Commenting on the day the surprise merger between Tesco and Booker was announced and the parties' confidence that they will obtain merger clearance from the CMA, the Grocer reports:

"Not everyone is as convinced the deal will sail through the competition process quite so smoothly. Independent competition solicitor Vivienne Robinson said the takeover will be the biggest case the CMA looks at this year.

""The CMA will examine if Booker does indeed have a decisive influence over the stores and to what degree any contractual arrangements give it control over the sites and what they stock,” she added.

""What regulators will be particularly concerned about is Tesco taking control of the supply chain to its downstream competitors in the smaller grocery store end of the market. It will ask what the implications are of Tesco being the distribution chain supplier to those stores and whether they could raise prices.”"

In competition law terms, many businesses would benefit from a UK exit from the EU:
  • The EU Commission could no longer conduct dawn raids on companies in the UK.
  • There would be some limited freedom to adopt clauses in contracts that are currently banned by the EU.
  • There would be less risk of class action claims in the UK courts for damages becauses EU competition decisions and law would no longer bind the UK courts (provided the UK does not join the EEA).
On the other hand, some things would not change with an exit:
  • UK competition law is largely based on EU competition law legislation and is unlikely to change much if the UK exits. Over time, there may be some divergence.
  • UK businesses which sell goods or services in the EU will continue to be bound by EU competition law. As now, EU competition law may apply if there is cross-border trade with EU countries (i.e., the issue of membership of the EU is irrelevant).
Assuming the UK did not join the EEA afterwards, the downside of an EU exit would be:
  • The UK government would no longer influence competition decisions. However, realistically, the UK only has limited influence at the moment anyway. Influence in Europe will continue to be mainly through lobbying.
  • Cartels and breaches of the rules involving cross-border trade with the EU might be subject to investigation by both the EU Commission and the CMA, which might result in two fines. At the moment, if the Commission investigates, the CMA cannot.
  • For very large companies with turnover that hits the EU’s (very high) merger control thresholds, their mergers would still need a clearance in the EU. However, post-exit, they might also need a separate clearance in the UK. Currently, it is one or the other but not both. This would add to transaction costs.
Vivienne is quoted in The Grocer magazine on the likelihood of J. Sainsbury plc's acquisition of Argos being cleared by the Competition and Markets Authority in its forthcoming Phase 1 investigation. The transaction does not raise major competition issues and should be cleared without any requirement for the parties to agree to exclude any Argos stores from the deal.

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