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The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe): I congratulate my hon. Friend the Member for Reading, West (Martin Salter) on securing a debate that I see as very important. I am glad to have the opportunity to discuss the issues that he raised. I, too, am surprised that the Under-Secretary of State for Environment, Food and Rural Affairs, our hon. Friend the Member for South Dorset (Jim Knight) was not able to stay to give us the benefit of the skills gained from his long experience of working for Dentons Directories, but I understand that he had a previous commitment. I am grateful to my hon. Friend the Member for Ealing, North (Stephen Pound) for his intervention because I know that the issue is important to his constituents.
My hon. Friend the Member for Reading, West raised the issue because, as he said, Yell's headquarters is in his constituency and is an important provider of jobs—almost 900, I think he said. He paid tribute to the work of the Communication Workers Union, Connect and Yell itself in raising the issue with him as the constituency Member. Clearly, there are many concerns.
I recently received a letter from my hon. Friend and am pleased that he has already had a response from the Competition Commission. I, too, shall send him a written response shortly.
My hon. Friend raised a number of issues, but he knows that I cannot intervene directly in many matters because of the rules of the competition framework that we have established. Where I can, I shall respond to his points. I also give him a commitment that, if he is not satisfied with my response, I shall be happy to meet a delegation from his constituency if that is helpful.
The UK competition framework has established the Office of Fair Trading and the Competition Commission as independent statutory bodies and they
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take decisions based purely on competition considerations, unaffected by any political agenda or intervening factors, allowing experts and independent competition bodies to take decisions on mergers and markets. With that independence comes responsibility. The Competition Commission has a statutory duty to consult widely on its interim findings and to ensure that its members reach the right decisions. Independent competition authorities are a key benefit introduced under the Enterprise Act 2002 regime and are a key factor in the recognition of the OFT and the Competition Commission as world class. I know that my hon. Friend has doubts about the competence of both bodies but, as the Minister with responsibility for competition affairs, I can assure him that the UK is a world-class leader. Members on both sides of the House recognise the benefits of the revised structure that we have set up.
The Office of Fair Trading may make a reference to the Competition Commission when it has reasonable grounds for suspecting that one or more features of a market prevent, restrict or distort competition in the UK. The Department of Trade and Industry cannot overrule or influence a decision by the OFT to make a market investigation reference. As required by the Enterprise Act, the OFT consulted on its proposal to refer the classified directory advertising services market before making the reference to the Competition Commission. Its consultation revealed no substantive evidence to change its mind about making a reference.
My hon. Friend referred to the timetable. The Competition Commission aims to offer best value for money, reaching the right decision in the shortest period of time while following fair and transparent procedures. It does not have a free mandate on setting or extending its timetables for market investigations. There is a statutory maximum period of two years with no possibility of extension. The commission's rules of procedure require it to have an administrative timetable for the major stages of a review. It aims to complete its investigations well within the two-year maximum period. In the case of the classified directory advertising services inquiry, the commission hopes to complete the investigation well within the two-year statutory deadline.
There are two main reasons why the Competition Commission's timetable for market investigations under the provisions of the Enterprise Act is longer than its monopoly investigations under the Fair Trading Act 1973. The group of members presiding over an inquiry has to be more transparent in its thinking during the course of an inquiry and the Competition Commission is now responsible for the determination and negotiation of remedies if an adverse effect on competition finding is reached. Increased transparency involves publishing more documents and providing parties to our inquiries with the opportunity to influence the commission's thinking well before the release of the final report.
The Competition Commission keeps its procedures under constant review. It will see if anything can be done to speed up the time frame while following statutory requirements. It has recently completed its first Enterprise Act market investigation—into store card credit services—so this is an opportune time to consider how it investigates markets.
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My hon. Friend mentioned the emerging thinking document. The group of members working on the CDAS inquiry published their emerging thinking document on 24 January 2006. It provides parties with an opportunity to study the group's evolving thoughts and to submit evidence in support of or against them. By the time the group publishes its emerging thinking, it will already have consulted widely on the key competition issues. The thinking is preliminary and it is possible that new evidence will come to hand that will significantly influence the group's decision before the publication of provisional findings and, of course, the final report.
Martin Salter: I am grateful to my hon. Friend for directly responding to the points that I have raised, but he should bear it in mind that the evidence provided to the Competition Commission in this interminable inquiry contains nothing new whatever, so if the commission is to produce a change of direction in its provisional findings, it will need to acknowledge the evidence that already exists.
Mr. Sutcliffe: I am grateful to my hon. Friend for making that point. I am trying to describe the procedural way in which the Competition Commission operates, but we have heard his contribution this evening and I am sure that the Competition Commission will hear exactly what he is saying. Indeed, the letter that he received from the Competition Commission explains how it may need to learn from some of the lessons of the case, which, as he says, seems to have spanned the change in the structures, which is one of the problems that he and his constituents and the company have faced.
We are trying to introduce into the Competition Commission regime the need to consult parties during both merger and market investigations. The Competition Commission publishes as much information as possible on the inquiry website, having regard to the fact that confidential commercially sensitive information needs to be kept confidential. It actively seeks views from interested parties by placing advertisements in relevant newspapers and trade journals, undertaking surveys and directly approaching key consumers, competitors and relevant trade organisations for evidence.
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The Competition Commission invites key parties for oral hearings to present their views on competition issues. During the classified directory inquiry, it commissioned two in-depth surveys of businesses that advertise or have recently stopped advertising in classified directories. The group of Competition Commission members appointed to an inquiry hold complete responsibility for the procedures followed on inquiries and the decisions reached. Members are fully engaged with staff over the course of an inquiry and are present at the vast majority of hearings with the main and third parties involved in an inquiry, so is incorrect to question the control that staff have over members' decisions.
The Competition Commission's chairman, Peter Freeman, has widespread experience in competition. Before his appointment as chairman in December 2005, he had been deputy chairman since May 2003. Before joining the Competition Commission, Peter was head of the European Community and competition law practice at the international law firm Simmons and Simmons.
The Competition Commission has substantial powers to remedy an adverse effect on competition, including changing the structure of a market by requiring companies to divest themselves of parts of their business. In exercising those powers, the Competition Commission needs to be sure that it reaches the right decisions, which requires in-depth economic analysis into matters such as market features, dynamics occurring in the market and incentives for firms to act under certain market conditions.
It is not for Ministers to decide whether action is necessary when we have put in place a well-established, independent and rigorous competition framework, but I understand the concern that my hon. Friend has raised. I hope that he will take from my comments this evening that we take this matter seriously and understand the effects on his constituents and the company in his constituency. I have regular meetings with the competition authorities. I am happy to raise that issue to discover what lessons can be learned, and as I said earlier, I am happy to meet my hon. Friend if he feels that that is appropriate. I am sure that all hon. Members look forward to hearing the results of the competition authorities' deliberations on this subject, and we wait with interest to see what happens.
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