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Clause 204: Enforcers
476. This clause deals with those bodies who are to have enforcement powers under this Part.
477. Three categories of enforcement bodies are defined: 'general enforcers', 'designated enforcers' and 'Community enforcers'.
478. 'General enforcers' are the OFT and every weights and measures authority in Great Britain (trading standards departments) (subsection (1)).
479. The Secretary of State will have an order-making power to confer enforcement powers upon other UK public bodies and private consumers organisations that have as one of their purposes the protection of the collective interests of consumers (subsection (2)). These bodies collectively are defined as 'designated enforcers'. An order under this section may designate a body for the purposes of domestic and/or Community infringements, and for different types of infringement within each of those categories (subsection (6) and (7)).
480. The Secretary of State may only confer enforcement powers on a public body if it is independent (subsection (3)) and on a private consumer organisation if it fulfils such objective criteria as the Secretary of State is required to specify by order (subsection (4)). The designation of a body by virtue of subsection (3) will be conclusive evidence that the body is a public body for the purposes of this Part. This will be relevant, for example, in relation to whether the enforcer is to have the statutory power to obtain documents and information under clause 216 (subsection (8)).
481. Regulation 4 of the SNORs contains the existing power to designate private consumer organisations (in the SNORs called 'other UK qualified entities') and sets out criteria according to which they may be designated. It is anticipated the Secretary of State will set similar criteria for designating private consumer organisations for the purposes of Community infringements, but she may decide to set different criteria in respect of domestic infringements.
482. It is intended that the very first order made will be to designate the public enforcement authorities (in the SNORs called 'public UK qualified entities'), other than those who are general enforcers under this Part, at present listed in Schedule 3 to the SNORs for Community infringements. It may also designate any private bodies who may have been designated as 'other UK qualified entities' for Community infringements by the time this Part of the Act comes into force.
483. Community enforcers are entities from other EEA States that are listed in the Official Journal of the European Communities under Article 4.3 of the Injunctions Directive (subsection (5)).
484. At the request of a designated enforcer who has been designated for the purposes of one or more Community infringements, the Secretary of State must notify the European Commission that it should be added to the list of bodies published in the Official Journal of the European Communities as being qualified to bring proceedings in all Member States. The notification to the Commission must include the types of Community infringement in respect of which the body is designated, in addition to the name and a general description of the purpose of the body, which are required under Article 4(2) of the Injunctions Directive (subsection (10)). It is up to the Commission how it deals with the publication, but the current Official Journal entry for Denmark includes a reference to the individual directives for which each of the Consumer Ombudsman and Danish Medicines Control Agency are qualified to bring actions.
485. The Secretary of State is required to notify the Commission if a designated enforcer ceases to be designated for the purpose of Community infringements or if its designation in relation to such infringements is varied. The Secretary of State must also inform the Commission of any change in the name or purpose of a designated enforcer (subsection (11)).
Clause 205: Consultation
486. This clause applies if an enforcer thinks that an infringement has occurred, is occurring, or, in the case of a Community infringement, is likely to occur. Except where the OFT thinks that an application for an enforcement order should be made without delay, enforcers must first consult the OFT (if it is not the enforcer) and the person against whom the enforcement order may be made and give the latter the opportunity to stop the infringement occurring, continuing or being repeated, as the case may be, without the need for court action (subsections (1) to (3)). It may be, for example, that the trader was not aware that his or her conduct constituted an infringement or that he or she is able to show that it was an isolated occurrence. The enforcer may then decide it is not necessary to make an application. It may also be that the trader decides to offer an undertaking to the enforcer under clause 210.
487. If the infringement is not stopped within 14 days after the request for consultation is received, the enforcer may make an application for an enforcement order under clause 208 without further delay (subsection (4)(a)). This period is reduced to 7 days where the enforcer intends to make an application for an interim enforcement order under clause 209 (subsection (4)(b)) (see below). The Secretary of State will have an order-making power to make rules as to consultation (subsection (5)). The Department plans to use this to provide for addresses for service of the request for consultation and to specify a deemed date of receipt of a request for consultation, for example two days after posting first class.
488. The purpose of enforcers being required to consult the OFT is to enable the OFT to perform a co-ordinating role in relation to proceedings under this Part. This will enable the OFT to facilitate the sharing of information between enforcers to promote consistent enforcement throughout the country and to make directions under clause 207 to avoid the risk of traders facing multiple actions in relation to the same infringement. It is not envisaged that the OFT should become directly involved in the consultations with the trader except where he or she is the enforcer or has been asked to do so by the trader.
Clause 206: Applications
489. This clause is concerned with the person against whom an application for an enforcement order may be made, the types of infringement in respect of which particular enforcers are to have the power to make applications to the courts, and the courts that are to hear such proceedings.
