House of Lords - Explanatory Note
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Clause 352: Grants to access radio providers

734.     OFCOM may make such grants as they consider appropriate to the providers of access radio, as more fully described in the notes to clause 257 above. The terms and conditions of such grants are at the discretion of OFCOM, but neither the bestowing of a grant upon any person, nor the terms on which this is done, shall make that person a disqualified person under Schedule 2 to the Broadcasting Act 1990 in relation to an access radio licence.

Clause 353: Amendments of 1990 and 1996 Acts

735.     This clause amends the definition of programme services in the 1990 Act so as to include a broad range of services including on-demand and internet services and also and introduces Schedule 15, which makes amendments to the 1990 and 1996 Acts. Most of these amendments are consequential on the Bill. They are described in more detail in the notes for Schedule 15.

Clause 354: Meaning of "available for reception by members of the public"

736.     This clause defines "available for reception for members of the public" in such a way as to exclude 'one to one' services on cable, satellite or by means of a multiplex service. Examples of such services include internet and video-on-demand services where an individual viewer requests an individual library item such as a film. However, any television service that is designed to be broadcast or distributed simultaneously, or virtually simultaneously, to its audience will be held to be "available for reception by members of the public", even where the technical means of distribution is on a one to one basis.

737.     The Secretary of State may by order modify clause 354 having regard to: the public's expectations of protection as regards the contents of television programmes; the extent to which members of the public are able to make use of facilities for exercising control over the programmes accessed; the practicability of applying different levels of regulation for different services; the financial impact of any proposed modifications on service providers; and technological developments.

Clause 355: Interpretation of Part 3

738.     This clause provides for the interpretation of defined terms.

PART 4: LICENSING OF TV RECEPTION

739.     The requirement to hold a licence for the use of a television receiver is currently contained in the Wireless Telegraphy Act 1949, as amended by the Broadcasting Act 1990. The 1990 Act made the BBC (rather than the Secretary of State) responsible for TV licence administration. Part 4 of the Bill consolidates the existing provisions relating to the administration and enforcement of TV licences and separates them from provisions relating to other wireless telegraphy licences.

Clause 356: Licence required for use of TV receiver

740.     This clause prohibits the installation or use of a television receiver without a TV licence issued by the BBC, and makes it an offence, punishable by a fine, for any person to:

  • install or use a television receiver without a TV licence; or

  • have a television receiver in his possession or under this control, intending to install or use it without a TV licence, or knowing (or having reasonable grounds for believing) that another person intends to install or use it without a TV licence.

741.     Subsection (5) exempts from the requirement to hold a TV licence any person who, in the course of business as a dealer, delivers, installs on delivery, demonstrates, tests or repairs television receivers. Subsection (6) gives the Secretary of State the power to make regulations creating further categories of exemptions from the requirement to hold a TV licence for prescribed equipment, persons, circumstances or purposes.

742.     Paragraph 52 of Schedule 18 provides that any television licence granted under the Wireless Telegraphy Act 1949 before the coming into effect of this clause shall have effect after its coming into force as a licence for the purposes of this clause.

Clause 357: TV licences

743.     This clause gives the BBC the power to issue TV licences. The BBC may include in TV licences such conditions and restrictions as they think fit. They must attach such conditions and restrictions as the Secretary of State directs, and may not attach any conditions expressly prohibited by a direction issued by the Secretary of State. They are also precluded from including any provision conferring a power of entry to any premises.

744.     Subsection (2) gives a non-exhaustive list of the type of conditions that might be included in a TV licence, including provisions relating to the type of television receiver covered by the licence, the persons authorised to install or use a television receiver under the licence, and the purpose for which the receiver may be installed or used.

745.     Subsection (5) gives the BBC the power to revoke or modify a TV licence either by notice to the licensee or by a general notice published in a manner as specified in the licence. The BBC must modify the conditions or restrictions in a TV licence if directed by the Secretary of State to do so. Otherwise the licence continues for the period specified in the licence.

Clause 358: TV licence fees

746.     This clause allows the Secretary of State - subject to obtaining the consent of the Treasury - to make regulations setting the fees payable by licensees to the BBC (i) on the issue or renewal of a TV licence; and (ii) in such other circumstances as the Secretary of State provides for in the regulations. Regulations may also allow for concessions, and provide for payment of the licence fee by instalments.

