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Page 3, line 37, leave out from first ("may") to end of line 38 and insert ("extend the period for which an exemption has effect; but, if the rules so provide, he may do so only in specified circumstances.").

The noble Lord said: My Lords, this is a technical amendment which clarifies the effect of Clause 4(6).

It seems to us that the subsection might be interpreted as preventing the director from extending the period of an individual exemption if the rules do not specify any circumstances in which the period may be extended.

The amendment clarifies that the director may extend the period for which an individual exemption has effect even if rules under Clause 51 do not specify any circumstances in which the period may be extended. If the rules provide he may extend the period of exemption only in specified circumstances, his power is so restricted. I beg to move.

On Question, amendment agreed to.

Clause 6 [Block exemptions]:

The Deputy Speaker (Lord Murton of Lindisfarne): My Lords, if Amendment No. 7 were to be agreed to, I shall be unable to call Amendment No. 8, owing to pre-emption.

Lord Kingsland moved Amendment No. 7:

Page 4, line 37, leave out from ("may") to end of line 38 and insert ("cancel a block exemption in respect of a particular agreement if that agreement has effects which are incompatible with the criteria in section 9.").

The noble Lord said: My Lords, Clause 6(6)(c) provides that,

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I imagine that those "specified circumstances" are circumstances to be defined by the set of rules to which we all look forward under Clause 51 of the Bill.

The provision seems to be too wide. Therefore the amendment seeks to discipline the circumstances in which a block exemption can be cancelled by adopting the words in Clause 9 which reflect paragraph 3 of Article 85 of the Treaty of Rome. I beg to move.

Lord Haskel: My Lords, I was interested to hear what the noble Lord, Lord Kingsland, had to say. He is also, of course, quite right. The Commission block exemptions do what he said. However, the amendment was tabled only on Tuesday and I have not had the opportunity to give the matter full consideration. Certainly I am not content with the precise wording of the amendment, but I believe that the noble Lord may have made a valid point. I believe that this matter will need to be reviewed in another place. I hope that on that basis he will be prepared to withdraw his amendment, which, as we have heard, would pre-empt Amendment No. 8 in my name, to which I shall now speak.

Amendment No. 8 is a further technical amendment to tidy up the provisions of the Bill. The Bill enables a block exemption order to provide a power for the director to cancel a block exemption in respect of a particular agreement in specified circumstances. The amendment clarifies that this power applies to the block exemption which is created by the order, not any other block exemption.

Lord Kingsland: My Lords, I feel quite disconcerted by the noble Lord's reply. I hasten to beg leave to withdraw the amendment before he changes his mind.

Amendment, by leave, withdrawn.

Lord Haskel moved Amendment No. 8:

Page 4, line 37, leave out ("a") and insert ("the").

On Question, amendment agreed to.

Clause 17 [Enactments replaced]:

5.50 p.m.

Lord Fraser of Carmyllie moved Amendment No. 9:

Page 10, line 23, after ("practices)") insert ("and those provisions of the Fair Trading Act 1973 relating to the investigation of a structural or scale monopoly").

The noble and learned Lord said: My Lords, This amendment relates to the investigation of scale monopolies. It relates to a point that we have considered previously. I hope the noble Lord will not take it amiss if I say that I have never been entirely convinced that the full weight of his own intellectual rigour lies behind the response that he has offered. I shall not elaborate the argument; the noble Lord is well aware of my view. This is not just "belt and braces"; it is a wholly unnecessary additional power. It seems to me that the argument that at some time and some place in the future it might be desirable to be able to resort to these powers is a less than compelling argument.

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It might be argued that the provision should be retained, just in case it is necessary to use it. But what troubles me is that while the Bill seeks to ensure full and effective competition policy, at the same time our policy should be to reduce so far as is possible unnecessary duplication in bureaucratic terms, and reduce so far as is possible the uncertainty for business and the risk that it might be confronted with attacks on more than one front for no good reason.

My understanding is that leaving these provisions in place will ensure that there is imposed within the United Kingdom a more extensive regime for regulating the competitive behaviour of firms than presently exists anywhere in either Europe or North America.

