The UK has formally notified the EU of its exit from the EU. The extent to which this is likely to affect the application and enforcement of EU competition law in the UK is outlined below. Much will depend of course on the content of any exit deal reached with the EU.
On 29 March 2017, the UK notified the European Council of its intention to leave the EU, under Article 50 of the Treaty on European Union. Formal negotiations on leaving the EU will take place, and the UK has a maximum of two years from in which to conclude an agreement on its withdrawal. Any exit deal has to be approved unanimously by the Council, and the European Parliament has veto powers over any deal struck.
In the absence of an agreement on withdrawal, unless the Council unanimously agreed that the two-year period could be extended, then, in the absence of the Article 50 being revoked (if that were possible), the obligations imposed by the EU Treaties and legislation and rights conferred thereunder would cease to apply. In that scenario, the UK's relationship with the EU would, as other non-EU countries, be governed by WTO rules.
Impact on EU competition law
When the UK exits the EU, the application of EU law generally will depend on any trade agreement reached with the EU and the extent to which this incorporates existing EU law.
As regards competition law, there will be less substantive change as EU competition law applies in any event to any agreement (formal or informal), including cartels, alliances, or abuse of a dominant position, which affects trade between Member States, irrespective of whether the party or parties are located within the EU.
Agreements or abuses which produce effects confined to the UK would, as currently, be outside the scope of EU competition law, but UK competition law (in particular the Competition Act 1998) on agreements and abuses closely mirrors EU law (Articles 101 and 102 TFEU), so such practices would continue to be subject to those very similar national laws. ‘Block exemption’ Regulations exempting categories of agreements such as vertical or technology transfer agreements would no longer apply in the UK, but agreements which comply with them would remain exempt under EU law.
Articles 101 and 102 TFEU would, however, no longer apply in the UK and the jurisdiction of the European courts would cease. The UK would, therefore, have the ability to investigate and reach its own conclusions in cases which currently fall within the exclusive jurisdiction of the EU. This could in theory be a benefit, but would require additional resources. It may be that the UK authorities and courts would be required to have regard to the jurisprudence of the European General Court and Court of Justice, but in any event, there could potentially be a divergence of jurisprudence.
Mergers or joint ventures within the meaning of the EU Merger Regulation 139/2004 (‘EUMR’) would continue to be subject to the compulsory notification regime to the Commission, if the relevant global, EEA and/or EEA Member State turnover thresholds are met. The ‘one-stop principle’, whereby EU national authorities have no jurisdiction over mergers caught by the EUMR, may no longer exclude the UK authorities from claiming jurisdiction over such mergers, thus requiring notification to both the UK authorities and the Commission, a question which will depend on any EU/UK agreement that may be reached. As regards mergers falling outside the EUMR, they would continue to be governed by national merger control regimes, including the UK, according to those countries’ laws.
As regards state aid (Articles 107–109 TFEU), the UK would no longer be prohibited by EU law from granting subsidies or other advantages to undertakings. It may be that such matters would be the subject of a trade agreement reached with the EU. A UK company would, however, continue to be able to enforce the EU state aid rules, in so far as aid threatened to distort competition within the EU.