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Brexit

Brexit and competition law

The political guidelines for the Brexit negotiations adopted by the 27 Heads of State or Government on 29 April 2017 contain a statement of relevance for future competition law: “any free trade agreement … must ensure a level playing field, notably in terms of competition and state aid, and in this regard encompass safeguards against unfair competitive advantages through, inter alia, tax, social, environmental and regulatory measures and practices.” On 3 May 2017 the Commission recommended that the “UK withdrawal agreement should respect … the role of the Court of Justice of the European Union. … an alternative dispute settlement should only be envisaged if it offers equivalent guarantees of independence and impartiality to the Court.” The Council will meet on 22 May 2017 to authorise the opening of negotiations. A first meeting between negotiators is likely to be held after the UK election in June. The guidelines refer to competition issues in the context of a potential free trade agreement that would take much time to negotiate and might contain provisions that require the approval of parliaments in each of the remaining 27 member states. It would therefore probably take several years after Brexit for a comprehensive agreement on competition issues to enter into force. Assuming that the parties maintain their current positions, the following seems plausible.

The EU will no longer have competence to rule on mergers, anticompetitive behaviour or the granting of state aid in the UK. While the EU will have the competence to act if measures in the UK have an effect in the EU, it will not be able to enforce its decisions in the UK. The competition law rules that are harmonised and well-working in the European Economic Area (EU plus Norway, Liechtenstein and Iceland) neither will apply to the UK nor will they serve as an acceptable model for the UK government. The competition law rules that apply between the EU and Switzerland, might serve as an acceptable model for both the EU and the UK especially for the exchange of information between the competition authorities in merger control and antitrust cases. Finally, EU state aid law will no longer be applicable in the UK and, while WTO anti-subsidy rules will continue to apply, they provide much less protection for companies that are harmed by subsidies granted to competitors. For more on the impact of Brexit click [German Version] / [English Version]