Enterprise Bill

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Mr. McWalter: No.

Mr. Waterson: The hon. Gentleman is becoming grumpy again, although not without provocation.

Miss Johnson: My hon. Friend has considerable imagination.

Mr. Waterson: I hope that the Under-Secretary is not going to start now. It is Thursday and we are all meant to be running down gently towards the weekend. Indeed, the way the Government run their business these days, it is hardly worth the train fare from Eastbourne to come to this place.

We think, as does the CBI, that business should be entitled to some form of compensation. That would also deter frivolous or vexatious complaints. I hope, indeed I have some confidence, that the OFT will be pretty brisk in dealing with the obviously frivolous complaint. One can imagine that some attention-seeking Back Benchers—I will not name names—might run a wholly spurious and unjustified campaign against a particular company. The peg in their press release would be that they were writing an official super complaint to the OFT, when in fact it had no basis.

Mr. Carmichael: If the hon. Gentleman's intention were to eliminate vexatious and frivolous complaints, he would certainly have my support. However, the amendment would do much more than that; it relates to any complaint from which no proceeding results. There could be good grounds for the reference being made in the first place. As the Under-Secretary said, the complaint must be well reasoned, but even if it is found after the preliminary investigation not to merit further investigation, is it not right for these concerns to be aired in the first place?

Mr. Waterson: I do not think that anyone is saying that concerns should not be aired. The nature of the system is such that there will probably be three categories of complaint. The wholly frivolous and vexatious complaint can be dismissed out of hand and at minimum cost. The very serious complaint, which the legislation is designed to address, will rightly be pursued. Under our amendments, there is no question of compensation in those cases. However, there will be cases in the middle in which there may be grounds for it. This is a matter for much more detailed guidance.

I used the word ''reasonable'' in the amendment. In civil litigation, even if one wins a case hands down—I do not know what the system is in Scotland—one almost never recovers all one's costs. In a sense, that deters both sides from litigation, which must be a good thing. In America, there is usually the opposite situation, in which no recovery of costs is usually permissible. That can encourage people with deep pockets to oppress people with fewer resources.

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Mr. Djanogly: The reference that my hon. Friend makes to civil proceedings is relevant. The hon. Member for Orkney and Shetland said that if one had a good case but lost, one should be awarded costs. However, if one goes down the court route and loses, it will not matter if one has a good case—costs will be awarded against the loser. If the case is dropped, for whatever reason, it will not be the company's fault that it was brought in the first place and the company should get costs.

Mr. Waterson: As the phrase goes in litigation, costs follow the event. If one wins, one gets most of the costs; if one loses, one pays not only one's own but the other side's costs.

Andy Burnham (Leigh): Following the logic of the hon. Gentleman's argument, if a complaint against a company were upheld, would he support the company refunding the costs of the consumer body that brought the complaint?

Mr. Waterson: I do not have a philosophical problem with that. I do not expect the Under-Secretary to accept the amendment with open arms but I hope that, as part of the guidance, members and potential members of the OFT—such as Mr. Ecclestone—are listening carefully to our debate and considering such issues. If I had to produce the draft guidance, starting with a blank sheet of paper, I would allow a broad area of discretion to award costs or a contribution to costs. Cases that are not frivolous or vexatious but that ultimately prove to have little merit may be investigated at inordinate length. There should be some compensation in such cases.

We will deal with consumer complainant bodies fairly soon—not soon enough for some hon. Members, no doubt. Fortunately, many such organisations are well resourced, with substantial membership and access to other funds. They conduct their business in a professional—to use the word in a complimentary sense—and organised way and they expect to be and are taken seriously by business and industry. It is only right that they bear any contribution to costs that is justified.

Mr. Ken Purchase (Wolverhampton, North-East): The hon. Gentleman has expressed admiration for consumer groups that are professional, well-organised and understand the law, but there is a contradiction in extolling the professionalism and good organisation of a consumer group on the one hand and associating it with a frivolous or unnecessary claim against a company on the other. That contradiction gives the hon. Gentleman's game away.

