Enterprise Bill

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Miss Johnson: Otherwise, if there were a direct link to EU law, which I think is what the hon. Gentleman is suggesting, the prosecution would be required to prove a breach of EU law in every case. He will understand that that would entail a lot of complex argument about economic competition of a sort that would make prosecution extremely difficult.

Mr. Djanogly: I cannot foresee any circumstances in which prosecution would not be extremely

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complicated, which is what we shall argue on clause stand part. The point is whether someone should go to prison for a cartel offence. Surely, the matter should be beyond reasonable doubt.

Miss Johnson: The dishonesty approach avoids the need for the prosecution to prove up front that there has been a breach of UK or EU competition law. The Commission has told us informally that it favours the dishonesty approach. Of course, there will be complex arguments, but the issue is the degree of complexity. A tightly defined offence based on dishonesty is appropriate for the new criminal offence. That will focus the attention of courts, juries and the wider public on the wrongful nature of hard-core cartels—that is, dishonesty.

I hope that I have persuaded hon. Gentlemen that, even if he should want to reflect further on the matter, the amendment should be withdrawn. If not, I regret that I shall have to ask the Committee to oppose it.

Mr. Carmichael: Had I been sharper off the mark, I would have intervened on the Under-Secretary.

The point that I want her to consider relates to a comment that she made about subsection (2), which states:

    ''if operating as the parties to the agreement intend''.

She seemed to be telling the Committee that once the agreement has been made, it does not have to be implemented. Has she—or her advisers—considered whether that is easily caught by the existing general criminal law of an attempted offence, which, clearly, would have been committed at that stage? The draftsmen may merely be reinventing the wheel.

Miss Johnson: I need to seek advice on that. If I may, I shall write to the hon. Gentleman and circulate my letter to other Committee members.

On the hon. Gentleman's original question, I can confirm that he is right in his understanding of what I said: the agreement does not need to have been implemented to be caught. The making of the agreement is the offence. That is what matters, not whether it was implemented and that is what I said earlier.

Mr. Waterson: I am grateful for the Under-Secretary's explanation. It will be painfully apparent that I have not been wholly convinced, but on the basis that she and her advisers will consider the matter further and that we may return to it later, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Waterson: I beg to move amendment No. 88, in page 131, line 20, at end insert—

    '(9) This section shall not enter into force until three years after the entry into force of the European Commission's reforms of Community competition law'.

The amendment would add an additional subsection to the clause reflecting the concerns of many people about a possible divergence between the regime in this country and in Europe. The Under-Secretary will be aware that business organisations such as the CBI are concerned that while EU modernisation reforms are going ahead apace, it is

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slightly eccentric of this country to be ploughing its own furrow, not only so soon after the previous legislation, but when we are expecting EU reforms and a new European system. It would be sensible to allow that system to be introduced and bedded down and to see how it works in practice before we move ahead.

Miss Johnson: Is the hon. Gentleman suggesting that we should always wait to implement measures until the EU has done so?

Mr. Waterson: No, quite the opposite. It just seems to make enormous sense, particularly if we are trying to look after the interests of British business. If people have to adjust to diverging regimes, it would be an enormous burden on business, an extra cost and not very sensible. I do not think that I have ever been accused of being excessively communautaire, but it seems completely barmy to have two diverging systems affecting British companies or foreign companies operating in this country; hence, the timing in the amendment.

As we know, the Commission has plans to reform the situation. It is planning to share enforcement of the rules with the national competition authorities and the courts of each member state, and it hopes to ensure consistent application of the law by establishing a network between itself and the national competition authorities for the passing of information. We will deal with the passing of information in considerably more detail on the stand part debate.

Mr. Purchase: The question of running two regimes is important. However, from the wording of the amendment, it seems that, if we should make such a law, it would control those relationships. Unless the hon. Gentleman believes that there could be an appeal based on a not yet implemented European law, why should we not offer this degree of protection, such as it is, earlier than our European counterparts and for once drive the train rather than be a passenger?

Mr. Waterson: The hon. Gentleman's intervention is important and highly intelligent, as one would expect, but what is the point of moving in this direction if the rest of Europe, or the European regime, is moving in a different direction? We will come to this in much more detail when we discuss criminalisation.

An argument is that we are following what already happens in Europe by bringing in criminal sanctions. It is true that Austria and Ireland have anti-trust regimes that are part criminal, yet criminal sanctions have hardly ever been used in either jurisdiction. I am

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told that in the first five years of the Irish competition Acts being in force, there was only one conviction, which I believe resulted in a fine of 1,500 punts—a princely sum. Presumably, the amount would be in euros now. The criminal sanctions in the French commercial code are rarely used, and the offence of bid rigging in Germany is seen principally as an anti-corruption not a cartel law.

There are also questions about whistleblowers, the seriousness of penalties as between large and small companies and as between the European and the domestic regimes. Again, I do not want to develop them now and have to repeat myself on stand part.

Mr. Djanogly: The three-year period is relevant to European law, as my hon. Friend said, but also to the length of time since the Competition Act 1998 was introduced. The penalties imposed in that legislation have not yet been tested, and we do not know how well they will work. It would be better to have a three-year period to test the existing penalties before we rush ahead and introduce new ones.

Mr. Waterson: My hon. Friend makes a telling point. As I recall, we have an amendment further down the batting order that says that some of the Bill's provisions should not come into effect until 1 March 2005, exactly five years after the 1998 Act came into force on 1 March 2000. Most of industry and certainly the CBI are completely bemused as to why the Government are rushing to re-open some of the issues when they thought that they had been settled, at least for the time being, in the 1998 Act.

Whatever the issue—cartels, labelling, food standards or anything else—we owe it to businesses to give them some certainty over a reasonable period, so that they do not have constantly to update themselves, while trying to run their businesses on shifting sands.

5 pm

Mr. Purchase: Britain has been ahead of the game on competition law. Recently, we have been the equal of Germany on such law; many other European countries have not, particularly the Italians. It is of no surprise that the Europeans will need more time to implement this protection than we do. It is time for us to take the lead.

It being Five o'clock, The Chairman adjourned the Committee without Question put, pursuant to Order of the Committee [16 April ].

Adjourned till Tuesday 23 April at half-past Ten o'clock.

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The following Members attended the Committee:
Conway, Mr. Derek (Chairman)
Barnes, Mr.
Borrow, Mr.
Burnham, Andy
Cable, Dr.
Campbell, Mrs. Anne
Carmichael, Mr.
Djanogly, Mr.

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Field, Mr. Mark
Irranca-Davies, Huw
Johnson, Miss
Pearson, Mr.
Pugh, Dr.
Purchase, Mr.
Waterson, Mr.

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