Public Call for Evidence: The House of Lords probes the impact of Brexit on Competition Policy

• United Kingdom

• Brexit
• Competition, EU and Trade - Brexit

28-07-2017

On 21 July 2017, the House of Lords EU Internal Market Sub-Committee (“EU Committee”) chaired by Lord Whitty, launched an inquiry into the key issues that will arise in the negotiations on Brexit and the impact of Brexit on UK competition policy.

The EU Committee have invited interested parties to submit evidence to contribute to this public debate on the opportunities and challenges of leaving the EU for UK competition policy, and to inform and influence the UK Government’s consideration of these issues.

They will look into the opportunities for reshaping enforcement of competition policy after Britain leaves the EU, and whether the authorities have the capacity to “cope with additional responsibilities and a greater caseload.”

Effect of Brexit

As a member of the EU, the UK can apply European rules against monopolies and cartels, as well as benefit from EU-wide enforcement undertaken by the Commission. Furthermore, the UK’s competition regime is underpinned by domestic statutes modelled on EU law. This close interconnection between EU and domestic competition policies will potentially present significant challenges and opportunities to reshape the UK’s domestic regulatory regime when it leaves the EU.

Post-Brexit, there will be a break in that model. Domestic legislation relating to merger control and antitrust issues will remain in force but the UK will be expected to carry out its own investigations into cartels or mergers that would previously have been conducted by the Commission. This increase in responsibilities is expected to need a commensurate increase in resources for UK regulators. In addition, the UK will also have to consider how and whether it will be able to continue cooperation arrangements with the other members of the European Competition Network to facilitate mutual assistance and information sharing with the Commission and other national competition authorities across the EU post Brexit.

State aid on the other hand presents entirely different challenges for the UK as it is an area of competition law that is controlled exclusively by the European Commission. The UK might be faced with the prospect of establishing an entirely new domestic framework relating to State Aid post Brexit.

The EU Committee said it would explore the role of subsidy and state aid obligations, which currently apply to the UK as an EU member, and which could form part of the UK’s obligations under a future trade agreement between the two sides.

What will the inquiry explore?

• the opportunities and challenges in re-shaping UK competition policy post-Brexit; 
• the implications of Brexit for the application and enforcement of competition law in the UK;
• whether UK authorities have the capacity and resources to cope with additional responsibilities and a greater caseload;
• potential state aid obligations in any UK-EU free trade agreement; and
• future cooperation between the UK and the EU on investigations and enforcement actions.

Timeline

Public hearings will be held from September 2017 until November 2017. The EU Internal Sub-Committee aims to publish its report, with recommendations, early in 2018. The report will receive a response from the Government and will be debated in the House.

The EU Committee has asked for written submissions on a range of competition law questions from anyone with a relevant interest. Submissions are sought by Friday 15 September 2017. Interested parties need not address all questions in their response, and respondents from a particular area or sector are invited to focus on the questions most pertinent to them.

It is noted that others may be invited to give oral evidence but the details of this have not yet been disclosed.

The Committee’s Questions

The questions posed to the public by the EU Committee cover a broad spectrum of some of the antitrust, mergers and state aid law concerns that the UK will be faced with post Brexit. Listed below are some of the examples of these questions:

• to what extent should the UK maintain consistency with the EU on the interpretation of EU competition law?
• what is the likelihood and the implications of the UK conducting parallel investigations with the Commission and other national competition authorities?
• would a transitional arrangement for antitrust enforcement / merger control after the UK’s withdrawal be necessary? If so, what would these arrangements need to address?
• how burdensome would dual CMA/Commission merger notifications be for companies?
• would World Trade Organisations’ (WTO) anti-subsidy rules restrict the UK’s ability to support industries or individual companies, through favourable tax arrangements?

Comment

This call for evidence is an opportunity for business concerns about the future competition law framework in the UK post Brexit to be thoroughly exploited.

If you would like to contribute to this paper, please feel free to contact our Competition Department, who will be happy to assist you with any questions of law or fact.

The progress of the inquiry can be followed here.