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Baroness Blackstone: I wonder if I may intervene. I am a little surprised that my noble friend Lord Eatwell did not make it clear to my noble friends Lord Dubs and Lord Gordon of Strathblane that we are going to take away these amendments and come back at Report. I made that clear to my noble friend Lord Eatwell, so I think it would be helpful before we go further—

Lord Gordon of Strathblane: If Clause 307 is being withdrawn, I can sit down very quickly. If Clause 307 is going, I am delighted.

I should like to come back to Clause 306 which is staying and about which I should like to say a word. A bid is put forward to run a licence. If successful, a licence is awarded and it is up to the regulatory body—which in my day was the IBA, then the Radio Authority and now Ofcom—to ensure the licensee sticks to that promise. That promise will include a degree of localness. That is the way forward. I am delighted to hear that Clause 307 is coming out.

Baroness Buscombe: I should like to intervene. My name is at the top of the statement that:


I have had no prior notice that that clause was going to be withdrawn. That was why I spoke at length.

Lord Brooke of Sutton Mandeville: I shall be extremely—

Baroness Blackstone: I wonder whether I could respond to what has been said. If the noble Lord, Lord Brooke, does want to come in, I will sit down again.

I did not actually say to my noble friend, Lord Gordon of Strathblane, that I would withdraw Clause 307. I want to make it clear that extensive discussions have taken place between the noble Lord, Lord Eatwell, and his representatives and officials of my department. We have conceded that we have not got this right. We do want to come back at Report with amendments which will resolve the problems that noble Lords have pointed out. If the noble Lord, Lord Brooke, still wants to speak, I shall sit down, otherwise I should like to explain the position of the Government.

It would be simplest if I dealt first with Amendments Nos. 250E, 252A, 252B and 254 since they all deal with the means by which the local content and character of local radio should be protected. I will then go on to Amendments Nos. 252C, 253 and 255 which deal with the more detailed but no less important questions of

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whether the provisions relating to localness need to refer specifically to music, musicians or local talent. The Government have agreed a significant relaxation of the ownership rules for local radio, so that there could be as few as two owners in each area. On a national level, the ownership rules would, by extension, permit the UK radio industry to be dominated by two major groups.

Clearly, we believe that these new ownership rules are right or we would not be proposing them. However, we also recognise that there is a possible risk that greater consolidation could lead to a loss of localness in local radio. We do not say that this will inevitably happen, merely that it could happen. We therefore want to establish a structure that avoids any damaging effects on local radio.

Clause 307 therefore requires Ofcom to draw up guidance on localness. There has, however, been concern in the radio industry that this could lead to the micro-management of the industry, as my noble friend Lord Dubs expressed earlier in this debate and as my noble friend Lord Eatwell expressed at Second Reading. The radio industry has made a number of constructive suggestions to change the Bill which we very much welcome. Those suggestions are given effect to in the amendments before us. We very much welcome those suggestions. As I said just now, my officials have discussed them in some detail with the industry. We are persuaded that we should make changes to the Bill which retain protection for the local character of radio stations while addressing the issue of micro-management. I should like to consider the options and bring back amendments on Report.

I have some sympathy with the thinking behind Amendment No. 254 but I do not think that the amendment is acceptable. We believe—the industry recognises that in its amendments—that there is a case for strengthening Ofcom's responsibilities for securing the broadcast of local material, of which an appropriate amount is locally made. In other words, I believe that the case is already made for taking action now.

However, I would remind noble Lords that this duty of Ofcom's will have to be interpreted by it in the context of its general duties. That will ensure, among other things, that its regulation is proportionate and targeted only at cases in which action is needed. I believe that that, along with the amendments I hope to table on Report, should be sufficient to ensure that Ofcom does not adopt an over-regulatory approach to that duty.

I have much sympathy with the thinking behind Amendments Nos. 252C, 253 and 255. We recognise and value the British music industry and recognise also the importance of the relationship between the radio industry and the music industry. I have already indicated that I should like to consider the amendments tabled to Clauses 306 and 307 with a view to tabling government amendments on Report. I want to ensure that the amendments adequately cover the central notion of "local material, of which an appropriate amount is locally made". However, in

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doing so I shall take careful account of the points made about the importance of music, particularly in local radio, and shall consider whether that can be better reflected in the wording of the Bill. In doing so, we shall be helped by the imaginative and constructive amendments we have debated tonight.

