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New Clause 5
Excisions from reports: Part 4
'(1) Subsection (2) applies where the Secretary of State is under a duty to publish a report of the Commission under section 136.
(2) The Secretary of State may exclude a matter from the report if he considers that publication of the matter would be inappropriate.
(3) In deciding what is inappropriate for the purposes of subsection (2) the Secretary of State shall have regard to the considerations mentioned in section 238.
(4) The Commission shall advise the Secretary of State as to the matters (if any) which it considers should be excluded by him under subsection (2).
(5) References in sections 130(4) to (6), 137(2) and (5) to (7), 142(3) to (5) and 166(10) to the giving or laying of a report of the Commission shall be construed as references to the giving or laying of the report as published.'.—[Miss Melanie Johnson.]
Brought up, read the First and Second time, and added to the Bill.
New Clause 3
Use of fines by OFT
'.—(1) The OFT will consider whether any fines which it imposes under Chapter I or Chapter II of the 1998 Act might be
(2) The OFT may in pursuance of subsection (1), make such direction as it considers appropriate.'.—[Mr. Waterson.]
Brought up, and read the First time.
Mr. Waterson: I beg to move, That the clause be read a Second time.
Mr. Deputy Speaker: With this it will be convenient to discuss the following: Amendment No. 3, in clause 4, page 2, line 24, at end insert—
'and
(d) an assessment of the additional costs to business of the exercise of its functions.'.
Amendment No. 6, in page 2, line 34, leave out—
'seriously and prejudicially affect the'
'significantly harm the legitimate business'.
Amendment No. 210, in clause 6, page 3, line 9, after "consumers", insert "and producers".
Amendment No. 8, in page 3, line 20, leave out—
'seriously and prejudicially affect the'
'significantly harm the legitimate business'.
Amendment No. 211, in clause 8, page 3, line 35, after "consumers", insert "and producers".
Amendment No. 212, in page 3, line 39, after "consumer", insert "and producer".
Amendment No. 213, in page 3, line 41, after "consumer", insert "and producer".
Amendment No. 214, in page 4, line 1, after "consumer", insert "or producer".
Amendment No. 215, in page 4, line 3, after "consumer", insert "or producer".
Amendment No. 216, in page 4, line 9, after "consumers", insert "and producers".
Amendment No. 217, in clause 9, page 4, line 18, leave out from beginning to "section" in line 19.
Amendment No. 218, in clause 11, page 5, line 2, after "consumer", insert "or producer".
Amendment No. 219, in page 5, line 5, after "consumers", insert "or producers".
Amendment No. 10, in page 5, line 6, leave out "90" and insert "60".
Amendment No. 11, in page 5, line 13, leave out subsection (4).
Amendment No. 220, in page 5, line 15, after "consumer", insert "or producer".
Amendment No. 221, in page 5, line 18, after "consumers", insert "or producers".
Amendment No. 222, in page 5, line 34, at end insert—
'and—
(c) "producer" means an individual involved in the manufacture, production or sale of goods or services.'.
Mr. Waterson: Our new clause and amendments again deal with the general functions of the OFT. The hon. Member for North-East Derbyshire (Mr. Barnes) has also tabled amendments, and I look forward to our usual fascinating debate.
We debated the provisions of new clause 3 in Committee, and it is part of the Opposition's responsibility to make choices about the issues to which we wish to return on Report. We thought that this issue was worth debating again, because it is important and because we did not think that the Under-Secretary's response in Committee was adequate. As she has had more time to reflect on the matter, we might now make more progress. A glance at the new clause shows that it would determine the fate of fines determined under chapters I and II of the Competition Act 1998 and use them for the benefit of consumers.
Substantial income might be derived from such fines in any given year, and that money could be applied for the remedial benefit of consumers in general. The Consumers Association has publicised the case in which a car manufacturer—I forget which one—agreed to donate substantial funds to the association as part of the settlement of potential proceedings. The association undertook to use that money to inform consumers about the purchase of cars, including purchase from suppliers based on the continent. When the offence alleged is predatory pricing, the consumer will have benefited from lower prices, albeit at the longer-term loss of competition. In such cases, under current legislation consumers would be unlikely to recover damages. However, if the funds obtained were applied for the benefit of consumers in general, that would sensibly reflect the fact that there is no individual remedy.
If the Under-Secretary's reply is based on the one that she gave in Committee, I know that she will say that there are separate provisions in the Bill for funds to be applied for consumer information and education. We welcome that. However, the new clause would ensure the use of a separate stream of funding to consumers in general.
