The EU-UK Trade and Cooperation Agreement of December 2020 (the TCA) has a significant impact on competition law.
- Merger control: parallel regimes – As of 1 January 2021, UK turnover will no longer be taken into account for the purposes of the EU jurisdictional thresholds. This means that deals which previously triggered an EU filing may now trigger parallel EU and UK filings, or parallel filings in the UK and other Member States. In particular, deals between businesses with significant UK and Irish turnover which previously triggered an EU filing may now instead trigger parallel UK and Irish filings. Parallel filings will increase the time, cost and uncertainty associated with obtaining mergers clearance. While the substantive tests of EU and UK, and Irish and UK, merger control are currently similar, the regimes differ in their processes and timescales. In addition, parallel filings can result in different and possibly conflicting remedies.
- State aid – As of 1 January 2021, the UK will no longer be subject to the EU State aid regime*. However, under the TCA, the UK is required to establish a subsidy control regime, including a recovery remedy. The TCA gives the UK the choice between an ex ante and an ex post regime; it remains to be seen which approach the UK will choose. The UK is required to publicly report relevant subsidies within six months of their grant and interested parties have the right to obtain further information. The regime must be regulated by an independent authority (likely to be the CMA) and be enforceable before the UK courts. In addition to the respective domestic enforcement regimes of the EU and UK, the TCA provides for additional enforcement tools. For example, the EU and UK can unilaterally impose tariffs or quotas on certain goods to retaliate against subsidies of the other party which negatively affect trade or investment.
* A nuance is that under the Northern Ireland/Ireland Protocol, the EU State aid regime will apply to the UK in respect of any measure that affects “trade between Northern Ireland and the Union which is subject to this Protocol”. This means that EU State aid rules would not only apply to subsidies to firms in Northern Ireland trading under the Protocol, but also to pan-UK subsidies where they benefit Northern Irish firms.
- Competition law enforcement – the TCA requires the UK to maintain an effective competition law regime, including prohibitions on anti-competitive agreements and abuse of a dominant position, enforced by an independent authority. However, the EU and UK regimes may diverge over time, and this will complicate competition law compliance for businesses operating in both the EU and the UK. Businesses could be subject to two sets of investigations in respect of the same alleged misconduct.
- Private damages actions – the UK is one of the major jurisdictions for follow on damages actions based on European Commission infringement decisions. Follow on damages actions may be brought on the basis of European Commission infringement decisions issued on or before 31 December 2020; and on the basis of European Commission infringement decisions resulting from cases in which the European Commission has “initiated proceedings” on or before 31 December 2020.
- Public procurement rules – the objective of the TCA is to guarantee EU and UK suppliers access to public procurement procedures in the territory of the other party. The TCA incorporates certain provisions of the WTO GPA and supplements these with additional rules. For example, each party shall ensure that where its procuring entities require a supplier, as a condition for participation in a covered procurement, to demonstrate prior experience, they do not require that the supplier has such experience in the territory of that party.