Companies Bill [H.L.] (Hansard, 20 April 1989)

HL Deb 20 April 1989 vol 506 cc902-26 902

§ 5.28 p.m.

§ Lord Strathclyde
My Lords, I beg to move that the Bill be now further considered on Report.

§ Moved, That the Bill be further considered on Report.—(Lord Strathclyde.)

§ On Question, Motion agreed to.

§ Lord Lloyd of Kilgerran moved Amendment No. 147E:

§ Before Clause 105, insert the following new clause:

§ ("Merger References.

§ At end of section 64(5) of the Fair Trading Act 1973 (merger situation qualifying for investigation) insert the words "and in his discretion to any matters to which section 84 of this Act may apply to which his attention or that of the Director has been drawn in writing" ").

§ The noble Lord said: My Lords, we are now dealing with an amendment to Section 64 of the Fair Trading Act 1973 which, as your Lordships will realise, is concerned with a, merger situation qualifying for investigation". A merger reference may be made to the commission by the Secretary of State. Before the Secretary of State makes the reference, the Director General of Fair Trading will have examined the situation in accordance with his duties under Section 2 of the Act. The object of the amendment is to introduce an element of increasing fairness into the arrangements before the Secretary of State and the Monopolies and Mergers Commission decide upon the merger position and to introduce an elementary principle 903 of natural justice. It is also intended to remove uncertainty.

§ Perhaps I may briefly refer the House to the duties of the registrar under Section 2 of the 1973 Act. He has a comprehensive agenda to his duties. According to Section 2(1)(a), he has to keep under review, the carrying on of commercial activities in the United Kingdom which relate to goods supplied to consumers in the United kingdom", and so on. That is a wide duty. Under subsection (1)(b) it is his duty, to receive and collate evidence becoming available to him with respect to such activities as are mentioned in the preceding paragraph". In many ways this is a curious function for a director. He has to receive—that is simple. He has to collate the evidence—again, that is simple. What evidence? It is the evidence becoming available to him with respect to such activities as are mentioned in the preceding paragraph. He will receive evidence in writing or perhaps orally for a large number of reasons, not only because people are interested in the merger per se but perhaps for reasons of pure commercial help to the person who is writing to the director.

§ Section 64(5) reads: In determining whether to make a merger reference to the Commission the Secretary of State shall have regard, with a view to the prevention or removal of uncertainty". That is one of the objects. Let us not forget that the Secretary of State will have been advised by the director of the position generally as a result of collecting evidence which came to him in any form or in any way. Section 64(5) continues: to the need for making a determination as soon as is reasonably practicable". My amendment would add the words: and in his discretion"— the Secretary of State's discretion— to any matters to which section 84 of this Act may apply to which his attention or that of the Director has been drawn in writing Section 84 refers to the public interest and sets out items which are considered to be relevant to the public interest in these circumstances. Under my amendment, if the director receives something in writing he will pass it to the Secretary of State who in his discretion should refer it to the tribunal. It may be said that it is not necessary, having regard to the terms of Sections 64 and 84, for my amendment. However, it is necessary again to emphasise the curious nature of the jurisdiction of the director. He can get information from anywhere and from anybody. One of the principal parties to the merger whose case is to go to the Monopolies and Mergers Commission may not know anything about that. That is totally unfair. Statements of considerable consequence to the party to the merger may have been made. The party to the merger should have the opportunity to know what that information is.

§ This would be in line with what is happening in regard to investigations under the Treaty of Rome. I had the honour for a couple of years to be a member 904 of a working committee of the EC. There I found that many of the investigations carried out by the commission under Sections 85 and 86 of the Treaty of Rome were the result of even anonymous information sent to the appropriate committee or the appropriate directorate of the EC. Some of the investigations arose as a result of letters and documents sent by outsiders without the knowledge of the other parties concerned. In order to try to modify and clarify some of the procedures we tried to give an opportunity to a person, an institution or a company that has been referred to in such documents sent privately to the directorate to know what was being held against them.

§ In my opening remarks I referred to principles of natural justice. It would be appropriate, where under Section 64 there has arisen a merger situation qualifying for investigation, that not only relevant matters concerning competition or matters principally relevant to Section 84 but any matter which is indirectly of consequence to the parties of the merger should be disclosed to the tribunal. Therefore the Secretary of State should submit to the Monopolies and Mergers Commission such matters as had been drawn to the director' attention in writing. I beg to move.

§ Lord Williams of Elvel
My Lords, we support the amendment not least on the ground which we argued in Committee that there is a discrepancy between the criteria the Secretary of State has to use, which are up to him, when he makes a merger reference and the criteria which the Monopolies and Mergers Commission has to use under the statute which are contained in Clause 84. The criteria of the Secretary of State on reference seemed to us to be determined by ministerial statements from time to time. I believe that the ministerial statement still in operation is the one which refers to the competition issue. On future occasions other ministerial statements drawing attention to other issues may be the basis of a merger reference.
The noble Lord, Lord Lloyd, seeks in an elegant way, if I may compliment him on his amendment, to introduce into the issue of whether there should be a merger reference other matters which have been drawn to the attention of the Secretary of State or of the director and relate to Section 84. We argued in Committee for a parallel procedure between the director, the Secretary of State and the Monopolies and Mergers Commission. We said that all of them in their individual capacities should have regard to Section 84 of the Act which defines the public interest. That proposition was rejected by the Government and I believe that the amendment moved by the noble Lord is probably the best we can achieve under the present circumstances. Accordingly, we support the amendment.

§ Lord Brabazon of Tara
My Lords, I have read with interest the discussion in Committee on the similar amendment moved by the noble Lord, Lord Peston. It appears to me that there was, and is, little between us. As my noble friend the Secretary of State explained, since the matters in Section 84 are ones to which the MMC must have regard, he must 905 inevitably have them in his mind in deciding whether to refer mergers to the MMC. The intention, it seems, is merely to make this explicit. The noble Lord, Lord Lloyd of Kilgerran, is I know always anxious to make the legislation what might be called user friendly so that its provisions are clear to companies affected by it. As a general principle, we are all in favour of this.
But in this instance is there really any doubt on the point? My noble friend has on numerous occasions, in your Lordships' House and elsewhere, explained the considerations which he applies in deciding whether to refer mergers to the MMC. People involved in mergers have a pretty good idea what are these considerations, of which the main one is the effect on competition. That some people would like to see greater certainty in the way these are applied is another matter. As has been said before, this is not easily compatible with a discretionary system, and could only be achieved by a loss of flexibility. Which considerations he should apply has also been questioned sometimes, but again that is another matter.
In the circumstances, explicitly mentioning the Section 84 criteria at this point is unnecessary. However, it is more than that, because bringing them in implies a more rigorous examination of mergers against public interest criteria at the reference stage. As my noble friend said in Committee, this would pre-empt the role of the MMC. The legislation leaves it to the MMC to judge whether something is against the public interest. The Secretary of State's role is to decide whether there is an issue which should be subjected to such a judgment.
There clearly is a link between the criteria applied by the MMC and the Secretary of State's decision to refer a merger, but this amendment is not needed to spell it out and could in fact confuse it. There is a further aspect. This area of the law is at issue in a case at present being considered by the juducial committee of your Lordships' House. It would be wrong for me to say any more than that, but I submit that it would be curious to amend the legislation at the very moment when its meaning is being established conclusively. There might then be those who would like to see the law changed, but that is another matter and is not I think the question at present. For all those reasons, I hope that the noble Lord will agree to withdraw the amendment.

