Enterprise Bill

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Mr. Tony McWalter (Hemel Hempstead): I wonder whether the hon. Gentleman thinks that the clause is partly intended to deal with cases in which the OFT is not fulfilling its duties as we should all like it to. If a Minister used the power, it would represent an expression of no confidence in the OFT, and presumably a review of its membership might follow. My experience with West Hertfordshire health authority has led me to want to have its members dismissed. The OFT might be as incompetent as that public body, and the Minister might need to send a shot up the gunnels.

Mr. Waterson: Across the gunnels is probably the correct nautical expression—a shot up the gunnels sounds potentially far more disastrous.

The hon. Gentleman makes an excellent point, but sadly he is entirely off-message, as the Government have suggested quite the opposite to everyone, including industry and hon. Members. The last thing that Ministers want is for the Derbyshire-Hemel Hempstead axis to come pounding on Ministers' doors and saying, ''I'm fed up with this—there's a factory closing in my constituency and the OFT is almost as bad as West Hertfordshire health authority, so what are you going to do about it?'' Ideally, the Minister should reply, ''There's nothing I can do about it, squire. It is not down to me—it's down to an independent body that employs wonderful people and has massive new resources. In the bad old days of Mrs. Block-it and the Tories, of course, we could have done something about it, but not anymore. We are just getting on with the business of governing the country and trying to get a third term.''

That is the theme that runs, like the word ''Blackpool'' through a stick of rock, through the entirety of this part of the Bill, apart from this clause. Although I understand the point being made by the hon. Member for Hemel Hempstead (Mr. McWalter), both he and the hon. Member for North-East Derbyshire (Mr. Barnes) are talking about a different piece of legislation.

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The debate has thrown up a whole series of questions for the Minister, and I shall listen agog to his response.

Mr. Lansley: I am happy to concur with my hon. Friend. I shall not quote the White Paper at great length, but it is curious to discover in the proposals for the market investigation regime a whole series of paragraphs on the role of Ministers but no specific reference or foreshadowing of the clause. On the contrary, paragraph 6.42 says:

    ''Reducing Ministerial Involvement is an underlying theme of the changes made to our competition regime. The Government believes that competition authorities acting on the basis of sound economic analysis are best placed to take decisions in order to correct competition weaknesses, and restore healthy competition for consumers. This view has strong support within our domestic competition community, and internationally.''

Although subsequent paragraphs express reservations in relation to exceptional public interest cases or major divestment remedies, at no point does the White Paper say that decisions on competition will be made by the Competition Commission, but decisions on references to the commission by the OFT and other sector regulators will not be made solely by the competition authorities—they will be interfered with by Ministers.

The provision is completely contrary to the thrust of the Bill and it is astonishing that Ministers should want to include it. The question of public interest cases is not involved here. I imagine that the hon. Members for North-East Derbyshire and for Hemel Hempstead might want to go to Ministers and use the public interest provisions, which we shall discuss later. However, we are dealing only with competition matters at this point. On competition grounds, the Government propose to retain a power for the Secretary of State to set aside the view of the competition authorities on competition matters, which will undermine the predictability and consistency that Ministers claim to want and to be pursuing in the Bill as a whole. Frankly, one could take out the clause and there would be no negative consequences, only positive ones.

Mr. Djanogly: I totally concur with my hon. Friends the Members for Eastbourne and for South Cambridgeshire on whether a Minister should have the right to be satisfied with a decision by the OFT in those circumstances.

Materiality is another aspect of the clause that has not yet been mentioned. Subsection (2) will allow a Minister to make a reference if they suspect that any feature or features will distort competition, and there is a materiality aspect to that. It is not only a question of whether a Minister is satisfied, but a question of the basis on which they can be satisfied. The clause works on the basis that there is no bottom line or level at which it would or would not be acceptable for a Minister to refer. They can refer for any reason at all, which is why clause 124 is inadequate.

Mr. Field: Much has been said already on the clause, so I shall speak only briefly.

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I have spoken about mergers on a number of earlier occasions in the consideration of part 3. I instinctively feel that it is naïve to believe that mergers do not have a political angle. To that extent, I have always had some sympathy with the view that there should potentially be some ministerial input on mergers. There is, however, no justification for ministerial input into market investigations. Indeed, our concern is that that will allow Ministers to play to the tabloid gallery when it whips up a furore about a particular market. A Minister may insist on a reference, but they will not have any sort of balancing veto on a reference put forward by the OFT. In other words, ministerial power will be one way, rather than two way, in relation to OFT references, and, egged on by the mob, a Minister will be able to use that power to appear to rescue the situation as and when it suits them, which is not sensible, especially in relation to market investigations.

There are other areas of the Bill in which some ministerial input may be a sensible way forward. That is, in a sense, a matter of—dare I use the phrase—political philosophy, and I am sure that such commercial thinking changes from one era to the next. There is absolutely no justification for any ministerial intervention on market investigations.

