Previous Section Back to Table of Contents Lords Hansard Home Page


Lord Kingsland: My Lords, this line of amendments deals with another aspect of concurrency. Until now we have been discussing the problem of bridging. Here we confront a situation in which a regulator can opt either to go down the regulatory route in terms of enforcing a licence obligation or down the Bill route in terms of determining whether a prohibition exists and, if that is determined to be the case, to inflict a penalty.

On the assumption that the regulator has these two powers, how ought he to conduct himself? In my submission, the regulator ought to opt at the earliest possible phase to go down one route or the other. One of the difficulties that the Minister faces in seeking to find an appropriate formula to ensure that this happens is the following. If I were a regulator, I would find the early phases of the procedures laid down in the Competition Bill very attractive: I have draconian powers of search and seizure; I can knock down somebody's door if I want to; I have the widest possible powers to get my hands on documents if I want them. On the other hand, when it comes to the procedure at the end of the Bill, I am much more hedged about by my Bill powers than I would be under my regulatory powers: I am subject to an elaborate and--I say in parenthesis--highly desirable appeal procedure; I can be subject to judicial review; and I have a range of other obligations which make the end phase of the procedure quite demanding.

Therefore, if I were a regulator, I should like to start my investigation under the Bill because of my extensive investigative powers but I should like to avoid going the whole way. At some stage I should like to switch to my regulatory powers so that I can complete my objectives by enforcing under the regulatory regime.

I do not suggest for a moment that that course has occurred to any regulator, but it might do so at some stage once the Bill becomes an Act. Therefore, in my submission, it is extremely important that provisions should be included in the Bill to prevent that happening and to require each regulator to opt at an early stage for the route down which he wishes to travel.

23 Feb 1998 : Column 494

I give one example of the difficulties that the noble Lord will encounter if he does not face up to this problem. Widespread information-pooling powers are given to the director under Clauses 53 and 54 of the Bill. What is to stop a regulator going on a fishing expedition? He starts off by using his Bill powers, extracts a lot of information from the regulatee and spreads it around to other regulators. All of a sudden someone finds something that entitles him to go off in another direction. Is that conducive to certainty and consistency in the system?

Following on from what the noble Lord, Lord St. John, and the noble Viscount, Lord Trenchard, said, Amendment No. 172 in my name deals with the problem that faces the electricity industry. It is not a problem that is unique to the electricity industry; other former utilities face exactly the same problem. That amendment was tabled at Committee stage and I thought I detected some sympathy from the noble Lord when he responded to my promotion of it at that time. It seeks to give the regulator an option if he would prefer to use his Bill powers rather than his enforcement powers under the Electricity Act. But it is crucial that he opts clearly for one route or the other and, once he has opted, he ought not to be allowed to switch back.

Lord Simon of Highbury: My Lords, noble Lords, refreshed from a period of contemplation and, I hope, dinner as well, seem to have returned with but one thought on their minds: that concurrency still raises certain problems. I should like to point out to the noble Lord, Lord St. John, that, in replying to his previous two amendments, I thought I had made two matters absolutely clear: that the duties under the Bill are paramount for a regulator and that we wish to carry over Clause 58 with the maximum consistency. Those issues in his otherwise generous response seem to have been missed.

It is important, when we are talking of concurrent powers, that we understand that the Bill and the prohibitions are paramount for the regulator, and that we are subsequently talking about the duties which may arise under the licence conditions. Indeed, when the noble Lord, Lord Kingsland, was eloquently talking of how he would behave as a regulator--my mind immediately started to "boggle" at the thought of what the noble Lord might do were he to become a regulator--I felt that I would have but one comfort; that is, that as a consumer I would be sure that once he had done his business I would have the most competitive supply of whatever commodity it was that was available to me. I remind the House that, whichever way we twist and turn on the use of the powers, the outcome is likely to be that, however the information is exchanged between the regulators or the director general, with the proper provisions we will be in a position where the industry will become more competitive and the offers to the consumer more attractive. That must always be our focus.

I do not intend to return to a justification of concurrency. In Committee, the noble Lord, Lord Kingsland, spoke to an amendment that was the same as the present Amendment No. 174. I said that that

23 Feb 1998 : Column 495

amendment seemed to make a valid point about the interaction between Section 25 of the Electricity Act and the enforcement of the prohibitions. I said that I should therefore like to reflect on the issue it raised and come back to the matter at Report. The noble Lord struck a kernel of understanding.

I have indeed reflected on the matter and concluded that it would be right to bring forward government amendments in respect of each of the utility statutes to deal with the point. I am happy to give a commitment to bring forward amendments at Third Reading.

I believe that the Bill should be amended to remove the obligation on each of the regulators to take action under his utility statute to enforce licence conditions, if he were already taking action under the prohibitions and he was satisfied that that would be the more appropriate course of action to deal with the breach or threatened breach. That is clearly right.

We consider that the regulator should not be committed, once and for all, to taking action only under the provisions of the Bill. If circumstances change, or indeed his assessment of the situation changes, he has to retain the ability to take action to enforce the licence condition. A breach of licence condition cannot be allowed to continue just because a regulator had started to take action under the prohibitions and then found, for whatever reason, that that was not an effective route for dealing with the breach. I therefore concede on one point but wish to clarify the situation on another.

