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Lord Kingsland: In those circumstances, I am very happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 41 agreed to.

Clauses 42 and 43 agreed to.

Clause 44 [The Competition Commission]:

Lord Kingsland moved Amendment No. 169A:

Page 22, line 4, leave out subsections (1) and (2).

The noble Lord said: I beg to move Amendment No. 169A. I should like to speak also to Amendments Nos. 169B to 169F and other amendments in this group. I shall not take up too much of the Committee's time in explaining the background to this amendment. I believe that I dealt with the matter in winding up on behalf of the Opposition during Second Reading. Noble Lords opposite are aware of the case I seek to make. I believe that the competition commission is a mistaken institution and should not be in the Bill. The two functions given to it in the Bill, one of adjudication and the other of investigation in relation to monopolies,

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should better be undertaken in the first case by the High Court and in the second case by the Director General of Fair Trading. I shall not reopen those issues. I am aware that noble Lords opposite are actively reflecting on them and no doubt will in due course deliver their judgment on them one way or another.

Meanwhile, in order to follow through my proposals, certain amendments to the Bill are required. Some of those are set out in Amendment No. 169A and the other amendments to which I have referred. Clause 44(1) deals with the responsibilities of the purported competition commission in respect of monopolies and mergers. I have sought to remove the competition commission as the actor and replace it with the director. I believe that the director in addition to being responsible for Chapter II prohibitions should also be responsible for the investigation of complex monopolies. I believe that it is a nonsense to divide the responsibilities in respect of two such intimately connected matters. I beg to move.

Lord Borrie: I rise to oppose this amendment. The proposal for the establishment of a competition commission to perform the role provided in the Bill was also recommended by the previous government. I welcome that. The idea of a competition commission is, among other things, to build up specialised knowledge of competition matters. I believe that what the noble Lord, Lord Kingsland, sees as a disadvantageous mix is a good mix; namely, a membership which hears references from time to time--no doubt fewer than in the past--on complex monopolies and scale monopolies. But the same individuals who are members of the competition commission may comprise part of the membership of a tribunal hearing appeals from decisions, including decisions on penalty and substance, from the Director General of Fair Trading.

I commend the mix of qualities and qualifications of members, which is not untypical of the Monopolies and Mergers Commission in the past. Assuming it continued, it would include businessmen, trade unionists, academics, economists, lawyers and others from different walks of life. In the main, they would serve in a part-time capacity; others would serve perhaps more or a less in a full-time capacity. They would provide a mixed background of experience and would be able to build up considerable expertise in a specialised field of law and policy; namely, cartels and abuse of dominant position.

I believe that to substitute the High Court--which I suppose would mean a judge of the Queen's Bench Division who, once in a blue moon, would deal with this specialised area--would be even less satisfactory than the constitution of the Restrictive Practices Court, which under this Bill will come to an end. There a judge of the High Court would have sitting with him two members who were not judges but who had experience of business and commerce. The idea of a competition commission--I hope that the Minister will forgive my saying that this device was not thought up by the present Government but by the previous one--builds upon the

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experiences of both the Restrictive Practices Court and the Monopolies and Mergers Commission, and is a sound one.

It is clear, as the noble Lord, Lord Kingsland, indicated in relation to previous matters, that he fully understands that the president of the tribunal function of the competition commission will be a highly qualified lawyer of the calibre of a High Court judge. That is recognised by the fact that any appeals from the competition commission should go to the Court of Appeal and not to the High Court, because that would be at the same level as the president himself. The competition commission will have the mix of functions to which the noble Lord objects, and the mix of membership. Those are both plus points for the proposal in the Bill. It would be a great pity to accept this combination of amendments, which would destroy that building up over the years and continuing into the future, of a specialised body.

9.15 p.m.

Lord Simon of Highbury: First, I am grateful to the noble Lord, Lord Kingsland, for the notice he gave of this amendment in debate on the first Committee day. As I did not have the pleasure of winding up on that occasion, perhaps I may put forward, build on, and, I hope complement, the ideas that my noble friend Lord Borrie has just been expounding.

It may be helpful if I explain why we have proposed the institutional framework set out in the Bill. As I understand the noble Lord's amendments, the intention is to abolish the Monopolies and Mergers Commission and transfer its functions to the Office of Fair Trading. The MMC currently exercises functions under the Fair Trading Act monopoly and merger provisions, which we intend to continue within the new competition commission. We have already expended a good deal of energy discussing the reasons for retaining that legislation. The question here is whether those functions would be better carried out by the Office of Fair Trading.

