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Digital Markets, Competition and Consumers Act 2024

Contents

Part 3: Enforcement of consumer protection law

Chapter 1: Overview

  1. Part 3 provides for two regimes for the civil enforcement of consumer protection law to protect the collective interests of consumers: a court-based regime (which simplifies and enhances the regime provided by Part 8 of the Enterprise Act 2002) and a direct enforcement regime which is administered by the CMA (the "Part 3 enforcement regimes"). In particular, Part 3 provides for a single category of infringement to which the Part 3 enforcement regimes apply (instead of the two categories of infringements which feature in Part 8 of the Enterprise Act 2002, domestic infringements and Schedule 13 infringements). Subject to the transitional provisions set out in section 215 and Schedule 19, the Part 3 enforcement regimes replaces the regime provided by Part 8 of the Enterprise Act 2002 for conduct which takes place after commencement.

Section 147: Overview

  1. This section provides an overview of the structure of this Part.
  2. Chapter 2 defines the scope of the Part 3 enforcement regimes (subsection (2)).
  3. Chapter 3 sets out the court-based regime and which enforcers can use it (subsection (3)). It provides for enforcers to apply for, and the courts to make, the following types of orders:
    1. Enforcement orders,
    2. Interim enforcement orders,
    3. Online interface orders (only public designated enforcers may apply), or
    4. Interim online interface orders (only public designated enforcers may apply).
  4. An enforcer or the court can accept an undertaking from the enforcement subject instead of making an application for, or making, an enforcement order or interim enforcement order.
  5. Chapter 3 provides for certain enforcers and the court to attach remedies - enhanced consumer measures - to enforcement orders and undertakings. The enhanced consumer measures need to fall into at least one of three specified categories (referred to as the "redress", "compliance" and "choice" categories). Measures in the redress category offer compensation or other redress to affected consumers. Compliance measures are intended to increase business compliance with the law and to reduce the likelihood of further breaches. Measures in the choice category help consumers obtain relevant market information to enable them to make better purchasing decisions.
  6. It also provides new powers for the courts to impose civil monetary penalties on enforcement subjects who have infringed the consumer protection laws within scope of Part 3.
  7. Finally, it provides new powers for the courts to impose civil monetary penalties for non-compliance with an undertaking.
  8. Chapter 4 provides a new direct enforcement regime for the CMA in respect of the consumer protection laws listed in Schedule 16 (subsection 4). Chapter 4 provides a new express power for the CMA to investigate suspected infringements. It provides new powers for the CMA to give provisional and final infringement, breach of undertakings and breach of directions enforcement notices. These notices may include compliance directions, impose monetary penalties and, for infringement notices, attach enhanced consumer measures.
  9. Chapter 4 provides new powers for the CMA to give online interface notices. The CMA may accept an undertaking instead of giving a final infringement notice and where it has not given an online interface notice.
  10. Chapter 4 provides for the CMA to make an application to the court where a direction included in a final notice has not been complied with.
  11. Finally, it provides a new power for the CMA to give provisional and final false information notices to any person who provides the CMA with materially false or misleading information in connection with the exercise of the CMA’s functions under Chapter 4 or the direct enforcement of non-compliance with CMA information notices (see explanatory note for section 208 and Schedule 17 below in relation to direct enforcement of non-compliance with CMA information notices).

Chapter 2: Relevant infringements

Section 148: Relevant infringements

  1. The main underlying policy purpose is to define the scope of the Part 3 enforcement regimes. The act or omission must harm the collective interests of consumers (subsection (1), paragraph (a)). There must be harm or a risk of harm to a section of the public who are consumers, and this harm can be inferred from the accumulation of individual instances of harm.
  2. Subsection (5), paragraph (a) makes it clear that continuation or repetition of an act or omission could harm the collective interests of consumers, since the interests of future customers of the trader can be affected. For example, if a trader has not complied with the requirement to give information relating to the right to cancel an off-premises or distance contract under regulations 10(1) and 13(1) of, and paragraph (l) of Schedule 2 to, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, the court or the CMA could consider that this omission harms the collective interests of consumers, on the basis that repetition of this omission would harm the interests of potential future customers of the trader.
  3. Subsection (5), paragraph (b) makes it clear that a single act or omission is also capable of harming the collective interests of consumers. For example, a supplier who puts on to the market a single, large consignment of a beverage stated to be a healthy drink for a baby that is wholly unsuitable for this purpose.
  4. Subsection (2) sets out key definitions of "commercial practice", "trader" and "consumer". The main policy purpose for the use of the concept of "commercial practice" here is to limit the scope of the Part 3 regimes to those acts or omissions which amount to commercial practices, i.e. interactions between traders and consumers. This is because several of the enactments, obligations and rules of law within scope of Part 3 (see note for section 150 below) apply also to solely trader to trader interactions.
  5. The definition of commercial practice is broad and far reaching. A commercial practice can be derived from a single act or omission, depending on the relevant circumstances, as well as from repeated behaviour and a course of conduct (R v X Ltd [2013] EWCA Crim 818, at paragraph 22, Warwickshire County Council v Halfords Autocentres Ltd [2018] EWHC 3007 (admin), at paragraph 28).
  6. Subsection (2), paragraph (b) makes it clear that the definition includes an act or omission by a trader relating to a third party trader’s goods, services or digital content. Subsection (2), paragraph (c) establishes that an act or omission by a trader that enables private individuals (i.e. consumers) to sell products to that trader or to each other are also included in the definition of commercial practice. For example, this would bring the acts or omissions of an online marketplace that designs their website in such a way that the consumer goods advertised are misleadingly described into scope of the Part 3 enforcement regimes.
  7. Subsection (3) makes it clear that the definition includes acts or omissions which take place before, during or after promotion or supply (if any). For example, the acts or omissions of a debt collection agency that acquires claims derived from consumer credit agreements with consumers and seeks to recover these debts some considerable time after the original consumer credit agreements were concluded can amount to a commercial practice. An act or omission need not relate to a promotion or supply to or from consumers which actually occurs, in order to amount to a commercial practice. The concept is concerned with systems rather than individual transactions between a consumer and a business (Warwickshire County Council v Halfords Autocentres Ltd [2018] EWHC 3007 (admin), at paragraph 29).
  8. The definition of "consumer" makes it clear that a consumer is an individual, i.e. a natural person. Body corporates, including small and micro companies, are excluded from the definition of consumer. However, businesses may be protected under other legislation governing trader-to-trader transactions, e.g. the Business Protection from Misleading Marketing Regulations 2008 which prohibit advertising that is misleading to traders.
  9. The court or the CMA, as relevant, must consider whether the individual is acting for purposes wholly or mainly outside of their business to determine if they fit the definition of consumer. It is irrelevant whether the individual is supplying, or receiving, a good, service or digital content. The words "wholly or mainly" make it clear that: the individual is still a consumer when acting for dual purposes (a consumer purpose and a business purpose) as long as the consumer purpose is the main purpose. This means, for example, that a person who buys a kettle for their home, works from home one day a week and uses it on the days when working from home would still be a consumer. An individual who occasionally sells their unwanted and used clothes on eBay is also likely to be a consumer. Conversely, a sole trader who operates from a private dwelling and buys a printer of which 95% of the intended use is for the purposes of their business, is unlikely to be a consumer.
  10. An individual who supplies goods or services for mainly non-business purposes to a person who receives them for business purposes will still be a consumer. For example, an individual who sells their personal vinyl record collection to a second-hand record shop is likely to be a consumer.
  11. Further, an individual who acts for the purpose of a future business, which is not yet up and running, is likely to be a consumer. For example, an individual who participates in training to gain skills or a qualification with a view to supply goods or services for business purposes in the future is likely to be a consumer.
  12. Limb (a) of the definition of "trader" extends to any person who is acting for purposes relating to his business. Subsection (4), paragraph (a) makes it clear that acts or omissions "by" such a person may include acts or omissions done or made by a person acting in their name or on their behalf (for example, their agent, subcontractor or representative), where this liability is imposed by the enactment, obligation or rule of law in question or other rules of law of general application. For example, where a building company subcontracts part of a building contract, the court or the CMA could consider the actions or omissions of the subcontractor carried out on behalf of the building company to be acts done or omissions made by the building company itself.
  13. Limb (b) of the definition of trader makes it clear that a person (for example, an agent, subcontractor or representative) acting in the name of, or on behalf of, another for purposes relating to the other’s business, may also be held personally liable, where this liability is imposed by the enactment, obligation or rule of law in question or other rules of law of general application. It is irrelevant whether a person acting in the name of, or on behalf of, another is also acting for their own business or private purposes in relation to the same act or omission (subsection (4), paragraph (b)).

Section 149: The UK connection condition

  1. This section sets out the jurisdictional test which must be met for a commercial practice to fall within scope of the Part 3 enforcement regimes. It limits the extraterritorial reach of the regimes to acts or omissions done or made by a trader who satisfies at least one of conditions set out in subsection (1). These are not mutually exclusive.
  2. Subsection (1), paragraph (a) applies where the trader has a place of business in the United Kingdom. This means that traders with a place of business in the United Kingdom are in scope of the Part 3 enforcement regimes regardless of whether they have been incorporated in the United Kingdom or overseas.
  3. Subsection (1), paragraph (b) applies where the trader carries on business in the United Kingdom. This does not require the trader to have a place of business in the United Kingdom and this condition can be satisfied by management activity taking place abroad (Akzo Nobel N.V. v Competition Commission & Ors, [2014] EWCA Civ 482, at paragraphs 30 - 38).
  4. Subsection (1), paragraph (c) brings in scope commercial practices occurring as part of activities directed to consumers in the United Kingdom by any means.
  5. To satisfy this condition, the trader’s relevant activities must demonstrate an intention of being directed to consumers in the United Kingdom. This is an objective test: while evidence of "actual intention" may assist in resolving the question it is not a necessary ingredient (see Merck KGaA v Merck Sharp & Dohme Corp & Or's [2017] EWCA Civ 1834 at paragraph 165, Argos Limited v Argos Systems Inc. [2018] EWCA Civ 2211 at paragraph 51 and Bitar v Banque Libano-Francaise [2021] EWHC 2787 (QB) at paragraph 26). The question is whether average consumers in the United Kingdom would consider that the activities are directed at them.
  6. It follows that the fact that the trader’s goods, services or digital content are accessible by consumers in the United Kingdom (for example, through a website) is insufficient to establish that the trader’s relevant activities are directed to consumers in the United Kingdom (see Merck KGaA v Merck Sharp & Dohme Corp & Or's [2017] EWCA Civ 1834 at para 168, Nifty v Soleymani [2022] EWHC 773 at para 69).
  7. Whether the trader’s activities are directed to consumers in the United Kingdom by any means is a question of fact requiring evaluation of all the relevant circumstances. These may include (alone or in combination) (see Merck KGaA v Merck Sharp & Dohme Corp & Or's [2017] EWCA Civ 1834 at para 170, Bitar v Banque Libano-Francaise [2021] EWHC 2787 (QB) at para 28):
    1. The nature of the activity,
    2. The nature of the goods, services or digital content,
    3. The relevant contact details – for example, use of a telephone number with an international dialling code,
    4. The relevant domain name (for a website),
    5. The language used,
    6. The currency indicated,
    7. List or map of areas for delivery or provision of the goods, services or digital content, or
    8. Any past transactions with consumers in the United Kingdom.
  8. The UK connection condition may be met, for example:
    1. by an overseas trader who promotes and sells, via its website, services to consumers in the United Kingdom;
    2. by an overseas platform which promotes, via its website, a third party’s services to UK consumers. For example, an overseas platform whose website promotes holiday clubs and add-on trips to consumers in the United Kingdom, whilst a third party resort operator is responsible for the actual sale and provision of these goods and services to the consumer;
    3. where the consumer is the supplier.
  9. This section does not require the supply in question to be made by the trader, only that the trader has a place of business in or carries on business in the United Kingdom or that its commercial practice occurs in the carrying on of activities directed to consumers in the United Kingdom. The effect of this section is to enable enforcement using the Part 3 regimes to protect consumers within the United Kingdom no matter where the trader is based, as long as the UK connection condition is met.

Section 150: The specified prohibition condition

  1. This section limits the application of the Part 3 enforcement regimes to the commercial practices which breach an enactment, obligation or rule of law listed, or to the extent listed, in Schedules 15 or 16 - in these notes, "infringing practices" (subsections (1) and (2)).

Schedule 15: Consumer protection enactment

  1. The table in Schedule 15 lists the enactments, obligations and rules of law to which the court-based enforcement regime in Chapter 3 of this Part applies. The corresponding entry in the second column of the table sets out which enforcers can use the court-based enforcement regime to enforce that enactment, obligation or rule of law (subsections (3) and (4)).

Schedule 16: Direct enforcement enactments

  1. The table in Schedule 16 lists the enactments to which the CMA direct enforcement regime in Chapter 4 of this Part applies (subsection (2)).

Chapter 3: Consumer protection orders and undertakings

Enforcers for purposes of Chapter

Section 151: Enforcer

  1. This section restates and updates section 213 of Part 8 of the Enterprise Act 2002 and sets out which persons can use the court-based enforcement regime set out in this Chapter. The category of "Schedule 13 enforcer" under Part 8 of the Enterprise Act 2002 (section 213, subsection (5A)) is not re-stated as the Government considers it is no longer necessary to maintain a separate category of enforcers whose powers are limited to enforcing consumer protection laws of EU origin. Relevant enforcers are re-categorised by this section as public designated enforcers.
  2. Two categories of enforcer are defined: public designated enforcers (subsection (1)) and private designated enforcers (subsection (2)).
  3. The category of public designated enforcers consolidates the two previous categories of public enforcers in Part 8 of the Enterprise Act 2002 – general enforcers (i.e. the CMA, local weights and measures authorities in Great Britain - i.e. Trading Standards departments - or the Department for the Economy in Northern Ireland) and public bodies designated by order of the Secretary of State under section 213, subsection (2) of the Enterprise Act 2002.
  4. Subsection (3) sets out a delegated power for the Secretary of State to add or remove an enforcer or to amend their entry. Regulations made by the Secretary of State under this section are subject to the draft affirmative procedure (subsection (7)), see section 337, subsection (3)). As per subsection (4) and subsection (5), paragraph (c), the power to add a new enforcer is subject to the limitation that the enforcer has, as one of its purposes, the protection of the collective interests of consumers. This power cannot be used to remove or vary the enforcement powers of the CMA, local weights and measures authorities in Great Britain and the Department for the Economy in Northern Ireland under this Chapter. Any changes to the powers of these enforcers could fundamentally reshape the consumer protection regime in the UK, given their cross-economy remits. Therefore, the Government considers their powers should not be capable of alteration through secondary legislation (subsection (6)).
  5. Subsection (5) further limits the Secretary of State’s power to add a person as a private designated enforcer to where the Secretary of State considers that the person is not a public body and also satisfies the designation criteria in section 152.

Section 152: Designation criteria

  1. This section sets out the criteria a person must satisfy for the Secretary of State to designate it as a private designated enforcer. Applicant organisations must provide evidence to the Secretary of State that they meet the designation criteria listed in subsection (1). This is likely to include, for example, their legal status and constitution, a list of directors, examples of situations in which the organisation has protected the collective interests of consumers, etc.
  2. The Government intends that any subsequent failure to meet the criteria will form the basis for the Secretary of State to change or withdraw the designation of a person as a private designated enforcer.
  3. The criteria listed in this section replicate the criteria listed in Articles 3 and 4 of the Enterprise Act 2002 (Part 8 Designated Enforcers: Criteria for Designation, Designation of Public Bodies as Designated Enforcers and Transitional Provisions) Order 2003, with some minor amendments for simplification.
  4. The designation criteria establish certain minimum standards of governance, transparency and competence that a person must meet in order for it to carry out enforcement action under this Chapter (subsections (1) to (3)). The underlying policy intent is to mitigate the risk of private organisations (especially those with trading arms) using the enforcement process for competitive advantage or commercial gain.

