House of Commons - Explanatory Note
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Clause 338: Restrictions relating to nominated news providers

689.     Subsection (1) allows for a person to hold up to a 40 per cent interest in the nominated news provider, replacing the existing limit of 20 per cent.

690.     Subsection (2) explains that the 40 per cent limit applies to a participant who holds a regional Channel 3 licence as if all such licence-holders, together with the persons connected with each of them, were one person. The effect is that ITV licence holders between them can hold no more than a 40 per cent share. Other participants are also considered to represent the same person as those connected with them.

691.      Subsection (3) gives the Secretary of State order-making powers to repeal or modify any of the restrictions on ownership of the nominated news provider. Any order must be made either on the recommendation of OFCOM or after consulting OFCOM.

Clause 339: Changes of control of Channel 3 services

692.     OFCOM are to include in the licence for every regional Channel 3 service conditions to ensure that any body corporate holding such a licence notifies OFCOM in advance of any proposals that may result in a change of control of the licensee, or of a person connected with the licensee who is, actually or potentially, involved in providing programmes for inclusion in the licensed service.

693.     Where such a change of control may result, or has resulted, over a body corporate holding a regional Channel 3 licence, OFCOM shall review and publish a report on the effects or likely effects, and their proposed response. In particular, they shall review the impact of the change of control on the quality or range of regional programmes and productions and the effect of the change of control on the regional character of the service.

Clause 340: Action following review under s. 339

694.     If, following a review under clause 339, OFCOM consider that the effect of the relevant change of control is prejudicial to the matters set out in clause 339(4) or (5), they must vary the relevant licence. Any such variation may lead to the inclusion in the licence of conditions that are more burdensome than those included prior to the variation. However, they must be conditions that would have been fulfilled during the three months prior to the change of control or, if those three months were atypical of the licensee's performance during the previous year, another three-month period during the preceding year.

695.     The licensee must always be given the opportunity to comment on the report before OFCOM vary the licence. The variation shall not be effective until the change of control actually occurs.

Clause 341: Variation of local licence following change of control

696.     OFCOM are to include in the licence for every local sound broadcasting service conditions to ensure that any body corporate holding such a licence notifies OFCOM in advance of any proposals that may result in a change of control of the licensee, or of a person connected with the licensee who is, actually or potentially, involved in providing programmes for inclusion in the licensed service. Where such a change of control may result, or has resulted, over a body corporate holding a relevant licence, OFCOM shall review the effects, or likely effects, of the change. The review will consider the possible impact of such a change on the quality and range of programmes, the character of the service, and OFCOM's duty in respect of the local content and character of services (set out in clause 302). OFCOM must publish a report of its review setting out its conclusions and any proposed action.

Clause 342: Action following review under section 341

697.     If, following a review under clause 341, OFCOM consider that the effect of the relevant change of control is prejudicial to the matters set out in clause 341(4), they must vary the relevant licence. Any such variation may lead to the inclusion in the licence of conditions that are more burdensome than those included prior to the variation. However, they must be conditions that would have been fulfilled during the three months prior to the change of control or, if those three months were atypical of the licensee's performance during the previous year, another three-month period during the preceding year. The licensee must always be given the opportunity to comment on the report before OFCOM vary the licence. The variation shall not be effective until the change of control actually occurs.

Clause 343: Meaning of "control"

698.     This clause amends the provisions relating to the control of a body corporate set out in paragraph 1 of Schedule 2 to the Broadcasting Act 1990 (circumstances where there is deemed to be control even though the person in question does not have a 50 per cent, or greater, interest in a company):

  • It is explained that a person will be treated as having de facto control of such a body if he would (if he chose to) be able in most cases or in significant respects to ensure that affairs of the company are conducted in accordance with his wishes.

  • There will be an assumption that anyone with an interest of 20 per cent or more in a body has de facto control of that body, unless it is shown otherwise;

  • OFCOM will be required to publish and update guidance on some, but not necessarily all, of the factors they will take into account when determining whether a person has "control" of a body, within the meaning of paragraph 1(3)(b) of Part 1 of Schedule 2 to the 1990 Act.

