Business and Commercial Updates
It may no longer be possible to refuse to disclose UK legal advice in an EU antitrust investigation
Competition law in post-Brexit Britain: how will it impact your business? Georgina Eclair-Heath Harrison Clark Rickerbys
At present, both UK and EU competition laws apply in the UK. However, this is set to change when Brexit takes effect on 29 March 2019. Assuming – as seems most likely – that the UK leaves the common market entirely, this article considers how Brexit will affect competition law enforcement in the UK and the implications for UK businesses.
Merger control Post-Brexit, the EU Merger Regulation – with its ‘onestop-shop’ system of merger review – will no longer apply in the UK. As a result, large-scale mergers that previously only had to be notified to the European Commission will probably also have to be notified to the UK’s Competition and Markets Authority (CMA). This will almost certainly increase the caseload – and the complexity of the cases – being dealt with by the CMA. It could also increase the transaction costs for merging businesses. That said, the many similarities between the EU and UK merger review processes suggest that the additional burden should be fairly limited. There does remain, however, a risk that the two authorities reviewing the same transaction could reach differing decisions.
Antitrust While the EU competition rules (Articles 101 and 102 of the Treaty on the Functioning of the European Union) will continue to apply to anti-competitive conduct by UK businesses in the EU, post-Brexit they will no longer apply to conduct in the UK. Agreements/conduct affecting UK markets will only be caught by the UK antitrust rules (Chapter I and II Competition Act 1998). This will have several effects on competition law enforcement in the UK. n First, while the European Commission will still be able to investigate the conduct of UK companies, its powers of investigation will be limited to written requests for information. It will no longer be able to conduct on-site inspections (‘dawn raids’) of UK premises or request the CMA to carry out such inspections on its behalf.
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n Second, as with merger control, UK companies may increasingly find themselves subject to parallel investigations by the EU and UK competition authorities. n And finally, once Section 60 Competition Act 1998 (which requires the CMA to apply the UK competition rules consistently with those of the EU) is repealed, UK and EU competition rules could begin to diverge. This could increase the cost and complexity of complying with competition law as companies are forced to navigate two sets of rules. However, any divergence is likely to take a number of years and is likely to be limited. Not only are the rules likely to remain substantively similar, but the UK courts will continue to be bound by the substantial body of UK case law that has developed in line with EU competition law jurisprudence. Brexit will also have implications for how UK companies manage antitrust investigations. In particular: n It may no longer be possible to refuse to disclose UK legal advice in an EU antitrust investigation. As the EU rules on legal privilege only cover the advice of EEA-qualified lawyers, advice of UK-qualified lawyers will no longer be protected. n Leniency applicants in cartels operating in both the EU and UK may now need to submit full leniency applications at both EU and UK national level. Companies filing a full EU leniency application will no longer be able to safeguard their position in a UK leniency queue through a short-form UK application.