Mr. Carmichael: I shall likewise be brief. Frankly, it sticks in my craw to agree with the hon. Member for Eastbourne time after time, and I now find myself in a position in which I agree with four Conservative Members, which is more than even I can stand.

Mr. Waterson: Just to probe the hon. Gentleman, does it stick in his craw because I am a Conservative, because I represent an English seat or because I took my seat off a Liberal Democrat—or all three?

Mr. Carmichael: The fact that the hon. Gentleman is a Conservative is certainly enough for me. The fact that his seat is in England is of no consequence whatsoever. I am married to an Englishwoman—

Mr. Waterson: Very broad minded.

Mr. Carmichael: It is certainly broad minded on her part. I hold no part in xenophobia against the English. The hon. Gentleman took his seat from a Liberal Democrat, but I am sure that that is a fault that will be mended in time.

The clause is a sensible backstop position. We are dealing with what I expect will be a very small number of cases. At the end of the day, the business of Ministers and politicians is to take hard decisions and not simply to abdicate all responsibility. The clause may be inconsistent with some of the ministerial press releases that have been put out, but I certainly would not damn it for that reason. What we have is a sensible backstop position. In circumstances in which the OFT has taken a decision that, in the wider sense, may be acceptable to it but will not be acceptable to the wider community, there should be some recourse for the Minister to make that clear.

6.15 pm

Mr. McWalter: I am grateful that the hon. Member for Eastbourne took my intervention, because it gave rise to a lively debate that has flushed out the clear

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differences between the sides in the debate. I get the strong impression that those on the Opposition Benches—at least, those on the Conservative Benches—would like the OFT to be as inefficient as I claim that the West Hertfordshire health authority is, on the basis that it would be supine and inefficient, and business could just get on with doing its stuff without anyone asking whether the climate in which they were conducting their business was actually one of fair competition. I believe that it is important that the function be delivered effectively because, as has been said repeatedly in the debate, that would be to the benefit of good business. I hope that the Minister will not feel inclined to accept the argument that has been made by Opposition Members.

Mr. Barnes: The Fair Trading Act 1973 allows references by the Secretary of State on competition and public interest grounds. My understanding is that, as a matter of policy since the early 1980s, different Governments have seldom used public interest grounds to make references. However, Secretaries of State must have made several references to the Competition Commission, despite what has been said. It might be interesting to know how many there were and what the Government's policy is on references under the clause. If their policy is the same as that for public interest, Opposition Members have nothing to worry about.

Mr. Alexander: To be perfectly honest, I am not quite sure where to start, given the range of comments and the excitement generated by the clause. Perhaps the obvious place to begin is with the comments of the hon. Member for Orkney and Shetland. As the debate proceeded, I found myself having ever more in common with him. We both represent Scottish seats, we both have English wives, and we both think that the clause is sensible and logical.

I assure my hon. Friends the Members for North-East Derbyshire and for Hemel Hempstead that, emboldened by their remarks, I shall reject Conservative Members' view and urge the Committee to do so. The accusation levelled at the Government is that the clause contains a word-processing aberration. I would have had more sympathy with the Opposition's comments if they had used the word ''remedy'' in place of ''reference.'' That is the key point and the sense of proportion that must be brought to the discussion.

The danger is—again, this turns on quite an important point—that, had we not had such a power, an opportunistic Opposition might have said that it was an outrageous breach of parliamentary accountability and would have argued for appropriate accountability. Therefore, it is important to recognise that retaining a reserve power for Ministers to make references in exceptional circumstances will enhance the overall accountability of the new regime. Subsection (3) specifies that, like the OFT and certain sectoral regulators, Ministers will be able to refer a market only if they have reasonable grounds to suspect that one feature or more of a market is preventing, restricting or distorting competition in the supply or acquisition of specified goods or services.

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For clarification, I confirm that the Minister must satisfy the same reference criteria as the OFT. As with references made by the competition authorities, ministerial references will be subject to review by the competition appeal tribunal. We intend that the primary responsibility for making market investigation references should lie with the independent competition authorities—for these purposes, the OFT and certain sectoral regulators—which is entirely consistent with the spirit and letter of the White Paper and discussions on the Bill. Under the new regime, Ministers will no longer be able to veto references made by the OFT and certain sectoral regulators.

In line with the intention, Ministers' power to make a market investigation reference is more constrained than their power to make monopoly references under the Fair Trading Act. Subsections (1) and (2) specify that Ministers will be able to refer markets only in exceptional circumstances in which they are not satisfied with a decision of the OFT not to make a market investigation reference to the Competition Commission, or in which they are satisfied that the OFT or relevant sectoral regulator is aware of the evidence that has led to a suspicion but that it is not likely to reach a decision on whether to make a reference within a reasonable time.

Therefore, the reserve power is consistent with our decision to take Ministers out of the vast majority of decisions in competition cases. The reserve power allows Ministers only to request that a decision be made. I return to the point with which I began my remarks: there is a fundamental difference between a reference and a remedy. We are asking only that Ministers be allowed to request that a decision be made, but that does not entitle them to any involvement in the decision-making process itself.

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