Lord Borrie
Main Page: Lord Borrie (Labour - Life peer)Enterprise and Regulatory Reform Bill
Lord Borrie Excerpts
Lord Whitty
My Lords, I shall speak also to Amendment 24M. Amendment 24L deals with what issues the CMA will have to take into account when dealing with completed mergers. The principle should also apply to prospective mergers. When asking whether competition is lessened, as the clauses refer to, we need to consider why we want competition to be maintained or increased. Competition is not, in my view, an end in itself; it is about the efficiency of the newly created entity, its ability to compete—globally, in some instances—and whether it is in the long-term interests of consumers. In the vast majority of cases, the long-term interests of consumers are served by more competition rather than less. Therefore, lessening competition can be, and usually is, a detriment to consumers, but there are instances where that is not the case. Not all competition results in benefits to consumers.
Mergers can often reduce competition but sometimes manage to increase customer service and improve the way in which customers regard the supplier of the product or service. Unravelling mergers, particularly completed mergers, could, on occasion, result in less customer service. Hence, as well as a straightforward metric on what share of the market is covered by an already completed merger, we need to assess what the future of the new entity will be in terms of its long-term global competitiveness, which may not be relevant in all markets, but will be relevant in quite a few, and, in all markets, what is the effect on long-term consumer benefit of detriment. That needs to be written into the Bill. It should not be just a question of the metric of market share.
Amendment 24M also deals with consumer interests. Clause 23 deals with the investigative powers of the CMA. It includes provisions which are three and a half pages long but do not mention consumers once. Clause 23(2) deals with permitted purposes—that is, on what grounds investigations can take place. The amendment simply suggests that one of those permitted purposes ought to be in order to investigate situations when the CMA gets complaints or references from consumer organisations, specifically from those organisations which are designated as having super-complaint powers—that is, they can bring a worked-up super-complaint under present legislation to the OFT or the Competition Commission.
Designated bodies include Which?. They also include Citizens Advice and for the time being Consumer Focus. We will argue separately for a role for small businesses. A super-complaint has to be investigated. To get to that stage the consumer organisations must have a fully worked-out case. There are a number of cases that the OFT has looked into. I have a list here, which includes the supply of beer in UK pubs. Apparently CAMRA is a designated consumer organisation, which I had forgotten and am gratified to hear. We brought in a case when I was chair of the National Consumer Council and Consumer Focus on home credit. Citizens Advice first raised payment protection insurance, which is now a huge consumer issue, with its knock-on effect on other areas of consumer detriment yet to be completely resolved. There are a large number of super-complaints that have been considered over the last five years or so.
Consumer organisations also receive information about things that do not really amount to a super-complaint, or that would take too long, or that are too complex to turn into a super-complaint. At the moment the Bill covers neither the situation with super-complaints leading to an investigation nor complaints raised by designated consumer organisations that are short of a super-complaint. Amendment 24M deals with that situation. It deals with it under the mergers section and should also logically apply to the markets situation. These two amendments would embed more reference to consumers and the way in which consumers and consumer organisations can get into this competition system. I beg to move.
Lord Borrie
I support my noble friend Lord Whitty. He and the Minister, no doubt, will recall that when the Bill was going through the other place the then Minister, Mr Norman Lamb—I think that he now has a different post—got into a lot of discussion, because many people were concerned that the only interest of the consumer that was being expressed or mentioned was the consumer’s short-term interest. You can find references in Hansard, when this was being discussed in the other place, where the Minister emphasised more than once that we must be especially interested in the long-term interests of the consumer. These amendments are concerned with that.
Clearly you can have a merger which, in the short-term interest of the consumer, would seem to be a bad thing. A merger can lead to less competition when a company, rather than battling with other companies in the same field, is no longer inhibited by the competition from the company with which it is merging. We and the relevant regulatory bodies, especially the CMA, need to be concerned with the long-term interest. That is what matters in the long run. What immediately occurs this year or next year may be very unimportant compared with what it leads to. We want to know what are the long-term interest and benefit, or the disbenefit, to the consumer. That is what will count in the long run.
