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Baroness O'Cathain: My Lords, I certainly had no intention of misleading the House. I saw figures. In my view, aspirin and Disprin are the same. I try to avoid taking either, but there it is. I never for one moment suggested the closure of community pharmacists. I made the point that this was a competition Bill and I could not understand why over-the-counter medicines were the only items subject to retail price maintenance. On a previous occasion the noble Lord, Lord Morris, said that the difference between over-the-counter medicines in a community pharmacy and elsewhere was about 50p. I shall not go into the difference, but I suspect that it is good deal higher than that. If the article in the Evening Standard, which I have only just seen, is true and over-the-counter medicines account for only 5 per cent. of the total turnover of these pharmacies, what are we worried about? We are talking about 5 per cent. If community pharmacies are so valued by members of the community there is no competition problem; the community will support them. I do not believe that the nonsense of having retail price maintenance on certain

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products should create a problem under the Competition Bill. I believe that the Competition Bill is right and the amendment is wrong.

Lord Simon of Highbury: My Lords, I thank my noble friend Lord Morris both for the charming way in which he has spoken of the efforts that we have made to resolve the real issues that lie behind his amendments and the clarity of his position.

It is worth making one or two points despite the lateness of the hour because these are very important issues, as the noble and learned Lord, Lord Fraser, said. The development of our policy is important. The Government wholly accept the importance of community pharmacies. We fully understand the interests of those who wish to press their arguments. I do not mean "interests" in the wrong sense of that word. I am referring to those who are seriously concerned about the role of pharmacies in health policy. I have said before from this side of the Chamber when speaking for the Government that we fully understand the very important health policy issues in this debate, but they are different from the competition issues. I shall not be drawn into a discussion of health policy at seventeen minutes to the hour. I believe that the issue in competition terms is not whether retail price maintenance in this sector is good or bad, but whether the independent bodies which have been set up to look at such matters under statutory provision should be allowed to do so, or whether the RPM for OTC medicines should be removed from scrutiny under the Resale Prices Act and the Chapter I prohibition in the Bill until 2004. That is the purpose and likely effect of my noble friend's amendments. It is a point to which I shall return with regard to the position of competition in this sector, and, in particular, its European aspects.

My noble friend raised also, correctly, the question of double jeopardy. He then kindly acknowledged that I have been trying to respond to that issue through the government amendments. In looking at the position that we have now reached, I can see the case, although it is not what the Government propose, for saying that RPM of OTC medicines should be considered under the new regime only, in which case it would benefit from the one-year transitional period we are providing for existing agreements. I can also see the case for saying, as we have proposed, that the present action should be allowed to continue to a conclusion, and if the result of the proceedings is that OTC medicines are exempt, RPM on those goods should benefit from a generous five-year transitional period from the Chapter I prohibition.

However, it is difficult to see the case for saying that the present action, seeking a review of the exemption, should be stayed, and that RPM for OTC medicines should benefit from a five-year exclusion. As I said, I shall return to that point in terms of competition law in general.

The existing exemption of RPM for OTC medicines has always been subject to possible review by the court, if there is prima facie evidence of a material change in the relevant circumstances since the court took its decision in l970. My noble friend's amendments take

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the opportunity of the Bill effectively to ask whether the practice could be exempt from consideration until 2004. As I have said, we recognise the public interest in a plentiful and well-distributed supply of pharmacies. We would hope, as well as expect, that the court would consider most carefully any evidence that they might be put at risk by the prohibition of RPM.

It is only fair to point out that the director general has studied the issue long and hard, and therefore has proposed a review. I shall not go into the points that he has made in calling for the review. All I will say is that they are clearly serious and important. I shall let the matter rest there for tonight, except to return to a final point--that my noble friend's amendments would obviously prevent proper consideration of them by a court until 2004.