Chapter 6: Other provisions about television and radio services

Clause 344: Annual factual and statistical report

699.     OFCOM are under a duty to carry out a review of the provision of the television and radio programmes in the United Kingdom and to prepare (and publish their findings and conclusions) a factual and statistical report twelve months after the commencement of this clause and annually thereafter. In carrying out the review, OFCOM must consider each of the matters listed in subsection (3). These include: the extent to which television and radio services programmes are representative of the principal genres of such programmes; the extent to which OFCOM's codes relating to listed events and fairness have been complied with; trends in audience behaviour; the financial condition of the television and radio programme market(s); relevant intellectual property matters that have been significant during the period; technological developments; the availability of people with skills used to provide television and radio services and programmes; and the availability of facilities for the provision and training in such skills. OFCOM's duty under this clause is in addition to their duty to prepare a report on the current state of public service television broadcasting under clause 256.

Clause 345: Grants to access radio providers

700.     OFCOM may make such grants as they consider appropriate to the providers of access radio, as more fully described in the notes to clause 254 above. The terms and conditions of such grants are at the discretion of OFCOM, but neither the bestowing of a grant upon any person, nor the terms on which this is done, shall make that person a disqualified person under Schedule 2 to the Broadcasting Act 1990 in relation to an access radio licence.

Clause 346: Amendments of 1990 and 1996 Acts

701.     This clause amends the definition of programme services in the 1990 Act so as to include a broad range of services including on-demand and internet services and also and introduces Schedule 15, which makes amendments to the 1990 and 1996 Acts. Most of these amendments are consequential on the Bill. They are described in more detail in the notes for Schedule 15.

Clause 347: Meaning of "available for reception by members of the public"

702.     This clause defines "available for reception for members of the public" in such a way as to exclude 'one to one' services on cable, satellite or by means of a multiplex service. Examples of such services include internet and video-on-demand services where an individual viewer requests an individual library item such as a film. However, any television service that is designed to be broadcast or distributed simultaneously, or virtually simultaneously, to its audience will be held to be "available for reception by members of the public", even where the technical means of distribution is on a one to one basis.

703.     The Secretary of State may by order modify clause 347 having regard to: the public's expectations of protection as regards the contents of television programmes; the extent to which members of the public are able to make use of facilities for exercising control over the programmes accessed; the practicability of applying different levels of regulation for different services; the financial impact of any proposed modifications on service providers; and technological developments.

Clause 348: Interpretation of Part 3

704.     This clause provides for the interpretation of defined terms.

PART 4: LICENSING OF TV RECEPTION

705.     The requirement to hold a licence for the use of a television receiver is currently contained in the Wireless Telegraphy Act 1949, as amended by the Broadcasting Act 1990. The 1990 Act made the BBC (rather than the Secretary of State) responsible for TV licence administration. Part 4 of the Bill consolidates the existing provisions relating to the administration and enforcement of TV licences and separates them from provisions relating to other wireless telegraphy licences.

Clause 349: Licence required for use of TV receiver

706.     This clause prohibits the installation or use of a television receiver without a TV licence issued by the BBC, and makes it an offence, punishable by a fine, for any person to:

  • install or use a television receiver without a TV licence; or

  • have a television receiver in his possession or under this control, intending to install or use it without a TV licence, or knowing (or having reasonable grounds for believing) that another person intends to install or use it without a TV licence.

707.     Subsection (5) exempts from the requirement to hold a TV licence any person who, in the course of business as a dealer, delivers, installs on delivery, demonstrates, tests or repairs television receivers. Subsection (6) gives the Secretary of State the power to make regulations creating further categories of exemptions from the requirement to hold a TV licence for prescribed equipment, persons, circumstances or purposes.

708.     Paragraph 49 of Schedule 18 provides that any television licence granted under the Wireless Telegraphy Act 1949 before the coming into effect of this clause shall have effect after its coming into force as a licence for the purposes of this clause.

