Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Kingsland: The Minister now emphasises a factor to which he referred earlier but only in minor key. I shall not press him further. I thank him for engaging in the debate. I shall reflect on what he said but I am sure he will not be surprised if I return to the matter on Report. I think it extremely important that the decisions of the Competition Commission are properly accountable. As the Bill is drafted, I am not

18 Jul 2002 : Column 1510

satisfied that they are. Although not during every minute of the summer break, on those occasions when officials allow him the noble Lord to apply his mind to the Bill I hope that the Minister will reflect on this matter. I regard it as of high importance. Nevertheless, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 117 agreed to.

Clauses 118 to 124 agreed to.

Clause 125 [Index of defined expressions]:

Lord Sainsbury of Turville moved Amendment No. 150:

    Page 92, line 3, at end insert—

    "References under section 21, 32, 44 or 61Sections 36(2), 48(1), 55(8) and 63(2)"

On Question, amendment agreed to.

Clause 125, as amended, agreed to.

Clause 126 [Power of OFT to make references]:

Lord Kingsland moved Amendment No. 151:

    Page 92, line 28, leave out "suspecting" and insert "believing"

The noble Lord said: The reason that the noble Lord, Lord Borrie, returns after a very brief departure from the Chamber is because I am about to move Amendment No. 151. The noble Lord will not be unfamiliar with the text of the amendment. I think that he forecast it in his Second Reading speech. It is the continuation of a debate which began in 1978.

Lord Borrie: It was 1998.

Lord Kingsland: It seemed as though it began in 1978! It is the distinction between "suspecting" and "believing". I feel as strongly today about the matter as I did four years ago. I believe that "suspecting" is inappropriate statutory language in these circumstances. A more felicitous way of expressing what I think the Minister intends is to use the expression "believing". In the expectation that the noble Lord, Lord Borrie, will be intervening before the Minister, I beg to move.

Lord Borrie: I cannot resist the offer to intervene. In my Second Reading speech I did indeed predict that there would be such an amendment from the noble Lord. I just managed to return to the Chamber while the noble Lord was on his feet three or four minutes ago. He said that prior to making a reference to the Competition Commission for an investigation of a particular market, the role of the Office of Fair Trading was to establish a prima facie case and put it to the Competition Commission. He is absolutely right.

The Office of Fair Trading cannot be expected to know the answers to the questions that it puts to the Competition Commission. It seems to me that it is appropriate that it should have suspicions and if they are based on the research work that it has carried out, and therefore can justify the matter going to the Competition Commission, that is fine. But if one wants the clause to say that the OFT must have reasonable grounds for believing, a Catch 22 situation comes into effect and it has to be sure of the answers to the questions. Therefore, the Competition

18 Jul 2002 : Column 1511

Commission is practically redundant. It will merely repeat the work that the OFT has carried out. It seems to me that, as the noble Lord knows, those intelligently drafted clauses in the Bill are designed to replace the somewhat technically old-fashioned clauses about complex monopolies and suchlike that not so many people would understand as would understand the clauses in the Bill.

The amendment tabled by the noble Lord would damage the distinction between the role of the OFT and the Competition Commission, and it is just as bad as those that he produced for the Competition Bill all those years ago.

Lord Sainsbury of Turville: It is always more encouraging to have the noble Lord, Lord Borrie, behind one than on the opposite side of the Chamber. This amendment would require the OFT to satisfy a higher burden of proof before making a market investigation reference. Requiring the OFT to have reasonable grounds for believing rather than suspecting that there are adverse effects on competition before it can make a reference could mean that in some cases the OFT would have to gather considerably more evidence before it could make a reference. That could prolong many of the OFT's preliminary inquiries and make them more burdensome for business.

One particular concern in relation to this amendment is that where more evidence is required to justify a belief rather than a suspicion that there are competition problems, it may sometimes be possible for businesses effectively to frustrate the reference process by holding out against the OFT's requests for the extra information needed to convert its suspicion into belief because the OFT cannot use its formal investigative powers under Clause 169 until it believes that it already has the power to make a reference.

It is worth noting by way of comparison that the threshold of reasonable grounds for suspicion which we are proposing here is the same threshold that the OFT must satisfy in order to progress from a preliminary investigation of an alleged breach of the Competition Act prohibitions on anti-competitive agreements and abuse of dominance to a full investigation in which it can use its formal investigative powers to require the production of documents, enter premises and so on. The analogy between the two stages of an OFT inquiry under the Competition Act and the OFT and Competition Commission stages of a market investigation is not perfect in all respects, but it is quite strong, as it is clearly the case that we must expect a much more detailed investigation from the Competition Commission, or from the OFT once it has started to use its formal investigative powers in a Competition Act case, than we would expect from the OFT before it uses such powers, or when making a market investigation reference.

In any event, the OFT's record in applying the reasonable suspicion threshold in that context should give noble Lords some comfort, as on the basis of that

18 Jul 2002 : Column 1512

threshold the OFT currently rejects some 95 per cent of the Competition Act complaints that it receives. In other words, only in 5 per cent of cases does the OFT find that the requirement to have reasonable grounds for suspecting that one of the Competition Act prohibitions has been infringed is met.

Finally, we should remember that the OFT's decision as to whether or not to make a reference will not depend exclusively on whether it has reasonable grounds to believe or to suspect that there is an adverse effect on competition. We shall debate the point more fully in connection with other amendments proposed by noble Lords. Suffice it to say for now that the OFT's draft guidance on making market investigation references sets out a number of other important matters, such as the extent of any detrimental effects on customers arising from the competition problems concerned, to which the OFT will have regard before it decides, on the evidence before it, to make a reference.

In summary, we believe that in most cases, the amendment will make no difference, and in those cases where much more evidence is required to justify a belief than a suspicion, it will actually have the opposite of its intended effect, making life harder rather than easier for business involved in investigations. On that basis, I would ask the noble Lord to withdraw this amendment.

Lord Kingsland: I am going to withdraw this amendment. I hope the Minister will not regard my motives for doing so as Machiavellian when I explain what they are.

The debate on the previous amendment was about the extent to which there is a two-tier system of decision-making between the OFT and the Competition Commission. The Minister said that the degree of knowledge that the OFT should have ought not to be such as to make it capable of triggering its investigative powers under Clause 169.

If that is so, that reinforces my contention during the previous debate that the role of the OFT in relation to these investigations is not a genuine first-tier role. It simply has to suspect. That is enough for it to refer to the Competition Commission. It does not have to carry out a full investigation. It only has to do so on suspicion. A fortiori therefore, the decisions of the Competition Commission ought to be subject to a substantive appeal to the CAT.

Lord Sainsbury of Turville: The logic works the other way round. If you say that the OFT has to have belief and you say that the competition appeal tribunal should take a substantive decision, you are saying that this decision will be taken three times.

Lord Kingsland: The noble Lord cannot have it both ways. If the Minister is not prepared to accept belief under this amendment, that it renders it even more difficult than it was 10 minutes ago for him to argue that the initial participation of the OFT constituted a substantive first-tier decision.

18 Jul 2002 : Column 1513

If the Minister wishes to stick to suspicion, it makes it much more difficult for him to say that there are three stages under the matters that we considered in Amendment No. 149. If he were prepared to accept my amendment which requires belief, it would be much more difficult for me to make my case out under Amendment No. 149. That is the reason why I am prepared to withdraw this amendment, which I beg leave to do.

Amendment, by leave, withdrawn.

[Amendment No. 152 not moved.]

Next Section Back to Table of Contents Lords Hansard Home Page