Digital Markets, Competition and Consumers Act 2024

Part 2: Competition

Chapter 1: Anti-trust

The Chapter 1 and 2 prohibitions

Section 119: Removal of requirement for agreements etc to be implemented in the UK

534. This section expands the territorial reach of the Chapter 1 prohibition of the Competition Act 1998.
535. The Chapter 1 prohibition makes illegal agreements between undertakings, decisions by associations of undertakings or concerted practices which may affect trade within the United Kingdom and have as their object or effect the prevention, restriction or distortion of competition. Prior to this Act, such agreements, decisions and practices were only prohibited where they are, or are intended to be, implemented in the United Kingdom.
536. Subsections (2) and (3) expand the territorial reach of the Chapter 1 prohibition. Subsection (2) replaces the previous section 2(1) to provide that agreements, decisions and practices which are, or are intended to be, implemented in the United Kingdom continue to fall in scope of the Chapter 1 prohibition insofar as they may affect trade within the United Kingdom, and further that agreements etc. which are likely to have an immediate, substantial and foreseeable effect on trade within the United Kingdom are also within the scope of the Chapter 1 prohibition, even when these are not implemented in the United Kingdom. The expansion of the territorial reach of the prohibition is therefore qualified by the degree to which it has an effect on trade in the United Kingdom. Agreements etc. implemented outside of the United Kingdom which are likely to have a more limited effect in the United Kingdom than those which are immediate, substantial and foreseeable are not captured by the Chapter 1 prohibition. Subsection (3) repeals the previous section 2(3) of the Competition Act 1998 which sets out that only agreements etc. implemented or intended to be implemented in the United Kingdom are caught by the prohibition.
537. The qualified effects test ensures that UK trade and businesses and consumers based in the United Kingdom are protected from the detrimental effects of anticompetitive conduct, regardless of where that conduct takes place, even when an agreement is implemented in another jurisdiction.
538. Subsection (4) provides that the expanded scope of the prohibition only applies to agreements etc. which are made after the coming into force of the section.
539. Subsection (5) applies the interpretative provision made at section 2(5) of the Competition Act 1998 so that the reference to "agreements" in subsection (4) is to be read as applying equally to, or in relation to, a decision by an association of undertakings or a concerted practice (but with any necessary modifications).

Section 120: Repeal of exclusions relating to the European Coal and Steel Community

540. This section repeals paragraph 8 in Schedule 3 to the Competition Act 1998 in order to remove a provision which has been redundant since the expiry of the Treaty establishing the European Coal and Steel Community and make other consequential provision. Schedule 3 sets out general exclusions to the Chapter I and II prohibitions in the Competition Act 1998. Paragraph 8 provided an exclusion for agreements and conduct relating to coal or steel products to the extent to which the European Coal and Steel Community gave the European Community exclusive jurisdiction in the matter. The provision has had no effect since the Treaty expired in 2002.

Investigations

Section 121: Duty to preserve documents relevant to investigations

541. This section makes provision amending Part 1 of the Competition Act 1998 to impose a duty to preserve documents where a person knows or suspects that an investigation is, or is likely to be, carried out by the CMA.
542. Subsections (1) and (2) make provision for the insertion of section 25B into the Competition Act 1998. Section 25B(1) sets out that the duty applies where a person knows or suspects that an investigation is, or is likely to be, carried out by the CMA. Subsection (2) of section 25B sets out the actions which are prohibited where the duty arises. As defined in section 59 of the Competition Act 1998, documents for this purpose include information recorded in any form.
543. The duty to preserve evidence arises from the point that a person has knowledge of, or suspects, that an investigation under section 25 of the Competition Act 1998 either is being carried out, or is likely to be carried out. In practice, the duty would arise where a business receives a case initiation letter from the CMA and so is aware that its conduct is under investigation. It may further arise where, for example, an individual working for a business is aware that a customer has reported their suspicions of price fixing and that the customer has been interviewed by the CMA, or members of an anti-competitive agreement are "tipped off" that a member of the agreement has blown the whistle to the CMA. The duty would apply in this case to the individual and their employer.
544. Subsection (3) amends section 40ZE of the Competition Act 1998 (inserted by paragraph 8 of Schedule 8 to this Act), which sets out the powers of the CMA (and sector regulators) to impose a financial penalty on a person if, without reasonable excuse, they fail to comply with a requirement specified in that section which has been imposed for the purposes of an investigation under section 25. Subsection (3) amends section 40ZE so that failure to comply with the new duty, without a reasonable excuse, gives rise to liability for a financial penalty.

Section 122: Production of information authorised by warrant

545. This section amends sections 28 and 28A of the Competition Act 1998 which make provision regarding the grant of warrants, and the powers of the CMA when executing such warrants, to enter business premises (section 28) and domestic premises (section 28A) for the purposes of an investigation concerning an infringement of either the Chapter I or Chapter II prohibitions. When executing such warrants, a named CMA officer (who may be accompanied by other CMA officers authorised by the CMA) has the power, among other things, to require the production of information which is held electronically and accessible from the premises.
546. Subsection (2) amends section 28(1) of the Competition Act 1998 to expand the powers of the court or CAT to grant a warrant to the CMA on the basis that there are reasonable grounds for suspecting that there are documents relevant to an investigation which are accessible from the premises, where the other criteria set out in that section are met.
547. Subsection (3) amends the powers set out in section 28(2) of the Competition Act 1998 which a warrant authorises the CMA officers to exercise. Section 28(2)(f) is amended to broaden the power to require the production of information which is stored in electronic form, and which is accessible from the premises. This power now applies to any information stored electronically and accessible from the premises, not only that which the named officer considers relates to a matter relevant to the investigation.
548. Subsection (3) further inserts paragraphs (g), (h) and (i) into section 28(2). Paragraph (g) enables CMA officers to operate equipment on the premises for the purpose of producing information stored in electronic form and accessible from the premises which is visible and legible or in a form from which it can readily be produced in a visible and legible form. For example, this power could be used to operate equipment so that electronic information can be transferred securely to CMA devices or where an undertaking or its employees cannot or will not produce the required information in such a form. Paragraph (h) enables the named officer to require assistance from any person on the premises to access information held electronically and accessible from the premises (such as the provision of passwords or encryption keys). Paragraph (i) empowers the CMA to take copies of or seize anything produced which the named officer considers relates to any matter relevant to the investigation.
549. Subsections (4), (5) and (6) make amendments which have identical effect in relation to the power at section 28A of the Competition Act 1998 concerning the grant of a warrant, and powers available under that warrant, to enter and inspect domestic premises.
550. Subsection (7) makes a consequential amendment to section 30 of the Competition Act 1998 which deals with privileged communications, that is a communication between a professional legal adviser and a client, or one made in connection with, or in contemplation of, legal proceedings and for the purpose of those proceedings. Section 30(1) of the Competition Act 1998 provides that a person shall not be required under Part 1 of that Act, to produce or disclose a privileged communication. Section 122(7) inserts a new section 30(1A) which sets out that nothing in section 28 or section 28A of the Competition Act 1998 authorises an officer to produce, seize, makes copies of or take extracts from any communication which a person could not be required to produce or disclose, as a result of the protection given by section 30(1).

Section 123: Additional powers of seizure from domestic premises

551. This section amends Part 2 of the Criminal Justice and Police Act 2001, to specify the powers of seizure conferred by section 28A(2) of the Competition Act 1998 for the purposes of section 50 of the Criminal Justice and Police Act 2001 and make clarificatory amendments regarding the existing specification of the power at section 28 of the Competition Act 1998 in light of its amendment by section 122 of this Act. Section 28 of the Competition Act 1998 provides the CMA with a power to enter business premises when authorised by warrant, and section 28A of the Competition Act 1998 provides equivalent powers in relation to domestic premises. The powers of seizure conferred by section 28(2) of Competition Act 1998 are already specified for the purposes of section 50 of the Criminal Justice and Police Act 2001, so the amendment aligns the powers available to the CMA whether they are inspecting business or domestic premises under a warrant and makes consequential amendments in light of those made by section 122.
552. Specification of the powers for the purposes of section 50 of the Criminal Justice and Police Act 2001 provides for a power of seizure, where a named officer of the CMA (or a sector regulator where relevant) is on any premises as a result of a warrant issued under section 28 or 28A, and finds anything which they have reasonable grounds to consider they are authorised to seize, but it is not reasonably practicable on the particular premises either to determine whether the material or information is indeed within the scope of the warrant, or for something they consider to be within scope to be separated from something else located on the premises.
553. Subsection (2) amends section 50(6) of the Criminal Justice and Police Act 2001 to make clear that, as in relation to section 28(2)(b) of the Competition Act 1998, whilst section 50 applies to the section 28A(2)(b) Competition Act 1998 power, it only enables those exercising it to copy material in order to examine it elsewhere to determine or separate out what in fact they would be entitled to copy under section 28A itself. It does not give them the power to seize original documents.
554. Subsection (3) amends section 57(1) of the Criminal Justice and Police Act 2001 to add section 28A(8) of the Competition Act 1998 to the list of provisions. Section 28A(8) of the Competition Act 1998 applies in relation to documents which have been seized under section 28A(2)(c), because they appear to be of the relevant kind and there is a need to take possession of them (rather than copies) because such action appears necessary to preserve the documents or prevent interference with them, or it is not reasonably practicable to take copies of the documents on the premises. Where the power is exercised, section 28A(8) provides that the documents may be retained for no longer than 3 months. The amendment to section 57(1) of the Criminal Justice and Police Act 2001 clarifies that the three month maximum limit continues to apply where the section 50 power has been relied upon and extends the protections set out in that section regarding the relationship between the Criminal Justice and Police Act 2001 regime and the Competition Act 1998 powers.
555. Subsection (4) amends section 63(2) of the Criminal Justice and Police Act 2001 to provide that the CMA’s powers under section 28(2)(f) of the Competition Act 1998, and those under section 28A(2)(f) and (g), to take copies of information stored in electronic form which has been produced are to be treated as a power of seizure for the purposes of the Criminal Justice and Police Act 2001 and so subject to the safeguards set out in that regime.
556. Subsection (5) amends section 64(3) of the Criminal Justice and Police Act 2001 to specify that the appropriate judicial authority for an application under section 59 of that Act in relation to material seized in reliance on the section 28A Competition Act 1998 power is, in relation to England and Wales and Northern Ireland, the High Court and, in relation to Scotland, the Court of Session. Section 59 Criminal Justice and Police Act 2001 allows any person with a relevant interest in the seized property to apply to the appropriate judicial authority on certain grounds for the return of the whole or part of the seized property.
557. Subsection (6) amends section 65(2) of the Criminal Justice and Police Act 2001. It ensures that references to items which are subject to legal privilege in the Criminal Justice and Police Act 2001 will be read consistently with the definition of "privileged communications" in section 30 of the Competition Act 1998, when the relevant property which has been seized is in exercise, or purported exercise, of section 28A of the Competition Act 1998 or section 50 of the Criminal Justice and Police Act 2001 as exercisable by reference to section 28A of the Competition Act 1998.
558. Subsection (7) amends section 66(5) of the Criminal Justice and Police Act 2001 to ensure any references to seizure under the Criminal Justice and Police Act 2001 will be read as including the CMA’s powers to take possession of items under section 28A(2)(c) of the Competition Act 1998.
559. Subsection (8) amends paragraph 67 in Part 1 of Schedule 1 to the Criminal Justice and Police Act 2001 so that section 50 of that Act applies to the CMA’s powers under section 28A(2) of the Competition Act 1998, as it already applies to the powers under section 28(2) of the Competition Act 1998.

Proceedings before the Competition Appeal Tribunal

Section 124: Standard of review on appeals against interim measures directions

560. This section changes the standard of review to be applied by the CAT on appeals against interim measures directions under section 35 of the Competition Act 1998 from a determination on the merits by reference to the grounds set out in the notice of appeal to a review which applies the same principles as would be applied by a court on an application for judicial review.
561. Under section 35 of the Competition Act 1998, when an investigation has been commenced but not completed, the CMA has the power to issue directions known as "interim measures" for the purpose of preventing significant damage to a particular person or category of person or protecting the public interest.
562. Subsection (1) amends section 46 of the Competition Act 1998 to make clear that a decision to either make or not make interim measures directions under section 35 can be appealed to the CAT by any party to an agreement in respect of which the CMA has made such a decision or any person in respect of whose conduct the CMA has made such a decision. It is already clear that third parties have such a right of appeal to the Tribunal under section 47(1)(d)-(e).
563. Subsections (2), (3) and (4) amend Schedule 8 to the Competition Act 1998 so that appeals in respect of CMA decisions to make or not make interim measures directions will be determined by the CAT by applying the same principles as would be applied by a court on an application for judicial review.

Section 125: Power of Competition Appeal Tribunal to grant declaratory relief

564. This section introduces Schedule 3 which amends the Competition Act 1998 in order to give the CAT the power to grant declaratory relief in individual or collective claims made with regards to actual or alleged infringements of the Chapter I or II prohibitions in the Competition Act 1998. Schedule 3 further amends Schedule 4 to the Enterprise Act 2002 to make express provision regarding the making of Tribunal rules in relation to the grant of declaratory relief.
565. Declaratory relief takes the form of a declaration (or declarator in relation to Scotland), which is a remedy whereby the CAT makes a legally binding statement on the application of the law to a particular set of facts. It may be granted independently of any other claims or awards such as payment of compensation. A declaration could, for example, be about the interpretation of a clause in a contract, the interpretation of a term or provision in a statute or a statutory instrument or whether a patent is still valid.

Schedule 3: Power of Competition Appeal Tribunal to grant declaratory relief

566. Paragraphs (2) and (3) amend section 47A of the Competition Act 1998 to insert subsection (3A) which expands the types of claims which may be made in proceedings before the CAT to include a claim for the making of a declaration (or declarator in relation to Scotland).
567. Paragraph (4) inserts section 47DA into the Competition Act 1998. This section provides that declarations or, in Scotland, declarators, granted by the Tribunal have the same effect as those granted by the High Court or the Court of Session respectively and that the Tribunal must apply the same principles as the High Court and Court of Session when deciding whether to grant a declaration or declarator. Further, the Tribunal may grant a declaration or declarator whether or not any other remedy is claimed.
568. Paragraphs (5) and (6) make a consequential amendment to section 47F of the Competition Act 1998 to reflect that Schedule 8A to that Act now makes provision in respect of declaratory relief as well as other kinds of claims.
569. Paragraph (7) amends section 49 of the Competition Act 1998 to make provision for appeals to be made against a decision by the Tribunal to grant declaratory relief.
570. Paragraph (8) makes consequential amendments to Schedule 8A to the Competition Act 1998 regarding the conduct of claims before a court or the CAT to ensure that claims for declaratory relief may be sought in addition to, or instead of, claims in respect of loss or damages.
571. Paragraph (9) inserts an additional paragraph 21B into Schedule 4 to the Enterprise Act 2002 so as to include declaratory relief to the list of areas which the rules, made by the Secretary of State regarding proceedings before the Tribunal, may cover.

Section 126: Exemplary damages

572. This section amends the Competition Act 1998 to enable the CAT, High Court of England and Wales, the Court of Session and Sheriff Court in Scotland, or the High Court in Northern Ireland to award exemplary damages in competition cases (except in collective proceedings before the CAT).
573. Parties who have suffered harm due to a breach of competition law can initiate private damages claims, on a stand-alone or follow-on basis, against individuals or businesses which committed the infringement or alleged infringement.
574. Exemplary damages, in common law, are awarded beyond what is compensatory for the loss or harm which occurred to punish particularly egregious conduct. In cases where compensatory redress is considered insufficient in light of the defendant’s conduct, additional and proportionate exemplary damages can be sought. Courts have developed well-established principles regarding the award of exemplary damages, including when such an award may be made and the quantum thereof.
575. Subsection (1) amends section 47C of the Competition Act 1998 so that exemplary damages cannot be sought or granted in collective proceedings before the CAT, that is cases where multiple claimants are seeking remedies against the same defendant(s) as part of one case.
576. Subsection (2) makes amendments to Schedule 8A to the Competition Act 1998. Paragraph 15 of Schedule 8A is amended to provide that an immunity recipient can be liable to pay exemplary damages to its direct or indirect customers or suppliers (as defined in subparagraphs (a) to (d) of paragraph 15(1)). However, an immunity recipient cannot be held liable for exemplary damages that the claimant is unable to obtain from other undertakings involved in the cartel infringement. Part 8 of Schedule 8A, which previously prevented the award of exemplary damages, is repealed, and a consequential amendment is made to Part 10.

Chapter 2: Mergers

Section 127: Relevant merger situations and special merger situations

577. This section introduces Schedule 4 which makes several changes to the thresholds which determine what transactions are within jurisdiction of UK merger control. Transactions within jurisdiction can be reviewed by the CMA although no obligations or requirements are imposed on businesses by being in scope. Jurisdiction does not trigger automatic CMA review or intervention.
578. Schedule 4 introduces a new acquirer-focused threshold which provides a more comprehensive and effective jurisdictional basis for certain vertical and conglomerate mergers, in particular acquisitions that may reduce dynamic competition and risk the development of new products or services. It also introduces a small merger safe harbour which is primarily targeted at reducing the regulatory burden faced by small and micro businesses.