Applications for enforcement orders and interim enforcement orders

Section 153: Applications

  1. This section identifies which categories of person an application for an enforcement order or an interim enforcement order may be made against, and the types of infringements in relation to which an application may be made. This section restates most of section 215 of the Enterprise Act 2002 and updates it as needed.
  2. An enforcer may apply for an order against the infringer (the person considered to have engaged in, be engaging in or be likely to engage in the infringing practice) or an accessory (subsections (1) and (3)). Where the infringer is a body corporate, an accessory is any person who has a special relationship with the infringing body corporate and who consented or connived in the infringing practice – this and the meaning of "special relationship" is defined in sections 219 and 220. An enforcer may apply for an order against an accessory even if no application is made in respect of the infringer. These notes use the term "enforcement subject" to mean both the infringer and any accessories to the infringing commercial practice.
  3. Subsection (2) sets out that enforcers may make applications under this section only for breaches of those enactments, obligations or rules of law which they have been authorised to enforce as per Schedule 15.
  4. Subsection (4) limits the power to apply for the imposition of a monetary penalty for past or ongoing infringing practices to public designated enforcers only (i.e. private designated enforcers may not apply to court for the imposition of penalties). This application can be made as part of the application for an enforcement order.
  5. Subsection (5) precludes the application for a penalty where the infringer is likely to engage in an infringing practice. A similar qualification is not needed for accessories as section 219(2)(c) has the effect that an accessory cannot be an accessory to future infringing practices.

Section 154: CMA directions to other enforcers

  1. This section provides a direction-making power for the CMA. This section restates and updates section 216 of the Enterprise Act 2002.
  2. If it appears to the CMA that an enforcer other than itself intends to apply for an enforcement order or an interim enforcement order in respect of a particular infringement, it may direct which enforcer may make the application, that only the CMA may do so or that an application should not be made at all (subsections (1) and (2)). The underlying policy intent is for the CMA to be able to prevent businesses being faced with multiple applications for interim enforcement or enforcement orders in respect of the same potentially infringing practice. The Government considers that the CMA is able to decide which enforcer is best placed to proceed with the application.
  3. Subsection (4) limits the CMA’s power to direct that an application should not be made to where the particular infringement is being investigated by the CMA under the direct enforcement regime in Chapter 4 or the CMA proposes to conduct such an investigation.
  4. Where the CMA makes a direction under subsection (2), this does not prevent the CMA or another enforcer from agreeing an undertaking with the enforcement subject or the CMA from taking other steps to prevent the infringing practice or bring the infringing practice to an end (subsection (3)).
  5. Subsection (5) provides a power for the CMA to vary or withdraw a direction under this section.

Section 155: Consultation

  1. This section provides that where an enforcer thinks that a relevant infringement has occurred, is occurring or is likely to occur, they must consult the enforcement subject before making an application for an enforcement order or interim enforcement order (subsection (1)). This section restates, consolidates and updates the duty to consult set out in section 214 of the Enterprise Act 2002 and the underlying secondary legislation on making and receipt of an initial consultation request.
  2. The requirement to consult is suspended if the CMA thinks that an application for an enforcement order or an interim enforcement order should be made without delay (subsection (5)). The enforcer is required to notify the CMA of its intention to apply for an enforcement order or an interim enforcement order under section 169 which enables the CMA to assess whether a prospective application is urgent and should be made without consultation with the enforcement subject.
  3. Subsection (2) defines the purposes of consultation under this section. In particular, the consultation should alert the enforcement subject to the possibility of a monetary penalty being sought alongside an enforcement order.
  4. The underlying policy intent is that in most cases prior consultation will provide an opportunity to stop or prevent the relevant infringement without the need for court action. It may be, for example, that the enforcement subject was not aware that their practice constituted a relevant infringement. Following consultation, the enforcer may then decide it is not necessary to make an application. The enforcement subject may decide to offer an undertaking to the enforcer (see section 163).
  5. Subsections (3) and (4) require the enforcer to give a written consultation request - by notice - to the enforcement subject. Section 332 sets out the process for giving notices under this Part to persons within and outside of the UK.
  6. Subsections (6) to (9) set out the minimum periods for consultation for enforcement orders and interim enforcement orders and related definitions.

Powers of court on application under section 153

Section 156: Enforcement orders and undertakings

  1. This section sets out that where the court considers that the respondent to an application for an enforcement order has engaged, is engaging in or is likely to engage in an infringing practice, or is an accessory to an infringing practice, it may either make an enforcement order against, or accept an undertaking from, the infringer or an accessory (for the purpose of these notes, the "enforcement subject") (subsections (1) and (2)). This section restates, simplifies and updates section 217 of the Enterprise Act 2002.
  2. In considering whether to exercise its discretion to make an enforcement order, the court must have regard to whether the enforcement subject has failed to comply with any undertaking given under section 163 or section 185 in respect of the infringing practice(subsection (3)). Failure to comply with an undertaking may be relevant to the question of whether an enforcement order should be made (rather than another undertaking accepted). However, there is no requirement for an undertaking to have been breached before an order can be granted.
  3. An enforcement order must set out the nature of the infringing practice (e.g. past, ongoing or likely) and give directions to the enforcement subject in order to achieve compliance. The order must direct the infringer to not continue or repeat the infringing practice. The order must direct any accessory to not consent or connive in the infringing practice. The order must direct the enforcement subject (infringer and accessory) to not engage in the infringing practice in the course of their business or another business, and to not consent or connive in the carrying out of the infringing practice by a body corporate with which they have a special relationship (subsections (4) and (6)). The underlying policy intent is to prevent, for example, a sole trader from evading the scope of an enforcement order by setting up a company to operate the same business and continue the infringing practices.
  4. In addition, the court may order the enforcement subject to publish at their expense its order (in full or in part) and/or a corrective statement in such form and manner as deemed adequate to publicly correct any information provided to consumers and the general public (subsections (8) and (10)). This discretionary power may be used, for example, in respect of an advert that has been found to be misleading, to prevent further distorting consumers’ purchasing decisions based on the misleading contents of the advert. Whether or not the court exercises this power, enforcers are able to publish the terms of court orders and undertakings given to the court (see below).
  5. As an alternative to making an enforcement order, the court may accept an undertaking from the enforcement subject (subsection (2), paragraph (b)). The undertaking may cover the same compliance requirements as in an order or may be to take such steps as the court believes will achieve compliance (subsection (5)). The court may also accept a further undertaking from the enforcement subject to publish at their expense the terms of the undertaking (in full or in part) or a corrective statement (subsection (9)).
  6. Where the court accepts an undertaking under this section, it may vary the undertaking if it considers that would achieve compliance or release the undertaking if it is no longer needed (for example, if the original compliance concerns no longer apply or the enforcement subject’s business model has changed such that the undertakings are no longer needed) (subsection 11)). It is open to enforcement subjects who have given the undertakings to seek their release, but this could be done at the court’s own initiative too.

Section 157: Enforcement orders and undertakings: enhanced consumer measures

  1. This section empowers the court to include enhanced consumer measures that it considers to be just reasonable and proportionate in an enforcement order or undertaking. This section partially restates and updates section 219B of the Enterprise Act 2002. Enhanced consumer measures are defined by section 221.
  2. Subsections (2) and (3) require the court to consider the likely benefits and costs of the measures, as part of its assessment of the proportionality of the measures. In particular, the court must take into account for this assessment the costs of the measures themselves to the enforcement subject, as well as administrative costs.
  3. Subsection (4) stipulates that the enforcement subject may also be required to provide information or documents to the court to enable it to determine if they are carrying out the enhanced consumer measures as stipulated.
  4. Subsections (5) and (6) set out that where a settlement agreement is entered into in connection with the payment of compensation required as an enhanced consumer measure, any waiver of consumers’ rights to bring civil proceedings is not valid to the extent that it purports to extend beyond the conduct covered by the order or undertaking.

Section 158: Enforcement orders: requirement to pay monetary penalty

  1. This section gives a new, discretionary power to the court to require payment of a monetary penalty through an enforcement order (subsection (2)). This power is limited to where the application for the order was made by a public designated enforcer (subsection (1)).
  2. Only infringing practices that have taken place (or are currently happening) can be penalised with a monetary sanction (subsection (3)).
  3. Section 203 makes further provisions for what information must be included in an enforcement order, or in a separate notice accompanying an order, which includes a requirement to pay a monetary penalty (subsection (4)).
  4. The court has discretion to impose a monetary penalty as it considers appropriate, subject to the statutory maxima set out in subsection (5).
  5. The underlying policy intent is to provide for a penalty of up to the higher of a fixed amount or a percentage of turnover because:
    1. a penalty of up to only a fixed amount might not act as a meaningful deterrent for large companies with substantial turnover,
    2. conversely, there may be smaller companies (such as a new start up) which have a low or negligible turnover, so a penalty of up to only the relevant percentage of turnover might not act as a meaningful deterrent, and
    3. some individuals in scope of the penalty powers, such as a company director who consents or connives in the infringing practice (as an accessory) will not have a turnover and therefore the higher penalty will necessarily be a penalty of up to the fixed amount.
  6. Where the enforcement subject has a turnover that can be determined, a fixed amount penalty must not exceed £300,000 or, if higher, 10% of the total value of the enforcement subject’s turnover. Section 204 concerns calculation of the enforcement subject’s turnover. Where the enforcement subject does not have a turnover, the fixed penalty must not exceed £300,000.
  7. Subsections (6) and (7) make provision to prevent a person from being subjected to both civil and criminal sanctions in respect of the same conduct.
  8. Subsection (6) prevents an enforcement subject who has been found guilty of an offence from being required to pay a monetary penalty in respect of the same conduct.
  9. Subsection (7) clarifies that an enforcement subject does not commit an offence by conduct in respect of which a monetary penalty under this section has been imposed.
  10. Subsection (8) provides an enforcement subject who is required to pay a monetary penalty with a right to appeal the decision to impose a penalty, its nature or amount "on the merits", in addition to their existing appeal rights.
  11. Subsection (9) provides that in Scotland ‘service of the order’ includes service of an extract order in execution of or diligence on the order. This ensures that Part 3 of the Act accounts for the different mechanisms and terminology in Scotland for the service and enforcement of orders.

Section 159: Interim enforcement orders and undertakings

  1. This section gives a discretionary power to the court, where the conditions in subsection (1) are satisfied, to make an interim enforcement order or accept an undertaking as an alternative. An undertaking accepted as an alternative may cover the same compliance requirements as in an interim enforcement order or may be to take such steps as the court considers will secure compliance (subsection (2), paragraph (b)). This section restates and updates section 218 of the Enterprise Act 2002.
  2. An interim enforcement order may be made without notice to the enforcement subject if the court considers that appropriate (subsection (3)). However, an enforcer other than the CMA must not make an application for an interim enforcement order without complying with the prior notification requirements in section 169. A notice period of up to 7 days, or (if sooner) the CMA consent to the making of the application, is required under that section.
  3. Secondly, subsection (7) requires that where an application for an interim enforcement order is made without notice, the application must explain why no notice has been given and, in any event, all relevant information supporting the application must be included, to enable the court to decide if the conditions for making an interim order have been met.
  4. An application for an interim enforcement order without notice may be considered to be necessary, for example, if an enforcer becomes aware that a misleading advertisement is about to be published in a national publication or if a trader sets up in temporary premises to sell goods of unsatisfactory quality or to mislead consumers as to the goods they are purchasing (so-called "one day sales").
  5. An interim enforcement order must stipulate the nature of the infringing practice and how compliance is to be achieved (subsections (4) and (5)).
  6. An application for an interim enforcement order may be made at any point in time, subject to the exception that the application cannot be made after an application for an enforcement order, or a final infringement notice, against the same enforcement subject in respect of the same conduct, has been determined or given (subsection (6)).
  7. Subsections (8) and (9) provide for the variation or discharge of an interim enforcement order. Subsection 9(b) provides that an interim enforcement order made in respect of certain conduct is discharged upon the giving of a final infringement notice to the respondent in respect of that conduct. It is the Government’s intention that the CMA (which is not granted interim enforcement powers in Chapter 4) will be able to obtain an interim enforcement order from the court but then pursue final enforcement through its direct enforcement powers (i.e. through the imposition of a final enforcement notice), rather than seeking an enforcement order from the court.

Online interface orders and interim online interface orders

Section 160: Applications

  1. This section and sections 161 to 162 replace and update sections 218ZA – 218ZD of Part 8 of the Enterprise Act 2002. Those sections limited the CMA’s, and the court’s, online interface powers to infringements of EU-derived consumer protection laws. With the consolidation of infringements of domestic and EU-derived laws into a single category of infringement, this limitation is removed. Therefore, this section extends the courts’ online interface powers to the enactments, obligations and rules of law previously categorised as domestic infringements under Part 8. This section also extends the power to apply for an online interface order to all public designated enforcers, rather than just the CMA as was the case under the Enterprise Act 2002.
  2. The following examples illustrate where online interface orders and interim online interface orders could potentially be useful in relation to consumer protection law within the former category of domestic infringements in Part 8:
  3. Underage sales products: Several consumer protection enactments of domestic origin restrict the display or supply of certain products until the consumer is at an age to make informed decisions as to the risks (fireworks and tobacco for example). An online platform based overseas could be promoting the supply of such third-party products to consumers in the UK.
  4. Hallmarking: There is a strict legal requirement for domestic suppliers of precious metals to consumers (such as gold, silver and palladium) to have their articles appropriately assessed as to their authenticity and quality - and stamped (or hallmarked) by an assay office. A trader based overseas may decide to direct its sales to consumers in the UK, supplying falsely described – or highly substandard – "precious" metals directly to UK consumers in breach of UK hallmarking requirements. Where the trader cannot be identified or is not responsive to enforcement measures against them, the public designated enforcer might wish to apply for an online interface order against a third party UK-based website through which the trader’s sales are directed at consumers in the UK.
  5. Weights and measures: Under the UK’s weights and measures regime, there are systems of control for the sale of packaged or short-weight goods as well as the prescribed measurements and descriptions as to their mass, volume or number. It is possible that there may be online supply of goods to UK consumers which have the aim of overcoming legal restrictions or avoiding inspection. Where the trader cannot be identified or is not responsive to enforcement measures against them, the public designated enforcer might wish to apply for an online interface order against the third-party overseas website through which the trader’s goods are sold to UK consumers.
  6. Subsection (1) sets out the circumstances when a public designated enforcer (as listed in section 151(1) may apply to court for an online interface order or an interim online interface order.
  7. Subsection (2) sets out the categories of person in respect of whom the application may be made: the infringer or a third party. However, subsection (3) sets out a jurisdictional test which limits the power of public designated enforcers to apply for an order to a third party overseas who satisfies at least one of the conditions listed in that subsection. See the explanatory note for section 149 regarding the "carries on business in the United Kingdom" and the "directs activities … to consumers in the United Kingdom" limbs of this jurisdictional test.
  8. Subsection (5) extends the CMA’s enforcement coordination power set out in section 154 so it can make directions to other enforcers when it appears that another public designated enforcer intends to apply for an online interface order or interim online interface order.
  9. Subsection (6) clarifies that the power to apply for an online interface order or interim online interface order does not preclude the use of the other powers provided by this Chapter. It is possible that a public designated enforcer might wish to apply for an enforcement order against the infringer and, simultaneously, for an online interface order against a third party (where, for example, the enforcer does not consider that an enforcement order against the infringer would, by itself, be wholly effective and considers that the online interface order is therefore necessary to avoid the risk of serious harm to the collective interests of consumers).

Section 161: Online interface orders

  1. This section gives the court a discretionary power to make an online interface order, in response to an application from a public designated enforcer under section 160, where the conditions set out in subsection (1) are met. The court must have found that there is, has been or is likely to be a relevant infringement, that there are no other available means under Chapter 3 of Part 3 of the Act which would be wholly effective by themselves to stop or prohibit the infringement and it is necessary to make an order to avoid the risk of serious harm to the collective interests of consumers.
  2. Subsection (2) lists what a person can be required to do through an online interface order, including displaying warnings to consumers or removing infringing content from an online interface. The meaning of an "online interface" is given by subsection (5) and includes websites and apps.
  3. Subsections (3) and (4) enable the public designated enforcer (that applied for the order) to publicise any online interface orders made by the court under this section and to identify the infringer, where known, in order to raise awareness of that enforcement intervention and stop any continuing effects of the infringing practice.

