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Stumbling Towards the UK’s New Administrative Settlement: A Study of Competition Law Enforcement After Brexit
Published online by Cambridge University Press: 11 July 2018
Abstract
While there has been much talk of the role of parliaments and courts in the Brexit process, far less—indeed very little—has been said about the challenges facing the largest part of the UK government: the administrative branch. Whatever results from the UK’s negotiations with the EU, Brexit will likely necessitate wide-ranging and fast-paced administrative reform in the UK. In this article, we use a detailed case study of a particular part of administration—the Competition and Markets Authority (‘CMA’)—to highlight the nature and extent of the challenges facing administrative agencies. This case study is demonstrative as, while there is an extant UK competition administration structure, competition law and its enforcement are highly Europeanised. We propose that the challenges facing administrative bodies in the UK—including the CMA—can be understood as possessing three key dimensions: internal organisation issues; external coordination issues; and substantive legal issues. We argue that, in many instances, these three dimensions will be in tension which each other. That is to say, the reality of reforming administration post-Brexit will involve trade-offs between questions of internal organisation, external coordination, and substantive law.
Keywords
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- © Centre for European Legal Studies, Faculty of Law, University of Cambridge
Footnotes
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We are grateful to M-J Clifton, Richard Kirkham, and Jack Simson-Caird for comments and discussions on various drafts, as well to Kenneth Armstrong and Okeoghene Odudu for helpful editorial contributions.
References
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2 For an excellent overview and analysis, see R Rawlings, ‘Brexit and the Territorial Constitution: Devolution, Reregulation and Inter-governmental Relations’ (2017) The Constitution Society.
3 Our focus here is largely on central government administration. Distinct issues arise regarding, e.g., local government and devolved administration post-Brexit.
4 This is possible under Article 50 TEU. See further House of Commons Foreign Affairs Select Committee, Article 50 Negotiations: Implications of ‘No Deal’ (7 March 2017) Ninth Report of Session 2016–17.
5 Of course, all administrative systems are imperfect in some way and the current system of competition administration is itself not perfect.
6 There are other agencies in the UK with powers to enforce competition law, e.g., the Financial Conduct Authority (‘FCA’), the Office of Communications (‘OFCOM’), the Office of Water Services (‘OFWAT’), and the Office of Gas and Electricity Markets (‘OFGEM’). These authorities and their competition powers will not be considered here but they create additional complexity to the post-Brexit landscape considered here.
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24 Article 50, in part, provides ‘[t]he Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period’.
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30 Ibid.
31 In its written evidence (CMP0002) to House of Lords European Union Committee, Brexit: Competition and State Aid (2018) HL 67, the CMA has estimated that Brexit could result in an additional caseload of 30 to 50 phase 1 mergers and half a dozen phase 2 cases each year.
32 National Audit Office, Report by the Comptroller and Auditor General: The UK Competition Regime (2016), p 4.
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34 The Claims in respect of Loss or Damage arising from Competition Infringements (Competition Act 1998 and Other Enactments (Amendment)) Regulations 2017 (implementing Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing action for damages under national law for infringements of the competition law provisions of the Member States and of the European Union). On the benefits, see Department for Business, Innovation & Skills (now BEIS), UK Implementation of the EU Damages Directive (2014/104/EU): Impact Assessment (2015).
35 This body was created on 1 April 2014 by the Enterprise and Regulatory Reform Act 2013 and took over the competition functions of the Office of Fair Trading and Competition Commission.
36 A working group—the Brexit Competition Law Working Group—chaired by Sir John Vickers has been established to consider these issues, see: Brexit Competition Law Working Group, Conclusion and Recommendations (2017), para 1.7.
37 Ibid, para 2.3.
38 M Coleman, ‘The Future of Section 60 CA98 Post-Brexit: Observation on the Provisional Conclusions of the Brexit Competition Law Working Group’ (2017) Brexit Competition Law Working Group, available at https://www.bclwg.org/wp-content/uploads/2017/05/Martin-Coleman-Section-60-Note.pdf.
39 Brexit Competition Law Working Group, see note 36 above, para 2.8.
40 Coleman, see note 38 above.
41 Ibid.
42 Brexit Competition Law Working Group, see note 36 above, para 2.8.
43 House of Lords European Union Committee, see note 31 above.
44 Ibid, para 1.5.
45 P Lowe, The Implications of Brexit for UK and EU Competition Policy and Law Enforcement (2016) Response to Brexit Competition Law Working Group Issues Paper, p 11.
