§ Mr. Lansley
I beg to move amendment No. 147, in page 6, line 5, leave out "Secretary' of State" and insert "Lord Chancellor".
Mr. Deputy Speaker
With this it will be convenient to discuss the following: Government amendment No. 158.
Amendment No. 148, in schedule 2, page 188, line 12, at end insert—
'(1A) A person is not eligible for appointment as an ordinary member unless he appears to the Lord Chancellor to have appropriate experience and knowledge (whether of competition law and practice, other relevant law and practice, economic and business practice, or experience in relation to any sector of industry to which the Competition Appeal Tribunal exercises an appellate function'.
§ Government amendments Nos. 169 to 181.
§ Amendment No. 311, in clause 17, page 7, line 39, leave out "that" and insert "as to whether".
§ Amendment No. 312, in page 8, line 1, leave out "that" and insert "as to whether".
§ Amendment No. 313, in page 8, line 3, leave out "that" and insert "as to whether".
§ Amendment No. 314, in page 8, line 4, leave out "that" and insert "as to whether".
§ Government amendments Nos. 372, 159, 182 to 184, 252 to 255, 160 and 161.
Amendment No. 315, in clause 116, page 82 leave out lines 25 to 34 and insert—
'(5A) The Competition Appeal Tribunal may confirm or set aside the decision which is the subject of the appeal and may—
§ Government amendments Nos. 256, 257, 296 and 297.
§ Mr. Lansley
This group of amendments relates to the Competition Appeal Tribunal. There are 29 Government amendments, which I am sure the Minister will tell us about in due course. I want to speak to amendments Nos. 147 and 148, tabled in my name, and I shall also refer to our amendments Nos. 311 to 314 and 315.
1061 The purpose of amendment No. 147 is to change the responsibility for the appointment of ordinary members of the Competition Appeal Tribunal's panel. Hon. Members will recall that the tribunal was established under the Competition Act 1998, and consists of a president, a panel of chairmen and ordinary members. The ordinary members are appointed by the Secretary of State, as distinct from the Lord Chancellor, who is responsible for the appointment of the president and the panel of chairmen; that is carried forward into this Bill. The president and the panel of chairmen have responsibility not only for having competition law expertise but for ensuring that the tribunal behaves in a way that is consistent with the way in which a court would consider similar decisions.
As the Government have constructed the legislation, the Competition Appeal Tribunal indeed has to behave like a court in some respects, in that it applies the principles of judicial review to appeals that are made to it. It is, therefore, necessary for it to have legal expertise. For that reason, if for no other, appointment by the Lord Chancellor is to be sought after.
There is, however, a particular reason why I propose that the Lord Chancellor should also be responsible for appointing the ordinary members. Under the Competition Act, it was correctly felt that the ordinary members could be appointed by the Secretary of State because they would bring the additional expertise necessary to examine appeals on their merits, on issues relating to anti-competitive agreements or abuses of a dominant position. The cases brought before the tribunal demonstrate that experience not only of competition law but of economic analysis of competition is necessary to reach decisions on those issues. I shall come to appropriate expertise when I speak to amendment No. 148.
Other things being equal, the Secretary of State could continue to appoint the ordinary members of the tribunal, in relation to decisions on the Competition Act, without arty problems. That is because the decisions that are appealable to the Competition Appeal Tribunal under the Competition Act come from decisions made by the Office of Fair Trading. Under the Bill, however, the decisions will not necessarily be made by the Office of Fair Trading or the Competition Commission. In certain circumstances, they will be made by the Secretary of State. Of course, under the Fair Trading Act 1973, such decisions used to be appealable to the High Court, so a judge would be responsible for assessing judicial review decisions made by the Secretary of State. However, the Government propose in the Bill that decisions made on judicial review grounds be appealed to a body whose members are appointed by the Secretary of State.
My primary contention in speaking to amendment No. 147 is that that is an unacceptable infringement of the proper independence of the tribunal in exercising its function. Indeed, such an independent and impartial tribunal is required by article 6 of the European convention on human rights. However, we could arrive at circumstances in which a decision made by the Secretary of State is appealed on judicial review grounds, but in which one of the members of the body to which it is referred is about to be reappointed—or not—by the Secretary of State. By the simple expedient of making the Lord Chancellor rather than the Secretary of State 1062 responsible for such appointments, we can escape that problem, so I commend the amendment to the Minister's consideration.
