My Lords, I shall speak also to the other amendments in the group, all of which deal with broadly the same issue: the regime on cartels.
In Clause 41 the Government have made a bold and necessary step, despite criticism from significant sections of business, to make the cartel criteria work. They seek to delete the requirement that for any cartel operation to be an offence under the 2002 Act it has to have been committed dishonestly. That is an unnecessarily high threshold of proof, which has greatly restricted the competition authorities’ ability to use their cartel powers to deal with cartels. The issue should be whether a cartel has been established that restricts competition and is to the detriment of consumers, not whether lies, fraud and deceit can be proved. Scrapping those dishonesty criteria in the first three subsections of Clause 41 is very welcome.
However, there is a “but” coming. The rest of Clause 41 rather spoils and undermines it. Subsections (4) and (5) limit the occasions when an offence can be committed and provide an absolute defence. New Section 188A in subsection (5) states that an offence has not been committed if, despite a cartel-like arrangement, customers are told; or, in the bid rigging situation, the assessors of the bidders, the clients, have been told; or the arrangements have been published; or that they are made in order to comply with another legal requirement. I fully accept the last defence—it makes sense—but the rest do not make sense. A damaging cartel arrangement can exist whether or not customers are told; a damaging cartel arrangement on contracting bids can be damaging to consumers and can exclude new entrants—small business mainly—whether or not the client has been told; and consumers and small business can suffer detriment whether or not such arrangements are published.
The purport of the notion about publication seems to go back to the old days when registered cartels were recognised and protected. It goes back two or three turns of the competition law provisions and is not sensible in this day and age. It is out of kilter with the rest of the Bill.
Unfortunately, it goes further than that. Even when an offence has been committed, new Section 188B in subsection (6) provides in absolute terms that it is a
defence if there was no intention to conceal the cartel arrangement; or, extraordinarily, that it was disclosed to legal advisers. Again, cartels can damage consumers and potential small business new entrants whether or not concealment was intentional and whether or not my learned friend has been informed. The effect of the cartel is therefore the issue, not the motivation and not the way in which it has been communicated.
My amendments would delete all reference in subsection (5) to no offence being committed under new Section 188A(1). That is, the only context in which an offence could be deemed absolutely not committed would be where it is to fulfil another legal requirement. The rest of the amendments would delete all references to a defence and replace it with a relevant mitigation. I recognise that there is some mitigation if you have told the customers or the client, but it is not an absolute defence. It needs to be taken into account by the court, but it does not prevent the court reaching a “guilty” verdict. Otherwise, if you do not adopt those two deletions, the positive move by the Government in the first couple of subsections of Clause 41 will be seriously undermined. I therefore hope that the Minister will recognise the sense of that and understand that the very positive consensus on the main issue in relation to this clause will be undermined unless we modify it broadly speaking according to this group of amendments. I beg to move.