Communications Bill

Public Bill Committee, 4 February 2003.

Standing Committee E

Clause 355 - Matters in relation to which OFCOM have competition functions

Andrew Lansley (Conservative, South Cambridgeshire)

I beg to move amendment No. 677, in

clause 355, page 306, line 39, leave out subsections (2) and (3).

I am trying to address the Minister, but I am looking straight into the sun—a cunning Government ploy on his part.

As we turn into the home straight, we come to what I hope will not be a minority pursuit. Before we discuss the next four clauses on concurrent powers, I should say that there is very little disagreement about the desirability of the concurrency of powers. If the amendments seem somewhat detailed, the Minister will understand that it is simply because we are trying to make sure not only that the provisions are implemented accurately, but that they can be understood. We may be doing more of the latter than the former.

The amendment relates to the definition of the matters in relation to which Ofcom will have competition functions concurrently with the Office of Fair Trading. Let us consider other legislation, including telecommunications legislation. The Director General of Telecommunications, or Oftel, has concurrent powers with the Office of Fair Trading in relation to the Competition Act 1998. The matters in relation to which they have concurrent powers are defined in several statutes. In the case of Oftel and the Telecommunications Act 1984, those matters are referred to as:

''commercial activities connected with telecommunications''.

In the Electricity Act 1989, they are referred to as:

''commercial activities connected with the generation, transmission or supply of electricity''.

As we shall see in clause 356, the concurrent powers of Ofcom will be defined as

''commercial activities connected communications matters.''

The question is what ''communications matters'' are for that purpose, as the Bill does not say that they are everything relating to communications for which Ofcom has powers. The simplicity of other legislation does not apply in this case. Unless I am much mistaken, the references in subsection (1)(a) to (e) are listed not so much because they must be included—a general definition of communications matters would do that—but because something is to be left out. I notice that newspapers are left out; perhaps other things have been too, but I have not

noticed them. We must ask whether that is that the right way to go about things.

My submission is that it is right to leave out newspapers. We do not wish Ofcom to have concurrent powers in relation to newspapers, because if it did, it would have to undertake market investigations on newspapers, for example, which it is not best placed to do. It would also have to consider questions of abuse of a dominant position in the newspaper industry, or anti-competitive practices. That would be something that no other sector regulator has sought to do. The Bill does not set up the sector regulatory powers that would be necessary to make Ofcom the best-placed regulator to deal with newspaper issues, so I am content that newspapers should be out of concurrency.

Subsections (2) and (3) would change the definition of ''communications matters''. I have tried to establish whether there is comparable power in other legislation for the scope of matters for which other sector regulators have concurrent powers to be amended by order, even if the order is made by the affirmative resolution. I cannot find such a power, but that is probably because the powers defined for other sector regulators are relevant to that sector regulator in the whole of the relevant Act. There is no intention of adding to or subtracting from the general scope of those sector regulators.

Why is the order-making power in the Bill? I take it that it is not because the Government attach an order-making power to everything in the Bill in case they want to change it subsequently. It is there for a reason, and that could be one of three reasons. First, the power could be in the Bill to extend the definition of communications matters to matters beyond the Bill. That is highly unlikely. The sector regulator, almost by definition, must regulate only matters for which it has powers, hence making it the best regulator to act.

Secondly, the power could be in the Bill to reduce the scope of competition functions if, for example, it were decided that Ofcom should have concurrent powers for telecommunications but not for broadcasting. That is a tenable proposition but it would be undesirable and should be done only through primary legislation and not statutory instrument. We debated competition in relation to broadcasting at great length and we regarded Ofcom as the best-placed regulator for that given all its powers in relation to the industry. The Independent Television Commission has had some, but not all, of the powers that Ofcom will have in relation to broadcasting.

Thirdly, the power could be in the Bill in order to extend the definition of communications matters in the Bill. That brings me back to newspapers because the power could be used to bring newspapers into the definition of communications matters. That is undesirable for reasons that I mentioned earlier.

I cannot envisage circumstances in which it would be desirable for the definition of communications matters to which concurrency applies to be changed. There is no precedent for a general order-making power on a contingent basis. Amendment No. 677

would remove the order-making power. There would be no adverse consequences to other parts of the Bill, but we would define communications matters for subsequent clauses when we applied concurrency.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I support the amendment. A large part of the justification for this chapter of the Bill in the explanatory notes relates to the comparison of the powers given to Ofcom in relation to the OFT and those that are available to other utility regulators. According to the notes, the Government intend to set up an arrangement between the OFT and Ofcom that is similar to existing arrangements.

My hon. Friend the Member for South Cambridgeshire (Mr. Lansley) did not raise a trivial point. There is considerable concern about the way in which Ofcom could expand its remit to inappropriate areas of activity on which it does not have expertise. There is a large worry about potential interference by the Government, and my hon. Friend touched on that. We shall shortly discuss Ofcom's role in newspaper mergers, but this is a sensitive area. The idea that Ofcom's remit could be altered by order of the Secretary of State causes some alarm and there are questions about how that provision might be implemented at a future date. As my hon. Friend said, the measure is largely unprecedented and it is bound to lead to greater concerns; it will also raise questions about why the Government have included the provision at this point. I hope that the Minister will take my hon. Friend's amendment seriously, because it touches on how Ofcom might be used in future, which is causing real fears outside the House. I hope that the Minister will reassure us.

Stephen Timms (Labour, East Ham)

Good morning, Mr. Atkinson. I welcome the consensual character of the remarks made by the hon. Member for South Cambridgeshire. Ofcom has an advisory role in relation to newspapers—we will discuss that matter further when we reach the relevant clause later this morning—and there is no intention that the concurrent powers should be extended into that medium. I hope that that assurance helps the Committee.

The ability to change the list in subsection (1) is included in recognition of the fact that the sector is changing rapidly and expanding fast. The legislative framework must be flexible enough to allow the regulator to deal with the changing products and services supplied by the sector and with the methods by which those are delivered to customers and the general public. We have said much in this Committee about the rapid pace of change in the sector and the provision would provide flexibility in the context of the speed of technological change. That is not an issue in respect of various other fields in which the concurrent powers can be exercised.

We must equip ourselves with the ability to respond quickly and effectively to changes that are likely to impact on Ofcom's ability to exercise concurrent powers with the OFT under the Competition Act

and the market review provisions of the Enterprise Act 2002. Our aim is that Ofcom should use general competition powers wherever those are most appropriate. The attainment of that aim could be thwarted if technological or market developments leave anomalous gaps in the coverage of Ofcom's powers that could only be filled by new primary legislation. I think that the Committee would agree that that would be an unfortunate outcome.

In response to the points that were made by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), changes to the definitions can only be made under an order that is approved by affirmative resolution of both Houses of Parliament—subsections (2) and (3) make that clear. It would not just be a matter for the Secretary of State. There would be an opportunity for scrutiny and debate by both Houses, should the need arise.

Andrew Lansley (Conservative, South Cambridgeshire)

I am grateful to the Minister. Heaven knows, we are all in favour of future-proofing the Bill. We can see that there is a specific way in which an order could be introduced to extend the definition in a way that we do not want, but there is no specific way in which an order could be used to extend it in a way that we do. Will the Minister give us a specific example of how the definition could change, in respect of technology, so that it does not encompass all communications matters?

Stephen Timms (Labour, East Ham)

No. I would not want to speculate about the specific ways in which the provision might be used. As one always says in such discussions, if we could envisage what the circumstances would be, we would have included them in the list in subsection (1). It is precisely because we do not know what the technology or the market developments will bring that we need the flexibility that subsections (2) and (3) provide. There is a requirement for an affirmative resolution by both Houses. Members of the Committee will recognise that that gives an effective safeguard against the concerns of the hon. Member for South Cambridgeshire. I have of course made explicit the fact that we have no intention of extending it to cover newspapers.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Obviously, it is convenient for Governments to include a provision in every Bill saying, ''We cannot envisage any circumstances in which we may want to change a piece of legislation, but we are not omnipotent and they may suddenly arise, so it would then be convenient to push through any changes by order.'' While the Minister is right to say that an order requires parliamentary scrutiny, those of us with experience of the scrutiny of orders are aware that that is a fairly limited process. It does not enable amendment. The scrutiny lasts, if we are lucky, for an hour and a half and at the end of it the Government Back Benchers wake up and stop signing their letters and say, ''Aye'', and that is the end of the matter. It does not inspire confidence that the proper protections and safeguards are maintained.

Peter Atkinson (Conservative, Hexham)

Order. The hon. Gentleman is making a speech, not an intervention.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I am sorry, Mr. Atkinson, I am getting carried away. The Minister has not come up

with any advantages under the subsection, but we have identified some disadvantages. If he felt it to be so necessary, perhaps we could return to the matter as primary legislation in the extreme event that it may or may not lead to change, rather than keep it in the Bill.

Stephen Timms (Labour, East Ham)

I am a little surprised by the tone of the hon. Gentleman's remarks, because I can recall numerous lengthy debates in Committees, when Opposition Members were extremely anxious to include in the Bill a requirement for an affirmative resolution in respect of a matter. The hon. Gentleman may belittle that as something of no significance, but neither he nor the hon. Member for South Cambridgeshire would make that point in other circumstances. I think that their normal line on that is right, in that the requirement for an affirmative resolution is a significant and substantial constraint on what the Government can do in future. It is a great reassurance to hon. Members in a wide range of circumstances and they should take a good deal of comfort from it in these circumstances, too.

The fact is that we do not know where the technology or the market will go in the future. All of us recognise that there are dramatic changes under way and I do not believe that the hon. Gentleman would suggest that they are about to stop. All of us recognise that they will continue and that is why we need the flexibility, with the significant constraint that no change could be made without an affirmative order of both Houses.

Andrew Lansley (Conservative, South Cambridgeshire)

I can hear the clatter of the ''Criminal Justice (Lock up anybody you want whenever you want to) Bill'', which is probably proceeding further along the Committee Corridor, even as we speak. After the consensual nature of my introduction to the amendment, the last thing that we will do is to disrupt those proceedings at such an early an hour, so we will not press the matter to a Division.

I wondered whether ''electronic'' would ever be technologically insufficient for the purpose of the Bill. If it were not a sufficient description of the communications networks and services, we would need not only an order under clause 356 to extend Ofcom's powers and to provide concurrency, but a whole raft of measures. That is one of the principal objections to an order. We cannot just extend Ofcom's powers by finding some small technological loophole. If there is a loophole, it will occur in various places throughout the Bill and the chances are that substantial changes will be needed, rather than a single order under clause 356 to extend concurrency. The Government should think about such matters long and hard—and I have no doubt they have done so. Therefore, I will not press this amendment to a Division now. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

John Whittingdale (Conservative, Maldon and East Chelmsford)

I seek clarification about a small matter that touches on an area that we have already

addressed—the wide range of activities that could come within the scope of Ofcom's competition functions.

I am particularly concerned about subsection (1)(d), which refers to

''apparatus used for providing or making available anything mentioned in the preceding paragraphs''.

The word ''apparatus'' can be defined quite widely. It could refer to equipment that might be maintained in telephone exchanges or broadcasting equipment. I am still not wholly convinced that Ofcom should have the right to scrutinise those items under its competition powers, but ''apparatus'' could be interpreted more broadly, so that it refers to televisions or radio receivers.

That might not be the Minister's intention, and he may be satisfied that ''apparatus'' is incapable of being interpreted in that way, but I seek his assurance on that. If we were to draw a comparison between the activities of Ofcom and those of Ofwat or Ofgem, for example, there is a possible interpretation that would mean that Ofwat might have some remit to scrutinise competition in the market for bath taps, or that Ofgem might be able to examine the hairdryer market. Ofcom should not get involved in the sale of apparatus that is used for communication services through telephones and so forth.

Andrew Lansley (Conservative, South Cambridgeshire)

The Government have told the Committee a little about television receivers, and monitors used for computing purposes and television receivers, and the answer to, ''Is it a television receiver?'' is, ''Does it receive television?'' When a monitor—or, sometimes, even a television—is purchased, it is not necessarily clear for what purpose it will be used. I presume that television sets that might be used for receiving broadcasting might be treated as apparatus for electronic network purposes.

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend raises an interesting point. It is a matter of some sadness to me that the clauses relating to the licence fee passed by without our having the opportunity to debate them, because that was a point that I would have liked to have explored.

I obtained a ministerial answer not so long ago that confirmed that a personal computer that can receive television signals—most new PCs have that capability—is a television receiver in the eyes of the television licensing centre and that therefore it should have a licence; it is debatable whether that is a method by which the television licensing centre is extending its grasp even further. If that argument applies with regard to whether a receiver needs a licence, it could also apply to apparatus related to electronic communication services. My hon. Friend has raised a point that increases my concern about this matter. The idea that Ofcom might be able to investigate competition in the supply of electronic equipment by Dixons, Currys and PC World seems absurd.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

Does the hon. Gentleman accept that there might be some exceptional circumstances? For example, in the mobile phone market, which has had financial difficulties, one can imagine the majority of manufacturers going out

of business. I certainly can envisage circumstances in which there might be few manufacturers left, and questions would be asked about the competitive nature of the market for the essential equipment needed to access those networks. I wonder whether the hon. Gentleman could envisage such circumstances, too.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I have some difficulty with the extent to which Oftel has intervened in the mobile phone market, because I think that that market is quite competitive. However, even in the mobile phone market, the fact that the sale of handsets is linked to the contract for service provision means that there is a reason why the sale of handsets should be examined by the regulator. There is no link between the sale of telephones, televisions or radios and the provision of services, so I do not think that there is any justification for the provisions. There is no concern about the lack of competition in that market, either. I recently purchased a television by means of the internet, and the extent to which competitive forces are now applying downward pressure on prices, particularly through internet marketing, is enormous. There is no need to include the provision.

Andrew Robathan (Conservative, Blaby)

Surely mobile phones have an international market. Ofcom has very little to do with whether mobile phones or television receivers should be considered apparatus and how they should be marketed. In such an international market, one narrow national regulator should not have such authority.

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend is right. This is a subject in which the principles of free trade apply. I do not want to spend too much time on the clause, but it raises an issue that we mentioned in debate on the amendment tabled by my hon. Friend the Member for South Cambridgeshire—the scope that the Bill seems to give Ofcom and the Government through powers under competition legislation. Those powers are extensive, and we should be careful to ensure that they are properly focused on the right part of the market. We should take care that they cannot be extended, either at the whim of the Secretary of State or because of the fuzzy drafting of the clause, to parts of the market in which there is no particular concern about the state of competition. In particular, the powers should not relate to matters about which Ofcom has no great knowledge, experience or expertise that is not already available from the Office of Fair Trading.

Michael Fabricant (Conservative, Lichfield)

I hate to rise in disagreement—although it is only a slight disagreement—with my hon. Friend, but I would not criticise the drafting of the clause as being fuzzy. The issue is more the fuzzy logic with regard to the provision of electronic equipment, its interface and convergence, which is after all what the Bill is all about.

Several hon. Members have said that there are huge overlaps between types of electronic equipment. My hon. Friend the Member for Maldon and East Chelmsford, with whom I agree in this respect, has pointed out that a computer can now be used as a

television reception device. That poses a question. I know that what I am about to say partly comes under clause 354, but I am relating the issue to clause 355. Every retailer who sells a television must report the name and address of the purchaser to the licensing authorities. Would the same obligation apply in the case of someone who goes into PC World and buys a TV reception card?

The House is going through a rather traumatic time, as we are all being told to upgrade our computers to Windows 2000, and Members of Parliament are being supplied with compact computers.

Peter Atkinson (Conservative, Hexham)

Order. This is a very interesting debate, and I do not want to stop the hon. Gentleman just as he is starting, but I remind him that we are debating competition law. Perhaps he could confine his remarks to that subject.

Michael Fabricant (Conservative, Lichfield)

The question is, would the provision of a TV reception card be within the orbit of clause 355? Will the Minister explain whether Ofcom would be beyond its remit in determining what provision of equipment or services might come under competition law, which would involve interference with the market? I suspect that the Minister will answer that Ofcom will take a sensible approach, but I share the concern of my hon. Friend the Member for Maldon and East Chelmsford. The drafting of clause 355 must be future proof, but because of the drafting, were Ofcom not an enlightened organisation, it might go beyond the remit originally anticipated by the Minister. For example, subsection (1)(a) refers to

''the provision of electronic communications networks'',

which could include cable television.

One could go into PC World and buy a network card—a PCM1A card is available, to return to the compact computers that have been issued to all Members of Parliament. If we were to buy a network card and install it in our computers at home, would that be within the orbit of clause 355(1)(a)? It is highly unlikely but not impossible. Perhaps my hon. Friend the Member for Maldon and East Chelmsford was right and I was wrong to disagree that the drafting of the clause was fuzzy.

Mark Hoban (Conservative, Fareham)

The provision of cards may not fall within paragraph (a), but it may fall within paragraph (d), which refers to

''apparatus used for providing or making available anything mentioned in the preceding paragraphs''.

Michael Fabricant (Conservative, Lichfield)

My hon. Friend has hit the nail on the head. He has shown that absolutely nothing that could be connected to a network or used for any form of communication is precluded from clause 355.

The issue is an interesting one to explore. If one is on the internet, one is very much part of a communications network. I challenge the Minister with a different question: instead of asking whether Ofcom might go beyond its brief, what areas of communication would not fall under clause 355?

Chris Bryant (Labour, Rhondda)

This speech.

Michael Fabricant (Conservative, Lichfield)

What possible area of network communications could not come under clause 355 and be specifically excluded? There is a real risk that a less

enlightened board of Ofcom would go beyond the remit of the Bill. Several hon. Members have said that we will be back in Committee in three or four years with another Broadcasting or Communications Bill. God forbid!

Chris Bryant (Labour, Rhondda)

Take it easy.

Michael Fabricant (Conservative, Lichfield)

The hon. Gentleman seeks to intervene and delay me in my effort to tease certain answers from the Minister. Permit me to continue my teasing without interruption. I seek your protection, Mr. Atkinson—[Hon. Members: ''Ah!'']. What areas specifically relating to network communication do not come under the orbit of competition law referred to in clause 355? Although I appreciate that this is an attempt to future-proof the legislation, so that we shall not find ourselves in four of five years' time back here in Committee Room 10 under your enlightened chairmanship, Mr. Atkinson—

Peter Atkinson (Conservative, Hexham)

I will not make the same mistake twice.

Michael Fabricant (Conservative, Lichfield)

The Chairman says that he will not make the same mistake twice. However, I suspect that he is enjoying this interesting debate. I would like to find out which areas will be excluded. Does the Minister not think that, by future-proofing the legislation, he has made the locus of clause 355 too broad? How can he ensure that future generations within Ofcom will listen to what he has said, rather than adhering precisely to the provisions of the clause, which show no bounds?

Andrew Robathan (Conservative, Blaby)

I support my hon. Friend the Member for Maldon and East Chelmsford. We have had a particularly entertaining discussion thanks, particularly, to my hon. Friend the Member for Lichfield (Michael Fabricant) talking in his inimitable way about the broad locus of the Bill. Nevertheless the clause is important, because it covers matters in relation to which Ofcom should have competition functions. If one were standing back, one might assume that that was the limit of Ofcom's power, and what it should consider. However, as both of my hon. Friends have pointed out, there seem to be no limits. If we talk about apparatus, we are not sure what it is. We have debated the matter before, and I do not want to revisit old debates, but there is still no clarity—[Interruption.] Hon. Members say that it was two months ago. We were not sitting then, but that is nearly the case. I hope that we shall not be sitting in two months' time, God willing. We still have no clarity about what will be covered by, for instance, apparatus. There has been a suggestion that Ofcom might need to rule on mobile telephones, but I do not think that that is the case. It is an international market; Nokia is marketing telephones in Japan. We need to consider how to get our Government out of involvement in such matters rather than involving a Government agency—in this case, Ofcom—in matters that are best left to the market. I hope that the Minister will finally clarify the limits of Ofcom's powers relating to apparatus and other matters defined in the Bill. The Bill should be about limiting powers, not about broadening them.

