HL Deb 17 November 1997 vol 583 cc367-427

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 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 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 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 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 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 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.

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. 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 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? 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 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 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 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 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 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 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 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, 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 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 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?

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.

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 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 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 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 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 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 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 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 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 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". 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.

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 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 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 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, 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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.

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 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 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 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 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 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 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.