Section 162: Interim online interface orders

  1. This section gives the court a discretionary power to make an interim online interface order, in response to an application from a public designated enforcer under section 160, where the conditions set out in subsection (1) are met. The court can make an interim online interface order only if the court considers that the strict criteria for making a final online interface order under section 161 would be likely to be met (if the application had been for a final online interface order). This enables the court to take urgent action in respect of infringing online content while ensuring the imposition of potentially intrusive requirements is commensurate with the alleged harm they address.
  2. The court may make an interim online interface order without a public designated enforcer having given notice of the applications to the respondent if the court considers that appropriate (subsection (2), paragraph (b)). Subsection (2), paragraph (a) and subsection (5) require that where an application for an interim online interface order is made without notice, it must explain why no notice has been given, and in any event, all relevant information supporting the application must be included, to enable the court to decide if the conditions for making an interim online interface order have been met.
  3. Subsection (3) lists what a person can be required to do through an interim online interface order. The requirements are the same as those that can be imposed under a final online interface order under section 161 (for example, removal of content from an online interface). The meaning of an "online interface" is given by section 161, subsection (5).
  4. An application for an interim online interface order may be made at any point in time, subject to the exception that the application cannot be made after an application for an online interface order, or an online interface notice, against the same respondent in respect of the same relevant infringement, has been determined or given (subsection (4)).
  5. Subsections (6) and (7) provide for the variation or discharge of an interim online interface order.

Undertakings and further proceedings

Section 163: Acceptance of undertakings by enforcers

  1. This section provides that where an enforcer could make an application to the court for an enforcement order or interim enforcement order against a person whom it believes is an infringer or an accessory ("an enforcement subject"), it may accept an undertaking from the enforcement subject (subsection (1)). This section restates and updates section 219 of the Enterprise Act 2002.
  2. The enforcer is not required to have notified the CMA before accepting an undertaking under this section (subsection (8)). An enforcer may decide that such an undertaking will avoid the need for it to apply for an order.
  3. Subsection (2) sets out the scope of an undertaking under this section:
    1. for the infringer, not to continue or repeat the infringing practice,
    2. for the accessory, not to consent or connive in the infringing practice,
    3. for both the infringer and accessory, not to engage in the infringing practice in the course of their business or another business, and to not consent or connive in the carrying out of the infringing practice by a body corporate with which they have a special relationship.
  4. Subsections (4) and (5) enable enforcers to exercise discretion as to publishing undertakings agreed under this section to, for example, raise consumer awareness, maintain market confidence and deter future infringing practices or conduct. Such publicity is not an enhanced consumer measure. The party giving an undertaking may publish the undertaking instead of the enforcer.
  5. Under section 156, if an enforcement subject gives an undertaking to an enforcer under this section, the court must take into account any failure to comply with the undertaking when exercising its discretion to make an enforcement order on any subsequent application in relation to the same conduct.
  6. Under section 170, an enforcer must notify the CMA of the terms of any undertaking given to it under this section and the identity of the person giving it. This is to enable the CMA to fulfil its coordination role.
  7. Where an enforcer accepts an undertaking under this section, it may accept from the enforcement subject any variation of the undertaking if it considers that would achieve compliance. An enforcer may also release the undertaking if it is no longer needed (for example, if the original compliance concerns no longer apply or the enforcement subject’s business model has changed such that the undertaking is no longer needed) (subsection 6)). It is open to enforcement subjects who have given undertakings to seek their release, but this could be done at the enforcer’s own initiative too (subject to the procedural requirements set out in section 165).
  8. Subsection (7) imposes record-keeping requirements on enforcers in relation to undertakings they accept and reviews of their effectiveness they carry out.

Section 164: Undertakings under section 163: enhanced consumer measures

  1. This section empowers an enforcer to include enhanced consumer measures that it considers to be just, reasonable and proportionate in an undertaking. It partially restates and updates section 219B of the Enterprise Act 2002.
  2. Subsections (2) and (3) require the enforcer to consider the likely benefits and costs of the measures, as part of its assessment of the proportionality of the measures. In particular, the enforcer must take into account for this assessment the costs of the measures themselves to the enforcement subject, as well as administrative costs. Private designated enforcers are subject to further provisions in section 177 (subsection (7)).
  3. Subsection (4) stipulates that the enforcement subject may also be required to provide information or documents to the enforcer to enable it to determine if they are taking any enhanced consumer measures required.
  4. Subsections (5) and (6) set out that where a settlement agreement is entered into in connection with the payment of compensation as a result of an enhanced consumer measure, any waiver of consumers’ rights to bring civil proceedings is not valid to the extent that it purports to extend beyond the conduct covered by the undertaking.

Section 165: Undertakings under section 163: procedural requirements

  1. This section sets out the process to be followed where an enforcer, upon its own initiative, proposes to materially vary, or release, an undertaking it has previously accepted (subsections (1) to (4)). Subsection (5) provides discretion to the enforcer to consider whether a variation is material.

Section 166: Consumer protection orders or undertakings to court: further proceedings

  1. This section, which restates and updates section 220 of the Enterprise Act 2002, applies where the court has made a consumer protection order against an enforcement subject or member of the same interconnected corporate group (see section 176), or the court has accepted an undertaking from an enforcement subject. Where there is a failure to comply with the order or undertaking, the enforcer who made the original application or any public designated enforcer is able to make a further application to the same court that made the order or accepted the undertaking (subsections (1), (2) and (3)).
  2. An application cannot be made for a failure to comply with an undertaking or order which consists solely of a failure to provide information or documents required by the undertaking or order to determine whether the enforcement subject is taking any enhanced consumer measures required (subsection (7)).
  3. In an application relating to a failure to comply with an undertaking given to the court, where the enforcer has the power under Chapter 3 of Part 3 to make the application, an enforcer can include an application for an enforcement order, an interim enforcement order, an online interface order or an interim online interface order (subsection (4)). An application for a consumer protection order can only be made in respect of a commercial practice that has occurred or is occurring (subsection (6), paragraph (b)).
  4. Breach of a consumer protection order will be a contempt of court (breach by disobedience). The enforcer must establish liability to the criminal standard of proof.
  5. Where the court finds that undertakings given to it have been breached, it may also treat the breach as a contempt of court. Alternatively, as indicated above, this section provides that the court may make an enforcement order, an interim enforcement order, an online interface order or an interim online interface order (as applicable) and/or require the enforcement subject to pay a monetary penalty (subsection (5)).
  6. However, the court is not able to accept another undertaking in response to an application for a consumer protection order under this section (subsection (6), paragraph (c)) and is able to impose a monetary penalty (under subsection (5), paragraph (b)) regardless of whether the enforcement subject has a reasonable excuse (also see section 167 in relation to monetary penalties for non-compliance with undertakings given to enforcers), reflecting the serious nature of breaching an undertaking given to the court.
  7. Subsection (6), paragraph (a) removes the power for the CMA to give directions (under section 154 and section 160, subsection (5)) and removes the requirement for the enforcer to consult with the enforcement subject (under section 155) before making an application for a consumer protection order following on from non-compliance with an undertaking. The consultation requirements aim to resolve infringing practices without the need for court action. Where an enforcer believes a person has breached an undertaking given to the court, which is itself an alternative to a court order, the Government considers that another round of out-of-court consultation would fail to resolve the underlying infringing practice.
  8. Subsection (8) provides an enforcement subject who is required to pay a monetary penalty with a right to appeal the decision to impose a penalty, its nature or amount "on the merits", in addition to their existing appeal rights.
  9. Section 168 sets out the maximum monetary penalties that the court may impose under this section and section 203 makes further provisions for information to be included in an order, or in a notice to accompany an order, that includes a requirement to pay a monetary penalty (subsection (9)).

Section 167: Undertakings to public designated enforcers: further proceedings

  1. This section sets out that where a public designated enforcer has accepted an undertaking and there has been a failure to comply with it, the enforcer is empowered to make an application to the court (subsections (1) and (2)).
  2. However, an application cannot be made for a failure to comply with an undertaking which consists solely of a failure to provide information or documents required by the undertaking to determine whether the enforcement subject is taking any enhanced consumer measures attached to the undertaking (subsection (7)).
  3. In its application, a public designated enforcer can request the imposition of a monetary penalty for the alleged failure to comply with the undertaking. If the court finds that the undertaking is not being complied with and is satisfied that this failure is without a reasonable excuse, the court may make an order requiring the payment of a monetary penalty (subsection (4), paragraph (b) and subsection (5)).
  4. In its application under this section, an enforcer can also include an application for a consumer protection order (subsection (3)). This means that where the enforcer has the power under Chapter 3 of Part 3 to make the application, they may apply for an enforcement order, an interim enforcement order, an online interface order or an interim online interface order (as applicable). By making such an order, the court is able to address the infringing practice and any related consent or connivance to it by an accessory. A consumer protection order can be made by the court instead of or in addition to making an order to pay a monetary penalty for failure to comply with an undertaking, without reasonable excuse.
  5. Subsection (4), paragraph (a) provides that the court may make a consumer protection order instead of any other order within its power to make (e.g. a finding of contempt). An enforcement order made by the court may include the imposition of a monetary penalty (see section 158). Therefore, the court has discretion to impose monetary penalties following an application made by a public designated enforcer under this section in respect of failure to comply with the undertaking and/or in respect of the relevant infringement.
  6. The court is not able to accept another undertaking in response to an application for a consumer protection order under this section (subsection (6), paragraph (c)). This is because there would already have been one failure to comply with an undertaking and it would be appropriate to escalate the means by which compliance is sought.
  7. Subsection (6), paragraph (a) removes the power for the CMA to give directions (under section 154) and the requirement for the enforcer to consult with the enforcement subject (under section 155). The consultation requirements aim to resolve infringing practices without the need for court action or to facilitate enforcement action by the most appropriate enforcer in the circumstances of the case. Where an enforcer believes an enforcement subject has breached an undertaking, which is itself an alternative to a court order, this may strongly suggest that another round of out-of-court consultation would fail to resolve the underlying infringing practice.
  8. An application under this section can only be made in respect of a commercial practice that has occurred or is occurring (subsection (6), paragraph (b).
  9. Subsection (8) provides an enforcement subject who is required to pay a monetary penalty with a right to appeal the decision to impose a penalty, its nature or amount "on the merits", in addition to their existing appeal rights.
  10. Section 168 sets out the maximum monetary penalties that the court may impose under this section and section 203 makes further provisions for information to be included in an order, or in a notice to accompany an order, that includes a requirement to pay a monetary penalty (subsection (9)).

Section 168: Monetary penalties under sections 166 and 167: amount

  1. This section sets out the maximum monetary penalties that the court may impose for failure to comply with undertakings given to public designated enforcers or to the court. It specifies the maximum fixed penalty and the maximum daily rate penalty.
  2. The court has discretion to impose a penalty of a fixed amount and/or a penalty based on a daily rate as it considers appropriate, subject to the statutory maxima set out in subsection (3).
  3. See explanatory note to section 158 for the policy rationale for providing for a penalty of up to the higher of a fixed amount or a percentage of turnover.
  4. Where the enforcement subject has a turnover that can be determined, a fixed amount penalty must not exceed £150,000 or, if higher, 5% of the total value of the enforcement subject’s turnover. Section 204 concerns calculation of the enforcement subject’s turnover. Where the enforcement subject does not have a turnover, the fixed penalty must not exceed £150,000 (subsection 3, paragraph (a)).
  5. Where the enforcement subject has a turnover that can be determined, a daily penalty must not exceed £15,000 or, if higher, 5% of the total value of the enforcement subject’s daily turnover. Where the enforcement subject does not have a turnover, the daily penalty must not exceed £15,000 per day (subsection 3, paragraph (b)).
  6. Subsection (4), paragraph (a) has the effect that a daily penalty imposed by the court on the enforcement subject can only begin to accrue after the respondent has received notice of the application served to the court by the enforcer to determine whether the undertaking has been breached on the enforcement subject. A daily penalty stops accruing when the enforcement subject fulfils the relevant requirements unless the court determines an earlier date (subsection (4), paragraph (b)).

Notification of CMA

Section 169: Notification requirements: applications

  1. This section restates and updates the effect of sections 214 and 215 of the Enterprise Act 2002 to the extent they include obligations on enforcers who are not the CMA. This section requires these other enforcers to notify the CMA of their intention to apply for a consumer protection order. The enforcer can only make an application for an enforcement order or an online interface order at least 14 days after the notice was given (beginning with the day the notice was given). There is a corresponding requirement – subject to a minimum 7-day period from the day the notice was given – when an enforcer intends to apply for an interim enforcement order or an interim online interface order (subsections (1) to (3)). These waiting periods can be shortened if the CMA consents by notice to the enforcer making the application sooner (subsection (2), paragraph (b)). Subsection (4) requires the enforcer to inform the CMA of the outcome of any application it makes.
  2. The policy intent underlying the notification requirement in this section is for the CMA to be able to perform a coordinating role in relation to enforcement under this Part. The notification requirement enables the CMA to facilitate the sharing of information between enforcers and to make directions under section 154. The Government considers that this mitigates the risk of traders facing multiple actions in relation to the same infringing practice.
  3. Subsections (5) and (6) require an enforcer to inform the CMA of the making, and outcome, of applications to the court under section 166 in respect of a failure to comply with a consumer protection order or undertakings to the court.

Section 170: Notification requirements: undertakings

  1. This section requires enforcers to notify the CMA of the terms of any undertaking given to them under section 163 and of the identity of the person(s) giving it (subsections (1) and (2)).
  2. The underlying policy intent is to enable the CMA to fulfil its coordination role. This section restates equivalent provisions in section 219 of the Enterprise Act 2002.

Section 171: Notification requirements: proceedings

  1. This section, which restates section 230 of the Enterprise Act 2002, applies if a local weights and measures authority (i.e. Trading Standards department) in England and Wales intends to start proceedings for an offence under an enactment listed in Part 1 of Schedule 15 (subsection (1)).
  2. The authority must give the CMA notice of its intention to start proceedings (subsection (2)). Subsection (3) sets out the notice period. The authority must also notify the CMA of the outcome of the proceedings (subsection (4)).
  3. The underlying policy intent is to enable the CMA to fulfil its coordination role. For example, the CMA could inform one authority that another is prosecuting, or that an enforcement order has been granted, in respect of the same infringing practice.
  4. Any criminal proceedings will not however be invalid simply because the prosecuting authority has not given the CMA notice (subsection (5)).
  5. This section is not relevant to Scotland, where all criminal prosecutions are brought by the Procurator Fiscal, nor to Northern Ireland where public law enforcement of consumer protection legislation rests with the Department for the Economy.

Section 172: Notification requirements: convictions and judgments

  1. This section restates section 231 of the Enterprise Act 2002. It gives the courts in the UK the power to notify the CMA of convictions and judgments that might not otherwise be brought to its attention, for the purpose of the CMA considering whether to exercise its functions under this Chapter or Chapter 4 (subsections (1) to (4)).

Jurisdiction etc

Section 173: Appropriate court

  1. This section sets out the criteria to determine which courts within the UK have jurisdiction to hear and determine applications for consumer protection orders. This section restates and updates relevant provisions in section 215 of the Enterprise Act 2002.
  2. The starting point is subsection (2), which provides for the appropriate courts where the respondent has a place of business in, or carries on business in England and Wales, Scotland or Northern Ireland.
  3. Subsection (3) provides for the appropriate court where the respondent does not have a place of business in, nor carries on business in England and Wales, Scotland or Northern Ireland. In such cases, the relevant consumer’s domicile determines which court or courts have jurisdiction.
  4. Subsections (4) and (5) define who is a relevant consumer for this purpose.

Section 174: Effect of orders in other parts of the United Kingdom

  1. This section provides for consumer protection orders made by a court in one part of the UK to have effect in another part of the UK, as if they were made by the court that could make an order in that other part of the UK. This provision eliminates any jurisdictional gap within the UK, ensuring consumer protection orders made within one part of the UK will apply across its nations.
  2. This section restates and consolidates the corresponding provisions in sections 217, 218, 218ZB, and 218ZC of the Enterprise Act 2002.

