EXCISIONS FROM REPORTS: PART 3 (Hansard, 13 June 2002)

§ The Parliamentary Under-Secretary of State for Trade and Industry (Miss Melanie Johnson)
I beg to move, That the clause be read a Second time.

§ Mr. Deputy Speaker (Sir Alan Haselhurst)
With this it will be convenient to discuss the following: Government new clause 5—Excisions from reports: Part 4.
Government amendments Nos. 235, 236, 240 to 242, 258 and 298 to 300.

§ Miss Johnson
All the amendments relate to reports by the Office of Fair Trading and the Competition Commission. New clauses 4 and 5 and amendments Nos. 258 and 298 relate to excisions from reports. New clauses 4 and 5 make provision for the Secretary of State to have regard to the need to exclude certain information when publishing a report that she has received from the Office of Fair Trading or the Competition Commission. I shall be happy to give Members further details if they require them.

§ Mr. Nigel Waterson (Eastbourne)
The Under-Secretary is right; we need not detain the House long on this group of amendments, but I have a few questions with which I should like to probe a little further.
The background to this matter is the formalisation of the status of the Office of Fair Trading. That harks back to Conservative legislation in the 1970s, which set up the original structures. It was common ground in Committee that it was right to revisit the matter, and we broadly support the basic proposals and the new powers and functions of the OFT.
1040 There were various debates in Committee, which I do not intend to rehearse, about the contents of the differing reports that will be produced under the Bill when enacted. We as a party have been keen to emphasise the concern of business—whether it be the CBI, the mention of which seems to raise the hackles of the hon. Member for North-East Derbyshire (Mr. Barnes), or any other business organisation—that, no matter how laudable the aims of the legislation, and particularly this part of the Bill, in protecting consumers and people generally against malpractice, it must be borne in mind that unless such matters are dealt with properly, there can be enormous costs to businesses, partly because confidential or commercially sensitive information may find its way into the public domain.
We already know about the extra £15 billion worth of costs that have been heaped on business under this Government, and about the worries about red tape to which organisations such as the Institute of Directors have drawn attention. Indeed, we know about the CBI's figure of £5.8 billion a year extra in taxes on business under this Government. Against that disastrous background, it is important that we do not heap further burdens on business.
New clauses 4 and 5 are similarly worded. In both new clauses, subsection (2) refers to the publication of matter that would be inappropriate, and new clause 4 goes on to say that the body that has prepared the report—whether it is the OFT or the Competition Commission—will advise the Secretary of State on matters to be excluded by him or her when the report is published. Is it considered that the Secretary of State will feel able to make further excisions from such reports? I am asking, perhaps over-laboriously, whether the Secretary of State will be able simply to accept or refuse the proposals of the body preparing the report, or whether it is envisaged that she or he will have, as it were, a final censor's job and make his or her own excisions on top of those proposed by the body.
The other issue is what is defined as inappropriate. The new clauses helpfully refer to section 238, which sets out three or four different considerations: first, matters that are contrary to the public interest; secondly, commercial information where disclosure might significantly harm legitimate business interests; thirdly, information related to the private affairs of the individual, the disclosure of which might significantly harm the individual's interests; and fourthly, whether the disclosure of any such information is necessary for the particular purpose. Does the Under-Secretary regard that list as exhaustive? Could the term "inappropriate" be used to cover all matters which are of perfectly understandable concern to those who are the subject of the report, or, indeed, to Ministers and those who advise them?
Under clause 43, where the Secretary of State issues an intervention notice, the OFT will produce a report on the public interest issues, including representations that it has received. Again, I assume that all that applies equally not just to the conclusions in the report, but to all the, as it were, second-hand information given by way of evidence to the OFT. Otherwise, of course, there might be a disincentive for people to be wholly open and honest in making such representations.
Where the Secretary of State refers matters to the Competition Commission, the reports under clause 44 will be based on an initial investigation under clause 60 and 1041 where the Secretary of State refers a matter under clause 61. As I understand it, those are all instances in which the proposed provision would bite.
The principal issue that we want to raise is whether the lists that I have gone through are exhaustive, or whether there is an element of flexibility, which we would welcome, in excising what is inappropriate. We on the Opposition Benches might take some modest credit for persuading Ministers that the issue should be taken even more seriously in the Bill than it was originally. Subject to those explanations, we would welcome a tightening of the provisions.

