the definition in clause 126(2) after the words "adverse effect on competition", while amendment No. 309 would have inserted a reference to a different subsection of clause 126 after the phrase "customer benefits". The clause appears to contain no definition of "adverse effect on competition" or "customer benefits".

My initial instinct was that there had been a draftsman's error or oversight, but it is conceivable that there is a more sinister reason. This part of the Bill deals with public interest cases, and the draftsman may have thought that, if the definitions were left up in the air, then so be it. The Under-Secretary is shaking her head, so clearly the interpretation of something more sinister is not

right. In that case, she is welcome to leap to her feet and accept my amendments with alacrity and joy.

Melanie Johnson (Labour, Welwyn Hatfield)

Perhaps I should intervene on the hon. Gentleman if he intends to continue at length, because the conspiracy view of history is seldom right. I hope that I can delight him by saying that the amendments make similar points to that made in amendment No. 304, which was accepted last week by my hon. Friend the Minister. I am grateful to hon. Members for raising the issue. We want to ensure that the Bill is improved where necessary, and I will give further consideration to their suggestions with a view to tabling drafting amendments on Report. I support the reasons given by the hon. Gentleman for proposing the amendments but, none the less, I ask him to withdraw them.

Nigel Waterson (Conservative, Eastbourne)

I am almost overwhelmed. The Under-Secretary has been good enough to confirm that the conspiracy theory is wrong, so the reason must be the alternative, which I would not dream of mentioning in mixed company. I am delighted that we have found some gaps in drafting, and equally delighted that she is prepared to take them on board. It would be utterly churlish of me not to withdraw the amendments immediately.

Derek Conway (Conservative, Old Bexley and Sidcup)

Order, as the lead amendment has not been moved, it is not necessary to withdraw it.

Andrew Lansley (Conservative, South Cambridgeshire)

In order to understand clause 133 better , I want ask some questions of the Under-Secretary. I confess that I am non-plussed. One does one's best to follow the drafting, but on this occasion I have lost it.

The explanatory notes make it clear that clause 133 is intended to enable the commission to decide the issues in a market investigation case. We are dealing with such a case, where a public interest intervention notice has been served. The explanatory notes suggest that the Competition Commission should have to consider not only the same questions as it would have considered under clause 126, where there was no public interest element, but—in addition to issues about a competition-only market investigation—what course of action would be appropriate in the light of any relevant public interest considerations. That is fine. I understand that we are dealing with a public interest element, but the structure of the clause suggests that the question to be decided by the commission is simply whether there is an adverse effect on competition. There is no other reference.

Clause 141 deals with when the Secretary of State has had the matter referred with an adverse effect on competition, but has not taken a decision and it reverts to the commission. However, no particular considerations that should be decided by the commission are specified. It seems to me, on the face of it, that the only issue is whether there is an adverse effect on competition—in which case, under this group of clauses, the matter is referred to the Secretary of State for a decision.

It is also unclear to me whether the Competition Commission is required to decide whether there is an adverse effect on competition, bearing in mind the public interest considerations, and if there is such an adverse effect, which questions have to be decided by the Competition Commission on referral to the Secretary of State. That seems to be entirely a matter, subsequently, for the Secretary of State.

I conclude with a question, on which the matter rests. If the Competition Commission decides that there is no adverse effect on competition but—for the sake of argument—the Secretary of State has issued an intervention notice on a national security consideration, where is it reflected in the clause that the Competition Commission must look to that national security consideration, and if it believes that there is a relevant public interest that should be subject to a decision by the Secretary of State, will so refer the matter rather than simply saying, "There is no adverse effect on competition," and publish a report? No question in relation to public interest is specified in the clause.

Melanie Johnson (Labour, Welwyn Hatfield)

The hon. Gentleman raises a question about how the clause works, and how it relates to other clauses. The clause states that the Competition Commission must consider the case, in the light of the issue, in the intervention notice. The clause simply refers to the action by the Secretary of State under clause 139, thereby taking account of the public interest issue. Those are the terms in which the Bill is drafted.

I am unsure which bits of the clause the hon. Gentleman is especially confused about, but I draw his attention to the fact that subsection (4) requires the Competition Commission to decide the same questions with regard to action to be taken where a report delivered to the Secretary of State under the public interest provisions reverts to the Competition Commission—that is, where the Secretary of State has failed to take a decision within 90 days of the receipt of a report from the commission—or where the Secretary of State decides that there is no public interest consideration that should be weighed against the competition issues identified by the commission.

I hope that that explains the nature of the clause, and what it does.

Andrew Lansley (Conservative, South Cambridgeshire)

I confess that it does not. Let me try to be a bit clearer: I understand that if the commission finds that there is an adverse effect on competition, it refers the matter to the Secretary of State. However, if it finds that there is no adverse effect on competition, but an intervention notice with a national security consideration may be relevant, does that mean that the Competition Commission simply says that there is no adverse effect on competition—that the national security consideration is not a competition effect—and then publishes its report? Subsequent clauses would suggest that, under those circumstances, no remedy is available to the Secretary of State.

Melanie Johnson (Labour, Welwyn Hatfield)

The hon. Gentleman is getting quite technical. I have listened carefully to the points and questions that he has raised, and I think that it would be most helpful for me to offer to write to him with regard to them.

Question put and agreed to.

Clause 133 ordered to stand part of the Bill.

Clauses 134 and 135 ordered to stand part of the Bill.

Clause 136 - Time-limits for investigations and reports: part 4

Nigel Waterson (Conservative, Eastbourne)

I rise briefly to probe the Under-Secretary on a couple of matters with regard to this clause. The first echoes the previous debate about the two-year limit. My hon. Friends the Members for Huntingdon and for Cities of London and Westminster have made all the important points about that, and about the real problem that is caused to businesses by such uncertainty hanging over them for up to two years. It appears that that issue does not cut any ice with the Under-Secretary or her hon. Friends, but it remains a concern. At least there is a suggestion of movement in the clause.

Under subsection (2), the Secretary of State has the power to

"alter the period of two years".

Melanie Johnson (Labour, Welwyn Hatfield)

The hon. Gentleman's points chime well with those I made in debate on clause 129 when we discussed amendment No. 35, which would have reduced the period to 12 months. I have said that we do not normally expect the process to take anything like two years; that is a long stop. I also said that there is a provision to vary the period downwards, as the hon. Gentleman says. Those points, which I made in relation to amendment No. 35, obviously hold true in our discussion on clause 136. I do not have a great deal to add, but I reassure the hon. Gentleman that he is right in what he says, and that our intentions are no different to his own on the subject.

Nigel Waterson (Conservative, Eastbourne)

Again, we have an assurance that the Under-Secretary's intentions are entirely honourable. Who am I to argue with that?

Question put and agreed to.

Clause 136 ordered to stand part of the Bill.

Clauses 137 and 138 ordered to stand part of the Bill.

Clause 139 - Remedial action by Secretary of State

Andrew Lansley (Conservative, South Cambridgeshire)

At the risk of being technical, I should like to be clear on a point that bears on the clause. My reading is that if the Competition Commission decides that there is no adverse effect on competition, we do not reach the provisions under this clause, and the Competition Commission simply publishes a report. However, if the commission concludes that there is an adverse effect, the report is put in the hands of the Secretary of State, who may take such decisions as flow from it.

It is interesting that the power provided on market investigations in which a public interest intervention notice is served is not simply the power to vary the remedies proposed by the Competition Commission in the relevant public interest. It is a wider power to decide which remedies should be taken, and the Secretary of State need only "have regard to" the commission's report. The only constraint on the Secretary of State is that, if the Competition Commission decides that there is an adverse effect on competition, the Secretary of State cannot decide that there is not. So far as I understand, the Secretary of State is otherwise free to vary any or all the remedies proposed for dealing with the "adverse effect on competition" or the "detrimental effect on customers".

I make that point in a stand part debate because I think that it would be far better if the whole clause were rewritten to make it clear that the Secretary of State should follow the advice of the Competition Commission on the effect on competition and how it is to be remedied. I would make changes to the clause as are required in relation to the public interest raised by the Secretary of State.

There are two dangers, perhaps the most obvious being that the Secretary of State will find it tempting to substitute his or her judgment for that of the Competition Commission on how competition effects should be dealt with. Secondly, I refer to the Secretary of State's temptation to find a relevant public interest consideration at any stage up to four months after a market investigation has been initiated. Having served an intervention notice on any public interest consideration that can be specified, the Secretary of State brings the whole of the subsequent process of determining all the remedies into his or her own hands. That is inherently undesirable because consistency and predictability of independent competition authorities require that the process be conducted

independently. The more that public interest intervention notices are served—especially if they are specified for consideration other than for national security—the more that remedies will be put back into the hands of the Secretary of State and not the competition authorities.

Derek Conway (Conservative, Old Bexley and Sidcup)

Before I call the Under-Secretary to reply, I emphasise that we are discussing clause 139.

Melanie Johnson (Labour, Welwyn Hatfield)

Indeed, Mr. Conway, I am happy for the hon. Member for South Cambridgeshire to become technical, and delighted that he is getting stuck into the detail of the Bill. If there were no adverse competition finding, the Secretary of State could only mitigate or eliminate the competition remedy on the relevant public interest grounds. If there were no adverse competition finding, the Competition Commission would simply publish its report. It would not send it to the Secretary of State for a decision. In other words, a report will not reach the Secretary of State if there has been no adverse finding by the Competition Commission.

Andrew Lansley (Conservative, South Cambridgeshire)

We seem to be touching on the technical point that arose under clause 133, and it is precisely what I am concerned about. If there were a national security consideration and it had no competition effects, surely the Secretary of State would want to retain a reserve power and take some remedy through a market investigation to deal with the relevant public interest effect. Unlike some of our other arguments, I acknowledge that a public interest may need to be protected. If no competition effect arises, the Secretary of State has no power to determine the public interest consideration.

Melanie Johnson (Labour, Welwyn Hatfield)

The hon. Gentleman is encouraging me to write to him further. There will be a hierarchy for taking into account competition, public interest, customer benefits and the regulated statutory functions. If the Secretary of State accepts a Competition Commission analysis of competition, she will choose the remedy in the light of all the relevant considerations. I take the hon. Gentleman's point that, supposing no adverse effects were identified, how would we meet the possible public interest requirement. I undertake to write to him about that.

Ken Purchase (Labour/Co-operative, Wolverhampton North East)

The matter is becoming confusing and it is right that we should understand it properly. Notwithstanding the fact that the Secretary of State may find other reasons, let us deal specifically with security. Even though no competition issues may flow from what the Secretary of State considers a security issue, would not she decide that the security issue overrides all the other considerations?

Melanie Johnson (Labour, Welwyn Hatfield)

No. However, given the interest that has been shown in the matter, I still undertake to write to members of the Committee about it.

Question put and agreed to.

Clause 139 ordered to stand part of the Bill.

Clauses 140 and 141 ordered to stand part of the Bill.

Clause 142 - Power of veto of Secretary of State

Nigel Waterson (Conservative, Eastbourne)

My comments echo the type of nasty technical point that my hon. Friend the Member for South Cambridgeshire is prone to make about such matters, and it may be that we need a detailed letter from the Under-Secretary setting out how all the clauses hang together. When we debate clause 145, we shall return to the separate issue of the definition of public interest and so forth; we need to debate that topic more than once.

I am concerned about the bald title of the clause. Given the complexity and technicalities of the Bill, there must be provision for an interface between what the Secretary of State and the OFT are doing. However, I am alarmed that the Secretary of State will have very wide powers. The OFT may have good reasons for wanting to proceed with particular undertakings that it considers sufficient to sort out problems in particular cases. Why should the OFT be subject to a sweeping power of veto by the Secretary of State?

As a general theme in the Bill, we are concerned about the Government's purported aim of taking politicians out of decision-making in this subject area. We broadly support that aim, which should be made abundantly clear, although we believe that it probably already happens in practice. However, on more than one occasion, the Secretary of State has seemed doggedly to want to hang on to some of the powers currently held by politicians. Although I accept the need for a defined interface between the Secretary of State and the OFT, is it necessary for the Secretary of State to retain the wide power of veto?

Jonathan Djanogly (Conservative, Huntingdon)

Is there a deadline for the Secretary of State to give consent under the provisions and, if not, why not?

Melanie Johnson (Labour, Welwyn Hatfield)

I reassure the hon. Member for Eastbourne that the reason for the provision is that there may be proposed undertakings in lieu of a reference that operate against the public interest. The clause would give the Secretary of State the power to block acceptance of any such undertakings. The hon. Gentleman was right to ask whether such powers were absolutely necessary, but I am sure that he and I could readily agree that there are circumstances in which the Secretary of State would need such powers.

Nigel Waterson (Conservative, Eastbourne)

Again, in wrestling with concepts of public interest, it would be useful to us both if the Under-Secretary provided concrete examples of the type of undertaking that would be damaging to the public interest. Why on earth would the OFT

consider accepting such undertakings in the first place?

