Section menu

Enterprise Act

The Act builds on the progress made by the Competition Act 1998, recent insolvency reforms and measures already implemented in the 1999 White Paper ‘Modern Markets: Confident Consumers’ (URN 99/1184).

Key Facts:

• The Enterprise Act contains measures that reform competition law, strengthen consumer protection and modernises the insolvency regime.
  
• The Act included provisions formally creating the Office of Fair Trading, the Competition Appeal Tribunal (CAT) and its supporting body the Competition Service.
  
• The current newspaper merger regime will remain in place for the time being as it is being updated by the Communications Bill.
  
• The separate water merger scheme will be commenced once the Water Bill has clarified the scope of the régime.
  
• Some measures brought in by the Act involved personal insolvency (bankruptcy) reform and also reform of the Insolvency Service financial regime. Details may be found on the Insolvency Service website.

Main Reforms in the Enterprise Act

Office of Fair Trading

• Establishes the OFT as an independent statutory body with a Board, and gives it a greater role in ensuring that markets work well to the benefit of all.

Competition Measures

• The introduction of the ‘substantial lessening of competition’ test to replace previous wider public interest test.
  
• A turnover test replaces the previous current assets test for determining which mergers qualify for investigation.
  
• The Competition Appeals Tribunal will hear cases by third parties alleging that companies have infringed the competition laws.
  
• Criminal sanctions with a maximum penalty of five years in prison to deter those individuals who dishonestly operate hardcore cartels.
  
• New power for the OFT to ask the High Court for directors to be disqualified for up to five years for competition offences.
  
• Consumer bodies able to make complaints (known as ‘supercomplaints’) as a representative body to the Office of Fair Trading about markets that are not working well for consumers.
  
• There are greater opportunities for victims of anti-competitive behaviour to gain redress. Consumer bodies will be able to make claims on behalf of individuals who have suffered.

Consumer Protection Measures

• Extending the Enforcement Orders regime (Stop Now Orders) to protect consumers from traders who do not meet their legal obligations.
  
• OFT to approve Codes of Practice.

Insolvency Reforms

See Insolvency Service web site

OFT Guide

The Office for Fair Trading (OFT) has published a guide to the principal competition and consumer provisions of the Enterprise Act and also the Office’s new role under the Act.