Clause 68 - Initial enforcement orders: completed mergers

Enterprise Bill – in a Public Bill Committee at 10:30 am on 1 May 2002.

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Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne 10:30, 1 May 2002

I beg to move amendment No. 273, in page 49, line 41, after `created', insert—

`(aa) the provisions of section 20(1)(b) have been satisfied;'.

There is an echo of our previous debates on the dominance test, of which the Opposition are still in favour. We should like subsection (3) to be tied in with the amendments we tabled on the dominance test, which would have allowed the OFT to act if it had grounds to suspect that a dominant position would be created or enhanced and competition would be significantly reduced. The Government have set their face against the dominance test as a matter of principle—I will not pursue it in detail now as we debated it as a matter of principle—but we still think that there should be an additional requirement in the provision, and are open to argument from the Minister as to how our concerns, and those of the CBI, might be met in a different way. I hope that that helps to illustrate the concerns that lie behind what is, after all, a probing amendment.

Photo of Douglas Alexander Douglas Alexander Minister of State (e-Commerce & Competitiveness)

Perhaps I can help the hon. Gentleman by clarifying our response to both the CBI and the probing amendment. The amendment would prevent the OFT from introducing an initial order unless it has a reasonable suspicion that the creation of the relevant merger situation has resulted, or may be expected to result, in a substantial lessening of competition. In practice, however, if the OFT were to hear about a merger that clearly has no competition implications—for example, two businesses in very different markets—it would be highly unlikely to make an order preventing further integration of the merged entity. The OFT will act only if it is concerned about the merger's likely impact on competition. I am confident that the additional criterion required by the amendment will be applied automatically in practice.

We have not formally introduced such a requirement in the Bill because, not least, we foresee difficulties in drafting it in a workable way. The problem is that it is difficult not to set the test too high and thereby render the clause unworkable in practice. To make a reference, the OFT must believe that a relevant merger has resulted or may result in a substantial lessening of competition in any market or

 

markets. Any test would have to be sufficiently lower than that belief in order to allow the OFT to act while it establishes whether there is a case for a full reference. I assure the Committee that we have considered that carefully and we are not convinced that we can create a workable formula.

Photo of Nigel Waterson Nigel Waterson Conservative, Eastbourne

I am pleased to hear from the Minister that the matter has at least occurred to the Department and been considered. I do not want to detain the Committee unduly, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 68 ordered to stand part of the Bill.

Clause 69 ordered to stand part of the Bill.