Enterprise Bill

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Mr. Waterson: It is very reassuring to hear that Ireland may be moving towards the same test–and I am not necessarily saying that it is not the right test, because there are strong arguments for both tests. However, I am slightly surprised that the Minister is so unfazed by the potential difficulties of having different tests here and in Europe. I appreciate that the difference is not as stark as it is in the case of cartels, because in most cases it should be clear which regime companies are dealing with. However, there will be uncertainty in some cases, and companies do not really want to have to keep abreast of decisions and case law and practice relating to two different tests. That is still a concern, but given that we will return to some of those themes in the stand part debate, I do not intend to press the matter.

Mr. Barnes: One final word on Biwater. When the Minister said that the Secretary of State and the OFT doubted the public interest consideration, bundles of material about the public interest were sent to the Secretary of State and to the OFT, and the Minister referred the matter back–but whether those matters were given any detailed consideration or merely put to one side on the basis that the competition test was the overriding factor is another point. Certainly, from the responses of the director of the OFT, it seemed clear to me that the bundles of evidence and all the argument that we had about the public interest were not given much consideration. If they had been, it is much more likely that the matter would have been referred to the Competition Commission.

I am not against an arrangement in which one set of competition rules operates throughout the whole European Union. I hope that in establishing that, we would act as we would in Britain for our own competition rules–in as democratic a way as possible. The great problem with the European Union is the democratic deficit that does not allow that. Democratic systems will try to ensure that democratic arrangements are continued through their

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decisions. We are missing out on that so far, but perhaps the debate on public interest has only just begun.

Mr. Field: I have some sympathy with the hon. Gentleman's view regarding the European Union's democratic deficit. Is not one of the concerns in the constituency case to which he has referred at great length really that many of his constituents dislike the outcome rather than the process? Realistically, however much of a process was gone through, involving central Government and the consideration of a public interest test, had the outcome remained the same his constituents would have objected just as strongly.

Mr. Barnes: A process under which a report was issued to the Secretary of State from the OFT stating that everything was okay and failing to indicate that the closure of the plant was afoot, the news of which was suddenly dropped on people, would be very disturbing. There was concern in my constituency about the result and the consequences, and people were trying to mitigate that. However, they also objected to the procedure under which the decision was made, the inadequacy of any consultation with the work force and the misleading behaviour of the Biwater management. Those factors were also important. We cannot divide decisions from the procedures under which they are made. That is an important element of democracy.

Mr. Purchase: I take my hon. Friend's point. However, the European regulations would be no more helpful in the terms in which he wishes them to be than the rules that would apply in the UK. During the consultation, the question arose of dual jurisdiction of UK and EC regimes. The Library research paper states:

    ''The Government noted that since mergers fall to be handled under either the UK regime or the EC regime but not both, arguments for using the same test were less strong than in other parts of competition control where dual jurisdiction could arise.''

Does that overcome the problem of the democratic deficit, given that UK procedures can be judged here, where democracy is fully developed?

Mr. Barnes: I still think that the matter presents problems. The initial reason for setting up the Common Market was that markets were no longer national. A wider framework was needed for the operations of markets and competition within them, because national markets were coming to be dominated by multinational companies.

Having a wider framework in which to act does not seem objectionable to me. However, such frameworks should be subject to democratic input and decision making. My position on Europe is that I fear a federal, social Europe whose democratic credentials have yet to be established. We had better hold on to some of our authority until the two areas in which decisions are to be made are clearly established and defined. I spent eight interesting years on what was then called the European Legislation Committee trying to resolve where the boundaries were and what the increases in competences were.

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The Chairman: Order. I should be grateful if the hon. Gentleman would return to the amendments.

Mr. Barnes: Competition is affected, as is the operation of the public interest, because the involvement of politicians, under proper control and regulation, is democratic involvement. That is important at national and EU level, and it is a question of working out the right frameworks for competition.

3.30 pm

Mr. McWalter: In his summing up, will my hon. Friend address the point that, if the Bill is enacted, there may be more support for workers like those at Biwater than there would have been in the old days? In addition, if those workers had been aware of clear guidelines, they would have made the case not that there would be a loss of 700 jobs but that there would be a substantial lessening of competition in the pipe industry. That would have been a basis for the OFT's consideration.

Mr. Barnes: That was the consideration, the brief and the duty of the OFT and the Secretary of State under the previous arrangements. The hope is that the Bill will provide greater accountability and greater access to a newly established OFT and that openings that did not exist–[Interruption.]

