The Enterprise Act 2002 (Merger Fees and Determination of Turnover) (Amendment) Order 2014

EXPLANATORY NOTE

(This note is not part of the Order)

This Order amends the Enterprise Act 2002 (Merger Fees and Determination of Turnover) Order 2003 (S.I. 2003/1370) (“the 2003 Order”). The 2003 Order relates to the functions of the Secretary of State, the Office of Fair Trading (“the OFT”) and the Competition Commission under Part 3 of the Enterprise Act 2002 (functions in relation to completed and anticipated mergers) and under sections 32 to 35 of the Water Industry Act 1991 (c. 56) (mergers between water and sewerage undertakers). The 2003 Order contains provisions about the payment to the OFT of fees in connection with the exercise of certain of these merger functions, and this Order amends those provisions.

As a result of provision made by and under the Enterprise and Regulatory Reform Act 2013 (c. 24), the merger functions of the OFT and the Competition Commission have transferred to the Competition and Markets Authority (“the CMA”). Articles 3, 4(b) and (c), 5(b), 7(b), 9 and 10 make amendments to the 2003 Order which are consequential on that transfer.

This Order also amends the 2003 Order to change the time when the fee is payable in cases where a merger notice is given under section 96 of the Enterprise Act 2002, taking account of the fact that amendments made to section 96 by the Enterprise and Regulatory Reform Act 2013 enable merger notices to be given in respect of both anticipated mergers and completed mergers. This change to the 2003 Order is made by articles 4(a) and 10 of this Order, and consequential amendments are made by articles 5(a), 6 to 8 and 11. The fee will be payable (as in cases where no merger notice is given) when the CMA or, as the case may be, the Secretary of State publishes either a merger reference in relation to the notified arrangements or its decision not to make a merger reference. The fee will be payable in respect of a decision by the CMA or (as the case may be) the Secretary of State that it is or may be the case that a relevant merger situation has been created or that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation. The 2003 Order currently provides for the fee to be paid when the merger notice is given and to be repaid if the OFT concludes that the notified arrangements would not, if carried into effect, result in the creation of a relevant merger situation.

New article 6(1) and (2) of the 2003 Order, substituted by article 7 of this Order, also provides that if the person who gave the merger notice under section 96 of the Enterprise Act 2002 has ceased to exist by the time the fee becomes payable, the fee is payable by the “acquirer” (defined in article 6(3) and (4) of the 2003 Order).

In replacing article 7 of the 2003 Order, article 8 of this Order also updates and clarifies the provisions exempting acquirers from paying a merger fee where they qualify as small or medium sized enterprises. New article 7(3) provides explicitly that the exemption does not apply to acquirers who are individuals. New article 7(4) takes the place of existing article 7(3), which sets out the circumstances in which the acquirer will qualify as small or medium sized. Existing article 7(3) refers to provisions of the Companies Act 1985 (c. 6) which have been replaced by provisions of the Companies Act 2006. New article 7(4) refers to the new provisions but makes no change of substance. It refers to “the acquirer” rather than (as existing article 7(3) does) to “the enterprise”.

Article 12 makes transitional provision and savings.

The Schedule to the Enterprise and Regulatory Reform Act 2013 (Commencement No. 6, Transitional Provisions and Savings) Order 2014 (S.I. 2014/416 (C. 17)) contains transitional provisions and savings relating to the transfer to the CMA of the merger control functions of the OFT and the Competition Commission under the Enterprise Act 2002 and in connection with the amendments made by the Enterprise and Regulatory Reform Act 2013 to the law relating to merger notices. Similarly, article 3 of the Enterprise and Regulatory Reform Act 2013 (Competition) (Consequential, Transitional and Saving Provisions) Order 2014 makes transitional provision in connection with the transfer to the CMA of functions relating to water mergers under sections 32 to 35 of the Water Industry Act 1991.

An impact assessment completed for Parts 3 and 4 of the Enterprise and Regulatory Reform Bill, introduced to Parliament on 23rd May 2012, contains an assessment of the effect that the reforms to the competition regime will have on the costs of business and the public and voluntary sectors and is available at the following website:

https://www.gov.uk/government/publications/strengthening-competition-and-creating-a-single-market-authority.