Enterprise and Regulatory Reform Bill

Session 2012 - 13
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Enterprise and Regulatory Reform Bill

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 3 — Anti-trust
35

35
Extension of powers to issue warrants to CAT
Schedule 13 (which amends the 1998 Act to extend the powers under that Act
to issue warrants to the Competition Appeal Tribunal) has effect.
36
Part 1 of the 1998 Act: procedural matters
(1)
Part 1 of the 1998 Act (competition) is amended as follows.
5
(2)
After section 25 (power to investigate) insert—
“25A
Power of CMA to publish notice of investigation
(1)
Where the CMA decides to conduct an investigation it may publish a
notice which may, in particular—
(a)
state its decision to do so;
10
(b)
indicate which of subsections (2) to (7) of section 25 the
investigation falls under;
(c)
summarise the matter being investigated;
(d)
identify any undertaking whose activities are being
investigated as part of the investigation;
15
(e)
identify the market which is or was affected by the matter being
investigated.
(2)
Section 57 does not apply to a notice under subsection (1) to the extent
that it includes information other than information mentioned in that
subsection.
20
(3)
Subsection (4) applies if—
(a)
the CMA has published a notice under subsection (1) which
identifies an undertaking whose activities are being
investigated, and
(b)
the CMA subsequently decides (without making a decision
25
within the meaning given by section 31(2)) to terminate the
investigation of the activities of the undertaking so identified.
(4)
The 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
30
follows.
(4)
After paragraph 1 insert—
“Delegation of functions
1A    (1)
Rules may provide for the exercise of a function of the CMA under
this Part on its behalf—
35
(a)
by one or more members of the CMA Board (see Part 2 of
Schedule 4 to the Enterprise and Regulatory Reform Act
2013);
(b)
by one or more members of the CMA panel (see Part 3 of that
Schedule to that Act);
40
(c)
by one or more members of staff of the CMA;
(d)
jointly by one or more of the persons mentioned in paragraph
(a), (b) or (c).

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 3 — Anti-trust
36

      (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
performed on its behalf by any other person).”
5
(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)
Rules may, in particular, make provision as to the appointment of a
10
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
person who is to exercise on behalf of the CMA its function of
15
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)
a member of the CMA panel;
20
(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)
identify any other concerns about the fairness of the
25
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)
Rules may make provision as to arrangements to be made by the
30
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)
who has not been involved in the investigation in question to
35
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;
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(c)
a member of staff of the CMA.”

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 3 — Anti-trust
37

(7)
After paragraph 13B insert—
“Settling cases
13C
Rules 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
5
to which the investigation relates.”
Interim measures and other sanctions
37
Threshold for interim measures
In section 35 of the 1998 Act (interim measures), in subsection (2)(a), for
“serious, irreparable damage” substitute “significant damage”.
10
38
Penalties: guidance etc.
(1)
Part 1 of the 1998 Act (competition) is amended as follows.
(2)
In 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
15
(b)
the desirability of deterring both the undertaking on whom the
penalty is imposed and others from—
(i)
entering 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
20
prohibition or the prohibition in Article 82.”
(3)
In section 38 (guidance on level of penalties), in subsection (8), before “must
have regard” insert “and the Tribunal”.
Miscellaneous
39
Power for Secretary of State to impose time-limits on investigations etc.
25
After section 31E of the 1998 Act insert—
“31F
Power for Secretary of State to impose time-limits on investigations
etc.
(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
30
description specified in the order;
(b)
the making by the CMA of decisions (within the meaning given
by 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
35
must consult the CMA and such other persons as the Secretary of State
considers appropriate.”

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 4 — Cartels
38

40
Review of operation of Part 1 of 1998 Act
(1)
The 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
5
with the day on which Part 1 of Schedule 5 (which transfers the functions of the
Office 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
10
Cartels
41
Cartel offence
(1)
Section 188 of the 2002 Act (cartel offence) is amended as follows.
(2)
In subsection (1), omit “dishonestly”.
(3)
Omit subsection (6).
15
(4)
After subsection (7) insert—
“(8)
This section is subject to section 188A.”
(5)
After that section insert—
“188A
Circumstances in which cartel offence not committed
(1)
An individual does not commit an offence under section 188(1) if,
20
under the arrangements—
(a)
in a case where the arrangements would (operating as the
parties 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
25
agreements for the supply to them of the product or service so
affected,
(b)
in 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
30
(c)
in any case, relevant information about the arrangements
would be published, before the arrangements are implemented,
in 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—
35
(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,
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(c)
the products or services to which they relate, and

