Brexit: competition and State aid

Daniel Jowell QC

The House of Lords EU Internal Market Sub-Committee has published its report on Brexit: Competition and State aid.  Amongst the Committee’s conclusions and recommendations are:

  • The “UK may wish, over time, to depart from EU competition case law, particularly as the Single Market imperative underpinning it may no longer be relevant to the UK. Brexit also offers an opportunity to diverge from the EU in terms of enforcement decisions on some antitrust cases and merger reviews. With the repatriation of responsibility in this area, the UK will be free to take a more innovative and responsive approach to tackling global competition enforcement challenges, including fast-moving digital markets and dominant online platforms.”
  • “Although Brexit does not necessitate a fundamental revision of the UK’s well-established domestic competition framework, the ‘consistency principle’ under section 60 of the Competition Act 1998 will no longer be appropriate in its current form after the UK leaves the EU and EU law no longer has primacy. It would be desirable to replace section 60 with a softer duty, whereby UK authorities might ‘have regard to’ EU law and precedent, although such an approach may not be appropriate in the longer-term.”
  • A “comprehensive competition cooperation agreement” should be negotiated by the UK Government to facilitate extensive cooperation between the national competition authorities of Member States, and the European Commission, on investigations and enforcement actions.
  • “It is likely that the EU will insist on some form of State aid controls in any UK-EU Free Trade Agreement (FTA). If this is not case, the World Trade Organization’s (WTO) Agreement on Subsidies and Countervailing Measures (ASCM) would not represent an adequate alternative” as it has no domestic application. As introduced, the EU (Withdrawal) Bill would preserve a general prohibition on State aid without specifying what body would assume the Commission’s current role of reviewing and approving compatible measures. The Committee urges “the Government to address this omission as soon as possible and clarify whether State aid responsibilities will be assumed by an existing, or new, authority.”
  • “A number of factors have enabled the UK, and London in particular, to develop into Europe’s foremost jurisdiction for private damages actions resulting from breaches of competition law. Many of these features are likely to endure beyond Brexit, but uncertainty surrounding the future status of EU antitrust prohibitions and Commission decisions could put this leading status at risk. The Government should take this into account when it decides whether to repeal or amend the legislative basis for ‘follow on’ claims in the Competition Act 1998, and whether to allow UK bodies to continue to accept final Commission decisions.”

The complete report is here.

House of Lords Constitution Committee Report on the EU (Withdrawal) Bill

The House of Lords Constitution Committee has today published its long-awaited report on the EU Withdrawal Bill which it described as ‘constitutionally unacceptable’.  The Bill is fundamentally flawed and needs to be rewritten in several ways, peers have said, as the House of Lords prepares to debate the legislation this week.

The committee said that the bill as it currently stands risked “undermining legal certainty” and should be substantially changed, even though it has already been voted through the House of Commons.

Richard Gordon QC gave oral evidence to the committee alongside Lord Neuberger of Abbotsbury. The report can be accessed here.

David Vaughan CBE QC

David Anderson QC

All concerned with European Law will wish to join Brick Court Chambers in our sadness at the death on Monday, aged 79, of David Vaughan CBE QC.

David practised at Brick Court throughout his life at the Bar. He transformed its fortunes, first by attracting to it such stars as Robert Alexander (later Lord Alexander) and Nicholas Phillips (later Lord Phillips, President of the Supreme Court), and then by building it into a major centre of excellence in European Law. As Maya Lester has noted on her EU Sanctions blog, he encouraged everyone from the most junior to the most senior with his kind, visionary and energetic style.

But David’s influence went far beyond the Chambers where he was so well loved. He was the editor of comprehensive works on EU law, a Visiting Professor at Durham, and a guiding force behind some fine institutions: a pioneering law practice in Brussels, the Bar European Group, the European Circuit and – in later years – the Slynn Foundation for European Law. Through his infectious excitement, he tempted many young practitioners, at home and in the accession states, from more sober and parochial pursuits into the great legal adventure that was Europe.

Of his more than 100 cases before the European Court of Justice, few were routine. Constitutional history was made in the Factortame litigation of 1988-2000, with the suspension and then disapplication of an Act of Parliament, followed by damages for those whose livelihoods it had destroyed. In the words of John Couceiro, one of David’s Spanish Fishermen, “he led us on a great journey, which I would not have missed for the world”. The Sunday Trading cases caused the ECJ to rethink its case-law on free movement of goods, and Courage v Crehan forged the principles still applied to competition damages. David fought with particular tenacity for procedural fairness, whether in the long run of cartel cases he conducted for ICI or in the sanctions context, where People’s Mojehadin of Iran paved the way for Kadi.

David rarely failed to win, and never failed to entertain. He took on the established order with relish, daring and humour. He saw the best in everyone, and helped others to see it too. Having done so much to humanise European law and make it palatable to the British, his death at this time is especially poignant. We will not see his like again.

