§ 3.22 p.m.
§ Lord Ezra asked Her Majesty's Government:
§ Whether they will provide details of the fines the European Commission is believed to be imposing on certain steel makers, including British Steel.
§ The Minister of State, Department of Trade and Industry (Lord Strathclyde)My Lords, the European Commission yesterday announced the decision to impose fines of slightly more than 100 million ecu on 16 steel companies from seven Community and three Scandinavian countries. The fines follow a Commission investigation into alleged anti-competitive activity in beams, where findings were made of price fixing, exchange of information and market sharing. British Steel's fines total 32 million ecu (£24.4 million). I understand that British Steel will be appealing against the decision.
§ Lord EzraMy Lords, I thank the noble Lord for that information and I accept that it must be the task of the Commission to ensure that the rules and regulations of various Community treaties are adhered to. Would he nevertheless agree that in the present situation within the European steel industries the Commission is getting its priorities wrong and that what it should be concentrating on is eliminating the subsidies, a large quantity of which still survive, rather than on penalising companies which are not subsidised and which may be purely technically in infringement of the rules of the treaty?
§ Lord StrathclydeMy Lords, I entirely agree with the premise of the noble Lord's question. It is right that the Commission has an important role to play in governing the treaties which deal with this subject. But of course its priorities should be to deal with the subsidy regime that exists for steel manufacturers throughout the Community. The Government have helped the Commission after the results of the November and December industry councils. That has made the Commission's job a lot easier. I should perhaps remind the House that the Government are in the forefront of efforts to bring about free and fair markets throughout the Community.
§ Lord Clark of KempstonMy Lords, will my noble friend urge the Government to press the European Commission to impose fines on those governments that give subsidies to steel industries against the spirit of the common market; subsidies which are killing the competitiveness of our steel industry?
§ Lord StrathclydeMy Lords, we never fail to take the opportunity of demonstrating to the Commission and indeed to our other European partners that the interests of sound economies are best served by free trade. The Commission clearly has a role to police its own treaties in the way it sees fit. And that is what it has done in this particular case.
§ Lord Cledwyn of PenrhosMy Lords, can the Minister say whether the Government will be supporting the steel companies in their appeal against the fines?
§ Lord StrathclydeMy Lords, first and foremost, this is a private sector matter between British Steel and the European Commission. If there is help and advice that we can offer British Steel, we shall do so. However, at this stage I am not yet certain whether or not British Steel will take an appeal forward.
§ Baroness O'CathainMy Lords, can the Minister confirm that some 10 years ago, at the insistence of the Commission, there were mandatory minimum prices for the steel industry in Europe? There was a restructuring proposal by, I think, Davignon which meant that there were continuous discussions between steel companies. What has now happened seems to be just an extension of fining people for what the Commission encouraged in the first place.
§ Lord StrathclydeMy Lords, the noble Baroness is right. Between 1980 and 1988 the Commission administered production quotas under the manifest crisis provisions of the ECSC treaty. That finished in 1988. The investigation with which the Commission is concerned at the moment was post-1988.
§ Lord GeddesMy Lords, reverting to the subject of subsidies, is my noble friend aware that the Commissioner concerned, when giving an interview on television yesterday, emphasised how necessary it was,
to stick to the rules".291 Would my noble friend be kind enough to encourage that Commissioner and indeed our partners in other European countries also to stick to the rules regarding illegal subsidies?
§ Lord StrathclydeMy Lords, we never fail to make that point both to the Commission and to our European partners. We do believe in fair play; we do believe in sticking to the rules; and we do believe in sticking to the law in this case.
§ Lord Mason of BarnsleyMy Lords, I note from what the Minister said that a number of steel producers in Europe have also been charged with price fixing, market sharing and exchange of information. Can he explain why it is that British Steel has been called upon to pay the biggest tine of all—£24 million? Was the fix of that magnitude? Was British Steel the ringleader in this alleged cartel? If not, will the Government—reverting to a previous question—be prepared to assist British Steel if it has to appeal to the Commission or to the European Court of Justice?
§ Lord StrathclydeMy Lords, although we have not seen the formal notice of these fines from the European Commission I understand that British Steel was fined the most because it sold the most products into the European Community. It was the largest player in the manufacture of the beams which were the subject of the investigation. I can go no further than the answer that I gave to the nobble Lord, Lord Cledwyn of Penrhos.
Lord Bruce of DoningtonMy Lords, is the noble Lord aware that Articles 92 and 93 of the Treaty of Rome lay the responsibility on the Commission to eliminate state subsidies that distort competition? In the steel industry that has been the case for the past five years. Why is it that the Commission has not instituted action under Article 92 and brought the matter before the European Court of Justice? Why, in default, have not Her Majesty's Government urged that this course of action be taken? Five years have passed since the first infringement of Article 92.
§ Lord StrathclydeMy Lords, that is because this particular investigation comes under Article 65 of the European Coal and Steel Community Treaty. That is the relevant treaty in respect of this investigation.
§ Lord Thomson of MonifiethMy Lords—
§ Lord PestonMy Lords—
§ The Lord Privy Seal (Lord Wakeham)My Lords, I believe the next question comes from the noble Lord, Lord Thomson of Monifieth.
§ Lord Thomson of MonifiethMy Lords, while endorsing what my noble friend Lord Ezra and others have said about the importance of dealing with illegal subsidies and creating proper conditions for free competition, does the Minister agree that in the world as it is today international cartels can be met effectively only by Community action and not by national action? Does the Minister further agree that effective action 292 against international cartels is in the interests of all of us in terms of lower prices and higher living standards in the long run?
§ Lord StrathclydeYes, my Lords, and that is why we are supporters of the rule of law within the European Community.
§ Lord PestonMy Lords, I am glad that the Opposition Front Bench is allowed to intervene.
§ Lord PestonMy Lords, there are certain courtesies involved here. Since I am still slightly at a loss to know what the Government are going to do, does the Minister agree that British Steel is an efficient operator which is being hammered in two ways? On the one hand, it is being subjected to unfair competition from subsidised industries and, on the other, it is subject to this fine the size of which, as I understand it, is so large because British Steel is itself so large and efficient? The Minister keeps talking about such matters but what one would like to know—and if I were part of British Steel I should like to know—is what the Government are going to do?
§ Lord StrathclydeMy Lords, as I made clear earlier, this is a private sector matter between British Steel and the Commission. The noble Lord should not link the two issues. The investigation deals with a period between 1988–91, whereas the subsidy regime and the industry councils taken at the end of last year deal with the future. There I join with the noble Lord in saying that we wish to see a subsidy-free future for the European steel industry.