Lords Sitting of 17 November 1997

Preamble
The House met at a quarter past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Southwell.

Lord Stone of Blackheath
Andrew Zelig Stone, Esquire, having been created Baron Stone of Blackheath, of Blackheath in the London Borough of Greenwich, for life—Was, in his robes, introduced between the Lord Healey and the Baroness Hayman.
Baroness Linklater of Butterstone
Mrs. Veronica Linklater, having been created Baroness Linklater of Butterstone, of Riemore in Perth and Kinross, for life—Was, in her robes, introduced between the Lord Mackie of Benshie and the Lord Jenkins of Hillhead.
Lord Simpson of Dunkeld
George Simpson, Esquire, having been created Baron Simpson of Dunkeld, of Dunkeld in Perth and Kinross, for life—Was, in his robes, introduced between the Lord Weinstock and the Lord Haskel.

Message from the Queen
The Earl of Airlie: My Lords, I have the honour to present to your Lordships a message from Her Majesty the Queen signed by her own hand. The message is as follows:
"I have received your Address and, relying on the wisdom of my Lords, I desire that my prerogative and interest, in so far as they may be concerned, should not stand in the way of consideration by the House of Lords of alterations in the ceremony of introduction".

Russian Nuclear Submarines: Decommissioning
2.49 p.m.
Lord Sudeley Lord Sudeley asked Her Majesty's Government:
What diplomatic initiatives they will make and what financial assistance they will give to aid the dismantling of decommissioned Russian nuclear submarines which pose a threat to the environment.
Lord Whitty: My Lords, the United Kingdom, other western governments and international bodies such as the International Atomic Energy Agency are working with the Russian Government to identify safe and practical means of decommissioning their nuclear submarines. That involves the managing and disposal of
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the spent fuel and radioactive waste from them. The UK contributes through European Union co-operation programmes, study contracts and programmes run by the International Atomic Energy Agency.
Lord Sudeley: My Lords, I thank the Minister for his reply. However, can he say, first, what endorsement the Government might give to any proposal to purchase floating dry docks from the Ukraine for the dismantling of the decommissioned Russian submarines? Secondly, can he say whether the Government might give any direct financial assistance to any Norwegian proposal to remove spent fuel from the Russian submarines and transport it to land? Thirdly, can the Minister tell the House what endorsement the Government might give to the proposal of Nirex to set up a regional radioactive waste committee to develop a common waste policy in north west Russia, where most of the submarines are situated?
Lord Whitty: My Lords, on the first question, I can tell the noble Lord that there is no immediate proposal to purchase from the Ukraine. On the second question, I can say that we are co-operating, together with various other countries, including the other western countries. Norway is providing technology and funds. The United States is providing ship-breaking equipment and also upgrading the low level radioactive waste facility which the Russians have at Murmansk. Japan, France and the EU are also co-operating. This is international co-operative action to help the Russians with this very difficult situation. So far as concerns Nirex, I am not aware of a direct involvement in that respect. Again, there is international co-operation on both the land-based nuclear waste in north west Russia and the additional naval-originated nuclear waste in the Arctic seas.
Lord Jenkins of Putney: My Lords, although we are all glad to know that the Government are helping the Russians in their endeavours to get over the problem of nuclear waste in the Baltic, is it not the case that this country is continuously, by the process of reprocessing nuclear weapons, adding daily to the amount of nuclear waste?
Lord Whitty: No, my Lords; the British nuclear fleet has never dumped nuclear waste or dumped a nuclear submarine in the oceans. The problem with the Russian fleet is that that was the normal means of disposing of Russian nuclear waste for many years up until 1993. In addition, to enable the Russians to fulfil their commitments on disarmament, the decommissioning process now needs some additional technical help.
Lord Campbell of Croy: My Lords, in reply to a Question tabled by me in May of last year, my noble friend Lady Chalker stated that, although the Russians have not asked for any international co-operation, British experts were already then carrying out a feasibility study. Can the Minister say whether there

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have been any significant developments on that study? Further, is the deterioration of the rusting hulls increasingly becoming a dangerous factor?
Lord Whitty: My Lords, I believe that the study to which the noble Lord referred was that carried out by the National Nuclear Corporation on the radiological consequences of dumping. That is feeding into the way in which the Russians are dealing with the matter, together with international co-operation. We have also contributed to the study by the International Atomic Energy Authority into such problems.
Lord Avebury: My Lords, will the Minister join me in congratulating the Norwegian Bellona Foundation and former Soviet naval captain Aleksandr Nikitin on publishing the report on the Russian north sea fleet which drew attention to the unsafe methods of disposal and storage being used in the Russian north? Will the Government make representations to the Russian authorities that the prosecution against Aleksandr Nikitin be dropped, bearing in mind the great service that he has rendered to the international community in exposing such risks?
Lord Whitty: My Lords, the matter has been raised with the Russians. However, I am not in a position to report on any response.
Viscount Long: My Lords, can the Minister tell the House how many submarines are in this state and have to be looked after or dismantled?
Lord Whitty: My Lords, there are about 90 submarines which have already been decommissioned, not all of which have had their fuel dealt with effectively. We anticipate that at least another 30 will require decommissioning over the next few years.
Lord Bruce of Donington: My Lords, the noble Lord's Question and, indeed, his supplementary question specifically asked about financial assistance. I must apologise to my noble friend the Minister if I misunderstood his reply. However, I would be glad if that could be clarified. Do we or do we not provide financial assistance?
Lord Whitty: My Lords, we provide technical assistance and we also provide financial assistance via the European Union's TACIS programme, which is directed at clearing nuclear waste. The total TACIS programme involves about £78 million, of which the UK's contribution is about 13 per cent.
Lord Whaddon: My Lords, will my noble friend the Minister bear in mind the reported dumps of highly toxic substances and unused weapons in the Baltic, quite apart from nuclear weapons? Further, will my noble friend ensure that British aid is extended to the neutralising of those dumps?
Lord Whitty: My Lords, the Baltic Council and the Baltic states are very much pre-occupied with the
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matter. If there is British technological assistance which can help the Scandinavian countries, we shall certainly stand by to provide it.
Baroness Rawlings: My Lords, what is the Government's response to the description by the Bellona Foundation—the Norwegian environmental pressure group mentioned by the noble Lord, Lord Avebury—of the situation in the Kola Peninsula as, "Chernobyl in slow motion"?
Lord Whitty: My Lords, the main problem in the Kola Peninsula is land-based nuclear waste rather than naval nuclear waste. There is a very serious problem involved, for which the European Union and other western countries are providing assistance. However, the full scope of the report requires further study. It is clear that there is a very substantial environmental problem in the area.

NATO-Russia Permanent Joint Council
2.57 p.m.
Lord Judd Lord Judd asked Her Majesty's Government:
What progress has been made in the ministerial meetings of the NATO-Russia Permanent Joint Council.
Lord Whitty: My Lords, the NATO-Russia Permanent Joint Council met at foreign Minister level in New York on 26th September. Good progress was made with NATO-Russia relations, on co-operation in Bosnia and on peacekeeping more generally. The Permanent Joint Council also agreed its future work programme, which will include military co-operation and co-operation to work against the proliferation of weapons of mass destruction. The Permanent Joint Council will next meet at defence Minister level in Brussels on 3rd December and at foreign Minister level on 16th or 17th December. The work of preparing for these meetings is carried forward by permanent representatives at NATO.
Lord Judd: My Lords, I thank my noble friend the Minister for that most helpful reply. Does he agree that, as the expansion of NATO goes forward, the importance of such meetings cannot be overemphasised if we are to build positive relationships with Russia?
In view of the various elements in sound security policy, can my noble friend the Minister say anything more to the House about what was discussed with the Russians on the matter of arms control, on the issue of nuclear, biological and chemical terrorism and on the proliferation of means of delivery of nuclear, biological and chemical capability? Can my noble friend also tell the House whether there was an opportunity to discuss the important issue of defence conversion in Russia, in view of the alarming social and economic significance of the defence industry in that country?
Lord Whitty: My Lords, many of the issues raised by my noble friend are appropriate for the agenda of the

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defence Minister level discussions in December, although a final agenda has not yet been reached. Clearly, one of the main purposes of the NATO-Russia body is to deal with the legacy of environmental, military and technical problems remaining from earlier Soviet military activity.
Lord Wallace of Saltaire: My Lords, can the Minister tell us how far Her Majesty's Government see the NATO-Russia dialogue developing? Many half promises were made during the first six months of this year. Russia is to have permanent representation in NATO, and NATO is to have permanent representation in Moscow. Do we see ourselves moving towards a situation where Russia becomes, in effect, a half member of NATO within the next 10 to 15 years?
Lord Whitty: My Lords, 10 or 15 years is a long time. At present there are no plans and no requests for Russia to join NATO. The arrangements with Russia are entirely separate from the NATO structure and entirely different from the whole process of enlargement of NATO. The noble Lord is absolutely right: the total approach to security in Europe and beyond requires not only the strengthening of NATO but also the strengthening and the institutionalisation of the arrangements with Russia. That is what the NATO/Russia agreement is about.
Baroness Rawlings: My Lords, what discussions have taken place in the joint council on Russia's relationships with the republics of the former Soviet Union given the challenge posed by the rising tide of Islam in Uzbekistan, Kazakhstan, Kirghizstan and Turkmenistan and by the Taleban movement in Afghanistan? What co-operation should there be between these countries and NATO to help resolve these tensions?
Lord Whitty: My Lords, as regards the terms mentioned by the noble Baroness, those discussions have not taken place. However, there is the intention that relations between NATO and the central Asian republics should be improved, and indeed any stability in the NATO/Russia situation would help in the relationships with the central Asian republics.
Lord Peston: My Lords, as a matter of logic, will my noble friend explain to your Lordships the following? If Russia and the other eastern nations join NATO, what would the point of NATO be?
Lord Whitty: My Lords, I think I implied that any prospect of Russia joining NATO was rather a long way off. The point of the enlargement of NATO, and of bringing in central and eastern European countries to either membership or a relationship with NATO, is to provide security and stability for the whole of the European area and to provide a combined European approach to military problems in general. As compared
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with the polarisation of Europe during the period of the Cold War, these are positive and effective moves towards greater security for all the peoples of Europe.
The Earl of Carlisle: My Lords, will the Minister assure us—
Lord Jenkins of Putney: My Lords—
The Lord Privy Seal (Lord Richard): My Lords, it is the turn of the Liberal.
The Earl of Carlisle: My Lords, will the Minister assure us that at the next December meeting of the joint council Her Majesty's Government will invite the Russian Federation to sign a negotiated border treaty with Estonia? Will Her Majesty's Government also point out that the eastern European nations have no desire to join a Russian security organisation and that any pressure on those nations, in particular the three Baltic states of Estonia, Latvia and Lithuania, will be regarded as counter productive?
Lord Whitty: My Lords, the views of the central and eastern European states, in particular the Baltic states, are well known to Russia and to the west. We respect those positions. As regards the agenda of the December meeting, I have already said that it is yet to be finalised, but some of these issues will undoubtedly be touched on.
Lord Jenkins of Putney: My Lords, will the noble Lord confirm that NATO already has no purpose other than its own survival?
Lord Whitty: My Lords, I do not accept the terms outlined by the noble Lord. Clearly the original purpose of NATO has changed. NATO's role now is to ensure the survival of us all in a more stable world. As I said earlier, the end of the Cold War period has now been replaced by a situation where NATO can bring in the countries of both eastern and western Europe and engage in a more stable relationship with Russia and other peripheral areas of the European continent.

Lorne House: Funding
3.4 p.m.
Lord Peyton of Yeovil Lord Peyton of Yeovil asked Her Majesty's Government:
Whether the withdrawal of grants from the Inner London Probation Service and the East London and The City Health Authority and the ending of a temporary grant from the Department of Health will lead to the closure of Lorne House, the only residential establishment in the country which exists to care for young drug addicts and alcoholics; and, if so, whether they will take steps to prevent this.
The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn): My Lords, Lorne House's main income comes from local

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authorities under the community care arrangements. The Inner London Probation Service has not withdrawn its funding, but has guaranteed Lorne House a minimum of £20,000 next financial year. Its income from probation services will be higher if additional places for offenders under probation service supervision are taken up. We hope that Lorne House will be able to continue its work, although in the end this will depend on the extent to which it can provide services which funders are satisfied are cost effective. Before I part from this reply, I personally sincerely acknowledge the long, continuing interest of the noble Lord, Lord Peyton, in this important field.
Lord Peyton of Yeovil: My Lords, I am grateful for the Minister's kindly remark. Will he not go a little further and accept that to allow a hostel of this kind, with the proven record that it has, simply to disappear for lack of support would make no sense at all? It would mean that a number of young people early in their lives would simply drift into the penal system. That would be a disaster for them and a huge and continuing cost for the state. I very much hope that the noble Lord will take an early opportunity to remind the Treasury that this so-called economy would result in a huge and continuing cost for the state.
Lord Williams of Mostyn: My Lords, as so often on these occasions, the noble Lord, Lord Peyton of Yeovil, as far as I am concerned— I say nothing in parenthesis about the Treasury—is pushing at an open door in principle. Apart from the grant of £20,000, which is not negligible, the Department of Health, as I think the noble Lord will know, has given Turning Point a one-off grant of £50,000 for this financial year. That is to ensure that it continues to run Lorne House. Turning Point intends to review its operation and its structure but has not yet reported its conclusions. I dare say that your Lordships would unanimously agree that for us to make any commitment before that review is concluded would not be prudent.
Lord Molloy: My Lords, in addition to the remarkable submission made by the noble Lord, Lord Peyton, with regard to this remarkable establishment, will my noble friend consider that the whole medical profession would urge Lorne House to be created if it did not already exist? Will my noble friend not lightly disband Lorne House but ensure that it can continue to carry out the remarkable work that it is undertaking?
Lord Williams of Mostyn: My Lords, I thought I had given an indication that the Government value the work of Lorne House. It is a unique establishment. It deals with addicts of drink, solvents and other drugs from the ages of 15 to 25. Of course we value its work. As I have indicated, we have demonstrated that value by a grant of £50,000 to Turning Point which is the parent organisation of Lorne House.
Lord Desai: My Lords, I declare an interest as chairman of City Road, which is a pan-London drug
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intervention agency. Will the Minister bear in mind that the problem of covering the expense of drug addicts is not particular to Lorne House but is a London-wide phenomenon? Will the Government bear in mind that early and careful treatment of drug addicts saves much money later?
Lord Williams of Mostyn: My Lords, that final point of the noble Lord, Lord Desai, is absolutely right. It does not just save money for the future; it also saves wasted lives and broken dreams. This general sub-text was very much in the mind of the Home Secretary when he asked the chief constable, Mr. Keith Hellawell, to undertake an overview of the present drug problems and how we deal with them in a variety of ways. I can assure your Lordships that this matter is very much in the forefront of the thinking of the Home Office.
Lord Acton: My Lords, can my noble friend say how many residential places there are at Lorne House?
Lord Williams of Mostyn: My Lords, I can. Lorne House has 20 beds. In 1996-97 Lorne House admitted a total of 105 male and female young persons aged between 15 and 25. The average stay is seven to eight weeks. Residents can stay for up to six months if necessary.
Lord Peyton of Yeovil: My Lords, I hope that the Minister can clear up one point. He has referred to the £50,000 grant. That was made, was it not, by the last government?
Lord Strathclyde: Ah!
Lord Peyton of Yeovil: My Lords, what concerns me now is that this worthy establishment cannot continue to exist indefinitely on a hand-to-mouth basis. It must have some long-term certainty of continuing; otherwise its work will be paralysed.
Lord Williams of Mostyn: My Lords, I am happy to confirm to the noble Lord, Lord Peyton of Yeovil, and in particular the noble Lord, Lord Strathclyde, that the donation of £50,000 preceded 1st May. But that is entirely the point of giving that grant. Turning Point is reviewing the operation. We await the results of that review; and we shall proceed in, I hope, a prudent way.

Thorne and Hatfield Moors SSSI
3.11 p.m.
Baroness Nicol Baroness Nicol asked Her Majesty's Government:
What plans they have to protect Thorne and Hatfield Moors SSSI from denotification, and to remove the current planning permission on the site.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman): My Lords, the Government have no statutory role in requiring or

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preventing the notification or denotification of individual sites. That is a matter for scientific judgment by the council of English Nature.
The decision on whether to revoke or modify a planning permission is the responsibility of the relevant mineral planning authority, in this case Doncaster Metropolitan Borough Council.
Baroness Nicol: My Lords, I thank the Minister for that not unexpected Answer. Is my noble friend aware that Thorne and Hatfield Moors are two of the most important wildlife sites in the United Kingdom—they provide habitat for 25 of our most endangered species—and that raised bogs, of which these are two examples, are of the highest priority under the European Union habitats directive? Is it not time that the Government looked seriously at the working of the 1981 Act with a view to updating the legislation so that a more considered approach could be taken on these important sites? Is my noble friend aware that Doncaster Metropolitan Borough Council, to which she referred, is against the denotification and has said so, as is the Environment Agency? The situation is very unsatisfactory.
Baroness Hayman: My Lords, my noble friend has a long-standing interest in this area. The Government are considering currently the options for strengthening the protection given to special sites. We hope to consult on that issue in the new year.
However, because of the well known concerns about Thorne and Hatfield SSSIs, my honourable friend the Minister for the Environment recently invited English Nature to make a presentation. That was attended by local MPs who have an interest in the area and by Friends of the Earth. At that meeting Mr. Meacher asked English Nature to look again at all the evidence for denotification. The council of English Nature will be considering that evidence carefully at its meeting on 2nd December.
Lord Beaumont of Whitley: My Lords, will the Government support the wildlife charter launched today by a wide-ranging group of NGOs? It calls for planning laws to reflect the national importance of all SSSIs and to prevent their damage in future from such activities as peat extraction.
Baroness Hayman: My Lords, as the noble Lord said, the wildlife charter was launched today. We believe that it is a useful document. As I said earlier, we are already considering how best to improve the protection and management of SSSIs in the context of our commitment to improve the protection for wildlife. Officials have already held discussions with a wide range of bodies. We welcome the views of the wildlife organisations, which provide positive and useful ideas which will be considered carefully. In the new year there will be a full public consultation on a range of options.
Lord Hardy of Wath: My Lords, will my noble friend consider that in this century 95 per cent. of the peat bogs in this country have disappeared? Those
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referred to in the Question are the most important areas which remain. The issue needs consideration at the highest possible level.
Baroness Hayman: My Lords, it is because of the concerns raised over possible denotification of parts—I should stress that it is only parts—of the Thorne and Hatfield Moors SSSIs, to which my noble friend referred, that we have asked English Nature to look carefully at this area. Following a major voluntary transfer of sites with planning permission from the peat operator to English Nature, peat is now worked only from those sites within Hatfield and Thorne Moors which have already been damaged by previous extraction over many decades.
Baroness Nicol: My Lords, perhaps I may offer the Minister one further thought. Almost 19 per cent. of our sites of special scientific interest—it is one of our strongest designations—are either destroyed or damaged each year. That has continued since 1981. Can the Minister explain to English Nature that unless we are seen to protect our own most valuable sites our exhortations to other countries, especially in Europe, to protect their sites are not helped?
Baroness Hayman: My Lords, I take note of what my noble friend says. As she is aware, a number of candidate special areas of conservation under the habitats directive have been submitted to the European Commission. Parts of Thorne and Hatfield Moors have been included as candidate special areas of conservation although not the parts currently being considered for denotification, as I understand it.
Baroness Hamwee: My Lords, while I may be pushing at a partially open door, the matter bears emphasis. In an area where the public have not been convinced by the scientific evidence so far presented, does the Minister accept that it is important that evidence is of the highest order and totally convincing? The Minister stated that peat is being extracted now only where the land has already suffered from extraction and has been damaged. By definition, to remain a peat bog, a peat bog has to be wet. By definition, the scientific views seem to be those which are challenged by a wide number of people.
Baroness Hayman: My Lords, the noble Baroness is correct. Work is being undertaken only at sites which have been damaged. In the context of peat bogs, it is sensible to do that since it is only by continuing extraction to groundwater level that bogs will be re-established allowing the regeneration of the conservation interest. But it is precisely because of the concerns raised about the quality of the scientific evidence that my honourable friend asked English Nature to look again at that evidence and consult with some of the people who are challenging it. However, eventually the responsibility lies with the council of English Nature.
Lord Bowness: My Lords, the Question relates to sites of special scientific interest. However, in reply to

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the noble Lord, Lord Beaumont of Whitley, the Minister referred to wildlife. In view of the concern about the countryside and sites of special scientific interest, will the Minister take the opportunity in the context of the protection of wildlife to tell the House that she will look carefully at planning policy vis-à-vis the green belt? That has an important role to play as well.
Baroness Hayman: My Lords, I admire the noble Lord's ability to involve green belt policy in SSSI questions. Issues of the green belt are important. We are looking at planning policy in a variety of contexts, in particular as regards regeneration of town centres.

Business of the House
3.19 p.m.
Lord Carter: My Lords, it may be for the convenience of the House to know that the Motion in the name of my noble friend Lord Sewel on the Food Protection (Emergency Prohibitions) (Oil and Chemical Pollution of Fish) Order 1997 will be moved during the dinner adjournment this evening. The relevant sign was omitted from today's Order Paper due to a printer's error.

British Nationality (St. Helena) Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Competition Bill [H.L.]
3.20 p.m.
The Minister of State, Department of Trade and Industry (Lord Simon of Highbury): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Simon of Highbury.)
On Question, Motion agreed to.
House in Committee accordingly.
[The PRINCIPAL DEPUTY CHAIRMAN OF COMMITTEES in the Chair.]
Clause 25 [Director's power to investigate]:
Lord Kingsland Lord Kingsland moved Amendment No. 94:
Page 13, line 9, leave out ("a reasonable suspicion") and insert ("reasonable grounds for belief").
The noble Lord said: The Opposition have rather rashly entrusted me with the task of dealing with amendments to Clauses 25 to 28. Before I begin, perhaps I may make a general comment on the philosophy that lies behind our amendment.
As the Minister is aware, his Government seek to incorporate the European Convention on Human Rights into domestic law. He is further aware that that will
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require officials in this country to meet the standards of conduct laid down in Article 6 and Article 8 of that convention.
As matters stand, a competition official can enter the premises of a business without notice; can address questions to anyone in the premises; does not need to tell that person before he addresses a question to him or her what is the purpose of the investigation; can require any relevant document to be produced to him where the question of relevance is a matter for him and him alone; and there is no requirement for a period to pass during which the relevant official can call on his legal advisers.
It is clear to me from the jurisprudence of the European Commission of Human Rights and the European Court of Human Rights that in many respects that conduct falls below the level set by the convention. Whatever one's views might be about the merits or otherwise of incorporating the convention, it is the Government's intention to seek to incorporate it. Therefore it is not unreasonable for the Opposition to expect the standards that the Government set themselves to comply with the convention.
With those opening remarks in mind, I turn to Amendment No. 94. It seeks to substitute the expression "reasonable suspicion" (at line 9 on page 13) with "reasonable grounds for belief'. That is a stiffer test for the director general. I need not explain the implications at great length. In our submission the director general should have grounds that are stronger than mere suspicion in order to exercise his powers. "Reasonable grounds for belief" means that there is at least some evidence for what he is about to do. I beg to move.
Lord Borrie: This is an important amendment, and is part of a series, as the noble Lord, Lord Kingsland, mentioned. For the moment, I merely wish to refer to Amendment No. 94, which is quite straightforward. To my mind it is not an amendment that the Committee ought to accept, since it perpetuates the very unsatisfactory position that has lasted for many years in which the Office of Fair Trading has had inadequate investigative powers. I remind the noble Lord, Lord Kingsland, that the previous government, in a White Paper and a Green Paper, asserted that the existing powers of the director general were inadequate in order to combat serious price-fixing cartels and other restrictive trade agreements.
The phrase in the existing law is, "reasonable cause for belief". The noble Lord, Lord Kingsland, wishes to say, "reasonable grounds for belief". Those phrases are immensely similar, and the existing phrase, "reasonable cause for belief", has been interpreted by the Court of Appeal as meaning that the director general must have firm evidence of, for example, a price-fixing agreement before he can investigate whether there is one. That seems to be a Gilbertian situation; it has caused the director general great difficulties in the past—both myself, when I held that office, and my successor—so that one had to rely on the word of whistle-blowers who were employees or perhaps participants in the cartel and who would emerge out of the woodwork possibly years

