§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill. In doing so, for the convenience of the House, perhaps I may inform the House that the usual channels have agreed to allocate some extra time to the Committee stage of the Bill. That will be next Monday, 29th July, instead of the Animal Health Bill.
§ Moved, That the House do now again resolve itself into Committee.—(Lord Sainsbury of Turville.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [THE DEPUTY CHAIRMAN OF COMMITTEES (Lord Lyell) in the Chair.]
§ Clause 185 [Cartel offence: penalty and prosecution]:
§
Lord Hunt of Wirral moved Amendment No. 188:
Page 136, line 12, at end insert—
() Notwithstanding any other provision of law, no person who enters into a relevant confidential non-disclosure agreement shall commit an offence in relation to entering or putting into effect that agreement.
() In this section—
§ The noble Lord said: The purpose of the amendment is to ensure that the no-action leniency regime for individuals under the cartel offence can operate effectively with the leniency regime for companies under the civil infringement of Article 81/ Chapter 1.
§ It is policy in the European Community and in the United Kingdom to encourage all those involved in cartels to provide information on a cartel under amnesty policies. This policy requires full disclosure of all the relevant facts. Normally the executives are required to give an undertaking to co-operate but an individual who has committed an offence under Clause 181 is unlikely to assist with an application for leniency without obtaining a written notice from the Office of Fair Trading under Clause 185(4).
§ It may be necessary to assess what has happened in a cartel, for instance, which extends outside the borders of the United Kingdom. In the United States a Supreme Court mandated agreement permits a company or undertaking and individuals who may have personal criminal liability, together with their respective lawyers, to discuss whether any application should be made for amnesty in conditions of confidentiality.
§ Under the criminal law in the United Kingdom, any information coming into the hands of a defendant may be used at his trial and no agreement not to use it is enforceable. Furthermore, it is a crime of perversion of the course of justice to agree to conceal or do anything which may conceal the fact that a crime of breach of competition law has been committed. For those reasons, I believe that Amendment No. 188 is necessary. I beg to move.
§ Lord McIntosh of HaringeyI am relieved that the noble Lord, Lord Hunt, referred to Clause 185(4), as the printed amendment says 183(4), which I thought was an error. Subsection (4) provides for the OFT to issue a "no action" letter to an individual who comes forward, whether alone or as part of a corporate application for leniency. The letter will guarantee that the individual will not be prosecuted provided that he meets and abides by certain conditions. The OFT has issued draft guidance, which noble Lords will have received as it was published last week, setting out the terms and including pro forma "no action" letters. The guidance makes it clear that leniency will be granted on the basis of an individual's need for it, and only in so far as it is necessary to gain evidence with which to investigate and prosecute cartels.
The drafting of the amendment does not make its intended effect entirely clear, but having heard the noble Lord, Lord Hunt, I am relieved to know that it 134 concerns the position when an individual applies for leniency and the undertaking for which he works is not given an opportunity to make its own leniency application. Normally, the two will run hand in hand, but there are circumstances in which it might be necessary to dissociate them.
For instance, when an individual makes an initial approach to the OFT, some investigation is necessary before it is clear that the activity actually constitutes a cartel. If the OFT were to approach the company at this early stage the employee might be open to reprisals for making the allegation. Or an individual who had minor involvement in a cartel might blow the whistle on senior colleagues who were more deeply implicated. In those circumstances, it would not be a good idea to approach the company. It would tip them oil so that they could destroy evidence, which is not unheard of.
If the undertaking does not stop its involvement in the cartel, or if the undertaking has been a ringleader in the cartel, it will be ineligible for full leniency in any case.
Therefore, it is not appropriate to limit in advance the way in which the OFT can make use of intelligence gained from its leniency programme. But it is required by administrative law to act reasonably in all circumstances. It is also important to bear in mind that the OFT encourages businesses to put in place a compliance programme under which firms would become aware of cartel activity directly, so that a joint approach to the OFT could be made in the first place.
§ Lord Hunt of WirralI am grateful to the Minister for his explanation. In view of his reassurance on the question of reasonableness, in particular, I should like time to reflect. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 185 agreed to.
§ Clause 186 [Extradition]:
§
Lord Kingsland moved Amendment No. 189:
Page 136, line 17, leave out paragraphs (b) and (c).
§ The noble Lord said: I shall be extremely brief. This is a probing amendment to ask the Government whether they can be specific about the nature of the conspiracy offence and the attempt to commit such an offence. Clause 183 provides for a new offence in statute, the essence of which is a dishonest agreement. Will the Minister say what constitutes conspiracy and attempt, so as to fix criminal liability?
§ Lord McIntosh of HaringeyThe clause is about extradition, but I shall not refer to that as the noble Lord, Lord Kingsland, has not done so. The dishonesty to which he referred is a new offence, which we have discussed, so I shall not go over that ground.
The inchoate offences of conspiracy and attempt are not new. They apply under the Criminal Law Act 1977 and the Criminal Attempts Act 1981 automatically to this offence. UK law recognises that conspiring to commit a crime and an attempt to commit a crime are serious and should not be beyond the reach of the law. Prosecuting such offences is an important aspect of 135 deterring criminals and enables investigatory bodies to step in and prevent the crime being implemented and harming potentially millions of customers.
I shall say a word about extradition because there was a misunderstanding about it in the Commons. We are talking about extradition to, not from other countries. The number of countries with whom we have regular extradition is limited. In particular, it is limited to the United States, as those who follow the affairs of Sotheby's and Christies know.
§ Lord KingslandI am most grateful to the Minister for his response. As I said, my main object in moving the amendment was to probe the Minister on the precise nature of the offences of conspiracy and attempt in relation to the substantive offence. I do not know how far the Minister is prepared to speculate about the extent to which individuals would have to be engaged in negotiations on price-fixing before that constituted conspiracy or an attempt.
§ Lord McIntosh of HaringeyI can best deal with that with an example. Imagine two employees of a single company that is alleged to be part of a cartel and imagine if there were a director and sales manager who were conspiring to fix prices. They would be involved in a conspiracy. That would be an example of a conspiracy if the cartel had taken place; if it were being planned and had not taken place, it would be an attempt. Clearly, it is to the advantage of everyone, including the customers who would suffer if a cartel had effect, if one could proceed against them on that basis. That is why that arrangement has been in law for 25 years.
§ Lord KingslandI am most grateful to the noble Lord for his response, on which I shall reflect. In the mean time, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ 9 p.m.
§ On Question, Whether Clause 186 shall stand part of the Bill?
§ Lord Hunt of WirralI turn to the Minister's comments on extradition. We well understand that in this regard we are talking primarily about the United States of America and that we therefore have to tread with a degree of caution because of the double effect about whatever we decide in relation to the Bill. As we extend criminality to cover an offence, a conspiracy to commit such an offence and an attempt to commit such an offence, under the doctrine of dual criminality, a request for extradition, once a country has criminal penalties for an activity, will apply, so far as a country's demands are concerned, where it has equivalent criminal penalties.
Will the Minister please confirm that there is no question of the extradition provisions in the clause applying retrospectively? I imagine that he will be able to confirm that. If so, it would be helpful if he could 136 identify exactly what he means when he says that it will not apply retrospectively. Does retrospection apply to a criminal conviction, for example, in the United States in absentia of a United Kingdom subject who is here or to the date of the alleged offence itself?
Following the comments of my noble friend the shadow Lord Chancellor, if we are making criminal a conspiracy or an attempt, it will immediately follow that in the United States there could be an attempt to extradite for a similar category of offence, which goes much wider in the United States than it would here; I refer, for example, to some form of limitation of production. If there was an attempt to limit production, it would be held to be an attempt in the United States although it might not be in this country. As he seeks to balance those two conflicting points, it would be helpful if the Minister would give us some reassurance.
§ Lord McIntosh of HaringeyOn the point of limiting production, limiting a production is already provided for in Clause 183(2)(c). The definition of a cartel is not at issue.
On the issue of retrospection, the answer is that the provisions are not retrospective; the arrangement is determined according to the date of the offence. An offence that was committed before the Act came into force would not be extraditable. I believe that those were the two points on which the noble Lord, Lord Hunt, sought reassurance.
§ Clause 186 agreed to.
§ Clause 187 [Investigation of offences under section 183]:
§
Lord Kingsland moved Amendment No. 190:
Page 136, line 27, at end insert "insofar as relevant to the investigation of the offence under section 179 which it is suspected has been committed
§ The noble Lord said: This amendment is self-evident. It seeks to focus the power in Clause 187 to the specific circumstances of the alleged offence. In my submission, it does not undermine the clause's intention; it simply makes sure that it has a proper purpose. I beg to move.
§ Lord BorrieIs the amendment correct in referring to "section 179" or should it refer to "section 183"?
§ Lord McIntosh of HaringeyIf I can answer for the noble Lord, Lord Kingsland, the amendment is meant to refer to Section 183. The version that went through the Commons referred to "section 179". I make no point of that.
The point I do make is that the noble Lord, Lord Kingsland, is entirely right. The arrangement must be restricted in the way in which he suggests, and it is. Clause 187(2) states that the criminal investigatory powers,
are exercisable, but only for the purposes of an investigation under subsection (1)".137 Subsection (1) states:The OFT may conduct an investigation if there are reasonable grounds for suspecting that an offence under section 183 has been committed".I hope that that provides what the noble Lord was seeking.
§ Lord KingslandI am most grateful to the noble Lord. In those circumstances, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ On Question, Whether Clause 187 shall stand part of the Bill?
§ Lord KingslandAgain, I shall be very brief. I am sure that the noble Lord will recall debate on the last amendment of the second Committee day, when I made a particular reference to Clause 187 and the contrasting use of expressions therein. Clause 187(1) contains the expression,
if there arc reasonable grounds for suspecting that an offence under section 183 has been committed".Clause 187(2) contains the expression,in any case where it appears to the OFT that there is a good reason to exercise them for the purpose of investigating the affairs".In short, the discretion exercisable under Clause 187(1) is by way of being an objective discretion, whereas the discretion exercisable under Clause 187(2) is a subjectively exercised discretion.Perhaps I may ask the Minister whether the following interpretation is what is intended by the Government. Do the Government intend that the decision to make an investigation should be a decision which is predicated on reasonable grounds for suspecting but that thereafter, once those reasonable grounds are present, the means by which the investigation is conducted is based on a subjective view about what appears to be a good reason for exercising a particular power to pursue that investigation? Is that the distinction that the Government seek to make?
§ Lord McIntosh of HaringeyNearly. The first part of the proposition is certainly right. The noble Lord, Lord Kingsland, is right in saying that the test for launching an investigation in Clause 187(1) is reasonable grounds for suspecting that an offence has been committed. The test for using powers in Clause 187(2) for the purpose of an investigation under subsection (1) is in any case where it appears to the Office of Fair Trading that there is good reason to exercise them. Therefore, he has described the situation precisely.
The OFT can carry out an investigation if there are reasonable grounds for suspecting that an offence under Clause 183 has been committed. The power of investigation cannot be used unless the threshold has been met. Therefore, the use of the powers is subject to the test in Clause 187(1).
However, whether there are reasonable grounds for suspicion will depend on the information available. Examples of information that could be sources of 138 reasonable grounds for suspicion are records of secret meetings or statements from employees or complaints. I do not know that I would call those "subjective", but they will be unearthed only as an investigation under the strict test of Clause 187(1) proceeds. That is why we must have the complication of the succeeding clauses in the Bill. But certainly the noble Lord's principal proposition is entirely correct.
§ Lord KingslandIn a sense, subsection (2) of Clause 187 comes before subsection (1). In order to establish whether there are reasonable grounds for suspecting, am I right in thinking that the Government are entitled to move straight to subsection (2) and, on the basis of the subjective test, to probe around?
§ Lord McIntosh of HaringeyNo. As subsection (2) says, that would be the case,
only for the purposes of an investigation under subsection (1)".Therefore, subsection (1) is the master, so to speak.I believe it is being suggested that government could use subsection (2) for fishing expeditions. They cannot because they would have to apply the reasonable suspicion test, and that is subjective. That is why I resisted the word "subjective". Evidence is required.
§ Lord KingslandSubsection (2) can be triggered only by subsection (1)? I am most grateful. In those circumstances, I shall not press the Question whether the clause shall stand part.
§ Clause 187 agreed to.
§ Clause 188 [Powers when conducting an investigation]:
§
Lord Hunt of Wirral moved Amendment No. 191:
Page 136, line 30, leave out from beginning to second ",to" and insert "past and present employees of the business of which the person under investigation is an officer or employee
§
The noble Lord said: In Clause 188 we move to the subject of the powers of the Office of Fair Trading when conducting an investigation. Amendment No. 191 would leave out in the second line of subsection (1) the words,
any other person who it has reason to believe has relevant information",
and insert in their place,
past and present employees of the business of which the person under investigation is an officer or employee".
