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Lord McIntosh of Haringey: My Lords, I shall not make a point about the fact that we are now discussing the word "appreciable", whereas we previously discussed the word "significant". There is no significant or appreciable difference between the words. The arguments that were used against the word "significant" can be used equally well against "appreciable". The noble Lord, Lord Hunt of Wirral, gave us the benefit of a repetition of the arguments that were used. Those arguments are true.

Market investigations exist to investigate and, where possible, rectify potentially significant competition problems. They are not a way of launching huge data-gathering exercises on a whim. The OFT has explained in its draft guidance, which is in the Library, what factors it will take into account when considering a possible market investigation reference. It will not use those powers lightly. Only when the OFT's preliminary inquiries suggest that there are potentially significant or appreciable—whatever word we use—competition concerns will it be justified in subjecting the industry to the more rigorous scrutiny of the Competition Commission. If the OFT were to refer what appeared to be a trivial case, as the noble Lord suggested, it would find itself having to defend the reasonableness of its decision before the Competition Appeal Tribunal.

What would we add by putting that in the Bill? We are concerned here with principles of economic analysis that cannot be reduced to statutory language. In ministerial statements of policy, we can explain properly how the reference powers will be operated. We can take account of materiality concerns, but we do not think that such matters can be more accurately or usefully conveyed by incorporating them into the clause. It could be said that the words "to an appreciable extent" would introduce an element of confusion. By themselves, they would not enshrine in statute all the matters that the OFT might be expected to take into account when deciding whether it had identified possible competition problems. Even if we

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were to add explicit references to all those matters, we would still be left with the fact that the OFT was operating a discretionary power of reference and must use its judgment in each case to decide what weight to give to all the various factors.

Our approach is broadly in keeping with the Competition Act 1998, Article 81 of the EC treaty and the existing monopolies regime. None of those explicitly requires that there should be a significant, substantial or appreciable effect on competition. The question of materiality, to which the noble Lord, Lord Hunt of Wirral, referred, has been a matter for case law and guidance, rather than the drafting of primary legislation.

As regards Amendments Nos. 27 and 28, I cannot add much to what my noble friend Lord Sainsbury said. I can deal with the comparison which the amendments raise between market investigations and the provisions in Article 81 of the EC treaty and Section 2 of the Competition Act. Those provisions prohibit anti-competitive agreements where they prevent, restrict or distort competition to an appreciable extent. That qualification exists as a result of case law and guidance rather than being explicit on the face of the legislation concerned. There are reasons—I could go into them in detail but I will not—why it would be inappropriate to put a similar qualification into the clause.

Conformity with the Competition Act and Article 81 does not justify the amendments, nor do they have anything to commend them. I am sorry to be negative about the matter but we have debated it on a number of occasions and the argument for the amendment is no stronger.

Lord Hunt of Wirral: My Lords, the Minister has made a significant concession, which has moved me to an appreciable extent. I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Phillips of Sudbury moved Amendment No. 26:

    Page 101, line 22, at end insert—

"( ) In this Part the words "prevents, restricts and distorts competition" are to be given the same meaning as the equivalent words in the Competition Act 1998 (c. 41).""

The noble Lord said: My Lords, Amendment No. 26 seeks to add a subsection to Clause 130 to make clear what the noble Lord, Lord Sainsbury of Turville, conceded in Committee when I moved Amendments Nos. 95, 102 and 105 to what were then Clauses 126 and 129.

The noble Lord, Lord McIntosh, made a facial gesture when I said that the noble Lord conceded the point, but it will become clearer why we have tabled the amendment.

Lord McIntosh of Haringey: My Lords, perhaps the noble Lord, Lord Phillips, will allow me to intervene. I become suspicious when people talk of concessions. I made no concessions to the noble Lord, Lord Hunt,

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and I do not believe that my noble friend Lord Sainsbury made any concessions to the noble Lord, Lord Phillips.

Lord Phillips of Sudbury: My Lords, it will become clear what I mean. The amendments tabled in Committee were designed to clarify that the making of any market reference in relation to the legal profession should take into account the special public interest considerations relevant to the supply of legal services. They were, as proposed in the amendments, to be able to take account of the interest of the sound administration of justice, the interests of the consumers of justice and of those lacking the same. In reply, the noble Lord, Lord Sainsbury, recognised the importance of the issues raised and said:

    "The sound administration of justice and the promotion of access to justice are matters of the utmost concern to this Government".—[Official Report, 15/10/02; col. 818.]

He also recognised that the rules of the legal profession would be more appropriately dealt with under the Competition Act 1998 rather than by way of a market reference under the Bill. He nevertheless accepted that such rules were capable of being subject to a market reference under the provisions of the Bill—now in Clause 130—but concluded that the amendment was unnecessary on the grounds that the sound administration of justice and access to justice were capable of being addressed under the customer benefit provisions of the Bill. That is why I said that the noble Lord, Lord Sainsbury, conceded the points of the amendments moved in Committee.

