Monthly Archives: March 2021

On the 4 March 2021, the UKs Financial Conduct Authority (FCA) updated its website with further guidance on the Temporary Permissions Regime (TPR), which came into force at the end of the transition period on 31 December 2020. The guidance is relevant for EU incoming firms that made an application under the TPR in 2020 to continue operating on a cross-border basis in the UK and who are currently carrying out their UK business or marketing on this basis.

As detailed in our previous note from November 2020, the UK established the TPR to enable firms and funds that relied on passporting into the UK under European legislation, to continue operating in the UK post-Brexit, providing those firms with limited temporary relief to operate without being authorised by the FCA.

The FCA is now contacting firms in the TPR and providing confirmation of the firms landing slot (i.e., the opening and closing dates) during which firms have, to either apply for a UK authorisation or cancel their temporary permission and then cease any regulated activity in the UK.

Application for full authorisation

Firms that have received a landing slot are advised to review the FCAs guidance on landing slots for information on next steps for applications for FCA authorisation.

The FCA emphasises that applications for authorisation should not be submitted before the opening date and should be submitted no later than the closing date and specifies that the FCA reserves its right to disregard and potentially destroy applications received outside of the landing slot and in addition, may cancel the applicants temporary permission, if applications are not received in time.

Cancelling temporary permission

Firms that choose not to submit an application and decide to cancel their temporary permission are provided with guidance on cancelling a temporary permission.

Firms should consider their circumstances when ceasing activities in the UK, as they might be eligible to move into the supervised run-off (SRO) mechanism, which is part of theFinancial Services Contracts Regime, in situations where there is remaining UK business to run off.

Supervision under the TPR

The FCAs third guidance explains how firms will continue to be supervised, as long as they are operating under the TPR. In most instances, firms in the TPR are supervised in the same way as other authorised firms, though matters that were reserved to the home state regulator before the end of the transition period, can be fulfilled by substituted compliance and may therefore not require reporting to the FCA.

Next steps

Firms in the TPR should now start to assess their UK strategy ahead of being provided with their landing slots and should review whether they require a UK authorisation or whether there are alternative approaches available, which will ensure they can serve UK clients or market their products to UK investors.

Where FCA authorisation is likely, firms should bear in mind timing to prepare the application and then be granted the authorisation can take between 6-9 months with delays currently expected due to volume of applications and challenges to processing times due to Covid-19. If firms require additional time to prepare, the FCA may grant a change of the opening and/or closing date.

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Brexit: FCA guidance for firms operating in the UK under the Temporary Permissions Regime - JD Supra

Following Brexit, EU competition law continued to apply in the United Kingdom until 31 December 2020 as part of an agreed Transition Period. In this LawFlash, we summarise how the end of the Transition Period is likely to impact the enforcement of competition law in the United Kingdom going forward, the extent to which UK competition agencies and courts are free to diverge from EU principles and case law, and our initial thoughts on the future landscape of competition law in the United Kingdom.

The United Kingdom (UK) exited the European Union (EU) on 31 January 2020. Thereafter until 11:00 pm on 31 December 2020, there was a Transition Period. Pursuant to the UK-EU Withdrawal Agreement 2019, the United Kingdom continued to apply and be subject to EU competition law throughout the Transition Period.

On 24 December 2020, the EU and the UK reached a Trade and Cooperation Agreement (TCA), which defines the trading relationship between the EU and the UK following the end of the Transition Period, including the arrangements in relation to competition law and antitrust.

It is fair to say that the TCA does not set out much detail with regard to competition law enforcement. Further information in that regard is to be found in the UK Withdrawal Agreement,[1] the UK Withdrawal Act,[2] the Competition SI[3], and the Implementation SI.[4]

In this note we set out the main takeaways on the effect of Brexit on competition law, together with our initial observations as a result of our experience with regard to a number of ongoing investigations by the UK antitrust authority, the Competition and Markets Authority (CMA).

Article 101 of the Treaty on the Functioning of the European Union (TFEU), like its functional equivalent, Chapter I of the UK Competition Act 1998 (CA98), prohibits arrangements between businesses that have as their object or effect the restriction, distortion, or prevention of competition between EU member states (or in the United Kingdom in the case of Chapter I CA98), unless they can be shown to give rise to benefits to consumers that outweigh any restrictions of competition. Such anticompetitive arrangements can arise directly or indirectly between competitors, and/or between companies at different levels of the supply chain, such as between a supplier and its customers.

