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Baroness Buscombe: My Lords, I should like to press the Minister on several points concerning the scope and purpose of his amendments. On Report, the Minister set out clear boundaries to the Government's intended plurality test. In particular, he stated that it would be,
- "a matter of policy normally to apply the test in practice to those areas where the current rules are being removed completely".
In addition, he added—which he added again today—that,
- "usually, the Secretary of State would consider intervening",
- "national newspapers with more than 20 per cent of the market/Channel 5; national newspapers with more than 20 per cent of the market/national radio service, Channel 3; Channel 3/national radio; Channel 5/national radio; and national radio/national radio".—[Official Report, 2/7/03; col. 915.]
This clearly stated approach to the plurality test reflects the key concerns expressed by the noble Lord, Lord Puttnam, and others throughout the passage of the Bill and in the pre-legislative scrutiny process. That is a concern over a liberalisation of the cross-ownership provisions for Channel 5—as we have heard today—as well as the prospect of investment by non-EEA companies in UK media companies in Channels 3 and 5 (and UK radio).
I am concerned therefore that it is not just these carefully targeted policy aims that are reflected in these amendments. Instead, having considered the amendments, it appears that the Government are presenting us with a plurality test which could be applied to all "merger situations" involving broadcasters or broadcasters and newspapers which qualify for investigation under the Enterprise Act 2002. It could also apply to transactions that initially may not qualify for investigation, but concerning which the Government's amendment to Clause 375 would permit an intervention notice to be served. Such transactions would include mergers and acquisitions among cable and satellite channels that have launched in the UK without any of the special privileges or protections given to those broadcasters using scarce, analogue terrestrial frequencies, and which have not had any special media ownership rules applied to them previously. Examples, of which there are almost limitless permutations, might include the acquisition of the National Geographic Channel or History Channel by Discovery Networks, the acquisition of additional music video channels by MTV or the purchase of one channel provider by another—for example Flextech Television and Turner.
The provision represents a major shift in government communications policy and as the Government are aware it is of significant concern to all broadcasters, who now face another regulatory barrier and greater uncertainty. I should like to remind your Lordships of the comments of the broadcasting
Minister during the Committee stage of the Bill in another place. The Minister said that the problem with the plurality plus competition test was that,
- "it inevitably leads to uncertainty . . . Although businesses may be used to dealing with uncertainty daily, they do not actively seek out uncertainty. We should make clear rules where appropriate. If we accepted the amendment"—
- "we would effectively be putting those who wanted to acquire media assets in a worse position. In addition to complying with the clear and transparent ownership rules and satisfying the competition authorities, an owner would face the further obstacle of satisfying a plurality test. The Bill is intended to remove regulations, not to impose new and unnecessary ones".—[Official Report, Commons Standing Committee E, 6/2/03; cols. 1002-04.]
I recognise that the Government have subsequently introduced amendments into your Lordships' House as a compromise. I also recognise that the Minister said on Report—and has confirmed today—that guidance would be produced to clarify the provisions and narrowly to define the scope of the plurality test. However, we are concerned that nothing has been produced yet. It is creating disquiet in the industry and on the part of the Opposition that such wide provisions are being introduced with the promise of guidance to come once the Bill has received Royal Assent.
In the absence of such guidance I should be grateful if the Minister would provide further clarification. Why have the Government gone to the trouble of including all broadcasters in the plurality test, only to produce guidance to exclude most of them from it? Surely a better solution would have been to amend Clause 373 to narrow the target of the plurality test in the first instance to Channel 3, Channel 5 and radio; that is, the scarce analogue terrestrial frequency services, which have been the source of the concerns of the noble Lord, Lord Puttnam, and others about non-EEA and cross-media ownership all along.
I should also be grateful if the Minister would explain the status of the guidance to be produced, and why this has not been made available at the same time as the amendments to the Bill. After all, if a key feature of the plurality test is that it is to be narrowly applied by the guidance, so as give broadcasters confidence and clarity, it naturally follows that the two must be considered hand in hand. How are we to decide on the merits of the amendments when they represent only half the story? Such guidance is unlikely to have the same legal force as the provisions in the Bill, so the certainty that could be derived from it is likely to be limited.
I should be grateful if the Minister could clarify the Government's intentions towards the existing 20:20 ownership rule governing Channel 3 licences in the light of the new plurality test. As the Minister said on Report, the 20:20 rule has something of a cliff-edge element to it, with the plurality test allowing "finer judgments" to be made in particular cases according to circumstances. Given that it is his stated intention to apply the plurality test in this particular case and, in
addition, only where the current rules are being removed completely, it would follow that the 20:20 rule should be abolished.
Lord Fowler: My Lords, I also have one or two concerns and shall speak briefly. I agree with the Minister that it would have been much more useful had we been able to debate this set of amendments prior to our debate on Channel 5. There is no question that it might have illuminated that debate.
Having read not only the clauses and the amendments, but the Minister's letter, I think this is a useful addition and I congratulate the noble Lord, Lord Puttnam, on achieving it. However, I do not think that it answers some of the concerns relating to the Bill, in particular, those relating to the rules on foreign ownership that we were debating under the first set of amendments. It seems to me that it is not intended to do so.
I am not clear why the Minister was so upset with the noble Lord, Lord McNally, for mentioning the report in the Financial Times. It seemed to me that that report was relevant to this debate. It said that senior officials of his department insisted that the amendment would not hamper the principle of allowing United States' media groups to bid for ITV or enabling newspaper publishers to seek control of Channel 5. I know that the Government are rather concerned about sources at the moment, but there is no dispute about the source in that case. Senior officials have told the Financial Times that that is the issue, and as far as I know the department have done nothing to correct that.
I think that we are allowed to be a little sceptical about some aspects of the Bill. At the end of the day, the decision will rest with the Secretary of State—there is no question about that. The Minister's letter to the Front Bench leaders said that the provision enables the Secretary of State to intervene in a case. It does enable, but of course it does not require. At present, we do not all have overwhelming confidence that the Government would intervene in particular circumstances.
There is no rule set down to deal with a number of the cases that we will be discussing. There is, for example, no rule, such as the one that I have included in an amendment to be debated later, for making reciprocal arrangements a condition if a United States company takes over a British television company. We will debate later whether that rule is right or wrong—I can perhaps predict what the Minister's reply will be—but at least if that rule is in the legislation, we know exactly where we are.
The Secretary of State is not bound by the advice given. The Minister made much of his contention that no Minister would ever overrule the advice given to him in this area. I am not entirely sure that that is correct. There are examples where the unanimous recommendations of the Office of Fair Trading have been overruled. I remember one instance involving regional newspapers—the Nottingham Evening Post—where the OFT said quite clearly that deal should not go ahead, but it was overruled. It was overruled, as it happens, by the Government of which I was a member.
I did not agree, but that was the decision. The Minister will say that that example concerns a Conservative Government and that nothing of that kind would ever happen under a Labour Government, but that slightly beggars belief.
The amendment is a useful addition, but I do not think that we should place too much emphasis on it. Personally, I welcome what has been done and what the noble Lord, Lord Puttnam, has achieved, but I give only two cheers for the final version of the amendment.
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