Brexit: Implications on Competition Law and Public Procurement
4 February 2019
Authors: Jenni Heurlin, Anette Laulajainen, Sven Olsson
The UK is due to leave the European Union (EU) on 29 March 2019. Should the UK leave the EU, it may have implications for Nordic companies with business interests in the UK especially in a no-deal scenario.
The UK and the EU published a draft Withdrawal Agreement in November 2018. The draft Withdrawal Agreement, if concluded, would provide for a transition period ending on 31 December 2020 during which EU law would continue to apply in the UK.
The UK Parliament has, however, rejected the Withdrawal Agreement in its current form, yet it has voted in favour of avoiding a no-deal Brexit.
In the absence of any further action by the UK or the EU, the UK will leave the EU at midnight (CET) on 29 March 2019 (the “Brexit Day”).
We have summarised below some of the main aspects of the two different scenarios from the point of view of competition law and public procurement based on, among other things, the UK Competition Authority’s current guidance. However, as we are all very well aware, the situation regarding Brexit remains uncertain and the guidance, as well as the Withdrawal Agreement, could still change.
Merger Control – Status Quo or Parallel Reviews?
During the transition period, a status quo will be maintained: the EU and UK merger control regimes will continue to be applied in a similar way as if the UK were still a member of the EU.
The EU “one-stop shop” for mergers will no longer be applicable in the UK. The UK Competition and Markets Authority (the “CMA”) will be the only competent authority to investigate transactions affecting the UK.
• Final Commission decision prior to the Brexit Day. The CMA will have no jurisdiction over a transaction which the European Commission (the “Commission”) has reviewed and for which a final decision has been issued prior to the Brexit Day.
• No Commission decision on the Brexit Day. If a transaction meets both the UK and the EU thresholds (excluding the UK turnover) and it has effects on competition in the UK, it may be reviewed by both the Commission and the CMA. This also applies to situations where a transaction has been notified to the Commission, but the Commission has not issued a final decision before the Brexit Day. While the UK merger control regime is voluntary, the CMA has advised companies contemplating transactions to be notified around the Brexit Day or the review of which would continue after the Brexit Day to engage in parallel discussions with the Commission and the CMA at an early stage, especially if there are potential competition concerns in the UK.
Infringement Cases – National Rules or EU Law?
The Commission will continue to have jurisdiction over competition infringement cases which have been initiated before the end of the transition period. For the duration of the transition period, the UK must interpret national competition rules in accordance with EU law.
The CMA will no longer enforce the EU competition rules. Instead, only the UK’s national antitrust regime will apply. No major changes are, however, expected as the UK’s current competition rules are substantially the same as the EU rules. In addition, the CMA and the UK courts may depart from the pre-Brexit case law of the Court of Justice of the European Union and the decisional practice of the Commission only in certain cases.
In cases where the Commission has not issued an infringement decision prior to the Brexit Day, the CMA could engage in parallel investigations post-Brexit if the behaviour may have anti-competitive effects also in the UK.
Public Procurement – Agreement on Government Procurement
During the transition period, EU regulation on procurement will continue to be applicable in the UK. The draft Withdrawal Agreement also includes specific articles that relate to the transitional issues for procurement, such as the situation where procurement procedures are launched before the end of the transition period but are not yet finalised on the last day of it.
The Member States’ authorities will have to apply the same rules to a potential UK supplier as to any other business based in a third country with which the EU does not have an agreement on procurement. However, an agreement on procurement is on its way.
The parties to the Agreement on Government Procurement (the “GPA”) have approved, in principle, the UK’s final market access offer to take part in the GPA following its departure from the EU. The GPA is a voluntary agreement between the EU and 18 countries to open up their public procurement markets to each other. The UK is currently a member to the GPA through its membership of the EU but is now on its way to become a member in its own right. If the UK does become an independent member of the GPA, procurement opportunities above certain monetary thresholds will continue to be open to suppliers in the EU, and vice versa. In many ways, the GPA is coordinated with the EU directives on procurement. However, the GPA will not give the UK the same full access to EU procurement markets that it currently enjoys.
State Aid – Limited Substantial Effects
The EU state aid regime will continue to apply in the UK, and the Commission will remain the competent authority for up to eight years after the end of the transition period.
The UK Government has introduced an instrument that will transpose the current EU state aid regime into national law with no material amendments to the framework.
State aid that has already been approved by the Commission before the Brexit Day will not need to be reapproved. However, any aid that has been notified to the Commission before the Brexit Day but for which no decision has been made by then will have to be renotified to the CMA.
Hannes Snellman Assists with Any Brexit-Related Questions
The Hannes Snellman Competition & Procurement Teams in Helsinki and Stockholm are happy to discuss any questions or concerns that you may have in relation to Brexit.