Schedule 4: Relevant and special merger situations

579. Schedule 4 makes several changes to the thresholds which determine what transactions are within jurisdiction of UK merger control.
580. Section 23 of the Enterprise Act 2002 sets out the criteria for a merger to qualify as a "relevant merger situation" and therefore be subject to potential investigation by the CMA. This is the case where the transaction meets at least one of two "tests" detailed below:
     1. the "turnover test": the value of the turnover in the UK of the target exceeds £70 million; or
     2. the "share of supply test": the merger would result in the creation or enhancement of at least a 25% share of supply of goods or services in the UK, or in a substantial part of the UK. This test is met, for example, for a merger between two enterprises each having a 15% share of supply, as well as for a merger between two enterprises where one which already has a 25% share of supply merges with another having a 5% share.
581. Schedule 4 amends the thresholds in three ways:
     1. it increases the level of the turnover test,
     2. it introduces a safe harbour for mergers involving parties with low levels of UK turnover, and
     3. it introduces a new acquirer-focused threshold for merger review.
582. Paragraph 2 of Schedule 4 implements these three amendments:
     1. Subparagraph 2 increases the level of the turnover test from £70m UK turnover to £100 million UK turnover.
     2. Subparagraph 3 introduces a safe harbour by adding a condition into the existing share of supply test in section 23(2) that requires at least one of the merging enterprises to have UK turnover of more than £10 million. This has the effect that any merger involving only enterprises with a respective UK turnover of £10 million or less is exempt from UK merger review on competition grounds.
     3. Subparagraph 4 prevents turnover of the enterprise being taken over from being double counted in certain merger situations, such as a joint venture.
     4. Subparagraph 5 introduces a new acquirer-focused threshold by inserting new subsections (4C) - (4G) into section 23. These specify the conditions which must be met in respect of one of the merging enterprises regarding share of supply (subsection (4D)) and turnover (subsection (4E)) and set out an additional condition intended to ensure the transaction has a sufficient connection with the UK (subsections (4F) and (4G)). The persons carrying on the enterprise concerned need to have at least a 33% share of supply of goods or services in the UK, or in a substantial part of the UK, and the enterprise must have a UK turnover of over £350 million. The UK nexus criterion is met where an enterprise other than the one that meets the share of supply and turnover conditions is carried on by a UK business or body, at least part of its activities are carried on in the UK, or it supplies goods or services in the UK. The conditions are to be assessed without taking the merger into account, i.e. on the assumption that it has not taken place or will not do so.
583. Paragraph 3 makes consequential amendments to sections 28(5) and (6) of the Enterprise Act 2002 which includes a delegated power for the Secretary of State to amend section 23 by order so as to alter the turnover figures specified in that section. The changes ensure that the provisions of these subsections are applied not just to the existing turnover test but also the turnover elements of the new acquirer-focused threshold and the safe harbour. The exercise of this power is subject to the negative resolution procedure. The power is limited to substituting one figure for another and the Secretary of State is required to act in accordance with public law principles when doing so. The overall parameters for the thresholds, e.g. that there should be a safe harbour for mergers involving parties with a specified level of turnover or that there should be a threshold focussed on mergers involving larger, established market players, are set out in the primary legislation.
584. Paragraph 6 amends the provisions in section 59 of the Enterprise Act 2002 on special public interest cases to ensure that public interest interventions in media mergers are not affected by the increase in the turnover test and the small merger safe harbour. The special public interest regime enables the Secretary of State to refer certain mergers for investigation on public interest grounds, even though they do not meet the jurisdictional thresholds outlined above. They are scrutinised against public interest considerations only, with no review on competition grounds. The Secretary of State will retain their ability to intervene in mergers where at least one of the enterprises concerned is a media enterprise or a newspaper enterprise and where the target turnover is over £70 million as well as where at least one of the enterprises concerned is a media enterprise or a newspaper enterprise and the share of supply test has been met, even if none of the enterprises has UK turnover of over £10 million.
585. Paragraph 6 also amends section 59(6A) of the Enterprise Act 2002 to amend the conditions for application of the special public interest merger regime. Section 59(6A) previously allowed the Secretary of State by order to amend the conditions relating to mergers involving media and newspaper enterprises with an existing share of supply of 25%. Paragraph 6 amends that power so that it allows the Secretary of State to alter the turnover threshold figure of £70 million. The exercise of this power is subject to the negative resolution procedure. The power is limited to substituting one figure for another and the Secretary of state is required to act in accordance with public law principles when doing so. The overall parameters for the thresholds, i.e., that there should be a threshold focused on the target’s UK turnover, are set out in the primary legislation. Separately, the non-turnover elements of the thresholds are subject to amendment by a delegated power which is, however, subject to the draft affirmative procedure as it permits a wider range of amendments to the threshold tests than altering a turnover figure.
586. Paragraph 7 amends Schedule 5A to the Enterprise Act 2002 which was recently inserted by Schedule 16 to the Energy Act 2023 as part of the amendments made by that Act to enable the CMA to investigate energy network mergers in Great Britain effectively. Paragraph 7 amends the modifications made by Schedule 5A to Chapter 1 of the Enterprise Act 2002 for the energy network merger regime, to reflect the changes made to the ordinary merger regime by the Act. Firstly, paragraph 7, subparagraph 2 amends the level of the turnover test for the energy network merger regime from £70 million GB turnover to £100 million GB turnover, in line with the amendment raising the threshold in the ordinary turnover test from £70 million UK turnover to £100 million UK turnover in paragraph 2, subparagraph 2 of Schedule 4. Secondly, paragraph 7, subparagraph 3 amends Schedule 5A to take account of the amendments made to section 28 of the Enterprise Act 2002 by Schedule 4 to the Act and corrects the modification made by paragraph 3(c) of Schedule 5A to section 28(6) of the Enterprise Act 2002.
587. Paragraph 9 amends the existing delegated power to alter the share of supply test in section 123 of the Enterprise Act 2002. This power will extend to altering the new thresholds introduced by Schedule 4. The amendments introduce restrictions or safeguards in relation to these new uses of the power which are similar to those currently applying in relation to amendments of the share of supply test.
588. Paragraphs 4 and 10 make minor consequential amendments.

Section 128: Fast-track references under sections 22 and 33 of EA 2002

589. This section introduces Schedule 5 which amends Part 3 of the Enterprise Act 2002 to enable the CMA to fast- track a merger to an in-depth Phase 2 investigation if it receives a request from the parties involved in a merger to do so. It streamlines merger review procedures and timelines by removing certain statutory duties on the CMA that previously limited use of the existing, non-statutory fast- track procedure.
590. While the legislation does not specify for which reasons the parties involved in a merger can request a fast- track, this is most likely to be helpful where the facts of the case are such that the parties involved in a merger and the CMA both consider at an early stage of the investigation that it is highly likely that the merger will be referred to an in-depth Phase 2 investigation. Under such circumstances, it may be beneficial for all parties to streamline the review process and move straight to Phase 2.

Schedule 5: Mergers: Fast-track references under sections 22 and 33 of EA 2002

591. Schedule 5 amends Part 3 of the Enterprise Act 2002 to enable the CMA to fast track a merger to an in-depth Phase 2 investigation if it receives a request from the parties involved in a merger to do so (paragraph 1).
592. The CMA may only launch a Phase 2 investigation if it believes that it is or may be the case that a completed or anticipated merger has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom. If parties are aware that their merger is likely to fall into this category, moving straight into Phase 2 should speed up the overall process by significantly reducing the timelines to get to the in-depth investigation.
593. Paragraph 2 introduces a new duty in section 22(1A) on the CMA to make a reference for a Phase 2 merger investigation regarding a completed merger if it has accepted a fast-track request from the parties involved in a merger. In a fast-track merger investigation, this duty replaces the ordinary duty in section 22(1) to make a reference for a Phase 2 merger investigation where the CMA believes that it is or may be the case that the completed merger has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom. Paragraph 3 introduces an equivalent duty in section 33(1A) for anticipated mergers.
594. Paragraph 4 amends section 34ZA which sets out the time-limits for decisions about Phase 2 references to include a time limit for fast-track references. It requires the CMA to notify the parties involved in a merger of the making of a fast-track reference within the "initial period" which is the statutory period of 40 working days within which the CMA must complete the initial stage of its merger review process (Phase 1).
595. Paragraph 7 inserts new sections 34ZD, 34ZE and 34ZF setting out the conditions and procedure for fast-track reference requests. Section 34ZD enables the parties involved in a merger to make such a request either before or after the start of Phase 1. The CMA may publish further guidance on the appropriate timings for such a request. When it receives such a request, the CMA must decide whether to accept it and has to notify the parties involved in a merger of its decision (see new section 34ZE). Where the request is made before the start of the Phase 1 investigation, the CMA can either reject it before or after it launches Phase 1, or accept it after launching Phase 1 and before the end of the initial period. Where the request is made after the start of the Phase 1 investigation, the CMA has to either accept or reject it before the end of the initial period. New section 34ZF sets out the conditions for acceptance of a request. The CMA has broad discretion on whether to accept a fast-track request but can only do so if it is satisfied to the usual standard that a relevant merger situation has been or may be created (i.e. that the merger meets the jurisdictional tests set out in section 23 of the Enterprise Act 2002 – see the note on Schedule 4 for further details). Unlike a standard Phase 1 investigation, however, the CMA does not have to determine whether the merger has resulted, or may be expected to result, in a substantial lessening of competition and therefore does not have to undertake the investigation necessary to come to this decision. Instead, it will investigate the substantive issues at the in-depth Phase 2 investigation. When deciding whether to accept a fast-track reference request, the CMA must have regard to whether the merger could raise public interest issues (see section 58 of the Enterprise Act 2002) or whether a special public interest intervention has been launched under section 59 of that Act, to ensure no such case is unduly fast tracked.
596. Paragraph 8 amends section 39 which sets out the time limits for Phase 2 investigations and reports. It enables the CMA to extend a Phase 2 investigation following a fast-track reference by up to 11 weeks for ‘special reasons’ (instead of the normal 8 weeks allowed in a non-fast tracked Phase 2 investigation). This slightly longer permitted extension period reflects the fact that a fast-track decision in the early stages of a Phase 1 investigation means the CMA may be unable to rely on information gathered and findings made at Phase 1 to the same extent as it would ordinarily. In some cases, the CMA may therefore need to be able to extend the Phase 2 investigation for slightly longer to ensure it can conduct a full and proper investigation.
597. Paragraph 10 amends Schedule 5A to the Enterprise Act 2002 which was recently inserted by Schedule 16 to the Energy Act 2023. It amends the modifications made by Schedule 5A to Chapter 1 of the Enterprise Act 2002 for the energy network merger regime to ensure that a review of a merger between energy network enterprises under that regime cannot be fast tracked.
598. Paragraphs 5-6, 9 and 11-15 make consequential amendments to provisions in the Enterprise Act 2002, including by introducing a duty on the CMA to publish a fast-track reference decision under section 107.

Section 129: Mergers of energy network enterprises

599. This section introduces Schedule 6 which amends Part 3 of the Enterprise Act 2002 to facilitate the investigation of mergers involving energy networks enterprises under sections 68B or 68C of that Act and under section 22 or 33 of that Act by the same CMA Group.

Schedule 6: Mergers of energy network enterprises

600. Schedule 6 amends Part 3 of the Enterprise Act 2002 to facilitate the investigation of mergers involving energy networks enterprises under sections 68B or 68C of that Act and under section 22 or 33 of that Act by the same CMA Group. In particular, it ensures that a merger can still be referred for review on competition grounds if it has already been referred under the energy network merger regime. It also makes other minor amendments and corrections to provisions relating to mergers involving energy network enterprises.

Section 130: Mergers involving newspaper enterprises and foreign powers

601. Section 130 introduces Schedule 7 to the Act. Section 130 confirms that the provisions in Schedule 7 relating to foreign powers gaining control or influence over newspaper enterprises do not apply in relation to foreign state merger situations created before 13 March 2024.

Schedule 7: Mergers involving newspaper enterprises and foreign powers

602. Schedule 7 inserts a new Chapter (Chapter 3A: "Mergers involving newspaper enterprises and foreign powers") and Schedules (Schedule 6A: "Determination of when a foreign state newspaper merger situation has been created" and Schedule 6B: "Control or influence of a person by a foreign power") into the Enterprise Act 2002, relating to mergers involving newspaper enterprises and foreign powers. The new Chapter 3A includes the new sections 70A to 70G referred to below, and new Schedule 6B includes new Parts 1, 2 and 3.

New section 70A

603. Subsection (1) of this new section requires the Secretary of State to give the CMA a notice (a "foreign state intervention notice") if the Secretary of State has reasonable grounds to suspect that a foreign state newspaper merger situation (as defined in subsection (3)) has been created or its creation is in progress or under contemplation. Subsection (2) confirms that the situation in question must be specified in the notice, while subsection (6) confirms that the notice comes into force when it is given, and ceases to be in force when the matter to which it relates is finally determined.
604. Subsection (3) sets out the circumstances in which a foreign state newspaper merger situation is considered to have been created. Subsection (3) applies existing provisions in the Enterprise Act relating to merger situations, with modifications as set out in new Schedule 6A, to circumstances where one of the enterprises which is being merged is a newspaper enterprise, and as a result of the merger, a foreign power is able to control or influence, or increase its level of control or influence over, the policy of the person carrying on the newspaper enterprise.
605. Subsection (4) introduces new Schedule 6B which makes provision about the circumstances in which a foreign power is able to control or influence the policy of a person for the purposes of this Chapter.

New section 70B

606. Subsection (1) obliges the CMA to provide a report to the Secretary of State, within a time period specified by the Secretary of State, in relation to the foreign state intervention notice which has been given to them.
607. Subsection (2) sets out the necessary content of such a report, namely the decision which the CMA has reached as to whether a foreign state newspaper merger situation has been created (or is in progress or under contemplation), and a summary of the relevant representations which it has received. The CMA must carry out the investigations it considers appropriate to inform its report (subsection (3)) and, as part of its investigations, the CMA must invite representations from the enterprises concerned (subsection (4)).

New section 70C

608. New section 70C sets out the action which the Secretary of State must take on receipt of a report from the CMA setting out the CMA’s belief that a foreign state newspaper merger situation has been created, is in progress or is under contemplation.
609. Subsection (2) confirms that, in such circumstances, the Secretary of State must make an order containing such provision which they consider reasonable and practicable, which may include anything permitted by Schedule 8 to the Enterprise Act (provision that can be included in enforcement orders), as well as such supplementary, consequential or incidental provision as they consider appropriate (subsection (3)), to prevent or reverse the merger. Subsection (4) confirms that such an order can be varied or revoked.
610. Subsection (5) enables the provisions in paragraph 2 of Schedule 7 to the Enterprise Act 2002 relating to enforcement and the prevention of pre-emptive action to be applied to this new Chapter. This gives the Secretary of State the power to make an order which prevents action which might prejudice a foreign state intervention notice which is in force, or the CMA’s report on the case, or the ability for either the Secretary of State, or the CMA, to take any action relating to a notice or a report.

New section 70D

611. New section 70D confirms that other powers in Part 3 of the Enterprise Act 2002 (for example, the public interest merger regime in Chapter 3) can also be exercised in relation to a foreign state newspaper merger situation (subsection (1)), and that the use of those other powers does not prevent the exercise of the powers in new Chapter 3A (subsection (2)).
612. Subsection (3) requires the CMA to bring to the attention of the Secretary of State any case which it has identified through the exercise of its duties under section 22 ("Duty to make references in relation to completed mergers") or 33 ("Duty to make references in relation to anticipated mergers"), and which it believes may involve a foreign state newspaper merger situation. This reflects a similar requirement in section 57 of the Enterprise Act 2002 for the CMA (and Ofcom) to bring to the attention of the Secretary of State any case which it believes raises any public interest consideration, as specified in section 58 of the Enterprise Act 2002.

New section 70E

613. New section 70E sets out a definition of "foreign power" for the purposes of this Chapter. The definition is modelled on section 32 of the National Security Act 2023 but also includes senior members of a foreign government, state, agency or authority in their private capacity as well as their public one. Subsection (3) clarifies that the Channel Islands, the Isle of Man and the British Overseas Territories are not to be considered as foreign countries or territories for the purpose of this Chapter.
614. This provision should be read with section 127 of the Enterprise Act (associated persons). Section 127 provides that associated persons, and any bodies corporate they control, are to be treated as one person for the purposes of establishing whether there is a foreign state newspaper merger situation under new section 70A(3) – see paragraph 4(10) of Schedule 6A to the Act. For example, an individual who is a foreign power, and any spouse, partner or relative of that individual are associated persons.

New section 70F

615. Subsection (1) of this section clarifies that the term "newspaper" is to be read, for the purpose of this Chapter, as including periodicals (such as news magazines).
616. Subsection (2) confirms that a matter is considered to be "finally determined" when the Secretary of State has either made an order to prevent or reverse a merger under new section 70C(2) or has published a report provided by the CMA under new section 70B stating that the CMA does not believe that such a merger has been created, is in progress or is under contemplation.

