Competition Bill [H.L.]

HL Deb 23 February 1998 vol 586 cc491-538

Consideration of amendments on Report resumed on Schedule 10.

[Amendments Nos. 167 to 168A not moved.]

Lord St. John of Bletso moved Amendment No. 169:

Page 70, line 45, at end insert— ("(3B) Where the Director is entitled to exercise any of the functions assigned to him by subsection (3) above in respect of any matter he shall deal with that matter by exercising those functions and not by exercising any functions provided by or under Part II of this Act or any licence issued under that Part. (3C)Where the Director proposes to exercise any of the functions assigned to him by subsection (3) above, before doing so he shall give written notice that he proposes to exercise those functions to any person likely to he affected. (3D)Where the Director exercises any of the functions assigned to him by subsection (3) above in respect of any matter, any duty imposed upon him by any other provision of this Act to take enforcement action in respect of that matter shall not apply."").

The noble Lord said: My Lords, this amendment, like Amendments Nos. 166 and 167, is specific to the information technology field. It deals with the problems posed by the overlap of jurisdictions where the DGT acts as regulator under the 1984 Telecommunications Act and as competition authority under the new powers in the Bill. The amendment ensures that the DGT, when exercising powers to deal with anti-competitive behaviour within the Bill, should do so under and strictly within the scope of the Bill.

While I accept the Government's commitment to give new, comprehensive powers to regulators on a concurrent basis with the DGFT, I am concerned that those powers could make the regulators the investigator, the prosecutor, the judge or even the jury. It is therefore important that the Bill establishes and clearly defines how and when the regulator will exercise those powers.

I refer again to the letter which was sent by Oftel. The DGT, in his commentary on the amendment, said: I believe this amendment would unnecessarily restrict my freedom to use the most appropriate legislation in a particular case". The DGT also wrote in the Financial Times last week expressing concerns on a number of the amendments to Schedule 10. He was concerned that the amendments might threaten the ability of sectoral regulators to tackle anti-competitive behaviour effectively. I do not entirely agree with his concerns. The amendments are not aimed at reducing the efficacy of the sectoral regulators' powers to tackle anti-competitive behaviour but—and I stress this—that they determine and define exactly when and how those powers should be exercised. The amendment would promote the use of powers under the Bill and ensure that anti-competitive behaviour within the Bill was tackled in accordance with the provisions of the Bill. It would promote consistency and certainty about how anti-competitive behaviour within the scope of the Bill should be dealt with. It would ensure that the provisions of the Bill were not avoided or circumvented by use of alternative overlapping powers which might be available to the DGT from time to time. To mix up the different roles and powers and to make no provision about when each set of powers should be used would encourage conflict and potential confusion. If the wrong tools are used for a job, the nature of the job itself can become confused.

The amendment would avoid any problem if decisions were based on mixed jurisdictions. There would be severe difficulties for a tribunal dealing with any appeal from a decision based on mixed jurisdictions. The amendment would not prejudice the new powers under the Bill or disturb the continuing regulatory powers of the DGT to deal with any matters, including competition matters, falling outside the scope of the Bill.

As I mentioned in my previous two amendments, the jobs of a regulator and of a competition authority under the Bill are different. As indicated by the noble Lord, Lord Kingsland, the purposes of competition law and regulation, and their regimes of enforcement, are different. It is likely that it is for those reasons that the 1984 Telecommunications Act gave the DGT general powers as a competition authority on a concurrent basis with the DOFF in addition to his regulatory objectives and powers. If the DGT is to have two jobs it is essential that it is clear when he will do one and when he will do the other. When the jobs overlap, the Bill, with this amendment, should prevail.

The second part of the amendment deals with whether a matter is within the scope of the Bill or outside the scope of the Bill. The amendment would ensure that the DGT consider at the outset whether to proceed under the Bill's powers or under other powers. The DGT should give written notice of the cases where he proposes to exercise functions under the Bill rather than other functions.

The third part of the amendment ensures that where the DGT exercises functions under the Bill, any duty which might arise under the 1984 Act to deal with the same matter under the separate enforcement provisions in that Act shall not apply. I refer again to the DGT's letter of 17th February where he stated on this subject: I would agree with concerns highlighted in the last part of the amendment about the Director General of Telecommunications being required, as a result of obligations in the Telecommunications Act, to take enforcement action against a breach of a licence condition even if he decided that it was more appropriate to deal with the situation under the new Competition Act.

My amendment would clarify how the regime should work in a complementary and commonsense way. I beg to move.

9 p.m.

Viscount Trenchard

My Lords, I speak in support of Amendment No. 169 which seeks to ensure that the Director General of Telecommunications, in pursuing the objectives of the Bill, must decide whether he wishes to exercise powers granted under the Bill or powers granted under other legislation. It also requires him to use Bill powers to deal with matters within the scope of the Bill and to make clear that he is acting under Bill powers alone.

For the reasons I gave earlier when speaking in support of Amendments Nos. 166 and 167—namely, the need for consistency and certainty, particularly in the information technology field—this amendment is important. As Mr. Thomas Sharpe QC pointed out in his article in The Times today, it would be a fundamental mistake to regard competition and regulation as having no real difference between them. I hope that the Minister may have had time to read the article during the dinner-hour.

I believe it is essential that the business community should know that anti-competitive behaviour of the kind dealt with by Articles 85 and 86 of the Treaty of Rome should be dealt with under the Bill. I hope that, after further consideration, the Minister may decide to support the amendment.

Lord Kingsland

My Lords, this line of amendments deals with another aspect of concurrency. Until now we have been discussing the problem of bridging. Here we confront a situation in which a regulator can opt either to go down the regulatory route in terms of enforcing a licence obligation or down the Bill route in terms of determining whether a prohibition exists and, if that is determined to be the case, to inflict a penalty.

On the assumption that the regulator has these two powers, how ought he to conduct himself? In my submission, the regulator ought to opt at the earliest possible phase to go down one route or the other. One of the difficulties that the Minister faces in seeking to find an appropriate formula to ensure that this happens is the following. If I were a regulator, I would find the early phases of the procedures laid down in the Competition Bill very attractive: I have draconian powers of search and seizure; I can knock down somebody's door if I want to; I have the widest possible powers to get my hands on documents if I want them. On the other hand, when it comes to the procedure at the end of the Bill, I am much more hedged about by my Bill powers than I would be under my regulatory powers: I am subject to an elaborate and—I say in parenthesis—highly desirable appeal procedure; I can be subject to judicial review; and I have a range of other obligations which make the end phase of the procedure quite demanding.

Therefore, if I were a regulator, I should like to start my investigation under the Bill because of my extensive investigative powers but I should like to avoid going the whole way. At some stage I should like to switch to my regulatory powers so that I can complete my objectives by enforcing under the regulatory regime.

I do not suggest for a moment that that course has occurred to any regulator, but it might do so at some stage once the Bill becomes an Act. Therefore, in my submission, it is extremely important that provisions should be included in the Bill to prevent that happening and to require each regulator to opt at an early stage for the route down which he wishes to travel.

I give one example of the difficulties that the noble Lord will encounter if he does not face up to this problem. Widespread information-pooling powers are given to the director under Clauses 53 and 54 of the Bill. What is to stop a regulator going on a fishing expedition? He starts off by using his Bill powers, extracts a lot of information from the regulatee and spreads it around to other regulators. All of a sudden someone finds something that entitles him to go off in another direction. Is that conducive to certainty and consistency in the system?

Following on from what the noble Lord, Lord St. John, and the noble Viscount, Lord Trenchard, said, Amendment No. 172 in my name deals with the problem that faces the electricity industry. It is not a problem that is unique to the electricity industry; other former utilities face exactly the same problem. That amendment was tabled at Committee stage and I thought I detected some sympathy from the noble Lord when he responded to my promotion of it at that time. It seeks to give the regulator an option if he would prefer to use his Bill powers rather than his enforcement powers under the Electricity Act. But it is crucial that he opts clearly for one route or the other and, once he has opted, he ought not to be allowed to switch back.

Lord Simon of Highbury

My Lords, noble Lords, refreshed from a period of contemplation and. I hope, dinner as well, seem to have returned with but one thought on their minds: that concurrency still raises certain problems. I should like to point out to the noble Lord, Lord St. John. that, in replying to his previous two amendments, I thought I had made two matters absolutely clear: that the duties under the Bill are paramount for a regulator and that we wish to carry over Clause 58 with the maximum consistency. Those issues in his otherwise generous response seem to have been missed.

It is important, when we are talking of concurrent powers, that we understand that the Bill and the prohibitions are paramount for the regulator, and that we are subsequently talking about the duties which may arise under the licence conditions. Indeed, when the noble Lord, Lord Kingsland, was eloquently talking of how he would behave as a regulator—my mind immediately started to "boggle" at the thought of what the noble Lord might do were he to become a regulator—I felt that I would have but one comfort: that is, that as a consumer I would be sure that once he had done his business I would have the most competitive supply of whatever commodity it was that was available to me. I remind the House that, whichever way we twist and turn on the use of the powers, the outcome is likely to be that, however the information is exchanged between the regulators or the director general, with the proper provisions we will be in a position where the industry will become more competitive and the offers to the consumer more attractive. That must always be our focus.

I do not intend to return to a justification of concurrency. In Committee, the noble Lord, Lord Kingsland, spoke to an amendment that was the same as the present Amendment No. 174. I said that that amendment seemed to make a valid point about the interaction between Section 25 of the Electricity Act and the enforcement of the prohibitions. I said that I should therefore like to reflect on the issue it raised and come back to the matter at Report. The noble Lord struck a kernel of understanding.

I have indeed reflected on the matter and concluded that it would be right to bring forward government amendments in respect of each of the utility statutes to deal with the point. I am happy to give a commitment to bring forward amendments at Third Reading.

I believe that the Bill should be amended to remove the obligation on each of the regulators to take action under his utility statute to enforce licence conditions, if he were already taking action under the prohibitions and he was satisfied that that would be the more appropriate course of action to deal with the breach or threatened breach. That is clearly right.

We consider that the regulator should not be committed, once and for all, to taking action only under the provisions of the Bill. If circumstances change, or indeed his assessment of the situation changes, he has to retain the ability to take action to enforce the licence condition. A breach of licence condition cannot be allowed to continue just because a regulator had started to take action under the prohibitions and then found, for whatever reason, that that was not an effective route for dealing with the breach. I therefore concede on one point but wish to clarify the situation on another.

In this context it has been helpful to hear what has been said about Amendments Nos. 172, 173, 174 and 174A. However, Amendments Nos. 169 and 224 seem, in different ways, to go further in seeking to reduce a regulator's flexibility. Amendment No. 169A relates to a different aspect of the relationship between the prohibitions and the utility statutes.

As I said, I believe it is right to make amendments to remove the duty that would require a regulator to take parallel enforcement action. But I do not accept that it would be right to impose the restrictions on regulators' powers that are in some of these amendments. It is for the judgment of the regulator as to which enforcement route to pursue. I certainly do not accept that a regulator should be precluded from taking licence enforcement action because he can take some action on the same matter under the prohibitions, even if that is clearly less effective. Nor that he should be precluded from taking licence enforcement action because he started taking action under the prohibitions and circumstances changed. I believe that the proposal in Amendment No. 169 for a regulator to give notice before he exercises any concurrent function under the Bill is unworkable. Some requirements for notice to be given are set out in the Bill, others will be specified in director's rules. Of those, some may relate to the exercise of concurrent powers; for example, in relation to notification for guidance or a decision. But a blanket notice requirement on regulators is neither desirable nor workable.

I feel that some of the concern about overlap between the prohibitions and licence conditions may not be justified because the licences in place may in some cases need to adapt to the strengthened competition law that will be in place when the prohibitions are brought into effect. The Director General of Telecommunications told me that a number of licence conditions were removed when the Fair Trading Condition, based, like the prohibitions, on Articles 85 and 86, was introduced into telecommunications licences. He went on to say that, in the light of the implementation of the Competition Bill, Oftel will continue to consider the removal of licence conditions that are no longer necessary. Similarly, the Director General of Gas Supply told me that she will be considering the extent to which licence conditions, such as those which control prices, can fall away.

Perhaps I may quote from the letter of the Director General of Gas Supply: I would like to take this opportunity to confirm that once the competition legislation is in place, and as competition becomes more effective in gas supply and in activities ancillary to transportation, such as storage, I will be considering the extent to which licence conditions, such as those which control prices, can fall away on the basis that I can rely instead on the new, more effective powers under general competition legislation". The letter from the Director General of Tele-communications states: In the future, particularly in light of implementation of the Competition Bill, Oftel will continue to consider the removal of licence conditions that are no longer necessary". I quote those letters in order to show to the House that this will be a moving circumstance and that we should construct both a series of rules and therefore subsequent guidance which is able to take account of the way the market place changes with the experience of the new competition law. I do not regard this as fixed in stone. We should look at the rules that the director general and the regulators bring forward and comment on them, as we will have appropriate occasion to do, in the future.

Amendment No. 169A creates a wholly inappropriate link between telecommunications sectoral regulation and the Bill. It is not realistic to treat action in relation to licence conditions as decisions under the Bill. They are not decisions under the prohibitions and it would not be right to treat them as such.

