House of Commons - Explanatory Note
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Clause 218: Notices: enforcement

534.     This clause sets out the remedies that are to be available to the OFT and designated enforcers that are public bodies if a person defaults in complying with a notice.

535.     If a person fails to furnish the information requested within the time specified, an application may be made by the enforcer that served the notice to the court for an order requiring the default in compliance to be made good. Where the court is satisfied that the person has failed to comply with a notice and that the information is reasonably required for the purposes set out in clauses 215 and 216, it may make an order requiring the person to do anything it is necessary to do to comply with the notice. Where the court makes such an order, it may order costs against the person in default or, if the person is a corporate body, against any of its officers responsible for the default.

Miscellaneous

Clause 219: Evidence

536.     Subsection (1) provides that convictions in any related criminal proceedings in Great Britain may be used as evidence in proceedings under this Part.

537.     Where an alleged infringement would be enforceable by civil proceedings (i.e. a breach of contract or a breach of a non-contractual duty owed to a person or some Community infringements), subsection (2) will allow related judgements in the civil courts to be admitted in evidence, except where they have been overturned on appeal (subsection (3)).

538.     This will allow related judgements in the criminal and civil courts to be admitted in evidence for the purpose of proving these infringements (but such findings are not relevant to the issue of whether the conduct harms the collective interests of consumers).

Clause 220: Advice and information

539.     The OFT is required (as soon as is reasonably practicable) to prepare and publish advice and information explaining the provisions of this Part and indicating how it expects them to operate in practice. This will promote consistent enforcement across the country. In preparing any advice and information, the OFT must consult such persons as it considers representative of those affected. This advice and information may be published in such form and in such manner as the OFT considers appropriate.

Clause 221: Notice to OFT of intended prosecution

540.     This clause replaces section 130 of FTA 1973 and applies if a local weights and measures authorities in England and Wales intends to start proceedings for an offence under an enactment or subordinate legislation the Secretary of State may specify for the purposes of this section (subsection (1)).

541.     The authority must give the OFT notice of its intention to start proceedings, together with a summary of the facts on which the charges are to be founded (subsection (2)). The authority must postpone proceedings for 14 days or until the OFT has notified the authority that it has received the notice and the summary of the facts (subsection (3)). The authority must also notify the OFT of the outcome of the proceedings (subsection (4)).

542.     The Department's intention is that the enactments and subordinate legislation to be designated for this section will mirror those a breach of which will be a domestic infringement or Community infringement for the purposes of this Part. This will reinforce the OFT's co-ordination role in respect of the legislation to which this Part applies. For example, the OFT could inform one authority that another is prosecuting or that an enforcement order has been granted. This may lead the authority to decide it is not necessary to prosecute. Proceedings will not however be invalid simply by virtue of the fact that the OFT had not received 14 days' notice of the intended prosecution.

543.     This clause does not apply in relation to Scotland, where all criminal prosecutions are brought by the Procurator Fiscal.

Clause 222: Notice of convictions and judgments to OFT

544.     This clause will give the courts in the UK the power to notify the OFT of convictions and judgments that might not otherwise be brought to its attention, for the purpose of the OFT considering whether to exercise its functions under this Part or under the Estate Agents Act 1979 ('EAA'). It is immaterial that proceedings have been finally been disposed of by the courts. Under the EAA, the DGFT has the power to issue a warning notice or a banning order preventing a person from acting as an estate agent. This clause replaces section 131 FTA 1973.

Interpretation

Clause 223: Goods and services

545.     Subsections (2) and (3) provide a definition of 'goods' and the 'supply of goods' for the purposes of this Part, including in relation to the meaning of 'consumer'. These definitions are identical in substance those contained in section 137 (2) FTA 1973.

546.     Subsections (4) and (5) follow section 138(3) FTA 1973 in extending the definition of goods and services. Subsection (4) states that goods or services supplied wholly or partly outside the UK must be taken to be supplied to or for a person in the UK if the conditions in subsection (5) are satisfied.