§ In many ways, I simply seek to test the Minister as to why such a wide power of conducting an investigation is necessary. It can cover anyone without limit in deciding whether or not a person may have been involved in the business which is the subject of the investigation. It is a probing amendment and I look forward to hearing the Minister's response. I beg to move.
§ Lord McIntosh of HaringeyThe straightforward answer is that the information relevant to the investigation could be held by undertakings or individuals who are not and never have been formally connected to the business of the person under investigation. One could have difficulty with the 139 wording of this amendment. One could ask whether someone was an employee, a former employee, agency staff or a contractor. It could make effective investigations very difficult. But the fundamental answer I give to the noble Lord is that these are not new powers. They are powers comparable to those given to the Serious Fraud Office in the Criminal Justice Act 1987 and to the Office of Fair Trading itself in the Competition Act 1998, and they have not caused any problems.
§ 9.15 p.m.
§ Lord Peyton of YeovilThe Minister has used the words, "One could have difficulty". He is referring to the people who will have the powers, if the amendment is passed. I am worried about the people against whom the powers, which seem to be rather sweeping, are exercised. This is not the first time that I have trodden this ground. I did so the other day with as reasonable a man as the noble Lord, the Minister for Science. I had hoped that he might at least recognise some of my anxieties. I felt deeply disappointed and downcast that his reply did not produce a word of comfort.
My anxieties about giving people wide powers to seek information have been greatly increased and enhanced by the recent conduct of the Financial Services Authority, which has stimulated banks, stockbrokers and chartered accountants to check whether clients whom they knew perfectly well may or may not be tempted to engage in money laundering. Many perfectly innocent people are badgered by authority, and people abuse authority—a point that does not really occur to anyone as reasonably minded as the noble Lord who is handling this Bill. It worries me that people in authority, having the power to obtain information, may decide to cast their nets as wide as possible, regardless of how many people that may annoy and irritate.
So far as I am concerned, the Financial Services Authority has been totally unresponsive to complaints, nor does it seem to be aware of the immense irritation that it causes. I cannot believe that those who sent the inquiry forms to me have, as a result of bothering people such as myself, been in any way successful in checking the undesirable habit of money laundering by criminals. The Government should be very careful before granting powers of this kind. They can be quite certain that they will be, and very often are, abused.
§ Lord McIntosh of HaringeyAs the noble Lord well knows, I am instinctively sympathetic to what he says. I have spent all my life complaining about the abuse of authority—of Jacks-in-office, as they may be called. The fact that I am now a Jack-in-office myself has not stopped my objecting to the practice. I regret that I do not know about the FSA case to which the noble Lord has referred; no doubt I should.
My fundamental answer is that which I gave when we discussed the Question of whether Clause 187 should stand part; namely, that any investigation has to be constrained by Clause 187(1), which is that the 140 investigatory powers are exercisable only for the purpose of an investigation under that subsection. In other words, there has to be some good reason for it in the first place. I do not know whether the noble Lord, Lord Peyton, is consoled by that, or whether he is consoled by the fact that, as I said in my response to this amendment, these are not new powers at all. They are powers that have been given to the Serious Fraud Office since 1987 and to the Office of Fair Trading since 1998. Although I can never guarantee that they will not be misused, they will not be misused because of any failure of drafting in the Bill.
§ Lord Peyton of YeovilI am much obliged to the noble Lord. It never occurred to me that I should be speaking to someone who would only offer deaf ears to a message. When he says that these are powers which have already been given, that does not set my anxieties at rest at all. They are powers that have been given previously and abused previously.
It would be very satisfactory to me if as a result of this very brief discussion—and I promise not to prolong it—the noble Lord would kindly communicate to the Financial Services Agency the fact that at least a large part of its inquiries have been addressed to people who are very wide of the mark. Therefore, people such as myself with nothing to do with money laundering have been vastly irritated and asked all kinds of absurd questions for no particular reason. As a result, here am I at this hour of the night badgering the Minister to give me an answer. Perhaps he could talk to Sir Howard Davies and tell him that he has personally been inconvenienced by my inquiries and that my inquiries are stimulated by the Financial Services Agency.
§ Lord RazzallBefore the Minister responds, perhaps he could explain to me what it is that the noble Lord, Lord Peyton, has just said which has any relevance to the Bill?
§ Lord Peyton of YeovilThe noble Lord seems to be inquisitive. Perhaps he would kindly read the clause. The Bill is about seeking information. I am merely saying that people who are given powers to seek information occasionally abuse them. I hope that I have got through to the noble Lord's consciousness—difficult as that is.
§ Lord RazzallI thank the noble Lord for his polite response to my inquiry. I was not aware at twenty past nine that we were considering the correspondence between the noble Lord and the FSA. I apologise; I have obviously misunderstood the noble Lord's point.
§ Lord Hunt of WirralMy noble friend Lord Peyton needs no assistance or even support from me, but there is a great deal in what he says on which I should like to press the Minister a little further.
In supporting the opposition to Amendment No. 191 the Minister said that he cited existing powers as an example of why these powers went no further than the existing powers under the Competition Act and 141 those of the Serious Fraud Office. My noble friend Lord Peyton has given an example of where existing powers in his view are being abused. The purpose of the amendment was to try and seek some reassurance from the Minister that here although we are mirroring—and I recognise that—existing powers for the Financial Services Authority, the Serious Fraud Office and so on, we are however dealing with a new cartel offence. That is the importance of the debate.
With the new offence under Clause 183 we shall consider a whole range of powers passing to the Office of Fair Trading in connection with any investigation under Clause 183. I therefore support my noble friend. It is important in the early days of considering these powers to demonstrate that they will be exercised not only under the existing administrative law but also that they will be exercised with considerable discretion in favour of those who are accused.
I rehearse the fact that under Clause 187(1) the investigation can be conducted,
if there are reasonable grounds for suspecting that an offence may have been committed".But in Clause 188, which we are now debating, the OFT may by notice in writing require any person who it believes has relevant information.
§ Lord McIntosh of HaringeyIt has reason to believe.
§ Lord Hunt of Wirral—whom it has reason to believe has relevant information. My noble friend Lord Peyton is questioning why it is necessary for this extensive power to be worded in such wide terms. Of course, I accept that the Office of Fair Trading will exercise good reason in any step that it may take, but what will be the checks and balances against it? Will there be any objective test; will there be any method by which the person who has received the notice can dispute it on the grounds that he does not have relevant information, or will he have to go to the trouble of responding—as every good citizen should—to the best of his ability, which may involve him in considerable time and trouble? That is the point being made by my noble friend Lord Peyton—not only from the example of his experience with the Financial Services Authority, but also when considering the wide wording that we are being asked to approve. I hope that the Minister will give us further reassurance on that point.
§ Lord McIntosh of HaringeyLet me refer first to the particular complaint of the noble Lord, Lord Peyton, about the harassment—I think that that is the correct word—to which he was subjected on the issue of money laundering by the Financial Services Authority. I imagine that he had that discussion in the Chamber with my noble friend Lord Sainsbury and that the matter and his views will have already been communicated to the Financial Services Authority. If they have not, I undertake to ensure that they are and that that is investigated. I shall ask to know the outcome, because I need to be satisfied.
142 In response to what the noble Lord said before, I said that I could not give an undertaking that that would never happen. These things do happen. What I can give is the undertaking that that cannot happen because it is permitted by the Bill. Not only are the provisions of the Bill not new, they have been in existence for 15 years. I know that that is insufficient consolation to the noble Lord, and, in a sense, I agree with him. But the provisions are quite precise.
In the House of Commons, in response to such concern, we added Clause 188(5). In other words, we made clear that any notice given to someone to answer questions must make clear the subject matter and purpose of the investigation and the nature of the offences created by Section 196. I do not know whether that happened to the noble Lord or whether the Financial Services and Markets Act 2000 gives the same assurance. But we took account of that particular point, raised in Committee in the Commons, and amended the Bill for that purpose. Those powers have for many years been considered necessary for investigations. If someone came up against a brick wall of it being the wrong person—not an employee, for example, as in the case of the previous amendment—a damaging cartel, which we have agreed ought to be criminalised, could get away with it because the investigatory powers were insufficient.
Those powers are in any case constrained by the European Convention on Human Rights and, in many respects, by administrative law. I do not suppose that that answer satisfies the noble Lord, Lord Peyton—to whom I am sympathetic—but it is intended to do so.
§ Lord Peyton of YeovilIt is not wholly satisfactory, but the very attitude of the noble Lord eases my anxieties. I am most grateful to him for that. If I may say so, he has quite restored that balance and equanimity that I always wish to retain, which was temporarily disturbed by the noble Lord, Lord Razzall.
§ 9.30 p.m.
§ Lord Hunt of WirralI join my noble friend Lord Peyton in thanking the Minister for his response, which does much to reassure noble Lords on this side of the Committee about the extent to which these powers will be exercised. In fact, it is under this amendment that the restriction to employees would apply. However, the Minister certainly responded to that. My noble friends and I would like time to reflect upon the Minister's words. In those circumstances, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§
Lord Kingsland moved Amendment No. 192:
Page 137, line 6, at end insert—
() Any person of whom information is sought pursuant to this section shall not be required to provide such information, if the provision of that information would infringe his right to silence or his right against self-incrimination or both.
§
The noble Lord said: This topic also arose at the end of proceedings on the second day of Committee. The terms of both Amendments Nos. 192 and 193 are self-evident. What has prompted them is the confusion in our minds between the role of the OFT as a civil investigator and its role as a criminal investigator. The Minister will note that Clause 187 begins after the title:
Criminal investigations by OFT".
If the OFT is to make criminal investigations, it must conform not only with Article 6(1) of the human rights convention but also with Article 6(2) and Article 6(3). For that to be satisfied, an additional subsection needs to be added to Clause 188 in the sense set out in Amendments Nos. 192 and 193.
§ I believe that I drew to the Minister's attention last week the desirability of a proper temporal division of work between the criminal investigations body on the one hand, and the OFT on the other. I believe that it is desirable that the OFT should not move until the criminal investigations body decides that it is going to terminate its investigation. Otherwise, the measures set out in the Bill give insufficient protection to the party being investigated. I beg to move.
§ Lord McIntosh of HaringeyPerhaps I may return to what we were saying after midnight on Thursday—or rather Friday morning—about the interaction of civil and criminal proceedings. This is really quite important; and, indeed, deserves repetition. We already have the civil law in these cases: we have it under the Competition Act 1998 and, fundamentally, it targets the undertaking. Clearly, you have to target undertakings for cartels.
However, the criminal offence in the Bill, which is the extension of what I have just described, targets individuals. In the existing state of law in other respects, you also have to target individuals. The civil powers under the Competition Act focus on infringements by undertakings. The cartel provisions in the Enterprise Bill deal with criminal actions by individuals. One single cartel could involve both; in other words, it could involve both an undertaking and individuals.
The OFT will collect evidence for a new offence to criminal standards to ensure that it is admissible in a criminal trial. OFT investigators will abide by the various codes of conduct created by the Police and Criminal Evidence Act 1984 for the investigation of criminal offences. Suspects will be cautioned before being interviewed by OFT officers investigating the criminal offence. Clause 193, to which we will come shortly, will ensure that statements that are compelled under powers in the Competition Act 1998 may not be used as evidence in criminal proceedings, except—the point made by the noble Lord, Lord Kingsland, on Thursday night—in limited circumstances that we can go into. In conducting civil and criminal investigations, the OFT is in a similar position to that of Customs and Excise and the Inland Revenue, each of which also successfully carries out successful parallel civil and criminal investigations.
144 The amendments in this lengthy group would provide a right to silence, a right against self-incrimination and a right to legal representation for persons being investigated for the cartel offence. Those are necessary and proper safeguards in cases in which evidence given by somebody under investigation may later be used in court against them. OFT officers investigating a criminal offence are already subject to those safeguards and will have regard to the codes of practice for criminal investigations in England, Wales and Northern Ireland, as provided by the Police and Criminal Evidence Act 1984. That Act says:
Persons other than police officers"—which is what OFT officers are—who are charged with the duty of investigating offences or charging offenders shall in the discharge of that duty have regard to any relevant provision of such a code".OFT and SFO officers are "persons other than police officers".The purpose of the Police and Criminal Evidence Act is to protect suspects where investigators are trying to obtain evidence that can be used against them. If OFT investigators seek voluntary statements, they will be subject not only to the safeguards that the amendments would provide but to all the other requirements concerning breaks, embassy access, religious needs and so on. If they seek information under compulsion, using the powers conferred by Clauses 188 to 190, the Police and Criminal Evidence Act does not apply. However, Clause 192 provides protection against self-incrimination. In other words, information obtained under compulsion cannot be used in court against the person who gave it, except in limited circumstances. The noble Lord, Lord Kingsland, referred to the Saunders case on Thursday night. That safeguard mirrors that provided to persons subject to a fraud investigation under Section 2 of the Criminal Justice Act 1987.
