Interruption.] The Government Whip has a voice in this Committee for the first time. He suggests that the hon. Member for Twickenham will speak to the amendments. I should like to speak first, if I may.
Given that the plan is to have a non-adversarial approach to this entire regulation it seems somewhat inappropriate to set out such strict penalties. We are therefore of the view that paragraphs (d), (e), (f) and (g) should be deleted. The hon. Member for Twickenham seeks to delete paragraph (c). We want to delete the commission's power to impose financial penalties if a person fails to provide evidence. Without necessarily rehearsing all the old arguments, I should be interested to see what justification the Minister has for a stricter regime in part 4, which deals with market investigations, compared with the perhaps understandably more strict regime in mergers.
Dr. Cable: There is an important issue here, namely the toughening of penalties in relation to the provision of evidence. The issue has been raised not just by the industry lobbies but by the Law Society, which was concerned about the significance of the law. There are two obvious reasons why evidence is withheld. One is deliberate obstruction, such as the Enron-Anderson type of problem that involved shredding and disappearing files. Clearly there is criminal intent in such cases and there is the power to pursue companies using the criminal law for contempt of court. That is right.
Evidence is often not provided as a result of inefficiency, which can be on either side. It can be the inefficiency of the company in not giving sufficient priority to assembling the evidence, or it can be the inefficiency of the competition authorities in not programming their work and setting totally unreasonable demands for paper. What indication does the Minister have that there is a serious problem with this type of investigation and that without additional financial penalties the evidence will not be forthcoming? The people to whom I have talked about the Bill had no evidence that this was a problem. Perhaps the Minister could quote us some examples or some aggregate data to show that there is a problem.
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How could a company appeal if it was subject to a fine even though it believed that it had acted completely reasonably in the provision of evidence? The whole purpose of this type of investigation is to be non-adversarial and yet it builds a fine and penalty system into the process. Perhaps the Minister can talk us through it. How will an aggrieved company that feels that it has been unfairly penalised for inefficiencies that it did not commit argue its case?
Miss Johnson: The purpose of the system of sanctions for not providing information to the competition authorities is to encourage prompt and full compliance with any reasonable requests for information that they make.
The hon. Member for Twickenham asked whether there had been difficulties. We cannot give specific examples because of confidentiality, but I assure him that they are rare occurrences. I will come to the context in which the powers operate, which I hope will help hon. Members to see why we are resisting the amendmentsas I shall be urging the Committee to do.
Under the existing monopolies regime, where the parties fail to comply with a formal request for information the Competition Commission can apply to the court for such non-compliance to be punished as if it were a contempt of court. The ultimate sanction for non-compliance is therefore imprisonment, but that would be an extreme response. We suspect that the contempt provisions in the Fair Trading Act have ceased to be a credible deterrent to non-compliance with the Competition Commission's information requests.
It seems more appropriate to encourage compliance by recourse to financial penalties. Our proposal follows the model in the Bill's merger provisions and the similar power of the European Commission to impose fixed and daily substantial penalties on undertakings that fail to comply with the formal decision requesting information in the context of the investigations under articles 81 and 82 of the EU treaty.
The power will be easier for the Competition Commission to use, not least because it does not involve applying to the court. It should therefore be a more credible deterrent than its predecessor. I stress the following points to reassure hon. Members opposite.
As I said in my opening comments, the Competition Commission does not expect to exercise this power frequently. In general it finds that parties to its investigations adopt a constructive approach to its requests for information. However, there are a minority of cases otherwise. The unco-operative approach of one or two firms can damage the inquiry as a whole. Other businesses suffer as much as the Competition Commission as a result of inquiries dragging on unnecessarily. We have provided a number of procedural safeguards to prevent the Competition Commission from misusing the power. It can be used only where the commission considers that a person has failed to provide information without reasonable excuse. There is a right to a full appeal to
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the Competition Appeal Tribunal on the merits of the Competition Commission's decision to impose financial penalties.
The Commission will be required to set out its approach to using the power in a published policy statement in line with clause 105. The amounts specified in 107(7) are absolute maximums. It is unlikely that penalties would be imposed at that level save in exceptional circumstances. For those reasons I hope that the amendment will be withdrawn and I urge Members to support the clause.
Mr. Waterson: Will the Minister accept that it is not very helpful for her to sayno doubt convincingly from her point of viewthat the powers will not be used often or unreasonably? We are giving the powers to someone else; in this case, officials who may be gung-ho about making demands. We must test all the powers that we give to others outside this place against the worst-case scenario. The hon. Member for Twickenham hinted that that would be a company doing its best, which was not ill-intentioned but felt that it was being put under unfair pressure to produce documents and information beyond the main scope of the inquiry.
Against that test, we are leaving a great deal of discretion to the reasonableness of the officials involved. Any safeguards must be built into the legislation and not simply be assurances given in Committeewhich, with respect, are utterly worthlessthat the powers will not be used often, will be used reasonably and so on. There may be some safeguards in the Bill but they are not enough.
Miss Johnson: Before the hon. Gentleman spoke, I was setting out a number of safeguards that are in the Bill to prevent matters from being pursued in the way that I think he is suggesting might happen. In any case, we do not expect the power to be exercised frequently. In fact, we expect it to be exercised infrequently, because it would be needed only in an unusual situation.
None the less, a need exists, and it would be wrong of the Government not to make provision to meet that need if a couple of firms did not co-operate. As I have said, if inquiries drag on unnecessarily, other businesses could be damaged just as much as the commission. The provision is therefore sensible for all parties concerned, and I urge the Committee to resist the amendment if it is pressed to a vote.
Mr. Field: We had a fairly full debate on this issue under part 3, so I am happy to beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Field: I beg to move amendment No. 324, in page 122, line 24, at end insert
'(1A) Section 105 shall, in its application by virtue of subsection (1) above, have effect as if section 105(1) were omitted.'.
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Again, the amendment covers ground that we have covered in the last few moments. In keeping with the non-adversarial approach underlying the market investigations that we have in mind, and the parallels that come into play, clause 105(1) should not be included. As hon. Members may recall, it gives the Commission, for the purposes of an investigation under the merger provisions, the power to
''give notice to any person requiring him . . . to attend at a . . . place specified in the notice; and . . . to give evidence to the Commission''.
With regard to market investigations, our view is that the powers that would remain intact in the rest of clause 105 would be sufficient. We certainly appreciate, and not just with Enron and other incidents in mind, that the offence of suppressing or destroying documentation that is set out in clause 106 needs to remain. Again, it is paralleled in clause 168. However, the provision goes one step further. If the investigative process in respect of market investigations as compared with mergers can be conducted through documents and without requiring individuals to appear before the commission in the way that is described, that should be made plain.
I should be interested to have some guidance from the Under-Secretary. I can understand why, for drafting purposes, clause 105 may simply have been transferred intact into clause 168, but does she really believe that there should be no difference between the provisions that apply to mergers and those that apply to market investigations? Does she not believe that those parties, be they individuals or companies, who are subject to the much broader range of market investigations should have a little more protection than those who are specifically subject to a merger investigation under part 3?