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Lord Sainsbury of Turville: I do not think it is a question of analysis; it is a question of to what extent you value the comparators that the regulator has. If you are prepared to see those comparators disappear—which has an effect on all consumer of water, because there is no longer the pressure on particular water companies—you can set any benefits against that. We believe that this has sufficient importance in driving up the performance that the benefits have to be more than just marginally greater; they have to be substantially greater.

Lord Borrie: I am grateful to the noble Lord, Lord Hunt, for his intervention. It may encourage the Government to rethink these matters. I have no doubt that over the decade since privatisation the word

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"substantially" has been right. No one is suggesting at the present time that the comparator competition regime should disappear. But the regulator, Ofwat, has a curious reluctance to indicate how many water companies he needs in order to make these comparisons. It is well known that there are only 10 sewerage companies; there have never been any more since privatisation. Yet comparisons are made between them in order to provide price limits and so on. A larger number—19, as the Minister indicated—are water supply companies. It may be that at the present time it is difficult for the Competition Commission to justify a merger on the basis of having to find substantial benefits to the consumer which would outweigh the loss of a particular comparator.

It would be better if the Government would reconsider the matter and allow the Competition Commission rather more leeway, as with other mergers. However, in the light of what has been said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 134 not moved.]

Schedule 6 agreed to.

Clauses 68 to 74 agreed to.

Clause 75 [Restrictions on certain share dealings: anticipated mergers]:

Lord Sainsbury of Turville moved Amendments Nos. 135 and 136:


    Page 55, line 6, leave out "68 or".


    Page 55, line 7, leave out "69 or".

On Question, amendments agreed to.

Clause 75, as amended, agreed to.

Clauses 76 to 78 agreed to.

Clause 79 [Final undertakings]:

Lord Sainsbury of Turville moved Amendments Nos. 137 and 138:


    Page 59, line 12, leave out "that reference" and insert "the subject-matter of the undertaking".


    Page 59, line 14, leave out ", 80 or" and insert "or 80 in relation to the subject-matter of the undertaking; or


(b) section"

On Question, amendments agreed to.

Clause 79, as amended, agreed to.

Clauses 80 to 82 agreed to.

Schedule 7 [Enforcement regime for public interest and special public interest cases]:

Lord Sainsbury of Turville moved Amendments Nos. 139 to 141:


    Page 219, line 11, leave out ", 10 or 11" and insert "or 10"


    Page 219, line 11, leave out "that reference" and insert "the subject-matter of the undertaking"


    Page 219, line 14, leave out ", 10 or" and insert "or 10 in relation to the subject-matter of the undertaking; or


(b) paragraph"

On Question, amendments agreed to.

Schedule 7, as amended, agreed to.

Clause 83 agreed to.

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Schedule 8 agreed to.

Clauses 84 to 87 agreed to.

Schedule 10 agreed to.

Clauses 88 to 103 agreed to.

Clause 104 [Further publicity requirements]:

Lord Sainsbury of Turville moved Amendments Nos. 142 to 144:


    Page 74, line 26, at end insert—


"(aa) any decision made by it under section 36(2) to treat a reference made under section 21 or 32 as if it had been made under section 32 or (as the case may be) 21;"


    Page 74, line 38, at end insert—


"(fa) any decision made by it under section 48(1) to treat—
(i) a reference made under subsection (2) or (3) of section 44 as if it had been made under subsection (4) or (as the case may be) (5) of that section; or
(ii) a reference made under subsection (4) or (5) of section 44 as if it had been made under subsection (2) or (as the case may be) (3) of that section;"


    Page 74, line 47, at end insert—


"(ja) any decision made by it under section 63(2) to treat a reference made under subsection (2) or (3) of section 61 as if it had been made under subsection (3) or (as the case may be) (2) of that section;"

On Question, amendments agreed to.

Clause 104, as amended, agreed to.

Clauses 105 to 116 agreed to.

Clause 117 [Review of decisions under Part 3]:

Lord Sharman moved Amendment No. 145:


    Page 83, line 25, at end insert—


"( ) For the purposes of subsection (1) "any person aggrieved" means any person who is a party to the relevant merger situation or special merger situation."