Clause 224: Supply of services

547.     This clause follows the definition of 'supply of services' in section 137(3) of FTA 1973, with two modifications. The first modification is the inclusion of new subsection (4), which is intended to ensure that a person who receives, or obtains copies of, computer software or data such as information, music or photographs electronically for their own use is covered by the definition. Such persons are not receiving anything in physical form and so are not receiving 'goods'. This provision ensures that such consumers will be considered to be receiving a service.

548.     The second change is the omission from the definition of 'supply of services' of sections 137(3)(c), (d), (e) and (g) of FTA 1973, which relate to the making of arrangements to permit the use of land in certain specified circumstances. The intention is that the Department will make a statutory instrument under the order-making power in subsection (7) to reinstate these provisions before this Part of the Act comes into force.

PART 9: INFORMATION

Introduction

549.     This Part creates a new gateway that sets out general restrictions and conditions for the disclosure of competition and consumer information held by public authorities. It reflects the Government strategy of widening and harmonising the gateways through which information can be disclosed in the UK and overseas and at the same time introduces appropriate safeguards in respect of permitted disclosure of information.

550.     The Anti-Terrorism, Crime and Security Act 2001 introduced a new gateway (and amended numerous existing gateways) to allow the disclosure of certain information to UK and overseas authorities for the purpose of pursuing criminal investigations or proceedings. The provisions in this Part create a corresponding gateway for competition and consumer information in relation to criminal matters. However, they also create a gateway to allow certain information to be disclosed for use in relation to certain civil investigations and proceedings in the UK and overseas. This wider gateway is necessary for the disclosure of information relating to consumer and competition matters as overseas enforcement of such legislation is often under a civil regime.

551.     The provisions in this Part will enable a public authority to disclose information to facilitate the exercise of its own statutory functions and certain statutory functions of other persons and for the purposes of any criminal investigations or proceedings.

552.     With regards to overseas public authorities, the provisions are more limited. It will be possible to disclose information to any overseas authority for the purpose of any criminal investigations or proceedings. However, for the purpose of civil proceedings, information can only be disclosed to those public bodies involved in the enforcement of consumer or competition legislation. In addition, competition information obtained under the Financial Services and Markets Act 2000 and certain sensitive commercial information (for example, information connected to market and merger investigations) is expressly excluded from the overseas gateway (regardless of whether the information is required in relation to a civil or criminal matter). There are also various safeguards in this Part designed to prevent the misuse of any information disclosed overseas.

553.     In order to provide a consistent regime, the gateways that exist in current legislation for the disclosure of information relating to consumer and competition matters will be harmonised. Therefore, the provisions in this Part will replace the existing information disclosure provisions in the legislation listed in clause 238.

Restrictions on disclosure

Clause 227: General restriction

554.     This clause sets out the general restriction on the disclosure of information by a public authority. The term 'public authority' is defined by reference to the Human Rights Act 1998 in clause 228.

555.     Subsection (1) states that the general restriction applies only to information classed as 'consumer information' or 'competition information' - terms that are also defined in clause 228. However, these provisions impose no restrictions on the disclosure of information that falls outside the definitions in clause 228. The restriction also applies in respect of consumer information or competition information that relates to either the affairs of an individual or to those of any business of an undertaking.

556.     Subsection (2) provides that the restriction will apply throughout the lifetime of any individual who is the subject of the information, or while any undertaking to which the information relates continues in existence. However, it also acts as a pointer to the exceptions to the general restriction that are set out in clauses 229-233 inclusive.

557.     Subsection (3) sets out a further exception to the general restriction: disclosure is permitted where the information concerned has already been placed in the public domain by any lawful means, including - but not restricted to - any of the exceptions to the general restriction set out in clauses 229-233 inclusive.

558.     Subsection (4) states that all of the provisions on disclosure of information are subject to the provisions of the Data Protection Act 1998.

559.     Subsection (5) confirms that the provisions in clause 227 are not intended to affect any other powers elsewhere to disclose information.

Clause 228: Information

560.     This clause defines the classes of information to which the disclosure provisions will apply.

561.     Subsection (1) defines 'consumer information' as information that has been obtained by a 'public authority' (as defined in subsection (4)) in connection with the exercise by it of any function that it has under either Part 8 of the Enterprise Bill ('Enforcement of Certain Consumer Legislation'), or under any of the enactments listed in Part 1 of Schedule 14 of the Enterprise Bill.

