Part 2: Competition law enforcement

On January 17, 2017 British Prime Minister Theresa May outlined for the first time her plan for leaving the EU. Indicating a "hard Brexit", May explained that the UK (i) will leave the EU single market and (ii) will neither be bound by EU rules nor by decisions of the European Court of Justice. In consequence, the UK would have to leave the European Economic Area (EEA) after Brexit, too.

Even though the British Supreme Court decided on January 24 that Parliament has to authorise Brexit, a "hard Brexit" is still a likely scenario.

A "hard Brexit" would have an impact on European law enforcement and in particular on European competition law. Although most of the problems arising could be resolved by bilateral agreements between the UK and the EU, it is unclear if the UK will adopt this approach.

Against this background, we summarize the probable (as it stands now) main changes in competition law after Brexit and the corresponding risks and chances for business in three newsletters.

Following our first newsletter on merger law, this second newsletter deals with the competition law enforcement, while our third newsletter will cover cartel damage claims.

Double standards and double punishment?

  • After the British Competition and Markets Authority ("CMA") will have left the European Competition Network ECN, both the CMA and the European Commission could investigate infringements of competition law which affect the UK and also have an appreciable effect on trade between the remaining EU Member States. This parallel jurisdiction yields the risk of double fines (which is forbidden under EU law).
  • The EU legal professional privilege will no longer apply to UK lawyers.

Possible substantive changes to UK competition law

  • After Brexit, the primacy of the prohibition of cartels in Art. 101 TFEU over UK competition law will cease.
  • In addition, the CMA and the UK courts will not be bound by decisions of the European Court of Justice.
  • Nevertheless, there are good reasons to expect that there will not be significant changes to UK competition law after Brexit. Firstly, competition rules are based on (general) economic considerations. Secondly, many competition law regimes outside the EU are based on EU competition law (the most recent example being Hong Kong).
  • Yet one important change will be that the integration of the single market (which is an integral part of EU competition law) will not be an objective of UK competition law any longer. This might affect the admissibility of prohibitions of parallel imports and territorial exclusivity under UK law.
  • Companies should keep in mind that activities in the UK, which nevertheless have an appreciable effect on trade between the remaining EU Member States, are still subject to EU competition law.