Enterprise Act 2002: The New Law of Mergers, Monopolies and Cartels

Tim Frazer, Susan Hinchcliffe and Kyla George. 2003 Enterprise Act 2002: The New Law of Mergers, Monopolies and Cartels. The Law Society. London.

Barely a few months after the Enterprise Act received royal assent and some months before it actually comes into force, we have a book outlining the

The authors all work for US law firm Arnold and Porter. The book they have compiled is essentially a 'one-stop-shop' for anyone seeking to understand the changes made to competition law by the groundbreaking Enterprise Act.

The authors of course rightly point out that the key problem with competition law is that it is like waiting for a bus; nothing arrives for ages and then it all comes at once. The tidal wave of change that has washed over competition law in the last few years is truly breathtaking - which makes a guide such as this all the more important. The way in which the law has changed in the Enterprise Act also provides ample need for all parties in the process to become acquainted with the changes. While the Competition Act 1998 simply sought to drag UK competition law into the latter half of the 1990s, the Enterprise Act is a different beast altogether.

The 1998 Competition Act set about more firmly shaping the law around the EC law and jurisprudence and tightening the processes. It also placed competition institutions on a firmer footing and boosted both their role and funding. At the time the Act was passed, it seemed to be the culmination of a debate, which had festered for many years, about the role of UK competition law in a European context. However, with the hindsight of the Enterprise Act, it is possible to see it more as a stepping stone to the building of the oft-cited 'world class competition regime '.

The scope of the Enterprise Act is very broad, but it is also remarkably deep. This is a sweeping, yet shallow piece of legislation; it truly is a farreaching reform that will change the way the competition system works for many years to come, though the impact of the Act is likely to take time to feed through the system.

The outline of this fine book indicates the scope of the law, with sec tions on the new rights of redress, as well as changes to the institutions, merger reform, cartel powers and market investigations. Of course, one of the most interesting sections for this reviewer is the section related to 'supercomplaints', a new power under which listed consumer bodies can complain to the Office of Fair Trading about a particular market that is not functioning well for consumers. The only niggle with the book here is that the authors missed the fact that CA, with its private dentistry complaint, was first out of the blocks. Instead, they list the NACAB supercomplaint on doorstep selling as the first. Definitely a correction for the reprint.

The authors provide a balanced and sensible review of the supercomplaint process, successfully resisting the hype about what is little more than a formalised route for lodging a complaint. The procedure does not confer on complaining bodies any special powers or status. What it does do, as the authors explain, is provide a channel for highlighting problems that consumers face in markets not working at their optimum level. More interesting in many ways is the section on third party appeals and claims for damages at the Competition Appeal Tribunal, which is a far more real power for consumer organisations.

The book is very useful in guiding those looking to use these powers along the right path. But the real impact of the new powers for consumer bodies may have been somewhat missed. As was clear in discussions about the basic provisions of the then Enterprise Bill, there was a desire to light a fire under competition regulation.

For many years, there was a widely held view that UK competition authorities were rather conservative in their view of the market. The fact that markets like car distribution and extended warranties had long been targeted by organisations like CA, without any significant response from regulators, led many to believe that the real drive for competition came from outside the bodies established to police the market. The new powers for consumer organisations are thus as much about providing a constituency for competition as they are about enhancing access. The process of making a supercomplaint generates discussion and publicity. The very existence of the power provides an incentive for the OFT to use its own investigative powers effectively. The last thing an energised OFT wants is to look like it is being forced into unwanted market investigations.

Of course, the great irony of the supercomplaint and appeals powers is that they have come a decade too late. The real force of enhanced access would have been most welcome during the 'wilderness years' of UK competition law when little was done and little was proposed. The powers now granted come at a time when the OFT and Competition Commission have been energised by new leadership and new powers. The supercomplaint must thus be seen as recognition of influence and, perhaps more importantly, as a regulatory backstop should the energised authorities run out of steam.

The bulk of the book rightly focuses on the changes to merger law in the UK and the sensible move from a dominance test to the much more economics-based test of whether there is a significant lessening of competition. For practitioners, mergers constitute the bread and butter of their work. Indeed, the fact that other changes like supercomplaints is covered in sufficient detail is a credit to the authors.

The same applies to the provisions on cartels and market investigations. The balanced coverage of the cartel offence is particularly welcome as this was the one provision in the Act that threatened to frighten the horses so much that they bolted.

The deeper coverage of OFT investigative powers is likewise extremely welcome as this is perhaps where change will be most acutely felt. The desire to energise the OFT is even more apparent in the area of market investigations. The power to scrutinise markets that are not working well has been a significant facet of UK competition law and the complex monopoly powers for the Competition Commission have been retained simply because they have proved so useful. The Commission work on the new car market, for instance, was highly influential at EU level and its kudos has very often rested on this element of its power. Giving the OFT a similar remit to review markets and refer or take action as it sees fit is a logical extension of its powers and one that will force it to be more proactive.

The enormous changes to UK competition law written into the Enterprise Act are difficult to gauge even for those who worked closely on the law at its many stages of discussion. This book, published so soon after the Act was passed, will be held dear to the heart of every practitioner, supercomplainant and investigator. The balance of analysis, explanation and direction is just right to help the reader understand what the Act means. The reprinting of the entire Act and appended documents is also very helpful to keep all the elements together.