Enterprise and Regulatory Reform Bill

Session 2012 - 13
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Other Bills before Parliament

Enterprise and Regulatory Reform Bill

Enterprise and Regulatory Reform Bill
Part 3 — The Competition and Markets Authority
13

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Abolition of the Competition Commission and the OFT
(1)
The Competition Commission is abolished.
(2)
The Office of Fair Trading is abolished.
(3)
Schedule 5 (which amends the Competition Act 1998 and the Enterprise Act
2002 to make provision for the transfer of functions from the Competition
5
Commission and the Office of Fair Trading to the CMA and to make other
minor and consequential amendments) has effect.
(4)
Schedule 6 (which amends other enactments to make provision for the transfer
of certain functions from the Competition Commission and the Office of Fair
Trading to the CMA) has effect.
10
20
Transfer schemes
(1)
The Secretary of State may make one or more transfer schemes in connection
with—
(a)
the establishment of the CMA under this Act,
(b)
the transfer of functions under or by virtue of this Act from the
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Competition Commission or the Office of Fair Trading to the CMA, or
(c)
the abolition of that Commission or that Office under this Act.
(2)
A transfer scheme is a scheme for the transfer of property, rights and liabilities
of the Competition Commission or the Office of Fair Trading to—
(a)
the CMA, or
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(b)
a Minister of the Crown (as defined by section 8 of the Ministers of the
Crown Act 1975).
(3)
The things that may be transferred under a transfer scheme include—
(a)
property, rights and liabilities that could not otherwise be transferred;
(b)
property acquired, and rights and liabilities arising, after the making of
25
the scheme.
(4)
A transfer scheme may make consequential, supplementary, incidental or
transitional provision and may in particular—
(a)
create rights, or impose liabilities, in relation to property or rights
transferred;
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(b)
make provision about the continuing effect of things done by the
transferor in respect of anything transferred;
(c)
make provision about the continuation of things (including legal
proceedings) in the process of being done by, on behalf of, or in relation
to the transferor in respect of anything transferred;
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(d)
make provision for references to the transferor in an instrument or
other document in respect of anything transferred to be treated as
references to the transferee;
(e)
make provision for the shared ownership or use of property;
(f)
make provision that is the same as or similar to the TUPE regulations.
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(5)
A transfer scheme may provide-
(a)
for the scheme to be modified by agreement after it comes into effect;
(b)
for modifications to have effect from the date when the scheme first
came into effect.

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 1 — Mergers
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(6)
For the purposes of this section—
(a)
an individual who holds employment in the civil service is to be treated
as employed by virtue of a contract of employment, and
(b)
the terms of the individual’s employment in the civil service are to be
regarded as constituting the terms of the contract of employment.
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(7)
In this section—
“civil service” means the civil service of the State;
“TUPE regulations” means the Transfer of Undertakings (Protection of
Employment) Regulations 2006 (SI 2006/246);
references to rights and liabilities include rights and liabilities relating to
10
a contract of employment;
references to the transfer of property include references to the grant of a
lease.
Part 4
Competition Reform
15
Chapter 1
Mergers
Investigation powers
21
Investigation powers: mergers
(1)
Section 109 of the Enterprise Act 2002 (“the 2002 Act”) (investigation powers in
20
connection with attendance of witnesses etc.) is amended as follows.
(2)
Before subsection (1) insert—
“(A1)
For the purposes of this section, the permitted purposes are the
following—
(a)
assisting the CMA in carrying out any functions, including
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enforcement functions, exercisable by it under or by virtue of
this Part in connection with a matter that is or has been the
subject of a reference or possible reference under section 22 or
33;
(b)
assisting the CMA or the Secretary of State in carrying out any
30
functions, including enforcement functions, of the CMA or (as
the case may be) the Secretary of State under or by virtue of this
Part in connection with a matter that is or has been the subject
of a reference or possible reference under section 45 or 62.”
(3)
In subsection (1), for the words from the beginning to “under this Part,”
35
substitute “The CMA may, for a permitted purpose,”.
(4)
In subsection (2), for the words from the beginning to “under this Part,”
substitute “The CMA may, for a permitted purpose,”.
(5)
In subsection (3), for the words from the beginning to “under this Part,”
substitute “The CMA may, for a permitted purpose,”.
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Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 1 — Mergers
15

