HL Deb 15 October 2002 vol 639 cc732-53

5.12 p.m.

Consideration of amendments on Report resumed on Clause 1.

[Amendment No. 3 not moved.]

Schedule 1 [The Office of Fair Trading]:

Lord Hunt of Wirral moved Amendments Nos. 4 and 5:

Page 195, line 5, after "chairman," insert "a chief executive,"

Page 195, line 7, after "chairman" insert "and the chief executive"

On Question, amendments agreed to.

Lord Graham of Edmonton moved Amendment No.6:

Page 195, line 8, at end insert— ( ) The chairman and members shall be broadly representative of interests in the area of responsibility of the OFT.

The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendment No. 7, which relates to line 8 on page 195. It reads: Members shall be appointed on the basis of their expertise in areas of responsibility of the OFT and such expertise shall not disqualify them on the grounds of conflict of interest".

I begin by declaring marginal interests: I continue to have active links with the Co-operative Movement and with the British Retail Consortium, with both of which I have had useful consultations.

In striking at this aspect of the Bill, perhaps I may say how pleased I was to be present for the earlier debate when Members on all sides of the House spoke clearly and with authority. They did the Bill proud—I do not refer to the result of the vote, but to the intelligence that they brought to the debate from their experience elsewhere. I was delighted to be present.

These matters were raised at an earlier stage. I simply want to remind the Minister that I welcome the main thrust of the reform of the OFT; namely, its transformation into a board, the requirements for an annual plan and its new remit for promoting the benefits of competition for consumers and the economy.

These amendments take up an idea introduced in earlier amendments by the noble Lord, Lord Hunt. They support the Bill, but attempt to shape or re-shape its provisions by obtaining from the Minister intelligence and advice on what he and his colleagues have in mind as regards those who will carry out its provisions.

The noble Lord, Lord Hunt, posed the 64,000 dollar question: who regulates the regulators? It is no good saying after the event that we ought to have done such and such; or the Minister saying, "If only you had only mentioned this, I could have taken it into account". The purpose of my amendments is to seek assurances from the Minister that the thrust of what I seek is taken care of in the Bill in general—in which case he will no doubt be kind enough to point that out to me.

I should be interested in hearing from the Minister how, for example, the process of selecting the members will take place. The noble Lord, Lord Hunt—that is the third and last time that I shall mention him in this debate—drew attention to the advertisement that had appeared giving some indication, but that is not sufficient to satisfy me.

The Minister is aware of my strong connection with the Co-operative Movement, which is a consumer movement. I am naturally interested in hearing from him the steps that he and his colleagues have in mind to ensure that those who have wide experience of consumer matters will be considered. I do not mean opening the drawer of the great and the good, pulling out names and saying that it is the turn of this or that person. I should like to hear what he has in mind in terms of trawling over the wide range of people—north and south, male and female, black and white—who are prominent in the consumer movement. A great deal of legislation comes to us these days from Brussels. Do the Minister and his colleagues have the European dimension in mind when considering who will serve on boards?

We should not be looking for people who are "experts" or even "authorities" in these matters. I am always prepared, when reading a list of people who are to serve on a committee, not to know any of them. Then, when I look into their credentials, I am pleasantly surprised to see how well qualified they are, even to my untutored mind. Within the confines of the Bill, the Minister has a great deal to offer to us. I beg to move.

Lord Sainsbury of Turville

My Lords, I shall speak to Amendments Nos. 17 to 21. These amendments respond to points made by noble Lords in Committee and fulfil commitments I made to agree to consider these points further. I shall speak also to Amendments Nos. 6 and 7.

Amendments Nos. 17 and 18 require the OFT to publish a summary of its rules and procedures for dealing with conflicts of interest. The OFT is already required to consult the Secretary of State when drawing up these rules and procedures. The publication of a summary of them under this amendment will ensure transparency in how the OFT conducts itself in this important area. The amendments are in response to an amendment tabled in Committee by the noble Lord, Lord Kingsland, the noble Baroness, Lady Miller, and the noble Lord, Lord Hunt.

Amendments Nos. 19 and 20 require the OFT to lay the proposals for its annual plan, as well as the final version, before Parliament and to hold a public consultation on the proposals at least two months before the final version is published. This removes the discretion that the OFT currently has under the Bill to consult such persons "as it considers appropriate", and, I hope, satisfies noble Lords' concerns that the OFT should consult widely on the plan. These amendments respond to an amendment by the noble Lords, Lord Kingsland and Lord Hunt, and the noble Baroness, Lady Miller, in Committee.

Amendment No. 21 provides additional requirements for the content of the OFT's annual report. Noble Lords expressed concern in Committee that more detail should be placed on the face of the Bill. The amendment provides for significant new requirements covering the main activities and investigations over the year, the allocation of financial resources and enforcement practices and performance. This last requirement would include, for example, an assessment of how OFT has complied with the Enforcement Concordat, which I believe will be welcomed by business. This amendment responds to amendments tabled by my noble friend Lord Graham, the noble Lords, Lord Kingsland, Lord Hunt, Lord Razzall and Lord Sharman, and the noble Baroness, Lady Miller, in Committee.

Amendments Nos. 6 and 7, tabled by my noble friend Lord Graham, seek to ensure that the OFT board is made up of people who are representative of the key areas of OFT responsibility and that such people will not be disqualified from taking up board appointments on grounds of conflict of interest. We will be holding a fair and open competition for non-executive board posts in accordance with Nolan procedures. In answer to the points made by my noble friend, I hope very much that this will not consist of the great and the good but of people who can bring some real skills to this area.

The range of skills and qualities that we are looking for may mean that some members of the board will be drawn from, for example, competition, consumer or business backgrounds, and it is to be hoped that some will have experience of European matters. Our aim is to appoint the best candidates, not to have quotas or de facto appointments representing certain interests. Although board members are likely to have other outside interests, they will be appointed to the board in their own right, not as representatives of a particular interest. Their role on the board will be to see that the OFT takes the right strategic decisions to fulfil its functions effectively and to achieve its goal of making markets work for consumers.

We want to appoint the best people to give the OFT a strong and strategic board with a balance of skills, expertise and abilities. Experience of, for example, general management or strategic skills will be as valuable to the board as a wide-ranging and in-depth experience of competition and consumer issues, but not every candidate need necessarily have all these qualities, skills and expertise in all these areas.

