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Lord Patten : My Lords, one should be properly cautious when rising from one's place to intervene if one has not been present at a Grand Committee, where complex issues such as this one were discussed fully. However, I have spoken in other parts of your Lordships' proceedings, and while I plead guilty to not having been present in Grand Committee when this issue was debated, I rise in strong support of what my noble friend Lord Hodgson of Astley Abbotts has just said. Governments of both political colours—not only the present Government, but earlier Conservative Administrations—have been accused, sometimes rightly, of going too far down the road of fulfilling what they see as the outcomes desired by an EU directive, or—to use the excellent phrase of my noble friend—of gold-plating.

That is not desirable in this case. We now have far too many new potential criminal offences being introduced, hand over hand, in this country. I do not speak of the 43 criminal justice Acts we have seen in the last nine years. One should proceed very cautiously before bringing into law new potential criminal offences which may never be used, may frighten practitioners, and may lie unnoticed on the statute book. That is not good legislation. My noble friend has put his finger on it: we should leave it to the panel. If other European jurisdictions can manage perfectly well without going this far, why on earth should this Administration go to the lengths of gratuitously introducing new and unnecessary criminal offences?

Lord Goldsmith: My Lords, in introducing his amendment, the noble Lord, Lord Hodgson of Astley Abbotts, rightly identified the starting point in Grand Committee. The Government believe that the requirements of Article 17 of the takeovers directive will not be satisfied simply by relying on the sanctions which the panel has at its disposal and is likely to be prepared to use. The noble Lord referred to what is happening in Ireland and Germany. I do not have details of that, so I cannot respond specifically to what he says. I certainly do not have details of, for example,
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the sanctions available to the pertinent bodies, or their practice in using them. There may be differences in practice that justify taking a different approach to the necessity of having a criminal offence.

I shall briefly summarise the points I made in Grand Committee and then pick up those raised by the noble Lords, Lord Hodgson and Lord Patten. There has been detailed discussion of, and consultation on, this matter. It is not intended to prevent the panel exercising its own powers, but—this is an important point, dealing with the issue of compensation, raised by the noble Lord—my understanding is that the panel does not want to police breaches after the event. The panel operates, during the course of a bid, by calling somebody in, requiring them to change the terms of their document so as to comply with the rules, and so forth. That is why, in particular, the power to order compensation does not appear to be an adequate sanction. I can also envisage circumstances in which the power to order compensation would not, in itself, be adequate because it would be difficult to identify just what the compensation ought to be. Certainly, given the time involved, the panel would not want to police breaches after the event in this way.

The second concern raised by the noble Lord was the possibility that the panel might, by changing the contents of the rules, enlarge the effect of a criminal offence. That theory is wrong because the offence relates to failures—I shall return to the terms of those failures—to comply with the rules about bid documentation. It identifies the relevant rules in Clause 635 by reference to the directive itself. "Offer document" means rules designated, or rules that give effect to Article 6.3 of the directive. "Response document" means a document required to be published by rules giving effect to Article 9.5 of that directive. The relevant documents, which are the subject matter on which a criminal offence can be founded, must meet the requirements of Articles 6 and 9 of the directive. No doubt, because these are directives, there is some scope for the precise content, but they still have to meet the requirements of Articles 6 and 9. They are limited by the boundaries of Articles 6 and 9, so it is not possible simply to extend them in that way.

A further point I want to emphasise is that we have looked carefully at whether the scope and clarity of the offence is sufficient. When I come to government amendments relating to this clause, we want to refine those in light of comments made in Grand Committee. When that is done we should see two things. The first is an offence that is clearly defined. The second is a light-touch approach to a criminal offence. I say this because we have not focused on it before: breach of the only rule giving rise to an offence arises, as subsection (3) says, only where the person knows that the offer document did not comply or was reckless about compliance.

Lord Hodgson of Astley Abbotts: My Lords, could the noble and learned Lord foreshadow—without firing his ammunition in respect of these later
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amendments—which amendments he is referring to when he speaks of refining the offence under this clause?

Lord Goldsmith: My Lords, we have discussed the persons subject to the offence, and we will come back in the amendments to the position of those who are directors of corporate bodies standing behind a bid. We debated this in Grand Committee. I emphasise that we have looked at that. I hope noble Lords will recognise that in this area, as in others, we have listened very carefully to what has been said by Members opposite, those on the Liberal Democrat Benches, and others who have participated. Where we have seen that there is a point, we have responded to it. We responded very substantially earlier today to the amendments I have been dealing with concerning auditors' liability and directors' duties. We have looked at this and seen that there is a need to make some refinements to those who are subject to it. As the Government responsible for implementing the directive, we take the view that unless we have an offence—albeit a light-touch offence—we will not be meeting the terms of the directive.

There are good reasons why the panel's powers would not be adequate if it was not prepared to exercise those powers after the event. That area needs to be met. Where the Government have taken the view that they need to do something to meet their international obligations, the House should be very slow indeed not to accept that, particularly given that, at the end of the day, the only person at risk would be somebody who knew that an offer document did not comply and was reckless as to whether it complied, but went ahead with it anyway.

The noble Lord, Lord Patten, was concerned that this might frighten practitioners. Someone who knows that he is putting forward a document that is non-compliant or is reckless about doing so should, in a sense, be frightened. He ought to be doing it right. I am sure that those participating in this debate have been personally involved in offer documentation, as I have, and know the huge amount of attention that all practitioners pay to what is going on. Only someone who is really reckless or intent on breaking the rules will find themselves in breach of this provision.

Lord Patten: My Lords, the noble and learned Lord the Attorney-General is quite right that people—practitioners, or whoever they are—should be fearful of the criminal law when it has been passed into statute. However, I genuinely seek education from him. I am self-evidently not a lawyer, but I know that words spoken by Ministers and reported in Hansard—particularly those spoken by noble and learned Lords such as the Attorney-General—can be carefully studied in future years. I have never heard the term "light-touch offence" before. I thought an offence was an offence was an offence. What does "light touch" mean in this context?

Lord Goldsmith: My Lords, I am happy to respond to that invitation. I meant that we could have said,
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"We need a criminal offence, so we will make it one that is committed not only where someone acts in a sharp, deliberate way to break the rules, or is reckless, but if someone breaks the rules through negligence". Someone could be careless and put forward an offer document which does not comply. We could even have said that people are guilty of criminal offences where there is no fault but they have broken the rule. It happens from time to time and we call those offences of strict liability. We could have done all those things; there are other ways in which this could have been a much more onerous criminal responsibility. That is what I meant by "light touch". We have taken the view that, to meet our international obligations, we need to have something which provides the possibility of a criminal offence, but we have put it as narrowly as possible. That is the response to the accusation of gold-plating. Once upon a time, gold-plating used to be rather a good thing to do, but in this context it is not.

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