The Fair Trading Act balances carefully the respective roles of the Office of Fair Trading, the MMC and the Secretary of State. The approach to dealing with competition issues under the Act is very different from that introduced by the Bill in relation to the prohibitions. I touched on that point in the debate last week. The Act enables wide ranging investigations into markets, and for matters to be considered against a general public interest test, albeit that competition is in practice a central feature of that test. Further, a very wide range of remedies may be imposed to remedy situations which are determined to be contrary to the public interest. In those circumstances it is quite right that the responsibility for remedies should rest with Ministers, subject to parliamentary scrutiny.

I believe also that it is right that under this sort of approach there should be a careful separation between the body which conducts the preliminary investigation and frames the reference; and the body which conducts in-depth inquiries, considers matters against the public

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interest test, and makes recommendations as to remedies. The collegiate structure of the MMC is right for this latter role. As my noble friend Lord Borrie reminded us, that was also the previous government's view.

I think that there would be too great a risk in combining all those functions in a single organisation. The Fair Trading Act has been in operation for nearly 25 years now, and I believe that the separate and independent character of the MMC has been crucial in establishing and maintaining confidence in the operation of the law.

The new prohibition regime introduces a different approach to competition matters and calls for a different institutional arrangement. The Bill establishes legal tests for assessing whether behaviour is anti-competitive or not. The Office of Fair Trading is to be the primary enforcer of the prohibitions. It is right that under that approach, appeals against the substance of his decisions should be dealt with by more court-like arrangements than are appropriate for MMC inquiries under the Fair Trading Act.

That is why the Bill establishes a new tribunal within the competition commission. The tribunal will, as I say, have many of the characteristics of a court, as my noble friend Lord Borrie said. Indeed it will be recognised as having the same importance and status as the High Court, as appeals from the tribunal will be to the Court of Appeal. I have no doubt that the European Court of Justice will see the tribunal in the same light. The noble Lord, Lord Kingsland, will know that Article 177 of the EC treaty expressly refers to references from tribunals as well as courts.

There will be a clear advantage in dealing with appeals against the director's decisions in a tribunal--of high status like this one--rather than in a court. The procedural rules by which the tribunal operates may be tailored to suit the nature of the matters it will typically deal with, and they will be drawn up taking into account best practice from the courts and other tribunals.

The tribunal will be a UK-wide body, capable of dealing with issues relating to the whole of the UK. That will be a very distinct advantage given the nature of many competition cases.

The approach we have chosen also means that cases will be heard by both legal and lay members. I believe that it is essential that the tribunal panel contains the necessary breadth of experience and expertise to be able to deal effectively and efficiently with the complex commercial, economic and social issues involved in competition cases. Our approach also means that we can draw on a much wider range of people to chair tribunals while of course recognising that tribunal chairmen will need to be properly legally qualified. Schedule 7 to the Bill sets out necessary legal qualifications.

I have explained why we believe that it is right to go down the road of a tribunal to hear appeals under the new regime. We do not, however, see any need to create an additional competition body. That would be unduly costly. The arrangements we propose will make the most efficient use of the expertise and resources available. We also believe that it will encourage healthy

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cross-fertilisation within the new competition commission. It will serve to promote consistent treatment of similar matters under the different pieces of legislation, although of course the method of approach to matters will be different. The primary function of the tribunal will be to re-hear and review the evidence considered by the director, not to initiate its own in-depth investigations.

Clause 44 introduces Schedule 7 of the Bill, which sets out detailed provisions governing the new competition commission's establishment and functions. In relation to the existing functions of the MMC, which will carry over to the new commission, the aim has been to reproduce the current arrangements. As to the new functions introduced by this Bill, the schedule provides for the appointment of tribunal panel members, chairmen and president. I should like to take this opportunity to say that at a later stage we will wish to make a number of amendments to the schedule to tidy up various points which we had not time to deal with before introduction. These are mainly technical changes and I hope that all will be uncontentious. But I am keen that we should get them right before the Bill leaves this House. For example, the provisions as to auditing should be changed in line with treasury guidance which we have received. We would also wish to ensure that conditions as to financial and management matters--though not to anything else--may be attached to grants to the commission.

I thank the Committee for giving me the opportunity to lay out some of the institutional arrangements and to explain our thinking. Perhaps I may summarise my remarks. The basis of our approach is that it is essential for the credibility of the new regime, and in the interests of fairness and transparency, that there are effective and efficient appeal arrangements. We believe that our proposals will achieve that and, at the same time, mesh sensibly and productively with the institutions already in place under the current regime.

I suspect that my lengthy--that is, at this stage of the evening--and institutionally-based reply comes as little surprise to the noble Lord, Lord Kingsland. Perhaps having heard it he will see fit at this stage to withdraw his amendment.

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