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after the cartel or other misconduct had been operating. The history of this matter over the past 20 years and more suggests that a stronger power is needed.
There is always a balance in these matters. There has to be some element of trust, combined with an element of accountability, in whatever official has significant powers of investigation. The noble Lord must be right in that the Government will wish, as tomorrow they continue their debate on the Human Rights Bill, to conform to the Convention on Human Rights.
I hope that the noble Lord will feel able to withdraw this particular amendment, simply because it would allow a very unsatisfactory situation to continue when, for the first time in many years, we are trying radically to improve the law in relation to competition and trying to ensure that those who have the responsibility for enforcing it will have adequate powers—not, as has been the case in the past, inadequate powers—to investigate.
Lord Peston: In speaking to this amendment, I apologise to the Committee for not taking part in earlier deliberations on this very important Bill, which, as we are all agreed, is long overdue. In responding to the noble Lord, Lord Kingsland, one ought to point out that the general philosophy—which I hoped all noble Lords would share—stems from Adam Smith's dictum that competition is a very good thing and competitive market structures are fundamental to the protection of consumers. When one talks about human rights, those are the kind of ideas that I, at least, think about. The Bill goes some way in the right direction. As it happens, I should have adopted a more draconian approach, and regard the Bill as too much of a compromise. However, this is not the occasion for a Second Reading speech.
Essentially, the Bill provides a legal underpinning for the law and for investigation enforcement. As my noble friend Lord Borrie pointed out, the director general must have a basis for doing the work that he, or one day, as we hope, she, will have a chance to do. What worries me about the amendment as it is formulated is that it is assumed that the director general has already carried out the investigation that Chapter III of the Bill enables him to do. In other words, it must logically be asked: what would it be reasonable for the director general to have to do before he can go on to the next stage? It seems to me that what is reasonable is that the director general and his office should have a suspicion that there have been infringements. We must not forget that, in the context of the Bill, infringements are an extremely important matter. I believe that my noble friend Lord Borrie is right. If the director general had to have reasonable grounds for his belief, it would follow that he had already done the work that this is all about.
Although it is useful for an amendment of this kind to be put down and one should not criticise the Opposition for doing so, it seems to me that, as was my practice when I sat on the Opposition Benches, the purpose of the amendment is to make clearer than might otherwise be the case why the Bill is drafted in its present form. I hope that my noble friend is not of a mind to accept the change of wording. I make the point
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that it is precisely the wording in the Bill that is needed if we are to have an active and serious competition policy. That is what I hope for.
3.30 p.m.
Lord Campbell of Alloway: The issue is simple. Ought the director general to have some evidence before he exercises these draconian powers? It is not to the point to say, "Oh, he knows all about it already", or "He has to know about it already", before he exercises the power and he has to know what is the object of it. That is not the situation at all.
The question is whether the director general should have some evidence, some grounds for belief, or whether there should be mere suspicion, albeit reasonable, which imports a fundamental element of doubt. It may be a difficult matter of debate, but on the whole I support the amendment.
Lord Simon of Highbury: First, I wish to try to respond to the noble Lord, Lord Kingsland, as to positioning and the first four schedules. I can announce to him that he can now proceed in total relaxation because I shall handle them from this side of the Chamber.
The first positioning concerned compatibility with the European Convention on Human Rights, since in these clauses we are talking about the protection of individual rights in the investigation process. We believe that the regime is fully compatible with the European Convention on Human Rights and that the Bill would pass that test. In any event, as the noble Lord rightly mentioned, the Government have recently introduced the Human Rights Bill into your Lordships' House which will require, so far as possible, primary and secondary legislation to be read and given effect in a way that is consistent with the European convention. So on both tests—the existing shape of the Bill and the future direction of legislation—we feel that the Bill is well positioned.
Perhaps I may extend the very interesting general debate and the points that have been made. It is worth noting that Clause 25 is the first of many important clauses dealing with investigations. The number of amendments proposed to the clauses confirms their importance. I know also, from our earlier debate at Second Reading, that these clauses have raised a number of concerns. I look forward to detailed discussion of some of the concerns as we continue through the Committee stage.
It is important, however, for the general positioning that we do not lose sight of the overall purpose of the legislation in all the detailed consideration of individual clauses and the weighing of the balances.
One of the key aims of the Bill is to deter anti-competitive behaviour. An effective way of doing that is to ensure that if anti-competitive behaviour takes place it will be identified. That is the purpose of having vigorous and effective investigatory powers. I make absolutely no apology for that. The Government's position is that the current regime is inadequate and ineffective—points which my noble friend Lord Borrie

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has just made—particularly in its failure to tackle cartels. We know that change is long overdue and, as the debate continues, I shall, of course, listen carefully to all the points that are made. I shall certainly not want to rule out making improvements to the Bill, but I believe it will be very difficult to persuade the Government to accept amendments that would damage the deterrent effect of the regime.
So much for general positioning. Let me now turn specifically to Amendment No. 94. Clause 25 sets a threshold which must be reached before the director general may conduct investigations. It is right that there should be a threshold. It is not our intention that the director general should go on "fishing expeditions", as I believe they are colloquially called, just in the hope of turning up something.
Clause 25 sets out a threshold appropriate for starting an investigation. The director general must have reasonable suspicion that either of the prohibitions has been infringed. Let me emphasise that this is the threshold for the director general to start his investigation. It should be judged in that light.
We discussed the issue at Second Reading and I have had the benefit of being able to reflect on what was said. I recall that the noble Baroness, Lady O'Cathain, spoke of the importance of those powers. I was also particularly struck by the words of my noble friend Lord Borrie. He said then, and he said much the same again today—and it is a powerful point—
"Up to now the law has been that the Office of Fair Trading can only demand and require … documents from suspected companies if it has 'reasonable cause to believe' that there is a cartel. But that has been interpreted by the courts in such a way that it creates a Catch-22 situation. Ilt seems absurd to have a] requirement for the Office of Fair Trading to have firm evidence of the existence of a cartel before it can issue a notice in order to find out whether the cartel exists".—[officia/ Report, 30/10/97; col. 1170.]
I agree with the sentiments expressed by my noble friend Lord Borrie. Acceptance of the amendment would probably seriously impede the investigation of suspected cartels and other anti-competitive behaviour. It would be quite wrong to have a high threshold of reasonable grounds for belief before allowing an investigation to commence. On that basis, the noble Lord, Lord Kingsland, will not be surprised to learn that I urge him to reconsider and to withdraw his amendment.
Lord Kingsland: I thank the Minister for his reply and hope that he will not mind if I address one or two further questions to him. He stated in his reply that "reasonable suspicion" only authorised the start of an investigation. But if he addresses himself to Clause 25(2), he will see that that is not so. Subsection (2) states that:
"The Director may authorise any officer of his to exercise on his behalf all or any of the powers conferred by section 26 or 27".
So it seems on the face of it that "reasonable suspicion" is enough to trigger the full procedure.
What does the Minister consider reasonable suspicion entails? For example, would it be enough for an innocent bystander to write a letter to the director general alleging that a particular cartel existed with
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nothing more? Would that, in the Minister's view, constitute reasonable suspicion? Alternatively, would it be enough for the director general to read in the financial columns of informed newspapers in this country that there were rumours in the City that there was a cartel or that a monopoly was abusing a dominant position? Would those matters amount to reasonable suspicion?
Our fear is that the expression "reasonable suspicion" would be used to permit officials in the director general's employment to engage in what are often termed "fishing expeditions". We would regard that as highly undesirable and an enormous waste of taxpayers' money as well as not being fair to the companies involved. I hope the Minister will not mind my asking him again to be more specific about where he sees the line being drawn between the kind of situations that I mentioned and "reasonable suspicion".
Lord Simon of Highbury: Let me say, first, that the noble Lord is right in that my remarks related to Clause 25. When we reach Clauses 26 and 27 there will be other debates and they should be sequential.
What is reasonable cause to believe? What is reasonable cause to have suspicion? It is the reasonableness and the nature of the data that are pertinent. In general terms those are matters of judgment for the director. We will never be able to be absolutely certain as to precisely where lines of judgment are drawn. They are lines of judgment. But the following areas have had common currency of sources of reasonable grounds for suspicion: copies of agreements which are usually supplied secretly by people who have been members of cartels who are disaffected and who have grounds for wanting to pass on confidential information; statements from employees or ex-employees, the so-called "whistle blowing test" with which we are all coming to terms in industry; a substantial complaint by a competitor who has been refused entry into a cartel; and perhaps economic evidence of prices moving in a specific way. All those in the past have existed and had judgments taken about them as being reasonable grounds. The one I find least convincing is, "My Lord, I read it in the newspaper".
Lord Campbell of Alloway: Does not the Minister appreciate that "reasonable cause for suspicion" is the most abused bureaucratic concept that we have? For instance, a police officer stops somebody in a car on suspicion of drink driving. When asked what was his reasonable cause, he says, "He was driving too slowly", "He was driving too fast" or some other made-up excuse. The phrase is wide open to abuse by any bureaucrat.
Lord Simon of Highbury: My worry is that the consumer has been even wider open to abuse as a result of the way that some companies have behaved. We have heard from practitioners with 20 years' experience that it has often taken a painfully long time to uncover that sort of concerted practice. The protection should be on the side of the consumer.

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The noble Lord's argument in relation to the driver of a car is persuasive in a personal way, should it happen to me; but it is beside the point when we are trying to protect consumers from the sort of extravagances which they have had to endure.
3.45 p.m.
Lord Fraser of Carmyllie: This is the first amendment and it is extremely important that we get it right. Once the director has come to the view that he has "a reasonable suspicion", it is at that point that these draconian powers are triggered. There is no getting away from that. The jurisprudence of the European Union is such that this competition law would be regarded as criminal, but in fact it is not criminal; it is part of an administrative process set out in the Bill.
Powers are given to the director general. As we see in Clause 26, he does not have to obtain a warrant to go into people's houses; he can ask questions without explaining why. If we were dealing with this as a criminal Bill, I have no doubt that there would be keen and anxious scrutiny given to this provision. Why Amendment No. 94 is important and why we are taking time over it is because once the director has no more than "reasonable suspicion", all the other powers flow from it.
I do not know whether my noble friend wishes to pursue the matter further. I intervene at this stage to say how important it is. Until we correctly establish the starting point, there are real dangers that excessive powers might be given to the director. At one point the Minister used the expression, "Where there was firm evidence". But if there was firm evidence then the test of "reasonable grounds for belief' would be met.
What troubles us most is the idea that a trade competitor, who is not in the cartel about which allegation has been made, may make a mischievous or malicious complaint. After that it is difficult for the director to set it aside if the only test he has to meet is one of reasonable suspicion. I do not know if my noble friend wants to intervene again, but we shall certainly want to come back to this point at a later stage.
Lord Peston: Before my noble friend the Minister replies and the noble Lord considers what he wants to do, perhaps as a layman I can ask for some clarification. I assume that "reasonable suspicion" is not to be interpreted as a psychological term; in other words, we would not bring in psychiatrists to discover whether or not the director was correct. I assume that we are discussing a legal concept. I ask therefore whether "reasonable suspicion" is subject to test in the courts. I assume that it is and therefore the problems raised by Members of the Committee opposite simply do not arise reasonably—if I may use that word in this context.
As my noble friend the Minister pointed out, certain evidence, short of conclusive evidence, comes to hand to the director who then considers it and says, "On the basis of what I have been told, I feel that reasonably I ought to mount an investigation". That makes good sense to me. He does not have enough evidence to say, without further analysis, that there is an infringement.
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But he has evidence—that is all we require here—to say that he has "a reasonable suspicion" and therefore ought to conduct an investigation.
Given that the courts would protect a firm which felt the director was being unreasonable—they would say, "You do not have a reasonable position. Let us argue it through"—and given that we all wish to see competition policy and competition itself strengthened, I cannot see what is currently exercising Members of the Committee opposite.
Lord Fraser of Carmyllie: Perhaps I may intervene again. The noble Lord, Lord Peston, may wish to examine the matter this way. If someone goes to the police and makes an allegation about him, the police may properly, given the allegation made, begin to conduct some investigation of the conduct of the noble Lord. Where there would be a difference if criminal conduct was being alleged is that it would not immediately give the police, without warrant, the right to ask questions; the right to go into premises that were either occupied or unoccupied and ask questions of all manner of people without giving them warning, a caution or anything like that. There would require to be a build-up of the case before much of that could happen. Certainly at one point some judicial intervention would be required.
As I understand it, other than in the rather restricted circumstances to which we shall come in relation to Clause 28, there is virtually no judicial intervention or opportunity for it in this scheme of things. That is why we feel that the issue must be examined very carefully.
Lord Simon of Highbury: I have listened with great care to the arguments. I understand clearly that this is an important opening threshold test for the sequence of the clauses we are debating. I would draw two or three points from the argument. The noble and learned Lord, Lord Fraser, said that much may follow from Clause 25. I did not hear the emphasis on the word "may". It appeared as if everything was sequential.
It is important to stress that the "reasonable suspicion" can affect many different stages of action thereafter on the judgment of the director general. It is the "may" which I believe is important, because the issue is what the director general could do in circumstances where he had a reasonable suspicion. There are then stages of impact from that. Perhaps the test the noble and learned Lord is applying is how far this can be taken; and it can be taken, as he says, a long way. He mentioned entering premises—I would confirm that homes can be entered only if they are business premises—and using force in doing so, both of which arise in later clauses. The point I make is that the reasonable suspicion is the threshold which starts an investigation.
There are many ways in which an investigation may be taken forward. Later clauses show us the outside limits, as it were, as one would have with a contract. We all know that we write contracts. Contracts give us the outside limits at which we negotiate with our partners. That is my experience of business. In the meantime, within the contract, one can do many things

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and undertake many behaviours. But those are all within the limit of the contract. Here we are arguing about the start of the process. I believe that, given how complex and clever people are in terms of hiding circumstances when they wish to indulge in concerted practice and wish to abuse the consumer, the power should be on the side of the investigator in order to take forward a reasonable suspicion.
My noble friend Lord Peston asked whether this is a matter of psychology. As he rightly said, we must have a ground which a reasonable man would find suspicious. It may not be absolutely firm evidence in the terms of the letters or the contract, but indications about behaviour that a reasonable man might wish to pursue. If the reasonable man, in terms of the director general, is out of court and has not drawn the right conclusions, there are many ways in which that can be corrected. But, on the whole, we have to make the reasonable presumption that the director general is a reasonable man.
Baroness Oppenheim-Barnes: I hope the noble Lord will forgive me if I am missing the point completely, but how do these powers differ from the powers in the Competition Act, which is repealed by the Bill, in terms of points of reference for the director general to start an investigation?
Lord Simon of Highbury: I have to take notice of that question because it is a deeply interesting one. We have looked in many ways at the compatibility with the regime that exists in places like Customs and Excise and under the Companies Act. But in terms of a detailed reconciliation between these processes and those under existing law in the national circumstance, I certainly take notice of the question and shall come back to the noble Baroness. I should point out that these processes are already in place under the existing jurisprudence of the Community.
Lord Kingsland: So that the tension between the Government and the Opposition in your Lordships' House can be creative, perhaps I may suggest a possible way out of this difficulty. I do not seek to produce a specific draft on the hoof but the approach would go something like this. The director may open an investigation if he has reasonable suspicion, first, that the Chapter I prohibition has been infringed or, secondly, that the Chapter II prohibition has been infringed. The director may, if he has reasonable grounds for belief thereafter that a prohibition has been infringed, authorise any officer of his to exercise on his behalf all or any of the powers conferred by Clauses 26 and 27. That would inject two stages into the opening phases of the investigation. I do not expect the Minister to give a definitive response now, but I invite him at least to indicate that he might, at the end of the day, consider such an alteration.
Lord Borrie: I hope that the Minister will not go along the route suggested by the noble Lord, Lord Kingsland. What does "open an investigation" mean?
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There cannot be an investigation without some ability to require documents or to require to see someone in order to hear what he has to say. The Minister was right in referring to Clause 25 as being only the opening of an investigation, and the noble and learned Lord, Lord Fraser of Carmyllie, was correct in saying that there have to be the other clauses to which we shall come in a moment, although he slightly confused the issue when talking about entering premises. The later clauses make a clear distinction between going along, knocking at a door and being admitted, having said to some degree what you are there for, and knocking doors down or forcible entry, for which a warrant is required. We shall come to that in due course.
Surely there cannot be any effective investigation without the director general having some powers, and those "some powers" should, in my submission, be available on a reasonable suspicion. A "reasonable suspicion" does not mean any suspicion. It does not mean simply acting, to take up the example used by the noble and learned Lord, Lord Fraser, on a rumour which is referred to as such in a newspaper. One cannot have reasonable suspicion if one has nothing more than the say-so of a rival who, as it were, "would say that, wouldn't he", in order to be mischievous.
"Reasonable suspicion" is somewhere—a judgment has to be made in the particular circumstances—between suspicion, or mere suspicion, as the noble Lord, Lord Campbell, said a moment ago, and reasonable cause or reasonable grounds for belief. "Reasonable suspicion" seems to be a happy balance and should be the basis for the obvious forms of investigation to which I have referred.
Lord Simon of Highbury: I am impressed by the ability of the noble Lord, Lord Kingsland, to draft on the hoof. However, I shall decline to respond on the hoof. We believe that having the appropriate threshold to start the investigation is a vital part of improving the process in order to create a more competitive and fairer environment for companies. I urge the noble Lord as strongly as I can to reconsider the position.
Lord Kingsland: I shall not disguise from the Minister my disappointment at his response. I shall reflect on it. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4 p.m.
Lord Kingsland Lord Kingsland moved Amendment No. 95:
Page 13, line 12, at end insert—
("and notifies the persons whose conduct is to be investigated of the nature of the alleged infringement and of any matters which he considers relate to it.").
The noble Lord said: This is the first of a group of four amendments, Amendments Nos. 95, 100, 101 and 106. Amendment No. 95 amends page 13, line 12, of Clause 25(1) by adding the words,
"and notifies the persons whose conduct is to be investigated of the nature of the alleged infringement and of any matters which he considers relate to it".
Perhaps I may put the four amendments in context. Each one seeks to notify the persons to whom the competition authorities are addressing themselves of the nature of the complaint and also seeks to specify the particular documents that the competition authorities are likely to require. The four amendments should be seen in that spirit.
Amendment No. 100, at page 13, line 20, of the Bill, proposes a substantial addition to Clause 26(2). The text reads,
"The power conferred by subsection (1) is to be exercised by a notice in writing signed by the Director".
The amendment seeks to add,
"which identifies the specified document; specifies the conduct which is being investigated; specifies the Director's grounds for considering that the specified document relates to a matter which is relevant to that investigation; and states that a person on whom the notice has been served has the right and shall be afforded sufficient time to seek legal advice before complying with the notice".
It is a kind of compendium amendment which sets out what we believe to be proper protection for the individual in these circumstances.
Amendment No. 101, at page 13, line 20, seeks to add:
"The notice must state the purpose for which the request is being made and the penalties for non-compliance".
Finally, Amendment No. 106 relates to page 13, line 40, of the Bill. Clause 27(1) states:
"Any officer of the Director who is authorised in writing by the Director (or by an officer acting on his behalf under section 25(2)) to do so … may enter any premises in connection with an investigation under section 25".
The amendment seeks to add:
"The written authorisation referred to in subsection (1) shall state the purpose for which the investigation is being made and the penalties for failing to comply with a request by an investigating officer".
I believe that the amendments are self-explanatory. I beg to move.
Lord Simon of Highbury: Clause 25, as we have just debated, provides for the basic threshold of "reasonable suspicion" of an infringement of either of the prohibitions to trigger the power to investigate. Amendment No. 95 seeks to add a further requirement that the person whose conduct is the subject of the investigation must first be notified of the nature of the infringement. As a general point, it is not unreasonable for those being investigated to be told what is the nature of the alleged infringement. We have a number of amendments which address that point in different ways. I need to address them case by case. The significance of Amendment No. 95 is that it would require, at the outset of all inquiries, notice to be given to undertakings telling them of the "charges against them". That would render redundant all those provisions which provide for unannounced visits with or without a warrant. I believe that the amendment goes too far.
Clause 26 provides for the director—I am moving forward slightly here, as did the noble Lord, Lord Kingsland—by giving notice, to require the production of specified documents. Amendments Nos. 100 and 101 would require that the notice specifies the conduct being
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investigated and the penalties for non-compliance. Amendment No. 100 also covers some other matters to which I shall return.
Amendment No. 106 would require the purpose of the investigation and the penalties for failing to comply with the request to be set out in the written authorisation provided for in Clause 27.
I am advised that it is implicit in the requirement for written authorisation in Clause 25(2) that the authorisation will have to identify the subject matter of the investigation. That is a common point. That would follow the requirement in Regulation 17/62 under which the European Commission conducts investigations into suspected infringements of Articles 85 and 86. I would also expect the director to be prepared to wait a reasonable time for the lawyers of the undertaking to arrive provided he is allowed to remain on the premises while waiting. That is also implicit in the European jurisprudence. Equally, I would expect individuals to be warned of the penalties for failing to comply with a request where that was relevant. I have not thought it necessary hitherto to set that out on the face of the Bill given the position of Regulation 17/62 and the European jurisprudence.
As I say, the first of these matters, the notice as to the purpose of the inquiry, is implicit in the Bill already. However, I am aware that this requirement and the one as regards the notice of penalties for non-compliance are express requirements of Regulation 17/62. At this point I see no objection to following suit.
It is important that we should get any amendment exactly right. I should like to consider further the case for how that might be effected. At this stage I believe that the general approach in Amendments Nos. 101 and 106 is to be preferred, but I shall be inviting the noble Lord to withdraw Amendments Nos. 95 and 106 to allow me to consider the matter further. Amendments Nos. 101 and 106 are the preferred direction of amendments in reconstituting this point.
Amendment No. 100 goes rather wider. It would require the notice, to be given to a person to produce a document relating to any matter relevant to an investigation, to include further specific information about the subject of the investigation. In many cases it will, quite frankly, be impossible to provide the information that the amendment seeks to include. It is unlikely that a specific document could be identified to this degree in many cases. I make no apology for this. The point has been made previously that cartels and other anti-competitive behaviour invariably involve secrecy and concealment. Consequently, we have intentionally provided for a wide definition of "specified document" to ensure that the director can obtain the information necessary for his investigation. Even were it possible to give the information in question, these amendments would give too much encouragement to falsify or destroy documents, sufficient to thwart the investigation.
A number of points have been raised in this exchange between the noble Lord, Lord Kingsland, and myself. I should like to reflect on the position as regards specifying the conduct being investigated, stating

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penalties and allowing time for lawyers to arrive at premises. I believe that that is the general thrust of Amendments Nos. 101 and 106, but I must advise those noble Lords who have followed this rather long explanation of the four amendments that I do not find myself as persuaded by the wording of Amendments Nos. 95 and 100. In the circumstances and in order to allow the Government time to reflect on the two amendments that we do find helpful, I ask noble Lords opposite to withdraw Amendment No. 95.
Lord Peston: Before everybody becomes too helpful and in total agreement, perhaps I may interface a certain tone of dissent. I am particularly intrigued by Amendment No. 95. Perhaps the noble Lord, Lord Kingsland, will think back to Wealth of Nations and reflect on Adam Smith's remarks that people of any trade seldom meet together essentially without a view to exploiting the consumer. Those were not Adam Smith's words—I cannot remember the precise wording—but that is broadly what this is all about. The noble Lord might also like to think about the so-called "Gary dinners", which were the essence of the American steel cartel. Members of the firms met together for dinner and took it in turn to raise prices—one firm would raise its prices one month while another would raise its prices the next month, and so on.
It is because we are trying to deal with such behaviour from cartels—let alone with the points raised by my noble friend the Minister about the destruction of documents—that I do not believe that we should put on the face of the Bill wording which would restrict the director-general's ability to look into such matters. He cannot very well turn up and say, "I am investigating the fact that you have all been having dinner together". I suspect that his investigation will be based on several things which indicate the operation of a cartel; but that is so obvious that I wonder why it has to be stated on the face of the Bill.
I was glad to hear that my noble friend is not very keen to accept Amendment No. 95, but I fail to see why he might be remotely keen to accept Amendments Nos. 101 and 106 other than in a spirit of goodwill. He will naturally want to look at anything suggested by the Opposition and, of course, I strongly approve of that. However, I believe that the central principle must be to construct a Bill that enables the director to deal with infringements and anti-competitive, anti-consumer activities. That is what I believe the Bill to be about. I regard it as broadly reasonable. I believe that it already strikes a reasonable balance. I do not want to discourage my noble friend from thinking further, but I hope that he has not already reached his conclusions on these matters.
Lord Campbell of Alloway: Given what the noble Lord, Lord Peston, has just said, I hope that the Minister will not depart from his suggestion, if I may put it that way, that what was implicit—I need not go over it again
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or the reasons why it was implicit, which are very important—should appear on the face of the Bill. I have put it quite shortly to save time.
Lord Peyton of Yeovil: There were occasions in the last Parliament when I felt it necessary, even desirable (although not everybody agreed with me) to endeavour to put what I thought was right and sensible into the minds of Ministers. I was not always successful, but I should like to take the opportunity afforded to me by the noble Lord, Lord Peston, to say how much I welcome a repetition of such arguments between himself and his noble friends. It gives my noble friends on the Front Bench an opportunity to get their breath back, although the Minister may find it a little tiresome, and greatly as I admire the noble Lord, Lord Peston, I am not sure whether it will do his standing with his noble friends all that much good. I am particularly sorry that, having briefly referred to Adam Smith's Wealth of Nations, we did not have the stimulating experience of hearing the noble Lord speak in more detail on that subject. I know of no one better qualified.
4.15 p.m.
Lord Ezra: In spite of what the noble Lord, Lord Peston, said, I support the amendments under consideration. At some stage those investigated need to know why they are under investigation. The fact that the Minister is prepared to take another look at this makes me feel very satisfied and I would not have intervened had it not been for the noble Lord, Lord Peston, quoting, as he regularly does, from Wealth of Nations. The Inland Revenue has occasionally told me that I have omitted something from my return, but it has never given me any clue about what has been omitted. On one occasion I spent hours with my financial adviser and, in the event, although there was an omission, it was an omission which did not involve any tax liability. Given the hours that I had spent, I was a little irritated. That is why I believe that if people are being investigated, they should be given at least some clue or guidance about the reason for that investigation.
Lord Simon of Highbury: I am grateful for the observations of the noble Lord, Lord Peyton, about the stimulating nature of debate in your Lordships' House. I do not believe that the noble Lord was present last Thursday when we had the most stimulating debate between the noble Baroness, Lady O'Cathain, who was fully in favour of all the investigatory powers that we are proposing, and some of her noble friends. The other side of the Committee had a remarkably interesting debate on that. Sitting in the middle, I receive wide-ranging advice from all corners of the Committee—and is not that a privilege?
I should like to say to the noble Lord, Lord Pestonhe is, of course, my friend—that I listened with interest to him say that the main point of Wealth of Nations is competition. I agree—it is competition to achieve great value for all sides.
In concluding, I hope, this debate on these amendments, I repeat that I shall reflect on the four amendments, two of which I do not find appropriate but

