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The Deputy Speaker: My Lords, Amendment No. 78 has now been moved. The noble Lord has, of course, spoken to Amendment No. 80, which is grouped with it.
Lord Sainsbury of Turville: My Lords, at almost every stage of the Bill's progress we have discussed the issue of whether there should be a full appeal on merits in merger cases. At every stage, we have put the case that judicial review was, and remains, the appropriate basis for reviewing decisions taken in merger investigations. One of the reasons why we keep coming back to the matter is that the Opposition have still not recognised just how effective a judicial review-type appeal would be in holding the competition authorities to account for their actions.
I shall give some examples. If the OFT or the Competition Commission misinterpreted their duties under the Enterprise Act, they would be caught by a judicial review-type appeal. If a panel of the Competition Commission failed to observe due process, such as failing to comply with the chairman's procedural rules, and that amounted to a material procedural unfairness, a judicial review-type appeal would cover that. If the OFT or the Competition Commission had, to a material extent, based a decision on an incorrect factual assessment of the conditions of competition in a market affected by a merger, the appeal mechanism that we propose would, again, catch that. If the authorities acted unreasonably, if their decision fell outside the range of conclusions that
could reasonably be reached on the evidence before the competition authorities or if the remedies were disproportionate in the circumstances, a judicial review-type appeal would pick that up.The right of review therefore provides a high level of protection for the parties—more, perhaps, than noble Lords might have realised, although the noble Lord, Lord Hunt of Wirral, will be aware of the situation, given the work that he has done. It is also sufficient to protect their rights under the Human Rights Act 1998. We recognise that a full right of appeal, as envisaged, would go even further in allowing the parties to revisit all the issues discussed during a merger investigation and to hold a full hearing of the merits of the case. However, as we have said before, that is not the best way to deal with such decisions.
The problem, as we have tried to explain on numerous occasions, is that there is no right or wrong answer on whether a merger should be allowed to go ahead. Two groups of competition experts looking at the same merger situation could well come to different conclusions as to whether there was a competition problem and what the remedies should be. That means that a full rehearing would merely substitute one set of views for another, which may or may not make for a more just outcome. The more workable appeal mechanism is one that considers whether the decision was reasonable and was based on a fair process.
The right to bring an action should be open to more than just the parties to the merger in question. Some third parties—for example, customers, suppliers and competitors—may have an interest in a case and should, therefore, have access to the tribunal. However, we are keen to prevent frivolous or vexatious applications or those from parties with no direct interest in a case. That is why Schedule 3 provides that tribunal rules may be made to allow the Competition Appeal Tribunal to reject proceedings if it considers that the person instituting them does not have a sufficient interest in the decision or has disclosed no valid grounds for bringing the proceedings. The tribunal will also be able to reject proceedings that it considers vexatious. A time-limit will be specified in the tribunal's rules. We are consulting on the length of time, but it will be three months or less. We have removed that from the clause to avoid confusion.
We are also aware that any limit that we place on the scope of any review mechanism in the Bill will not affect the rights of third parties to seek judicial review of decisions in the High Court. We should, therefore, create a two-tier system, in which merger parties would have access to the tribunal, while third parties relied on the High Court. We cannot stop the judicial reviews taking place; the only question is whether we create a two-tier system.
In general, I am surprised that the noble Lord is pushing so hard for full appeal. I should have thought that, from a business perspective, full appeal would be more of a concern. It could well cause delays and add to the costs; it would create a two-tier approach, with
third parties relying on judicial review through the courts; and it would not necessarily always lead to what the parties would regard as a more just outcome.Finally, the review mechanism should not be seen in isolation. It needs to be assessed alongside the wide array of safeguards we are introducing to strengthen decision-making; the new requirement on the Competition Commission to have clear procedural rules; greater transparency requirements, including the publication of reasons for decisions; and other safeguards, such as the two-thirds voting requirement for key decisions. Backed by these, we are convinced that a judicial review type appeal mechanism is the right one. It leaves the taking of these complex decisions to the competition authorities, which will build up a body of expertise in the effective discharge of their functions. It leaves the tribunal to become expert at policing their decisions, ensuring that the process is fair and the outcome reasonable; and it leaves those businesses and others affected by the decisions with a clear, fast and effective mechanism for resolving any disputes. On that basis, I ask the noble Lord to withdraw the amendment.
