HL Deb 30 July 2002 vol 638 cc846-52 12G (1) In paragraphs 12A to 12F "the appointed day" means such day as the Secretary of State may by order made by statutory instrument appoint; and different days may be appointed for different purposes. (2) An order made by the Secretary of State under paragraph 12C, 12D or 12E—
  1. (a) may make different provision for different purposes; and
  2. (b) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament."

The noble Lord said: This group of government amendments is concerned with transitional and consequential matters. Members of the Committee will have received a letter setting out briefly the purpose and nature of these amendments.

Amendment No. 387A is the one with most significance. It sets out the arrangements for the transition from the Fair Trading Act merger and monopoly regimes to the new regimes. It will, therefore, be of interest to businesses which may be planning mergers for next year. Our approach to the transition has been governed by the principle that in planning mergers, business should have certainty about whether the new or the old law will apply. This has led to the adoption of the following provisions.

For anticipated mergers properly notified to the OFT under the merger notice procedure in Section 75A of the Fair Trading Act, the old law will continue to apply if notification took place before the day appointed for the commencement of the new law. For anticipated mergers that are not notified using the merger notice procedure, the applicable law will be the one applying when the authorities take a decision about that merger. In other words, the law applying when the merger is referred, cleared, or cleared on the basis of undertakings. For mergers completed before the appointed day, the old law will apply irrespective of the date when the merger is notified to the OFT or otherwise made public. For monopoly references, the old law will apply to all references made before the commencement of the new market investigations regime.

The amendment also makes provision for the assignment, where appropriate, of orders and undertakings made or accepted by the Secretary of State under the old regime to the OFT or to the Competition Commission. Where such orders or undertakings are assigned, the OFT or the commission will take on responsibility for their subsequent variation or termination. Our plan is for the Secretary of State to assign those orders and undertakings which are concerned with competition. Those which are concerned with wider public interest issues will remain the responsibility of the Secretary of State.

Amendments Nos. 389A to 389C and 389E to 389F are consequential amendments to the Telecommunications Act 1984 and the Broadcasting Act 1990. These Acts (along with other utilities Acts) contain provisions allowing the relevant regulator to refer disputed licence modifications to the Competition Commission. Such references currently rely on procedural provisions in the Fair Trading Act and the Competition Act 1998 which are being modified by the Enterprise Bill. Most of the necessary consequential amendments to these utilities Acts have already been made. These further amendments clarify some of the earlier amendments and complete the picture. They make explicit provision about the interaction between, for example, the criminal provisions and order-making powers in the Enterprise Bill which have effect for the purposes of the penalties provisions in Clauses 106 to 113 and their corresponding provision in the individual enactments.

The amendments to the Telecommunications Act and the Broadcasting Act provide a template for consequential amendments that will be required to the other utilities Acts that are similarly affected. As I said in my letter, we plan to bring forward these further amendments on Report.

Amendment No. 389D removes an erroneous reference to the Competition Act 1980 in one of the consequential amendments to the Airports Act.

Amendment No. 390A brings the Competition Appeal Tribunal under the supervision of the Council on Tribunals. It replaces the current reference to the Competition Commission appeal tribunals in Schedule I to the Tribunal and Inquiries Act 1992. The Council on Tribunals is responsible for keeping under review the constitution and working of a wide range of tribunals. I beg to move.

On Question, amendment agreed to.

Schedule 24, as amended, agreed to.

Clause 273 [Power to make consequential amendments etc.]:

Lord Kingsland moved Amendment No. 388: Page 190, line 8, at end insert— () But no order made under subsection (1) may amend or alter or in any way affect Part 6.

The noble Lord said: I can make this point very simply. The Secretary of State should not be permitted to amend or alter in any way by order the definition of the criminal offence or of any of the investigatory powers. Such changes should be subject to the full parliamentary scrutiny afforded to an amending Bill. I beg to move.

Lord Sainsbury of Turville

This amendment seeks to exclude Part 6 of the Bill—which deals with the cartel offence—from the provisions in Clause 273, under which the Secretary of State is given the power to make supplementary, incidental or consequential provisions by order.

