Competition Law - will Brexit impact on the regulation of markets?

Background

UK competition law is based on (and almost mirrors) the EU legislation in terms of the substantive provisions as well as the thresholds for investigations etc.

The Competition Act 1998 mirrors Articles 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”) and therefore the UK competition authority – the Competition and Markets Authority (“CMA”) and the EU Commission often work together in terms of investigations, fines and market analysis.

Therefore, when the UK leaves the EU (if this is without a deal) then the EU legislation, guidance and jurisprudence (i.e. previous case law and decisions of the EU courts which are often relied upon in UK cases) will all cease to have binding effect in the UK legal system (although may be persuasive).

A further issue is that often the EU will be involved with and may lead an investigation into a UK company where the infringing act and/or proposed merger has an effect on the whole of the EU (and not just the UK) and therefore post-Brexit, many have wondered what happens to such investigations and ongoing matters which are ongoing on exit day.

Guidance from CMA

The CMA has now published guidance (available here) on how a no-deal Brexit would impact on the functions and activities of the CMA.

This guidance covers the following areas:

  • prohibition and cartel enforcement
  • merger control 
  • consumer law enforcement 

It also answers some common questions that have been asked such as:

What happens to live cases that impact both the EU and UK?

Who continues/has jurisdiction over such cases (is this the EU/CMA)?

This guidance will only be applicable when (and if) the UK leaves the EU without a deal. If we leave with a deal from the EU and/or don’t end up leaving the EU then the guidance will not apply.

Advice on Competition Cases and Enforcement post-Brexit

We have outlined the main points in the guidance below:

(a) Mergers

After exit day, mergers which have the potential to affect both the UK and EU could be subject to separate proceedings (i.e. an investigation in the UK and an investigation in the EU) and therefore companies should be aware that any international mergers/acquisitions may require consideration from both a UK and EU perspective as well as noting that any requirements for notification would also apply to both UK and EU competition authorities.

Cases:

(i) Decisions made pre-Brexit – if the EU Commission has made a decision in relation to a merger case before Brexit then this will continue to apply and the UK CMA will not be able to override this decision unless it is struck down by the EU court.
(ii) Ongoing investigations on exit day – if the EU Commission has an ongoing investigation which impacts the UK on exit day then the UK CMA could take jurisdiction over the UK elements of the merger investigation under the UK laws.

(b) Prohibitions

Similar to mergers, where a company has committed an offence under competition law which impacts the UK and EU that company could be subject to two separate investigations and/or fines for such conduct.

The CMA will still be bound to act in accordance with pre-Brexit case law from the EU but could depart from post-Brexit decisions that the EU Commission may make.

(i) Ongoing investigations on exit day – where the CMA is investigating conduct which has an EU element/impact then the CMA will no longer, after exit day, be able to continue looking at those EU aspects and these may be investigated by the EU Commission separately.

Where the EU are conducting an investigation before and/or on exit day, then the UK CMA cannot start its own investigation if a decision has been reached by the EU Commission in this regard. Where a decision has not yet been reached then the UK is not prevented from starting its own investigation into the conduct.

(c) Consumer Protection Enforcement

Consumer protection law will not change post-Brexit and therefore businesses selling to consumers should not be subject to any additional/more onerous regulations that are already in force across the EU.

Some things to note:

(i) Businesses in the UK selling to EU consumers – as consumer protection law is similar across the EU, Brexit should not have a huge impact on obligations etc. Therefore UK businesses should be aware that they must apply the law in the member state where the consumer is based (which could in the future differ from UK regulation).
(ii) UK consumers buying from EU traders – the laws will remain the same unless the UK government repeals and/or replaces these in the future and new obligations are imposed on EU companies offering goods/services to UK consumers.

This guidance from the CMA is very much a “if all else fails” document and will only apply if the UK leaves the EU on 29th March 2019 with no deal. This guidance was designed to give some clarity over what laws will continue to apply, what laws may change and how this will affect organisations in practice if they are subject to any actions/investigations by the CMA and/or EU Commission before or after Brexit.

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