Enterprise Act 2002
Encyclopedia
The Enterprise Act 2002 is an Act
of the Parliament
of the United Kingdom
which made major changes to UK competition law with respect to mergers and also changed the law governing insolvency
bankruptcy
.
Make all competition decisions through independent bodies, root out forms of anti-competitive behaviour, create a strong deterrent effect, to redress injured parties in distortions of competition and raise the profile of competition policy in the UK.
The act made the Office of Fair Trading
formally independent from government, and gave it additional powers. It is now possible for searches to be carried out under warrant from this act of business premises involved with potentially prohibitable mergers. The act also established the Commission Appeals Tribunal (CAT) for companies to appeal against decisions by the Competition Commission
. The role of the Director General of Fair Trading (DGFT) was also abolished and his powers given to the OFT, this was seen as an attempt to depersonalize the competition investigation process. The Minister of Trade and Industry in the past played a large role in competition policy, having final say over whether a particular merger was in the public interest. Under the new Act his role was significantly diminished in order to de-politicize competition regulation which had been accused of being inconsistent in the past. He now only has powers to intervene if the proposed merger will affect the media to the detriment of the public, national security or if one of the firms is a government contractor.
On the deterrence side of the act, jail terms of a maximum of five years for directors was introduced in order to increase deterrence for forming cartels.
The competition commission also had its scope widened to cover investigations of whole industries, not just specific firm, for example the supermarket industry.
procedures for failing companies. The purpose was to enhance the policy of creating a "rescue culture", so that insolvent companies so far as possible should be saved, before their assets are stripped and distributed to creditors.
. Previously, bankruptcy would typically last for a period of between 2 and 3 years, but now the majority of bankruptcies will be discharged after only 12 months. The law
was changed to give those with genuine cases of financial
hardship the opportunity to be free of their indebtedness
. For those who have tried, unsuccessfully, to resolve their financial difficulties, the new laws allow them to petition for their own bankruptcy and start again.
Additional changes also mean that there are harsher restrictions for those who have previously been made bankrupt and those who have been through criminal bankruptcy. If an individual had previously been an undischarged bankrupt during the 15 years before the current bankruptcy (unless the previous bankruptcy was annulled) he/she was automatically discharged on 1 April 2009.
A bankrupt may ask the court for a discharge 5 years after the date of the bankruptcy order, but the court can refuse or delay the discharge, or grant it conditionally on terms requiring you to make some payments out of the individuals income. A person can however become free from bankruptcy immediately if the court annuls (cancels) the bankruptcy order; this normally happens when the debts (including any fees and expenses of the bankruptcy proceedings) have been paid in full or if the bankruptcy order was made in error.
Alternatively, if a person has failed to carry out their responsibilities under the bankruptcy proceedings, the Official Receiver could apply to the court to delay the discharge from bankruptcy. If the court is in agreement, the bankruptcy order can only end when the suspension has been lifted and the time remaining on the bankruptcy period has run out.
How assets are treated
There is now a limit of 3 years(either from the date of the Bankruptcy Order or from when the Official Receiver/Trustee first became aware of the Bankrupt's interest in the property), during which the Trustee in Bankruptcy (this may be the Official Receiver, but is far more likely to be an Insolvency Practitioner normally an accountant. The Official Receiver's staff have little experience or training in the litigation involved) must deal with the debtor's main residence. There is no time limit for dealing with other assets or properties. If the Official Receiver fails to realize the property during this time, the property will revest in the (ex-)bankrupt.
Where it is believed that the debtor has brought about the bankruptcy through their own irresponsible or imprudent conduct, there are now more severe consequences. If this is the case, the Official Receiver can apply for a Bankruptcy Restriction Order, which may be applicable for between 2 and 15 years, in addition to the normal length of discharge.
Examples of such situations
Failure to produce or retain records;
Incurring debts as a result of gambling
;
Incurring debts that have arisen as a result of precarious or risky conjecture.
Additionally, the usual cost to an individual that wishes to petition for their own bankruptcy has risen from £460 to £510 as of 1 April 2008.