I make a distinction between the paramount objective of looking to the prohibitions in bringing the new competition law into place and the separate role of the regulators in applying licence conditions. As I said in a previous answer, although I do not believe these to be what the noble Lord, Lord Kingsland, would like to see, I do understand that we will have to pay great attention to the relationship between these two bodies of law in order to achieve the most effective development of competition in very differently behaving market places. I hope that, with a commitment to bring forward the government amendments for Third Reading on the particular issue of the Electricity Act, the noble Lord will be willing to withdraw the amendment.

9.15 p.m.

Lord St. John of Bletso

My Lords, I am grateful for the Minister's considered response and I fully take on board what he said about the duties of the regulator and the prohibitions being paramount. The Minister referred to the need to retain flexibility for the DGT. My amendment would not remove flexibility for the DGT. The DGT would still decide whether a matter was to be dealt with as anti-competitive behaviour within the scope of the Bill or as something else under the other powers. Once the DGT decides to proceed on the basis that he is addressing anti-competitive behaviour within the scope of the Bill he will be obliged, with this amendment, to use the Bill's powers. If there is any difficulty at the initial stages of investigation it may be that the amendment should be redrafted slightly to impose the requirement to use the Bill's powers at the earliest practical moment—certainly before any substantive decision is taken.

The new competition laws are very different from the old. They give extremely wide discretions. As I have said, the powers are so wide that anyone wielding them is essentially investigator, prosecutor and judge, all in one. It therefore follows that the relationship between the new competition laws and the continuing regulatory powers is very different from that between the existing laws and the regulatory powers. The new relationship causes new problems and, in that event, should be dealt with in the Bill. It should be clear from the Bill that all anti-competitive behaviour within the scope of the Bill must be tackled by the Bill. The Bill will have primacy and will not be circumvented by alternative powers.

Finally, the Bill will not be mixed with other powers, but will be operated by the DGT on precisely the same basis as by the DGFT. Although the Minister says that in his opinion the provisions of this amendment would, in his word, be "unworkable", I remain convinced that an amendment such as this is necessary. I shall need to return to the issue perhaps at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Kingsland had given notice of his intention to move Amendment No. 169A:

Page 70, line 45, at end insert— ("(3B) If, in the exercise of his functions under this Act, the Director decides to impugn a matter on grounds within the Chapter I prohibition or Chapter II prohibition of the Competition Act 1998, that decision shall he treated as a decision for the purposes of section 45 of that Act. (3C)The Director shall give written notice to any person likely to he affected by any decision made in accordance with subsection (3B) above. (3D)Following the making of a decision in accordance with subsection (3B) above, the Director shall not take any enforcement action under this Act in respect of the matter which is the subject of that decision—

1. (a) until the end of the period for giving notice of appeal against the decision; or
2. (b) if such an appeal is made, until that appeal is determined or withdrawn."").

The noble Lord said: My Lords, I have already spoken to this amendment, but I have heard the Minister's response. While thanking him very much indeed for the specific remarks he made about the electricity industry in the context of Amendment No. 172, I am extremely disappointed about the manner in which he dealt with the issue of parallel jurisdiction exercised by the regulator.

The effect of what the Minister said is this: by this Bill he will be amending the regulatory Bills. Through his interpretation of what the regulator can do, the Minister will be handing over a whole range of powers to each one of the regulators that they do not have in the Act. It also seems to break the fundamental code of sportsmanship which ought to apply to the exercise of the regulatory regime. It is very important that enterprises are given a fair chance. Fairness is now part of our constitution. It has become part of it through decisions made in a series of cases in judicial review. It is now going to be part of it in statutory form through the incorporation of the Bill of Human Rights. That fairness has to be reflected in the Competition Bill just as it will have to be reflected in all Bills that are made by your Lordships' House in future.

I have reflected on what the Minister said. I am certainly not going to press the amendment to a vote, but it is a matter to which the Opposition will be returning at Third Reading.

The Deputy Speaker (Baroness Lockwood)

My Lords, is the noble Lord moving Amendment No. 169A?

Lord Kingsland

My Lords, no.

[Amendment No. 169A not moved.]

[Amendments Nos. 170 and 171 not moved.]

[Amendment No. 171A had been withdrawn from the Marshalled List.]

[Amendments Nos. 171H, 171E and 171J not moved.]

[Amendment No. 171C had been withdrawn from the Marshalled List.]

[Amendment No. 171K not moved.]

Lord Haskel moved Amendment No. 171D:

Page 76, line 29, leave out from beginning to first ("the") in line 30 and insert ("In selecting a group to perform the Commission's functions in relation to any such reference,").

The noble Lord said: My Lords, we have already debated this amendment on Day 2. We considered it with Amendment No. 142A. I beg to move.

On Question, amendment agreed to.

Lord Haskel moved Amendments Nos. 171E to 171G:

Page 76, line 50, at end insert— ("() At the end of section 101, insert— (6) Information obtained by the Director in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 53 and 54 of that Act (disclosure) and not to subsections (I) to (5) of this section.'"').

Page 77, line 34, at end insert— ("() At the end of section 42, insert— (7) Information obtained by the Director in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 53 and 54 of that Act (disclosure) and not to subsections (1) to (6) of this section."").

Page 78, line 20, leave out from beginning to first ("the") in line 21 and insert ("In selecting a group to perform the Commission's functions in relation to any such reference,").

On Question, amendments agreed to.

[Amendments Nos. 172 to 174A not moved.]

Lord Haskel moved Amendments Nos. 174B to 174D:

Page 78, line 47, at end insert— ("() At the end of section 57, insert— (7) Information obtained by the Director in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 53 and 54 of that Act (disclosure) and not to subsections (1) to (6) of this section.'"').

Page 79. line 28, leave out from beginning to first ("the") in line 29 and insert ("In selecting a group to perform the Commission's functions in relation to any such reference,").

Page 79, line 50, at end insert— ("() After section 206(9) (restriction on disclosure of information), insert— (9A) Information obtained by the Director in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 53 and 54 of that Act (disclosure) and not to subsections (I) to (9) of this section."").

The noble Lord said: My Lords, we debated this group with Amendment No. 164D. I beg to move.

On Question, amendments agreed to.

Lord McNally moved Amendment No. 174E:

Page 80, line 45, leave out from beginning to end of line 14 on page 81.

The noble Lord said: My Lords, your Lordships will be aware how assiduous an attendee my noble friend Lord Ezra has been at our deliberations on this Bill. He cannot be here this evening and it is with his leave and on his behalf that I am moving this amendment which he thinks deserves clarification from Ministers.

The amendment concerns the interaction between the Bill and the Railways Act 1993. Under that Act, a train operating company which enters into an agreement to use the railway network, or a station, or a maintenance depot can do so only in accordance with directions issued by the railway regulator. The so-called "access agreements" are scrutinised carefully by the rail regulator who normally requires changes to be made to a proposed agreement when he directs the parties to enter into it. In giving his directions, the regulator has a duty to follow a number of criteria set out in the Railways Act, including acting, in the manner which he considers best calculated … to promote competition in the provision of railway services. The result is that access agreements are entered into only on the direction of the railway regulator, following detailed scrutiny and with the object of promoting competition.

In those circumstances, it would not make sense for the agreements to be subject to the prohibitions in this Bill. It is my noble friend's understanding that they are excluded by Schedule 3(3). This excludes agreements made, in order to comply with a legal requirement. I hope that the Minister will confirm that that is his understanding.

If my noble friend is right that access agreements are excluded from the prohibitions, then sub-paragraphs (5) and (6) of Schedule 10(15) are redundant. They introduce consequential amendments to the Railways Act which would specifically empower the rail regulator to require amendments to be made to an access agreement entered into on his direction if it has infringed a Chapter I or Chapter II prohibition, but an agreement which is excluded from the prohibitions cannot infringe them.

Amendment No. 174E removes that unnecessary change to the Railways Act. If the amendment is not made, the changes to the Railways Act will not only undermine confidence in the commercial and regulatory arrangements underpinning the restructured railway industry, but will also cast doubt on the effectiveness of Schedule 3 in excluding agreements made to comply with a legal requirement. I beg to move.

Lord Simon of Highbury

My Lords. the last time that the noble Lord, Lord McNally, and I exchanged views in a quiet and thoughtful manner in this House, and I made what I thought was a quiet and thoughtful response, the noble Lord said, "What the Minister means is 'get lost"'. I am warning the noble Lord that I shall try again.

As the noble Lord described, the Bill inserts a provision into the Railways Act 1993. I have some sympathy with the concerns raised by the noble Lord. To the extent that the terms of access agreements are required by the regulator, they will be excluded under Schedule 3. The provision in Schedule 10 is not intended to cast doubt on that. It would apply only in circumstances where the provisions of access agreements are not legal requirements. I am advised that that might apply in the case of amendments to access agreements.

Amendment No. 174E would not produce the result of precluding the application of the powers in the Bill to access agreements to the extent that they were not legal requirements. Instead, it would leave uncertain whether the bar in the Railways Act on the regulator requiring amendments to such agreements did or did not apply to the powers of the regulator under the Bill so far as concerned any provisions of an access agreement that were not legally required.

I am not therefore persuaded that the Bill is wrong as drafted, but I am prepared to reflect carefully on the points that the noble Lord has made to assess whether any change to the Bill would be desirable. With the assurance that we will reflect upon this matter, I invite the noble Lord to withdraw his amendment.

Lord McNally

My Lords, perhaps I may seek to clarify my "get lost" remark. The Minister will recall that Billy Budd's excuse was a moment of impulse instantly regretted. I am sure that that was the case. I am sure that my noble friend Lord Ezra will carefully read the response and reflect upon it. He has drawn attention to a possible conflict. I am sure that when he reads the Minister's response he will be assured that his concerns are to be examined. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.30 p.m.

Lord Haskel moved Amendment No. 174F:

Page 81, line 19, at end insert— ("() After section 145(6), insert— (6A) Information obtained by the Regulator in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 53 and 54 of that Act (disclosure) and not to subsections (I) to (6) of this section."").

The noble Lord said: My Lords, the House has already debated this amendment. I beg to move.

On Question, amendment agreed to.

Lord Haskel moved Amendments Nos. 174G to 174J:

Page 82, line 15, leave out from beginning to first ("the") in line 16 and insert ("In selecting a group to perform the Commission's functions in relation to any such reference,").

Page 82, line 42, at end insert— ("() At the end of Article 61, insert— (7) Information obtained by the Director in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 53 and 54 of that Act (disclosure) and not to paragraphs (1) to (6)."").

Page 83, line 29, at end insert— ("() At the end of Article 44, insert— (8) Information obtained by the Director in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 53 and 54 of that Act (disclosure) and not to paragraphs (1) to (7)."").

The noble Lord said: My Lords, I beg to move Amendments Nos. 174G to 174J en bloc.

On Question, amendments agreed to.

Clause 53 [General restrictions on disclosure of information]:

Lord Kingsland moved Amendment No. 175:

Page 26, line 17, leave out ("subsection (2) is") and insert ("subsections (2) and (4A) are").

The noble Lord said: My Lords, Amendment No. 175 and the other amendments in this grouping were dealt with at Committee stage. Clause 53(3) of the Bill exempts quite widely from the rules of confidentiality disclosure of information made for the purpose of facilitating the performance of any relevant functions of a designated person. "Relevant functions" and "designated persons" are dealt with in Schedule 11 to the Bill. We debated this matter at some length in Committee. I believe that the Minister will agree with me if I describe his reaction to my submissions as pretty dusty.

I have retabled the amendments that I tabled in Committee. Amendment No. 176 seeks to remove Clause 53 (3)(a)(i) from the Bill. By so doing it removes the associated designated persons and relevant functions listed in Schedule 11. Given his reply in Committee the Minister may not feel that he can go as far as to agree with me totally this time. I have therefore presented him with some alternatives.

The first is in Amendment No. 175 itself, which seeks to cut down the circumstances in which Clause 53(3) applies, requiring a delayed period before any information given to one of those designated persons can be passed on to another designated person.

The problem is that if, together with the schedule, the clause stands in its present form, a huge pool of information will be created, consisting not just of the Director General of Fair Trading and the regulators, but a whole range of other people over whom there will be no control or discipline with respect to how they disseminate that information. So any regulator who has grounds for suspecting that something is going on in his particular sector, can tap into that pool, as it is presently established, without any constraint on his ability to do so, or any protection for the person to whom the information in the pool refers.

If the Minister is not prepared to accept the blockbuster amendment, he has the option of going for Amendment No. 175, connected with Amendment No. 178, which will require a period of notice before information given for one purpose is allowed to be used for another purpose. Alternatively, there is a series of amendments which can be made to Schedule 11 itself, which would cut down and control the definition of "designated person" and "relevant function".

Clause 53 is an enormous gap in the system of protection to which an individual is entitled if he is under investigation. I hope that the Minister will look carefully at these amendments and respond positively. I beg to move.

Lord Simon of Highbury

My Lords, we are dealing here with a large group of amendments which cover various aspects of confidentiality. That confidentiality of information is an important issue is not doubted by either side of the House. The noble Lord, Lord Kingsland, should be in no doubt that I understand that this is a sensitive matter, especially for business. It is for sure, and my memory is still fresh on those issues. We have accordingly framed the relative provisions in the Bill carefully.

Some of the amendments in the group are new. Nevertheless, I was slightly disappointed that we have again to go over the ground that we debated in Committee, but I shall. It was not that I thought that I was dusty. It would have been difficult to have read that into my mind at that time. I was desperately hoping that I was clear, but clearly I was not. So dusty may mean a certain way of being cloudy in vision. I am not sure, but we will get to it.