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two of which I feel may add value to the Bill and which we may take forward after reflection. I therefore ask the noble Lord, Lord Kingsland, whether he is prepared to withdraw his amendment.
Lord Kingsland: Given that the Minister has not in any way resiled from his earlier remarks in relation to these amendments, despite the intervention of the noble Lord, Lord Peston, I gladly beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Lord Ampthill): Before calling Amendment No. 95A, I should remind the Committee that if it is agreed to I cannot call Amendments Nos. 96 or 97.
Lord Peyton of Yeovil Lord Peyton of Yeovil moved Amendment No. 95A:
Page 13. leave out lines 13 and 14.
The noble Lord said: Perhaps I may start by saying that I believe that competition is a good and necessary thing and follow that up with what noble Lords opposite could regard as either a threat or a promise: if I am accused of being a friend of cartels or someone who wishes to snuff out competition, I shall feel obliged to make an extremely long speech or series of speeches in my own defence. I hope that that will effectively silence any unpleasant jibes from the Benches opposite.
I continue by assuring the noble Lord who has the duty of carrying this Bill through that, had my noble friends and I still been on the other side of the House, I would have made exactly the same speech as I am about to make now. Perhaps I may interpolate one comment. When the Minister says that it is a great privilege to receive advice from all quarters of the Chamber, that is a testimony either to his guile or to the nobility of his nature. I prefer the latter construction, and I gladly salute him.
The words to which I particularly object are "any officer of his". Those words are very wide indeed. There is a need to indicate the officer of the director who has the necessary skills, experience and tact to carry out what may be a difficult and embarrassing task. I do not expect the Minister to draft on the hoof or to respond immediately with an acceptance of my amendment. That is not what is required here. However, I hope that he will give serious consideration to the possibility of limiting this power.
One understands that the authors of Bills that come before this House tend to approach them with an instrument not unlike a pepper mill. One sprinkles convenient phrases throughout the Bill in the hope that noble Lords will not notice them and in the belief that one never knows when they will become useful. Thus, it is a great pity not to include them. I do not believe that this is particularly welcome. I hope that the Minister will agree to examine the matter.
The powers conferred here relate not merely to the production of documents but to the requirement for an explanation of what a document is about and also entry without warrant. Even in these days when Parliament is not noticed all that much it is appropriate that we should
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at least stand up and say that Ministers must think very carefully before they include such language in a Bill. I was encouraged by the noble Lord's reference to fishing expeditions. I understand that it is not the intention of the Government to encourage such expeditions. During my time in your Lordships' House from time to time I have come across instances where people furnished with certain powers have tended to use them. I believe that a good number of people in official circles were born with whistles in their mouths and cannot refrain from blowing them on the most trivial and unimportant occasions. Without going into details, in one case a farmer in Lanarkshire was literally tortured for a year or so by presumptuous, intruding officials who were eventually brought to book only by a very sensible and wise judgment in the sheriff court.
I hope that the noble Lord will not impute to me any hostility to competition when I say that I am nervous about putting into the hands of people about whom I know very little powers that they may feel tempted to abuse, if only to ensure that they win the approval of their superiors. I beg to move.
Lord Borrie: I preface my remarks by saying that I fully recognise the noble Lord's commitment over many years to the desirability of commerce and industry enjoying a competitive structure. We shall therefore avoid the threat of the noble Lord to make lengthy speeches to prove that he is indeed pro-competition. No doubt many Members of the Committee are of the same view. I recognise also that the noble Lord is in favour of the provision of adequate powers to ensure that those who engage in price fixing or other anti-competitive practices have their conduct investigated and, if it is proved, are perhaps condemned. On many matters both I and the noble Lord are in full agreement.
However, by the nature of this amendment the noble Lord suggests that the Director General of Fair Trading, who heads an office of 300 or 400 people, would have to investigate personally the facts of particular cases. The noble Lord desires to delete that part of the clause which specifies that an authorised officer should be enabled to do that. There are other amendments yet to be discussed—I do no more than mention them—which suggest that there should be some qualification attaching to particular members of staff of the Office of Fair Trading and that they alone should be permitted to engage in these investigations. It is normal practice—my experience of the Office of Fair Trading is that it is not abused—that if an official on the staff of the Office of Fair Trading is duly authorised to do certain acts which the legislation permits him to do that is surely sufficient. According to the resources available, that is carried out and the director general is fully responsible for the proper conduct of the investigation.
Lord Peyton of Yeovil: I should like to make a short rejoinder to the noble Lord, Lord Borrie. First, he should not take me further than I desire to go. This amendment is simply exploratory. I made clear that I was conscious of its defects and that I did not expect it to be accepted by the Government. I merely asked that the Minister should look at the points to which I referred. Secondly,

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the noble Lord, Lord Borrie, obviously feels some degree of paternity for this Bill. I do not blame him for that. But he should not allow his enthusiasm for the Bill to eclipse all of the arguments against it that I believe to be valid.
Lord Campbell of Alloway: I believe that all noble Lords have a degree of enthusiasm for the Bill. Certainly, I have. By and large, in principle the Bill is a very good one. I am concerned that there should be a calm approach to a reasonable balance of protection. With the greatest respect to the noble Lord, Lord Borrie, I believe that my noble friend has raised a very important point in the context of reasonable protection. I have some practical experience. I am not concerned with what the director does. However, I am a little concerned that an officer should be authorised by the director or given a licence to conduct a fishing expedition in relation to documents which fall,
"within a category of document which is specified, or described, in the notice".
That seems a bit too wide. It seems unreasonable. I am not sure, in actual practice, what "category of document" means. I am conversant, in my profession, with discovery in categories of documents. That I understand, but I do not see in this context what "category of document" can conceivably mean.
If I cannot understand what it means, how can the authorised officer understand what it means even if the director understands what it means? Category of document? Contract? Invoice? They would form categories, but it is difficult to know what conceivable restrictive effect the term "category of document" could have. If, in practice, it does not have one, I respectfully suggest to the Minister that it is fair to ask him to reconsider the point.
4.30 p.m.
Lord Peston: Not for the first time in this place, I do not have the faintest idea of what is going on. Am I right in saying that we are still discussing the third group of amendments on the Marshalled List which contains six amendments?
Noble Lords: No.
Lord Peston: Am I right that the noble Lord, Lord Peyton, has merely moved the first amendment in the group?
Noble Lords: No.
Lord Peston: The noble Lord was not debating his first amendment?
Lord Peyton of Yeovil: There is no one I would rather help than the noble Lord, Lord Peston. I moved Amendment No. 95A. If the noble Lord has the paper available, he will be able to tell very quickly what we are talking about.
Lord Peston: I am aware of what the noble Lord did, but do I have an obsolete piece of paper? Mine includes
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the other five amendments. Customarily, we tend to debate all the amendments in the group together unless something has happened recently about which no one has told me. I take it we are debating Amendment No. 95A only. Is that right? In due course the proposers of the other five amendments in the group may find time to join in. I had assumed that we would debate all six together, because that is typically what this place has done over the past 10 years. For all I know, there has been some change in our rules of procedure while I was sleeping over the weekend.
Having said that, perhaps I may reiterate that I would have expected the proposers of the other amendments to have had their say, because they all fit with the amendment moved by the noble Lord, Lord Peyton. I share all the noble Lord's fears about bureaucrats and people poking their noses into things they should not poke their noses into. I share his approach. It is the Committee's duty to try to expose these matters or to prevent their happening. I interpret the subsection that the noble Lord wishes to delete as saying no more than that the director general may use his staff to do his job. That is all I interpret that to mean, and no more. He may not use his staff in a Draconian way, a Nazi way, or any other way. The provision merely says that he may use his staff.
I agree with everything that the noble Lord said about his fears. However, I do not see that we could have a Bill that did not allow the director to have people to do some work for him. That is the only point here. The reason I made my acerbic remarks is that the remaining amendments deal with points of detail concerning what the staff may do and which staff we are talking about. I suppose that in due course we may reach those topics. The noble Lord, Lord Peyton, is to be congratulated on putting his fears on the record, but I hope that he does not push further than that in the sense of getting us to a position where no work could take place, which I believe would be the sole consequence if my noble friend the Minister were to agree to Amendment No. 95A. One person could not possibly do all the work himself.
Lord Kingsland: On this occasion I did not take the remarks of the noble Lord, Lord Peston, to be acerbic. I had been under the misapprehension that we were debating just Amendment No. 95A. I think I am wrong about that, and that we should be looking at all the amendments, so I apologise to the Committee for not having intervened earlier. I understand that if Amendment No. 95A is adopted, Amendments Nos. 96 and 97 will fall. Nevertheless, I should say something about them. Both relate to page 13, line 13. Amendment No. 96 inserts between "any" and "officer" the word "senior". That is very much in the spirit of what my noble friend was seeking to obtain by his amendment.
Along the same lines, after "of his" Amendment No. 97 seeks to insert,
"who is an appropriately qualified official in the division of the Office of Fair Trading responsible for investigations".
The reason why the expression "responsible for investigations" has been included is to draw the Minister's attention to the fact that the Director General

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of Fair Trading has in these matters a split personality. On the one hand he has to investigate these matters; on the other hand he has to adjudicate upon them. It is important therefore that on the face of this part of the Bill there should be some clause or subsection which helps us understand how he will achieve that important division. The Minister may not wish to address the point now. If so, I hope that at some stage in the course of the amendments we can return to it.
Amendments Nos. 105, 124 and 142 are in the spirit of my noble friend's amendment and deal with different phases of the investigatory process. Amendment No. 105 seeks to strike out the expression,
"or by an officer acting on his behalf under section 25(2)".
So the amendment similarly limits, when premises are being entered by an official, the range of officials who can fulfil that task.
Amendment No. 124 relates to the clause which gives power to enter premises under a warrant granted by a magistrate. It seeks to insert the words,
"senior office of the Director who is an appropriately qualified official in the division of the OFT responsible for investigations, and other named senior officers with appropriate qualifications and from the same division to accompany him".
In other words, it clarifies the kind of officials who will undertake this task and their level of seniority.
Finally I turn to Amendment No. 142. That, again, is in the same spirit and is designed to leave out Clause 28(8)(b):
"a person acting on his behalf".
So the only two categories that remain as a definition of the "appropriate person" are the director or a person authorised under Clause 25(2).
Lord Peyton of Yeovil: Before my noble friend sits down, I do not want to let my inquisitiveness go too far, but I wish he would make clear whether he gives his broad general support to the amendment which I moved.
Lord Kingsland: I thought that I had done that, perhaps not in so many words. I think I expressed support for the spirit of what my noble friend said when dealing with every amendment to which I spoke.
Lord Simon of Highbury: I am aware of the sequential nature of the amendments. Perhaps the noble Lord, Lord Peyton, will not mind my answering the general point before going on to deal with the definition of the level of person, brought in by the later amendments. I shall try to answer in sequential terms.
I am aware of the anxieties about the investigatory powers in the Bill and that the matter is difficult and sensitive. The idea that the investigation will be handled by junior, inexperienced or untrained personnel in the office of the director general or sector regulators is being probed. I appreciate that Amendments Nos. 96, 97, and 124 seek to address that anxiety by specifying qualifications or rank. However, I do not believe that we can sensibly provide for such matters in statute. How would one define "senior"? What qualifications would be regarded as appropriate to the work of investigating?
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Amendment No. 95A would prevent the director general from authorising one of his officers to conduct investigations or enter premises without a warrant. Therefore, he would have to undertake those functions himself. That would be unworkable, as many of my noble friends have observed. The provision enables the office of Director General of Fair Trading to work. Any officer is merely a definition of the requirement that there must be a delegatory management power within the organisation.
Amendment No. 124 would additionally require the director general and sectoral regulators to separate their organisations internally and to create a discrete investigation division. It was trailed by the noble Lord, Lord Kingsland, when he asked me how the investigatory and judgmental functions could live together.
The Bill, like many others, creates functions for the officers concerned. It would be undesirable and impractical to go beyond providing the statutory framework and to try to provide for the internal organisation of such officers. The director general will have statutory duties and functions to perform under the terms of the Bill. He must ensure that his staff and organisation is adequate for that purpose. Therefore, I urge the noble Lords to withdraw their amendment specifying the nature of "officers" who can receive the delegated power of the director general to do the reasonable business of the Office of Fair Trading.
Amendment No. 142 would remove the power for persons acting on behalf of the director general, other than those authorised by him to exercise investigative powers to apply for a warrant. The reason for the provision is to enable other suitable members of the director general's staff to make application for a warrant. That could be, for example, a lawyer in his office. An application for a warrant is a serious business. The information must be given on oath and I have no doubt that only suitable persons would make the applications. Therefore, I invite noble Lords to withdraw their Amendment No. 142.
4.45 p.m.
Lord Peyton of Yeovil: As regards Amendment No. 95A, I am bound to say to the Minister that if I were sitting on the opposite side of the Chamber, which was the case a year ago, I should say that I was extremely disappointed in his reply. I did not ask him to accept my amendment; I made it clear that it made no sense and was silly. On the other hand, it gave him an opportunity to go away and consider what has been said.
I say to the noble Lord with the utmost courtesy that there are few things more irritating to an Opposition than a Minister, when a serious point is made, at best deploying the answer typed out in his brief long before the argument is made. The noble Lord is a man of great experience and I hope that he will agree to take the issue away and look at it again. The provision "any officer of his" is too broad. There is no indication of rank or seniority; so far as I know the person could be a temporary officer employed last week. As the Bill stands, it is not good enough.

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I hope—and I really mean this—that the Minister will agree to do nothing more than look at the matter again without any commitment.
Lord Campbell of Alloway: The clause, for clarification in Hansard, is Clause 24(3)(b). While I am on my feet, perhaps I may say it is quite wrong, as was suggested by the noble Lord, Lord Peston, that either—
Lord Peyton of Yeovil: I thank my noble friend for allowing me to intervene. I believe that it would be easier if the Minister could reply to my simple invitation. I hope that he will agree to take the matter away and look at it again without further commitment.
Lord Simon of Highbury: In reply to the noble Lord, Lord Peyton, while it is often necessary to read one's brief and to follow the careful line of one's department, I happen to believe most strongly that it is important that the director general should have delegatory powers to manage his own system. Those are difficult to define in the structure of words in the text qualifying "any" or "any senior" officer that we have discussed. Perhaps I may humbly submit that because I spent many years trying to run large administrative groups I thought hard and sincerely about whether the qualification of "any officer" should be made on the face of the Bill or by the management of the office, which in these terms is the director general when he sets about fulfilling his task. Therefore, the brief was not read lightly or without consideration; it was given as my experience of how best to organise serious departments of office.
I will think again and think seriously about the point which the noble Lord raised. However, I want him to know that I have already considered hard. I am not just a reader, but the brief helps me to keep my place. Perhaps I may deal with the earlier point—
Lord Peston: Before the Minister responds, perhaps we can complete this section of the business. The Minister was right about the ability to delegate, but the noble Lord, Lord Peyton, is right in expressing concerns about the misuse or even abuse of delegated powers. I am always troubled about such issues because of the legal dimension. I take it for granted that, legally, one does not have to write into Bills that powers must not be misused or abused. I believe that that is a general characteristic of all our legislation and of human beings.
I am delighted that my noble friend the Minister will look at the matter again. I hope that his answer is that we do not need to write the provision into the Bill because it is part of our system of law and government. However, I do not believe that that detracts from the importance of the intervention of the noble Lord, Lord Peyton.
Lord Campbell of Alloway: Because there is abuse, there is a procedure of abuse of power. That is no reason whatever, with the greatest respect to the noble Lord, Lord Peston, for not seeking to narrow the area of licence in a Bill. All I seek to do in supporting my noble friend Lord Peyton is to suggest, as I have suggested, that the Bill is unnecessarily wide. The Minister has been kind enough to
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say, without commitment, that he will consider the matter. That generosity is accepted. I hope that the noble Lord, Lord Peston, will accept that the object is not at all to make the regime unworkable. I want—and I believe my noble friend Lord Peyton wants—the regime to work but to work fairly. That is all.
Lord Peyton of Yeovil: I do not wish to prolong the proceedings. I am extremely grateful to my noble friend Lord Campbell of Alloway. Until the very last minute, I was not sure that he was supporting my amendment but I am glad that he has made that point clear.
The noble Lord, Lord Simon, was good enough to say that he appreciated the point I am trying to make, and I certainly appreciate his difficulty. I appreciate also his courtesy in saying what he did and, on that basis, I am happy to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 96 and 97 not moved.]
Clause 25 agreed to.
Clause 26 [Powers when conducting investigations]:
Lord Kingsland Lord Kingsland moved Amendment No. 98:
Page 13, line 16, leave out ("any person") and insert ("any officer or senior employee of an undertaking").
The noble Lord said: Amendments Nos. 98, 102 to 104, 109, 116 and 129 look at the same issue as we addressed from the other end of the telescope. They concern the rank of the person questioned. Most of these amendments are, on their face, fairly straightforward. Amendment No. 98 seeks to leave out the words "any person" and insert the words,
"any officer or senior employee of an undertaking".
Amendments Nos. 102, 103 and 104 deal with a slightly different point; that is, the extent to which former employees should be questioned. The amendments seek to promote the notion that the investigatory action is taken against the company and not against an individual and that once an individual has left the company he should not be subject to that questioning regime. Such documentary evidence that is required by the investigator will be on the files and the successor should be in a perfectly good position to answer any question which the investigator needs to ask.
Amendment No. 109 seeks to replace the word "person" with the expression "officer or senior employee", as do Amendments 116 and 129.
To put the matter in a rather absurd but not wholly imaginary context, one does not wish to see an investigating officer shimmying up to the cleaning lady and extracting from her the skeleton key, because in those circumstances a wide-ranging extraction of documents could take place without any controls at all. I beg to move.
Lord Borrie: There is one part of the proposed amendments which I should like to query, in relation to past employees or people no longer in employment. I hope that when this Bill becomes law, because of the greater investigatory powers, it will be possible for the

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Office of Fair Trading to deal with anti-competitive practices and cartel agreements rather more speedily than it sometimes has in the past.
Nevertheless, even in the future I imagine it will be the case, as certainly it was in the past, that sometimes information comes to light about agreements that were made some time ago, not necessarily years ago but perhaps just months ago, and one or two of the key people involved who have information are people who have just left the employment of the company being investigated or left its employment some time ago. It seems to me to be unduly restrictive to say that it is not permissible for the investigation to include inquiring of people and obtaining documents from people who may have recently or some time ago left that company's employment.
Lord Ezra: As my name is to two of the amendments on which the noble Lord, Lord Borrie, commented specifically, perhaps I should say a few words in their defence.
As the noble Lord, Lord Kingsland, pointed out so clearly, the aim of the amendments is to try to limit the enormous scope of those inquiries. While we all agree with the purpose of the investigations, we feel that there should be some limit in respect of the people, as we have discussed previously, who undertake them and the people who are inquired into.
I entirely take the point made by the noble Lord, Lord Borrie, that it may be that the issue under investigation arose at some earlier period and that the persons primarily involved may have left the company's employ. That is a perfectly arguable proposition. However, I should feel happier—I hope the Minister will be prepared to have another look at this matter—were some such word as "normally" to be introduced so that normally the persons to be inquired into would be current employees of the company but in exceptional circumstances others might be turned to.
Lord Peston: "Normally" takes me back to the happy days when I used to sit on those Benches opposite and if I was totally at a loss as to which amendment to speak to, "normally" was my favourite word because it gave me an entrée and an opportunity to speak. Now I am on these Benches, I regard "normally" as the kind of weasel word that we could do without.
We are discussing a rather technical matter. Essentially, we are concerned with documents. The director would like to know what they mean and would like an explanation of them. He may receive the answer, "I don't know. I wasn't there when they were drawn up. I am not at all clear what was their origin". That will be very frustrating for the director and, as my noble friend Lord Borrie pointed out, would make the investigation much more difficult.
It seems to me that any investigator would rather approach current employees—and that brings in the "normally" of the noble Lord, Lord Ezra. Of course that is the case because it is much more difficult to approach someone who is not there or to find out who the relevant person may be. The Minister may clarify the issue for
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us, but my reading of the Bill suggests that it means essentially what the noble Lord, Lord Ezra, would like it to mean; namely, that the investigator would say, "I have this document. Can you give me an explanation of it?". Those people say that they cannot, to which the investigator responds by asking who can give him an explanation of it; who was present when that particular part of the agreement was drawn up. That person may have left or be dead but, in practice, that would be a second stage.
Therefore, again, I believe that one should raise these examples when discussing Bills of this kind. But, subject to hearing what the Minister says, which I hope will not be too alarming, it seems to me that the Bill should meet the needs of the noble Lords, Lord Ezra and Lord Kingsland, on this matter, unless we assume that the director is not very interested in doing his job properly but simply interested in making trouble for firms. I do not make that assumption. I make the assumption that the director has a responsibility in terms of competition and competition policy and that he will meet those obligations reasonably. This Bill enables him to do that. I would be fearful of any amendment to the Bill which would actually make it impossible for the director to do his job. Having said that, I look forward to hearing my noble friend's response.
5 p.m.
Lord Simon of Highbury: Amendment No. 98 to Clause 26 would restrict the range of persons from whom the director general may require the production of documents. If we follow through the other amendments, as indeed we were advised to do—and we are looking down the other end of the telescope this time—it will be seen that Amendments Nos. 102, 103 and 104 would restrict the range of persons from whom an explanation of the documents may be required. Amendments Nos. 109 and 129 relate to similar points in Clauses 27 and 28. Essentially, as the noble Lord, Lord Kingsland, explained, the amendment would restrict the range of persons to officers or senior officers in terms of the investigatory approach.
I can understand the concerns which have prompted the tabling of these amendments. I even sympathise with such concerns, and appreciate that the CBI has pressed very strongly for these changes. But, if we are to make a sound judgment about the range of these powers, we must keep in mind the purpose that they are intended to achieve.
Clause 26 is the first clause we come to in the Bill which confers specific investigatory powers on the director general. Clause 26 gives the director general powers to require the production of specified documents. Clause 26 is, if you like, the first weapon in the director general's armoury. Later clauses provide for a power of entry and a power to enter premises under a warrant. I have already sought to explain that effective powers of investigation and the certainty of discovery are key elements of deterring anti-competitive behaviour.
However, there is a second important factor that we must bear in mind. I should point out to Members of the Committee that I am working up to answering the points

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that have been raised. The statutory investigatory powers must be able to cater for the very worst case of unscrupulous concealment of evidence of a cartel, or other anti-competitive behaviour. I would expect most cases where the DGFT has reasonable suspicions to proceed with the full co-operation of the undertaking being investigated. Full use of the powers provided in the Bill should, therefore, generally be unnecessary. Many of us are fully aware of the normal course of events in investigations. My own past company has been investigated many times; and, indeed, on many occasions we provided the information required.
While the powers in Clause 26 may be used to require past employees to provide explanations, those in Clauses 28 and 29 do not contain such a limitation. The reason for this is simply that these powers are exercisable on the premises of the undertaking during an inspection visit. Clearly past employees are unlikely to be present on the premises to answer questions. The powers to seek explanations of documents from past employees may be needed where an undertaking is found to have been committing an infringement over a long period, as has been pointed out. As my noble friend Lord Borne said, they are a necessary part of the director's armoury.
As regards junior employees, while I value the phrase, "shimmying up to the tea-lady"--indeed, that phrase stuck in my mind—it is important that we seriously have the ability to speak to both secretaries and personal assistants. They may be younger but they may, effectively, have a great deal of knowledge of the activities under investigation. We must also remember that the range of things that may appear in documents needing explanations is wide. Therefore, it seems to me to be right that the powers should also be exercisable when asking that category of employee or past employee for explanations.
However, that does not mean that we should limit the powers for expected use in normal circumstances. As I said, the limit of the powers in the Bill must cater for the very worst cases that we expect to encounter. I believe that that consideration throws a very different light on the matter. I have said it before, but I believe that I must repeat it: cartels do not advertise themselves very often. Identifying them and establishing their existence requires painstaking investigation and adequate powers. While the intention behind the amendment, and those grouped with it, is understandable, in practice it could materially assist the unscrupulous in concealing evidence. Price-fixing rings operated by employees might be beyond investigation if those employees were no longer employed by the undertaking once the investigation was under way. Conspiracies of silence would quite clearly be easier to operate.
Of course there must be proper safeguards for the innocent. Clause 41 makes it clear that it is a defence if a document was not in the individual's possession or under his control and that it was not reasonably practicable for him to comply with a requirement. The director general must act reasonably. But putting the broad perspective on the need for this to be the "outer
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limits" of the director general's capacity to find the case, then, going to whomsoever in the organisation—if needs be, even the tea-lady—would be an acceptable requirement to avoid the continuation and long continuation of some of the cartels which, if we look with the gift of hindsight, have been running against the interests of the consumer.
My conclusion remains that accepting the amendment would weaken the effectiveness of the investigatory process and the deterrent effect of the regime. It will not, I believe, surprise noble Lords who have tabled the amendments if I urge them, given the seriousness of the requirement to make investigations successful, to consider withdrawing them.
Lord Kingsland: I thank the Minister for his reply. However, I should just like to expand on one point that I made when introducing the amendments. It is the point about the cleaning-lady. It is not her level of responsibility that is relevant; it is the imbalance, in authority between the person who is seeking information and the person who is asked to render it. If you have a big imbalance of authority between those two people, you are much more likely as an investigator to extract evidence to which you are not entitled.
Unlike the Minister, I have never experienced one of these investigations but I understand that they can be tough or even brutal. If a senior investigator comes into an office and addresses a very junior member of staff in a forceful way, he may extract from that member of staff a whole range of evidence to which he is not entitled. Although we have yet to see the incorporation of the European Convention on Human Rights in our law, we all know that the law in our country is that evidence illegally obtained is, nevertheless, evidence. Therefore, the relationship between the investigator and the investigated party on the ground is an important one. It is that relationship that the amendments seek to address.
Lord Peston: Perhaps I may say a few words before the noble Lord decides what to do about his amendment. I have listened to what the noble Lord said, but I would ask him to reflect back a few years to a time when he was a junior member of staff. Does he recall, as I do, that very frequently the junior member of staff who produces a document is often the only one who understands it? Indeed, on many occasions when I was a young man my senior would say, "Oh, he knows what this is all about, ask him".
I understand the noble Lord's fears, but what would worry me a little about the precise wording of the amendment is the fact that, as it is written, it would mean that only senior people—who, I have to say, having become one myself, frequently do not know very much about such documents even though they may be produced under their name—could be asked for such explanations. The wording of the amendment would prevent a junior person speaking on such matters. That can always be dealt with by redrafting but we ought to be careful of assuming that the senior person who is always responsible in theory is responsible in practice and that he understands what the matter is all about. I speak for myself, but my experience is that the senior

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person often does not know what the matter is about. His only good idea is to get the junior person to do the work.
Lord Kingsland: I am at the moment experiencing what it is like to be a junior member of a new organisation. I assure the Committee that the experience is extremely immediate. This matter need not be a difficulty. All that it requires is for the senior member of the investigated company, having been questioned by the investigator, to ask the junior member to reply to certain questions or produce certain documents. That is not precluded. I agree with the noble Lord, Lord Peston, that there are circumstances in which the person at the coalface knows best. However, there is nothing to prevent the Bill permitting appropriate delegation by a company official. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Peyton of Yeovil Lord Peyton of Yeovil moved Amendment No. 98A:
Page 13, line 17, leave out ("he considers").
The noble Lord said: This is a simple and brief amendment but its brevity is matched only by its reasonableness. I very much hope that the Minister will appreciate that fact. Clause 26(1) states,
"For the purposes of an investigation under section 25, the Director may require any person to produce to him a specified document which he considers relates to any matter relevant to the investigation".
My amendment seeks to remove the words "he considers". Clause 26(1) would therefore state,
"a specified document which relates to any matter relevant to the investigation".
I cannot see any reason why the words I have mentioned are necessary except as a grotesque example of insisting upon belt and braces and suspenders too. I hope that the noble Lord will resist this temptation which is always put in front of Ministers. Again and again, Ministers are told, "Minister, there is only one thing that you can really count on and that is your own judgment. You must never allow any words to be included or taken out which will have the effect of removing that subjective judgment. Objective judgment is to be avoided at all costs."
We are all conscious that Ministers and others, to whom considerable and wide powers are dedicated, find it almost impossible to admit that there exists even the remotest chance of those powers being abused while they are in charge. However, that does not prevent the frequent and regular abuse of powers in high places. Law reports are littered with them; parliamentary debates are littered with them; even your Lordships' House, which is not given to loud complaining, has from time to time heard complaints about the abuse of powers. Therefore, I do not think it is too much to suggest that the power to insist upon the production of a specified document should depend upon the fact that that document relates to the matter under investigation. It is simply not good enough for people to excuse themselves from all examination by simply saying, "I thought it referred to or concerned" this or that. I hope that the noble Lord will accept the force of that argument, or that at the very least—I say this with much more hope on this amendment than on my previous
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amendment—he will agree to consider what is a serious point. To deny it is to deny the existence, or the possibility of, abuses. I beg to move.
5.15 p.m.
Baroness O'Cathain: I understand exactly what my noble friend Lord Peyton says and his powerful argument with regard to removing the words, "he considers". However, my mind was racing ahead, particularly when my noble friend used the expression "belt and braces". I believe that under his proposed amendment there would be more belt and braces. One could be flooded out with paper. I refer to any document, be it a tram ticket, a train ticket or a menu. One could lose the relevant document because every office now contains so much paper. I should have thought the director general would have to be able to sift through that. He should specify exactly what he thinks relates to a specific investigation. I fear one might confuse the issue by allowing him to be submerged by a great amount of paper.
Lord Kingsland: I shall move, or rather speak to, Amendments Nos. 99, 111, 117, 118 and 130.
Lord Peyton of Yeovil: I hate to interrupt my noble friend but I hope that he will at least refer to the amendment I moved.
Lord Kingsland: Of course I shall refer with total and unqualified approbation to the amendment that my noble friend has moved.
Lord Williams of Elvel: Is it not the case that, an amendment having been moved, the Committee should speak to that amendment whatever the grouping may be?
Lord Kingsland: I shall speak to all those in the group, as I believe I indicated.
Baroness Nicol: All that is wrong is that the noble Lord needs to acknowledge the fact that Amendment No. 98A has been moved in saying that he wishes to speak to Amendment No. 99 and the others. It is quite simple really.
Lord Kingsland: I thought that what I said, rather incompetently, was in effect that. However, I apologise if I did not get my line of sight exactly right. I shall endeavour to improve the focus as I work my way through these amendments.
Baroness Nicol: I think it was the attempt to move Amendment No. 99 which upset people.
Lord Kingsland: I beg the pardon of the noble Baroness. These amendments for the most part seek to tighten up the criteria by which documents are considered by the director general. Clause 26(1) states,
"For the purposes of an investigation under section 25, the Director may require any person to produce to him a specified document which he considers relates to any matter relevant to the investigation".

