On 23 May 2012, the Department for Business, Innovation and
Skills (BIS) published the Enterprise and Regulatory
Reform Bill (the Bill), which was introduced into Parliament on the
same day. The Bill implements expected reforms to the UK
competition regime, alongside reforms relevant to many other areas
of business practice, including employment law, green investment,
copyright law and executive pay.
Here, we concentrate on the competition reforms, which are found in
Parts Three and Four of the Bill. The reforms involve extensive and
detailed changes to all competition law enforcement
procedures. We set out the main aspects below.
Previously, on 15 March 2012, BIS had confirmed its intention to
overhaul the UK competition rules. Please see
here for our Law-Now on the March announcement, which the
current Bill largely reflects.
The main reform: the creation of the Competition and
A new Competition and Markets Authority (the CMA) is established by
Part Three of the Bill, which also sets out the provisions relating
to the governance and decision-making powers of the CMA. In
addition, the Office of Fair Trading (the OFT) and the Competition
Commission are abolished under Part Three. The provisions of Part
Three also transfer to the CMA the functions of the Competition
Commission and the competition functions of the OFT.
In relation to antitrust investigations, Part Four contains a
number of provisions that will reinforce the enforcement and
investigation powers of the CMA in practical terms when it comes to
investigating anti-competitive agreements or the abuse of market
power. However, the overall structure of investigations is
For certain regulated sectors, the regulator has concurrent powers
with the competition authorities to enforce the antitrust
rules. These powers will be unchanged, but various provisions
in the Bill will result in the priority application of the
antitrust rules to these sectors in preference to rules under
specific sectoral regulation and will result in an enhanced power
for the CMA to decide whether to exercise its Competition Act 1998
powers in respect of a case rather than the sectoral regulator.
Mergers and markets
For merger control, the most significant point is that there
will be no move to a mandatory notification regime, which was
debated in the first consultation phase which led to these reforms.
The changes to the merger control regime are therefore procedural
only, the most significant of them being the imposition of stricter
time limits on the CMA.
The Bill strengthens the CMA's conduct of market investigations
by introducing new powers to:
(i) include more than one market in the same investigation;
(ii) investigate public interest issues (which, at least
initially, denotes issues where national security is at stake)
alongside competition issues at the request of the Secretary of
A significant change to competition enforcement is to the
criminal law cartel offence. This offence currently requires a
finding of "dishonesty". This requirement will be removed
and will be replaced by the introduction of new circumstances in
which the offence is not committed, namely where affected parties
are notified of "relevant information" or if that
information is published in a prescribed manner.
To date, enforcement of these rules has been problematic.
Removal of the dishonesty requirement may mean that a greater
number of criminal prosecutions are successfully pursued. It
remains to be seen whether the "relevant information"
provisions can be applied with clarity.
The reforms of the competition regime are motivated above all by
considerations of efficiency and resource allocation. There are few
major surprises or radical changes in the new regime, although a
large number of procedural changes have been introduced by the Bill
which will be of practical importance in all forms of
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