Brexit has happened. The UK is no longer an EU Member State. What does that mean for competition law in the UK?
Has Anything Changed?
In the short term, nothing will change. Until the end of the transition period set out in the UK Withdrawal Agreement, the rights and obligations of EU law continue to apply just as they did before. That transition period is due to end on 31 December 2020, unless both sides agree to an extension. So far, the UK Government has refused to consider a possible extension and has even sought to legislate against one.
But, for at least the next 11 months, EU law will continue to apply. The UK will be treated as an EU Member State for the purposes of competition law (as well as other purposes) and EU institutions will retain jurisdiction over any administrative procedures that are already underway or that initiated before the end of the transition period.
This is not limited to competition law. The UK is still, in effect, part of the internal EU market and the freedoms guaranteed under the EU Treaties continue to apply. Manufacturers can still export goods into and out of the UK. Services can still be offered across border. EU citizens (including UK citizens) can move freely between the EU and UK, and not be discriminated against when seeking work. And the UK will have to abide by EU rules on State Aid.
The same applies to competition law. Nothing changes in the short term. But for companies considering an acquisition or merger, and for those involved in antitrust investigations, there may be advantages or disadvantages in beginning those proceedings before the end of the transition period.
Mergers that meet the jurisdictional thresholds under the European Merger Regulation will continue to be reviewed by the European Commission under the one-stop-shop principle throughout the transition period. And UK turnover will continue to count as EU turnover when deciding whether those thresholds are met. The Commission will retain exclusive jurisdiction over mergers that are formally notified in Brussels before the end of the transition period, even where the investigation continues after December 2020. It will also retain the power to monitor and enforce UK aspects of any remedies in these cases unless it explicitly agrees to transfer responsibility to the UK Competition and Markets Authority (CMA).
The substantive provisions of EU competition law (anticompetitive agreements and abuse of dominance under Articles 101 and 102 of the TFEU) will also remain in force in the UK during the transitional period. EU law will continue to be binding, EU Block Exemptions will continue to apply, and UK competition law will have to be interpreted consistently with EU law.
Under EU law, the competition authorities of EU Member States cannot investigate agreements or conduct already being investigated by the European Commission. This will continue to be the case during the transition period. If the Commission is investigating a cartel in the UK, the CMA cannot.
The Commission will also retain exclusive jurisdiction over UK aspects of antitrust investigations that are ongoing at the end of the transition period, provided it has already opened formal proceedings before that date – however long those proceedings take to complete. As with mergers, the Commission have will retain the power to enforce remedies in these cases, unless it explicitly agrees to transfer responsibility to the CMA or a concurrent UK competition authority.
The CMA’s has published guidance on the application of EU competition law during the transition period and its role under the Withdrawal Agreement.
And then what?
It is far less clear what will happen after the transition period. The one-stop-shop review of mergers under the EU Merger Regime will almost certainly end in the UK. Transactions may have to be reviewed by the Commission and the CMA. Similarly, it seems likely that UK authorities will be able to investigate suspected cartels and abuses of dominance in parallel with the European Commission. The substantive provisions of UK competition law may even start to diverge from EU law over time.
The joint political declaration on the future relationship between the EU and UK states only that the two sides will seek to ensure: “open and fair competition, encompassing robust commitments to ensure a level playing field.” It is too early to know exactly what that level playing field will look like.
But for now at least, nothing changes.