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Amendment No. 99 seeks to include the words "is necessary" to the investigation. The wording of the Bill seems to us to be too loose a criterion for the director general. It gives him too much scope in his choice of documents. Amendments Nos. 111, 117 and 118 in different contexts seek to do precisely the same.
In a different way, Amendment No. 130 also seeks to tighten up the circumstances in which the director general exercises his discretion. Clause 28(2)(e) states:
"to require any information which is held in a computer and is accessible from the premises and which the named officer considers relates to any matter relevant to the investigation".
The amendment seeks to remove,
"which the named officer considers relates to any matter relevant to the investigation",
and to insert,
"is specified in a notice under section 26(2) issued in relation to the".
Lord Simon of Highbury: First, I speak to Amendment No. 98A and the general point raised by the noble Lord, Lord Peyton. I shall then attend to the other amendments which, as the noble Lord, Lord Kingsland, pointed out, are sequential.
As ever, we are thinking hard about striking the right balance between safeguarding the rights of those being investigated, ensuring that the investigation is properly carried out, and that the overall regime acts as a deterrent.
Clause 26 enables the Director General of Fair Trading to produce a specified document which he considers relates to any matter relevant to the investigation. Amendment No. 98A, moved by the noble Lord, Lord Peyton, removes the words, "he considers". The point was made by the noble Baroness, Lady O'Cathain, that if one takes out "he considers" one could find a flood of paper moving towards one at a rate of knots when considering the way in which the investigation may be conducted. However, that is not the point I wish to make in arguing that the amendment is not helpful.
The important point is that the director should be able to ask for a document that he thinks is relevant. Here we have the Catch-22 argument again. Until the director general has seen the document, he cannot tell that it is definitely relevant. For example, the director general may wish to see a director's diary because he considers it relevant in determining whether he attended a meeting at which he believed a cartel fixed prices. Until he sees it, he will not know whether or not it is a relevant feature.
The amendments remove that margin of appreciation or judgment which I am sure is important in properly determining that documents, in whichever category the director general considers should be produced, are relevant to the investigation. I argue that "he considers" is sensible as a limiting factor for the data flow but, more importantly, allows the director general to determine the nature of the investigation. Under those terms, I believe that it is important that his personal consideration is a vital element in the chain of inquiry.
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Amendment No. 99, and those relating to it, put down by the noble Lords, Lord Lucas and Lord Kingsland, and the noble and learned Lord, Lord Fraser, relate to the words "is necessary". We believe that to insert "is necessary" would make matters worse. The overall result could increase the ability of undertakings to challenge the right of the DGFT to require the production of documents if he could not meet the standards of demonstrating objectively that the document related to the investigation. This would be a potential recipe for frustrating an investigation rather than a justifiable protection for those being investigated.
Amendment No. 101A would deprive the director general of the ability to ask for classes of document. Each and every document would have to be specified. It would be a chicken and egg situation. Until the director can identify a document, he will not be able to require its production. But he would not know precisely what documents he should ask for until he had seen and identified them. Hence we believe that he must be able to ask for categories of document. The point was raised earlier by a noble Lord who is no longer in his seat. I could have answered his question now as regards category of documents. The category may be invoices, as the noble Lord indicated. It could be agreements or contracts. In this modern day and age it might even be printouts and spreadsheets since we are talking about the computerisation of information as well. All those would be categories of documents. Unless the director general is absolutely clear beforehand, he would be wise to ask for a category of document if he considered that it had an implication for the way in which the investigation was progressing.
Again, I believe that the tone of Amendment No. 101A is a recipe for frustrating the investigation rather than a justifiable protection for those being investigated.
What is important here is the balance between the capacity of the director general to move towards discovery in an appropriate manner, as he considers, and the protection of the individuals who are producing the data. Our belief is again—I am becoming rather repetitive—that in many of the cases which are difficult, where we seek to improve our capacity to find against, it is often difficult and frustrating for the director to move forward. We believe that the balance in the new framework of the Bill gives the director general a better opportunity to get at the hard cases, if I may so put it.
Finally, we do not believe that the amendment in the name of the noble Lord, Lord Peyton, achieves the right balance. Therefore we ask the noble Lord whether he is prepared to withdraw his amendment.
Lord Peyton of Yeovil: Having moved the amendment, perhaps it is appropriate that I seek leave to withdraw it. However, while I do not ask the noble Lord to give any sweeping commitment at this stage, perhaps he will consider what was said. There is a genuine and real fear—it is not confined to this side of the Chamber—that if one gives powers to director generals or Ministers, very respectable people, it is at least possible that they, or one of their underlings, may be tempted at some time to abuse that power for the best

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possible reason: they think that they are doing right; they are bringing a culprit to justice. But they are still breaking the rules. I hope that the noble Lord will bear those considerations in mind. If he will do so, I am happy to beg leave to withdraw the amendment.
Lord Kingsland: Perhaps I may—
Lord Peyton of Yeovil: I had sought leave to withdraw the amendment. If my noble friend wishes to intervene, I should have thought that he would probably have done so before I spoke.
Amendment, by leave, withdrawn.
[Amendments Nos. 99 to 104 not moved.]
Clause 26 agreed to.
Clause 27 [Power to enter premises without a warrant]:
[Amendments Nos. 105 and 106 not moved.]
Lord Peyton of Yeovil Lord Peyton of Yeovil moved Amendment No. 106A:
Page 14, line 2. leave out ("one working day's") and insert ("two working days'").
The noble Lord said: One working day's notice is a very short space of time. It is all too easy for governments and large organisations to think that other, less well-equipped bodies have plenty of spare people around to pay attention to matters. I do not believe that that is so. There is no magic in the two days that is suggested rather than three, four or five. It simply seemed to me that one day is rather short notice. I hope that the Minister will re-examine the provision. I beg to move.
5.30 p.m.
Lord Simon of Highbury: This is the fourth time that I have come to the Dispatch Box to respond to an amendment tabled by the noble Lord, Lord Peyton. Three times he has entreated me to listen and to consider and reflect on an amendment. Three times I have replied that I will think about it. This time, my thinking time will be short. I can state quite clearly that I agree with the amendment.
Lord Peyton of Yeovil: I rise to my feet moved, astonished and grateful. I give the noble Lord an undertaking that I shall not disturb him any further this evening.
On Question, amendment agreed to.
Lord Kingsland Lord Kingsland moved Amendment No. 107:
Page 14, line 5, leave out ("a reasonable suspicion") and insert ("reasonable grounds for belief").
The noble Lord said: The point is a very straightforward one; it has been discussed already. The amendment deals with the expression "reasonable suspicion" and seeks to replace it with "reasonable grounds for belief-. I do not know whether the Minister has changed his mind about these expressions since we spoke about them two hours earlier. I beg to move.
Lord Simon of Highbury: Indeed, we debated the matter at great length earlier as a question, in particular,
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of the balance that is required when considering what are appropriate powers for the director general. I have listened very carefully to the arguments put. Lest the noble Lord, Lord Kingsland, thinks that the noble Lord, Lord Peyton, having left the Chamber is a sign that one is merely waiting for someone to move in order to agree an amendment, I must tell him that on this matter we have debated the balance. We are not in favour of reflecting this amendment in the redrafting of the Bill. At this stage, we would wish the noble Lord to withdraw his amendment on the same basis as the arguments that have gone before.
Lord Kingsland: The noble Lord heard the previous debate. I trust that he will reflect on this matter in the same way as he said he would reflect on the earlier matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingsland Lord Kingsland moved Amendment No. 108:
Page 14, line 10, after ("25(1)(b)") insert—
("and the giving of notice in accordance with subsection (1) would be likely to result in that party or undertaking concealing, destroying or tampering with any document specified in a notice under section 26(2);").
The noble Lord said: This amendment refers to the circumstances in which the director does not have to respect the limitation in Clause 27(2), which states that.
"No investigating officer is to enter any premises in the exercise of his powers under this section unless he has given at least one working day's written notice to the occupier of the premises".
Subsection (3) cuts down that right in certain circumstances:
"if the Director has a reasonable suspicion that the premises are, or have been, occupied by … a party to an agreement which he is investigating … or … an undertaking the conduct of which he is investigating".
The amendment seeks to limit that exception so that the circumstances in which the day's grace would be disallowed would be circumstances in which the director had a genuine suspicion that something would be done with the evidence. I beg to move.
Lord Simon of Highbury: These amendments relate to the power to enter premises. As previously stated, it is an important power. Let me reiterate that I do not expect it to be used very frequently. But these powers must be sufficient to enable the director general to obtain all the documents relevant to his investigation into whether there has been an infringement of the prohibitions. As I have explained, these powers must be effective to conduct investigations. They must be sufficiently strong to cater for the worst cases of covert cartels. The right to make unannounced visits is therefore an important weapon in the director general's armoury.
Amendment No. 108 would increase the threshold to be crossed before the director general has a right of entry. Under the Bill, as presently drafted, he could make unannounced visits if the premises in question are occupied by an undertaking whose conduct he is investigating or if he has reasonable suspicion that that is so. All of this is, of course, subject to the provision

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in Clause 25 that the director general must have a reasonable suspicion that either prohibition has been infringed.
Amendment No. 108 would increase the threshold such that the giving of notice would be likely to result in the specified documents being tampered with or destroyed. While these are among the circumstances in which an unannounced visit would be necessary—so I understand the logic behind the amendment—there are additional circumstances. Giving notice also gives those being investigated time to prepare their story.
However, we need to address the practical effect of the amendment. How could the director general establish that the giving of notice would be likely to result in the documents being tampered with or destroyed? That sounds like a Catch 22 situation. How could he establish that without making an unannounced visit in the first place? We have many instances of that difficult hurdle for the director general in making his case.
The practical result of this amendment would be to create a high hurdle before unannounced entry. It would be the same as that which exists under Clause 28 for obtaining a warrant. As I have already said, we believe that it is right to give the director the power to make surprise visits. We must be able to cater for the most unscrupulous operators. Acceptance of this amendment would materially weaken the effectiveness of the investigating powers and the deterrence of the regime. Accordingly, I urge the noble Lord to withdraw it.
Amendment No. 110 is a further example of limiting the range of the director general's powers in a way which on the face of it is reasonable but which in practice would seriously limit the effectiveness of the powers. Unannounced entry to premises is an important part of an investigation. If, when he is there, the investigating officer could only ask for documents to be produced and ask for explanations of documents he had previously considered relevant and had given notice of, then that would obviously hamper the investigation. Investigation of a document may well indicate that other documents may contain relevant information relating to the cartel or other anti-competitive behaviour. So there may be a sequence of documentation. Is there to be a formal notice under Clause 26(2) each time so that you move from one document to another only by a separate formal notice? That would not be an appropriate way to conduct an investigation that could have any hope of unearthing evidence of a cartel, particularly if that cartel was clever enough to require that type of approach to finding information. If the investigating officer had the power to write notices on the spot, what purpose would be served? It seems to me better that he should have the ability to find the documentation as appropriate, which I believe would be restricted by these amendments. I urge both noble Lords to consider withdrawing Amendment No. 108 and not moving Amendment No. 110.
Lord Kingsland: That is the Minister's point of view. Can he tell me what purpose Clause 27(2) serves? Clearly the only reason for entering premises is if the director has
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reasonable grounds to believe or has a reasonable suspicion that it is relevant to the party whom he is investigating.
I put it to the Minister that it is hard to conceive of a set of circumstances in which an investigation will not fall into subsection (3). Perhaps he can prove me wrong. But if I am right, what is the point of including subsection (2) in Clause 27? It will never be operable.
Lord Simon of Highbury: There is a sequential logic in that statement which escapes me for the moment. Could the noble Lord elaborate, or perhaps he can explain it outside?
Lord Kingsland: Clause 27(2) gives a company a day's grace before the director general descends on it. Subsection (3) cuts down that right to a day's grace in certain circumstances. In my submission, the terms of subsection (3) are drawn so widely as to exclude any possibility of a company exercising its rights under subsection (2).
Lord Simon of Highbury: Again, this is an interesting point but it has escaped me. I shall have to ask the noble Lord to give me a tutorial on the point afterwards. In the circumstances, I wonder whether he is prepared to consider withdrawing the amendment.
Lord Kingsland: I would be delighted to receive a tutorial from the Minister on the subject, or, if he wishes, to give him one. The point is important to the Opposition. If the Minister is unable to accede to our amendment, we shall table it again at Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 109 to 111 not moved.]
5.45 p.m.
The Deputy Chairman of Committees (Lord Murton of Lindisfarne): In calling Amendment No. 112, if it were to be agreed to, I shall not be able to call Amendment No. 113, owing to pre-emption.
Lord Kingsland Lord Kingsland moved Amendment No. 112:
Page 14, leave out lines 19 and 20.
The noble Lord said: This point will be raised in different ways under Amendments Nos. 112, 113 and 114. It goes to the right to silence. In what circumstances can a person who is on the receiving end of an investigation be required to give an explanation? We should bear in mind that we are on the edge of incorporating the European Convention on Human Rights into law, unless the Opposition win the intellectual argument. The right to silence is enshrined in that convention. Does the Minister feel in those circumstances that he can sustain the power of the director general in the Bill? I beg to move.
Lord Simon of Highbury: I do not think it is unreasonable for an investigating officer to be able to require explanations of a document. The European

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Commission's inspectors are empowered to ask for oral explanations of books and business records on the spot when conducting investigations under Articles 85 or 86.
Without such a power, investigations could be seriously hampered. Perhaps I could give a couple of examples of the problems that might be caused. I was talking earlier about documentation from a computer, which is specifically included in the Bill. If Members of the Committee have seen a spreadsheet, they will know that it is difficult to track down the relevant information without an explanation of the sheet's structure or the way in which the formulae and equations are used and applied. If a private code, abbreviations or some kind of shorthand were being used, the document might be incomprehensible without an explanation.
The power of explanation is one that it is useful to have available. I hope that the noble Lord will not wish, on reflection, to emasculate the investigation powers in the Bill and will not press the amendment. However, I understand the issue of self-incrimination raised by him. The Bill will provide the same defences against self-incrimination as exist under European jurisprudence which provides that (and I quote from Orkem):
"the Commission may not compel an undertaking to provide it with answers which might involve an admission on its part of the existence of an infringement which it is incumbent upon the Commission to prove".
Investigations are always bounded by European jurisprudence; and I would hope that that answer will be taken into account by the noble Lord, Lord Kingsland, in considering what to do with his amendment.
Lord Kingsland: It is true that the case of Orkem gives the individual the right to withhold any document which involves an admission. It does not, however, give an individual the right to withhold a document that may be used to establish the existence of anti-competitive behaviour. Under the jurisprudence of the European Court of Human Rights, the individual's rights are much broader. As the Minister will be aware, in the case of Funke v. France it is clear that the individual's rights go to the second as well as the first category. As we discovered in the recent case, it is clear that in financial and business matters the rights of the individual are no less than they are in other matters.
I submit that my amendment must be seen in the light of the jurisprudence of the Court of Human Rights and not just the jurisprudence of the European Court of Justice.
Lord Simon of Highbury: As I think I said in an earlier answer, we believe that the regime is fully compatible with the European Convention on Human Rights. In any event, as I also mentioned, we are currently bringing forward legislation which will require, so far as is possible, both primary and secondary legislation to be read and given effect to in the same way as is consistent with the European Convention. So that is in the body of law which is being developed. I should like the noble Lord to reflect on
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that. I shall carefully consider the position he has put, but we believe that the regime is compatible.
Viscount Trenchard: Perhaps I may speak in support of the amendment. I have sympathy with the view expressed by the Minister that it is reasonable to ask for an explanation. But, as drafted, the Bill states that the officer is entitled to receive the explanation that he requires. That sounds as though he is entitled to say what explanation he wants.
Lord Simon of Highbury: The meaning is that the officer requires an explanation. I shall reflect carefully on the use of the words and think hard about the point raised by the noble Lord, Lord Kingsland. It is a serious point. We are talking about developing law in terms of our position in the UK, inside the protection of the overall umbrella of the Orkem finding in European jurisprudence.
We are aware of the point raised and it bears consideration. However, we need a little more time.
Lord Kingsland: In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingsland Lord Kingsland moved Amendment No. 113:
Page 14, line 19, at end insert ("reasonably").
The noble Lord said: Amendment No. 113 seeks to convert a subjective discretion into an objective discretion. It relates to the requirement to produce documents and provide explanations. It converts the sentence,
"to provide such explanation of it as the officer may require",
to,
"to provide such explanation of it as the officer may reasonably require".
The reason for the injection of the word "reasonably" is to make the discretion of the officer subject to judicial control. I beg to move.
Lord Simon of Highbury: I understand the concern that lies behind the amendment. I wholly accept that an investigating officer should only be able to demand such explanations of a person as may reasonably be required.
However, it is a principle of our law—I speak with a certain amount of deference to the noble Lord, Lord Kingsland—that, in exercising powers of the sort that we would be conferring on an investigating officer, the person having the power must behave reasonably. The law has that effect without express provision on the face of the Bill. On that basis the amendment is unnecessary and I hope that the noble Lord will feel able to withdraw it.
Lord Kingsland: In those circumstances I do not feel able to withdraw the amendment. The word "reasonably" is interpreted by the courts in a different way according to circumstances. Equally, the absence of the word "reasonably" can be read by courts in different ways. If the Minister feels that an officer ought to behave reasonably, that belief should be reflected in the text of the Bill by inserting the word "reasonably".
Lord Borrie: Before the noble Lord sits down, perhaps he will consider this point. If there were judicial review proceedings against the officer in respect of what was required, surely it is existing law that if no reasonable officer would have done what that officer is alleged to have done, then judicial review proceedings would condemn what took place. In other words, the officer's action is reviewable because he did not act reasonably.
Lord Kingsland: Without being over dramatic in my response to the noble Lord, Lord Borrie, I remind him of the great case of Liversidge v. Anderson in 1940 when the then noble and learned Lord, Lord Atkin, sought to read "reasonable behaviour" into a subjective discretion and failed. The Opposition are seeking a guarantee. The Minister said that it was inconceivable to expect his officers to behave unreasonably.
Lord Borrie: Does not the noble Lord agree with me that it is generally accepted today that it was Lord Atkin who was correct?
Lord Kingsland: He was nevertheless in a minority of one in a House of five. I was about to invite the Minister on this occasion to accept the amendment.
Lord Simon of Highbury: I do not wish to come between two noble and learned gentlemen of this Chamber on a matter of case law. My problem as a practical businessman looking at this construction is that, if we make express provision on the face of the Bill, it may be read as casting doubt in respect of other provisions on the general principle that powers should be reasonably exercised. It would be undesirable if we had to move through all the powers of the Bill, where the debate concerned the reasonable nature of action by one of the officers, to determine whether reasonableness in one instance should be put on the face of the Bill and in another should be regarded as a general principle of the law.
I do not want to enter into the debate on previous judgments in case law. That point needs to be taken into account in the noble Lord's thinking and I beg him again not to ask us always to put on the face of the Bill what we believe it inherently contains.
Lord Kingsland: I am aware that the Committee is impatient to get on. But there are grounds for making an exception in this clause. It refers to the right of silence which is a right that is different in kind, not just in degree, from other rights of the individual. Therefore I invite the Minister to reflect on the matter between now and Report stage.
Lord Simon of Highbury: I shall think about the matter, having aired most of the doubts in all our minds.
Lord Kingsland: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6 p.m.
Lord Kingsland Lord Kingsland moved Amendment No. 114:
Page 14, line 20, at end insert—
("provided that the person is afforded sufficient time to seek legal advice before complying with any such requirement").
The noble Lord said: This is a point which the Minister addressed when responding to the second group of amendments. It relates to the time that an individual needs to seek legal advice before complying with the requirement. I sensed that the Minister was sympathetic when he previously addressed the matter, but I do not know whether he feels the same way in these circumstances.
Lord Simon of Highbury: I do not initially wish to disappoint the noble Lord, Lord Kingsland. My reflections earlier on time related to the time between the notice of intent to investigate and the investigation. Amendment No. 114 relates to what is happening in the here and now, during the course of the investigation under way. Amendment No. 119 would require an investigating officer entering premises to allow the occupiers reasonable time to contact their legal representatives. I would expect that to happen.
It is a procedural feature of the EC regime that the undertaking which is the subject of the investigation is given by the Commission and therefore that such an opportunity is given. As Sir Leon Brittan said in an answer given to a question about investigations in the European Parliament,
"[The Commission] must … allow the company a reasonable time in which to secure, during the period of the investigation, the services of an in-house legal adviser or a lawyer of its choice".
However, it is well known that the Commission will wait only a limited time for a lawyer to arrive and will do so only if it can be confident that the records of the business remain in the state they were in when the Commission officials arrived, which can happen only if they remain on the premises. There is a certain difficulty about judging the time for lawyers to arrive.
The European Court has recognised the right to legal representation as one of the rights of defence but not that an undertaking is entitled to delay unduly the commencement of an investigation while a company is awaiting its legal adviser. I expect therefore the director general to follow Commission practice in conducting his investigations. Clause 58 of the Bill makes provision for EC jurisprudence generally to be imported into our domestic regime under the Bill and also for the director general to have regard to Commission statements. The right of defence and the statement by Sir Leon Brittan would thus apply by the Clause 58 route. Therefore, I am not sure that we need to have an amendment to the Bill.
It is important, however, not to tie up an investigation in procedural knots. These amendments, by making detailed and explicit provisions rather than relying on the general principles, take that risk. We are bringing over the European application through the words of Sir Leon Brittan. I hope the noble Lord will see that as adequate protection for the reasonable application of

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advice and legal advice as the investigation gets under way and that he will be prepared to withdraw the amendment.
Baroness O'Cathain: I support the amendment. Although I have listened to the Minister saying that the point will be covered under EU legislation, I think that Clause 27 does not give much help or hope to the person under investigation. The clause is fairly onerous. I think it would be more realistic and reasonable to have the amendment on the face of the Bill. I hope that the Minister will see it that way. I understand what he says about not making the clause too detailed. However, subsection (4)(d) states:
"take copies of, or extracts from, any document which is produced".
Subsection (4)(e) states:
"require any information which is held in a computer and is accessible from the premises".
If the clause is as detailed as that, why cannot we put in the few words suggested in my noble friend's amendment?
Lord Simon of Highbury: Amendments Nos. 114 and 115 are aimed at affording the person who is actually to produce a document or an explanation of it, who is not necessarily the occupier, to be given a similar opportunity to obtain legal advice. We think that would be impractical. An investigation could, of course, involve the production of many documents and explanations. The whole process would therefore become over-complicated. If that is not the intent of Amendments Nos. 114 and 115, I shall reflect very carefully on the points that have been made.
Lord Kingsland: In supporting my noble friend, perhaps I may summarise in this way. Subsection (4)(b)(i) states:
"to produce any document which he considers relates to any matter relevant to the investigation".
The noble Lord will see from the subsection that the discretion that the Minister exercises is entirely subjective. My noble friend and I would be much more relaxed if that phrase could be redrawn as follows:
"to produce any document which he reasonably considers relates to any matter relevant to the investigation".
I say that because, if he or she does not have legal advice about whether a document is or is not relevant, there is nothing an individual can do to resist the demand. As far as I am aware, there is no system of appeal in relation to the issue of relevance. In my submission, there are two choices open to the Minister. He should either introduce the word "reasonably", which makes it clear that the standard is objective, or introduce a delay to allow an individual to obtain legal advice. In other circumstances, the man behind the guichet, if I may use an expression I used during the Second Reading of another Bill, is in total control of the situation.
Lord Simon of Highbury: We dealt earlier with the concept of reasonableness. Perhaps I may reflect on these issues. I am not convinced in my own mind that
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the reasonableness argument is the right way to tackle this. However, I should like to think carefully about the nature of how legal advice is obtained in the circumstances. The existing European jurisprudence is not satisfactory to the noble Lord and he would like to see this tied a little more clearly to page 14, line 20 of the Bill. I shall think about it in that context.
Lord Kingsland: I thank the Minister. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 115 to 119 not moved.]
Clause 27, as amended, agreed to.
Clause 28 [Power to enter premises under a warrant]:
Lord Kingsland Lord Kingsland moved Amendment No. 120:
Page 14, line 28, leave out ("A justice of the peace") and insert ("The President of the Tribunal").
The noble Lord said: In moving this amendment, I wish to speak also to Amendments Nos. 121, 131, 132, 143 and 144. All these amendments relate to replacing the application to a justice of the peace with an application either to the president of the tribunal or to a judge of the High Court.
The Minister may or may not be aware that the Opposition have tabled amendments which seek to remove to the High Court the powers of the tribunal to act as a court of appeal. If those amendments are successful, the president of the tribunal will become a High Court judge in any event. Although the amendments have been couched in terms of the president of the tribunal, in the context of the whole Bill it is our view that the tribunal should be a branch of the High Court. In those circumstances, the president of the tribunal would be a High Court judge. Our general point is that, because of the technical nature of these matters, we do not feel that a justice of the peace—I take nothing away from the merits of justices of the peace—is the relevant adjudicator. I beg to move.
Lord Simon of Highbury: I have listened with interest to that legal construct and the point as to why warrants should be issued by High Court judges or by the president, who will have the status of a High Court judge. I am thoroughly of the view that the right to entry using reasonable force is a necessary part of ensuring that the process of investigation goes forward. It is a key element in our strategy. I respond to the views of the Committee, which are very clear, that forcible entry is a serious matter. Therefore, it is important that we set the proper threshold to be reached before the powers are used and ensure that they are authorised in the proper manner.
I see some advantage in the power to issue warrants resting with High Court judges. I prefer that to the alternative we are also offered this afternoon of the president of the tribunal. That is because I do not believe that the function rests easily with the nature of the tribunal arrangements. In the light of the submission by the noble Lord, Lord Kingsland, I am very much minded to consider Amendments Nos. 121, 132 and 144, hut, because of the nature of the organisation, I ask him not

