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Lord Razzall: My Lords, I share the general acceptance of the noble Lord, Lord Hodgson, of these regulations. I want to confine my comments to one point, which I regard as pretty fundamental. When the Minister opened the discussion he said that he was opening a debate. We have debates on Second Reading speeches, in Committee, on Report and at Third Reading. With regulations the Minister says, "These are the regulations that we, the Government, think we should have". The Opposition go through what I can perhaps call the charade of asking a number of questions about the regulations. Our only remedy as Opposition Members is to propose that the regulations should not be passed.
I speak as one who in an earlier life spent a lot of time dealing with competition law and the practice of it. The Minister and the noble Lord, Lord Hodgson, do not need me to tell them that these regulations provide fundamental alterations to competition law in practice. The fundamental point for the House is whether this is the right way to implement these sorts of provisions.
I understand that the Government have a timetable problem. The attendance of noble Lords in this House is currently limited to six, if we include the noble Lord leaning with attentive interest behind me. That does not demonstrate the importance of the laws we are about to pass. These measures have significant implications for matters such as entry to people's
business premises and personal residences under warrant. I can almost hear my noble friend Lord Lester behind me questioning the human rights aspects. Yet, here we are at 8.50 p.m. dealing with this item because of the way in which the Government have brought it forward.I have no complaint, nor has the noble Lord, Lord Hodgson, about the thrust of what the Government are trying to achieve. The point that I wanted to make in a gentle way is whether this is the right way to deal with fundamental changes to competition law. Dare I say it—the reason why the Government can deal with the matter in this way is that very few noble Lords in this House are particularly interested in this area. They leave it to the noble Lords, Lord Triesman and Lord Hodgson, or to me. That does not mean that it is the right way to make these alterations.
The Minister spoke for 22 minutes on introducing a regulation. The length of time he spoke indicated the importance of this regulation to law in our country. The noble Lord, Lord Hodgson, asked him a number of significant questions. However, there is no point in his answering the noble Lord because the noble Lord cannot do anything about it. The Minister may be able to clarify matters, but all the noble Lord, Lord Hodgson, can say if he does not like the answer is, "Well, I have to accept the regulation because I cannot amend it".
I put in a plea to the Government. It is not the fault of the noble Lord, Lord Triesman; he does not decide the Government's programme. In these technical areas which fundamentally change British law our body politic has to think carefully about whether the right way to make the changes is by regulation of this nature.
Having made that general point, of course I shall support the regulation. I agree with the thrust of what is happening. However, I am sure that if the matter had come to the House in primary legislation, the noble Lord, Lord Hodgson, and myself would be bringing forward amendments that the Government would be likely to accept. That is the friendly and amicable way in which the noble Lord, Lord Triesman, always deals with these matters.
The Earl of Erroll: My Lords, I rise briefly to echo and concur entirely with what the noble Lord, Lord Razzall, has just said. I came upon the orders by accident and listened with interest to the exposition of exactly why the EC should be allowed to amend our primary legislation without our debating it. I can see all sorts of good reasons for it being amended, but I am not at all sure that I am happy with the method by which it is done.
I was intrigued by a couple of things that the Minister said. At the end, he said that this gives us domestic control of the regulation. But I think that I heard him say at the beginning that EC legislation must run in parallel with our domestic law, and, in fact, will overrule it when there is a conflict. So I do not
see how we have any domestic control over it at all, or why we bother to keep domestic law, although I do not necessarily need a detailed answer on that.The Minister went on to say that it will be the best competition law. But if it complies with EC competition law, I do not see how ours will be better than anybody else's—or are we gold-plating again? In that case, we should carefully consider the gold-plating elements. This sort of thing should be done through proper parliamentary scrutiny and debate, not in the form of statutory instruments which we cannot amend. I was concerned when I heard about the powers that are being given to enter domestic premises, and so on. That is the sort of thing that Parliament should debate, because I am sure that that is not in the EC competition regulation.
My last point relates to something that I find irritating about many government measures. The Government produce incredibly complicated regulations and then, to be helpful, they produce something like this thick tome, which starts with a note that states:
- "has been prepared for illustrative purposes only, in order to aid Parliamentary consideration of the Regulations. It has no formal status and should not be relied upon for any other purpose".
All I can say is that if the Government cannot get it right, how is anyone else expected to? Let us say that I had a smallish business and could not afford expensive lawyers. I might want to rely on a document such as that, but I am told that I cannot. It is ridiculous that the Government should be allowed disclaimers of that nature. If they cannot get it right, I cannot see how they can expect anyone else to. That does not mean that such documents should not be issued—they should be—but they should not include a disclaimer such as that.
9 p.m.
