This publication first appeared in the April 2017 edition of The M&A Lawyer.
The United Kingdom’s June 23, 2016 vote to leave the European Union (EU)—known as Brexit—triggered a political and economic earthquake in Europe. After nine months of intense speculation and debate, Prime Minister Theresa May launched the formal Brexit process on March 29, 2017 by delivering a letter to the European Council invoking Article 50 of the Treaty on European Union (TEU), which sets out the procedure for a Member State to leave the EU.1 Donald Tusk, the President of the European Council, promptly responded by issuing a statement2 acknowledging receipt of the Article 50 letter and publishing draft guidelines for the negotiation to be led by the European Commission.3
Among the many difficult issues to be addressed in the Brexit negotiations, competition policy does not feature prominently. The UK’s Article 50 letter doesn’t mention competition policy at all, and the European Council’s draft guidelines state merely that any future agreement between the EU and the UK must “ensure a level playing field in terms of competition and state aid, and must encompass safeguards against unfair competitive advantages.” Nonetheless, Brexit is likely to have significant consequences for businesses engaged in acquisitions or joint ventures triggering antitrust review in Europe.
In particular, Brexit will bring an immediate end in the UK to the EU’s “one-stop-shop” under the European Union’s Regulation 139/ 20044 on the control of concentrations among undertakings (the EUMR). Currently, an EU merger filing precludes the need for a filing in the UK. As from the Brexit effective date, mergers may trigger filings both in the EU and the UK. Thus, Brexit will likely lead immediately to more UK merger notifications, a significant increase in the UK Competition and Markets Authority’s (CMA’s) workload, and increased burdens for companies. Global M&A transactions often trigger multiple merger filings, and the addition of one more may not seem too serious. Duplicate filings in Brussels and London will likely have a disproportionate impact, however, owing among other things to the fact that both authorities will often need to examine the same European markets in parallel, both authorities employ front-loaded, information-heavy regimes and any required remedies may overlap or even conflict.
This “Brexit tax” in merger control can’t be avoided entirely, but with creativity and good will the CMA and the Commission can significantly reduce its impact. The Commission and the CMA need not await the results of other negotiations before exploring these possibilities. Indeed, in a speech on February 4, 2017 (“the Coscelli Speech”),5 the CMA’s Acting Chief Executive acknowledged that “arrangements for effective co-operation and information sharing . . . will be key to the effectiveness of any future UK regime” and stressed the importance of coordination “even before Exit.” This article explores the merger control implications of Brexit and suggests ways to mitigate the burden on competition authorities and business.
How will latest changes to Volcker Rule affect non-US banks?
Kathleen A. Scott discusses the final Volcker Rule, focusing on some of the issues raised by non-US banks in their comments.