In England, Wales and Northern Ireland, a suspect has no right to have a lawyer present when being interviewed under compulsory powers. However, in the interests of fairness and unless it would unduly delay or obstruct the investigation, the Serious Fraud Office advises persons under investigation that they may wish to seek legal representation. I can give an undertaking that the Office of Fair Trading will follow SFO practice in that respect.
Amendment No. 201 would remove the exception to the safeguard against self-incrimination. That safeguard prevents the use of statements obtained under compulsion in a civil investigation conducted under the Competition Act 1998 against the person who made them for the purposes of prosecuting for a new offence. However, it is common practice in criminal law for persons to lose that protection if they make inconsistent statements or voluntarily provide information. That approach is consistent with Sections 2(8) and (8AA) of the Criminal Justice Act 1987.
145 I hope that that will address the noble Lord's concerns.
§ Lord KingslandI am grateful to the Minister for that full explanation. On the basis that the provisions that he mentioned are either already incorporated in the Bill or are incorporated by implication, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 193 not moved.]
§ Clause 188 agreed to.
§ Clause 189 [Power to enter premises under a warrant]:
§ [Amendments Nos. 194 and 195 not moved.]
§ On Question, Whether Clause 189 shall stand part of the Bill?
§ Lord Hunt of WirralBefore moving on to Amendment No. 195A, I thought it would be worth considering whether Clause 189 should stand part of the Bill. I am concerned about certain aspects of this clause. As a whole the clause makes it clear that it would enable officers to enter premises and remove all material, even though it might be irrelevant or immaterial. The provisions would allow an officer to seize material if it was not reasonably practicable to determine while on the premises whether the material was seizable, or in the case of property some of which was seizable, which items the officer would be entitled to seize.
I recognise that the exercise of this power is subject to strict safeguards, including the requirement to give written notice and the duty to return legally privileged material, but we should be cautious about conferring such wide-ranging powers; that is, powers that would enable officers to seize any material at all. I would welcome some reassurance from the Minister on these points.
§ Lord McIntosh of HaringeyThe noble Lord, Lord Hunt, did not mention the most important safeguard included in Clause 189, which is that the authority of the High Court or the sheriff in Scotland must be sought before a warrant can be issued. As I have said, that is the most important protection.
The definition of which documents may be seized and the consequences of a power to enter premises under a warrant are not new; what is new is the level of authority necessary here. Subsection (5) amends Part 1 of Schedule 1 to the Criminal Justice and Police Act 2001 so that it will apply to investigations of the offence. The investigatory procedures have not changed: what is new is the introduction of the new offence of engaging in a criminal cartel.
The amendment would enable officers of the OFT to remove material where it is not possible to examine it properly on the premises due to constraints of time and technology. Officers can remove anything which they would be entitled to seize in isolation, even if it is held within something that they have no power to seize, such as a hard drive or an entire disk. The exercise of 146 the power is subject to strict safeguards which include a requirement to provide a written notice and a duty to return legally privileged material.
This is always going to be a contentious issue, but it is on the basis of the judicial authority required that I defend the clause.
§ Lord Hunt of WirralI recognise that it is on the basis of the judicial authority that the Minister seeks to defend the clause. Under Clause 189 an application must be made first to the High Court or, in the case of Scotland, by the procurator fiscal to the sheriff, but that application would set out the grounds for believing that there might be documents on the premises which are in any way material and would detail the reasonable grounds for so believing.
I am looking for further assurance, judicial authority having been persuaded that there might be documents. Under the clause as drafted, it would be possible to sweep up all the documents, go away and examine them, retain what is material and return what is not.
However, the Minister says that these powers mirror those to be found elsewhere, but the concern is that we are dealing with the Office of Fair Trading rather than duly authorised police officers. He has pointed out other examples and I would like to reflect on his words. I am grateful to him.
§ Clause 189 agreed to.
§ 9.45 p.m.
§
Lord Hunt of Wirral moved Amendment No. 195A:
After Clause 189, insert the following new clause—
§ "189A APPLICTION FOR PRODUCTION ORDER
- (1) A judge may on an application made to him by the prosecutor, make a production order if he is satisfied that each of the requirements for the making of the order is fulfilled.
- (2) The application for a production order must state that a person specified in the application is believed to have committed an offence under section 183.
- (3) The application must also state that—
- (a) the order is sought for the purposes of the investigation;
- (b) the order is sought in relation to material, or material of a description, specified in the application; and
- (c) a person specified in the application appears to be in possession or control of the material.
- (4) A production order is an order either—
- (a) requiring the person the application for the order specifies as appearing to be in possession or control of material to produce it to an appropriate officer for him to take away; or
- (b) requiring that person to give an appropriate officer access to the material, within the period stated in the order.
- (5) The period stated in the production order must be a period of seven days beginning with the day on which the order is made, unless it appears to the judge by whom the order is made that a longer or shorter period would be appropriate in the particular circumstances."
§ The noble Lord said: Amendment No. 195A seeks to align the powers of the Office of Fair Trading in conducting investigations under the Bill with powers afforded to other authorities in similar circumstances conducting investigations.
147§ Under the Bill as currently drafted, the Office of Fair Trading may conduct an investigation on the basis of a reasonable suspicion that an offence under Section 183 may have been committed. No recourse will be required to be made to the court to determine that the powers invoked under Section 188 are necessary for the purposes of the investigation and likely to be of substantial value to the investigation.
§ Is the Minister satisfied that those powers are compatible with Article 8 of the European Convention on Human Rights? I recognise that his noble friend Lord Sainsbury of Turville has signed a statement on the face of the Bill stating that in his view the provisions are compatible with the convention rights, but I would like reassurance from the Minister on that specific point.
§ I am concerned because in cases of search of property by officials for the purposes of the detection and prosecution of serious crime, the European Court of Human Rights has held that in order to satisfy the test of being necessary in democratic society so as to justify the exception under Article 8.2, prior authorisation by a judge would normally be required. A French law, which lacked a safeguard of that type, was condemned by the court in the case of Funke v. France (1993) 16EHRR 297, because it allowed the authorities exclusive competence to determine the scale, frequency and legality of searching in each case. The Minister will not therefore be surprised when I return to the point I raised earlier, drawing an analogy between that situation and cases in which the OFT will require the information under this clause.
§ It is the view of a number of distinguished lawyers that sufficient safeguards should be put in place to ensure that the new powers are proportionate to the intended outcome. The amendment seeks to achieve that and ensures that the same criteria as must be fulfilled before a court will, for example, grant production orders on the Proceeds of Crime Bill, will apply before a notice can be issued. I recognise that we have dealt with those points to some extent already, but I would be grateful if the Minister could reply in detail to the amendment. I beg to move.
§ Lord McIntosh of HaringeyI can assure the noble Lord, Lord Hunt, that I recognise where these amendments have come from. These additional clauses are taken directly from the Proceeds of Crime Bill, which, since it has passed through your Lordships' House, will become the Proceeds of Crime Act within a few days.
The amendments seek to replace the provisions of Clause 198, the power to enter premises without a warrant. They contain, in essence, the same safeguards as those contained in Clause 189, as the noble Lord will recognise. Clause 189 has been drafted specifically to align the powers of the Office of Fair Trading in conducting investigations under this offence with the powers afforded to the Serious Fraud Office in the Criminal Justice Act 1987.
148 As I argued earlier, the Office of Fair Trading is best placed to investigate this offence as it draws on its experience of investigating very similar offences under the Competition Act 1998. It will work closely with the Serious Fraud Office, particularly as the Serious Fraud Office will be acting as prosecutor of the offence. So it is important—indeed, vital—to align the powers of investigation between the two authorities to avoid confusion.
The noble Lord, Lord Hunt, made a specific point about ensuring that the powers under which an authority may obtain information and search premises are compatible with Article 8 of the European Convention on Human Rights. Not only has the Minister signed an assurance to that effect but the Joint Committee on Human Rights has scrutinised the Enterprise Bill and set out its views in its 18th report. The Joint Committee considered the provisions of Part 6 of the Bill and came to the conclusion that there are sufficient statutory safeguards in place to ensure that the powers would be exercised compatibly with human rights.
The proposed new clauses replicate all the safeguards that are already contained in part of Clause 189, with one substantial difference. I do not know whether or not it was intentional. The new clauses require that a production order can be issued only if a person specified in the application is believed to have committed an offence under Section 183, while Clause 189 requires the OFT to demonstrate to the judge that there are reasonable grounds for believing that there are documents on the premises in question which are required for the purposes of an investigation.
I hope that the noble Lord, Lord Hunt, will agree that it would be unjustified to require the OFT to identify an individual who has committed an offence under Clause 189 before going to the High Court for authority. You could well have a reasonable suspicion that there are documents on a company's premises without knowing who put them there or in whose charge they are. So, in so far as there is any difference between these amendments and Clause 189, I hope that it will be agreed that Clause 189 is to be preferred.
§ Lord Hunt of WirralI should like to reflect on what the Minister said. Whenever powers of this nature are granted to such a wide extent it is important to ensure that there are necessary safeguards, particularly in regard to the right to privacy. I still have some concerns which the Minister has not completely allayed, but I should like time to reflect on them before taking them any further. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 195B to 195H not moved.]
§ Clause 190 [Exercise of powers by authorised person]:
§
Lord Razzall moved Amendment No. 196:
Page 138, line 15, at end insert—
() The OFT shall be responsible for all acts and omissions of any authorised person exercising powers under this section.
§
The noble Lord said: The amendment is unusual for a Bill of this complexity in that its words stand on their own. It is quite clear what we on these Benches are seeking. Clause 190 gives the OFT powers to appoint authorised people to exercise its powers under Clauses 188 or 189. We seek to amend that with a provision indicating that the OFT,
shall be responsible for all acts and omissions of any authorised person exercising powers under this section".
§ This may seem to be a statement of the obvious. However, the concern has been expressed by a number of people—in particular with regard to potential damage to IT systems as a result of intervention by authorised persons—that the OFT should accept responsibility on the face of the Bill for the exercise of powers by authorised persons. I beg to move.
§ Lord McIntosh of HaringeyI am sympathetic to the thinking behind the amendment. Had I been in the position of the noble Lord, Lord Razzall, I should have done exactly the same. I can quite appreciate that someone coming in and searching for information on a PC or on a network could do a great deal of damage for no justification. So the idea of making the OFT responsible for the acts and omissions of any authorised person exercising powers under this clause is entirely right.
The OFT already recognises that it is responsible for the actions of its staff and any authorised competent investigator. It is because it may have to subcontract that the noble Lord's concerns come to the fore. It could be subcontracting to IT specialists, who would not make that kind of mistake, because those skills might not be available to OFT staff. It could be subcontracting to accountancy firms, or to the FSA or to the National Audit Office under certain circumstances.
The contracts that the OFT will have with these persons who are not officials of the OFT will set out the nature of the functions that the contractor is undertaking on behalf of the OFT and deal with liability concerning any actions they commit which exceed the OFT's powers.
Any person under investigation would in the first instance seek recourse from the OFT as the authorising authority. The OFT might seek to recover any damages awarded against them from its contractors.
I believe that the amendment is unnecessary. As I have said, the provisions of this clause are modelled against very similar provisions contained in the Criminal Justice Act 1987. That Act does not contain a provision making the SFO expressly responsible for the actions of its contractors; however, the SFO takes responsibility and regulates its obligations and responsibilities with its contractors through separate 150 contracts. That seems to have worked for a considerable number of years and there is no good reason to suppose that it will not work now.
§ Lord RazzallWhile expressing surprise that the Minister wants to take on the sins of his forefathers, I am happy to reflect on what he has said, and I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 197 and 198 not moved.]
§ On Question, Whether Clause 190 shall stand part of the Bill.
§ Lord Peyton of YeovilPerhaps I may briefly raise a similar point to one that I raised previously. It relates to Clause 190(1):
The OFT may authorise any competent person who is not an officer of the OFT to exercise on its behalf all or any of the powers conferred by section 188 or 189".Is not that provision slightly broad? Were it to be qualified, it would be somewhat better: "competent" to do what? I do not think that we do want to bring in anyone who might possibly be thought to be not entirely a lunatic. I do not wish to press the point, but I hope that the noble Lord might agree that this wording could be examined. I do not think that it is asking very much.
§ 10 p.m.
§ Lord KingslandMy noble friend Lord Peyton has, at least partly, stolen my thunder; that was precisely the point that I wished to make about Clause 190. Moreover, Clause 190, as I think I said earlier in these proceedings, ought to be made subject to Clause 189(2). The noble Lord, Lord McIntosh, will recall that Clause 189(2) gives specific warrant-making powers. Unless Clause 190 is constrained in some way, it can be used to override or circumvent the requirements of Clause 189(2). In my submission the relationship between these two clauses should be tidied up by the Government.