Article 102 TFEU, like Chapter II CA98, prohibits the abuse of a dominant position. Dominance is generally defined as a firms ability to behave independently of its competitors, customers, suppliers and, ultimately, final consumers. In broad terms, a business may be considered to have market dominance if it has a market share of around 40% or more in a relevant market. While dominance is not an infringement, it is prohibited for a firm to abuse its dominance. Companies found to have breached Articles 101 or 102 TFEU and/or Chapter I or Chapter II CA98 are liable for fines of up to 10% of their worldwide group turnover, while in the UK individuals may incur personal liability which may be civil or criminal in nature.[5]

The TCA aims to provide a level playing field in the way that UK and EU businesses are regulated. In respect of competition law, the TCA enshrines a commitment by the UK and the EU to maintain effective competition laws that will address anticompetitive agreements and abuses of a dominant position, and to ensure the enforcement of competition law by independent authorities in a transparent, fair and non-discriminatory manner.

The TCA also emphasises the importance of co-operation with regard to developments in competition policy and enforcement activities. In practice, this means that the European Commission (Commission) and the national competition authorities of EU member states may exchange information with the CMA to the extent this is permitted by law, and vice versa. This is important since, for example, the Commission will no longer have jurisdiction to conduct dawn raids in the UK or to request the CMA to do so on its behalf with regard to suspected Article 101 or Article 102 infringements.

Since 1 January 2021, the UK antitrust agencies, the CMA and concurrent regulators, are no longer able to investigate and enforce Article 101 and Article 102 TFEU.

That being said, Articles 101 and 102 will continue to apply to conduct by UK firms that is implemented or produces effects within the EU, which may also include UK conduct to the extent that it produces effects within the EU, as has traditionally been the case with regard to third states (that is, non-EU member states). Since 1 January 2021, such conduct will be investigated and enforced by the Commission or the national competition authorities of EU member states.

Furthermore, the Commission will continue to have competence over the UK elements of Continued Competence Cases, that is, cases that were initiated but not concluded by the Commission before the end of the Transition Period.

In summary, broadly the following will apply:

We expect the CMA to be very active in antitrust enforcement following the UKs break from the EU. Whilst in the past the CMA (like all national EU antitrust agencies) had to take the back seat where the Commission took up an investigation, it is now able to run an investigation under UK competition law in parallel with an investigation by the Commission and to focus on the UK market specifically.

Parallel investigations will inevitably give rise to significant additional costs, delays, and complexity for businesses, despite the EUs and UKs commitment in the TCA that their respective competition authorities will cooperate and coordinate where this is permissible by law. The risk of parallel investigations will require firms to think about their strategic options. In relation to leniency applications, it should be borne in mind that the protection afforded by applications to the Commission will not extend to fines, prosecution, or disqualification proceedings in relation to a UK investigation and vice versa.

The CMA is also free to pursue its own agenda as it seeks to lead the way in terms of key antitrust reforms, including in the digital sector. The impetus for digital reform in the UK has resulted in the CMA proposing, among other things, the establishment of an enforceable code of conduct to govern the behaviour of platforms that are designated as having Strategic Market Status (a new and novel concept) and novel approaches with regard to algorithms (see our recent CMA Paper and Consultation on Impact of Algorithms on Competition and Consumer Welfare and below). In this context, we may also see the CMA leaving behind traditional enforcement methods and making more use of market tools to intervene against big tech companies.

Prior to the end of the Transition Period, Section 60 CA98 provided that UK competition authorities and courts must, as far as possible, interpret UK competition law in a manner that is consistent with EU competition law, including the case law of the European courts, and must have regard to any decision or statement of the Commission.

Section 60 CA98 has now been revoked and replaced with a new Section 60A. Section 60A applies to all cases from 31 December 2020 onwards, including ongoing CMA investigations and court cases that were live on 31 December 2020 relating to conduct before 1 January 2021.

The CMA, concurrent regulators and the English courts are no longer required to interpret UK competition law consistently with the case law of the European Court, which is no longer binding. New EU case law (reached after 31 December 2020) is not binding on the UK antitrust agencies or the English courts.

However, Section 60A CA98 provides that the UK antitrust agencies and the English courts are required to ensure consistency with EU competition case law and the Commissions decisions reached prior to 1 January 2021, unless it is considered to be appropriate not to do so in the light of certain specified circumstances. In paragraph 4.22 of the CMA guidance on its Functions after the End of the Transition Period (CMA125) of 20 December 2020 (Guidance), the CMA points to Section 60A CA98 which sets out that such a departure from established EU case law may be appropriate in the light of the following factors:

In January 2021, the CMA began contacting companies that were under investigation by the CMA to notify them that, following the end of the Transition Period, EU law no longer applies in the UK and the CMA will continue its investigation of suspected infringements on the basis of UK competition law in relation to conduct that took place both before and after 31 December 2020. In its approaches, the CMA has been keen to note that, whilst Section 60A CA98 requires the CMA to act with a view to ensuring that there is no inconsistency with pre-existing EU case law and principles, the CMA is nonetheless allowed to depart from such case law and principles where it considers that it is appropriate to do so.

