Lords Sitting of 19 February 1998

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Blackburn.

Bullying in Schools
Lord Ashley of Stoke Lord Ashley of Stoke asked Her Majesty's Government:
What steps they are taking to tackle bullying in schools.
The Minister of State, Department for Education and Employment (Baroness Blackstone): My Lords, the Government attach a high priority to helping prevent and combat bullying. We are planning several initiatives, including an international conference to explore strategies successfully used in various countries to tackle bullying, and further guidance to schools building on my department's anti-bullying pack published in 1994. We will also be taking more active steps to spread information on good practice in combating the problem.
Lord Ashley of Stoke: My Lords, I welcome my noble friend's Answer. However, is she aware that the Government have not gone as far as they could have done before the international conference? Bullying is causing enormous damage to children; it even leads to suicides. Will my noble friend consider a proposal under which an annual report must be presented to the Minister by every school on its anti-bullying policy? Does she agree that there should be a requirement on every school to present to the Minister what has or has not been done? Will she further consider a league table so that everyone knows which are the good and bad schools in relation to bullying? If that is done, we shall have more information about the anti-bullying policies of schools and about those schools which are failing to do anything about the matter.
Baroness Blackstone: My Lords, I entirely agree with my noble friend when he says that bullying is totally unacceptable. It can certainly scar a child for life and do terrible damage. I am confident that the vast majority of schools have adopted an anti-bullying strategy and do take the matter very seriously. However, where schools are not doing as well as they should in this respect we must do something about it. My right honourable friend the Secretary of State recently lent his support to a number of anti-bullying campaigns. We expect school development policies to reflect proper anti-bullying strategies. To publish statistics in the form of a league table, to use my noble friend's term, would he difficult. Clearly, there are many definitions as to
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what constitutes bullying. It is therefore very hard to collect statistics. What is important is that we take action.
Baroness Gardner of Parkes: My Lords, I normally agree with proposals advanced by the noble Lord, Lord Ashley. I do not agree that there is any great value in publishing tables. The only tables we should see would be from schools where bullying is a known and acknowledged problem. Does the Minister agree that the greatest difficulty is discovering where bullying goes on? What can be done to improve discovery and to give children who are bullied the courage to come forward and say it is happening? Should we not give teachers the responsibility of accepting that this practice is going on and of listening carefully to what the bullied child is saying?
Baroness Blackstone: Yes, my Lords, I agree very much with the noble Baroness's comments. It would he difficult to produce either valid or reliable statistics. I can see all sorts of ways in which those schools that had identified bullying would then want to try to underestimate it. And there would be schools which had not discovered it. It is important that we get all schools, their governing bodies and staff to take the problem very seriously and work together with parents to try to root it out. Parents have a big role to play. When they are concerned that their child is being bullied, it is important for them to talk to the child about it and then take the matter up with the teaching staff of the school. In that way we shall make some progress.
Lord Hunt of Kings Heath: My Lords, does my noble friend agree that it often comes down to a question of leadership and that where head teachers recognise that there is a problem and are prepared to take decisive action it is possible to remove much bullying from schools? The problem arises when head teachers refuse to see the problem and do not listen to parents, thus allowing bullying to become a serious matter in those schools. Does the Minister accept that in the training and development of head teachers there is a need to give a particular focus to the issue of bullying?
Baroness Blackstone: My Lords, yes. As in all matters where schools are concerned, the leadership of head teachers is central. I accept what my noble friend says. The training of head teachers should include consideration of how to intervene to prevent bullying wherever it occurs. That kind of training should be available, I believe to every classroom teacher as well. It is, after all, the classroom teacher who is most likely to be able to observe bullying and pick it up. Of course, head teachers must do their best to make sure their staff take the matter seriously.
Lord Cledwyn of Penrhos: My Lords, is it not the case that bullying is at its least in church schools? Is there not a lesson there?
Baroness Blackstone: My Lords, I was not aware that there was less bullying in church schools than in

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county schools. If my noble friend can provide evidence of that, we shall look into it and see what we have to learn from church schools.
Baroness Carnegy of Lour: My Lords, following on from that point, does the Minister agree that the important factor is that the whole atmosphere of the school is right and that the hidden curriculum of the school should be one of good relationships, one person to another, and kindness to one another? If bullying can be seen as going against the atmosphere of the school, it is easier to stop it.
Baroness Blackstone: My Lords, yes, I agree entirely with the noble Baroness, Lady Carnegy of Lour. It is a whole-school policy that is required. It is the ethos of the school that is important, so that all children and young people understand that bullying is intolerable and completely unacceptable behaviour.
Lord Ashley of Stoke: My Lords, does my noble friend agree with the following two propositions? First, studies have shown definitions of bullying: there is no problem about that. Secondly, if we can name and shame schools with regard to school standards, we can name and shame them with regard to bullying, which is an equally serious problem.
Baroness Blackstone: My Lords, I do not entirely agree with my noble friend that definitions of bullying are very easy. Bullying can be psychological as well as physical. It can be difficult to identify until some time after it has begun. Certainly, if we were to discover that serious bullying was going on in particular schools with no effort being made to address the matter we should do something to identify the failure of those schools in that regard.

Jury Research
3.15 p.m.
Lord Borrie Lord Borrie asked Her Majesty's Government:
What proposals they have for the repeal of Section 8 of the Contempt of Court Act 1981 so as to permit independent and authoritative research into the working of juries in civil and criminal cases.
The Lord Chancellor (Lord Irvine of Lairg): My Lords, my noble friend knows as well as any of your Lordships the controversy that has surrounded this issue in the past. He addressed it in his own work, Law of Contempt, in 1973, which I studied in its first edition at the time and was pleased to see yesterday has now reached its third edition.
Section 8 provides that:
"it is a contempt of court to obtain, disclose or solicit any particulars of statements made, opinions expressed, arguments advanced or votes cast by members of a jury in the course of their deliberations".
That statutory provision was introduced in your Lordships' House by way of amendments. The Government have no plans to repeal Section 8. On
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the other hand, the Government would listen with care to any proposals for forms of jury research and to representations about the need for amendment to Section 8 to permit the research proposed.
Lord Borrie: My Lords, in thanking my noble and learned friend the Lord Chancellor for that response, perhaps I may ask him whether the present Government have considered the proposal of the Royal Commission on Criminal Justice of five years ago which said that such research was desirable because informed debate is better than argument based, as they put it, on surmise and anecdote? Further, bearing in mind the Government's own consultation paper of three days ago on serious fraud trials, in which several of the options put forward by the Government include the elimination or restriction of jury trials, would it not be better to have research into how juries reach their verdicts before the Government reach decisions on such important matters?
The Lord Chancellor: My Lords, we are well aware of what the 1993 Runciman Royal Commission on Criminal Justice had to say about Section 8 and we have noticed that the noble and learned Lord, Lord Bingham, the Lord Chief Justice, in his press interview on assuming office in 1996 indicated that he would favour some form of limited jury research. In that, he departed from the views of his two immediate predecessors. We believe that he would support no more than researchers, licensed, say, by the Lord Chancellor, interviewing jurors post-trials to ascertain their level of understanding of the issues in the case on terms that neither the case nor the jurors interviewed would be identified in the research. I see that my noble friend nods his head: I believe that that is the position with which he would associate himself.
I am asked about the consultation paper issued a few days ago on juries in serious fraud trials. That consultation paper recognised the limitations imposed by Section 8. On the other hand, it is perfectly possible that views could be expressed about jury trials in serious fraud cases that would be free-standing and not dependent upon jury research—for example, that the cases are too long and too much for juries, as for example in the Blue Arrow case, or that there is an unfairness to the prosecution in having to divide the total picture of criminality into separate parts so that the whole picture does not come in front of the jury, as perhaps exemplified by the Maxwell case. It would be possible therefore for the view to emerge that the general advantages of juries in serious criminal cases are outweighed by the disadvantages in that class of case, regardless of any research.
Lord Hooson: My Lords, does not the noble and learned Lord agree that it would be embarking upon a dangerous course to follow the suggestion of research into jury judgments? After all, one would be inquiring into their judgment. When a jury retires no notes are taken of its deliberations and it may be out for days. What transpires in its verdict is its general view of the whole case. Has not that been one of the great safeguards of justice within our country? The noble and

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learned Lord may agree that to embark on a judgment that is described as independent and authoritative would be extremely misleading. Very often, as I am sure the experience of many who practice at the Bar illustrates, jury verdicts—often against the whole tendency of the media—are correct in their eventual judgment.
The Lord Chancellor: My Lords, I believe that there is general public confidence in the jury system in serious criminal trials and that the only major contemporary question is whether serious fraud trials should be made an exception. I also feel strongly that jury service is a major civic duty involving the public in deciding questions of fact about guilt or innocence, and that gives the public great confidence in the administration of criminal justice. The Government are also conscious of the main arguments against jury research; namely, that jury service is burdensome enough for members of the public without jurors being interrogated about the ebb and flow of their deliberations in the jury room.
Lord Archer of Sandwell: My Lords, does my noble and learned friend agree that the system may be brought into disrepute not by what juries say and do, but by what lawyers and judges say and do? To address the problem of fraud trials by withdrawing cases from juries is rather like responding to malpractices in horse-racing by shooting the horse.
The Lord Chancellor: My Lords, I agree that the sins of others in the administration of justice are visible and that juries deliberate in private. That is why some say that jury research is required.

Gas Directive: Combined Heat and Power
3.22 p.m.
Lord Ezraasked Her Majesty's Government:
Whether the European Union gas directive, as redrafted, contains a discrimination against combined heat and power, and, if so, whether this is in contradiction with declared European Union policy in favour of combined heat and power.
The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): My Lords, the policy of the Energy Council is to support combined heat and power and we will promote it under our presidency as a means of contributing to renewable energy objectives. The proposed gas directive allows member states an option to establish a consumption threshold to determine the eligibility of combined heat and power producers to benefit from gas competition where it is necessary to safeguard the balance of their electricity market. It was not the council's intention to discriminate against combined heat and power or to contradict European Union policy in proposing this provision, but to permit member states a means to prevent distortion of their
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electricity markets where incentives or preferences are already provided to promote combined heat and power projects.
Lord Ezra: My Lords, I thank the noble Lord for that Answer. However, I should explain that for many years I have been a strong advocate of combined heat and power and at present am connected with a company that operates such schemes. In spite of what the Minister said, does he agree that it is a little unfortunate, coming so soon after the Kyoto Conference, that the EU should appear to be speaking with two voices about one of the most effective means of reducing energy consumption? In that connection, will he confirm that a draft directive is now being considered by the European Parliament? If the parliament was to come forward with revised wording for the directive which would lessen the adverse impact on combined heat and power, can the Minister say whether the Council of Ministers, over which the UK currently presides, would look favourably at such an amendment?
Lord Clinton-Davis: My Lords, I am well aware of the noble Lord's commitment to combined heat and power, a commitment which, as he knows, I have shared for a long time. The Government share that view also. Indeed, only yesterday the fuel efficient CHP generating plant at the British Sugar Plc factory at Bury St. Edmunds, Suffolk, was the first to be given government consent while the review of energy sources for power generation is under way. That is encouraging and shows the Government's commitment. I do not accept that the EU is speaking with two voices. It is a matter of interpreting what was said by the council. I am aware that the European Parliament is to deliberate on the matter. I do not want to enter into hypothetical questions in relation to what the eventual conclusion may be, but the presidency and the Commission will take serious account of anything that the European Parliament says.
Lord Hardy of Wath: My Lords, given the huge and increasing volume of coal-fired generation on other continents, would it not be sensible for Europe and preferably Britain to ensure that research and development into clean coal combustion in association with combined heat and power would be both nationally and internationally relevant?
Lord Clinton-Davis: My Lords, that is a matter for the presidency and the Commission. I have taken strong account and note of what my noble friend said.
Lord Razzall: My Lords, without wishing to provoke an intervention from the noble Lord, Lord Bruce of Donington, does the Minister agree that that was a somewhat shabby compromise by the Council of Ministers in order to protect the interests of Spain? Would it not have been better for it to have been dealt with by giving Spain a derogation? Can the Minister confirm that the policy of the United Kingdom Government is to use their influence in the European Parliament to ensure that the correct result is arrived at

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in order to give Spain the protection it needs without at the same time going against the principle of combined heat and power?
Lord Clinton-Davis: My Lords, I do not accept that it was a shabby compromise. In fact, the agreement that was reached sought to take account of the requirements of various countries. The role of the United Kingdom in the presidency is to advocate that specific arrangement and the role of the EU Parliament will be to investigate the whole process. It will not be of use for me to speculate as to what the outcome will be, save to say, as I indicated, that the presidency and the Commission will take serious note of the European Parliament's view. Of that I have no doubt at all.

London and Continental Railways
3.27 p.m.
Lord Berkeleyasked Her Majesty's Government:
What is their current contingent liability in respect of debts incurred by London and Continental Railways.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman): My Lords, London and Continental Railways raised some £430 million of debt to fund the development of the CTRL and Eurostar operations for the period up to the main fund-raising for construction. Under the funding agreements with the lending banks, that debt is to be repaid from Eurostar revenues in the event that the development agreement is terminated.
Lord Berkeley: My Lords, I am grateful to the Minister for that Answer. At the time the Channel Tunnel Rail Link Bill was passing through your Lordships' House, and the Government were awarding a contract—after competitive tender—to London and Continental Railways, the then Minister of State for Transport, John Watts, issued a memorandum on 8th March which stated that none of the total government finance of £1.8 million would be payable until three-quarters of the way through construction. It also stated that LCR would be responsible for the construction and commercial risks. There was nothing in the document about quantifying contingent liabilities. Can the Minister say whether she agrees that the House was seriously misled by the previous government in being led to believe that all early construction risks had been taken by the private sector?
Baroness Hayman: My Lords, the development agreement which this Government inherited means that if LCR fails before it raises the funding for the construction of CTRL, the debts accumulated while it was in charge—the majority of which arise from Eurostar losses—revert to the public sector and to the Government.
Lord Bruce of Donington: My Lords, did the Minister just say that the Government, in agreement
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with the private sources of finance and with London and Continental Railways, agreed to underwrite in effect any default in borrowing? If that is the case, surely it must be that Parliament was seriously misled. According to the Financial Times of 12th February, the contingent liability has materialised at around £420 million. That is not peanuts. Why was it that the government of the day did not reveal that contingent liability, which they must have taken into account?
Baroness Hayman: My Lords, I cannot answer for the previous government as to what they revealed about the development agreement. Paragraph 4(c) of the explanatory memorandum stated that it involved the ability of the government to enter into direct agreements with LCR's financiers. I have just explained the effect of that to the House. The money that was raised by LCR for the design and development of the CTRL and the accumulated losses in operating Eurostar, if they were not refinanced by raising funding for the main project and if the development agreement failed, revert to the public sector.
Lord Williams of Elvel: My Lords, does my noble friend agree that the capitalisation of LCR was seriously insufficient and that, in taking on this contract, it had no idea that the Eurostar revenues would be less than it had assumed? Have the shareholders of LCR written off all their liabilities or are they prepared to face up to the liabilities that may be consequential on the collapse of LCR?
Baroness Hayman: My Lords, as the House will be aware from the Statement of the Deputy Prime Minister in another place, we are in the middle of a 30-day period following LCR coming to the Government and explaining that it had indeed, as my noble friend pointed out, grossly overestimated the profit it would make from operating Eurostar services and that this had undermined the company's financing plans and asking the Government for an extra £1.2 billion to help bridge that gap. The Deputy Prime Minister made it clear that, although the Government were committed to contributing the £1.8 billion, a further £1.2 million was unacceptable. We are now in the 30-day period of seeing whether LCR can come up with another way of fulfilling its obligations under the development agreement.
Baroness Thomas of Walliswood: My Lords, I am sure the Government share our concern that the failure of LCR could lead either to the non-construction of the Channel Tunnel rail link or to only its partial construction. There is the further disbenefit that if it were not continued as far as St. Pancras, the whole development of that area of London would be under threat, including the contributions from the single regeneration fund and the private sector. Will the Government do everything they possibly can to ensure that the Channel Tunnel rail link is completed, even if that means doing it in sections? We must have at some

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point a clear indication that the Government are committed to the project and will find a way of carrying it Out.
Baroness Hayman: My Lords, I note the comments of the noble Baroness. As I said earlier, we are looking very carefully—I know that London and Continental Railways is also looking very carefully—to see whether there is a solution to what is a grave problem. She is right to point out that there are a number of inter-related issues—this is not simply about links between Kent and St. Pancras—surrounding the CTRL, particularly the redevelopment and regeneration projects at Stratford and around Ebbsfleet. These are serious issues. I should make it clear to her, in reply to her question about building only part of the CTRL, that the Act and the development agreement both provide for a railway between St. Pancras and the Channel Tunnel. That is what we are talking about, and the Government are looking to LCR to come up with a proposal.
Lord Bruce of Donington: My Lords, following my first supplementary question, has my noble friend noticed the definite and deafening silence of the Opposition on this matter?
Baroness Hayman: My Lords, perhaps the noble Lord, Lord Brabazon of Tara, would like to intervene.
Lord Brabazon of Tara: My Lords, I was about to rise to my feet. However, in deference to the noble Lord, Lord Bruce of Donington, I waited until he had finished his question. I was rising as he rose, but I naturally deferred to a senior Member of the House like the noble Lord. Being, as we are, in the middle of this 30-day period, can she give an assurance that at the end of the period she will make a Statement to the House on the outcome of the negotiations? I can understand that perhaps noble Lords behind her would not welcome such a Statement. Can the noble Baroness also confirm that, of the £1.8 billion of government money that was promised to this project, at least a half of that was to improve the Kent commuter lines'? Therefore, if any alternative plan were put forward which did not improve Kent commuter lines, presumably that figure of £1.8 billion would be up for negotiation if not cancelled altogether?
Baroness Hayman: My Lords, when the Deputy Prime Minister made his Statement in another place he undertook to make a further report to Parliament when he had had a chance to consider any proposals that were put to him by LCR during the 30-day period. As the noble Lord will be aware, your Lordships' House had risen at the time that Statement was made and therefore it was not repeated. But we would be anxious that the House have the opportunity to discuss any further proposals.
The noble Lord asked about the Kent commuter lines. It is correct that the project has implications not only for links between Europe and London and indeed other parts of Great Britain; but there are also important
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advantages in terms of commuting services and the regeneration issues.

London and Continental Railways

  Lord Chancellor (Tenure of Office) (Amendment) Bill [H.L.]
  3.36 p.m.
  Lord Alderdice: My Lords, I beg to introduce a Bill to make further provision about the law relating to the tenure of the office of Lord Chancellor by persons who are not members of the Church of England. I beg to move that this Bill be now read a first time.
  Moved, That the Bill be now read a first time.—(Lord Alderdice.)
  On Question, Bill read a first time, and to be printed.

  Electricity Generation Bill [H.L.]
  Lord Ezra: My Lords, I beg to introduce a Bill to extend the obligation to generate electricity from certain fuel sources. I beg to move that this Bill be now read a first time.
  Moved, That the Bill be now read a first time.—(Lord Ezra.)
  On Question, Bill read a first time, and to be printed.

  Data Protection Bill [H.L.]
  The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn): My Lords, I beg to move the Motion standing in my name on the Order Paper.
  Moved, That it be an instruction to the Grand Committee to whom the Data Protection Bill [H.L.] has been committed that they consider the Bill in the following order:

  Clauses 1 to 4,

  Schedules 1 to 4,

  Clauses 5 and 6,

  Schedule 5,

  Clauses 7 to 36,

  Schedule 7,

  Clauses 37 to 46,

  Schedule 6,

  Clauses 47 and 48,

  Schedule 8,

  Clauses 49 and 50,

  Schedule 9,

  Clauses 51 to 63,

  Schedules 10 and 11,

  Clause 64.—(Lord Williams of Mostyn.)

  On Question, Motion agreed to.

Bank of England Bill
Lord McIntosh of Haringey: My Lords, I beg to move the Motion standing in my name on the Order Paper.

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Moved, That it be an instruction to the Grand Committee to whom the Bank of England Bill has been committed that they consider the Bill in the following order:

Clause 1,

Schedule 1,

Clauses 2 to 6,

Schedule 2,

Clauses 7 to 13,

Schedule 3,

Clauses 14 to 22,

Schedule 4,

Clause 23,

Schedule 5,

Clauses 24 to 26,

Schedule 6,

Clauses 27 to 37,

Schedule 7,

Clauses 38 to 42,

Schedule 8,

Clause 43,

Schedule 9,

Clauses 44 to 46.—(Lord McIntosh of Haringey.)

On Question, Motion agreed to.

Bank of England Bill

  Teaching and Higher Education Bill [H.L.]
  Baroness Blackstone: My Lords, I beg to move the Motion standing in my name on the Order Paper.
  Moved, That the amendments for the Report stage be marshalled and considered in the following order:

  Clause 1,

  Schedule 1,

  Clauses 2 to 29,

  Schedules 2 and 3.—(Baroness Blackstone.)

  On Question, Motion agreed to.

  Local Government (Experimental Arrangements) Bill [H.L.]
  Read a third time: an amendment (privilege) made; Bill passed, and sent to the Commons.

Greater London Authority (Referendum) Bill
3.40 p.m.
Baroness Hayman: My Lords, I beg to move that the Commons reasons be now considered.
Moved, That the Commons reasons be now considered.—(Baroness Hayman.)
On Question, Motion agreed to.

COMMONS REASONS
[The page and line number refer to Bill (49) as first printed by the Lords.]

LORDS AMENDMENT
1 Clause 1, page 1, line 8, after ("prescribe,") insert ("hut not less that eight weeks after publication of a Bill providing for the establishment of a Greater London Authority and the election of a mayor for Greater London,")
The Commons disagreed to this amendment for the following reason—
1A Because it is not desirable to make the publication of a Bill providing for the establishment of a Greater London Authority a precondition of the holding of the referendum.
Baroness Hayman: My Lords, I beg to move that the House do not insist on their Amendment No. 1 to which the Commons have disagreed for the reason numbered 1A. This referendum is about giving the people of London a say in their future and giving them the ability to signal—or to withhold—their consent to proposals for new city-wide government for their capital.
Debate on this Bill has shown that, despite sometimes differing views about the proposals on offer, all sides of the House are united in wanting to ensure that as many Londoners as possible have the opportunity to cast their vote on referendum day. It is for that very reason that the Government have chosen to hold the referendum on 7th May, the same day as local elections. Combining the two will help increase voter turnout for both polls and avoid the possibility of voter fatigue setting in and reducing participation at a later poll.
Combining the polls will also save a not insignificant sum of public money although I accept that effective democratic participation must always weigh more heavily than cost in making a decision of this sort. As I explained in Committee, a requirement to publish a Bill before the referendum would in effect delay the poll by very many months. It could not be held by 7th May. We are working very hard to bring forward the White Paper publication date towards the end of March so that there is time for people to see the proposals in detail and to make up their minds on them. It would not be possible to turn the White Paper's proposals into a Bill in time for the joint poll. That means that we would lose the benefits of a combined poll.
Such a requirement could only be justified if the value of the additional information that would be available to the public as a result of publication of a Bill outweighed the negative impact of delaying the referendum. I do not believe this to be the case. As I have said to the House before we will publish a White Paper well in advance of the referendum. It will set out our proposals in clear and comprehensible terms. In addition, a summary version of the White Paper will be sent free to every London household. The Government's proposals will be fully explained to Londoners. Publication of what will be a complex and lengthy piece of proposed legislation would not add to that process.
This is not an argument about differing principles. We all agree that Londoners should be fully informed of the issues on which they will vote. The amendment is about how we go about ensuring that. There can be no doubt about the Government's commitment to ensuring that

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people are well informed of the issues to be put to them in the referendum. But to expect and to continue with the amendment that insists on the publication of a Bill before a referendum would wreck the whole timetable for that referendum. I suggest that the disadvantages far outweigh any minimal advantages of having a draft Bill rather than the clearly enunciated proposals set out in the White Paper. Therefore, I urge your Lordships' House not to insist on the amendment.
Moved, That the House do not insist on their Amendment No. 1 to which the Commons have disagreed for the reason numbered 1A.—(Baroness Hayman.)
Lord Bowness: My Lords, the Minister's response is disappointing even if predictable. It is unfortunate that in another place the Minister should have described the amendment as a wrecking amendment. Had they been so minded, the Government could have arranged their timetable and business to have allowed sufficient time to have published a Bill. In moving this amendment, we did not ask for there to be an Act. We were promised a White Paper on 23rd March. I am troubled. I hope that the Minister can make clear during the debate on this amendment whether that date has slipped since there was a reference this afternoon to a White Paper by the end of March.
But what is perhaps more to the point is this. Had many of the points made by my noble friend Lord Mackay of Ardbrecknish as regards referenda been heeded, some of these problems would not have arisen. There would have been a clear set of rules and principles about both the procedures and the stage at which proposals were put to the electorate.
I am also concerned that in another place the Minister seemed to he more worried about the nature of the vote in your Lordships' House than answering the real issues which were raised. The more I read the debate and listened to the response to the suggested amendment, the more I was forced to the conclusion that criticisms and suggestions that something should be reconsidered are met with blank refusal. One is led to believe that whoever made the criticism or suggestion, quite irrespective of the make-up of the body or the people making it, it would still have been rejected.
Rejection seems to have been based on what the Minister said in another place; namely,
"The Government have already given clear undertakings that the White Paper will set out in detail and in plain English all the key issues about structures, powers, the method of election and the operation of the Greater London authority that the people of London will need to know about to reach a judgment. Is that not a sensible way to proceed?".—[Official Report, Commons, 11/2/98; col. 434.]
No, it is not. I believe that it is a presumptuous way to proceed. How can any Government claim that all the detail of a White Paper's proposals will pass through the parliamentary process unscathed? Only a Government who start the process determined to listen to no argument at all can make that statement. How can a Government claiming to want to listen say in advance that their paper will contain everything that people need to know? What about what they want to know as regards
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these proposals? I believe that the Government's approach is unfortunate, but it is not my intention to press the point.
On Question, Motion agreed to.

