Enterprise Bill

[back to previous text]

Mr. Lansley: I see the Minister's point, but I am afraid that I do not agree with it. Essentially, he is not saying, ''Is not it reasonable for Ministers to have reasonable grounds for suspicion of an anti-competitive effect and, therefore, to make it a subject for reference?'' He must address the point that, by using the power, Ministers will be seen in the market to be substituting their decisions for those of the Office of Fair Trading on exactly the same information. That is at the heart of our objection.

Mr. Alexander: I merely reinforce what I said previously. We are conscious that the power is to be used only in exceptional circumstances and that a balance must be struck. We want to ensure that there is a greater degree of accountability throughout the process. If one were to ask me candidly what I think the market would wish, I would say that it wants a situation in which references can be made to the Competition Commission and, indeed, the appellate body of the competition appeal tribunal, but, none the less, there is provision for further investigations to take place. A degree of proportion must be brought to the debate. There is a fundamental difference between a reference being made for further investigations, deliberations and decisions and the idea that the provision is in breach of the spirit, thrust or rationale of the Bill.

Column Number: 439

Mr. Lansley: If we are trying to bring proportion to the debate, we should do exactly that. The regulatory impact assessment in the White Paper suggests that there might be five such investigations in a year. If the Minister decides in any year, on the basis of the same competition evidence—we are discussing only competition grounds—to make a reference where the OFT does not, that would be a substantial part of the Competition Commission's activity on market investigations for that year. The Minister must tell us not about balances and possibilities, but whether he can contemplate any specific instance—hypothetical, perhaps—in which Ministers would exercise the power.

Mr. Alexander: I would make a couple of immediate responses. First, I do not fully understand the logic of the hon. Gentleman's position. He says that he does not want to talk about possibilities and balances, but he invites me to do exactly that, by identifying a specific possibility. By definition, exceptional is exceptional.

Secondly, the idea that there will be a vast rush of ministerial requests that the Competition Commission investigate matters is defied by the exercise of a similar power in previous circumstances. I explained the specific terms on which a reference for further investigation would occur, and I simply do not think that the evidence of history bears out the hon. Gentleman's suggestion of a hypothetical scenario in which there would suddenly be a rush of references on the basis of ministerial recommendation.

Mr. Waterson: This provision is very important and we would wish to divide the Committee on it, unless the Minister has some further pearls of wisdom for us. He makes three broad points. First, he says that this is a reserve power. The clause does not say that it is. Secondly, he says that it will be used only in exceptional circumstances. The clause does not saying anything about that at all, and he would not be drawn on what would constitute exceptional circumstances. Thirdly, he talked about accountability. One cannot have it both ways. One can have the world order wished for by the hon. Members for North-East Derbyshire and for Hemel Hempstead—on that basis, I presume that they will be voting with us on the clause—in which Ministers can respond to political pressure from sources such as their colleagues and step in, which was the case in the bad old days; I suppose that one could call that accountability. Alternatively, one can have a system in which the OFT is set up as an independent body. That would mean that it could do whatever it wanted, which would include wreaking mayhem like West Hertfordshire health authority.

The Minister has not even attempted to tackle the final issue. If it were not for my high regard for him, I would regard that as a slight discourtesy to the Committee. On what basis would a Minister take a different perspective from the OFT, after it had made a thorough initial investigation, on exactly the same set of facts? That is the key issue. Unless the Minister can reassure us, we shall not be happy with the clause.

Mr. Alexander: I assure the hon. Gentleman that no discourtesy was intended to him or the Committee.

Column Number: 440

Returning to the substantive point at issue, asking for a decision to be taken rather than taking a decision, which is the current position, does not contradict the spirit or, indeed, the rationale of the Bill. However important the involvement of Ministers may be, it is also important that their involvement is transparent and that they fulfil their role in close co-operation with the OFT. There is, perhaps, a genuine disagreement there.

I do not fully understand the logic that suggests that my hon. Friends the Members for North-East Derbyshire and for Hemel Hempstead would, given their contributions to the debate, find favour with the arguments outlined by the hon. Member for Eastbourne.

Mr. Lansley rose—

Mr. Alexander: If I might make some progress, I will then be happy to take an intervention.

We need to strike an appropriate balance between respecting the independence of the competition authorities in making determinations and decisions, which is a rationale that runs through the entire White Paper and the Bill, and recognising that there are exceptional instances in which it would be appropriate for a Minister to ask the Competition Commission to investigate further.

Mr. Lansley: I am getting worried by the Minister's desire to treat the fact that decisions on competition grounds will be made independently by the Competition Commission as sufficient in itself to guarantee the independence of the OFT. Those are two distinct bodies. The OFT will be trying to establish in the marketplace a clear, consistent and predictable understanding of the competition grounds on which it would expect to refer a market for investigation by the Competition Commission. The Minister must understand that independence means that if the Secretary of State were to bring information to the OFT, and the OFT considered it and decided not to make a reference, substituting a Minister's decision for the decision of the OFT would directly undercut that independence. The independence of the Competition Commission on the decision cannot restore the independence of the OFT.

Mr. Alexander: I fear, once again, that I must dispute the logic of the hon. Gentleman's position. We would both agree that there can be a position whereby the Competition Commission is deemed to be, and recognised as, fully independent in terms of its deliberations and, ultimately, its decision. Equally, there could be a decision in which the criteria for investigations conducted by the OFT would be recognised within the marketplace. There could be circumstances in which a Minister would, acting on their own initiative, take the view, having met the same criteria, that a reference was appropriate.

Given the history of the role of the OFT, I do not accept the logic of the point that the hon. Gentleman is advancing. Given the OFT's independence to date, I suggest that the market has not questioned whether Ministers' powers will be restricted. If that was his point, it is a serious allegation.

Column Number: 441

Mr. Lansley: Let us not get into red herrings. The Bill makes it perfectly clear that the Secretary of State will be able to make references on public interest grounds. We are, however, only discussing competition. The Minister proposes that the Secretary of State should have powers to undermine the independence of decision making on competition grounds by the OFT.

I want to put a second question to the Minister. If the OFT issues guidance in pursuance of the legislation about how it should interpret markets, conduct or any of the other factors in clause 123 that flow into whether a reference should be made, is the Minister saying that the Secretary of State will consider himself or herself bound to consider a reference on the same criteria as that published guidance?

6.30 pm

Mr. Alexander: I shall answer the first of the comments, and then move on to the substantive second point. There was an interesting interplay between the comments of the hon. Members for Eastbourne and for South Cambridgeshire. A question was posed asking why a reference could be made to the Competition Commission by a Minister but a Minister could not block a reference to the Competition Commission by the OFT .

I would have more sympathy with the argument of the hon. Member for South Cambridgeshire that that is a significant impediment to the independence to the OFT, if what we were proposing was a means by which a Minister could bar the OFT from making such a reference to the Competition Commission. That is simply not what the clause is intended to do, or narrates.

Mr. Lansley: With respect, I have not proposed that the Secretary of State should have a power to bar references by the OFT, so I would appreciate it if the Minister would address the arguments that I have made, rather than different ones.

Mr. Alexander: If the hon. Gentleman had allowed me to make some progress, I would have merely pointed out that, if we are in the arena of red herrings as he describes it, I do not accept the logic of the idea that the ability of the Minister to recommend that the Competition Commission investigate the matters somehow inhibits or destroys the independence of the OFT. I would accept the logic of that position were it the case that Ministers could prevent the OFT from making references to the Competition Commission—a point which was raised earlier in the debate.

 
Previous Contents Continue

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index


©Parliamentary copyright 2002
Prepared 1 May 2002