562.     Subsection (2) defines 'competition information' as information that has been obtained by a 'public authority' (as defined in subsection (4)) in connection with the exercise by it of any function that it has under the following Parts of the Enterprise Bill - Part 3 ('Mergers'), Part 4 ('Market Investigations'), Part 6 ('Cartel Offence') or Part 7 ('Miscellaneous Competition Provisions'); or under any of the enactments listed in Part 2 of Schedule 14 of the Enterprise Bill.

563.     Subsection (3) has the effect of applying the new disclosure provisions to all 'consumer information' and 'competition information' held by public authorities at the time that this Act is passed, as well as to any such information obtained subsequent to the passing of the Act.

564.     Subsection (4) requires the term 'public authority' to be construed in accordance with the terms of section 6 of the Human Rights Act 1998 - that is to include courts and tribunals (including the House of Lords in its judicial capacity), as well as any person exercising functions of a public nature, but excluding Parliament. (An 'overseas public authority' is separately defined in clause 233).

565.     Subsection (5) empowers the Secretary of State to amend the lists of legislation giving rise to statutory functions in Schedule 14. This will allow the lists to be updated to reflect subsequent changes to the legislative base. Subsection (6) provides that statutory instruments made under subsection (5) will be subject to the negative Parliamentary procedure.

Permitted disclosure

Clause 229: Consent

566.     Subsection (1) provides that disclosure will be permitted where the authority wishing to disclose the information obtains the necessary consent(s) that are detailed in the following subsections.

567.     Subsection (2) requires the consent to disclosure by the provider of the information, but applies only where the authority knows the identity of the person from whom it obtained the information. This recognises the possibility that it may not always be possible to identify the provider of particular pieces of information. Where the identity of the provider is known, the authority must satisfy itself that the provider was legally in possession of the information and that the provider consents to further disclosure before releasing the information.

568.     Subsections (3), (4) and (5) require the consent by the subject of the information. Where the information concerns the affairs of an individual, that individual must consent to further disclosure by the authority. Where the information relates to the business of an undertaking, subsection (5) requires consent to be given by a senior representative of the undertaking: for example, the company secretary or other director; a partner; or, in the case of an unincorporated body, a person in a position of management or control.

Clause 230: Community obligations

569.     This clause permits the disclosure of consumer and competition information where it is necessary for the authority to disclose the information for the purpose of fulfilling any obligation under European Community law.

Clause 231: Statutory functions

570.     This clause enables public authorities holding information to disclose consumer and competition information to persons exercising specified statutory functions.

571.     Subsection (1) provides that a public authority that holds information to which the disclosure provisions in this Part apply may disclose that information for the purpose of facilitating the exercise by that public authority of any of its statutory functions.

572.     Subsection (2) provides that if information is disclosed under subsection (1) in circumstances in which it is not put into the public domain, such information must not be further disclosed by the recipient of the information without the agreement of the public authority that disclosed the information to it, and disclosure may only be for the purpose of facilitating the exercise by the public authority of its statutory functions.

573.     Subsection (3) provides that consumer and competition information held by public authorities can be disclosed to any person for the purpose of facilitating the exercise of any function that person has under the Enterprise Bill, any of the Acts specified in Schedule 15 or any secondary legislation specified by the Secretary of State by an order made for the purpose of either of these subsections.

574.     Subsection (4) provides that information disclosed to a person exercising a permitted function under one of the Acts or pieces of legislation specified in subsection (3) can only be used for a function mentioned in the relevant legislation.

575.     Subsection (5) provides that the term 'enactment' will be taken to refer to primary and secondary legislation, as well as to Scottish and Northern Ireland legislation.

576.      Subsection (6) empowers the Secretary of State to amend the lists of enactments in Schedule 15. Subsection (8) provides that statutory instruments made under subsection (6) will be subject to the negative Parliamentary procedure.

