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'(2) Parts 3, 4, 5, 6 and 7 of this Act shall not come into force before 1st March 2005'.
I shall speak briefly to the amendment. We discussed this in Committee but, given our slightly truncated debates last Thursday, I still think it is worth debating the amendment, which would ensure that parts 3, 4, 5, 6 and 7 of the Bill, once enacted, do not come into force before 1 March 2005.
I am sure that it is rare to propose amendments to the commencement provisions in a Bill. However, we have received very strong lobbying from the CBI and other organisations which feel quite aggrieved, not unreasonably, that we are revisiting competition law only a very short time after the Competition Act 1998, which was described at the time as the state-of-the-art measure on competition, and an even shorter time after the Act came into effect. We believe that there is a symbolic importance in suggesting that there should be a moratorium before the new provisions on competition come into force.
I am sure that Members want to get on to Third Reading, so I will desist from going through all the provisions that are being proposed on competition matters. We had some debate on it last Thursday. However, this seems eccentric for two reasons—first, it will place extra burdens on business because companies will have to become au fait with these new competition provisions very soon after doing so in respect of the 1998 Act.
Secondly, it was clear from our deliberations in Committee that on certain key issues the regime in this country and the European Union would be moving in opposite directions. That is very unfortunate; there is no doubt that the European regime for competition is developing, and developing quite fast. Again, there seemed to us to be great sense in waiting to see how that regime, to which British companies are subject, developed before committing ourselves to further changes in competition law. That is the purpose of the amendment, and I commend it to the House.
Mr. Carmichael: I can probably beat the hon. Member for Eastbourne (Mr. Waterson) for brevity. I believe that
there is some force in what he says. I feel as if passing competition legislation is almost like buying a new computer—by the time everything is installed and all the games are up and running, it is obsolete and something better has come on the market. [Interruption.] Or, indeed, as my hon. Friend the Member for Southport (Dr. Pugh) says, it has crashed.I am not convinced that the length of the delay envisaged in the amendment is desirable, but as I have said on a number of occasions in Committee, there is a good reason for having a period of mature reflection on the progress of the Competition Act, which is of two years' vintage only. Before the Bill comes into force in its entirety, it might be possible to commence introducing some of the provisions over a longer period of time.
Miss Johnson: In the interests of brevity, I will not go over all the reasons why we propose to have the Bill. Its provisions build on those of the 1998 Act. There is no real reason for delaying it, as the amendment proposes, until at least 1 March 2005. It would be unusual for the House to introduce legislation, support it and then suggest that it needs to be delayed for so long.
I set out the rationale for each of the reforms on Second Reading and in Committee. Merger and market reforms will depoliticise the process; they will improve the clarity of the framework for decisions and the predictability of the decisions made under it. The introduction of an offence for cartels will create a real deterrent against individuals who enter into cartels, and the effect will be fewer cartels. The civil regime introduced by the 1998 Act imposes civil fines on companies but it does not deter individuals in this way.
I do not believe that there are any grounds for delaying the introduction of this package of important reforms, and I urge the hon. Gentleman to withdraw the amendment.
Mr. Waterson: I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.57 pm
Miss Melanie Johnson: I beg to move, That the Bill be now read the Third time.
I thank hon. Members for their valuable contributions to our debates on the Bill, not only on Report but on Second Reading and in Committee. The Bill is set to go on to the other place in even better shape, I believe, than it was on its introduction. That is due to the diligence that many Members of the House have demonstrated in scrutinising the Bill. I am particularly grateful for the constructive approach of Opposition Members to the Bill, their support for the majority of the measures and their determination to improve it.
Hon. Members have asked how much of a difference the proposals will make to people's lives in practice; they have sought reassurance that the Bill will not create new burdens on business and have asked whether sufficient resources will be available to back up the new powers in the Bill. I have sought to reassure them on these points throughout the passage of the Bill and will do so again this evening.
There remains a productivity gap with our key competitors—France, Germany and the United States. My Department's No. 1 public service agreement target is to tackle this productivity gap. The measures in the Bill will boost productivity through promoting stronger competition and an enterprise culture. They will make a real difference to people's lives. It is no wonder, then, that the Bill has wide support. The Federation of Small Businesses says:
- "We do not see anything controversial in these proposals and would urge all party support and speedy implementation through Parliament".
- "put an end to the billions lost to consumers each year from rogue traders".
- "we value a very tough competitive regime because it will enhance productivity".
