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Lord Borrie: My Lords, I have great sympathy with some of the points made. Certainly it is extremely valuable to have had a debate initiated on the whole question of concurrency and consistency. If there is one point on which everyone in the Chamber agrees, it is the desirability of consistency in decision-making whichever regulator is involved, so that competition law develops, with the aid of the competition commission's appeal tribunal. I think that that is everyone's intention.

But the amendments immediately under discussion seem to proceed from gentle to harsh rigidity. They start with the notion of the director making rules, and proceed to amendments such as Amendment No. 170, which would lay down at some length and with great rigidity in the Act itself the intention as to precisely where the demarcation lines should be. If noble Lords believe that consistency is desirable, there is another technological matter on which we may agree and that is the current convergence in the field of broadcasting, telecommunications, information technology, and so on. I challenge noble Lords to say where we will be in five or 10 years' time. It therefore follows that it would be

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wholly undesirable to lay down, in either modest or rigid form, the demarcation lines. The noble Lord, Lord Kingsland, is concerned with the regulatee. I am not sure about that word but I think I understand what he means. Business and industry want to know where they stand. At this stage of a developing convergence in technologies and at this stage of regulation, before the Government's utilities regulation review, which will almost certainly change some of the regulatory arrangements, it would be unwise to lay down demarcations which may be suitable in February 1998 but which will almost certainly be unsuitable in February 1999 or in five years' time.

The arrangement whereby the Director General of Fair Trading chairs informal meetings to discuss rules and procedures is the kind of concordat which has existed for many years in the more limited concurrent jurisdiction of other regulators. The concordat is made public and can be altered from time to time. It would be much more helpful than laying down the precise rules proposed by the noble Lord, which may or may not be right.

Lord Desai: My Lords, I support the comments of my noble friend Lord Borrie. I have been worried about concurrency for some time. It is untypical of the noble Lord, Lord Kingsland, and the philosophy of his party to impose a vast number of rules on a changing scene. The present arrangement will not last and we will need new arrangements in three or four years' time. We need, not a hierarchy of rules, but a hierarchy of authority so that one knows who is the top dog who can be consulted by those who are lower in the hierarchy. The current arrangement may not be perfect but the Director General of Fair Trading can talk to other regulators and resolve matters. However, I still believe that this is a transitional arrangement and that we will have to decide the matter after the utilities review and then introduce binding rules. Inventing vast numbers of rules now is not the way forward.

Baroness O'Cathain: My Lords, just because something is going to change does not mean that it should not be controlled now. New customer practice can develop over a very short period of six to 18 months, after which time it is very difficult to get it back on track. Although we are dealing with a new technological area, telecommunications, it is a bit of a cop-out to say that we should not lay down precise rules because everything changes so rapidly.

During the debate on the Broadcasting Bill many noble Lords stated that the Broadcasting Act would be superseded by another Broadcasting Act because everything changes so rapidly. The same could apply here, but that did not stop us from acting in relation to the Broadcasting Act. I have a great deal of sympathy with the idea that in order to stop excesses this area should be regulated now and not retrospectively.

Lord Fraser of Carmyllie: My Lords, in putting forward an amendment containing a set of rigid rules we thought that we would be appealing to the philosophy of the noble Lord, Lord Desai, not to our own. The

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proposals we have put forward are not entirely consistent. We are seeking to improve the Bill, to find the best way forward which will meet with broad support and avoid issues of concurrency in relation to issues that we do not as yet fully grasp.

It is difficult to define what will be the jurisdiction of Oftel. I do not know what the area of telecommunications will encompass in five or 10 years' time. Without being particularly skilled in gazing into the crystal ball of technology, there is every prospect that Oftel might seek to regulate everyone from Microsoft to Asda and Sainsbury. The amendment is a better way forward and avoids the risk of returning in three or four years to make further changes in primary legislation. It would be better to take the extremely complicated area of telecommunications competition away from Oftel and put it under the direct and exclusive authority of the director general.

I rose to speak to the further amendment in this group, Amendment No. 225, which the noble Lord did not directly address. It proposes that the Secretary of State should be prevented from making an order to bring Clause 52 into force until the review of the function of regulators has been completed and a report made to Parliament. One could probably accurately predict parts of the review particularly in the energy field but elsewhere it might be more complicated. Before that clause is brought into force Parliament should know what has happened. I appreciate that there are great difficulties and no doubt a very extensive review has been undertaken. The Minister has been open enough at each stage of the Bill to make clear that, however desirable, it would not be possible to complete that review before the Bill leaves this House. We accept that situation but suggest that there should be a provision, as proposed, which would delay commencement.

Lord Simon of Highbury: My Lords, it is worth making one or two general points about concurrency. In my last response I managed to put it off and talk to why I believe that another advisory committee would not be advisable at this stage. The noble and learned Lord, Lord Fraser, has probably addressed the factors of concurrency that he really wanted to talk about so I can put it off no longer; but I am glad that he is going to reflect on my previous answer.

