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Column Number: 949
Standing Committee E
Tuesday 4 February 2003
(Afternoon)
[Mr. Peter Atkinson in the Chair]
Clause 361
Newspaper public interest considerations
Question proposed [this day], That the clause stand part of the Bill.
2.30 pm
Question again proposed.
The Minister for E-Commerce and Competitiveness (Mr. Stephen Timms): We have had an interesting discussion on the clause. I listened carefully to the case made by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), who clarified his point helpfully. I think that he was not arguing against the inclusion of clause 461, but rather speaking as though there were an amendment that would delete new subsection (2A) to section 58 of the Enterprise Act 2002 and leave in place only new subsection (2B), the plurality part of the provision. He accepted that it was appropriate to have a special regime for newspapers, but explained why he was not happy with the one proposed in the Bill. He went on to suggest that the wording in subsections (2A) and (2B) would open the door to a number of undesirable consequences.
First, I should like to explain where the wording of subsections (2A) and (2B) comes from. Subsection (2A) makes reference to two matters that should be taken account of, the ''accurate presentation of news'' and ''free expression of opinion''. Those have been on the statute book for a very long time. I took the opportunity of the lunch break to look through my well-thumbed copy of the Fair Trading Act 1973. Section 59(3) says that
''the Commission shall report to the Secretary of State whether the transfer in question may be expected to operate against the public interest, taking into account all matters which appear in the circumstances to be relevant and, in particular, the need for accurate presentation of news and free expression of opinion.''
Those are exactly the words used in subsection (2A). In fact, the 1973 wording is, as the Committee will have noticed, a good deal wider, because it refers to taking into account
''all matters which appear in the circumstances to be relevant''.
In other words, anything may be taken into account, but particularly the need for the two points in subsection (2A).
Subsection (2B) on the test of plurality, for which the hon. Member for Maldon and East Chelmsford gave support, has not appeared in legislation before, although the principle can be inferred from the outcome of cases that have been examined. It will be clear to the Committee that the new form of wording in the clause is significantly narrower than in the old. We are not, as the hon. Gentleman argued, opening the door to some new and dangerous developments.
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Actually, the phrasing of the clause is significantly tighter and narrower than was the case under the Fair Trading Act 1973, which has, in the view of most people, operated very well during past 30 years.
It would be possible to have, as the hon. Gentleman argued that we should, only a plurality test, in other words we could remove the historic wording of subsection (2A) and leave subsection (2B). The Committee should reflect for moment on whether that would be a good idea.
The hon. Member for South Cambridgeshire (Mr. Lansley) referred to the celebrated 1990 case involving David Sullivan and the Bristol Evening Post. The Monopolies and Mergers Commission concluded that the evidence of David Sullivan's connection with the Daily Star and his holdings in the Daily Sport and the Sunday Sport, to which we referred this morning, suggested that he would seek to influence editorial policy, the character and the content of the newspapers in a manner that would harm both the accurate presentation of news and the free expression of opinion. That acquisition, or merger, was stopped because reference was made to the two criteria in subsection (2A). It is hard to determine whether such an acquisition would have been stopped if reference had been made only to the plurality test in that case. One might say that the fact that Mr. Sullivan was unable to acquire the Bristol Evening Post was the result of an unfortunate and undesirable decision. Most people, however, would agree that that decision was correct in the circumstances and should such a situation arise again, we would surely wish to be able to come to the same conclusion as the Monopolies and Mergers Commission.
I strongly resist the hon. Gentleman's suggestion that the historic form of words in subsection (2A) should be removed and that we should instead retain the plurality test in subsection (2B). One reason for maintaining the form of words was to achieve continuity between the old and new, the advantage being that businesses would have the certainty that they could rely on the existing body of precedent when contemplating future mergers.
Mr. Andrew Lansley (South Cambridgeshire): I would not want the Minister to engage in too much speculation on any individual case. However, would he agree with me and with my hon. Friend the Member for Maldon and East Chelmsford that subsection (2A) should not necessarily be removed, but that it would be interesting to consider how it would be applied?
Would the Minister agree that there is a substantial difference between the proposed new regime and the old? Under the old regime, those who were not already newspaper proprietors were not liable to be caught by the special newspaper merger regime. Let us consider, without discussing the merits of the case, what might have happened if the Government, or Ministers, had chosen not to apply a wider public interest test in relation to Mr. Desmond's acquisition of Express Newspapers. If a case akin to Mr. Sullivan's were to occur in future and the ''Mr. Sullivan'' in question were not a newspaper proprietor, he would be caught. Indeed, it has been demonstrated that in the recent past he would not have been caught.
