Clause 181
Enterprise Bill
12:45 pm
Miss Melanie Johnson (Parliamentary Under-Secretary, Department of Trade and Industry; Welwyn Hatfield, Labour)
That is helpful. I shall return to some earlier points made by the hon. Member for Huntingdon about summary conviction. At the moment, magistrates courts can provide for summary convictions, and they cover prison sentences of up to six months or a fine up to the statutory maximum of £5,000. The hon. Gentleman may be right that it would be inappropriate to deal with many cartel offences in magistrates courts, but that is a matter for them. Magistrates are able to refer up to the High Court and are usually likely to do so. The system allows magistrates courts to refer certain more serious offences to higher jurisdictions, even though the process starts with the magistrates.
The amendments would seriously undermine the intended deterrent effect, which is a key objective of the new offence. The maximum prison term in the Bill has been set to create the appropriate level of deterrence for serious and damaging anti-competitive behaviour. The maximum five-year prison term in the Bill is appropriate for a serious financial crime and is in line with existing precedents. It is also in line with international precedents: Canada has a five-year term for hard-core cartels, as does Germany for bid-rigging cartels; Norway has a six-year maximum and France four years. As hon. Members have remarked, the US has a three-year maximum, as does Japan.
Providing solely fines as a sanction for cartels would in no way reflect the seriousness of the offence. The Government accept that fines may be appropriate in less serious cases with mitigating circumstances, but fines do not have the same deterrent effect as imprisonment. It is a question of the punishment fitting the crime, which is right and appropriate.
Dishonest companies might find ways of reimbursing employees who were fined or of indemnifying them against a potential fine. If fines were the only sanctions, dishonest companies would take a commercial decision to engage in a cartel. They would weigh the risk of being caught and the size of the fine against the likely gain to be derived from the cartel, which would be no deterrent at all. Honest companies tell the OFT that the threat of imprisonment will help to impress on their employees the need not to become involved in cartels. In addition—
It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned till this day at half-past Four o'clock.