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Lord Simon of Highbury: My Lords, we discussed a similar amendment on Report. I said then that, in circumstances where the director has given directions involving some managerial or administrative action to be taken by officers of an undertaking and the director has had to obtain a court order because they have wilfully failed to take that action, we think it right that they should be liable for the costs of remedying their default. That is the position that we debated on Report and that is the position that we now wish to state again. I would ask the noble and learned Lord to consider withdrawing his amendment.
Lord Fraser of Carmyllie: My Lords, I have listened to what the noble Lord has to say. He will not be surprised if I express my disappointment, but I beg leave to withdraw.
Amendment, by leave, withdrawn.
Lord Kingsland moved Amendment No. 25:
The noble Lord said: My Lords, Clause 36 gives the Director-General of Fair Trading an immense power by allowing him to issue interim measures. That is particularly true when one considers that he is not acting in a judicial capacity. In my submission, therefore, we ought at least to subject him to the same principles of control as are applied by a judge when issuing an interim injunction in the High Court. That is the purpose of my amendment which I beg to move.
Lord Simon of Highbury: My Lords, we have discussed amendments on interim measures before. We are determined that interim measures should provide a way of tackling anti-competitive behaviour quickly before serious damage has been inflicted. We believe that that has been the great failing of our current system. Indeed my noble friend Lord Borrie made that point previously.
This amendment would shift the balance too far in one direction, making it difficult for the director to act in cases where we believe he ought to be able to act. There are already adequate safeguards in the clause as it stands. They are intended to ensure that the director hears the views of the alleged offender and will have to take into account any representations that are made to him about the harm that the offender says the measures will cause him when considering whether to take measures to protect the victim.
I believe that the noble Lord underestimates these safeguards. The director must have a reasonable suspicion that infringement of either prohibitions has taken place. He must consider it necessary for him to act:
The directions must be such as are reasonably necessary to deal with the matters in question. These safeguards, as I have tried to read them in an italicised sense in the clause, are very significant. We also think that they are appropriate. I therefore would invite the noble Lord to withdraw his amendment.
Lord Kingsland: My Lords, in a court of law when there is an award of an interim injunction you have to
Lord Simon of Highbury: My Lords, I am not prepared to respond to the position in which we would put the director-general. I have clearly stated that we believe the safeguards to be appropriate and significant. We must also wait for the rules which the director-general will be publishing on the issue of interim measures. As your Lordships will have seen from the letter placed in the Library, it is one of the areas in respect of which he must lay down rules. Therefore, I am not prepared to make any further commitments until we have considered the matter again.
Lord Kingsland: My Lords, in view of that interesting reply, will the Minister undertake to draw the attention of the director-general to this part of the debate so that the director-general can give due consideration to introducing such an undertaking in damages to benefit an enterprise which is under investigation as the subject of an interim measure?
Lord Simon of Highbury: My Lords, as I have said, I am making no further commitments at this stage. However, I am certain that after the debate the director-general will read Hansard very carefully.
Lord Kingsland: My Lords, that is some consolation. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 37 [Penalty for infringing Chapter I or Chapter II prohibition]:
Lord Fraser of Carmyllie moved Amendment No. 26:
The noble and learned Lord said: My Lords, I rise with some weariness to address the amendment. Earlier during Third Reading, I suggested that in view of the Minister's apparent agreement with the purpose of the amendments which we previously moved he might agree to these amendments. However, he appears to be content that the debate is recorded in Hansard. I imagine that I shall receive the same dusty answer in relation to this amendment.
During previous debates on the issue of penalties, the turnover of the offending business and how that is to be defined or restricted, the Minister has taken the view that those issues are sufficiently clear. I still regard that to be a somewhat cavalier approach. I am not clear what
It could mean that some penalties will be disproportionately large or that the companies which might be confronted with such penalties will be left with a greater degree of uncertainty. I should prefer to see the provision on the face of the Bill and I hope that, after at least three exchanges on the subject, the Minister is moving closer to my argument. I hope that he is prepared to accept the amendment because, as I looked back in Hansard, he did not appear to disagree with the Opposition that some limitation should be achieved in determining the level of penalty. I beg to move.
Lord Simon of Highbury: My Lords, for reasons that I shall explain, I wish that the noble and learned Lord had spoken to his Amendment No. 27. I shall deal, first, with Amendment No. 26. As he rightly said, we have discussed the matter previously. In case I failed to do so, I should like to make the Government's position on the definition of turnover for the imposition of a penalty as clear as I can.
It is the Government's firm and unambiguous policy that when we come to make the order specifying how turnover is to be defined, we shall confine it to turnover which arises in the UK. I therefore entirely concede the substance of this aspect of the noble and learned Lord's concerns and I hope that he will not question further my position on this matter. However, it is also, and has always been, our clear policy that these are not matters to be specified in the primary legislation. They should be provided in secondary legislation.
The other manner in which the noble and learned Lord seeks to restrict the definition of turnover is by confining it to "the relevant goods and services". As I said on Report, I do see the argument for that and it is something which we can consider. However, there are other points to take into account. A very large undertaking might have a dominant position in a small market which it abuses to the detriment of small competitors. In that case it might not be right that the penalty should be limited to the turnover of the company in that market, and not reflect wider considerations; for example, the size and sophistication of the undertaking committing the abuse. It is precisely because of detailed points like this that we believe the matter should be dealt with by secondary legislation and we should consult interested parties first.
Nevertheless, we do recognise the particular sensitivity of the scale of any penalty that may be imposed under the Bill. That is why the Bill provides that no order specifying how turnover is to be determined may be made unless a draft of it has been laid before Parliament and approved by a resolution of each House. Your Lordships will therefore have an opportunity to consider and discuss the detailed provisions we will propose, after consultation, for
Turning to Amendment No. 27, I believe that the director should issue guidance on the criteria to be applied in deciding whether to impose a penalty, as well as on setting the appropriate amount of any penalty. As I told the House on Report, I am assured by the Office of Fair Trading that it intends to issue such guidance.
Our policy is that Clause 39 guidance should be capable of including the principle that, as under Community law, penalties should be applied only where there has been intent or negligence in breaching the prohibitions, and that the director, tribunal and court should be required to have regard to it. Since the discussion on Report, however, I have received further advice on this matter. I suggested then (19th February, col. 360) that no amendment of the Bill was necessary. I am now advised that the clause may well not have the effect intended and that an amendment may indeed be necessary. I am sorry if I have inadvertently misled your Lordships' House.
To put this right, the clause will clearly need to be reviewed in another place. On that basis, I hope that the noble and learned Lord, will kindly withdraw his Amendment No. 27.
Page 18, line 28, leave out from ("person,") to end of line 30 and insert ("and
(b) of protecting competition,
he may give such directions as are requisite for the purpose.
(2A) In determining whether to give directions in accordance with subsection (2) the Director shall have regard to--
(a) the seriousness of the alleged infringement;
(b) the likelihood that the infringement will be established at the completion of his investigation;
(c) whether the imposition of a fine under this Act or an award of damages would provide an adequate remedy for that alleged infringement; and
(d) the balance of convenience in giving or not giving such directions.").
"as a matter of urgency for the purpose--
(a) of preventing serious, irreparable damage to a particular person or a category of person, or
(b) of protecting the public interest".
6.30 p.m.
Page 19, line 21, leave out from ("undertaking") to end of line 22 and insert ("in the United Kingdom in the relevant goods or services").
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