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Standing Committee B
Wednesday 1 May 2002
[Mr. Derek Conway in the Chair]
Review of decisions under Part 3
Amendment moved [this day]: No. 172, in page 81, line 5, leave out 'person' and insert 'party to a merger'.—[Mr. Carmichael.]
Mr. Alistair Carmichael (Orkney and Shetland): When time was called at 1 pm, we had established only that the amendment could be dealt with in short compass—but for the fact I had mislaid my notes.
The Confederation of British Industry describes the clause as one of the most damaging in this part of the Bill. However, subject to what else is said in debate, I intend this as a probing amendment. The CBI's concern is, I believe, well founded. The provision will leave any person who is aggrieved by a merger decision, and not merely parties to the merger, with a right to appeal against that decision. Once the decision has been taken to merge, one would normally expect a line to be drawn under the matter—it would be a clear-cut point at which the parties could continue to plan—but there will now be up to three months of uncertainty while third parties exhaust their rights of appeal.
The CBI says that that will cause unnecessary uncertainty to business, and that it will risk undermining the competition focus of merger control by placing excessive reliance on the views of competitors. The fact that the provision could undermine the commission's work is particularly worthy of the Minister's consideration. He may suggest that the three-month time limit will provide some sort of protection, but given that those three months will come at the end of what could be a fairly lengthy procedure, the time limit for the lodging of an application is not so much a protection but the cause of potential further injury to the interests of the businesses involved.
Mr. Jonathan Djanogly (Huntingdon): There is an awful lot of sense in the amendment. Much damage could be done by allowing any person who was not a party to the merger to appeal against a decision of the Office of Fair Trading. It could become a charter for costs and expenses on the company, and for taking court cases and disrupting business. It could have significant ramifications. It is possible that the three months allowed for making an appeal could be tacked on to the conditions to the acquisition. Rather than acting as an appeal, it could slow down the process in every case.
Another significant problem could arise in insolvency cases, when it would be in the interests of customers and employees that the transaction should
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be pushed through as fast as possible. The company could hold discussions with the OFT and come to an arrangement on how to move forward, but someone could disrupt all that by making an application under the clause. It could have significant consequences, and I would be interested to hear the Minister's response.
Mr. Andrew Lansley (South Cambridgeshire): I am sorry to delay the moment at which my hon. Friend will hear the Minister's reply, but I must confess that I do not agree with the hon. Member for Orkney and Shetland (Mr. Carmichael). I hope that the Minister will say this anyway, but I shall put it on the record: it is not right to treat the views of competitors as something that should not carry weight. Competitors' arguments in relation to mergers are often precisely those that have a locus in relation to the competitive situation that would be created as a result of the merger, and they should have force. If we were to exclude persons who were not parties to the merger, we would arbitrarily exclude some of the very people who should have a power to appeal against some of the processes involved in making the decision.
If the amendment is not agreed, that will not necessarily mean that there will be a great deal of uncertainty. The hon. Gentleman will have seen schedule 3, paragraph (11)(a) and (b), under which the tribunal can rule that a person making a complaint does not have sufficient interest or has not disclosed valid grounds for an appeal. On that basis, I do not see that the uncertainty is a problem, unless it is an uncertainty that is well grounded and that might give rise to a valid appeal against a decision. I do not support the amendment.
The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander): Given that this is my first appearance under your chairmanship, Mr. Conway, it would be remiss of me not to say what a privilege it is to serve on the Committee. My official briefing indicates that the amendment seeks to limit the parties that can apply to the Competition Appeal Tribunal for a review of decisions made in a merger case to the parties to that merger. That would prevent third parties from having such decisions reviewed. What my official briefing does not indicate is that I am dangerously close to consensus with the hon. Member for South Cambridgeshire (Mr. Lansley). Given the spirit of partnership between our parties north of the border, I hesitate before disagreeing profoundly with the comments of the hon. Member for Orkney and Shetland. However, I have three reasons for taking issue with the amendment.
First, let me deal with the allegation of the hon. Member for Huntingdon (Mr. Djanogly), that this is somehow a charter for costs. We have already, as the hon. Member for South Cambridgeshire has kindly noted, limited who can bring a case to the CAT. The clause refers only to aggrieved parties; schedule 3 provides that tribunal rules may be made that allow for the CAT to reject proceedings either if it considers the person instituting them not to have a sufficient interest in the decision with respect to which they are brought or if the document instituting them discloses no valid grounds for their being brought. The rules can
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also provide for the CAT to reject proceedings that it considers vexatious—we touched on that this morning.
Secondly, the hon. Member for Huntingdon mentioned timing. Let me reiterate, for clarification, that the period set down is the same as it is at present for judicial review. I shall explain the significance of that. Limiting the scope of the appeal would mean that the rights of third parties to seek judicial review and decisions in the High Court would remain. That would create a two-tier system in which merger parties had access to the CAT, and third parties relied on the High Court. I am not convinced that that would be consistent with the approach that we have developed throughout the Bill.
The third and substantive point on which I find myself at issue with the hon. Member for Orkney and Shetland is that there is a case for third parties to be able to review the proceedings, because some have a very clear interest. As the hon. Member for South Cambridgeshire said, customers, suppliers and competitors could all have their business prospects directly affected by a range of decisions taken by the authorities, from the clearance of a merger to the imposition of particular remedies.
Limiting appeals in the way proposed would run counter to the changes that we are making to the Competition Act 1998 in this Bill. Under clause 15, which we shall discuss shortly, third parties will be able to appeal directly to the CAT against decisions of the OFT where they have a sufficient interest in a case. The system as set out in the clause offers the right level of involvement for third parties. Those that can demonstrate a sufficient interest in the case and valid grounds to bring proceedings should be allowed to apply for decisions to be reviewed.
I am grateful to the hon. Member for Orkney and Shetland for suggesting that the amendment was probing, and I ask him to withdraw it.
Mr. Carmichael: It seems as though there is no dispute of substance. No one denies the right of third parties to be involved in the process, but the question is of striking the balance on where their involvement should be terminated. The view that I expressed in support of the hon. Member for Huntingdon was that termination should take place at the end of the decision procedure by the CAT.
There seems to be a great deal of sense in what the Minister says, and I appreciate that the subject has not been dismissed out of hand. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mr. Nigel Waterson (Eastbourne): I want to deal briefly with the substance of the clause. The provision is for a review, not an appeal as such, and there is an important difference. It is another example of the split role of the Competition Appeal Tribunal, which in different guises is an appeal body and the equivalent of a court of first instance. We shall return to that issue.
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I want to quiz the Minister a little about what the review will involve. There will apparently not be any re-hearing of the matter. The clause states that the CAT will use
''the same principles as would be applied . . . for judicial review'',
presumably in the High Court. I assume that only legal or procedural points could be taken up on such a review, and that the whole matter could not be re-heard ab initio. As the clause states, there is then the possibility of appeal
''on any point of law . . . to the Court of Appeal or''—
in Scotland—''the Court of Session''. Am I right to think that there would be no question of reconsidering evidence, and that the process would merely involve dealing with technical, legal or procedural points?
A slightly separate issue is the three-month limit. Subsection (3) is a little opaque. In any view, it states that there is a definite three-month limit, although subsection (4) states that the period can be modified. However, subsection (3) also mentions not bringing an application with ''unreasonable delay''. Even if someone brings an application within the clear three-month limit, can they still be held to be out of time—effectively struck out—for delay in bringing the application? There is confusion, so it would help if the Minister explained a little more clearly what was intended.