Clause 123 - Power of OFT to make references

Enterprise Bill – in a Public Bill Committee am 5:15 pm ar 1 Mai 2002.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne 5:15, 1 Mai 2002

I beg to move amendment No. 298, in page 90, line 9, leave out 'suspecting', and insert 'believing'.

Photo of Derek Conway Derek Conway Ceidwadwyr, Old Bexley and Sidcup

With this it will be convenient to take the following amendments: No. 155, in page 90, line 9, leave out from 'that' to 'prevents' in line 11 and insert—

'the conduct in the course of a business of any person or persons substantially'.

No. 299, in page 90, line 11, after 'services', insert 'significantly'.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

We now move to the market investigations part of the Bill. I am happy to speak to the amendments in my name and that of my hon. Friends in the first group—Nos. 298 and 299. It was rather a photo finish in tabling No. 155 and I shall leave the Liberal Democrats to speak to that amendment, although our names also feature above it.

A few general comments might obviate the need for a stand part debate on the clause, which is an important provision that kicks off this part of the Bill. It sets out the OFT's power to make references and extends its power to seek out anti-competitive behaviour.

Concerns have been expressed, not least by the CBI, about the clause, along with the Government's commitment to giving the OFT increased resources to ferret out anti-competitive behaviour in the UK economy. I assume that the Government believe that a great deal of illegal activity is going on that current powers and resources have been unable to tackle. That is not a view that the CBI entirely shares. It states:

''However the great concern of industry is the second case and the potential for an enlarged and empowered OFT to cast its net far and wide looking for any possible behaviour or structure that could be construed as anti competitive.''

It refers to the consumer protection aspects such as super complaints, for example. There was a slight worry that British business would be rather beleaguered as a result of the provisions. As a Committee, it is our job to reassure if possible. It refers to the need for ''some reasonable constraints'' on the OFT to avoid disruption and counter-productive investigations and so on.

Amendments Nos. 298 and 299 would change ''reasonable grounds for suspecting'' to ''reasonable grounds for believing'' and would insert the word ''significantly'' before

''prevents, restricts or distorts competition''.

In addition to the CBI's worries, there is a genuine concern about the cost to business of such investigations—that they might be extremely expensive and tie up an awful lot of resources, especially management time. The amendments are designed to produce a higher threshold for the provisions.

The CBI points out that in clause 123(1) there is no lower limit to the level of impact. There should be a de minimis provision to ensure that unreasonably counter-productive investigations are not launched because they would tie up businesses' time and lead to costs. That is why the requirement of suspicion is too low and there should be a good reason to believe that something has occurred, which is a somewhat higher test. The insertion of the word ''significantly'' would also tighten things up.

I mention the scale monopoly provisions. I think that they are mentioned in the White Paper, although I cannot find the reference—I am sure that the Minister has it at his fingertips. In a debate in the House of Lords on the Competition Bill on 13 November 1997, Lord Simon of Highbury said:

''We also believe that the scale monopoly provisions will continue to have value although we do not intend that their use should be limited with the introduction of the new prohibitions. In future we do not expect references to be made of scale monopolies except in circumstances where there has already been proven abuse under the prohibition and where the DGFT believes that there is a real prospect of future abuses by the same firm.''—[Official Report, House of Lords, 13 November 1997; Vol. 583, c. 300.]

Is that the Government's view on this Bill, or has their view changed since that debate?

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

In the interest of completeness, I am inclined to support the two Conservative amendments that are grouped with amendment No. 155, which stands in my name and the names of my hon. Friends the Members for Twickenham (Dr. Cable) and for Southport (Dr. Pugh), in addition to several Conservative members of the Committee.

To put it bluntly, our worry about the clause and the mischief that we want to remedy with the amendment is the broad nature of the powers that are given. One can imagine that a proactive Director General of Fair Trading could become a competition tsar who runs around looking for cases or causes to take up. The Minister may say that there are other restraints on the DGFT and no doubt that is the case. My experience shows, however, that if there is the possibility of a person abusing a power, eventually, the power will almost inevitably be abused.

