Enterprise Bill

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Mr. Andrew Lansley (South Cambridgeshire): I had been speaking for too long and had only a limited amount left to say, but I want to complete my remarks because I was approaching my denouement.

I had disagreed with the hon. Member for North-East Derbyshire, although I understood why he tabled the amendment. The Minister could give us further explanations about why the Government do not think that there will be continuing difficulties in relation to merger cases that do not easily fall into the jurisdiction of either the United Kingdom or the European Community. Likewise, there are issues concerning the interpretation of competition law under the EC merger regime, which will not necessarily apply to the UK because we apply a different test. That may lead to difficulties, for example if a merger is approved in the United Kingdom but is then felt to be in some way anti-competitive or to abuse a dominant position as a result of the application of EC regime through the Competition Act 1998.

All those questions give rise to a perfectly reasonable presumption, which motivated the Government, not least in the Competition Act 1998, to seek complementarity between the UK competition regime and that which applies in the European Community. I recall that, in section 60, that Act even went to the point of ensuring that any issue that was not otherwise expressly provided for in statute would be interpreted in line with the EC competition regime. I presume that courts in this country continue to believe that that is the case, even in relation to

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merger cases, unless there are specific statutory differences.

Therefore, there are good reasons to wonder about the desirability of a dominance test rather than a substantial lessening of competition test. The essence of my argument is to question whether we have the opportunity to employ a different regime in this country from that which necessarily applies under the Community mergers regime. We do; we are not required to have the same regime. If we have that opportunity, and if the Government think that we can get away with it, or perhaps draw the European Commission, under its review of the mergers control regime, further in the direction of a tough regime for a substantial lessening of the competition tests, we should do so. Relative competitiveness–competitive intensity–in the United Kingdom is the essential test.

I was interested to listen to listen to Professor Nicholas Crafts last week talking about Britain's relative economic performance. He said that in previous decades–he referred particularly to the 1960s and 1970s, the tendency in the United Kingdom was to believe that the application of industrial policy would lead to relative gains in productivity. That was found not to be the case. One of the principal reasons for that was that where businesses were not profit-maximising, there was a degree of excessive management control and a lack of accountability to shareholders, making it difficult to achieve competitive intensity through that route, competition policy was far more likely to have an impact upon productivity performance than industrial policy.

Mr. Ken Purchase (Wolverhampton, North-East): I am sorry not to have heard the very beginning of what the hon. Gentleman said, but on the narrow point of productivity and planning versus competition, is it not true that during the 1980s, when there was relatively free and unfettered competition, the underlying trend for growth was almost precisely the same as it had been throughout the post-war period? There may be merits to either system, but one cannot make absolute claims on behalf of either of them.

Mr. Lansley: I commend Professor Crafts's monograph from the Institute of Economic Affairs to the hon. Gentleman. He will read that the trend gains in productivity in the United Kingdom during the 1980s were higher relative to others than during the preceding period. When France and Germany were making substantial gains in productivity after the second world war, the United Kingdom's appropriate response should have been to move towards a more competitive regime through the application of industrial policy.

Before I let the hon. Gentleman intervene again, he might like to consider an important point. The Budget Red Book made specific reference to the productivity issue and referred to the fact–it was about the only glimmer of hope that the Government could grab hold of–that in the past 10 years there had been some narrowing of the gap in productivity with France. Except that, on examining the table in the Red Book, it was plain that that narrowing had occurred during

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the first six years of the past 10 years and had widened slightly during the past four.

Mr. Purchase: I am interested in what the hon. Gentleman has to say. It does not require a great leap of imagination to recognise that one of the main purposes of improving productivity, although it is good in itself, is to increase prosperity. That is usually measured by increased growth in the economy as a whole. That was my point–during the 1980s, in any analysis, the growth and the improvements in productivity were overwhelmingly based on taking the labour fraction out of the equation. That resulted in huge losses to the public purse and did not improve growth in this country one iota.

The Chairman: Order. This denouement is turning into a major deviation. I should be grateful if the hon. Gentleman would return to the amendment.

Mr. Lansley: You are very kind, Mr. Beard. The hon. Member for Wolverhampton, North-East (Mr. Purchase) tempted me and we indulged ourselves. We should not have done so–you are quite right.

