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Lord Simon of Highbury moved Amendment No. 42:

Page 46, line 32, leave out from ("75") to ("(agreements") in line 33.

The noble Lord said: In moving this amendment I shall speak also to Amendments Nos. 43 and 44. These amendments extend the exclusion for planning obligations to cover Crown planning obligations. These are analogous to the planning obligations under Section 106 of the Town and Country Planning Act 1990 that may be entered into under Section 299A of that Act in respect of Crown land. There is no reason to treat Crown land differently from other land. I beg to move.

On Question, amendment agreed to.

Lord Haskel moved Amendments Nos. 43 and 44:

Page 46, line 33, after ("land)") insert ("or 246 (agreements relating to Crown land) of the Town and Country Planning (Scotland) Act 1997)"
Page 46, leave out lines 36 and 37 and insert--
("(2) In sub-paragraph (1)(a), "planning obligation" means--
(a) a planning obligation for the purposes of section 106 of the Town and Country Planning Act 1990; or
(b) a planning obligation for the purposes of section 299A of that Act.").

On Question, amendments agreed to.

Lord Ezra moved Amendment No. 45:

Page 47, line 8, at end insert--
("( ) In respect of conduct by a regulated utility, there shall be a rebuttable presumption that conduct which is in compliance with its licence and the statute under which its licence was granted or treated as granted does not constitute a breach of any prohibition under Chapter II.").

The noble Lord said: As the Bill is drafted the regulators will express prohibition powers for their own industry: concurrent powers with OFT. However, in each of the regulated industries there are already detailed rules set out in the licences which each company has to abide by. Those licences cover price controls, customer protection and how a company may respond to competition. In the case of gas, the licences had considerable parliamentary scrutiny, as I know, as recently as 1995. Despite that, there is little mention of the licences in the Bill, so behaviour that complies with a licence could then be questioned by the regulator as

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anti-competitive. The amendment tries to get round that problem by stipulating that behaviour that complies with a licence should be assumed not to be anti-competitive until proved otherwise.

A strong feeling throughout the Second Reading debate, and now in this Committee, has been our concern about the way in which utility regulators will exercise their powers under the Bill. The amendment simply states that the behaviour of a utility that complies with an existing licence provision should be assumed not to be an abuse of a dominant position unless proved otherwise. There is little mention in the Bill of how the provisions should interrelate with licence conditions. It would be wrong for the regulators not to consider the licences when exercising their new powers. That would undoubtedly be a worry and would put the utilities in the difficult position of complying with one statute but not knowing whether they had infringed another. I beg to move.

Lord Fraser of Carmyllie: I understand it to be a courtesy of your Lordships' House, but not a requirement, that if the Opposition want to agree with a proposal it is appropriate to signal that by putting a name to the amendment. I apologise for not having done so, but I should like to take this opportunity to say that with regard to Schedule 3 and this amendment, we have considerable sympathy with the points raised by the noble Lord, Lord Ezra. At a later stage we shall want to return to our concern that if the Government want to persist with a scheme under which the regulator is put into pole position, there exist opportunities nevertheless whereby a third party might then revert to the broader, general provisions relating to competition. That ought to be restricted so far as possible. If it were not, an unacceptable degree of uncertainty would exist. We are thinking of companies such as BG which have met their requirements (having possibly battled long and hard with the regulator to reach a compromise). It seems unacceptable that thereafter a third party might re-enter to challenge, say, BG, over price caps.

Whether the particular approach promoted by the noble Lord, Lord Ezra, is the most suitable means of achieving that end we leave open, but at this stage we signal that we share his concern that there should not be that ping-pong between the regulator (in the premier position) and those challenging companies. Such an approach has its attractions and might have the advantage of avoiding the problem almost entirely other than in the most exceptional circumstances. The presumption which the noble Lord has suggested ought to be included is not an absolute one, but, as the wording of the amendment suggests, it would be rebuttable.