There is a further argument about imbalance of resources. Costs to the Office of Fair Trading are borne by the taxpayer. Those resources would not be available to businesses investigated under the Bill. Investigations will be highly involved and complex and will require much management time and many legal

and accounting resources. It is fair and proper that without trying to diminish the force of the investigations, which I welcome in broad terms, a direct link should be established between the conduct of an enterprise that is the subject of an investigation in which it must account for its actions, and the effect on the market.

The amendment would leave the OFT with substantial power, but it would redress the balance that is presently out of kilter.

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

First, I shall deal with resources, which seem to underpin the thought behind the three amendments. The Government said in the White Paper that we want a strong and proactive OFT that will scrutinise markets throughout the economy to assess whether competition is working well. If it were not working well, the OFT would take appropriate action. That is why the OFT has the new markets and policy initiatives division, which will give it a stronger platform to tackle markets that are not working well for consumers.

However, I add the following caveat: action on markets does not necessarily mean referring a market to the Competition Commission for further inquiry. The right action may mean that the OFT is sharing information with consumers, that it is making recommendations to the Government about regulations that impede competition, or it could mean no action at all.

The amendments would limit the scope of the market investigations regime by restricting the basis on which references can be made about the conduct of firms and their customers. Amendment No. 155 would insert the word ''substantially'' into the reference criteria before

''prevents, restricts or distorts competition''.

They would also limit the scope of the regime by restricting the basis on which references can be made by requiring the OFT to have reasonable grounds for believing that one or more features of the market is or are preventing, restricting or distorting competition before it could make a market investigation reference or by requiring the OFT to have identified a significant or substantial impact on competition.

I shall now deal with the issue of belief and amendment No. 298. As it stands, subsection (1) requires the OFT to have reasonable grounds for suspecting such activities. The amendment would make the criteria that the OFT must satisfy before making a reference slightly more demanding—as identified by the hon. Member for Eastbourne. When formulating the reference criteria, we considered whether the OFT should be required to have a reasonable suspicion or a belief that a feature or features of the market is or are preventing, restricting or distorting competition.

I shall explain why we have chosen suspicion, not belief. Is it not appropriate that the OFT should be more, rather than less, certain that problems in a market merit investigation by the Competition Commission? There are two main reasons why we

did not choose belief as the test. In some cases, the OFT will have enough evidence to justify more than a reasonable suspicion that there are competition problems in a market. We certainly hope that the OFT will always ground its reference decisions in as strong an evidential base as is available to it.

However, there may be cases when the OFT has enough evidence to justify a reasonable suspicion, but not enough to justify a reasonable belief. The only way in which to obtain the extra evidence that it would need to satisfy the higher threshold is with the co-operation of companies in the market that are under investigation. In such circumstances, it does not seem right that, by not co-operating with the OFT to provide the extra information, companies could prevent it from making a reference decision.

Belief can be a tricky concept to pin down. Sometimes, if there is enough evidence to justify a reasonable suspicion that something is the case, there is probably enough—or nearly enough—evidence to justify a belief that it is the case. In other words, replacing ''suspecting'' with ''belief'' would make little difference. At other times, however, by the time there is enough evidence to justify a reasonable belief that something is the case, it will be virtually certain that it is so. Clearly, we do not expect certainty—or as close as economists can get to certainty—at the OFT stage of the investigations. If we did, there would be no purpose in the bipartite model of the OFT conducting a preliminary investigation, followed by a more thorough, determinative investigation by the Competition Commission.

The intention behind the amendment is no doubt to safeguard the interests of competitive businesses from unjustified investigation and, as we have heard, from the costs that will be consequent thereon. However, to the extent that it would make any difference at all, I fear that it would be more likely to provide shelter for uncompetitive businesses. It would sometimes require the OFT to carry out investigations almost as thorough as those of the Competition Commission to meet its thresholds, rather than achieving its purpose, which is to alleviate the burdens of businesses where possible.

Amendments Nos. 299 and 155 would introduce a formal requirement for the OFT to have reasonable grounds to suspect that one or more features of a market was ''significantly'' or ''substantially'' preventing, restricting or distorting competition before it could make a reference. I agree with the sentiment behind that: market investigatory powers should come into play only when the person making the reference has identified potentially serious competition problems in a market. I am not convinced, however, that it is necessary or desirable to introduce the proposed change of wording to prevent the making of unjustified or unnecessary references.

