Opportunity for a more effective competition regime post-brexit, say Lords committee

Since the UK joined the EU, the UK and the EU institutions have shared responsibility for competition matters—including anticompetitive conduct or agreements (antitrust), merger control, and State aid—so Brexit is likely to have a significant impact on the UK’s domestic competition regime.

There is a broadly consistent international approach to competition policy (across the EU and globally) and Brexit should not be taken as a reason to throw away these shared fundamental principles. Nonetheless, Brexit does present the UK with an opportunity to address shortcomings of the current regime, particularly in relation to State aid where (working with the devolved administrations) the UK will have to create a domestic framework from scratch.

The Government will also need to address short-term legal and regulatory issues, and clarify jurisdiction during any transition period.

The report’s main conclusions are:

Antitrust and mergers

• While there should continue to be consistency between the UK and EU’s approach to competition matters, the UK will be free to take a more innovative and responsive approach to tackling global competition enforcement challenges, such as fast-moving digital markets and dominant online platforms.
• It will be in the interests of UK and EU competition authorities to continue to cooperate post-Brexit. A formal cooperation agreement should be negotiated covering investigations and enforcement actions.

State aid

• EU rules have not been the decisive factor in limiting State aid in the UK during the time it has been an EU Member State.
• It is highly likely that any deep and comprehensive UK-EU Free Trade Agreement (FTA) will include State aid provisions.
• Outside the EU, a UK-wide State aid framework will be necessary to meet WTO obligations and to avoid intra-UK subsidy races and distortions of competition in the UK’s own internal market. The Government will need to avoid any approach where they appear to be both 'rule maker' and 'rule taker' by involving and securing the support of the devolved administrations in developing this framework.

Transition

• ‘Bridging’ arrangements will be necessary to clarify jurisdiction in cases which are ‘live’ at the point of Brexit, as well as future cases relating to conduct which occurred while the UK was still a member of the EU. 
• The Government should also agree the terms of a transition period with the EU in the first quarter of 2018 to ensure that businesses are not faced with the complexity and cost of having to adapt to Brexit twice. 

Future policy

• After the UK leaves the EU, new institutions (including the Government’s proposed Trade Remedies Authority and possibly a new UK State aid authority) will be needed to work alongside the CMA and the Competition Appeal Tribunal. The Government should consult with the devolved administrations and local government, as well as businesses and consumer groups, to design an inclusive post-Brexit competition system that more closely reflects domestic needs and priorities.

Chairman of the Committee, Lord Whitty, said:

“While our witnesses favoured ongoing consistency between the UK and EU’s approach to competition matters, we were encouraged that they also saw opportunities for the UK to improve our competition regime after Brexit. The Government needs to provide clarity on what the transition period will look like, and on their longer-term policy for competition matters - particularly in relation to State aid. To develop this policy, the Government will need to consult with the devolved administrations and local government, as well as businesses and consumer groups.”