Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Hunt of Wirral: Our amendment explores the situations when a general access condition might be imposed. It appears from conversations with Ofcom that it envisages such a condition being imposed in two circumstances. The first is when it wishes to impose an access condition on the universal service provider, but in relation to services that fall outside the

27 Apr 2009 : Column 87

universal postal service. The second is when another postal operator has developed a dominant network in an area—perhaps a certain city—to such an extent that it is pushing out the universal service provider’s network. In both these circumstances, the operator on whom the condition is being imposed would have to have built up significant market power. It is hard to imagine it ever being desirable to insist that a small operator—perhaps one that has created a niche market by investing in a highly specialised network—give access to another. My amendment, therefore, would ensure that the access condition would not be imposed on an inappropriately small operator. I beg to move.

The Parliamentary Under-Secretary of State for Communications, Technology and Broadcasting (Lord Carter of Barnes): This amendment would restrict Ofcom’s power to impose general access conditions so that it can be applied only to postal operators with significant market power. The Government agree that stringent criteria must be met before a general access condition may be imposed. Those criteria are already set out in the Bill. First, under Clause 44(3), Ofcom may impose a condition only where it is necessary either to promote effective competition or to protect the interests of the users of postal services. This necessity test, which we discussed under the previous amendment but one, will rightly limit the cases in which this clause can apply. Secondly, Clause 44(4) specifically requires Ofcom to take account of a number of factors before imposing any general access condition. These include technical and economic viability, feasibility, investment made by the postal operator from whom access is being sought, the need to secure effective competition in the long term, and intellectual property rights. Further, Ofcom is bound by the general test set out in Schedule 6.

Clause 44 implements Article 11a of the 2008 Postal Services directive. That directive provision requires member states to ensure that transparent, non-discriminatory access conditions are available to elements of postal infrastructure, or services provided within the scope of the universal service, where it is necessary to do so to protect the interests of users. Clause 44 adequately provides for this.

The 2008 directive makes no reference to any requirement of “significant market power”. That concept, as I am sure noble Lords are aware, derives from European telecoms legislation, which lays down extensive provisions relating to the finding of significant market power in a range of so defined markets in framework directives, and the consequences which flow from such a finding. No equivalent provisions are to be found in the European postal directives. To introduce the term “significant market power” here in isolation would have the potential to cause legal confusion as to its intended effect and purpose.

I genuinely believe that the noble Lord can take some comfort from the fact that, because the concept of significant market power is so embedded in European telecoms legislation, it is, as a result of the last six years, a very real part of the Ofcom DNA. While it may not be enshrined in terms in the way he is looking for, he can take some comfort from the fact that it is enshrined in practice.

27 Apr 2009 : Column 88

In the Government’s view, the Bill as drafted already provides adequate protection against unnecessary regulation. We therefore consider the amendment to be unnecessary and I hope that the noble Lord is content to withdraw it.

Lord Hunt of Wirral: I am very grateful to the Minister for that clarification, which I would like to consider. In the mean time, I beg leave to withdraw the amendment.

Amendment 95F withdrawn.

Clause 44 agreed.

Amendment 96 not moved.

Clause 45 : Consumer protection conditions

Debate on whether Clause 45 should stand part of the Bill.

Lord Hunt of Wirral: Clauses 45 and 46 establish a consumer protection scheme, which I understand expands on a scheme that has only recently been created under the Consumers, Estate Agents and Redress Act 2007. I sympathise completely with the desire to have all the relevant postal services legislation in one document and would have had no objection whatever to the transfer of the scheme from one Act to another. But that is not quite what is being done. Instead, the Government are taking the opportunity to amend the scheme in small but significant ways. One such difference is to allow a participant who breaches the scheme rules to be thrown out of the scheme. I can see why such a rule would be welcomed by some but I cannot immediately understand why it was not included in the Consumers, Estate Agents and Redress Act.

Do the Government intend to introduce legislation amending that Act to ensure that the new rules that apply here will also apply to the industries remaining under the old scheme? I am sure that there are other differences between the schemes and I hope that the Minister might clarify exactly what they are. The original Act went through after extensive consultation with the industry, yet, as far as I am aware, there has been no consultation on these changes. Perhaps the Minster can explain.

The purpose of the amendment is to ask the Minister whether he agrees that this is the right way to take this forward. If a scheme needs to be improved, steps need to be taken to improve it, but that should be done in a way that is both transparent and consistent. These clauses appear to be neither. I beg to move.

Lord Carter of Barnes: This is another example of getting the balance right in the distribution of responsibilities and powers in this regime. Clause 45, in conjunction with Clause 46, sets out the consumer protection conditions that Ofcom may impose. The noble Lord rightly identifies the one change, which is I believe the only change from the existing regime. Specifically, a consumer protection condition may require a postal operator to assume liability in respect of loss or damage to postal packets; establish and maintain procedures, standards and policies with respect to consumer protection matters; and make payments relating to qualifying consumer expenses of the National Consumer Council or the Office of Fair Trading. As

27 Apr 2009 : Column 89

the noble Lord, rightly observed, this clause allows Ofcom to set any condition that appears necessary for it to secure effective protection for users.