Lord Triesman: My Lords, first, I thank noble Lords for raising one or two interesting issues for me to try to address. Given the lateness of the hour, I shall try to do so rapidly. If I do not cover all of them, I hope that noble Lords will accept that we will go through the record carefully and ensure that we write to them to explain anything that I inadvertently miss.
I start with the large-scale questions about the process in which we are engaged. That is obviously a matter of fundamental importance. Both the noble Lord, Lord Razzall, and the noble Earl, Lord Erroll, raised those questions. First, I accept what I took to be a mild rebuke that this is not a debate in the sense in which most people would use the word. It is certainly true that a considerable volume of statutory instruments enter your Lordships' House, which we deal with whatever the hour of the day or night as best we can schedule them. In a way, I make no apology for that, because I suspect that the alternatives would be worse.
None the less, that does mean that on occasion, we will be faced with what are very significant changes. I accept that—I think that I said that I saw them as that: they are
the first really big changes in this area for about 42 years. We will face big changes and this is a limited debate in that sense. I can only say to the noble Lord, Lord Razzall, that, having heard what he and other noble Lords said, we may be a small group but, goodness knows, it is a highly erudite one, from what I have just heard, and one that has obviously looked at the matter in some detail. It may be an issue that the Joint Committee on Statutory Instruments should look at. I should go no further than that today. No doubt, people will wish to consider the impact of the points made.Further to the comments of the noble Earl, Lord Erroll, when I referred to greater domestic control, I meant that I was pleased to see, as the statutory instruments were developed, that the requirement to designate UK national competition authorities to deal with EU regulation brought back some extremely important powers rather than leaving them with EU regulation authorities. I would rather they were dealt with by the Office of Fair Trading, the sectoral regulators and the others that I mentioned than elsewhere. The repatriation of some of those powers is good domestically.
Nothing said today indicates gold plating. In many ways it indicates that, in a very complex area, a successful attempt is being made to simplify as much as possible a good deal of complex material. Once it is simplified, either in explanations or statutory instruments, we are bound to make the obvious point that the law is the law. Illustrative statements about the law, and remarks about it in this House or elsewhere, are important explanations, but inevitably everyone will have to rely on ensuring that the law itself is obeyed and that we do not introduce ambiguity inadvertently.
The noble Lord, Lord Hodgson, raised a sequence of important questions. Like all speakers in this debate, I am grateful that we all seek the same enhancement of competition—the operation of the free market in vigorous circumstances—and that we all recognise that it is valuable for the United Kingdom. I was disappointed to hear that the website was quite so obscure. I am in a lifelong search for great websites, but I shall now conduct the experiment that the noble Lord, Lord Hodgson, has carried out, not because I disbelieve him in any respect but because I would like to feel that it could be got right.
The noble Lord's first question was about timetables. The timetable has been tight from the start, given the scale of the changes needed to give effect to the regulations and, in reviewing the domestic regime, considering the changes necessary to ensure that the EU and United Kingdom regimes were not so divergent as to cause considerable difficulties for those that the regime would cover—the overwhelming proportion of business. It is a very significant issue. It is true that the process has taken months. I do not want to depart significantly from the remarks of my honourable friend Gerry Sutcliffe in another place. He explained why the process had taken so long, and I have expressed as fairly and as clearly as I can my regrets about the legislation's late arrival in this House. One of the things that I take comfort from is
the extent of the consultation carried out. Sometimes consultation can take time, but it is nevertheless worth getting right.I understand the point made about the OFT timescale and the consultation period of six weeks. The consultation period will close on 4 June. Incidentally, responses will be made public, unless anybody has specified that confidentiality is required. The OFT hopes to publish final versions of the competition law guidelines and related guidelines by 1 August 2004, so that the procedural rules can come into operation on the same date. I hope that that will mean that that short time will, at least, be used to the optimum effect. I know that it is desirable to have the maximum time and not rush matters in consultation on any regulation. That is one of the guiding features of the work of the Better Regulation Task Force, for example. None the less, there is an intensive but sensible and well designed programme on the part of the OFT. There is every reason to think that it will be workable.
I was asked how many member states were ready to roll with the proposals on 1 May. We know that member states are in various states of preparedness for 1 May. Some will catch the train on the same date as we do, but a great deal depends, in all member states, on the structure of their domestic competition law and the timetables required for making amendments to that law. Obviously, we have little influence on that, just as they would have little influence on our position. All are co-operating fully within the European competition network, and the regulation will have direct effect from that point. Generally speaking, the legislative processes are moving rapidly, even if not all the states will be ready on 1 May, for the reasons that I gave.
I turn to the vexed issue of legal professional privilege. I think that the essence of the questions that I have been asked is whether the regulations weaken the protection of legal professional privilege. They do not. When the OFT investigates suspected infringements of EC competition law in the UK on its own behalf or on behalf of other national competition authorities, the UK rules on legal professional privilege will apply. It is not necessary or desirable to elaborate greatly on that statement. It is a clear statement, and the position is best expressed in clear terms.
