Enterprise and Regulatory Reform Bill (HC Bill 61)

persons as the relevant authority considers appropriate, undertakings
to take such action as the relevant authority considers appropriate.”

(3) After subsection (2B) of that section insert—

“(2C) A person may, with the consent of the relevant authority, take action of
5a particular description where the action would otherwise constitute a
contravention of an undertaking accepted under this section.”

(4) In section 158 (interim orders: Part 4), after subsection (2) insert—

“(2A) Subsection (2B) applies where—

(a) subsection (1)(a) to (c) applies; and

(b) 10the relevant authority has reasonable grounds for suspecting
that pre-emptive action has or may have been taken.

(2B) The relevant authority 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) 15do anything mentioned in subsection (2)(b) to (d);

(b) impose such other obligations, prohibitions or restrictions as it
considers appropriate for that purpose.”

(5) After subsection (2B) of that section insert—

“(2C) A person may, with the consent of the relevant authority, take action of
20a particular description where the action would otherwise constitute a
contravention of an order under this section.”

Time-limits and procedure

31 Market studies and market investigations: consultation and time-limits

Schedule 12 (which makes provision about consultation in relation to decisions
25whether to make a market investigation reference and about time-limits in
relation to the conduct of market studies and the markets investigation
reference regime under Part 4 of the 2002 Act) has effect.

CHAPTER 3 Anti-trust

Investigation powers

32 30Investigations: power to ask questions

(1) Part 1 of the Competition Act 1998 (“the 1998 Act”) (competition) is amended
as follows.

(2) After section 26 (powers when conducting investigations) insert—

“26A Investigations: power to ask questions

(1) 35For the purposes of an investigation, the CMA may give notice to an
individual who has a connection with a relevant undertaking requiring

the individual to answer questions with respect to any matter relevant
to the investigation—

(a) at a place specified in the notice, and

(b) either at a time so specified or on receipt of the notice.

(2) 5The CMA must give a copy of the notice under subsection (1) to each
relevant undertaking with which the individual has a current
connection at the time the notice is given to the individual.

(3) The CMA must take such steps as are reasonable in all the
circumstances to comply with the requirement under subsection (2)
10before the time at which the individual is required to answer questions.

(4) Where the CMA does not comply with the requirement under
subsection (2) before the time mentioned in subsection (3), it must
comply with that requirement as soon as practicable after that time.

(5) A notice under subsection (1) must be in writing and must indicate—

(a) 15the subject matter and purpose of the investigation, and

(b) the nature of the offence created by section 44.

(6) For the purposes of this section—

(a) an individual has a connection with an undertaking if he or she
is or was—

(i) 20concerned in the management or control of the
undertaking, or

(ii) employed by, or otherwise working for, the
undertaking, and

(b) an individual has a current connection with an undertaking if,
25at the time in question, he or she is so concerned, is so employed
or is so otherwise working.

(7) In this section, a “relevant undertaking” means an undertaking whose
activities are being investigated as part of the investigation in
question.”

(3) 30For the heading of section 26 substitute “Investigations: powers to require
documents and information”.

(4) Section 30A (use of statements in prosecution) is amended as follows.

(5) The existing text becomes subsection (1).

(6) In subsection (1), for “26 to 28A” substitute “26 and 27 to 28A”.

(7) 35After that subsection insert—

“(2) A statement by an individual in response to a requirement imposed by
virtue of section 26A (a “section 26A statement”) may only be used in
evidence against the individual—

(a) on a prosecution for an offence under section 44, or

(b) 40on a prosecution for some other offence in a case falling within
subsection (3).

(3) A prosecution falls within this subsection if, in the proceedings—

(a) in giving evidence, the individual makes a statement
inconsistent with the section 26A statement, and

(b) evidence relating to the section 26A statement is adduced, or a
question relating to it is asked, by or on behalf of the individual.

(4) A section 26A statement may not be used in evidence against an
undertaking with which the individual who gave the statement has a
5connection on a prosecution for an offence unless the prosecution is for
an offence under section 44.

(5) For the purposes of subsection (4), an individual has a connection with
an undertaking if he or she is or was—

(a) concerned in the management or control of the undertaking, or

(b) 10employed by, or otherwise working for, the undertaking.”

33 Civil enforcement of investigation powers

(1) Part 1 of the 1998 Act (competition) is amended as follows.

(2) After section 40 insert—

“Civil sanctions

40A 15Penalties: failure to comply with requirements

(1) Where the CMA considers that a person has, without reasonable
excuse, failed to comply with a requirement imposed on the person
under section 26, 26A, 27, 28 or 28A, it may impose a penalty of such
amount as it considers appropriate.

