Previous Section Back to Table of Contents Lords Hansard Home Page

Baroness Nicol moved Amendment No. 147:

After Clause 30, insert the following new clause--

Commission investigation

(" . The Director shall not instigate any investigation under section 25 where the conduct of the parties in respect of which the Director would otherwise be minded to instigate an investigation is or has been the subject of a Commission investigation as defined in section 59(1).").

The noble Baroness said: This new clause has the support of the British Retail Consortium which is concerned about certain aspects of the Bill as it stands. The prohibitions contained in the Bill reflect Articles 85 and 86 of the Treaty of Rome. The same course of conduct or agreement may give rise to inquiries by both the European and the UK competition authorities.

The new clause seeks to prevent parallel investigations. Investigations, as the Committee will realise, involve not just parties to an agreement or

17 Nov 1997 : Column 417

course of conduct but a considerable number of third parties from whom copious amounts of information may be sought involving those third parties in considerable time and expense in respect of an agreement or course of conduct with which they have no connection.

It is extremely important that all parties to the agreement or course of conduct should not be subject to double investigation or double inquiries. The Bill provides that an agreement which is unobjectionable under European law can also be unobjectionable under United Kingdom law and the EC competition authorities must therefore be given primacy in investigation. The additional clause which I propose would preclude the director investigating a matter that is or has been the subject of a Commission investigation, thus avoiding a double investigation. However, the amendment deals with only one aspect of the problem of overlapping jurisdiction. There must be further consideration of the issues involved in order to ensure that all areas of overlap, in particular the problem of double jeopardy, have been dealt with. I beg to move.

Lord Haskel: In responding to the noble Baroness, I cannot over-emphasise that the purpose of the Bill is to ensure as far as possible a consistency with EC approach and thereby to ease burdens for business. Both the director and the European Commission will be applying substantially the same competition tests and following common jurisprudence where applicable. We believe that, in practice, if the Commission is investigating a matter it is unlikely that the director will start his own separate investigation. The Commission will already have the matter in hand; that is the parallel investigation to which my noble friend referred.

Even though the risk of separate investigation is small in practice, we have also considered the case for placing a bar on the director conducting separate investigations into the same matter which the European Commission is investigating or has investigated. We decided that it would not be right to prevent the director from ever exercising his investigatory powers in such a situation.

In deciding whether to provide for such a power, I am sure that the noble Baroness will appreciate that we must be alive to the risk of loopholes which can be abused. For instance, if we were to prevent the director from investigating behaviour which the European Commission had investigated some time before, or with third parties, it would not be possible to take account of market developments. Conduct at the time of the Commission investigation may have proved justifiable, but after several years the market may have transformed and it would therefore be wrong to prevent the director from starting an investigation. Equally, even for cases which are the subject of current or recent investigations, determining what is the behaviour which the Commission is investigating may well be extremely difficult.

The amendment could prevent the director from taking action against conduct which raised UK competition concerns but appeared to be within the scope of a Commission investigation, although it was actually of no interest to the Commission. We should guard against placing such barriers in the way of the

17 Nov 1997 : Column 418

director in forcing prohibitions to protect competition in the UK. In view of the likelihood of the amendment creating loopholes, I invite the noble Baroness to withdraw it.

Lord Graham of Edmonton: The Minister began his remarks by saying that the Bill was designed to produce consistency between UK and EC practice and inquiries. He then said that, while inconsistency was unlikely, loopholes could emerge as a result of market changes. Of course that is possible, but as loopholes emerge does not the Minister envisage consultation between the UK and the EC in order to ascertain the EC's intention in respect of what has become a flawed piece of legislation?

We do not want business, third parties or anyone to be involved in what is sometimes distasteful and expensive work which takes time. A great deal of paper is produced only to go through it again. Would it not be better to avoid that situation by ensuring that the supreme body, the EC, is consulted and takes the initiative? If the Director General of Fair Trading updates the UK law as a result of loopholes the EC would have to make changes to its legislation.

I believe that the amendment is sensible. The director general may believe that he is unable to take action because certain possibilities are unlikely to arise. However, surely there is dialogue between the authorities here and in Brussels and there should be a sensible approach. If there is a superior and inferior level, the UK is inferior by comparison to the EC.

I must declare an interest under Part III of the register. I am secretary of the all-party group for retail trade and I hope that my comments have not let it down.

Lord Haskel: I began my remarks by saying that I cannot over-emphasise that the purpose of the Bill is to ensure as far as possible that the burdens on business are eased. By consultation, burdens on business can be eased. Furthermore, consultation can ease the burden on the director. However, there are cases in which there is not sufficient Community interest. The Commission notice on co-operation with national authorities, which was recently published, acknowledged that some cases it has examined are anti-competitive, but it does not wish to pursue them because there is not a sufficient Community interest. The notice goes on to state:

    "It goes without saying that in such cases the national authority may take action".

I hope that that explanation satisfies the noble Lord.

Baroness Nicol: I still have one worry. The Minister referred to changes which may take place over time and which may make a further investigation necessary. I appreciate that and I am sure that the intention behind the clause is not to disallow a second investigation which may be necessary after a period of time. However, I hope to avoid a dual investigation, either simultaneously or within a short period of time, which would involve all the parties in a great deal of unnecessary work. Perhaps we might agree a wording

17 Nov 1997 : Column 419

which would preclude investigations following too quickly. Perhaps the Minister will look at the matter again.

Lord Haskel: I would have thought that one could leave it to the good sense of the Commission and the director to ensure that work is not duplicated. My noble friend does not wish the work to be duplicated or repeated after too short a period of time. I would have thought that one could leave the matter to the good sense of the director and the Commission. After all, they are applying the same competition tests and neither will want to duplicate the work.

7 p.m.

Lord Graham of Edmonton: The Minister is saying, following the good sense of my noble friend Lady Nicol, that an internal UK investigation is not likely to follow very quickly after the authorities in Brussels have reached their findings. Businesses and the British authorities need to be assured that they will have an opportunity to digest the significance and practice of the EC change. If we could have that assurance, that would go some way towards ameliorating the aggravation which may occur.

Enormous costs are involved in any survey or investigation. It would be helpful to the Committee if the Minister could repeat that he does not envisage that soon after an EC investigation, there is likely to be a need for a further investigation.

Lord Haskel: I repeat that we think it is unlikely that the director will start his own separate investigation when the Commission already has the matter in hand. I refer to our earlier discussions when the Minister raised the question of reasonableness within the Bill. It is not reasonable to expect people to duplicate that work.

Baroness Nicol: I hate to sound cynical, but I never like to rely on "good sense". However, I should like to think about the reply which we have been given and, in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 31 [Directions in relation to agreements]:

Baroness Nicol moved Amendment No. 148:

Page 16, line 30, at end insert--
("( ) No direction issued pursuant to section 31(3)(a) shall restrict or inhibit the right of the parties to the agreement so modified from terminating such agreement.").

The noble Baroness said: Clause 31 gives the director power to make such directions as the director considers appropriate in bringing an infringement to an end. Clause 31(3) provides that a direction of the director may include provisions requiring the parties to modify their agreement or to terminate it.

Parties to an agreement which is found to infringe the prohibitions may prefer to terminate their arrangement rather than continue in a form which they had not agreed. The amendment makes it clear that the director does not

17 Nov 1997 : Column 420

deprive the parties of their right to terminate the agreement rather than modify it if that is their wish. I beg to move.

Next Section Back to Table of Contents Lords Hansard Home Page