I do not think that there is a difference to the protections that exist for in-house lawyers in a company. The point that has been made is straightforward: the OFT may receive communications from in-house lawyers from a national competition authority in a member state where the circumstances of communication for the in-house lawyer are not privileged. In those circumstances, the OFT may use the documentation received from other competition authorities in its investigation. The position in the UK does not change.
The decision on whether it is necessary to act on a request from another member state for an investigation is discretionary. I hope that there will be widespread co-operation; the system will not work
without it, and there would be little point in it. Having said that, I feel that the discretionary element is of some importance. We would not want to find ourselves dragged through widespread fishing expeditions of any kind, for example. That is an important factor.The amount of any penalty imposed will be determined by the OFT and calculated in accordance with published guidance. The draft guidance on the issue is the subject of separate consultations by the OFT. The closing date of the OFT consultations is 4 June. Once again, all the responses will be published on 1 August.
A point was made about the fifth factor—the adjustment to ensure that the maximum turnover figure was not exceeded and that fines could not be more that 10 per cent of the undertaking's world-wide turnover in the previous business year. I mentioned it in the initial statement. That is the description, and, if further detail is required, I shall be happy to write to any noble Lord who wishes to have it. However, that is the fundamental position.
I was asked about the position of the verticals, in particular as regards the newspaper and magazine distribution world. Perhaps I may say to the noble Lord, Lord Hodgson, that there is no expectation that that element of business will collapse. We do not believe that it will. Indeed, we would be considerably alarmed if we thought that it would. Generally, I do not think that the businesses involved think that it will collapse either. No one would want to take irremediable steps, in the circumstance that there may be problems.
The general arguments for the repeal of the verticals exclusion apply to newspaper and magazine industry businesses as they do for other industries. Anti-competitive agreements should all be subject to competition scrutiny. I do not think that we would want to see any stand outside it unless there was an overwhelming reason to do so. The Competition Act allows for anti-competitive effects of an agreement to be balanced against the consumer benefits that it provides. Obviously, if widespread loss of delivery of newspapers and magazines occurred, that would be disbeneficial of a quite major kind to the affected communities. As I say, we do not anticipate that that will happen.
I undertake to go back over the responses that have been received from that industry in order to ensure that no loopholes as regards the loss of benefits will be found. I do not believe that they will be found, but it is worth checking.
With regard to evidence that can be used in possible prosecutions, when the OFT is investigating suspected infringements of EC competition law in the UK on its own behalf or on behalf of another national competition authority, under Section 30 or Section 65J of the Competition Act, those are the provisions that would apply. Investigations will be conducted by the commission on its own behalf. When OFT officials assist the commission in its inspections Article 12 of the EC regulations will apply.
I make those points because that provision should stop the kinds of fishing expedition that would, quite rightly, cause considerable concern. From having discussed this matter in some detail with officials and others, my understanding is that it is not really expected that those will be the sources from which OFT investigations will lift off. I think that it is fair to say that the bulk of the possible investigations are much more likely to arise from complaints by injured parties, by complaints from whistleblowers—now becoming something of a factor—and by evidence that is coming from the European Competition Network that has been specifically established in order to assist in that area.
I should touch on self-incrimination. I do not think that there are any fundamental changes in the provisions in United Kingdom law on self-incrimination, but I shall make certain that I am right and I will write to noble Lords for clarity. At the moment, I am not aware of any fundamental point on that.
As regards the judicial hierarchy, Sections 62A and 65H both require an application to a High Court judge for a warrant. Court is defined in Part II as meaning the High Court. Therefore, there should not be the sort of problem that, quite rightly, I have been asked to deal with.
In the midst of all the issues that have been raised—I close with this and again apologise for the length of my response—the fundamental point is that this is a big change. It needed a degree of elaboration and I hope that noble Lords will forgive me for the extent to which I have done that. Modernisation of business regulation can be lost in the fine detail, but it is extremely important to the well-being of the United Kingdom economy. Indeed, all noble Lords have remarked in the course of our discussion that that is the objective of us all: good competition makes for sound business, which in turn increases the prosperity of the country and its people. That is the core message I have taken from the contributions to the debate.
When we introduced the Competition Act 1998, we recognised the desirability of aligning regulatory systems for the EC and the UK to bring them
substantially into parallel and to minimise uncertainty for business. Pursuing good and sound business practice and looking for the benefits of that—I am happy that we are all on the same side—does not remove from us the responsibility for ensuring that the businesses we are talking about are not embroiled in uncertainty, which is the purpose of what we have done.I have tried to respond to all the points as satisfactorily as possible. If I have not done so, no doubt noble Lords will let me know and I will come back to them in due course.
On Question, Motion agreed to.
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