Part of Communications Bill – in a Public Bill Committee at 9:45 am on 28 January 2003.
Kim Howells
Parliamentary Under-Secretary, Department for Culture, Media & Sport
9:45,
28 January 2003
I have to admit that I share with the hon. Member for South Cambridgeshire a kind of perverse enjoyment of matters relating to competition law and its implications for markets including broadcasting and telecommunications. The hon. Member for Maldon and East Chelmsford should not underrate his ability to give us the gospel according to BSkyB—he did a magnificent job. However, I do not agree with the amendments, and I shall explain why.
The effect of amendments Nos. 618 and 625 would be to give primacy to ofcom's duty under Clause 3(1)(a) to promote the interests of consumers where
appropriate by promoting competition. Amendment No. 650 seeks a similar outcome, but would also add Ofcom's duty under clause 3(1)(c)
''to secure the availability throughout the United Kingdom of a wide range of television and radio services which (taken as a whole) are both of high quality and calculated to appeal to a variety of tastes and interests.''
The amendments would widen the scope of the decisions that would be subject to the right of appeal on their merits to the Competition Appeals Tribunal. The effect would be unduly to limit Ofcom's statutory discretion in the application of its general duties under clause 3 and those functions that, rightly, should have a route of appeal to judicial review.
Clause 3 sets out an overall duty on Ofcom to further the interests of consumers in relevant markets, where appropriate by promoting competition. As a general duty, together with the other duties contained in clause 3, it applies to all of Ofcom's functions, including those set out in the clauses relating to its Broadcasting Act competition powers. The same is true of Ofcom's general duty to secure the availability of a wide range of television and radio services. Ofcom is required to resolve any conflict between its clause 3 duties in such manner as it thinks fit.
We have provided for those of Ofcom's decisions that are made for the purpose of ensuring fair and effective competition to be subject to a right of appeal on the merits to the CAT. Other decisions that Ofcom makes for policy reasons may have an economic effect, but that does not mean that they should be subject to a similar right of appeal. It is important that Ofcom, a specialist broadcasting regulator, should retain its discretion in that respect. We are satisfied that judicial review of those of Ofcom's decisions that do not relate to competition is entirely appropriate.
Amendment No. 645 would limit Ofcom's ability to determine the most appropriate route for intervening in a competition matter. The ''where appropriate'' test, in the current wording of clause 305(2), is in line with the concurrent powers of all other regulators in competition matters. That formulation acknowledges that regulators of a range of sectors, not only of communications, are best placed to determine whether to use general competition law or sector-specific competition powers. That is entirely the correct approach. Broadcasters can apply for judicial review if they consider that Ofcom has wrongly used its sector-specific powers when the Competition Act powers would have been the more appropriate route.
The hon. Member for Maldon and East Chelmsford raised the specific matter of ensuring parity and equity between platforms. He was right to say that cable packages do not require a licence under part 3, but nor does a packager of satellite channels. However, a cable packager that provided its own channels as well as or instead of simply distributing channels provided by others would need a licence for those channels. In that respect, therefore, cable and satellite are treated in the same way. It depends on the nature of the business and especially on whether the packager provides its own channels.
It is true, as the hon. Gentleman said, that no regulator has used both sets of powers simultaneously.
There is always a choice of route. He mentioned the Oftel statement of 1 July 2002, which stated:
''In some cases it may be appropriate to use sectoral powers. However, in the Majority of cases that could potentially be caught by the Competition Act, but which do not arise from interconnection disputes, the Director General now expects to investigate, and where appropriate take enforcement action, under the Competition Act rather than under the sectoral regime. The proportion of cases dealt with under the Competition Act will increase.''
The hon. Gentleman could have quoted that statement. Oftel is not saying that it will not use sectoral powers—on the contrary. It went on to state:
''Oftel may decide at any stage in an investigation that it is more appropriate to carry out the investigation under the sectoral regime rather than under the Competition Act.''
It is clear that the regulators should, from time to time, have access to the necessary powers. As I have already outlined, there is good reason for that.
Those who argue against clause 304 believe that the Competition Act is sufficient to protect against anti-competitive behaviour in broadcasting. That is a cause of fundamental disagreement. Under the prohibitions in the Competition Act—those prohibitions on which Ofcom would largely have to rely were its sector-specific powers to be removed—Intervention would be allowed only if there was an abuse of a dominant position, or if agreements existed that appreciably prevented, restricted or distorted competition. We are concerned about cases in which markets should be opened up to greater competition but where the legal tests required by the Competition Act are not met. That is when the anorak expertise of the hon. Member for South Cambridgeshire becomes important. I shall attempt to explain why.
The sector-specific powers contained in the Bill can be used to supplement those contained in the Competition Act. The Competition Act cannot be applied until the regulator has reason to believe that an enterprise has harmed the market by acting anti-competitively, or that the market has been harmed by existing agreements. As such, there are situations in which the use of sector-specific powers may be more effective, especially where advance action or action in a short time frame is required to ensure effective competition.
The opponents of that policy want us to leave the broadcasting sector to be determined by the Competition Act, which, I am sure the hon. Member for Maldon and East Chelmsford will agree, has very little broadcasting case law behind it. The Act is still relatively new. Our policy is to carry over the safeguards that the ITC and the Radio Authority have had to guarantee that Ofcom has that same flexibility to ensure fair and effective competition as the other broadcasting regulators had pre-Ofcom.
We have made changes to ensure that Ofcom cannot use those powers in a way that unnecessarily burdens industry. The policy's opponents might have lost sight of the fact that the Bill will ensure that Ofcom must not use its sector-specific competition powers where it considers that the more appropriate
route would be under the Competition Act. That is important. Any decision that Ofcom makes for a competition purpose will have a route of appeal to the CAT. Moreover, Ofcom must periodically review any of the prohibitions that it issues under its sector-specific powers to ensure that unnecessary burdens on the industry are removed. Given those safeguards, I hope that the hon. Member for Maldon and East Chelmsford will seek leave to withdraw his amendments.
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A parliamentary bill is divided into sections called clauses.
Printed in the margin next to each clause is a brief explanatory `side-note' giving details of what the effect of the clause will be.
During the committee stage of a bill, MPs examine these clauses in detail and may introduce new clauses of their own or table amendments to the existing clauses.
When a bill becomes an Act of Parliament, clauses become known as sections.
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Ofcom is the independent regulator and competition authority for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services.
Ofcom Web Site http://www.ofcom.org.uk