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Brexit Sunset Clause Risks Uncertainty for UK Competition Law

 |  November 4, 2022

By: Andreas Stephan (Centre For Competition Policy Blog)

This blog post draws on the presentation given by Professor Catherine Barnard (University of Cambridge) at the ESRC ‘UK in a Changing Europe’, ‘UK Regulation after Brexit Revisited’ event held at the British Academy in London on 27th October 2022.

The UK’s new Prime Minister, Rishi Sunak, promised to put EU laws through the ‘shredder’, as part of the leadership contest campaign video he released in August when running against his predecessor, Liz Truss. The Retained EU Law (Revocation and reform) Bill (REUL) promises to impose a sunset clause on 2,400 or so pieces of retained EU law, which will cause them to cease applying in the UK unless ministers actively act to keep them. This includes all secondary law (regulations and directives) and related case law of the European Commission and Court of Justice of the European Union (CJEU), which plays an important role informing UK Competition Law (at least to the extent that it relates to EU case law delivered until 31 December 2020). This blog explains why the law could create significant uncertainty for the enforcement of UK competition law and what might be done about it.

The REUL Bill is part of the current government’s commitment to deliver on its 2019 election manifesto promise to ‘Get Brexit Done’. It seeks to purge the UK statute books, not only of the retained laws based on secondary legislation adopted through the European Union (Withdrawal Act) 2018, but also the binding nature of the pre-Brexit case law on which much of it relies. This will be done through an unprecedented ‘sunset clause’, under which all secondary retained EU law and case law will cease to have effect past a certain date. Rishi Sunak had originally promised to do this in his first hundred days as Prime Minister. Liz Truss (who won the first leadership contest this year) announced the sunset clause would take effect on 31 December 2023. The exact timing is unclear at present, because the full scale of the exercise (reviewing 2,400 laws) is becoming apparent to government. For example, the UK’s Business Department has warned they would need 400 staff to review or repeal the 300 pieces of retained EU Law legislation it is responsible for. 

REUL will not affect the core provisions of the UK’s competition law regime and in particular merger regulation. Even as a member of the EU, the UK had its own domestic provisions in the Competition Act 1998 and Enterprise Act 2002. Most notably, the UK’s merger control regime is procedurally different to that of the EU’s, albeit with a very similar overall approach to anti-competitive mergers. The effect of Brexit was essentially for the UK regime to be upscaled from a ‘national competition law’ within the EU, to an international regime that engages all anti-competitive behaviour and mergers that affect UK markets. Where the European Commission previously investigated most multi-jurisdictional cases on behalf of the UK and all other Member States, now the EU and UK regimes potentially apply alongside each other, in relation to businesses that trade in both markets. Indeed, we have already seen the first conflicting outcome in the merger case of Cargotec and Konecranes. The European Commission cleared the merger in February 2022, but the CMA went on to block it in April 2022…