Clause 81 - Enforcement regime for public interest and special public interest cases

Enterprise Bill – in a Public Bill Committee am 11:15 am ar 1 Mai 2002.

Danfonwch hysbysiad imi am ddadleuon fel hyn

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

Photo of Andrew Lansley Andrew Lansley Ceidwadwyr, South Cambridgeshire 11:30, 1 Mai 2002

I do not want to detain the Committee for long. I made the following point yesterday in relation to a number of preceding clauses. At this stage, we are re-entering the structure of the Bill as it relates to special public interest cases. For that purpose, I am interested in the extent of the public interest. We have previously discovered, or at least I have discovered although some members of the Committee may have known this already, that the Secretary of State will be able to intervene in public interest cases to require a reference to be made, and will be able to make a reference even if the OFT has advised against it or has seen no adverse public interest.

The Secretary of State will, in effect, be able to disregard a report from the Competition Commission and proceed with accepting undertakings or making orders. A whole enforcement regime will flow from that, to a point at which it would be very kind of them to contemplate the thought that the OFT might advise them. There will be no further contemplation that the OFT's advice should be heeded by them in any way. As far as I can see, they will be entirely free to proceed as they think fit.

We have a complete structure from an initial intervention by way of specifying additional public interests that have to be considered all the way through to enforcement action, and at no point will the Secretary of State be formally constrained by the advice of the OFT or the decisions of the Competition Commission. I make that point because I want to put on record that the more I spend time on that matter, the more necessary it becomes for the Government to consider a different regime for any public interest case that does not relate specifically to national security. I shall leave special public interest cases out of that because we discussed them yesterday.

Photo of Douglas Alexander Douglas Alexander Minister of State (e-Commerce & Competitiveness)

I shall endeavour not to cover ground that, as the hon. Gentleman said, the Committee has already covered. Instead, I want to focus my remarks specifically on clause 81.

Clause 81 will bring into effect a separate but similar enforcement regime for those cases in which the Secretary of State decides to intervene. I should like to highlight the two main differences between the enforcement regime for the Secretary of State and that for normal merger cases. First, the Secretary of State's interim undertaking and order-making powers will cover the period before and after a reference. They will come into effect once the Secretary of State has introduced the intervention notice, which may be before or after the merger has been referred. Those are referred to as pre-emptive undertakings, in order to distinguish them from the OFT's initial orders and the Competition Commission's interim orders and undertakings.

Secondly, the Secretary of State will make the orders by statutory instrument. The OFT and the Competition Commission will make orders on their

own authority because we believe that that is appropriate for independent competition authorities. Unlike the Competition Commission, the Secretary of State will continue to evaluate a merger on the basis of the public interest test. Because Parliament is, of course, the guardian of public interest, it seems appropriate that it will remain involved in approving the Secretary of State's order on those matters. In future, all such orders will be made under the negative resolution procedure. Previously, any order involving divestment would have required an affirmative resolution. Divestment is now treated like any other remedy in the main merger regime; it is no longer treated separately.

To address a couple of points made by the hon. Member for South Cambridgeshire (Mr. Lansley), I confirm that it is our intention to ensure that the Secretary of State takes the final decision on cases that raise matters of public interest. However, he or she will be constrained by having to accept competition authorities' views on competition. Of course, the Secretary of State, rather than the OFT, will have a determinative role.

Photo of Andrew Lansley Andrew Lansley Ceidwadwyr, South Cambridgeshire

I do not want to delay the Committee, but I want to make it clear that I understand the Minister's point about the way in which the Secretary of State will be constrained on competition matters by the advice of the OFT or the decisions of the Competition Commission. We are, however, dealing with a public interest enforcement regime. Unless the Minister tells me that I am wrong, I shall assume that the Secretary of State will not be constrained on public interest matters by such advice or decisions.

As far as I can see—we may discuss this in detail although perhaps we do not need to—as a result of bringing schedule 6 into effect, clause 81 will not even constrain Secretaries of State in making orders to remedy any adverse public interest effects that arise as a result of the Competition Commission's investigation. They seem to be free to accept undertakings or make orders as they choose. I hope that that is not the case, but I should like to know whether there is some such provision.

Photo of Douglas Alexander Douglas Alexander Minister of State (e-Commerce & Competitiveness)

I am wary of being drawn on to ground that has been covered at some length. I hoped that Members would agree unanimously that it is appropriate that public interest decisions rest specifically with Secretaries of State, not least given the degree to which they are accountable to Parliament, which is best placed to determine and advance public interest. The importance of Parliament is a message that has been heard loud and clear in recent years, and the clause reflects that.

Question put and agreed to.

Clause 81 ordered to stand part of the Bill.

Schedule 6 Enforcement regime for public interest and special public interest cases