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"( ) 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."



    Page 126, line 39, leave out "three months" and insert "one month"

The noble Lord said: These amendments seek to do exactly the same in relation to market investigations as the amendments moved in relation to Clause 148. Given the Minister's explanation, I do not propose to move the amendments.

[Amendment Nos. 168 to 170 not moved.]

Lord Kingsland moved Amendment No. 171:


    Page 127, line 7, 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: In contrast with appeals under the Competition Act 1998, the Bill provides only for a form of judicial review of decisions taken under the new market investigation powers. That is particularly important given the overlap between investigations under Chapter 2 of the 1998 Act and the new market investigation powers. In a letter dated 7th May to my honourable friend Mr. Nigel Waterson, the Minister in another place accepted that in some cases the OFT would have a discretion to proceed either to a full investigation under the 1998 Act or to refer the matter to the commission under the new powers. The choice would be significant for those investigated because, under the former, there would be a full right of appeal from the OFT's decision to the CAT whereas, under the latter, there would be no full appeal of the Competition Commission's investigation.

There is a parallel in the Competition Act which may or may not be of interest to the Minister—I am sure that he knows about it. It arose because of certain powers of the sector regulators. In certain circumstances, those powers allowed the regulator to opt to investigate either within the framework of the regulatory legislation or within the framework of the Competition Act. He could opt for whichever he preferred. In some circumstances, the protection for

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the individual was better under one regime than under others. The Minister wrestled with that issue with some difficulty at many stages of the Bill. It seems to me that it is a useful parallel to draw with the situation with which we are now confronted under this Bill. I beg to move.

The Deputy Chairman of Committees (Viscount Simon): I advise Members of the Committee that, if Amendment No. 171 is agreed to, I cannot call Amendments Nos. 172 to 174 due to pre-emption.

Lord Sainsbury of Turville: In their different ways, these amendments seek to give parties a right to review the substance of any decision taken by the competition authorities in a market investigation as well as the right to review the procedure by which the decision was reached.

As I mentioned in the context of Clause 117 concerning mergers, the subject of what should constitute appropriate grounds for review of a decision following a merger or market investigation was discussed at length in the other place. In market investigation, as for mergers, we continue to believe that a review based on judicial review is the rights means for challenging decisions taken.

Market investigations do not focus on conduct or structures that are prohibited by law from the outset. The authorities have to decide on a case-by-case basis whether any features of a market are having an adverse effect on competition and what steps should be taken to remedy such adverse effects in each case.

Again, as for mergers, considerable discretion will have to be exercised by the authorities. And, again, decisions will be based on analysis of individual cases according to their specific facts. Recent case law, in particular, in the Alconbury case, suggests that, to a limited extent, material errors of fact could be a ground for intervention in judicial review cases.

The taking into account of mistaken fact can, in some cases, be regarded as taking into account irrelevant consideration or failure to provide reasons that are adequate or failure to base a decision on any evidence. This is an evolving area and it is one reason that we have chosen for these grounds.

Again, these arguments are very similar to those that we advanced previously. For the same reasons, I ask the noble Lord to withdraw his amendment.

Lord Kingsland: There are similarities between this situation and the previous one in relation to mergers. But there are also important differences. In this situation, there is a clear option for the OFT to go down one route or the other. The route that the OFT chooses to go down will have significant implications for the degree of protection afforded to the individual. If it is a Part 2 investigation, the individual knows that the decision of the OFT is capable of being substantively reviewed by the CAT. But if it is an investigation under the new powers, the OFT knows that the decision by the Competition Commission is subject only to judicial review.

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Therefore, in circumstances where the OFT has an option, one might be forgiven for thinking that the temptation will be to choose the Competition Commission route rather than the route of full investigation by the OFT. The extent of the review of the competition capable of being mounted in courts is much lighter than that in the CAT. In my submission, it is important to eliminate that bias so that the OFT is not tempted to choose a route for reasons which have nothing to do with the inherent merits of that route. Perhaps the Minister would care to react to that further development of the argument.

Lord Sainsbury of Turville: It is true that the OFT will have some discretion in what we expect to be a small number of cases as to whether to investigate under the Competition Act or the Enterprise Bill. But beyond that initial choice the two types of investigation are not directly comparable. Under the Competition Act the OFT will consider whether behaviour is unlawful against a body of established jurisprudence whereas a market investigation under the Enterprise Bill considers whether behaviour is having an adverse effect on competition. That is an important distinction. Under the Enterprise Bill the authorities have considerable discretion. Hence it is possible only to review whether they have behaved reasonably not whether they have the answer right or wrong in legal terms. We continue to believe, therefore, that judicial review is the right basis on which decisions are reviewed in market investigations.

Lord Kingsland: One way of improving the objectivity of the OFT would be to establish clearly and publicly guidelines for its approach to decisions in circumstances where it has an option to go down one route or another. I seek to avoid the OFT making a choice of route on grounds which have nothing to do with the inherent merits of that route. I do not suggest that it will normally behave like that. But there will be circumstances in which it will be perceived to have behaved like that.

One way to avoid that situation would be to devise some guidelines for the OFT to ensure that its decision about the route was made clearly on an objective basis. Even if the Minister thought that it was good idea, I suspect that he would not be able to react positively now on the Floor of the House. Perhaps he will reflect on the matter. To a large measure, that would get round the solution I propose in the amendment but at the same time would go a long way to reassuring the market about the probity of the OFT's approach.

Lord Sainsbury of Turville: The noble Lord's concern is that the OFT would choose one route or the other because the review process is different. However, the review process is appropriate to the decisions being made under the two routes. To say that one is an easier review process is to miss the point. These are two different kinds of decisions being made which are reviewed appropriately in different ways.

18 Jul 2002 : Column 1530

11.30 p.m.

Lord Kingsland: I take that point. In a sense that is what suggested to me that a set of objective guidelines, setting out precisely the philosophy that the Minister has just outlined to your Lordships, would solve any problems of perception that the marketplace may have about the OFT's motives. Will the Minister reflect on that matter over the Summer Recess without, of course, giving any commitment to the course of action that I suggest? I hope that he will accept that I am prepared to move away from my amendment towards a solution that I believe that he would accept as more attractive than the amendment itself.

Lord Sainsbury of Turville: I shall certainly look at it when I return from my summer holiday.

Lord McIntosh of Haringey: The noble Lord, Lord Kingsland, did not ask how long the Minister's summer holiday would be!

Lord Kingsland: Sadly for the Minister, I am sure that it will be a very crisp experience! In all the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 172 not moved.]


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