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Mr. Timms: The hon. Gentleman is absolutely right. From the point of view of the newspaper industry that is one of the benefits of the new regime. The industry has felt rather disadvantaged compared with people coming in from outside and in that respect the provision is a helpful development.
I did not get the sense from what the hon. Member for Maldon and East Chelmsford said that it was as the hon. Gentleman had suggested. I thought that the hon. Gentleman was concerned about references to the accurate presentation of news and free expression of opinion on the grounds that that would open the door to undesirable influence over the press. If that was not the case, I will gladly give way.
Mr. Whittingdale: The Minister is not quite reflecting what I said. I was not suggesting that we should do away with subsection (2A) and keep subsection (2B). If that had been my view, we would have tabled an amendment to do that. I was suggesting that when we allow politicians to begin to make judgments on certain questions, such as whether or not the presentation of news is accurate, that inevitably leads to subjective judgments. There is a danger that politics can creep in. I fully accept that the wording has existed for a long time, but that does not mean that the danger is not there. It therefore becomes all the more important that we build in safeguards. That is a precursor to the debate that we will have about the involvement of Ofcom and others when reaching decisions.
Mr. Timms: I am grateful to the hon. Gentleman for that clarification. It is helpful that he made it clear that he is content for subsection (2A) to remain in the Bill because we can all agree about that. Perhaps I should sit down now because that would be a helpful conclusion to our debate.
The hon. Gentleman said that the criteria have been in legislation for 30 years. The Committee would want to know the grounds for any proposed change. Most people will take the view that a regime based mainly on those two criteria, but also on a wider test, has worked well and will look forward to it doing so in the future.
Question put and agreed to.
Clause 361 ordered to stand part of the Bill.
Clause 362
Adaptation of role of OFT in initial investigations and reports
Mr. Andrew Robathan (Blaby): I beg to move amendment No. 261, in
clause 362, page 311, line 23, leave out from '(2B)' to end of line 25.
The amendment is fairly straightforward. I want the Minister to explain the thinking behind the change that clause 362 would make to section 44 of the Enterprise Act 2002. Clause 362(3) says:
'' 'newspaper public interest consideration' means any consideration which . . . in the opinion of the Secretary of State, is concerned with newspapers and ought to be specified in section 58''
My amendment would remove that wide-ranging, draconian power.
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Section 44 of the Enterprise Act provides for an Office of Fair Trading report when the Secretary of State has issued a public interest intervention notice on a merger. If the merger is a newspaper merger, the OFT's functions are to be carried out by Ofcom. New subsection (8) says that ''newspaper public interest consideration'' shall be the considerations
''specified in section 58(2A) or (2B)''.
They are the considerations of accurate presentation of news, free expression of opinion and plurality of views. Additionally, new subsection (8) says that a ''newspaper public interest consideration'' may be a consideration that
''in the opinion of the Secretary of State, is concerned with newspapers and ought to be specified in section 58.''
That mirrors the provision in section 42(3) of the Enterprise Act, which states:
''a public interest consideration . . . is specified in section 58 or . . . in the opinion of the Secretary of State, ought to be so specified.''
That wide power seems acceptable in the context of the national interest, which is presumably what it is supposed to cater for, except when considering a newspaper case. However, the power to turn an ordinary commercial merger into a public interest case, which could be prohibited although there were no competition issues, without any consideration of public interest and without amendment to section 58, seems alarmingly wide, and I hope that the Minister will justify it. If the consideration had to be in section 58, I understand that any new consideration would have to be scrutinised by Parliament. However, the new power could be exercised to stop a merger without anything coming before Parliament.
It is also objectionable that the extension is not linked to the public interest, as the section 42(3) model is. The Secretary of State has only to think that there is a consideration linked to newspapers before we are suddenly in section 58 territory where competition is irrelevant and whatever the Secretary of State says goes. If that is wrong, I hope that the Minister will give us an explanation. I am not entirely clear about whether advice for the Secretary of State will come from the OFT or Ofcom. Which would be better in such a case?
If the provision remains in the Bill, newspaper companies will have no means of knowing whether a proposed merger should be looked at in the light of the known factors in the Enterprise Act because it will happen after the Bill has been passed into law or in the light of unknown factors that will not come out until the merger process is some way advanced. That is an unfair burden to put on commercial companies, and I ask the Government to explain what is intended, and why it is thought necessary to have such a wide power for newspaper mergers. Unless the Government come up with a good explanation and can prove that the draconian powers are needed, they should withdraw new clause 44(8)(b).
2.45 pm
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