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Baroness Miller of Hendon moved Amendment No. 22:

The noble Baroness said: In moving this amendment, I wish to speak also to Amendments Nos. 23 and 24. As I have mentioned, Clause 15 was inserted into the Bill as an afterthought, following the Committee stage in another place and shows all the signs of the Government legislating on the hoof.

We believe it is appropriate that there should be the facility to refer the activities of those providing postal services to the Competition Commission. I should perhaps remind the Committee that I am a former member of the Competition Commission, although in my day it was called the Monopolies and Mergers Commission. I should also reassure Members of the Committee that I am not trying to drum up business for my former colleagues.

Postal service providers will, of necessity, be few in number and the temptation to indulge in anti-competitive practices will surely be there. I question whether the powers in this clause include overseas providers to the commission. Perhaps the Minister can tell us. If they do not, then this is a matter calling for a further amendment so as to ensure that overseas providers have to play by the same rules as our domestic ones. The new, belated clause requires some fine tuning.

Amendment No. 22 supports the power of the postal services commission to refer matters to the Competition Commission at any time it considers it appropriate to do so. It adds a requirement that there shall be an automatic referral to the Competition Commission once every three years for it to conduct an overview of this vital public service.

I cast no aspersions on any intended members of the postal services commission, or indeed on any of the regulators of other industries. But there is always a danger that they may become so involved with the organisations they supervise that they accept as reasonable practices that may not prove so in terms of independent review.

I also call to mind occasions when complaints about a particular industry have not been referred to the Competition Commission when there has been a reasonable demand that they should be on the grounds that the initiative should come from the Office of Fair Trading, which, for whatever reasons, has taken a different view. This small amendment simply requires the Competition Commission to look at the industry at least once every three years.

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Amendment No. 23 deletes the words "specified in the reference" so that, once a matter is in the hands of the Competition Commission, it may look further afield if it thinks it appropriate without being told that it is not within its immediate terms of reference. That is especially appropriate bearing in mind that, under the previous amendment, once postal services are placed before the Competition Commission, it need not look at them again for three years.

I accept that under Clause 15(2) the postal services commission can supplement a reference that is already under way. That is the point of my amendment--namely, to strengthen the subsection by ensuring that the power to vary references to the Competition Commission does not apply to the automatic triennial that I have proposed.

Amendment No. 24 is purely consequential on Amendment No. 23. The three amendments are entirely constructive. They are designed to strengthen the powers in the clause and I hope that the Government will be able to accept them. I beg to move.

Lord Newby: For a moment I thought that we were again debating the Financial Services and Markets Bill. There, too, we heard a proposal for an automatic review of the workings and codes established by the FSA. The view that we took then, which we take also in relation to this amendment, is that review is fine when there is a purpose to it, but to have automatic reviews every three years--to pluck the plant up by the roots, whether or not there is any suggestion that it might be necessary--seems to us a superfluous requirement.

Clause 15 enables the commission to make a reference whenever it wants. It is a flexible provision. If there is no suggestion that a reference is necessary, the commission will not make one. That is by far the most sensible way to proceed in this case rather than putting in place an unnecessary and onerous triennial provision.

Lord Sainsbury of Turville: I should like to speak to Amendments Nos. 22 to 24. The amendment before the Committee would have the effect of subjecting every licence holder to a Competition Commission inquiry at least once every three years. It is a welcome variation on an amendment moved in another place that would have restricted the postal services commission to only these references, but it would still leave an unsatisfactory state of affairs and I shall be asking the noble Baroness to withdraw the amendment.

The aim behind the amendment seems entirely laudable; namely, to subject licence holders to regular regulatory review. However, that rather ignores the fact that the postal services commission will subject licence holders to more regular and detailed review. It is the postal services commission that is best placed to carry out this function, not the Competition Commission.

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Furthermore, I would not wish to devalue the effect of a Competition Commission reference so that it becomes a regular chore. I strongly agree with the noble Lord, Lord Newby. A reference is an extremely serious matter; it will take considerable management time and will carry an estimated cost of £1 million plus for the company involved. It seems unjust and burdensome that a company with model relations with the regulator should have to be subjected to this. Similarly, why should a burden like this apply to a new entrant with perhaps limited resources?

