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The result is that those contemplating entering into mergers, acquisitions or joint ventures in this country in the media sector face considerable regulatory uncertainty. This has the potential to harm the United Kingdom's reputation as an attractive place for investment, so we have a great deal of sympathy with the noble Lord, Lord Gordon, in raising the issue. However, I am not yet quite sure that his proposed solution is necessarily the right way forward; indeed, he gracefully admitted that there may be others. Simply moving the regulation regime from the Office of Fair Trading to Ofcom might not, I fear, ensure a more flexible and dynamic competitive environment, particularly if Ofcom is simply working under the same rules. Instead, we believe that it would make sense to look at updating the competition rules for media mergers, perhaps by examining the threshold levels and the criteria by which mergers are examined.
6 pm
Lord Fowler: My Lords, I wish to intervene briefly. If, like the noble Lord, Lord Gordon, one is to declare past interests, I should declare a past-regrettably-interest as chairman of two regional newspaper companies, one of which I think we sold to Johnson Press, of which the noble Lord was a board member.
I have great sympathy with the point that my noble friend has just made. The Kangaroo case raises important questions about what the national interest is. Whether or not the amendment moved by the noble Lord, Lord Gordon, is the correct way of putting it-it probably is not, as he has been modest enough to say-the issues that have been raised should certainly be considered by the Government. In the Kangaroo case, a proposal to bring a number of companies together in providing a service was not approved. The only result of that will be that companies from outside the United Kingdom will fill the gap that has been left. That cannot be in the national interest or the public interest, however it is that one wants to put it. Although the Minister will have all kinds of reasons why the amendment is not drafted correctly, I hope that he will at least recognise that there is a serious point here, which the Government-and only the Government can do this-will need to handle and concentrate on.
Lord Mackay of Clashfern: There is a lot to be said for Ofcom having responsibility in this area. As the noble Lord, Lord Gordon, said, it has the day-to-day acquaintance with the media that is essential to understand what the public interest is likely to be in this area. For my part, I would be keen to agree with the substance
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Lord Young of Norwood Green: My Lords, the amendment moved by my noble friend Lord Gordon proposes that Ofcom should be given a whole new set of powers, responsibilities and duties, equivalent to all those that the Office of Fair Trading has in relation to merger control but applicable only in relation to mergers involving enterprises engaged in broadcasting. There has been some acknowledgement that this is not necessarily the perfect solution.
This proposal appears to stem from a belief that Ofcom, as a sector regulator, would be better placed than the OFT to identify such mergers and, where appropriate, undertake the initial phase 1 consideration of these. The role currently performed by the OFT for all UK mergers involves deciding whether or not to refer a merger to the Competition Commission to undertake a full phase 2 investigation into the competition effects of the merger. It must do this if it considers that a merger may be expected to result in a substantial lessening of competition. We are satisfied that the OFT is entirely capable of carrying out this function for all mergers, including those involving broadcasting enterprises. It has built up substantial expertise and experience in assessing whether or not a particular merger might result in a substantial lessening of competition and can draw on expert teams of economists and lawyers to help it reach such decisions. Ofcom does not currently have any such capability. It is not clear what purpose would be served by requiring it to attain such capability simply to duplicate a role already performed effectively by the OFT. This would appear unnecessary and would introduce wasteful duplication and undue complexity into the merger regime. It may be noted that the number of mergers involving enterprises engaged in broadcasting that may actually occur is likely to be very small and will represent only a tiny fraction of the mergers taking place in the economy.
The Government recently gave careful consideration to the merits of amending the role played by Ofcom in the merger control regime as it relates to mergers involving media enterprises. We decided no change to the statutory regime was appropriate. However, as was announced in the Digital Britain report, it was decided that the OFT would include in its updated guidance on merger control a specific commitment to consult Ofcom whenever it considers any merger involving enterprises engaged in newspaper publishing and/or commercial radio or television broadcasting. We are satisfied that this effectively ensures that the particular knowledge and expertise Ofcom possesses will be drawn on and properly taken into account whenever the OFT considers and takes decisions on media mergers, while avoiding burdening Ofcom with a whole new set of powers and all the duties, burdens and costs that would go with them.
I listened carefully to the points made by my noble friend Lord Gordon and the noble Lord, Lord De Mauley, when he himself recognised that this is not the right vehicle. Moving everything to Ofcom would
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Lord Gordon of Strathblane: I feel that, in the light of the support from the other three speakers, the matter must be taken further. It clearly is not appropriate to press it this evening. I have no intention of so doing because I concede, despite the kind remarks of the noble and learned Lord, Lord Mackay, that there might be better ways of doing this. I would simply invite the Minister, before he reaches a conclusion on this, to ask the Department for Culture, Media and Sport if it is happy with the project Kangaroo decision. The department's feeling was that no public interest concerns whatever were raised by the decision, and yet the Competition Commission turned it down. We are not talking about the near future or what might happen. Channel 4 has already moved to YouTube so the flight of business to America is already taking place. I hope that once the Minister has done that, there might be a warmer response to a proposal that, after discussion with others, I will put forward at the next stage. In the mean time, I beg leave to withdraw the amendment.