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to press Amendments Nos. 120, 131 and 143, which concern tribunals and the president's role, while we effectively consider the three positive amendments.
Lord Fraser of Carmyllie: Perhaps I may say to the Minister how much we welcome that indication from him. There is also a different line of reasoning that he might wish to bring to bear on this matter. Of course justices of the peace throughout the United Kingdom are well used to being asked by police officers to sign search warrants, so that aspect is not particularly problematic. As regards Clause 28, one would have to consider whether there are reasonable grounds for believing that there are on any premises documents whose production has been required under Clauses 26 or 27. The Minister has worked his way through the provisions assiduously. He has gone back to Clauses 26 and 27, which in turn take him back to Clause 25, which in turn takes him back to Clause 18, and that takes him all the way through to Article 86 of the Treaty of Rome. There are plenty of very highly conscientious justices of the peace throughout the country but, if they were taken logically through those provisions and were then asked what is an abuse of a dominant position in the market place, I believe that their willingness to face up to whether or not a warrant should be granted would be very different from their response in cases with which they are very familiar, such as those involving drugs or whatever it might be. I hope that the Minister will give very serious consideration to that. I do not believe that he will be surprised to hear me say that if power is granted to a High Court judge this side of the Border we would expect, indeed demand, comparable treatment north of it.
Lord Kingsland: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 121 not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 122:
Page 14, line 35, leave out ("it is reasonable to suspect") and insert ("there are reasonable grounds for belief').
The noble Lord said: Amendments Nos. 122, 123, 133 and 134 take us back to "reasonable suspicion" and "reasonable grounds for belief'. On two occasions the Minister has spoken on this issue. Can I take it that his view remains the same as it was at the beginning of today's proceedings? I beg to move.
Lord Simon of Highbury: The noble Lord, Lord Kingsland, has judged my reaction well. My views remain unchanged and therefore it is hardly surprising that I ask whether he will consider withdrawing his amendment.
Lord Kingsland: I shall be delighted to withdraw my amendment on the usual terms.
Amendment, by leave, withdrawn.
[Amendments Nos. 123 and 124 not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 125:
Page 15, line 4, leave out ("such force as") and insert ("no more force than").
The noble Lord said: This amendment is almost a banker. I am absolutely convinced that the Minister will happily accede to this amendment. It seeks to change the expression,
"such force as is reasonably necessary for the purpose"
to,
"no more force than is reasonably necessary for the purpose".
I beg to move.
Lord Borrie: As the noble Lord, Lord Kingsland, and I have disagreed on many subjects, on this one I am happy to go along with his amendment and commend it to the Minister.
6.15 p.m.
Lord Simon of Highbury: I find myself in a quandary. When I see these particular battalions raised against me I begin to wonder whether it could be absolutely correct for me to say that I entirely agree with the principle that, on those rare occasions when these powers are used, no one should be authorised to use more force than is necessary. That is the effect of the Bill as drafted. I find it difficult to see that the proposed new wording makes any difference. I would like to hear one more time why it is that the words in the Bill are not adequate for the amount of force that is necessary to go about one's business.
Lord Kingsland: It is a question of tone, really. It is the way in which these things are normally expressed by judges when dealing with the duties of citizens in relation to the exercise of force; namely,
"no more force than is reasonably necessary".
It is not a trick amendment and it does not seek to cut down the officers' authority, but simply to express it in terms which are more attuned to our own constitutional traditions.
Lord Simon of Highbury: I can respond positively in terms of advice on style, culture and mode to the noble Lord opposite. I shall think very hard about this, because if this is the right language to use it would be inappropriate for me, as the common man, to question the difference between the two alternatives. I shall think very carefully about style, culture and the right approach, and we shall discuss this matter again in, I hope, as pleasant circumstances as we have tonight.
Lord Kingsland: In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees: If Amendment No. 126 is agreed to I shall be unable to call Amendment No. 127 through pre-emption.
Lord Kingsland Lord Kingsland moved Amendment No. 126:
Page 15, leave out lines 6 to 9.
The noble Lord said: Amendments Nos. 126 and 127 are couched as alternatives. I believe that the Minister is aware of that. The purpose of these amendments is to limit the power to remove documents. It is in that spirit that they are drawn. Exactly the same is true of Amendments Nos. 128 and 140. I beg to move.
Lord Ezra: As Amendments Nos. 127 and 140 stand in my name, perhaps I may speak briefly to them. I feel that there is some inconsistency in the Bill as drafted. There are references to "copies of' or "extracts from" documents. There are other references to the original documents. Original documents should not be taken. A company should be left with its original documentation. Furthermore, there should be consistency in the drafting of the Bill. I therefore hope that the Minister will take serious note of these two amendments.
Lord Simon of Highbury: Amendment No. 126 would mean that an officer who had entered premises under a warrant would be unable to search them. This would undermine the whole purpose of the provision. The power to enter under warrant is for exceptional cases where the production of documents has already been refused, entry has been refused, or it is reasonable to suspect that documents may be destroyed or concealed. We are therefore talking about the very limits of investigation, if I may express it in those terms. Under those circumstances, is it realistic to imagine that documents would then simply be made available? Very rarely. I would suggest. Cartels which have been hiding their existence are unlikely to leave incriminating documents lying around.
Amendment No. 127 would not affect the power of search but would mean that an officer entering under a warrant would not be able to take possession of documents or prevent their destruction. The director's officers would just be able to take copies or extracts. I can understand the concerns of those who believe that the power to take possession of documents goes too far. That is implicit in Amendments Nos. 126 and 127, but I cannot emphasise too strongly that these are powers for use in the exceptional cases in which we know that the rogues have thus far repelled all boarders. It may be that such people are even outright hostile to an investigation.
I cannot accept that it would be right to leave OFT officials in a position where they might be watching documents that would provide evidence of a cartel being shredded and be powerless to do anything about it, or where they might be trying to photocopy documents on the premises while they were being threatened. I see serious problems with restricting the nature of the activity which an investigator can undertake.
As I have said, we have to construe the provisions as applying in extreme circumstances. I believe that we would again be seriously limiting the powers of the investigation if we were to accept Amendments Nos. 126 and 127. Given that we are considering
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extreme circumstances, I ask the noble Lords, Lord Kingsland and Lord Ezra, whether they would be prepared to withdraw their amendments.
Lord Ezra: I have taken careful note of what the Minister has said, but there nevertheless appears to be a degree of contradiction in the provisions of subsection (2)(b) and subsection (2)(c). Paragraph (b) refers to the authorisation,
"to take possession of any document"
while paragraph (c) relates to the authorisation,
"to take copies of, or extracts from, any such document".
I should have thought that, if, as the Minister says, paragraph (b) refers to wholly exceptional circumstances, that should be stated on the face of the Bill because, as I read the provisions, I am not exactly clear what we are considering given that paragraph (c) refers to taking,
"copies of, or extracts from, any such document".
That seems to be multiple treatment of the same document.
Lord Simon of Highbury: I am not sure that it is multiple treatment; it is simply that we want to cover a number of options. It may be desirable for the officer to take copies if he can and he may well get the original, but the point is that he has to look for whatever evidence he can.
In the exceptional circumstances of a search taking place under a warrant in what could be a hostile situation, I think that it is reasonable that the officer should be able to copy documents which appear to him to be of a kind that may be required rather than him having to rely on the original only. All sorts of things may be happening. The circumstances can be violent. Some cases have been very difficult. What matters is that the officer can get evidence, whatever evidence, while he can. That is why we have provided for the possibility of an officer looking for both types of evidence.
Lord Kingsland: Perhaps I may invite the Minister to consider changing the order of the clause so that the normal behaviour of the investigating officer would be to take copies of, or extracts from, documents and that only when it is necessary in some specified (or, what is much more likely in this style of drafting, some unspecified) situation should the officer be able to take the original document. I say that because, if a company is facing an investigation, it would be extremely inconvenient for the company to lose its original documents. Therefore, it should be exceptional that an original document is taken. In withdrawing my amendment, perhaps I may suggest that the Minister considers some way of reordering the construction of that subsection.
Lord Simon of Highbury: I am very clear about the point that has just been made. Perhaps I may be allowed to reflect on it.
Amendment, by leave, withdrawn.
[Amendments Nos. 127 to 134 not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 135:
Page 15, line 21, leave out ("relating") and insert ("necessary").
The noble Lord said: This amendment relates to subsection (3) of Clause 28 and to the circumstances in which a justice of the peace,
"is satisfied on information on oath that it is reasonable to suspect that there are also on the premises other documents relating to the investigation".
The amendment seeks to replace the word "relating" with "necessary". I beg to move.
Lord Simon of Highbury: We have already had similar amendments from the noble Lord, Lord Kingsland. As I previously indicated, I consider this limitation would be unduly restrictive of the director's power to require the production of documents. In this instance, the power concerns entering premises under warrant where relevant documents are likely to be destroyed, removed, concealed or tampered with if they were required to be produced. In these circumstances, the warrant may also authorise action to be taken in respect of other relevant documents (that is, other than those thought likely to be destroyed). The investigating officer would have to make a precise on-the-spot judgment that such documents were necessary.
In the aim of general consistency with similar clauses about which we have argued previously, we believe that "relating" allows the person on the spot the right amount of judgment to be able to procure and seize the information that is necessary for the investigation. I have spoken in a similar vein before and it probably does not surprise the noble Lord that I ask him whether he is prepared to withdraw the amendment.
Lord Kingsland: I am not in the least surprised by the Minister's response. Nevertheless, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingsland Lord Kingsland moved Amendment No. 136:
Page 15, line 22, after ("shall") insert ("specify those documents and").
The noble Lord said: I am a touch more optimistic about the Minister's likely response to this amendment because it relates to the next line of subsection (3), which states:
"relating to the investigation concerned, the warrant shall"—
and the amendment seeks to insert the words, "specify those documents and" before,
"also authorise action mentioned in subsection (2)".
I should like to speak also to Amendment No. 137, which I believe to be straightforward. The amendment seeks to remove "document" and insert "documents".
6.30 p.m.
Lord Simon of Highbury: The director may obtain a warrant where he suspects that there are documents on premises that he could require under Clause 26(2) but which he suspects would be tampered with or destroyed if he did require them. He can then exercise the search powers in relation to documents of that kind. Under
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Clause 28(3) the warrant may also authorise him to search for other documents relating to the investigation concerned. These are relevant documents that he does not suspect would be tampered with or destroyed. Amendment No. 136 would require the warrant to specify what these documents were rather than enable the exercise of the power to search for such documents on the spot.
As I said in relation to a somewhat similar amendment on unannounced entry, investigation of one document may well indicate that other documents may contain evidence relating to the cartel or other anti-competitive behaviour. It is not clear what would happen if the amendment were accepted. Would the investigating officer have to try and exercise the powers in Clause 26 to obtain the documents and, if refused, go back for a further warrant? Is that effective investigation? I think not. I therefore believe it right that the director should be able to obtain, under a warrant, this additional power to search for relevant documents. I do not believe that the power should be restricted, as it would be, by the amendment. In those circumstances, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Skelmersdale: Before my noble friend decides what to do with his amendment, I observe that in line 21 the Bill specifies "other documents", whereas in line 23 the reference is to "any such document". Should not the two be the same, either singular or plural?
Lord Simon of Highbury: I believe that "any such document" falls within "the documents".
Lord Kingsland: If I correctly understand the response of the noble Lord, he believes that there are many circumstances in which it would be extremely difficult for the investigating officer to identify the documents concerned. But if that officer takes the view that those documents are relevant, how can he not know what they are?
Lord Simon of Highbury: When the officer arrives he may not know the relevance of a particular document. When he is there he understands the relevance of one document and his train of thought may then lead him to other documents. As I said in response to an earlier intervention, this is a document which falls under the generality of "the documents". At any stage he may be surprised by the thought of what document may be relevant to his train of thought during the investigation. This is a dynamic situation which requires flexibility on the part of the investigator.
Lord Kingsland: I look forward to reading the response of the Minister in Hansard tomorrow. I believe that my point stands. In order to have a right to acquire a document the document must satisfy the test of relevance. In order to apply that test the investigating officer must at least know the class of documents which is relevant, if not the individual documents. Surely, there is no objection to that being specified in the warrant.
Lord Simon of Highbury: Since I believe that this debate could continue for some time, particularly the

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difference between the singular and plural, I now understand the point that is made. I shall think about it carefully. We shall have another opportunity to discuss it.
Lord Kingsland: I am much obliged to the noble Lord. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 137 not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 138:
Page 15, line 25, at end insertȔ
("(4A) The warrant referred to in subsection (I) shall state the purpose for which the investigation is being made and the penalties for failing to comply with a request by an investigating officer.
(4B) Any person entering the premises by virtue of a warrant under this section shall allow the occupiers reasonable time to contact their legal representatives before exercising any of the powers conferred by subsection (2).
(4C) Any person entering unoccupied premises by virtue of a warrant under this section shall refrain from exercising the powers under section (2) until reasonable opportunity has been given for an officer or senior employee of the company to be present.").
The noble Lord said: Amendment No. 138 seeks to insert a long passage at the end of subsection (4) of Clause 28 at line 25 on page 15. I shall not read it out. The passage specifies what the warrant should contain. I should like to speak also to Amendment No. 139, which again is related to the contents of the relevant warrant. I beg to move.
Lord Ezra: My name is attached to Amendment No. 139. I believe, however, that the point is better covered in the proposed new subsection (4C) of Amendment No. 138 and the wording,
"reasonable opportunity has been given for an officer or senior employee of the company to be present".
I believe that that is preferable to making it an absolute condition. Therefore, I should like to associate myself with the amendment.
Lord Simon of Highbury: I thank the noble Lord, Lord Ezra, for that clarification. I would have found it quite difficult dealing with the two amendments. His intervention is much appreciated. Amendment No. 138 in the names of the noble Lords, Lord Kingsland and Lord Lucas and the noble and learned Lord, Lord Fraser, puts forward three insertions to Clause 28. The first would require a warrant authorising entry to premises to state the purpose for which the investigation was being made and the penalties for failure to comply. Amendment No. 106 raised a similar point in relation to the authorisation of entry under Clause 27. I indicated then that I would be willing to reflect on the matter, and I am happy to do so as well in relation to warrants under Clause 28.
The second part of Amendment No. l38 deals with the opportunity to contact legal representatives. This was discussed in relation to Clause 27. As I said then, the effect of commission statements, to which the director is to have regard, is that a company would be allowed a reasonable time in which to contact legal
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representatives provided the delay did not impede the investigation. We therefore do not see a need for amendment to the Bill. However, I said that I would give consideration to the matter when we debated Clause 27.
The third part of Amendment No. 138 deals with entry into unoccupied premises, as does Amendment No. 139 in the name of the noble Lord, Lord Ezra. It seeks to provide an opportunity for a representative of the company to be present before the powers under the warrant are exercised, but it does not preclude the powers being used if such an opportunity has lapsed without being taken up. I can understand the concerns about entry to unoccupied premises. I am not convinced that there needs to be a provision of the kind suggested by the last part of Amendment No. 138. 1 am willing to reflect upon it. I shall give careful consideration to the first two parts of Amendment No. 138 and subsume to a large extent the point made by the noble Lord, Lord Ezra. On that basis, I hope that the amendment will be withdrawn.
Lord Kingsland: On that basis, I am delighted to do so. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 139 and 140 not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 141:
Page 15. line 33, after ("for") insert ("no longer than is necessary for the purposes of the investigation and in any event for not longer than").
The noble Lord said: I am tempted to say that the amendment is wholly self-explanatory. I beg to move.
Lord Simon of Highbury: I agree entirely with the principle that documents should be kept no longer than is necessary. Under those circumstances, I am willing to consider this point with a view to returning on Report with an appropriate amendment.
Lord Kingsland: I thank the Minister for that reply. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 142 to 144 not moved.]
Clause 28 agreed to.
Lord Kingsland Lord Kingsland moved Amendment No. 145:
After Clause 28, insert the following new clause—
EXERCISE OF FUNCTIONS BY REGULATOR
(". Where any functions of the Director under sections 25 to 28 are, in accordance with Schedule 10, exercised by a regulator, the regulator shall exercise those functions jointly with the Director.").
The noble Lord said: The amendment relates to a matter which was debated fully on the first day in Committee. I do not wish to oblige the Minister to enter into the fundamentals of that debate. I know that he has given an undertaken to consider carefully the relationship between the director general on the one hand and the regulators on the other. I wish merely to draw his attention to the fact that here is another area

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where harmonisation will be necessary if he decides not to put one or other in charge of the matter. In those circumstances, I do not expect the Minister to give a long reply. but just to indicate that, together with all the other matters concerning the relationship of the director general and the regulators, he will consider this issue. I beg to move.
Lord Simon of Highbury: The amendment would require the Director General of Fair Trading to be involved whenever a regulator took action under the investigation powers in the Bill, whether to require documents or to enter premises. That is its fundamental point. I recognise and appreciate the spirit with which the noble Lord raised the amendment with me in general terms. No doubt we will return to a fuller discussion about the role of the regulators on another day. As he is aware, I do not believe that a requirement for double banking between the regulators and the director in undertaking investigations would be an efficient or effective way of operating.
However, the amendment as such prompts the question whether the Bill, as drafted, enables a regulator and the Director General of Fair Trading to work together on investigations where both agree that that would be helpful. I am doubtful that it does. It might well provide useful flexibility if it did. I should like to reflect further on that point with the possibility of bringing forward a separate amendment on that on Report. On that basis, I invite the noble Lord to withdraw the amendment.
Lord Kingsland: I thank the Minister for his reply. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 29 [Privileged communications]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 146:
Page 16. line 11, at end insert—
("(4) In this section "professional legal adviser" includes employed professional legal advisers.").
The noble and learned Lord said: This is a short but important point given the interplay between the provisions in Clause 29 and Clause 58 which bring into play the jurisprudence of the ECJ. Of course advice given by a lawyer to his client in the UK would normally be privileged. We are concerned that, following a case in the ECJ which I understand is AM and S, where the legal advice was given by a qualified lawyer but one who was employed in-house, the privilege that would ordinarily be extended to a legal adviser and his client has been abandoned, withdrawn or lost. If that is the case, and as the pattern is pretty clear now in some large concerns of having an extensive legal corps working in-house, it would seem desirable that the confidentiality we would otherwise expect to be allowed should be maintained. It is for that reason that we have tabled the amendment. I beg to move.
Lord Haskel: Far be it from me to become involved in a legal argument with such an eminent noble and
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learned Lord. It is the Government's intention that the director should not be able to require, under his investigation powers, the production of legal advice and other material enjoying legal professional privilege, whether the lawyer concerned is an external lawyer or an "in-house" lawyer. I am therefore in complete agreement with the noble and learned Lord as to the approach to be adopted. However, I am advised that this is the effect of the Bill as currently drafted.
We have always been clear that we wished to depart from the narrow definition of privileged communications under EC law, which extends only to advice given by an independent lawyer, which is interpreted as not including in-house lawyers. The fact that the Bill refers to legal professional privilege in High Court proceedings signals that this is an issue on which EC law is not to be applied by the governing principles clause.
The position of 'in-house' lawyers was considered in a case in 1974 in your Lordships' House called Alfred Crompton Amusement Machines Ltd versus Customs and Excise Commissioners. Lord Cross said:
"The Court of Appeal held that Mr Justice Forbes was wrong in holding that there was any distinction for the purposes of a claim to legal professional privilege between solicitors in private practice and salaried legal advisers and the appellants did not challenge that view in their appeal to this House".
We consider therefore that the Bill already achieves what the noble and learned Lord wants.
Lord Fraser of Carmyllie: Clearly there is nothing between us as to the eventual outcome that we wish to achieve. However, if it is intended to send a signal, it has been a faint one. We are concerned that the broader approach set out in Clause 58 would run contrary to what the noble Lord has said. As our objective is the same, we will look at the matter again. We should not like there to be any risk that such privilege would be lost or withdrawn. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 29 agreed to.
Clause 30 agreed to.
Baroness Nicol Baroness Nicol moved Amendment No. 147:
After Clause 30, insert the following new clause—
COMMISSION INVESTIGATION
(" .The Director shall not instigate any investigation under section 25 where the conduct of the parties in respect of which the Director would otherwise be minded to instigate an investigation is or has been the subject of a Commission investigation as defined in section 59(1).").
The noble Baroness said: This new clause has the support of the British Retail Consortium which is concerned about certain aspects of the Bill as it stands. The prohibitions contained in the Bill reflect Articles 85 and 86 of the Treaty of Rome. The same course of conduct or agreement may give rise to inquiries by both the European and the UK competition authorities.
The new clause seeks to prevent parallel investigations. Investigations, as the Committee will realise, involve not just parties to an agreement or

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course of conduct but a considerable number of third parties from whom copious amounts of information may be sought involving those third parties in considerable time and expense in respect of an agreement or course of conduct with which they have no connection.
It is extremely important that all parties to the agreement or course of conduct should not be subject to double investigation or double inquiries. The Bill provides that an agreement which is unobjectionable under European law can also be unobjectionable under United Kingdom law and the EC competition authorities must therefore be given primacy in investigation. The additional clause which I propose would preclude the director investigating a matter that is or has been the subject of a Commission investigation, thus avoiding a double investigation. However, the amendment deals with only one aspect of the problem of overlapping jurisdiction. There must be further consideration of the issues involved in order to ensure that all areas of overlap, in particular the problem of double jeopardy, have been dealt with. I beg to move.
Lord Haskel: In responding to the noble Baroness, I cannot over-emphasise that the purpose of the Bill is to ensure as far as possible a consistency with EC approach and thereby to ease burdens for business. Both the director and the European Commission will be applying substantially the same competition tests and following common jurisprudence where applicable. We believe that, in practice, if the Commission is investigating a matter it is unlikely that the director will start his own separate investigation. The Commission will already have the matter in hand; that is the parallel investigation to which my noble friend referred.
Even though the risk of separate investigation is small in practice, we have also considered the case for placing a bar on the director conducting separate investigations into the same matter which the European Commission is investigating or has investigated. We decided that it would not be right to prevent the director from ever exercising his investigatory powers in such a situation.
In deciding whether to provide for such a power, I am sure that the noble Baroness will appreciate that we must be alive to the risk of loopholes which can be abused. For instance, if we were to prevent the director from investigating behaviour which the European Commission had investigated some time before, or with third parties, it would not be possible to take account of market developments. Conduct at the time of the Commission investigation may have proved justifiable, but after several years the market may have transformed and it would therefore be wrong to prevent the director from starting an investigation. Equally, even for cases which are the subject of current or recent investigations, determining what is the behaviour which the Commission is investigating may well be extremely difficult.
The amendment could prevent the director from taking action against conduct which raised UK competition concerns but appeared to be within the scope of a Commission investigation, although it was actually of no interest to the Commission. We should guard against placing such barriers in the way of the
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director in forcing prohibitions to protect competition in the UK. In view of the likelihood of the amendment creating loopholes, I invite the noble Baroness to withdraw it.
Lord Graham of Edmonton: The Minister began his remarks by saying that the Bill was designed to produce consistency between UK and EC practice and inquiries. He then said that, while inconsistency was unlikely, loopholes could emerge as a result of market changes. Of course that is possible, but as loopholes emerge does not the Minister envisage consultation between the UK and the EC in order to ascertain the EC's intention in respect of what has become a flawed piece of legislation?
We do not want business, third parties or anyone to be involved in what is sometimes distasteful and expensive work which takes time. A great deal of paper is produced only to go through it again. Would it not be better to avoid that situation by ensuring that the supreme body, the EC, is consulted and takes the initiative? If the Director General of Fair Trading updates the UK law as a result of loopholes the EC would have to make changes to its legislation.
I believe that the amendment is sensible. The director general may believe that he is unable to take action because certain possibilities are unlikely to arise. However, surely there is dialogue between the authorities here and in Brussels and there should be a sensible approach. If there is a superior and inferior level, the UK is inferior by comparison to the EC.
I must declare an interest under Part III of the register. I am secretary of the all-party group for retail trade and I hope that my comments have not let it down.
Lord Haskel: I began my remarks by saying that I cannot over-emphasise that the purpose of the Bill is to ensure as far as possible that the burdens on business are eased. By consultation, burdens on business can be eased. Furthermore, consultation can ease the burden on the director. However, there are cases in which there is not sufficient Community interest. The Commission notice on co-operation with national authorities, which was recently published, acknowledged that some cases it has examined are anti-competitive, but it does not wish to pursue them because there is not a sufficient Community interest. The notice goes on to state:
"It goes without saying that in such cases the national authority may take action.
I hope that that explanation satisfies the noble Lord.
Baroness Nicol: I still have one worry. The Minister referred to changes which may take place over time and which may make a further investigation necessary. I appreciate that and I am sure that the intention behind the clause is not to disallow a second investigation which may be necessary after a period of time. However, I hope to avoid a dual investigation, either simultaneously or within a short period of time, which would involve all the parties in a great deal of unnecessary work. Perhaps we might agree a wording

