Enterprise and Regulatory Reform Bill

Session 2012 - 13
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Enterprise and Regulatory Reform Bill

Enterprise and Regulatory Reform Bill
Schedule 11 — Markets: investigation powers
183

Schedule 11
Section 28(8)

Markets: investigation powers
Enforcement of investigation powers
1
After section 174 of the 2002 Act insert—
“174A
Enforcement of powers under section 174: general
5
(1)
Where the CMA considers that a person has, without reasonable
excuse, failed to comply with any requirement of a notice under
section 174, it may impose a penalty in accordance with section 174D.
(2)
The CMA may proceed (whether at the same time or at different
times) under subsection (1) and section 138A(3) in relation to the
10
same failure.
(3)
Where the CMA considers that a person has intentionally obstructed
or delayed another person in the exercise of its powers under section
174(7), it may impose a penalty in accordance with section 174D.
(4)
A person commits an offence if the person intentionally alters,
15
suppresses or destroys any document which the person has been
required to produce by a notice under section 174.
(5)
But a person does not commit an offence under subsection (4) in
relation to any act which constitutes a failure to comply with a notice
under section 174 if the CMA has proceeded against the person
20
under subsection (1) in relation to that failure.
(6)
A person who commits an offence under subsection (4) is liable—
(a)
on summary conviction, to a fine not exceeding the statutory
maximum;
(b)
on conviction on indictment, to imprisonment for a term not
25
exceeding 2 years or to a fine or to both.
(7)
The CMA shall not proceed against a person under subsection (1) in
relation to an act which constitutes an offence under subsection (4) if
that person has been found guilty of that offence.
(8)
In deciding whether and, if so, how to proceed under subsection (1)
30
or (3) or section 138A(3), the CMA shall have regard to the statement
of policy which was most recently published under section 174E at
the time the failure or (as the case may be) the obstruction or delay
concerned occurred.
(9)
In this section—
35
(a)
the reference to the production of a document includes a
reference to the production of a legible and intelligible copy
of information recorded otherwise than in legible form; and
(b)
the reference to suppressing a document includes a reference
to destroying the means of reproducing information
40
recorded otherwise than in legible form.

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Schedule 11 — Markets: investigation powers
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174B
Restriction on powers to impose penalties under section 174A
(1)
No penalty shall be imposed by virtue of section 174A(1) or (3) if
more 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
5
permitted by virtue of this Part.
(2)
In the following provisions of this section, “the section 174 power”
means the power under section 174 to which the failure or (as the
case may be) the obstruction or delay in question relates.
(3)
Where the section 174 power is exercised for the purpose mentioned
10
in section 174(1)(a), the relevant day is the day when the CMA finally
concludes the carrying out of its section 5 functions.
(4)
Where the section 174 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
15
concerned is superseded or released or (as the case may be) the
enforcement order concerned is revoked.
(5)
Except where subsection (3) or (4) applies, the relevant day is the day
determined in accordance with the following provisions of this
section.
20
(6)
Where the section 174 power is exercised for the purpose mentioned
in section 174(1)(b) in connection with a matter that is the subject of
a possible reference under section 131, the relevant day is the day
when the CMA finally decides whether to make the reference.
(7)
Where the section 174 power is exercised for the purpose mentioned
25
in section 174(1)(b) in connection with a matter that is the subject of
a reference under section 131 or 132, the relevant day is the day when
the reference is finally determined (see section 183).
(8)
Where the section 174 power is exercised for the purpose mentioned
in section 174(1)(c) in connection with a matter that is the subject of a
30
possible reference under section 140A(4) or (5), the relevant day is
the day when the Secretary of State makes the reference.
(9)
Where the section 174 power is exercised for the purpose mentioned
in section 174(1)(c) in connection with a matter that is the subject of a
reference under section 140A(5), the relevant day is the day when the
35
reference is finally determined (see section 183).
174C
Section 174B: supplementary provision
(1)
For the purpose of section 174B(3), the CMA finally concludes the
carrying out of its section 5 functions if—
(a)
the CMA publishes the market study report under section
40
131B(4) or (as the case may be) gives it to the Secretary of
State under section 140A(2); or
(b)
the period permitted for the preparation by the CMA of the
market study report and for the report to be published under
section 131B(4) or (as the case may be) given to the Secretary
45
of State under section 140A(2) expires and no such report has
been so prepared or no such action has been taken.

