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Lord Teviot: My Lords, I am most grateful for the way in which the Minister responded to my amendment. I shall, of course, read most closely what he said in

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Hansard tomorrow. At present, I do not envisage returning to the matter. I am indeed most grateful to the Minister. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 136A:


After Clause 40, insert the following new clause--

Defence in cases where infringement of Chapter I or Chapter II prohibition not foreseen

(" . In any civil proceedings brought under or in connection with this Part, including any Part I proceedings, it shall be a defence for a person to show that, having regard to all the circumstances, he could not reasonably have foreseen that the agreement or conduct to which those proceedings relate would constitute an infringement of the Chapter I or the Chapter II prohibition (as the case may be).").

The noble and learned Lord said: My Lords, this amendment deals with the problem, as we see it, that might result where someone, or an undertaking, has in fact been found to have acted in such a way that an infringement of the prohibitions has taken place. The amendment takes account of the fact that the actual effect of behaviour may not be known in advance and that a defence based on intent will, therefore, be unworkable.

As the Minister acknowledged during the first day of the Report stage:


    "An abuse may be the effect of conduct on the part of a dominant company without being the intended result".--[Official Report, 2/9/98; col. 911.]

Our amendment would not provide a defence on the basis of knowledge but on whether the eventual outcome was a reasonably foreseeable consequence of the course of action taken by the defendant. I beg to move.

Lord Haskel: My Lords, the purpose of the new prohibitions is to catch agreements and behaviour with anti-competitive effects. It is for the courts to determine whether an agreement or conduct breaches the prohibitions with all the consequences that that may have in civil law. It should not be a matter that depends on the parties foreseeing such an infringement. It cannot be a matter dependent on the parties' perceptions as to whether an agreement is void; or as to whether conduct that injures a third party is abusive.

Nevertheless, the notion of what could reasonably have been foreseen to be an infringement of the prohibition will of course be highly relevant in the new prohibition regime. It will no doubt feature in the director's guidance on the appropriate amount of any penalty. We are seeking to provide as much certainty as possible for businesses assessing the application of the new prohibitions. Those taking reasonable precautions will be able to stay the right side of the new regime. The prohibitions are not new concepts. They are modelled on Articles 85 and 86 which British business has lived with for over 20 years. Firms can look to existing Community jurisprudence as a guide. In addition, the director will be issuing guidance on how the prohibition system will operate.

Furthermore, if firms are in any doubt about the application of the prohibitions, they can seek guidance from the director or seek a formal decision. If the

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director grants an exemption in respect of an agreement, the agreement will be enforceable in the courts assuming the exemption was validly granted. Otherwise, the director's decisions will no doubt be of highly persuasive authority in the courts. Clause 56 also provides as a general rule that director's findings of fact are to be binding in court proceedings.

In view of those arguments, I urge the noble and learned Lord, Lord Fraser, to withdraw the amendment.

Lord Fraser of Carmyllie: My Lords, I am grateful to the Minister for that explanation. I shall read it carefully in Hansard. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 136B:


After Clause 40, insert the following new clause--

Decisions on matters subject to a Commission investigation

(" .--(1) The Director shall not make a decision that--
(a) an agreement infringes the Chapter I prohibition; or
(b) conduct infringes the Chapter II prohibition,
if that agreement or conduct is the subject of an investigation by the Commission under a provision of Community law relating to Article 85 or 86.
(2) Nothing in this section shall prevent the Director from conducting in respect of that agreement or conduct--
(a) an investigation in accordance with section 25; or
(b) a Director's investigation or Director's special investigation within the meaning of Part II.").

The noble and learned Lord said: My Lords, this new clause would prohibit the director general from making a decision that the Chapter I or II prohibitions have been infringed in respect of an agreement or conduct which is the subject of an investigation by the European Commission under Article 85 or 86. I emphasise that the new clause would not prevent the director carrying out an investigation under Part I (or at the request of the European Commission) under Part II but would require any decision to be stayed until the question of whether a breach of Article 85 or Article 86 has been committed is determined.

The amendment would relate only to decisions by the director, and therefore an undertaking could not make an unfounded application for clearance to the European Commission to avoid an investigation by the director. The amendment specifically provides that it does not prevent the director from conducting an investigation and is in addition to Clause 40(4) which provides that notification of a matter to the Commission does not stop such an investigation.

The amendment is consistent with the governing principles of Clause 58(3) which requires decisions to take account of relevant decisions of the European Commission. It is also consistent with the regime for parallel exemptions provided by Clause 10. I beg to move.

Lord Haskel: My Lords, I must emphasise that the purpose of the Bill is to ensure as far as possible consistency with the EC approach and thereby ease burdens for business.

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Both the director and the European Commission will be applying substantially the same competition tests and following common jurisprudence where applicable. In practice, therefore, if the Commission is investigating a matter, we think it unlikely that the director will start his own separate investigation and proceed to a decision when the Commission already has the matter in hand.

Clearly it would be a waste of both regulatory resources and precious business time for dual domestic and Community proceedings to take place. The Commission notice on co-operation between itself and national competition authorities deals with and provides some guidance on how the Commission and national competition authorities should handle these cases. This notice and common sense co-operation between the director and the Commission provides the practical safeguard against unnecessary duplication, about which the noble Lord was concerned.

It would be wrong to go further and place legal bars on the face of the Bill preventing the director from taking a decision in respect of matters which are the subject of any form of investigation under Articles 85 and 86.

As I explained in Committee, legal bars in this area can provide dangerous loopholes. What of the agreement notified to the European Commission which raises little or no Community interest and which the Commission has neither the time nor the resources to attend to? Such an agreement may be causing serious harm to the domestic economy, but if the Commission initiates its review of the agreement, the amendment would prevent the director from prohibiting it, even where the Commission does not proceed quickly against it because it is of no Community interest. Surely it would be wrong to prevent the director proceeding to a decision in respect of such an agreement so that its harmful domestic effects can be stopped. The ability of the director to investigate such an agreement is not enough. He must be able to proceed to a decision to stop it. Indeed, the legal bar proposed by the noble and learned Lord, Lord Fraser, could encourage spurious notifications or even complaints to Brussels of agreements with mainly domestic effects to thwart effective action by the director.

Of course, where there is active Commission investigation, one can expect the director not to pursue the same matter independently. In view of that explanation, I invite the noble and learned Lord to withdraw the amendment.

Lord Fraser of Carmyllie: My Lords, I am not entirely persuaded by the logic of the noble Lord's approach. I wish there to be a common sense and practical approach taken by those in the Commission, and by the director general. The amendment comes forward in that context. We do not suggest that some barrier should allow a loophole to be established. If that had been in our minds we would have put forward an amendment which did not even allow the director general to begin an investigation.

The only limit we suggest is that if it is being pursued through Brussels, the director general should not proceed all the way to a decision. We do not seek to

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establish that because there has been a notification nothing should happen within the domestic context. But we do not want two things going on at the same time indefinitely, and it seemed appropriate for there to be a restriction on the director general taking a decision, not a restriction on him investigating. The noble Lord seems to suggest that some spurious notification may be made to prevent any investigation in the United Kingdom. That is not what the amendment seeks to achieve. We recognise that investigations should be allowed to go forward.

I ask the noble Lord to think further about the matter. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 41 [Offences]:


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