Stephen Timms (Labour, East Ham)

The hon. Member for Lichfield made a promising start by disagreeing with his hon. Friend, but he lost his way subsequently.

Together with clauses 356 and 357, the clause gives Ofcom concurrent powers with those of the OFT under general competition law in respect of communications matters, including broadcasting and related matters, but not for mergers. The scope of the items listed in subsection (1) needs to be understood clearly in that context. As its title indicates, the clause is about matters in relation to which Ofcom has competition functions alongside the OFT. The clause sets out the range of matters in respect of which it has that concurrency in the full range of powers to deal with cases under the Competition Act and the market investigation provisions of the Enterprise Act.

Hon. Members have asked me to spell out the breadth of the application of the clause. At present, the situation is anomalous. The Director General of Telecommunications has concurrency with the OFT with regard to telecommunications and related matters and the arrangements work well. However, for historical reasons, the ITC and the Radio Authority do not have similar concurrent powers in respect of broadcasting matters. At the moment, the relevant powers are exercised by the OFT alone, and the clause will ensure that Ofcom has such powers, and not only in respect of telecommunications.

Andrew Robathan (Conservative, Blaby)

On that point, it is all very well for the Minister to say that he is making the provisions the same and more logical, but he has not said whether it is desirable for Ofcom to have such powers.

Stephen Timms (Labour, East Ham)

It is highly desirable. It would make no sense to create Ofcom as the independent regulator for the whole communications sector, but not to give it powers to deal with competition issues that arise in that sector under general competition law and the sector-specific regime. That would be particularly illogical given that we want Ofcom to use the Competition Act in preference to sectoral powers wherever that would be a more appropriate way of proceeding. The clause will allow it do that.

As regards the reference to apparatus, we have been round that particular course several times in our debates. We are including provisions to allow Ofcom to apply sectoral competition rules to the supply of communications apparatus in certain circumstances. We have had several interesting discussions about the number of people who still rent their telephones from the incumbent telephony operator, and we have indeed established that the hon. Member for Ryedale (Mr. Greenway) is one such person. We also referred to the fact that many such telephones are still hard wired, which is why we need to keep the ability to address the issue in the Bill. I refer hon. Members back to clause 89, on which we had the major debate on the subject.

Mark Hoban (Conservative, Fareham)

The Minister pointed out that we have had several debates about hard wires and rented apparatus, and I wonder whether the cost of giving everyone a free telephone—

Peter Atkinson (Conservative, Hexham)

Order. That is nothing to do with the clause.

Stephen Timms (Labour, East Ham)

We have debated the matter extensively, and I simply remind the Committee of what I said—I think that it was in response to the hon. Member for Lichfield. We will look at the definition of apparatus to ensure that there are no difficulties and we will return to the subject on Report if necessary.

Michael Fabricant (Conservative, Lichfield)

The whole thrust of my point may have been hidden by the other issues that I was discussing. I was asking whether any areas of networking would not be covered by the clause.

Stephen Timms (Labour, East Ham)

No. The communications sector, as defined in the clause, is covered. We want Ofcom to be able to exercise concurrent powers with the Director General of Fair Trading in the whole communications sector, as defined in the clause. We do not want to exclude any part of the electronic communications market. Given that assurance, I hope that the hon. Gentleman will feel that the clause is a welcome addition to the Bill.

Question put and agreed to.

Clause 355 ordered to stand part of the Bill.

Clause 356 - OFCOM's functions under Part 4 of the Enterprise Act 2002

Andrew Lansley (Conservative, South Cambridgeshire)

I beg to move amendment No. 675, in

clause 356, page 307, line 20, after '(b)', insert

'in any other provision of that Act,'.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss amendment No. 676, in

clause 357, page 308, line 40, after '(b)', insert

'in any other provision of that Act,'.

Andrew Lansley (Conservative, South Cambridgeshire)

As the Minister briefly informed us, clause 356 is about the extension of concurrent powers to Ofcom under the Enterprise Act. At the moment, concurrency does not apply to the ITC, but it does apply to Oftel. In the clause, we are broadening the concurrency that Ofcom enjoys compared with Oftel.

There are two groups of amendments to the clause, and the second is the more substantive. In the manner of my hon. Friend the Member for Lichfield, I shall therefore narrow my locus for a moment and talk about a specific drafting point. I freely confess that I may simply not understand why the language is as it is, and I should be grateful if the Minister would enlighten me.

The provision in clause 356(3) is mirrored in part 2 of schedule 9 on page 248 of the Enterprise Act in relation to the Director General of Telecommunications, although the language is different from that in clause 356. Why is it different? Amendment No. 675 relates to the Enterprise Act 2002 and amendment No. 676 relates to the Competition Act 1998. Paragraph 2(6) in part 2 of schedule 10 of the Competition Act contains language that I assume is intended to be mirrored in clause 357(3). The two amendments deal with the same issue but in relation to two different statutes.

Why is the wording different? I may be wrong, but let me say what I think. The approach seems to be that if, in relation to part 4 of the Enterprise Act, one

requires references to the OFT to be construed as including references to Ofcom, it may be assumed unnecessary to make any similar assumption about any other part of the Act. Almost by definition, one need not specify where the context requires that outside part 4 because, outside part 4, references to the OFT will not be construed as references to Ofcom and will be construed as references to Ofcom or to a sector regulator only where the original Act—the Enterprise Act or Competition Act—requires them to be so construed.

Now let me say why that is not sufficient. Of course, part 4 of the Enterprise Act or, in respect of clause 357, part 1 of the Competition Act are not the only provisions describing powers in the hands of the OFT and the sector regulators, which need to be used concurrently. There are other powers. For example, section 203 of the Enterprise Act relates to powers of entry. As far as I am aware, it is intended that, under the Enterprise Act, powers of entry should be used concurrently by sector regulators and the OFT. If powers are held concurrently, they are not in part 4 but in part 7. In so far as they relate to part 4, it might be held that, by implication, references to the OFT should be construed also as references to Ofcom, but not necessarily so. It seems to me that we should be prepared for the read-across to go outside the relevant part of the legislation.

That brings us back to the language of the Enterprise Act, which is different. It says,

''references . . . shall be construed as including references to Ofcom except—

in sections 166 and 171;''—

we need not detain ourselves with what that means—

''and

(b) where the context otherwise requires.''

But in the absence of the amendment,

''where the context otherwise requires''

would relate only to part 4. However, it should relate also to other parts of the Bill. The same is true, for instance, in relation to section 204 of the Enterprise Act on the disqualification of directors, which is a concurrent power. I paid slightly less attention to that part of the Enterprise Act when I was a member of the Committee that considered that legislation than I did to this part of the Communications Bill. Perhaps I missed it.

It seems that investigation powers under sections 62 and 64 of the Competition Act can be used concurrently, and that should be done in a similar fashion to that in which we relate concurrency to Ofcom. My question is, in a nutshell, whether the drafting of the Enterprise Act and the Competition Act is wrong—perhaps that is a bit harsh on the draftsmen; I should have said unnecessary. Is it unnecessarily wide, and is the drafting used in the Bill right—narrow, but necessarily or correctly narrow—or have we inadvertently in clauses 356 and 357 narrowed our focus—or narrowed our locus, as my hon. Friend the Member for Lichfield might say—onto part 4 of the Enterprise Act and part 1 of the

Competition Act, leaving out other parts of those Acts that ought to have been included?

Stephen Timms (Labour, East Ham)

I think that I can give the hon. Gentleman the reassurance that he seeks. The provisions of subsection (3) are confined to part 4 of the Enterprise Act 2002. In other words, the wording of the subsection can be used to extend concurrent powers to Ofcom only insofar as those powers are referred to in part 4 of the Enterprise Act. Even without the amendment, subsection (3) cannot be used to extend powers from part 7 of the Enterprise Act. That raises a rather different question, however, about the powers in part 7 of the Enterprise Act mentioned by the hon. Gentleman that ought to be applied to Ofcom.

In the context of this debate, the point is that subsection (3) does not convey those powers to Ofcom. However, there are investigation powers in part 4 and in section 174, and other powers appear in part 3—for example, requirements about the attendance of witnesses are applied by section 176. On reflection, the hon. Gentleman should accept that adding the words proposed in the amendment would not change the meaning, because that meaning can be used only to give Ofcom powers that are in part 4 of the Enterprise Act—or, in the case of clause 357, in part 1 of the Competition Act. The other powers to which he referred, which may well be needed, are applied elsewhere in the Bill.

Andrew Lansley (Conservative, South Cambridgeshire)

First, I want to be sure that Ofcom requires no power as a concurrent regulator in relation to those two Acts that is reflected in other parts of the legislation but that is not applied by virtue of part 4 of the Enterprise Act and part 1 of the Competition Act.

Secondly, is the drafting of the Enterprise Act, in so far as it is the same as the Competition Act for those purposes, wider than is needed? Therefore, the drafting is different for the Communications Bill. I want to be absolutely sure that the Minister is clear that the drafting is different and does not need to be the same as it was for the other pieces of legislation, including the Enterprise Act, which was drafted only last year.

Stephen Timms (Labour, East Ham)

I am not entirely clear about the hon. Gentleman's second question. I would need to look at the precise drafting of the Enterprise Act, but I am confident that it is correct. I am equally confident that the job that must be done is done by the wording in the Bill.

Turning to the hon. Gentleman's first question, the answer is yes. We need Ofcom to be able to have certain powers, and those powers are contained elsewhere in the Bill. Clause 356(3) is restricted to the powers in part 4 of the Enterprise Act. Any other powers that are needed are set out elsewhere.

Andrew Lansley (Conservative, South Cambridgeshire)

I am grateful to the Minister, and I take his point. I did not understand that when he first made his point about powers elsewhere that he was referring to clauses 174 and 176 in this Bill, not the Enterprise Act. On that basis, and especially because the Minister said that the Government would be sure about the disparity in drafting, I am content to leave the matter to further consideration.

I am not attempting to make a point about drafting, Mr. Atkinson. Drafting is intensely difficult. Even the drafting of legislation such as the Enterprise Act is capable of improvement—everything is capable of improvement. It may be that the Bill works better as a formulation than the Enterprise Act did last year. Unless the Minister wishes to intervene, I shall be happy to seek leave to withdraw the amendment.

Stephen Timms (Labour, East Ham)

I need to clarify that my references were to sections 174 and 176 of the Enterprise Act, and not to the Communications Bill.

Andrew Lansley (Conservative, South Cambridgeshire)

Clearly, Mr. Atkinson, my research for amendments Nos. 675 and 676 took me only so far. Although, in iteration in Committee, one can read, think and look at the same time, I, too, shall look at sections 174 and 176 to see whether they do the job. However, I am content that it is perfectly obvious that a train of thought has been followed that has been designed to ensure that everything is grouped back in by application under part 4 of the Enterprise Act, and that the required powers are there. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Andrew Lansley (Conservative, South Cambridgeshire)

I beg to move amendment No.678, in

clause 356, page 307, line 29, at end insert

'and they shall together agree who shall exercise functions in relation to that matter.'.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss amendment No.679, in

clause 356, page 308, line 21, at end add—

'(13) The Secretary of State may make regulations for the purpose of coordinating the performance of functions under Part 4 of the Enterprise Act 2002 which are exercisable concurrently by the Office of Fair Trading and OFCOM by virtue of this section.'.

Andrew Lansley (Conservative, South Cambridgeshire)

This might be a little simpler, amazingly. The amendments probably cut to the purpose of the clause in more accessible ways for those who read our debates.

Concurrency regulations under the Competition Act were made in 2000, and I do not think that subsequent regulations have been made. Disappointingly, much as we value the presence of the Minister from the Department of Trade and Industry, it was the Minister for Tourism, Film and Broadcasting, who, as the Parliamentary Under-Secretary of State for Consumer and Corporate Affairs, signed the regulations. I was looking forward to teasing him about his recollection of his own regulations: I suspect that he would know them pretty well.

The concurrency regulations are important from the point of view of industry's understanding of the matter, and of reassuring it that it will not suffer double jeopardy. When the Joint Committee began its work, the risk of double jeopardy was one of the concerns that were raised about the nature of Ofcom with regard to the Communications Bill. Double jeopardy can occur only if the concurrent powers are used in ways that are duplicatory, and if they are improperly co-ordinated between the two regulators. It was the view of the Joint Committee—and my personal view—that the concerns that were raised

could not be substantiated by evidence: examples from other sectors give no reason to suppose that it is impossible for concurrency to be pursued in a way that does not give rise to double jeopardy. Indeed, it should enable competition powers to be used more effectively. As the Minister rightly said, in so far as sector powers are being used as well, it offers a route by which ex ante powers and sector specific powers can progressively be dispensed with in favour of competition based powers, which—in the longer term—industry will find are more congenial to the maintenance of a market structure. Therefore, I have no difficulty with the intentions of clause 356.

There is a difference between clause 356, which deals with the Enterprise Act, and clause 357, which addresses the Communications Act. When we come to look at concurrency in relation to the Competition Act, we will find that there is already a power in that Act for the making of regulations: regulations have been made, and we can see the process by which concurrency works. With regard to the Enterprise Act, there is no comparable power that requires or permits the making of regulations for how concurrency works.

It might be the case that, by implication, concurrency works in relation to the Enterprise Act in similar ways to how it works under the Competition Act. Indeed, when one looks through clause 356, that seems to be what is going on. The manner in which concurrency should be exercised between the OFT and Ofcom is specified in clause 356, even though it is not specified in the Enterprise Act: for example, there is a requirement to consult in subsection (5). The requirement in subsection (6) that if one of those bodies were to act the other should not, specifically excludes the double jeopardy point.

The strongest principle in the regulations, and the one on which Ministers should rely when they introduce legislation on concurrency, is that the best placed regulator acts. That is enshrined in the guidance on concurrency that accompanies the Competition Act. Paragraph 3.8 states:

''The general principle will be that a case will be dealt with by whichever of the Director General of Fair Trading or the relevant regulator is better, or best, placed to do so.''

However, there is a problem with how that might work, because the first regulator to act is not necessarily the best placed one. The guidance issued under the Competition Act contemplates that one regulator might initiate proceedings but conclude after consultation that the other regulator is best placed to act and there is power to transfer a case from one regulator to another, but nothing in clause 356 contemplates the possibility of such a transfer.

Paragraph 3.10 of the guidance issued under the Competition Act states:

''Once the matter has been determined under Regulations 5 or 6, Regulation 7 also prohibits any other authority from exercising prescribed functions in relation to that case''—

so regulation 7 in the statutory instrument is a parallel to subsection (6)—

''unless it is formally transferred to that authority under the procedures laid down in Regulation 8.''

Although the principle that if one regulator starts, the other should not exercise functions is established in the regulations under the 1998 Act, those regulations allow for the subsequent transfer of cases. Unless I misunderstand the legislation, the provisions exclude the possibility of a transfer of a case between two regulators.

Is there an omission? That is the point that I was coming to on the amendments. Amendment No. 679 would permit the Secretary of State to

''make regulations for the purpose of coordinating the performance of functions''.

The transfer of functions is merely one example of the way in which regulations could be made for that purpose.

Amendment No. 678 would add to subsection (5). Whereas the OFT and Ofcom have to consult each other before exercising functions, the purpose of the amendment is to make sure that neither regulator engages—I hope that this will never happen—in a pre-emptive strike on the other. They would be required to agree. One could not merely consult the other and then act. If they did not agree, under subsection (8) they would be required to go to the Secretary of State for a determination as to how the matter should be dealt with. It seems to me that those two bodies should not only consult, but agree. That is implied by the structure of the clause.

Amendment No. 678 is consistent with the intention of subsection (5) and closes off what might otherwise be a risk of something that I hope would not occur. On amendment No. 679, in so far as there might be issues dealt with in the regulations under the Competition Act that appear not to be properly dealt with under either the Enterprise Act or the clause, regulations could be made, for example, on the transfer of functions.

Stephen Timms (Labour, East Ham)

I agree that the exercise by the OFT and Ofcom of their concurrent powers under part 4 of the Enterprise Act needs to operate smoothly, fairly and effectively. That has been the case with the OFT and sectoral regulators under the Competition Act, but the amendments would introduce some unnecessary additional provisions into the arrangement, and I therefore hope that hon. Members agree that they are not appropriate.

Amendment No. 678 would require the OFT and Ofcom not merely to consult each other before deciding which of them should take a case under the 2002 Act, but to agree which of them should take that case, as the hon. Member for South Cambridgeshire has explained. That is indeed the position under the concurrency regulations that my hon. Friend the Minister for Tourism, Film and Broadcasting issued in relation to the Competition Act. It is certainly right that we need to prevent double jeopardy and duplication of action by the concurrent regulators. However, I hope that the hon. Gentleman would agree that substantively the same practical effect is achieved under the Bill in subsection (6), which provides that

''Neither the Office of Fair Trading nor OFCOM shall exercise . . . functions which are exercisable concurrently . . . if functions

which are so exercisable have been exercised in relation to that matter by the other.''

Andrew Lansley (Conservative, South Cambridgeshire)

If the problem were double jeopardy, that would be fine. However, as I have explained, the problem is that in those circumstances, which I freely acknowledge have not to my knowledge arisen, whereby one regulator—say, Ofcom if it had a less enlightened board—decided to engage in a market investigation but was not best placed to act, there would be nothing in the provisions to stop Ofcom pursuing that route after consultation with the OFT and simply using subsection (6) to be the first to act, thereby closing off the possibility of action by the OFT.

Stephen Timms (Labour, East Ham)

To conclude the point that I was making about the difference between the arrangements under the Competition Act and the Enterprise Act, the formulation is somewhat different in each, but the effect is the same.

The hon. Gentleman is, I think, raising a point about the possibility of transfers. He was arguing earlier that in some circumstances it should be possible to bring about a transfer between the two. Transfers can be handled by administrative arrangements between the regulators, as happens in relation to the Enterprise Act. These things work by way of a co-ordination arrangement, through the concurrency working party, a group of officials from the OFT and the sectoral regulators set up when the Competition Act was introduced. That has worked well.

Andrew Lansley (Conservative, South Cambridgeshire)

But that is precisely where the difference between the Competition Act, the Enterprise Act and the current proposal is relevant. Under the Competition Act, regulation 8 allows for transfers. Subsection (6), however, implies that once either Ofcom or the OFT had begun to act, transfers would not be possible. In fact, they are expressly excluded in primary legislation. That is not how the Competition Act works. There is nothing in it to preclude or allow transfers. The matter is dealt with in secondary legislation. Under the Bill, primary legislation will block transfers.

Stephen Timms (Labour, East Ham)

No, because administrative arrangements between the regulators will still be possible, as is the case under the Enterprise Act.

Amendment No. 679 would replicate for the Enterprise Act the powers in the Competition Act for the Secretary of State to make concurrency regulations. We have not made provision for that in the Bill, because, first, the clause as it stands deals with the possibility of double jeopardy, as I have said. Secondly, whereas the regulations made under the Competition Act contain various detailed provisions about the way in which these matters will be handled—for example, with regard to telling those concerned which of the concurrent bodies is dealing with their case—we do not consider that necessary for the Enterprise Act.

That is partly because the Enterprise Act already provides—for example at section 169—a process in which those with an interest in a part 4 investigation must be consulted before any reference is made to the

Competition Commission. Thus, interested parties will know before any substantive decisions are taken as to who is in charge of the case. Another reason is that—in contrast to the situation under the Competition Act, when concurrency was a relatively new concept and more sectoral regulators were involved—the Bill deals with concurrency as an established concept in one sector, and we have created Ofcom as the independent regulator for that sector. All that needs to be done is for Ofcom to work out the detail of the processes that it will adopt in the relevant context, in conjunction with the OFT.

