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The Enterprise Act received Royal Assent on 7 November
2002. It covers a range of measures to enhance Enterprise
through strengthening the UK's competition law framework,
transforming our approach to bankruptcy and corporate
rescue, and empowering consumers.
The Act builds on the progress made by the Competition
Act 1998, recent insolvency reforms and measures already
implemented in the 1999 consumer White Paper 'Modern Markets:
Confident Consumers'.
The substantive consumer and competition provisions of
the Act came into force on 20 June 2003. See Implementation
schedule for more information
The Enterprise Act has now been published here.
The Explanatory Notes
are available here.
Fact
Sheet
The OFT have published a guide
to the principal competition and consumer provisions of
the Enterprise Act and the Office's new role under the Act.
Main reforms in the Enterprise Act
The measures in the Enterprise Act will empower consumers,
modernise the insolvency regime so that it supports enterprise,
and help to make UK markets more competitive. The main
reforms in the Act are outlined below:
Office of Fair Trading
Replacement of the office of Director
General of Fair Trading with a new statutory authority
Competition Measures
Taking politics out of competition decisions
More transparent and accountable decision-making
by the competition authorities
Criminal sanctions with a maximum penalty
of five years in prison to deter those individuals who
dishonestly operate hardcore cartels
Greater opportunities for victims of anti-competitive
behaviour to gain redress
Consumer Protection Measures
Extending the Stop Now Orders regime
to protect consumers from traders who do not meet their
legal obligations
OFT to approve Codes of Practice
Empowering consumer bodies to make 'super-complaints'
Insolvency Reforms
Reform corporate insolvency law by restricting
the use of administrative receivership and streamlining
administration; making it quicker, more flexible, easier
to access and fairer
Provide a modern bankruptcy regime that
encourages entrepreneurship and provides a fresh start
to those who have failed through no fault of their own
Abolish the Crown's preferential right
to recover unpaid taxes ahead of other creditors
Modernise the financial regime of the
Insolvency Service
Office of Fair Trading
Replacement of the office of Director
General of Fair Trading with a new statutory authority
to be known as the Office of Fair Trading (OFT). OFT will
consist of a Board, headed by a Chairman. We expect the Board
to have a majority of non-Executive members. This is a significant
depersonalisation of competition and consumer regulation.
The new authority will come into being on 1 April 2003, with
John Vickers as its first Chairman. After that appointment
the roles of Chairman and Chief Executive will be held by
two separate people.
Competition Measures
Taking politics out of competition
decisions - instead expert, independent, competition
bodies will take decisions on merger and market investigations
using competition-based tests.
More transparent and accountable
decision-making by the competition authorities. The
competition authorities will issue comprehensive guidance
on the new regime. They will be obliged to consult on
and give reasons for all significant decisions. There
will be a new right of appeal to the Competition Appeals
Tribunals in merger and market inquiries. Inquiries will
have to be completed within statutory maximum timetables.
Reforms to the Competition Commission's procedures will
allow for a more transparent and better informed remedy-setting
phase following the publication of provisional competition
findings.
Criminal sanctions with a maximum
penalty of five years in prison to deter those individuals
who dishonestly operate hardcore cartels - agreements
to fix prices, share markets, limit production and rig
bids. The offence will be tightly defined ensuring that
honest businesspeople will have nothing to fear. US research
shows that cartels raise the prices of the affected goods
and services by 10 per cent on average.
Greater opportunities for victims
of anti-competitive behaviour to gain redress - making
it easier to bring claims for damages for losses suffered
due to anti-competitive behaviour (there have been no
successful actions for 30 years). Consumer bodies will
be able to make claims on behalf of individuals who have
suffered.
Consumer Protection Measures
Extending the Stop Now Orders to
protect consumers from traders who do not meet their legal
obligations. The new enforcement regime will apply
to infringements of a wide range of legislation protecting
the economic interests of consumers, such as failing to
carry out a service (e.g. building work or home maintenance)
to a reasonable standard. This will also ensure that honest
traders, especially small businesses, do not face unfair
competition from those who engage in unlawful conduct.
OFT to approve Codes of Practice.
The OFT will be able to give formal approval to codes
of practice - helping consumers identify businesses they
can trust e.g. car repair garages or estate agents for
example. Businesses involved in the scheme will also gain
a marketing advantage.
Empowering consumer bodies to make
'super-complaints' to the OFT about features of a
market which are harming consumers. The OFT will be required
to respond within 90 days. This will significantly strengthen
the voice of consumers on competition matters.
Insolvency Reforms
Reform corporate insolvency law
by restricting the use of administrative receivership
and streamlining administration; making it quicker, more
flexible, easier to access and fairer;
- The Act will streamline the system of administration;
removing the need for a court hearing in most cases, whilst
retaining its collective nature and providing adequate safeguards
for all stakeholders. This will make administration more
accessible, cheaper and less bureaucratic.
- The Act will restrict the use of administrative receivership
and shifts the balance in favour of administration, which
is a collective procedure and takes account of the interests
of all creditors.
Provide a modern bankruptcy regime
that encourages entrepreneurship and provides a fresh
start to those who have failed through no fault of their
own. At the same time they provide effective protection
against the small minority of bankrupts who abuse their
creditors and the public.
- Those who have failed through no fault of their own
and who co-operate with the Official Receiver will be
discharged from their debts and released from restrictions
after [a maximum of 12 months].
- The Act will introduce a new Bankruptcy Restrictions Order
regime, where the minority of bankrupts who have abused
their creditors and the public will face restrictions from
between 2 and 15 years.
- The Act makes mechanisms to remove many of the irrelevant
and outdated restrictions that currently apply to bankrupts,
which will help reduce the stigma of bankruptcy.
- The Act will limit the period in which a trustee may deal
with an interest in a bankrupt's (or former bankrupt's)
home to three years in most cases.
Abolish the Crown's preferential
right to recover unpaid taxes ahead of other creditors.
This will bring real benefits to unsecured creditors,
including many small firms.
Modernise the financial regime of
the Insolvency Service. Reforms to the Insolvency
Services Account will mean that creditors, including many
small firms, receive the maximum possible investment return.
Simplifying the fee structure will bring increased transparency
and simplicity.
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