Concerns have been raised several times since 2016, but the finalisation of the Brexit deal in the last days of December clarified the authority's future role and confirmed the end of the ‘one stop shop’, meaning mergers can now be subject to review by both the CMA and the European Commission.
"Significant changes" are on the horizon for the application of antitrust and merger control rules in the UK, and there are calls for continued cooperation with Europe and a boost for the CMA's resources as it adjusts to its new role.
Those were the conclusions of Virna Rizzo and Jordan Le Gallo, lawyers at Cohen Amir-Aslani a member of Globalaw.
Writing for Capacity, they said: "With regard to the competitiveness of the telecom actors, we believe that the CMA, in addition to its role as regulator of British competition, will promote British players in future operations, which could lead to distortions of decisions with the European Commission.
"This situation would be disastrous for the interests of the European competition (in the broad sense) against American and Chinese competitors. The cooperation between the CMA and the EUCR is therefore fundamental."
They continued: "Indeed, they should never forget that while the divorce is finalised, both parents shall always think about the interests of their children."
Mergers and divestments
UK competition rules will likely diverge from EU competition law in the near future, but parallel merger reviews for any strategic deal that raises competition concerns, are "unlikely to be straightforward" Rizzo and Le Gallo explained.
"It also introduces the prospect of acquisitions being cleared by one regulator but blocked by another."
They continued: "Businesses carrying out a merger or acquisition will have to proceed before the CMA and the European Commission with two different procedures, two different regulations and two potential risks of sanctions. Even if the UK maintains some of the old competition rules from the pre-Brexit area (but we believe they may diverge further in the future), the CMA is no longer required to follow the interpretation of competition law by the EUCJ nor to ask for questions regarding said interpretation."
Merging parties that need to comply with separate regimes will face additional costs and regulatory burden. They also risk parallel cartel investigations and, given the CMA has intrusive powers to reverse the effects of completed mergers which took place prior to UK clearance, it could force divestments.
It's bad news for the industry and will increase workloads at the authority.
Rizzo and Le Gallo said: "In order to avoid the risk of a forced divestment and the heavy costs associated with that, most buyers will notify the CMA if there is any risk for the merger to give rise to serious competition concerns. We can therefore reasonably expect Brexit to have a considerable adverse effect on the CMA, which is likely to need substantial additional resources in order to deal with its increased case load."
For its part, the CMA has said on its website that it has been "preparing for some time for the end of the transition period", by building capabilities and closely tracking cases that could land on its desk.
In a piece published last month, it said: "The pre-notification discussions that precede formal investigations have been ongoing with a number of merging parties for several months. Now that the transition period has ended, more formal investigatory steps will begin as those cases progress. The CMA has, for example, already issued an invitation to comment in relation to the Nvidia/ARM transaction."
The CMA currently has three open merger enquiries in the telecommunications sector: Liberty Global plc / Telefónica S.A.; Sinch Holding AB / SAP Digital Interconnect Unit from SAP SE; and Cellnex UK Limited / Arqiva Services Limited.
There are two non-merger cases listed under telecommunications: a ‘loyalty penalty’ super-complaint for customers who stay with the same connectivity provider; and alleged breaches of consumer law in the anti-virus software sector.
In the electronics sector, CMA has a enquiries open on Facebook, Inc / Giphy, Inc and NVIDIA/Arm.
The CMA's problems don't end there. Freedom of information documents published by Bloomberg this week, show that in the past two years the CMA has been hit by 150 personal data breaches, comprising 81 cases of unauthorised disclosure and 40 missing devices.
You can read the full piece by Virna Rizzo and Jordan Le Gallo here and there will be more on the impact of Brexit on telecoms and tech in the next issue of Capacity magazine.
