The purpose of this group of amendments is to try to ensure that we begin as we mean to go on. It has been said right from the beginning that the focus of the regime is on the public, consumers, traders and small businesses that are given a bad time in the marketplace. I think we all agree that they are the people who should be enabled to settle their claims and not to make the fact that the claims can be settled into a charter for legal advisers, third-party funders and ad hoc organisations collected together. That has been the Government’s position right from the start.
Of course, the fact that we focus on the people who are in the best position to put the claim because they have suffered the damage does not mean that the legal profession will not be involved. No one would dream of accepting any form of settlement in this field without taking good legal advice. That would apply to defendants as well. Nevertheless, the endeavour should be, as my noble friend said, that the benefit does not go to what you might call the legal outriders: claims managers, hedge funds and so on.
The question I asked myself on this group of amendments was how to achieve more certainty that we will maintain the focus on consumers. That seems to me to be a matter of the balance between the statute
and the tribunal rules. Those are the two places in which the rules of the game will be settled. To get the balance right, I think we must ensure that some things which are not at the moment mandatory under the Bill become things which must happen rather than things which may happen.
That is the reason for Amendments 41D and 41F. Three matters are added by those amendments to what will be subsection (5): two at the beginning and one at the end. The first to be added at the beginning is for the competition authority to make sure that,
“it considers that the proposed collective proceedings are justiciable and have merit”.
There is much evidence of vexatious claims being made in other jurisdictions. If those claims are speculative or even worse—I think there is evidence of this in some provinces in Canada whose systems have been cited—they become blackmail claims. The argument is put that it would be less expensive to settle and pay over some money than to fight through a collective action.
The second addition that Amendment 41D seeks to insert is that the tribunal may make a relevant order only,
“when it considers that early settlement will not be achieved either by alternative dispute resolution or any other means of resolving the dispute”.
There is, of course, a concentration on alternative dispute resolution, and that comes also from Europe. I think we would all want to feel that the tribunal had a statutory duty to find out not just whether or not such a system is available, which is the way the measure is drafted in its rules at present, but to satisfy itself that these matters had been considered and that if there was a faster and cheaper way of coming to a resolution which was in the interests of all the parties, it would be followed. As we know, sometimes irrationality creeps into disputes, when a rational approach tells you that it would be better to settle.
Thirdly, another of my proposed amendments seeks to deal with the fact that my noble friend on the Front Bench said in Grand Committee that the Government did not want to restrict the flexibility of the Competition Appeal Tribunal. I quite accept that. Therefore, I have included in Amendment 41F the catch-all provision:
“Nothing in subsection (5) prevents the Competition Appeal Tribunal from taking into account any other matter which it considers to be relevant”,
so that it is not constrained.
I have tabled two small amendments because I was concerned with the thought that the Bill as drafted seemed to imply that only one person would apply for authorisation. It seems to me likely that if there is a fairly big issue and the Bill is very open regarding who may apply for authorisation, two or three people may apply. Therefore, Amendments 41E and 41G seek to replace “the” with “a” at lines 4 and 14 of page 113. I am told that that drafting is defective but I would like to understand the Government’s position on this point. If more than one person seeks authorisation, how do the Government see that situation being dealt with? Presumably, some form of appeal procedure will need to be made available to those who are not chosen. I do not think the Bill covers that issue. I refer back to my
short description of a Bill Committee debate in the other place where that point was raised. As far as I can see, it was never settled, and is not settled in the Bill as drafted.
Amendment 41H seeks to define and limit who can bring a claim. It seems to me that it has been Which?, and now we are going to an open field. Would it not be much more sensible to make a move which greatly expands the number of people who can make a claim and, of course, expands the type of claim they can make from that of opt in only to opt in and opt out, and not to have the possibility of a very wide range of people applying for authorisation? Indeed, if we are to keep the focus on the public, traders and businesses, we want to make sure that those affected are represented by people who collectively have their interests at heart and know a bit about the detail of the business that they are in as well. Therefore, Amendment 41H seeks to leave out “a person”, which is the general description at the moment, and insert,
“any appropriate consumer representative body or trade association”.
I am bound to say this seems to me to be completely in line with what the Government have said throughout.
7.15 pm
At Second Reading, the Secretary of State said that this provision is not for lawyers but for the people who are directly affected. In responding to consultation, the Government said that lawyers, third-party funders and special purpose vehicles would be ruled out. However, the Explanatory Notes to the Bill contain the phrase that I have used. Therefore, in turning the proposition from the negative—that it is not to be this kind of person—to the positive—it is to be that kind of person— I believe that I am acting in accordance with the Government’s written and expressed policy in inviting the Government to do what they have already said they intend to do.
I turn to the amendments to new Section 47B(8)(b). It is important that I read into the record that new Section 47B(8)(b) says,
“only if the Tribunal considers that it is just and reasonable for that person to act as a representative in those proceedings”.
That is a very subjective test. The phrase “just and reasonable” is more normally represented as “fair, just and reasonable”. The latter phrase is very frequently used in proceedings to judge the behaviour of people in the past. It comes into negligence actions very frequently and is used to judge the past. I have asked whether there are precedents for it being used to judge the future. At present, no precedent has been produced. I believe that it will not be at all easy for the Competition Appeal Tribunal to look at a prospective authorised person and say, “Oh goodness, yes, I can see as a matter of judgment that this person is going to be just and reasonable”. We have to remember that there is no previous track record because this is a new procedure including the opt out, which has not been the case previously. Therefore, Amendment 41J proposes to substitute for the relevant wording the phrase,
“the person has the experience and standing appropriate to the size, type and extent of the claims to be made”.
Amendment 41K seeks to,
“leave out ‘just and reasonable’ and insert ‘just, reasonable and in the primary interests of the class members’”.
In the first case, what we are looking at is references that the party can bring. What have they done in the past? Who are they? Do they have the knowledge and the skills which would make them good leaders of a collective action? In the second case, we are looking at their motivation. Do they really want to work in the interests of the class members or not?
I apologise for speaking at length. In summary, a scheme is involved in these eight amendments. They are designed to shift the balance to give more statutory backing to the operations of the Competition Appeal Tribunal as it writes its rules and to enable the regime to develop against the background of a scheme which has been decided by Parliament and not one which is left entirely to the tribunal. I beg to move.