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Lord Fraser of Carmyllie moved Amendment No. 40:
The noble and learned Lord said: My Lords, this amendment and Amendment No. 41 relate to issues of confidentiality and immunity from defamation. They propose the deletion of subsections (5) and (6) and suggest an express provision which states:
The concern behind the amendments is that the Bill as framed allows the information to be passed on to a large number of other authorities. We recognise that there is a need for that. However, the concern is that the power could be used to allow the exchange of confidential information between the UK competition authority and a foreign competition authority, and--dare I say it?--in the spirit of friendship, to Washington and the United States of America for whom I have the highest regard. The Minister will be well aware that, in regulatory and competition matters, if in other areas an unacceptable degree of extraterritoriality has been exercised, in this sphere the appetite for extension of power is almost limitless.
It is possible that the Minister can give a simple assurance that the powers allowed under the Bill would not extend to allowing disclosure of information in the circumstances I have outlined. However, with his extensive knowledge of matters both industrial and commercial, I am sure that the Minister will appreciate that there is a very real concern that there should not be a kind of disclosure at large. Indeed, that could cause huge damage and might involve all manner of British companies in ranges of actions or huge requirements for justification of their actions which, in other
Lord Simon of Highbury: My Lords, we debated the important issue of confidentiality at great length both in Committee and on Report. I shall speak briefly to Amendment No. 40. As I explained on Report, subsections (5) and (6) of Clause 55 enable the Secretary of State to specify additional persons and purposes to whom, and for which, disclosure is to be permitted. That power is exercisable by order subject to annulment by either House. The purpose of this power is to ensure that there is sufficient flexibility in the Bill to respond to developments in regulatory and competition policy without need for fresh primary legislation.
The noble and learned Lord, Lord Fraser, asked specifically about disclosure to foreign competition authorities. I wish to make it clear that the power was not designed for this purpose and the Government's view is that the powers conferred by this provision would not enable a foreign competition authority to be designated as a person to whom a disclosure could be made. I am grateful for the opportunity to clarify that point. Under those circumstances, I hope that the noble and learned Lord will withdraw the amendment.
Lord Fraser of Carmyllie: My Lords, that was a short but extremely satisfactory answer. That is exactly the concern we had. I express my thanks to the Minister. With the reassurance he has given, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 42 and 43 not moved.]
Clause 60 [Principles to be applied in determining questions]:
Lord Kingsland moved Amendment No. 44:
Page 28, line 43, leave out subsections (5) and (6).
"Information disclosed pursuant to subsection (3) or (5) is subject to an obligation of confidentiality and shall not be disclosed by the recipient".
Leave out Clause 60 and insert the following new Clause--
(" .--(1) Subject to subsection (2)--
(a) a person exercising functions under this Part in relation to a matter; or
(b) the court in determining a question arising under this Part in relation to a matter,
shall ensure that the matter is dealt with and determined in the same manner as the European Court or the Commission would deal with and determine that matter in accordance with Title V of the Treaty, if that matter affected trade between Member States.
(2) The Secretary of State may by order provide that subsection (1) shall not apply to any provision of this Act where he is satisfied that it is necessary to do so.
(3) Any order under subsection (2) shall be made by statutory instrument which shall be laid in draft before Parliament for approval by resolution of each House.
(4) In subsection (1) "court" means any court or tribunal.").
The noble Lord said: My Lords, Amendment No. 44 seeks to leave out Clause 60, which used to be Clause 58--we all became used to calling it Clause 58 so it is now rather strange to have to call it Clause 60--and replace it with this concise but at the same time comprehensive amendment, which does everything the Government's clause does but in half the space. However, I suspect that the Minister will not agree with that judgment.
The purpose of the amendment is to clarify a number of issues that have been in doubt about the extent to which the law of the European Community governs the clauses of the Bill. The confusion has arisen for two reasons. First, there are some places in the Bill where the Government have quite deliberately decided to stray from the path taken by the European institutions. In those areas where the Government have made that expressly the case, there has been no problem. But there are many other areas where it seems by implication to be the case but is not absolutely clear.
The second problem is that it is not clear on the face of the Government's text to what extent it extends beyond the substantive law to the procedural and remedial law. Leaving that question uncertain is damaging. It is unnecessary to leave it uncertain. In any case, the Government are going to be hedged about as a consequence of the incorporation of the European Convention on Human Rights, whose standards, if anything, will prove more demanding than those of the European Court of Justice. The Government have every interest in getting this matter as right as they can before the Bill becomes an Act of Parliament.
What the amendment does, in, I suggest, a very helpful way for the Minister, is to state clearly what aspects of European Community law apply. That is done in subsection (1). Subsection (2) gives the Secretary of State a complete way out by enabling him, by order, to say that subsection (1) shall not apply to any provision of this Act where he is satisfied that it is necessary to so provide. The approach is not dissimilar, I recognise, from the one adopted in Amendment No. 39, where the reserve powers of the Director General of Fair Trading are set out, subject to the discretion of the Secretary of State, to add to them or vary them. Here, the effect of European Community law--substantive, procedural and remedial--is crystal clear under subsection (1); but under subsection (2) the Secretary of State in any particular case, either all at once at the beginning or at some stage later on, can resile from that position. That is an infinitely better approach than the one laid down in the Bill.
I accept that this approach was not taken on day one. This approach has evolved as the Minister has reacted to our amendments. We have incorporated the Minister's concerns in our amendments. By this process of successive approximation I hope that we have now arrived at an amendment which the Minister can accept. I beg to move.