I reassure my noble friend that candidates with backgrounds relevant to OFT's responsibility will not automatically be disqualified from taking up board appointments on grounds of conflict of interests. Provided that they comply with the OFT rules and procedures on conflicts of interest, which I mentioned, there is no need for them to be disqualified. It is unnecessary to set this out on the face of the Bill. If noble Lords agree with the amendments that I am moving in this group, the Bill will be clear that OFT will have published rules and procedures for dealing with conflicts of interest, and board members will have to act in accordance with these or face removal by the Secretary of State. I do not think that there is any need to add anything more to the Bill. In view of these arguments, I hope that my noble friend will feel able to withdraw his amendments.

Baroness Oppenheim-Barnes

My Lords, before the Minister sits down, can he make it clear that there is no intention to impose any kind of positive discrimination in the appointments, and that the best people for the job will be chosen, regardless of whether they are all men, all women, all black or all white?

Lord Sainsbury of Turville

My Lords, I can give the assurance that the best people for the job will be appointed.

Lord Graham of Edmonton

My Lords, I am grateful to the Minister, in particular for moving his amendments, which go further along the road towards what I was asking for. I get the impression that he is looking for a balance in which there is not a predominance of those with experience in retailing, production, finance or any other field. I was heartened by his reference to the possibility that there would be someone, or perhaps more than one person, with experience of the European regulatory regime. The Minister can be satisfied that I intend to withdraw my amendments, and I am grateful to him for his comments on his own amendments.

Amendment, by leave, withdrawn.

[Amendment No. 7 not moved.]

Lord Hunt of Wirral moved Amendments Nos. 8 to 16:

Page 195, line 10, after "chairman" insert ", the chief executive"

Page 195, line 12, after "chairman" insert ", the chief executive"

Page 195, line 14, after "chairman" insert", chief executive"

Page 195, line 16, after "chairman" insert ", chief executive"

Page 195, line 21, after "chairman" insert ", chief executive,"

Page 195, line 22, leave out "either" and insert "any"

Page 195, line 23, after "chairman" insert ", chief executive"

Page 195, line 29, after "chairman" insert ", chief executive"

Page 195, line 33, after "chairman" insert ", chief executive"

On Question, amendments agreed to.

Lord Sainsbury of Turville moved Amendments Nos. 17 and 18:

Page 196, line 11, at end insert "rules and"

Page 196, line 12, at end insert— (3) The OFT shall from time to time publish a summary of its rules and procedures for dealing with conflicts of interest.

On Question, amendments agreed to.

Clause 3 [Annual plan]:

Lord Sainsbury of Turville moved Amendments Nos. 19 and 20:

Page 2, line 13, leave out subsection (2) and insert— (2) The OFT shall for the purposes of public consultation publish a document containing proposals for its annual plan at least two months before publishing the annual plan for any year.

Page 2, line 15, leave out from "lay" to end of line and insert "before Parliament a copy of each document published under subsection (2) and each annual plan"

On Question, amendments agreed to.

Clause 4 [Annual and other reports]:

Lord Sainsbury of Turville moved Amendment No. 21:

Page 2, line 24, at end insert— (c) a summary of the significant decisions, investigations or other activities made or carried out by the OFT during the year; (d) a summary of the allocation of the OFT's financial resources to its various activities during the year; and (e) an assessment of the OFT's performance and practices in relation to its enforcement functions.

On Question, amendment agreed to.

Clause 6 [Provision of information etc. to the public]:

Lord Phillips of Sudbury moved Amendment No. 22:

Page 3, line 3, after "competition" insert "within a context of social community and environmental responsibility"

The noble Lord said: My Lords, this amendment is comparable to the one moved in Committee, when a number of your Lordships spoke in support of it. Clause 6, entitled "Provision of information etc. to the public", is divided into two parts.

We have no quarrel whatever with Clause 6(1)(b), which gives the OFT the function of giving information or advice in respect of matters relating to any of its functions to the public". That seems to us on these Benches to be absolutely sensible. It is Clause 6(1)(a) that concerns us. It talks of making the public aware of the ways in which competition may benefit consumers in, and the economy of, the United Kingdom". That provision is buttressed by Clause 6(2)(a), which gives the OFT the power to publish educational material and, in the following subsection, to commission any independent group, body or organisation to produce materials or carry out education. In simple terms, the concern on these Benches is that for education, particularly in schools, one needs a broader matrix than the bare one provided by Clause 6. That is particularly the case given that Clause 6 refers only to promoting public awareness of the benefits of competition. Much heat was generated at Committee stage, during which the Minister expressed himself to be passionate about competition. He said that competition does indeed benefit consumers. We agree. He added that the best form of consumer protection is choice. We agree.

The argument on this amendment is not about free marketeers and anti-free marketeers; it is about the simple fact, which is no great secret, that competition comes in many forms and not all of it is desirable. Let me give a couple of examples of competition that is lawful and certainly red of tooth and claw. What about a firm that exploits foreign workers in their working conditions and pay? That is perfectly lawful. Indeed, one could say that if one were a real competitor in the real, tough economic world, the more we exploit foreign workers to produce cheap products for the shelves here, and to make a profit, the better. But plainly that is not the view of the majority in this House, and I would be staggered if it were the Minister's view. What about, for example, environmental issues? The reckless despoliation of the environment is not unlawful, but it could be highly competitive if one takes a narrow view of that concept. I know that the Minister does not and I read his words only because I want to suggest that both the quotes I gave need to be couched within a broader context of social, community and environmental awareness and responsibility.

I have used those words in the amendment because they appear in the model Companies Bill, which was published after a huge amount of work by the commission sitting on the reform of company law under Dame Mary Arden. Those three words are to be found in Clause 75 of the draft Companies Bill, which talks about the duties to consider, including other matters, in operating and financial reviews of larger companies. Those matters include, the companies' policies on environmental issues; the companies' policies on social and community issues".

There is therefore no doctrinal difference between us and the Government on this clause. The difference lies simply and solely around the issue of education in schools. It has nothing to do with the regulation of business or anything else, but with education in schools. And it is the Government's firm policy that education in schools, which will come as part of the citizenship curriculum, must be broad, impartial and fair.