Debate on whether Clause 1 should stand part of the Bill.
Lord Howard of Rising: My Lords, we have been through Clause 1 in some detail. In summary, we on these Benches are concerned that this clause will inhibit Ofcom's ability to perform its current duties effectively while at the same time failing to achieve what the Government proclaim they are seeking to do. I am afraid that after listening to the responses to the previous groups of amendments, I remain unconvinced. If these new secondary duties have any effect on Ofcom at all, and are not just ignored, they would seem to be negative. I therefore oppose the Question that this clause should stand part of the Bill.
Lord Clement-Jones: My Lords, like my noble friend Lord Razzall, I am somewhat baffled by the excitement generated by Clause 1. However, I am breaking the Trappist vow that I made at the beginning of the debate. Sadly, we have only about an hour and a half of proceedings left today in which to underline the opposition on these Benches to the proposal made by the noble Lord, Lord Howard.
I certainly do not yield to the noble Lord, Lord Lucas, in his excitement at the prospect of the iTablet coming down the track. It is a perfect illustration of the convergence mentioned by the noble Baroness, Lady Buscombe. I think that another noble Lord also used the word "convergence". This clause is designed
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This clause is not the big bang to end all clauses; it is a very modest qualifier to the current duties of Ofcom. We believe that it is appropriate for the post-convergence age. We do not believe that it detracts from the duties of Ofcom towards the consumer. Indeed, we believe that the investment duties are designed to make it more responsive to the consumer. If this clause were not included, do we honestly believe that Ofcom would suddenly become more responsive to the consumer? Of course not. I think that the noble Lord, Lord Davies, talked about making sure that broadband was more universally available. Of course, that is one of the underlying objectives of the duties imposed on Ofcom. As the noble Lord, Lord Maxton, said-my noble friend Lord Razzall also mentioned it-if Ofcom does not have these duties, who does have them? It is not easy to distinguish between regulation and policy, as the noble Lord, Lord Howard, has done. As regards the expansion and coverage of mobile networks that my noble friend Lord Steel mentioned, where do policy and regulation respectively begin? It is not easy to make that distinction.
I am sure we all agree that there is a need to deliver the Digital Britain strategy. We on these Benches believe that Ofcom is an absolutely essential instrument to do that. Unlike the noble Lord, Lord Lucas, I do not believe that this clause is designed to allow Ofcom to cuddle up to the major players; that is not the essence of it at all.
I shall not continue at great length. Points have been teased out on the public service broadcast front. The right reverend Prelate made extremely cogent remarks on that on two occasions. It is not just about public service broadcasters; it is also about public service content and plurality. Plurality is the essence of the post-convergence age. I believe that Ofcom needs to have that duty as set out in Clause 1. If anybody wanted to illustrate the way in which public service content brought people together, they should give the example of the Christmas and New Year broadcasts. If anybody thought that the delivery of content was being so totally Balkanised that it did not bring us together culturally, the Christmas broadcasts such as "Strictly Come Dancing", "The X Factor", and "Dr Who", which were viewed by many people, would prove that they were mistaken. Millions watched those broadcasts. I forget which show had the largest audience; it was probably "The X Factor", which I believe was watched by some 20 million people. All that demonstrates the need for regulation, for somebody to hold the ring in this post-convergence era. I have continued for far too long, but I hope that the passion with which I have talked illustrates that we do need to preserve this clause in this Bill.
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6.15 pm
Lord Whitty: My Lords, I am not going to support this clause either. Nor on this occasion am I declaring an interest, because this is a bit of friendly, personal advice to my noble friend the Minister. Will he talk to his officials and to parliamentary draftsmen about the wording particularly of subsection (2) of this clause? I felt that it was not a clear answer to the issue of balance. The further we went on in the debate on the amendment moved by the noble Lord, Lord Lucas, the more concerned I was about balance. The Government's intention may well be benign, but that is not clear from the wording. We know that for particular words-including the word "particular", which the noble and learned Lord, Lord Mackay, spoke about-we need to have clarity on what they mean, as we do with the word "appropriate" and the word "efficient". I am not opposing this clause at all, but the wording needs another look. I would be grateful if my noble friend the Minister at least undertook to consult his officials on whether he could express it better.
