Enterprise Bill

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Mr. Lansley: I want to support my hon. Friend the Member for Eastbourne. The amendment will help us to establish the Government's intentions and explain how clause 40 is intended to work. It may be helpful if I explain why there might be a problem with clause 40(3). To explain the amendment, I must refer ahead to clause 56, on which I will not dwell because we will come to it later.

National security interests are specified in clause 56. It is clearly intended that the Secretary of State will be able to add to such a consideration, which might give rise to an intervention notice. That would, however, have to be done by order. In doing so, the Secretary of State would not be confined to cases that were about to be considered by the OFT or the Competition Commission. Cases that were already under consideration could be looked into. There is no sense in which the absence of such a consideration already being specified by order under clause 56 would mean that the Secretary of State could not act when presented with a merger situation if he or she felt that a public interest, which had not previously been considered and that we had not put in the legislation, were brought to bear.

As we will discuss later under clause 51, the Secretary of State will be able to wait for up to 24 weeks before finalising a consideration. In that context, finalising means making the order necessary to amend clause 56. That is a problem because if there were a relevant merger situation and the Secretary of State held the opinion under clause 40(3) that a consideration ought to be specified under clause 56, he or she would have 24 weeks in which to decide whether to make an order, which, as we have previously heard, happens to be exactly the same 24 weeks during which the Competition Commission would consider the case under the time limit.

The Secretary of State would have the luxury of having an opinion on whether a consideration ought to be in clause 56. The OFT and the Competition Commission would consider it under an intervention notice all the way through the reference, but at the end of the day the Secretary of State would not have to make the order, in which case that consideration would fall away and the reference would not be made.

The Secretary of State would be able to have his cake and eat it. He would be able to have an opinion about whether a consideration ought to be made under section 56, he could have it tested by reference to the Competition Commission and could get virtually to the last day and it would still be considering it. He could then pull everything away at the last minute and it would never have to go before Parliament.

I dwell on all those matters because if the amendment moved by my hon. Friend the Member for Eastbourne were agreed, the Secretary of State could still intervene. Clause 56, as amended, could be used. The difference is that the Secretary of State would have to bring an order before Parliament and get it to agree that such a consideration ought to be added to the exceptional considerations of national security that were foreshadowed in the legislation.

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On the face of it, there would be ample time in which to do that because 28 days is sufficient time to make and lay an order. There would be no bar under clause 56 for that to relate to considerations for cases that had already occurred. People would not be able to run through a merger situation and secure consent without the Secretary of State having an opportunity to make an intervention notice, because he could amend clause 56 to do it. The legislation is designed not to allow the Secretary of State in wholly exception circumstances to issue an intervention notice with the scrutiny of Parliament but to allow the Secretary of State to make an intervention notice and test the issue virtually to completion without the intervention of Parliament.

We could deal with that by following the amendment of my hon. Friend the Member for Eastbourne and getting rid of the part of the clause that allows for the opinion of the Secretary of State, or we could change the time limits in clause 51 so that the Secretary of State must finalise the consideration at an earlier point. I shall not dwell on clause 51. We can quickly refer to it later, if necessary. However, a way of dealing with the issue would be for the Secretary of State not to take the power in clause 40, which allows an opinion about an intervention notice, but to use the proper procedure under clause 56.

5.45 pm

Mr. Djanogly: One of the most significant purposes of the review of competition law is to remove political interference. I do not think that anyone in the Room would dispute that. On the one hand the public interest test has been removed—extremely curtailed, at least—but on the other, the Secretary of State has a get-out if, in his opinion, something should count as public interest. There is an inconsistency of approach.

When we debated clause 20 at some length, Opposition Members argued that the OFT should have discretion on making referrals. At that time, the Government attacked the suggestion on the basis of a variety of arguments but mainly the concept of uncertainty coming into the legislation and the need for businesses to be able to have certainty. Yet here the tables have been turned, this time in favour of discretion for the Secretary of State. The Government seem to be arguing that the Secretary of State should have discretion to decide when the measure should apply. I would be grateful if the Under-Secretary would justify the inconsistency of approach.

