Enterprise Bill

Part of the debate – in the House of Lords at 6:15 pm on 15th October 2002.

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Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary (Science and Innovation), Department of Trade and Industry, Parliamentary Under-Secretary (Department of Trade and Industry) (Science and Innovation) 6:15 pm, 15th October 2002

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 (l) 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.