Lord Kingsland

My Lords, perhaps I may help the Minister: by the expression I meant "dismissive".

Lord Simon of Highbury

My Lords, no, that would not have been right. This is an important issue and I would not have been dismissive about it. We have explained carefully the basis for our position on these points. The disclosure provisions in the Bill are fully in line with the type of disclosure provisions contained in many other UK regulatory statutes. Let us make no mistake about it, we agree that the provisions are tough, but they are carefully balanced and closely defined.

The sanction for infringing these provisions is also very tough. Unlawful disclosure of information obtained under the Bill will be a criminal offence. Whether or not a great pool of information is available to the regulators as a result of the Bill and the exchange of information, they will still be subject to a—and I would use the word—"draconian" regime of punishment for improper use.

Amendments Nos. 175 and 178A are to do with information passed by a person who obtains it under the Bill to one of the regulators specified in Schedule 11. There is no case for imposing the restrictions set out in this amendment on such co-operation. We have explained before that the provisions for disclosure between regulators in this Bill are entirely within the mainstream of UK regulatory statutes. There are no such restrictions in those other statutes and nor should there be. Our view is that the provisions of Clause 53 as to disclosure will continue to apply to information obtained under the Bill when it is disclosed to another regulator for the purposes of this Act. The information is therefore fully protected against being used except for authorised purposes.

Amendment No. 175A relates to subsection (2) of Clause 53. Subsection (2) is a very restrictive provision. It requires that information may not be disclosed without the consent of both the person who initially provided the information and, if they are different, the person or business to whom that information relates. That is a tougher restriction than appears in most other regulatory statutes. The amendment seems to me to add nothing. The relevant person will have to be told the purpose for which the information is to be used in order to secure his consent. If he does not wish to give consent, he need not do so.

We discussed a similar amendment to Amendment No. 176 in Committee. We explained on that occasion that this amendment would wreck the Bill. That remains the case. The amendment would prevent any disclosure of information for the purposes of functions under the Bill, except with consent. It would prevent, for example, the disclosure of information between the director and the competition commission to assist the Commission to hear appeals. It would likewise prevent the director from disclosing to parties who were subject to an investigation the information necessary for them to understand the accusations against them. I hope the House will therefore agree that the new regime would be unworkable with this amendment.

Amendment No. 177 is another that we discussed in Committee. It would delete subsection (3)(a)(ii) of Clause 53, which enables information to be disclosed to the European Commission to help the Commission perform its functions under European competition law. As my noble friend Lord Haskel explained in Committee, we believe it is right to give the director the power to help the Commission to enforce community competition law.

Amendment No. 177A relates to similar territory. We think it is unnecessary. If disclosure of information is not required to meet a Community obligation it cannot be disclosed under Clause 53(3)(d). Unlawful disclosure is a criminal offence.

Amendment No. 179 would remove subsections (5) and (6) of Clause 53. These provisions enable the Secretary of State to specify additional persons and purposes to whom and for which disclosure is to be permitted. This power is exercisable by order, subject to annulment by either House. The purpose of this power is to ensure that there is sufficient flexibility in the Bill to respond to developments in regulatory and competition policy without need for fresh primary legislation.

Amendment No. 179A, like 177A, misses the point that disclosure of information obtained under the Bill is prohibited unless it is specifically permitted. The subsection (5) power enables an order to be made permitting information to be disclosed for the purpose of specified functions. Information not meeting those purposes may not be disclosed. I am glad of the opportunity to make this clear. I hope the noble Lord will therefore agree that the amendment adds nothing to the firmness of that position.

Turning to Amendments Nos. 180 and 180A, they seek to impose a statutory duty on the recipients of information passed through the disclosure gateways in Clause 53. As I have already explained, our view is that the provisions as to the disclosure in Clause 53 will continue to apply to information obtained under the Bill when it is disclosed to another regulator for the purposes of the Act. The information is therefore fully protected against being used except for authorised purposes.

In the context of information passed to the European Commission, such a provision cannot be made to apply. However, such information will be subject to European law, which will restrict its disclosure. If we turn to Clause 53(3)(c), for example, do noble Lords think that if a policeman is passed information about an offence he should not be allowed to disclose that further? No, it would be quite wrong to interfere with disclosure in criminal proceedings, which must remain a matter for the criminal law and the courts dealing with those proceedings.

Turning to the persons listed in Schedule 11, it would frustrate the whole purpose of the gateways in the Bill if a regulator were to be prohibited from disclosing information provided to him to perform a statutory function if such disclosure were needed in order to perform that function. We are quite clear that appropriate restrictions will apply to any further disclosure of information that they have received under Clause 53.

As I understand it, the purpose of Amendment No. 180B appears to be to apply the duties contained in Clause 54 to any disclosure of information made under Clause 53. That is already the effect of the Bill as it stands. I hope that that clarification is helpful.

Amendments Nos. 180C to 180E, 181, 182 and 182A all seek in one way or another to interfere, in differing degrees, with the ability of those who obtain information under the Bill to disclose it to other persons specified in Schedule 11 for the purposes of their statutory functions. For those reasons, noble Lords will understand that I do not believe that they add to the safeguards that are already introduced into the gateways.

Amendment No. 183 is another which relates to the confidentiality of information obtained under the Act and passed to another person. The same points as I made in relation to Amendment No. 180 apply.

I have gone fully through the system because, as I said when I started, we regard the balance of safety in the area of confidentiality for the individual and the business as being an important matter to which we must all attend with due seriousness. I have tried to attend to it in that way.

I hope that having heard what I have said noble Lords will accept that what we have set out in the Bill strikes the right balance between the importance of protecting information and the need to ensure that the new regime is fair, transparent and workable.

We have taken considerable care in framing them, recognising that this is indeed an extremely important issue, particularly the issue of fairness which the noble Lord, Lord Kingsland, put to me so clearly. We think that the Bill is entirely in line with existing UK precedents. I therefore urge the noble Lord to consider the withdrawal of the amendments.

9.45 p.m.

Lord Kingsland

My Lords, I wish to thank the Minister very much for going through each amendment so carefully and assiduously. I am especially grateful to him for his reaction to Amendment No. 180B, in which he made it absolutely clear that Clause 53 is subject to the contents of Clause 54. I would prefer it to be on the face of the Bill, but, if the Minister is not prepared to do that, I shall take his statement as being absolutely clear from an interpretive point of view.

The purpose of this group of amendments is to reinforce the point that I was aiming to make at an earlier stage of our proceedings today about the importance of keeping distinct the jurisdictional powers which relate on the one hand to the Bill and on the other hand to the regulator. My concern was that the pool of information that would be gathered under Schedule 11 should be used strictly for Bill purposes and should not seep into the regulatory sphere. That would be including things in the regulatory acts which it was not the intention of Parliament to do.

I have listened as carefully as I could to the Minister's response. I shall read Hansard with equal care and reflect as to whether I should return to the matter on Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 175A to 177A not moved.]

[Amendment No. 178 had been withdrawn from the Marshalled List.]

[Amendments Nos. 178A to 180B not moved.]

Schedule 11 [Interpretation of Section 53]:

[Amendments Nos. 180C to 183 not moved.]

Baroness Nicol moved Amendment No. 184: Page 27, line 15, leave out ("the Director") and insert ("any designated person or specified person (as defined in subsections (4) and (6) of section 53 respectively)").

The noble Baroness said: My Lords, yet again I am afraid that I shall invite the Minister to canter round a course that he has covered before. I wish to move Amendment No. 184 and to speak in particular to Amendments Nos. 185 and 208. The effect of this group of amendments would be to protect the commercial secrets of innocent third parties—that is my particular concern—during investigation and thereby to encourage more transparency when detailed information is required by the authorities.

Amendment No. 184 seeks to ensure that the obligation to protect commercial secrets is extended also to designated or specified persons involved in the investigation. Amendments Nos. 185 and 208 introduce those obligations.

The amendments would also promote harmonisation of approach in respect of investigation across the EU and would reduce the bureaucratic burden on businesses by introducing consistency in documentation.

Your Lordships will remember that I raised those concerns in Committee and I am aware that the British Retail Consortium has since had an encouraging dialogue with the Bill team. However, I have tabled these amendments so that the Minister can clarify and record assurances which he has given during those discussions.

Of course, investigations are necessary to ensure that there is no abuse of power and that consumers have access to a free and competitive market. But it cannot be right that business secrets of innocent third parties are revealed to their competitors. The amendment would introduce a system which is used currently by the competition directorate of the European Union—DGIV—in its investigations.

Article 214 of the Treaty of Rome imposes a general duty on all EU officials not to disclose information which, by its nature is a professional secret, and, in particular, information relating to enterprises and concerning their commercial relations or components of their production costs". That is reflected in the detailed regulations setting out the rules for investigation in Regulation 17/62.

Articles 19(3) and 21(2), which deal with the publication of detailed reports, specifically bind the Commission to have regard to the legitimate interests of undertakings in the protection of their business secrets. That system seems to work effectively for DGIV and for businesses themselves. It is surely in the interests of both business and authorities to have a transparent approach to investigations. If businesses are confident that their commercial secrets will be respected, it is more likely that they will be co-operative with investigators. I beg to move.

Lord Kingsland

My Lords, the difficulty is that there are a whole lot of other amendments in the group and if I do not speak to them now, I shall not have an opportunity to do so.

This really is a continuation of the exchanges that I had the privilege of having with the Minister a few moments ago. He conceded that Clause 53 was subject to Clause 54. That was extremely good news. We now have the added problem of examining Clause 54 to see whether its terms are strong enough to bear this immense responsibility. I trust the Minister will agree with me that on a true construction of the terms of Clause 54 it is inadequate to bear the heavy responsibility placed upon it. I draw his attention particularly to Clause 54(3)(a)(i) and (ii). I am particularly concerned about the expression "in his opinion" which is inserted into both these paragraphs, as that introduces a subjective element into the application of the director's judgment which is, I think, in contrast with what the Minister has sought to introduce in other parts of the Bill. My amendments seek to remove that.

Moreover, my amendments also seek to remove the expression, must also have regard to the need for excluding". Perhaps I can give the Minister the benefit of the doubt by suggesting to him that what he really means is exclude, no more and no less, and that the "have regard to" and "the need for" are simply otiose.

Lord Simon of Highbury

My Lords, these amendments focus us directly on the question of the proper balance between the protection of information and the demands of efficiency, transparency and fairness under the new regime. This balance is, as I said in answering the previous group of amendments, an important issue, and I am grateful to my noble friend Lady Nicol and to the noble Lords opposite, for providing us with another opportunity to examine it in such clear terms before the Bill leaves this House. I say "clear terms" because the amendments propose a radical shift in the balance. Indeed, I fear that the proposals illustrate the risk of hampering the operation of the new regime to a degree which unbalances the options.

It is right that the director should be under a duty to have regard to the need to exclude business secrets. This is what the first part of Amendment No. 185 appears to propose. The duty is already contained in Clause 54. Under Clause 54 the director is required to balance that need against the extent to which disclosure is necessary for his purposes under the Bill. When I say the "director" I also mean the regulators acting under the Bill. The Government believe that this is the right duty. We should not under-estimate the seriousness of the matter. The director will have to weigh carefully the potential harm to the interests of business and individuals before disclosure. I might point out that it would also not be in the director's interest to disclose information unnecessarily. To do so would clearly discourage co-operation in any future cases.

But these issues must be weighed against the necessity to disclose information in certain circumstances; for example, to enable a party to have sufficient details of the case it has to meet so as to be able to respond. If the director failed to follow this principle it would certainly be grounds for legal challenge. This also applies to publishing decisions that there have been infringements where other parties have a clear interest in knowing the facts about that infringement.

Amendment No. 185 would impose a further, far more onerous restriction to demonstrate that the public interest in disclosure outweighed the business's interest in confidentiality. I fear that this would be a recipe for paralysis. It would give infringers fertile ground to obstruct and to delay the director's procedures, challenging him at every turn that he has not produced a sufficient demonstration of the public interest. The scope for delay could be almost endless. We have to give the director some discretion, although clearly, as I said, within strict bounds, if the system is to work.

The amendment imposes a rigid requirement for notice. In some circumstances 14 days' notice may be right. In others, however, it will not be. We have already debated a proposal to impose a notice requirement on confidential exchanges of information between regulators. This amendment would impose the same requirements on every function under the Bill where disclosure is necessary. It makes no allowance for the differences. What if, for example, the director needs to move urgently to impose interim measures to stop an abuse? He could be hamstrung by this proposal.

We have accepted the argument that it is right for third parties to have notice and an opportunity to make representations in some circumstances. But the right way to approach this is through the Director's Rules, which will be sufficiently detailed to cater for different scenarios, and which can be more readily refined. This is not a matter for primary legislation. The rules will of course be subject to consultation, so people will have an opportunity to say if they do not believe the rules cover the right matters in the right way.

My noble friend Lady Nicol referred to the practice under the EC system of enabling business to identify which pieces of information are confidential. Again this is a matter of procedure best left to the Director's Rules. It does not strike me as the sort of detail which is necessary or sensible to put into the primary legislation, and indeed I do not believe it appears in Regulation 17/62 either. It is the Commission's implementing regulations, equivalent to the Director's Rules, on the making of notifications under Regulation 17 that provide for parties to identify business secrets and to justify that treatment in making applications.

