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Lord Haskel: I can quite see that the parties to an agreement in respect of which the director has issued a direction under this clause may wish to terminate the agreement. Indeed, they may well wish to terminate it at a much earlier stage of the director's intervention.

In our view, there is nothing in the Bill to prevent the parties to an agreement from terminating it at any stage. I do not believe that the clause as drafted gives the director the power to require parties to an agreement not to terminate it. They can terminate it at any time they wish. Therefore, my noble friend's amendment is unnecessary because the parties to an agreement already have the right to terminate it whenever they so wish.

Baroness Nicol: Is my noble friend saying that, even if the director has insisted on a modification, that still leaves the parties with a right to terminate the agreement?

Lord Haskel: My understanding is that the parties can terminate it at any stage.

Baroness Nicol: And ignore the modification?

Lord Haskel: Yes.

Baroness Nicol: In that case, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 31 agreed to.

Clauses 32 and 33 agreed to.

Clause 34 [Interim Measures]:

Lord Fraser of Carmyllie moved Amendment No. 149:

Page 17, line 17, leave out ("a reasonable suspicion") and insert ("reasonable grounds for belief").

The noble and learned Lord said: Amendments Nos. 149 and 150 take us back to the issue of "reasonable suspicion" or "reasonable grounds for belief". I am not sure that I can repeat with profit what my noble friend Lord Kingsland has already said. However, because, at this time, I decline to elaborate in that way is not to be taken by the Government as an indication that, in the context of interim measures, we depart from our view that a preferable requirement would be that the director should have "reasonable grounds for belief".

I recognise that this has been put forward to deal with a difficult circumstance when the director has not completed his investigation and, under subsection (2), he regards it as important to act as a matter of urgency in order to prevent

    (b) of protecting the public interest".

Therefore, we recognise how that particular provision has come about.

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However, I am sure that the Minister will confirm that the powers of direction which he could then give, even at a stage of investigation, are very significant indeed. Those directions could do significant damage or harm to a number of undertakings. In those circumstances, while in no way departing from the earlier urging of my noble friend when saying that "reasonable grounds for belief" is preferred to "reasonable suspicion", it is our view that it is particularly desirable that the higher test should be included within the Bill. I beg to move.

Lord Borrie: I am delighted to know that the noble and learned Lord, Lord Fraser of Carmyllie, appreciates the need for interim measures, because there have been extremely serious cases in the past when it has not been found possible to complete an investigation. I use as an example the predatory pricing on the part of one bus company against another. By the time the investigation had been completed and any final measures were available to the authorities, the bus company complainant had gone into liquidation and been wiped out by the anti-competitive practice being engaged in. The lack of interim measures has been significant.

I turn to the specific point of the amendment. Because the investigation has not been completed, it may well be that there is a case for interim measures, although there is not yet a reasonable belief that a Chapter I or II prohibition has been breached because it requires the further completion of the investigation to tell one that. It would be a great pity if those new and invaluable interim measure powers were to be hobbled by requiring "reasonable grounds for belief" as distinct from "a reasonable suspicion" at a time when the investigation has not been completed. Therefore, I hope that the Minister will not give way to this amendment.

Lord Haskel: I am grateful to my noble friend Lord Borrie for that intervention. I remember on Second Reading he reminded us of the past harmful anti-competitive behaviour which had been permitted to continue unchecked for long periods. This provision forms an important part of our plank in our reform of current UK competition law because the current system is certainly failing to tackle anti-competitive behaviour quickly before serious damage has been inflicted.

I turn to Amendments Nos. 149 and 150. It is right that the power to impose interim measures should be exercisable only once an adequate threshold has been passed. Clause 34(1), requiring the director to have a reasonable suspicion that the prohibition has been infringed, is an appropriate threshold for starting the process for the imposition of interim measures. It is merely a preliminary threshold and must be judged in that light. Once that threshold has been crossed, the director must then go on to satisfy further conditions before being able to impose interim measures. Those other thresholds are set out in subsection (2) of the clause and are the subject of other amendments which I am sure we shall go on to discuss.

However, we have also discussed today, in the context of the investigation powers, the significantly higher threshold which this test of "reasonable grounds for believing" would set for the director. We believe that

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this is not appropriate where it provides simply the initial hurdle which must be cleared before the director can proceed to examine whether the further conditions for the exercise of the power are satisfied. I hope, therefore, that that explanation will satisfy the noble and learned Lord.

