HC Deb 25 March 1993 vol 221 cc703-4W
Mr. Rowe

To ask the President of the Board of Trade what action is to be taken to implement the Monopolies and Mergers Commission's report on electrical contracting services at London exhibition halls.

Mr. Neil Hamilton

The report on electrical contracting services at London exhibition halls was published in April 1990 and found that there was a complex monopoly situation in favour of the following five electrical contractors:

  • Ecando Systems Ltd.
  • Business Design Centre Ltd.
  • Lightpower Exhibitions Ltd.
  • S. Seymour (Electrics) Ltd.
  • Johnson Smith & Company Ltd.

The five contractors benefit from preferential arrangements with certain of the large exhibition halls, whereby exhibition organisers are required to use or give preference to an electrical contractor nominated by the hall owner. The Monopolies and Mergers Commission—MMC—concluded that: this situation operates against the public interest. In particular such arrangements restrict competitions discourage new entry into the market and inhibit the growth of competition.

Action to implement the report has been delayed while Earls Court and Olympia Ltd., the owner of Ecando Systems Ltd., sought judicial review of the MMC's findings taking their case to appeal. Both judgments upheld the MMC's findings and ECO has indicated that its subsidiary Ecando Systems Ltd. will negotiate with the Director General of Fair Trading with a view to reaching appropriate undertakings.

I have therefore written today to Sir Bryan Carsberg, the Director General of Fair Trading—DGFT—requesting him, under section 88(1) of the Fair Trading Act, to consult with the five contractors with a view to obtaining undertakings in line with the remedies proposed by the MMC:

  1. (i) The "tying arrangements" between exhibition hall owners and electrical contractors will be prohibited; but where an exhibition organiser has a long term exclusive agreement with an independent electrical contractor this may be allowed. In such circumstances the hall owner may require his nominated contractors as well as the organiser's to be allowed to tender for an exhibitors work.
  2. (ii) The payment of commission by electrical contractors to hall owners will be prohibited.
  3. (iii) Price transparency will be increased by requiring that a detailed schedule of prices for electrical contracting services is made available to exhibitors before an exhibition.

In the case of company groups including a hall owner, an exhibition organiser and an electrical contractor, the MMC recommended that the exhibition organiser should be prohibited from using the group electrical contractor at events held in the group halls. After the public consultation, that followed the publication of the report, an alternative remedy was suggested, which would promote fair competition at company group events but would not preclude the group contractor from carrying out electrical work at such events:

  1. (a) the group's exhibition organiser will be permitted to nominate the group's electrical contractor for exhibitions staged at the halls owned by the group only on the condition that the stand holder is given the option of using at least one other alternative contractor;
  2. (b) the hall owner will not be permitted to provide the electrical contracting services himself.

This finally remedy only applies to Earls Court and Olympia Ltd. the group exhibition organiser Philbeach Ltd. and the group electrical contractors Ecando Systems Ltd. I am asking the DGFT to negotiate an undertaking from Ecando Systems Ltd. that will allow fair competition at Philbeach organised events in ECO halls.

In view of the delay in implementing the report, I have asked the DGFT to convene negotiations with Ecando Systems Ltd. with a view to obtaining appropriate undertakings within two months. The DGFT will also commence negotiations with the remaining four electrical contractors named in the report to agree similar undertakings. In the event that undertakings are not secured promptly from the five contractors concerned, I will consider making an order.

The MMC's inquiry was confined to provision of electrical contracting services in London. When the report was published, the DGFT indicated that he would make enquiries to establish if similar tying arrangements existed between hall owners and electrical contractors outside London. I am therefore asking the DGFT to seek assurances from hall owners outside London that such practices are not being conducted in their halls.