Competition/antitrust

In a nutshell

It is the job of the UK and EU regulatory authorities to ensure that markets function effectively on the basis of fair and open competition. The rules in the UK and EU are substantially similar, but UK bodies concentrate on those rules that have their greatest effect domestically, while EU authorities deal with matters affecting multiple member states. Of all areas of law in the UK, competition law is – at present – most closely intertwined with the EU. While most competition rules are enshrined into domestic law, the changing relationship between domestic and European competition authorities as Brexit takes effect is likely to cause much head-scratching among businesspeople, Eurocrats and lawyers alike.

On 1 April 2014, the Competition and Markets Authority (CMA) was established as the UK government’s main regulatory body, adopting many of the functions of the Office of Fair Trading (OFT) and the Competition Commission (CC). The CMA works closely with industry-specific regulatory bodies, such as Ofcom for the media and telecoms industry. With a higher budget and greater resources available than ever before, the CMA was created in order to strengthen business competition in the UK and crack down on anti-competitive activities.

Competition authorities have extensive investigative powers – including the ability to carry out dawn raids – and can impose hefty fines. The CMA continues to become more proactive and litigation-minded, and the European Commission – the regulator dealing with matters also affecting other EU countries – readily doles out big fines where necessary.

Competition

What lawyers do

  • Negotiate clearance for acquisitions, mergers and joint ventures.
  • Advise on the structure of commercial or co-operation agreements to ensure they can withstand a competition challenge.
  • Deal with investigations into the way a client conducts business.
  • Bring or defend claims in the Competition Appeal Tribunal (CAT).
  • Advise on cross-border trade or anti-dumping measures (preventing companies exporting products at a lower price than normally charged in the home market).
  • Regulators investigate companies, bring prosecutions and advise on the application of new laws and regulations.

Realities of the job

  • You won’t get much independence; junior lawyers work under the close supervision of experienced partners. In the early days, the job involves a great deal of research into particular markets and how the authorities have approached different types of agreements in the past.
  • You need to be interested in economics and politics.
  • The work demands serious academic brainpower twinned with commercial acumen.
  • As a popular area of practice it’s hard to break into. Work experience with a regulator or at the European Commission in Brussels will enhance your prospects.
  • Advocacy is a relatively small part of the job, though you could end up appearing in the High Court or the CAT.
  • Working an at international law firm you will travel abroad and may even work in an overseas office for a while, perhaps in Brussels. Fluency in another language can be useful. There is also a trend for lawyers to switch between private practice and working for the regulators.

Current issues

October 2021

  • The Covid-19 pandemic saw the European Commission adopt a ‘temporary framework’ to enable member states to utilise the ‘full flexibility foreseen under State aid rules’ to best mitigate the economic fallout from the pandemic. Domestically, the British government relaxed certain competition laws in relation to essential products. Laws regarding the sharing of stock level data, distribution depots, delivery vans, and staff pooling between supermarkets were relaxed to allow retailers to collaborate in their Covid response.
  • Last year also saw the creation of a dedicated Covid-19 taskforce. In March, the CMA announced its creation to address the potential harming effects of anti-competitive behaviours on consumers and the market more generally. It outlined five key areas of focus: (1) to identify harmful sales and pricing practices; (2) hold firms to account through warnings and subsequent actions for exploiting these circumstances through unjustifiable prices and misleading claims; (3) take enforcement action for breaches; (4) powers to advise the government on any necessary emergency legislation; (5) advise the government on balancing competition law and necessary measures implemented to protect public health and the supply of essential goods.
  • One such matter raised to the taskforce concerned PCR testing. In August 2021, the CMA launched an investigation into PCR test pricing for British residents returning overseas after prices varied widely dependent on provider.
  • Another significant CMA investigation this year has been into Nvidia’s takeover of UK chip designer Arm. According to the CMA, the £29.5 billion deal raises ‘serious competition concerns’ in reducing competition in semiconductor chip markets, thereby inflating the prices of any product that relies on them.
  • Globally, the Federal Trade Commission has dealt a hefty blow to Facebook through its request that the company must sell WhatsApp and Instagram. It argues that Facebook’s policy of acquiring rival companies has strangled competition across the globe, with the company having a monopoly over social networking.
  • The hot water continues to surround Facebook as the CMA, after its in-depth investigation launched this year, could force the social media giant to sell Giphy, the popular and integrated gif service. The £290 million deal raised a number of concerns last year and the CMA has recommended it sells the company in its entirety.
  • The seismic £31 billion merger between Virgin Media and O2 was provisionally cleared by the CMA in April 2021, meaning the joint venture will now create a telecommunication giant likely to be able to challenge the power of BT.
  • Away from specific cases, the CMA’s annual impact assessment highlights its new powers, such as new responsibilities to investigate more global cartel, antitrust, and merger cases. It has also set up the Digital Markets Unit and established the Office for the Internal Market. The impact assessment also showed for every £1 the CMA spent on operating costs, it saw £25 average benefit to customers across the last three years.
  • The Digital Markets Unit now holds responsibility for enforcing the UK’s new digital regulatory regime, with the aim to promote ‘greater competition and innovation’ in digital markets and protect ‘consumers and business from unfair practices’ online.
  • The United Kingdom formally left the EU when the Transition Period ended on 31 December 2020. The Trade and Cooperation Agreement (TCA) came into effect and defined both trading relationships and competition arrangements. Commentators have however suggested that it did not provide much detail regarding competition enforcement. One big takeaway is that the UK no longer has to interpret competition law consistently with European Court case law; however, it is required to ensure consistency with it and decisions reached before 1 January 2021 by the Commission unless it is considered ‘appropriate’ not to in specific circumstances.
  • By assessing all mergers within a 40-day limit, the CMA is tightening its grip on merger control. Increased efficiency means it now clears more cases in phase one without the need for the more intensive second phase, and a number of related legal challenges have developed into case law. The CMA is currently looking into monopoly concerns following the likely awarding of the East Midlands Trains franchise to Abellio, and investigating whether this will cause higher fare prices as Abellio will be the sole rail service provider between Norwich, Ely and Thetford.
  • Globally, Big Data and the monopolisation by tech giants continues to remain an area of concern. The new heads of the European Commission have tech giants firmly in their sights, with regulations being sought to curtail the influence of these behemoths. Primary concerns are the use of data collection; the (potential for the abuse of) power algorithms have on global markets, specifically concerning pricing decisions; and the growing global trends of ‘killer acquisitions,’ whereby tech giants swallow up smaller start-ups, acquiring their technology, and effectively removing competitors.
  • The EU continues to compel tech giants – such as Google and Amazon – to share their data, akin to how other services operate, in an attempt to modernise current legal framework for digital services under the Digital Services Act. The move to request data being shared seeks to dismantle the power and advantage a monopoly of data can give: rules are determined by those who know the game. Critics have said that opening up data erodes personal protection, coupling concerns over what data ought to be shared, and to whom.
  • 2021 continued the trend of prosecution in the financial services sector. Following the fallout from the 2008 financial crash and LIBOR Scandal, antitrust authorities are now seeking to remedy the “historic under-enforcement” in the sector. As such, a new statutory provision enables the UK’s Financial Conduct Authority to exercise existing competition law enforcement powers with focus on financial services. In its first formal decision under these new competition enforcement powers, the FCA found that three asset management firms had breached competition law for disclosing strategic information prior to one IPO and one placing in a 2019 finding.