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Viscount Trenchard: My Lords, I should like to speak in support of Amendments Nos. 166 and 167. We have come a long way since we debated the Bill at Second Reading. I welcome the co-operative approach which the Government have in general adopted in seeking to improve the Bill and to remove the imperfections in it which compromise the paramount need for consistency and clarity in the application of competition law. Unfortunately, however, the concurrent powers which the sectoral regulators and the DGFT will exercise under the Bill remain a potential cause of confusion and muddle. I wholly agree with what my noble friend Lord Kingsland said a little earlier on the subject.
As noble Lords are no doubt aware, investment decisions in a competitive environment require a clear and unambiguous regulatory framework with as little room as possible for uncertainty and inconsistency in the application of laws and regulations. The Bill as presently drafted vests new and comprehensive competition law powers in the sectoral regulators, but does not clearly separate those powers from those which sectoral regulators already possess, and will continue to possess, for a variety of purposes, some of which overlap and others of which may conflict with the objectives enshrined in the Bill.
I suggest that that is a recipe for confusion and uncertainty which may well tend to delay or prevent investment decisions, thus weakening the competitive position of British businesses with a consequent negative effect on both employment prospects and customer services. It is surely undesirable that the Bill does not specify clearly the respective circumstances in which powers will be exercised by the DGFT and the sectoral regulators.
I recognise, however, that the Government are committed to granting concurrent powers. The more serious problem, as the noble Lord, Lord St. John of Bletso, clearly pointed out, is that sectoral regulators may, or are possibly required to, have regard to their various other functions when they exercise their powers under the Bill. This clearly means that their conclusions may not always be the same as would be those of the DGFT who does not have other, possibly conflicting, responsibilities deriving from powers granted otherwise than in the Bill in considering the same matters.
The sectoral regulators have responsibilities to seek to achieve objectives which have no connection with the principal purpose of this Bill, which is to protect competition. These responsibilities should be clearly isolated from their responsibilities under the Bill. The new powers granted to the sectoral regulators under the Bill are considerably greater than those which it has been felt that they should exercise hitherto. It is, therefore, all the more important to define clearly the circumstances and contexts within which they may be used.
In order to thrive in today's competitive market, business undertakings need certainty and consistency in the application of the law. These laws include unclear terms such as "abuse". The provisions for the issue of procedural rules contained in Clause 49 will not explain what abuse of dominance is. Any advice or information provided by the director under Clause 50 will be only non-binding and cannot be comprehensive. Certainty cannot be obtained through the alignment provisions of Clause 58 because EU case law remains under-developed, patchy and in part conflicting. Much will, therefore, be left to the discretion of those applying the new laws on a case-by-case basis.
Amendments Nos. 166 and 167 are necessary to ensure that when the Director General of Telecommunications acts under his Bill powers he does so consistently with the way in which the Director General of Fair Trading would act.
Amendment No. 168, which has been tabled by my noble and learned friend Lord Fraser of Carmyllie and my noble friend Lord Kingsland, and which I also support, establishes consistent treatment with what would be the case in the European Court.
These amendments, if adopted by your Lordships, will help to remove confusions and to procure a greater degree of clarity and consistency in application of the extensive powers granted by the Bill. They would promote alignments with the European law principles referred to in Clause 58. They would avoid the perhaps unintended situation where regulators and regulatory goals depart from the Bill's objectives and processes.
Schedule 10 should be amended to avoid misalignment with European law principles and to ensure that Clause 58 is not overridden. These amendments will not have any adverse or inhibiting effect on the effectiveness or the working of the Bill. I hope that the Minister will support their introduction.
Lord Kingsland: My Lords, Amendment No. 168 is a second-best amendment. It refers also to the telecommunications sector. The noble Viscount, Lord Trenchard, has already alluded to it. Essentially, where there is a conflict between the objectives of the Bill and the objectives of the Telecommunications Act, it seeks to require the Bill's objectives to be paramount except in circumstances where the regulatory objectives are "relevant". "Relevant" is defined as what would be relevant to the European Court of Justice if it were directing its mind to the matter. That is not an ideal solution but it offers the Minister an alternative should he have any reservations whatsoever about the previous two amendments.