In fact, the OFT is already in the process of preparing more detailed guidelines on the operation of the Enterprise Act, in co-operation with the other sector regulators with concurrent powers, including the bodies whose activities will be subsumed into Ofcom. There is thus already good co-ordination on the matters in question, and I look forward to its continuing. The powers in clause 356 are drafted to fit with the powers in the Enterprise Act and they mirror those for other regulated sectors. The hon. Gentleman is right to note that the approach is slightly different from that in the Competition Act, but I hope that I have persuaded him that sufficient procedural safeguards are built into the provisions as drafted.

Both the amendments are unnecessary, and I hope that the hon. Gentleman will feel able to withdraw them.

Andrew Lansley (Conservative, South Cambridgeshire)

I am afraid that on this occasion the Minister has not persuaded me at all. Indeed, he tried at one point to have things both ways. He argued that there was no need for amendments like mine because the best placed regulator would act in the first instance, under the Enterprise Act, and because there is a duty to consult under section 169 of that Act, and so on—by extension, he argued that it would always be true that the first regulator to act would be the best place to act; he argued also that, in any case, administratively, the two regulators could transfer functions between them if, in any circumstance, one were to act but the other was best placed. He cannot have it both ways. I may be wrong, but it seems to me, on the face of it, that the second argument is certainly not true. I cannot see how administrative arrangements between the regulators—still less if those arrangements were not covered by secondary legislation—could override what appears to be a requirement under clause 356(6).

I am even slightly worried about whether, if Ofcom were to begin the process of consultation on a market investigation, it would be construed as exercising

''in relation to any matter functions which are exercisable concurrently''.

Once Ofcom starts the process—even the process of consulting about a market investigation—will it, by virtue of subsection (6), be required to continue, even if the scope of the market investigation would make it better for the Office of Fair Trading to act?

This is not a purely academic and theoretical argument. Many people in the industry feel that over time there will be merit in market investigations being conducted by the OFT, even when it might be possible

for Ofcom to conduct them, because of the benefit of having them carried out by a more independent body than Ofcom. As time goes on, in relation to some of the issues, Ofcom has become intimately connected to the market structure that has been created by virtue of licence conditions relating to broadcasting and significant market power conditions that have been set under telecommunications legislation.

I am not content that the structure of the Bill properly provides yet for the degree of flexibility that should be available under the Enterprise Act. The issue is not about double jeopardy. I am pretty sure that in more or less any circumstances the regulators will avoid that. It is about the achievement of the general principle that the best-placed regulator should be the one to act. It is also about establishing the flexibility that would enable that to happen. The important points are, first, that the two regulators should not only consult one another, but be required to agree, and, secondly, that they should have the ability to transfer cases if it becomes apparent, even after the commencement of functions, that a regulator—probably Ofcom—should transfer to the OFT.

I shall not press the amendment to a vote because I have made my point and I have no doubt that the Government's intentions are the same as mine. There is no difference over policy—only over drafting—and the last thing that I should claim would be the ability to draft legislation. My amendments might not be right. However, the Government need to think hard about the matter. If they agree with me, there may be room for more amendment to clause 356. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

John Whittingdale (Conservative, Maldon and East Chelmsford)

I want to raise a specific matter about the clause and then to make a more general observation about what the clause is intended to achieve.

The first matter amounts to a suggested change. I apologise to the Committee, because had I thought about it earlier I should have tabled it as an amendment. As I did not do so, perhaps I may at least draw it to the Minister's attention. Much of our debate on the clause has been about trying to reproduce the powers and the terms set out in the Enterprise Act, as well as the general application of competition law.

My particular concern is about the wording of the Bill, which is different from that in other legislation in cases where it would be sensible and consistent to use the same wording. I am looking particularly at subsection (7)(a), which imposes the duty on Ofcom, for the purpose of assisting the Competition Commission in carrying out an investigation, to give the commission

''any information which . . . relates to matters falling within the scope of the investigation,''

and, under subsection (7)(b),

''any other assistance which the Commission may require''.

It might be more sensible to insert the word ''reasonably'' in relation to both information and assistance, so it would read ''which reasonably relates'' and ''may reasonably require''. If we were to do that, it would put the measure on a par with the requirements on the OFT in part 4 of the Enterprise Act. In the corresponding provision of that Act, the OFT must act reasonably in relation to providing information to the Competition Commission once it has referred the matter to it for investigation, and it may give such assistance as the Commission may reasonably require. Such an amendment, had I had time to table it, would have phrased the Bill so that it mirrored the Enterprise Act. I apologise to the Minister that it is not an amendment, but I put it to him for consideration.

While he is reflecting on that, might I make a more general observation in relation to the clause. We are dealing with the functions carried out by Ofcom under the terms of the Enterprise Act. I was fortunate enough to debate that Act on Second Reading. In general, I support it. My hon. Friend the Member for South Cambridgeshire and I are graduates of the Tebbit school. When Lord Tebbit was Secretary of State for Trade and Industry, he laid down the principle that references to the competition authorities for intervention should be made only on competition grounds. Subsequent Secretaries of State have followed that rule, with varying degrees of rigour. Some notable exceptions occurred in the early life of this Government, when references were made that seemed to have little to do with competition. The clause concerns competition and the Enterprise Act essentially puts that in statute and removes ministerial interference.

In the next section we shall debate the specific exemption to that principle, which relates to newspaper mergers. However, before we do so, I should like to say something about the way in which the Enterprise Act is framed. I expressed a concern during debates on the Act that applies equally to this clause, which deals with Ofcom's carrying out its functions under the Enterprise Act in terms of the communications market.

I believe in the power of the market and competition, as do my hon. Friends. It has been argued that we do not need to have competition references; if there is abuse of market power, or a cartel is in operation, somebody will enter the market or somebody else will undercut, and in the long term there will be a market-based solution. However, I am persuaded that the market does not always act quickly or effectively enough. I commend to the Committee the work of Dr. Irwin Stelzer, who has written persuasively on the matter. He is a fine advocate of the free market and of competition policy. If he believes that it is necessary for Government to intervene to prevent abuse, who am I to question him? I have concerns about paragraph 723 of the explanatory notes to clause 356, which states:

''Part 4 of the Enterprise Act 2002 will replace the monopoly provisions of the Fair Trading Act 1973 with a new regime of 'marketing investigations'.''

It goes on to say that market investigations might be necessary

''where competition does not appear to be working well, but where there is no apparent breach of existing competition law.''

It then says:

''An example of the sort of circumstances in which a market investigation might take place would be a situation where a few large firms supplied almost the whole of the market and, without there being any agreement between them, they all tended to follow parallel courses of conduct, while new competitors faced significant barriers to entry''

I expressed some concerns at the time of the Enterprise Act because, essentially, it boils down to Ministers thinking that there may be something dodgy going on but not having evidence to back up their suspicions. That has led inevitably to the imposition of huge costs on the industries that have been subjected to investigations. I would like to give a couple of examples because they illustrate the dangers.

The first, although it is not directly the responsibility of Ofcom it is related, is the record industry. There have been stories of the rigging of markets and the pricing of compact disks in particular over many, many years. In 1993, a year-long investigation by the Monopolies and Mergers Commission—

Peter Atkinson (Conservative, Hexham)

Order. I would be grateful to the hon. Gentleman if he told me what his argument has to do with the very precise provisions of clause 356, which deal with the functions of Ofcom under part 4 of the Enterprise Act. I know that he is going on a wide preamble; nevertheless, I wish that he would return to the subject matter as soon as possible.

John Whittingdale (Conservative, Maldon and East Chelmsford)

My argument is relevant because clause 356 deals with that part of the communications market in which Ofcom applies Enterprise Act powers. Therefore my concerns about how such powers can be used apply equally to Ofcom in looking at the communications market as they do to how the Office of Fair Trading can use its new powers under the Enterprise Act. It is perfectly relevant to consider examples in which Enterprise Act powers have been used because the dangers that arise from them are equally applicable to how Ofcom might interpret its powers under clause 356.

It is valuable to consider a few examples. The example of the record industry is a very good one because it was subject to a full investigation by the Monopolies and Mergers Commission, which cleared the industry of any wrongdoing.

Michael Fabricant (Conservative, Lichfield)

Is my hon. Friend aware that the old Select Committee on National Heritage also conducted an inquiry and confirmed that there was a monopoly in the record industry?

Peter Atkinson (Conservative, Hexham)

Order. Once again, we are debating examples. I have told the hon. Member for Maldon and East Chelmsford that his remarks were going wide of the clause and I hoped that he was bringing his them to a conclusion. I would be grateful if he did not engage in the debate suggested by the hon. Member for Lichfield.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I merely suggest to my hon. Friend the Member for Lichfield, with due respect to

the Committee, that if I had to say which was more likely to find the truth, the Monopolies and Mergers Commission or the Department of Culture, Media and Sport, I know which of them I would choose. The important point is that the record industry was subjected to a year-long investigation that found no evidence of wrongdoing. That investigation cost the industry about £20 million.

Nevertheless, in the past three years there have been five more investigations, none of which has overturned the conclusions of the first one. There is a danger that the general view will be that, although they found nothing this time, something is clearly going on because prices are very high and considerable profits are being made, so we should have another look at it. The same thing happened in the 1990s, when the former Secretary of State for Trade and Industry, the right hon. Member for Tyneside, North (Mr. Byers), stood up at a Labour party conference and started talking about rip-off Britain. That led to an investigation into supermarket pricing, which did not come up with any evidence.

Although I am all in favour of giving powers to a regulator to root out anti-competitive practice and to search for evidence of cartels, we should always remember that that is not a cost-free option. It places a significant burden on the industry, which is subject to investigation at a considerable cost. It is incumbent on the regulator to think very carefully before recommending a full investigation. Some have argued that, when an industry is subject to an investigation and incurs considerable costs in providing the regulator with material concerning its market position, if the subsequent inquiry finds that it has acted properly and that there is no evidence of anti-competitive practice, the industry might have some claim for costs. I raised that suggestion during debate on the Enterprise Bill and it did not find favour. However, we should bear it in mind.

Ofcom should examine areas where there have been allegations of abuse of market power, particularly the area of conditional access charges, because there is a dominant position. In some cases, such allegations turn out to be justified, in others they do not. Nevertheless, there should not be a rolling examination—as soon as one investigation into potential abuse has finished the next one starts. At this stage of the Bill—when we are considering how Ofcom is to carry out its functions under the Enterprise Act—we should flag up a warning. We cannot assume that having investigations into potential anti-competitive practices will always be of benefit to the consumer, especially if no evidence is found and a large price tag is attached. The consequence will be that the consumer will have to pick up the bill.

Stephen Timms (Labour, East Ham)

The hon. Member for Maldon and East Chelmsford has raised two points. First, he wants to add the word ''reasonably'' in two places in clause 356. He will know from our discussions that Ofcom has always to act reasonably. We are resistant to the idea of putting in the Bill statements to the effect that Ofcom should behave reasonably. He argued that there is precedent for the use of the word, and I shall

consider the suggestion, but I am cautious about adding too many statements that do not seem to be required.

The hon. Gentleman also referred to the changes that the Government have made. He was right to point out that, under the Enterprise Act, Ministers are not involved in decisions on the references. That is an important strengthening of the competition framework for the British economy. He seems to be saying that he is in favour of that. In clause 356, we are simply carrying across provisions that have already been agreed for inclusion in the Enterprise Act and putting them in this legislation as well. The hon. Gentleman said that he had made similar points during the debate on the Enterprise Act and that they did not find favour. We now need to ensure that we carry across into the Bill the framework that Parliament has agreed. I take issue with the hon. Gentleman's assumption that people will launch investigations for which there is no evidence. That will not happen. Regulators would be reluctant to embark on a major exercise unless there were a significant reason for them to do so. It is important that, if there is evidence of a problem that falls short of a breach of competition law, it should be possible for action to be taken or an investigation to be carried out. These provisions permit that, as do similar provisions in the Enterprise Act that have been agreed by Parliament.

Question put and agreed to.

Clause 356 ordered to stand part of the Bill.

Clause 357 ordered to stand part of the Bill.

Clause 358 - Application of the Competition Act 1998 to news provision

Michael Fabricant (Conservative, Lichfield)

This is an important provision, although it is merely a technical amendment to the Broadcasting Act 1996. It is somewhat different from clauses 356 and 357 in that it seems—if the explanatory notes are correct—to restrict the powers of the Office of Fair Trading. Will the Minister explain the relationship of the clause to the operations of ITN or any other Channel 3 news provider?

ITN has had its ups and downs. It is a major provider of television news, both in the United Kingdom and overseas, and it is to be congratulated on its recent launch of a 24-hour news service. It could be argued, however, that ITN would be unsustainable in a completely free market. I suspect that if ITV channels were free to choose national television news providers to operate as separate groups in ITV, they might not all choose to use ITN, not because there is anything wrong with ITN's editorial standards or content but because of the cost. I would argue that ITN provides remarkably good value for money, because the provision of any form of television news

is a costly business. It should also be remembered that, much like BBC news, ITN is not only a user of the wires—the tapes that are available from organisations such as Reuters—but includes major news gatherers and news agencies. Where does the Minister see the future of ITN with regard to Channel 3? How does he see clause 358 impinging on ITN? Will the clause primarily enshrine the role of ITN as the sole news provider to Channel 3? He will be aware that we discussed the ownership of Channel 3 on earlier parts of the Bill, and it is now conceivable that Channel 3 could be owned by an overseas organisation, which might be a news provider itself. That raises interesting questions.

If Channel 3 were taken over by News Corp Ltd. or, perhaps more likely, by an Italian or German news group, which was a news gather, what would be the position if the news group said, ''We are already news gatherers. We can provide our own news service to Channel 3 and we choose not to use ITN because that would duplicate television news provision.'' How would that relate to clause 358 and the role of the competitive market? Subsection (6) states:

''In subsection (8) (notice by Office of Fair Trading to the Secretary of State)''—

I presume that that is the Secretary of State for Culture, Media and Sport. I look to the Minister for guidance, but none is forthcoming.

Andrew Lansley (Conservative, South Cambridgeshire)

Any Secretary of State? International Development?

Andrew Robathan (Conservative, Blaby)

Defence?

Michael Fabricant (Conservative, Lichfield)

We need a little clarity. I assumed that it would be the Department of Trade and Industry or the Department for Culture, Media and Sport, perhaps even the Ministry of Defence. We can explore the various Departments, but the clause does not define which Secretary of State it is.

The Secretary of State will be taking a view on whether or not it is in the public interest that a monopoly position be maintained. If Channel 3 were to be acquired by an overseas or a British organisation that was a news gatherer, but not including ITN, how would that impinge on the provisions of clause 358? Would the Secretary of State feel that it might be in conflict with the OFT? Might it be regarded as a monopoly position, or would the explanatory notes prevail?

I know that the explanatory notes do not have precedence over the Bill, but in this instance I find them particularly helpful. They state:

''The Secretary of State is obliged to consult the OFT before making such declarations and to notify the OFT after making such declarations.''

In particular, it says that the Secretary of State—I should say he or she, because we do not know which Department we are talking about—

''may declare that any provisions in an agreement between regional Channel 3 licence holders for the appointment of the Channel 3 news provider are either not anti-competitive or, if anti-competitive, are proportionate to the objectives being achieved''.

That means the provision of an effective news service primarily in competition with that provided by BBC television news.

I suggest that that might not be the objective of the Secretary of State or Ofcom, if the independent licence holders were owned by an overseas organisation that was itself a television news provider. What would be the role—I am tempted to say what would be the locus—of the clause in that instance?

Stephen Timms (Labour, East Ham)

I should first explain that the clause amends references in section 194A of the Broadcasting Act 1990 to the OFT, so that it refers to both OFT and Ofcom. It is being amended now because it is another aspect of the concurrent exercise of powers by both offices. The reasons for that were mentioned by the hon. Member for Lichfield when he spoke about the importance of the role of the news provider to Channel 3.

The nominated news provider arrangements have been in place for a long time, to ensure that independent high-quality news is provided for ITV, the major free-to-air commercial TV channel. It does not have to be ITN; it could be any organisation that satisfies Ofcom that it is up to the necessary standard. However, all hon. Members would agree that some arrangements could, as the hon. Gentleman suggested, give rise to some concern, although it would depend on the details. We want to maintain the possibility of intervention, provided for by the Broadcasting Act 1990, to ensure that news is up to standard for Channel 3.

Michael Fabricant (Conservative, Lichfield)

I am interested in the point that the Minister is beginning to explore. He has pointed out the importance of the independent news provider, whoever that may be. Does the Minister believe that there would be cause for concern if that news provider were primarily based outside the UK, whatever the quality of the news provided?

Stephen Timms (Labour, East Ham)

I do not want to speculate about the issues that might arise in any particular case. The essential concern is with quality, which is at the heart of the arrangements that have been in place for a long time for the identification of a nominated news provider. The reason for the provisions is that some might argue that the arrangements are anti-competitive. I suspect that that would not be the case, but it could be argued. The clause is therefore needed to make it clear that the arrangement is not outside the law. The detail of how the nominated news provider arrangements work and the criteria that need to be satisfied are set out in clauses 271 to 274.

On the question of foreign ownership, the heart of issue is the question of quality. That is the point on which Ofcom needs to satisfy itself. All of us would agree that that is appropriate for the reasons that have been outlined. The clause allows us to extend that long-standing arrangement, which we would all agree has worked well, into the new era in which both Ofcom and OFT have a role.

Question put and agreed to.

Clause 358 ordered to stand part of the Bill.

Clauses 359 and 360 ordered to stand part of the Bill.

Clause 361 - Newspaper public interest considerations

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No.642, in

clause 361, page 311, line 4, leave out from first 'in' to 'the' and insert

'all media available to citizens of'.

The amendment deals with a specific concern relating to newspaper interests. We have more general concerns that will be addressed when we debate the next two clauses. Our concern relates to the view of the market that is taken when considering merger proposals for newspapers. There has been a lot of discussion about multi-media convergence, and about the way that the different forms of media will over time come together. We have also been talking about the need to future-proof the Bill, in order that we do not have to revisit the legislation too rapidly in the future. Therefore, the purpose of the amendment is to recognise the fact that the market we are examining is changing rapidly—it has already been subject to great change and might well change further in coming years.

It is short-sighted that when we examine the plurality of views that we should restrict our examination to the newspaper market, rather than considering the media market as a whole. Newspaper circulation has been declining over the past decade. I believe that the figure for overall newspaper circulation has gone down by about 13 per cent. over the past 10 years. That is at least in part because of the growing market in alternative forms of news provision, entertainment or whatever else people have traditionally bought newspapers to obtain. When we consider the plurality of views, which the clause deals with, it is important that we should not restrict ourselves to newspapers only. Those views will be expressed through a variety of different means. We shall have local television stations and radio stations; we may have circulating magazines in a particular area; we shall have specialist interest publications; and, more and more, I suspect, the internet will supply views, comment and news.

When we come to test the question of whether plurality exists, it seems short-sighted to say that that consideration should simply apply to the newspaper market.

The purpose of the amendment is to extend the scope of any examination to account for all the different forms of media that are available to UK citizens, be that either a national investigation or an investigation of a local market. I hope that the Minister recognises that the amendment was moved in the spirit of the Bill. The Bill's purpose is to take into account rapidly changing technology and means of delivery. It seems to us that, quite soon, it will be inappropriate to focus on one specific aspect—the newspaper market. It would be more sensible for those considering whether there is adequate plurality of views to take into account all the different forms of media. It is not an enormous amendment, but it does raise a very important point that lies at the heart of the

justification for many of the measures that we debate today.

Stephen Timms (Labour, East Ham)

The hon. Member for Maldon and East Chelmsford has raised some interesting questions, and those questions will run through the entire debate on arrangements for newspapers.

