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Baroness Oppenheim-Barnes: I hope the noble Lord will forgive me if I am missing the point completely, but how do these powers differ from the powers in the Competition Act, which is repealed by the Bill, in terms of points of reference for the director general to start an investigation?
Lord Simon of Highbury: I have to take notice of that question because it is a deeply interesting one. We have looked in many ways at the compatibility with the regime that exists in places like Customs and Excise and under the Companies Act. But in terms of a detailed reconciliation between these processes and those under existing law in the national circumstance, I certainly take notice of the question and shall come back to the noble Baroness. I should point out that these processes are already in place under the existing jurisprudence of the Community.
Lord Kingsland: So that the tension between the Government and the Opposition in your Lordships' House can be creative, perhaps I may suggest a possible way out of this difficulty. I do not seek to produce a specific draft on the hoof but the approach would go something like this. The director may open an investigation if he has reasonable suspicion, first, that the Chapter I prohibition has been infringed or, secondly, that the Chapter II prohibition has been infringed. The director may, if he has reasonable grounds for belief thereafter that a prohibition has been infringed, authorise any officer of his to exercise on his behalf all or any of the powers conferred by Clauses 26 and 27. That would inject two stages into the opening phases of the investigation. I do not expect the Minister to give a definitive response now, but I invite him at least to indicate that he might, at the end of the day, consider such an alteration.
Lord Borrie: I hope that the Minister will not go along the route suggested by the noble Lord, Lord Kingsland. What does "open an investigation" mean?
There cannot be an investigation without some ability to require documents or to require to see someone in order to hear what he has to say. The Minister was right in referring to Clause 25 as being only the opening of an investigation, and the noble and learned Lord, Lord Fraser of Carmyllie, was correct in saying that there have to be the other clauses to which we shall come in a moment, although he slightly confused the issue when talking about entering premises. The later clauses make a clear distinction between going along, knocking at a door and being admitted, having said to some degree what you are there for, and knocking doors down or forcible entry, for which a warrant is required. We shall come to that in due course.Surely there cannot be any effective investigation without the director general having some powers, and those "some powers" should, in my submission, be available on a reasonable suspicion. A "reasonable suspicion" does not mean any suspicion. It does not mean simply acting, to take up the example used by the noble and learned Lord, Lord Fraser, on a rumour which is referred to as such in a newspaper. One cannot have reasonable suspicion if one has nothing more than the say-so of a rival who, as it were, "would say that, wouldn't he", in order to be mischievous.
"Reasonable suspicion" is somewhere--a judgment has to be made in the particular circumstances--between suspicion, or mere suspicion, as the noble Lord, Lord Campbell, said a moment ago, and reasonable cause or reasonable grounds for belief. "Reasonable suspicion" seems to be a happy balance and should be the basis for the obvious forms of investigation to which I have referred.
Lord Simon of Highbury: I am impressed by the ability of the noble Lord, Lord Kingsland, to draft on the hoof. However, I shall decline to respond on the hoof. We believe that having the appropriate threshold to start the investigation is a vital part of improving the process in order to create a more competitive and fairer environment for companies. I urge the noble Lord as strongly as I can to reconsider the position.
Lord Kingsland: I shall not disguise from the Minister my disappointment at his response. I shall reflect on it. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4 p.m.
Lord Kingsland moved Amendment No. 95:
The noble Lord said: This is the first of a group of four amendments, Amendments Nos. 95, 100, 101 and 106. Amendment No. 95 amends page 13, line 12, of Clause 25(1) by adding the words,
Perhaps I may put the four amendments in context. Each one seeks to notify the persons to whom the competition authorities are addressing themselves of the nature of the complaint and also seeks to specify the particular documents that the competition authorities are likely to require. The four amendments should be seen in that spirit.
Amendment No. 100, at page 13, line 20, of the Bill, proposes a substantial addition to Clause 26(2). The text reads,
It is a kind of compendium amendment which sets out what we believe to be proper protection for the individual in these circumstances.
Amendment No. 101, at page 13, line 20, seeks to add:
Finally, Amendment No. 106 relates to page 13, line 40, of the Bill. Clause 27(1) states:
I believe that the amendments are self-explanatory. I beg to move.
