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Lord Fraser of Carmyllie: I cannot say that I am particularly persuaded by the argument that adopting the language of the proposed legislation itself--namely,


is inappropriate. For me, it is precisely the language suggested by the Government. I guess that it is a requirement on the draftsman for some elegant variation rather than any real need to introduce a separate test. However, we may yet reconsider the matter at a later stage.

We believe that it would be useful to have a maximum period built into the provision. The powers are very extensive and the measures that might be taken against a company could seriously cripple that company's business if the director, however well intentioned, was simply wrong. Indeed, the degree of damage might be such that the undertaking would never recover. That is why we thought it would be useful to have a focusing of the mind and, therefore, the requirement that there should be a maximum period. With those further observations, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 152 to 154 not moved.]

Lord Haskel moved Amendment No. 155:


Page 17, line 39, leave out ("section 31(3) also applies") and insert ("sections 31(3) and 33 also apply").

The noble Lord said: In moving the above amendment I shall, with the leave of the Committee, speak also to Amendment No. 156. The amendments correct an obvious omission from the Bill. Clause 33 provides that if a person has failed without reasonable excuse to comply with directions given by the director to bring to an end an infringement of either prohibition, the director may apply to the court for an order. The amendments apply the same procedures where a person has failed without reasonable excuse to comply with a direction imposing interim measures; that is, when he suspects that the prohibitions have been infringed and he gives directions as a matter of urgency and subject to the safeguards in this clause. I beg to move.

On Question, amendment agreed to.

Lord Haskel moved Amendment No. 156:


Page 17, line 41, leave out ("section 32(3) also applies") and insert ("sections 32(3) and 33 also apply").

On Question, amendment agreed to.

Clause 34, as amended, agreed to.

Clause 35 [Penalty for infringing Chapter I or Chapter II prohibition]:

Lord Fraser of Carmyllie moved Amendment No. 157:


Page 18, line 19, after ("undertaking") insert ("in the United Kingdom in the relevant goods or services").

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The noble and learned Lord said: This is an important amendment but I have some optimism that either I shall be told it is an acceptable amendment, or at the very least I shall be given the reassurance once again that we are seeking to achieve the same end and what I wish to introduce is unnecessary. Clause 35 deals with the penalties that might be imposed in the event of an infringement of either a Chapter I or Chapter II prohibition. Clause 35(7) states,


    "No penalty fixed by the Director under this section may exceed 10% of the turnover of the undertaking (determined in accordance with such provisions as may be specified in an order made by the Secretary of State)".

It may be the intention of the Government to introduce just the restriction that we wish to see on the face of the Bill. I am not at the moment absolutely certain that it is necessary to put this on the face of the Bill, but it would be extremely helpful if the noble Lord could give some indication exactly what is proposed, or what plans they have to introduce an order along the lines of that set out in the provision in brackets in the clause. If the noble Lord is not already aware of this I must tell him that in the business community there is a real worry that if a large undertaking with activities not only elsewhere in the European Union but at any point around the world, had imposed on it a 10 per cent. penalty on its worldwide or European turnover, that would be grossly excessive. For that reason we should like to see the penalty restricted, if not on the face of the Bill, then in an unequivocal undertaking from the Minister that that is the intention of the Government. I beg to move.

Lord McNally: I associate these Benches with this amendment. The provision seems to be rather loosely drafted. As the noble and learned Lord has indicated, it could imply quite draconian punishments on companies. The clarification sought in this amendment would be appreciated by a large number of companies or, let us say, by a small number of companies but very worried ones.

Lord Haskel: I accept that this clause is quite draconian. However, I remind the Committee that this Bill is also intended to be a deterrent. The Government have already said that it is our intention that the turnover to be determined under Clause 35 should be UK turnover. I am happy to confirm that. As for confining the turnover to turnover in the relevant goods or services, I am not persuaded that it should be so confined. It has been suggested that otherwise the provision would discriminate against large companies. Is it not the case that the amendment might discriminate in favour of a large company as opposed to a small one? However, these are in any case not matters for the moment. How turnover is to be defined will be decided at a later date, after careful consideration and discussion with interested parties.

However, I wholly accept that the provisions we draw up will be of considerable importance as they will determine just how heavy a potential burden 10 per cent. of turnover is on an undertaking. That is why Clause 67 provides that an order under this subsection of Clause 35 may not be made unless a draft has been laid before

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Parliament and approved by a resolution of each Chamber. This matter will come before the Chamber when the draft has been prepared. In the light of those remarks, and especially the fact that Parliament will have to approve our proposed provisions on the definition of turnover, I hope that will satisfy the noble and learned Lord and that he will feel able to withdraw the amendment.

Lord Fraser of Carmyllie: I am grateful to the noble Lord for his reply. I suppose that in these post-Pepper days I have obtained more than enough from him when he indicates that it is the clear intention of the Government to restrict the turnover to United Kingdom turnover rather than to European or worldwide turnover. He may have a point regarding how we attempted to restrict turnover in terms of the amendment, but our primary purpose was to establish that the Government were referring to the United Kingdom. I am sure that British industry will be hugely relieved to hear that. I have no doubt it would still like to bring the figure down from 10 per cent. However, 10 per cent. of UK turnover is clearly far less of a risk than 10 per cent. of worldwide turnover. It is not difficult to think of some companies in which 10 per cent. of worldwide turnover would exceed their United Kingdom turnover. In their case a massive penalty could be imposed on them. I am most grateful to the noble Lord for his explanation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 35 agreed to.

Clause 36 agreed to.

Clause 37 [The appropriate level of a penalty]:

Lord Fraser of Carmyllie moved Amendment No. 158:


Page 18, line 33, at beginning insert ("Before fixing any penalty under this Part").

The noble and learned Lord said: I am not sure why Amendments Nos. 158 and 159 are not grouped. As far as we are concerned, this is a small, simple point. I shall speak to both the amendments together.

We are anxious to ensure that guidance is drawn up in consultation with industry and is put in place before any prohibitions come into force. That would seem to me to be a reasonable enough request. I very much hope that the noble Lord can reassure us that that is exactly what the Government want to do. I hope that he can be brief. I remember many long hours when I was asked to put guidance provisions on the face of Bills. I am not in a mood at the moment to threaten the noble Lord, but at later stages of the Bill we may have fairly extended discussions about guidance. I beg to move.

Lord Haskel: I shall speak to Amendments Nos. 158 and 159. I agree with the noble and learned Lord that the director should not be able to impose any penalty under the prohibitions until the guidance has been prepared and published. We consider that this requirement is implicit from the fact that the clause imposes on the director a duty to prepare and publish guidance and to have regard to the guidance for the time being in force under Clause 37 when setting the amount

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of any penalty. If the director were to set a penalty before preparing and publishing guidance we consider he would be failing to comply with the duties imposed under this clause.

On Amendment No. 159, it would be natural for the director to wish to consult relevant persons when preparing the guidance on the appropriate amount of penalty. As we said during Second Reading, the director is planning to undertake a thorough and extensive consultation with practitioners and other interested parties in the preparation of the general guidelines to be issued pursuant to Clause 50. Likewise, the director intends to consult relevant persons when preparing the guidance on the appropriate amount of penalty.

I accept that the Bill does not provide expressly for such consultation and I shall reflect in the period between now and Report on whether an explicit obligation on the director to consult should appear on the face of the Bill. That should cut short all our discussions. I therefore invite the noble and learned Lord to withdraw the amendment.


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