Enterprise Bill

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Miss Johnson: The hon. Gentleman's points turn on the question of witnesses being required to attend. His line of argument surprises me, because many investigations require witnesses to attend, and there is a value to that requirement, in addition to information and documentation, so that the Competition Commission has effective access. That enables it to investigate and take properly informed decisions, which is right and proper. However, I emphasise again that we do not expect the commission to exercise the power frequently, because in general parties to its investigations adopt a constructive approach to its requests.

The power is likely to operate only rarely, but it will help to ensure that investigations are completed in a timely manner. It may shortcut many other processes if the witnesses are present. We want to avoid delays, so it is right for the Competition Commission to have this power. It is valuable to be able to request that witnesses attend and bear witness on investigations. As I said, we do not expect those powers to be exercised frequently.

5 pm

Mr. Field: I return to Opposition Members' principled concerns about the powers being granted to the Competition Commission, the OFT and the

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Government more widely in respect of mergers and market investigations. Significant powers are being conferred and we are assured that they will be exercised only rarely. One of the main purposes of examining the Bill line by line in Committee is to receive reassurances. I accept that the Minister has provided verbal assurances, but if the powers were sparingly used over the years or even redundant, we would want the powers to be pared down. Given the similarities between this Bill and the Fair Trading Act, for example, we fear that the present provision might be used as a minimum template for future legislation.

Mr. Tony McWalter (Hemel Hempstead): Is the hon. Gentleman forgetting that the object of these powers is to stop people from rigging markets? That can deprive consumers of millions of pounds that they would otherwise not have to pay for goods and services, or sometimes drive good businesses that are trading fairly into the dust. I should be pleased if the hon. Gentleman would remember the object of having these powers.

Mr. Field: Given that we have already had umpteen sittings, I hope that I am slightly aware of the ideas behind the Bill. I accept the hon. Gentleman's point, but it is a matter of principle for the Opposition—not just because we stand up for business; on the Proceeds of Crime Bill I stood up for individuals. The increasing creeping effect of more legislative powers can be insidious. When the next Bill intended to regulate markets and mergers investigations comes before this House in 10 or 15 years' time, the OFT's and the commission's powers will be used as a basic template. That is the nub of our concern. We have heard the Minister's assurance that the powers will be utilised only in exceptional circumstances, but we remain concerned. I am partly comforted by those assurances, but it is worth reiterating our concerns. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 168 ordered to stand part of the Bill.

Clause 169

Review of decisions under Part 4

Mr. Waterson: I beg to move amendment No. 325, in page 122, line 37, leave out 'not'.

This is a probing amendment, which I hope that the Minister can deal with swiftly.

Subsection (2)(a) deals with exclusion—from a review carried out by the Competition Appeal Tribunal—based on an imposition of

    ''a penalty under section 106(1) or (3) as applied by section 168''.

We simply wondered why.

Miss Johnson: The amendment may be based on a misunderstanding of the purpose of clause 169(2)(a). The provisions are not intended to rule out the possibility of an appeal against decisions, but to clarify that such an appeal should be heard under the specific appeal provisions relating to penalties as set out in clause 110. They are applied to market investigation

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references by clause 168. If that is not the basis of the hon. Gentleman's misunderstanding, perhaps he will clarify it further, but I believe that I have answered his point.

Mr. Waterson: I am not sure that the Minister has identified my precise misunderstanding, but what she says sounds convincing enough for me to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Waterson: I beg to move amendment No. 326, in page 123, leave out lines 10 and 11 and insert

    'be entitled to review the substance of the decision, as well as the procedure by which that decision was reached'.

This deals with an altogether more substantial concern that we have touched on before in a different context. In response to my previous amendment, the Minister confused an appeal with a review, which, however similar they appear to a lay person, are two different things. A review deals only with complaints about points of law or the procedural aspects of a decision. It allows no investigation into the substance of the case. There is no justification—we are emboldened in our view by the support of the CBI—for limiting tribunals to judicial review alone. It must be possible to review the substance of the matter as well as the mere procedure or points of law. That would give greater confidence to all involved in the procedures. It is a simple natural justice that the entire matter—I include procedural issues and points of law, but not only them—be capable of being examined again. Concern by any party that the matter has not been dealt with properly or that an improper conclusion has been reached justifies starting the procedure.

