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Lord McIntosh of Haringey: My Lords, I am not entirely clear from what the noble Lord, Lord Kingsland, said at the beginning whether he is speaking only to Amendments Nos. 35 and 36 or speaking also to Amendments Nos. 39 and 40, which are concerned with the Regulation of Investigatory Powers Act. If it is the latter, I should reply to all four amendments.
Lord Kingsland: My Lords, I apologise to the noble Lord. I dealt with the group beginning with Amendment No. 33 and then spoke to Amendments Nos. 35, 36, 39 and 40. I thought that I had made that clear. I said that I would speak to both groups because I noted that the group beginning with Amendment No. 33 includes Amendments Nos. 37 to 41. I think that that is consistent with what I said.
Lord McIntosh of Haringey: My Lords, the misunderstanding was my fault. I shall deal first with Amendments Nos. 35 and 36 and then go on to Amendments Nos. 39 and 40.
As has been said, Amendments Nos. 35 and 36 are similar if not identical to earlier ones which have been identified. The core of the accusation, if I may put it that way, is that it is inappropriate for the Office of Fair Trading to have concurrent investigation and prosecution powers with the Serious Fraud Office. The Bill provides for the SFO and the OFT to prosecute the new offence in England, Wales and Northern Ireland,
but the expectation of the Government, the SFO and the OFT is that the SFO will carry out all prosecutions initially. The noble Lord, Lord Kingsland, has correctly quoted me as saying something like that on Report. The SFO has the necessary resources and experience for the criminal prosecution of this type of case, having prosecuted other white-collar crime such as insider dealing for many years.Amendments Nos. 35 and 36 seek to amend the arrangements for the prosecution of the new offence. The effect is the same in both cases. I presume that the reference in Amendment No. 35 to Clause 183 should be to 187 under the new numbering. Both amendments would make the SFO the sole prosecutor, but subject its prosecutorial role to the consent of the OFT. On the latter point, it would be neither workable nor appropriate to give the prosecution role to the SFO but to deny it the discretion to take the final decision on which cases to prosecute. Of course, the SFO will work closely with the OFT on cartel cases which look likely to lead to criminal prosecution, but the final decision will rightly be theirs.
The noble Lord, Lord Kingsland, cast doubt on the kind of conflict that he claims might exist within the Office of Fair Trading as between its different responsibilities. The Director-General of Fair Trading commissioned an independent review to consider changes to OFT procedures required by the introduction of criminal sanction for cartels. That review was conducted by Sir Anthony Hammond, the former Treasury Solicitor, and Roy Penrose, Queen's Police Medal. They concluded that if the OFT were to prosecute,
- "it would [also] be possible to ensure, by creating suitable internal structures, the separation of the investigatory from the prosecutorial function, thus complying with what has become known as 'the Phillips principle' ie: that those taking the legal decision to prosecute should be seen to be separate from and independent of the investigators".
As I have said, the OFT role initially will be solely as investigator. However, the Bill allows the flexibility for the OFT to take on a prosecutorial role at some time in the future, if that becomes appropriate. That might be the case if the number of cartel prosecutions created a conflict with other SFO priorities, although I should emphasise that we do not expect a large number of prosecutions. Again, the noble Lord, Lord Kingsland, reflected correctly what I said on Report. Before it could take on a prosecution role, the OFT would have to develop the necessary capability and resource. None of this is a new element of government policy—we said all this in our response to consultation in December 2001. We said that the SFO should be the,
- "lead prosecutor in England, Wales and Northern Ireland with the OFT as an additional named prosecutor".
The noble Lord, Lord Kingsland, spoke also to Amendments Nos. 39 and 40. I could respond also to Amendment No. 41. These amendments concern powers of investigation. They would simply take out certain clauses. They would remove the power for the OFT to investigate the offence; the power to seek documents under notice; and any powers given to authorised persons. Some of the powers remain, but they are meaningless in the light of the proposed amendments. These powers are necessary to investigate the offence by the most appropriate investigatory body for such an offence—the Office of Fair Trading. These clauses authorise the OFT to investigate cartel offences and exercise important powers of investigation if there are reasonable grounds for suspecting that an offence under Clause 187 has been committed. The powers are intended to be tough and effective yet provide safeguards for those being investigated. They are broadly modelled on investigatory powers conferred on the Serious Fraud Office by the Criminal Justice Act 1987. The SFO is the intended prosecutor for this offence and may at a later stage of an investigation carry out some follow-up or additional investigation. For that reason it is necessary to align the OFT investigatory powers with those given to the SFO. The investigatory powers are restricted to this offence only; that is, cartels. The OFT will continue to investigate infringements of Chapters 1 and 2 of the Competition Act 1998 using powers specifically granted under that Act. Those powers are intended to facilitate civil investigations against undertakings.
The OFT can carry out an investigation if there are reasonable grounds for suspecting that an offence under Clause 187 has been committed. The powers of investigation cannot be used unless that threshold is met. Whether there are reasonable grounds for suspicion will depend on the information available. To remove those powers would make an investigation impossible and would render the new offence meaningless. For the new offence to carry a deterrent effect and to eliminate existing and future cartels appropriate powers of investigation are necessary. Those powers need to be accompanied by appropriate safeguards and also provide for the power to hold those responsible who obstruct justice and fail to comply with an investigation. The clauses provide the necessary powers of investigation, adequate safeguard and appropriate offences.
I did not say this when I referred to the definition of "dishonesty" earlier, but, frankly, if we had agreed to the definition of "dishonesty" proposed in the earlier amendments, we would have taken the heart out of the cartel provisions in Part 6 of the Bill. If we take away the investigatory powers provided in the Bill by removing the clauses we are discussing, we effectively take the heart out of the cartel part of the Bill. It is impossible to conceive how we could have an effective regime against hard-core cartels of the kind which are targeted in this part of the Bill unless we have the parts of the Bill which would be removed by these amendments.
My understanding has always been that both opposition parties supported the criminalisation of cartels. However, that is not shown in the amendments we are discussing. If the House were to accept them, we would lose this important part of the Bill and this important protection for the consumers of this country.
6.45 p.m.
Lord Kingsland: My Lords, I am most grateful to the Minister for his detailed reply. I have heard large parts of it before but that is not his fault. He has had to listen to large parts of my submissions on this subject as well.
If it were the intention of the Opposition to achieve the effect with respect to investigative powers that the Minister suggests, I would wholly agree with his conclusions about our inconsistency. But the Minister knows very well that that is not the purpose of these amendments. The purpose of these amendments is to make it absolutely clear that where criminal prosecutors are concerned, it is the SFO that is the responsible body and not the OFT.
The reason for that is as follows: to seek to give coterminous responsibilities, or to blend the two in some way or other, would give, in the case of a criminal prosecution, an unfair advantage to the prosecutor, and place the potential defendant at a serious disadvantage. These difficulties could be overcome in the ways that the Opposition have suggested in the course of the Committee and Report stages of this Bill. The Minister has to see our amendments in that context. They are certainly not wrecking amendments. Of course, we accept that the SFO would have to have full investigative powers in circumstances where it proposed to undertake a criminal prosecution.
However, the Minister is sticking by his guns. I am not, on balance, inclined to take the opinion of the House. Therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 36 and 37 not moved.]
Clause 191 [Investigation of offences under section 187]:
Clause 192 [Powers when conducting an investigation]:
Clause 194 [Exercise of powers by authorised person]:
Clause 198 [Surveillance powers]:
[Amendments Nos. 42 and 43 not moved.]
Clause 203 [Disqualification]:
Clause 208 [Reform of Community competition law]:
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