I refer to what was said by the noble Lord, Lord Borrie, in Committee. The Minister may say that nothing the OFT will do will be less than unbiased and fair and non-propagandist. The noble Lord said: it strikes me that the specific functions of the OFT in the Bill and in the Competition Act are partisan in the promotion of competition. More balanced judgments are made by the Competition Commission and others. In future, it will be part of the job of the Office of Fair Trading, as it has been in the past 30 years, to be partisan in those respects".—[Official Report, 16/6/02; col. 1156.] We are saying, "Fair enough in all that it does, but not fair enough in schools". It runs directly counter to the obligations which the Government have imposed on themselves statutorily. I read that the statutory order imposing citizenship education directs that pupils should be taught about, how the economy functions, including the role of business and financial services…the rights and responsibilities of consumers, employers and employees…the wider issues and challenges of global interdependence and responsibility, including sustainable development". That last phrase replicates in crude terms what the amendment puts into the Bill.

I urge the Government to take a step back and accept that if they are taking, as they are, a specific power on the part of the OFT to educate in schools—or, worse, to get others to do it for them—they must accept that in that regard, if no other, they ought to couch it in a wider social, moral and environmental context. I beg to move.

5.30 p.m.

Baroness Oppenheim-Barnes

My Lords, I apologise in advance to the noble Lord, Lord Phillips, if I sound churlish about the amendment. When I first looked at the amendment, I said to myself, "Oh dear". When I looked at it again, I said, "I absolutely hate this amendment".

At one time I had responsibility for these matters. In order to demonstrate to your Lordships how prejudiced I was in this respect—and the noble Lord, Lord Borrie, will remember it well—I confess that I used to complain bitterly about the public interest criteria in Monopolies and Mergers Commission findings. I felt that it was not narrow enough; I wanted, purely and simply, public interest struck out and the consumer interest put in.

To become too diverse in this matter is to take away from the consumer interest. It is a pure interest and one which is already covered well in the Bill, as quoted by the noble Lord. Employment legislation deals with a great deal of what he has said and other legislation deals with other factors he has raised. In my experience, it is difficult enough to teach children in schools their simple rights and obligations as consumers. So many people have tried to do it and I challenge the noble Lord to go into schools and to question children—even those in the upper classes—about their rights and obligations as consumers. Even today, with all the work that has been done, few will have the slightest idea. That is due in part to the fact that we have had a great deal of confusing legislation, but the fact remains. I would be against any amendment which in these matters sought in any way to mitigate against the pure consumer interest and which would go further than the other issues named in the Bill.

Baroness Howe of Idlicote

My Lords, I support the amendment tabled by the noble Lord, Lord Phillips, and I do so for two reasons. First, I declare an interest in that I chair a foundation for the environment which was set up some 10 years ago by BOC. We have funded the encouragement of the dissemination of information on the environment to schoolchildren. I therefore believe that this is an important area as regards good governance, social responsibility and the environment. I must also report that from everything the foundation has picked up subsequently we know that children and young people are far more alive to the benefits for the consumer of having such issues taken into account.

The second reason I support the amendment is the importance to competition. Without doubt, the bottom line benefits from the growing acknowledgement by companies that their customers, the citizens of their country, want them to be good corporate, community-involved bodies in the broad sense and to follow good environmental practices.

I therefore warmly support the amendment and I hope that if it is not accepted at least the OFT, with its new responsibilities in this regard, will take on board the aims behind it. I warmly approve of them.

Lord Hodgson of Astley Abbotts

My Lords, my Amendment No. 23 is in this group. I have a great deal of sympathy with what the noble Lord, Lord Phillips, is trying to achieve. I do not want to go over issues debated in Committee, but I have read carefully what the Minister said on that occasion. I did not find his words convincing.

The amendment refers to Clause 6, the heading of which is, Provision of information etc. to the public". It is not the provision of information; it is the provision of one side of the argument. Therefore, the heading of the clause is misleading in terms of what is contained in the clause. My amendment seeks to remove the word "benefit" and insert the word "effect", which is a more even-handed way of dealing with the issue.

The OFT is a regulatory body; it holds the reins. It needs to be seen to be even-handed, not a propagandist for one side of the argument. That is not to say that the operation of the market is not important and is not supported by me and all other noble Lords in the House. It is an educational role, but not a propagandist role. Let the public know about competition. In Committee, replying to the noble Lord, Lord Phillips of Sudbury, the Minister said: Quite simply, I believe that we should require the OFT to concentrate and focus on its primary task; namely, the promotion of competition. We should have the confidence to let it promote the benefits of competition, because that is its role".—[Official Report 16/7/02; col. 1159.] The Minister, however, has given only half its role. The OFT's role is actually to hold the ring, not to speak in that particular way.

We have already referred today to the Financial Services and Markets Act 2000. As I was a member of one of the regulatory bodies—the Securities and Futures Authority—subsumed under the FSMA, I learned a little about the discussions in your Lordships' House, before I became a Member, about the roles given to the Financial Services Authority. Section 2(2)(b) of the Act states that one of the FSA's regulatory objectives is to promote "public awareness", which is a perfectly fair objective. The Act goes on, in Section 4, to explain what is meant by "public awareness". It states: The public awareness is: promoting public understanding of the financial system… It includes, in particular—promoting awareness of the benefits and risks associated with different kinds of investment or other financial dealings". The duty to inform and educate the public and to help them understand what happens in the financial services arena is therefore absolutely fairly and squarely defined and imposed on the Financial Services Authority. It is Clause 6 of the Bill that is lopsided and should be made much more even-handed.

Lord Hunt of Wirral

My Lords, I rise with some trepidation because I think that I am about to disagree for the first time with my noble friend Lady Oppenheim-Barnes. I feel trepidation because, in 1979, as Parliamentary Private Secretary to the then Secretary of State, I was one of my noble friend's very junior administration members when she took through, against all the odds, the Price Commission (Amendment) Act 1979 which abolished the Price Commission. I have always had the profoundest respect for all that she utters—at least until today when she said that she did not agree with these amendments, particularly Amendment No. 22. I agree with her on the issue of consumers, but I think that the attraction of this amendment is that it seeks to put competition itself in a context of responsibility as expressed by the noble Lord, Lord Phillips of Sudbury.

