Government publishes Guidance on merger review and anti-competitive activity after Brexit

The document covers how merger review and investigations into anti-competitive activity would be affected if there’s a “no deal” Brexit.

The Guidance explains that after the UK leaves the EU it will no longer be part of the EU competition system. Therefore, the European Commission will no longer begin investigations into the UK elements of mergers or cases involving anti-competitive conduct in the UK. Instead, the Competition and Markets Authority (CMA) will be responsible.

The CMA will also take over jurisdiction of the UK aspects of live EU antitrust and merger cases that the Commission was investigating before Brexit, but which have not yet been decided. Businesses should be aware that it is possible that there will be no agreement on jurisdiction over these cases.

Businesses operating in the UK must continue to comply with UK competition law as they do now and those operating in the EU must comply with EU competition law.

Most businesses will not need to take any action unless they are subject to an ongoing investigation or considering a merger transaction.

The EU merger system will continue to apply to the UK until the point of Brexit. Businesses considering a merger that will have an impact in both the UK and EU single market will need to comply with both EU and UK merger rules.

Businesses should contact both the CMA and the European Commission where they meet the relevant thresholds.

For live EU merger cases with UK aspects, where businesses do not expect to receive an EU decision before exit day, they should contact the CMA and the European Commission to find out if they need to make parallel notifications.

The Guidance advises that businesses subject to an ongoing antitrust investigation at the point of exit should take independent legal advice on how to comply with any ongoing investigation by the European Commission and/or the CMA.

Businesses operating in the UK and the EU will need to comply with the UK and the EU antitrust rules. Breaches of these rules may be investigated by both the CMA and the European Commission in parallel where there are effects in both markets.

As for block exemptions, the Vertical Restraints Block Exemption Regulation (330/2010/EC) that currently exempt certain types of agreements from competition rules where there are benefits for consumers will be preserved in the UK.

Businesses will want to satisfy themselves that they continue to fall within the terms of the preserved exemptions, but the intention is that agreements that benefit from these exemptions should continue to do so.

Businesses or consumers who wish to claim damages based on competition infringement decisions will not be able to rely on decisions made by the European Commission after Brexit day in the UK courts. The Guidance advises taking independent legal advice about pursuing any claim. To read the Guidance in full, click here.

The Government published separate Guidance on the CMA’s state aid role if there’s no Brexit deal earlier in the year. That Guidance discusses introducing a UK State aid regime, equivalent to the EU regime and explains that in the event of no deal the CMA will be the UK state aid enforcement authority, in place of the European Commission, from exit day. To read that Guidance in full, click here.