New section 70G

617. New section 70G enables the Secretary of State to amend the definition of "foreign power" or "newspaper" (subsection (1)) by making regulations subject to the affirmative resolution procedure. Such regulations may provide for a description of person to be treated as if they were not a foreign power (subsection (2)), for the purpose of this Chapter.
618. Subsection (1) of this section enables the Secretary of State to change the meaning of ‘foreign power’.
619. Subsection (2) of this section sets out that regulations may, in particular, make provision to exclude categories of persons from being treated as a foreign power and to base this on the level of independence that person has from a foreign power or the level of interest they have in a newspaper or news magazine.
620. Subsection (1)(b) gives the Secretary of State the ability to change the definition of ‘newspaper’, where reference is made to it throughout this Chapter either to widen or to narrow the scope of the types of news publication covered by the foreign state newspaper merger regime.
621. Subsection (3) gives the Secretary of State the power to apply provisions in Chapter 1 of Part 3 of the Enterprise Act 2002 to the new regime in Chapter 3A. In particular, a modification to a provision in Part 3, Chapter 1 by Schedule 6A sets the turnover threshold for the creation of a foreign state newspaper merger situation at £2 million. The power in section 70G(3) enables this threshold to be varied.

New Schedule 6A

622. New Schedule 6A applies a number of provisions, with modifications, from Chapter 1 of Part 3 of the Enterprise Act 2002 (sections 23 to 29) for the purposes of new Chapter 3A.
623. Paragraph 1(2) of Schedule 6A amends section 23 to reduce the turnover threshold for the creation of a relevant merger situation to £2 million.
624. Paragraph 1(3) amends section 24 to provide that the deadline for the Secretary of State to issue a foreign state intervention notice and for the CMA to gives its report (see new section 70B above) is, in relation to a completed merger, four months from the date of completion or notice of the material facts of the merger are given to the CMA or Secretary or State, or are made public. The material facts include facts about whether or the extent to which a foreign power is able to control or influence a newspaper enterprise.
625. Paragraph 1(5) modifies section 26 to provide that where a foreign power which is already able to control or influence a newspaper enterprise increases their level of control or influence (e.g. by acquiring more shares or voting rights), this is to be treated as the foreign power bringing the newspaper under its control thus allowing the Secretary of State to give a foreign state intervention notice.

New Schedule 6B, Part 1 - Conditions for control or influence

626. Part 1 of new Schedule 6B sets out a list of conditions which define when control or influence from a foreign power arises in the case of a merger involving newspaper enterprise and a foreign power. If one or more of these conditions is met, a foreign power is to be able to control or influence the policy of a person defined in new section 70F as a newspaper or periodic news publication. The specific conditions in subparagraphs (2) to (6) of paragraph 1 are subject to a power to amend the requirements set out in Part 3 of this schedule.
627. Subparagraph (2) sets conditions related to the holding of shares by a foreign power, directly or indirectly, in a UK newspaper or periodic news publication.
628. Subparagraph (3) sets conditions related to voting rights that a foreign power holds either directly or indirectly in a UK newspaper or periodic news publication.
629. Subparagraph (4) sets conditions related to any right, directly or indirectly, to appoint or remove any officer (for example a director or chief executive) of a UK newspaper or periodic news publication.
630. Subparagraph (5) sets conditions related to any right or ability to direct, control or influence (whether directly or indirectly) the policies or activities of a UK newspaper or a periodic news publication; this would include a UK newspaper or a periodic news publication’s editorial policies.
631. Subparagraph (6) applies the requirements on control and influence where the foreign power exercises that through a trust or partnership.

New Schedule 6B, Part 2 - Interpretation

632. Part 2 of new Schedule 6B sets out how various terms should be interpreted for the purpose of new Schedule 6A. It includes paragraph 7 which defines voting rights in relation to shares that have such a right, paragraph 9, which sets out how the provisions should be interpreted where a foreign power holds a share or right indirectly, for example, in paragraph 9(1)(b) as part of a chain, while paragraph 11 confirms that where a foreign power controls a right, the right is to be treated as held by that foreign power.

New Schedule 6B, Part 3 - Power to amend circumstances in which there is control or influence

633. Part 3 of new Schedule 6B provides the Secretary of State with a power to make regulations to amend the requirements which must be satisfied in order for a foreign power to be considered to have control or influence. This includes the capacity to change specified proportions of shares or rights (paragraph 15(1)(a) and (b)), the assumptions to be made regarding control or influence including with reference to ownership of those shares or rights (paragraph 15(1)(c)), and the point at which ‘control’ or ‘influence’ will be considered to come within new section 70A (paragraph 15(1)(d)); as well as to change or supplement new Schedule 6B, Part 1 such as to include other circumstances which would come to a similar effect as the conditions set out in that Part. The power can be used to apply such changes from 13 March 2024.
634. Paragraph 15(3) confirms that such regulations may confer a discretion on the CMA.

Further amendments

635. Schedule 7 also makes various consequential amendments to the Enterprise Act 2002 (paragraph 4 (further amendments)). These include provisions which require the Secretary of State to publish details of any foreign state intervention notice (subparagraph 4(a)) and any report received by the Secretary of State from the CMA under section 70B within 7 days of its receipt (subparagraph 4(b)). Subparagraph (9) amends section 124 of the Enterprise Act 2002 (orders and regulations under Part 3) to provide that a statutory instrument under section 70G or paragraph 15 of Schedule 6B must be made using the affirmative resolution procedure.

Section 131: Mutual agreements to extend time-limits: duty to make reference cases

636. This section enables the CMA and parties involved in a merger to mutually agree to extend the statutory timetable for Phase 2 investigations (known as stopping the clock) where this is likely to support timely resolution of merger investigations and to create added flexibility to the process.
637. Section 39 of the Enterprise Act 2002 (time limits for investigations and reports) requires the CMA to prepare and publish its report on a merger reference within 24 weeks from the date of the reference.
638. Subsection (2) amends section 39 to give the CMA the power to extend the Phase 2 timetable where it and the parties involved in a merger agree to do so. The length of an extension period has to be agreed between the CMA and parties involved in a merger. The extension comes into force when published under section 107 and continues until the end of the agreed extension period, unless the CMA and the parties involved in a merger agree to an earlier cancellation.
639. Subsection (3) amends section 40 of the Enterprise Act 2002 to make clear that a mutually agreed extension does not prevent the CMA from using its existing powers to extend the Phase 2 timetable for other reasons, e.g. for special reasons (section 39, subsection (3)) or if it considers that a relevant person has failed to comply with any requirement of a formal notice under section 109 to provide information or documents (section 39, subsection (4)). The amendment to section 40(5) ensures that mutually agreed extensions are included when calculating the total length of the Phase 2 timetable in a case where there are multiple extensions.
640. Subsection (4) makes amendments to section 107(2) to ensure that the CMA is required to publish any decision, agreed to by it and the parties involved in a merger, to cancel a previously agreed extension.
641. While the legislation does not specify in which circumstances the CMA and the parties involved in a merger can agree an extension, this is most likely to be helpful in support of early consideration of remedies or in multi-jurisdictional mergers that are being reviewed in other countries in parallel to the UK.

Section 132: Mutual agreements to extend time-limits: public interest cases

642. This section enables the CMA and the parties involved in a merger to mutually agree to extend the statutory timetable for Phase 2 investigations where there has been a public interest intervention, replicating the provision in section 130 for standard merger reviews.
643. Subsection (1) explains that this section amends Chapter 2 of Part 3 of the Enterprise Act 2002. This Chapter sets out that the Secretary of State may intervene in the consideration of a merger where the Secretary of State believes it raises a public interest consideration that needs to be taken into account (relevant considerations are specified in section 58 of the Enterprise Act 2002).
644. Subsections (2) and (3) make amendments to sections 51 and 52 of the Enterprise Act 2002 which are equivalent to those made by section 130. The only notable difference is that subsection (2) ensures that the CMA can only make an extension or cancel it in a public interest case, if the Secretary of State consents. This ensures the Secretary of State is appropriately involved in the decision-making, reflecting their role as decision maker in public interest interventions. This will apply to special public interest cases too as section 65(3) of the Enterprise Act 2002 applies sections 51 and 52 automatically to such cases.
645. Subsection (4) makes amendments to section 107 which are equivalent to those made by section 130.

Section 133: Publication of merger notices online

646. This section replaces an obligation on the CMA in section 96(5) of the Enterprise Act 2002 to publish the latest form of the merger notice in the London, Edinburgh and Belfast Gazettes with an obligation to instead publish it online (for example on the CMA website). The merger notice is used by undertakings to notify the CMA of potentially relevant merger situations.

Chapter 3: Markets

Section 134: Market studies: removal of time-limit on pre-reference consultation

647. Section 134, subsections (1) and (2) amend section 131B of the Enterprise Act 2002 to remove the restriction on the time period during which the CMA, after the commencement of a market study, is required to either begin a consultation regarding a proposal to make a reference or must publish notice of its decision not to make a reference. The requirement to undertake a consultation in a case where the CMA proposes to make a reference, or where it does not propose to make a reference but has received representations in response to the market study notice indicating that it should make a reference, are set out in section 131A of the Enterprise Act 2002 and continue to apply. The removal of the time restriction gives the CMA flexibility and more time to gather evidence to determine when the consultation process should commence, provided that it can complete the process and reach a decision on a reference within 12 months of the publication of the market study notice.
648. Subsection (3) removes provisions which enable the Secretary of State, by order, to reduce the 6-month time limit period, since these become redundant as a consequence of the removal of the restriction mentioned above.

Section 135: Power to make a reference after previously deciding not to do so

649. This section amends Section 131B of the Enterprise Act 2002 to specify the circumstances when a market investigation reference may be made, following an earlier decision by the CMA or a concurrent sector regulator during a market study not to make a market investigation reference in relation to the same matter.
650. Subsection (4) inserts new subsections (8) and (9) in section 131B of the Enterprise Act 2002. These make provision so that a reference for a market investigation may not be made within 2 years of the publication of a market study report in relation to the same matter, unless there has been a material change in circumstances since the report was prepared. This could include where it is subsequently discovered there has been a mistake of fact or misrepresentation made during the course of the market study, or evidence was provided late in the course of the study which indicates that the market has changed since the report was prepared.

Section 136: Scope of market investigations

651. This section makes provision regarding the ability of the CMA (or the appropriate Minister, as the case may be) to specify the feature or features of a market it considers require further investigation when making a reference under section 131 or section 132 of the Enterprise Act 2002 and amending the questions which the CMA group constituted under Schedule 4 to the Enterprise and Regulatory Reform Act 2013 to undertake the investigation must consider accordingly.
652. Subsection (2) inserts new subsections (1A) and (1B) in section 133 of the Enterprise Act 2002 which make provision so that a reference may require the CMA Group to limit its investigation to the effects of features of the market or markets concerned which are set out in the reference itself ("particular features"). It further amends section 133(2) of the Enterprise Act 2002 so that the provision sets out examples of the types of feature which the reference may specify.
653. Subsection (3) amends section 134 of the Enterprise Act 2002 so that the CMA group will only be required to investigate "relevant features", defined in new section 134, subsection (2B) of the Enterprise Act 2002 as being any features of a relevant market other than features that are excluded by virtue of the above amendments to section 133 of the Enterprise Act 2002. This ensures that the questions which the CMA Group must consider reflect only the matter or matters it is required to investigate as specified in the reference and prevents unnecessary duplication of work.
654. It is therefore possible for a reference to be made which refers a whole market for investigation, or specific features of a market, where the person making the reference has identified particular features of concern. This means the question to be considered by the CMA reflects that it is possible for the CMA to refer the whole market for investigation, or a specific feature of the market where they have identified that specific features require further investigation, rather than the market as a whole.
655. Should it subsequently be identified that it would be appropriate for the terms of a reference to be varied, there are powers for the CMA (or the appropriate Minister, as the case may be), to vary a market investigation reference under section 135 of the Enterprise Act 2002.

Section 137: Acceptance of undertakings at any stage of a market study or investigation

656. This section gives effect to Schedule 8 which expands the temporal scope of acceptance of undertakings, allowing voluntary commitments to be accepted by the CMA during all stages of a market study and a market investigation. It also allows the CMA to accept undertakings partially to narrow the issues which require further investigation.

Schedule 8: Acceptance of undertakings at any stage of a market study or investigation

