Enterprise Bill

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Mr. Barnes: My hon. Friend said that there were two legs to the argument; one was about removing the Minister from his role in competition policy. The amendments do nothing about reinstating the role of the Minister–later amendments would do that. These amendments relate to the role of the OFT. I am still not convinced that the competition test is destroyed by the factors that I am trying to put forward. They may be ameliorated somewhat, but in my area, following the pit closures, others such as Biwater, Demaglass, Stirling Steel and Bryan Donkins have all gone, with massive problems–

The Chairman: Order. This seems to be a long intervention.

Miss Johnson: I have to disagree with my hon. Friend. I understand the points that he makes, but to introduce other considerations would be to widen the Bill beyond strict competition issues; it would draw in other issues that would be subject to a considerable degree of interpretation. My hon. Friends have made a number of useful remarks, including pointing out that the existing provision, under which the Biwater decision was made, was based on a public interest test. None the less, it did not help my hon. Friend in his concerns about its outcome.

Mr. McWalter: Does my hon. Friend agree that it is not unreasonable for people to be worried about an emphasis on competitiveness if they think that those who are seeking to make our economy more competitive are willing to increase unemployment, as happened in an earlier decade? If competitiveness and improved productivity go hand in hand with a commitment to full employment, nobody should be shy in welcoming that.

Miss Johnson: Indeed. My hon. Friend is quite right. Opposition Members discussed Professor Crafts's contributions to this area of debate earlier. I was present at a seminar with Professor Michael Porter recently at which he advocated not only the sort of policies that we are pursuing but the idea that existing manufacturing and service sector industries could develop new opportunities and new strands to their activities, as a result of change that would better secure jobs and the future of those organisations. He claimed that that could be achieved by working in clusters, in line with his theories about the best economic and productivity structures.

The Government have also taken steps to help communities that are dealing with the closure of plants. A number of such steps were taken with the Clay Cross community. A response group was created to co-ordinate the work of local and regional partners in support of those affected. On-site job vacancies, benefits and training advice were provided and a range of redevelopment work was funded under the single regeneration budget. All those measures reflect the Government's serious commitment to full employment. Where there are local employment difficulties, steps are taken to deal with that and to ensure that local people again have jobs with a long-term future.

I shall set the reforms to the merger regime in the context of the operation of the existing Fair Trading

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Act 1973 regime. In practice, competition has been the principal factor in UK merger policy for many years. If one examines the reports of the Competition Commission on mergers, the employment effects of mergers have not determined decisions in recent years, as my hon. Friend the Member for North-East Derbyshire remarked. Legislating for a focused competition test is not likely to make a large difference to the way in which mergers are regulated.

That is not to suggest that the change is not worth making. As I mentioned on Second Reading, there is always the possibility that a new Secretary of State will arrive and invent a new doctrine. We could all sit around and imagine the doctrines that we would most like to have invented, but it would be very contingent on who the Secretary of State was and to which political party he or she belonged. The substantial test for mergers that is currently being considered is broad in principle and confers some discretion. With that discretion comes inherent uncertainty about how the regime will apply, and our reforms are designed to address that problem.

Mr. Lansley: One aspect of the use of the public interest test under existing legislation that was not really covered in the discussion on the amendments is the question of the characteristics of a person seeking to acquire a company. I take the Under-Secretary's point that hard cases make bad law, and one should not extrapolate from any individual case, but has she thought about, for example, the case of Andrew Regan and the Co-op in 1997? What view does she take of the admissibility or otherwise under the competition test of the fitness of a person to acquire a company?

Miss Johnson: That has been much discussed. I will not be drawn by the hon. Gentleman's invitation to speculate on the hoof, much as he might want me to do so. I return to the point made by my hon. Friend the Member for North-East Derbyshire about the third party comment on access for unions. As now, the OFT will publish an invitation to comment. Because I receive and respond to all the letters that MPs write on these matters, I know that many different views have been expressed on issues of considerable concern in the field of competition. For example, there has been a great deal of correspondence about the distribution of newspapers, which is currently the subject of an OFT investigation. All views that are germane to the competition test are carefully considered.

Before I return to the scope of the Bill, I should like to address some of the questions about transparency and certainty and where accountability lies. Concern has been expressed about Ministers removing some of the existing avenues through which people are able to make representations.

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There will be a greater requirement on the OFT and the Competition Commission to publish guidance on the competition tests. They will need to consult publicly and will, where practicable, have to consult all parties about decisions that are likely to be contrary to their interests. The OFT will always consult the parties to a merger about the direction of their thinking on reference before the reference occurs and

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about the matters on which they intend to rely. More generally, the OFT will, as now, publish an invitation to comment when it is considering a qualifying merger and it will, as I have said, consider written comments carefully.

There will be more certainty about the timetables for the work of the Competition Commission. In addition, there is the statutory right of appeal–so there are many aspects to the process.

We discussed earlier the relationship between the House and the work of the OFT. It is of particular interest to hon. Members, who might have a concern about forward plans and annual reports and would want to know about their availability for examination, should they choose to make them the subject of debate through any of the usual channels.

I should like to mention the scope that the Bill provides for the Secretary of State to make an order to define public interest issues to be taken into account in the consideration of a merger. Ministers would take decisions about a merger where such issues arose. We have no intention to define such criteria other than for national and public security concerns, as my hon. Friend the Member for North-East Derbyshire hinted. I mention that power because it provides a safety valve for the new regime, ensuring that any exceptional case can be dealt with appropriately.

We have had a long and very useful debate. I hope that I have responded to hon. Members' points and that the amendment will be withdrawn.

Mr. Waterson: It does indeed seem like a long time since I was on my feet. I could have gone to the cinema or had a very extended lunch while the interesting debate within the Labour party played itself out. I owe half an apology to the Liberal Democrats, who I had thought were the past masters at holding two impossibly irreconcilable views at once. However, there has been quite a split in the Government ranks on this Committee–they seem to have two very different agendas. I can only assume that it was irony when the Minister thanked the hon. Member for North-East Derbyshire for having tabled the amendments. It has been a fascinating debate, and some of the nuances of Government policy that have come out have been most interesting.

I do not want to detain the Committee, because some of these themes will come up again in the stand part debate. There are some key issues that we want to raise about the way in which the whole new regime will work, and that is best done in the stand part debate. However, I want to mention the European relationship. With all due respect, the Minister has not really given us any inkling of why the Government seem to have changed their view on the problems or otherwise of there being a disparity between what happens here and in Europe. My hon. Friend the Member for South Cambridgeshire described his experience considering the Competition Bill, as it then was, and said how different the Government's attitude was then.

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Miss Johnson: I shall try to help the hon. Gentleman and his hon. Friend by pointing out that articles 81 and 82 apply as prohibitions on company activity. We believe that there is a clear benefit in having one set of rules for all business activities. Mergers are separate transactions, and companies will know which regime applies in the majority of cases. If there is a question about which regime applies, in a sense, that question already exists, because there is a question–which has arisen in several cases over the years–about whether the issue should be dealt with at European level or by the national competition authority. That issue has always arisen in a few cases, but in the majority of cases, it is totally clear which regime will apply.

We believe that it is important to have the right test, and I have said why I think that this is the right test. Indeed, Ireland is also considering revising the basis of the test that applies there to make it a substantial lessening of competition test, and draft proposals to that effect have recently been introduced. Several countries are moving in that direction because they see it as the right answer for business and consumers. That is why we, too, want to make that move.

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