Session 2012 - 13
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Enterprise and Regulatory Reform Bill


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

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Part 3

The Competition and Markets Authority

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The Competition and Markets Authority

(1)   

There is to be a body corporate known as the Competition and Markets

Authority.

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(2)   

In this Part that body is referred to as “the CMA”.

(3)   

The CMA must seek to promote competition, both within and outside the

United Kingdom, for the benefit of consumers.

(4)   

Schedule 4 (which makes provision about the CMA) has effect.

21      

Abolition of the Competition Commission and the OFT

10

(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 certain functions from the

Competition Commission and the Office of Fair Trading to the CMA and to

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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.

22      

Transfer schemes

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(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

Competition Commission or the Office of Fair Trading to the CMA, or

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(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

(b)   

a Minister of the Crown (as defined by section 8 of the Ministers of the

30

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

the scheme.

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(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;

 
 

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 1 — Mergers

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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.

(6)   

For the purposes of this section—

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(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.

(7)   

In this section—

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“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

a contract of employment;

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references to the transfer of property include references to the grant of a

lease.

Part 4

Competition Reform

Chapter 1

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Mergers

Investigation powers

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Investigation powers: mergers

(1)   

Section 109 of the Enterprise Act 2002 (“the 2002 Act”) (investigation powers in

connection with attendance of witnesses etc.) is amended as follows.

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(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

enforcement functions, exercisable by it under or by virtue of

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this Part in connection with a matter that is or has been the

 
 

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 1 — Mergers

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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

functions, including enforcement functions, of the CMA or (as

the case may be) the Secretary of State under or by virtue of this

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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,”

substitute “The CMA may, for a permitted purpose,”.

(4)   

In subsection (2), for the words from the beginning to “under this Part,”

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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,”.

(6)   

In subsection (4), after “shall” insert “—

(a)   

specify the permitted purpose for which the notice is given,

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including the function or functions in question; and

(b)   

”.

(7)   

In subsection (5), for the words from the beginning to “under this Part,”

substitute “The CMA, or any person nominated by it for the purpose, may for

a permitted purpose”.

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(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—

“(8A)   

In subsection (A1), “enforcement functions” means—

(a)   

in relation to the CMA—

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(i)   

functions conferred by virtue of section 87 on the CMA

by enforcement orders;

(ii)   

functions of the CMA in relation to the variation,

supersession or release of enforcement undertakings or

the variation or revocation of enforcement orders;

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(iii)   

functions of the CMA under or by virtue of section 75,

76, 83 or 92 in relation to enforcement undertakings or

enforcement orders;

(b)   

in relation to the Secretary of State—

(i)   

functions conferred by virtue of section 87 on the

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Secretary of State by enforcement orders;

(ii)   

functions of the Secretary of State in relation to the

variation, supersession or release of enforcement

undertakings or the variation or revocation of

enforcement orders;

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(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.”

(10)   

In section 110 (enforcement of powers under section 109: general), omit

subsection (4).

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Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 1 — Mergers

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(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

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

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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”

means the power under section 109 to which the failure or (as the case

may be) the obstruction or delay in question relates.

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(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

superseded or released or (as the case may be) the enforcement order

concerned is revoked.

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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

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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 (2) of that section;

 
 

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 1 — Mergers

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(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.

(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—

5

(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

undertaking;

(c)   

in a case falling within subsection (1)(c), the making of the

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decision not to make the reference;

(d)   

in a case falling within subsection (1)(d), the expiry of the initial

period;

(e)   

in a case falling within subsection (1)(e), the expiry of the

preliminary assessment period;

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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;

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(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 (2) 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)—

 
 

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 1 — Mergers

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(a)   

in sub-paragraph (i), omit “or (as the case may be) the obstruction or

delay is removed”, and

(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”.

5

Interim measures

24      

Interim measures: pre-emptive action: mergers

(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.

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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

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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

30

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

40

under this Part which may be justified by the CMA’s decisions on the

reference.”

 
 

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 1 — Mergers

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(9)   

In the heading for “completed mergers” substitute “completed or anticipated

mergers”.

(10)   

Schedule 7 (which makes further provision about interim measures under Part

3 of the 2002 Act) has effect.

25      

Interim measures: financial penalties: mergers

5

(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

(1)   

Where the appropriate authority considers that a person has, without

reasonable excuse, failed to comply with an interim measure, it may

10

impose a penalty of such fixed amount as it considers appropriate.

(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

15

make provision for determining—

(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.

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(4)   

An order under subsection (3)(b) may, in particular, make provision as

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

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is to be determined.

(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)).

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(6)   

The Secretary of State may by order amend subsection (2) so as to alter

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

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imposed under section 110(1), with the modification that any reference

in those provisions to the 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—

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(a)   

an undertaking under section 80, or

(b)   

an order under section 72 or 81 or paragraph 2 of

Schedule 7;

“appropriate authority” means—

 
 

 
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Revised 4 February 2013