Enterprise Bill

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Mr. Waterson: The Under-Secretary talks about adjusting the legislation. My inference is that she means that that will have to be done quickly, to deal with an unexpected "we know not what" situation. Surely, national security is the only umbrella under which one can imagine something like that happening. The legislation can always be adjusted by introducing further primary legislation. What reason can there be, other than national security, to change the grounds of the Bill in a great hurry? Presumably that is the point of regulations.

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Miss Johnson: The hon. Gentleman is again trying to persuade me to be more specific. I cannot and will not do so. In my experience, it is not unusual for the Government to be told that a piece of legislation has an outcome, issue or problem, unforeseen and unforeseeable at the time of its introduction, that has arisen since. Because it relates to public interest, it is important for the Secretary of State to have such a power. We do not have a list or any single item to which the clause should apply, but it is important for the provision to be available.

Mr. Barnes: My problem with the Locke example—my hon. Friend the Member for Hemel Hempstead pointed out that there might have been some defective reasoning—is that that "something I know not what" does not exist. The matter that is provided for in law will not refer to anything in future, so the provision might as well not be made. I would want it to be something that was a possibility—something that had substance.

Miss Johnson: I appreciate that my hon. Friend seeks to put substance into the provision. However, by the nature of what is being considered, it is not something of substance. It might well be of great substance in the future; the fact that it is not foreseeable does not mean that it does not exist.

Mr. McWalter: I cannot believe that. Post 11 September, we know that operating our markets in such a way as potentially to deny a livelihood and the prospect of life to people from some nation or other poses a threat to our national security. I do not know why my hon. Friend is being so evasive about confronting my examples of what could count as prima facie threats to national security. Hence, there is a prima facie case for considering those matters under subsection (3).

Miss Johnson: I recognise that my hon. Friend raises issues that are important to the future of the planet, and that the Government should take them on board. However, let me reassure him that I am not trying to be evasive in not specifying something. I am trying to be clear with the Committee that the reason for not specifying something is because it is unforeseeable. We cannot put any further meat on the bones of the matter. I have explained why we think that it is important to public interest considerations that the legislation does not fail to meet some future need. That is why we are including the provision in the Bill.

Dr. Vincent Cable (Twickenham): I want to pursue the point a bit further.

Mr. Purchase: This could get worse.

Dr. Cable: It could get worse.

As the Under-Secretary's position rests on the narrow national security definition, will she clarify what she means by national security? The old ideas about national security being a matter of standing armies moving across frontiers have been replaced with a much more fluid view of what is involved. The

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hon. Member for Hemel Hempstead was right about that.

In the United States, where the argument has been well developed in terms not just of competition policy but of trade policy, the idea of national economic security is adduced to justify a wide variety of Government interventions. There is a danger that if the Under-Secretary sticks to the concept of national security, everything from threats to the biosphere to unemployment will be bundled under it. If she intends to take a stand on this narrow definition, will she explain to us what national security means for the purposes of the legislation?

Miss Johnson: In earlier debates, I did explain that. National security is defined under this clause as it is under clause 56, which governs mergers. It includes defence and other essential public security considerations. I am afraid that I cannot remember whether the hon. Gentleman was present during our earlier debates, but I assure him that a definition of the terms has been placed on the record for the benefit of the Committee.

Mr. Waterson: I do not want to prolong this debate—[Hon. Members: "Sit down then."]—but I will if provoked. I particularly do not want to do so because, as the Under-Secretary rightly reminded us, we had a long debate, with an equally unsatisfactory outcome, on clause 56. She talks about some future need, but is wholly unable, no matter how hard she is pressed from both ends of the political spectrum, to come up with anything that might conceivably amount to such a need.

I am sure that the Under-Secretary is being open and not evasive, contrary to what her so-called honourable friend the hon. Member for Hemel Hempstead said about her performance. However, the more doughtily she fights her position on the matter, the more suspicious we become. What on earth are we including the provisions for? On the basis of her arguments, every Bill that comes before the House ought to include an escape clause in case some great horror—or benefit, as the hon. Member for North-East Derbyshire might say—has not been envisaged. That is not the way legislation works. We deal with the here and the now.

The provision on national security is already very wide and could, in the wrong hands, have a gigantic scope. Why is that not enough? If something were to come up that none of us has ever conceived of, could it not be dealt with quickly by primary legislation? Presumably it would be of such enormity and moment to the whole country that even the Opposition parties would collude in its rapid passage through the House. If I read the Under-Secretary's remarks right, it would have to be of such significance that it would deserve that kind of approach.

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We are deeply unhappy about the matter. We do not understand why the Under-Secretary is hanging on to the powers set out in subsection (3) with such ferocity when she has not got a clue what they might be needed for. What is this "need" about which she continually talks?

Miss Johnson: I am grateful to the hon. Gentleman for his suggestion that the Opposition will always collude with the Government in finding time for primary legislation of an urgent nature, although I am not sure that the usual channels on the Labour Benches would agree with that conclusion. Indeed, it is often difficult to find slots for urgent primary legislation, so I have reservations about his assumption.

