THE IMPACT OF
BREXIT ON PUBLIC
ENFORCEMENT OF
ANTITRUST LAW
Master Competition Law and RegulationClément Lefevre Submitted on 21 July 2017
Written under the supervision of : Dr K.J. Cseres
Content
Abstract ... 2
I. Introduction ... 3
II. The role of the Competition and Markets Authority in the enforcement of antitrust law in the United Kingdom ... 5
III. The different models for Brexit: a Competition Law perspective ... 7
a. The current regime: Regulation 1/2003 ... 7
b. EEA Agreement ... 9
i. Presentation of the agreement ... 9
ii. Public enforcement of competition law in the EEA ... 10
c. EU-Switzerland agreement ... 12
i. Presentation of the agreement ... 12
ii. Public enforcement of competition Law as part of the EU-Switzerland relations .... 14
d. The CETA ... 16
i. Presentation of the agreement ... 16
ii. Public enforcement of competition law as part of the EU-Canadian relations ... 18
e. Conclusion ... 19
IV. Public enforcement related transitional issues ... 21
a. Retroactive competence of the Commission (on-going cases) ... 22
b. Enforcement powers of the Commission post-Brexit ... 23
c. Leniency policy and legal certainty ... 24
d. Extension of the legal privilege ... 24
V. Conclusion ... 25
Bibliography ... 27
Abstract
The exit of the United Kingdom from the European Union will have major effects on many branches of law. Competition law, as it is Europeanised, will be particularly affected by Brexit. We chose with this thesis to examine what the impact of Brexit on the public enforcement of antitrust law will be. Indeed, anti-competitive agreements and behaviours can seriously endanger the process of competition, and a genuine continuity in the enforcement of the relevant rule is necessary, despite Brexit. We consequently answered the following question:
How will public enforcement of antitrust law be impacted by Brexit?
In terms of methodology, this paper first describes how the enforcement of antitrust law currently took place in the United Kingdom and in the European Union under the competition law act 1998 and regulation 1/2003. This shows how fundamental cooperation between the National Competition Administrations and the Commission is in the system of public enforcement antitrust law. This makes clear that the Brexit implications will greatly depend on the cooperation deal concluded between the UK and the EU.
Therefore, this thesis focuses on three agreements that would represent the range of possibilities for future cooperation. The first of this agreement is the European Economic Area agreement. Such an agreement would preserve a public enforcement system similar to the one currently in force, but is unlikely to be concluded due to political reasons. Then, the Swiss model is studied, which comes with a so-called “type 2” agreement for competition law cooperation. Even if, also for political reason, the Swiss model is not likely to be replicated either, the competition law cooperation agreement is a valid option as it secures wide possibilities for exchanges of information. Lastly, we examine the Canadian model. This model also comes with a competition agreement but it does not allow any exchange of information that would not be permitted without it. It is our conclusion that this option would be insufficient for future relation between the CMA and the Commission, given the strong ties that currently exist and the interconnection of the markets.
The second part of the thesis is dedicated to the identification of transitional issues that would arise immediately after Brexit. Those issues concern jurisdictional matters as well as concerns regarding legal certainty for UK businesses. We finally propose different alternatives to these issues. What comes out of this analysis is that a transitional deal needs to be carefully concluded between both parties in order to safeguard the continuity of the public enforcement of antitrust, as well as legal certainty.
I.
Introduction
The previous years have been marked by the arising of a polycrisis of the European Union: refugee crisis, banking crisis, economic crisis, political crisis… The culmination of this crisis has probably been reached on the 23rd of June 2016, when, for the first time in the history of the Union, the people of one of the Member State, the United Kingdom, took its decision by referendum to leave its membership from the EU. Although unprecedented, this situation has been planned in the Treaty on the Functioning of the European Union. Indeed, its Article 50 provides, inter alia, that “any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements”. Such decision implies that the EU treaties shall cease to apply in the said country, which might be equivalent to a “legal earthquake”, depending on the deal agreed upon by the EU and the exiting State. Indeed, with the Great Repeal Bill promised by Theresa May, the 1972 European Communities Act will be annulled, and EU Law will lose its primacy over national Law. Even if the base of the acquis will remain unchanged for administrative reasons (repealing all EU-legislation would be unworkable and would lead to holes in the legislation), the UK authorities will from that point be able to enact legislation without any exterior constraint.
The debates on whether the Brexit will be “soft” or “hard” have been evocative of this issue, as the future relationship between the United Kingdom and the European Union fully depends on it. As such, the Centre for European Policy Studies deems that the different debated models range from the WTO standard situation to a full European Economic Area membership, the first being considered as the “hard” version of the Brexit and the latter as “soft”1
. Some authors, as Phedon Nicolaides, have intended to establish typologies of effects of a withdrawal from the EU2, and have reached the conclusion that the occurrence and magnitude of envisaged effects will depend on the agreed post-exit relationship between the exiting Member State and the Union.
Given the proportion of national legislation influenced by EU L-aw, major changes are to be expected. From the UK’s authorities’ point of view, Competition Law is an interesting matter to focus on, as the Competition Law Act of 1998 closely mirrors EU Antitrust Law, leaving the UK authorities with room for manoeuvre to distinguish its policy from EU policy post-Brexit. Particularly, regulation 1/2003 lays down an elaborate cooperation system between the Commission and National Competition Authorities. Practically, the Competition and Markets Authority (CMA) cooperate very closely in public enforcement matters, public enforcement of Competition Law being defined as the enforcement of Competition rules by State authorities vested with special powers to investigate an infringement.3
Besides, given the length of time involved in antitrust investigations and appeals, the general consensus is that transitional arrangements would need to be negotiated to address the issues
1
Michael Emerson, Which model for Brexit? , CEPS Special Report No. 147, October 2016
2
Phedon Nicolaides, Withdrawal from the European Union: a typology of effects, Maastricht Journal Vol. 20, 2013, pp. 209-219
3
Kai Hüschelrath & Sebastian Peyer, Public and Private Enforcement of Competition: Law A Differentiated
that are likely to arise following Brexit. Indeed, the loss of competence of the Commission implies transitional issues regarding on-going investigations, on-going infringements or remedies.
We will intend with this thesis to answer the following question: How will public enforcement of antitrust law be impacted by Brexit?