§ Lord Lloyd of Kilgerran
My Lords, I am most grateful to the noble Lord, Lord Williams of Elvel, for his support and for his use of the word "elegant" in respect of my introduction to the amendment. I am also grateful to the Minister for pointing out that part of the reason for my activities in this House as regards Bills which relate to industry—especially legal Bills—is that I would like to see such legislation become more user-friendly. He was also most encouraging when he said that there did not seem to be much difference between us. However, perhaps I should say at once that I did not understand his rather vague allusions to a case at present being considered by the Judicial Committee of your Lordships' House. For my part, I had no idea that any issue which arose from my amendment could 906 become the subject of some decision of the Judicial Committee. Indeed, the noble Lord did not emphasise, and nor did he indicate, what the issue was. Therefore I am in the dark on the matter.
I had only two reasons for putting forward the amendment: the first was to remove uncertainty in the interests of natural justice; the second was to add another parameter of fairness to the investigations which arise under Sections 2 and 64 of the Fair Trading Act 1973. This is the Report stage of the Bill. Despite the kind words which the Minister said about me (in respect of my wish to make legislation more user-friendly and that there is very little difference between us) and despite the fact that the substance of the amendment has not been discussed before, I am tempted to take certain action which will decide the matter one way or the other, unless he has anything further to say. However, I pause here for a moment to see whether my seductive words have failed to convince the Minister. I see that they have. In those circumstances, I must ask the House to decide the issue.

§ 5.45 p.m.

§ On Question, Whether the said amendment (No. 147E) shall be agreed to?

§ Their Lordships divided: Contents, 43; Not-Contents, 100.

907

DIVISION NO. 4
CONTENTS
Arran, E. [Teller.]	Fraser of Carmyllie, L.
Belstead, L.	Glenarthur, L.
Boardman, L.	Henley, L.
Brabazon of Tara, L.	Hooper, B.
Carnock L.	Mackay of Clashfern, L.
Denham, L. [Teller.]	Skelmersdale, L.
Dundee, E.	Strathclyde, L.
Elliot of Harwood, B.	Trumpington, B.

976

NOT-CONTENTS
Cocks of Hartcliffe, L.	Tordoff, L. [Teller.]
Hacking, L.	Williams of Elvel, L.
Ponsonby of Shulbrede, L. [Teller.]

Moved accordingly, and, on Question, Motion agreed to.

§ Resolved in the negative, and amendment disagreed to accordingly.

§ 5.53 p.m.

§ Lord Lloyd of Kilgerran moved Amendment No. 147F:

§ Before Clause 105, insert the following new clause:

§ ("General functions of the Director.

§ . In section 2(2) of the Fair Trading Act 1973 leave out "uncompetitive" and insert "Anti-competitive" ").

§ The noble Lord said: My Lords, this is a simple amendment. It amends Section 2 of the Fair Trading Act 1973 and is designed to bring it up to date having regard to the Competition Act 1980 and to the position that has arisen since the date of that Act with regard to how mergers are being dealt with.

§ It has been emphasised many times in Committee, and even this afternoon, that the Monopolies and Mergers Committee is concerned largely with competition. I read part of Section 2 of the Fair Trading Act 1973 when I dealt with the previous amendment. I shall now refer your Lordships to subsection (2), which provides: It shall also be the duty of the Director so far as appears to him to be practicable from time to time, to keep under review the carrying on of commercial activities", and then: ascertaining the circumstances relating to, monopoly situations or uncompetitive practices". The term "uncompetitive practice" can mean that the commercial activities which the director has to investigate are not competitive. It is an absurd phrase to have in a section, these days at any rate, because it could include the investigation of commercial activities in relation to the manufacture of—if I may say so—lavatory pans, and firms which are making silicon chips.

908

§ In the Competition Act 1980 the word to be found is "anti-competitive". The commercial activities that are to be investigated are those that the director may think are anti-competitive, not uncompetitive. This is not a question of semantics. It clarifies the position of mergers in this country and even activities under the Treaty of Rome, in that what the Director General of Fair Trading, the Secretary of State concerned with such matters, and the Monopolies and Mergers Commission are concerned with is anti-competitive issues.

§ I never express much confidence when dealing with these matters because I know that Ministers, especially in regard to this Bill, are so tied to their briefs that it requires a certain amount of courage for them to diverge from them. It has been done. The noble Lord, Lord Strathclyde, has done it on several occasions. I hope that the Minister leading for the Government this afternoon will come along with me and let me have the amendment. In this modern age, we cannot leave the director appointed under the Fair Trading Act to deal with such an extensive variety of uncompetitive commercial activities. He must, however, deal with them if they introduce an aspect of anti-competitiveness. I beg to move.

