European Union: Government Publishes Further Competition Brexit Legislation Amending Its Original Regulations On Competition Law In Order To Address The Issue Of EU Commitments Relating To The UK

On 10 September 2019 the UK Government published the text of a second Competition Brexit SI, the Competition (Amendment etc.)(EU Exit)(No2) Regulations 2019 (the new Regulations) which make a number of changes to the original Competition (Amendment etc.)(EU Exit) Regulation 2019 (the principal Regulations). The principal Regulations are discussed in an earlier blog post here.

The new Regulations will only take effect if the UK leaves the EU without a deal, and focus on the issue of commitments given to the EU Commission before Exit day, in the context of its merger reviews and anti-trust investigations, and which relate to the supply or acquisition of goods or services in the UK. The new Regulations are subject to an Affirmative Resolution and have been made and laid under Schedule 7 paragraph 5 of the EU (Withdrawal) Act 2018 which deals with urgent deficiencies cases, in order to make sure they are in place by exit day.

The purpose of the new Regulations is to mitigate the consequences of certain provisions set out in the EU Commission's Notice to Stakeholders on the Withdrawal of the UK and EU Competition Law (Commission Notice). The Commission Notice provides that, following the UKs withdrawal from the EU, parties may in certain circumstances consider requesting the Commission to waive, modify or substitute certain commitments under the standard review clause that is typically contained in commitments. If the Commission waives or modifies such commitments, it will no longer be responsible for the enforcement of the UK elements of the original commitment, and the CMA would also have no jurisdiction to enforce the original commitments or adopt new commitments to remedy the harm. This would result in an enforcement gap that may harm UK businesses and consumers.

The UK Government had previously assumed that the EU Commission would continue to monitor and enforce any commitments made to it and which related to the UK, provided they were accepted by the Commission before exit day. Under the principal Regulations all decisions made by the Commission under the EU Merger Regulation and under Regulation 1/2003 are revoked, which includes decisions with commitments relating to the UK. There are currently no provisions for the UK competition authorities to be able to monitor and enforce these commitments after exit day.

The new Regulations now amend the principal Regulations in order to prevent the revocation of Commission decisions with commitments that relate to the supply or acquisition of goods or services in the UK, which instead will be preserved as retained EU law. The new Regulations provide a list of the relevant decisions with commitments with a UK element made prior to 15 August 2019 and a general provision ensures that any further UK-related EU commitments adopted before exit day will also be preserved. The current list includes Commission decisions relating to 12 anti-trust cases and 31 merger clearances. The new Regulations include provisions for the amendment and interpretation of these commitments in order to make sure they can operate effectively as domestic law.

The new Regulations make the necessary changes to the Enterprise Act 2002 and the Competition Act 1998 in order to give the CMA the powers to monitor and enforce these commitments. These new powers largely mirror the current CMA's powers relating to commitments accepted under the UK regime. Any differences are there in order to address issues resulting from the fact that the commitments were originally given to the EU Commission.

The new Regulations require the CMA to publish guidance on how it will interpret and apply the test of whether or not commitments relate to the supply or acquisition of goods or services in the UK and how it intends to deal with these EU commitments that become retained EU law. We will provide a further update here once the CMA guidance becomes available.

The new Regulations also clarify the law and procedure to be applied in private enforcement claims which involve breaches of both UK and EU competition law and which involve conduct which spans exit day. The principal Regulations make transitional provisions for private damages claims relating to domestic infringements and EU infringements, but do not expressly address the position relating to claims involving breaches of domestic and EU prohibitions after exit day, or claims which involve behaviour which spans exit day. The clarification now provided for such cases will assist parties to litigation and the courts after exit day.

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