Out-Law News | 31 Jan 2020 | 8:56 am | 4 min. read
Andrea Coscelli was commenting after the CMA published new guidance on the scope of the regulator's functions in the areas of merger control, competition law enforcement and consumer protection law enforcement in the UK during the forthcoming Brexit transition period and after that period ends.
In an accompanying statement, Coscelli said: "The year ahead will be one of profound change for the country. The CMA has been planning extensively for the UK’s departure from the EU, and we are ready to assume our new responsibilities at the end of the transition period. As we take on a more active role in global cases from January 2021, we are determined to be a robust champion for competition and for UK consumers."
The UK is scheduled to officially leave the EU at 11pm GMT on 31 January 2020. However, the UK and remaining 27 members of the EU have negotiated a withdrawal agreement designed to help smooth the UK's exit from the trading bloc. The withdrawal agreement sets out a transition period that is applicable up until 11pm GMT on 31 December 2020.
The CMA's new guidance is aimed at explaining how its approach, and also that of EU institutions such as the European Commission and Court of Justice of the EU (CJEU), will be impacted by Brexit, both during the transition period and thereafter.
During the transition period, EU law will still apply in the UK and decisions taken by the CMA in respect of both competition law and consumer protection law issues will have to follow the EU provisions. The government, however, has the power during the transition period and thereafter to set new rules setting out the circumstances in which UK courts and tribunals could diverge from CJEU case law carried over at the point of exit on 31 January 2020.
In relation to mergers, the European Commission will retain jurisdiction over transactions impacting the UK market where those transactions meet the EU thresholds for notification, where they have been notified to the Commission prior to the end of the transition period and where the Commission's investigation is still 'live' at the end of that period.
Though notification of mergers in the UK remains voluntary, the CMA said it could review mergers that had not yet been formally notified or referred to the Commission before the end of the transition period because, for example, pre-notification discussions were still ongoing. In that case, the CMA could open its own UK domestic merger investigation where it believes there is a realistic prospect that the deal may lead to a substantial lessening of competition in a UK market, and businesses that do not voluntarily notify it of merger plans risk being forced to subsequently unwind their arrangements.
The CMA said that it "may take certain preparatory steps during the transition period" to determine whether it should open a formal investigation into merger deals after the transition period elapses. It has encouraged "early and constructive engagement on mergers that may fall under the jurisdiction of the CMA at the end of the transition period", and outlined that doing so is "likely to help with the expedient investigation of the case". This could mean that parties engaged in merger pre-notification discussions with the Commission during the transition period may need to engage with the CMA on a parallel basis.
The CMA explained how it could run competition enforcement investigations and merger investigations in parallel with the Commission from next year. Currently, the Commission has exclusive jurisdiction to investigate mergers that meet the EU jurisdictional thresholds on a 'one stop shop' basis, with the CMA being consulted as a member of the EU advisory committee.
According to the new guidance, there is the potential for live merger investigations being undertaken by the Commission to be referred to the CMA to continue, and similarly the CMA could take on the role of monitoring and enforcing remedies or undertakings agreed prior to the end of the transition period in Commission cases after the transition period elapses. Further, EU antitrust cases that remain live and within the Commission's remit after the transition period could see the CMA intervene in respect of UK-specific activity postdating the transition period.
Even after the transition period ends, EU courts will retain exclusive jurisdiction to hear appeals involving Commission merger or antitrust decisions relating to cases opened during the transition period.
The CMA also provides guidance on the implications of the UK's exit from the EU on director disqualification proceedings for breaches of competition law – the CMA will be able to bring such proceedings against directors involved in a breach of EU competition law which is the subject of an infringement decision taken by the Commission during the transition period and in certain other circumstances.
There is less clarity about the status of cross-border consumer protection enforcement cases, referred to the CMA under the consumer protection cooperation regime, that remain 'live' after the transition period. The CMA's prioritisation principles will help determine if and how such cases will be taken forward. Further, the nature of the CMA's future cooperation with EU agencies on consumer protection enforcement after the transition period is yet to be agreed.
CMA functions deriving from UK domestic law, such as regulatory appeals, market studies, market investigations, and the criminal cartel offence, are "less materially affected by EU exit" and therefore not specifically covered in the guidance. The CMA will publish further guidance once negotiations about the "future relationship" between the EU and UK have been concluded.
Broader Brexit-related legal implications for businesses based or active in the UK should also be considered.
16 Jan 2020
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