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Mr. Tom Harris (Glasgow, Cathcart): Does the hon. Gentleman share my surprise at the call for harmonisation with Europe on this issue by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale)? Does the hon. Gentleman agree that that is a concern more for cartels than for consumers?
Dr. Cable: The hon. Member is right. I, too, was a little surprised by the comment of the hon. Member for
Maldon and East Chelmsford; in fact, I was encouraged by it. Perhaps it illustrates the reformist tendency that we are told exists in the shadow Cabinet.The point about criminalisation is not whether it is wrong, but whether it is necessary. Is the problem a lack of powers, which we discussed earlier? As I understand it, only one case—involving Arriva and FirstGroup—was subject to massive fines under the Competition Act 1998, and that was thrown out by the courts. It is not a lack of powerful sanctions, therefore, that has deterred the authorities from dealing with cartels.
One big problem in dealing with cartels, to which the hon. Member for Maldon and East Chelmsford rightly referred at length, is that of whistleblowers. Unless somebody blows the whistle on a cartel, it is impossible to track it down. By accident, I uncovered a cartel operating in my constituency. A constituent of mine, who was a leaseholder in a block of flats for which the council was the freeholder, challenged some building work on the roof that cost £5,000. On obtaining the tenders submitted to the council, we discovered that they were all within £5 of £5,000—a clear, prima facie case of a cartel.
I asked for a proper investigation, and although there was clear circumstantial evidence, nothing could be proved. All who were involved denied ever having spoken to each other. Of course, such a case would not stand a cat in hell's chance in a cartel investigation, because it would not meet the standard of criminal proof. There has to be whistleblowing, and a culture in the British and European systems that encourages it. Criminalisation of itself will not solve the problem.
One must also bear it in mind that, whenever cartel legislation has been significantly toughened, as it was in the 1950s, the response has been merger activity among small companies. Many companies will take cartels in-house, thereby preventing action under the law. Useful work by Mr. Simionides, a British academic, demonstrated a big increase in such activity in the 1950s, in response to the then Conservative Government's action against cartels. It is possible, therefore, to escape criminal sanctions through obvious business strategies.
My basic point about cartels is rather different, however. What is a cartel? In her introduction, the Secretary of State said that she will provide a very tight definition, but there is a commonsense one. A cartel involves companies getting together to raise prices and restrict services. In addition to the highly proscribed cartels that the Government are going to act against, others are operating under their noses. I wonder whether the Government or the competition authorities have thought of looking at the Association of Train Operating Companies, which meets next week to take a collective decision to increase the price of the network card by £10, thereby devaluing it for anybody who lives within 35 miles of London. A group of business men is acting together to raise prices collectively and restrict a service—a cartel by any definition. However, it is operating under the Government's nose; indeed, I believe that the Government talk to it.
Another example—in many ways, it is more topical and important—is the banking system. As I have repeatedly pointed out in debates with the Secretary of State and the Chancellor, and as the Cruickshank report showed, in
effect, the banking system operates as a cartel. However, I doubt whether anybody expects Mr. Barrett to go behind bars. The banking system is accepted as a legitimate structure, but the Government need to be more careful about distinguishing between small cartels—gentlemen in dirty macs in the back room of a pub who are subject to criminal sanctions—and legitimate cartels that operate in the heart of the business establishment and are totally free not only from criminal sanctions but from effective regulation. That gap in credibility needs to be bridged.On bankruptcy, I agree with many of the comments that have already been made. The hon. Member for South–West Hertfordshire (Mr. Page), among others, pointed out that distinguishing between good and bad bankruptcy could become virtually impossible, and certainly unworkable. Such problems are always difficult in law. One thinks of the problems associated with trying to discover the guilty party in a divorce case. We are importing into bankruptcy the same subjective judgments. Many people will be wrongly judged from their point of view. They will launch legal appeals and the process will become very complicated. The administrative system will lose much of its flexibility and become much more expensive.
In respect of bankruptcy, I want also to endorse the point that was made about Crown prerogative. In that regard, a welcome and positive step is being taken, but we need to be careful. In many ways, we are talking not about the law but the spirit of the law. If the Inland Revenue loses its Crown prerogative but continues to operate in the same way, regarding itself none the less as driven by a need to get at assets before other creditors, the same problems will arise. The issue is as much about the way the Inland Revenue functions as it is about the law.
I endorse the importance of personal bankruptcy. It has yet to be pointed out that many very poor people would benefit from personal bankruptcy, but cannot get through the bankruptcy process because they cannot afford the £250 fee. If the legislation is going to deal with personal and corporate bankruptcy together, we should devote time and thought to how the bankruptcy law affects the socially excluded, who are right at the bottom of the social scale.
I want to reinforce the comments of the hon. Members for Luton, South (Margaret Moran) and for South Ribble about the stop now provisions. They constitute an important innovation, but it is unclear how they will operate. I fully agree with those hon. Members who emphasised the need to apply stop now orders not just to illegal activities, but to activities specifically designed to get around the law. Pyramid selling was mentioned, but there are many other examples, such as time-share and the jobbing contractor scandals. Such scams are often cleverly designed to get around the law, and it is important that the stop now provisions be applied to them. It may well be that, as the Secretary of State said, the general legal powers that were discussed do not apply, but we must find some other way to deal with the problem.
