Competition damages claims and the Great Repeal Bill: the fate of Articles 101 and 102

27 Apr 2017

According to many Leavers, Brexit would allow the UK to recover its liberty by casting off a yoke of bondage imposed by EU law. Most competition lawyers could have been forgiven for thinking that after Brexit Articles 101 and 102 would no longer have direct effect in the UK.

The Government’s White paper on the Great Repeal Bill may therefore have come as something of a surprise. The Government announced that, at least for the time being, it intends to incorporate into UK law any EU treaty provisions which create rights that can be relied on directly in court by an individual – as Articles 101 and 102 undoubtedly do.

What difference will this make?

The main benefit is that, so long as Articles 101 and 102 are part of UK law, you have a straightforward legal basis for bringing claims based on them in the national courts, i.e. as claims for breach of statutory duty.

As and when those articles stop being part of UK law, such claims will probably need to be brought as claims for a breach of a foreign tort. The claimant will have to prove that the EU rules formed part of the law of, say, France, and will be obliged to call expert evidence to prove their substantive content as a matter of fact.

Show me a lawyer who thinks this sort of additional complexity would be a good idea, and I will show you someone who thinks they can make money out of it.

But we should distinguish between claims relating to pre-Brexit and post-Brexit periods.

One of the main reasons to base claims on Article 101 or 102 after Brexit will probably be to bring a ‘follow on’ action relying on a European Commission infringement decision (assuming these are preserved). If you need to prove the infringement yourself, it will generally be easier to claim under the Competition Act.

Even after we have left the EU there should be a steady flow of Commission infringement decisions covering the pre-Brexit period: competition investigations are lengthy affairs, and unlawful activities can remain hidden for years.

It may not, though, be strictly necessary to incorporate the main EU antitrust provisions in order to facilitate such claims. That is because, while section 2(1) of the European Communities Act 1972, which currently gives Articles 101 and 102 legal effect in this country, is due to be repealed, section 16 of the Interpretation Act 1978 states that, unless the contrary intention appears: “where an Act repeals an enactment, the repeal does not … (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under that enactment … [or] (e) affect any … legal proceeding or remedy in respect of any such right, privilege obligation, liability, penalty, forfeiture or punishment”.

As a result, if you acquired a right to sue someone for breach of statutory duty as a result of a pre-Brexit infringement of Article 101 or 102, then you should still be entitled to bring legal proceedings to vindicate your rights even after the repeal of the 1972 Act (perhaps basing your claim on both the 1972 and 1978 Acts).

Turning to claims covering the post-Brexit period, it is difficult at the moment to know how beneficial it would be to retain Articles 101 and 102 within our domestic legal framework over the medium term.

That is because it will partly turn on the outcome of the Brexit negotiations. The UK and EU might agree, for example, that Articles 101 and 102 should continue to apply to the UK for the purpose of any Commission competition investigations already underway at the date of Brexit.  And the potential attractiveness of the UK as a forum for damages claims relating to EU or global cartels will depend on what is agreed in respect of jurisdictional and choice of law rules.

But there are at least three good reasons to domesticize Articles 101 and 102 at least for the time being.

First, despite the possibility of relying on the Interpretation Act, having Articles 101 and 102 within the domestic legal framework will remove any doubt as to the legal basis for bringing claims relating to the pre-Brexit period. Given there will be a great deal of legal uncertainty around, any opportunity to reduce it should be grasped.

Second, and however unhelpfully from our perspective as lawyers, cartelists and abusive companies are not going to end their unlawful activities the day before Brexit and initiate a new set of practices a day later. Claims will inevitably straddle the pre-Brexit and post-Brexit periods, and if you need to base your pre-Brexit claim on the EU antitrust provisions in order to take the benefit of a Commission infringement decision it will be a lot easier if you can use the same legal basis for your post-Brexit claim.

Third, depending on what is negotiated, there may be real benefit to facilitating EU law claims even if they only cover the post-Brexit period.

Set against this, there is no obvious down-side to keeping Articles 101 and 102 within UK law. The ‘inter-state trade’ jurisdictional threshold means that the EU rules don’t apply to UK-specific practices, and any UK companies which export to the continent will need to comply with them in any event. All it does it make it easier for people to bring claims in the UK courts.

Even if the Government felt that it would be incongruous to keep Articles 101 and 102 as part of UK law over the long term, it would be unwise for it to try to specify an end-date while the future situation remains as unclear as it is at the moment. More sensible would be if the relevant secondary legislation under the Great Repeal Act gave ministers the power to repeal the provisions if and when that was considered appropriate at some point in the future – after properly consulting the sector.

That would be consistent with the broader approach set out in the White Paper, namely that we should maintain the current legal status quo for the time being and work through whether or not we want to repeal or make changes to EU-derived law over time, i.e. after we have left the EU.

It would certainly be nice if the Government took advantage of the extra time it has bought itself by calling a general election two years after the last one and avoided taking rushed decisions in this and other areas. I love the an election night infographic as much as the next man or woman, but some more concrete benefits in exchange for the joys of the next few weeks would be greatly appreciated.