Enterprise Bill

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Mr. Waterson: We agree with the wisdom of repealing part 2 of the 1973 Act. The issue, which we shall consider in more detail later, is what to replace it with. We appreciate that some of the powers have fallen into disuse and that the committee seems to have fallen off its perch, as no one has seen hide nor hair of it since 1983. Clearly, something had to be put in its place, but there is a great debate to be had–perhaps not now–about where clause 202 takes us.

As the Minister will be aware, a campaign has recently been started by the National Consumer Council and various other leading consumer bodies, pushing for the duty not to trade unfairly. I appreciate that there are many arguments to be had about the scope of that, its practicality and its impact on other areas of English law. I do not want to open up such a debate today; we shall say more in due course. However, it is important to put down a marker about the fact that there is significant disappointment among consumer bodies that, although we are getting rid of part 2 of the Fair Trading Act, its proposed replacement is not man enough to do the job–if that is not a politically incorrect way of putting it.

As I said at the start of our proceedings in

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Committee–it feels like a long time ago although it was only this morning–the opportunity to reform consumer legislation seems to come round on a 30-year cycle. Let us do our best to grab the opportunity in both hands. We shall not vote against clause 10 for the reasons that I have mentioned. However, I should not like the Minister to take that as approval–there is a great deal of debate to be had.

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Mr. Harry Barnes (North-East Derbyshire): I am also interested in the question of where powers go. I raise it now because of the points that have been made by the hon. Member for Eastbourne. It would be helpful to discover whether the measures have fallen off their perch altogether, whether they are covered by a complex clause later in the Bill, or whether they have been hived off to the new Office of Fair Trading. That is a further marker for the future.

Miss Johnson: I acknowledge the interest in the issues raised by the repeal of part 2 of the Fair Trading Act. We shall have a fuller debate later in the Committee's proceedings.

Question put and agreed to.

Clause 10 ordered to stand part of the Bill.

Clause 11

Super-complaints to the OFT

Mr. Waterson: I beg to move amendment No. 17, in page 5, line 3, leave out ''feature, or combination of features, of'' and insert

    ''agreements between undertakings, decisions by associations of undertakings, or concerted practices in''.

The Chairman: With this we may discuss the following amendments: No. 18, in page 5, line 4, leave out from ''services'' to end of line 5 and insert ''prevents, restricts or distorts competition''.

No. 24, in page 5, leave out lines 31 and 32.

Mr. Waterson: We have reached one of the more exciting parts of the Bill. [Interruption.] I notice a ripple of excitement among Labour Members, particularly from the hon. Member for South Ribble. I am sure that we shall have a lively debate.

The arrival of the super complaint must have seemed like the arrival of gunpowder and cannons to the proprietor of a medieval castle–alarming and impressive at the same time. It is, on paper, an extremely powerful weapon, which could change the balance of power–I do not want to get too carried away or I shall sound like David Starkey–between consumers and business. Like all powerful weapons, it must be handled with care. That is why we have tabled a number of amendments; they express our concerns, queries and probing ideas and those of business about how it will work in practice.

I should like to make a point that might be of help. Our general approach will be to seek fairly wide debates on groups of amendments, but to dispense with a stand part debate unless no amendments to the clause have been tabled. Even then, we might not have a stand part debate if the clause does not warrant it.

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However, because this clause is such an important part of the Bill, we might want to say something about the stand part aspect of it even after we have dealt with the amendments.

When the Department is preparing its press releases about how wonderful the Bill is, the provision for super complaints will be one bit that ends up in the first paragraph. The concept of super complaints is widely welcomed by the consumer organisations. We are keen for it to work in a way that delivers for consumers but does not cause massive problems and disruption for legitimate business.

The wording of amendments Nos. 17 and 24 replicates the wording in article 81 of the EU treaty and the chapter 1 prohibition in the Competition Act 1998. Without such replication, it seems to us and to organisations such as the CBI that there is a risk of inconsistency and uncertainty. There is also the possibility that a new and unnecessary additional standard could be introduced into the UK competition regime. I do not know whether that was what the Department had in mind when it drafted this part of the Bill, but we want to find out through these probing amendments.

Amendment No. 18 would delete the wording

    ''is or appears to be significantly harming the interests of consumers''

and replace it with the phrase

    ''prevents, restricts or distorts competition''.

That would again replicate wording in article 81of the EU treaty and the chapter 1 prohibition in the 1998 Act. It is again a question of consistency and certainty and the concern is again that a new and additional standard is being introduced into the regime. Anti-competitive behaviour almost by definition harms consumers, so is there any real need to refer to them explicitly?

