New Clause 3 (Hansard, 11 April 1972)

§ Mr. Chataway
I beg to move, That the Clause be read a Second time.

§ Mr. Deputy Speaker (Mr. E. L. Mallalieu)
With the new Clause we are discussing sub-Amendment (a), in line 19, leave out from 'interest' to second 'the' in line 25, and Amendment No. 64, in Schedule 1, page 13, line 1, column 2, after '(1)', insert: 'before the definition of "broadcast relay station" there shall be inserted the words"'associate' in relation to a body corporate (including a programme contractor which is a body corporate) means a body corporate which is a member of the same group as that body corporate; and for this purpose any two bodies corporate are to be treated as members of the same group if one of them is a body corporate of which the other is a subsidiary (within the meaning of section 154 of the Companies Act 1948) or if both of them are subsidiaries (within the meaning of that section) of one and the same body corporate," and'.

§ Mr. Chataway
The new Clause is intended to meet an undertaking I gave in Committee, which I think was acceptable to both sides.

§ Mr. Richard
May I be referred to the date in Committee?

§ Mr. Chataway
In our discussions on Clause 7 it was argued by a number of hon. Members on both sides that there might be a danger of a large newspaper group accumulating an interest in more than one local radio station and acquiring in total a very large shareholding in the system as a whole. I think there were anxieties at other points in our discussions about other companies, not necessarily newspaper companies, equally coming into a dominant position.
The new Clause is intended to meet these anxieties. It requires the Authority to examine the circumstances of applicants and those associated with them to 1175 see whether, if they were awarded a contract, their holding would add up to an aggregate interest in the service as a whole. For this purpose subsection (4), the definition subsection, excludes from consideration people whose beneficial shareholding is less than 5 per cent. This means that the Authority does not have to examine cases where the shareholding is less than 5 per cent., bat it examines cases of more than 5 per cent. with an eye to two things. One is the nature and extent of the interest, its size, how widely it is dispersed and how much control its existence denotes, and the other is the circumstances, such as the reputation, character and known policies of the individuals who would have the interest.
If it comes to an affirmative conclusion the Authority is then under a duty to refrain from entering into the proposed contract. If it believes that a group has too large a shareholding in the system as a whole, a shareholding that would be likely to be damaging, it will not allow that group to participate in any further consortium.
The Clause has two effects. The first is to draw the Authority's attention to the dangers, to make it more readily attuned to the maintenance of vigilance against this particular hazard. Second, it imposes upon the Authority an actual duty to take the action I have described, a duty that it has no choice but to exercise. Therefore, although the Clause is of formidable length, I hope its nature will be clear to hon. Members.

(1) Before entering into a sound programme contract the Authority shall seek to ascertain—
5	(a) whether the person or any of the persons with whom the contract is proposed to be made is (either alone or in partnership with one or more other persons) entitled to the benefit of one or more existing sound programme contracts, and
10	(b) where the person or any of the persons with whom the contract is proposed to be made is a body corporate, whether that body corporate, or any associate of that body corporate, or any participant in that body corporate or in any such associate, is a person or one of the persons entitled to the benefit of one or more existing sound programme contracts, or is a participant in a body corporate so entitled or included among the persons so entitled or in an associate of a body corporate so entitled or so included
15	and, having regard to any matters ascertained by them under this subsection, the Authority shall consider whether, if the proposed contract were made, any one person would, in any one or more of the capacities mentioned in paragraphs (a) and (b) of this subsection or in any combination of any such capacities, have an aggregate interest in the benefit of two or more sound programme contracts.
20	(2) If, in the circumstances mentioned in the preceding subsection, it appears to the Authority that a person would have such an aggregate interest and that, having regard to—
(a) the nature and extent of that aggregate interest, and
(b) any other circumstances appearing to the Authority to be material,
25	the existence of that aggregate interest might prejudice the performance by the Authority of any duty imposed on them by this Act, or imposed on them in relation to local sound broadcasting services by the principal Act, the Authority shall refrain from entering into the proposed contract.
30	(3) In this section 'sound programme contract' means a contract for the provision of local sound broadcasts, and 'existing sound programme contract', in relation to any contract proposed to be entered into by the Authority, means a sound programme contract which is in force at the time when the Authority are considering entering into the proposed contract; and 'participant', in relation to a body corporate, means a person who (whether alone or jointly with one or more other persons, and whether directly or through one or more nominees) holds or is beneficially entitled to not less than one-twentieth of the shares in that body corporate.—[Mr. Chataway.]