Communications Bill

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The Minister for E-Commerce and Competitiveness (Mr. Stephen Timms): Let me comment on the specific terms of the amendment moved by the hon. Member for Blaby (Mr. Robathan). First, however, I apologise to you, Mr. Atkinson, and to the Committee for my late arrival. I am pleased to find you looking after the Committee.

There are a number of examples, rather like the one given by the hon. Gentleman, of the words in a Bill being not quite the same as those in a directive. That is because the conventions and the principles of interpretation of UK law are not the same as those for European Community law. It is not always possible to use the literal words of the directives in order to obtain the intended effect. I put it to the hon. Member for Blaby and the Committee that it is not sensible simply to copy the text of directives into UK

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legislation. The term ''utmost account'', which the amendments would add to the Bill, is not used in UK legislation. We have done the right thing by using a term that is more conventional in UK law than the term in the directives.

I would also make the point to the hon. Member for Blaby that the wording is a little different from the wording in the draft Bill, which follows from comments that were made by the Joint Committee. The draft Bill contained the phrase ''have regard'', and we have gone further. The Joint Committee made a fair point that we needed to change the form of words in order to reflect the directive in the Bill. The form of words on the face of the Bill achieves that and it would not be sensible to use the precise words of the directive.

Mr. Robathan: I will not necessarily argue the toss with the Minister over this, but will he reassure me on a point? I am not a lawyer, although we received fairly expensive legal advice on these points—luckily, we were not paying. Will he assure me that, in legal terms, ''due account'' means the same as ''utmost account'' for these purposes? To a layman, the word ''utmost'' is obviously much more emphatic than the word ''due''.

Mr. Timms: In terms of how a UK court will interpret the Bill, the phrase ''due account'' does the job. The phrase ''utmost account'' would not do the job because it is not familiar in UK law. The answer to the hon. Gentleman's question is yes, but I wanted to phrase my answer slightly more carefully.

The question asked by the hon. Member for South Cambridgeshire is more general and does not arise specifically from the amendment, although it relates to significant market power conditions. As he said, we have interpreted ''not effectively competitive'' as meaning a market in which somebody has significant market power. He referred to that as a simplification, but we used that interpretation when drafting UK legislation. If Ofcom concludes that nobody has significant market power, clause 80(4) provides that it must withdraw all previous significant market power services obligations that have been imposed.

Mr. Lansley: I had noted that, but I understood that that was in relation to reviews, which is why I raised the point. That is distinct from the original market analysis and determination.

Mr. Timms: I think that clause 80(4) does the job that the hon. Gentleman wants. Of course, Ofcom will carry out analyses. We might need to explore the matter further when we reach clause 80, but his point that there is a simplification compared with what is in the directive is fair.

Mr. Lansley: I am sorry to interrupt the Minister again. Although we can discuss the matter again when we reach clause 80, I did not think that there was a problem under that clause because it relates specifically to subsequent reviews of market power, market analysis and market power determinations, and to the removal of pre-existing SMP conditions. The directive is about not only SMP conditions, but all pre-existing sector-specific obligations. Although this can happen within months, the question is what will happen toward the latter part of next year when Ofcom undertakes initial determinations and examines pre-existing obligations.

Mr. Timms: If, following the market review, nobody has significant market power, it will not be permissible to impose significant market power services conditions at all. That is set out in clause 42. In clause 80, we deal with when there are subsequent reviews. The Bill achieves what is set out in the directive.

Mr. Robathan: As the Minister has said, this is not the only place in which ''utmost'' has been replaced by ''due''. As a non-lawyer, I cannot argue with him on the use of those words; however, I remain concerned that the emphasis of ''utmost'', as provided for in the framework directive, has been weakened by the use of ''due''. I hope that that will not give Ofcom powers that it could abuse—although I suspect that it would not abuse them—to the detriment of people in the market. The framework directive did not intend that.

I am sure that the Minister's assurances have been given with the full weight of his legal team behind him, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 75 ordered to stand part of the Bill.

Clauses 76 and 77 ordered to stand part of the Bill.

Clause 78

European Commission's powers in

respect of proposals

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

Mr. Greenway: I will try to be brief, but the Minister will acknowledge that clause 78, and its juxtaposition with clauses 76 and 77, is very important. It gives the European Commission powers to overrule something that Ofcom intended to do in relation to the UK market. It will be worth while putting two or three observations and questions on the record, and teasing the Minister for some answers.

