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Lord Simon of Highbury moved Amendment No. 54:

Page 3, line 32, after ("rules") insert ("under section 49").

The noble Lord said: This is a drafting amendment. I beg to move.

On Question, amendment agreed to.

Lord Berkeley moved Amendment No. 55:

Page 3, line 34, at end insert--
("( ) The Director shall publish full details of all requests for individual exemptions within 28 days of receipt in such a way as he thinks most suitable for bringing them to the attention of those likely to be affected.").

The noble Lord said: In moving Amendment No. 55, I wish to speak also to Amendment No. 63. Amendment No. 55 refers to individual exemptions and Amendment No. 63 to block exemptions, imposing upon the director the requirement to publish details of all requests for exemptions within 28 days of receipt. The reason for the amendments is that unless there is some obligation on the director to publish information about applications for exemptions, the first people may hear of this, and also organisations which may potentially be affected by such applications, is under the circumstances mentioned in Clause 8(1) which states that,

I submit that, in many cases, that may be too late for representations to be made. Unless I have missed the provision elsewhere in the Bill, it would be very helpful if information were made available; indeed it is essential. I therefore beg to move the amendment.

Lord Simon of Highbury: It is important that, before the director grants individual exemptions or recommends that a block exemption order be made, interested parties are fully aware of the director's proposed action.

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The Bill already provides, in paragraph 5 of Schedule 5, that when the director is determining an application for a decision to grant an individual exemption, he is required to publish the application,

    "in such a way as he thinks most suitable for bringing it to the attention of those likely to be affected by it, unless he is satisfied that it will be sufficient for him to seek information from one or more particular persons other than the applicant".

When considering whether to recommend that the Secretary for State makes a block exemption order, subsection (1) of Clause 8 requires the director to,

    "publish details of his proposed recommendation".

That provision will ensure that there is adequate consultation before the director recommends a block exemption. The nature of a block exemption means that undertakings do not have to apply to the DGFT in order to benefit from it, unless the opposition procedure in Clause 7 applies. If an undertaking applies for a decision under Clause 14, the DGFT may decide that the agreement is exempt from the prohibition because of the block exemption. The application will be published as described above.

As the Bill already contains provisions to ensure that interested parties are able to make representations relating to block and individual exemptions, I ask my noble friend whether he is prepared to withdraw his amendment.

Lord Berkeley: I am grateful to my noble friend the Minister for that explanation. I shall read it very carefully, but I think it probably satisfies my requirements. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4, as amended, agreed to.

Clause 5 [Cancellation etc. of individual exemptions]:

Lord Kingsland moved Amendment No. 56:

Page 3, line 37, at end insert (", after hearing any representations from the undertakings concerned").

The noble Lord said: I think that the general intention of these clauses is to include an element of sportsmanship in the relationship between predator and prey. The Minister will be aware of those sections into which the Opposition wish to insert the appropriate protection.

Amendment No. 56 relates to page 3, line 37, inserting:

    "after hearing any representations from the undertakings concerned";

and Amendment No. 57 proposes the same insertion at line 44 on page 3. Amendments Nos. 77 and 78 relate to page 9 of the Bill. The insertion is slightly modified, but again has the same effect:

    "after notifying the party which made the application and considering any representations".

Finally, Amendments Nos. 89 and 90 are amendments to the same effect.

Bearing in mind that the end result of this procedure is a fine--a penalty--we believe it is important that a company that is likely to be on the end of an investigation should have proper time to reflect and to make counter-representations.

13 Nov 1997 : Column 345

I am aware that we have not yet seen the Minister's proposals on the detailed procedure for reply. He may well have in mind some appropriate assertions of the sort I have mentioned at that stage. I beg to move.

Lord Simon of Highbury: If the director cancels an individual exemption and imposes a penalty, his decision will be appealable to the competition commission under Clause 45. The appeal process provided in the Bill is the proper protection to which parties affected by the director's decisions are entitled. However, I accept that in addition there will need to be rules governing the procedures when the director takes further action after having decided that one of the prohibitions has been infringed or when cancelling an individual exemption, varying or removing a condition or obligation or imposing additional conditions or obligations.

If I may draw Members' attention to Schedule 9, they will see that paragraphs 5 and 6 make provision for rules on the procedures to be followed in those cases. I would expect that, among other things, the rules would make provision for the issues of notification and listening to representation raised by Members. I therefore hope that they will feel able to withdraw their amendments. The rules should make the appropriate provision clear.

Lord Lucas: I feel that the Minister could be a little more generous. There were so many qualifications in his answer that doing the exact opposite of what he implied would be perfectly consistent with what he said. If the Minister feels unable to go beyond the brief this evening, I hope that he will be able to feel more definite about the matter at Report and will give us satisfactory guidance to the effect that those who make applications and are concerned in this matter will be consulted in the way suggested by the amendments rather than saying that they might just possibly, maybe, one day, be consulted.

