Enterprise Bill

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

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

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Mr. Waterson: I have already flagged up the fact that this seems to be the most appropriate place in which to have a full stand part debate on the concept of the Competition Appeal Tribunal, why it is provided for, what its function is, and in what way it is supposed to be an improvement on what has gone before. That seems to be our only option, given the guillotine that will fall in 25 minutes or so.

The role of the Competition Appeal Tribunal seems to have changed during the drafting of the Bill. It is a novel concept in the English legal system, so it is important that we consider carefully how it will slot into that system. It will be an important entity, with its own quango to look after its organisation, and it will deal with some important issues. It was originally conceived, as the name suggests, as an appeal tribunal to protect against unfair or unreasonable findings of the Competition Commission. That seems entirely proper. However, it is also being asked to fulfil a different role—that of a court of first instance. It is being asked to adjudicate on claims for damages following a finding by the OFT that a super complaint is justified. What is more, the OFT's findings of fact cannot, apparently, be challenged on that basis. The only safeguard, which seems to us to be inadequate, is that a damages claim cannot be heard until the appeals process is concluded.

Our first major question is whether the CAT is to be an appeals court or a court of first instance. Apparently it is to be a bit of both. That has the potential to be contrary to basic principles of fairness and due process of law. More practically, the two things call for different skills on the part of the judges or those who will be sitting in a quasi-judicial capacity. There is a world of difference between those who sit at first instance in any part of the legal system and those who sit in the appellate courts, as the Court Service and even the Lord Chancellor's Department, if so minded, might tell the Under-Secretary if she asked them. That is reflected not only in the seniority of those who sit in appellate courts as opposed to the courts of first instance, but in their remuneration. I should be grateful if she would expand a little on how the skills are to be provided in the relatively small structure of the CAT.

I am sure that the Under-Secretary will say that those involved will form a highly specialised group of people with expertise that will look on a regular basis at a narrow part of the law. I do not disagree; that is fine. However, that is entirely different, lest she try to elide the two points, from my point about the difference between the skills required—whatever the subject—of judges of first instance and of judges on appeal.

Our view, although we shall not get too excited about it, is that claims for damages ought to be heard in properly constituted, regular courts of law, not least because they are used to dealing with such claims. Although there will be an element of expertise in considering such cases, the fundamental rules in English law on how claims for damages are calculated, how the quantum is arrived at and how questions of remoteness and liability are resolved are pretty

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standard and need not overly tax judges in the rest of the legal system. It is clear, however, that as the tribunal is presently set up, it will indeed have the power to award damages to those injured by breaches of either UK or EC competition law. That will place an extra layer on top of the current system because the civil courts already have the power to award damages in those situations.

Again, is it simply because the body is to be specialist that it is thought that it will dispense a better sort of justice? Is it thought that the pressure of cases will be too great for the existing court system? I do not think that anyone could fail to be impressed by the ability of even the most run-of-the-mill, first-instance, High Court judge to grasp in a short space of time the essentials of cases that may be based on a series of different aspects of the law.

Will the Under-Secretary also confirm that there were very few civil claims under the pre-1998 law? She may have the figures at her fingertips, or they may be at somebody's fingertips. The number of claims brought since then has not been significantly higher. Establishing a breach may not be difficult because the claimant can rely on an OFT or European Commission ruling, but proving the loss would be difficult. For example, a retailer who has been charged more than the market price as a result of a cartel may suffer no loss because they have passed on the increase to their customers. The ultimate consumer is the only person likely to be able to demonstrate a loss in such circumstances, but a price increase higher up the distribution chain may be a very small element in the price that they pay. They would therefore have very little incentive to sue.

Another issue, which would have arisen naturally under one of our amendments, is whether a remedy that is readily available in the civil courts—injunctive relief—should be available to the Competition Appeal Tribunal. I think that I am right in saying that it is not currently envisaged that the tribunal should have such a power, but it ought to be able to step in to stop or prevent something happening by issuing an injunction.

We have already had a significant debate about the possibility of importing something like class actions in the United States law into English law, so I do not want to develop that any further at this stage. Suffice it to say, we wonder whether schizophrenia is involved in the role of the CAT, as it will have a function in both the first instance and in an appeal.

On dealing with claims for damages, are we simply reinventing the wheel? Perhaps those matters are best left to the existing court system, which is capable of dealing with them. It does not seem likely that the number of additional cases will be sufficient to put extra strain on the court system as it stands at the moment. Given the complexity and cost of setting up the life-support system for the tribunal in the first place, are the Government going too far in extra cost and resources when they could achieve the same result more cheaply through the existing court system? Those are some of the themes that we would wish to develop, particularly if we had the chance to discuss some of our

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other amendments to what is, after all, a very important part of the Bill that deserves thorough scrutiny in Committee.

Mr. Lansley: I want to say a word or two about the constitution of the Competition Appeal Tribunal as set out in clause 12. The Government have moved from the position under the Competition Act on who appoints the president of the tribunal and the panel of chairmen to direct appointment by the Lord Chancellor, rather than by the Secretary of State—although the Secretary of State will continue to appoint a panel of ordinary members to the tribunal. In making that move, Ministers must have understood that the independence of the tribunal from the Secretary of State had some value, but the logic of that does not appear to have been followed through. If the Lord Chancellor is to determine who has the appropriate legal background to become president of the tribunal, or to act as one of the panel of chairmen, and that person is independent from the Secretary of State, it would be more appropriate for that person to hear appeals on grounds of judicial review against decisions that come to the tribunal under the legislation.

6.45 pm

The Committee will recall that the Competition Appeal Tribunal, in addition to the damages hearings referred to by my hon. Friend the Member for Eastbourne, hears appeals against decisions taken under the Competition Act chapter 1 and 2 prohibitions, and hears them under circumstances where it considers the merits of the case. The panel consists of a chairman with legal experience approved by the Lord Chancellor, and ordinary members appointed by the Secretary of State, who have the appropriate knowledge of competition law, practice and, by extension, economic expertise. However, under the Bill, appeals will be heard on grounds of judicial review, rather than the wider grounds of again hearing the merits of the decision. In particular, we will hear appeals on grounds of judicial review against decisions made by the Secretary of State that will not necessarily have been taken by the OFT or the Competition Commission.

The need for those panels to be different should be obvious. The demand for economic expertise is less, the demand for competition law expertise might still apply and the demand for legal qualifications should be manifest. That would seem to point to a panel constructed entirely of those who are qualified to be president or to be in the panel of chairmen. The advantage of going down that route is that one would be constructing a panel consisting entirely of those appointed by the Lord Chancellor rather than by the Secretary of State, so the independence of the panel from the Secretary of State, and the issue of reappointment by the Secretary of State, could not be held to rights.

It would be very strange if a judicial review against a decision of the Secretary of State were heard by a panel whose members were due to come up for reappointment by the Secretary of State at some early

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point. There are many people who would regard as substantive the difference between that sort of judicial review and the sort formerly available to a High Court under the Fair Trading Act, where the judge is not susceptible to reappointment by the Secretary of State who took the decision. It is not a very long step from the Bill to a point where it is clear that if hearings are going to go to judicial review, the panel should consist only of a president or those appointed to the panel of chairmen for the tribunal.

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