Section 175: Evidence

  1. This section, which restates and updates section 228 of the Enterprise Act 2002, allows convictions in the criminal courts and findings in the civil courts to be admitted in evidence for the purpose of proving that an infringing conduct has occurred. It is still necessary to prove, for example, that the conduct harms the collective interests of consumers.
  2. Subsection (1) provides that convictions in any related criminal proceedings in the UK may be used as evidence in proceedings under this Part.
  3. Subsection (2) enables findings in civil proceedings to be admitted in evidence under this Part, except where the findings have been overturned on appeal (subsection (3)). Subsection (4) defines in respect of whose conduct findings may be made and evidence may be admitted under this section.

Miscellaneous

Section 176: Interconnected bodies corporate

  1. This section restates and updates section 223 of the Enterprise Act 2002. It sets out that where the court makes a consumer protection order against a body corporate that is, or becomes, a member of a group of interconnected bodies corporate, the court has a discretionary power to direct that the order is binding upon one or more other members of the same corporate group (subsections (1) and (3)). The court has discretion to make some or all of the requirements of the order, i.e. compliance directions, enhanced consumer measures and monetary penalties, binding on other members of the same corporate group but only if the court considers it just, reasonable and proportionate to do so (subsection (4)).
  2. In considering whether it is just, reasonable and proportionate to exercise this power, the court may take into account, for example:
    1. to what extent any other group members have been the "brains" behind the infringement or have benefitted from it,
    2. whether the infringing body corporate has sufficient funds to pay the penalty, and whether to ensure the penalty is paid it is necessary to make the requirement to do so binding on one or more members of the same corporate group. The underlying policy intent is to help prevent the infringing body corporate from engaging in corporate restructuring to minimise or avoid liabilities.
  3. Subsection (2) sets out the circumstances in which a body corporate is considered to be or becomes a member of a group of interconnected bodies corporate (when the interconnection condition applies). These include where the infringing body corporate becomes a member of a group of interconnected bodies corporate after the order is made, or an existing group of which it is a member is enlarged.
  4. Subsection (5) defines what a group of interconnected bodies corporate is and subsection (6) defines when any two bodies corporate are interconnected with each other.
  5. Subsection (7) requires a copy of an order to be given to any group member on whom it is made binding. Where new members are added to the corporate group, an enforcer may apply to the court for an order to bind those new members to the requirements of the order.

Section 177: Enhanced consumer measures: private designated enforcers

  1. This section restates section 219C of the Enterprise Act 2002. It sets out two conditions that must be met before enhanced consumer measures can be included in an undertaking given to a private designated enforcer or in an undertaking given to the court, or an order made by the court, following an application made by a private designated enforcer.
  2. Subsection (3) sets out the first condition, which is that the enforcer must have been specified by the Secretary of State in regulations for this purpose (i.e. regarding securing enhanced consumer measures) and subsection (6) provides the conditions which must be satisfied before an enforcer may be specified in the regulations. This section gives the Secretary of State a delegated power to make regulations subject to the negative parliamentary procedure (subsection (9)).
  3. Subsection (4) sets out the second condition, which is that the enhanced consumer measures must not directly benefit the enforcer or an associated undertaking. Subsection (5) sets out, non-exhaustively, particular types of measures that would be considered to directly benefit the enforcer or an associated undertaking. Subsection (10) defines associated undertaking.
  4. Subsections (7) and (8) require private designated enforcers, where including enhanced consumer measures in an undertaking, to have regard to any relevant advice or guidance given by a Primary Authority. The policy objective is to support consistency in achieving business compliance, given that a Primary Authority enables businesses to form a legal partnership with one local authority, which then provides assured and tailored advice on complying with, inter alia, trading standards regulations, that other local regulators must respect.

Section 178: Substantiation of claims

  1. This section enables the court to require evidence from traders substantiating the factual claims used in their commercial practices with consumers, which are at issue in an application for a consumer protection order involving alleged contravention of Chapter 1 of Part 4 (protection from unfair trading) to this Act (subsections (1) and (2)). This section restates and updates section 218A of the Enterprise Act 2002.
  2. The effect of this provision is that the burden of proof regarding the accuracy of the claim rests on the trader and any claim (such as claims about products having various positive effects on health) should be based on evidence which can be verified by the court.
  3. The content and scope of the evidence to be supplied will depend on the specific content of the factual claim and it is for the court to decide if any evidence provided is adequate. If the court considers that it is not, or if no evidence is produced, the court can decide the claim is inaccurate (subsection (3)).

Section 179: Crown application

  1. This section confirms that this Chapter binds the Crown if it engages in an infringing practice (see section 148) or consents or connives in such a practice (subsection (1)).
  2. Subsection (2) makes an exception for monetary penalties.
  3. This section restates and updates section 236 of the Enterprise Act 2002. It ensures that if an emanation of the Crown is acting as a trader, for example a government agency providing services to members of the public for a fee, it can be enforced against if proven to have engaged in infringing practices.

Chapter 4: Direct Enforcement Powers of CMA

Investigations

Section 180: Power of CMA to investigate suspected infringements

  1. This section gives a power to the CMA to investigate suspected infringements. This power acts as a trigger for the use of the CMA’s direct enforcement powers under this Chapter.
  2. The CMA can conduct investigations under Chapter 4 of Part 3 if it reasonably suspects that an infringing practice has occurred, is occurring or is likely to occur. The CMA can investigate the person committing the actual or likely infringing practice (the "infringer"), an accessory to such a practice, or both (together the "enforcement subject") (subsection (1)).
  3. The CMA may publish a notice of investigation under this section, setting out what and, so far as possible, whom, it is investigating and indicating the investigation timetable (subsection (3)). This will signal to other market participants that the CMA has reasonable grounds for suspecting either that the practice constitutes a relevant infringement or that there has been or is consent or connivance in the practice by another relevant person. This may encourage consumers, other traders or other entities to come forward with relevant information or evidence. Publication of a notice is not mandatory in all cases (e.g. it may not be appropriate if potential prejudice may be caused to the investigation).
  4. If the CMA has published an investigation notice then, if it decides to close the investigation, it must publish a notice of termination of the investigation (subsection (4)).

Infringement notices and penalties

Section 181: Provisional infringement notice

  1. This section allows the CMA, once it has started an investigation under section 180, to give a provisional infringement notice to the enforcement subject (subsections (1) to (3)). This power is discretionary. The CMA may choose not to exercise it where, for example, it considers that the infringing practice of concern can be resolved by means of accepting undertakings under section 185.
  2. As it represents the CMA’s provisional view, the provisional infringement notice does not mean that the CMA has made a finding that the enforcement subject has engaged in or is likely to engage in the infringing practice or has consented or connived to it. The provisional infringement notice gives the enforcement subject an opportunity to know the case against them, and if they choose to do so, to respond in writing and orally.
  3. The provisional infringement notice must specify certain details (subsection (4)), including:
    1. the grounds for the CMA’s belief that there has been or is likely to be an infringing practice or consent or connivance to such a practice (as relevant),
    2. proposed directions, which specify any conduct required to ensure compliance as defined in subsection (5). If the proposed directions include enhanced consumer measures (as the CMA considers to be just, reasonable and proportionate), the notice must state that and the details of those measures (subsection (6)),
    3. the representations process that applies. If the enforcement subject wishes to make oral representations, the CMA must arrange for an oral hearing and this opportunity must be specified in the provisional infringement notice (subsection (7)).
  4. If the CMA is considering the imposition of a monetary penalty, further information must be included in the provisional infringement notice regarding the penalty, including its proposed amount and factors justifying both its imposition and amount (subsection (8)).

Section 182: Final infringement notice

  1. This section gives a discretionary power to the CMA to issue a final infringement notice where it is satisfied that the enforcement subject has engaged, is engaging or is likely to engage in the infringing practice or is an accessory to such a practice. The CMA may exercise this power following the issue of a provisional infringement notice under section 181, the expiry of the time for the enforcement subject to make representations on it, and after considering any representations received (subsections (1) and (2)).
  2. In deciding whether to give a final infringement notice, the CMA must have regard to whether the enforcement subject has already given an undertaking (covering the infringing practice or an accessory’s conduct currently under investigation) under Chapters 3 or 4 of Part 3 (subsection (3)). Failure to comply with an undertaking would be relevant to the question of whether it is proportionate to issue a final infringement notice (as opposed, for example, to accepting a further undertaking).
  3. The final infringement notice may include directions to achieve compliance (for the latter, see meaning at section 181, subsection (5)), including such enhanced consumer measures as the CMA considers to be just, reasonable and proportionate and may require payment of a monetary penalty (subsection (4)). The CMA may wish to give directions (including enhanced consumer measures) to rectify an infringement without imposing a penalty and vice versa.
  4. A monetary penalty cannot be imposed where the CMA is satisfied that an infringing practice is likely to occur only and therefore has not actually occurred or is not currently occurring (subsection (5)). The effect is that only actual infringing practices that have taken place (or are currently happening) can be penalised with a monetary sanction on the infringer. A similar qualification is not needed for accessories as section 219(2)(c) achieves the effect that an accessory cannot be an accessory to future conduct.
  5. The CMA has discretion to impose such a monetary penalty as it considers appropriate, subject to the statutory maxima set out in subsection (6).
  6. See explanatory note to section 158 for the policy rationale for providing for a penalty of up to the higher of a fixed amount or a percentage of turnover.
  7. Where the enforcement subject has a turnover that can be determined, a fixed amount penalty must not exceed £300,000 or, if higher, 10% of the total value of the enforcement subject’s turnover. Section 204 concerns the calculation of the enforcement subject’s turnover. Where the enforcement subject does not have a turnover, the fixed penalty must not exceed £300,000.
  8. The final infringement notice must specify certain details (subsection (7)), including:
    1. the CMA’s findings of facts relating to the infringing practice or conduct,
    2. other factors which justify the issuing of the notice,
    3. where a penalty is imposed, the information specified in section 203,
    4. the enforcement subject’s appeal rights.
  9. In addition, the CMA may require the enforcement subject to publish at their expense the final infringement notice (in full or in part) and/or a corrective statement (subsections (8) and (9)). For example, a corrective statement may be required in respect of an advertisement that has been found by the CMA to be misleading, to prevent further distorting consumers’ purchasing decisions based on the misleading contents of the advert.

Section 183: Final infringement notice: directions to take enhanced consumer measures

  1. This section empowers the CMA to include enhanced consumer measures that it considers to be just, reasonable and proportionate in a final infringement notice.
  2. Subsections (2) and (3) require the CMA to consider the likely benefits and costs of the measures, as part of its assessment of the proportionality of the measures. In particular, the CMA must take into account for this assessment the costs of the measures themselves to the enforcement subject, as well as administrative costs.
  3. Subsection (4) provides that the enforcement subject may also be required to provide information or documents to the CMA to enable it to determine if the enforcement subject is carrying out the enhanced consumer measures as stipulated.
  4. Where a settlement agreement is entered into in connection with the payment of compensation required as an enhanced consumer measure, any waiver of consumers’ rights to bring civil proceedings is not valid to the extent that it purports to extend beyond the conduct covered by the final infringement notice (subsections (5) and (6)).

Online interface notices

Section 184: Online interface notices

  1. This section empowers the CMA to give an online interface notice as a last resort to prevent serious harm to the collective interests of consumers where the CMA is satisfied that a person has engaged in, is engaging in, or is likely engage in, an infringing practice (subsections (1) and (5)).
  2. The notice can be given to the infringer or any third party (subsection (2)). However, subsection (3) sets out a jurisdictional test which limits the CMA’s power to give a notice to a third party overseas who satisfies at least one of the conditions listed in that subsection. See the explanatory note for section 149 regarding the "directs activities ... to consumers in the United Kingdom" limb of this jurisdictional test.
  3. It is possible that the CMA might give a final infringement notice under section 182 to the infringer and, simultaneously, an online interface notice to a third party (where, for example, the CMA is not satisfied that the giving of the final infringement notice to the infringer would, by itself, be wholly effective and is satisfied that the directions in the online interface notice are therefore necessary to avoid the risk of serious harm to the collective interests of consumers).
  4. Subsection (4) lists what a person can be required to do through an online interface notice, including displaying warnings to consumers or removing infringing content from an online interface. The meaning of "online interface" is given by subsection (10) and includes websites and apps.
  5. Subsection (6) sets out certain details which the online interface notice must specify, including:
    1. the CMA’s findings in relation to the circumstances justifying the notice,
    2. the appeal rights of those who have received the notice.
  6. Subsections (7) and (8) enable the CMA to publicise any online interface notices given under this section and to identify the infringer to raise awareness of that enforcement intervention and stop any continuing effects of the infringement.

Undertakings

Section 185: Undertakings

  1. This section applies where the CMA has started an investigation under section 180 which has not yet resulted in the CMA giving a final infringement notice under section 182 or an online interface notice under section 184, in relation to the matter under investigation.
  2. In that case, the CMA may accept an undertaking from a person who it believes has engaged in, is engaging in or is likely to engage in an infringing practice or is an accessory to such a practice (subsections (1) and (2)). The CMA may decide that such an undertaking will avoid the need for it to give a final infringement notice as the acceptance of an undertaking can lead to faster resolution of consumer protection concerns and shorten the enforcement process. This is underlined by the fact that when giving an undertaking to the CMA, the enforcement subject does not need to admit that it has engaged in the alleged infringing practice and the CMA, upon accepting the undertaking, will make no finding to that effect.
  3. The undertaking must include provisions which effectively stop the alleged infringing practice and hence ensure compliance with consumer protection law (subsection (4)). It may also include such enhanced consumer measures as the CMA considers just, reasonable and proportionate (subsection (3)). The CMA cannot impose any monetary penalties in an undertaking (though it may subsequently impose monetary penalties for any breaches without reasonable excuse of the terms of the undertaking - see section 189).
  4. Under section 182, if an enforcement subject gives an undertaking to it pursuant to this section, the CMA must take this, as well as failure to comply with it, into account in considering whether to give a final infringement notice.
  5. Subsection (5) makes provision, in certain circumstances, for the CMA to vary the terms of the undertaking at the enforcement subject’s initiative. It is also open to the CMA to release them from the undertaking, whether on its own initiative (subject to the procedural requirements set out in section 187) or at the enforcement subject’s request. This may be appropriate, for example, if the original compliance concerns no longer apply.
  6. The CMA’s power to accept an undertaking under this section does not limit, or take away from, the CMA’s enforcement powers (as a public designated enforcer) under Chapter 3 of this Part (subsection (6)). Such Chapter 3 powers include the acceptance of an undertaking during an investigation under the court-based enforcement regime (see section 163).

Section 186: Effect of undertakings under section 185

  1. This section prevents the CMA, once it accepts an undertaking under section 185, from giving a final infringement notice (under section 182) or an online interface notice (under section 184) to the same enforcement subject in relation to the same matter (subsections (1) and (2)). The underlying policy intent is that undertakings are an alternative to final infringement or online interface notices and therefore the effect is that a person cannot be subjected to multiple enforcement resolutions of the same matter.
  2. Nevertheless, subsection (3) provides that, where the CMA accepts an undertaking from a person, it is not prevented from giving a final infringement notice or online interface notice to that person) in circumstances which:
    1. either are not covered by the undertaking, or
    2. cast doubt on the effectiveness of the undertaking to stop or prevent the consumer detriment because of reasonable grounds for suspecting non-compliance with the undertaking (subsection (3), paragraph (c)), or a change to, or revelation regarding, the basis on which the undertaking was accepted (subsection (3), paragraphs (b) and (d)).
  3. However, subsection (3) does not remove the need to meet the threshold requirements in sections 182 and 184 before a final infringement notice or an online interface notice is given, i.e. subsection (3) does not permit the CMA to automatically issue a final infringement notice or online interface notice.
  4. Subsection (4) has the effect that undertakings are to be treated as released from the date the CMA gives a final infringement notice or an online interface notice in the circumstances set out in subsection (3) paragraphs (b), (c) or (d).