I understand that no other organisation has any similar power, allowing it to overrule Ofcom simply because it has determined that what Ofcom is proposing may create a barrier to the single market. That suggests that Ofcom proposals to regularise the market in the UK may lead to difficulties depending on the European Commission's view on the market for a particular telecommunications service throughout Europe as a whole. As far as I can see from clause 78—perhaps the Minister will confirm this—there is no right of appeal against the European Commission's decision. Would the Commission's decision be subject to judicial review?

If the Commission could overturn something that Ofcom was proposing for our domestic telecommunications market, I presume that it could do the same in another member state—indeed, one would like to think that that situation would be more likely. The Commission could determine that the proposals of another member state's Government or regulator were a barrier to the single market. That, of

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course, would mean a barrier to British telecommunications and media companies pursuing their interests in that member state.

I hope that I have described that clearly enough, and I wonder whether the Government intend to monitor comparable arrangements in other member states. Over the years, we have all grown used to the general cry that, although in this country we play by the rules, other member states may be less forthcoming. We have to accept that article 7(4) of the framework directive makes it clear that the Commission should have that power, which I hope the Minister can confirm will be applied as rigorously in other EU countries as it is likely to be in Britain.

Brian White: I have expressed concern in the past about the regulators' club, which was set up as a result of the framework directive. Clause 79 contains rules about the way in which Ofcom relates to the European Commission. Ofcom will be part of the regulators' club, which may be a cosy arrangement or a properly functioning interaction between the regulators. What is the relationship between the regulators' club and the UK Government? How does the regulators' club relate to the European Commission, and is it involved in the determination of the information that is reported to the European Commission? What is the role of the meeting of the regulators? What is their jurisdiction?

6.30 pm

If the answer to that question is none—as I hope it will be—my question is what arrangements are in place to make sure that an old boys' club in which information is quietly exchanged does not come into existence. There are a number of ways to deal with companies with significant market power. I am thinking of the way in which the German regulator has had a cosy relationship with Deutsche Telekom in the roll-out of broadband in order to promote broadband. That is contrary to the spirit of competition, which the European Union has been pushing. This country has a particular interaction with the Republic of Ireland, and clause 79 talks about definitions of the market. I wonder how Ofcom would relate to the European Union if the market were not only the UK but the UK and Ireland.

Mr. Timms: We talked this morning about the extent to which the market with which the Bill deals is increasingly international. Although the market is global rather than simply European, the European markets are significant. We have common rules for regulating the European markets, and in that context it is right that the Commission should play its part in their regulation within the bounds set for it by the directives. As the hon. Member for Ryedale said, such regulation is mandated by article 7(4) of the framework directive.

In any case, where Ofcom intends to identify a particular market or make a market power determination, during the period given for representations under clause 76 the European Commission may inform Ofcom that it believes that the proposed market identified in the notice or Ofcom's proposed market determination may not be compatible with the single European market or with any Community obligations. In that case, Ofcom must not give effect to its proposals for a further two months. Ofcom must withdraw its proposal if, in accordance with the procedure in article 7(4), the Commission decides within that two-month period that the proposal must be withdrawn.

If we are to have a single international market, there inevitably needs to be the possibility of such an intervention taking place. Of course, as the hon. Gentleman rightly says, that should be a possibility in every member state and certainly not only in the UK. I can give him the assurance that he was looking for because there is a firm commitment, which was reaffirmed at the European Council meeting in Brussels only a week or so ago, that every member state is committed to implementing the new telecommunications framework before 25 July. He can be confident that if there are any problems in that process there will be a good deal of pressure and sanction. There is a genuine European Union-wide commitment to implementing the directives, including that particular element of them. There is no getting away from the requirement in article 7(4) of the framework directive, which is very clear.

The hon. Gentleman asked what appeal would be available if someone were injured by a decision of the European Commission in those circumstances. The only way would be for the UK Government to take legal proceedings under the treaty to the European Court of Justice. I think that that would be unusual, but that arrangement is formally in place.

My hon. Friend the Member for Milton Keynes, North-East asked about the arrangements for the regulators' club, as he described it. There is no jurisdiction for such an institution, and the position that he hopes will apply there will apply. I certainly hope that the national regulatory agencies will be in touch with each other, sharing experiences and keeping each other informed. He rightly drew attention to concerns about arrangements in some countries. I hope that having a common regulatory framework right across Europe—every country is going through the process that this Bill take us through—will mean that there is much more transparency about such arrangements and relationships than there has been in the past. This whole process is an important step in the right direction, addressing the rather uneven pattern seen in Europe in the past.

Question put and agreed to.

Clause 78 ordered to stand part of the Bill.

Clause 79 ordered to stand part of the Bill.

 

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Prepared 17 December 2002