657. Paragraph 1 is self-explanatory.
658. Paragraph 2 of Schedule 8 makes amendments to section 131B of the Enterprise Act 2002 so that in a case where a market study has been undertaken, and the CMA has accepted an undertaking under the new section 154A, either instead of, or in addition to, making an investigation for a market reference under section 131, the market study report must contain that decision.
659. Paragraph 3 of Schedule 8 makes amendments to section 133A of the Enterprise Act 2002 which deals with which functions of the CMA must be carried out on its behalf by the group constituted under Schedule 4 to the Enterprise and Regulatory Reform Act 2013 following the making of a reference under any of sections 131, 132 or 140A of the Enterprise Act 2002 ("the CMA Group") and which may be carried out by the CMA Board. Section 133A(1) lists the decisions which must be made by the CMA Group. That subsection is amended to include a decision to accept an undertaking in lieu of a report under section 154A. Subsection (2) lists the decisions which may be made by the CMA Board where the CMA Group has ceased to exist. It is amended to include a decision to accept an undertaking in lieu of a report.
660. Paragraph 4 of Schedule 8 amends section 136 to make provision so that a report on a market investigation reference must include any decision made by the CMA during the course of the investigation to accept an undertaking partially in lieu of a report.
661. Paragraph 5 of Schedule 8 makes amendments to section 139 Enterprise Act 2002 as a consequence of the introduction of the new section 154A of the Enterprise Act 2002. Section 139 concerns the circumstances in which the Secretary of State may give a notice to the CMA ("a public interest intervention notice") that they believe it is or may be the case that one or more public interest considerations is relevant to a matter in relation to which a market study notice has been published, or a consultation regarding a possible reference under section 131 has commenced in accordance with section 169 of the Enterprise Act.
662. Subparagraphs (2) and (3) of Paragraph 5 amend sections 139(1A)(a) and 139(1B)(a) so that the permitted period within which the Secretary of State may give a public interest intervention notice ends where the CMA accepts an undertaking fully in lieu of a reference under the new section 154A (whether in a case in which a market study notice has been published by the CMA, or a consultation regarding a possible reference commenced under section 169 of the Enterprise Act 2002). Should the CMA accept undertakings partially in lieu and then plan to make a reference in relation to other features of a market, the Secretary of State retains the power to issue a public interest intervention notice. Subsections (4) and (5) make consequential amendments to reflect the replacement of section 154 with the new section 154A of the Enterprise Act 2002.
663. Paragraph 6 of Schedule 8 makes amendments to section 140 of the Enterprise Act 2002. Section 140 makes provision regarding public interest intervention notices which may be given under section 139. By section 140(4) a public interest intervention notice comes into force when it is given and remains in force until the matter to which it relates is "finally determined" under the Chapter. Section 140(5) sets out when a matter is finally determined for the purposes of subsection (4). Paragraph 6 amends the list of circumstances in section 140(5) so that it includes the acceptance by the CMA of an undertaking fully in lieu of a reference. Should the CMA accept undertakings partially in lieu, any public interest intervention notice would remain in force.
664. Subparagraph (3) of Paragraph 6 makes a consequential amendment to section 140(6A) to replace the reference to former section 154 with the new section 154A of the Enterprise Act 2002.
665. Paragraph 7 of Schedule 8 amends section 150 of the Enterprise Act 2002 so that the Secretary of State’s power of veto over the acceptance of undertakings applies to the new section 154A power to accept undertakings in lieu of a reference as it previously applied to undertakings in lieu under the old section 154.
666. Paragraph 8 of Schedule 8 inserts new section 154A in the Enterprise Act 2002 in substitution for section 154 of the Enterprise Act 2002, replacing the CMA’s power to accept undertakings in lieu with a power to accept two types of undertakings: undertakings in lieu of a reference and undertakings in lieu of a report. Both types of undertaking can be accepted either partially or in full of the reference or report, allowing the CMA to use them to narrow the issues which require further investigation either before, or during the course of, a market investigation.
667. New section 154A(1) of the Enterprise Act 2002 expands the temporal scope of acceptance of undertakings by the CMA. It provides that the power to accept an undertaking applies where no market study notice has been published under section 130A but the CMA considers it has the power to make a market investigation reference under section 131, and otherwise intends to make a reference, where a market study notice has been published under section 130A but no market investigation reference has been made under section 131, or where a market investigation reference has been made under section 131, but no report published under section 136. Acceptance of undertakings after a market investigation reference has been made will allow the CMA to use them to narrow issues during the course of a market investigation.
668. New section 154A(2) of the Enterprise Act 2002 mirrors former section 154(3) of the Enterprise Act 2002, and provides that the new power is to accept, from such persons as it considers appropriate, and to take such actions as it considers appropriate, for the purpose of remedying, mitigating or preventing an adverse effect on competition or any detrimental effect on customers so far as it has resulted from the adverse effect on competition, or may be expected to result from it.
669. New section 154A(3) of the Enterprise Act 2002 provides that undertakings accepted in circumstances where the CMA considers it has power to make a reference and otherwise intends to make a reference, or where a market study notice has been published up to the making of a market investigation reference are known as "undertakings in lieu of a reference". Undertakings accepted after the making of a reference under section 131 or 132, but before the publication of a report under section 136 are known as "undertakings in lieu of a report".
670. New section 154A(4) of the Enterprise Act 2002 provides that undertakings in lieu of a reference may be accepted instead of making a reference, in which case they are "undertakings fully in lieu of a reference", or in addition to making a reference under section 131 in which case they are "undertakings partially in lieu of a reference". Any reference made would have to relate to features other than those to which the undertakings relate, as a result of the restrictions in section 156 of the Enterprise Act 2002 (see further below). Undertakings in lieu of a report may be accepted either instead of publishing a report under section 136 ("undertakings fully in lieu of a report"), or in addition to publishing such a report ("undertakings partially in lieu of a report"). Where undertakings are accepted partially in lieu of a report, the questions which must be addressed in the report are amended by section 156 of the Enterprise Act 2002.
671. New section 154A(5) of the Enterprise Act 2002 mirrors former section 154(3) of the Enterprise Act 2002, but is applied only in relation to undertakings accepted fully in lieu of either a reference or a report. The CMA is required to have regard to the need to achieve as comprehensive a solution as is reasonable and practicable as regards the adverse effect they are targeted at. That the duty is not applied to undertakings accepted partially in lieu of a reference or report recognises that the CMA may continue its inquiry in relation to other features which give rise to competition concerns.
672. New section 154A(6) of the Enterprise Act 2002 provides that when accepting undertakings under the section, the CMA may in particular have regard to the effect on any action on any relevant customer benefits or the feature or features concerned, mirroring former section 154(4).
673. New section 154A(7) of the Enterprise Act 2002 follows the approach in former section 154(5) and the restriction in section 138(6) of the Enterprise Act 2002. This provision prevents the CMA taking action in relation to a potential detrimental effect on customers unless they are also taking action in relation to the underlying adverse effect on competition. Where a detrimental effect on customers has already materialised, the CMA is able to address the adverse effect or the customer detriment, in the alternative.
674. Subsections (8), (9) and (10) of the new section 154A Enterprise Act 2002 mirror the previous section 154(6), (7) and (8) Enterprise Act 2002 respectively. Undertakings accepted under the new section 154A come into force when accepted, and may be varied, or superseded by other undertakings and may be released by the CMA. The CMA is required, as soon as reasonably practicable, to consider any representations received by it in relation to the variation or release of any undertaking accepted under the section. The powers to accept undertakings are subject to the Secretary of State’s power of veto at section 150 of the Enterprise Act 2002, and the procedural requirements set out in section 155 of the Enterprise Act 2002.
675. Paragraph 9 of Schedule 8 amends section 155 of the Enterprise Act 2002 (undertakings in lieu: procedural requirements).
676. Sub-paragraph (2) of Paragraph 9 amends subsection 155(1) so that the procedural requirements and restrictions set out in the section apply to the new undertakings to be accepted under section 154A as they applied to undertakings in lieu under section 154. These include specific consultation and publication requirements.
677. Sub-paragraph (3) of Paragraph 9 repeals subsection 155(3), replacing it with a new subsection (3A). This requires the CMA to set out, in a notice detailing an undertaking which it proposes to accept, the adverse effect on competition and any detrimental effect on customers resulting from the adverse effect on competition, which the CMA has identified. The obligation to include the terms of the reference which the CMA considers it has the power to make, and would otherwise intend to make, is omitted. This reflects that in the early stages of a market study, the CMA may not be in a position to set out the terms of the market investigation reference in full, even in circumstances where it is satisfied that there is an adverse effect on competition in the market which the undertaking would remedy, mitigate or prevent.
678. Sub-paragraph (4) of Paragraph 9 makes consequential changes to amend references to former section 154 to refer to new section 154A of the Enterprise Act 2002.
679. Paragraph 10 of Schedule 8 amends section 156 Enterprise Act 2002 which deals with the effects of undertakings and the bar on making future references, to reflect the new types of undertaking created by the new section 154A.
680. Sub-paragraphs (1) and (2) of paragraph 10 of the Schedule are self-explanatory.
681. Sub-paragraphs (3) and (4) of paragraph 10 of the Schedule amend section 156(A1) and (1) so that the restrictions set out in those sub-section applies to undertakings accepted under the new section 154A as they applied to undertakings in lieu accepted under section 154. The references to "any feature" in the amended section 156(A1)(b) and new section 156(1)(ab) reflects that undertakings may be accepted partially in lieu. Where undertakings have been accepted in relation to particular features, or combinations of features, a reference may not be made in relation to the same feature or combination of features within the following 12 months, however this does not prevent the making of a reference in relation to another feature in the same market.
682. This also means that where undertakings in lieu have been accepted in relation to a specific feature in a market, that will have the effect of preventing the making of an ordinary reference which relates to the market as a whole (i.e. any feature of the market which may be present) within 12 months following the acceptance of those undertakings. In contrast, where the CMA Board narrows the scope of a reference under section 133 of the Enterprise Act 2002, this would not prevent the reference of the entire market where this is considered appropriate.
683. For example, where an undertaking in lieu has been accepted in relation to feature A in market Z, it would not be possible for an ordinary reference to be made in the following 12 months relating to feature A in market Z, nor a cross-market reference which includes feature A in relation to market Z. The CMA would be able to make an ordinary reference in relation to any other feature in market Z, and a cross-market reference which includes feature A in relation to any other market except Z.
684. Sub-paragraph (5) of paragraph 10 of the Schedule is self-explanatory.
685. Sub-paragraph (6) of paragraph 10 of the Schedule inserts new subsections (4), (5), (6) and (7) into section 156 of the Enterprise Act 2002 to address the effects of undertakings in lieu of a report under new section 154A.
686. New subsections 156(4) and (5) of the Enterprise Act 2002 provide that where the CMA has accepted an undertaking in lieu of a report, the CMA’s obligation to consider the questions set out in section 134 of the Enterprise Act 2002 does not apply in relation to the feature, or features, to which the undertakings relate. Where an undertaking is accepted partially in lieu of a report, the report will therefore only be required to address the features which are not resolved by the acceptance of the undertaking or group of undertakings. Where an undertaking is accepted fully in lieu of a report, there is therefore no obligation to publish a report under section 136 and the duty under section 138 does not arise.
687. The new subsection 156(6) provides that where the CMA accepts an undertaking fully in lieu of a report, the CMA must, instead of the section 136 report, prepare and publish a report setting out its decision to accept the undertaking, reasons for the decision and such information as it considers appropriate for facilitating a proper understanding of the decision and reasons.
688. The new subsection 156(7) is self-explanatory.
689. Paragraph 13 of Schedule 8 amends section 162 of the Enterprise Act 2002 which sets out the duty on the CMA to keep the carrying out of undertakings under review, and from time to time consider whether they have been or are being complied with, and or need to be varied or superseded by another undertaking. Paragraph 13 amends sections 162(4) and (8) of the Enterprise Act 2002 so that this duty will apply to undertakings accepted under section 154A as it applied to undertakings accepted under section 154 and includes the new types of undertaking in the definition of "enforcement undertaking". This has the effect of making undertakings under new section 154A Enterprise Act 2002 enforceable by virtue of existing section 167 of the Enterprise Act 2002 which applies to any enforcement undertaking.
690. Paragraph 14 of Schedule 8 makes amendment to section 169 of the Enterprise Act 2002. Section 169 requires a relevant authority (that is the CMA, or the Secretary of State in cases involving a full or restricted reference) so far as practicable, to consult where it proposes to make a relevant decision if it considers such decisions are likely to have a substantial impact on the interests of any person. Section 169(6) Enterprise Act 2002 sets out a list of "relevant decisions". Paragraph 14 of Schedule 8 amends this list so it includes decisions to accept an undertaking in lieu of a reference under section 154A as it previously applied to decisions to accept undertakings in lieu under section 154.
691. Paragraph 15 of Schedule 8 makes consequential changes to section 174C of the Enterprise Act 2002 to amend references to former section 154 to refer to new section 154A of the Enterprise Act 2002. Section 174C supplements section 174B which sets out a restriction on the exercise of powers to impose penalties under section 174A for non-compliance with an information notice issued under section 174. There is a limitation period imposed on the issue of a civil penalty for non-compliance with an information notice, which, as amended by Schedule 9, is 10 weeks from the "relevant day". By section 176B(6), where the information gathering power is exercised for the purpose of the CMA’s enforcement functions in relation to 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.
692. Section 174C(3) makes provision regarding when the relevant day is for the purposes of section 176B(6). Paragraph 15 amends section 174C(3) so that the decision to accept an undertaking fully in lieu of a reference under section 154A will be taken as the day the CMA finally decides whether to make a reference under section 131 for this purpose, and so the limitation period will run from that date.
693. Paragraph 16 of Schedule 8 amends the list of circumstances where a market investigation reference is deemed to be finally determined set out in section 183(3)(a) of the Enterprise Act 2002 to include the acceptance of an undertaking fully in lieu of a report under new section 154A Enterprise Act 2002.
694. Paragraph 17 of Schedule 8 makes consequential changes to amend references to former section 154 in paragraph 29 of Schedule 4 to the Enterprise and Regulatory Reform Act 2013 to refer to new section 154A of the Enterprise Act 2002.

Section 138: Final undertakings and orders: power to conduct trials

695. Subsection (1) gives effect to Schedule 9 which makes provision to enable the CMA, and as the case may be, the Secretary of State, to conduct trials of remedies before settling a final remedy package.

Schedule 9: Final undertakings and orders: power to conduct trials

696. Paragraph 2 of Schedule 9 makes amendment to section 133A of the Enterprise Act 2002, which deals with which functions of the CMA must be carried out on its behalf by the group constituted under Schedule 4 to the Enterprise and Regulatory Reform Act 2013 following the making of a reference under any of sections 131, 132 or 140A of the Enterprise Act ("the CMA Group") and which may be carried out by the CMA Board. Section 133A(1) sets out the decisions which must be carried out by the CMA Group. Section 133A(2) sets out the decisions which may be carried out by the CMA Board where the CMA Group has ceased to exist.
697. Paragraph 2(2) amends subsection 133A(1) so that the decisions under sections 138 to 138B which must be made by the Group are limited to those which relate to an adverse effect on competition in respect of which the CMA is required to take action in accordance with section 138(2) within the period permitted by section 138A(1). It further inserts decisions made under the new section 161C into subsection 133A(1). The CMA Group is thereby required to make decisions regarding any remedies which are to be settled within the period required by section 138A(1) immediately following the conclusion of a market investigation reference, and the design and commencement of any implementation trial to be undertaken under new section 161C, however decisions to be taken at the conclusion of an implementation trial may be taken by the CMA Board, as may decisions to revise remedies in accordance with section 138(2) following a decision made under the new section 162A(5).
698. Paragraph 2(3) amends subsection 133A(2) to include decisions made under the new section 162B concerning the variation of any undertakings accepted or orders made for the purpose of a trial undertaken under the new section 161C. This allows the CMA Board to vary remedies during the implementation trial period once the CMA Group has ceased to exist.
699. Paragraph 3 of Schedule 9 amends section 138A of the Enterprise Act 2002 which deals with the time limits within which the CMA is required to take action by either accepting undertakings or imposing orders, following a finding of an adverse effect on competition in a market investigation report published under section 136. By section 138A(1) the CMA is required to discharge its duty under section 138(2) within 6 months from the date of the publication of its report. That time period may be extended by no more than 4 months where the CMA considers there are special reasons for doing so.
700. Paragraph 3(2) inserts new subsections 138A(A1) to (A3). New subsections (A1) and (A3) have the effect of disapplying the time limit in relation to any adverse effect on competition in relation to which an implementation trial takes place, or where, as a result of an implementation trial, it is not reasonably practicable for the CMA to discharge its duty in relation to another adverse effect on competition identified in the report. Instead, the time in which the section 138(2) duty must be discharged is the date specified under the new section 161D(5)(b)(ii); that is the date specified in the final implementation trial notice as the last date on which any implementation trial measure (undertaking or order) is to have effect. The new subsection (A2) confirms that the existing time limits apply to any other adverse effects on competition. This means that where, in a report published under section 136, the CMA identifies multiple adverse effects on competition , and considers that an implementation trial should be undertaken in relation to one or more of those adverse effects, the existing 6+4 month window will apply to remedies which relate to any adverse effect on competition which are not the subject of a trial, and which is it is reasonably practicable for the CMA to settle before the trial is concluded. The extended period will apply to the remedies which are the subject of the trial, and those which it is not reasonably practicable for the CMA to make a final decision about before the trial concludes.
701. Paragraphs 3(3) and 3(4) make consequential amendments to section 138A of the Enterprise Act 2002 to reflect that the existing window for action to be taken under section 138(2) Enterprise Act 2002 continues to apply in all other cases except those indicated at section 138A(A1).
702. Paragraph 4 of the Schedule inserts new sections 161B, 161C, 161D and 161E which provide powers for the CMA (and Secretary of State, in public interest cases) to undertake trials of different packages of qualifying remedies before reaching a decision as to the final measures to be accepted or imposed under section 159 or section 161 Enterprise Act 2002.

New section 161B – Implementation trials: purpose and interpretation

703. New section 161B Enterprise Act 2002 introduces new sections 161C to 161E and makes interpretative provision for the purpose of those sections.
704. New section 161B(2) defines "relevant authority" as the CMA or the Secretary of State. The CMA has responsibility for making decisions regarding remedies in relation to cases which have not involved a full or restricted reference. In the case of the latter, decision making powers regarding remedies lie with the Secretary of State.
705. New section 161B(3) makes interpretative provision which applies in relation to Part 4. It further includes a power for the Secretary of State to specify in regulations matters in relation to which remedial action will be "qualifying remedial action" and so in scope of the power to conduct an implementation trial. This power is subject to the draft affirmative procedure, see section 145 and paragraph 3(8) in Schedule 14 to the Act.
706. New section 161B(4) provides that the last day on which an implementation trial measure may have effect is the earlier of either the day specified in the final implementation trial notice as the last day on which any undertaking or order made under the new powers is to have effect, or the day on which a decision is made regarding the final remedy package under the relevant power concerned. There is no limit on how long an implementation trial may last, as each trial will need to be designed according to the needs of the particular market. However, the CMA (or Secretary of State, as the case may be) will be required to set out in the final implementation trial notice how long the specific trial measures are to last for, and will be required to make a decision regarding the final remedy package within that period.
707. New section 161B(5) provides that where the CMA makes a decision under section 138A(3) to extend the period within which it must make a decision regarding the final remedy package, as a result of a person failing to comply with a requirement of an information notice under section 174, where such failure prevents the CMA properly discharging its duty under section 138(2), then the last day on which an implementation trial measure is to have effect is the last day of that period as so extended. This ensures that in the event the CMA has not been provided with information it needs to evaluate the effectiveness of remedies to enable it to make a decision regarding the final remedy package, it will not be forced to make a decision without this as a result of the time restriction that would otherwise apply.
708. New section 161C – Power to conduct implementation trials.
709. New section 161C(1) gives the CMA the power to begin an implementation trial where it is under a duty to take remedial action in accordance with section 138(2), (which may be either because it has identified an adverse effect on competition in a report prepared and published under section 136 within the required time period following the making of a market investigation reference, or because it is required to take action under the new section 162A(5)), and it has not taken, but is minded to take qualifying remedial action, that is action which relates to the provision of information to consumers, whether directly or through an intermediary, or any other matter which may be specified in regulations made by the Secretary of State. Consumer is defined in section 183 Enterprise Act 2002 for the purposes of Part 4.
710. New section 161C(2) gives the Secretary of State the power to begin an implementation trial where (i) the Secretary of State has the power to take action under section 159 or section 161 by virtue of section 147(2) or section 147A(2), (ii) and they have not taken, but are minded to take qualifying remedial action.
711. New section 161C(3) provides that the powers of both the CMA and Secretary of State to undertake implementation trials are subject to the requirements in new section 161D Enterprise Act 2002 concerning the publication of notices.
712. New section 161C(4) provides that an implementation trial is begun by the CMA, or the Secretary of State, as the case may be, by the acceptance of an undertaking or making of an order under section 161C for the purposes of assessing, during the implementation trial period, the likely effectiveness of the qualifying remedial action.
713. New sections 161C(5) and (6) make provision so that where the CMA or Secretary of State begin an implementation trial, they also have a power to accept undertakings or make orders which they consider would be likely to contribute to, or otherwise be of use for remedying, mitigating or preventing an adverse effect on competition, or detrimental effect on customers resulting from it, or which may be expected to result from it, identified in the report concerned, during the implementation trial period. This allows the relevant authority flexibility to design implementation trials according to the needs of the market and to impose a provisional remedy in relation to one section of the market, while other remedies are trialled with other cohorts. It further means that where adverse effects are linked such that it is not reasonably practicable to determine a final remedy package while the implementation trial is ongoing, a provisional remedy may be put in place in relation to a related adverse effect on competition pending the outcome of the trial.