I listened to my noble friend Lord Hodgson of Astley Abbots when we debated this issue in Committee. Now that we have had some tautological discussion about "affect" or "effect", I think that it is entirely apposite to insert the word "affect" in place of "benefit". I agree with the noble Baroness, Lady Howe of Idlicote, that these two amendments would be beneficial to the way in which the OFT will perform its functions. I hope that the Minister will see the amendments as genuine attempts to try to present a balanced approach. As my noble friend Lord Hodgson of Astley Abbots put it, we have to try to strike a proper balance between competition per se for its own sake and the more interesting discussion of ways in which it can affect consumers either positively or negatively.

While I am on my feet—I wanted to do this in our debate on an earlier group of amendments—I should like to thank the Minister for listening in Committee to my noble friends and to other noble Lords We are grateful to him for having listened and coming forward with those amendments on Report. I hope that he will listen and be as positive about these two amendments as well.

5.45 p.m.

Lord Borrie

My Lords, I have rather enjoyed the intra-party disagreement on the other side of the Chamber. I come down on the side of the noble Baroness, Lady Oppenheim-Barnes. I thought that the noble Lord, Lord Hodgson of Astley Abbots, was quite wrong to say that, in either the past or the future, it is intended that the OFT should "hold the ring". The OFT is a partisan body which determines whether there is a prima facie case that a matter requires investigation. Subsequently, someone else will do the balancing and hold the ring and reach a conclusion. In this Bill, for the very first time, there is even provision for something called a "cartel offence" in which the OFT, with the Serious Fraud Office, will be the prosecutor. It will be the courts, however, that determine whether that case is justified.

Lord Hodgson of Astley Abbotts

My Lords, I understand the noble Lord's point about holding the ring. He will appreciate, however, that the Financial Services Authority is also a prosecuting authority.

Lord Borrie

Indeed, my Lords. However, my point is to undermine the argument of the noble Lord, Lord Hodgson, and indeed that of the noble Lord, Lord Phillips of Sudbury. I do not disagree at all with the type of educational materials that the noble Lord, Lord Phillips, would like school children and even adults to receive; what I dispute is whether the OFT—with its partisan role, as I said, in the sphere of consumer and competition affairs—is the appropriate body to fill that role. I do not think that it is. To include the type of words that the amendment seeks to introduce would be to ask the OFT to fill a role that is not really apt for that body to perform.

Lord Sainsbury of Turville

My Lords, Amendments Nos. 22 and 23 seek to amend the Office of Fair Trading's function of making the public aware of the ways in which competition may benefit consumers and the economy. I begin by reminding noble Lords of the purpose of Clause 6. A key role of the OFT is to make markets work for consumers. This is reflected in the clause which gives the OFT the function of promoting to the public the benefits that competition has for consumers and the economy and providing the public with information or advice on matters relating to its functions.

Competition does indeed benefit consumers: the best form of consumer protection is choice. The aim of the clause is to help to create assertive and knowledgeable consumers who are aware of the importance of competition. There is much to be done in this sphere. The DTI peer review of the UK's competition regime showed that while more than 83 per cent of respondents in the United States thought that competition policy was important to the US public, the equivalent figure in the UK was just 10 per cent. So there is a very substantial job to be done.

I turn to the two amendments. I have great sympathy with Amendment No. 22, but rather little sympathy with Amendment No. 23. Amendment No. 23 proposes that the OFT should have the function of making the public aware of the ways in which competition may affect, rather than benefit, consumers and the economy. I find that an extraordinary statement. We are establishing this body because we believe that competition is a good thing. The alternative would be to say that we do not think that competition is a good thing—that we think that some monopolies and a few cartels would be an excellent thing. In establishing this body, we are clearly making the judgment that competition is a good thing.

To ask the body established to make that statement to express the view that competition is other than a good thing would be to make an extraordinary assumption. We did not, for example, establish the Equal Opportunities Commission and tell it, "By the way, you should put forward a balanced view about equal opportunities. Perhaps equal opportunity is not always a good thing". Rather, we said to the EOC: "We expect you to promote equal opportunities". The same applies to the treatment of racial discrimination. I do not know what we are doing in this legislation if we are not starting with the assumption that competition is a good thing. We should therefore refer to the "benefits" and not just the "affect" of competition.

When consumers understand the benefits of competition—which include quality, choice and accessibility as well as price—I believe that they become more powerful, more confident of their rights and more demanding. I understand from what the noble Lord, Lord Phillips, said in Committee that he believes that competition may have adverse consequences for consumers. I beg to differ. Of course, competition can be abused but that does not alter the fact that, overall, competition is a good thing. Anti-competitive behaviour constitutes abuse but competition does not. Anti-competitive behaviour harms consumers. However, competition benefits consumers and the clause should reflect that.

Amendment No. 22 falls into a different category. I have a great deal of sympathy with it, particularly as regards the context of school education. However, I wish to explain why the Government do not want to accept the amendment. It seeks to amend Clause 6 to give the OFT the function of making the public aware of the role of competition within a context of social community and environmental responsibility. As I am sure the House is aware, I certainly accept the importance of social community and environmental responsibility. Indeed, those are matters which the Government actively promote. I also accept that consumer and competition policy must function within the broader framework of social welfare. We are not saying that competition which in any way detracts from legislative, social or environmental frameworks should be excused or condoned. However, I do not believe that it is right to broaden the specific focus of the OFT which is rightly focused on making markets work for consumers. To broaden the OFT's general function as proposed in the amendment would seem to be a rather arbitrary choice.

Lord Clinton-Davis

My Lords, does not the argument that has been made fit well with what is in the Bill which does not merely mention competition but also the economy of the United Kingdom of which the environment is an important part?

Lord Sainsbury of Turville

My Lords, I totally agree with the noble Lord. The economic framework is important. However, the point I am trying to make is that if one singles out particular aspects of the social and economic contexts in which competition policy operates and states that the OFT must also focus on those matters, an almost endless list arises of other issues of which it must take account: for example, health and safety issues, employment law and all the other contexts within which competition policy operates.

Lord Phillips of Sudbury

My Lords, I am obliged to the Minister for giving way. There is, of course, a big difference here in that employment law and health and safety issues constitute laws. However, we are talking about a moral framework which is never susceptible to legal intervention within which this matter should be addressed. The Minister makes his own point that a great deal of industrial business and service activity, whilst being competitive and lawful, can be deleterious in other respects.