Clause 232: Criminal proceedings

577.     This clause permits disclosure for the purposes of criminal proceedings to another public authority.

578.     Subsections (1) and (2) permit a public authority to disclose consumer or competition information to any other public authority that enforces in any part of the UK any legislation by way of criminal proceedings. Disclosure may be made for the purposes of investigating whether there have been breaches of the criminal law; assisting in the bringing or conducting of criminal proceedings; or deciding whether to commence or terminate such investigations or proceedings. Disclosure is not required to be for the purposes of specified statutory functions - information may be disclosed for the purpose of the enforcement of any enactment by way of criminal proceedings.

579.     Subsection (3) provides that information disclosed to a public authority under this clause can only be used for a purpose for which disclosure is permitted under this Part.

580.     Subsection (4) provides that the term 'enactment' will be taken to refer to primary and secondary legislation as well as to Scottish and Northern Ireland legislation.

Clause 233: Overseas disclosures

581.     This clause specifies the circumstances under which information may be disclosed to overseas authorities.

582.     Subsections (1), (2) and (9) permit a public authority to disclose consumer or competition information to any overseas public authority (as defined in subsection (8)) for the purpose of any criminal investigations or proceedings, or for civil investigations or proceedings that relate to competition or consumer matters.

583.     Subsection (3) prevents the disclosure to any overseas authority of information that is held by any person or body that has been designated as an enforcer by the Secretary of State for the purposes of Part 8 of the Enterprise Bill under subsection 204(4). It also prevents the disclosure to any overseas authority of any competition information obtained under the Financial Services and Markets Act 2000 and certain sensitive commercial information (for example, information connected to market and merger investigations).

584.     Subsection (4) provides that the Secretary of State can prevent disclosure of information overseas if she thinks the proceedings or investigation for which the information has been requested would be more appropriately carried out by authorities in the UK or in another country.

585.     Subsection (6) provides that the criteria drafted by the OFT under clause 234 must be applied by the UK authority in any decision it has to make regarding the disclosure of information to an overseas authority.

586.     Subsection (7) prevents information that is disclosed to overseas authorities from being further disclosed (without the permission of the UK authority from whom the information came). This prevents the overseas authority from using the information for any purpose other than the purpose for which it is disclosed by the UK public authority and from further disclosing it to other bodies or authorities. Should they wish to use it for a different purpose than that originally specified, a further request to the UK authority would have to be made.

587.     It is accepted that subsection (7)(b) is essentially unenforceable as there are no sanctions that could be taken against an overseas authority that contravenes these conditions. However, it is envisaged that should an overseas authority breach these provisions it is unlikely that a UK authority would disclose any further information.

588.     Subsection (8) defines an overseas public authority. For the purpose of this Part, an overseas public authority is any organisation involved in the conduct of criminal investigations or proceedings, and also those organisations involved in the conduct of any civil investigations or proceedings related to the enforcement of competition or consumer legislation. In reality, this will probably include police and security forces together with national competition authorities and organisations with powers linked to consumer legislation (these could be public or private bodies).

Clause 234: Overseas disclosures: criteria

589.     This clause places a legal requirement on OFT to issue and publish the criteria that will be used by UK public authorities when making decisions on the disclosure of information. It also allows OFT to vary the criteria.

Clause 235: Competition information: considerations relevant to disclosure

590.     This clause specifies further considerations that public authorities must have regard to before disclosing any competition information.

591.     Subsections (2) and (3) provide that, before disclosing the relevant information, a public authority must consider whether disclosure would be contrary to the public interest, and whether disclosure would cause significant harm to the interests of the business or individual to which it relates.

592.     Subsection (4) provides that, should the public authority consider that disclosure of particular competition information is contrary to the public interest or could significantly harm the interests of an individual or a business, then they must make a judgement as to the extent to which disclosure of that information is necessary.

Offences

Clause 236: Offences

593.     This clause sets out the circumstances in which the disclosure of information, or the use of information disclosed, constitutes an offence, and also specifies the sanctions that will apply if such an offence is committed.