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which would preclude investigations following too quickly. Perhaps the Minister will look at the matter again.
Lord Haskel: I would have thought that one could leave it to the good sense of the Commission and the director to ensure that work is not duplicated. My noble friend does not wish the work to be duplicated or repeated after too short a period of time. I would have thought that one could leave the matter to the good sense of the director and the Commission. After all, they are applying the same competition tests and neither will want to duplicate the work.
7 p.m.
Lord Graham of Edmonton: The Minister is saying, following the good sense of my noble friend Lady Nicol, that an internal UK investigation is not likely to follow very quickly after the authorities in Brussels have reached their findings. Businesses and the British authorities need to be assured that they will have an opportunity to digest the significance and practice of the EC change. If we could have that assurance, that would go some way towards ameliorating the aggravation which may occur.
Enormous costs are involved in any survey or investigation. It would be helpful to the Committee if the Minister could repeat that he does not envisage that soon after an EC investigation, there is likely to be a need for a further investigation.
Lord Haskel: I repeat that we think it is unlikely that the director will start his own separate investigation when the Commission already has the matter in hand. I refer to our earlier discussions when the Minister raised the question of reasonableness within the Bill. It is not reasonable to expect people to duplicate that work.
Baroness Nicol: I hate to sound cynical, but I never like to rely on "good sense". However, I should like to think about the reply which we have been given and, in the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 31 [Directions in relation to agreements]:
Baroness Nicol Baroness Nicol moved Amendment No. 148:
Page 16, line 30, at end insert—
("( ) No direction issued pursuant to section 31(3)(a) shall restrict or inhibit the right of the parties to the agreement so modified from terminating such agreement.").
The noble Baroness said: Clause 31 gives the director power to make such directions as the director considers appropriate in bringing an infringement to an end. Clause 31(3) provides that a direction of the director may include provisions requiring the parties to modify their agreement or to terminate it.
Parties to an agreement which is found to infringe the prohibitions may prefer to terminate their arrangement rather than continue in a form which they had not agreed. The amendment makes it clear that the director does not
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deprive the parties of their right to terminate the agreement rather than modify it if that is their wish. I beg to move.
Lord Haskel: I can quite see that the parties to an agreement in respect of which the director has issued a direction under this clause may wish to terminate the agreement. Indeed, they may well wish to terminate it at a much earlier stage of the director's intervention.
In our view, there is nothing in the Bill to prevent the parties to an agreement from terminating it at any stage. I do not believe that the clause as drafted gives the director the power to require parties to an agreement not to terminate it. They can terminate it at any time they wish. Therefore, my noble friend's amendment is unnecessary because the parties to an agreement already have the right to terminate it whenever they so wish.
Baroness Nicol: Is my noble friend saying that, even if the director has insisted on a modification, that still leaves the parties with a right to terminate the agreement?
Lord Haskel: My understanding is that the parties can terminate it at any stage.
Baroness Nicol: And ignore the modification?
Lord Haskel: Yes.
Baroness Nicol: In that case, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 31 agreed to.
Clauses 32 and 33 agreed to.
Clause 34 [Interim Measures]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 149:
Page 17, line 17, leave out ("a reasonable suspicion") and insert ("reasonable grounds for belief").
The noble and learned Lord said: Amendments Nos. 149 and 150 take us back to the issue of "reasonable suspicion" or "reasonable grounds for belief'. I am not sure that I can repeat with profit what my noble friend Lord Kingsland has already said. However, because, at this time, I decline to elaborate in that way is not to be taken by the Government as an indication that, in the context of interim measures, we depart from our view that a preferable requirement would be that the director should have "reasonable grounds for belief".
I recognise that this has been put forward to deal with a difficult circumstance when the director has not completed his investigation and, under subsection (2), he regards it as important to act as a matter of urgency in order to prevent
"serious, irreparable damage to a particular person or category of person, or
(b) of protecting the public interest".
Therefore, we recognise how that particular provision has come about.
However, I am sure that the Minister will confirm that the powers of direction which he could then give, even at a stage of investigation, are very significant indeed. Those directions could do significant damage or harm to a number of undertakings. In those circumstances, while in no way departing from the earlier urging of my noble friend when saying that "reasonable grounds for belief' is preferred to "reasonable suspicion", it is our view that it is particularly desirable that the higher test should be included within the Bill. I beg to move.
Lord Borrie: I am delighted to know that the noble and learned Lord, Lord Fraser of Carmyllie, appreciates the need for interim measures, because there have been extremely serious cases in the past when it has not been found possible to complete an investigation. I use as an example the predatory pricing on the part of one bus company against another. By the time the investigation had been completed and any final measures were available to the authorities, the bus company complainant had gone into liquidation and been wiped out by the anti-competitive practice being engaged in. The lack of interim measures has been significant.
I turn to the specific point of the amendment. Because the investigation has not been completed, it may well be that there is a case for interim measures, although there is not yet a reasonable belief that a Chapter I or II prohibition has been breached because it requires the further completion of the investigation to tell one that. It would be a great pity if those new and invaluable interim measure powers were to be hobbled by requiring "reasonable grounds for belief" as distinct from "a reasonable suspicion" at a time when the investigation has not been completed. Therefore, I hope that the Minister will not give way to this amendment.
Lord Haskel: I am grateful to my noble friend Lord Borrie for that intervention. I remember on Second Reading he reminded us of the past harmful anti-competitive behaviour which had been permitted to continue unchecked for long periods. This provision forms an important part of our plank in our reform of current UK competition law because the current system is certainly failing to tackle anti-competitive behaviour quickly before serious damage has been inflicted.
I turn to Amendments Nos. 149 and 150. It is right that the power to impose interim measures should be exercisable only once an adequate threshold has been passed. Clause 34(1), requiring the director to have a reasonable suspicion that the prohibition has been infringed, is an appropriate threshold for starting the process for the imposition of interim measures. It is merely a preliminary threshold and must be judged in that light. Once that threshold has been crossed, the director must then go on to satisfy further conditions before being able to impose interim measures. Those other thresholds are set out in subsection (2) of the clause and are the subject of other amendments which I am sure we shall go on to discuss.
However, we have also discussed today, in the context of the investigation powers, the significantly higher threshold which this test of "reasonable grounds for believing" would set for the director. We believe that
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this is not appropriate where it provides simply the initial hurdle which must be cleared before the director can proceed to examine whether the further conditions for the exercise of the power are satisfied. I hope, therefore, that that explanation will satisfy the noble and learned Lord.
Lord Fraser of Carmyllie: I regret it, but I am afraid that I shall have to disappoint the noble Lord. However, I shall not alarm him and pursue my disappointment to a Division on the matter. I should like to make it clear that we regard the issue most seriously. Despite the noble Lord's response and the support from his noble friend Lord Borrie, I am still concerned that such powers are pretty extensive and could be imposed right from the very beginning. It seems to me that there is something slightly alarming about the situation if the director is allowed to resort to interim measures at the very time he starts his investigation. It is exactly the same test. All that is required of him is to have reasonable suspicion about the matter. It follows, therefore, that he could apply those powers from the word go. As I said, I shall not press the matter tonight, but it is certainly something to which we shall return on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 150 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 151:
Page 17, line 26, leave out ("protecting") and insert ("preventing serious and irreparable damage to").
The noble and learned Lord said: This is a fairly simple amendment, and I should point out to the Committee that I am speaking also to Amendments Nos. 152 to 154. The Minister will see that we have in fact adopted his own wording for the second category in the subsection. Paragraph (b) talks of, "protecting the public interest". We propose a shift in the language to reflect that which is to be found in paragraph (a). That would seem to us to be more desirable and we would like to hear what the Minister has to say in that respect.
So far as concerns Amendment No. 152, I believe that we have already made some progress as regards the relationship with the High Court or the Court of Session in Scotland. Therefore, I have nothing further to say about that amendment at this stage. The only other amendment in the group upon which we would like to hear some comment from the Minister is Amendment No. 154. In that amendment we suggest that it would be appropriate, given the nature of these interim measures—and bearing in mind the reasons that I have already outlined—for the provision to be restricted to a maximum period of three months. I beg to move.
7.15.p.m
Lord Haskel: We share the noble and learned Lord's concerns that the power to impose interim measures should be subject to adequate safeguards. We have therefore made this power subject to a number of important checks and balances. It is only exercisable if certain requirements set out in the Bill are met. First, as

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we have just discussed, the director must have a "reasonable suspicion" that the prohibition has been infringed.
Secondly, one of the alternative conditions for acting is that the director must consider that it is,
"necessary as a matter of urgency",
for the purpose of protecting the public interest. Therefore, not every damage to the public interest will be a sufficient reason to act. It must also be,
"necessary as a matter of urgency".
That is a significant hurdle for the director to satisfy.
Amendment No. 151 would introduce the additional limitation of forcing the director to show the prospect of serious and irreparable damage to the public interest. I do not believe that this is the appropriate criterion where harm to the public interest is at stake. For example, where there is the prospect of harm to large parts of the economy, we must carefully consider the balance to be struck between the damage to the economy and the firm which is to be subject to the interim measure. In such a case, I believe that the interests of the individual firm are already adequately protected by the significant hurdle of the director showing that,
"it is necessary for him to act … as a matter of urgency".
I turn now to Amendments Nos. 152 and 153. I agree with the noble and learned Lord, Lord Fraser, that the interests of firms subject to interim measures must be protected by effective safeguards. We have done this and have done so by providing that a decision to impose interim measures will be appealable to a tribunal of the competition commission. We have also provided that the tribunal rules may make provision for a tribunal to suspend the effect of an interim measure imposed by the director before taking a final decision on whether the interim measure should be upheld. This is contained in paragraph 13 of Schedule 8. Given those safeguards, I believe it right that the power to impose directions should remain with the director subject to the safeguard of an appeal to a tribunal.
I move on now to Amendment No. 154. We too have been alive to the concerns expressed that an interim measures order should not remain in place for an undue period of time. However, the three-month time limit proposed by the noble and learned Lord in which to reach a final decision may in certain cases not be sufficient where complex and detailed analysis of the economic and legal issues for the final decision is required. Nevertheless, as we said during the first Committee day, we expect to bring into force, when the system has bedded down, the provision in Schedules 5 and 6 enabling application to the court to ensure there is no undue delay in determining applications for decisions. Behaviour subject to interim measures can of course be notified to take advantage of this procedure.
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In view of all those hurdles to be overcome—and, indeed, all the procedures which I believe protect companies—I hope that the noble and learned Lord will feel satisfied and therefore will feel able to withdraw his amendment.
Lord Fraser of Carmyllie: I cannot say that I am particularly persuaded by the argument that adopting the language of the proposed legislation itself—namely,
"preventing serious, irreparable damage to a particular person",
is inappropriate. For me, it is precisely the language suggested by the Government. I guess that it is a requirement on the draftsman for some elegant variation rather than any real need to introduce a separate test. However, we may yet reconsider the matter at a later stage.
We believe that it would be useful to have a maximum period built into the provision. The powers are very extensive and the measures that might be taken against a company could seriously cripple that company's business if the director, however well intentioned, was simply wrong. Indeed, the degree of damage might be such that the undertaking would never recover. That is why we thought it would be useful to have a focusing of the mind and, therefore, the requirement that there should be a maximum period. With those further observations, I beg leave to withdraw the amendment.
[Amendment, by leave, withdrawn.
[Amendments Nos. 152 to 154 not moved.]
Lord Haskel Lord Haskel moved Amendment No. 155:
Page 17, line 39, leave out ("section 31(3) also applies") and insert ("sections 31(3) and 33 also apply").
The noble Lord said: In moving the above amendment I shall, with the leave of the Committee, speak also to Amendment No. 156. The amendments correct an obvious omission from the Bill. Clause 33 provides that if a person has failed without reasonable excuse to comply with directions given by the director to bring to an end an infringement of either prohibition, the director may apply to the court for an order. The amendments apply the same procedures where a person has failed without reasonable excuse to comply with a direction imposing interim measures; that is, when he suspects that the prohibitions have been infringed and he gives directions as a matter of urgency and subject to the safeguards in this clause. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 156:
Page 17, line 41, leave out ("section 32(3) also applies") and insert ("sections 32(3) and 33 also apply").
On Question, amendment agreed to.
Clause 34, as amended, agreed to.
Clause 35 [Penalty for infringing Chapter 1 or Chapter II prohibition]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 157:
Page 18, line 19, after ("undertaking") insert ("in the United Kingdom in the relevant goods or services").
The noble and learned Lord said: This is an important amendment but I have some optimism that either I shall be told it is an acceptable amendment, or at the very least I shall be given the reassurance once again that we are seeking to achieve the same end and what I wish to introduce is unnecessary. Clause 35 deals with the penalties that might be imposed in the event of an infringement of either a Chapter I or Chapter II prohibition. Clause 35(7) states,
"No penalty fixed by the Director under this section may exceed 10% of the turnover of the undertaking (determined in accordance with such provisions as may he specified in an order made by the Secretary of State)".
It may be the intention of the Government to introduce just the restriction that we wish to see on the face of the Bill. I am not at the moment absolutely certain that it is necessary to put this on the face of the Bill, but it would be extremely helpful if the noble Lord could give some indication exactly what is proposed, or what plans they have to introduce an order along the lines of that set out in the provision in brackets in the clause. If the noble Lord is not already aware of this I must tell him that in the business community there is a real worry that if a large undertaking with activities not only elsewhere in the European Union but at any point around the world, had imposed on it a 10 per cent. penalty on its worldwide or European turnover, that would be grossly excessive. For that reason we should like to see the penalty restricted, if not on the face of the Bill, then in an unequivocal undertaking from the Minister that that is the intention of the Government. I beg to move.
Lord McNally: I associate these Benches with this amendment. The provision seems to be rather loosely drafted. As the noble and learned Lord has indicated, it could imply quite draconian punishments on companies. The clarification sought in this amendment would be appreciated by a large number of companies or, let us say, by a small number of companies but very worried ones.
Lord Haskel: I accept that this clause is quite draconian. However, I remind the Committee that this Bill is also intended to be a deterrent. The Government have already said that it is our intention that the turnover to be determined under Clause 35 should be UK turnover. I am happy to confirm that. As for confining the turnover to turnover in the relevant goods or services, I am not persuaded that it should be so confined. It has been suggested that otherwise the provision would discriminate against large companies. Is it not the case that the amendment might discriminate in favour of a large company as opposed to a small one? However, these are in any case not matters for the moment. How turnover is to be defined will be decided at a later date, after careful consideration and discussion with interested parties.
However, I wholly accept that the provisions we draw up will be of considerable importance as they will determine just how heavy a potential burden 10 per cent. of turnover is on an undertaking. That is why Clause 67 provides that an order under this subsection of Clause 35 may not be made unless a draft has been laid before
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Parliament and approved by a resolution of each Chamber. This matter will come before the Chamber when the draft has been prepared. In the light of those remarks, and especially the fact that Parliament will have to approve our proposed provisions on the definition of turnover, I hope that will satisfy the noble and learned Lord and that he will feel able to withdraw the amendment.
Lord Fraser of Carmyllie: I am grateful to the noble Lord for his reply. I suppose that in these post-Pepper days I have obtained more than enough from him when he indicates that it is the clear intention of the Government to restrict the turnover to United Kingdom turnover rather than to European or worldwide turnover. He may have a point regarding how we attempted to restrict turnover in terms of the amendment, but our primary purpose was to establish that the Government were referring to the United Kingdom. I am sure that British industry will be hugely relieved to hear that. I have no doubt it would still like to bring the figure down from 10 per cent. However, 10 per cent. of UK turnover is clearly far less of a risk than 10 per cent. of worldwide turnover. It is not difficult to think of some companies in which 10 per cent. of worldwide turnover would exceed their United Kingdom turnover. In their case a massive penalty could be imposed on them. I am most grateful to the noble Lord for his explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 35 agreed to.
Clause 36 agreed to.
Clause 37 [The appropriate level of a penalty]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 158:
Page 18, line 33, at beginning insert ("Before fixing any penalty under this Part").
The noble and learned Lord said: I am not sure why Amendments Nos. 158 and 159 are not grouped. As far as we are concerned, this is a small, simple point. I shall speak to both the amendments together.
We are anxious to ensure that guidance is drawn up in consultation with industry and is put in place before any prohibitions come into force. That would seem to me to be a reasonable enough request. I very much hope that the noble Lord can reassure us that that is exactly what the Government want to do. I hope that he can be brief. I remember many long hours when I was asked to put guidance provisions on the face of Bills. I am not in a mood at the moment to threaten the noble Lord, but at later stages of the Bill we may have fairly extended discussions about guidance. I beg to move.
Lord Haskel: I shall speak to Amendments Nos. 158 and 159. I agree with the noble and learned Lord that the director should not be able to impose any penalty under the prohibitions until the guidance has been prepared and published. We consider that this requirement is implicit from the fact that the clause imposes on the director a duty to prepare and publish guidance and to have regard to the guidance for the time being in force under Clause 37 when setting the amount

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of any penalty. If the director were to set a penalty before preparing and publishing guidance we consider he would be failing to comply with the duties imposed under this clause.
On Amendment No. 159, it would be natural for the director to wish to consult relevant persons when preparing the guidance on the appropriate amount of penalty. As we said during Second Reading, the director is planning to undertake a thorough and extensive consultation with practitioners and other interested parties in the preparation of the general guidelines to be issued pursuant to Clause 50. Likewise, the director intends to consult relevant persons when preparing the guidance on the appropriate amount of penalty.
I accept that the Bill does not provide expressly for such consultation and I shall reflect in the period between now and Report on whether an explicit obligation on the director to consult should appear on the face of the Bill. That should cut short all our discussions. I therefore invite the noble and learned Lord to withdraw the amendment.
Lord Fraser of Carmyllie: I did not mean to threaten the noble Lord in any way. However, I am extremely grateful to him for his reply. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 159 not moved.]
Lord Hoyle: I beg to move that the House be resumed. In moving the Motion, perhaps I may suggest that the Committee stage begin again not before 8.30 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Food Protection (Emergency Prohibitions) (Oil and Chemical Pollution of Fish) Order 1997
7.31 p.m.
The Parliamentary Under-Secretary of State, Scottish Office (Lord Sewel)rose to move, That the order laid before the House on 22nd October be approved [10th Report from the Joint Committee].
The noble Lord said: My Lords, the order before the House today seeks approval for an order made under the Food and Environment Protection Act 1985 to prohibit fishing for all species of fish and shellfish in a designated area in the North Sea outwith the Moray Firth.
The decision to make the order was based on the results of analysis carried out by our scientists at the marine laboratory in Aberdeen. These test results confirmed the presence of petrogenic taint and oil contamination in samples of nephrops taken from within the designated area. The shellfish samples were taken from that area in mid-September following a spill of
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crude oil in late August in the Texaco Captain oilfield. The purpose of the order was to prevent contaminated fish from reaching the market.
Oil from the Captain field is held in a floating production, storage and offloading facility (FPSO) and then transhipped by dedicated shuttle tanker. The incident which led to the making of the order we are debating today stems from the collision of the shuttle tanker with the FPSO. Although there was damage to both vessels no oil was spilled. The incident required a shut-down for two weeks to allow essential repairs. During that period Texaco carried out a maintenance programme on the FPSO. Production resumed just before midnight on 24th August. Only at daybreak, however, was it discovered that oil was being discharged into the sea.
Approved dispersants were used almost immediately from the stand-by vessel as the slick moved slowly westwards and later in the day from specialist aircraft chartered by the marine pollution control unit. Texaco reported that a slick of only seven tonnes remained on the surface of the sea at dusk on 25th August.
The company's initial estimate of the spill was 150 tonnes. However, this was revised downwards successively to 100 tonnes. Normally, this size of oil-spill would not trigger post-spill monitoring. Recent experience from a number of spills shows that dispersant use will disperse oil into the top few metres of the water column. Sampling experience, backed up by research undertaken by the marine pollution control unit, confirms that the deeper one goes, the less the concentration of oil in water becomes. Therefore the long-term effects on the underlying sediment and the marine life that it supports should be minimal.
The spill, however, had been greater than initially estimated, and on 3rd September Texaco announced in a press release that it was 685 tonnes and that the company was commissioning post-spill monitoring programmes of seabed sediment and fish and shellfish. Texaco arranged for the sampling of sediment from a number of points across the whole area affected by the spill. The sediment samples were sent to an independent laboratory for analysis. In addition, three trawls of roundfish and shellfish samples were also taken from different locations under the suspected area of impact of the spilt oil. The fish and shellfish samples were sent to the marine laboratory for analysis.
The results from the sediment analysis found elevated hydrocarbon levels of sediment up to five times the background levels which occur naturally.
Analysis of the fish samples involves a two-stage process. First, a trained panel of individuals taste batches to detect taint. Thereafter, gas chromatography-mass spectroscopy chemical analysis is carried out to establish the level of contamination for comparison with reference levels which occur naturally. Such analysis detected taint in shellfish from one trawl; and three of four aggregate samples of shellfish from this trawl were subsequently found to be contaminated with hydrocarbons of petrogenic origin. The tainted sample was found to be the most contaminated with polycyclic aromatic hydrocarbon (PAH) levels 45 times higher than a reference sample.

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Your Lordships will appreciate that the whole process is time-consuming as it is important to base results on the most rigorous analysis possible. The shellfish samples were the first to be analysed, those being the most likely to have been adversely affected. Roundfish such as cod or haddock would have swum out of the area.
It is on the basis of these results that the order was brought into force on Tuesday, 21st October. With advice from our scientists, the exclusion zone was set up to cover the whole area affected by the spill and the wide range of species normally fished within that area. This action was taken to avoid unnecessary risks even though contaminated shellfish had come from just one zone within that area.
The scientific and medical advice indicates that the consumption of contaminated fish and shellfish will not have posed any significant risks to human health. It is unlikely that an individual would have consumed large quantities of any species from the affected area before the ban was introduced. Nevertheless, high contamination levels from samples meant that the safest course of action was to eliminate any doubt by imposing a total fishing ban. This course of action is consistent with measures to reduce the exposure of the public to polycyclic aromatic hydrocarbons, some of which are known to be carcinogenic.
In setting up these arrangements we were well aware of the impact they would have on the fishing industry. However, public health must come first and this is recognised and accepted by the fishermen. They are well aware of the potentially damaging effect on the reputation of fish landed in Scotland if the action taken in the face of evidence of contamination and potential adverse effects on public health was not seen to be appropriate. Public confidence has to be maintained in the wholesomeness and safety of fish sold. Any threat to that would spell long-term difficulties for the industry.
During the debate on the emergency order on 5th November in another place, my honourable friend the Parliamentary Under-Secretary of State, Scottish Office, explained that there was a possibility that the oil spilled in late August was the likely source of the problem, although it was unlikely ever to be proved absolutely. Indeed, further test results, which have since become available, indicate that the oil contamination does not contain the identifying markers which relate to Captain crude oil and probably results from previous industrial activity, tanker discharge or river run-off. Irrespective of the origin of the oil, however, the order will remain for as long as the scientific evidence shows that fish are contaminated.
Our scientists have in fact now advised that roundfish taken from within the exclusion zone have been tested and are not contaminated and that they are free from taint. I am pleased to say that on the basis of that advice and the recent test results, restrictions were lifted on Friday 14th November for all species of roundfish such as haddock and cod. That action was effected by the making of a partial revocation order under the Food and Environment Protection Act 1985.
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Restrictions must remain in place for flatfish and shellfish until results of analysis show that these species are unaffected or are no longer affected. Where that is the case the ban will be lifted progressively for those other species when test results, scientific and medical advice indicate that it is safe to do so.
We are, of course, continuing to monitor the position closely and further sampling has been instigated. When the order was made, a second batch of fish, shellfish and sediment samples were taken for analysis from within and outwith the exclusion zone for the purpose of comparison. The test results from that second round of sampling will be available at the end of November. More samples will be collected later this week and results from this latest batch are expected at the end of the year. The outcome of results from these further sampling programmes will determine whether additional monitoring will be required.
I must emphasise that our aim in making the order is to protect public health. I can assure the House that the ban will be lifted as soon as the evidence warrants it. I beg to move.
Moved, that the order laid before the House on 22nd October be approved [10th Report from the Joint Committee].—(Lord Sewel.)
Lord Mackay of Ardbrecknish: My Lords, I am sure that the House is grateful to the Minister for his explanation of the order. I have no problem with the principle involved, although, as the Minister might agree, one or two odd and interesting questions arise from what he has just said. As I am sure the Minister appreciates, the order relates to quite a large area: 756 square kilometres. I am not entirely sure what that means in square miles. Perhaps the Minister will tell me when he replies.
The most intriguing point is that I had understood—and clearly the department had understood—at the beginning that the pollution found in the nephrops population on the sea-bed was the result of a Texaco oil spill. If I heard the Minister correctly, there are now considerable scientific doubts about that, since what scientists refer to as the markers did not lead back to the Texaco spill. That is the most worrying aspect of what the Minister told the House. When I read the order and received some background briefing from the fishing industry, it was my understanding that Texaco accepted that there had been an oil spill—although it seemed rather odd that the company kept going up and down the scale as to the size of the spill. On further analysis we then discover that the contamination does not appear to have resulted from that oil spill. It concerns me that the problem may be a good deal wider than the area that is excluded. I have no doubt that scientists are working on the source of the contamination.
I was pleased to hear that the restrictions on roundfish had been lifted. As the Minister rightly said and as I understood, no tainting was found in the roundfish samples taken in the area. As the Minister will know, the roundfish fishery in that area is not hugely important. The area is important as a nephrops fishery.

