Brexit: The death knell for European antitrust damages actions in the UK?

02 Aug 2017

On 26 July 2017, the Brexit Competition Law Working Group (the “BCLWG”) published its final recommendations for post-Brexit competition law policy in the UK. In doing so, it gave some reassurance to those concerned that the UK would cease to be an attractive venue for damages actions by those who have suffered from infringement of European competition law.

The BCLWG has recommended that sections 58A and 47A of the Competition Act 1998 – which make European Commission decisions binding on the High Court and the Competition Appeal Tribunal – should be retained, so it would remain the case that those wishing to sue for damages based on such decisions would not need to prove that competition law was infringed. All they would need to prove would be how much damage was caused to them as a result.

Assuming a “hard” Brexit, it might seem strange to make the decisions of a foreign power binding on UK courts and tribunals. However, retention of sections 58A and 47A would not make UK companies subject to European law. Companies that do no business in the EU will not need to abide by its laws. Those that do will have to abide by them just as US companies do now, as illustrated by the Commission’s recent imposition of a €2.42 billion fine on Google.

The BCLWG’s Conclusions and Recommendations argue (at §2.21) that retention of sections 58A and 47A will be important to protect UK companies post-Brexit because the infringement of competition law may affect the UK too, and it cannot be assumed that the UK’s Competition & Markets Authority will carry out an investigation in parallel with the Commission.

However, retention of sections 58A and 47A would not only be relevant to UK companies. The ability of claimants from multiple countries to aggregate their claims and bring them together in a single jurisdiction can be vital as, otherwise, claims are often of insufficient size to be viable. The UK has, until now, been a leading jurisdiction chosen by claimants from across Europe to bring their damages actions.

Retention of sections 58A and 47A alone will not ensure that this continues. The ability of those from other Member States to bring their claims in the UK is currently governed by the Recast Brussels Regulation on jurisdiction and the recognition and enforcement of judgments. Their ability to do so post-Brexit will depend on the regime that replaces it.

The BCLWG does not comment on this. It sees the issue as being outside its scope, as it does not specifically concern competition law (§2.27). It is likely that both sides of the Brexit negotiations will want certainty of jurisdiction and enforcement, and something along the lines of the Brussels Regulations – or the similar Lugano Convention governing issues of jurisdiction and enforcement between the EU and the European Free Trade Association – would appear to be a simple off-the-shelf solution. However, it would be premature to assume that the replacement regime will not restrict the UK courts’ jurisdiction over pan-European claims.

Indeed, there is a question over what regard the government will have to the BCLWG’s recommendations. Its members are prestigious and their collective view has unquestionable validity. However, the government did not set the group up, and its recommendations may be politically difficult to follow. As explained, retaining sections 58A and 47A would not mean giving up power to Brussels or making UK companies subject to EU rules. On the contrary, it may be instrumental in the UK courts continuing to decide cases involving European parties. However, European Commission decisions binding UK courts may be unpalatable to those who do not appreciate these subtleties.

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