Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Simon of Highbury: My Lords, I note the point made by the noble Earl, Lord Harrowby. However, what I have said is on the record and the matter falls better to the guidance which will be given in order to give ourselves the necessary flexibility within the statements that have already been made in the House on this matter as regards the way in which the director wishes to take that forward.

Lord Fraser of Carmyllie: My Lords, I am concerned about Amendment No. 134. We were told clearly by the Government in earlier discussions that there would be a restriction to the United Kingdom. I am rather concerned that the matter of the geographic confines is now something to which there is no reference in the Bill. I understood from what the Minister said that he has some sympathy for the point raised within Amendment No. 134 that it should be restricted to relevant goods or services. His reference to the European Court of Justice seemed to indicate that a similar restriction is contemplated by the court when such fines or penalties are imposed.

I invite the Minister to reflect further on that matter, especially if he has sympathy for the issue raised. It seems to me desirable to have that reference on the face of the Bill and I am sure that the noble Lord observed that there is sympathy for that view on all sides of the House. In the meantime, I beg leave to withdraw the amendment.

19 Feb 1998 : Column 361

Amendment, by leave, withdrawn.

[Amendment No. 134 not moved.]

Clause 37 [The appropriate level of a penalty]:

[Amendments Nos. 135 and 135A not moved.]

Lord Simon of Highbury moved Amendment No. 135B:

Page 18, line 29, leave out from ("section") to end of line 31 and insert ("he must consult such persons as he considers appropriate.
( ) If the proposed guidance or alteration relates to a matter in respect of which a regulator exercises concurrent jurisdiction, those consulted must include that regulator.").

The noble Lord said: My Lords, in moving this amendment, I should like to speak also to Amendment No. 135C, 149E, 159B, 164A and 164B. All the amendments but one in the group are in response to points raised in Committee by the noble Lord, Lord Kingsland, on which I agreed to reflect. The noble Lord moved an amendment which would have required the Secretary of State to consult appropriate persons when preparing tribunal rules. Amendment No. 149E places such a requirement on the Secretary of State.

We have also tabled amendments placing a similar requirement on the director general to consult appropriate persons when preparing his rules (under Clause 49); guidelines on the appropriate level of the penalty (under Clause 37); and advice and information (under Clause 50).

Amendment No. 164B places a similar requirement on sectoral regulators to consult when they are preparing their own advice and information. In fact, I am pleased to report that the Director General of Fair Trading wrote to me on 6th February reporting considerable progress in preparing procedural rules and guidelines.

Working closely with the sector regulators, the director general has identified a list of areas to be covered in guidelines. He expects to publish the vast bulk of the guidelines series by September of this year. In doing so, he is working to ensure that the documents are business friendly and aimed at those likely to be affected by the provisions of the Bill rather than legal specialists, although I am sure both will understand them.

His letter also confirms that before issuing guidelines, the sector regulators and the director general expect to consult as widely as possible, including consumer bodies, local authority associations, and, of course, the business community and its advisers. I have placed copies of the director general's letter in the Library of the House.

Also included in this group is Amendment No. 135C. This is a technical amendment which puts right the definition of appropriate court in Clause 37 so as to include the House of Lords. This change is needed because the House of Lords will be the ultimate court to hear appeals on the level of penalty and so should also have regard to the guidance on the level of penalties issued by the director. I beg to move.

On Question, amendment agreed to.

19 Feb 1998 : Column 362

Lord Haskel moved Amendment No. 135C:

Page 19, line 3, at end insert--
("(d) the House of Lords.").

On Question, amendment agreed to.

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

Lord Teviot moved Amendment No. 136:

Page 20, line 3, at end insert--
("( ) Immunity may not be granted under this section to a company which the Director considers has initiated an anti-competitive act.").

The noble Lord said: My Lords, as your Lordships know, Clause 35 deals with infringements of Chapter I and Chapter II prohibitions. It gives draconian powers to the Director General of Fair Trading. It also allows the director general to impose fines of up to 10 per cent. of turnover of the company or group concerned. Again, it gives limited immunity to small agreements in Clause 38, but rightly gives power to the director general to withdraw that immunity in certain circumstances; namely, in Clause 39, subsection (4).