In order to explain how public enforcement of antitrust law will be impacted by Brexit, we will first of all briefly review the powers of enforcement of the Competition and Markets Authority under the Competition Law Act 1998. Then, we will see what the current situation of cooperation between the CMA and the European Commission is under regulation 1/2003. This situation will unavoidably change after Brexit. Based on the current models of cooperation between the EU and third countries, post-Brexit enforcement of Competition Law could take very different paths. The range of possible models for cooperation is wide, we will therefore pick three different likely models corresponding to a soft Brexit (EEA membership), an intermediary model (EU-Switzerland agreement), and a hard Brexit (the Canadian model), and examine how public enforcement of Competition Law would take place if the United Kingdom was to adapt to these models for future cooperation with the EU. This will imply a description of the agreements and of the mutual competition-related obligations that arise from it. Using this study as reference, we will comment on the efficiency of the UK’s public enforcement system depending on the chosen model, and weigh the pros and cons of the different options. We will also determine the likeliness of the choice of each model depending of the constraints they impose and the advantages they offer.
In a last part, we will list the public enforcement of antitrust law-related transitional issues. Insofar as no deal has been reach yet between the European Union and the United Kingdom on the way to deal with these issues, we will identify the different possibilities to deal with them. This part will be referring to the work of the Brexit Competition Law Working Group (BCLWG), whose goal since the referendum has been to identify competition law-related Brexit issues, and to gather legal opinions of a large number of competition law professionals and scholars in order to ultimately provide advice on the path to follow in the Brexit negotiations for competition law matters. It will also refer to the European Union’s draft guidelines on Brexit negotiations.
II. The role of the Competition and Markets Authority in the
enforcement of antitrust law in the United Kingdom
In the United Kingdom, the source of law of the wide powers of enforcement of the Competition and Markets Authority is the Competition Act 1998. The purpose of this Act is to give the sectoral regulators wide powers to eradicate cartels and abusive behaviours. It was significantly amended to cope with regulation 1/2003. This paragraph intends to show what these powers of enforcement are.
The first significant power of the CMA is to conduct investigations, which is set out at paragraphs 25 to 29 of the Competition Act. These investigations are one of the aspects of the public enforcement of antitrust law which is marked by European law. Indeed, Article 60 to 65, which translate Article 20 and 22 of regulation 1/2003, allow the CMA to conduct investigations on behalf of the Commission or at the request of another National Competition Authority or another Member State. Such investigations may be conducted if “there are reasonable grounds for suspecting” that the Competition Act or Article 101 and 102 TFEU have been infringed. A written notice, better known as “Statement of objection”, has to be sent to the investigated persons “likely to be affected” and should give them an opportunity to seek representation.4The CMA has an arsenal of enforcing measures it can take under the Competition Act. These measures constitute the range of possibilities available pursuant to the issuance of a statement of objections.
First, in the same way as the Commission can take legally binding commitments from undertakings as a remedy of their anti-competitive behaviour, the CMA is enabled by section 31(2) of the Act to take commitments.5 The CMA however won’t propose to the approached undertaking to adopt such commitment. It is for the undertaking to discuss the possibility of a commitment. Then, the CMA can take interim measures if an investigation under section 25 is not completed and if it is necessary to prevent serious and irreparable damage to a person, or to protect the public interest. A defence exists to such measure: the undertaking needs to prove that the presumed anticompetitive agreement fulfils the four conditions of Article 101 (3) TFEU.
Thirdly, directions can be given by the CMA to an approached undertaking under section 32(1) in order to bring an Article 101 infringement to an end. Similar provisions exist in section 33 concerning Article 102 infringements. It is however unclear how far can these directions go. For instance, where article 7 of regulation 1/2003 measures can impose structural remedies, it is less obvious that the CMA is allowed to take such measures. These directions are to be given to the appropriate persons, who will not necessarily be the perpetrators of the unlawful conduct but those who have the ability to influence the behaviour of the infringing persons. Failure to comply with the directions will allow the CMA to apply to the court for an order requiring compliance within a specified time.
4
R(5)
5
Sections 36(1) and 36(2) of the competition act 1998 deal respectively with the classic sanction for infringements of Article 101 and 102: the penalty. Regarding the amount of the penalty, the rule is similar to the rule of regulation 1/2003: the fine cannot exceed 10% of the annual turnover of the undertaking during the business year preceding the CMA investigation.6 It is possible for businesses having entered into an anti-competitive agreement or perpetrating an anti-competitive behaviour to escape penalties. Section 39 provides that in the case of “small agreements” or “agreements and conducts of small significance”, immunity can be conferred. However, this exception does not apply to price-fixing agreements, and the undertaking must prove that it acted believing that its behaviour would fall under the scope of the exception. Agreements are considered to be small when the combined turnover of the parties does not exceed £20 million. Concerning Article 102 infringements, a conduct is “of small significance” if the perpetrator’s worldwide turnover in the preceding calendar year was £50 million or less.7 Another way to seek immunity is through whistleblowing, in accordance with the United Kingdom’s own leniency program. The aim of this policy is to act as a deterrent for undertakings tempted by entering into anti-competitive agreements or by having anti-competitive behaviours. Different types of leniency and immunity can be granted depending on the significance of the information given by the whistle-blower, and on its rank among whistle-blowers. Finally, settlement procedures can be agreed between the CMA and the parties to the investigation. When the infringement is admitted and agreement is given to pay a reduced penalty, such settlement can happen. The discount reflects the time and energy saved by the CMA as a result of the agreement not to contest the case.
Given that these rules closely mirror regulation 1/2003, it is interesting to note that we might expect changes in their substance, as the UK authorities will most likely not be binding by European law post-Brexit. This brings us to the different options that exist for future cooperation between the two parties. Indeed, the exactness of this statement varies depending on the deal agreed between the EU and the UK. We will evaluate in the next part how public enforcement is bound to evolve between the different models for future cooperation.
6
Competition Act 1998 (Determination of Turnover for Penalties) Order 2000, SI 2000/309
7
Competition Act 1998 (Small Agreements and Conduct of Minor Significance) Regulations 2000, SI 2000/262, reg 4.
III. The different models for Brexit: a Competition Law
perspective
The EU has concluded an extensive list of agreements with many countries.8 These agreements are divided into three categories. First, the Customs Unions eliminate tariffs between the parties to it. Then, the Association Agreements aim at reducing or removing customs tariffs in bilateral trade. Finally, the Partnership and Cooperation Agreements do not concern customs policies, but seek to establish general frameworks for bilateral economic relations. Since the referendum and the victory of the “no” side, discussions have been going on about which model should be used for future EU-UK relationship.9 For the sake of clarity and to evaluate the possible range of cooperation, we will focus on three models likely to serve as templates for such a relationship: the EEA model, the Switzerland model, and the Canadian model. Our goal is to evaluate the impact of the choice of each of these models for EU-UK relationship on the public enforcement of antitrust law.
