Committee’s assessment |
Legally important |
Cleared from scrutiny; further information requested |
|
Document details |
Proposal for a Directive to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market |
Legal base |
Articles 103 and 114 TFEU; ordinary legislative procedure; QMV |
Department |
Business, Energy and Industrial Strategy |
Document Number |
(38624), 7621/17 + ADDs 1–4, COM(17)142/2 |
22.1The Commission’s proposals seek to ensure that all National Competition Authorities in the EU have a core set of powers at their disposal, as well as guaranteed independence from political or other influence.
22.2The Government tells us that the Competition and Markets Authority (CMA) and concurrent competition regulators in the UK already have most of the powers set out in the directive, and that the UK is expected to be largely compliant with the proposed directive.
22.3However, the Minister for Small Business, Consumers and Corporate Responsibility (Margot James) raises concerns relating to the Commission’s proposals on leniency and limitations into the CMA’s discretion to grant immunity.
22.4The Minister notes that given that the directive is expected to be adopted in spring 2019, followed by a two year transposition period, the Government did not expect to have to implement the proposal.
22.5We asked the Government whether there were any proposals in the directive that could usefully be incorporated into UK competition legislation in due course. We also asked which aspects of the mutual assistance provisions in the Directive the Government might find particularly useful post-Brexit.
22.6On the proposals on leniency, we asked whether the introduction of specific rules might negatively affect the efficacy of UK competition authorities in situations where UK and EU NCAs are dealing with the same matter.
22.7Finally, given the Government’s expectation that the timing of the proposal will mean that the UK will not be required to implement the directive, we asked whether it might not be counter-productive for the UK to raise its concerns during negotiations.
22.8The Minister in her response provides examples of provisions relating to the imposition of fines where the directive would confer wider powers. These relate to powers to fine for breach of commitments or interim measures, and the liability of members of an insolvent association. The Minister informs us that while introducing such provisions is not a legislative priority for the Government, it will consider whether similar provisions could be made as part of a wider Bill, should the opportunity present itself.
22.9Provisions for mutual assistance will be particularly important for the UK’s national competition authorities in future, and the Minister tells us that the provisions set out in the directive could be useful to the CMA. She adds that the Government is considering such provisions as part of its approach to the negotiations with the EU on future cooperation, as well as the costs and benefits of different forms of future cooperation.
22.10The Commission’s proposals on leniency have raised particular concerns from the CMA. The Minister observes that the effect of specific EU rules will “depend on the nature of the final rules on leniency at EU level and any final agreement between the UK and the EU on future cooperation”. It is possible that differences may arise “in cases during a period of separation from the EU regime where a leniency application might have been made at the EU level before the date of exit but not the UK”. However, the Minister believes that the CMA’s current approach, which is to encourage leniency applicants to file in the UK in addition to other EU jurisdictions where there is conduct that relates to the UK market, will be of particular value following the UK’s departure from the EU.
22.11On the UK’s active participation in the negotiations on this directive, even though it does not expect to be required to implement it, the Minister states the UK’s significant experience in this area will be of value to those EU Member States that share the same concerns (e.g. on leniency), as the UK, and that the UK’s views, which are given with “the spirit of ensuring the best law possible”, are “still valued by other Member States and the European Commission”.
22.12Although this Directive is not expected to be adopted until after the UK’s withdrawal from the EU, it is likely to have implications for the enforcement of domestic competition laws. For instance, if the UK is not able to access information from other EU competition authorities, or if there are significant differences in approaches to leniency, the UK’s ability to deal effectively with competition issues relating to businesses with cross-border structures could be compromised.
22.13We note the Minister’s statement that the Government is presently developing its position on the modalities for future cooperation with the EU in this area. Given that the Minister has provided detailed responses to the questions posed by the previous Committee, we are content to release this document from scrutiny. We ask, however, that the Minister update us in due course on the progress and outcome of negotiations on this proposal, particularly with regard to those issues highlighted as of relevance to the UK.
22.14We draw this Report and the Minister’s response to the attention of the BEIS Committee, which may wish to examine in due course the Government’s plans for ensuring effective competition enforcement cooperation between UK competition authorities and EU national competition authorities.
Proposal for a Directive to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market: (38624), 7621/17 + ADDs 1– 4, COM(17) 142/2.
22.15Our earlier Report listed at the end of this chapter provides a detailed overview of the proposed Directive and the Government’s position.
22.16On the question as to whether there are proposals in the directive that the Government believes could be usefully incorporated into UK competition legislation in due course, the Minister notes the following:
22.17The Minister states that introducing the above provisions is not currently a legislative priority for the Government, and that she does not believe that such provisions justify a standalone Bill. The Minister adds that “the Government will consider whether similar provisions could be made as part of a wider Bill, if an appropriate legislative opportunity presents itself”.
22.18On mutual assistance, the Minister responds that
“similar provisions to those in Articles 23,24 and 25 of the directive could be useful in cooperation between the CMA in the UK and competition authorities both inside and outside the EU after EU exit.”
22.19The Minister highlights the following powers:
22.20The Minister states that while negotiations with the EU “are currently focussed on separation issues such as how to deal with competition cases that are live at the point the UK exits from the EU”, the Government is also in the process of developing its position on future cooperation. Provisions such as those above “are under consideration as part of that process.” The Minister adds that “the Government is giving consideration to the costs and benefits for the UK of different forms of future cooperation with the EU”.
22.21On the issue of leniency, the Minister responds that the effect of specific EU rules on UK investigations where the CMA and EU NCAs are dealing with the same matter would “depend on the nature of the final rules of leniency at EU level and any final agreement between the UK and the EU on future cooperation”.
22.22In particular, the Government believes that issues are most likely to arise “during a period of separation from the EU regime where a leniency application might have been made at the EU level before the date of exit but not in the UK”. However, since the directive’s transposition date is stated as being after the date of the UK’s withdrawal from the EU, the Minister does not believe that this will be a particular concern.
22.23In addition, the Minister adds that “the CMA already encourages leniency applicants to file in the UK as well as the EU where there is conduct that relates to the UK market and this will be increasingly important once the UK has left the EU”.
22.24Finally, on the utility of raising UK concerns during negotiations when the Government does not expect to be required to implement the directive, the Minister notes that “a number of other EU Member States also have concerns about the proposals in the directive on leniency. The UK and the CMA have significant experience in this area and in my view the UK’s opinions, which are given in the spirit of ensuring the best law possible, are still valued by other Member States and the European Commission”.
Fortieth Report HC 71—xxxvii (2016–17), chapter 9 (25 April 2017).
1 December 2017