At this stage I, as usual, declare an interest of which many of your Lordships will be aware. For a long time I have taken a special interest in the bus industry and it is the impact that this Bill will have on that industry which I wish to highlight. Some of your Lordships will be aware of the bus "wars" which were a feature of the industry in the late 1980s. Thankfully, those are now a thing of the past. However, the industry is still competitive, and occasionally the Director General of Fair Trading has to intervene. What is not always appreciated is that the anti-competitive actions can be initiated by large and small operators alike.

There is still an element of "cowboy" operations which can cause havoc on established routes and networks, to the disadvantage of passengers. At this point I must stress that the amendment is aimed solely at protecting the public's bus services, not the market position of the current service providers. However, to protect the passenger, we must protect the current service providers from anti-competitive behaviour. It therefore follows that the Government must ensure that any operator, irrespective of size, which flouts the rules is punished.

The established operator providing high quality services, backed up by sustained investment, which merely responds to the behaviour of the "cowboy" must not be penalised. If we are to ensure that passengers will receive the high quality services that they deserve, I believe that we must look closely into the effects that Clause 39, as currently written, will have.

I am aware that the main thrust of the clause is to reduce compliance costs on small businesses, something of which I, for one, am generally in favour. However, the Government have a responsibility, when bringing forward legislation, to underpin this aim to ensure that it does not merely place on the statute book a law which gives small businesses immunity from fines and, in effect, carte blanche to attack their larger competitors in an anti-competitive fashion. I am sure that that is not the Government's intention, which is why I think that the clause needs closer examination.

19 Feb 1998 : Column 363

In conclusion, I should acknowledge again that there is a mechanism incorporated in the Bill which enables the Director General of Fair Trading to withdraw immunity from fines in certain circumstances. I hope, therefore, that the Minister will be able to accept the amendment or agree to propose an equivalent on Third Reading. If, however, he is not minded to do either, I hope that he will indicate tonight his support for the Director General of Fair Trading for the principle of the withdrawal of immunity from fines for any company perpetrating anti-competitive behaviour. I beg to move.

6.45 p.m.

Lord Simon of Highbury: My Lords, I have a great deal of sympathy with the noble Lord, Lord Teviot. Coming from a large company background myself, it never escaped my notice that very small companies were able to perpetrate very considerable damage. I guess if they were setting their minds to very large abuses, they could also achieve that aim. Therefore, I fully understand the point of proportionality, if I may put it that way, that the noble Lord has put to me.

However, I do not believe that the modest protection conferred by the clause for what I shall, for convenience, call SMEs (small and medium-sized enterprises) should really give rise to the concerns which the noble Lord has expressed. As the noble Lord rightly said, the Government believe there ought to be some recognition of the compliance costs for small and medium-sized enterprises. We have therefore provided in Clauses 38 and 39 that parties to small agreements and persons whose conduct is of minor significance should be immune from penalties for breaches of the Chapter I and Chapter II prohibitions respectively.

Nevertheless, we wholly accept that SMEs may infringe the prohibitions including, as I hinted in my introduction, abusing dominant market positions. Small companies are absolutely capable of doing that. That is exactly why the clauses provide for the director to be able to withdraw the benefit of the immunity. Moreover, the full range of the investigation and enforcement powers, including the power to give directions with a view to bringing to an end the infringement of a prohibition, will be available to the director if he needs to use them.

Therefore, I doubt that the provisions will disadvantage competitors of small and medium-sized enterprises or the public in the way described by the noble Lord. The provisions are not in any sense a licence to SMEs to infringe the prohibitions and, in particular, to abuse a dominant position. Under those circumstances, the director has every power that he requires to act and would be able to withdraw the immunities. In view of those explanations, I hope that the noble Lord will feel able to withdraw the amendment.

Next Section Back to Table of Contents Lords Hansard Home Page