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Schedule 11 — Markets: investigation powers
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(2)
For the purpose of section 174B(3), the time when the CMA finally
concludes the carrying out of its section 5 functions is—
(a)
in a case falling within subsection (1)(a), the publication of
the report or (as the case may be) the giving of it to the
Secretary of State;
5
(b)
in a case falling within subsection (1)(b), the expiry of the
period concerned.
(3)
For the purpose of section 174B(6), the CMA finally decides whether
to make a reference under section 131 if—
(a)
the CMA makes such a reference;
10
(b)
the CMA accepts an undertaking under section 154 instead of
making such a reference;
(c)
the CMA publishes notice that it has otherwise decided not to
make such a reference; or
(d)
the period permitted for the preparation by the CMA of a
15
market study report in relation to the matter and for the
report to be published under section 131B(4) has expired and
no such report has been so prepared or published.
(4)
For the purpose of section 174B(6), the time when the CMA finally
decides whether to make a reference under section 131 is—
20
(a)
in a case falling within subsection (2)(a), the making of the
reference;
(b)
in a case falling within subsection (2)(b), the acceptance of the
undertaking concerned;
(c)
in a case falling within subsection (2)(c), the publication of the
25
notice concerned;
(d)
in a case falling within subsection (2)(d), the expiry of the
period concerned.
(5)
In subsection (4)(b) the reference to the acceptance of the
undertaking concerned shall, in a case where the CMA has accepted
30
a group of undertakings under section 154, be treated as a reference
to the acceptance of the last undertaking in the group; but
undertakings which vary, supersede or revoke earlier undertakings
shall be disregarded for the purposes of subsections (2)(b) and
(4)(b).”
35
174D
Penalties
(1)
A penalty imposed under section 174A(1) or (3) shall be of such
amount as the CMA considers appropriate.
(2)
In the case of a penalty imposed under section 174A(1), the amount
may be—
40
(a)
a fixed amount;
(b)
an amount calculated by reference to a daily rate; or
(c)
a combination of a fixed amount and an amount calculated
by reference to a daily rate.
(3)
In the case of a penalty imposed under section 174A(3), the amount
45
shall be a fixed amount.
(4)
A penalty imposed under section 174A(1) shall not—

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Schedule 11 — Markets: investigation powers
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(a)
in the case of a fixed amount, exceed such amount as the
Secretary of State may by order specify;
(b)
in the case of an amount calculated by reference to a daily
rate, exceed such amount per day as the Secretary of State
may so specify; and
5
(c)
in the case of a fixed amount and an amount calculated by
reference to a daily rate, exceed such fixed amount and such
amount per day as the Secretary of State may so specify.
(5)
A penalty imposed under section 174A(3) shall not exceed such
amount as the Secretary of State may by order specify.
10
(6)
An order under subsection (4) or (5) shall not specify—
(a)
in the case of a fixed amount, an amount exceeding £30,000;
(b)
in the case of an amount calculated by reference to a daily
rate, an amount per day exceeding £15,000; and
(c)
in the case of a fixed amount and an amount calculated by
15
reference to a daily rate, a fixed amount exceeding £30,000
and an amount per day exceeding £15,000.
(7)
Before making an order under subsection (4) or (5), the Secretary of
State shall consult—
(a)
the CMA; and
20
(b)
such other persons as the Secretary of State considers
appropriate.
(8)
In imposing a penalty by reference to a daily rate—
(a)
no account is to be taken of any days before the service on the
person concerned of notice of the penalty under section 112
25
(as applied by subsection (10)); and
(b)
unless the CMA determines an earlier date (whether before
or after the penalty is imposed), the amount payable ceases to
accumulate at the beginning of the earliest of the days
mentioned in subsection (9).
30
(9)
Those days are—
(a)
the day on which the requirement of the notice concerned
under section 174 is satisfied;
(b)
the day which is the relevant day in the case in question for
the purposes of section 174B.
35
(10)
Sections 112 to 115 apply in relation to a penalty imposed under section
174A(1) or (3) as they apply in relation to a penalty imposed under section
110(1) or (3).
174E
Statement of policy on penalties
(1)
The CMA shall prepare and publish a statement of policy in relation
40
to the enforcement of notices given under section 174.
(2)
The statement shall, in particular, include a statement about the
considerations relevant to the determination of the nature and
amount of any penalty imposed under section 174A(1) or (3).
(3)
The CMA may revise its statement of policy and, where it does so, it
45
shall publish the revised statement.

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(4)
The CMA shall consult such persons as it considers appropriate
when preparing or revising its statement of policy.”
Investigation powers: miscellaneous consequential amendments
2
Part 4 of the 2002 Act (market investigations) is amended as follows.
3
Omit section 175 (enforcement of powers under section 174: offences).
5
4
Omit section 176 (investigation powers of the Commission).
5
In section 179 (review of decisions under Part 4), in subsection (2)(a), for
“section 110(1) or (3) as applied by section 176” substitute “section 174A(1)
or (3)”.
6     (1)
Section 181 (orders under Part 4) is amended as follows.
10
      (2)
In subsection (4), for the words from “or 161,” to “section 176” substitute “,
161, 174D(4) or (5), or under section 114(3)(b) or (4)(b) as applied by section
174D”.
      (3)
In subsection (10)—
(a)
omit “111(4) or (6) or”, and
15
(b)
for “176” substitute “174D”.
Schedule 12
Section 30