Lord Sainsbury of Turville

My Lords, that leads me to my next point. If one refers to a moral framework, one should ask what is the competence of the OFT to give views or, indeed, materials on a whole range of other issues. I should place the matter in a realistic context in terms of how it would operate in schools. I believe that our main concern is similar in that context. Citizenship is already taught in schools. It is for schools to decide what materials they use in educating their pupils and the appropriate context for those materials. The noble Lord, Lord Phillips of Sudbury, commented that citizenship covers a much broader area than simply competition. The noble Lord should not worry that this matter will be placed within an inappropriate framework. It is not envisaged that the OFT will allocate significant resources to providing educational materials specifically aimed at schoolchildren. Its efforts will be aimed principally at educating the public at large.

Although I have great sympathy with the viewpoint that has been expressed, if we introduce the other matters that are proposed, we distract the OFT from the job that it is competent to perform and from its important focus; namely, to inform the public with regard to competition. We risk taking the OFT into other waters. I accept that it is proposed that that should be done within a certain framework. However, the OFT should focus on informing the public of the benefits of competition as that is what it is set up to do.

Lord Phillips of Sudbury

My Lords, I am grateful for the Minister's response. I believe that there is a difference here. I believe that a great deal of the value judgments that have to be made even within the framework of the Bill involve decisions that are not purely economic. The notion of fair trade, for example, is not based on a purely economic concept but on the concept of what is fair. There is no way round that problem. The Minister suggests that by introducing concepts of social community and environmental awareness, one is opening a Pandora's box. First, that is not the case as I have used only those three adjectives in the amendment. Secondly, I agree with the noble Baroness, Lady Howe, that any education, whether offered by the OFT or anyone else, that disregards that matrix of considerations is doomed to failure because it will not achieve its purpose.

I am a little surprised that the Government are not happy to accept the amendment as I believe that it would enforce the work of the OFT. Finally, it does not extend the scope of the OFT; it simply states that if the OFT is to engage in education as opposed to giving information or advice, it must do so in a broader context. Therefore, I wish to seek the opinion of the House.

5.57 p.m.

On Question, Whether the said amendment (No. 22) shall be agreed to?

Their Lordships divided: Contents, 75; Not-Contents, 126.

Division No. 2
Addington, L. Jacobs, L.
Allenby of Megiddo, V. Jopling, L.
Astor of Hever, L. Kingsland, L.
Avebury, L. Lindsay, E.
Barker, B. Livsey of Talgarth, L.
Blackburn, Bp. McColl of Dulwich, L.
Blaker, L. MacGregor of Pulham Market, L.
Boardman, L.
Bradshaw, L. Maclennan of Rogart, L.
Buscombe, B. Maddock, B.
Byford, B. Mar, C.
Carlile of Berriew, L. Mar and kellie, E.
Clement-Jones, L. Marlesford, L.
Coe, L. Michie of Gallanach, B.
Craigavon, V. Moynihan, L.
Dahrendorf, L. Newby, L.
Dholakia, L. Newton of Braintree, L.
Falkland, V. Northover, B.
Geddes, L. Oakeshott of Seagrove Bay, L.
Goodhart, L. Perry of Walton, L.
Goschen, V. Phillips of Sudbury, L. [Teller]
Greaves, L. Razzall, L.
Hamwee, B. Reay, L.
Hanningfield, L. Redesdale, L.
Harris of Peckham, L. Roberts of Conwy, L.
Harris of Richmond, B. Rodgers of Quarry Bank, L.
Hayhoe, L. Rogan, L.
Higgins, L. Roper, L.
Hodgson of Astley Abbotts, L. [Teller] Saltoun of Abernethy, Ly.
Scott of Needham Market, B.
Howe, E. Seccombe, B.
Howe of Aberavon, L. Sharp of Guildford, B.
Howe of Idlicote, B. Sharples, B.
Hunt of Wirral, L. Skelmersdale, L.
Smith of Clifton, L. Thomas of Walliswood, B.
Stewartby, L. Tope, L.
Stodart of Leaston, L. Vinson, L.
Taverne, L. Wallace of Saltaire, L.
Wilcox, B.
Acton, L. Howie of Troon, L.
Ahmed, L. Hoyle, L.
Alli, L. Hughes of Woodside, L.
Alton of Liverpool, L. Hunt of Chesterton, L.
Amos, B. Hunt of Kings Heath, L.
Andrews, B. Islwyn, L.
Bach, L. Janner of Braunstone, L.
Barnett, L. Jay of Paddington, B.
Bassam of Brighton, L. Jeger, B.
Berkeley, L. Jones, L.
Bernstein of Craigweil, L. Kilclooney, L.
Billingham, B. King of West Bromwich, L.
Blease, L. Kirkhill, L.
Borrie, L. Layard, L.
Bragg, L. Lea of Crondall, L.
Brooke of Alverthorpe, L. Lipsey, L.
Brookman, L. Lofthouse of Pontefract, L.
Brooks of Tremorfa, L. McCarthy, L.
Burlison, L. Macdonald of Tradeston, L.
Campbell-Savours, L. McIntosh of Haringey, L. [Teller]
Chandos, V.
Christopher, L. MacKenzie of Culkein, L.
Clarke of Hampstead, L. Marsh, L.
Clinton-Davis, L. Masham of Ilton, B.
Cohen of Pimlico, B. Mason of Barnsley, L.
Corbett of Castle Vale, L. Merlyn-Rees, L.
Craig of Radley, L. Milner of Leeds, L.
Crawley, B. Morris of Aberavon, L.
David, B. Oppenheim-Barnes, B.
Davies of Coity, L. Orme, L.
Davies of Oldham, L. Patel, L.
Desai, L. Patel of Blackburn, L.
Dixon, L. Paul, L.
Donoughue, L. Pendry, L.
Dormand of Easington, L. Peston, L.
Elder, L. Plant of Highfield, L.
Evans of Parkside, L. Prys-Davies, L.
Evans of Watford, L. Radice, L.
Farrington of Ribbleton, B. Ramsay of Cartvale, B.
Faulkner of Worcester, L. Rendell of Babergh, B.
Fitt, L. Richard, L.
Fyfe of Fairfield, L. Rooker, L.
Gale, B. Sainsbury of Turville, L.
Gavron, L. Sawyer, L.
Gibson of Market Rasen, B. Sheldon, L.
Gilbert, L. Simon, V.
Gladwin of Clee, L. Smith of Leigh, L.
Golding, B. Stoddart of Swindon, L.
Goldsmith, L. Stone of Blackheath, L.
Gordon of Strathblane, L. Strabolgi, L.
Goudie, B. Taylor of Blackburn, L.
Gould of Potternewton, B. Temple-Morris, L.
Graham of Edmonton, L. Thornton, B.
Greenway, L. Tomlinson, L.
Grenfell, L. Turner of Camden, B.
Grocott, L. [Teller] Varley, L.
Hardy of Wath, L. Walker of Doncaster, L.
Harrison, L. Warwick of Undercliffe, B.
Haskel, L. Weatherill, L.
Haskins, L. Whitty, L.
Healey, L. Williams of Mostyn, L. (Lord Privy Seal)
Hilton of Eggardon, B.
Hogg of Cumbernauld, L. Williamson of Horton, L.
Hollis of Heigham, B. Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.