Melanie Johnson (Labour, Welwyn Hatfield)

It is quite difficult to give examples, because we envisage the powers being used only in rare circumstances; when the OFT seeks undertakings in lieu of reference in a public interest case. We must ensure that the undertakings are not inappropriate in light of a legitimate public interest issue. The nature of undertakings can be tremendously varied, and it would be difficult to give specific examples to illustrate the point. It is likely to be a rare recourse, but it is important to have the provision to ensure that the Bill can do what may sometimes be necessary.

Jonathan Djanogly (Conservative, Huntingdon)

Did the Under-Secretary consider my short point about whether there should be a deadline for the Secretary of State to give her consent?

Melanie Johnson (Labour, Welwyn Hatfield)

I apologise to the hon. Gentleman for not having responded. There is no deadline or specific time frame but there is a requirement on the Secretary of State to respond as soon as practicable. The Secretary of State also has a duty to act reasonably. Safeguards are, therefore, built in.

Jonathan Djanogly (Conservative, Huntingdon)

In such circumstances, would it not be normal to have a time limit?

Melanie Johnson (Labour, Welwyn Hatfield)

In many cases in the Bill an assumption is made and, sometimes, spelled out, that the time frame will be as soon as is practicable. That is, apparently, normal provision under administrative law. In this case, that is the right time frame in which to demand a response, as it may be difficult to know which issues might arise. I assure the hon. Gentleman that it is not an attempt to elongate the process. I share his concern that the process should be transparent and timely throughout.

Question put and agreed to.

Clause 142 ordered to stand part of the Bill.

Clause 143 - Further interaction of intervention notices with general procedure

Melanie Johnson (Labour, Welwyn Hatfield)

This relates to our earlier discussion of amendments Nos. 304, 308 and 309. I am grateful to the hon. Gentleman for having raised these issues, and I do not want to shock him too much by saying again that our intention is that the definitions in clause 126 should apply to public interest cases. I would welcome the opportunity to study the points involved further, with a view to introducing amendments to deal with the issues raised on Report. Again, I reassure the hon. Gentleman that we should like to take away the amendment and come back with appropriate amendments. I therefore ask him to withdraw the amendment.

Nigel Waterson (Conservative, Eastbourne)

This is a red-letter day. On that basis, I am all too willing again to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 143 ordered to stand part of the Bill.

Clause 144 ordered to stand part of the Bill.

Clause 145 - Specified considerations: Part 4

Mark Field (Conservative, Cities of London and Westminster)

Tempting though it is to lead this matter to a Division, and thereby to end a highly respected young political career, I am unsure whether we would support the idea that sport should be included in the list. Although I—like the hon. Member for Leigh (Andy Burnham)—am a keen sports fan, I do not think that sport should be seen as closely associated with national security unless the list is made much more exhaustive. However, I do not know whether the Under-Secretary has any thoughts on other areas that might be included.

Melanie Johnson (Labour, Welwyn Hatfield)

It is nice of the hon. Gentleman to give my hon. Friend the Member for Leigh a sporting chance, but I am sure that he does not need that.

It might be helpful to my hon. Friend if I set out the role of the Secretary of State in public interest issues. Markets will be referred only on competition grounds. They have not previously been referred only on competition grounds, as he is aware. There is no scope in the new regime for a market to be referred for any other reason. The purpose of the public interest provisions in relation to market investigations is to ensure that the Secretary of State can review the remedies that the Competition Commission might impose.

We believe that, in general, the Competition Commission should address the competition problems that it identifies in the course of a market investigation. Addressing competition problems will drive improvements in the market; it will benefit businesses and consumers. When considering remedies to any adverse effects on competition, the Competition Commission will be able to have regard to the relevant customer benefits, which include increased quality and choice—I reassure my hon. Friend about that.

Therefore, we do not believe that anything further is required to safeguard the particular interests of sport, and I do not think that it would be appropriate to specify that topic in the legislation as a public interest consideration—or to go down the path suggested by the hon. Member for Cities of London and Westminster, who is tempting me to add other things to the list. The Competition Commission can and already does take into account the special characteristics of sporting markets, but they are as much about the big-business broadcasting and entertainment markets as they are about sport. It would not be desirable to set a precedent by treating those sectors differently under competition policy. Other sectors would also make claims to be treated as special cases—as the hon. Gentleman's suggestion indicates—and that might go on for some time.

This legislation and the Competition Act 1998 replace the provisions on restrictive practices. In market investigations, there is no duty to refer. Where the reference is made, the Competition Commission can take account of customer benefits, including quality.

I hope that that reassures my hon. Friend, and that he will not press his amendment to a vote.

Andy Burnham (Labour/Co-operative, Leigh)

I thank the Under-Secretary for that reply. I am reassured by her explanation that the Secretary of State retains the discretion to intervene if important public interest issues are at stake. I agree with her that such cases are often brought against sports leagues primarily because the regulators are trying to influence and shape the broadcasting industry. However, sport is often the vehicle for that, and it is sport structures that may suffer when regulators try to achieve that goal.

The unravelling and breakdown of a broadcasting deal can have a disastrous impact on sport, as we have seen with the collapse of ITV Digital, which will undoubtedly have an effect on football league clubs. I have had some assurance from the Under-Secretary that if sport is ever the subject of investigation by the competition authorities, it will be given a sympathetic hearing. I therefore beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Nigel Waterson (Conservative, Eastbourne)

I congratulate the hon. Member for Leigh on developing his arguments so carefully, as befits a former special advisor at the Department for Culture, Media and Sport. He has done us all a service because he has reminded us of the dangers lurking in subsection (3). However, we have already debated that subject, so I shall cut to the chase.

At the moment, when we consider the so-called public interest, we are concerned only with "national security" and we are reminded that we must fall back on the European definition of "public security", which is referred to in subsection (2).

In subsection (3), the Secretary of State retains the power to

"modify this section for the purpose of adding to, removing or amending any consideration which is for the time being specified in this section."

My thinking is entirely in line with that of the hon. Gentleman. If other factors are going to be added to the important concept of public interest, they should appear in the Bill. We think that it is wrong that the Secretary of State should arrogate to herself the power to add to the list in future, and we tabled an amendment on the subject to an earlier clause. Let us hear what the Under-Secretary might be keen to add to the list, as she is not keen to add sport, and let us hear why she thinks that her Secretary of State should have that power to add to the list instead of having to come back to primary legislation.

Harry Barnes (Labour, North East Derbyshire)

The hon. Member for Eastbourne is correct that some of what he has said has been debated before. However, the subject has not yet been clarified. No examples or definitions have been given of what could be referred to under subsection (3). The Opposition are worried that a camel will be pushed through the eye of a needle, and that the situation will be different to that indicated.

In response to amendment No. 376, which my hon. Friend the Member for Leigh tabled, it was suggested that there might be an opening for sport to be included in the clause, but will it be included? I hope that I have correctly understood the philosopher John Locke—my hon. Friend the Member for Hemel Hempstead (Mr. McWalter) will correct me otherwise—who when speaking about secondary and primary qualities of objects said that even if all those qualities were removed, there would still be something there to which colours and other things would adhere. That was the "something I know not what". We have such a something; we do not know how it should be described. Is it to be—as feared by Opposition Members, which would be hawked by myself—something that can be used on wider grounds, or is it an exception that the Committee cannot describe or even think about? We need some understanding between the two sides. I believe that the Government intend it to be a fallback option which might be required for unknown circumstances and which needs to be in the Bill. It will not be anything of the nature suggested by the Opposition or that others would place their hopes in.

I quoted earlier from a letter from the Secretary of State to the secretary general of the Trades Union Congress, which confirms that point. It states:

"The system will however contain a fallback option to consider other public interest matters before a case is referred".

That seems to satisfy the interests of the TUC, which is keen to have public interest provisions in the Bill. The letter continues:

"although in reality the Government does not envisage that new public interest gateways will be created except in extremely rare circumstances. Our policy is for the vast majority of cases to be considered without ministerial involvement.

I understand that mergers do have a wide impact beyond competition concerns, but the focus of our merger regime is to achieve long term economic efficiency."

The Under-Secretary should be aware that I am not alone in my thinking on the issue. There is genuine concern that issues such as employment, the distribution of industry and exports should be defined in the Bill. There is an opportunity under the clause to do that, and other avenues in the Bill will allow it. Perhaps we should have a comprehensive list of sets of amendments on Report that would ensure public interest—unless Opposition Members can cite examples of some interpretation or definition that they are worried about. People like myself can be content that there are other avenues and back doors that we can use. It would be nice if it were clarified in the legislation beyond peradventure that we have in mind public interest concerns.

Tony McWalter (Labour/Co-operative, Hemel Hempstead)

I shall resist the temptation to engage in a discussion about Locke's contradictory concept of substance, but the focus on subsection (3) is useful. I agree with my hon. Friend the Member for North-East Derbyshire (Mr. Barnes), about the need for examples in this debate. In an earlier discussion, I mentioned an example of a national security issue—that of accepting products that could lead to gross degradation of the biosphere. It may be helpful for the Under-Secretary to focus her thoughts on that. In discussions about genetically modified crops and organisms, those who are of the doomsday school may be quite wrong. However, they may be right, and if they are, admitting materials that might lead to degradation of the biosphere could be regarded as quite strongly against the national interest. Those wishing to import such materials would, in a sense, be prima facie involved in breaching national security. Although we have debated this issue before, it is worth considering whether the framework of law outside the Bill can provide the type of assurances that we need about accepting something as a product.

Other considerations are taken into account by the framework of law outside the enterprise system and culture. That applies to degradation of the biosphere.

Hon. Members will be aware of ways in which competition policy is used by the American Government, who sometimes provide ways of producing products that threaten competitors in a market—banana or sugar producers, for example. Other players in the market may be threatened, not simply with having to liquidate their businesses, but with paying for the competition culture with their lives or with the prospect of curtailing forever their chance of earning a livelihood.

There are all sorts of agreements—the Lomé convention, for example—about how we should operate with other countries and treat their work forces. However, it is incumbent on us to pay attention to the wider framework and ensure that we do not end up with a competition policy that is antithetical to our ideas about what constitutes fair competition in the world of commerce.

Melanie Johnson (Labour, Welwyn Hatfield)

I have been tempted by my hon. Friends and the Opposition into debating an issue about which there has already been considerable discussion, although I appreciate hon. Members' interest and concern. Subsections (3) and (4) provide a mechanism for amending the list of public interest considerations, but at the risk of upsetting hon. Members on both sides of the political divide—perish the thought—I emphasise that the Government have no current plans to use the power to broaden the scope of the Secretary of State's role in market cases.

My hon. Friend the Member for North-East Derbyshire, in his Lockean reference, most accurately represented this issue as a thing "we know not what". Like my hon. Friend the Member for Hemel Hempstead, I have a background in philosophy, but I shall not follow up the reference any further. However, the provision is certainly necessary. We have no plans to use the power to broaden the role of the Secretary of State. The reserve power to specify new public interest considerations is a necessary safeguard to ensure that the legislation can be adjusted. That is why it appears in the Bill as it does. I cannot give hon. Members on either side of the Committee any comfort about what the thing in question might be.

Nigel Waterson (Conservative, Eastbourne)

The Under-Secretary talks about adjusting the legislation. My inference is that she means that that will have to be done quickly, to deal with an unexpected "we know not what" situation. Surely, national security is the only umbrella under which one can imagine something like that happening. The legislation can always be adjusted by introducing further primary legislation. What reason can there be, other than national security, to change the grounds of the Bill in a great hurry? Presumably that is the point of regulations.

Melanie Johnson (Labour, Welwyn Hatfield)

The hon. Gentleman is again trying to persuade me to be more specific. I cannot and will not do so. In my experience, it is not unusual for the Government to be told that a piece of legislation has an outcome, issue or problem, unforeseen and unforeseeable at the time of its introduction, that has arisen since. Because it relates to public interest, it is important for the Secretary of State to have such a power. We do not have a list or any single item to which the clause should apply, but it is important for the provision to be available.

Harry Barnes (Labour, North East Derbyshire)

My problem with the Locke example—my hon. Friend the Member for Hemel Hempstead pointed out that there might have been some defective reasoning—is that that "something I know not what" does not exist. The matter that is provided for in law will not refer to anything in future, so the provision might as well not be made. I would want it to be something that was a possibility—something that had substance.

Melanie Johnson (Labour, Welwyn Hatfield)

I appreciate that my hon. Friend seeks to put substance into the provision. However, by the nature of what is being considered, it is not something of substance. It might well be of great substance in the future; the fact that it is not foreseeable does not mean that it does not exist.

