Enterprise Bill

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Subsection (4) limits any orders, so that they can vary the period only to two years. With regard to that, there is not a consequential amendment, so I presume that somebody clever at the Law Society has thought that they can keep the possibility of an extended period. As the hon. Member for Huntingdon said, allowing extensions on a case by case basis makes more sense than the blanket provision.

Miss Johnson: I do not for a moment expect that the majority of market investigations will take the Competition Commission two years to deal with. This provision is a long stop; it is not an assumption of an average time, or the likely time or even the time that exceptional cases might take.

By way of comparison, Opposition members talked about monopoly inquiries. Over the past four years, these have taken the Commission 13 months, on average, from the date of reference to the publication of report. Therefore, twelve months would reduce that period. Of course, that is not an exact precedent, and I accept the points made by Opposition members because there will be differences between market investigations and monopoly inquiries, but I can see no reason why the average market investigation should take twice as long as the average monopoly inquiry.

I share the concern of Opposition Members that market investigations should not take any longer than they have to, especially as it is clear that they place burdens on the businesses that are under investigation. The statutory maximum is a long stop, rather than a norm. For each inquiry, the Competition Commission will set a detailed administrative timetable as soon as possible after the reference is made. If an inquiry does not warrant a two-year investigation—I do not expect that most of them will—that will be reflected in the administrative timetable, which will be published early on. However, the fact that many investigations can and will be conducted in less than two years does not justify the amendment—notwithstanding the support for it from that well-known militant trade union, the Law Society—because it would impose on the Competition Commission a statutory maximum that is shorter than the average length of current monopoly inquiries. In other cases, the amendment would destroy the Competition Commission's ability to conduct a market investigation effectively.

We want a predictable framework so that people know what length of time inquiries are likely to take. We cannot tell at the moment, but we know that, like monopoly inquiries, the inquiries will often involve

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enormous quantities of data, complex legal, regulatory and economic issues, and many parties. We believe that it would be dangerous to set the initial statutory maximum at less than two years, although I emphasise that we hope that most investigations will be concluded in a considerably shorter period.

Obviously, as hon. Members suggest, in the light of new experience, it might be appropriate for the Secretary of State to exercise her power under subsection (3) to reduce the statutory maximum. We want a quality process that fits. We are dealing with a horses for courses situation, and the time frame needs to be right for each investigation. In the final analysis, fairness is more important than speed. We believe that our proposal strikes a proper balance between thoroughness and urgency. I hope that I have persuaded the hon. Member for Cities of London and Westminster to withdraw the amendment.

Mr. Field: I confess that I remain uncomfortable with the limit. The Under-Secretary provides some comfort and says that, all too often, the investigation will not take two years. However, there is a danger in any bureaucracy of an instinctive mentality. Once an investigation starts, those involved will know that they have two years, notwithstanding the provisional timetable to which the Under-Secretary refers. The mentality may be that they have 24 months, and, therefore, things will drag on for a prolonged period.

Miss Johnson: The hon. Gentleman does not seem to be taking on board my point about early timetabling of the conduct of the inquiry, which will provide the timeframe within which the entire investigation will take place.

Mr. Field: I appreciate that, but the early timetabling will take place within the confines of the two-year maximum, however much we try to introduce a discipline in timetabling.

Is any guidance provided with respect to the nine-month timetable for monopolies inquiries? If most such monopoly investigations take seven or eight months—in other words, nine months provides a strict discipline—that suggests having a lesser timetable, rather than merely relying on the fact that the two years is a long stop and that the investigation may take less time.

Mr. Djanogly: What if the commission asks for a variation, and the original timetable goes out of the window? The company involved would be in a much worse position.

Mr. Field: Yes, there would be a concern, notwithstanding the initial timetabling plan, that a variation would throw out the timetable. However, the Under-Secretary encouraged us earlier when she said that in no circumstances, notwithstanding a variation, would the entire investigation take more than two years, on the basis that the clock would not be put back to zero.

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We are uncomfortable with the proposal. We have all made our comments fairly plain, and I hope that the Under-Secretary will give the matter some thought. I appreciate that provision has been made for her to consider reducing the timetable once the Bill is up and running and in view of investigations that have taken place.

I hope that plenty of attention will be brought to bear on the matter. It is important not simply in terms of the awkwardness involved for a company that is subject to a market investigation. The provision runs counter to the intention behind the Bill and may lead to less innovation and, therefore, less customer value.

Miss Johnson: I am listening carefully to Opposition Members. However, for the many reasons that I have given, they are failing to alarm me. In addition, in respect of monopolies investigations—about which there was a further question—there is no outer limit under the current regime. The Office of Fair Trading, or the Minister making a reference, sets the Commission a deadline for producing its report, which is typically between nine and 15 months. However, nine months is quite unusual and has been given on only a couple of occasions. It is parallel to the provision that will exist for a timetable to be published setting out the new arrangements. Overall, the fact that there has been no outer limit has not led to the inquiries being conducted over a long time.

