Clause 16 - Damages

Enterprise Bill – in a Public Bill Committee am 2:45 pm ar 18 Ebrill 2002.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon 2:45, 18 Ebrill 2002

I beg to move amendment No. 31, in page 8, line 3, at end insert—

'(3A) The Tribunal shall also have the power to grant injunctive relief.'.

I would be interested to know why we are not dealing with clause 15 first, because in some ways it draws into clause 16. I appreciate that the Government want to open up the enforcement of competition law and encourage private actions—we will come to those issues when we discuss clause 15—but the order in which we are considering matters still seems unusual.

The Competition Act 1988 already provides for the right to seek damages in the courts, and clause 16 will provide the extra teeth to competition appeals tribunals, which will also be able to hear damages claims.

Different types of relief—damages and injunctive relief—are available to claimants. The claimant will often be concerned not only to receive compensation in the form of damages for what has happened, but to apply to the court for injunctive relief to prevent it happening again. Insofar as that is relevant to the court process, it is also relevant to the CAT process. If not, the claimant could not achieve both objects through the same legal process. A claimant pursuing damages through the CAT would need a simultaneous court action in process to obtain injunctive relief. That would lead to a costlier and lazier process being heard by two courts that could take different tacks on the same issue.

To the extent that the amendment would simplify the process, I fully support it. However, wider issues are relevant. The Government have changed their mind. The issue was debated during the passage of the 1998 Act and it was decided then that damages should

not fall within the CAT process. Will the Minister explain the Government's changing thought processes? I note that a Library research paper refers to consultations prior to the 1998 Act and sets out the Government's view then:

''We have considered carefully the option of making the Competition Commission, as opposed to the Courts, the forum to hear private law actions for breach of the prohibition such as claims by third parties for damages or interim relief. We have concluded that there are significant drawbacks to such private actions being heard in the tribunal. In practice the application of the prohibition would often be one of many areas of the commercial dispute to resolve which, in turn, could lead to an unnecessary duplication of fact finding as the tribunal heard competition law points and the courts heard other aspects of the same case. Moreover, if the tribunal were to hear such private law actions, this could prejudice its primary objective of providing a quick and efficient review of DGFT decisions. We have therefore decided that such private actions should be heard in the courts.''

We are now dealing with the damages side, so we are diverging from that position only a few years later by placing it into a CAT process, while it has been decided that the injunctive relief element will not be moved into that process. That will complicate rather than simplify matters. Will the Government explain their view?

The concept of injunctive relief is part of the wider debate on the role of the CAT. Competition issues should generally be dealt with by the CAT rather than by a mix of the CAT and the courts. The Government have been lobbied generally and several judges have argued that the CAT should have a wider role than under the Bill. It is in the interests of business that a specialised tribunal, which will act more quickly than the courts, deals with competition. Increasing the ability of the courts to take speedy decisions, making the process more uniform and avoiding duplication should lead the Government to review the amendment carefully.

Photo of Alistair Carmichael Alistair Carmichael Shadow Spokesperson (Energy and Climate Change), Liberal Democrat Spokesperson (Energy and Climate Change) 3:00, 18 Ebrill 2002

I rise to endorse the words of the hon. Member for Huntingdon (Mr. Djanogly). The tribunal has a quasi-judicial function, so it is only sensible that the full range of civil avenues should be open for exploration. If an injunction were granted at an early stage but later found to be wrongful diligence, might not the damages be horrific? I presume that an injunction would be used sparingly in England. My only other observation relates to the drafting of the amendment. Subsection (2) refers to

''a claim in tort or, in Scotland, delict'',

so it would be similarly sensitive to acknowledge in the amendment that Scotland does not use the term ''injunction'', but ''interdict''. My amendment to the amendment would make it absolutely correct and more elegant.

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

First, clauses 16 and 17 are concerned with damages claims, so they can be grouped coherently together. Clause 15, however, belongs more appropriately with part 2, which we have not yet reached. If the hon. Member for Huntingdon reflected further on that, he would understand that that is the simple reason behind the current focus on clause 16.

The amendment would give the Competition Appeal Tribunal the power to grant injunctive

relief—the power to make directions in the context of damages claims made before it. Such a power is unnecessary. When a damages claim is made before the tribunal, the issue of whether an infringement of competition law has taken place will already have been decided either by the OFT or the tribunal itself on appeal from the OFT. In taking decisions on infringements of competition law, the OFT or the tribunal will have full powers to grant injunctive relief in the form of directions. Additionally, the OFT will have the power to grant interim relief while it is still investigating a possible infringement and the tribunal to grant interim relief while it is still hearing an appeal.

If an appeal were made against a decision of the OFT that an agreement does not infringe the chapter 1 prohibition, the tribunal could make an interim order preventing the parties to the agreement from implementing it. If it is upheld, the CAT could make a final direction requiring the parties to modify or terminate the agreement. All such issues will have been decided before a damages claim is made, so any appropriate injunctions will already be in place. The power is not needed at the stage when the tribunal is hearing or deciding on a claim for damages. In a damages case, the only powers that the CAT needs are the power to award the damages and the power to award costs. On no occasion would an extension of the injunctive powers of the CAT to cover damages cases be required. Therefore, I invite the hon. Gentleman to withdraw the amendment and ask the Committee to support me in opposing it.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

I thank the Under-Secretary for her comprehensive response. Ultimately, the concept of damages is acceptable—certainly more than that of super complaints—if only because here we are talking about a defined set of circumstances rather than heading off into the unknown. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

I beg to move amendment No. 55, in page 8, line 25, at end insert—

'(5A) The limitation period for bringing claims pursuant to this section shall be six months from the date on which the cause of action arose.'.