§ Lord McIntosh of HaringeyI hoped that I had addressed the concerns of the noble Lord, Lord Peyton, when I was responding to the amendment of the noble Lord, Lord Razzall. I did spell out the fact that some of the skills to which the noble Lord, Lord Razzall, referred—which are not necessarily available to the staff of the OFT—would be necessary in certain circumstances. I spelled out the possibility that these could be information technology skills, or accountancy skills in order to enable them to interpret the documents that they might find. It seemed to the noble Lord, Lord Razzall, that it was reasonable that there should be the ability to subcontract in these circumstances.
As to the issue of their being "competent persons" rather than "qualified persons", I do not think that there is a very great distinction. "Competent persons" implies the same degree of skill and control; it just does not relate to a particular qualification. Competent investigators are already subject to OFT 151 authorisation. Clause 190 allows the OFT to authorise any competent investigator who is not an officer of the OFT to exercise the powers given under Clauses 188 and 199. The provisions under Clause 189(2) to which the noble Lord, Lord Kingsland, referred, and the requirement that this should be a named officer of the OFT, applies also to Clause 190 where the OFT is authorising someone else who is not an officer of the OFT. In other words, they have to be named and they have to produce evidence of who they are. We have tabled separate amendments to secure that.
The limitation of this authority is set out at Clause 190(2)—that it can be granted only,
for the purpose of investigating the affairs, or any aspect of the affairs, of a person specified in the authority".So they are not just let loose. The authority specifies who they are; what they have to do; who they are authorised to investigate; and what the content of that investigation is. However, I think that the fundamental point behind Amendment No. 190 is that, in addition to those safeguards, as I have made clear, the OFT is responsible for the actions of its staff and of any authorised competent investigator. That responsibility is equivalent regardless of whether they are staff.The contracts that the OFT will have with authorised persons who are not officials of the OFT will set out the nature of the functions they are undertaking on behalf of the OFT and deal with liability for any actions that they commit which exceed OFT powers. That is a red rag to the noble Lord, Lord Peyton, I know, because the possibility of anyone exceeding the powers is not acceptable to him. It happens; it should not happen; but it is not made any more possible by the provisions of this Bill.
§ Lord Peyton of YeovilI certainly would not wish to go to the stake for the sake of "qualified" as opposed to "competent". It was only an idea and I am not strongly committed to it. I hope that the noble Lord will take the measure away. All I want him to do is to look at the wording. I accept what he said; namely, that elsewhere there is provision that the OFT is responsible for those who act on its behalf whether they are members of its staff or just named for a purpose.
Looking at the relevant subsection in isolation, I do not think that it ought to be included. There ought to be some kind of obligation on the OFT to ensure that the relevant person is competent or qualified. Simply to say that anyone that it considers competent will do is a little wide. I hope that the noble Lord will reconsider the measure. I am not asking for any more than that.
§ Lord McIntosh of HaringeyI shall, as always, certainly think about the matter. However, I reread Clause 190 when the issue arose. It seems to me that it is explicit. It begins by stating that authority can be conferred on any competent person. However, subsection (2) of the clause restricts the purpose of that authority. Subsection (3) restricts the obligation of 152 anyone to comply with a requirement imposed by such a person unless the latter produces evidence of his authority. Those are real protections of which I shall take account as I consider the observations of the noble Lord, Lord Peyton.
§ Lord KingslandI hope that the Minister will, in the light of what he has said, agree to introduce an amendment on Report expressly linking Clause 189(2) and Clause 190(1) in order to make it absolutely clear that any authorisations made under Clause 190(1) are subject to the procedure set out in Clause 189(2).
§ Lord McIntosh of HaringeyI shall certainly look at that linkage again.
§ Lord KingslandI am most grateful.
§ Clause 190 agreed to.
§ Clause 191 [Privileged information etc.]:
§
Lord Hunt of Wirral moved Amendment No. 198A:
Page 138, line 18, leave out from "any" to end of line 21 and insert "item subject to legal privilege
§
The noble Lord said: I should like to probe the definition of "legal privilege" for the purposes of this part of the Bill. As currently drafted the Bill restricts the circumstances in which legal privilege can be claimed. Under subsection (1) of Clause 191,
A person may not under section 188 or 189 be required to disclose any information or produce any document which he would be entitled to refuse to disclose or produce on grounds of legal professional privilege".
The amendment seeks rather to reflect the existing definition of "legal privilege" which has operated successfully in other legislative measures. The amendment would alter the subsection to read:
A person may not under section 188 or 189 be required to disclose any information or produce any item subject to legal privilege".
Grouped with the amendment I am discussing is Amendment No. 199. That amendment seeks to delete the words at line 28, page 138:
the OFT has authorised the making of the requirement".
Amendment No. 200 seeks to insert at line 28, page 138 the words,
for the purposes of this Part, 'privileged communications' has the same meaning as in section 30 of the Competition Act 1998".
Amendment No. 200A seeks to delete subsection (3) of Clause 191 to take account of Scottish practice.
§ I hope that the Minister will justify the different definition or accede to the amendments. Article 8 of the European Convention on Human Rights enshrines the right to privacy. The law has shown a willingness to acknowledge that right through the doctrine of legal professional privilege. I hope the Minister will accept that these amendment seek to preserve that doctrine and to ensure that communications between a solicitor and client are privileged. I beg to move.
§ Lord McIntosh of HaringeyTwo different issues are involved. One relates to the issues raised by Amendments Nos. 198A, 200A and 202A. They provide a different way of accounting for the 153 equivalent in Scotland of legal professional privilege. I understand that the amendments come from the Law Society of Scotland.
The Government's intention throughout Part 6 has been to model the OFT's investigatory powers and safeguards for those under investigation on those contained in the Criminal Justice Act 1987. Clauses 191 and 197 follow the Criminal Justice Act 1987 precedent. That was to ensure consistency of approach regardless of whether the OFT or the SFO are investigating or prosecuting. We recognise that there are concerns that current Scottish customs and practice should be properly reflected in the Bill. Therefore, we should like to consider the three amendments and look again at the issue.
I cannot be quite so sympathetic to Amendments Nos. 199 and 200. Amendment No. 199 would seek to remove the OFT's power to override the protection in respect of banking professional privilege. We considered leaving out banking privilege altogether. To give it greater prominence, as the amendment would do, is not the direction in which we would be inclined to move.
The origins of this privilege lie in the Criminal Justice Act 1987 which we have used as a model for the investigatory powers for the cartel offence. Section 2 of that Act confers powers of investigation with respect to serious fraud investigations. Since the OFT and the SFO will be working closely together on cartel investigations, the Government want to ensure that the investigatory powers of the two bodies are aligned. Section 2(10) of the Criminal Justice Act 1987 provides for banking professional privilege. Section 2(10)(b) provides the director of the SFO with the power to override this privilege. Clause 191(2) would replicate that arrangement. The amendment would deny that equivalent power to the Office of Fair Trading. We think that that hampers investigations and would destroy the alignment with the Criminal Justice Act.
In summary, I am prepared to consider Amendments Nos. 198A, 200A and 202A but I am much less sympathetic to the other two amendments.
§ Lord Hunt of WirralI am grateful to the Minister for his remarks about the application of the clause to Scotland. Although I did not detect much willingness to concede, he said that he would reflect on the remaining amendments. I should also like to reflect on his comments. In those circumstances, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 199 to 200A not moved.]
§ Clause 191 agreed to.
§ Clause 192 agreed to.
§ Clause 193 [Use of statements obtained under competition Act 1998]:
§ [Amendment No. 201 not moved.]
§ Clause 193 agreed to.
§ Clauses 194 and 195 agreed to.
§ Clause 196 [Offences]:
154§ [Amendment No. 202 not moved.]
§ Clause 196 agreed to.
§ 10.15 p.m.
§ Clause 197 [Interpretation of sections 187 to 196]:
§ [Amendment No. 202A not moved.]
§ Clause 197 agreed to.
§ Clause 198 [Powers of entry]:
§ [Amendment No. 202B not moved.]
§ Clause 198 agreed to.
§ Clause 199 [Disqualification]:
§ [Amendments Nos. 203 to 212 not moved.]
§
Lord McIntosh of Haringey moved Amendment No. 212A:
Page 144, line 2, leave out from "person" to end of line and insert "an undertaking which is a company of which he is a director has committed or is committing a breach of competition law,
(ab) the OFT or the specified regulator thinks that the conduct of the person as a director makes him unfit to be concerned in the management of a company,
§ The noble Lord said: I am indebted to the noble Lord, Lord Freeman—I hope that the message can be passed to him in case he does not read Hansard—for drawing attention to a technical defect in the provisions on competition disqualification undertakings. Amendments Nos. 212A and 215A make it clear that the OFT, or specified regulator, must consider that a person is unfit to be involved in the management of a company before it can accept a competition disqualification undertaking from an individual. In making its assessment, the OFT or a specified regulator will take into account the same considerations in relation to a director's conduct that a court would have to do.
§ On Question, amendment agreed to.
§
Lord Kingsland moved Amendment No. 213:
Page 144, line 10, at end insert "without leave of the court
§ The noble Lord said: This straightforward amendment seeks to qualify the provisions in Part 7. We believe that the additional flexibility is desirable.
§ Lord McIntosh of HaringeySection 1 of the Company Directors Disqualification Act 1986 was amended by the Insolvency Act 2000 to provide that an individual who is the subject of a disqualification order cannot obtain the leave of the court to act as an insolvency practitioner. That refers to the third part of the provisions in the clause. This was to make the CDDA consistent with Section 390(4)(b) of the Insolvency Act 1986, which provides an absolute ban on an individual acting as an insolvency practitioner if he is subject to a disqualification order. The absolute ban is mirrored in Section 1A(1) of the CDDA in respect of disqualification undertakings. The drafting of new Section 911(4) is therefore designed to reflect the current provisions on leave to act in the CDDA.
155 We believe that a person who has committed serious economic misconduct as a company director should probably not be trusted in other capacities that involve the handling of other people's assets. We wish to avoid a situation whereby a disqualified person could submit reports to the Secretary of State under Section 7 of the Company Directors Disqualification Act on the conduct of a failed company's directors. On that basis, I hope that the amendment will not be pressed.
§ Lord KingslandI am of course grateful to the Minister for his response. In our view, the mediation of the court in those circumstances would provide adequate protection and a desirable degree of flexibility. I shall reflect on the Minister's reply. Meanwhile, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments. Nos. 214 and 215 not moved.]
§
Lord McIntosh of Haringey moved Amendment No. 215A:
Page 144, line 24, at end insert—
(7) Subsections (4) to (8) of section 9A apply for the purposes of this section as they apply for the purposes of that section but in the application of subsection (5) of that section the reference to the court must be construed as a reference to the OFT or a specified regulator (as the case may be).
§ On Question, amendment agreed to.
§ Clause 199, as amended, agreed to.
§ Clauses 200 to 203 agreed to.
§ Clause 204 [Reform of Community competition law]:
§
Lord McIntosh of Haringey moved Amendment No. 216:
Page 148, line 22, leave out "this section" and insert "subsection (1)
§ The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 217 to 219.
§ A European Commission draft regulation, currently under negotiation by member states, is proposed to replace the current Regulation 17, which implements Articles 81 and 82: the competition articles of the European Community treaty. The UK's Competition Act is closely modelled on Articles 81 and 82, which prohibit restrictive agreements and the abuse of a dominant position. I am sorry to have to tell the Committee that "modernisation" is the accepted shorthand for the reform of Regulation 17, which will have the effect—to use a less offensive term—of decentralising the enforcement of Articles 81 and 82 to national courts and national competition authorities. The UK supports that initiative.
§ Clause 204 of the Enterprise Bill gives the Secretary of State a power to make regulations so that, post-modernisation, amendments may be made to our domestic competition regime in order to eliminate or reduce differences between the Competition Act 1998 and the EC's competition rules. But there are also exclusions from the application of the prohibitions of the Competition Act 1998 in other Acts. I support this set of amendments, which adds a power to remove or 156 modify these exclusions—for example, the exclusion in the Financial Services and Markets Act 2000 for rules of a recognised investment exchange. EC competition law does not provide for similar exclusions and, while these differences between the application of domestic competition law and EC competition law already exist, after modernisation the domestic regime may become unworkable because the EC competition rules will be applied by the OFT along with our domestic regime So, after modernisation, OFT will have to operate two different but overlapping systems, both dealing with anti-competitive agreements and abuse of dominant provision. That will create confusion for business over which regime applies to a particular case and prove unworkable for the OFT. So the power is needed so that our domestic regime and the EC competition regime may be made consistent.
§ The power provided for in Amendment No. 217 is tightly drawn. Amendments Nos. 216, 218 and 219 are consequential on Amendment No. 217. The affirmative resolution procedure applies to any use of the powers given by this clause—although the powers are tightly drawn, it is only right that Parliament should have the opportunity to debate any specific use of those powers.
