UK Antitrust authority sets out its Brexit preparations
On 22 February 2018, Competition and Markets Authority (“CMA”) General Counsel, Sarah Cardell, gave a speech setting out the UK competition authority’s objectives and the steps taken to prepare for Brexit. This is a matter of importance for all sectors, but particularly the financial services sector that plays such a significant role in the UK economy. The key points are as follows:
- The CMA’s Brexit preparations assume the authority will have an increased enforcement role as the result of the loss of EU jurisdiction. With respect to mergers, the CMA estimates it will take on an additional 30-50 Phase I merger cases a year (resulting in an additional 5 Phase II in-depth reviews). With respect to antitrust enforcement, where the CMA has more discretion regarding which cases it takes on, the authority expects to open an additional 5-7 complex antitrust investigations every year.
- As a result, the CMA is ramping up its recruitment efforts, for example adding around 30 members to its Edinburgh outpost over the next two years. The authority is also working to agree cooperation arrangements with the European Commission as well as other competition authorities to facilitate evidence-sharing and overseas enforcement.
- The CMA intends to continue its involvement in international organisations fostering cooperation, such as the International Competition Network (“ICN”), the European Competition Network (“ECN”) or the Organisation for Economic Co-operation and Development (“OECD”).
- Furthermore, while the CMA sees benefits to maintaining broad consistency between UK and EU competition law enforcement, Brexit is expected to allow the CMA to develop into an independent global authority in its own right, which may lead to differences in enforcement.
- To ensure that the CMA is an effective enforcer post-Brexit, the CMA will require much more resources. There is no clarity as yet as to whether and when those resources will be forthcoming.
Why does this matter?
Even though there is still much uncertainty as to practical details, advisors should be aware that:
- Transactions or anticompetitive practices that impact the UK will fall more readily within the CMA’s jurisdiction, both instead of and alongside the European Commission.
- Divergences may begin to occur between UK and EU antitrust enforcement, which will increase the burden for firms involved in CMA investigations, notably where the European Commission investigates non-UK impacts in parallel.
What are the next steps?
As negotiations between the UK and EU continue, more clarity should emerge on the when, how and who of post-Brexit UK competition law enforcement:
- Competencies could transfer to the CMA from the European Commission either at the start of the transition period (i.e. from March 2019), if agreed, or at the end (i.e. from March 2021 in the case of a 2-year transition).
- The CMA has also requested the UK government to clarify the limits on the ability of UK enforcers to diverge from existing EU jurisprudence currently contained in its Withdrawal Bill.
How can Cadwalader help?
Cadwalader’s antitrust team is one of only a few to focus on the financial services sector. We are specialists in offering ‘end-to-end’ advice on compliance, investigations and related litigation in this sector and have experience before the CMA, the European Commission and other antitrust authorities around the globe.
If you would like to discuss the issues arising in this alert, or how we can help you more generally, please contact us.