HL Deb 13 June 2003 vol 649 cc503-7

12.50 p.m.

Lord McIntosh of Haringey

rose to move, That the draft order laid before the House on 12th May be approved [20th report from the Joint Committee].

The noble Lord said: My Lords, in moving the order I should also like, if I may, to speak to the supply of services order, the anticipated mergers order and the protection of legitimate interests order.

The consumer and competition provisions of the Enterprise Act enter into force on 20th June. The Act implements the Government's pledge to give more independence to the competition authorities. It takes the politics out of competition decisions with decisions on mergers and markets being taken by expert and independent competition bodies. The consumer provisions create a new super-complaints regime to encourage consumer bodies to bring complaints to the attention of the Office of Fair Trading. Part 8 of the Act also strengthens the enforcement of consumer law, extending the successful stop now orders regime—which is known by the terrible name of SNORs.

I start with the domestic infringement orders. This order sets out the list of domestic legislation that will be covered by the new Part 8 regime. Part 8 is intended to strengthen consumer protection by giving enforcement bodies wider powers to obtain court orders—similar to injunctions—against traders who cheat consumers and who provide unfair competition to honest businesses.

The new enforcement regime is modelled closely on the stop now orders which came into force in June 2001. Enforcers have been using the stop now regime successfully to stop a wide range of illegal trading practices. Part 8 of the Enterprise Act will implement the requirements of the injunctions directive in place of the SNORs, but will also enable court orders to be made to prohibit breaches of domestic law requirements not covered by the SNORs. Those are termed domestic infringements. The domestic infringements order specifies the legislation and rules of law in respect of which acts or omissions may give rise to domestic infringements. As we promised during the passage of the Bill, we have consulted extensively on the laws to be included in the domestic infringements order, and we have taken account of the responses in drawing up the order we are discussing today.

A range of mainstream consumer protection legislation is included in the order and is intended to protect the economic interests of consumers. This legislation includes, among other Acts, the Trade Descriptions Act, Section 4 of the Prices Act and certain offences under the Weights and Measures Act intended to protect consumers against short measures. That will enable quick and effective action to be taken against, for example, car traders who purchase high-mileage cars and lower the mileage prior to offering the cars for sale. It will also enable action to be taken against businesses which deliberately cheat consumers by giving them a quantity which is less than they paid for. It will also cover a wide range of other practices which harm consumers, such as counterfeiting and piracy, lottery-like scams and harassment of the elderly or vulnerable into making purchases. The new regime will enable better enforcement where these offences are committed. It also covers legislation on underage sales to children of such things as tobacco and fireworks.

Most importantly, by including breaches of the implied terms contained in the Supply of Goods and Services Act, the order will enable enforcement action to be taken against traders who fail to carry out a service with reasonable care and skill—such as cowboy builders and dodgy car repairers. That gives noble Lords a flavour of the provisions the order will bring in and the impact it will have. I hope that it will be agreed that this strengthening of enforcement will bring considerable benefits to consumers and also to the vast majority of honest businesses.

I turn now to the supply of services order. This specifies the circumstances in which permitting or making arrangements to permit the use of land is to be classified as the supply of a "service" for the purpose of merger and market investigations and the enforcement of certain consumer legislation. With the exception of car parks, these types of arrangements were already listed in Section 137 of the Fair Trading Act. We have added car parking primarily for consumer protection purposes. It will enable an enforcement order to be made under Part 8 to prohibit the use of notices in car parks which purport to exclude all liability due to negligence and whose only purpose seems to be to deceive consumers into thinking that they have no rights.

I turn to the anticipated mergers order, which relates to the merger provisions of the Enterprise Act. This order amends Sections 27 and 29 of the Act, which allow for the reference of completed mergers to the Competition Commission where the events constituting the merger took place over a period of up to two years. The purpose of the order is to apply these anti-avoidance measures to anticipated mergers; that is where all or part of the transaction has not yet been agreed but matters are in progress or contemplation. This replaces similar provision for anticipated mergers that was formerly made in Section 75(4) of the Fair Trading Act 1973.

Finally, I turn to the protection of legitimate interests order. There are a very limited number of merger cases in which the Government may wish to protect the public interest on non-competition grounds. In those cases the Enterprise Act provides a mechanism whereby the Secretary of State can intervene and decide on particular mergers that raise specified public interest considerations by serving an intervention notice. Apparently, national security is the only public interest specified in the Act. This instrument deals with mergers that fall to the European Community merger regulation—the ECMR. It ensures that the UK can act in ECMR cases to protect important non-competition interests. That is specifically foreseen by the European Community merger regulation itself.