§ Lord Brabazon of Tara
My Lords, again, I have read with interest the discussion in Committee about Section 2 of the Fair Trading Act. At that time, my noble friend Lord Strathclyde was trying to persuade the noble Lord, Lord Lloyd, that any additional reference there to "anti-competitive practice" was unnecessary. That obviously succeeded so well that he is now suggesting adopting the term in Section 2 as it stands. It may therefore seem rather churlish of me if I say that that remains in our view unnecessary, and indeed a possible recipe for confusion.
If I may briefly remind noble Lords, we are talking here of the duty of the Director General of Fair Trading to keep commercial activities under review. He must do so, among other things, with a view to becoming aware of monopoly situations or uncompetitive practices. He can then take appropriate action under the other provisions of the Act, to investigate those matters, or, under the Competition Act, to investigate anti-competitive practices. There is nothing to stop him looking at anti-competitive practices merely because that is not the precise term used here. Far from Section 2 having nothing to do with anti-competitive practices, it in fact describes the director general's basic duty, from which, in a sense, all his other activities stem.
My noble friend Lord Strathclyde said in Committee that the term "uncompetitive practice" was perhaps less graphic than "anti-competitive practice". I think that is right, but that does not mean that there is anything terribly wrong with it. It is a term whose general sense is fairly obvious, which has a precise meaning as defined in Section 137 of the Act, and which is used in several other places in the Act. It occurs, for example, in Section 48, in the context of monopoly references, and in Section 78, which deals with general references.
The definition in Section 137, although very similar to that of "anti-competitive practice" under 909 Section 2 of the Competition Act, differs from it in a number of respects. It relates to commercial activities, which means, the production and supply of goods in the United Kingdom, the supply of services in the United Kingdom and the export of goods from the United Kingdom". Anti-competitive practices, in the context of the Competition Act, relate to the supply but also the acquisition of goods or services in the UK alone, and also in any part of the UK. Adopting in the Fair Trading Act a term which has its own meaning in the Competition Act could result in confusion. Bringing the two Acts fully into line would entail looking at all the relevant definitions and at all their occurrences throughout the legislation. This would be a major exercise of, I would suggest, limited value.
As I said on the last amendment, the noble Lord is, I know, concerned about the intelligibility of legislation, as far as possible, to the layman. There is nothing magical about one term or another, as he knows; it is all a matter of how they are defined. The term "anti-competitive practices" and the definition were obviously felt to be right for the provisions of the Competition Act in 1980. Perhaps, if we were looking at the Fair Trading Act again, we should try to adopt the same terminology and definitions—though not necessarily, as the provisions have different purposes. However, there is no evidence that the existing term in the Fair Trading Act gives rise to any great confusion in practice; that is, we have no evidence. If the noble Lord has any, he will no doubt let us know.
As we said during Committee, we should not rule out the possibility of a more thoroughgoing review of all this legislation at some stage. I merely ask the noble Lord to consider, in the light of what I have said about the extent of the consequential amendments, whether the parliamentary time which these would require is justified for the sake of what seems, with respect, tinkering with the terminology of provisions that otherwise work well. I submit that the answer has to be no.

§ Lord Lloyd of Kilgerran
My Lords, I am very much obliged to the noble Lord for reading his brief so carefully and, if I may say so, with such elegance. That is a term which was quite unjustifiably applied to me a little earlier. I shall not delay the House any longer on the matter. I beg leave to withdraw the amendment.

§ Amendment, by leave, withdrawn.

§ Clause 105 [Restriction on references where prior notice given]:

§ [Amendment No. 147G had been withdrawn from the Marshalled List.]

§ Lord Brabazon of Tara moved Amendment No. 147H:

§ Page 106, line 2, leave out ("twenty-eight days beginning with the first working") and insert ("twenty days, determined in accordance with subsection (7) of this section, beginning with the first").

§ The noble Lord said: My Lords, with the leave of the House I shall speak to Amendments Nos. 147H, 147J, 147K and 147M. At Committee stage my noble 910 friend the Secretary of State agreed, in response to an amendment tabled by the noble Lords, Lord Williams of Elvel and Lord Peston, to look again at the use of "Working days" in the definition of the period allowed for consideration of prior notice of a merger.

§ The noble Lord, Lord Williams of Elvel, referred at the time to the possible difficulties which a period based on calendar days could cause if one of the longer public holidays intervened. The competition authorities would have less time to consider prenotified mergers where this was the case. The Government's intention in framing the original provision in calendar days was to make calculation of the relevant period as simple and straightforward as possible. The number of days lost due to Bank Holidays would not of course be very great and would not have seriously jeopardised the prenotification system; particular problems which might arise over Christmas, for example, could have been dealt with by using the power to extend tile notification period.

§ However, in response to the concerns expressed in Committee, we are prepared to accept that a period of working days rather than calendar days might be considered clearer for all concerned. Amendments Nos. 147H and 147J therefore replace the prenotification period in new Section 75B(2) of 28 calendar days starting and ending on a working day, with a period of 20 days. Subsection (7), as amended by Amendment No. 147M, provides that such periods are to exclude days not normally considered working days; that is, Saturday, Sunday, Good Friday, Christmas Day and any day which is a Bank Holiday in England and Wales. Similarly, Amendment No. 147K replaces the possible extension period of 14 calendar days with a period of 10 days, excluding weekends, etc.

§ I am pleased to be able to bring forward these changes in response to the concerns that have been raised. These amendments will clarify the calculation of the prenotification period while retaining the same basic period. They show, I think, that we are always open to constructive suggestions for improvements to the Bill, and that the debate in your Lordships' House can be most valuable in clarifying our minds on such matters. I beg to move.

§ Lord Williams of Elvel
My Lords, I am most grateful to the noble Lord, Lord Brabazon of Tara, for introducing these amendments which respond to the problems that I raised in Committee. I am also grateful to him for saying that the debates in your Lordships' House sometimes serve to clarify the Government's mind, because I have found on certain occasions that the Government's mind is not entirely clear.
The amendments understandably reduce the number of days, and, as we agreed in Committee—I think that the noble Lord the Secretary of State and I agreed—we could not keep the 28 days if we were going over to working days. The number of working days would have to be fewer than the calendar days. I am grateful to the noble Lord for bringing these amendments forward and we are happy to accept them.

911

§ Lord Mottistone
My Lords, the CBI has considered this matter and it supports the amendment. We believe it to be a definite improvement.

§ On Question, amendment agreed to.

§ Lord Brabazon of Tara moved Amendments Nos. 147J and 147K:

§ Page 106, leave out lines 7 and 8.

§ Page 106, line 14, leave out ("period of fourteen") and insert ("ten").

§ The noble Lord said: My Lords, I have already spoken to Amendments Nos. 147J and 147K, and with the leave of the House I beg to move them en bloc.

§ On Question, amendments agreed to.

§ Lord Brabazon of Tara moved Amendment No. 147L:

§ Page 106, line 33, after ("misleading") insert— ("(aa) he suspects that it is not proposed to carry the notified arrangements into effect").

§ The noble Lord said: My Lords, this amendment responds to another commitment given in Committee by my noble friend the Secretary of State. In response to an amendment moved by the noble Lord, Lord Williams of Elvel, he ageed to look at the possibility of enabling the Director General of Fair Trading to reject a prenotification where he suspects that there is no intention to implement the notified arrangements. That is what this amendment does.

§ The power would be used where for one reason or another it becomes clear that it is not intended to proceed with a prenotified merger but the notice is not withdrawn. It sometimes happens that merger proposals, in which there may be a great deal of interest, in the end come to nothing. The power would have to be exercised reasonably. The director general could not just arbitrarily decide that an application was not serious but would have to have good reason to think so.

§ This is a small but useful procedural improvement which will help to ensure that resources are concentrated on those mergers where there is a clear intention to proceed. I beg to move.