The existing special newspaper merger regime was contained in the Fair Trading Act 1973. However, it is interesting to look at how we got there. It all arose from the recommendations of the royal commission on the press in1961–62, and the general concern that the increasing concentration of newspaper ownership in too few hands could threaten freedom, variety of expression and opinion, and perhaps even the unbiased presentation of the news. Provisions in the Monopolies and Mergers Act 1965 and the 1973 Act arose from the royal commission's recommendations. In several cases since then, that legislation has enabled successive Governments to prevent newspaper acquisitions that would been against the public interest.

A simple question that will underpin the whole debate on the next few clauses is whether Parliament still believes that there is something special about newspapers. It is perfectly possible to make the argument, as the hon. Member for Maldon and East Chelmsford started to do, that there is no longer anything special about newspapers, given the plethora of media channels. That may be the position that the hon. Gentleman advances.

My response is that there is still a very special place for newspapers in opinion forming in Britain. Therefore, we still need special arrangements for newspaper mergers. That is at the heart of the debate that we shall have on the next few clauses, so it is helpful to raise that key issue right at the start. The Committee must take a view on it.

New section 58(2A), to be inserted into the Enterprise Act, refers to the need for

''accurate presentation of the news''

and ''free expression of opinion''. New section 58(2B), which amendment No. 642 targets, specifies

''The need for, to the extent that it is reasonable and practicable, a plurality of views in newspapers in each market for newspapers in the United Kingdom or a part of the United Kingdom''.

The plurality of views and opinion in newspapers continues to be an important public interest. Newspapers are opinion formers. Despite all the changes of the past 40 years, they still play a particular and critical role in the political process. The Government are committed, in the Bill, to continue to protect the public interests that can arise in newspaper mergers. In one respect, the newspaper industry is alone among the mainstream media—the others being television, radio and satellite broadcasting. It does not require licences from an independent media authority in order to operate and it never will. It is a by-product of licensing in those other media that plurality can be assured through limits on the control of licences. Only through the operation of the special newspaper public interest divisions can

transactions that might give rise to plurality concerns be investigated. If we remove that safeguard, we shall lose an important ability—which successive Governments have taken advantage of—to protect the public interest.

Michael Fabricant (Conservative, Lichfield)

I am following the Minister's argument and I agree with him. As he points out, the licences within ITV, regardless of ownership, ensure that that there are different editorial provisions regarding local news and so on. Would he not acknowledge that even within a particular news group, the members might not speak with one voice? I give the example of News Corporation. The Sun has a very different editorial policy from, say, The Sunday Times, particularly in its political viewpoint, as does The Times. The News of the World has a different tone and political allegiance again. Can the Minister confirm that he is not falling into the trap of saying that single ownership of newspapers necessarily means that all of those newspapers will speak with a single voice?

Stephen Timms (Labour, East Ham)

I can confirm that I am not falling into the trap. Equally, the hon. Gentleman will agree that newspaper mergers can give rise to concerns in that area. Therefore, we need to continue to have an ability to address public interest issues that arise from mergers when they are proposed.

Chris Bryant (Labour, Rhondda)

The hon. Member for Lichfield might have a point in relation to national newspapers, whose ownership is widely known. However, in a local newspaper regime, people might not know that all of their local newspapers are owned by the same organisation and that they have joint editorial meetings. That is why it is important to have a public interest safeguard.

Stephen Timms (Labour, East Ham)

I agree. When we come to the clauses that deal specifically with the ownership of local newspapers, the case will be made that we should not apply a public interest test. I shall argue—as my hon. Friend has done—that it is important, for his reasons and others, to maintain the ability to apply a public interest test in the case of local newspapers.

It has been a longstanding approach to recognise that newspapers, nationally and locally, are opinion formers. The amendment would require the Secretary of State, when considering the impact of a newspaper merger, to consider whether the merger had any impact on the plurality of views expressed in all media. That would dilute the impact of the provisions. We need to protect the newspaper industry, because newspapers continue to play a special role.

Mark Hoban (Conservative, Fareham)

Does the Minister not accept that the importance that he is ascribing to newspapers has diminished in recent years as newspapers have changed their role and their content? They are more feature based and less news based, and feature far less opinion and much more celebrity.

Stephen Timms (Labour, East Ham)

We could have an interesting debate about whether newspapers are less influential in the formation of current opinion than they were 30 or 40 years ago; I am not certain that they are. However, there have been changes, some of which the hon. Gentleman has described. My view is that newspapers

continue to play a significant part in influencing the formation of opinion. I shall no doubt rehearse that point at some length as we debate the clauses.

Mark Hoban (Conservative, Fareham)

Allied to the fact that the role of newspapers in forming people's views has diminished is the fact that their circulation has decreased—in many cases, significantly—and their readership has, therefore, declined. They do not occupy the same privileged place that they did in the 1960s.

Peter Atkinson (Conservative, Hexham)

Order. Before the Minister responds, may I indicate to the Committee that I am happy to have a clause stand part debate? The amendment is quite narrow, so we could perhaps dispose of it and move on to the stand part debate in which the issues that have been raised quite properly could be dealt with even better.

Stephen Timms (Labour, East Ham)

In response to the hon. Member for Fareham (Mr. Hoban), it is true that there are many examples of newspaper circulations having risen. Who knows what further changes there will be in the years ahead? It is clear that at the moment newspapers continue to play a special part, which is not radically different from the part that they played 40 years ago and which is sufficient to require a public interest test to be applied.

The amendment would bring cross-media ownership issues under the ambit of the special public interest intervention process. Other provisions in the Bill deal with issues arising from cross-media ownership and we should not bring those in to the special newspaper merger control regime of the Enterprise Act. We will debate that in respect of later amendments. On this amendment, introducing such a cross-media public interest test indirectly through the newspaper merger regime would be inappropriate. The central issue is whether we should continue to have the special arrangement in respect of newspapers. I think that we should.

John Whittingdale (Conservative, Maldon and East Chelmsford)

The Minister is right. Although the amendment is narrow, it is based on an important factor that will influence much of our consideration of this chapter. The Minister's case is, as I understand it, that newspapers are still special and therefore they deserve exceptional provisions. That may or may not still be the case. He said that the circulation of some newspapers is increasing and that the circulation of others is decreasing—that is obvious. I bow to the hon. Member for Rhondda (Mr. Bryant) and I give him the chance to be recorded in the Hansard report of our debate for saying that his local newspaper, the Rhondda Leader, has enjoyed a rise in its circulation.

Chris Bryant (Labour, Rhondda)

Despite my column.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Yes. Nevertheless, the overall circulation of newspapers is falling and that is to some extent inevitable, given that there are so many more different ways to obtain news and comment. That situation will continue and we will soon be in a position to receive news and all kinds of things through mobile phones and other devices. The unique position that has been held by newspapers is therefore under threat. We have said that we must ensure that the Bill takes account of future technological developments, and there is a strong

case for reflecting that at this stage. If we were to make our amendment, I assume that that would not prevent the Secretary of State from saying that it is plain that newspapers are still the most influential voice in this market. It is right that we should try to ensure that plurality exists in the newspaper market. That would not be excluded by the amendment. The amendment would mean that if it were plain that other voices and other views were expressed through different media outlets, that should be taken into account.

We shall press the amendment as a matter of principle and to flag up the fact that it is important.

Question put, That the amendment be made:—

The Committee divided: Ayes 5, Noes 11.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I want to explore another aspect of the clause—one that could probably occupy us for the rest of the day although I shall not stray too far down that road. The clause says that the first public interest consideration should be

''The need for . . . accurate presentation of news''.

Accurate presentation of news is a subjective issue. What some people consider to be accurate presentation of news might be regarded by other people as an appallingly biased and ill-informed account of the state of affairs. A symptom of my fear is that if we stray on to the issue of public interest, we are in danger of beginning to interfere with the freedom of the press.

My first worry, which is more obvious, is whether accurate presentation of news is actually necessary. [Laughter.] The hon. Member for Rhondda mocks, but let me give him an example. He will recall headlines in the Daily Sport such as ''Elvis found living on the moon''. Most people would probably believe that that was not accurate presentation of news.

Andrew Robathan (Conservative, Blaby)

What?

John Whittingdale (Conservative, Maldon and East Chelmsford)

I am sorry to break that to my hon. Friend; I should try to do so sensitively and fairly.

Part of the appeal of several newspapers—the Daily Sport is the most obvious example—is the fact that they carry highly entertaining stories that most people realise are not wholly true. Such newspapers do not claim to do otherwise, but because they fall in the definition of newspapers, the Secretary of State would

presumably, accordingly to the clause, have to consider whether there was accurate presentation of news in the event of a bid to take over the Daily Sport. I do not know the full truth behind the ''Freddie Starr ate my hamster'' story. That, too, may not have been a fully accurate presentation of a news story; nevertheless it was one of the most successful headlines that The Sun has produced. It has passed into public mythology. Therefore the question whether we need accurate presentation of news is slightly less obvious than it would seem to be at first sight.

Chris Bryant (Labour, Rhondda)

It is a delight to hear a former Conservative spin doctor arguing that the truth is not necessarily important in the presentation of news. I remember writing an article for The Times that was subsequently used in an American newspaper. When the American newspaper was about to print it, it checked every fact. The Times never checked a single fact. Does the hon. Gentleman think that there should be a greater burden on British newspapers to check their facts before they publish?

John Whittingdale (Conservative, Maldon and East Chelmsford)

First, I deny vigorously the accusation that I was ever a spin doctor. That is an invention of this Government. I am proud to have worked as a political secretary and a special adviser, but Mr. Alastair Campbell has taken the definition of spin doctor to new heights and I would never have fallen into that category. I occasionally assisted journalists in understanding the arguments and principles lying behind Government policy, but that was a different thing.

Secondly, and more importantly, the hon. Gentleman asked whether The Times has the same standards when checking facts as American newspapers. I do not know whether that is the case or not, but if a newspaper is bought because it has a reputation for accuracy and objectivity in its presentation of news and readers discover that that reputation is no longer as solid as it once was, they will buy another newspaper and that will happen rapidly.

Michael Fabricant (Conservative, Lichfield)

On the point that was made by the hon. Member for Rhondda, does my hon. Friend agree that op-ed material is not news? Does he further care to speculate that the reason why the American newspapers were checking on the facts was not so much because they wanted to present news that was factually correct to their readers, but because of the fear of litigation that is still much stronger in the United States than it is in the United Kingdom?

John Whittingdale (Conservative, Maldon and East Chelmsford)

I am not sure whether that is correct, although I bow to my hon. Friend's superior knowledge of the matter. It may well be the case, but it is certainly a fact that in this country one of the key reasons—I am grateful to the hon. Member for Rhondda for having highlighted the fact—why newspapers are not the same as other means of communication that we have been dealing with in the rest of the Bill is that there is nothing to stop anyone starting up a newspaper. Indeed, the Minister made that point in his response to our debate on the previous amendment. To start up a newspaper does

not require a licence and therefore there is a much more open market.

Newspapers will come into being if it were felt that the existing newspapers are not providing a sufficient diversity or standard of accuracy. The Independent is a case in point. It is a national newspaper that was launched particularly because the existing newspapers did not cater for the section of the market that was unaligned and which was looking for objectivity and impartiality. Whether it has achieved that objective is another matter.

Chris Bryant (Labour, Rhondda)

As far as I can tell, the hon. Gentleman is arguing that the market will provide accuracy. If someone reads a newspaper and finds that it is not accurate, he will stop buying it, but there is no evidence of that happening. Readers of all the tabloid newspapers cheerfully admit that the newspapers are not accurate, but they still continue to buy them. It is not so much a question of facts alone, but many newspapers have whole articles built deliberately to create big headlines that will increase sales without a single attributed quote or a single fact in them.

John Whittingdale (Conservative, Maldon and East Chelmsford)

The hon. Gentleman says that there is no evidence, so I shall give him some. I believe that The Times has become a mouthpiece of the Government. It swallows the line given by Downing street and reproduces it without criticism or comment. As a result, I have stopped buying it.

Andrew Robathan (Conservative, Blaby)

I stopped buying The Times long before the Government came to power. Is not the proof that The Times so willingly took the article from the hon. Member for Rhondda without checking it?

John Whittingdale (Conservative, Maldon and East Chelmsford)

I did not see the article.

Andrew Robathan (Conservative, Blaby)

It was 12 years ago.

Michael Fabricant (Conservative, Lichfield)

The hon. Gentleman was a Conservative then.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Before you intervene to pull me back on course, Mr. Atkinson—

Peter Atkinson (Conservative, Hexham)

No, I am enjoying it.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I will try to use the lunch break to find the article by the hon. Member for Rhondda so that we can make a judgment. However, there is another serious point. The hon. Gentleman said that people go on buying the tabloids even though they know that they are not necessarily accurate, which bears out my point. When one buys a broadsheet, one expects a level of accuracy that goes beyond certain tabloids. I gave examples of stories in the Daily Sport and The Sun that were printed for their entertainment value not because they were necessarily an accurate reflection of the complete position.

Brian White (Labour, North East Milton Keynes)

The Joint Committee was shown a quote from the Daily Mail that suggested that it was no longer possible to see where factual reporting ends and opinion starts. Is not one of the problems causing the decline in newspapers that they are increasingly concerned with opinion rather than facts and the accurate interpretation of news?

John Whittingdale (Conservative, Maldon and East Chelmsford)

I do not disagree with the hon. Gentleman, but, to return to the clause, are these

matters for the Secretary of State to take into account when considering newspaper acquisitions?

Andrew Lansley (Conservative, South Cambridgeshire)

The hon. Member for Milton Keynes, North-East (Brian White) touched on the Joint Committee's proposal, but the Joint Committee was talking about a test of plurality for accurate presentation of news and free expression of opinion—and a clear differentiation between the two. Would the hon. Gentleman agree with me rather than with the Joint Committee that merger control procedures should be about absolute issues of ownership and not used as a lever with which to try to exercise continuing control over the editorial content of newspapers?

John Whittingdale (Conservative, Maldon and East Chelmsford)

I agree absolutely, completely and 100 per cent. with my hon. Friend. The matter will be at the heart of the debate over this and coming clauses. There is a concern about the whole thrust of the clauses dealing with newspaper mergers. There is a danger that, in ostensibly considering the matters of competition involved in mergers and acquisitions, the Secretary of State could open a door for Government interference in editorial content and the presentation of news. The concern is widely felt and my hon. Friend is entirely right to flag it up at this point.

Stephen Timms (Labour, East Ham)

I am anxious that we should clearly understand the hon. Gentleman's position. Is he saying that the special regime for newspapers that has been in place for some 40 years is no longer needed and that there should no longer be special arrangements surrounding the merger of newspapers?

John Whittingdale (Conservative, Maldon and East Chelmsford)

An argument can be made for that, but I will not advance it today. One could put forward an intellectual argument for newspapers to be treated on competition grounds, like other commodities. Nevertheless, the Minister's point is that newspapers have an influence that perhaps requires that they have special treatment. Therefore, if we apply special provisions to newspapers that go beyond those applicable in more general competition issues, we must build in strong safeguards. We must be clear which issues are legitimate for the Government to consider. The issue of the plurality of views, which goes beyond the general competition point, is legitimate, and that is why my amendment to the clause would not have struck out new section 52(2B) of the Enterprise Act, but would instead have widened the definition. Plurality is a relevant issue.

Michael Fabricant (Conservative, Lichfield)

While my hon. Friend considers whether to advance the proposition that there should be no competition controls, may I add that 40 years ago the vast majority of people took their news from newspapers? The current estimate is that only 11 per cent. of the population get their news from newspapers. The majority get news not even from radio, but from television. As a consequence, the ownership of newspapers is now far less important than it was 40 years ago, when the rules were originally put in place.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I agree—that is an important point that refers back, to some extent, to our earlier debate on plurality and to the need to take account

more widely of the media as a whole. My hon. Friend is right that the market will continue to change, and the chances are that the figure for newspapers' share of the market in news will go on falling.

Brian White (Labour, North East Milton Keynes)

Is it not also true that some television news programmes use newspapers to set the agenda for the topics that they discuss?

John Whittingdale (Conservative, Maldon and East Chelmsford)

That is a reason why we in this place spend so much time talking to newspaper journalists. We do not think that we are influencing only those who buy newspapers, as in that case it probably would not make a great deal of difference to the results of general elections. The hon. Gentleman is right. It has always been the view that opinions expressed in the daily papers go on to influence news scheduling and coverage and the priorities set by the broadcasters. The ''Today'' programme is clearly an example of that. I was not saying that newspapers are not important, or will not continue to be. However, for the reasons that my hon. Friend the Member for South Cambridgeshire gave—and we will return to them later—it is all the more important that we are clear as to what are the legitimate concerns that the Government should take into account when examining newspapers.

Andrew Lansley (Conservative, South Cambridgeshire)

May I take my hon. Friend back to his point about the accurate presentation of news? When he referred to the Daily Sport and The Sun, I anticipated that he would make a distinction between the two. David Sullivan's proposed acquisition of the Bristol Evening Post in 1990 is a case in point on the accurate presentation of news. That was about the character of the owner, in this case David Sullivan, who owns the Daily Sport. That is in distinction to a newspaper such as The Sun, as the character of the owner is such that it would not necessarily be thought to prejudice the accurate presentation of news.

John Whittingdale (Conservative, Maldon and East Chelmsford)

The character of the owner is important, and we shall certainly want to come to that issue, but we will probably do so under the next clause or the clause following that. I was merely considering the news stories carried in the papers. I am grateful to my hon. Friend, because I would not like it to be said that I am suggesting that The Sun and the Daily Sport are the same.

The Sun is a great newspaper, or rather a news paper. It occasionally carries extremely entertaining stories that are perhaps not so obviously news, but most of its readers know the difference between the two. The Freddie Starr story I mentioned is plainly an example of one such stories. I believe that the Daily Sport carries some news, but one has to look very hard to find it, but I am not sure, because I do not look at it. None the less, people do not buy the Daily Sport to find out what is going on in the world—or if they do, they are sadly disappointed.

Chris Bryant (Labour, Rhondda)

But is not the plurality issue essential to the accuracy of news? Many people read more than one newspaper. In fact, evidence suggests that most people who read a newspaper read at least two or three. There is the synoptic problem, in that if three newspapers come to the same conclusion, and print the same supposed facts, on a story, we might assume that

it is reliable. However, it might turn out that there was only one source for that story, because there was only one news gathering operation that was organised by a single media conglomerate. If one were made aware of that, one might not attribute the same accuracy and credibility to that information.

John Whittingdale (Conservative, Maldon and East Chelmsford)

What has usually happened is that one unnamed Cabinet Minister has had lunch with three lobby journalists.

The hon. Gentleman made another interesting point: one might be faced with a contradiction. It could be argued that if a single news story is interpreted in three different ways—perhaps even contradictory ways, which does happen—that represents the kind of plurality of views in newspapers that we are seeking to achieve in new subsection (2B). However, it might also be argued that that would contradict the need for accurate presentation of news that is stipulated in new subsection (2A). That is all in the eye of the beholder.

Seeking to ensure accurate presentation of news is a very worthy cause that I think that all of us would sign up to, but when we get down to the specifics, one person's notion of accurate presentation is very different from another's. This is an intensely political area, and I am concerned that this clause and subsequent clauses might begin to open the door to interference in newspaper content that is political and of a kind that most people in this country would wish to avoid.

Michael Fabricant (Conservative, Lichfield)

I share my hon. Friend's concern. I wish to put on the record my gratitude to the official or officials who wrote the explanatory notes because they are very helpful. The notes point out:

''Currently, only national security is a specified consideration.''

I think that all of us would agree that D notices should be issued with respect to national security, particularly at these troubled times, but I would be very concerned if we were ever to find a situation developing in which D notices or something similar were issued to newspapers because of the perceived accuracy of the presentation of news.

We have only a few minutes left, so I will be very brief. Who will make the analysis? Who will those individuals be? With regard to the interpretation of the ''accurate presentation of news'' there is a huge danger. It is interesting that that requirement immediately precedes paragraph (b), which talks about the ''free expression of opinion''.

