Competition Bill [H.L.]

HL Deb 09 February 1998 vol 585 cc955-90

9.10 p.m.

Consideration of amendments on Report resumed. Clause 19 [Excluded cases]:

Lord Simon of Highbury moved Amendments Nos. 25 to 27: Page 10, line 40, leave out from beginning to second ("or") and insert ("providing for one or more additional exclusions;"). Page I I, line I. leave out ("case") and insert ("provision"). Page I I. line 2, at end insert— ("( ) The Secretary of State may at any time by order amend paragraph 6 of Schedule 3 with respect to the Chapter prohibition.").

The noble Lord said: My Lords, I beg to move Amendments Nos. 25 to 27 en bloc.

On Question, amendments agreed to.

Lord Fraser of Carmyllie moved Amendment No. 28: After Clause 19, insert the following new clause EXEMPTED CONDUCT (" . The Chapter II prohibition does not apply to any conduct arising from the performance of an agreement which is exempted from the Chapter I prohibition in accordance with section 4.").

The noble Lord said: My Lords, when noble Lords considered the amendment in my name on the subject of vertical agreements I indicated that I was grateful to the Minister for providing me with a copy of the expert report on how the European Court and the Commission approached such matters. I do not depart from my gratitude to the Minister for that. However, after the dinner hour I am in a slightly more suspicious frame of mind. The suspicion underlying Amendment No. 28 is that if and when the Government bring forward a proposal that allows for exemptions or exclusions from the Chapter I prohibition on vertical agreements they may be a little relaxed about them because they will reassure themselves that in any event any matter of which they disapprove will be caught under a Chapter II prohibition.

With the insertion of a new clause, the amendment seeks to provide that the Chapter II prohibition does not apply to any conduct arising from the performance of an agreement which is exempted from the Chapter I prohibition in accordance with Clause 4.

I appreciate that in some respects the amendment is premature in as much as we have not seen what are the exclusions. I should like reassurance from the Minister that where such an exemption is allowed for, there will not be, as it were, a back door through which the conduct can be looked at in terms of a Chapter II prohibition. I do not believe that the argument needs any elaboration. If the Minister can give some reassurance that would be helpful. I beg to move.

9.15 p.m.

Lord Simon of Highbury

My Lords, we debated the issue of the relationship between the two prohibitions during the first Committee day in response to an amendment proposed by the noble Lord, Lord Kingsland. As I said then, the two prohibitions introduced by the Bill will operate hand in hand. Essentially they will have the same relationship to each other as do Articles 85 and 86 of the treaty. That relationship is well established and works satisfactorily in practice.

On the basis of EC jurisprudence, the director cannot grant an agreement an exemption under the Chapter I prohibition if in doing so he would be exempting something that appears to be prohibited under the Chapter II prohibition. There should be no specific provision in the Bill providing protection from the Chapter II prohibition for agreements which have obtained an individual exemption. Parties who have obtained an individual exemption will have the benefit of knowing that the director has had to take account of the Chapter II prohibition in assessing their agreement.

Of course an exemption cannot provide a blank cheque for any type of anti-competitive behaviour in the future. The relevant market might change materially in an unforeseen way, for example, and the agreement might become seriously harmful. Action against the agreement might then become possible either by withdrawing the exemption or under the Chapter II prohibition, but only of course if the relevant conditions and safeguards were met. It would be wrong to place any legal bar on the fact of the Bill preventing action in such circumstances. I therefore invite the noble and learned Lord to withdraw the amendment.

Lord Fraser of Carmyllie

My Lords, I would not go so far as to say that it would be wrong to have such a legal bar, but as I said in my opening remarks, it would be curious to try to establish the relationship until we know what will be the scheme for exclusion or exemption. So I shall withdraw the amendment.

I hoope that the Minister will take the amendment as a shot across his bows. As he seeks to work out what would be the best arrangements for exemptions or exclusions for vertical agreements, I hope that he will understand that we shall be looking to see that there is as clear as possible an arrangement between the Chapter. I and Chapter II prohibitions. He offered some reassurance when he said that if an exemption were to be granted on an individual basis, whoever has the responsibility for granting it would have been required to look to see if there were any problem with a Chapter II prohibition. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 [Exclusions: Mergers and Concentrations]:

Lord Simon of Highbury moved Amendment No. 29: Page 39. line 26, after ("1973),"), insert ("or (b) is directly related and necessary to the attainment of the result mentioned in paragraph (a),").

The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 30 and 31. In Committee, the noble Lord, Lord Kingsland, suggested that ancillary agreements to mergers should be excluded from the Chapter II prohibition as well as the Chapter I prohibition. I was grateful to the noble Lord for raising the matter.

As I indicated at the time, we would not normally expect the entering into of restrictions ancillary to a merger to fall foul of the Chapter II prohibition. But I do not believe we can rule that out, and it is therefore right to provide an exclusion. Amendments Nos. 29, 30 and 31 have that effect. I beg to move.

Lord Kingsland

My Lords, is this a moment when I must thank the Minister for his kind concession? I am obliged to him.

On Question, amendment agreed to.

Lord Simon of Highbury moved Amendments Nos. 30 and 31: Page 39, line 34, after ("conduct") insert ("(either on its own or when taken together with other conduct)"). Page 39, line 35, at end insert ("or (b) it is directly related and necessary to the implementation of the transfer.").

On Question, amendments agreed to.

Lord Simon of Highbury moved Amendment No. 32: Page 39, line 40, at end insert—

1. ("(IA) If the Director is considering whether to give a direction under this paragraph, he may by notice in writing require any party to the agreement in question to give him such information in connection with the agreement as he may require.
2. (1B) The Director may give a direction under this paragraph only as provided in sub-paragraph (IC) or (2).
3. (1C) If before the end of such period as may be specified in rules under section 49 a person fails, without reasonable excuse, to comply with a requirement imposed under sub-paragraph (IA), the Director may give a direction under this paragraph.").

The noble Lord said: My Lords, in moving Amendment No. 32, I shall speak also to Amendments Nos. 33, 71, 160, 162, 163, 187, 188, 189, 190 and 220. The first two amendments explain the exclusion and clawback which we have put in place. They will be relevant, for instance, to issues under Clauses 21 and 22 which we discussed earlier.

Amendments Nos. 160, 162, 163, 187, 188, 189, 190 and 220 define information which is required by the director in making assessments of the provisions under Amendments Nos. 32 and 33 for the definition of clawback.

There is an artificial and unnecessary rigidity. It would be better if it were generally enabled to make a notification before any exclusion were lost. Amendment No. 71 provides a power for regulations to be made which would enable provision for that effect. They are all technical amendments. I beg to move.

On Question, amendment agreed to.

Lord Simon of Highbury moved Amendment No. 33: Page 39, line 41, leave out ("give a direction only") and insert ("also give a direction under this paragraph").

On Question, amendment agreed to.

Schedule 2 [Exclusions: Other Competition Scrutiny]:

Lord Simon of Highbury moved Amendment No. 34: Page 41, line 13, at end insert ("to the extent to which the agreement relates to the regulating provisions of the body concerned.").

The noble Lord said: My Lords, in moving Amendment No. 34, I speak also to Amendments Nos. 35 to 45 and Amendment No. 48. They are technical amendments to include the Financial Services Act within the scope of the Bill. They also cover a related provision for the European Economic Area in addition to the European Union. They provide a geographic extension. I beg to move.

On Question, amendment agreed to.

Lord Simon of Highbury moved Amendments Nos. 35 to 45: Page 41, line 14, at beginning insert ("Subject to subsection (2A)"). Page 41, leave out lines 19 to 21 and insert ("to the extent to which the agreement relates to the regulating provisions of the body concerned.

1. (2A) The exclusion provided by subsection (2) applies only if
1. (a) the body has applied for a recognition order in accordance with the provisions of this Act; and
2. (b) the application has not been determined.
2. (2B) The Chapter 1 prohibition does not apply to a decision made by—
   1. (a)a recognised self-regulating organisation,
   2. (b)a recognised investment exchange, or
   3. (c)a recognised clearing house,
   to the extent to which the decision relates to any of that body's regulating provisions or specified practices.
3. (2C) The Chapter 1 prohibition does not apply to the specified practices of
   1. (a) a recognised self-regulating organisation. a recognised investment exchange or a recognised clearing house; or
   2. (b) a person who is subject to?
   1. (i) the rules of one of those bodies; or
   2. (ii) the statements of principle, rules, regulations or codes of practice made by a designated agency in the exercise of functions transferred to it by a delegation order.").

Page 41. line 34. after ("provisions") insert ("or specified practices"). Page 41, line 45, leave out ("(3) and (4)") and insert ("and (2B) to (4)"). Page 42, leave out lines 2 to 11 and insert

1. ("(a) in relation to a self-regulating organisation, any rules made, or guidance issued, by the organisation;
2. (b) in relation to an investment exchange, any rules made or guidance issued by the exchange;
3. (c) in relation to a clearing house, any rules made. or guidance issued, by the clearing house:

specified practices" means

1. (a) in the case of a recognised self-regulating organisation, the practices mentioned in section 119(2)(a)(ii) and (iii) (read with section 119(5) and (6)(a)):
2. (b) in the case of a recognised investment exchange, the practices mentioned in section 1 19(2)(b)(ii) and (iii) (read with section 119(5) and (6)(b));
3. (c) in the case of a recognised clearing house, the practices mentioned in section 119(2)(c)(ii) and (iii) (read with section 119(5) and (6)(b));
4. (d) in the case of a person who is subject to the statements of principle, rules, regulations or codes of practice issued or made by a designated agency in the exercise of functions transferred to it by a delegation order, the practices mentioned in section 121(2)(c) above (read with section 121(4);").

Page 42, leave out lines 15 to 21. Page 42, line 28, after ("body") insert ("to the extent to which it relates to the rules or guidance of that body relating to the carrying on of investment business by persons certified by it ("investment business rules")"). Page 42. line 29, leave out ("between undertakings"). Page 42, line 35, leave out from ("by") to end of line 37 and insert ("that body's investment business rules"). Page 42, line 39, leave out ("the agreement") and insert ("an agreement to which this section applies"). Page 43, line 36, leave out ("that Act") and insert ("the Competition Act 1998").

