Enterprise Bill

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Miss Johnson: The hon. Gentleman assumes that the Ministry of Defence will sleep through such matters, but it will do no such thing. It will be alert to possible issues and will advise on those that could be of concern to national security. That anxiety is likely to be fully met by the role of the MOD in the process.

Mr. Djanogly: Is the Under-Secretary suggesting that the MOD will review all the OFT's decisions, to consider whether they are in the national interest? I think not, which rather proves the point. The argument has become circular. It has been pointed out that the Secretary of State, rather than the OFT, should decide what is in the national interests. It is worth remembering that the OFT is made up of business men and academics. The Secretary of State should make such decisions.

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I shall leave the matter there, as the arguments have been clearly set out, but for one further question. If we accept that we have a circular argument, will the Minister please clarify what she considers to be material or immaterial?

Miss Johnson: The hon. Gentleman's request is very wide ranging. I have already discussed the nature of materiality and given some examples. For example clogging up the system and vexatious behaviour are examples of non-material issues. I cannot give the hon. Gentleman some sort of list that summarises materiality; it will have to be considered case by case, as many issues need to be considered in context.

Mr. Djanogly: I want to return to the point. What happens if, after the OFT has decided that something is immaterial and, therefore, need not be put to the Secretary of State, it is shown to be material and should have been discussed in a wider context, for example, in the House?

Miss Johnson: I assume that there would be some further discussion about how that had come to pass, but I do not envisage that ever taking place. The hon. Gentleman is trying to tempt me down the path of hypotheticals when the provision is designed to ensure that things work well, that issues are not considered unnecessarily and that we make sure that the right people, including the Ministry of Defence, have an input. I am at a loss to envisage the sort of circumstances to which the hon. Gentleman refers.

Mr. Tony McWalter (Hemel Hempstead): As a codicil to the debate, there is something in what the hon. Member for Huntingdon says. If, for example, a company that produces titanium were trying to merge with a company that produces aluminium, that might not instantly attract anyone's attention. But let us suppose that some new technology is creating a titanium-aluminium alloy, which happens to be particularly useful for gun casings. In that case, I can imagine that the OFT might lack the technical expertise to see what was happening, which could give rise to problems of national security. However, if wider knowledge were available to the Under-Secretary—I speak as a Member of the Science and Technology Committee—it might alert her to what was happening. The Under-Secretary should bear in mind that that point might equally be expressed from the Labour Benches.

Miss Johnson: My hon. Friend raises a more specific case, which is helpful. The OFT will issue invitations to comment on all the cases that it investigates, so there will be plenty of opportunity for people to comment. I have never found that people were backwards in coming forwards with their views on the importance of various courses of action.

Question put and agreed to.

Clause 55 ordered to stand part of the Bill.

Clause 56

Specified considerations

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

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6.30 pm

Mr. Lansley: Some of the matters that we have discussed are relevant here, but I do not want to go over them again. Having examined the cart in detail, we come to the horse. The question is to which areas the decision-making attributes should be applied. I have established something that I had not previously fully understood—the Secretary of State is proposing a special decision-making procedure, to be applied to national security in the first instance. Under that procedure, if the Secretary of State believes that there is a national security consideration, she can issue an intervention notice, enabling that consideration to be taken into account alongside the competition grounds.

The Office of Fair Trading may declare that there are no competition grounds and may even advise that no reference to the Competition Commission be made on the public interest grounds raised in the intervention notice. However, the Secretary of State can go ahead with the reference and can also, as I understand it, contradict a report from the Competition Commission that states that there are no competition grounds and no adverse effect on the public interest. The Secretary of State can maintain that there is such an effect and that there must therefore be a remedy. As far as I can see from the rest of the Bill, she can seek her own remedy rather than being constrained to follow any remedy set out by the Competition Commission.

We are contemplating a merger regime quite different from the provisions under the Fair Trading Act, which this Bill is designed to replace. Under those provisions, if the Secretary of State thought that there was a public interest, he or she could force a reference to be made even if the OFT advised against it, but was constrained by the decision of the Monopolies and Mergers Commission. If the MMC found that there was no adverse public interest, that was the end of the matter.

The new regime is quite different. Perhaps I am particularly slow, but I had thought that the Secretary of State was simply proposing to leave the public interest criterion in relation to national security in the legislation, so that it would apply in much the same way—that she was merely proposing not to narrow the test to competition.

However, we are dealing with a different approach to the public interest. It may well be appropriate to apply this different test to national security, because the Secretary of State may well take a different view from the Office of Fair Trading and be right to do so. As my hon. Friend the Member for Huntingdon said, the various economically or business-trained members of the Competition Commission may not appreciate considerations of national security to the extent that Ministers have to.

Ministers have ultimate responsibility for national security, so they may well entirely substitute their view for that of the competition authorities, but in terms of any national interest other than that of national security it becomes difficult to justify the Secretary of State's reserve power to intervene and to cause the matter to be investigated by the Competition

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Commission. However, the measures go much further. The Bill proposes a power that would allow the Secretary of State not only to cause a reference to be made and an investigation to be undertaken into such a merger, but to substitute his or her view of the public-interest aspects of that investigation for that of the Competition Commission.

We debated an amendment that would have limited the Secretary of State's ability to impose his or her views. In this debate we should recognise that if the Minister is saying that she and her colleagues would not contemplate adding to the power in section 56, it is probably incumbent upon them to contemplate not giving themselves the power to go beyond national security, or, as it is defined in the EC merger regulations, public security. It is an excessive power in relation to any factor other than national security.

Mr. Harry Barnes (North-East Derbyshire): What worries the hon. Member for South Cambridgeshire because it is a faint possibility worries me because it does not clearly specify that the public interest should be considered. I pursued the public interest argument when we debated amendments Nos. 126 and 129 in our seventh sitting. That is why I did not move amendment No. 262, which was tabled in my name. It would have applied the public interest consideration to the Secretary of State, whereas the previous amendment would have applied it to the OFT. Both of those are especially important given the points made by my hon. Friend the Under-Secretary on clause 43. I shall follow that argument very carefully, but that is why I felt that I should not move my amendment at that particular time. Nevertheless, I still have a great deal of interest in the public interest.

Mr. Waterson: My hon. Friend the Member for South Cambridgeshire has elegantly rehearsed the argument about extending the public interest exception beyond national security. As I said when we debated an amendment at some length—I do not want to repeat those arguments—we are far from satisfied. The Under-Secretary is saying that no one in her Department can conceive of any circumstances, not matter how hypothetical, in which that power might be extended, but at the same time she is utterly determined to keep it in the Bill. That is a major concern, not least because it calls for a wholly different regime and philosophy from that in the rest of this part of the legislation, which is something that the Library brief helpfully makes clear. Again, we have made the point, which bears brief repetition, that if we are all in favour of keeping ministerial involvement to a minimum, the exception has to be extremely narrow.

I do not want to rehearse the arguments deployed by my hon. Friend and I want to focus on what is in the Bill as opposed to what might be in clause 56, or other clauses, at some time in the future. We are told that the concept of national security is based either partly or wholly—again, I should like that to be clarified—on the phrase ''public security'', which, once again, crops up in the EC merger regulations. I would be grateful if the Minister would give us some guidance on how that phrase is defined.

We have all advanced the debate on the basis, which is almost an assumption, that national security

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is a defence matter. The hon. Member for Hemel Hempstead (Mr. McWalter) gave the example of defence equipment contracts, but national security could also involve terrorism.

 
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