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Unfortunately, it so happens that it is important at about this time of year. Therefore, the restrictions impact greatly on nephrops fishing in the outer Moray Firth.
I wonder whether the Minister can help the fishermen and the Texaco Oil Company to come to a conclusion in regard to compensation. I imagine that Texaco is now saying, "If the markers in the samples that you have taken do not actually lead back to our oil spill, it is not us you should be talking to about compensation". That is a development that has taken place since I talked with representatives of the fishing industry at the end of last week when they were reasonably content that Texaco was taking seriously the matter of compensation. I can see that the Minister's remarks will change that.
I had intended to ask about continuing monitoring. However, the Minister stated that the results from the most recent monitoring are expected shortly, and that this week some additional monitoring will go on. I have no problem at all with that. The situation requires a considerable amount of monitoring. I hope that the Minister will be able to tell me that the scientists will look very carefully at just exactly what they have found in the nephrops population.
We know from the "Braer" incident that it took some time before the effects of the oil began to diminish. I believe that there are some exclusion areas off the south of Shetland where fishing for shellfish is still not allowed. With that in the background, one is slightly worried about this area of the Moray Firth since it is significant for nephrops fishing.
I am not sure whether this is appropriate; however, I believe that the House will not mind my saying that during the "Braer" incident I was involved as chairman of the Sea Fish Industry Authority. We were all very impressed by the manner in which Mr. Malcolm Green, then chief executive of Shetland Islands Council, tackled the matter. All will be sad to hear of his very early death, as reported in the newspapers today. The "Braer" incident underlines the long life of oil pollution, especially in relation to shellfish. It does not seem as important for roundfish since, as the Minister said, they can swim out of the area. Shellfish do not have that ability to nearly the same extent and the effect of pollution on them can be considerable.
As the Minister will know, the nephrops fishery round the whole coast of Scotland is particularly important, especially for all the small communities where boats go out for just a day or two. I hope that this incident will be viewed very seriously, especially if it turns out that the pollution comes from sources other than the Texaco oil spill, because that could have consequences for others.
I am reassured by the Minister's remarks that the monitoring will be on a fairly continuous basis and that the nephrops fishery ban will be lifted as soon as it is safe to do so. I can certainly have no argument with that.
Lord Sewel: I thank the noble Lord for a measured and constructive contribution to the debate. I associate myself and these Benches with his remarks about the late chief executive of Shetland Islands Council, Mr. Malcolm Green.
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I believe we both recognise that it is perplexing that the spill triggered the investigation, only for the results of the investigation to indicate that the contamination was not caused by the oil that was spilt but by some other factor. Clearly, the most careful examination is required, if at all possible to identify the source of that contamination. I understand that because it lacks the North Sea markers, and particularly the Captain crude markers, it is likely to have been of Middle East origin; however, that is only a likelihood at present. Whether it is the result of some earlier flushing of tanks, I am not in a position to say. The noble Lord is right to draw our attention specifically to that issue and to the fact that we need to resolve it.
I can rise to the noble Lord's challenge. The figure is 440 square miles.
The noble Lord also mentioned compensation. As he well knows, our approach is based on the principle that the polluter pays and it is traced back to the polluter. Until recently, Texaco was standing in that position. There will now have to be an attempt to identify the source of the oil that is causing the contamination. I suspect that it will be a difficult job. Nevertheless, our scientists will attempt to identify the source and make the information available.
The noble Lord asked what had been found in the nephrops population and the status of the contamination there. I can assure him that full results will be published, following tests from the three samples. It is a perplexing case, as I recognise. The Government have had to act on the basis of the precautionary principle to ensure that public health is safeguarded. I hope that that is recognised. I commend the order.
On Question, Motion agreed to.
Baroness Farrington of Ribbleton: My Lords, I beg to move that the House do now adjourn during pleasure until 8.30.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.51 to 8.30 p.m.]

Competition Bill [H.L.]
House again in Committee.
Clause 37 [The appropriate level of a penalty]:
Lord Haskel Lord Haskel moved Amendment No. 160:
Page 19, line 1, leave out ("a tribunal or the court") and insert ("an appeal tribunal or the appropriate court").
The noble Lord said: In moving Amendment No. 160, I shall speak also to Amendments Nos. 161 and 162.
Amendments Nos. 160 to 162 are required following a change made in response to the consultation process that appeals on points of law and level of penalty should go directly from the appeal tribunal of the competition commission to the Court of Appeal.
Under the general definition of the term "court" in Clause 57, the court referred to in Clause 37 is the High Court which will not have any role in appeals on the level of penalty. The amendments also make clear that it

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is only appeal tribunals of the competition commission, rather than tribunals in general, which will be involved in appeals on the level of penalty. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 161:
Page 19, line 6, leave out ("a tribunal or court") and insert ("an appeal tribunal or the appropriate court").
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 162:
Page 19, line 8, at end insert—
("(9) In subsections (7) and (8) "the appropriate court" means—

(a) in relation to England and Wales, the Court of Appeal;

(b) in relation to Scotland, the Court of Session;

(c) in relation to Northern Ireland, the Court of Appeal in Northern Ireland.").

On Question, amendment agreed to.
Clause 37, as amended, agreed to.
Clause 38 [Limited immunity for small agreements]:
Lord Lucas Lord Lucas moved Amendment No. 163:
Page 19, line 16, at end insert ("but not less than £50 million in respect of Part I and not less that £100 million in respect of Part II").
The noble Lord said: In moving Amendment No. 163, I shall speak also to Amendment No. 166. Both amendments deal with the same point; that is, the level of turnover at which these clauses kick in. It is particularly important that it should be set at a substantial and significant level.
The Bill is drawn, quite rightly, in a way which allows it to operate flexibly against all sorts of possible breaches of the intention of the legislation. But that generates, in the minds of people who may be subject to it—particularly companies—a degree of uncertainty as to whether or not they are caught by it.
It is unreasonable that small companies which do not have the administrative structure to deal with this sort of problem should be caught by this legislation. After all, the likelihood of their being involved in serious ill to their fellow man along the lines of competition misbehaviour is extremely unlikely.
The figures in the amendment are of no particular significance. They were inserted because I did not know what definition of "turnover" the Government had in mind. If they are thinking of turnover within the UK, possibly the figures may be too high; if they are thinking of global turnover, then they are not. I beg to move,
Lord Haskel: The noble Lord, Lord Lucas, raises an important point.
Before dealing specifically with the amendments, the Committee may find it helpful for me to point out that both Clause 38 and Clause 39 provide that the criteria for defining "small agreements" and "conduct of minor significance"—and hence of determining to which small and medium enterprises the limited immunity from penalties is to apply—may, in particular, include turnover and market share. A market share limit might be more appropriate for targeting regulatory resources to where there is most competition concern.
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Such an approach is not without merit, hut it does not deal effectively with the concern voiced by the noble Lord, Lord Lucas, about the burden on small and medium enterprises. Moreover, the definition of a market, and hence calculation of market share. may give rise to uncertainty and therefore may provide less comfort to business than a straight turnover test.
The Committee will be interested to know that the Government's preliminary conclusion, subject to consultation at the time on the detail of the secondary legislation, is that it would be appropriate to set the limits in both Clauses 38 and 39 by reference to turnover. I can also confirm, as has already been made clear, that our intention is that the turnover should relate to the UK only. However, we thought it wise to draft the Bill to allow a market share limit as an alternative or in addition to a turnover limit or indeed any other criteria, and to enable turnover to be defined by secondary legislation.
Amendments Nos. 163 and 166 raise two issues. First, whether the Bill should itself specify minimum figures for defining turnover, or whether the figures should be left entirely to secondary legislation; secondly, what figures should be set. On the first issue there is of course the point that whatever monetary figure we might prescribe on the face of the Bill would be overtaken by events in the real world. But I would not wish to rest my case solely on pointing out the possibility of price inflation.
More fundamentally, we will need to see how this new competition regime works in practice. It may be that whatever figures are prescribed in secondary legislation will need to be adjusted as lessons are learnt and as the new regime beds down. What the Bill needs to provide is a flexible system for enabling the Government to deal with developments, rather than imposing limits on the face of the Bill. Nevertheless—to come on to the second issue raised by the noble Lord—I recognise that the Committee is entitled to know what the Government's present thinking is on those figures.
When Members opposite were in government they suggested in their 1989 White Paper, which proposed a prohibition based on Article 85, a de minimis level of a mere £5 million. Later they issued a consultation document which sought views on a figure of £20 million. The Government's compliance cost assessment for this Bill was based on the assumption that the figure in respect of both agreements and conduct would be £20 million.
We are of course sensitive to the concerns expressed both inside and outside your Lordships' Chamber. The Government have listened and our present view is that the figure for small agreements and conduct of minor significance should be turnover between £20 million and £50 million. In the case of agreements, the turnover is of course the combined turnover of the parties.
I am not able to give Members of the Committee a more precise figure now, not least because we will need to take a judgment nearer the time and will of course wish to consult on the detailed provisions with interested parties. I recognise that even the upper limit I announced is significantly lower than the figures the noble Lord

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proposed, especially as regards conduct, though he indicated that we should not attach too much significance to his figures. Nevertheless, the Government have listened to the concerns that have been raised. In the light of that explanation, I hope that the noble Lord will be prepared to consider my words and not press his amendment.
Lord Lucas: I am extremely grateful to the Minister for that eloquent and wholly satisfactory explanation. I shall be withdrawing my amendment. However, I should be grateful if the noble Lord would favour me with one further piece of information. Let us suppose that we are looking at an agreement that might come within the small agreement category and that the two parties to that agreement are of a totally disproportionate size. One might have a small manufacturer with a new product who is selling it to Sainsbury only, because Sainsbury has offered him a particular promotion, or one might have a sweet shop which is buying its chocolates from Cadbury. Is there any way in which such essentially small agreements can be exempted under the clause, or are they caught just because one party to them is big? Does it mean that the small company which is also party to them will have to tread as carefully as a big company would have to tread in the same circumstances?
Lord Haskel: Both parties would have to tread carefully. But it all depends on the nature of the agreement. It depends on whether the small company or the large company is contravening the conditions of the Bill.
Lord Lucas: I understand what the noble Lord says. However, one may have a new product and one may be the market in that product. I imagine that Mr. Dyson, when he started up with his vacuum cleaners, was the market for such vacuum cleaners. I would be concerned if he had to employ two or three lawyers, because he was the market, to deal with the problems under the Bill.
Lord Haskel: I do not think he would, because it is no crime to be dominant. The crime is to exploit that dominance. If Mr. Dyson exploited his dominance, he would be in danger. However, simply having a dominant product is not a crime.
Lord Lucas: I shall not extend this discussion. I shall read carefully what the noble Lord has said and perhaps return to the matter at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingsland Lord Kingsland moved Amendment No. 164:
Page 19, line 20, leave out from ("35(1)") to end of line 35.
The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 167. The amendments are closely related. Amendment No. 164 deals with Chapter I prohibitions and Amendment No. 167 deals with Chapter II prohibitions. The point
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of reference for these amendments is Clause 35, which is entitled Penalty for infringing Chapter I or Chapter II prohibition.
Small businesses are caught by the prohibitions but they are granted immunities in certain circumstances. Those circumstances are set out in Clauses 38 and 39. Having granted these immunities, the Government seek in certain circumstances to claw them back. Those circumstances, in respect of Chapter I prohibitions, are set out in Clause 38(3) to (8), and, in respect of Chapter II prohibitions, are set out in Clause 39(3) to (8). These two amendments seek to strike out the circumstances in which the Government can cancel immunity. I beg to move.
8.45 p.m.
Lord Haskel: The short answer to the noble Lord's amendment is that we do not want small businesses to learn bad habits. I do not believe it is right that small businesses should never be capable of having penalties imposed on them other than in the case of price-fixing agreements, which this amendment seems to imply. If the noble Lord's amendments were accepted, there would remain the possibility of the prohibitions being enforced by a decision of the director and directions under Clauses 31 and 32. There would also be the possibility of third party actions.
In the nature of things, though, ordinary consumers and small companies, who will commonly be the victims of anti-competitive agreements and abuses by small and medium-sized enterprises, are less likely and less able to pursue their rights through the courts than would a big business. But a major element of the new regime that we are proposing, and what was rather lacking from the regime that it will replace, is deterrence. If there is little or no possibility of a business being penalised for infringing the prohibitions, it will have no incentive to avoid doing so at that time or thereafter.
That is not to say that there should not be some immunity from penalty for small businesses. These clauses show that the Government accept that there should and the protection they provide is extensive. The director must give written notice of his intention to withdraw immunity from penalty. The removal of immunity cannot be backdated to before the director took his decision. In determining the withdrawal date, the director must have regard to the time required to be able to bring the infringement to an end. Thus, any reasonable business would have every opportunity to avoid the imposition of a penalty. I would therefore think it not at all likely that many businesses protected by these clauses would be subject to penalties. We also need to guard against what I might call serial infringers. If there were no risk of penalty, a business would have little incentive not to engage in repeated small infringements.

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In the light of what I have said and the recognition that all sides have shown for the need for the system to deter—I know I have the noble Lord's agreement on that—I wonder whether he is able to withdraw the amendment.
Lord Kingsland: I thank the Minister for his response but I wish to point out to him that there is already a substantial deterrent in place. Small businesses are not immune to the effect of the prohibitions themselves. Because they are still subject to the prohibitions, they can be subject to third party actions. Therefore, the deterrence is in the fact that the third party can bring an action against them.
We think the immunity should be unqualified both because the costs of compliance by small businesses are very great—they do not have the resources which large businesses have to ensure that they are complying with every crossed "t" and dotted "i" of the competition regime—and, equally, because monitoring the agreements is likely to absorb, since small businesses are numerous, a disproportionate amount of the time of the Director General of Fair Trading. For those reasons I believe that a fair balance is already achieved between deterrence on the one hand, and a light touch for the regime on the other.
Lord Haskel: I am not quite sure what point the noble Lord is making. Is he saying that there is already sufficient deterrence and that the regime is therefore unimportant? He appears to be ignoring the other points I was making about serial infringements, the fact that there is protection for small and medium-sized companies and the fact that the director has to give written notice if he intends to withdraw immunities. It seems to me that most businesses have every opportunity to avoid the imposition of a penalty. Indeed, being small businesses, most of them would not have to make a large effort to ensure that they did not fall within the prohibitions of the Bill.
Lord Kingsland: I do not want to prolong the discussion on these amendments too much. I say to the Minister that the deterrent is provided by the fact that these small businesses are subject to the prohibitions and is considerably greater than he might think. Who is most likely to identify anti-competitive behaviour by small businesses? It will be their competitors. They are in a strong position to bring third party actions against companies that contravene Chapters I and II of this Bill. I emphasise to the Minister that there is a very good built-in system of deterrence already in existence. There is no need to add the great panoply of bureaucratic interference which will necessarily flow from these small businesses also being subject to the penalties.
Lord Borrie: I believe that the noble Lord, Lord Kingsland, exaggerates the deterrent aspect of third party actions. In my experience in the limited area under the Restrictive Trade Practices Act third party actions have been possible in the past. But small businesses have been extremely reluctant to take action themselves because of the expense. With some reason they have thought that the public office, namely the Office of Fair Trading, set up especially to enforce the law should take action at public expense. That is the real deterrent.
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When one talks about small businesses one should not assume that they are all good boys. We are all in favour of small businesses and their continued success. But we also know of cases—not just the bus companies that I mentioned earlier today but also estate agencies—where firms have been known time and again to engage in malpractice. I do not mean to damn all estate agencies and bus companies, but I do not believe that it is right to say that third party actions are a sufficient deterrent in all cases.
Lord Kingsland: I do not know whether the Minister is going to respond further to what I said. I suspect that the argument has been pretty fully aired. In the circumstances I express my regret that the Minister has not responded more positively to my suggestions, and I shall bear that in mind when considering what amendments to table at Report stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingsland Lord Kingsland moved Amendment No. 165:
Page l9, line 40, at end insert ("(but shall not prejudice a supplier's right to prohibit loss leading)").
The noble Lord said: This is a fairly straightforward amendment. It seeks to add to the end of Clause 38(9) the expression,
"but shall not prejudice a supplier's right to prohibit loss leading".
I believe that the context will be clear to the Minister. The subsection deals with price-fixing agreements. The intention of the amendment is to make it clear that a supplier's right to prohibit loss leading shall not be included in that category. I beg to move.
Lord Haskel: I would like to make clear at the start that the Bill is not intended to introduce any general rule prohibiting all restrictions on loss leading. We had this debate on the first day in Committee when we discussed the newspaper industry. Restrictions by a supplier on loss leading may or may not be prohibited, depending on their effects on competition.
All we provide in Clause 38 is that the special immunity from penalties is not available where the agreement has the object or effect of restricting the freedom of one party to determine prices. This is an important safeguard. Such agreements have the potential to create the most serious anti-competitive effects.
If an agreement does not qualify for the special immunity under Clause 38, it does not follow that it will be prohibited. A restriction on loss leading might not fall within the prohibition in the first place, and if it did it might qualify for exemption. The director can assess the effects of the restriction in the individual circumstances. The director will have to decide whether the price of a product is a loss leader or the supplier is satisfied with low margins. I therefore urge the noble Lord to withdraw his amendment.
Lord Kingsland: I thank the Minister very much indeed for his reflective answer to my amendment. In those circumstances I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 38 agreed to.
Clause 39 [Limited immunity in relation to the Chapter II prohibition]:
[Amendments Nos. 166 and 167 not moved.]
Clause 39 agreed to.
Clause 40 [Agreements notified to the Commission]:
Lord McNally Lord McNally moved Amendment No. 168:
Page 20, line 30, leave out ("does not prevent") and insert ("prevents").
The noble Lord said: In the absence of my noble friend Lord Ezra, and at his request, I move this amendment. I know that it is a matter of some concern to him and he very much regrets that he is unable to be here to move it. It is a small but decisive amendment. It relates to his concern, which I share, about the overlapping nature of the jurisdiction of UK regulators and EC regulators.
Running through some of the ministerial responses and the contributions of their Back-Bench supporters, there seems to be the idea that regulators are a good thing and that these are the guys in the white hats who go around the countryside slaying wrongdoers here, there and everywhere. We on this side of the Committee share the enthusiasm of Ministers for rooting out the wrongdoers, but a good deal of the evidence that we hear from industry is that the work of the regulators can be leisurely, academic and far removed from the realities of running a business.
My noble friend is anxious that those who are trying to run a business—not the sinners or wrongdoers or the people about whom Ministers are concerned, but the ordinary businessmen—do not find themselves in a kind of double jeopardy as a result of giving powers both to the EC and UK regulators. One might find that when one regulator is satisfied, the other regulator starts up a separate investigation.
That is the thinking behind my noble friend's amendment. As I say, it is not something that he has come up with as an early morning inspiration; the amendment is the result of some pretty heavy lobbying by industry based on its own experience and its fears. I hope that the Minister can give some reassurance. I beg to move.
9 p.m.
Lord Kingsland: My noble and learned friend Lord Fraser of Carmyllie has added his name to this amendment. In wholly concurring with what has just been said on behalf of the noble Lord, Lord Ezra, by the noble Lord, Lord McNally. I should like to emphasise just one point. As I understand it, the philosophy behind the Bill is to ensure that our legislation on this matter dovetails with the European Community regime. Above all, it aims to introduce certainty and economy into the operation of the regime.
In the context of those two objectives, I find it difficult to understand why the fact that an agreement has been notified to the Commission does not prevent the director from investigating it himself. There seems to be an unnecessary overlap of responsibilities which will not only create unnecessary work for the director
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general and his staff and unnecessary work for any company that is being investigated, but which will also impose unnecessary burdens on the economy. As the Minister said in a number of earlier interjections, the whole object of this Competition Bill is to enhance the competitiveness of the economy.
Lord Haskel: I shall not try to comment on the remarks of the noble Lord, Lord McNally, about the work habits of regulators and whether they are in contact with the real world, especially in the presence of my noble friend Lord Borrie. Regulators have, however, been effective in the past few years in reducing the prices and looking after the interests of the consumer and that, to some extent, means being in touch with the real world.
Perhaps I may move now to the comments made by the noble Lord, Lord Kingsland, about dovetailing into the European regime. We discussed this when we considered the amendment moved by my noble friend Lady Nicol. We concluded that the European Commission and the director in the United Kingdom did not want to duplicate each other's work. They would not want to carry out unnecessary extra work.
We have, however, carefully considered the case for giving absolute legal certainty by preventing any action by the director while the Commission is considering the same matter. We have provided in this clause the legal certainty of immunity from penalties under the Chapter I prohibition before the Commission determines the notification for exemption. However, we decided that it would be dangerous to provide in the Bill a bar on the director investigating such agreements. In deciding whether to provide for such a bar, I am sure that noble Lords will appreciate that we must be alive to the risk of loopholes which can be abused. We discussed that earlier.
There may be cases notified to the European Commission which raise little or no Community interest, which it has neither the time nor the resources to attend to, and which the director might therefore wish to investigate. The cases may not involve interstate trade. Further, if we accepted the amendment, parties to agreements which have no effect on interstate trade may see a loophole and notify agreements to the Commission in an attempt to evade action being taken by the director. We therefore consider that it would be wrong to create an absolute legal bar preventing the director from investigating cases which have been notified to the European Commission. I hope that that explanation satisfies the Committee.
Lord McNally: Perhaps I should take this opportunity to try to correct Hansard. I referred earlier to regulators, and I should like to insert, "except with the shining exception of the noble Lord, Lord Borrie".
Noble Lords: Hear, hear!
Lord McNally: I am not sure about the Minister's explanation. I can see that the Government do not want to create loopholes, but these provisions seem to go a lot further than mere dovetailing. The strong

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representations of the CBI and others with concerns about overlapping jurisdictions have not been made lightly. I hope that as the Bill proceeds there will be an opportunity to look again at this. However, in the light of the Minister's interim reply, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 40 agreed to.
Clause 41 [Offences]:
Lord Kingsland Lord Kingsland moved Amendment No. 169:
Page 20, line 38, after ("produce") insert ("or provide an explanation or).
The noble Lord said: I hope to have a little more success with this amendment. It is not quite a technical amendment, but it seems to me that what we are seeking runs on quite naturally from what is in the Bill already. The amendment deals with the question of offences under Clause 41(2), which states:
"If a person is charged with an offence under subsection (1) in respect of a requirement to produce a document, it is a defence for him to prove",
and the defences are then listed. The amendment seeks to insert, after the words "requirement to produce" the phrase,
"or provide an explanation of",
a document. That is often a requirement of an investigator and it seems to us that the defences ought equally to apply to that. I beg to move.
Lord Haskel: The noble Lord, Lord Kingsland, will have a bit more success with this amendment because I can see the strength of his argument. It is not the intention of the Government to make it an offence for a person to provide an explanation of a document where that person is not able to provide such an explanation. I accept that I should reflect further on this issue in the period between now and Report. I would therefore invite the noble Lord to withdraw his amendment. We shall consider it further.
Lord Kingsland: In those circumstances, I am very happy to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 41 agreed to.
Clauses 42 and 43 agreed to.
Clause 44 [The Competition Commission]:
Lord Kingsland Lord Kingsland moved Amendment No. 169A:
Page 22, line 4, leave out subsections (1) and (2).
The noble Lord said: I beg to move Amendment No. 169A. I should like to speak also to Amendments Nos. 169B to 169F and other amendments in this group. I shall not take up too much of the Committee's time in explaining the background to this amendment. I believe that I dealt with the matter in winding up on behalf of the Opposition during Second Reading. Noble Lords opposite are aware of the case I seek to make. I believe that the competition commission is a mistaken institution and should not be in the Bill. The two functions given to it in the Bill, one of adjudication and the other of investigation in relation to monopolies,
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should better be undertaken in the first case by the High Court and in the second case by the Director General of Fair Trading. I shall not reopen those issues. I am aware that noble Lords opposite are actively reflecting on them and no doubt will in due course deliver their judgment on them one way or another.
Meanwhile, in order to follow through my proposals, certain amendments to the Bill are required. Some of those are set out in Amendment No. 169A and the other amendments to which I have referred. Clause 44(1) deals with the responsibilities of the purported competition commission in respect of monopolies and mergers. I have sought to remove the competition commission as the actor and replace it with the director. I believe that the director in addition to being responsible for Chapter II prohibitions should also be responsible for the investigation of complex monopolies. I believe that it is a nonsense to divide the responsibilities in respect of two such intimately connected matters. I beg to move.
Lord Borrie: I rise to oppose this amendment. The proposal for the establishment of a competition commission to perform the role provided in the Bill was also recommended by the previous government. I welcome that. The idea of a competition commission is, among other things, to build up specialised knowledge of competition matters. I believe that what the noble Lord, Lord Kingsland, sees as a disadvantageous mix is a good mix; namely, a membership which hears references from time to time—no doubt fewer than in the past—on complex monopolies and scale monopolies. But the same individuals who are members of the competition commission may comprise part of the membership of a tribunal hearing appeals from decisions, including decisions on penalty and substance, from the Director General of Fair Trading.
I commend the mix of qualities and qualifications of members, which is not untypical of the Monopolies and Mergers Commission in the past. Assuming it continued, it would include businessmen, trade unionists, academics, economists, lawyers and others from different walks of life. In the main, they would serve in a part-time capacity; others would serve perhaps more or a less in a full-time capacity. They would provide a mixed background of experience and would be able to build up considerable expertise in a specialised field of law and policy; namely. cartels and abuse of dominant position.
I believe that to substitute the High Court—which I suppose would mean a judge of the Queen's Bench Division who, once in a blue moon, would deal with this specialised area—would be even less satisfactory than the constitution of the Restrictive Practices Court, which under this Bill will come to an end. There a judge of the High Court would have sitting with him two members who were not judges but who had experience of business and commerce. The idea of a competition commission—I hope that the Minister will forgive my saying that this device was not thought up by the present Government but by the previous one—builds upon the

