Clause 59 - Overseas information disclosure

National Security and Investment Bill – in a Public Bill Committee at 12:15 pm on 10th December 2020.

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Question proposed, That the clause stand part of the Bill.

Photo of Nadhim Zahawi Nadhim Zahawi Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), The Parliamentary Under-Secretary for Health and Social Care

Clause 59 removes a restriction on the ability of the Competition and Markets Authority to co-operate with its international partners on merger cases. At the end of the transition period, the UK will no longer be part of the European Union’s competition system. The CMA will become responsible for investigating the effects on competition of larger international mergers, which were previously investigated by the European Commission. In a globalised economy, effective cross-border enforcement of competition law, which protects UK markets and consumers, relies increasingly on close international co-operation. The ability to disclose confidential information to assist an overseas authority with this enforcement activity, including in circumstances where parties have not provided their consent for the information to be disclosed, is a crucial ingredient of strong co-operation.

Moreover, the willingness of an overseas authority to disclose confidential information will often depend on whether the receiving authority can reciprocate. Any restrictions on the CMA’s ability to disclose such information could therefore inhibit the effectiveness of its international co-operation. The overseas disclosure gateway, which is set out in section 243 of the Enterprise Act 2002, provides an important mechanism for the CMA to disclose information to its overseas counterparts when consent has not been provided by relevant parties. The gateway permits disclosure for the purpose of helping an overseas authority’s enforcement activities.

However, the CMA is currently unable to use the overseas disclosure gateway to disclose information that comes to it in connection with a merger investigation. This means that the CMA is restricted from sharing certain information with its overseas counterparts that might be crucial to their investigation of a merger. This restriction presents two challenges for the UK’s competition authorities. First, it weakens the control of mergers with an international dimension that might adversely affect UK markets and consumers. Secondly, it inhibits the CMA’s ability to receive information that might be critical to its own merger investigations, because it has no ability to reciprocate. That, in turn, could also weaken its protection of UK markets and consumers. Clause 59 rectifies this by removing the restriction in the overseas disclosure gateway and allowing the CMA to use the gateway to disclose merger information to overseas public authorities.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (Digital, Culture, Media and Sport)

I thank the Minister for setting out clause 59, because I had thought that it was inconsequential. I listened to what he said carefully, as I always do, but I did not hear him use the term “national security” once. The function of the Bill is national security. Although we have not defined it, we have debated that the Bill should be narrowly circumscribed to concerns of national security. Having listened carefully to the Minister, I get the impression that the clause has been added, and for very good reasons, to facilitate and enable the CMA’s competition and mergers powers.

We are putting the national security interest relating to mergers and acquisitions firmly here in the Bill, so the CMA is no longer concerned with and involved in that, yet this clause facilitates the CMA’s sharing of information with overseas public authorities. That information, by definition, will not be with regard to national security, because national security investigations will take place under the powers in the Bill that lie with the Secretary of State. I am somewhat confused as to what this clause is doing in the Bill. Would the Minister like to intervene to illuminate and clarify that the clause has something to do with national security?

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (Digital, Culture, Media and Sport)

I find it somewhat worrying, given our debates about keeping the Bill focused narrowly on national security, that the Government have added a clause to help the CMA in its functions. My hon. Friends and I have been thinking of a number of ways in which we would like to help the CMA in its functions and to improve the Enterprise Act, but we have been resolute in focusing on national security, because that is the matter before the Committee. Yet it seems that the clause, although very well meaning, is designed for an entirely different function.

You are not stopping the debate, Mr Twigg, so I presume it is in order to debate the functions of the CMA in relation to competitions and mergers generally, rather than to national security specifically.

Photo of Nadhim Zahawi Nadhim Zahawi Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), The Parliamentary Under-Secretary for Health and Social Care

It is worth respectfully reminding the hon. Lady and the Committee that this is a separate topic in the Bill that is unrelated to the NSI regime, as set out in the explanatory notes.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (Digital, Culture, Media and Sport)

I have the explanatory notes, and they do not state that the clause deals with a separate topic. Paragraph 173 states:

“Clause 59 amends the overseas disclosure gateway in section 243 of the Enterprise Act 2002, removing the restriction on UK public authorities disclosing information that comes to them in connection with a merger investigation under that gateway.”

The explanatory notes do not state that the functions of the CMA are separate from national security as clearly as the Minister just has. I do not want to detain the Committee, but I register the Labour party’s concern—

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Deputy Spokesperson (Treasury - Chief Secretary)

Does the hon. Lady share my understanding that the definitive statement on what the Bill is about is the long title of the Bill, not the explanatory notes? Does she agree that the long title makes no mention whatsoever of helping the CMA in the general exercise of its purpose?

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (Digital, Culture, Media and Sport)

I am grateful to the hon. Gentleman for his intervention, because he is absolutely right that, rather than having a debate on the contents of the explanatory notes, line-by-line scrutiny of the Bill should focus on what the Bill says, and it does not mention general improvements to our competition and mergers regime, much as we feel that improvements could be made. Although we will not oppose the clause, I register our disappointment that we were not better informed of the Bill’s additional scope.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (Digital, Culture, Media and Sport)

The Minister’s argument is to look at page 4 of the explanatory notes, but it does not say that the CMA’s functions are separate from national security.

Photo of Michael Tomlinson Michael Tomlinson Government Whip

“Interaction with” the CMA.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (Digital, Culture, Media and Sport)

It says “interaction with” the CMA. but it does not say that that is separate from national security. In this afternoon’s sitting, when we discuss the additions that we would like to the remit and definition of “national security”, I hope that the Minister will recognise that the Bill is broader than national security, as was simply understood from his previous responses.

Question put and agreed to.

Clause 59 accordingly ordered to stand part of the Bill.