That is the reasoning behind the group of amendments. They are more probing amendments than anything else, but I would be interested to hear the Minister's response to them.

Miss Johnson: The amendments would narrow the definition of a super complaint by placing the emphasis on conduct connected to breaches of chapter 1 of the Competition Act or article 81 of the EU treaty rather than broader problems in the market that may harm the interests of consumers. Our intention is to ensure that consumers receive better protection by enabling consumer bodies to complain about any market failure that causes significant harm to consumers. In order to do that, we need a broad definition of the circumstances in which a super complaint can be made.

Using the language of the Competition Act, as suggested in the amendments, would narrow the focus of the procedure to the potential investigation of anti-competitive agreements. The new super complaints procedure is intended to ensure that the OFT is made aware of as wide a range of markets that are not working well for consumers as possible–not just those markets where competition concerns arise. Taken by

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itself, without amendment No. 17, amendment No. 18 would mark super complaints out as a preliminary to OFT action under its competition law powers, such as those under the Competition Act, or through a market investigation. It would not be allowed to act under its consumer protection powers.

Consumer bodies and anyone else who wants to complain about basic infringements of the Competition Act can already do so. Super complaints should not be limited to a preliminary to a particular type of competition investigation. They should be an open-ended vehicle for the OFT to launch investigations under any of its consumer and competition powers. By, effectively, excluding the possibility of a consumer-side action as a follow-up to a super complaint, the amendment perpetuates the division between the OFT's competition and consumer sides, which the Bill is trying to break down. The amendment would make it very difficult for consumer bodies to submit super complaints. As third parties, they are unlikely to know much about the agreements that firms have entered into between themselves.

The hon. Gentleman said that these were probing amendments. I hope that with that explanation I have encouraged him not to press them to a Division.

Mr. Djanogly: I support this group of amendments. The question arises whether a clause that is, on the face of it, well meaning will give companies comfort that they will not be subject to witch-hunting by consumers or pressure groups. There is a balance to be struck here, as with other parts of the Bill.

I was slightly concerned by the Under-Secretary's statement that the measure was to be left as ''an open-ended vehicle'', as that seems a dangerous way of proceeding in what could be a litigious area. I accept the suggestion that we need a clearer definition of what can and cannot be investigated. Amendment No. 18 ties that down by referring back to article 81.

As the Bill stands, a super complaints procedure applies when the interests of consumers appear to be harmed, but what does that mean in practice? Who decides, and on what basis, what is best for consumers? Would it be consumer groups, for example? The CBI pointed out that that gives much too narrow a base; anyway, what would represent a consumer group for the purposes of the Bill? The new standard will lead to an awful lot of litigation, with costs being passed on to the public; to consumers, in other words.

There was a recent example of such a procedure in action. In October 2001, the OFT agreed to a Consumers Association referral to undertake a super complaints procedure, although at the time that would have been done only on a trial basis because the legislation did not exist. The case was brought against the dentistry profession.

In January 2002, the OFT announced that it would undertake a full investigation, which it expected to finish by the end of the year. It would have been helpful to the Committee if the investigation had been finished by now, because we would have had a better opportunity to analyse how it worked in practice. Unfortunately, that opportunity is unavailable.

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Several questions surround that investigation, however. One might ask if the expected date was fair, but I shall not discuss dates as that subject arises in a later batch of amendments.

I mention the case now because it has an interesting aspect in relation to the Bill. When one reads the Consumers Association briefing on the state of the process so far, two basic reasons are given for the referral, as identified by the excellent magazine, Which? The first relates to transparency in charging, which certainly makes sense as the basis for an investigation. The second was more interesting, as it related to huge disparities in tariffs between dentists. That is an interesting concept, which seemed strange to me when I first read it.

I understand why the Consumers Association might want to point out why high-charging dentists should be avoided and to say who is a high-charging dentist, so that consumers know whom to avoid. However, when one considers competition issues, one normally looks for competition abuse, a convergence of price, people organising cartels or undermining consumers by maintaining a close series of prices. In this case, however, the Consumers Association is complaining about a massive divergence of prices, which is the exact opposite of the competition test. That brings us back to the essence of super complaints and the new rationale.

The Consumers Association is obviously looking forward to the time when the legislation is in place and it can run clear of the competition rule and start creating a new area of law. I do not know what the Consumers Association wants–perhaps some sort of 1970s price-capping policy–but it has nothing to do with competition.

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