Competition Law: Eu's Influence On The Uk

The UK left the EU on 31 January 2020, and the Brexit Transition Period ended on 31 December 2020. On 1 January 2021, the UK and EU became two distinct regulatory, legal, and customs territories, governed by the Trade and Cooperation Agreement (TCA). The TCA outlines rules on subsidy control and competition policy, including the obligation for both parties to have a competition law that prohibits anticompetitive practices and an operationally independent competition authority. Since Brexit, EU competition law no longer applies in the UK, and the two regions now operate completely separate competition regimes. This paragraph will explore the implications of this separation and how it affects businesses and consumers in the UK and EU.

UK-EU Trade and Cooperation Agreement

The UK-EU Trade and Cooperation Agreement (TCA) is a deal that was agreed upon by the UK and EU on 24 December 2020 to govern their future trading and security relationship after the UK left the EU. The TCA is made up of three pillars:

• A free trade agreement covering the economic and social partnership, including transport, energy and mobility
• A framework for cooperation between law enforcement and judicial authorities across civil and criminal matters
• An overarching governance arrangement that allows for cross-retaliation across different economic areas

The TCA is supplemented by unilateral decisions taken by both sides, including on financial services equivalence and data adequacy. It includes provisions on governance and dispute settlement, with the latter involving an initial period of consultation between the parties and possible recourse to an independent arbitration tribunal.

The TCA establishes a UK-EU Partnership Council to supervise the operation of the agreement at a political level, providing strategic direction. The council is supported by a network of committees. Either party can refer any issue relating to the implementation or interpretation of the TCA and its supplementing agreements to the Partnership Council, which has the power to adopt decisions and recommendations regarding the application of the agreement.

The TCA provides that the UK and European Parliaments may establish a Parliamentary Partnership Assembly (PPA) consisting of members of both parliaments. The assembly may seek information from the Partnership Council and make recommendations on the implementation of the TCA and any supplementing agreements.

The TCA also provides for civil society engagement, referring to consultation with domestic advisory groups and a civil society forum.

In terms of the impact of the TCA on competition law, the agreement will have little effect in practice. The TCA contains provisions requiring the UK and EU to respect certain high-level principles in the field of competition law, and the UK will be free to diverge from the EU on issues of relative detail. These provisions are not subject to the level playing field "rebalancing mechanism" or the general dispute resolution regime of the TCA, which means they would be difficult to enforce in the event of a perceived breach.

Since Brexit, under the terms of the UK-EU trade agreements, EU competition law is no longer enforced in the UK, and the two regions now operate completely separate competition regimes. The UK's Competition and Markets Authority (CMA) is now responsible for all anti-competitive practices that affect UK markets and consumers.

Competition Act 1998

The Competition Act 1998 is the major source of competition law in the United Kingdom, alongside the Enterprise Act 2002. The Competition Act 1998 provides an updated framework for identifying and dealing with restrictive business practices and the abuse of a dominant market position. The act is divided into two chapters, each dealing with a different type of restrictive practice.

Chapter I of the Competition Act 1998 deals with restrictive practices engaged by companies operating within the UK that distort, restrict or prevent competition. These practices are primarily in the form of horizontal agreements between firms on the same level of the supply chain, such as retailers or wholesalers. These agreements could involve limiting output, collusively sharing information, fixing prices, tendering collectively, and sharing markets out. The Competition and Markets Authority (CMA) is responsible for prosecuting such firms, and can levy fines of up to 10% of the firm's annual global turnover for every year in which a violation has taken place, up to a maximum of 3 years. Exemptions from prohibition are available if the firm can demonstrate that these practices are in the interest of the consumer, by increasing market efficiencies or advancing technical progress.

Chapter II deals with the abuse of a dominant position by a firm that uses practices such as predatory pricing, excessive prices, refusal to supply, vertical restraints, and price discrimination to maximise profit, gain a competitive advantage, or otherwise restrict competition. Investigating alleged breaches of Chapter II involves a two-stage process. First, it must be identified if the firm possesses a dominant market position. This can be done through various concentration indices, such as the Herfindahl-Hirschman Index (HHI). Generally, if a firm is found to have a market share of over 40%, it is considered a threat to competition. There are no exemptions to Chapter II, as by its very definition as an "abuse" of a market position, one must be guilty of wrongdoing for the chapter to apply.

The Competition Act 1998 was designed to harmonise UK law with EU competition policy, with Chapter I and II of the act mirroring the content of Articles 81 and 82 of the Treaty of Amsterdam (formerly Articles 85 and 86 of the Treaty of Rome). However, following the UK's departure from the EU, EU competition law no longer applies in the UK. While EU competition law in force before Brexit, including the European courts' historic case law, will continue to apply in the UK as "retained EU law", UK courts will now be able to depart from this in certain circumstances.

Enterprise Act 2002

The UK's exit from the EU on 31 January 2020 and the end of the Brexit transition period on 31 December 2020 meant that EU competition law ceased to apply in the UK. The UK and EU now operate completely separate competition regimes.

The legislative framework for the UK's competition regime is established by the Competition Act 1998 and the Enterprise Act 2002, as amended by the Enterprise and Regulatory Reform Act 2013, which created the Competition and Markets Authority (CMA).

