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Lord Fraser of Carmyllie: I find that a rather unsatisfactory answer. What I really object to is that a rather phoney libertarian exception is being offered here. Page 29, line 5 of the Bill states,

It continues by saying,


    "(a) they are also used in connection with the affairs of an undertaking".

I hope that the noble Lord was being lighthearted and appreciated that I offered no imputation of his conduct while he was chairman of BP. I am absolutely certain that there could scarcely have been a night when he did not take home with him papers in connection with the affairs of the undertaking of which he was chairman. If that is what the Government want to do and if they are going to say, "We consider this to be such a problem that we are going to allow people to enter premises of all types and in all circumstances" then they should say so. There should not be this rather false idea that domestic premises are to be excluded. With this particular definition it seems to me that the government advisers are saying that if one has papers relating to a cartel when one goes home, one should leave them in the motor car. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Simon of Highbury moved Amendment No. 252A:

Page 29, line 13, leave out ("in paragraph 1 of Schedule 10") and insert ("by section 52").

On Question, amendment agreed to.

Clause 57, as amended, agreed to.

Clause 58 [Principles to be applied in determining questions]:

Lord Kingsland moved Amendment No. 253:

Page 29, line 20, leave out from ("that") to end of line 25 and insert ("all those having functions under this Part discharge those functions so as to ensure that so far as is possible questions arising under this Part are dealt with and determined in a manner which is consistent with the treatment of corresponding questions arising in Community law").

The noble Lord said: In moving this amendment I shall speak also to Amendments Nos. 254 to 257. The purpose of these amendments is to clarify the nature of the relationship between Part I of the Bill and European Community law. Clause 58(1) is more preambular in content rather than dealing with a specific obligation. The amendment seeks to rectify that situation.

In particular Amendment No. 253 deals with a number of concepts which seem excessively vague. The expression "compatible" is not explained; nor is the expression "corresponding questions". A need for consistency is rehearsed, but consistency between what differing regimes?

There are four particular matters to which I wish to draw the attention of the Committee. First, the expression, "to decide matters with a view to securing

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consistency" seems to us to be much better stated by the expression, "to ensure consistency." That makes the obligation absolutely clear.

The expression "corresponding questions" is too vague. Why not simply say that "The application of Part I must conform with the jurisprudence of the European Court of Justice in relation to Article 85 of the Treaty"? That is what I understand is being said.

In our submission the Bill must make it plain when Parliament intends to take a different approach from the European Community and Article 85. The expression used in the Bill is "incompatibility", but we believe that that is too loose-limbed; in other words, where the Minister is asking the Committee to accept that we differ, he ought to say so. The principles of European Community law comprise certainty, non-discrimination, objectivity and proportionality. Those principles ought not just to be enshrined in the substance of the law relating to the competition regime; they ought also to infect the way in which it is drafted. I beg to move.

9.30 p.m.

Lord Simon of Highbury: I shall respond to Amendments Nos. 253 to 257 as a group. Indeed, in responding to the amendments of the noble Lord, Lord Kingsland, I think it would be helpful, first, if the noble Lord will bear with me, to explain the purpose of Clause 58 and how it is intended to operate.

The purpose of the governing principles clause is to ensure as far as possible that the UK and EC prohibitions are interpreted and develop consistently with the EC competition law system. This is of critical importance in minimising burdens on business. The problems for business in having two similar, but in their detail different, prohibitions interpreted according to two different bodies of case law could be very burdensome.

The clause will, subject to one qualification I shall discuss further, require those determining questions under Part I to avoid inconsistency with Community law. They are also to have regard to the decisions and statements of the Commission. This will also apply to interpretation of the rules made by the DGFT under Clause 49. This importation extends not only to the substantive law but also to the general procedural safeguards developed under EC law; for example, the right against self-incrimination. That right developed by the European Court of Justice in Orkem v. Commission will be available to individuals who are asked by the DGFT for an explanation of a document under the powers in Clauses 26 to 28.

However, this principle of Community law importation will apply only to the extent that the provision of Community law in question is not inconsistent with the provisions of the Bill or the rules made by the DGFT under Clause 49. Let me give an example of a departure on the face of the Bill. Clause 29 confers a greater degree of legal professional privilege against production of documentation than exists under EC law. This is deliberate. Indeed, such an approach has wide-ranging support in this House as we debated earlier.

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In making the procedural rules, the DGFT is not obliged to secure that there is no inconsistency with EC procedural law since he will not be "determining a question" under Part I. The Bill provides that the rules made by the DGFT are not to come into effect until they have been approved by order made by the Secretary of State. These orders are to be subject to annulment by a resolution of either House.