The first of these selected agreements is the EEA model (also known as “Norway” model). It is a relevant option as the United Kingdom used to be an EFTA member before entering the EU. It comes with an elaborate system of concurrent enforcement of competition law. The second model is the Swiss model, which grants Switzerland a greater room for manoeuvre but is still considered as a “soft Brexit” option. Finally, we will focus on the Canadian model, which provides for minimal cooperation compared to the two precedent models. This option can be categorized as “hard Brexit”. The World Trade Organisation model could have been worth studying, as it is the standard model of cooperation for WTO members which did not enter into any agreement (and as it would meet the political expectations of a fair amount of Brexit voters). However, the economic implications of such a choice would be such in terms of destruction of ties with UK’s closest economic partner, that it is seen as unsuitable and unlikely by both parties.
a. The current regime: Regulation 1/2003
This paragraph will intend to briefly present how public enforcement of antitrust law currently works in the European Union, and how the national competition authorities cooperate with the Commission on this matter. The powers of the Commission to enforce Articles 101 and 102 TFEU are contained in regulation 1/2003, which provides for a system of transnational and multiple-layered enforcement.10 Articles 4 and 5 deal with the division of powers between the Commission and the NCAs. In particular, the Commission has large powers of investigation, decision-making powers and powers to impose penalties. In parallel, NCAs have powers to apply Articles 101 and 102 in individual cases. The CMA consequently
8
Miguel Tell Cremades & Petr Novak, Brexit and the European Union: General Institutional and Legal
Considerations, January 2017 9
5 TAKEAWAYS ON BREXIT: Outlining Possible Scenarios for a New UK-EU Relationship and their Impact on
Citizens, European Citizen Action Service, 2017 10
Or Brooks, Ten Years of Decentralized EU Competition Law Enforcement – Success or Failure?, December 2014
has powers to order interim measures, accept commitments and impose fines or periodic penalty payments.
The regulation provides for an elaborate system of cooperation between the NCAs and the Commission. This cooperation is embodied by the European Competition Network. Articles 11 to 16 of the regulation contain provisions on such cooperation. The Commission as well as the NCAs are required to cooperate closely. For instance, the Commission is under an obligation in virtue of Article 11(2) to transmit the most important documents it collected. Conversely, the NCAs must inform the Commission in writing under Article 11(3) before commencing proceedings. The goal of these rules is to be able to allocate the best placed authority. Similarly, Article 11(4) provides that no later before accepting a commitment or taking an infringement decision, the NCA must inform the Commission.
Article 12 of the regulation is relevant when it comes to exchanges of information. The principle is the free movement of information between the NCAs. This is a pillar of the functioning of the European Competition Network. Article 12(1) provides that the authorities and the Commission can provide one another with any element of fact or of law, including confidential information. This information must be used with a view of applying competition law.
The Commission has a lead role as part of this system: it ensures the coherence in the application of the competition rules, and has powers to initiate its own proceedings, and thereby to terminate an investigation conducted by an NCA.
Case allocation is an important part of the cooperation between the NCAs and the Commission. The Notice on NCA cooperation gives indication about such cooperation.11 In particular, it sets jurisdictional principle governing the allocation of cases between the different competition authorities. The main principle is that the case allocation system is based on parallel competences in order to ensure an efficient division of work between the different authorities. Depending on the circumstances, a case can be dealt by the Commission alone, a single NCA, or several NCAs acting in parallel. The criteria is that the best placed authority must be the one which will be the most efficient when investigating on a case. Three conditions must be met to fulfil this criterion.12 First, “the agreement or practice has substantial direct actual or foreseeable effects on competition within its territory, is implemented within or originates from its territory”. Then, the authority must be “able to effectively bring to an end the entire infringement, i.e. it can adopt a cease-and-desist order the effect of which will be sufficient to bring an end to the infringement and it can, where appropriate, sanction the infringement adequately”. Finally, “it can gather, possibly with the assistance of other authorities, the evidence required to prove the infringement”. We can conclude from this that most of the time, an agreement affecting mostly the territory of a single Member State will mean that its NCA is well placed to investigate on the matter. The concurrent action of multiple NCAs can be envisaged when the action of a single NCA would not be sufficient to bring an infringement to an end, but the effects of the infringement are
11
Commission Notice on cooperation within the Network of Competition Authorities
12
limited to the territory of the concerned Member States. This option is a significant advantage for the concerned competition authorities, because they endeavour to coordinate their action to the extent possible and in the end save significant resources. Point 13 of the notice underlines that a leading authority may be designated. Finally, the Commission will be considered as well placed when “one or several agreement(s) or practice(s), including networks of similar agreements or practices, have effects on competition in more than three Member States (cross-border markets covering more than three Member States or several national markets)”.13
Pursuant to the adoption of the Great Repeal Bill, the United Kingdom will not be bound by the obligations imposed by Regulation 1/2003, nor will it be able to benefit from its benefits anymore. The challenge is therefore for the EU and the UK to find an agreement on the future cooperation of their respective competition authorities. We will not focus on the three agreements corresponding to three options in terms of public enforcement of competition law. We will proceed by examining the possibility which is the least different from the current model first, the EEA agreement.
b. EEA Agreement
i. Presentation of the agreement
In the end of the 1980s, the idea of the creation of a trade deal between the European Union and its closest trading partner started to grow in minds. Multiple factors made the adoption of such an agreement possible. First, the then-President of the Commission, Jacques Delors, was opposed to enlarging the European Communities immediately, as he thought it would render more difficult the achievement of the internal market and the monetary Union. On the EFTA (European Free Trade Area) States’ side, the cold war coming to end made it possible to entertain closer cooperation with the EC without getting out of neutrality. It is important to identify the goals of the EFTA to understand the benefits the EFTA States seeked in the EEA agreement. The Association was founded in 1960, and composed of Austria, Denmark, Norway, Portugal, Sweden, Switzerland and the United Kingdom. Liechtenstein and Iceland then joined. Due to the membership of several EFTA States to the European Union, the only remaining States are currently Liechtenstein, Norway, Switzerland and Iceland. The immediate aim of the Association was to provide a framework for the liberalisation of trade in goods amongst its Member States. Its other goal was to create a counter power to the growing European Communities, which were characterized by more politically-driven ambitions.
