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Lord McIntosh of Haringey: My Lords, I am somewhat puzzled by the Opposition's approach to the issue here in Part 3 on mergers and in Part 4 on market investigations. The same criteria applied when we discussed those matters previously. Yet, lo and behold, we now have Amendment No. 18, which would restrict who can go to appeal, but is balanced by amendments that would widen the grounds for appeal. Amendment No. 18 has not been moved, so we are left

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with the proposal to widen the grounds for appeal in Amendments Nos. 19 and 20, with no restriction on who can appeal.

On Thursday, by tabling Amendment No. 29 to Part 4, the Opposition proposed the restriction on who can go to appeal but no amendment to widen the grounds for appeal. Amendment No. 30 was then tabled at the last minute, so we now have provisions that seem to be in line with what was argued previously, but not with what has been argued today. So something strange is going on that is not entirely clear to me.

We listened carefully to what was said in Committee, on Report and today. We share the desire to give parties the tools that they need to challenge decisions made by the competition authorities and to have as much legal certainty as is practicable. We are just as keen that whatever review mechanism we introduce should be effective in holding the competition authorities to account. We have been prepared to consider whether we can provide greater legal certainty.

We are consulting on how long parties should have to bring an action. One starting point was three months, but we are now seeking views on whether that should be just one month in the case of a merger decision. We have not come to a final view but we are consulting and demonstrating willingness to modify the review mechanism in the light of concerns expressed in the House and by the business and legal communities.

We are puzzled by Amendment No. 20, which seems to mix judicial review with the characteristics of a full appeal by leaving subsection (4) untouched. We cannot see how that would work technically. Judicial review grounds focus on whether a decision is reasonable and whether the procedure followed was fair. In most cases, that would not provide the tribunal with the material that it would need to substitute the decisions of the original decision-maker.

However, even at Third Reading, I shall not concentrate too much on technical difficulties. I think that it is common ground that full appeal could be wider in scope than judicial review. We must ensure that parties have access to the justice that they need to protect their rights and that the competition authorities can be held to account for their actions.

The intellectual argument for judicial review is strong and compelling. First, decisions by the competition authorities in merger cases do not lend themselves to full rehearing. Such decisions are not right or wrong; they are reasonable or unreasonable. That is what must be assessed. A full rehearing would not necessarily lead to a more just outcome; it would just substitute one set of views for another. Secondly, judicial review-type appeals will ensure that parties' rights are protected. They will pick up any material procedural irregularities or material errors of fact that have led to an unfair process or conclusion.

Finally, this approach to appeals is based on an effective division of responsibilities between the competition authorities and the tribunal. The tribunal will become quick and expert in policing its decisions,

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ensuring that the process is fair and the outcome reasonable. The actual taking of the complex case-by-case decisions will remain with the competition authorities, ensuring that they take greater responsibility for decisions and leading to greater consistency in decision-making.

The noble Lord, Lord Kingsland referred to the Airtours case at the court of first instance. But that was closer to a judicial review. It did not carry out a full appeal on the merits. The court may have gone into more detail than would the UK courts, but it considered similar issues: errors of law; fairness of procedures; and reasonableness of decision. That is what a competition appeal tribunal would do.

Similarly, the Schneider-Legrand case, to which the noble Lord referred, overturned the decision to prohibit the merger but again on comparable grounds to that of judicial review in this country. The court found errors, omissions and contradictions in the Commission's economic reasoning and that the procedure followed was flawed because there was a discrepancy between the initial statement of objections shared with the parties and the Commission's final decision. That left Schneider with no opportunity to propose appropriate corrective measures. Those are judicial review considerations, not what the amendments would achieve. As a result, Schneider may acquire Legrand by correcting what was a faulty decision—in what, for the court of first instance, is a relatively short time.

I can leave out what I was going to say about limiting the number of people who can appeal; that amendment has not been moved. However, I hope that it is clear that the analogies with Europe, the requirements for consistency and the extent of judicial review coverage mean that it would be a serious mistake to approve the amendments.

