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House of Lords

Thursday, 5th June 2003.

The House met at eleven of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by the Lord Bishop of Chester.

Communications Bill

The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(Baroness Blackstone.)

On Question, Motion agreed to.

House in Committee accordingly.


Lord Puttnam moved Amendment No. 280A:

    Before Clause 340, insert the following new clause—

(1) Section 58 of the Enterprise Act 2002 (c. 40) (specified considerations) shall be amended as follows.
(2) After subsection (2) there shall be inserted—
"(2C) The public interest in—
(a) the maintenance of a range of media owners and voices sufficient to satisfy a variety of tastes and interests;
(b) the promotion and maintenance of a plurality of broadcast media owners, each of whom demonstrates a commitment to the impartial presentation of news and factual broadcast programming; and
(c) the promotion and maintenance, in all media including newspapers, of a balanced and accurate presentation of news, the free expression of opinion and a clear differentiation between the two;
is specified in this section."
(3) In subsection (3), after the words "any consideration", there shall be inserted "(other than the consideration specified in subsection (2C))"."

The noble Lord said: In moving Amendment No. 280A, I shall also speak to Amendments Nos. 281, 282 and 283. The Government wish to deregulate ownership of the broadcasting industry. This reflects the way in which the technology has developed, with digital broadcasting making many more channels possible within the spectrum previously used for analogue broadcasting, and satellite and cable offering additional ways of getting channels and stations to audiences. The old system, in which a scarcity of spectrum meant controls were needed to determine who could run a limited number of channels, is no longer relevant. The case has also been made that deregulation reduces the constraints on business and allows the consumer to take the prime position in shaping and influencing the way choices and services are developed.

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So far, so good. I think we can all agree on where we do not want deregulation to take us. In fact, in Committee in another place, Dr Howells summed it up quite neatly:

    "Our key aim is to ensure that there is a range of competing voices readily available to citizens so that they are free to form their own opinions. . . If we allow the largest newspaper companies, which are already influential, to buy up Channel 3—the only commercial public service broadcaster that currently—

I stress "currently"—

    "has universal access to a mass audience—we risk a significant reduction in the number of voices in play in the media, and there would be a risk that one voice could become much louder than the others. That would represent an unacceptable concentration of the influence in the current circumstances".

The Minister went on to say:

    "I believe that such a concentration in one voice would also be harmful to politics, because it could create a media owner so powerful that they could exercise direct influence over political decisions".—[Official Report, Commons Standing Committee E, 30/1/03; col. 860.]

We might not yet agree on the means to avoid this outcome, but we need no reminding that it is a situation we all wish to avoid. Here is the problem—it is the word "currently". The Bill, as the Government have repeatedly stressed, needs to be future-proof.

In a period of rapid economic, technological and ownership change, the one thing we cannot do is even begin to guess at who might or might not attempt to control this or that element of the media. What we can do, however, is refuse to contemplate any broadly unacceptable level of media concentration where each of the component parts is of significant size and reach in its own right.

What we need, therefore, is the ability to identify these concentrations as and when they occur, examine them in an analytical, fact-based way and ask whether they fit our definition of "unacceptable". The drawback of relying on cross-media ownership rules is that they can all too easily be overtaken by changes in market circumstances, as Dr Howells acknowledged in response to a question from Andrew Lansley, the MP for South Cambridgeshire, during the Committee stage. We must also dispel the current fantasy that should unacceptable levels of ownership emerge, regulators can move swiftly to put the genie back in the bottle.

There are two ways of accomplishing what we propose, and we need both of them. One looks from the viewpoint of the consumer; the other from the viewpoint of the citizen. For the consumer, we have competition policy, and that is already built into the Bill. For the citizen, we have the public interest plurality test. Together, they represent a formidable duo, and they are both flexible and future-proof.