Provisions
Act of Parliament
An Act of Parliament is a statute enacted as primary legislation by a national or sub-national parliament. In the Republic of Ireland the term Act of the Oireachtas is used, and in the United States the term Act of Congress is used.In Commonwealth countries, the term is used both in a narrow...
of the Parliament
Parliament
A parliament is a legislature, especially in those countries whose system of government is based on the Westminster system modeled after that of the United Kingdom. The name is derived from the French , the action of parler : a parlement is a discussion. The term came to mean a meeting at which...
of the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
which made major changes to UK competition law with respect to mergers and also changed the law governing insolvency
Insolvency
Insolvency means the inability to pay one's debts as they fall due. Usually used to refer to a business, insolvency refers to the inability of a company to pay off its debts.Business insolvency is defined in two different ways:...
bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
.
Structure
- Part 1 The Office of Fair TradingOffice of Fair TradingThe Office of Fair Trading is a not-for-profit and non-ministerial government department of the United Kingdom, established by the Fair Trading Act 1973, which enforces both consumer protection and competition law, acting as the UK's economic regulator...
(ss 1-11) - Part 2 The Competition Appeal TribunalCompetition Appeal TribunalThe Competition Appeal Tribunal of the United Kingdom was created by Section 12 and Schedule 2 to the Enterprise Act 2002 which came into force on 1 April 2003.-Functions:The current functions of the CAT are:...
(ss 12-21) - Part 3 Mergers
- Chapter 1 Duty to make references (ss 22-41)
- Chapter 2 Public interest cases (ss 42-58)
- Chapter 3 Other special cases (ss 59-70)
- Chapter 4 Enforcement (ss 71-95)
- Chapter 5 Supplementary (ss 96-130
- Part 4 Market Investigations
- Chapter 1 Market investigation references (ss 131-138)
- Chapter 2 Public interest cases
- Chapter 3 Enforcement
- Chapter 4 Supplementary (ss 168-184)
- Part 5 The Competition CommissionCompetition CommissionThe Competition Commission is a non-departmental public body responsible for investigating mergers, markets and other enquiries related to regulated industries under competition law in the United Kingdom...
(ss 185-187) - Part 6 Cartel offence (ss 188-202)
- Part 7 Miscellaneous Competition Provisions (ss 203-209)
- Part 8 Enforcement of certain consumer legislation (ss 210-236)
- Part 9 Information (ss 237-247)
- Part 10 InsolvencyUK insolvency lawUnited Kingdom insolvency law deals with the insolvency of firms and individuals in the United Kingdom. The important statutes are the Insolvency Act 1986, as amended by the Enterprise Act 2002, as well as the Company Director Disqualification Act 1986 and the Companies Act 2006.Insolvency is a...
(ss 248-272) - Part 11 Supplementary (ss 273-281)
- Schedules
Competition policy
The Act had five major competition policy objectives;Make all competition decisions through independent bodies, root out forms of anti-competitive behaviour, create a strong deterrent effect, to redress injured parties in distortions of competition and raise the profile of competition policy in the UK.
The act made the Office of Fair Trading
Office of Fair Trading
The Office of Fair Trading is a not-for-profit and non-ministerial government department of the United Kingdom, established by the Fair Trading Act 1973, which enforces both consumer protection and competition law, acting as the UK's economic regulator...
formally independent from government, and gave it additional powers. It is now possible for searches to be carried out under warrant from this act of business premises involved with potentially prohibitable mergers. The act also established the Commission Appeals Tribunal (CAT) for companies to appeal against decisions by the Competition Commission
Competition Commission
The Competition Commission is a non-departmental public body responsible for investigating mergers, markets and other enquiries related to regulated industries under competition law in the United Kingdom...
. The role of the Director General of Fair Trading (DGFT) was also abolished and his powers given to the OFT, this was seen as an attempt to depersonalize the competition investigation process. The Minister of Trade and Industry in the past played a large role in competition policy, having final say over whether a particular merger was in the public interest. Under the new Act his role was significantly diminished in order to de-politicize competition regulation which had been accused of being inconsistent in the past. He now only has powers to intervene if the proposed merger will affect the media to the detriment of the public, national security or if one of the firms is a government contractor.
On the deterrence side of the act, jail terms of a maximum of five years for directors was introduced in order to increase deterrence for forming cartels.
The competition commission also had its scope widened to cover investigations of whole industries, not just specific firm, for example the supermarket industry.
Companies
The Enterprise Act made substantial amendments to the administrationAdministration (insolvency)
As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. The process – an alternative to liquidation – is often known as going...
procedures for failing companies. The purpose was to enhance the policy of creating a "rescue culture", so that insolvent companies so far as possible should be saved, before their assets are stripped and distributed to creditors.
