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Lord Kingsland moved Amendment No. 29:



"( ) For this purpose "any person aggrieved" shall mean any person who is a subject of the reference or possible reference and who is directly affected by the decision."

The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendment No. 30.

Although I am moving Amendment No. 29, it has been spoken to sufficiently both in Committee and on Report for me to remain silent on it at Third Reading. I misled the Minister with respect to the equivalent amendment under Part 3 of the Bill. I had meant to move it but to say that I should not speak to it for the same reasons as I shall not speak to it in relation to market investigations.

The Minister is aware that the intention of Amendment No. 30 is to provide for a substantive appeal on the merits from decisions of the Competition Commission rather than the more limited form of judicial review proposed in the Bill. In contrast with appeals under the Competition Act, this Bill provides only for a form of judicial review for decisions taken under the new market investigation powers.

This amendment has some similarities to the amendment that we tabled to Part 3 of the Bill in respect of mergers. However, in my submission, it is of even greater importance. The degree of initial consideration given to potential market investigation is much less than the degree of consideration given at an initial stage to proposed mergers.

In Committee, the noble Lord, Lord Sainsbury of Turville, stated that, as with mergers, the Government continued to believe that a review based on judicial review was the right means of challenging decisions taken on market investigations. As with mergers, discretion is given to the authorities and I accept that in the Alconbury case suggests that, to a limited extent, material error could be grounds for intervention in judicial review cases. These arguments are to be found at col. 1528 of Hansard for 18th July.

However, in our view, the effect of the Bill as drafted is that in these cases, there will be only one examination—by the Compeitition Commission—with no other body empowered to check and confirm the facts as found or the conclusions drawn by it. The Office of Fair Trading will not have carried out any detailed review before making the reference to the commission: this is made clear by the draft guidelines on market investigation references published in July 2002. Under Clause 126, there is a relatively low threshold for making market investigation references: the OFT must have "reasonable grounds for suspecting" that competition is prevented, restricted or distorted in some markets in the UK. In paragraph 3.7 of the draft guidelines the OFT states that it,


    "will not attempt to make more than a preliminary analysis",

28 Oct 2002 : Column 62

before making a reference. This is borne out by paragraphs 2.11 and 2.19.

As I have noted, the route taken by the OFT will have a fundamental impact on the rights of the parties concerned and, in particular, on their right of appeal. There is no logic in creating an expert competition appeal tribunal if significant competition cases are required to be heard by the High Court under judicial review—a refrain that the Minister has heard on more than one occasion during today's debates. Moreover, as I have noted in connection with mergers, we very much doubt that judicial review will give the courts sufficient jurisdiction to ensure that the evidence has been correctly analysed and the appropriate conclusions drawn.

The Minister's reaction on Report did not change. It was, in substance, the same as that in relation to merger references. Yet the arguments are even stronger in relation to market investigations than they are in relation to mergers, for two reasons. First, although no fine would be imposed, should the outcome of a review be adverse to a particular company the remedies which may be available are extensive and include divestment of a business. Secondly, in some cases, the OFT will have the choice between a Chapter 2 investigation and a market investigation with, as already observed, significant differences in relation to the rights of the parties concerned and in particular their right of appeal.

Moreover, as in the case of mergers, judicial review will not necessarily offer redress against areas in relation to, say, market definition, degree of competitiveness in a market and the many other aspects involved in an investigation. I beg to move.

Lord McIntosh of Haringey: My Lords, nine-tenths of what I could say now I said on the earlier amendments on mergers. The arguments for judicial review as opposed to a total rehearing are unchanged, and it would be unfair of me to subject the House to them again.

I ought to refer to the point that the noble Lord, Lord Kingsland, raised today and in correspondence with my noble friend Lord Sainsbury; that is to say, the choice that the OFT might have between a market investigation and a Competition Act 1998 decision. I do not think that the noble Lord used the word bias, but he suggested that the OFT might be tempted to use one method rather than another because of the nature of the appeal proceedings. I think I understood the noble Lord correctly on that matter.

When the noble Lord raised the matter in Committee, my noble friend Lord Sainsbury sought to reassure him that no such bias would arise because the two different types of appeal were appropriate to two different types of decision. My noble friend wrote to the noble Lord on the 30th September with a copy of the guidelines that the OFT intends to publish on when it would pursue a market investigation and when a Competition Act decision. The clear message from the OFT is that it will always consider action under the Competition Act first, and that no account will be

28 Oct 2002 : Column 63

taken of the relevant appeal mechanism. I hoped that that would satisfy the request for objective guidelines and that the noble Lord would be prepared—I think he used these words himself—to move away from this amendment.

I do not expect the noble Lord to be satisfied with the judicial review arguments in the more general sense, but we have had that argument and passed beyond that stage. I hope that this amendment will not be pressed.

Lord Kingsland: My Lords, I think I made it clear in my initial observations that I regard the case against judicial review in market investigations to be even stronger than in the case of mergers.

That is partly for the reason on which the Minister has reassured me, for which I thank him. But, more importantly, it is also because the initial stage of the investigation of a potential market distortion is, in my submission, little short of derisory. There is only one real bite at the cherry, and that is insufficient.

