Enterprise Bill

[back to previous text]

Miss Johnson: The answer is no.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New clause 14

Minority reports of Commission: Part 3

    '(1) Subsection (2) applies where, on a reference to the Commission under this Part, a member of a group constituted in connection with the reference in pursuance of paragraph 15 of Schedule 7 to the Competition Act 1998 (c.41), disagrees with any decisions contained in the report of the Commission under this Part as the decisions of the Commission.

    (2) The report shall, if the member so wishes, include a statement of his disagreement and of his reasons for disagreeing.'.—[Miss Melanie Johnson.]

    Brought up, read the First and Second time, and added to the Bill.

    New clause 15

    Minority reports of Commission: Part 4

    '(1) Subsection (2) applies where, on a market investigation reference, a member of a group constituted in connection with the reference in pursuance of paragraph 15 of Schedule 7 to the Competition Act 1998 (c.41), disagrees with any decisions contained in the report of the Commission under this Part as the decisions of the Commission.

    (2) The report shall, if the member so wishes, include a statement of his disagreement and of his reasons for disagreeing.'—[Miss Melanie Johnson.]

    Brought up, read the First and Second time, and added to the Bill.

    New Clause 5

    Use of fines by OFT

    '(1) The OFT will consider whether any fines which it imposes under Chapter I or Chapter II of the 1998 Act might be applied for any purpose or purposes which would contribute towards remedying harm suffered by consumers generally as a result of the infringements of those provisions.

    (2) The OFT may, in pursuance of subsection (1), make such direction as it considers appropriate.'.—[Mr. Waterson.]

    Brought up, and read the First time.

Mr. Waterson: I beg to move, That the clause be read a Second time.

I hope that, for once, the purpose of the new clause is obvious from the wording. Under the current regime, fines may be imposed under chapter I and II of the Competition Act 1998. In a sense, the aim of the new clause dovetails with the provision of funding for consumers or consumer groups that we have just debated. Consumer bodies have asked what will happen to the fines and whether they might be applied to the benefit of consumers generally. I appreciate that that process is different from an education or information-spreading process. When taking the class action approach, however, it will sometimes be impossible to identify all the consumers affected.

Column Number: 710

The Under-Secretary gave an example a moment ago, albeit in a different context, of a problem with Rover car parts or car sales. That example ties in neatly: one could devote the funds to remedy

    ''harm suffered by consumers generally'',

as the new clause says. That would be welcomed by consumers, consumer bodies and the OFT, and I hope that it receives the Under-Secretary's support.

Miss Johnson: I have considerable sympathy with the aims of the new clause, in so far as I am keen that there should be projects to help consumers who suffer as a result of anti-competitive practices. However, that will be possible under clause 262, which allows the Secretary of State to

    ''give financial assistance to any person for the purpose of assisting . . . activities which the Secretary of State considers are of benefit to consumers''.

That may include specific groups of consumers who have suffered harm as a result of a particular anti-competitive practice.

In fact, clause 262 has a wider application than the new clause. Although the priority will be to fund projects relating to the markets in which fines have been levied for anti-competitive behaviour, the clause will also ensure that consideration can be given to financial assistance for a wide range of projects and other work that would benefit consumers. It is not confined to consumers who have suffered from anti-competitive practices for which fines have been levied under the Competition Act. The clause will benefit consumers more widely and ensure that a more strategic view can be taken of the issues that need addressing and of the funding available.

For those reasons, clause 262 is better for consumers than the new clause would be. In view of that, I hope that the motion will be withdrawn.

Dr. Vincent Cable (Twickenham): I should like to say a few words in support of the new clause. I do not understand the Under-Secretary's reply, because the alternative that she offers relates to the powers of the Secretary of State. We are not concerned with whether the Secretary of State should be able to dish out money to consumer groups, which is fine in itself. However, the new clause would establish a flexible link between the abuse and some restitution for the people affected, without making that restitution mandatory. It would give the OFT the power to use the fine revenue for the consumer group, under certain circumstances, and is far more targeted than the Under-Secretary implied.

Mr. Waterson: I accept what the Under-Secretary says, but I remain wedded to having a separate power for the OFT to deal with the funds, which will otherwise simply disappear into the Treasury and be of no benefit to anyone. I would like to return to the point, but I shall be withdrawing the motion.

Miss Johnson: I should like to explain further our reasons for resisting the new clause, in response to the points made by the hon. Members for Twickenham (Dr. Cable) and for Eastbourne. Initially, we entertained a similar idea to theirs, but it did not seem a good idea for the OFT to be allocating fines money

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to projects benefiting consumers, because there might be a conflict of interest. Allegations might be made that fines were taken for a specific purpose or that specific projects were favoured. That would make it difficult to maintain business confidence, so we thought that it would be inappropriate for the OFT to occupy the position suggested in the new clause.

As regards links to fines for anti-competitive behaviour, it is better to agree the level of funding in the context of the Department's budget. We can then plan and ensure that the money is well used to fund groups generally for the benefit of consumers. Fines are unpredictable, and we do not know which organisations will be subject to them and how much they will be fined until the fine is imposed. Linking consumer benefits to fines could, therefore, lead to a rather erratic cash flow.

For all those reasons, we felt that it was inappropriate to pursue the proposed mechanism.

10 am

Mr. Waterson: It is always interesting when the Under-Secretary gets down to the part of her brief that says ''if pressed''.

Miss Johnson: I have not got down to that part—none of the points are headed ''if pressed''.

Mr. Waterson: In that case, if the argument is so good, why did she not deploy it the first time around? Perhaps she simply shuffled her papers the wrong way. I must say, however, that her argument is still not very good.

One of our set books at school was Evelyn Waugh's wonderful ''Scoop'', which is set in what we would now call a third world country—I think it was called Ishmaelia—where the country's army and inland revenue are combined, and punitive columns are sent out to lay waste to villages and to collect tax in kind. It is a little far-fetched to suggest that under new clause 5 the OFT would operate a slash-and-burn policy and go round finding people so that it can generate cash flow. We are still wedded to our proposal, and although we shall not press the motion, we shall be back. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 6

Enforcement orders: costs

    'Where the court determines that the person named in the application is not engaged in conduct which constitutes an infringement and that therefore the application brought under section 206 has failed, the court shall make an order that the enforcer shall bear the costs of that application.'.—[Mr. Djanogly.]

Brought up, and read the First time.

Mr. Djanogly: I beg to move, That the clause be read a Second time.

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We return to consumer legislation. The new clause deals specifically with provisions under which the enforcer—it may be the OFT or the local trading standards body—applies to the court for an enforcement order that subsequently fails. I hope that the Under-Secretary will confirm that, in that situation, existing legislation allows the court to make an order for costs to go to the winning party.

The new clause gives us a good and possibly final opportunity briefly to remind the Committee of a point that my hon. Friends and I have made throughout our proceedings. In many ways, the Bill has been drafted too one-sidedly and against the interests of business. Although that has happened for all the right reasons in many cases, there has been a massive increase in the OFT's power. That will often have dramatic implications for businesses, in terms of the costs that they will have to incur to defend themselves. Indeed, they will incur costs even before they are prosecuted, when they respond to requests for documentation that are made under the Bill's investigatory powers.

For all those reasons, it was necessary to include in the Bill provisions to redress the balance and to give business more rights to obtain compensation where it had acted properly and has been found innocent at the end of the day. Of course, the business will often have been subject to insolvency in the meantime, and the personal reputations of its owners will have been subject to a significant downside. The new clause would redress the balance by stating that, where the court finds against the enforcer making the application, it is just and correct that the person on the other side receives their costs.

 
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