[Part II]

Part of Enterprise Bill – in a Public Bill Committee at 8:00 pm on 23rd April 2002.

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Photo of Miss Melanie Johnson Miss Melanie Johnson Parliamentary Under-Secretary, Department of Trade and Industry 8:00 pm, 23rd April 2002

The amendment would reduce the maximum period of disqualification that may be specified in a disqualification undertaking from 15 years to five years. I am not sure, however, that the hon. Gentleman dealt with the issue: clause 195 is intended to reduce red tape, but the amendment seems to increase it.

The purpose of providing an alternative means of disqualifying directors is twofold. First, it protects the public by allowing for the quicker and earlier disqualification of unfit directors. Secondly, it avoids unnecessary court proceedings and reduces costs where parties agree on an appropriate length of disqualification. The Bill's provisions are modelled on those introduced into the Company Directors Disqualification Act by the Insolvency Act 2000. The Insolvency Act has generally been agreed to be

successful, and I mentioned the disqualifications in it earlier.

If competition undertakings are to be successful, the period of the disqualification undertaking must be proportionate to the seriousness of the case. The OFT and a director might agree that the director's conduct merited disqualification and that the appropriate period was, for example, six years. That would, however, fall outside the scope of the amendment, which would restrict the ability to deal with the matter by means of a disqualification undertaking. The OFT would have to make a disqualification application to the court, which would increase the costs for all concerned. That would be unnecessary, because an agreement could be reached outside the court.

Having explained the effects of the amendment, which might not be entirely what the hon. Gentleman expected, I hope that he will withdraw it.