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Lord McIntosh of Haringey: My Lords, I am grateful to my noble friend Lord Graham for his strong support for the orders and I am grateful for the way in which he introduced his amendments. I shall speak about them first and then turn to the guidance and the consultation.
Amendment No. 170 seeks to ensure that consumer organisations that carry on a commercial activity are not eligible to be designated as enforcers under this part. Amendment No. 171 is an alternative to Amendment No. 170 which would allow the Secretary of State to designate a consumer organisation with a
We believe that the fact that a consumer body has a trading arm should not of itself disqualify it from being designated as an enforcer, provided that the trading arm does not control the body and that any profits made by the trading arm are used only for the purposes of furthering the stated objectives of the body. Excluding bodies with trading arms would exclude many, if not most, charities that use commercial activities to fund their stated objectives.
I understand the point about the potential conflict of interest, which is why the draft criteria I have made available to the House and on which we shall consult fully after Royal Assent includes the strict requirement that before the Secretary of State can designate a private consumer organisation as an enforcer, she must be satisfied that the organisation is so constituted, managed and controlled as to be expected to act independently, impartially and with complete integrity. If, after being designated, a consumer organisation uses its powers to further its own commercial interests it would be breaching that criterion and the Secretary of State would remove its designation.
We shall consult widely on the draft criteria giving all interested parties the chance to raise their concerns. The consultation will also include draft guidance, to which my noble friend referred, on the applications and designation process, including pragmatic proposals on dealing with potential conflicts of interest where an applicant has a commercial trading arm, and on removing a body's designation if it ceases to meet the criteria. I welcome comments on the consultation on the draft criteria.
Amendment No. 172 seeks to substitute the existing power for the Secretary of State to make orders under this clause subject to negative resolution procedure with one subject to affirmative resolution procedure. I appreciate that the power will be used to make statutory instruments setting out the criteria that private consumer organisations will have to meet to be given enforcement powers, but I point out that the Delegated Powers and Regulatory Reform Committee has examined all the proposed delegated powers in the Bill and is content for the power in this clause to be subject to the negative resolution procedure.
Amendment No. 173 seeks to ensure that this part could not be used solely for the purpose of clarifying legislation where the intention of that legislation is in doubt. It is for the OFT or another enforcer to decide whether it is appropriate to initiate the enforcement procedure provided for in any given circumstance. I recognise that there may be some situations where the enforcer and the trader disagree as to whether a breach has taken place because they have different views as to what the legislation means. However, Clause 209 generally requires enforcers first to consult the OFT (if it is not the enforcer) and the person against whom the enforcement order may be made and give the latter the
I accept that there may be some cases where a genuine difference of view remains, but in those cases only the courts could resolve such a difference. The courts can find that there is an infringement only if the collective interest of consumers is being harmed. I understand the concerns, but I hope that I have reassured my noble friend Lord Graham that those points are already being dealt with.
Lord Graham of Edmonton: My Lords, I am grateful to the Minister and his colleagues who have taken seriously the points I wanted to raise. We are talking about the consumer population of this country who could be affected by the manner in which the interpretations take place. The Minister has satisfied me that all my points have been considered in one way or another by himself and his colleagues. I do not believe that I shall return to the matter again. I am grateful to the Minister for his action. I beg leave to withdraw my amendment.
The noble Lord said: My Lords, we are all grateful for the Minister's guidance. He is extremely skilled in dealing with these matterseven when it comes to battling with things that apparently do not mean very much. It would be interesting to know more about the injunctions directive. I am not as intimate with every line of the Bill as the Minister, so he is in a much better position to guide us. Perhaps he could say who or what is the injunctions directive to which Clause 210(8) refers:
The Minister has never been able to conceal the fact that he has a sense of humour. I am sure that he has a lively sense of the ridiculous. I wonder whether the noble Lord does not find that provision somewhat ridiculous. I will not make a long speech because I do not know what that subsection means. If the Minister would be good enough to provide guidance on those two matters, I would be extremely grateful. Then I
The key to this is whether an associate could reasonably be expected to know that he or she was an associate. The clauses are drawn so wide as to mean that all sorts of people will, quite unwittingly, find themselves dragged into the net. In the case of a second or third-generation family firm, together the family might control one-third of the voting power and therefore fall within the provisions of the clause but, after three generations, family members might have spread all over the country or the world. I have acted for long-standing family businesses where the relatives have dispersed as far as New Zealand and the United States. For them to be considered associates and therefore caught by Clause 217 seems a catch-all too far.
Amendment No. 174 seeks to remove the requirement that where a court may examine whether the purpose of a Community enforcer justifies its making the application, the purpose of the Community enforcer must be construed by reference to the injunctions directive. That is set out on page 80, paragraph 452, of the Explanatory Notes:
I do not know whether the noble Lord, Lord Peyton, is interested in pursuing Amendment No. 174. Perhaps he is more concerned about the meaning of the injunction directive. I hope that I am not misjudging him. The directive only gives Community enforcers the right to make applications for enforcement orders in respect of those interests protected by the enforcer in its home state. Removing subsection (8) could inhibit a court from refusing an application from a Community enforcer that was taking action in respect of infringements that it could not act to prevent in its home state. It is a case of, "Do as I do, not as I say".
Clause 215(3) gives enforcers the discretion, where a person has failed to comply with an undertaking given to the court, to apply for an enforcement order or interim enforcement order instead of an order finding that the infringer is in contempt of court. Subsection (5), which Amendment No. 176 would remove, disapplies certain procedures of the original enforcement process that are inappropriate. I will explain why the provisions in subsection (5) are right.
First, although we would certainly expect the enforcer to approach the infringer before bringing further court proceedings, we do not see a need for the enforcer to consult the Office of Fair Trading under Clause 209 and delay bringing action for 14 days, for enforcement orders, or seven days, for interim enforcement orders, where successful court action has already been taken but the infringer has then breached an undertaking that he has given to the court.
Secondly, the power for the OFT to make directions as to which enforcer may make an application for an enforcement order is unnecessary in these cases because Clause 215(2) means that only the enforcer who made the original application or the OFT can make an application to the court to enforce the order or undertaking.
Finally, we see no reason why the court should be able to accept a further undertaking from a person who had already breached an undertaking that he had given. What we are doing here, I hope it will be agreed, is simplifying the procedures; we are removing unnecessary steps but maintaining the necessary protection.
I turn to Amendments Nos. 178 and 179, to which the noble Lord, Lord Hodgson, spoke. The definition of an "associate" is relevant for the purpose of determining whether an application for an enforcement order can be made against a person who consents to, or connives at, conduct by a body corporate that constitutes an infringement.
Amendments No. 178 and 179 seek to remove two elements from the definition of "associate" in subsection (10), namely, paragraphs (e) and (g). I understand concerns that paragraphs (e) and (g) might be seen as defining the word "associate" too widely. But we do not want a person to be able to avoid enforcement action being taken against him simply by placing shares nominally in the name of a member of his extended familyfor example, his wife's sister's husband. They could be living in the same house or be close friends. Paragraph (e) is intended to prevent that.
Paragraph (f) covers unmarried couples, including same sex couples who live together in an established relationship. In exactly the same way as paragraph (c) includes within the definition of an "associate" a person who is a relative of the individual's spouse, paragraph (g) covers relatives of a person's established partner. We see no good reason to make a distinction between relatives of an individual's spouse and relatives of an individual's partner. I hope that that deals with the points raised.
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