6.7 p.m.

[Amendment No. 23 not moved.]

Clause 11 [Super-complaints to OFT]:

Lord Hunt of Wirral moved Amendment No. 24:

Page 5, line 4, at end insert— ( ) In the event that the OFT decides to take no action, and an undertaking has incurred costs as a result of the complaint, the OFT upon the application of the undertaking may make an order that the consumer body which made the complaint shall contribute to the costs of that undertaking.

The noble Lord said: My Lords, investigations by the competition authorities often impose huge costs and other burdens on business. I make no apology for moving this amendment. When there is no action by the competition authorities following a super-complaint against an undertaking, the undertaking should at least be given the opportunity of seeking a contribution to its costs. I cannot foresee that the noble Lord will have any argument against that; there are surely many arguments in favour of it. It would deter frivolous or vexatious complaints. I see no other provision in the Bill that would have that effect. Once again, I stress that investigations impose huge costs and other burdens on business. There is therefore every right for an undertaking, when a business has had to incur considerable cost, to at least have an opportunity to try to get some contribution to its costs. I beg to move.

Lord Kingsland

My Lords, I hope that the Minister will forgive two speakers rising from the Front Bench. The main reason that I do so is to apologise to him for tabling two manuscript amendments: Amendments Nos. 27A and 158A. I take full responsibility for the fact that they are late. I do not know whether the Minister is in a position to respond to them. I see that the noble Lord is nodding. I thank him for preparing himself so swiftly for the coming ordeal.

I spoke to Amendment No. 27A during the Committee stage. In reply, the noble Lord, Lord McIntosh of Haringey, stated that the Government did not propose to add any new category of appealable decisions, save category (m), which concerned decisions not to grant interim measures under Section 35.

The noble Lord continued that the other proposed additions were not appropriate as they would extend the category of appealable decisions to intermediate or investigatory steps taken by the OFT. The noble Lord further added that parties at the stage of intermediary investigatory steps could still use judicial review, which, I entirely accept, carries with it the possibility of quashing interim measures.

In the course of my speech supporting this amendment in Committee, I relied heavily on a recent case of the Competition Appeal Tribunal called Bettercare. The Minister will be relieved to know that I do not intend to take your Lordships through the details of that case again. I shall make only one additional observation.

If one takes, for example, our proposed paragraph (1)—a category which refers to a decision by the OFT not to investigate a complaint under Chapters I or II—and compares it with an investigation started by the OFT but terminated because, for one reason or another, there are no good grounds to continue it, then that comparison, in my submission, is a distinction without a difference. In both cases, the OFT is deciding not to continue to investigate a matter. The only difference is that one decision is made in the course of an investigation and the other is made not to make the investigation at all. I believe it is difficult to see why, in making those decisions, the criteria of the OFT should differ. If my analysis about that is correct, it seems to me curious that in one case a person has a right to a full appeal to the Competition Appeal Tribunal but, in the other, only to judicial review in the High Court.

I would add that it was my impression that, under this legislation, the Government were striving to find some unifying judicial themes in dealing with competition law. That, in turn, suggests to me that the Government should, so far as possible, concentrate litigation in one place rather than two.

There is a second manuscript amendment in this group—Amendment No. 158A—Which concerns delay by the Office of Fair Trading. If there is delay by the OFT in any investigation that it undertakes from time to time under Chapters I or II, the only way that a person under investigation can respond to that situation is to make an application to the High Court. This amendment seeks to enable an approach to be made to the Competition Appeal Tribunal in order both that the OFT can be reminded that it has been considering a matter for some while and that the Competition Appeal Tribunal can be empowered to give directions to the Office of Fair Trading to expedite the investigation.

Again, I recognise that the Minister has had very little time to consider this matter, and I shall understand if he wants to defer a response until Third Reading. However, if he has something to say on it, I shall of course be very grateful to hear him.

Once again, I apologise to the Minister for the fact that these amendments are in manuscript.

6.15 p.m.

Lord Borrie

My Lords, I am among those who have only just seen these manuscript amendments. It may be due to my own inadequacy that I cannot understand why they are coupled with Amendment No. 24, which relates to Clause 11. They seem to deal with entirely different matters. Perhaps there has been a slip-up somewhere. I do not know whether I am the only person who has had that difficulty.

However, I want to speak to Amendment No. 24. It is somewhat similar to amendments that we discussed in Committee and, indeed, is somewhat less extreme than one proposed by the noble Lord, Lord Sharman, at that stage. But there was an interesting division on the Liberal Democrat Benches. For some reason, several noble Lords on those Benches have deserted us at this moment. But I noticed that, in relation to the similar amendment moved by his colleague, one other member of the Liberal Democrat team—the noble Lord, Lord Phillips of Sudbury—said that it would put a torpedo under Clause 11 if it were passed.

To my mind, that is an appropriate phrase because, if this amendment were carried, it would seriously inhibit the work of consumer bodies, which are meant to promote super-complaints and which must be designated—no doubt after careful consideration by the Secretary of State. According to my knowledge of consumer bodies, it is very unlikely that they are rolling in money and are able easily to manage to pay the type of costs that might be envisaged by the amendment.

