EU: Brexit to impact the antitrust world

Last week British citizens opted to leave the EU, this obliges the UK to negotiate a new trade deal with its European neighbors. Britain now will need to draft its own laws to replace EU regulations now applicable to mergers, cartels and monopolies.

Enforcement of competition law in the UK will be the sole responsibility of the Competition and Markets Authority which will only apply UK law. For cartel or abuse of dominance investigations there will no longer be a one-stop shop for companies, which might have to respond to both the UK and the European authorities. This will increase those companies’ regulatory burden and costs.

There is also a possibility that transactions will have to be notified in the EU as well as the UK and commercial activity will have to be assessed under both the EU merger rules and as well as the UK rules if both jurisdictions are equally affected. This might mean two different sets of waiting periods and remedies.

When it comes to mergers, the UK competition rules are already modelled to a large extent on the equivalent EU rules. When the UK law is decoupled from that of the EU, but with both systems running in parallel the two systems are bound to diverge. With EU law no longer being superior, any decisions taken in Brussels will no longer have a binding effect in the UK, nor will precedents set by European Courts.

This would mean that a large merger or a cartel affecting UK customers would end up subject to two reviews: one in Brussels and another in London.“If Britain leaves, at a certain stage, every big merger that currently goes to the European Commission will also come to Britain,” Fingleton, headed the Office of Fair Trading, said.  “That is going to be quite messy for business.”

Companies will have to spend more on lawyers and advisers, he said, and there will be “additional risk” over the timing of any merger reviews. This could potentially be even greater “in terms of the true cost to merging parties.”