Tony McWalter (Labour/Co-operative, Hemel Hempstead)

I cannot believe that. Post 11 September, we know that operating our markets in such a way as potentially to deny a livelihood and the prospect of life to people from some nation or other poses a threat to our national security. I do not know why my hon. Friend is being so evasive about confronting my examples of what could count as prima facie threats to national security. Hence, there is a prima facie case for considering those matters under subsection (3).

Melanie Johnson (Labour, Welwyn Hatfield)

I recognise that my hon. Friend raises issues that are important to the future of the planet, and that the Government should take them on board. However, let me reassure him that I am not trying to be evasive in not specifying something. I am trying to be clear with the Committee that the reason for not specifying something is because it is unforeseeable. We cannot put any further meat on the bones of the matter. I have explained why we think that it is important to public interest considerations that the legislation does not fail to meet some future need. That is why we are including the provision in the Bill.

Vincent Cable (Liberal Democrat, Twickenham)

I want to pursue the point a bit further.

Ken Purchase (Labour/Co-operative, Wolverhampton North East)

This could get worse.

Vincent Cable (Liberal Democrat, Twickenham)

It could get worse.

As the Under-Secretary's position rests on the narrow national security definition, will she clarify what she means by national security? The old ideas about national security being a matter of standing armies moving across frontiers have been replaced with a much more fluid view of what is involved. The

hon. Member for Hemel Hempstead was right about that.

In the United States, where the argument has been well developed in terms not just of competition policy but of trade policy, the idea of national economic security is adduced to justify a wide variety of Government interventions. There is a danger that if the Under-Secretary sticks to the concept of national security, everything from threats to the biosphere to unemployment will be bundled under it. If she intends to take a stand on this narrow definition, will she explain to us what national security means for the purposes of the legislation?

Melanie Johnson (Labour, Welwyn Hatfield)

In earlier debates, I did explain that. National security is defined under this clause as it is under clause 56, which governs mergers. It includes defence and other essential public security considerations. I am afraid that I cannot remember whether the hon. Gentleman was present during our earlier debates, but I assure him that a definition of the terms has been placed on the record for the benefit of the Committee.

Nigel Waterson (Conservative, Eastbourne)

I do not want to prolong this debate—[Hon. Members: "Sit down then."]—but I will if provoked. I particularly do not want to do so because, as the Under-Secretary rightly reminded us, we had a long debate, with an equally unsatisfactory outcome, on clause 56. She talks about some future need, but is wholly unable, no matter how hard she is pressed from both ends of the political spectrum, to come up with anything that might conceivably amount to such a need.

I am sure that the Under-Secretary is being open and not evasive, contrary to what her so-called honourable friend the hon. Member for Hemel Hempstead said about her performance. However, the more doughtily she fights her position on the matter, the more suspicious we become. What on earth are we including the provisions for? On the basis of her arguments, every Bill that comes before the House ought to include an escape clause in case some great horror—or benefit, as the hon. Member for North-East Derbyshire might say—has not been envisaged. That is not the way legislation works. We deal with the here and the now.

The provision on national security is already very wide and could, in the wrong hands, have a gigantic scope. Why is that not enough? If something were to come up that none of us has ever conceived of, could it not be dealt with quickly by primary legislation? Presumably it would be of such enormity and moment to the whole country that even the Opposition parties would collude in its rapid passage through the House. If I read the Under-Secretary's remarks right, it would have to be of such significance that it would deserve that kind of approach.

We are deeply unhappy about the matter. We do not understand why the Under-Secretary is hanging on to the powers set out in subsection (3) with such ferocity when she has not got a clue what they might be needed for. What is this "need" about which she continually talks?

Melanie Johnson (Labour, Welwyn Hatfield)

I am grateful to the hon. Gentleman for his suggestion that the Opposition will always collude with the Government in finding time for primary legislation of an urgent nature, although I am not sure that the usual channels on the Labour Benches would agree with that conclusion. Indeed, it is often difficult to find slots for urgent primary legislation, so I have reservations about his assumption.

If we had a specific example in mind, we would include it in the Bill. It is because we do not have such an example, and because the matter is important and we might want to do something quickly and easily that we are including the provision—for those reasons and no other. Opposition Members can become more suspicious if they wish, but their suspicion is entirely misplaced. The measure is designed to deal solely with the unforeseeable, and I cannot be more specific about what the unforeseeable might contain.

Question put and agreed to.

Clause 145 ordered to stand part of the Bill.

Clauses 146 and 147 ordered to stand part of the Bill.

Clause 148 - Effect of undertakings under section 146

Nigel Waterson (Conservative, Eastbourne)

I beg to move amendment No. 311, in page 108, line 1, leave out

`or needs to be varied or superseded'.

"false or misleading in a material respect".

The whole basis of accepting that undertaking would be negated. Again, we can see the force in that.

With all due respect to the draftsmen, it is the weasel words

"or needs to be varied or superseded"

in subsection (2)(a) that are objectionable. The amendment would remove them, which would limit the OFT's powers to make further investigation references if it had received undertakings that had been complied with. Subject to the obvious

exceptions that I mentioned, if an undertaking has been offered, discussed and accepted on those terms, the people offering it should feel reasonably certain that they will not face a further market investigation reference unless they are in some way to blame. Clear examples would be breaches of undertaking or when false information had been provided that had formed the basis of the willingness to accept the undertaking in the first place.

I cannot see how the words

"or needs to be varied or superseded"

Melanie Johnson (Labour, Welwyn Hatfield)

I am delighted to inform the hon. Gentleman that he is still on a winning streak, and that the conspiracy view of history is still wrong. I am happy to accept the amendment tabled in his name and that of other Opposition Members.

The wording of clause 148 has come directly from section 56D of the Fair Trading Act 1973, but on further reflection we cannot see any reason to retain it. It weakens the case for giving undertakings, as there is effectively no protection from reference during the supposed quiet period. Twelve months is not a long time in the context of market investigations, so the OFT would not have long to wait, even if it changed its mind after agreeing to the undertakings. I am therefore content to accept the amendment.

Amendment agreed to.

Clause 148, as amended, ordered to stand part of the Bill.

Clause 149 - Interim undertakings: part 4

Derek Conway (Conservative, Old Bexley and Sidcup)

With this it will be convenient to discuss amendment No. 313, in page 108, line 34, after `reference', insert

`but not any such action which could be beneficial to competition or customers'.

Once the investigation is complete and the report has been published, most companies will not want to

stand back. They will either want to go to the Competition Appeal Tribunal or take on board the report's implications as far and as fast as they can, then move on. A company would rarely sit back and do nothing, and wait until the OFT loads it with orders. In almost any case, that would not be in the company's interests. The concern with the provision is that the wording could be used to prevent a company moving ahead in a way in which would not be anti-competitive, and which would, in any normal regard, be acceptable.

The amendments try to address that by stating that a company should be barred only from taking evasive action, rather than from taking any action at all. Amendment No. 313 goes wider: the question should be not only of the negative—that the company should not evade—but of the extent to which the action concerned would not affect competition, and of whether it were beneficial to customers. For those circumstances, a definition of pre-emptive action should be carved out. The amendments head in the same direction, but amendment No. 313 is slightly wider. I appreciate that they are not of the finest draftsmanship, but I hope that the Under-Secretary accepts my point.

Melanie Johnson (Labour, Welwyn Hatfield)

In a market investigation, interim undertakings and orders are available only following the publication of the Competition Commission's report. Their purpose is to prevent the parties from taking action that might prejudice the ability of the Competition Commission to introduce the final remedies identified in the report. The parties may in the interim period want to take steps on their own initiative and to address competition concerns that were identified in the reports. I reassure the hon. Gentleman that interim undertakings and orders would prevent such action only if it were deemed prejudicial. Perhaps such action, although taken in the interests of competition, would undermine the ability of the Competition Commission to implement a remedy that would have an even greater beneficial impact. In such cases, the Competition Commission should be able to introduce an interim order or secure interim undertakings.

The key point is that action should not be prejudicial to the eventual outcome of the market reference. That clearly covers action that is intended to evade or obstruct. It may also, in the circumstances that I have set out, cover pre-emptive action of a more positive nature, but which if unchecked may not result in the best outcome for competition and consumers. I appreciate the hon. Gentleman's remarks about the nature of his amendments. I hope that they are probing, and that I have reassured him that they are not necessary.

Jonathan Djanogly (Conservative, Huntingdon)

Having heard what the Minister has had to say, I am more satisfied about how the wording will be interpreted. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 149 ordered to stand part of the Bill.

Clauses 150 and 151 ordered to stand part of the Bill.

Clause 152 - Order-making power where final undertakings not fulfilled: Part 4

Clause 159 - Rights to enforce undertakings and orders under this part

Nigel Waterson (Conservative, Eastbourne)

You probably need a rest from putting the questions, Mr. Conway.

I have a couple of queries, particularly about subsections (4) and (9), with which I would be grateful if the Under-Secretary dealt, although I would be happy for her to write if that is easier. The clause concerns enforcement of undertakings or orders. Clearly, there has to be a mechanism for enforcement. I am concerned about the wider possibility of those affected by subsection (3), which states:

"any person who may be affected by a contravention of the undertaking or the order."

I have three specific questions. First, how closely related to the undertaking would people have to be to be able to claim damages, and do the normal rules of remoteness and so on apply when calculating damages? Secondly, where would they normally be expected to bring those proceedings? I presume that it would be in the commercial court. Thirdly, what measure of damages would normally apply for that sort of claim? Presumably, such claims would be on a tortious basis. I presume that there is a body of law relating to similar breaches and claims under fair trading legislation, which would assist us, and the Under-Secretary, on those questions.

Melanie Johnson (Labour, Welwyn Hatfield)

I am grateful to the hon. Gentleman for his points, which I have listened to carefully, and also for his suggestion that I might write to him. I will indeed do so, and give copies to Committee members.

Question put and agreed to.

Clause 159 ordered to stand part of the Bill.

Clause 160 - Regulated markets

Melanie Johnson (Labour, Welwyn Hatfield)

I beg to move amendment No. 370, in page 115, line 4, at end insert—

"(ca) modifying networking arrangements (within the meaning given by section 39(1) of the Broadcasting Act 1990 (c.42));".

Melanie Johnson (Labour, Welwyn Hatfield)

The Broadcasting Act 1990 contains a power, in section 193, for the Secretary of State to amend networking agreements by order as a result of a merger or a monopoly report under the Fair Trading Act. The Broadcasting Act requires the regional channel 3 licensees to enter into networking arrangements for the purpose of enabling regional channel 3 services, taken as a whole, to be a nationwide system able to compete effectively with other television programme licences provided in the UK. An application for a channel 3 licence must be accompanied by networking arrangement proposals. When an application has been duly made, the Independent Television Commission, the economic regulator for the sector, must send details of the networking proposals to the OFT and must not award a licence unless it appears to the ITC that the proposals are satisfactory.

The order-making power in section 193 of the Broadcasting Act is similar to the order-making power given to the Secretary of State to amend licences in other regulatory regimes as a result of an FTA report. Schedule 8 to this Bill contains amendments to other sectoral legislation to extend the order-making power to allow the OFT and the Competition Commission to modify licences and to allow that order-making power to be triggered following a report under the powers in the Enterprise Bill, rather than an FTA report. Amendment No. 375 brings the Broadcasting Act regime, which deals with the networking arrangements, into line with the other regulatory statutes. That is because, under the new regime, the OFT and the Competition Commission will be the decision makers in most cases.

Amendments Nos. 370 and 371 require both the Secretary of State and the Competition Commission to have regard to the duties of the ITC, as stated in section 2(2) of the Broadcasting Act, when considering amending networking arrangements as a remedy in a market investigation. Parliament has given the ITC those duties, and it is right that the Competition Commission and the Secretary of State, when considering modifying networking arrangements, should act with regard to them. Amendment No. 372 amends the definition of "sectoral regulator" in clause 160 to include the ITC.

These sensible amendments will bring the provisions in the Broadcasting Act into line with the new regime. I commend them to the Committee.

Amendment agreed to.

Nigel Waterson (Conservative, Eastbourne)

I beg to move amendment No. 314, in page 115, line 19, at end insert—

"(k) modifying the conditions of a licence granted under the Wireless Telegraphy Act.".

I rise only to give the Under-Secretary the opportunity to intervene on me and confirm my growing suspicion: amendment No. 314 may already have been covered by one of the Government amendments that we have just considered.

"modifying the conditions of a licence granted under the Wireless Telegraphy Act."

Nigel Waterson (Conservative, Eastbourne)

That was a spectacular own goal. I shall plough on by saying that the role of the Radiocommunications Agency, and the licences that it issues under the Wireless Telegraphy Act and the associated regulations, are covered neither by the Bill nor by the Government amendments, as the Under-Secretary has been good enough to confirm. I think that the CBI raised the point that the issue is very important in many markets that use electronic information technology. It is not entirely clear why it should not be included in the Bill, but clearly the Under-Secretary has given the matter deep thought, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 371, in page 115, line 31, at end insert—

`(ca) in relation to any networking arrangements (within the meaning given by section 39(1) of the Broadcasting Act 1990 (c.42)), the duties of the Independent Television Commission under section 2(2) of that Act;'

`(fa) the Independent Television Commission;'.—[Miss Melanie Johnson.]