490. An application for an enforcement order (including an interim enforcement order) must be made against the person the enforcer thinks has engaged or is engaging in conduct that constitutes an infringement or, in the case of a Community infringement, is likely to do so (subsection (1)).
491. General enforcers may make applications for enforcement orders in respect of all infringements to which this Part applies (subsection (2)).
492. A designated enforcer may make an application for an enforcement order only in respect of those infringements for which it is designated (subsection (3)).
493. A Community enforcer may make an application for an enforcement order only in respect of a Community infringement (subsection (4)).
494. An application for an enforcement order may be made to the High Court or a county court if the person against whom the order is sought carries on business or has a place of business in England and Wales; or to the Court of Session or the Sheriff if the person carries on business or has a place of business in Scotland. There is no presumption that one court or the other is more appropriate, but it would be possible for the courts to transfer proceedings in accordance with normal procedure (subsection (5)).
495. The court may examine whether the purpose of a Community enforcer justifies it taking action in the particular case (subsection (6)). Where the court thinks that the purpose of the Community enforcer does not justify it taking action, it may refuse the application solely on that ground (subsection (7)). The purpose of a Community enforcer in this context is the purpose of the body for the purpose of the Injunctions Directive, in particular the infringements in respect of which it has the power to act in its own State (subsection (8)).
496. An enforcer that is not the OFT must notify the OFT of the outcome of an application made under this section (subsection (9)). This would include the terms of any undertaking given to, or order made by, the court.
Clause 207: Applications: directions by OFT
497. This clause provides that, if the OFT believes that an enforcer or enforcers other than itself intends to apply for an enforcement order in respect of a particular infringement, it may direct which enforcer may bring such proceedings, or that only it may do so (subsections (1) and (2)). Where the OFT directs that only it may make such application it may, instead of doing so immediately, seek a voluntary undertaking from the trader that he or she will stop the infringement or refer the matter to another regulatory or self-regulatory body to deal with (subsection (3)). The OFT may vary or withdraw any direction made under this clause (subsection (4)).
498. The effect will be that if the OFT becomes aware that an enforcer (other than a Community enforcer) is intending to make an application, but there are regulatory or self-regulatory mechanisms that the enforcer has not attempted to use, the OFT could make a direction to the effect that only it can apply. This will be the case even if the OFT had no prior knowledge, and therefore no intention to apply itself, before it became aware of the alleged infringement or the other enforcer's intention.
499. The clause will also allow the OFT to prevent a multiplicity of applications being made by different enforcers against the same trader in respect of the same infringement. The OFT could decide which enforcer is best placed to proceed with the application. It may be, if, for example, a majority of the trader's customers are in another EEA State, that the OFT could direct that a Community enforcer should bring proceedings and not others, but this is not likely to happen very often.
500. The OFT may take such steps as it thinks appropriate for bringing a direction given under this section to the attention of other enforcers who may be affected by it. This will minimise the risk that they will enter into negotiations with the trader over the same infringement (subsection (5)).
501. This section does not prevent an application for an enforcement order being made by a Community enforcer because the only constraint permitted by the Injunctions Directive on such bodies is the requirement to give the OFT two weeks' notice of their intention to make an application to the courts (subsection (6)).
Clause 208: Enforcement orders
502. Where the court is satisfied that the person against whom proceedings have been brought has engaged in conduct that constitutes an infringement or, in the case of a Community infringement, is likely to do so, the court may make an enforcement order against that person (subsections (1) to (3)). The Department considers that it is a requirement of the Injunctions Directive for the courts to be able to make orders to stop threatened Community infringements. In considering whether to make an enforcement order, the court must have regard to whether the respondent has failed to comply with any voluntary undertaking he or she may have given to the enforcer under clause 210 (subsection (4)). The order must indicate the nature of the conduct that constituted the infringement and must require the respondent:
as provided by subsections (5)-(7). The last element will prevent a sole trader from evading the scope of an enforcement order by acquiring a company with a nominal share capital to operate his or her business.
503. In addition, the court may order the respondent (but not the enforcer) at his or her expense to publish its decision (in full or in part) in such form as deemed adequate and/or publication of a corrective statement with a view to eliminating or reducing the continuing effects of the infringement (subsection (8)). This is a requirement of the Injunctions Directive. An obvious example for its use would be in respect of an advertisement that has been found to be misleading. It would be for the discretion of the courts when to exercise this power and how the information should best be published to bring it to the attention of consumers. However, whether or not the court exercises this power, enforcers would be free to publish the terms of court orders and undertakings given to the court (see below).