Lord Thomson of Monifieth: The Minister has made an important statement and created a new situation. I was to speak purely to Amendments Nos. 253 and 255 on the importance of music to local sound broadcasting. Therefore, I am grateful for the very positive mentions the Minister made about that and her rethinking of the situation.

On a general point, one of the matters which interested me in preparing for this part of the debate was what was said by the Minister in another place, Dr Kim Howells. He stated frankly that the Government's proposal represented,


    "an enormous liberalisation so as to allow for the possibility—I hope that it does not come to pass—of two large radio groups dominating the UK market. If we do not take steps to prevent it, that level of concentration could lead to a drift away from localness".—[Official Report, Commons, 25/02/03; col. 163.]

The knowledge we have of what happened in the United States, where legislation led to huge changes in concentration of ownership, leads us to feel that we very much welcome the fundamental reconsideration mentioned by the Minister. I hope that as well as continuing to respond positively on the importance of music in local sound broadcasting, the Government will be able to reassure us on the wider implications of the liberalisation of their ownership policy in terms of retaining a local sound broadcasting industry which really shows local character and identity.

Lord Dubs: I am extremely grateful to my noble friend for her handsome response. We look forward to seeing what the Government come up with on Report. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 251 to 252B not moved.]

Clause 306 agreed to.

Clause 307 [Local content and character of local sound broadcasting services]:

[Amendments No. 252C to 255 not moved.]

Clause 307 agreed to.

Clause 308 agreed to.

Clause 309 [Conditions relating to competition matters]:

[Amendments Nos. 255ZA to 255ZC not moved.]

Clause 309 agreed to.

11 p.m.

Clause 310 [Exercise of Broadcasting Act powers for a competition purpose]:

Baroness Buscombe moved Amendment No. 255A:


    Page 273, line 34, at end insert "; and

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(e) every power of theirs to issue a code of practice or guidance to holders of such a licence"

The noble Baroness said: I shall also speak to Amendments Nos. 256, 257, 258ZCA and 258ZE to 258ZH.

The amendments address an extremely important issue relating to the economic regulation of broadcasters, which was extensively debated in Committee in another place. The answers provided by the Government at the time were unsatisfactory, and we have therefore decided to return to the issue to press the Government further.

The Bill gives Ofcom sector-specific competition powers relating to broadcasting, which allow it to include a general fair trading condition in Broadcasting Act licences, and also the ability to exercise concurrent powers under the Competition Act 1998. There are significant concerns, however, over the Bill's provisions which enable Ofcom to undertake economic regulation of broadcasting through broadcasters' licences under the Broadcasting Act in addition to these two groups.

Part 3 gives Ofcom overall power to regulate the broadcasting sector via broadcasting licences issued pursuant to the Broadcasting Acts of 1990 and 1996. This gives Ofcom the power to impose licence conditions on licensees and issue directions pursuant to the fulfilment of Ofcom's duties. However, Part 3 provides no guidance on how or indeed whether Ofcom should undertake the economic regulation of broadcasting, using its Broadcasting Act powers as opposed to its Competition Act powers or its sector-specific competition powers.

The key point here is that clearly not all conceivable matters of economic regulation will be matters of competition. Some will be matters of consumer interest, which have no or little competition element. For example, could Ofcom impose conditions on broadcasting licensees relating to the packaging and pricing of their channels and services, pursuant to its duties to further the interests of consumers in relevant markets, or to secure the availability of a wide range of TV and radio services?

It is important to note that decisions under the Competition Act or for a competition purpose under subsection (4) provide for a full right of appeal to the Competition Appeal Tribunal. However, decisions made pursuant to Ofcom's broadcasting powers exercised other than for a competition purpose would not attract a right of appeal to the Competition Appeals Tribunal.

It should also be noted that even if a decision of Ofcom is partly made for a competition purpose the clause provides that no appeal to the Competition Appeal Tribunal will be forthcoming. An appeal would be possible only if the decision was made by Ofcom where the only or main reason was a competition purpose.

As I said in an earlier debate on Part 2, there is serious concern that this lack of appeal right fails to provide broadcasters with the same rights as, say, telephony providers and providers of other electronic

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communications networks and services when they find themselves subject to economic regulation by Ofcom. That is the background to the amendment.