Many of the consumer powers depend on the capacity of trading standards departments. Stronger consumer action powers are all very well, but if trading standards officers are severely under-equipped and resourced, as they are at present, much of that action will not be taken locally. Local councils' trading standards departments have to be beefed up so that that aspect of the legislation can be effective.
In conclusion, I welcome much of the philosophy behind the Bill, which is big and complex. It will require a great deal of scrutiny, and we shall certainly table a good many critical amendments to it.
6.30 pm
Ms Joan Walley (Stoke-on-Trent, North): I want to make a small contribution, but I am grateful to have had the opportunity to listen to the debate because this is clearly a very far-reaching, complex and highly technical Bill that will affect our constituencies and the businesses in them in many ways. The hon. Member for Twickenham (Dr. Cable) made clear in his thoughtful contribution how far reaching the Bill is, and I hope that those hon. Members who are fortunate enough to serve on the Standing Committee—I do not include myself as one of them—will have an opportunity to give it the full scrutiny that it clearly deserves.
I have briefly looked at schedule 25 and reckon that about 36 measures on the statute book will be affected by the changed powers of the Office of Fair Trading, as opposed to those of the previous Director General of Fair Trading. I hope that hon. Members will consider the way in which the Government are developing competition policy and the fact that there is more liberalisation.
The Communication Workers Union lobbied Parliament earlier today. It is concerned that Postcomm might be taking forward its proposals too hastily, and perhaps not in the right direction. It is crucial, therefore, that we carefully consider how the Bill will affect other Acts on the statute book. I remember going to the OFT with other hon. Members to make representations about football coverage under the Broadcasting Act 1990 and football club mergers. Clearly, we need to understand how the Bill will affect such issues.
My hon. Friend the Member for South Ribble (Mr. Borrow) mentioned some of the concerns that were expressed by citizens advice bureaux. I have had almost Herculean battles with firms facing bankruptcy in my constituency—usually manufacturing companies—especially when there have been real fears about what will happen to their employees. We have to consider the proposals very carefully, because perhaps they will bring about some changes.
I welcome the Bill, which will bring real benefits to unsecured creditors, including many small businesses. People say to me, "Joan, I don't understand why the Inland Revenue always has the first call when a firm is about to go under." Many people may be owed money, which they need to be paid, but because they are not top of the queue they too go under. So the Bill will increase and enhance competitiveness in a way that benefits constituencies throughout the country, not just Stoke- on-Trent, North.
Citizens advice bureaux have already circulated their concerns to many Members of Parliament. They are concerned about whether those on means-tested benefits and in hardship will be exempt from the bankruptcy deposit fee. I hope that the Minister will consider that issue in responding to the debate. Many of our constituents cannot afford to take advantage of some of the Bill's proposals. We should consider whether there should be an option to pay by instalment and perhaps reduced fees.
As well as having talks with trading standards officers about guidance and consultation, I hope that the Government will have further talks with citizens advice
bureaux, as that might provide a way forward. Many of my constituents face debt and bankruptcy, and they need to be included. The Bill needs to be inclusive, especially in relation to the disadvantaged sections of our communities.I speak as a former chairman of a local government health and consumer services committee, which had responsibility for trading standards officers, and in doing so I should like to echo the concerns that have been expressed about trading standards officers. A consistent approach must be taken throughout the country. What happens in each part of the country—including Northern Ireland and so on—must reflect what happens elsewhere, so the guidance should be consistent. I hope that there will be proper consultation on that.
I also hope that the Bill will continue to enable trading standards officers to act against rogue traders. The opportunities that it provides to act against rogue traders represent a real step forward and will be warmly welcomed by many people. I hope that the Minister will consider the guidance that will be issued to trading standards officers on the new extended stop now regime.
For many years I have tried to get answers about unfair competition and barriers to enterprise, especially in relation to independent petrol retailers and the newspaper industry, which Select Committee on Trade and Industry and the OFT have investigated. A lot of Members have been approached by independent petrol retailers, many of whom have gone under during the past five or six years because of unfair competition. In swathes of the country—not in my constituency, where there are some excellent ones, I hasten to add—many of them have closed because of such unfair competition.
In the time that I have had to consider this lengthy and hefty Bill, I have tried to consider whether that long-standing concern can be addressed. I hope that the Minister will consider the issue in detail in his reply or in a follow-up letter to me. Those retailers are buying fuel wholesale, but the wholesale suppliers are selling oil and petrol at less than cost price in parts of the country because they can gain an advantage elsewhere in the supply structure. The independent petrol retailers operate at a loss because of unfair competition in the buying and selling of petrol. That is grossly unfair.
Many small businesses are severely disadvantaged by the power of the larger conglomerates that provide them with goods and services. Small businesses in rural areas and areas of high unemployment are particularly vulnerable. The Bill presupposes that the consumer is an ordinary member of the public, but small businesses are also consumers—they receive goods and services from larger businesses. Will the Bill afford them adequate protection? I know that clauses 5 to 8 refer to the issue, and I hope the Minister will pay close attention to it.
Currently, a monopoly is deemed to have been brought about if a supplier dominates 70 per cent. of the market. In the oil industry, three players dominate 80 per cent. of the fuel-supply market. No individual company will cross the magic 30 per cent. threshold and thus trigger an investigation, but collectively they dominate the market. All their prices at the pump move either up or down in unison. What protection from such predatory action will the Bill provide? Those running independent garages in my constituency—I will not name them—will listen closely to the Minister's reply.
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