Again, this is a short point. It is not clear to us why subsection (9) says that the commission

"shall not have regard ... to any relevant customer benefits".

Melanie Johnson (Labour, Welwyn Hatfield)

Again, I can help the hon. Gentleman. Subsection (9) ensures that the commission must take into account only those issues that fall within the scope of the relevant statutory functions and not the standard set of customer benefits. The amendment gives the Competition Commission discretion to consider customer benefits alongside its duty to take account of regulator statutory functions. A standard set of customer benefits is set out in clause 126.

The benefits to consumers are defined in terms of lower prices, higher quality and greater choice of goods and services, and are covered in some form in most regulator statutory duties. For example, Oftel has a duty to promote the interests of consumers in respect of price, quality and choice, and a duty to promote research into the development and use of new techniques. Parliament has given the regulator its statutory duties, which must be taken into account when the regulator performs its function. It is right that the Competition Commission should have regard to those duties when considering relevant action.

However, although all the regulators have a duty to promote or facilitate effective competition, certain regulators do not have an explicit duty covering each of the standard set of customer benefits. For example, Ofwat has no specific duty relating to innovation. It is likely that in practice the regulator would consider the benefits of innovation in his duty to promote or facilitate effective competition, but it is not always explicit in the statutory functions.

The Competition Commission has discretion to take into account the standard set of customer benefits in market investigations in "normal" sectors. In regulated sectors, the discretion to consider customer benefits is replaced by a duty to take into account regulator statutory functions. However, if it is uncertain whether the standard set of customer benefits is included in the regulator statutory functions, we agree with the hon. Gentleman that we need to revisit the wording in subsection (9) to clarify that. Therefore, I agree to consider his amendment further. In the light of my remarks, I hope that the hon. Gentleman will seek to withdraw the amendment.

Nigel Waterson (Conservative, Eastbourne)

I am most grateful to the Under-Secretary and I look forward to seeing her amendments later. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 160, as amended, ordered to stand part of the Bill.

Schedule 8 - Certain amendments of sectoral enactments

Clause 162 - General information duties

Nigel Waterson (Conservative, Eastbourne)

I have another brief point, which pertains to subsection (2). It is right, practical and necessary that the OFT gives the commission any information in its possession which the commission may reasonably require, as set out in subsection (1)(a), and any other assistance. I am slightly baffled about subsection (2), which seems to assume that the

commission will not be the best judge of the information that it needs to receive from the OFT, and that the OFT may force on the commission information that it does not want. I am all in favour of belt and braces in drafting, but that seems to be a subsection too far. The commission is best placed to decide what information it needs. It beggars belief that the OFT would want to say, "You should have asked for the following information, so here it is." Can the Under-Secretary explain?

Melanie Johnson (Labour, Welwyn Hatfield)

The explanation is simple. The Competition Commission will not necessarily know what information the OFT has. The OFT has a duty to give to the Secretary of State or an appropriate Minister all the information it has that has been requested and which the OFT believes is appropriate. The provision may be needed when the Secretary of State is considering referral of a market to the Competition Commission, and the OFT may have information that has led it to conclude that a market reference is unnecessary. The OFT should then be able to share that information with the Secretary of State, but the Competition Commission will not necessarily know what the OFT has.

Clause 162 ordered to stand part of the Bill.

Clause 163 - Advice and information: Part 4

Jonathan Djanogly (Conservative, Huntingdon)

The clause returns to a matter that was discussed earlier under clause 123. It would be helpful if the Under-Secretary gave an update on the publication of general advice. When the matter was last discussed, Opposition Members were concerned that the guidance had not been published with the Bill so that the Committee could consider the situation in the round. It would be helpful if the Under-Secretary updated the Committee on the progress of the guidance.

Melanie Johnson (Labour, Welwyn Hatfield)

Advice and information will be available before commencement of the market provisions in the Bill—before 1 May 2003. The OFT and the Competition Commission will want to publish their guidance four months before the new regime is brought into force because that is in line with Government best practice. In addition, both authorities intend to consult on the guidance material. I hope that that reassures the hon. Gentleman.

Jonathan Djanogly (Conservative, Huntingdon)

I thank the Under-Secretary, but due to the speed at which she read her brief, I could not go through the dates in my head. Will the guidance be available before Third Reading?

Melanie Johnson (Labour, Welwyn Hatfield)

No, it will not. I said that it would be available before 1 May 2003. I cannot prejudice the time scales of the House and another place, but I do not believe that it will be available before Third Reading.

Jonathan Djanogly (Conservative, Huntingdon)

Does the Under-Secretary not believe that it would be appropriate and helpful to all concerned if the Committee or the House were able to see the guidance before Third Reading, so that we could consider the nitty-gritty implications before the Bill goes to another place?

Melanie Johnson (Labour, Welwyn Hatfield)

There may be issues about consulting in advance of Royal Assent and making an assumption about the passage of the Bill. I hope that it will reach the statute book, but I cannot say that for the reasons given. There will be appropriate

consultation, it will be published and a proper timetable will be adopted which will enable people to know exactly what is envisaged before commencement of the market provisions. That meets the needs of the case.

It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Four o'clock.

Standing Committee B

Clause 163 - Advice and information

Clause 164 - Further publicity requirements: Part 4

Nigel Waterson (Conservative, Eastbourne)

I beg to move amendment No. 316, in clause 164, page 120, line 5, at end insert

'but should be published as soon after such action or decision as is reasonably practicable.'.

Welcome back to our deliberations, Mr. Beard. We have been racing ahead; this morning the Government accepted a series of minor amendments tabled by me that have to be incorporated into a later stage of the Bill. I hope that my luck will hold.

This is an unobjectionable little amendment that would ensure that publication takes place soon. There is no earthly reason why it should not be done promptly but it is as well that it should be in the Bill. I cannot imagine any reasonable Minister having a problem with the amendment.

Melanie Johnson (Labour, Welwyn Hatfield)

The amendment would ensure that where reasons for decisions are not published at the time of the decision they are published as soon as is reasonably practicable after the decision has been taken. It is our intention that the requirement to publish reasons for decisions will increase the transparency of the operation of the regime; it will also increase the public accountability of the decision makers.

Subsection (6) provides that where it is not reasonably practicable to do so, reasons are not required to be published at the same time as the decision concerned is taken. However, I assure the hon. Gentleman that it is implicit in the subsection, as it is in the rest of the clause, that the requirements to publish should be met as soon as is practicable. It is not therefore necessary to add to the provision and we do not want to treat it differently from the rest of the clause. I sympathise with the reasons for tabling the amendment, but it is unnecessary. In any event, we

shall act in accordance with the hon. Gentleman's wishes in this regard. I hope that he will ask leave to withdraw the amendment.

Nigel Waterson (Conservative, Eastbourne)

I do not know what has happened to the Minister since we broke for lunch; she is in a much less amenable mood than she was. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 272, in clause 164, page 120, leave out lines 8 to 10.—[Miss Johnson.]

Clause 164, as amended, ordered to stand part of the Bill.

Clause 165 - Defamation: Part 4

Nigel Waterson (Conservative, Eastbourne)

You may remember, Mr. Beard, that we had a short debate on defamation under a different clause, the number of which escapes me. I do not want to repeat that debate but I said then that I was quizzical about whether we should apply a blanket privilege in terms of the law of defamation to what was done earlier in the Bill. Our deliberations in Committee and in the Chamber are subject to absolute privilege, as are court and tribunal proceedings, but there are significant risks attached to qualified privilege, not least because if malice is proved, an action for defamation can be taken.

By way of parenthesis, one of the leading cases on parliamentary privilege involved a previous hon. Member for Wealden and the Church of Scientology. It established that parliamentary privilege is absolute in every respect, and I hope that my hon. Friend the Member for Wealden (Mr. Hendry) does not have go through any similar litigation during his long and distinguished career in this place.

I wanted to return to this subject because of the words

''in the exercise of any of their functions under this Part.''

Anything that remotely approximates to a judicial process or is equivalent our deliberations, including matters such as a Competition Appeal Tribunal hearing or a formal investigation by the Office of Fair Trading or the Competition Commission, should attract absolute privilege. However, the clause goes too far in giving that privilege in

''any of their functions under this Part.''

Some of the less important functions are not quasi-judicial or quasi-parliamentary and should attract only qualified privilege. There will be no risk at all to those involved if they say what they say on appropriate occasions and in the absence of malice. If there were an occasion—I cannot image one—when those conditions were not met, an action could properly lie. We are debating potentially highly explosive matters, including corporate reputation and share prices, in which ill-advised or malicious comments can have a disastrous effect on both individuals and companies.

The clause is drawn too widely. I have explained why qualified privilege has a place in the Bill, and I will be interested to hear the Minister's thoughts.

Jonathan Djanogly (Conservative, Huntingdon)

Do the proposals in the clause reflect existing legislation or do they differ from what exists?

Melanie Johnson (Labour, Welwyn Hatfield)

I am grateful for hon. Members' interest in the clause and I agree that there are some important issues.

I should say first that the Fair Trading Act 1973 currently provides similar protection in undertakings and reports, and the clause will carry forward that protection and update the provision to ensure that all the authorities' functions are covered. Providing protection from actions for defamation is necessary to ensure that parties cannot seek redress from the authorities for statements that they made in carrying out their functions under the market's regime. That is why it is important that the measure covers all the functions of the authorities in question.

The procedures in the new legislation are different because we are seeking greater transparency and, as the hon. Gentleman will appreciate, a greater range of statements will be made. However, under the 1973 Act, the protection was attached to similar statements when they were made through Parliament, and we simply want to update the provision.

Jonathan Djanogly (Conservative, Huntingdon)

Am I to understand that the extension means that the protection will not now cover statements only made through Parliament, but those made outside as well?

Melanie Johnson (Labour, Welwyn Hatfield)

Yes.

Question put and agreed to.

Clause 165 ordered to stand part of the Bill.

Clause 166 - Investigation powers of OFT

Nigel Waterson (Conservative, Eastbourne)

We have concerns that echo those of the CBI about the breadth of the powers in clauses 166 and 167, which give the OFT powers during preliminary investigations. They seem excessive compared with those of other investigative bodies, when no offence has been shown to have been committed, and are more substantial than those in clause 184 to investigate cartels. They also exceed those provided by the Competition Act 1998. The CBI says:

''The powers are disproportionate and these clauses are unnecessary whilst the Competition Act is in place.''

We do not seek to scrap the 1998 Act during consideration of the Bill, but I suppose that the Government's argument is that we are trying to build

on those provisions instead. The powers appear to be extraordinarily wide, especially during preliminary investigations. The CBI continues:

''It is the potential excessive use of these powers in combination with the widened scope to trawl through industry looking for conduct or structures that might be anti-competitive which is of such concern.''

We have already discussed the potential cost of such investigations and their impact on companies' resources. The CBI has a separate concern that such investigations might have an impact on the willingness of companies to do business in this country rather than anywhere else. There is a similar argument about wealthy individuals paying full British tax, which the Treasury is currently reviewing. It is difficult not to see the Treasury's argument in favour of their doing so. Those people, like the companies I mentioned, have enormous choice about where they do business. I would not like the clause and the powers that it provides to be seen as a way of discouraging companies from being set up in this country.

We agree with the CBI that the powers are disproportionate, especially during preliminary investigations, and I urge the Minister to reconsider them.

Vincent Cable (Liberal Democrat, Twickenham)

Will the Minister comment on a story this morning on the front page of the Financial Times, which I believe related to the powers under the clause? It may have come from elsewhere, such as the lobbies or her Department. It suggested that the Government intend the powers in the clause to provide for draconian actions such as telephone tapping and other surveillance techniques. The people who reported the story may have got it badly wrong, but the extent to which Government powers could be used alarmed me. I hope that the Minister will take the opportunity to refute the lurid story.

Melanie Johnson (Labour, Welwyn Hatfield)

On the CBI's claims, we believe that the powers are appropriate. I do not agree that they are tougher than those for cartel investigations. The monopolies regime grants the OFT powers of entry. We have replaced those powers with the power to require persons to attend at a specified time and place to give evidence. That is better tailored to the regime. The powers are similar to those for cartel investigations, but the market's power extends to requiring estimates and forecasts, as they are likely to be relevant to that type of inquiry.

The story mentioned by the hon. Member for Twickenham (Dr. Cable) related to a criminal offence in relation to cartels, not to Competition Commission reports. That may help the hon. Gentleman to get the story straight.

Question put and agreed to.

Clause 166 ordered to stand part of the Bill.