These goals bore in mind, the content and nature of the EEA agreement can be more easily apprehended. Part I of the agreement deals with is defined objectives and principles. Article 1 lays them down generally, as being “to promote a continuous and balanced strengthening of trade and economic relations between the Contracting Parties with equal conditions of competition, and the respect of the same rules, with a view to creating a homogeneous European Economic Area”. The second paragraph of this article specifies that
13
in practice, such strengthening of trade and economic relations entails the “free movement of goods, services, persons, capital, the setting up of a system ensuring that competition is not distorted and that the rules thereon are equally respected”, and “closer cooperation in other fields, such as research and development, the environment, education and social policy” within the area. The benefits of such a close cooperation are high for both parties: Norway alone is EU’s fifth trading partner, and the EU is by far the most important trading partner of the EFTA. Moreover, 200 000 EU citizens are currently exercising their EEA rights in EFTA states.14 Understandably, such cooperation therefore has a cost for the weaker party to the deal. The EFTA countries contribute to the EU budget as high as EUR 460 million.15 We may also see the participation to the EU policy as a condition for access to the opportunities granted by the single market.
This agreement has the particularity to plan common competition rules for the entire European Economic Area. Part IV of the agreement, dealing with competition rules, consequently mirrors the European provisions concerning agreements between undertakings, abuses of dominance, or State Aid. Consequently, it can be said that the EEA agreement plainly copies EU competition provisions, the goal of the agreement being the establishment of a coherent and homogeneous economic area.16 Article 53 and 54 of the agreement correspond to Article 101 and 102 TFEU. Such common competition rules imply certain obligations weighing on the EFTA States. First, these States are subject to the primacy of EU Law at the time of adoption of the agreement and therefore benefit of the acquis commnautaire. One of the special features of the EEA is its dynamic aspect: the common rules of the EEA are regularly updated with EU legislation. Then, EFTA courts have a duty of consistent judicial interpretation. Competition law-wise, this has some importance on the independence of the EFTA States competition authorities which cannot conduct different interpretation than the European Court of Justice.
Some argue that EEA membership could be a Brexit option for the UK, which would correspond to what is referred to as a “soft Brexit”.17 We will now examine the elaborate rules regarding public enforcement of competition Law between the EFTA states and the EU Member States.18
ii. Public enforcement of competition law in the EEA
The institution responsible for the monitoring of the EEA agreement is the EFTA surveillance authority. As the European Commission, it is responsible for safeguarding fair competition and is independent from the EFTA States. It cooperates tightly with the
14
Halvard Haukeland Fredriksen, Christian N.K. Franklin, Of pragmatism and principles: The EEA Agreement
20 years on (2015) 52 Common Market Law Review, Issue 3, pp. 629–684
15
Opinion on European cooperation programmes 2014 – 2020 and the participation of the local and regional
level in EEA EFTA States, forum of local and regional authorities, 27 November 2012 16
Chad Damro, The new trade politics and EU competition policy: shopping for convergence and co-operation,
Journal of European Public Policy, 2006 17
Anne MacGregor and Adam Kidane, Post-Brexit Scenarios For UK Competition Policy And Public
Enforcement: The EEA Model V Complete Independence, November 2016 18
Fariborz Nozari, Competition Rules in the European Economic Area, International Journal of Legal
Commission, especially in “mixed” cases. The rules of cooperation between the surveillance authority and the Commission are laid down in the protocol 23 concerning the cooperation between the surveillance authorities.19 Case allocation is organized at article 56 of the agreement. The principle is the following: if only trade between EFTA States is affected, then the EFTA surveillance authority and the EFTA court are competent. It is also competent, as laid down at Article 56(1)(2), “on cases where the turnover of the undertakings concerned in the territory of the EFTA States equals 33% or more of their turnover in the territory covered” by the EEA Agreement. Otherwise, the Commission is competent for all other cases. Concerning abuse of dominance, the decision on which authority is competent depends on the territory in which a dominant position is deemed to exist. The EFTA Surveillance Authority Notice on cooperation within the EFTA Network of Competition Authorities brings some precisions to these rules.20 It basically copies the rules in force in the European Union and transposes the Commission Notice on cooperation within the Network of Competition Authorities to the EFTA.21
Protocol 23 goes into more details concerning the EU-EFTA cooperation on competition matters. Article 1 of the protocol sets a general duty to exchange information upon request of either of the surveillance authorities. For the initial phase of the proceedings, this means that the surveillance authorities must inform each other of the start of any procedure and exchange any information they would have gathered in their respective territories concerning the commencement of the first formal investigative measure. Formal notifications must also be issued when “addressing to the undertakings or associations of undertakings concerned its statement of objections, publishing its intention to adopt a decision declaring Article 53 or 54 of the Agreement not applicable, or publishing its intention to adopt a decision making commitments offered by the undertakings binding on the undertakings”.22
Finally, one surveillance authority must transmit the other letters by which a file is closed or a complaint is rejected. Article 7 entitles the surveillance authority which is not competent to issue request for information and to a right to make observations on an on-going investigation.
The use of exchanged information is strictly framed at Article 9 of the protocol. Paragraph 2 sets the main principle governing the use of information exchange between the surveillance authorities: “Information acquired or exchanged pursuant to this Protocol shall only be used in evidence for the purpose of procedures under Articles 53 and 54 of the Agreement and in respect of the subject matter for which it was collected”. Paragraphs 3, 4 and 5 deals with information gathered through leniency programs. Such information, when it is transmitted to another surveillance authority, cannot be used as a basis for starting an inspection on its own behalf. Moreover, the consent of the leniency applicant is needed for the information to be transmitted. This brings us to the application of the leniency program within the EFTA States. The EFTA has adopted a notice on immunity from fines and reduction of fines in cartel
19
Agreement on the European Economic Area - Protocol 23 concerning the cooperation between the surveillance authorities
20 EFTA Surveillance Authority Notice on cooperation within the EFTA Network of Competition Authorities
(2006/C 227/07)
21 Commission Notice on cooperation within the Network of Competition Authorities (2004/C 101/03) 22
cases.23 This notice in fact copies the relevant EU notice and entitles participants to cartels to the exact same right of application to the leniency program. Any undertaking having taken part to a secret cartel can seek either immunity or a reduction of fine. The notice sets that an undertaking can seek immunity when it is the first company to submit important insider evidence of an unknown or unproved cartel. Fine deduction will be offered to companies that do not qualify for immunity but whose information represent significant added value to that already in possession of the authority.
Getting back to protocol 23, another point of interest is the obligation of professional secrecy24 codified at Article 10, under which “The EC Commission, the EFTA Surveillance Authority, the competent authorities of the EC Member States and the EFTA States, their officials, servants and other persons working under the supervision of these authorities as well as officials and servants of other authorities of the States shall not disclose information acquired or exchanged by them as a result of the application of [the] Protocol”.