LORDS AMENDMENT
2 Page 1, line II, leave out ("question") and insert ("questions")
The Commons disagreed to this amendment for the following reason—
2A Because the question asked in the referendum should be in the form set out in the Schedule to the Bill.
Baroness Hayman: My Lords, I beg to move that the House do not insist on their Amendment No. 2 to which the Commons have disagreed for the reason numbered 2A. In moving this Motion, I should also like to speak to Amendment No. 3. This is the issue which has been at the heart of the debate on this Bill at all stages in this House and in another place. We have gone from stage to stage into more and more minute detail and analysis of the varying options and the ramifications of the questions that it was suggested were put on the ballot paper.
In trying again to state the Government's position on the referendum question, I should like to step back a little from the detail and come once again to the principles. The flaws in the multiple question formulations proposed by parties opposite, and crystallised in the amendment before us today, have been addressed both here and in another place. I do not propose to dwell on them.
However, I should like to restate the Government's position on the two issues at stake here. The first is the nature of the referendum proposed. It was clear from the earlier remarks of the noble Lord, Lord Bowness, that in some ways—the noble Baroness, Lady Hamwee, said this in terms—many people would have preferred to see a post-legislative referendum; failing such a post-legislative referendum, they were seeking a referendum following publication of a Bill. However, this amendment takes us further away from certainty and more into turning the referendum into a consultation exercise as opposed to a test of consent. A pre-legislative test of consent was always what the Government were promising—an opportunity to put to the people of London not only the Government's well thought-out, detailed proposals but also their opinions on how the government of London should be structured. It is important to focus on the issue of consent—the consent to bringing forward legislation to implement the proposals set out in the White Paper.
As well as differences of opinion about whether the referendum should be post-legislative or a much wider, much softer and much more consultative process, there are differences of opinion between the parties about the best form of government for London. It is perfectly understandable and acceptable that such different views exist, but the Government's position has always been that, although such views may exist and although parties are perfectly free to propound them, it is not the Government's duty to put those different views to the people of London in a referendum, raising expectations

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that the Government would then act in ways which the Government firmly believe would not be in the interests of the people of London.
We were elected on a manifesto promise to establish a Greater London authority consisting of a mayor and an assembly, following a referendum—a referendum on those proposals. This Bill was introduced to provide for that additional expression of consent in accordance with a clear manifesto commitment—nothing more and nothing less.
Accusations of arrogance, of high-handedness, are without foundation. If we are guilty of anything, it is of wishing to put a crystal clear proposition to the people of London, and put it in a way that can deliver a clear mandate to the Government. We have been accused of not being willing to trust the people and of not being willing to risk rejection of our proposals. We are willing to risk the rejection of our proposals if that is what the people of London wish. If they consent to the implementation of our proposals, they will vote yes. If they are opposed to our plans, they are free to vote no. What we are not prepared to do is to raise their expectations or to waste public money on holding a referendum on unclear propositions which could not provide a clear mandate—and on propositions that we believe to be fatally flawed. I refer to separating the question on the elected mayor from that on the elected assembly.
It is interesting that the first amendment was posed on the basis of producing more clarity so that people could better understand what they would be voting for. The noble Lord, Lord Bowness, referred to the use of the phrase "a wrecking amendment". When introducing the Motion, I said that the Lords amendment would wreck the timetable of the Bill. I think that that is true. I also believe that that amendment, taken in conjunction with this amendment, does wreck the Bill because it would be impossible to produce a draft Bill to be published before the referendum covering the possible outcomes of what was essentially a consultative referendum which might result in very different answers with regard to the form of government that should be introduced.
We need to have clarity in the process. It is not a question of the Government saying to the people of London. "Take it or leave it". The Government are fulfilling their responsibility of offering real choice and the prospect of a real outcome following expression of that choice. Anything else opens up a Pandora's box of confusion: a referendum that would lack clarity and lead to a devalued, unclear and worthless mandate.
The proposals that we shall put to the people of London have not been dreamt up on a whim. They are the result of extensive consultation and careful consideration. In the week commencing 23rd March—that is the same formulation that I have used all the way through our debates in this House—the White Paper will be published. As I have expressed it before, that will put
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the flesh on the bones of the Government's proposals. However, the bones of the Government's proposals are not up for negotiation and I make no bones—
Noble Lords: Oh!
Baroness Hayman: My Lords, I should say, "I make no apology for that"! We have always said that we would consult on the question of the Greater London authority. We had to make it clear that that authority would comprise two separately elected elements: a mayor to provide the voice and the leadership and an elected assembly to provide the accountability. Together they form one proposition—and that is the proposition that we intend to put to the people of London in a simple yes/no referendum. The detail will be reflected in the White Paper.
In developing and implementing our proposals, we have sought to maximise consultation, democratic participation and inclusion. We have been reaching out to the people of London and they have had their opportunity to have their say on all the questions raised in the Green Paper. Having done that, it is right that the people of London should then be asked to consider that question, and to vote on it on 7th May. They will vote on a single question proposed by the Government. That is the only way to provide them with a clear voice. They will know what their vote will mean. I urge the House not to insist on this amendment.
Moved, That the House do not insist on their Amendment No. 2 to which the Commons have disagreed for the reason numbered 2A.—(Baroness Hayman.)
Baroness Hamwee: My Lords, the Minister commented on the relationship between these two amendments and the first amendment. However, as we have already disposed of the first amendment, I suggest that it is not necessary to address that point.
The first point to strike me when I read the Commons reason was how inadequate it is as a reason. It does not begin to reflect the Minister's argument, which was a perfectly respectable argument—I am sorry. I hope that that does not sound impertinent. For the Commons to say, "We disagree with the amendment because the question should be in the form in which we first proposed it", is not the highest reasoning of which either House of Parliament is capable.
I congratulate the Minister on presenting the Motion in a somewhat calmer fashion than appeared to prevail in the other place, according to my reading of the Commons Official Report. A sharp distinction can be drawn between presentation there and in this House. I suppose that it is not for Members of this House to comment on the standard of debate in another place, but it did not seem to me to set a gold standard.
There is a difference of view—some may put it more emphatically than others—as to what this exercise should comprise. The Minister has been clear throughout that the Government propose a package. She has said that it is not a consultative exercise in the sense in which we on these Benches would like to see it. She

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spoke of it being a test of consent. My continuing difficulty is: consent to what? There is to be flesh on the bones but the White Paper will represent this project in its infancy. The completed legislation will be the fully formed adult with both skeleton and no doubt flesh and will be rather more substantial than when the White Paper is published.
We on these Benches believe that if two questions were asked and the outcome was not what the Government favoured, the matter would have to be reconsidered. We have made no bones about that. We have never proposed that the Government should be hound by the outcome of a two-question referendum if they genuinely considered that it would not be possible or practical—the term "pragmatic" was much used in another place in relation to this exercise—for the wish of Londoners expressed in answering the questions to be put into effect. I am disappointed. I regard this as a lost opportunity to achieve a high level of democratic legitimacy for the two constituent parts of the proposed authority. I believe that we shall require a better debate than will be enabled of a subject that so far appears to have been hijacked by discussion of the personalities involved, not the way in which the authority will operate.
Yesterday I attended a discussion held by the King's Fund on the impact of the GLA on health in London. Formerly, health was not proposed to be within the power of the GLA but matters such as pollution and housing very much affect the health of Londoners. What particularly struck me was the almost dangerously high expectations among the very well informed people who discussed this topic without a debate about how the structure would operate, as if we would move from nothing—not even a skeleton—to something that was fully formed. They expected this new organisation to solve so many problems.
I do not believe that the White Paper will produce the level of detail that we seek. Earlier this year I tabled a Written Question relating to the responses to the Green Paper. I asked how many people had expressed themselves to be in favour of an assembly with a separate directly elected mayor, an assembly alone or a mayor alone. The Answer of the Minister was that the details would be in the White Paper to be published in March. I do not believe that the White Paper is likely to provide that kind of detailed analysis. I appreciate that the responses are available for inspection, but it is beyond the scope of members of the public, and, quite honestly, Members of the Opposition, to do the amount of work required to provide an answer. I believe that the Government have an obligation to answer those questions.
However, with a sense of disappointment but also realism, and also a little question in my mind as to whether when presented with the ballot paper on 7th May I shall be tempted to spoil it by writing yes and no—because I do not find the question crystal clear according to the Minister's description of it—we on these Benches accept that this composite question is the question to be asked. I therefore look forward to working on the substantive Bill. That may be the second best approach, but the details of the relationship between
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the constituent parts of the authority, in particular the checks and balances, are ones to which I hope this House and another place will give all the attention that they deserve.
Lord Bowness: My Lords, this response is almost as regrettable as I found the response to the previous amendment, especially as the Government at an earlier stage in another place virtually invited the Conservatives and Liberal Democrats to produce a proposal for a sensible set of two questions that they could both support. That was done. Like the noble Baroness, Lady Hamwee, I am disappointed by the reasons given for its rejection. It appears that once again the Government are not prepared to listen to the argument or, despite what the Minister said earlier this afternoon, to risk having to listen to the people.
The Government may well want a directly elected mayor and a directly elected assembly. I have no doubt that members of the Government will campaign for it. The Minister says that it is not possible to produce a Bill, or, as it is to be, a White Paper with alternatives, but that is not something for which we have asked and it is not what we say. Were the Government to listen to the essence of this amendment they would produce their White Paper on the basis of their stated policy. But there are two questions. I submit that it would be a better pre-legislative test of consent, if that is what it is, not a consultation, if the two questions were posed.
It is possible to want one proposition but not the other. It is possible that with merely a White Paper people will form views on the details—even those that the Government decide that they need—but not be prepared to endorse one or other element of the proposition. This does not commit the Government to proceeding with one and not the other, but they would need to think again about the rejected element. I find it distressing that the Government will not take that risk. One is inevitably drawn to the conclusion that they are sure about people's willingness to buy the proposal neatly wrapped up as one but rather more nervous about their reaction if it is opened up so that people are allowed to see and comment on the constituent parts. I regret that the Government cannot contemplate the possibility of a second thought either after the referendum or in this House this afternoon.
Lord Rea: My Lords, as one of the few Members on these Benches who supported this amendment initially it is right that I should say a few words this afternoon. I agree with my noble friend that clearly the manifesto promised a referendum on the combined package, but as a member of the Labour Party I do not recall contributing to that decision. Many other Londoners would very much like to have back their elected assembly but a significant number are not convinced that a directly elected mayor is desirable. I remain to be convinced that the benefits of such a new institution in London will outweigh the dangers. As the noble Baroness has said, the Government have been accused of not trusting Londoners. I believe that they would be shown to have greater trust of Londoners by allowing the two-question version to stand.

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One anxiety expressed by my honourable friend Nick Raynsford in another place was the danger that if we have two questions we might land up with an elected mayor without an assembly. I think that that would be unlikely, but I believe that it is the outcome that some Members of the Opposition Benches would like to see. I agree that that is a danger that we want to avoid. However, that could have been dealt with easily by asking first, "Do you want an elected assembly or not?" and then asking the second question to be answered only if the answer to the first question is, "Yes". But I realise that on this occasion the Government are steam-rollering ahead with this, and that it will be clearly ridiculous to try to get in the way, because this time we will be completely squashed.
Earl Russell: My Lords, I am glad that my noble friend Lady Hamwee said what she did about the Commons Reasons, because they are remarkable:
"Because the question asked in the referendum should be in the form set out in the Schedule to the Bill".
That must say one of two things. Either it says, "This Bill is unamendable, because it is our will", or it says, "We disagree because we disagree because we disagree". Neither of those is particularly persuasive.
I shall have been here 10 years next month. During that time I have noticed the reasons given by another place becoming slowly more perfunctory. It is a sliding process in which last May does not seem to have caused so much as a blip. It is something which causes me some regret. It also raises—this is the serious point that I want to make—the attitude of government to a revising Chamber. I say that without prejudice to any decision on what form such a revising Chamber might ultimately take.
All governments say that they want a revising Chamber, but all governments do not like it when they get it. The trouble with a revising Chamber is that it is no good unless you have it when you do not like it, because if you only have it when you do like it, in effect, you do not have a revising Chamber at all.
Government, it seems to me, is an animal of remarkable political consistency no matter in which party colours it may temporarily be clothed. All governments believe that they have well thought out and carefully considered proposals; all governments believe that altering those will open a Pandora's Box of confusion; and all governments believe, although they are not always as honest about it as the Minister was today—I thank her for that—that the bones of the proposal are not up for consideration. That is an attitude which calls in question the uses of a revising Chamber.
I should like to ask the Minister—I hope that notice of the question has reached her—how many times the Government have had amendments carried against them in this House; how many of those amendments they have accepted; how many they have reversed; and in how many of them they have reached a compromise. I hope that the reply to those questions will not offend against the law of averages.
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In the previous Parliament Mr. Frank Field—as my memory is not perfect, I believe that I must be paraphrasing—said that, if the Lords should so much as find a grammatical error in an Act of Parliament. a junior Whip would rise to move, "That this House doth disagree with the Lords in the said amendment". I hope that Mr. Field was wrong.
Lord Archer of Weston-Super-Mare: My Lords, it has now become obvious that we shall have just one question for the people of London on the referendum paper, and I accept that, although I believe that the Liberal Benches and the Conservative Benches won the argument even if they lost the vote. Would the Minister be kind enough to confirm that no government money will be spent on a "Yes" campaign, when both opposition parties did not approve of the question to be put to the people of London?
4.15 p.m.
Lord Dahrendorf: My Lords, while I agree entirely with my noble friends Lord Russell and Lady Hamwee on the quality of the reasons given by the other place, and that that is an important deficiency in the debate which we are having, I am of course one on these Benches who, from the beginning, was not in favour of the amendment which we are discussing.
For the sake of clarification and to do perhaps a little better than others in other places who are looking for reasons, perhaps I may say once again that my basic motive is a view of what representative government is about. I believe that it is about government taking the initiative, and Parliament debating and deciding at the end of the day. That is a view which does not make me a natural supporter of referendums in general. I still find it difficult to find a sensible place for referendums in the process of representative government.
If there is such a place, it is probably the one which the Government have chosen in this case, because it does not detract from our ability in Parliament to debate whatever legislation comes forward, if indeed the Government conclude that the results of the referendum enable them to go forward with legislation. It is such a motive which has led me to support throughout the notion that the government initiative should go further than just asking open-ended questions; should indicate the direction in which the Government propose to go; and I therefore find it easy to support the line taken by the Minister, and will also find it easy to take an active part in the "Yes" campaign.
Lord Davies of Coity: My Lords, I listened with interest to what the noble Earl, Lord Russell, said about this being a revising Chamber, and to the noble Lord. Lord Archer, making the point that the argument was won on those Benches, and yet we are moving forward in the way that the Government propose. Let me remind this House that both this House and another place are representative of the British people. The British people took a decision on 1st May last year when a manifesto was presented to them. The Government now propose to act in line with the commitment that they gave the British people, and they were elected to do exactly that.

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This place must recognise that at the end of the day it is the British people who decide what happens in this country.
Baroness Carnegy of Lour: My Lords, those are bold words, but a moment might come when the Government will begin to learn from the mistakes they have made since 1st May. The people of Scotland are becoming increasingly astonished to find the detailed problems involved in what they voted for in their pre-legislative referendum. Anyone who reads the Scottish press will understand that. Perhaps that is what will happen in London. I do not know. The Government should begin to learn about this type of thing.
Baroness Hayman: My Lords, I shall, first, respond to the questions that were asked during this short but interesting debate. The noble Earl, Lord Russell, was kind enough to give me notice, but it was such brief notice that I am afraid that I shall have to write to him with the information that he requires in respect of dealing with amendments in another place, if he will forgive me for that.
I can give the noble Lord, Lord Archer of Weston-Super-Mare, the assurance for which he asks. I have made it clear on other occasions that no government money will be spent on a "Yes" campaign. We have always been explicit that we shall be spending money on an information campaign—I believe that that has been welcomed throughout the House—to inform people about the proposals, the nature of the referendum, and the details of what is being put before them. There will be no public funding for either a "Yes" or a "No" campaign.
The noble Earl, Lord Russell, spoke about a revising Chamber. He accused me of honesty in saying that the bones of the proposal were not up for consideration. If he reads the Official Report he will see that I intended to say that the bones were not up for consideration in terms of putting the question in the referendum. The referendum is to be on the proposal. The consultation will deal with the detail which will go around the bones. I do not suggest that the bones of any government policy or piece of legislation are not up for consideration and debate within Parliament, because that would be inappropriate. However, as I have said many times, we owe it to the people of London to be explicit and clear about what we are proposing. As suggested by the noble Lord, Lord Dahrendorf, we must be responsible.
Comments were made about the Government's response to the two questions. The suggestion was made that that might not be in line with the proposals that we are putting forward because we consider them to be the best form of government for London. I find that suggestion strange. It was said again today that the Government would not be bound by the outcome of the referendum. The outcome might show that 80 per cent. of the people wanted a mayor, but 20 per cent. wanted an assembly; or that 70 per cent. of the people wanted an assembly, but only 45 per cent. wanted a mayor. It was said that although we would have to think about such an outcome we would not be bound by it. It was said that such an outcome "would not commit" the
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Government. That is not good governance. The people of London need to know what will be the outcome of their vote. The outcome will be the Government taking the proposals forward or dropping them. That is clear.
The noble Lord, Lord Bowness, spoke of the challenge set in the early days of debate in another place about whether two appropriate questions could be formulated. That challenge was set on the basis that the Government were not opposed to the number of questions, but that there were tests. The tests were whether there could be two questions which gave clarity, did not propose unworkable options and were able to provide a clear mandate. Those are the underlying reasons for deciding to have one question. We are not committed to one question rather than two, but we are committed to putting forward only workable options. We do not want to provide a false prospectus for people voting in the referendum. We want to achieve a clear mandate for the Government. I believe that the only way to do that is to return to the original question as proposed in the schedule. I hope that in the debates in your Lordships' House the reasoning behind that has been explained from the Dispatch Box and I urge the House not to insist on its amendments.
On Question, Motion agreed to.

LORDS AMENDMENT
3 In the Schedule, page 6, leave out lines 3 to 7 and insert:
("The Government propose the establishment of a Greater London Authority made up of an elected assembly and a separately elected mayor, both to be elected by Londoners.
Question 1: Are you in favour of an elected assembly?
Put a cross (X) in one box:
Yes
No
Question 2: Are you in favour of an elected mayor?
Put a cross (X) in one box:
Yes
No
The Commons disagreed to this amendment for the following reason—
3A Because the question asked in the referendum should be in the form set out in the Schedule to the Bill.
Baroness Hayman: My Lords, I spoke to this amendment during the debate on Amendment No. 20. I beg to move that the House do not insist on their Amendment No. 3 to which the Commons have disagreed for the reason numbered 3A.
Moved, That the House do not insist on their Amendment No. 3 to which the Commons have disagreed for the reason numbered 3A.—(Baroness Hayman.)
On Question, Motion agreed to.

Competition Bill [H.L.]
4.24 p.m.
The Minister of State, Department of Trade and Industry (Lord Simon of Highbury): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Lord Simon of Highbury.)
On Question, Motion agreed to.
Clause 26 [Powers when conducting investigations]:
Lord Haskel Lord Haskel moved Amendment No. 84:
Page 13, line 14, leave out from ("Director") to end of line 15.
The noble Lord said: My Lords, I spoke to this amendment on the first day of Report. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 85:
Page 13, line 15, at end insert ("which—

(a) identifies the specified document;

(b) specifies the conduct which is being investigated;

(c) specifics the Director's grounds for considering that the specified document relates to a matter which is relevant to that investigation; and

(d) states that a person on whom the notice has been served has the right, and shall be afforded reasonable time, to seek legal advice before complying with the notice.").

The noble and learned Lord said: My Lords, in moving Amendment No. 85, I shall speak to a number of other amendments, but, in view of the Minister's Amendment No. 86, for which I am grateful, not to Amendment No. 88.
The purpose of this group of amendments is to ensure that those who are to be subject to investigation will be aware, first, of the purpose of the investigation and, secondly, the penalties to which they might be subject if non-compliance follows. That will assist them in establishing whether the documents requested are necessary to the investigation. It will have the added advantage of preventing fishing expeditions by investigating officers.
The requirement in the amendment that the purpose of the investigation should be stated exists in the corresponding powers of the European Commission where it has authority to request information. At EU level, the question of whether a document is necessary to an investigation is subject to review by the European Court. In our view, a similar safeguard should exist in the United Kingdom.
The group of amendments also contains a proposal that persons subject to an investigation should be given an opportunity to obtain legal advice. At first sight, that might not seem necessary. However, I am sure that the Minister appreciates that, under Clause 41, in the event of non-compliance by an individual criminal sanctions might follow. That is a serious matter for individuals who otherwise might have had no contact with the criminal law. We believe that in this complicated area
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of the law it is desirable that they should at least have the opportunity of taking their own legal advice and of discovering their rights and obligations.
A further amendment proposes that the written authorisation referred to should state the purpose for which the investigation is being made and the penalties for failing to comply with the request. A number of the amendments cover the issue of legal advice, but the broad proposition is that the investigation when it starts is not a criminal investigation. It is an investigation for competition law purposes, which is perfectly reasonable. However, at a later stage of the proceedings an individual might find himself subject to legal sanctions. We believe that the powers in the Bill are insufficient and there are insufficient safeguards for the individual. I beg to move.
Lord Ezra: My Lords, I support this series of amendments mainly because it would bring the wording of the Bill more into line with the wording, of EU legislation. The Government state that the main purpose of this legislation is precisely to achieve that. That would apply in this case and therefore I hope that the amendments will be agreed to.
4.30 p.m.
Lord Kingsland: My Lords, the Minister will be aware that a large number of those amendments which were tabled in Committee to Clauses 25, 26, 27 and 28 have been retabled. They were gone through in great detail in Committee. I trust that the Minister will be relieved to hear that they will not be subject to the same detailed investigation again today, at least not from the Opposition Front Bench.
However, I should like to trespass on the Minister's time to make a general statement about this series of amendments. He will recall that the matter was touched on in the Opposition's winding-up speech on Second Reading and he will know that the context in which the amendments are placed is the procedural regime set up, first, by the European Community and, secondly, by the human rights convention soon to be incorporated into our law if Her Majesty's Government have their way in another place.
Under the Bill, powers given to the OFT are draconian. The Minister responded in only a minor way in the revised Bill which he has produced for Report stage. It is likely that when the OFT exercises those powers, it will be frequently subject not only to appeals to the tribunal but also to actions for judicial review.
It is a debatable point as to whether Clause 58 incorporates into the procedural rules of the Bill the same procedural safeguards which have already been laid down by the European Court of Justice in Luxembourg. However, there can be absolutely no doubt whatever that once the Human Rights Bill becomes law in this country the safeguards laid down by that Bill will apply to any action taken by the OFT. In looking at those procedures and in applying the general doctrines of proportionality and fairness, the Minister will find that the standards required by our courts are higher than those which he has inserted into the Bill.