Clause 167 ordered to stand part of the Bill.

Clause 168 - Investigation powers of the Commission

Mark Field (Conservative, Cities of London and Westminster)

I beg to move amendment No. 158, in page 122, line 19, leave out paragraph (c).

Nigel Beard (Labour, Bexleyheath and Crayford)

With this it will be convenient to take the following amendments: No. 319, in page 122, leave out line 19.

No. 320, in page 122, leave out line 20.

No 321, in page 122, leave out line 21.

No. 322, in page 122, leave out line 22.

No. 323, in page 122, leave out line 23.

Mark Field (Conservative, Cities of London and Westminster)

I shall not spend too much time on this because in a sense much of the discussion has already taken place on clauses 105 and 106. [Interruption.] The Government Whip has a voice in this Committee for the first time. He suggests that the hon. Member for Twickenham will speak to the amendments. I should like to speak first, if I may.

Given that the plan is to have a non-adversarial approach to this entire regulation it seems somewhat inappropriate to set out such strict penalties. We are therefore of the view that paragraphs (d), (e), (f) and (g) should be deleted. The hon. Member for Twickenham seeks to delete paragraph (c). We want to delete the commission's power to impose financial penalties if a person fails to provide evidence. Without necessarily rehearsing all the old arguments, I should be interested to see what justification the Minister has for a stricter regime in part 4, which deals with market investigations, compared with the perhaps understandably more strict regime in mergers.

Vincent Cable (Liberal Democrat, Twickenham)

There is an important issue here, namely the toughening of penalties in relation to the provision of evidence. The issue has been raised not just by the industry lobbies but by the Law Society, which was concerned about the significance of the law. There are two obvious reasons why evidence is withheld. One is deliberate obstruction, such as the Enron-Anderson type of problem that involved shredding and disappearing files. Clearly there is criminal intent in such cases and there is the power to pursue companies using the criminal law for contempt of court. That is right.

Evidence is often not provided as a result of inefficiency, which can be on either side. It can be the inefficiency of the company in not giving sufficient priority to assembling the evidence, or it can be the inefficiency of the competition authorities in not programming their work and setting totally unreasonable demands for paper. What indication does the Minister have that there is a serious problem with this type of investigation and that without additional financial penalties the evidence will not be forthcoming? The people to whom I have talked about the Bill had no evidence that this was a problem. Perhaps the Minister could quote us some examples or some aggregate data to show that there is a problem.

How could a company appeal if it was subject to a fine even though it believed that it had acted completely reasonably in the provision of evidence? The whole purpose of this type of investigation is to be non-adversarial and yet it builds a fine and penalty system into the process. Perhaps the Minister can talk us through it. How will an aggrieved company that feels that it has been unfairly penalised for inefficiencies that it did not commit argue its case?

Melanie Johnson (Labour, Welwyn Hatfield)

The purpose of the system of sanctions for not providing information to the competition authorities is to encourage prompt and full compliance with any reasonable requests for information that they make.

The hon. Member for Twickenham asked whether there had been difficulties. We cannot give specific examples because of confidentiality, but I assure him that they are rare occurrences. I will come to the context in which the powers operate, which I hope will help hon. Members to see why we are resisting the amendments—as I shall be urging the Committee to do.

Under the existing monopolies regime, where the parties fail to comply with a formal request for information the Competition Commission can apply to the court for such non-compliance to be punished as if it were a contempt of court. The ultimate sanction for non-compliance is therefore imprisonment, but that would be an extreme response. We suspect that the contempt provisions in the Fair Trading Act have ceased to be a credible deterrent to non-compliance with the Competition Commission's information requests.

It seems more appropriate to encourage compliance by recourse to financial penalties. Our proposal follows the model in the Bill's merger provisions and the similar power of the European Commission to impose fixed and daily substantial penalties on undertakings that fail to comply with the formal decision requesting information in the context of the investigations under articles 81 and 82 of the EU treaty.

The power will be easier for the Competition Commission to use, not least because it does not involve applying to the court. It should therefore be a more credible deterrent than its predecessor. I stress the following points to reassure hon. Members opposite.

As I said in my opening comments, the Competition Commission does not expect to exercise this power frequently. In general it finds that parties to its investigations adopt a constructive approach to its requests for information. However, there are a minority of cases otherwise. The unco-operative approach of one or two firms can damage the inquiry as a whole. Other businesses suffer as much as the Competition Commission as a result of inquiries dragging on unnecessarily. We have provided a number of procedural safeguards to prevent the Competition Commission from misusing the power. It can be used only where the commission considers that a person has failed to provide information without reasonable excuse. There is a right to a full appeal to

the Competition Appeal Tribunal on the merits of the Competition Commission's decision to impose financial penalties.

The Commission will be required to set out its approach to using the power in a published policy statement in line with clause 105. The amounts specified in 107(7) are absolute maximums. It is unlikely that penalties would be imposed at that level save in exceptional circumstances. For those reasons I hope that the amendment will be withdrawn and I urge Members to support the clause.

Nigel Waterson (Conservative, Eastbourne)

Will the Minister accept that it is not very helpful for her to say—no doubt convincingly from her point of view—that the powers will not be used often or unreasonably? We are giving the powers to someone else; in this case, officials who may be gung-ho about making demands. We must test all the powers that we give to others outside this place against the worst-case scenario. The hon. Member for Twickenham hinted that that would be a company doing its best, which was not ill-intentioned but felt that it was being put under unfair pressure to produce documents and information beyond the main scope of the inquiry.

Against that test, we are leaving a great deal of discretion to the reasonableness of the officials involved. Any safeguards must be built into the legislation and not simply be assurances given in Committee—which, with respect, are utterly worthless—that the powers will not be used often, will be used reasonably and so on. There may be some safeguards in the Bill but they are not enough.

Melanie Johnson (Labour, Welwyn Hatfield)

Before the hon. Gentleman spoke, I was setting out a number of safeguards that are in the Bill to prevent matters from being pursued in the way that I think he is suggesting might happen. In any case, we do not expect the power to be exercised frequently. In fact, we expect it to be exercised infrequently, because it would be needed only in an unusual situation.

None the less, a need exists, and it would be wrong of the Government not to make provision to meet that need if a couple of firms did not co-operate. As I have said, if inquiries drag on unnecessarily, other businesses could be damaged just as much as the commission. The provision is therefore sensible for all parties concerned, and I urge the Committee to resist the amendment if it is pressed to a vote.

Mark Field (Conservative, Cities of London and Westminster)

We had a fairly full debate on this issue under part 3, so I am happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mark Field (Conservative, Cities of London and Westminster)

I beg to move amendment No. 324, in page 122, line 24, at end insert—

'(1A) Section 105 shall, in its application by virtue of subsection (1) above, have effect as if section 105(1) were omitted.'.

Again, the amendment covers ground that we have covered in the last few moments. In keeping with the non-adversarial approach underlying the market investigations that we have in mind, and the parallels that come into play, clause 105(1) should not be included. As hon. Members may recall, it gives the Commission, for the purposes of an investigation under the merger provisions, the power to

''give notice to any person requiring him . . . to attend at a . . . place specified in the notice; and . . . to give evidence to the Commission''.

With regard to market investigations, our view is that the powers that would remain intact in the rest of clause 105 would be sufficient. We certainly appreciate, and not just with Enron and other incidents in mind, that the offence of suppressing or destroying documentation that is set out in clause 106 needs to remain. Again, it is paralleled in clause 168. However, the provision goes one step further. If the investigative process in respect of market investigations as compared with mergers can be conducted through documents and without requiring individuals to appear before the commission in the way that is described, that should be made plain.

I should be interested to have some guidance from the Under-Secretary. I can understand why, for drafting purposes, clause 105 may simply have been transferred intact into clause 168, but does she really believe that there should be no difference between the provisions that apply to mergers and those that apply to market investigations? Does she not believe that those parties, be they individuals or companies, who are subject to the much broader range of market investigations should have a little more protection than those who are specifically subject to a merger investigation under part 3?

Melanie Johnson (Labour, Welwyn Hatfield)

The hon. Gentleman's points turn on the question of witnesses being required to attend. His line of argument surprises me, because many investigations require witnesses to attend, and there is a value to that requirement, in addition to information and documentation, so that the Competition Commission has effective access. That enables it to investigate and take properly informed decisions, which is right and proper. However, I emphasise again that we do not expect the commission to exercise the power frequently, because in general parties to its investigations adopt a constructive approach to its requests.

The power is likely to operate only rarely, but it will help to ensure that investigations are completed in a timely manner. It may shortcut many other processes if the witnesses are present. We want to avoid delays, so it is right for the Competition Commission to have this power. It is valuable to be able to request that witnesses attend and bear witness on investigations. As I said, we do not expect those powers to be exercised frequently.

Mark Field (Conservative, Cities of London and Westminster)

I return to Opposition Members' principled concerns about the powers being granted to the Competition Commission, the OFT and the

Government more widely in respect of mergers and market investigations. Significant powers are being conferred and we are assured that they will be exercised only rarely. One of the main purposes of examining the Bill line by line in Committee is to receive reassurances. I accept that the Minister has provided verbal assurances, but if the powers were sparingly used over the years or even redundant, we would want the powers to be pared down. Given the similarities between this Bill and the Fair Trading Act, for example, we fear that the present provision might be used as a minimum template for future legislation.

Tony McWalter (Labour/Co-operative, Hemel Hempstead)

Is the hon. Gentleman forgetting that the object of these powers is to stop people from rigging markets? That can deprive consumers of millions of pounds that they would otherwise not have to pay for goods and services, or sometimes drive good businesses that are trading fairly into the dust. I should be pleased if the hon. Gentleman would remember the object of having these powers.

Mark Field (Conservative, Cities of London and Westminster)

Given that we have already had umpteen sittings, I hope that I am slightly aware of the ideas behind the Bill. I accept the hon. Gentleman's point, but it is a matter of principle for the Opposition—not just because we stand up for business; on the Proceeds of Crime Bill I stood up for individuals. The increasing creeping effect of more legislative powers can be insidious. When the next Bill intended to regulate markets and mergers investigations comes before this House in 10 or 15 years' time, the OFT's and the commission's powers will be used as a basic template. That is the nub of our concern. We have heard the Minister's assurance that the powers will be utilised only in exceptional circumstances, but we remain concerned. I am partly comforted by those assurances, but it is worth reiterating our concerns. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 168 ordered to stand part of the Bill.

Clause 169 - Review of decisions under Part 4

Nigel Waterson (Conservative, Eastbourne)

I beg to move amendment No. 325, in page 122, line 37, leave out 'not'.

This is a probing amendment, which I hope that the Minister can deal with swiftly.

Subsection (2)(a) deals with exclusion—from a review carried out by the Competition Appeal Tribunal—based on an imposition of

''a penalty under section 106(1) or (3) as applied by section 168''.

We simply wondered why.

Melanie Johnson (Labour, Welwyn Hatfield)

The amendment may be based on a misunderstanding of the purpose of clause 169(2)(a). The provisions are not intended to rule out the possibility of an appeal against decisions, but to clarify that such an appeal should be heard under the specific appeal provisions relating to penalties as set out in clause 110. They are applied to market investigation

references by clause 168. If that is not the basis of the hon. Gentleman's misunderstanding, perhaps he will clarify it further, but I believe that I have answered his point.

Nigel Waterson (Conservative, Eastbourne)

I am not sure that the Minister has identified my precise misunderstanding, but what she says sounds convincing enough for me to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Nigel Waterson (Conservative, Eastbourne)

I beg to move amendment No. 326, in page 123, leave out lines 10 and 11 and insert

'be entitled to review the substance of the decision, as well as the procedure by which that decision was reached'.

This deals with an altogether more substantial concern that we have touched on before in a different context. In response to my previous amendment, the Minister confused an appeal with a review, which, however similar they appear to a lay person, are two different things. A review deals only with complaints about points of law or the procedural aspects of a decision. It allows no investigation into the substance of the case. There is no justification—we are emboldened in our view by the support of the CBI—for limiting tribunals to judicial review alone. It must be possible to review the substance of the matter as well as the mere procedure or points of law. That would give greater confidence to all involved in the procedures. It is a simple natural justice that the entire matter—I include procedural issues and points of law, but not only them—be capable of being examined again. Concern by any party that the matter has not been dealt with properly or that an improper conclusion has been reached justifies starting the procedure.

Jonathan Djanogly (Conservative, Huntingdon)

As I see it—the Minister will tell me if I am wrong—companies are being given the power to take to the CAT what they would previously have taken to judicial review. The clause will not much advance a company's ability to gain an effective appeals process. Stringent new penalties are put in place, but they are not balanced by companies' ability to opt for proper appeals. We do not oppose using the CAT for this purpose—we encourage it—but we want companies to be able to go to the CAT on the basis of a proper appeal rather than merely judicial review.