On Question, amendments agreed to.

Baroness Hamwee moved Amendment No. 46: Page 46, line 48, at end insert ("COPYRIGHT Copyright, Designs and Patents Act 1988 The Chapter I prohibition does not apply to any agreements, decisions or practices relating to the licensing of copyright works where one or more of the parties is under the jurisdiction of the Copyright Tribunal pursuant to section 149 of the Copyright, Designs and Patents Act I988.").

The noble Baroness said: My Lords, in moving Amendment No. 46, I shall speak also to Amendments Nos. 61, 62 and 70. They were grouped with Amendment No. 4, which I did not move. I hope that I shall not confuse the House unduly by removing Amendment No. 46 from its place in the list.

I am briefed by British Music Rights, an organisation whose members consist of the Music Publishers' Association, the Alliance of Composer Organisations, the Performing Right Society and the Mechanical-Copyright Protection Society. I declare an interest in that I am a partner in a firm of solicitors which has a substantial practice in the entertainment industry.

The amendments are supported by the British Phonographic Industry. They are relevant to those who create and deal in copyright material. Although my briefing has come from the music industry, I am asked to say that the Publishers Association—that is the book publishers—wholeheartedly support the amendments concerned with copyright licensing.

Those who have briefed me fully understand and support the objectives of the Bill. However, they are concerned with the effect on their industry. They are concerned that the effect could be to stifle the industry with heavy-handed regulation, which I am well aware is quite the opposite of what the Minister is seeking to achieve. I have seen in the Official Report his use of the term "administrative overload" on a number of occasions.

I hardly need remind your Lordships of the success of the UK's music industry. Its creative success is being celebrated this evening at the Brit Awards by those who are probably in the middle of dinner and applauding the winners of those awards. Its creative success is translated into economic success and the music industry is a very substantial net earner of foreign exchange.

The economic and creative root of the music business is the right to control a copyright work. Some of the amendments in this group deal with the use of collecting societies. Those societies are a matter of convenience for more than one part of the sector. Collecting societies are helpful to individual creators and publishers. The administration, licensing and collection involved would be a mammoth task for individuals. The infrastructure which is provided by collecting societies is designed to support the very substantial number of medium and in particular small enterprises which flourish within the business.

I had not known, until I was briefed for this evening, that the great majority of the members of the Music Publishers' Association have businesses of less than £500,000. Collecting societies are convenient for users as well as for the licensees. They help them to find the source of a licence and give them certainty about the terms; for example, the BBC seeking licences for short clips of music for a programme. The ease of doing that means cost savings in the system and those savings are passed on to members.

Finally, blanket licensing creates a bargaining position. The merits of collective licensing were considered by the Monopolies and Mergers Commission which reported in 1988 on the operation of Phonographic Performance Limited and other collecting societies. The report of the MMC stated: the continued existence of the bodies … has been endorsed in many different environments because the convenience they offer to both the owner and the user of copyright is unlikely to he matched by any other means. Decisions of the European Court of Justice and the EC Commission make clear that the existence of collective licensing bodies is compatible with Article 86 of the Treaty of Rome, although the manner in which the bodies' functions are performed must comply with the Article's terms". Of course, that is understood.

Amendments Nos. 46 and 61 seek to disapply the Chapters I and II prohibitions where the Copyright Tribunal has jurisdiction. Under the Copyright, Designs and Patents Act, the Copyright Tribunal deals with disputes between copyright owners and those who wish to use copyright works and can make orders varying the terms of licence, settling certain royalties granting certain licences and so on.

The tribunal will continue and to that extent, this country is in a different position from that of our European partners. I understand that the tribunal is unique to the United Kingdom; or, to put the matter another way, those who are concerned with copyrights will, because of the continued operation of the Copyright Tribunal as well as the regime of this Act, will be subject to a double jeopardy. In such circumstances there is concern that the Bill, and in particular Clause 58, is insufficient to protect those who work in the industry. The Minister may say that the tribunal is not concerned with competition and that it is dealing with a parallel activity. However, because of the matters which can be referred to it, I would say that the effect is that it is concerned with competition.

Amendment No. 62 deals with recommendations by trade associations. I should say at once that I understand the dilemmas of referring to particular organisations within amendments. I would not seek to press the amendment, which deals in particular with the position of the Music Publishers' Association, although it is intended to be more extensive. That association has for years negotiated agreements with, among others, the Association of British Orchestras, which looks after professional musicians, the National Federation of Music Societies, which represents amateurs, and the BBC. It makes recommendations about the terms of agreements; but only recommendations. There is no obligation on members to accept those recommendations. However, in practice, for reasons of convenience to which I have alluded, most do take note of them.

Your Lordships will understand that, by its nature, music does not come in standard packages and it is helpful to have a body which works closely with representatives of users to find ways of making systems for hiring sheet music simpler and introducing certainty into the tariffs and pricing structure. The benefits to the amateur as well as the professional sector are also reflected in the benefits to the consumer—in this case the audience, the listener. Exempting recommendations by trade associations would, I believe, mean further streamlining administration and would, therefore, be in the public interest.

Amendment No. 70 refers to individual licensing. It seeks to bring individual licensing within the block exemptions. Perhaps I should say here that I hope the Minister can give us some words of assurance about block exemptions in this area. I well understand the Government's reluctance to attempt to write a UK-specific version of Article 85. I am not trying to challenge that approach tonight. Nevertheless, I hope that I shall receive some words of comfort this evening.

The creator of a work is the copyright owner and he has an absolute right to control the product of his creation. However, individuals find it very difficult to license and control their work, and especially to monitor its use. I am sure that a moment's thought will enable your Lordships to understand how hard it would be for an individual to ensure that he is paid for the use of a piece of music when it is not possible for him to listen, for example, to every radio station for 24 hours a day. Through my practice, I have had much experience of clients whose creativity goes hand in hand with a certain innocence about business matters.

Therefore, individuals and publishers will license collecting societies which manage copyright works. These are de facto monopolies, but they operate in the interests both of the owners and the users of the works. The amendment has been put forward because the industry is seeking certainty. For example, will all copyright agreements be notifiable? The cost and contractual uncertainty involved is another concern of the industry. The industry is also concerned because it understands that the European Commission at present processes to conclusion less than 60 arrangements a year and it has heard that the Office of Fair Trading does not anticipate being able to do better in that respect. There will be real resource problems if every contract needs notification. I suggest that the provisions would be a direct threat to the current cost structures. I believe that the exclusion regarding individual licensing of copyright works would be compatible with the Government's policy in respect of vertical agreements.

I appreciate that I have taken up a good deal of your Lordships' time, but this still feels like a rather swift canter through some of the areas of copyright which give rise to concern. I believe that this matter is viewed with concern by some in government. As I say, I hope that I may tempt the Minister to give some words of assurance tonight. I appreciate that he must have an appallingly crowded schedule given the number of areas covered by the Bill, but I hope that he can arrange a meeting with those in the music industry to discuss their concerns. I am sure that would be extremely welcome as they wish to get this matter resolved satisfactorily. I beg to move.

Lord Fraser of Carmyllie

My Lords, I do not wish to add anything of substance to what has already been said by the noble Baroness. However, her suggestion as regards a meeting is a constructive one. I am certainly aware of the concerns that have been expressed and which she has so articulately spelt out. If those concerns could be met, I have no doubt that would be of considerable interest to the industry.

Lord Simon of Highbury

My Lords, I wonder whether I detected in the opening remarks of the noble Baroness, Lady Hamwee, that she might rather have been at the Brits award having an enjoyable evening than singing this song tonight. I appreciate the clear way in which the points were expressed. I do not intend to answer all of them tonight, but I certainly take seriously the invitation to meet and discuss some of the finer detail. I shall make one or two points. First, I should make it clear that copyright agreements are already subject to Articles 85 and 86 of the treaty. We need to bear this carefully in mind. Agreements made void by Article 85 cannot be made valid by an exclusion from a domestic provision.

Copyright, like other forms of property, can be abused. The European Court has sought to strike a proper balance in this area. I see no reason to depart from the principles established, and Clause 58 of the Bill will ensure that UK law follows the same path. Accordingly there is no reason to believe that the Bill would interfere with such agreements unless they are found to be appreciably anti-competitive and cannot satisfy the exemption criteria in the Bill.

I can assure noble Lords that the wording of Article 85 has been given a wide interpretation by the European Court of Justice, as the study prepared by Professor Whish—to which I referred earlier—demonstrates. This wide interpretation will be imported into the domestic system by virtue of the governing principles clause in the Bill, Clause 58. I see no reason why justified copyright agreements, even if they were restrictive in some respects, could not satisfy the exemption criteria in Clause 9 as they stand.

The noble Baroness has argued that the existence of the Copyright Tribunal in the UK provides a reason for our not following the position at European level. Amendments Nos. 46 and 61 would have the effect of excluding those matters which are within the jurisdiction of the Copyright Tribunal from the scope of both the Chapter I and Chapter II prohibitions. The role of the Copyright Tribunal is, however, different from that of enforcing competition law. Its role is to resolve disputes between copyright owners acting collectively and those who wish to use copyright works. In doing so, it is not required to apply a competition test, and therefore it would be wrong to see the Copyright Tribunal as a competition scrutiny regime. Moreover, I understand that the tribunal adjudicates on aspects of an agreement or potential agreement as it affects the two parties to the agreement and not on any wider anti-competitive effects.

Amendment No. 62 achieves an effect which extends far beyond the sphere of music rights. It would exclude from the prohibition recommendations made by trade associations to their members so long as those reflect the terms of an agreement negotiated between the trade association and a third party; and it would apply across the economy. My view is that the effect of such an exclusion would be to open a loophole which would allow lawyers to frame anti-competitive agreements in a manner which would fall within the scope of the exclusion. This would significantly undermine the prohibitions.