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Therefore, I trust that the Minister will look very carefully at this and subsequent series of amendments to these clauses, bearing in mind the consequences of falling below that standard.
Lord Simon of Highbury: My Lords, as the noble and learned Lord, Lord Fraser, observed, this is a large group of amendments and included in it are government amendments, and I should like to try to find a way through all of them. The powers of the Bill are those necessary to ensure a competitive marketplace. I am always careful about the use of the word "draconian". I believe that we must have effective competition in the UK market and in the European marketplace. Our purpose is to achieve that in the most consistent way possible.
The Government have listened carefully to the points made in Committee, and indeed, as has been stated, have come forward with amendments to address some of the concerns expressed. We do not accept all the points raised and I shall endeavour to explain why. First, I take Amendment No. 85. That repeats an amendment tabled in Committee by the noble and learned Lord, Lord Fraser, and the noble Lord, Lord Kingsland. That was considered at length in Committee (Official Report, 17/12/97; col. 376) and I see nothing new in the circumstances now to cause us to reconsider the matter.
The amendments proposed would place an impossible burden on the investigator; for example, in respect of the requirement to specify the grounds for considering that a specified document relates to the investigation. Such a requirement would clearly only have the effect of frustrating the investigation. Specifying the conduct being investigated is, we believe, better done in the government amendment which we have tabled.
Amendments Nos. 95A, 95B and 109A were also debated and rejected in Committee for similar reasons. They limit the director's power to ask for documents and information held on computer and, effectively, explanations of them in relation to documents and information he has already considered relevant and had required by notice. We see no reason to alter our view on that.
In speaking to Amendment No. 86, I should like to cover also Amendments Nos. 93, 94, 99 and 138. In Committee we considered a number of amendments aimed at requiring information to be given to the undertaking which is under investigation. While certain information would be given during the investigation as a matter of ordinary practice, we undertook to consider amendments to require the undertaking to be given notice of the subject matter and the purpose of the investigation and what are the penalties for non-cooperation with an investigation. Having reflected carefully on the debate, I am satisfied that it is right to amend Clauses 26, 27 and 28 to give legal effect to and to provide for those matters. Undertakings should be told of the nature of the investigation they are facing. I am grateful to the noble and learned Lord, Lord Fraser, and the noble Lords, Lord Ezra, Lord Kingsland and Lord Lucas, for the points they raised in that regard. They have been taken into account.
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These amendments require the relevant information to be given in each instance when investigatory powers are exercised. Therefore, they will cover requirements under Clause 26, when premises are entered without a warrant under Clause 27, and when they are entered with a warrant under Clause 28. Those are along the lines of similar requirements in EC Regulation 17/62 which governs the investigations by the EC Commission into suspected infringements of Articles 85 and 86.
Amendment No. 99 is a technical correction to ensure consistency in the use of the term "investigating officer".
The points in Amendments Nos. 87, 88 and 82 are covered fully in government amendments.
Amendment No. 90 addresses the question of the right of being afforded reasonable time to seek legal advice. We went over that ground fairly extensively in Committee. That is an area in which I do not accept that we should go as far as the amendment suggests. In Committee I explained the regime which would apply under the Bill. I added that the European Court has recognised the right to legal representation as one of the rights of defence but not that an undertaking is entitled to delay unduly the commencement of an investigation while a company is awaiting its legal adviser.
Therefore, I expect the director general to follow Commission practice in conducting his investigations. Clause 58 makes provision for EC jurisprudence generally to be imported into our domestic regime and also for the director general to have regard to Commission statements. Therefore, I believe that we have covered the ground already in our own statements made in Committee and in the amendments which we have tabled.
I do understand the implications that the noble Lord, Lord Kingsland, has put to us about the future development of UK law. I understand that and naturally, as that develops, the jurisprudence will develop in relating the two sets of legal bases. But the fact here is that we have, as I said, within our amendments relating to this Bill attempted to follow the principles of Clause 58 in bringing across the EC jurisprudence on competition matters, and I am satisfied that we have done that according to the structure that we require for competition in the UK market. On that basis, I am not as yet convinced that we need to bring forward further amendments than those we have already tabled to take account of the position debated in Committee.
Lord Fraser of Carmyllie: My Lords, I am grateful to the Minister for his full reply on this rather complicated set of amendments. I thank him because I believe that he has, in the main, answered most of the concerns that we expressed. He will no doubt appreciate that it is quite complicated to fit them all into place. I look forward to having an opportunity to read the Bill before Third Reading to ensure that we have covered all that we wish to cover.
I was interested to hear the Minister pray is aid Clause 58 on the question of legal advice. Without in any sense warning him, I have no doubt that we shall have a detailed debate on that clause when we reach that

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stage. Again, we shall reflect on what the Minister said about legal advice. I believe it still has some attraction to us that there should be some express indication of it. However, as the Minister responsible for the Bill has said at the Dispatch Box that the issue of legal advice is part of the European jurisprudence that he would expect to be followed, that may be sufficient for our purposes. As I said, I shall reflect on that aspect of the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Haskel Lord Haskel moved Amendment No. 86:
Page 13, line 15. at end insert—
("(2A) A notice under subsection (2) must indicate—

(a) the subject matter and purpose of the investigation; and

(b) the nature of the offences created by sections 41 to 43.").

On Question, amendment agreed to.
[Amendment No. 87 had been withdrawn from the Marshalled List.]
[Amendments Nos. 88 to 90 not moved.]
Clause 27 [Power to enter premises without a warrant]:
Lord Haskel Lord Haskel moved Amendment No. 91:
Page 13, line 33, leave out ("(or by an officer acting on his behalf under section 25(2))").
On Question, amendment agreed to.
[Amendment No. 92 not moved.]
Lord Simon of Highbury Lord Simon of Highbury moved Amendment No. 93:
Page 13, line 37, leave out from ("given") to end of line 38 and insert ("to the occupier of the premises a written notice which—

(a) gives at least two working days' notice of the intended entry;

(b) indicates the subject matter and purpose of the investigation; and

(c) indicates the nature of the offences created by sections 41 to 43.").

On Question, amendment agreed to.
4.45 p.m.
Lord Kingsland Lord Kingsland moved Amendment No. 93A:
Page 13, line 40, leave out ("a reasonable suspicion") and insert ("reasonable grounds for belief").
The noble Lord said: My Lords, I believe that the Minister's amendment meets my concern on this matter, if he agrees with me that a "reasonable suspicion" is to be interpreted as "reasonable grounds for belief"; in other words, the test is an objective test. I beg to move.
Lord Haskel: My Lords, we looked at the implications of the phrase "reasonable grounds to believe" as against "reasonable grounds to suspect" extensively in Committee, especially in the context of the basic trigger for the investigation powers in Clause 25 and in relation to the waiving of notice requirements where there is entry of premises without a warrant.
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The debate has caused us to look again very carefully at the provisions of the Bill. As a result, I have come to the conclusion that there is an unjustifiable anomaly in Clause 28 which should be corrected. Clause 28(1) of the Bill provides for the circumstances in which a warrant may be obtained for the entry and search of premises in the course of an investigation. Essentially these are as follows: first, where there may be documents on premises, which have been required to be produced but have not been produced; secondly, where there may be documents on premises which, if they were required to be produced, might be concealed, removed, tampered with or destroyed; and, thirdly, where there may be such documents on premises, production of which could have been required and an investigating officer has attempted to enter the premises but has been unable to do so. In my view, the appropriate test in each case should be one of "reasonable suspicion" that these matters are so.
The director general has made representations to us to ask that the test should be "reasonable suspicion". I am also satisfied that an investigation by the director general would be handicapped by leaving the Bill unchanged.
Amendment No. 104 is grouped with this amendment. It is a consequential amendment which conforms the language of Clause 28(1)(b) to that in paragraphs (a) and (c). I believe that the Bill should be corrected and, therefore, will wish to move that amendment at a later stage.
Having explained our view on the appropriate test to be applied in this particular limb of Clause 28(1), it will come as no surprise to the House to hear that we do not favour the consequences of the string of amendments which have been tabled by noble Lords with this amendment. We discussed this at length on Second Reading and in Committee and we believe that the reasons for applying the test of "belief' are compelling. I therefore ask noble Lords to withdraw their amendments.
Lord Kingsland: My Lords, on the assumption that I have understood the noble Lord correctly, I willingly beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord Kingsland Lord Kingsland moved Amendment No. 93B:
Page 14, line 2, after ("25(1)(b)") insert ("and the giving of notice in accordance with subsection (1) would be likely to result in that party or undertaking concealing, destroying or tampering with any document specified in a notice under section 26(2)").
The noble Lord said: My Lords, this amendment was moved by the Opposition in Committee. I have not noticed any reaction from Her Majesty's Government in the revised Bill for Report. In my submission, this is an important amendment because the exemption given by Clause 25(1)(a) and (b) for acting without a warrant is a large exemption and ought to be qualified in the way set out in the amendment. I beg to move.
Lord Simon of Highbury: My Lords, the right to make unannounced visits is an important weapon in the director general's armoury. His powers must be

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sufficient in the worst cases of covert cartels to enable him to obtain all documents relevant to his investigation into whether there has been an infringement of the prohibitions.
The proposed amendment would increase the threshold to be crossed before the director general has an unannounced right of entry. At present, under the Bill, if he has a reasonable suspicion that a prohibition has been infringed, he could make unannounced visits if the premises in question are occupied by an undertaking whose conduct he is investigating or if he has reasonable suspicion that this is so.
Amendment No. 93B would increase the risk that the giving of notice would enable an undertaking to prepare in advance for the director's investigation and make it more likely that relevant documents would be hidden, tampered with or destroyed. How could the director establish in advance that the giving of notice would be likely to have the result of the documents being tampered with or destroyed? How could he establish that without making an unannounced visit in the first place?
The practical result of the amendment will be to create a high hurdle before unannounced entry. It will be the same as that which exists under Clause 28 for obtaining a warrant. We believe that it is right to give the director the power to make surprise visits where the undertaking concerned is a suspected infringer. I therefore urge the noble Lord to withdraw his amendment because we are maintaining the same position, as he rightly observed, that we did when we discussed it at Committee stage.
Lord Kingsland: My Lords, I thank the Minister for his reply. However, I cannot resist expressing my disappointment that he has failed to move on the issue. The amendment covers precisely those circumstances that he fears. In my submission, it would not be difficult for the director to pass the test laid down by the amendment, if indeed he moved within the two day period. However, I do not propose to press the amendment. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Haskel Lord Haskel moved Amendment No. 94:
Page 14, line 4, at end insert—
("(3A) In a case falling within subsection (3), the power of entry conferred by subsection (1) is to be exercised by the investigating officer on production of—

(a) evidence of his authorisation; and

(b) a document containing the information referred to in subsection (2)(b) and (c).").

The noble Lord said: My Lords, we spoke to this amendment when we debated Amendment No. 85. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 95 and 95A not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 95B:
Page 14, line 9, leave out ("relates to any matter relevant") and insert ("is necessary").
The noble Lord said: My Lords, the amendment simply tightens up the criteria by leaving out,
"relates to any matter relevant",
and inserting,
"is necessary".
It is an amendment made in other parts of the Bill where we think that the discretion given to the director is unnecessarily wide. I beg to move.
Lord Simon of Highbury: My Lords, we may be indulging in a significant tightening and untightening of bolts. I seem to be doing most of the untightening.
We considered similar amendments in Committee. We took the clear view (at cols. 396 and 411 of Hansard 17th November) that seeking to impose the objective test that documents should be "necessary" to an investigation in order that they can be required to be produced, would serve to do no more than frustrate the investigation. We remain entirely of that view, and I hope in understanding our position noble Lords are able to withdraw the amendment.
Lord Kingsland: My Lords, the Minister will not be surprised to learn that I am also disappointed in that reply. However, I am rapidly becoming a realist in these matters. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Speaker (Lord Strabolgi): My Lords, if Amendment No. 95C is agreed to, I cannot call Amendments Nos. 96 and 96A.
[Amendments Nos. 95C to 97 not moved.]
Lord Kingsland Lord Kingsland had given notice of his intention to move Amendment No. 97A:
Page 14, line 12, at end insert—
("provided that the person is afforded sufficient time to seek legal advice before complying with any such requirement").
The noble Lord said: My Lords, this matter has already been dealt with by the Minister in another context. Having heard the noble Lord's reply in that context, we know what it will be in response to this amendment. In those circumstances, I shall not move the amendment.
[Amendment No.97A not moved.]
[Amendments Nos. 97B and 98 not moved.]
Lord Haskel Lord Haskel moved Amendment No. 99:
Page 14, line 16, leave out ("named") and insert ("investigating").
The noble Lord said: My Lords, we spoke to this amendment when we debated Amendment No. 85. I beg to move.
On Question, amendment agreed to.
The Deputy Speaker: My Lords, if Amendment No. 99A is agreed to, I cannot call Amendment No. 99B.
[Amendments Nos. 99A to 101 not moved.]
Clause 28 [Power to enter premises under a warrant]:
The Deputy Speaker: My Lords, if Amendment No. 102 is agreed to, I cannot call Amendments Nos. 102A or 102B.
Lord Haskel Lord Haskel moved Amendment No. 102:
Page 14, line 20, leave out from beginning to ("that") in line 21 and insert ("On an application made by the appropriate person to the court in accordance with rules of court, a judge may issue a warrant if he is satisfied").
The noble Lord said: My Lords, I beg to move Amendment No. 102 and speak to government Amendments Nos. 110, 114, 115, 137, 199, 201, 202, 204, 205 and 207 and Amendments Nos. 102A, 102B, 110A, 110B, 114A, 114B, 199A and 202A.
In the Second Reading debate and in Committee we discussed whether the function of issuing warrants authorising the entry of premises should be a matter for a High Court judge rather than for a justice of the peace. Amendments to that effect were tabled by the noble and learned Lord, Lord Fraser, and the noble Lord, Lord Kingsland. I am grateful to them for having raised this point.
The Government have listened very carefully to the points made and we have concluded that it would indeed be right to make this change. Amendments Nos. 102, 110 and 114 achieve this. The definition of the relevant court for each of England and Wales, Scotland and Northern Ireland is now to be found in the interpretation section (Clause 57). I might add at this point that the noble and learned Lord, Lord Fraser and the noble Lords, Lord Kingsland and Lord Lucas, yesterday again tabled their original amendments—now numbered 102A, 102B, 110A, 110B, 114A, 114B, 199A, 202A. I can add no more than that the Government's amendments will make the change to a High Court judge as I have indicated. For the reasons I have also previously indicated, we do not think it appropriate that the president of the tribunal should exercise this function.
Lord Fraser of Carmyllie: My Lords, perhaps I may genuinely thank the Minister for moving on this issue. If I may say so, it is an extremely wise action. It seemed to us that a justice of the peace somewhere in the United Kingdom might find it extremely difficult to exercise his powers correctly in deciding whether to grant a search warrant. I am grateful that this power has been given exclusively to a senior member of the judiciary in whichever jurisdiction it happens to be.
Perhaps I may refer to the amendment in my name, Amendment No. 111. It has been somewhat aggressively grouped with the primary amendment relating to justices of the peace. I shall be grateful for an explicit response from the Minister.
He will observe that in the second paragraph of the amendment the point is again made about,
"reasonable time to contact their legal representatives before exercising any of the powers conferred by subsection (2)".
If the Government are of the view that such an opportunity should not be given, it would be helpful if
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we could discover their reasoning. I suspect that we know what it is, but it would be just as well to hear from the Minister.
5 p.m.
Lord Haskel: My Lords, yes. Amendment No. 111 is in this grouping. We have already discussed the matters raised by that amendment. In the light of the Government's amendments dealing with entry to empty premises, I hope that the noble and learned Lord will be prepared to withdraw that amendment since the matter has been dealt with.
On Question, amendment agreed to.
The Deputy Speaker: My Lords, Amendments Nos. 102A and 102B are pre-empted.
Lord Simon of Highbury Lord Simon of Highbury moved Amendment No. 103:
Page 14, line 22, leave out ("believing") and insert ("suspecting").
The noble Lord said: My Lords, we covered this matter earlier in the debate. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 104:
Page 14. line 27, leave out ("it is reasonable to suspect") and insert ("there arc reasonable grounds for suspecting-).
The noble Lord said: My Lords, this amendment was spoken to when we debated Amendment No. 93A. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 104A and 104B not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 104C:
Page 14, line 38, leave out from ("named") to end of line 40 and insert ("senior officer of the Director who is an appropriately qualified official in the division of the OFT responsible for investigations, and other named senior officers with appropriate qualifications and from the same division to accompany him—").
The noble Lord said: My Lords, during the course of our debate at Second Reading, a certain amount was said about the director general being in the position of investigator, judge and jury. Here, we have a clause dealing with an official who will have investigatory powers. The expression used in the clause is "a named officer". We have sought in this amendment to be more specific about the category of official who is tasked. The reason is simply this. Up to now the OFT has had a kind of preliminary investigatory role. Now that its powers are to be greatly extended, it seems to us extremely important that effective Chinese walls are built within the organisation so as to give confidence to the entrepreneurial community. It is important for a company being investigated to be sure that those officers in the OFT who conduct investigations do not thereafter arbitrate on questions of, for example, penalties. That is

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the reason why the kind of officer and the task that he undertakes in the OFT are clearly set out in our amendment. I beg to move.
Lord Simon of Highbury: My Lords, I am rather surprised that we are returning to this debate since the matter was dealt with thoroughly in Committee. However, I am happy to go over the ground again.
I am aware from the debate in Committee that one of the fears raised about the investigation powers under the Bill was that difficult and sensitive matters involved in an investigation might be handled by junior or inexperienced or untrained personnel in the offices of the director or sectorial regulators. I appreciate that Amendment No. 104C seeks to address that concern by specifying qualifications or rank. However, I do not think that we can sensibly provide for such matters in a statute. How would "senior" be defined? What qualifications would be regarded as "appropriate" to the work of investigating? We have of course already debated on Report the subject of delegation in relation to the amendments to Clause 25.
Amendment No. 104C would additionally require the director and sectoral regulators to separate their organisations internally and create a discrete investigation division. This Bill, like many others, creates functions for the offices concerned. I believe it would be undesirable and impractical to go beyond providing the statutory framework and try to go further and provide for the internal organisation of those offices. As I said in Committee, we have to accept that there needs to be a delegatory capacity in the management sense in organising complex offices in the administrative terms to which we refer. The directors will have statutory functions and duties to perform under the terms of the Bill. They will themselves have to ensure that their staff and organisation are both adequate for those purposes. I therefore ask the noble Lord to withdraw his amendment.
Lord Kingsland: My Lords, does the Minister agree that an official exercising investigatory powers should also exercise adjudicatory powers in the matter that he is investigating?
Lord Simon of Highbury: My Lords, the Office of Fair Trading already has an investigative unit, the Cartels Task Force, which has had some successes within the limitations of the current legislative framework. That would provide the organisational base for the Office of Fair Trading's investigation function in the new Bill. However, we do not believe it right to compartmentalise the Office of Fair Trading in its exercise of the functions in the Bill in respect of investigating and making decisions. That would be wasteful of resources and would require duplication of effort.
Lord Kingsland: My Lords, the Minister will not be surprised to learn that I find that reply deeply disappointing. I put him on notice now that it is a matter to which we shall wish to return at Third Reading.
Lord Borrie: My Lords, before the noble Lord sits down, is he aware that in a related field within the
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Office of Fair Trading—under the Consumer Credit Act,—for the past 24 years there have been investigating officers and adjudicating officers. They have been kept separate. But that provision is not written into the legislation. It is to be found only in the administrative arrangements within the office itself.
Lord Kingsland: My Lords, I am most grateful to the noble Lord for that piece of information. However, on reflection, he ought to accept that that reinforces the point that I made to the Minister. If that is the practice in that field, why should it not also be the practice in the field of competition law? If the practice has been continued for so long, is it not time that it was enshrined in our own statute law? I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingsland moved Lord Kingsland moved Amendment No. 104D:
Page 14, line 41, leave out ("such force as") and insert ("no more force than").
The noble Lord said: My Lords, this amendment is as much about constitutional tone as substance. It may be that the net effect of the expression,
"such force as is … necessary",
is no more severe than the net effect of the expression, "no more force than is necessary". However, in my submission the expression that Her Majesty's Government have chosen to use is foreign to our constitutional tradition. It smacks of an autocratic rather than a constitutional authority. My amendment is not intended to alter the substance of the clause but merely the way in which the powers of the director are expressed. In those circumstances, I should be much obliged if the Minister would reconsider his decision not to move on this matter. I beg to move.
Lord Elton: My Lords, can the Minister confirm that this subsection refers only to the use of force for the purpose of entering premises and confers no right to use force once the premises have been entered? Perhaps he can tell us what will happen if, having broken down the front-door, those entering the premises find a series of other doors, behind one of which is the evidence they are looking for, or if someone within seeks to oppose their progress down the corridor?
Lord Simon of Highbury: My Lords, perhaps I may speak first to the amendment and then see whether I can find the wit to tackle the many doors along the corridor. As I said to the noble Lord, Lord Kingsland, in Committee, we entirely agree with the principle that, on those rare occasions when force is used to enter premises, no one should be authorised to use more force than he reasonably needs to use in order to do so. En passant, I believe that that covers the point about force being used to enter the premises. As I went on to say, that is the effect of the Bill as drafted. While I understand the concern that motivates the noble Lord's amendment, I do not believe that it would change the effect of the Bill. The officer entering the premises will not be entitled to break down the door if those