§ Of course, that involves further use of delegated powers. I should tell the Committee that this week we are intending to send the Delegated Powers and Regulatory Reform Committee a supplementary memorandum. That will detail the two government amendments which impact on delegated powers in the Bill. As always, we shall take extremely seriously any observations that the committee has. But we have no reason to suppose that it will object to this particular use of delegated powers. I beg to move.
§ On Question, amendment agreed to.
§
Lord McIntosh of Haringey moved Amendments Nos. 217 to 219:
Page 148, line 30, at end insert—
(2A) The Secretary of State may by regulations repeal or otherwise modify any provision of an Act (other than the 1998 Act) which excludes any matter from the Chapter I prohibition or the Chapter II prohibition (within the meaning of Part 1 of the 1998 Act).
(2B) The power under subsection (2A) may not be exercised—
Page 148, line 31, leave out "The regulations" and insert "Regulations under this section
Page 148, line 36, after "power" insert "to make regulations
§ On Question, amendments agreed to.
§ Clause 204, as amended, agreed to.
§ Clause 205 agreed to.
§ Schedule 13 agreed to.
§ Clause 206 [Domestic infringements]:
§
Lord Razzall moved Amendment No. 220:
Page 150, line 4, after "(2)" insert "or is an unfair commercial practice
§ The noble Lord said: In moving Amendment No. 220, I shall speak also to Amendments Nos. 221 and 253. We now come to a different section of the Bill. I know that we have just spent a very happy hour talking about a number of detailed amendments. However, I fear that with these amendments we come to an area where we on these Benches disagree fundamentally with the position that the Government took at Second Reading on the form of the Bill. These amendments attempt to put into our legislation a general obligation for traders to trade fairly.
§ That obligation applies as a safety net in many industrialised countries—that is, most EU member states and certainly New Zealand, Australia and the United States. At Second Reading the Minister, the noble Lord, Lord Sainsbury, indicated that the Government were not persuaded that English law—I hesitate on that point: I am not entirely clear whether it is English law or whether this is a devolved matter, but no matter—should have such a generalised duty. However, as the Minister is well aware, soon developments in the European Union are likely to lead us to a directive that will require considerable amendment to the law.
§ As we are approaching 10.30 p.m., I do not wish to over-press the point or speak for too long. However, for the purposes of the record, I believe that it would be useful to read into it examples of why existing consumer protection is inadequate. Our consumer protection legislation depends entirely on being able to catch rogue traders either with specific legislation or with regulations. I am very grateful to both the Consumers' Association and the National Consumer Council for providing me with examples of rogue traders whose behaviour is not currently caught by the existing law. Perhaps I may give two such examples in order that the Minister may explain to the Committee why he believes that a general duty not to trade unfairly would not catch such people.
§ The first example concerns the elderly disabled woman who responds to an advertisement for a therapeutic chair. The advertisement invites her to telephone for an information brochure. When she telephones, she is persuaded to invite a salesman to her home for a product demonstration. In doing so, she unknowingly loses her right to a seven-day cooling-off period and the trader has exploited the loophole in the legislation. There is no protection for that individual under existing law.
§ The second example, which no doubt will be dear to noble Lords as we approach our summer holidays, concerns the holiday brochure that states that the hotel is 25 metres from the sea. As the Minister proceeds to a Spanish beach on his holiday at the beginning of August, he realises that the brochure fails to mention that a motorway runs between his hotel and the beach—no offence under the Consumer Protection Act. Those are two examples—many more have been brought to our notice—of why we on these Benches feel that there should be a general duty not to trade unfairly.
158§ We have no pride of authorship in the form of the amendment, which we have tabled as a probing amendment. We know from the Minister's remarks at Second Reading that the Government are not persuaded. We hope that they will be persuaded and, if they are, will return at Report stage with a better clause than we have drafted.
§ 10.30 p.m.
§ Lord BorrieI have a great deal of sympathy with this amendment. If I did not, it would be surprising. I do so because in 1990, admittedly 12 years ago, when I was the Director-General of Fair Trading, a report was published in which I expressed myself as in favour of introducing into our law a general duty to trade fairly, for the same kinds of reasons as the noble Lord, Lord Razzall, has put forward for his amendment; namely, because of gaps in the law.
The value of a general duty, whether expressed positively, as I did in 1990, or negatively, as in this amendment—a duty not to trade unfairly is that the law never quite catches up with the malpractices of traders. Some traders always seem to be a step ahead of the law. However, I admit today that, in principle, I prefer the law and the civil obligation to be precise. My general view is that if the law is to be respected and is not to impinge unfairly on traders, it needs to be clear and precise. Consumers, and their advisers, also need to know their precise rights.
I therefore believe that it is preferable that the malpractices of the kinds listed—I think it is a non-exhaustive list—in the noble Lord's amendment should as far as possible be covered by amendments to the existing law. In Amendment No. 253, in relation to misdescriptions of services as distinct from goods, the noble Lord has in fact proposed exactly that.
Another example, similar to that given by the noble Lord a few moments ago, is that if a contract is signed at a dealer's premises, there is in law a cooling-off period for customers and, therefore, there would be little point in the dealer trying to pressurise the customer into signing the contract. If that law were extended to contracts signed at home, even when a visit is solicited—it would not be too difficult—some of the examples of unfair trading used by the noble Lord in tabling his amendment to illustrate problems would disappear. In my view, several other examples of malpractice covered by the amendment could be dealt with by pepping up the law on undue influence and the law on misrepresentation, such as the example given by the noble Lord about the travel brochure.
It may be that the National Consumer Council, for which I have every respect—perhaps its distinguished former chairman, the noble Baroness, Lady Wilcox, could be persuaded to say a few words—will, despite the points that I have just made, still think that a general duty embodied in law is desirable, although it may lack the specificity that I have suggested is desirable. So I am glad that the Minister in another place at a late stage of the Bill offered a seminar on the subject. One may make fun of that—is this government by seminar instead of by legislation? But, 159 bearing in mind that she mentioned the summer, and that there is a gap between the Committee and Report stages of the Bill in this House, if there is a seminar in between times—say in September—it may help to take this discussion a little further.
My present view is one of agnosticism, but I am concerned that new fangled malpractices can emerge that no existing law deals with. I should like finally to quote the words of the great Francis Bacon. He said:
He that will not apply new remedies must expect new evils; for time is the greatest innovator".
§ Baroness WilcoxAs the previous chairman of the National Consumer Council, I would be drummed out if I did not stand up to speak to this matter. As noble Lords have already said, there is a great sympathy around this, a sympathy for a desired general duty to trade fairly because of the gaps in the law. But 1, too, find it difficult. I am grateful to the noble Lord, Lord Borrie. In my years at the National Consumer Council I worked happily with him on many things to bring them to a fruition so that we could cover some of these more difficult areas.
I was particularly interested in the points he made about a contract signed at a dealer's premises giving a cooling off period. I wondered whether that could not be extended to contracts signed at home—"pepping up", as the noble Lord, Lord Borrie, calls it, such things as undue influence and the law on misrepresentation. Much as I have great sympathy for what the National Consumer Council proposed and wished to take forward, it lacks specificity. I do not like seminars either. But if there is a chance that something could work between Committee and Report stages, I should be keen to take part if I could and see whether we could not do something a little better after the Recess. Therefore, I am afraid that I cannot support the amendment at this time, but I have sympathy for the argument.
§ Lord Hunt of WirralI am grateful to my noble friend Lady Wilcox for her words. I find myself very much in agreement with her conclusion. It was my honourable friend Nigel Waterson in the other place who took the lead on this issue and made a compelling and convincing argument, to which the Minister responded with the notion of a seminar. I join with the noble Lord, Lord Borrie, in welcoming that development.
As I said in the debate at Second Reading, it is difficult to find a way through this situation, but it is important and imperative that we search every avenue that we can. I therefore very much agree with my noble friend that we now await the seminar, which I hope can be arranged as soon as possible, so that we can discuss possible ways forward at that seminar in time for us to debate the matter further on Report.
§ Lord Sainsbury of TurvilleI speak to Amendments Nos. 220,221 and 253. Amendments Nos. 220 and 221 would introduce a general duty not to trade unfairly. That was debated at some length in the other place.
160 I am sure that everyone would agree that businesses should treat their customers fairly. In addition to meeting their legal obligations, it is clear that businesses which treat consumers fairly and well are the businesses which will succeed in a competitive marketplace. However, I am not convinced that enshrining a general duty not to trade unfairly in legislation is necessarily the right way to achieve a fair deal for consumers.
There is already a strong body of legislation protecting consumers' rights. Where that legislation is found to be ineffective, the answer is usually better enforcement. If traders do not comply with existing law, there is no more reason to think they will comply with a general duty. And if traders disappear and cannot be traced, a general duty will not help. That is why better enforcement of existing consumer protection law is vital, which is exactly what this part of the Bill will achieve.
It is also important that policies for any new laws are founded on robust evidence. They must be needed to deal with issues of consumer concern and detriment not already covered by existing law. They must not impose undue burdens on business.
As my noble friend Lord Borrie said, that is why my honourable friend the Minister for Competition, Consumers and Markets, Melanie Johnson, is inviting key stakeholders from consumer groups, enforcers and business to a seminar to explore the issue in more depth. They will consider in detail cases that consumer organisations have cited in support of a general duty, which were also raised in debate in the other place and an example of which the noble Lord, Lord Razzall, also raised. I have noted that the noble Baroness, Lady Wilcox, would like to be invited to the seminar, and I am sure that if that is possible, it will be done.
Once we have a clear picture of where are the real problems, we will consider what further action would be appropriate. Where necessary, that will of course need to take account of what is happening in the European Union. The European Commission has just published a communication outlining its plans to develop proposals for a framework directive covering fair trading. The Commission will undertake extensive consultation with member states and other stakeholders. It would be unfortunate if we were to legislate precipitately in this case, only to be faced with similar but different European proposals in due course.
I turn to Amendment No. 253 which would remove a discrepancy in the Trade Descriptions Act 1968 whereby there is a requirement to prove Mens rea in order to establish an offence in relation to misdescribed services, although there is no parallel requirement to establish that in respect of misdescribed goods. In that context, mens rea means that the trader must be proved to have known that his statement was false or that he did not care whether it was true or not. Misdescriptions in relation to both goods and services will normally constitute a misleading advertisement under the Control of Misleading Advertisements Regulations 1998. 161 "Advertisement" in those regulations has a wide definition and covers any form of representation to promote the supply of goods or services. Mens rea is not a consideration under those regulations, which are already covered by the stop now orders regulations and will be covered by Part 8 of the Bill.
Although I do not think that the Bill is the right place to amend Section 14 of the Trade Descriptions Act 1968, my department will be happy further to consider the issue with the Local Government Association, the Local Authorities Co-ordinator of Regulatory Services and the Trading Standards Institute, which I understand support the amendment.
As I said at the beginning of my reply, the amendments all seek to amend the underlying framework of consumer protection legislation. As I said, that is not the intention of the Bill which focuses on improving the enforcement of existing legislation that protects consumers. I have explained why I think that that is right and important, and I have offered my department's help in working with interested bodies on trade descriptions issues. In view of that, I invite the noble Lord to withdraw his amendment.
§ Lord RazzallI listened with great interest not only to the Minister but to other noble Lords who have spoken from their vast experience of the issue. I shall obviously withdraw the amendment, but first I should like to make some general comments because the issue is important. The Government have defended their position with an approach that is completely different from that taken in most European Union countries, the United States, Australia, New Zealand and other countries.
I was going to say that I shall wager equally with the Minister, hut, bearing in mind our relative wealth, that is probably an unfortunate wager on my part. Instead, I will guarantee that, within the next two years, the Minister will rise here to introduce consumer protection legislation that will completely confound what he has just told us. The European Union will have developed its proposals and there will be a directive that the Government will implement. The Minister will turn on its head all of his case about why we should not have a general duty to trade fairly and tell us why the European Union is entirely right to introduce its directive including such a duty.
If the Minister had stood up and simply said that, although it is a little early for such a provision, he understood the comments made; and if he had then continued to say that the European Union was considering the matter and that the Government would, therefore, like a year or two to reflect upon what that consideration would produce—after which they would bring forward legislation—I should have completely understood the noble Lord's point. But, of course, he did not have to put consumer protection legislation in this Bill: this is an Enterprise Bill; in other words, the Chancellor of the Exchequer's Bill, which is designed to do something about productivity.
The fact that the noble Lord's ministry wished to tack in consumer protection issues here prematurely is not my problem; it is his. Therefore, a year or two may 162 well elapse before he turns this argument on its head. As I said, I shall not seek to take the noble Lord's money because he earns more than me, but that will undoubtedly be the case in a few years' time.
