Clause 90 - Rights to enforce undertakings and orders

Enterprise Bill – in a Public Bill Committee am 11:45 am ar 1 Mai 2002.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon 11:45, 1 Mai 2002

I beg to move amendment No. 278, in page 63, line 34, leave out subsections (3) and (4).

Photo of Mr Nigel Beard Mr Nigel Beard Llafur, Bexleyheath and Crayford

With this it will be convenient to take the following amendments: No. 279, in page 64, line 13, leave our subsection (9).

No. 280, in clause 91, page 64, line 18, leave out subsection (1).

No. 281, in clause 91, page 64, line 21, leave out subsection (2).

No. 282, in clause 91, page 64, line 23, leave out subsection (3).

No. 283, in clause 91, page 64, line 28, leave out "also".

No. 284, in clause 91, page 64, line 31, leave out "also".

No. 285, in clause 91, page 64, line 34, leave out subsection (6).

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

I should like the Minister to clarify a particular issue when he responds to the amendments. If a divesture order is implemented and a company goes into a sale process and appoints agents but no buyer appears, in what circumstances does the Minister envisage a claim under subsections (3) and (4), as they are currently constituted, and bearing in mind subsection (5)? That will be a relevant consideration and concern for businesses.

There are further concerns behind the wish to delete subsections (3) and (4). We are discussing any one person being able to mount an action. Again, that will lead to uncertainty for companies. Whether an undertaking has been breached may itself be subjective and open to interpretation. That could be used by a single person as a means of causing vexatious actions against the company; or a few customers out of several thousand might decide to use those provisions in that way.

Photo of Mr Tony McWalter Mr Tony McWalter Labour/Co-operative, Hemel Hempstead

Will the hon. Gentleman confirm that he basically agrees that the whole principle of giving undertakings is a good idea and a progressive way forward, although it could go wrong?

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

The principle of undertakings is one that I accept and it is unnecessary to remind the hon. Gentleman that the concept is not new. It is currently used—often constructively. It can be less formalistic than going through all the other procedures. I am talking about the ability of unconnected individuals to bring an action against a company for a breach of

that undertaking. It is a question of who should have a claim. If subsections (3) and (4) were used in the wrong way, they could in effect be a way of blackmailing a company. On the basis that it is likely that the Minister is going to oppose the amendments, does he agree that it would be correct to insert some form of de minimis mechanism to ensure that a small number of people cannot blackmail a company?

Photo of Douglas Alexander Douglas Alexander Minister of State (e-Commerce & Competitiveness)

The amendments seek only to allow the Competition Commission, the OFT and the Secretary of State to bring civil proceedings to enforce undertakings, orders and statutory restrictions on further integration and share acquisition. I understand the hon. Gentleman's concern that it might be too easy for people to bring actions in the courts, which would lead to a rise in unnecessary litigation and subsequent costs to business, but I am not convinced that the provisions would have that effect.

The FTA refers to any persons bringing civil proceedings in respect of any failure or apprehended failure of the person responsible to fulfil the undertaking in section 93(2) of that Act, and applies similarly to any persons bringing civil proceedings in respect of any contravention or apprehended contravention under that section. The breadth of the provisions has been limited by the judgment on the merger involving Mid Kent Holdings in 1997. In the light of that judgment, we decided in drafting clauses 90 and 91 not to provide for any person to bring an action.

We will allow only those persons who sustain loss or damage as a result of any breach of an undertaking, order or statutory restriction to bring an action. That means that people directly affected by the failure of a party to comply with its obligations will be able to bring an action. That will provide an appropriate balance and address some of the concerns about the need to ensure that there is an appropriate standard before an action is brought.

Although the statutory restrictions were not enforced in that way under the FTA, the restriction on integration is new and there are no grounds for treating it differently from undertakings or orders. Notwithstanding my previous profession as a Scottish lawyer, like other Government Members and Opposition Members, I am keen to avoid an overly litigious system, but we must strike the right balance between protecting the parties from undue interference and cost, and allowing those parties with a genuine grievance access to redress. The formulation in clauses 90 and 91 achieves that balance.

I must admit to the Committee that I did not follow the logic of the hon. Gentleman's first point, but if I failed exactly to comprehend it, I would be happy to write to him.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

At the start of the sitting, I pointed out that subsection (5) would stop a vexatious litigation claim in circumstances in which a company did its best to divest. It would be helpful if the Minister dealt with that because it would give some comfort to business, which will be concerned by those provisions.

I should like the Minister to comment on the slightly broader proposal that I made in my opening remarks. If he does not accept our amendments, does he not believe that there should be some limit on a minimum claim level—perhaps not as specifically put in the amendments—or a de minimis mechanism that would come into play to ensure that claims that were taken up were serious, which would reduce the threat to business of claims being made for the sake of it?

Photo of Douglas Alexander Douglas Alexander Minister of State (e-Commerce & Competitiveness) 12:00, 1 Mai 2002

I hope that I can offer the hon. Gentleman reassurance. The terms of the Fair Trading Act 1973 are the basis on which we move forward. I sought to ventilate in my earlier remarks that we have tried to limit the scope of those capable of bringing such litigation. We have been alive to concerns about an over-litigious system, which is why the scope has been narrowed. We have more of a meeting of minds over the outcome than the hon. Gentleman suggests, but I shall be happy to write to him on the issue of vexatious litigants and how the clauses address that.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

I thank the Minister for his response, and I hope that businesses take comfort from the Government's attitude to unnecessary litigation. I beg to ask leave to with draw the amendment.

Amendment, by leave, withdrawn.

Clause 90 ordered to stand part of the Bill.

Clauses 91 and 92 ordered to stand part of the Bill.