Finally, Article 6 of the protocol deals with advisory committees. It says that each surveillance authority shall be entitled to be present to advisory committees of the other surveillance authority. The relevant documentation shall be transmitted prior to the meetings.
c. EU-Switzerland agreement
i. Presentation of the agreement
Even though it is a member of the EFTA, Switzerland failed to ratify the EEA agreement and rejected membership in 1992. Consequently, several bilateral treaties have been concluded with the European Union whereby the Swiss confederation has adopted several provisions of EU Law in order to participate to the single market. Particularly, the cornerstone of the relations between the two parties is the 1972 EU-Switzerland agreement. Still, exchanges with Switzerland are extensive, as it the EU’s third trading partner.25
The 1972 Free Trade agreement does not provide for mirrored competition law provisions binding upon Switzerland, as is the case with the EEA agreement. However, certain common aims and unlawful behaviours are identified. First, Article 1(b) of the agreement defines one of the goals of the agreement as being “to provide fair conditions of competition for trade between the Contracting Parties”. Article 23 then provides for a more detailed enumeration of behaviours incompatible with the Parties’ views of fair competition. In particular, points (i) and (ii) of this article refer, respectively, to competition-restricting agreements between undertakings, and individual or collective abuses of dominance. Therefore, it appears that the EU’s conceptions of competition restricting behaviour are relevant within the framework of
23
EFTA Surveillance Authority Notice on Immunity from fines and reduction of fines in cartel cases (2009/C 294/04)
24
Carl Baudenbacher, The Handbook of EEA Law, 2016
25
Client and Supplier Countries of the EU28 in Merchandise Trade, European Commission, Directorate General for Trade
the agreement. A document issued by the EEA is relevant in order to identify the extent to which interpretation of this article is free.26 Basically, the declaration says that if the implementation of the Article is indeed free for the EFTA States, the concerned practices will be assessed on the basis of the criterions set by the Treaty establishing the European Economic Community. This means that European case-law, standards and thresholds will be applied.
For long, entry into the Swiss market was prevented by informal barriers to trade resulting from these low standards in terms of common competition law. Aware of this issue, the Swiss authorities modified their competition Law regime in 1995 by creating the Acart (the Swiss Cartel Act).27 A further step was made towards an EU-like competition law regime pursuant to the inefficiencies of the Swiss regime showed at the occasion of the Hoffman-La Roche case.28 The Swiss competition authority’s ability to impose fine was indeed at that time very limited.29 First, sanctions similar to those in vigour in the EEA were put in place. Second, the Swiss competition agency was granted new powers, such as being able to conduct dawn raids or to seize documents. Furthermore, a leniency program was put in place. Finally, market power was introduced as a proxy for establishing dominance, in a will to cope with ECJ’s case law. Nevertheless, substantive divergences do exist between the two regimes: the merger review remains more permissive, and the Helvetic federation has chosen to stick with the previous system of pre-notification of possibly anti-competitive agreements.30
The EU-Switzerland agreement is seen as a pertinent option for future relations between the United Kingdom and the European Union. Indeed, the UK would then benefit of a higher independence from the Union than with the EEA option. Such independence would allow it to keep a certain control on its immigration policy and to significantly reduce its contribution to the budget of the Union, while securing a large access to the internal market.31 However, there are some cons to these options, the first one being that the EU-Switzerland model is framed by a great number of agreements, which the EU authorities are unlikely to be willing to replicate. The second issue relates to the restricted access of the Swiss service industry to the EU’s market. Finally, the last major issue concerns the free movement of person, of which Switzerland is part, and which was a genuine driver of the “no” campaign in Great Britain. The elaborate mechanism of cooperation between Switzerland and EU authorities in terms of public enforcement of competition law is still worthy to examine.
26
Declaration by the European Economic Community concerning the application of article 23(1) of the agreement
27
Federal Act on Cartels and other Restraints of Competition, 6 October 1995
28
Hoffmann-La Roche & Co. AG v Commission of the European Communities, Court of Justice of the European Communities, Case 85/76, ECLI:EU:C:1979:36
29
Franz Hoffet and Marcel Dietrich, Recent developments in Swiss competition law, 2004
30
Suzanne Rab, Ilyse Stempler & Gerald Brei, EU and Swiss Competition Law: Navigating the Boundaries, 2012
31
Is the Swiss model suitable for post-Brexit UK-EU relations?, Brexit Central, 25 september 2017 and Katie Forster, Switzerland offers UK Brexit solution to prevent EU 'explosion' over free movement, 9 september 2016
ii. Public enforcement of competition Law as part of the EU-Switzerland relations
This general cooperation scheme is completed by a new agreement that was signed by the European Union and Switzerland in May 2013, and which entered into force in 2014. This agreement provides for a number of mechanisms allowing a smooth concurrent functioning of both competition authorities, particularly where it comes to information exchange. It is seen by authors as a significant step forward in EU-Swiss enforcement cooperation in competition law.32
We will now look into the details of the agreement in order to evaluate the degree of cooperation it allows between the Commission and the Swiss competition authority. The purpose of the agreement is made explicit at Article 1. Its goal is to facilitate coordination and cooperation and to provide for a scheme of information exchange. Moreover, it aims at lessening the possibility of conflicts between the parties in the application of their competition laws.
The first provision dealing with a particular mechanism set by the agreement is Article 3. It sets an obligation of notification weighing on the competition authorities where they consider that the interests of the other party could be affected by their enforcement activities. A non-exhaustive list of cases in which such notifications would be required is then provided. Finally, formal indications are given concerning the notifications. It should be written, “Include the names of the parties to the investigation, the activities under examination and the markets they relate to, the relevant legal provisions and the date of the enforcement activities.”33
Article 4 deals with the coordination of the parties’ enforcement activities. The first paragraph specifies that such coordination can take place when the enforcement activities of the Parties’ relate to similar matters. This paragraph stresses the importance of the timing of inspections (dawn raids) as part of this cooperation. Paragraph 2 mentions four factors that could be taken into account when deciding whether to coordinate enforcement activities. These are the effect of the coordination on the probability to reach the enforcement objectives or to obtain information, the possibility of avoiding conflicting obligations, and the opportunity to make a more efficient use of resources.
Conflict avoidances are the matter of Article 5 and 6, being respectively about negative and positive comities. The conflicts at stake are not of jurisdictional nature but relate to the interest of the Parties. Therefore, Article 5 provides that one Party “should give careful considerations to the interest of the other Party throughout all phases of its enforcement activities”. This means that it should notify it of the developments of the case, grant it an opportunity to comment, and take these comment into account. The corollary of this Article is Article 6, which provides that one party can request “that the competition authority of the other Party initiate or expand appropriate enforcement activities” if its interests are at stake
32
Marek Martyniszyn, Inter-agency evidence sharing in competition law enforcement, 11 may 2014
33
and if it believes it is in position to help conduct more efficient enforcement activities. Such request should be, in virtue of the second paragraph of the Article, as precise as possible about the nature of the anticompetitive activity and its actual or potential effects. It should include an offer resuming what information or other cooperation the competition authority is able to provide. The requested competition authority should inform the requesting authority as soon as practically possible.