The power to make market investigation references is discretionary. We trust the OFT not to abuse its discretion by referring markets when it does not think that there are potentially serious competition problems. There are several reasons for that. While the OFT's budget is being increased to take account of

all its new functions—as set out in the White Paper—its resources will always be finite and it will naturally want to concentrate them on the most serious cases.

If the OFT makes references when the competition problems are trivial, or the Competition Commission finds that the imposition of a remedy is not justified by any adverse effects on competition that it can discern, the OFT's reputation and credibility will suffer.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne 5:30, 1 Mai 2002

The Minister describes an ideal world, and although I am sure that one exists out there somewhere, I rarely encountered one as a lawyer. The problem was graphically described by the hon. Member for Orkney and Shetland when he said that the OFT, flushed with new powers and functions, will be keen to make its mark. No matter how responsible, experienced and able are the people running the OFT at the most senior levels, there will be a double adrenalin rush of extra resources and extra powers.

Great pressure will be placed on those at the OFT, by Ministers as well as everyone else, to prove their mettle. Inevitably, they will not be able to divorce themselves from higher-profile campaigns in the tabloid press or the business pages of the more responsible papers. The Minister cannot simply hope that that will not happen. Matters will be pursued that may not come to anything in the end. However, in the meantime enormous costs will be run up—in terms of experts, lawyers and so forth—and damage will have been done to the businesses under investigation.

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

The hon. Gentleman raises an important point, but I am not predicating my support for the Bill as drafted on a hope or aspiration but on the fact that the reference power is not a new power for the OFT and that there are constraints under which it is clearly working. It must exercise its power reasonably, and if it does not, it will of course be open to review by the Competition Appeal Tribunal, regardless of the resource base for the OFT. The constraints on its operation and the expectation of how it must conduct itself continue to be in place.

The flexibility of having a power rather than a duty to refer also encourages the OFT to consider other ways of dealing with less serious competition problems that might technically meet the market investigation reference criteria—by reporting on its general duties, for example. At the risk of repeating myself, the current Fair Trading Act's monopoly reference criteria are pitched more or less as ''low'' as the proposed market investigation reference criteria in the Bill, but in only one of the last 12 cases did the Competition Commission not find adverse effects. Again, if we wish to anticipate future conduct by the OFT, acknowledging the points made by the hon. Gentleman concerning the additional resources and power outlined in the White Paper and the Bill, to recognise how the powers have operated in the past is a useful check on us.

In short, we do not expect that the new regime's reference criteria will lead to there being many more market investigations than there have been monopoly inquiries in recent years. Any increase in the number of

references is likely to result from increased OFT resources, not from changes introduced by the Bill.

On the comments made by Lord Simon of Highbury in the other place in relation to the Competition Act, it may not come as a complete surprise to the Committee to hear that I do not have the exact words of my erstwhile ministerial colleague in front of me, but I will try to offer what comfort I can about the thinking behind this part of the Act. In general, we would expect the OFT to use the Competition Act in cases in which it suspects that the Act's prohibitions on anti-competitive agreements or abuse of dominance are being infringed, and market investigation powers in cases in which the Act is not applicable. Whenever the choice is less straightforward, the decision about which powers to use will be at the OFT's discretion, on examination of all of the facts of the case in question. I do not wish anything that I say today to be taken as an attempt to tie the OFT's hands in terms of the discretion that it can exercise.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

This issue may be very important in certain circumstances, although I accept that those may not be common. Does the Minister envisage that the OFT will issue guidelines on the question?

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

We had a discussion earlier this morning about what guidelines and information would be made available. The hon. Member for Twickenham is no longer in the Committee. He upbraided me for saying that I would write and tell hon. Members what was in the Bill. In fact, I gave an undertaking to explore the issue of when guidelines would be made available, and I am happy to add this issue to the list of matters on which I will be in touch with the hon. Member for Eastbourne.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

The Minister has taken our concerns seriously, and there appears to be an element of unanimity on the issue. That may be because only one Liberal Democrat Member is here, and we would have to take a poll of all three to be sure that they agreed. None the less, there is concern about this important issue not only among Conservatives and Liberal Democrats but in industry and business.