§ Lord Williams of Elvel
My Lords, again, I am grateful to the noble Lord, Lord Brabazon of Tara, for bringing this amendment forward. It responds to points we made in Committee.
There is only one small question I have about the drafting, and that is the use of the word "suspects". It seems to me to be a slightly odd expression: if the director suspects something. I should have thought "has reason to believe" would probably be a better expression, but perhaps the noble Lord can convince me that I am wrong. I do not wish unduly to prolong the discussion on the amendment. I am sure that the noble Lord is giving much thought to what I have just said. In the course of time he will be able to respond to my point, perhaps without undue delay. I believe that the noble Lord, Lord Lloyd of Kilgerran, also wishes to intervene.

912

§ Lord Lloyd of Kilgerran
My Lords, I had the same difficulty about the word "suspects", but perhaps the noble Lord now has some advice about the word. I think this is a useful amendment and I feel that I ought to congratulate the noble Lord, Lord Williams, on having clarified the mind of the Government so well with regard to the last two amendments.

§ Lord Brabazon of Tara
My Lords, we are always open to useful suggestions. I understand that the word "suspects" is quite commonly used in legislation; therefore I see nothing unusual about using it in this case. However, if I find that there is any reason to change that opinion I shall certainly write to the noble Lord.

§ On Question, amendment agreed to.

§ Lord Brabazon of Tara moved Amendment No. 147M:

§ Page 106, line 39, leave out from ("In") to ("(a)") in line 41 and insert ("determining any period for the purpose of subsections (2) and (3) of this section no account shall be taken of").

§ The noble Lord said: My Lords, I spoke to this amendment with Amendment No. 147H. I beg to move.

§ On Question, amendment agreed to.

§ [Amendment No. 148 had been withdrawn from the Marshalled List.]

§ Lord Mottistone moved Amendment No. 148A:

§ Page 107, line 14, at end insert ("provided that the merger with one enterprise other than an enterprise to which these arrangements relate creates a merger situation qualifying for investigation or which clearly affects the impact of the notified merger.").

§ The noble Lord said: My Lords, new Section 75C(1)(d) as at present worded provides that the expiry of the merger notice will not prevent a subsequent reference, if meanwhile any intervening merger is completed by any party. The CBI, which advised me, appreciates the concern to avoid condoning intervening mergers which change the nature and effects of the merger under consideration. However, care should be taken not to create an opportunity for tactical frustration of a merger notice by the target completing a non-material merger.

§ I consider that the exception allowed under new Section 75C(1)(d) should be limited to intervening mergers which themselves qualify for investigation, or which materially affect the impact of the notified merger. The object of the amendment is to achieve that qualification to the existing wording. I am not sure whether the Government have given thought to this problem; I think it is a serious one which deserves consideration. I beg to move.

§ Lord Brabazon of Tara
This amendment relates to one of the exceptions which will make it possible for the Secretary of State to refer a merger to the Monopolies and Mergers Commission even after it has been prenotified and the period for consideration has expired without a reference. There may seem to be rather a number of these exceptions, but the intention behind them is simply to leave the authorities no worse off than they are at present. It must be borne in mind that otherwise, once the 913 period for consideration ends, the power to refer a merger has gone for good. We want to help business with this new procedure, but not at the expense of creating loopholes through which mergers which should be scrutinised can slip.
Following automatic clearance of a merger on the expiry of the pre-notification period, the parties will have up to six months to complete it. Before it takes place, one of the parties could merge with another enterprise, outside the notified arrangements. This merger might or might not qualify for investigation on its own. What is of potential concern is the previously unforeseen combination which will then come about when the pre-notified merger finally happens. For example, if A has a 15 per cent. share of a market, and notifies a merger with B which has no presence in that market, there will probably be no problems. If B then merges with C, which has a 15 per cent. share in that market, again there are unlikely to be grounds for intervening. It is when A and C eventually come together, through the merger which has already been cleared, creating a 30 per cent. market share, that problems could arise. New section 75C(1)(d) simply enables us to examine that new situation, if necessary.
It will be a matter of judgment for the Secretary of State whether there are new factors which justify re-opening a case in these circumstances. If there are none, then the decision will be unchanged, and he will not need to exercise the power to refer the merger. Indeed, his decision would be open to challenge if he did so. Only where the new merger might alter the view taken of the pre-notified merger would there be any grounds for exercising the power. This is likely to arise only very rarely, and I take it that my noble friend would not question the substance of the provision to deal with such cases.
The amendment moved by my noble friend Lord Mottistone would limit this power to cases where the second merger itself qualified for investigation or where it clearly affects the impact of the notified merger. Whether the second merger qualifies is beside the point; it is the impact on the original, pre-notified, merger which is important.
My noble friend has suggested that this provision would lend itself to companies wishing to forestall a pre-notified, contested merger. I am not sure how likely this is; they would have to move rapidly to merge with another firm, the merger of which with the bidder could lead to a reference. No doubt there are other forms of "poison pill" available to companies who are really determined. Besides, only 10 per cent. or so of mergers are contested, and pre-notification, though it is open to all, is likely to benefit primarily the great majority of straightforward, uncontested mergers.
In any case, for the reasons I have explained, this possibility would not necessarily be eliminated by my noble friend's amendment. The Secretary of State will still only change his decision where there are significant new factors, such as a potential competition problem, which did not exist before. In that case, it is quite right that it should be possible to take another look at the case. Merger control does not exist to help one side or the other, but to deal with the effects of mergers on the public interest.
914 Under the provision as amended, the impact on the notified merger would still remain a matter of judgment for the Secretary of State. We therefore question whether in practice it makes any real difference. Either way, only the Secretary of State can decide, on the advice of the Director General of Fair Trading, whether the new situation should be referred to the MMC. Either way his decision must be a reasonable one. He cannot arbitrarily re-open a case. While recognising the concern which underlies this amendment, we are not sure that in practice there is much of a problem here, or that, such as it is, we can do much about it. I hope that, in view of my remarks, my noble friend will be prepared to study what I have said and will withdraw the amendment.

§ 6.15 p.m.

§ Lord Mottistone
My Lords, I am most grateful to my noble friend for explaining at such length the thinking behind not accepting my amendment, and indeed for explaining the thinking behind this part of the Bill. It sounded to me as if his argument was a good one, but naturally I shall need to study it with great care. It is possible that the matter may be re-opened at a later date. I beg leave to withdraw the amendment.

§ Amendment, by leave, withdrawn.

§ Lord Brabazon of Tara moved Amendment No. 148B:

§ Page 108, line 9, after ("withdrawn") insert ("and").

§ The noble Lord said: My Lords, in moving Amendment No. 148B, I shall, with the leave of the House, also speak to Amendments Nos. 148C and 148D. What is and is not appropriately left to secondary legislation has been much debated in your Lordships' House and in Committee. But I think there would be agreement that some matters are best dealt with in regulations. These include many of the details of the pre-notification system which do not affect the essential principles. Many of these are matters where requirements could change over time, or in the light of experience.