This may be an indication that the CMA is setting the ground for a divergence from established EU case law and decisional precedent even with regard to conduct and investigations preceding 1 January 2021, and that it will seek to rely on Section 60A CA98 in order to do so.

For example, in light of statements by the CMA to date, it is possible the CMA will seek to diverge from EU precedent with regard to procedure and rights of defence. It is also possible that the CMA will seek to diverge from established EU precedent with regard to the substantive analysis of anticompetitive agreements or abuse of dominance. If that were to be the case, we would expect a very litigious future, with companies appealing CMA decisions. Such an approach by the CMA would be in line with its increasing reliance in a number of ongoing investigations on its so-called margin of appreciation as a means of moving away from established case law and from established economic and legal principles that may run counter to the CMAs analysis. Furthermore, since the English courts will no longer have the ability to refer questions of interpretation of EU law to the European courts (which is currently a key component driving consistency in competition law interpretation), a gradual divergence over time becomes an even more likely prospect.

As we discussed in our recent LawFlash on the CMA Paper and Consultation on Impact of Algorithms on Competition and Consumer Welfare, the CMA may have given us a flavour of things to come in its recent Algorithms research paper. For example, with regard to abusive conduct, in a departure from established competition law, the CMA suggests that a firm may abuse its dominance unknowingly and unintentionally. With regard to anticompetitive agreements, the CMA puts forward a novel proposition on what it describes as autonomous tacit collusion, where complex and sophisticated pricing algorithms learn independently to tacitly collude, without having been instructed to suppress competition by human operators. The CMA says that this could give rise to a situation in which firms unwittingly and unintentionally collude on the market. The CMAs suggestion with regard to so-called autonomous tacit collusion is a material departure from the established Chapter I CA98/ Article 101 TFEU case law and give rise to significant questions on the meaning of collusion. As we said in our LawFlash, a departure from the requirement to show a meeting of minds in order to find the existence of anticompetitive collusion would turn competition law on its head.

[5] Company directors may be disqualified from serving as a director for a period of up to 15 years, whilst the participation in a hardcore criminal cartel (namely, bid-rigging, price fixing, market or customer sharing, or limitation of output or supply) may also lead to the imposition of a five-year prison sentence, unlimited fines, or both for the individual.

[6] As described below, claimants will be able to bring actions, including damages claims in the English courts with regard to Commission infringement decisions issued reached before 1 January 2021.

[7] However, while adherence to any commitments entered into by parties to the investigation will continue to be monitored by the Commission, any UK aspects of their commitments may be transferred to the CMA.

[8] That is, where the Commission issued a Statement of Objections or a request for the parties under investigation to express their interest in engaging in settlement discussions.

[9] As described below, claimants will be able to bring actions, including damages claims in the English courts with regard to Commission infringement decisions that may be reached after 31 December 2020 in respect of Continued Competence Cases (including cases that have not yet exhausted the appeals process).

[10] However, the Commission may transfer the UK aspects of any commitments to the CMA.

[11] The CMA may have been investigating the relevant conduct both under EU and UK competition law.

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The Impact of Brexit on UK Competition Law Cases - JD Supra

Nationalism, independence and the constitution have dominated political debate for years. There is a febrile unease with the status quo and a sneaking but growing suspicion that neighbours are getting things easier, enjoying life a little more. Change is indubitably in the airin England.

The rise of English nationalism, behind and beyond Brexit, is an increasingly potent political force south of the border and, experts suspect, could easily play as pivotal a role in the future of the United Kingdom as Scottish, Welsh or Irish nationalism.

Academic Richard Wyn Jones says English nationalism has two faces: It combines a sense of English identity and a sense that English identity isnt properly recognised within the UK, and a Scottish-focused grievance that England is actually unfairly treated within the UK in some ways.

It combines that focus on England, with a fierce pride in Britains past and a commitment to a particular vision of Britains place in the world, which is a really big role.

That world view was particularly challenged by the perceived intrusion of the European Union in British public life. European membership was seen as undermining the traditional English sense of where sovereignty should reside and how we should be legitimately governed, says Wyn Jones.

So European membership led to a significant backlash, especially amongst those people who feel English. Sstatistically there was a very obvious correlation between how English you felt and how Eurosceptic you were.