5.30 p.m.

Lord Kingsland: My Lords, I am grateful to the noble Lord for his response. In a way, his reaction to the amendment is consistent with his reaction to Amendments Nos. 1 and 2. Having created a specialised competition tribunal, the noble Lord is reluctant to give it any work to do. That is, perhaps, an exaggeration; but he is reluctant to give it all the work that taking the trouble to set it up merits.

If judicial review of a merger decision in the United Kingdom amounted to the same kind of review as that given to merger cases by the court of first instance in Luxembourg, I would reflect again on the wisdom of the amendment. However, our experience of commercial and competition judicial review in the United Kingdom leads to the ineluctable conclusion that judicial review—indeed, judicial review of commercial matters generally—is significantly less capable of investigating the kind of details that the court of first instance would investigate in a similar situation. That is because the judges have chosen not to trespass on the territory that has become so familiar to the court of first instance.

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I shall not press the amendment to a vote. However, I hope that, between now and the time when the Bill goes to another place, the noble Lord will reconsider what he said—so that he can amend that part of the Bill accordingly.

As always, I listened with great care to the noble Lord, Lord Borrie. His experience of such matters is unsurpassed in your Lordships' House. I venture to take issue with the noble Lord to the extent that I believe that the United Kingdom has reached the stage at which it would be foolish for us to remain too far behind developments on competition matters in the European Community. It is clear that they are becoming more judicialised—for better or for worse—and we must also go down that path.

Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 20 not moved.]

Clause 120 [Fees]:

Lord McIntosh of Haringey moved Amendments Nos. 21 and 22:

    Page 92, line 3, leave out "(determined in accordance with the order)" .

    Page 92, line 7, at end insert—

"(4A) For the purposes of subsection (4)(c)(ii) the turnover of an enterprise shall be determined in accordance with such provisions as may be specified in an order under this section.
(4B) Provision made by virtue of subsection (4A) may, in particular, include provision—
(a) as to the amounts which are, or which are not, to be treated as comprising an enterprise's turnover;
(b) as to the date or dates by reference to which an enterprise's turnover is to be determined;
(c) restricting the turnover to be taken into consideration to turnover which has a connection of a particular description with the United Kingdom.
(4C) An order under this section may, in particular, in connection with provisions of the kind mentioned in subsection (4A) make provision enabling the Secretary of State or the OFT to determine matters of a description specified in the order (including any of the matters mentioned in paragraphs (a) to (c) of subsection (4B))."

On Question, amendments agreed to.

Clause 123 [Orders and regulations under Part 3]:

Lord McIntosh of Haringey moved Amendments Nos. 23 and 24:

    Page 93, line 27, after "section" insert "33 or"

    Page 93, line 39, after "section" insert "33,"

On Question, amendments agreed to.

Clause 130 [Power of OFT to make references]:

Lord Hunt of Wirral moved Amendment No. 25:

    Page 100, line 28, after "competition" insert "to an appreciable extent"

The noble Lord said: My Lords, it may assist the House if I indicate that, in moving Amendment No. 25, I shall speak also to Amendments Nos. 27 and 28. Unless other noble Lords press the point, it is not necessary to have a separate debate on those amendments, as they seek the same effect.

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The amendment would add a degree of materiality in deciding whether to open what are potentially lengthy and costly investigations. The wording of the amendment is consistent with the Competition Act 1998 and with European competition law. I must admit that I borrowed that language, so that the clause would be consistent with the Act and EC competition law, both of which require an effect on competition to be appreciable for an adverse finding to be made. I hope that the Minister will accept the amendments.

So far, the Government's position has been that it is unnecessary to add the qualification because it would be unreasonable for market investigation references to be used for trivial competition policy. The OFT's draft consultation paper on market investigation references, which was published last July, does not specifically say that references will be made only if competition is distorted to an appreciable extent. If the policy is that there should be some sort of threshold in practice, the joint working party's view is that the legislation should say so. I beg to move.

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