Clause 100 - Civil liability for breach of conditions
Communications Bill
5:00 pm
Mr John Whittingdale (Maldon and East Chelmsford, Conservative)
I beg to move amendment No. 112, in
clause 100, page 94, line 14, leave out paragraph (a).
Since this is my first contribution, rather than an intervention, in this sitting may I join in wishing the Committee a happy new year and apologise for my slightly late arrival? The explanation relates to the point that you just made, Mr. Gale. I set my autopilot and found myself in the middle of the Committee considering the Hunting Bill, before beating a hasty retreat to the calmer waters of the Communications Bill.
Clause 100, on the face of it, appears to be relatively simple. It addresses civil liability and makes compliance with conditions and with enforcement notification a duty owed to, and enforceable by, any person who has suffered a loss as a result of a breach of conditions. Under the Telecommunications Act 1984, it is possible for a person to sue for breach of an enforcement order from Oftel. However, the clause goes further and gives individuals the power to sue for breaches of conditions. Many in the industry believe strongly that it is inappropriate for people to have recourse to the courts for breaches of conditions. The amendment would remove the provision under which compliance with a condition, rather than an enforcement order, is a duty owed to third parties.
Such a case that might occur is if a person believes that he has been unfairly or unduly discriminated against. It is a primary job of the regulator to determine that; it is not, in most cases, a matter of law that courts should judge. An obvious question to ask is what is the point of having a regulator if somebody can have recourse to the courts to decide whether a breach has occurred?
Other obligations under the conditions of authorisation might relate to highly technical issues such as price regulation, whether economic tests have been met, or third party rights. If we allow all those to be grounds for recourse to the courts, there is a real danger that we will create a litigious environment and undermine Ofcom's authority to enforce the conditions that it lays down. There is no requirement under EU directives to allow such third-party rights.
I think that the amendment is the only one that we have considered to date that has brought together all providers in the sector: British Telecom, which is the biggest provider; the alternative providers that are in competition with BT; and the mobile operators that can be considered to be direct competitors. All providers have expressed considerable concerns about the extension of the right to allow people to sue providers for potential breach of conditions.
Several further points have been made by the industry. They are valid and I hope that the Minister will at least consider them. First, conditions in a telecommunications authorisation are quintessentially a matter of public policy. Policy considerations, such as the duty to act transparently and the principle of proportionality, should be applied when conditions are enforced. A third party that enforces them through a court will not be able to do that. Conditions in authorisation are designed to be of general benefit rather than to give rise to what could be called quasi-contractual duties that are enforceable by individuals. That is another reason why it is much more
appropriate that those highly specific rules should be left to a public body.
Most of the alternative providers operate in a market that is either highly competitive, or in which they themselves are sometimes the victims of anti-competitive behaviour. It is unclear why they should be exposed to a much greater range of civil liabilities than are other individuals and companies that are going about their business. That is particularly true in the current financial environment; many such providers are operating under very tight margins, and the extra legal liabilities that the clause would impose on them open up the real possibility that telecoms and internet providers will find it more difficult to obtain funding to operate in the UK.
Where it is felt that special consumer protection measures are needed, they are covered by the horizontal regimes—for example, through the consumer credit regime. Quite often, the customers of business-focused telecommunications providers are larger than the providers themselves; therefore they, too, do not need the special legal privileges that the clause will provide.
There is a fear that the right to take court action could be used by a telecoms operator who does not like Ofcom's policy stance, and that it could therefore result in the second-guessing of the regulator's policy, which is a bad idea in principle. Furthermore, it is not always clear what the conditions of authorisation really mean. They are not designed to give legal certainty in the way that, for example, a legal contract would. It is part of Oftel's role—and it will become part of Ofcom's role—to decide those questions. For example, the word ''reasonable'' is used more than 20 times in the new draft conditions of authorisation that Oftel is proposing should have effect under the new regime. It will not always be possible for providers of communications services to know when they are complying with their obligations—or, in other words, to define whether they are acting reasonably.
For all those reasons, there is real concern that the effect of the clause will be to second-guess the job of the regulator and to create double jeopardy for providers. The provision is not required under the terms of the new directive and it is strongly felt to be unnecessary and potentially detrimental to the development of communications services in this country. The entire industry is united on the issue. I urge the Minister to think carefully about whether he considers the provision to be necessary, or whether he might, on second thoughts, accept the merits of our amendment to remove it.