The UK Competition and Markets Authority (CMA) has published a number of technical notices setting out the status of antitrust cases and mergers in a “no deal” scenario. These are particularly helpful and relatively clear for antitrust cases and mergers that have already been notified to the European Commission (EC) but where the EC is yet to take a formal decision. It is, of course, possible that the interpretation of the notices will be the subject of litigation but the attempt to give certainty is to be welcomed. More information here.
The Brexit Competition Law Working Group (“BCLWG”), has published its conclusions and recommendations on the implications of Brexit for UK competition law and policy. The BCLWG was set up by a group of senior antitrust figures to foster public debate and inform government policy on the implications of Brexit for competition law. The report is available here.
Summary of the report
- Brexit does not give cause for radical reform of the principal UK competition statutes, nor of the role of the competition authorities.
- However, primary legislation will require amendment. In particular, the report recommends that the duty in section 60 of the Competition Act for the UK authorities and courts to act consistently with EU be amended to become a duty to ‘have regard to’ that jurisprudence. It also recommends repeal of section 10 of the Competition Act so that future EU block exemptions from the competition rules (e.g. EU Vertical Block Exemption) are not automatically imported into the UK; they would instead become a matter for the UK to decide.
- To preserve continuity of the ability of private parties to bring actions for damages in the UK for breaches of EU (as well as UK) competition law, the report recommends retaining sections 47 and 58 of the Act.
- For mergers the report recommends retaining the existing statutory criteria. In particular it does not support a change to the substantive assessment of mergers (the ‘substantial lessening of competition’ test). The report also does not consider that the current regime regarding the ability of the Government to intervene in mergers that raise public interest issues needs to be changed.
Brexit raises significant issues concerning transitional arrangements (both for antitrust and merger investigations); future cooperation between the UK and EU authorities; and the resources that the CMA will need to cope with its increased case load. In relation to transitional issues, the report makes a series of recommendations on the carrying forward of commitments from past antitrust and merger cases, and of leniency arrangements. Particularly difficult issues could arise in relation to mergers that ‘straddle’ the date of Brexit, and (in the longer run) parallel UK/EC investigations, both of mergers and antitrust issues.
- Barclays is in talks with Irish regulators about expanding its presence in Dublin in the run up to Brexit. Barclays quoted “In the absence of certainty around….an agreement, we intend to take necessary steps to preserve ongoing market access for our customers”. BBC News
- At least 15 Conservative MPs are in talks with Labour to defeat Theresa May’s hard Brexit. Stephen Kinnock said there was a “growing recognition” of the need for Britain to embrace a Norway-style arrangement to head off the threat of severe economic damage. Given the Prime Minister’s precarious working majority of just 12, a group of 15 rebel Tories could be sufficient to defeat the Conservatives in any Commons vote. The Independent
- Theresa May has been warned of an “immense constitutional crisis” if she goes ahead with a key Brexit bill without devolved governments’ consent. Welsh First Minister Carwyn Jones said the repeal bill, to convert current EU laws into UK law, was a “naked power-grab” which he could not support. He has joined forces with SNP leader Nicola Sturgeon to oppose the bill. BBC News
Please see below for today’s update on key Brexit news items:
- “Trade realities expose the absurdity of a Brexit ‘no deal’“, the FT reports. The article cites a recent World Bank study which argues that if the UK shifted from EU to WTO terms, trade in goods with the EU would halve and trade in services would fall 60 per cent. Financial Times
- The UK pharmaceutical sector has been told to prepare for a “crisis” Brexit scenario of drastically reduced access to European markets and hundreds of millions of pounds of restructuring costs unless a swift regulatory deal can be struck with Brussels. In a paper detailing how firms should prepare for Brexit, the European Medicines Agency advised UK-based pharma companies to move hundreds of roles and functions to an EU member state ahead of Brexit in order to maintain their existing rights to sell medicines in the common market. The Telegraph
- Jeremy Corbyn and Theresa May have outlined opposing strategies in terms of negotiating a Brexit deal. Labour has confirmed that walking away from Brexit negotiations if EU demands become too onerous would be “absurd” and that “there is no such thing as a no deal”, whilst Theresa May has reconfirmed her stance that “no deal is better than a bad deal”. The Guardian.