I remain unconvinced that it would be desirable if the Bill were to afford any special treatment to the field of copyright or music rights, notwithstanding, as the noble Baroness says, the great importance of the industry in its competitive position for our UK performers and writers. It would certainly be wrong to exclude certain recommendations of trade associations as proposed by Amendment No. 62.

I refer to Amendment No. 70 and the question of exemption. Clause 9 of the Bill makes provisions to ensure that those agreements which have sufficient countervailing benefits will be eligible for an exemption. Amendment No. 70 would alter the exemption criteria in the Bill to add a specific reference to the facilitation of copyright works.

Criteria in the clause are already framed in a broad manner to allow for an exemption on the basis that an agreement improves production or distribution or that it promotes technical or economic progress. It is the fact that they do not mention any specific sector of the economy that is the strength of the criteria. Regardless of the sector, where agreements satisfy the criteria they will be able to benefit from an exemption.

Having given that rather brief response, I wish to underline again that I think there are technical matters within this wide-ranging issue of copyright relative to the Competition Bill that it would be wise for us to discuss. I hope that with that in mind at this stage the noble Baroness, Lady Hamwee, will be prepared to withdraw the amendment.

Baroness Hamwee

My Lords, these are issues which may be more conveniently dealt with at this stage of the Bill within the forum of a meeting. I shall not seek to respond to the Minister's answer save to say that the entertainment in your Lordships' House today has outshone anything that anyone could hope to be enjoying this evening at the Brit Awards. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 3 [General Exclusions]:

Lord Simon of Highbury moved Amendment No. 47: Page 47, line 14, at end insert ("Section 21(2) agreements 1 A.—(1) The Chapter I prohibition does not apply to an agreement in respect of which a direction under section 21(2) of the Restrictive Trade Practices Act 1976 is in force immediately before the coming into force of section 2 ("a section 21(2) agreement"). (2) If a material variation is made to a section 21(2) agreement, sub-paragraph (I) ceases to apply to the agreement on the coming into force of the variation. (3) Sub-paragraph (I) does not apply to a particular section 21(2) agreement if the Director gives a direction under this paragraph to that effect. (4) If the Director is considering whether to give a direction under this paragraph, he may by notice in writing require any party to the agreement in question to give him such information in connection with the agreement as he may require. (5) The Director may give a direction under this paragraph only as provided in sub-paragraph (6) or (7). (6) If before the end of such period as may be specified in rules under section 49 a person fails, without reasonable excuse, to comply with a requirement imposed under sub-paragraph (4), the Director may give a direction under this paragraph. (7) The Director may also give a direction under this paragraph if he considers

1. (a) that the agreement will, if not excluded, infringe the Chapter I prohibition: and
2. (b) that he is not likely to grant it an unconditional individual exemption.

(8) For the purposes of sub-paragraph (7) an individual exemption is unconditional if no conditions or obligations are imposed in respect of it under section 4(3)(a). (9) A direction under this paragraph

1. (a) must be in writing;
2. (b) may be made so as to have effect from a date specified in the direction (which may not he earlier than the date on which it is given).").

The noble Lord said: My Lords, this amendment is grouped with Amendment No. 217.

In Committee, my noble friend Lord Currie suggested that agreements which had received a direction under Section 21(2) of the RTPA should be given a permanent exclusion from the Chapter I prohibition, rather than the five-year transitional exclusion at present provided for in the Bill. I was grateful to my noble friend for raising the matter.

Many of the respondents to the August consultation document had emphasised the effort and cost that would be required to review such agreements, even after a five-year transitional period. This was the largest element of the non-recurring compliance costs in the compliance cost assessment on the Bill. I was therefore pleased to be able to say that we would bring forward an amendment at Report stage.

This amendment fulfils that commitment and provides an exclusion for agreements in respect of which at commencement a direction under Section 21(2) RTPA is in force. It includes the power for the director to claw back the exclusion in certain circumstances, as I said in Committee it would. It includes a power for the director to require parties to an agreement to provide information, of the kind that this House considered earlier in relation to the mergers exclusion. And it provides that an agreement should continue to enjoy the benefit of this exclusion as long as there has been no material variation to it.

As a consequence of the exclusion Amendment No. 217 removes the existing provision for a five-year transitional period. I beg to move.

On Question, amendment agreed to.

Lord Simon of Highbury moved Amendment No. 48: Page 47, line 14, at end insert? ("EEA Regulated Markets 1B.—(1) The Chapter I prohibition does not apply to an agreement for the constitution of an EEA regulated market to the extent to which the agreement relates to any of the rules made, or guidance issued, by that market. (2) The Chapter I prohibition does not apply to a decision made by an EEA regulated market, to the extent to which the decision relates to any of the market's regulating provisions. (3) The Chapter I prohibition does not apply to

1. (a) any practices of an EEA regulated market; or
2. (b) any practices which are trading practices in relation to an EEA regulated market.

(4) The Chapter I prohibition does not apply to an agreement the parties to which are or include

1. (a) an EEA regulated market, or
2. (b) a person who is subject to the rules of that market,

to the extent to which the agreement consists of provisions the inclusion of which is required or contemplated by the regulating provisions of that market. (5) In this paragraph? EEA regulated market" is a market which

1. (a) is listed by an EEA State other than the United Kingdom pursuant to article 16 of Council Directive No. 93/22/EEC of 10th May 1993 on investment services in the securities field; and
2. (b) operates without any requirement that a person dealing on the market should have a physical presence in the EEA State from which any trading facilities are provided or on any trading floor that the market may have;

EEA State" means a State which is a contracting party to the EEA Agreement; regulating provisions", in relation to an EEA regulated market, means

1. (a) rules made, or guidance issued. by that market,
2. (b) practices of that market, or
3. (c) practices which, in relation to that market, are trading practices;

trading practices", in relation to an EEA regulated market, means practices of persons who are subject to the rules made by that market, and which

1. (a) relate to business in respect of which those persons are subject to the rules of that market,
2. (b) are required or contemplated by those rules or by guidance issued by that market, or
3. (c) are otherwise attributable to the conduct of that market as such.").

On Question, amendment agreed to.

9.45 p.m.

Lord Kingsland moved Amendment No. 49: Page 47, line 20, at end insert— ("(2) If the Secretary of State is satisfied that an undertaking provides services of the kind referred to in this paragraph he may, on the application of an officer of that undertaking, certify that in relation to that service a particular task is one to which this paragraph applies. (3) A certificate issued by the Secretary of State in accordance with sub-paragraph (2) that a particular task is one to which this paragraph applies shall be conclusive evidence of that fact.").

The noble Lord said: My Lords, in moving this amendment I should also like to speak to Amendments Nos. 50 and 51. All these amendments relate to paragraph 2 of Schedule 3 to the Bill dealing with "general exclusions". The paragraph reflects exactly the words of Article 90 of the Treaty of Rome, referring to the concept of "services of general economic interest."

Amendment No. 49 seeks to add the Secretary of State to the list of those who can grant exemption from the prohibitions under Schedule 3, paragraph 2. Under the Bill as drafted, the only two who can grant those exemptions from the prohibitions are either the Director General of Fair Trading or one or other of the relevant sectoral regulators. The amendment seeks to add to that list the Secretary of State so that the Secretary of State has power to certify that a service is one of general economic interest to which the exclusion applies and would make such a decision (or certificate) conclusive evidence in any subsequent proceedings. It simply widens the category of persons who can invoke the paragraph.

Amendments Nos. 50 and 51 ought to be read in the alternative. Amendment No. 50 simply refers to the Director General of Telecommunications. Amendment No. 51 widens that category to all regulators in all the relevant regulated areas. What both amendments seek to do, either specifically in relation to the Director General of Telecommunications or generally in relation to all regulators, is to say that, in determining whether or not a particular service is one of general economic interest, and therefore caught by paragraph 2 of Schedule 3, the Director General of Telecommunications or all the sectoral directors are entitled to have regard to obligations imposed on them under their respective Acts—in other words, the obligations contained in the remits under their respective Acts. I beg to move.

Lord Simon of Highbury

My Lords, the "services of general economic interest" exclusion has been drafted to follow the terms of Article 90 so that EU jurisprudence can apply in this area. Whether services fall within this exclusion should be determined by the director, tribunal or court according to EU jurisprudence under the governing principles of Clause 58 in the same way that they determine other matters according to the principles of Clause 58.

Amendment No. 49 would make the question as to whether services fall within the ambit of this exclusion determinable by the Secretary of State. In our view, whether services fall within the exclusion should not be determined by the Secretary of State. The Bill confers powers to make competition decisions on the director, tribunal and courts, and that is the appropriate place. In any event a determination of whether a task was one to which paragraph 2 of Schedule 3 applies would leave the question of how far the prohibitions necessarily obstruct performance of that task still to be decided.

It is worth noting that the Secretary of State does have a discretionary fall-back power of exclusion. the "public policy" exclusion power in paragraph 5 of Schedule 3.

But it is one thing to have a fall-back power to provide an exclusion in cases where there are exceptional and compelling reasons of public policy and quite another for the Secretary of State to get involved every time an undertaking wishes to claim that it should benefit from a general exclusion designed to attract the EU position. The Government would not wish the Secretary of State to have that role.

There may be licence requirements, for example, on common tariffs between urban and rural areas which might be considered to fall within the terms of this exclusion. But if they are strict requirements of the licence, they would in any event fall within the legal requirements exclusion.

The exclusion in paragraph 2 to Schedule 3 sets out a general principle to be interpreted when the need arises. If a company wishes to clarify that agreements or conduct do not infringe the prohibitions by virtue of paragraph 2, they can make a notification to the director for guidance or a decision.

As I have said, whether the exclusion applies is to be determined according to EU jurisprudence. I imagine that this House will turn to the question of regulators' statutory duties on the second day of the Report stage. But I see no reason why the position regarding duties should be different for decisions involving this exclusion, as Amendments Nos. 50 and 51 would provide. The test is whether undertakings are entrusted with services of general economic interest, not whether they should be so entrusted. In making decisions under the prohibitions, if the question arose, the director's and the regulators' role would be to determine whether (drawing on European jurisprudence) the undertaking was so entrusted. I therefore urge the noble Lord, Lord Kingsland, to withdraw his amendments at this stage.

