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Page 19, line 40, at end insert ("(but shall not prejudice a supplier's right to prohibit loss leading)").

The noble Lord said: This is a fairly straightforward amendment. It seeks to add to the end of Clause 38(9) the expression,

I believe that the context will be clear to the Minister. The subsection deals with price-fixing agreements. The intention of the amendment is to make it clear that a supplier's right to prohibit loss leading shall not be included in that category. I beg to move.

Lord Haskel: I would like to make clear at the start that the Bill is not intended to introduce any general rule prohibiting all restrictions on loss leading. We had this debate on the first day in Committee when we discussed the newspaper industry. Restrictions by a supplier on loss leading may or may not be prohibited, depending on their effects on competition.

All we provide in Clause 38 is that the special immunity from penalties is not available where the agreement has the object or effect of restricting the freedom of one party to determine prices. This is an important safeguard. Such agreements have the potential to create the most serious anti-competitive effects.

If an agreement does not qualify for the special immunity under Clause 38, it does not follow that it will be prohibited. A restriction on loss leading might not fall within the prohibition in the first place, and if it did it might qualify for exemption. The director can assess the effects of the restriction in the individual circumstances. The director will have to decide whether the price of a product is a loss leader or the supplier is satisfied with low margins. I therefore urge the noble Lord to withdraw his amendment.

Lord Kingsland: I thank the Minister very much indeed for his reflective answer to my amendment. In those circumstances I beg leave to withdraw it.

Amendment, by leave, withdrawn.

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Clause 38 agreed to.

Clause 39 [Limited immunity in relation to the Chapter II prohibition]:

[Amendments Nos. 166 and 167 not moved.]

Clause 39 agreed to.

Clause 40 [Agreements notified to the Commission]:

Lord McNally moved Amendment No. 168:

Page 20, line 30, leave out ("does not prevent") and insert ("prevents").

The noble Lord said: In the absence of my noble friend Lord Ezra, and at his request, I move this amendment. I know that it is a matter of some concern to him and he very much regrets that he is unable to be here to move it. It is a small but decisive amendment. It relates to his concern, which I share, about the overlapping nature of the jurisdiction of UK regulators and EC regulators.

Running through some of the ministerial responses and the contributions of their Back-Bench supporters, there seems to be the idea that regulators are a good thing and that these are the guys in the white hats who go around the countryside slaying wrongdoers here, there and everywhere. We on this side of the Committee share the enthusiasm of Ministers for rooting out the wrongdoers, but a good deal of the evidence that we hear from industry is that the work of the regulators can be leisurely, academic and far removed from the realities of running a business.

My noble friend is anxious that those who are trying to run a business--not the sinners or wrongdoers or the people about whom Ministers are concerned, but the ordinary businessmen--do not find themselves in a kind of double jeopardy as a result of giving powers both to the EC and UK regulators. One might find that when one regulator is satisfied, the other regulator starts up a separate investigation.

That is the thinking behind my noble friend's amendment. As I say, it is not something that he has come up with as an early morning inspiration; the amendment is the result of some pretty heavy lobbying by industry based on its own experience and its fears. I hope that the Minister can give some reassurance. I beg to move.

9 p.m.

Lord Kingsland: My noble and learned friend Lord Fraser of Carmyllie has added his name to this amendment. In wholly concurring with what has just been said on behalf of the noble Lord, Lord Ezra, by the noble Lord, Lord McNally. I should like to emphasise just one point. As I understand it, the philosophy behind the Bill is to ensure that our legislation on this matter dovetails with the European Community regime. Above all, it aims to introduce certainty and economy into the operation of the regime.

In the context of those two objectives, I find it difficult to understand why the fact that an agreement has been notified to the Commission does not prevent the director from investigating it himself. There seems to be an unnecessary overlap of responsibilities which will not only create unnecessary work for the director

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general and his staff and unnecessary work for any company that is being investigated, but which will also impose unnecessary burdens on the economy. As the Minister said in a number of earlier interjections, the whole object of this Competition Bill is to enhance the competitiveness of the economy.

Lord Haskel: I shall not try to comment on the remarks of the noble Lord, Lord McNally, about the work habits of regulators and whether they are in contact with the real world, especially in the presence of my noble friend Lord Borrie. Regulators have, however, been effective in the past few years in reducing the prices and looking after the interests of the consumer and that, to some extent, means being in touch with the real world.

Perhaps I may move now to the comments made by the noble Lord, Lord Kingsland, about dovetailing into the European regime. We discussed this when we considered the amendment moved by my noble friend Lady Nicol. We concluded that the European Commission and the director in the United Kingdom did not want to duplicate each other's work. They would not want to carry out unnecessary extra work.

We have, however, carefully considered the case for giving absolute legal certainty by preventing any action by the director while the Commission is considering the same matter. We have provided in this clause the legal certainty of immunity from penalties under the Chapter I prohibition before the Commission determines the notification for exemption. However, we decided that it would be dangerous to provide in the Bill a bar on the director investigating such agreements. In deciding whether to provide for such a bar, I am sure that noble Lords will appreciate that we must be alive to the risk of loopholes which can be abused. We discussed that earlier.

There may be cases notified to the European Commission which raise little or no Community interest, which it has neither the time nor the resources to attend to, and which the director might therefore wish to investigate. The cases may not involve interstate trade. Further, if we accepted the amendment, parties to agreements which have no effect on interstate trade may see a loophole and notify agreements to the Commission in an attempt to evade action being taken by the director. We therefore consider that it would be wrong to create an absolute legal bar preventing the director from investigating cases which have been notified to the European Commission. I hope that that explanation satisfies the Committee.

Lord McNally: Perhaps I should take this opportunity to try to correct Hansard. I referred earlier to regulators, and I should like to insert, "except with the shining exception of the noble Lord, Lord Borrie".

Noble Lords: Hear, hear!

Lord McNally: I am not sure about the Minister's explanation. I can see that the Government do not want to create loopholes, but these provisions seem to go a lot further than mere dovetailing. The strong

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representations of the CBI and others with concerns about overlapping jurisdictions have not been made lightly. I hope that as the Bill proceeds there will be an opportunity to look again at this. However, in the light of the Minister's interim reply, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 40 agreed to.

Clause 41 [Offences]:

Lord Kingsland moved Amendment No. 169:

Page 20, line 38, after ("produce") insert ("or provide an explanation of").

The noble Lord said: I hope to have a little more success with this amendment. It is not quite a technical amendment, but it seems to me that what we are seeking runs on quite naturally from what is in the Bill already. The amendment deals with the question of offences under Clause 41(2), which states:

    "If a person is charged with an offence under subsection (1) in respect of a requirement to produce a document, it is a defence for him to prove",

and the defences are then listed. The amendment seeks to insert, after the words "requirement to produce" the phrase,

    "or provide an explanation of",

a document. That is often a requirement of an investigator and it seems to us that the defences ought equally to apply to that. I beg to move.

Lord Haskel: The noble Lord, Lord Kingsland, will have a bit more success with this amendment because I can see the strength of his argument. It is not the intention of the Government to make it an offence for a person to provide an explanation of a document where that person is not able to provide such an explanation. I accept that I should reflect further on this issue in the period between now and Report. I would therefore invite the noble Lord to withdraw his amendment. We shall consider it further.

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