Enterprise Bill

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Mr. Tony McWalter (Hemel Hempstead): I wish to take issue with the hon. Gentleman's definition of the benefits here as ''airy-fairy''. For example, it would be enormously beneficial to the person who produces genuine organic milk organically to have the person who produces milk that he calls organic that is not produced organically taken to task. It cannot be an airy-fairy benefit, but a real benefit, that proper businesses competing fairly are retained and those that are not competing fairly and are using all sorts of duplicitous means to undermine others are brought to book.

Mr. Waterson: I thought that the hon. Gentleman was about to say that it should be put out of business rather than brought to book.

Mr. McWalter: Yes.

Mr. Waterson: Ah well, if necessary. I do not think that the OFT regards one of its powers as putting people out of business. As my hon. Friends the Members for Huntingdon and for Cities of London and Westminster (Mr. Field) have both graphically explained, that can be the effect of an investigation, or of repeated investigations. The records industry is a good example of an industry that has been subject to a

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series of investigations over a number of years at enormous expense. We might have some data on that for a debate later in our proceedings.

One must look at the worst case, which is a company or a sector that is subject to an OFT investigations at vast expense with nothing at the end of it. Merely being given a clean bill of health may not be enough. It may be enough to sound the death knell of the company or companies and it is impossible for hon. Members on either side to argue convincingly that this information should not be available. It has emerged that we now have this wonderful document that sets it all out. Some boffins in the Cabinet Office have produced a set of rules. Those rules have been applied to the Bill, albeit with a slightly incredible result, but it should be a great deal easier to produce an assessment of the impact of investigations by an actual OFT, rather than the more nebulous investigation of the potential effect of a Bill.

Andy Burnham (Leigh): Rather than compelling companies to disclose information, should it not be a matter of individual choice for the directors of each company concerned whether to make public the costs that it has incurred as part of an OFT investigation?

Mr. Waterson: The hon. Gentleman has a firm grip of the wrong end of the stick. We are talking only about what the OFT must disclose. It is a matter for the OFT and we are not going to micro-manage it to that extent. However, I would have thought that the OFT would produce a figure rather than specific details about individual companies. We will come on to that; it is a good point that should perhaps be made later. There is some discussion to be had about the disclosure of information and the safeguards, which we believe are inadequate.

Miss Johnson: Does not the hon. Gentleman accept that the OFT has no information about the costs to individual businesses of being involved in investigations or cases with which the OFT is dealing?

5.15 pm

Mr. Waterson: I presume that whoever produced the assessment for the Bill had no idea of specific costs, so how on earth did they arrive at it? Perhaps we can chat about it later over a drink as it is fascinating in an anorak sort of way. By any account, the impact assessment has been prepared in a total vacuum. No one is complaining, except about the result, which seems a little weird. The Under-Secretary was brandishing a nice, thick document that sets out how to approach it. I presume that a slimmer document could be prepared for, and by, the OFT.

Miss Johnson: I briefly remind the hon. Gentleman of two points that I made. I ask him to take them into consideration in his remarks, as he does not seem to be doing so. Of course, the existing regime has costs for business. My first point was about additional extra costs. The second is that the OFT does not make regulations. The regulatory impact assessment is for authorities, which make regulations and are therefore in control of the degree of regulation and the costs of the regulatory process, to consider the costs and the benefits. The OFT does not make those regulations.

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Mr. Waterson: I take the Under-Secretary's point. I do not suggest that the OFT makes the regulations. However, the amendment could not be clearer: it is

    ''an assessment of the additional cost to business of the exercise of its functions.''

There is a cost to be assessed if the OFT decides to exercise its function by having yet another investigation into, say, the record industry, and has a result or no result–end of story. This is not rocket science–I did not think that it was when I tabled the amendment–but information that should legitimately be in the public domain. The CBI is concerned about that. It is not something that I dreamed up on the beach in Eastbourne; it is a concern of business people. I am amazed that the Government are not prepared to accept the amendment, let alone the two less controversial amendments. I urge hon. Members to support the amendments.

Question put, That the amendment be made:–

The Committee divided: Ayes 5, Noes 11.

