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Brexit Law Blog: Archive

This blog tracked legal issues arising from Brexit. It ran from the referendum in 2016 to last post in May of 2021.

New SI confirms binding effect of “continued competence” Commission decisions even after the end of the Brexit transition period

Posted on 01 Dec 2020 by Brick Court

Charlotte Thomas

The Government has published a new statutory instrument confirming that the European Commission will have “continued competence” in relation to competition and merger investigations begun before the end of 2020.

Decisions reached by the Commission in such “continued competence” competition infringement cases can therefore continue to found follow-on damages claims in the UK even if they are taken after 31 December 2020.

That’s the short version – the considerably longer and more convoluted version, which requires tracing through some labyrinthine SI amendments, follows.

The current position

The term “infringement decision” under Part I of the Competition Act 1998 is currently defined as including decisions of the European Commission that EU competition law has been infringed, as well as decisions of the CMA (or the Competition Appeal Tribunal on appeal from the CMA) that either EU competition law or domestic competition law has been infringed: s 47A(6).

Thus, when s 58A(2) of the Act (as amended to give effect to the Damages Directive) provides that the High Court and Competition Appeal Tribunal are “bound by the infringement decision once it has become final” where a claim is brought in respect of that infringement decision, that includes both EU competition infringement decisions of the Commission and EU and domestic competition infringement decisions of the CMA.

Decisions of the European Commission are therefore currently capable of founding so-called ‘follow-on’ damages claims in UK courts and many competition damages claims have been brought in the UK on just this basis.

Commission decisions are also of relevance where any decision in taken in relation to breaches of the domestic prohibitions contained in Part I of the Act under s 60, which requires questions under Part I to be determined “so far as possible” consistently with EU law, including having regard to “any relevant decision or statement of the Commission”.

But what will happen after Brexit takes effect at 11pm on 31 December 2020, following the end of the transition period?

The 2019 Regulations

The Government’s ‘no-deal’ competition law SI, the Competition (Amendment etc) (EU Exit) Regulations 2019 (SI 2019/93) (available here), as originally made, provided:

  • As to infringements of EU competition law, under para 14(2)(b) of Schedule 4, Part 6, after ‘exit day’ a claim relating to an infringement of EU competition law which occurred before exit day could be made as long as that claim could be made before exit day – importantly, para 14(3) specified that it does not matter whether the damage caused by the infringement occurred before or after exit day. Para 7(4)(a) of Schedule 4, Part 3, which applies to claims described in para 14(2) by virtue of para 15, specifically confirmed that references to EU competition infringement decisions of the European Commission “do not include a decision made on or after exit day”.
  • As to domestic competition infringements, under reg 30(3), a new s 60A was inserted into the Competition Act 1998 confirming that the duty of consistency with EU court decisions and the duty to have regard to relevant decisions or statements of the European Commission only apply in respect of such decisions or statements issued before exit day. Para 17 of Schedule 4, Part 6 then disapplied certain elements of reg 30(3) concerning disclosure from the investigation file in relation to domestic competition infringements that occurred before exit day.

The Withdrawal Agreement

The Withdrawal Agreement, which was agreed in October 2019 and which entered into force on 31 January 2020, provides for a different transitional rule in relation to decisions of the European Commission, by Article 92 (emphasis added):

“1. The institutions, bodies, offices and agencies of the Union shall continue to be competent for administrative procedures which were initiated before the end of the transition period concerning: (a) compliance with Union law by the United Kingdom, or by natural or legal persons residing or established in the United Kingdom; or (b) compliance with Union law relating to competition in the United Kingdom.

3. For the purposes of this Chapter: … (b) proceedings for the application of Article 101 or 102 TFEU conducted by the European Commission under Council Regulation (EC) No 1/2003 shall be considered as having been initiated at the moment at which the European Commission has decided to initiate proceedings in accordance with Article 2(1) of Commission Regulation (EC) No 773/2004”.

This creates a category of so-called “continued competence” cases, which secure the continued relevance of competition infringement decisions of the European Commission where two criteria apply:

  • Before the end of the transition period (i.e., before 11pm on 31 December 2020), the Commission has decided to initiate proceedings with a view to adopting a competition infringement decision under Council Regulation (EC) No 1/2003; and
  • The competition infringement has been committed by natural or legal persons residing or established in the UK, or relates to competition in the UK.

Article 95(1) of the Withdrawal Agreement further provides that decisions taken in such “continued competence” cases and addressed to the UK or to “natural and legal persons residing or established” in the UK must be treated as binding “on and in” the UK. Meanwhile, Article 95(2) confirms that the Commission continues to be competent to monitor and enforce commitments given and remedies imposed in or in relation to the UK in connection with antitrust and merger cases, unless it agrees to transfer that competence to the CMA.

The new 2020 Regulations

The Government has now published (on 26 November 2020) a statutory instrument which gives effect to Articles 92 and 95 of the Withdrawal Agreement in the UK after the end of the transition period: the Competition (Amendment etc) (EU Exit) Regulations 2020 (SI 2020/1343) (available here, with a helpful explanatory memorandum here).

The amendments made by the 2020 Regulations to the 2019 Regulations include the following points relevant to follow-on damages claims:

  • The 2020 Regulations replace all references in the 2019 Regulations to ‘exit day’ to ‘IP completion day’ – i.e., 11pm on 31 December 2020, when Brexit will actually take effect, at least as matters stand (European Union (Withdrawal Agreement) Act 2020, s 39).
  • The 2020 Regulations continue to provide in respect of EU competition infringements that Commission decisions issued before IP competition day are binding but Commission decisions after IP completion day are not, “except in relation to cases in which the European Commission has continued competence after IP completion day in accordance with Article 92 of the EU withdrawal agreement”: Part 1, reg 36(c) of the 2020 Regulations, amending para 7(3)(b) of Schedule 4, Part 6 of the 2019 Regulations (still applicable to para 14(2) by virtue of para 15). Thus, the concept of “continued competence” is defined directly by reference to Article 92 of the Withdrawal Agreement.
  • The 2020 Regulations further provide that these transitional provisions also apply where the claim is or includes a claim in respect of a domestic competition infringement which spans the end of the transition period (reg 39(5) and (8)).
  • The 2020 Regulations similarly permit competition infringement collective redress schemes to be founded on “continued competence” Commission decisions (reg 38).

The 2020 Regulations also contain important provisions allocating jurisdiction between the CMA and Commission where the Commission has “continued competence” in respect of competition investigations (regs 36-37) and merger control cases (regs 40-45, inserting a new Part 6A into the 2019 Regulations). They also require the CMA to monitor compliance in respect of transferred EU antitrust and merger commitments pursuant to Article 95(2) of the Withdrawal Act (reg 4, introducing new ss 40ZA-D to the Competition Act 1998, and reg 8, introducing new ss95A-B into the Enterprise Act 2002, respectively).

The CMA’s draft Guidance

Also worth noting in this regard is the CMA’s draft Guidance on the functions of the CMA after the end of the Transition Period (CMA125), published on 2 October 2020 (available here) and in respect of which the consultation closed on 30 October 2020 (available here).