504. As an alternative to making an enforcement order, the court will have the discretion to accept an undertaking from the respondent. The undertaking may take the same form as the order, or may be to take such steps as the court considers necessary will prevent him or her doing anything the order would have prohibited him or her from doing (subsection (9)). In these circumstances, the court may also accept a further undertaking from the respondent to publish at his or her expense the terms of the undertaking (in full or in part) or a corrective statement (subsection (10)).
505. Where the court accepts an undertaking from the respondent in respect of conduct that constitutes an infringement, it cannot make an enforcement order in respect of that finding (subsection (11)).
506. An injunction has effect only in the jurisdiction (England and Wales, or Scotland or Northern Ireland) in which it was granted. The effect of subsection (12) is that an enforcement order made under this Part will apply throughout the UK. It will therefore be capable of stopping a person who is the subject of an order in one jurisdiction of the UK from harming the collective interests of consumers in the other two jurisdictions.
Clause 209: Interim enforcement order
507. This clause provides for the making of applications for, and the award by the courts of interim enforcement orders when certain conditions are satisfied.
508. Where it is alleged that a person has engaged in conduct that constitutes an infringement or, in the case of a Community infringement, is likely to do so, and it appears to the court that:
the court may make an interim enforcement order. An interim order may be made without notice being given to the person named in the application if it appears to the court that it is appropriate to do so (subsection (1)). But subsection (6) requires that where an application for an interim enforcement order is made without notice being given to the person named in the application it must explain why no notice has been given.
509. An application for an interim enforcement order without notice may be necessary, for example, if an enforcer becomes aware that a misleading advertisement is about to be published in a national newspaper or if a trader sets up in temporary premises to sell goods of unsatisfactory quality or to mislead consumers as to the goods they are purchasing (so-called 'one day sales').
510. An interim enforcement order must indicate the nature of the alleged conduct will and require the person against whom it is made:
as provided by subsections (2) to (4).
511. An interim enforcement order may be applied for before an application for an enforcement order is made and at any time until an application for an enforcement order is determined (subsection (5)). However, an enforcer other than the OFT must not make an application for an interim enforcement order without complying with clause 209. In cases of great urgency and whenever an application is made without notice, the enforcer should have obtained the agreement of the OFT to dispense with the prior consultation requirement.
512. The court may vary or discharge an interim enforcement order on the application of either the enforcer who applied for the order or the person against whom it is made (subsection (7)). An interim enforcement order ceases to have effect on the determination of the application for an enforcement order (subsection (8)).
513. As an alternative to making an interim enforcement order the court may accept an undertaking from the respondent. The undertaking may take the same form as the interim order, or may be to take such steps as the court considers necessary will prevent him or her doing anything the order would have prohibited him from doing (subsection (9)).
514. As with enforcement orders, an interim enforcement order made in one part of the UK will apply throughout the UK (subsection (10)).
Clause 210: Undertakings
515. This clause provides that where an enforcer has the power to make an application to the court for an enforcement order it may accept an undertaking from a person who has engaged, or is engaging, in conduct that constitutes an infringement or, in the case of a Community infringement, is likely to do so. The undertaking must require that person:
as provided by subsections (2) to (5). An enforcer may decide that such an undertaking will avoid the need for it to apply for an order. An enforcer must notify the OFT of the terms of any undertaking given to it under this section and the identity of the person giving it (subsection (6)). If a person gives an undertaking and fails to comply with it, the court must take this into account in considering whether to make an enforcement order.
Clause 211: Further proceedings
516. This clause applies where an enforcer believes that an enforcement order (including an interim enforcement order) or an undertaking given to the court has been breached. In any such case, either the enforcer who made the application for the order or the OFT will be able to make a further application to the court to enforce the order (subsections (1) and (2)).
517. This further application might lead the court to find that its order or undertakings given to it have been breached and therefore that the respondent is in contempt of court. If the court finds that a breach has been committed, it can impose a fine or a term of imprisonment not exceeding two years.
518. However, where a further application is made to the court in respect of a failure to comply with an undertaking given to the court, the enforcer may instead make an application for an enforcement order or for an interim enforcement order (subsection (3)). Similarly, the court may make an enforcement order or an interim enforcement order instead of or as well as finding that the respondent is in contempt (subsection (4)). An application to enforce an undertaking given to the court must be made to the court that accepted the undertaking (subsection 5(b)).
519. An enforcer (other than the OFT) must notify the OFT if it makes an application to the court in respect of a failure to comply with an enforcement order, an interim enforcement order, or an undertaking given to the court. It must also notify the OFT of any order made by the court on the application. Where an enforcer makes an application to enforce an order the consultation requirements in clause 205 and the OFT's powers of direction in clause 207 do not apply: the purpose of notifying the OFT is to keep it informed of proceedings against particular traders to assist its co-ordination function.
