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Lord McNally: My Lords, as I explained, the amendment is identical to that tabled by Clive Soley in the Commons, which could not be debated because of the guillotine. I half expected that the Minister might accept the amendment so that it could return to the Commons and Clive Soley could have his debate. Overcoming that disappointment, I was very pleased by the summing-up of the noble Lord, Lord McIntosh. All too often, I fear, Ministers have sounded like the school sneak rushing to the proprietors saying, "Look, aren't we good boys? We are against statutory regulation". The balance should involve to a much greater extent Ministers telling the press to clean up its act.

I shall comment briefly on the gypsy warning that I received from the noble Lord, Lord Thomson. I can tell him that I have cancelled my subscription to Asian Babes and to my local massage parlour. I now live a life of such monogamous heterosexuality that I would qualify to be a C of E bishop. The Sun will search my dustbin in vain. The explanation could also be advancing age.

I am pleased with the tone and the contributions today. I wish to thank the noble Lord, Lord Lipsey, a practising journalist, in particular. There is a need for the cultural change for which he called, and for the press to establish its own ethical standards. I welcome the comments made by Sir Christopher Meyer to the Culture, Media and Sport Select Committee. He said: "Come back in a year's time and see what progress we've made". That is a good idea. Since I started with the Charge of the Light Brigade, let me finish with the Terminator—"we'll be back". I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

[Amendment No. 53 not moved.]

Clause 65 [Tariffs etc. for universal services]:

Lord Evans of Temple Guiting moved Amendment No. 54:

(a) to pay for an unnecessary additional service; or

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(b) to pay, in respect of anything required by the order, any amount that is attributable to the provision to him of such a service.
( ) The references in subsection (3), in relation to a person, to an unnecessary additional service are references to anything the provision of which—
(a) he has to accept by reason of his being provided, at his request, with something required by the order ("the requested service"); and
(b) is not necessary for the purpose of providing him with the requested service."

The noble Lord said: My Lords, in moving Amendment No. 54, I shall also speak to Amendment No. 55. Concerns were raised that the wording of Clause 65, dealing with tariffs for universal services, might permit more intrusive regulation than is desirable. The possibility of "gold-plating" was referred to. We indicated in Committee that we were sympathetic to those concerns and are accordingly putting forward these amendments to address them.

The provisions of the directive which this clause transposes—I refer to Article 10.1 of the Universal Service Directive—are concerned with ensuring that a subscriber wishing to be provided with any of the universal services specified by the directive shall not be required to pay for facilities or services which are not necessary or not required for the service requested.

The amendments address directly the question of the bundling of unnecessary services or facilities with the services requested. I believe that they effectively meet the concerns that have been raised, while continuing to provide a full implementation of the intention of the directive. I beg to move.

Baroness Buscombe: My Lords, we welcome the government amendments to this clause, which reflect amendments tabled in Committee by the noble Lord, Lord Avebury, to which my noble friend Baroness Wilcox and I added our names. The Bill, as previously drafted, incorrectly interpreted Article 10.1 of the Universal Service Directive. Therefore, we are grateful that the Government have reconsidered the proposed provision and amended it accordingly.

Lord Avebury: My Lords, we are also grateful to the Minister for doing that which was promised by his noble friend Lord McIntosh in answer to Amendment No. 102 in our names in Committee—and to see that when somebody receives anything that has to be provided under the Universal Service Directive, he is not required to pay for anything else, or to pay for anything beyond that which is strictly necessary for the provision of that service. This is a useful amendment, and we are grateful to the Government for inserting it.

On Question, amendment agreed to.

Lord Evans of Temple Guiting moved Amendment No. 55:

    Page 67, line 15, at end insert—

"( ) References in this section to providing a person with anything include references to making it available or supplying it to him."

On Question, amendment agreed to.

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1.15 p.m.

Lord Avebury moved Amendment No. 55A:

    Before Clause 91, insert the following new clause—

(1) Where OFCOM determine that there are reasonable grounds for believing that a person may be contravening, or may have contravened, a condition set under section 42, they may undertake an investigation.
(2) Where OFCOM decide to undertake an investigation under subsection (1), they shall give the person concerned a notice in writing which—
(a) indicates the reasons for the investigation being conducted by OFCOM;
(b) specifies in sufficient detail the condition and alleged contravention in respect of which the investigation is being undertaken; and
(c) specifies the period during which the person has an opportunity to make representations about the matter.
(3) Subject to section 95(3), the period specified under subsection (2)(c) must be a period of at least one month beginning with the day on which the notice is given."

The noble Lord said: My Lords, in moving Amendment No. 55A, I shall also speak to Amendments Nos. 56 to 64. We believe that these amendments are necessary to put in place a proper three-stage process leading up to the imposition of fines on communications providers for breaches of the general and other conditions of entitlement.