Clause 350: TV licences

709.     This clause gives the BBC the power to issue TV licences. The BBC may include in TV licences such conditions and restrictions as they think fit. They must attach such conditions and restrictions as the Secretary of State directs, and may not attach any conditions expressly prohibited by a direction issued by the Secretary of State. They are also precluded from including any provision conferring a power of entry to any premises.

710.     Subsection (2) gives a non-exhaustive list of the type of conditions that might be included in a TV licence, including provisions relating to the type of television receiver covered by the licence, the persons authorised to install or use a television receiver under the licence, and the purpose for which the receiver may be installed or used.

711.     Subsection (5) gives the BBC the power to revoke or modify a TV licence either by notice to the licensee or by a general notice published in a manner as specified in the licence. The BBC must modify the conditions or restrictions in a TV licence if directed by the Secretary of State to do so. Otherwise the licence continues for the period specified in the licence.

Clause 351: TV licence fees

712.     This clause allows the Secretary of State - subject to obtaining the consent of the Treasury - to make regulations setting the fees payable by licensees to the BBC (i) on the issue or renewal of a TV licence; and (ii) in such other circumstances as the Secretary of State provides for in the regulations. Regulations may also allow for concessions, and provide for payment of the licence fee by instalments.

Clause 352: Powers to enforce TV licensing

713.     This clause sets out procedures for the issue and use of search warrants for the purpose of investigating offences under clause 349. Subsections (1) and (2) provide that a justice of the peace in England or Wales, a sheriff in Scotland, or a lay magistrate in Northern Ireland, may grant a search warrant to one or more persons authorised by the BBC or OFCOM where he is satisfied by information provided under oath that there are reasonable grounds for suspecting (i) that an offence under clause 349 has been or is being committed; (ii) that evidence related to such an offence is likely to be on premises or in any vehicle specified in the warrant; and (iii) that one or more of the conditions set out in subsection (3) are satisfied. These conditions are: that it is impracticable to communicate with any person who may grant entry; that there is no one who is entitled to grant access; that entry will not be granted unless a warrant is produced; or that the purpose of the search may be frustrated or seriously prejudiced unless carried out immediately.

*vehicle is defined in subsection (10) as including any vessel, aircraft or hovercraft.

714.     A warrant granted under this clause will be valid for one month after the day of grant. It may grant powers to enter and search specified premises or vehicles and to examine and test any television receiver found there. A warrant issued to a person authorised by OFCOM may only be used to investigate breaches of TV licence conditions relating to radio interference. Persons acting under a warrant may use reasonable force in the exercise of these powers.

715.     Subsection (7) imposes a duty on any person who is on the premises specified in the warrant, or who is in, in charge of, or present at the vehicle specified in the warrant, to provide any assistance necessary to enable any person acting under the warrant to examine or test any television receiver found there.

716.     Subsection (8) makes it an offence to intentionally obstruct the exercise of any powers granted under a warrant under this clause or to fail (without reasonable excuse) to provide any assistance required under subsection (7). A person guilty of such an offence is liable to a fine.

Clause 353: Interpretation of provisions about dealer notification

717.     This clause replaces the definitions of "television dealer", "television programme" and "television set" in section 6 of the Wireless Telegraphy Act 1967, enabling the Secretary of State, by regulations order, to define a television dealer and a television set for the purposes of the dealer notification requirements of the Wireless Telegraphy Act 1967. The apparatus specified in regulations defining television sets may include software used in association with it.

Clause 354: Meaning of "television receiver" and "use"

718.     This clause defines a television receiver as apparatus of a description defined by the Secretary of State, by order, as a television receiver. The apparatus specified in an order may include software used in association with it.

