DECISIONS ON MATTERS SUBJECT TO A COMMISSION INVESTIGATION

HL Deb 19 February 1998 vol 586 cc365-82

(" —(1) The Director shall not make a decision that—

1. (a) an agreement infringes the Chapter I prohibition; or
2. (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

1. (a) an investigation in accordance with section 25; or
2. (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.

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 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 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—

1. (a) to provide an explanation of a document, or
2. (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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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—

1. (a) an appeal panel member;
2. (b) a reporting panel member;
3. (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 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—

1. (a) if there is one deputy chairman, by him,
2. (b) if there is more than one—
1. (i) by the deputy chairman designated by the Secretary of State; or
2. (ii) if no such designation has been made. by the deputy chairman designated by the deputy chairmen;
3. (c) if there is no deputy chairman able to act—
1. (i) by the member designated by the Secretary of State; or
2. (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 moved Amendments Nos. 144A to 144E:

Page 58, line 27, leave out from first ("of") to ("the") in line 28 and insert ("—

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

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

1. ("(b) prepare a statement of accounts in respect of each of its financial years; and
2. 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—

1. (a) the information to be contained in it,
2. the manner in which the information contained in it is to be presented, or
3. (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—

1. (a) examine, certify and report on each statement received by him as a result of this paragraph; and
2. (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—

1. (a) must include that member or those members; and
2. (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—

1. (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
2. (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 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 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 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 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 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 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 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.

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.