Clause 83 - Conditions about network access etc.
Communications Bill
6:45 pm
Mr John Whittingdale (Maldon and East Chelmsford, Conservative)
Clause 83 is obviously especially important, as it specifies the ability of Ofcom to set conditions when it has identified a provider of communication services as having significant market power. In terms of the conditions that may be imposed on that dominant provider, one of the key obligations is likely to be non-discrimination. By that, I mean a requirement that will prevent the dominant provider from discriminating in favour of the dominant supplier's own downstream businesses, as opposed to supplies of the same services by third party competitors.
I hesitate to name BT again, but it is the obvious example. It supplies services in competition with other providers on its own network. Obviously, BT's competitors could be placed at a significant disadvantage if the incumbent—in other words, BT—were able to reduce the quality of service, or charge higher prices.
Under the current BT licence, which is to be replaced by the new regime established through the Bill, BT is required not to show undue discrimination or undue preference to itself. However, it is not a requirement of the access and interconnection directive that discrimination must be undue for there to be a breach of the non-discrimination obligation. I refer the Minister to paragraph 17 of the article's preamble and article 10 of the directive, in which there is no reference to a materiality threshold—in other words, the degree of discrimination necessary for the measure to come into effect.
That is a reflection of European Union competition law, under which there is no need, in the case of an abuse of the dominant position, to prove that there is hindrance of competition. It is enough to show that conduct is likely to produce such an effect. There is also no need to show that the effect would be substantial. Therefore, the requirement for the discrimination to be ''undue'' is not in accordance with European law. The risk is that the mere existence of the word ''unduly'' will imply that Ofcom must consider there to be a threshold of material effect above and beyond that required under European law. Not only is the provision a mis-implementation of the European directive, but it potentially puts BT's competitors in the United Kingdom at a disadvantage compared with those operating in other European Union member states. For that reason, we have tabled amendment No. 199, which would remove the word ''unduly''.
Amendment No. 200 is also connected with the principle of non-discrimination. It is designed to ensure that the UK implementation of the principle is interpreted in accordance with the provisions of the access and interconnection directive, which states in article 10(2) that
''Obligations of non-discrimination shall ensure, in particular, that the operator applies equivalent conditions in equivalent circumstances to other undertakings providing equivalent services, and provide services and information to others under the same conditions and of the same quality as it provides for its own services, or those of its subsidiaries or partners.''
That is a clear definition and a fairly specific requirement. Given that it is set out in those terms, it would be helpful if we could include a reference to the directive and the language in it in the Bill. That is the purpose of amendment No. 200.