PART 5: COMPETITION IN COMMUNICATIONS MARKETS

Chapter 1: Functions of OFCOM under Competition Legislation

719.     Chapter 1 of Part 5 of the Bill allows OFCOM to exercise concurrent powers with the Office of Fair Trading (OFT) under Part 1 of the Competition Act 1998 and Part 4 of the Enterprise Act 2002. Currently, the Director General of Telecommunications has concurrent jurisdiction with the OFT to exercise functions under these Acts in so far as they relate to "commercial activities connected with telecommunications" (see section 50 of the Telecommunications Act 1984, as amended by Part 2 of Schedule 9 to the Enterprise Act 2002). Chapter 1 of Part 5 will give OFCOM concurrent powers in relation to a wider range of activities including broadcasting and related matters.

Clause 355: Matters in relation to which OFCOM have competition functions

720.     This clause explains the expression "communications matters" as it is used throughout this Chapter. "Communications matters" include any one or more of the following:

  • the provision of electronic communications networks;

  • the provision of electronic communications services;

  • the making available of services or facilities in association with a network or service or for facilitating the use of a network or service;

  • apparatus used for any of the above; and

  • broadcasting and related matters.

721.     Subsection (2) gives the Secretary of State a power by order to amend this definition. No such order is, however, to be made unless a draft of it has been laid before Parliament and approved by a resolution of each House.

Clause 356: OFCOM's functions under Part 4 of the Enterprise Act 2002

722.     This clause gives OFCOM current jurisdiction with the OFT to apply and enforce the provisions of Part 4 of the Enterprise Act 2002 (market investigations), with certain limited exceptions, in relation to commercial activities connected with communications matters.

* Under subsection (4), the expression activities connected with communications matters includes the supply and export of apparatus used for providing or making available electronic communications networks or services and the production or acquisition of any such apparatus for supply or export.

723.     Part 4 of the Enterprise Act 2002 will replace the monopoly provisions of the Fair Trading Act 1973 with a new regime of "market investigations". These are designed to complement the Competition Act 1998 by providing a means of addressing problems in markets where competition does not appear to be working well, but where there is no apparent breach of existing competition law. An example of the sort of circumstances in which a market investigation might take place would be a situation where a few large firms supplied almost the whole of the market and, without there being any agreement between them, they all tended to follow parallel courses of conduct, while new competitors faced significant barriers to entry into the market, and there was little or no evidence of vigorous competition between the existing players (i.e. a non-collusive, uncompetitive oligopoly). The OFT is able to make a reference to the Competition Commission where it has reasonable grounds to suspect that the structure of a market in or including the UK, or the conduct of persons supplying or acquiring goods, or of their customers, prevents, restricts or distorts competition in connection with the supply or acquisition of goods or services in the UK. Where the Competition Commission finds that such an adverse effect on competition exists, it is under a duty to take such remedial action within its powers as it considers reasonable and practicable. A number of sectoral regulators have concurrent powers with the OFT to make market investigation references in respect of markets which fall within their areas of responsibility. The Communications Bill will give concurrent powers to OFCOM to exercise the OFT's functions under Part 4 of the Enterprise Act 2002 in relation to commercial activities connected with communications, except that, unlike the OFT, OFCOM will neither be obliged to keep a register of undertakings accepted and orders made under Part 4 (under section 166 of the Enterprise Act 2002) nor will they be obliged to issue guidance on the making of market references (under section 177 of that Act).

724.     Subsections (5) and (6) are designed to prevent the simultaneous exercise by both OFCOM and the OFT of their powers under Part 4 of the Enterprise Act 2002 in relation to the same matter. These subsections place those bodies under a duty to consult with each other before exercising any of the concurrent powers under this clause and prohibit them from exercising these powers in a case where the other has already done so.

725.     Subsection (7) places OFCOM under a duty, where they have referred a matter to the Competition Commission under the provisions of Part 4 of the Enterprise Act 2002, to provide the Competition Commission with any relevant information relevant to the investigation in their possession and with any other assistance that is within their power to give.

726.     Subsection (8) gives the Secretary of State the power to conclusively determine any question that arises as to whether OFCOM may carry out any particular function under this clause. However, subsection (9) also makes clear that no action taken by OFCOM under Part 4 of the Enterprise Act 2002 is open to challenge on the grounds that such action should have been taken by the OFT.