Viscount Trenchard

My Lords, I wish to speak in support of Amendments Nos. 50 and 51.

A noble Lord

Order!

Lord Kingsland

My Lords, I am somewhat disappointed at the Minister's reply, although not entirely surprised. As he rightly said, these amendments anticipate a later debate on Schedule 10 and he will not be surprised to hear that in essence the points will re-emerge, the Minister might say under the guise of other amendments, but I shall say quite properly under other amendments. We can re-open the matter on the second day of Report. I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 50 and 51 not moved.]

Lord Ezra moved Amendment No. 52: Page 47, line 28, at end insert ("O In respect of conduct by a regulated utility, the fact that conduct is in compliance with its licence and the statute under which its licence was granted or treated as granted shall be evidence that it does not constitute a breach of the Chapter q prohibition.").

The noble Lord said: My Lords, with Amendment No. 52 are grouped Amendment No. 53 in the name of the noble Lord, Lord Kingsland and Amendment No. 54 which is in my name.

This an important amendment. It is the successor to an amendment tabled at Committee stage which would have ensured that there would be a rebuttable presumption that behaviour that complied with the licence did not infringe the provisions of the Act. The new amendment is an attempt to do that by a simpler and more explicit means.

As the Bill is drafted, the regulators will exercise prohibition powers for their own industry concurrent with the powers of the Office of Fair Trading. In each of the regulated industries there are already detailed rules set out in the licences that each company must abide by. These licences cover price controls, customer protection and how a company may respond to competition. In the case of gas, the licences had parliamentary scrutiny as recently as 1995.

Despite the comments made by the Minister in Committee, there is little mention of the licences in the Bill, so behaviour that complies with the licence could then be questioned by the regulator as anti-competitive. Alternatively a licence agreed by one regulator could then be challenged by another. The amendment tries to get round the problem by stipulating that behaviour which complies with the licence should count as evidence that the Act is not being infringed.

A strong theme throughout Second Reading and in Committee was the concern about the way in which utility regulators exercise their powers under the Bill. That was recognised in Committee when the Minister agreed to, reflect strongly on the question of whether rebuttal is an appropriate concept as to the way that the guidance process may be undertaken".—[Official Report, 13/11/97; col. 335.]

The amendment simply states that the behaviour of a utility that complies with an existing licence provision should be counted as evidence that an abuse of a dominant position has not occurred. It is a simpler and more explicit version of the rebuttable presumption amendment previously put forward.

Currently there is little mention in the Bill of how the new provision should interrelate with existing licence conditions. Amendment No. 52 would provide some degree of consistency between the licensees and the new legislation by saying that if behaviour was permitted by licence, that would be counted as evidence that the behaviour was not infringing the Act. After all, the licence conditions are important. They cover areas such as customer protection, price control and how a company responds to the introduction of competition. It is essential that the utilities should be able to operate within the licence conditions which reflect the individual nature of the markets in which they are active. They must not have the uncertainty of finding themselves in breach of a potentially conflicting set of rules. It would therefore be wrong for the regulators not to consider licences in exercising their new powers.

I should add that the licence conditions under which the utilities currently operate are designed in themselves to prevent abuse of market power; for example, condition 13 of the gas licence includes strict conditions to prevent anti-competitive behaviour by the dominant power. I beg to move.

Lord Simon of Highbury

My Lords, I am not sure how a court would interpret "compliance" in Amendment No. 52 as it stands and if it were to become part of the Bill.

Lord Kingsland

My Lords, I am sorry, I was slow in rising to promote Amendment No. 53 in my name, which is grouped with the amendment of the noble Lord, Lord Ezra. I can be brief. Amendment No. 53 in essence refers to the same issue.

The purpose of the amendment is to make it clear that action taken by holders of licences under the Electricity Act 1989, which they are required by their licences to take, would not infringe either the Chapter I or the Chapter II prohibitions. It is a specific example of the more general proposition so eloquently expressed by the noble Lord, Lord Ezra.

Lord Simon of Highbury

My Lords, where a licence permits something to be done or gives freedom to do something, can the behaviour be said to be in compliance with the licence? Indeed, can anything that is not inconsistent with the terms of the licence be said to be in compliance? That would clearly be unacceptable.

It is the Government's policy that the prohibition should apply in the regulated utility areas. That is to ensure that anti-competitive conduct can be dealt with. It was never the assumption that licence conditions could deal with all the competition concerns which can arise. That is why the regulated sectors are subject to the existing general competition law as well as to their own regimes of specific regulation. In these circumstances some interaction and overlap is inevitable.

I therefore understand the concerns about the interaction between licence conditions and the prohibitions that the noble Lord, Lord Ezra, raises, and indeed raised in slightly different terms in Committee, when I undertook to reflect carefully on whether rebuttal was an appropriate concept. The clear-cut case is where a company is specifically required to do something by a licence condition. It is clearly right that if a company is required to do something by law it should not be caught by the prohibitions for complying with that requirement. That is why we have provided, in paragraph 3 of Schedule 3, for an exclusion for compliance with legal requirements. In the utility sectors, such requirements imposed by licence conditions are imposed by or under the relevant enactment and hence are "legal requirements".

In this context, I should like to refer to Amendment No. 53 in the name of the noble Lord, Lord Kingsland. This amendment seeks to provide for a specific exclusion for agreements or conduct which are required under conditions in licences imposed by or under the Electricity Act 1989. However, as I have just indicated, the exclusion in paragraph 3 of Schedule 3 already applies to requirements imposed by such licence conditions. It is therefore not necessary to make further provision in this respect. This would not only be unnecessary duplication; it might cast doubt on whether requirements under other licensing regimes were excluded.

Returning to the amendment of the noble Lord, Lord Ezra, I agree it is tempting to think that there should also be some special provision for conduct that is in compliance with a licence regime. But we have to consider what the term "in compliance with" means in this context. It could be interpreted as ranging from something that was specifically approved, through areas where limits were set but companies are free to decide on their own conduct within those limits, to something that was simply not covered by a licence condition and therefore not forbidden. Within this range there is clearly scope for anti-competitive behaviour that is not in breach of an explicit licence condition. Where it occurs, I would want the prohibition to be applied as vigorously and as effectively as elsewhere in the economy.

The argument that conduct that is permitted by a licence condition should in some way be protected from challenge under the Chapter II prohibition comes most strongly into focus on price caps. I realise that a number of companies are concerned about a risk of challenge. But I do not believe that there is the realistic prospect of a successful challenge to the overall level of a price cap. The Director General of Gas Supply, for example, has told me, in the context of the processes and considerations involved in the setting of a price control, that she cannot envisage that there would be grounds for overall pricing at levels permitted by a price control to be challenged as a breach of the Chapter II prohibition. Nevertheless, if a company were still concerned about the risk of challenge, it would be open to it to make a notification to the regulator and obtain guidance.

While I do not believe that pricing up to the overall level of a cap would be open to challenge, pricing within the cap could still be an infringement of the Chapter II prohibition. I make no apology for returning to the example of predatory pricing which I quoted in Committee, and which we have discussed in another context today. It is perfectly possible for predatory pricing to take place, and yet for it to be said to be "in compliance" with a price control that sets a maximum level of prices. Indeed, where the price control is framed in terms of a basket of goods or services, it may be possible for predatory low prices on some products to co-exist with high prices on other products, with total revenue still within the cap. If such behaviour occurred, I would expect it to be tackled, and I would not wish the company concerned to be able to deflect action on the grounds that it was in compliance with a licence condition.

I therefore believe that the right course is to provide for the legal requirements exclusion, as we have done. Beyond that I believe that the normal burden of proof should apply in respect of decisions as to whether the prohibitions have been infringed. The onus will be on the director, regulator, or a complainant to establish that the conduct complained of constitutes an infringement of the prohibitions. It should be for those making the decision (the director, tribunal or court) to determine what evidence is relevant to the decision. The terms of a licence condition may well be relevant.

I do not believe it would be right to include a provision that would be uncertain in its interpretation, risking unnecessary appeals to resolve it, that would at best have no real effect, but which could at worst make it more difficult to tackle cases of real abuse. I therefore urge the noble Lord, Lord Ezra, to withdraw his amendment.

Lord Ezra

My Lords, I am grateful to the noble Lord for the detailed response given to this important amendment. Nonetheless, I am somewhat disturbed by it. If, as I pointed out, the licence conditions include strict conditions to prevent anti-competitive behaviour by the dominant supplier, then it seems to me that observance of the licence conditions should be regarded as predominant in cases where such conditions apply. The trouble is that that must create uncertainty in the enterprise.

The noble Lord referred to notifications. Even though strictly in compliance with the licence, having regard to the fact that anti-competitive behaviour cannot be indulged in, would they nonetheless have to think of notifying under the Competition Act? That leads to a confusing situation of an additional administrative burden which should be avoided. If there is any weakness in the Acts under which these utilities operate, then those Acts should be corrected. We and they should know where we stand. While I have no intention of pressing the amendment tonight at this late hour, I would like carefully to reflect on the situation and I may well come back to it at the next stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment Nos. 53 and 54 not moved.]

Lord Simon of Highbury moved Amendment No. 55: Page 48, line 7, at end insert? ("( ) An international arrangement relating to civil aviation and designated by an order made by the Secretary of State is to be treated as an international obligation for the purposes of this paragraph:).

The noble Lord said: My Lords, it may be helpful if I take this amendment separately. I shall take Amendments Nos. 56, 57 and 58 together and Amendments Nos. 59 and 60 together.

As I indicated in Committee we were continuing to review the extent of the exclusions set out in Schedule 3. Paragraph 4 of that schedule provides a power for the Secretary of State to exclude agreements from the scope of the prohibitions if she is satisfied that it would be appropriate to do so in order to avoid a conflict with an international obligation of the UK.

