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Lord Fraser of Carmyllie: My Lords, I cannot say that I am entirely persuaded by the argument. I am surprised that the noble Lord, Lord Borrie, found difficulty with my argument because it is a fairly simple one. The argument advanced at Committee stage was that we can do nothing to Article 85 and that we must not circumscribe it in any way as it appears in our domestic law. The simple point I was making is that a year ago, when confronted with the same issue, the Dutch had no difficulty whatever in adding a significant circumscribing of Article 85. If the noble Lord wishes to see it it runs to about two and a half pages.

More importantly, I believe that we shall have to return to this matter because I do not believe that we have yet had a full enough answer to the point that my noble friend Lord Kingsland and the noble Lord, Lord Ezra, raised. With this amendment we are seeking to ensure that business understands what is expected of it in terms of notification. It seems to us that it is desirable that it understands that as clearly as possible, not only for its own purposes but also for those who have to deal with the notifications that the number is reduced to the sensible minimum. From past experience the Commission's problem, as we see it, is that it has been seriously over-burdened with unnecessary notifications. What really lies behind our amendment is an attempt to reduce that burden. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 3:

Page 2, line 24, leave out subsection (4) and insert--
("( ) Any decision or provision of an agreement which is prohibited by subsection (1) is void, but this will not affect the remaining provisions of any such agreement.").

The noble and learned Lord said: My Lords, this is an even shorter amendment. The wording of Clause 2(5) might be read as indicating that the whole of any agreement would be void. This amendment is designed to ensure that should there be a specific anti-competitive part of it it should be severed but the rest of the

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agreement can stand. The amendment tries to eliminate that problem. I do not believe that the argument needs further elaboration. I beg to move.

Baroness Nicol: My Lords, I hope that my noble friend will be able to accept the amendment. I raised this concern at Committee stage. In response my noble friend said,

    "The application of the prohibition to a contract should not always lead to the entire contract being void".

He went on to say,

    "The best way to avoid such a possibility is to mirror the language of Article 85(2)".--[Official Report, 13/11/97; col. 267.]

I withdrew the amendment, but I said that I would take advice and might return to it. I have since been advised that there is still some concern that the English courts may not apply what is known as the blue pencil test and that therefore there might be difficulty caused which we would hope to avoid. I hope that my noble friend will look kindly on the amendment.

Lord Kingsland: My Lords, the Minister will have no difficulty this time with the restrictions of European practice because I believe that the approach of the European Commission and, indeed, of the European Court of Justice, is to take the view that, as far as the techniques of civil ability are concerned, it is a matter for each member state to adopt such techniques as are typical in its own law.

Lord Ezra: My Lords, this amendment, which I support, is in line with the intention of the previous amendment; namely, to make clear to enterprises where they stand on the matter. As has been pointed out, it is reasonable that enterprises should know where they stand if part of an agreement deals with a prohibited aspect but the remainder does not. In practice, it would probably be all right, but I believe that a point of this importance should be stated on the face of the Bill.

Lord Simon of Highbury: My Lords, as the noble and learned Lord, Lord Fraser, noted, we debated a similar amendment on the first Committee day, tabled by my noble friend Lady Nicol. As I said then, I think we are all agreed that the application of the prohibition to a contract should not always lead to the entire contract being void. This is the result under Article 85. The European Court of Justice has held that it is only those elements of an agreement which are prohibited under Article 85 which are void, leaving the question of the enforceability of the remaining provisions to national laws to determine. That point was clearly put by the noble Lord, Lord Kingsland. How do we achieve the same result for the UK system? I remain convinced that the best means is to mirror the language of Article 85(2) of the EC treaty, which deals with the consequences of an agreement being caught by the EC prohibition. This is what we have done in subsection (4).

This principle of European Community law will apply to the interpretation of the Chapter I prohibition as a result of Clause 58. Whether the infringing elements are severable from the agreement as a whole so that what is

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left is enforceable is a matter for the general law of contract applicable in England and Wales, Scotland and Northern Ireland.

So, if we are clear that we do not want the whole contract to be automatically void, what is the harm, you may ask, in expressly providing so. As I said in Committee, we consulted on the basis of language very similar to that set out in the amendment and we received comments from legal practitioners that it would displace normal UK rules of severance and prevent the normal rules of severance applying, with the possibility of severing "offending" parts of whole "provisions". Moreover, by not copying out the words of Article 85(2) it would risk divergence from EC law. A different type of severance test might develop from that applied by the UK courts in applying Article 85. This in turn could create burdens for business by having to deal with two subtly different types of severance test under the EC and UK prohibitions.

