The CMA’s Draft Guidance on its Functions Post-Exit Day

November 2020
Region: Europe

The Competition and Markets Authority’s (CMA) Draft Guidance explains how the CMA intends, after 31 December 2020 (Exit Day), to:

  • Apply and incorporate EU rules, principles and decisions adopted up to Exit Day into the UK legal order
  • Coordinate its approach to new cases with past, current and future EU investigations – in particular, Antitrust and Merger Control investigations

This Draft Guidance poses, in our view, serious risks for past and current defendants of EU Commission’s investigations – in particular:

  • Antitrust – Post-Exit Day the CMA will be able to:
    • Open a parallel inquiry to ongoing EU investigations (albeit the CMA investigation will be limited to the post-Exit UK aspects of the potential infringement); the Draft Guidance does not explain how the CMA will be able to isolate the post-Exit Day UK aspects of infringing conduct without infringing defendants’ rights of defence
    • Re-open the UK aspects of certain antitrust investigations closed by the EU Commission
    • Investigate the UK aspects of EU decisions annulled by the EU Courts
  • Merger control – Post-Exit Day:
    • The EU Commission will retain exclusive jurisdiction over transactions formally notified to the EU under the EU Merger Control Regulation (EUMR) prior to 23 December 2020
    • The CMA and the EU Commission will each have jurisdiction over transactions that (a) meet both the EU and the UK thresholds; and (b) have not been formally notified to the EU prior to 23 December 2020

      For deals for which signing is expected around Exit Day, merging parties should carefully consider the implications of the timing of any notification to the EU Commission on condition precedents provisions and deal timetable due to the risk of a parallel/additional CMA review starting on 1 January 2021 over deals not notified to the EU Commission before 23 December 2020)

Finally the Draft Guidance regrettably does not explain how the removal of references to EU key concepts in UK legal instruments such as “the objective of achieving an integrated internal market in the EU” (which is relevant in various instances, for example, exclusivity in distribution agreements) will impact the substance of UK competition rules.

This client alert provides a description, and a critical review, of the CMA’s Draft Guidance.