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experiences of both the Restrictive Practices Court and the Monopolies and Mergers Commission, and is a sound one.
It is clear, as the noble Lord, Lord Kingsland, indicated in relation to previous matters, that he fully understands that the president of the tribunal function of the competition commission will be a highly qualified lawyer of the calibre of a High Court judge. That is recognised by the fact that any appeals from the competition commission should go to the Court of Appeal and not to the High Court, because that would be at the same level as the president himself. The competition commission will have the mix of functions to which the noble Lord objects, and the mix of membership. Those are both plus points for the proposal in the Bill. It would be a great pity to accept this combination of amendments, which would destroy that building up over the years and continuing into the future, of a specialised body.
9.15 p.m.
Lord Simon of Highbury: First, I am grateful to the noble Lord, Lord Kingsland, for the notice he gave of this amendment in debate on the first Committee day. As I did not have the pleasure of winding up on that occasion, perhaps I may put forward, build on, and, I hope complement, the ideas that my noble friend Lord Borrie has just been expounding.
It may be helpful if I explain why we have proposed the institutional framework set out in the Bill. As I understand the noble Lord's amendments, the intention is to abolish the Monopolies and Mergers Commission and transfer its functions to the Office of Fair Trading. The MMC currently exercises functions under the Fair Trading Act monopoly and merger provisions, which we intend to continue within the new competition commission. We have already expended a good deal of energy discussing the reasons for retaining that legislation. The question here is whether those functions would be better carried out by the Office of Fair Trading.
The Fair Trading Act balances carefully the respective roles of the Office of Fair Trading, the MMC and the Secretary of State. The approach to dealing with competition issues under the Act is very different from that introduced by the Bill in relation to the prohibitions. I touched on that point in the debate last week. The Act enables wide ranging investigations into markets, and for matters to be considered against a general public interest test, albeit that competition is in practice a central feature of that test. Further, a very wide range of remedies may be imposed to remedy situations which are determined to be contrary to the public interest. In those circumstances it is quite right that the responsibility for remedies should rest with Ministers, subject to parliamentary scrutiny.
I believe also that it is right that under this sort of approach there should be a careful separation between the body which conducts the preliminary investigation and frames the reference; and the body which conducts in-depth inquiries, considers matters against the public
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interest test, and makes recommendations as to remedies. The collegiate structure of the MMC is right for this latter role. As my noble friend Lord Borrie reminded us, that was also the previous government's view.
I think that there would be too great a risk in combining all those functions in a single organisation. The Fair Trading Act has been in operation for nearly 25 years now, and I believe that the separate and independent character of the MMC has been crucial in establishing and maintaining confidence in the operation of the law.
The new prohibition regime introduces a different approach to competition matters and calls for a different institutional arrangement. The Bill establishes legal tests for assessing whether behaviour is anti-competitive or not. The Office of Fair Trading is to be the primary enforcer of the prohibitions. It is right that under that approach, appeals against the substance of his decisions should be dealt with by more court-like arrangements than are appropriate for MMC inquiries under the Fair Trading Act.
That is why the Bill establishes a new tribunal within the competition commission. The tribunal will, as I say, have many of the characteristics of a court, as my noble friend Lord Borrie said. Indeed it will be recognised as having the same importance and status as the High Court, as appeals from the tribunal will be to the Court of Appeal. I have no doubt that the European Court of Justice will see the tribunal in the same light. The noble Lord, Lord Kingsland, will know that Article 177 of the EC treaty expressly refers to references from tribunals as well as courts.
There will be a clear advantage in dealing with appeals against the director's decisions in a tribunal—of high status like this one—rather than in a court. The procedural rules by which the tribunal operates may be tailored to suit the nature of the matters it will typically deal with, and they will be drawn up taking into account best practice from the courts and other tribunals.
The tribunal will be a UK-wide body, capable of dealing with issues relating to the whole of the UK. That will be a very distinct advantage given the nature of many competition cases.
The approach we have chosen also means that cases will be heard by both legal and lay members. I believe that it is essential that the tribunal panel contains the necessary breadth of experience and expertise to be able to deal effectively and efficiently with the complex commercial, economic and social issues involved in competition cases. Our approach also means that we can draw on a much wider range of people to chair tribunals while of course recognising that tribunal chairmen will need to be properly legally qualified. Schedule 7 to the Bill sets out necessary legal qualifications.
I have explained why we believe that it is right to go down the road of a tribunal to hear appeals under the new regime. We do not, however, see any need to create an additional competition body. That would be unduly costly. The arrangements we propose will make the most efficient use of the expertise and resources available. We also believe that it will encourage healthy

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cross-fertilisation within the new competition commission. It will serve to promote consistent treatment of similar matters under the different pieces of legislation, although of course the method of approach to matters will be different. The primary function of the tribunal will be to re-hear and review the evidence considered by the director, not to initiate its own in-depth investigations.
Clause 44 introduces Schedule 7 of the Bill, which sets out detailed provisions governing the new competition commission's establishment and functions. In relation to the existing functions of the MMC, which will carry over to the new commission, the aim has been to reproduce the current arrangements. As to the new functions introduced by this Bill, the schedule provides for the appointment of tribunal panel members, chairmen and president. I should like to take this opportunity to say that at a later stage we will wish to make a number of amendments to the schedule to tidy up various points which we had not time to deal with before introduction. These are mainly technical changes and I hope that all will be uncontentious. But I am keen that we should get them right before the Bill leaves this House. For example, the provisions as to auditing should be changed in line with treasury guidance which we have received. We would also wish to ensure that conditions as to financial and management matters—though not to anything else—may be attached to grants to the commission.
I thank the Committee for giving me the opportunity to lay out some of the institutional arrangements and to explain our thinking. Perhaps I may summarise my remarks. The basis of our approach is that it is essential for the credibility of the new regime, and in the interests of fairness and transparency, that there are effective and efficient appeal arrangements. We believe that our proposals will achieve that and, at the same time, mesh sensibly and productively with the institutions already in place under the current regime.
I suspect that my lengthy—that is, at this stage of the evening—and institutionally-based reply comes as little surprise to the noble Lord, Lord Kingsland. Perhaps having heard it he will see fit at this stage to withdraw his amendment.
Lord Kingsland: I hope that Members of the Committee will forgive me if I have one last crack at the issue because I consider it important. I would not like to abandon it without pursuing it one step further. Why a court? Simply because Article 6 of the European Convention on Human Rights and the jurisprudence under it have made it clear that the process in which the director general is to be involved concludes with criminal penalties. Since that is the case, those who are likely to be on the receiving end of such penalties are entitled to all the requirements of due process. From what I have seen of the proposals for the procedure of the tribunal I am not convinced that they will receive it. Indeed, I do not believe that a tribunal is a suitable institution to guarantee due process. For that reason, I propose that the function should be performed by a division of the High Court. I shall leave that point there.
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The Minister talked about the extremely delicate balance that the procedure for investigating complex and scale monopolies requires and has talked about how successful that balance has been over the past 20 years. Leaving aside that judgment of history, I question whether his view that giving the powers of the Monopolies and Mergers Commission to the Director General of Fair Trading would destroy the separation of powers that has been achieved by the existing procedure.
Under the Bill, the Director General of Fair Trading has powers of investigation, prosecution, conviction and fine. There is hardly a separation of powers there. Therefore, I do not know why the Minister should think that handing the powers of the Monopolies and Mergers Commission to the Director General of Fair Trading would further affect adversely the concept of separation of powers.
Moreover, there seems to be an unacceptable duplication of function in investigating monopolies. Surely the investigation of Chapter II prohibitions and complex and scale monopolies will often require investigation into the same companies in the same industries. How can one justify separate organisations looking at those two issues simultaneously or even sequentially? I find that very difficult. However, I shall not ask the Minister to repeat or even elaborate on what he has already said unless he wishes to do so. I understand the Minister's position. I merely invite him to reflect on what I have said. It is a matter to which we shall probably return on Report.
Lord Simon of Highbury: There is one point that I should like to make and it concerns the issue of the European Convention on Human Rights and the point raised again about the capacity of a court or tribunal to address those facts with due process. I see no reason why a tribunal cannot give the appropriate judgments and protections. A court-like tribunal or a tribunal-like court seems to me, as a layman, to be dancing on a pin head.
If inappropriate judgments are made by a tribunal-like court in terms of the European Convention on Human Rights issues, it will be possible to appeal against those judgments. But I have every confidence that such matters can be addressed by the tribunal in process terms. I am grateful that the noble Lord does not seek to go further into institutional relationships and I ask the noble Lord to withdraw the amendment at this stage.
Amendment, by leave, withdrawn.
[Amendments Nos. 169B to 169D not moved.]
Clause 44 agreed to.
On Question, Whether Schedule 7 shall be the seventh schedule to the Bill?
Lord Kingsland: The notice of my intention to oppose this Question must be seen in the light of the previous debate in relation to the status of the competition commission and all the points which have already been covered. In those circumstances, I shall no longer oppose the Motion that Schedule 7 shall be agreed to.
Schedule 7 agreed to.
Clause 45 [Appealable decisions]:
[Amendments Nos. 169E and 169F not moved.]
9.30
Lord Kingsland Lord Kingsland moved Amendment No. 170:
Page 22, line 32, at end insert ("or as to whether the Director has complied with the requirements of section 58").
The noble Lord said: The amendment relates to Clause 45(2) which deals with "appealable decisions". The clause concerns the circumstances in which an individual or a company may appeal to the competition commission. The amendment seeks to add a requirement to those circumstances; namely, whether or not the director has complied with the requirements under Clause 58 regarding compliance with the principles of European Community law. I beg to move.
Lord Simon of Highbury: Clause 45 enables appeals to the new competition commission appeal tribunal against a decision taken by the Director General of Fair Trading or by one of the sector regulators under the prohibitions. It is our intention that substantive decisions by the director should be appealable to the competition commission. We believe that the right to appeal against such decisions is an essential part of ensuring a fair and transparent system.
The requirements in Clause 58 are intended to ensure that the new prohibitions are applied consistently with the principles of Articles 85 and 86 except where the Bill specifically provides otherwise. That is the point of connection to which the noble Lord, Lord Kingsland, referred. It is our view that the Bill already provides that these requirements apply to the director in making decisions as to the application of the prohibitions. Therefore, it would be possible to appeal against a decision by the director that a particular course of conduct infringes the Chapter II prohibition on the grounds that the director's decision was not in accordance with the requirements of Clause 58. This is similar to our earlier discussion on whether or not a man is a reasonable man. I ask the Committee: do we have to add it to the Bill to ensure that the Clause 58 provision is seen as fundamental to the whole process; in other words, appealable against if it is not applied?
The view from this side of the Committee is that we do not believe that Amendment No. 170 adds anything to the Bill. As I said, it will be possible to appeal against a decision by the director on the grounds that his decision was not in accordance with the requirements of Clause 58. I am most grateful to the noble Lord, Lord Kingsland, for enabling me to put this on the record. However, I ask him to consider withdrawing his amendment.
Lord Kingsland: I am most grateful for the Minister's response. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 171 not moved.].
Lord Kingsland Lord Kingsland moved Amendment No. 172:
Page 23, leave out line 5.
The noble Lord said: In moving this amendment, I wish to speak also to Amendment No. 176. Amendment No. 172 seeks to amend Clause 45(3), which contains a list of appealable decisions. The amendment seeks to remove the words, "cancelling an exemption". Amendment No. 176 seeks to insert at page 23, line 11 the words,
"and any other action of the Director relating to an individual exemption, a block exemption or parallel exemption made under sections 4 to 11".
In other words, it retains the concept of an exemption but expands it to a wider range of matters which in our submission are more appropriate and more comprehensive. I beg to move.
Lord Simon of Highbury: I shall speak to Amendments Nos. 176 and 172. Amendment No. 172 seems to be consequential. There is no need for the deleted reference to exemptions if Amendment No. 176 is accepted.
I have already explained our intention that substantive decisions by the director should be appealable to the competition commission. The list of appealable decisions in Clause 45(3) is intended to specify the various substantive decisions that the director might make, and which may be appealed to the commission.
Many of the decisions contained in this list relate to individual or block exemptions. It is our intention that all substantive decisions relating to exemptions should be capable of being appealed to the competition commission. I do not, therefore, believe that these amendments are necessary. All the matters which should be appealable in relation to exemptions will be appealable.
On the other hand, the very broad formulation in Amendment No. 176 would bring in matters which in our view it would be neither practicable nor necessary nor desirable to make appealable. We do not, for example, intend it to be possible to appeal against a view taken by the director that there had been a material change in circumstances concerning an exempted agreement. This would not be a substantive decision. It is, however, right that, if the director decides in such circumstances that an exemption should be revoked, that decision should be open to appeal. The Bill enables such appeals to be made. Indeed, once such a decision had been made by the director, it might be appealed on the grounds that there had been no material change in circumstances. But we believe that the right stage to make such an appeal is when, and if, the director takes a decision.
I would like to say at this stage that we are currently reflecting on whether the list in Clause 45(3) is precisely right. It has been suggested to us that there may be minor gaps or some scope for clarification. It is important that we should have covered all types of decision that should be appealable. This may therefore be an area which we would wish to return to at Report Stage, without, however, wishing to depart from our intention that only substantive decisions should be

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appealable. With that in mind, I ask the noble Lord, Lord Kingsland, whether he would see fit at this stage to withdraw Amendments Nos. 172 and 176.
Lord Kingsland: I thank the Minister for his response. I am happy in the circumstances to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingsland Lord Kingsland moved Amendment No. 173:
Page 23, line 5, at end insert—
("( ) requiring production of a specified document under section 26(1)").
The noble Lord said: In moving Amendment No. 173, I shall speak also to Amendment No. 174. The amendments add categories to the list of appealable decisions. Amendment No. 173 requires production of a specified document under Section 26(1). Amendment No. 174 provides,
"in respect of requests for documents and for explanations of documents under sections 26, 27 and 28".
I believe that the amendments are self-explanatory. I do not need to add anything to them.
Lord Simon of Highbury: The amendments seek to enable appeals to the competition commission against the director's use of his investigation powers.
Clause 45 provides for appeals against decisions by the director. This allows people and businesses to appeal against decisions which, if put into effect, will damage their interests—for example, a decision to impose a penalty, or a direction to stop engaging in a particular business practice. Such decisions could obviously have a significant impact on those affected.
Requests for documents by the director under his powers are not substantive decisions. An individual or business will not suffer any harm by producing a document, or explaining a document to the director—unless, of course, the document reveals that there has been wrongdoing, in which case the document is obviously relevant.
It is only an offence under the Bill to refuse to provide a document which is relevant to the investigation. No one can be successfully prosecuted for not producing a document if it is not relevant.
This all harks back to the very full debate we had about the need for a director to have the powers of investigation he needs to be able to enforce the prohibitions effectively. It is the Catch-22 situation that we spent some time discussing before dinner. I hope it will not return. I shall soon be calling it the Yossarian effect. I think that it is right that the director should be able to see any relevant documents in order to investigate matters properly. It can do a firm no harm to produce such documents for a director. There are clear safeguards in the Bill to protect information contained in such documents. Indeed, criminal sanctions would apply to any unlawful disclosure of such information by the director.
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Having sought to elaborate on the difference between a decision and a documentation, I urge the noble Lord to consider withdrawing the amendment.
Lord Kingsland: As the Minister rightly observed, in an earlier debate we investigated the meaning of relevance, in particular the objectivity or otherwise of the person who decided whether or not a document was relevant. I believe the Minister said that one cannot be prosecuted for not producing a document that is not relevant. The difficulty about that approach is that the person who decides whether or not a document is relevant is the director general. On the face of the Bill, his discretion on this matter is absolute. Therefore those words may not be as comforting as the Minister might genuinely and in a bona fide way have considered them to be.
I hope that the Minister will consider the two amendments in the light of the earlier debate. I believe that this issue of relevance is fundamental to the procedures. If there is no way in which the director general's view about relevance can be questioned, it is a serious defect in the due process that the Minister seeks to guarantee and might suffer at the hands of the courts at a later stage. I therefore ask the Minister, not only for the successful operation of the Bill, but also because of the legal context in which it has to operate, to reflect carefully on this issue when he returns at Report stage. In those circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 174 not moved.]
9.45 p.m.
Lord Kingsland Lord Kingsland moved Amendment No. 175:
Page 23, line 9, at end insert—
("( ) on a Director's finding within the meaning of section 56(2)").
The noble Lord said: This amendment relates to Clause 45 (3). It seeks to establish a right to appeal,
"on a Director's finding within the meaning of section 56(2)".
Clause 56(2) defines a director's finding as,
"a finding of fact made by the Director in the course of determining an application for a decision under section 14 or 22".
In our submission, it is an important protection for the individual or company that is being investigated to have a right of appeal in those circumstances. I beg to move.
Lord Simon of Highbury: The issue raised by the noble Lord is an interesting one. It might be helpful if he could clarify whether the right of appeal is before the finding and decision of the director general, or after. It is a matter of some interest as to where the appeal is positioned or whether this is just a general statement.
Lord Kingsland: A case could be made out for both. However, the amendment as I see it refers to an appeal after the decision is taken in relation to the factual underpinning of the final decision.
Lord Simon of Highbury: I am grateful to the noble Lord for that elucidation. It is important that we

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understand the sequence well. It is appropriate for the process to be followed and a decision made by the director, and a total finding then to be appealable on the basis of the facts. We would not like to split the process going through to the director by appealing facts on the way. That may not be the most efficient process. However, there is an interest in considering the way in which an appeal on facts made after the decision is built into the construction of these clauses. I shall think extremely hard about the position that the noble Lord has now clarified; I wish to reflect on it before Report stage.
Lord Kingsland: I am most grateful to the Minister for that response. In those circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 176 and 176A not moved.]
Clause 45 agreed to.
Clause 46 [Third party appeals]:
Lord Kingsland Lord Kingsland moved Amendment No. 177:
Page 23. line 17, leave out ("Director asking him") and insert ("Tribunal asking it").
The noble Lord said: I shall move Amendment No. 177 and speak also to Amendments Nos. 178 to 187. The point is simple. In our submission the appeal should not be to the director but to the tribunal. It will give third parties who have a sufficient interest in the decision the right to appeal to the tribunal. It seems to us that the objectivity of that approach is a better solution than the one set out in the Bill. I beg to move.
Lord Simon of Highbury: In responding to the group of amendments tabled by the noble Lords, Lord Kingsland and Lord Lucas, it may be helpful to outline the considerations behind devising the mechanism by which third parties should be able to appeal a decision of the director.
Clearly it would have been unacceptable for the director himself, without the safety net of appeal, to determine whether the third party had the requisite interest to challenge his decision and, if so, whether to change his decision. None of us likes having our decisions overturned, even directors general in white hats or whatever appropriate clothing the noble Lord, Lord McNally, ascribed to them. That is why we have allowed appeal on the question of having the requisite interest and, if so, whether the decision should be changed. That is an important safeguard and ensures that the clause strikes the right balance.
However, we carefully considered the option proposed by the amendments of the noble Lord, Lord Lucas, of allowing a third party to go directly to the tribunal without first approaching the director. It may be that many Members of the Committee have put down amendments in this large group and I hope that I have not ascribed any amendment to the wrong noble Lord. I am grateful for the opportunity to listen to the arguments. However, I continue to prefer the approach set out in Clause 46. That is because it should help avoid unnecessary appeals.
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For example, the third party might have new information which was not available at the time the director took his decision. The director could discuss the new information and concerns with the parties who are the subject of the decision and it might be that a revised decision is issued which is acceptable to all and which avoids the cost of setting up an appeal tribunal.
If the director accepts that the third party has the requisite interest in the decision, this procedural question does not then have to be determined as an initial issue by the tribunal before the main appeal. Once again costs could be saved. I accept that the director will not be keen to have his appeal challenged, but when he is determining the issue of requisite interest under Clause 46, of course he must and will act reasonably and within the law. The director, with his detailed knowledge of the case, should be able to come to a view quickly. The tribunal, on the other hand, would have to spend far greater time examining the case before being able to come to a decision on this initial procedural question. If the director accepts that the third party has the requisite interest under Clause 46, the tribunal can be saved this task.
Finally, by obliging the third party to approach the director first, the tribunal will have an established issue to determine between two opposing parties. The amendments do not provide for the director to be an opposing defendant before the tribunal.
Turning now to Amendment No. 181 of the noble Lord, Lord Lucas, this amendment would prevent representative actions. The Government believe strongly in an appeals system which is fair and transparent in which the business community and consumers have a fair right of appeal.
If we were to prohibit organisations representing third parties with a sufficient interest to appeal a decision, we would certainly severely prejudice the interests of consumers. An individual consumer may not have the time or resources to appeal a decision on his own; if consumers are to have a real voice in the new system, it must be possible for organisations such as the Consumers Association to be able to appeal a decision on their behalf. The same arguments apply to small traders who may have to rely on their trades institutions. In the light of these explanations, I hope noble Lords who tabled that series of amendments which run through cost efficiency in the nature of the appeal and then the ability of the small man to be represented by what to him seems a Goliath in taking an appeal forward, will see fit to withdraw them.
Lord Lucas: I found that last explanation so convincing that I have entirely forgotten why I tabled the amendment.
Lord Kingsland: In those circumstances, I have no option but to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 178 to 187A not moved.]
Clause 46 agreed to.
Clause 47 [Appeal tribunals]:
Lord Kingsland Lord Kingsland moved Amendment No. 188:
Page 24, line 2, after ("Tribunals") insert ("and such other persons as he considers appropriate, including organisations representing industry").
The noble Lord said: I have some expectation that this amendment will not prove controversial. It simply adds to the list of consultees set out in Clause 47(2). After the word "Tribunals" the amendment seeks to insert,
"and such other persons as he considers appropriate, including organisations representing industry".
Here is one exception to all the other cases that we incorporated in our amendments today when we are expanding the discretion of the Secretary of State, not seeking to contract it. I beg to move.
Lord Simon of Highbury: The final statement made me pause to reflect, but not for too long. Clause 47(2), to which this amendment relates, contains a power for the Secretary of State to make rules in relation to appeals. I should explain that it is the Government's intention that this power should be exercised by statutory instrument subject to annulment. The Bill does not currently provide for that. That is an oversight. I draw the attention of the Committee to Amendment No. 271, relating to Clause 67, which we will come to in due course and which is designed to put that right.
We intend therefore that the rules should be open to parliamentary scrutiny before they are introduced. In drawing up the rules we will also consult the council on tribunals. The new tribunal will, in any case, be subject to scrutiny by the council.
As the noble Lord, Lord Kingsland, implied, we also have every intention of consulting relevant organisations. On the specific point to which this amendment is directed, I am happy to commit to consulting industry interests on draft rules. That was our intention in any case and the Bill does not preclude such consultation.
Again, I feel rather like the reasonable man, although I am becoming more unreasonable every time I say it. The amendment is unnecessary because it is included in the overall intention of the clause. Having heard my explanation, perhaps the noble Lord would be prepared to withdraw the amendment. If not, I shall think carefully about whether it adds to the powers of the Secretary of State in the most reasonable way.
Lord Kingsland: I thank the Minister for his response. I hope that he will reflect on the amendment and by one means or another ensure that the Secretary of State takes into account the various factors that underlie the text. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 47 agreed to.
Clause 48 [Appeals on point of law etc.]:
[Amendments Nos. 188A to 188G not moved.]
Clause 48 agreed to.
10 p.m.
Schedule 8 [Appeals]:
[Amendment No. 189 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 190:
Page 64, line 41, leave out ("no valid") and insert ("insufficient").
The noble Lord said: This is, I hope. a very simple amendment. It is directed at the end consequences of Clause 46 and what follows by way of third party appeals. Perhaps the Minister would be kind enough to confirm my understanding that this is the sole route of third party appeals provided by the Bill. There has been some suggestion that, somewhere in its crannies and crevices, the Bill gives third parties additional rights to take action on the causes set out in the Bill in the courts rather than through the director. I have heard that, but I have not yet been able to detect it. I hope the Government will confirm that that is not the case and that the third party rights are all and only as set out in Clause 46 and following clauses.
That being the case, I am concerned that those organisations subject to the Bill should be free from vexation and harassment by those who wish to pursue political points, whether based on matters of emotion, ecology, morality or religion, which occasionally afflict people in their battles with companies. It seems to me that that is what this part is dealing with, but it appears to be rather narrowly drawn. It is drawn to say that the appeal "reveals no valid ground". That is an astonishingly strict interpretation. One can think of few circumstances where an appeal would have no valid ground.
With regard to paragraph 7(b), the person who falls under that sub-paragraph would have to be so habitually litigious as to be almost notorious. I would much prefer discretion to be given to the competition commission, on a rather wider scale, to deal with actions and appeals which amount merely to harassment rather than there being any substantial cause behind it which might lead to a substantially varied decision by the director or ought to have led to such a variation in decision. Therefore, I should like to see, if not this amendment, at least something made to the same effect to give the commission the discretion to deal with people seeking to misuse the powers given under the Bill. I welcome the ability of third parties to take action under the Bill but I think it has to be moderated by good sense. I beg to move.
Lord Simon of Highbury: Perhaps I may confirm for the noble Lord, Lord Lucas, that this is the only part of the Bill which refers to the appeal process for third parties. He has no need to look elsewhere for the third party appeal process.
I thank the noble Lord for his suggestion that the formulation "insufficient reason" should be used for consistency, particularly to be consistent with Clause 46(4). The test in that clause relates to the substance of a decision, and not whether, as here, the grounds for appeal are admissible. I have some difficulty in thinking that there is in practical terms any significant difference between the formulation "no valid" and "insufficient".

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"Valid" is the right word because what the tribunal will be looking at is whether the appellant has a basis for appealing, and not how strong his case is.
To the extent that the amendment may have an effect in practice, it would probably tend to make it more common for the tribunal to reject appeals. I am not persuaded that that would be right. The provision is directed at disallowing appeals based on grounds which are simply not proper grounds for the tribunal to deal with. At an early stage that would be a decision thus saving costs for everyone. It is very important that we do not undermine the arrangements in the Bill which ensure that there is effective recourse to appeal under the new regime.
At this stage debating the words "valid" and "insufficient" would get us into considerable trouble. We take the view that "validity" is the right word because we are looking at whether the appellant has a basis for appeal and not the strength of the case.
Lord Lucas: I thank the Minister for that explanation. Before withdrawing the amendment there are two things I would like to leave on the record. The first is that my question was not whether this is the only appeals mechanism in the Bill for third parties, but whether this is the only part of the Bill which gives additional rights to third parties to attack the evils which are identified particularly in Clauses 2 and 18 of the Bill; in other words, whether in the interstices of this Bill third parties are given the right of independent action through the courts. I do not necessarily require an answer now, but if the answer is yes I would very much like to have it before Report stage.
Secondly, let us suppose we have a third party appealing on the basis that the market share which the director general said existed was 17.9 per cent. when in
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fact it was 18.3 per cent. Under those circumstances where there is a very minor allegation of error of fact, but possibly a quite correct one, which is unlikely to make any major difference to the findings, will the competition commissioner have to go through the whole panoply of a monopolies commission investigation, or is there in the Bill—and I shall be grateful if the noble Lord can point it out—some power other than that contained in paragraph 7 to exercise summary judgment? If there is no ability to do that, and if the smallest error of fact under paragraph 2(a) is sufficient to trigger a complete investigation, then that needs looking at. I am happy to leave those points to Report stage.
Lord Simon of Highbury: Perhaps I may take up the point again on third party rights. I want to make it absolutely clear that the only rights of appeal for third parties in this Bill are set out in this schedule, as I have said. It is true that third parties have rights to seek damages in the courts as a result of actions held here. As regards the wider point on third party rights under the Bill other than by appeal, I should like to respond to the noble Lord on that subject separately. That point having been made for the record, I shall be delighted if the noble Lord withdraws the amendment.
Lord Lucas: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 8 agreed to.
Lord Haskel: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at nine minutes past ten o'clock.