Copying the language of Article 85(2) means that the courts will look to EC law for the meaning of the provision as to voidness. Having decided what provisions of the agreement are void the court will then apply the rules in the relevant domestic law to decide what the effect of those provisions being void may be on the enforceability of the remaining provisions of the agreement.

The relevant test of severance in English law is whether, after severing the void terms, that alters entirely the scope or intention of the agreement or removes the heart and soul of the agreement. If the answer is no, the remaining provisions of the agreement will remain enforceable. I am satisfied of the clarity of that, after taking legal advice. Therefore, I urge the noble and learned Lord, Lord Fraser, to withdraw the amendment.

Lord Bruce of Donington: My Lords, may I ask the Minister to clarify a point about my understanding of his position? If the European Court of Justice comes to a decision that part of the activities ought to be prohibited, but the remainder remains free of the judgment, do I understand the noble Lord's position to be this: because the remainder has been, as it were, ignored by the European Court of Justice, our courts nevertheless have to have regard to the fact that the Commission might not (and perhaps unofficially) agree with the Court's opinion and our courts therefore have to follow an Act of Parliament on the supposition that the Commission might act to prohibit the activity and, in order to remain within the ambit of Articles 85 and 86 of the Treaty, they should leave it at that and merely follow it so that the whole activity is barred? Is that the noble Lord's position?

4.45 p.m.

Lord Simon of Highbury: My Lords, for clarification, the point that I was making, and which I now repeat for my noble friend, is that European law may speak to voiding part of the contract. If it does not void the whole of the contract, it looks to the national

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law base to decide whether any other parts of the contract not voided by the European judgment will be voided by the national court.

Lord Fraser of Carmyllie: My Lords, even if I have failed to persuade the Minister to incorporate this amendment in the Bill, following our exchange I am confident that I have secured that his words on the matter will be repeatedly quoted in courts of law in the future. With that satisfaction, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 4 not moved.]

Clause 3 [Excluded agreements]:

Baroness Wilcox moved Amendment No. 5:

Page 2, line 41, leave out from ("exclusions)") to end of line 42.

The noble Baroness said: My Lords, in moving Amendment No. 5, I should like to speak also to Amendment No. 67. I return to an issue that I raised in Committee: the way in which the Bill deals with professional rules. As with other parts of the economy, the professions must be properly scrutinised to make sure that they do not indulge in anti-competitive practices. History has shown that some rules, such as advertising and fee-setting, can be anti-competitive and need monitoring.

When we last debated the issue, I pointed to an issue of current concern with the Office of Fair Trading: the legal profession and multi-disciplinary practices. Solicitors' rule books have prevented them entering into agreements with other non-solicitor professions, such as accountants. They prevent fee-sharing with non-solicitors and restrict the work of solicitor employees. At the same time, however, the commercial pressures on law firms have been growing with the larger firms of accountants (such as Arthur Andersen, Price Waterhouse and Coopers & Lybrand) expanding and developing their own international network of law firms.

I suggest that the legal profession here could be under commercial pressure for another reason. The extension of conditional fees and the decline of legal aid, as announced by the Lord Chancellor last autumn, could result in significant changes to the way in which the legal profession operates. Some of the smaller legal firms may need to find new ways of operating to survive in an increasingly commercial world. Multi-disciplinary practices could be a way forward for them if the Law Society were to change its rules.

In many ways, the Bill will result, I believe, in a considerable improvement in the competition system. It will be simpler, more consistent and more streamlined. However, it is not when dealing with professional rules. Therefore, would it not be more straightforward, clearer and more consistent with the Bill's overall approach if all the professions were brought within the overall scope of the Chapter I prohibition, as my amendment proposes? Why should surveyors, for instance, be treated differently from estate agents?

I agree with the noble Lord that not all professional rules have competition implications--indeed, some professional rules exist for the protection of the public--

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but if professional rules were to be treated as part of the prohibition, could not the professional bodies apply to the Director General of Fair Trading for their rule books, or even parts of their rule books, to be exempted from the prohibition under Clause 4? Professional rules could then be treated in the same way as other agreements subject to the prohibition. I suggest that those professions who produced acceptable rules would have nothing to fear. Surely, such a system could work alongside the other systems of approval of professional rules.

This is a point of principle which is about ensuring that different parts of the economy are treated in the same way with regard to competition law without singling out certain parts for special treatment. One hopes that it is also about maintaining consistency and clarity in the way in which the new system will operate to the benefit of all. I beg to move.

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