Markets: time-limits
Market studies and decisions whether to make a reference under section 131
1
Before section 131 of the 2002 Act (power of OFT to make market
20
investigation references) insert—
“Market studies
130A
Duty to publish market study notice
(1)
Where the CMA is proposing to carry out its functions under section
5 in relation to a matter for the purposes mentioned in subsection (2),
25
the CMA must publish a notice under this section (referred to in this
Part as a “market study notice”).
(2)
The purposes are—
(a)
to consider the extent to which a matter in relation to the
acquisition or supply of goods or services of one or more than
30
one description in the United Kingdom has or may have
effects adverse to the interests of consumers; and
(b)
to assess the extent to which steps can and should be taken to
remedy, mitigate or prevent any such adverse effects.
(3)
A market study notice shall, in particular, specify—
35
(a)
the matter in relation to which the CMA is proposing to carry
out its functions under section 5;

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Schedule 12 — Markets: time-limits
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(b)
the period during which representations may be made to the
CMA in relation to the matter; and
(c)
the dates by which the CMA is required to comply with the
requirements imposed on it by sections 131A and 131B.”
2
After section 131 of that Act insert—
5
“131A
Decisions about references under section 131: consultation
(1)
This section applies to a case where the CMA has published a market
study notice and—
(a)
the CMA is proposing to make a reference under section 131
in relation to the matter specified in the notice; or
10
(b)
a representation has been made to the CMA within the period
specified in the notice under section 130A(3)(b) to the effect
that such a reference should be made but the CMA is
proposing not to make such a reference.
(2)
The CMA shall—
15
(a)
publish notice of the proposal concerned; and
(b)
consult the relevant persons about the proposal, in such
manner as it considers practicable, before deciding whether
to make a reference.
(3)
The CMA may, for the purposes of subsection (1), ignore any
20
representation which it considers to be frivolous or vexatious.
(4)
For the purposes of subsection (2), a person is a “relevant person” if
the CMA considers that its decision whether to make a reference is
likely to have a substantial impact on the person’s interests.
(5)
In consulting a person for the purposes of this section, the CMA
25
shall, so far as practicable, give its reasons for the proposal.
(6)
In considering what is practicable for the purposes of this section, the
CMA shall, in particular, have regard to—
(a)
the restrictions imposed by the time-table for making the
decision (see section 131B); and
30
(b)
any need to keep what is proposed, or the reasons for it,
confidential.
131B
Market studies and the making of decisions to refer: time-limits
(1)
Where the CMA has published a market study notice in a case to
which section 131A applies, the CMA shall, within the period of 6
35
months beginning with date on which it publishes the notice—
(a)
publish the notice under section 131A(2)(a); and
(b)
begin the process of consultation under section 131A(2)(b)
(but the CMA need not complete the process within that
period).
40
(2)
Subsection (3) applies where—
(a)
the CMA has published a market study notice;
(b)
no representation has been made to the CMA within the
period specified in the notice under section 130A(3)(b) to the
effect that a reference under section 131 should be made in
45
relation to the matter specified in the notice; and

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(c)
the CMA has decided not to make such a reference.
(3)
The CMA shall, within the period of 6 months beginning with the
date on which it publishes the market study notice, publish notice of
the decision not to make a reference.
(4)
Where the CMA has published a market study notice it shall, within
5
the period of 12 months beginning with the date on which it
publishes the notice, prepare and publish a report (referred to in this
Part as a “market study report”) which sets out—
(a)
the findings of the CMA in relation to the matter specified in
the notice; and
10
(b)
the action (if any) which the CMA proposes to take in relation
to the matter.
(5)
In a case to which section 131A applies, the market study report
shall, in particular, contain—
(a)
the decision of the CMA to make a reference under section
15
131 in relation to the matter specified in the market study
notice, the decision to accept an undertaking under section
154 instead of making such a reference or (as the case may be)
the decision otherwise not to make such a reference;
(b)
the CMA’s reasons for the decision; and
20
(c)
such information as the CMA considers appropriate for
facilitating a proper understanding of its reasons for the
decision.
(6)
Where a market study report contains a decision of the CMA to make
a reference under section 131 in relation to a matter, the CMA shall,
25
at the same time as it publishes the report, make the reference.
(7)
This section is subject to section 140A (duty of Secretary of State to
refer in public interest intervention cases).
131C
Time-limits under section 131B: supplementary
(1)
The Secretary of State may by order amend section 131B so as to alter
30
one or more of the following periods—
(a)
the period of 6 months mentioned in subsection (1) or (3) or
any period for the time being mentioned in either of those
subsections in substitution for that period;
(b)
the period of 12 months mentioned in subsection (4) or any
35
period for the time being there mentioned in substitution for
that period.
(2)
But no alteration may be made by virtue of subsection (1) which
results in—
(a)
the period for the time being mentioned in subsection (1) or
40
(3) exceeding 6 months; or
(b)
the period for the time being mentioned in subsection (4)
exceeding 12 months.
(3)
Before making an order under this section the Secretary of State shall
consult the CMA and such other persons as the Secretary of State
45
considers appropriate.”