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Lord Sharman: I am very grateful to the Minister for his full and detailed reply. I want to think a little about what he said about Amendment No. 145, but I am very much encouraged by his remarks about time limits. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 146 and 147 not moved.]

Lord Sharman had given notice of his intention to move Amendment No. 148:



"(6) The Tribunal may confirm or set aside the decision which is the subject of the appeal and may—
(a) remit the matter to the OFT, the Secretary of State or the Commission as the case may be (the "original decision maker");
(b) cancel or vary any conditions or obligations imposed by the original decision maker;
(c) give any directions or take such steps as the original decision maker could have made; or
(d) make any other decision which the original decision maker could have made."

The noble Lord said: The amendment was conditional and follows on from Amendments Nos. 145, 146 and 147. The amendment would be relevant only if the conditions in Clause 117 were narrowed. On that basis, it would not be sensible to move the amendment.

[Amendment No. 148 not moved.]

18 Jul 2002 : Column 1507

Lord Kingsland moved Amendment No. 149:


    Page 83, line 41, leave out subsections (6) and (7) and insert—


"( ) The Competition Appeal Tribunal may confirm or set aside the decision which is the subject of the appeal and may—
(a) remit the matter to the OFT, the Secretary of State or the Competition Commission as the case might be (the original decision maker),
(b) cancel or vary any conditions or obligations imposed by the original decision maker,
(c) give such directions or take such steps as the original decision maker could have made, or
(d) make any other decision which the original decision maker could have made."

The noble Lord said: I shall be brief. In contrast with appeals under the Competition Act, the Bill provides only for a form of judicial review for decisions on mergers. Given that the Competition Commission is to take decisions about mergers and, where it thinks necessary, impose conditions, those decisions ought to be capable of substantive review. I beg to move.

Lord Sainsbury of Turville: The amendment seeks to give parties a right to a full appeal on the merits of any decision taken by the competition authorities in a merger investigation. The subject of what should constitute the appropriate grounds for review of decisions following a merger or market investigation was debated at length in another place. The Government explained that the Bill provides for parties aggrieved by decisions to have them reviewed by the competition appeal tribunal on the same grounds as would be applied by the courts on an application for judicial review. That mirrors the current situation with the Fair Trading Act 1973, where decisions are open to challenge on judicial review grounds.

With merger investigations, we continue to believe that a review based on judicial review is the right means for challenging decisions. That type of review by the CAT will ensure that the procedures followed by the authorities were fair and that the parties were given the opportunity to put their case. Such a review will allow the tribunal to re-examine any decision taken by the authorities to assess whether it was reasonable.

Mergers are not prohibited by law from the outset. The authorities must decide on a case-by-case basis whether a particular merger will lead to a substantial lessening of competition and the steps that should be taken to remedy any such effects in each case. Decisions will be based on analysis of individual cases, their specific facts and the economic analysis of those facts by the authorities acting in accordance with their statutory duties. They will not be evaluated against a defined prohibition by reference to an existing body of substantive competition law and jurisprudence—as would be the case with decisions under the Competition Act 1998.

Considerable discretion must be exercised, so it would be difficult for the CAT to assess whether the decision made was right or wrong in objective terms. In that context, we clearly need to ensure that the process followed by the authorities was fair and that

18 Jul 2002 : Column 1508

the parties were given the opportunity to put their case. A judicial review-type appeal is appropriate. If, on applying the principles of a judicial review, the CAT considers that the challenge to the decision is justified, the original decision-maker can be asked to look at the decision again. That is the most appropriate way to deal with the type of decision that will be made under this part of the Bill. I ask the noble Lord to withdraw the amendment.

Lord Kingsland: I thank the Minister for his reply. Under the Competition Act 1998, there is a substantive appeal from the decisions of the Office of Fair Trading. Why should the situation be different in relation to mergers? The Competition Commission makes a decision resulting from the kind of sophisticated analysis that one has come to expect from that institution, involving a great deal of technical analysis—just as do the investigations of the OFT. There is little difference in the substance of the two decisions, yet there is no substantive appeal from the decisions of the Competition Commission. What is the justification for that distinction?

The noble Lord mentioned the Fair Trading Act 1973, but no CAT existed then, so it is not surprising that judicial review was the only route. Since then, the appeals tribunal system has become established and offers great expertise, which the tribunal intends to bring to bear on the quality of decisions about competitive markets in the United Kingdom.

Why deny the proposed body the chance to review merger decisions in exactly the same way as it reviews competition decisions? I fail to see the logic and, in my submission, it means that the Competition Commission will have a discretion vastly greater than that of the OFT. I can see no justification either on constitutional grounds or on competition grounds for allowing that on the face of the Bill.

Lord Sainsbury of Turville: In this sense, there are two distinct differences between the Competition Act 1998 and the Enterprise Bill. One concerns prohibition; the second relates to the number of bodies involved. Under the Competition Act 1998, there is a very clear situation where a company is in breach of either prohibition or dominance of restrictive agreements, thereby breaking the law.

The second point is that, under the Competition Act 1998, the OFT acts on its own authority and is the only body involved in the decision. It is therefore important that decisions can be fully reviewed. Under the Enterprise Bill, there is already a two-stage process in which both the OFT and the Competition Commission are involved. That very much lessens the need for a third body to have a full right of review on the merits.

Lord Kingsland: The Minister raises the distinction in procedures. Of course, there is a distinction in the procedures, although not as substantial as the Minister suggests. As I understand it, he is saying that there is a two-stage procedure under the Competition Act—the OFT and the substantive appeal—and a two-stage

18 Jul 2002 : Column 1509

procedure under the Enterprise Bill—the initial examination by the OFT and its reference on grounds of suspicion to the Competition Commission. Therefore, allowing a further appeal to the CAT would bring about, as it were, a third tier and, therefore, judicial review would be justified. That, as I understand it, is the Minister's argument.

However, in reality, the Competition Commission procedure is not a two-stage procedure. The OFT looks at the matter not fundamentally but in order to take a view as to whether or not there is a prima facie case. The OFT does not conduct a substantial analysis in the way that it does under the Competition Act. It decides whether or not there is a prima facie case to answer. If it finds that there is, it then refers the case to the Competition Commission. Only the Competition Commission undertakes a fundamental analysis. Although it has the appearance of being the second stage, in reality it is the first stage.

The correct conclusion to draw from that is that, just as the CAT stage under the Competition Act is the second stage, so judicial review is the second stage under the Enterprise Bill. In my submission, there is an imbalance there in the approach of the Government to those two situations. In reality, the next stage from the competition analysis is a second and not a third stage. Therefore, it should attract the CAT.

I am bound to say that the impression that I have from the Minister's reply is that he does not want the Competition Commission to be examined in the intimate way in which he is prepared to allow the OFT to be examined. If I am right about that, why should that be? The nature of the analysis of the Competition Commission is no more or less significant in relation to mergers or other matters than is the nature of the analysis of the OFT. They seem to be conducting an equally important exercise, dealing with a technical approach and raw materials that are similar. Therefore, surely both deserve the same approach on appeal.

10.15 p.m.

Lord Sainsbury of Turville: There has been much talk today about the need for certainty and speed. We have had proposals to cut the period from three months to one month. For the substantive decision to be taken at three different levels seems unduly protracted. To replace one person's decision, on a matter which cannot be established in a simple way and ultimately has an element of judgment, on three occasions seems an unduly lengthy process for those subjected to it. People are constantly returning to the same decision. In a judicial review a more limited aspect of the case is considered.


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