(2) 20The amount may be—

(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) 25A penalty imposed under subsection (1) must not—

(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
30specify;

(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.

(4) The fixed amount specified for the purposes of subsection (3)(a) or (c)
35may not exceed £30,000.

(5) The amount per day specified for the purposes of subsection (3)(b)
or (c) may not exceed £15,000.

(6) In imposing a penalty by reference to a daily rate—

(a) no account is to be taken of any days before the service of the
40notice under section 112 of the Enterprise Act 2002 (as applied
by subsection (9)) on the person concerned, 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 (7).

(7) The days are—

(a) the day on which the requirement concerned is satisfied;

(b) 5the day on which the CMA makes a decision (within the
meaning given by section 31(2)) or terminates the investigation
in question without making such a decision;

(c) if the Secretary of State has made an order under section
31F(1)(b) imposing a time-limit on the making of such a
10decision, the latest day on which such a decision may be made
as a result of the investigation in question.

(8) Before making an order under subsection (3), the Secretary of State
must consult the CMA and such other persons as the Secretary of State
considers appropriate.

(9) 15Sections 112 to 115 of the Enterprise Act 2002 (supplementary
provisions about penalties) apply in relation to a penalty imposed
under subsection (1) as they apply in relation to a penalty imposed
under section 110(1) of that Act.

40B Statement of policy on penalties

(1) 20The CMA must prepare and publish a statement of policy in relation to
the use of its powers under section 40A.

(2) The CMA must, in particular, include a statement about the
considerations relevant to the determination of the nature and amount
of any penalty imposed under section 40A.

(3) 25The CMA may revise its statement of policy and, where it does so, it
must publish the revised statement.

(4) The CMA must consult such persons as it considers appropriate when
preparing or revising its statement of policy.

(5) If the proposed statement of policy or revision relates to a matter in
30respect of which a regulator exercises concurrent jurisdiction, those
consulted must include that regulator.

(6) In deciding whether and, if so, how to proceed under section 40A, the
CMA must have regard to the statement of policy which was most
recently published under this section at the time when the failure
35concerned occurred.”

(3) Section 38 (guidance about appropriate level of penalties under section 36) is
amended as follows.

(4) In subsection (1), after “under this Part” insert “in respect of an infringement of
the Chapter 1 prohibition, the Chapter 2 prohibition, the prohibition in Article
4081(1) or the prohibition in Article 82”.

(5) In subsection (1A), for “a penalty under this Part” substitute “such a penalty”.

(6) In subsection (8), after “under this Part” insert “in respect of an infringement of
a kind mentioned in subsection (1)”.

(7) Section 42 (offences of failure to comply with requirements imposed in
45investigations and obstruction) is amended as follows.

(8) Omit subsections (1) to (4).

(9) In subsection (6), omit “(1) or”.

34 Extension of powers to issue warrants to CAT

Schedule 13 (which amends the 1998 Act to extend the powers under that Act
5to issue warrants to the Competition Appeal Tribunal) has effect.

35 Part 1 of the 1998 Act: procedural matters

(1) Part 1 of the 1998 Act (competition) is amended as follows.

(2) After section 25 (power to investigate) insert—

“25A Power of CMA to publish notice of investigation

(1) 10Where the CMA decides to conduct an investigation it may publish a
notice which may, in particular—

(a) state its decision to do so;

(b) indicate which of subsections (2) to (7) of section 25 the
investigation falls under;

(c) 15summarise the matter being investigated;

(d) identify any undertaking whose activities are being
investigated as part of the investigation;

(e) identify the market which is or was affected by the matter being
investigated.

(2) 20Section 57 does not apply to a notice under subsection (1) to the extent
that it includes information other than information mentioned in that
subsection.

(3) Subsection (4) applies if—

(a) the CMA has published a notice under subsection (1) which
25identifies an undertaking whose activities are being
investigated, and

(b) the CMA subsequently decides (without making a decision
within the meaning given by section 31(2)) to terminate the
investigation of the activities of the undertaking so identified.

(4) 30The CMA must publish a notice stating that the activities of the
undertaking in question are no longer being investigated.”

(3) Schedule 9 (examples of provision that may be made in rules) is amended as
follows.

(4) After paragraph 1 insert—

35“Delegation of functions

1A (1) Rules may provide for the exercise of a function of the CMA under
this Part on its behalf—

(a) by one or more members of the CMA Board (see Part 2 of
Schedule 4 to the Enterprise and Regulatory Reform Act
402012);

(b) by one or more members of the CMA panel (see Part 3 of that
Schedule to that Act);

(c) by one or more members of staff of the CMA;

(d) jointly by one or more of the persons mentioned in paragraph
5(a), (b) or (c).