The noble Baroness is concerned about the question of regulatory capture. There is always a concern that, however well-intentioned regulators and the regulated are, they can fall into a cosy relationship. However, we believe that the postal services commission, especially with its panel of commissioners rather than one regulator, will be highly effective.

Perhaps I may deal also with the question of the overseas postal operator. If such an operator applies for and receives a licence to operate in the UK postal services market, he will be subject to the competition provisions in the Bill. All postal operations are subject to general competition law outside the Bill.

Therefore, while I applaud the intention behind the amendment, I believe that the Bill as drafted puts in place a much more even system of regulation than that suggested by the amendment. For the reasons I have outlined, I hope that the noble Baroness will withdraw the amendment.

Baroness Miller of Hendon: I accept the Minister's explanation and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 23 and 24 not moved.]

Clause 15 agreed to.

Clauses 16 to 19 agreed to.

7 p.m.

Clause 20 [Application of competition legislation to references etc.]:

Lord Sainsbury of Turville moved Amendment No. 25:

    Page 15, line 42, at end insert--

("(6) Section 82(1) and (2) of the 1973 Act (prejudicial information and absolute privilege) shall apply to notices given by the Competition Commission under section 19(6) or (8) above as it applies to reports made by the Competition Commission under that Act.").

The noble Lord said: This is a small technical amendment which will extend the relevant parts of Section 82 of the Fair Trading Act to the notices issued by the Competition Commission under Clause 19. This means that the Competition Commission will be required to have regard to the need to exclude, so far as practicable, any matter which relates to the private affairs of an individual, where the publication of that matter would or might, in its opinion, seriously and prejudicially affect the interests of that individual; and any matter which relates specifically to the affairs of a

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particular body of persons, whether corporate or uncorporate, where publication of that matter would or might, in the opinion of the Competition Commission, seriously and prejudicially affect the interests of that body, unless in its opinion the inclusion of that matter relating specifically to that body is necessary for the purposes of the report. The amendment also extends to the commission absolute privilege for the purposes of the law of defamation and allows it to publish notices in the same honest and open manner as its reports. I beg to move.

On Question, amendment agreed to.

Clause 20, as amended, agreed to.

Clauses 21 to 29 agreed to.

Clause 30 [Financial penalties]:

Baroness Miller of Hendon moved Amendment No. 26:

    Page 21, line 9, at end insert--

("(3) No penalty imposed by the Commission under this section may exceed 10 per cent of the turnover of the licence holder (determined in accordance with such provisions as may be specified in an order made by the Secretary of State.").

The noble Baroness said: I shall be brief in explaining the purpose of Amendment No. 26. When the Bill was in Committee in the other place the clause was not examined at all. I suspect that that was because the timetabling was much more difficult in another place, which is not able to go through every clause line by line as is our practice. It is important that we debate these matters, even if they are very small. The clause gives the commission the power to impose financial sanctions in the form of a penalty. It is right that Parliament should look at that sanction and decide whether it really intends to give the regulator absolute unfettered power to impose any penalty that he thinks fit without limit for any offence, serious or trivial. Some Acts of Parliament provide for unlimited penalties but they are for criminal offences, not for what in essence are actions similar to a breach of contract where the perpetrator's licence may be revoked straight away and his business is closed down, or his licence is not renewed in future, and in addition he is liable to pay a penalty.

I believe that an unlimited penalty is not called for and is grossly excessive. The amendment that we propose follows, word for word, an identical provision in the Government's own Competition Act 1998. I believe that in the interests of consistency the Government should follow their own recent precedent and not allow such an unfettered discretion for what may turn out to be--we know not--quite a small offence. If it was a serious offence undoubtedly the licence holder would lose his licence and his business would be finished, and he would also face a penalty. But Parliament should decide what the penalty should be; it should not be unfettered. I beg to move.

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