I have already given a couple of examples, and another one would arise when consumers had clearly been disadvantaged but it was impossible to identify or trace those harmed. Something may have gone on for many years across an entire market without records being kept of the people involved. In another example, many people might have lost a tiny amount as the result of a harmful practice. However, recognition should be made of the fact that there has been misdoing by the companies involved.
3 pm
The Minister was less than convincing when she addressed the problem in Committee. One of her defences was that we might encourage the OFT to operate a slash and burn policy, and go out of its way to find people so that it could produce the stream of funding. That is far-fetched. In fact our suggestion would make sensible use of the funds, unlike the alternative, which allows them to disappear into the black hole of the Treasury.
We discussed an amendment similar to amendment No. 3 in Committee, and I accused the Minister of intransigence. I had hoped that she might reconsider her case, because we need to assess the additional costs to business that will arise when the OFT exercises its functions. The Conservative party is keen to stick up for businesses, large and small, when it comes to the extra burdens and costs that are heaped on them. There is a cumulative process of placing more burdens on business, and those have a particular impact on smaller firms.
It is important to make a regular assessment of the additional cost to business of the OFT's exercise of its functions. That is eminently sensible. We debated how to assess that burden in Committee, and it is worth trying to work out whether the burdens on business are substantial, as we fear they might be, and how they stack up against the benefits to consumers. Unbelievably, the regulatory impact assessment of the Bill concluded that its provisions would impose no extra cost burden on business. We do not accept that, and it requires explanation.
In Committee, my hon. Friend the Member for Huntingdon (Mr. Djanogly) gave the example of a company that started to trade in a new market. It received a letter from the Department of Trade and Industry saying that the trade was against the public interest. In effect, the Department threatened to wind up the company and prosecute the directors. The company took legal advice and was very worried. It would have cost a great deal to clear the company's name, and the matter never went to court. The director involved settled with the Department, the company was wound up and various other measures had to be taken. The company simply did not have the resources—or, perhaps, the courage—to sit out the argument with the powers that be.
We all accept that the OFT needs to be beefed up and provided with more staff and resources. I often see job advertisements for the OFT in the papers—not that I make a habit of looking through the appointments sections; I merely have a wistful curiosity about all those positions that allow people to earn more than I do. The OFT is obviously building up its staff in anticipation of the changes. When the Bill receives Royal Assent, they will be like coiled springs, waiting to leap into action. The OFT will have massive resources and deep pockets, which may not be true of the companies with which it deals.
Amendments Nos. 6 and 8 replace similar amendments tabled in Committee. The phrase
- "significantly harm the legitimate business"
We debated recent dawn raids involving the Serious Fraud Office and other prosecuting authorities. Although such action might be relevant and necessary in certain cases, we want to ensure that restraints and constraints on the new authorities are included in the Bill. We do not want the new authorities, flush with new resources, responsibilities and powers, aggressively and vigorously to pursue companies that may be innocent and blameless. The disruption of a company's business and the undue publicity could have a serious effect on it.
I expect the OFT to take a more rigorous view of company raids than other authorities. Only a few weeks ago, several pharmaceutical companies were subject to a
dawn raid, and it is staggering how the details of raids are often firmly in the public domain and the media before they take place. That is of great concern, especially as we still operate under the premise that people are innocent until proved guilty. Such cases are usually complex and take many months, or even years, to resolve. Although prosecutions are often not pursued or are unsuccessful, incalculable damage is inflicted in the meantime on the interests of the companies under investigation.Amendment No. 10 deals with super-complaints. Those are an important and useful innovation, strongly supported by all the main consumer bodies. They ensure that something that is happening across the country does not have to be pursued by individual trading standards departments, but by a super-complaint brought, typically, by a consumer body. The Bill specifies, however, that the OFT should publish a response to a super-complaint within 90 days. We agree that there should be a limit on the time taken to respond, but our amendment suggests 60 days. There can be no practical objection to that. Extensions of time could always be applied for and given.
It is almost inevitable that substantial publicity will be generated, especially by the first super-complaints. They will be a novelty and probably come on the back of a substantial consumer campaign on a particular malpractice or piece of sharp trading. If such publicity is generated and it blights the activity of a company or group of companies, it is important that the period should be as short as possible. On the other side of the coin, it must surely be in the interests of consumers that such matters be resolved as speedily as possible.
The sister amendment, amendment No. 11, would remove subsection (4) from clause 11, which allows the Secretary of State to take the power to amend the time limit, presumably up or down. In Committee we debated the best intentions of this particular Secretary of State and those who advise her, but we still think that the clause should be changed.
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