Clause 11 - Super-complaints to the OFT
Enterprise Bill
6:30 pm
Mr Jonathan Djanogly (Huntingdon, Conservative)
I support this group of amendments. The question arises whether a clause that is, on the face of it, well meaning will give companies comfort that they will not be subject to witch-hunting by consumers or pressure groups. There is a balance to be struck here, as with other parts of the Bill.
I was slightly concerned by the Under-Secretary's statement that the measure was to be left as ''an open-ended vehicle'', as that seems a dangerous way of proceeding in what could be a litigious area. I accept the suggestion that we need a clearer definition of what can and cannot be investigated. Amendment No. 18 ties that down by referring back to article 81.
As the Bill stands, a super complaints procedure applies when the interests of consumers appear to be harmed, but what does that mean in practice? Who decides, and on what basis, what is best for consumers? Would it be consumer groups, for example? The CBI pointed out that that gives much too narrow a base; anyway, what would represent a consumer group for the purposes of the Bill? The new standard will lead to an awful lot of litigation, with costs being passed on to the public; to consumers, in other words.
There was a recent example of such a procedure in action. In October 2001, the OFT agreed to a Consumers Association referral to undertake a super complaints procedure, although at the time that would have been done only on a trial basis because the legislation did not exist. The case was brought against the dentistry profession.
In January 2002, the OFT announced that it would undertake a full investigation, which it expected to finish by the end of the year. It would have been helpful to the Committee if the investigation had been finished by now, because we would have had a better opportunity to analyse how it worked in practice. Unfortunately, that opportunity is unavailable.
Several questions surround that investigation, however. One might ask if the expected date was fair, but I shall not discuss dates as that subject arises in a later batch of amendments.
I mention the case now because it has an interesting aspect in relation to the Bill. When one reads the Consumers Association briefing on the state of the process so far, two basic reasons are given for the referral, as identified by the excellent magazine, Which? The first relates to transparency in charging, which certainly makes sense as the basis for an investigation. The second was more interesting, as it related to huge disparities in tariffs between dentists. That is an interesting concept, which seemed strange to me when I first read it.
I understand why the Consumers Association might want to point out why high-charging dentists should be avoided and to say who is a high-charging dentist, so that consumers know whom to avoid. However, when one considers competition issues, one normally looks for competition abuse, a convergence of price, people organising cartels or undermining consumers by maintaining a close series of prices. In this case, however, the Consumers Association is complaining about a massive divergence of prices, which is the exact opposite of the competition test. That brings us back to the essence of super complaints and the new rationale.
The Consumers Association is obviously looking forward to the time when the legislation is in place and it can run clear of the competition rule and start creating a new area of law. I do not know what the Consumers Association wants–perhaps some sort of 1970s price-capping policy–but it has nothing to do with competition.