The old Independent Broadcasting Authority had very strict rules for television and radio and that was carried forward into the Independent Television Commission and the Radio Authority: there should be a clear demarcation between news and opinion. Does the Minister envisage that Ofcom might say at some point in the future, ''There needs to be a clear demarcation''? When sophisticated people read newspapers they understand what is op-ed—editorial and opinion—and what is hard news, but it could be argued that unsophisticated people do not understand that distinction.

The hon. Member for Rhondda raised some interesting questions and his probing points should be thought about. I do not share his view that there is always the same editorial team within a certain newspaper group, because even in the local press there is often competition between the daily and weekly editions. He also raises the valid point about what is the source of news. Does the Minister envisage that there might be daily intervention by Ofcom over these issues?

Chris Bryant (Labour, Rhondda)

At present, most groups would not think of combining their editorial teams, and they would not decide to combine their news gathering teams. There are separate correspondents in Parliament for The Sun, The Times, the News of the World, and so on. If, as a result of a merger, it were likely that the news gathering and/or editorial teams of several national newspapers would be combined, that would be a legitimate concern.

Michael Fabricant (Conservative, Lichfield)

Yes, but is it not also a matter of concern that many of the smaller newspapers—and even the bigger newspaper groups that are cutting back—are more dependent than ever before on single sources such as the Press Association or Reuters? It could be argued that the Press Association supplies accurate news—and I would suggest that it has a good reputation for accuracy—but that news is from a single source, nevertheless.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Will my hon. Friend give way?

Michael Fabricant (Conservative, Lichfield)

No, because I wish to conclude my remarks before 11.25 am. I want to put on the record that although I understand why new subsection (2A) has been added, it is a source of concern as it may well be abused in the future.

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

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

Standing Committee E

Clause 361 - Newspaper public interest considerations

Stephen Timms (Labour, East Ham)

We have had an interesting discussion on the clause. I listened carefully to the case made by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), who clarified his point helpfully. I think that he was not arguing against the inclusion of clause 461, but rather speaking as though there were an amendment that would delete new subsection (2A) to section 58 of the Enterprise Act 2002 and leave in place only new subsection (2B), the plurality part of the provision. He accepted that it was appropriate to have a special regime for newspapers, but explained why he was not happy with the one proposed in the Bill. He went on to suggest that the wording in subsections (2A) and (2B) would open the door to a number of undesirable consequences.

First, I should like to explain where the wording of subsections (2A) and (2B) comes from. Subsection (2A) makes reference to two matters that should be taken account of, the ''accurate presentation of news'' and ''free expression of opinion''. Those have been on the statute book for a very long time. I took the opportunity of the lunch break to look through my well-thumbed copy of the Fair Trading Act 1973. Section 59(3) says that

''the Commission shall report to the Secretary of State whether the transfer in question may be expected to operate against the public interest, taking into account all matters which appear in the circumstances to be relevant and, in particular, the need for accurate presentation of news and free expression of opinion.''

Those are exactly the words used in subsection (2A). In fact, the 1973 wording is, as the Committee will have noticed, a good deal wider, because it refers to taking into account

''all matters which appear in the circumstances to be relevant''.

In other words, anything may be taken into account, but particularly the need for the two points in subsection (2A).

Subsection (2B) on the test of plurality, for which the hon. Member for Maldon and East Chelmsford gave support, has not appeared in legislation before, although the principle can be inferred from the outcome of cases that have been examined. It will be clear to the Committee that the new form of wording in the clause is significantly narrower than in the old. We are not, as the hon. Gentleman argued, opening the door to some new and dangerous developments.

Actually, the phrasing of the clause is significantly tighter and narrower than was the case under the Fair Trading Act 1973, which has, in the view of most people, operated very well during past 30 years.

It would be possible to have, as the hon. Gentleman argued that we should, only a plurality test, in other words we could remove the historic wording of subsection (2A) and leave subsection (2B). The Committee should reflect for moment on whether that would be a good idea.

The hon. Member for South Cambridgeshire (Mr. Lansley) referred to the celebrated 1990 case involving David Sullivan and the Bristol Evening Post. The Monopolies and Mergers Commission concluded that the evidence of David Sullivan's connection with the Daily Star and his holdings in the Daily Sport and the Sunday Sport, to which we referred this morning, suggested that he would seek to influence editorial policy, the character and the content of the newspapers in a manner that would harm both the accurate presentation of news and the free expression of opinion. That acquisition, or merger, was stopped because reference was made to the two criteria in subsection (2A). It is hard to determine whether such an acquisition would have been stopped if reference had been made only to the plurality test in that case. One might say that the fact that Mr. Sullivan was unable to acquire the Bristol Evening Post was the result of an unfortunate and undesirable decision. Most people, however, would agree that that decision was correct in the circumstances and should such a situation arise again, we would surely wish to be able to come to the same conclusion as the Monopolies and Mergers Commission.

I strongly resist the hon. Gentleman's suggestion that the historic form of words in subsection (2A) should be removed and that we should instead retain the plurality test in subsection (2B). One reason for maintaining the form of words was to achieve continuity between the old and new, the advantage being that businesses would have the certainty that they could rely on the existing body of precedent when contemplating future mergers.

Andrew Lansley (Conservative, South Cambridgeshire)

I would not want the Minister to engage in too much speculation on any individual case. However, would he agree with me and with my hon. Friend the Member for Maldon and East Chelmsford that subsection (2A) should not necessarily be removed, but that it would be interesting to consider how it would be applied?

Would the Minister agree that there is a substantial difference between the proposed new regime and the old? Under the old regime, those who were not already newspaper proprietors were not liable to be caught by the special newspaper merger regime. Let us consider, without discussing the merits of the case, what might have happened if the Government, or Ministers, had chosen not to apply a wider public interest test in relation to Mr. Desmond's acquisition of Express Newspapers. If a case akin to Mr. Sullivan's were to occur in future and the ''Mr. Sullivan'' in question were not a newspaper proprietor, he would be caught. Indeed, it has been demonstrated that in the recent past he would not have been caught.

Stephen Timms (Labour, East Ham)

The hon. Gentleman is absolutely right. From the point of view of the newspaper industry that is one of the benefits of the new regime. The industry has felt rather disadvantaged compared with people coming in from outside and in that respect the provision is a helpful development.

I did not get the sense from what the hon. Member for Maldon and East Chelmsford said that it was as the hon. Gentleman had suggested. I thought that the hon. Gentleman was concerned about references to the accurate presentation of news and free expression of opinion on the grounds that that would open the door to undesirable influence over the press. If that was not the case, I will gladly give way.

John Whittingdale (Conservative, Maldon and East Chelmsford)

The Minister is not quite reflecting what I said. I was not suggesting that we should do away with subsection (2A) and keep subsection (2B). If that had been my view, we would have tabled an amendment to do that. I was suggesting that when we allow politicians to begin to make judgments on certain questions, such as whether or not the presentation of news is accurate, that inevitably leads to subjective judgments. There is a danger that politics can creep in. I fully accept that the wording has existed for a long time, but that does not mean that the danger is not there. It therefore becomes all the more important that we build in safeguards. That is a precursor to the debate that we will have about the involvement of Ofcom and others when reaching decisions.

Stephen Timms (Labour, East Ham)

I am grateful to the hon. Gentleman for that clarification. It is helpful that he made it clear that he is content for subsection (2A) to remain in the Bill because we can all agree about that. Perhaps I should sit down now because that would be a helpful conclusion to our debate.

The hon. Gentleman said that the criteria have been in legislation for 30 years. The Committee would want to know the grounds for any proposed change. Most people will take the view that a regime based mainly on those two criteria, but also on a wider test, has worked well and will look forward to it doing so in the future.

Question put and agreed to.

Clause 361 ordered to stand part of the Bill.

Clause 362 - Adaptation of role of OFT in initial investigations and reports

Andrew Robathan (Conservative, Blaby)

I beg to move amendment No. 261, in

clause 362, page 311, line 23, leave out from '(2B)' to end of line 25.

The amendment is fairly straightforward. I want the Minister to explain the thinking behind the change that clause 362 would make to section 44 of the Enterprise Act 2002. Clause 362(3) says:

'' 'newspaper public interest consideration' means any consideration which . . . in the opinion of the Secretary of State, is concerned with newspapers and ought to be specified in section 58''

My amendment would remove that wide-ranging, draconian power.

Section 44 of the Enterprise Act provides for an Office of Fair Trading report when the Secretary of State has issued a public interest intervention notice on a merger. If the merger is a newspaper merger, the OFT's functions are to be carried out by Ofcom. New subsection (8) says that ''newspaper public interest consideration'' shall be the considerations

''specified in section 58(2A) or (2B)''.

They are the considerations of accurate presentation of news, free expression of opinion and plurality of views. Additionally, new subsection (8) says that a ''newspaper public interest consideration'' may be a consideration that

''in the opinion of the Secretary of State, is concerned with newspapers and ought to be specified in section 58.''

That mirrors the provision in section 42(3) of the Enterprise Act, which states:

''a public interest consideration . . . is specified in section 58 or . . . in the opinion of the Secretary of State, ought to be so specified.''

That wide power seems acceptable in the context of the national interest, which is presumably what it is supposed to cater for, except when considering a newspaper case. However, the power to turn an ordinary commercial merger into a public interest case, which could be prohibited although there were no competition issues, without any consideration of public interest and without amendment to section 58, seems alarmingly wide, and I hope that the Minister will justify it. If the consideration had to be in section 58, I understand that any new consideration would have to be scrutinised by Parliament. However, the new power could be exercised to stop a merger without anything coming before Parliament.

It is also objectionable that the extension is not linked to the public interest, as the section 42(3) model is. The Secretary of State has only to think that there is a consideration linked to newspapers before we are suddenly in section 58 territory where competition is irrelevant and whatever the Secretary of State says goes. If that is wrong, I hope that the Minister will give us an explanation. I am not entirely clear about whether advice for the Secretary of State will come from the OFT or Ofcom. Which would be better in such a case?

If the provision remains in the Bill, newspaper companies will have no means of knowing whether a proposed merger should be looked at in the light of the known factors in the Enterprise Act because it will happen after the Bill has been passed into law or in the light of unknown factors that will not come out until the merger process is some way advanced. That is an unfair burden to put on commercial companies, and I ask the Government to explain what is intended, and why it is thought necessary to have such a wide power for newspaper mergers. Unless the Government come up with a good explanation and can prove that the draconian powers are needed, they should withdraw new clause 44(8)(b).

John Whittingdale (Conservative, Maldon and East Chelmsford)

I agree with my hon. Friend. First, new subsection (8) says that ''newspaper public interest consideration'' is anything that has been specified in the Bill, and then, in new paragraph (b),

it says that it is also anything that is not specified in the Bill but should be. It seems that we are leaving the gate open.

That brings me on to events that have already been mentioned, both by the Minister and by my hon. Friend the Member for South Cambridgeshire. We need to review some of the decisions made recently under existing legislation, and consider how those decisions might have been made if this new legislation had been in place. There are two cases that we should consider. The first, which was mentioned by my hon. Friend, is the proposed acquisition of the Bristol Evening Post in 1990 by Mr. David Sullivan. It was thought that the acquisition might act against the public interest and, under the existing wording, the need for the ''accurate presentation of news'' and the ''free expression of opinion''. The Minister rightly points out that that wording has been in place for some time.

The Monopolies and Mergers Commission report said:

''Were someone of Mr. Sullivan's business background and interests seen to have a significant influence in their affairs''—

that is, the affairs of the Bristol Evening Post and the Western Daily Press—

''their reputation could well be seen as compromised, particularly where the reporting of events with sexual aspects was involved. Were he to have acquired effective management control these effects could be expected to be more pronounced.''

It is interesting that the commission mentions the reporting of events with sexual aspects; presumably that is a reference to the fact that Mr. Sullivan owns several other publications that some would describe as pornographic, and owned the Daily Sport and Sunday Sport. For that reason, the commission decided that the existing wording was applicable. However, I am not entirely sure why the fact that he owned pornographic magazines meant that his newspaper could not accurately present news.

Secondly, we should consider the recent acquisition of the Daily Express by Mr. Richard Desmond. In that case, the matter was considered by the Secretary of State. After some deliberation, the Secretary of State decided that the acquisition did not raise any concerns for the reason that my hon. Friend the Member for Blaby (Mr. Robathan) gave; Mr. Desmond did not then own any newspapers. I shall not elaborate at great length on the matter, but Mr. Desmond, as is fairly well known, is the proprietor of such magazines as Horny Housewives, Mega Boobs, and Asian Babes.

Mr. Desmond is a successful businessman, and I have no difficulty with the fact that he is the proprietor of those magazines. Personally, I did not think that there was any reason why that should have prevented him from owning the Daily Express. Certainly, he has not turned it into an extension of Mega Boobs. However, the acquisition caused quite a lot of controversy, not among Opposition Members, but among Labour Members, many of whom felt that Mr. Desmond's proprietorship of such magazines should disqualify him from acquiring the Daily Express. I remember that there was an early-day motion on the subject, and several hon. Members continue to be of that opinion. At the time, there was the complicating

factor of Mr. Desmond's connection with the Government. It was perhaps unfortunate that, almost exactly at the same time as Mr. Desmond's potential acquisition was being considered, he decided to give a significant financial donation to the Labour party. I am not suggesting that the Secretary of State's decision to allow the acquisition was influenced by the fact that £100,000 was given to the Labour party eight days later, but the waters are murky so we need to be careful.

The provision is entirely open ended. It means that the Secretary of State can decide that the fact that a person who is about to acquire a national newspaper may have other commercial interests that some people would regard as undesirable was a public interest criterion that should be specified under section 58(2A) and give him the power to intervene. When we debated the Enterprise Bill, we knew that the Government intended to make changes to the special newspaper regime, although we had not seen the details because they have only become apparent in the Communications Bill. At the time, we expressed concern that the public interest criteria were ill-defined, especially the provision that allows the Government to decide what they want to be in the public interest, which will give them grounds for intervention.

It is important that the Minister justifies why he considers it necessary to have such an open-ended power. Will he explain what sort of public interest issue might arise, which is not specified under section 58(2A) or (2B), but which the Secretary of State may decide later should have been specified in those provisions?

Andrew Lansley (Conservative, South Cambridgeshire)

I had not intended to say much about the matter, but the manner in which subsection (3) has been drafted to insert the definition of ''newspaper public interest consideration'' is slightly perplexing. What will be gained by it? Under section 42(3) of the Enterprise Act, if the Secretary of State wishes to make a special public interest intervention notice in relation to a matter that is not specified under section 58 of the Act, the Secretary of State can do so and then has 24 weeks within which to finalise the public interest consideration under section 58. If my recollection is right, under section 53, a reference under section 45 would not be able to proceed to the commission. The commission would not be able to consider it. In so far as the provision under section 42, which refers to a consideration

''not so specified but, in the opinion of the Secretary of State, ought to be so specified''

will be repeated under proposed section 44(7) of the Enterprise Act by virtue of the clause, it is duplication.

I am not sure what benefit will be derived from requiring that any public interest intervention or consideration that is specified by the Secretary of State, which is outwith those that are to be specified under the Bill, but related to newspapers, should necessarily to be treated as a newspaper public interest consideration. The subsequent consideration of them will not necessarily be any different. It does not automatically follow that, because something relates to newspapers and a public interest arises about it, it

should necessarily be considered against the same criteria as those under clause 361. There may be a different reason, just as, for example, newspaper merger considerations could arise in relation to national security implications. That consideration is also specified in section 58, but if it relates to newspapers, it has to be considered under the criteria of clause 361. Are the factors in clause 361 not necessarily applied to every newspaper public interest consideration? If a new consideration was specified as a result of the insertion into section 44(7), surely the Secretary of State would have to specify what that was, with its own factors? In which case, we are right back to section 42 and exactly the same process.

On the face of it, the provision is duplicatory and is not required. The amendment tabled by my hon. Friend the Member for Blaby seems satisfactory in that respect.

Stephen Timms (Labour, East Ham)

The clause is mainly about ensuring consistency with the Enterprise Act regime that Parliament has already agreed. The hon. Member for Blaby asked me the purpose behind the clause. Section 58(3) of the Enterprise Act sets out a mechanism by which the Secretary of State can, by order, add, remove or amend public interest considerations from the merger control regime. The hon. Gentleman expressed concern that the Secretary of State could do that without any further reference to Parliament. I can give him a helpful reassurance about that. Such an order would require parliamentary approval with an affirmative resolution by both Houses of Parliament. Therefore, if there were to be an addition, there would need to be explicit parliamentary approval for it.

If Parliament did not give its approval, then as the hon. Member for South Cambridgeshire said, there are restrictions under section 53 of the Enterprise Act that set out how the Competition Commission should cancel the reference. There would need to be approval.

As the provisions will integrate newspaper mergers into the Enterprise Act's general merger regime, the power could be used to either vary or remove the newspaper public interest considerations set out in clause 361. That is a further point of which the Committee needs to take note. It is not only about the possibility of adding in a further consideration, but it also allows the removal of matters under clause 361. The provision could be used to add further public interest considerations relating to newspapers; it could be used to add a newspaper public interest consideration while a particular case is under investigation by the regulatory authorities, again to achieve consistency with the Enterprise Act.

The Enterprise Act provisions will allow the Secretary of State to review the scope of the newspaper public interest considerations and any other specified in the Act, in light of experience of their operation and following one of the key principles behind the Bill, the power is designed to future-proof the legislation against developments in the newspaper market, which might make the current public interest considerations inappropriate. The powers are certainly appropriate in a merger control regime where we are

moving from a general test of the public interest to a deliberately limited one about the substantial lessening of competition. We cannot predict what public interest issues might arise in future merger cases, whether relating to newspapers or not, but we would wish to be consistent with the Enterprise Act mechanisms already agreed for dealing with such events.

Andrew Lansley (Conservative, South Cambridgeshire)

I am grateful to the Minister for giving way. I do not follow his reference to the clause enabling newspaper public interest considerations to be removed. As I understand it, they do not happen here, but by virtue of the order-making power under section 58 of the Enterprise Act. Is that correct?

Stephen Timms (Labour, East Ham)

I am not sure what the hon. Gentleman means by ''they''. The hon. Gentleman's point is correct, but subsection (3) allows those variations to occur.

We want to align the newspaper provisions in the Enterprise Act's public interest regime with those of the Enterprise Act's special public interest regime. Like the public interest regime, the Enterprise Act's special public interest regime does not provide for any new public interest considerations to be added during the course of a merger investigation and we believe that we should have that ability.

If the amendment were accepted, the provisions in the clauses would continue to apply to any merger that raised a public interest consideration as set out in new subsection (2A) and (2B) to be inserted in section 58(2), but not to any new public interest consideration added by the Secretary of State during a merger investigation. I am sure that the Committee will agree that that outcome makes no sense.

The hon. Member for Maldon and East Chelmsford asked about Richard Desmond and Express Newspapers and the blocking of David Sullivan's acquisition of the Bristol Evening Post. His question was answered in part by the hon. Member for Blaby who pointed out that, because he was an existing United Kingdom newspaper proprietor, David Sullivan's acquisition of the Bristol Evening Post fell within the special newspaper merger regime. Therefore, the acquisition required mandatory reference to the Competition Commission.

The acquisition by Northern and Shell of the Express titles did not fall under the regime because it was not an existing newspaper proprietor. It was considered instead under the general merger provisions of the Fair Trading Act. I assure the hon. Member for Maldon and East Chelmsford that the merger clearance was dealt with 100 per cent. by the book on the basis of independent advice from the director-general of fair trading. That should reassure the hon. Gentleman.

As I said, any such change would be subject to parliamentary scrutiny, which, if the hon. Gentleman checks paragraphs 8 to 26 of schedule 16 of the Bill, is ensured by reference to section 124 of the Enterprise Act.

Andrew Lansley (Conservative, South Cambridgeshire)

I am afraid that, on this occasion, the Minister has not responded accurately and fully to the points that my hon. Friends and I have made. Clause 362 gives the Secretary of State power to add public newspaper considerations, but does not give him the power to remove them. The power to remove them is by virtue of the order making power in section 58 of the Enterprise Act.