To what avail is that likely to be? I said that I wanted to return to competition law in general, and I have to remind noble Lords that over and above whatever we may provide in domestic competition law, there exists Article 85 of the Treaty of Rome, which is directly applicable in the UK. If RPM for OTC medicines in the UK were to be removed from any form of competition scrutiny under domestic law, it is entirely possible that the Commission would seek to examine it under Article 85.

So I have to warn the House that the consequences of passing the amendments, as tabled by my noble friend, are unpredictable and may not necessarily be to the advantage of the sponsors of the amendments. It would be better were we to leave the matter to be dealt with on its merits by the court, and to provide that if, but only if, the proceedings result in an exemption from RPM for OTC medicines, they should enjoy the benefit of a five-year transitional exclusion from the Chapter I prohibition from the end of the proceedings, and the director should not be able to propose to terminate the transitional period early. That is the double jeopardy issue which I believe will be the effect of the Government's amendments.

Those are the issues that we have been carefully weighing. They are difficult issues, as my noble friend Lord Morris rightly put to us tonight. I commend to your Lordships the approach as tabled in our amendments. We have considered long and hard what are the most appropriate ways forward and what they might be. I hope that my noble friend Lord Morris will agree to reflect further on our proposals and I ask him not to press his amendment at this stage.

Lord Morris of Manchester: My Lords, it is clearly the sense of your Lordships' House as a whole that the Minister should have due time to reflect on what has been said tonight by noble Lords all across the House. My noble friend the Minister's track record encourages me to think that, if anyone can make our case against placing small business in double jeopardy, it is my noble friend. Thus, I am content that my amendment should not be pressed at this stage, so that he can use his best endeavours before Third Reading to achieve acceptance of the amendment, if not in its present terms then in some other form to the same effect. Meanwhile, I strongly urge him, as did the noble Lord, Lord

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McNally, and others, to emphasise to his colleagues the wisdom of ensuring full and effective co-ordination between Whitehall departments on an issue of such importance both socially and morally. That, too, is clearly seen as a most important consideration by your Lordships on both sides of the House. For those reasons, I shall not be pressing the amendment at this stage.

Amendment, by leave, withdrawn.

[Amendments Nos. 214 and 215 not moved.]

Lord Haskel moved Amendment No. 215A:

Page 92, line 14, at end insert--
("(1A) There is no transitional period for an agreement, decision or practice in respect of which there are continuing proceedings to the extent to which the agreement, decision or practice is, as a result of those proceedings, void or unlawful.").

On Question, amendment agreed to.

[Amendment No. 216 not moved.]

Lord Haskel move Amendments Nos. 217 to 217B:

Page 92, leave out lines 27 and 28.
Page 92, line 30, leave out ("and") and insert ("the transitional period is five years.").
Page 92, leave out lines 31 to 33 and insert--
("(5A) In the case of an agreement, decision or practice relating to goods which immediately before the commencement date are exempt under section 14 of the RPA, the transitional period is five years, unless sub-paragraph (1A) applies.
(5B) In the case of an agreement, decision or practice relating to goods--
(a) which at the commencement date are the subject of continuing proceedings, and
(b) which at the conclusion of the proceedings are found to be exempt under section 14 of the RPA,
the transitional period is five years.").

On Question, amendments agreed to.

[Amendment No. 218 not moved.]

Lord Haskel moved Amendments Nos. 219 to 222:

Page 92, line 39, leave out (" 25(2)").
Page 93, line 9, at end insert--
("( ) If, by virtue of paragraph 8(5A) or (5B), there is a transitional period for an agreement, decision or practice relating to goods--
(a) which immediately before the commencement date are exempt under section 14 of the RPA, or
(b) which at the conclusion of continuing proceedings are found to be exempt under section 14 of the RPA,
the period is not affected by sub-paragraphs (1) to (5) of this paragraph.").
Page 93, line 21, at end insert ("documents and").
Page 93, line 37, at end insert ("regardless of whether or not it will be exempt").
Page 94, line 3, at end insert ("regardless of whether or not it will be exempt").

On Question, amendments agreed to.

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Schedule 14 [Repeals and Revocations]:

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