However, both the Law Society and the Bar Council, which are taking a direct and close interest in the amendment, regard it as undesirable for such issues to be addressed only in that context. Under the scheme of the Bill, customer benefits fall to be considered in the context of remedies once an adverse effect on competition has been identified. Clause 130(2) provides that an adverse effect on competition arises if any feature of the market prevents, restricts or distorts competition.

As regards professional legal rules, these may well restrict competition while having effects that are purely beneficial, as the European Court of Justice found in the Wouters case (C-309/99). The effect of such rules should not be treated, therefore, as "adverse effects on competition", as they apparently would be in the light of Clause 130. We believe that the key words,

    "prevents, restricts or distorts competition",

in Part 4 of the Bill should be interpreted in the same way as the equivalent words are interpreted in the Competition Act and under Articles 81 or 85 of the EU treaty. Then it would be clear that in circumstances such as those of the Wouters case, which was a partnership between lawyers and accountants, rules reasonably considered necessary for the proper practice of the legal profession were not to be treated as preventing, restricting or distorting competition.

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We also believe that the Bill should contain provisions that make it explicit that this is the intended basis of interpretation, just as the Competition Act in Section 60 makes clear that it is to be interpreted consistently with the corresponding provisions of Community law. Section 60 states:

    "At any time when the court"—

that is to say, the English court—

    "determines a question arising under this Part, it must act ... with a view to securing that there is no inconsistency between—

    (a) the principles applied, and decision reached, by the [English] court in determining the question; and

    (b) the principles laid down by the Treaty and the European Court".

However, both the Law Society and the Bar Council strongly believe that the presence on the face of this mammoth Bill of an explicit provision such as that in the amendment would give a great deal of clarity. It would also avoid the prospect of different interpretations being used with regard to the words concerned. Above all, especially given the Government's repeated commitment to clarity of drafting and accessibility, it will make it abundantly clear on the face of the Bill that there should be a read-across to the relevant Euro law and the Competition Act 1998.

The amendment is wholeheartedly supported by the two professional bodies not out of self interest but because it should make the Bill, which is difficult enough, more comprehensible even to lawyers. It has the merit, which I hope the Government will see, that whereas in Committee the three amendments referred specifically to the legal profession, Amendment No. 26 does not. It applies to any body coming before the OFT or the Competition Commission and there avoids that criticism. I beg to move.

5.45 p.m.

Lord Brennan: My Lords, I support the amendment. At the Report stage, which unfortunately I was unable to attend, a debate took place which the noble Lord, Lord Phillips, led on the balance to be struck between the interests of competition as an economic principle and the interests of the community to have quality of justice. The one should not be invoked at the cost of the other.

During the debate, as I read it, my noble friend Lord Sainsbury, in a clear and forthright manner, accepted the strength of the argument that we should be careful not to damage the quality of justice by remorseless pursuance of market principles of competition. If to describe that as a concession is to demean the quality of his agreement, I will not use the word "concession". It was plain to be read as no doubt it was plainly said.

But the important issue is this. If a profession such as the law—or indeed any profession—wants to give quality of service to the public, there are certain features of that task which self-evidently cost money and which must be paid for through the fees that people charge. The examples are obvious. The desire for people to be properly qualified by continuous professional development and education must be in

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the public interest. The need to regulate by discipline those who breach the standards the public would expect to be observed has to be paid for. Within my own profession—the Bar—the fact that we are now debating a levy against existing barristers which will be used to allow people from poorer backgrounds to become barristers is surely an acceptable expense within that profession. It meets a good public objective.

If any of those practices, which all involve cost, are to be regarded as necessary, they should be taken into account if and when any questions of competitive practices arise within the legal or any other profession. That was recognised in the Competition Act 1998, where the prohibition under Section 2 against anti-competitive practices was coupled with an exception in Schedule 4 for all the main professions, the structure of the Act meaning that those professions could, if they were able to establish a public interest, justify practices which might at first sight appear to be anti-competitive.

That was recognised in that Act; that Act sought to be compatible with our European treaty obligations; and, as I understood the debate on Report, my noble friend the Minister made clear that should competition practices in the law or any other profession be investigated, it was most likely to be done under that Act. If that is correct, the assurance which all professions would seek is that the present Bill should not provide some other route for investigation of professional practice if the Competition Act already fulfils that requirement.

If there is some further area of competition principle which this Bill deals with but the Competition Act does not, I am sure that my noble friend the Minister will make that clear. If there is no such extra dimension, I am sure that he will make it equally clear that we fall to be dealt with under the other Act and that if and when the Bill and the Act ever came to be considered, they would each be given the same meaning. All we seek on behalf of the professions is legislative consistency and sense, an objective with which I have no doubt my noble friend the Minister will agree. I am sure that he will show an equal measure of clarity and forthrightness in his acceptance of our arguments as did his noble friend the Minister on the previous occasion.

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