727.     Subsection (10) applies section 117 of the Enterprise Act 2002 to the carrying out by OFCOM of functions under this clause. Section 117 makes it an offence for a person knowingly or recklessly to supply materially false or misleading information to the Secretary of State, the OFT, the Competition Commission or to another person who he knows will use the information for the purpose of providing information to the Secretary of State, the OFT or the Competition Commission.

Clause 357: OFCOM's functions under the Competition Act 1998

728.     This clause is analogous to the existing provisions of the Competition Act 1998 giving concurrent jurisdiction to other sectoral regulators such as the Director General of Telecommunications. This clause gives OFCOM concurrent jurisdiction with the OFT to apply and enforce Part 1 of the Competition Act 1998, with the exception of section 38 (1) to (6) and section 51. This means that OFCOM will be able to exercise almost all of the functions of the OFT under Part 1 of the 1998 Act in so far as they relate to activities connected with communications matters. Subsection (8) gives OFCOM concurrent jurisdiction with the OFT with respect to certain transitional provisions of the 1998 Act.

Section 38 of the Competition Act 1998 requires the OFT to prepare and publish guidance as to the appropriate amount of any penalty under Part 1 of the Act. Section 51 allows the OFT to make rules (currently in the form of the Competition Act 1998 (Director's Rules) Order 2000, SI 2000 No. 293) setting out the procedures to be followed by the OFT, the sectoral regulators and third parties under Part 1 of the Act.

* Under subsection (4), the expression activities connected with communications matters includes the supply and export of apparatus used for providing or making available electronic communications networks or services and the production or acquisition of any such apparatus for supply or export.

729.     The 1998 Act is based on Articles 81 and 82 of the EC Treaty. It contains two prohibitions: first, of agreements which prevent, restrict or distort competition and which may affect trade within the United Kingdom ('the Chapter I prohibition'); secondly, of conduct which amounts to an abuse of a dominant position in a market which may affect trade within the United Kingdom ('the Chapter II prohibition'). The 1998 Act is generally applied and enforced by the OFT. However, in a number of regulated industries such as telecommunications, gas, electricity, water and sewerage and railway services, functions under the Act are carried out by the sectoral regulator concurrently with the OFT. Examples of the functions in respect of which OFCOM will have concurrent jurisdiction include:

  • to investigate possible infringements of the Chapter I or Chapter II prohibitions, either on their own initiative or in response to complaints;

  • to impose financial penalties and/or to give directions to bring an infringement of either of the prohibitions to an end; and

  • to issue general advice and information on how the Act applies to the communications sector.

730.     OFCOM and the OFT will consult with each other before a decision is made as to who will deal with a case in respect of which there is concurrent jurisdiction. Formal arrangements for consultation are set out in regulations made under the Competition Act 1998. In general, anti-competitive agreements or abusive conduct that relate to activities connected with communications matters will be dealt with by OFCOM (unless the OFT is better placed to do so). Where it is unclear which regulator has jurisdiction, the matter will be referred to, and determined by, the Secretary of State. However, no objection may be made against anything done by OFCOM on the grounds that it should have been done by the OFT.

Further provision for the co-ordination of the performance by the OFT and sectoral regulators of concurrent functions in contained in the Competition Act 1998 (Concurrency) Regulations 2000 (SI 2000 No. 260). The OFT and each regulator are also represented on the Concurrency Working Party which was formed in 1997 to ensure full co-ordination between regulators and the OFT and to ensure consistency of approach to casework.

731.     Section 44 of the Competition Act 1998 makes it an offence, directly or indirectly, to provide false or misleading information to the OFT. As subsection (3) of this clause provides that references to the OFT in Chapter 1 of the Competition Act 1998 are generally to be read as including OFCOM, section 44 of the Competition Act 1998 will also apply in relation to information provided to OFCOM in connection with their exercise of concurrent jurisdiction under that Act.

 
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Prepared: 20 November 2002