Competition Act 1998

Part I — Competition

Chapter I — Agreements

Introduction

Power to enter business premises under a warrant.

1

The following shall cease to have effect—

• (a) the Restrictive Practices Court Act 1976 (c. 33),

• (b) the Restrictive Trade Practices Act 1976 (c. 34),

• (c) the Resale Prices Act 1976 (c. 53), and

• (d) the Restrictive Trade Practices Act 1977 (c. 19).

The prohibition

General restrictions on disclosure of information.

2

• (1) Subject to section 3, agreements between undertakings, decisions by associations of undertakings or concerted practices which have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom and which—

• (a) in the case of agreements, decisions or practices implemented, or intended to be implemented in the United Kingdom, may affect trade in the United Kingdom, or

• (b) in any other case, are likely to have an immediate, substantial and foreseeable effect on trade within the United Kingdom,

are prohibited unless they are exempt in accordance with the provisions of this Part.

• (2) Subsection (1) applies, in particular, to agreements, decisions or practices which—

• (a) directly or indirectly fix purchase or selling prices or any other trading conditions;

• (b) limit or control production, markets, technical development or investment;

• (c) share markets or sources of supply;

• (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

• (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) Any agreement or decision which is prohibited by subsection (1) is void.

• (5) A provision of this Part which is expressed to apply to, or in relation to, an agreement is to be read as applying equally to, or in relation to, a decision by an association of undertakings or a concerted practice (but with any necessary modifications).

• (6) Subsection (5) does not apply where the context otherwise requires.

• (7) In this section “the United Kingdom” means, in relation to an agreement which operates or is intended to operate only in a part of the United Kingdom, that part.

• (8) The prohibition imposed by subsection (1) is referred to in this Act as “the Chapter I prohibition”.

Excluded agreements

Excluded agreements

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• (1) The Chapter I prohibition does not apply in any of the cases in which it is excluded by or as a result of—

• (a) Schedule 1 (mergers and concentrations);

• (b) Schedule 2 (competition scrutiny under other enactments);

• (c) Schedule 3 (planning obligations and other general exclusions). ...

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) The Secretary of State may at any time by order amend Schedule 1, with respect to the Chapter I prohibition, by—

• (a) providing for one or more additional exclusions; or

• (b) amending or removing any provision (whether or not it has been added by an order under this subsection).

• (3) The Secretary of State may at any time by order amend Schedule 3, with respect to the Chapter I prohibition, by—

• (a) providing for one or more additional exclusions; or

• (b) amending or removing any provision—

• (i) added by an order under this subsection; or

• (ii) included in paragraph 1 ... or 9 of Schedule 3.

• (4) The power under subsection (3) to provide for an additional exclusion may be exercised only if it appears to the Secretary of State that agreements which fall within the additional exclusion—

• (a) do not in general have an adverse effect on competition, or

• (b) are, in general, best considered under Chapter II or the Fair Trading Act 1973the Enterprise Act 2002.

• (5) An order under subsection (2)(a) or (3)(a) may include provision (similar to that made with respect to any other exclusion provided by the relevant Schedule) for the exclusion concerned to cease to apply to a particular agreement.

• (6) Schedule 3 also gives the Secretary of State power to exclude agreements from the Chapter I prohibition in certain circumstances.

Exemptions

Individual exemptions

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• (1) The OFT may grant an exemption from the Chapter I prohibition with respect to a particular agreement if—

• (a) a request for an exemption has been made to it under section 14 by a party to the agreement; and

• (b) the agreement is one to which section 9 applies.

• (2) An exemption granted under this section is referred to in this Part as an individual exemption.

• (3) The exemption—

• (a) may be granted subject to such conditions or obligations as the OFT considers it appropriate to impose; and

• (b) has effect for such period as the OFT considers appropriate.

• (4) That period must be specified in the grant of the exemption.

• (5) An individual exemption may be granted so as to have effect from a date earlier than that on which it is granted.

• (6) On an application made in such way as may be specified by rules under section 51, the OFT may extend the period for which an exemption has effect; but, if the rules so provide, it may do so only in specified circumstances.

