Brexit Competition Law Working Group endorse continuity of UK competition law and policy post Brexit

Report findings

Its overarching message is that the principles of UK competition legislation should remain in force; however specific provisions may need to be re-assessed. The provisional recommendations included that, in the interests of the UK economy, the UK would be best served by the continuity of UK competition law and policy as it currently stands. The notion that Brexit should prompt a radical reform of principal UK competition law, or that the role of the competition authorities should change, was rejected.

Possible changes and amendments to existing rules on Brexit

The BCLWG found that much existing legislation will not require amendment. For example, parts of Schedule 3 to the Competition Act 1998 (CA 1998), which operates to exempt various types of agreements from domestic antitrust rules, should remain in force. Paragraphs 1 (planning obligations), 4 (services of general economic interest), 5 (compliance with legal requirements), 6 (avoidance of conflict with international obligations) and 7 (public policy) should not be impacted by the UK’s withdrawal from the EU.

The BCLWG also recommended that provisions, which set out the ability of private parties to bring follow-on actions for damages in the UK for breaches of EU (and UK) competition law, should also remain unchanged.

However, some primary legislation will need to be revised. In particular provisions, which require UK authorities act consistently with EU case law, should be amended so that the duty is to “have regard” to EU jurisprudence.

Other provisions that will require amendment according to the BCLWG include:

• Block exemptions: repeal of section 10 of the CA 1998 so that UK law does not automatically incorporate block exemptions created by the EU (however, existing EU block exemptions should continue to exempt agreements from the Chapter I prohibition which prohibits anticompetitive agreements).

• Common agricultural policy: paragraph 9 of Schedule 3 to the CA 1998, which relates to agricultural agreements that work toward the attainment of the objectives of the Common Agricultural Policy.

• Financial markets: financial markets are currently regulated by EU law (paragraph 3 of Schedule 3 to the CA 1998). The agreements that are reached between the EU and UK will have to be negotiated before recommendations as to how the legislation should be amended are made.

• Coal and steel: paragraph 8 of Schedule 3 which exempts agreements for coal and steel could potentially be amended.

Comments on transitional provisions

The provisional findings highlight the potential difficulties that the UK could face in relation to transitional arrangements in respect of competition law procedures, and how the respective UK and EU authorities need to co-operate on an ongoing basis. Particular issues highlighted by the BCLWG include:

• Commitments: whether commitments that are offered to the European Commission pursuant to Article 9 of Council Regulation 1/2003) pre-Brexit will continue to be binding in the UK post-Brexit is uncertain. To determine whether or not the commitments will still apply, each case may have to be examined individually and the language of those commitments analysed. The BCLWG recognises that addressing this could be incredibly resource-heavy, and as such suggests that they should be nationalised through the Great Repeal Act to the extent that they affect the UK, giving the UK Competition and Markets Authority (the CMA) the power to enforce them.

• Privilege: under EU law, advice given by external counsel qualified in the EEA is privileged from disclosure. However, there is a question mark as to whether or not privilege will still apply to advice given by UK only qualified lawyers. Transitional agreements will have to provide certainty as to whether legal privilege in European Commission cases will continue to apply (relating to investigations both pre and post Brexit).

The BCLWG has called on the CMA to issue guidance on these vital transitional issues in due course. For parties facing these potential hurdles, the BCLWG encourages the parties to engage with the Commission and the CMA.

Merger control

The BCLWG recommended that the "substantial lessening of competition" test and the existing public interest criteria test under UK merger control rules be retained. The group also suggested that the role of public interest criteria under the merger regime be expanded. However, the group does not appear as yet to have reached a consistent view as to whether there should be a transition of the EU provisions in relation to market investigations.

The report highlights the need for the CMA to work with the European Commission to agree a pre-Brexit strategy in relation to the merger referral process. The CMA should continue to utilise the powers conferred to it under Article 9 of the EU Merger Regulation to request full or partial reference back to the UK for any mergers that have been notified to the European Commission at the time of Brexit. This will be particularly important for the eight months preceding Brexit to ensure that cases that could be notified pre-Brexit and are likely to enter the EU Phase II process post-Brexit are captured.

The BCLWG note that the CMA’s work load will inevitably increase following Brexit and their resources will ultimately be impacted as a result. However, the existing level of fines and the fees for notification involved should work toward supporting the authority in its daily function.

The draft report was discussed at a half-day conference on 02 May 2017. Comments have been invited by 15 May 2017, following which a full written report will be published.