New section 161D – Implementation trials: notices

714. New section 161D of the Enterprise Act 2002 makes provision regarding the procedural steps which the relevant authority is required to follow before it may begin an implementation trial.
715. New section 161D(1) requires that the relevant authority must publish both a provisional implementation trial notice, and a final implementation trial notice.
716. New section 161D(2) specifies the matters that must be included in the provisional implementation trial notice. The relevant authority must set out details of each implementation measure, that is undertaking and order, it is minded to accept or impose, and the relevant adverse effect each is intended to address must be specified. The relevant authority must state any other facts that they consider justify the imposition of the measure, and set out how it intends to assess the effects of the measure, and the last day on which it intends for the measure to have effect. It must further invite the making of representations by the persons on which it is minded to impose measures, and specify how, and by when, such representations must be made. New subsection (3) specifies that at least 15 days after the date on which the provisional implementation trial notice is published must be allowed for the making of representations.
717. New subsection 161D(4) makes provision requiring the relevant authority to take into account any representations received in response to the provisional implementation trial notice, and where they consider it appropriate to begin an implementation trial, to publish a final implementation trial notice.
718. New section 161D(5) specifies the matters which must be set out in the final implementation trial notice. This must include the implementation trial measures the relevant authority intends to impose, and in relation to each such measure, how they intend to assess the effect of the measure, and the last day on which the measure is to have effect. Since trials are to be undertaken in circumstances where it is not clear what the most effective approach to the remedy is, there is no statutory time limit set in relation to the trial period itself. To ensure that a trial cannot continue indefinitely, the final implementation trial notice must specify the last day on which each implementation trial measure is to have effect. This specified day acts as a long stop on the implementation trial, and is the date by which the final action under section 138(2) by the CMA must be taken. The period specified will therefore take account of both the time needed to allow the remedy to take effect, its effectiveness to be assessed, and to allow any consultation to take place about the final measure to be imposed taking into account the conclusions of the trial.

New section 161E – Implementation trials: supplementary

719. New section 161E of the Enterprise Act 2002 makes provision regarding the applicability of other provisions in Part 4 to the new powers to undertake implementation trials, and other procedural provisions.
720. New section 161E(1) requires the CMA, before accepting an undertaking for a purpose permitted by new subsection 161C, to provide the person with information about the possible consequences of failing to comply with it. Any person to whom an undertaking accepted under section 161B relates has a duty to comply with it, which is owed to any person who may be affected by a contravention of it and which is actionable under section 167(4) of the Enterprise Act 2002. Further, the new subsection 167A inserted by Schedule 10 makes provision for a relevant authority to impose a civil penalty for failure to comply with undertakings accepted under Part 4 of the Enterprise Act 2002.
721. New section 161E(2) requires the CMA to begin an implementation trial either within the 6 month window (extendable by 4 months) under section 138A of the Enterprise Act 2002, where the trial immediately follows a market investigation, or within 6 months of the decision to vary a remedy following a decision that action should be taken under section 162A(5) as a remedy has been ineffective.
722. New section 161E(3) applies the provisions at section 138(3), (5), and (6) to decisions regarding remedies for implementation trials as they apply to decisions concerning action to be taken under section 138(2). That is, decisions concerning implementation trial measures must be consistent with the decisions included in the relevant report published under section 136, unless there has been a material change in circumstances since the preparation of the report or the CMA otherwise has a special reason for deciding differently. The CMA may have regard to the effect of any action on any relevant customer benefits of the feature or features of the market or markets concerned. The CMA may not take action to remedy, mitigate or prevent any detrimental effect on customers which is anticipated to arise from the adverse effect on competition if that detrimental effect has yet to arise, unless the adverse effect on competition is being remedied, mitigated or prevented. There is no requirement for the CMA to have regard to the need to ensure that remedies are as comprehensive as is reasonably practicable, given the nature of an implementation trial.
723. New section 161E(4) applies the provisions in section 147(3)(b), (4), (5) and (6) of the Enterprise Act 2002 to decisions made regarding implementation trials by the Secretary of State in a restricted public interest case as they would apply to final remedies imposed in those cases. These are the requirement for the Secretary of State to have regard to the CMA’s report, the bar on the Secretary of State challenging the CMA’s decision as to whether there is an adverse effect on competition, the power to have regard to the effect of any action on any relevant customer benefits of the feature/s concerned and the restriction on the Secretary of State taking action in relation to potential detrimental effect on customers unless the underlying adverse effect on competition is being remedied.
724. New section 161E(5) applies the provisions in section 147A(3) and (4)(b) of the Enterprise Act 2002 to decisions made regarding implementation trials by the Secretary of State in a full public interest reference case as they would apply to a final remedy in those cases. These are the requirement for the Secretary of State to have regard to the CMA’s report and the power to have regard, in particular, to any detrimental effect on customers so far as resulting from effects adverse to the public interest concerned.
725. New sections 161E(6) and (7) apply the procedural obligations to undertakings accepted and orders made under section 161C for the purposes of an implementation trial as they apply to the making of any final order under section 161 of the Enterprise Act 2002 or acceptance of an undertaking under section 159 of the Enterprise Act 2002.
726. Paragraph 5 of Schedule 9 inserts new Section 162B of the Enterprise Act 2002, which provides a power for the CMA or the Secretary of State to vary implementation trial remedies. By new subsection (1), the section applies where the CMA or Secretary of State has imposed implementation trial measures in accordance with section 161C.
727. New section 162B(2) requires the CMA to keep under review the effectiveness of any measure which has been imposed.
728. New section 162B(3) requires the CMA, from time to time, to consider whether a measure has been, or is being, complied with, and whether any undertaking accepted or order imposed, is no longer appropriate and needs to be varied or revoked, or in the case of undertakings, one or more parties could be released from it, or it should be superseded by a new undertaking.
729. New section 162B(4) requires the CMA, within the implementation trial period, to provide the Secretary of State with such advice as it considers appropriate in relation to the variation of any measure accepted or imposed by the Secretary of State under section 161C.
730. New section 162B(5) makes provision for the CMA and Secretary of State to take such action as they consider appropriate in relation to the variation or release of undertakings or orders, or replacement by new undertakings or orders during the implementation trial period.
731. New section 162B(6) prevents the CMA or Secretary of State from varying an implementation trial measure in such a manner that it would extend the implementation trial period and requires any varied measure to remain in compliance with section 161C.
732. New sections 162B(8), (9) and (10) apply the provisions at sections 138(3), (5) and (6) to variations of implementation trial measures by the CMA, and the provisions at sections 147(3)(b), (5) and (6) and sections 147A(3) to variations of implementation trials measures by the Secretary of State, as they apply to measures imposed at the outset of an implementation trial.
733. Paragraph 6 of Schedule 9 makes amendments to section 165 of the Enterprise Act 2002 to apply the procedural requirements set out in Schedule 10 (other than the provision in paragraph 9 of that Schedule, which allow the relevant authority to dispense with the requirements where there are special reasons for doing so) to any decision to accept an undertaking or make an order for the purpose of an implementation trial under section 161C, as they apply in relation to undertakings accepted under section 159 and orders made under sections 160 and 161 of the Enterprise Act 2002. Schedule 10 sets out specific consultation and publication requirements.
734. Paragraph 7 of Schedule 9 makes amendments to section 167 of the Enterprise Act 2002 so that enforcement action can be taken in relation to undertakings accepted and orders imposed for the purpose of an implementation trial, as can be taken in relation to other types of order and undertaking under Part 4 Enterprise Act 2002.
735. Paragraph 8 of Schedule 9 makes amendments to new section 167A of the Enterprise Act 2002 (inserted by paragraph 16 of Schedule 11 to this Act - Civil penalties in connection with breaches of remedies), so that penalties can be imposed in relation to undertakings accepted and orders imposed for the purpose of an implementation trial, as will be the case in relation to other types of order and undertaking under Part 4.
736. Paragraph 9 of Schedule 9 makes amendments to new section 167B of the Enterprise Act 2002 (inserted by paragraph 16 of Schedule 11 of this Act - Civil penalties in connection with breaches of remedies), so that the penalty amount payable by reference to a daily rate ceases to accumulate at the beginning of the day on which the undertakings accepted and orders imposed for the purpose of an implementation trial are complied with, as will be the case in relation to other types of order and undertaking under Part 4.
737. Paragraph 10 of Schedule 9 makes amendment to section 169 of the Enterprise Act 2002 so that it requires a relevant authority so far as practicable, to consult where it proposes to make a relevant decision, if it considers such decisions are likely to have a substantial impact on the interests of any person. Section 169(6) sets out a list of "relevant decisions". Paragraph 10 amends the list so this includes decisions to impose implementation trial measures, and decisions to vary or replace existing remedies.
738. Paragraph 11 of Schedule 9 amends section 172 of the Enterprise Act 2002 which sets out specific decisions which the CMA is required to publish. Subsection 172(2) is amended to include a decision under section 138A(A1)(b) that the CMA considers it is not reasonably practicable to separate the element of the remedy package undergoing an implementation trial from an element of the remedy package that is not undergoing an implementation trial, but might be influenced by the results of that implementation trial and so the time for complying with the section 138(2) duty is extended to the end of the implementation trial.
739. Subsection (2) of section 138 gives the Secretary of State a delegated power, by regulations, to amend (a) specified sectoral legislation, and (b) section 168 of the Enterprise Act 2002 in connection with the provision made by Schedule 8 to this Act, that is the ability to undertake trials of different packages of market investigation remedies.
740. Where a market investigation takes place in a regulated sector, to ensure there is no conflict between the regime in Part 4 of the Enterprise Act 2002 and for instance, regulatory licensing schemes, the existing legislative framework makes provision so that the CMA, or Secretary of State (as the case may be), are given powers to modify regulatory conditions directly, or to request that relevant regulatory authority does so. These powers sit within the sectoral enactments.
741. Where the CMA and Secretary of State have powers to take action directly, section 168 Enterprise Act 2002 makes provision so that, when taking such action, they are required to have regard to the functions of the regulatory authority which would ordinarily be responsible for such actions.
742. Without amendment of the sectoral enactments, the CMA or Secretary of State may be unable to take action to trial different regulatory conditions when undertaking implementation trials. Should the sectoral enactments be amended to give this power to the CMA and Secretary of State, section 168 Enterprise Act 2002 would also require amendment to ensure that they were required to take relevant regulatory functions into account appropriately. Subsection (2) provides the power for the Secretary of State, by regulation, to make these amendments.
743. Subsection (3) provides examples of the types of provision which the power may be used to make in the specified sectoral enactments.
744. Subsection (4) limits the power in subsection (2) so that where it is used to amend a sectoral enactment listed in section 168 of the Enterprise Act 2002, it may only make provision in connection with a relevant action mentioned in section 168(3) Enterprise Act 2002. This means that, in relation to those enactments, the power can only be exercised to allow the CMA or Secretary of State to take the same types of action during an implementation trial as they can already take when settling a final remedy package following a market investigation.
745. Subsection (5) lists the relevant sector legislation that may be amended using the power at subsection (2).
746. Subsection (6) imposes a requirement that the relevant regulators must be consulted before the Secretary of State makes regulations to amend the sectoral legislation. If section 168 Enterprise Act 2002 is amended, such sectoral authorities as the Secretary of State considers are likely to have an interest in the amendment must be consulted.
747. Subsection (7) lists the relevant sectoral authorities for the purposes of the consultation requirements.
748. Subsection (8) provides a power for the Secretary of State, by regulations, to add or remove an enactment in scope of the power at subsection (2) and to amend subsection (7) so as to add, amend or vary an entry.
749. Subsection (9) is self-explanatory.

Section 139: Duty of CMA to monitor undertakings and orders

750. This section makes provision regarding the review of remedies by the CMA and for new powers for the CMA or the Secretary of State (as the case may be) to vary remedies accepted or imposed following a market investigation which are subsequently found to have been ineffective.
751. Subsection (2) amends section 161(5) of the Enterprise Act 2002 to broaden the Secretary of State’s power to vary or revoke an order. Previously the Secretary of State had the power to vary or revoke an order only where the CMA advised that such variation or revocation was appropriate by reason of a change of circumstances. Section 161(5) is amended so that the Secretary of State has the power to vary or revoke an order following the receipt of advice from the CMA under either 162(3) (in relation to a change in circumstances) or section 162A(8).
752. Subsection (3) amends section 162 of the Enterprise Act 2002 to repeal subsections (5) to (7). The heading before the section is also amended to reflect that the duty under the section is thereby limited to require the CMA to monitor the carrying out of remedies accepted or imposed at the end of a market investigation, as opposed to the effectiveness of those remedies.
753. Subsection (4) inserts new section 162A of the Enterprise Act 2002 which imposes a separate duty on the CMA to monitor the effectiveness of undertakings and orders accepted or imposed under Part 4 of the Enterprise Act 2002 and makes provision for powers to amend remedies which are found to have been ineffective.
754. New sections 162A(1) to (3) re-enact previous section 162, subsections (5) to (7) and require the CMA to keep the effectiveness of remedies under review and report its findings to the Secretary of State when requested to do so, and otherwise from time to time. A copy of that report must be given to the Secretary of State and published.
755. The new sections 162A(4) to (6) provide a power for the CMA to vary undertakings accepted or orders imposed by it which are subsequently identified to be ineffective for the purpose of remedying, mitigating or preventing the adverse effect on competition, or any actual or potential detrimental effect on customers resulting from it which was identified in a market investigation.
756. New section 162A(4) provides that the new power arises in relation to action taken by the CMA under section 138(2) Enterprise Act 2002, (that is undertakings accepted under section 159 or orders imposed under section 161), in relation to an adverse effect on competition identified in a report published by the CMA under section 136, subsection (1) within the preceding 10 years, where the CMA’s review under subsection 162A, paragraph (1) has concluded that the undertaking or order has been ineffective for the purpose of remedying, mitigating or preventing the adverse effect on competition, or detrimental effect on customers resulting from it. The power is not available where the CMA took action under section 138, subsection (2) less than 2 years ago, or took action under section 162A(5), less than 2 years ago. This provides a "cooling-off" period after undertakings are accepted or orders imposed (whether immediately following a market investigation reference, or after action taken under the new section 162A(5)), and a "long stop" of 10 years on the exercise of the power.
757. New section 162A(5) provides that where the power arises, the CMA must take such action as it considers appropriate in relation to the variation or release of undertakings or orders, or replacement by new undertakings or orders.
758. New section 162A(6) provides that where the CMA decides to take action under subsection (5), it must do so within 6 months of the date of publishing its decision to do so.
759. New sections 162A(7) and (8) set out an obligation for the CMA to provide advice to the Secretary of State in relation to remedies accepted or imposed by the Secretary of State under either section 147 in relation to a restricted public interest reference, or section 147A in relation to a full public interest reference which it concludes have been ineffective for the purposes of remedying, mitigating or preventing the adverse effects they were intended to address.
760. New section 162A(7) provides that the new obligation arises in relation to action taken by the Secretary of State under section 147(2) or section 147A(2) of the Enterprise Act 2002, (that is undertakings accepted under section 159 or orders imposed under section 161), in relation to an adverse effect on competition, or effect adverse to the public interest identified in a report prepared and published by the CMA and laid before each House of Parliament by the Secretary of State within the preceding 10 years, where the CMA’s review under subsection 162A(1) has concluded that the undertaking or order has been ineffective for the purpose of remedying, mitigating or preventing the adverse effect it was intended to address. The obligation does not arise where the Secretary of State took action under section 147(2) or section 147A(2) no less than 2 years prior. As under subsections (4) and (5), this provides a "cooling-off" period of 2 years after undertakings are accepted or orders imposed (whether immediately following a reference, or after action taken after advice provided under section 162A(8)), and a "long stop" of 10 years on the obligation to provide advice, and therefore the exercise of the expanded power of the Secretary of State to make variations following the receipt of such advice.
761. Subsection (6) of section 138 amends section 169 (certain duties of relevant authorities to consult: Part 4) of the Enterprise Act 2002. Section 169 requires a relevant authority so far as practicable, to consult where it proposes to make a relevant decision if it considers such decisions are likely to have a substantial impact on the interests of any person. Section 169(6) sets out a list of "relevant decisions". Subsection (6) amends the list so this includes decisions by the CMA to take action under section 162A(5).
762. Subsection (7) amends section 172 (further publicity requirements) of the Enterprise Act 2002 to include a decision made to take action under the new section 162A(5) power in the list of decisions which the CMA is required to publish. It further inserts a new section 172(11) into the Enterprise Act 2002 which requires the Secretary of State, where they have decided to take action to vary or revoke an order or undertaking following the receipt of advice from the CMA under either section 162(3) or section 162A(8), to lay details of the decision and reasons for it, and the CMA’s advice, before each House of Parliament, after the relevant variation action has been taken.
763. Subsection (8) amends section 177 (excisions from reports: Part 4) of the Enterprise Act 2002 to make provision so that the Secretary of State may exclude a matter from the CMA’s advice before laying it before Parliament in accordance with the new section 172(11) obligation, where they consider that inclusion would be inappropriate. Depending on the nature of the public interest consideration, it may be that there is information within the advice that it would not be appropriate for this to be disclosed in a document which will be made public.

Section 140: Taking action in relation to regulated markets

764. Section 140 makes amendments to section 168 of the Enterprise Act 2002, to tidy up the section and correct references to enactments which have become out of date.