- s 248 Replacement of Part II of Insolvency Act 1986Insolvency Act 1986The Insolvency Act 1986 is an Act of the Parliament of the United Kingdom that provides the legal platform for all matters relating to personal and corporate insolvency in the UK.-History:...
- s 249 Special administration regimes
- s 250 Prohibition of appointment of administrative receiver
- s 251 Abolition of Crown preference
- s 252 Unsecured creditors
- s 253 Liquidator's powers
- s 254 Application of insolvency law to foreign company
- s 255 Application of law about company arrangement or administration to non-company
Individuals
Since the 1 April 2004 there have been considerable changes to the laws concerning bankruptcy in EnglandEngland
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
. Previously, bankruptcy would typically last for a period of between 2 and 3 years, but now the majority of bankruptcies will be discharged after only 12 months. The law
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
was changed to give those with genuine cases of financial
FINANCIAL
FINANCIAL is the weekly English-language newspaper with offices in Tbilisi, Georgia and Kiev, Ukraine. Published by Intelligence Group LLC, FINANCIAL is focused on opinion leaders and top business decision-makers; It's about world’s largest companies, investing, careers, and small business. It is...
hardship the opportunity to be free of their indebtedness
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
. For those who have tried, unsuccessfully, to resolve their financial difficulties, the new laws allow them to petition for their own bankruptcy and start again.
Additional changes also mean that there are harsher restrictions for those who have previously been made bankrupt and those who have been through criminal bankruptcy. If an individual had previously been an undischarged bankrupt during the 15 years before the current bankruptcy (unless the previous bankruptcy was annulled) he/she was automatically discharged on 1 April 2009.
A bankrupt may ask the court for a discharge 5 years after the date of the bankruptcy order, but the court can refuse or delay the discharge, or grant it conditionally on terms requiring you to make some payments out of the individuals income. A person can however become free from bankruptcy immediately if the court annuls (cancels) the bankruptcy order; this normally happens when the debts (including any fees and expenses of the bankruptcy proceedings) have been paid in full or if the bankruptcy order was made in error.
Alternatively, if a person has failed to carry out their responsibilities under the bankruptcy proceedings, the Official Receiver could apply to the court to delay the discharge from bankruptcy. If the court is in agreement, the bankruptcy order can only end when the suspension has been lifted and the time remaining on the bankruptcy period has run out.
How assets are treated
There is now a limit of 3 years(either from the date of the Bankruptcy Order or from when the Official Receiver/Trustee first became aware of the Bankrupt's interest in the property), during which the Trustee in Bankruptcy (this may be the Official Receiver, but is far more likely to be an Insolvency Practitioner normally an accountant. The Official Receiver's staff have little experience or training in the litigation involved) must deal with the debtor's main residence. There is no time limit for dealing with other assets or properties. If the Official Receiver fails to realize the property during this time, the property will revest in the (ex-)bankrupt.
Where it is believed that the debtor has brought about the bankruptcy through their own irresponsible or imprudent conduct, there are now more severe consequences. If this is the case, the Official Receiver can apply for a Bankruptcy Restriction Order, which may be applicable for between 2 and 15 years, in addition to the normal length of discharge.
Examples of such situations
Failure to produce or retain records;
Incurring debts as a result of gambling
Gambling
Gambling is the wagering of money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods...
;
Incurring debts that have arisen as a result of precarious or risky conjecture.
Additionally, the usual cost to an individual that wishes to petition for their own bankruptcy has risen from £460 to £510 as of 1 April 2008.
Provisions
- s 256 Duration of bankruptcy
- s 257 Post-discharge restrictions
- s 258 Investigation by official receiver
- s 259 Income payments order
- s 260 Income payments agreement
- s 261 Bankrupt's home
- s 262 Powers of trustee in bankruptcy
- s 263 Repeal of certain bankruptcy offences
- s 264 Individual voluntary arrangement
- s 265 Disqualification from office: justice of the peace
- s 266 Disqualification from office: Parliament
- s 267 Disqualification from office: local government
- s 268 Disqualification from office: general
- s 269 Minor and consequential amendments
External links
- Explanatory notes to the Enterprise Act 2002 from the Office of Public Sector InformationOffice of Public Sector InformationThe Office of Public Sector Information is the body responsible for the operation of Her Majesty's Stationery Office and of other public information services of the United Kingdom...
.