Surely the whole point of Clause 11 is that such bodies have special expertise. They are given a remit in Clause 11 to assist the public interest in bringing forward complaints that deserve closer investigation. It would seem a great pity to hobble that work by the proposed costs deterrent provided by the amendment.

I remind your Lordships that the guidance that will come from the Office of Fair Trading will ensure—indeed, it will insist—that super-complainants present a reasoned case. That, surely, is sufficient to dispel any notion that vexatious complaints will arise which would be a thorough nuisance and cause a cost problem to the businesses or undertakings concerned.

Lord Sainsbury of Turville

My Lords, I shall speak to Amendment No. 25, which is also in this group. This amendment would make it a requirement for the Secretary of State to publish criteria which bodies would have to meet in order to be designated as super-complainants. It has always been the Government's intention to publish those criteria, and the amendment responds to a similar one tabled by the noble Lords, Lord Razzall and Lord Sharman, in Committee, which I agreed to consider.

We shall consult fully on the criteria after the Bill has received Royal Assent. I have written to the noble Lord, Lord Kingsland, and others with copies of the latest draft of the criteria, which I hope they have found helpful.

Amendment No. 24 seeks to make consumer bodies contribute towards the costs incurred by the business where the OFT has decided that there is no case to answer following its consideration of a super-complaint. I am afraid I believe that the amendment is based on a false premise. It treats the super-complaints process as if it were a litigious one. Super-complaints are not about taking businesses to court; they are about providing designated consumer groups with a quick and effective route into the OFT system for complaints about market features that are harming consumers. If a super-complaint is submitted with inadequate evidence or which is clearly without foundation, it will not take the OFT long to announce that it intends taking no further action. I cannot imagine that it would require much work either, if any, by the companies in the affected market.

We have already put in place checks to prevent against frivolous or vexatious super-complaints being submitted in the first place. Consumer bodies, to be designated to bring super-complaints, will have to meet criteria drawn up by my department. A body will have to produce evidence of experience and acting responsibly—and of the ability to put together reasoned super-complaints.

The cost of putting together a reasoned super-complaint is likely to be considerable. Taking that into account, together with the damage to a body's reputation if the OFT publicly dismissed a super-complaint as frivolous, it is unlikely that the making of a super-complaint will be entered into lightly. The OFT has begun consultation on draft guidance on the making of super-complaints and I wrote to noble Lords about that in September.

We expect that there will be informal consultation between the body bringing the super-complaint and the Office of Fair Trading before the OFT accepts the complaint. It is highly unlikely that a frivolous super-complaint will be submitted but if that does happen, the OFT will not take further action beyond the initial consideration. I do not think that should take long or require much from the companies concerned.

In all super-complaint cases, the OFT will publish the reasons for what action, if any, it proposes to take—which will ensure that consumer groups submit decent super-complaints. They will not want the bad publicity and subsequent damage to their reputation from the OFT discarding one of their super-complaints as wasteful.

The super-complaint process does not impose new burdens on companies. It will only consider whether action is justified—just as with any other complaint. The process involves no sanctions or judgments of its own. Super-complaints are simply a new route into the OFT system—an initial "fast tracking" to ensure that complaints about market failure that harm consumers are given consideration within a fixed period. The options that the OFT has for follow-up action to super-complaints are the same as for any other complaint.

It is therefore right that all parties should follow the same procedure in terms of costs. Parties do not get their costs back when other complaints are submitted to the OFT and investigations are carried out that result in no action being taken. It would be an unnecessary additional burden and unfair to have that condition attached to complaints made via the super-complaints procedure. It would almost certainly discourage designated bodies from bringing super-complaints and make the new procedure meaningless. The bodies would surely opt instead for submitting a normal complaint, where the threat of costs does not exist. I am confident that the checks that we have already put in place will be sufficient to guard against frivolous super-complaints.

Similar arguments on costs have not been made in respect of super-complaints where the complaint is found by the Office of Fair Trading to be legitimate and results in further action by the OFT to make markets work properly and protect consumers. I did not hear any calls for the businesses concerned to contribute towards the costs of the super-complainant in such cases. In view of those arguments, I invite the noble Lord to withdraw the amendment.

I have been briefed efficiently and quickly by DTI civil servants on Amendments Nos. 27A and 158A. My comments this morning on the movers of this amendment and on the procedures of the House of Lords will, I hope, remain confidential to myself and the civil servants.

Amendment No. 27A would add to the list of decisions by the OFT that could be appealed to the Competition Appeal Tribunal under the Competition Act 1998. Section 46(3) lists a number of decisions of the OFT that can be subject to a full appeal to the tribunal and further decisions may be added by regulation. In our earlier debate, I accepted an amendment in the category covered by Section 46(3)(m) and we are working to bring forward secondary legislation as soon as practicable to add that new right to Section 46(3) and Section 47.

I am convinced that the remaining proposals that form Amendment No. 27A should not be taken forward. Paragraphs (i) to (k) relate to intermediate steps in the OFT's investigative procedures and are not substantive decisions of the OFT. Granting a right of appeal on interim investigatory steps would be highly unusual, significantly increase the length of OFT investigations and reduce the office's discretion to deploy resources to areas where it can be most effective. There would be a concurrent deleterious effect on the operation of the competition regime as a whole.

Subsection (1) concerns OFT decisions not to investigate complaints. It is essential that a right of appeal to the CAT is only granted against substantive decisions of the OFT, as was always the clear intention during the passage of the Competition Bill.

Amendment No. 158A would provide for persons who had submitted material to the Office of Fair Trading alleging infringement of Chapters I and II prohibitions of the Competition Act 1998 to seek a direction from the Competition Appeal Tribunal that the OFT's investigation of the alleged infringement is determined without any unnecessary further delay, where the court is satisfied that there has been undue delay on the part of the OFT.

The investigation of complaints alleging infringement of Chapters I and II prohibitions of the Competition Act 1998 is the responsibility of the Office of Fair Trading. Some of the allegations that the OFT will receive will be dismissed at an early stage, whereas some will lead to findings of a serious breach under the Act.