The principle of concurrency is right. This is a Bill about competition. Regulators need to have powers in order to encourage and maintain competition in their sectors and to co-ordinate their use of sector-specific regulation with these powers. We have said that we do not believe that a "bright line" of jurisdiction is practical. We do not want gaps or litigation about who has jurisdiction. Hence, powers have to be exercisable concurrently by the regulator and the Director General of Fair Trading to ensure the competitive marketplace which I know all noble Lords are seeking via the powers of this Bill.

The marketplace is dynamic, as we have repeated many times. We have already talked about the scope of Oftel, though we shall return to that in further

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amendments. It is true that the legal scope of Oftel's remit needs to be kept under review. It must be clear, but it must be wide enough and it must be up to date. As many noble Lords and the noble Baroness, Lady O'Cathain, have stated, this is probably the most dynamic marketplace that we are currently trying to regulate. We are prepared to respond to the concerns expressed in Committee to propose a clarification and widening of the powers of Oftel, but within the current framework of Oftel's existing powers and concurrency. We do not believe that a more radical review of Oftel's powers would be appropriate for the Bill. It needs to be dealt with in the context of telecommunications and broadcasting generally, which the Government are reviewing. We expect to launch a consultation on these matters in the spring. We shall talk about the scope of Oftel; we shall talk about the telecommunications sector and broadcasting generally; but we must have a starting point in a very dynamic market, and this is about the starting point.

To help define the starting point we have said clearly that flexible rules need to be drawn up to make clear within the prescribed legal scope who does what. Rules need to change and adapt as necessary. I am slightly fearful that my noble friend Lord Desai has already defined only five years as the lifetime of the rules; that worries me. But, who knows, in five years' time I may be elsewhere. Let us define the rules that we need today and make clear as part of the rules to whom notification should be made. This is a matter for the Director General of Fair Trading, consulting regulators, to decide in the first instance, under Clause 49 of the Bill. Rules are, however, to be subject to consultation, approval by the Secretary of State and the parliamentary process, so there will be further opportunity to make sure that they are clear and adequate. They will not drop like pennies from heaven; they will be consulted on. There is further scope for clarification of the role of individual regulators in the advice and information to be prepared under Clause 50.

We have tried to describe a framework in which, as I believe I observed at Committee stage, in a dynamic marketplace sensible men will speak and work together under a format of rules which will be flexible and capable of taking into account the dynamism of the marketplace, which we all wish to encourage and make more competitive.

I believe that that is wholly consistent with everything we have said to date on the subject of concurrency, but I believe it will be helpful for the record if I now turn to Amendments Nos. 170 and 171. Those amendments would very substantially limit the ability of the Director General of Telecommunications to use his concurrent functions under the Bill. If this kind of restriction were right for the Director General of Telecommunications, by implication it would be right for the other regulators. The Government do not accept that it would be right to have any such restriction.

Each of the utility statutes provides that before either the regulator or the director general exercises concurrent functions in a particular case he shall consult the other; and once one of them has taken action the other is barred from doing so. When they consult, I would expect the

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regulator and the Director General of Fair Trading to be able to reach agreement on which of them is best placed to take action. This will be in a context where procedural issues on concurrency will be dealt with in rules under Clause 49 and advice and information under Clause 50. The letter of 6th February from the Director General of Fair Trading, to which I referred on the second day of Report, described the progress which has been made by the working party of the Office of Fair Trading and regulators which is already considerable. For example, they have agreed on a central public register of notified agreements and a single notification point.

These amendments would put an override on the consultation between regulator and the Director General of Fair Trading. Effectively it would mean that wherever it appeared to the director general that a matter fell, even partly, within a set of criteria, he would have exclusive jurisdiction, to the exclusion of the regulator. There would be no consideration as to which of them was more appropriate; only the director general would be able to act. Freely adapting the words of my noble friend Lord Desai, I think we would have defined the chief honcho. And, in each of these amendments, some of the criteria seem wide enough to suggest that the director general could end up dealing with a large proportion of the matters which would otherwise fall within the scope of a regulator's concurrent powers. I do not believe that such a mechanistic approach is appropriate; and I certainly do not believe it would be right to provide concurrent functions for regulators and then allow a large part of those concurrent functions to be clawed back.

Similarly, I do not believe it would be right for rules to prescribe whether it is the director general or the regulator who should act on a matter which falls within the scope of the regulator's concurrent jurisdiction. It is the Bill which prescribes the scope of concurrent jurisdiction. I am advised that it would not be possible for rules to prevent the director general or the regulator from acting on a particular matter which falls within the scope of the regulator's concurrent jurisdiction.

I do not believe it would be right to provide for the scope of concurrent jurisdiction of the Director General of Electricity Supply to be limited in the way that Amendment No. 171B would seem to do. The amendment would limit the scope of concurrent jurisdiction of the director general in a way which would undermine his powers to act under the Bill. If he acted on a matter which related mainly but not exclusively to commercial activities connected with the generation, transmission or supply of electricity, he would be exposed to the risk of legal challenge. This would be unacceptable.

