This page sets out the impact of Brexit on:
- regulatory investigations of possible anticompetitive conduct; and
- damages actions by the victims of such conduct.
Brexit will have no impact on competition law until the UK leaves the EU in at least two years’ time.
Thereafter the impact will depend on the post-Brexit model that the UK negotiates; with full exit at one extreme and, at the other, Norway-style membership of the European Free-Trade Association (EFTA) which has agreed with the EU to form the European Economic Area (EEA).
EFTA and EEA membership, or similar
Whilst is it uncertain that other members of EFTA would consent to UK membership, early indications are that the UK wishes to negotiate a close relationship with the EU, be it inside or outside EFTA.
The UK’s laws on anticompetitive collusion and abuse of a dominance are almost identical to the EU’s; and so are the EEA’s. The key difference is that, if the UK joined EFTA, the competition regulator for cross-jurisdictional matters would be the EFTA Surveillance Authority instead of the European Commission.
The ability to bring damages actions in the UK for pan-European breaches of competition law could also be largely unaffected if the UK acceded to the Lugano Convention, which governs issues of jurisdiction and enforcement of judgments between the EU and EFTA. The Lugano Convention is materially similar to the Brussels Regulation which governs these issues within the EU.
This scenario is inherently more speculative, as the alternative relationship to be negotiated could fall anywhere within a wide spectrum.
Unless Chapters 1 and 2 of the Competition Act 1998 (CA’98) were repealed, the UK’s laws against anticompetitive collusion and abuse of a dominance would continue to mirror the EU’s, but it is likely that there would be a repeal of s60 of the CA’98 which requires competition law to be applied in the UK in a manner consistent with application in the EU. After repeal of s60, the two regimes would start to diverge.
Unless the UK and EU could reach an understanding, undertakings that conducted businesses in the UK and the EU would be subject to two regimes and, if they were suspected of anticompetitive conduct, they might have to contend with regulatory investigations by both the UK’s Competition & Markets Authority (CMA) and the European Commission. Those wishing to apply for leniency or settle such investigations would have to do so in parallel processes with each of the two regulators.
Under the CA’98, the infringement decisions of the CMA and the European Commission are binding on the UK courts. However, it tends to be infringements established by the European Commission that are large enough to warrant follow-on damages litigation.
The provisions of the CA’98 which make Commission decisions binding could well be repealed; although they could be retained out of pragmatism. It would be unusual to make the decisions of a foreign power binding on the UK courts, but antitrust damages actions are more developed in the UK than in most Member States. England in particular has become a venue of choice for them, bringing considerable economic benefit.
If Commission decisions were no longer binding, a standalone action could still be brought on the basis that the decision was persuasive, but this would be more risky than commencing a claim in a competing jurisdiction; principally the Netherlands or Germany.
Indeed, even if Commission decisions continued to be binding, it is another question whether the EU would either recognise the UK court’s jurisdiction over infringement of EU law or enforce its judgments. This would depend on what was negotiated in these regards, with likely criteria being the place of infringement or of domicile of the parties.