Finally, I have never taken the view of the Conservative Party about this Government. I believe that government by focus group is not a bad idea. I certainly believe that government by seminar is a very good idea. Indeed, I look forward to the seminar. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 221 not moved.]
§ Clause 206 agreed to.
§ Clause 207 agreed to.
§ 10.45 p.m.
§ Clause 208 [Enforcers]:
§
Lord Sainsbury of Turville moved Amendment No. 221A:
Page 151, line 28, after "Investment" insert "in
§ The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 222, 223 and 223A, together with Amendments Nos. 224 to 228. Amendment No. 221A makes a minor drafting change in the title of the Department of Enterprise, Trade and Investment in Northern Ireland. Amendments Nos. 222, 223 and 233A are intended to remove any possible suggestion that the Secretary of State could exercise a subjective opinion that a body has, as one of its purposes, the protection of the collective interests of consumers in deciding whether or not to designate that body as an enforcer under this part of the Bill.
§ We are only resisting these amendments because we believe that the Bill does not allow for such a possibility. Therefore, the amendments are unnecessary. There is no policy difference between us here. As it is the Secretary of State who will be designating the bodies, it must necessarily be her opinion that is relevant. But, although she can designate any body that she thinks has as one of its purposes the protection of the collective interests of consumers, her opinion must, as far as possible, be an objective one. It must satisfy the requirements of administrative law. So her opinion must be reached fairly. It must take into account all relevant factors, and no irrelevant ones. It must not be unreasonable.
§ I can therefore assure the Committee that the Secretary of State will indeed only designate a body under this part if she reaches the view on the basis I have described that it has, as one of its purposes, the protection of the collective interests of consumers. For public bodies this purpose will often be set out in the statute establishing the body. In addition, the criteria that the Secretary of State is required to specify for designating private consumer bodies will require evidence of a track record that is sufficient to demonstrate experience, competence and expertise in protecting the collective interests of consumers. The designation will be by order, so there will be parliamentary scrutiny and the opportunity for debate.
163§ Any decision by the Secretary of State to designate a body that did not have as one of its purposes the protection of the collective interests of consumers, or to designate a private consumer organisation that did not meet the criteria that she is required to specify by order, would of course be open to challenge by way of judicial review.
§ Amendment No. 224 seeks to ensure consumer organisations with a trading interest are not designated as "enforcers" under this part of the Bill. Amendment No. 225 seeks to ensure that a consumer organisation is not designated in such a way as would allow it to bring applications for enforcement orders in areas where it carries on a commercial activity.
§ I fully understand business concerns about the potential conflict of interest if consumer organisations have the right to bring applications for enforcement orders in areas in which they have a commercial interest, for example by bringing an application for an enforcement order against a business carrying on the same commercial activities as its trading arm or in cases in which the trading arm could itself be the subject of an application for an enforcement order.
§ I reassure the House that the criteria that the Secretary of State is required to specify by order will guard against such an occurrence. The criteria for designating consumer organisations with trading arms will include provisions to ensure that any potential conflicts of interest are properly dealt with. The fact that a body has a trading arm should not disqualify it from being designated as an enforcer under this part, provided that the trading arm does not control the body and that any profits made by the trading arm are used only to fund its consumer representation or other related work. Excluding bodies with trading arms would exclude many, if not most, charities, which use commercial activities to fund their stated objectives.
§ Regulation 4 of the Stop Now Orders (EC Directive) Regulations 2001 contains the existing power to designate private consumer organisations and sets out the criteria according to which they may be designated. That includes a requirement that the organisation be so constituted, managed and controlled that it can be expected to act independently, impartially and with complete integrity. If, having been designated, a consumer organisation fails to comply with the criteria, the Secretary of State would be required to remove its designation. We expect to set similar criteria for designating consumer organisations under this part, but we will consult widely on the draft criteria. That will give all interested parties the chance to raise their concerns. I will, of course, welcome comments from your Lordships on the consultation on the draft criteria.
§ Amendments Nos. 226, 227 and 228 seek—
§ Lord Hunt of WirralI am so reluctant to interrupt the Minister. Rightly, he rose to move Amendment No. 221A, but he has now proceeded to respond to Amendments Nos. 222, 223 and 223A, even though they have not yet been moved. No doubt, the noble 164 Lord, Lord Razzall, will make a point about that. Now, he is proceeding to respond to my amendments, Amendments Nos. 226, 227 and 228. I would prefer him to respond once I put the case for the amendments, so that I might influence his response. I do not want to hear it in advance of mine.
§ Lord Sainsbury of TurvilleI stand corrected. I thought that for me simply to propose that I would put the word "in" into the phrase "in Northern Ireland" would be a waste of the noble Lord's time, so I thought that I would cover the other amendments. I apologise to the noble Lord. I shall certainly listen to his arguments before I go any further.
§ Lord Hunt of WirralI am so grateful to the Minister for allowing me to get a word in edgeways: it is kind of him.
As we consider Part 8 of the Bill, I ought to draw your Lordships' attention to the fact that, in Standing Committee in the other place, the whole of this important part of a complex Bill, which deals with the rights of and duties owed to consumers was allocated just a few moments because of the guillotine. There was no opportunity to deal properly with the amendments. As we have said on many previous occasions, it is incumbent on your Lordships' House to play an important part in scrutinising legislation that has not been considered in the other place because of the guillotine.
Amendment No. 226 is linked with Amendments Nos. 227 and 228. Amendments Nos. 227 and 228 are identical, and Amendment No. 226 is similar. I hope that the Minister will allow me to speak to the omnibus or generic amendment—the sum of those three parts. It is a routine request that orders such as those to be made under Clause 208 should be subject to the affirmative resolution procedure in both Houses, rather than the negative procedure. I should put it on the record immediately that I dislike intensely the negative procedure because it gives so little opportunity for proper scrutiny, while in any event the procedures of Parliament inhibit the possibility of amendment.
Clause 208 is the only clause in this part of the Bill to introduce secondary legislation. Those who have scrutinised this part will see that it enables the Secretary of State to designate persons or organisations as enforcers. I know that my noble friend Lady Miller of Hendon would have wanted to be present as we scrutinise these provisions. Unfortunately, for a number of reasons she was unable to be present this evening. However, she told me how she felt—that the word "enforcers" was a term redolent of menace, conjuring up a picture of sinister men in trenchcoats and trilby hats making traders offers that they cannot possibly refuse.
Since those qualified to be enforcers include every weights and measures authority in Great Britain, a number of recent cases cause us to approach this part of the Bill with some degree of trepidation. The clause permits the Secretary of State to appoint what are called "general enforcers" and "designated enforcers". 165 As the Minister has already pointed out, "designated" enforcers could include any person or organisation that,
the Secretary of State … thinks has as one of its purposes the … collective interests of consumers".It need not necessarily be a body generally accepted as unarguably having such a purpose, but one which the Secretary of State in her wisdom and by some hitherto undisclosed subjective test thinks has such a purpose. In other words, under the present wording of the clause, any self-appointed pressure group able to create enough noise and fuss to come to the attention of the Secretary of State could be designated as an enforcer with powers to apply for enforcement orders under Clauses 209 and 210.The enforcement powers are wide and far-reaching. However, I should like to point out that we do not object to them in principle, nor do we object to the Secretary of' State delegating enforcement powers to appropriate persons or organisations. Nor, indeed, do we object to the Secretary of State defining the extent of the infringements in which the enforcers may involve themselves in enforcing against, as provided in subsection (6)(b). The amendments seek to ensure that there is adequate scrutiny of the qualifications of the enforcer. Because the appointment is to be made by statutory instrument, we believe that it should automatically be open to debate by means of the positive resolution procedure.
That is the purpose of the amendments. I hope that the Minister will look on them favourably.
§ Lord Sainsbury of TurvilleI have listened with great interest to the noble Lord, but I do not think that the government position will change on this. Perhaps I may reiterate a point that I hope I explained in my earlier remarks; namely, that this is not simply a subjective test. We shall provide clear guidance. Furthermore, the Secretary of State can be held to ensuring that any actions coincide with that guidance.
The view held by the noble Baroness, Lady Miller, of enforcers is rather wide of the mark in this instance. Of course it is always a matter of judgment and debate whether the affirmative resolution procedure is required in a particular case. We do not think that it is required here because these will be fairly routine situations. Furthermore, I should remind the noble Lord that the Delegated Powers and Regulatory Reform Committee, having examined all the proposed delegated powers in the Bill, expressed itself content for the power in this clause to be made under the negative resolution procedure. I think that that was entirely right.
On the basis of those remarks, I hope that the noble Lord will not seek to press his amendments.
§ On Question, amendment agreed to.
§ [Amendments Nos. 222 to 228 not moved.]
§ Clause 208, as amended, agreed to.
§ Clause 209 agreed to.
§ Clause 210 [Applications]:
§
Lord Razzall moved Amendment No. 229:
166
Page 153, line 18, after "a" insert "domestic or
§ The noble Lord said: This is a small amendment which is either significant or merely a drafting point. Either the words "domestic or" have been omitted as a drafting error, or they have been omitted as a result of a principle. If it is a drafting error, no doubt the Minister will say that it will be rectified on Report. If it is a point of principle, I shall be interested to know what it is. I beg to move.
§ Baroness WilcoxI, too, am interested to hear the answer and hope that the Minister will enlighten the Committee on why Clause 210 does not refer to domestic infringements. It seems to be a discrepancy in the wording of the Bill, particularly as the 2001 regulations include that wording.
§ Lord Sainsbury of TurvilleAmendment No. 229 would enable an enforcer to make an application for an enforcement order against a person who it was believed was likely to engage in conduct which would constitute a domestic infringement. That is already the case in respect of Community infringements because we believe that it is a requirement of the injunctions directive.
Officials have discussed the issue with the Office of Fair Trading and the local authorities' co-ordinating body on regulatory services. Although we fully understand the argument in favour of giving enforcers the power to make applications to stop domestic infringements before they occur, we have not been provided with sufficient convincing cases of when the power might be used to merit extending the scope of domestic infringements in this way.
A power to prevent infringements before they occur is likely to be most useful in the field of advertising where a single misleading advertisement has the potential to harm a large number of consumers. This would be a Community infringement and, as I have already mentioned, the Bill gives enforcers the power to take action to stop likely Community infringements if necessary by making an application for an interim enforcement order. On that basis, this is not a drafting error but a clear policy decision and we believe that it is the right one.
§ Lord RazzallI thank the Minister for that answer and I am pleased that it is a policy issue. He says that the Government are not persuaded that there are sufficient examples to warrant the insertion of the words "domestic or", but I am sure that between now and the Report stage the noble Lord, Lord Borrie, the noble Baroness, Lady Wilcox, and I will be able to draw specific examples to the Government's attention. On that basis, I am happy to beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 230 not moved.]
§
Lord Kingsland moved Amendment No. 231:
Page 153, line 31, at end insert—
167
() An application for an enforcement order shall comply with the appropriate pre-action protocol and civil procedure rules for the time being in force.
§ The noble Lord said: An enforcement order under Clause 210 is an important instrument for the purpose of giving effect to the Bill when it becomes an Act. Although the application for such an order is to the regular courts of this country, nowhere is it provided that the procedure to be used is the civil procedure rules—including the pre-action protocol instituted by the noble and learned Lord, Lord Woolf, which requires substantial disclosure of the complainant's claim and evidence right at the outset of the case.
§ The effect of this early disclosure of the claimant's case will be to concentrate the defendant's mind on the likelihood of his losing and, in the case of enforcement proceedings, of remedying the alleged wrong. The amendment seeks to ensure from the outset that enforcers exercise their powers under the same rules as apply to all other parties to the civil courts; and that the civil courts make the necessary additional rules if the present rules are for the moment inadequate to cover this novel course of action. I beg to move.
§ Lord Sainsbury of TurvilleAmendment No. 231 has the same purpose as Amendment No. 232, which we did not debate, and seeks to ensure that enforcers could not bring applications to court without complying with the civil procedure rules and pre-action protocols, which are intended to enable parties to achieve an out-of-court settlement by encouraging early exchange of information by the parties.
The civil procedure rules will apply to applications under this part. The rules provide that the court will expect all parties to have complied with any relevant pre-action protocols, with non-compliance being taken into account by the court when considering costs. As such, it is unnecessary to have any additional reference to compliance within primary legislation. On that basis, I ask the noble Lord to withdraw the amendment.
§ Lord KingslandThe Minister will understand that I am not entirely happy with his reply. I shall go away and think about what he said. In the mean time, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 232 to 234 not moved.]
§ Clause 210 agreed to.
§ Clause 211 agreed to.
§ Clause 212 [Enforcement orders]:
§
Lord Razzall moved Amendment No. 235:
Page 154, line 33, at end insert—
() The court must have regard to whether the information and advice published in pursuance of section 224(1) has been adhered to by the enforcer bringing the application.