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 4 — Cartels
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(d)
such 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
5
paragraph 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
10
(c)
includes 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
15
Parliament.”
(6)
After section 188A (as inserted by subsection (5) above) insert—
“188B
Defences to commission of cartel offence
(1)
In a case where the arrangements would (operating as the parties
intend) affect the supply in the United Kingdom of a product or service,
20
it is a defence for an individual charged with an offence under section
188(1) to show that, at the time of the making of the agreement, he or
she did not intend that the nature of the arrangements would be
concealed from customers at all times before they enter into agreements
for the supply to them of the product or service.
25
(2)
It is a defence for an individual charged with an offence under section
188(1) to show that, at the time of the making of the agreement, he or
she did not intend that the nature of the arrangements would be
concealed from the CMA.
(3)
It is a defence for an individual charged with an offence under section
30
188(1) to show that, before the making of the agreement, he or she took
reasonable steps to ensure that the nature of the arrangements would
be disclosed to professional legal advisers for the purposes of obtaining
advice about them before their making or (as the case may be) their
implementation.”
35
(7)
After section 190 of the 2002 Act insert—
“190A
Cartel offence: prosecution guidance
(1)
The CMA must prepare and publish guidance on the principles to be
applied in determining, in any case, whether proceedings for an offence
under section 188(1) should be instituted.
40
(2)
The CMA may at any time issue revised or new guidance.
(3)
Guidance published by the CMA under this section is to be published
in such manner as it considers appropriate.
(4)
In preparing guidance under this section the CMA must consult—

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 4 — Cartels
40

(a)
the Director of the Serious Fraud Office;
(b)
the Lord Advocate; and
(c)
such other persons as it considers appropriate.”
(8)
The amendments made by subsections (1) to (6) apply only in relation to
agreements falling within section 188(1) of the 2002 Act which—
5
(a)
are made after the commencement of this section, and
(b)
relate to arrangements made or to be made after that commencement.
42
Extension 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.
10
(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
procurator fiscal, the appropriate body may issue a warrant if it is satisfied”.
(3)
After subsection (1) insert—
“(1A)
In subsection (1), “appropriate body” means—
15
(a)
in England and Wales and Northern Ireland, the High Court or
the Competition Appeal Tribunal;
(b)
in Scotland, the sheriff.”
(4)
After subsection (4) insert—
“(4A)
An application for a warrant under this section must be made—
20
(a)
in the case of an application to the High Court or the sheriff, in
accordance with rules of court;
(b)
in 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
25
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)
for the Tribunal dealing with the proceedings to consist only
30
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
hearing;
35
(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)
as to the persons entitled to be heard in such proceedings
40
(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;

Enterprise and Regulatory Reform Bill
Part 4 — Competition Reform
Chapter 5 — Miscellaneous
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(e)
as 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).
5
      (2)
Paragraphs 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
10
10A(1)(a) and 18”.
Chapter 5
Miscellaneous
Enforcement orders: markets and mergers
43
Enforcement orders: monitoring compliance and determination of disputes
15
In Schedule 8 to the 2002 Act (provision that may be contained in certain
enforcement 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
20
person (referred to in this paragraph as an “appointee”) by the
relevant authority or by such other persons as may be specified or
described in the order to—
(a)
monitor compliance with such terms of the order as are so
specified or described or terms of any directions given under
25
the order;
(b)
determine any dispute between persons who are subject to
the order about what is required by any such terms.
      (2)
An order made by virtue of this paragraph must make provision as
to the terms of an appointee’s appointment.
30
      (3)
A determination made by virtue of an order under this paragraph is
binding on—
(a)
any person who is subject to the order;
(b)
the relevant authority; and
(c)
in the case where the relevant authority is the Secretary of
35
State, the CMA.”
44
Enforcement orders: provision of information
(1)
Schedule 8 to the 2002 Act (provision that may be contained in certain
enforcement orders made under Part 3 or 4 of that Act) is amended as follows.
(2)
Omit paragraph 15 (publication etc. of price information).
40