Enterprise Bill

---

[back to previous text]

Mr. Purchase: I came in this morning with a sunny disposition, but I am becoming grumpy. With great respect, I think that the amendment is frivolous. If we were talking about the civil action of some showbiz personality who was upset because his last pop record had been criticised and felt that that had damaged his reputation, he could get on with it and take whatever action he chose. At the end of that litigation, the costs would rightly be awarded as the hon. Member for Eastbourne described.

In this instance, the word reasonable should be used in its fullest sense. It is not reasonable to believe that a responsible, well-organised professional consumer group would take either a frivolous or, in the words already used, a ''thin'' complaint to the OFT. The period of time in which they are to respond would be considerably shortened if there were a frivolous or thin complaint. In the best tradition of these Committees, the amendment is designed to probe. I urge my hon. Friend the Under-Secretary to reject it and Government Members to vote against it. Will the Opposition please withdraw it as quickly as possible?

Mr. Carmichael: I, too, oppose the amendment. My concern is that it would seriously emasculate the operation of super complaints. It would act as a significant disincentive to designated consumer bodies in bringing complaints. I have a great deal of sympathy with what the hon. Member for Eastbourne says about vexatious and frivolous complaints, but there ought to be some protection in the process of designation and the requirement for a reasoned complaint.

I envisage the procedure working in this way: a complaint will be made and representations will be

Column Number: 097

made by the business, industry, or firm concerned. At the stage at which the complaint is made, certain information will be available to the consumer body—probably whatever is publicly available. The business concerned will almost certainly hold information that it will not disclose prior to the starting of the super complaint procedure. When that information is made available to the OFT, it may result in no further action being taken. In that instance, given the information available to the consumer body when it brings the complaint, it is acting in good faith. If, when the OFT performs its role, it is found that no further action is necessary, there is no reason why the consumer body should be liable for costs when it is acting in good faith in that way. It would be a massive disincentive to bringing complaints.

The parallel that has been drawn with the courts in civil proceedings is a bogus analogy; we are dealing with a procedure that the hon. Member for Huntingdon quite rightly called a preliminary investigation. Such a situation will not occur. There is certainly no parallel in Scottish civil procedure and I am not aware of anything south of the border.

The wording of the amendment is very different from what one would have expected, listening to the hon. Member for Eastbourne. All that is required is that the OFT should take no action. For example, action might not be taken if the business concerned admitted what it had done and said that it would not do it again. Even in those circumstances, however, the consumer body that made the complaint

''shall bear the reasonable costs''

under the amendment.

If the hon. Gentleman had restricted the amendment to frivolous or vexatious complaints, I would have had a great deal of sympathy for it. Indeed, with that in mind, I urge the Minister to consider some sort of protection against such complaints. However, the amendment certainly does not have that effect and I cannot support it for that reason.

Mr. Djanogly: The hon. Gentleman discussed the possibility that consumer associations might be made bankrupt because of the amendment. Although they do a marvellous job overall, they will all at any given time have several litigation suits pending against them. In many instances, they settle the complaints and publish apologies in their magazines. It is simply not realistic to think that they never make mistakes. Indeed, companies can be threatened with bankruptcy because of the proceedings. It comes down to where the costs should lie. Should they invariably lie with the companies, with the consumer bodies or, in certain circumstances—I appreciate that the amendment does not say it—with the OFT and the Government? We must consider that question.

I want to discuss whether such investigations are conceptually different from normal OFT investigations. I would say that they certainly are. In the context of how consumer bodies work, the investigations are unlikely to be conducted through the normal OFT course of events, in which it

Column Number: 098

announces that it is investigating, gets on with it quietly for several months—unless the Serious Fraud Office gets involved—and comes up with its finding. Instead, there is likely to have been correspondence with consumers and possibly campaigns in the newspapers, surveys in consumer magazines and features on programmes such as ''That's Life.''

Andy Burnham: That was years ago.

Hon. Members: ''Watchdog.''

Mr. Djanogly: Now it is ''Watchdog.''

The environment is very different from that of a standard OFT investigation. The company should have the right to compensation if, after all that, the finding is that the claim was wrong.

Andy Burnham: Does the hon. Gentleman agree that, even if a complaint is not upheld, the organisation that brought it has served the wider public interest by focusing public debate and attention on business practices and encouraging greater understanding of a particular business?

