1 00118601 Emerging themes 2019 A4 AW v31 combined - Page 58



MARKETS
Parallel investigations following Brexit
The UK competition authorities (including the CMA
and the FCA) are prohibited from applying competition
law to cases over which the European Commission
(Commission) has chosen to exercise its jurisdiction.
By way of example, when the Commission launched
an investigation into insurance and reinsurance brokers
in the aviation and aerospace sector in late 2017, the
FCA had to close the investigation into this sector that
had launched in April that year.
After Brexit, the CMA and the FCA will be allowed to
investigate any perceived anti-competitive practise
affecting the UK, irrespective of whether the Commission
is also conducting its own investigation in respect of
conduct affecting trade in the EU.
Where conduct affects both the UK and EU, firms may
face parallel EU and UK investigations, and infringing
firms could be fined up to 10% of worldwide group
turnover by the authorities in both jurisdictions. With no
formal UK role in the EU institutions post-Brexit, UK firms
involved in an EU investigation with any concerns about
the approach taken by the Commission will not be able
to rely on the UK to make representations on their behalf
directly to the EU institutions.
It remains to be seen how the CMA
and the FCA will prioritise the cases
they investigate both in the short
and longer term.
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Possible divergence of approach and increased
compliance burden
At present, UK competition law is substantively the same
as EU competition law. Indeed, the UK competition
authorities and courts must deal with questions under
UK competition law in a manner consistent with the
equivalent EU rules.
It is not clear whether a similar duty will apply postBrexit. The Government has stated that it intends to
preserve the EU’s so-called block exemption regulations,
which provide a “safe harbour” for certain types of
common agreements which meet prescribed criteria.
Firms who rely, for example, on the specialisation block
exemption when supplying goods or services jointly with
competitors (for example, in the context of co-insurance
or syndicated lending) may welcome this.
However, if a broader obligation for UK competition
law to remain consistent with EU law ceases to apply,
although the broad tenets of UK competition law
are unlikely to change, firms may find that important
differences start to develop between EU and UK rules
and that the application of UK competition law
becomes less predictable.
It is possible, as part of this post-Brexit divergence,
that additional or alternative considerations may be
introduced to the UK competition regime, a regime
which has historically been based on widely accepted
and objective legal and economic analysis. New
considerations could include, for example, national
security, vulnerable consumers and the environment.
Irrespective of whether the UK regime is amended
post-Brexit, potential divergence in enforcement
practises and outcomes may make it more risky
for firms to apply a one-size-fits-all approach to
competition law compliance across the EU and UK.
Consequently, compliance costs may increase.

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