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Competition Bill [H.L.]

3.33 p.m.

The Minister of State, Department of Trade and Industry (Lord Simon of Highbury): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.--(Lord Simon of Highbury.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Clause 1 agreed to.

Clause 2 [Agreements etc. preventing, restricting or distorting competition]:

Lord Fraser of Carmyllie moved Amendment No. 1:

Page 2, line 21, at end insert--
("( ) Subsection (1) applies only if the agreement, decision or practice has, or is likely to have, a significant effect on competition within the United Kingdom.").

The noble and learned Lord said: I must tell Members of the Committee immediately that this is not just a probing amendment. It is our view that the wording of the prohibition should be explicitly confined to those arrangements which have a "significant" effect on competition. It is not just a matter of improvement of the wording for the sake of drafting; there is a real value involved.

The prohibition in the 1996 draft Competition Bill specifically applied only where there was a "significant" effect on competition. Under the law of the European Union, the scope of Article 85 is limited to arrangements which have an "appreciable" effect on competition. Therefore, in our view, it is entirely consistent with Clause 58 for the United Kingdom prohibition, modified as we suggest, to be worded in that way. We do not believe that that wording would hinder the overall aim of consistency with EU jurisprudence. The noble Lord, Lord Simon, will be aware from what was said on Second Reading of the Bill that, if we have one broad intention in putting forward amendments, it will be that so far as possible we shall attempt to secure the aim of consistency. We believe that the insertion of the word "significant" will be of particular benefit--

Lord Ewing of Kirkford: I am sorry to interrupt the noble and learned Lord, but I have to say that I am absolutely astonished to find him speaking from the Dispatch Box today. Am I not right in assuming that the noble and learned Lord has, in the past few days, been appointed non-executive chairman of an oil company? For a party that made so much so-called "capital" out of the shareholding in BP of my noble friend Lord Simon, I wonder whether the noble and learned Lord is entitled, first, not to declare an interest and, secondly, to speak from the Front Bench.

Lord Fraser of Carmyllie: I certainly will be declaring that interest. As I understand it, there is

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nothing in the rules of the House which restricts me from speaking from this position. If the noble Lord wishes to make a further point, I shall allow him to do so. However, I certainly did not understand that there was any such restriction. As the noble Lord indicated, I have been invited to become a non-executive chairman of an oil company. I should make it absolutely clear now, as I was intending to do in the register--which, I believe, is to be republished before the end of the month--that I shall certainly not be speaking on any matters relating to energy policy or, indeed, any matters relating to energy affairs.

As I was seeking to say, if the requirement of significance were attached to the wording, it would be of value to business and also to the OFT in that it would help to ensure that unnecessary notifications are not made. Those who are familiar with the problems that the European Union has encountered will be aware that, because of the wide interpretation that has been given to Article 85, a vast number of unnecessary notifications have been made. In those circumstances, the Commission has been unable to cope. We would not wish to see such an experience repeated within the United Kingdom. I should also point out that this matter is of concern not only to business broadly; there are legal interests who have brought the same point to our attention. I beg to move.

Lord Ezra: Amendment No. 4 in my name has been grouped with the amendment just moved by the noble and learned Lord. I wish to reinforce what the noble and learned Lord, Lord Fraser, had to say. It seems to me--this arises from points made by several noble Lords in the Second Reading debate--that we need, as far as possible, while accepting the general purpose of this Bill, to limit the amount of uncertainty and to limit the number of unnecessary notifications. I should have thought that the inclusion of the single word "significant" in the amendments standing in the names of the noble and learned Lord, Lord Fraser, and myself would help in that direction. I very much hope, therefore, that the Government will find it possible to introduce that word which was in the original draft Bill which accompanied the Green Paper on this subject.

Lord Borrie: I thought I should raise an issue which is not only relevant to this amendment but also to others which I have noticed have been tabled in the name of the noble and learned Lord, Lord Fraser of Carmyllie. Under the present jurisprudence of the European Union, as I understand it, Article 85 applies only where the effect on competition is appreciable. If the word "appreciable" and the word "significant" are more or less the same, is the amendment that is proposed otiose?

I also have a more general point to make. The noble and learned Lord, Lord Fraser, suggested that it was desirable to incorporate into our UK legislation the point at which European jurisprudence has reached in terms of the prohibition applying only if there is an appreciable effect on competition. That point can, of course, be applied to many, many matters in this Bill. I wonder whether the amendment is also unnecessary because, as I understand Clause 58 of the Bill, it

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incorporates into this UK legislation the current state of European jurisprudence, at any rate most clearly at the level of the European Court of Justice.

If we are to accept the point that is being made by the noble and learned Lord, Lord Fraser, and the noble Lord, Lord Ezra, I wonder whether we shall set a train in motion where we shall want to amend all sorts of clauses in order to ensure that we are brought up to date with European law. I know that will save lawyers from having to check their reference books as to what the state of European law is, but I do not think that is particularly the job of this Chamber or indeed the other Chamber.

3.45 p.m.

Lord Campbell of Alloway: As the noble Lord has said, this measure represents the perceived jurisprudence of the Commission and the Court of Justice today. However, that was not the case originally. In the very early days--I know this as I used to appear in these cases before the Commission and the court--before the jurisprudence developed, one had to register in order to obtain block exemption or exemption. No one really quite knew in those days where they were. I can see every advantage in this. This is not the thin edge of incorporating the jurisprudence of the court and the Commission into this Bill. This is an essential, practical and precautionary measure so that right at the outset everyone understands that, put another way, a de minimis situation is simply not relevant. What is the objection to that kind of clarity? One can put in a de minimis provision. That is the way we would draft it. That is the way our restrictive practices court looks at the matter. However, the Commission and the Court of Justice look at it in the terms of this amendment, so why not use it? Why not clarify the position?

The Earl of Balfour: Before the Minister replies, I wish to ask a question. I was interested to note that Amendment No. 1 standing in the name of my noble and learned friend Lord Fraser states,

"Subsection (1) applies only if the agreement ... has, or is likely to have, a significant effect on competition within the United Kingdom".

Almost exactly the same words appear in Amendment No. 4 which contains the words,

"has, or is likely to have".

Clause 2(3) of the Bill states,

"Subsection (1) applies only if the agreement, decision or practice is, or is intended to be, implemented in the United Kingdom".

I wonder whether this should be "was" or "was intended to be" because I cannot see how the Government can take action over something that has not yet been decided. This may be a technical point but I think it is worth raising. I was interested in the difference in sense as regards the amendments which have been tabled.

Baroness Oppenheim-Barnes: I, too, think this is an important amendment. I note the points that have been made by my noble friend which I believe are apposite. Those points illustrate perfectly that throughout the whole of this Committee stage we must not forget that

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after the passage of this Bill there will be an entirely new playing field with goalposts in some cases having been moved radically in relation to some of the monopoly legislation that we already have, and particularly with regard to definitions. What will the new definitions be? How will we be responsible for implementing them? Are they better, or likely to be better than the ones we already have?

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