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Lord McIntosh of Haringey moved Amendment No. 31:



"(8A) If, apart from this subsection, an order made by the Secretary of State under section 152(3) would be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it shall proceed in that House as if it were not such an instrument."

On Question, amendment agreed to.

Clause 187 [Cartel offence]:

Lord Hunt of Wirral moved Amendment No. 32:


    Page 143, line 8, at end insert—


"(1A) "Dishonestly agrees" means, for the purposes of subsection (1), making an agreement knowing that it has one or more of the consequences set out in subsections (2) to (6) in breach of the prohibition contained in section 2 of the 1998 Act (the prohibition) and not meeting the criteria in section 9 of the 1998 Act (the criteria for individual and block exemptions), with the dishonest intention of causing detriment to consumers or customers."

The noble Lord said: My Lords, we have debated the issue previously. I do not propose to set out the arguments in detail again. I shall merely say that there should be a clear definition of what constitutes a dishonest agreement.

Although we have attempted to define "dishonestly agrees" in the amendment, I hope the Minister understands that our prime purpose is to say that there ought to be a proper definition. If the Government can find a better one than ours, we should be very pleased to hear from them.

Clause 187 sets out the cartel offence. I can imagine defence counsel arguing that an agreement cannot be dishonest if it is exempted under UK competition law. That is a further reason why we need to provide a clear boundary for the criminal conduct. In doing so, surely the best way forward is to have linkage to the Competition Act in the definition.

In keeping with the principles of better regulation, the new offence should be set out in the clearest possible terms so that those affected can readily understand what they need to do, or not to do, to avoid committing a criminal offence. I beg to move.

Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord, Lord Hunt, for—if the noble Lord, Lord Kingsland, will allow me to steal the word—the telegraphic way in which he introduced the amendment. I do not want to go over the ground again.

The definition in the amendment is not workable. In fact, it is worse than unworkable, because the offence would be effectively unprosecutable. The definition includes a requirement to prove knowledge of a breach of the Competition Act 1998. It would be extremely

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difficult, if not impossible, for the Crown 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. Our objective of creating real deterrence against cartels would be undermined. I am utterly unconvinced by that part of the wording of the amendment.

I am also unconvinced because, just like the previous amendment on the subject, it includes the word "dishonest". In other words, it is circular. Trying to define dishonesty with the phrase,


    "with the dishonest intention of causing detriment",

takes us to a chicken and egg situation. I cannot see how we can get out of that. That is not just a debating point. It would be a debating point in Committee or on Report, but this is Third Reading. The provisions have got to be right now and this is wrong.

There is a perfectly good definition in case law—the Ghosh test meaning of dishonesty. As the noble Lord, Lord Hunt, did not go into any detail on that, I shall not do so either. It is all on the record. I hope the amendment will not be pressed.

Lord Hunt of Wirral: My Lords, I thought that the noble Lord, Lord Razzall, dealt with the Minister's point about the Ghosh case in the last debate, so I did not want to repeat that.

I greatly regret that the Minister is still unwilling to move on providing a proper definition in statute law. He relies solely on the definition in case law, which is not adequate. However, in the circumstances, as he is not willing to move, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 33 not moved.]

Clause 188 [Cartel offence: supplementary]:

[Amendment No. 34 not moved.]

Clause 189 [Cartel offence: penalty and prosecution]:

The Deputy Speaker (Lord Murton of Lindisfarne): My Lords, before I call Amendment No. 35, I must tell the House that if it were to be agreed to, I could not call Amendment No. 36 owing to pre-emption.

6.30 p.m.

Lord Kingsland moved Amendment No. 35:

Page 144, line 40, leave out subsection (2) and insert—


"(2) In England and Wales and Northern Ireland, proceedings for an offence under section 183 may be instituted only by the Director of the Serious Fraud Office with the consent of the OFT."

The noble Lord said: My Lords, in moving Amendment No. 35, I intend also to speak to the amendments in the group beginning with Amendment No. 33 and the group beginning with Amendment No. 35. As the Minister may be aware, the Public Bill Office drew to my attention the infelicities of some of the amendments in these groups. On mature reflection, I must say that I agree with the Public Bill Office. I am

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therefore very happy not to move or speak to Amendments Nos. 33, 34, 37 and 38. However, in moving this amendment, I shall also speak to Amendments Nos. 36, 39 and 40.

This matter has been well rehearsed in Committee and on Report. The issue is the degree to which the OFT should become involved in criminal investigations. In the Government's response—of December 2001—to consultation, it was stated that they had decided that the SFO should be the lead prosecutor. The Minister is well aware that we agree with that. In our submission, however—and I believe that this view is shared by noble Lords on the Liberal Democrat Benches—the Bill does not reflect the Government's statement as it gives equal powers to the OFT and the SFO and also gives the OFT extensive criminal investigation powers.

The powers of the OFT to investigate civil infringements committed by companies under the Competition Act 1998 are very different from the criminal powers under this Bill. The rights of defence differ as well as the procedures. As the noble Lord, Lord McIntosh, has heard me say before, giving the OFT both sets of powers will lead to confusion, particularly as most criminal investigations are likely to stem from an initial investigation under the Competition Act. We question whether the checks and balances within, and the experience of, the OFT are sufficient to prevent confusion of the two roles.

Moreover, we do not accept the Government's view as stated in another place that an individual's trial would not be prejudiced by an adverse finding in respect of substantially the same matter against his employer company by, say, the Commission in Brussels under Article 81.

Nor do we think it appropriate that the chairman of the OFT, who has no experience of criminal investigations and prosecutions, should authorise surveillance on application by one of his officials under the Regulation of Investigatory Powers Act 2000. Instead, if the OFT is to have surveillance powers, application should be made to an independent judicial authority such as the Attorney General or a High Court judge.

In Committee, the noble Lord, Lord McIntosh, stated that the SFO and the OFT would work together in both cartel investigations and also decisions to prosecute. However, the noble Lord went on to say that it will be the SFO who will undertake any prosecution in England, Wales and Northern Ireland. The Government no doubt believe that this method will link the SFO's expertise in criminal prosecutions with the OFT's expertise in competition investigation. The noble Lord, Lord McIntosh, was anxious to underline 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.

I moved this amendment again on 15th October 2002 on Report. Although the Government stated in Committee that they did not envisage that the OFT

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would take on the role of prosecutor unless there was a change of circumstances in the future, the noble Lord, Lord McIntosh, said:


    "The OFT would have to take time to develop the necessary capability and resource before it could take on a prosecution role".—[Official Report, 15/10/02; col. 841.]

That implies that it is intended that the OFT will in due course become a prosecutor.

Although it was argued that the OFT could have, in effect, Chinese walls to separate the investigatory from the prosecutorial function, it is a fundamental principle that distinctions in roles are transparent and capable of being understood by those affected by them. Given that the internal structure of the OFT can be changed at the instance of the management of the OFT, there is no guarantee for individuals that the internal divisions will be maintained, or maintained at an appropriate level.

As the noble Lord, Lord Razzall, pointed out (at col. 840 of the Official Report of 15th October 2002) the Government have resisted some amendments on the ground that they cover eventualities that might not arise. Here, the Government are specifically catering for a situation which they say is unlikely to arise.

I apologise to the noble Lord, Lord McIntosh, for returning to this matter, but we feel that there is a real risk of confusion of powers. It is crucial on an issue affecting the fundamental rights of the citizen that the Government ensure that the procedures laid down in the Bill are as fair as they possibly can be. I beg to move.


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