In this context it has been helpful to hear what has been said about Amendments Nos. 172, 173, 174 and 174A. However, Amendments Nos. 169 and 224 seem, in different ways, to go further in seeking to reduce a regulator's flexibility. Amendment No. 169A relates to a different aspect of the relationship between the prohibitions and the utility statutes.

As I said, I believe it is right to make amendments to remove the duty that would require a regulator to take parallel enforcement action. But I do not accept that it would be right to impose the restrictions on regulators' powers that are in some of these amendments. It is for the judgment of the regulator as to which enforcement route to pursue. I certainly do not accept that a regulator should be precluded from taking licence enforcement action because he can take some action on the same matter under the prohibitions, even if that is clearly less effective. Nor that he should be precluded from taking licence enforcement action because he started taking action under the prohibitions and circumstances changed. I believe that the proposal in Amendment No. 169 for a regulator to give notice before he exercises any concurrent function under the Bill is unworkable. Some requirements for notice to be given are set out in the Bill, others will be specified in director's rules. Of those, some may relate to the exercise of concurrent powers; for example, in relation to notification for guidance or a decision. But a blanket notice requirement on regulators is neither desirable nor workable.

I feel that some of the concern about overlap between the prohibitions and licence conditions may not be justified because the licences in place may in some cases

23 Feb 1998 : Column 496

need to adapt to the strengthened competition law that will be in place when the prohibitions are brought into effect. The Director General of Telecommunications told me that a number of licence conditions were removed when the Fair Trading Condition, based, like the prohibitions, on Articles 85 and 86, was introduced into telecommunications licences. He went on to say that, in the light of the implementation of the Competition Bill, Oftel will continue to consider the removal of licence conditions that are no longer necessary. Similarly, the Director General of Gas Supply told me that she will be considering the extent to which licence conditions, such as those which control prices, can fall away.

Perhaps I may quote from the letter of the Director General of Gas Supply:


    "I would like to take this opportunity to confirm that once the competition legislation is in place, and as competition becomes more effective in gas supply and in activities ancillary to transportation, such as storage, I will be considering the extent to which licence conditions, such as those which control prices, can fall away on the basis that I can rely instead on the new, more effective powers under general competition legislation".

The letter from the Director General of Tele- communications states:


    "In the future, particularly in light of implementation of the Competition Bill, Oftel will continue to consider the removal of licence conditions that are no longer necessary".

I quote those letters in order to show to the House that this will be a moving circumstance and that we should construct both a series of rules and therefore subsequent guidance which is able to take account of the way the market place changes with the experience of the new competition law. I do not regard this as fixed in stone. We should look at the rules that the director general and the regulators bring forward and comment on them, as we will have appropriate occasion to do, in the future.

Amendment No. 169A creates a wholly inappropriate link between telecommunications sectoral regulation and the Bill. It is not realistic to treat action in relation to licence conditions as decisions under the Bill. They are not decisions under the prohibitions and it would not be right to treat them as such.

I make a distinction between the paramount objective of looking to the prohibitions in bringing the new competition law into place and the separate role of the regulators in applying licence conditions. As I said in a previous answer, although I do not believe these to be what the noble Lord, Lord Kingsland, would like to see, I do understand that we will have to pay great attention to the relationship between these two bodies of law in order to achieve the most effective development of competition in very differently behaving market places. I hope that, with a commitment to bring forward the government amendments for Third Reading on the particular issue of the Electricity Act, the noble Lord will be willing to withdraw the amendment.

9.15 p.m.

Lord St. John of Bletso: My Lords, I am grateful for the Minister's considered response and I fully take on board what he said about the duties of the regulator and the prohibitions being paramount. The Minister referred

23 Feb 1998 : Column 497

to the need to retain flexibility for the DGT. My amendment would not remove flexibility for the DGT. The DGT would still decide whether a matter was to be dealt with as anti-competitive behaviour within the scope of the Bill or as something else under the other powers. Once the DGT decides to proceed on the basis that he is addressing anti-competitive behaviour within the scope of the Bill he will be obliged, with this amendment, to use the Bill's powers. If there is any difficulty at the initial stages of investigation it may be that the amendment should be redrafted slightly to impose the requirement to use the Bill's powers at the earliest practical moment--certainly before any substantive decision is taken.

The new competition laws are very different from the old. They give extremely wide discretions. As I have said, the powers are so wide that anyone wielding them is essentially investigator, prosecutor and judge, all in one. It therefore follows that the relationship between the new competition laws and the continuing regulatory powers is very different from that between the existing laws and the regulatory powers. The new relationship causes new problems and, in that event, should be dealt with in the Bill. It should be clear from the Bill that all anti-competitive behaviour within the scope of the Bill must be tackled by the Bill. The Bill will have primacy and will not be circumvented by alternative powers.

Finally, the Bill will not be mixed with other powers, but will be operated by the DGT on precisely the same basis as by the DGFT. Although the Minister says that in his opinion the provisions of this amendment would, in his word, be "unworkable", I remain convinced that an amendment such as this is necessary. I shall need to return to the issue perhaps at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.


Next Section Back to Table of Contents Lords Hansard Home Page