Brexit: The transition period is ending - what do you need to know?
Following the United Kingdom’s official withdrawal from the EU on 31 January 2020, the withdrawal transition period, in which various provisions of EU antitrust law continued to apply, has now expired on 31 December 2020. Although the recently concluded Trade and Cooperation Agreement between the EU and the United Kingdom contains, among other things, certain provisions for cooperation between the countries' competition authorities, it does not change the fact that companies should prepare for certain changes:
Merger control
For UK-related transactions notified to competition authorities after 31 December 2020, the so-called ‘one-stop-shop’ no longer applies. Under this principle, the European Commission was fully competent for transactions that met the turnover thresholds of EU merger control and therefore had an EU dimension. This was also true in so far as the transactions concerned the United Kingdom. After the end of the transition period, this will change and companies will have to prepare themselves for the increased review of notifications by the UK Competition and Markets Authority (“CMA”) parallel to those conducted by the European Commission.
In the future, when assessing whether the turnover thresholds of EU merger control are met, it will also be necessary to ensure that turnover from the United Kingdom is no longer taken into account. However, as the thresholds for EU merger control have not been adjusted downwards despite the withdrawal of the United Kingdom, fewer transactions could fall within the scope of EU merger control from January 2021 onwards. This may lead to the need for more parallel notifications in the remaining EU Member States, as the thresholds there are significantly lower than at EU level. In individual cases, however, consideration may be given to referring the matter to the European Commission.
Antitrust proceedings
The European Commission remains competent for antitrust proceedings if it has already initiated these before the transition period expired. If the European Commission has not initiated antitrust proceedings in a matter which also concerns the United Kingdom before the transition period expired, the CMA may initiate proceedings regardless of whether the conduct took place before or after 31 December 2020. It is important to note, however, that, in accordance with the effects doctrine, the European Commission is also competent for misconduct in such cases where the conduct in question has an effect within the EU (in addition to the United Kingdom). In the area of antitrust proceedings, too, companies will therefore have to anticipate parallel proceedings in future, thereby increasing the risk of fines.
There are other practical issues in addition to these selected problems: Will antitrust decisions of the European Commission or the EU courts have a binding effect in the United Kingdom? This binding effect on national courts is of considerable importance in cartel damages proceedings because it facilitates the burden of proof requirements for a claimant. Will British courts still recognise such a binding effect in future or should a potential claimant seeking cartel damages preferably assert its claims in an EU Member State for reasons of legal certainty?