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25 Feb 2003 : Column 218—continued
New Clause 13
Meaning of Control
'(1) Paragraph (1) of Part I of Schedule 2 to the 1990 Act shall have effect subject to the following amendments.
(2) For subparagraph (3) there shall be substituted—
"(3) For the purposes of this Schedule a person has control of a body corporate if that person is able, or it is reasonable to expect that person to be able, directly or indirectly to ensure that the affairs of a body are conducted in accordance with that person's wishes.
(3A) In determining whether a person controls a body corporate all relevant circumstances shall be taken into account including the level of participation in the body corporate of that person and the level of participation of other participants in the body, and if it is the case that the person does not ensure that the affairs of the body corporate are conducted in accordance with that person's wishes consistently or on a continuing basis, that fact shall be disregarded.
(3B) Without prejudice to the generality of subparagraph (3)—
(a) a person has control of a body corporate if that person is beneficially entitled to more than 50 per cent. of the equity share capital in the body or possesses more than 50 per cent. of the voting power in it, and
(b) a person has control of a body corporate if that person is beneficially entitled to 50 per cent. of the equity share capital in the body or possesses 50 per cent. of the voting power in it, and is party to an arrangement with another participant in the body corporate under which they agree to exercise their voting power or any of it in a particular way either generally or in relation to any particular issue or not to exercise their voting power or any of it in relation to any particular issue."
(3) Subparagraph (5) shall cease to have effect.
(4) After paragraph 3 there shall be inserted—
(3A)—(1) In this paragraph "guidance on control" means guidance on the matters which Ofcom consider should be taken into account in determining whether any person controls a body corporate within the meaning of paragraph 1(3) to (3A) above.
(2) In determining the question whether a person has control of a body corporate account shall be taken of any published guidance on control.
(3) OFCOM shall prepare guidance on control and shall publish a draft of the guidance in such manner as they consider appropriate for bringing it to the attention of persons who in Ofcom's opinion are likely to be affected by such guidance.
(4) OFCOM shall also publish, together with the draft, a notice that any person may make representations to OFCOM on the draft within such period as may be specified in the notice, not being less than one month from the date of publication.
(5) OFCOM shall take account of the representations made within the specified time in preparing the guidance on control and shall publish the guidance, not later than 3 months from the last
(6) OFCOM shall keep the guidance on control under review and may publish revised guidance from time to time; and subparagraphs (3) to (5) above shall apply to any such revised guidance as they apply to the original guidance with any necessary modifications.
(5) In Part 2 of Schedule 2 to the 1990 Act after 5A there shall be inserted—
"5B. For the purposes of this Part two or more persons or bodies shall not be taken to control a body corporate otherwise than by virtue of paragraph 1(3A) or (3B) of Part I of this Schedule unless they are acting together in concert.".'.—[Mr. Greenway.]
Brought up, and read the First time.
Mr. Greenway: I beg to move, That the clause be read a Second time.
Mr. Speaker : With this it will be convenient to discuss the following amendments: No. 12, in page 290, line 38 [Clause 337], leave out paragraph (a).
No. 179, in page 290, line 39 [Clause 337], at end insert—
'(bb) paragraph 2 (disqualification for religious bodies);'.
No. 184, in page 294, line 5 [Clause 340], leave out subsections (1) and (2) and insert—
'(1) Subsection (9) of section 32 of the 1990 Act (limits on participation in nominated news providers) shall cease to have effect.'.
No. 149, in page 302, line 13, leave out Clause 347.
No. 114, in page 424, line 4, [Schedule 14], leave out from 'order' to end of line 5 and insert
'amend or repeal the preceding provisions of this Part, but any such amendment must not have the effect of increasing the restrictions on the holding of any licence and, in particular, may not increase any number (whether expressed in words or figures) in this Part'.
No. 2, in page 424, line 5 [Schedule 14], at end insert—
'Part 1A Channel 5 Services
6A(1) A person is not to hold a Channel 5 licence if—
(a) he runs a national newspaper which for the time being has a national market share of 20 per cent. or more; or
(b) he runs national newspapers which for the time being together have a national market share of 20 per cent. or more.
(2) For the purposes of this paragraph, each of the following shall be treated as holding a Channel 5 licence—
(a) the actual licence holder; and
(b) every person connected with the actual licence holder.
(3) The provisions of paragraphs 2 to 4 of this Schedule shall apply for the purposes of this Part of this Schedule insofar as they relate to national newspapers as if a Channel 5 licence were a licence to provide a Channel 3 service.'.
No. 115, in page 429, line 33, [Schedule 14], leave out 'any provision' and insert 'Parts 3 or 4'.
No. 13, in page 451, line 33 [Schedule 15], leave out subparagraph (4) and insert—
'(4) For paragraph 1(2) and (3) of Part 2, there shall be substituted—
No. 14, in page 550 [Schedule 19], leave out lines 3 to 5.
No. 15, in page 550, line 6 [Schedule 19], leave out '(2) and'.
Mr. Greenway: New clause 13 seeks to clarify the meaning of control for the purposes of schedule 2 to the 1990 Act, which contains the provisions restricting cross-media ownership, and for the purposes of clauses 339 to 342, which introduce new powers for Ofcom where there is a change in control of a Channel 3 or Channel 5 licence holder. So many important licensing issues depend on what is meant by control that it cannot be right to introduce uncertainty into its meaning now. We are, after all, a long way down the path of development of the law in this area. We should have learned enough to be clear and certain in any alteration that we make.
The new clause is proposed as an alternative to clause 347, which, for the benefit of hon. Members who were not on the Committee, introduces the concept that a holding of 20 per cent. of equity or voting power is, of itself, evidence of control. That clearly is not logical or sensible. If enacted, it would introduce considerable uncertainty into this important area of media law. The presumption is rebuttable, but we all know how difficult it is to prove a negative. The 20 per cent. participant will, in many cases, be able to show that he does not control the company only by showing that another person does. However, there is no reason why he should have the necessary information to prove that another person has control. How would he know? The Government, in their response in Committee, did not justify the change. The Minister suggested that the reason for the change was that a 20 per cent. holding was the level at which questions started to be asked. We entirely agree with that, but it is a quantum leap from that position to the proposition that a person with a 20 per cent. holding should be deemed to be a controller unless he can show that he is not.
The hon. Member for Sunderland, South (Mr. Mullin) made an impassioned plea on the need for more time to debate these matters. He knows about the criminal law; if we were dealing with a criminal offence, the Government would be the first to agree that it would be quite wrong to move from saying that someone is suspected of committing a crime to saying that he is guilty unless he can show that he is not. That is the philosophy that underpins clause 347. That is the effect that it will have.
New clause 13 would change things so that a person would be deemed to have control only if that person does, in fact, have control—whether or not the control is exercised directly or indirectly, and whether or not it is exercised consistently. That would be so whatever the level of shareholding, but there is no chance that the licence-holding restrictions would hit someone who did not have control.
I want to make it clear to the Minister that what we are seeking to say is not that a 20 per cent. holding can never constitute control, but that such a holding does
not automatically constitute control. Indeed, the new clause would still allow for lower percentages than even 20 per cent. to constitute control, but real control, not a mythical control that can never exist, would be considered under our scheme.
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