Is there any Silver Lining in Brexit from an Antitrust Perspective?
Almost all of the commentary on Brexit from an antitrust perspective is negative. Its all about minimising the costs from duplication of merger assessments and the prospect of legal uncertainty. This is combined with a fear that in the process of Brexit British antitrust will lose its European antitrust moorings. The CMA it is feared will head off in the direction of MMC pre-1973 opaque public interest justifications for merger clearances and market investigations.
Is it possible however for the UK free of European regulatory structures to enhance in some respects the operation of its antitrust regime? And potentially could the UK become a regulatory laboratory for development of antitrust policy in Europe? The potential is that the British authorities could take Brexit and turn it into a win win for both Britain and the rest of Europe.
To give two examples. First, once free of the European regulatory structures the UK could seek to significantly enhance its criminal cartel regime. Greater use of plea agreements, director disqualification orders, an enhanced leniency regime and reshaping the civil procedures against companies so they followed immediately on the back of the criminal procedures seamlessly. The overall impact would be to create the most formidable anti-cartel regime in Europe. Given the economic footprint of the British economy (even post-Brexit) the British regulator would end up creating a significant additional deterrent effect against price-fixing cartels that would have a positive effect both in the UK and EU economies.
A second example would be to look again at the issue of exemption decisions in respect of the UK’s restriction of competition provision contained in Section 2 of the Competition Act 1998. Following the abolition of the notification and exemption system in respect of Article 101 in Regulation 1/2003 the UK followed suit and abolished its own notification and exemption system. The UK now has only a limited and little used opinion system.
There has always been a compelling argument that it was a mistake to abolish the notification and exemption system: That the real problem was the over-broad jurisdiction of Article 101. The old pre-2004 notification and exemption system was valuable in terms of legal certainty for business. Post-Brexit the British authorities could envisage bringing back a modernised notification and exemption system which would be voluntary; where the scope of Section 2 was expressed in more limited terms than the Commission’s traditional interpretation of the scope of Article 101 (or rather as would then have been Article 81) and would imposed a filing fee to limit the cost implications for the CMA in dealing with exemption assessments.
This UK experimentation would give EU states the opportunity to see how a modernised notification and exemption system would work to everyone’s benefit. It also may give the UK a competitive advantage by help keeping some business on British shores, as some capital intensive businesses who desire legal certainty make base themselves in the UK to take advantage of exemptions granted by the CMA. However, for the exemption to be valuable in the EU, the CMA would still have to ensure its exemptions kept close to the accepted canons of EU antitrust law. Hence while a notification and exemption system may give the UK a competitive advantage it would also have the effect of helping to anchor Britain close to mainstream EU antitrust law.
*This article originally appeared as the leader in Competition Law Insight, 9th May 2017.