On 21 July 2017, the House of Lords EU Internal Market Sub-Committee (the EU Committee), chaired by Lord Whitty, launched an inquiry into the key issues that will arise in the negotiations on Brexit and the impact of Brexit on UK competition policy.
The EU Committee have invited interested parties to submit evidence to contribute to this public debate on the opportunities and challenges of leaving the EU for UK competition policy, and to inform and influence the UK government’s consideration of these issues.
They will look into the opportunities for reshaping enforcement of competition policy after Britain leaves the EU. They will also consider whether the UK Competition and Markets Authority (CMA) and other regulators which have concurrent competition powers have the capacity to ‘cope with additional responsibilities and a greater caseload’.
Effect of Brexit
As an EU member state, the UK has jurisdiction to apply EU competition rules against monopolies and cartels, as well as benefit from EU-wide enforcement undertaken by the Commission. Furthermore, the UK’s competition regime is underpinned by domestic statutes modelled on EU law. This close interconnection between EU and domestic competition policies will potentially present significant challenges and opportunities to reshape the UK’s domestic competition law regime when the UK leaves the EU.
Post-Brexit, there will be a break in that model. Domestic legislation relating to merger control and antitrust issues will remain in force but the UK will be expected to carry out its own investigations into cartels or mergers that would previously have been conducted by the Commission. This increase in responsibilities is expected to need a commensurate increase in resources for the CMA, as well as other UK regulators with concurrent competition powers. In addition, the UK will have to consider how and whether it will be able to continue co-operation arrangements with the other members of the European Competition Network to facilitate mutual assistance and information sharing with the Commission and other national competition authorities across the EU post-Brexit.
State aid on the other hand presents entirely different challenges for the UK, as it is an area of competition law that is controlled exclusively by the Commission. The UK might be faced with the prospect of establishing an entirely new domestic framework relating to State aid post-Brexit.
The EU Committee said it would explore the role of subsidy and state aid obligations, which currently apply to the UK as an EU member state, and which could form part of the UK’s obligations under a future trade agreement between the two sides.
What will the inquiry explore?
The EU Committee’s call for evidence states that the inquiry will explore:
- the opportunities and challenges in reshaping UK competition policy post-Brexit;
- the implications of Brexit for the application and enforcement of competition law in the UK;
- whether UK competition law authorities have the capacity and resources to cope with additional responsibilities and a greater caseload;
- potential state aid obligations in any UK-EU free trade agreement; and
- future co-operation between the UK and the EU on investigations and enforcement actions.
Timeline
Public hearings will be held from September until November 2017. The EU Committee aims to publish its report, with recommendations, early in 2018. The report will receive a response from the government and will be debated in the House of Lords.
The EU Committee has asked for written submissions on a range of competition law questions from anyone with a relevant interest. The deadline to submit a response was on Friday 15 September 2017. Interested parties need not address all questions in their response, and respondents from a particular area or sector are invited to focus on the questions most pertinent to them. The respondents may subsequently be invited to give oral evidence.
The committee’s questions
The questions posed to the public by the EU Committee cover a broad spectrum of some of the antitrust, merger and state aid law concerns with which the UK will be faced post-Brexit. Listed below are some examples of those questions:
- To what extent should the UK maintain consistency with the EU on the interpretation of EU competition law?
- What are the likelihood and the implications of the UK conducting parallel investigations with the Commission and other national competition authorities?
- Would a transitional arrangement for antitrust enforcement/ merger control after the UK’s withdrawal be necessary? If so, what would these arrangements need to address?
- How burdensome would dual CMA/Commission merger notifications be for companies?
- Would the World Trade Organization (WTO)’s anti-subsidy rules restrict the UK’s ability to support industries or individual companies, through favourable tax arrangements?
Comment
This call for evidence is an opportunity for business concerns about the future competition law framework in the UK post-Brexit to be thoroughly exploited. Post-Brexit, businesses that operate in the UK and the rest of the EU will have to comply with both UK and EU competition rules, which could mean being subject to, for example, merger control regimes under both jurisdictions.
If you would like to contribute to the EU Committee’s call for evidence, please contact Eversheds Sutherland’s competition team, who will be happy to assist you with any questions of law or fact. The progress of the inquiry can be followed at www.parliament.uk/brexit-competition-lords-inquiry