The noble Lord said: In moving the amendment I shall speak also to Amendments Nos. 146 and 147. Clause 117 deals with the basis on which an aggrieved party may apply for a review or a reference in regard to a decision under the Bill. The amendments seek, in general parlance, to tighten the grounds on which such an application may be made. Amendment No. 145 defines any person aggrieved by adding the words,


    "any person who is a party to the relevant merger situation or special merger situation".

Amendment No. 146 deletes subsection (2). Amendment No. 147 replaces the time limit of three months with one month.

The clause is drawn widely in terms of allowing any person aggrieved by a merger decision to appeal against it. In future, parties whose mergers are approved will not have a definitive ruling but instead face a further period of three months of uncertainty to establish whether any aggrieved party might appeal. That will cause huge, unnecessary uncertainty to business and risks undermining the competition focus of merger control by potentially placing excessive reliance on the views of competitors.

Given that competition law should protect competition rather than competitors, that is not appropriate. Parties will either have to delay closing

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until expiry of the appeal period, adding unnecessary delay to what is already potentially a long drawn-out review and approval process, or run the risk of later needing to unwind and divest. The proposed three-month limit is excessive; one month should be sufficient.

The issue is not resolved by the wording in Part 2 of Schedule 4 on tribunal rules. The rules are permissive in nature and not adequately restrictive of the persons who may apply for a review. I beg to move.

10 p.m.

Lord Sainsbury of Turville: The amendments make changes to who can apply to review a decision, what decisions can be reviewed and how long parties have to bring an action. Amendment No. 145 merits the longest response. It seeks to limit the parties that can apply to the competition appeal tribunal to review decisions made in a merger case to the parties to the merger. That would prevent third parties having such decisions reviewed.

As we set out in the other place, there are three good reasons to oppose the amendment. First, we have already limited who can bring a case to the competition appeal tribunal. The clause refers only to aggrieved parties, but in Schedule 3 we provide that tribunal rules may be made that allow for the competition appeal tribunal to reject proceedings if it considers that the person instituting them does not have a sufficient interest in a decision with respect to which the proceedings are brought or the documents instituting the proceedings disclose no valid grounds for bringing them. The rules can also provide for the competition appeal tribunal to reject proceedings that it considers vexatious.

Secondly, limiting the scope of appeals in the Act will not affect the right of third parties to seek judicial review of decisions in the High Court. We would therefore create a two-tier system, with merger parties having access to the competition appeal tribunal and third parties relying on the High Court.

Thirdly, there is a case for third parties to be able to review the proceedings, because some have a clear interest. The business prospects of customers, suppliers and competitors could all be directly affected by a range of decisions taken by the authority from the clearance of a merger to the imposition of particular remedies.

Finally, limiting appeals in the way proposed would run counter to the changes that we are making to the Competition Act 1998. Under Clause 16, third parties will now be able to appeal directly to the competition appeal tribunal against decisions of the OFT if they have a sufficient interest in a case.

In conclusion, the system as set out in Clause 117 offers the right level of involvement for third parties. Those that can demonstrate a sufficient interest in the case and valid grounds for bringing the proceedings should be allowed to apply for decisions to be reviewed.

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Amendment No. 146 would remove subsection (2). This is based on a misunderstanding of the role of that subsection. It is not the intention to prevent appeals against penalties. We have made separate provision for such appeals in Clause 111, which allows for a full appeal on the merits against penalties imposed by the authorities.

We are more open on Amendment No. 147. We are keen to get the period right and to strike the right balance between certainty to business and legitimate access to justice. Three months was chosen because it mirrors the period available to parties to apply for judicial review in the courts.

However, we are aware that the CBI in particular would like the period shortened. We intend to consult on the time period in the context of the consultation on the tribunals rules in the autumn. The rules can make different provision from the three months in the Bill if necessary, as set out in subsection (4). The consultation will allow us to take soundings from all users of the system, practitioners and representative bodies before coming to a final view on what the period should be. We see no need to change the legislation at this stage.

In the light of those arguments, I should be grateful if the noble Lord would not press the amendments.


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