The clause highlights specifics, such as complaints handling, dispute resolution, provision of remedies and redress, and the availability of information to users. These protections are both right and important, as the noble Lord recognises, and they are recognised by the postal services directive which requires us to ensure that simple, inexpensive procedures are made available by all postal service providers for dealing with users’ complaints. Licensed postal operators, as the noble Lord pointed out, are currently already subject to regulations governing complaints handling and redress schemes. These were made under Part 2 of the Consumers, Estate Agents and Redress Act, which will no longer apply to post. This clause is necessary so that Ofcom has the power to maintain the effect of current regulations if, of course, it is proportionate and objectively justifiable to do so.

Clause 46 enables Ofcom to require that all or a particular subset of postal operators be members of an approved redress scheme, under which users of postal services may make complaints about postal operators. The key thing is that such an investigation and subsequent determination should be done by a person independent of the postal operators and of Ofcom, which is what this clause allows for. The clause also sets out that a consumer protection condition may require postal operators to provide Ofcom with information about the level of compliance with the standards for handling complaints and to publish information about the number of complaints made about it and the way in which they were dealt with. A consumer protection provision imposed on a universal service provider must include a requirement for the publication of information about the number of complaints and how they were dealt with. Again, the postal services directive requires that we ensure that universal providers and, where appropriate, undertakings providing services that come within the scope of the universal service publish information on the number of complaints that they receive and the manner in which they deal with them.

Clauses 45 and 46 provide necessary protection for consumers that we believe is proportionate to the benefit, and allow us to implement properly our obligations under the postal services directive.

Lord Hunt of Wirral: I am grateful to the Minister, but he has not quite answered the point about what consultation has taken place. That is something that we might return to at a later stage: I will leave it to him to decide when he deals with that point.

Lord Carter of Barnes: On the basis of my knowledge, I will address it now. My understanding is that, as the noble Lord rightly points out, the existing accredited redress scheme is a relatively new innovation in the postal services market. We will write to clarify this, but I am almost certain that, in the change process, Ofcom will be consulting on the transfer.

Clause 45 agreed.

Clause 46 agreed.

Schedule 5 agreed.

27 Apr 2009 : Column 90

Amendment 96ZA

Moved by Lord Hunt of Wirral

96ZA: Before Clause 47, insert the following new Clause—

“Separation for accounting purposes

OFCOM must have regard to the method by which costs are to be allocated to different services set out in the Postal Services Directive in imposing any regulatory condition under section 34, 35, 44 or Schedule 3 requiring a separation for accounting purposes between different matters.”

Lord Hunt of Wirral: The amendment seeks to address a concern that was raised by the Select Committee in the other place about a possible inconsistency between the accounting methods required under the postal directive and those that might be required by Ofcom. The new clause would require Ofcom to ensure that only one system of accounting is used that will meet all the criteria.

Can the Minister give us any idea of the timescale in which the Government intend to respond to the Select Committee report in the other place? We have had a discussion about timing. Bearing in mind that we are scheduled to begin Report on 11 May, it would be helpful if the Minister would indicate whether we might by that date have some responses from the Government to the many questions raised by the Select Committee in the other place. The amendment seeks to address one of those concerns, but it would be helpful to the House to have a more general response to that important report before we ourselves reach Report.

Ofcom has to abide by the principle of proportionality under Schedule 6. I understand that the requirement in the Communications Act to review regulatory burdens and ensure that they are necessary carries over to these provisions. I would welcome the Minister’s assurances that this is the case and that due care will be taken to keep the numerous accounting conditions in the Bill as consistent and as straightforward as necessary. I beg to move.

8.45 pm

Lord Carter of Barnes: I have read the amendment and listened to the noble Lord’s questions. I would describe this as a “seeking-clarity amendment”. On his question about the Government’s response to the Select Committee’s report—a “seeking-certainty question”—I am afraid that I cannot give him certainty about the date of the Government’s response. However, I reiterate that it is our ambition to get the response to the noble Lord in good time, and hopefully in time for it to inform the ongoing debate on the Bill.

On the specific question of Amendment 96ZA, through the Bill we have given effect to our postal services directive obligations in respect of accounting separation, in particular the requirements of Article 14 of the directive, by giving the appropriate powers to Ofcom. As such, the requirement to act in accordance with the directive in carrying out its obligations is placed on Ofcom. As a public authority, Ofcom must not, in any event, act in a way that is contrary to European law requirements.

27 Apr 2009 : Column 91

As a further safeguard, Section 102 of the Postal Services Act will be amended to give power to the Secretary of State to make an order on Ofcom to ensure compliance with the directive, if it is considered that a Community obligation under the directive is not being complied with. I hope that these factors provide reassurance that appropriate controls are in place to ensure that Ofcom will act in accordance with the directive’s requirements in imposing accounting separation requirements.