§ The powers in new Section 75D already enable us to provide when merger notices from pre-notifiers are treated as received, and the manner in which notices and information are to be given to or by the Director General of Fair Trading. Amendment No. 148D fills a small but significant gap by enabling us to provide when information is treated as given as well as the manner of doing so. Information supplementing the original merger notice, whether requested by the director general or not, must be provided in good time for the authorities to act on it, and provision for this is made in new Sections 75B(6)(b) and 75C(1)(c). The time at which information is provided could, therefore, be critical, so we must be able to say when this is regarded as occurring, just as we can for merger notices. It is in companies' interests that this should be clear, as failure to disclose information in time could leave a merger open to further scrutiny.

§ Amendments Nos. 148B and 148C are drafting amendments. They divide the paragraph concerned, 915 which would otherwise become rather long and cumbersome, into two paragraphs. I beg to move.

§ On Question, amendment agreed to.

§ Lord Brabazon of Tara moved Amendments Nos. 148C and 148D:

§ Page 108, line 11, leave out ("and") and insert ("(bb) provide for").

§ Page 108, line 14, at end insert ("and the time at which such information is to be treated as provided or disclosed".

§ The noble Lord said: I beg to move Amendments Nos. 148C and 148D en bloc. I have just spoken to these amendments.

§ On Question, amendments agreed to.

§ Lord Williams of Elvel moved Amendment No. 148E:

§ After Clause 105, insert the following new clause:

§ ("Functions of Director in relation to mergers.

§ ( ) In Part V of the Fair Trading Act 1973, in section 76 (functions of Director in relation to merger situations) at end insert— (c) to satisfy himself, before making recommendations under (b) above, that—

(i) if there are issues other than the competition issue, interested parties are aware of his concerns and have had reasonable opportunity to comment on them;
(ii) reasonable time-limits have been given to interested parties for comment before he makes his recommendations;
(iii) the roles and responsibilities of parties appearing before him are properly identified and defined;
(iv) the facts of the matter before him have been fully established; and
(v) advisers giving evidence to him have done so as though section 47 of the Financial Services Act 1986 (misleading statements and practices) had applied, namely that it is a criminal offence to—
1. (a) make a statement, promise or forecast which the adviser knows to be misleading, false or deceptive or dishonestly conceals any material facts; or
2. (b) recklessly make (dishonestly or otherwise) a statement, promise or forecast which is misleading, false or deceptive." ").

§ The noble Lord said: My Lords, when the noble Lord, Lord Young of Graffham, made his statement in response to my Private Notice Question on 3rd April I indicated that I would table an amendment to this Bill which reflected some of the recommendations made by the inspectors in what I take to be the House of Fraser report. I say "I take to be" because I have no copy of the House of Fraser report and I only know what I know as a result of reading certain newspapers.

§ I tell noble Lords frankly that I have addressed the problem of how far it is proper for me to refer to the report, or what I take to be the report. I have taken advice on the matter. My conclusion and the advice I have received is that I should refer to the report only as strictly necessary in order to explain the amendment which I am moving this afternoon. I propose to observe that rule.

§ At present, when the director is required to exercise his functions in relation to mergers there is no onus on advisers to verify information that they give to him. There is no onus on advisers to substantiate the assurances they may give to the director, or 916 to the Secretary of State. There is no indication anywhere in the statute that the advisers, or the principals, should apply the same standards of behaviour in making representations and providing information to the authorities as they do under the Financial Services Act when issuing a prospectus. That seems to me to be a serious gap in the present legislation which the House of Fraser report exposed.

§ The inspectors expressed the hope that it was rare for deception of regulatory bodies to be practised on such a grand scale. I hasten to add that they found no fault with the Director General of Fair Trading or his staff, but they pointed out that the comfort taken by the Office of Fair Trading from the assurances of the advisers was greater than the comfort those advisers thought they were giving. The inspectors said that that lack of meeting of minds on the giving and taking of comfort in this or any other case must be overcome in future if healthy Government-City reliance and trust was to prosper.

§ I believe that that is the important point. It is the point that I am addressing in moving the amendment. There is confusion about the role of advisers when they make representations to the director. There is confusion about the status of discussions between interested parties and the Office of Fair Trading. Above all, there is confusion about how much weight should be placed on the assurances given by advisers, and by principals, to the director in order to allow him to exercise his function in making a recommendation to the Secretary of State as to whether or not a merger should be referred to the Monopolies and Mergers Commission.

§ I said earlier that the Secretary of State is also vulnerable in this respect. A press notice was issued by the Department of Trade and Industry on 14th March 1985 about the House of Fraser takeover in which the Secretary of State of the day announced that he took into account the statements made, and assurances given and the support given to those statements and assurances by Kleinwort Benson Ltd., which was one of the advisers to one of the parties in the transaction. The Secretary of State himself relied on the advisers to do their homework with due diligence and to make sure that they got all their facts right.

§ The amendment tracks the recommendations of what I take to be the House of Fraser report almost in its entirety, with the exception of paragraph (v). Taking paragraph (i) first, the inspectors recommended that, If there are issues other than the competition issue" — which is the major issue to which the Government address themselves when deciding whether or not to make a mergers reference— interested parties are aware of his [the director's] concerns and have had reasonable opportunity to comment on them". There have been occasions when the director has expressed concerns about issues other than the competition issue. It seems a sensible recommendation that the parties concerned should be aware of the director's thinking and should be allowed to comment.

§ Secondly, they should be allowed to comment within a reasonable period of time. They should not 917 be asked to comment overnight as to whether their company is too highly leveraged, whether they are in breach of some patent regulation, or whatever the director may be worried about.

§ Thirdly, the roles and responsibilities of parties appearing before the director should be properly identified and defined. If a party comes before the director as an adviser the director should be able to satisfy himself that the role of adviser is properly defined—this is the merchant bank and the lawyer —so that there is no doubt as to who is playing what role.

§ Finally, paragraph (iv) sets out the inspectors' recommendation that the facts of the matter before the director should be fully established. Any material which is put before the director should be properly researched and properly verified, as is the normal course in the case of a prospectus or another document in a takeover.

§ Paragraph (v) is not a recommendation of the inspectors in what I take to be the report. It goes further than those recommendations. The Financial Services Act 1986 lays down that anybody who makes a misleading statement or recklessly makes a statement which is false or deceptive which induces an investment or a transaction leading to investment is guilty of a criminal offence. If that is the case with regard to a prospectus it should be the case for information given and submissions made to the director in regard to mergers and takeovers.

§ Your Lordships may wish to ask yourselves how the director satisfies himself that that is the case. I believe that the director could properly say to advisers, "I should like you to sign a piece of paper saying that the information you have given me is in accordance with the Financial Services Act requirement". I am perfectly certain that any reputable adviser signing that piece of paper would understand the rules of the game; namely, that the information communicated to the director must be of prospectus validity and must be properly researched.

