Brexit - Competition
Critical issues for businesses to consider:
- The EU-UK Trade and Cooperation Agreement includes a commitment to maintain effective merger control rules to address significantly anti-competitive mergers.
- The UK has maintained its own merger control regime post-Brexit and some mergers involving Irish companies will no longer be able to benefit from the “one stop shop” mechanism where their transaction has a UK dimension. Such transactions may require notification in the UK to the Competition and Markets Authority, as well as at EU level to the European Commission. This will require additional commercial planning in carrying out certain multi-jurisdictional mergers, acquisitions and joint ventures post-Brexit.
- Practically speaking, the number of mandatory notifications involving large multinational Irish companies under the EU Merger Regulation (EUMR) is likely to decrease. This is because many Irish multinationals tend to have significant UK activities and turnover, which will no longer be counted in post-Brexit threshold assessments.
Antitrust Enforcement and Litigation
- The EU-UK Trade and Cooperation Agreement includes mutual commitments to maintain effective competition laws to address anti-competitive arrangements and abuses of a dominant position in the EU and UK. This effectively means that status quo of the existing EU and UK competition law rules remains. However, there is a possibility of greater divergences in competition law and enforcement policy between the Irish and UK competition authorities in the medium to long term.
- Irish companies may be able to 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 3rd party funding and class action lawsuits in this jurisdiction.
- There is a framework for subsidy control agreed under the EU-UK Trade and Cooperation Agreement which largely replicates the existing EU state aid regime, but also gives the UK significant flexibility in adopting its own new regime. The definition of “subsidy” is effectively the same as under EU state aid rules. The agreement provides that both the EU and UK must have an effective system of subsidy control, ensuring subsidies respect certain key principles in preventing any material effect on trade.
- UK had previously indicated that it would follow WTO subsidy rules after the end of the implementation period as well as any international obligations on subsidies agreed under future free trade agreements. The WTO rules anti-subsidy rules are much narrower in scope that EU State aid rules, as apply to only goods (and not services), they ban subsidies that are dependent on export quantities, and only provides for a dispute resolution mechanism as enforcement.
- 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, though the European Commission’s COVID-19 Temporary Framework has already introduced a more relaxed regime and is set to apply until the end of 2021.