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Lord Fraser of Carmyllie: My Lords, like many others in this House, I of course acknowledge the wide experience and distinguished manner in which the noble Lord, Lord Borrie, conducted himself in another role. However, "he would say that, wouldn't he?" when it comes to a desire to retain yet a further set of powers possibly to confront a remote set of circumstances where there might just be a degree of anti-competitive behaviour.

I make no apology for returning to this matter. I am concerned that, as this Bill is about to leave this House, we have not yet struck the balance correctly in the sense of making sure that we have a proper, clear, lucid competition policy, but at the same time we do not impose unnecessary burdens on business in the United Kingdom. I do not believe that that balance has been achieved.

Until half an hour ago, I was minded to test the mood of the House on this amendment. I do not propose to do that, although I make no apology for raising the matter again. I hope that I correctly picked up the emphasis in the response of the noble Lord, Lord Simon, that he is not yet persuaded that before this legislation concludes its passage through another place it will be recognised that this is an unnecessary duplication of the powers. If, as the noble Lord, Lord Borrie, said, this is a dramatic and radical change in our approach to competition policy, that ought to be enough without leaving in place an unnecessary power in relation to scale monopolies. With that grouse, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6 p.m.

Clause 18 [Abuse of dominant position]:

Lord Fraser of Carmyllie moved Amendment No. 10:

Page 10, line 26, after ("undertakings") insert (", which carry on business in the United Kingdom,").

The noble and learned Lord said: My Lords, at the risk of irritating the Minister, this is yet another set of amendments we have previously considered. At an earlier stage, the noble Lord, Lord Simon, emphasised that if there were a lack of clarity in the Bill the courts could have regard to Hansard to clear up any ambiguities that might exist. Of course, I understand how that would work. On reflection, it is of greater concern to me that Clause 18 is one of the linchpins of this legislation. It is not an incidental provision within the Bill; it is one of the two most important clauses. If there is any ambiguity about it, and that has been recognised, it is desirable that we should clear up that ambiguity now and place on the face of the Bill a set of terms that will not require the courts, companies or anyone else to search Hansard to discover exactly what the Government had in mind. That might be desirable, following on the Pepper v. Hart decision, if ambiguity

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unintended by the draftsman and government emerges at a later point. If we know there is ambiguity or difficulty, it seems to me desirable to make the matter clear on the face of the Bill. It is for that reason that I return to the point, particularly as it seems to me that there is little of substance between the Minister and myself on what we wish to achieve.

Amendments Nos. 10, 11 and 13 are grouped with Amendment No. 12, which seeks to clarify the relationship between Chapter I and Chapter II prohibitions. At Community level, conduct may be investigated under both Articles 85 and 86 as those articles provide two distinct means of addressing competition issues in relation to the development of the single market and the over-arching objectives in Article 3 of the treaty. Such considerations are not, in our view, relevant on a domestic level.

Both the Chapter I and Chapter II prohibitions concern behaviour which prevents, restricts or distorts competition. The distinction between them is that Chapter I addresses such behaviour between two or more undertakings while Chapter II addresses such behaviour by one undertaking alone. In order to reduce uncertainty, compliance costs and litigation, the Bill should make clear that, if conduct does not prevent, restrict or distort competition and thus falls within Clause 2(1), it cannot and should not fall within Clause 18(1). It is to avoid that duplication that I return to this amendment. I beg to move.

Lord Kingsland: My Lords, the comments of my noble and learned friend Lord Fraser are all the more powerful in view of the Minister's response to the previous amendment on scale monopolies. If it is the Minister's determination to keep the scale monopoly legislation intact, that is a powerful argument for making the scope of Clause 18 crystal clear.

As the Minister knows, in the European Community Articles 85 and 86 have a relationship, but we do not yet know--because the jurisprudence of the European Court still evolves--exactly what that relationship is. Jurisprudentially, that is a different world. In the Bill the Minister has the power to make clear the relationship between the two articles. We need to know what that relationship is. If the prohibition is the same, he must say so. If it is not, he must tell us to what extent the Chapter II prohibition differs from that of Chapter I.

