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New Clause 28

Consideration by Competition Commission


".--(1) If the Director--
(a) makes a report under section (Reports by Director General of Fair Trading)(2), or
(b) asks the Commission to consider a report that he has made under section (Reports by Director General of Fair Trading)(3),
the Commission must consider the matter.
(2) The Commission must then make its own report on the matter unless it considers that, as a result of a change of circumstances, no useful purpose would be served by a report.
(3) If the Commission decides in accordance with subsection (2) not to make a report, it must make a statement setting out the change of circumstances which resulted in that decision.
(4) A report made under this section must state whether, in the opinion of the Commission--
(a) the regulating provision or practice which is the subject of the report has a significant anti-competitive effect, or
(b) the regulating provisions or practices, or combination of regulating provisions and practices, which are the subject of the report have such an effect.
(5) A report under this section which states that, in the opinion of the Commission, there is a significant anti-competitive effect must also--
(a) state whether the Commission considers that that effect is justified; and
(b) if it states that the Commission considers that it is not justified, state its opinion as to the action, if any, that ought to be taken by the Authority.
(6) Subsection (7) applies whenever the Commission is considering, for the purposes of this section, whether a particular anti-competitive effect is justified.
(7) The Commission must ensure, so far as that is reasonably possible, that the conclusion it reaches is compatible with the functions conferred, and obligations imposed, on the Authority by or under this Act.
(8) A report under this section must contain such an account of the Commission's reasons for--
(a) any opinion which it has expressed in the report, and
(b) if it has reached a conclusion on whether a particular anti-competitive effect is justified, that conclusion,
as is expedient, in the opinion of the Commission, for facilitating proper understanding of that conclusion or opinion.

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(9) Schedule (Role of Competition Commission) supplements this section.
(10) If the Commission makes a report under this section it must send a copy to the Treasury, the Authority and the Director.".--[Mr. Timms.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 29

Role of the Treasury


".--(1) This section applies if the Competition Commission makes a report under section (Consideration by Competition Commission)(3) which states that in the opinion of the Commission there is a significant anti-competitive effect.
(2) If the Commission's opinion, as stated in the report, is that the anti-competitive effect is not justified, the Treasury must give a direction to the Authority requiring it to take such action as may be specified in the direction.
(3) But subsection (2) does not apply if the Treasury consider--
(a) that, as a result of action taken by the Authority 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 direction under subsection (2), the Treasury must have regard to any opinion expressed by the Commission when it complied with section (Consideration by Competition Commission)(5)(b).
(5) Subsection (6) applies if--
(a) the Commission's conclusion, as stated in its report, is that the anti-competitive effect 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.
(7) The Authority may not be required as a result of this section to take any action--
(a) that it would not have power to take in the absence of a direction under this section; or
(b) that would otherwise be incompatible with any of the functions conferred, or obligations imposed, on it by or under this Act.
(8) Subsection (9) applies if the Treasury are considering--
(a) whether subsection (2) applies and, if so, what action is to be specified in a direction under that subsection; or
(b) whether to give a direction under subsection (6).
(9) The Treasury must--
(a) do what they consider appropriate to allow the Authority, and any other person appearing to the Treasury to be affected, an opportunity to make representations; and
(b) have regard to any such representations.
(10) If, in reliance on subsection (3)(a) or (b), the Treasury decline to act under subsection (2), they must make a statement to that effect, giving their reasons.
(11) If the Treasury give a direction under this section they must make a statement giving--
(a) details of the direction; and
(b) if the direction is given under subsection (6), their reasons for giving it.

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(12) 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.".--[Mr. Timms.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 32

Misleading the Director General of Fair Trading


". Section 44 of the Competition Act 1998 (offences connected with the provision of false or misleading information) applies in relation to any function of the Director General of Fair Trading under this Act as if it were a function under Part I of that Act.".--[Mr. Timms.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 1

Restrictions on powers of Treasury


"(1) Where given power under this Act to make regulations or orders, the Treasury shall not exercise those powers so as to impose restrictions or requirements which are likely to have any of the relevant effects, except to the necessary extent, and shall disapply, limit or relax restrictions or requirements imposed by or under this Act so as to seek to ensure that they are likely to have the relevant effects only to the necessary extent.
(2) The relevant effects are: impairing, impeding, restricting or distorting competition or innovation.
(3) The necessary extent is: the extent necessary to protect actual or potential consumers and financial markets or exchanges or to maintain confidence in the financial system.
(4) Competition is: the international competitiveness of the United Kingdom, the financial system or UK persons and competition between authorised persons.
(5) 'Consumers' has the same meaning as in section 5.
(6) 'The financial system' has the same meaning as in section 3.
(7) 'UK person' means a person whose registered office (or, if he does not have a registered office, whose head office) is in the United Kingdom.".--[Mr. Heathcoat-Amory.]

Brought up, and read the First time.

Mr. Heathcoat-Amory: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Michael J. Martin): With this it will be convenient to discuss amendment No. 52, in clause 372, page 194, line 37, leave out--


"other provision of this Act"

and insert--


"provision of this Act other than section (Restrictions on powers of Treasury)."

Mr. Heathcoat-Amory: The new clause and amendment No. 52 are important because they would restrict the power of the Treasury. The Bill would subject the FSA to certain restrictions. As we have heard in a previous debate, the authority would be given objectives and principles to pursue and by which it would have to abide. However, those provisions would not be binding on the Treasury.

The Treasury has considerable powers under the Bill. In earlier debates, some Labour Members complained about the Treasury's power of appointment over certain

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individuals and members of the authority itself. If those hon. Members believe that the Treasury should be constrained in the exercise of its powers, they have the chance to join us in supporting a new clause and an amendment that would do so.

The Treasury has major powers; for example, to grant exemptions under the financial promotion regime, and to specify what are regulated activities. Furthermore, it can exempt professional firms, such as lawyers and accountants, from the provisions of the Bill.

Those wide-ranging powers are best summed up and illustrated by clause 372, which is the subject of the new clause and the amendment. Clause 372 states:


That is a Henry VIII clause. The Treasury is given the power to alter primary legislation by the use of orders.

We have debated the inadequacy of the scrutiny of the House in respect of such orders, so it is important further to constrain the Treasury in that regard. Even Henry VIII would have been jealous of clause 372. Henry VIII clauses are so called because in 1539 Parliament passed the Act of Proclamations, which authorised the use of proclamations as an alternative to statute law. I do not know the circumstances in which that Act was passed. I imagine that Parliament felt it was better to regulate matters in some way, even though it could hardly have approved of that exercise of authority by the king.

Proclamations issued by the king were always fairly minor and never affected life or property, whereas the orders that can be brought forward under the Bill may affect property in the form of people's money and investments. Proclamations in the middle ages were generally not enforced or the courts were reluctant to enforce them, whereas the Bill will be rigorously enforced. [Interruption.]


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