An excellent Issues Paper1 has recently been published by the Brexit Competition Law Working Group (“the Group”) highlighting many potential competition law uncertainties post-Brexit which are related to Irish businesses trading in the UK. The Group, comprising of well-known competition law practitioners and academics, was set up with the aim of informing UK government competition policy post-referendum. While the actual impact of Brexit on competition law and policy is difficult to predict, this Issues Paper identifies a large number of very practical competition issues to bear in mind. It provides a window into the myriad multi-sectoral legal challenges facing business and stakeholders in a post-Brexit Britain.
Much uncertainty remains around the substance of any future agreement between the UK and the EU, not least because of the two pending court cases. However, it is clear that there will be sweeping changes if the UK also opts to remove itself from the EEA and the Group uses this possibility as its working assumption.
The Issues Paper explores post-Brexit issues, including immediate and potential changes to the competition regime, and identifies other affected areas including State aid and competition in regulated markets. Some of the key issues are:
- The potential for a complete vacuum around the procedures and processes supporting core structures –such as the EU Merger Regulation2 (the "EUMR”), which creates a "one stop shop” for larger mergers to be examined solely by the European Commission. This will no longer apply to the UK following Brexit, with consequences including: a double regulatory burden; potential conflicting regulatory decisions and loss of established regulatory cooperation in the ECN; inconsistent timelines impacting completion; and an increase in workload for the UK’s CMA, with immediate consequences in terms of resourcing and capacity.
- A key issue arises from the role of a post-Brexit UK, and in particular the role of UK precedent in the Irish legal system (a complexity not limited to competition law) and the role of precedent decisions from the EU and other Member States in a UK court. Precedents from the Courts of England, Scotland, Wales and NI are regularly cited in the Irish Courts and the cross-pollination of legal systems is particularly notable in EU law related areas. In a scenario where UK case law diverges from the EU established norms, the common origins of much legislation may be gradually eradicated and the Irish legal system may thus lose one of its key jurisprudential sources.
- In the short-term, the Issues Paper recognises that businesses trading in both the UK and the EU would remain subject to EU law. A consistent application of EU and UK competition law is highly desirable, with obvious benefits for Irish businesses trading in the UK. However radical divergences cannot be excluded at this time.
- Longer term issues arise from the loss of the UK as a key player in terms of EU competition enforcement. The UK's role as a leading forum for private competition litigation in the EU and under the Damages Directive (which was to be implemented this year by the UK) may be compromised.
- Finally, the Issues paper briefly examines State aid, such issues are highlighted by the recent publicity surrounding the assurances given to Nissan by the UK government. Even given the application of WTO anti-subsidy rules, it seems that post-Brexit, the UK will be able to provide higher levels of State funding to UK industry than are currently permissible. Although UK authorities have recognised( ) that specific promises to compensate Nissan for tariffs post-Brexit would be anti-competitive – it is far from clear that other forms of encouragement will not be necessary to maintain relationships with key sectoral manufacturers.
The myriad issues arising solely from a competition perspective highlight the challenges that Brexit poses on every front. The Issues Paper does a comprehensive job of looking at the preliminary questions and challenges thrown up by Brexit for the competition law field without recommending solutions at this stage. The Group sought comments and submissions on the paper and will hold roundtable discussions with a view to delivering a final report to the UK government early in 2017.