Clause 359: Powers to enforce TV licensing

747.     This clause sets out procedures for the issue and use of search warrants for the purpose of investigating offences under clause 356. Subsections (1) and (2) provide that a justice of the peace in England or Wales, a sheriff in Scotland, or a lay magistrate in Northern Ireland, may grant a search warrant to one or more persons authorised by the BBC or OFCOM where he is satisfied by information provided under oath that there are reasonable grounds for suspecting (i) that an offence under clause 356 has been or is being committed; (ii) that evidence related to such an offence is likely to be on premises or in any vehicle specified in the warrant; and (iii) that one or more of the conditions set out in subsection (3) are satisfied. These conditions are: that it is impracticable to communicate with any person who may grant entry to the relevant premises or vehicle; that there is no one with whom it is practicable to communicate who is entitled to grant access to the evidence; that entry will not be granted unless a warrant is produced; or that the purpose of the search may be frustrated or seriously prejudiced unless carried out immediately on arrival at the relevant premises or vehicle.

*vehicle is defined in subsection (10) as including any vessel, aircraft or hovercraft.

748.     A warrant granted under this clause will be valid for one month after the day of grant. It may grant powers to enter and search specified premises or vehicles and to examine and test any television receiver found there. A warrant issued to a person authorised by OFCOM may only be used to investigate breaches of TV licence conditions relating to radio interference. Persons acting under a warrant may use reasonable force in the exercise of these powers.

749.     Subsection (7) imposes a duty on any person who is on the premises specified in the warrant, or who is in, in charge of, or present at the vehicle specified in the warrant, to provide any assistance necessary to enable any person acting under the warrant to examine or test any television receiver found there.

750.     Subsection (8) makes it an offence to intentionally obstruct the exercise of any powers granted under a warrant under this clause or to fail (without reasonable excuse) to provide any assistance required under subsection (7). A person guilty of such an offence is liable to a fine.

Clause 360: Interpretation of provisions about dealer notification

751.     This clause replaces the definitions of "television dealer", "television programme" and "television set" in section 6 of the Wireless Telegraphy Act 1967, enabling the Secretary of State, by regulations, to define a television dealer and a television set for the purposes of the dealer notification requirements of the Wireless Telegraphy Act 1967. The apparatus specified in regulations defining television sets may include software used in association with it.

Clause 361: Meaning of "television receiver" and "use"

752.     This clause defines a television receiver as apparatus of a description defined by the Secretary of State, by order, as a television receiver. The apparatus specified in an order may include software used in association with it. Indicative draft regulations to define a television set and a television receiver were brought forward at Commons Committee stage.

PART 5: COMPETITION IN COMMUNICATIONS MARKETS

Chapter 1: Functions of OFCOM under Competition Legislation

753.     Chapter 1 of Part 5 of the Bill allows OFCOM to exercise concurrent powers with the Office of Fair Trading (OFT) under Part 1 of the Competition Act 1998 and Part 4 of the Enterprise Act 2002. Currently, the Director General of Telecommunications has concurrent jurisdiction with the OFT to exercise functions under these Acts in so far as they relate to "commercial activities connected with telecommunications" (see section 50 of the Telecommunications Act 1984, as amended by Part 2 of Schedule 9 to the Enterprise Act 2002). Chapter 1 of Part 5 will give OFCOM concurrent powers in relation to a wider range of activities including broadcasting and related matters.

Clause 362: Matters in relation to which OFCOM have competition functions

754.     This clause explains the expression "communications matters" as it is used throughout this Chapter. "Communications matters" include any one or more of the following:

  • the provision of electronic communications networks;

  • the provision of electronic communications services;

  • the making available of services or facilities in association with a network or service or for facilitating the use of a network or service;

  • apparatus used for any of the above; and

  • broadcasting and related matters.

755.     Subsection (2) gives the Secretary of State a power by order to amend this definition. No such order is, however, to be made unless a draft of it has been laid before Parliament and approved by a resolution of each House.

Clause 363: OFCOM's functions under Part 4 of the Enterprise Act 2002

756.     This clause gives OFCOM current jurisdiction with the OFT to apply and enforce the provisions of Part 4 of the Enterprise Act 2002 (market investigations), with certain limited exceptions, in relation to commercial activities connected with communications matters.

* Under subsection (4), the expression activities connected with communications matters includes the supply and export of apparatus used for providing or making available electronic communications networks or services and the production or acquisition of any such apparatus for supply or export.

