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Lord Razzall: My Lords, before the Minister sits down, will he accept that in the Ghosh case the definition of dishonesty, on which the Government are relying in this case, is that juries must ask themselves, first, whether what was done was dishonest by the standards of reasonable people and, secondly and more importantly, whether the defendant understood that that was the case?
As regards prosecutions in this area, the defendant in order to be caught by the Ghosh case must understand that it was dishonest in the context of the provisions referred to in the amendment. Otherwise, no reasonable person could regard it as being dishonest. If the Minister believes that it is impossible to prosecute under the amendment proposed by the noble Lord, Lord Kingsland, would he not accept that the arguments apply equally to those two tests in the Ghosh case?
Lord McIntosh of Haringey: My Lords, I said that the Ghosh case implies both intent and the knowledge of the consequences of the agreement. Under Amendment No. 153, the Crown would have to prove beyond reasonable doubt that the defendant who had concluded a cartel agreement did so knowing that he was breaching particular sections of the Competition Act 1998. That does not make sense.
Lord Hunt of Wirral: My Lords, at this late hour I have no wish to engage in semantics with the Minister, and certainly no wish to engage in circular semantics. Therefore, I will take time to reflect on what he said and on the perceptive questioning and interesting points made by the noble Lord, Lord Razzall. Therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 154 not moved.]
Clause 185 [Cartel offence: penalty and prosecution]:
Lord Kingsland moved Amendment No. 155:
- Page 138, line 42, leave out ", or
The noble Lord said: My Lords, in Committee, the noble Lord, Lord McIntosh of Haringey, stated that the SFO and the OFT would work together both in cartel investigations and on decisions to prosecute. However, it will be the SFO that will undertake any prosecution in England, Wales and Northern Ireland. As I understand it, the Government believe that this approach will link the SFO's expertise in criminal prosecution with the OFT's expertise in competition investigations. We also learned from the noble Lord that the Government do not expect a large number of prosecutions. He said that on 18th July 2002 at col. 1542 of the Official Report.
The envisaged procedure appears to be that the OFT will undertake the initial investigation using powers broadly modelled on the SFO powers in the
In fact, even though the OFT is included as an additional prosecutor of the offence, it is neither expected nor adequately resourced to do so. The OFT has only been included to facilitate any change of circumstances in the future that will justify it being able to perform a prosecution role. This was made clear on 18th July 2002 at col. 1542 of the Official Report and on 22nd July at col. 134.
We remain of the view that there is a serious risk of confusion over the exercise of these powers if the OFT is to have both criminal investigatory powers under this Bill and civil investigatory power under the Competition Act 1998. These are different procedures and, perhaps of even greater importance, engage different rights of defence. If the Government intend the SFO to be the lead prosecutor, in my most respectful submission, the Bill should say so. If this proves inappropriate, extending the powers to the OFT can be debated as an amendment to the Bill as enacted at a later stage.
We believe, firmly, that criminal investigations of cartel offences should be carried out exclusively by the SFO. The OFT has no experience of criminal investigations. It should not, therefore, have the burden and responsibility of complying with the different standards that apply in criminal matters. Its responsibility should be limited to the enforcement of civil remedies. I beg to move.
Lord Razzall: My Lords, I support Amendment No. 155, which is identical, I think, to the one that my noble friend Lord Sharman moved in Committee. When, quite late at night, this matter was debated in Committee, the Minister gave a rather extensive explanation of how in his view the SFO and the OFT would operate in this sphere, giving those of us who proposed the amendment some food for thought.
The critical remarks of the noble Lord, Lord McIntosh, are set out at col. 1542 of the Committee stage debate where, having explained in detail that it was envisaged that the SFO and OFT would operate very much in the way that my noble friend Lord Sharman and the noble Lord, Lord Kingsland, wanted, he said that it was nevertheless necessary to have the Bill drafted in the way that it is for the following reasons. He stated:
I doubt whether the noble Lord, Lord Kingsland, or I will be able this evening to persuade the Minister to give any ground. However, perhaps I may draw to his attention the fact that as we have progressed through the Bill and we on this side of the House have produced amendments with regard to what might happen in the future, we have always been told, "We do not need to do that because the Government will be able to deal with the situation in a different way were that eventuality to arise". I cast noble Lords' minds back to the debate that we had on what could be called "the Sir Jeremy Lever amendment" where the noble Lord, Lord Sainsbury of Turville, told us that were the situation we were considering likely to arise, the Government would be able to deal with it in a certain way.
I was persuaded completely by what the Minister said in Committee about how he envisaged that the measure would operate. However, I was not persuaded that that was a reason for not accepting what was the amendment of my noble friend Lord Sharman and what is now the amendment of the noble Lord, Lord Kingsland. Therefore, I support the amendment.
Lord McIntosh of Haringey: My Lords, I do not know why the House needs me as the noble Lord, Lord Razzall, makes my speeches for me and anticipates what I am going to say. That saves time up to a point. However, I still have to make the points.
Amendment No. 155 seeks to amend the arrangements for the prosecution of the new offence by making the SFO the sole prosecutor, but subjecting its prosecutorial role to the consent of the OFT. That is a new element on the amendment of the noble Lord, Lord Sharman.
The Bill provides for the SFO and the OFT to prosecute the new offence in England, Wales and Northern Ireland, but it is our expectation, as the noble Lord, Lord Razzall, anticipated, that the SFO will carry out all prosecutions in the first instance. It has the necessary resources and experience for the criminal prosecution of this type of case, having prosecuted other white-collar crime such as insider dealing for many years.
However, it may become appropriate at some time in the future for the OFT, whose role initially will be as investigator, to take on a prosecutorial role. I believe that the noble Lord, Lord Kingsland, suggested that there might be a conflict between the prosecutorial role and the investigatory role. I remind the noble Lord that we commissioned an independent review of OFT procedures carried out by Sir Anthony Hammond and Roy Penrose. They concluded that if the OFT were to prosecute,
(b) by or"
"The OFT is included in the Bill as an additional named prosecutor but it is neither expected nor resourced to prosecute initially. It has only been included so that if circumstances justify it in future, the OFT will be able to perform a prosecution role. That might arise if the number of cartel prosecutions created a conflict with other SFO priorities".—[Official Report, 18/7/02; col. 1542.]
What the Minister will say, if he is not on this occasion prepared to accept the noble Lord's amendment, is that he accepts that the matter will be tackled in the
way that we want but just in case in the future it might be necessary because of resource implications for it to be done another way, we have to have the Bill phrased in the way that it is.
11.15 p.m.
"it would be possible to ensure, by creating suitable internal structures, the separation of the investigatory from the prosecutorial function, thus complying with what has become
15 Oct 2002 : Column 842
- known as "the Phillips Principle" ie: that those taking the legal decision to prosecute should be seen to be separate from and independent of the investigators".
The OFT would have to take time to develop the necessary capability and resource before it could take on a prosecution role. That is consistent with the Government's stated policy in the response to consultation; namely, that the SFO should be the lead prosecutor in England, Wales and Northern Ireland with the OFT as an additional named prosecutor. The amendment also proposes to give the prosecution role to the SFO but to deny it the discretion to take the final decision on which cases to prosecute. I do not know whether that is intended but that is what it would do. It will of course work closely with the OFT on cartel cases that look likely to lead to criminal prosecution but the final decision will rightly be its own. On that basis, I hope that the amendment will not be pressed.
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