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Lord McNally moved Amendment No. 95:

"(9A) OFCOM shall not set conditions of a discretionary character under this section in any case in which they decide that a more appropriate way of proceeding in relation to the matter in question would be under the Competition Act 1998 (c. 41).
(9B) When OFCOM have come to a decision on the appropriate way of proceeding under subsection (9A) they shall publish a notice to that effect, giving their reasons for the decision, in such manner as they consider appropriate for bringing their decision to the attention of the persons who, in their opinion, are likely to be affected by it."

The noble Lord said: I hope that Ministers will find this group of amendments useful if not acceptable. We are trying to make sure that we have the balance right between Ofcom's sector-specific powers and the competition powers in the Competition Act 1998 and the Enterprise Act 2002. I think our committee was much influenced by one of the Conservative members, Andrew Lansley, who had served on the Enterprise Bill in another place and had become quite an enthusiast for its powers, if properly used. We were also impressed by the evidence from Don Cruickshank, who said that the United Kingdom is acquiring a system of competition law "worthy of its name" and developing a culture of enforcement to match. Without going back to the previous debate, that culture of enforcement and resources of enforcement will be very important.

It was interesting that, on balance, the pre-legislative committee thought that, where it could, Ofcom should leave these matters to the competition and enterprise legislation to give greater certainty to the players in the sector that they have clear Acts to refer to and to make sure that Ofcom used its sector powers only where absolutely necessary. These amendments seek to get that balance right. I beg to move.

Baroness Buscombe: We support these amendments. Clause 42 gives Ofcom the power to set conditions in the electronic communications industry. Amendment No. 95 would prevent Ofcom from setting conditions of a discretionary character if it decides that a more appropriate way of proceeding would be under the Competition Act 1998. That we entirely support.

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Although I am not quite sure what,

    "conditions of a discretionary character"

are, and whether the noble Lord, Lord McNally intends the amendment to apply only to those conditions referred to in Clause 42(10)(c), the purpose behind the amendment is, we think, entirely right. One of the principles of good regulation which we discussed in relation to Clause 3 is proportionality, and the proportionate approach of the regulator should be to apply ex ante regulation only where necessary. If competition law will do the trick, there should be no need to regulate. Furthermore, the amendment is entirely consistent with the framework directive which states in Recital 27:

    "It is essential that ex ante regulatory obligations should only be imposed where there is not effective competition . . . and where national and community competition law remedies are not sufficient to address the problem".

In the light of the other obligations on Ofcom, it may be said that this amendment is not strictly necessary, but we believe it is right in principle and look forward to what the Minister will say in response.

The effect of Amendments Nos. 104 and 127 is to prevent Ofcom from making a market power determination where Ofcom has determined that the identified market is effectively competitive. That seems to us to be right. If the relevant market is effectively competitive, there is no need for Ofcom to interfere and it should not make a market power determination. As with Amendment No. 95, Amendment No. 104 makes explicit the obligation on regulators contained in the framework directive not to interfere when a market is effectively competitive.

Lord McIntosh of Haringey: I, too, worked on the Enterprise Bill, and I am certainly enthusiastic about the idea of a general competition law applying, with sectoral law applying only when necessary. The problem is that we are now in Part 2. I shall bore the House by saying over and over again that Part 2 implements a number of European directives. Clause 42, to which Amendment No. 95 refers, implements article 6.1 and part A of the annexe of the authorisation directive and articles 4.1 and 4.3 of the access directive. Clauses 75 and 76 implement articles 14 and 15 of the framework directive. Clause 91 implements article 10 of the authorisation directive.

It would be lovely if general competition law could deal with all the matters under debate, but we have not yet reached that position in the European electronic communications network and services market. Progress across Europe varies, which is why we have supported the directives and why we are transposing them into United Kingdom law.

I recognise that Amendment No. 95 follows recommendation 74 of the Joint Committee report. As we said in the government response, we certainly understand the Joint Committee's concern that sectoral obligations should be confined to situations where normal competition legislation is not sufficiently effective for the special circumstances of this market. However, we believe that the Joint Committee's concerns are adequately dealt with in the

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way in which conditions are set, especially in the requirements on the regulator before he sets any conditions.

The regulator can set conditions only where they are really needed and appropriate, and all activities of Ofcom are subject to provisions of Clause 3(3)(b). They must be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed. That is an adequate safeguard on the way in which Ofcom sets conditions, and makes Amendment No. 95 unnecessary.