Lord Hunt of Wirral: My Lords, I have listened carefully to the Minister's response. All I can deduce is that he has not yet been subjected to a judicial review of any of his decisions. The noble Lord laughs and indicates that he has not. It is good to hear that, and I admire him for it. However, he might have a word with one or two of his ministerial colleagues who have been so subjected. He might then understand better some of the points that I have sought to make.
On the point that he has made about Amendment No. 80, I am arguing for the situation as it applies under the 1998 Act, where an appeal can be on merit. With some of these highly complicated decisions, which are very much based on economics, the narrow confines of judicial review are inappropriate. I shall, of course, take time to reflect on what the Minister has said and we may return to this subject yet again. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Sainsbury of Turville moved Amendment No. 79:
- Page 86, line 20, leave out subsections (3) and (4).
On Question, amendment agreed to.
Lord Sainsbury of Turville moved Amendment Nos. 81;
- Page 87, line 36, at beginning insert "special"
On Question, amendment agreed to.
Lord Sainsbury of Turville moved Amendments Nos. 82 and 83:
- After Clause 118, insert the following new clause—
On Question, amendments agreed to.
Clause 119 [Orders and regulations under Part 3]:
"PRIMACY OF COMMUNITY LAW
(1) Advice and information published by virtue of section 103(1) or (3) shall include such advice and information about the effect of Community law, and anything done under or in accordance with it, on the provisions of this Part as the OFT or (as the case may be) the Commission considers appropriate.
(2) Advice and information published by the OFT by virtue of section 103(1) shall, in particular, include advice and information about the circumstances in which the duties of the OFT under sections 21 and 32 do not apply as a result of the European Merger Regulations or anything done under or in accordance with them.
(3) The duty or power to make a reference under section 21 or 44(2) or (3), and the power to give an intervention notice under section 41, shall apply in a case in which the relevant enterprises ceased to be distinct enterprises at a time or in circumstances not falling within section 23 if the condition mentioned in subsection (4) is satisfied.
(4) The condition mentioned in this subsection is that, because of the European Merger Regulations or anything done under or in accordance with them, the reference, or (as the case may be) the reference under section 21 to which the intervention notice relates, could not have been made earlier than 4 months before the date on which it is to be made.
(5) Where the duty or power to make a reference under section 21 or 44(2) or (3), or the power to give an intervention notice under section 41, applies as mentioned in subsection (3), references in this Part to the creation of a relevant merger situation shall be construed accordingly."
After Clause 118, insert the following new clause—
"POWER TO ALTER SHARE OF SUPPLY TEST
(1) The Secretary of State may by order amend or replace the conditions which determine for the purposes of this Part whether a relevant merger situation has been created.
(2) The Secretary of State shall not exercise his power under subsection (1)—
(a) to amend or replace the conditions mentioned in paragraphs (a) and (b) of subsection (1) of section 22;
(b) to amend or replace the condition mentioned in paragraph (a) of subsection (2) of that section.
(3) In exercising his power under subsection (1) to amend or replace the condition mentioned in paragraph (b) of subsection (2) of section 22 or any condition which for the time being applies instead of it, the Secretary of State shall, in particular, have regard to the desirability of ensuring that any amended or new condition continues to operate by reference to the degree of commercial strength which results from the enterprises concerned having ceased to be distinct.
(4) Before making an order under this section the Secretary of State shall consult the OFT and the Commission.
(5) An order under this section may provide for the delegation of functions to the decision-making authority."
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