On the 1st of January 2021, Britain officially left the European Union with a trade agreement passed through Parliament just days before the new year. Seemingly rushed, the agreed deal was in fact months of preparation in progress, evidenced by the composed guidance published by the Competition and Markets Authority (CMA) summarising the impact of Brexit on domestic competition law.

Depending on the UK and the EU’s relationship, the guidance is also subject to change. The key points are:

Cases where the EUMR* merger proceedings were initiated prior and on 31st December 2020 will remain the European Commission’s responsibility and therefore the CMA is not entitled to examine the merger.

However, the CMA will have access to relevant information and may be included in the corresponding Advisory Committee meetings.
This is beneficial for when a merger decision of the European Commission is annulled or in the process of appealing as the CMA could assert jurisdiction from when it becomes clear that the UK elements of the merger would not be re-examined by the European Commission.

Cases where the EUMR merger proceedings were not initiated prior to 31st December 2020 would mean that the CMA has jurisdiction to review and investigate the merger and its effects within the UK, allowing domestic merger control law to apply.

This transfer of cases could lead to identical notifications and therefore increased cost and time for the parties involved hence why the guidance also encourages cooperation between the two competition authorities.

Essentially, the EU Commission and the CMA will operate as two separate, but parallel entities and mergers and competition enforcement cases may still be subject to both the UK Competition Act 1998, Enterprise Act 2002 and the Articles 101 and 102 of the Treaty of the Functioning of the European Union. (TFEU). This will depend on whether the EUMR proceedings were triggered before or on the 31st December 2020.

Because of these newfound responsibilities, the CMA will be looking to expand and open its own UK domestic merger investigation to prevent the ‘substantial lessening of competition’ in a UK market. It hopes to have the ability to intervene multibillion- pound global deals starting with insisting control over Virgin Media which runs on the Vodafone network (owned by Liberty Global Plc) and O2 (owned by Telefónica S.A.) £31bn merger. Currently, the CMA has referred this proposed merger for an in-depth Phase 2 investigation where several third parties have raised concerns over damaging competition and the threat of increasing mobile charges.

Historically, the CMA has been ‘soft’ on tech transactions, most notably Facebook’s acquisition of Instagram which they believe should not have been approved. Thus, the CMA intends to create a Digital Markets Unit which can create rules customised to each dominating tech giant such as Facebook, Google, Apple, Microsoft, Netflix and Airbnb. The aim is to prevent any anti-competition abuses from occurring and not just trying to rectify the situation after. However, many competition lawyers do not think it will be too smooth sailing for the CMA, partly because legislation required for this power can only be granted through the MPs’ vote which is highly unlikely given the coronavirus climate. Additionally, it is perceived that the CMA should not ‘overreach’ as there is much debate on any extreme intervention powers in the market since it is in the UK’s interest to operate as a fairly regulated free market as it intends to open its economic borders internationally.

*The EUMR is the European Union merger law which requires firms within the European Union proposing a merger to apply for approval for the Commission and undergo stages of procedures.

by Ke Thie Kiew

The Expansion of the CMA