European Union: European Commission Publishes Notice On Competition Law In Case Of No Deal Brexit

On 25 March 2019, the European Commission ("Commission") published a notice concerning the main implications for EU competition law of the withdrawal of the United Kingdom from the EU ("Brexit") in a no-deal scenario. Following the extension decided upon by the European Council, the withdrawal date is 13 April if the House of Commons does not approve the Withdrawal Agreement by 29 March 2019. Otherwise, the withdrawal will be extended to 22 May 2019.

As of the withdrawal date, the United Kingdom will become a third country as regards the application of EU competition rules.

Enforcement of EU antitrust rules

The fact that the United Kingdom will become a third country will not have as such an impact on the applicability of EU antitrust rules to UK companies. Indeed, as any company registered or headquartered in a third country, UK companies will remain subject to EU antitrust rules if their anticompetitive conduct is implemented or produces effects in the EU.

However, the Commission will no longer be able to carry out inspections under Article 20 of Regulation 1/2003 in the United Kingdom. On the other hand, the Commission will still be able to obtain information under Article 18 of Regulation 1/2003.

EU merger control

A no-deal Brexit will not have an impact on the applicability of the EU Merger Regulation ("EUMR") to UK companies when the jurisdictional criteria of the EUMR are fulfilled. It is however possible that both the Commission and the UK national competition authority will be competent to review in parallel a planned concentration under their respective substantive and jurisdictional rules on merger control. Hence, companies will no longer benefit from the one-stop-shop principle.

As to the jurisdiction of the Commission, the relevant date for establishing EU jurisdiction over a concentration is the date of the conclusion of the binding legal agreement, the announcement of a public bid or the acquisition of a controlling interest or the date of the first merger notification, whichever date is earlier. These rules are not altered by a no-deal Brexit. Importantly though, if the relevant date for establishing EU jurisdiction takes place after Brexit, the Commission will no longer take into account the turnover that the parties to the concentration realize in the United Kingdom, when establishing the relevant EU-wide turnover and the relevant turnover realized in individual Member States.

As regards the Commission's jurisdiction following a referral of a concentration without EU dimension, a distinction needs to be drawn between pre-notification referrals pursuant to Article 4(5) EUMR, and post-notification referrals pursuant to Article 22 EUMR:

  • Under Article 4(5) EUMR, the notifying party or parties may make a reasoned submission that a concentration without an EU dimension be reviewed by the Commission, provided that the concentration is capable of being reviewed under the national competition laws of at least three Member States. Any competent Member State may object within fifteen working days. In instances where an Article 4(5) submission has been made prior to the withdrawal date and where a concentration without EU dimension is capable of being reviewed in three Member States, amongst which the United Kingdom, the Commission will acquire jurisdiction under Article 4(5) EUMR if, prior to Brexit day, the period of fifteen working days has elapsed without any competent Member State expressing its disagreement. The fact that a concentration is capable of being reviewed in the United Kingdom will no longer be relevant for the application of Article 4(5) EUMR for submissions made after Brexit day.
  • As far as Article 22 EUMR is concerned, after its withdrawal, the United Kingdom will no longer be empowered to refer cases to the Commission or to join referral requests by other Member States. If the United Kingdom has requested the referral or joined a referral request by another Member State prior to Brexit and the Commission has decided to examine the concentration in accordance with Article 22(3) EUMR before the Brexit date, the case will be considered to be referred also with respect to the United Kingdom. If not, the case will not be considered to be referred in relation to the United Kingdom.

The Commission also explains in its Notice that after Brexit day in a no-deal scenario, it will have to take account of the fact that the UK will no longer be part of the internal market. This implies that the Commission will no longer be competent to find that a planned concentration would or would not significantly impede effective competition in UK national or subnational markets. Moreover, trade between the EU and the UK may become subject to new tariffs and non-tariff barriers. This may have a bearing on the Commission's competitive assessment including the suitability and viability of remedies where a concentration leads to competition concerns. The respective consequences will be assessed on a case-by-case basis.

As regards investigatory tools within the context of merger control, the Commission explains that inspections pursuant to Article 13 EUMR will no longer be possible in the United Kingdom. However, the Commission will still be able to obtain information under Article 11 EUMR.

The Commission further states that all its decisions under the EUMR (including decisions imposing conditions and obligations) will remain valid after Brexit. In this regard, it indicates that no distinction should be drawn between decisions that relate to the effect of a concentration on competition at the level of the EEA or within any of the remaining 27 EU Member States, and its decisions that relate to the effect of a concentration in UK national or sub-national markets. These decisions will in principle remain valid also in instances where commitments address a competition issue only affecting a UK national or sub-national market. This being said, following Brexit, parties may consider requesting the Commission to waive, modify or substitute certain commitments under the standard review clause that is typically contained in commitments. Requests may be considered founded in instances where the commitments in question address competition issues in UK markets only.

A full copy of the Commission's Notice is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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