Given the approach of the courts to commercial judicial review, I have little hope that the kind of review that will be offered to a complainant will look properly at the substance of the decision taken. It is important that the substance of decisions is looked at carefully. Quite apart from the issue of fairness, it will keep the investigator on his toes. For that reason, although I did not call a vote on mergers, I wish to test the opinion of the House.

6.14 p.m.

On Question, Whether the said amendment (No. 29) shall be agreed to?

Their Lordships divided: Contents, 72; Not-Contents, 113.

Division No. 3

CONTENTS

Anelay of St Johns, B.
Attlee, E.
Baker of Dorking, L.
Beaumont of Whitley, L.
Biffen, L.
Blaker, L.
Brooke of Sutton Mandeville, L.
Brougham and Vaux, L.
Byford, B.
Campbell of Alloway, L.
Carlisle of Bucklow, L.
Carnegy of Lour, B.
Cavendish of Furness, L.
Colwyn, L.
Cope of Berkeley, L. [Teller]
Craig of Radley, L.
Craigavon, V.
Dean of Harptree, L.
Dixon-Smith, L.
Eden of Winton, L.
Elles, B.
Elliott of Morpeth, L.
Elton, L.
Forsyth of Drumlean, L.
Fowler, L.
Geddes, L.
Glentoran, L.
Goschen, V.
Griffiths of Fforestfach, L.
Hayhoe, L.
Henley, L.
Hooper, B.
Howe, E.
Howe of Aberavon, L.
Howe of Idlicote, B.
Howell of Guildford, L.
Hunt of Wirral, L.
Jenkin of Roding, L.
Jopling, L.
King of Bridgwater, L.
Kingsland, L.
Lamont of Lerwick, L.
Lang of Monkton, L.
Luke, L. [Teller]
Lyell, L.
MacGregor of Pulham Market, L.
Marlesford, L.
Masham of Ilton, B.
Mayhew of Twysden, L.
Monro of Langholm, L.
Mowbray and Stourton, L.
Moynihan, L.
Murton of Lindisfarne, L.
Noakes, B.
Northbrook, L.
Northesk, E.
O'Cathain, B.
Park of Monmouth, B.
Peyton of Yeovil, L.
Rawlings, B.
Reay, L.
Rees, L.
Renton, L.
Rotherwick, L.
St John of Fawsley, L.
Sharples, B.
Shrewsbury, E.
Taylor of Warwick, L.
Trumpington, B.
Tugendhat, L.
Waddington, L.
Walker of Worcester, L.

NOT-CONTENTS

Acton, L.
Ahmed, L.
Amos, B.
Andrews, B.
Ashley of Stoke, L.
Ashton of Upholland, B.
Bach, L.
Barnett, L.
Bassam of Brighton, L.
Bernstein of Craigweil, L.
Bhatia, L.
Billingham, B.
Blackstone, B.
Blease, L.
Borrie, L.
Bragg, L.
Brennan, L.
Brookman, L.
Burlison, L.
Campbell-Savours, L.
Christopher, L.
Clark of Windermere, L.
Clinton-Davis, L.
Corbett of Castle Vale, L.
Crawley, B.
David, B.
Davies of Coity, L.
Davies of Oldham, L.
Dean of Thornton-le-Fylde, B.
Desai, L.
Dixon, L.
Dormand of Easington, L.
Dubs, L.
Elder, L.
Evans of Parkside, L.
Falconer of Thoroton, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Filkin, L.
Fyfe of Fairfield, L.
Gale, B.
Gavron, L.
Gibson of Market Rasen, B.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Gregson, L.
Grenfell, L.
Grocott, L. [Teller]
Harris of Haringey, L.
Harrison, L.
Haskel, L.
Hayman, B.
Hilton of Eggardon, B.
Hogg of Cumbernauld, L.
Hollis of Heigham, B.
Howie of Troon, L.
Hughes of Woodside, L.
Hunt of Chesterton, L.
Irvine of Lairg, L. (Lord Chancellor)
Islwyn, L.
Janner of Braunstone, L.
Jeger, B.
Jordan, L.
King of West Bromwich, L.
Kirkhill, L.
Layard, L.
Lea of Crondall, L.
Lipsey, L.
Lofthouse of Pontefract, L.
Macdonald of Tradeston, L.
McIntosh of Haringey, L. [Teller]
MacKenzie of Culkein, L.
Mason of Barnsley, L.
Massey of Darwen, B.
Merlyn-Rees, L.
Milner of Leeds, L.
Mitchell, L.
Morgan, L.
Morris of Aberavon, L.
Parekh, L.
Patel of Blackburn, L.
Pendry, L.
Pitkeathley, B.
Plant of Highfield, L.
Prys-Davies, L.
Radice, L.
Randall of St. Budeaux, L.
Rendell of Babergh, B.
Richard, L.
Rooker, L.
St. John of Bletso, L.
Sewel, L.
Sheldon, L.
Simon, V.
Stone of Blackheath, L.
Strabolgi, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Temple-Morris, L.
Thornton, B.
Turnberg, L.
Turner of Camden, B.
Walker of Doncaster, L.
Warwick of Undercliffe, B.
Weatherill, L.
Whitaker, B.
Whitty, L.
Williams of Elvel, L.
Williams of Mostyn, L. (Lord Privy Seal)
Winston, L.
Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.

28 Oct 2002 : Column 65

6.25 p.m.

[Amendment No. 30 not moved.]

Clause 180 [Orders under Part 4]:


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