The Minister said that the amendment would prevent additional newspaper public interest considerations being considered under the special public interest regime for certain newspaper mergers. However, it does not do that. Clause 364 deals with varying the criteria for what constitutes part of the merger control regime and refers to such issues as the size, market share, and share of supply of newspapers. It has nothing to do with the specific public interest consideration in question.

If the amendment were passed and an additional ''newspaper public interest consideration'' was not specifically brought forward but such matters were simply dealt with in the normal way as a separate specified public interest consideration under section 58, it would not be capable of being the subject of investigation and report by Ofcom. Ofcom can only make investigations and reports under what will be new section 44A, which relates to newspaper public interest considerations. That is the difference.

My hon. Friend must decide whether to press the amendment to a Division, but it seems to me that it does not do the damage that the Minister says that it does. It has a different effect, which many in the newspaper industry would not regard as damaging.

Andrew Robathan (Conservative, Blaby)

I am grateful to my hon. Friend, who brings considerable knowledge to the debate.

I have not studied in detail the paragraphs in schedule 16 that the Minister referred to, but I will take his remarks at face value. He is always courteous and straightforward with the Committee, so it is difficult not to do what he wants. When he asks me to withdraw an amendment, I always feel like a bit of a heel if I am not prepared to say, ''As he has asked me so nicely, of course I will withdraw it.''

The Minister made a very good point: he has put it on the record that this will be subject to public scrutiny, which is very important. However, the additional comments of my hon. Friend the Member for South Cambridgeshire prove that there is—to put it mildly—some confusion. On the one hand we have heard that the clause has duplicated what is in the Enterprise Act, but on the other hand we have been told that that is not the case and that the clause is necessary. Either it is necessary or it is not.

There is confusion. For that reason—and because of the pertinent points that were made by my hon. Friends the Members for South Cambridgeshire and for Maldon and East Chelmsford—I will press the amendment to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 4, Noes 14.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No. 587, in

clause 362, page 311, line 26, leave out from 'daily' to 'newspaper' in line 27 and insert 'or Sunday'.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss the following:

Amendment No. 588, in

clause 362, page 311, line 28, after 'a', insert 'substantial'.

Amendment No. 262, in

clause 362, page 311, leave out line 29 and insert—

'(10) Paragraph 3(2) and (3) of Schedule 14 of the Communications Act 2003 shall apply in relation to subsection (9) as they apply in relation to paragraph 3(1) of that Schedule but with the substitution for the references to OFCOM of references to the Secretary of State.'.

Amendment No. 24, in

clause 364, page 312, line 41, at end insert—

'(3CC) The condition in subsection (3C) will not be satisfied if, in relation to the supply of newspapers of any description considered, the total circulation of those newspapers does not exceed 50,000 on a daily or a weekly basis as appropriate.'.

New clause 22—Free of charge newspapers—

No. NC22, to move the following Clause:—

'In section 129 of the Enterprise Act 2002 (other interpretation provisions) after subsection (4) there shall be inserted—

''(5) For the purposes of determining any market share of a newspaper by reference to the number of copies sold in any market, copies of a newspaper which is distributed free of charge (rather than sold) which are distributed in that market shall be taken into account as if they had been sold.''.'.

John Whittingdale (Conservative, Maldon and East Chelmsford)

This group of amendments covers several issues, a couple of which are relatively minor in comparison with the main issue, which is whether the regime should extend to smaller and locally based newspapers. Before I turn to that major concern, I shall mention the two amendments in this group that address different matters.

Amendment No. 262 removes proposed new subsection (10) because it would allow the Secretary of State to amend the definition of a newspaper. The Minister has laid great stress on the need to ensure that the Bill fits in with the provisions that have been enacted under the Enterprise Act. Amendment No. 262 would specify a consistent definition of what is a newspaper and it would, therefore, apply the definition that is already available in the Bill. We are concerned that the Bill would give the Government a fairly wide power to change the definition as it sees fit and we

think that it goes too far. As the Government have specified a definition of a newspaper in respect of the merger provisions of the Bill and the Enterprise Act, we feel that it would be more consistent if that definition were applied to the clause.

A separate issue, which is covered by new clause 22, concerns what is a newspaper market in relation to ascertaining the market share of a newspaper. At the moment, the newspaper market is calculated in terms of the number of copies sold, but for some time now that market has been a much larger entity. The number of free newspapers is growing and those can have a considerable influence. In London, for example, the free newspaper Metro is distributed at every underground station. That is a successful enterprise and it is, I suspect, influential. For a market share to be ascertained without a recognition that free newspapers exist would be curious, to say the least.

Andrew Robathan (Conservative, Blaby)

On that point, would my hon. Friend agree that we have grown up with the idea of free newspapers filled with advertisements being delivered locally to the community? Actually, as I travel on the underground in the morning, like millions of people do every day—I do not have the correct figure to hand—I notice that Metro is the newspaper that is read the most on underground trains.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I do not know if it is the most read; it is certainly the most freely distributed across the floor.

Andrew Robathan (Conservative, Blaby)

It hides most faces.

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend is right. There is no question that that free newspaper is successful in London. However, that situation does not just apply to London. In my constituency there are a variety of free newspapers, in particular, the Yellow Advertiser, which is ubiquitous around the country. There are also a number of other free papers, some of which are specifically concerned with job opportunities, car sales and so on. However, on examining a newspaper market and assessing whether a newspaper would have a dominant position as a result of a merger or acquisition, it should be recognised and taken into account that that free newspapers might be an important element.

Mark Hoban (Conservative, Fareham)

My hon. Friend refers to the power of free newspapers. We should remember that Metro was published by Associated Newspapers as a way of protecting themselves from a Swedish competitor, which was about to launch a free newspaper in London that would have directly affected the Evening Standard and its advertising revenues. Metro is, in a sense, a spoiler that was intended to protect the Evening Standard. That demonstrates the power of free newspapers and the importance of the market.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Metro is owned by Associated Newspapers and my hon. Friend's explanation of why the group felt that it was necessary to launch it is right. That was a successful tactic, but whatever the

motivation of Associated Newspapers, Metro is now an influential and important part of the London newspaper market.

In moving new clause 22, we have sought to use the words that are contained in paragraph 3(8) of schedule 14, which ensure that free newspapers are counted for the purposes for determining the market share of a paid-for paper in relation to the cross-media ownership provisions. It is curious that market share should be determined in one way in relation to those provisions and in another way in respect of merger provisions. Again, in order to obtain a little consistency, we hope that the Minister will recognise the force of the argument for incorporating that aspect of the market when examining this clause.

After speaking briefly to amendment No. 262 and new clause 22, which are separate matters, I turn to the largest issue raised by the amendments: provisions relating to local newspapers and, especially, weekly newspapers and newspapers with a reasonably small circulation. There are strong arguments in favour of removing smaller local papers from the special newspaper regime.

Historically, the Competition Commission has not found that the acquisition of a purely local newspaper would be against the public interest on grounds of freedom of expression. It can be argued that commercial pressures ensure that the editorial content of local papers is driven by the interests of local readers and by such papers' customers. The general competition provisions will always apply, and our approach on many of these clauses is to question whether it is necessary to have an onerous regime in addition to the existing regime applied through competition legislation. It is our view—and not only ours—that it is inappropriate for the regime that is designed to cover large national dailies and influential newspapers to be applied to small local papers.

The Newspaper Society has argued that the Bill's jurisdictional tests will extend discretionary scrutiny. The society's president said that the Bill is not deregulatory because the new tests will allow

''Ministerial interference in transactions exempt from the special newspaper regime and which hitherto have not raised any freedom of expression and public interest concerns. In practice, the new regime will become a more rigorous version of the old. This would maintain the very restraints upon the regional and local press and unnecessary regulatory burdens that the Bill is intended to lift. It would also increase uncertainty as to the regulatory outcome of any newspaper merger, substantially undermining the value of the removal of prior consent''—

an aspect of the Bill that we support.

Amendments Nos. 587 and 588 would remove small local weekly newspapers and newspapers that do not have a significant circulation in a part of the country from the provisions. That has been widely supported by a huge variety of newspapers throughout the country. I shall not read out every letter that I received on the subject, but I heard from the group editor of the Eastbourne Herald and Gazette series, the editor in chief of the Ackrill media group, which is based in Harrogate, the deputy editor of the Yorkshire Post and the editor of the Yorkshire Evening Post.

The editor of the Yorkshire Evening Post said that continuing the paper's proud tradition requires

''the company for which I work to continue making money so I can continue my argument for a sizeable share to enable my team to their job. Put simply . . . editorial quality, independence and integrity relies on parent companies being allowed to grow either through investment but more likely through acquisition.''

Several local newspapers fear that the imposition of the additional regulatory requirement might be an impediment to much-needed investment in local newspapers.

Stephen Timms (Labour, East Ham)

One of the difficulties with amendment No. 588 is that it is not clear what constitutes a ''substantial'' part of the United Kingdom. Is he suggesting, by reading out that letter, that Yorkshire would not count as a substantial part of the United Kingdom? I would have thought that it would, by any definition. It would assist us if he could give more clarity on what he means by ''substantial''.

John Whittingdale (Conservative, Maldon and East Chelmsford)

There are different ways of addressing the matter; some have suggested that it could be done through circulation, and some by turnover.

Andrew Lansley (Conservative, South Cambridgeshire)

Presumably the Minister knew what was meant by ''a substantial'' part when he put the phrase into new subsection (3D) under clause 364(2), which we shall come to later. The Minister should know the answer to his question, because in a footnote on page 389 of the Department's evidence to the Joint Committee, it says:

''In the context of the FTA the meaning of 'a substantial part of the UK' has been clarified by caselaw as meaning the part must be of 'such a size, character and importance as to make it worthy of consideration for the purposes of the Act.'''

In its evidence to the Joint Committee, the Newspaper Society suggested that Yorkshire could, for those purposes, be considered a substantial part of the United Kingdom. Unfortunately, so too could a city as small as Cambridge. However, the amendment would at least distinguish the phrase from ''part'', which could be very small.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Once again, I am hugely relieved and grateful that my hon. Friend is on the Committee. I thank him for his helpful point. He, too, has tabled an amendment that is designed to address the issue, and I hope that he will say a few words on it. Whether or not the Yorkshire Evening Post would be caught under the provisions is a matter to be determined, but I do not cite it in particular. It is just one of many local newspapers—most of which could not, under any terms, be described as circulating in a substantial part of the United Kingdom—that have expressed considerable concern on that point. I will not quote any more of them, but they include the Bury Free Press, Portsmouth Publishing & Printing Ltd., and the Mid Sussex Times. There is a long list. The Government should at least pay attention to those concerns, which are genuinely felt by many newspapers that do not have an easy time, and that have real fears the provision will introduce a more burdensome regime.

I shall quote the director of the Newspaper Society. My hon. Friend the Member for South Cambridgeshire is right to say that the society gave

evidence to the Joint Committee, but the director points out that he only received the draft policy memorandum on the newspaper transfer regime—without any clauses attached—the evening before he was required to give that evidence. We should, perhaps, rather take into account the views that he has expressed since then. The director argues strongly that

''a complex and uncertain regime would make matters worse. Contrary to the Government's assurances, these proposals would not simplify and streamline the newspaper ownership controls nor remove small newspaper transactions from the special regime as promised.

The new regime would enhance, not increase, the discretionary power of the Government.''

The director argues, as have many, that the newspaper industry would have no objection to the application of the competition tests under the Enterprise Act 2002

''if they simply triggered the general regime shared by all other industries.''

Many think that the special newspaper regime relating to the smaller newspapers is unnecessary and unfair. I therefore ask the Minister to consider whether we should apply the full weight of the tests to small, locally based newspapers, when there are no real concerns about freedom of expression, and no other considerations. There is a real danger that the powers may increase the burdens on those papers, and make life more difficult for them.

Andrew Lansley (Conservative, South Cambridgeshire)

I am grateful for the opportunity to add a little to my hon. Friend's remarks. At paragraph 279 of its report, the Joint Committee stated:

''We would wish the Government to have full regard to the need for a substantial deregulatory outcome for the newspaper industry, especially as regards local newspapers.''

It should be deregulatory not only in relation to local newspapers, but on a wider basis. The Minister takes the same view. He was quoted as having said on 13 June last year that the Communications Bill promised a less burdensome regime for newspapers and would remove the smallest local newspapers from regulation altogether.

If the regime is to be deregulatory in its effect compared with the existing regime, it must do more than simply take the smallest local newspapers out of the special merger control regime. In effect, they can be outside the regime now if they have a circulation of below 50,000. Under section 58(4) of the Fair Trading Act, it used to be 25,000.

How do we achieve a substantial deregulatory outcome? Under the Bill, as drafted, the outcome would not necessarily be deregulatory. It would be deregulatory only if, in practice, Ministers were to invoke the intervention notice on few occasions. The scope of the special public interest regime under clause 364 and the definitions under clause 362 could bite substantially on local newspapers. As was illustrated by the exchange about the meaning of a substantial part of the United Kingdom, if it remains simply a part of the United Kingdom under the new subsection (9) of section 44 of the Enterprise Act, cities the size of Cambridge and considerably smaller areas than that could be covered.

I am talking not only about local newspapers, but about local weekly newspapers. Back in the 1960s, the regime excluded weekly periodicals, but included local weekly newspapers. That perversity under the current system has existed for the best part of 40 years and is strange to justify it on competition grounds. We know not least because the Government have reminded us so in the policy document that was issued last year that, in practice, on competition grounds, local merger have had no references that have been refused on grounds of competition alone. As for other public interest aspects, we have talked about the Sullivan case, but there are few such cases. The case of the Bristol Evening Post concerned a larger regional newspaper, not a smaller one.

From experience, evidence suggests that the mischief that could result from moving to a seriously deregulatory approach would be minimal. How would we go about it? Some amendments have different ways in which to achieve such a result. The lead amendment tabled in the name of my hon. Friend the Member for Maldon and East Chelmsford would redefine the newspaper for such purposes as a daily or Sunday newspaper. It would remove the anomaly of when local newspapers, including weekly newspapers, are brought back into the special merger regime where weekly periodicals on a national basis are omitted, even though they are newspapers for other purposes. Daily regional or local newspapers will still be included in the regime. In my area, the Cambridge Evening News is a daily paper. The fact that we removed ''local'' from the definition does not mean that it would not continue to be part of the definition, so it would be in. The second amendment, No. 588, would insert the word ''substantial''.

We have discussed what ''substantial'' means or may be interpreted as meaning for such purposes. It is at least an improvement on no qualification of part of the United Kingdom. Case law suggests that Cambridge—using my constituency as an illustration—is a substantial part of the United Kingdom, so the Cambridge Evening News would not be out on those grounds. I could not be accused of pursuing a closely self-interested approach to the matter, but many other local newspapers throughout the country, including some dailies, would be excluded.

Amendment No. 24 relates to circulation. I think that I am on my own for those purposes.

Mark Hoban (Conservative, Fareham)

No.

Andrew Lansley (Conservative, South Cambridgeshire)

Perhaps I shall win round Committee members. The Government have moved away from circulation. If we want to exclude a significant part of the local newspaper industry from the scope of the special merger regime, probably the only way to do it is by reference to circulation—the way in which the past regime has operated. The Government are proposing to get away from circulation in pursuit of consistency with the merger regime under the Enterprise Act, but the de minimis threshold in the

Act—at £45 million or whatever—has absolutely no bearing on local newspapers; most of which would be way outside it.

The moment that we use other definitions of share of supply or share of market, we would bring back into scope some small local markets. There is continuing merit in using a circulation criterion as a basis for establishing a de minimis threshold. I do not pretend that amendment No. 24 is sufficient in itself; we would need to reincorporate some of the circulation definitions that are currently in the Fair Trading Act. Given that we are pursuing the amendment of my hon. Friend the Member for Maldon and East Chelmsford and raising amendment No. 24 tangentially, I shall not worry too much about that.

If the Government were persuaded to change their mind, they would have to do the necessary drafting. The definition of circulation is not inherently difficult because it has been applied over many years. Even with the inclusion of free circulations now, it is still not that difficult to achieve.

We are using the figure of 50,000 because of the current application of a mandatory reference to circulation at the 50,000 mark. What does it mean for regional publications? For those purposes, the Cambridge Evening News would be included above 50,000, although my list—it is for 2001, so it is probably a little out of date—consists of regional titles, with a circulation of more than 50,000. The Yorkshire Evening Post might have been excluded, if we had gone for a circulation of more than 100,000. However, in 2001 its circulation was cited as 99,199, so the Yorkshire Evening Post is well within the limit, as indeed are a lot of local newspapers.

The Derby Evening Telegraph, and the South Wales Evening Post for example, are above the line.

Mark Hoban (Conservative, Fareham)

What about the Portsmouth Evening Post?

Andrew Lansley (Conservative, South Cambridgeshire)

The Portsmouth Evening Post is below the 50,000 mark, if that is of any help to my hon. Friend. I am encouraging him in the direction of amendment No. 24. We are referring to newspapers below the threshold of 50,000, which generally operate in a relatively local market. The need for a special merger control regime in relation to those newspapers has not been demonstrated in the past and should not be pursued now.

In terms of the practical changes to the legislation to achieve a deregulatory outcome, the Government must consider accepting some of these amendments—I think that they should accept them all. They should accept amendment No. 587 to remove the anomaly, and amendment No. 588 although it would probably have a limited benefit in practical terms. However, to achieve the deregulatory outcome that the Joint Committee sought and the Government promised the newspaper industry, it is necessary to go further and to think about re-introducing a circulation limit as a de minimis threshold, rather than introducing the ones that we will discuss in relation to clause 364.

Andrew Robathan (Conservative, Blaby)

I will not detain the Committee for long, but I wish to support my hon. Friend the Member for South Cambridgeshire.

This discussion addresses one of the main intentions of the Bill. We were told at length about how this Bill is meant to be deregulatory. With regard to newspaper mergers, I make no apology for quoting in full what my hon. Friend has already quoted. On 13 June, the Minister said:

''For newspaper transfers we will bring in a streamlined and less burdensome regime, that focuses regulatory action on those newspaper transfers that appear to raise competition or plurality concerns. We shall remove the smallest local newspapers from regulation altogether.''

Paragraph 9.7.2 of the policy of the draft Communications Bill of May 2002 states:

''De minimis provisions will remove the smallest local newspapers from regulation altogether.''

We all applaud the intentions of being deregulatory, streamlining, making life easier and getting the Government's nose out of places where it should not be, but they have not been fulfilled. My hon. Friend has drawn attention to the fact that the Joint Committee's recommendations are not being effectively followed: the proposed regime is more restrictive than the present one.

Local newspapers have been referred to, and I have been contacted by the editor of the Harborough Mail and the Lutterworth Mail.—[Interruption.] The Committee might wish to know that the House of Lords wishes to remain appointed, as we thought it would.

The Harborough Mail is a very small newspaper, and it has an offshoot, the Lutterworth Mail in my constituency, which has a circulation of 6,000. Can it really be in the national interest to have it covered by the Bill? I ask the Minister to fulfil the intentions that he stated in June. The Newham Recorder serves his constituency: I am sure that it would also wish to be outside the coverage of the Bill. It is ludicrous even to consider having small newspapers covered by the Bill when everybody—and in particular the Minister and the Government—has said that they want it to be deregulatory and to exclude small newspapers.

Stephen Timms (Labour, East Ham)

The key issue concerning these amendments and this clause is the one that I drew to the Committee's attention this morning. To focus specifically on local newspapers, the crucial question is whether public interest considerations should be taken into account when local newspaper mergers are examined? If one takes the view that they should be taken into account for local newspapers—as we argued for national newspapers, and the Committee accepted—what is in the Bill follows logically from that. I will explain that: it is the central issue of these amendments.

