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Mr. Timms: When we debated clause 90, I set out the key elements of the enforcement arrangements that we proposed for the conditions of entitlement, which will replace the current system of telecommunications licences. Clause 100 provides that the obligation to comply with the conditions of entitlement—an enforcement notification, or conditions attached to a direction to suspend a person's entitlement to provide networks or services or make available associated facilities—is a duty owed to every person who may be Column Number: 304 affected by the contravention. The impact of the introduction of such a duty is the creation of a new right for a private party to bring civil court actions for damages—or whatever—against a person whom they consider is not complying with their obligations under the conditions.
5.15 pmThe remainder of the clause contains provisions defining more closely the basis on which an action is to be based, and subsection (3) includes a statutory defence in proceedings that the person
a breach. Under section 18 of the Telecommunications Act 1984, such a right only arises where the Director General of Telecommunications has made an order requiring the licensee to comply with his obligations under the licence. In other words, private parties do not have a right of action unless and until the director has ruled that the licensee is in breach of his obligations. Amendment No. 112 would prevent a private party from bringing civil proceedings unless Ofcom had determined that a provider was in breach of a condition of entitlement. I do not believe that that would be an appropriate or helpful change to make to the clause. I understand the argument that extending the right of private party action, which we propose, might add to the business burden faced by communications providers, and I understand the concerns about the risk that private parties may bring action out of the blue, rather than raise alleged breaches with Ofcom as complaints or disputes. The hon. Member for Maldon and East Chelmsford is right to express those concerns, which we considered when preparing the Bill. However, those concerns are not justified to the extent that the provisions should be amended. There is concern that a court might take a view that is not consistent with that which might be taken by Ofcom. That cannot be ruled out, although I think that it would be a rare occurrence. It would be right if Ofcom were to take account of court decisions when it takes a view—I would expect that to happen. It is possible for a regulator's position on an issue to evolve over time, and now that we are introducing a full right of appeal on the merits of a case, there are bound to be cases in which the regulator's original decision is overturned or modified on appeal. Complete consistency, and the certainty that goes with that, cannot be assured in the system that would be introduced under the Bill, but they would not be assured if Ofcom alone were to decide on the matter, and the additional risk created by the courts having to decide on the merits of a case does not seem to be a large one. The parties may provide the courts with any specialist evidence that they think appropriate, which is what happens in respect of a case or decision by the regulator. The hon. Member for Maldon and East Chelmsford voiced concern about providers being ambushed by private parties without the issue having been raised previously with Ofcom. There are no grounds for the view that the courts would not allow adequate time for a provider to prepare a defence and for relevant Column Number: 305 documents and so on to be made available before a hearing; nor would the opening of proceedings preclude the parties from reaching an agreed settlement by negotiation before a formal judgment was reached. I expect the courts to give short shrift to any frivolous cases that might be brought before them.Mr. Simon Thomas (Ceredigion): Does a third party have to go through a complaints procedure with Ofcom first, before resorting to the courts? If they do not have to do that, why has that not been considered in the context of the clause? Mr. Timms: That goes to the heart of the amendment. The clause gives providers the opportunity to take a concern directly to the courts, rather than go through Ofcom, should they wish to do that. When reaching a view on whether that is the right approach, it is important to consider the other side of the case—the considerable and quite significant benefits of what we are proposing. Part 2 introduces new rights in respect of providers' entitlement, subject to conditions, to provide networks and services and provide associated facilities. Those rights are recognised in the communications directive that part 2 implements. The unrestricted right of private party recourse is a proper counterpart to that. Just as providers will no longer need to obtain a Government licence before commencing or varying operations, it will no longer be necessary for them or others to route complaints about abuse of those rights to a Government-created body, or to rely on that body to secure an appropriate outcome. The possibility of court action without a previous Ofcom decision against the provider— John Robertson: Will the Minister give some clarification on that point? Would someone who starts a company and sells services without obtaining a licence come under Ofcom's powers? If a complaint were made against the company while it did not have a licence, would a customer still be able to go to Ofcom to make a complaint? Mr. Timms: Under the framework set out in the Bill, there will no longer be licences. The company in my hon. Friend's example would need to comply with the conditions set down by Ofcom for an operation of that sort. Under clause 100, we propose that if an aggrieved party thinks that Ofcom's conditions are not being effectively and properly implemented by a provider, they can go to court to try to have that put right. That is a helpful change, because the case he mentions might not be a high priority for Ofcom. It might join a list of issues that Ofcom is dealing with. Our view is that creating the opportunity for an aggrieved party to go to court to try to put things right, rather than having to go through Ofcom, is a helpful change. The amendment, which would remove that possibility, would be unhelpful. Brian White (Milton Keynes, North-East): Many companies have concerns about barriers to entry. Has my hon. Friend considered the barriers that the amendment could create to entry to the market? A start-up company would have to employ lawyers to consider the question of its entry to the market being prevented by malicious legal action. Column Number: 306 The Chairman: Before the Minister proceeds, I gently suggest to him that if some other Chairmen had been sitting in my place and he had stood with his back to the Chair for as long as he has, he would have had his head bitten off. Mr. Timms: I apologise for turning my back on you, Mr. Gale. I shall endeavour not to do so again. The arrangement set out under clause 100 gives people with grievances—and we have all come across companies that have grievances about such matters—the opportunity to take their complaint to court rather than having to wait for Ofcom to reach a conclusion about it. That will give small and new players a greater opportunity to be effective in the competitive marketplace than they would have if we left things as they are. I consider this a pro-competition change, rather than the reverse. The hon. Member for Maldon and East Chelmsford made the point that the directive does not make an express provision permitting such claims, and that is correct; but recital 27 of the authorisation directive, as he will know, says that the directive is
The directive that is being implemented in part 2 introduces or acknowledges the possibility of this kind of change being made. Mr. Allan: I would be grateful if the Minister could clarify whether there would be any barrier to companies mounting legal action against each other were the clause not included in the Bill. Do we have to say explicitly that civil action could be taken in respect of the breaching of an Ofcom condition? Or, does the presumption that someone could take such action anyway mean that, even without the clause, a company that felt aggrieved could go to court and say, ''I wish to take action because I believe that there is a barrier to my entering this market''? Mr. Timms: Should the amendment be agreed and clause 100(1)(a) deleted, people would have to go to Ofcom and would not be able to go to court. My argument is that, if it is appropriate, the possibility of going to court is helpful. The courts are well able to reject vexatious or frivolous cases, so companies should not be prevented from going to court if it is in their interests to do so. Mr. Lansley: I have listened carefully to what my hon. Friend the Member for Maldon and East Chelmsford said from the Front Bench and he is right. It is strange that the Minister resists the argument. Certainly, recital 27 of the authorisation directive might contemplate such a possibility, but the articles do not specify it. If the directives were looking for something that was pro-competitive, they would have set it out. The logic of the Minister's argument would apply equally to Competition Act prohibitions. Why would one not have an independent right to go to court to secure damages against someone in contravention of those prohibitions? We have not gone that far, and there is a great risk that enforcement of this regime will be taken out of the hands of Ofcom too many times, at Column Number: 307 too early a stage and into the hands of courts. It is undesirable to risk Ofcom trying to establish a system of regulation and finding that it has been taken out of its hands by earlier court decisions.
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| ©Parliamentary copyright 2003 | Prepared 7 January 2003 |