The first point on which I should like to seek the Minister's confirmation is whether it is the intention to task Ofcom with undertaking economic regulation of broadcasters outside the realm of competition matters. The answer to this question is important and may well determine whether my amendments are necessary, as they are designed to give a right of appeal to broadcaster licensees in circumstances in which Ofcom exercises such powers through the vehicle of television licensable content service licences.

Relevant to this analysis is the fact that cable operators who are retailers of pay television will escape regulation of their pay TV retail activities, as they may not hold TLCS licences unless they themselves operate channels. In those circumstances, it would seem disproportionate to seek to regulate identical retail activities of satellite broadcasters simply because the satellite broadcaster happens to hold TLCS licences for channels that he operates himself. The Minister's response to that disparity in another place did not address the situation in practice. The fact remains that cable operators will be unregulated and satellite broadcasters regulated in relation to the same activities simply because the models under which each operates differ.

We still have not heard an explanation of the Government's position on whether it is intended that Ofcom should seek to undertake economic regulation through the backdoor or TLCS licences in the way that we have described. The Bill does not expressly preclude that type of regulation. Can the Minister, therefore, provide such an assurance to the Committee today? If so, my amendments to these clauses may be redundant. Broadcasters will have the assurance that they are seeking; that is, they will not face economic regulation through their licences for reasons other than a competition purpose. Therefore, the question of whether they have a proper right of appeal in those circumstances becomes irrelevant.

Given that such assurances may not be forthcoming, I shall explain the reasons for my amendments. As I mentioned in my initial overview, one major concern of broadcasters is that decisions of an economic nature not taken for a competition purpose will not, as currently proposed in the Bill, have a right of appeal to the Competition Appeals Tribunal. To clarify a concern raised in another place, we do not suggest that an appeal to the Competition Appeals Tribunal be available on all decisions of Ofcom under its Broadcasting Act powers. Most decisions will have some economic impact, however small, and we accept that they would attract no more than a right of judicial review.

The key point, however, is that decisions in the nature of the examples that I have given, such as those relating to retail pricing and packaging of television services, would attract a right of appeal to the Competition Appeals Tribunal. I have heard no rational argument as to why that should not be the case in any of the debates.

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That is to be contrasted with, for example, price regulation of a mobile telephone operator under Part 2, which attracts full rights of appeal to the Competition Appeals Tribunal. Unless the Government have a compelling reason why, say, potential price regulation of Artsworld, FilmFour or digital radio services must not have a full right of appeal, this is surely the discrepancy that they need to address.

Let me explain how my amendments seek to address the matter. Amendments Nos. 258ZA, 258ZB and 258ZC are the key. As I indicated, Clause 310(4) currently allows any persons affected by a decision by Ofcom to exercise any of its Broadcasting Act powers for a competition purpose to appeal to the Competition Appeals Tribunal. Amendments Nos. 258ZA and 258ZB seek to ensure also that any person affected by a decision by Ofcom to exercise any of its Broadcasting Act powers in the fulfilment of general duties under Section 3 may appeal to the Competition Appeals Tribunal. That would ensure that any form of economic regulation, whether taken for a competition purpose or pursuant to any of Ofcom's general duties under Clause 3, would be subject to appeal to the Competition Appeals Tribunal.

The two amendments on their own would mean that all Ofcom regulation, including content regulation, would become subject to the Competition Appeals Tribunal. That is not my intention with these amendments. Amendment No. 258ZC would amend Clause 310(8) to ensure that the right of appeal to the Competition Appeals Tribunal is disapplied in relation to all Ofcom's content regulation functions. That would be the case unless any such decision were made for a competition purpose as reflected in Amendment No. 258ZCA.

Amendments Nos. 258ZE to 258ZH to Clause 311 are consequential to these amendments and widen the scope of any future Ofcom review of its codes, guidance, directions and, as proposed in Amendment No. 258ZF, conditions. I look forward to the Minister's response to these amendments. They are a rather elegant solution to the problem and appear to resolve concern on both sides of the argument. Clearly, it is a point on which we need reassurance from the Minister.

While we are looking at the provisions regarding rights of appeal, I will, with the leave of the Committee, broaden the discussion to rights of appeal under Part 3 in relation to content. It is a matter on which I gave prior notice to the noble Lord, Lord McIntosh.

It has been drawn to my attention—I know that there is considerable concern beyond your Lordships' House, for example in the CBI—that no right of appeal exists under Part 3 with regard to content. So broadcast consumers affected by Ofcom's decision under Part 3 will have only judicial review as their appeal route. I am suggesting that that is unsatisfactory, primarily because of the limited grounds on which decisions can be reviewed.

