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11.15 pm

As my hon. Friend the Minister for Competition and Consumer Affairs said in Committee, where a power extends to the scope of the prohibition, it is right that it be subject to affirmative resolution of both Houses of Parliament. Equally, it is right that a Minister, rather than the director general, is responsible for making orders.

Amendments Nos. 55 and 57 would both give the director general an ability to exercise clawback whenever he wishes to do so. As we have said, we think it right that

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the director general be able to exercise clawback, but only when he considers that an agreement would, if clawed back, infringe the chapter I prohibition, and that he would not be likely to grant it an unconditional exemption. That test will allow him to exercise clawback when an agreement is seriously anti-competitive, while giving businesses that enter into benign vertical agreements the proper certainty that they require.

By removing a test for clawback, the amendments could undermine the purpose of clause 50. If businesses are not given reasonable confidence that there is an appropriately high threshold before clawback, they may well seek to notify benign vertical agreements that are covered by an order to obtain that greater certainty.

I fully accept the sentiment that gave rise to amendment No. 56, but do not view it as necessary. We intend to consult widely with consumer groups, such as the National Consumer Council, as well as business before making an order under clause 50.

The hon. Member for Eastleigh raised the issue of intellectual property. We do not believe that there is a need to cover such agreements in the special treatment proposed. The licensing of intellectual property rights has been subject to article 85 in the United Kingdom for more than 25 years, and a licence to use intellectual property rights as such is not restrictive; it is granting a freedom. Other copyright issues are covered by the Copyright, Designs and Patents Act 1988 and recent European Community directives. I shall send the hon. Gentleman copies of the recent directive, because discussions of it took place upstairs. I do not think that the hon. Member for Daventry (Mr. Boswell) had quite joined the DTI team from the Treasury at the time--one of his hon. Friends dealt with it--so, if that would helpful, I shall send the hon. Gentleman a copy too, so that both Front-Bench Teams are aware of the position.

Let me return to amendment No. 56. The Department would expect as a matter of course to conduct an assessment of the costs and benefits for all legislation--primary or secondary. That assessment is placed in the Library when legislation is introduced to Parliament. In addition, my right hon. Friend the Chancellor of the Duchy of Lancaster has undertaken to issue guidance requiring Government Departments to publish such an assessment when a proposal is consulted on. That new guidance is likely to be in place by September this year.

On that basis, I invite the hon. Members for South Cambridgeshire and for Eastleigh not to press their amendments.

Mr. Lansley: I am grateful to the Minister for the manner in which he responded, although I feel that on this occasion--although not in some of our earlier debates--the substance was not sufficient. It is like trying to grasp a hologram; one looks for the Government's proposals on vertical agreements, and they are just not there.

I am prepared to accept that the objective should be to arrive at a definition of vertical agreements which is workable, consistent and aligned between ourselves and the European Commission, and which, as the CBI proposes, should presume that vertical agreements are excluded in the vast majority of cases with appropriate clawback and definitions. The proposed amendments do that.

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The difference between Conservative Members and the Minister is that we feel that we should be leading the Commission to an appropriate definition, not simply resting upon the proposition that the Commission will, in due course, come up with a definition. Judging by the first accounts that have been presented to us in Committee and in the Chamber tonight, I believe that there may be practical difficulties with the definition when the time comes. Rather than resting on the proposition that flexibility is all and that we must go with the Commission when the moment arrives, it would be better to legislate rationally and in accordance with our objectives, and to press the Commission to come on board. However, I appreciate that the Minister was trying to respond helpfully and, as I understood him, he was not rejecting the definitions in the amendments so much as trying to see whether in due course some of those thoughts about price fixing and so on could be taken on board. On that basis I see no purpose in pressing the amendment. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 11, in page 26, leave out lines 24 and 25.--[Mr. Ian McCartney.]

Schedule 9

Director's Rules

Amendment made: No. 16, in page 77, leave out lines 12 to 16.--[Mr. Ian McCartney.]

Clause 53


Mr. Boswell: I beg to move amendment No. 5, in page 27, line 39, at end insert--

'(1A) a fee charged to a business for the discharge of functions by the Director shall not exceed the costs of fulfilling that particular function in that case.'.

I am conscious of a rather unsatisfactory discussion in Committee about the charging of fees, during which the Under-Secretary of State made it quite clear that the Government had not yet decided whether to charge fees or what they would be. As my hon. Friends said, that made it difficult to see whether the fees that might be charged had been taken into the compliance cost assessment, about which we have considerable reservations.

The amendment cannot be contested in principle. It seeks to ensure that in charging fees--we do not at this stage reopen the question whether fees would be charged--the director should not exceed the cost of fulfilling the function for which the fee is charged. That is basic natural justice and proportionality, and I have two points to support it, the first of which is at the macro level. It is important that the competition legislation and the suite of advice and fees to be charged by the director should not be used, to use the phrase in schedule 3, as a revenue-producing monopoly. The idea is not to charge greater amounts than the costs would require.

The second point is at the micro level and, in a sense, it is embodied in the amendment. It would be possible for the regulator to produce a schedule with a discriminatory

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function. For example, if the director or the Government prompting him were to take against the press or pharmaceutical companies or public utilities, the fees schedule might be arranged in a way that would discriminate between those businesses, or one of them, and other businesses that requested services from the director. Those services could be of more or less the same character and involve approximately the same cost.

As I have said, the amendment seeks to establish the principle that fees should not exceed the costs of the case, although it leaves open the principle that the fees could be lower--they could be rebated--or might not be charged at all. I hope that Ministers will consider those matters and give some assurances on them.

Mr. Ian McCartney: When we discussed the issue of the director's fees in Committee, it was recognised that it can be appropriate to charge fees when a genuine service is provided by the public sector. It was also recognised that fees for the giving of guidance and decisions might be a way of managing the director's work load in concentrating resources on where they are most needed and discouraging frivolous applications. However, the Government have not decided whether fees should be charged, still less the basis on which they might be set. I cannot accept the amendment because, if we decide the director should charge fees, it would narrow the range of options for calculating them. In particular, it would contradict subsection(2)(a), which provides that the rules may in particular provide for the amount of any fee to be calculated by reference to matters that may include


    "(ii) the turnover of a person whose conduct the Director is to consider".

That provision was inserted by an amendment in another place because some respondents to the consultation exercise had argued that it might be appropriate to set differential fees for applicants to the director, based on their ability to pay.

I do not suggest that that is the basis on which any fees will be charged. As I have said, we have not taken any decision on whether fees will be charged, or how any fees would be calculated, but I do believe that it is an option which the Bill should make available. I recall that, in Committee on 11 June, the hon. Members for Eastleigh (Mr. Chidgey) and for Daventry (Mr. Boswell) raised concerns about the burden of fees on small companies, and the hon. Member for Daventry recognised the value of being able to consider the possibility of relating the fees to the size of the undertaking. However, I can give some assurances about the exercise of the power to charge fees.

First, the Bill will enable fees to be set only at a level intended to cover the costs of the director in providing the particular services to which they relate; the fees could not be set at a level designed to generate a profit. Secondly, as any fees would be set by the director's rules, they would have to be consulted on, by virtue of clause 51(3). Business will therefore have an opportunity to consider and comment on the amount of any fees and the basis on

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which it is proposed to calculate them. I hope that that helps the hon. Member for Daventry in his consideration of whether to withdraw the amendment.

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