I am grateful to the Minister for saying that he will investigate whether there will be any guidelines. It would be depressing if the answer to what I might call the Lord Simon point was no. We strongly believe that the restriction in clause 123(1), in particular, should be stronger. We may return to the issue later, but for now 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. 300, in page 90, line 13, at end insert—

'(1A) In making its decision the OFT shall take into account countervailing benefits to customers or to innovation.'.

This is another amendment inspired by our friends at the CBI. It deals with countervailing benefits to customers or to innovation, and echoes an issue that we discussed in a different context the other day. The Competition Commission is required to take

countervailing benefits to customers into account when undertaking investigations once a reference has been made, and the OFT should be given a similar duty if we are to limit unnecessary references.

I have already dwelt on the cost to industry of references that get nowhere and are not justified to begin with. There can be a superficial, short-term impact on the market structure and conduct of industries that depend on rapid innovation, particularly in a global market, and that must be considered in the context of countervailing benefits. One example from the CBI is the formation of consortiums of competitors to bid for major Government contracts that no one supplier can handle alone. A current example is the contract for new aircraft carriers, which almost by definition is beyond the capacity of a single contractor, because of the different technical skills and the number of shipyards that would needed for the work. We should also consider the situations described in the OFT and DTI report ''Innovation and Competition Policy'', which notes that traditional competition regulation is seriously flawed when applied to high-technology markets.

For all those reasons, it is important that the Bill provides that the OFT, like the Competition Commission in a different context, should take into account countervailing benefits of the sort that I described.

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

In contrast to the mergers reference test, there is no need to specify countervailing benefits in the markets reference test. The OFT has a duty to refer qualifying mergers to the Competition Commission, and we must therefore specify that it need not refer such mergers if it believes that the adverse effects of the resulting substantial lessening of competition are outweighed by any customer benefits.

Let me deal first with the hon. Gentleman's reference to consortiums and with the treatment of individual joint ventures and consortiums. Those will almost always be examined under chapter 1 of the 1998 Act or the merger control regime, rather than by means of the market investigations under the Bill. In any event, the competition authorities will have discretion under all three regimes to allow arrangements that can be seen as restricting competition, where such arrangements bring sufficiently wide economic benefits to justify the anti-competitive outcome.

The substance of my other point in response to the hon. Gentleman's query is that the Competition Commission is not required to consider customer benefits, but only has discretion to do so. The amendment would impose a requirement on the OFT to take account of countervailing benefits in the markets regime, whereas it only has discretion to take account of customer benefits in the mergers regime. In contrast to the position in the mergers regime, the amendment would require the OFT actively to search out potential countervailing benefits and to assess their importance relative to competition concerns in the market, making it significantly more difficult to refer a market to the Competition Commission. That might also encourage

parties to delay the OFT's investigation by making frivolous claims that are evidently not worthy of further consideration but are none the less cumulatively time-consuming for the OFT to examine in turn.

The amendment also contains a wider definition of customer benefits than that used elsewhere in parts 3 and 4. It refers to

''countervailing benefits to customers or to innovation''

rather than solely to customer benefits. That phrase would include benefits to innovation per se, even if they did not benefit customers, and that is not right. In markets where competition is not working well, customers may suffer significant detriment. A benefit, however large, that does not accrue to them should not prevent the market from being referred to the Competition Commission with a view to making it work more effectively.

The amendment would undermine the flexibility of the market investigations regime. It would make the pre-reference investigation process longer and more complicated, without making it any fairer or significantly improving the quality of the OFT's substantive decision making. That would make market investigations more costly and time-consuming for the firms involved. I am sure that no one on the Committee would want that.

Photo of Andrew Lansley Andrew Lansley Ceidwadwyr, South Cambridgeshire 5:45, 1 Mai 2002

Before the Minister concludes, I hope that he will make it clear that the OFT will be expected to strike the right balance. On the one hand, it has an obligation to avoid long, complex and costly pre-reference investigations. On the other, I hope that it will not simply consider competition aspects—in relation to supermarkets, for example—or the level of concentration in the market, and say that there must be a reference. There may be substantial evidence, in whatever form, to show that customer benefits are being derived from the market's structure.