Cancellation etc. of individual exemptions

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• (1) If the OFT has reasonable grounds for believing that there has been a material change of circumstance since it granted an individual exemption, it may by notice in writing—

• (a) cancel the exemption;

• (b) vary or remove any condition or obligation; or

• (c) impose one or more additional conditions or obligations.

• (2) If the OFT has a reasonable suspicion that the information on which it based its decision to grant an individual exemption was incomplete, false or misleading in a material particular, it may by notice in writing take any of the steps mentioned in subsection (1).

• (3) Breach of a condition has the effect of cancelling the exemption.

• (4) Failure to comply with an obligation allows the OFT, by notice in writing, to take any of the steps mentioned in subsection (1).

• (5) Any step taken by the OFT under subsection (1), (2) or (4) has effect from such time as may be specified in the notice.

• (6) If an exemption is cancelled under subsection (2) or (4), the date specified in the notice cancelling it may be earlier than the date on which the notice is given.

• (7) The OFT may act under subsection (1), (2) or (4) on its own initiative or on a complaint made by any person.

Block exemptions

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• (1) If agreements which fall within a particular category of agreement are, in the opinion of the CMA, likely to be exempt agreements, the CMA may recommend that the Secretary of State make an order specifying that category for the purposes of this section.

• (2) The Secretary of State may make an order (“a block exemption order”) giving effect to such a recommendation—

• (a) in the form in which the recommendation is made; or

• (b) subject to such modifications as he considers appropriate.

• (3) An agreement which falls within a category specified in a block exemption order is exempt from the Chapter I prohibition.

• (4) An exemption under this section is referred to in this Part as a block exemption.

• (5) A block exemption order may impose conditions or obligations subject to which a block exemption is to have effect.

• (6) A block exemption order may provide—

• (a) that breach of a condition imposed by the order has the effect of cancelling the block exemption in respect of an agreement;

• (b) that if there is a failure to comply with an obligation imposed by the order, the CMA may, by notice in writing, cancel the block exemption in respect of the agreement;

• (c) that if the CMA considers that a particular agreement is not an exempt agreement, it may cancel the block exemption in respect of that agreement.

• (7) A block exemption order may provide that the order is to cease to have effect at the end of a specified period.

• (8) In this section—

• “exempt agreement” means an agreement which is exempt from the Chapter I prohibition as a result of section 9; and

• “specified” means specified in a block exemption order.

Block exemptions: opposition

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• (1) A block exemption order may provide that a party to an agreement which—

• (a) does not qualify for the block exemption created by the order, but

• (b) satisfies specified criteria,

may notify the OFT of the agreement for the purposes of subsection (2).

• (2) An agreement which is notified under any provision included in a block exemption order by virtue of subsection (1) is to be treated, as from the end of the notice period, as falling within a category specified in a block exemption order unless the OFT—

• (a) is opposed to its being so treated; and

• (b) gives notice in writing to the party concerned of its opposition before the end of that period.

• (3) If the OFT gives notice of its opposition under subsection (2), the notification under subsection (1) is to be treated as both notification under section 14 and as a request for an individual exemption made under subsection (3) of that section.

• (4) In this section “notice period” means such period as may be specified with a view to giving the OFT sufficient time to consider whether to oppose under subsection (2).

Block exemptions: procedure

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• (1) Before making a recommendation under section 6(1), the CMA must—

• (a) publish details of its proposed recommendation in such a way as it thinks most suitable for bringing it to the attention of those likely to be affected; and

• (b) consider any representations about it which are made to it.

• (2) If the Secretary of State proposes to give effect to such a recommendation subject to modifications, he must inform the CMA of the proposed modifications and take into account any comments made by the CMA .

• (3) If, in the opinion of the CMA , it is appropriate to vary or revoke a block exemption order it may make a recommendation to that effect to the Secretary of State.

• (4) Subsection (1) also applies to any proposed recommendation under subsection (3).

• (5) Before exercising its power to vary or revoke a block exemption order (in a case where there has been no recommendation under subsection (3)), the Secretary of State must—

• (a) inform the CMA of the proposed variation or revocation; and

• (b) take into account any comments made by the CMA .

• (6) A block exemption order may provide for a block exemption to have effect from a date earlier than that on which the order is made.