Amendment No. 148 is designed to extend the description of the experience that ordinary members of the Competition Appeal Tribunal should have. My reason for tabling the amendment is that it is clear that the tribunal will not only be asked to consider judicial review decisions, but be used as a body under sector-specific legislation. For those who care to look, schedule 9 gives a range of examples in which that arrangement will apply. The decisions that will be made by sector regulators, especially in respect of licence conditions, are not simply legal decisions, but relevant to economic analysis and require business experience.
That point was further brought home to me when it became clear that in the draft Communications Bill that is being scrutinised elsewhere—I am a member of its scrutiny committee—the Government intend that the Competition Appeal Tribunal be the body to which decisions made by the Secretary of State or the Office of Communications will be appealed. Those decisions will be substantive and not made simply on a judicial review basis, so general legal expertise and competition law expertise will not be sufficient for the panel in dealing with them.
To make the Bill more effective in terms of the availability of opportunities for appeals to be heard in respect of sector regulators' decisions on licence conditions, my second submission on amendment No. 148 is that the Minister should think seriously about extending the sort of business and economic analysis experience that panel members of the Competition Appeal Tribunal can bring to bear.
I want briefly to refer to amendments Nos. 311 to 314. The amendments deal with clause 17, which amends the Competition Act, and are intended to ensure that the question whether a claim for damages might be brought to the tribunal is determined not by whether the OFT has decidedthat … the prohibition has been infringed",but by whether it has made a decision "as to whether" it has been infringed. The amendments do not stem only from the fertile imaginations of Opposition Members, but derive from the recommendations of the Joint Working Party on Competition Law of the Bars and Law Societies of the United Kingdom.
As I understand it—I apologise if I have misunderstood the joint working party—the purpose of the provisions as things stand is that a court can entertain an application for damages by a private party in respect of infringements or argued infringements of the anti-competitive agreements or in relation to prohibitions on abuse of a dominant position. The current structure of the Bill would mean that where the OFT has decided that such an infringement existed, an application for an award of damages would go to the Competition Appeal Tribunal. However, the concern is that those who wish to argue that there is an infringement by which harm has arisen and for which damages may be claimed could still go to the court to make a private claim.
For my purposes, I will be made comfortable if the Minister can assure me that it would not be possible for a further claim to be made when the OFT decides that such 1063 an infringement has not been made. If it is possible for the matter to be taken to the court when the OFT has decided that there is no infringement and has not proceeded, that will be an additional jeopardy. It is that jeopardy that the amendments are designed to remove, so that the issue rests with the competition authorities and the Competition Appeal Tribunal, as I think the Government would have intended.
Amendment No. 315 is intended to test the issue. Its purpose, which is to make decisions on merger references appealable to the Competition Appeal Tribunal on their merits, seems on the face of it to be a step too far. However, it is important to test the Minister out, especially as I do not think that that happened in quite the same terms in Committee. The question is whether the decision by the OFT on making a merger reference is sufficient for the subsequent investigation by the Competition Commission, which is usually the determining body in this regard, to be regarded as a full appeal by an independent and impartial tribunal. I think that the answer to that question is yes in terms of mergers, but for reasons that I shall come to in speaking to a later group of amendments, I think the answer is no in so far as market investigations are concerned.
If the Minister can further assure us that the Competition Commission is the appeal body for such purposes—the independent and impartial tribunal that is needed for appeal against a substantive decision on a merger reference by the OFT—we will be sure that we have the two-stage process that is necessary to give proper reassurance to those who are affected by competition decisions.
