Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Hunt of Wirral moved Amendment No. 161:

The noble Lord said: Subsection (5) as amended would read,

    "For the purposes of this Part, in relation to a market investigation reference, including public interest cases, there is a detrimental effect on customers",

which is then described. The clause's definition should be applied throughout Part 4. I look forward to the Minister's response. I beg to move.

Lord Sainsbury of Turville: The amendment would ensure that the term "detrimental effect on customers"

18 Jul 2002 : Column 1524

would have the meaning given it under Clause 129 in competition and public interest cases alike. The amendment is not necessary as the Bill currently produces that outcome. In response to helpful suggestions from the Opposition in another place, the Bill was amended to ensure that the definition set out in Clause 129 would apply in all cases, including public interest cases. That is the effect of Clause 146(1). On the basis of that explanation I invite the noble Lord to withdraw the amendment.

Lord Hunt of Wirral: That is very interesting. I am grateful to the Minister. I apologise; I had not spotted that change. I will reflect on his wise words. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 162 not moved.]

Lord Hunt of Wirral moved Amendment No. 163:

    Page 95, line 42, at end insert—

"(iii) improvements to production or distribution; or
(iv) promoting technical or economic progress;"

The noble Lord said: The list in subsection (8)(a) currently reads:

    "it is a benefit to customers in the form of—

    (i) lower prices, higher quality or greater choice of goods or services in any market in the United Kingdom . . . or

    (ii) greater innovation in relation to such goods or services".

The amendment would add:

    (iii) improvements to production or distribution; or

    (iv) promoting technical or economic progress".

If the Minister were to accept the amendment it would align the Enterprise Bill with the Competition Act 1998 and Article 81 of the European Community's competition law, which specifically require such benefits to be taken into account. Without that change there is a probability that the benefits to customers will be interpreted as only the benefits to the immediate consumer and the potential benefits to customers or consumers at large will not be taken into account. I beg to move.

Lord Sainsbury of Turville: Our definition of "a relevant customer benefit", covering lower prices, higher quality or greater innovation or choice, follows the definition used in the mergers clauses of the Bill rather than the criteria set out in Article 81(3) of the EC treaty, also to be found in Section 9 of the Competition Act 1998, for exempting anti-competitive agreements where they bring wider economic benefits.

The two sets of criteria look different on paper. This is a difference primarily in perspective rather than substance. We are satisfied that in practice they will lead to the consideration of much the same issues in much the same way.

The Bill's criteria are slightly more exacting, but we do not think that that is a problem, partly because a greater emphasis on competition is not inappropriate and partly because Article 81 and Chapter 1 of the Competition Act are concerned with individual agreements whereas market investigations will

18 Jul 2002 : Column 1525

generally be concerned with other forms of conduct. If the Competition Commission were to be routinely concerned with individual agreements between firms, which may often promote technical or economic progress at the expense of competition, I might have some sympathy with the amendment. However, that will not be the case. Where it is, we expect that it will deal with such agreements by inviting the OFT to consider them under the appropriate provisions of the Competition Act.

The Competition Commission will generally be concerned with other matters such as uncompetitive unilateral conduct or structural matters such as barriers to entry. These are not noted for the frequency with which they produce any benefits to customers, let alone serving the aims of innovation and economic progress.

I should also mention two specific categories of case in which the anti-competitive effects of market features may be weighed in the balance against a wider range of customer benefits than is described in our definition or in Article 81(3). First, there are those cases in which the Competition Commission recommends repeal or amendment of an existing law or regulation. In such cases it will be for the Government or other relevant public authority to weigh the Competition Commission's analysis of competition problems resulting from that law or regulation against its own assessment of whatever public policy considerations led to it being made originally.

Secondly, if the Competition Commission has conducted a market investigation in one of a number of regulated sectors and considers that the appropriate remedy involves any of the categories of relevant action set out in Clause 163, such as modifying an electricity licence, it will be obliged to take account of the relevant regulator's statutory functions—effectively the set of objectives that govern the regulation of the sector concerned—which are likely to include competition and customer benefits, as defined in subsection (8), but also other wider and more sector-specific objectives, such as the provision of a universal postal service.

I am conscious of a further concern that has been raised as to whether our definition is wide enough to protect the interests of future or potential customers. Innovative behaviour today, which will bring benefits to customers tomorrow, can be taken into account by the Competition Commission as a relevant benefit to customers, provided it is expected to accrue within a reasonable period and would be unlikely to accrue but for a feature of the market that is adversely affecting competition. Clearly, much will depend on the circumstances of individual markets, but that is as it should be.

Finally, from a technical point of view, we seriously doubt that it would be possible exactly to replicate the Article 81(3) criteria without importing EC jurisprudence wholesale into Part 4, which would be inappropriate, given that market investigations are a free-standing regime designed to complement rather

18 Jul 2002 : Column 1526

than duplicate the provisions of Community competition law. I therefore ask the noble Lord to withdraw the amendment.

Lord Hunt of Wirral: I am grateful to the Minister for that detailed explanation, which I would like to study over a longer time than I have to hand. I hope that he accepts that our concern is to avoid the short-term approach and take the more strategic one. Obviously he has spent some time considering his response, for which I am very grateful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 129 agreed to.

Clauses 130 to 163 agreed to.

Schedule 9 [Certain amendments of sectoral enactments]:

Lord Sainsbury of Turville moved Amendments Nos. 165 and 166:

    Page 226, line 8, after "was" insert "carried on by".

    Page 232, line 9, after "was" insert "carried on by".

On Question, amendments agreed to.

Schedule 9, as amended, agreed to.

Clause 169 [Investigation powers of OFT]:

Lord Kingsland moved Amendment No. 167:

    Page 124, line 35, leave out subsection (7).

The noble Lord said: This amendment relates to a new power but the Explanatory Notes do not explain why it is thought necessary or desirable to give the OFT such a power—which is both repressive and inappropriate. Under the Restrictive Trade Practices Act 1976, the OFT could apply to court for the examination of an individual under oath. Such an arrangement would ensure that the rights of the person examined were fully respected and that such a power will be used only in extreme circumstances. I beg to move.

Lord Sainsbury of Turville: The amendment seeks to remove the OFT's power to take evidence on oath and to administer oaths. Our intention is to replace the powers currently available under Section 44 of the Fair Trading Act 1973 with a set of powers tailored to the new regime. The Section 44 powers provide a right of entry, which we have removed. Instead, we have modelled the updated provisions in Clause 169 on the powers that will be available to the Competition Commission during a market investigation. The OFT will have those powers only when it believes that it has the power to make a reference, so it seems sensible to align them with those of the Competition Commission.

However, there might be concerns about extending the powers to take evidence on oath. In light of the concerns expressed by the noble Lord, I am happy to accept the proposed amendment.

18 Jul 2002 : Column 1527

Lord Kingsland: I had carefully formulated a reply appropriately expressing regret at the Minister's reply. I am delighted at the Minister's response.

On Question, amendment agreed to.

Clause 169, as amended, agreed to.

Clauses 170 to 173 agreed to.

Clause 174 [Review of decisions under Part 4]:

Lord Sharman had given notice of his intention to move Amendments Nos. 168 to 170:

    Page 126, line 31, at end insert—

Next Section Back to Table of Contents Lords Hansard Home Page