If we had a specific example in mind, we would include it in the Bill. It is because we do not have such an example, and because the matter is important and we might want to do something quickly and easily that we are including the provision—for those reasons and no other. Opposition Members can become more suspicious if they wish, but their suspicion is entirely misplaced. The measure is designed to deal solely with the unforeseeable, and I cannot be more specific about what the unforeseeable might contain.

Question put and agreed to.

Clause 145 ordered to stand part of the Bill.

Clauses 146 and 147 ordered to stand part of the Bill.

Clause 148

Effect of undertakings under section 146

12.30 pm

Mr. Waterson: I beg to move amendment No. 311, in page 108, line 1, leave out

    `or needs to be varied or superseded'.

It would seem sensible to allow the possibility of a market reference being made under certain restricted circumstances, even when an undertaking has been given and accepted. The obvious example is set out in subsection (2)(a), which is about breaches. No one could reasonably gainsay that. Another obvious and perfectly acceptable example is subsection (2)(b), which deals with information supplied that was relevant to the undertaking being

"false or misleading in a material respect".

The whole basis of accepting that undertaking would be negated. Again, we can see the force in that.

With all due respect to the draftsmen, it is the weasel words

"or needs to be varied or superseded"

in subsection (2)(a) that are objectionable. The amendment would remove them, which would limit the OFT's powers to make further investigation references if it had received undertakings that had been complied with. Subject to the obvious

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exceptions that I mentioned, if an undertaking has been offered, discussed and accepted on those terms, the people offering it should feel reasonably certain that they will not face a further market investigation reference unless they are in some way to blame. Clear examples would be breaches of undertaking or when false information had been provided that had formed the basis of the willingness to accept the undertaking in the first place.

I cannot see how the words

    "or needs to be varied or superseded"

add anything, except to create a gateway—that is the buzzword of the Bill—through which another investigation can be launched, even though the first investigation has been satisfactorily resolved by way of an undertaking having been offered and accepted. I want the Minister to reassure me that the words are not for that purpose. If they are not, I cannot see what purpose they serve, so I hope that she might be prepared to accept the amendment.

Miss Johnson: I am delighted to inform the hon. Gentleman that he is still on a winning streak, and that the conspiracy view of history is still wrong. I am happy to accept the amendment tabled in his name and that of other Opposition Members.

The wording of clause 148 has come directly from section 56D of the Fair Trading Act 1973, but on further reflection we cannot see any reason to retain it. It weakens the case for giving undertakings, as there is effectively no protection from reference during the supposed quiet period. Twelve months is not a long time in the context of market investigations, so the OFT would not have long to wait, even if it changed its mind after agreeing to the undertakings. I am therefore content to accept the amendment.

Amendment agreed to.

Clause 148, as amended, ordered to stand part of the Bill.

Clause 149

Interim undertakings: part 4Mr. Djanogly

: I beg to move amendment No. 312, in page 108, line 31, after `means', insert `evading'.

The Chairman: With this it will be convenient to discuss amendment No. 313, in page 108, line 34, after `reference', insert

    `but not any such action which could be beneficial to competition or customers'.

Mr. Djanogly: We move to interim undertakings, although both amendments, which address the definition of pre-emptive action, are relevant to clause 150, which deals with interim orders. We are therefore talking about interim undertakings and orders.

Once the investigation is complete and the report has been published, most companies will not want to

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stand back. They will either want to go to the Competition Appeal Tribunal or take on board the report's implications as far and as fast as they can, then move on. A company would rarely sit back and do nothing, and wait until the OFT loads it with orders. In almost any case, that would not be in the company's interests. The concern with the provision is that the wording could be used to prevent a company moving ahead in a way in which would not be anti-competitive, and which would, in any normal regard, be acceptable.

The amendments try to address that by stating that a company should be barred only from taking evasive action, rather than from taking any action at all. Amendment No. 313 goes wider: the question should be not only of the negative—that the company should not evade—but of the extent to which the action concerned would not affect competition, and of whether it were beneficial to customers. For those circumstances, a definition of pre-emptive action should be carved out. The amendments head in the same direction, but amendment No. 313 is slightly wider. I appreciate that they are not of the finest draftsmanship, but I hope that the Under-Secretary accepts my point.

Miss Johnson: In a market investigation, interim undertakings and orders are available only following the publication of the Competition Commission's report. Their purpose is to prevent the parties from taking action that might prejudice the ability of the Competition Commission to introduce the final remedies identified in the report. The parties may in the interim period want to take steps on their own initiative and to address competition concerns that were identified in the reports. I reassure the hon. Gentleman that interim undertakings and orders would prevent such action only if it were deemed prejudicial. Perhaps such action, although taken in the interests of competition, would undermine the ability of the Competition Commission to implement a remedy that would have an even greater beneficial impact. In such cases, the Competition Commission should be able to introduce an interim order or secure interim undertakings.

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