The Chairman: Order. Will the person with the mobile phone please turn it off or leave the Room?

Mr. Barnes: My final point–

Mr. McWalter: I was asking whether, if there were clear guidelines–[Interruption.] I apologise, Mr. Beard. I think that my mobile has turned itself on.

First, will my hon. Friend consider the point that the clarity of the Bill will make it easier for workers to address this issue than was the case before? Secondly, as the OFT was previously more concerned about market dominance than about a ''substantial lessening of competition'', the inclusion of that phrase will also help workers in future.

Mr. Barnes: I hope that that is the impact of the development that my hon. Friend describes, but it is doubtful whether that extra avenue will be sufficient to overcome the problems that I have suggested. I believe that other considerations should be taken into account.

What if I over-egged the pudding in connection with a firm like Biwater and it was nearer to the break point? If that were the case, the public interest factors, such as the distribution of employment in a deprived area, the distribution of industry and the important considerations of the export market, could tip it over the edge, and the case could be sent to the Competition Commission. That is another body that will have a further and wider look at the matter. The add-on is important, even if it is easier for the future equivalent of the Biwater workers to access the new OFT.

I now want to consider the position that the Government adopt when closures take place, and particular problems exist, in an area such as Clay Cross. Special measures can be taken and provisions used, but many of these take a considerably long time

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to bite in terms of helping to create alternative forms of employment with something like the wage levels that existed previously. We therefore need something that allows us to ease ourselves into situations more dramatically than the extremes of pure market considerations allow. That is why making the competitive considerations the sole ones is important. Although it tempers the measure, it does not destroy it. I took the message from the British Bankers Association that it was all a foregone conclusion and that I would not be able to change what has taken place, although I live to fight another day. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Waterson: On a point of order, Mr. Beard. As you know, we feel considerably constrained by the short time that the Government want to devote to this matter in Committee and the speed with which they want to put it through the House generally. It might have been helpful to you and the Committee if they had vaguely tried to establish some common ground among their Members before starting the Committee stage. We have had a long series of not uninteresting speeches from rebel Labour Members who do not seem to share the Minister's aspirations for the Bill. If that carries on, the scrutiny by the rest of the Committee will become even less effective because of the limited time available.

The Chairman: That is not a point of order. It is a matter not for the Chair but for the usual channels.

Mr. Barnes: I beg to move amendment No. 124, in page 10, line 36, leave out subsection (2).

The Chairman: With this it will be convenient to take the following: amendments: No. 213, in page 11, line 2, after 'customer', insert 'and supplier'.

Government amendment No. 176

No. 214, in page 11, line 3, at end insert–

    '(c) the enterprise which is the subject of the proposed merger will become insolvent within the immediate future; the market shares of the enterprise would in any event go to the acquiring party; and there is no less anti-competitive way of selling the company.'.

No. 212, in page 11, line 40, at end add–

    '(8) The Secretary of State shall make regulations to define ''sufficient importance'' within the meaning of subsection (2)(a).'.

No. 127, in clause 31, page 19, line 18, leave out subsection (2).

No. 219, in clause 31, page 19, line 26, after 'customer', insert 'and supplier'.

Government amendment No. 177

No. 218, in clause 31, page 19, line 28, at end insert–

    '(d) the enterprise which is the subject of the proposed merger will become insolvent within the immediate future; the market shares of the enterprise would in any event go to the acquiring party; and there is no less anti-competitive way of selling the company.'.

No. 234, in clause 39, page 25, line 27, at end add–

    '(6) In making a decision under subsection (2), the Commission may also have regard to whether the enterprise which is the subject of the proposed merger will become insolvent within the immediate future; the market shares of the enterprise would in any event go to

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    the acquiring party; and there is no less anti-competitive way of selling the company.'.

No. 237, in clause 42, page 28, line 42, after 'customer', insert 'and supplier'.

Government amendment No. 178

No. 238, in clause 42, page 28, line 47, at end insert–

    '(g) the enterprise which is the subject of the proposed merger will become insolvent within the immediate future; the market shares of the enterprise would in any event go to the acquiring party; and there is no less anti-competitive way of selling the company.'

No. 254, in clause 45, page 33, line 2, at end insert–

    '(10A) The Commission may also have regard to whether the enterprise which is the subject of the proposed merger will become insolvent within the immediate future; the market shares of the enterprise would in any event go to the acquiring party; and there is no less anti-competitive way of selling the company.'.

No. 253, in clause 45, page 33, line 1, after 'customer', insert 'and/or supplier'.

 
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