This amendment may have been proposed to try to ensure that Royal Mail is not required to provide accounting information in multiple formats resulting in an excessive regulatory burden. If that is the intention of the amendment, I reassure noble Lords that when imposing any condition, including accounting separation conditions, the Bill requires that Ofcom must act in a way which is proportionate, and it would not be proportionate to impose unnecessary requirements on Royal Mail. However, I hope we all agree that this is an opportune moment for Royal Mail and the development of the market, and that when Ofcom goes through the initial process the analysis should be based on accurate information; hence the requirement to be able to ask for the information that is needed. I therefore invite the noble Lord to consider withdrawing his amendment.

Lord Hunt of Wirral: I am grateful to the Minister, particularly for the assurance he has given about the response to the various questions raised by the Select Committee in another place. Given the force of his remarks, I was never looking for certainty. The fact that he will use his best endeavours to deliver that response as quickly as possible must satisfy even the most sceptical Member of this place. I am very grateful to him for all that he has done to bring that about. I would like to reflect on the points that he raised on the amendment. In the mean time, I beg leave to withdraw the amendment.

Amendment 96ZA withdrawn.

Clause 47 agreed.

Schedule 6 agreed.

Clause 48 : Appeals against price control decisions

Amendment 96ZB

Moved by Lord Carter of Barnes

96ZB: Clause 48, page 28, line 15, leave out subsection (3)

Lord Carter of Barnes: I beg to move Amendment 96ZB. In doing so, I will also speak to the other amendments in the group standing in the name of my noble friend the Secretary of State.

This group of amendments relates to appeals against price control decisions. The first amendment removes a power for Ofcom to impose certain procedural requirements in relation to appeals from its decisions. Instead of this, we seek an amendment to provide the Competition Commission with the power to make rules regulating the conduct of appeals. This power is

27 Apr 2009 : Column 92

very similar to powers that the commission already has under paragraph 12 of Schedule 22 to the Energy Act 2004.

The next issue that these amendments address is a concern that the Bill does not currently give the Competition Commission a specific power to investigate matters before making its decision. As noble Lords will be aware, it is unusual for an appeal body to investigate matters afresh and, for this reason, specific provision is made in the Bill to make it clear that, in its appeal role in relation to price control errors only, the Competition Commission has the power to investigate any relevant matter.

Amendment 96ZE, which gives the commission the power to make rules about appeals to it under Clause 48, also provides a power for the Secretary of State by order to make provisions mirroring those of the Enterprise Act 2002 which allow the commission to require the attendance of witnesses and which give it the information-gathering powers that would be necessary for it to make a proper determination of the appeal. This also includes the ability of the Competition Commission to “stop the clock” if information pertaining to an appeals process is not provided in good time.

Without a provision to extend the statutory time limit for determining an appeal, the Competition Commission could find itself in a position where it would have to determine an appeal without information that it considers necessary to ensure that all relevant factors are taken into consideration when making a determination. The amendment, in essence, provides that the time limit may be extended if a person has not complied with a requirement made by the commission relying on its investigatory powers.

I hope that I have provided a clear description of these government amendments, which are important, we believe, to ensure that the Bill functions as intended. I beg to move.

Amendment 96ZA agreed.

Amendments 96ZC and 96ZD

Moved by Lord Carter of Barnes

96ZC: Clause 48, page 28, line 18, after “section” insert “(and with rules made under section (Appeals under section 48: supplementary))”

96ZD: Clause 48, page 28, line 36, at end insert—

“(8A) The Commission may investigate any matter or do any other thing for the purpose of making a decision under subsection (7)(b).”

Amendments 96ZC and 96ZD agreed.

Clause 48, as amended, agreed.

Amendment 96ZE

Moved by Lord Carter of Barnes

96ZE: After Clause 48, insert the following new Clause—

“Appeals under section 48: supplementary

(1) The Commission may make rules about the making, conduct and disposal of appeals under section 48.

27 Apr 2009 : Column 93

(2) The rules may, in particular, impose time limits or other restrictions on—

(a) the taking of evidence at an oral hearing, or

(b) the making of representations or observations at an oral hearing.

(3) The rules may make different provision for different cases.

(4) The Commission must publish the rules in such manner as it considers appropriate for the purpose of bringing them to the attention of those likely to be affected by them.

(5) Before making the rules, the Commission must consult such persons as it considers appropriate.

(6) The Secretary of State may by order—

(a) apply any of sections 109 to 117 of the Enterprise Act 2002 (c. 40) (investigation powers of the Commission), with or without modifications, in relation to appeals made under section 48, and

(b) make provision for and in connection with the extension of the period within which appeals must be determined in cases where requirements imposed under section 109 of that Act (as applied) have not been complied with.

(7) An order under subsection (6) is subject to negative resolution procedure.”

Amendment 96ZE agreed.

Amendment 96A

Moved by Lord Cotter

Next Section Back to Table of Contents Lords Hansard Home Page