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("Role of the Treasury
RECOGNITION ORDERS: ROLE OF THE TREASURY

.--(1) Subsection (2) applies if, on an application for a recognition order--
(a) the Director makes a report under section 301 but does not ask the Competition to consider it under section (Consideration by Competition Commission);
(b) the Competition Commission concludes--
(i) that the applicant's regulatory provisions do not have a significantly adverse effect on competition; or
(ii) that if those provisions do have that effect, the effect is justified.
(2) The Treasury may refuse to approve the making of the recognition order only if they consider that the exceptional circumstances of the case make it inappropriate for them to give their approval.
(3) Subsection (4) applies if, on an application for a recognition order, the Competition Commission concludes--
(a) that the applicant's regulatory provisions have a significantly adverse effect on competition; and
(b) that that effect is not justified.
(4) The Treasury must refuse to approve the making of the recognition order unless they consider that the exceptional circumstances of the case make it inappropriate for them to refuse their approval.").


    After Clause 304, insert the following new clause--

DIRECTIONS BY THE TREASURY

(".--(1) This section applies if the Competition Commission makes a report under section (Consideration by Competition Commission)(4) (other than a report on an application for a recognition order) which states the Commission's conclusion that there is a significantly adverse effect on competition.
(2) If the Commission's conclusion, as stated in the report, is that the adverse effect on competition is not justified, the Treasury must give a remedial direction to the Authority.
(3) But subsection (2) does not apply if the Treasury consider--
(a) that, as a result of action taken by the Authority or the recognised body concerned in response to the Commission's report, it is unnecessary for them to give a direction; or
(b) that the exceptional circumstances of the case make it inappropriate or unnecessary for them to do so.
(4) In considering the action to be specified in a remedial direction, the Treasury must have regard to any conclusion of the Commission included in the report because of section (Consideration by Competition Commission)(7)(b).
(5) Subsection (6) applies if--
(a) the Commission's conclusion, as stated in its report, is that the adverse effect on competition is justified; but
(b) the Treasury consider that the exceptional circumstances of the case require them to act.
(6) The Treasury may give a direction to the Authority requiring it to take such action--
(a) as they consider to be necessary in the light of the exceptional circumstances of the case; and
(b) as may be specified in the direction.

9 May 2000 : Column 1520


(7) If the action specified in a remedial direction is the giving by the Authority of a direction--
(a) the direction to be given must be compatible with the recognition requirements applicable to the recognised body in relation to which it is given; and
(b) subsections (3) and (4) of section 292 apply to it as if it were a direction given under that section.
(8) "Remedial direction" means a direction requiring the Authority--
(a) to revoke the recognition order for the body concerned; or
(b) to give such directions to the body concerned as may be specified in it.").


    After Clause 304, insert the following new clause--

STATEMENTS BY THE TREASURY

(".--(1) If, in reliance on subsection (3)(a) or (b) of section (Directions by the Treasury), the Treasury decline to act under subsection (2) of that section, they must make a statement to that effect, giving their reasons.
(2) If the Treasury give a direction under section (Directions by the Treasury) they must make a statement giving--
(a) details of the direction; and
(b) if the direction is given under subsection (6) of that section, their reasons for giving it.
(3) The Treasury must--
(a) publish any statement made under this section in the way appearing to them best calculated to bring it to the attention of the public; and
(b) lay a copy of it before Parliament.").

On Question, amendments agreed to.

Clause 305 [Procedure on exercise of certain powers by Treasury]:

Lord McIntosh of Haringey moved Amendments Nos. 170H to 170L:


    Page 161, line 22, leave out from beginning to ("such") in line 24 and insert--


("(1) Subsection (2) applies if the Treasury are considering--
(a) whether to refuse their approval under section (Recognition orders: role of the Treasury);
(b) whether section (Directions by the Treasury)(2) applies; or
(c) whether to give a direction under section (Directions by the Treasury)(6).
(2) The Treasury must--
(a) take").


    Page 161, line 29, leave out ("302;") and insert ("(Further reports by Director General of Fair Trading) or by the Competition Commission under section (Consideration by Competition Commission);").


    Page 161, line 31, leave out ("299 or 300;") and insert ("(Recognition orders: role of the Treasury) or (Directions by the Treasury);").


    Page 161, line 32, leave out ("had").

On Question, amendments agreed to.

Clause 306 [Monopoly situations etc.]:

Lord McIntosh of Haringey moved Amendment No. 170M:


    Leave out Clause 306.

The noble Lord said: My Lords, in moving Amendment No. 170M I should like to speak also to Amendments Nos. 170Q and 170T.

9 May 2000 : Column 1521

These amendments complete the changes needed to align the competition provisions in Part XVIII with those in Chapter III of Part X: we indicated at earlier stages that we would do this. Amendment No. 170M deletes Clause 306 and removes a bar on the Competition Commission looking at a recognised body's regulatory provisions and practices when investigating whether a monopoly situation exists under the Fair Trading Act 1973. We removed a similar bar in the regime in Part X in response to Don Cruickshank's interim report on banking services in the United Kingdom.

Amendments Nos. 170Q and 170T narrow the exclusion from the Competition Act 1998 in the same way as we have in Part X. Again this was in response to the Cruickshank recommendations. I beg to move.

On Question, amendment agreed to.

Clause 307 [The Chapter I prohibition]:

Lord McIntosh of Haringey moved Amendments Nos. 170N to 170R:


    Page 162, line 42, leave out paragraph (b).


    Page 163, line 1, leave out paragraph (b).


    Page 163, line 7, leave out ("contemplated") and insert ("encouraged").


    Page 163, line 8, leave out from first ("practices") to end of line 9.

On Question, amendments agreed to.

Clause 308 [The Chapter II prohibition]:

Lord McIntosh of Haringey moved Amendments Nos. 170S and 170T:


    Page 163, line 21, leave out paragraph (b).


    Page 163, line 25, leave out ("contemplated") and insert ("encouraged").

On Question, amendments agreed to.

Clause 309 [Interpretation of Part XVIII]:

Lord McIntosh of Haringey moved Amendments Nos. 170U and 170V:


    Page 164, leave out lines 8 and 9.


    Page 164, line 12, leave out ("300(3);") and insert ("(Directions by the Treasury)(8);").

On Question, amendments agreed to.

Clause 313 [The core provisions]:

Lord McIntosh of Haringey moved Amendment No 170W:


    Page 166, line 23, leave out ("381") and insert ("380").

The noble Lord said: My Lords, in moving Amendment No. 170W, perhaps I may say that there are two Opposition amendments in the group. If I may, I shall comment on them after they have been spoken to by noble Lords opposite.

Amendment No. 170W is a minor consequential amendment that I hope will not detain us. It removes the reference to Clause 381 from Clause 313(1), which lists the core provisions which may be applied to members of Lloyd's by an insurance market direction

9 May 2000 : Column 1522

under Clause 312. The reason for the amendment is that Clause 381 has been deleted as part of the package of decision-making amendments. I beg to move.

Lord Kingsland: My Lords, in this group the Opposition have Amendments Nos. 170X and 170Y, to which I can speak briefly. They concern Lloyd's and matters of consultation.

In our view a proposed exercise of powers under Clause 315 to make a direction should be accompanied by an explanation. If the direction needs to be made urgently and therefore without consultation it should still be accompanied by a cost benefit analysis and a statement of reason.


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