As currently drafted, the term "international obligation" only covers formal treaties. It has been pointed out to us that this could be unduly narrow in the aviation sector. Inter-governmental agreements permitting flights between the UK and other countries are often not made as treaties. For example, they may take the form of memoranda of understanding. In practice, however, such agreements are honoured as if they were treaties. We therefore believe it right to make this limited extension to the scope of the exclusion-making power to cover agreements in the aviation sector made pursuant to such inter-governmental arrangements which fall short of treaty status. I beg to move.

On Question, amendment agreed to.

Lord Simon of Highbury moved Amendment No. 56: Page 48, line 30, leave out from ("agreement") to end of line 31 and insert (-which relates to a coal or steel product to the extent to which the ECSC Treaty gives the Commission exclusive jurisdiction in the matter. ( ) Sub-paragraph (1) ceases to have effect on the date on which the ECSC Treaty expires ("the expiry date").").

The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 57 and 58. They are technical amendments to put the ECSC treaty into the right context as regards the treaty that governs the Competition Act. I beg to move.

On Question, amendment agreed to.

Lord Simon of Highbury moved Amendments Nos. 57 and 58: Page 48, line 32. leave out from ("apply") to end of line 33 and insert ("to conduct which relates to a coal or steel product to the extent to which the ECSC Treaty gives the Commission exclusive jurisdiction in the matter. ( ) Sub-paragraph (2) ceases to have effect on the expiry date."). Page 48, line 35, leave out from first ("the") to end of line and insert ("ECSC Treaty; and ECSC Treaty" means the Treaty establishing the European Coal and Steel Community.").

On Question, amendments agreed to.

Lord Simon of Highbury moved Amendment No. 59: Page 48, line 35, at end insert— ("Agricultural products 6A.—( I) The Chapter I prohibition does not apply to an agreement to the extent to which it relates to production of or trade in an agricultural product and—

1. (a) forms an integral part of a national market organisation;
2. (b) is necessary for the attainment of the objectives set out in Article 39 of the Treaty; or
3. (c) is an agreement of farmers or farmers' associations (or associations of such associations) belonging to a single member State which concerns?
   1. (i) the production or sale of agricultural products, or
   974
   2. (ii) the use of joint facilities for the storage, treatment or processing of agricultural products.
   and under which there is no obligation to charge identical prices.

(2) If the Commission determines that an agreement does not fulfil the conditions specified by the provision for agricultural products for exclusion from Article 85(1) of the Treaty, the exclusion provided by this paragraph ("the agriculture exclusion") is to be treated as ceasing to apply to the agreement on the date of the decision. (3) The agriculture exclusion does not apply to a particular agreement if the Director gives a direction under this paragraph to that effect. (4) If the Director is considering whether to give a direction under this paragraph, he may by notice in writing require any party to the agreement in question to give him such information in connection with the agreement as he may require. (5) The Director may give a direction under this paragraph only as provided in sub-paragraph (6) or (7). (6) If before the end of such period as may be specified in rules under section 49 a person fails, without reasonable excuse, to comply with a requirement imposed under sub-paragraph (4). the Director may give a direction under this paragraph. (7) The Director may also give a direction under this paragraph if he considers that an agreement (whether or not he considers that it infringes the Chapter I prohibition) is likely, or is intended, substantially and unjustifiably to prevent, restrict or distort competition in relation to an agricultural product. (8) A direction under this paragraph—

1. (a) must be in writing;
2. (b) may be made so as to have effect from a date specified in the direction (which may not be earlier than the date on which it is given).

(9) In this paragraph— agricultural product" means any product of a kind listed in Annex II to the Treaty; and provision for agricultural products" means Council Regulation (EEC) No. 26/62 of 4th April 1962 applying certain rules of competition to production of and trade in agricultural products.").

The noble Lord said: My Lords, in moving Amendment No, 59, I should like to speak also to Amendment No. 60. Both are technical government amendments. As I said during the first Committee day, a good case has been made for an amendment along the lines of EC Regulation 26/62. This provides for special treatment under Article 85 for certain types of agricultural agreements, including agricultural co-operatives. I am most grateful to the noble Lords, Lord Lucas and Lord Stanley, and to my noble friend Lord Graham of Edmonton for raising the question of the treatment of agricultural agreements.

We are now proposing an exclusion from the Chapter I prohibition of anti-competitive agreements along the lines of EC Regulation 26/62 which covers certain agricultural agreements, including agricultural co-operatives. The exclusion is designed to ensure that agreements in the agricultural sector will be treated under the Bill in a similar way to how they are treated under EC competition law. This furthers our overall objective of seeking, so far as possible, consistency in the treatment of agreements under the EC and UK prohibition systems. Extending the exclusion beyond the scope of agreements covered by EC Regulation 26/62 would not be consistent with these objectives.

As is the case with the exclusions for mergers and agreements cleared under Section 21(2) of the Restrictive Trade Practices Act, the director general will have the ability to clawback individual agreements to be considered under the prohibition. However, such a clawback can be exercised only if the director general considers that the agreement is likely or is intended substantially and unjustifiably to prevent restrict or distort competition in relation to an agricultural product. This is a high threshold, but one which will enable the director general to take action against agreements causing serious harm.

The exclusion also provides a power for the director general to request information from the parties to an agreement which benefits from the exclusion. This is the same information-gathering power as applies to the exclusions for mergers and agreements which have been cleared under Section 21(2) of the Restrictive Trade Practices Act. We have discussed today in relation to those exclusions the reasons why the director general must have this information gathering power as part and parcel of the provision of such automatic exclusions. I beg to move.

Lord Stanley of Alderley

My Lords, I thank the Minister for tabling the amendment and explaining it so fully. I hope that the noble Lord will not accuse me of looking a gift horse in the mouth if I raise certain problems—at least the chief of which are fairly short.

I am not sure that I fully understand why the director general is being given all these powers which are not necessary in other types of business. Due to the speed with which the noble Lord produced the amendment—I very much welcome that—the agricultural co-operative movement has not really had the time to digest its possible effects—I stress that they are "possible" effects—and in particular how the courts might interpret it. What I do know is that if the noble Lord had not tabled an amendment, the co-operative movement would have been wiped out. That is why I thank him very much.

If events should prove the amendment to be seriously flawed—my lawyers always say that everything could be flawed—so making the future of agricultural co-operatives uncertain, I wonder whether the noble Lord would be prepared to take further steps to correct the matter. I am asking quite a nasty question here. I am most grateful to the noble Lord for tabling the amendment, but I wonder whether he is prepared to let his officials and those of the agricultural co-operative movement meet to discuss their particular problems. I think that they are in as big a muddle as I am.

To save time, perhaps I may break the rules of the House for a moment by thanking the noble Lord for the action that he has taken on my Committee-stage amendment to Schedule 12 on potatoes. As the government consultation period does not expire until 16th March—I am grateful to the noble Lord's officials with regard to this—I shall not move my repeat amendment at this stage of the Bill. I thank the noble Lord for his help on that also.

10.15 p.m.

Lord Simon of Highbury

My Lords, I appreciate the difficulty of the noble Lord, Lord Stanley of Alderley, in trying to get to the bottom of some of the technical points in the Bill. We find ourselves in very much the same position. Without making any commitment to extend the nature of the amendments that we have drafted, we are prepared to meet the NFU, the Federation of Agricultural Co-operatives and other interested parties to take the technical debate to a stage of greater clarity.

On Question, amendment agreed to.

[Amendments Nos. 60 to 62 not moved.] Schedule 4 [Professional Rules]:

Lord Teviot had given notice of his intention to move Amendment No. 63: Page 50, line 9, after ("(2),") insert ("and having consulted industry trade bodies,").

The noble Lord said: My Lords, due to a misunderstanding and following advice I do not wish to proceed with the amendment. My main amendment is Amendment No. 136 in Clause 39. I leave others, in particular my noble friend Lord Selkirk of Douglas and the noble Lord, Lord Howie of Troon, to move their amendments.

[Amendment No. 63 not moved.]

Lord Selkirk of Douglas moved Amendment No. 64: Page 50, line 25, leave out ("or solicitors") and insert (", solicitors and Notaries public").

The noble Lord said: My Lords, the amendment clarifies the terms of Schedule 4, Part II, paragraph 1, which details the legal professions whose professional rules are excluded agreements under Clause 3 of the Bill. The Bill strengthens competition law by bringing United Kingdom law more closely into line with the provisions of the Treaty of Rome. It recognises, however, that certain professional rules should be excluded from general competition law because of the value placed on self-regulation by the professions. That exclusion is achieved by Clause 3 and Schedule 4.

The Law Society of Scotland has concerns that the definition of the legal professional services in Schedule 4, Part II, paragraph 2, does not include the profession of notary public. Notaries public are clearly members of the legal profession. In Scotland notaries are governed by the Solicitors (Scotland) Act 1980 which provides for specific admission and removal procedures. A person can be admitted as a notary in Scotland only if he or she is qualified to be admitted as a solicitor. Most applicants for notaries public are admitted as solicitors at the same time. That dual nature renders it logical for notaries to be included in the terms of Schedule 4 to avoid the possibility that solicitor notaries are subject to two competition regimes, one as solicitor and the other as notary.

Notaries in Scotland are subject to the professional rules and regulations of the Law Society of Scotland, and that society is actively engaged in developing the specific regulation of notaries. For example, in February 1997 for the first time the Law Society of Scotland published guidance on the activities of notaries. The society is of the view that the definition of "rules" in paragraph 1(2) of Schedule 4 covers that guidance. Common law regulation of notaries applies as well as regulation via solicitors' practice rules. The Scottish Solicitors Disciplinary Tribunal has upheld findings of professional misconduct against solicitors acting only in a notarial capacity.

Scottish notaries are also involved in the cyber notary project relating to electronic data interchange and the role of the trusted third party. The society is closely involved in the creation of a cyber notary association in the United Kingdom which would lead to further development of notarial protection with a requirement for notary specific rules to deal with that new environment. Accordingly, it is likely that within a very short period of time, professional rules and regulations relating specifically to notaries will need to be developed, rather than the current reliance on existing guidance on the common law, or on solicitors' regulations.

