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Baroness Buscombe: My Lords, we support the amendments.
Lord McIntosh of Haringey: My Lords, these are identical to the amendments tabled in Committee, and I am sorry that the noble Lord, Lord Avebury, did not like my response then. I shall try again.
In the noble Lord's closing remarks on the amendments in Committee, he raised a point of semantics as central to his position. He suggested that the use of the word "finds" in Article 10 of the Authorisation Directive meant that there had to be an investigation by Ofcom before it could justifiably take enforcement action. He said:
- "One does not find something to be true out of thin air"—
- "Evidence must be produced. In particular, if one is examining a case that involves substantial penalties, one must allow the person who is being accused the opportunity of rebutting the allegations".—[Official Report, 20/5/03; col. 708.]
I quoted the noble Lord in full, because he put my own point very well. I quite agree that Ofcom should not be able to impose a penalty or require remedial action without first producing evidence of the contravention and allowing an opportunity for representations. But that is exactly what Clause 91
already requires. Enforcement action can be commenced in accordance with Clause 91 only where Ofcom has reasonable grounds for believing that a person is contravening or has contravened a condition. In many instances—probably the majority—prior investigation of the matter in issue will be necessary before Ofcom will be able to decide whether or not it has such "reasonable grounds".The amendments would have the effect of mandating a formal investigation after Ofcom has already determined that it has reasonable grounds for believing that a breach has or is occurring. Thus on this basis it is very possible that Ofcom would have to carry out two investigations, one in order to determine whether it has grounds to carry out an investigation under Clause 91, and one under Clause 91 itself. We do not need, and should not have, statutory provision requiring Ofcom to carry out an investigation in order to determine whether it has reasonable grounds to believe that a contravention is occurring or has occurred, as these amendments would provide.
Ofcom will have the necessary investigatory powers, notably through the collection of information in accordance with Clause 132. Where it uses them, it must do so in accordance with the procedures in Clauses 134 and 135. However, in some cases, sufficient evidence may be presented at first instance—for example, in documents supplied by a complainant—or may have been obtained informally. To require a preliminary investigation in those circumstances, before a notification of contravention could be issued, would only add bureaucratic delay. Nor is there any question of the subject of Ofcom's enforcement actions not being informed of the case against them and the evidence for it. The notification to be given under Clause 91 must set out the basis for the making of Ofcom's determination, and the subject of action must be allowed a period—normally, a month, as required by the directives—in which to make representations to Ofcom on it and to take any corrective or remedial action that may be necessary, if it so wishes.
Only at the end of that period will Ofcom have power to make a final determination on whether or not there has been a contravention and, if appropriate, impose penalties or other remedies. If the subject of notification takes appropriate remedial action within the period, whether or not he also makes representations against the notification, Ofcom cannot impose any financial penalty or take any other enforcement action against them, even if they subsequently find there to have been a breach. The failsafe is in the opposite direction from that claimed by the noble Lord, Lord Avebury. Of course, in addition there is a full right of appeal to the tribunal on the merits, so there is no question of prejudice to the rights of the subject of the enforcement action under Clause 91.
I also take issue with the noble Lord on his claim, which he made last time and repeated today, that taking action on the basis of reasonable belief is contrary to the directive. Article 10 of the Authorisation Directive requires that, where the regulator finds that there is a breach, it shall notify the operators of that finding and give them a reasonable opportunity to state their views and remedy any breaches within a specified period. If
they do not do so, the regulator is then required to take measures to ensure compliance, including imposing financial penalties where appropriate. In our view, 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. As the directive requires representations to be capable of being made and remedial action to be taken following the finding, we believe that it is legitimate to interpret the reference to "find" in this context as meaning that there are reasonable grounds for believing that a contravention has occurred or is occurring.I remind noble Lords that, under the present system, in some cases, by the time effective enforcement action could be taken, those affected by the breach could already have suffered substantial, and possibly irreversible, adverse consequences. The new provisions streamline the enforcement process. But, in order to conform with the directives, normally at least a month has to elapse between Ofcom issuing a contravention notice and the issue being finally decided, before any remedial action can be taken.