§ Dr. Vincent Cable (Twickenham)
I should like to say a few words in support of proposals that seem sensible and constructive. I am not a lawyer either and I take my cue from the Law Society, but it seems to me that some perfectly justifiable points are being raised. In particular, I refer to amendment No. 315. I think that the question that is being asked—it has been put slightly differently from the way in which the hon. Member for South Cambridgeshire (Mr. Lansley) has put it—is about why there is a difference between the ways in which the Competition Act and the Bill work. As I understand it, the Competition Act allows a full and substantive appeal to be made on the basis of the merits involved, but the judicial review process for which the Bill provides is much more truncated. It is not obvious why the two matters should be dealt with somewhat differently, and the amendment is designed to provide not only a stronger process of appeal, but some consistency between the two measures. It would be useful to hear from the Minister the reasons why that difference is being maintained.
§ Miss Melanie Johnson
The hon. Member for South Cambridgeshire (Mr. Lansley) has already covered the aims of amendments Nos. 147 and 148. On the first point, which is that the amendments would ensure that the Lord Chancellor would make all the appointments, as I explained in Committee, we are happy with the division of responsibilities that we envisage for the Lord Chancellor and the Secretary of State. I thought that the hon. Gentleman shot his own foot somewhat by pointing out that there would be a difference between the role of 1064 the chairman and president and that of the other appointees to the tribunal, as those on the panel of chairmen would have to understand what was consistent and behave as if the tribunal were a court. The tribunal is indeed a court, and it therefore makes sense that the people who are appointed have explicit qualifications. The Lord Chancellor obviously has an expertise that is at a premium in considering such questions. We believe that his involvement in those cases should ensure that we attract candidates of the highest calibre to be chairmen.
However, we believe that the Secretary of State for Trade and Industry is best placed to identify and select candidates with the necessary blend and breadth of experience and background to constitute ordinary members. They will not have to carry out legal roles, nor will they require legal qualifications. Such members will not necessarily be bringing specific legal expertise, but they will be expected to have expertise relevant to competition. They could be drawn from a wide range of backgrounds. The background could be legal but it could also be in economics, business, accountancy or other areas. For that reason, we believe that the right balance has been struck.
There are already measures in place to ensure that the ordinary members, chairmen and president can carry out their duties without any external influence being brought to bear. We have strengthened these measures. The only grounds for removing any member from office will he incapacity or misbehaviour. The scenario that the hon. Member for South Cambridgeshire entertained briefly of a member being removed is not an issue. Also, members and chairmen will be appointed for one eight-year term with no reappointment. Previously, members were appointed for shorter terms and then reappointed, so the break that the hon. Gentleman referred to did exist.
These safeguards, and others, will ensure the integrity of the tribunal's decisions. The division of responsibilities offers the best prospect of securing the required level of legal and other expertise on the tribunal.
On the second issue, we share the desire of the hon. Gentleman—if we have understood the intention of his amendment correctly; there appears to be a negative too many—to attract ordinary members with relevant expertise. We made a commitment in the White Paper that all members should have expertise relevant to competition. However, we have deliberately not included a specific requirement in the Bill because of the difficulties in formulating such a requirement. That is a very different situation from that for the legally qualified chairmen and president, whom we require to have experience of competition law and practice. That concept is relatively easy to define.
"Expertise relevant to competition" is much broader, and could come from working in business or from having an accountancy background, for example. We need to keep our options open if we are to attract members of the calibre required, and particularly if we want to attract candidates from diverse backgrounds and from all areas of the UK. The problems of definition do not arise here, as they did in the case of those who needed experience of competition law and practice. It is for that reason that we have made the change. I am entirely sympathetic to the points made by the hon. Gentleman.
The amendment represents the sentiment of what we are trying to achieve, but it is not necessary to require it in the Bill. We could risk excluding potentially very good 1065 candidates if we were to do so. I ask the hon. Gentleman to withdraw the amendment, recognising that the needs are being met.
Amendment No. 315 seeks to give parties a right to review the substance of any decision that is taken. The subject of what could constitute the appropriate grounds for review of a decision following a merger or market investigation was discussed in Committee. As I explained then, the Bill provides for parties who are aggrieved by decisions to have them reviewed by the CAT on the same grounds as would be applied by the courts on the application for judicial review. That is the situation under the Fair Trading Act at present, where decisions of the Secretary of State are open to challenge on judicial review grounds.
We continue to believe that judicial review is the right jurisdiction for appeals against decisions taken in merger investigations. That type of review by the CAT will ensure that the procedures followed by the authorities are fair and that the parties are given the opportunity to put their case. It will allow the CAT to re-examine any decision taken by the authorities to assess whether it is reasonable.