The criteria for individual and block exemptions

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• (1) An agreement is exempt from the Chapter I prohibition if it—

• (a) contributes to—

• (i) improving production or distribution, or

• (ii) promoting technical or economic progress,

while allowing consumers a fair share of the resulting benefit; and

• (b) does not—

• (i) impose on the undertakings concerned restrictions which are not indispensable to the attainment of those objectives; or

• (ii) afford the undertakings concerned the possibility of eliminating competition in respect of a substantial part of the products in question.

• (2) In any proceedings in which it is alleged that the Chapter I prohibition is being or has been infringed by an agreement, any undertaking or association of undertakings claiming the benefit of subsection (1) shall bear the burden of proving that the conditions of that subsection are satisfied.

Parallel exemptions

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• (A1) An agreement is exempt from the Chapter I prohibition if it falls within a category of agreements specified as exempt in an assimilated block exemption regulation.

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) An exemption from the Chapter I prohibition under this section is referred to in this Part as an assimilated exemption.

• (4) An assimilated exemption—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) ceases to have effect—

• (i) if the relevant assimilated block exemption regulation ceases to have effect; or

• (ii) on being cancelled by virtue of subsection (5) or (7).

• (5) In such circumstances and manner as may be specified in rules made under section 51, the CMA may—

• (a) impose conditions or obligations subject to which an assimilated exemption is to have effect in respect of an agreement;

• (b) vary or remove any such condition or obligation;

• (c) impose one or more additional conditions or obligations;

• (d) cancel the exemption in respect of an agreement.

• (6) In such circumstances as may be specified in rules made under section 51, the date from which cancellation of an exemption is to take effect may be earlier than the date on which notice of cancellation is given.

• (7) Breach of a condition imposed by the CMA has the effect of cancelling the exemption.

• (8) In exercising its powers under this section, the CMA may require any person who is a party to the agreement in question to give it such information as it may require.

• (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (12) In this Part, “assimilated block exemption regulation” means the following regulations as amended from time to time—

• (a) Council Regulation (EC) 169/2009 applying rules of competition to transport by rail, road and inland waterway;

• (b) Commission Regulation (EC) 906/2009 on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies (consortia);

• (c) Commission Regulation (EU) 330/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices;

• (d) Commission Regulation (EU) 461/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector;

• (e) Commission Regulation (EU) 1217/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements;

• (f) Commission Regulation (EU) 1218/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialisation agreements;

• (g) Commission Regulation (EU) 316/2014 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of technology transfer agreements.

Exemption for certain other agreements

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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notification

Requests for Director to examine agreements

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• (1) Sections 13 and 14 provide for an agreement to be examined by the OFT on the application of a party to the agreement who thinks that it may infringe the Chapter I prohibition.

• (2) Schedule 5 provides for the procedure to be followed—

• (a) by any person making such an application; and

• (b) by the OFT, in considering such an application.

• (3) The Secretary of State may by regulations make provision as to the application of sections 13 to 16 and Schedule 5, with such modifications (if any) as may be prescribed, in cases where the OFT—

• (a) has given a direction withdrawing an exclusion; or

• (b) is considering whether to give such a direction.

Notification for guidance

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• (1) A party to an agreement who applies for the agreement to be examined under this section must—

• (a) notify the OFT of the agreement; and

• (b) apply to the OFT for guidance.

• (2) On an application under this section, the OFT may give the applicant guidance as to whether or not, in its view, the agreement is likely to infringe the Chapter I prohibition.

• (3) If the OFT considers that the agreement is likely to infringe the prohibition if it is not exempt, its guidance may indicate—

• (a) whether the agreement is likely to be exempt from the prohibition under—

• (i) a block exemption;

• (ii) a parallel exemption; or

• (iii) a section 11 exemption; or

• (b) whether it would be likely to grant the agreement an individual exemption if asked to do so.

• (4) If an agreement to which the prohibition applies has been notified to the OFT under this section, no penalty is to be imposed under this Part in respect of any infringement of the prohibition by the agreement which occurs during the period—

• (a) beginning with the date on which notification was given; and

• (b) ending with such date as may be specified in a notice in writing given to the applicant by the OFT when the application has been determined.

• (5) The date specified in a notice under subsection (4)(b) may not be earlier than the date on which the notice is given.

Notification for a decision