Lord Marland
I thought that that was a brilliant speech by the noble Lord, Lord Whitty—
Lord Borrie
My noble friend Lord Whitty has made a most useful point. There is no doubt at all that this Bill, and this part of the Bill, is a convenient vehicle. Governments often look for convenient vehicles to do things that they have already decided to deal with. In this case that may not be so, but I suggest that if it seems convenient to the noble Lord, Lord Whitty, I have no doubt that it will seem convenient to some members of the Government.
I think that what we on this side of the Committee this afternoon are saying is that we are not worried about particular words in an amendment, and we are not expecting the Minister to accept these particular amendments. However, we are expecting the Minister to take this back to his people with higher pay rates than he has, and indeed to the Ministry of Justice and all the other departments that are probably interested in this subject, because plurality of the media is vitally important. It is a public interest concept beyond competition. It is subsidiary to competition, in a sense. We want competition because we want plurality. We want plurality because we want diversity of opinions throughout the industry. The Bill is a convenient opportunity to deal with an aspect of Leveson which, I am sure, is not the most controversial at all—but it happens to be with us, and it happens to be on the Government’s agenda. There also happens to be a Report stage and a Third Reading at which he can take this further.
Lord Brooke of Sutton Mandeville
My Lords, knowing the nature of this Government and the fact that not everyone in it is paid, I wonder whether before my noble friend the Minister gets up, he could tell us whether he has a pay grade at all. If he does not then, quite clearly, he has an all-inclusive alibi against anything which is said to him from the opposite side.
Lord Borrie
Surely the noble Viscount would agree that these things sometimes have a deterrent value. People know about them; there is no need for them to be served with a writ.
Viscount Eccles
I quite agree about deterrents: a nuclear bomb is a deterrent. You have to provide a deterrent. Everyone will say, “Well we expected that, so now we’ll only go to 70 and not 90”. I am sorry, but I do not agree with the philosophy behind such a system. The minimum number of sanctions and penalties that you can achieve is the best, and the greatest degree of things working properly by consent is the best way to go.
Lord Whitty
My Lords, these amendments are a little more complicated. I am not sure that I understand this myself, I concede to the Minister. They address the issue of employees giving information to the Competition Commission, in this case during the course of anti-trust cases. As I understand it, Clause 33 provides, in secret price-fixing cases for example, powers to ask questions of the employees about the undertakings concerned.
By definition, the actual knowledge of price-fixing will be confined to a few relatively senior people—directors of the company or their senior managers or agents. However, it is the nature of an enterprise that people get to know these things one way or another. Sometimes, indeed, employees who themselves may be quite high up but not immediately responsible for the area get to know about it, or it could be a secretary or a clerk in the finance department, or whatever. They might volunteer the information, or at least respond once the investigators are on the case. The investigators would be using the powers within this clause, and they may get information voluntarily or from pressing a junior employee to say something that, frankly, was damaging, or would be seen as damaging, to the position of the company that had been carrying out the price-fixing, bid-rigging or whatever.
The changes proposed in my amendments would try to ensure that those employees, of whatever status, who give or volunteer information have at least as much protection as in the Employment Rights Act provisions for whistleblowers. It is therefore important that this is put beyond doubt, so this is effectively a “for the avoidance of doubt” clause. Otherwise the investigation may itself be inhibited on the one hand because people will not come forward with information, while on the other hand it could mean that individuals are prosecuted for breach of commercial confidence or, if they have refused information, are themselves prosecuted individually, rather than the company or the senior management or directors concerned, for failure to provide that information. I accept that there may be better ways of doing this but I am anxious that such people, as well as the investigation, should be protected by some clarification here. I beg to move.
Lord Borrie
My noble friend Lord Whitty has tabled a very valuable amendment here. It is most important that any employee who public-spiritedly, and in the public interest, discloses information that he has from his employment that may indicate some illegality on the part of his employer or senior employees must be protected. The Public Interest Disclosure Act is now embodied in the Employment Rights Act, which we discussed at an earlier stage, and it is most important that nothing be done elsewhere in the Bill that would damage that protection.
In some countries—in the United States, for example—employees and others get what is called a leniency benefit. They may have had some guilt themselves in knowing about an illegality that their firm was committing, but they may get leniency by informing the powers that be of what that illegality is. This provision does not go as far as that; I bring that point up only to make it clear that in some countries the protection given to the whistleblower is even better than in ours. Our protection is good and is embodied in the Bill, and the amendment that my noble friend wants to introduce would ensure that that protection existed.