Competition law after Brexit: Monckton’s response to the Brexit Issues Paper

02 Dec 2016

Monckton Chambers has submitted its response to the Brexit Competition Law Working Group (BCLWG) Issues paper.*

Our response makes a number of specific suggestions as to how the Government could best respond to a hard Brexit, but also highlights some more general points which bear emphasis given the current political climate.

Brexiteers often argue that by substituting UK for EU law, the regulatory burdens on UK companies will be reduced, allowing the UK economy to become more dynamic and productive. Whatever the position elsewhere, that line of reasoning does not apply in the field of competition policy.

That is for two reasons. First, this is not an area in which one set of rules can simply be substituted for another: the EU competition regime will continue to operate in parallel with the UK regime, and UK companies will need to comply with both. This task will be more straightforward if the UK retains a modified version of s.60 CA98, so that the domestic antitrust rules continue to develop broadly in parallel with Articles 101 and 102.

In order to minimise the dual regulatory burden on UK companies, as well as to ensure the UK regime operates effectively, the Government will need to negotiate arrangements enabling the CMA and the European Commission to cooperate closely in a post-Brexit world. Among other things, it would be helpful if the two regulators were able to share information and analysis when investigating the same matters in parallel, assisted each other in organising dawn raids and mutually recognised leniency applications.

The second reason why the standard arguments in favour of Brexit do not apply is that competition law is not an area of EU law which imposes disproportionate regulatory burdens going beyond what we, in the UK, consider to be appropriate. On the contrary, the UK deliberately chose to model its domestic antitrust rules on the EU provisions – because we thought they were sensible rules to adopt. As a result, UK and EU law prohibits exactly the same sorts of anti-competitive agreements and conduct.

Successive UK governments have taken steps to encourage private actions for breaches of competition law, recognising that effective enforcement benefits consumers and boosts UK productivity. That applies in particular to EU competition law, as many of the largest distortions to competition in the UK will be the result of anti-competitive practices operating across several European countries which fall foul of the EU prohibitions.

In our view, an important conclusion follows from this, which is that the Government should ensure that it remains easy for parties to bring actions in the domestic courts for breaches of EU competition law, including by retaining a version of s.47A CA98 so that claimants do not need to ‘re-prove’ infringements that have already been the subject of a Commission decision.

It is unrealistic to expect the CMA will have the resources to duplicate the Commission’s casework, so there will be many Commission decisions finding infringements of Articles 101 or 102 without a corresponding CMA decision finding an infringement of Chapter I or Chapter II. The experience of the past decade shows that far fewer private actions will be brought if claimants have to establish the infringement for themselves, given the complexity of many competition cases.

If s.47A is amended so that it no longer applies to Commission decisions, private actions will have lower prospects of success and fewer people will be willing to fund them. As a result, fewer UK consumers and small businesses will be compensated where they are harmed by anti-competitive practices that are contrary to both the (virtually identical) UK and EU rules, but which are only subject to an infringement finding at the EU level.

A good example is the follow-on claim currently being brought in the Competition Appeal Tribunal against MasterCard on behalf of all UK consumers. The claim, said to be the largest ever brought in the UK courts, is worth £14 billion and relies on a Commission infringement decision. If the claimants can establish that the established breach of EU law harmed UK consumers, millions of UK citizens will receive financial compensation.

Such claims should continue to be possible after Brexit. For UK consumers these actions are effectively a free lunch. The Government should not take it away.

* Our response took into account comments from a number of members of chambers but does not necessarily represent the views of any individual member.