There is a view that we should not take public interest considerations into account with regard to local newspapers, and that they should be outside the regime altogether. The Government's view is that we should apply public interest considerations to them.

Andrew Lansley (Conservative, South Cambridgeshire)

Can the Minister explain why a national newspaper that is published on a weekly

basis but not on a Sunday would not be part of the special newspaper merger control regime, but a weekly newspaper that is published locally but not on a Sunday would be?

Stephen Timms (Labour, East Ham)

That was the explicit view of Parliament in 1965, and I think that it was right, because local weekly newspapers—Committee members will be familiar with many of them—are influential in their local areas in a way that national weekly publications, other than Sunday newspapers, are not. I accept the hon. Gentleman's point that it is a rather odd formulation. However, when one reflects on the role that the publications in question play in our communities, one can understand why it was good sense for Parliament in 1965 to insist on including local weekly newspapers in the regime.

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend has struck us dumb. It is extraordinary that we should be applying the full rigour of the tests to small weekly local newspapers but not to national weekly newspapers. It might be said that national weekly newspapers, apart from the Sundays, are not influential. However, let us consider the The Economist; I do not know whether it meets the definition of a newspaper, but many would regard it as such. No one could conceivably argue that The Economist is not a highly influential weekly publication that deals with the events of the day. Most people would regard such a publication as a newspaper.

Stephen Timms (Labour, East Ham)

The essential point in considering the amendments is whether the regime should be applied to local newspapers, which are typically weekly publications. There are, of course, examples of local daily newspapers, but most hon. Members read weekly local newspapers and the question is whether the influence of those is such that they should qualify for the public interest regime. In 1965, Parliament took the view, specifically and explicitly, that they would and that was right—the influence of those publications is such that they should be included.

Several hon. Members rose—

Stephen Timms (Labour, East Ham)

I have a choice of interventions.

Andrew Lansley (Conservative, South Cambridgeshire)

An embarrassment of interruptions.

Let us say, for the sake of argument, that Parliament had a legitimate concern in 1965. We may, however, reconsider that in the light of experience. Since 1979, nine reports relating to newspaper mergers have led to adverse findings. To what extent have adverse reports from the Monopolies and Mergers Commission or the Competition Commission—especially the nine that led to adverse findings—demonstrated any substantive concern about mergers affecting weekly local newspapers?

Stephen Timms (Labour, East Ham)

There are examples where that has occurred; for example, in respect of one or two of the cases that we have already considered. It is true that in respect of those cases public detriment concerns were raised about publications other than weekly newspapers, but in the reports that have been produced on a couple of those mergers—I think that the Bristol Evening Post was one of those and I shall check that—[Interruption.]

Andrew Lansley (Conservative, South Cambridgeshire)

It is a daily newspaper.

Stephen Timms (Labour, East Ham)

We are talking about organisations that publish various publications, including weekly newspapers. The reports—[Interruption.] I will check to see if that is the case and if it is not I will set it right.

There have been cases in which public detriment concerns have been raised in respect of an organisation that produced a daily paper. It all comes back to the central point on which the Committee must take a view, which is whether it is right that there should be public interest considerations in local newspaper mergers and whether the view that Parliament took in 1965 is still appropriate today. I think that it is. The influence of the publications in question means that they must be subject to a public interest regime.

I will qualify the comments that I made in June last year, but the essential principle on which the Committee needs to take a clear view is whether the influence and significance of local newspaper is such that they should be subject to a public interest regime. I believe that they should.

Andrew Robathan (Conservative, Blaby)

I look forward to having the argument set out clearly, because I do not believe that it has been. This morning we have been discussing how the world has changed. People used to take all their information from newspapers—local or otherwise. Now, they take much more information from other media, especially television. The world was different 38 years ago, when the Minister and I were probably still in short trousers. He cannot keep relying on the decisions of Parliament in 1965 as if they were somehow sacrosanct.

Stephen Timms (Labour, East Ham)

Indeed, but is the hon. Gentleman saying that there should be no regime for local newspapers? If that is the Opposition's point of view, it would be helpful if it were clearly expressed—then we would know where we all stood.

Andrew Robathan (Conservative, Blaby)

The Minister is not an unintelligent person. He can read the amendments. They bolster what the Government stated was their policy. As the Minister said, ''We shall remove the smallest local newspapers from regulation altogether.'' My hon. Friend the Member for South Cambridgeshire is suggesting that a circulation of 50,000 would be a good starting point.

Stephen Timms (Labour, East Ham)

Therefore, the hon. Member for Blaby accepts that there should be a public interest regime, albeit one that is amended in some way.

Andrew Robathan (Conservative, Blaby)

It is a moot point.

Stephen Timms (Labour, East Ham)

The hon. Gentleman now says that it is a moot point, but it would help to have some clarification of the Opposition's position.

John Whittingdale (Conservative, Maldon and East Chelmsford)

The amendments speak for themselves. We believe that weekly local papers and those with a small circulation should be covered by the existing competition regime, as are all other mergers and acquisitions. It is unnecessary to apply the full force of the special newspaper regime to them.

Stephen Timms (Labour, East Ham)

Yes, but is it necessary to apply any public interest regime to local weekly newspapers?

John Whittingdale (Conservative, Maldon and East Chelmsford)

No.

Stephen Timms (Labour, East Ham)

Well, that is helpful. The hon. Gentleman says that there should be no public interest considerations in the case of local weekly newspapers. The view taken in 1965 was that such considerations are appropriate in the case of local weekly newspapers and I believe that that continues to be correct—not because a decision taken in 1965 must be true now, but because that decision continues to be correct. I hope to make progress in explaining why I believe that to be the case.

The provisions are intended to protect an important public interest in the accurate presentation of the news, free expression of opinion and a plurality of views locally as well as nationally. That continues to be an important concern. Amendment No. 587 would delete references to local newspapers published other than on a daily or Sunday basis—the local weekly newspapers to which we have referred. The Bill as drafted mirrors the definition of newspapers set out in the Fair Trading Act 1973. That definition was derived from the Monopolies and Mergers Act 1965, so it carries more than 30 years of use and interpretation, covers daily and Sunday newspapers—whether local or national—and local periodicals, mainly the weekly publications.

The definition was drafted to ensure that only local periodicals were subject to the special newspaper merger regime, not national periodicals. Local weekly titles were included in the1965 Act at the explicit insistence of Parliament in recognition of the importance of the local press, because they were not initially included. We do not wish to extend the current regime to cover national periodicals, but the House was correct in 1965 and the grounds remain valid for recognising that local newspapers deserve particular protection.

The number of cases under the current special newspaper regime in which transfers of local newspapers that are circulated on a non-daily and non-Sunday basis have given rise to an adverse public interest finding justifies including such titles in the regime. I mentioned the Bristol Evening Post case, and it was right that the report referred to such concerns. A further example is the Daily Mail and General Trust plc and T Bailey Forman instance in 1994. Specified public interest issues can arise in respect of local newspaper mergers if they involve companies with significant turnover and/or share of supply. It is right for authorities to be able to investigate further if plurality concerns have been identified.

The jurisdictional tests proposed for newspaper mergers are the same as those that identify a deal as being sufficiently significant to come within the Enterprise Act merger regime. The only exception is that if there is an existing 25 per cent. share of supply of newspapers or of advertising in newspapers in a substantial part of the UK, plurality issues may be taken into account although there is no increase of the share of supply. That is because consolidation might not be directly relevant to plurality assessments.

The smallest newspapers will be taken out of the regime because the enterprise acquired will not have a

UK turnover in excess of £70 million or because the 25 per cent. supply threshold will not be reached in a substantial part of the UK. The treatment of local newspapers needs to be seen in the context of the reforms to the regime as a whole. In particular, the prior written consent of the Secretary of State on pain of criminal sanctions is no longer required.

Andrew Robathan (Conservative, Blaby)

Will the Minister give way?

Stephen Timms (Labour, East Ham)

Let me finish this important point because it was missing from several comments made about the Bill's impact. The Bill is substantially deregulatory for two reasons. The prior written consent of the Secretary of State, which is required before a merger under the current regime, will no longer be required. There is no question of criminal sanctions under the new regime. That is a significant change to the environment in which the mergers will take place and delivers the deregulatory goal that I referred to and that the Puttnam committee asked for.

Andrew Robathan (Conservative, Blaby)

What exactly did the Minister mean by a substantial part of the United Kingdom?

Stephen Timms (Labour, East Ham)

There are two respects in which a substantial part of the United Kingdom might be referred to. The meaning of the term is well understood and established in the Enterprise Act case. When the amendment adds the wording, it is not understood, and that would cause difficulties.

The Bill's proposals deliver a substantial deregulatory outcome for the newspaper industry. The Secretary of State will have discretion to intervene on public interest grounds to ensure that future regulatory intervention will focus on transactions that raise plurality issues. However, the preservation of accurate presentation of news, free expression of opinion and plurality of views in the UK is of key importance. As a result, it should be possible to address plurality issues if they arise in the context of a transaction involving local newspapers.

Andrew Lansley (Conservative, South Cambridgeshire)

I am slightly perplexed by the Minister's assertion that local newspapers will receive a deregulatory benefit because of the removal of prior consent and criminal provisions. Under section 58 of the Fair Trading Act 1973, prior written consent is required in transfers involving newspapers with circulations of at least 500,000, and the transfer would be unlawful without the consent and would lead to criminal sanctions. I am not sure how the two deregulatory effects have any impact under the present regime on small newspaper transfers, so they do not really offer a deregulatory benefit to small newspapers.

Stephen Timms (Labour, East Ham)

They would certainly have a deregulatory impact on the newspaper industry, including those parts of the industry that produce local newspapers. I underline that point because it seems, from some of the submissions made by the newspaper industry, that it has not been accepted. I am glad that Conservative Members accept it, because it is important. I have already said that the very smallest newspapers will be taken out of the regime, as the regime will not affect an enterprise acquired that does not have a turnover in the UK in excess of £70 million or will not reach a 25 per cent. share of the

supply threshold in a substantial part of the UK, so there are benefits, too.

I should like to make some progress on the other points that have been raised. We have had an exchange about the use of the word ''substantial'', which would be inserted by amendment No. 588. The definition of ''newspaper'' used in the Bill mirrors the wording used under the current special newspaper merger provisions of the Fair Trading Act. The relevant authorities have considerable experience of applying the relevant test in practice.

As I have said, I am not sure—and I do not think that anyone else is, either—what effect the amendment would have. It would certainly increase uncertainty about the issue, and that would be unhelpful. Inserting the word ''substantial'' would complicate the analysis of the jurisdiction of the authorities, and would weaken the protection of public interest currently available. In my view, it is essential that we maintain that protection in the local sector.

Amendment No. 262 refers to clause 362(3), which incorporates new clause 44(8) to (10) into the Enterprise Act 2002. The amendment would remove the ability of the Secretary of State to amend the definition of newspapers for the purposes of the merger control regime, and would tie the definition to the exercise of certain provisions of schedule 14 to the Bill, which deals with media ownership rules.

I have already said that the definition of ''newspaper'' as set out in the provisions goes back 30 years. We are conscious that what constitutes a newspaper, as well as the distribution of newspapers, may well change. There may in future be a need to ensure that the provisions protecting plurality are drafted so that changes in the newspaper industry do not prevent the effective operation of the special newspaper public interest regime. It may, for example, become more common for titles to circulate across national boundaries, so that important UK titles do not necessarily circulate wholly or mainly in the UK. If that were the case, it might be appropriate to amend part of the definition of ''newspaper''. The power to amend the definition, as set out in new subsection (9) of section 44 of the Enterprise Act, is intended to enable that.

Amendment No. 24 relates to clause 364, but it is appropriate to deal with it now in the context of mergers involving local papers. The amendment would introduce an additional threshold that would have to be met before the Secretary of State was entitled to intervene in transactions that raised newspaper public interest concerns or did not satisfy the general jurisdictional thresholds of the merger control provisions of the Enterprise Act. As drafted, the Bill will enable the Secretary of State to intervene on newspaper public interest grounds when a transaction satisfies the general merger control jurisdictional criteria—namely when the value of turnover in the UK of the enterprise being acquired exceeds £70 million, or when the merger would create or enhance a 25 per cent. share of supply in the UK, or a substantial part of the UK. However, the criteria do not necessarily catch all the transactions that might raise public interest concerns in accurate presentation

of opinion, free expression of opinion or plurality. Clause 364 provides that, when a merger does not meet the standard jurisdictional criteria, but involves an enterprise that had a 25 per cent. share of the supply of newspapers or advertising in newspapers in the United Kingdom or a substantial part of it, it may be investigated on public interest grounds. There will be no competition assessment.

The effect of the proposed amendment would be to prevent the Secretary of State from intervening in cases involving plurality concerns that do not satisfy the standard merger regime thresholds when the total circulation of the newspapers concerned does not exceed the specified threshold. That would apply if the relevant newspaper had a significant share of supply or even if it had a monopoly at a local level. It would not be right that we should be precluded from considering whether a newspaper transfer gave rise to public interest concerns in such circumstances.

Andrew Lansley (Conservative, South Cambridgeshire)

I am not sure whether the Minister is arguing that small, local newspapers should be subject to the merger control regime on competition grounds. Surely, he was not arguing that, given that the barriers to entry to small and local newspaper markets are slim and the merger control regime is not intended to apply to small enterprises. Can he cite an example of the adverse findings relating to past merger control inquiries that have concerned newspaper acquisitions when the total circulation of the acquiring and transferred newspaper—the two parties to the merger—is below 50,000? I do not think that he can.

Stephen Timms (Labour, East Ham)

I do not have the circulation data about the cases to which I have drawn the Committee's attention. Relatively small weekly newspapers were included in the Bristol Evening Post and the T Bailey Forman cases. I do not know the precise circulation figures for them. The essential point is whether we think it right that there should be the ability to take public interest consideration into account in the case of local newspapers. My contention is that it is right and that we should do so.

There has been some discussion about the 50,000 threshold. Under the Fair Trading Act regime, newspaper mergers require the prior consent of the Secretary of State. In most cases, such consent can be given only following a report on the transaction by the Competition Commission. However, in certain cases, including when the circulation of the newspaper being transferred falls below 50,000, the Secretary of State can give such consent without reference to the Competition Commission in relation to the transaction, although she retains an ability to make such a reference if she considers it appropriate. That is important. It was suggested that, if the newspaper circulation was below 50,000, that was not a possibility. That is not right. It is not a requirement. Nevertheless, there is a requirement to seek the prior consent of the Secretary of State under the current regime on pain of criminal penalties about transactions, when the circulation of the relevant

paper is less than 50,000, provided that the other combined circulation thresholds are met.

New clause 22 would restrict the approach that may be taken by the competition authorities in defining relevant markets in the context of mergers involving newspapers. It is not appropriate for Parliament to legislate the economic analysis that should be applied by the competition authorities in a merger context. The clause would apply to an investigation under the general merger control regime of the Enterprise Act that applied to newspapers as well as to the application of the special newspaper public interest criteria.

As members of the Committee will know, one of the aims of the Enterprise Act is to ensure that competition investigations are handled by specialist competition authorities without undue interference. As a result, it is proposed that Ministers can intervene in merger investigations only when specified public interest concerns arise. Against that background, legislating the approach to be taken by those authorities to market definition in a general merger context would be inappropriate. I am aware that the wording proposed was taken in part from provisions set out in schedule 14 of the Bill, which deals with media ownership. I do not agree that it is appropriate to incorporate provisions dealing with the identity of persons who may hold the Channel 3 licence into the merger control provisions of the Enterprise Act—which is what the new clause would do.

Let me conclude with the central point that the Committee must decide whether it is appropriate for there to be the possibility of applying public interest considerations in the case of local, as well as national, newspapers. My argument is that it is appropriate and that the Committee should therefore reject the amendments.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I am grateful to the Minister for replying at some length and dealing with all the points that have been raised. However, I am somewhat disappointed by the content of his remarks. The Minister initially said that the Bill was deregulatory and we have shown that, when it comes to small and local newspapers, it is not; it is more restrictive than the existing regime. It means that smaller free and paid-for local newspapers that are not subject to the regime under the Fair Trading Act will in future be subjected to discretionary scrutiny on plurality grounds under the new regime.

The Minister said that the Bill will be deregulatory throughout the newspaper industry and it is certainly the case that in some aspects it is. However, I am not sure that it would be a comfort to the Maldon & Burnham Standard to know that the requirement on the Daily Mail to give prior notification will be removed. He went on to state that the addition of ''substantial'' would create uncertainty. It would not create uncertainty in the case of a small local newspaper; it would be fairly certain that if ''substantial'' were added, as we have suggested, it would no longer be caught by the Bill, whereas at the moment it would be. In that respect, it would be deregulatory and create certainty.

The Minister's argument seemed to boil down to the fact that Parliament in 1965 stated that weekly and local newspapers should be covered, and therefore, because that had been decided in 1965, we should accept that it was right. I do not know why Parliament took that decision in 1965. We were not in Government in 1965, so it was the Labour party that was responsible. I would hope that we disagreed with it then; we certainly disagree with it now. I am not persuaded by the hon. Gentleman's arguments and we wish to press the amendments to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 4, Noes 16.

Clause 363 - Additional investigation and report by OFCOM

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I beg to move amendment No. 666, in

clause 363, page 312, line 4, after '45', insert

'including the grounds for such advice and recommendations'.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss the following:

Clause stand part.

Amendment No. 267, in

clause 369, page 317, line 5, leave out 'OFCOM'.

Amendment No. 270, in

schedule 18, page 525, line 11, leave out 'and OFCOM'.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

It falls to me to move amendment No. 666. Hon. Members may have noticed that it is the amendment of the beast, but it is actually a harmless amendment despite its inauspicious number. It would clarify an issue that the Minister might be able to clarify anyway: what is the amount and extent of the information that will be published when Ofcom takes an advisory role on newspaper mergers?

The votes of Liberal Democrat Members have demonstrated that we are not opposed to Ofcom's role in the way in which Conservative Members are—there is a clear difference of political views there. However, if Ofcom is to have the role, it is important that its grounds for giving advice and making recommendations should be published in order to make the proposition workable.

If the grounds for the recommendations are published, it will give more clarity to newspapers, which will allow future proposals for mergers and

takeovers to be guided. The Minister referred to cases of the Bristol Evening Post and Mr. Sullivan and, more recently, the Express Group and Mr. Desmond. When such controversial cases arise, it would assist the newspaper industry to know not only recommendations made, but the grounds for them.

I understand that under schedule 16, paragraph 18, the reports from Ofcom will be published. We want either a verbal commitment from the Minister or a commitment in the Bill that the published reports will include not only the recommendations, but the grounds for them.

John Whittingdale (Conservative, Maldon and East Chelmsford)

The amendment is not objectionable and if we must have clause 363, the amendment would marginally improve it. However, our worries are a little more fundamental than the hon. Gentleman's because we question the whole necessity of involving Ofcom in newspaper mergers and acquisitions. I suppose that that will lead me to slip into the clause stand part debate, which has been grouped with the amendments. The amendments that we tabled were designed to remove Ofcom from the process, but we object to the whole clause.

The Bill proposes that the regime for newspaper mergers—not for other mergers—should require the involvement of four separate regulators that will make references, investigate the merger and determine any measures required after a reference. The four institutions are the Office of Fair Trading, the Secretary of State, the Competition Commission and Ofcom. It is self-evident that the involvement of so many regulators will impose burdens on those who wish to acquire a newspaper interest. They will have to spend time negotiating at least twice and possibly three times with officials on exactly the same matters, which will cause uncertainty for all involved. Advice is already required to be given to the Secretary of State by the OFT, and now it is proposed that Ofcom should conduct another investigation and produce another report that will inevitably cover some of the same ground. If a reference is made and the recommendation is that the merger cannot or should not go ahead at all or be subject to certain conditions, the Minister will have to take advice from the Competition Commission, the OFT and Ofcom again.

