Coordination across the Channel: The EU & UK conclude technical negotiations on a Competition Cooperation Agreement
The UK’s withdrawal from the European Union has put European competition policy into a rather awkward state. The schism has left EU and UK Competition Law as geographical neighbors and almost identical twins both in legal form and substance. However, they are worlds apart when it comes to their ability of coordination. Before Brexit, and in its capacity as the competition authority for an EU Member State the UK’s Competition and Markets Authority was a member the European Competition Network. It was therefore institutionally and legally embedded in the enforcement of competition law across the entire continent. That included being kept abreast of investigations launched by other National Competition Authorities (NCAs), coordinating and information sharing on investigations, as well as participating in discussions on issues of common interest.Today, that is no-longer the case. CMA, as the NCA of a tier-one country, is no longer a member of ECN and has limited ability to cooperate with the Commission or NCAs in competition investigations. We have seen missteps in a previously harmonious dance between European member states. Perhaps the most notable was when the CMA reached different conclusions than the Commission when it came to the decision of whether Microsoft could buy Activision
. It is a common practice in the EU to sign agreements on competition cooperation with third countries to avoid situations in which peer authorities end up stepping on each other’s feet when investigating investigations with a supranational focus. The EU has already signed agreements with the US and Canada, as well as with Japan, South Korea, and Switzerland. OECD data indicates that bilateral cooperation agreements are increasing between competition agencies. Collusion might be illegal for firms, but it’s certainly not for competition authorities (at least, with a cooperation agreement)!In that context, in October 2024, the EU and the UK concluded technical negotiations on their own bilateral Cooperation Agreement (EU press release
, UK press release), which should enter into force in 2025, after ratification by EU and UK institutions. This agreement would restore the pre-Brexit level of cooperation between CMA and EU Authorities. It’s tempting to dismiss this Agreement as insignificant; the end of a temporary lack of coordination in the competition policy. First, the Agreement has a great deal of importance due to the importance of coordination among competition authorities. This is especially true since the CMA no longer subordinates to the Commission within the EU hierarchy of competition law and now has a broader scope. Second, the landscape of competition policy in 2024 will be vastly different than it was before Brexit. The geopolitical environment in which competition policy is conducted has also changed dramatically, especially after the recent reelection of US president Donald Trump. Cooperation where it counts
Brexit means that the CMA’s competence has been expanded to include tasks previously performed by the EU Commission while the UK was a member state. The CMA now has the responsibility to review mergers that were previously reviewed by the EUMR under its “one-stop shop” approach. It also investigates competition law violations which would have previously been handled by Commission. Brexit has meant that certain investigations are now being conducted in both jurisdictions simultaneously, whereas previously they were only done by the CMA or the Commission. Multinational corporations are often scrutinized in multiple jurisdictions simultaneously. It can be a major headache for both the competition authorities as well as the firms involved if the investigations reach different conclusions. It is acceptable for different competition authorities, for example, to reach different conclusions if their laws dictate different outcomes based on the same facts or due to the inherent openness in competition law
. However, cooperation agreements are nevertheless vital to minimise accidental disharmony, as well as to ensure that if there is reasonable disagreement, then it can be managed appropriately.