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Unlike appeals to the Competition Appeals Tribunal under Part 2, which can revisit the merits of the decision, judicial review only looks at the way in which decisions were made. All that is despite the communications White Paper promise of appropriate review procedures within the regulator.

In its fourth report, for 2002–03, the Joint Committee on Human Rights expressed reservations about possible breaches of Article 6 of the ECHR in the procedures set out under Part 3. It also stated that judicial review is unlikely to be an effective remedy because the subjective nature of Ofcom's judgment would make it difficult to assess the quality of the decision.

I should be enormously grateful if the Minister could allay my concerns, and the concerns of those beyond your Lordships' House, by explaining how the Government envisage the appeals process under Part 3 working in practice. For example, does the Minister envisage the establishment of an internal review procedure for dealing with appeals?

I turn briefly to other amendments. Clause 310(1) identifies the powers of Ofcom to which the clause applies. It appears to me that Ofcom's powers listed here should also include its powers to issue codes of practice or guidance to holders of licences. That is reflected in Amendment No. 255A.

Clause 310(2) requires Ofcom,


    "Before exercising any of their Broadcasting Act powers for a competition purpose",

to,


    "consider whether a more appropriate way of proceeding in some or all of the matters in question would be under the Competition Act 1998".

Clause 310(3) requires that,


    "If Ofcom decides that a more appropriate way of proceeding would be under the Competition Act 1998, they are not, to the extent of that decision, to exercise their Broadcasting Act powers in relation to that matter".

I believe this to be an unsatisfactory situation, with the Bill failing to require or even encourage Ofcom to use its concurrent competition powers in preference to its sector-specific powers.

Amendments Nos. 256 and 257 seek to introduce a less ambiguous position by requiring Ofcom not to use its Broadcasting Act powers on any matter where that matter is capable of being dealt with under the Competition Act. I am aware that this matter was addressed in Committee in another place. At the time the Minister said that the current formulation acknowledges that regulators of a range of sectors, not only of communications, are best placed to determine whether to use competition law or sector-specific powers. He also said that the parties who considered that Ofcom had taken the wrong route could apply for judicial review. This is clearly not the case. Given that Ofcom has discretion as to which route to follow I cannot imagine a scenario where a party would be able to argue successfully that Ofcom had exceeded its powers by choosing one route or the other.

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My new clause, Amendment No. 258ZD, seeks to introduce some additional procedural safeguards into this part of the Bill. I believe that the introduction of and changes to licence conditions and directions should be governed by a set of tests for their introduction and modification similar to the tests for setting or modifying conditions in Clause 44 of Part 2 which apply to electronic communications networks and services. It would be helpful if the Minister could explain why the Government have chosen not to adopt such measures in Part 3 of the Bill. I beg to move.

11.15 p.m.

Lord Razzall: Perhaps I should apologise to the Committee for intruding on private grief by intervening for the first time on Clause 309 on the sixth day in Committee. However, it falls to me to speak on competition matters in relation to amendments to the Bill.

I support the noble Baroness's requirement of various undertakings. A number of the questions she posed can easily be answered and the undertakings given. However, I find myself in some difficulty over two fundamental questions she asks. I do not see anywhere in Clauses 309, 310 and 311, to which the noble Baroness's amendments relate, any express or implied implication that the clauses give Ofcom the power to impose conditions or regulations that do not relate to competition matters. There is much in what she said about concerns that the Bill will give Ofcom powers to produce regulations that affect economic performance and economic-related issues, but nowhere in the three clauses do I find any express or implied concerns. I am sure that the Minister—who was nodding as I was speaking—could give her the confirmation she requests in regard to that issue.

I part company with the noble Baroness over the question of judicial review. Clause 310(2) is very specific:


    "Before exercising any of their Broadcasting Act powers for a competition purpose, OFCOM must consider whether a more appropriate way of proceeding in relation to some or all of the matters in question would be under the Competition Act 1998".

In the event of a dispute over whether those powers have been exercised, I see no better remedy than judicial review. I disagree with the noble Baroness that judicial review on that issue is an inappropriate mechanism. Any other appeal mechanism would be much more prescriptive and restrictive. Judicial review has been developed over the years to deal with the exercise of government powers of this nature and has been rather radically honed in recent years.


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