(6)
In subsection (4), after “shall” insert “—
(a)
specify the permitted purpose for which the notice is given,
including the function or functions in question; and
(b)
”.
(7)
In subsection (5), for the words from the beginning to “under this Part,”
5
substitute “The CMA, or any person nominated by it for the purpose, may for
a permitted purpose”.
(8)
In subsection (6), for the words from “for the purpose of” to “under this Part”
substitute “for a permitted purpose”.
(9)
After subsection (8) insert—
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“(8A)
In subsection (A1), “enforcement functions” means—
(a)
in relation to the CMA—
(i)
functions conferred by virtue of section 87 on the CMA
by enforcement orders;
(ii)
functions of the CMA in relation to the variation,
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supersession or release of enforcement undertakings or
the variation or revocation of enforcement orders;
(iii)
functions of the CMA under or by virtue of section 75,
76, 83 or 92 in relation to enforcement undertakings or
enforcement orders;
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(b)
in relation to the Secretary of State—
(i)
functions conferred by virtue of section 87 on the
Secretary of State by enforcement orders;
(ii)
functions of the Secretary of State in relation to the
variation, supersession or release of enforcement
25
undertakings or the variation or revocation of
enforcement orders;
(iii)
functions of the Secretary of State under or by virtue of
paragraph 5, 6 or 10 of Schedule 7 in relation to
enforcement undertakings or enforcement orders.”
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(10)
In section 110 (enforcement of powers under section 109: general), omit
subsection (4).
(11)
After section 110 insert—
“110A
Restriction on powers to impose penalties under section 110
(1)
No penalty shall be imposed by virtue of section 110(1) or (3) if more
35
than 4 weeks have passed since the day which is the relevant day in the
case in question; but this subsection shall not apply in relation to any
variation or substitution of the penalty which is permitted by virtue of
this Part.
(2)
In the following provisions of this section, “the section 109 power”
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means the power under section 109 to which the failure or (as the case
may be) the obstruction or delay in question relates.
(3)
Where the section 109 power is exercised in connection with an
enforcement function (within the meaning of that section), the relevant
day is the day when the enforcement undertaking concerned is
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superseded or released or (as the case may be) the enforcement order
concerned is revoked.

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 1 — Mergers
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(4)
Except where subsection (3) applies, the relevant day is the day
determined in accordance with the following provisions of this section.
(5)
Where the section 109 power is exercised for the purpose mentioned in
section 109(A1)(a) in connection with a matter that is the subject of a
possible reference under section 22 or 33, the relevant day is the day
5
when the CMA finally decides whether to make the reference.
(6)
Where the section 109 power is exercised for the purpose mentioned in
section 109(A1)(a) in connection with a matter that is the subject of a
reference under section 22 or 33, the relevant day is the day when the
reference is finally determined (see section 79).
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(7)
Where the section 109 power is exercised for the purpose mentioned in
section 109(A1)(b) in connection with a matter that is the subject of a
possible reference under section 45 or 62, the relevant day is the day
when the Secretary of State finally decides whether to make the
reference.
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(8)
Where the section 109 power is exercised for the purpose mentioned in
section 109(A1)(b) in connection with a matter that is the subject of a
reference under section 45 or 62, the relevant day is the day when the
reference is finally determined.
110B
Section 110A: supplementary provision
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(1)
For the purpose of section 110A(5), the CMA finally decides whether to
make a reference under section 22 or 33 if—
(a)
the CMA decides that the duty to make such a reference applies;
(b)
the CMA accepts an undertaking under section 73;
(c)
the CMA decides not to make such a reference (otherwise than
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because it has accepted an undertaking under section 73);
(d)
the initial period for the purposes of section 34ZA expires
without the CMA having complied with the duty under
subsection (1) of that section;
(e)
the preliminary assessment period for the purposes of section
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34A expires without the CMA having complied with the duty
under subsection (1) of that section;
(f)
the period permitted by section 73A for the CMA to make a
decision required by subsection (2)(a) or (3) of that section
expires without the CMA having made the decision.
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(2)
For the purpose of section 110A(5), the time when the CMA finally
decides whether to make a reference under section 22 or 33 is—
(a)
in a case falling within subsection (1)(a), the making of the
decision that the duty to make such a reference applies;
(b)
in a case falling within subsection (1)(b), the acceptance of the
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undertaking;
(c)
in a case falling within subsection (1)(c), the making of the
decision not to make the reference;
(d)
in a case falling within subsection (1)(d), the expiry of the initial
period;
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(e)
in a case falling within subsection (1)(e), the expiry of the
preliminary assessment period;

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 1 — Mergers
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(f)
in a case falling within subsection (1)(f), the expiry of the period
in question.
(3)
For the purpose of section 110A(7), the Secretary of State finally decides
whether to make a reference under section 45 or 62 if—
(a)
the Secretary of State makes such a reference;
5
(b)
the Secretary of State accepts an undertaking under paragraph
3 of Schedule 7;
(c)
the Secretary of State decides not to make such a reference
(otherwise than because of the acceptance of an undertaking
under paragraph 3 of Schedule 7);
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(d)
the preliminary assessment period for the purposes of section
46A expires without the CMA having complied with the duty
under subsection (1) of that section.
(4)
For the purpose of section 110A(7), the time when the Secretary of State
finally decides whether to make a reference under section 45 or 62 is—
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(a)
in a case falling within subsection (3)(a), the making of the
reference;
(b)
in a case falling within subsection (3)(b), the acceptance of the
undertaking;
(c)
in a case falling within subsection (3)(c), the making of the
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decision not to make the reference;
(d)
in a case falling within subsection (3)(d), the expiry of the
preliminary assessment period.
(5)
Paragraph 7(8) to (10) of Schedule 7 applies for deciding if and when a
reference under section 45(2) or (3) or 62(2) is finally determined for the
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purpose of section 110A(8) as it applies for deciding those questions for
the purpose of paragraph 7 of Schedule 7.
(6)
Paragraph 8(7) to (9) of Schedule 7 applies for deciding if and when a
reference under section 45(4) or (5) or 62(3) is finally determined for the
purpose of section 110A(8) as it applies for deciding those questions for
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the purpose of the definition of “relevant period” in paragraph 8(6) of
that Schedule.”
(12)
In section 111 (penalties), in subsection (5)(b)—
(a)
in sub-paragraph (i), omit “or (as the case may be) the obstruction or
delay is removed”, and
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(b)
in sub-paragraph (ii), for the words from “the day” to the end of the
sub-paragraph substitute “the day which is the relevant day in the case
in question for the purposes of section 110A”.
Interim measures
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Interim measures: pre-emptive action: mergers
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(1)
Omit section 71 of the 2002 Act (initial undertakings: completed mergers).
(2)
Section 72 of that Act (initial enforcement orders: completed mergers) is
amended as follows.

