Final offer mechanism
38Power to adopt final offer mechanism
(1)Where the CMA considers that the following three conditions are met in relation to a transaction between a designated undertaking and a third party, the CMA may—
(a)require the undertaking, and
(b)invite the third party,
to submit to the CMA terms as to payment (“final offer payment terms”) which the undertaking or, as the case may be, the third party regards as fair and reasonable for the transaction.
(2)The first condition is that the transaction is a transaction in which the designated undertaking would—
(a)provide goods or services to the third party, or
(b)acquire goods or services from, or use goods or services of, the third party.
(3)The second condition is that, by failing to agree fair and reasonable terms as to payment for the transaction, the designated undertaking has breached an enforcement order, other than an interim enforcement order, made in relation to a breach of a conduct requirement of the type permitted by section 20(2)(a) (requirement to trade on fair and reasonable terms).
(4)The third condition is that the CMA could not satisfactorily address the breach within a reasonable time frame by exercising any of its other digital markets functions.
(5)In subsection (1), “transaction” means—
(a)a future transaction, or
(b)the future performance of an ongoing transaction,
whether in accordance with a contract or otherwise.
(6)In sections 39 to 44—
“the designated undertaking” means the undertaking mentioned in subsection (1);
“the transaction” means the transaction mentioned in subsection (1);
“the third party” means the third party mentioned in subsection (1).
39Collective submissions
(1)Where the CMA considers that—
(a)the conditions in section 38(2), (3) and (4) are met in relation to a single transaction between the designated undertaking and two or more third parties, and
(b)the third parties are capable of acting jointly in relation to final offer payment terms relating to the transaction,
the CMA may exercise the power in section 38(1) to invite the third parties (the “joined third parties”) to make a single submission to the CMA of final offer payment terms that the joined third parties collectively regard as fair and reasonable for the transaction.
(2)Where the CMA proceeds in reliance on subsection (1), sections 40 to 44 apply as if—
(a)in section 40(8) references to “the third party” were to any one or more of the joined third parties;
(b)all other references to “the third party” were to the joined third parties.
(3)Where the CMA considers that—
(a)the conditions in section 38(2), (3) and (4) are met in relation to two or more transactions between the designated undertaking and two or more third parties,
(b)the same terms as to payment are capable of applying to the transactions, and
(c)the third parties are capable of acting jointly in relation to final offer payment terms relating to the transactions,
the CMA may exercise the power in section 38(1) to invite the third parties (the “grouped third parties”) to make a single submission to the CMA of final offer payment terms that the grouped third parties collectively regard as fair and reasonable for the transactions (the “grouped transactions”).
(4)Where the CMA proceeds in reliance on subsection (3), sections 40 to 44 apply as if—
(a)in the following provisions, references to “the third party” were to any one or more of the grouped third parties—
(i)section 40(8);
(ii)section 41(2)(b);
(iii)section 42(1)(b);
(iv)section 43(2);
(b)all other references to “the third party” were to the grouped third parties;
(c)in section 43(1) and (2), the reference to “the transaction” were to any one or more of the grouped transactions;
(d)all other references to “the transaction” were to the grouped transactions.
40Final offer mechanism
(1)The power conferred by section 38(1) is to be exercised by giving a notice (a “final offer initiation notice”) to the designated undertaking and the third party.
(2)The final offer initiation notice must—
(a)specify the designated undertaking, the third party and the digital activity in respect of which the power is being exercised;
(b)describe the breach of the enforcement order in relation to which the second condition in section 38 is met;
(c)summarise the transaction;
(d)specify a date (the “submission date”) on or before which final offer payment terms are to be submitted to the CMA;
(e)state the period by the end of which the CMA must make any final offer order (see section 41(3));
(f)state the circumstances in which that period may be extended (see section 104).
(3)As soon as reasonably practicable after giving a final offer initiation notice, the CMA must publish a statement which—
(a)includes the information mentioned in subsection (2), and
(b)if the CMA is considering taking any other action relating to any underlying cause of the breach of the enforcement order, includes a summary of, and explanation for considering, that action.
(4)After giving a final offer initiation notice, the CMA may—
(a)change its view of the transaction or the third party, provided that the new transaction or third party remains substantially the same as the previous transaction or third party,
(b)revise any list of joined third parties or grouped third parties, or
(c)change the submission date.
(5)The powers conferred by subsection (4) are to be exercised by giving a revised version of the final offer initiation notice to the designated undertaking and the third party.
