Enterprise Bill

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Mr. Djanogly: After the ream of Government amendments that have just been made, it would help if the Minister were to give a brief review of the purpose of the changes proposed in schedule 11, as it is a relatively short period of time since the Competition Commission was set up. For instance, I note that paragraph 5 provides that appointments to the commission have been extended from five to eight years. That seems a long time, and it is likely that the only people who will apply will be those at the end of their careers or academics and civil servants, rather than, as we discussed previously, business men leaving their businesses for a while and then returning to them.

Miss Johnson: The reason for making the changes is principally to introduce strict security of tenure in order to ensure the independence of members of the commission. That was the result of a Whitehall-wide review in July 2000, prompted by ECHR concerns. Previously, members were in practice appointed for three-year terms, with second, third and even fourth appointments. Under schedule 7, we prohibited the appointment of any person as a commission member for more than five years at a time. Appointments were subsequently made for two terms of four years only,

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with an automatic renewal after the first term. Paragraph 5 embodies that eight-year term in the schedule. I believe that it is an improvement on the existing provision.

Question put and agreed to.

Schedule 11, as amended, agreed to.

Mr. Lansley: On a point of order, Mr. Beard. I confess that I may have been insufficiently quick in understanding what was going on, but am I right in thinking that, because, we debated a group of Government amendments under clause 175 that included Government new clause 8, we will be held to have debated the form of the annual report of the Competition Commission? In the form presented by the Government, it does not include any of the cautionary words that my hon. Friend the Member for Huntingdon intended to propose in a debate about what should or should not be included in the commission's report.

Only when we reached clause 176, which was subsequent to that group of amendments, did it became obvious to Opposition Members—and, it seems, some Labour Members—that the Competition Service's report was to disappear and that the report of the Competition Commission would replace it. We were therefore being invited to discuss the deletion of the annual report under clause 176—after the point at which we had agreed to include the report of the Competition Commission. We were seeking to debate that point under a false premise. I wonder whether it would be in order for us to debate Government new clause 8 separately.

The Chairman: A new clause that has been grouped would not normally be debated again, but I shall consider the hon. Member's point of order and respond later.

Mr. Nigel Waterson (Eastbourne): I beg to move amendment No. 338, in page 129, line 19, leave out

    'such other persons as he considers appropriate'

and insert

    'other interested parties or their representatives'.

The Chairman: With this we may take amendment No. 339, in page 129, line 34, leave out

    'such other persons as he considers appropriate'

and insert

    'other interested parties and their representatives'.

Mr. Waterson: Bits keep falling off the Bill. We lurch into the last half hour of the debate and, on my arithmetic, we have about 24 clauses and schedules to get through.

I hope that the purpose of amendment No. 338 is clear. It would narrow the discretion of the chairman of the Competition Commission to decide on its rules and procedures and make it clear that it is not entirely up to him whom he consults. It is much less important than it might have been, thanks to the shift in the role

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and importance of the Competition Commission that was brought about by clauses that we have already debated.

Much the same points may be made about amendment No. 339. There should be a specific obligation to consult interested parties before issuing the rules and procedures.

Miss Johnson: In this area of the Bill, we have a choice between a flexible, common-sense consultation provision and a more prescriptive measure that would require the Competition Commission to act in a certain way. In helping the Committee to take a view on that, it might assist if I outline how the Competition Commission chairman plans to develop the rules of procedure.

Later this year, there will be a formal consultation process with members of the Competition Commission about the rules. However, the chairman also intends to hold a wider public consultation. The draft rules are to be placed on the commission's website and there will be an accompanying press notice, explaining the consultation process and inviting views. The commission has confirmed that it will consult those who responded to the competition White Paper published last July. The respondents included business organisations, law firms, trade unions, other regulators and consumer groups. The Competition Commission's plans will, therefore, ensure that a broad cross-section of interested parties are consulted. The consultation will not be limited to parties who are likely to engage directly in mergers and their representatives, but will extend more widely. For those reasons, I do not agree with the sentiments expressed by the hon. Member for Eastbourne, whose amendment is more prescriptive. The broad formulation adopted in the Bill avoids the need to define terms such as ''interested parties or their representatives''. I hope that, with that clear expression of intent in this regard, Opposition Members will be reassured about how the draft rules will be developed and will agree that the amendment is unnecessary.

Mr. Waterson: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Miss Johnson: I beg to move amendment No. 195, in

page 129, line 43, after '1973 (c. 41)' insert

    ', section 32 of the Water Industry Act 1991 (c.56)'.