46 Ibid, p 12.
47 Council Regulation (EC) 139/2004 [2008] OJ L24/1, 29.1.2004. See further N Parr, R Finbow, and M Hughes (eds), UK Merger Control: Law and Practice, 3rd ed (Sweet & Maxwell, 2016).
48 The European Merger Regulation 139/2004 Article 9(2) provides that a member state may request referral on its own initiative or upon the invitation of the Commission.
49 Conflicting outcomes between the UK and other European competition authorities have recently occurred in relation to Akzo’s proposed acquisition of Metlac (which was cleared in several jurisdictions around the world but blocked in the UK) and Eurotunnel’s attempt to purchase the former SeaFrance business (which was cleared in France but blocked in the UK). Another, older example of conflicting outcomes occurred in relation to GE’s bid for Honeywell (which was cleared in the USA but blocked in the EU).
51 European Commission, Merger Statistics (2017), available at http://ec.europa.eu/competition/mergers/statistics.pdf.
52 Forbes and Hughes, see note 27 above; Vickers, see note 27 above.
53 Section 22(2)(a) and Section 33(2)(a), Enterprise Act 2002.
54 Office of Fair Trading, Mergers: Exceptions to the Duty to Refer and Undertakings in Lieu of Reference Guidance (2010) OFT1122.
55 Ibid.
56 Competition and Markets Authority, Mergers: Exception to the Duty to Refer in Markets of Insufficient Importance (June 2017) CMA64.
57 Ibid.
58 J Schmidt, ‘Big Enough to Matter or Too Small to Care? Small Mergers and Competition Authorities’ (2017) Shepherd and Wedderburn, available at https://shepwedd.com/sites/default/files/Big_enough%20_to_matter_or_too_small_to_care.pdf.
59 Transactions are caught by the UK merger control rules (under the Enterprise Act 2002) and may be investigated by the CMA if there is a ‘relevant merger situation’. A merger situation will qualify for review if it meets either of the two alternative jurisdictional tests: (1) If the enterprise to be acquired exceeds £70 million turnover (the turnover test); or (2) as a result of the merger, 25% share of supply of goods or services of any description is created or enhanced in the UK as a whole or in some ‘substantial part’ of the UK (share of supply test).
60 Brexit Competition Law Working Group, Brexit Competition Law Working Group: Second Roundtable (2016), pp 2–3.
61 A Lindsay, Brexit Competition Law Working Group Issues Paper Response (2016), p 2.
62 In October 2017, the UK government, through the Department for Business, Energy and Industrial Strategy, launched the National Security and Infrastructure Investment Review, where it is proposed to allow the government to intervene in the merger of small businesses when there are national security concerns, see: Department for Business, Energy & Industrial Strategy, ‘Government Updates Mergers Regime to Protect National Security’ (17 October 2017), available at https://www.gov.uk/government/news/government-updates-mergers-regime-to-protect-national-security.
63 Vickers, see note 27 above.
64 Brexit Competition Law Working Group, see note 36 above, para 3.9
65 Ibid, para 3.12.
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68 Reader, see note 66 above.
69 Office of Fair Trading & Ors v IBA Health Ltd [2004] EWCA Civ 142 (19 February 2004).
70 Reader, see note 66 above.
71 Ibid, p 25
72 Ibid.
73 Brexit Competition Law Working Group, see note 36 above, para 3.14.
74 European Council (Art. 50) Guidelines Following the United Kingdom’s Notification Under Article 50 TEU (29 March 2017), available at http://www.consilium.europa.eu/en/press/press-releases/2017/04/29-euco-brexit-guidelines.
75 Ibid, para 20.
76 Ibid, para 23.
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81 Ibid, para 25.
82 For example, European Commission Decision of 30 August 2016 State Aid SA.38373 – (Apple); European Commission Decision of 21 October 2015 on State Aid SA.38374 – (Starbucks); European Commission Decision of 21 October 2015 on State Aid SA. 38375 – (Fiat); State Aid SA.38944 – (Amazon); State Aid SA. 38945 – (McDonald’s); and SA.44888 – (GDF Suez).
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