• +49 (30) 804 03 588 | +49 (0)157 322 38619 | +33 (0) 6 79183704
  • sybille.boese-tarsia@sbt-rechtsanwaeltin.eu
  • Nickisch-Rosenegkstrasse 9, 14129 Berlin
  • +49 (30) 804 03 588 | +49 (0)157 322 38619 | +33 (0) 6 79183704
  • sybille.boese-tarsia@sbt-rechtsanwaeltin.eu
  • Nickisch-Rosenegkstrasse 9, 14129 Berlin
POSTED IN: Uncategorized

Some Cherry-Picking: Brexit and EU Competition Law

Following UK’s referendum decision to exit the EU, the scenarios in the change of UK competition law (and policy) are heatedly debated.
Depending on the option the UK government might choose (i.e. from adhering to the EEA to EFTA to completely opting out and being left to conclude bilateral agreements with each of the EU countries, such as Switzerland), the results will vary.

The most challenging assumption is that the UK government opts for a “Swiss” solution, i.e. an exit from the EU, i.e. opting out of all of EU Treaties. The UK would/will gain the greatest freedom to alter its competition law landscape. For example, the competition-relevant regulations (such as the Block Exemption Regulation on Vertical Agreements) will cease to have direct effect following the departure from the EU, as will do so all the EU Regulations.

Merger Legislation

In absence of any new agreed applicable legislation, the Brexit would end the one-stop shop merger control under the EU Merger Regulation. This means any merger, joint-venture, participation would have to be vetted by the UK competition authority and in one or more EU member states. This extra control will inevitably give rise to significant additional (administrational and lawyers’) costs, delays and uncertainty for UK businesses.

Antitrust Offenses

The double investigation would mean that infringers would have to pay any collusive fees twice. It may also make leniency programs less effective.
A whistle-blower from e.g. a cartel which operates both in the UK and the EU may not feel the incentive to report its existence to the one authority if that means that the cartel is also revealed to the other authority, with separate prosecution and separate fines.

Damages Actions

The UK (together with the Netherlands and Germany), i.e. the courts of England and Wales are a preferred forum for both standalone and follow on competition law damages (under art 101, 102 TFEU); it is doubtful that with the Brexit the UK will maintain this position.

State Aids

With Brexit, the UK would be outside the state aid control system. The UK government would gain liberty to subsidize UK businesses/banks. It would also have more freedom to grant preferential tax treatment to international/non-UK companies. However, the UK would lose the ability to challenge the EU Commission’s decisions or to challenge EU countries about the abuse of the regime.

It appears unlikely that with such a scenario UK businesses will have an advantage, the reason being that EU/EEA businesses could easily tender for UK contracts via a UK subsidiary or partnering with a UK-based entity.