MODIFICATION OF RESTRICTIVE TRADE PRACTICES ACT 1976 IN ITS APPLICATION TO AGREEMENTS RELATING TO CHANNEL 3 NEWS PROVISION

HC Deb 01 July 1996 vol 280 cc589-91

'.—(1) After section 194 of the 1990 Act there is inserted— "Modification of Restrictive Trade Practices Act 1976 in its application to agreements relating to Channel 3 news provision

194A.—(1) In this section a "relevant agreement" means an agreement—

1. (a) which is made between all holders of regional Channel 3 licences for securing the appointment by them, in accordance with conditions included in their licences by virtue of section 31A(a), of a single body corporate to be the appointed news provider for the purposes of section 31(2), or
2. (b) which is made between them and the body corporate appointed to be the appointed news provider for the purposes of section 31(2) for purposes connected with the appointment.

(2) If a relevant agreement is registered under the Restrictive Trade Practices Act 1976 ("the 1976 Act"), the Director General of Fair Trading shall report to the Secretary of State as to whether it appears to the Director that the agreement falls within subsection (4).

(3) If, on receiving a report under subsection (2), it appears to the Secretary of State that the agreement falls within subsection (4), he may give a direction to the Director requiring him not to make an application to the Restrictive Practices Court under Part I of the 1976 Act in respect of the relevant agreement.

(4) A relevant agreement falls within this subsection if—

1. (a) those provisions of the agreement by virtue of which the 1976 Act applies to the agreement do not have, and are not intended or likely to have, to any significant extent the effect of restricting, distorting or preventing competition, or
2. (b) all or any of those provisions have, or are intended or likely to have, that effect to a significant extent, but that the effect is not greater than is necessary—
1. (i) in the case of a relevant agreement falling within subsection (1)(a), for securing the appointment by holders of regional Channel 3 licences of a single body corporate to be the appointed news provider for the purposes of section 31(2), or
2. (ii) in the case of a relevant agreement falling within subsection (1)(b), for compliance by them with conditions included in their licences by virtue of section 31(1) and (2).

(5) The Secretary of State may vary or revoke any direction given under subsection (3) above if he satisfied that there has been a material change of circumstances such that—

1. (a) the grounds for the direction have ceased to exist, or
2. (b) there are grounds for giving a different direction; and where the Secretary of State so varies or revokes any direction, he shall give notice of the variation or revocation to the Director.

(6) In this section—

1. (a) "agreement" and "Director" have the same meaning as in the 1976 Act, and
2. (b) "regional Channel 3 licence" has the same meaning as in Part I."

(2) Subsection (1) shall not apply in relation to any agreement (within the meaning of the Restrictive Trade Practices Act 1976) made for the purposes of the provision of news programmes by a nominated news provider under section 31(2) of the 1990 Act as originally enacted.'—[Mr. Sprout.]

Brought up, and read the First time.

Mr. Sproat

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this, it will be convenient to discuss Government amendment No. 91.

Mr. Sproat

In Committee on 13 June, when introducing the new clauses that now form clauses 70 to 72 of the Bill relating to the provision of a single channel 3 news provider, I said that the Government were still considering the implications of those new clauses in relation to competition law. New clause 9 and amendment No. 91 are the products of that careful consideration.

The provisions of sections 31 and 31A of the 1990 Act, as amended by the Bill, will require the regional channel 3 companies to select one news provider from a pool of nominees deemed by the Independent Television Commission to be of an acceptable standard. We are concerned that the agreements between individual ITV companies to secure a single news provider, or agreements between the channel 3 companies collectively and the single news provider on the terms of the contract might be registrable under the Restrictive Trade Practices Act 1976. We are particularly aware that an agreement between the channel 3 licence holders to appoint a news provider would be a registrable agreement under the terms of the RTPA and might be referred to the restrictive practices court. That possibility arises as a consequence of the fact that the Director General of Fair Trading has a duty, subject to certain provisions of the Act, to take proceedings before the restrictive practices court.

The Government do not want to risk those agreements being referred to the restrictive practices court as a direct result of channel 3 companies complying with Government policy. However, we consider that the significance of any restrictions accepted in the agreements should be tested against the policy in the 1976 Act. The amendments are designed to bring about that result.

The provisions of new clause 9 give the Secretary of State for Trade and Industry the power, on the advice of the Director General of Fair Trading, to direct the DGFT not to refer to the restrictive practices court any registrable agreement relating to the provision of a single news provider for the regional channel 3 network. The Secretary of State can so direct the DGFT only if, having received a report from the DGFT, it appears to him that the restrictions in the agreement which make it registrable do not significantly restrict, distort or prevent competition, or that any such restriction is not greater than is necessary for securing the appointment of a single news provider by the regional channel 3 companies. The last point is very important.

The Government's intention is to lift the threat of a referral of the agreements in question to the restrictive practices court where the restrictions are justified against the test that I have described. It is not our intention to give the channel 3 companies a free rein to make anti-competitive agreements generally in respect of the provision of news to the network. Such practices would remain subject to general competition law. Restrictions that the Secretary of State deemed greater than necessary for securing the appointment of a single news provider could still be referred by the DGFT to the restrictive practices court, which would then decide whether they were against the public interest.

Question put and agreed to.

Clause read a Second time, and added to the Bill.