The Earl of Erroll: My Lords, very briefly, I would like to support what the noble Lord, Lord Whitty, has just said. The ideas behind this clause are good, but the exact wording is wrong. It is not ideal. The noble Lord, Lord Clement-Jones, has given me the opportunity of pointing out that he thinks that Ofcom has done extremely well in some ways, and he mentioned the local loop unbundling. The trouble with the local loop unbundling is that although it has done fine in the cities, where there is a lot of competition, but-and this is where the later amendments of the noble Lord, Lord Whitty, are going to be so important, and I support them very heavily-it has allowed the entire local loop to degrade in rural and distant areas to an almost disastrous extent. Investment in those areas is not commercially interesting, and this is where the word "efficiency" and the points made by the noble and learned Lord, Lord Mackay, come in.
Another example where Ofcom may have made a mistake is over the sharing of mobile telephone masts. That sounds very efficient, but it has allowed companies to reduce the number of masts in some areas. We now have such contention on some masts that you will find that your signal is not as good as it used to be in some areas, because they have taken out some masts in order to save money. It has not done what it was expected to do, which was to increase the amount of masts available and give us better coverage. We are getting worse coverage instead. I am not sure that Ofcom realises some of the unintended consequences of some of their policy decisions.
Lord Puttnam: I suggest to the Minister that the advice he has had from the noble Lord, Lord Whitty, is very, very good advice and I urge him to listen to it.
Lord Lucas: The noble Lord, Lord Whitty, seems to have encapsulated my arguments at much shorter length than I employed.
Lord Young of Norwood Green: My Lords, for which relief, many thanks. I thank the noble Lord, Lord Clement-Jones, for giving up his vow of silence
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Addressing the points of concern raised by my noble friend Lord Whitty and others, including my noble friend Lord Puttnam, I undertake to look at it again. However, Ofcom has a statutory duty to consider both the interests of citizens and consumers, with no hierarchy between the two. Ofcom is obliged to treat both equally. No doubt there are different views about how well it has done on particular issues, but the statutory position is clear. That is just one point. However, I understand the point that my noble friend Lord Whitty made when he said that he feared that the balance of interest would be detrimentally affected by the legislation. That is certainly not our intention and, if necessary, we will certainly make sure that that is clarified..
I could not help but be amused when the noble Earl, Lord Erroll, said that he did not like the idea of mast-sharing. Nothing stirs my local residents association more than the erection of another mobile telephone mast, and I do not think that there is a popular vote out there for the idea that we should have more of them. We have to do two things, do we not? One reason why these clauses are important is that everyone is trying to ensure that-whether we are talking about broadband, mobile telephone networks and so on-we get genuinely universal coverage. It is not easy to achieve that, and there will be a number of different platforms. However, I think that mast-sharing has to be part of that solution.
The analysis of Ofcom offered by the noble Lord, Lord Clement-Jones, was about right. In a very complex area-convergence was emerging in 2003 but was nowhere near where it is now-Ofcom has done a reasonable job in ensuring that there is competition and a number of different offerings whether in broadband or mobile. There is a wide range of prices and services to serve people as a whole. As the noble Lord, Lord Clement-Jones, said, removing the clause would undermine Ofcom's role in an era when convergence has fully emerged. I therefore hope that the clause will remain and that the noble Lord, Lord Howard-it is probably a vain hope-will reconsider.
Baroness Buscombe: Notwithstanding what the Minister said, does he agree that it might be wise for him, prior to Report, to take away some of the points that have just been made on terminology by the noble Lords, Lord Whitty and Lord Puttnam, and by others? Does he agree that this is of fundamental importance? Terminology in itself means rather a lot and the clause as a whole might be acceptable with the right terminology.
Lord Young of Norwood Green: I thought that I had already given that assurance. The last thing we would want is to create any doubt about the importance of citizens and consumers, so we will look at the terminology.
Lord Howard of Rising: I am glad to hear that the Minister will look at it. As I should like to give him some decent encouragement to do so, I shall test the opinion of the Committee.
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6.25 pm
Division on Clause 1 Stand Part.
Contents 106; Not-Contents 55.
Addington, L.
Alderdice, L.
Bach, L.
Barker, B.
Bassam of Brighton, L. [Teller]
Bhatia, L.
Bilston, L.
Blackstone, B.
Bonham-Carter of Yarnbury, B.
Borrie, L.
Boyd of Duncansby, L.
Brett, L.
Brooke of Alverthorpe, L.
Brookman, L.
Burnett, L.
Campbell-Savours, L.
Clark of Windermere, L.
Clement-Jones, L.
Corbett of Castle Vale, L.
Cotter, L.
