Competition (Amendment etc.) (EU Exit) Regulations 2019

Debate between Lord Berkeley and Lord Stevenson of Balmacara

Tuesday 4th December 2018 Lords Chamber

[Lord Berkeley (Lab)]

My Lords, my understanding is that these draft regulations will apply only if we crash out or similar with no deal at the end of March next year. As the noble Baroness said, there are some interesting questions, to which we need answers.

I should like to get some answers from the Minister about what happens to some of the cases that are being considered at present by either the CMA or the European Commission competition authorities. Such cases run for years. They may have started now, but they certainly will not finish. Presumably anything that starts before 29 March next year will continue to some conclusion by the competition authority in the Commission. Is there a time limit on that? How will the relationships between the UK parties, if you like, and the Commission and the other parties be handled in that transition period, which may go on for a great deal longer than any transition that the Prime Minister may be negotiating? Some of these competition cases go on for years.

One case I have got slightly involved in watching is between two railway manufacturing companies, Siemens and Alstom. Siemens has its head office in Germany and Alstom has its head office in France, I think. They have been proposing a merger of all their businesses for several years now. The European Commission has got to the stage of issuing something that is not technically an opinion, but seems to me to be an opinion, which suggests that a merger would be a bad idea for competition across Europe in the whole railway sector. The companies appear to have been trying to promote the merger as a way of preventing Chinese industries taking over everything in Europe, including the UK. Both companies have subsidiaries in the UK; some make trains, some make signalling and some do other things. If that merger went ahead on the continent—in Europe—could the CMA stop a merger between their subsidiaries in this country, or vice versa? How would it work? If they wanted to merge in this country, would the CMA’s decision apply in Europe?

Presumably, if any of this is to work at all, there has to be some communication between the CMA and the European Commission’s competition department on issues such as this. I would welcome a comment from the Minister as to how that conversation—it may be only a conversation—would happen and the extent to which a decision by one party would be binding on the other. I look forward to his comments.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am very grateful to the Minister for letting me have a letter before this debate; it came in good time and was correctly addressed. I am sure he will be delighted to know that our discussion across the Dispatch Box in the Moses Room on our previous SI has borne perfect fruit, and I have enjoyed being able to get myself up to speed before dealing with the matter at hand.

I am looking forward to the Minister’s comments on the points raised by the noble Baroness, Lady Burt, and my noble friend Lord Berkeley. Between them, they have exposed some of the difficulties with this SI. Although there is very little that one would object to in what it tries to set out, it raises a number of doubts and concerns about the process that has been going on which are not entirely related to Brexit. Many of the SIs that we are seeing under the general heading of “EU exit regulations” are effectively cut-and-paste, substituting “UK and its institutions and authorities” for “EU”. But in a case such as this, which, as my noble friend says, could go on for years and may have to be transferred across and dealt with under joint arrangements, there is material that is subject to fine investigation and discussion. It affects thousands of consumers in many countries and many areas, and there are difficulties in trying to calibrate that effectively. It is not quite the same as the general ones. I just wanted to make that point.

There are general questions here as well as specific ones about the documentation, and I will cover both sets of questions as I go through it. My main concern relates to paragraphs 7.3 and 7.4 of the Explanatory Memorandum, which is otherwise very good and very clear. I thank the officials for their work on it. We miss impact statements, which are often a source of much more information about the issues before us, but in their absence the Explanatory Memorandum is very good. The first and main point here is the Government’s decision—there are other ways of dealing with this issue—to repeal Section 60 of the Competition Act, which provides that, as far as possible, the CMA and UK courts must interpret UK competition law in a manner consistent with EU competition law. There is a straightforward issue here about whether that would be appropriate in a no-deal Brexit situation. The Government could have had a number of options here, one of which would have been to be more generous in terms of the wish to see the best jurisprudence brought to bear on any cases that might be in front of the CMA. They could choose not to disallow the interpretive obligation but take it as appropriate, or some other wording. That would have been a way of ensuring that the best decisions were reached even though it might transgress a red line on the role of the courts in the EU post a no-deal Brexit.

If that is the issue, have the Government got it right by repealing Section 60 and bringing forward a modified section, Section 60A, to replace it, which provides in some detail that the competition regulators and the UK courts will continue to be bound by an obligation to ensure that there is no inconsistency with pre-exit EU competition case law but makes it impossible to bring in any jurisprudence that takes place afterwards except in limited circumstances? I am sure that Ministers have thought about this carefully and I would be grateful if the Minister would share with us a little of that thinking. It seems to me that, in an attempt to give expression to the red-line areas, they are causing what might turn out to be a legal—I am trying to think of the appropriate word—

[Lord Berkeley]

Minefield?