Written Evidence Submitted to the House of Lords' EU Internal Market Sub-Committee on Brexit: Competition Inquiry
Project Report. Lords Select Committee, London, 2017
10 Pages Posted: 14 Nov 2017
Date Written: September 14, 2017
As a preview, I include my answer to the first question set out in the Brexit competition inquiry.
Question 1: What should competition policy in the UK set out to achieve?
1. UK competition policy should make domestic markets work better for the benefit of a broadly defined range of consumers, but mostly final consumers, i.e., citizens. First, it should accelerate vigorous competition enforcement against anti-competitive agreements and abuse of dominant and, foremost, oligopolistic market positions; and it should deal with potentially harmful mergers that have an impact on UK markets. Second, it should resist the temptation to govern markets through self-inflicted harmful protectionist measures, such as state aid or domestic subsidies favouring domestic producers and such like.
2. The ideal scenario following the UK’s departure would be to maintain the current status quo in terms of UK competition policy: (i) driving economic growth through affordable prices for high quality and innovative products and/or services and (ii) becoming better enforcers of competition laws, namely, the UK Competition Act 1998 and the Enterprise Act 2002, as amended by the Enterprise and Regulatory Reform Act 2013. I believe that an industrial strategy that attempts to keep a handful of failing businesses alive or, indeed, active in the UK through the issuance of comfort letters, potentially discriminatory subsidies, and financial contributions will all have a negative impact on domestic competition based on an inefficient allocation of resources and, in the long-run, will discourage foreign investment in the UK.
3. In an undesirable scenario of the UK defaulting on World Trade Organization rules, the UK is, nonetheless, bound by the Agreement on Subsidies and Countervailing Measures so that any potential subsidies granted to a domestic enterprise or industry, or group of enterprises or industries, are either prohibited or actionable. I would not engage with further details at this stage, given that I do not know whether there is going to be a trade deal. Suffice it to say that the EU’s official position is that, in the first instance, there will be a withdrawal agreement only, not a trade deal.
Keywords: UK Competition Law, Brexit Inquiry, Competition Policy
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