Reform of the UK Competition Regime – The Competition Provisions of the Enterprise and Regulatory Reform Act

 The Enterprise and Regulatory Reform Bill received Royal Assent on 25 April 2013. The changes brought on by the Enterprise and Regulatory Reform Act (the "Act") are wide ranging. It is possibly the single most substantive reform of UK's competition regime. The Act is expected to fully come into force by April 2014.

The competition provisions of the Bill went through both the Houses with very few substantive changes to the original proposals. Two notable changes are:

• the Secretary of State was given new powers to remove the competition functions of the sectoral regulators if s/he considers that it is appropriate to do so for the purpose of promoting competition; and
• the new defences to committing a cartel offence were added, and the dishonesty test was removed.

Summary of changes

•  The Competition Commission (CC) and the competition functions of the Office of Fair Trading (OFT) are merged into a single competition authority, the Competition and Markets Authority (CMA). The CMA is due to come into legal existence in October 2013 and will become fully operational, with the functions of the OFT and CC transferred to it, in April 2014.
• Changes to the cartel offence where the dishonesty test has been removed from the offence in order to make it easier to prosecute. The new definition now refers to agreements not made openly. In addition, individuals charged with the cartel offence will have a defence if they can show they did not intend to conceal the nature of the cartel arrangements or where they took reasonable steps to seek legal advice.
• The existing administrative model for antitrust enforcement is maintained but a number of enhancements have been made in order to improve the quality of decisions and to reduce the length of time to resolve cases.
• The merger control regime remains voluntary and the current jurisdictional thresholds are not being changed, but the CMA will have greater powers to keep business separate and prevent further integration. New statutory timetables have been introduced for Phase 1 review, for undertakings in lieu of a Phase 2 reference, and for the remedies implementation at the end of Phase 2.
• Statutory timetables have been introduced for all stages of the market investigations process. The CMA has been given powers to carry out cross-market investigations in order to deal with issues that are common to a number of markets in one investigation.

Click here for a briefing which contains a more detailed overview of the various changes introduced by the Act.