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Why Britain's current semi-detachment from EU Competition principles could become complete post Brexit
- AuthorStephen Hornsby
Much of the speculative commentary on Brexit and its implications for competition law has adopted “a business as usual” analysis. It is said that we are bound to follow EU law while we are members and that it is likely that competition law based on the EU/EEA model will kick in once we leave – subject to obvious changes on merger control etc. As we shall see, this analysis is not quite right.
One of the distinct features of EU competition policy, apart from its “single market” goal, was, and is, its embodiment of other public policy objectives. These include environmental, health, social, labour and cultural objectives. In seeking to balance these objectives with competition policy, the European Court of Justice has held that public health outweighed competition considerations, that ethical standards outweighed them too and that the administration of justice also outweighed them. (See Meca Medina, Laurent Piau & Wouters)
Back in the day, when the Competition Bill was going through Parliament, Lord Simon the Government spokesman said that
“The Commission has to take into account a wide range of counter-vailing benefits when making decisions under Article 85 (now Article 101 TFEU). In particular, the Commission has taken into account the public health benefits of agreements when reaching decisions. However the issue goes wider than public health. The Commission has for example taken into account the environment benefits of agreements. It is clear that under the Bill the Director General (now the Competition & Markets Authority) can be expected to do likewise and to form the same judgments against the body of law that I have mentioned which have existed in the interpretation by the Commission under Article 85” (now Article 101 TFEU).
Lord Simon supported his view by reference to the written opinion of Professor Richard Whish. Subsequently however, the European Commission (but not the European Court of Justice) and the UK competition authorities have not given such weight to public policy (unlike the Dutch Competition Authority for example). Few decisions if any can be cited which show that the UK authorities have adopted a broader approach balancing other policies with competition. Indeed, Lord Simon seems to have been forgotten and key policy makers consider that it is preferable if UK competition law follows a sole “consumer welfare” goal. “Consumer welfare” is a more strictly economic approach and has certain aspects in common with the Chicago School of Economics. It is a narrow and hard edged approach that in some cases may conflict with the other policy considerations to which the European Court of Justice has given precedence.
To the extent that the sole goal of “consumer welfare” is applied in practice and other objectives are ignored or overridden, the UK is out of line with its obligation under the Competition Act 1988 – which is to follow decisions of the European Court of Justice. Arguably, this makes the UK already semi-detached from its European ‘parent’ whose policy was informed right from the beginning by the belief that there should be a market economy with a safety net which would allow other wider public policy considerations to be taken into account. [i]
In recent years, the need for a serious competition policy has been bipartisan in the UK without much debate on what that might actually mean. This is likely to change once it becomes clear that actually a “full” Brexit will provide an opportunity for a government of the day to rid UK competition policy of public policy objectives identified by the European Court of Justice. If say, a Conservative government does so, this won’t be an enormous change because arguably it has been made already on the quiet. But it will at least be explicit official and formal; hopefully its prospect will trigger some debate before the next Election – at which point others might take a different view. Of course if Brexit is less than “full” (i.e. we adhere to EEA norms) then the unsatisfactory semi-detachment described above may continue unless and until successfully challenged in the courts.
This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.