HL Deb 09 November 1976 vol 377 cc182-5

2.50 p.m.

The Earl of LAUDERDALE

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether there could be any conflict between Article 86 of the Treaty of Rome, on fair trading, and the dominant position in the market for crude oil from the United Kingdom continental shelf which BNOC aims to secure through the voluntary agreement of producing companies to sell 51 per cent. of their output to it.

Lord STRABOLGI

No, my Lords.

The Earl of LAUDERDALE

My Lords, in thanking the noble Lord for the brevity of his reply, I should like to ask whether he has familiarised himself with Article 86 of the Treaty, and whether it is not the case that a company which has a dominant position in a major part of the European Community Market could be open to charges of distorting trade if it limits production to the prejudice of consumers or uses its cartel position in any other ways to limit competition?

Lord STRABOLGI

No, my Lords, I cannot agree. Merely having secured access to 51 per cent. of North Sea oil in, of course, the public interest does not give a dominant position in regard to the crude oil market, taking into account crude from the North Sea together with the availability of similar alternative oil from other sources available to multinational oil companies.

The Earl of LAUDERDALE

My Lords, I thank the noble Lord for that further precision of the Government's view; but would he not agree that where the market for refined spirit is concerned a control of more than half of the refined spirit resulting from production in the North Sea—the largest within Western Europe—must lead, or at any rate can lead, to distortions of competition and can place other traders in a disadvantageous position in the downstream market?

Lord STRABOLGI

No, my Lords. The Article prohibits abuse of a dominant position, not the mere existence of one.

The Earl of LAUDERDALE

My Lords, would the noble Lord not agree that placing competitive traders at a disadvantage is an abuse as defined under the Article?

Lord STRABOLGI

My Lords, BNOC does not have a dominant position. It is absurd to argue that BNOC is abusing a position it has not got.

Lord CAMPBELL of CROY

My Lords, as the United Kingdom is likely to be exporting offshore oil to at least one other member of the EEC within four years, while being ourselves self-sufficient in oil, are the Government aware that there might then be contravention of Articles 37 and 90 of the Treaty of Rome, and have the Government yet had any discussions with the Commission about these matters and the proposed role of BNOC?

Lord STRABOLGI

My Lords, the Question was about Article 86, but I can say to the noble Lord that BNOC's share of trade within the EEC will at best be about 10 per cent. With regard to the second question of the noble Lord, we have not been in touch with the European Commission about conflicts between the Treaty and Her Majesty's Government's participation policy because we do not intend to come into conflict with the Treaty.

Lord TREFGARNE

My Lords, did the Government arrive at this view purely by means of consultation among themselves, or did they in fact consult the Commission with respect to the Answer which the noble Lord has given today?

Lord LEE of NEWTON

My Lords, why is it that the Party opposite always get so annoyed when the British people begin to gain from this possession?

The Earl of LAUDERDALE

My Lords, is the noble Lord aware that I am very far from being annoyed? I always enjoy the noble Lord's answers to my questions as I always enjoy answers from the other side. The noble Lord said just now that BNOC does not have 51 per cent., but the whole point is that it is aiming to get it in what is a critical part of the European market for refined products.

Lord STRABOLGI

My Lords, it is 51 per cent. of the United Kingdom's oil production. It is not a dominant position in the oil market of Europe. Secondly, as I pointed out, BNOC has 10 per cent. only of this trade, and secondly the Article deals with an abuse of a dominant position, not the mere fact of having a dominant position, whatever the noble Earl may want to imply.

The Earl of LAUDERDALE

My Lords, is the noble Lord aware that—

The LORD PRIVY SEAL (Lord Peart)

My Lords, I hope that the noble Earl will accept that reply.