Melanie Johnson (Labour, Welwyn Hatfield)

The Bill provides for parties who are aggrieved by decisions to have them reviewed by the CAT on the same grounds applied by the courts on application for judicial review. That position applies under the Fair Trading Act, whereby the Secretary of State's decisions are open to challenge on judicial review grounds. Judicial review remains the right jurisdiction for appeals against decisions taken in market investigations. Such a CAT review will ensure that the procedures followed by the authorities are fair, and that the parties were given the opportunity to put their case. It will also allow the CAT to examine any decision taken by the authorities to assess whether it was reasonable and proportionate.

I am aware that under the Competition Act 1998 the parties have a full right of appeal against OFT decisions. However, there is an important difference between the two regimes. Under the 1998 Act, companies in breach of dominance prohibition or the restrictive agreements are breaking the law. The chapters 1 and 2 prohibitions are modelled closely on articles 81 and 82 of the EC treaty. Cases can therefore be evaluated against a defined prohibition by reference to a body of competition law and previous jurisprudence in the UK and the EU. It is therefore easier to assess whether the decision taken is objectively right or wrong.

Under the Bill, the decisions will be based on an economic analysis of the facts of each case by the authorities acting in accordance with their statutory duties. They will not be evaluated against the defined prohibition by reference to an existing body of substantive competition law and jurisprudence. That means that the authorities will exercise considerable discretion when taking any decision under the Enterprise Bill. It will be difficult for the CAT to assess whether a decision is objectively right or wrong. Such public law decisions are complex, and a review based on judicial review is appropriate.

Jonathan Djanogly (Conservative, Huntingdon)

Is the Minister saying that the findings of the investigation cannot be wrong?

Melanie Johnson (Labour, Welwyn Hatfield)

No, I am not saying that. There is a mechanism for challenging decisions taken in relation to market investigation references. We must ensure that the process followed by the authorities in a market investigation was fair, and that the parties were given the opportunity to put their case. If the CAT considers that the challenge to the decision is justified when it applies the principles of judicial review, the original decision taker can be asked to reconsider. That is the most appropriate way to deal with the type of decision that will be taken under the clause. Therefore, I do not support the amendment.

Nigel Waterson (Conservative, Eastbourne)

I want to make three points, which the Minister has not completely addressed. My hon. Friend the Member for Huntingdon made one of them when he intervened, and he is still making it from a sedentary position. As he rightly said, one must accept that in the real world the initial decision may have been completely misjudged, and not for procedural or purely legal reasons.

We are going to all the trouble of setting up a highly specialised tribunal—the Competition Appeal Tribunal—which is unlike any other court or tribunal in the land, as it will have specialist expertise in these matters. The Minister says that the decisions will have been taken on economic and other grounds, and that it is all very difficult. The CAT above all tribunals should be able to judge these issues, especially whether they had been approached in the right way in the first instance. With respect, it does not help the Minister to refer back to the Fair Trading Act under which, as she rightly said, there is a possibility of a judicial review of a decision taken by the Secretary of State. It is difficult

to think of any other mechanism for challenging such a decision. However, we are setting up such a mechanism under the Bill. In the cart-before-the-horse way in which some of the issues are being debated, we will consider later in more detail the constitution and powers of the CAT, and how it will work.

We no longer rely on challenging a decision taken by the Secretary of State, as we are setting up that extra layer. I fail to understand why the Minister ignores that in her response to the amendment. We are not making much progress in changing the Bill in this respect, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 169 ordered to stand part of the Bill.

Clause 170 - offences

Jonathan Djanogly (Conservative, Huntingdon)

I beg to move amendment No. 327, in page 123, line 24, leave out

'and 117 (offences by bodies corporate)'.

The CBI brought this relatively small issue to our attention. Clause 170 deals with offences and provides that the mergers clauses dealing with false or misleading information and offences by bodies corporate apply also to the market regime. It has been suggested that the words ''and 117'', referring to clause 117 on offences by bodies corporate, should not be included. I would be interested to hear the Minister's comments.

Melanie Johnson (Labour, Welwyn Hatfield)

The clause is a standard provision. Under a similar section in the Competition Act 1998, section 72, where a body corporate has committed a relevant offence, an officer of that body corporate is also guilty if it is proved that the offence was committed with his consent or connivance, or resulted from neglect on his part. Without that power, as the hon. Gentleman urges, it would not be possible to hold a person responsible for the offence, committed by consent, connivance or neglect, of providing the Competition Commission with false or misleading information.

There should be a strong incentive for officers of bodies corporate to assist the Competition Commission in its investigations. The amendment would be detrimental to its investigative powers. I therefore hope to persuade the hon. Gentleman to withdraw his amendment.

Jonathan Djanogly (Conservative, Huntingdon)

Having heard the Minister's assurances, I beg the Committee's leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 170 ordered to stand part of the Bill.

Clauses 171 and 172 ordered to stand part of the Bill.

Clause 173 - interpretation: part 4

Nigel Waterson (Conservative, Eastbourne)

I beg to move amendment No. 328, in page 124, line 31, at end insert

'and includes a local authority or a public body.'.

Nigel Beard (Labour, Bexleyheath and Crayford)

With this we may discuss amendment No. 136, in page 124, line 34, after 'is', insert—

'(a) a consumer of goods or services whether publicly or privately provided.'.

Nigel Waterson (Conservative, Eastbourne)

The CBI raised this issue, which has wider ramifications. The amendment seeks to clarify that the provisions would cover public bodies such as local authorities. I have a distinct memory of debating the issues when shadowing local government, particularly when the Local Government Bill was going through its stages. There is an increasing desire in local government to get away from the old ultra vires doctrine and to be permitted to trade and find other ways of producing income. This is the other side of that coin.

The borough of Westminster was particularly active in lobbying on this issue because of the other opportunities available to it in terms of charging film companies, and so on. Local authorities can boost their income in ways other than holding out their hand to central Government for grants—we know that the level for specific grants has gone up exponentially under this Government—and increasing council taxes, and so on, in these days of continued capping, although under a slightly different system.

In its context, this is laudable. Local authorities are looking for innovative ways to raise revenue, or engaging in activities which could loosely be called trade, which they are capable of doing—no one wants to encourage them to go into things that they are plainly not cut out for. However, every silver lining has a cloud, and the other side of the equation is the concern of the CBI and others about unfair competition. It is a little like the concerns that we occasionally hear from our local chamber of commerce about the explosion in the number of charity shops. There is no difficulty if they are genuine, but certain charity shops buy in their produce and operate much more commercially, sometimes using their inbuilt advantages to compete unfairly with genuine local businesses. That is a slightly different illustration of the point.

We must not allow, even unintentionally, public bodies of whatever sort to be outwith the potential investigations. I have mentioned local authorities as perhaps the best example, but I am sure that hon. Members can imagine others. The amendment would ensure that market investigations can apply to publicly owned bodies that may operate as I have described, including by selling goods or services for gain.

Other examples include potential mixed markets in which both private and public businesses operate. They span health care, hospitals, postal services—we have seen the recent proposals from that industry's regulator—and even the defence sector. The CBI has a

fair point, which is that if such bodies operate in a commercial environment, they should be treated like any other market operator by the competition rules. It is a fair point. It may not have a practical effect on many organisations but, as I said earlier, there is increasing pressure for local authorities to be more involved in commercial activities and for them to be allowed to be.

I recall that there was a Green Paper floating around when I left the job of shadowing the Minister responsible for local government, which may have been firmed up into a White Paper by now. The Government did not seem unsympathetic to the cause. There is also a growing trend of a mixture of public and private provision across our public services. There is a big debate to be had on that, but not today. On that basis, I commend the amendment to the Committee.

Vincent Cable (Liberal Democrat, Twickenham)

The hon. Member for Eastbourne (Mr. Waterson) has a point, which is practical rather than a matter of public sector versus private sector. After the changes of the past 20 years, there is not much public enterprise left. Those that remain include the Post Office, which is covered by a separate regulatory regime and we have discussed how that fits in with this Bill, and the BBC, which is currently being debated Downstairs in the context of the draft communications Bill. There are areas in which Government quangos and public entities are being encouraged to operate commercially, and that presents a competition policy problem.

One example, with which I am familiar because of its impact on a company in my constituency, relates to the Department of Trade and Industry and Companies House, which is a public provider of data about companies. It generates the data, transforms it and has been encouraged to sell it into the market. At first sight, getting Companies House to earn some money seems admirable, but there is already a small private sector industry of companies that buy data from Companies House, transform it through sophisticated computers and data processors, and sell it into the market. Those companies have found themselves in the awkward position of buying data from Companies House at a higher price than Companies House charged to its own marketing division. That problem may have been resolved by now, as it was raised with me two years ago, but it illustrates the kind of dilemmas that arise.

The same problem arises with Ordnance Survey, another Government agency that the Government encouraged to be more commercial before they realised that private companies were in the business of using the mapping data on a commercial basis. I do not argue about the rights and wrongs here, but there is a rather awkward borderline between the public and private sector in those little niches of the market. It is important that competition is fair and is seen to be fair and that the Government entities operate on the same basis as their private sector competitors. If the amendment manages to capture that problem, even if it is a rather limited one, it has a good deal of value.

Ken Purchase (Labour/Co-operative, Wolverhampton North East)

I strongly believe that local authorities and other bodies, which in essence cannot go bankrupt, should not compete in the private sector for the sale of goods and services of whatever kind. I am a strong supporter of the mixed economy and I believe that competition should be fair. I have no problems in saying that local authorities and other public bodies should be subject to similar rules of the game. I am concerned, however, that the hon. Member for Eastbourne mentions charities. While it is also true that an element of unfair of competition can obtain in the circumstances that he described, charities and other voluntary bodies have to adhere to so many rules and obligations that we are in danger of loading the system to the point where people will no longer volunteer.

I am an honorary parliamentary adviser to the British Healthcare Association, which has come under the scrutiny of the Financial Services Agency. While matters have been resolved, the problems of getting to grips with the new requirements for an essentially non-profit-making charity assisting people with their health care within the national health service resulted in considerable expenditure. Others in the charitable field are concerned about the way that they are being brought under the aegis of bodies like the FSA. If this measure were extended to charities it would be another disincentive to people volunteering for what are often important additions to our social life.

Jonathan Djanogly (Conservative, Huntingdon)

It seems unfair that the public sector should not be included in the market investigation regime. The hon. Member for Twickenham made a good point. It is not a question of public against private here, but the public sector acting as a private sector body, which is now possible within the law and is increasingly being encouraged by the Government. I do not say that that is necessarily a bad thing. Let us take one example. There has been talk of the NHS buying up private hospitals, either in total or the use of all or a percentage of their beds. A monopoly provider will move into the private sector and compete from a massively dominant position.

Considering that the health service will have an extra £9 billion after the tax increases to play with, that is a massive block compared with private sector competitors. In that context it is a very relevant issue. The NHS is the largest employer in the world. It is a massive corporation, with massive monopoly purchasing power. If policy changes, as it seems to be doing, so that it can compete with the private sector, it should be subjected to the regime outlined here. If the amendments are not carried, I hope that the Government will think about the issue more carefully. That has come across from all hon. Members.

John Pugh (Liberal Democrat, Southport)

I am all in favour of people thinking about the issue a lot more carefully and I listened carefully to what the hon. Member for Eastbourne said. He gave me the sense that we are debating a limited kind of application; that it could apply to public bodies only in so far as they operate in the commercial environment.

The hon. Gentleman then went on to describe situations where traditional local authority services have rivals in the private sector, so it seems to me that the amendment could embrace almost any public body activity where there is, in theory, the opportunity of a private enterprise providing a similar or analogous service. If that were the case, would it apply right across the board to the whole range of public sector bodies and their operations?

The hon. Member for Huntingdon talked about the public sector acting on a private sector basis. I am not aware, however, that it is always entirely clear when a local authority is or is not doing that. I think it would be accepted, therefore, that an anxiety would be that we might apply it to areas of public sector operation where there are no customers—there are citizens—and where there are no actual profits. However—

Nigel Beard (Labour, Bexleyheath and Crayford)

Order. This is a rather long intervention.

John Pugh (Liberal Democrat, Southport)

I accept that.

Jonathan Djanogly (Conservative, Huntingdon)

This is a fascinating and complicated area, and the hon. Gentleman makes points that should be considered in that context.

I end by saying that if the Government—

Nigel Waterson (Conservative, Eastbourne)

Following on from the previous intervention, this is an interesting train of thought. Would my hon. Friend care to comment on a situation where a hospital, for example, decides to subsidise its mainstream activities by taking in laundry from people other than its patients and to turn that into a business to create income? What would be the position if it entered into arrangements that were anti-competitive with private laundries in a particular locality? Which side of the line would that take us?