The amendment is another attempt to limit the effect of the clause, by including a new subsection, (5A), which proposes a limitation period. Clause 16 amends the Competition Act 1998 to allow the tribunal to hear damages claims, but cases can be brought to the tribunal only after a finding by the United Kingdom or European authorities of an infringement of either the UK prohibitions or those in the European treaty. As I shall outline in more detail in our debate on clause 17, if there is a claim for damages in tort—in delict in Scotland—the tribunal will not be able to hear damages claims until any possible appeal has been heard.

The clause also makes it clear that findings of an infringement by the OFT and the tribunal are to be binding on all courts. I hope that the Minister will clarify matters in her reply, which will obviate the need for a stand part debate. I want to know what the position is likely to be. Can the Minister confirm that

these are quasi-judicial hearings? Will people be permitted, or have the right to, legal representation?

It would be reasonable to introduce the six-month period in the amendment to avoid companies being put in excessive jeopardy. It is not an excessively short time. The limitation period for industrial tribunals, for example, is only three months. In any event, as a backstop, as clause 16(6) shows, general civil claims are not affected by the proposal, so if the proposed limitation period expires, civil proceedings may still be brought by injured parties. I stress that the six months would start to run only from the time that the cause of action arises, which will be clearly definable in terms of the infringements to which I referred. I urge the Committee to support the amendment.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

The possible consequences for a company of a claim being made under clause 16 could be severe, so I support the concept of a time period. The CAT will be a new organisation. I am not sure how it would work without amendment and I should be grateful if the Minister would advise the Committee whether existing general laws of limitation will apply to claims. I should have thought not, as there will be a tribunal rather than a court process, therefore it is particularly important that there should be a cap on the time period. Clause 17, which we shall discuss later, will empower consumers to make claims. I have visions of an American-type situation in which law firms advertise for claimants and trail around the country trying to get as many people as they can to join the action, which will go on for months or even years as a result. That would be damaging to the company and to the legal process. For that reason, it is important to get the measure right.

By tradition, time scales in tribunal processes are generally shorter than in court cases. We do not want to detract from what is in the best interests of the taxpayer. I therefore suggest that the six-month period is appropriate.

Photo of Miss Melanie Johnson Miss Melanie Johnson Parliamentary Under-Secretary, Department of Trade and Industry 3:15, 18 Ebrill 2002

The Bill enables the period within which claims can be brought to be stipulated in the tribunal rules that are made by the Secretary of State. We are considering what we should align to that period. Under section 2 of the Limitation Act 1980, the period for the courts is six years. There seems to be no reason why the option of pursuing a claim through the tribunal should be available for a shorter time than is available for making an equivalent claim through the courts. Our aim is to facilitate, rather than to discourage, the bringing of claims before the tribunal. Claims can be brought only when the full process has been gone through and when an appeal, if relevant, has been heard.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

I disagree. There is a tradition in this country of differing periods between court and tribunal processes, which is one reason for tribunals. Employment comes to mind. An employee may have a contractual right to sue for six years, but may have to go to a tribunal within three months.

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

The tribunal is a fully judicial body and legal representation is as available in a tribunal as it is in a court.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

Before the Under-Secretary finishes discussing that matter, would it not be unusual for any tribunal to have the power to specify its own limitation period? She, or even the Secretary of State, is right that under the Limitation Act 1980 there is a limit of six years on ordinary and other contractual claims. However, there is a panoply of different time limits in English law. My hon. Friend the Member for Huntingdon mentioned personal injury in employment tribunals, for which the limit is three years. For some bizarre reason, it is two years for collision cases in Admiralty law and there is a range of other cases. Is it right for the period to be established by regulation rather than mainstream law?

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

The hon. Gentleman is making a point not only about whether the time limit should be in the Bill, but about it being six months. Six months is a short amount of time for many cases. Issues relating to damages, for example, can be complex.

Photo of Alistair Carmichael Alistair Carmichael Shadow Spokesperson (Energy and Climate Change), Liberal Democrat Spokesperson (Energy and Climate Change)

I remind the Under-Secretary of the restricted scope of subsection (5), which relates to cases where paragraphs (d) and (e) apply. Almost everything that is to be discovered about such cases will have been discovered long before any such period starts. There is a need for time limits, or prescription periods, in the Bill. That was always agreed and it is an undesirable departure to prescribe time limits by rules of court.

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

I have listened carefully to the arguments of Opposition Members, but six months is too short a timeframe. It would be unfortunate if the Bill specified a time limit of six months and I urge the hon. Gentlemen to withdraw the amendment. We are considering the time limit and I will return to it later in the debate.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

The Under-Secretary kindly said that she does not have a closed mind on the subject and will reconsider it. That is entirely appropriate, as she has divined that there is a strong groundswell of belief that the issue should be reconsidered. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 16 ordered to stand part of the Bill.