I now turn to the amendments tabled by the noble Lord, Lord Kingsland, Amendments Nos. 184A and 184B, and Amendments Nos. 185A to 185D. The effect of these amendments is to remove requirement for the director and the Secretary of State to balance the relevant considerations. I have already noted that some discretion is necessary for the system to work effectively and clearly.

More damagingly still, the amendments will make it unlawful for the director or Secretary of State to disclose any information which might damage the legitimate interests of business or individuals. I believe this proposal to be unworkable. Disclosure may sometimes be necessary. I have already mentioned, for example, the need for parties under investigation to have sufficient information to enable them to understand the case against them. It would be quite wrong to limit that right in this way.

If I may turn quickly to Amendment No. 208, there is already an established system in place for protecting confidential information under the FTA. Interested parties are given an opportunity to make representations to the MMC as to whether information that they have provided should remain confidential, before the MMC sends its report to the Secretary of State.

I do not in any way seek to play down the importance of the arguments raised by noble Lords and my noble friend Lady Nicol in respect of the disclosure provisions in the Bill. On the contrary we have taken considerable care to get the balance right. What we have produced in the Bill is entirely in line with existing UK precedents. We have also brought forward an amendment recognising the force of the arguments about notice to third parties and an opportunity to make representations.

It is important to recognise that the director or Secretary of State will only wish to disclose information where that is properly justified under the tests we have set out in the Bill. It would hardly be in their interests to disclose confidential information without proper justification. Companies would soon become unwilling to co-operate and the effectiveness of the system would be compromised. Nevertheless, we do not believe that the system would be workable without some discretion, albeit circumscribed as we have provided. I am grateful for this opportunity to explain our position once again. I urge my noble friend Lady Nicol to withdraw the amendment.

Baroness Nicol

My Lords, I am grateful for the careful answer that the Minister has just given. I am persuaded by the arguments to withdraw my amendment. It is comforting, too, that there is an opportunity in the formation of the rules to clarify even further some of the matters that he mentioned. I can quite see his point about not wanting the provision in primary legislation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 184A to 185 not moved.]

Lord Kingsland moved Amendment No. 185A:

Page 27, line 21, leave out from ("also") to ("so") in line 22 and insert ("exclude,")

The noble Lord said: My Lords, I beg to move Amendment No. 185A. I have spoken to this amendment. I do not think the Minister responded to my point about the subjective judgment of the director. It related to the expression "in his opinion". However, I have no doubt that the noble Lord will reflect on that matter and, in that spirit, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 185E to 185D not moved.]

Clause 56 [Findings of fact by Director]:

[Amendment No. 186 not moved.]

Lord Haskel moved Amendment No. 186A:

Page 28, line 4, at end insert ("; or (b) conducting an investigation under section 25.").

The noble Lord said: My Lords, as I explained on the third day of Committee, it is the Government's intention that Clause 56 should apply to findings of fact made by the director in all decisions. It should not be limited to decisions resulting from a notification for a decision. The amendment gives effect to that intention. I beg to move.

On Question, amendment agreed to.

Clause 57 [Interpretation]:

[Amendment No. 186B not moved.]

Lord Fraser of Carmyllie moved Amendment No. 186C:

Page 28, line 36, at end insert— ("" dominance" does not include any ability to act independently which might exist but for a legal requirement arising other than under this Act;").

The noble Lord said: My Lords, Clause 57 concerns interpretation of governing principles. It immediately precedes Clause 58, the Eldorado Clause in the Bill which will provide a goldmine for lawyers for at least the next decade.

We hope by Amendments Nos. 186B and 186C to reduce by a small margin the opportunities for digging away at that vein. Amendment No. 186C proposes that included within this interpretation clause "dominance" should be clearly defined. The definition we have offered is that "dominance" should have the same meaning as within the EC treaty.

It might shorten proceedings if I say that in relation to my next amendment, Amendment No. 187B, which relates to undertaking, we will be adopting the same position. I cannot believe that anyone would wish to see anything other than clarity being given to the interpretation of the Bill. I beg to move.

Lord Simon of Highbury

My Lords, I was not clear from the drafting of the amendment what its purpose was. I understand from the noble and learned Lord's explanation that it is partially to stop lawyers earning money and to disapply the Chapter II prohibition from an undertaking in so far as it occupies a dominant position because of a legal requirement.

We cannot accept this proposal. We intend that the fundamental question of dominance should be interpreted in accordance with Article 86 jurisprudence. The proposal would interfere with that interpretation to a degree. I remind the noble and learned Lord that the Chapter II prohibition will catch abuses, not dominance itself. Dominant companies have a responsibility not to abuse their market position, howsoever the dominance arises. If the concern is that the conduct may be caught as an abuse, even if that conduct is required under statute, the Bill ensures that that will not be the case.

Paragraph 3 of Schedule 3 provides that the Chapter II prohibition does not apply to conduct carried out in order to comply with the legal requirement. It would not, however, be right to disapply the prohibition from all conduct carried out by an undertaking which occupies a dominant position under a statutory regime.

In the light of that explanation, which I hope is a fair conclusion as to the answer that the noble and learned Lord required for clarification, but in no certainty that I have given it correctly, I invite him to withdraw his amendment.

Lord Fraser of Carmyllie

My Lords, that is not a wimpish answer by the Minister but I do think it is a slightly wimpish answer by the draftsman. I can see no reason why he should not have been prepared to see dominance. If I am wrong and it does not accurately reflect the terms of the EC treaty, I would retreat immediately. If, however, the definition I have attached to it is a correct one, I believe it would have been helpful to have that placed on the face of the Bill. As the noble Lord might expect, I am not concerned to press the amendment at this time. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Haskel moved Amendment No. 187:

Page 28, line 43, at end insert— ("'information" includes estimates and forecasts;").

The noble Lord said: My Lords, this amendment was debated on day one. I beg to move.

On Question, amendment agreed to.

Lord Simon of Highbury moved Amendment No. 187A:

Page 29, line 6, at end insert— (""person", in addition to the meaning given by the Interpretation Act 1978, includes any undertaking;").

The noble Lord said: My Lords, this is a technical amendment which provides that in the interpretation of Part I of the Bill "person" is to include any undertaking.

As your Lordships will be aware from our earlier discussions on this Bill, the prohibitions are modelled on Articles 85 and 86 which apply to undertakings and, as a result of Clause 58, words in the Bill such as "undertaking" are to be interpreted by reference to EC law. However, it is not appropriate for all of the provisions of the Bill to be drafted in terms of "undertakings". For example, Clause 20 provides that persons may apply to the DGFT for guidance or decision about the application of the Chapter II prohibition to their conduct. The applicant may seek to argue in that application that the Chapter II prohibition does not apply to it because it is not an undertaking. But there may be undertakings that are not regarded by our legal system as persons. We therefore felt that we should make clear through this amendment that a "person" is to include any undertaking. I beg to move.

On Question, amendment agreed to.

Lord Fraser of Carmyllie moved Amendment No. 187B

Page 29, line 17, at end insert— (""undertaking" includes a person who, or body which, requires, causes or connives in an infringement of the Chapter I prohibition or Chapter II prohibition. () Except where the context otherwise requires words and expressions in this Act shall have the same meaning as in the Treaty.").

The noble and learned Lord said: My Lords, I have already explained the reasoning that lies behind Amendment No. 187B. It is an attempt to place on the face of the Bill what I understand to be the definition to be found in the treaty. I move it shortly because I anticipate exactly the same response as previously. I beg to move.

Lord Simon of Highbury

My Lords, my response will not vary on this occasion. I do not think I have a wimpish draftsman this time; but, given the late hour, my response stands as the noble and learned Lord predicted.

Lord Fraser of Carmyllie

My Lords, with that compelling argument, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Haskel moved Amendment No. 188:

Page 29, line 18, leave out ("the production of').

The noble Lord said: My Lords, we have already debated this amendment. I beg to move.

On Question, amendment agreed to.

Lord Haskel moved Amendments Nos. 189 and 190:

Page 29, line 20, leave out ("the production of").

Page 29, line 21, at end insert— ("() Any power conferred on the Director by this Part to require information includes power to require any document which he believes may contain that information.").

The noble Lord said: My Lords, we have already debated Amendments Nos. 189 and 190. I beg to move en bloc.

On Question, amendments agreed to.

10.15 p.m.

Clause 58 [Principles to be applied in determining questions]:

Lord Fraser of Carmyllie moved Amendment No. 191:

Page 29, line 23, leave out from beginning to ("questions") in line 24.

The noble and learned Lord said: My Lords, in many respects this is as important a group of amendments as we have discussed this evening, and again it is regrettable that we come to it at this late stage.

Perhaps I may look back at the history of Clause 58. If we reflect on what was said at Second Reading, I do not recall any contribution to that Second Reading debate where it was said that it was not desirable in one form or another to include Clause 58 within the Bill; that if Articles 85 and 86 of the Treaty were to be incorporated into our domestic law, so far as possible it should be clear that we understood where the jurisprudence of the European Court would be followed in the United Kingdom and where it would not be followed.

That broad proposition found no dissent in any part of your Lordships' House. However, I know that along Competition Street the noble Lord has the reputation of being a model Minister in terms of being prepared to listen to representations from all quarters. If I may say, by all reputation the noble Lord has been exceptionally patient with all representations that have been made to him from quarters that are clearly conflicting in their ultimate objectives. It is worth placing on record that we have a great respect for him for that.

However, it must be clear to the Minister as it is becoming clear to me that, while nobody wishes to see Clause 58 in any sense removed from the Bill, there is a growing anxiety—not only among those who are experts in this area of law, but also more broadly in the CBI and elsewhere—that we are potentially about to encounter a risk that, far from Clause 58 being of assistance to the courts of the United Kingdom—that is the ultimate stage of any competition law process—more importantly, it also will not help at an early stage when companies have to determine whether or not the conduct in which they are engaged is in breach of the provisions of the Bill. It is important that they are able to determine as clearly, effectively and as quickly as they can whether or not they will be in breach.

As more people look at the situation, there is a growing unease about the clarity of the definition or the extent of what the clause provides. When I said earlier in a slightly flippant way that it was a sort of "Eldorado" clause. I meant that with some seriousness and sincerity. It sounds a good, simple idea that lawyers and judges in the United Kingdom should know immediately to what jurisprudence they might refer. But the first thing that one finds in the clause—the purpose is simply enough stated—are the words, The purpose of this section is to ensure that so far as is possible (having regard to any relevant differences between the provisions concerned). questions arising under this Part in relation to competition within the United Kingdom arc dealt with in a manner which is consistent with the treatment of corresponding questions arising in Community law in relation to competition within the Community".

Before we get into the wording in the brackets, we already have the qualification, The purpose of this section is to ensure that so far as is possible". No sooner do we finish with that qualification, than we have the greater qualification within the brackets— (having regard to any relevant differences between the provisions concerned)".

A similar issue arises as soon as one reaches subsection (2) which states, At any time when the court determines a question arising under this Part, it must act (so far as is compatible with the provisions of this Part and whether or not it would otherwise be required to do so) with a view to securing that there is no inconsistency". We start by thinking it is all going to be seriously helpful. What concerns me is that those who appear before the competition courts and deal in competition law would not even begin to engage in a debate before the court as to what is the jurisprudence of the ECJ. They would spend a considerable, if not interminable, time in trying to discover whether or not what was being discussed was in the area described as "relevant differences" or issues of compatibility. This is a very real question. It would be helpful for the future development of competition law within the United Kingdom if we could discover before the Bill concludes its passage through Parliament just exactly where those issues of compatibility or incompatibility are said to arise.

I do not want at this hour to deal with this matter exhaustively but the jurisprudence of the ECJ has developed in such a way that there are detailed decisions about procedure and about how things are to be taken forward. However, as soon as we get to this Bill, we see in Clause 49(1), which we have not been too distantly considering, that, The Director may make such rules about procedural and other matters in connection with the carrying into effect of the provisions of this Part as he considers appropriate". In isolation in a domestic context one would have regarded that as being a perfectly sensible and sound provision to include within any Bill. However, because the ECJ has already developed an elaborate set of decisions about what is procedurally permissible and correct, there is immediately an issue of inconsistency, incompatibility, difference and the like. Furthermore, Clause 34 spells out the requirement for the director to give interim relief—interim measures. Again, the ECJ has developed a significant body of jurisprudence about that. Similarly, in relation to Clause 35 on fines, there are major matters which have been the subject of ECJ jurisprudence.

We would probably settle for an undertaking from the Minister that he will at least write to us to spell out where in Clause 58 the Government, in the way they have put together the framework of the Bill, recognise that there are indeed relevant differences or issues of incompatibility. I have given three examples and I have no doubt that my noble friend Lord Kingsland would be able to identify a large number of other issues. I hope I have emphasised sufficiently to the noble Lord that we are not hostile to the basic approach of having such a provision, but we are extremely concerned that, far from achieving simplification and uniformity with European law, we suffer the very real risk that our domestic law will become even more complicated than would be the case if the clause were to be omitted. We are not suggesting that as an approach but we are anxious that real complications might emerge. I beg to move.