However, the original point was relevant. Other things being equal, if we, in the course of consideration of the Bill, have a chance of ensuring a merger control regime that is likely to provide pressures and incentives conducive to competition in general and to a greater intensity of competition in the United Kingdom than in other parts of the EU, because of industry's interpretation of other regimes as more lax, we should take it. We should do so notwithstanding some of the difficulties that might ensue in losing control of one of two of the larger mergers to the European Commission, which might want to take control. I think that we should go down that path.

Mr. Tony McWalter (Hemel Hempstead): I find myself in the slightly difficult position of having some of what I wanted to say on amendment No. 211 taken away from me by the hon. Member for South Cambridgeshire (Mr. Lansley). However, I express my gratitude to him. He points out that there is more scope for acting on measures that undermine competition with the Bill as currently drafted than would be the case if amendment No. 211 were to be accepted.

Amendment No. 125, proposed by my hon. Friend the Member for North-East Derbyshire, raises interesting questions, and I hope that the Minister will respond to them positively. I was amused to hear it said that an amendment that, in paragraph (c), speaks of

    ''promoting, through competition, the reduction of costs and the development and use of new techniques and new products, and of facilitating the entry of new competitors into existing markets''

is rabidly left wing. If it is, then rabid left wing-ness has undergone a Damascene conversion.

The interesting thing about the amendment is how it connects to the remarks of the hon. Member for Eastbourne (Mr. Waterson). At the beginning of his speech–it seems a long time ago–he asked what was the justification for such a Bill so soon after the Competition Act 1998, particularly as it seems that, under the Bill, our rules on competition and competitiveness will be rather more stringent than

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those that apply in the European Union. That is a good question. The answer is that we are seeking to promote an enterprise economy–something that our rules fail to deliver. On that point, I disagree with my hon. Friend the Member for North-East Derbyshire, because I believe that an effective competition regime is a vital component of an enterprise economy.

I was introduced to competition when my father, who was a painter and decorator, tendered for the job of painting some houses in Hemel Hempstead. Some of the other tenders were significantly lower, so he did not get the contract. That, he thought, was business–until he found out that the competitiveness of those other companies did not stem from having a more efficient or effective method of delivery. Those other companies invited my father in on a scheme whereby stolen paint would be made available. That was the basis on which some people were able to make highly competitive bids.

Britain has historically suffered from a variety of damaging business practices. They have often been allowed to persist, but the question is how, under statute, should they be resisted? In my father's case, the obvious thing to do was not to use the provisions of a trade and industry Bill but to prosecute those who stole the paint–not to say that it was against the public interest that people should steal a competitive advantage, but to ensure that the criminal law and other forms of law could be used to provide a competitive framework.

The thinking behind amendment No. 125 is that all of that should be included in the Bill. That is an error. If a company seeks to steal competitive advantage–other hon. Members may have encountered this in their constituencies–by dumping its waste at midnight in places where it has to pay no kind of dues and it is not fussy about the pollution and other damage that it causes, the criminal law should become involved. I am pleased that the stop now regulations in the Bill will make it possible for the authorities to prevent those who practise in a dubious way from continuing to do so. Not only will they be prosecuted but their capacity to continue trading will be undermined.

2.45 pm

To pick up the point made by my hon. Friend the Member for North-East Derbyshire about trade unions, another way of seeking to steal competitive advantage is to pay workers less than the minimum wage, to give them no holiday pay and to fail to do any of the things that a reasonable company, seeking to honour its obligations to the public and its employees and to trade fairly, would do–such as to conform to environmental and industrial relations regulations and to keep laws governing the ways in which it advertises its services.

Competitive advantage can be stolen. However, in a fair trading Bill, we are seeking to establish the principles of fair competition and to ensure that those who aim to trade fairly really are given a competitive advantage, so that they do not have to keep looking over their shoulders, trying to fight off

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the latest set of inquiries into their status; they can get on with the business of being an effective business.

In considering the series of amendments tabled by my hon. Friend, we must ask ourselves to what extent the Bill should reflect his concerns and to what extent the Government are providing a framework outside of their industry policy that makes the conditions for business fairer. The Committee will agree that there is still a long way to go. There are many highly dubious practices. An interesting aspect of Tuesday's debate was when we discussed clause 202 and the probing amendment to it that, oddly, went to a vote. That highlighted a series of dubious trading practices that, if they are not rebutted, might lead to businesses stealing an unfair advantage. I noted that, in her response to that debate, the Minister said that there was a lot of value in the amendment and that she would try to find ways of incorporating some of its ideas in the Bill.

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