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Baroness Nicol moved Amendment No. 184:
The noble Baroness said: My Lords, yet again I am afraid that I shall invite the Minister to canter round a course that he has covered before. I wish to move Amendment No. 184 and to speak in particular to Amendments Nos. 185 and 208. The effect of this group of amendments would be to protect the commercial secrets of innocent third parties--that is my particular concern--during investigation and thereby to encourage more transparency when detailed information is required by the authorities.
Amendment No. 184 seeks to ensure that the obligation to protect commercial secrets is extended also to designated or specified persons involved in the investigation. Amendments Nos. 185 and 208 introduce those obligations.
The amendments would also promote harmonisation of approach in respect of investigation across the EU and would reduce the bureaucratic burden on businesses by introducing consistency in documentation.
Your Lordships will remember that I raised those concerns in Committee and I am aware that the British Retail Consortium has since had an encouraging dialogue with the Bill team. However, I have tabled these amendments so that the Minister can clarify and record assurances which he has given during those discussions.
Of course, investigations are necessary to ensure that there is no abuse of power and that consumers have access to a free and competitive market. But it cannot be right that business secrets of innocent third parties are revealed to their competitors. The amendment would introduce a system which is used currently by the competition directorate of the European Union--DGIV--in its investigations.
Article 214 of the Treaty of Rome imposes a general duty on all EU officials not to disclose information which,
That is reflected in the detailed regulations setting out the rules for investigation in Regulation 17/62.
Articles 19(3) and 21(2), which deal with the publication of detailed reports, specifically bind the Commission to have regard to the legitimate interests of
Lord Kingsland: My Lords, the difficulty is that there are a whole lot of other amendments in the group and if I do not speak to them now, I shall not have an opportunity to do so.
This really is a continuation of the exchanges that I had the privilege of having with the Minister a few moments ago. He conceded that Clause 53 was subject to Clause 54. That was extremely good news. We now have the added problem of examining Clause 54 to see whether its terms are strong enough to bear this immense responsibility. I trust the Minister will agree with me that on a true construction of the terms of Clause 54 it is inadequate to bear the heavy responsibility placed upon it. I draw his attention particularly to Clause 54(3)(a)(i) and (ii). I am particularly concerned about the expression "in his opinion" which is inserted into both these paragraphs, as that introduces a subjective element into the application of the director's judgment which is, I think, in contrast with what the Minister has sought to introduce in other parts of the Bill. My amendments seek to remove that.
Moreover, my amendments also seek to remove the expression,
Perhaps I can give the Minister the benefit of the doubt by suggesting to him that what he really means is exclude, no more and no less, and that the "have regard to" and "the need for" are simply otiose.
Lord Simon of Highbury: My Lords, these amendments focus us directly on the question of the proper balance between the protection of information and the demands of efficiency, transparency and fairness under the new regime. This balance is, as I said in answering the previous group of amendments, an important issue, and I am grateful to my noble friend Lady Nicol and to the noble Lords opposite, for providing us with another opportunity to examine it in such clear terms before the Bill leaves this House. I say "clear terms" because the amendments propose a radical shift in the balance. Indeed, I fear that the proposals illustrate the risk of hampering the operation of the new regime to a degree which unbalances the options.
It is right that the director should be under a duty to have regard to the need to exclude business secrets. This is what the first part of Amendment No. 185 appears to propose. The duty is already contained in Clause 54. Under Clause 54 the director is required to balance that need against the extent to which disclosure is necessary for his purposes under the Bill. When I say the "director" I also mean the regulators acting under the Bill. The Government believe that this is the right duty.
But these issues must be weighed against the necessity to disclose information in certain circumstances; for example, to enable a party to have sufficient details of the case it has to meet so as to be able to respond. If the director failed to follow this principle it would certainly be grounds for legal challenge. This also applies to publishing decisions that there have been infringements where other parties have a clear interest in knowing the facts about that infringement.
Amendment No. 185 would impose a further, far more onerous restriction to demonstrate that the public interest in disclosure outweighed the business's interest in confidentiality. I fear that this would be a recipe for paralysis. It would give infringers fertile ground to obstruct and to delay the director's procedures, challenging him at every turn that he has not produced a sufficient demonstration of the public interest. The scope for delay could be almost endless. We have to give the director some discretion, although clearly, as I said, within strict bounds, if the system is to work.
The amendment imposes a rigid requirement for notice. In some circumstances 14 days' notice may be right. In others, however, it will not be. We have already debated a proposal to impose a notice requirement on confidential exchanges of information between regulators. This amendment would impose the same requirements on every function under the Bill where disclosure is necessary. It makes no allowance for the differences. What if, for example, the director needs to move urgently to impose interim measures to stop an abuse? He could be hamstrung by this proposal.
We have accepted the argument that it is right for third parties to have notice and an opportunity to make representations in some circumstances. But the right way to approach this is through the Director's Rules, which will be sufficiently detailed to cater for different scenarios, and which can be more readily refined. This is not a matter for primary legislation. The rules will of course be subject to consultation, so people will have an opportunity to say if they do not believe the rules cover the right matters in the right way.
My noble friend Lady Nicol referred to the practice under the EC system of enabling business to identify which pieces of information are confidential. Again this is a matter of procedure best left to the Director's Rules. It does not strike me as the sort of detail which is necessary or sensible to put into the primary legislation, and indeed I do not believe it appears in Regulation 17/62 either. It is the Commission's implementing regulations, equivalent to the Director's Rules, on the making of notifications under Regulation 17 that provide for parties to identify business secrets and to justify that treatment in making applications.
I now turn to the amendments tabled by the noble Lord, Lord Kingsland, Amendments Nos. 184A and 184B, and Amendments Nos. 185A to 185D. The effect of these amendments is to remove requirement for the director and the Secretary of State to balance the relevant considerations. I have already noted that some discretion is necessary for the system to work effectively and clearly.
More damagingly still, the amendments will make it unlawful for the director or Secretary of State to disclose any information which might damage the legitimate interests of business or individuals. I believe this proposal to be unworkable. Disclosure may sometimes be necessary. I have already mentioned, for example, the need for parties under investigation to have sufficient information to enable them to understand the case against them. It would be quite wrong to limit that right in this way.
If I may turn quickly to Amendment No. 208, there is already an established system in place for protecting confidential information under the FTA. Interested parties are given an opportunity to make representations to the MMC as to whether information that they have provided should remain confidential, before the MMC sends its report to the Secretary of State.
I do not in any way seek to play down the importance of the arguments raised by noble Lords and my noble friend Lady Nicol in respect of the disclosure provisions in the Bill. On the contrary we have taken considerable care to get the balance right. What we have produced in the Bill is entirely in line with existing UK precedents. We have also brought forward an amendment recognising the force of the arguments about notice to third parties and an opportunity to make representations.
It is important to recognise that the director or Secretary of State will only wish to disclose information where that is properly justified under the tests we have set out in the Bill. It would hardly be in their interests to disclose confidential information without proper justification. Companies would soon become unwilling to co-operate and the effectiveness of the system would be compromised. Nevertheless, we do not believe that the system would be workable without some discretion, albeit circumscribed as we have provided. I am grateful for this opportunity to explain our position once again. I urge my noble friend Lady Nicol to withdraw the amendment.
Page 27, line 15, leave out ("the Director") and insert ("any designated person or specified person (as defined in subsections (4) and (6) of section 53 respectively)").
"by its nature is a professional secret, and, in particular, information relating to enterprises and concerning their commercial relations or components of their production costs".
"must also have regard to the need for excluding".
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