After a tumultuous few days in the UK Parliament, it has become clear that the three most likely options when it comes to the UK leaving the EU are:
1. Option A: The UK leaves without a deal either on 12 April 2019 or, more likely around 22 May 2019 if the Prime Minister succeeds in agreeing an extension with the EU
2. Option B: The UK leaves on the terms of the current draft of the Withdrawal Agreement on 22 May 2019 and the Transition Period runs until 31 December 2020, with the possibility of an extension
3. Option C: The UK and EU agree an extension (length not yet agreed) and the terms on which the UK leave the EU are renegotiated
The likelihood of any one of these options is uncertain but businesses should be prepared for all eventualities.
For businesses: (i) already in the midst of an EU merger control review; or (ii) whose deal meets EU thresholds (on the basis of pre- or post-Brexit EU turnover) and a binding agreement has already been signed, or a public bid has been announced, Option A could result in a UK merger review (as well as an EU review) if the deal also meets the UK thresholds. In these cases, unless the Commission has already issued its decision before the UK’s departure, the parties should start to engage with the CMA to determine whether they should make a UK filing. A UK filing is most likely to be advisable where the deal: (i) may result in potential UK competition concerns; (ii) involves critical national infrastructure; and/or (iii) has a high political/public profile. For Options B and C, the outcome is simpler for mergers already under the Commission’s microscope – the status quo prevails until the UK leaves the EU – so parties can continue with their EU process.
For businesses contemplating an EU filing, waiting until after 22 May 2019 to sign (for a private deal) or announce (for a public bid) could avoid the possibility of the dual filing requirements (if the deal triggers the UK thresholds and the EU thresholds without UK turnover – see above) if the Withdrawal Agreement is ratified. If it is not, and there is a no-deal scenario, parties may need to look at filing with the EU and/or EU Member States and the UK, depending on the deal and whether it meets the relevant thresholds. If parties chose to delay filing, under Options B and C, nothing would change for the immediate future – if the transaction triggered the EU thresholds, it would need to be filed with the Commission as it does now. Parties would then need to reassess the position when the future relationship provisions became clear(er).
If the Commission has cleared a deal, the CMA will respect the EU’s clearance decision and will not open a second investigation, unless the EU clearance is subsequently overturned on appeal.
Please get in touch with Iona Crawford, Alex Potter or Martin McElwee if you would like more information on any of these scenarios, including suggested next steps. Our Brexit podcast (found here) goes into more detail on Brexit and merger control, while also covering cartels and State aid.