Clause 93 - Amount of penalty under s. 92
Communications Bill
11:15 am
Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)
As the hon. Member for South Cambridgeshire said, it is likely that Ofcom will need to decide whether it is more appropriate to use the Competition Act powers or the sectoral regime to deal with a particular issue. The Competition Act sets a maximum turnover threshold of 10 per cent. The hon. Member for Maldon and East Chelmsford suggested that there was an inconsistency. The key comparison is with the Competition Act regime, not with what the Bill says about broadcasting, and the figure of 10 per cent. is consistent with the Competition Act.
As for licences under the Broadcasting Act 1996 whereby Ofcom will enforce a lower limit of up to 5 per cent. of qualifying revenue, the broadcasting regime is different in many respects from that for networks and
services. It serves a different purpose. It is not so closely focused on economic regulation, but includes a wide range of other potentially more subjective matters. It uses various methods and sanctions, including licensing, which the Bill will abolish for networks and services. There is not a material inconsistency in having different turnover percentages in the two different parts of the Bill.
As for how the penalties will be calculated, the turnover to be taken into account in that context is not the whole turnover of the company or the group, but only that which is relevant in respect of time and business activity. It could be a small part of the total. The hon. Member for Maldon and East Chelmsford pressed me to go further in setting out how the penalties will be calculated. When calculating penalties, Ofcom will be required to operate according to rules made by the Secretary of State, which will be subject to approval by resolution of both Houses. That will ensure that a fair and sensible basis is adopted after due consideration by those in the industry with an interest and Members of both Houses.
Subsections (1) and (2) require Ofcom to ensure that, in each case in which it chooses to impose penalties, the penalties are appropriate and proportionate to the contravention concerned. I know that the hon. Member for Maldon and East Chelmsford would like me to go further, but that is as far as I want to go today in spelling out the way in which the regime will operate.