Mr. Field: I entirely agree with the comments of my hon. Friends the Members for Huntingdon and for South-East Cambridgeshire—

Mr. Lansley: South.

Mr. Field: I apologise to my hon. Friend the Member for South Cambridgeshire (Mr. Lansley). Clearly, I do not know the geography of Cambridgeshire as well as that of the centre of London. Perhaps I may be forgiven for that.

We had a long discussion on clause 20 and I openly said that I was uneasy about the idea of taking politics out, not least for the reasons given by my hon. Friend

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the Member for South Cambridgeshire in relation to those who are not deemed fit to run companies and how the powers to make the sort of inquiry that we had in mind might be taken away from the Secretary of State.

Clause 56 is entirely clear about the ground of national security. Clause 40 tries to undermine or drive a coach and horses through the issue of national security by virtually giving carte blanche to any Minister, notwithstanding national security considerations—I believe that such considerations are entirely acceptable to everyone—effectively, to play to the gallery. In recent years, Ministers have played to the gallery on competition matters in several cases. For example, the rip-off Britain campaign that was run by the then Secretary of State for Trade and Industry in the late 1990s was a deliberate attempt to get at the supermarket chains.

We are concerned that playing to the gallery will undermine the predictability and certainty tests that have been heralded to such a great extent. Subsection (3) gives carte blanche for any Secretary of State to undermine the very ideas of competition and certainty that the Enterprise Bill should be putting in place. I shall be interested to have the Under-Secretary's guidance as to how the clause will operate. Under what circumstances will Ministers invoke their powers and go one step further than what is envisaged in clause 56?

Miss Johnson: Let me be clear: we have no plans to specify new public interest considerations. Merger reform has been the subject of extensive consultation and we have considered thoroughly whether anything beyond national security should be in the Bill. We do not expect to specify further issues in relation to the current scope of the merger control regime.

It would be unwise, however, to ensure that unforeseen circumstances could not be dealt with if there were a compelling case in the public interest. We must ensure that we can meet unforeseen circumstances and other legislation makes similar provision. The European merger control arrangements are focused on competition, but provide that member states can take appropriate measures to protect other legitimate interests. Consideration of whether new issues raised by member states are legitimate interests takes places in parallel with consideration of the case. That is a sensible arrangement and it ensures that a case is not needlessly delayed.

The amendment could stop the Secretary of State claiming an interest where a case raises important issues but the deadline for a reference decision is close. I have already explained why it is sensible to have limited flexibility, but I reassure the Committee that wherever an intervention notice cites a new public interest consideration, subsection (7) will ensure that the Secretary of State must move quickly to make an order specifying that consideration. The subsection states that it must be finalised ''as soon as practicable''—[Interruption.] The hon. Member for South Cambridgeshire is laughing, but it is only sensible to include such a provision.

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The Bill also ensures that public interest considerations can be taken into account in making a final decision on a case only if they have been finalised by Parliament. Our proposals ensure that the Secretary of State can intervene to claim an interest in a case, but cannot determine its outcome with regard to any public interest consideration that has not been approved by Parliament. That represents the right balance: we need to ensure that the legislation can deal with unforeseen matters, and provide appropriate safeguards for the use of the Secretary of State's powers, but I emphasise that we have no proposals to use that. We are simply ensuring that if the unforeseen arises, we have some contingencies.

On Government intervention, ministerial involvement will be the exception. The Secretary of State will take decisions only where the case raises certain matters specified by parliamentary agreement. The Secretary of State must serve the intervention notice before the public interest test can be applied. If no intervention notice is served, the case follows the competition-only route.

Of course, companies need certainty. When a case raises wider public interest issues, the Secretary of State needs to claim interest transparently and within a clear deadline. The intervention notice will have to be published and will make it clear that the case is to be decided by the Secretary of State in terms of the public interest test. The Secretary of State will have to give reasons for the intervention. It is important that companies know that non-competition issues must be raised in advance of any possible reference decision.

The Secretary of State will be limited in the matters on which he or she can intervene. They must already have been specified in legislation, or be ones that the Secretary of State thinks should be so specified. There are no plans to extend that beyond national security.

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