Lord Borrie

My Lords, at this hour I will not delay the House because I am sure that we would like to hear the Minister. I believe that the noble and learned Lord, Lord Fraser, in his usual charming and helpful way, has made some fundamental errors as regards the way in which the Government have sought and explained throughout the debates on this Bill how they see its purposes in relation to European law. For example, he has ignored the differences between substantive law and procedural law. He has ignored the fact that in the set-up for the United Kingdom we have the Director General of Fair Trading and the other regulators. We also have the commission on appeal. We have a structure, system and procedures which are not precisely the same as in the European Union. Therefore, it is inevitable that one has to use words like "as far as possible" and others of that kind. I shall not elaborate further on the speech that I was most interested to hear, because, like everyone else, I would like to hear from the Minister, too.

Lord Kingsland

My Lords, I had not intended to intervene in this phase of the debate until I heard the noble Lord, Lord Borrie. He is quite wrong in accusing my noble and learned friend Lord Fraser of clouding the issue because it is perfectly straightforward. Either Her Majesty's Government intend the procedural jurisprudence of the European Court of Justice to apply to our own competition law or they do not. It is not clear on the face of the Bill because it refers to decisions of the court. The court makes many decisions on procedure, remedies and third party rights. As the Bill stands, we do not know to what extent they apply. These are important matters. We need to be clear that we understand exactly what the Government's interpretation is; otherwise we are not in a position to draw sensible conclusions about many other clauses. The noble and learned Lord, Lord Fraser, mentioned Clauses 34 and 35 of the Bill. I shall add to that Clause 36 on third party rights.

Lord Simon of Highbury

My Lords, in the spirit of the hour and the way this debate on Clause 58 is developing and which is absolutely crucial, I do not believe that I need to refer extensively to the amendments that have been tabled. I could but I shall not because, first, I appreciate the way in which the Opposition have credited me with listening so far during the course of this Bill and, secondly, I wish to make clear that I have listened to their last statements. So I am not going to go into the amendments. I shall, however, comment on the general proposition that is being put to me, as I understand it. It is that the construction of Clause 58 is confusing. I understand the proposition but I cannot agree. As I said in Committee, the purpose of the governing principles is to ensure that as far as possible the UK prohibitions are interpreted and developed consistent with EC prohibitions. That is of crucial importance in minimising the burdens on business. They already deal with EC prohibitions that have applied in the UK for over 20 years. We must seek to maintain the domestic prohibitions on parallel tracks. That is the purpose of Clause 58.

The noble and learned Lord, Lord Fraser, is, I know, a highly professional and extremely well-trained lawyer in his own right. He said to me that he finds the clause confusing. As a mere businessman my problem is that I thought it was clear. Therefore, I am left with something of a problem, which is the statements which purport to bring across the fundamental prohibitions. In my previous life I dealt with them for 20 years. I did not find much difficulty in understanding them because I believe that most businessmen understand what an abuse is. In my view much difficulty has been made of the complexity of this notion. I do not think that it is so complex for most businessmen. Therefore, when reading the clause, I believe that I would have understood that it carries across into our law the basis of the law which I have had to consider for 20 years when conducting my international business. I thought that it was clear.

There must be some doubts in the minds of the Opposition—doubts which they have not in any way reflected in their discussion on the amendments, which I appreciate—and, from a very legal construct, doubts about the relationship of this clause to other parts of the Bill. We have had a clear statement from my noble friend Lord Borrie that we have to differentiate between the fundamental construct of the law, the procedural aspects and the rules flowing from that. Indeed, this is a different argument from the clarity of Clause 58 in carrying across the jurisprudence and the construct of European law. The point is well taken that those are two different issues. I do not want to go into the issue of procedural coherence as opposed to the coherence of Clause 58. They are different debates and they can be taken one by one, as we have taken them. I want to stick with the view that has been proposed that Clause 58 is not clear in carrying across the basic body of jurisprudence in Europe.

I shall reflect carefully on the general statement that has been made because it has been made by an eminent lawyer and if, on a careful reading of the text, I find that this is a real problem rather than a construct about how procedure flows, I shall reconsider whether I can say anything further to elucidate what I take to be a clear clause to help the noble and learned Lord in this matter. I shall attend to that, but I can give no promises at this stage because I must reflect carefully on the noble and learned Lord's confusion.

10.30 p.m.

Lord Fraser of Carmyllie

My Lords, the noble Lord might now find that this will take a little longer to resolve, because it is not a confusion that I have; it is a confusion of the Confederation of British Industry and it is a difficulty which one of the most prominent law firms in the City has. It is not a matter to be dealt with too lightly. I thought that I had taken the trouble, as briefly as I could, to summarise an argument that I believe requires a serious answer. As I have not had a serious answer, I now intend to go over it so that the noble Lord can reflect on it at his leisure.

In my opening remarks, I pointed first to Clause 49(1), which states: The Director may make such rules about procedural and other matters in connection with the carrying into effect of the provisions of this Part as he considers appropriate". I commented that if that were to be a solely domestic provision, with no reference to any other jurisprudence or legal system, it would be a perfectly standard and obvious provision to include in the Bill. However, I am invited to look to the whole of the Bill against the provision of Clause 58. The difficulty seems to arise because the European Community has developed both its procedural and remedial rules not, as we might sometimes see it, simply from a procedural basis but from fundamental principles derived from the treaty itself. If the noble Lord wishes to write to me before Third Reading to tell me that with regard to Clause 58 we in the United Kingdom shall never have to look to the jurisprudence of the ECJ (and all the other decisions attaching to that primary source), I would be very satisfied.

More importantly, there are very prominent lawyers in the City who have entered into this debate, not in any childish way or for any short-term, narrow party-political reasons, but because they are concerned that the competition law of the United Kingdom should be as clear and as lucid as possible. I have no doubt that they would be even more interested to hear the noble Lord's answer. If that is the course that he contemplates I hope that he will spell out that neither procedural nor remedial matters are to be construed in the context of Clause 58 and explain in the fullest possible detail the legal basis on which he reaches that conclusion. If he does so I doubt that your Lordships will have time to return to this matter, but because of the broad concern, not hostility that Clause 58 should be as clear as possible it would be helpful if the Minister could provide me with that information, and preferably before we reach Third Reading. I beg leave to withdraw Amendment No.191.

Amendment, by leave, withdraw.

[Amendments Nos. 192 to 198B not moved.]

The Deputy Speaker (Baroness Hooper)

My Lords, there is a printing error in the Marshalled list. Therefore, I must call Amendment No.199 before Amendment No.199A. In doing so, I draw to the attention of noble Lords that if Amendment No. 199 is agreed to Amendment No.199A is pre-empted.

Clause 60 [Power to enter premises: Commission investigations]:

Lord Haskel moved Amendment No. 199: Page 30. line 38, leave out from beginning to ("by") in line 39 and insert ("A judge of the High Court may issue a warrant if satisfied, on an application made to the High Court in accordance with rules of court").

The noble Lord said: My Lords, this amendment has already been spoken to. I beg to move.

On Question, amendment agreed to.

[Amendments Nos.199A and 199B not moved.]

Lord Haskel moved Amendment No. 200:

Page 31, line 5, at end insert— ("() A Commission investigation is also being obstructed if there are reasonable grounds for suspecting that there are books or records on the premises—

1. (a) the production of which has been required by an official of the Commission exercising his power in accordance with the provision under which the investigation is being conducted; and
2. (b) which have not been produced as required.").

The noble Lord said: My Lords, I beg to move Amendment No. 200 and speak also to Amendments Nos. 203 and 210. These amendments ensure that the provisions concerning warrants issued in relation to investigations concerning Articles 85 and 86 of the EC Treaty reflect the corresponding provisions relating to investigations under the domestic regime. It is our intention that the procedures set out in Part II should be equivalent to those proposed for domestic investigations in this Bill with differences only to reflect the different nature of the investigation at issue. It makes administrative and regulatory sense for similar procedures to be available to ensure that a competition investigation can be conducted effectively irrespective of whether an EC or domestic competition investigation is taking place.

On Question, amendment agreed to.

[Amendments Nos. 200A and 200B not moved.]

Lord Haskel moved Amendment No. 201:

Page 31, line 34, leave out from first ("to") to end of line 37 and insert ("the High Court are to be read as references to the Court of Session.").

The noble Lord said: My Lords, we considered this amendment on day two. I beg to move.

On Question, amendment agreed to.

Clause 61 [Power to enter premises: Director's special investigations]:

[Amendment No. 202A not moved.]

Lord Haskel moved Amendment No. 202:

Page 31. line 38, leave out from beginning to ("by") in line 39 and insert ("A judge of the High Court may issue a warrant if satisfied, on an application made to the High Court in accordance with rules of court').

The noble Lord said: My Lords, we have already debated this amendment. I beg to move.

On Question, amendment agreed to.

[Amendment No. 202B not moved.]

Lord Haskel moved Amendment No. 203:

Page 32, line 4, at end insert— ("() A Director's special investigation is also being obstructed if—

1. (a) there are reasonable grounds for suspecting that there are books or records on the premises which an authorised officer of the Director has power to examine;
2. (b) the officer has produced his authorisation to the undertaking, or association of undertakings, and has required production of the books or records; and
519
3. (c) the hooks and records have not been produced as required.").

The noble Lord said: My Lords, we have already debated this amendment. I beg to move.

On Question, amendment agreed to.

[Amendments Nos. 203A and 203B not moved.]

Lord Haskel moved Amendment No. 204:

Page 32, line 29, leave out from first ("to") to end of line 32 and insert ("the High Court are to be read as references to the Court of Session.").

The noble Lord said: My Lords, we debated this amendment on day two. I beg to move.

On Question, amendment agreed to.

Lord Haskel moved Amendment No. 205:

After Clause 61, insert the following new clause—

ENTRY OF PREMISES UNDER SECTIONS 60 AND 61: SUPPLEMENTARY

(".—(1) A warrant issued under section 60 or 61 must indicate—

1. (a) the subject matter and purpose of the investigation;
2. (b) the nature of the offence created by section 62.

(2) The powers conferred by section 60 or 61 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—

1. (a) take such steps as arc reasonable in all the circumstances to inform the occupier of the intended entry; and
2. (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, we debated this amendment on day two. I beg to move.

On Question, amendment agreed to.

Clause 63 [Monopoly investigations: general]:

[Amendment No. 206 not moved.]

Clause 64 [Investigations: complex monopolies]:

Lord Haskel moved Amendment No. 207:

Page 35, line 12, at end insert— ("() If a person is charged with an offence under subsection (4) 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 prove that he had a rasonable excuse for failing to comply with the requirement.").

The noble Lord said: My Lords, we debated this amendment on day two. I beg to move.

On Question, amendment agreed to.

[Amendment No. 208 not moved.]

Lord Fraser of Carmyllie moved Amendment No. 209:

Before Clause 66, insert the following new clause—

CONTRACTS AS TO PATENTED PRODUCTS ETC

(" . Sections 44 and 45 of the Patents Act 1977 shall cease to have effect.").

The noble and learned Lord said: My Lords, I may have some knowledge about some areas of the law, but I have to say that I have virtually no knowledge of that area of the law which is encompassed by the Patents Act. This is an important amendment. I look forward to the Minister's response. I beg to move.

Lord Haskel

My Lords, I shall speak also to Amendment No. 223. I am most grateful to the noble and learned Lord for raising the position of Sections 44 and 45. In a very few words he made an extremely strong case. So we are prepared to accept his amendment. Clearly we shall have to address the transitional arrangements, such as the position of agreements currently in force which are affected by Sections 44 and 45 of the Patents Act. We will also have to consider any savings which may need to he made affecting the respective territorial extent of the Patents Act and the Competition Bill. Such matters can be dealt with under our powers in Clause 70 or in another place.

Lord Fraser of Carmyllie

My Lords, I knew that I was articulate and fluent, and all the rest, but I have been quite bowled over by the Minister's response for which I am very grateful.

On Question, amendment agreed to.

Lord McNally moved Amendment No. 209A:

After Clause 66, insert the following new clause—

TRADE MARKS, NAMES ETC: UNFAIR COMPETITION

(" . —(1) Any of the acts and practices referred to in sections (Trade marks, names etc: confusion) and (Trade marks, names etc: damage to goodwill or reputation) of this Act shall constitute an act of unfair competition and shall be actionable as such.

(2) In an action for unfair competition under this Act all such relief by way of damages, injunctions, accounts or otherwise shall be available to the plaintiff as is available in respect of the infringement of any property right.

(3) Nothing in this Act affects any of the laws relating to passing off or malicious falsehood or to the protection of any intellectual property right.").

The noble Lord said: My Lords, I do not know whether that means the shorter the speeches the more chance we have of convincing Ministers. The Minister will know that my broad philosophical approach to the Bill is that a competition Bill should be about competition and that we should use the opportunity to see whether we can advance the cause of competition. It is in that spirit that I move Amendment No. 209A and speak also to Amendments Nos. 209B to 209D.

When I raised the question of lookalikes earlier in the passage of the Bill, a number of noble Lords—most vigorously the noble Lord, Lord Peston—assured me that it had already been dealt with in earlier legislation. I can only say that if that is the case it was dealt with inadequately. The grievance remains about lookalike products and in proposing the amendments it is my intention to suggest to Ministers that those grievances are legitimate and that the Bill is an appropriate opportunity to right the wrongs done by lookalikes.

Lookalike products trade parasitically by mimicking the package of brands. They use the brand's imagery and reputation to persuade consumers that their products are related to the brand. Lookalike packaging is most commonly used by retailers who seek to gain market share by associating their products with the brand leaders. There is no doubt that authoritative polling has shown that shoppers are confused and believe that when they are buying similarly packaged products they are buying the genuine goods.

