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30 Oct 2002 : Column 922—continued

Mr. Robathan: I just want to clarify one thing. Although we may not object to everything, we are not entirely happy with the Bill. However, much of it is sensible.

Mr. Barnes: I realise that many people in the City and elsewhere will be happy with many of the measures. However, other people are attracted to different aspects of it, such as consumer rights, which we wanted to extend to worker rights, and bankruptcy. Had things been different, the 11 Clay Cross councillors, some of whom still represent people in my constituency, might have faced a different system.

The scope of our debate is reduced to matters associated with the European Union and clawing back powers. In addition, the definition of public interest is a bit restrictive because it refers to the distribution of employment and industry. It is drafted in that way because of the possibility that it would be debated and can be discussed only in the context of amendments Nos. 53 and 54.

6.45 pm

We are restricted to European merger laws. They relate to mergers of a certain scale and to a community dimension, which in turn relates to a complex threshold provision. They are handled exclusively by the European Commission rather than national competition authorities. However, European law allows national competition authorities to request the Commission to consider a merger on a number of grounds including defence interests, mergers that primarily affect the member state and cases in which a member state needs to take action to protect its legitimate interests. The amendments would instigate and extend public interest concerns.

The subject was elaborated on and discussed in the Lords. Lord Sainsbury explained that the intention of the amendments tabled there was

the economic community merger regulations. He went on:

My intention is not in line with that. I want to widen the scope, even though the extent to which I can do that under the procedures of the House is limited.

I feel strongly about the matter, especially in light of the Biwaters experience and ensuing developments. It seemed that the Government were ready to get rid of the public interest concern as it related to mergers. The House needs another chance to express its views on that so that a residual part of the public interest remains.

Dr. Cable: I admire the hon. Gentleman's persistence and stamina. I have supported him because he has a

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case, although my point of departure is different from his. The existing system, which allows Ministers to make final decisions on mergers, has considerable disadvantages. That is why the Bill gets rid of it. The problem with the system is that it leads to capricious political intervention, but it does have some advantages. Ministers are ultimately accountable and can act in a wider public interest. There will be times, such as the impact of a merger on a geographical area, when that would be useful. The hon. Gentleman is right that it is desirable to have the principle of a backstop provision.

Mr. Barnes: There is no arrangement by which the Director General of the Office of Fair Trading can use the public interest argument when referring a case to the Competition Commission. We should consider whether that power should fall to the Secretary of State or the director, or a combination of the two.

Dr. Cable: The hon. Gentleman suggests options, but we are arguing about the principle.

Mr. Redwood: The hon. Gentleman said that ministerial decisions can be capricious. As a Minister who was involved in making competition decisions, I hasten to put it on the record that they were never capricious. Had they been capricious, they would have been subject to judicial review and legal proceedings. There are rightly strict controls on how Ministers make such decisions and on how they have to be promulgated and explained. The hon. Gentleman should reflect again. There can never be a capricious ministerial decision unless it is one that is overturned.

Dr. Cable: The right hon. Gentleman may be playing with words. He is describing the procedure correctly, but Ministers have in the past made decisions on mergers policy that do not appear to have been inspired by competition policy or the public interest. That is why the Bill was introduced and why it has the support of all parties.

The hon. Member for North-East Derbyshire (Mr. Barnes) has made his presentation on several occasions. I am not sure that we would be well served by having another Division on the matter, but if the hon. Gentleman wants to press it to a vote, I will support him.

John McDonnell (Hayes and Harlington): The debate on public interest and public security, as defined by the European merger regulations, has been extensive but not particularly clear. It would be helpful for future interpretation of the law if the Minister stated on record whether, under those regulations, the definitions of public interest and public security take any account of the distribution of industry and employment. Are rates of employment and unemployment in an area a consideration in determining public interest or public security? Can the Minister give examples in which those factors would be taken into account?

Mr. Redwood: I hope, Mr. Deputy Speaker, that if the Minister catches your eye, she will comment a little more on the main purpose of these amendments and on the relation between UK and European Union law.

When the Bill that became the Competition Act 1998 was before the House, we were assured that it would be the final statement on the necessary division between

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EU law and UK law. We were told that it would implement a new system that would ensure that we were not at variance with Brussels and that we had separated powers correctly. We are now told by Ministers that the Act is far from perfect and that we must pass voluminous legislation to get it right, even though EU competition law has not changed very much. The main definitions for that law were set out in the merger regulations and other important texts that have not changed in the intervening period.

Will the Minister explain why errors were made and why she feels that the Government have now got it right? Is she prepared to say that this is a definitive version of the relative powers of the EU and the UK in this field, barring, of course, further change because of a development in the superior law of the EU? I was pleased to hear the Minister admit that EU law in this field is superior—and that that is reflected in the Bill—because I have long believed and argued that, and I have encountered resistance from those who want to pretend that the EU is less powerful than it is. That was an important statement by the Minister.

Mr. Djanogly : I point out, in support of my right hon. Friend, that it was repeatedly said in Committee that the previous legislation is so recent that we have not had time to assess its implications and how it works in practice.

Mr. Redwood: My hon. Friend has made the powerful point that such complicated legislation, with many regulations, takes a long time to bed down. It takes time to establish the case law by which we see how legislation is working, so the Government, figuratively speaking, have pulled up the plant to see whether it is growing, which is not a good way of practising horticulture. I am worried that they may do that again because of the enormous complexity of this Bill. They lack a sureness of touch because they are trying to marry their political wish to tell the British people that Europe has very little power and is not taking strong legal powers beyond those of the nation states in their desire to align themselves with the obviously strong powers held by the Brussels regime in this and many other areas.

Will the Minister reassure the House that she is aware of the current negotiations for a constitution for Europe? That is important work, and drafts have been in circulation. Can she assure the House that nothing in those drafts clarifying the relative powers of the Union and the member states will mean that she, or her successor, has to return to the House within a couple of years to legislate yet again? One worries that, as the Government fumble for a solution, this will become a perpetual round of legislating, revising and amending. That would mean that all those in the business community who are desperate for certainty about the law, about who applies it and about who has power would constantly have to go to expensive lawyers for interpretations of lengthy new legislation.

I have declared my interest in the register, and I do not speak on behalf of business, but that community is increasingly befuddled by the length and complexity of legislation and the constant changes to it. It is beginning to feel that the Government change the law rather more often than does the EU, although they claim that in some way the EU requires those frequent changes.

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Will the Minister reassure us that she has taken account of all the best legal advice about the current position, and that it is now definitive? Secondly, will she reassure us that nothing doing the rounds in Brussels or elsewhere in the EU is likely to make a material change? Thirdly, will she confirm that there is nothing in the preliminary drafts for the European constitution that will require us to revise the Bill? Fourthly, does she think that there can now be a period of greater certainty and clarity to allow our competition regime to bed down for years and give us a good chance to see how it works?

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