Mr. Djanogly: As I see it—the Minister will tell me if I am wrong—companies are being given the power to take to the CAT what they would previously have taken to judicial review. The clause will not much advance a company's ability to gain an effective appeals process. Stringent new penalties are put in place, but they are not balanced by companies' ability to opt for proper appeals. We do not oppose using the CAT for this purpose—we encourage it—but we want companies to be able to go to the CAT on the basis of a proper appeal rather than merely judicial review.

Miss Johnson: The Bill provides for parties who are aggrieved by decisions to have them reviewed by the CAT on the same grounds applied by the courts on application for judicial review. That position applies under the Fair Trading Act, whereby the Secretary of State's decisions are open to challenge on judicial review grounds. Judicial review remains the right jurisdiction for appeals against decisions taken in market investigations. Such a CAT review will ensure that the procedures followed by the authorities are fair, and that the parties were given the opportunity to put their case. It will also allow the CAT to examine any decision taken by the authorities to assess whether it was reasonable and proportionate.

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I am aware that under the Competition Act 1998 the parties have a full right of appeal against OFT decisions. However, there is an important difference between the two regimes. Under the 1998 Act, companies in breach of dominance prohibition or the restrictive agreements are breaking the law. The chapters 1 and 2 prohibitions are modelled closely on articles 81 and 82 of the EC treaty. Cases can therefore be evaluated against a defined prohibition by reference to a body of competition law and previous jurisprudence in the UK and the EU. It is therefore easier to assess whether the decision taken is objectively right or wrong.

Under the Bill, the decisions will be based on an economic analysis of the facts of each case by the authorities acting in accordance with their statutory duties. They will not be evaluated against the defined prohibition by reference to an existing body of substantive competition law and jurisprudence. That means that the authorities will exercise considerable discretion when taking any decision under the Enterprise Bill. It will be difficult for the CAT to assess whether a decision is objectively right or wrong. Such public law decisions are complex, and a review based on judicial review is appropriate.

Mr. Djanogly: Is the Minister saying that the findings of the investigation cannot be wrong?

Miss Johnson: No, I am not saying that. There is a mechanism for challenging decisions taken in relation to market investigation references. We must ensure that the process followed by the authorities in a market investigation was fair, and that the parties were given the opportunity to put their case. If the CAT considers that the challenge to the decision is justified when it applies the principles of judicial review, the original decision taker can be asked to reconsider. That is the most appropriate way to deal with the type of decision that will be taken under the clause. Therefore, I do not support the amendment.

Mr. Waterson: I want to make three points, which the Minister has not completely addressed. My hon. Friend the Member for Huntingdon made one of them when he intervened, and he is still making it from a sedentary position. As he rightly said, one must accept that in the real world the initial decision may have been completely misjudged, and not for procedural or purely legal reasons.

We are going to all the trouble of setting up a highly specialised tribunal—the Competition Appeal Tribunal—which is unlike any other court or tribunal in the land, as it will have specialist expertise in these matters. The Minister says that the decisions will have been taken on economic and other grounds, and that it is all very difficult. The CAT above all tribunals should be able to judge these issues, especially whether they had been approached in the right way in the first instance. With respect, it does not help the Minister to refer back to the Fair Trading Act under which, as she rightly said, there is a possibility of a judicial review of a decision taken by the Secretary of State. It is difficult

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to think of any other mechanism for challenging such a decision. However, we are setting up such a mechanism under the Bill. In the cart-before-the-horse way in which some of the issues are being debated, we will consider later in more detail the constitution and powers of the CAT, and how it will work.

We no longer rely on challenging a decision taken by the Secretary of State, as we are setting up that extra layer. I fail to understand why the Minister ignores that in her response to the amendment. We are not making much progress in changing the Bill in this respect, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 169 ordered to stand part of the Bill.

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