If the noble Lord, Lord Simon, can confirm that that assessment is correct, I shall make one final attempt and ask him to set out the argument that he regards as compelling for retaining what, I am bound to repeat, seems a wholly unnecessary provision. There would be no risk to competition policy if this particular part of the existing arrangements were to be removed. I beg to move.

Lord Borrie: My Lords, it is a great pity that the noble and learned Lord pushes this amendment for the third time in the course of debate on this Bill.

It is true that if we were a country in the European Community which had no experience of these matters in terms of competition policy, we should probably simply incorporate in a tidy way, holus-bolus, Articles 85 and 86 of the Treaty of Rome, and there would be no other provision.

I am glad to say that the noble and learned Lord has admitted, at least implicitly, that continuation of the old-style complex monopoly references is desirable; otherwise, there would be a possible hole between the Chapter I prohibition and the Chapter II prohibition.

So far as scale monopoly references are concerned, it is to be generally admitted that it is only a somewhat remote possibility that such would be needed after these prohibitions of the Competition Bill have been initiated and incorporated into our law.

It may be desirable, in relation to a scale monopoly--which would be some very dominant company in a market that had been engaging in serious anti- competitive practices or excessive pricing--that the only satisfactory remedy would be the structural one of divestment, of requiring a de-merger of a company. That possibility is provided as a remedy in the Fair Trading Act but is not included in the Competition Bill because it is not within the European Union jurisprudence. It would be a pity if it were to be lost. It would be as if our own experience of this kind of possible scale monopoly reference over the past 40 years was simply cast aside and we did no better than a country which has had no such experience at all. This Bill is intended to make a dramatic and radical change in competition law, but not in such a way as to ignore valuable experience from the past.

Lord Simon of Highbury: My Lords, as the noble and learned Lord said, we debated this same proposal

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on Report. On that occasion the noble and learned Lord, Lord Fraser, set out eloquently why he felt that the scale monopoly provisions should be repealed. Indeed, on that occasion my noble friend Lord Borrie set out with equal intellectual rigour why they should remain in place.

I respect the noble and learned Lord's position and his reasons for wanting to raise the matter again today. Fortunately, he does not have to test my intellectual rigour so much, because the argument has already been provided by perhaps the most experienced exponent of competition law in this House. I freely admit that we have said that there is scope for debate about the precise powers that need to be retained under the new regime. We invited an open debate on the retention of the scale monopoly powers and we have listened carefully to the views that have been expressed from the other side of the Chamber. However, having listened to all the arguments, I am not yet persuaded that it would be right to repeal the scale monopoly powers.

I have explained in earlier debates that we believe that these provisions will continue to have value in situations where, as my noble friend Lord Borrie said, it is the fundamental structure of the market, and not any specific abuse, which is the problem. In these circumstances the scale monopoly provisions enable the more flexible imposition of structural remedies, including the divestment of part of a business, as my noble friend Lord Borrie mentioned.

We have said that the prohibitions will be the primary weapons against anti-competitive behaviour, and that the scale monopoly provisions will be very much a reserve power. Nevertheless, in some circumstances they may prove the only real means of remedying a market in which structural factors inhibit free competition.

I entirely agree that firms should not be subject to double jeopardy. I was grateful to the noble and learned Lord, Lord Fraser, for giving me an opportunity on the second day of Report to clarify how we intend the Chapter II prohibition and the scale monopoly provisions to interact. As I made clear on that occasion, it is not the Government's intention that the prohibitions and the Fair Trading Act monopoly provisions should be used in parallel on the same matters.

I also re-stated during the debate on Report, the Government's policy on future use of the scale monopoly provisions. We intend that these powers should be used in the future only in circumstances where there has already been proven abuse under the prohibitions, and where the director believes that there is a real prospect of further abuses by the same firm. In these circumstances the more flexible powers to impose structural remedies that we have discussed may be the only effective means of preventing further abuses.

As I also said on Report, the use of the scale monopoly provisions in the regulated utility sectors is being considered separately under the utility review.

In conclusion, we have considered carefully the arguments that we have heard on this issue, and they have been eloquently put. The debates in this House have been particularly valuable in this respect. We have

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concluded that our policy of retaining the provisions, albeit as very much a reserve power for use in limited circumstances, represents the right balance. I therefore invite the noble Lord to withdraw his amendment.

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