757.     Part 4 of the Enterprise Act 2002 will replace the monopoly provisions of the Fair Trading Act 1973 with a new regime of "market investigations". These are designed to complement the Competition Act 1998 by providing a means of addressing problems in markets where competition does not appear to be working well, but where there is no apparent breach of existing competition law. An example of the sort of circumstances in which a market investigation might take place would be a situation where a few large firms supplied almost the whole of the market and, without there being any agreement between them, they all tended to follow parallel courses of conduct, while new competitors faced significant barriers to entry into the market, and there was little or no evidence of vigorous competition between the existing players (i.e. a non-collusive, uncompetitive oligopoly). The OFT is able to make a reference to the Competition Commission where it has reasonable grounds to suspect that the structure of a market in or including the UK, or the conduct of persons supplying or acquiring goods, or of their customers, prevents, restricts or distorts competition in connection with the supply or acquisition of goods or services in the UK. Where the Competition Commission finds that such an adverse effect on competition exists, it is under a duty to take such remedial action within its powers as it considers reasonable and practicable. A number of sectoral regulators have concurrent powers with the OFT to make market investigation references in respect of markets which fall within their areas of responsibility. The Communications Bill will give concurrent powers to OFCOM to exercise the OFT's functions under Part 4 of the Enterprise Act 2002 in relation to commercial activities connected with communications, except that, unlike the OFT, OFCOM will neither be obliged to keep a register of undertakings accepted and orders made under Part 4 (under section 166 of the Enterprise Act 2002) nor will they be obliged to issue guidance on the making of market references (under section 177 of that Act).

758.     Subsections (5) and (6) are designed to prevent the simultaneous exercise by both OFCOM and the OFT of their powers under Part 4 of the Enterprise Act 2002 in relation to the same matter. These subsections place those bodies under a duty to consult with each other before exercising any of the concurrent powers under this clause and prohibit them from exercising these powers in a case where the other has already done so.

759.     Subsection (7) places OFCOM under a duty, where they have referred a matter to the Competition Commission under the provisions of Part 4 of the Enterprise Act 2002, to provide the Competition Commission with any relevant information relevant to the investigation in their possession and with any other assistance that is within their power to give.

760.     Subsection (8) gives the Secretary of State the power to conclusively determine any question that arises as to whether OFCOM may carry out any particular function under this clause. However, subsection (9) also makes clear that no action taken by OFCOM under Part 4 of the Enterprise Act 2002 is open to challenge on the grounds that such action should have been taken by the OFT.

761.     Subsection (10) applies section 117 of the Enterprise Act 2002 to the carrying out by OFCOM of functions under this clause. Section 117 makes it an offence for a person knowingly or recklessly to supply materially false or misleading information to the Secretary of State, the OFT, the Competition Commission or to another person who he knows will use the information for the purpose of providing information to the Secretary of State, the OFT or the Competition Commission.

Clause 364: OFCOM's functions under the Competition Act 1998

762.     This clause is analogous to the existing provisions of the Competition Act 1998 giving concurrent jurisdiction to other sectoral regulators such as the Director General of Telecommunications. This clause gives OFCOM concurrent jurisdiction with the OFT to apply and enforce Part 1 of the Competition Act 1998, with the exception of section 38 (1) to (6) and section 51. This means that OFCOM will be able to exercise almost all of the functions of the OFT under Part 1 of the 1998 Act in so far as they relate to activities connected with communications matters. Subsection (8) gives OFCOM concurrent jurisdiction with the OFT with respect to certain transitional provisions of the 1998 Act.

*Section 38 of the Competition Act 1998 requires the OFT to prepare and publish guidance as to the appropriate amount of any penalty under Part 1 of the Act. Section 51 allows the OFT to make rules (currently in the form of the Competition Act 1998 (Director's Rules) Order 2000, SI 2000 No. 293) setting out the procedures to be followed by the OFT, the sectoral regulators and third parties under Part 1 of the Act.

* Under subsection (4), the expression activities connected with communications matters includes the supply and export of apparatus used for providing or making available electronic communications networks or services and the production or acquisition of any such apparatus for supply or export.