Lord Simon of Highbury: That sounds like a challenge to which the noble Lord will respond.

Lord Kingsland: I am much obliged to the Minister for his response. I simply add that it is not just in the interests of the alleged offender that these amendments are proposed. Some delay for consideration on behalf of the director general may lead him, for perfectly legitimate reasons, to change his mind about his original intentions. In those circumstances the appeal process would not have to be relied upon and a great deal of time and money would be saved by everyone. I thank the Minister for his response and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 57 not moved.]

Lord Graham of Edmonton moved Amendments Nos. 58 to 61:

Page 4, line 1, leave out from ("condition") to end of line and insert ("allows the Director, by notice in writing, to take any of the steps in subsection (1).").
Page 4, line 4, after ("(2)") insert (", (3)").

13 Nov 1997 : Column 346

Page 4, line 6, after ("(2)") insert (", (3)").
Page 4, line 9, after ("(2)") insert (", (3)").

The noble Lord said: In moving Amendments Nos. 58 to 61, I shall speak also to Amendment No. 62, which addresses a slightly different point.

This part of the Bill deals with the powers of the director general to cancel individual exemptions. Members of the British Retail Consortium are concerned about the form in which the words appear at present. Exemptions are important and valuable and in some instances could well be crucial. Therefore they are not to be given or abused lightly and certainly will not be lost lightly. The Bill provides for the director general to grant individual exemptions from the prohibition provided for in Clause 2 in respect of agreements if certain circumstances are satisfied. The director general can make individual exemptions subject to conditions.

The Bill provides that:

    "If the Director has reasonable grounds for believing that there has been a material change of circumstance since he granted an individual exemption",


    "If the Director has a reasonable suspicion that the information on which he based his decision to grant an individual exemption was incomplete, false or misleading in a material particular",

he may by notice in writing

    "(a) cancel the exemption; (b) vary or remove any conditional obligation; or (c) impose one or more additional conditions or obligations".

However, the Bill provides that, if a condition in the individual exemption has been breached, the exemption is automatically cancelled and the Clause 2 prohibition will apply.

The amendments that I have moved, in effect, are saying to the Minister, "Steady on, it is possible to commit what, in the context, is a minor breach, and yet having done that there could be a technical breach such as a failure to provide information on time." That seemed possibly to fall within the ambit of what the director general can do. Therefore, with a small, modest dereliction one loses the benefit of the whole exemption. We think that is wrong. We suggest in these amendments that the director general should have power to impose a remedy proportionate to the problem, including the cancellation of the exemption if that is appropriate.

Amendment No. 62 replaces the automatic termination provision with one providing that the block exemption may contain provisions whereby the director general can by notice cancel a block exemption in respect of any agreement if there is a breach of condition for the reasons set out in the revised amendments to Clause 5.

Again, as with every amendment moved in the past seven or eight hours, they are substantially probing and designed to get from the Minister and his colleagues a reaction following which there may be further action at a later stage.

This is a modest amendment and in the spirit of its being ten o'clock at night it is one which I hope the Minister will gladly give in order to go home early. I beg to move.

13 Nov 1997 : Column 347

10 p.m.

Lord Simon of Highbury: I believe that the ability to grant block and individual exemptions is an important aspect of the prohibition regime contained in Chapter I of this part of the Bill. Both businesses and consumers will benefit from these exemptions. They will allow agreements which have countervailing benefits as set out in the criteria in Clause 9 to continue even where they have anti-competitive effects.

A decision to grant an exemption will be far from straightforward and will often involve the detailed consideration of the agreements and their economic effects. The ability to grant exemptions which impose requirements on parties to agreements will often be essential. It allows a necessary degree of flexibility when granting exemptions.

Our approach in this respect follows that under the Community prohibition contained in Article 85. The Bill provides for two kinds of requirements to be imposed, obligations and conditions. Where agreement reaches an obligation contained in individual or a block exemption the director must give notice in writing before taking action. In the case of an individual exemption he has a discretion as to whether there is a need to cancel the exemption, or whether it may be more appropriate to take other courses of action such as imposing an additional condition or obligation. Breach of a condition results in the automatic cancellation of that exemption with respect to that agreement with no need for the director to take further action.

The effect of these amendments would be to remove the distinction between conditions and obligations. Conditions would be treated in the same way as obligations currently are under the Bill. In each case, breach of these has the same effect as provided in the Bill.

Such a change would significantly weaken the flexibility which will be necessary when granting exemptions. At European level in granting exemptions the Commission has found it necessary to impose conditions as well as obligations.

There is a risk that if the director or Secretary of State is denied the ability to impose conditions the breach of which has the automatic effect of cancelling the exemption with respect to the agreement in question, he will be more cautious in granting exemptions. This would reduce the number of agreements which are able to benefit from block and individual exemptions under the prohibition.

Given that risk, I would urge my noble friend Lord Graham of Edmonton to withdraw these amendments at this stage.

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