Blog: Brexit and the likely effect on UK competition law

David Flint

David Flint considers the potential consequences of Brexit on competition law.

Since 1998, UK Competition Law, contained in Chapters I and II of the Competition Act 1998 and the Enterprise Act 2002, has operated in parallel with the system of EU Competition Law contained in Articles 85 and 86, then 81 and 82 and now Articles 101 and 102 of the Treaty on the Functioning of the European Union (“TFEU”).

The UK rules mirror those of the EU, other of course that the UK rules refer to an effect on trade in the UK, whereas the EU rules have an EU focus. Although almost identically worded to the EU rules, the rules have been enacted into a primary UK statute and are therefore unlikely to be effected per se by any implications of Brexit.

Even if Brexit occurs, the EU rules will still be relevant to UK businesses as they will be bound by them if they do business, directly or indirectly, in the EU and, depending on the particular post-Brexit regime which exists, may still be bound by them directly. The European Court and the EU Commission have made it clear that if any agreement or arrangement has any effect within the EU, the EU will have jurisdiction to apply its rules. From the earliest days of the EEC (now EU) the European competition authorities have applied the rules against undertakings outside the territory of the EU.

Similar parallel wording exists in the EEA Treaty and in many of the Association Agreements which the EU has with third countries, so it seems improbable that any arrangement with the UK, post-Brexit would not have an “EU-like” set of competition rules, particularly as the existing UK rules are so closely aligned.

One issue which will need to be addressed is Section 60 of the Competition Act 1998, which provides that questions arising under Part I of the Competition Act (the competition part) are to be dealt with in a manner which is consistent with the treatment of corresponding questions arising under EU law in relation to competition within the European Union. Courts and the CMA are required to ensure no inconsistency between the two systems and are obliged to apply the principles set out in the TFEU and by the European Court and decisions of that court. They are also required to have regard to any relevant statement or decision of the EU Commission.

Post-Brexit, it may be that such an alignment will no longer be required, but presumably (given the almost identical wording) the UK authorities would have regard to what was happening in the EU (it may be persuasive) – the coordination of approach by competition and antitrust authorities in the EU and beyond though bilateral arrangements and the European Competition Network will ensure that that happens.

It is not impossible that State Aid and Public Procurement rules will diverge, but international obligations under WTO will impose some restraint on what the UK could do.

It is not impossible that over time UK and EU rules will diverge, even if only slightly, increasing the compliance costs for business. Mergers will no longer benefit from a one-stop-shop process, so increasing complexity and cost.

There may also be issues of private damages and of jurisdiction depending on how the Brussels I Convention on jurisdiction, recognition and enforcement of judgements in civil and commercial matters is applied to the new world.

Of course, nothing may change, and indeed nothing will change until the UK actually leaves the EU and that can only happen after at least two years from exercise of the Article 50 request. Any new regime is therefore unlikely to be in place before early 2019. In the meantime, all the existing rules will continue to apply.

Blog: Brexit and the likely effect on UK competition law

  • David Flint is senior partner at MacRoberts.
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