Enterprise Bill

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Mr. Waterson: Will my hon. Friend develop one of his earlier themes? If a foreign-owned European airline was seeking to take over or merge with British Airways in one of those situations that are all too common in the European Union, in which the national airline in question was in receipt of substantial state aid and there were continuing arguments between our Government and the other Government about whether the merger was proper under EU rules, should our Government have some ability to intervene, given that there is that unfairness for a different reason?

Mr. Lansley: In the example to which my hon. Friend refers, as with London Electricity and

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Electricité de France, there was held to be a Community dimension, and as such it was considered under the EC merger control regime. As it fell not under the substantial lessening of competition test but under the dominance test, I do not think that we can consider it in relation to the test in the legislation. I did not cite the case of London Electricity and Electricité de France in order to examine what should have been done in such circumstances. Although it was not patriated in the UK, it should have been, because it essentially dealt with the UK domestic market.

None the less, we can conceive of the range of circumstances in which there have been overseas acquisitions of UK companies. I would not want to intrude a further lack of predictability by inserting another criterion according to which Ministers can intervene in such cases. I am looking for some ministerial comfort that, even though we may be dealing with mergers that take place in the UK, that affect the UK and that must be considered within the context of the UK market–but in the same way as my hon. Friend the Member for Eastbourne referred to the chartered accountant's view about not confining ourselves to domestic economic concerns–without necessarily thinking of a relevant market elsewhere, we should think about the circumstances of the parties to the merger and consider not only the immediate plans but their characteristics and how the participants, if they are state owned or if they enjoy disproportionate market power in related markets, might undermine competition in the UK to the detriment of UK companies. The essence is whether there will be the flexibility in the competition test to think positively about the characteristics of international acquisitions that occur inside the UK domestic market.

Mr. Djanogly: I do not want to go over old ground, but I generally support what my hon. Friend just said. The provisions are going in the right direction. We have been heading in that direction for several years anyway, with a few blips along the way. Mergers should not be a political issue but should be decided on the basis of their effect on competition, so I welcome the removal of the political process from the decisions.

However, one thing that has come out in the debate is that much of the practical application of the provisions will be down to whatever appears in the Government's guidance. I appreciate that there is a requirement in clause 102 for the OFT to publish the advice by the time the Bill is enacted. However, that will be much too late. When considering clauses such as clause 20, it would have been helpful to have had as early as possible an understanding of what will be included in the guidance. It would have been more than helpful if we had had that information before the debate today. A lot of the to-ing and fro-ing that we had this morning might not have had to happen. The Under-Secretary has said that issues such as those in subsection (2)(a) and (b) will rely on what is in guidance. They are subjective issues. On several occasions during our discussions on the clause–when discussing subsection (1), where we wanted more discretion inserted, and elsewhere–we have

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raised the fact that there is such subjectivity. It is fair to say that that gives me and my hon. Friends cause for concern about how the provisions will be adapted.

I have one further point. Please will you give me a little leeway, Mr. Beard? I did not speak earlier on the implications of the clause because I was intending to speak on clause stand part. I shall take the point from a slightly different angle from that which we heard this morning from Government Members, and I shall be brief.

There is another aspect to the clause, further to the way in which it was discussed this morning. We heard the Government's approach. We heard the approach of the hon. Member for North-East Derbyshire, who looked at it from the point of view of the public interest, although that was the public interest not of the Government but of civil servants, a point that has not yet been mentioned, and that I found–

The Chairman: Order. The hon. Gentleman is repeating the arguments that we have already had this morning. I should be grateful if he would concentrate on issues that have not already been covered rather than repeating arguments that have.

Mr. Djanogly: I shall indeed, Mr. Beard, and shall come straight to the point.

Whichever of this morning's arguments from the Government Benches we take, it missed the point. It is all very well to say that we are going to improve competition by changing the type of competition law that we have, but I do not think that that is necessarily the case. It may improve the way of regulating competition, and I shall not argue against regulation. However I do not think that the type of competition regime has anything to do with the reasons for the closure of the factory in the constituency of the hon. Member for North-East Derbyshire, although hon. Members were arguing that this morning. I think that the reason for that is something that we would better spend our time looking at–the wage costs and regulatory regime in that factory.

The Chairman: Order. The hon. Gentleman is returning to the themes that we considered this morning, and the wage costs in the particular factory that was cited as an example have nothing to do with the principles of the clause. If he has no further point to make, he should resume his seat.

Mr. Djanogly: With respect, Mr. Beard, it was not the Opposition that called this Bill the Enterprise Bill. I think that it would more properly be called the Insolvency, Consumer and Competition Bill. The Government decided to call it the Enterprise Bill, so it is most appropriate that, at each stage, we have the opportunity to assess to what extent it encourages enterprise. On Second Reading, the Under-Secretary made great play of how the Government believed that the Bill would support enterprise. I therefore think it valid to argue that in many respects it will not do so, and will actually work against enterprise.

The Chairman: This clause stand part debate is not to do with that general principle. I have already ruled twice that we should not return to the issues discussed

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this morning, but the hon. Gentleman is doing just that. I hope that he will now remain in his seat.

Miss Johnson: Reluctantly, I shall make some brief remarks. I believe that the last part of this debate has been a sad and very long rehearsal and that very few new points have been made.

Mr. Waterson: On a point of order, Mr. Beard. I am very happy to accept your guidance but certainly will not accept lectures from a Minister on how the debate is conducted.

Miss Johnson: I believe that I am free to express my views on how the debate has been conducted. Brevity

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is a virtue, and it is often a sign of intelligence to be able to put things quickly and smartly.

On the question of the nature and role of national champions, firms that face strong domestic competition perform best in international markets. That is the evidence–

It being Five o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Order of the Committee [16 April].

Adjourned till Tuesday 30 April at half-past Four o'clock.

The following Members attended the Committee:
Beard, Mr. Nigel (Chairman)
Alexander, Mr.
Atkins, Charlotte
Barnes, Mr.
Borrow, Mr.
Brown, Mr. Russell
Burnham, Andy
Cable, Dr.
Campbell, Mrs. Anne
Djanogly, Mr.
Field, Mr. Mark
Hendry, Mr.
Irranca-Davies, Huw
Johnson, Miss
Lansley, Mr.
McWalter, Mr.
Pugh, Dr.
Purchase, Mr.
Waterson, Mr.

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