The noble Lord also suggested that the provisions of Clause 95 were sufficient to allow Ofcom to deal urgently with cases where a breach of condition by an operator was causing substantial and possibly irreversible damage. He suggested that my argument that the clause was too narrow was not a strong one. However, the clause allows, among other things, for the normal period of a month for representations to be waived. Consequently, the test for applying the Clause 95 powers is very strict, as it should be. To use them, Ofcom must have reasonable grounds for suspecting that the alleged breach in question creates an immediate risk of a serious threat to public health, safety or security, or serious economic or operational problems for other users or suppliers. So it would not be possible to use these powers in more routine cases.
Nevertheless, some of those cases could involve potentially significant, and possibly irreversible, detriments to the profitability and competitiveness of other operators and/or to consumers, even though they might not be so serious as to drive the victim out of business. In that the noble Lord, Lord Avebury, is right; Clause 95 could be used in those circumstances.
Clause 91 provides for procedures that are robust enough to minimise the risk of such difficulties and to limit delay, while giving those subject to them sufficient opportunity to defend themselves and avoid penalties.
Amendment No. 64 seeks to replace the provisions of subsections (4) to (11) of the clause with a general power for Ofcom to make procedural rules by statutory instrument. Presumably the aim here is to provide more opportunity for discussion and debate on the detailed enforcement processes and to limit Ofcom's discretion to make and amend its own administrative procedures. We do not consider that such a change would be either necessary or desirable. There has already been considerable opportunity for interested parties to comment and make suggestions in the area and we have considered the points made to us.
Ofcom needs to be allowed a certain amount of discretion and flexibility in regard to its administration of the various powers and duties which Parliament will be giving it in order to be able to respond quickly to new developments and as its experience of operating the new system increases. It will be under various obligations to ensure that its processes and the means by which those are drawn up are fair and transparent. The obligations are set out in Clauses 3, 6, 142 and 385. It is unnecessary to add to them in this way.
I wish to make a final point about the word "finds". The noble Lord, Lord Avebury, asked me whether any other country in Europe is interpreting the word "finds" as a decision out of the blue. This is not a question of Ofcom making a decision out of the blue; it must make a determination that it has reasonable grounds to believe that there is a contravention of a condition. That is the theme that I would like the noble Lord, Lord Avebury, to take back to British Telecom as a result of our debate today.
Lord Avebury: My Lords, obviously we shall discuss the Minister's careful and thorough reply with those who have advised us on these amendments, but at first sight I must say that I am wholly dissatisfied with what he has said. First, the noble Lord has not shown that there is anywhere else in Europe where the term "finds" is being used in the way envisaged in this Bill. The word suggests a process that does not require any previous investigation, which in the normal English use of the term "finds"—as in "the court finds"—means that some process of investigation has been undertaken and that that process has led to the conclusion being reached.
Furthermore, the noble Lord did not address the argument that I presented about the consequences for the person who has to take remedial action so as to avoid the possibility of a fine. The undertaking may consider that it has a very good response to the allegation. It then puts in its representations, but to avoid the possibility that the regulator may impose a fine amounting to as much as 10 per cent of turnover at the conclusion of the one-month delay, the undertaking is forced to take this remedial action which may, as I have said, be extremely costly and against which, if the regulator finds that it is not guilty of the breach as was first claimed, the undertaking has no remedy whatsoever. The operator will have paid over money, it will have taken steps which may have damaged its market position, but at the end of one month, if the regulator finds that it has not been guilty of a breach of a condition, it has no remedy whatsoever.
However, in light of the fairly thorough argument put to us by the noble Lord, we shall now take the matter back to those who advise us and consider whether we must return to the matter at Third Reading. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 91 [Notification of contravention of conditions]:
[Amendments Nos. 56 to 64 not moved.]
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