Clause 106 - Enforcement of powers under section 105: general

Enterprise Bill – in a Public Bill Committee am 12:30 pm ar 1 Mai 2002.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Question proposed, That the clause stand part of the Bill.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

Once again, we are discussing the production of documents, and the enforcement powers latch on to that. The Bill will clearly make the commission much more forceful and powerful. As with many aspects of the Bill, we are dealing with an increase in enforcement powers and greater penalties.

It is important to appreciate that, in most situations, most companies, particularly third-party companies, that are asked to provide background information will do so voluntarily and will help the OFT or the commission with their investigations as much as they can. The fear, which I and others have expressed at various times during the Bill's progress, is that with all the new enforcement powers the process will become more formalistic. Will the powers mean that, rather than providing a better flow of information, the flow of information will dry up? Will the information that is provided be only the minimum that is requested, so that the commission's questions are not fully answered? I should be grateful if the Minister would address that concern and give some comfort to business that, when they provide information, clauses such as this will be not be used against them.

The other issue that I want to raise goes back to the question of confidential information. That has arisen at innumerable points throughout the Bill and applies also to these provisions. If companies knew that they could consent in some way to the information that was released, whether under clause 106 or other provisions, would they not be more likely to be freer with the information that they gave in the first place?

Photo of Douglas Alexander Douglas Alexander Minister of State (e-Commerce & Competitiveness) 12:45, 1 Mai 2002

I shall put the hon. Gentleman's remarks in context by explaining the clause and then deal with his points about the monetary penalties and the consequences with regard to the way in which investigations are conducted.

The clause gives the Competition Commission a power to impose monetary penalties on any person where specified information is not provided by a date formally notified by the commission in a clause 105 notice. The term "any person" means one of the merging parties or a third party. The power replaces the Competition Commission's current power to

apply to a court for a contempt finding. I hesitate to say it, given some of the company in the Committee, but it is closely modelled on the powers that are available to the European Commission under articles 11, 14 and 15 of the European Community merger regulation, which has operated successfully since 1990.

In respect of the point raised by the hon. Member for Huntingdon, we both want these discussions to take place as amicably as possible. I agree that the parties involved in an agreed takeover will usually co-operate, as the form and track records show. However, I do not concur with the view that suggests that monetary penalties are a disincentive to a more voluntary and co-operative approach being taken. There are circumstances in which inquiries will not always be known as adversarial; in hostile takeovers, for example, one party may be deeply unwilling to co-operate and third parties will often have no incentive to co-operate, yet their information is vital to the work of the relevant authorities in ascertaining matters such as market shares.

Therefore, we believe that the approach of the parties to information requests is often affected, not just by the fact that there are potential monetary penalties but also in terms of the way in which the system works in practice and—I say it in a spirit of self-reproach as a lawyer—by the conduct of the legal advisers themselves. We must ensure that the legal advisers involved do not take an overly adversarial approach, allowing no ability for the relevant authorities to expedite the process in a situation that is susceptible to tactical game playing by respective advisers.

Parties and their advisers are used to operating in line with the provisions and disciplines of the EC merger regime. We do not think that they will have any problem in practice with the importation of this regime into UK law.

Photo of Jonathan Djanogly Jonathan Djanogly Ceidwadwyr, Huntingdon

Does not the Minister appreciate that often the reason why the information is not provided is not because of the penalties but because the companies are afraid that that information will be put to uses other than those that the internal purposes of the investigation require? In other words, they ask if it will be released into the public domain. Can the Minister give any comfort to business that the provisions will not be used to allow confidential information, especially that belonging to third-party companies, to be released and used in a way that is detrimental to their interests?

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

I am sensitive to the hon. Gentleman's point, but he is trying to identify a solution to what he perceives to be a problem in a clause that deals with something else. We are dealing with a substantive issue: do monetary penalties assist in the ongoing work of the competition authorities? I understand that discussions have already taken place in the Committee about the entrance into the public domain of information handed to the authorities. The substantive point at issue in the clause is whether

those monetary penalties will focus the minds of the parties involved in the discussions. My view is that monetary penalties do focus minds and therefore make an important contribution to the non-adversarial approach that we are keen to ensure in as many cases as possible in this important work.

I hope that I have responded satisfactorily to the hon. Gentleman's point. I am sensitive to the fact that he has continuing and enduring concerns on issues of public disclosure of private information but I am not convinced that it sits comfortably within the debate.

Question put and agreed to.

Clause 106 ordered to stand part of the Bill.