Jonathan Djanogly (Conservative, Huntingdon)

My hon. Friend makes a good point. I remember that in Westminster we contracted out collections from parking meters and serviced collections from other councils' parking meters. We did that as an ancillary service to the existing service, which as the law currently works in local government, was all that we could do. If, however, the Government changed it—I think that there are proposals to do so—so that councils can provide services, clearly problems may occur with competition in terms of public money being used, in effect, to corner the market. Those are relevant considerations here.

If the amendments are not passed, I should be interested to hear the Under-Secretary's response to whether, if a public hospital had some private beds, as many do, it would be caught within the regime? If the public hospital increased its private beds to 50 per cent., would it then be caught within the regime? What I am interested to hear, as things stand, is whether the extent to which a public body involves itself in private activities has any bearing on whether it is caught within the definition of business.

Huw Irranca-Davies (Labour, Ogmore)

The way in which the clause is worded would seem to include most trading enterprises whether they are in the public sector, the charitable sector or the private sector. The amendment, which includes the words ''a local authority'', would seem to encompass the whole remit of what a local authority does.

Ultra vires and charitable status have already been referred to, but let me give an example other than hospitals. If a college was, in effect, trading as a charity, neither in the public nor the private sector, but having, as part of its enterprises, summer schemes that it operated out of its sports facilities under a separate trading arm, a separate trading enterprise, my interpretation of the wording of the clause is that those would be included. The same is true if a local authority has a dual-use sports centre. The operation is similar. It provides activities for schoolchildren during the day, but becomes a commercial operation in the evening. The amendment would extend the clause to cover the complete reach of the local authority beyond its simple trading. Will the Under-Secretary clarify that point?

Tony McWalter (Labour/Co-operative, Hemel Hempstead)

My hon. Friend the Member for Ogmore (Huw Irranca-Davies) anticipated one of my points. However, it is important to recognise that some of the analogies that have been used are inappropriate. It is not clear whether there is a market in health care in all circumstances. The NHS is predicated on the idea that someone is entitled to health care if they need it, and the cost of meeting that care will be provided, regardless of whether they have any market power or the capacity to purchase. That raises different issues from the question of whether a market obtains.

On local authority services, the object of the best value regime is partly to try to ensure that a local authority will not undertake to deliver services if another party, such as another local authority or a private company, could deliver them more effectively, thus literally giving best value. In the special circumstances of the public sector, the market is unquestionably imperfect. So far as health care is concerned, it is good that it is imperfect, as it means that people who do not have market power nevertheless receive the service. There is therefore a surrogate—best value—system in the public sector that has the effect of subjecting public bodies to market forces so far as it is appropriate. This might be another case in which we look to legislation outwith the Bill to deal with some of the concerns expressed by hon. Members. I agree with many hon. Members that it is important that such market disciplines are used to ensure that consumers are not ripped off by the public sector any more than they should be by the private sector.

Melanie Johnson (Labour, Welwyn Hatfield)

The amendments seek to expand the definitions of consumer and business for the purposes of market investigations. We are in danger of losing sight of that. Amendment No. 328 deals with the definition of business, which in clause 173

''includes a professional practice and...any other undertaking which is carried on for gain or reward or which is an undertaking in the course of which goods or services are supplied otherwise than free of charge''.

It is important to understand that that means that the goods or services that are publicly provided commercially will be covered.

Nigel Waterson (Conservative, Eastbourne)

The Minister rather skated over the word ''or'', which is crucial as it appears that there are two alternative tests. One is that an undertaking is being carried out for gain or reward—in other words, commercially—the other is a much lesser test:

''or which is an undertaking in the course of which goods or services are supplied otherwise than free of charge''.

That eliminates the NHS at a stroke, unless the Government have further plans to which we are not yet privy. It certainly does not cover undertakings that are being carried out commercially.

Melanie Johnson (Labour, Welwyn Hatfield)

I will elucidate the definition of business, which is the same in the Bill as it is in the Fair Trading Act. Hon. Members will all be interested in the NHS in this context. In a recent merger case, the Heart hospital in London was sold by its private owners, Gleneagles Hospital UK, to the national health service. That shows that the definition of business catches NHS trusts when operating on a commercial basis. The OFT investigated the merger and did not refer it to the Competition Commission because no competition problems arose. It fell within the appropriate definitions. Amendment No. 328 is therefore unnecessary.

The hon. Member for Twickenham spoke to amendment No. 136. The definition of consumer mirrors that of existing Fair Trading Act provisions in part 3. It is included for the purpose of the definition of customer, which is also used in part 4. ''Customer'' includes a customer who is not a consumer. Consumer is defined by the clause as any person who is either

''a person to whom goods are or are sought to be supplied (whether by way of sale or otherwise) in the course of a business carried on by the person supplying or seeking to supply them; or . . . a person for whom services are or are sought to be supplied in the course of a business carried on by the person supplying or seeking to supply them; and who does not receive or seek to receive the good or services in the course of a business carried on by him''.

That definition already covers consumers of goods and services whether publicly or privately provided as long as they are goods and services supplied in the course of a business.

The amendment faces two problems. First, it would go further in encompassing consumers of public goods and services irrespective of whether they are provided on a commercial basis. As it stands, the definition covers goods or services that are publicly provided on a commercial basis, as I explained. I would not want to widen the definition to include those publicly provided with goods or services for free or on a non-commercial basis. Secondly, the amendment would extend the definition of consumer to any person who is privately supplied with goods or services, which we believe is an inappropriate extension of the definition.

In the light of my full explanation of both amendments and their relationship to the existing clause, I hope that I can persuade both Opposition Members to withdraw their amendments.

Nigel Waterson (Conservative, Eastbourne)

I am not wholly convinced that the Minister changed course in response to my helpful intervention. We can accept that anyone carrying out an undertaking in the course of a business should be caught by the definition, but I part company with the Minister when she talks about a commercial basis. An enterprise may not be carried out on a commercial basis, in the ordinary sense of the term, and may make a nominal charge or one below what would normally be charged, but the only way to fall outside the definition is to charge nothing at all—or no money, which would remove the NHS as we bequeathed it to the Government.

We get into murkier waters where public bodies set up an operation that is usually carried out by commercial bodies, but do not charge a proper or full rate. As long as they charge something, however nominal, we believe that they should be covered by the definition. On one reading they already are, but the Minister's attempt to explain it by stressing ''on a commercial basis'' undermines her own case.

Huw Irranca-Davies (Labour, Ogmore)

By way of a straightforward observation, I doubt whether the hon. Gentleman would want to extend his amendment to cover aspects of local authority provision or, by logical extension, charitable provision that tackles social need where the market would usually not step in. Much regulation already defines commercial and trading activities and where the local authority or charity should keep away from filling a gap that the market could easily step in on. The worry with the amendment, and the logic of it, is that there should be an extension to the voluntary sector and that all aspects of its concern and business would then be covered. That might have the effect of deterring such bodies.

Nigel Waterson (Conservative, Eastbourne)

The hon. Gentleman makes a fair point, but I have two comments in response. First, the ground is shifting under us with regard to what local authorities are or are not allowed to do now or in future, and the basis on which they will be able to do things and charge for them. Secondly, all that we are setting out is the possibility of people being involved in the provisions.

At the end of the day, there still has to be evidence of anti-competitive activity and a prima facie case for a full investigation. As I said initially, it seems extremely unlikely that any of the bodies that we are talking about would get involved in such a situation. However, it would be wrong for the definition, or certainly the Under-Secretary's interpretation of it, to exclude them from an investigation if they were engaged in prima facie anti-competitive activity. As I said, her introduction of the expression ''on a commercial basis'', which is not reflected in the clause, has muddied the waters, but we have debated the issue long enough.

Vincent Cable (Liberal Democrat, Twickenham)

I am still a little baffled as to what precisely ''on a commercial basis'' means. We know that some public entities, such as the Export Credits Guarantee Department, operate on a commercial

basis, which means covering their costs. Others, such as London Transport, also operate on a commercial basis, but have to earn a 6 per cent. return on capital. The phrase is used in a varied way in the public sector, and the precision that the Under-Secretary seeks in the clause is still not there. However, I shall not press my amendment to a vote.

Nigel Waterson (Conservative, Eastbourne)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 173 ordered to stand part of the Bill.

Clause 174 ordered to stand part of the Bill.

Clause 197 - Power to modify schedule 7

Nigel Waterson (Conservative, Eastbourne)

Again, there is an echo of something that we have debated before. We object in principle to the Secretary of State's having the power to modify by statutory instrument schedule 7. It contains some important provisions, even if they are tucked away in a schedule. We make no complaint about that, but if there are significant changes to what is set out in the schedule, due consideration should be given to them at all stages by the House. We have made a similar point before, and I do not wish to labour it, but I should like the Under-Secretary to justify why the Secretary of State should have that power.

Melanie Johnson (Labour, Welwyn Hatfield)

Through the work of the Committee, we are trying to ensure that the Bill will stand the test of time. It is therefore important that the list of remedies can be amended over time to reflect market developments. One example is that we have changed the list to allow authorities to specify how information should be published. They could specify that it should be published on the internet, which is obviously a new development since 1973. There may be similar developments in future.

To reassure the hon. Gentleman, I point out that a modification requires an affirmative resolution of both Houses of Parliament. The provision is necessary, however, to provide the right degree of flexibility in the legislation to reflect changes and market developments that might take place over a considerable time.

Question put and agreed to.

Clause 197 ordered to stand part of the Bill.

Nigel Waterson (Conservative, Eastbourne)

The hon. Gentleman makes a fair point, but I have two comments in response. First, the ground is shifting under us with regard to what local authorities are or are not allowed to do now or in future, and the basis on which they will be able to do things and charge for them. Secondly, all that we are setting out is the possibility of people being involved in the provisions.

At the end of the day, there still has to be evidence of anti-competitive activity and a prima facie case for a full investigation. As I said initially, it seems extremely unlikely that any of the bodies that we are talking about would get involved in such a situation. However, it would be wrong for the definition, or certainly the Under-Secretary's interpretation of it, to exclude them from an investigation if they were engaged in prima facie anti-competitive activity. As I said, her introduction of the expression ''on a commercial basis'', which is not reflected in the clause, has muddied the waters, but we have debated the issue long enough.

Vincent Cable (Liberal Democrat, Twickenham)

I am still a little baffled as to what precisely ''on a commercial basis'' means. We know that some public entities, such as the Export Credits Guarantee Department, operate on a commercial basis, which means covering their costs. Others, such as London Transport, also operate on a commercial basis, but have to earn a 6 per cent. return on capital. The phrase is used in a varied way in the public sector, and the precision that the Under-Secretary seeks in the clause is still not there. However, I would be happy for the amendment to be withdrawn.

Nigel Waterson (Conservative, Eastbourne)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 173 ordered to stand part of the Bill.

Clause 174 ordered to stand part of the Bill.

Nigel Waterson (Conservative, Eastbourne)

Again, there is an echo of something that we have debated before. We object in principle to the Secretary of State having the power to modify by statutory instrument schedule 7. It contains some important provisions, even if they are tucked away in a schedule. We make no complaint about that, but if there are significant changes to what is set out in the schedule, due consideration should be given to them at all stages by the House. We have made a similar point before, and I do not wish to labour it, but I should like the Under-Secretary to justify why the Secretary of State should have that power.

Melanie Johnson (Labour, Welwyn Hatfield)

Through the work of the Committee, we are trying to ensure that the Bill will stand the test of time. It is important that the list of remedies can be amended over time to reflect market developments. One example is that we have changed the list to allow authorities to specify how information should be published. They could specify that it should be published on the internet, which is obviously a new development since 1973. There may be similar developments in future.

To reassure the hon. Gentleman, I point out that a modification requires an affirmative resolution of both Houses of Parliament. The provision is necessary, however, to provide the right degree of flexibility in the legislation to reflect changes and market developments that might take place over a considerable time.

Question put and agreed to.

Clause 197 ordered to stand part of the Bill.

Clause 199 ordered to stand part of the Bill.

Clause 175 - The Competition Service

Melanie Johnson (Labour, Welwyn Hatfield)

I beg to move Government amendment No. 341, in page 128, line 9, leave out 'the Competition Commission and'.

Nigel Beard (Labour, Bexleyheath and Crayford)

With this it will be convenient to take the following: Government amendments Nos. 342 and 343.

Motion to transfer clause 175.

Government amendments Nos. 345 to 352.

Motion to transfer Schedule 10.

Government amendments Nos. 355 to 369.

Government new clause 8—Annual report of Commission.

Melanie Johnson (Labour, Welwyn Hatfield)

It will be helpful if I set out briefly the reasons behind the changes proposed in this group of amendments.

We have tabled the amendments with a view to guaranteeing the complete independence of the Competition Appeal Tribunal from the Competition Commission. The Government have always intended for the two to be fully independent of one another. Indeed, the Competition Commission appeals tribunal—the CAT's precursor—is part of the Competition Commission. That raises no conflict of interest at present, because the CCAT hears appeals only against the decisions of the OFT in cases under the Competition Act 1998.

