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Competition Law consequences of Brexit

Although it is difficult today to draw up a precise inventory of Brexit’s consequences in terms of competition law due to the lack of reliable information regarding exit terms, it is nonetheless possible to predict a complexification of issues for businesses and their lawyers for at least three reasons.

Brexit’s first predictable consequence for businesses is formal: it will result in an increase in their administrative workload.

On the one hand, antitrust law defines the respective powers of national and European competition authorities on the basis of turnover thresholds, which allows for a single notification to be sent to the European Commission once a merger regrouping several active companies in various European countries exceeds the European thresholds.

In the aftermath of Brexit, a European merger will require notification not only to the European Commission but also to the British competition authorities. The procedural benefit formerly granted by EU legislation will thus disappear.

On the other hand, in terms of controlling anti-competitive practices, a company carrying out its activities in the UK remains subject to European competition law as long as this practice has an impact on intra-European trade, and it will be exposed to a dual control of said practice. Indeed, the European Commission is considered to be in the best position to examine practices having an effect in more than three Member States.

Following Brexit, an anti-competitive practice which would have effects in more than three Member States and in the UK might be subject to a double examination and therefore be liable to a possible double sanction by both the British competition authorities and the European Commission.

The second consequence of Brexit is material and lies in a greater risk of divergence between European and British competition regulations.

While EU membership requires a Member State to comply with primary competition legislation and European treaties, as well as with secondary legislation, its implementing regulations and directives, Brexit might exempt the UK from that obligation.

In other words, up to now, a company operating in the UK and in several Member States has enjoyed a certain uniformity of assessment of its anti-competitive practices or its mergers. In the future, however, it is likely to face possible diverging views between the UK competition authorities and their European counterparts.

This will necessarily result in greater legal uncertainty for European companies operating in both the UK and on the European continent.

The third predictable consequence of Brexit relates more specifically to the competition authorities themselves.

Indeed, Brexit should lead to less cooperation between the European Union, the authorities of various Member States and those of the UK.

For instance, the European Commission will no longer be able to carry out visits and seizures on the premises of undertakings in the UK and will have to settle for issuing simple written requests for information.

Conversely, the British Courts responsible for the application of competition law will no longer be able to seek the interpretation of the ECJ.

This lesser cooperation constitutes an historical break in the construction of European competition law.

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