6 November 2018

Professor Erika Szyszczak is a Research Professor in Law and a fellow of the UK Trade Policy Observatory. She was the Specialist Adviser to the House of Lords European Union Committee Inquiry: Brexit: competition and state aid

On 30 October 2018, the Government revealed its plans on how competition law will continue to operate in the scenario where the UK and the EU are unable to reach an amicable separation agreement – the so-called ‘no deal’ scenario where there is no future EU-UK trade agreement in place. This Blog comments on the expected increase in the workload of the Competition and Markets Authority after Brexit and the proposed new, autonomous approach to competition policy where Regulators and courts will no longer be under an obligation to follow EU competition law.

Competition law is a vital tool in the EU Single Market and is increasingly used in trade agreements as a measure to counteract corruption and to tackle barriers to trade beyond a customs border. In the UK, the competition regime is robust, based upon Article 101 TFEU (cartels) and Article 102 TFEU (abuse of a dominant position) and the Merger Regulation, with a strong national regulator in the form of the Competition and Markets Authority (CMA). There is a history of judicial involvement in competition cases, through review of CMA decisions, and the growth in private damages claims.

The contingency plans for a “No Deal” scenario are to be found in a Statutory Instrument, The Competition (Amendment etc.) (EU Exit) Regulations 2019  accompanied by an Explanatory Memorandum alongside guidance from the CMA [[https://www.gov.uk/government/publications/cmas-role-in-antitrust-if-theres-no-brexit-deal]. The Statutory Instrument will revoke Articles 101 and 102 TFEU and the EU Merger Regulation. It was anticipated that the most sensible approach in order to avoid extra regulatory burdens for the regulator, as well as business, would be for the UK to maintain a close and parallel approach with EU competition law and policy. This was the recommendation of the Brexit Competition Law Working Group and in evidence submitted to the House of Lords European Union Committee  Inquiry on Brexit: competition and State aid.

It is acknowledged that arrangements for competition enforcement in the Brexit divorce could be messy since it may take many years for anti-competitive behaviour to come to light, or to be felt in the market. Thus close co-operation with the European Commission and National Regulatory Authorities in other Member States also seemed sensible. But the Statutory Instrument addresses this issue with a number of transitional arrangements.

Consequences for Private Damages Claims

The new provisions anticipate that European Commission Decisions finding an infringement of EU competition will no longer be binding after Brexit for the purpose of follow-on actions in the UK courts. Thus a claimant for a private damages action will have to open new proceedings in the UK courts, and would be well-advised to do so now for any current investigations before the European Commission. There is an exception in that the transitional provisions will provide that the binding effect of European Commission Decisions that pre-date Brexit will be maintained, even if any appeals against them are only concluded after Brexit.

EU Case Law and Decisions

Surprisingly, the Statutory Instrument will repeal s.60 of the Competition Act 1998, replacing it with s60A.  Section 60 currently requires the UK competition provisions (Chapter I and Chapter II prohibitions) to be interpreted so far as is possible consistently with the EU approach under Articles 101 and 102 TFEU.

The new s.60A addresses the role of European Court judgments and European Commission Decisions. Looking forward, there will be no legislative obligation on UK courts and regulators to have regard to European Court judgments or European Commission Decisions after Brexit.

An issue which was addressed in the EU (Withdrawal) Act 2018 is the scenario where UK courts are obliged to follow EU judgments that pre-date Brexit. The new s60A (7) provides that the relevant court or decision-maker may disapply the interpretative obligation if they consider that to be appropriate in the light of various criteria, one of which is a post-Brexit development in EU law, either through European Commission policy-making or a judgment from the European Courts. Other criteria include differences between UK and EU markets, developments in economic activity, generally accepted principles of competition analysis or the particular circumstances under consideration.

Block Exemption Regulations

The EU currently uses seven Block Exemption Regulations in sectors and areas where there is a common understanding of anti-competitive conduct (which is illegal) and acceptable business dealings which can be tolerated. These free up valuable time for the European Commission to focus on hard-core cartels, but also provide a useful template for business dealings. For the time being these Regulations will be retained in UK law until their expiry dates, (the latest being 30 April 2026 for the Technology Transfer Regulation), but amended where there are problems arising as a result of the UK ceasing to be a Member State of the EU.  The Statutory Instrument transfers the power to amend or revoke the Regulations to the Secretary of State, acting in consultation with the CMA.

In addition to the increased work of adapting competition law to the requirements of the UK market, the CMA will also take on additional work involving mergers which would have fallen under the jurisdiction of the European Commission, as well as new responsibilities in relation to the regulation of State Aid.

Thus the proposed new approach offers opportunities for the CMA to develop competition policy independently of developments in the EU. This may prove to be a new dynamic to the development of global competition policy.

 

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The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.

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