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 1 — Mergers
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(3)
For subsection (1) substitute—
“(1)
Subsection (2) applies where—
(a)
the CMA is considering whether to make a reference under
section 22 or 33; and
(b)
the CMA has reasonable grounds for suspecting that it is or may
5
be the case that two or more enterprises have ceased to be
distinct or that arrangements are in progress or in
contemplation which, if carried into effect, will result in two or
more enterprises ceasing to be distinct.”
(4)
Omit subsection (3).
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(5)
Before subsection (4) insert—
“(3A)
Subsection (3B) applies where—
(a)
subsection (1)(a) and (b) applies; and
(b)
the CMA also has reasonable grounds for suspecting that pre-
emptive action has or may have been taken.
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(3B)
The CMA may by order, for the purpose of restoring the position to
what it would have been had the pre-emptive action not been taken or
otherwise for the purpose of mitigating its effects—
(a)
do anything mentioned in subsection (2)(b) to (d);
(b)
impose such other obligations, prohibitions or restrictions as it
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considers appropriate for that purpose.”
(6)
After subsection (3B) insert—
“(3C)
A person may, with the consent of the CMA, take action or action of a
particular description where the action would otherwise constitute a
contravention of an order under this section.”
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(7)
In subsection (6), in each of paragraphs (a) and (d), after “section 22” insert “or
33”.
(8)
After subsection (7) insert—
“(8)
In this section “pre-emptive action” means action which might
prejudice the reference concerned or impede the taking of any action
30
under this Part which may be justified by the CMA’s decisions on the
reference.”
(9)
In the heading for “completed mergers” substitute “completed or anticipated
mergers”.
(10)
Schedule 7 (which makes further provision about interim measures under Part
35
3 of the 2002 Act) has effect.
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Interim measures: financial penalties: mergers
(1)
After section 94 of the 2002 Act (rights to enforce undertakings and orders
under Part 3) insert—
“94A
Interim undertakings and orders under this Part: penalties
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(1)
Where the appropriate authority considers that a person has, without
reasonable excuse, failed to comply with an interim measure, it may
impose a penalty of such fixed amount as it considers appropriate.

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Part 4 — Competition Reform
Chapter 1 — Mergers
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(2)
A penalty imposed under subsection (1) shall not exceed 5% of the total
value of the turnover (both in and outside the United Kingdom) of the
enterprises owned or controlled by the person on whom it is imposed.
(3)
For the purposes of subsection (2), the Secretary of State may by order
make provision for determining—
5
(a)
when an enterprise is to be treated as controlled by a person;
and
(b)
the turnover (both in and outside the United Kingdom) of an
enterprise.
(4)
An order under subsection (3)(b) may, in particular, make provision as
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to—
(a)
the amounts which are, or which are not, to be treated as
comprising an enterprise’s turnover;
(b)
the date or dates by reference to which an enterprise’s turnover
is to be determined.
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(5)
An order under subsection (3) may, in particular, make provision
enabling the appropriate authority to determine matters of a
description specified in the order (including any of the matters
mentioned in paragraphs (a) and (b) of subsection (4)).
(6)
The Secretary of State may by order amend subsection (2) so as to alter
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the percentage for the time being mentioned there to any percentage
not exceeding 5%.
(7)
Sections 112 to 115 apply in relation to a penalty imposed under subsection (1)
as they apply in relation to a penalty of a fixed amount imposed under section
110(1), with the modification that any reference in those provisions to the
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CMA is to be read as a reference to the person who imposed the penalty under
this section.
(8)
In this section—
“interim measure” means—
(a)
an undertaking under section 80, or
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(b)
an order under section 72 or 81 or paragraph 2 of
Schedule 7;
“appropriate authority” means—
(a)
in relation to an interim measure which is an order made
by the Secretary of State under paragraph 2 of Schedule
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7, the Secretary of State;
(b)
in relation to any other interim measure, the CMA.
94B
Statement of policy in relation to powers under sections 94 and 94A
(1)
The CMA shall prepare and publish a statement of policy in relation to
the use of its powers under—
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(a)
section 94, insofar as they relate to interim measures; and
(b)
section 94A.
(2)
The CMA shall, in particular, include a statement about the
considerations relevant to the determination of the amount of any
penalty imposed under section 94A.
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