The telecommunications sector is not the only one with worries about the bridge. In the Telecommunications Act there is no bridge; that is what distinguishes it from all the other utility sectors. But the bridge that exists in the other utility sectors is very different from that which the Minister proposes. There are two reasons for this. First, the competition component that forms part of the bridge in the other sectors is much weaker than the one proposed in the Bill. It is an alloy of the Fair Trading Act 1973 and the Competition Act 1980. Secondly, the present powers of the regulator under the existing bridge in those two Acts are very light indeed; in particular, they are not enforcement powers. What is proposed by maintaining the bridge in all these other sectors, therefore, is much more dramatic than it seems superficially. In effect it is as dramatic a change as that proposed by the Minister for the telecommunications sector.
It is absolutely clear that many of the regulatory objectives, desirable though they are in their own context, are in flagrant contradiction to the objectives of the Bill. One example of that, which I believe has been described to your Lordships in the course of the Committee and Report stages, is the provision of universal service in the world of telecommunications. That is a laudable objective which clearly conflicts with the competition objective.
I say to the Minister when looking at these amendments that it is not too late to think again about the wisdom of what is proposed with respect to the bridge. With the greatest respect, it certainly deserves deeper reflection than it appears to have received so far.
Lord Simon of Highbury: My Lords, I am very grateful to the noble Lord, Lord St. John, the noble and learned Lord, Lord Fraser in a previous debate, the noble Lord, Lord Kingsland, and the noble Viscount, Lord Trenchard, for again raising the issue of the relationship between duties under the utilities statute and exercise by the Director General of Telecommunications and other regulators of concurrent functions under the Bill. I certainly do not accept the comment of the noble Viscount, Lord Trenchard, that this is a muddle. It is not. We seek to explain, as we have been challenged to do yet again by the noble Lord, Lord Kingsland, how we can have a framework Bill for competition and at the same time a regulatory process running in parallel.
To date, clearly I have failed to explain my reasoning to the noble Lord, Lord Kingsland. He says that on the one hand an adjudicatory and reactive system, which is what the prohibition is, and on the other hand an interventionist and active system are two separate bodies of thought that can never meet. I do not agree. I believe that we should strive to make them meet. It is most appropriate in dynamic market places to have a framework for a Competition Bill that encourages businesses to run their affairs in the most competitive manner, but with a very large stick to beat them if they do not do that in markets which for years have had none of these opportunities due to the very strange systems that have been adopted in the past for running the utilities. I should not go into that. However, because of
I do not feel at all muddled. I have listened with very great care to what noble Lords on the Opposition, Liberal Democrat and Cross Benches have put to us as to how best to shape the Bill, particularly in regard to the position of the Director General of Telecommunications who has focused this argument, and other regulators who have a bridge whereas he does not. I have pondered, reflected and listened. In the light of all that I have thought about the provisions of Schedule 10. The result that we wish to achieve is that each regulator must regard his functions under the Bill as paramount and act in accordance with the governing principles set out in Clause 58. That was the point so clearly made by the noble Lord, Lord St. John. At present we have provided that he may have regard to his statutory utility duties although he is not required to do so.
Our policy is that in exercising the functions under the Bill a regulator and the director must each apply the same considerations as to what he may or may not take into account. The reference to "having regard to the statutory duties" was intended to show that the regulator could look at them but was to be circumscribed by the paramount duties under the Bill in doing so. I understand that the Divisional Court in a case involving British Telecom held that the effect of the existing disapplication of the duties of the Director General of Telecommunications under the Telecommunications Act was that he was not entitled to look at them. However, that interpretation was obiter and the court in some future case might come to a different conclusion. We do not believe it is right that a regulator exercising concurrent powers should be prevented from looking at matters covered by his duties; nor that the relationship between the duties and the functions under the Bill should be left subject to uncertainty.
Noble Lords opposite and the noble Lord, Lord St. John, have not accepted that "have regard to" achieves our mutual desire for the regulators and the director to apply the prohibition in the same way as to minimise inconsistency. I have listened carefully to the points that have been made that the ability of a regulator to have regard to statutory duties raises the possibility, however small, of inconsistency in the basis on which the prohibitions are to be applied by the director and each regulator.
The position that we wish to achieve is that a regulator applying the prohibitions is to do so on precisely the same legal basis as the director general. We wish to make that clear on the face of the Bill. I accept the argument that the Government need to table amendments to the Bill in order to achieve that. I hope that with that assurance the noble Lord will be content to withdraw his amendment at this stage.
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