Schedule 7 - Provision that may be contained in certain enforcement orders

Enterprise Bill – in a Public Bill Committee am 11:30 am ar 1 Mai 2002.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Douglas Alexander Douglas Alexander Minister of State (e-Commerce & Competitiveness) 11:30, 1 Mai 2002

I beg to move amendment No. 191, in page 209, line 7, after `proceedings;' insert—

`(ja) the approval by the relevant authority or another person of anything required by virtue of the order to be done or of any person to whom anything is to be transferred, or in whom anything is to be vested, by virtue of the order;'.

Photo of Mr Nigel Beard Mr Nigel Beard Llafur, Bexleyheath and Crayford

With this it will be convenient to take Government amendment No. 192.

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

Amendment No. 191 introduces an express provision to allow the competition authorities to approve the buyer of a divested asset, or to approve other conduct in relation to divestment. We initially thought that paragraph 10 would allow the authorities to do that. That provision gives the authorities approval of conduct in matters relating to anything that may be prohibited by an order. However, we subsequently concluded, for technical reasons, that approving a buyer in relation to a divestment would not be covered by that paragraph's scope.

It is important that the authorities can approve the buyer of a divested business because it means that the divestment has the desired effect of reversing the substantial lessening of competition. That allows the authorities to avoid a situation where they require the divestment of a business only for it to be sold to a major player in the same market. That would only continue the competition problem.

Amendment No. 192 is a consequential change required to ensure that the phrasing in paragraph 14(k) is consistent with the proposed paragraph 14(ja). I ask hon. Members to support this technical amendment.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

Paragraph 10 and the new power, which will give the OFT the right to approve the buyer of a divested business, requires consideration. I am not sure under which circumstances the power would be justified, and to allow the OFT to decide to whom the business should be sold seems a significant increase in the state's power. I can understand the need to divest in certain circumstances, but why should the state be able to tell the company to whom it should divest? That is otiose.

If the divesting would be in breach of the competition regulations, the sale could be investigated and an inquiry could be mounted. However, we are considering the simple situation of the state being able to tell a business that it can or cannot sell interests to someone else. I would appreciate it if the Minister explained the circumstances in which that might be allowed and in which the provisions could be used in respect of a further sale.

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

The recent Interbrew case suggests that we currently enjoy the power in schedule 8, although that is not explicit in the schedule. If it would be helpful, I am happy to ensure that a letter is sent to the hon. Gentleman explaining that case law.

My more general point is consistent with that I have just made about the case surfacing and the fact that the power exists. I hesitate to concur with the hon. Gentleman's view that the amendment reflects a substantive increase in the power of the state. It is merely a technical amendment to ensure that existing powers can be used.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

The problem is that we are moving towards the state deciding to whom businesses should be sold. Does the Minister believe that that is sensible? I understand the need for the negative, but the provision is almost positive in terms of the OFT being brought into the process of selling. That is not a healthy advance.

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

I sought to clarify the fact that the amendment does not reflect a significant and substantive increase in the powers of the state. It goes to the fundamental basis of our thinking in the Bill, which involves interaction between state and market. We are clearly of the view, as expressed in the White Paper, that a degree of transparency and rigour is welcome, but equally that the authorities should be empowered with the ability to take necessary action, consistent with the provisions that we are discussing, to ensure genuinely competitive markets. If we share the ambition of an enterprising economy, with productivity as well as profits and a genuinely competitive environment in the United Kingdom, there is a serious and important discussion to be had about the best role for individual competition authorities. We are clear that we have struck the right balance in the White Paper and the Bill. It will provide the necessary leadership in competition and enterprise policy to achieve the sort of economy that we are aiming for.

Amendment agreed to.

Amendments made:No. 192 in page 209, line 9, after `by' insert `virtue of'.

No. 193, in page 210, line 18, at end insert—

`22A References in this Schedule to the notification of prices or other information are not limited to the notification in writing of prices or other information.'—[Mr. Alexander.]

