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