Lord Simon of Highbury: My Lords, as we were reminded, we debated identical amendments during the Report stage. I explained on that occasion that the Government are at one with the noble Lord in terms of how we wish Clause 18 to operate in relation to the relevant geographic market. I entirely agree that there may well be circumstances in which the relevant market includes, but is wider than, the UK. Indeed, your Lordships' Committee accepted two amendments which I moved in order to ensure that Clause 18 is not read as limiting the relevant geographic market to the United Kingdom.

Clause 18(1) requires that there must be dominance in a market. Clause 18(3) provides that there must be dominance within the United Kingdom or any part of it.

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It is plainly right that both of those elements must be present. We are not interested in dominance which exists elsewhere but not in the United Kingdom, nor in dominance of any kind other than market dominance. What the clause does not do is require that the market must be entirely contained within the UK.

I believe it to be clear, but it is worth noting, as I did at Report stage, that your Lordships' House decided in the case of Pepper v. Hart that reference can be made to statements in Hansard in certain circumstances to clarify the meaning of legislation. That does not mean that the legislation is therefore unclear. I am merely saying that, if there is any doubt in anyone's mind as to the clarity of the legislation--I believe it to be clear, but others may not--that opportunity exists and the courts will be entitled to look at statements that I have made about the operation of the clause. That opportunity is largely for the court. In practice, I believe that people will understand the clause as written.

It may be that the noble Lord's amendments would achieve the same effect in a different way. I am not clear whether they would or would not; but that is not the point. The Government are clear that the amendments that I moved in Committee meet the concerns which the noble Lord has raised and which we debated at that time. It is for that reason that I invite the noble and learned Lord to withdraw his amendments.

Amendment No. 12 contains three different elements, which I shall address in turn.

The first element would introduce a test into the prohibition which is not present in Article 86. It is true that Article 86 is concerned with abuses which restrict or distort competition. However, the wording of the amendment does not reflect the fact that exploitative behaviour by dominant companies may also be an abuse. In any case we have made clear that we do not intend to depart from the fundamental principles of Articles 85 and 86. This amendment departs from the Article 86 model in a significant way and will therefore interfere with the application of the governing principles clause. For all the reasons that we have debated at length, we are not prepared to do that. Business is entitled to be able to look to Article 86 jurisprudence to help understand the interpretation of the new prohibition.

The second element of the amendment is rather circular. As I noted during Report (col. 956 on 9th February), EC jurisprudence shows that the director could not grant on agreement an exemption under the Chapter I prohibition if in doing so he would be exempting something that appears to be prohibited under the Chapter II prohibition. So, if an agreement involves conduct that breaches the Chapter II prohibition, it cannot meet the requirements for exemption under Chapter I. At the same time, firms who have obtained an individual exemption will have the benefit of knowing that the director has had to take account of the Chapter II prohibition in assessing their agreement.

The third element of the amendment provides that no conduct which is excluded from the Chapter II prohibition by virtue of Clause 20 may be caught as an

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abuse. This is clearly the effect of the Bill as it stands, although I am grateful for the opportunity to explain that position in terms.

The fact that we are excluding particular behaviour from the Chapter I prohibition does not automatically mean that it should be excluded from the prohibition of abuse of dominance. We are proposing to exclude some categories of behaviour from both prohibitions; for example, agreements or conduct engaged in in order to comply with a legal requirement, or to avoid conflict with international obligations. In other cases, however, competition issues may arise from certain sorts of behaviour only where there is dominance. Vertical agreements are the most obvious example. As I said, the Government are seeking to define an exclusion from the Chapter I prohibition for such agreements. But we are clear that the Chapter II prohibition should still apply.

I hope that, having heard those explanations, the noble and learned Lord will be prepared to withdraw his amendment.

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