§ I believe that the amendment plugs an important gap in our existing system for regulating mergers. That gap was demonstrated in the case that I have mentioned. I believe that the director has a right to be able to satisfy himself that what he is told is the truth, the whole truth and nothing but the truth. The Government would do well to attend to the inspectors' recommendations and to what I have put forward this afternoon. I beg to move.

§ Lord Lloyd of Kilgerran
My Lords, I rise to make a contribution after the noble Lord, Lord Williams of Elvel, with some surprise because I had not realised that in regard to these amendments he would, to use his happy phrase, track his argument on the case of the House of Fraser. I do not approach the amendment having in any way regard to the House of Fraser; I am totally ignorant of any matters associated with it. I shall certainly not read from anything that has been published or support my arguments regarding the amendment by reference to the vague generalisations that have been floating around in connection with the House of Fraser.
918 I looked at the amendment objectively because parts of it—sub-paragraphs (c)(i) to (c)(iv) inclusive—are associated with the earlier amendment that I put forward invoking, perhaps rather pompously, questions of public interest and fairness. I believe it is important that when there are matters before the Director General of Fair Trading or the Secretary of State and where, there are issues other than the competition issue, interested parties are aware of his concerns and have had reasonable opportunity to comment on them". I support sub-paragraph (i) on purely basic grounds of common sense and fairness. The same applies to sub-paragraph (ii), which refers to "reasonable time-limits", to sub-paragraph (iii) which provides that," the roles and responsibilities of parties appearing before him are properly identified and defined", and to sub-paragraph (iv) which provides that, the facts of the matter before him have been fully established". It seems to me that those four suggestions are perfectly proper and should have been adopted by the Government irrespective of whatever happened in the House of Fraser.

§ 6.30 p.m.

§ Lord Brabazon of Tara
My Lords, as the noble Lord, Lord Williams of Elvel, explained, this amendment is concerned with the statements and comments made to the Director General of Fair Trading before he submits his advice on a merger to the Secretary of State. It raises a number of different issues and, in dealing with them, I propose, like the noble Lord, Lord Lloyd of Kilgerran, to concentrate on the substance of the amendment and not on a widely publicised case which may or may not have prompted it.
Given that the inspector's report has not been published, as the noble Lord made clear, he will not expect me to reveal whether it contains any of the matters to which he referred. That will no doubt emerge in due course, but, as I said, I shall deal with the amendment on its merits. Should a case be made for further changes to the legislation or to procedures, we shall consider it in the same way. This is not the appropriate time to go into questions about a particular case even were aspects of that case not before the Judicial Committee of this House. Noble Lords have had the benefit of a full statement on the report on House of Fraser which my noble friend the Secretary of State made on 3rd April. I have certainly nothing to add to what he said then.
Perhaps I may now return to the amendment. Before making recommendations to the Secretary of State, the director general is to satisfy himself upon a number of points, set out in sub-paragraphs (i) to (v). The first is that, if there are issues other than competition, interested parties are aware of the director general's concerns and have had a reasonable opportunity to comment on them. The second is that interested parties have been given reasonable time to comment.
This amendment in fact anticipates Amendment No. 148L which will give the director general a duty to consider representations from interested parties. 919 That results from a commitment that my noble friend the Secretary of State gave during Committee, which was welcomed by the noble Lord, Lord Peston, as responding admirably to the Committee's concerns. Since our amendment responds to those concerns, it is a little strange that the noble Lord, Lord Williams, has tabled a similar amendment.
That is by the way; the point is that the director general must consider representations by interested parties, whether on competition or on other issues. Our amendment would reinforce that duty. In doing so, he must act reasonably; so it follows that he must allow adequate time for comments. If he did not do so, he could be regarded as failing in his duty. There is obviously a balance to be struck here between allowing time for comments and enabling the Secretary of State to reach a decision as soon as practicable, as the law also requires. Mergers should not be unduly delayed, consistent with the proper carrying out of the authorities' functions.
Indeed, one of the aims of the pre-notification system is to help expedite simple cases. The noble Lord, Lord Williams, was himself concerned about the power to extend the period for consideration indefinitely. Limiting the number of extensions is indeed something that we are considering, but of course that would mean comments having to be submitted promptly if a decision is to be taken within the specified period.
Up to this point, then, we believe that the noble Lord's concerns are already met by the legislation as we propose to amend it in this Bill. But, to the extent that sub-paragraph (i) goes further and requires the director general to tell interested parties about concerns which he may have relating to a merger, then we have reservations. Where the director general has concerns on particular points, he will naturally, where appropriate, seek comments on those within the limits imposed by confidentiality. So, to that extent, this point too is already met. But what is appropriate and proper will depend on the case, and the rigid requirement proposed could not take account of that.
Moving on to sub-paragraph (iii), the question of the roles of the persons appearing before the director general is of course primarily a matter for them to resolve among themselves. Naturally, it is desirable for the Office of Fair Trading to know in what capacity people are acting, what their responsibilities are and who may be in the lead. This is something we shall want to ask in the context of the pre-notification system. But this is essentially a procedural matter; it can be established under the law as it stands and it is difficult to see how it can be legislated for.
As to sub-paragraph (iv), naturally it is desirable fully to establish the facts relevant to the public interest before advice is given to the Secretary of State; that goes without saying. If, in the event, it proves that there were material facts which had not been made public and of which the Secretary of State or director general were unaware at the time, then the law provides that a reference to the Monopolies and Mergers Commission can still be made, provided that this is done within six months of the new material facts emerging. This, together with the 920 new offence, to which I shall come in a moment, should enable the authorities to rely on information that they are given without having to seek independent verification on every point, which would be a practical impossibility.
I should remind the noble Lord that it was not in doubt that my noble friend the Secretary of State had the power to refer the takeover of House of Fraser to the MMC on the basis of new material facts revealed by the inspectors' report. In fact, he decided, in accordance with the director general's advice, not to do so. It is that point which is at present before the Judicial Committee of this House.
Sub-paragraph (v) as it stands would merely require the director general to satisfy himself that advisers had acted as though subject to Section 47 of the Financial Services Act. How he is to do that, and why advisers should oblige, is not clear. I take it that the noble Lord actually wants to subject them to Section 47. As he knows, the Bill itself introduces a new offence of giving false or misleading information to the competition authorities—not just the director general, but the Secretary of State and the MMC as well. That would apply to anyone who gives information either knowing it to be false or misleading in a material particular, or recklessly gives it; that is, disregards whether it is true or not. It would apply to principals or advisers. Moreover, those who supplied information for the purpose of giving it to the authorities would be similarly caught.
There was some discussion about Section 47 of the Financial Services Act in Committee following which my noble friend Lord Strathclyde wrote to the noble Lord. As he said in his letter, Section 47 deals with the very different and, in our view, more serious matter of making false statements to induce people to make investments. Given the general offence that we are already introducing, a further offence here is quite unnecessary.
The sole additional point with which the noble Lord's amendment is concerned, it seems, is the severity of the maximum penalty, which is seven years' imprisonment for Section 47, but only two years for the new offence and, for that matter, for the comparable offence in Section 200 of the Financial Services Act. During Committee, however, the noble Lord did not, as I understand it, want the penalty for the new offence increased. If so, I cannot understand why he should have changed his mind. It surely cannot have been as a result of something that he may have read. Ever since my noble friend was advised by the Director General of Fair Trading that there were new material facts in a certain case, it should have been clear that there was some question whether the authorities had previously been given misleading information.
I should add that we are not introducing this offence in response to any particular case. We like to see things in perspective and it has in fact been our intention to introduce this new broader offence for some time. We are doing so simply because it seems to us wrong that people should be able to give false information to the competition authorities with impunity. Nothing has happened to change our view that two years is an appropriate maximum penalty for an offence of this kind.
921 I apologise that it has been necessary to take up so much of your Lordships' time, but there are a number of separate points here which deserve careful consideration. I hope that I have shown why many of the points are already adequately provided for in the legislation as it is or as it will be amended by the Bill. Therefore, as I have explained, the changes in the amendment do not seem to us at present to be necessary. I hope therefore that the noble Lord will be satisfied with my reply and feel able to withdraw this amendment.

