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Lord Lucas: I am extremely grateful to the Minister for that eloquent and wholly satisfactory explanation. I shall be withdrawing my amendment. However, I should be grateful if the noble Lord would favour me with one further piece of information. Let us suppose that we are looking at an agreement that might come within the small agreement category and that the two parties to that agreement are of a totally disproportionate size. One might have a small manufacturer with a new product who is selling it to Sainsbury only, because Sainsbury has offered him a particular promotion, or one might have a sweet shop which is buying its chocolates from Cadbury. Is there any way in which such essentially small agreements can be exempted under the clause, or are they caught just because one party to them is big? Does it mean that the small company which is also party to them will have to tread as carefully as a big company would have to tread in the same circumstances?

Lord Haskel: Both parties would have to tread carefully. But it all depends on the nature of the agreement. It depends on whether the small company or the large company is contravening the conditions of the Bill.

Lord Lucas: I understand what the noble Lord says. However, one may have a new product and one may be the market in that product. I imagine that Mr. Dyson, when he started up with his vacuum cleaners, was the market for such vacuum cleaners. I would be concerned if he had to employ two or three lawyers, because he was the market, to deal with the problems under the Bill.

Lord Haskel: I do not think he would, because it is no crime to be dominant. The crime is to exploit that dominance. If Mr. Dyson exploited his dominance, he would be in danger. However, simply having a dominant product is not a crime.

Lord Lucas: I shall not extend this discussion. I shall read carefully what the noble Lord has said and perhaps return to the matter at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Kingsland moved Amendment No. 164:

Page 19, line 20, leave out from ("35(1)") to end of line 35.

The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 167. The amendments are closely related. Amendment No. 164 deals with Chapter I prohibitions and Amendment No. 167 deals with Chapter II prohibitions. The point

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of reference for these amendments is Clause 35, which is entitled Penalty for infringing Chapter I or Chapter II prohibition.

Small businesses are caught by the prohibitions but they are granted immunities in certain circumstances. Those circumstances are set out in Clauses 38 and 39. Having granted these immunities, the Government seek in certain circumstances to claw them back. Those circumstances, in respect of Chapter I prohibitions, are set out in Clause 38(3) to (8), and, in respect of Chapter II prohibitions, are set out in Clause 39(3) to (8). These two amendments seek to strike out the circumstances in which the Government can cancel immunity. I beg to move.

8.45 p.m.

Lord Haskel: The short answer to the noble Lord's amendment is that we do not want small businesses to learn bad habits. I do not believe it is right that small businesses should never be capable of having penalties imposed on them other than in the case of price-fixing agreements, which this amendment seems to imply. If the noble Lord's amendments were accepted, there would remain the possibility of the prohibitions being enforced by a decision of the director and directions under Clauses 31 and 32. There would also be the possibility of third party actions.

In the nature of things, though, ordinary consumers and small companies, who will commonly be the victims of anti-competitive agreements and abuses by small and medium-sized enterprises, are less likely and less able to pursue their rights through the courts than would a big business. But a major element of the new regime that we are proposing, and what was rather lacking from the regime that it will replace, is deterrence. If there is little or no possibility of a business being penalised for infringing the prohibitions, it will have no incentive to avoid doing so at that time or thereafter.

That is not to say that there should not be some immunity from penalty for small businesses. These clauses show that the Government accept that there should and the protection they provide is extensive. The director must give written notice of his intention to withdraw immunity from penalty. The removal of immunity cannot be backdated to before the director took his decision. In determining the withdrawal date, the director must have regard to the time required to be able to bring the infringement to an end. Thus, any reasonable business would have every opportunity to avoid the imposition of a penalty. I would therefore think it not at all likely that many businesses protected by these clauses would be subject to penalties. We also need to guard against what I might call serial infringers. If there were no risk of penalty, a business would have little incentive not to engage in repeated small infringements.

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In the light of what I have said and the recognition that all sides have shown for the need for the system to deter--I know I have the noble Lord's agreement on that-- I wonder whether he is able to withdraw the amendment.

Lord Kingsland: I thank the Minister for his response but I wish to point out to him that there is already a substantial deterrent in place. Small businesses are not immune to the effect of the prohibitions themselves. Because they are still subject to the prohibitions, they can be subject to third party actions. Therefore, the deterrence is in the fact that the third party can bring an action against them.

We think the immunity should be unqualified both because the costs of compliance by small businesses are very great--they do not have the resources which large businesses have to ensure that they are complying with every crossed "t" and dotted "i" of the competition regime--and, equally, because monitoring the agreements is likely to absorb, since small businesses are numerous, a disproportionate amount of the time of the Director General of Fair Trading. For those reasons I believe that a fair balance is already achieved between deterrence on the one hand, and a light touch for the regime on the other.

Lord Haskel: I am not quite sure what point the noble Lord is making. Is he saying that there is already sufficient deterrence and that the regime is therefore unimportant? He appears to be ignoring the other points I was making about serial infringements, the fact that there is protection for small and medium-sized companies and the fact that the director has to give written notice if he intends to withdraw immunities. It seems to me that most businesses have every opportunity to avoid the imposition of a penalty. Indeed, being small businesses, most of them would not have to make a large effort to ensure that they did not fall within the prohibitions of the Bill.

Lord Kingsland: I do not want to prolong the discussion on these amendments too much. I say to the Minister that the deterrent is provided by the fact that these small businesses are subject to the prohibitions and is considerably greater than he might think. Who is most likely to identify anti-competitive behaviour by small businesses? It will be their competitors. They are in a strong position to bring third party actions against companies that contravene Chapters I and II of this Bill. I emphasise to the Minister that there is a very good built-in system of deterrence already in existence. There is no need to add the great panoply of bureaucratic interference which will necessarily flow from these small businesses also being subject to the penalties.

Lord Borrie: I believe that the noble Lord, Lord Kingsland, exaggerates the deterrent aspect of third party actions. In my experience in the limited area under the Restrictive Trade Practices Act third party actions have been possible in the past. But small businesses have been extremely reluctant to take action themselves because of the expense. With some reason they have thought that the public office, namely the Office of Fair Trading, set up especially to enforce the law should take action at public expense. That is the real deterrent.

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When one talks about small businesses one should not assume that they are all good boys. We are all in favour of small businesses and their continued success. But we also know of cases--not just the bus companies that I mentioned earlier today but also estate agencies--where firms have been known time and again to engage in malpractice. I do not mean to damn all estate agencies and bus companies, but I do not believe that it is right to say that third party actions are a sufficient deterrent in all cases.

Lord Kingsland: I do not know whether the Minister is going to respond further to what I said. I suspect that the argument has been pretty fully aired. In the circumstances I express my regret that the Minister has not responded more positively to my suggestions, and I shall bear that in mind when considering what amendments to table at Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Kingsland moved Amendment No. 165:

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