Chapter 4: Cartels

Section 141: Production of information authorised by warrant

765. Section 141 amends section 194 of the Enterprise Act 2002 which makes provision regarding the grant of warrants, and the powers of the CMA when executing such warrants, to enter premises for the purposes of an investigation concerning the cartel offence. That offence is set out at section 188 of the Enterprise Act 2002. In England and Wales, and Northern Ireland, proceedings for the offence may only be brought by the Director of the Serious Fraud Office, or by, or with the consent of, the CMA.
766. Section 194 of the Enterprise Act 2002 enables a named officer of the CMA (who may be accompanied by other CMA officers authorised by the CMA) to require the production of information held electronically and accessible from a premises during an inspection under a warrant. These investigative powers apply to the CMA only; where the Serious Fraud Office is investigating a suspected commission of the cartel offence it uses its powers under the Criminal Justice Act 1987.
767. Subsection (2) amends section 194(1) of the Enterprise Act 2002 to expand the powers of, in England and Wales or Northern Ireland, the High Court or the CAT, and in Scotland, the sheriff, to grant a warrant to the CMA on the basis that there are reasonable grounds for suspecting that there are relevant documents accessible from any premises, where the other criteria set out in that section are met.
768. Subsection (3) amends the powers set out at section 194(2) of the Enterprise Act 2002 which a warrant authorises the CMA officers to exercise. Section 194(2)(d) is amended to broaden the power to require the production of information stored electronically and accessible from the premises. This power will now apply to any information stored electronically and accessible from the premises, not only that which the named officer considers relates to a matter relevant to the investigation.
769. Subsection (3) further inserts new paragraphs (e), (f) and (g) into section 194(2) of the Enterprise Act 2002. Paragraph (e) enables the CMA officers to operate equipment on the premises for the purpose of producing information stored in electronic form and accessible from the premises in a form in which it is visible and legible or in a form from which it can readily be produced in a visible and legible form. For example, this power could be used to operate equipment so that electronic information can be transferred securely to CMA devices or where an undertaking or its employees cannot or will not produce the required information in such a form. Paragraph (f) enables the CMA officers to require assistance from any person on the premises to access information held electronically and accessible from the premises (such as the provision of passwords or encryption keys). Paragraph (g) empowers the CMA to take copies of or seize anything produced which the named CMA officer considers relates to any matter relevant to the investigation.
770. Subsection (4) makes a consequential amendment to section 196 of the Enterprise Act 2002 which deals with privileged information etc. Section 196(1) of the Enterprise Act 2002 provides that a person may not, under the powers at section 193 or 194, be required under the powers to produce or disclose a privileged communication, except that a lawyer may be required to provide the name and address of his client. Section 196(2) provides that a person may not be required under sections 193 or 194 to disclose any information or produce any document in respect of which he owes an obligation of confidence by virtue of carrying on any banking business, unless certain exceptions apply. Subsection (4) inserts a new section 196(2A) which sets out that nothing in section 194 authorises an officer to produce, seize, makes copies of or take extracts from any communication which a person could not be required to produce or disclose, as a result of the protection given by section 196(1) or (2).

Chapter 5: Miscellaneous

Section 142: Attendance of witnesses etc.

771. Section 142 amends section 26A of the Competition Act 1998, and sections 109 and 174 of the Enterprise Act 2002. Section 26A of the Competition Act 1998 sets out the power of the CMA (and so where relevant the sector regulators exercising functions on a concurrent basis) to require persons to answer questions with respect to any matter relevant to an investigation under section 25 of that Act into a suspected infringement of either the Chapter I or Chapter II prohibitions. Section 109 of the Enterprise Act 2002 makes provision regarding the CMA’s powers to require the attendance of witnesses and production of documents etc. for the purposes of its functions under Part 3 of that Act (mergers). Section 174 of the Enterprise Act 2002 makes provision regarding the powers of the CMA (and so the sector regulators exercising functions on a concurrent basis) to require the attendance of witnesses and production of documents etc. for the purposes of its functions under Part 4 of that Act (market studies and market investigations).
772. Subsection (2) amends section 26A(1) of the Competition Act 1998 to broaden the power to require persons to attend and answer questions, by enabling the CMA, by notice, to require any individual to attend an interview at a time and place specified, and answer questions for the purpose of an investigation, rather than only those who have a connection to a relevant undertaking. A person has a connection with an undertaking if they are, or have been, concerned with the management or control of the undertaking, employed by or otherwise working for the undertaking. A relevant undertaking means an undertaking whose activities are being investigated under section 25 of the Competition Act 1998. Subsection (2) further amends section 26(1)(a) to specify that a person may be required to answer questions remotely.
773. Subsection (3) amends section 26A(2) of the Competition Act 1998 so that a copy of the notice which must be given to an individual who is required to attend and answer questions must also be given to any relevant undertaking that the individual in question has a current connection with.
774. Subsection (5) amends section 109(1) of the Enterprise Act 2002 to specify that a person may be required to answer questions remotely.
775. Subsection (6) amends section 174(3) of the Enterprise Act 2002 to specify that a person may be required to answer questions remotely.

Section 143: Civil penalties etc in connection with competition matters

776. This section introduces Schedule 10, 11 and 12.
777. Subsection (1) introduces Schedule 10 which amends the powers of the CMA to issue civil penalties and introduces new powers for the CMA to issue civil penalties where previously only criminal offences existed, for failure to comply with investigative measures and information requirements under Part 1 of the Competition Act 1998 (competition) and Parts 3 (mergers) and 4 (market studies and market investigations) of the Enterprise Act 2002.
778. Subsection (2) introduces Schedule 11 which provides for new powers for the CMA to issue civil penalties for breaches of interim measures, commitments and directions under Part 1 of the Competition Act 1998 (competition) and interim measures, undertakings in lieu, final undertakings and orders under Parts 3 (mergers) and 4 (market studies and market investigations) of the Enterprise Act 2002. Collectively, these measures are known as "remedies".
779. Subsection (3) introduces Schedule 12 which provides for consequential amendments related to the legislative framework which provides for the exercise of some functions of the CMA concurrently by sector regulators. The amendments provide that some of the new functions, in particular those which relate to the publication of statements of policy, are not to be exercisable by the sector regulators.

Schedule 10: Civil Penalties etc in connection with competition investigations

780. Schedule 10 amends the powers of the CMA to issue civil penalties and introduces new powers for the CMA to issue civil penalties where previously only criminal offences existed, for failure to comply with investigative measures and information requirements under Part 1 of the Competition Act 1998 (competition) and Parts 3 (mergers) and 4 (market studies and market investigations) of the Enterprise Act 2002.
781. These powers also apply to concurrent regulators (under Part 1 of the Competition Act 1998 and Part 4 of the Enterprise Act 2002), and functions of the Secretary of State and Ofcom relating to public interest cases under the Enterprise Act 2002. In the following paragraphs references to the CMA should be read to include "and others where relevant" unless indicated otherwise.
782. Part 1 of Schedule 10 makes amendments to Part 1 of the Competition Act 1998.
783. Paragraphs 2, 3, 4, 5 and 6 of Schedule 10 amend sections 26, 26A, 27, 29 and 40ZD of the Competition Act 1998 respectively to insert provision which requires that notices issued under those sections (or a warrant, in the case of section 29) must include the possible consequence of failing to comply with the relevant information gathering power, rather than only information regarding the offences at sections 42 to 44 of the Competition Act 1998. This will ensure that those who are required to produce or provide information are made aware of the financial penalties which may be imposed for non-compliance without reasonable excuse at the time the obligation is imposed or arises.
784. Paragraph 8 of Schedule 10 inserts a new section 40ZE into the Competition Act 1998.
785. New section 40ZE, subsection (1), makes provision to empower the CMA to impose a penalty on a person in accordance with section 40A where the CMA considers that they have, without reasonable excuse:
786. failed to comply with a requirement imposed on them under any of sections 26 (power to require documents and information) , 26A (power to ask questions), 27 (power to enter business premises without a warrant), 28 (power to enter business premises under a warrant), 28A (power to enter domestic premises under a warrant) or 40ZD (information relating to transferred EU anti-trust commitments and transferred EU anti-trust directions);
     1. obstructed an officer acting in the course of their powers under section 27, or under a warrant issued under sections 28 or 28A;
     2. destroyed or otherwise disposed of, falsified or concealed, or caused or permitted such action, a document which had been required to be produced under any of sections 26, 27, 28 or 28A;
     3. provided information that was false or misleading in a material particular to the CMA in connection with any function of the CMA under Part 1 (whether or not the information had been required to be provided by the CMA);
     4. provided information that was false or misleading in a material respect to another person, knowing that it was to be used for the purpose of providing information to the CMA in connection with any of its functions under Part 1.
787. This introduces civil penalties where only criminal offences existed previously (in relation to the destruction etc. of documents which had been required to be produced, and the provision of false or misleading information to the CMA), and in relation to the new duty to preserve documents (as provided by section 121 of the Act). The "without reasonable excuse" threshold is consistent with the threshold for existing civil penalties (under section 40A of the Competition Act 1998, and sections 110 and 174A of the Enterprise Act 2002).
788. New section 40ZE, subsection (2) makes provision which prevents a civil penalty being issued in relation to an act or omission which constitutes an offence under any of sections 42 ((obstruction(the heading for section 42 is substituted by paragraph 11 in Schedule 10, see further below)), 43 (destroying or falsifying documents) or 44 (false or misleading information), if the person has by reason of the act or omission, been found guilty of the offence. Similar provision is inserted in relation to the offences, in order to prevent a person being penalised under both the civil and criminal enforcement regimes.
789. New section 40ZE, subsection (3) requires the CMA to have regard to the statement of policy most recently published under section 40B when deciding whether, and if so how, to proceed in relation to the issue of a civil penalty.
790. New section 40ZE(5) applies sections 112 to 115 of the Enterprise Act 2002 in relation to penalties imposed under section 40ZE(1) as they apply to penalties issued under section 110(1) or (1A) of that Act, with relevant modifications. Sections 112 to 115 of the Enterprise Act 2002 make provision in relation to procedural requirements which must be followed, the making of payments and interest by instalments, appeals in relation to penalties and the recovery of penalties.
791. Paragraph 9 of Schedule 10 amends section 40A of the Competition Act 1998 so that it deals with the amount of a penalty imposed under the new section 40ZE. New section 40A(1A) is inserted so that a penalty imposed is to be of such amount as the CMA considers appropriate. Section 40A(2) is amended so that penalties issued in relation to failures to comply with an information requirement which are continuing may be a fixed amount, an amount calculated by reference to a daily rate, or a combination of the two. New section 40A(2A) makes provision so that a penalty imposed in relation to the obstruction of an officer in the exercise of his powers under section 27, or a warrant issued under sections 28 or 28A, or the destruction etc. of documents which have been required to be produced, or the provision of false or misleading information, must be a fixed amount. This reflects that these breaches are not capable of remedy. Section 40A(3) is amended to set out the maximum penalty on a person who is not an undertaking. In the case of a fixed amount, the penalty must not exceed £30,000. In the case of an amount calculated by reference to a daily rate, the penalty must not exceed £15,000 per day. Section 40A(3A) is inserted to set out the maximum penalties which may be imposed on a person who is an undertaking. In the case of a fixed amount, the penalty must not exceed 1% of the turnover of the undertaking. In the case of an amount calculated by reference to a daily rate, the penalty must not exceed 5% of the daily turnover of the undertaking. Section 40A(6) is amended to reflect the amendments to the procedural requirements in section 112 of the Enterprise Act 2002 made by paragraph 18 of Schedule 10, and the provision made by the new section 40ZE. New section 40A(7A) makes provision for the Secretary of State to amend by regulations the maximum penalties which may be imposed on a person who is not an undertaking. This power is subject to the draft affirmative procedure, see section 145 and paragraph 1(3) of Schedule 14. New sections 40A(10) to (12) enable the Secretary of State to make provision by way of regulations for determining the turnover and daily turnover of an undertaking for the purposes of the section. This power is subject to the negative procedure.
792. Paragraph 10 of Schedule 10 amends section 40B of the Competition Act 1998 which requires the CMA to prepare and publish a statement of policy in relation to the use of its powers to impose civil penalties. New section 40B(5A) introduces a requirement for the statement of policy to be approved by the Secretary of State before it can be published.
793. Paragraphs 11,12 and 13 of Schedule 10 make amendments to sections 42, 43 and 44 of the Competition Act 1998 respectively. Section 42 sets out the offence in relation to obstructing officers acting under sections 27, 28 or 28A of the Act. Section 43 sets out the offence relating to the destruction etc. of documents which have been required to be produced by the CMA, and section 44 the offence relating to the provision of false or misleading information to the CMA. New subsections are inserted into each of those sections to provide that a person does not commit an offence by reason of any act or omission in relation to which the CMA has proceeded by issuing a civil penalty under the new section 40ZE(1). Paragraph 11 also amends the heading for section 42 to clarify the offence to which the provision relates.
794. Part 2 of Schedule 10 makes amendments to Part 3 (mergers) of the Enterprise Act 2002.
795. Paragraph 15 amends section 110 of the Enterprise Act 2002 which makes provision regarding the issue of penalties for non-compliance with any requirement of a notice issued under the information gathering power at section 109. Section 110(1) is substituted to empower the CMA to impose a penalty on a person in accordance with section 111 where it considers that the person has, without reasonable excuse:
     1. failed to comply with any requirement of a notice issued under section 109;
     2. obstructed or delayed a person in the exercise of that person’s powers under section 109(6) (which permits the copying of any document produced);
     3. altered, suppressed or destroyed any document which the person had been required to produce by notice under section 109.
796. Section 110(1A) is inserted to allow the appropriate authority (being the CMA, OFCOM, or the Secretary of State, who all have functions under Part 3 in relation to mergers which raise public interest considerations as a result of which they may be provided with information even though they do not have compulsory information gathering powers), to impose a penalty on a person where it considers that they have, without reasonable excuse:
     1. supplied information that was false or misleading in a material respect to the authority in connection with any of its function under Part 3;
     2. supplied information that was false or misleading in a material respect to another person, knowing that it was to be used for the purpose of providing information to the appropriate authority in connection with any of its functions under Part 3.
797. New section 110(1C) is inserted to make provision which prevents a civil penalty being issued in relation to an act or omission which constitutes an offence under section 116A (Intentional destruction etc. of documents, inserted by this Schedule) or section 117 (False or misleading information) if the person has by reason of the act or omission, been found guilty of the offence. Similar provision is inserted in relation to the offences, in order to prevent a person being penalised under both the civil and criminal enforcement regimes.
798. Section 110(9) is amended to require the CMA to have regard to the statement of policy most recently published under section 116 when deciding whether, and if so how, to proceed in relation to the issue of a civil penalty either under section 110(1) or (1A), or under section 39(4) or 51(4) (which concern the CMA’s powers to extend the time within which a reports under sections 38 and 50, respectively) are to be prepared and published where a relevant person has failed to comply with a requirement in a section 109 notice). Where OFCOM is the appropriate authority, it must have regard to the statement of policy most recently published under section 392 of the Communications Act 2003.
799. Paragraph 16 of Schedule 10 amends section 110A of the Enterprise Act 2002. It makes amendments which are consequential to the amendments to section 110(1) and further extends the limitation period which applies to the issue of a penalty in relation to non-compliance with a requirement imposed by a notice issued under section 109, or the obstruction or delay of another person in the exercise of their powers under section 109(6), from 4 weeks to 10 weeks from the relevant day, as determined in accordance with that section.
800. Paragraph 17 of Schedule 10 amends section 111 of the Enterprise Act 2002 so that it deals with the amount of a penalty imposed under section 110(1) or (1A). Section 111(1) is amended so that a penalty imposed is to be of such amount as the appropriate authority considers appropriate. Section 111(2) is amended so that penalties issued by the CMA in relation to failures to comply with an information requirement which are continuing may be a fixed amount, an amount calculated by reference to a daily rate, or a combination of the two. Section 111(3) is amended so that a penalty imposed by the CMA in relation to the obstruction of an officer in the exercise of his powers under section 109(6), or the destruction etc. of documents which have been required to be produced, and penalties imposed by an appropriate authority in relation to the provision of false or misleading information, must be a fixed amount. This reflects that these breaches are not capable of remedy. Section 111(4) is amended to set out the maximum penalty on a person who does not own or control an enterprise. In the case of a fixed amount, the penalty must not exceed £30,000. In the case of an amount calculated by reference to a daily rate, the penalty must not exceed £15,000 per day. Section 111(4A) is inserted to set out the maximum penalties which may be imposed on any other person. In the case of a fixed amount, the penalty must not exceed 1% of the global turnover of the enterprises owned or controlled by the person. In the case of an amount calculated by reference to a daily rate, the penalty must not exceed 5% of the daily global turnover of the enterprises owned or controlled by the person. Section 111(5) is amended to reflect the amendments to the procedural requirements in section 112 of the Enterprise Act 2002 made by paragraph 18 of this Schedule. New section 111(7A) makes provision for the Secretary of State to amend by regulations the maximum penalties which may be imposed on a person who does not own or control an enterprise. This power is subject to the draft affirmative procedure, see section 145 and paragraph 2(6) of Schedule 14. New sections 111(9) to (11) enable the Secretary of State to make provision by way of regulations for determining when an enterprise is to be treated as being controlled by a person, and the turnover and daily turnover (both in and outside the United Kingdom) of an enterprise for the purposes of the section. This power is subject to the negative procedure.
801. Paragraph 18 of Schedule 10 makes amendments to section 112 of the Enterprise Act 2002. Section 112 sets out the main procedural requirements which apply in relation to the imposition of penalties. New subsection (A1) is inserted to require the appropriate authority to issue a provisional penalty notice before it may impose a penalty. New subsection (A2) requires that the provisional penalty notice must contain a draft of the final penalty notice the appropriate authority is minded to give, invite the making of representations from the recipient and set out how and by when, such representations must be made. New subsection (A3) requires the appropriate authority to have regard to any representations received and prevents the issue of a penalty before the time specified in the provisional notice for the making of representations has expired. Section 112(2) and (3) are amended to reflect that it may be the case that a penalty is issued by the Secretary of State or Ofcom, and not the CMA.
802. Paragraph 19 of Schedule 10 makes amendments to section 113 of the Enterprise Act 2002 to reflect that it may be the case that a penalty is issued by the Secretary of State or Ofcom, and not the CMA.
803. Paragraph 20 of Schedule 10 amends section 114 (appeals in relation to penalties) of the Enterprise Act 2002. The amendments to section 114(4) and (5) reflect that it may be the case that a penalty is issued by the Secretary of State or Ofcom, and not the CMA. New subsection (5A) requires the CAT, in cases of penalties imposed by the CMA or OFCOM, to have regard to relevant guidance when considering what is appropriate for the purposes of section 114(5). Section 114(5) allows the CAT, on an application under the section, to quash the penalty, substitute a penalty of a different nature or of such lesser amount or amounts as it considers appropriate, or substituting the date or dates by which the penalty must be paid, where this has been the subject of the appeal. The relevant guidance, in relation to a penalty imposed by the CMA, is the statement of policy published under section 116 of the Enterprise Act 2002 at the time the act or omission occurred. The relevant guidance, in relation to a penalty imposed by OFCOM, is the statement of policy published under section 392 of the Communications Act 2003 at the time the act or omission occurred.
804. Paragraph 21 of Schedule 10 amends section 115 (Recovery of penalties) of the Enterprise Act 2002 to reflect the insertion of section 110(1A) and that it may be the case that a penalty is issued by the Secretary of State or Ofcom, and not the CMA.
805. Paragraph 22 of Schedule 10 amends section 116 (Statement of policy) of the Enterprise Act 2002 to reflect the broadening of the power to issue penalties in section 110. It further amends section 116(4) and inserts new section 116(5) which require the CMA to consult the Secretary of State specifically, in addition to such other persons it considers appropriate, when preparing or revising its statement of policy, and requires that the statement be approved by the Secretary of State prior to publication.
806. Paragraph 23 of Schedule 10 inserts new section 116A (Intentional destruction etc. of documents) into the Enterprise Act 2002. This repositions the provisions regarding the offence previously found at section 110(5) to (7) of the Enterprise Act 2002, omitted by paragraph 15. It also applies in relation to the offence previously found at section 174A(3) to (7), omitted by paragraph 27 of Schedule 10. The new section 116A is applied for the purposes of Part 4 of the Enterprise Act 2002 by section 180.
807. Paragraph 24 of Schedule 10 amends section 117 (false or misleading information) to reflect the insertion of the definition of "appropriate authority" in section 110(1B) by paragraph 15. It further inserts section 117(2A) which provides that no offence is committed in relation to any act or omission in relation to which a penalty has been issued under section 110(1) or (1A).
808. Part 3 of Schedule 10 makes amendments to Part 4 (market studies and market investigations) of the Enterprise Act 2002.
809. Paragraph 27 amends section 174A of the Enterprise Act 2002 which makes provision regarding the issue of penalties for non-compliance with any requirement of a notice issued under the information gathering power at section 174. Section 174A(1) is substituted to empower the CMA to impose a penalty on a person in accordance with section 174D where it considers that the person has, without reasonable excuse:
     1. failed to comply with any requirement of a notice issued under section 174;
     2. obstructed or delayed a person in the exercise of that person’s powers under section 174(7) (which permits the copying of any document produced);
     3. intentionally altered, suppressed or destroyed any document which the person had been required to produce by notice under section 174.
810. Section 174A(1A) is inserted to allow the relevant authority (being the CMA, or the Secretary of State, or the appropriate Minister (so far as the Minister is not the Secretary of State acting alone) who all have functions under Part 4 as a result of which they may be provided with information even though they do not have compulsory information gathering powers), to impose a penalty on a person where it considers that they have, without reasonable excuse:
     1. supplied information that was false or misleading in a material respect to the relevant authority in connection with any of its function under Part 4;
     2. supplied information that was false or misleading in a material respect to another person, knowing that it was to be used for the purpose of providing information to the relevant authority in connection with any of its functions under Part 4.
811. New section 174A(1C) is inserted to make provision which prevents a civil penalty being issued in relation to an act or omission which constitutes an offence under section 116A (Intentional destruction etc. of documents, inserted by this Schedule) or section 117 (False or misleading information) if the person has by reason of the act or omission, been found guilty of the offence. Sections 116A and section 117 are applied for the purposes of Part 4 of the Enterprise Act 2002 as they apply for the purposes of Part 3, by section 180 Enterprise Act 2002. Similar provision is inserted in relation to the offences, in order to prevent a person being penalised under both the civil and criminal enforcement regimes.
812. Section 174A(8) is amended to require the CMA to have regard to the statement of policy most recently published under section 174E when deciding whether, and if so how, to proceed in relation to the issue of a civil penalty. New section 174A(10) applies sections 112 to 115 of the Enterprise Act 2002 in relation to penalties imposed under section 174A(1) and (1A) as they apply to penalties issued under section 110(1) or (1A), with relevant modifications. Sections 112 to 115 of the Enterprise Act 2002 make provision in relation to procedural requirements which must be followed, the making of payments and interest by instalments, appeals in relation to penalties and the recovery of penalties.
813. Paragraph 28 of Schedule 10 amends section 174B (restrictions on powers to impose penalties under section 174A) of the Enterprise Act 2002. It makes amendments which are consequential to the amendments to section 174A(1) and further extends the limitation period which applies to the issue of a penalty in relation to non-compliance with a requirement imposed by a notice issued under section 174, or the obstruction or delay of another person in the exercise of their powers under section 174(7), from 4 weeks to 10 weeks from the relevant day, as determined in accordance with that section.
814. Paragraph 29 of Schedule 10 amends section 174D (penalties) of the Enterprise Act 2002 so that it deals with the amount of a penalty imposed under section 174A(1) or (1A). Section 174D(1) is amended so that a penalty imposed is to be of such amount as the relevant authority considers appropriate. Section 174D(2) is amended so that penalties issued by the CMA in relation to failures to comply with an information requirement which are continuing may be a fixed amount, an amount calculated by reference to a daily rate, or a combination of the two. Section 174D(3) is amended so that a penalty imposed by the CMA in relation to the obstruction of an officer in the exercise of his powers under section 174(7), or the destruction etc. of documents which have been required to be produced, and penalties imposed by an relevant authority in relation to the provision of false or misleading information, must be a fixed amount. This reflects that these breaches are not capable of remedy. Section 174D(4) is amended to set out the maximum penalty on a person who does not own or control an enterprise. In the case of a fixed amount, the penalty must not exceed £30,000. In the case of an amount calculated by reference to a daily rate, the penalty must not exceed £15,000 per day. Section 174D(4A) is inserted to set out the maximum penalties which may be imposed on any other person. In the case of a fixed amount, the penalty must not exceed 1% of the global turnover of the enterprises owned or controlled by the person. In the case of an amount calculated by reference to a daily rate, the penalty must not exceed 5% of the daily global turnover of the enterprises owned or controlled by the person. New section 174D(6A) makes provision for the Secretary of State to amend by regulations the maximum penalties which may be imposed on a person who does not own or control an enterprise. This power is subject to the draft affirmative procedure, see section 145 and paragraph 3(8) of Schedule 14. Section 174D(8) is amended to reflect the amendments to the procedural requirements in section 112 of the Enterprise Act 2002 made by paragraph 18. New sections 174D(11) to (13) enable the Secretary of State to make provision by way of regulations for determining when an enterprise is to be treated as being controlled by a person, and the turnover and daily turnover (both in and outside the United Kingdom) of an enterprise for the purposes of the section. This power is subject to the negative procedure.
815. Paragraph 30 of Schedule 10 amends section 174E (Statement of policy on penalties) of the Enterprise Act 2002 to reflect the broadening of the power to issue penalties in section 174A. It further amends section 174E(4) and inserts new section 174E(5) which require the CMA to consult the Secretary of State specifically, in addition to such other persons it considers appropriate, when preparing or revising its statement of policy, and requires that the statement be approved by the Secretary of State prior to publication.
816. Paragraph 31 of Schedule 10 amends section 179 (review of decisions under Part 4) of the Enterprise Act 2002 to reflect the amendments made to section 174A.
817. Paragraph 32 of Schedule 10 amends section 180 (offences) of the Enterprise Act 2002 to apply the offence at section 116A Enterprise Act 2002, which is a repositioning of the offence at section 110(5) to (7), for the purposes of Part 4, with relevant modifications.

