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Lord Sainsbury of Turville: The amendment seeks to indicate a further public interest consideration, that the Secretary of State could intervene on decisions about mergers. I say to my noble friend Lord Hoyle that when we consider newspapers a different set of considerations are taken into account. The plurality of the press is covered by the Fair Trading Act and will be updated by the Communication Bill. A different set of considerations apply in that case. I shall be talking about other companies.

As the Bill stands, the competition authorities will take decisions on mergers on the basis of a focused competition test. The Secretary of State has power to intervene in a case that raises a public interest issue, which she believes should be specified in legislation. At present we foresee a need for ministerial intervention on national security grounds only. That is the only consideration specified in the Bill.

The Government have considered the case for specifying further matters, but we do not anticipate that Ministers will need to intervene on any other issues. That is why the Bill does not mention social effects or the effects on employment.

Switching away from the current public interest test to a competition test for assessing mergers has involved hard thinking and tough choices. It is a focused policy. We believe that in the vast majority of cases the economy is best served if mergers are assessed solely on the basis of their effect on competition and that these decisions are best taken by the expert competition authorities operating independently of Ministers.

Merger regulation is best aimed at safeguarding the competitive intensity in the economy. Competition provides the spur for businesses to be more productive, innovative and efficient, better able to provide long-term, sustainable employment and better products and services for consumers.

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Adding social and employment factors to the test for mergers would create barriers to market restructuring. We believe that it is wrong to create such barriers unless there are significant anti-competitive effects. Restructuring must be possible if companies and markets are to remain dynamic and competitive.

I recognise, of course, that mergers can have adverse social and employment impacts in the short term, but I do not believe that the answer is to indicate that Ministers should step in on such grounds. That way lies uncertainty and unpredictability with political lobbying creeping back into the whole process.

The task for the Government is to make sure that the economy as a whole is strong and to help people who are affected to adapt, retrain and get new jobs. We have a good record for creating the conditions for a dynamic economy which can adjust to change. We have the lowest unemployment rate since the 1970s, the lowest rate of inflation and the lowest interest rates since the 1960s. We have record numbers of people in work because private sector employment has increased by 1.25 million over the past five years. We remain the number one destination for foreign, direct investment into Europe.

I should like to make a further important point. It is to set the reforms to the merger regime in the context of the existing fair trading legislation and how it has operated. In practice, competition has been the principal factor in the UK merger policy for many years. In 1984, the then Secretary of State for Trade and Industry, the noble Lord, Lord Tebbit, announced that references would be made primarily on competition grounds. That has been a pursued by every subsequent Secretary of State. When one looks at the reports of the Competition Commission on mergers one finds that the employment effects and other non-competition effects of mergers, other than national security issues, are not matters that have determined decisions in recent years. Legislating for a focused competition test is not something which will make a large difference in practice to the way in which mergers are currently regulated.

Finally, I mention the mechanism of the Bill which provides for factors other than competition and national security being considered, should this prove necessary in the future. I shall explore that in more detail in a moment as regards Amendment No. 131. It is worth noting in relation to this amendment that the power in Clause 57(3), together with the power of intervention set out in Clause 41, represent a careful balance. This amendment would tip that balance. As we have said before, we have no current plans to specify new public interest considerations. We have built in appropriate checks on the use of this power, which we believe are essential to preserve the predictability of the new regime. However, we also believe that the mechanism provides an important safety valve which will ensure that the very exceptional case can be dealt with appropriately. In the light of this explanation, I invite the noble Baroness to withdraw the amendment.

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Baroness Turner of Camden: I thank the Minister for that explanation. He will not be surprised to learn that I find it disappointing because it has always been the case that competitiveness has been the sole criterion since the Tebbit test. That does not necessarily mean that it has always been right or that people have not suffered as a result of it being applied. In fact, we know of cases where that has happened. The policy that my noble friend has enunciated will not prevent the Government being lobbied when people believe that they are being disadvantaged. Quite obviously, people will make a fuss if they feel that they are being harmed as a result of decisions made within the criteria laid down in this Bill.

However, I do not intend to press the matter further now. I should like to think about it and then decide what further action I might wish to take at Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Davies of Oldham: I beg to move that the House do now resume. In moving the Motion, I suggest that we return to this business not before 8.30.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

Regulation of Investigatory Powers (Maintenance of Interception Capability) Order 2002

7.30 p.m.

The Parliamentary Under-Secretary of State, Home Office (Lord Filkin) rose to move, That the draft order laid before the House on 22nd May be approved [31st Report from the Joint Committee].

The noble Lord said: My Lords, this order has been made in exercise of the powers conferred on the Secretary of State by Section 12(1), (2) and (5) and Section 78(5) of the Regulation of Investigatory Powers Act 2000 (RIPA).

Part I of Chapter I of RIPA updates the previous law in the UK governing the interception of communications. It provides for and regulates powers to allow lawful interception of communications by law enforcement, security and intelligence agencies, consistent with the Human Rights Act 1998. It also creates a system of safeguards reflecting the requirements of Article 8 of the European Convention on Human Rights.

In the United Kingdom, interception is only conducted under warrants authorised personally by the Secretary of State and where it is deemed necessary in the interests of national security for the purpose of preventing or detecting serious crime, or for safeguarding the economic well-being of the UK.

In short, the order under the Act gives the Secretary of State the authority to require communications service providers, which could be a telephone company or a postal service, to put in place an infrastructure capable of intercepting communications when a warrant is issued

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with proper authority for them to do so. So the order is not about the actual interception, but the putting in place of an interception capability, as the title implies.

The schedule to the order lists those obligation which appear to the Secretary of State reasonable to impose on communications service providers for the purpose of securing the information required. The obligations under Part I provide for public postal services and public telecommunication services being required to respond.

There has been lengthy consultation on the order. Also RIPA established a Technical Advisory Board. As the House may well know, it is a non-departmental public body, with the right and the role to comment on draft orders or draft notices made under the Act and to give advice to the Secretary of State. If approved by the House, the order will take effect on 1st August 2002. The Secretary of State's power to impose the obligations in the order shall be exercised through a notice issued to specific communications service providers. So it is order, then notices and then—if the provision is in place—in future times, warrants to undertake interceptions.

The Government intend that a notice given to a CSP will, wherever possible, be the product of prior dialogue and agreement between the Government's representatives and the CSP in question. However, should a CSP consider that a notice given to it is unreasonable, it is able to make reference to the Technical Advisory Board, as I indicated.

Clearly, there are issues of financial burdens imposed on CSPs in setting up such an infrastructure or responding to specific warrants. Therefore, the Act imposed a requirement on the Secretary of State to make fair contribution to the costs incurred as a consequence of those obligations. For example, last year alone, CSPs received some 14 million from the Government. But there is under way a fuller consultation process with the industry about trying to develop the costing regime and the compensation framework to compensate for it.

Without more ado, I commend the order to the House. I beg to move.

Moved, That the draft order laid before the House on 22nd May be approved [31st Report from the Joint Committee].—(Lord Filkin.)


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