Amendment No. 104 would add further requirements on Ofcom when considering the setting of significant market power conditions. We consider that to be unnecessary, too. As we promised in responding to the Joint Committee's recommendation 63, we considered again whether the Bill could be improved to provide that significant market power conditions were set only when there was no effective competition. The way in which we have drafted Clauses 75 and 76 give the effect that the Joint Committee required.

Significant market power conditions can be set only when someone has a position that amounts to dominance in the market concerned. That is set out in Clause 75(2), which refers to provisions of the framework directive to ensure that our interpretation of "dominance" is consistent with the interpretation across Europe. It is obvious that, if we have regulations consistent with European legislation, quite apart from the fact that we are obliged to introduce them, it is enormously to the benefit of the broadcasting and telecommunications industry that the same conditions should apply throughout Europe. If someone has "dominance", in our view and in the view of European Commission there is manifestly a lack of effective competition. In those circumstances, the regulator should be able to decide what ex ante conditions it is appropriate to set. Therefore, I do not believe Amendment No. 104 is necessary, and it follows that Amendment No. 127, which provides definitions, is unnecessary.

I see the argument in favour of Amendment No. 117. It is a good thing to have consistency with other parts of the Bill, although it has not worried us in the past. We are prepared to accept that amendment, if that is the wish of the House.

Lord McNally: I do not know whether to do a lap of honour. We understand that there are constraints. It is worth emphasising that the Joint Committee was not simply a nanny and a meddler. It did not simply add on responsibilities, as the noble Lord, Lord Peyton, seemed to suggest. We accepted the argument that the communication industries would benefit from the type of rigorous competition established by the Enterprise and Competition Acts. I quoted Don Cruickshank's feeling that this country now has some extremely good competition machinery. Consequently, and reverting to the previous debate, we want that machinery to have the necessary resources to make the provisions bite.

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The Minister has given a most welcome response. Do we get the concession now? When we reach that part of the Bill, do we all say, "Agree"?

Lord McIntosh of Haringey: Yes.

Lord McNally: That is excellent. Thank you very much. I beg leave to withdraw the amendment and await the win.

Amendment, by leave, withdrawn.

Clause 42 agreed to.

Clauses 43 to 60 agreed to.

6.15 p.m.

Clause 62 [Obligations to be secured by universal service conditions]:

Baroness Gibson of Market Rasen moved Amendment No. 95A:

    Page 64, line 23, at end insert "; and

"(f) to secure the availability throughout the United Kingdom of affordable access to services of ever-greater bandwidth""

The noble Baroness said: Amendment No. 95A asks Ofcom to ensure that broadband services are included within the definition of what constitutes high-speed services. That will both hasten the design and delivery of broadband services and assist the Government to achieve their aim of the UK being the most extensive and competitive broadband market in the G7 by 2005. For the UK that means a high-tech infrastructure that will enable worthwhile jobs to be located anywhere in the country, and it means the ability to attract international investment and to compete effectively with other modern economies.

Overall, the problem is not predominantly one of supply. Most of the population of the UK now have access to a broadband service. Nevertheless, many rural users are prevented from accessing the technology because they live too far from their local exchange or their exchange has not been upgraded, or because the range of alternative access technologies are not available or are directed to the non-residential market.

There are a number of matters on which the Government need to take action. They need to show potential users the practical benefits of broadband through pilots and demonstration and showcase projects. The Government should publicise the benefits of broadband through major education and awareness programmes. They should take the lead in creating demand through the public sector by co-ordinating the response of public sector authorities at the local level, such as councils and schools, and by using the public sector, through the post office and library, as focal points for the delivery of broadband services.

Ofcom, of course, has the primary role in boosting take-up by providing a definition of universal service—the mechanism by which everyone has the right to receive certain communications service

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regardless of where they live, at a price they can afford, which encompasses the high-speed delivery of those services.

Such is the success of broadband where it is available that no one accessing broadband will return to the narrow-band dial-up of yesterday. The services available through and generated by broadband delivery will become as essential to residential homes as the telephone and the power supply. Above all, a universal access requirement will ensure that we do not create a broadband barrier to go alongside the digital divide that already exists and that broadband instead becomes the means of overcoming that divide. I beg to move.

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