Claims of the U.K. entering in to anti-competitive agreements have surfaced following assurances supposedly given to Nissan Motor Company following the recent referendum result for the United Kingdom to leave the European Union – i.e Brexit.
The EU anti-competitive regulator is looking into the allegations in accordance with currently active anti-competitive regulations, like the Treaty on the Functioning of the European Union (TFEU).
Tax barriers
When importing and exporting goods, there can be tax barriers; but being in the EU normally means free movement of goods without extra tax restrictions.
The EU imposes a tariff on car imports of 10 per cent, and as there is a lot of uncertainty surrounding the U.K.’s exit from the EU, it’s difficult to say what trading agreements will end up looking like.
One possibility could see Britain trading with the EU on the World Trade Organisation’s (WTO) terms, which means that they will face the same barriers as WTO members.
Speculations arise
Taking into consideration this uncertainty, there has been speculations that the U.K. government has given the car manufacturers assurances that there will be some compensation if their vehicles are faced with EU tariffs. This in turn could then make the competition between car manufacturers and Nissan unfair.
Nature of the deal
It’s thought that Theresa May gave assurances to Nissan that, even if the U.K. definitely does leave the EU, the automotive industry will remain competitive by stating that the U.K. may be staying in the EU customs union.
These suspicions may be confirmed, as Nissan recently decided to stay in Sunderland, confirming that they will be making two new developments in the North East. It’s arguable that Nissan may not have confirmed such projects if they were not given the assurances by the U.K. government.
But all we can do is speculate until EU antitrust regulators shed some light onto the matter…
No denial
There is no denial between the U.K. government and Nissan about the assurances, but they refused to deny whether a written guarantee was given. When asked about whether there were any letters, the U.K. government said that “all forms of communications” were made.
It seems logical that Nissan would only make development plans if they were given firm guarantees that they would not be affected by Brexit. This line of thought it also supported by Sir Vince Cable, the former business secretary throughout the Coalition government, when he said:
“I find it impossible to believe that they would go ahead without some pretty copper-bottomed promises.”
Competition and Markets Authority input
If the U.K. government are found to have been involved in the anti-competitive agreements, they could also be subject to further investigations, and possible financial penalties from our own domestic regulatory bodies. The Competition and Markets Authority are the regulating body in the U.K. to impose such penalties if any anti-competitive behaviour is deemed to be taking place.
Pressure for explanations
There is pressure mounting over whether the U.K. has made anti-competitive assurances, with the shadow Brexit secretary, Keir Starmer, calling on the government to give full explanations of the deal made between them and Nissan.
By being open and accountable, this may remove any potential suspicions of anti-competitive behaviour; if there hasn’t been any of course.