That is hardly a streamlined regime. It will increase the time that is taken, it will be bureaucratic and it will be expensive for everyone involved. Regulators will have to consult widely, which will lead to more time-consuming and expensive inquiries. On those grounds alone, we see no necessity to introduce the involvement of Ofcom when the existing regime works perfectly well.

However, I have a more fundamental concern. We have spent many weeks discussing the fact that, essentially, Ofcom is being established to deal with questions relating to electronic communications. It is involved in the regulation of the telecommunications industry, and of the broadcasting sector where there has been spectrum scarcity, and the existence of a limited amount of spectrum has justified it taking an interest in content. As we know, it will have a powerful content board, which will require it to reach judgments

on the content of the industries that it is responsible for.

That goes to the heart of my concern. The idea that a regulator should begin to take an interest in the content of newspapers is alarming. It has given rise to fears about what role Ofcom might take in advising the Secretary of State. At the moment, the publishing industry is not subject to restrictions that apply to other forms of media, which is right, in particular because there are no barriers to entry into it, unlike in the broadcasting sector. To allow a body whose remit includes content regulation for broadcasters to get involved in matters relating to newspaper content is dangerous. It is easy to say glibly that the freedom of the press must be guarded and defended, but it is a fundamental freedom.

I am sure that the Minister will say that there is no threat to the freedom of the press in this aspect of the Bill, but that is not the view of many newspapers. The Sun stated:

''Press freedom is under threat from government regulation.

At present the Communications Bill says Ofcom . . . oversees newspapers.

This raises the alarming spectre of governments being able to influence what papers publish.

This may be an honest error by Tessa Jowell, the Culture Secretary, or her civil servants.

It may be something a tad more sinister from Industry Secretary Patricia Hewitt—who as a Kinnockite mistrusts the Press.

With parts of the Press perfectly willing to turn the Blairs into demons—and print the cruellest jibes about them—we could understand if some in government were out to get Fleet Street.

But if newspapers are put under Ofcom's umbrella, Press freedom will be dealt a dangerous and unprecedented blow.''

Unusually, the Daily Mirror finds itself in the same camp as The Sun. It states that the only real questioning voice of the Government

''has come from the press—and the loudest has been the Daily Mirror''.

I am unsure whether I agree with that.

''Now Labour is trying to control that voice.

Its weapon is something called the Communications Bill which will introduce a new supposedly independent regulatory body with restrictive powers over newspapers on the grounds of public interest.

Don't be fooled.

This is not Labour guaranteeing your rights as the public, it is Labour giving itself a free hand to do whatever it wants and silence anyone who dares to disagree.''

Finally, I shall cite the Daily Mail. For the Government that to get the Daily Mail, the Daily Mirror and The Sun in to the same camp is quite an achievement, but in this instance they have done it. The Daily Mail said:

''Mr. Blair's desire to crush any vestige of media independence will be put into sinister relief when Parliament gives a second reading to the Communications Bill, which, far from protecting Press freedom—which Ministers claim to believe in—will do quite the opposite.''

In addition, Ofcom

''as it is devised . . . will also have a say in 'public interest matters' . . . giving it an extremely dangerous potential to introduce statutory regulation in newspapers in the future.''

The article continues:

''In its present form, the Ofcom legislation would enable an authoritarian Prime Minister to introduce censorship, claiming to be able to act in the public interest.''

Some of those warnings may appear a little lurid to Committee members, but there is real concern about the issue. As my hon. Friend has already said, the Minister is a courteous and intelligent man and I am sure he never intended that the Bill should usher in the kind of censorship regime about which some of the newspapers have expressed a fear. We are, nevertheless, introducing an opportunity for regulators, who are responsible in other areas for the monitoring of content, to get involved in the newspaper takeover regime. That is, as I have already argued, unnecessary and Ofcom has no obvious expertise in this particular area.

Ofcom will consist of people who have, until now, been involved in regulating the telecommunications sector with Oftel, or with the Broadcasting Standards Commission and the Independent Television Commission, bodies that are more involved with the content of broadcasting. None of the bodies that are coming together to comprise Ofcom have anything to do with newspapers.

Andrew Lansley (Conservative, South Cambridgeshire)

I am slightly perplexed about the Government's intention. For example, two telecommunications companies may be engaged in a merger that is significant for the purposes of merger control, but which did not give rise to significant market power and therefore did not impact on Ofcom's role in setting conditions. There is nothing in the legislation that requires the OFT to seek Ofcom's advice in relation to such a merger, even though Ofcom has explicit responsibilities for and detailed knowledge of the industry. Does my hon. Friend think it odd that Ofcom would have a little scrutiny role over the industry and that it should be explicitly given legislative power to provide advice?

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend makes a fair point. He uses the word ''odd'' and odd is a word. However, he highlights the reason why some have attributed more sinister motives, rather than just oddness, to the clause. Ofcom will be required to provide advice to the Secretary of State in an area in which it has no obvious expertise. One assumes that in order to acquire the relevant knowledge and experience of mergers, officials from the Minister's Department might have to be seconded to Ofcom before they could take on such a role. That seems unnecessary when the OFT is already carrying out that task.

We are concerned that the clause includes Ofcom in the process for assessing newspaper mergers and acquisitions. I have no doubt that the Minister will say that the lurid interpretation that some have put on that fact is entirely misplaced and that such fears are unfounded. I hope that he is correct. The Minister must recognise, however, that the Government have managed to unite the whole newspaper industry in expressing its concern. Therefore, they should have a good reason for including the provision requiring Ofcom's involvement. The Government should be saying, ''We realise that this may give rise to some

fears, but the advantages of involving Ofcom are so great that we feel the provision should be included.''

We cannot see any advantages to involving Ofcom at all. Given the real anxieties about this matter and that it is not obvious what additional knowledge, experience or advice Ofcom could bring to the table, we feel that the entire clause is redundant and dangerous and should be removed.

Stephen Timms (Labour, East Ham)

As the hon. Member for Maldon and East Chelmsford demonstrated, the provision has been the subject of a great deal of interest in the newspaper industry, which has lobbied nationally and locally for Ofcom's role to be removed.

I was grateful for the support expressed by the hon. Member for Sheffield, Hallam (Mr. Allan), but the hon. Member for Maldon and East Chelmsford has just treated the Committee to a sweeping denunciation. Anyone examining our deliberations might get the impression that there is unanimity on the issue, but that is not the case. The Joint Committee chaired by Lord Puttnam reported:

''We consider that OFCOM will be able to develop sufficient expertise in media markets and plurality issues to make it well-placed to perform the advisory role envisaged for it.''

That pre-legislative scrutiny committee examined the matter and was lobbied on the lines outlined by the hon. Gentleman, but reached a different view. It stated that the advisory role proposed for Ofcom, on which I will elaborate in a moment, was appropriate.

The industry's fears stem from a misapprehension of Ofcom's role in the regime. Ofcom's role in newspaper mergers is advisory and relates only to the specified newspaper public interest considerations. Ofcom will take no decisions and unlike the advice on competition from the OFT, Ofcom's advice on plurality will not be binding on Ministers. Ofcom will have no role at all in newspaper mergers unless and until the Secretary of State intervenes in a particular case.

At present, officials in my Department provide such advice. In future, Ofcom will provide it. That is the change being made. Ofcom will provide the advice and, as the hon. Member for Sheffield, Hallam pointed out, it will be published. That will make the process much more transparent than in the past, which is a significant benefit for the industry. Decisions on newspaper mergers that appear to raise public interest concerns will remain the responsibility of the Secretary of State and she will be accountable to Parliament for them. As the independent regulator, however, Ofcom is the body best placed to advise the Secretary of State on specified newspaper public interest considerations to help her decide whether to make a reference.

We are certainly not attempting to subvert press freedom or subjugate the press to the whims of politicians. The proposals relate only to merger control. It is hard to understand how one could conclude from that advisory role that we are entering the type of world described by the hon. Member for Maldon and East Chelmsford. The provision is not about content regulation. I emphasise that the Bill does not allow Ofcom to play any role in newspaper

content regulation—none whatever. It is not a means of introducing statutory regulation of the newspaper industry through the back door. Let me make it absolutely clear once again: we have no plans to extend content regulation to the newspaper industry. In fact, widening the availability of advice to Ministers, and making the views put to them more transparent, can only improve decision-making about those important issues, and will certainly improve public understanding of them.

Andrew Lansley (Conservative, South Cambridgeshire)

I am interested in the Minister's contention that Ofcom would not be in a position to give advice on editorial matters. What if the Secretary of State, subsequent to a reference, were minded to use the powers under clause 373, which have to do with attaching conditions to the operation of a newspaper or requiring the agreement of the relevant authority before dismissing an editor or a journalist? Is the Minister saying that there is no possibility of Ofcom giving advice to the Secretary of State, or making recommendations on the application of such provisions? I think that there is.

Stephen Timms (Labour, East Ham)

The clause is clear about the narrow circumstances in which Ofcom will provide advice. It will do so when it has been determined that the Secretary of State will intervene. The Secretary of State will seek advice, which will be provided by Ofcom, and that advice will be published. The change is that the advice will come not from officials in the Department, whose views will never be made known, but from Ofcom. That will be a significant improvement in the transparency of the process. It certainly does not give rise to any of the alarms and conspiracy theories that have been raised outside Committee.

John Whittingdale (Conservative, Maldon and East Chelmsford)

The Minister says that Ofcom's remit is narrowly defined, but the clause simply says that

''The report shall contain—

(a) advice and recommendations on any . . . public interest consideration mentioned in the intervention notice''.

Those considerations will probably include the issue of plurality, and that will require Ofcom to consider questions of content. The Minister seems to be arguing that the provision will be of huge benefit to the newspaper industry, but he must recognise that the benefit is utterly invisible to everyone involved in the industry. They think that the provision could be abused.

Stephen Timms (Labour, East Ham)

We are talking only about instances in which a merger is being considered, and advice is being given to the Secretary of State about whether that merger is appropriate. We have already considered examples in which matters such as the accurate presentation of news have been an issue. In those instances, officials in the Department would have provided advice, and the Secretary of State would then have taken a view. The difference is that the advice will now be provided by Ofcom. It will be published for all to see and, as always, the Secretary of State will make a decision based on it. I hope that it is clear that the proposed framework will not have any of the

draconian effects that have been mentioned outside the Committee.

On amendment No. 666, clause 363 provides that when the Secretary of State has intervened in a merger on newspaper public interest grounds, Ofcom will provide her with a report on the newspaper public interest considerations that she has specified. The report must include two things: first, Ofcom's advice and recommendations on the newspaper public interest considerations specified in the intervention notice, and secondly a summary of representations that it has received on those considerations.

The hon. Member for Sheffield, Hallam wanted Ofcom to give its grounds for its advice and recommendations, but that is not necessary. Ofcom's role in relation to the special newspaper merger regime will be purely advisory. The decision will remain with the Secretary of State. Paragraph 18 of schedule 16 requires the report to the Secretary of State to be published. Ofcom is also required to provide a summary of the representations made to it. That will provide sufficient evidence of the basis for Ofcom's advice and recommendations without it being necessary to legislate for it. It will mean a great deal more information being in the public domain about the basis for the decision, the advice itself and the background to it.

Amendment No. 267 would amend clause 369, which allows the Secretary of State to publish advice and information on the newspaper public interest considerations specified under clause 361 and to show how she expects the newspaper provisions to operate. It requires that, if she chooses to publish such guidance, she must consult the other players in the regime, such as the OFT, the Competition Commission and Ofcom. Given that Ofcom is to advise the Secretary of State on mergers raising newspaper public interest considerations, it is only sensible that it should be given the opportunity to comment on the draft guidance. It would only be comment. The Secretary of State would not be bound to accept any views that Ofcom offered on the draft guidance.

I come now to amendment No. 270 to schedule 18. Under the Fair Trading Act, the Secretary of State accepted several conditional consents to newspaper transfers. They are underpinned by criminal sanctions. Schedule 18 sets out a mechanism by which the Secretary of State can accept Enterprise Act undertakings in place of the Fair Trading Act's conditional consents. The Secretary of State may consult the Office of Fair Trading and Ofcom before deciding whether to accept such an undertaking.

Given that the Fair Trading Act conditional consents relate to competition and public interest issues, it seems appropriate that the Secretary of State should consult the Office of Fair Trading and Ofcom when considering whether to accept Enterprise Act undertakings in their place. The amendment would not preclude the Secretary of State from consulting Ofcom, when deciding whether to accept such an undertaking.

To sum up, Ofcom's role in the regime will be purely advisory. The proposals are only about merger control, not content regulation. The Government have no interest or intention in extending content regulation to the newspaper industry. The clause will not lead to a move in that direction.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I am grateful to the Minister for his helpful and comprehensive response. He must be gratified by the faith that the newspaper industry has shown in staffing his Department in that it is pressing so hard to maintain a situation whereby advice comes from his officials, not Ofcom. If the amendment was a kind of beast, it was a stalking horse. The pantomime season has only just finished, so it would be most appropriate to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 12, Noes 4.

Clause 364 - Extension of special public interest regime for certain newspaper mergers

Andrew Robathan (Conservative, Blaby)

I beg to move amendment No. 382, in

clause 364, page 312, line 42, leave out from beginning to end of line 2 on page 313.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss the following:

Amendment No. 482, in

clause 364, page 313, line 6, leave out 'or newspaper advertising'.

Amendment No. 483, in

clause 364, page 313, line 11, leave out from 'newspapers' to 'shall' in line 12.

Amendment No. 484, in

clause 364, page 313, line 13, leave out 'or newspaper advertising'.

Amendment No. 485, in

clause 364, page 313, line 20, leave out 'or newspaper advertising'.

Amendment No. 486, in

clause 364, page 313, line 27, leave out 'or newspaper advertising'.

Amendment No. 487, in

clause 364, page 313, line 28, leave out 'or newspaper advertising'.

Amendment No. 488, in

clause 364, page 313, line 34, leave out subsection (4).

Andrew Robathan (Conservative, Blaby)

The beginning of the explanatory notes to clause 364 states that it amends section 59 of the Enterprise Act

''which currently makes provision for the Secretary of State to intervene and serve a 'special intervention notice' in relation to an exceptional category''—

and now come the critical words—

''of mergers involving government defence contractors.''

We understand what the Enterprise Act is about.

The clause also introduces a new subsection (3D) to section 59 of the Enterprise Act. It allows a special public interest merger reference to be made where a newspaper with at least 25 per cent. of the advertising in newspapers in the UK is involved in a merger. The amendments would remove the provision and the reference to advertising. There is nothing to stop such a reference being made in the ordinary way under chapter 1 of part 3 of the Enterprise Act. We do not suggest that there is anything wrong with that as a general principle, but we cannot see that advertising should have anything to do with the special considerations under section 58 of the Enterprise Act, as set out in clause 361, which are the accurate presentation of news, free expression of opinion and plurality of views in newspapers.

In the case of that provision, the only considerations are those in proposed new section 58(2A). A reference is proposed when only one paper carries the requisite 25 per cent. market share of advertising in newspapers—that is 25 per cent. of the whole newspaper advertising market—and there is no increase in that share. It is difficult to understand how that can be relevant when the market share of the paper itself is not relevant.

I shall cite an example. A paper with, say, 5 per cent. of the newspaper market could be covered under the provision, because it carried more than 25 per cent. of the advertising. That might be unlikely, because advertisers want to advertise where the circulation is greatest, but that is my point. If the issue is about the market share of the paper as a paper, it is already catered for in the Bill. The only reason for the provision is that the Government anticipate its use when there is less than a 25 per cent. market share for the paper itself. Will the Minister justify that? Why do the Government think that, when a paper carries 25 per cent. of the advertising and has less than 25 per cent. of the share of the market as a newspaper, it is particularly relevant to look at the accurate presentation of news, the free expression of opinion and the plurality of views?

The amendment was drafted on the advice of the Advertising Association. We are not saying that newspaper advertising should not be examined by the Commission, but when the newspaper has less than 25 per cent. of the market share, why should it be referable under the new provision simply because it carries 25 per cent. of advertising? Why should the special public interest considerations have to be looked at in the light of such a merger when they are not apparently relevant to any other paper with less than 25 per cent. of the newspaper market?

Advertising is an ordinary commercial product and should be treated the same as any other product under chapter 1 of part 3 of the Enterprise Act. Newspapers with 25 per cent. of the market share can rightly anticipate special merger references, but those with less should be free to further their commercial interests just as any other enterprise would be.

Finally, for the benefit of the Minister, I wish to point out that if he were to accept amendment No. 382, it would remove one of the two references to a

''substantial part of the United Kingdom''.

Stephen Timms (Labour, East Ham)

The hon. Gentleman started well. I listened carefully to what he said and I can give him some encouragement on that score. We are looking for a proxy for the level of influence that a newspaper has in the community that it serves—that is what we want to measure. That could be because of the newspaper's level of circulation or distribution. The share of supply of newspapers test would enable us to look at transactions involving titles that have a 25 per cent. share of supply in terms of circulation or distribution. The influence of a newspaper may also be measured by the share of advertising revenue that it generates, because newspapers can only attract a large proportion of advertising if they are influential in their target communities, otherwise there is no point in placing advertising in them.

A transaction involving such a newspaper could raise a specified newspaper public interest concern.

I noted what the hon. Gentleman said and because he tabled the amendment, my officials have held discussions with officials at OFT about how it might operate the share of supply test in the extended jurisdiction regime. I want my officials to pursue those discussions further and if the hon. Gentleman withdraws the amendment, I shall consider the matter further before we consider the Bill on Report and, if appropriate, I shall table suitable amendments.

Should that further reflection lead us to conclude that we should not move amendments on Report, I shall write to the hon. Gentleman before then. I can offer him the reasonable prospect that we might be able to move in the direction for which he argued.

Andrew Robathan (Conservative, Blaby)

The Minister is, as always, courteous and reasonable, and he knows that I do not like to go against that. I think that the point about the ''substantial part of the United Kingdom'' swayed him. I thank him for his words, and I thank his officials for the hard work that they will carry out. With the hope that the Minister will move an amendment on Report that might be better than ours, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No. 383, in

clause 364, page 313, line 22, leave out 'their parties'.

I am not sure that I have quite the same hopes for this amendment, but I have a small degree of hope for one or two of those further down the Order Paper.

The amendment is moved in the spirit of inquiry. I am not sure what is meant by the phrase:

''transactions concerned differ as to . . . their parties''.

Does that relate to sales of newspapers because each sale will obviously be to a different party? It is curious that the phrase is included in the clause.

When we consider advertising, what is the point of allowing supply to be treated as different if the parties are different? If an advertiser buys space in different papers, should a purchase from each paper be treated as a separate form of supply? If that is the case, there will be many references under the provision because many papers could have at least 25 per cent. of the market from each advertiser.

That might not be the purpose of the reference, in which case I retreat. I want the Minister to explain the curious way in which the clause is worded.

Stephen Timms (Labour, East Ham)

The amendment would change the wording of new section 59(6C). The wording of that mirrors the wording of the general merger regime in the Enterprise Act 2002, which was adopted from our old friend the Fair Trading Act. The identity of the parties to a transaction has been treated as relevant when deciding whether the share of supply test is satisfied for a considerable period. There is no compelling reason why we should adopt a different approach now.

The amendment would introduce different tests for establishing whether the share of supply test is satisfied in cases that fall under the general merger regime and the special newspaper public interest regime. It would be unduly burdensome to ask the decision-making authority to calculate the share of supply in two different ways. Given the familiarity of all members of the Committee with the Fair Trading Act 1973 and that fact that that has not caused difficulties during the past 30 years, I hope that the Committee considers it appropriate to leave the words in the Bill.

Andrew Robathan (Conservative, Blaby)

Tell us what it means.

Stephen Timms (Labour, East Ham)

The hon. Gentleman is shouting at me. The identities of the parties to a transaction have been treated as a relevant factor in deciding whether the share of supply test is satisfied for a long time.

The rest of the debate is in Hansard.