I believe that an investment in a brand which may take years to be associated in consumers' minds with quality, taste or value should be protected on behalf of the consumers. In this case, imitation is not the sincerest form of flattery. It is a form of theft and should be treated as such. The amendments seek to prevent lookalike products by ensuring that unfair competitive practices are outlawed.

Amendment No. 209A would allow unfair competition to be actionable, just as other property rights are. Amendment No. 209B would prevent unfair competition practices which are likely to cause consumer confusion over product and services. Amendments Nos. 209C and 209D would prevent parasitic trading on brand goodwill and reputation by protecting the distinctiveness of product packaging.

Since I and other noble Lords first raised the matter, discussions have taken place with Mr. Nigel Griffiths, Minister for Competition and Consumer Affairs. He agreed to discuss the problem of lookalike products. That initiative was most welcome and I am glad to see that after some prodding the Government have been persuaded to consider the issue. However, we do not yet have on record any public statement confirming that the Government see this as an existing problem or that they are prepared to act on it. That is why I again raised the matter this evening.

The decision to produce a draft paper on potential solutions is useful, but I would welcome clarification from the Government on whether they think that the study of the problem rules out action under the Competition Bill. If the Government now accept that it is a problem, why not use this opportunity to legislate upon the issue?

If the Government do not take the opportunity to address the problem in this Bill, then when will there be legislative opportunity to tackle it? Ministers must be well aware of the difficulty of securing parliamentary time. Brand manufacturers would be extremely concerned if the issue were allowed to fall by the wayside again after years of campaigning for change.

Before I close, perhaps it would help noble Lords if I explained what the amendment will not do. It will not reduce consumer choice or raise prices. I was rather disappointed that my old employers, the British Retail Consortium, suggested that in its briefing about lookalikes. I humbly suggest to my old bosses that it is no part of their job to protect imitators because imitators are no friends of retailing or quality. I am pleased to see that Tesco have agreed to stop producing lookalikes. That is an advance.

However, the amendments would not restrict the use of visual clues which indicate a product category. Such category indicators—for example, yellow bottles indicating lemon-scented detergent—would not be affected. Brand manufacturers are not seeking to limit category indicators which are an important aid to the consumer. This misunderstands the issue. It is neither the purpose nor the effect of the amendments. Lookalikes involve a whole range of features from one brand being copied closely to create a strong resemblance and an apparent link with another brand.

It is also palpable nonsense to suggest that any court would be incapable of differentiating between a category indicator and a lookalike which closely mimics the brand. As I said before, what we are dealing with here is a kind of theft, a theft of good name which has often taken years of investment to create. I beg to move.

Lord Islwyn

My Lords, in considering the amendments and new clauses moved by the noble Lord, Lord McNally, the basic question which I think needs to be asked is whether the Government recognise that there is a problem. If they do, then it follows that I should ask: what are they going to do about it? I feel it is essential to recognise what a lookalike product is. As I understand it, a lookalike product is one with packaging which deliberately imitates, mimics if you like, that of a brand.

In putting these few points to noble Lords, I wish to point out that I have no financial interest whatever. The imitators have similar colours, pack shapes, labels and names which are used to achieve the deception. The lookalike products are produced by retailers, domestic manufacturers and overseas manufacturers. I should have thought that this commercial piracy should be outlawed.

The products are not to be confused with own label supermarket products, which are distinctly packaged. Needless to say, consumers are confused by the packaging, they tend to believe that there is a connection between the brand and the lookalike when none exists. Consumers face far less choice through the disincentive to innovate because of incessant copying.

So far as I am able to ascertain, this Competition Bill does not cover that issue of lookalikes. My understanding is that the World Intellectual Property Organisation—a United Nations body—has put forward proposals which would answer the problem. Those would tackle the lookalike problem and consumer confusion, and, not least, the damaging of a competitor's goodwill and reputation. Distinctive packaging costs as much to produce as lookalike packaging, so there will be no additional cost to the consumer.

We should all recognise that brands are important in a free market economy. They are the basis on which a differentiation can be made between products and the basis on which there is competition. By comparison, lookalikes distort competition by deceiving consumers and by reaping a financial reward from a competitor's ideas, investment, effort and risk. There would seem to be a weakness in UK law which makes this country particularly vulnerable to lookalikes.

The Bill and the amendment put forward could deal with the problem once and for all. I urge the Government to consider the issue seriously.

Baroness O'Cathain

My Lords, I oppose this amendment and in doing so, I declare an interest as a non-executive director of Tesco. But that is really not why I am speaking on this issue.

First, the noble Lord, Lord McNally, said that shoppers were confused. I assure your Lordships that shoppers are not confused. I pray in aid of that comment the fact that the Consumers' Association and the National Consumer Council—and I believe we all have great respect for both bodies—do not believe that shoppers are confused. At present there is an Institute of Grocery distribution code; there is the Trade Marks Act 1994; and there is the tort of passing off. That provides the trademark owners with adequate protection against infringement.

The noble Lord who has just spoken said that own-label products are not the same as lookalikes. But part of the argument seems to be that lookalikes are own-label products. Own labels are brands that have been built up by the retailers themselves. I believe that there is more confusion about this issue on the Floor of this House than there is outside on the part of the canny shopper buying the goods in the supermarket. I hope that this amendment will not be accepted.

Lord Fraser of Carmyllie

My Lords, after that brief intervention, I rise with some trepidation to say to the noble Lord, Lord McNally, that he has no need to apologise for having tabled these amendments again. My noble friend Lady O'Cathain is correct to say that this is far from an easy issue to resolve immediately.

However, from the last time we discussed this matter, it seems that some profitable progress has now been made because the Minister, Mr. Nigel Griffiths, has, I understand met with the British Brands Group and has given some indication of the recognition of a problem existing. If that is the Government's position, it would certainly be worth while to have that recognition placed on public record.

It may be that the Minister will have to say that that is not the appropriate time or there is not sufficient time to incorporate an amendment into the Bill. However, perhaps he will bring us up to date on where matters stand after that apparently useful meeting with Mr. Nigel Griffiths. I have no doubt that a large number of people and concerns would welcome such a statement from him.

11 p.m.

Lord Haskel

My Lords, as other noble Lords have pointed out, we discussed this matter in great detail in Committee. Then, as today, we have heard a range of opinions and I am grateful to noble Lords for giving us the benefit of their experience in this matter and for explaining to us their views about lookalikes. Clearly, it is important that a consensus is reached on the need to change and, if so, on the extent of any change. There obviously is a divergence of opinion and we have heard that reflected in the Chamber this evening.

These amendments would add a substantial new dimension to the Bill. They would create new rights and remedies which are far more extensive than those which owners of existing intellectual property and similar rights already possess. Under the guise of unfair competition they will widen the rights of the owners of such rights, amongst other things, to exclude their competitors from offering products that are similarly got up but not so as to confuse the consumer. I am not sure that the noble Lord. Lord McNally, is right when he says that his amendment will advance the cause of competition.

Amendment No. 209C in particular goes well beyond providing protection for branded goods from lookalikes. In effect it covers virtually any commercial activity which lessens or would be likely to lessen the distinctive character or advertising value even of the appearance or the presentation of a product or service. This would create a new right of action of an extremely wide scope. Much has been made of the confusion that consumers might suffer as a result of the practices which these amendments are designed to address. However, these amendments would create rights of action whether or not the act or practice causes confusion.

These amendments would effectively make redundant almost all existing trade mark legislation because of the much larger range of activities that would be actionable than is currently the case. Indeed the UK might find itself out of step with other member states in granting greater protection to registered trade marks than is provided under the EC Trade Marks Directive. Clearly, the implications of this need to be considered very carefully, in particular the impact that the adoption of very rigid unfair competition laws would have on the consumer. It is therefore important that all parties are given the opportunity to put their views forward.

Nevertheless the Government recognise the concerns which brand owners have expressed about the current remedies available to protect their products. The noble Lord is quite right: following the debate on this issue at the Committee stage, the Competition and Consumer Affairs Minister, Mr. Nigel Griffiths, met representatives of the British Brands Group and another trade group, Anti Copying in Design, which has similar concerns.

While it remains our view that this Bill is not an appropriate vehicle to deal with this issue, it has been agreed that those two groups will make further representations to Ministers on this matter. These groups are in touch with officials. I should again point out that there is not a consensus on this issue; in particular the Government are concerned to ensure that the interests of the consumer are fully represented and considered.

Opportunities to discuss unfair competition have also arisen since the Trade Marks Bill was debated in 1994, notably before the Standing Advisory Committee on Industrial Property. That committee has not recommended that there is a need for unfair competition legislation. The committee is continuing to review the issue as further evidence is presented.

I hope noble Lords will see that we are prepared to explore with the industry and consumers the appropriate response to the concerns that have been raised this evening. Meanwhile, there are effective remedies in common law and under the Trade Marks Act 1994 where confusion is caused in the mind of the consumer. I gave examples in Committee. Lookalikes in the form of the alleged imitation of packaging can be dealt with by the common law tort of passing off, which has proved effective. I referred to the Penguin v. Puffin case.

As I have said, these amendments in any instance would go well beyond the issue of defining unfair competition as acts or practices which would cause confusion to consumers. Given this, as well as the lack of consensus on what, if any, further remedies are needed in this area, and the Government's willingness to consider the representations I mentioned earlier, I invite the noble Lord to withdraw his amendment.

Lord McNally

My Lords, I am grateful for the support I received from the noble Lord, Lord Islwyn. Also, but for a bereavement, my noble friend Lady Hamwee would have been here this evening to speak in my support.

Picking through the Minister's reply, there were signs of some encouragement and some movement on this issue. I cannot agree with the noble Baroness on this. The amount of effort that goes into imitating a brand into which tremendous investment has already poured is the give-away. The own-brand products of the supermarkets stand and stand (I almost said "fall") because they are quality products based on the name of the supermarket. For example, people associate the names Tesco and Sainsbury with quality. We do not object to that. We are objecting to what has always seemed to me to be quite blatant passing off.

The Minister has gone through his brief pointing out that there have been attempts at legislation and that there are opportunities in the courts. I did receive one "behind the chair" intervention from the Government Chief Whip, which in the circumstances either reveals the horrid reputation I have in this House or his own suspicion. He asked me whether I intended to divide the House. Ministers already know that my interventions are meant only to be helpful in making progress so far as this Bill is concerned. I know that at five minutes past eleven the Minister is already considering whether there are not better ways of earning a living, such as running an international oil company. So in those terms and in the light of the noble Lord's reply, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 209B to 209D not moved.]

Clause 67 [Offences by bodies corporate etc.]:

Lord Haskel moved Amendment No. 210:

Page 36, line 18, leave out from ("under") to end of line 19 and insert ("any of sections 41 to 43, 53(8) or 62.").

The noble Lord said: My Lords, e have already considered this amendment. I beg to move.

On Question, amendment agreed to.

Clause 68 [Crown application]:

Lord Haskel moved Amendment No. 210A:

Page 37, line 8, at end insert— ("(3A) If, in respect of a suspected infringement of the Chapter II prohibition or of the Chapter II prohibition otherwise than by the Crown or a person in the public service of the Crown, an investigation is conducted under section 25—

1. (a) the power conferred by section 27 may not be exercised in relation to land which is occupied by a government department, or otherwise for purposes of the Crown, without the written consent of the appropriate person; and
2. (b) section 28 does not apply in relation to land so occupied.

(3B) In any case in which consent is required under subsection (3A), the person who is the appropriate person in relation to that case is to be determined in accordance with regulations made by the Secretary of State. (3C) Sections 60 and 61 do not apply in relation to land which is occupied by a government department, or otherwise for purposes of the Crown, unless the matter being investigated is a suspected infringement by the Crown or by a person in the public service of the Crown. (3D) In subsection (3C) "infringement" means an infringement of Community law relating to Article 85 or 86 of the Treaty establishing the European Community.").

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. 210B:

Page 37, line 15, at end insert— ("() Any amendment, repeal or revocation made by this Act hinds the Crown to the extent that the enactment amended, repealed or revoked hinds the Crown.").

On Question, amendment agreed to.

Schedule 12 [Minor and Consequential Amendments]:

Lord Haskel moved Amendment No. 210C:

Page 84, line 40, at end insert— ("() In section 81 (procedure in carrying out investigations) —

1. (a) in subsection (1) —
1. (i) in the words before paragraph (a), omit from "and the Commission" to "of this Act)";
2. (ii) in paragraph (b), omit "or the Commission, as the case may be," and "or of the Commission";
2. (b) in subsection (2), omit "or the Commission" and "or of the Commission"; and
3. (c) in subsection (3), omit from "and, in the case," to "85 of this Act" and "or the Commission, as the case may be,".").

On Question, amendment agreed to.

Lord Haskel moved Amendment No. 210C:

Page 85, line 18, at end insert— ("() In section 135(1) (financial provisions)—

1. (a) in the words before paragraph (a) and in paragraph (b), omit "or the Commission"; and
2. (b) omit paragraph (a)." ").

On Question, amendment agreed to.

[Amendment No. 211 had been withdrawn from the Marshalled List.]

Lord Haskel moved Amendment No. 211A:

Page 85, line 21, at end insert—

("The Estate Agents Act 1979 (c. 38)

. In section 10(3) of the Estate Agents Act 1979 (restriction on disclosure of information), in paragraph (a)—

1. (a) omit "or the Restrictive Trade Practices Act 1976"; and
2. (b) after "the Coal Industry Act 1994", insert "or the Competition Act 1998".").