This clause provides the flexibility to make by delegated legislation any minor revisions to legislation that arc required to ensure that the provisions of this Bill fit well with the provisions of other legislation. These powers can be used only to supplement or to make incidental or consequential provision, and for the limited purposes given in paragraph (1): for the purposes of the Bill and in consequence of, or to give effect to, its terms.

These powers are limited in scope. It is entirely sensible and normal to include such powers in a Bill of this complexity, covering a number of policy areas.

I can assure the Committee that these powers would not permit the wholesale rewriting of substantive parts of the Bill—neither in Part 6 nor in any other part of the Bill. They have to be looked at in context. It would not be possible to use them to make significant changes to Part 6, such as changing the definition of the offence; increasing the penalties for the offence; or reducing the protections provided for in relation to the exercise of the investigative powers in Part 6.

But of course it is always possible that a provision made under these powers could have an effect on Part 6, and so it would be inappropriate to exclude that part from the scope of the clause. On that basis, I ask the noble Lord to withdraw his amendment.

Lord Kingsland

I am most grateful to the Minister. I am greatly reassured by his response. In those circumstances, I am content to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 389 not moved.]

Clause 273 agreed to.

Clause 274 agreed to.

Schedule 25 [Minor and consequential amendments]:

Lord Sainsbury of Turville moved Amendments Nos. 389A to 389F: Page 326, line 5, at end insert "; (b) after subsection (4) there is inserted— (5) This section shall not have effect in relation to the furnishing of information to the Commission in connection with its functions under any provision of the Enterprise Act 2002 as applied by virtue of section 13B of the Telecommunications Act 1984." Page 340, line 24, at end insert— (4) Provisions of Part 3 of the Enterprise Act 2002 which have effect for the purposes of sections 106 to 113 of that Act (including, in particular, provisions relating to offences and the making of orders) shall, for the purposes of the application of those sections by virtue of subsection (1) above, have effect in relation to those sections as applied by virtue of that subsection. (5) Accordingly, corresponding provisions of this Act shall not have effect in relation to those sections as applied by virtue of that subsection." Page 341, line 46, at end insert— (10) In section 103 (time limits for summary proceedings)— (a) that section shall be renumbered as subsection (1) of that section; (b) after that subsection there is inserted— (2) Subsection (1) above shall not apply for the purposes of an offence under any provision of the Enterprise Act 2002 as applied by virtue of section 13B above." Page 342, line 7, leave out "or the 1980 Act Page 350, line 27, at end insert— (4) Provisions of Part 3 of the Enterprise Act 2002 which have effect for the purposes of sections 106 to 113 of that Act (including, in particular, provisions relating to offences and the making of orders) shall, for the purposes of the application of those sections by virtue of sub-paragraph (1), have effect in relation to those sections as applied by virtue of that sub-paragraph. (5) Accordingly, corresponding provisions of this Act shall not have effect in relation to those sections as applied by virtue of that sub-paragraph. Page 353, line 3, at end insert— (4) This paragraph shall not have effect in relation to the supplying of information to the Competition Commission in connection with its functions under any provision of the Enterprise Act 2002 as applied by virtue of paragraph 4A."

On Question, amendments agreed to.

Lord Borrie moved Amendment No. 390: Page 353, line 15, at end insert— (2A) In section 12, after subsection (3) there is inserted— (3A) For the purposes of subsection (3)(b)(ii) the principles there referred to shall require the Competition Commission, in re-determining any disputed price limit which a relevant undertaker had required the Director to refer to the Commission, to express separately its conclusion whether (and if so, to what extent) the application of those principles required the Commission to include in its re-determination of that price limit an allowance for all or part of the costs incurred by that relevant undertaker (after the date upon which it required the Director to refer that disputed determination for re-determination) in preparing for and pursuing its case before the Commission"

The noble Lord said: This amendment stands in my name and that of the noble Lord, Lord Hodgson of Astley Abbotts. It has been promoted by Water Voice, the body representing the 10 regional statutory Ofwat customer service committees. It speaks for the consumer of water services.