§ The noble Lord said: Amendment No. 235, which stands in my name and that of my noble friend Lord Sharman, with one drafting exception is virtually 168 identical to Amendment No. 236, which stands in the name of the noble Baroness, Lady Miller, and the noble Lords, Lord Hunt and Lord Kingsland.
§ On the face of it, the amendment speaks for itself. On these Benches and on the Conservative Benches we believe that there should be an additional clause to the effect that the court must have regard to whether the information and advice published in pursuance of Clause 224(1) has been adhered to by the enforcer bringing the application. The wording of the amendments—subject to the small addition made by the noble Lord, Lord Kingsland, to his amendment—is self-explanatory. I look forward to hearing the Minister's response. I beg to move.
§ Lord KingslandAs the noble Lord indicated, the Secretary of State will be able to give wide enforcement powers to a large number of bodies and persons—any person or body in fact, to quote Clause 208(2)(b), which the Secretary of State,
thinks has as one of its purposes the protection of the collective interests of consumers".It is not difficult to conceive that, among the chosen ones, there will be pressure groups which are frequently interested in only single issues, or organisations with particular expertise in only one specialised field. It may not always be groups such as the Consumers' Association which possess, of course, a wide spectrum of interests.At this juncture I do not want to give examples or to say anything which may seem to denigrate any organisations which the Secretary of State may see fit to designate as enforcers. But it is essential, when such pressure groups are given the wide powers that they are to have under the Bill—power to initiate and power to pursue, at the public expense, proceedings that may cost someone a vast amount of money and time to defend—that the enforcer acts in a quasi-judicial and impartial manner. That means not pursuing a particular personal agenda, however well-meaning the objective is. Impartiality in investigating, impartiality in taking proceedings and impartiality in the way in which they are pursued are all essential.
There must not be the slightest possibility suggested that—again to use the example of the OFT—the collective interest of the public, as stated in subsection (2)(a), is other than the only motivation. The interests of the supporters of a particular pressure group nominated to be an enforcer may not be the same as the collective interests of the public. That is why Clause 224 wisely stipulates that the OFT should give advice and information about the operation of this part of the Bill.
We cannot have a situation whereby different enforcers apply different criteria to the operation of the Bill and the way they perform the duties and exercise the powers that the Secretary of State gives to them. This amendment takes nothing away from the Bill or the powers that are given to the enforcers. It 169 simply ensures that the advice and guidance of the OFT is not ignored or flouted and that one enforcer acts consistently with others.
§ Lord Sainsbury of TurvilleAmendments Nos. 235 and 236 seek to require the courts, in deciding whether to make an enforcement order, to have regard to whether the enforcer has complied with any information and advice published by the OFT.
One of the reasons for giving the OFT a duty to publish advice and information is to promote a consistent approach to enforcement by the various bodies which will have enforcement powers under this part. We would certainly expect all enforcers to follow any guidance published by the OFT. This will be reinforced by the Memorandum of Understanding which each enforcer will be expected to sign with the OFT. These will be similar to the Memoranda of Understanding which the OFT is near to finalising with enforcers under the stop now orders regulations. But we do not see that there is a need to enshrine this in legislation. We also have to recognise that in many respects each enforcer will have to make its own decision on enforcement action.
Furthermore, unscrupulous traders are notorious for trying to find any loophole in the law which they can wriggle through. This amendment would give them the opportunity to use any slight actual or alleged departure from the OFT guidance as grounds for challenging why an order should not be made against them. This could significantly weaken the provisions of this part if the courts spend more time on deciding whether the OFT guidance has been completely complied with rather than the real issue before them; that is, whether or not an infringement has occurred.
The courts in any case have a discretion as to whether to make an order. We can be confident in the ability of the courts to do justice. If a court is satisfied that, although an infringement has occurred, it will not be repeated, it can decide either not to make an order or accept an undertaking from the defendant. If the court is not satisfied that the infringement will not be repeated, or the defendant does not offer an undertaking, it is unlikely to be in the public interest for an order not to be made, even if the enforcer has not complied with the guidance in every particular respect.
In view of these arguments, I invite the noble Lord to withdraw the amendment.
§ Lord RazzallI have listened with interest to the Minister's response, and superficially I have some sympathy with it. I shall read his words carefully in Hansard. In the meantime, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 236 not moved.]
§ [Amendment No. 237 had been withdrawn from the Marshalled List.]
§ [Amendment No. 238 not moved.]
170§ 11.15 p.m.
§
Lord Kingsland moved Amendment No. 239:
Page 155, line 8, at end insert —
(8A) Where any person fails to comply (whether wholly or in part) with an order made under subsection (8) the OFT may take such steps as it considers reasonable—
(8B)Any reasonable expenses incurred by the OFT under subsection (8A) may be recovered by it as a civil debt from the person whose failure it has publicised.
(8C)For the purposes of the law of defamation the publication of the order and the failure to comply therewith and a corrective statement pursuant to subsection (8A) shall be absolutely privileged.
§
The noble Lord said: Subsection (8) of Clause 212 very sensibly provides that, after the case has been made out for the issuing of an enforcement order, the court may require publication of the order and, if necessary, a corrective statement. The subsection explains that this is,
for the purpose of eliminating any continuing effect of the infringement".
This is a very sensible provision which we applaud.
§ However, what happens if the infringer does not comply with the order? Well, the court has its own methods of enforcing its orders: proceedings for contempt of court, followed by sequestration of assets or imprisonment or fines. However, these all take a long time. In the meanwhile, the objective of eliminating the continuing effects of the infringement moves further into the distance.
§ I believe that the sensible provisions of this subsection are deficient because they do not provide a speedy remedy. This amendment, giving the OFT power to insert any necessary advertisement and to recover the cost from the infringer, remedies that defect. It also covers the situation where the infringer goes out of business or disappears or is out of the jurisdiction of the court, although here the OFT might not be able to recover the expense involved.
§ Lastly, proposed new subsection (8C) protects the OFT from any defamation proceedings in the remote case of someone taking action as a result of its publishing a judgment or a corrective statement.
§ I trust that noble Lords will accept that this is a wholly constructive amendment designed to improve the Bill. I beg to move.
§ Lord Sainsbury of TurvilleAmendment No. 239 seeks to give the OFT a statutory power to publicise a failure by a person to comply with a court order requiring him to publish either its decision that he should not engage in conduct which constitutes an infringement, or a corrective statement. It would also give the OFT the power to publish the order and a corrective statement complying with the order. The OFT would be able to recover from that person any reasonable expenses it incurs in doing so and could not be sued under the law of defamation for any inaccuracy in the information published.
171 We believe that the court will make an order requiring the defendant to publish its decision or a corrective statement only when there is a real risk that consumers could continue to suffer harm from a past infringement. An obvious example would be where an advertisement had been found to be misleading. The court could then decide that the defendant should publish a corrective advertisement of equal prominence to the misleading advertisement, to stop consumers acting on the basis of the original misleading information.
Where the court makes such an order, I certainly agree that the defendant should comply with its decision as he should with any other order the court may make. However, where the OFT or the enforcer who made the original application believes that a person has failed to comply with the order, I believe that the appropriate and proportionate response would be for it to make a further application to the court, under Clause 214 of this Bill, to enforce the order. This further application might lead the court to find that its order had been breached and that the defendant is in contempt of court. The OFT or the enforcer may then wish to give publicity to those further proceedings. However, an express power to do so is not necessary because publication will be permitted under Clause 236 as it will facilitate the exercise by the OFT of its functions under this part.
As is already the case under the stop now orders regulations, it is the OFT's intention to publicise information on completed cases under this part, including details of the court's order and any order made in further proceedings to enforce the original order or undertaking to the court. In doing so, we would expect any publicity to be accurate, balanced and fair to the trader.
However, it is not clear whether this amendment is intended to apply only if the court holds that the person has not complied or whether the OFT's view is sufficient. Subsection (8C) of this amendment appears to give the OFT absolute privilege in relation to the law of defamation, even if the court later found there was no failure. This would have the potential to cause significant and irreparable harm to the reputation of a business if an alleged failure was publicised by an enforcer before a court had ruled on it, and the court subsequently did not uphold the enforcer's view, leaving the business with no redress. The OFT does not need absolute privilege if it is publishing details of a court order made in further proceedings because a claim for defamation could not possibly succeed in those circumstances.
I hope that on the basis of that argument the noble Lord, Lord Kingsland, will withdraw the amendment.
§ Lord KingslandI am most grateful to the Minister for his response. I take the point about the proposed subsection (8C). I shall reflect on it between now and Report and on whether to bring back the amendment. In the meantime, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§
Lord Kingsland moved Amendment No. 240:
Page 155, line 26, at end insert—
() Where the court determines that the person named in the application is not engaged in (or was not at the time of the application engaged in) conduct which constitutes an infringement and that therefore the application brought under section 210 or 213 has failed, the court shall make an order that the enforcer shall bear the costs of that application and reimburse the respondent for his reasonable costs and expenses in defending the claim.
§ The noble Lord said: Under the Bill, when it becomes law, any one of the enforcers appointed by the Secretary of State will be given the power to take any business to court for some alleged infringement of consumer rights. Supposing it loses, what happens then? There is nothing to prevent it from making repeated applications to the court, of course, based on slightly different facts. In other words, an enforcer can take several bites of the cherry.
§ But even if there is only one unsuccessful complaint, the person who has been exonerated should, in my submission, be entitled to recover the costs and expenses of defending the case. These claims will be brought in the regular courts which have power to award costs to successful parties. The amendment seeks to ensure that the courts will follow that procedure in cases brought under this Bill when enacted. I beg to move.
§ Lord Sainsbury of TurvilleWe believe that in court proceedings under Part 8, the normal rules as to costs, or in Scotland, expenses, should apply. The rules on costs in the Civil Procedure Rules will apply.
The general rule is that costs should follow the event, so that if the enforcer does not succeed and no order or undertaking to the court is made the enforcer will normally be ordered by the court to pay the business's costs. This will deter enforcers from behaving improperly or unreasonably, or from pursuing frivolous or ill-considered proceedings.
But the courts have discretion to depart from the general rule. For example, if a business has withheld important information from the enforcer which would have made proceedings unnecessary, it may be right for it to bear its own costs or part of them, even if no order is made. In other cases where an enforcer has not behaved reasonably in conducting a case it might be right for the enforcer to bear its own costs or even some of the business's costs even where an order is made. It is right that the court, which will know the circumstances of the particular case and the way it has been conducted by the parties, should have discretion. In those circumstances I ask the noble Lord to withdraw the amendment.
§ Lord KingslandI am entirely happy with that reply. I understand that the noble Lord is saying that the regime of costs which will apply to these actions will be exactly the same as the general regime applying to all civil actions. In those circumstances I am happy to beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 212 agreed to.
§ Clause 213 [Interim enforcement order]:
§ [Amendment No. 241 not moved.]
§ Clause 213 agreed to.
§ Clauses 214 to 218 agreed to.
§ Clause 219 [OFT]:
§ [Amendment No. 242 not moved.]
§ Clause 219 agreed to.
§ Clause 220 [Other enforcers]:
§ [Amendment No. 243 not moved.]
§ Clause 220 agreed to.
§ Clauses 221 to 223 agreed to.
§ Clause 224 [Advice and information]:
§
Lord Razzall moved Amendment No. 244:
Page 162, line 22, leave out from beginning to second "the" and insert "Before the Act comes into effect
§ The noble Lord said: In moving the amendment, I speak also to Amendments Nos. 244 to 249 and 251, some of which stand in my name and that of my noble friend Lord Sharman; and some stand in the name of noble Lords on the Conservative Benches. Other noble Lords may wish to speak to them.
§ We want to probe the Government on the clarity, transparency and awareness of the community as regards the law. It is not an attempt to restrict or to disagree with the powers of the legislation. If the law is clear, we believe that it will be more readily observed. I give an example, relevant to Clause 224, in order to explain Amendment No. 244. Significant representations have been made to us, and no doubt the Government, regarding the operation of stop now orders by the Office of Fair Trading. It started to give them in. April/May or even June 2001. Guidance regarding those stop now orders was not apparent to certain elements of the business community until at least 12 months later. In those circumstances, the amendment gives the necessary clarity. I beg to move.
§ Lord Hunt of WirralI rise to speak to Amendment No. 245. I agree with the noble Lord, Lord Razzall. The advice and information referred to in Clause 224 will be crucially important in setting out the procedure and processes under which the enforcement orders will be operated. We have received advice from a number of organisations, in particular the CBI, stressing how essential it is that all parties should be clear about the way in which the new enforcement powers under Part 8 will be exercised. As the noble Lord and others have already pointed out, the powers are new and range widely.. They can be exercised by a number of different enforcers. It is our intention, therefore, that transparency of process and procedural safeguards are vital; and this part of the Bill should not come into force until the guidance is available.
