Impasse at the border - reports that EU closes off digital policy coordination with the UK government over Northern Ireland Protocol disagreements

In a potential blow to international cooperation on the regulation of digital markets, it has been reported that the European Commission is no longer cooperating with the UK government on various aspects of digital regulation, such as tackling alleged abuses of dominance or anticompetitive agreements of Big Tech players, and data protection issues.

UK antitrust digital regulation falling behind 

In June, EU legislators reached agreement on the Digital Markets Act (DMA), which aims to more tightly regulate the activities of so-called “gatekeepers” that hold “entrenched and durable positions” in the digital economy. 

Meanwhile as our recent post, "Has the UK Digital Markets Unit regime become a damp squib?", highlighted, UK digital market regulation risks falling behind its international counterparts, and particularly the EU, after proposals for the CMA's Digital Market Unit (DMU) have been watered down and the UK government has delayed placing it on a statutory footing - as appetite to legislate appears to have waned ahead of the next general election. 

Cooperation on ice 

This reported non-cooperation policy (which has not been confirmed or commented on officially by either the European Commission or the UK government’s Department Digital, Culture, Media and Sport), is believed to prevent EU officials from discussing and sharing information with UK officials (such as CMA personnel) on digital policy issues and live antitrust investigations. 

Politico has reported (citing several unnamed EU officials) that the EU's position was adopted earlier this year in protest over what it perceives to be the UK’s lack of compliance with the post-Brexit trade deal, particularly in regard to the UK’s stance on the Northern Ireland Protocol. This followed outgoing UK Prime Minister Boris Johnson signaling that those parts of the Brexit agreement governing the movement of goods across the Northern Ireland border, such as checks and customs arrangements on goods, were no longer workable. 

Going one step further, earlier this month, the UK’s House of Commons passed the Northern Ireland Protocol Bill which would effectively give the UK government the power to unilaterally row back on parts of the Brexit deal. The Bill is among one of many issues that is subject to ongoing legal action launched by the European Commission.

A significant shift

This development marks a significant shift from the sentiments of the early post-Brexit days – when the CMA’s EU Exit Guidance (published in December 2020) talked of its wish to continue “close engagement and cooperation with other competition and consumer agencies in the EU”.

The FT reported in July 2021 that “Brussels and the UK are planning to work more closely together on antitrust enforcement through sharing information and investigations”. Even as recently as June 2022, the CMA’s interim CEO Sarah Cardell said that, in order to maximise its impact, the CMA “must work intelligently and collaboratively with partner agencies both domestically, for example through the DRCF, and internationally, especially given the global reach of so much of our work.”

Widening the UK - EU gap on digital

The implications of this policy are potentially far-reaching and threaten to widen the gap between the digital market regimes of the EU and the UK, particularly as the EU continues to press ahead with implementing the DMA, which is due to come into force in Spring 2023, and other key pieces of tech regulation including the Digital Services Act. 

Although it is understood that officials are still engaging in “off-the-record” conversations, a lack of official dialogue and strategic planning on digital policy runs increases the risk of divergence in regulating what are often inherently global markets. This makes for an even more challenging regulatory landscape for companies in the tech sector to navigate.