To ensure that the most serious and harmful cases are dealt with effectively, the OFT needs the discretion to deploy its resources accordingly. The amendment would restrict the OFT's ability to prioritise its caseload and would hamper the investigation of serious breaches of the Act. Furthermore, many elements of an investigation are outside the OFT's control—for example, where it is dependent on further information from third parties. That can affect the time it takes the OFT to gather the material necessary to further an investigation, which would not be assisted by the amendment. I am not minded to take forward either of the amendments and hope that they will be withdrawn.

Lord Hunt of Wirral

My Lords, I am grateful to the Minister for responding to Amendment No. 24. In the light of his remarks, I will reflect carefully on his points and those of the noble Lord, Lord Borrie. I thank the Minister most warmly for his response to the manuscript amendments. We will carefully consider not only what he said publicly but also that which he is reputed to have said privately to his officials about the procedures of the House. In all those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Sainsbury of Turville moved Amendment No. 25:

Page 5, line 9, leave out subsection (6) and insert— ( ) The Secretary of State—

  1. (a) may designate a body only if it appears to him to represent the interests of consumers of any description, and
  2. (b) must publish (and may from time to time vary) other criteria to be applied by him in determining whether to make or revoke a designation."

On Question, amendment agreed to.

Schedule 4 [Tribunal: procedure]:

6.30 p.m.

Lord Sainsbury of Turville moved Amendment No. 26:

Page 205, line 16, after "particular" insert"—

  1. "(a) provide for time limits for making claims to which section 47 A of the 1998 Act applies in proceedings under section 47A or 47B;
  2. (b) provide for the Tribunal to extend the period in which any particular proceedings may be brought; and
  3. (c)"

The noble Lord said: My Lords, I am conscious that this is a large group of amendments but they are all similar, in that they primarily make technical changes to the Bill to improve its functioning. They reflect work that has been done over the summer to respond to certain points raised by noble Lords in Committee and to check through the Bill for accuracy. Our hope is that none of the amendments in this group will cause your Lordships any difficulty. Given the size of the group, I will keep my commentary to a minimum and focus on those amendments that are likely to be of most interest.

I said in Committee that we would consult on what would be the appropriate period for bringing an action following a decision in a merger or market investigation. We have now launched our consultation on the tribunal's rules. Part of that seeks views on whether the periods should be one month for a merger and six weeks for a market.

I emphasise that we have not yet come to any view on the appropriate length of either period. However, we have decided that as we may end up changing these periods in the tribunal's rules at an early stage in the life of the legislation, it would be better to remove the reference to three months from the face of the Bill. Amendments Nos. 26, 79 and 141 guarantee that whatever the outcome of the consultation we have the flexibility we need.

There are 28 technical amendments aimed at improving the clarity of the public interest regimes under the Bill. The most significant changes to the EPI scheme are Amendments Nos. 50 and 117, which clarify that there is a power to add new public interest considerations, unrelated to any considerations already specified in Clauses 57 and 148. That was always our clear policy intention.

Amendments Nos. 89, 90, 143 and 144 are technical amendments to provide for the situation where an order effecting a change to the public interest considerations specified in Clause 57 or 148 is subsequently not approved by Parliament. These amendments ensure that the changes are reversed.

We are also tabling 20 amendments to improve the enforcement regime in Parts 3 and 4 of the Bill. Of those, 14 are required to ensure that more than one undertaking can be accepted—for example, when the OFT is considering accepting undertakings in lieu. The remaining six make minor technical changes to other parts of the regime.

Amendment No. 64 is concerned with the interaction between the special regime for water mergers and the general mergers regime. Mergers between conglomerates and multi-utility companies can involve the merger of a range of different businesses. It is possible that a merger between two water enterprises falling to be assessed under the special regime could be a component of a bigger merger. The amendment clarifies that the general Part 3 mergers regime can apply to the bigger merger but, where that happens, excludes from consideration any merger between water enterprises that is subject to the separate mandatory assessment under the Clause 67 regime.

In Committee, the noble Lord, Lord Hunt of Wirral, moved an amendment to the definition of "business" in what is now Clause 178, which I agreed to consider further. The purpose of the noble Lord's amendment was to make clear that the conduct of public bodies, where it has an impact on competition in a market, can be taken into account in the context of a market investigation.

In our view, amending Clause 178 is not the best way of resolving that point. We propose instead to delete the words "in the course of business" from Clause 126(2). That means that the conduct of public bodies supplying or acquiring goods or services in a market will always be capable of being taken into account as a "feature" of a market within the meaning of this clause. Given that the conduct of public bodies is capable of having a significant impact on competition in many markets, we believe that that is appropriate.

Clause 191 provides for professional privilege in respect of legal and banking material in the context of investigations of the cartel offence. Amendment No. 157 provides a different way of accounting for the equivalent in Scotland of legal professional privilege. I am grateful to the noble Lord, Lord Hunt of Wirral, and to his colleagues who drew attention to that matter in Committee.

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. The original Clauses 191 and 197 followed the Criminal Justice Act 1987 precedent. That was done to ensure consistency in approach regardless of whether the OFT or SFO are investigating or prosecuting.

However, having considered the matter further, we recognise the concerns that current Scottish customs and practice be properly reflected in the Bill. I am therefore pleased to move the amendment which draws on the opposition amendment brought forward in Committee. It follows the more recent precedent of the Proceeds of Crime Act 2002 and provides a definition which corresponds more closely with Scottish practice.

Amendments 149 and 150 allow for the appointment of independent members to the Competition Commission's governing council. The function of those independent members will be solely and specifically to sit on the council. We see the addition of independent members to the council as a way of strengthening the leadership of the Competition Commission and reflecting best practice in corporate governance. The council would now consist of the chairmen, the deputy chairmen, the chief executive and one or more independent member.

A number of other amendments are being made, but as I stressed at the outset I do not intend to go into any more detail now. I re-emphasise the minor and technical nature of the amendments. I beg to move.

On Question, amendment agreed to.

Lord Sainsbury of Turville moved Amendment No. 27:

Page 205, line 19, leave out sub-paragraph (3).

On Question, amendment agreed to.

[Amendment No. 27A not moved.]

Lord Davies of Oldham

My Lords, I beg to move that consideration on Report be now adjourned. In moving the Motion I suggest that the Report stage begin again not before 8 p.m.

Moved accordingly, and, on Question, Motion agreed to.

Back to