Section 187: Undertakings under section 185: procedural requirements

  1. This section sets out the process to be followed where the CMA, upon its own initiative, proposes to materially vary, or release, an undertaking it has previously accepted (subsections (1) and (5)).
  2. The CMA must first give notice of its intention and rationale to the person who is party to the undertakings (subsections (2) and (3)). The CMA must consider any representations by that person and confirm its decision to that person (subsection (4)).

Section 188: Provisional breach of undertakings enforcement notice

  1. This section, in conjunction with section 189, sets out the CMA’s powers to enforce compliance with undertakings accepted under section 185.
  2. The CMA may give a provisional breach of undertakings enforcement notice to a person, if it has reasonable grounds to believe that they have failed to comply with one or more of the terms of the undertaking (subsections (1) and (2)).
  3. The provisional breach of undertakings enforcement notice does not constitute a finding that a person has failed to comply with the terms of the undertaking and, where the notice provides that the CMA is considering imposing a monetary penalty, does not constitute a finding by the CMA that there is no reasonable excuse for the alleged breach.
  4. The provisional breach of undertakings enforcement notice represents the CMA’s provisional view and proposed next steps. It allows the enforcement subject to know the case against them and, if they choose to do so, to respond in writing and orally.
  5. The provisional breach of undertakings enforcement notice must specify certain details (subsection (3)), including:
    1. the terms of the undertaking which are alleged to be breached and the acts or omissions which constitute the breach,
    2. proposed directions to achieve compliance as defined in subsection (5):
      1. for the infringer, not to continue or repeat the infringing practice,
      2. for the accessory, not to consent or connive in the infringing practice.
      3. for the enforcement subject(s) (infringer and accessory), not to engage in the infringing practice in the course of their business or another business, and not to consent or connive in the carrying out of the infringing practice by a body corporate with which they have a special relationship.
    3. the representation process that applies. If the enforcement subject wishes to make oral representations, the CMA must arrange for an oral hearing and this opportunity must be specified in the provisional breach of undertakings enforcement notice (subsection (4)).
  6. Further information must be included in the provisional breach of undertakings enforcement notice if the CMA is considering imposing a monetary penalty on the enforcement subject, including factors which justify the imposition of a penalty and its proposed amount (subsection (6)).

Section 189: Final breach of undertakings enforcement notice

  1. This section allows the CMA to issue a final breach of undertakings enforcement notice where it is satisfied that the enforcement subject has failed to comply with one or more terms of the undertaking. The CMA may issue a final breach of undertakings enforcement notice following the issue of a provisional breach of undertakings enforcement notice under section 188, the expiry of the deadline to make representations to the CMA and after considering any representations received (subsections (1) and (2)).
  2. The notice may specify directions to achieve compliance (see explanatory note for subsection (5) of section 188), a monetary penalty or both (subsection (3)). The CMA may give directions without imposing a penalty and vice versa.
  3. A monetary penalty can only be imposed if the CMA is satisfied that there is no reasonable excuse for the breach of the undertakings (subsection (4)). This means, for example, an enforcement subject may be able to avoid a requirement to pay a monetary penalty if they can provide evidence of an externally verifiable and unforeseen factor(s) outside of their control, which resulted in the breach of the term or terms of the undertaking.
  4. The final breach of undertakings enforcement notice must specify certain details (subsection (5)), including:
    1. the acts or omissions which constitute the breach,
    2. further factors, which justify the giving of the notice,
    3. if directions are imposed, specify any action to be taken (or stopped) to ensure the infringing practice ceases, will not be repeated or to prevent it from arising (as applicable),
    4. if a penalty is imposed, the penalty notice information specified in section 203,
    5. the applicable rights and procedures to appeal the notice.
  5. The CMA has discretion to publish a final breach of undertakings enforcement notice, as the CMA considers appropriate (subsection (6)).

Section 190: Monetary penalties under section 189: amount

  1. This section sets out the maximum monetary penalties (a fixed amount or an amount based on a daily amount or both) that the CMA may impose in a final breach of undertakings enforcement notice under section 189.
  2. The CMA has a discretion to impose such a monetary penalty as it considers appropriate, subject to the statutory maxima set out in subsection (3).
  3. See the explanatory note for section 158 for the policy rationale for providing for a penalty of up to the higher of a fixed amount or a percentage of turnover.
  4. Where the enforcement subject has a turnover that can be determined, a fixed amount penalty must not exceed £150,000 or, if higher, 5% of the total value of the enforcement subject’s turnover. Section 204 concerns calculation of the enforcement subject’s turnover. Where the enforcement subject does not have a turnover, the fixed penalty must not exceed £150,000 (subsection (3), paragraph (a)).
  5. Where the enforcement subject has a turnover that can be determined, a daily penalty must not exceed £15,000 or, if higher, 5% of the total value of the enforcement subject’s daily turnover. Where the enforcement subject does not have a turnover, the daily penalty must not exceed £15,000 per day (subsection 3, paragraph (b)).
  6. Subsection (4), paragraph (a) means that a daily penalty imposed by the CMA can only begin to accrue after the CMA has given a provisional breach of undertakings enforcement notice to the enforcement subject, i.e. the point when the enforcement subject is clearly made aware of their failure to comply with the terms of the undertaking. A daily penalty stops accruing when the enforcement subject fulfils the requirements of the final breach of undertakings enforcement notice, unless the CMA determines an earlier date (subsection (4), paragraph (b)).

Directions

Section 191: Provisional breach of directions enforcement notice

  1. This section, in conjunction with section 192, sets out the CMA’s powers to enforce compliance with enforcement directions given in its final infringement notices under section 182, online interface notices under section 184 and final breach of undertakings enforcement notices under section 189. This is the final step in the CMA’s own control under the direct enforcement regime.
  2. The CMA may give a provisional breach of directions enforcement notice to an enforcement subject, if it has reasonable grounds to believe that they have failed to comply, without a reasonable excuse, with an enforcement direction given to the enforcement subject (subsections (1) and (2)).
  3. As it represents the CMA’s provisional view, the provisional breach of directions enforcement notice does not mean that the CMA has made a finding that the enforcement subject has failed to comply with an enforcement direction or that it considers that they do not have a reasonable excuse for failing to do so. The provisional breach of directions enforcement notice allows the enforcement subject an opportunity to know the case against them, and if they choose to do so, to respond in writing and orally.
  4. The provisional breach of directions enforcement notice must specify certain details (subsections (3) to (5)), including:
    1. the grounds of the alleged failure to comply with an enforcement direction(s), without reasonable excuse,
    2. proposed directions to achieve compliance with the enforcement direction(s),
    3. the intent and rationale to impose a penalty and its proposed amount,
    4. the representation process that applies and a deadline for the enforcement subject to respond. If the enforcement subject wishes to make oral representations, the CMA must arrange for an oral hearing and this opportunity must be specified in the provisional breach of directions enforcement notice (subsection (4)).

Section 192: Final breach of directions enforcement notice

  1. This section allows the CMA to issue a final breach of directions enforcement notice requiring the payment of a monetary penalty where the CMA is satisfied that the enforcement subject has without reasonable excuse failed to comply with an enforcement direction. The CMA may issue a final breach of directions enforcement notice following the issue of a provisional breach of directions enforcement notice under section 191, the expiry of the time to make representations and after considering any representations received (subsections (1) and (2)).
  2. Subsection (3) reflects that at this late stage of giving a final breach of directions enforcement notice and given the seriousness of failing to comply with its previous directions without a reasonable excuse, the CMA will wish in every case to impose a penalty. Subsection (5) provides that the CMA has a discretion to vary or revoke its original directions and to specify new directions to achieve compliance.
  3. The final breach of directions enforcement notice must specify certain details (subsections (4) and (6)), including:
    1. the CMA’s findings in relation to the circumstances of the breach,
    2. the monetary penalty information specified in section 203, which includes information on appeal rights in respect of the imposition of the penalty;
    3. where the notice varies an enforcement direction or specifies other directions, applicable rights and details to appeal the notice.
  4. The CMA has discretion to publish a final breach of directions enforcement notice (subsection (7)).

Section 193: Monetary penalties under section 192: amount

  1. This section stipulates the maximum monetary penalties that the CMA may impose in a final breach of directions enforcement notice under section 192. It specifies the maximum fixed penalty and the maximum daily rate penalty.
  2. The CMA has discretion to impose such a monetary penalty as it considers appropriate, subject to the statutory maxima set out in subsection (3).
  3. See the explanatory note to section 158 for the policy rationale for providing for a penalty of up to the higher of a fixed amount or a percentage of turnover.
  4. Where the enforcement subject has a turnover that can be determined, a fixed amount penalty must not exceed £150,000 or, if higher, 5% of the total value of the enforcement subject’s turnover. Section 204 concerns calculation of the enforcement subject’s turnover. Where the enforcement subject does not have a turnover, the fixed penalty must not exceed £150,000 (subsection (3), paragraph (a)).
  5. Where the enforcement subject has a turnover that can be determined, a daily penalty must not exceed £15,000 or, if higher, 5% of the total value of the enforcement subject’s daily turnover. Where the enforcement subject does not have a turnover, the daily penalty must not exceed £15,000 per day (subsection (3), paragraph (b)).
  6. Subsection (4), paragraph (a) means that a daily penalty imposed by the CMA can only begin to accrue after the CMA has given a provisional breach of directions enforcement notice to the enforcement subject, i.e. the point when enforcement subject is clearly made aware of their failure to comply with an enforcement direction. A daily penalty stops accruing when the enforcement subject complies fully with the relevant directions, unless the CMA determines an earlier date (subsection (4), paragraph (b)).

Section 194: Powers of court to enforce directions

  1. This section provides a backstop power for the CMA to apply to an appropriate court where it considers that a person has failed to comply with a direction given in a final breach of directions enforcement notice under section 192.
  2. This section also sets out an alternative means for the CMA to enforce compliance with enforcement directions, i.e. those given in its final infringement notices under section 182, online interface notices under section 184 and final breach of undertakings enforcement notices under section 189 – by means of applying to court for an order.
  3. It is for the CMA to decide whether to enforce directions itself (using powers under sections 191 and 192) or by making an application to the court under this section. The underlying policy intent is that the direct enforcement route may be appropriate where the prospect of a CMA-imposed monetary penalty would incentivise compliance. However, there may be cases where this prospect is potentially ineffective or insufficient and the prospect of a court order (which would result in contempt proceedings if breached) would act as an appropriately stringent sanction.
  4. An order made by the court under this section may require the enforcement subject to take such steps as the court considers appropriate to achieve compliance with the enforcement direction in issue (subsection (3)). The court may also order that the enforcement subject(s) pay all the costs or expenses of the application (subsection (4)).
  5. The CMA may also apply for an enforcement order, an interim enforcement order, an online interface order or an interim online interface order under Chapter 3 (subsection (5)). This will enable the court to take action in respect of any practice or conduct which amounts to a relevant infringement (by making a consumer protection order) in addition to, or instead of, making an order in respect of the breach of directions.
  6. Subsection (6) applies provisions in Chapter 3 concerning which court has jurisdiction to hear and decide applications, and relevant court powers to a court order under this section.

Section 195: Substantiation of claims

  1. This section enables the CMA, where it gives a provisional notice (defined in subsection (4)) to an enforcement subject and the respondent makes representations in respect of that notice, to require evidence from the enforcement subject substantiating the factual claims used in their commercial practices with consumers, which are at issue in CMA direct enforcement proceedings involving alleged contravention of Chapter 1 of Part 4 (protection from unfair trading) to this Act (subsections (1) and (2)).
  2. The effect of this provision is that the burden of proof regarding the accuracy of the claim rests on the trader and any claim (such as claims about products having various positive effects on health) should be based on evidence which can be verified by the CMA.
  3. The content and scope of the documentation to be supplied will depend on the specific content of the factual claim and it would be up to the CMA to decide if the evidence provided is adequate. If the CMA considers that it is not, or if no evidence is produced in the first place, the CMA can decide the claim is inaccurate (subsection (3)).

Section 196: Variation or revocation of directions

  1. This section sets out the process to be followed where the CMA proposes to make a material variation of, or to revoke, an enforcement direction it has given through a final infringement notice under section 182, an online interface notice under section 184, a final breach of undertakings enforcement notice under section 189 or a final breach of directions enforcement notice under section 192 (subsection (1) and (5)).
  2. The CMA must first give notice of its intention and rationale to the person subject to those directions and provide details regarding how and when representations can be made (subsections (2) and (3)). The CMA must consider any representations by that person and give notice of its decision to that person (subsection (4)).

False or misleading information

Section 197: Provisional false information enforcement notice

  1. This section, in conjunction with section 198, gives discretionary power to the CMA to enforce against the provision of materially false or misleading information provided to it in connection with the exercise of its direct enforcement functions under Chapter 4 of Part 3 of this Act or under paragraph 16B or 16C of Schedule 5 to the Consumer Rights Act 2015 (as inserted by paragraph 2 of Schedule 17 to this Act).
  2. The CMA’s power under this section may be used where, for example, the CMA has reasonable grounds to believe that it has been given, without reasonable excuse, materially false or misleading information in written representations on a provisional infringement notice, during an oral hearing, or in response to proposed undertakings or proposed material variations of undertakings.
  3. Subsection (1) sets out the circumstances in which the CMA may give a provisional false information enforcement notice under subsection (2).
  4. The provisional false information enforcement notice must specify certain details (subsection (3)), including:
    1. the information in question and why the CMA believes that it is materially false or misleading,
    2. the CMA’s reasons for proposing a monetary penalty and its proposed amount,
    3. the representation process that applies. If the respondent thinks that their circumstances warrant oral representations, the CMA must arrange for an oral hearing and this opportunity must be specified in the provisional false information enforcement notice (subsection (4)).

Section 198: Final false information enforcement notice

  1. This section allows the CMA to issue a final false information enforcement notice following the issue of a provisional false information enforcement notice under section 197 and after considering any representations received. The notice is to require payment of a monetary penalty where the CMA is satisfied that the relevant information provided to it is materially false or misleading and was provided without reasonable excuse.
  2. The CMA may impose a monetary penalty of the amount that it considers to be appropriate, subject to the statutory maxima set out in subsection (4).
  3. See the explanatory note to section 158 for background on providing for a penalty of up to the higher of a fixed amount or a percentage of turnover.
  4. Where the enforcement subject has a turnover that can be determined, a fixed amount penalty must not exceed £30,000 or, if higher, 1% of the total value of the enforcement subject’s turnover. Section 204 concerns calculation of the enforcement subject’s turnover. Where the enforcement subject does not have a turnover, the fixed penalty must not exceed £30,000.
  5. Subsection (5) sets out the information that must be contained in the final false information enforcement notice.

Miscellaneous and appeals

Section 199: Statement of policy in relation to monetary penalties

  1. This section requires the CMA to produce and publish a statement about the considerations relevant to the exercise of its powers to propose and to impose monetary penalties in respect of:
    1. relevant infringements (sections 181 and 182),
    2. breaches of undertakings (sections 188 and 189),
    3. breaches of directions (sections 191 and 192),
    4. provision of materially false or misleading information in connection with the exercise of the CMA’s direct enforcement functions (sections 197 and 198).
  2. Subsection (2) specifies particular considerations which the statement must include.
  3. Subsection (3) provides for the CMA to revise its statement from time to time.
  4. Subsections (4) and (5) set out the process to be followed before the CMA first publishes or subsequently revises the statement. In particular, the Secretary of State must approve the final statement before first publication, and any subsequent revisions to it.
  5. Subsections (6) and (7) require the CMA to have regard to the most recent, Secretary of State-approved statement, at the time of the act or omission giving rise to the penalty, in deciding whether to impose a penalty under this Chapter and if so, the nature and the amount of the penalty.