763.     The 1998 Act is based on Articles 81 and 82 of the EC Treaty. It contains two prohibitions: first, of agreements which prevent, restrict or distort competition and which may affect trade within the United Kingdom ('the Chapter I prohibition'); secondly, of conduct which amounts to an abuse of a dominant position in a market which may affect trade within the United Kingdom ('the Chapter II prohibition'). The 1998 Act is generally applied and enforced by the OFT. However, in a number of regulated industries such as telecommunications, gas, electricity, water and sewerage and railway services, functions under the Act are carried out by the sectoral regulator concurrently with the OFT. Examples of the functions in respect of which OFCOM will have concurrent jurisdiction include:

  • to investigate possible infringements of the Chapter I or Chapter II prohibitions, either on their own initiative or in response to complaints;

  • to impose financial penalties and/or to give directions to bring an infringement of either of the prohibitions to an end; and

  • to issue general advice and information on how the Act applies to the communications sector.

764.     OFCOM and the OFT will consult with each other before a decision is made as to who will deal with a case in respect of which there is concurrent jurisdiction. Formal arrangements for consultation are set out in regulations made under the Competition Act 1998. In general, anti-competitive agreements or abusive conduct that relate to activities connected with communications matters will be dealt with by OFCOM (unless the OFT is better placed to do so). Where it is unclear which regulator has jurisdiction, the matter will be referred to, and determined by, the Secretary of State. However, no objection may be made against anything done by OFCOM on the grounds that it should have been done by the OFT.

*Further provision for the co-ordination of the performance by the OFT and sectoral regulators of concurrent functions in contained in the Competition Act 1998 (Concurrency) Regulations 2000 (SI 2000 No. 260). The OFT and each regulator are also represented on the Concurrency Working Party which was formed in 1997 to ensure full co-ordination between regulators and the OFT and to ensure consistency of approach to casework.

765.     Section 44 of the Competition Act 1998 makes it an offence, directly or indirectly, to provide false or misleading information to the OFT. As subsection (3) of this clause provides that references to the OFT in Chapter 1 of the Competition Act 1998 are generally to be read as including OFCOM, section 44 of the Competition Act 1998 will also apply in relation to information provided to OFCOM in connection with their exercise of concurrent jurisdiction under that Act.

Clause 365: Application of the Competition Act 1998 to news provision

766.     This clause amends section 194A of the Broadcasting Act 1990. Under that section, the Secretary of State may declare that any provisions in agreements between regional Channel 3 licence holders for the appointment of the Channel 3 news provider are either not anti-competitive or, if anti-competitive, are proportionate to the objectives being achieved. The effect of such a declaration is that the Chapter I prohibition in the Competition Act 1998 (referred to above) does not apply to those provisions and the OFT cannot use its powers under Chapter 3 of Part 1 of that Act to investigate the agreement. The Secretary of State is obliged to consult the OFT before making such declarations and to notify the OFT after making such declarations.

767.     This clause amends the references in section 194A of the Broadcasting Act 1990 to the OFT to refer to both the OFT and to OFCOM. This reflects the concurrent jurisdiction of the OFT and OFCOM under Part 1 of the Competition Act 1998 in relation to communications matters.

768.     Paragraphs 57 and 58 of Schedule 18 (transitional provisions) provide that from the date on which clauses 363 and 364 come into force, anything done by the Director General of Telecommunications under the Enterprise Act 2002 or the Competition Act 1998 which OFCOM would, under those provisions, have the power to do in the future, will be taken to have been done by OFCOM. Anything else will, from the date of entry into force, be taken to have been done by the OFT.

Chapter 2: Newspaper mergers

769.     The Enterprise Act 2002 (EA 2002) repealed the majority of the merger provisions of the Fair Trading Act 1973 (FTA 1973) and created a new merger control regime. However, the special newspaper merger regime contained in sections 57 to 62 FTA 1973 remained intact. Under the special newspaper regime, a transfer of a newspaper or newspaper assets to a newspaper proprietor requires the prior written consent of the Secretary of State where the newspapers of the proprietor to whom the transfer is made (including the titles being acquired) have an average paid for circulation of 500,000 copies or more per day. Subject to certain statutory exceptions, the Secretary of State cannot give this consent until the Competition Commission have reported on the matter. If consent is not obtained when required the transaction will be unlawful and void.

770.     Consideration of reform of this aspect of the merger control system was deferred so that it could be considered as part of the overall reform of media ownership rules in this Bill. Chapter 2 of Part 5 of this Bill makes provision for the repeal of the existing newspaper merger regime provisions and the integration of newspaper mergers into the overall structure of the EA 2002 merger regime. Newspaper mergers will no longer be subject to mandatory pre-notification requirements and the criminal sanctions, which underpin the current regime, will not be continued.