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inside are prepared to open it for him. Such force as is reasonably necessary is what is needed to gain access and no more.
I agreed to think carefully about the drafting, the tonal question, which I believe the noble Lord, Lord Kingsland, raised again. I said:
"I shall think very hard about this, because if this is the right language to use it would be inappropriate for me, as the common man, to question the difference between the two alternatives".—[Official Report, 17/11/97; col. 408.]
As part of my reflections, we searched the statute book. This revealed 62 cases in English law of the words "such force as is reasonably necessary" and none of the words "no more force than is reasonably necessary". On that basis, I guess the vote is on our side in terms of tone and even more so in terms of research.
In reply to the subsidiary question, I confirm that it is only force used for entering which is referred to, as I indicated half-way through the first part of my answer, and that every subsequent door, if closed, could be broken down to enter the premises. Force would not be used against persons.
Lord Kingsland: My Lords, I thank the Minister for his reply. I am surprised by its substance but delighted to hear that, in moving my amendment, I was suggesting an improvement in our constitution, which I had hitherto always thought perfect. I believe that the additional question addressed to the Minister by my noble friend Lord Elton with regard to force against persons was not addressed in his reply.
Lord Simon of Highbury: My Lords, I did say that there would be no force used against persons, only against the subsequent doors in the corridor if they were closed.
Lord Elton: My Lords, may I ask where it is provided that the convention is that one can break down a door but not break a person's nose in the process? I realise that the noble Lord will probably wish to reply to this question after the debate by some other means.
Lord Simon of Highbury: My Lords, perhaps I may take advice on that point and respond at greater leisure. I suppose it depends how close one stands to the door. But that may not be the appropriate answer.
Lord Kingsland: My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 104E not moved.]
Lord Simon of Highbury Lord Simon of Highbury moved Amendment No. 105:
Page 14, line 43, leave out ("possession or) and insert ("copies of, or extracts from,").
The noble Lord said: My Lords, I beg to move Amendment No. 105 and speak to Amendments Nos. 106, 108, 111A and 112. We listened carefully to the concern expressed in Committee by the noble Lords,
340
Lord Kingsland and Lord Ezra, that the taking of original documents could be extremely inconvenient for a company which is the subject of an investigation. We undertook to reflect upon the points made with a view to making it clear that the taking of originals should be a last resort.
I am grateful to the noble Lords for raising this issue. I am clear that powers of seizure are necessary as a last resort to deal with serious cases of obstruction. It may not always be possible to copy documents. Seizure is a serious matter and it is right to ensure that there are appropriate safeguards in place. Having reflected on the debate in Committee, I agree that there is a case for strengthening the safeguards.
Amendment No. 106 limits the powers of seizure and confines them to circumstances where seizure is necessary to prevent them being destroyed or interfered with or where it is not reasonably practical to take copies of them on the premises concerned. Amendment No. 105 secures the reordering suggested by the noble Lord, Lord Kingsland, putting the taking of copies first, further emphasising that seizure is a last resort. Amendment No. 108 is a consequential amendment. I beg to move.
Lord Ezra: My Lords, I wish to speak to Amendment No. 112, which is grouped with Amendment No. 105. The point of the amendment is to ensure that, where original documents have been seized—which can only be for a period of three months—the enterprises concerned can have access to them, if need be, during that period. It seems to me that that is a reasonable additional safeguard.
Lord Fraser of Carmyllie: My Lords, the noble Lord has spoken to Amendment No. 112, to which I also have my name. We welcome the amendments that the Government have tabled, Amendments Nos. 105 and 106. Having regard to Amendment No. 106 and the proper emphasis which the Government now accord to the desirability of taking copies rather than the original documents, if that can be achieved, it seems to me that what is proposed in Amendment No. 112 ties in with that approach.
As I understand the position, the investigating officer will go in and will be entitled to take copies of documents. That is what he must address his mind to first: "Can I achieve my purposes by taking copies?". If that is the case, he does so. If he cannot do that, he takes the originals. If the documents seized were not capable of being copied, it may be difficult for the individual or the undertaking if there is no access to the documents while they are under investigation.
If the Government recognise the desirability and good sense of people being able to retain the originals and that the originals should be taken away only if they cannot be dealt with in any other fashion, perhaps the amendment is not the most appropriate way to achieve the Government's aim. In such circumstances it would be appropriate for there to be at least access to the documents. No one is asking for their immediate return, just that there should be some access to them while the

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investigation is taking place. With those few words, and a request for further explanation from the Government, I support the noble Lord, Lord Ezra.
Lord Haskel: My Lords, noble Lords put their finger on an important point; that is, that it would be wrong for the Bill to try to prescribe in great detail what should happen in every conceivable circumstance. The Government have already come forward with amendments to the Bill to ensure that seizure is the last resort. But we must allow reasonable flexibility in the arrangements provided in the Bill.
If documents have been taken in the limited circumstances in which they are now permitted, we should leave it to the director to behave reasonably and to allow access, where that is necessary, to the company concerned. I am confident that the director will behave reasonably in this and other important areas. I am sure that that confidence is shared by the noble Lord, Lord Ezra.
Were we to start from the assumption that the director would always try to behave unreasonably and make provision in the Bill to prevent it, we would end up with an unworkable Bill and an unworkable system.
I therefore invite the noble Lord to put his trust in the good sense of the director.
On Question, amendment agreed to.
The Deputy Speaker: My Lords, if Amendment No. 106 is agreed to, I cannot call Amendment No. 106A.
Lord Haskel Lord Haskel moved Amendment No. 106:
Page 14. line 44, leave out from ("(1)") to end of line I on page 15 and insert—
("(bb) to take possession of any documents appearing to be of that kind if—

(i) such action appears to he necessary for preserving the documents or preventing interference with them; or

(ii) it is not reasonably practicable to take copies of the documents on the premises;

(bc) to take any other steps which appear to be necessary for the purpose mentioned in paragraph (bb)(i);").
The noble Lord said: My Lords, I spoke to Amendment No. 106 earlier. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 106A and 107 not moved.]
Lord Haskel Lord Haskel moved Amendment No. 108:
Page 15, line 2, leave out ("such document") and insert ("document appearing to be of a kind mentioned in subsection (1)").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 109 and 109A not moved.]
The Deputy Speaker: My Lords, if Amendment No. 110 is agreed to, I cannot call Amendment No. 110A.
Lord Haskel moved Lord Haskel moved Amendment No. 110:
Page 15. line 10, leave out from second ("the") to first ("that") in line 11 and insert ("judge is satisfied").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 110A to 111A not moved.]
Lord Ezra Lord Ezra had given notice of his intention to move Amendment No. 112:
Page 15. line 24, at end insert ('provided that such steps which appear to be necessary shall be taken to provide the person from whom such documents have been taken with access to them whilst they are in the possession of the Director.").
The noble Lord said: My Lords, I heard what the noble Lord, Lord Haskel, said in relation to this amendment. While I am prepared to accept that the director would always act reasonably, nonetheless it seems to be reasonable guidance to give to him. Perhaps therefore the Government will reflect on this minor amendment between now and Third Reading. I shall not now move the amendment.
[Amendment No. 112 not moved.]
[Amendment No. 112A not moved.]
Lord Haskel Lord Haskel moved Amendment No. 113:
Page 15, line 27, leave out from ("behalf-) to end of line 28.
The noble Lord said: My Lords, I spoke to Amendment No. 113 with Amendment No. 84. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 114:
Page 15, line 29, leave out subsection (9).
The noble Lord said: My Lords, I spoke to Amendment No. 114 when we debated Amendment No. 102. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 114A and 114B not moved.]
Lord Haskel Lord Haskel moved Amendment No. 115:
After Clause 28, insert the following new clause—

ENTRY OF PREMISES UNDER WARRANT: SUPPLEMENTARY
(" .—(1) A warrant issued under section 28 must indicate

(a) the subject matter and purpose of the investigation;

(b) the nature of the offences created by sections 41 to 43.

(2) The powers conferred by section 28 are to be exercised on production of a warrant issued under that section.
(3) If there is no one at the premises when the named officer proposes to execute such a warrant he must, before executing it

(a) take such steps as are reasonable in all the circumstances to inform the occupier of the intended entry; and

(b) if the occupier is informed, afford him or his legal or other representative a reasonable opportunity to be present when the warrant is executed.

(4) If the named officer is unable to inform the occupier of the intended entry he must, when executing the warrant, leave a copy of it in a prominent place on the premises.
(5) In this section—
"named officer" means the officer named in the warrant; and
"occupier", in relation to any premises, means a person whom the named officer reasonably believes is the occupier of those premises.").
The noble Lord said: My Lords, I spoke to Amendment No. 115 when we debated Amendment No. 102. I beg to move.
On Question, amendment agreed to.
Clause 30 [Decisions following an investigation]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 116:
Leave out Clause 30 and insert the following new clause—

NOTICE PRIOR TO MAKING DECISIONS
(" . — (1) Subsection (2) applies if the Director proposes to make—

(a) a decision that the Chapter I prohibition has been infringed; or

(b) a decision that the Chapter II prohibition has been infringed.

(2) Before making a decision under this section, the Director must—

(a) give not less than 28 days written notice to the person (or persons) likely to he affected by the proposed decision;

(b) give that person (or those persons) a reasonable opportunity to make representations to him including, at the request of that person (or persons), oral representations; and

(c) Take account of and comment upon any such representations when making his decision.").

The noble and learned Lord said: My Lords, I appreciate the desirability of putting together groups of amendments where there is a common theme. I congratulate the noble Lord on this grouping; he excelled himself and it is a volume to get through. However, I am not equal to the task and may indicate to the noble Lord that we will deal with Amendments Nos. 125 and 126 when we come to them in their appropriate place. Perhaps I can speak first to Amendment No. 116.
As the Minister will appreciate, Clause 30 would require those affected by a decision to be given notice of the opportunity to make representations before that decision is made. However, that requirement applies only where the decision relates to investigation conducted by the Director General of Fair Trading under the powers provided by Clause 25 of the Bill and the DGFT is not placed under an express obligation to take account of any representations made to him.
The new clause would change the procedure which the DGFT or the regulator must follow before making a decision that a Chapter I or Chapter II prohibition has been infringed. It would extend the obligation to give notice in any case where the DGFT or the regulator proposes to make a decision that the Chapter I or II prohibition has been infringed and would ensure that the obligation is undertaken properly by requiring him to take account of any representations made.
It would seem to us that that would be in accordance with the rules of natural justice—ensuring that decisions were made on a properly informed basis with due regard being paid to the views of any person affected by them and ensuring that such persons have the right to be heard and make representations, similar to that enjoyed before
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a court, in all cases where it is proposed to make decisions affecting them. The need for the DGFT to take account of or comment upon any representations received would, in our view, assist the tribunal in the hearing of any subsequent appeal on the decision that has been made.
Perhaps I may turn to Amendments Nos. 117 to 120, which are amendments to Clause 31. Clause 31 gives the director general the power to make directions in respect of infringement of a Chapter I prohibition. These amendments are designed to provide safeguards in relation to the exercise of the powers given to him under that clause. As presently drafted, subsection (1) allows the director general to give a direction to any person he considers appropriate for the purpose of bringing the infringement of the Chapter I prohibition to an end. That would include innocent third parties.
The first amendment we tabled would limit the sweeping power given to the director general so that such directions may be given only to those party to the relevant agreement. The clause provides for any such direction to include a requirement to modify or terminate the relevant agreement, but does not provide for modification in the sense of severing the offending provisions but leaving the remainder of the agreement intact. We had some discussion on the principles of severance on the first day of the Report stage but I shall be interested to hear what the noble Lord has to say about that in this context. The power to give directions is not subject to any requirements to give notice to the persons affected before the direction is made. This prevents those affected from making representations on the need for fairness of the direction and the manner in which it will be implemented.
The third amendment in the group would require the director general to give such notice and to receive and to take account of any representations made. As it is currently drafted, the clause does not make it clear whether directions will come into effect before any right of appeal has been exercised. The fourth amendment, Amendment No. 124, would stay the effect of the direction until the time for making an appeal has expired and until an appeal had been determined or withdrawn or the person concerned had confirmed that no appeal was to be made. I think I have spoken sufficiently to the amendments. I beg to move.
5.30 p.m.
Lord Kingsland: My Lords, I wish to speak to Amendments Nos. 125 and 126. Clause 33 enables the Director General of Fair Trading or a regulator to apply to the court for an order to enforce a direction to end an infringement of the Chapter I and Chapter II prohibitions given under Clauses 31 or 32 where the undertaking to which that direction is addressed has failed to comply with its terms. In addition to imposing a liability on undertakings to comply with such a court order or risk being in contempt for failing to do so, and to meet the costs of the application for that order, Clause 33 also provides for the order and liability for costs to be directed at the officers of the undertaking personally.

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The competition law of the European Community is concerned with and directed at undertakings. It does not confuse public and private law issues and therefore does not provide for personal liability of this kind on the part of officers of an undertaking. These amendments would ensure that UK competition law is in line with the corresponding EC law, one of the Government's stated aims in relation to the Bill, by removing the provision which would impose personal liability on the officers of an undertaking.
Lord Elton: My Lords, I have to confess that I am here for nostalgic reasons. In 1984 I was in the position of the noble Lord, Lord Simon of Highbury, and taking the first Data Protection Bill through the House. I am very much aware of the difficulty of balancing the need to he absolutely fair to the person who is subject to the regulation and the need to be certain that that fairness does not diminish the protection given to the person being protected. I intervene merely to say that, if the noble Lord intends to resist the first amendments in the group, I hope it will only be on the grounds that it would expose those who are supposed to be protected to unnecessary risk. But otherwise the balance must be in favour of the person who will be in receipt of the broken door, to which reference was made on the previous amendment.
Lord Simon of Highbury: My Lords, I thank noble Lords for their consideration in accepting a large grouping. I shall try to do justice to the sequence of amendments that have been tabled. I shall therefore speak, first, to Amendment No. 116. I am grateful to the noble and learned Lord. Lord Fraser, for drawing to the attention of the House the great importance of procedural safeguards before and indeed after decisions are made by the director. Indeed, the noble Lord, Lord Elton. said that we must try to ensure that we stray neither too far from or too close to the lines of "unbalancing" judgment.
I agree that the procedural safeguards are important and need to he clearly spelt out. Where I differ from noble Lords opposite is in how this result can best be achieved. We have given careful thought to the structure of the Bill. The Bill itself provides the basic framework for the safeguards. Clause 30 provides that, before making a decision on his own initiative following an investigation, the director must give written notice to parties likely to be affected by the proposed decision and allow those parties to make representations. It is right that such safeguards should be made clear on the face of the Bill. That is the balance we require in the case of own initiative decisions of the director.
The Bill itself does not specify how these basic safeguards are to apply in detail. That is a matter where flexibility in primary legislation is desirable. Accordingly, the Bill provides for procedural matters to be prescribed in rules set under Clause 49 and subject to parliamentary scrutiny. I therefore regard questions such as the length of the notice period to be more suitably dealt with in rules and not on the face of the Bill.
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The same is true of the procedures for allowing representation, including whether there should be opportunity for oral representation. I therefore see no need to make explicit provision for the director to take account of representations. It is implicit in the existing provision in Clause 30 that the director must take account of the representations he receives in making his decision. Nor do I see a need for an explicit provision requiring him to comment on such representations, given that the director will be producing reasoned decisions.
As for decisions made pursuant to notification, the director general will clearly have the arguments of the parties before him in the shape of the notification. Once again, we have expressly provided in Schedules 5 and 6 for the director to follow the procedures as laid down in Clause 49. The detail of this procedure will be set out in the director's rules under Clause 49. We expect that a first draft of the rules will be available in the spring. Once again, such rules will be subject to parliamentary scrutiny. It would be wrong for the detail to be enshrined on the face of the Bill in what we consider to be an inflexible form. Therefore, I shall invite the noble and learned Lord, Lord Fraser, to withdraw the amendment when I reach the end of this rather lengthy response.
I now turn to Amendments Nos. 117 and 121. They seek to limit the range of persons to whom the director may give directions for the purpose of bringing the infringement to an end. At present, Clauses 31 and 32 are widely drawn, and intentionally so. They include such persons or such person as he considers appropriate to bring the infringement to an end. This will include both individuals—natural persons—and bodies corporate. The noble and learned Lord's amendment seeks to limit this, in the case of a Chapter I infringement, to a party to that agreement, and, in respect of a Chapter II infringement, to the person or persons whose conduct infringes that prohibition.
On the face of it that might appear reasonable. However, there is a strong possibility that the undertakings involved in infringements will be part of, or even the whole of, a very complex corporate group structure. The company which is directly a party to an infringing agreement or which is apparently responsible for infringing conduct may not be the actual instigator of that infringement. It may be a subsidiary that is directly involved in this way, but the infringement may well have been brought by the ultimate parent company or other prominent entities within the complicated group structure. As has been stressed before in the context of the investigation and enforcement regime under this Bill, the director must have the ability to get at the real culprit.
I turn now to Amendments Nos. 118 and 122. These would limit the powers of the director to require the termination of an infringing agreement or of infringing conduct. As currently drafted, he would be empowered under Clauses 31 and 32 to require by directions the relevant agreement or conduct to be amended or to be terminated. The noble Lords' amendment would make the power to require termination of the agreement or the conduct to be conditional upon there having been a prior

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attempt by means of similar directions to modify the relevant agreement or conduct so as to bring the infringement to an end. This is unnecessary and undesirable. There will be cases where modifying the agreement or conduct is not sufficient and termination is the only proper remedy. The director should have the power to terminate the agreement or conduct in this way.
Amendments Nos. 119 and 123 seek to add new safeguards before the giving of directions under Clauses 31 and 32. Such new procedure would involve the director, where he had decided that there was an infringement of either of the prohibitions and intended to issue directions, to go through the process of giving written notice of the proposed direction to the person concerned, affording him the opportunity to make representations and to take any such representations into account. Effectively the director would have to repeat the same process he had possibly only just gone through and which he is required to do by Clause 30 before making the decision that there had been an infringement. Again, such duplication would serve no useful purpose and would simply delay the remedial action. I believe that it is right in these circumstances for the safeguards to be prescribed in the director's rules under Clause 49. Schedule 9 explicitly refers to the fact that rules may cover the procedure to be followed when the director takes enforcement action.
Amendments Nos. 120 and 124 in our view are also undesirable. Clause 45 of the Bill provides for appeals to the competition commission against decisions made by the director, and this includes directions made under Clauses 31 and 32 to bring infringements of either of the prohibitions to an end. These amendments would prevent such directions from taking effect until the period of notice of appeal had expired or until any such appeal had been dealt with, except where the persons concerned gave written notice to the director that they did not intend to appeal. One of our concerns about the enforcement of these prohibitions has been to ensure that infringing agreements or conduct are brought to an end as swiftly as possible to minimise the damage they cause. The requirements proposed here would inevitably involve delay and because of this we have made it clear in Clause 45 that, as far as is relevant here, the making of an appeal will not suspend the effect of the direction. We recognise the need for safeguards, however. Schedule 8 to the Bill, in providing further for the appeal process, allows a tribunal to make an interim order and such an order can suspend the effect of a direction. We consider that providing for such suspension on the merits of the case is preferable to deferring the operation of directions almost automatically and across the board, which would be the effect of these amendments.
Finally, I turn to Amendments Nos. 125 and 126, as spoken to by the noble Lord, Lord Kingsland. They seek to ensure that responsible officers of undertakings are not made the subject of orders requiring the remedying of failures to comply with directions. The circumstances contemplated here are that the director has decided that there has been an infringement of one of the
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prohibitions. He has given directions which involve the officers of an undertaking taking some managerial or administrative action which they have failed, without any reasonable excuse, to do. This provision enables a court to compel the officers to take that action. If there is no power to achieve this end, then the direction will not be complied with and the infringement may go on unchecked. In these circumstances we consider it right that such officers who are wilfully in default may be liable for the costs of obtaining such an order.
I am grateful to noble Lords for their patience while I responded extensively to a number of clauses. I am satisfied that procedural safeguards are adequately provided for in the Bill as it is drafted. Amendments in this group also limit the powers of the director general to take enforcement action and weaken the Bill's effectiveness against anti-competitive conduct, when we know it is having a very stark effect on the competition circumstances that are being investigated.
In response to the point made by the noble Lord. Lord Elton, we have tried to achieve balance between what should be on the face of the Bill and what should be in the guidelines and whatever written directions are given by the director general. Therefore, I am sure that it will come as no great surprise to learn that I ask both the noble and learned Lord, Lord Fraser, and the noble Lord, Lord Kingsland, whether they are prepared to withdraw their amendments.
5.45 p.m.
Lord Fraser of Carmyllie: My Lords, as regards the Minister's response to Amendment No. 116, he wholly persuades me. I agree that, on reflection and having listened to what he had to say, the course the Minister has suggested for these procedural matters is a more appropriate one. It may be some small comfort to him. and certainly to his officials, to know that I shall not be returning to the matter at Third Reading.
I am also grateful to the noble Lord for expressing more clearly than I did that Amendments Nos. 117 to 124 are parallel amendments to Clauses 31 and 32. I believe that at one point I inadvertently slipped from one clause to the other. I would like to read what the Minister said as regards the first of the three amendments. I am grateful to him for his full response. But perhaps I may indicate to him that as regards Amendments Nos. 120 and 124, I do not propose to consider them again at the final stage. I very much agree with the argument that the noble Lord has advanced, that given the power to suspend that is to be found in Schedule 8, paragraph 2, that is a more appropriate way to deal with a case where there is a desire to see the decision suspended while an appeal is being heard. With that exposition, and again with my thanks to the Minister, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 31 [Directions in relation to agreements]:
[Amendment No. 117 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 117A:
Page 16, line 15, leave out ("he considers appropriate") and insert ("are requisite").
The noble and learned Lord said: My Lords, this is a small and short amendment but in our view it is not without its importance. The clause, as currently drafted, provides for the director to give,
"such directions as he considers appropriate",
to end an infringement of a Chapter I prohibition. We are concerned that that power is too widely drawn and might permit directions to be given which extend beyond the action needed to bring an infringement to an end. The proposal that we offer is that the phrase as "he considers appropriate" should be replaced by the phrase "are requisite". That would in some measure limit the power to give directions which are no more than is necessary or required in the circumstances to end the infringement.
We have adopted that approach because in our view such a change would ensure that the remedy is proportionate to, and is thus consistent with, EC jurisprudence, as is set out in Clause 58 and of which so much mention has been made. It would also conform to the notion of severability—that only those provisions or features of an agreement or practice which violate Article 85(1) are void. That would be in line with decisions of the European Court of Justice. I beg to move.
Lord Simon of Highbury: My Lords, I do not believe there is anything to be gained by seeking to amend this test. The director will have considered the case carefully and reached a decision. He is very well placed to make a judgment as to what directions are appropriate to bring the infringement to an end. We would not expect the director to give directions which exceed what is necessary to bring an infringement to an end. If we are not to place some faith in his judgment, we should not be proposing to give him the powers which the Bill proposes to give to him. As it is, the giving of a direction under Clause 31 is, of course, an appealable decision under Clause 45. I do not see the necessity to tighten the wording in this instance and I trust that the noble and learned Lord will not be pressing this amendment.
Lord Fraser of Carmyllie: No, my Lords, I certainly shall not be pressing the amendment, although it might have been valuable for the Government to accept it. Where the director general has a number of routes to bring an infringement to an end, provisions worded as we have suggested might focus his mind more clearly on the duty incumbent upon him to do so but not in any way that would be unduly onerous for the infringing party. Having expressed that continuing misgiving, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 118 to 120 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 120A:
Page 16, line 22, at end insert—
("() In circumstances where the Director is entitled to exercise functions both under the Fair Trading Act 1973 ("the 1973 Act") and under this Part, he shall exercise his functions under the 1973 Act and not under this Part if it appears to him that any enforcement action which may need to be taken includes the imposition of a structural remedy.
() In this section "structural remedy" means an order made in accordance with Part 11 of Schedule 3 to the 1973 Act.").
The noble and learned Lord said: My Lords, the Government have indicated that the provisions of the Fair Trading Act 1973 relating to scale monopolies are not to be repealed in order to retain flexibility in dealing with structural factors which inhibit competition and because they are necessary to allow for the imposition of structural remedies, reorganisation and divestment. It is claimed that adequate powers to deal with such monopolies will not be conferred by this Bill.
The amendment would require the relevant powers under the Fair Trading Act to be exercised, and not those conferred by the Bill, in relation to any case where a structural remedy may be required. That is to avoid the prospect of action being taken under the powers provided by the Bill and then separate procedures under the 1973 Act being commenced after the need for a structural remedy has been identified.
During the first day of Report stage, the noble Lord, Lord Simon, indicated that an exemption from the Chapter I prohibition would not be granted if it would exempt something that appears to infringe a Chapter II prohibition. He said that at col. 956 of Hansard. We were grateful to him for that because it clearly identified the relationship between the two prohibitions.
However, in contrast, the interaction of the powers under the Bill and those in the 1973 Act are not totally clear. The amendment seeks to ensure that the powers in the 1973 Act to provide a structural remedy are exercised in a manner which avoids any confusion between the two regimes. Throughout the passage of the Bill, the Minister has sought to emphasise the desirability, as he sees it, of there being no risk of such confusion. Even if the noble Lord is not prepared to accept the amendment, I hope that, as he did with regard to the interrelationship between the prohibitions under Chapter I and Chapter II, he will take this opportunity to clarify the position. I beg to move.
Lord Simon of Highbury: My Lords, I am full of admiration for the noble and learned Lord's ingenuity in responding to my arguments about the scale monopoly provisions during last week's debate. Let me make one thing clear, I hope, from the outset. It is not the Government's intention that the prohibitions and the Fair Trading Act monopoly provisions should be used in parallel on the same matters. There is no question of such double jeopardy. The prohibitions will be the primary weapons against anti-competitive behaviour in the future. If the director suspects that there has been an infringement of the prohibitions, we would expect him to investigate the matter in relation to the prohibitions and not to make a reference under the monopoly