Mr. Djanogly: There may well be reasons why it is interesting to consider an issue for the reasons that the hon. Gentleman gave. However, if the OFT loses or decides that there is no course of action to be taken, why should the company have paid for the state to investigate? Why should that cost fall to the shareholders of the company or, indeed, consumers? The company must pass on the cost of that investigation to shareholders or consumers through its prices, or go bankrupt. The money has to come from somewhere. The hon. Gentleman made a valid point, but why should the company have to pay if it has not been in the wrong?

Mr. Purchase: The hon. Gentleman should think about quantification. Let us take the two cases that have been mentioned. In the frivolous case, I suspect that there would be no inquiries to the companies whatsoever. In the very thin case, there might be a very short correspondence between the OFT and the company complained about, but that would be end of story. Quantify for me, please.

Mr. Djanogly: The hon. Gentleman's argument about the period of time is a good one. I was going to finish with that. If a frivolous pre-investigation were launched within the 90-day period, the cost would be relatively light by the time that the complaint was, in effect, knocked out by the OFT. The Consumers Association would be open to lower costs than it would have been had that investigation run for a long time.

Having listened to the debate, I think that it would be better to pursue the matter by looking at the different periods, as the hon. Gentleman suggests. During the 90-day period, perhaps the consumer body should be liable for costs if the action fails. If the OFT then decides to pursue the matter, perhaps the costs should go to the Government.

Mr. Purchase: The amendment deals with cases in which

''the OFT decides to take no action''.

There is no question of proceeding.

Column Number: 099

Mr. Djanogly: No, as I said. More to the point, the amendment says that the consumer body alone shall bear the cost. I am saying that perhaps that should not be for the consumer body alone. If the OFT decides to continue with the action after the 90-day period, perhaps the OFT—the Government—should pay.

Miss Johnson: First, I re-emphasise the fact that checks are in place, which several of my hon. Friends and the hon. Member for Orkney and Shetland have also emphasised, to ensure that frivolous complaints are not submitted. I believe, along with several of my hon. Friends, in particular my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase), who has been pursuing the matter, that there should not be any genuinely frivolous complaints, given the guidance and the designation process. I take the word ''frivolous'' as meaning what it does, not as some sort of cover for something that does not progress later. There is a difference and several hon. Members have made a distinction between three possible categories of complaint. If genuinely frivolous complaints are submitted, something has gone wrong with the process. It is likely to be a serious matter for any organisation to proceed with a complaint in the first place.

As I said, consumer bodies will have to meet certain criteria, on which we shall consult fully. They will have to demonstrate their capacity to put together a reasoned case and devote considerable resources to producing that case in accordance with the OFT's guidance. Opposition Members may be forgetting that any process of examining how well something is working—the investigation and making of cases about what is going wrong and what, if anything, might be done about it—makes demands on all sides.

As I said, there will also be an informal consultation before the OFT accepts the complaint and it is therefore unlikely that the making of a super complaint would be entered into lightly.

11 am

Parties do not get their costs back when other complaints are submitted to the OFT and investigations are carried out that result in no action being taken, which is the middle category. I take it that Conservative Members have no problem with situations in which further action is taken because a problem has been identified.

As my hon. Friend the Member for Leigh (Andy Burnham) said, if there appears to be a reason to examine a case to see what issues arise from it, it is not right that an additional burden should be placed on the organisation bringing forward that matter, at which the OFT will have looked and decided that there is at least a reasoned case to be further examined as a result of that process. It is therefore unfair to attach that condition to complaints made by that procedure.

We are learning a lot about the hon. Member for Huntingdon. I am sure that his interest in dentistry is not an enthusiasm shared by most members of the public or, indeed, by most members of the Committee. He talked about proceedings and costs, but it is not a court process. There is always a temptation, which I am sure that his background as a lawyer will make him

Column Number: 100

want to resist, to assume that all things come down to the law. The process is another avenue by which complaints can be made. I hope that I have reassured hon. Members about the safeguards to ensure that frivolous complaints are not made, and I hope that Opposition Members will have been reassured sufficiently to withdraw the amendment.

By way of reassurance to my hon. Friend the Member for Hemel Hempstead about the resourcing of consumer groups, the Government do not intend to provide them with additional resources. However, the paper that the National Consumer Council has submitted to the Committee makes it clear that it intends to apply for designation and believes that that would be possible.

 

---

Prepared 18 April 2002