§ Lord Lloyd of Kilgerran
My Lords, in an endeavour to clarify my mind about the Government's views in regard to paragraphs (i) to (iv) of subsection (c), which were the subject of my address, perhaps I may point out that in the course of his presentation the Minister referred to Amendment No. 148L tabled in the name of the noble Lord, Lord Young of Graffham. I should like to ask him this question. Does he in effect have some sympathy (I shall not put it any higher than that) with the four parts of paragraph (c) in Amendment No. 148E, and are most of those matters to be dealt with in other amendments put forward by the Government?

§ Lord Brabazon of Tara
My Lords, we shall obviously be coming to Amendment No. 148L in a moment or two. I considered the different paragraphs in the amendment of the noble Lord, Lord Williams, and commented on each one of them, in particular that one which, as I said, would come up again with Amendment No. 148L.

§ Lord Lloyd of Kilgerran
My Lords, before the noble Lord again sits down, I did not gather what his position was. I heard his comments in relation to those four paragraphs, but he was reading rather quickly and I did not quite understand the position. Rather than delay the House, perhaps it will be best for me to read what he said in Hansard.

§ Lord Williams of Elvel
My Lords, I am sorry to have paused but I thought that the noble Lord had received by carrier pigeon a message which he wished to convey to the noble Lord, Lord Lloyd of Kilgerran. Obviously I was mistaken.
I am grateful to the Minister for responding fully to this amendment and to the noble Lord, Lord Lloyd, for his commentary on it. For myself I find it hard to understand how Amendment No. 148L which the Government are proposing covers my points. I think that the noble Lord, Lord Lloyd, agrees with me that there are certain disparities between the two amendments.
Perhaps I may go through the Minister's explanation. I understood him to say that in the normal course of events the director would make interested parties aware of his concerns. That was obviously not the case in one important instance and that is why the inspectors who produced this report, which I have not seen, made what I believe to be a recommendation to that effect. The Minister then said that it was possible for the roles of the different parties that appeared before the director to be established by the law as it stands. Having looked at the law and having been a practitioner under the 922 law as it stands for some considerable time, I find it difficult to see where the law allows the director to determine exactly who is doing what and in what role. No doubt the Minister will be able to point me to that section of the law as it stands which allows the director to do that.
As regards the verification of the facts, I accept what the Minister says and that the Bill amends the status of the information that is to be provided to competition bodies. That is welcome and I am glad that the Government have accepted that particular recommendation. Nevertheless, the point that I was trying to make in Committee—and the noble Lord referred to it—concerned penalties. I was not trying to increase the penalties but simply trying to align them to make sure that the offence of providing misleading information or making a misleading statement or recklessly making a statement which would be false or deceptive carried the same penalty whether an organisation was making it to a private investor and inducing an investment decision or to a competition authority. It seemed to me very odd that there was a discrepancy between the two penalties. However, I shall not pursue that point very far. I made it in Committee and make it again to the Minister; it is just a question of alignment of penalties under what I regard as similar types of offence.
I am glad that the Government have given careful consideration to these anonymous recommendations which have been reproduced in my amendment. I believe we shall have to look at what the noble Lord has said. He has been kind enough to address himself, as the noble Lord, Lord Lloyd, quite rightly mentioned, to the generality of the problem. It is not a problem of a particular instance; in my view it is a problem of a general nature. I shall certainly look as what he has said. Having heard the debate on Amendment No. 148L, we may if necessary come back to the problem at a later stage. I beg leave to withdraw the amendment.

§ Amendment, by leave, withdrawn.

§ 6.45 p.m.

§ Lord Williams of Elvel moved Amendment No. 148EA:

§ Before Clause 106, insert the following new clause:

§ ("Employee representations

§ "84A. In carrying out an investigation on a merger reference the Commission shall seek representations from relevant employees and employee organisations and from relevant consumer organisations." ").

§ The noble Lord said: My Lords, in moving this amendment, which is tabled in my name and that of the noble Lord, Lord Peston, it may be for the convenience of the House if I also speak to Amendment No. 148L. Our discussion in Committee referred to employee organisations and relevant consumer organisations. The Government undertook to look at this general problem and they have come forward with Amendment No. 148L, which instructs the director to: take into consideration any representations made to him by persons appearing to him to have a substantial interest". 923 We welcome Amendment No. 148L but wonder whether Amendment No. 148EA in either words that track the wording of Amending No. 148L or in my wording would be appropriate. After all, if the director must take into consideration various matters, it seems to us to be only right that the commission also should do that. Because the commission deliberates at much greater length (obviously, under the system) and with much greater thoroughness than the director can possibly do in the time available and because the commission has this responsibility, it seems to us necessary to ensure that the commission actively goes out and seeks representations from the bodies which are most concerned. Certainly the director can rightly take into consideration any representation made to him, but we believe that the commission should go out and seek representations from similar bodies. It seems to me that if the Government have conceded on the director point, they should also concede on the commission point. I beg to move.

§ Lord Lloyd of Kilgerran
My Lords, briefly I should like to welcome the government amendment, Amendment No. 148L, for the reasons given by the noble Lord, Lord Williams. It seems to me that Amendment No. 148EA tabled in the name of the noble Lords, Lord Williams and Lord Peston, fills a gap which is essential to be filled in the present practice in relation to the position of the commission. New Section 84A rightly suggests that: In carrying out an investigation on a merger reference the Commission shall seek representations" — and seeking representations is an important matter- from relevant employees and employee organisations and from relevant consumer organizations". I support this amendment.

