Brexit: competition and State aid

Posted on 05 Feb 2018 by Brick Court

Daniel Jowell QC

The House of Lords EU Internal Market Sub-Committee has published its report on Brexit: Competition and State aid.  Amongst the Committee’s conclusions and recommendations are:

• The “UK may wish, over time, to depart from EU competition case law, particularly as the Single Market imperative underpinning it may no longer be relevant to the UK. Brexit also offers an opportunity to diverge from the EU in terms of enforcement decisions on some antitrust cases and merger reviews. With the repatriation of responsibility in this area, the UK will be free to take a more innovative and responsive approach to tackling global competition enforcement challenges, including fast-moving digital markets and dominant online platforms.”
• “Although Brexit does not necessitate a fundamental revision of the UK’s well-established domestic competition framework, the ‘consistency principle’ under section 60 of the Competition Act 1998 will no longer be appropriate in its current form after the UK leaves the EU and EU law no longer has primacy. It would be desirable to replace section 60 with a softer duty, whereby UK authorities might ‘have regard to’ EU law and precedent, although such an approach may not be appropriate in the longer-term.”
• A “comprehensive competition cooperation agreement” should be negotiated by the UK Government to facilitate extensive cooperation between the national competition authorities of Member States, and the European Commission, on investigations and enforcement actions.
• “It is likely that the EU will insist on some form of State aid controls in any UK-EU Free Trade Agreement (FTA). If this is not case, the World Trade Organization’s (WTO) Agreement on Subsidies and Countervailing Measures (ASCM) would not represent an adequate alternative” as it has no domestic application. As introduced, the EU (Withdrawal) Bill would preserve a general prohibition on State aid without specifying what body would assume the Commission’s current role of reviewing and approving compatible measures. The Committee urges “the Government to address this omission as soon as possible and clarify whether State aid responsibilities will be assumed by an existing, or new, authority.”
• “A number of factors have enabled the UK, and London in particular, to develop into Europe’s foremost jurisdiction for private damages actions resulting from breaches of competition law. Many of these features are likely to endure beyond Brexit, but uncertainty surrounding the future status of EU antitrust prohibitions and Commission decisions could put this leading status at risk. The Government should take this into account when it decides whether to repeal or amend the legislative basis for ‘follow on’ claims in the Competition Act 1998, and whether to allow UK bodies to continue to accept final Commission decisions.”

The complete report is here.