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The Chairman: Order. I do not want to put the hon. Gentleman into any more difficulty, but appeals are covered in the next group of amendments. Mr. Whittingdale: In actual fact, Mr. Ofcom, amendment No. 650—[Laughter.] Michael Fabricant: It must be the heavy regulatory touch. Mr. Whittingdale: As my hon. Friend suggests, Mr. Atkinson, it may be the heavy regulatory touch that caused me to call you Mr. Ofcom. I do apologise. I was addressing amendment No. 650, which has been included in the group of amendments for this clause and which deals with procedural safeguards, including rights of appeal. The matter is dealt with in both clauses 304 and 305, and I assure you, Mr. Atkinson, that if I am allowed to consider these matters in the current debate on clause 304, I am less likely to speak at such length when I outline the case in favour of the amendments to clause 305. The Chairman: The Committee might consider that a fair deal. Mr. Whittingdale: Let us hope that this sets a precedent for relations between regulators and those whom they seek to regulate. The Bill currently provides full rights of appeal in three circumstances: in relation to decisions that are taken under part 2, decisions that are taken under the concurrent competition powers, and decisions that are taken when Ofcom is exercising its powers under the Broadcasting Act 1990
I have already mentioned that Ofcom could try to take decisions and impose licence conditions and directions that amount to economic regulation in connection with a number of its primary duties that it has not designated as being
for which the only recourse under the provisions of the Bill as it stands is to go to judicial review. Thus, broadcasters will be denied rights that are available to, for example, telecommunications operators. It is bizarre and inconsistent that in a Bill that is based on convergence, Ofcom's ability to act in relation to electronic communications networks and services is subject to due safeguards and accountability, but that ability is not safeguarded in relation to broadcasting.
9.45 amThe amendments and new clauses tabled by my hon. Friend the Member for South Cambridgeshire go a long way towards rectifying those deficiencies. They would remove the unnecessary and redundant fair Column Number: 752 trading condition in licences, tying conditions relating to competition matters to clause 3(1)(a), which states Ofcom's duty to promote consumer interests in markets that are relevant to the provision of licensed services or of connected services, where that is appropriate, by promoting competition. That would ensure that if Ofcom relied on that duty in exercising its powers under the 1990 Act, there would be a full right of appeal. Other procedural safeguards that are currently lacking would also be put in place: for example, consultation prior to the introduction of codes, licence terms or general conditions, and consultation prior to subsequent changes in its codes and licences.The third amendment in the group, No. 650, goes further than my hon. Friend's amendments. It would ensure that a power exercised by Ofcom pursuant to clause 3(1)(a) and 3(1)(c) would be subject to proper procedural safeguards, including full rights of appeal. It therefore closes a hole in the Bill through which Ofcom might seek to rely on its clause 3(1)(c) duty and take decisions and impose licence conditions and directions. Such a course of action would amount to economic regulation, for which proper safeguards might not be provided and for which the only recourse would be judicial review. There is evidence from the current regulatory regime that the risk of a regulator using such a duty is not theoretical. The ITC has acted under both of its primary duties under the Broadcasting Act 1990—to ensure that there is fair and effective competition and to ensure that a wide range of services are available—to undertake matters of significant economic regulation. I recognise that the Government do not intend to provide for a full independent appeals process on the merits of any decision, licence condition or direction made by Ofcom. I fully accept that the Competition Appeals Tribunal is not well placed to make judgments relating to, for example, taste and decency issues. However, our amendments are not intended to be open ended and they do not allow for such appeals in respect of Ofcom's duties in respect of standards in all television and radio services. The judicial review process will continue to provide the appropriate mechanisms and standards for appeals on matters relating to offensive and harmful material in television and radio services, unfair treatment in programmes, and infringements of privacy. If there are other areas in which the Government think that full independent rights of appeal or proper procedural safeguards should apply, they should identify them, allow a proper debate to take place, and table the appropriate amendments to narrow the scope accordingly. That is standard better regulation practice, as supported by the Government, which requires transparency, accountability, proportionality, consistency and the targeting of cases in which action is needed. The Government are not meeting the standards of better regulation in respect of the power under discussion, because it is not targeted on cases in which action is needed. This is not the first time that we have raised the issue of safeguards and appeals. In the debate on clause 187, I mentioned that its effect would be to Column Number: 753 introduce full rights of appeal for decisions, directions, approvals and consents made under part 2. We agreed that it would put in place strong and necessary safeguards and I contrasted that with the provisions in part 3. In his response, the Minister for E-Commerce and Competitiveness said that
However, it should be clear from what the Minister said and my comments on what he said that the issue is not as simple as that. The fact that proper procedural safeguards and rights of appeal are not contained in EC directives is not sufficient grounds for their exclusion from the Bill. It is a matter of the Government's professed principles of good regulation that they are expanded in part 3, in which an element of economic regulation is involved. Pure matters of content, such as those covered by Ofcom's duty in clause 3(1)(d), are unlikely to give rise to questions of economic regulation that merit a full right of appeal to the Competition Appeals Tribunal. However, we have shown that the Bill leaves Ofcom with the ability to undertake matters of significant economic regulation under part 3 that may be unrelated, or only indirectly related, to content regulation. That might be done on grounds other than its concurrent competition powers or its sectoral powers for a competition purpose. In such cases, there is no right to a full appeal process, even though similar decisions made under part 2—for example, in relation to pricing and packaging of telecommunications services—provide such a right. I hope that, in responding to this lengthy submission, the Minister will use the opportunity to clarify the Government's thinking