This English nationalism threatens the Union in two ways, according to Wyn Jones. It brought about the Brexit referendum, which, through its geographically different results, has led to Scotland and Northern Ireland leaving the EU against the wishes of the majority of its citizens, reviving the cause of Scottish independence after the 2014 referendum defeat. But, after that referendum, English nationalism put completing Brexit above all else.

Wyn Jones, who is director of Cardiff Universitys Wales Governance Centre and Dean of Public Affairs, adds: English Eurosceptics prioritise leaving the EU, and have prioritised leaving the EU, above maintaining the UK Union, which is why we have the situation where there is now an economic border in the Irish sea between Great Britain and Northern Ireland.

That is a very, very obvious example of Brexit being valued above the future of the UK and we know that one of the really striking things about attitudes in England is that the more English you feel the more relaxed you are about the territorial integrity of the state.

In a new book, Englishness: The Political Force Transforming Britain, Wyn Jones and Edinburgh academic Ailsa Henderson examine the impact of English nationalism on the United Kingdom and reveal polling showing a rising number of English voters are relaxed about independence for all.

He said: Actually, there isnt majority support for Northern Ireland remaining in the UK in England, but even in terms of Scotland and Wales there is a significant minority in England, and that significant minority is found amongst those people who feel most English, who are actually quite relaxed about those countries becoming independent.

While English nationalists dont reject Britains nations remaining as one state, they see a future very much on Englands terms.

The vision of what the UK would look like is one where Scotland and Wales remain in the Union, but in Scotlands case with substantially less public spending, with very little voice in terms of the way the UK is run. So, effectively, Scotland would be largely autonomous but largely without influence in terms with the way that the UK is run, that will be fine for the English, but I am not sure it would be fine for the Scots.

The key moment in the rise of English nationalism was the 2015 General Election when, Wyn Jones says, the Conservative Party deliberately played to English voters concerns.

The way they won that election was very, very clearly by raising the bogey of Scottish influence well, you could say SNP influence over a Labour minority government but, as we show in the book, the people involved in putting the campaign together were very, very well aware that they were tapping into deeper English resentment and grievance, it was not just about the SNP.

What they did in 2015 quite deliberately has triggered all kinds of tensions that threaten the future of the UK.

Wyn Jones concludes the future of the United Kingdom is very uncertain, and has doubts about the likely success of any of the strategies currently suggested by unionists to save it, including the recently announced relocation of 1,000 civil service jobs from Whitehall to Scotland.

Britains political landscape has changed, he says, and English nationalism is here to stay.

Theres been a tendency to think of nationalism, national identity, as only being relevant when you think about northern Ireland, or Scotland, or Wales, he says.

Actually what you have got everywhere across the UK is this kind of complicated web of national identities which intersect with values, world views. And, so, if you want to understand British politics, you have to talk about England in a way that is very unfamiliar to us.

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Brexit was put above all else: Experts chart the rise of English nationalism and why it is putting strain on a Union already under stress - The Sunday...

LONDON (ICIS)--Chemicals exports from EU countries to the rest of the world fell in January, in line with overall trade in goods which took a hit from renewed measures to slow down the spread of the pandemic, said Eurostat on Thursday.

Imports of chemicals into the EU took a hit of 16.5%, although the overall volumes of imports were around half of those in exports.

Eurostat also confirmed how the UKs withdrawal from the EUs Single Market on 1 January affected trade in goods between the two areas, in line with figures published by the UKs national statistics body earlier this week.

The EU has traditionally been a net exporter of chemicals, with chemicals output in several countries within the bloc notably Germany being key in the global chemicals trade.

Several EU countries, including Germany or France, were in January under lockdown measures as the pandemic was spreading again; those lockdown measures remain in place, while as of this week Italy has also gone into stricter measures.

Chemicals output also took a hit in January across the 27-country, although overall industrial output managed to keep in the positive, said Eurostat earlier in March.

The fall in chemicals exports was the smallest among chemicals-intensive manufacturing sectors like machinery and vehicles production, which fell more than 12%.

The trade surplus for the EU's chemicals industry widened in January, to 17.1bn, as imports fell by a larger percentage than exports.

BREXIT DEAL IMPACTEurostat also confirmed the sharp fall in UK-EU trade in goods as the Brexit trade deal kicked off on 1 January, mirroring statistics published by the UKs Office for National Statistics (ONS).

The sharp falls, however, should be taking with a pinch of salt, according to analysts, as one month would not be representative, especially as previous stocking and global logistics woes are taken into consideration.

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EU chemicals exports, imports fall in January on renewed lockdowns, Brexit impact - ICIS