The Law Society would like, and would be grateful for, a guarantee from the Minister that all notaries public in the UK will be covered by the new law. The situation which applies to notaries public in England and Wales is somewhat different. In that jurisdiction, notaries are subject to the Court of Faculties under the Ecclesiastical Licences Act 1533. The most recent legislation relating to notaries in England and Wales is contained in the Courts and Legal Services Act 1990. They are also subject to rules enacted by the Master of the Court of Faculties.

In Scotland, on the other hand, notaries were nationalised as long ago as the reign of Mary Queen of Scots. Only in 1990 was the royal prerogative in relation to notaries given up. I move the amendment as I believe it is necessary for the avoidance of doubt and to ensure consistency of approach to the regulation of the legal profession. It has the support of the Society of Public Notaries of London, the Notaries Society of England and Wales, the College of Notaries in Northern Ireland and the Law Society of Scotland. It also has the support of the UK Notarial Forum which met last Friday in Dublin. I beg to move.

Lord Haskel

My Lords, as I explained a little while ago in speaking to the amendment of my noble friend Lord Bruce of Donington, who is not in his place, the Government consider that it is right to confine the list in Schedule 4 to those professional services which are exempted from the Restrictive Trade Practices Act by Schedule 1 to that Act. Your Lordships will not therefore be surprised to learn that the Government do not agree that notaries public should be added to the list in Schedule 4 to the Bill.

In the case of notaries, there are however two additional reasons why it would be inappropriate to add them to the list. First, there is a very substantial overlap between the profession of solicitors and that of notaries. As noble Lords will observe, solicitors are already included in the list, and it therefore seems to us to be somewhat supernumerary to add notaries. I recognise that that is an argument that can be deployed in support of either side. However, my second point reinforces the case for saying that not only would the addition of notaries to the list be redundant; it would also be inappropriate.

The Chapter I prohibition bites on agreements between undertakings, decisions between associations of undertakings and concerted practices. It is not concerned with requirements imposed under statute, which is the basis of the regulation of notaries. Clearly, there is no need to exclude something which does not apply in the first place. That is not necessarily the case for all of the rules of the professions currently listed in Schedule 4 to the Bill. In the light of those points, I hope that the noble Lord will feel able to withdraw his amendment.

The noble Lord commented about the position in Scotland. I am not sure whether it is appropriate to discuss that at this stage. We shall be debating later the effect of the Bill in Scotland. It may well be that Scottish notaries could be debated then.

Lord Selkirk of Douglas

My Lords, I thank the Minister for his reply. I had anticipated that he would advance that line of argument. This Bill does not follow precisely the terms of Schedule 1 to the Restrictive Trade Practices Act 1976. For example, Schedule 1 to the 1976 Act provides that legal services are restricted to the services of banisters, advocates, or solicitors in their capacity as such. The phrase "in their capacity as such" is omitted from the Competition Bill and as a result may produce a different outcome. Perhaps the Competition Bill envisages that the professional services of banisters and solicitors should not be restricted to those individuals acting in their capacity as such. For example, it might include insolvency practitioners or independent financial advisers. Surely, that is not a correct interpretation.

I should be grateful if the Minister would reconsider the matter before Third Reading. The omission of the notaries from the Restrictive Trade Practices Act 1976 may have been an oversight. I shall reflect on the Minister's reply and if necessary return to the matter on Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Knight of Collingtree moved Manuscript Amendment No. 64A: Page 50, leave out line 33 and insert— ("4. The services of ophthalmic medical practitioners, ophthalmic opticians (optometrists) and dispensing opticians other than (in each case) the sale or supply of optical appliances.").

The noble Baroness said: My Lords, Schedule 4 as currently drafted will not do what the Bill intends. It is clear that the intention is to exclude the services of various professions from the provisions of the Bill. But if we leave the wording as it is in respect of ophthalmic services the law will affect a range of things which the authors of the Bill surely did not intend to affect.

In recent years, there have been enormous advances in the care and treatment of eyes. The clinical activities of optometrists go far wider than just sight testing. For instance, the fitting of contact lenses demands high levels of expertise. Currently, the law provides that only professionally qualified people can do that, but it is not the testing of sight and it will therefore not be covered by the Bill.

What about shared care, to use the current jargon? That system brings together GPs, ophthalmologists, other doctors and optometrists to monitor such things as the clinical progress of a patient suffering from glaucoma or perhaps diabetic retinopathy. That is an important service, but it is not the testing of eyes and it will not be covered by the Bill.

The Government appear to believe that the current wording linking the words "ophthalmic" and "the testing of sight" are sufficient to protect the activities of optometrists. However, the profession does not agree and I believe that in respect of such matters we should listen to the profession. It states that, as Schedule 4 stands, some of the professional and clinical activities of optometrists and dispensing opticians will be included and some excluded. If in future a court is asked to interpret the Competition Act it is likely to declare that Parliament decided to exclude some activities and to include others.

However, why should the optometrist's clinical monitoring of a patient suffering from glaucoma be subject to the rules on competition? That is not a commercial activity; it is essentially a clinical and professional activity. The Government propose to exclude professional activities from the scope of the Bill, so why will they not exclude the monitoring of glaucoma?

I do not seek more than the profession seeks—to exclude from the Bill commercial activities such as selling frames, glasses or contact lenses—but I want to ensure that all aspects of professional eye care are properly covered. That is not the case at the moment.

Will the Minister look at the matter again? I am sure that he shares my wish to have a clear law and a fair law and one which will not lead to a number of court cases. I beg to move.

10.30 p.m.

Lord Howie of Troon

My Lords, this amendment has been grouped with Amendment No. 65, as far as I understand it, unless the grouping has been changed, and I do not think it has, although that amendment has nothing to do with optometry.

I listened with great interest to what the noble Baroness, Lady Knight, said. She may remember me from a previous incarnation long ago in the House of Commons. We sit diagonally across the House from each other and I can scarcely see her from here. I am sure that if people hear that plea from the faint sighted, they may pay some attention to her amendment.

I turn to Amendment No. 65. I do not wish to add anything to the list which has been put in the Bill. It is always dangerous to add to lists because, as the noble and learned Lord, Lord Hailsham, used to tell us over and over again, the longer the list, the longer the list of people left off it. Therefore, a list was dangerous.

However, I am more interested not in leaving something off the list or adding to it but dealing with the definitions with which the list is concerned. I am weary of raising the subject of engineering in this House, and no doubt noble Lords, such few as are here, are tired of hearing me doing it, apart from the noble Lord, Lord Ezra, who delights in it. But Whitehall can never get engineering right somehow. It has a hang-up or problem with it. As I understand it, there have been discussions between the Engineering Council and the Government but, as far as I can see, those discussions have not, as yet, been fruitful.

If one looks at paragraph 17 of Schedule 4 at the bottom of page 51, a list of a sort can be seen. Under the heading "Engineering", the Bill states: The services of persons practising or employed as consultants in the field of … (a) civil engineering".

That either leaves out or includes structural engineers. The structural engineers would not like to be left out; the civil engineers might be happy if they were. However, an accommodation should be arranged in that respect.

The Bill goes on to refer to mechanical, aeronautical and marine engineering and others. It then refers to, "mining, quarrying, soil analysis", and this is where I begin to become a little bit worried about Whitehall, or other forms of mineralogy or geology".

We engineers admire mineralogists and geologists and we often depend upon them. But however admirable and dependable they are, they are not engineers. A geologist is not an engineer; he is a geologist. He is a scientist of some kind. He is not an engineer. He may impinge on engineering and engineering may depend upon him, but an engineer he most emphatically is not.

I move on to agronomy. I am sure that is very good. The Bill then mentions forestry. I am rather unhappy that my noble friend Lord Taylor of Gryfe is not here because he is a great forester. However, my noble friend Lord Taylor, for all his goodness as a forester, is not an engineer. Foresters are not engineers. Let's pull ourselves together. The Bill then refers to "livestock rearing". I should have thought that livestock rearing had something to do with fanning. Farmers are sometimes engineers when they drain their fields but they are not engineers when they are rearing their livestock, I do not think, unless I am in some way misled.

The Bill then refers to ecology. Ecology has to do with a variety of things—mushrooms and newts. Ken Livingstone would be an engineer under this definition, I imagine. There must be some mistake here.

I move on to metallurgy, which is near enough. My old friend, but not noble friend in the sense that it is used in this House, the noble Lord, Lord Kirkwood, is a metallurgist, and he is a chartered engineer because we permit metallurgists to describe themselves as chartered engineers.

I move on to the reference to chemistry. The most notable chemist I know from recent years is the noble Baroness, Lady Thatcher. However, with all her virtues, she is not an engineer; she is a chemist. My younger brother is also a chemist, but he would be affronted to be described as an engineer. We know that there are chemical engineers, but chemists are not engineers. Indeed, the word "chemist" is used in Scotland to describe pharmacists who are most emphatically not engineers. However, that is another matter.

The next item is biochemistry, to which the same applies, followed by physics. Some practitioners in physics are engineers, that is most usually so if they happen to be electrical engineers. However, most practitioners of physics are not electrical engineers. Therefore, to include physics under the general heading of "Engineering" is—I hesitate to use the word "ignorant"—preposterous. In a way, the whole paragraph is gathered together both roughly and readily under sub-paragraph (f) which refers to, any other form of engineering or technology analogous to those mentioned in sub-paragraphs (a) to (e)",

which I suppose is meant to include the people I have mentioned as having been left out; namely, chemical engineers, petroleum engineers, naval architects, and so on. Indeed, this set of definitions is a rag-bag and is almost entirely useless.

I have been asked by the Engineering Council to refer to the clause and propose a rather simple amendment to it. In doing so, I shall look further up page 51 of the Bill and to paragraph 10 which refers to, "The services of architects". I believe that we all understand what an architect is—or do we? We know that an architect is a man who designs buildings, houses and things of that nature and makes them rather lovely, and so on. However, in professional terms, an architect is someone who is registered under what used to be called ARCUK. I know that that name has recently been changed but, unfortunately, I cannot quite remember the new name. Perhaps my noble friends on the Front Bench will be able to tell me. However, the service of an architect must refer to one who is registered, otherwise it does not mean an architect at all because the title of "architect" is protected.