The noble Lord said: My Lords, I shall speak also to Amendments Nos. 211B, 212A, 223A, 223B and 223C. These are minor consequential amendments. I beg to move.

On Question, amendment agreed to.

Lord Haskel moved Amendment No. 211B:

Page 88, line 9, at end insert—

("The Consumer Protection Act 1987 (c. 43)

. In section 38(3) of the Consumer Protection Act 1987 (restrictions on disclosure of information)—

1. (a) omit paragraphs (e) and (f); and
2. (b) after paragraph (o) insert—

"(p) the Competition Act 1998." ").

On Question, amendment agreed to.

[Amendment No. 212 not moved.]

Lord Haskel moved Amendment No. 212A:

Page 89, line 16, at end insert—

("The Cool industry Act 1994 (c. 21)

. In section 59(4) of the Coal Industry Act 1994 (information to be kept confidential by the Coal Authority) —

1. (a) omit paragraphs (e) and (f), and
2. (b) after paragraph (m), insert—

"(n) the Competition Act 1998."").

On Question, amendment agreed to.

Schedule 13 [Transitional Provisions and Savings]:

Lord Morris of Manchester moved Amendment No. 213:

Page 91, line 21, after ("determined") insert— ("(a) in the case of proceedings under the RPA, before the date of enactment; and (b) in the case of proceedings under the RTPA,").

The noble Lord said: My Lords, I beg to move the amendment standing in my name on the Order Paper.

While it may be helpful for me very briefly to recall the case for this group of amendments, I shall not, of course, repeat tonight the arguments with which I commended these amendments to your Lordships' House in the short debate made possible by my paving amendment to Clause 1 of the Bill on 9th February.

What was established then, by speeches from all parts of the House, was that this Bill will determine whether community pharmacy has any future in Britain. Independent researchers have shown that as many as 3,000 local pharmacies are today barely viable. But if Retail Price Maintenance (RPM) on over-the-counter medicines was abruptly to end, thousands more would face closure at a time when the public service they provide has never been more important to local communities, more especially to millions of elderly and disabled people, mothers with small children and the less well-off with no private means of transport, who rely so crucially on their chemists' shops.

The tabling of the amendments had two purposes. Briefly stated, the first was to stay the Director General of Fair Trading's legal proceedings under the old Act: for not to do so would put community pharmacies in double jeopardy. My second purpose was to secure RPM for over-the-counter medicines for a minimum 5-year period of transition before it could be tested by the director general under the new Act, so as to provide time for a proper analysis of the pharmacy market; to allow community pharmacies to develop their role in the Government's healthcare agenda; and to facilitate due consideration of the effects of the large and growing body of European case law.

In response to the wide-ranging support given to my amendments on 9th February, my noble friend the Minister undertook to look sympathetically at the case for RPM to be granted for a minimum 5-year transitional period once his Bill comes into force. He has been as good as his word and I am most grateful to him for tabling his amendments, thus making it possible for me not to press my amendment on the issue. In 34 years at Westminster I have rarely known a Minister go to so much trouble both to consult and help a parliamentary colleague.

There still remains, however, the highly important issue of staying, for a limited period, the legal proceedings which have now been commenced by the director general under a law that, not improbably, will be replaced on the day the court action is concluded. The director general would then have a second opportunity to litigate under the provisions of the new Act. That classically is double jeopardy and is what my amendments to Schedule 13 sought to avoid. For their part, not surprisingly, the community pharmacists want the case for RPM to be tested only once, under the new law, and against up-to-date criteria for determining the public interest.

They have overwhelming public support, as the MORI poll demonstrates, and already 108 Members of another place, of whom 99 are Labour Members of Parliament, have put their names to an Early Day Motion supporting the community pharmacists. It is worth stressing as well that to force the closure of thousands of community pharmacies would be to act in flat contradiction of the Government's stated policy of promoting small businesses. For so many such businesses to be forced to close to the advantage of big business is also surely both socially and morally indefensible.

But there has now been an ugly and disquieting new development in relation to my amendment on staying the director general's legal proceedings under the old law. In Last Thursday's Evening Standard it was reported that: The Office of Fair Trading today launched a fierce rearguard action as the drugs industry scented victory in its fight to keep price-fixing for over-the-counter medicines. The House of Lords was set to debate an amendment to the Competition Bill … which, if passed, would enshrine price-fixing in law for non-prescription drugs. Last month the OFT launched legal action in the Restrictive Practices Court to have price-fixing for drugs outlawed—although the case will not be heard until next year at the earliest. If the amendment successfully passes through Parliament the legal action will automatically fail. The director general, John Bridgeman, set out to lobby peers, concerned that in the past the Labour Party had supported the pharmacists' case for keeping the status quo. Last year there was cross-party backing in the House of Lords for exempting pharmacists …

The newspaper goes on to report the director general as directly implying that the "drug giants" are behind my amendments, even although they sell medicines as readily to hypermarkets as they do to local pharmacies, and quotes him as saying that, drug companies are among the biggest spenders on advertising", as if our debate tonight was one between drug companies and the consumer.

I most strongly repudiate the suggestion of involvement by drug companies of any size in the drafting or tabling of any of my amendments. I am not retained by the drug companies or by anyone else, nor have I ever been retained by any drug company, large or small, giant or dwarf, in all my years in Parliament. My commitment is to community pharmacy and the most vulnerable of its customers. If the Evening Standard report is accurate—and I have seen no attempt by Mr. Bridgeman to correct what it says—I have been very seriously misrepresented; and indeed in the view of experienced parliamentarians who have discussed it with me, the report is grossly contemptuous of your Lordships' House. Mr Bridgeman's remarks are at once partial and unfair and constitute a blatant and unprecedented attempt by a public official to intervene in the parliamentary process.

His remarks also imply that those who support my amendments are seeking special protection. They are not. In fact they fully accept that community pharmacy should ultimately have to make its case under the provisions of this Bill after it becomes law. But they believe that the director general's action in bringing proceedings under an Act that is about to be repealed and replaced by new legislation is oppressive and unjust.

It is demonstrably wrong for Mr Bridgeman to suggest that these amendments are either inspired by, or aimed at supporting, the drugs industry. It is wrong for him to quote as a fact, and then exaggerate, an assumption made in one study, which is completely baseless, that price-fixing costs consumers at least £180m per annum". It is also wrong for him to say that pharmacy is seeking special protection when it is simply seeking to argue its case once, under this Bill's provisions, and thus to avoid double jeopardy. And it is wrong again to suggest that the British public pay too much for their medicines, when in fact local pharmacists can help them to get the right medicine at the right price, together with good advice.

I am reminded of Lloyd George's famous dictum that war is too important to leave to the generals. Those who know most about Lloyd George's private life might say that there were some things too important to leave to Lloyd George. But we must profoundly hope that what Mr. Bridgeman has now done will not have influenced too many people to conclude that fair trade is too important to leave to the Office of Fair Trading.

Clearly, his attempt to influence this debate ill-becomes a public servant and merits comment from the department. I trust that my noble friend shares my concern about its implications and am sure that he appreciates how strong and genuine feeling is in this House and beyond about allowing the director general to continue, at vast expense to the public purse and to small businesses alike, with legal proceedings that are so widely regarded as a waste of public money.

If the Minister is unable to respond conclusively tonight to my amendment on staying those proceedings—I know that he is still in dialogue about it with colleagues in other departments—I urge him and them, when they are free to act, to do so as parliamentary and public opinion want and expect them to do. In that regard I can hope for no better outcome than that, when we come to Third Reading and the need then for a definitive decision from this House, my noble friend will be seen to have done as well for us as he did in satisfying the call for a five-year transitional period under the new law. I beg to move.

Lord Fraser of Carmyllie

My Lords, I can deal briefly with this amendment. First, I say to the noble Lord, Lord Simon, that the next group of amendments also deal with issues of community pharmacy—Amendments Nos. 215 and 216. I indicate to him now that I shall not move those amendments when we reach the next group.

Briefly, I should like to offer a number of observations. I certainly do not believe that this is an appropriate time—almost the last group of amendments on Report—to be dealing with something which the noble Lord, Lord Morris, is right in describing as an issue attracting a great deal of concern in the wider world. As he also pointed out, that concern is also felt in another place where over 100 Members of Parliament signed an Early-Day Motion indicating their concern for the continued existence of community pharmacies.

Perhaps I can also place on record that I have known the noble Lord in another place as well as here, and I do not suppose that we will always agree on political issues. However, the idea that the noble Lord would table amendments and spend the time that he has for any purpose other than pursuing the belief and desirability of maintaining community pharmacies is an outrage. If that is indeed what Mr. Bridgeman told the Evening Standard, I hope that he will retract it. It would seem to me that, for an admired public servant, for once he has lost a sense of objectivity and ought to reflect carefully on the matter.

All I say to the Minister is that I do not believe it to be necessary or appropriate for him to give a full reply tonight. I simply want to indicate that, rather than pursuing the line of amendments in my name on the Order Paper, we will look to him coming back with amendments to meet the full case advanced by the noble Lord, Lord Morris of Manchester. That is not in the nature of a threat; it is in the nature of a proper response to public demand that if we do not obtain that reply the noble Lord should anticipate that we shall certainly want to test the will of the House when we return at Third Reading.

Finally—this is not a complaint addressed to the Minister—I have said repeatedly that it is not a matter of competition policy that concerns us; it is a matter of the Government's declared health policy. It is a good health policy. If the noble Lord is again going to reject the amendments moved by his noble friend Lord Morris of Manchester, I hope that we shall see on the Government Front Bench health Ministers so that we can look them straight in the eye and discover whether or not they truly believe that what they are asking their noble friends to vote for coincides with the policy which the Department of Health truly believes to be the correct one.

Lord Graham of Edmonton

My Lords, I rise to support my noble friend Lord Morris. I am sure the Minister senses that this is one of those issues on which one has to take a direct and focused point of view. As I said earlier, I am concerned as a consumer and as someone interested in retailing about the inevitable way in which small shops have been gobbled up by the big ones. I declared an interest then, as I do now, in the Co-operative movement. We are the proud possessors of big shops as well as little ones. But when one looks at what has happened on the high street of the village or the small town, one cannot help but come to the conclusion that if one lifts the protection for the small community pharmacy there will be closures.

The figure of 3,000 has been quoted, which seems too precise to be true. Whether that figure will stand up remains to be seen. In the town of Loughton in Essex there is one very large supermarket, Safeway, a company for which I have the highest respect. In the high street there are two or three chemists, one of which is a Co-op chemist. If the supermarket is allowed to reduce the charges, the Government may say, "This is what competition is all about—to reduce the cost to the consumer." I think that Parliament is about more than simply reducing the cost. It ought to be about protecting the consumer. Medicines are not like pounds of cheese, the cogs of wheels or newspapers. The Government should take on board that medicines are in a special category. Very often the small pharmacy is looked upon by its users as a place in which they can have confidence. The pharmacist gives advice freely and serves the community well.

I noticed in the newspaper today that Asda has placed a large advertisement asking that the amendments be rejected. Asda believes in what it calls "fair prices." I read that to mean "fair profits." Big companies like Asda are motivated almost completely by the desire to become bigger and bigger and more profitable. Inevitably, that is at the cost of the small businessman or consumer.

I do not demur from anything said by my noble friend or by the noble and learned Lord, Lord Fraser. The Minister has time to reflect on finding some means to satisfy the House. The Minister has gone a long way. I believe that he can go just a little further. It would be a tragedy if the Government got the reputation of believing in removing the barriers to competition but also carried out the long process of eliminating or reducing choice for the consumer. The case that has been made should very much impress the Minister. I look forward to hearing what he has to say.

11.30 p.m.

Lord McNally

My Lords, since the noble Lord, Lord Morris, called Lloyd George in aid in his remarks perhaps I may remind him of the cartoon showing a young Liberal outside a conference calling on people to make love and not war. The old Liberal passing said that Lloyd George did both. But I do not believe that the noble Lord, Lord Morris, need worry about his own reputation as regards some of the remarks that he reported to the House. I believe that he stands far too high for anyone to cast doubts on why he tabled these amendments.

I intervene only briefly because when he raised the matter earlier my colleague, the noble Baroness, Lady Ludford, from these Benches, gave support. We have here a genuine case of the danger of an important policy falling between departments. It is clear that the Department of Trade and Industry, with its push for competition, may not be full square with the Department of Health. It was very interesting when this issue was first raised at Question Time. I believe it was the health Minister, the noble Baroness, Lady Jay, who responded in an inadequate way because she said that these were matters for the DTI. It is not good enough for an issue of such importance as the role of the community pharmacy to shuttlecock between departments without its role in the community being adequately defended.

The noble Lord, Lord Morris, made a powerful case. He has had support from all Benches in this House. I hope that we shall have an assurance from the Minister that if the matter cannot be dealt with fully at this time of night and at this stage of the debate the message will go back firmly into Whitehall that allowing this issue to fall between departments is not good enough. We want a comprehensive response which gives what the public want—a guarantee that the community pharmacy is to be protected in order to fulfil a role which is needed in our community.

