My Lords, Clause 41 makes some very significant changes to the law on cartels. At present, the competition authorities have to establish dishonesty by finding the directors or senior management of a company or their agents engaging in, say, market carve-ups, bid-rigging or price-fixing. “Dishonesty” takes us into the criminal law and, as a threshold, it is rather subjective at the point where it is triggered. I think that the Government are therefore convinced that it is too high a threshold and inhibits prosecution—or even investigation—into areas where a positive act of dishonesty has to be assumed, prima facie, before you start investigating. I understand and agree with that, in principle, and I agree on that part of the clause which removes the dishonesty threshold.
However, since making that judgment I have received representations, as colleagues no doubt have, from various groups of lawyers saying that this gets us into a worse situation than we started with because if you remove “dishonesty”, there will be court challenges as to why you proceeded in that case. I am not going to read out any of their learned opinions—the Minister will no doubt be grateful for that—but they indicate that there are still difficulties with doing that, which are in one sense compounded by the second part of this clause. I am hoping to remove subsections (4) and (5) but they interact and this is therefore complex, yet again.
The second part of this clause was introduced very late. It was not debated in another place and I object to it in principle. In effect, it is saying that if you inform people that you are engaging in market rigging, no offence has been committed. I understand that this was a sweetener to some industrial pressure from the CBI and others, but it is wrong. It is a highly detrimental provision; in effect, it is returning to the situation where there were registered cartels. We came away from that many decades ago and I think rightly so. If a bid rigging exercise exists, if a cartel of purchasers exists, if a price ring is in operation, if a market carve-up is taking place, surely it does not matter whether you told your lawyer or the Daily Telegraph that it is there. It is distorting competition and having an effect on market suppliers. Even if you told your customers, or at least some of them who are your suppliers, or even registered the matter with the authorities, it does not alter the fact that this is potentially an unfair trading practice. The effects are a distortion of the trade and the market and ultimately probably a detriment to consumers or suppliers. The CMA needs to be able to investigate that.
I appreciate that transparency; having told somebody can be mitigation in particular cases. However, I do not understand that it is an absolute defence, which is what effectively this clause seems to say. I think the Government need to clarify the first part of the clause and delete the second part. I think it is ill-thought out and an unwise concession to pressure. If we build on—but make clearer—how we can enforce this and trigger a threshold without the dishonesty provision being there, we certainly should not go down the road of transparency being a defence. It is not a defence, nor does it achieve the objective of freer markets, greater competition and better benefit to consumers. I beg to move.