(2) Sub-paragraph (1) does not apply in relation to any function
prescribed in regulations made under section 7(1) of the Civil
Aviation Act 1982 (power for Secretary of State to prescribe certain
functions of the Civil Aviation Authority which must not be
10performed on its behalf by any other person).”

(5) After paragraph 13 insert—

“Oral hearings: procedure

13A (1) Rules may make provision as to the procedure to be followed by the
CMA in holding oral hearings as part of an investigation.

(2) 15Rules may, in particular, make provision as to the appointment of a
person mentioned in sub-paragraph (3) who has not been involved
in the investigation in question to—

(a) chair an oral hearing, and

(b) prepare a report following the hearing and give it to the
20person who is to exercise on behalf of the CMA its function of
making a decision (within the meaning given by section
31(2)) as a result of the investigation.

(3) The persons are—

(a) a member of the CMA Board;

(b) 25a member of the CMA panel;

(c) a member of staff of the CMA.

(4) The report must—

(a) contain an assessment of the fairness of the procedure
followed in holding the oral hearing, and

(b) 30identify any other concerns about the fairness of the
procedure followed in the investigation which have been
brought to the attention of the person preparing the report.”

(6) After paragraph 13A insert—

“Procedural complaints

13B (1) 35Rules may make provision as to arrangements to be made by the
CMA for dealing with complaints about the conduct by the CMA of
an investigation.

(2) Rules may, in particular, make provision as to—

(a) the appointment of a person mentioned in sub-paragraph (3)
40who has not been involved in the investigation in question to
consider any such complaint;

(b) the time-table for the consideration of any such complaint.

(3) The persons are—

(a) a member of the CMA Board;

(b) a member of the CMA panel;

(c) a member of staff of the CMA.”

(7) After paragraph 13B insert—

“Settling cases

13C 5Rules may make provision as to the procedure to be followed in a
case where, during an investigation, one or more persons notify the
CMA that they accept that there has been an infringement of a kind
to which the investigation relates.”

Interim measures and other sanctions

36 10Threshold for interim measures

In section 35 of the 1998 Act (interim measures), in subsection (2)(a), for
“serious, irreparable damage” substitute “significant damage”.

37 Penalties: guidance etc.

(1) Part 1 of the 1998 Act (competition) is amended as follows.

(2) 15In section 36 (penalties), after subsection (7) insert—

“(7A) In fixing a penalty under this section the CMA must have regard to—

(a) the seriousness of the infringement concerned, and

(b) the desirability of deterring both the undertaking on whom the
penalty is imposed and others from—

(i) 20entering into agreements which infringe the Chapter 1
prohibition or the prohibition in Article 81(1), or

(ii) engaging in conduct which infringes the Chapter 2
prohibition or the prohibition in Article 82.”

(3) In section 38 (guidance on level of penalties), in subsection (8), before “must
25have regard” insert “and the Tribunal”.

Miscellaneous

38 Power for Secretary of State to impose time-limits on investigations etc.

After section 31E of the 1998 Act insert—

“31F Power for Secretary of State to impose time-limits on investigations
30etc.

(1) The Secretary of State may by order impose time-limits in relation to—

(a) the conduct by the CMA of investigations or investigations of a
description specified in the order;

(b) the making by the CMA of decisions (within the meaning given
35by section 31(2)) as a result of investigations or investigations of
such a description.

(2) Before making an order under subsection (1), the Secretary of State
must consult the CMA and such other persons as the Secretary of State
considers appropriate.”

39 Review of operation of Part 1 of 1998 Act

(1) 5The Secretary of State must—

(a) review the operation of Part 1 of the 1998 Act, and

(b) prepare and publish a report on the outcome of the review.

(2) The report must be published before the end of the period of 5 years beginning
with the day on which Part 1 of Schedule 5 (which transfers the functions of the
10Office of Fair Trading under Part 1 of the 1998 Act to the Competition and
Markets Authority) comes into force.

(3) The Secretary of State must lay the report before Parliament.

CHAPTER 4 Cartels

40 Cartel offence

(1) 15Section 188 of the 2002 Act (cartel offence) is amended as follows.

(2) In subsection (1), omit “dishonestly”.

(3) Omit subsection (6).

(4) After subsection (7) insert—

“(8) This section is subject to section 188A.”