That was by way of a general introduction and I turn now to the specific amendments tabled by the noble Lord, Lord Kingsland. I must start by saying that I believe that there is much common ground between us. I have considered the alternative language proposed, but I still feel that our objectives are best served by the clause as it is drafted--despite the excellence of the proposals. Let me try to explain why.

Turning first to Amendments Nos. 253 and 254, it is quite right that business should be granted as much certainty as possible about the application and interpretation of the prohibitions. The governing principles clause forms a central plank in achieving this objective. We have been clear on the face of the Bill where we are departing from the EC model; for example, the UK appeal system is clearly different from the EC system since appeals are not limited to the narrow judicial review-type grounds applicable to European Commission decisions.

Outside these specific areas of departure, business can look to the EC system for the interpretation of the prohibitions. I believe that the language in subsection (2) requiring the director and any court or tribunal to act with a view to securing that there is no inconsistency with Community law is a sufficiently tight test. It meets our objective of ensuring that the UK and EC prohibitions remain on parallel tracks.

I do not believe that the test should be made yet tighter as proposed by the noble Lord, Lord Kingsland. It is not possible to create an exact copy of the EC system. EC competition law has certain elements which cannot simply be transposed into the domestic system. For example, the Community objective of ensuring a common internal market for 15 different national states simply does not make sense in a purely domestic context. Therefore, those applying the prohibitions must be able to produce a sensible translation of the EC rules into the domestic system. This explains the reference to consistency between questions arising in relation to "competition within the UK" which correspond to those arising in Community law in relation to "competition within the Community". Once again I emphasise that the language in subsection (2) is very tight, and rightly so. In addition, those applying and interpreting the prohibitions must always act with the purpose set out in subsection (1) in mind; that is, consistency with the EC approach. Subsections (2) and (3) must therefore be read as a package together with the purpose in subsection (1). Finally, to put the matter beyond doubt the duty on the director or UK court or tribunal under subsection (2) is to apply not only the principles applied in a corresponding question but also any relevant decision of the Court.

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Amendment No. 257 seeks to give precision to the meaning of corresponding questions of Community law. However, I consider this to be far too narrow a definition. By way of example, I refer to the study prepared by Professor Whish which I mentioned when we debated Clause 9. I have placed copies in the Library of this House. As Professor Whish has noted in the study on the breadth of Article 85(3), the exemption criteria are interpreted against the backdrop of the underlying principles and objectives contained in the EC Treaty. Treaty objectives such as those to protect the environment contained in Article 130 may be relevant in considering whether an exemption can be granted. If we adopted the narrower definition proposed, the director might not be able to grant an exemption in respect of a type of agreement which the Commission would have had power to exempt. Such a definition could therefore lead to divergence with EC law and, worse still, prevent the director from exempting restrictive agreements which had worthy countervailing benefits.

As for the question of importation of the general principles of Community law such as the principle of proportionality, I can confirm to the noble Lord that it is our clear intention that they are included within the principles applied by the European court referred to in this clause. I am advised that this is the effect of the clause as drafted and that there is no need for specific reference to them.

I turn now to Amendment No. 255 which deletes the reference to the relevant EC principles and decisions being those applicable at the time the UK decision is being taken. The reference to "as applicable at that time" is to make clear that if there is a decision of the European Court which conflicts with the latest interpretation of the point by the UK courts, those applying the prohibition must follow the EC interpretation. It is also the case that if, as can happen, the jurisprudence of the ECJ changes over time it is the latest decision which prevails. We cannot rely on the European Communities Act to achieve either of these results because we are borrowing, not applying, EC law. Amendment No. 255 might therefore force the courts and the director to apply the prohibition inconsistently with the EC approach and thereby defeat the very objective of the governing principles clause.

Finally, I deal with Amendment No. 256 which makes the Secretary of State subject to the governing principles clause. We did not apply Clause 58 to the Secretary of State simply because we considered that she did not have functions under the Bill where it would be relevant and right to apply EC law. For example, the power of exclusion under Clause 3 might often involve doing something different to EC law. That is the main purpose of the clause. We want to have the right, for example, to exclude vertical agreements. The Bill provides for that by secondary legislation. I know that the noble Lord, Lord Kingsland, pressed for such an exclusion to be on the face of the Bill and, as I said, I shall reflect most carefully on that point. However, in the event that such an exclusion is written into the Bill there will

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remain a need to vary or fine-tune it by secondary legislation and make further exclusions as appear necessary.

Our view is that the exercise of exclusion powers would not be "determining a question" for the purpose of Clause 58. However, applying the clause to the Secretary of State could cast doubt on the way she could exercise that power. That is a detailed response to a matter where I started by saying that there would be a lot of common agreement. I hope that in the light of that explanation the noble lord, Lord Kingsland, will reconsider his amendment.

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