Section 200: Interconnected bodies corporate

  1. Where the CMA gives a body corporate a final infringement notice, an online interface notice or a final breach of directions enforcement notice, this section gives the CMA a discretionary power to make the requirements of the notice binding upon one or more members of the same interconnected corporate group (subsections (1), (3) and (8)). The CMA has discretion to make some or all of the requirements of the notice, i.e. directions, enhanced consumer measures and monetary penalties, binding on other members of the same corporate group but only if the CMA considers it just, reasonable and proportionate to do so (subsection (4)).
  2. In considering whether it is just, reasonable and proportionate to exercise this power, the CMA may take into account, for example:
    1. to what extent any other group members have been the "brains" behind the infringement or have benefitted from it,
    2. whether the infringing body corporate has sufficient funds to pay the penalty, and
    3. whether to ensure the penalty is paid, it is necessary to make the requirement to do so binding on one or more members of the same corporate group.
  3. The underlying policy intent is to prevent the infringing body corporate from engaging in corporate restructuring to minimise or avoid liabilities.
  4. Subsection (2) sets out the circumstances in which a body corporate is considered to be or becomes a member of an interconnected corporate group for the purposes of this section. These include where the body corporate that is subject to the notice becomes a member of a group of interconnected bodies corporate after the notice is given, or an existing group of which it is a member is enlarged.
  5. Subsection (5) defines what an interconnected corporate group means for the purposes of this section.
  6. Any two bodies corporate are interconnected if one of them is a subsidiary of the other, or if both are subsidiaries of the same company (subsection (6)).
  7. Where the CMA imposes requirements on other members of the interconnected corporate group, it must give the final notice to them in addition to giving it to the enforcement subject (subsection (7)).

Section 201: Record-keeping and reporting requirements

  1. This section requires the CMA to keep a record of undertakings it has accepted and enforcement directions it has given under the direct enforcement regime provided through this Chapter, and any reviews it carries out of their effectiveness (subsection (1)).
  2. In addition, the CMA must prepare and publish a report on the effectiveness of its undertakings and enforcement directions, and the number and outcome of appeals brought under this Chapter, if requested to do so by the Secretary of State (subsections (2) and (3)). These reports will assist the Secretary of State in monitoring and evaluating the operation of the direct enforcement regime.

Section 202: Appeals

  1. This section provides for appeals from certain direct enforcement decisions taken by the CMA under this Chapter.
  2. Appealable decisions: Subsection (1) sets out the CMA decisions and directions against which an appeal under this section can be brought, when given by a relevant notice or imposed by virtue of a relevant notice. Subsection (8) defines "relevant notice" for the purpose of this section. These are any final direct enforcement notices under this Chapter through which a penalty may be imposed on the respondent.
  3. Persons able to bring appeals: Subsection (1) also sets out that any person to whom a relevant notice is given may bring an appeal. This includes a member of the same interconnected corporate group, to whom a relevant notice has been given under section 200.
  4. Grounds for appeal are set out in relation to a monetary penalty and directions in subsections (2) and (3) respectively. These provide for a right of appeal "on the merits". The appeal court is able to:
    1. inquire into the correctness of the CMA’s findings of fact and into the correctness of the CMA’s analysis of, and conclusions drawn from, those facts,
    2. inquire into the correctness of the CMA’s interpretation of the law,
    3. inquire into the correctness of the discretion exercised by the CMA.
  5. The final ground of appeal, in subsection (2), paragraph (d) and subsection (3), paragraph (d), reflects in particular the Government’s intention that the appeal court will have discretion to hear fresh evidence on appeal. There could therefore arise circumstances where the appeal court finds that on the evidence before it, the CMA arrived at a reasonable conclusion, but on the basis of the new evidence before the court, the CMA’s conclusions were nonetheless wrong. This reflects the observation of the Court of Appeal in CMA v Flynn Pharma, [2020] EWCA Civ 339, at paragraph 146.
  6. Appropriate appeal courts (subsection (9)), these are:
    1. The High Court in England and Wales or Northern Ireland, or
    2. The Outer House of the Court of Session in Scotland.
  7. Powers of appeal court (subsection (4)). The appeal court will be able to confirm, vary or set aside the CMA’s notice, or any part of it. In addition, it may also remit the matter under appeal back to the CMA, save where the appeal relates to a final false information notice. For example, the appeal court may:
    1. Impose, revoke or vary the amount of any penalty imposed by virtue of a notice,
    2. Give such directions, or take such other steps, as the CMA could have given or taken,
    3. Make any other decision which the CMA could itself have made,
    4. Confirm the CMA’s decision and dismiss the appeal, including if the court concludes that the decision was the right one but for different reasons than those given by the CMA.
  8. The policy intent is that a court conducting an appeal on the merits under this section should interfere only if it concludes that the decision is wrong in a material respect (reflecting the observation of the Court of Appeal in T-Mobile v Ofcom [2008] EWCA Civ 1373, as approved by the Court of Appeal in CMA v Flynn Pharma, [2020] EWCA Civ 339, at paragraphs 143 to 147).
  9. The time limits within which an appeal must be brought are (see subsections (6), (7) and (9)):
    1. Within 60 days of the CMA giving a final notice to a person,
    2. Except for appeals of final false information enforcement notices which must be brought within 28 days of the CMA giving that notice to a person,
    3. The appeal court may extend the period for bringing an appeal, for example, to further the overriding objective set out in rule 1.1 of the Civil Procedure Rules (England and Wales).
  10. Effect of appeals (subsection (8)): The requirement to pay a penalty, and the requirement to pay compensation (under an enhanced consumer measure direction) will be suspended until an appeal of these decisions is determined. Otherwise, the making of an appeal will not automatically suspend the effect of any directions to which the appeal relates.

Chapter 5: Monetary penalties: general provision

Section 203: Information to accompany orders or notices imposing monetary penalties

  1. This section prescribes the information that must be stated in an order made by the court, or a final notice given by the CMA, that includes a requirement to pay a monetary penalty (subsections (1) and (2)). Subsection (6) clarifies the interpretation of ‘service of order’ as it relates to proceedings in Scotland.
  2. Subsections (3) and (4) provide for a person who receives an order or notice imposing a monetary penalty to apply to the court or the CMA, respectively, to vary the date or dates by which the penalty or portions of it are required to be paid.

Section 204: Determination of turnover

  1. Chapters 3 and 4 give discretionary powers to the courts and the CMA to impose monetary penalties of up to the higher of two caps – a specified amount or a percentage of a person’s turnover.
  2. Subsection (1) of this section defines "turnover", for the purposes of calculating a penalty based on the recipient’s turnover, as the recipient’s global turnover (i.e. both in and outside the UK) as well as the turnover of any person who controls the recipient and the turnover of any person whom the recipient controls.
  3. Subsections (2) to (4) give a delegated power to the Secretary of State to make relevant provisions by regulations, including:
    1. for when a person is to be treated as controlled by another, and
    2. methodologies for determining turnover for different types of entity.
  4. Regulations under this section are subject to the negative parliamentary procedure (subsection (5)).

Section 205: Power to amend amounts

  1. This section gives a delegated power to the Secretary of State to make regulations to amend the stated maximum monetary amount for the non-turnover based penalties for both the fixed penalties and daily penalties imposable under this Part. This power may be used to update maximum monetary amounts in order to offset the erosion of the real value of the fixed maxima through inflation, or to amend the maximum fixed or daily penalty amounts (both upwards and downwards) to achieve the intended policy outcome of effective deterrence of non-compliance in a proportionate manner. This power does not allow for amendment to the percentage amount, which is stated for the purpose of determining a maximum penalty by reference to the enforcement subject’s turnover.
  2. The Secretary of State must consult with relevant parties before making these regulations (subsection (2)).
  3. Regulations under this section are subject to the draft affirmative procedure (see section 337, subsection (3)).

Section 206: Recovery of monetary penalties

  1. This section provides that if the period during which an appeal against a penalty may be made has expired without an appeal having been made, or where an appeal has been determined, withdrawn or disposed of the CMA may commence proceedings to recover the penalty and any unpaid interest as a civil debt (subsections (1) to (3)).
  2. Subsections (4) and (5) provide that where the CMA has given a final infringement notice requiring the payment of both a penalty and consumer compensation as an enhanced consumer measure, it must first consider whether any of the compensation it has ordered is due to consumers and it may choose to delay commencing penalty recovery proceedings until affected consumers get their money back. This means the CMA can be flexible in weighing up the direct benefit to affected consumers from receiving compensation against the need to enforce a penalty as soon as feasible. Such flexibility is desirable where an enforcement subject may lack sufficient financial resources to pay both compensation and the monetary penalty.

Section 207: Monetary penalties: further provision

  1. Subsection (1) provides for interest at the statutory rate (as specified in section 17 of the Judgments Act 1838) to be incurred on the unpaid balance if a penalty imposed by the court or the CMA is not paid by its deadline.
  2. Where a person applies to change the date or dates by which the penalty, or different portions of it, are to be paid, the payment(s) cannot be required from the person before the application is dealt with (subsection (2)).
  3. Where a person applies to appeal the penalty, its payment cannot be required from the person before the application is dealt with (subsection (3)).
  4. Subsection (4) enables the court to require immediate payment of outstanding penalties. Subsection (5) enables the CMA to do the same.
  5. If a penalty is varied by the court on appeal from a CMA final notice, the appeal court can decide when interest on the substituted penalty can be charged from (subsection (6)).
  6. Subsection (7) deals with the payment of monetary penalties by entities that are not a body corporate, for example partnerships or unincorporated associations. Such penalties are to be paid out of the assets or funds of the entity.
  7. Receipts from the courts’ or the CMA’s exercise of the power to impose monetary penalties will be paid into the relevant Consolidated Fund (subsection (8)).

Chapter 6: Investigatory Powers

Section 208: Investigatory powers of enforcers

  1. Schedule 5 of the Consumer Rights Act 2015 details the investigatory powers available to consumer enforcers for the purposes of civil enforcement of consumer protection law. This section introduces Schedule 17 to this Act, which amends Schedule 5 of the Consumer Rights Act 2015 to enhance the enforceability of statutory information notices given to a person under paragraph 14 of Schedule 5 and to clarify enforcers’ ability, during onsite inspections, to access material which is held remotely. The key amendments in this Chapter and its corresponding Schedule are to:
    1. provide the courts with a power to impose a civil monetary penalty (subject to maximum amounts) where the court finds there has been non-compliance with an information notice without reasonable excuse,
    2. provide a direct enforcement power for the CMA to decide whether an information notice that it has issued has been complied with and if not, to impose a civil monetary penalty (subject to the same maximum amounts referred to above in the context of the court’s equivalent fining power) for any non-compliance without reasonable excuse,
    3. set out the extra-territorial reach of enforcers’ powers to request information by notice, to which the above sanctions apply, for purposes including the Part 3 enforcement regimes,
    4. provide rules for service of notices, and
    5. amend the prescribed conditions for seeking a premises entry warrant to make clear that they cover documents accessible from the premises as well as documents located on the premises.