If Ofcom believes that a provider is committing a breach, the proper course of action is, first, to investigate whether this is the case; secondly, to make a decision as a result of the investigation; and, thirdly, to take enforcement action—including, where appropriate, the imposition of a fine. The clause assumes that if any provider is committing a breach, he has done so knowingly, and therefore as soon as Ofcom becomes aware of this breach it only has to issue the determination and to impose whatever penalties it chooses. But there is a three-stage process in general competition law, and it is not necessarily the case that sector regulation is easier to understand. Noble Lords who have had to read this Bill will agree that the general, significant market power and access-related conditions may cause difficulties of interpretation to the wide range of new communications providers that now fall within the remit of Ofcom.

Even under the existing regime, experience has shown that many alleged breaches of conditions turn out, on investigation, not to be breaches after all. It is unreasonable to expect providers to start remedying alleged breaches before it has been established by Ofcom that such a breach has occurred. In Committee, the Minister suggested, on 20th May, at col. 707, that attempting to replace a two- stage process with a three-stage process, as we propose, would actually result in a six-stage process. That is a misleading caricature of the amendment, because two of the stages that the Minister invented were of the serving of notices. That is an operation requiring no longer than the time it takes to draft the notices, and the Minister manages to insert a further stage by treating the process of formal

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investigation and the opportunity for representation as consecutive rather than concurrent, as they would be.

We do not accept that a three stage process need take much longer, or that it has had the dire results attributed to it under the existing regime, let alone under general competition law. There are rules and procedures for investigating breaches of the Competition Act 1998, drawn up by the Office of Fair Trading, known as the directors' rules. We see no reason why that should not read across into the Bill, and, to put it the other way round, we do see problems arising if there is a radical difference between the two regimes of this Bill and of the Competition Act.

Even more fundamentally, we say that there is a serious misinterpretation of Article 10 of the Authorisation Directive, dealing with compliance. Article 10.2 deals with the situation where a national regulatory authority "finds" that an undertaking does not comply with the conditions, while in the Bill that word is transmuted into "determine that there are reasonable grounds for believing". Secondly, the subject of this determination has to take what the Minister calls "remedial action", which may include the payment of substantial sums of money, at the same time as that person is making representations against the "determination", or he risks the payment of a substantial fine if Ofcom's belief turns out to be true. The undertaking has to accept that a breach has been committed and do whatever Ofcom may require to remedy it while at the same time arguing that Ofcom misdirected itself in making the original determination. That is a profoundly unsatisfactory and unfair process. It cannot have been the intention of the directive, because it defies natural law. Can the Minister name any other country in Europe which is using the term "finds" in Article 10.2 to mean a decision taken out of the blue, placing an undertaking under the obligation to take costly action within a month to remedy alleged breaches of the conditions which it denies.

The Minister said, in our debate on 20th May:

    "It would be in breach of a person's right to a fair hearing and against natural justice to make a conclusive determination before allowing a person to make representations".—[Official Report, 20/5/03; col. 707.]

But that is exactly what the Bill does.

Ofcom determines that there are reasonable grounds for believing that a contravention has occurred. Secondly, it issues a notification. Thirdly, the undertaking makes representations, but at the same time complies with the notified conditions and remedies the consequences of the breaches. Fourthly, if at the end of a month from the date of the notice, the undertaking has not fully complied with the notice, Ofcom may issue an enforcement notification. Fifthly, Ofcom may take civil proceedings if the undertaking still fails to comply. The Government's process has five stages, as compared to the three in ours. Only at the fifth stage could the undertaking get a fair hearing if it has rejected the initial notice as unreasonable.

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The Minister's argument, and the procedure for dealing with breaches in the Bill, fail to recognise that there will be situations, as there are now, where an issue is not clear cut, because the regulator has to judge whether something is "unfair", or because there has to be interpretation of an obligation. There are going to be cases where, after proper consideration of the representations made, Ofcom will reverse its original belief and decide that no breach has occurred. That surely the Government must acknowledge; if Ofcom were infallible, there would be no point in allowing representations. But where the company is exonerated after consideration, it will have incurred financial, competitive and goodwill losses, for which it has no remedy. Nor is there any penalty against the competitor whose complaint is not upheld after more thorough investigation. That will inevitably encourage the use of complaints by firms that come under legitimate competitive pressure.

We are not trying to make the enforcement of conditions unnecessarily bureaucratic or cumbersome, and we recognise that there may be cases where there is a serious risk to public health, public safety or national security, or where serious operational or economic problems may be caused to another provider or user, so we accept the urgency procedures of Clause 95. The Minister says these are "extremely limited", but we believe that they fully meet the danger of,

    "substantial and possibly irreversible adverse consequences".—[Official Report, 20/5/03; col. 706.]

which the Minister ascribed to a genuine investigation of prima facie breaches of the conditions. I beg to move.

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