Question proposed,That this schedule, as amended, be the Seventh schedule to the Bill.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

I would like to hear the Minister's opinion on two further points. First, paragraph 11 could result in goods or services having to be supplied to a specific standard, but there is no reference to the level of that standard. Does the Minister foresee the standard in the order being higher than that currently provided? The question concerns certainty for businesses and it is important to discuss that.

My second point relates to paragraph 20, which refers to publication of information supplied to the Competition Commission. I have spoken in different contexts on that point before. Why does that paragraph not deal just with companies that are subject to the merger itself? If information is published about a third-party company, in the interests of maintenance of its confidentiality and of respect for confidential information, that company should be requested to give its consent before the information is published.

Photo of Mr Tony McWalter Mr Tony McWalter Labour/Co-operative, Hemel Hempstead 11:45, 1 Mai 2002

I would like the Minister to consider one element of schedule 7 that slightly worries me. Paragraph 2(2) states that an order may not be made in so far as the agreement relates to the

"terms and conditions of employment of any workers".

I think that I can understand the reasoning behind that. Presumably, one would not want the enforcement authorities to tell a group of workers who have negotiated a certain holiday entitlement that, as part of the conditions imposed, their holidays would be scrapped. I can see that the paragraph might intend a certain element of protection for workers.

What worries me slightly is that, particularly when an enterprise is going through an uncertain period and possibly a merger as well, workers can be given conditions such as zero-hour contracts and various other shenanigans can go on. There are problems about whether it is reasonable for a company to merge with the possible intention of giving those highly deleterious working conditions to an entire group of workers rather than to one part of it. I wonder whether the Minister might consider that there could be occasions when the paragraph might work against the interests of a work force, rather than protect their rights, as was its intention.

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

First, I will place in context my remarks in response to the comments of the hon. Member for Huntingdon. Schedule 7 sets out the list of matters specified in the Competition Commission's report that can be included in final orders for the purpose of remedying the adverse effects following a merger or market investigation. That list is based on schedule 8 of the Fair Trading Act 1973. It has been updated to reflect modern drafting conventions. Certain new remedies have been added. Those are remedies that expedience has already shown it would be useful to be able to call upon. I will address one or two of those specific remedies.

The first point raised by the hon. Member for Huntingdon related to paragraph 11. That allows parties to be required to supply goods and services to a particular standard or in any particular manner. Bus companies would be one example. They can be required to maintain a certain frequency of service. That must be a remedy to a competition problem. I emphasise that that is the thinking behind paragraph 11.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

My point was that there is nothing that stipulates the level of the standard. Will the Minister comment on whether it is likely in any circumstances that the level in the order will be higher than the current one?

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

I hope that my earlier remarks concerning how we are trying to update the FTA give the hon. Gentleman the comfort that he is looking for. We are seeking to reflect in modern drafting some of the experience and insights that we have gained from the implementation of the Fair Trading Act over almost 30 years. In that sense, the ambition of the drafting was to ensure replication while anticipating in practical terms the problems that have been encountered in implementation of the Fair Trading Act.

On the hon. Gentleman's more substantive point about paragraph 20, the provision on disclosure of information in clause 235 will apply to the publishing of information. I understand that he is content to address those substantive questions when we get to clause 235. I hope that that is an adequate answer at this stage of the debate.

I have not had the opportunity to consider in detail the points made by my hon. Friend the Member for Hemel Hempstead on paragraph 2. I should be happy to write to him on them.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

I should appreciate it if the Minister addressed the matter of the publishing of information, as we may or may not get to clause 235 during this stage of the debate. The matter is specifically and directly addressed in paragraph 11.

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

I shall try to offer what assurance I can to the hon. Gentleman. Under paragraph 20, the authorities will have regard to the need to exclude information that would be contrary to the public interest or that might significantly harm legitimate business interests or individuals' interests. They must also have regard to the need to disclose information that will ensure effective enforcements. That is the basis on which the paragraph was drafted. I hope that that answers his question.

Schedule 7, as amended, agreed to.

Clauses 83 to 86 ordered to stand part of the Bill.

Schedule 9 agreed to.

Clauses 87 to 89 ordered to stand part of the Bill.