I propose now to move on to rather shaky ground; indeed, rather thin ice. I say that because the title "engineer" is not, unfortunately, protected in the same way as that of an architect. My amendment suggests that we leave out that farrago—that misleading collection of titles—and quite simply insert the words, chartered or incorporated engineers and engineering technicians".

It is quite possible that all those words should carry capital letters, but I suppose that that would be too presumptuous. What we need is a simple definition of "engineer" here which is understood in the profession rather than this "Whitehallese" which is quite un-understandable.

Lord Ezra

My Lords, the point just raised so effectively by the noble Lord, Lord Howie, merits some consideration. I feel quite simply that if the heading "Engineering" could be headed "engineering and technology", as is stated in paragraph 17(f) of Schedule 4, his problem would be solved.

The Earl of Buckinghamshire

My Lords, before the Minister replies to the amendment, I shall speak to Amendment No. 66 which is grouped with the series of amendments that we are discussing. I should declare an interest as a partner in Watson, Wyatt Partners who are a firm of consulting actuaries and employ benefit consultants. I have been in discussion with the Faculty and the Institute of Actuaries about this amendment. Watson, Wyatt Partners and I are regulated by the Institute of Actuaries.

I am concerned that the Competition Bill currently before your Lordships' House does not specifically exempt the actuarial profession from the revisions of Chapter I of the Bill, which as we know are designed to prohibit commercial agreements preventing, restricting or distorting competition. As it is currently drafted, the Bill could open up the professional rules of the actuarial profession to challenge as anti-competitive practices. This is clearly not the intention of the Bill, which in Schedule 4 lists a wide range of professions which will be exempt from Chapter I, including, among others, solicitors, accountants, architects and insolvency practitioners.

The UK's 10,000 or so actuaries are represented by the Faculty of Actuaries in Scotland and the Institute of Actuaries in England and Wales. Like other professional bodies the faculty and the institute are governed by charter which can be altered only by sanction of the Privy Council. The faculty and the institute set their own standards and professional qualifications for the actuarial profession and in order to protect the interests of the consumer.

Before I conclude my remarks, I apologise to the Minister and to your Lordships for not checking the generic title under which Amendment No. 66 has been tabled. It has been tabled under the generic term "Insurance". As I am sure your Lordships are aware, the work of actuaries is not confined solely to insurance. If the Minister accepts this amendment, as I am sure he will, it may be better for the generic term "actuarial" to be used. That would be in line with the other generic terms in Schedule 4. I believe that the omission of actuaries from Schedule 4 of the Bill is an oversight that can be rectified by this simple amendment.

Lord Haskel

My Lords, the discussion we have just had proves how wise the Government are to confine the list in Schedule 4 to those professional services which are excluded from the Restrictive Trade Practices Act by Schedule 1 of that Act. It will be apparent from what I am going to say that the Government do not agree that the exclusion should be widened any further.

The purpose of Schedule 4 of the Bill is not to confer a mark of respectability upon particular professions. The purpose is to carry forward into the Bill an exclusion for the professional rules of those professions which are presently excluded from the Restrictive Trade Practices Act. Those professions are listed in italics under Schedule 4. The suggestion of the noble Lord, Lord Ezra, is helpful because the headings in italics such as "Engineering" carry no weight in the Bill. It is the listed activities which are not in italics which are important. Certainly the Government would consider whether these headings should be changed. Perhaps that will help to deal with the point raised by the noble Lord, Lord Howie.

10.45 p.m.

Lord Howie of Troon

My Lords, it will not do so in any way. Changing "engineering" to "technology" will make no difference to what I said. I am sorry to disappoint my noble friend.

Lord Haskel

My Lords, I turn to the question of actuaries. I do not wish to disparage the profession of actuary, but the fact is that it is not one of those services which is excluded from the Act. If there were a need for actuaries to be reconciled with competition law, they would already have to ensure that they complied. In the light of that point, I hope that the noble Earl will not move Amendment No. 66.

Amendments Nos. 64A and 65 take us into different territory. Instead of adding an exclusion they amend existing exclusions. I do not wish to underestimate the worth of the Engineering Council or the engineering profession. In the noble Lord, Lord Howie, it has a doughty champion. The effect of the amendments would be to narrow the scope of the services whose professional rules may be designated under the Bill.

As I understand it, the purpose of Amendment No. 64A is to make the words in the schedule conform more closely to how optometrists view their profession. However, the present provision referring to the testing of sight is not only longstanding—it is drawn from the Restrictive Trade Practices Act—but it is also drawn from Section 36 of the Opticians Act 1989 which is identical to Section 30 of the Opticians Act 1958. It is true that the provisions need to be seen in their different context and that, for example, the Bill and the RTP Act do not need to concern themselves with the criminal offence of the Opticians Act relating to the testing of sight for the purposes of prescribing glasses. But I do not see a case for changing the longstanding link between the Opticians Act and the provisions in the Bill.

As your Lordships know, the existing criteria are copied from Article 85(3) of the EC treaty. To change the criteria would defeat one of the main objectives of the Bill since it would mean that competition law and practice domestically, and at European level, would diverge.

Objectively justified standards of professional competence and good practice are designed to protect the consumer, and to be objectively justified they should not deny consumers a fair share of the benefits or impose restrictions which are not indispensable to that objective or substantially eliminate competition. I have no doubt that if professional rules are justified they are capable of satisfying these criteria. Of course it may also be that an objectively justified professional rule did not infringe the prohibition in the first place.

We have had a lengthy discussion on professional rules. The Government recognise that a case can be made for a wider exclusion as regards professional rules, and for a narrower exclusion of such rules. We have sought to take account of the different arguments and to bear in mind both the particular nature of professional rule making and the different historical treatment of particular professional rules.

I hope that all noble Lords who have spoken will recognise that other noble Lords have taken a contrary view. The Government believe that they have taken a balanced view on the matter.

Lord Howie of Troon

My Lords, before my noble friend sits down, is he replying to the right amendment? I was not aware that we were talking about professional rules. I do not think that I mentioned professional rules at any point during my brief intervention. Had I known that he would do so, it might have been longer. I will give my noble friend ample time to recover his memory. I was talking about the definition of "engineer", which had nothing whatever to do with rules or anything of the sort. It was entirely to do with the farrago of a definition which is in the Bill. I proposed to him a very simple, two-line amendment which covers the matter adequately. I wonder if he would turn his mind to that and perhaps just say, "Yes, what a good idea".

Lord Haskel

My Lords, I was speaking to Amendments Nos. 64A, 65 and 66. Other noble Lords raised the question of professional rules.

Lord Howie of Troon

My Lords, I wonder if my noble friend would actually reply—

Lord Carter

My Lords, this is Report stage. The noble Lord is allowed to ask some brief questions for elucidation.

Lord Howie of Troon

My Lords, I yield entirely to the Chief Whip.

Baroness Knight of Collingtree

My Lords, in the light of the Minister's remarks, although I am very disappointed, and certain that there will be a time ahead when he will regret the number of court cases that the matter will engender, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 65 to 68 not moved.]

Clause 9 [The criteria for individual and block exemptions]:

[Amendments Nos. 69 and 70 not moved.]

Clause 12 [Requests for Director to examine agreements]:

Lord Simon of Highbury moved Amendment No. 71: Page 7, line 33, at end insert? ("( ) The Secretary of State may by regulations make provision as to the application of sections 13 to 16 and Schedule 5, with such modifications (if any) as may be prescribed, in cases where the Director

1. (a) has given a direction withdrawing an exclusion; or
2. (b) is considering whether to give such a direction.").

On Question, amendment agreed to.

Clause 14 [Notification for a decision]:

Lord Haskel moved Amendment No. 72: Page 8, line 25, leave out ("if it is not otherwise exempt").

The noble Lord said: My Lords, in moving this amendment I shall also speak to Amendments Nos. 145, 221 and 222.

These are technical amendments designed to ensure that the term "infringe" is used consistently throughout the Bill. They are drafting amendments. I beg to move.

On Question. amendment agreed to.

Schedule 5 [Notification under Chapter 1: Procedure]:

Lord Haskel moved Amendment No. 73: Page 52, leave out lines 40 to 43.

The noble Lord said: My Lords, I shall also speak to Amendments Nos. 74 to 78, and Amendment No. 161. These amendments respond to amendments tabled in Committee by the noble Lord, Lord Lucas, the noble and learned Lord, Lord Fraser, and the noble Lord, Lord Kingsland, on which we gave a solemn and binding undertaking to reflect.

The noble and learned Lord, Lord Fraser, argued that the ability of the director to convert an application for guidance into a formal decision might discourage businesses from seeking guidance because of concerns about confidentiality.

It is our intention that the provisions on applying for guidance should provide a relatively informal procedure whereby businesses can obtain confidential guidance which, because third parties have not been consulted, cannot be as certain as applying for a decision that is made with the benefit of the views of third parties.

We accept the noble and learned Lord's point that the ability of the director to convert an application for guidance into an application for a decision might undermine confidence and procedure. These amendments put the noble Lords' proposals into practice. I beg to move.

Lord Fraser of Carmyllie

My Lords, I am extremely grateful to the Government for listening to what we had to say in Committee. We warmly applaud the introduction of these amendments.

On Question, amendment agreed to.

Lord Haskel moved Amendments Nos. 74 and 75: Page 53, leave out lines 7 to 29. Page 53, line 41, leave out from ("decision") to end of line 43.

On Question, amendments agreed to.

Schedule 6 [Notification under Chapter II: Procedure]:

Lord Haskel moved Amendments Nos. 76 to 78: Page 54, leave out lines 41 to 44. Page 55, leave out lines 4 to 22. Page 55, line 34, leave out from ("decision") to end of line 36.

On Question, amendments agreed to.