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provisions. I would expect the Secretary of State to veto a monopoly reference in relation to matters that were the subject of current proceedings under the prohibitions; nor would I expect the director to wish to make such a reference.
There may, however, be circumstances where the prohibitions are not the appropriate means of dealing with competition issues. As we have debated before, the Fair Trading Act complex monopoly provisions may enable the authorities to deal with problems that fall outside the Chapter I and Chapter II prohibitions, particularly where there is parallel behaviour by companies in a market but no actual agreement. In these circumstances the prohibitions would not apply, but the director would have the option of a monopoly investigation if he felt that there were effects adverse to the public interest.
The position in relation to the scale monopoly provisions is rather different. I explained the Government's policy on the use of these powers in Committee (at col. 300 of Hansard). We believe that these powers should be used in the future only in circumstances where there has already been proven abuse under the prohibitions and where the director believes that there is a real prospect of further abuses by the same firm. In these circumstances, as the noble and learned Lord recognised, the more flexible powers to impose structural remedies available under the scale monopoly provisions may be the only effective means of preventing further abuses. I should at this point remind the House that, as I said in Committee, the use of the scale monopoly provisions as regards the regulated utility sectors is being considered separately under the utility review.
It seems to me that the policy I have described is a more significant and, if I may say so, a clearer way to focus the use of the scale monopoly powers than that proposed in the amendment. The amendment would require the director to second-guess the findings that the MMC would come to following its investigation of a reference. It would require the director to second-guess the view that the Secretary of State would take in the light of those findings. It is, of course, quite rightly the responsibility of the Secretary of State, subject to parliamentary control, to decide on the application of the wider powers available under the Fair Trading Act. It would not be right for the director to indicate whether structural remedies were needed.
There is one further important point I wish to make. The amendment seems to suggest that if there is a possibility that structural remedies would be appropriate, these should be tried first. I suspect that this is not actually the noble and learned Lord's view, but it would seem to be the consequence of the amendment. It is our view that the penalties and directions available under the prohibitions will be effective remedies in the vast majority of cases. Wider structural remedies would be contemplated only in circumstances where this does not prove to be the case.
That is the Government's position as established in the Bill and in their policy statements. The amendment however perceptively drafted cuts across that position
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and would have the highly undesirable consequences that I have mentioned. I suspect that those consequences are ones that the noble and learned Lord would not himself have intended. I hope that my answer clarifies the Government's intention in their last statement. I therefore urge the noble and learned Lord to withdraw his amendment.
6 p.m.
Lord Fraser of Carmyllie: My Lords, this is a probing amendment. I would have been astonished had the noble Lord indicated that it would be accepted. The noble Lord is aware that we would prefer the provisions relating to scale monopoly to be repealed altogether. That remains our position. We still harbour a faint hope that the Government may yet come round to the view that they are unnecessary. If they are to be retained I take it from the Minister's answer that he accepts there should be as little confusion as possible.
I was grateful to the Minister for setting out how he expected the director general to approach these matters. I should like to reflect further on how it would be possible to allow for the retention of a structural remedy (to put it in that shorthand form) without having to subject undertakings to the risks that they would first have to be tapped in this way and a further change made under the Fair Trading Act 1973. That seems to me to be unnecessarily cumbersome. However, I am grateful to the Minister for what he has said. I shall reflect upon it. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 32 [Directions in relation to conduct]:
[Amendments Nos. 121 to 124 not moved.]
Clause 33 [Enforcement of directions]:
[Amendments Nos. 125 and 126 not moved.]
The Deputy Speaker (Lord Allenby of Megiddo): My Lords, before calling Amendment No. 127, I should draw to your Lordships' attention that if this amendment should be agreed to, I cannot call Amendments Nos. 127A to 130A inclusive.
Clause 34 [Interim measures]:
Lord Ezra Lord Ezra moved Amendment No. 127:
Page 17, line 7, leave out subsections (1) and (2) and insert—
("(1) This section applies if—

(a) the Director has reasonable grounds for belief that the Chapter I or the Chapter II prohibition has been infringed but has not completed his investigation into the matter, and

(b) it is necessary for the Director to act under this section as a matter of urgency—

(i) on a complaint made in relation to the agreement or conduct under investigation, for the purpose of preventing serious, irreparable damage specified in the complaint to the complainant or a category of persons which includes the complainant, or

(ii) for the purpose of preventing intolerable damage to the public interest,

where the damage is likely to occur in consequence of the agreement or conduct under investigation before the Director is reasonably able to complete that investigation.
(2) The Director may give such directions as are necessary for the purpose of preventing any occurrence of the damage referred to in subsection (1)(b)(i) or (ii) in the period between the giving of the directions and the date when he is reasonably able to complete that investigation.
(2A) The Director shall not take action under this section where subsection (1)(b)(i) applies unless he has first considered whether—

(a) the person (or persons) to whom he proposes to give the direction would be likely to suffer serious irreparable damage if the direction is given and his investigation subsequently establishes that the Chapter I or the Chapter II prohibition has not been infringed and, if so, whether he is satisfied that on balance it is still appropriate to give the direction, and

(b) the complainant should he required to provide, in a form specified by the Director, adequate security to the person (or persons) to whom the Director proposes to give the direction for any costs incurred or damage suffered by that person if the direction is given and his investigation subsequently establishes that the Chapter I or the Chapter II prohibition has not been infringed.").

The noble Lord said: My Lords, we come to the important subject of interim measures under Clause 34. Quite rightly, the clause allows the director general or the sector regulator to issue interim measures which prevent potential abuse while an issue is being investigated. That is not something to which we can object. However, what is a matter of concern is that the clause does not include any checks or balances as incorporated in European law to ensure that these measures are implemented only in exceptional circumstances. In EU law a prima facie case must be established before interim measures are imposed. I refer to Article 83(2) of the Rules of Procedure of the Court of Justice, as supported by European case law.
At present Clause 34(1) allows the director general or sector regulator subjectively to impose such measures merely if he has a reasonable suspicion that Chapter I or Chapter II prohibitions have been infringed. Subsection (1)(a) of the amendment seeks to introduce objectivity comparable with EU law by requiring the director general or the sector regulator to have reasonable grounds for belief before interim measures are imposed. Certainly, interim measures should not exceed what is necessary in the particular situation. The director should be required to weigh the interests of the company alleged to be infringing before deciding whether to grant interim measures; that is, to undertake a balance of convenience test. In addition, in line with EU case law—for example, National Carbonising Co. v. Commission—it must be considered whether the complainant should be required to give a cross-undertaking in damages or a bond guarantee. For all these reasons, I ask the Government seriously to consider Amendment No. 127. I beg to move.
Lord Kingsland: My Lords, the Opposition also have a number of amendments along these lines, including Amendments Nos. 128, 129, 129A, 130, 130A, 130B, 133A and 133B. Those amendments very much follow the amendment just moved by the noble Lord. Lord Ezra. The European Commission has powers to impose interim measures but the circumstances in which they can be exercised have been strictly constrained by the European Court of Justice. Our amendments seek to introduce into the Bill the same
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kind of criteria as British courts have developed in interim injunctions. I believe that the language follows quite carefully our own case law.
The only amendments to which I draw particular attention are those on page 17, in line 17, which seek to replace "the public interest" with "competition" and to place before it "preventing serious and irreparable damage to." We were particularly struck by the enormous breadth of the power given to the director general in Clause 32(2)(b) to protect the public interest in circumstances in which presumably he is the only person who determines what is the public interest. That appears to us to be unnecessarily wide. If one accepts that there must be a set of rules in the Bill that narrows the circumstances in which interim measures can be applied by the director general, one must also accept that the expression "public interest" requires very careful examination before it is allowed to become law.
Lord Mishcon: My Lords, I follow the comments of the noble Lord with an apology to the House if I introduce a minor point into a matter of obvious major principle. The noble Lord who has just sat down referred to "public interest" as important wording that might create a degree of doubt as to whether it was a truly objective test. The noble Lord, Lord Ezra, was extremely keen in making clear to the House that objectivity was very much in this mind when he moved his own amendment which he said followed European law. I was somewhat aghast when I read the wording of the amendment so eloquently moved by the noble Lord, Lord Ezra. In paragraph (b)(ii) one reads:
"for the purpose of preventing intolerable damage to the public interest".
I pray that this will never be copied in any Act of Parliament passed by this House or the other place. I draw it to the attention of the noble Lord because to think in terms of objectivity in the context of what should be tolerated and what should not is a little alarming.
Lord Simon of Highbury: My Lords, these amendments deal with the important area of the director's powers to take interim measures pending his final decision in a case. It would of course be a truism to say that in this area we need to balance adequate safeguards in respect of the exercise of the powers to order interim measures against enabling the director to act quickly to bring temporary relief to those affected by seriously anti-competitive agreements and behaviour so as to prevent irreparable damage or protect the public interest.
The amendment would shift the balance too far in the direction of making it too difficult for the director to act in cases where we believe that he should properly be able to do so. I recognise, as noble Lords have said, that in some respects their amendments reflect existing Commission law and practice in that area. But this is an area where we believe we can improve on the position at Community level. Interim measures have proved to be a difficult tool for the Commission to use. We are determined that they should provide a way of tackling anti-competitive behaviour quickly, before serious

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damage has been inflicted, which has been a great failing of the current system. I am talking about our current system and the European system.
However, I believe that I will be able to offer noble Lords some comfort as to the extent to which the director is obliged under the existing clause to take into account the interests of a party who would suffer from interim measures.
I turn now to the specific issues raised by these amendments. Both the noble Lords, Lord Ezra and Lord Kingsland, seek to raise the threshold of "reasonable suspicion" that either prohibition has been infringed, to the significantly higher threshold of "reasonable grounds for belief. We have of course discussed those wordings in a number of different contexts.
The context here is that this is merely a preliminary threshold. The director must go on to satisfy further conditions before being able to impose interim measures. I do not believe the threshold of "reasonable grounds for believing" there to be an infringement is right where it provides simply the initial hurdle which must be cleared before the director can proceed to examine whether the further conditions for the exercise of the power are satisfied.
The three most important changes that would be made by Amendment No. 127 in the name of the noble Lord, Lord Ezra, would be to require the director: first, only to take action to prevent—and we have heard the views of my noble friend Lord Mishcon on the words—"intolerable damage to the public interest"; I take note of his experience in these matters; secondly, to take action on receipt of a complaint only and after considering the damage that would be inflicted on the recipient of the direction and balancing the pros and cons; and, thirdly, to consider whether the complainant should be required to provide adequate security for costs incurred and damage suffered should the director in the event conclude that a prohibition has not been infringed.
The first and last of those I recognise as, in essence, the position under Community law and practice. To the first, I must say that with regard to the effect on the public interest, though not required to be intolerable, as is the case under EC law, the matter must be one of urgency before he can act. With regard to the last of the three rubrics, I believe that in only one case in 1976 has the Commission required a bond to be given. In the case of abuse of a dominant position, interim measures would be required to protect small companies which are being damaged. Requiring them to provide a bond would remove a major advantage of asking the director to exercise those powers over their applying to the court for an injunction.
As regards the second point, although it does not appear on the face of the Bill, the director must obviously have some reason to act, which may be a complaint or the result of his own inquiries uncovering an agreement or behaviour that he suspects contravenes the prohibition. I have some sympathy for the point that any damage suffered by the subject of interim measures
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should not be disproportionately greater than the damage which the complainant is likely to suffer if interim measures are not taken.
However, the director will be required to give notice to the undertaking to be the subject of the measures, and to consider its representations as to the effect the measures will have upon it.
The clause sets out the hurdles the director must clear before he gives directions. That is intended to ensure that he hears the views of the offender, so to speak, and does not act in a way which causes disproportionately greater harm to the offender than the victim.
The director must have a reasonable suspicion that infringement of prohibition has taken place, must consider it necessary for him to act as a matter of urgency for the purpose of preventing serious, irreparable damage to a person or category of person or the protection of the public interest, and the directions must be appropriate for the purpose. Action which causes disproportionately greater damage to one party is unlikely to be appropriate. Moreover, the director, in exercising his powers, would be subject to the principle of proportionality. Any action he takes should not exceed what is necessary to achieve the objective sought; that is to say, the prevention of serious, irreparable damage or the protection of the public interest.
Perhaps I could now turn briefly to a couple of other issues raised by this group of amendments.
Amendment No. 130A appears to be aimed at transferring the responsibility for deciding upon interim measures to, I presume, a tribunal of the competition commission. Certainly I agree that a tribunal has a role to play. We have provided that a decision to impose interim measures will be appealable to a tribunal of the competition commission. We have also provided, in paragraph 13 of Schedule 8, that the tribunal rules may make provision for a tribunal to suspend the effect of an interim measure imposed by the director before taking a final decision on whether the interim measure should be upheld. In those circumstances, I believe that it is right that the power to impose directions should remain with the director, subject to the safeguard of an appeal to a tribunal.
The noble and learned Lord, Lord Fraser, in his amendment, seeks to substitute
"preventing serious and irreparable damage to competition"
for the public interest test. I think the broader test is preferable. Perhaps I could give one example why "competition" is too narrow. The Chapter II prohibition of the abuse of a dominant position goes wider than just competition. There is clear authority from its European counterpart, Article 86, that it prohibits excessively high prices. High prices are not in themselves anti-competitive—indeed, in so far as they encourage new entrants, they are pro-competitive. So the director would need to bear in mind the need to tackle exploitative behaviour as well as anti-competitive behaviour.
Finally, both the noble Lord, Lord Ezra, and the noble and learned Lord, Lord Fraser, have proposed that interim measures should be subject to a three-month limit. I understand the concern that an interim measures order should not remain in place for an undue period of time.

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However, the three months' limit proposed in which to reach a final decision may not be sufficient where complex and detailed analysis of the economic and legal issues for the final decision is required. Nevertheless, as we said in Committee, we expect to bring into force, when the system has bedded down, the provision in paragraph 7 of Schedules 5 and 6, enabling an application to the court to ensure that there is no undue delay in determining applications for decisions. Behaviour subject to interim measures can of course be notified to take advantage of that procedure.
I hope that with that reflection on the balance that we are trying to achieve in interim powers between swift and effective action, which has not been the strength of our current law base or the Commission's in carrying out the implications of Articles 85 and 86, and the capacity of the tribunal to judge on those matters and the appropriateness of the action, the noble Lord will be able to withdraw his amendment.
Lord Ezra: My Lords, I thank the noble Lord, Lord Mishcon, for his important intervention and I take careful note of it. I also thank the noble Lord, Lord Simon, for his considered reply. He rightly identified the two reasons for the amendment. The first is to bring the clause more into line with European legislation and case law and the second is to avoid causing unreasonable damage to the enterprises concerned during the interim period. I shall take careful note of what he said and reflect upon it.
I am a little concerned about the considerable damage which could be caused to a firm if, after investigation, it were found that it had not infringed the rules. That could he the case. During the apparently unlimited period of the implementation of interim measures great damage could be caused to the firm. We must reflect on that matter between now and Third Reading but, in the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 127A and 127B not moved.]
Lord Kingsland Lord Kingsland had given notice of his intention to move Amendment No. 128:
Page 17, line 13, leave out ("considers") and insert (",having applied the same reasoning which a court would apply in determining an application for any interim measure, is satisfied").
The noble Lord said: My Lords, I listened with great interest to the Minister's reply on the question of interim measures. It is undesirable that the director should have the ability to apply interim measures on a more generous basis than our own courts. I shall read his comments in Hansard with interest and give notice that the Opposition might wish to return to the matter on Third Reading.
[Amendment No. 128 not moved.]
[Amendments Nos. 129 to 133A not moved.]
Clause 35 [Penalty for infringing Chapter I or Chapter II prohibition]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 133B:
Page 17, line 38, at end insert—
("() In determining whether to require an undertaking to pay him a penalty in respect of an infringement in accordance with
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subsection (1) or (2), the Director shall have regard to the gravity and duration of that infringement.").
The noble and learned Lord said: My Lords, this group of amendments deals with the penalties which might be imposed. Amendment No. 133B would require the director to have regard to the gravity and duration of an infringement in deciding whether to impose such a penalty. The Minister might refer me to Clause 35(4), which in turn refers to Clause 39. Notwithstanding the arrangement in the Bill, we regard it as desirable that the director should be under the clear and express direction to have regard to the gravity and duration of an infringement.
As regards Amendment No. 134, we have considered the issue on at least one occasion. I am grateful to both Ministers for the further explanation that they have provided. It has gone a long way to allay some of the concerns which have been expressed to us. However, I have another concern on which I hope to secure a further degree of reassurance and possibly acceptance of the amendment.
Our contention is that the penalty of up to 10 per cent. of turnover should apply only to turnover in the relevant goods and services in the United Kingdom. If not, some large companies—it is not difficult to think of them—which may have several subsidiaries carrying on wholly unrelated activities independently of each other might be disproportionately penalised. The noble Lord, Lord Simon, stated that the penalty related to UK turnover. On 30th October, he referred to 10 per cent. of the turnover of the offending business. During Committee, the noble Lord, Lord Haskel, also made it clear that the provision related to UK turnover. We are not yet clear about whether the provision is restricted to turnover in the relevant goods and services. We have tabled the amendment to secure further clarification.
I am sure that the Minister will have noted that Amendments Nos. 135 and 135A are in part alternatives. We do not expect him to consider allowing both. Clause 37 requires the director to prepare and publish guidance on the appropriate levels of penalties to be imposed for infringement of Part I of the Bill. The amendment would widen the obligation imposed on the director and require guidance on the criteria to be applied in deciding whether to impose the penalty as well as the level of the penalty. In a different formulation, Amendment No. 135A seeks to achieve much the same end. In our view, it would be desirable that that is spelt out. It should be made clear that it refers not only to the amount of the penalty but whether the penalty should be imposed. I beg to move.
Lord Ezra: My Lords, I rise to speak to Amendment No. 134 and to support the noble and learned Lord. Clarification of the words "the relevant goods or services" is required. It is easy to think of companies operating in the UK. I was involved with a company making building materials. It dealt in a whole range of separate building materials operated by separate subsidiary companies. If one of those operations was suspect, in accordance with the competition rules it would be wrong that the whole of its turnover in

