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Lord Goldsmith: For the reasons I gave in relation to the last group of amendments, I cannot accept this amendment. It has the same viceI do not use that word pejoratively; the same defectas the amendment put forward by the noble Lord, Lord Sharman, in narrowing the people covered by the offence to those who are named as taking responsibility for the offer document. It even goes one stage further and removes the bidder from the scope of the offence as well. That is certainly not justifiable.
As to the explanation given by the noble Lord that in a particular case the bidder might be a newco, and therefore not have a great deal behind it, I shall have to think how good an argument that is. In any event, it does not cover the totality of those who would be, in the words of the Bill,
Lord Hodgson of Astley Abbotts: I shall consider what the Attorney-General has said to see whether the drafting could be improved to deal with the point he has made. I am not sure that our gateway is quite as wide as he says it is. In the mean time, I beg leave to withdraw the amendment.
The amendment moves us on to Clause 629, which we have touched on before, concerning compensation. The clause allows the Takeover Panel to order the payment of compensation if certain specified rules are breached. The panel has stated that this will apply to those code rules dealing with the "payment of money". Rather than allowing the panel discretion to order such an amount as is, in the very broad phrase of the clause, "just and reasonable", would it not be clearer for all parties concerned in a bid, including the panel itself, to set some parameters about the amounts which can be ordered to be paidfor example, that the intention is to put target shareholders in the position they would have been if the bidder had complied fully with the relevant rules? This is covered in Amendment No. A154C.
This would prevent arguments in the future as to the exercise of the panel's discretion in these matters, because it could point to some concrete guidance as to the amount reimbursable rather than if the broad words "just and reasonable" were retained in the clause. It would be helpful for the wider world if the Attorney-General could explain the Government's thinking as to the strategic purpose behind Clause 629whether it is to provide a high-level overview or a more stringent detailed test. I beg to move.
Lord Goldsmith: In Clause 629 we wanted to give the panel a power to include provision within its rules for the payment of compensation where rules are breached, but it is limited to a case, as the Bill provides, where the relevant breach is a breach of a rule, the effect of which is to require the payment of money. We did not want the panel just to become a body to whom any party with a grievance about a takeover bid process could turn in search of financial recompense, so the clause has intentionally been drafted in quite restricted terms.
The amendment would remove the "just and reasonable" criterion and prescribe instead, rather inflexibly, that the compensation should be designed to ensure that the shareholders should be in the same financial position as if the relevant rule had not been breached. That is not as satisfactory as the present clause on two grounds. For the panel to determine in what financial position the shareholder would have
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been could be quite difficult. What would the shareholder have done with the money if it had been paid? I have no doubt that is something someone claiming compensation would claim. They would say, "If only this had been done, I would be in this position; I would have done this or that, and I would have had this asset, or this income". We do not want to impose on the panel the obligation to make that sort of inquiry. Noble Lords opposite have referred to their experience, which is considerable. On the other side, with my experience as a lawyer, I know how complicated some people can make questions about what compensation ought to be.
That is one disadvantage. The amendment would also take out the useful criterion that the panel could decide what compensation was just and reasonable, which seems a helpful way to ensure that the effect of the clause will be just, but will not require the sort of analysis I have identified. It may be that in a particular case the panel might decide it would be right for it to determine what compensation is just and reasonable and what financial position the shareholder would have been in, but it would not be right to impose on it the obligation to do that in all cases. That would be the effect of the amendment, which I therefore cannot accept.
Lord Hodgson of Astley Abbotts: I thought the Minister made an elegant case and then shot his own fox at the end, if I may make so bold. He said that he suspected on most occasions the panel would be inclined to see what would have happened if
Lord Goldsmith: With respect, I did not say "on most occasions". I said I could see that there could be occasions when the panel might want to do that in an appropriate case. I did not say most cases, and I certainly do not agree it should happen in all cases.
Lord Hodgson of Astley Abbotts: I stand corrected. The reality is, though, that when the panel comes to see what is just and reasonable, it will seek to put the person into the same financial position as he would have been if the rule had not been breached. That is the practice it will almost certainly be following, so our amendment was aimed at creating a certaintyalthough I will accept that it has inflexibility attached to itthat this procedure was likely to be followed on most occasions. We will have another look at this, but in the mean time I beg leave to withdraw the amendment.
The noble Lord said: In Clause 630 we are looking at enforcement by the court of the panel's ruling. Amendment No. A155 is put forward on the advice of
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the Law Society, and is designed to clarify that the procedures that allow the panel to seek enforcement of its rule decisions by the court are not designed to create a forum in which the matters underlying the panel's decision are required to be re-examined.
Clause 630 is intended to provide a mechanism to the panel to apply to the court to enforce a rule decision or request for information. The Department of Trade and Industry envisages that on such an application a court would not consider it appropriate to re-hear the merits of the case. However, the drafting of "rule-based requirement" is ambiguous because it does not explicitly refer to the panel's decisions. It is open to litigants to argue that the section requires the court to consider whether or not a ruling of the panel has been breached, but in each case to consider whether the underlying rule has been breached.
The proposed amendment attempts to clarify the wording of the clause, in keeping with its aim, in order to dissipate the substantial risk of litigation re-testing the rules for decisions of the panel. Without this amendment, we are concerned that those subject to rulings may force the panel to seek such orders under Clause 630 to create an opportunity to have the original decision challenged in court. I beg to move.
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