The core of this agreement is reached with Articles 7, 8 and 9, which deal with exchanges of information and the use that can be made of it. Article 7 provides for a general scheme of information exchange and in particular confidential information. Confidential information refers to information in the possession of one administration that could assist the other administration in its investigations. The Parties may transmit any information in their possession provided that the undertaking which issued the information gave its written consent to it. Personal data may only be transmitted when both administration investigate on similar matters. There is, however, no obligation to transmit any information: paragraph 5 makes it clear that the purpose of the Article is solely to provide the competition authorities with a possibility to exchange information. Moreover, paragraph 6 adds a major limit to this Article. Indeed, information gathered under leniency procedures, unless the party which provided it gave his consent. Finally, paragraph 8 precises that if for any reason an administration was to transmit false information without knowing, it would have to let the other administration know immediately.
Patrick Ducrey compares the structure of this Article to a cascade, as the greater the need for the exchanged information to be protected is, the stricter the requirements for its transmission are (from no formalities to the possibility of refusing to transmit).34 In the first level of the cascade, any non-confidential information can be discussed. The second level relates to exchange of documents and evidence. The concerned undertakings however have to waive their right to have the information treated as confidential by consenting to their exchange between the administrations. Finally, in the third level of the cascade, there is no consent from the undertaking concerned by the exchange of evidence. The information can be exchanged if the three conditions laid down at paragraph 4 are met. First, both administrations have to be investigating on the same matters for the information to be transmitted. Besides, only information that is already available can be exchanged. The goal of this rule is to prevent administrations to “fish” for information. Secondly, the request for information must be a formal one. Thirdly, there must be a consultation between the competition authorities in order to determine which documents are relevant to be exchanged. These consultations are normally verbal. Fourth, the fourth level of the cascade refers to special protection, as information gathered under leniency programs or information given to an authority in order to secure a settlement. The only way to exchange such information is with the express consent of the undertaking. These two limitations are important, insofar as the concerned undertaking needs to be sure that the concerned information remains confidential to act accordingly. Finally, in
34 Patrick Ducrey, The Agreement between Switzerland and the EU Concerning Cooperation in the Application of their Competition Laws, Journal of European Competition Law & Practice, 2013, Vol. 4, No. 5
the fifth level of the cascade, an administration cannot use information if it is forbidden by its own national law.
Article 8 gives more precision regarding the use that can be made of exchanged information. First, exchanged information may only be used for the purpose of enforcing competition law and, if the information was requested, for the purpose of the request. Then, no information transmitted shall be used to impose sanctions on natural persons. Finally, Parties can impose terms and conditions to the use of information it exchanges. Article 9 stresses the importance of the protection of the confidentiality of the information by both parties. With these articles, the European Union welcomes for the first time the entry into force of an agreement enabling the two competition authorities to exchange evidence they have gathered in their respective investigations, making it a so-called “second generation” agreement. About this, the Commissioner in charge of competition policy, Margrethe Vestager, declared: “The possibility to exchange evidence gives competition authorities new strength. I am very pleased on behalf of consumers and companies alike and I believe this agreement will lead to more efficient competition law enforcement".35
Article 9 of the agreement deals with official secrecy and with the rules of confidentiality that apply to both administrations. First, under paragraph 1, the request for information themselves are treated as confidential. Pursuant to this request, the information obtained is subject to official and business secrecy. This means that it cannot be transmitted to official authorities or third parties. In case of violation of this obligation by a competition authority, the other authority must be notified immediately.
Finally, Article 11 provides for a general consultation right framed by the agreement. It also mentions in its second paragraph that the Parties should inform each other “of any amendment to their competition laws, as well as of any amendment to other laws and regulations and of any change in the enforcement practice of their competition authorities that may affect the operation of this Agreement.”
This agreement is- rightly- well received by the community of competition law professionals. Patrick Ducrey underlines that it significantly raises the level of cooperation between the Swiss competition authority and the Commission in a way that brings a genuine added value to the efficiency of procedures.
d. The CETA
i. Presentation of the agreement
Traditionally, the European Union does not entertain as tight relations with Canada as it does with its direct geographical neighbours. However, a strong will to cooperate on both sides of the Atlantic Ocean gave birth to the Comprehensive Economic and Trade Agreement. This agreement, signed on October 30th 2016 after years of negotiations, aims at liberalising trade between the two Parties by, inter alia, lowering tariffs and non-tariffs barriers. Its
35
Press release Competition: Commission welcomes entry into force of Cooperation Agreement with
founder, Jean Charrest, wanted it to be a “massive gateway to America” as well as “mean of access to businesses wishing to invest in Canada while being able to access Europe”.36 Before this agreement, the only treaty providing for competition law rules was the 1976 Framework Agreement for commercial and economic co-operation between the European Communities and Canada. Even then, the competition law implications of the agreement were rather limited. Indeed, it simply stated in its Article II(2) that “the Contracting Parties shall use their best endeavours to discourage, in conformity with their legislation, restrictions of competition by enterprises of their respective industries, including pricing practices distorting competition”.
The CETA is slightly more developed when it comes to competition law. Its 17th chapter is dedicated to competition policy. The provisions are meant to preserve the benefits of trade liberalization earned with the agreement from anti-competitive conduct.37 Article 17.2 reminds the importance of free and undistorted competition. The parties therefore commit to take appropriate measures against anti-competitive behaviours. Such appropriate measures are elaborated at Article 17.3. At point 3, a reference is made to the Agreement between the European Communities and the Government of Canada regarding the application of their competition laws of 1999.38 This agreement, aiming at facilitating enforcement of competition Law for both parties, will be examined closely at point ii.
Article 17.4 deals with dispute settlements. It precises that nothing such as dispute settlements exist within the frame of the CETA with regard to competition policy. This point is of importance, as arbitration mechanisms were highly controversial due to the loss of sovereignty they imply for the contracting Parties.
It appears that the primary focus of the CETA is not competition Law. However, the deal is not made at the expense of competition law, as it reminds its benefits on economic growth and how necessary it is to further liberalisation processes. Still, the reference made at Article 17.2 refers to the agreement between the Parties on competition law matters. It is therefore of importance within the frame of the agreement.