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different activities, even if carried on in the UK, were to be penalised. It is an important issue which requires clarification.
Lord Monson: My Lords, other than as a small shareholder, I have no connection with any company large enough to be caught by the provisions of the Bill. However, I believe that the amendments are not only well thought out, but some or all are necessary in order to prevent the possible imposition of unjust penalties.
Lord Simon of Highbury: My Lords, I recognise that Amendments Nos. 133B and 135B derive from requirements placed upon the commission in respect of its fining policy. I am sure that in drawing up guidance under Clause 37 the director will have full regard to these matters. However, I believe that the question of policy on penalties is best left to guidance following detailed consultation with interested parties. We should preserve maximum flexibility. I believe that we may be able to improve on commission practice. For example, I believe that the OFT has an ambition to be more predictable in its fining policy than the commission.
As regards Amendment No. 134, an identical amendment was discussed in Committee by, I believe, the noble and learned Lord, Lord Fraser. However, since I find it difficult to distinguish between the perspicacity and good sense which I hear from members of the Opposition on many amendments, it may have been the noble Lord, Lord Kingsland. As my noble friend Lord Haskel—and he I do recognise—said on 17th November (at col. 425 of Hansard), it is the Government's intention that the turnover will be confined to that which arises in the UK. I hope that the noble and learned Lord and the noble Lord, Lord Ezra, will accept our words on that. I do not believe that that matter should be specified in primary legislation.
The question of confining the turnover to the relevant goods and services is something which merits further consideration. While I can see the argument, and there is also the point that such a limitation might discriminate in favour of large companies with many different divisions, the ECJ has said that in setting the amount of fines, regard must be had to a number of factors which include the volume and value of the goods in respect of which the infringement was committed.
In the Pioneer case the court said that the 10 per cent. limit was an upper limit to prevent fines being disproportionate to the size of the undertaking concerned. The Commission cannot be required to take account of only the turnover on the market where infringements occur.
Therefore, those are not easy matters but they are important. I believe that the department should consult on them with interested parties before drawing up the order. I recognise that that may not be an entirely satisfactory answer to your Lordships, given that the amount of any penalty which may be imposed is an important matter in which noble Lords will rightly wish to take an interest. However, for the very reason that the Bill provides that no order under Clause 35(7) is to be
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made unless a draft of it has been laid before Parliament and approved by a resolution of each House, I believe that timely consideration can be given to the matter.
It is important to consult on that matter but I believe also that that important parliamentary safeguard will ensure that your Lordships are content with the results of our consultation.
On Amendment No. 135, I accept the noble and learned Lord's point that the director should issue guidance on the criteria to be applied in deciding whether to impose a penalty as well as on setting the appropriate amount of the penalty. I am assured by the OFT that the guidance under Clause 37 will cover that. No amendment is needed because the appropriate amount of any penalty would include cases where no penalty was appropriate. Therefore, with those assurances and my commitment to see the consultation truly take place, I hope that the noble and learned Lord will withdraw his amendment at this stage.
The Earl of Harrowby: My Lords, before the Minister sits down, I should say that I am a businessman like the Minister. I should like him to think again about mentioning on the face of the Bill the United Kingdom as part of the turnover as well as the separate subsidiaries. I should have thought that that was of significance to many companies. Like the noble Lord, I have been a chairman of companies which have subsidiaries all over the world, operating in different activities. Therefore, it is every bit as important to designate that the turnover referred to is United Kingdom or otherwise. It is not a matter which should be left to an understanding.
Lord Simon of Highbury: My Lords, I note the point made by the noble Earl, Lord Harrowby. However, what I have said is on the record and the matter falls better to the guidance which will be given in order to give ourselves the necessary flexibility within the statements that have already been made in the House on this matter as regards the way in which the director wishes to take that forward.
Lord Fraser of Carmyllie: My Lords, I am concerned about Amendment No. 134. We were told clearly by the Government in earlier discussions that there would be a restriction to the United Kingdom. I am rather concerned that the matter of the geographic confines is now something to which there is no reference in the Bill. I understood from what the Minister said that he has some sympathy for the point raised within Amendment No. 134 that it should he restricted to relevant goods or services. His reference to the European Court of Justice seemed to indicate that a similar restriction is contemplated by the court when such fines or penalties are imposed.
I invite the Minister to reflect further on that matter, especially if he has sympathy for the issue raised. It seems to me desirable to have that reference on the face of the Bill and I am sure that the noble Lord observed that there is sympathy for that view on all sides of the House. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 134 not moved.]
Clause 37 [The appropriate level of a penalty]:
[Amendments Nos. 135 and 135A not moved.]
Lord Simon of Highbury Lord Simon of Highbury moved Amendment No. 135B:
Page 18, line 29, leave out from ("section") to end of line 31 and insert ("he must consult such persons as he considers appropriate.
() If the proposed guidance or alteration relates to a matter in respect of which a regulator exercises concurrent jurisdiction, those consulted must include that regulator.").
The noble Lord said: My Lords, in moving this amendment, I should like to speak also to Amendment No. 135C, 149E, I59B, 164A and 164B. All the amendments but one in the group are in response to points raised in Committee by the noble Lord, Lord Kingsland, on which I agreed to reflect. The noble Lord moved an amendment which would have required the Secretary of State to consult appropriate persons when preparing tribunal rules. Amendment No. 149E places such a requirement on the Secretary of State.
We have also tabled amendments placing a similar requirement on the director general to consult appropriate persons when preparing his rules (under Clause 49); guidelines on the appropriate level of the penalty (under Clause 37); and advice and information (under Clause 50).
Amendment No. 164B places a similar requirement on sectoral regulators to consult when they are preparing their own advice and information. In fact, I am pleased to report that the Director General of Fair Trading wrote to me on 6th February reporting considerable progress in preparing procedural rules and guidelines.
Working closely with the sector regulators, the director general has identified a list of areas to be covered in guidelines. He expects to publish the vast bulk of the guidelines series by September of this year. In doing so, he is working to ensure that the documents are business friendly and aimed at those likely to be affected by the provisions of the Bill rather than legal specialists, although I am sure both will understand them.
His letter also confirms that before issuing guidelines, the sector regulators and the director general expect to consult as widely as possible, including consumer bodies, local authority associations, and, of course, the business community and its advisers. I have placed copies of the director general's letter in the Library of the House.
Also included in this group is Amendment No. 135C. This is a technical amendment which puts right the definition of appropriate court in Clause 37 so as to include the House of Lords. This change is needed because the House of Lords will be the ultimate court to hear appeals on the level of penalty and so should also have regard to the guidance on the level of penalties issued by the director. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 135C:
Page 19, line 3, at end insert—
("(d) the House of Lords.").
On Question, amendment agreed to.
Clause 39 [Limited immunity in relation to the Chapter II prohibition]:
Lord Teviot Lord Teviot moved Amendment No. 136:
Page 20, line 3, at end insert—
("() Immunity may not be granted under this section to a company which the Director considers has initiated an anti-competitive act.").
The noble Lord said: My Lords, as your Lordships know, Clause 35 deals with infringements of Chapter I and Chapter II prohibitions. It gives draconian powers to the Director General of Fair Trading. It also allows the director general to impose fines of up to 10 per cent. of turnover of the company or group concerned. Again, it gives limited immunity to small agreements in Clause 38, but rightly gives power to the director general to withdraw that immunity in certain circumstances; namely, in Clause 39, subsection (4).
At this stage I, as usual, declare an interest of which many of your Lordships will be aware. For a long time I have taken a special interest in the bus industry and it is the impact that this Bill will have on that industry which I wish to highlight. Some of your Lordships will be aware of the bus "wars" which were a feature of the industry in the late 1980s. Thankfully, those are now a thing of the past. However, the industry is still competitive, and occasionally the Director General of Fair Trading has to intervene. What is not always appreciated is that the anti-competitive actions can be initiated by large and small operators alike.
There is still an element of "cowboy" operations which can cause havoc on established routes and networks, to the disadvantage of passengers. At this point I must stress that the amendment is aimed solely at protecting the public's bus services, not the market position of the current service providers. However, to protect the passenger, we must protect the current service providers from anti-competitive behaviour. It therefore follows that the Government must ensure that any operator, irrespective of size, which flouts the rules is punished.
The established operator providing high quality services, backed up by sustained investment, which merely responds to the behaviour of the "cowboy" must not be penalised. If we are to ensure that passengers will receive the high quality services that they deserve, I believe that we must look closely into the effects that Clause 39, as currently written, will have.
I am aware that the main thrust of the clause is to reduce compliance costs on small businesses, something of which I, for one, am generally in favour. However, the Government have a responsibility, when bringing forward legislation, to underpin this aim to ensure that it does not merely place on the statute hook a law which gives small businesses immunity from fines and, in effect, carte blanche to attack their larger competitors in an anti-competitive fashion. I am sure that that is not the Government's intention, which is why I think that the clause needs closer examination.
In conclusion, I should acknowledge again that there is a mechanism incorporated in the Bill which enables the Director General of Fair Trading to withdraw immunity from fines in certain circumstances. I hope, therefore, that the Minister will be able to accept the amendment or agree to propose an equivalent on Third Reading. If, however, he is not minded to do either, I hope that he will indicate tonight his support for the Director General of Fair Trading for the principle of the withdrawal of immunity from fines for any company perpetrating anti-competitive behaviour. I beg to move.
6.45 p.m.
Lord Simon of Highbury: My Lords, I have a great deal of sympathy with the noble Lord, Lord Teviot. Coming from a large company background myself, it never escaped my notice that very small companies were able to perpetrate very considerable damage. I guess if they were setting their minds to very large abuses, they could also achieve that aim. Therefore, I fully understand the point of proportionality, if I may put it that way, that the noble Lord has put to me.
However, I do not believe that the modest protection conferred by the clause for what I shall, for convenience, call SMEs (small and medium-sized enterprises) should really give rise to the concerns which the noble Lord has expressed. As the noble Lord rightly said, the Government believe there ought to be some recognition of the compliance costs for small and medium-sized enterprises. We have therefore provided in Clauses 38 and 39 that parties to small agreements and persons whose conduct is of minor significance should be immune from penalties for breaches of the Chapter I and Chapter II prohibitions respectively.
Nevertheless, we wholly accept that SMEs may infringe the prohibitions including, as I hinted in my introduction, abusing dominant market positions. Small companies are absolutely capable of doing that. That is exactly why the clauses provide for the director to be able to withdraw the benefit of the immunity. Moreover, the full range of the investigation and enforcement powers, including the power to give directions with a view to bringing to an end the infringement of a prohibition, will be available to the director if he needs to use them.
Therefore, I doubt that the provisions will disadvantage competitors of small and medium-sized enterprises or the public in the way described by the noble Lord. The provisions are not in any sense a licence to SMEs to infringe the prohibitions and, in particular, to abuse a dominant position. Under those circumstances, the director has every power that he requires to act and would be able to withdraw the immunities. In view of those explanations, I hope that the noble Lord will feel able to withdraw the amendment.
Lord Teviot: My Lords, I am most grateful for the way in which the Minister responded to my amendment. I shall, of course, read most closely what he said in
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Hansard tomorrow. At present, I do not envisage returning to the matter. I am indeed most grateful to the Minister. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 136A:
After Clause 40, insert the following new clause—

DEFENCE IN CASES WHERE INFRINGEMENT OF CHAPTER I OR CHAPTER II PROHIBITION NOT FORESEEN
(" . In any civil proceedings brought under or in connection with this Part, including any Part I proceedings, it shall he a defence for a person to show that, having regard to all the circumstances, he could not reasonably have foreseen that the agreement or conduct to which those proceedings relate would constitute an infringement of the Chapter I or the Chapter II prohibition (as the case may be).").
The noble and learned Lord said: My Lords, this amendment deals with the problem, as we see it, that might result where someone, or an undertaking. has in fact been found to have acted in such a way that an infringement of the prohibitions has taken place. The amendment takes account of the fact that the actual effect of behaviour may not be known in advance and that a defence based on intent will, therefore, be unworkable.
As the Minister acknowledged during the first day of the Report stage:
"An abuse may be the effect of conduct on the part of a dominant company without being the intended result".—[Official Report. 2/9/98; col. 911]
Our amendment would not provide a defence on the basis of knowledge but on whether the eventual outcome was a reasonably foreseeable consequence of the course of action taken by the defendant. I beg to move.
Lord Haskel: My Lords, the purpose of the new prohibitions is to catch agreements and behaviour with anti-competitive effects. It is for the courts to determine whether an agreement or conduct breaches the prohibitions with all the consequences that that may have in civil law. It should not be a matter that depends on the parties foreseeing such an infringement. It cannot be a matter dependent on the parties' perceptions as to whether an agreement is void; or as to whether conduct that injures a third party is abusive.
Nevertheless, the notion of what could reasonably have been foreseen to be an infringement of the prohibition will of course be highly relevant in the new prohibition regime. It will no doubt feature in the director's guidance on the appropriate amount of any penalty. We are seeking to provide as much certainty as possible for businesses assessing the application of the new prohibitions. Those taking reasonable precautions will be able to stay the right side of the new regime. The prohibitions are not new concepts. They are modelled on Articles 85 and 86 which British business has lived with for over 20 years. Firms can look to existing Community jurisprudence as a guide. In addition, the director will be issuing guidance on how the prohibition system will operate.
Furthermore, if firms are in any doubt about the application of the prohibitions, they can seek guidance from the director or seek a formal decision. If the

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director grants an exemption in respect of an agreement, the agreement will be enforceable in the courts assuming the exemption was validly granted. Otherwise, the director's decisions will no doubt be of highly persuasive authority in the courts. Clause 56 also provides as a general rule that director's findings of fact are to be binding in court proceedings.
In view of those arguments, I urge the noble and learned Lord, Lord Fraser, to withdraw the amendment.
Lord Fraser of Carmyllie: My Lords, I am grateful to the Minister for that explanation. I shall read it carefully in Hansard. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 136B:
After Clause 40, insert the following new clause

DECISIONS ON MATTERS SUBJECT TO A COMMISSION INVESTIGATION
(" —(1) The Director shall not make a decision that—

(a) an agreement infringes the Chapter I prohibition; or

(b) conduct infringes the Chapter II prohibition,

if that agreement or conduct is the subject of an investigation by the Commission under a provision of Community law relating to Article 85 or 86.
(2) Nothing in this section shall prevent the Director from conducting in respect of that agreement or conduct

(a) an investigation in accordance with section 25; or

(b) a Director's investigation or Director's special investigation within the meaning of Part II.").

The noble and learned Lord said: My Lords, this new clause would prohibit the director general from making a decision that the Chapter I or II prohibitions have been infringed in respect of an agreement or conduct which is the subject of an investigation by the European Commission under Article 85 or 86. I emphasise that the new clause would not prevent the director carrying out an investigation under Part I (or at the request of the European Commission) under Part II but would require any decision to be stayed until the question of whether a breach of Article 85 or Article 86 has been committed is determined.
The amendment would relate only to decisions by the director, and therefore an undertaking could not make an unfounded application for clearance to the European Commission to avoid an investigation by the director. The amendment specifically provides that it does not prevent the director from conducting an investigation and is in addition to Clause 40(4) which provides that notification of a matter to the Commission does not stop such an investigation.
The amendment is consistent with the governing principles of Clause 58(3) which requires decisions to take account of relevant decisions of the European Commission. It is also consistent with the regime for parallel exemptions provided by Clause 10. I beg to move.
Lord Haskel: My Lords, I must emphasise that the purpose of the Bill is to ensure as far as possible consistency with the EC approach and thereby ease burdens for business.
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Both the director and the European Commission will be applying substantially the same competition tests and following common jurisprudence where applicable. In practice, therefore, if the Commission is investigating a matter, we think it unlikely that the director will start his own separate investigation and proceed to a decision when the Commission already has the matter in hand.
Clearly it would be a waste of both regulatory resources and precious business time for dual domestic and Community proceedings to take place. The Commission notice on co-operation between itself and national competition authorities deals with and provides some guidance on how the Commission and national competition authorities should handle these cases. This notice and common sense co-operation between the director and the Commission provides the practical safeguard against unnecessary duplication, about which the noble Lord was concerned.
It would be wrong to go further and place legal bars on the face of the Bill preventing the director from taking a decision in respect of matters which are the subject of any form of investigation under Articles 85 and 86.
As I explained in Committee, legal bars in this area can provide dangerous loopholes. What of the agreement notified to the European Commission which raises little or no Community interest and which the Commission has neither the time nor the resources to attend to? Such an agreement may be causing serious harm to the domestic economy, but if the Commission initiates its review of the agreement, the amendment would prevent the director from prohibiting it, even where the Commission does not proceed quickly against it because it is of no Community interest. Surely it would be wrong to prevent the director proceeding to a decision in respect of such an agreement so that its harmful domestic effects can be stopped. The ability of the director to investigate such an agreement is not enough. He must be able to proceed to a decision to stop it. Indeed, the legal bar proposed by the noble and learned Lord, Lord Fraser, could encourage spurious notifications or even complaints to Brussels of agreements with mainly domestic effects to thwart effective action by the director.
Of course, where there is active Commission investigation, one can expect the director not to pursue the same matter independently. In view of that explanation, I invite the noble and learned Lord to withdraw the amendment.
Lord Fraser of Carmyllie: My Lords, I am not entirely persuaded by the logic of the noble Lord's approach. I wish there to be a common sense and practical approach taken by those in the Commission, and by the director general. The amendment comes forward in that context. We do not suggest that some barrier should allow a loophole to be established. If that had been in our minds we would have put forward an amendment which did not even allow the director general to begin an investigation.
The only limit we suggest is that if it is being pursued through Brussels, the director general should not proceed all the way to a decision. We do not seek to

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establish that because there has been a notification nothing should happen within the domestic context. But we do not want two things going on at the same time indefinitely, and it seemed appropriate for there to be a restriction on the director general taking a decision, not a restriction on him investigating. The noble Lord seems to suggest that some spurious notification may be made to prevent any investigation in the United Kingdom. That is not what the amendment seeks to achieve. We recognise that investigations should be allowed to go forward.
I ask the noble Lord to think further about the matter. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 41 [Offences]:
Lord Haskel Lord Haskel moved Amendment No. 137:
Page 20. line 39, at end insert—
("() If a person is charged with an offence under subsection (1) in respect of a requirement—

(a) to provide an explanation of a document, or

(b) to state where a document is to be found,

it is a defence for him to show that he had a reasonable excuse for failing to comply with the requirement.").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 138:
Page 20, line 41, leave out from ("in to end of line 44 and insert ("the person imposing the requirement has failed to act in accordance with that section.").
The noble Lord said: My Lords, we have already spoken to the amendment. I beg to move.
On Question, amendment agreed to.
Clause 44 [The Competition Commission]:
The Deputy Speaker: My Lords, before calling Amendment No. 138A, I should tell your Lordships that if it is agreed to I cannot call Amendment No. 139.
Lord Kingsland Lord Kingsland moved Amendment No. 138A:
Page 22. line 4, leave out subsections (1) and (2).
The noble Lord said: My Lords, in moving Amendment No. 138A, I wish to speak also to Amendments Nos. 139A, 139B, 139C, 144F, 144G, 149D, 152A, 153A, 153B, 153C, 153D, 154A, I54B, 154C, 154D, 154E and 186B. The centre piece of the amendments is Amendment No. 152A. The pattern involves a substantial movement in the adjudicative furniture of the Bill. Amendment No. 152A seeks to replace the competition tribunal by a competition court. The powers of that court are set out in that amendment.
The idea that a branch of the High Court should deal with competition matters is not a novel one. We have the Restrictive Practices Court established in our system. There are three reasons why I believe that a branch of the High Court is better equipped to deal with the tasks of appeal than the appeal tribunal. The first is the new backcloth that competition rules will face under
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the Human Rights Bill, soon to become the Human Rights Act. As I understand it, the fundamental concept that lies behind that legislation is the concept of rights as entitlements. It is the High Court, and not any subsidiary tribunal, which has the right to make declarations of incompatibility where statutes fall short of the standards laid down in the Human Rights Act.
It is highly likely that a substantial number of the issues that will have to be dealt with by the competition tribunal will be procedural issues, and hence issues that will raise questions about individual entitlements—for example, a right to a fair hearing or a right not to have too onerous a penalty imposed on a company. In those circumstances it seems an unnecessary elaboration of the system to have to route matters through the tribunal which will ultimately end up in the appeal courts anyway.
The second reason why I believe it appropriate to establish a competition court to replace the appeals commission is that many of the issues connected with procedure are just as likely to be raised by applications to the High Court for judicial review as under appeal to the competition tribunal. In those circumstances, in my submission it will lead to confusion to have both the appeals tribunal and the High Court potentially capable of hearing procedural matters but leaving it uncertain as to which of the institutions is the more appropriate.
The third reason why I believe it appropriate to have a competition court is that the end of the procedure pursued by the Director General of Fair Trading under the Bill may be the imposition of a fine or penalty. Those are criminal remedies. In those circumstances it is more appropriate for a court of law than for a tribunal to hear matters arising from their wrongful imposition.
Those are the three main reasons for my proposing a competition court. Most of the other amendments in this line of amendments are consequential, save one. In seeking to replace the competition commission, I have chosen not only to seek to replace the appeals tribunal, but also that part of the commission which deals with many matters which are now the responsibility of the Monopolies and Mergers Commission. The reason for that is as follows.
As noble Lords are aware, the Opposition Front Bench has tabled amendments to exclude the responsibility for dealing with scale monopolies and structural monopolies from the Monopolies and Mergers Commission. Consistent with that philosophy, all that would be left to the Monopolies and Mergers Commission would be its merger responsibilities. In our submission it would be more appropriate that those powers, too, should be dealt with by the Director General of Fair Trading. That is the reason why the knock-on effect of having the court is the disappearance of the commission itself. I beg to move.
7 p.m.
Lord Borrie: My Lords, perhaps I might comment on the last remarks of the noble Lord, Lord Kingsland. I am strongly opposed to the substitution of the competition commission by a competition court. Of course it is true to say, as the noble Lord did, that in our

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own UK competition law there has been since 1956 a court, part of the High Court, known as the Restrictive Practices Court. That court has had a range of business over the past 40 years, and in the early years a considerable amount of substantive business. I would, however, draw attention to the constitution of that court from 1956 to this very day. While the presiding judge has indeed been a judge of the High Court, he has been supported—and my understanding is that the judges concerned have welcomed this—by lay members, people typically experienced in business and so on, who have been appointed to a panel from which they have been drawn for appropriate cases over the years.
The noble Lord is suggesting that, first, the appeal tribunal structure should disappear. There are certain amendments to which we have not yet come in which the noble Lord's unfortunate logic leads him to say that the Lord Chancellor should make the appointments, or the Lord Advocate in the case of appropriate Scottish judges. The amendments would do away with the present, very satisfactory constitution of the Monopolies and Mergers Commission, which is now to be transmuted into the competition commission, whereby appointments are made by the Secretary of State for Trade and Industry. Those are appointments of a mixed range of people working together from a great variety of backgrounds: business, academia, the trade unions, law, accountancy and so on. They are put on panels and appointed to appropriate cases. That is transmuted under this Bill; the competition commission is designed to ensure such an adequate mix and the Bill makes provision for the two functions of the competition commission in future.
The reporting function will apply when there are either scale monopoly or complex monopoly references—as the Minister pointed out several times, such instances will be rare. There will also be merger references under a continuation of the present procedure. The panels will be chosen from an appropriate mix of people and it is appropriate that they are all appointed by the Secretary of State for Trade.
Then there will be the so-called appeal function to constitute the appeal tribunals. It seems to me appropriate that the members should be appointed by the Secretary of State for Trade but, as provided for under the Bill, for the chairman of the appeal tribunal, as one might expect, to be a suitably qualified lawyer. The qualifications are set out in paragraph 26 of Schedule 7, which we shall debate. The appointments, also made by the Secretary of State for Trade, will be made in consultation with the Lord Chancellor or the Lord Advocate, as appropriate.
That scheme—the competition commission, with the reporting function and the tribunal function, which appoints, and so on—seems to me to be excellent. One bears in mind in the background that, if there is a point of law on which someone wishes to appeal later, the Bill provides for the Court of Appeal to deal with the matter.
However, I would emphasise that in both the appeal function and the reporting function of the competition commission it is immensely desirable to continue what has been a very useful experience in the Monopolies and
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Mergers Commission; namely, the mix of background that I have described. Certainly I believe it would he most undesirable if decisions about matters affecting industry, business and economics, where very often matters of law are relatively minor, were made solely by the people listed in Amendment No. 152A; namely, High Court judges. That seems to me singularly inappropriate, and I trust that the House will not agree to the amendments.
Lord Haskel: My Lords, I am most grateful to my noble friend Lord Borrie for his intervention, as he has far more experience of these matters than I. As he said, the Fair Trading Act carefully balances the respective roles of the director, the MMC and the Secretary of State. The approach to dealing with competition issues under the Act is very different to that introduced by the Bill in relation to the prohibitions.
We debated these points at some length in Committee. On that occasion the noble Lord, Lord Kingsland, eloquently set out his thesis that the MMC should be abolished and that there should be no new tribunal, and he has repeated that again today. I agree with my noble friend Lord Borrie. We are not seeking, with this Bill, to change substantively the way in which existing functions of the MMC are performed. Under the Bill these functions will transfer to the new competition commission, where they will be performed by the reporting arm of the commission. The purpose of the Bill is to introduce new legislation based on a prohibition approach.
The approach we have chosen also means that cases will be heard by both legal and lay members. My noble friend Lord Borrie explained most eloquently why this is desirable. We believe it is essential that the tribunal panel contains the necessary breadth of experience and expertise to be able to deal effectively and efficiently with the complex commercial, economic and legal issues involved in competition cases. Our approach also means that we can draw on a much wider range of people to chair tribunals, while, of course, recognising that tribunal chairmen will need to be properly legally qualified. Schedule 7 to the Bill sets out the necessary legal qualifications.
The noble Lord, Lord Kingsland, mentioned a number of procedural points. Most of those points will arise from the directors' rules and such points can equally well be raised in a tribunal as in a court.
The basis of our approach is that it is essential for the credibility of the new regime, and in the interests of fairness and transparency, that there are effective and efficient appeal arrangements. We believe that our proposals will achieve that and mesh sensibly and productively with the institutions already in place under the current regime. In view of these arguments, I invite the noble Lord to withdraw his amendment.
Lord Kingsland: My Lords, I thank the Minister for his not very surprising reply—at least, not very surprising to me. I make one point of clarification. It was not my intention to suggest that the former powers of the Monopolies and Mergers Commission should he transferred to the High Court. It was my intention that