Lord Fraser of Carmyllie: I regret it, but I am afraid that I shall have to disappoint the noble Lord. However, I shall not alarm him and pursue my disappointment to a Division on the matter. I should like to make it clear that we regard the issue most seriously. Despite the noble Lord's response and the support from his noble friend Lord Borrie, I am still concerned that such powers are pretty extensive and could be imposed right from the very beginning. It seems to me that there is something slightly alarming about the situation if the director is allowed to resort to interim measures at the very time he starts his investigation. It is exactly the same test. All that is required of him is to have reasonable suspicion about the matter. It follows, therefore, that he could apply those powers from the word go. As I said, I shall not press the matter tonight, but it is certainly something to which we shall return on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 150 not moved.]

Lord Fraser of Carmyllie moved Amendment No. 151:

Page 17, line 26, leave out ("protecting") and insert ("preventing serious and irreparable damage to").

The noble and learned Lord said: This is a fairly simple amendment, and I should point out to the Committee that I am speaking also to Amendments Nos. 152 to 154. The Minister will see that we have in fact adopted his own wording for the second category in the subsection. Paragraph (b) talks of, "protecting the public interest". We propose a shift in the language to reflect that which is to be found in paragraph (a). That would seem to us to be more desirable and we would like to hear what the Minister has to say in that respect.

So far as concerns Amendment No. 152, I believe that we have already made some progress as regards the relationship with the High Court or the Court of Session in Scotland. Therefore, I have nothing further to say about that amendment at this stage. The only other amendment in the group upon which we would like to hear some comment from the Minister is Amendment No. 154. In that amendment we suggest that it would be appropriate, given the nature of these interim measures--and bearing in mind the reasons that I have already outlined--for the provision to be restricted to a maximum period of three months. I beg to move.

7.15 p.m.

Lord Haskel: We share the noble and learned Lord's concerns that the power to impose interim measures should be subject to adequate safeguards. We have therefore made this power subject to a number of important checks and balances. It is only exercisable if certain requirements set out in the Bill are met. First, as

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we have just discussed, the director must have a "reasonable suspicion" that the prohibition has been infringed.

Secondly, one of the alternative conditions for acting is that the director must consider that it is,

    "necessary as a matter of urgency",

for the purpose of protecting the public interest. Therefore, not every damage to the public interest will be a sufficient reason to act. It must also be,

    "necessary as a matter of urgency".

That is a significant hurdle for the director to satisfy.

Amendment No. 151 would introduce the additional limitation of forcing the director to show the prospect of serious and irreparable damage to the public interest. I do not believe that this is the appropriate criterion where harm to the public interest is at stake. For example, where there is the prospect of harm to large parts of the economy, we must carefully consider the balance to be struck between the damage to the economy and the firm which is to be subject to the interim measure. In such a case, I believe that the interests of the individual firm are already adequately protected by the significant hurdle of the director showing that,

    "it is necessary for him to act ... as a matter of urgency".

I turn now to Amendments Nos. 152 and 153. I agree with the noble and learned Lord, Lord Fraser, that the interests of firms subject to interim measures must be protected by effective safeguards. We have done this and have done so by providing that a decision to impose interim measures will be appealable to a tribunal of the competition commission. We have also provided that the tribunal rules may make provision for a tribunal to suspend the effect of an interim measure imposed by the director before taking a final decision on whether the interim measure should be upheld. This is contained in paragraph 13 of Schedule 8. Given those safeguards, I believe it right that the power to impose directions should remain with the director subject to the safeguard of an appeal to a tribunal.

I move on now to Amendment No. 154. We too have been alive to the concerns expressed that an interim measures order should not remain in place for an undue period of time. However, the three-month time limit proposed by the noble and learned Lord in which to reach a final decision may in certain cases not be sufficient where complex and detailed analysis of the economic and legal issues for the final decision is required. Nevertheless, as we said during the first Committee day, we expect to bring into force, when the system has bedded down, the provision in Schedules 5 and 6 enabling application to the court to ensure there is no undue delay in determining applications for decisions. Behaviour subject to interim measures can of course be notified to take advantage of this procedure.

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In view of all those hurdles to be overcome--and, indeed, all the procedures which I believe protect companies--I hope that the noble and learned Lord will feel satisfied and therefore will feel able to withdraw his amendment.

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