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.
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.
- Brexit continues to be a big topic here, with the UK remaining subject to the EU state aid regime until the transition period ends. Merger control in the UK pre-dates that on an EU level, so complete separation from the EU may not have a large direct impact on the UK merger regime. However, companies could lose their ability to request merger clearance under both jurisdictions simultaneously – separate submissions may have to be made to both UK and EU regulators, driving up costs for businesses.
- There will probably be a need for the UK to establish its own domestic state aid authority post-Brexit, according to a report from the House of Lords’ EU Committee. The CMA is being considered for this role. In the transition period, it’s likely EU state aid rules will remain in place; however, it isn’t clear whether new measures would have to be sent to the European Commission for approval during this time. Generally, the EU restricts a government's ability to offer support to specific companies if it would give a company an advantage over its competitors. Exceptions can also be made if the aid in question is shown to be important to general economic development.
- Covid-19 has and will continue to raise interesting questions for antitrust lawyers. Commentators note that while current competition laws have proved malleable enough to address many a crisis, adjustments are having to be made. The European Commission has adopted 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. The Commission hopes the move will ensure sufficient liquidity is accessible to all businesses.
- Adjustments are similarly being made in the UK: the British government has relaxed certain competition laws in relation to essential products and services. In March, competition 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.
- In March, the CMA announced the creation of a dedicated Covid-19 taskforce to address the potential harming effects of anti-competitive behaviours on consumers and the market more generally. Key areas of focus include holding firms to account through warnings and subsequent actions for exploiting the circumstances surrounding the pandemic through unjustifiable prices and misleading claims; taking enforcement action if companies not only breach consumer law, but subsequently fail to heed warnings they've done so; and advising the government on balancing competition law and necessary measures implemented to protect public health and the supply of essential goods.
- The National Audit Office believes the CMA has made large strides in tackling the failings of previous competition regulators and that enforcement is now more coherent than before, but that the regulator could still increase the volume of successful enforcement cases it brings and improve business awareness of competition law. After facing criticism for its action on cartels, the CMA launched a ‘stop cartels’ campaign and hotline. Following a five-year investigation, the European Union issued a €1.07 billion fine to Barclays, Citigroup, J.P. Morgan, MUFG and the Royal Bank of Scotland for manipulating the foreign exchange market. Traders formed two cartels to rig the market by swapping trading information on chatrooms between 2007 and 2013.
- Globally, Big Data and the monopolisation of it by tech giants continues to remain an area of concern. The new heads of the European Commission have the industry's big players 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 European Commission has launched consultations on its upcoming Digital Services Act, a two decades-later follow up to the Electronic Commerce Directive 2000. The aims for the new legislation include helping smaller innovative online businesses flourish in a market that's increasingly controlled by large data holders; provide clearer rules and responsibilities for companies holding data on their customers; and preventing the dominant forces in the market from acting as 'gatekeepers'.
- 2020 also witnessed the continuing 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.