§ Lord Mottistone
My Lords, I was told that, not long ago in a case that shall be nameless, the trade unions concerned wrote to the commission and were not rebuffed. There were other interested parties who did the same. There was apparently no need for legislation to make this possible. Even if it is a question of importance that people should be sought out, I should have thought that the amendment provided a little "nannying". If people have a strong view about a merger in relation to their company it is up to them to take the initiative. If they do not have such a feeling, then jolly bad luck. But I do not think that one needs to have legislation which provides that these people are sought out. The other people involved in the case I mentioned would not be covered by this amendment, but they still took the initiative and were not rebuffed.

§ Lord Lloyd of Kilgerran
Before the noble Lord sits down, is he saying on behalf of the CBI, therefore— —

§ Lord Mottistone
My Lords, although this is the Report stage, perhaps I may say that I am not speaking on behalf of the CBI. I am speaking from personal experience.

924

§ Lord Lloyd of Kilgerran
My Lords, I may surely ask a question of the noble Lord, Lord Mottistone, before he sits down. Is he saying that that is not in order?
I am asking the noble Lord before he sits down, speaking as he is, in his own personal capacity, and not on this occasion for the CBI, whether he is saying that employees and employee organisations and consumer organisations will know what is going on. Is it not a duty of the commission—which does not have great publicity associated with it—to seek representations that are relevant?

§ Lord Mottistone
My Lords, as I obviously have not sat down, the answer is that I am quoting from personal experience. I should have thought that the situation which I have experienced could well happen again. I do not think that one needs to use the legislation to help people along in the way that is intended, as I said earlier.

§ Lord Lucas of Chilworth
My Lords, I had not intended to get involved here. However, my noble friend Lord Mottistone is now suggesting that there is some "nannying" involved in the amendment. Since by statute we have set up both the Office of Fair Trading and the commission, it seems to me that it should be charged with all relevant responsibilities. In the light of changed circumstances over the past few years, I believe that those responsibilities should be considered. This amendment seeks to look at them again. In the complexity of company share movements today, with mergers of subsidiaries by other foreign-owned companies, there would be many, notably employees, who would not necessarily be aware of the direction in which the company might be moving or, more certainly, might not have the ability to raise the questions with which an office would be charged were the amendment accepted.
As the noble Lord, Lord Lloyd of Kilgerran, says, this fills a very small gap. I believe that there is more right on that side of the argument than in the argument of my noble friend Lord Mottistone.

§ Lord Brabazon of Tara
My Lords, with permission, not only shall I reply to Amendment No. 148EA, but I shall speak also to government Amendment No. 148L, because both these amendments arise from the same debate in Committee on amendments moved by the noble Lord, Lord Peston. Those amendments were designed respectively to give the Director General of Fair Trading and the Monopolies and Mergers Commission a duty to seek representations on mergers from relevant employees, employee organisations and consumer organisations.
In replying to that debate, my noble friend the Secretary of State agreed to consider giving the Director General of Fair Trading, in advising on mergers, a duty to take into consideration any representations received from interested parties. Amendment No. 148L imposes such a duty and is in fact drafted in very similar terms to the existing duty on the Monopolies and Mergers Commission under Section 81(1)(a) of the Fair Trading Act.
925 My noble friend explained why he was not prepared to go further, either in respect of the director general or the MMC. It would be far too onerous to require the director general to seek out representations, and invidious to single out particular persons or groups to be approached. Nevertheless, the amendment would clearly include within its scope, where relevant, employees and trade unions, and consumer organisations, which were the groups about which noble Lords opposite were particularly concerned.
The noble Lord, Lord Peston, said on that occasion that my noble friend had responded admirably to his concerns. Given that we have done exactly what we then undertook to consider, I have to say that we were surprised, and perhaps a little disappointed, to see that the noble Lord, Lord Williams, had after all retabled the amendment applying to the MMC. The reply then had seemed to suggest that the noble Lords were satisfied with our response on the MMC.
As I have indicated, the MMC is already under a duty to take into consideration representations from anyone with a substantial interest in the subject matter of a reference, and bodies which are representative of such persons. This is in Section 81(1)(a). The fact that the noble Lord has tabled this amendment as an amendment to Section 84 leads me to wonder whether he has looked sufficiently carefully at Section 81. If he does, he will see that in addition to the provision I have just mentioned, the MMC must give interested parties the opportunity of an oral hearing, unless that is impracticable or unnecessary. The concerns of employees and consumers are thus already well catered for.
Furthermore, turning to the point raised by my noble friend Lord Mottistone, the MMC already takes appropriate steps to alert interested parties to the reference and to invite them to submit views. This is in addition to publishing the reference, which the Secretary of State is required to do. As well as advertising its inquiries in the press, the MMC writes to persons and organisations it considers may wish to give evidence, bearing in mind the nature of the merger. In practically all merger inquiries, these include the CBI and relevant employee organisations, and, depending on the subject matter, any relevant consumer organisations. By way of example, I would refer noble Lords to paragraph 5 of Appendix 1.1 of the report on Elders' bid for Scottish and Newcastle.
As with the director general, it would be invidious to single out certain groups for special treatment. That would imply that they had some special right to have their views heard, and that these carried more weight. As my noble friend said in Committee, this would exclude many other groups which might have as great or greater interest in a merger, such as industrial suppliers, competitors and customers. Those with an interest will obviously vary from case to case. Under Section 81, it is for the MMC to decide who has a genuine interest in a particular case. It is also for it to weigh up the views of all these particular interests and arrive at a balanced assessment of the overall public interest. By placing certain interest groups above others, the amendment 926 would detract from its role as the neutral arbiter of the public interest.
For these reasons, while we believe Amendment No. 148L represents a small but useful improvement to the legislation, we continue to believe that Amendment No. 148EA is misconceived. I very much hope that the noble Lord, Lord Williams will consider what I have said and will agree to withdraw the amendment.

§ Lord Williams of Elvel
My Lords, I am grateful to the noble Lord for his lengthy explanation of Section 81 of the Fair Trading Act, which I have read a number of times over the past few years. The difference is between passive acceptance of representation and actively seeking representation. That is the major problem. We are grateful to the Government for accepting our point on the role of the director. Nevertheless we believe that the commission should go out actively and seek representation instead of relying on Section 81(1) and passively accepting such representations as appear to it to be acceptable. Nevertheless, we are coming up to the witching hour of dinner. I do not propose to carry this matter any further. I beg leave to withdraw the amendment.

§ Amendment, by leave, withdrawn.

§ Lord Strathclyde
My Lords, I beg to move that further consideration on Report be now adjourned. We shall not return to this Bill before eight o'clock.

§ Moved accordingly, and, on Question, Motion agreed to.