Lord Fraser of Carmyllie: My Lords, before the Minister responds, he will appreciate that my name is also attached to the amendment. Whether or not the amendment is in precisely the right form is, in a sense,
Lord Simon of Highbury: My Lords, I am pleased that we have the opportunity to debate the governing principles clause. It is an important clause and the amendment gives me the opportunity to respond to the questions raised by the noble Lord, Lord Kingsland, and the noble and learned Lord, Lord Fraser. It may be helpful if I explain how the governing principles clause is to operate.
Perhaps I may deal, first, with what is imported under the clause. The noble and learned Lord, Lord Fraser, raised at Report a particular query on the extent to which EC procedural safeguards are imported. The primary purpose of the governing principles clause is to secure that, subject to single market considerations, the prohibitions apply to business in the same way under the Bill as under the EC Treaty. As far as possible, we want to achieve a seamless web so that agreements and practices which are prohibited under one regime are prohibited under the other and those that are permitted are permitted under both. The EC prohibitions are propositions of law which, over time, have acquired an internal dynamic in the Community system, in exactly the same way as purely domestic law propositions do in our own system. It is therefore not just a question of borrowing definitions. It is the propositions of law as a whole that we want to mirror.
The same considerations do not apply to purely procedural matters. Different procedural arrangements can apply for consideration of the same substantive issues. There is a strong argument of convenience, in terms of minimising burdens, for keeping in line wherever it makes sense to do so, but it is an argument of practicality rather than legal substance.
However, it is not always possible completely to separate substance and procedure. Issues such as the margin of discretion and what is to be treated as a question of fact rather than law fall on the borderline between them and involve elements of both. The very fact that Articles 85 and 86 now have an internal dynamic means that they have to be understood in the context of the general principles which apply to them as part of Community law. These, which one might call high level principles, may impinge on the meaning and effect of the prohibitions as a question of law. They range from the principle of legal certainty, which carries with it the proposition that contracts should not lightly be set aside, to the principle of fairness in administrative action. They can perhaps best be summarised as the necessary underpinning of the rule of law and, in this context, law means the whole system of Community law.
For this reason, we did not feel that it was right to attempt to confine the effect of Clause 60 to issues relating purely to the meaning of Articles 85 and 86 in isolation.
As I have said, purely procedural rules are not at all the same thing. The EC Commission could change its procedure, and has done, without affecting the substance of Articles 85 and 86. Different procedures apply in different sectors. It is true that some procedures, for example "Access to the File", are derived from ECJ/CFI judgments drawing on the high level principles, but these judgments were given in the context of the particular procedures adopted by the Commission. This is shown by the fact that they are not applied in the same way in other areas of Community administrative action. The same will be true of the director's rules.
At the Community level, much of the detailed procedure for the administration of the EC prohibition system is set out in Commission or Council regulations. The governing principles clause will not import any of these detailed procedures. This is especially so since the Commission is made up of a college of Commissioners and many of its procedures would simply not be appropriate for the director.
The Bill provides that the detailed procedure for the administration of the domestic system is to be set out in the director's rules. Clause 51 sets out the procedure for making the director's rules. These are the rules to which business will look to find out how the detail of the administration of the prohibition system will operate. In practice of course many of the detailed procedures adopted by the director may be very similar to the procedure set out in EC regulations. Parliament of course will also have the opportunity to object to the rules since they cannot come into operation until made by order.
There is some precedent for our approach. The noble Lord may have recognised that the wording of Clause 60 reflects, to some extent, the wording of Section 3(1) of the European Communities Act. In particular, there is the reference to determining questions in accordance with the principles laid down by and any relevant decision of the European Court of Justice and court of first instance. It is this which causes our courts to follow Community law when applying Article 85. Member states retain responsibility for applying Article 85 in the field of aviation transport beyond the Community frontier. However, nobody would suggest that it meant that the procedures which have been adopted by the UK authorities for the application of Article 85 had to be the same as the ones adopted by the Commission in those fields where it is they who have power to apply Article 85.
I hope the noble Lord will see from my explanation that we have given serious and detailed consideration to the suggestion that we should seek to ensure that European jurisprudence on procedural matters does not apply under Clause 60. This is the approach which the noble and learned Lord, Lord Fraser, indicated in debate on 23rd February (Hansard col. 517) that he hoped we would confirm. As I have said, in certain respects, procedural and substantive aspects of Community law are closely inter-related and in fact would be very difficult to separate. Any attempt to make such a separation could create greater uncertainty. The approach in Clause 60
I turn briefly to divergences from the EC system. As for the question of divergences, we are not importing it "lock, stock and barrel". Divergences are possible in three respects. First, I have just explained that the director will be setting out his own rules for the detailed procedural administration of the new prohibition system. Secondly, it is apparent from the face of the Bill where we have departed. A wider exclusion for mergers than exists under EC law is but one example. We have also previously debated the Government's position on penalties and interim measures. Thirdly, I explained at Committee that single market objectives would not be relevant to the domestic prohibition system.
We have debated these issues before and therefore I do not want to discuss them in any detail or pursue the issue of all the procedural approaches that are separate from the import of the high principle through Clause 60. However, I would be happy to write further on this subject to the noble Lord outlining our thinking in this area.
In conclusion, I believe that the governing principles clause will operate well in practice. However, I agree that it is important for business that the clause is made as certain as possible. I take very seriously the comments that the clarity of provisions, especially critical provisions such as the governing principles clause, could be improved. The department will have further dicussions with the CBI as the Bill progresses through the parliamentary process. If a suggestion is made which would improve the operation of the Bill we will make every effort to secure that improvement. However, for the reasons I have explained, I am not persuaded that the governing principles clause as drafted needs to be changed. With those general reflections I hope that the noble Lord will be prepared to withdraw the amendment.
8 p.m.
Lord Kingsland: My Lords, despite the attachment I have to the text of the amendment, I appreciate the full and thoughtful way in which the Minister has reacted to the amendment. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
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