UK Competition Law and Brexit

UK Competition Law and Brexit

Competition Law

Current UK competition law is modelled on that of the EU. The Chapter I and Chapter II Prohibitions of the UK Competition Act 1998 (which prohibit anti-competitive agreements and the abuse of a dominant market position) mirror the prohibitions contained in Articles 101 and 102 of the Treaty on the Functioning of the European Union, although there does not need to be a possible effect on trade between EU Member States for the UK prohibitions to apply. The Chapter I and Chapter II Prohibitions currently have to be interpreted according to a consistency principle so that EU jurisprudence is always taken into account in their application. Brexit could give the UK greater freedom to frame its own competition laws, which may not be modelled so closely on EU provisions. Companies involved in a cross-border cartel covering both EU countries and the UK would face separate investigations from the EU and UK, rather than just from the former.

Brexit could also lead to a decrease in the volume of competition-related litigation – when companies get sued over uncompetitive behaviour – going through the UK’s courts.

The UK has a separate criminal cartel offence, which can lead to individuals involved in price-fixing, bid-rigging and market sharing being jailed for up to five years and/or unlimited fines being imposed upon them, which is modelled on US anti-trust law.  This offence would be likely to remain post-Brexit.

Merger Control Law

The EU Merger Regulation currently provides a one-stop shop for large pan-European mergers where the parties meet certain worldwide and EU-wide thresholds. Without access to the EU’s one-stop shop procedure, the UK could consider a separate agreement with the EU, under which the UK allows the EU to decide on the permissibility of large mergers or the UK could look separately at every merger under UK merger law. Companies could have to undergo an additional merger review by the UK authorities, as well as making a filing in Brussels. That would create additional burdens of cost, time and administration on merging parties.

EU state aid law

EU state aid law could well cease to apply in the UK, depending upon the terms of Brexit. The UK could therefore have greater political freedom to support “national champions” with subsidies and other financial assistance.  However, without a direct ability to complain about subsidies provided to EU companies, UK businesses could be disadvantaged against EU-based competitors following a UK withdrawal from the EU.

The above article summarises complicated issues and legal advice should be taken in relation to specific queries, which we would be pleased to provide.