Apart from mergers, the Competition Commission may be involved in the water industry if a company wishes to challenge the price limits imposed upon it by Ofwat. Customers have no equivalent right to challenge such price limits before the Competition Commission. Yet if the company exercises its right of appeal to go from Ofwat to the commission, the commission in setting new price limits may allow the company to recover all the Ofwat inquiry costs—legal costs and the rest—from customers. This happened a few years ago to the Sutton and East Surrey and the Mid Kent water companies when those companies challenged the price limits. As a result, the water bills of customers of those fairly small companies went up quite a lot to pay for the inquiry costs.

The purpose of the amendment is to allow the Competition Commission explicit discretion when re-determining the price limits of companies to make an allowance for costs incurred by the company in preparing for and pursuing its case before the commission. That would mean that the company's shareholders, rather than its customers, could bear such costs at the commission's discretion.

I am happy to say that Ofwat—the water regulator—wrote to me after the tabling of this amendment expressing support. Perhaps I may quote just two sentences contained in the letter to me from the Director General of Water Services, Mr Philip Fletcher: I do not consider that companies' costs should always be borne by shareholders, but I do think that the allocation of costs should depend on whether the reference was reasonable. In judging this the Commission should be able to take account of the outcome of the referral and the companies' behaviour in its initial dealings with Ofwat".

I beg to move.

Lord Sainsbury of Turville

As we have heard, this amendment is aimed at giving the Competition Commission a discretion, when it is considering a water price cap reference, about whether to allow the costs incurred by a company in arguing its case to be included in the costs that can be recovered from customers through water charges. On the basis of legal advice, the Competition Commission currently takes the view that it has to allow for such costs, unless they are unreasonable.

I understand the issues involved here. I have some sympathy for the case outlined by the noble Lord, Lord Borrie. However, I hope that he will understand when I say that the change that he proposes is not central to the main competition objectives of the Bill. The Bill reforms the merger and monopoly regimes currently set out in the Fair Trading Act. It does not address the special regulatory regimes for the utilities, except where changes are needed as a direct consequence of the wider competition reforms. Accordingly, my department has not carried out any consultation on issues connected with the regulation of the utility statutes as part of the preparations for the Bill. Therefore, I am very keen not to extend the reach of the Bill into this new, untested area.

I believe that the issue raised by the amendment would be better addressed in the context of reforms to utility-specific legislation when the opportunity arises. On that basis, I urge the noble Lord, Lord Borrie, to withdraw the amendment.

Lord Borrie

I am bound to express a certain disappointment with the Minister's response. While not, of course, anticipating the Queen's Speech, I had hoped that the noble Lord would have mentioned the projected water Bill that departments have in mind. I am sorry that the noble Lord did not even mention it. Nevertheless, I shall consult with my advisers and consider whether or not I wish to pursue the matter further on Report. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Sainsbury of Turville Amendment No. 390A: Page 354, line 22, after "2" insert "— (a) for paragraph 9A there is substituted— 9A. The Competition Appeal Tribunal established under section 12 of the Enterprise Act 2002."; (b)

On Question, amendment agreed to.

Schedule 25, as amended, agreed to.

Schedule 26 agreed to.

Clause 275 [Commencement]:

[Amendment No. 391 not moved.]

Clause 275 agreed to.

Remaining clauses agreed to.

House resumed: Bill reported with amendments.

Lord Grocott

My Lords, in rising to move the adjournment of the House for the Summer Recess, perhaps I may give one explanation; namely, that it is quite frequently the case at this time for tributes to be paid to the staff of your Lordships' House. However, following discussions among the usual channels, if I may put it that way, it is felt that the appropriate time to pay such tributes would be at the end of the Session. So that is when we can look forward to that event. In so saying, I beg to move that the House do now adjourn for the Summer Recess.

On Question, Motion agreed to.

House adjourned for the Summer Recess at twenty-four minutes past one o'clock until Monday 7th October next.