Enterprise and Regulatory Reform Bill

Lord Stevenson of Balmacara Excerpts

Tuesday 18th December 2012 Grand Committee

[Lord Marland]

Thank you, Deputy Chairman. This is a government amendment. First, I would like to put on record my thanks to the officials. Not only have we had a confetti of amendments to deal with on this Bill but, late last night, they were all changed into different groupings. That has meant a huge amount of work for them but they have done it with good cheer. It has been difficult not only for them but for the rest of us. However, we shall press on as hard as we can. We have only 23 amendments to get through today so let us hope that we can do it. I am sure that people want to go home tonight for Christmas.

These government amendments are minor amendments. They are quite technical, which rules me out of the equation pretty early on, but they are consistent with what is intended. I hope that they will find favour with the Opposition and other Peers. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, we have very few comments to make on the substantive point in the amendments before us. We accept the drafting; it is very appropriate. On Amendment 25A, which is included in the group but was not specifically spoken to by the noble Lord, I simply note that this matter will come up later on in discussions. Although I have no comments to make at this stage, that does not mean that we will not wish to raise one or two points later. I agree that the rest of the amendments are technical.

I apologise for the slightly odd grouping of Amendment 26AD. It is not in my name but I shall speak to it—which will confuse matters even further.

[Lord Marland]

Is the noble Baroness, Lady Hayter, already on her Christmas holiday?

[Lord Stevenson of Balmacara]

She certainly is not. She is working hard on other matters elsewhere, to which I will need to repair. That is why I asked if we could group the amendments rather oddly, although I think they work in the scheme of things. I shall speak to them briefly at this point.

The point of concurrency, which is raised in these substantive amendments, raises an issue in relation to the way that the new architecture which has been proposed will operate. Clearly we take a view, which I think is common around your Lordships’ House, that functioning competition and certainty are the two single most important conditions that markets require to sustain investment and drive innovation. Those conditions are best aided by clear, robust and agile competition regimes. That condition is most required in fast-moving sectors, such as telecommunications, where the market is in a state of constant, relentless evolution.

The recent experience of competition oversight of one section of the telecommunications market—the pay TV market—highlights two critical failings that the Bill must address: the slow-moving pace of investigations and the confusion that might be caused by differing outcomes between sectoral and competition authorities. Although it is right that the CMA should be the ultimate protector of the basic principles of competition law, surely it cannot do so effectively in isolation from market developments and, in particular, from advice that may be available within the sectoral regulators.

In my remarks I want to refer to recent investigations of the pay TV market in considering questions of pace and lack of collaboration. I recognise that some of my remarks will delve deep into regulatory matters and it may be appropriate for the Minister, even although he has taken an extended Christmas break, to respond to me in writing if he wishes to go into some of the points that I am going to make.

On slow pace, UK consumers have enjoyed more than a decade and a half of investigation into competition in the content/pay TV market by Ofcom, the Competition Commission, the Office of Fair Trading and the European Commission. Inevitably, much effort has been duplicated. Nevertheless issues in the market have been identified and yet no lasting remedies have been proposed to tackle a consumer harm that the Competition Commission had initially estimated cost consumers £50 million to £60 million per year in inflated prices for premium content.

Inconsistency, or lack of collaboration, is the other point I want to make. In August 2012, just a week apart, both the Competition Commission and the Competition Appeal Tribunal reached completely inconsistent and contradictory conclusions on two aspects of the state of the pay TV market. On 2 August 2012, the Competition Commission concluded that Sky has market power and that competition in the pay TV retail market is “ineffective”. On 8 August 2012, the Competition Appeals Tribunal issued a completely different view to both the Competition Commission and previous Ofcom statements, concluding that there were no substantive competitive concerns regarding Sky’s supply of premium sports channels.

Surely what we need is for the different layers of a regulatory regime to work together in the best interests of the consumer. This amendment seeks to ensure that the CMA acts in co-operation with sectoral regulators when exercising its competition powers to share information; undertake joint working, investigation and, if needed, remedies; and to keep the performance of each sectoral regulator against its competition powers under periodic review.

The CMA should provide the central core of expertise in these cases. It should have primary responsibility for conducting the full competition investigation and ultimately should take the decision on all aspects in competition cases. A reformed and strengthened competition authority acting within the parameters of competition law is best placed to objectively apply competition principles consistently across all sectors.

However, it cannot effectively judge the competitive conditions of a given market in isolation from the sectoral experts. So we believe that the sectoral regulator is best placed to make the initial assessment as to whether competition concerns may potentially arise in a given scenario. In recent history—certainly where the pay TV market is concerned—that stage of the process has taken far too long.

In addition, there should be a renewed emphasis placed on sectoral regulators to reach a speedy judgment on whether referral to the CMA for full market investigation is indeed warranted. But the role of any sectoral regulator should not stop at speedy referral. Rather, it is vital that it also provides a supportive and advisory role to the CMA, imparting knowledge and experience in the sector which the CMA would take into account as appropriate, and where appropriate taking a central role in considering any remedies that might be required.

[Lord Marland]

I apologise; I should have dealt with this amendment in the same grouping. Clause 45, as was rightly said, will bolster concurrency by giving the CMA stronger powers to co-ordinate Competition Act enforcement work and giving regulators explicit duties to consider using the Competition Act. Amendment 26AD is intended to add to these arrangements to make sector regulators make an early decision on whether to refer a matter to the CMA for an in-depth investigation. It would also allow the regulators to take exclusive responsibility themselves for remedying a problem in a market.

I do not believe that this amendment is necessary. First, it is the Government’s intention that new timeframes for market processes will apply to sector regulators. This will be effected by subordinate legislation later in the year under this Bill. Therefore we recognise the need for a timeframe—but we will get to that, as I said, with subordinate legislation.

Secondly, there are existing provisions in the relevant sector legislation which prevent duplicate market investigations by the relevant regulators and the CMA. Furthermore, the CMA in looking at a market should be able to consider whether action by a regulator is impeding competition. Amendment 26AD therefore is not appropriate and I would ask the noble Lord to withdraw it.