BCLWG Provisional Conclusions and Recommendations

This report contains our provisional conclusions and recommendations on the implications of Brexit for UK competition law and policy. We invite comments and discussion on the report by 15 May 2017.

The Brexit Competition Law Working Group (BCLWG) has today published its provisional conclusions and recommendations. You can download a copy of the document below.

We invite comments and discussion on the report, including at a half-day conference being held at the British Institute of International and Comparative Law on 2 May 2017. To submit comments, please email by 15 May 2017.

In summary:

  1. Our view is that the interests of the UK economy, and those of businesses and consumers within it, will be best served by continuity of UK competition law and policy, so far as is possible following Brexit.
  2. Brexit does not give cause for radical reform of the principal UK competition statutes, nor of the role of the competition authorities.  Indeed, the challenges that Brexit poses to the effective operation of various areas of competition policy argue against contemplation of radical reform, at least for the time being.
  3. Primary legislation will nevertheless require amendment.  In particular, we recommend that the duty in section 60 CA98 for the UK authorities and courts to act consistently with European jurisprudence becomes simply a duty to ‘have regard to’ that jurisprudence.   We also recommend repeal of section 10 CA98 so that future (as distinct from existing) EU block exemptions from the competition rules are not automatically imported into the UK; they would instead become a matter for the UK to decide.  Brexit should cause some current exemptions, notably that for agricultural products, to fall away.  To preserve continuity of the ability of private parties to bring actions for damages in the UK for breaches of EU (as well as UK) competition law, we recommend retaining the provisions of sections 47 and 58 CA98.
  4. For mergers and market investigations we recommend retaining the existing statutory criteria, notably the ‘substantial lessening of competition’ test for mergers.  Likewise we would not vary the existing public interest criteria.  A question for market investigation references on which we do not have a settled view is whether there should be a domestic analogue of the current EU provision that precludes remedies relating to agreements between firms that go further than the competition rules.
  5. Brexit poses formidable issues concerning transitional arrangements, future cooperation between UK and EU authorities, and the resources that the CMA will need to carry out a substantially expanded caseload.  In relation to transition issues, we have made a series of recommendations on the carrying forward of commitments from past antitrust and merger cases, and of leniency arrangements.  Particularly difficult issues could arise in relation to mergers that ‘straddle’ the date of Brexit, and (in the longer run) parallel UK/EC  investigations, both of mergers and antitrust issues.  These do not have easy solutions but we identify ways to ameliorate them, and stress the importance of measures being taken and communicated well ahead of the date of Brexit.  These are matters in relation to which the UK and EC authorities should have strong interests in common.
  6. On resources we note that, beyond transitional issues, the CMA is likely to have a substantial number of large and complex merger cases each year that would previously have been reviewed by the EC (including for effects on UK markets).  Even with some adjustment of CMA priorities and procedures (transfer of powers to other bodies should be avoided), a substantial increase in resources will be needed if other activities are not to get squeezed.  Bearing in mind merger filing fees and competition fines, this need not involve cost to the public purse.
  7. This report has not addressed another aspect of EU competition law – State Aids, which will no longer apply to the UK after Brexit.  In conclusion, we would however note that, as industrial subsidies are generally costly to the economy, the UK should be open to agreeing constraints on them in trade negotiations.