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Lord Borrie: There is one part of the proposed amendments which I should like to query, in relation to past employees or people no longer in employment. I hope that when this Bill becomes law, because of the greater investigatory powers, it will be possible for the

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Office of Fair Trading to deal with anti-competitive practices and cartel agreements rather more speedily than it sometimes has in the past.

Nevertheless, even in the future I imagine it will be the case, as certainly it was in the past, that sometimes information comes to light about agreements that were made some time ago, not necessarily years ago but perhaps just months ago, and one or two of the key people involved who have information are people who have just left the employment of the company being investigated or left its employment some time ago. It seems to me to be unduly restrictive to say that it is not permissible for the investigation to include inquiring of people and obtaining documents from people who may have recently or some time ago left that company's employment.

Lord Ezra: As my name is to two of the amendments on which the noble Lord, Lord Borrie, commented specifically, perhaps I should say a few words in their defence.

As the noble Lord, Lord Kingsland, pointed out so clearly, the aim of the amendments is to try to limit the enormous scope of those inquiries. While we all agree with the purpose of the investigations, we feel that there should be some limit in respect of the people, as we have discussed previously, who undertake them and the people who are inquired into.

I entirely take the point made by the noble Lord, Lord Borrie, that it may be that the issue under investigation arose at some earlier period and that the persons primarily involved may have left the company's employ. That is a perfectly arguable proposition. However, I should feel happier--I hope the Minister will be prepared to have another look at this matter--were some such word as "normally" to be introduced so that normally the persons to be inquired into would be current employees of the company but in exceptional circumstances others might be turned to.

Lord Peston: "Normally" takes me back to the happy days when I used to sit on those Benches opposite and if I was totally at a loss as to which amendment to speak to, "normally" was my favourite word because it gave me an entree and an opportunity to speak. Now I am on these Benches, I regard "normally" as the kind of weasel word that we could do without.

We are discussing a rather technical matter. Essentially, we are concerned with documents. The director would like to know what they mean and would like an explanation of them. He may receive the answer, "I don't know. I wasn't there when they were drawn up. I am not at all clear what was their origin". That will be very frustrating for the director and, as my noble friend Lord Borrie pointed out, would make the investigation much more difficult.

It seems to me that any investigator would rather approach current employees--and that brings in the "normally" of the noble Lord, Lord Ezra. Of course that is the case because it is much more difficult to approach someone who is not there or to find out who the relevant person may be. The Minister may clarify the issue for

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us, but my reading of the Bill suggests that it means essentially what the noble Lord, Lord Ezra, would like it to mean; namely, that the investigator would say, "I have this document. Can you give me an explanation of it?". Those people say that they cannot, to which the investigator responds by asking who can give him an explanation of it; who was present when that particular part of the agreement was drawn up. That person may have left or be dead but, in practice, that would be a second stage.

Therefore, again, I believe that one should raise these examples when discussing Bills of this kind. But, subject to hearing what the Minister says, which I hope will not be too alarming, it seems to me that the Bill should meet the needs of the noble Lords, Lord Ezra and Lord Kingsland, on this matter, unless we assume that the director is not very interested in doing his job properly but simply interested in making trouble for firms. I do not make that assumption. I make the assumption that the director has a responsibility in terms of competition and competition policy and that he will meet those obligations reasonably. This Bill enables him to do that. I would be fearful of any amendment to the Bill which would actually make it impossible for the director to do his job. Having said that, I look forward to hearing my noble friend's response.

5 p.m.

Lord Simon of Highbury: Amendment No. 98 to Clause 26 would restrict the range of persons from whom the director general may require the production of documents. If we follow through the other amendments, as indeed we were advised to do--and we are looking down the other end of the telescope this time--it will be seen that Amendments Nos. 102, 103 and 104 would restrict the range of persons from whom an explanation of the documents may be required. Amendments Nos. 109 and 129 relate to similar points in Clauses 27 and 28. Essentially, as the noble Lord, Lord Kingsland, explained, the amendment would restrict the range of persons to officers or senior officers in terms of the investigatory approach.

I can understand the concerns which have prompted the tabling of these amendments. I even sympathise with such concerns, and appreciate that the CBI has pressed very strongly for these changes. But, if we are to make a sound judgment about the range of these powers, we must keep in mind the purpose that they are intended to achieve.

Clause 26 is the first clause we come to in the Bill which confers specific investigatory powers on the director general. Clause 26 gives the director general powers to require the production of specified documents. Clause 26 is, if you like, the first weapon in the director general's armoury. Later clauses provide for a power of entry and a power to enter premises under a warrant. I have already sought to explain that effective powers of investigation and the certainty of discovery are key elements of deterring anti-competitive behaviour.

However, there is a second important factor that we must bear in mind. I should point out to Members of the Committee that I am working up to answering the points

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that have been raised. The statutory investigatory powers must be able to cater for the very worst case of unscrupulous concealment of evidence of a cartel, or other anti-competitive behaviour. I would expect most cases where the DGFT has reasonable suspicions to proceed with the full co-operation of the undertaking being investigated. Full use of the powers provided in the Bill should, therefore, generally be unnecessary. Many of us are fully aware of the normal course of events in investigations. My own past company has been investigated many times; and, indeed, on many occasions we provided the information required.

While the powers in Clause 26 may be used to require past employees to provide explanations, those in Clauses 28 and 29 do not contain such a limitation. The reason for this is simply that these powers are exercisable on the premises of the undertaking during an inspection visit. Clearly past employees are unlikely to be present on the premises to answer questions. The powers to seek explanations of documents from past employees may be needed where an undertaking is found to have been committing an infringement over a long period, as has been pointed out. As my noble friend Lord Borrie said, they are a necessary part of the director's armoury.

As regards junior employees, while I value the phrase, "shimmying up to the tea-lady"--indeed, that phrase stuck in my mind--it is important that we seriously have the ability to speak to both secretaries and personal assistants. They may be younger but they may, effectively, have a great deal of knowledge of the activities under investigation. We must also remember that the range of things that may appear in documents needing explanations is wide. Therefore, it seems to me to be right that the powers should also be exercisable when asking that category of employee or past employee for explanations.

However, that does not mean that we should limit the powers for expected use in normal circumstances. As I said, the limit of the powers in the Bill must cater for the very worst cases that we expect to encounter. I believe that that consideration throws a very different light on the matter. I have said it before, but I believe that I must repeat it: cartels do not advertise themselves very often. Identifying them and establishing their existence requires painstaking investigation and adequate powers. While the intention behind the amendment, and those grouped with it, is understandable, in practice it could materially assist the unscrupulous in concealing evidence. Price-fixing rings operated by employees might be beyond investigation if those employees were no longer employed by the undertaking once the investigation was under way. Conspiracies of silence would quite clearly be easier to operate.

Of course there must be proper safeguards for the innocent. Clause 41 makes it clear that it is a defence if a document was not in the individual's possession or under his control and that it was not reasonably practicable for him to comply with a requirement. The director general must act reasonably. But putting the broad perspective on the need for this to be the "outer

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limits" of the director general's capacity to find the case, then, going to whomsoever in the organisation--if needs be, even the tea-lady--would be an acceptable requirement to avoid the continuation and long continuation of some of the cartels which, if we look with the gift of hindsight, have been running against the interests of the consumer.

My conclusion remains that accepting the amendment would weaken the effectiveness of the investigatory process and the deterrent effect of the regime. It will not, I believe, surprise noble Lords who have tabled the amendments if I urge them, given the seriousness of the requirement to make investigations successful, to consider withdrawing them.


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