However, I should like to refer back to a commitment I made during Committee on the issue of sensible men talking to sensible men and finding a sensible way to work together, to reflect on whether an amendment to the Bill may be needed to provide flexibility for a regulator and the director general to work together on investigations where both agree that this would be helpful (Official Report, 25/11/97; col. 915). We have therefore been considering the particular provisions in

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utility statutes that require the regulator and the director general to consult before either takes action; and for one to be barred from taking action once the other has done so. These seem to raise concerns about preventing the director general and regulators from working together, even where that would clearly be helpful, and about preventing a case being switched between a regulator and the director general even where a change of circumstances makes that appropriate. We are continuing to reflect on these provisions but, if we decide that changes are needed, they will have to be brought forward in another place. We are reflecting seriously on this issue which was raised in Committee.

Amendment No. 164E would not have the effect of removing concurrent functions. In any event, I have made clear that the Government believe it is right for regulators to be able to exercise functions concurrently with the director general.

Amendment No. 225 seems to be looking for yet another bite at the issue of concurrency right at the point where provisions of the Bill are being brought into effect. I could not accept that. The issue is being fully debated during the passage of the Bill. There will be wide-ranging consultation following publication of the utilities review Green Paper. I do not accept that there is any need for further debate at Report stage.

I have tried to recapture again--I hope just one more time--the reason why we believe concurrency to be fundamental to achieving true competition. I set out as per the letter of 6th February how the director general and the regulators are going about setting up a process of flexible rules that make clear that we are attending carefully to the issues on the table. Also, we are reflecting on an amendment to make the working together of the director general and a specific regulator under certain circumstances more flexible and supported. In those circumstances, I urge the noble and learned Lord, Lord Fraser, and the noble Lord, Lord Kingsland, to withdraw the amendment.

7 p.m.

Lord Kingsland: My Lords, I thank the Minister for that comprehensive reply in which he not only dealt with the amendments, but also with the wider aspect of concurrency.

In dealing with that wider aspect, the Minister made an observation to which I feel compelled to respond. He talked of the desirability of concurrency in the context of competition. In so saying, he made an assumption that the responsibilities for competition under the Bill are the same as the responsibilities for competition under whatever specific regulatory regime is under review.

The truth of the matter is that those responsibilities--for example, in the telecommunications sector--could not be more different. Under the Bill the responsibilities of the regulator will be reactive and adjudicatory, almost quasi-judicial, and very clear procedures will be set out to enable the regulator to fulfil that function. On the other hand, the competition responsibilities that the regulator has under his specific regulatory statute are quite different. They are not reactive; they are not

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adjudicatory; they are what I understand economists term "structural". He is there under his Telecommunications Act to promote competition; to change the structure of the industry if necessary; to make it more competitive. This is competition in an entirely different context. It would be extremely dangerous for the telecommunications regulator to confuse the two. That is just one example of why putting a bridge into the Telecommunications Act which was not there before is so dangerous. I have not heard the Minister address that specific matter. I hope that at some time in the course of the evening--these amendments are perhaps not the most appropriate--he will give your Lordships' House the benefit of some further reflections on the matter.

A second related but distinct point is that if the telecommunications regulator, the electricity regulator, the gas regulator or whichever regulator we are discussing, seeks to enforce against a regulatee, once the Bill is on the statute book, he now has not only one set of legally enforceable rules, but two. He has complete discretion as to which one he chooses, to enforce whatever he chooses to enforce. He is entitled to address himself not just to his responsibilities under the Bill, but also to his responsibilities under the regulation Act at the same time. That is a recipe for uncertainty among the enterprises subject to his jurisdiction. Inconsistency and uncertainty are enemies of enterprise and competition. If the Minister tells your Lordships' House that concurrency is a good thing, he must rebut those two allegations.

I listened to the noble Lord, Lord Borrie, with great interest. He has unmatched experience in this area. For 10 years he was Director General of Fair Trading. I shall certainly not accuse him of not keeping up with what has been going on since then. He has been most assiduous in attending all the stages of this Bill before your Lordships' House. But up to now the role of the Director General of Fair Trading has been a preliminary role in the adjudicatory process. He looked at the problem; made an assessment; took a decision and passed it on to somebody else. That is a very different world from the world into which Her Majesty's Government are about to take us. The informal arrangements--the casual chats on the telephone; the ad hoc meetings summoned in order to resolve a particularly knotty problem--may be highly appropriate to the old informalities of competition law, but it will not do where there are eight or nine regulatory directors who have jurisdictional enforcement powers in addition to those possessed by the Director General of Fair Trading.

I apologise to the Minister, but the offering that he served up in summing up the debate was too potent to resist. I had to reply more generally. I do not ask him to come back all at one go now. I thank him for the noble concession that he made on consultation. I hope that he will reflect on Amendment No. 159A and, in those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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