594.     Subsection (1) explains that an offence is committed if competition or consumer information is disclosed in circumstances to which none of the relevant exceptions set out in this Part applies and whilst the individual who is the subject of the information is still alive or any undertaking to which the information relates continues to trade.

595.     Subsection (2) specifies that an offence is also committed if information is disclosed despite a direction from the Secretary of State that it should not be.

596.     Subsection (3) extends the offence to include the use of information for a purpose not permitted under this Part.

597.     Subsection (4) specifies the maximum prison terms and fines available for imposition when an offence is committed.

Schedule 14: Specified functions

598.     This Schedule specifies the Acts under which any information obtained by a public authority in connection with the exercise of any statutory function will be 'consumer information' or 'competition information' for the purposes of this Part.

Schedule 15: Enactments conferring functions

599.     This Schedule lists certain legislation under which statutory functions arise for the purpose of clause 231. That is, information may only be passed to a public authority for the purpose of carrying out a statutory function that arises under the enactments listed in this Schedule.

PART 10: INSOLVENCY

600.     The insolvency clauses fall into four main sections: corporate insolvency; the abolition of Crown preference; individual insolvency (bankruptcy and individual voluntary arrangements) and the financial arrangements relating to the functions performed by the Secretary of State in relation to insolvency. These notes provide a general commentary on what the legislation seeks to achieve.

Companies

601.     Changes to the existing corporate insolvency regime focus on restricting the use of administrative receivership and streamlining administration. The White Paper 'Productivity and Enterprise: Insolvency - A Second Chance' recognised that the administration procedure introduced by the Insolvency Act 1986 was seen as an important tool in providing companies in financial difficulties with a breathing space in which to put a rescue plan to creditors. However, it also recognised that the procedure could be improved.

602.     The existing provisions contained in Part II of the Insolvency Act 1986 allow the court to make an administration order in respect of a company that is in financial difficulties. Broadly speaking, the effect of such an order is to afford the company protection from its creditors whilst attempts are made to save the company or achieve a better result for creditors than would be achieved in a winding-up. However, in practice, in many cases where a company gets into financial difficulties, this will lead to the appointment of an administrative receiver by those providing financial support for the company (typically the company's bank), since they usually will have taken a floating charge over all the company's assets. The holder of a floating charge has an effective veto over the appointment of an administrator. Such a person must be given notice of any application for an administration order, and if he or she appoints an administrative receiver, the court must dismiss the application unless the appointor of the administrative receiver consents to the making of an administration order (see section 9(2)(a) and section 9(3) Insolvency Act 1986).

603.     An administrative receiver primarily owes duties to his or her appointor rather than the company's creditors as a whole (as to the duties owed by an administrative receiver see Medforth v Blake [1999] 2 BCLC 221). His or her primary function is to seek repayment of the debt owed to his or her appointor. An administrative receiver has no powers or duty to seek to put together a company rescue in the same way that an administrator has (an administrator may put proposals to creditors for a Company Voluntary Arrangement (CVA) pursuant to Part I of the Insolvency Act 1986 or a scheme of arrangement pursuant to section 425 Companies Act 1985) (see sections 8(3) and 23 of the Insolvency Act 1986).

604.     The clauses will alter the above provisions in the following way. First, the appointment of administrative receivers will be restricted to certain exceptions (existing arrangements and capital markets) and the Bill seeks to provide that administrators will in future be appointed in situations that would have been dealt with through administrative receivership. Second, the procedure has been amended to streamline the process both in the provisions of the Bill and the Rules made under section 411 Insolvency Act 1986 that seek to give effect to the provisions of the Bill. Perhaps the most obvious of the measures is the introduction of the non-court routes into administration. The procedure has been amended to ensure all reasonably practicable options are considered without prejudicing the interests of those creditors who would previously have been entitled to appoint an administrative receiver and express obligations introduced to consider the interests of all creditors. It was recognised that the administration procedure as it currently stands is to a degree cumbersome.

605.     Administration will continue to have many of the features of the current system. At Annex C there is a table of correspondence that will assist readers in identifying to what extent the provisions of the Insolvency Act 1986 are reflected in new Schedule B1.

 
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Prepared: 26 March 2002