New Clause

Orders of the Day — Enterprise Bill – in the House of Commons at 6:04 pm on 30th October 2002.

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Lords amendment: No. 7, after clause 16, to insert the following new clause—Tribunal: regulations—

(1) The Lord Chancellor and the Secretary of State may together make regulations—

(a) empowering the courts to transfer to the Tribunal for determination by it any issue arising in any civil proceedings the determination of which depends on whether provisions of Chapter I or II of the 1998 Act or of Article 81 or 82 of the Treaty have been infringed where, in the opinion of the court making the transfer, the transfer would be conducive to the efficient conduct of the proceedings;

(b) making any rules that the Lord Chancellor and the Secretary of State may deem to be appropriate as ancillary to the power to make such transfers or to be reasonably required in connection therewith and in particular, but without prejudice to the generality of the foregoing, to the effect that—

(i) on making such a transfer, the court making the transfer may state facts that the Tribunal shall then treat as established for the purposes of determining the issues transferred to it;

(ii) after having made its determination, the Tribunal shall remit the matter to the court that made the transfer to it, declaring the determination of that issue by the Tribunal, which, subject to any clarification or amplification by the Tribunal of its determination that may be requested by the court that made the transfer, shall then be treated as a determination of that issue by that court;

(iii) enabling courts that have made, or have in contemplation the making of, such transfers and the Tribunal to co-operate together in any way that they deem to be appropriate to enable issues arising in the proceedings before then to be determined as efficiently as possible.

(2) The Lord Chancellor may appoint as president and as chairman of the Tribunal judges of any of the courts provided that, before appointing a judge of the Court of Session or sheriff courts under this subsection, the Lord Chancellor shall first consult the Lord President of the Court of Session.

(3) In this section references to "the courts" are to the High Court of Justice and the county courts in England and Wales and Northern Ireland and the Court of Session and the sheriff courts in Scotland.

(4) The power to make regulations under this section is exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

Photo of Miss Melanie Johnson Miss Melanie Johnson Parliamentary Under-Secretary, Department of Trade and Industry

I beg to move, That this House
disagrees with the Lords in the said amendment.

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

With this it will be convenient to take Government amendment (a) in lieu, Lords amendments Nos. 8 to 17, 74, 124, 189 to 209 and the Government motion to disagree thereto and Government amendment (a) in lieu, and Lords amendment No. 210.

Photo of Miss Melanie Johnson Miss Melanie Johnson Parliamentary Under-Secretary, Department of Trade and Industry

Lords amendment No. 7 would give the Secretary of State and the Lord Chancellor the power to make regulations allowing the courts to transfer to the Competition Appeal Tribunal issues arising in civil proceedings that require a determination of whether there has been an infringement of competition law.

The main argument made for the amendment in another place was that, following the implementation of the so-called modernisation project, which is likely during 2004, the ordinary courts will be given the power to apply article 81 of the EC treaty in full. They may therefore have to deal with significantly more civil cases raising complex competition law issues. The argument was that the courts were not equipped to deal effectively with competition law points, which often involve complex economic evidence.

Article 81(3) issues are thought to be particularly difficult, requiring an assessment of whether countervailing benefits arising from an anti-competitive agreement are sufficient to legitimise it. The Competition Appeal Tribunal, an expert body set up to hear appeals against decisions of the OFT on such matters, was perceived as better qualified to determine these matters.

The Government argued in another place that it was the role of the courts to build up the expertise in competition issues needed to handle competition matters arising in civil proceedings. There are practical ways in which the expertise of judges can be enhanced and, if necessary, certain judges could be nominated as specialists in competition law. The courts will also be assisted when necessary by the Office of Fair Trading and the European Commission. Under the modernisation regulation, the Commission will be empowered to submit written observations to the national courts on issues relating to the application of articles 81 and 82, and, when we implement modernisation, we intend to provide a similar power for the OFT. Both bodies, with the permission of the court in question, will also be able to submit oral observations as expert witnesses.