The Enterprise Act preserves the current position. The UK can use the domestic merger control regime, where necessary, to take action on matters other than competition, such as defence, in relation to cases that fall to the ECMR.

The order follows the procedures set out in the public interest and special public interest schemes of the Enterprise Act with appropriate modifications. Most of the other provisions of Part 3 of the Enterprise Act are applied with modifications where relevant.

Those are the four orders for discussion today. They are all required to implement the consumer and competition provisions of the Act which will come into force next Friday. They are important but technical measures, developed in consultation with all interested parties. I commend the first order to the House.

Moved, That the draft order laid before the House on 12th May be approved [20th report from the Joint Committee].—(Lord McIntosh of Haringey.)

Baroness Wilcox

My Lords, I thank the Minister. If I have it right, we are speaking to all four orders in one go. I therefore turn first to the domestic infringements and supply of services orders.

While we on these Benches will not be resisting the orders, a number of questions were raised in another place which remain unanswered. The Minister in another place promised a written reply which has not been delivered. I should therefore appreciate reassurance on these matters from the Minister today. The first question was what impact the supply of services order will have on the storage of caravans over the winter where farmers in rural areas have diversified.

The second question referred to the domestic infringements order, on the issue of consumer protection. The Minister listed many activities to be covered, but I am not sure that he specifically dealt with the one in the question that was asked. The question was as follows. There has been a growing trend of highly threatening rogue traders offering re-tarmacked drives. The job, if completed at all, is very shoddily carried out at a highly inflated price. How will the law be strengthened to provide consumers with protection from those traders?

As regards the Enterprise Act 2002 (Anticipated Mergers) Order 2003 and the Enterprise Act 2002 (Protection of Legitimate Interests) Order 2003, we on these Benches are happy to support these orders which strengthen measures that can be taken against anti-competitive mergers and acquisitions. The first extends control of completed mergers to cover anticipated mergers as well, and will close a loophole whereby an organisation can avoid regulatory scrutiny by engaging in transactions over a long period of time. Now the authorities will be able to aggregate transactions over two years. This should be beneficial to business competitiveness and consumers alike by preventing organisations from working around the system.

The protection of legitimate interests order concerns the procedure following the Secretary of State issuing a European intervention notice, and where the matter is one of public interest, it can be referred by the Secretary of State to the Competition Commission. While in principle we are against providing the Secretary of State with more and more powers, these particular orders seem harmless enough and, as I said, we shall happily support them.

Lord Newby

My Lords, we on these Benches also support the orders.

Lord McIntosh of Haringey

My Lords, I am grateful to the noble Baroness and to the noble Lord for their support for the orders. I can answer the question raised by the noble Baroness, Lady Wilcox. I am very sorry that I seem to have a draft letter to Mr Andrew Robathan but I do not have any evidence that it has been sent. It seems to me that it ought to have been sent since the matter was considered in Standing Committee in the House of Commons.

As regards caravans, the order would bring the arrangements regarding the storage of caravans, particularly on farms over the winter, within the definition of a supply of services for the purposes of the Enterprise Act, but it does not otherwise affect the legal status of those arrangements. It means that where farmers store caravans on their land, a caravan owner may be considered as a consumer for the purpose of the definition of a domestic infringement under Part 8 of the Enterprise Act. If the storage is supplied in breach of any of the laws which may be enforced under Part 8 as a result of the domestic infringement order, action can be taken by the local trading standards officer and any other general or designated enforcer. Farmers who conduct this business in a lawful and proper way have nothing to fear.

Itinerant tarmac layers are, of course, subject to the same laws as other traders. Orders to stop malpractices by such traders where they can be traced could he obtained if they repeatedly harassed a consumer or if they failed to give consumers notice of their right to cancel the contract—that would be a community infringement—or if they gave the consumer false information about the service they were providing. That would be a contravention of the Trade Descriptions Act. If they failed to comply with an enforcement order, that would constitute contempt of court which would carry the prospect of a term of imprisonment of up to two years. I hope that it will be agreed that that would be a powerful incentive to the person against whom an enforcement order had been made to mend his ways and not engage in such unlawful conduct in the future. I apologise for having to make that statement for the first time.

On Question, Motion agreed to.