We wanted the CAT to review the work of the reporting side of the Competition Commission in mergers and market cases, so we decided to separate the membership of the existing Competition Commission so that appeal panel members would be members of the separate body; the Competition Appeal Tribunal. That was why we initially proposed to create the Competition Service to act as a support body to the Competition Commission and the CAT, providing staff and services to both. However, we examined the structure further, saw that it was a little cumbersome and concluded that we should take this opportunity to amend the arrangements to separate entirely the Competition Commission from the CAT.

The Competition Service will now provide support services only to the Competition Appeal Tribunal, while staff employed directly by the Competition Commission will provide support services for it. It is for those reasons that I have tabled the amendments.

Andrew Lansley (Conservative, South Cambridgeshire)

When the Under-Secretary wrote to Committee members, she said that it was impossible for the CAT directly to employ its own staff. Why is that the case? If they could, we would not need the slightly excessive process of having a Competition Service in order to have a Competition Appeal Tribunal.

Melanie Johnson (Labour, Welwyn Hatfield)

Our advice is that that would not be appropriate, so a non-departmental public body is required to act as the employer of the CAT staff.

Andrew Lansley (Conservative, South Cambridgeshire)

The Under-Secretary may believe that it is appropriate or inappropriate, but she wrote to us to say that the CAT is unable to employ its own staff. Am I right in thinking that the CAT as a judicial body is unable to employ its own staff? Rather than the complex procedure of having the Competition Service, would it not be simpler for the CAT to be serviced by staff from somewhere such as the Lord Chancellor's Department?

Melanie Johnson (Labour, Welwyn Hatfield)

The CAT is unable to employ its own staff and needs a separate legal entity. By preserving the Competition Service, we will preserve the current level of independence for the tribunal. The Competition Service plays the role of the Competition Commission in the current set up.

Nigel Waterson (Conservative, Eastbourne)

Like my hon. Friend the Member for South Cambridgeshire, I am trying to be helpful. However, this question might seem simplistic in the context of the Bill. Why is it impossible for the CAT to be like any other court and be serviced by the Court Service? It is wholly independent, funded ultimately by the taxpayer and does a perfectly reasonable job—although not always as good as it should—in running the nuts and bolts and pay and rations side of the court system.

Melanie Johnson (Labour, Welwyn Hatfield)

First, it is not normally the case for tribunals to employ staff because of the difficulty of identifying who is a party to a contract. Furthermore, the tribunal only exists when it is constituted for a hearing. The hon. Member for South Cambridgeshire asked who could have provided the facility separate from the tribunals. The Lord Chancellor's Department could have done that, but it has not expressed any interest in doing so.

We believe that the arrangements are appropriate. They ensure the independence of the Competition Appeal Tribunal, and that it is supported by the right kind of separate legal entity to deal with the employment of staff and other relevant issues.

Nigel Waterson (Conservative, Eastbourne)

I was not intending to rise on this issue, but the Under-Secretary provokes me. She may be saying that we would not have started from here, but if we had started with a blank sheet, surely there would have been a different result? I can see the sense in keeping the bodies separate, but did it occur to anyone that this was a great opportunity to return to first principles and to decide how to start from scratch?

The way to do that is as for every other court. The mechanics of running a court—paying the clerks, hiring the officers and paying the judges or members of

the tribunal—do not vary much, whether it is the county courts, the High Court, the Court of Appeal or indeed the House of Lords. That is why there is a Court Service. So why do we need to reinvent the wheel?

Given that the Under-Secretary is in charge of the Bill, I found disturbing her plaintive comment that the Lord Chancellor's Department had not expressed any interest in running the Competition Appeal Tribunal.

Andrew Lansley (Conservative, South Cambridgeshire)

Does my hon. Friend recall that the reduction in the number of non-departmental public bodies is regarded as an objective in itself? One of the consequences of the proposed change is that an additional body corporate, the Competition Service, has to be created, although it could be avoided. It seems that by its nature this additional body will create an additional non-departmental public body; an additional quango, with all that tends to flow from that.

Nigel Waterson (Conservative, Eastbourne)

Absolutely. My hon. Friend makes a telling point. It will be a special quango because it will have only one function; to run this small section of the judiciary, the highly specialised Competition Appeal Tribunal. I do not know how many cases the Government estimate the tribunal might have to deal with in a year, but it will be a tiny fraction of those flowing through the main court system. Why invent this nice little quango, which I presume will recruit people who already work for the Court Service who already know how to run a court? It does not matter whether the tribunal administers competition justice or commercial justice in the High Court or commercial court, because the basic principles of running a tribunal or court are much the same. I do not know who runs the industrial tribunals, but I suspect that, ultimately, it is the Court Service.

I was on the point of expressing surprise that the Lord Chancellor's Department did not express any interest in running the tribunal. Is this because it has no confidence in the tribunal as a body, or because the Department thinks it is a waste of public money and will not work? Has anyone there been asked? It is not really a matter for anyone so elevated as the Lord Chancellor, but for the Court Service. These are the people who should be asked; they know how to run things. They do not always do so beyond criticism. As Members of Parliament, we always become slightly involved where there are problems of listing cases; although, of course, we cannot be involved in the merits. Surely the Court Service should be doing this, and not some brand new quango—as my hon. Friend the Member for South Cambridgeshire points out—that has to be started from scratch.

Melanie Johnson (Labour, Welwyn Hatfield)

I tried to answer that question in response to the hon. Member for South Cambridgeshire. In essence, he was making the same point as the hon. Member for Eastbourne. The only additional costs specific to the Competition Service structure are for a non-appointed member. The rest of the leadership team—namely the president of the CAT and the registrar—are not new people. They are currently employed by the Competition Commission and will transfer to the Competition Service. Court

staff will not be employed, as hon. Members suggested, in relation to the possible role of the Lord Chancellor's Department in all of this.

We believe that this provides the right degree of independence, sensibly and pragmatically, recognising the fact that we need to provide a separate body to deal with this to allow the tribunal to carry on its work in a fully independent manner. I am at a loss as to why Opposition Members are getting so excited about this point. It is a very small point.

Andrew Lansley (Conservative, South Cambridgeshire)

We are not that excited.

Melanie Johnson (Labour, Welwyn Hatfield)

I got a different impression. This is a small point. We are meeting the need for independence.

Amendment agreed to.

Amendments made: No. 342, in page 128, line 13, leave out

'Commission and the Tribunal of their'

and insert 'Tribunal of its'.

No. 343, in page 128, line 17, leave out 'the Commission and'—[Miss Melanie Johnson.]

Ian Pearson (Labour, Dudley South)

On a point of order, Mr. Beard, will the motion to transfer clause 175 be discussed before we approve the clause or afterwards?

Nigel Beard (Labour, Bexleyheath and Crayford)

I am advised that it is to follow.

Ian Pearson (Labour, Dudley South)

I am obliged, Mr. Beard. I did not want to lose the clause.

Clause 175, as amended, ordered to stand part of the Bill.

Resolved,

That clause 175 be transferred to end of line 9 on page 6—[Miss Melanie Johnson.]

Schedule 10 - The Competition Service

Nigel Waterson (Conservative, Eastbourne)

I beg to move amendment No. 329, in page 228, line 34, at end insert—

'(3) The appointed members must include members who have business as well as competition expertise.'.

I am slightly lost, Mr. Beard. Did schedule 10 whiz past me? I gather that it may now be called something else.

The amendment is designed to amend schedule 10—I think. It is a CBI concern—we thoroughly support it—to stipulate that the Competition Service must comprise members with business as well as

competition experience. The Under-Secretary suggested, although I may be misquoting her, that they were looking for people with competition experience to staff the service. We can agree with that, up to a point. However, at least some of them should also have wider experience of the business world. We do not want people who have simply been civil servants engaged in competition matters, looking at things from their end of the telescope. We want people who have experience of businesses that deal with competition law, particularly with the sorts of inquiries and investigations that are under debate. In a nutshell, that is the purport of the amendment, which I commend to the Committee.

Jonathan Djanogly (Conservative, Huntingdon)

I have a general question about the sort of person who is to be employed by the Competition Service. Is it the intention that they will be civil servants or secondees from the private sector, as they are on the Takeover Panel?

Melanie Johnson (Labour, Welwyn Hatfield)

The Government do not support amendment No. 329 because it focuses exclusively on business. I am conscious of the fact that the amendment was tabled before Committee Members had a chance to see our changes, for which I apologise. I hope that, because the Competition Service's role has been significantly reduced solely to that of supporting the Competition Appeal Tribunal, the hon. Gentleman will consider withdrawing his amendment.

In respect of appointed members, there is a wide range of individuals who could usefully contribute something to the running of the service. As the amendment suggests, a business person might be able to add value, which I do not dispute. Equally, a member of the legal profession could contribute, given that the body is quasi-judicial. We may even consider appointing an existing member of the tribunal if one had an interest in playing a managerial role. In answer to the hon. Member for Huntingdon, people could come from a variety of backgrounds. Given the range of good candidates, we are reluctant to limit in statute the sorts of people eligible to apply.

As a result of amendments, the Competition Service will consist only of a president, a registrar and one or more appointed members, as I mentioned in earlier discussions. I hope that Opposition Members recognise the value of what could be contributed by a member of the legal profession to the body.

Nigel Waterson (Conservative, Eastbourne)

The Under-Secretary makes the valid point that the significance of the body, with all due respect to its likely members, has been downgraded; that may be the wrong word, but hon. Members know what I mean. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 346, in page 229, line 5, leave out paragraph 3 and insert—

'3 An appointed member shall hold and vacate office in accordance with the terms of his appointment (and is eligible for re-appointment).'

No. 347, in page 229, line 10, leave out 'the appointed members' and insert 'any appointed member'.

No. 348, in page 229, line 24, leave out from beginning to end of line 32 and insert—

'Staff

6 (1) The Service may, with the approval of the Secretary of State as to numbers and terms and conditions of service, appoint such staff as it may determine

(2) The persons to whom section 1 of the Superannuation Act 1972 (c.11) (persons to or in respect of whom benefits may be provided by schemes under that section) applies shall include the staff of the Service.

(3) The Service shall pay to the Minister for the Civil Service, at such times as he may direct, such sums as he may determine in respect of any increase attributable to sub-paragraph (2) in the sums payable out of money provided by Parliament under the Superannuation Act 1972 (c.11).'.—[Miss Melanie Johnson.]

Nigel Waterson (Conservative, Eastbourne)

I beg to move to amendment No. 330, in page 229, line 34, at end insert—

'subject to the principles of transparency, accountability, consistency and proportionality.'.

Nigel Beard (Labour, Bexleyheath and Crayford)

With this it will be convenient to discuss the following amendments: No. 331, in page 230, line 5, after 'anything', insert 'reasonably necessary'.

No. 332, in page 230, line 6, at end insert—

'subject to the principles of transparency, accountability, consistency and proportionality.'.

Nigel Waterson (Conservative, Eastbourne)

The basic thrust of the amendments raises an important point. The CBI, which suggested them, wants to ensure that procedures followed by the Competition Service complied with the five principles set out by the Better Regulation Task Force; namely, transparency, accountability, targeting, consistency and proportionality. To anticipate something that the Under-Secretary may say, we were not particularly excited by the amendments to begin with, and are even less so now—I cannot speak for my hon. Friend the Member for South Cambridgeshire—because of the way in which the role of the Competition Service has been changed. However, it is important that the amendments are raised and that we hear the Under-Secretary's comments.

Melanie Johnson (Labour, Welwyn Hatfield)

The hon. Gentleman recognises that changes may have made this point less significant than it might have been before. The provision that the Competition Service may regulate its own procedure is required to provide the service with the power that it needs to organise its own affairs. In fact, it is an entirely standard provision. The Competition Commission has the same power under paragraph 5 of schedule 7 of the Competition Act 1998. The service also needs the power to do anything that is calculated to facilitate or is conducive or incidental to the performance of its functions. That is not a carte blanche for the service to interfere in the affairs of others but is another standard provision. Again, the Competition Commission has the same power under paragraph 8 of schedule 7 of the Competition Act 1998.

Obviously, I agree that the principles suggested by amendments Nos. 330 and 332—transparency, accountability, consistency and proportionality—are all worthy. However, they cannot be delivered simply by writing down the words. In any case, there is a general requirement on the part of all public bodies to behave fairly. Equally, were the service ever to be the subject of judicial review, the court could consider whether it had acted proportionately. Therefore, we do not need to make specific provision for that. We are confident that we have put in place the necessary arrangements to ensure the accountability of the Competition Service. It will have an obligation to keep proper accounts and to comply with Cabinet Office guidelines as an executive NDPB. I hope that I have reassured the hon. Gentleman and that he will feel able to withdraw the amendment.

The rest of the debate is in Hansard.