Division No. 1]

Cable, Dr. Vincent Djanogly, Mr. Jonathan Field, Mr. Mark
Hendry, Mr. Charles Waterson, Mr. Nigel

Atkins, Charlotte Barnes, Mr. Harry Borrow, Mr. David Burnham, Andy Campbell, Mrs. Anne Irranca-Davies, Huw
Johnson, Miss Melanie McWalter, Mr. Tony Pearson, Mr. Ian Purchase, Mr. Ken Thomas, Mr. Gareth R.

Question accordingly negatived.

Mr. Waterson: I beg to move amendment No. 5, in page 2, line 31, leave out

    'shall have regard to the need for excluding'

and insert 'shall exclude'.

The Chairman: With this we may discuss the following amendments: No. 6, in page 2, line 32, leave out

    'so far as is practicable'.

No. 7, in page 2, line 34, leave out 'in its opinion'.

No. 8, in page 2, line 34, leave out

    'seriously and prejudicially affect the'

and insert

    'significantly harm the legitimate business'.

No. 9, in clause 6, page 3, line 17, leave out

    'shall have regard to the need for excluding'

and insert 'shall exclude'.

No. 10, in clause 6, page 3, line 18, leave out

    'so far as is practicable'.

No. 11, in clause 6, page 3, line 20, leave out 'in its opinion'.

No. 12, in clause 6, page 3, line 20, leave out

    'seriously and prejudicially affect the'

and insert

    'significantly harm the legitimate business'.

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Mr. Waterson: I hope that we are moving on to less controversial territory, but let us see. This series of amendments is designed to tighten up the provisions of clause 4. They are all supported and sponsored by the Confederation of British Industry, which is again expressing through us its legitimate concerns about the clause.

Amendment No. 5 would remove from subsection (5) the rather woolly phrase

    ''shall have regard to the need for excluding'',

because that places too subjective a discretion in the hands of the OFT when it comes to disclosing sensitive information. We agree with the CBI that there should instead be a clear requirement, hence our wish to insert the words ''shall exclude''.

The disclosure of sensitive information arises at several points in the Bill. Indeed, the hon. Member for Leigh (Andy Burnham) touched on that issue in an intervention a moment ago. It is desperately important to business that sensitive information that could make or break a commercial organisation is not spread around as my hon. Friend the Member for Huntingdon described, but is kept confidential as far as is necessary or possible.

Amendment No. 6 would remove the words

    ''so far as is practicable''.

Again, we are trying to tighten the obligation on the OFT in respect of how it treats sensitive business information.

Clause 4(5)(b) allows the OFT to exclude information from its annual report if, in its opinion, publishing that information might seriously and prejudicially affect the interests of a particular person. That is welcome, as the CBI agrees, but again the discretion on the part of the OFT is too subjective. Amendment No. 7 would remove the words ''in its opinion''.

Under amendments Nos. 8 and 12, the words

    ''seriously and prejudicially affect the'',

which are also in clause 4(5)(b) and clause 6(3)(b), would be removed and replaced with

    ''significantly harm the legitimate business''.

The reason for the change is that that phrase is in clause 235 and it makes enormous sense for the same wording to be replicated here. That would provide clarity and consistency. Frankly, it seems odd to use two different standards for disclosure in the same Bill. In other words, parts 1 and 9 should be harmonised. That makes excellent sense.

The OFT has a function to make the public aware of the ways in which competition may benefit consumers and the United Kingdom economy. Again, we propose a series of amendments that would tighten the obligation on the OFT. These constitute sensible precautions. In today's debates, we have touched on the harm that can be done to companies if information is spread around where it should not be. I am sure that that will not happen, but one must consider all possibilities. One would not want a newly reconstituted OFT, flush with its new powers and functions, to impress the legislators and

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public at large with its effectiveness and usefulness by conducting dawn raids with massive publicity and tipping off chosen journalists, resulting in large spreads in the media about a particular investigation. I referred a few days ago to dawn raids on pharmaceutical companies. Clearly, some of the media were briefed.

Miss Johnson: I trust that the hon. Gentleman will make it clear that the Serious Fraud Office, not the OFT, was involved in those raids.

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