§ Mr. Andrew Lansley (South Cambridgeshire)
I confess that I am slightly confused by the Under-Secretary's suggesting that this group of amendments is entirely confined to matters of excision of information from reports. As I understand it, some of the Government amendments do something substantively different. I want to explore why amendments Nos. 235, 236, 240 and 242 are necessary and what is intended by them.
The Under-Secretary has written to us to clarify the purpose of the amendments. Under the first two amendments in respect of mergers, and the second two amendments in respect of market investigation references, where a public interest intervention notice has been served, the OFT or the Competition Commission will report to the Secretary of State.
Under the Bill as previously drafted, the OFT or the commission would have had the opportunity to make recommendations to the Secretary of State as to the actions that she could take under the legislation. As far as I am aware, the provisions for mergers appeared in clause 41 and those for market investigations appeared in a later clause. It would have allowed the Secretary of State to receive undertakings under clause 151 and to make orders under clause 155.
The Government amendments will mean that the commission can recommend to the Secretary of State that she should take other action, but that action is not specified. So I have a very simple question: what is the other action? If the action falls within the confines of the remedies set out in the respective provisions available to the Secretary of State, why is it not already sufficient for the OFT or the commission to be able to specify such remedies? If the action is beyond the confines of the Bill and what is available from the relative undertakings that can be derived from it, why are the additional remedies not specified in the Bill? I confess that nothing in the correspondence that the Under-Secretary has provided to us specifies what the other action might be, and under what legislative form it sits.

§ Miss Johnson
The hon. Member for Eastbourne (Mr. Waterson) asked whether the Secretary of State would be able to make her own excisions as well as those suggested. The answer is yes. The list of inappropriate coverage takes account of all the issues that the hon. Gentleman highlighted. It is not exhaustive, but we are not aware of any considerations other than those currently in the text. I hope that I have reassured him on that point.
The hon. Member for South Cambridgeshire (Mr. Lansley) raised several points and he is right to suggest that other issues are involved. He referred to Government amendment No. 242, but that relates to the 1042 voting rules for the decisions taken by the Competition Commission's reporting panels. Perhaps he meant to refer to amendment No. 241, but that was not absolutely clear.
Amendments Nos. 235, 236, 240 and 241 correct drafting oversights in clauses 46(7)(b) and 62(4)(b). These two paragraphs deal with the Competition Commission's ability, in its reports in public interest and special public interest cases, to recommend the taking of remedial action by other persons, and other than in the form of undertakings accepted or orders made under part 3.
Such action might include, in the case of Ministers, the amendment of existing legislation—whether by introducing new primary legislation or by using delegated powers to amend existing legislation—so as to remove a regulatory barrier to entry and to prevent a merged firm from exploiting a position of market power. Recommendations for the taking of such action are provided for in non-public interest merger eases by clauses 34(3)(b) and 35(2)(b).
As currently drafted, the reference to the taking of action by other persons in clauses 46(7)(b) and 62(4)(b) appears immediately after a reference to the taking of remedial action under the Secretary of State's part 3 powers, thus apparently excluding the possibility of the commission's recommending in public interest or special public interest cases that the Secretary of State should take remedial action other than under her part 3 powers.
Although such action is likely to emerge only very rarely as part of a reasonable and practicable remedial strategy in a merger case, it was not our intention to prevent the commission from being able to recommend that the Secretary of State should take remedial action of this kind in public interest or special public interest cases. The amendments ensure that this possibility is preserved.