The concerns which have arisen in relation to the stop now orders regulations remind us that full guidance was not available for a considerable time following the introduction of the regulations. I 174 understand that that guidance was not available for 10 months. Despite that, the Office of Fair Trading took action against business under the regulations from the day on which they came in to effect. Surely all parties, including business, are entitled to clarity of process. We look forward to receiving the reassurance from the Minister that we seek.
Amendments Nos. 246 and 247 leave out "may" and insert "must". It must be clear exactly how the OFT intends to exercise powers under this part of the Bill, including the criteria which the OFT will use in deciding whether to challenge business activity and how it will conduct that investigation. Business needs to know that standards of natural justice will be respected, which is why we contend that the OFT must have a positive obligation to publish information on those factors rather than the present permissive provision. I look forward to the Minister's response.
§ 11.30 p.m.
§ Lord Sainsbury of TurvilleI shall speak to Amendments Nos. 244 to 249 and Amendment No. 251.
Amendments Nos. 244 and 245 would ensure that the Secretary of State does not bring this part of the Bill into force before the OFT has published advice and information explaining the provisions of this part and how it expects them to operate in practice. I fully understand why the amendments have been tabled given business concerns that it will be helpful to them to understand the OFT's approach to its functions under the part, including its co-ordinating role, before the Bill comes into force.
However, this part requires a number of orders to be made by the Secretary of State before it can be brought into force. Foremost among those are the orders listing the legislation and common late duties for the purpose of domestic infringements on which we shall certainly wish to consult widely. Our consultation will follow the Cabinet Office code of practice on written consultation and allow 12 weeks for consultation. We also intend to follow the existing guidance to allow a further 12 weeks between making the orders and their coming into force. The result is that this part will not be brought into force hastily.
I can also reassure the Committee that it is the Government's intention that this part should not come into force before the OFT's guidance on the provisions and operation of this part are published. However, I do not think that it is necessary to specify that on the face of the Bill.
Amendment No. 246 would ensure that guidance published by the OFT always includes guidance about the factors which the OFT may take into account in considering how to exercise the functions conferred on it under this part. Amendment No. 247 then seeks to ensure that the OFT always takes these factors into account when exercising its functions under this part. While I understand the reason for the amendments, I am not convinced that they would achieve their intended purpose.
175 Amendment No. 246 would by implication create a presumption that the list of factors published in the guidance was a complete and exhaustive list of the factors that the OFT would need to take into account. That would in effect require the OFT to attempt to forecast all the conceivable ways in which the power in this part may be used and then identify all the possible relevant factors that it may need to take into account in any particular case. I am sure that the Committee will agree that with the best will in the world that would be an unrealistic challenge for the OFT, at least until it had gained considerable experience of how this part will work in practice.
Amendment No. 247 would then effectively bind the OFT to taking those factors into account to the exclusion of all others. The OFT would have no discretion not to take a particular factor into account even when to do so would be in the interests of business. Also, because the list would by implication be exhaustive the OFT would not be able to take any other factors into account even if there were relevant factors in a particular case that would be beneficial to business. The normal principles of administrative law will require the OFT and other enforcers to take into account all relevant factors and disregard irrelevant factors in the circumstances of each case.
Amendment No. 248 would change the reference in subsection (5) from,
If the OFT is preparing advice and information under this section" to "when" it is doing so. I agree with what the amendment seeks to achieve, given that this clause requires the OFT to produce such guidance. I shall therefore take this away and table a government amendment on Report.Amendments Nos. 249 and 251 would ensure that the advice and information published by the OFT include guidance on the approach that should be followed by other enforcers when taking action under this part. I certainly agree that the OFT should be capable of giving general guidance on the approach of other enforcers as well as its own. That will be essential if there is to be a consistent approach to enforcement by the various parties that will have enforcement powers under this part. The OFT does not have a general power to direct the activities of trading standards departments, which are part of local authorities, and we do not think it would be appropriate to give the OFT such a power.I expect that advice and information will set out the underlying principles that action should be appropriate and proportionate, brought by the appropriate body, and that businesses should be given a reasonable opportunity to put matters right with negotiation. It should also include advice on the procedures which should be followed by enforcement bodies when taking forward cases under this part. For example, we would expect the process to begin with a letter to the business, providing details of the business activity or practice giving cause for concern and inviting the business to enter into negotiation with the enforcer.
176 That is the type of information that the OFT has produced in its recently published guidance on the stop now orders regulations, which received broad support from business. We do not therefore see a need to enshrine that requirement in legislation. Subsection (6) does of course itself require the OFT to consult other enforcers in preparing its advice and information.
In view of those arguments, I invite the noble Lord to withdraw the amendment.
§ Lord RazzallIt is late and I tried very hard to listen to what the Minister said. As I said earlier, the purpose of Amendment No. 244, which stands in my name and that of my noble friend Lord Sharman, and that of the amendments standing in the name of the noble Lord, Lord Hunt—although he will speak for himself—is to ensure that those who have to observe the legislation are clear about what the law says and about what guidance will be adopted. The Minister's comments on the various amendments suggest that the Government accept that general point. The Minister's approach—of not bringing into effect the relevant sections until the guidance is available or of bringing another provision back on Report—appears to meet our points. I shall read his response in Hansard. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 245 to 249 not moved.]
§ [Amendment No. 250 had been withdrawn from the Marshalled List.]
§ [Amendment No. 251 not moved.]
§ Clause 224 agreed to.
§ Clauses 225 and 226 agreed to.
§
Lord Hunt of Wirral moved Amendment No. 252:
After Clause 226, insert the following new clause—
§ "DESTINATION OF FINES IMPOSED BY THE OFT
- (1)The OFT will consider whether any fines which it imposes under Chapter I or II of the 1998 Act might be applied for any purpose or purposes which could contribute towards remedying harm suffered by consumers generally (but not as individuals) as a result of the infringements of those provisions.
- (2)The OFT may, in pursuance of subsection (1), make such directions as it considers appropriate.
- (3)No action shall lie in any court (including for a judicial review) against any decision made by the OFT under subsections (1) and (2), including a decision not to apply to any fines for the purposes described in subsection (1)."
§ The noble Lord said: The amendment was first proposed by my honourable friends in the other place, led by John Whittingdale. However, it was not called there because of the operation of the guillotine. We have now added a further subsection: subsection (3), to which I shall return in a moment.
§
The new clause refers to the substantial fines—possibly running into millions of pounds—that the OFT can levy for breaches of the Competition Act 1998. Without specific provision, those fines will just alleviate the general burden of taxation. In this case, the fines would be levied because harm had been done to what Clause 208 refers to as,
the collective interests of consumers".
177
In the very litigious United States of America, there is a whole industry for bringing class actions in such cases, which I hope we never see within the confines of the United Kingdom. There are already actions going on in respect of alleged mis-selling of various financial services products. In this regard, we are dealing with fines that have been imposed because harm has been done to the collective interests of consumers. When the Office of Fair Trading levies a huge fine, it is my contention that that fine should, wherever possible, be used to alleviate the wrong suffered by the public.
§ Of course, it is very difficult to identify the members of the public who have lost out or suffered damage. But we have seen instances where the regulator has made certain utilities reduce their charges when it was thought appropriate for them to do so, bringing direct benefit to the consumers involved.
§ Therefore, it is our contention that it should not be impossible for some imaginative mind to provide in some way for discounts against the future supply of goods and services or to inaugurate a simple claim for a limited fixed amount of compensation where people can prove that they bought goods or services from the offending company or organisation which has been subjected to a substantial fine. If consumers in a particular locality are involved, the fine could be distributed to local authorities for the improvement of specific services which fall within the tenor of the fine.
§ In this amendment, we are asking the Government to respond to the overall intention, which is to find some way of compensating those who have suffered. In the amendment, the OFT is asked only to consider whether the fines could be used in that way. Under proposed new subsection (2) it is given the discretion to make such directions as it thinks appropriate.
§ However, the amendment differs from that submitted in the other place in that a new subsection (3) has been added. That subsection protects the OFT from being sued by someone for the way in which it has or has not exercised its discretionary powers under the clause.
§ The new clause makes it clear that, in exercising its considerable powers of punishment for serious infractions of the 1998 Act, the OFT is not simply the gatherer of yet another tax and that it should exercise its powers when reasonable and possible for the benefit of those harmed by some wrongful conduct. I beg to move.
§ Lord BorriePerhaps I may make a quick comment. I had not really considered this matter before I saw the amendment earlier today. I can see in principle the point that the noble Lord, Lord Hunt, seeks to make—that is, remedying harm suffered by consumers generally. The collective interests of consumers have been harmed and therefore they should be compensated.
But one or two examples that the noble Lord gave seemed to me to assist consumers as individuals or many individuals. Yet, in brackets in the amendment, he seeks not to do that. It seems to me that the main answer to the noble Lord—I hope that the amendment 178 will not be accepted—is that he is asking for something that is far too difficult to achieve in practice. He does not like the idea of the fines going to the general taxpayer, but, by and large, that is probably the best judgment of Solomon that could be made in the circumstances.
I do not believe that the example of the utilities is appropriate because almost everyone in an area has to take gas, electricity or water. Therefore, a discount on prices may be the most reasonable remedy if the utility has failed the public and broken its obligations. But I believe that the noble Lord is asking for the impossible, and the OFT would find it extremely difficult in almost any circumstance to come to a judgment that was seen to be fair and just.
§ Lord Sainsbury of TurvilleThese amendments would allow the OFT to direct that fines which it has imposed in respect of infringements of competition law be used for purposes that would help to remedy the harm suffered by a general class of consumer as a result of those infringements.
Like noble Lords opposite, I am keen to encourage projects or activities that benefit consumers. But Clause 270 already sets out the Secretary of State's power to do that. The new consumer grants fund that we shall establish for the purpose of that power could be used to give financial assistance to projects in areas where a general class of consumers has suffered harm but where it is not possible for all the individual consumers concerned either to be identified or to seek redress.
One of our priorities will be to fund projects relating to the markets in which the OFT has established a breach of competition law. A good example of the kind of work that we would like to mirror here comes from the 1980s when Rover Cars were found to be using anti-competitive practices. By the time that emerged, it was no longer possible to identify the consumers who had lost out. Rover donated £750,000 to the Consumers' Association to establish a self-financing information service for car buyers in the UK and £250,000 to the Research Institute for Consumer Affairs to help fund its ability car programme—a programme of research, information and action relating to goods and services for disabled motorists. Obviously, we would not be talking about company donations, but the work for which this donation was used is a helpful example of the kind of activity that we shall be considering.
Under our proposals, we shall also be able to use the fund for a wider range of projects or other work that would benefit consumers—not just those who have suffered from specific anti-competitive practices. That may include, for example, promoting knowledge and understanding of consumer rights and how to obtain redress when things go wrong; providing information and advice to assist consumers to decide which goods and services to buy—for example, through impartial product research and comparative surveys; projects to benefit socially or economically vulnerable consumers; 179 or projects to benefit disadvantaged groups who have special needs as consumers. But those are only illustrative examples.
The important point is that our proposals will already allow financial assistance to be given to projects that benefit consumers who have suffered from anti-competitive practices for which fines have been imposed under the Competition Act. But they will benefit consumers more widely, too, and will ensure that a more strategic view is taken both of the consumer issues that need addressing and of the funding available. By their very nature, fines are unpredictable, both in timing and amount. Therefore, consumer benefits linked to them would also necessarily be erratic and unpredictable. Furthermore, fines can be imposed under the Competition Act only where the undertaking concerned has acted intentionally or negligently. Although those will frequently be the cases in which most damage has been done to consumers, harm may also be done in other cases. In instances where the imposition of a fine is to act as a trigger for the use of the fund, given the scope for companies to dispute the fines, tenders for projects could be established as soon as the fine is levied, rather than paid, making the scheme more agile and timely.
All those measures are additional to our continuing ability under Clause 270 to fund bodies that promote the interests of consumers, such as the NCC. My department also has powers outside the Bill to spend money directly on consumer protection activities. For 180 those reasons, I believe that our proposals are better for consumers than the amendments and make the amendments unnecessary. I would add that subsection (3) of Amendment No. 252 attempts to remove the proposed fine-allocation decisions of the OFT from the scope of judicial review. I am not convinced that that would be found acceptable as a matter of propriety.
In view of those arguments, I hope that the amendment will be withdrawn.
§ 11.45 p.m.
§ Lord Hunt of WirralI am pleased that the Minister resisted the exhortation of his noble friend Lord Borrie to allow these sums to fall into the general body of taxation, but rather responded in a very constructive and positive manner, for which I am most grateful. I shall take time to reflect on what he said. Meanwhile, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 253 not moved.]
§ Clauses 227 to 232 agreed to.
§ Lord Davies of OldhamI beg to move that the House do now resume.
§ Moved accordingly, and, on Question, Motion agreed to.
§ House resumed.
§ House adjourned at ten minutes before midnight.