Our current belief, therefore, is that the courts will be able to cope with the consequences of modernisation without the need for powers to transfer issues arising in civil proceedings to the Competition Appeal Tribunal. However, we recognise the strength of feeling in another place that an explicit power should be provided in the Bill to allow regulations to be made allowing the courts to transfer competition law matters to the Competition Appeal Tribunal for determination by that body. If the proponents of the amendment are right, and the courts are not able to handle competition issues effectively, there will be specific powers to allow matters to be transferred. If the Government are right, the powers need never be used. On reflection, we now agree that an amendment along the lines of Lords amendment No. 7 would be a prudent piece of future proofing, and should be made.

However, there are some technical difficulties with Lords amendment No. 7 as it is currently drafted, which is why we propose to replace it and Lords amendment No. 209 with our amendments in lieu. I would like to highlight the main changes. First, the redraft provides that the Lord Chancellor alone, rather than jointly with the Secretary of State, would exercise the power to make regulations. There is no particular significance to that change—it is simply customary for the Lord Chancellor to have sole responsibility for such matters. Secondly, the amendment in lieu not only refers to the regulation-making power but makes it clear that the rules of court may be made in connection with a transfer. Thirdly, the amendment removes the power for the Lord Chancellor to appoint judges directly to the key positions on the Competition Appeal Tribunal. In another place, it was accepted that this power was not needed. The power exists already, but it would cut across the policy of the Lord Chancellor's Department that all appointments to tribunals should be made through open competition.

The second amendment in lieu, to Lords amendment No. 209, makes a corresponding adjustment to the scope of the tribunal rules so that they may make provision in connection with the transfer of proceedings from a court. Lords amendment No. 209, which was a Government amendment, is superseded by the amendment in lieu.

I would now like to turn to the remaining amendments in this group: amendments Nos. 8 to 17, 74, 124, 189 to 208 and 210. That group of Government amendments reflects work that was done in the other place to improve the drafting of part 2 of the Bill and related provisions. Part 2 is concerned with the establishment of the Competition Appeal Tribunal and the allocation to it of new powers such as the ability to hear damages claims arising from infringements of competition law. It also provides for such claims to be brought on behalf of named consumers.

The most important changes here are the technical improvements to clauses 17 and 18 of the Bill. Amendment No. 8, for example, makes it clear that the scope of a damages claim made before the tribunal is to be the same as that made before a court. It also makes it clear that the damages or other sums that may be awarded include all monetary awards that could be awarded by a court in respect of the relevant infringement. Amendment No. 9 ensures, among other things, that an infringement of competition law has to be established before a group claim can be brought, and that the right to bring a group claim does not affect the right to bring a claim before the court.

Amendment No. 11, too, is worth highlighting. It enables the Competition Appeals Tribunal to order the defendant to pay any monetary remedies to the body bringing the claim for onward distribution to the relevant individuals, as long as all of them consent. The damages will still be awarded to the individuals rather than the representative body, which will be acting on their behalf in receiving the amounts due.

Clause 19 adds a new section 58A to the Competition Act 1998 to provide that infringement findings—for example an OFT decision that a chapter 1 prohibition has been breached—will be binding in the courts when the courts are considering monetary claims. Amendment No. 17, however, clarifies that the new section does not apply in relation to infringement decisions made before the commencement of the section. It is important, for business certainty reasons, that there should be no retrospective application of the new provisions.

Amendments Nos. 74, 124 and 205 remove the reference to the period for bringing an appeal to the Competition Appeal Tribunal following a decision in a merger or market investigation. It is still our intention to have firm, fixed time limits, but these timings will now be set by the tribunal's rules, on which we are currently consulting. Part of that consultation seeks views on whether those periods should be one month for a merger and six weeks for a market. We have not yet come to a view on the appropriate length of either period. However, as we may end up changing these periods in the tribunal's rules, we decided that it would be better to remove the reference to three months from the Bill.