Batting for the consumer, we have the Competition Act and the Enterprise Act, and the Bill allows Ofcom to apply both to the broadcasting market. The Competition Act identifies dominant players in markets and looks for abuse of that dominance. The Enterprise Act comes at the issue from a slightly different perspective and aims to prevent unacceptable concentrations of ownership. It is brand-new

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legislation that introduces a new approach to mergers and takeovers. What is attractive is that expert independent bodies will take decisions in a non-political, transparent and predictable manner.

Under both the Competition Act and the Enterprise Act, once the case is proven the remedies available are significant. So you might argue that those powers are all we need to address unacceptable concentrations of media power. But they are designed to look at competition from a purely economic standpoint by asking, for example, whether consumer choice is reduced or too much economic power is given to one supplier. They cannot take account of the very special role the media plays in an informed society. Ofcom might see a problem and wish to address it but competition law simply does not provide the tools to allow it to do so.

So the tools are a part of the solution but not the whole solution. We also need a powerful player on behalf of the citizen, a powerful player already available to us in the Bill—the public interest test. In the case of this amendment, we see a clear public interest in "media plurality", which is defined in three ways: the maintenance of a range of media owners and voices sufficient to satisfy a variety of tastes and interests—that is, many speaking to many; the promotion and maintenance of a plurality of broadcast media owners, each of whom demonstrates a commitment to the impartial presentation of news and factual programming—that is, many broadcasters all abiding by the important impartiality requirements that this Bill and its predecessors set out; and the promotion and maintenance in all media, including newspapers, of a balanced and accurate presentation of the news, the free expression of opinion and a clear differentiation between the two.

There are several things going for this public interest test. The first is that it allows Ofcom and the OFT to carry out a proper analysis of the likely impact of any cross-media merger or take-over, an evidence-based approach that examines the sort of problems that could arise rather than simply asserting that there will not be any. The second is that it already exists in the Bill, as it forms part of the newspaper merger regime, updated from the Fair Trading Act 1973 in order to sit within the new Enterprise Act.

The third aspect, which is very important, is that it could be used to address the knotty issue of religious ownership. Rather than banning all religious bodies from owning licences and then giving them exceptional leave to do so when there is no longer any evidence of spectrum scarcity, each case could be examined on its merits. We might ask the fundamental question, "Would this prejudice the accurate and impartial presentation of news and factual programming or the free expression of opinion?"

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For those competition policy aficionados in the Chamber, adding a media plurality public interest test would align our legislation with the European merger regime, which recognises that individual member states have a special and legitimate interest in mergers that affect public security, prudential rules or the plurality of the media.

The other appealing thing about the media plurality public interest test is that, once included in the Bill and combined with Ofcom's review of the media ownership rules, it could be used as a safety net for a staged withdrawal from those ownership rules that have over time become unnecessary, either because the market has moved on, or because they relate to any channel or service which has become much bigger or smaller, or because Ofcom has carried out the necessary risk analysis to show that it is no longer applicable. I am quite deliberately trailing an impact analysis of Channel 5's cross-media ownership change.

In addition, if there are specific problems associated with any concentration of media ownership—perhaps cross-promotion or editorial influence—especially from the unregulated world of newspapers into the licensed world of broadcasting, this regime would enable the Secretary of State to attach very specific conditions to her approval. Those conditions would otherwise be difficult to apply to unlicensed bodies and certainly could not be applied in advance of agreeing a merger or takeover.

In another place, the Government have argued that this would place a greater degree of uncertainty, or new and unnecessary hurdles, in the face of broadcast media owners. That argument was made in Standing Committee E, on Thursday 6th February (at col. 1004 of the Official Report). If that is the case, it will be so only for that very small number of potential purchasers of newspapers, television channels or radio stations which are already major players in this market. So, not only is it flexible, but it is also targeted at what is clearly the point of greatest need.

I refer Members of the Committee to the entirely unanimous recommendation of the Joint Select Committee and its reasoning, as set out in paragraphs 218 to 224, on pages 59 and 60 of our report. I beg to move.

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