Schedule 11: Civil penalties etc in connection with breaches of remedies

818. Schedule 11 introduces new powers for the CMA to issue civil penalties for breaches of interim measures, commitments and directions under Part 1 of the Competition Act 1998 (competition) and interim measures, undertakings in lieu, final undertakings and orders under Parts 3 (mergers) and 4 (market studies and market investigations) of the Enterprise Act 2002. Collectively, these measures are known as "remedies".
819. The new powers to issue civil penalties also apply to concurrent regulators (under Part 1 of the Competition Act 1998 and Part 4 of the Enterprise Act 2002) and the Secretary of State insofar as remedies may be accepted or imposed in relation to public interest cases under the Enterprise Act 2002. In the following paragraphs references to the CMA should be read to include "and others where relevant" unless indicated otherwise.
820. Part 1 of Schedule 11 amends Part 1 of the Competition Act 1998.
821. Paragraph 2 of Schedule 11 amends sections 31A (commitments) of the Competition Act 1998, to insert provision which requires that, before accepting commitments from a person, the CMA must have provided them with information about the possible consequence of non-compliance. This ensures that those who offer commitments are made aware of the financial penalties which may be imposed for non-compliance without reasonable excuse before the commitment is accepted and the obligation crystallises.
822. Paragraphs 3 and 5 of Schedule 11 amend sections 31E and 34 of the Competition Act 1998 respectively. Sections 31E and 34 deal with the enforcement of commitments and directions, and allow the CMA to make an application to the court for an order to secure compliance. New sections 31E(4) and 34(4) are inserted to require the CMA, before taking such action, to have regard to the statement of policy most recently published by it under the new section 35C at the time of the non-compliance.
823. Paragraph 6 of Schedule 11 inserts new sections 35A, 35B and 35C into the Competition Act 1998.
824. New section 35A makes provision to empower the CMA to impose a penalty on a person in accordance with section 35B where the CMA considers that, without reasonable excuse:
     1. a person from whom the CMA has accepted commitments under section 31A has failed to adhere to them (and not been released from them);
     2. a person to whom the CMA has given a direction under section 32 (Directions in relation to agreements), section 33 (Directions in relation to conduct) or section 35 (Interim measures) has failed to comply with the direction.
825. New section 35A(2) requires the CMA to have regard to the statement of policy most recently published under section 35C at the time of failure to adhere or comply.
826. New section 35B makes provision regarding the amount of the penalty which may be imposed. New section 35B(1) makes provision so that a penalty imposed is to be of such amount as the CMA considers appropriate. New section 35B(2) sets out that a penalty may be a fixed amount, an amount calculated by reference to a daily rate, or a combination of the two. New sections 35B(3) makes provision regarding the maximum amounts of penalties in relation to a person who is not an undertaking. In the case of a fixed amount, the penalty must not exceed £30,000. In the case of an amount calculated by reference to a daily rate, the penalty must not exceed £15,000 per day. New section 35B(4) makes provision regarding the maximum amounts of penalties in relation to a person who is an undertaking. In the case of a fixed amount, the penalty must not exceed 5% of the turnover of the undertaking. In the case of an amount calculated by reference to a daily rate, the penalty must not exceed 5% of the daily turnover of the undertaking. Section 35B(5) provides that where a penalty is to be calculated by reference to a daily rate, no account is to be taken of days before a person is served with a provisional penalty notice, or after the day on which the person complies with the remedy. New section 35B(6) applies sections 112 to 115 of the Enterprise Act 2002 with modifications in relation to penalties issued under section 35A(1) as they apply to penalties under section 110(1) or (1A) of the Enterprise Act 2002. Sections 112 to 115 of the Enterprise Act 2002 make provision in relation to procedural requirements which must be followed, the making of payments and interest by instalments, appeals in relation to penalties and the recovery of penalties. New section 35B(7) makes provision for the Secretary of State to amend by regulations the maximum penalties which may be imposed on a person who is not an undertaking. This power is subject to the draft affirmative procedure, see section 145 and paragraph 1(3) of Schedule 14. New sections 35B(9) to (11) enable the Secretary of State to make provision by way of regulations for determining the turnover and daily turnover of an undertaking for the purposes of the section. This power is subject to the negative procedure.
827. New section 35C of the Competition Act 1998 requires the CMA to prepare and publish a statement of policy in relation to the use of its functions under sections 31E, 34 and 35A. By new section 35C(2) the statement must deal with the considerations relevant to the determination of the nature and amount of any penalty imposed under section 35A. New subsection (4) and (5) require the CMA to consult the Secretary of State and such other persons as it considers appropriate when preparing or revising the statement, and where the statement or revision relates to a matter in which a regulator exercises concurrent jurisdiction, they must also be consulted. New subsection (6) requires that the Secretary of State must approve the statement and any revisions before it is published.
828. Part 2 of Schedule 11 makes amendments to Part 3 (mergers) of the Enterprise Act 2002.
829. Paragraph 8 of Schedule 11 amends section 34C (functions to be exercised by CMA Groups) of the Enterprise Act 2002 to reflect the omission of section 94A of the Enterprise Act 2002 and insertion of the new section 94AA. This will ensure that where a CMA Group has been constituted under Schedule 4 to the Enterprise and Regulatory Reform Act 2013, it will have the function of determining whether, and if so how, the new functions under section 94AA should be exercised while it is in existence.
830. Paragraph 9 of Schedule 11 amends section 89 (subject matter of undertakings) of the Enterprise Act 2002 to insert provision so that before accepting undertakings from a person, the CMA (or the Secretary of State, as the case may be) must have provided them with information about the possible consequence of non-compliance. This ensures that those who offer undertakings are made aware of the financial penalties which may be imposed for non-compliance without reasonable excuse before the undertaking is accepted and the obligation crystallises.
831. Paragraph 10 amends section 94 (rights to enforce undertakings and orders) of the Enterprise Act 2002. Section 94(6) enables the CMA to enforce compliance with enforcement orders and enforcement undertakings by way of application to the court for an injunction, or interdict or any other appropriate relief or remedy. Paragraph 10 inserts new section 94(10) which requires the CMA to have regard to the statement of policy most recently published by it under section 94B at the time of the failure to comply with the undertaking or order.
832. Paragraph 11 of Schedule 11 replaces existing section 94A of the Enterprise Act 2002 with new sections 94AA and 94AB.
833. New section 94AA empowers the appropriate authority (that is the Secretary of State in relation to an enforcement undertaking or enforcement order made by the Secretary of State in a case which has involved a public interest consideration, and in relation to any other enforcement undertaking or enforcement order, the CMA) to impose a penalty on a person in accordance with section 94AB where they consider that the person has, without reasonable excuse, failed to comply with an enforcement undertaking or enforcement order. The CMA must, in deciding whether and if so how to proceed under section 94AA(1), have regard to the most recent statement of policy published by it under section 94B at the time of the failure to comply.
834. New section 94AB makes provision regarding the amount of the penalty which may be imposed. New section 94AB(1) makes provision so that a penalty imposed is to be of such amount as the appropriate authority considers appropriate. New section 94AB(2) sets out that a penalty may be a fixed amount, an amount calculated by reference to a daily rate, or a combination of the two. New sections 94AB(3) makes provision regarding the maximum amounts of penalties in relation to a person who does not own or control an enterprise. In the case of a fixed amount, the penalty must not exceed £30,000. In the case of an amount calculated by reference to a daily rate, the penalty must not exceed £15,000 per day. New section 94AB(4) makes provision regarding the maximum amounts of penalties in relation to any other person. In the case of a fixed amount, the penalty must not exceed 5% of the global turnover of the enterprises owned or controlled by the person on whom it is imposed. In the case of an amount calculated by reference to a daily rate, the penalty must not exceed 5% of the daily global turnover of the enterprises owned or controlled by the person. Section 94AB(5) provides that where a penalty is to be calculated by reference to a daily rate, no account is to be taken of days before a person is served with a provisional penalty notice, or after the day on which the person complies with the remedy. New section 94AB(6) applies sections 112 to 115 of the Enterprise Act 2002 with modifications in relation to penalties issued under section 94AA(1) as they apply to penalties under section 110(1) or (1A) of the Enterprise Act 2002. Sections 112 to 115 of the Enterprise Act 2002 make provision in relation to procedural requirements which must be followed, the making of payments and interest by instalments, appeals in relation to penalties and the recovery of penalties. New section 94AB(7) makes provision for the Secretary of State to amend by regulations the maximum penalties which may be imposed on a person who does not own or control an enterprise. This power is subject to the draft affirmative procedure, see section 145 and paragraph 2(6) of Schedule 14. New sections 94AB(9) to (11) enable the Secretary of State to make provision by way of regulations for determining when an enterprise is to be treated as being controlled by a person, and the turnover and daily turnover (both in and outside the United Kingdom) of an enterprise for the purposes of the section. This power is subject to the negative procedure.
835. Paragraph 12 of Schedule 11 amends section 94B (statement of policy in relation to powers under sections 94 and 94A) of the Enterprise Act 2002 to reflect the removal of section 94A and insertion of section 94AA.
836. Part 3 of Schedule 11 makes amendments to Part 4 (market studies and market investigations) of the Enterprise Act 2002.
837. Paragraph 15 of Schedule 11 amends section 133A (functions to be exercised by CMA Groups) of the Enterprise Act 2002 to reflect the insertion of the new section 167A. This will ensure that where a CMA Group has been constituted under Schedule 4 to the Enterprise and Regulatory Reform Act 2013, it will have the function of determining whether, and if so how, the new functions regarding the imposition of penalties under section 167A should be exercised while it is in existence.
838. Paragraph 16 of Schedule 11 inserts new section 161A (Acceptance of enforcement undertakings: Part 4) into the Enterprise Act 2002. This makes provision so that before accepting undertakings, the CMA or the Secretary of State, as the case may be, referred to as "the relevant authority", must have provided the person offering the undertaking with information about the possible consequence of non-compliance. This ensures that those who offer undertakings are made aware of the financial penalties which may be imposed for non-compliance without reasonable excuse before the undertaking is accepted and the obligation crystallises.
839. Paragraph 17 amends section 167 (rights to enforce undertakings and orders) of the Enterprise Act 2002. Section 167(6) enables the CMA to enforce compliance with enforcement orders and enforcement undertakings to which the section applies by way of application to the court for an injunction, or interdict or any other appropriate relief or remedy. Paragraph 17 inserts new sub-section 167(10) which requires the CMA to have regard to the statement of policy most recently published by it under section 167C at the time of the failure to comply with the undertaking or order.
840. Paragraph 18 of Schedule 11 inserts new sections 167A, 167B and 167C into the Enterprise Act 2002.
841. New section 167A empowers the relevant authority (that is the Secretary of State in relation to an enforcement undertaking or enforcement order made by the Secretary of State in a case which has involved a public interest consideration, and in relation to any other enforcement undertaking or enforcement order, the CMA) to impose a penalty on a person in accordance with section 167B where they consider that the person has, without reasonable excuse, failed to comply with an enforcement undertaking or enforcement order. The CMA must, in deciding whether and if so how to proceed under section 167A(1), have regard to the most recent statement of policy published by it under section 167C at the time of the failure to comply.
842. New section 167B makes provision regarding the amount of the penalty which may be imposed. New section 167B(1) makes provision so that a penalty imposed is to be of such amount as the relevant authority considers appropriate. New section 167B(2) sets out that a penalty may be a fixed amount, an amount calculated by reference to a daily rate, or a combination of the two. New section 167B(3) makes provision regarding the maximum amounts of penalties in relation to a person who does not own or control an enterprise. In the case of a fixed amount, the penalty must not exceed £30,000. In the case of an amount calculated by reference to a daily rate, the penalty must not exceed £15,000 per day. New section 167B(4) makes provision regarding the maximum amounts of penalties in relation to any other person. In the case of a fixed amount, the penalty must not exceed 5% of the global turnover of the enterprises owned or controlled by the person on whom it is imposed. In the case of an amount calculated by reference to a daily rate, the penalty must not exceed 5% of the daily global turnover of the enterprises owned or controlled by the person. Section 167B(5) provides that where a penalty is to be calculated by reference to a daily rate, no account is to be taken of days before a person is served with a provisional penalty notice, or after the day on which the person complies with the remedy. New section 167B(6) applies sections 112 to 115 of the Enterprise Act 2002 with modifications in relation to penalties issued under section 167A(1) as they apply to penalties under section 110(1) or (1A) of the Enterprise Act 2002. Sections 112 to 115 of the Enterprise Act 2002 make provision in relation to procedural requirements which must be followed, the making of payments and interest by instalments, appeals in relation to penalties and the recovery of penalties. New section 167B(7) makes provision for the Secretary of State to amend by regulations the maximum penalties which may be imposed on a person who does not own or control an enterprise. This power is subject to the draft affirmative procedure, see section 145 and paragraph 3(8) of Schedule 14. New sections 167B(9) to (11) enable the Secretary of State to make provision by way of regulations for determining when an enterprise is to be treated as being controlled by a person, and the turnover and daily turnover (both in and outside the United Kingdom) of an enterprise for the purposes of the section. This power is subject to the negative procedure.
843. New section 167C makes provision which requires the CMA to prepare and publish a statement of policy in relation to the exercise of the new functions under sections 167 and 167A. New subsection (2) requires that the statement must include the considerations relevant to the determination of the amount of any penalty imposed under section 167A. New subsection (4) requires the CMA to consult the Secretary of State and such other persons as it considers appropriate when preparing the statement and any revisions, and new subsection (5) provides that the statement and any revision may not be published without the approval of the Secretary of State.