European Union (Withdrawal) Bill: Disapplication of Primary Legislation

The Prime Minister has replied to Sir William Cash MP, Chairman of the European Scrutiny Committee, over the committee’s concerns about the provisions of the European Union (Withdrawal) Bill giving the UK courts a power to disapply pre-exit UK primary legislation (see post on 22 December 2017). The full text of her letter is here.

Keeping up with Brexit—preparations will intensify in 2018

Professor Derrick Wyatt QC offers analysis of the UK’s Brexit preparation and challenges ahead for the UK Parliament, central government, devolved administrations and businesses, as negotiations on the Withdrawal Agreement gather pace and negotiations on transitional arrangements and the framework of a future UK-EU trade relationship move up the agenda in 2018.

This article, first published on Lexis®PSL Public Law on 8 January 2018, is available here.

European Union (Withdrawal) Bill: Disapplication of Primary Legislation

Sir William Cash MP, Chairman of the European Scrutiny Committee, has written to the Prime Minister summarising the committee’s concerns about the provisions of the European Union (Withdrawal) Bill giving the UK courts a power to disapply pre-exit UK primary legislation.  The full text of his letter is here.

The Trade Bill – renegotiation and renewal of EU trade agreements after Brexit – in this new constitutional territory more Parliamentary scrutiny is urgently needed

Professor Derrick Wyatt QC

The lack of adequate Parliamentary scrutiny when the UK negotiates trade agreements (something it has not done in its own right for many years) has come to the attention of the House of Commons International Trade Committee. This is timely given the prospect of the UK negotiating the single most important trade agreement it is likely to negotiate for a long time – its future trade agreement with the EU. The context for the Committee’s concern is its inquiry into the Trade Bill. One of the issues which the Bill addresses is the domestic implementation in the UK of those EU trade agreements which are adapted for continued application by the UK after Brexit. The Committee has asked whether Parliamentary scrutiny of ministerial rules implementing these agreements is adequate, and, more broadly, whether scrutiny of the UK signing up to these and other trade agreements, is adequate. Continue reading

The EU (Withdrawal) Bill and the courts: peering through the glass darkly

In this Spotlight article, first published in the November issue of Butterworths Journal of International Banking and Financial Law, Richard Gordon QC considers the first draft of the EU (Withdrawal) Bill and the extent to which banks and other financial market participants can challenge by way of judicial review if they dislike the way the government amends primary financial services legislation by statutory instrument.

Please click here to view the article.

‘Negotiating Brexit: The Legal Landscape’

A co-authored paper by Richard Gordon QC and Alastair Sutton ‘Negotiating Brexit: The Legal Landscape’was launched last night in the House of Lords. It covers the Brexit negotiations to date including detailed sections on the EU’s Mandate and Position Papers, the EU Withdrawal Bill and the impact of the Brussels negotiations on the devolved governments. The event was chaired and hosted by Lord Tyler.

A link to the paper is here.

References to the European Court and Brexit

Aidan Robertson QC

Has the prospect of an impending Brexit affected the approach of the UK courts to the exercise of their discretion to make references to the Court of Justice of the European Union (CJEU) under Article 267 of the Treaty of the Functioning of the European Union (TFEU)? Two judgments show that the approach may now be different, depending on the circumstances; a third judgment, in which this issue was raised by the bench, is pending.

This issue was described by Roth J as “the elephant in the room” during closing submissions in the Competition Appeal Tribunal on 29 March 2017 in Generics (UK) Ltd v Competition and Markets Authority (Paroxetine), where he pointed out that where a referable issue arose in the present situation “there is a lot to be said for making a reference sooner rather than later”. If the issue were decided without a reference and then appealed, it might be that by the time the appeal was heard, Brexit would have taken place and the opportunity to make an Article 267 reference would have gone. Judgment in this case has yet to be delivered.

In Coal Staff Superannuation Scheme Trustees Ltd v HMRC [2017] UKUT 137 (TCC) (26 April 2017), Rose J rejected an application for an early reference to enable the CJEU to consider a question of the compatibility of UK tax legislation on withholding taxes with EU law on free movement of capital. Rose J held that whatever arrangements for Brexit might be negotiated, that should not at this stage require a change in judicial practice as to the exercise of discretion whether to refer under Article 267 TFEU. She rejected a submission that the appeal tribunal in this case had effectively been turned by Brexit into a court of final instance obliged to make a reference under Article 267(3) TFEU save where the issue of EU law is acte clair.

The Divisional Court in Northern Ireland in Kociolek v The Polish Judicial Authorities [2017] NIQB 87 (12 October 2017) rejected an application for a reference of a question as to whether the UK government had failed transpose into domestic law a European Council Decision on the European arrest warrant. The Court observed that by the time any ruling was handed down by the CJEU, Brexit would have taken place and even if the CJEU held that the UK was in breach of an obligation to transpose the Decision into national law “It is, of course, most unlikely that the political will to introduce such legislation would be present in any event.” The Court therefore concluded that a reference would be academic, recalling the “dictum of Lord MacDermott in McPherson v The Department of Education, NIJB 22 June 1973, that an order of the court ‘does not usually issue if it will beat the air and confer no benefit on the person seeking it’. That is apposite here.”