No merger is prohibited by law from the outset. It is for the authorities to decide case by case whether any merger will lead to a substantial lessening of competition and what steps should be taken to remedy that in each case. That could mean outright prohibition, or imposing conditions as the price of clearance.
Decisions will be based on an analysis of individual cases on their specific facts and an economic analysis of those facts by the authorities, acting in accordance with their statutory duties. They will not be evaluated against a defined prohibition by reference to an existing body of substantive competition law and jurisprudence, as would be the case with decisions under the Competition Act 1998.
A considerable amount of discretion needs to be exercised. It would be difficult for the CAT to assess whether the decision that has been made is right or wrong in objective terms. In this context, we clearly need to ensure that the process followed by the authorities was fair and that the parties were given the opportunity to put their case. A judicial review type of appeal is therefore appropriate.
Such a review by the CAT will also allow decisions to be assessed more quickly than would a full appeal on its merits. We consider that resolving these disputes quickly is particularly important in a merger situation where the market environment may be changing rapidly. The mechanism for challenging decisions made in relation to merger investigation references needs to ensure that the process followed by the authorities in a merger investigation is fair and that the parties are given the opportunity to put their case.
If, applying the principles of judicial review, the CAT considers the challenge to the decision is justified, the original decision maker can be asked to look at the decision again. We think that this is the most appropriate way to deal with the type of decision that will be made under these parts of the Bill.
The hon. Member for South Cambridgeshire asked about the Competition Commission, which is not an appeal body in the way that he envisages. The two bodies separately consider the issues involved in a case, but they 1066 do not formally consider an appeal. For both markets and mergers, we are happy that we have an overall structure that offers sufficient right of appeal. The combination of the Competition Commission and the CAT offers an opportunity for consideration of all the issues.
In relation to damages, one could in principle go to court in a case where there was no infringement found, but the court would have to have regard to the result of the OFT's decision.
Amendments Nos. 311 to 314 widen the basis on which claims for damages can be brought to the CAT by enabling claims to be brought where the OFT has found that there has not been an infringement of competition law. It is hard to envisage what basis there could possibly be for bringing a damages claim with respect to anti-competitive activity where it has been established that no infringement has occurred. As it stands, amendment No. 311 will not help those who have been harmed by anti-competitive activity to bring claims for damages, which is what I think the hon. Gentleman had in mind.
With that. I hope that I can persuade the hon. Gentleman to withdraw the amendment.
§ Mr. Lansley
I am comforted by what the Minister said about the measures for trying to secure the independence of the CAT, and about amendment No. 147. On amendment No. 148, I agree that we are looking for the same kind of objective. Looking back at the Competition Act 1998, which is amended here, I should be interested in whether there was some way of reflecting more substantively the range of experience that is required by the CAT as it accumulates these additional responsibilities. I understand that one would not want to do so in a way that frustrated the ability to appoint people who appear to have different but highly desirable experience, but it seems to me not to be beyond the wit of Government to achieve that. I must confess that, previously, it seemed to me that the reference to experience of competition law and practice seemed rather narrow and that it would be better to try to widen it, if that could be done.
I entirely understand the Minister's point about amendments Nos. 311 to 314. They could allow individuals to come to the tribunal in circumstances where the OFT decided that no infringement had occurred, but as she says, I doubt whether they would get very far. The question is, does that also mean that they would not get very far if they went to a court in such circumstances? She said that it is open to people to go to a court for a private action, but that the court would have to have regard to the OFT's decisions. Would it not be better to construct matters in such a way that people could not go to a separate court, but had instead to go to the tribunal? Given that the Government have created the tribunal as the appropriate body for hearing awards for damages, should it not also hear cases that could conceivably be brought in circumstances where an infringement had not been proved?
If I may, I shall leave the issue of appeals to be judged on its merits. I intimated my view that the two-stage merger process—involving the OFT, the Competition Commission and judicial review through the Competition Appeal Tribunal—is sufficient. However, for reasons that 1067 I shall explain later, that is not necessarily true in respect of market investigations. With those points in mind, I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.