Mr. Ken Purchase (Wolverhampton, North-East): Does my hon. Friend accept that companies could be of great help to themselves if they approached the Office of Fair Trading inquiry in an open and transparent way, rather than introducing the complicated obfuscation that frequently accompanies OFT inquiries and prolongs the work unnecessarily? As the hon. Member for Cities of London and Westminster suggested, that sometimes prevents product development. Does my hon. Friend accept that companies may help themselves in those matters?

Miss Johnson: I certainly agree that companies can, and should, help themselves. Unfortunately, as everybody would accept, there are occasionally complex situations that require complex information. That is the reason, as I said earlier, why the 12-month long stop is untenable. I want to re-emphasise the fact that a nine-month period is very unusual, 15 months is not common and 12 months does not seem to be sensible. We are committed to ensuring that investigations are completed in a good deal less than 24 months and we have the power to vary that if we need to. We are talking about a quality process and that is why we want to get the balance right. We do not want to curtail investigations that involve complex data and analysis of incoming information. We do not want to carry out a botched-up job by imposing a 12-month period. I hope that Opposition members will understand that—although we are coming from a similar position in terms of what we want to achieve and

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the period in which we would envisage that normally being achieved—the decrease in the time limit would not be sensible.

Mr. Field: This has been a worthwhile debate. I am assured by the Under-Secretary that attention will be paid to the time limit if it were believed to have deleterious effects on business. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 129 ordered to stand part of the Bill.

Clause 130

Duty to remedy adverse effectsMr. Field

: I beg to move amendment No. 307, in page 95, line 26, at end insert—

`(7) In the event that the Commission decides that no remedial action needs to be taken following a market investigation, it shall reimburse the costs and legal expenses of the undertaking which have resulted from the investigation'.

The amendment is more limited than it might at first appear. We are proposing that, when the Commission decides that no remedial action is necessary following an investigation, legal expenses and other costs incurred as part and parcel of the investigation should be reimbursed. Clearly, there is a connection with the previous amendment, especially if the two-year limit is to be upheld. There must be some protection for businesses that find themselves subject to an investigation that may not last as long as two years, but may drift into nine, 12 or 15 months. At the end of that period, if no remedial action were required after a full investigation, it would be only fair for there to be some compensation for the companies that have expended significant direct costs.

I appreciate that there will be many economic indirect costs that are not reclaimable in any sensible way. By using restrictive wording, which focuses on cases in which no remedial action is required after investigation, we would not disincentivise the OFT from making reasonable inquiries into markets.

11 am

Mr. Purchase: It concerns me that amendments demanding payment for investigations should have been tabled. I accept that an investigation may ultimately show that there were no problems with a company. However, the Conservatives are suggesting that the taxpayer should foot the bill for proper inquiries into industrial monopolies, anti-competition and so on. That could lead to considerable costs. Their method of probing the Bill is to suggest that the OFT will act capriciously on almost every occasion. In past sittings, I have noted the number of times that the Conservatives have concocted circumstances in which there will be capricious action by the OFT.

In many cases, it is fair enough to probe and to try to understand the Bill's intention and effects. However, it is an amendment too far to call upon the taxpayer to pay for investigations that turn up blank and give a company a clean bill of health. The

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Under-Secretary should rebut that idea as quickly as possible. It is not the Committee's duty to impose additional costs on the taxpayer.

Mr. Djanogly: It is, of course, correct that there should be investigations, and that the Competition Commission should have effective remedies to prevent an adverse impact on competition. However, we must realise that even when no remedial action is required after an investigation, a company will still have suffered costs, and will have spent a lot of management time on the issue. Its share price may have been affected. It may also have lost jobs, because a foreign competitor might have acted while the company stalled. Companies could be affected in many ways.

The hon. Member for Wolverhampton, North-East (Mr. Purchase) made the point that the public should not pay companies' costs but, in other cases, that is the case. The example that immediately comes to my mind is taken from my time on a planning committee. I remember that, frequently, when we were considering turning down an application that the officers had recommended for approval, the officers would say, "If you turn this down, the decision will be appealed, and costs will be awarded against the council." Under the hon. Gentleman's argument, one might say that that should not be allowed. However, it is allowed; quite rightly, too, because it puts in place a discipline. Public bodies, and those who serve on them, should be just as disciplined as companies or anyone else. That is what we are trying to say through the amendment.

With all due respect to the civil service, its members are paid to do their jobs, and the more creative they are and the better they are at their jobs, the more likely they are to find possibilities for referral. There should be a balance. Just as in my local government example, when a decision is made, the Minister concerned or the Competition Commission should realise that costs might be awarded against them if they were to take an action and lose it. I support the amendment because it seeks to achieve a fair balance.

 

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Prepared Tuesday 7 May 2002