The remaining amendments in this group are consequential on the changes to clauses 17 or 18 or are minor and technical improvements to this part of the Bill. I do not propose to go through them in detail, but I invite the House to agree that they should be made, and I am happy to address them should hon. Members so wish.

Photo of Andrew Robathan Andrew Robathan Shadow Spokesperson (Trade and Industry)

We are, of course, delighted that the Government have listened to the sensible arguments put forward in another place by my noble Friends Lord Kingsland, Lord Hunt of Wirral and others. The Government are rather foolish to say that their current belief is that the provision will not be necessary. Experienced lawyers have concluded that it will be necessary, and I am therefore delighted that the Government have accepted our views. That merely begs the question why such a contingency plan was not included in the Bill in the first place. With 750-odd amendments to the Bill, however, we are not that surprised.

We have taken unofficial legal advice on the matter, which was that amendment (a) to Lords amendment 7 is somewhat better than the one that we produced, so we are happy to accept it—one would expect a parliamentary draftsman to do better than an amateur parliamentary draftsman. Nevertheless, I would like to thank Sir Jeremy Lever, an eminent Queen's counsel, for his sensible and public spirited assistance.

I want to raise some concerns relating to Scotland and Northern Ireland. I am not a lawyer, so I hope that the Minister will be able to put me right—as she knows, I have come to the Bill somewhat late, so perhaps she will be able to do so straight away. Will the Government clarify whether separate measures will be necessary for Scotland and Northern Ireland? Although the Lord Chancellor is given particular mention, I had understood that the Lord President had jurisdiction in Scotland. I certainly understand that the joint working party of the Bars and Law Societies of the United Kingdom says that, in this case, the Lord Chancellor would not have the relevant jurisdiction. Could the Minister scurry around to get some legal advice on that point before we finish our consideration of this clause?

Photo of John Redwood John Redwood Conservative, Wokingham

I welcome the Government's change of heart in one important respect. I think that they will find that they need to make use of the provision. As for the principal arguments, it will expedite proceedings, as the general court system is very congested, and some of these cases need to be dealt with in a timely way. Furthermore, the technical complexity of this extremely voluminous Bill, which is very much in evidence this evening, will require specialists to argue the case and to adjudicate the complex issues involved. It will therefore often be necessary to send such cases to a tribunal to be dealt with by people who are well versed in this complicated area, and to ensure that they are dealt with in an expeditious manner. I hope that the Minister will enter fully into the spirit of the Government's welcome change of heart and recognise that it is not just a belt-and-braces provision. It was strongly recommended by independent lawyers of no political persuasion who have worked in this area for many years and have a firm view of how such matters should be handled.

Photo of Miss Melanie Johnson Miss Melanie Johnson Parliamentary Under-Secretary, Department of Trade and Industry 6:30 pm, 30th October 2002

I am grateful to Mr. Redwood for his remarks. Of course, I enter into the spirit as well as into the letter of the suggestion. I reassure him of that.

The Government have not acted in the way that Mr. Robathan suggested. We have not been foolish. We believe that the provision will not, in general, be necessary and that the courts will equip themselves with the necessary expertise. Views obviously differ, so we have accepted the wisdom of the suggestion that the Bill should contain the provision. Accordingly, we have tabled amendments that are as effective and as appropriate as possible.

I am not a lawyer, but I have taken legal advice about the issue of separate measures in Scotland and Northern Ireland. The court rules for Northern Ireland are made by the Lord Chancellor and are not a reserved matter. In fact, Northern Ireland will be covered exactly as specified in the Bill. The hon. Member for Blaby is correct about the position in Scotland, but the law will be consistent. The Lord President will make the rules in Scotland in the way that the hon. Gentleman suggested. There will be a separate arrangement for Scotland, but not for Northern Ireland.

Lords amendment disagreed to.

Government amendment (a) in lieu of Lords amendment No. 7 agreed to.

Lords amendments Nos. 8 to 17 agreed to.