The CETA could be a relevant model for future cooperation between the United Kingdom and the European Union, as advocated by Spain’s Minister of Foreign Affairs and Cooperation, Jose Manuel Garcia Margallo.39 Emphasising on the strong will of the English people to restrain the free movement of European workers to the United Kingdom, he deduced the EEA model and the Switzerland model could not be workable, which is not the case for the CETA.40 Such an option would correspond to what is referred to as “Hard Brexit”. The consequences for competition law enforcement will be major; let’s see what the implications
36 Radio-Canada, « Brexit : quel avenir pour l'accord de libre-échange Canada-UE? », Radio-Canada, 25 juin
2016
37
Daniel Shwarz & Mark Katz, What does CETA mean for EU and Canadian competition policy?, Kluwer Competition Law Blog
38
Agreement between the European Communities and the Government of Canada regarding the application of their competition laws of 1999.
39
Library Note Leaving the European Union: Future UK-EU Relationship- house of Lords, 25 november 2016
40
Alexandra Sims, Brexit deal will most closely resemble Ceta agreement with Canada, Spain says, the Independent, 17 October 2016
for cooperation between the UK and the EU will be on this matter. It is important to underline that the UK would then be free to determine the substance of its competition policy. This is also the case with Switzerland. However, in practice, Switzerland has chosen to align its competition policy on that of the EU.
ii. Public enforcement of competition law as part of the EU-Canadian relations
While being formulated differently, the agreement between the European Communities and the government of Canada regarding the application of their competition law is very close from the similar deal that exists between the European Union and Switzerland. The agreement begins at Article I by giving its purpose, namely promoting “cooperation and coordination between the competition authorities of the Parties” and lessening “the possibility or impact of differences between the Parties in the application of their competition laws”. The main difference concerning the purpose of the agreement with Switzerland is the lack of stress on the importance to facilitate information exchange between the Competition authorities. Article II plans a notification mechanism identical to the one existing in the EU Switzerland agreement. The Parties shall then notify each other whenever they believe their enforcement activities are likely to affect the important interests of the other Party. Then, Article III deals with possible consultations between the two Parties that are possible regarding any matter dealt with by the agreement.
Article IV is about the coordination of enforcement activities of the competition authorities. It is identical to the equivalent provision in the EU-Switzerland deal. The different factors determining the desirability of such coordination are the same. As a reminder, these factors are the effect of the coordination on the probability to reach the enforcement objectives or to obtain information, the possibility of avoiding conflicting obligations, and the opportunity to make a more efficient use of resources.
Article V and VI deal with positive and negative comity and correspond respectively to article 6 and 5 of the agreement with Switzerland. In virtue of these Articles, a Party having reasons to believe that anti-competitive activities are being conducted in the other Party’s territory can request to initiate appropriate enforcement activities. Conversely, “Where it appears that one Party’s enforcement activities may adversely affect the important interests of the other Party, each Party shall use its best efforts to arrive at an appropriate accommodation of the Parties competing interests”.
Unlike for other dispositions, a point that shows originality is Article VIII, which plans semi-annual meetings in order to exchange information on the Parties’ current enforcement activities and priorities, on economic sectors of common interest, to discuss policy changes which they are considering, and finally to discuss other matters of mutual interest relating to the application of their competition laws. Such semi-annual meetings should lead to the issuance of reports made available by the competition authorities.
Although not highlighted at the beginning of the agreement, exchange of information related provisions do exist in it. However, this agreement is a “first generation” agreement, meaning that competition authorities to exchange information and documents obtained in the course of
their investigations, unless they have obtained express waivers from the source of the information. In other words, the grounds for information exchange are quite limited. Paragraph 1 of Article VII generally specifies that the Parties shall “share information which will facilitate the effective application of their respective competition laws and promote better understanding of each other’s enforcement policies and activities”. The need to gather the consent of natural or legal person to exchange confidential information is stressed at paragraph 3. Finally, Article 10 brings several precisions concerning confidentiality and the use that can be made of exchanged information. First, no Party has an obligation to disclose information where it is prohibited by its law. Secondly, the Parties shall consult each other between using any information exchanged under this agreement before a court. Finally, information gathered under this agreement shall only be used for the purpose of enforcing competition law, and the information exchange shall be subject to the terms and conditions of the Party forwarding it. An exchange of letter between the two competition authorities is made available as part of the 1999 agreement. These letters act as clarifications on the purpose of the agreement. The European Commission asks the Canadian authority to confirm that the agreement in no way allows the violation of the professional secrecy provided by Article 20 of Council Decision No 17.41 The Government of Canada answers by adding the precision that “no information may be exchanged by Canada pursuant to this Agreement which could not have been exchanged in the absence of this Agreement.”
Considering all of the above, it is therefore possible to conclude that concerning to the cooperation of the CMA and the Commission with regard to the public enforcement of competition law, the competition administrations would suffer from a lack of legal manoeuvre to cooperate, given how intertwined the UK’s economy is with the internal market.
e. Conclusion
At the current point of negotiations, no option has been waived out. However, one of the central points of the campaign for Brexit was the lack of influence the UK supposedly had on its immigration policy because of the EU.42 Consequently, it is unlikely that the UK would join the EFTA back, given that participation to the free movement policy was one of the red lines given by the UK government. This is in conflict with the UK’s aspiration to be granted an as wide access to the internal market as possible. The same issue comes with the Swiss model. However, this model is characterized by its adaptability, as agreements were made upon several “packages”. We can therefore very well imagine such a model being transposed to the UK without free movement of persons provisions. The blocking point is rather on the side of the European Union: the model is criticized for allowing too much “cherry-picking”. A more practical issue relates to the length of the negotiations that would be necessary to reach such a structure of agreements. Finally, the Canadian model fits the UK’s aspiration with regard to the free movement of persons so well that David Davis, the British minister for exiting the European Union, described it as “perfect starting point for […] discussions with
41
Regulation No 17 First Regulation implementing Articles 85 and 86 of the Treaty
42
the Commission”.43
Even if advantageous politically, this model would come with a number of gaps: banking, for instance, falls outside of its scope. Though, it seems that Theresa May will prioritise excluding free movement of persons, whatever the economic price, following some of her declarations44
With regard to the public enforcement of competition law, it comes out of our analysis that there would be little changes to the current competition regime if the United Kingdom remained in the European Economic Area. A model similar to the agreement with Switzerland concerning the application of competition law would present the advantage to leave more freedom to the CMA, in terms of enforcement priorities for instance, but would also preserve the strong ties that currently exist between the competition authority and the Commission, especially regarding exchange of information. Finally, the Canada model would be relatively generic in so far as it does not allow information exchanges that would not have been allowed without the agreement. It is however worthy to note that competition law is not a criterion for the parties to select one agreement or another, as competition is a major white area of negotiations. This can be regretted, given the importance of the process of competition both for the internal market and the UK economy. Consequently, if one of the models is transposed to the UK, it is likely that the public enforcement of competition law regime will be too. The Brexit Competition Law Working group stresses in its provisional conclusions regarding competition Law and Brexit that the interconnectivity between the Commission and the CMA should not be forgotten.45 They advocate for a cooperation agreement entertaining strong relations between the two authorities, for the sake of the efficiency and effectiveness of the UK regime, and legal certainty for business. Particularly, the group advises for a deal allowing dawn raids on the territories of both parties by their competition authorities. The same goes with exchanges of information which will most likely be included in the cooperation agreement. Therefore, a sui generis model could be reached, taking elements from different models but ensuring an efficient cooperation in terms of public enforcement of competition law. This would be suitable for both parties. However, for such a model to be used, the EU negotiators would most likely have to agree to cherry-picking in the specific area of public enforcement of competition law.
