Enterprise Bill

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Mr. Lansley: I have indeed seen subsection (7). Given that the Secretary of State will have to set out the grounds for the intervention notice at the time at which it is made, can the Under-Secretary give any reason why an order under clause 56 should not be made within 12 weeks, for example, rather than the 24 that seem to be allowed?

Miss Johnson: When the Secretary of State wishes to intervene on those grounds she will be compelled to bring forward an order and to specify that in legislation. The 24-week period is a long-stop and fits in with a possible time scale for obtaining approval for a new public interest consideration. It was chosen for the order to be laid twice to allow for consultation and discussion, as well as long summer breaks and parliamentary timetables during such breaks. If the consideration is not approved within the deadline, the issue will be disregarded in any case. I assure the hon. Gentleman that we want to ensure that cases are not unduly delayed.

Mr. Lansley: When making an order to amend under clause 56, clause 116(7) provides that periods

    ''during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days''

will not be counted. I fail to see why a recess should be a relevant consideration. If time is to be allowed for

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orders to be made simply in a practical way, would it not be better to set an intermediate time limit of, for example, 12 weeks rather than allowing the Secretary of State 24 weeks during which the commission might be working?

Miss Johnson: As I have said, the time scale is a long-stop. It is a maximum and will not necessarily operate. I appreciate the hon. Gentleman's interest in trying to peg it to a shorter time frame. We would all like that, but the fact is that the summer break involves not only the House, but other parties that may wish to comment. Members of this House may wish to have an input but they may be away on holiday. During the summer, it is difficult for people to contribute fully to discussions unless some of the time scale falls outside the summer period. That is why we chose the time scale. It was not plucked out of the air. It allows for the most extreme case when that length of time may be required. We need that flexibility to cope with the need to obtain parliamentary approval and to make final decisions.

Clause 56 does not affect the limitation that the Secretary of State must intervene before reference and I hope that that clarifies the interaction between the two clauses. I hope that I have persuaded Opposition Members to support the clause unamended because I believe that we have got the balance right.

Mr. Waterson: I am sorry to disabuse the Under-Secretary, but she has not persuaded me. Two issues still worry me. One concerns the principle behind this part of the Bill: to eliminate ministerial involvement. I believe that it is common ground in the Committee—including the Under-Secretary—that any exception should be as narrow as possible. National security is, I hope, about as narrow as one can get. Rather like an elephant, it is difficult to describe but one knows it when one sees it. National security would hit any sensible Secretary of State firmly in the face as and when it arose. I am worried as a matter of principle about any attempt to extend what is being suggested, particularly in this vague way.

What the Under-Secretary said was supposed to reassure me, but it had the opposite effect. More worrying is the fact that, as she has repeated on several occasions, there are no plans whatever to specify any other ground and nothing foreseeable is being considered. That seems to be making the situation worse. If something sufficiently serious arose outwith the imagination of everyone involved with the Bill, including officials who have had a hand in drafting it over a long period, and was sufficiently serious and important, primary legislation could be passed through both Houses very quickly to deal with the matter, rather than going through the order-making procedure. It is very worrying that this might depend on the approach of the individual Secretary of State. We have been told that this Secretary of State cannot foresee any circumstances to be included, although I do not expect that she has spent much time worrying and thinking about it. National security is, apparently, all that we are worried about.

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Miss Johnson: I can reassure the hon. Gentleman that we have spent time thinking about the matter. After considering it very carefully, we can foresee no further situation that might be included.

Mr. Waterson: I take that point; I am not trying to denigrate the amount of time that the Secretary of State has spent on the matter. From that point of view, it is reassuring that she and other Ministers, however much time they have spent on it, have not come up with the remotest possibility of any other heading to put in primary legislation. However, suppose a different Secretary of State were to take over during what remains of the life of this Government—someone with a much more interventionist approach, who wanted to intervene before breakfast, before lunch and before dinner, to coin a phrase. This would be a wonderful section through which they could do that, by coming up with a whole range of different grounds.

Lest the Under-Secretary should think that fanciful, let her look ahead to amendment No. 262, which we shall debate very shortly, under clause 56. It is a workmanlike attempt by some of her old Labour colleagues in the House to do just that—open up a great hole in the legislation through which such interventionist policy could be enforced.

There is a problem about certainty. If the Under-Secretary wanted to go halfway towards allaying the concerns of the business community, she might agree to go away and consider later amendments to exclude any changes affecting mergers or investigations of mergers already afoot. That would take a lot of steam out of the business community's concerns. We are not happy with the explanations. I am not saying for a moment that the Under-Secretary has not tried hard and been absolutely open about the thinking behind the provision. However, given the Department's current thinking, it is precisely the mystery of why on earth we need to leave that gap in the legislation that still causes me concern. We might wish to return to the subject later. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 40 ordered to stand part of the Bill

Clause 41 ordered to stand part of the Bill.

Clause 42

Investigation and report by OFT

Amendment made: No. 178, in page 28, line 43, after ''outweigh'', insert

    ''the substantial lessening of competition and''.—[Miss Melanie Johnson.]

Clause 42, as amended, ordered to stand part of the Bill.

Clause 43

Power of Secretary of State to

refer matter to Commission

Question proposed, That the clause stand part of the Bill.

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Mr. Lansley: I do not wish to detain the Committee, but I want to be sure that I understand the purpose of the clause accurately. I would be grateful for the Under-Secretary's confirmation, as the clause seems to be designed to allow the Secretary of State to refer a merger situation to the Competition Commission after having made an intervention notice, whether or not the OFT has determined that there is a substantial lessening of competition. Further, under clause 42, the OFT will have provided advice and recommendations in relation to a public interest consideration raised by the Secretary of State under the intervention notice. The implication in clause 43—although it is not set out in detail—is that the Secretary of State will be able to make a reference to the Competition Commission whether or not the OFT has decided that that public interest consideration is well founded and should give rise to a reference.

In effect, if I understand the provision accurately, the Secretary of State is proposing to be able to ignore the OFT. The Competition Commission will be able to make a determination and the Secretary of State cannot sustain an intervention notice unless it is approved by Parliament. That further heightens the fact that, having issued an intervention notice, the Secretary of State can cause the Competition Commission to undertake a reference—with all that that entails—even though the intervention notice has not been discussed by Parliament and even though the public interest raised by the intervention notice may have led the OFT to say both that there may be no case for a reference to the Competition Commission, and that there is no substantial lessening of competition. So, the Under-Secretary wants an all-embracing power. I should be happy to see that confirmed in terms.

Miss Johnson: We have proposed that the Secretary of State should have the power to refer a case that qualifies for investigation if he or she believes that the merger may operate against the public interest. The result will be that the Secretary of State will refer cases requiring more in-depth consideration to the Competition Commission. The public interest test that the Secretary of State will apply under the new regime will be more limited than that in the Fair Trading Act. The Secretary of State will be limited to taking account of the relevant public interest considerations and any substantial lessening of competition.

The purpose of the clause is to provide discretion for the Secretary of State to refer mergers that might operate against the public interest. The Secretary of State will assess the public interest with regard to the competition issues and the relevant public interest considerations, and will view a substantial lessening of competition as operating against the public interest unless it is outweighed by the benefits of the public interest consideration. The Secretary of State has discretion to refer because that is appropriate. However, he or she must give the reasons for the decision on reference. The OFT has a duty to refer, as it is important to define the role of the relevant body.

To answer the hon. Gentleman's question, the Secretary of State can refer on public interest grounds

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where the OFT has said that there are no competition concerns. However, wider issues such as national security must be considered.

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