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such residual powers as may reside in the Monopolies and Mergers Commission should be transferred to the Director General of Fair Trading. I entirely take the point, which I think the Minister picked up from the eloquent intervention of the noble Lord, Lord Borrie, that it would not be right for a High Court judge to deal with matters connected with policy on mergers, and so forth. I hope there is no confusion about that. I shall reflect carefully on the Minister's reply and consider whether I should return to the matter at Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.15 p.m.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 139:
Page 22, line 7, at end insert ("and the Commission and each member of that Commission shall, in the performance of those functions, apply their own skill and judgement independently on the evidence before them").
The noble and learned Lord said: My Lords, if we cannot have our first option of a competition court, we should like to ensure that the competition commission is, in the exercise of its functions, as judicial as it possibly can be. For that reason Amendment No. 139 provides that:
"the Commission and each member of that Commission shall, in the performance of those functions, apply their own skill and judgement independently on the evidence before them".
Grouped with that amendment are Amendments Nos. 143 and 144. Amendment No. 143 suggests that a member of the commission appointed in accordance with the sub-paragraph referred to shall not continue to exercise any functions of the commission other than in relation to appeals. In short, we are trying to separate out the individuals, given the fact that the competition commission will have a mix of both executive and judicial functions. It will both exercise the investigative and enforcement powers of the MMC, which it will replace, and act as the body to which appeals from decisions of the director general will be made. It is relatively rare for executive powers of the kind exercised by the MMC to be combined in one body with judicial or quasi-judicial powers. In relation to EC competition matters, it is the European Court, the court of first instance, which has a purely judicial role. This amendment provides for a proper separation of the two.
Amendment No. 144 requires the Secretary of State to provide funding for the competition commission at a level which will enable it to perform its functions in an efficient and effective manner. At present the Bill provides for funding to be determined on a discretionary basis by the Secretary of State, who must pay such sum as he considers appropriate for the performance of these functions. I doubt whether the Chancellor of the Exchequer would be happy to live with this amendment. But, if the competition commission is to be taken seriously, some expression of an appropriate degree of
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funding to enable the commission to perform its functions effectively and efficiently is desirable. I beg to move.
Lord Borrie: My Lords. I have some sympathy with the last of the three matters raised by the noble and learned Lord. I am always concerned if public officials or bodies are inadequately resourced.
I thought that Amendment No. 139 was mildly insulting, unless the noble and learned Lord, Lord Fraser, has some evidence that members of the Monopolies and Mergers Commission, who have been performing functions of this kind for the past 40 years. have in any way not applied their skill and judgment independently on the evidence before them. I am not sure why one needs such a provision.
As to Amendment No. 143, which is in a way more important, I believe the proposal is a bad idea. One of the benefits of the way in which the competition commission is to be structured, according to the present wording of the Bill, with the reporting function and the appeal function, is the cross-fertilisation which will result. It would be an unfortunate waste of talent if members were appointed only to the one function and could not be transferred by the chairman or president from one function to the other when suitable cases arose. With the benefits of the considerable experience which the members will have, it would seem a pity if the structure were so rigid that members were appointed to one slot and could not move to the other.
Lord Haskel: My Lords, I presume the comments of my noble friend Lord Borrie—that he finds Amendment No. 139 vaguely insulting—arise from the fact that we expect members of the commission to exercise their functions independently and effectively. As the noble and learned Lord will be aware, anyone exercising a judicial function, as members of the tribunal undoubtedly will be, is required to act precisely in the way described in the amendment and not on the basis of external considerations. That is an established principle.
As is appropriate where public interest tests are concerned, the members' role is advisory. But the ultimate control lies with Parliament because Ministers are accountable for the decisions that are made on the basis of the MMC's advice.
In relation to Amendment No. 143, I agree with my noble friend Lord Borrie that there will be considerable benefits from cross-fertilisation. It will facilitate the transference of expertise. It should also promote a consistent approach to competition questions across the piece, notwithstanding the fact that the nature and procedures of the appeal and reporting arms of the commission will, as I explained, be different. Those are important, practical objectives.
A further practical point is that there is inevitably a finite pool of people who are able and willing to become panel members and who have the necessary skills, expertise and experience. Clearly before an individual could be appointed as a member of both the appeal panel and the reporting or specialist panel, he or she would have to demonstrate that they have the different

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attributes required. We may or may not get candidates with the necessary breadth of attributes. But if we do, I think it would be wrong to rule out using them both on the appeals and reporting sides of the commission.
Turning to Amendment No. 144, I can well imagine that my right honourable friend the Chancellor would say that there must be some form of budgetary control, which is essential in terms of good administration. The amendment would remove any such controls. The independence of the tribunal is ensured in other ways. Under these provisions dismissal is only possible on grounds of incapacity or misbehaviour.
I am grateful to the noble and learned Lord for giving me the opportunity to explain our position on these matters, and I hope that with those explanations he will be prepared to withdraw the amendment.
Lord Fraser of Carmyllie: My Lords, before the noble Lord, Lord Borrie, or any of those with whom he has worked in the past is upset, let me make it clear that there was no intention on my part to be insulting to anyone who has undertaken work on the Monopolies & Mergers Commission. I am satisfied, in relation to Amendment No. 139, by the declaration of the noble Lord, Lord Haskel, that that is exactly how any member of the commission should act in the future. For my purposes, his statement on behalf of the Government is sufficient.
In relation to Amendment No. 143, a fundamental difference of philosophy occurs. I believe that there is a strong argument for separating out that investigative and judicial or appellate role. Rather curiously, it seems to me that the Government acknowledge that. If we go to Schedule 7, paragraph 2, we do not simply have, "a commission shall be established with a certain number of members to perform these functions". We find that,
"The Commission is to consist of…members appointed by the Secretary of State to form a panel for the purposes of the Commission's functions in relation to appeals".
Then, in an almost separate category of members, we find,
"members appointed by the Secretary of State to form a panel for the purposes of the Commission's general functions".
The third section is,
"maintained under paragraph 22 for the purposes of a newspaper merger reference…members appointed by the Secretary of State under"—
and there follow a number of utility statutes.
If that is the way in which the Secretary of State must direct his mind and people must be appointed with those qualities, that experience and that knowledge, when it comes to the exercise of an appellate jurisdiction, it would be appropriate for those who are going to exercise the appellate jurisdiction to be drawn only from those in paragraph 2(1)(a).
The noble Lord, Lord Borrie, says that cross-fertilisation is desirable. I am bound to say that where there is a confusion of those functions, I would be concerned that those who come before the panel would feel, not that there was a useful cross-fertilisation, but that to some extent people may be somewhat tainted
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if they performed both responsibilities at the same time. I am sure the Government will acknowledge that it is unusual in our system to have a single body carrying out both an investigative and a judicial function. While we may return to that at a later stage, at the present time I beg leave to withdraw Amendment No. 139.
Amendment, by leave, withdrawn.
[Amendments Nos. 139A to 139C not moved.]
Schedule 7 [The Competition Commission]:
Lord Kingsland Lord Kingsland moved Amendment No. 140:
Page 56, line 27, leave out ("Secretary of State") and insert ("Lord Chancellor in consultation with the Lord Advocate").
The noble Lord said: My Lords, as a result of the eloquent and thorough way in which my noble and learned friend Lord Fraser of Carmyllie dealt with the previous amendment, I have little to say in support of Amendment No. 140.
It must follow, from the philosophy that there should be a clear distinction between the appeals panel and the general panel of the competition commission, that somebody other than the person who appoints the general panel should appoint the appeals panel. That is the logic behind replacing the Secretary of State for Trade and Industry with the Lord Chancellor. That seems especially appropriate in the light of the remarks I made in support of my earlier amendments relating to the competition court.
The responsibilities of the appeals tribunal are to apply the law of the land particularly in relation to procedural appeal. It seems therefore appropriate to give those undertakings that might be before the tribunal confidence in its jurisdiction and its jurisprudence that the president and its members are appointed in the way in which High Court judges are appointed. I add, though it is not in the amendment, that the president ought to be somebody who is either a High Court judge or has the equivalent merit and seniority. I beg to move.
Lord Haskel: My Lords, the Bill provides for the Secretary of State for Trade and Industry to appoint the members of the appeals tribunal. In the case of persons qualified for appointment to the panel of tribunal chairmen, she is required to do that in consultation with the Lord Chancellor.
By its nature, the tribunal will have to deal with complex economic and commercial issues. Many of the arguments which we discussed in the previous group of amendments apply here. The Government take the view that the Secretary of State for Trade and Industry will be well placed to identify and select candidates with the necessary blend and breadth of experience to lead such a tribunal. At the same time, it is equally important that the president and chairmen are legally qualified and have the necessary legal experience and standing to do the job. Confidence in the new regime demands nothing less. That is why she is required to consult with the Lord Chancellor.
The Bill does, of course, set out strict requirements for formal legal qualifications. We believe that this is the right balance of responsibilities to ensure that we get

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the right people for the job, and indeed the Government are very well aware of the crucial importance of doing that.
The quality and standing of the tribunal members, and particularly of the president, are central to confidence in the new appeal regime. The Government fully recognise the importance of finding the right people. We believe that the arrangements we have put in place will enable us to achieve that.
I am grateful to the noble Lord, Lord Kingsland, for explaining his views and for giving me the opportunity to explain ours. Having done so, I hope that he will be prepared to withdraw his amendment.
Lord Kingsland: My Lords, it will not surprise the noble Lord, Lord Haskel, to hear that I am deeply disappointed by his reply. I shall of course reflect on what he said, but we cannot exclude the possibility that this matter will re-emerge at Third Reading. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.30 p.m.
Lord Ezra Lord Ezra moved Amendment No. 141:
Page 56, line 28, at end insert ("at least one of whom shall have experience in and knowledge of consumer affairs").
The noble Lord said: My Lords, this amendment has been grouped with Amendments Nos. 142 and 164. We are here dealing with the interests of consumers. I raised this matter in a different manner at the Committee stage. I now come to it with three specific proposals. Although it can be argued that the Bill as a whole deals with safeguarding consumer interests, nevertheless, there is little specific reference to consumers in the document. I wish to remedy that omission.
Amendments Nos. 141 and 142 propose that, in regard to the commission panels dealing with appeals and with general functions, at least one of those appointed by the Secretary of State shall have experience in and knowledge of consumer affairs. We think that is important because the consumer interest could well be lost sight of in pursuing a purely legalistic approach to these matters.
The third proposition, Amendment No. 164, inserts the proposal that the director general should indicate how he intends to assess that consumers have a fair share of the resulting benefit of the decisions he takes under this part. We think that is important. The form of words is reflected in one of the few references to consumers on page 5, line 41, of the Bill. That is the same form of words and I think it is perfectly right that we should reintroduce it. I beg to move.
Lord Borrie: My Lords, I support the noble Lord, Lord Ezra, in his thoughts on the importance of having someone experienced in and knowledgeable of consumer affairs, whether it be in the reporting function or the appeal function. However, although, like him, I have had a background of considerable involvement in consumer affairs and recognise how unfortunate it would be if people representative of consumer affairs
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were not involved in key decisions relating to trade and industry, I cannot support his amendments. The logic of the amendment would surely immediately suggest the need to have representatives of small and medium-sized enterprises, the public sector, the utilities and so on. Claims would be made as to how vital it was to have these various important areas of industry and commerce represented and so the particular value of the thoughts behind the amendments would be lost in the rush of others who would make special claims.
Lord Simon of Highbury: My Lords, I understand the concern of the noble Lord, Lord Ezra, to ensure that consumer interests are properly represented in the reforms we are seeking to put in place. I endorse strongly his views; indeed, we have emphasised, as we have gone through the debates on the Bill, that a better deal for consumers is fundamental as an objective underpinning the Bill.
Amendments Nos. 141 and 142 concern the membership of the appeal and reporting panels of the competition commission. My noble friend Lord Haskel touched on this subject when we were in Committee. He pointed out that there is nothing in the Bill to prevent people being appointed to the appeal tribunal panel and sitting on tribunals to hear appeals on the basis that they have a particular expertise in consumer matters.
Perhaps I may expand a little on this basic point. The Government will expect to appoint to the appeal panel on the basis of merit, according to the Nolan guidelines, and we would expect to draw from a range of backgrounds, including consumer affairs, if candidates with the necessary skills were available. I am not assuming that they will not be. I assure the noble Lord that the Government will give careful consideration to appointing to the appeal panel members with that kind of background. We should like to be able to do so provided the right candidates are available.
As for the reporting panel, we are not seeking to make substantive changes to the arrangements for the existing functions of the MMC. The arrangements for appointments are carried over substantially unchanged into the new competition commission. Currently, members are appointed on merit, according to the Nolan guidelines, and on the basis of transparent criteria. They come from a range of backgrounds, as my noble friend Lord Borrie said, including consumer affairs. We would expect that approach to continue.
The difficulty with the amendments, apart from that pointed out by my noble friend Lord Borrie, is that they as well place an absolute requirement on the Secretary of State to appoint someone with a consumer affairs background. We could not accept that requirement for the simple reason that candidates with the necessary skills may not be available. It would be wrong to appoint people solely on the basis that they had a consumer affairs background if they did not also have the other attributes necessary to serve on the panels. It is really a point of the sine qua non element. We think that there are all the flexibilities here to appoint the right category of consumer representatives, if they are available. I hope the noble Lord will accept that point

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and, bearing in mind what I have said about our willingness to appoint the kind of people that he has in mind, will be prepared to withdraw the amendment.
Perhaps I may speak briefly to Amendment No. 164. The assessment that consumers have a fair share of the resulting benefit is an essential element of the criteria for exemption in Clause 9. No doubt the director will address the question of consumer benefit in that part of his advice and information dealing with the exemption decisions. However, it would not be appropriate to require him, as the amendment seems to do, to address consumer benefits across the range of his other decisions. Here he will be following EU jurisprudence, according to the governing principles in Clause 58, and the consumer benefit comes from a more effective protection of competition. not from direct assessment in individual decisions.
In Committee the noble Lord said that it was important that consumer groups should be consulted on the director's advice and information. I am grateful for the points he made in that respect. The director general's letter, which I mentioned earlier, confirms that consumer bodies such as the National Consumer Council and the Consumers' Association as well as the trading standards organisation will be contacted as part of the consultation.
Amendments Nos. 164A and 164B (which we debated earlier), will make consultation on advice and information a requirement. Consumer interests will therefore have an opportunity to comment formally if they do not believe that the advice and information covers all the necessary points.
I believe that I have addressed the three amendments as positively as I can without changing what is on the face of the Bill. With that explanation, I hope that the noble Lord will be prepared to withdraw the amendment.
Lord Ezra: My Lords, I thank the noble Lord for the detailed and sympathetic response that he gave to these amendments. I am leaving them with the impression that in making the appointments to the panels serious consideration will be given to having persons who, no doubt along with other qualities, possess expertise in consumer matters. If I have that right, I shall be prepared to withdraw the amendment. As regards Amendment No. 164, I would like to think again about its implications. I shall certainly not press the matter further tonight, but I may want to return to it again. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 142 not moved.]
Lord Haskel Lord Haskel moved Amendment No. 142A:
Page 56, line 31. leave out from ("appointed") to end of line 32 and insert ("(in accordance with paragraph 15(5)) from the panel maintained under paragraph 22;").
The noble Lord said: My Lords, in moving this amendment, I shall speak to Amendments Nos. 142B to 142D; Amendments Nos. 143A and B; Amendments
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Nos. 144A to E; Amendments Nos. 171D and G: Amendments Nos. 174C and G; Amendments Nos. 210C and D; and Amendments Nos. 222A and 222B.
This group of amendments make various minor and technical amendments to Schedule 7, with consequential amendments to Schedules 10, 12 and 14. My noble friend Lord Simon indicated in Committee that we wished to make a number of amendments to this part of the Bill in order to tidy up various points which we had not had time to deal with before introduction. These amendments meet that purpose. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendments Nos. 142B to 142D:
Page 56, line 36, at end insert—
("(iv) Article 15(9) of the Electricity (Northern Ireland) Order 1992.").
Page 56, line 36, at end insert—
("(1A) A person who is appointed as a member of a kind mentioned in one of paragraphs (a) to (c) of sub-paragraph (1B) may also he appointed as a member of either or both of the other kinds mentioned in those paragraphs.
(1B) The kinds of member are—

(a) an appeal panel member;

(b) a reporting panel member;

(c) a specialist panel member.").

Page 56, line 39, at end insert—
("() The validity of the Commission's proceedings is not affected by a defect in the appointment of a member.").
The noble Lord said: My Lords, I have already spoken to these amendments. I beg to move.
On Question, amendments agreed to.
[Amendment No. 143 not moved.]
Lord Haskel Lord Haskel moved Amendments Nos. 143A and 143B:
Page 57, line 2, at end insert—
("() If the chairman is absent or otherwise unable to act, or there is no chairman, any of his functions may be performed—

(a) if there is one deputy chairman, by him,

(b) if there is more than one—

(i) by the deputy chairman designated by the Secretary of State; or

(ii) if no such designation has been made. by the deputy chairman designated by the deputy chairmen;

(c) if there is no deputy chairman able to act—

(i) by the member designated by the Secretary of State; or

(ii) if no such designation has been made, by the member designated by the Commission.").

Page 57, line 33, after ("paragraphs") insert ("3 and").
The noble Lord said: My Lords, I have already spoken to these amendments. I beg to move.
On Question, amendments agreed to.
[Amendment No. 144 not moved.]
Lord Haskel Lord Haskel moved Amendments Nos. 144A to 144E:
Page 58, line 27, leave out from first ("of") to ("the") in line 28 and insert ("—

(a) the Secretary of State, as to numbers, and

(b) the Secretary of State and Treasury, as to terms and conditions of service,").

Page 59, leave out lines 4 to 24 and insert—

("(b) prepare a statement of accounts in respect of each of its financial years; and

send copies of the statement to the Secretary of State and to the Comptroller and Auditor General before the end of the month of August next following the financial year to which the statement relates.

(2) The statement of accounts must comply with any directions given by the Secretary of State with the approval of the Treasury as to—

(a) the information to be contained in it,

the manner in which the information contained in it is to be presented, or

(c) the methods and principles according to which the statement is to be prepared,

and must contain such additional information as the Secretary of State may with the approval of the Treasury require to be provided for informing Parliament.
(3) The Comptroller and Auditor General must—

(a) examine, certify and report on each statement received by him as a result of this paragraph; and

(b) lay copies of each statement and of his report before each House of Parliament.").

Page 59, line 25, leave out ("section") and insert ("paragraph").
Page 59, line 38, leave out from beginning to end of line 14 on page 60 and insert—
("15. —(1) Except where sub-paragraph (7) gives the Chairman power to act on his own, any general function of the Commission must be performed through a group selected for the purpose by the Chairman.
(2) The group must consist of at least three persons one of whom may be the Chairman.
(3) In selecting the members of the group, the Chairman must comply with any requirement as to its constitution imposed by any enactment applying to specialist panel members.
(4) If the functions to be performed through the group relate to a newspaper merger reference, the group must, subject to sub-paragraph (5), consist of such reporting panel members as the Chairman may select.
(5) The Secretary of State may appoint one, two or three persons from the panel maintained under paragraph 22 to be members and, if he does so, the group—

(a) must include that member or those members; and

(b) if there are three such members, may (if the Chairman so decides) consist entirely of those members.

(6) Subject to sub-paragraphs (2) to (5), a group must consist of reporting panel members or specialist panel members selected by the Chairman.
(7) While a group is being constituted to perform a particular general function of the Commission, the Chairman may—

(a) take such steps (falling within that general function) as he considers appropriate to facilitate the work of the group when it has been constituted; or

(b) exercise the power conferred by section 75(5) of the 1973 Act (setting aside references).").

Page 61, leave out lines 23 to 26 and insert—
("22. The Secretary of State must maintain a panel of persons whom he regards as suitable for selection as members of a group constituted in connection with a newspaper merger reference.").
The noble Lord said: My Lords, I have already spoken to these amendments. I beg to move.
On Question, amendments agreed to.
7.45 p.m.
Clause 45 [Appealable decisions]:
[Amendments Nos. 144F to 144H not moved.]:
Lord Haskel Lord Haskel moved Amendment No. 145:
Page 22, leave out line 36.
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 145A:
Page 22, line 40, at end insert ("5(1)(c),").
The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendment No. 145B. They add to the list of appealable decisions in Clause 45(3). As my noble friend Lord Simon indicated in Committee, we have been reflecting on whether there are any omissions from this list, given our policy that all substantive decisions should be appealable. We have concluded that the list, as it stands at the moment, does not cover the directors' decisions under Clause 5(1)(c), Clause 4(3)(b) or Clause 4(5). These are respectively decisions to add additional conditions or obligations to individual exemptions where the director has reasonable grounds for believing that, first, there has been a material change in circumstances since he granted an individual exemption; secondly, as regards decisions as to the period that an individual exemption will last; and, thirdly, decisions as to the starting date of individual exemptions. All these decisions have substantive effect. So it is right that they should be appealable. Amendments Nos. 145A and 145B ensure that that is the case. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 145B:
Page 22, line 42, at end insert—
("() as to the period fixed under section 4(3)(b), or
() as to the date fixed under section 4(5),").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 145C to 146C not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 147:
Page 23, line 14, at end insert—
("() The existence of a right of appeal against a decision shall not prejudice the right of the person in respect of whose conduct that decision is made from commencing legal proceedings to challenge the lawfulness of that decision.").
The noble Lord said: My Lords, this amendment is concerned with the circumstances in which the existence of a right of appeal against a decision does not prejudice the right of the individual against whom that decision was made to go to the courts to establish the unlawfulness of that decision. I shall assume that the

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Minister will accept this amendment, but for formality's sake I shall sit back and listen to what he has to say. I beg to move.
Lord Simon of Highbury: My Lords, the noble Lord will be extremely relieved to know that he will not have to sit and listen for long because I can confirm to him that we are doing nothing in the Bill to prevent the application of the normal rules of judicial review. Therefore, the lawfulness of decisions may be tested in the courts. I am very grateful to the noble Lord for giving me the opportunity to make that point clear.
Lord Kingsland: My Lords, I am much obliged to the noble Lord for that reply. In those circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 46 [Third party appeals]:
[Amendments Nos. 147A to 149D not moved.]
Clause 47 [Appeal tribunals]:
Lord Haskel Lord Haskel moved Amendment No. 149E:
Page 24, line 2, after ("Tribunals") insert ("and such other persons as he considers appropriate").
The noble Lord said: My Lords, this amendment has already been spoken to. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 150:
Page 24, line 2, after ("rules") insert ("about procedural and other matters").
The noble and learned Lord said: My Lords, in moving this amendment, I should like to speak also to Amendments Nos. 151 and 152. Clause 47 gives the Secretary of State the power to make rules for the competition commission appeals tribunal, but provides that the provisions of Schedule 8 shall not be taken to restrict the Secretary of State's powers in respect of such rules. I hope that it reassures the Minister to know that our amendments are intended only to probe the extent of the Secretary of State's power to override the provisions of Schedule 8. I beg to move.
Lord Haskel: My Lords, the noble and learned Lord wishes to probe the extent of the powers. It may be that the noble and learned Lord's concern is to ensure that the power is not used to make rules about substantive legal points. If so, I can assure him that that is not at all our intention. Indeed, in construing the power as a whole it is clear that this is not a power to make rules about substantive competition law and cannot properly be used that way.
It is however important to ensure that content of the rules is not limited by Schedule 8. It would lengthen the Bill unnecessarily to deal with all the matters that may be contained in the rules in that schedule. We have picked out in the schedule various important points to indicate the type of rules we would intend to be able to make, and to make sure that there is a power to make rules on points where it may not otherwise be clear from the Bill that the power existed.
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Amendment No. 152 relates to the power to include in the tribunal rules provisions about charging fees in relation to the costs of the tribunal. I have considerable sympathy with the spirit of the noble Lord's amendment. Given the commercial nature of the matters covered by this Bill, it is evident that the large majority of parties to appeals is likely to have access to considerable corporate funds. Nevertheless, if fees are to be charged in particular circumstances, we will indeed wish to be satisfied that this will not unreasonably deter proper access to the tribunal. I hope that those explanations satisfy the noble and learned Lord.
Lord Fraser of Carmyllie: My Lords, at this stage I am tempted to say to the noble Lord that that reply certainly does not satisfy me and thus to detain him for a great deal longer on a Thursday evening. However, the noble Lord may rest assured that I do not intend to do so. Having had to approach this Bill from the point of view of Opposition for the first time, it is interesting to note that not only probing amendments, but also Pepper amendments are being tabled in order to secure from time to time statements from the Government about what is intended in relation to any particular statutory provision. That is extremely valuable. The noble Lord has discharged that responsibility very adequately and, on that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 151 to 152A not moved.]
Lord McIntosh of Haringey: My Lords, I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

Late Payment of Commercial Debts (Interest) Bill [H.L.]
7.54 p.m.
Report received.
Clause 1 [Statutory interest]:
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 1:
Page 1, line 8, leave out from ("interest") to ("in") in line 9.
The noble Lord said: My Lords, in moving Amendment No. 1, it may be for the convenience of the House if we consider also Amendments Nos. 2, 3, 7, 11 and 17.
Our policy has been that interest due under the proposed legislation should be treated for all purposes in the same way as interest due under a term of a contract. It was for that reason that it was decided that the statutory right to interest should have effect as an implied term in contracts. Since there has been some question of whether the Bill as presently drafted ensures identical treatment in all cases, we decided to reflect further on the matter. In moving this amendment, I want

