CMA and EU Commission publish guidance on the impact of Brexit on competition law

The post below was first published on our Competition blog

Last week both the CMA and the European Commission published their final guidance on the impact of Brexit on competition law after the end of the transition period:

Notice to Stakeholders – Withdrawal of the United Kingdom and EU rules in the field of Competition

Guidance on the functions of the CMA after the end of the Transition Period

Both sets of guidance explain the legal changes after the end of the transition period on 31 December 2020 and how these will impact on the competition regulators’ powers.

From 1 January 2021 the EU and UK regimes will operate in parallel as two separate regimes and mergers and anti-competitive conduct may be subject to both the UK and EU merger control regimes and to Articles 101 and 102 TFEU and the Chapter I and II prohibitions of the UK Competition Act 1998.

Much of the impact also relates to jurisdiction over cases that are ongoing at the end of the transition period and powers and processes of each of the regulators.

We have set out below a brief summary of the key legislation and guidance relevant to Brexit and  competition law.  For more detailed information see our briefing on the impact of Brexit on merger control here and the competition chapter from the HSF Brexit legal guide here.

Relevant provisions of the Withdrawal Agreement

The Withdrawal Agreement (WA) includes transitional provisions for cases (antitrust and merger control) that are live at the end of the transition period.  Article 92 WA, which deals with ongoing administrative procedures, provides that after the end of the transition period the Commission continues to be competent for administrative procedures initiated before the end of the transition period.

Antitrust cases

Article 92(3)(b) WA specifies that for antitrust cases the Commission can initiate proceedings at any point in time, but no later than the date it issues a statement of objections, a request for parties to express their interest in engaging in settlement discussions or the date on which it publishes the summary of the case and main content of commitments. Cases that are initiated before the end of 2020are referred to as continued competence cases.

Merger cases

Article 92(3)(c) WA specifies that, for the purpose of the EU Merger Regulation (EUMR), proceedings shall be considered as having been initiated:

• at the moment the transaction has been notified to the Commission (in accordance with Articles 1,3 and 4 EUMR (“formal notification”)
• the time limit of 15 working days referred to in Article 4(5) EUMR (request by the merging parties for a merger to be reviewed by the Commission) has expired, without any Member State with national jurisdiction (including the UK) having expressed disagreement over the request to refer the case to the Commission
• the Commission has accepted (or is deemed to have accepted) a referral request under Article 22 EUMR in which the CMA participated

Again cases initiated before the end of 2020 will remain the exclusive competence of the EU Commission.

Commitments and remedies relating the UK

Article 95(2) WA provides that the Commission continues to be competent to monitor and enforce commitments given or remedies imposed in or in relation to the UK in cases already decided and continued competence cases, but that the Commission and the CMA can agree for that responsibility to be transferred to the CMA.

UK legislation

The Competition (Amendment etc.) (EU Exit) Regulations 2019 (Competition SI)

The Competition SI makes a number of changes to the current UK competition legislation where necessary in order to make the legislation suitable after the end of the transition period.  The Competition SI repeals a number of EU Treaty rights, EU competition Regulations and EU Commission decisions which are specific to the EU competition regime and will no longer be relevant for the UK after the end of the transition period. All references to EU law and EU institutions and to any powers or duties on the UK authorities in relation to current EU obligations are removed.

The Competition (Amendment etc.) (EU Exit) Regulations 2020 (Implementation SI)

The Implementation SI implements the provisions relating to competition law contained in the Withdrawal Agreement.  It makes a number of changes to the Competition SI, which was originally designed to address a no-deal situation and does not reflect the provisions of the Withdrawal Agreement, the existence of the transition period and the treatment of cases initiated during the transition period.

The Implementation SI makes the necessary provisions to ensure that the powers of the CMA are preserved to assist the Commission in its investigation of continued competence cases.  It also empowers the CMA to monitor and enforce EU commitments or remedies relating to the UK in cases where it is agreed between the EU and the UK after the end of the transition period that responsibility should be transferred to the CMA or a concurrent regulator.

References to “exit day” in the Competition SI are replaced with references to ““IP completion day” where appropriate. IP refers to implementation period, which is what UK legislation calls the transition period agreed under the Withdrawal Agreement.

CMA Guidance

Guidance on the functions of the CMA after the end of the Transition Period (CMA125) (CMA Guidance)

The CMA Guidance applies to the CMA’s ongoing and future merger and antitrust cases under the Enterprise Act 2002 and Competition Act 1998.  The majority of the text consists of a summary of the legal changes resulting from the UK’s exit from the EU.  For continued competence cases (cases initiated before the end of the transition period and for which the Commission continues to be competent after the end of the transition period), the CMA will continue to have access to relevant information and may be invited to attend Advisory Committee meetings, where the discussions concern the UK.

For antitrust cases the CMA will also be able to assist the Commission with dawn raids relating to continued competence cases after the end of the transition period, even though Part 2 of the Competition Act 1998 (which makes provision for the CMA to assist or act on behalf of the Commission in connection with Commission dawn raids) is repealed after the transition period.

Where the CMA is investigating conduct that may affect trade between the UK and one or more EU Member State and has not yet adopted a decision by 31 December 2020, it will no longer apply the EU prohibitions after 31 December 2020.  All actions taken by the CMA prior to 31 December 2020 in relation to the EU aspects of the investigation (eg information gathering under dawn raids, interviews, notices) will after 31 December 2020 be treated as having been done for the purpose of the UK elements of that investigation.

Commission Guidance

The Commission’s Notice to Stakeholders on the withdrawal of the UK and EU rules in the field of competition (Notice to Stakeholders)

The Notice to Stakeholders starts with a reminder of the territorial application of the EU competition rules which apply to companies regardless of their nationality, country of incorporation or where their headquarters are based.  Articles 101 and 102 TFEU and the EUMR will therefore continue to apply to UK companies after the end of the transition period to conduct which is implemented or has an effect in the EU, and to transactions which meet the jurisdictional thresholds of the EUMR. Companies may be subject to both the EU and the UK competition and merger control regimes.

The Commission will no longer have the powers to carry out dawn raids on companies in the UK, but it will still be able to obtain information under Article 18 of Regulation 1/2003 from UK companies.

For merger control, the Commission remains responsible for all cases that were initiated before the end of the transition period. After the end of the transition period turnover of the parties in the UK will no longer be relevant in order to assess whether the EUMR thresholds are met, and the Commission will have no jurisdiction to take into account the impact of a transaction it reviews on any UK market.

On turnover calculation for mergers, the Commission’s guidance states that the relevant date for establishing jurisdiction over a concentration is the date of conclusion of the binding legal agreement, the announcement of a public bid or the acquisition of a controlling interest or the date of the first merger notifications, whichever date is earlier.  If any of the relevant events takes place before the end of the transition period, the Commission will take into account the turnover of the parties to the concentration realised in the UK.  This is purely the Commission’s own approach to identifying whether it has jurisdiction.  If the case is not initiated until 2021, then the Commission’s substantive analysis and remedies cannot deal with the UK market.  The CMA guidance makes it clear that it will be free to assert concurrent jurisdiction, in any case where the Commission has not initiated proceedings before the end of 2020.

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