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UK goods face EU transport restrictions if post-Brexit competition is not 'fair'

UK businesses could face restrictions on exporting their goods to the EU in the event of a 'no deal' Brexit if the UK government implement measures that give UK businesses an unfair competition advantage over EU counterparts, according to proposals outlined recently.10 Jan 2019

The European Commission published a draft regulation in December that would, if implemented, give EU authorities scope to limit or even suspend the rights of UK road haulage companies to transport goods via roads in the EU.

The draft regulation (14-page / 325KB PDF), which would only apply in the event of a 'no deal' Brexit, does make provision for ensuring "basic road freight connectivity" continues for UK road haulage operators after Brexit in the event of a 'no deal' scenario. However, if equivalent access rights are not provided for EU-based hauliers to UK roads, or if the UK breaches conditions laid out in the legislation around "fair competition" then the UK hauliers' access rights could be restricted or revoked.

Competition law expert Alan Davis of Pinsent Masons, the law firm behind Out-Law.com, said: "The Commission wishes to ensure that, in the event of a hard Brexit, trade in goods between the UK and the EU is as frictionless as possible insofar as road haulage transport is concerned. However, it plans to reserve to itself significant retaliation powers if the UK does not comply with certain obligations to maintain a level competitive playing field in relation to road hauliers and more generally."

"This clearly shows the Commission's determination to ensure that EU law standards on competition law and state aid continue to be respected in this sector post-Brexit and ties the UK government's hands on its ability to step in to support the sector in some way," he said.

Currently, an EU regulation provides a legal basis for road haulage operators to transport goods between the UK and the rest of the EU, and vice-versa. However, in a 'no deal' Brexit scenario, UK hauliers would lose their rights to transport goods by road within the EU27 market, and similarly EU27 hauliers would lose their automatic access to the UK. The draft regulation set out by the Commission is designed to account for this scenario.

According to the proposals, the European Commission will "monitor the conditions under which Union road haulage operators compete with UK road haulage operators for the provision of road freight transport services" that are within the scope of the regulation, and would have the power to adopt 'remedies' if "said conditions are appreciably less favourable than those enjoyed by UK road haulage operators" as a consequence of any one of six listed "situations" arising.

The Commission's power to take action could be triggered as a result of the granting of subsidies by the UK; failure by the UK to have in place or to effectively apply competition law; failure by the UK to establish or maintain an independent competition authority; if the UK applies "inferior" standards in the protection of workers, safety, security or the environment or relating to the granting of licences to road haulage operators or to the qualification, training and medical controls for professional drivers; if the UK diverges from EU rules on road charging and taxation; or in the event of "any form of discrimination against Union road haulage operators".

Davis said the broad nature of the draft provisions are aimed at allowing the Commission to retaliate if it feels the UK government, in the aftermath of a 'no deal' Brexit, implements measures to boost UK business that put EU-based companies at a disadvantage in comparison.