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Digital Economy Bill [HL]

My Lords, the amendment moved by my noble friend Lord Gordon proposes that Ofcom should be given a whole new set of powers, responsibilities and duties, equivalent to all those that the Office of Fair Trading has in relation to merger control but applicable only in relation to mergers involving enterprises engaged in broadcasting. There has been some acknowledgement that this is not necessarily the perfect solution. This proposal appears to stem from a belief that Ofcom, as a sector regulator, would be better placed than the OFT to identify such mergers and, where appropriate, undertake the initial phase 1 consideration of these. The role currently performed by the OFT for all UK mergers involves deciding whether or not to refer a merger to the Competition Commission to undertake a full phase 2 investigation into the competition effects of the merger. It must do this if it considers that a merger may be expected to result in a substantial lessening of competition. We are satisfied that the OFT is entirely capable of carrying out this function for all mergers, including those involving broadcasting enterprises. It has built up substantial expertise and experience in assessing whether or not a particular merger might result in a substantial lessening of competition and can draw on expert teams of economists and lawyers to help it reach such decisions. Ofcom does not currently have any such capability. It is not clear what purpose would be served by requiring it to attain such capability simply to duplicate a role already performed effectively by the OFT. This would appear unnecessary and would introduce wasteful duplication and undue complexity into the merger regime. It may be noted that the number of mergers involving enterprises engaged in broadcasting that may actually occur is likely to be very small and will represent only a tiny fraction of the mergers taking place in the economy. The Government recently gave careful consideration to the merits of amending the role played by Ofcom in the merger control regime as it relates to mergers involving media enterprises. We decided no change to the statutory regime was appropriate. However, as was announced in the Digital Britain report, it was decided that the OFT would include in its updated guidance on merger control a specific commitment to consult Ofcom whenever it considers any merger involving enterprises engaged in newspaper publishing and/or commercial radio or television broadcasting. We are satisfied that this effectively ensures that the particular knowledge and expertise Ofcom possesses will be drawn on and properly taken into account whenever the OFT considers and takes decisions on media mergers, while avoiding burdening Ofcom with a whole new set of powers and all the duties, burdens and costs that would go with them. I listened carefully to the points made by my noble friend Lord Gordon and the noble Lord, Lord De Mauley, when he himself recognised that this is not the right vehicle. Moving everything to Ofcom would not necessarily solve the problem and there may be a need to update competition rules. The noble Lord, Lord Howard, came to a similar conclusion as a result of the analysis of the Kangaroo case. I thank my noble friend Lord Gordon for expressing what is a genuine concern. I hope he recognises, as I think a number of noble Lords do, that this is not necessarily the right vehicle. I do not know what I can promise to do at this juncture to resolve what I am sure noble Lords will recognise is a very complex area of legislation, but I will reflect on the points made. In the mean time, I hope that the noble Lord will withdraw the amendment.