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UK competition policy does not need to change because of Brexit, says regulator


UK competition policy can remain the same after the country leaves the EU, the Competition and Markets Authority (CMA) has said.

In written evidence submitted to a UK parliamentary committee examining Brexit's impact on UK competition policy, the regulator said the fact that the UK is moving towards Brexit "does not necessarily require" changes to be made to existing competition policy.

"While it is for government to determine the overall framework of UK competition law and policy, we note that retaining the current approach would provide a degree of stability and predictability for business," the CMA said.

"We note also that an effective competition policy is widely recognised as having a number of benefits for consumers, businesses, and the economy, through improved economic efficiency that delivers economic growth and development and long-term consumer welfare. For these reasons, a broadly similar approach to competition policy is evident internationally across many jurisdictions. We note also that there are some inherent risks arising from the changes that Exit will bring, and it will be important to retain a legally robust competition policy, including ensuring Exit does not give rise to policy or enforcement gaps and that unnecessary legal uncertainty and litigation are avoided," it said.

In its submission, the CMA said that there would be "practical benefits" to retaining a link between UK competition law and EU competition law post-Brexit, but said that in future UK courts should not be bound to follow EU law in its rulings.

"We consider that the current obligation on UK courts and authorities to act with a view to securing no inconsistency with European court judgments should be replaced with a softer duty, for example a statutory obligation to ‘have regard’ to EU law and precedent," the CMA said. 

"We consider that such a duty would allow UK courts and authorities to depart from EU law where they considered it appropriate, retaining a useful procedural discipline to consider relevant EU law on antitrust questions and to provide rational reasons for departures. There may also be additional benefits in terms of reducing the risk of frivolous litigation, as well as for business in being sure of a consistency of approach," it said.

The CMA said that "new bilateral or multilateral arrangements" would need to be put in place to ensure that, post-Brexit, it can continue to engage in parallel investigations with other national competition authorities from across the EU and "retain the existing investigative and information sharing benefits" that apply to the current arrangements.

The regulator said, however, that UK government plans to enable the CMA to engage in parallel investigations with the European Commission post-Brexit would be likely to result in an increase to its caseload, and could increase burdens on businesses as they would have to deal with two separate regulators. It said it is also likely that Brexit will lead to an increase in the number of cases on which it would need to cooperate with non-EU competition authorities in future, and require it to consider between 30 and 50 additional proposed mergers each year.

It is possible in future that the CMA and Commission might reach "divergent outcomes" in their assessment of mergers, the UK regulator said. In "extreme cases" this "could lead to the imposition of inconsistent requirements on businesses, potentially frustrating different jurisdictions' remedies, and even causing the abandonment of the merger", it said.  

The CMA called for the UK government and Commission to put in place "sensible" arrangements for dealing with investigations and merger control cases that overlap the time at which the UK formally exits the EU.

"Ideally such arrangements would be concluded as soon as possible to maximise certainty for businesses and their advisors," it said.

Guy Lougher, an expert on Brexit and competition law at Pinsent Masons, the law firm behind Out-Law.com, said: "The CMA’s paper is a good summary of the key issues for competition policy in the UK post-Brexit. Possibly the biggest single issue will be that of ensuring the CMA receives sufficient additional resources and personnel to be able to undertake its additional functions, especially in the merger control and competition enforcement areas, without either a reduction in its discretionary activities, such as market studies and informational roles, or a reduction in its performance standards."

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