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Lord Fraser of Carmyllie: My Lords, my name is also to the amendment. I support what the noble Lord, Lord McNally, said, with one exception. The word "significant" appeared, as I understand it, in the 1996 draft Bill. It is not an issue that has been around since 1966. It was in the 1996 draft. Its inclusion was warmly welcomed by business, and for good reason. Because of the wide interpretation of Article 85 in Europe regrettably the result was a mass of unnecessary notifications with which the Commission has been unable to cope within a reasonable timespan.
Our objective in seeking the inclusion of these words in the Bill is to avoid that experience within the UK. I appreciate that this is a matter we have dealt with at previous stages of the Bill. The Minister has given a number of answers pointing out that under EU law the scope of Article 85 is limited to arrangements which have an appreciable effect on competition. We propose that the word "significant" should be introduced. On reflection, I do not accept that the wording will hinder the overall aim of consistency with EU jurisprudence. I do not believe that it will be contradictory. We thought that the Government would share the aim that it is desirable to avoid that mass of unnecessary notifications. This is a simple way to achieve that object. I support the amendment.
Lord Simon of Highbury: My Lords, as the noble and learned Lord said we have considered most carefully the arguments advanced during the first Committee day and on Report by the noble and learned Lord, Lord Fraser, and the noble Lords, Lord Kingsland, Lord Ezra and Lord Campbell in support of the same amendment we are now debating. I remain convinced, as I said on Report, that we should not insert an express significance test on the face of the Bill.
As I explained on Report, the case law of the European Court of Justice clearly establishes that Article 85 applies only where there is an appreciable effect on trade and competition. I also gave an example of how the UK courts have clearly accepted the existence of the appreciability test under Article 85. The same result will follow for the UK prohibition of anti-competitive agreements as a result of the governing principles clause.
The requirement of appreciability will also be included in the director's guidance which will assist business in understanding what is expected of it in terms of notification.
We should not tinker with the wording of the Chapter I prohibition. There is no express significance test under Article 85. Insertion of such an express test for the Chapter I prohibition would, as I have argued before, create the impression that we were trying to depart from established European principles. That would create greater uncertainty. Worse still, I remain concerned that an express significance test might inadvertently create so high a threshold for action that we could impede the effective tackling of anti-competitive agreements.
The example of special treatment for small companies under the Dutch legislation given on Report by the noble and learned Lord, Lord Fraser, did not appear to amend the prohibition itself. Rather, it seemed to operate by way of specific exclusion. The Bill, of course, does provide special treatment for undertakings with a low turnover and we will shortly be debating amendments on that very subject.
So what of the concern expressed by noble Lords on Report, and today by the noble and learned Lord, Lord Fraser, of the risk of unnecessary notifications which Brussels has faced acting under Article 85? Many of the bureaucratic problems experienced by the Commission can be attributed to the way in which Article 85 has been applied to vertical agreements. Indeed, that has prompted the Commission to review its treatment of vertical agreements.
As I explained on Report, an important factor guiding the treatment of vertical agreements under Article 85 has been the single market objective of the Community. That is borne out by the study I referred to on Report prepared by Professor Whish and Dr. Bishop, a copy of which is in the Library of this House. Single market objectives will not be relevant to the interpretation of the domestic prohibitions. This fact therefore makes a comparison of the experience of the number of notifications to Brussels not an entirely fair one.
Even though single market objectives are not relevant to the interpretation of the domestic prohibitions, as I explained on Report we recognise the case for special treatment of vertical agreements under the Bill. I am not able to announce any special measures to this House, but work is continuing in consultation with business and the regulators.
We are taking steps to ensure that the regulators and business are not burdened with unnecessary notifications. Altering the nature of the prohibitions themselves, for the reasons I have explained, would be an uncertain and potentially dangerous course. I therefore urge the noble Lord to withdraw his amendment.
Lord McNally: My Lords, before the Minister concludes, will he clarify whether, in his guidance to the director, there will be specific guidance on the treatment
of small businesses, because, as I said, that is what is motivating this and subsequent amendments? That would give some reassurance.
Lord Simon of Highbury: My Lords, I can confirm that that is the intention of the consultation process now taking place and will be part of the rule-making approach.
Lord Fraser of Carmyllie: My Lords, before the noble Lord sits down, he may think it is unusual for me to complain about an answer that seems to me to be exclusively court-focused, but does he not understand that what concerns us is that without the word "significant" those companies will have to reach a view as to whether or not they must make a notification? If they do not understand the threshold, the risk is there. It is a very real risk and has been perceived to be so by the CBI. If there is not a threshold like this, there is a real risk that the experience that the European Commission has encountered over the years, although I hear what the Minister says about the single market complication, will be duplicated here in the United Kingdom. That would be extremely undesirable. We should be looking at this matter from the point of view of businesses quite as much as from the point of view of the courts.
