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