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

I would not wish my remarks to fetter the discretion that is exercised. In that sense, I am not convinced that the amendment would achieve its purpose without unbalancing the consideration that needs to be given to the OFT's market investigations. I therefore ask the hon. Member for Eastbourne to withdraw the amendment.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

I am far from convinced, but in the interests of progress, 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. 258, in page 90, line 14, leave out from 'reference' to 'services' in line 15 and insert 'to conduct'.

Photo of Derek Conway Derek Conway Ceidwadwyr, Old Bexley and Sidcup

With this we may discuss the following amendments: No. 156, in page 90, line 14, leave out from 'to' to 'shall' in line 15 and insert 'conduct'.

No. 301, in page 90, line 14, leave out from 'to' to 'shall' in line 15 and insert 'conduct'.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

I am interested only in amendments Nos. 258 and 301, and I shall leave the hon. Member

for Orkney and Shetland to tell us about the merits of amendment No. 156.

Again, our amendments are blatant attempts to restrict the basis on which references will be made. We tabled them out of a general wish to assist business, and to ensure that we do not end up with costly references that result in no further action. Amendment No. 258 would remove the words

''reference to a feature of a market in the United Kingdom for goods or services'',

referring instead to ''conduct''. We are trying to narrow down the provision by removing the rather woolly phrase ''feature of a market''—whatever that may mean—and referring to actual conduct.

Even more significant is the fact that amendment No. 301 would delete the phrase ''whether or not''. Unless we remove those words, grounds for making a reference could arise as a result of conduct outside the market concerned, although I am not sure what that means. The wording may simply be an example of sloppy draftsmanship—but it would be unfair to say so, and I withdraw the suggestion unreservedly, so it must represent a calculated effort by the Government to create a large gap through which whole markets and industries will be drawn before becoming the subject of references. The wording of the clause does not focus on specific, narrow references, which this part of the Bill is supposedly about. My hon. Friends and I are concerned about the inclusion of the words

''whether or not in the market concerned''.

I do not know what the Government are thinking of—I assume that they have thought about it. Why have they included those words?

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

I associate myself with the hon. Gentleman's remarks. Amendment No. 156 is virtually identical to No. 258, although I believe that it has a slight edge in elegance of drafting. It would take out some unwanted words and leave the phrase ''to conduct services''. I am not sure what it means, but it is all semantics and I suspect that it will not be accepted, so it does not make much difference.

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

I would not endeavour to intrude on a private squabble over the relevance of the amendments. With admirable candour, the hon. Member for Eastbourne conceded that the thinking behind the amendments was an explicit attempt to restrict the scope of investigations. I shall try to deal with the substantive points that he raised on the structure of the market and on the Government's thinking with regard to being outside a particular market.

Drawing on the remarks of the hon. Member for Eastbourne, the thinking behind the first two amendments seems to be that competition problems that warrant a market investigation can arise only from the conduct of particular firms or customers in that market. However, the conduct of firms and their customers may not be the whole story if competition is not working properly. For example, high barriers to entry into a market may have nothing to do with the conduct of firms already operating in that market, including regulatory obstacles to entry and constraints that can make it difficult for new entrants to gain

information. [Interruption.] I knew that my speech was exciting, but I am overwhelmed by the response.

When such structural causes of competition problems exist, the OFT should be able to take account of them when taking reference decisions. It is also important that the Competition Commission should be in a position, as far as possible, to take action to address such structural problems—something that the amendment would make impossible, because clause 126 relies on the definition of ''feature of a market'' in clause 123(2).

Opposition Members may agree that structural features of a market can, in theory, cause competition problems, but they may still say that it is unfair to burden businesses with an investigation into matters that are not a consequence of their actions. If that is the reason for the amendments, I would offer this explanation.

Monopoly inquiries and market investigations are not a one-way street for business—one that it always finds itself worse off for going down. They often improve the process of competition in the market by removing the all too often cosy and protected positions enjoyed by the incumbents. That should give small firms a better chance of entering the market, and it would expose businesses and consumers alike to the benefits of more vigorous competition. We have no intention of saying to potential entrants into an uncompetitive market, ''Sorry; the Competition Commission cannot help you because the problems that are keeping you out of the market are structural rather than discrete to the actions of an individual company.'' That would not seem appropriate, not least given our determination that the OFT's role in advancing competition should be proactive, as narrated in the White Paper.