383
to make it quite clear that no distinction is to be drawn between contractual and statutory interest. I hope that noble Lords will find that helpful.
The courts have regarded some statutory interventions in contract law as statutory rather than contractual even where the means adopted by the statute is contractual. That is a good reason for proceeding as we have. I hope that the House will feel that the Government have reacted prudently to the advice that we have received, for which I am most grateful. I beg to move.
Lord Fraser of Carmyllie: My Lords, in responding briefly to the noble Lord, first we on this side of the House extend our warm thanks for the way in which he has so positively responded to a number of the concerns expressed in Committee. I hope that his department, and other departments, will recognise that the use of the Moses Room for such Committee stages can yield some real advantages in that we get through the business quickly. If constructive proposals are advanced, the Government then have the opportunity to reflect on them and to bring forward their own amendments. That is a particular advantage with Bills such as this.
As I intend to intervene on only this amendment, I also thank the noble Lord for his letter responding to a number of the points that I raised in relation to Scotland. The noble Lord has been good enough to let me know that a copy of that letter has been placed in the Library. I know that there is a copy in the Library, but it has always been a mystery to me how other noble Lords are meant to discover that—that is, unless one goes along to the Library from time to time and asks, "Has Lord Clinton-Davis written any letters to anybody, and has he placed copies here in the Library?". As I regard the noble Lord's response as extremely helpful, I take this opportunity to put on a rather more public record the fact that he has given me a full reply to my points. Those in Scotland and elsewhere who are concerned about this matter now have due notice of where they can secure a copy of that response. I thank the noble Lord for that.
Perhaps I may now place on the record one point of concern. I accept what the noble Lord says both in relation to this Bill and to that on Scotland, but I have some unease. If a transaction across the Border were to go to court, there might in accordance with principles of legal and commercial certainty—theoretically at least—be three different rates of interest. That is undesirable but, regrettably, it is a necessary consequence both of the constitutional changes proposed and of this Bill. With only that observation, I repeat my gratitude to the noble Lord for the positive and constructive way in which he has responded to my concerns.
Lord Ezra: My Lords, I reiterate the comments of the noble and learned Lord, Lord Fraser. I thank the noble Lord, Lord Clinton-Davis, for the way in which the more relaxed atmosphere of the Moses Room was used to such good advantage. I entirely support the amendment that he has just moved. I am also grateful for the individual meetings organised by the noble Lord in which matters could be gone into further. We seem
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to be thanking the noble Lord before the Bill is passed. Normally, we do that right at the end. Nevertheless, this has been a very successful operation. In saying that I hope that the few amendments which the noble Earl, Lord Home, and I shall move later will he sympathetically considered.
8 p.m.
Lord Clinton-Davis: My Lords, I am most grateful for the very courteous and pleasant remarks that have been made about the way in which I have sought to respond to the debates that have taken place in this Chamber. I have also learnt a great deal. I was always under the impression that all those Peers who could be seen in the Library were looking for letters from me. I am equally puzzled. I have been the subject of such response before. I have never found anything in the Library that is remotely relevant to my concerns in relation to such Bills. Nevertheless, I appreciate what has been said. Noble Lords may perhaps begin to feel that flattery will get them anywhere.
As to the Moses Room procedure, this was the first such Bill in which I was involved as a Minister. I have done it before when in Opposition. I believe that it has a purpose. Perhaps one of its disadvantages is that only those who are vitally interested in the Bill will attend, whereas when the House sits like this the Benches are crowded. I believe that it has a positive advantage, and I am glad that both noble Lords have spoken as they have.
On Question, amendment agreed to.
Lord Clinton-Davis Lord Clinton-Davis moved Amendments Nos. 2 and 3:
Page 1, line 9, at end insert—
("(1A) Interest carried under that implied term (in this Act referred to as "statutory interest") shall be treated, for the purposes of any rule of law or enactment (other than this Act) relating to interest on debts, in the same way as interest carried under an express contract term.").
Page 1, line 11, at end insert ("that would otherwise be conferred by virtue of the term implied by subsection (1)").
On Question, amendments agreed to.
Clause 2 [Contracts to which Act applies]:
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 4:
Page 1, line 21, leave out from first ("agreement") to end of line 22.
The noble Lord said: My Lords, I beg to move Amendment No. 4. It will be for the convenience of the House if I speak also to Amendment No. 16. During Committee stage I said that I would consider further whether it was necessary to exclude conditional sale and hire purchase agreements from the Bill. The purpose of the Bill is to prevent or deter late payment because it is wrong that a customer should use its suppliers as a source of unauthorised credit. It was never our intention to give a right to claim interest on authorised credit. For that reason conditional sale and hire purchase agreements were excluded, they being essentially a form of authorised credit. It was not therefore appropriate to include them in the Bill.
I reflected further on the matter and was persuaded by the argument that some such agreements might not include provision for a remedy in the event of late payment of an instalment and repossession of the goods might not be a practical or appropriate remedy in many instances. We accepted that such agreements should in principle be subject to the legislation. Where the agreement includes a remedy for late payment Part II will apply, thereby ensuring that statutory interest cannot be claimed on top of that contractual remedy.
I believe that my noble friend Lord Borrie and the noble Earl, Lord Home, referred in Committee to the question of conditional sale agreements which consisted of ROMALPA or retention of title clauses. It was argued that these agreements should not be excluded from the Bill. We looked again at the definition of conditional sale agreements in the Bill which came from the Consumer Credit Act 1974 rather than the Sale of Goods Act 1979. I am advised that such ROMALPA agreements were never excluded from the legislation, but this amendment now clarifies the position beyond doubt. I am glad to respond positively again to the points made by noble Lords. I also thank them for the representations that they made to me before Report stage tonight.
On Question, amendment agreed to.
Clause 4 [Period for which statutory interest runs]:
Lord Clinton-Davis moved Amendment No. 5:
Page 2, line 32, after ("debt") insert ("(that is, the day on which the debt is to be created by the contract)").
The noble Lord said: My Lords, I beg to move Amendment No. 5. It will be for the convenience of the House if I speak also to Amendments Nos. 6, 12, 13, 14, 15 and 19. I seek to honour a commitment that gave at Committee stage to review the excessive credit periods and how the Bill deals with them. The Bill as originally drafted provided a remedy for the circumstance where a debtor insisted upon an unreasonably long period of credit so as to avoid potential claims for interest. I do not intend to reiterate how the Bill achieves that end because that is already on the record. However, I understood the concern that was expressed that legislation should be as clear as possible. I recognised that that reflected the concerns of the wider business community.
This group of amendments seeks to clarify the position. I draw your Lordships' particular attention to Amendment No. 14. The new clause extends the operation of the Unfair Contract Terms Act 1977 for the purposes of this legislation to contract terms that are not contained in the standard written terms of the purchase. The response to the Government's consultation on these amendments has been positive. I believed that it was right to consult upon them, although I concluded that there was a great deal in what had been said. We believe that this group of amendments meets the concerns expressed at Committee stage. I hope that the amendments go a long way towards clarifying how the Bill will combat the setting of excessive credit periods.
The Earl of Home: My Lords, I am grateful to the Minister for looking again at the wording of this clause.
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As he rightly says, he seeks to address a point that has been of concern to industry. I know that it is not the intention of the Government to disturb any existing tried and tested methods of trade, and I believe that these amendments go a long way towards proving that. They also reduce the opportunities whereby late payers can escape liability and therefore we support them. In Committee I attempted to link this Bill with the Unfair Contract Terms Act. However, I am the first to admit that the wording of the Minister is considerably more elegant than mine. Therefore, we on these Benches support the amendment.
Lord Meston: My Lords, likewise we on these Benches believe that the amendments meet the concerns expressed at Committee stage.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendments Nos. 6 and 7:
Page 2, line 32, at end insert ("unless the debt relates to an obligation to make an advance payment").
Page 3, line 5, leave out ("contractual provision") and insert ("contract term").
On Question, amendments agreed to.
Clause 5 [Rate of statutory interest]:
Lord Ezra Lord Ezra moved Amendment No. 8:
Page 3, line 9, leave out ("may") and insert ("shall").
The noble Lord said: My Lords, this amendment has been grouped with Amendment No. 9 in the name of the noble Earl, Lord Home. It is a small but important amendment which I moved in Committee. It received a sympathetic response from the noble Lord, Lord Haskel. It replaces the word "may" with the word "shall" in line 9 on page 3. The simple reason for it is that if it were not an obligation on the Secretary of State, the whole purpose of the Bill would fall. I am glad that the logic of that argument was accepted. I beg to move.
The Earl of Home: My Lords, we support the amendment moved by the noble Lord, Lord Ezra. As my amendment is grouped with it, I say merely that I am concerned that the way in which the formula by which the rate of interest is arrived at should be seen to be agreed by that part of government mostly involved with finance; namely, the Treasury. It would make it much easier for suppliers to explain to potential purchasers, particularly overseas purchasers, that it is a formula worked out within government rather than one set by an individual.
The additional words in paragraph (b) of the amendment will also add credibility. I remain unhappy about paragraph (b) because I still do not see how the Secretary of State will publicise changes in the rate at the time of high volatility of interest rates in a form which will enable suppliers to pick up those changes easily. I suspect that my colleagues in another place will continue to press for an answer on that point in due course.
Lord Clinton-Davis: My Lords, the fact is that the Bill, as the noble Lord, Lord Ezra, said, could not possibly operate if the Secretary of State did not set the

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rate of interest. Knowing the Treasury, I just cannot imagine circumstances in which she would do so without its agreement. I cannot remember whether I said this in Committee, but, if I did, it is an old Minister repeating stale jokes—it was Winston Churchill who said that the Treasury was like an inverted Micawber waiting for something to turn down. One has to be careful when dealing with it. I did not say that, did I?
Lord McIntosh of Haringey: I hope not!
Lord Clinton-Davis: My Lords, my noble friend who speaks for the Treasury in this House says that he hopes not. I am pleased that both noble Lords have retabled the amendments to Clause 5(1), and, of course, we are happy to accept them.
On Question, amendment agreed to.
The Earl of Home The Earl of Home moved Amendment No. 9:
Page 3, line 9, after ("order") insert ("made with the consent of the Treasury").
On Question, amendment agreed to.
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 10:
Page 3, line 13, leave out subsection (2) and insert—
("(2) Before making such an order the Secretary of State shall, among other things, consider the extent to which it may be desirable to set the rate so as to—

(a) protect suppliers whose financial position makes them particularly vulnerable if their qualifying debts are paid late; and

(b)deter generally the late payment of qualifying debts.").

The noble Lord said: My Lords, again, in moving the amendment I am seeking to address the concerns raised by the noble Lords, Lord Ezra and Lord Meston, and the noble Earl, Lord Home, in connection with the powers of the Secretary of State to prescribe a rate of statutory interest and the factors which she should be obliged to consider in taking that action.
Amendment No. 7 obliges the Secretary of State to consider both factors in Clause 5(2) in reaching any decision to alter the rate of statutory interest. The words "among other things" and "inter alia" amount to the same thing. Apparently the use of a foreign language makes the whole thing illicit and would no doubt cause the whole Bill to collapse. The amendment makes it clear, as we agreed in Committee, that the Secretary of State will be free to consider other factors while deliberating upon changes to the interest rates. I beg to move.
8.15 p.m.
Lord Meston: My Lords, again, I am grateful to the Minister. The wording proposed in Amendment No. 10 seems to be a great improvement on the Bill in its original form.
The Earl of Home: My Lords, I echo the words of the noble Lord, Lord Meston. I am also grateful to the Minister for agreeing to the amendment that I proposed in Committee, albeit in the wrong language. At least he
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was not insulted. Obviously it is important to look after those who are most likely to be embarrassed financially by late payers, and we support the amendment.
Lord Borrie: My Lords, I was intrigued when on an earlier amendment the noble and learned Lord, Lord Fraser, who has now left the Chamber, referred to receiving correspondence from my noble friend the Minister in response to matters he had raised in Committee. I, too, received a letter from my noble friend in relation to this clause. Like the noble and learned Lord, Lord Fraser, I was somewhat concerned over the formula which goes:
"A copy of the letter has been put in the Library of the House".
I wondered how it worked. I went along to the Library today and asked to see a copy of this letter and whether any other letters had been sent by my noble friend in relation to the Bill on other subjects.
I am afraid that after a little search nothing could be found. Unfortunately, because of involvement with the Competition Bill this afternoon, I was unable to go back and make further inquiries. I wished to make a point similar to that made by the noble and learned Lord, Lord Fraser, and the more specific point that I had a little difficulty in understanding the letter from my noble friend which was concerned with whether the word "deterring" in the clause, which provides:
"deterring the late payment of qualifying debts".
could be interpreted as including the possibility of a penal rate of interest. I was not sure what the response indicated. The Minister's response stated:
"The wording also covers the possibility that the forthcoming Directive might require the rate to he set at a deterrent level".
There my noble friend uses the word "deterrent", but in the consultative document put out earlier by the department, Annex B in relation to Europe states:
"A penal rate of interest may be levied by the Directive".
Page 19 of the consultative document asks the question:
"Should a penal rate of interest apply in order to deter late payment?".
In other words, at various stages in the consideration of this Bill the department seems to have been using the words "deterring" and "penal" as being more or less the same. I am left a little unclear. I am sure that many businesses would like to have the matter cleared up and not just through a letter which may or may not be available in the Library. Of course no one knows that there is a letter in the Library unless they have been so informed. A number of businesses and Members of this House might be interested to clear up the point as to what is permissible under the clause and what are the Government's intentions.
Lord Clinton-Davis: My Lords, the reason that the letters are missing might be that we described them as "billets doux" and consequently everyone was misled. I do not know. I shall look into the matter, because I was under the impression that the letters had been sent to the Library. Perhaps it was second-class mail, I do not know.

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There is, of course, as my noble friend will realise, a view that we have taken that rates of interest should not be penal. because that is offensive to the law, or can be construed as offensive to the law.
If there is some inconsistency in the letters that I have written, I shall look into the matter. However, in this context they amount to one and the same thing. In order to deter, the word "deter" is used in the Bill and that is the essential point.
The Green Paper referred to the approach contained in a possible draft directive emerging from the European Commission. We have not yet examined the detail of that. It is still open for a draft directive to be changed and for the word "deter", if there is a conflict, to be used instead. It is our preferred term. I hope that that is helpful to the noble Lord. Provided that no offence is caused in the interpretation of the court, no trouble will be caused.
I am advised that a deterrent level may be required by the director. There is distinction in that a very high rate of interest may be a penalty. A deterrent rate may apply where the rate is greater than that needed to recompense weak businesses. The point is that it is not necessarily punitive.
Lord Meston: My Lords, we have been round the course previously. Is not the fact that needs to be grasped that the word "penal" has a peculiar meaning in English civil law? Conceptually, one must accept that while all penalties are deterrents not all deterrents are penal. The Government are correct in saying that they should be looking at the deterrent rates of interest rather than the penal rates of interest.
Lord Clinton-Davis: My Lords, I am much obliged to the noble Lord. He is a distinguished Silk and I believe he knows what he is talking about.
On Question, amendment agreed to.
Clause 7 [Purpose of Part II]:
Lord Haskel moved Amendments Nos. 11 and 12:
Page 3, line 37, leave out ("under this Act") and insert ("that would otherwise apply").
Page 3. line 42, leave out from ("term") to end of line 2 on page 4.
On Question, amendments agreed to.
Clause 10 [Interpretation of Part II]:
Lord Haskel Lord Haskel moved Amendments Nos. 13 and 14:
Page 4, line 42, leave out from first ("interest") to end of line and insert ("or any contractual remedy other than interest").
Page 5, leave out lines 10 to 12 and insert ("vary the right to statutory interest is a reference to terms altering in any way the effect of Part I in relation to a qualifying debt (for example by postponing the time at which interest starts to run or by imposing conditions on the right to interest).").
On Question, amendments agreed to.
Lord Haskel Lord Haskel moved Amendment No. 15:
After Clause 13, insert the following new clause—

CONTRACT TERMS RELATING TO THE DATE FOR PAYMENT OF THE CONTRACT PRICE
(" . —(1) This section applies to any contract term which purports to have the effect of postponing the time at which a qualifying debt would otherwise be created by a contract to which this Act applies.
(2) Sections 3(2)(b) and 17(1)(b) of the Unfair Contract Terms Act 1977 (no reliance to be placed on certain contract terms in England and Wales and in Scotland) shall apply in cases where such a contract term is not contained in written standard terms of the purchaser as well as in cases where the term is contained in such standard terms.
(3) In this section "contract term" has the same meaning as in section 10(1).").
On Question, amendment agreed to.
Clause 15 [Interpretation]:
Lord Haskel Lord Haskel moved Amendments Nos. 16 and 17:
Page 6, line 39, leave out from first ("agreement") to ("as") in line 40 and insert ("has the same meaning").
Page 7, line 10, after ("of') insert ("the term implied by").
On Question, amendments agreed to.
Clause 16 [Short title, commencement and extent]:
The Earl of Home The Earl of Home moved Amendment No. 18:
Page 7, line 21, after ("force") insert—
("() as respects contracts where the purchaser is a public sector body and the supplier employs more than 50 persons, at the end of the period of three months beginning with the day on which this Act is passed;
() as respects any other contract,").
The noble Earl said: My Lords, the Bill envisages that, as part of the phasing arrangements, companies employing fewer than 50 people may sue other companies of any size or public sector bodies from day one. However, companies employing more than 50 people may not sue public bodies from day one. That seems rather strange to me.
I tabled a probing amendment in Committee asking that large companies should be able to make claims on other large companies. The Minister kindly said that he assumed that I included the public sector. Indeed, I did. He further said that large businesses are well able to look after their own contractual arrangements. But the public sector is the biggest business of all. Why cannot it look after itself? Why should the public sector need more time to get its act together compared with private sector big business? I do not understand the reasoning behind the noble Lord's submission, unless, for instance, he knows that the public sector owes so much money to so many large companies and is so late with its payments that the Government would be embarrassed if the figures became public knowledge.
Are the Government from day one not prepared to tell their own people to pay up or to stand up in public to be counted? I believe that the Government should set an example through the public sector and thus demonstrate their own commitment to the Bill. If the Government want reciprocity on this, I can see no reason why we should not support a proposal whereby the public sector can make claims on big business from day one. Indeed, the Government have time to introduce an amendment to that effect in the Bill in another place.
However, I am not so much concerned on behalf of very large companies, for it is unlikely that their business with the public sector will be so great that late payment will seriously jeopardise their existence. But the Government's method of dividing companies into big and small means that many companies are deemed under the definition in the Bill to be big but are at best

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medium sized. Some of those may well rely on public sector contracts for most—in some cases, perhaps, all—of their business and it is invidious that these people should be precluded at the beginning.
I am sure that the Government do not wish the public sector to be able to hide behind the provisions of the Bill or to discriminate against the type of medium sized company that I have described. Furthermore, many such medium sized companies may have contracts with local authorities, which, we must say, do not have a brilliant reputation for prompt payment. I beg to move.
Lord Ezra: My Lords, I support the amendment so effectively moved by the noble Earl. As the noble Lord, Lord Clinton-Davis, will know from our private discussions, I believe that we should move faster than is proposed. While I accept that there is a strong case for the phasing to enable small companies to enter at a slower rate and not have claims made against them until some time has elapsed and they have been able to put their affairs in order, there seems to be no reason whatever why the public sector should not subject itself to claims being made under the terms of the Bill.
The local authorities are big users of private sector services, but as I know from experience, some delay in making payment sometimes on grounds which after careful investigation are not sustainable. That leads to a considerable delay in payment being made. I agree with the noble Earl that the Government ought to have the courage of their convictions. We support their convictions in the Bill and believe that the public sector should be included right at the beginning and that claims could be made against any part of it, whether at ministerial level or local authority level. The Government could then set a good example and give the desirable proposition a good momentum.
Lord Clinton-Davis: My Lords, I am grateful to both noble Lords who have spoken in the debate. They made representations to me and we had an interesting discussion in the office in my department. I know that they feel strongly about the matter.
I believe that, having regard to the consultations which we entered into on the proposals, we ought to wait and see. I remind the House that they received widespread support, with 87 per cent. of business respondents to the Green Paper expressing support for phasing and 85 per cent. supporting the proposed timetable. Those factors are rather compelling. Therefore, we do not intend to extend the initial commencement period of the Bill to include claims by large businesses against other large businesses or the public sector. But I believe that one ought to wait and see. We shall be very flexible about this, but we want to see how the Bill operates in practice. If it becomes clear that there is a demand for a change then the important thing is to respect the purposes of the Bill which I have outlined previously in our debate today. It is all about seeking to improve the payment culture. If we are not succeeding in attaining those objectives, then we shall have to look carefully at ways and means of dealing with the matter. But I am cautious about
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interfering with what we are seeking to do in the light of those consultations that were extremely profound and which received such substantial support in relation to our proposals.
I take the matter further to deal with local authorities. Local authorities are already required to pay all invoices promptly. The Audit Commission has set a performance indicator for the current year that local authorities in England and Wales must monitor and publish details of the percentage of their bills paid on time.
National payment performance data will he published by the Audit Commission in February of next year and we shall continue to work with the Department of the Environment, Transport and the Regions to encourage best practice within local authorities. I know also that my honourable friend Mrs. Barbara Roche, the Minister responsible for small firms, will be attending the Central Local Partnership meeting on 3rd March with the DETR and the Local Government Association, where prompt payment by local authorities figures substantially on the agenda.
We shall also be looking at and monitoring carefully the effect of the legislation, as I have indicated, not least through the Payment Observatory of the Credit Management Research Group at Bradford University, to which I referred in our earlier debates.
Therefore, I reiterate that if it seems sooner rather than later that there is a need to extend the right to large businesses so that they can claim against the public sector, if that appears to be a requirement in the light of experience, we can do so after consulting interested parties again, including the Better Payment Practice Group, under the power conferred by Clause 16(3). I hope that we can agree at present to give the Government's phasing proposals an opportunity to work before we undertake any consideration of changes to them.
It seems to me also that the publication point is met by what is happening. In fact, we had a striking illustration of how exposure could result in rather earlier payment. By opening the matter to public gaze, I understand that one of your Lordships was paid very promptly when there had been a question of late payment. I cannot remember the exact details. Therefore, on the face of it it seems that public exposure counts and that is what I have been talking about in terms of the Audit Commission's report which I hope will have a singularly beneficial effect.
In those circumstances, I cannot accept the amendment which has been moved and spoken to so eloquently. I hope that your Lordships will come to the conclusion that we should give the Bill an opportunity to work having regard to the caveat which I have already mentioned.
8.30 p.m.
The Earl of Home: My Lords, I regard that as a very unsatisfactory answer. I do not quite see how experience will make the situation any clearer. Are 1,000 companies going to write to the Minister to say, "We were going to sue next week but we are not going to because we are not allowed to"? If individual companies

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within the public sector publish their late payment results, we shall not know whether the companies concerned are small or large. I do not believe that experience will help at all in this regard.
The Government are saying, "Do as I say, not as I do". They are giving carte blanche to the more incompetent parts of the public sector to continue in their bad and slothful ways. The Government are letting down a great many medium-sized businesses which the Minister said on Second Reading were the companies which he wanted to help. I believe that part of industry will be sorely disappointed by the lack of leadership by example which the Government have shown by their reluctance to consider the amendment.
However, the Government still have time to reconsider their position. I beg the Minister to think again in the light of what I have said. As the noble and
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learned Lord, Lord Fraser of Carmyllie, said, discussions on this Bill have been cordial and, for the most part, very constructive. I echo everything he said in that regard. In the light of what has been said and in the hope that the Minister will reflect on the point with his colleagues, although I feel strongly on the matter, I shall not divide the House on the amendment, and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
In the Title:
Lord Haskel Lord Haskel moved Amendment No. 19:
Line 3, at end insert ("; and for connected purposes").
On Question, amendment agreed to.
House adjourned at twenty-five minutes before nine o'clock.