The recent Microsoft/Activision merger serves as a prime example of the difficulties which can arise from the lack of coordination between competition authorities. CMA blocked the merger
in April 2023 after its phase 2 investigation was completed, only for the Commission, around a month later to approve the same deal
, subject to conditions. Microsoft proposed a restructured deal (basically the same as the original, but the rights to stream Activision games on the cloud outside the EEA were sold to Activision competitor Ubisoft). The CMA approved the restructured merger deal in September 2023 at the phase 1 review stage. This brought the UK authority in line with the EU counterpart. The CMA gave no explanation as to why the restructured merger was allowed, but the original deal was blocked. We will not comment here on the merits, but we do want to note that the CMA’s reversal was not as graceful as could have been. This episode highlights the importance of collaboration between competition authorities. The proposed Cooperation Agreement does not allow EU authorities and UK authorities to exchange sensitive commercial information without consent from those involved. However, it does allow them coordinate on everything else related to competition investigations. These include the cases that are being investigated and the strategy the authority is using for the case. Geopolitical Concerns
The Agreement and cooperation between European Competition Authorities is of particular importance in light of current geopolitical developments. The Agreement and cooperation between European competition authorities is all the more important given current geopolitical events. The EU has expressed concern about the dominance of US companies on the continent. Cooperation between the CMA, and the EU Commission could help to address these issues. NCAs such as the CMA may not have the geopolitical power to enforce competition laws against large businesses with headquarters on other continents. Coordinating in terms of approach, assessment, and perhaps decisions, may render enforcement against such undertakings more successful, as it could reduce the chance of conflicting decisions, and create stronger, unified policy statements.Posing a united front should not be difficult for the EU and UK competition agencies, since their competition regimes are much alike. The EU and UK competition regimes share many similarities, including their polycentric goals and normative assumptions. This is largely because they have intertwined histories. The current approaches to the competition law in both jurisdictions are also very similar. Both authorities have shown an increased integration in their decisions of environmental considerations as a policy. This is also highlighted in the Draghi report and CMA’s Focus Areas for 2024-2025. Both have shown a greater focus on digital markets, the EU passing the Digital Markets Act and UK recently passing the Digital Markets, Competition, and Consumers Act. Both agencies have conducted investigations in this sector. As mentioned above, investigations have often concerned the same market player, such as Amazon (the initial UK press release
mentioned that the CMA would ‘seek to liaise’ with the EU Commission, but this was not mentioned in the UK or EU’s decisions to impose commitments), Meta (in which case the UK imposed commitments
and the EU a fine
), and Apple (the UK closed the case
for reasons relating to prioritisation, and the EU applied commitments on the undertaking).
In terms of industrial policy – an ever more important concern – both jurisdictions have an ambition to grow their digital sectors and make them more competitive globally: the 2024 Draghi report on the future of EU competitiveness mentions this point on several occasions, as does the UK’s recent “Invest 2035: The UK’s Modern Industrial Strategy” report. The Draghi report, and a speech given by CMA CEO Sarah Cardell in response to the Invest 2035 Report, make it clear that in the future, both agencies could play a more proactive role in supporting industrial policy goals. The EU and UK have conducted parallel investigations on 11 mergers since Brexit. Five ended with divergent results. While a cooperation agreement does not entail a complete harmonisation of competition policy across the Channel – nor is such result necessarily a positive outcome – it would increase the number of stronger, unified decisions, which could support the goals pursued by both jurisdictions.Aside from avoiding conflicting approaches, coordination can also help agencies optimise their approach to enforcement, as outlined in the OECD 2014 Recommendation of the Council Concerning International Co-operation on Competition Investigations and Proceedings. Sharing theories of harm could save time and resources for agencies, even if they don’t have the authority to share confidential information. The agencies can still share confidential information, if the parties to an investigation agree to allow them to do so. In the past, agency cooperation has resulted in quicker and more coordinated decisions. Cooperation between the Australian ACCC (regarding Pfizer Nutrition’s acquisition by Nestle in 2012), and Pakistan’s CCP did not involve the sharing of confidential data, as there were no waivers. The authorities reported, however, that the high-level collaboration between them in reviewing economic concentration facilitated understanding market structures and identifying theories. Similarly, cooperation between the EU Commission and the US DoJ in the Cisco/Tandberg case (2010) allowed both agencies to save on investigation efforts; as the US DoJ had already begun its investigation by the time the EU started its own investigation, the latter was able to benefit from the conclusions of the former, and both agencies issued similar decisions at the same time. Exchanging opinions on theories of harm could thus potentially save resources for the EU and UK authorities, given the overlaps between the two jurisdictions’ approaches.Inter-agency cooperation can also be beneficial in terms of mutual learning. While the EU is interested in introducing a new market investigation tool, namely the New Competition Tool, the UK already has similar powers since the 2013 amendments to the Enterprise Act 2002. While the EU Commission also has expertise in carrying out sector inquiries and devising remedies, the CMA’s specific experience may be beneficial to the former.
ConclusionAgency cooperation presents a number of advantages – all of which are augmented by current geopolitical concerns and the never-ceasing effort to ensure a level playing field, both nationally and globally. We have argued that this proposed Agreement is a significant development, given the new role the CMA will play post-Brexit and the increasingly challenging geopolitical climate. The impact of the agreement can only be measured after its implementation, which is scheduled for 2025. Its success will depend largely on the willingness of each agency to share knowledge and expertise as well as their proactive decision to cooperate in cases of shared interests. It all comes down to their willingness and ability to create a positive vision of European competition law post Brexit, which acknowledges similarities in goals and policies between their two regimes. All relations with the company ended in March 2022.