Lord Simon of Highbury: My Lords, I suggest that we are looking at it from the point of view of business, while understanding that this is a Competition Bill to deal with occasions when businesses are not conforming with the practices with which we should wish them to conform.
I believe that further advice should be in the guidance and not on the face of the Bill. The purpose of taking the text as per the prohibitions in the European jurisprudence is precisely so that there is not additional confusion for businesses and extra work is not created because of that confusion.
Lord McNally: My Lords, in the light of the Minister's reply, I beg leave to withdraw the amendment.
The Principal Deputy Chairman of Committees (Lord Tordoff): My Lords, is it your Lordships' pleasure that the amendment be withdrawn?
Lord Fraser of Carmyllie: My Lords, no.
The Principal Deputy Chairman of Committees: My Lords, the Question is that this amendment be agreed to. As many of that opinion shall say Content.
The Principal Deputy Chairman of Committees: To the contrary, Not-Content.
The Principal Deputy Chairman of Committees: My Lords, I think the Not-Contents have it.
The Principal Deputy Chairman of Committees: My Lords, clear the Bar.
5.12 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
*Their Lordships divided: Contents, 20; Not-Contents, 91.
Ailsa, M.
Berners, B.
Braine of Wheatley, L.
Campbell of Alloway, L.
Courtown, E. [Teller.]
Dixon-Smith, L.
Erne, E.
Fraser of Carmyllie, L.
Holderness, L.
Howell of Guildford, L.
Kingsland, L. [Teller.]
Merrivale, L.
Monson, L.
Montgomery of Alamein, V.
Munster, E.
Murton of Lindisfarne, L.
Orr-Ewing, L.
Pilkington of Oxenford, L.
Rawlings, B.
Swansea, L.
Teviot, L.
Trenchard, V.
Acton, L.
Addington, L.
Alderdice, L.
Amos, B.
Archer of Sandwell, L.
Ashley of Stoke, L.
Berkeley, L.
Blackstone, B.
Blyth, L.
Borrie, L.
Burlison, L.
Carter, L. [Teller.]
Cocks of Hartcliffe, L.
Currie of Marylebone, L.
David, B.
Davies of Coity, L.
Desai, L.
Dholakia, L.
Donoughue, L.
Dormand of Easington, L.
Dubs, L.
Eatwell, L.
Elis-Thomas, L.
Ezra, L.
Farrington of Ribbleton, B.
Gallacher, L.
Gilbert, L.
Gladwin of Clee, L.
Gordon of Strathblane, L.
Gould of Potternewton, B.
Hanworth, V.
Haskel, L.
Hayman, B.
Hilton of Eggardon, B.
Howie of Troon, L.
Hoyle, L.
Hughes, L.
Hunt of Kings Heath, L.
Irvine of Lairg, L. [Lord Chancellor.]
Jacobs, L.
Janner of Braunstone, L.
Jeger, B.
Jenkins of Putney, L.
Judd, L.
Kennedy of The Shaws, B.
Kilbracken, L.
Linklater of Butterstone, B.
Longford, E.
Lovell-Davis, L.
Ludford, B.
McIntosh of Haringey, L. [Teller.]
McNally, L.
Mallalieu, B.
Merlyn-Rees, L.
Milner of Leeds, L.
Molloy, L.
Monkswell, L.
Montague of Oxford, L.
Nicholson of Winterbourne, B.
Nicol, B.
Peston, L.
Pitkeathley, B.
Ponsonby of Shulbrede, L.
Prys-Davies, L.
Puttnam, L.
Ramsay of Cartvale, B.
Rea, L.
Redesdale, L.
Rendell of Babergh, B.
Richard, L. [Lord Privy Seal.]
Rodgers of Quarry Bank, L.
Simon of Highbury, L.
Stallard, L.
Steel of Aikwood, L.
Stoddart of Swindon, L.
Stone of Blackheath, L.
Strabolgi, L.
Symons of Vernham Dean, B.
Thomas of Macclesfield, L.
Thomas of Walliswood, B.
Thomson of Monifieth, L.
Tope, L.
Tordoff, L.
Turner of Camden, B.
Walker of Doncaster, L.
Watson of Invergowrie, L.
Wedderburn of Charlton, L.
Whitty, L.
Williams of Crosby, B.
Williams of Elvel, L.
Williams of Mostyn, L.
Young of Old Scone, B.
*See Col. 1366.
Resolved in the negative, and amendment disagreed to accordingly.
5.21 p.m.
Lord Kingsland moved Amendment No. 3:
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