Schedule 12: Civil penalties: amendments relating to sectoral regulators

844. Schedule 12 makes amendments to the legislation by virtue of which sector regulators are able to exercise some functions under Part 1 of the Competition Act 1998 and Part 4 of the Enterprise Act 2002 on a concurrent basis with the CMA.
845. Schedules 10 and 11 to the Act make amendments which introduce new functions which, without provision otherwise, would fall to be exercised by the concurrent regulators. The new functions under section 35C in Part 1 of the Competition Act 1998 and section 167C in Part 4 of the Enterprise Act 2002 which relate to the preparation and publication of statements of policy concerning the exercise of the new powers to impose financial penalties are not to be exercised by the concurrent regulators. The function at existing section 174E in Part 4 of the Enterprise Act 2002 is also not to be exercised by concurrent regulators. The statements of policy to be prepared by the CMA will apply to the exercise of the functions by the concurrent regulators, and the CMA will be required to consult with the concurrent regulators in the preparation of the statements. Schedule 12 makes provision which amends the sector specific legislation so that the functions at section 35C of the Competition Act 1998 and section 167C and 174E of the Enterprise Act 2002 are not exercisable concurrently by the sector regulators.

Section 144: Service and extra-territoriality of notices under CA 1998 and EA 2002

846. This section gives effect to Schedule 13 which makes provision regarding the service and extra-territorial application of notices under Part 1 of the Competition Act 1998 and Parts 3 and 4 of the Enterprise Act 2002.

Schedule 13: Service and extra-territoriality of notices under CA98 and EA 2002

847. Schedule 13 makes provision regarding the service of documents and the extraterritorial application of notices under Part 1 of the Competition Act 1998 and Parts 3 and 4 the Enterprise Act 2002.
848. Paragraph 1 of Schedule 13 replaces the existing section 126 of the Enterprise Act 2002 with comprehensive provisions on the service of documents which reflect modern business practices. For example, comprehensive provisions on service of documents by email reflect its everyday use as a method of communication by businesses and individuals.
849. New section 126(1) provides that the section applies in respect of documents required or authorised to be served under Part 3 on a person by the CMA, OFCOM, or the Secretary of State, each of whom exercise functions under that Part.
850. New section 126(2) sets out the methods of service which may be used: either delivering it to the person, leaving at their proper address, sending it by post to that address, or sending by e-mail to the person’s email address.
851. New sections 126 (3), (4) and (5) make specific provision in relation to the service of documents on a body corporate, a partnership or an unincorporated body or association. In particular, these subsections set out specific classes of person (legal or natural) to whom a notice may be given to so as to effect service on the body corporate, a partnership or an unincorporated body or association.
852. New sections 126 (6) and (7) make provision to determine what is to be considered as a person’s "proper address" for the purpose of subsection (2).
853. New section 126(8) makes provision regarding the email address which may be used for the purposes of subsection (2).
854. New section 126 (9) makes provision regarding service which is to be effected outside the United Kingdom.
855. New section 126(11) provides that section 126 does not limit any other lawful means of serving a document on a person.
856. Paragraph 2 of Schedule 13 inserts a new section 44A into the Competition Act 1998 which applies the new section 126 of the Enterprise Act 2002 to the giving of notices under Chapter 3 of Part 1 of the Competition Act 1998. Chapter 3 of Part 1 sets out the powers of the CMA (and sector regulators where relevant) to investigate and enforce the prohibitions in Part 1 of the Competition Act 1998.
857. Paragraphs 3 to 14 make amendments to the legislation by virtue of which sector regulators are able to exercise the specified functions in Part 1 of the Competition Act 1998 on a concurrent basis with the CMA. That legislation each contains a provision which glosses references to the CMA in Part 1 of the Competition Act 1998 so that they are read appropriately as a reference to the sector regulator concerned. Paragraphs 3 to 14 amend the legislation to ensure that the gloss applies to provisions of the Enterprise Act 2002 applied by Part 1 of the Competition Act 1998, as it applies to provisions in the Competition Act 1998 itself. This ensures that references to the CMA in section 126 of the Enterprise Act 2002, as applied by the new section 44A of the Competition Act 1998, are read as a reference to the sector regulator concerned.
858. Paragraph 15 of Schedule 13 inserts a new section 44B into the Competition Act 1998.
859. New section 44B(1) provides that the new section applies to the exercise of the CMA’s power to give a person a notice under section 26 (Investigations: power to require documents and information) and section 40ZD (Information relating to transferred EU anti-trust commitments and transferred EU anti-trust direction).
860. New section 44B(2) sets out that the powers may be used, to give the notice to a person outside the United Kingdom (subject to the conditions in new subsections (3) and (4), and to require the production of a specified document or the provision of specified information held outside the United Kingdom.
861. New section 44B(3) provides that the power to give a section 26 notice to a person outside the United Kingdom may only be exercised if the person’s activities are being investigated as part of an investigation under section 25, or they have a "UK connection". Persons whose activities are being investigated as part of an investigation under section 25 includes parties to an anti-competitive agreement etc. whose activities are being investigated in relation to the Chapter I prohibition, and those whose conduct is being investigated in relation to the Chapter II prohibition. In effect, this allows information to be required to be produced from those persons who are the subject of an enforcement investigation and, also, third parties where there is a sufficient UK connection.
862. New section 44B(4) makes provision regarding the CMA’s power under section 40ZD of the Competition Act 1998. Section 40ZD enables the CMA to issue a notice under section 40ZD to a person outside of the United Kingdom if that person is bound by transferred EU anti-trust commitments (within the meaning of section 40ZA of the Competition Act 1998) or is subject to a transferred EU anti-trust direction (within the meaning of that same section).
863. New section 44B(5) sets out the circumstances in which a person has a UK connection for the purposes of the new section 44B(2)(b). A third party, that is a person other than an enforcement subject, may only be given a section 26 notice outside the United Kingdom if they are a United Kingdom national, an individual habitually resident in the United Kingdom, a body incorporated under the law of the United Kingdom or any part of the United Kingdom, or they carry on business in the United Kingdom.
864. New section 44B(6) defines a United Kingdom national for the purposes of sub-section (5)(a).
865. New section 44B(7) provides that nothing in the new section 44B of the Competition Act 1998 is to be taken to limit any other power of the CMA to give a notice under section 26 or 40ZD to a person outside the United Kingdom. Section 44B(7) makes provision so that to the extent that the CMA has a broader power, absent this section, to gather information extra-territorially under section 26 of the Competition Act 1998, section 44B does not limit such power.
866. Paragraph 16 of Schedule 13 inserts a new section 109B into Part 3 of the Enterprise Act 2002 to make provision for the extra-territorial reach of information notices under section 109.
867. New section 109B(1) provides that the section applies to the exercise of the CMA’s power to give a person a notice under section 109(2) or (3), that is for the production of specified documents, or the supply of such estimates, forecasts, returns or other information as may be specified or described in the notice.
868. New section 109B(2) sets out that the powers may be used to give the notice to a person outside the United Kingdom (subject to the conditions in new subsection (3)), and to require the production of a specified document or the provision of specified information held outside the United Kingdom.
869. New section 109(3)(a) provides that a notice may be issued to a person outside of the United Kingdom where that person is or was, part of, or involved with or carrying on an enterprise which is, or has been involved in a transaction in circumstances which have been or may be, the subject of a reference under sections 22, 33, 45 62, 62B or 62C of the Enterprise Act 2002 or the subject of a foreign state intervention notice given to the CMA under section 70A of the Enterprise Act 2002. This allows the CMA to exercise the section 109 information gathering powers extraterritorially in relation to any person involved in a merger which either has been, or may be, the subject of a reference, so allowing it to use the power for the purposes of both reviewing merger transactions, and for the purpose of any subsequent enforcement action following a review. This includes mergers where there has been a public interest intervention or special intervention notice as well as mergers reviewed under the energy network merger regime.
870. New section 109B(3)(b) allows the CMA to send notices extraterritorially to third parties to merger investigations if that third party is a person that has a UK connection as defined in the new section 109B (which is in identical terms to the definition of UK connection under the new section 44B of the Competition Act 1998).
871. New section 109B(5) provides that nothing in the new section 109B is to be taken to limit any other power of the CMA to give a notice under section 109(2) or (3) to a person outside the United Kingdom. Section 109B(5) makes provision so that to the extent that the CMA has a broader power, absent this section, to gather information extra-territorially under section 109 of the Enterprise Act 2002, section 109B does not limit such power.
872. Paragraph 17 of Schedule 13 inserts a new section 174ZA into Part 4 of the Enterprise Act 2002 to make provision for the extra-territorial reach of information notices under section 174.
873. New section 174ZA(1) provides that the section applies to the exercise of the CMA’s power to issue notices under section 174(4) or (5) of the Enterprise Act 2002, that is for the production of specified documents, or the supply of such estimates, forecasts, returns or other information as may be specified or described in the notice. Subsection (1) is self-explanatory.
874. New section 174ZA(2) sets out that the powers may be used to give the notice to a person outside the United Kingdom where they have a UK connection, and to require the production of a specified document or the provision of specified information held outside the United Kingdom. The requirement for a UK connection when serving a notice outside the United Kingdom is in line with the amendments set out above in the new section 44B of the Competition Act 1998 and section 109B of the Enterprise Act 2002 but reflects the fact that in the context Part 4 of the Enterprise Act 2002, there are no specific enforcement subjects who are suspected of infringing the law or specific enterprises ceasing to be distinct pursuant to a merger.
875. Subsection (3) sets out the circumstances in which a person has a UK connection for the purposes of the new section 174ZA of the Enterprise Act 2002.
876. New section 174ZA(5) provides that nothing in the new section 174ZA is to be taken to limit any other power of the CMA to give a notice under section 174(4) or (5) to a person outside the United Kingdom. Section 174ZA makes provision so that to the extent that the CMA has a broader power, absent this section, to gather information extra-territorially under section 174 EA02, section 174ZA does not limit such power.

Section 145: Orders and regulations under CA 1998 and EA 2002

877. This section introduces Schedule 14 which makes provision about the making of orders and regulations under the Competition Act 1998 and Parts 3 and 4 of the Enterprise 2002.

Schedule 14 Orders and regulations under CA 1998 and EA 2002

878. Schedule 14 amends the Competition Act 1998 and Parts 3 and 4 of the Enterprise Act 2002 to make provision regarding the Parliamentary procedures to apply to the new order and regulation making powers created by the Act and remove references to powers which are repealed as a result of other provision made by the Act.
879. Schedule 14 also amends the Competition Act 1998 and Parts 3 and 4 of the Enterprise Act 2002 to refer expressly to whether an order or regulations are subject to the affirmative or negative procedure in Parliament and to define those procedures. The Schedule does not change the substance of which procedure any order or regulations are subject to but rather inserts clearer and more modern language.
880. Where orders or regulations are subject to "the affirmative procedure", the orders or regulations may not be made unless a draft of the statutory instrument containing them has been laid before, and approved by a resolution of, each House of Parliament.
881. Where orders or regulations are subject to "the negative procedure", they are subject to annulment in pursuance of a resolution of either House of Parliament.
882. Paragraph 1 of this Schedule makes the required amendments to the Competition Act 1998.
883. Paragraph 2 of this Schedule makes the required amendments to Part 3 of the Enterprise Act 2002.
884. Paragraph 3 of this Schedule makes the required amendments to Part 4 of the Enterprise Act 2002.

Section 146: Meaning of "working day" in Parts 3 and 4 of EA 2002

885. This section amends Parts 3 and 4 of the Enterprise Act 2002, and the Enterprise Act 2002 (Merger Prenotification) Regulations 2003, so that they are consistent in providing that a bank holiday in any part of the United Kingdom is not a working day. This aligns with the definition of "working day" in section 330 of this Act.