Mr. Waterson: Uncharacteristically, the hon. Gentleman has not followed my argument. I said that if a claim is clearly frivolous and vexatious, I would expect the OFT to dismiss it out of hand, well within the 90-day period. However, I hope that there will be fewer such claims because of the potential sanction of costs. The amendment would bite in regard to the complaint that was not frivolous or vexatious—although it was rather thin and ultimately did not get anywhere—but was the subject of an investigation. Like the CBI, I believe that there should be a possibility of compensation.

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I do not say that my amendment is the be-all and end-all. Indeed, I recognise that consumer organisations do not support it. The National Consumer Council has been extremely helpful—just the sort of professional organisation to which I was referring

—in the run-up to the debate. It is a keen supporter of the super complaint and wants to be a super complainant. It accepts that there are concerns about what lawyers call fishing expeditions—which are not unknown to the legal world—by which legal or investigatory proceedings are started and used as a way of finding the evidence to justify the complaint. It states:

    ''We also oppose amendment 20 to this Clause which would hinder the ability of consumer bodies to take such action, particularly as they would now know what the 'reasonable costs' might be before taking such an action.''

That is a fair point and it is important to register that concern. Equally, however, the CBI is entitled to register its concern through us and to set out one mechanism for dealing with it. I therefore commend the amendment to the Committee.

Mr. McWalter: I shall speak briefly to the amendment. The David of the Consumer Association is taking on the Goliath of business. The amendment effectively says that David has a bigger stone than he used to have, but it should be taken away entirely. It threatens consumer organisations with bankruptcy. The Under-Secretary has already explained the significant constraints on taking decisions to launch super complaints and they are more than enough.

A complaint could be made on reasonable evidence and an investigation of a group of companies, perhaps all employing expensive lawyers, might follow. At the end of the process, a massive bill would have to be faced, perhaps as a result of OFT incompetence. In other words, the complaint might be perfectly reasonable, but not followed through effectively, leaving the consumer organisation saddled with the bill.

My concern is precisely the opposite of the one expressed in the amendment. I should like David to have not just one, but several, stones. What resources will be made available to consumer organisations to help them in their investigation of dubious practices? My amendment would be completely the other way round: David would have two or three stones and Goliath would be rather less well armed.

Mr. Field: On a couple of relatively minor points, first, we must appreciate that the biggest losses are often economic and whether reasonable costs can be quantified is an important issue. I refer to the loss of management time, which is difficult to apply directly to the work undertaken. The opportunity cost in executive time—the executive will have to examine the various papers produced by the case—is a significant factor. Does the Under-Secretary agree—she can make it clear in her reply—that one problem is that potential costs are never-ending? The economic costs under the law of tort or of contract would not be readily obtainable by the party suing in a similar context. The costs would not be caught. We are talking about reasonable costs here, presumably of legal and other

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professional advice that is directly contingent on the investigation.

Secondly, I made a comparison on Tuesday with the Monopolies and Mergers Commission, as it was called during my brief legal career, although I think that it is now called something different. I recall that several companies in industry sectors were regularly called before that commission. A raft of different industry sectors were investigated three or four times during a period of 15 or 20 years. For example, the beer industry and the British ice cream industry have had high-profile investigations over the years.

10.45 am

Within this process of super complaints, we may be letting ourselves in for the investigation of particular industries several times in a relatively short period of time. There may be a number of different ongoing inquiries into a particular industry, which may be high profile and have a relatively small number of players. The inquiries could involve prima facie doubt about monopolistic practices. It seems unacceptable that those industries should bear costs on a regular basis, particularly if the OFT kicks the super complainants' concerns into touch every time. Bearing in mind past monopolies and mergers procedures, I would like some guidance as to whether there will be an opportunity for the Government to give thought to ensuring that the costs of repeated investigations are not overly burdensome.

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