Even if the Government are not prepared to accept the exact wording of the amendment, I hope that they will at least understand and be sympathetic to what the noble Lord seeks to achieve. We on the Opposition Front Bench ask nothing more than that the Minister gives us some signal that he will reconsider this point before we return to it on Report.

Lord Simon of Highbury: I recognise the point which has been raised. Schedule 3(3) provides an

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exclusion for compliance with legal requirements. It is clearly right that if a company is required to do something by law, it should not be caught by the prohibitions for complying with that requirement. In the utility sector, such legal requirements include the requirements imposed by the licence conditions. That is quite clear. It is the Government's policy that prohibitions should apply in the regulated utility areas. The purpose is to ensure that anti-competitive conduct can be dealt with.

It is wrong to make the assumption that licence conditions deal with all competition concerns that can arise particularly in a dynamic market place. The point of having separate regulation and expertise with the regulator is the fact that these markets are developing in very different ways and at a different pace as privatisation and competition grow in the market place. We must think of them as being different. If we made this assumption there would be no need to apply the prohibitions in these areas, but precisely because of the changes in the market place we have a certain amount of caution. As we do not make that assumption we believe that we would give utilities false comfort about the real position under the prohibitions if we accepted the amendment that there should be a rebuttable assumption that conduct in conformity with the licence did not infringe the prohibition.

If anti-competitive conduct which is not covered by explicit licence conditions takes place one wants the prohibition to be applied as rigorously and as effectively as elsewhere in the economy. I do not believe that it is appropriate to introduce a provision that seeks to alter the burden of proof in relation to the Chapter II prohibition for conduct in compliance with the licence conditions. So far as concerns the process, the director, the tribunal and the courts can in any event take account of all the relevant factors in applying the prohibitions. When we come to the process later it will become clear that a third party who brings an unreasonable or vexatious case before the Commission will be turned down.

9.15 p.m.

Lord Fraser of Carmyllie: I completely understand what the noble Lord has said about a requirement. We take no exception to that provision. It is desirable and well positioned within the scheme of the Bill. The particular point is related to the price-capping provision. As the noble Lord will be aware from his former position as a doubtless interested observer of the battle between the then British Gas and Clare Spottiswoode, there was an intense battle about the establishment of the price cap, including a reference to the MMC. It seems to us to be at least worthy of exploration that after such a battle has been concluded--perhaps there will be other battles in future--as the companies settle down and understand that that is where the line has been drawn, there may be a risk that a third party has the capacity to intervene and take it back into the general competitive regulation. It is the uncertainty that that causes which is the source of our anxieties.

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Doubtless there are expert advisers within the noble Lord's department who can deal with this matter. We do not suggest that there should never be intervention, but that a rebuttable presumption, not an absolute or irrebuttable presumption, in principle is the line that should be pursued.

Lord Simon of Highbury: I first respond to the issue of the price cap which, quite pertinently, the noble Lord has tabled. I should like to go back to an earlier exchange with the noble Lord, Lord Ezra. Pricing within a price cap is not a guarantee against anti-competitive behaviour. We have had a long discussion in other circumstances on the question of predatory pricing. The noble Lord spoke about the proposals of BG in discussion with the regulator. On the basis of experience, the discussion has often turned on how close it is to the price cap, not how far below it it may be given the price cap regime. It is always open to the company, if there is a concern that the cap may be challenged under the Chapter II prohibition, to make a notification to his regulator to obtain guidance. I believe that there is an opportunity to test the cap on the upside by guidance, and that the regulator always gives and is obliged to give. But one should not forget the issue of predatory pricing if the price level is well below the cap. There is no guarantee as to which of those two will pertain. It is for that reason that I believe that the prohibition is still a valuable notion in regard to licence regulation.

I shall reflect strongly on the question of whether rebuttal is an appropriate concept as to the way that the guidance process may be undertaken. In the meantime I would ask and urge the noble Lord, Lord Ezra, to withdraw his amendment if he is satisfied that we have positioned the debate in the right area.

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