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Lord McIntosh of Haringey moved Amendment No. 94:



"(2) Section 47A applies to claims arising before the commencement of this section as it applies to claims arising after that time."

On Question, amendment agreed to.

Clause 17, as amended, agreed to.

Clause 18 [Claims on behalf of consumers]:

Lord McIntosh of Haringey moved Amendment No. 95:


    Page 8, line 42, leave out from beginning to end of line 9 on page 9 and insert—


"(1) A specified body may (subject to the provisions of this Act and Tribunal rules) bring proceedings before the Tribunal which comprise consumer claims made or continued on behalf of at least two individuals.
(2) In this section "consumer claim" means a claim to which section 47A applies which an individual has in respect of an infringement affecting (directly or indirectly) goods or services to which subsection (6) applies.
(3) A consumer claim may be included in proceedings under this section if it is—
(a) a claim made in the proceedings on behalf of the individual concerned by the specified body; or
(b) a claim made by the individual concerned under section 47A which is continued in the proceedings on his behalf by the specified body;
and such a claim may only be made or continued in the proceedings with the consent of the individual concerned.
(4) The consumer claims included in proceedings under this section must all relate to the same infringement.
(5) The provisions of section 47A(4) to (9) apply to a consumer claim included in proceedings under this section as they apply to a claim made in proceedings under that section.
(5A) Any damages or other sum (not being costs or expenses) awarded in respect of a consumer claim included in proceedings under this section must be awarded to the individual concerned; but the Tribunal may, with the consent of the specified body and the individual, order that the sum awarded must be paid to the specified body (acting on behalf of the individual)."

On Question, amendment agreed to.

[Amendments Nos. 96 to 102 not moved.]

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The Deputy Chairman of Committees (Viscount Allenby of Megiddo): For the information of the Committee, Amendments Nos. 96 to 101 are pre-empted by virtue of the fact that Amendment No. 95 has been agreed to.

Lord Kingsland: I apologise to the Committee. Because I was taken completely unawares by the fact that three or four lines had been pre-empted, as has been said, I shall simply not oppose the Question that Clause 18 shall stand part of the Bill.

Clause 18, as amended, agreed to.

Clause 19 [Findings of infringements]:

Lord McIntosh of Haringey moved Amendment No. 103:


    Page 9, line 35, leave out "for damages" and insert "in which damages or any other sum of money is claimed"

The noble Lord said: This amendment is consequential on the redraft of Clause 17. It merely makes allowances for any proceeding where the claim is for a monetary remedy other than damages. So a claim might be brought for the restitution of profits unlawfully made by the infringing company, as well as in respect of loss caused to the injured party. I beg to move.

On Question, amendment agreed to.

Lord Kingsland moved Amendment No. 104:


    Page 10, line 4, after "OFT" insert "or the European Commission"

The noble Lord said: In moving this amendment, I shall speak also to the other amendments in the group.

As presently drafted, the new Section 58A would not operate to make a decision of the European Commission that there had been an infringement of Article 81(1) or Article 82 binding upon a national court in proceedings before it for damages. This is anomalous given that findings by the OFT in respect of precisely the same infringement would be binding upon a national court in these circumstances.

There would appear to be no justification whatsoever for the distinction drawn between decisions of the OFT and decisions of the European Commission in this respect. Both the European Court of Justice and the English High Court have recognised that decisions of the European Commission should generally be followed by national courts. Indeed, as a matter of English law, a national court is now bound to uphold a finding of the European Commission that there has been a breach of Article 81(1) or Article 82.

It is submitted that the fact that the common law achieves a similar result to that which would be achieved by the proposed amendment does not make the proposed amendment redundant. The common law must be applied to the facts of each individual case by the courts. Defendants will, of course, attempt to take advantage of a variety of technical legal arguments to escape the conclusion that any particular decision of the European Commission is binding.

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Requiring claimants to rely upon a developing body of case law rather than a clear legislative pronouncement introduces an additional element of uncertainty into any private action for damages. The proposed amendment would put the matter beyond all doubt and would encourage and facilitate private actions in national courts following a finding of infringement by the European Commission. I beg to move.

Lord McIntosh of Haringey: I hope that I can readily put the noble Lord's mind at rest.

Amendment No. 104 is unnecessary, as Article 81 and Article 82 decisions taken by the European Commission are already binding on UK courts by virtue of European law. I rely on the judgment of the European Court of Justice in the Masterfoods case, which is referred to in paragraph 82 of the Explanatory Notes (ECJ Case C-344/98 Masterfoods v HB Ice Cream, at paragraphs 45 to 60 of the judgment).