I turn to the proposal in amendment No. 301 to restrict the OFT, when considering whether the conduct of firms acting in a particular market has prevented, restricted or distorted competition, to consideration of what those firms do in that market. The conduct of firms in a given market may prevent, restrict or distort competition not only within that market but in other markets, such as those in which their immediate suppliers and customers operate.

I was asked to give an airing to the Government's thinking on the clause. Perhaps the best example at such short notice is the Competition Commission's investigation into supermarkets. That found that the large supermarkets' buying power meant that some of their purchasing practices adversely affected the competitiveness of their suppliers, and distorted competition in the supplier market. That meant that suppliers were likely to invest less and spend less on product development and innovation, which would lead to lower quality and less consumer choice in the retail market. The Competition Commission also found that there were likely to be fewer entrants into the supplier market regardless of the issue in relation to the supermarkets.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

I may be missing the point, but surely that does not tackle my question. They would still be in the market concerned—supply of foodstuffs or whatever—to the public. The bit of the vertical chain that they are in is not relevant. With respect to the Minister, I do not think that that deals with the issue.

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

I am concerned if I have not made the point clear. The effect of the supermarkets within that supplier market was so significant as to affect its structure. Therefore, there was cause to look not only at the supermarket environment because the effect for suppliers, while they were able to sell products more widely, was significant.

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

On the point about supermarkets, the way in which the report took place was somewhat disingenuous. Effectively, it redefined the market for the purposes of being able to clobber the supermarkets, which struck me as a good example of a politically oriented investigation. There was a lot of furore in the press about the ''Rip off Britain'' campaign—that seemed to bring out the very worst of what we have been trying to expose in the debate, specifically in the amendments on this clause. The worst instincts were revealed. Common sense, as opposed to detailed statistical and academic analysis, will tell anyone that supermarkets run a good show, offer inexpensive food and give consumers masses of choice. However, it is easy, statistically, to justify an argument by redefining the marketplace, in this case by considering the suppliers' market rather than that of the supermarkets. That is the sort of problem that we envisaged—large and small business hamstrung by masses of regulation and by having to go through inquiries when many of them are politically motivated. I apologise for having made an intervention that was longer than many of my speeches.

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

I discern from the hon. Gentleman's longer contribution that he is making two points. The first concerns the entitlement to investigate something such as the supermarket market and the consequential impact on the suppliers market. The functions and powers that are given to the relevant authorities in the Bill reflect the fact that sometimes the test is not common sense; hugely complex financial and market matters have to be addressed. That is why we are keen to ensure that the authorities are underpinned not just by expertise but by resources that will enable complex negotiations and discussions to be taken forward in an appropriate manner.

I would agree with the hon. Gentleman if he were highlighting the importance of removing an overtly political motivation from many of the competition matters that we are addressing—that is the basis on which I hope that he would feel willing to support the Government. One of the principal underlying rationales of the Bill is to remove what has all too often in the past been an arbitrary position of politicians and to give a degree of comfort and certainty to the businesses involved, not least on the basis of the expertise and resource that I have described for the Competition Commission.

The definition of conduct in subsection (2) (b) is not as excessively wide as some speakers have suggested. It

includes only firms and customers who are active in the market that is the focus of the investigations of the OFT or the Competition Commission. The OFT will not be able to make a market reference on a whim. I sense a fear that might underpin some of the contributions to the debate; the OFT will have to be confident that it has reasonable grounds for suspecting that the conduct that it has identified prevents, restricts or distorts competition in the market concerned. I therefore hope that the hon. Member for Eastbourne will feel willing to withdraw the amendment.

Photo of Nigel Waterson Nigel Waterson Ceidwadwyr, Eastbourne

I hope that the Minister will not take it amiss if I say that I am no more reassured than I was to start with. I do not follow his rationale. However, for the sake of progress, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 123 ordered to stand part of the Bill.