The one-year countdown to Brexit ‘D-Day’ has begun. The UK will formally leave the EU on 29 March 2019, at which point it may enter a transition period during which it will remain in the customs union and single market and continue to be bound by EU laws. There is much speculation over the future division of powers and responsibilities between the UK’s Competition and Markets Authority (CMA) and the European Commission. At present, it is anticipated that competition policy will represent one of the main areas of potential divergence going forward and below we share our thoughts on three topics of particular current interest:
The CMA’s crackdown on cartels
The CMA is making determined and conspicuous moves to bolster the war on cartels in the UK, following their first active marketing campaign aimed at cracking down on illegal activity. For example, it ran a social media campaign to encourage and facilitate the reporting of illegal cartel activity, as well as educating SMEs on their competition law obligations. The campaign encouraged people to ‘Be Safe, Not Sorry’ and offered a clear incentive to those who suspect the existence of cartel activity by advertising rewards of up to £100,000 to whistle blowers. This stepped-up effort saw a 30% increase in tip-offs in 2017.
Post-Brexit the precise nature of cooperation with the European Commission in competition investigations remains uncertain. That said, however, the CMA’s renewed approach suggests that UK businesses would be naïve to think they may be less vulnerable to anti-competitive investigations. On the contrary, the CMA is demonstrating its resolve to combat cartel behaviour well in advance of our eventual departure.
Legal professional privilege and enrolment as a solicitor in Ireland
The marked increase in the number of Irish solicitors enrolled since 2016 has been driven principally by the dramatic increase in English lawyers fearful of their clients losing rights to assert legal professional privilege (LPP) post-Brexit.
Under the current EU competition regime, investigations conducted by or on behalf of the European Commission will only respect the confidentiality of documents over which LPP is asserted if it relates to communications:
- sent for the purpose of the client's rights of defence in relation to the Commission's investigation; and, most importantly,
- with an independent external lawyer who is qualified to practise in a member state within the European Economic Area (EEA).
Following Brexit, the UK will cease to be an EEA member state and it is generally expected that enrolment as an Irish qualified solicitor should ensure continued protection. That said, some doubt has been expressed by commentators whether merely being registered to practise or being on the roll would suffice. It is possible that a practising certificate or some further evidence of a more substantial connection with the profession or jurisdiction will be required by the EU Commission and Court of Justice.
The current EU merger control regime is governed by the EU Merger Regulation (EUMR). Under the EUMR, mergers that meet a certain turnover threshold require approval from the European Commission before being completed. The current UK regime allows voluntary notification of mergers to the CMA, where the proposed transaction meets certain turnover or market share thresholds. However, when a merger meets the EU notification threshold, notification is mandatory. EU clearance must be obtained before the merger is completed. The current regime’s ‘one-stop-shop’ for large mergers will inevitably be affected post-Brexit, potentially meaning that those mergers satisfying both EU and UK thresholds may be subject to review by both regimes. The prospect of filings being made to both regimes could have significant financial consequences and could lead to an increase in mergers meeting the EU threshold being forced through in advance of the uncertain post-Brexit position.