Countdown to Brexit - Competition Law

With the Brexit deadline fast approaching, the ByrneWallace Brexit team address various issues which will impact upon businesses either trading with or through the UK, or with suppliers in the UK, and/or with UK staff based in Ireland or staff in the UK. 

In the fourth of our spotlight series, we address Competition Law.

Critical issues for businesses to consider in a “No Deal" Brexit include:

Withdrawal Agreement/No Deal Brexit: If ratified, the Withdrawal Agreement will govern the UK’s ongoing legal relationship with the EU. Part Five of the Agreement contains mutual obligations in relation to competition law which maintain EU law principles in the areas of antitrust, State aid and merger control.  The Agreement also provides that the interpretation of those provisions will be in accordance with the EU competition law provisions and the Court of Justice of the European Union (CJEU), even where an independent UK Authority is assessing them. Therefore, the UK will have limited latitude to diverge from EU law in competition matters unless or until a negotiated future relationship agreement supersedes these provisions.

However, even in the absence of a Withdrawal Agreement, the UK’s European Union (Withdrawal) Act will apply. This Act provides that the provisions of EU law, including competition law, will be crystallised into and form a part of UK law upon exit date. Even though the UK would then be free to depart from the EU position, practically it is unlikely to do so in the short term.

Regardless of whether the Withdrawal Agreement is ratified or there is a No Deal, businesses ought to consider the following at a minimum: 

Merger Control: 

• Some mergers involving Irish companies will no longer be able to benefit from the “one stop shop” in merger control matters. Such transactions may require notification in the UK to the CMA, as well as at EU level. Therefore, greater commercial planning may be required in carrying out certain mergers, acquisitions and joint ventures post-Brexit.
• The number of mandatory notifications involving Irish companies under the EU Merger Regulation (EUMR) is likely to decrease.  Many of the mergers involving Irish companies requiring a mandatory notification under the EUMR meet the thresholds largely because of UK derived turnover, which will no longer be counted in post-Brexit threshold assessments.

Antitrust Enforcement and Litigation

• The threshold “effect on trade between Member States” in antitrust matters will be more difficult to establish where that trade supposedly takes place between Ireland and the UK.
• Irish companies can resist the disclosure of UK parent company documents in the event of any investigation or dawn raid be initiated by the European Commission.
• There is a possibility of an increase in the number of private antitrust “follow-on” cases being brought in Ireland in the absence of the UK as the forum of choice, albeit subject to the difficulties in 3^rd party funding and class action lawsuits in this jurisdiction.
• There is a possibility of greater divergences in competition law and enforcement policy between the Irish and UK competition authorities, though this is more likely in the medium- to long- term.

State Aid

• There is a possibility of a more liberal regime in the UK post-Brexit affecting Irish competitiveness.
• There is a possibility of a “Brexit bonus” or less restrictive enforcement applied by the European Commission in respect of State aid schemes implemented by the Irish State.