The National Audit Office (NAO) reported on 6 July on the ongoing preparations for the post-Brexit enforcement of competition, consumer and state aid law in the UK, highlighting ongoing challenges faced by the UK’s domestic enforcement bodies including the continuing lack of certainty on what the UK’s relationship with the EU will be after 29 March 2019.
The NAO’s review focused on preparations currently underway by the Department for Business, Energy and Industrial Strategy (BEIS), the Competition and Markets Authority (CMA) and National Trading Standards. The review highlighted particular risks in need of addressing, including cross-border market surveillance and data sharing, cross-border enforcement, and consumer redress when cross-border transactions go wrong.
The UK Government’s white paper on the future relationship between the UK and the EU, published last week, proposes that any future agreement between the UK and EU would see the two sides commit to “maintain reciprocal high levels of consumer protection”, as well as cooperation in consumer protection and competition enforcement, and control of subsidies through the UK continuing to follow the EU State aid regime.
Although the EU Withdrawal Act is now law, a number of pieces of secondary legislation still need to be prepared, including by BEIS, to get the UK statute book ready for Brexit. The NAO has noted that some adjustments may be needed to the Government’s timetabling of legislation to avoid a last minute rush of secondary legislation being put before Parliament in the immediate run-up to 29 March 2019.
The White Paper also notes that the CMA currently applies national competition law consistently with EU procedures, and that UK law has gone further than EU minimum standards. It sets out the Government’s aim to agree mechanisms for the CMA and European Commission to manage parallel merger and antitrust investigations, including sharing confidential information and working together in live cases.
This follows the NAO’s report having emphasised the need to build capacity and capability within the CMA, particularly in State aid and competition, where the UK currently relies either heavily or entirely on EU bodies. If the CMA is to gear up its capacity it will have to continue hiring heavily – the NAO noted that its current plans are to increase its staff numbers by 240, or 39%, to deal with the increase in competition workload alone. The CMA has previously estimated that it expects its merger control workload to increase by around 40-50% following Brexit.
46 additional staff will be required just to set up the CMA’s new State aid function, to reflect the commitment set out in the White Paper to commit, as part of the future agreement with the EU, to a ‘common rulebook’ (i.e. the EU’s rules) on State aid.
The NAO has concerns about how easy it will be to recruit qualified staff, with the CMA competing not only with sectoral regulators but also with higher pay in the private sector.
The NAO report also notes that Trading Standards may also have to upscale its capabilities, especially at the Port of Dover, in order to carry out product checks that are not currently required for goods coming from the EU, and that no additional funding has yet been provided or requested for this.
One further point emerging from the review is that it remains difficult for Government bodies to make full preparations for Brexit when it is not yet clear what shape Brexit will take, but this lack of clarity may continue for some time with the spectrum of possible outcomes still stretching from “no deal” to a close post-Brexit relationship (including on product standards). That difficulty in making plans for Brexit is something UK businesses will understand all too well.