The Enterprise Act 2002 (c. 40) is an act of the Parliament of the United Kingdom which made major changes to UK competition law with respect to mergers and also changed the law governing insolvency bankruptcy. It made cartels illegal with a maximum prison sentence of 5 years and states that the level of competition in a market should be the basis for investigation.

The Act had five major competition policy objectives:

• Make all competition decisions through independent bodies
• Root out forms of anti-competitive behaviour
• Create a strong deterrent effect
• Redress injured parties in distortions of competition
• Raise the profile of competition policy in the UK

The Act made the Office of Fair Trading formally independent from the government, and gave it additional powers. It is now possible for searches to be carried out under warrant from this act of business premises involved with potentially prohibitable mergers. The act also established the Commission Appeals Tribunal (CAT) for companies to appeal against decisions by the Competition Commission. The role of the Director General of Fair Trading (DGFT) was abolished and his powers were given to the OFT, which was seen as an attempt to depersonalize the competition investigation process.

The Minister of Trade and Industry previously played a large role in competition policy, having the final say over whether a particular merger was in the public interest. Under the new Act, their role was significantly diminished to depoliticize competition regulation, which had been accused of being inconsistent in the past. They now only have powers to intervene if the proposed merger will affect the media to the detriment of the public, national security, or if one of the firms is a government contractor.

On the deterrence side of the Act, jail terms of a maximum of five years for directors were introduced to increase deterrence for forming cartels. The competition commission also had its scope widened to cover investigations of whole industries, not just specific firms, for example, the supermarket industry.

The Enterprise Act made substantial amendments to the administration procedures for failing companies. The purpose was to enhance the policy of creating a "rescue culture", so that insolvent companies, so far as possible, should be saved before their assets are stripped and distributed to creditors.

Enterprise and Regulatory Reform Act 2013

The UK left the EU on 31 January 2020, and the Brexit Transition Period ended on 31 December 2020. Since then, EU competition law is no longer enforced in the UK, and the two regions now operate completely separate competition regimes.

The legislative framework for the UK's competition regime is established by the Competition Act 1998 and the Enterprise Act 2002, as amended by the Enterprise and Regulatory Reform Act 2013, which created the Competition and Markets Authority (CMA).

The Enterprise and Regulatory Reform Act 2013 (ERR) was passed under the Conservative and Liberal Democrat coalition government and obtained Royal Assent on 25 April 2013. The ERR Act introduced changes to legislation protecting historic buildings in England, aiming to cut the costs of doing business in Britain and boost consumer and business confidence.

The ERR Act 2013 made the following changes:

• Listed Building Heritage Partnership Agreements: These agreements allow owners of listed buildings and local planning authorities (LPAs) to agree on necessary routine and regular works that will not harm the building's special interest. This grants listed building consent (LBC) for an extended period, streamlining the process.
• Local Listed Building Consent Orders: LPAs can grant LBC for routine or minor changes to identified listed buildings in their area, which will not harm their special interest. This simplifies the process for well-understood and repeated works in similar buildings.
• Listed Building Consent Orders: The Secretary of State can grant LBC for routine or minor changes to identified listed buildings in England, bypassing multiple applications for LBC.
• Certificates of Lawfulness of Proposed Works: Formal confirmation that alteration or extension works to a listed building do not require LBC as they do not affect the building's special interest. Owners may find this convenient, although it is not mandatory.
• Other changes: The ERR Act also allowed for more precise listed building entries, the ability to seek Certificates of Immunity from Listing at any time, and the replacement of Conservation Area Consent with a requirement for planning permission.

CMA's enforcement action on resale price maintenance

Since the UK's exit from the EU on 31 January 2020, and the end of the Brexit transition period on 31 December 2020, EU competition law no longer applies in the UK. The UK and EU now operate completely separate competition regimes.

CMAs Enforcement Action on Resale Price Maintenance

The Competition and Markets Authority (CMA) has taken a series of enforcement actions against resale price maintenance (RPM) in the musical instruments and equipment sector. In five cases over eleven months, the CMA issued fines totalling £13.7 million and sent warning letters to the entire industry. The CMA pursued manufacturers and a retailer for RPM regarding the online sale of musical instruments. The CMA's actions underlined an EU-wide trend of regulators focusing on the controls manufacturers try to place on the online sales practices of their distributors.

The CMA's enforcement actions and ongoing monitoring of online resale prices within the musical instrument industry sent a clear message that it is taking RPM seriously and is focused on tackling online selling practices where retailers are instructed to maintain higher resale prices of their suppliers' branded products. The CMA's case studies regarding its investigations into Korg, Casio, and Fender, illustrate how indirect sanctions or pressure on a distributor designed to maintain a minimum resale price are likely to be found to infringe competition law.

The CMA also pursued a specialist music instrument retailer, GAK, despite the relevant manufacturer, Yamaha, having already admitted liability in exchange for immunity from fines. The CMA made clear that the fact that specialist retailers face difficulties in competing on price with 'big online discounters' will not justify their behaviour or result in a reduction of fines. The CMA's pursuit of GAK suggests that retailers who uphold RPM agreements or practices may be held to have infringed competition law.

The CMA has also imposed a fine for RPM on a retailer who agreed to implement the agreement despite previously having received a warning letter from the CMA. The CMA has so far only imposed fines on suppliers on the basis that the restrictions are imposed by them on the retailers. In an open letter to the musical instruments sector, the CMA advises retailers that if they agree with suppliers to sell at fixed or minimum prices, they may be found to be infringing competition law.

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