Mr. John Redwood (Wokingham): If competition is so good, why are hon. Lady's Government delaying its introduction in the Post Office?
Miss Johnson: My right hon. Friend the Secretary of State for Trade and Industry recently made a statement on the Post Office and we are trying to ensure that the Post Office has a secure future. That is not a matter for the Bill, which does not need to deal directly with issues of enterprise and productivity in the Post Office, as they are being fully addressed elsewhere. Indeed, it could be said that insufficient action by the Conservative Government meant that the future of the Post Office was not what it would have been had the organisation been suitably released from the constrictions under which it worked at that time.
The result of our extensive consultation on the Bill is a measure that reforms existing regulatory frameworks for the better. For example, there will be better competition regulation. By removing from Ministers decisions on mergers and market investigations, we are removing a layer of regulation and streamlining the regime. We are ensuring that decisions are taken by competition experts, free from short-term political pressures. By ensuring that those decisions are taken on the basis of a competition test, rather than a public interest test, we are improving the clarity of the framework for decisions and the predictability of the decisions made under it.
Opposition Members have expressed concerns about the manner in which the Office of Fair Trading will investigate markets. The OFT threshold for making references will be no lower than at present. The OFT will naturally want to concentrate its resources on the most serious cases. It will certainly not be in the OFT's interests to refer markets for detailed investigation unless there is a reasonable prospect that the Competition Commission will make an adverse finding. That has not happened in the past, and I cannot envisage its happening in the future.
Some forms of anti-competitive behaviour, specifically hard-core cartels, are highly damaging to consumers and a major drain on the world economy. Those are serious economic crimes and that is why the Bill provides for a criminal offence with the possibility of a maximum five-year criminal sentence.
The Competition Act 1998 already provides civil fines against firms, as I said a moment ago. However, to prevent the formation of hard-core cartels, we need to create real deterrents for individuals. Cartels operate undercover and are notoriously difficult to detect. That is why we are providing for tough but appropriate and proportionate investigatory powers, with significant safeguards.
As well as benefiting from stronger competition, consumers will benefit from effective consumer protection. The stop now orders, introduced last year for certain aspects of consumer protection, were widely welcomed by consumer organisations. The Bill will extend that protection to other sectors—especially the service sector—where consumers' interests are harmed by traders not meeting their legal obligations. The new framework will work better for consumers and for business.
We have heard several calls for the Bill to include a general duty not to trade unfairly. I agree that businesses should trade fairly, but I am not convinced that enshrining a general principle of that kind in legislation is necessarily the best way forward. Policies must be founded on a robust evidence base to ensure that they are effective and necessary, do not place undue burdens on business and serve the purpose of protecting the consumer—the overriding reason for those aspects of the Bill. That is why I shall invite key stakeholders to a seminar to explore their concerns with me in more depth. In the light of that seminar, I shall assess the case for further action.
If we are to build a truly enterprising economy, we must ensure that our insolvency regime supports rather than stifles the development and growth of new businesses. The Bill will deliver that support while striking a balance between the interests of creditors, companies and the public.
In providing early discharge for those who have failed through no fault of their own and by introducing a more stringent regime for the rest, we are drawing a clear distinction between the culpable and the non-culpable. That is vital if we are to move away from our current one-size-fits-all approach to bankruptcy which is inappropriate and unfair.
On earlier occasions and, indeed, this evening, some hon. Members have said that bankruptcy will become an easy option. That is a cynical argument that has no basis in fact. Debtors who can pay should pay and will pay. Trustees will be entitled to realise the same assets and income as they do at present, and that is why we are introducing bankruptcy orders for protection against the most reckless and dishonest people. However, we also believe that the consequences of bankruptcy should reflect the circumstances of the case.
As well as encouraging individual enterprise, we want to ensure that companies facing financial difficulties do not go to the wall unnecessarily. That is why we are restricting the use of administrative receivership and creating a new streamlined administration procedure with a clearer purpose and clear time scales. The procedure
will focus on company rescue and better returns for the company's creditors as a whole. We will also ensure that the interests of all creditors are taken into account.The measures in the Bill are radical and bold, but based on careful consultation. We have developed them to strike the right balance and to reform the existing framework of regulation for the better—without creating additional regulations for business. We will provide the necessary resources to ensure that the measures are effective. Together, the package of reforms will make a real difference to this nation's prosperity and I commend the Bill to the House.
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