Lord Islwyn

My Lords, I applaud the efforts which have been made by the Minister to resolve this issue. I, too, resent the attacks on my colleague and friend, the noble Lord, Lord Morris. He is above reproach. I have always admired his sincerity in espousing so many worthy causes over the years. At all costs we must avoid the closure of local pharmacies. It would be highly detrimental to many communities, as I know from personal experience and through my career in the other place. There are isolated estates with low wage earners and no personal transport. If the local pharmacy was closed they would be highly disadvantaged. The Government should look very seriously at the issue.

Lord Hughes

My Lords, I do not often speak in your Lordships' House nowadays and I have picked a rotten time to depart from my usual rule. At the beginning of these proceedings I indicated an interest and said that I would not speak or take any further part in them. That was based on my experience in local government more than half-a-century ago when the advice was that if one had an interest one could declare it but one must not take any further part. It was not very often that a councillor was in that position. However, recently, two company directors declared an interest in an amendment and then proceeded to vote; so I do not believe that I need deny myself any further.

My experience and knowledge of what takes place in the community pharmacy makes me aware that the fear within such pharmacies of what this provision will do to them is real. I give the example of the over-the-counter sales in a community pharmacy. They represent anything from 25 per cent. to 30 per cent. of its income.

It has been said that anywhere between 25 and 50 per cent. of the total number of community pharmacies might have to close. Their income might diminish by anything from 7.5 to 15 per cent. Few community pharmacies could survive a loss of income on that scale. If they do not survive, people will have to go elsewhere for more than their over-the-counter products because there is also the matter of prescriptions. In many cases, the only other place to go for a prescription is Boots or its equivalent, which can be anything from 10 to 50 miles from some villages. I believe that when we last considered this matter, the noble Lady, Lady Saltoun, spoke of experiences in her area and of having to put people on the bus. However, in many cases, the cost of getting a bus there and back would be more than the saving that might be made by using the supermarket.

I told the noble Baroness, Lady O'Cathain, that I would be referring to what she said in Committee about prices. I apologise to the noble Baroness if that is all that has kept her here at this unearthly hour. If she proposed to be here anyway, so much the better. The noble Baroness said in Committee that a 24-pack of Asprin is sold in supermarkets for 39p while in a community pharmacy Disprin is £1.50. If I can read my own writing, she also said that Nurofen cost £4.69 in a community pharmacy and £1.99 in a supermarket.

I wondered why in the first case the noble Baroness compared Asprin with Disprin, rather than Asprin with Asprin, whereas in her second example she compared like with like, so I made further inquiries. Supermarkets sell such products in packs of 24, which is supposed to safeguard against overdosing. Community pharmacies sell in lots of 100 tablets and they sell 100 for 99p which is equivalent to less than 25p for 24 as compared to the supermarkets' 39p, so there is not much incentive to go to a supermarket to buy Asprin.

In the second case, the noble Baroness compared like with like. I am absolutely certain that the prices which the noble Baroness quoted are correct, but sometimes one can quote something which is absolutely correct and yet create a false impression. I wondered why in the second case the noble Baroness compared like with like because the difference was so great. I have found that just as Disprin is an alternative to Asprin, so too the pharmacist has an alternative to Nurofen, Ibuprofen. Local pharmacies can sell that for £1.39. Once again, that is cheaper than the figure quoted for the supermarket.

My noble friends Lord Morris of Manchester and Lord Graham have spoken of all the other advantages of community pharmacies as compared with supermarkets. A case in point which has occurred to me relates to one of the most widely used drugs, which is beneficial when properly used, paracetamol. But two other products can be bought, Lemsip and Night Nurse, which both contain paracetamol. The community pharmacist would tell a customer that if he used both products he should be careful because he might unwittingly overdose. Would a salesperson in a supermarket be in a position to give that advice to a purchaser?

My noble friend referred to the remarks of the director general on the radio. I did not hear them. I do not know what he meant by "considering my position". It is possible that he meant that he would have to consider whether he was doing it the right way. However, it is perhaps more likely that he meant he would have to consider whether he should continue as director general. Considering the impropriety of what he said on the radio, if they have to choose between losing hundreds, perhaps thousands, of local pharmacies or losing the director general, I believe that the public would prefer to see the director general tendering his resignation.

Baroness O'Cathain

My Lords, I certainly had no intention of misleading the House. I saw figures. In my view, aspirin and Disprin are the same. I try to avoid taking either, but there it is. I never for one moment suggested the closure of community pharmacists. I made the point that this was a competition Bill and I could not understand why over-the-counter medicines were the only items subject to retail price maintenance. On a previous occasion the noble Lord, Lord Morris, said that the difference between over-the-counter medicines in a community pharmacy and elsewhere was about 50p. I shall not go into the difference, but I suspect that it is good deal higher than that. If the article in the Evening Standard, which I have only just seen, is true and over-the-counter medicines account for only 5 per cent. of the total turnover of these pharmacies, what are we worried about? We are talking about 5 per cent. If community pharmacies are so valued by members of the community there is no competition problem; the community will support them. I do not believe that the nonsense of having retail price maintenance on certain products should create a problem under the Competition Bill. I believe that the Competition Bill is right and the amendment is wrong.

Lord Simon of Highbury

My Lords, I thank my noble friend Lord Morris both for the charming way in which he has spoken of the efforts that we have made to resolve the real issues that lie behind his amendments and the clarity of his position.

It is worth making one or two points despite the lateness of the hour because these are very important issues, as the noble and learned Lord, Lord Fraser, said. The development of our policy is important. The Government wholly accept the importance of community pharmacies. We fully understand the interests of those who wish to press their arguments. I do not mean "interests" in the wrong sense of that word. I am referring to those who are seriously concerned about the role of pharmacies in health policy. I have said before from this side of the Chamber when speaking for the Government that we fully understand the very important health policy issues in this debate, but they are different from the competition issues. I shall not be drawn into a discussion of health policy at seventeen minutes to the hour. I believe that the issue in competition terms is not whether retail price maintenance in this sector is good or bad, but whether the independent bodies which have been set up to look at such matters under statutory provision should be allowed to do so, or whether the RPM for OTC medicines should be removed from scrutiny under the Resale Prices Act and the Chapter I prohibition in the Bill until 2004. That is the purpose and likely effect of my noble friend's amendments. It is a point to which I shall return with regard to the position of competition in this sector, and. in particular, its European aspects.

My noble friend raised also, correctly, the question of double jeopardy. He then kindly acknowledged that I have been trying to respond to that issue through the government amendments. In looking at the position that we have now reached, I can see the case, although it is not what the Government propose, for saying that RPM of OTC medicines should be considered under the new regime only, in which case it would benefit from the one-year transitional period we are providing for existing agreements. I can also see the case for saying, as we have proposed, that the present action should be allowed to continue to a conclusion, and if the result of the proceedings is that OTC medicines are exempt, RPM on those goods should benefit from a generous five-year transitional period from the Chapter I prohibition.

However, it is difficult to see the case for saying that the present action, seeking a review of the exemption, should be stayed, and that RPM for OTC medicines should benefit from a five-year exclusion. As I said, I shall return to that point in terms of competition law in general.

The existing exemption of RPM for OTC medicines has always been subject to possible review by the court, if there is prima facie evidence of a material change in the relevant circumstances since the court took its decision in 1970. My noble friend's amendments take the opportunity of the Bill effectively to ask whether the practice could be exempt from consideration until 2004. As I have said, we recognise the public interest in a plentiful and well-distributed supply of pharmacies. We would hope, as well as expect, that the court would consider most carefully any evidence that they might be put at risk by the prohibition of RPM.

It is only fair to point out that the director general has studied the issue long and hard, and therefore has proposed a review. I shall not go into the points that he has made in calling for the review. All I will say is that they are clearly serious and important. I shall let the matter rest there for tonight, except to return to a final point—that my noble friend's amendments would obviously prevent proper consideration of them by a court until 2004.

To what avail is that likely to be? I said that I wanted to return to competition law in general, and I have to remind noble Lords that over and above whatever we may provide in domestic competition law, there exists Article 85 of the Treaty of Rome, which is directly applicable in the UK. If RPM for OTC medicines in the UK were to be removed from any form of competition scrutiny under domestic law, it is entirely possible that the Commission would seek to examine it under Article 85.

So I have to warn the House that the consequences of passing the amendments, as tabled by my noble friend, are unpredictable and may not necessarily be to the advantage of the sponsors of the amendments. It would be better were we to leave the matter to be dealt with on its merits by the court, and to provide that if, but only if, the proceedings result in an exemption from RPM for OTC medicines, they should enjoy the benefit of a five-year transitional exclusion from the Chapter I prohibition from the end of the proceedings, and the director should not be able to propose to terminate the transitional period early. That is the double jeopardy issue which I believe will be the effect of the Government's amendments.

Those are the issues that we have been carefully weighing. They are difficult issues, as my noble friend Lord Morris rightly put to us tonight. I commend to your Lordships the approach as tabled in our amendments. We have considered long and hard what are the most appropriate ways forward and what they might be. I hope that my noble friend Lord Morris will agree to reflect further on our proposals and I ask him not to press his amendment at this stage.

Lord Morris of Manchester

My Lords, it is clearly the sense of your Lordships' House as a whole that the Minister should have due time to reflect on what has been said tonight by noble Lords all across the House. My noble friend the Minister's track record encourages me to think that, if anyone can make our case against placing small business in double jeopardy, it is my noble friend. Thus, I am content that my amendment should not be pressed at this stage, so that he can use his best endeavours before Third Reading to achieve acceptance of the amendment, if not in its present terms then in some other form to the same effect. Meanwhile, I strongly urge him, as did the noble Lord, Lord McNally, and others, to emphasise to his colleagues the wisdom of ensuring full and effective co-ordination between Whitehall departments on an issue of such importance both socially and morally. That, too, is clearly seen as a most important consideration by your Lordships on both sides of the House. For those reasons, I shall not be pressing the amendment at this stage.

Amendment, by leave, withdrawn.

[Amendments Nos. 214 and 215 not moved.]

Lord Haskel moved Amendment No. 215A:

Page 92, line 14, at end insert— ("(1A) There is no transitional period for an agreement, decision or practice in respect of which there are continuing proceedings to the extent to which the agreement, decision or practice is, as a result of those proceedings, void or unlawful.").

On Question, amendment agreed to.

[Amendment No. 216 not moved.]

Lord Haskel move Amendments Nos. 217 to 217B:

Page 92, leave out lines 27 and 28.

Page 92, line 30, leave out ("and") and insert ("the transitional period is five years.").

Page 92, leave out lines 31 to 33 and insert— ("(5A) In the case of an agreement, decision or practice relating to goods which immediately before the commencement date are exempt under section 14 of the RPA, the transitional period is five years, unless sub-paragraph (1A) applies. (5B) In the case of an agreement, decision or practice relating to goods—

1. (a) which at the commencement date are the subject of continuing proceedings, and
2. (b) which at the conclusion of the proceedings are found to be exempt under section 14 of the RPA,

the transitional period is five years.").

On Question, amendments agreed to.

[Amendment No. 218 not moved.]

Lord Haskel moved Amendments Nos. 219 to 222:

Page 92, line 39, leave out (" 25(2)").

Page 93, line 9, at end insert— ("() If, by virtue of paragraph 8(5A) or (5B), there is a transitional period for an agreement, decision or practice relating to goods—

1. (a) which immediately before the commencement date are exempt under section 14 of the RPA, or
2. (b) which at the conclusion of continuing proceedings are found to be exempt under section 14 of the RPA,

the period is not affected by sub-paragraphs (1) to (5) of this paragraph.").

Page 93, line 21, at end insert ("documents and").

Page 93, line 37, at end insert ("regardless of whether or not it will be exempt").

Page 94, line 3, at end insert ("regardless of whether or not it will be exempt").

On Question, amendments agreed to.

Schedule 14 [Repeals and Revocations]:

Lord Haskel moved Amendments Nos. 222A and 222B:

Page 95, line 22, column 3, at end insert—

("In section 81(1), in the words before paragraph (a), from "and the Commission" to "of this Act)"; in paragraph (b), "or the Commission, as the case may be" and "or of the Commission"; in subsection (2), "or the Commission" and "or of the Commission" and in subsection (3), from "and, in the case," to "85 of this Act", and "or the Commission, as the case may be,".")

Page 95, line 22, column 3, at end insert—

("In section 135(1), in the words before paragraph (a) and in paragraph (b), "or the Commission", and paragraph (a)."")

On Question, amendments agreed to.

Lord Fraser of Carmyllie moved Amendment No. 223:

Page 95, line 34, at end insert— ("1977 c. 37. The Patents Act 1977. Sections 44 and 45.")

The noble and learned Lord said: My Lords, I believe that following the acceptance of Amendment No. 209, the amendment is accepted. I am prepared to stand corrected. I beg to move.

On Question, amendment agreed to.

Lord Haskel moved Amendments Nos. 223A to 223C:

Page 95, line 34, at end insert—

("1979 c. 38.

The Estate Agents Act 1979.

In section 10(3), "or the 1979. Restrictive Trade Practices Act 1976."")

Page 96, line 44, at end insert—

("1987 c. 43.

The Consumer Protection Act 1987.

In section 38(3), paragraphs (e) and (f).")

Page 98, line 20, at end insert—

("1994 c. 21.

The Coal Industry Act 1994

In section 59(4), paragraphs (e) and (f).")

On Question, amendments agreed to.

Clause 70 [Consequential and supplementary provision]:

[Amendment No. 224 not moved.]

Clause 71 [Short title, commencement and extent]: [Amendment No. 225 not moved.]

House adjourned at six minutes before midnight.