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The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendment No. 14. The amendment relates to the rights of third parties to bring an action under one or other of the prohibitions. In Clause 48, there is a right for a third party to bring an action in circumstances where that third party wishes to "vary a decision" taken by the director-general. However, there is no other third party right on the face of the Bill.
In Committee, I believe the Minister expressed the view that he thought that third parties did have rights to bring actions under the prohibitions in the legislation. Under European Community law, it is clear that these rights exist under Articles 85 and 86 of the treaty because both those articles are directly applicable. That fact, together with the doctrine of effective remedies, has meant that British courts have been prepared to express those rights through the tort of breach of statutory duty. Therefore, the amendments seek to accord the same rights to our citizens under the relevant clauses in the Bill. In my submission, it is a very important point to clarify. If the Minister believes that this ought to be the case anyway, I do not see how he could possibly have an objection to these two amendments.
One of the interesting things that has been happening in the European Community is the increasing desire of the Commission to see a greater number of cases under its own competition law being taken and pursued not by the Commission but by individuals in member states. I suggest that it is preferable for competition issues to be pursued by the least bureaucratic means possible; in other words, third party actions by individuals, taking advantage of these prohibitions, is a desirable alternative to seeing the British prohibitions (and alleged wrongs under them) pursued either by the Director-General of Fair Trading or by the regulator. That is the basis upon which my two amendments have been tabled. I beg to move.
Lord Borrie: My Lords, I feel sure that my noble friend the Minister will agree that it is most important that third party rights are not only available but also that they are widely known to be so. It would be most unfortunate if complainants against the prohibited conduct of cartels or anti-competitive practices should have only one choice; namely, to go through the nominated official, the Director-General of Fair Trading.
I have always thought, as I am sure is the case with my noble friend the Minister, that one of the great advantages of the changes being made in this Bill by the Government is to enable businesses, individually if they so wish, to attack the anti-competitive practices of others and to do that in their own name, quite irrespective of the duties and responsibilities of the director-general.
The amendment seeks to make that right explicit on the face of the Bill. At first sight, that certainly seems to have many advantages. If the response of my noble friend to the amendment is that it is unnecessary because such private rights of action are clearly incorporated into the Bill through what is now Clause 60 (the general principles clause which incorporates the European jurisprudence), that is fine as far as concerns the substantive matter of their being third party rights. However, I have two questions for my noble friend. First, is there any good reason why this should not be made explicit, if only for educative purposes? Secondly, if there are reasons against making it explicit in the Bill, what recommendations does my noble friend have for the director-general, or his own department, to ensure that the availability of private rights of action, and all that that involves, is widely known throughout the business community?
Lord Simon of Highbury: My Lords, as my noble friend Lord Haskel explained on Report, rights of action under the domestic regime are to be the same as those under Articles 85 and 86. The courts have held that a right of action exists for breach of the EC prohibitions. The same right of action will exist for breach of the UK prohibitions. Clause 58, regarding the use of findings of fact made by the director, clearly contemplates such rights of action.
We do not want to go wider or narrower than the rights which exist for breach of the EC prohibitions. We believe that the best way to achieve this result is for the Bill to remain silent on the issue of private rights of action. Perhaps I may explain our reasoning. It is clear that Community law confers rights arising from a breach of Articles 85 and 86. This is a "principle" laid down by the European Court of Justice within the meaning of subsection (2) of the governing principles clause which will be imported into the domestic system, as implied by my noble friend Lord Borrie.
However, Community law is still in the process of development, for example, in terms of the class of persons able to claim such rights. If, say, a company with a wide consumer base were to breach the EC prohibitions, could it be said that all the consumers affected directly or indirectly had Community rights arising from the breach? Such a question is yet to be resolved.
An express right of action for breach of the prohibitions would need to provide answers to these unresolved EC questions. That, in turn, could lead to a divergence between rights of private action under European Community and UK competition law. We would not want a situation where the extent of rights of private action depended on whether the agreement affected trade between member states, often a difficult line to draw. Leaving the Bill as drafted will ensure that our courts can evolve third party rights of action as they evolve in the context of Articles 85 and 86.
As regards damages and injunctions, the consequences of breaching Community rights is left to national law, provided that the remedy meets a
It is already well established under UK law that private parties may seek an injunction for breach of EC competition law. Clause 58, relating to the use of findings of fact by the director in court proceedings, clearly contemplates such private rights of action for breach of the domestic prohibition. Rights to seek injunctions will therefore be available for breach of the domestic prohibitions.
Equally it is generally recognised under UK law that breach of the EC prohibitions may entitle third parties suffering loss as a result of the breach to claim damages. The majority of this House, by four to one, in the Garden Cottage Foods case stated obiter that such entitlement did exist. This ruling has generally been taken as authoritative, including by authors of leading textbooks in this field. In the light of this explanation I invite the noble Lord to withdraw his amendment.
Lord Kingsland: My Lords, I am much obliged to the Minister for that helpful response. I understood him to say that, as a consequence of his interpretation of what is now Clause 60 of the Bill, it is crystal clear that the courts of this country will derive from that private rights of action for breach of statutory duty and the array of defences that also go with that for a defendant in such cases. On that basis I am happy to withdraw the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McNally moved Amendment No. 4:
Page 2, line 25, at end insert--
("( ) Any infringement of the Chapter I prohibition is actionable by any person who may be affected by that infringement, subject to any defences under this Act and to the defences and other incidents applying to actions for breach of statutory duty.").
5.30 p.m.
After Clause 2, insert the following new clause--
(" .--(1) The Chapter I prohibition applies to agreements for the supply of goods where the supplier has reasonable grounds to believe that the purchaser intends to use the goods as loss leaders.
(2) In this section the "use of goods as loss leaders" means a sale of goods to consumers not for the purpose of making a profit but for the purpose of attracting to the establishment at which the goods are sold consumers likely to buy other goods or otherwise for the purpose of advertising the business of the person selling those goods.
(3) A sale of goods shall not be treated for the purposes of this section as the use of those goods as a loss leader where the goods are sold as part of a genuine seasonal or clearance sale, not having been acquired for the purpose of being resold as loss leaders.").
The noble Lord said: My Lords, as I explained when I moved an earlier amendment, I am quite consciously raising issues where Ministers have an opportunity to respond to real concerns from various sectors of industry. I have tabled this amendment as I have been lobbied by small shopkeepers and particularly independent newsagents. Their concern is that the current Bill has nothing to say specifically about loss leaders and the dumping of products in the market-place. Loss leaders and the dumping of products are significant commercial weapons. They are
Clearly we must not impede ordinary commercial activity, especially regular clearances or sales. Thus the amendment provides a specific exemption for goods which are genuinely sold at a reduced price as part of a sale. The Minister may have alternative proposals to that expressed in this amendment. There is clear evidence that small businesses may be vulnerable to loss leaders. I am sure that they, I and the House will be interested in the Minister's observations. I beg to move.
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