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30 Oct 2002 : Column 925—continued

Mr. Mark Field: I support the words of my right hon. Friend the Member for Wokingham (Mr. Redwood), and I think that the issue of certainty is central to the debate about the relationship between the EU legal regime on competition and that in the UK. My right hon. Friend rightly addressed the demand from business for more certainty. It is certainly odd that legislation passed as recently as 1998 is now being updated when it has not had an opportunity to bed down.

My concern, however, goes further, and I am interested to hear the Minister's response. There seems to be confused thinking about the role of competition policy. Indeed, it has to be said that, whatever one thinks of EU competition policy, it is fairly certain, and it has a test—the dominant position test. One of the concerns addressed in Committee and in the Lords is that the theory underlying the Government's introduction of the Bill, which will presumably be an Act before long, is that it will bring in a Xsubstantial lessening of competition" test. It strikes me that, notwithstanding the Minister's reassurance a few moments ago, there is a risk that if we are not careful we will fall foul of EU legislation and, as a result, our businesses will fall foul of the European court. I reiterate the point that we must have give the situation proper consideration and take full legal advice. The Minister reassured us that the Bill will be part and parcel of the EU process, but I can imagine that changing, particularly as we now seem to be diverging from the dominant position test.

I turn briefly to the contribution of the hon. Member for North-East Derbyshire (Mr. Barnes) and that of my old sparring partner, the hon. Member for Hayes and Harlington (John McDonnell). I am sure that he is aware that only yesterday the Lords finally gave the City of London (Ward Elections) Bill its Third Reading. However, I am concerned that in his desire to get a balanced distribution of industry and employment in his amendment, the hon. Member for North-East Derbyshire presumes that the trade unions are acting in the public interest. I do not believe that that is the case. The trade unions act, rightly, in their members' interests, but the idea that those interests and the public interest are one and the same is naive. I do not favour more Government control.

7 pm

Mr. Barnes: Of course, a substantial part of the Enterprise Bill covers consumers, who have their own individual concerns and legitimate interests. The hon. Gentleman may remember that I attempted to table another batch of amendments arguing that workers organisations should have such representation, which is

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not to say that they do not have sectional and selfish interests as well. However, they also have legitimate interests, which sometimes produce a fruitful result.

Mr. Field: The hon. Gentleman will forgive me if I cannot remember all his contributions. I am sure that, like me, he is befuddled by a number of matters that have come before the House. The Bill has not only completed its Report stage but has come back before the House today. However, I accept his point that collective interests are at stake, including consumer matters which, no doubt, we will discuss later, even if only in outline.

Opposition Members are concerned that large consumer bodies will play a more important role in the Bill's operation than their status necessarily dictates. They are not unaccountable, but should be regarded as a party with particular interests that do not necessarily amount to the public interest. I shall be interested in the Minister's response, but I am concerned that the amendments are proposing more Government control. It would be unwise to second-guess markets, as that served the country badly in the 1960s and 70s. If that were introduced in the Bill, there would be no great advantages, either for enterprise or the business community as a whole.

Miss Melanie Johnson: May I respond first to the amendments tabled by my hon. Friend the Member for North-East Derbyshire (Mr. Barnes)? I recognise that he has spent a considerable time trying to convince the Government of the wisdom of his case. Like the hon. Member for Twickenham (Dr. Cable), I admire his stamina and efforts.

The amendments to Lords amendments Nos. 53 and 54 seek to enable the Secretary of State to intervene and act to protect matters relating to

in cases that fall to the European Community merger regulation—the ECMR. I am not sure that the line numbers are accurate, but I think that that is the sense of my hon. Friend's proposals. We have previously debated in the House amendments that sought to introduce the consideration of matters such as employment in cases handled under the domestic regime. I shall not repeat in detail why the Government believe such changes are undesirable, although I agree with my hon. Friend that those matters are important. The Government believe that vigorous competition is the key to ensuring that United Kingdom businesses are better able to provide long-term and sustainable employment. Our record of creating more than 1.5 million new jobs since 1997 is proof of the success of our strategy.

The domestic regime that we have proposed ensures that competition is the key consideration—we have made it clear that that should be the focus of future merger inquiries. The European regime already operates along those lines. Under the ECMR, the European Commission looks solely at the competition aspects of the merger. Only in a very few cases is it necessary for member states to act in parallel to address non-competition concerns. We have proposed that the grounds on which the Secretary of State acts in ECMR

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cases should be no wider than those in which she may act in domestic cases. It seems sensible, therefore, to link the European intervention power to the considerations specified in clause 57. However, we also need to be aware of the impact of European law in ECMR cases. The ECMR provides that the grounds on which member states can act is limited to those specified as legitimate interests or recognised as such by a decision of the Commission. The grounds suggested by my hon. Friend are neither specified nor the subject of a Commission decision, so the amendments would have no effect in law. For those reasons, I urge him to withdraw his amendments, although I respect the fact that he has said that he may wish to press them to a vote.