Craig of Radley, L.
Crawley, B.
Davidson of Glen Clova, L.
Davies of Coity, L.
Davies of Oldham, L. [Teller]
D'Souza, B.
Dubs, L.
Eatwell, L.
Erroll, E.
Falkner of Margravine, B.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Foster of Bishop Auckland, L.
Gale, B.
Gibson of Market Rasen, B.
Gilbert, L.
Golding, B.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Greenway, L.
Grocott, L.
Harris of Haringey, L.
Harris of Richmond, B.
Haworth, L.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howarth of Newport, L.
Howe of Idlicote, B.
Hoyle, L.
Hunt of Kings Heath, L.
Jones, L.
Kilclooney, L.
King of West Bromwich, L.
Kingsmill, B.
Lea of Crondall, L.
Lee of Trafford, L.
Lipsey, L.
Listowel, E.
McDonagh, B.
McIntosh of Hudnall, B.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Maddock, B.
Mandelson, L.
Masham of Ilton, B.
Mawson, L.
Maxton, L.
Miller of Chilthorne Domer, B.
Mitchell, L.
Morris of Handsworth, L.
Nicholson of Winterbourne, B.
Patel, L.
Patel of Bradford, L.
Pitkeathley, B.
Puttnam, L.
Quin, B.
Ramsay of Cartvale, B.
Razzall, L.
Richard, L.
Roberts of Llandudno, L.
Rosser, L.
Royall of Blaisdon, B.
St. John of Bletso, L.
Sawyer, L.
Scott of Needham Market, B.
Shutt of Greetland, L.
Simon, V.
Soley, L.
Steel of Aikwood, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Taylor of Bolton, B.
Teverson, L.
Thomas of Gresford, L.
Thornton, B.
Tomlinson, L.
Tunnicliffe, L.
Wallace of Saltaire, L.
Walmsley, B.
Wedderburn of Charlton, L.
Whitaker, B.
Williamson of Horton, L.
Young of Norwood Green, L.
Young of Old Scone, B.
Anelay of St Johns, B. [Teller]
Astor of Hever, L.
Attlee, E.
Bates, L.
Bottomley of Nettlestone, B.
Bridgeman, V.
Brougham and Vaux, L.
Cathcart, E.
Cope of Berkeley, L.
Craigavon, V.
De Mauley, L.
Dundee, E.
Eccles, V.
Elton, L.
Fookes, B.
Fraser of Carmyllie, L.
6 Jan 2010 : Column 185
Glentoran, L.
Hamilton of Epsom, L.
Henley, L.
Hodgson of Astley Abbotts, L.
Hooper, B.
Howard of Rising, L.
Howe of Aberavon, L.
Howell of Guildford, L.
Hunt of Wirral, L.
Inglewood, L.
Jopling, L.
Knight of Collingtree, B.
Lawson of Blaby, L.
Luke, L.
MacGregor of Pulham Market, L.
Mancroft, L.
Marlesford, L.
Mayhew of Twysden, L.
Montrose, D.
Morris of Bolton, B.
Neville-Jones, B.
Newton of Braintree, L.
Norton of Louth, L.
O'Cathain, B.
Pilkington of Oxenford, L.
Rogan, L.
Ryder of Wensum, L.
Sandwich, E.
Seccombe, B. [Teller]
Selborne, E.
Sharples, B.
Sheikh, L.
Shephard of Northwold, B.
Skelmersdale, L.
Stewartby, L.
Strathclyde, L.
Trenchard, V.
Ullswater, V.
6.33 pm
Clause 2 : OFCOM reports on infrastructure, internet domain names etc
9: Clause 2, page 2, line 30, after "must" insert ", if requested to do so by the Secretary of State,"
Lord De Mauley: My Lords, Amendment 9 would provide that the new requirement for reports is rendered much more flexible and that the timetable is not set in stone. We support the principle of ensuring that Ofcom has the ability to provide expert, independent reports into the nature of the communications sector in the United Kingdom; indeed, one could argue that this is one of the principal reasons for having an independent regulator. However, there is a danger of Ofcom becoming something of a report-making monster.
The Bill contains numerous new reporting duties, many of which we feel are unlikely to be needed as regularly as the current drafting suggests. Clause 2 adds reports on communications infrastructure and services, and a report on the allocation, registration and misuse of domain names; Clause 3 adds reporting duties on public service media content; Clause 9 on the efficacy of obligations to tackle online piracy; Clause 10 on the efficacy of technical measures; Clause 22 on Channel 4's new duties; and Clause 26 on the viability of the teletext service. It seems that on almost every issue that the Bill addresses the Government's favoured solution is for Ofcom to provide a report on it.
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