Indeed, Amendment No. 105 provides an illustration of the confusion that can arise if an attempt is made to codify in a statutory provision in our law the position under European law. A decision of the European Commission has binding effects on the national courts, notwithstanding that it may be the subject of proceedings before the European Court of Justice or the court of first instance. However, it would no doubt normally be sensible for the national court to stay its proceedings pending the outcome of the European proceedings, or alternatively to make a preliminary reference itself to the European Court. The amendment proposed would be an inaccurate summary of the position under European law, since it might suggest that the Commission's decision was without legal effect before the European proceedings had been determined.

Amendments Nos. 106 and 107 are consequential on Amendments Nos. 104 and 105.

Lord Kingsland: I am most grateful to the Minister. I shall go away and look at the case. If it does indeed illustrate the point that he makes, I shall happily allow the matter to rest there. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 105 to 107 not moved.]

Clause 19, as amended, agreed to.

Clause 20 agreed to.

Schedule 5 [Proceedings under Part 1 of the 1998 Act]:

Lord McIntosh of Haringey moved Amendment No. 108:


    Page 205, leave out line 20 and insert "or other sum in respect of a claim made in proceedings under section 47A, or included in proceedings under section 47B (other than a decision on costs or expenses) or the amount of any such damages or other sum; and"

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The noble Lord said: Amendment No. 108 is a consequential amendment that is required as a result of the redrafting of Clauses 17 and 18. The amendment ensures that any sums awarded in claims under Section 47A, or in claims included in group consumer claims under Section 47B, may be the subject of an appeal to the Court of Appeal or to the Court of Session in Scotland. I beg to move.

On Question, amendment agreed to.

Schedule 5, as amended, agreed to.

Clause 21 [Duty to make references in relation to completed mergers]:

Lord Kingsland moved Amendment No. 109:


    Page 10, line 35, leave out "shall" and insert "may at its discretion"

The noble Lord said: The purpose of this amendment is to give the OFT a discretion rather than leave it under an obligation to make a reference to the Competition Commission in relation to both completed and anticipated mergers.

The Bill introduces a significant change of emphasis. Under the Fair Trading Act, the Secretary of State had discretion whether or not to refer mergers, acting on the advice of the Director-General of Fair Trading, whose advice, since October 2000, has always been accepted. The formulation proposed in Clauses 21 and 32 requires a reference to be made in the case of completed mergers and proposed mergers except in certain limited circumstances. The Minister in another place stated that there were no other circumstances in which a reference need not be made.

In practice, the clause will lead to a situation of almost obligatory pre-clearance for all mergers. Although many parties do that now, it is at their discretion. On Report, the Minister stated that those who raised such concerns seemed to be ignoring the fact that the OFT would apply a competition test. The Minister said that only cases that could lead to a substantial lessening of competition would be referred.

However, until we have a track record of the OFT applying the "substantial lessening of competition" test, it is very likely that in practical terms the parties will regard the absence of any discretion as a reason for seeking clearances in more cases than under the present regime. Moreover, in the case of joint ventures, the substitution of a 45 million turnover test for the 70 million assets test will mean that potentially many more joint ventures will now come within merger control.

There was no consultation on this change of policy. It was not mentioned in the White Paper. No reason has been given for the Minister's assertion that the new emphasis would not result in a greater number of references. I beg to move.

6 p.m.

Lord Borrie: I wonder whether the noble Lord, Lord Kingsland, is right in saying that there is no justification for the Minister's assertion in the other place that the new formula would not result in the

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reference to the Competition Commission of a greater number of mergers. He is of course aware that Clause 21(2) makes it clear that the OFT may not make a reference if it believes that,


    "the market concerned is not . . . of sufficient importance",

or if there are relevant customer benefits that,


    "outweigh the substantial lessening of competition",

that would arise from the merger. That cuts down the number of mergers where the duty of the OFT to make references to the Competition Commission arises.

I shall not debate the points that we shall no doubt discuss under the next amendment of the noble Lord, Lord Kingsland, but the key provision is based on the substantial lessening of competition. In legal terms, the noble Lord is correct in saying that there is no track record, because it is a new statutory test. In the past there was no statutory test other than the broad one on public interest; and several criteria, of which competition was one.

But to say that there is no track record is a wrong inference. The record shows the test's existence not only since the Competition Act 1998, or the year 2000 to which the noble Lord referred, but for at least the past couple of decades since the famous Tebbit test was announced whereby mergers would—save in exceptional circumstances—be referred to the Competition Commission only where there was a significant likelihood of a reduction in competition. It may not have been a statutory test, but it has been the test applied by both the Office of Fair Trading and Ministers, who are still involved until the Bill becomes law. The concern of the noble Lord, Lord Kingsland, does not seem justified.


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