(5) 20After that section insert—

“188A Circumstances in which cartel offence not committed

(1) An individual does not commit an offence under section 188(1) if,
under the arrangements—

(a) in a case where the arrangements would (operating as the
25parties intend) affect the supply in the United Kingdom of a
product or service, customers would be given relevant
information about the arrangements before they enter into
agreements for the supply to them of the product or service so
affected,

(b) 30in the case of bid-rigging arrangements, the person requesting
bids would be given relevant information about them at or
before the time when a bid is made, or

(c) in any case, relevant information about the arrangements
would be published, before the arrangements are implemented,
35in the manner specified at the time of the making of the
agreement in an order made by the Secretary of State.

(2) In subsection (1), “relevant information” means—

(a) the names of the undertakings to which the arrangements
relate,

(b) a description of the nature of the arrangements which is
sufficient to show why they are or might be arrangements of the
kind to which section 188(1) applies,

(c) the products or services to which they relate, and

(d) 5such other information as may be specified in an order made by
the Secretary of State.

(3) An individual does not commit an offence under section 188(1) if the
agreement is made in order to comply with a legal requirement.

(4) In subsection (3), “legal requirement” has the same meaning as in
10paragraph 5 of Schedule 3 to the Competition Act 1998.

(5) A power to make an order under this section—

(a) is exercisable by statutory instrument,

(b) may be exercised so as to make different provision for different
cases or different purposes, and

(c) 15includes power to make such incidental, supplementary,
consequential, transitory, transitional or saving provision as the
Secretary of State considers appropriate.

(6) A statutory instrument containing an order under this section is subject
to annulment in pursuance of a resolution of either House of
20Parliament.”

(6) The amendments made by this section apply only in relation to agreements
falling within section 188(1) which—

(a) are made after the commencement of this section, and

(b) relate to arrangements made or to be made after that commencement.

41 25Extension of power to issue warrants to CAT

(1) Section 194 of the 2002 Act (power to enter premises under a warrant) is
amended as follows.

(2) In subsection (1), for the words from the beginning to “if he is satisfied”
substitute “On an application made to it by the CMA or, in Scotland, the
30procurator fiscal, the appropriate body may issue a warrant if it is satisfied”.

(3) After subsection (1) insert—

“(1A) In subsection (1), “appropriate body” means—

(a) in England and Wales and Northern Ireland, the High Court or
the Competition Appeal Tribunal;

(b) 35in Scotland, the sheriff.”

(4) After subsection (4) insert—

“(4A) An application for a warrant under this section must be made—

(a) in the case of an application to the High Court or the sheriff, in
accordance with rules of court;

(b) 40in the case of an application to the Competition Appeal
Tribunal, in accordance with rules made under section 15.”

(5) In Schedule 4 to that Act, before paragraph 11, but after the cross-heading

immediately preceding it, insert—

“10A (1) Tribunal rules may make provision as to proceedings on an
application for a warrant under section 194 of this Act or section 28,
28A, 62, 62A, 63, 65G or 65H of the 1998 Act, including provision—

(a) 5for the Tribunal dealing with the proceedings to consist only
of the President or a member of the panel of chairmen;

(b) as to the manner in which the proceedings are to be
conducted, including provision—

(i) for such applications to be determined without a
10hearing;

(ii) in cases where there is a hearing, for it to be held in
private if the Tribunal considers it appropriate
because it is considering information of a kind
mentioned in paragraph 1(2);

(c) 15as to the persons entitled to be heard in such proceedings
(where there is a hearing);

(d) for requiring persons to attend to give evidence and produce
documents, and for authorising the administration of oaths
to witnesses;

(e) 20as to the evidence which may be required or admitted and the
extent to which it should be oral or written;

(f) allowing the Tribunal to fix time-limits with respect to any
aspect of the proceedings and to extend any time-limit
(before or after its expiry).

(2) 25Paragraphs 2 to 8, and 11 to 17, of this Schedule do not apply in
relation to the institution or conduct of proceedings for a warrant
mentioned in sub-paragraph (1).”

(6) In section 14 of that Act (constitution of Tribunal for particular proceedings
and its decisions), in subsection (5), for “paragraph 18” substitute “paragraphs
3010A(1)(a) and 18”.

CHAPTER 5 Miscellaneous

Enforcement orders: markets and mergers

42 Enforcement orders: monitoring compliance and determination of disputes

In Schedule 8 to the 2002 Act (provision that may be contained in certain
35enforcement orders made under Part 3 or 4 of that Act), after paragraph 20B
insert—

“Monitoring of compliance and determination of disputes

20C (1) An order may provide for the appointment of one or more than one
person (referred to in this paragraph as an “appointee”) by the
40relevant authority or by such other persons as may be specified or
described in the order to—