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Lord Razzall: It is late and I tried very hard to listen to what the Minister said. As I said earlier, the purpose of Amendment No. 244, which stands in my name and that of my noble friend Lord Sharman, and that of the amendments standing in the name of the noble Lord, Lord Hunt—although he will speak for himself—is to ensure that those who have to observe the legislation are clear about what the law says and about what guidance will be adopted. The Minister's comments on the various amendments suggest that the Government accept that general point. The Minister's approach—of not bringing into effect the relevant sections until the guidance is available or of bringing another provision back on Report—appears to meet our points. I shall read his response in Hansard. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 245 to 249 not moved.]
[Amendment No. 250 had been withdrawn from the Marshalled List.]
[Amendment No. 251 not moved.]
Clauses 225 and 226 agreed to.
Lord Hunt of Wirral moved Amendment No. 252:
- After Clause 226, insert the following new clause—
The noble Lord said: The amendment was first proposed by my honourable friends in the other place, led by John Whittingdale. However, it was not called there because of the operation of the guillotine. We have now added a further subsection: subsection (3), to which I shall return in a moment.
The new clause refers to the substantial fines—possibly running into millions of pounds—that the OFT can levy for breaches of the Competition Act 1998. Without specific provision, those fines will just alleviate the general burden of taxation. In this case, the fines would be levied because harm had been done to what Clause 208 refers to as,
Of course, it is very difficult to identify the members of the public who have lost out or suffered damage. But we have seen instances where the regulator has made certain utilities reduce their charges when it was thought appropriate for them to do so, bringing direct benefit to the consumers involved.
Therefore, it is our contention that it should not be impossible for some imaginative mind to provide in some way for discounts against the future supply of goods and services or to inaugurate a simple claim for a limited fixed amount of compensation where people can prove that they bought goods or services from the offending company or organisation which has been subjected to a substantial fine. If consumers in a particular locality are involved, the fine could be distributed to local authorities for the improvement of specific services which fall within the tenor of the fine.
In this amendment, we are asking the Government to respond to the overall intention, which is to find some way of compensating those who have suffered. In the amendment, the OFT is asked only to consider whether the fines could be used in that way. Under proposed new subsection (2) it is given the discretion to make such directions as it thinks appropriate.
However, the amendment differs from that submitted in the other place in that a new subsection (3) has been added. That subsection protects the OFT from being sued by someone for the way in which it has or has not exercised its discretionary powers under the clause.
The new clause makes it clear that, in exercising its considerable powers of punishment for serious infractions of the 1998 Act, the OFT is not simply the gatherer of yet another tax and that it should exercise its powers when reasonable and possible for the benefit of those harmed by some wrongful conduct. I beg to move.
Lord Borrie: Perhaps I may make a quick comment. I had not really considered this matter before I saw the amendment earlier today. I can see in principle the point that the noble Lord, Lord Hunt, seeks to make—that is, remedying harm suffered by consumers generally. The collective interests of consumers have been harmed and therefore they should be compensated.
But one or two examples that the noble Lord gave seemed to me to assist consumers as individuals or many individuals. Yet, in brackets in the amendment, he seeks not to do that. It seems to me that the main answer to the noble Lord—I hope that the amendment
I do not believe that the example of the utilities is appropriate because almost everyone in an area has to take gas, electricity or water. Therefore, a discount on prices may be the most reasonable remedy if the utility has failed the public and broken its obligations. But I believe that the noble Lord is asking for the impossible, and the OFT would find it extremely difficult in almost any circumstance to come to a judgment that was seen to be fair and just.
Lord Sainsbury of Turville: These amendments would allow the OFT to direct that fines which it has imposed in respect of infringements of competition law be used for purposes that would help to remedy the harm suffered by a general class of consumer as a result of those infringements.
Like noble Lords opposite, I am keen to encourage projects or activities that benefit consumers. But Clause 270 already sets out the Secretary of State's power to do that. The new consumer grants fund that we shall establish for the purpose of that power could be used to give financial assistance to projects in areas where a general class of consumers has suffered harm but where it is not possible for all the individual consumers concerned either to be identified or to seek redress.
One of our priorities will be to fund projects relating to the markets in which the OFT has established a breach of competition law. A good example of the kind of work that we would like to mirror here comes from the 1980s when Rover Cars were found to be using anti-competitive practices. By the time that emerged, it was no longer possible to identify the consumers who had lost out. Rover donated £750,000 to the Consumers' Association to establish a self-financing information service for car buyers in the UK and £250,000 to the Research Institute for Consumer Affairs to help fund its ability car programme—a programme of research, information and action relating to goods and services for disabled motorists. Obviously, we would not be talking about company donations, but the work for which this donation was used is a helpful example of the kind of activity that we shall be considering.
Under our proposals, we shall also be able to use the fund for a wider range of projects or other work that would benefit consumers—not just those who have suffered from specific anti-competitive practices. That may include, for example, promoting knowledge and understanding of consumer rights and how to obtain redress when things go wrong; providing information and advice to assist consumers to decide which goods and services to buy—for example, through impartial product research and comparative surveys; projects to benefit socially or economically vulnerable consumers;
The important point is that our proposals will already allow financial assistance to be given to projects that benefit consumers who have suffered from anti-competitive practices for which fines have been imposed under the Competition Act. But they will benefit consumers more widely, too, and will ensure that a more strategic view is taken both of the consumer issues that need addressing and of the funding available. By their very nature, fines are unpredictable, both in timing and amount. Therefore, consumer benefits linked to them would also necessarily be erratic and unpredictable. Furthermore, fines can be imposed under the Competition Act only where the undertaking concerned has acted intentionally or negligently. Although those will frequently be the cases in which most damage has been done to consumers, harm may also be done in other cases. In instances where the imposition of a fine is to act as a trigger for the use of the fund, given the scope for companies to dispute the fines, tenders for projects could be established as soon as the fine is levied, rather than paid, making the scheme more agile and timely.
All those measures are additional to our continuing ability under Clause 270 to fund bodies that promote the interests of consumers, such as the NCC. My department also has powers outside the Bill to spend money directly on consumer protection activities. For
In view of those arguments, I hope that the amendment will be withdrawn.
Lord Hunt of Wirral: I am pleased that the Minister resisted the exhortation of his noble friend Lord Borrie to allow these sums to fall into the general body of taxation, but rather responded in a very constructive and positive manner, for which I am most grateful. I shall take time to reflect on what he said. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 253 not moved.]
Clauses 227 to 232 agreed to.
"DESTINATION OF FINES IMPOSED BY THE OFT
(1) The OFT will consider whether any fines which it imposes under Chapter I or II of the 1998 Act might be applied for any purpose or purposes which could contribute towards remedying harm suffered by consumers generally (but not as individuals) as a result of the infringements of those provisions.
(2) The OFT may, in pursuance of subsection (1), make such directions as it considers appropriate.
(3) No action shall lie in any court (including for a judicial review) against any decision made by the OFT under subsections (1) and (2), including a decision not to apply to any fines for the purposes described in subsection (1)."
"the collective interests of consumers".
In the very litigious United States of America, there is a whole industry for bringing class actions in such cases, which I hope we never see within the confines of the United Kingdom. There are already actions going on in respect of alleged mis-selling of various financial services products. In this regard, we are dealing with fines that have been imposed because harm has been done to the collective interests of consumers. When the Office of Fair Trading levies a huge fine, it is my contention that that fine should, wherever possible, be used to alleviate the wrong suffered by the public.
11.45 p.m.
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