101 UK Brexit Notes

Connemara Programme October 16 2018 pg. 74 Business: Mergers and Anti-competitive activity Purpose This notice sets out how merger review and investigations into anti-competitive activity would be affected if the UK leaves the EU with no deal. If the UK leaves the EU in March 2019 without a deal, find out how this would affect:  the role of the Competition and Markets Authority;  merger review;  investigations into anti-competitive activity in the UK;  exemptions from competition law that businesses can benefit from;  claiming damages if you have been affected by anti-competitive behaviour. Before 29 March 2019 UK and EU competition law prohibit anti-competitive agreements and the abuse of a dominant market position. Merger control exists to prevent harmful effects to competition from mergers. While the UK is part of the EU, mergers which meet EU turnover thresholds and many cases of anti-competitive conduct which affect the UK as part of the Single Market are investigated by the European Commission, with appeals to the Court of Justice of the European Union (CJEU). Where the European Commission does not take jurisdiction (legal authority over the case), the Competition and Markets Authority (CMA) is responsible for investigating the impact in the UK market. UK sector regulators (such as Ofcom) also have concurrent powers to investigate suspected infringements of competition law. Most appeals from Competition and Markets Authority decisions are heard by the specialist Competition Appeal Tribunal. While the UK is part of the EU, it is possible to bring follow-on actions for private damages in UK courts for infringements of EU competition law based on decisions by the European Commission. European Commission decisions that are made before exit will continue to have the same legal status in UK law that they have now, meaning that claimants may bring follow-on claims based on those decisions in UK courts. In addition, the CMA and UK courts are required to follow decisions of the CJEU on points of competition law and to take account of decisions of the European Commission in order to avoid inconsistent decisions. After March 2019 if there’s no deal In the unlikely event of a ‘no deal’ scenario, the UK will cease to be part of the EU competition regime. The government is not proposing to make any changes to the UK competition regime beyond those necessary to manage the UK’s exit from the EU. The Competition and Markets Authority, which is a world-leading competition authority, will continue in its investigatory role for mergers and anti-competitive conduct with effects on UK markets. The government will make necessary changes to UK law through Statutory Instruments made under the EU Withdrawal Act 2018. These will remove references to EU law and institutions, and duties on UK bodies which relate to current EU obligations. For example, powers relating to the European Commission’s ability to undertake investigations of business premises in the UK will be removed; and the CMA and UK courts will no longer be bound to follow future CJEU case law. The domestic UK competition regime will remain in place. All businesses operating in the UK will continue to have to comply with UK competition law. Anti-competitive agreements and abuses of a dominant market position that affect competition within the UK will continue to be prohibited. The Competition and Markets Authority and sectoral regulators will continue to investigate possible breaches of UK competition law. The EU Withdrawal Act will preserve the EU block exemption regulations (which currently apply in the UK as parallel exemptions to the UK competition prohibitions). The block exemption regulations exempt certain types of agreements from competition rules where there are benefits for consumers. Any necessary modifications will be made to correct deficiencies in the exemptions, for example amounts denominated in euros will be converted and redenominated in pounds sterling. The intention is that existing agreements between companies that benefited from the parallel application of an EU exemption to the UK antitrust prohibitions prior to EU exit should continue to benefit from that exemption in the UK. Companies will also be able to benefit from the preserved block exemptions within the UK when they enter into new agreements that meet the relevant criteria after EU exit. In a ‘no deal’ scenario, businesses should be aware that it is possible that there will be no agreement on jurisdiction over live EU merger and antitrust cases to the extent that they address effects on UK markets. Businesses subject to an ongoing antitrust investigation should take independent legal advice on how to comply with any ongoing investigation of the European Commission and/or the Competition and Markets Authority (or the relevant UK regulator).