Clause 212: Community infringements: proceedings
520. This clause has two purposes. First, it provides general enforcers and designated enforcers that are public bodies with any necessary additional powers to their existing statutory powers to enable them to bring proceedings under the legislation implementing the Injunctions Directive in any EEA State to stop Community infringements that originate there but that harm the collective interests of consumers in the UK (subsections (1) and (2)). Whether private designated enforcers will have these powers will depend upon their own constitutions.
521. Second, it enables general enforcers and designated enforcers (both public and private) to co-operate with each other and with any Community enforcer for the purpose of bringing proceedings in other EEA States and to bring proceedings in the UK jointly with, or on behalf of, a Community enforcer or to facilitate the exercise by a Community enforcer of its functions (including accepting undertakings under clause 210) under the provisions of this Part (subsections (3) and (4)). There is no need for the clause to refer to an enforcer being able to apply jointly with or on behalf of another enforcer because there is no restriction on the enforcer's ability to apply in these circumstances. Whether a body is entitled to bring proceedings and in respect of which infringements is determined by clause 204.
Clause 213: Bodies corporate: accessories
522. This clause provides that if a body corporate engages in conduct that constitutes a domestic infringement or Community infringement with the consent or connivance of a person (an accessory) who has a special relationship with that body corporate, the consent or connivance is also conduct that constitutes the infringement (subsections (1) and (2)). The effect is that an application can be made under clause 206 for an enforcement order against an accessory who consents to or connives at such conduct.
523. The court will have the power to make an order against, or to accept an undertaking from, an accessory whether it has made an order or accepted an undertaking from the body corporate (subsections (5) and (6)). Similarly, an enforcer may accept an undertaking from an accessory whether or not it accepts an undertaking from the body corporate (subsection (7)).
524. The provisions of this Part apply to infringements consisting of consent or connivance as they apply to other infringements within the exception that the terms of orders and undertakings are modified slightly by subsections (8) and (9) of this clause.
525. Where an order is made as referred to in subsection (5) or an undertaking is accepted as referred to in subsections (6) or (7), it must require the accessory:
as provided by subsection (8).
526. An accessory may be either a controller of a company or a director, manager, secretary or other similar officer (or a person purporting to act in such a capacity). A 'controller' means someone who instructs the directors of a company as to how to act or someone who, together with any associates, controls one third or more of the voting power in the company. 'Associate' is defined in section 184 of the Consumer Credit Act 1974 and principally covers husbands and wives, relatives and business partners, and companies who share a 'controller'.
Clause 214: Bodies corporate: orders
527. Where an enforcement order (including an interim enforcement order) is made against a company, conduct by a company owned by that company or by a sister company would not be a breach of the order. This clause will give the court wide power to deal with this situation.
528. This clause will empower the court, when making an enforcement order or interim enforcement order under clause 208 or 209, respectively, to direct that the order will be binding upon all other members of a group of interconnected bodies corporate of which it is a member (subsection (2)). 'Interconnected bodies corporate' and 'group of interconnected bodies corporate' are defined by reference to the definition of 'subsidiary' in section 736 of the Companies Act 1985 (subsections (3) to (5)).
529. Further, if a body corporate subject to an enforcement order (including an interim enforcement order) becomes a member of a group of interconnected bodies corporate subsequently, or the group is enlarged, the OFT will be able to apply to the court for a direction that the order be binding on the new members or member.
Clauses 215 and 216: OFT & Other enforcers
530. These clauses will provide the OFT and designated enforcers who are public bodies with a statutory power to request information (including documents) by means of a notice served on any person.
531. These enforcers will be able to request this information for the purpose of enabling them to consider whether to exercise their functions under this Part (clause 215(2)(a) and clause 216(3)(a)). This may be the case, for example, where it is not possible on the basis of ad hoc complaints from consumers to determine whether the cause of complaint is the result of an accidental mistake or part of a deliberate pattern of unfair conduct (e.g. mail order companies sending out goods different from those that were ordered).
532. These enforcers will also be able to request information for the purpose of monitoring compliance with enforcement orders (including interim enforcement orders) and undertakings to enable them to decide whether to bring proceedings to enforce a court order or undertaking. However, a designated enforcer that is a public body can only use this power to monitor compliance with an enforcement order or undertaking granted in proceedings it has brought or with an undertaking given voluntarily to it. No such restriction applies in relation to the OFT, in part because the OFT will have the power to bring a further application to enforce a court order or undertaking given to the court granted in proceedings brought by any enforcer (clause 215(2)(d) and clause 216(3)(b)).
533. Neither designated enforcers that are private bodies nor Community enforcers will have a statutory power to request information themselves. The OFT will therefore have power to request information on behalf of these enforcers to enable them to consider whether to exercise their functions under this Part (clause 215(b) and (c)).
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