Short Reads

Never fear, a post-Brexit competition law checklist is here

Never fear, a post-Brexit competition law checklist is here

Never fear, a post-Brexit competition law checklist is here

31.12.2020 EU law

On 1 January 2021, the United Kingdom completes the process of separating from the European Union. However, the split between the UK and EU regimes will be a gradual process rather than a swift surgical cut, due to the treatment of ongoing cases and various substantive connections.

Nevertheless, now is the time for companies to incorporate any (potential) additional merger filing obligations and antitrust implications into their daily routines. It is also advisable to double-check whether current agreements may need to be revised to anticipate the upcoming expiry dates for EU block exemption regulations retained under the new regime. Check our post-Brexit checklist to see what lies ahead.

First: get the ground rules straight

However, before diving into these checklists, it is important to realise that Brexit does not alter the principles underlying the territorial application of EU competition law. According to EU case law, EU competition rules (Articles 101 and 102 TFEU) apply to companies regardless of their whereabouts, as long as their anti-competitive conduct is implemented or produces effects within the EU. So even though the UK is no longer part of the EU, the European Commission can still apply EU competition rules to UK companies. The difference is that post-Brexit the Commission will no longer be able to conduct dawn raids in the UK, or request the CMA to do so on its behalf. Instead, it will have to make do with requiring UK companies to provide it with all necessary information for the purpose of its investigations.

Similarly, Brexit does not alter the UK Competition and Markets Authority’s power to investigate suspected infringements of UK domestic competition law. The difference is that post-Brexit, the UK Competition and Markets Authority (CMA) and concurrent regulators will no longer have the power to apply EU competition rules. Instead, they will be confined to investigating anti-competitive conduct that may affect trade within the UK. This also means that, after 31 December 2020, the CMA will have to drop any EU elements in its ongoing investigations. According to the CMA’s guidance document, all actions taken before 31 December 2020 related to these EU elements will – after that date – be treated as having been carried out for the purpose of the UK elements of the investigation only. Companies may need to (re)consider whether and where to file for leniency after that date, as summary applications in Commission immunity application cases will no longer be available.

In short, even in a post-Brexit world, it is still important for companies:

  • to comply with the EU competition rules; this is still key, as conduct by UK companies can still be caught under these rules,
  • to comply with the UK competition rules; also still key, as conduct may be investigated by the Commission and CMA in parallel.

The checklists below provide pointers for companies at each stage of their antitrust and merger cases, post-Brexit.

Second: consult the checklists

The following checklists provide a brief overview of the legal implications of Brexit for merger and antitrust cases, and provide practical pointers for companies. More information can be found in the European Commission’s notice to stakeholders and the CMA guidance document.

MERGER CASES | POST-BREXIT
Actions taken prior to 1 January 2021
Situation Jurisdiction Implications  Pointers for companies
The Commission issued a merger decision. The Commission has exclusive jurisdiction. The merger’s clearance / prohibition is binding. Any commitments will be monitored by the Commission. 

N.B. only the EU courts can review the Commission’s decision.

If the EU courts annul the decision and the Commission does not re-assess the UK dimension of the merger, the CMA can assert jurisdiction.

Companies should be aware that:

  • the Commission may transfer the task of monitoring of the UK aspects of the commitments to the CMA, and
  • in the case of the EU courts annulling the Commission’s decision, the CMA may assert jurisdiction.
The merger has been notified to the Commission, but there is no decision yet. The Commission has exclusive jurisdiction until a final decision is reached.  The EU Merger Regulation’s one-stop-shop principle still applies. Companies will have their merger assessed by the Commission only.

N.B. pre-notification discussions with the Commission do not ‘count’ as notification. In such cases, companies should double-check whether the merger also meets the UK filing thresholds.
As of 1 January 2021   
Contemplated mergers. Both the Commission and CMA may be competent to review the merger. Potential parallel Commission and CMA merger filing obligations and investigations.

N.B. The Commission’s substantive assessment will no longer cover the UK. 
Companies should double-check whether the EU and/or the UK filing thresholds are met.

N.B. UK turnover is no longer included in the turnover calculations for meeting the EU filing thresholds.

 

ANTITRUST CASES | POST-BREXIT
Actions taken prior to 1 January 2021
Situation Jurisdiction Implications Pointers for companies
The Commission issued an infringement decision. The Commission is competent. The Commission decision is binding. Any commitments will be monitored by the Commission.

The CMA cannot open an investigation into the infringement.

N.B. The EU courts have exclusive competence to review the decision. 

Companies should be aware that:

  • the Commission remains the competent authority,
  • the Commission may transfer the monitoring of the UK aspects of the commitments to the CMA, and
  • the Commission decision can form the basis of follow-on damages cases in the UK.
The Commission formally initiated an investigation.  The Commission is competent to investigate the facts which occurred up to and including 31 December 2020. The Commission decision, once issued, is binding. Any commitments will be monitored by the Commission.

N.B. The EU courts have exclusive competence to review the decision. 

Companies should be aware that:

  • the Commission may still carry out inspections in the UK after 31 December 2020 for its investigation,
  • the Commission, once it has issued a decision, may transfer the monitoring of the UK aspects of the commitments to the CMA, and
  • the Commission decision, once taken, can form the basis of follow-on damages cases in the UK.
  After 31 December 2020, the CMA may investigate the same conduct pursuant to UK antitrust rules only for the facts occurring from that date onwards. Potential parallel investigations by the Commission and the CMA concerning the same conduct.

Companies should:

  • consider whether they would like to apply for leniency at the CMA, and
  • anticipate a possible fine (in addition to the possible Commission fine).
As of 1 January 2021
New investigations into potential anti-competitive conduct. The Commission is competent if the anti-competitive conduct is implemented or produces effects in the EU. Potential parallel investigations by the Commission and the CMA. 

Companies should:

  • decide whether to apply for leniency at the Commission and/or the CMA. It is no longer an option to make summary applications to the CMA when an application to the Commission is made, an
  • anticipate that two fines may be imposed.
  The CMA will investigate suspected infringements of UK domestic competition law in relation to conduct both before and after 31 December.

N.B. except for the situation where the Commission issued a decision with regard to an investigation which was formally initiated prior to 1 January 2020 (see above).
   
Agreements concluded in accordance with EU block exemption regulations. The UK preserves these regulations as “retained exemptions” and incorporates them into domestic law. The retained exemptions will operate as exemptions from UK prohibitions and will protect both established and new agreements. Companies should consider the territorial scope and duration of current and new agreements qualifying for any of the retained exemptions in light of their expiry dates (see Annex B of the CMA guidance document).

 

Team

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