43
Ashifa Kassam, Canada’s trade deal with EU, a model for Brexit? Not quite, insiders say, 15 August 2016The Guardian
44
Speech by Theresa May, Lancaster House, 17 January 2017
45
IV. Public enforcement related transitional issues
With regard to public enforcement of competition law, a number of questions must quickly be answered after Brexit to allow the enforcement system to function properly, whatever the model of cooperation followed with the European Union. Indeed, regulation 1/2003 will stop to apply as many cases or investigations will still be on going. We will here deal with such issues, based on the list of immediate post-Brexit issues related to the public enforcement of antitrust rules issued by the Brexit Competition Law Working Group.46
The framework to resolve these issues will most and most likely be a transitional deal. Such a deal is referred to in the official Brexit white paper as an “implementation phase to prepare for the new arrangements”.47 There is a large political consensus and especially in the UK’s
government that such a deal is necessary to prevent the UK to “fall off a cliff”.48
The goal is to give business and individuals enough time to prepare for the new arrangements. In practice, it would be in place the first day after the end of the two-year Article 50 process until a new deal comes into force. There is no information on how long it could be, but it is estimated that a realistic period ranges between 18 months and a decade.49 Concerning its content, it is likely that it will mainly deal with the continuity of the trade relationship between the UK and the EU, but it will have to deal with individual issues and in particular concerning the public enforcement of competition law.
First of all, the first issues that will be faced pursuant to the adoption of Theresa May’s promised Great Repeal Act will concern the fate of cases that are still in train at the point of Brexit. As underlined by Peter Roth, antitrust is by nature essentially retrospective.50 He uses the example of the recent fining decision of the Commission with regard to the Trucks cartel.51 This cartel lasted 14 years, from 1997 to 2011. Another example is the recent fining decision concerning lithium batteries manufactured in Japan and South Korea, where the concerned cartel came to an end in 2007.52 Therefore, this shows that antitrust related decisions can be expected several years after Brexit, which raises a number of questions. The first of them relates to the ability of the Commission to launch investigation in the UK after Brexit for infringements that took place before. Would the Commission be competent to do so, as European law was still in vigour at that time, or would the Competition and Markets Authority be? In the event the Commission was indeed competent, would there be a possibility for the CMA to simply launch parallel investigations?
46
BCLWG issues paper, 25 October 2016
47
Policy paper, The United Kingdom’s exit from, and new partnership with, the European Union, 15 may 2017
48
Brexit transition period increasingly likely, Finance Minister Philip Hammond says, 16 July 2017
49
Adam Payne, Explained: A transitional deal and what it would actually mean for Brexit, 16 February 2016
50
Sir Peter Roth, Competition law and Brexit: the challenges ahead, 28 march 2017, contribution to the BCLWG
51
Commission Decision of 19 July 2016 relating to a proceeding under Article 101 of the Treaty on the Functioning of the European Union and Article 53 of the EEA Agreement
52
Commission Decision of 12 December 2016 relating to a proceeding under Article 101 of the Treaty on the functioning of the European Union and Article 53 of the EEA Agreement
Another issue will be of importance immediately after Brexit. This issue concerns the EU’s leniency programme, which is a delicate matter insofar as it is deeply intertwined with the efficiency of public enforcement of competition law. The leniency policy offers immunity to companies involved in a cartel under certain conditions. These companies must have been the first to inform the Commission of an unknown cartel by providing them with sufficient information to launch an investigation to qualify for immunity. Otherwise, they can benefit from a reduction of fines if they provide information of significant added value to that already in possession of the Commission. With respect to civil sanctions, this leniency is currently EU-wide. Once the Commission opens an investigation the national competition authorities lose jurisdiction over any civil investigation on the same infringement, resulting on it being only investigated by the Commission. This “one-stop shop” in cartel investigations, as it is called by the Brexit Competition Law working Group, will no longer be available post Brexit. This will mean that the CMA will in theory be able to launch parallel investigations on matters that were reserved to the Commission up to now. This loss of legal certainty increases risk for businesses, and particularly for those which are current leniency applicants. Many questions arise: should the CMA select cases among those which are currently under investigations to open parallel investigation, as impact of an anti-competitive practice on the UK market will no longer be reviewed by the Commission? Would an applicant that was granted conditional immunity under the EU leniency program lose all the benefits of such a status? Finally, the possibility for the CMA to issue guidelines on its approach to cartel investigations and leniency policy for greater legal certainty should be reviewed.
One last issue qualifies as immediate after Brexit. This issue pertains to legal privilege. Under regulation 1/2003, advice provided to a company by external-EEA qualified counsel is privileged. It is therefore protected from disclosure during a Commission investigation. After the Great Repeal Act, it is unlikely that UK-only qualified lawyers will still fall under the scope of this protection for post-Brexit advice. However, UK businesses will still need advice on EU competition law if they want to further trade within the EU. Consequently, should the legal privilege be extended post-Brexit? Besides, attention should also be given to information that used to be protected but could no longer be.
a. Retroactive competence of the Commission (on-going cases)
This issue of the pending cases is a classic transitional issue. Sir Peter Roth compares the situation with the decisions taken by the Commission after 2002 in the coal and steel sector. Indeed, it continued to apply provisions of the Coal and Steel Treaty even though it came to an end.53 In this case, when it comes to investigations initiated by the Commission, the rule is Article 11(6) of regulation 1/2003. This provision indicates that the initiation of proceedings by the Commission shall relieve the competition authorities of the Member State to apply Articles 101 and 102 TFEU. This has to be read concurrently with Article 3(1) of the Regulation, which provides that NCAs which want to apply their national competition laws to any agreement or conduct which may affect trade between the Member States are
53
See, eg, Cases C-201 & 216/09P AccelorMittal Luxembourg SA v Commission, EU:C:2011:190, at paras 62– 70.