Schedule 17: Investigatory powers

Paragraph 2: Penalties for non-compliance with information notices
  1. Paragraph 15 of Schedule 5 to the Consumer Rights Act 2015 sets out the procedure and required content of an information notice issued under paragraph 14 of Schedule 5 to the Consumer Rights Act. Paragraph 2 makes limited amendments to Schedule 5 of the Consumer Rights Act so that an information notice has to specify the circumstances in which non-compliance with the information notice could result in the imposition of a monetary penalty (subparagraph (2)).
  2. Subparagraph (3) inserts a new paragraph 16A into Schedule 5 to the Consumer Rights Act, which will give the court the power to impose a civil monetary penalty where the court finds that there has been a failure to comply with an information notice without reasonable excuse (paragraph 16A, subparagraph (3)). "Without reasonable excuse" means, for example, that the recipient of an information notice may not be subject to a penalty if they can provide evidence of an externally verifiable and unforeseen factor, outside of their reasonable control, that resulted in non-compliance with the information notice.
  3. The new paragraph 16A is in addition to the existing power of the court under paragraph 16 of Schedule 5 to the Consumer Rights Act to make an order requiring the recipient of the information notice to do anything that the court thinks is reasonable for them to do to ensure compliance with the information notice as well as ordering the recipient of the notice to pay the costs or expenses of the enforcer’s application. Paragraph 16A, subparagraph (9) enables enforcers to combine an application for an order under paragraph 16 and an application for the imposition of a monetary penalty under paragraph 16A of Schedule 5 to the Consumer Rights Act, or to apply for one instead of the other.
  4. The Government considers that the provision of false or misleading information in response to an information notice constitutes a failure to comply with the information notice. Similarly, the destruction, disposal, concealment or falsification of requested information (e.g. destruction of a document or part of a document which contains the required information) also constitutes a failure to comply with the information notice.
  5. Paragraph 16A, subparagraph (4) covers the nature of the penalty that a court may impose where it finds that there has been a failure to comply with an information notice, without reasonable excuse. It specifies that the court may impose a fixed amount penalty or a penalty calculated by reference to a daily rate, or a combination of both. The court has discretion to impose such a monetary penalty as it considers appropriate, subject to the statutory maxima set out in paragraph 16A, subparagraph (5).
  6. The policy rationale for providing for a penalty of up to the higher of a fixed amount or a percentage of turnover is because:
    1. a penalty of up to only a fixed amount might not act as a meaningful deterrent for large companies with substantial turnover,
    2. conversely, there may be smaller companies (such as a new start up) which have a low or negligible turnover, so a penalty of up to only the relevant percentage of turnover might not act as a meaningful deterrent, and
    3. some individuals in scope of the penalty powers, such as a company director who consents or connives in the infringing practice (as an accessory) will not have a turnover and therefore the higher penalty will necessarily be a penalty of up to the fixed amount.
  7. Where the recipient of the information notice has a turnover that can be determined, a fixed amount penalty must not exceed £30,000 or, if higher, 1% of the total value of their turnover. Paragraph 16H concerns calculation of turnover for these purposes. Where the recipient of the notice does not have a turnover, the fixed penalty must not exceed £30,000 (paragraph 16A, subparagraph (5) (a)).
  8. Where the recipient of the information notice has a turnover that can be determined, a daily penalty must not exceed £15,000 per day or, if higher, 5% of the total value of their daily turnover. Where the recipient of the information notice does not have a turnover, the daily penalty must not exceed £15,000 (paragraph 16A, subparagraph (5) (b)).
  9. Paragraph 16A, subparagraph (6),(a) means that a daily penalty imposed by the court can only begin to accrue after the enforcer has served the court application on the recipient of the information notice, i.e. the point when they are clearly made aware of their failure to comply with the requirements of the information notice. A daily penalty stops accruing when the requirements of the information notice are met unless the court determines an earlier date (paragraph 16A, subparagraph (6) (b)).
  10. Paragraph 16A, subparagraph (7) sets out the information that must be included in a court order, or a notice accompanying service of the court order, that requires payment of a monetary penalty, including the type, amount and grounds for imposition of the penalty, the process and timing for its payment, and relevant rights to apply to change a payment date or to appeal against the penalty in the relevant jurisdiction.
  11. Paragraph 16A, subparagraphs (8) and (10) set out applicable rights for the recipient of the penalty to seek an amended payment schedule for, or to bring an appeal against, a penalty. A person who is required to pay a monetary penalty has a right to appeal the decision to impose a penalty, its nature or amount "on the merits", in addition to their existing appeal rights.
  12. Where the recipient of the information notice applies to appeal the penalty, its payment cannot be required before this application is decided (paragraph 16A, subparagraph (11)).
  13. Paragraph 16A, subparagraph (12) extends the court’s powers under paragraph 16(4) and (5) to require payment of costs to its order-making powers under paragraph 16A.
  14. Paragraph 16A, subparagraph (13) clarifies that, in Scotland, the references to an order being served (in subparagraphs (7) and (8) of Paragraph 16A) includes service of an extract order in execution of or diligence on the order.
Non-compliance with notice under paragraph 14: powers of CMA to give provisional enforcement notice
  1. Paragraph 16B empowers the CMA to give a provisional enforcement notice if it reasonably believes that a recipient of an information notice it has given under paragraph 14 of Schedule 5 to the Consumer Rights Act has failed to comply with it (paragraph 16B, subparagraphs (1) and (2)).
  2. The provisional enforcement notice does not mean that the CMA has made a finding that the recipient of the information notice has failed to comply with its requirements and, where the provisional notice provides that the CMA is considering to impose a monetary penalty for the alleged failure, does not constitute a finding by the CMA that there is no reasonable excuse for such a failure. Rather, the provisional enforcement notice represents the CMA’s provisional view and proposed next steps. It allows the recipient of the information notice to know the case against them and, if they choose to do so, to respond in writing or orally to the provisional enforcement notice.
  3. This provisional enforcement notice must specify the CMA’s grounds for giving it including the alleged compliance failure(s) and any actions which the CMA considers should be taken to secure compliance with the information notice (paragraph 16B, subparagraph (3)(a) and (b)). It must also invite the recipient of the provisional enforcement notice to make representations and set out the process for doing so (paragraph 16B, subparagraph (3)(c) and (d)). If the respondent wishes to make oral representations, the CMA must arrange for an oral hearing and this opportunity must be specified in the provisional enforcement notice (paragraph 16B, subparagraph (4)).
  4. Where the CMA considers the alleged compliance failure with the information notice warrants imposing a monetary penalty, the provisional enforcement notice must also state that and give details about the type, amount and grounds for the proposed penalty (paragraph 16B, subparagraph (5)).
  5. The Government considers that the provision of false or misleading information in response to an information notice constitutes a failure to comply with the information notice. Similarly, the destruction, disposal, concealment or falsification of requested information (e.g. destruction of a document or part of a document which contains the required information) also constitutes a failure to comply with the information notice.
Non-compliance with notice under paragraph 14: power of CMA to give final enforcement notice
  1. Paragraph 16C sets out when and how the CMA may issue a final enforcement notice for non-compliance with an information notice it has given under paragraph 14 of Schedule 5 to the Consumer Rights Act. It can do so only after the end of the period for representations by the recipient on the provisional enforcement notice and after considering such representations (if any) (paragraph 16C, subparagraph (1)).
  2. The final enforcement notice can impose a requirement to pay a monetary penalty or a requirement to comply with directions that the CMA considers appropriate to secure compliance with the information notice or both (paragraph 16C, subparagraph (2)).
  3. The CMA can impose a monetary penalty only if the CMA is satisfied that the person lacks a reasonable excuse for the compliance failure (paragraph 16C, subparagraph (3)). This means, for example, that a person will be able to avoid a penalty if they can provide evidence of externally verifiable and unforeseen factors outside the person’s control that resulted in the non-compliance.
  4. Paragraph 16C, subparagraph (4) covers the nature of the penalty that the CMA may impose. It specifies that the CMA may impose a fixed amount penalty or a penalty calculated by reference to a daily rate, or a combination of both. The CMA has discretion to impose such a monetary penalty as it considers appropriate, subject to the statutory maxima set out in paragraph 16C, subparagraph (5).
  5. See the explanatory note to paragraph 16A for the policy rationale for providing a penalty of up to the higher of a fixed amount or a percentage of turnover.
  6. Where the recipient of the information notice has a turnover that can be determined, a fixed amount penalty must not exceed £30,000 or, if higher, 1% of the total value of their turnover. Paragraph 16H concerns calculation of turnover for these purposes. Where the recipient of the notice does not have a turnover, the fixed penalty must not exceed £30,000 (paragraph 16C, subparagraph (5) (a)).
  7. Where the recipient of the information notice has a turnover that can be determined, a daily penalty must not exceed £15,000 per day or, if higher, 5% of the total value of their daily turnover. Where the recipient of the information notice does not have a turnover, the daily penalty must not exceed £15,000 (paragraph 16C, subparagraph (5)(b)).
  8. Paragraph 16C, subparagraph (6)(a) means that a daily penalty imposed by the CMA can only begin to accrue after the CMA has given a provisional enforcement notice, i.e. the point when the person is clearly made aware of their failure to comply with the requirements of the notice. A daily penalty stops accruing when the person fulfils the requirements of the notice unless the CMA determines an earlier date (paragraph 16C, subparagraph (6) (b)).
  9. Paragraph 16C, subparagraph (7) sets out what information must be included in a final enforcement notice that includes a requirement to pay a monetary penalty, including the type, amount and grounds for imposition of the penalty, the process and timing for its payment, and relevant rights to apply to change a payment date or to appeal against the final enforcement notice.
  10. Paragraph 16C, subparagraph (8) sets out applicable rights for a person to seek an amended payment schedule for a penalty.
  11. The CMA must have regard to the most recent published statement of policy (at the time of the acts or omissions giving rise to the penalty) detailing the considerations relevant to whether to impose a penalty under this paragraph, and the nature and amount of any such penalty (paragraph 16C, subparagraph (9)).
  12. The CMA may publish a final enforcement notice it has given under this paragraph in a manner it thinks appropriate, e.g. on its website (paragraph 16C, subparagraph (10)).
  13. Paragraph 16C, subparagraph (11) applies sections 190 to 195 of the Act to directions given by the CMA in a final enforcement notice under this paragraph.
Appeals against final enforcement notice
  1. Paragraph 16D provides for appeals from final enforcement notices given by the CMA under paragraph 16C.
  2. Appealable decisions: an appeal under this paragraph can be brought against the requirement to pay a monetary penalty for failure to comply with an information notice, or directions aimed at achieving compliance with an information notice, or both (paragraph 16D, subparagraph (1)).
  3. Persons able to bring appeals (paragraph 16D, subparagraph (1)): Any recipient of the final enforcement notice has the right to bring an appeal against the notice.
  4. Grounds for appeal are set out in paragraph 16D, subparagraph (2) in relation to appeals against the imposition of a monetary penalty and paragraph 16D, subparagraph (3) in relation to appeals against CMA directions given through a final enforcement notice. These provide for a right of appeal on the merits. The appeal court will be able to:
    1. inquire into the correctness of the CMA’s findings of fact and into the correctness of the CMA’s analysis of, and conclusions drawn from, those facts,
    2. inquire into the correctness of the CMA’s interpretation of the law,
    3. inquire into the correctness of the discretion exercised by the CMA.
  5. The final ground of appeal, in paragraph 16D, subparagraph (2)(d) and subparagraph (3) (d) reflects in particular the Government’s intention that the appeal court will have discretion to hear fresh evidence on appeal. There could therefore arise circumstances where the appeal court finds that on the evidence before it, the CMA arrived at a reasonable conclusion but on the basis of the new evidence before the court, the CMA’s conclusions were nonetheless wrong. See also the explanatory note for section 202.
  6. Appropriate appeal courts (paragraph 16D, subparagraph (8))
    1. The High Court in England and Wales or Northern Ireland, or
    2. The Outer House of the Court of Session in Scotland.
  7. Powers of appeal court (paragraph 16D, subparagraph (4)). The appeal court will be able to confirm, vary or set aside the CMA’s notice, or any part of it, as well as
    1. Impose, revoke or vary the amount of any penalty,
    2. Give such directions, or take such other steps, as the CMA could have given or taken,
    3. Make any other decision which the CMA could itself have made,
    4. Confirm the CMA’s decision and dismiss the appeal, including if the court concludes that the decision was the right one but for different reasons than those given by the CMA.
  8. The Government’s policy intent is that a court conducting an appeal on the merits under this section should interfere only if it concludes that the decision is wrong in a material respect (reflecting the observation of the Court of Appeal in T-Mobile v Ofcom [2008] EWCA Civ 1373, as approved by the Court of Appeal in CMA v Flynn Pharma, [2020] EWCA Civ 339, at paragraphs 143 to 147).
  9. Timing to bring an appeal: (paragraph 16D, subparagraphs (5) and (6)):
    1. Within 28 days of the CMA giving a final enforcement notice to a person
    2. The appeal court may extend the period for bringing an appeal, for example, to further the overriding objective set out in rule 1.1 of the Civil Procedure Rules for England and Wales.
  10. Effect of appeals (paragraph 16D, subparagraph (7)): The requirement to pay a civil monetary penalty will be suspended until the appeal is determined. Otherwise, the making of an appeal will not automatically suspend the effect of any directions to which the appeal relates.
Recovery of penalties imposed under paragraph 16C
  1. Paragraph 16E provides that if the period during which an appeal against a penalty for non-compliance with an information notice may be made has expired without an appeal having been made, or such an appeal has been made and determined, the CMA may commence proceedings to recover the penalty and any unpaid interest as a civil debt due to the CMA (paragraph 16E, subparagraphs (1) to (3)).
Statement of policy in relation to penalties under paragraph 16C
  1. Paragraph 16F requires the CMA to produce and publish a statement about the considerations relevant to the exercise of its powers to propose and to impose monetary penalties for non-compliance with information notices given by the CMA.
  2. Paragraph 16F, subparagraph (2) specifies particular considerations which the statement must include.
  3. Paragraph 16F, subparagraph (3) provides for the CMA to revise its statement from time to time, and to publish the revised statement.
  4. Paragraph 16F, subparagraph (4) sets out the process to be followed before the CMA first publishes or subsequently revises the statement. In particular, the Secretary of State must approve the final statement before first publication, and any subsequent revisions to it.
  5. See the explanatory note for paragraph 16C, subparagraph (9), which requires the CMA to have regard to the relevant version of the statement of policy in deciding whether, and if so how, to impose a civil monetary penalty for non-compliance with information notices given by the CMA.
Penalties imposed under paragraphs 16A and 16C: further provision
  1. Paragraph 16G makes further provisions for penalties imposed by the court under paragraph 16A and those imposed by the CMA under paragraph 16C. It provides for interest at the statutory rate (as specified in section 17 of the Judgments Act 1838) to be incurred on the unpaid balance of a penalty if a penalty imposed by the court or the CMA is not paid by its deadline (paragraph 16G, subparagraph (1)).
  2. Where a person applies to change the date or dates by which the penalty, or different portions of it, are to be paid, the payment(s) cannot be required from the person before the application is dealt with (paragraph 16G, subparagraph (2)).
  3. Paragraph 16G, subparagraph (3) enables enforcers to require immediate payment of outstanding penalties.
  4. If upon the appeal of the final enforcement notice, the penalty imposed by the CMA is varied by the court, then the court can decide the date from when interest on the substituted penalty can begin to be charged (paragraph 16G, subparagraph (4)).
  5. Paragraph 16G, subparagraph (5) deals with the payment of monetary penalties by entities that are not a body corporate, for example partnerships or unincorporated associations. Such penalties are to be paid out of the assets or funds of the entity.
  6. Money received from the courts’ or the CMA’s exercise of the power to impose monetary penalties will be paid into the relevant Consolidated Fund (paragraph 16G, subparagraph (6)).
Meaning of "turnover" for purposes of paragraphs 16A and 16C
  1. Paragraph 16H, subparagraph (1) defines "turnover", for the purposes of calculating a penalty based on the recipient’s turnover, as including the recipient’s global turnover (i.e. both in and outside the UK) as well as the turnover of any person who controls the recipient and the turnover of any person whom the recipient controls.
  2. Paragraph 16H, subparagraphs (2) to (4) give a delegated power to the Secretary of State to provide, by regulations:
    1. for when one person is to be treated as controlled by another, and
    2. methodologies for determining turnover including for different types of entity.
  3. Regulations under paragraph 16H are subject to the negative parliamentary procedure (paragraph 16H, subparagraph (6)).
Power to amend amounts
  1. Paragraph 16I(1) gives a delegated power to the Secretary of State to make regulations to amend the stated maximum monetary amount of the non-turnover based penalties for both the fixed penalties and daily penalties imposable under paragraphs 16A(5) and 16C(5). This power may be used to update maximum monetary amounts in order to offset the erosion of the real value of the fixed maxima through inflation, or to amend the maximum fixed or daily penalty amounts (both upwards and downwards) to achieve the intended policy outcome of effective deterrence of non-compliance in a proportionate manner. This power does not allow for amendment to the percentage amount, which is stated for the purpose of determining a maximum penalty by reference to the enforcement subject’s turnover.
  2. The Secretary of State must consult with relevant parties before making these regulations (subparagraph (2)).
  3. Regulations under this paragraph are subject to the draft affirmative procedure (subparagraph (4)), see section 337, subsection (3)).
Miscellaneous
  1. Paragraph 16J, subparagraph (1) prevents the CMA from using the court-based enforcement regime (under paragraph 16A) to enforce against failure to comply with an information notice where it has used the direct enforcement regime in respect of the same failure, i.e. given the information notice recipient a final enforcement notice in respect of the same failure.
  2. Paragraph 16J, subparagraph (2) prevents the CMA from using the direct enforcement regime in respect of a failure to comply with an information notice where the CMA has already used the court-based regime in in respect of the same failure. As a result, the CMA will only be able to use either the court-based enforcement regime (under paragraphs 16 and 16A) or its own direct enforcement regime (under paragraphs 16B and 16C) in relation to a failure to comply with a CMA information notice.
Paragraph 3: extra-territorial application in relation to notices
  1. Paragraph 3 inserts new paragraph 17A in Schedule 5 to the Consumer Rights Act which sets out the express extra-territorial reach of enforcers’ powers to request information by notice under paragraph 14 of Schedule 5, to which the new monetary penalty powers described above will apply.
  2. An information notice may be given to a person who is outside the UK (paragraph 17A, subparagraph (2), sub-point (a)). (This paragraph does not affect the enforcers’ ability to give information notices to persons in the UK).
  3. Paragraph 17A, subparagraph (2), sub-point (b) provides that the information notice may require the provision of information, which includes documents, held outside the UK. For instance, if the person to whom the information notice is addressed is inside the UK and can access required information held outside of the UK (e.g. in offshore cloud storage), they will be obliged to bring this information into the jurisdiction and produce it.
  4. The power to give a person a notice under paragraph 14 may be exercised in respect of two categories of recipients – potential enforcement subjects (defined in paragraph 17A, subparagraph (6)) and third parties. The latter category includes, for example, banks, payment systems service providers, domain name registrars, operators of servers or internet platforms or other intermediaries.
  5. An additional test needs to be met for an information notice to be given to a third party overseas, namely they must have a UK connection (paragraph 17A, subparagraphs (3) to (5)). Persons who are incorporated, serviced and operated outside the UK can meet the UK connection test if they direct their business activities to UK consumers (paragraph 17A, subparagraph (5), sub-point (d)). See the explanatory note for section 149 in relation to the "directing activities" test.
  6. For example, if the enforcer considered that details from a trader’s bank account were relevant to determining whether the trader had engaged in a relevant infringement, the enforcer could give an information notice to the trader’s bank seeking the relevant information as long as the bank directed its business activities to consumers in the UK.
Paragraph 4: Means of giving notices
  1. Paragraph 4 inserts new paragraph 17B in Schedule 5 to the Consumer Rights Act which sets out the process by which enforcers may give notices to persons under Part 3 of Schedule 5, including to business entities registered or operating outside the UK.
  2. Paragraph 17B, subparagraph (2) sets out four main means of service applicable to notices to be given to any person whether an individual or an artificial entity (referred to here, in either case, as the ‘recipient’).
  3. Paragraph 17B, subparagraphs (6) and (7) expand on the meaning of a recipient’s proper address for the purposes of subparagraph (2)(b) and (c), including, in relation to partnerships and any other type of firm, provision for service to the recipient’s principal office.
  4. Paragraph 17B, subparagraph (8) expands on the meaning of a recipient’s email address for the purposes of subparagraph (2)(d).
  5. Paragraph 17B, subparagraphs (7) and (8) respectively provide, where no other definition of the recipient’s proper address or (as the case may be) the recipient’s email address applies, for service to an address, or email address, by means of which the enforcer reasonably believes that the notice will come to the attention of the recipient.
  6. Paragraph 17B, subparagraphs (3) to (5) provide that service on each of the listed kinds of business entity can be effected by serving on an individual with the specified office or role in relation to the entity. The means of service provided for service on recipients in subparagraph (2) and related subparagraphs equally apply for the purposes of service on the specified individual.
Paragraph 5: Access to documents
  1. This paragraph makes clarificatory amendments to Part 4 of Schedule 5 to the Consumer Rights Act concerning enforcers’ ability, during onsite inspections, to access material which is held remotely, off-site – in particular where it is stored electronically. These amendments cover paragraph 32 of Part 4 of Schedule 5 only, which provides the conditions for a warrant in the context of an enforcer exercising its onsite investigatory powers. Save for this provision, the Government considers that Part 4 of Schedule 5 is clear that enforcers have the appropriate powers to require the production of information held remotely, when exercising their relevant onsite investigatory powers without a warrant.
  2. Subparagraphs (a) and (b) to this paragraph amend paragraph 32 of Schedule 5 to make clear that the conditions for a warrant to enter premises apply where (i) documents are accessible from the premises (even if the documents are not located on the premises), and (ii) it is likely that documents accessible from the premises would be concealed or interfered with, or access to them would otherwise be restricted, if notice of entry on the premises were given to the occupier.
  3. The effect of these amendments is that enforcers can obtain a warrant in relation to premises on the basis that it would give them access to information which may be remotely stored in electronic form but still be accessible from the premises – for example information held in a "cloud" platform rather than saved on a physical device on the business premises. Before the rise of cloud computing, that information might previously have been held in physical files on the premises or saved on a computer hard drive on the premises.
Paragraph 6: Meaning of firm
  1. This paragraph makes an amendment to paragraph 8 of Schedule 5 to the Consumer Rights Act to define "firm" for the purposes of that Schedule.