The amendment extends the duty of the Competition Commission chairman to make and publish rules of procedure to regulate the conduct of Competition Commission reference inquiries. It extends that duty to include rules for mergers referred under the special regime set out in clause 66 for assessing mergers between water enterprises.

Amendment agreed to.

Clause 178, as amended, ordered to stand part of the Bill.

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Schedule 12

Competition commission: certain procedural rules

Miss Johnson: I beg to move amendment No. 196, in page 234, line 22, after 'group' insert '—


The Chairman: With this it will be convenient to take Government amendments Nos. 197 and 198.

Miss Johnson: The amendments correct a minor technical inaccuracy in the drafting of schedule 12 and are necessary to reflect the fact that the Competition Commission carries out investigations, not references, under the Financial Services and Markets Act 2000.

Amendment agreed to.

Amendments made: No. 197, in page 234, line 23, at end insert '(l) and'.

No. 198, in page 234, line 25, after 'Act;' insert 'or—

    (b) under a provision mentioned in paragraph (m) of that definition;'.—[Miss Johnson.]

Schedule 12, as amended, agreed to.

Clause 12

The Competition Appeal Tribunal

6.30 pm

Mr. Waterson: I beg to move amendment No. 28, in page 6, line 5, leave out 'Secretary of State' and insert 'Lord Chancellor'.

The Chairman: With this it will be convenient to take amendment No. 29, in page 6, line 7, leave out 'Secretary of State' and insert 'Lord Chancellor'.

Mr. Waterson: We move into the part of the Bill that deals with the establishment of the Competition Appeal Tribunal, which is a wholly separate and specialist tribunal—really a court—within the English legal system. I want briefly to discuss the amendments before discussing the concept of the tribunal in a stand part debate, taking into account the limited time available to discuss the rest of this set of clauses and schedules and the next part of the Bill. That struck me as the most sensible peg on which to hang such a debate in part 2 of the Bill.

The amendments are easy to follow, and would mean that appointments were made by the Lord Chancellor rather than the Secretary of State. Despite the Lord Chancellor's occasional problems in the DIY field, we believe him to be at least nominally more independent than the Secretary of State. The appointments should not only be as independent as possible but should be seen to be. It is a modest amendment, and I hope that it will find favour with the Under-Secretary.

Miss Johnson: I am not clear what the hon. Gentleman thinks that the amendment would do. As hon. Members can see from the clause, the Lord Chancellor has already been given an active involvement in appointments to the CAT in that he

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will be responsible for appointing the tribunal's president and panel of chairmen. Previously, the Secretary of State made all appointments to the CAT, or CCAT. She consulted the Lord Chancellor before appointing the president but, otherwise, independently appointed chairmen and ordinary members. The Secretary of State will in future appoint only ordinary members.

Mr. Lansley: Will the Under-Secretary confirm that hitherto, under the Competition Act 1998, the CAT has not under any circumstances heard appeals from decisions of the Secretary of State, although it has heard them on decisions from the OFT under the chapter 1 and 2 prohibitions? Under the Bill, will the CAT consider appeals on grounds of judicial review from decisions by the Secretary of State?

Miss Johnson: I can confirm that that is right.

The hon. Gentleman may want to understand why I think that the division of responsibilities between the Lord Chancellor and the Secretary of State is the best approach. The Lord Chancellor makes the appointments requiring legal qualifications when his expertise is at a premium; his involvement should ensure that we attract candidates of the highest calibre to be chairmen. However, the Secretary of State is the person best placed to appoint ordinary members, as they will not necessarily bring with them a specific legal expertise. They will be required to have expertise relevant to competition and will continue to be drawn from a range of backgrounds, such as economics, business, accountancy and law.

The Secretary of State will also continue to finance the tribunal and to monitor its expenditure and cost effectiveness, which is why the Secretary of State should appoint the registrar, who will be the tribunal's senior official and act as accounting officer for both the tribunal and the Competition Service. We have strengthened the measures already in place to ensure that ordinary members, the chairman and president can carry out their duties without external influence being brought to bear. The only grounds for removing any member from office will be incapacity or misbehaviour. Members and chairmen will be appointed for one eight-year term with no reappointment; previously, members were appointed for shorter terms and then reappointed. The president will be appointed on the same terms as a High Court judge—in other words, until he retires.

The system provides a strong set of safeguards that will ensure the integrity of the tribunal's decisions and the best division of responsibilities in order to secure the required level of legal and competition expertise in the tribunal. I hope that I have persuaded the hon. Gentleman to withdraw the amendment. If not, I shall seek to oppose it.

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