771.     The EA 2002 provides for decisions on the majority of non-newspaper mergers to be taken by the independent competition authorities (the OFT and the Competition Commission) against a new competition-based test of whether they result in a substantial lessening of competition. This replaces the broader public interest test used in the FTA 1973. However, the EA 2002 also provides a mechanism whereby the Secretary of State can intervene and decide on particular mergers that raise specified public interest considerations, by the serving of an intervention notice. National security is the only public interest consideration currently specified in the section 58 EA 2002, although there is a mechanism in the EA 2002 that enables the Secretary of State to add a new public interest consideration or remove or amend an existing public interest consideration. The Secretary of State can serve an intervention notice in relation to any transaction that qualifies for consideration by the competition authorities because it is a "relevant merger situation" (see section 23 EA 2002). She can also serve a "special intervention notice" in relation to mergers involving government defence contractors where the standard qualifying thresholds (i.e. 25% share of supply or UK turnover of company being acquired exceeds £70 million) are not satisfied (i.e., where there is a "special merger situation" - see section 59 EA 2002, allowing these to be examined by reference to the specified public interest consideration(s), but not on competition grounds.

772.     Chapter 2 of Part 5 of the Bill integrates treatment of newspaper mergers with the merger regime of the EA 2002. However, as newspaper transactions can potentially raise public interest concerns beyond the substantial lessening of competition test, provision is also made for "newspaper public interest considerations" to be specified in section 58 EA 2002 so that the Secretary of State can specify these in an intervention notice or special intervention notice under the EA 2002. Provision is also made for an additional advisory role that OFCOM will have where the Secretary of State intervenes in a case on newspaper public interest grounds.

Clause 366: Repeal of existing newspaper merger regime

773.     This clause repeals sections 57 to 62 FTA 1973, which give effect to the existing special newspaper merger regime.

Clause 367: Repeal of exclusion for newspaper mergers from general merger controls

774.     This clause repeals section 69 EA 2002, which prevents a case from being referred to the Competition Commission under both the special newspaper merger regime in the FTA 1973 and the general merger regime in the EA 2002. With the repeal of sections 57 to 62 FTA 1973 (see clause 362) this provision is no longer necessary.

Clause 368: Newspaper public interest considerations

775.     Under the EA 2002, the Secretary of State can only intervene in mergers which satisfy the jurisdictional criteria (i.e., where there is a "relevant merger situation" pursuant to section 23 EA 2002 or a "special merger situation" pursuant to section 59 EA 2002) if she believes that a public interest consideration specified in section 58 EA 2002 is relevant.

776.     Currently, only national security is a specified consideration in section 58 EA 2002. This clause inserts new sections 58(2A) and (2B) that provide for newspaper public interest considerations to be specified in this section, thus giving the Secretary of State the power to intervene in a merger which satisfies the jurisdictional criteria where any of these newspaper public interest considerations are relevant.

777.     New subsection (2A) specifies the need for accurate presentation of news and free expression of opinion in newspapers. This carries forward (albeit in a slightly different context) the specific reference to these two factors in the public interest test that is currently applied by the Competition Commission when considering newspaper transfers under the special newspaper merger regime of the FTA 1973 (see section 59(3) FTA 1973).

778.     New subsection (2B) specifies the need for a plurality of views in newspapers. This is intended to enable a number of plurality issues going beyond free expression or accurate presentation of news to be taken into account, in particular, the structural impact of a transaction on the overall range of views and distribution of voice within the market. The test of a plurality of views is intended to enable regard to be had not only to the need for a sufficient number of views to be expressed, but also to the need for variety in those views, and for there to be a variety of outlets and publications in which they can be expressed. There is a qualitative element to the plurality assessment that requires account to be taken of the context in which titles circulate and the nature of those titles - for example, one title in a particular area may be of greater significance for plurality purposes than another.

779.     The plurality consideration in subsection (2B) is qualified by the reference to reasonableness and practicability of securing a plurality of views. This reflects the fact that although plurality in each and every market is the ideal goal of the regime, it may not be reasonable to seek to achieve this in relation to a particular part of the market - for example, because of the associated costs. Moreover, the level of plurality that may be considered reasonable in a large urban area may be different to that which is practicable in a small rural community. In making this assessment the Competition Commission will be able to take into account all relevant circumstances. It will be able to consider, for example the size and location of the relevant area, and the extent to which other newspapers in the same area contribute to the level of plurality.

 
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