(6)Where the power conferred by subsection (4)(b) is being exercised, the reference in subsection (5) to “the third party” includes each person that was a joined third party or a grouped third party prior to the exercise of the power or that is to be a joined third party or a grouped third party after the exercise of the power.
(7)As soon as reasonably practicable after giving a revised version of a final offer initiation notice, the CMA must publish a statement summarising the contents of the revised notice.
(8)To facilitate the submission of final offer payment terms, the CMA may (among other things)—
(a)use an information notice to require that the designated undertaking or the third party give information to the CMA (see section 69);
(b)share information between the designated undertaking and the third party in accordance with section 241 of EA 2002 (statutory functions);
(c)specify the form or manner in which final offer payment terms must be submitted.
41Final offers: outcome
(1)This section applies where—
(a)the CMA has exercised its power under section 38(1), and
(b)either—
(i)the CMA has received final offer payment terms from both the designated undertaking and the third party, or
(ii)the CMA has received final offer payment terms from either the designated undertaking or the third party (but not both), and the submission date has passed.
(2)The CMA must, unless section 43(1) applies, make an order (a “final offer order”) requiring that final offer payment terms it has received from the designated undertaking or the third party are to be given effect for the purposes of—
(a)the transaction, and
(b)any transaction between the designated undertaking and the third party which is substantially the same as the transaction.
(3)The CMA must comply with subsection (2) on or before the last day of the period (the “final offer period”) of 6 months beginning with the day on which the final offer initiation notice is given to the designated undertaking and the third party.
(4)The Secretary of State may by regulations amend this section so as to modify the length of the final offer period.
(5)Regulations under subsection (4) are subject to the affirmative procedure.
42Final offer orders: supplementary
(1)A final offer order must impose on the designated undertaking such obligations as the CMA considers appropriate for the purpose of—
(a)securing compliance with the requirement imposed by virtue of section 41(2), and
(b)preventing the designated undertaking from making an agreement with the third party which conflicts with that requirement.
(2)At the same time as making a final offer order, the CMA must give the designated undertaking and the third party a notice—
(a)summarising the transaction,
(b)including the reasons for the order, and
(c)enclosing a copy of the order.
(3)As soon as reasonably practicable after making a final offer order, the CMA must publish a statement summarising the contents of the final offer order and the notice given under subsection (2).
43Decision not to make final offer order
(1)The CMA may decide not to make a final offer order in relation to the transaction where it has reasonable grounds to believe that there has been a material change of circumstances since the final offer initiation notice was given.
(2)For the purposes of this section and section 44(3) a material change of circumstances includes an agreement between the designated undertaking and the third party with respect to terms as to payment in relation to the transaction.
(3)Where the CMA decides not to make a final offer order, it must give a notice to that effect to the designated undertaking and the third party.
(4)The notice must include the reasonable grounds referred to in subsection (1).
(5)As soon as reasonably practicable after giving a notice under subsection (3), the CMA must publish a statement summarising the contents of the notice.
44Duration and revocation of final offer orders
(1)A final offer order comes into force at such time as the CMA may specify in the order.
(2)A final offer order ceases to have effect—
(a)when revoked under this section, or
(b)subject to provision made in reliance on section 17 (existing obligations), when the designation to which it relates ceases to have effect.
(3)The CMA may revoke, or partially revoke, a final offer order where it has reasonable grounds to believe that there has been a material change of circumstances since the final offer order was made.
(4)Where the CMA decides to revoke, or partially revoke, a final offer order, it must give a notice to that effect to the designated undertaking and the third party.
(5)The notice must include the reasons for the CMA’s decision.
(6)The notice may include transitional, transitory or saving provision in relation to the revocation, or partial revocation, of the final offer order.
(7)As soon as reasonably practicable after revoking, or partially revoking, a final offer order, the CMA must publish a statement summarising the contents of the notice revoking, or partially revoking, the order.
(8)The fact that a final offer order ceases to have effect does not affect the exercise of any digital markets functions in relation to a breach or possible breach of that order.
45Duty to keep final offer orders under review
The CMA must keep under review—
(a)the extent to which an undertaking to which it has given a final offer order is complying with that order,
(b)the effectiveness of the final offer order,
(c)whether to revoke the final offer order, and
(d)whether to take action in accordance with Chapter 7 (enforcement and appeals) in respect of an undertaking which does not comply with a final offer order.