Lord Simon of Highbury: Clause 25, as we have just debated, provides for the basic threshold of "reasonable suspicion" of an infringement of either of the prohibitions to trigger the power to investigate. Amendment No. 95 seeks to add a further requirement that the person whose conduct is the subject of the investigation must first be notified of the nature of the infringement. As a general point, it is not unreasonable for those being investigated to be told what is the nature of the alleged infringement. We have a number of amendments which address that point in different ways. I need to address them case by case. The significance of Amendment No. 95 is that it would require, at the outset of all inquiries, notice to be given to undertakings telling them of the "charges against them". That would render redundant all those provisions which provide for unannounced visits with or without a warrant. I believe that the amendment goes too far.
Clause 26 provides for the director--I am moving forward slightly here, as did the noble Lord, Lord Kingsland--by giving notice, to require the production of specified documents. Amendments Nos. 100 and 101 would require that the notice specifies the conduct being
Amendment No. 106 would require the purpose of the investigation and the penalties for failing to comply with the request to be set out in the written authorisation provided for in Clause 27.
I am advised that it is implicit in the requirement for written authorisation in Clause 25(2) that the authorisation will have to identify the subject matter of the investigation. That is a common point. That would follow the requirement in Regulation 17/62 under which the European Commission conducts investigations into suspected infringements of Articles 85 and 86. I would also expect the director to be prepared to wait a reasonable time for the lawyers of the undertaking to arrive provided he is allowed to remain on the premises while waiting. That is also implicit in the European jurisprudence. Equally, I would expect individuals to be warned of the penalties for failing to comply with a request where that was relevant. I have not thought it necessary hitherto to set that out on the face of the Bill given the position of Regulation 17/62 and the European jurisprudence.
As I say, the first of these matters, the notice as to the purpose of the inquiry, is implicit in the Bill already. However, I am aware that this requirement and the one as regards the notice of penalties for non-compliance are express requirements of Regulation 17/62. At this point I see no objection to following suit.
It is important that we should get any amendment exactly right. I should like to consider further the case for how that might be effected. At this stage I believe that the general approach in Amendments Nos. 101 and 106 is to be preferred, but I shall be inviting the noble Lord to withdraw Amendments Nos. 95 and 106 to allow me to consider the matter further. Amendments Nos. 101 and 106 are the preferred direction of amendments in reconstituting this point.
Amendment No. 100 goes rather wider. It would require the notice, to be given to a person to produce a document relating to any matter relevant to an investigation, to include further specific information about the subject of the investigation. In many cases it will, quite frankly, be impossible to provide the information that the amendment seeks to include. It is unlikely that a specific document could be identified to this degree in many cases. I make no apology for this. The point has been made previously that cartels and other anti-competitive behaviour invariably involve secrecy and concealment. Consequently, we have intentionally provided for a wide definition of "specified document" to ensure that the director can obtain the information necessary for his investigation. Even were it possible to give the information in question, these amendments would give too much encouragement to falsify or destroy documents, sufficient to thwart the investigation.
A number of points have been raised in this exchange between the noble Lord, Lord Kingsland, and myself. I should like to reflect on the position as regards specifying the conduct being investigated, stating
Page 13, line 12, at end insert--
("and notifies the persons whose conduct is to be investigated of the nature of the alleged infringement and of any matters which he considers relate to it.").
"and notifies the persons whose conduct is to be investigated of the nature of the alleged infringement and of any matters which he considers relate to it".
17 Nov 1997 : Column 377
"The power conferred by subsection (1) is to be exercised by a notice in writing signed by the Director".
"which identifies the specified document; specifies the conduct which is being investigated; specifies the Director's grounds for considering that the specified document relates to a matter which is relevant to that investigation; and states that a person on whom the notice has been served has the right and shall be afforded sufficient time to seek legal advice before complying with the notice".
"The notice must state the purpose for which the request is being made and the penalties for non-compliance".
"Any officer of the Director who is authorised in writing by the Director (or by an officer acting on his behalf under section 25(2)) to do so ... may enter any premises in connection with an investigation under section 25".
"The written authorisation referred to in subsection (1) shall state the purpose for which the investigation is being made and the penalties for failing to comply with a request by an investigating officer".
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