Turning to the remarks of the right hon. Member for Wokingham (Mr. Redwood), the Competition Act 1998 and the Bill deal with different matters. The Competition Act deals with the introduction of prohibitions on anti-competitive agreements and abuses of the dominant position. The Bill is mainly about the reform of the merger and monopoly regimes, which were not touched by the Competition Act. The Bill completes the process of reform. We have also taken sensible steps to provide for future changes in Europe by providing for a power to deal with EC modernisation issues, although I emphasise the fact that the amendments are minor in relation to such matters. I hope that that clarifies my point that the Bill is a complementary exercise which completes the process begun by the Competition Act. Indeed, it also completes the reform of competition legislation and the competition regime in the UK, which lay untouched for several decades before the Government came to power in 1997.

Mr. Redwood: Is the Minister assuring the House that the Bill completes the reform process so that we are completely compatible with European Union law? We would therefore need only to make changes in future if there were a big upheaval in EU law. Will she also confirm that no such upheaval is planned in the current discussions on the constitution and other matters?

Miss Johnson: The right hon. Gentleman knows full well that it would be foolish of me to respond to his quest for assurances. We are doing our best to ensure that we do not have to make significant changes in future. I doubt whether he had a crystal ball when he was in government, and I do not have one either. The provisions are as future-proof as possible in relation, for example, to the changes mentioned by the hon. Member for Cities of London and Westminster (Mr. Field). We are discussing the future of the dominance test with the Commission and have moved towards a substantial lessening of competition. We would like the European authorities to do the same, but if they do not, that does not pose any difficulties for us. However, that is one of the main areas of discussion on competition law. I therefore hope that the right hon. Member for Wokingham accepts my assurances.

Lords amendment agreed to.

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Lords amendment: No. 19, page 11, line 43, after Xof" insert

Miss Johnson: I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker: With this we may discuss Lords amendment No. 20 and Government amendment (a) thereto, and Lords amendments Nos. 23, 25 to 27, 29 to 33, 35 to 52, 55 to 64, 67 to 73, 75 to 77, 79, 80, 83, 85 to 87, 91 to 115, 118 to 123, 125 to 131 and 212 to 225.

Miss Johnson: I shall speak to this group of merger and market amendments in two parts. First, I shall deal with the turnover threshold, and then I shall speak to themany technical amendments that constitute the remainder of the group.

On the turnover threshold, we agree with the Lords that clause 22 should be amended. We believe that Lords amendment No. 20, which replaced the #45 million threshold for mergers with one of #100 million, should itself be amended by amendment (a), which inserts one of #70 million.

The turnover threshold is one of two jurisdictional tests that make a merger eligible for investigation by the Office of Fair Trading. The other test is whether a merger would create or enhance a 25 per cent. share of supply. It is important to emphasise at the outset that these are eligibility thresholds only. If a merger involves the acquisition of a business with a UK turnover above the relevant threshold, the OFT is entitled to inquire into it. It does not mean that the merger will be referred or blocked but simply that the OFT can consider whether the merger raises sufficient competition concerns to justify a reference. The great majority of qualifying mergers are not subject to any further action by the competition authorities, but it is important that they can be assessed.

The purpose of thresholds is to strike a balance between excessive and necessary regulation. They should be aimed at ensuring that mergers of real concern can be examined, but avoid interference with cases of no material competition concern. Getting the level right is necessarily a matter of judgment.

The Bill replaces the current assets-based jurisdictional threshold with a turnover threshold. It is widely agreed that turnover is a better indication of the economic significance of a merger. The issue is at what level the new threshold should be set. Our goal in selecting the level of the turnover test has always been to bring within the scope of the merger regime broadly the same number of companies as currently qualify under the assets test. To get this right will inevitably take experience.

Our research indicated that a #45 million level would represent neither a tightening nor a loosening of the domestic merger control regime. In the context of a Bill that has as one of its primary aims the safeguarding of competition, we think that it would be odd to be thinking in terms of any significant relaxation of the scope of the regime. Anti-competitive mergers can do serious harm to the interests of consumers and to the economy at large. Avoiding that is the whole point of merger control and it should not be overlooked.

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Amending the threshold to #100 million, as the Lords propose, runs a serious risk of allowing anti-competitive mergers to proceed without any form of scrutiny by the competition authorities. The OFT has estimated that about 50 per cent. of the mergers that can currently be scrutinised would no longer be eligible for any form of investigation. Far greater reliance would have to be placed on the alternative share of supply test. That would go against the grain of experience to date. At present a big majority of mergers that qualify for investigation qualify under the assets test. It also goes against the grain of international notification regimes, which are invariably based on turnover thresholds.

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