Clause 25 [Director's power to investigate]:

Lord Kingsland moved Amendment No. 79: Page 13, line 4, at beginning insert ("Subject to subsection (3),").

The noble Lord said: My Lords, these amendments are intended simply to ensure that there is no overlapping jurisdiction in relation to competition matters by excluding an express sub judice call from the face of the Bill. I beg to move.

Lord Simon of Highbury

My Lords, this amendment would prevent the director from conducting an investigation or exercising any other functions in respect of matter which is the subject of proceedings before any court.

I do not think this is a desirable restriction. The prohibitions are a matter of public law. If there is an agreement or conduct to which they apply then the director should be free to act nowithstanding the existence of civil proceedings as his concern is with the effect of the agreement or conduct on competition generally and not just between the parties. There will obviously be cases in which he will leave the matter to the civil proceedings to determine. However, equally there may be cases where he considers he should investigate because of the effects on those who are not party to the proceedings. It would be wrong for him to be prevented for so long as the proceedings may continue.

If a third party were to pursue a case that a particular agreement was void on the grounds that it infringed the prohibition, the parties to that agreement might wish the director to make a decision on whether or not to grant an exemption. The court cannot grant an exemption; the director can and should be able to do so in these circumstances. It would be wrong to prevent him from doing so.

In general terms, I would advise that we should require the freedom for the director to be able to operate at two levels. On that basis, I urge the noble Lord, Lord Kingsland, to reconsider the case for the amendment.

Lord Kingsland

My Lords, I thank the Minister for his reply. I shall reflect on what he said but may well wish to return to this issue at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Haskel moved Amendment No. 80: Page 13, line 4, leave out ("he has a reasonable suspicion") and insert ("there are reasonable grounds for suspecting").

The noble Lord said: My Lords, Clause 25 is the first clause in the important section of the Bill dealing with the director's powers of investigation. We discussed these clauses extensively during Committee. I shall bring forward later significant amendments to strengthen the various safeguards that were discussed in Committee.

But at this stage I must begin by reporting to the House that in one respect Clause 25 is defective and needs to be corrected. That is the purpose of Amendment No. 80. As a point of principle, we believe that it is essential for the director general to be able to delegate his functions to his officers.

This provision applies to the Competition Bill, because of the reference to "any other enactment". Accordingly, the many other functions of the director set out in the Bill can be delegated by him to a properly authorised member of staff. We consider that the same position should apply to the initiation of an investigation as applies to these other functions. The power to delegate should apply.

The fact that Clause 25(2) makes explicit provision for delegation casts doubt on the applicability of Schedule 1 of the Fair Trading Act in this area of the Bill. Specifically, the unintended effect of Clause 25(2) was that the director general would personally have to be satisfied each and every time information was sought under Clause 26 that the threshold of suspicion that the prohibitions had been infringed was crossed.

This is not practicable nor desirable, as the noble Lord, Lord Kingsland, realises. The Office of Fair Trading is anticipating in the region of 1,200 complaints per year. Many, indeed a large majority, may well be disposed of easily without the need for the use of any formal powers. But a substantial number, perhaps up to 300, may require at least initial investigation by the seeking of information under Clause 26. Accordingly, it is important that his ability to delegate to an officer, properly authorised in writing, should be put beyond doubt. Amendment No. 80 rephrases subsection (1). It is intended to put beyond doubt that the director does not require personally to "suspect". I beg to move.

11 p.m.

Lord Kingsland

My Lords, I am grateful to the noble Lord, Lord Haskel, for his response to Amendment No. 80. If I remember rightly, during Committee stage I was pressing for a "reasonable suspicion" to be replaced by "reasonable grounds for belief'. I have been met at least half-way. In light of the number of times that I have been met at least half-way on the previous amendments that I tabled, I regard that as an excellent result.

On Question, amendment agreed to.

Lord Haskel moved Amendment No. 81: Page 13, line 8, leave out subsection (2).

On Question, amendment agreed to.

[Amendment No. 82 not moved.]

Clause 26 [Powers when conducting investigations]:

Lord Fraser of Carmyllie moved Amendment No. 83: Page 13, line I I, leave out ("person") and insert ('officer or senior employee of an undertaking").

The noble and learned Lord said: My Lords, looking to the hour, I reflect on the time that we agreed for Report stage, particularly seeing the Chief Whip in his place for which I am grateful, and I feel sorely done by. Neither my noble friend Lord Kingsland nor myself have taken up anything like a quarter of today's proceedings and there have been some exchanges latterly which hardly enhance the reputation of your Lordships' House as a revising Chamber. I wonder whether we will achieve much more at this time of the night.

We still have some important small amendments. I can move them briefly now, but I anticipate and have to give warning that we may need more time for Report stage or shall certainly return to these at Third Reading. It has been thoroughly unsatisfactory, as the Minister will appreciate. We have sought to be as constructive and positive as we have been throughout the passage of the Bill.

I turn to Amendment No. 83, which is coupled with a significant number of other amendments on the same theme. To describe it in shorthand, it is the "tea lady" problem. We are concerned that if requests are made and people are going to be interviewed, it should not be just any person; it should be any officer or a senior employee of an undertaking.

This is not merely a matter of being difficult. What follows from a number of these requests is that ultimately there is a risk of criminal sanctions being imposed on people. Although this is a brief set of amendments, they contain some important points. If people do not comply it may be because they are too junior. We do not want to see them subjected to the risk of any criminal sanction following from a failure on their part.

I appreciate that the context of the Bill sets a high standard if there are to be prosecutions at a later stage; it is not just a question of someone shrugging their shoulders and saying, "I do not understand". But in our view it is unreasonable to include present or past junior employees and that is what lies behind this set of amendments. I beg to move.

Lord Ezra

My Lords, Amendment No. 89 is grouped with this series of amendments and I should like to speak to it briefly. Its aim is to introduce a safeguard which allows the company under investigation to comment on the role of ex-employees being questioned, and on the appropriateness of so doing without wishing in any way to dilute the powers of the investigators. Obviously specific difficulties may arise where the departure of the employee was not on amicable terms.

Viscount Trenchard

My Lords, I wish to speak to Amendment No. 101, which is grouped with these amendments. I believe that the powers granted by Clause 27 to enter premises without a warrant are unduly strong and that the Bill would be improved if it ensured that investigating officers check that the people they deal with in exercising their powers under subsection (4)(b)(ii) of the clause are those who are responsible for any relevant document and understand the meaning and purpose of such a document. As drafted the Bill refers to "any person on the premises". The safeguard which Amendment No. 101 introduces would ensure that the investigating officer, in seeking an explanation as to the meaning of any particular document, would be required to check that the person under interrogation is indeed an appropriate person. The amendment largely follows the wording proposed by the noble Lord, Lord Ezra, in Amendment No. 89, which deals with a similar point.

Lord Haskel

My Lords, Amendments Nos. 83, 95, 98 and 107 in the name of the noble and learned Lord, Lord Fraser, would limit the persons who can be required to produce documents or explanations or statements in this way to officers or senior employees of an undertaking under investigation. We debated similar amendments in Committee at some length and I see nothing here which would cause us to change our view. In particular, as the amendments seem specifically aimed at removing junior employees from the scope of these provisions, I would recall the words of my noble friend Lord Simon. He said in Committee: As regards junior employees…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 he exercisable when asking that category of employee or past employee for explanations".—[0fficia/ Report,17/11/97: col. 391.]

There is a further point about Clause 26. The "person" here may be a legal person; for example, a company that is asked to produce documents. Indeed, when an investigation is started using these powers the director will not know to whom to direct a request, and so I would expect him to require the company—a legal person—and not an individual to produce documents and perhaps also ask the company for explanations. In Clauses 27 and 28 the persons can only be individuals.

I would add no more other than the fact that we already have a defence in respect of failing to produce in Clause 41 and are bringing forward further amendments to that clause dealing with offences to ensure that persons who are genuinely unable to give such explanations will not be guilty of an offence.

Amendment No. 89 seems to be aimed at adding a form of safeguard when explanations of documents are being sought under Clause 26. The director would be required to consult the undertaking as to the role of the employee or officer in the matter under investigation and the appropriateness of requiring them to provide an explanation. The object appears to be to give the undertaking or person being investigated an element of involvement and influence in respect of the persons against whom the director is to exercise his powers.

I suggest that this would not be a proper procedure to achieve that end. The director is deliberately given powers under the Bill to enable him to obtain as wide a range of information as possible in an investigation. He should be able to exercise those powers by asking those whom he believes can produce the documents or give the explanations he requires without being subject to the limitations proposed or having his choices scrutinised by the undertaking concerned. Surely it is for him to judge whether the person from whom he seeks information is a suitable person able to produce the document or give an explanation. If in so doing information he obtains is irrelevant or unreliable and if he based a decision on such evidence that there had been an infringement of one of the prohibitions, the proper course of action would be for the undertaking concerned to appeal against it under Clause 45. I ask the noble and learned Lord to withdraw the amendment and to rely on the judgment of the director.

Lord Fraser of Carmyllie

My Lords, I am not much inclined to rely on the judgment of the director. However, the noble Lord might be encouraged to know that I am prepared to rely on the very useful comment that he slipped into the middle of what he said, namely that he may bring forward amendments to Clause 41 because that is what is at the centre of our concerns. It is not that the director should not be able to investigate but that junior people who do not really know what is going on may find themselves open to a set of criminal sanctions. That could be extremely serious for young men and women, junior in a company, who have no intention of being obstructive in any fashion but who do not understand what is going on. That is the clear interrelationship between the two provisions that we wish to explore and clarify.

It would be extremely helpful if we were advised at the earliest possible opportunity of what the noble Lord proposes to do in relation to Clause 41 because that would not only potentially affect our assessment or judgment on amendments to this clause, but also to Clauses 27 to 30. With that lure I shall withdraw the amendment. This may be an appropriate time for the noble Lord to reflect on what he is going to write to me about Clause 41. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Carter

My Lords, I beg to move that further consideration on Report be now adjourned.

Moved accordingly and, on Question, Motion agreed to.

House adjourned at eleven minutes past eleven o'clock.