Chapter 7: Miscellaneous

Section 209: Powers to amend Schedule 15 and Schedule 16

  1. The court-based regime provided by Chapter 3 of this Part is limited in scope to commercial practices which contravene the enactments, obligations and rules of law listed, or to the extent listed, in Schedule 15. Among other matters, this section gives a delegated power to the Secretary of State to make regulations that add, remove or vary the enactments listed in Schedule 15 and hence to amend or update the scope of the court-based enforcement regime going forward (subsection (1), paragraph (a)).
  2. The effect of subsection (1), paragraphs (b) and (d) is that responsibilities of enforcers for enforcing different consumer protection enactments, obligations and rules of law may be updated if and when they evolve over time – for example, if it is no longer appropriate for a particular enforcer to be able to enforce particular consumer protection enactments because of a change in enforcement and/or regulatory remits.
  3. The CMA direct enforcement process provided by Chapter 4 of this Part is limited in scope to commercial practices which contravene the enactments specified, or to the extent specified in Schedule 16. This section also allows the Secretary of State to add, remove or vary the enactments listed in Schedule 16 and hence to amend the scope of the CMA direct enforcement regime going forward (subsection (1), paragraph (e)).
  4. The effect is that the scope of the CMA direct enforcement regime can be updated if regulation necessary to protect the economic interests of consumers changes in line with changes in market, trader and consumption behaviour.
  5. Subsections (2) and (3) limit the types of enactments that can be added to, or varied in, Schedules 15 and 16.
  6. Regulations made under this section are subject to the draft affirmative procedure (subsection (4)), see section 337, subsection (3)).

Section 210: Rules

  1. This section allows the CMA to make rules, subject to approval by the Secretary of State through secondary legislation, to set out procedural administrative details of the CMA direct enforcement regime. These rules will supplement the framework provided in Chapter 4 of this Part.
  2. The rules made under this section may provide for the exercise of CMA direct enforcement functions by the CMA’s Board, Panel and personnel (subsection (2)) and may cover a range of procedures including arrangements for ensuring confidential information is appropriately protected, arrangements for enforcement subjects to make representations to the CMA and arrangements for complaints’ handling (subsection (3)).

Section 211: Procedural requirements for making of rules

  1. This section sets down the process for rule-making under section 210. Firstly, subsection (1) requires the CMA to consult with stakeholders during its preparation of the rules. The effect is that the rules (or variations to them) will be subject to the scrutiny of traders, their representatives and other interested parties.
  2. Secondly, subsection (2) requires the CMA to obtain the Secretary of State’s approval (by regulations) before bringing any rule into operation or varying any rule. Subsection (3) empowers the Secretary of State to approve a rule in the form that it is submitted by the CMA or to approve a rule after modification. Where the Secretary of State proposes modifications to a rule or variation of it, subsection (4) requires the Secretary of State to first notify the CMA and take into account the CMA's comments on the proposed modifications before approving the rule.
  3. Subsection (5) empowers the Secretary of State (by regulations) to vary or revoke rules or to direct the CMA to vary or revoke rules. The process described in the paragraph above does not apply where the Secretary of State directs the CMA to vary or revoke rules in accordance with the direction (subsection (6)).
  4. Regulations containing the rules are subject to the negative parliamentary procedure (subsection (7)).

Section 212: Guidance

  1. This section requires the CMA to prepare and publish guidance about its general approach to carrying out its direct enforcement functions. The guidance will provide a greater level of detail and clarity to traders and other stakeholders about how this direct enforcement regime will operate in practice.
  2. Subsection (2) sets out the information that the guidance must include. Subsection (3) enables the CMA to prepare and publish guidance on further matters at its discretion. Subsection (4) sets out that the CMA must keep the guidance under review and may update this guidance.
  3. Subsections (5) and (6) place requirements on the CMA in relation to consultation and approval preceding any publication or revision of this guidance.

Section 213: Defamation

  1. This section protects the CMA against actions for defamation as a result of the exercise of functions under this Part.

Section 214: Minor and consequential amendments

  1. This section introduces Schedule 18 which contains minor and consequential amendments in relation to this Part.

Schedule 18: Part 3: Minor and consequential amendments

  1. Schedule 18 contains minor and consequential amendments in relation to this Part.

Section 215: Transitional and saving provision

  1. This section introduces Schedule 19 which provides transitional and saving provision in connection with this Part.

Schedule 19: Part 3: Transitional and saving provisions in relation to Part 3

  1. Schedule 19 contains transitional and saving provisions regarding:
    1. the operation of "the new law", i.e. Chapters 3 and 4 of Part 3 to the Act (and any legal provisions relating to those Chapters, including Schedule 5 to the Consumer Rights Act 2015 as amended by this Act), and
    2. the operation of "the old law", i.e. Part 8 of the Enterprise Act 2002 as it had effect immediately before the commencement of this Act (and any provisions of law relating to that Part, including Schedule 5 to the Consumer Rights Act 2015, as they had effect immediately before the commencement of this Act).
  2. General rules: The starting position is that the new law applies to conduct that takes place on or after the commencement date of Chapters 3 and 4 of Part 3 to the Act including where conduct of concern is likely to take place on or after the commencement date.
  3. Accordingly, the old law continues to apply (paragraph 2, subparagraphs (1)-(3)):
    1. to conduct which takes place before the commencement date of Chapters 3 and 4;
    2. to enforcement action regarding breach of a court order made under Part 8 of the Enterprise Act 2002 or an undertaking given to the court under that Part; and
    3. where proceedings have been started under Part 8 of the Enterprise Act 2002 against a person before the commencement of the new law for the purposes of the continuation and completion of those proceedings.
  4. Paragraph 3 makes provision for how the new law applies to continuing conduct and paragraph 4 makes provision for its application to undertakings given to an enforcer under Part 8 of the Enterprise Act 2002.
  5. Continuing conduct is an act or omission which starts before the new law has commenced (i.e. pre-commencement) but is repeated or continues on or after the new law’s commencement (i.e. post-commencement). Paragraph 3, subparagraph (2) provides that the new law applies in full to the continuing conduct to the extent that it takes place post-commencement. In these circumstances, paragraph 3, subparagraph (3) provides that the new law also applies in respect of the person’s pre-commencement conduct for the purposes of enabling the taking of enforcement action in relation to that conduct. However, paragraph 3, subparagraph (4) provides that in relation to the pre-commencement relevant infringement, a requirement under Chapter 3 or 4 of Part 3 can be imposed only if a requirement of a corresponding kind could have been imposed under the old law. This means that new enforcement powers, such as monetary penalties, cannot be applied retrospectively.
  6. Paragraph 3, subparagraph (5)) provides, regard may be had to the part of the continuing conduct which takes place pre-commencement for the purpose of enabling enforcement action in respect of the post-commencement conduct under the new law (paragraph 3, subparagraphs (5)). This ensures, for example, that the CMA can use its new direct enforcement powers (under Chapter 4 of Part 3) against a trader who is misleading a consumer by continuing to rely upon unfair contract terms post-commencement of the CMA’s new powers, albeit the relevant contract (containing the unfair terms) was agreed between the trader and the consumer pre-commencement of Chapter 4.
  7. Paragraph 4, subparagraphs (1) and (2) provide that where a breach of an undertaking given to an enforcer under Part 8 Enterprise Act 2002 takes place on or after the date of commencement of the new law, then the enforcer may only enforce this undertaking under the old law.
  8. However, if the enforcer considers that this act or omission constituting the breach of the undertaking may also be a relevant infringement under the new law (or a person is an accessory to the infringing practice), the enforcer has a choice whether to enforce that breach under the new law, or the old law (if the act or omission would have amounted to a domestic or Schedule 13 infringement under Part 8 of the Enterprise Act 2002) (paragraph 4, subparagraphs (3) to (5)). If the enforcer decides to pursue the breach under the new law (i.e. under Chapter 3 or, in the case of the CMA, under Chapter 4 of Part 3), then the matter must be treated as a "new" case. For example, in relation to beginning Chapter 3 enforcement, it may be appropriate to commence consultation under section 155. This approach ensures that a breach of an undertaking given to an enforcer under Part 8 Enterprise Act 2002 cannot result in a penalty being imposed retrospectively under the Part 3 enforcement regimes.
  9. Paragraph 4, subparagraph (6) makes provision for the treatment of a breach of undertaking where the relevant act or omission is continuing.
  10. Paragraph 5 sets out the transitional provisions that apply to information notices under paragraph 14 of Schedule 5 to the Consumer Rights Act 2015. The new powers and related provisions in Schedule 17 to the Act for the court and the CMA to enforce compliance with these information notices may only be exercised in relation to information notices given on or after the relevant commencement date of the Act. This means that monetary penalties for non-compliance with information notices cannot be imposed retrospectively.

Section 216: Enforcement of requirements relating to secondary ticketing

  1. This section amends consumer protection legislation to confer additional enforcement powers on the CMA in relation to secondary ticketing.
  2. Subsections (2) and (4) amend section 93 of, and Schedule 10 to, the Consumer Rights Act 2015 to make the CMA an enforcement authority for the purposes of Chapter 5 of Part 3 of that Act. Chapter 5 (inter alia) requires, in relation to the re-sale of tickets for recreational, sporting or cultural events in the United Kingdom, operators of secondary ticketing facilities and persons re-selling those tickets on those facilities to provide specified information about those tickets. The enforcement provisions will allow the CMA to impose a financial penalty on a person for breach of the requirements of Chapter 5.
  3. Subsection (5) amends the Breaching of Limits on Ticket Sales Regulations 2018 (S.I. 2018/735) to give the CMA enforcement functions under those regulations. Those regulations make it an offence to use software to purchase tickets for those events in excess of any sales limit on the purchase of those tickets with a view to financial gain. Subsection (3) enables the CMA to use the investigatory powers in Schedule 5 to the Consumer Rights Act 2015 for the purpose of investigating offences under those regulations.
  4. The enforcement powers conferred by this section are available in addition to (and do not in any way limit) the other powers that the CMA has under Part 3 of this Act in relation to infringements of Chapter 5 of Part 3 of the 2015 Act and of the regulations.

Chapter 8: Interpretation of Part

Section 217: Supply of goods or digital content

  1. This section provides for how references to the supply of goods or digital content should be construed across Part 3. It restates, simplifies and updates relevant provisions in section 232 and section 233 of the Enterprise Act 2002.
  2. Subsection (2) provides that references to a person making the (actual) supply of goods and digital content is to be read as including references to a person seeking to make such supply.
  3. Subsection (3) clarifies that the supply of goods includes the construction of buildings and other structures by one person for another.
  4. The effect of subsections (4) and (5) is that in these types of agreements the dealer is treated as the supplier alongside the finance company which is technically the supplier under the contract with the consumer.

Section 218: Supply of services

  1. This section provides how references to the supply of services should be construed across Part 3. It restates and updates section 234 of the Enterprise Act 2002.
  2. Subsection (2) provides that references to a person making the (actual) supply of services is to be read as including references to a person seeking to make such supply and subsection (5) provides a non-exhaustive definition for what constitutes supplying services.
  3. Subsections (3) and (4) excludes a contract of employment between an employer and employee from the definition of supply of services as well as a contract of apprenticeship.

Section 219: Accessories

  1. This section sets out who is an accessory to the commercial practice of a body corporate. This section and section 220 replace section 222 of the Enterprise Act 2002.
  2. Where a body corporate has committed or is committing a relevant infringement, an accessory to such practice is a person who has a special relationship with the infringing body corporate and has consented or connived in the practice (subsection (2)). Subsection (2), paragraph (c) has the effect that an accessory cannot be an accessory to future infringing practices. An accessory could be subject to enforcement action under this Part in addition to or instead of the infringing body corporate.

Section 220: Special relationships

  1. This section defines what constitutes having a special relationship with a body corporate. It covers two scenarios – where a person is a controller of the body corporate (subsections (2), paragraph (a) and subsections (3) - (7)) or where a person is an officer of a body corporate or purporting to act in such capacity (subsection (2), paragraph (b)).

Section 221: Enhanced consumer measures

  1. This section defines three types of enhanced consumer measures, referred to as "redress", "compliance" and "choice" measures. It substantively replicates the definitions in section 219A of the Enterprise Act 2002. Enhanced consumer measures may be required under:
    1. (Court- based regime (Chapter 3))
      1. an enforcement order made by the court (see section 157(1));
      2. an undertaking accepted by the court (see section 157(1));
      3. undertakings accepted by enforcers (see section 164(1) but note section 177 relating to private designated enforcers and enhanced consumer measures);
    2. (CMA direct enforcement regime (Chapter 4))
      1. as a direction in a final infringement notice (see section 183(1)));
      2. an undertaking accepted by the CMA (see section 185(3))
  2. Subsection (2) describes redress measures, which include offering compensation or other redress to affected consumers. Subsection (5) explains that affected consumers are not limited to those consumers who have suffered loss as a result of the infringing practice (that is conduct that has given rise to the undertaking, notice or court order in question) but also covers consumers who have been otherwise affected. This may include non-financial losses or instances of distress or inconvenience.
  3. Where the infringing practice relates to a contract, subsection (2), paragraph (b) states that measures in the redress category can include giving consumers the option to terminate that contract. Subsection (2), paragraph (c) allows for measures intended to be in the collective interests of consumers in cases where affected consumers cannot be identified or doing so would require a disproportionate cost to those giving the undertaking or to those against whom an order or notice is made. Measures in these circumstances could include, for example, the business making an appropriate charitable donation (where that charity acts in the interests of consumers). Subsection (2), paragraph (c) only applies in the circumstances outlined above. It does not apply in circumstances where affected consumers have been identified and choose to decline the redress offered. Consumers retain the right to refuse offers of redress, whether in an order, notice or undertaking, and instead take their own civil action against the person that has caused them detriment.
  4. Subsections (3) and (4) describe compliance and choice measures. Compliance measures are intended to increase business compliance with the law and to reduce the likelihood of further breaches.
  5. Compliance measures might include the person subject to the order, undertaking or notice:
    1. appointing a compliance officer;
    2. introducing a complaints handling process;
    3. improving their record keeping; or
    4. signing up to an established customer review / feedback site.
  6. Choice measures help consumers obtain relevant information to enable them to make better purchasing decisions.

Section 222: Other interpretative provisions

  1. This section defines certain terms for the purposes of this Part. All terms that are not listed below are self-explanatory (or, where the definition of the term is found in another section, have been explained elsewhere in these explanatory notes).
  2. The definition of business is non-exhaustive and widely drawn. It includes a trade, craft or profession (whether or not they are carried on for gain and reward), the activities of public bodies and the activities of others carried on for gain or reward (monetary or otherwise). For example, a trader may offer free repairs forever to obtain goodwill or reputational advantage. The underlying policy intent is for any commercial practices where non-monetary gain is made by a trader, such as the act(s) of providing free repairs, to be within scope of the enforcement regimes.
  3. The definition of goods is non-exhaustive and includes buildings and other structures (as a subcategory of immovable property).

Section 223: Index of defined expressions

  1. This section is self-explanatory.

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