about those aspects of the Bill and will consider tabling additional or alternative amendments to address the concerns that I have outlined, even if he cannot bring himself to support our amendments. Will he at least give us some assurance on how Ofcom will use both the powers that it inherits under competition legislation, and those that it can exercise under the Broadcasting Acts? Dr. Howells: I have to admit that I share with the hon. Member for South Cambridgeshire a kind of perverse enjoyment of matters relating to competition law and its implications for markets including broadcasting and telecommunications. The hon. Member for Maldon and East Chelmsford should not underrate his ability to give us the gospel according to BSkyB—he did a magnificent job. However, I do not agree with the amendments, and I shall explain why. The effect of amendments Nos. 618 and 625 would be to give primacy to Ofcom's duty under clause 3(1)(a) to promote the interests of consumers where Column Number: 754 appropriate by promoting competition. Amendment No. 650 seeks a similar outcome, but would also add Ofcom's duty under clause 3(1)(c)
The amendments would widen the scope of the decisions that would be subject to the right of appeal on their merits to the Competition Appeals Tribunal. The effect would be unduly to limit Ofcom's statutory discretion in the application of its general duties under clause 3 and those functions that, rightly, should have a route of appeal to judicial review. Clause 3 sets out an overall duty on Ofcom to further the interests of consumers in relevant markets, where appropriate by promoting competition. As a general duty, together with the other duties contained in clause 3, it applies to all of Ofcom's functions, including those set out in the clauses relating to its Broadcasting Act competition powers. The same is true of Ofcom's general duty to secure the availability of a wide range of television and radio services. Ofcom is required to resolve any conflict between its clause 3 duties in such manner as it thinks fit. We have provided for those of Ofcom's decisions that are made for the purpose of ensuring fair and effective competition to be subject to a right of appeal on the merits to the CAT. Other decisions that Ofcom makes for policy reasons may have an economic effect, but that does not mean that they should be subject to a similar right of appeal. It is important that Ofcom, a specialist broadcasting regulator, should retain its discretion in that respect. We are satisfied that judicial review of those of Ofcom's decisions that do not relate to competition is entirely appropriate. Amendment No. 645 would limit Ofcom's ability to determine the most appropriate route for intervening in a competition matter. The ''where appropriate'' test, in the current wording of clause 305(2), is in line with the concurrent powers of all other regulators in competition matters. That formulation acknowledges that regulators of a range of sectors, not only of communications, are best placed to determine whether to use general competition law or sector-specific competition powers. That is entirely the correct approach. Broadcasters can apply for judicial review if they consider that Ofcom has wrongly used its sector-specific powers when the Competition Act powers would have been the more appropriate route. The hon. Member for Maldon and East Chelmsford raised the specific matter of ensuring parity and equity between platforms. He was right to say that cable packages do not require a licence under part 3, but nor does a packager of satellite channels. However, a cable packager that provided its own channels as well as or instead of simply distributing channels provided by others would need a licence for those channels. In that respect, therefore, cable and satellite are treated in the same way. It depends on the nature of the business and especially on whether the packager provides its own channels. It is true, as the hon. Gentleman said, that no regulator has used both sets of powers simultaneously. Column Number: 755 There is always a choice of route. He mentioned the Oftel statement of 1 July 2002, which stated:
The hon. Gentleman could have quoted that statement. Oftel is not saying that it will not use sectoral powers—on the contrary. It went on to state:
It is clear that the regulators should, from time to time, have access to the necessary powers. As I have already outlined, there is good reason for that. Those who argue against clause 304 believe that the Competition Act is sufficient to protect against anti-competitive behaviour in broadcasting. That is a cause of fundamental disagreement. Under the prohibitions in the Competition Act—those prohibitions on which Ofcom would largely have to rely were its sector-specific powers to be removed—intervention would be allowed only if there was an abuse of a dominant position, or if agreements existed that appreciably prevented, restricted or distorted competition. We are concerned about cases in which markets should be opened up to greater competition but where the legal tests required by the Competition Act are not met. That is when the anorak expertise of the hon. Member for South Cambridgeshire becomes important. I shall attempt to explain why. The sector-specific powers contained in the Bill can be used to supplement those contained in the Competition Act. The Competition Act cannot be applied until the regulator has reason to believe that an enterprise has harmed the market by acting anti-competitively, or that the market has been harmed by existing agreements. As such, there are situations in which the use of sector-specific powers may be more effective, especially where advance action or action in a short time frame is required to ensure effective competition.
10 amThe opponents of that policy want us to leave the broadcasting sector to be determined by the Competition Act, which, I am sure the hon. Member for Maldon and East Chelmsford will agree, has very little broadcasting case law behind it. The Act is still relatively new. Our policy is to carry over the safeguards that the ITC and the Radio Authority have had to guarantee that Ofcom has that same flexibility to ensure fair and effective competition as the other broadcasting regulators had pre-Ofcom. We have made changes to ensure that Ofcom cannot use those powers in a way that unnecessarily burdens industry. The policy's opponents might have lost sight of the fact that the Bill will ensure that Ofcom must not use its sector-specific competition powers where it considers that the more appropriate Column Number: 756 route would be under the Competition Act. That is important. Any decision that Ofcom makes for a competition purpose will have a route of appeal to the CAT. Moreover, Ofcom must periodically review any of the prohibitions that it issues under its sector-specific powers to ensure that unnecessary burdens on the industry are removed. Given those safeguards, I hope that the hon. Member for Maldon and East Chelmsford will seek leave to withdraw his amendments.
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| ©Parliamentary copyright 2003 | Prepared 28 January 2003 |
