So long to EU?

Photo by Olia Nayda on Unsplash

Just when the UK Government thought it was coming out of an area of turbulence with all things EU related, the Europeans strike back.

Things were going splendidly: the European Union (Withdrawal Agreement) Bill had passed through the Commons with a “stonking” majority. Only the House of Lords to go and Brexit will be achieved by 31 January 2020.

Then the consequences of the Flybe affair hit the fan. Flybe is a British, regional airline and is in financial difficulty (again). The UK Government backed an emergency rescue plan which involved a tax break for the airline i.e. a temporary exemption from Air Passenger Duty.

Good old fashioned state interventionism? Yes, but legally problematic in today’s world of competitive markets. Lest we forget, the UK remains an EU member state until 31 January and, even then, the Johnson Government has committed itself to follow the organisation’s rules until December 2020.

Arguably, by backing Flybe’s rescue plan, the UK Government has given the company a form of State Aid (or subsidy). In terms of Article 107 of the Treaty on the Functioning of the European Union (TFEU) this is potentially unlawful. Such support is also a potential breach of Articles 101 and 102 of the Treaty (the competition provisions). The UK Government, of course, disputes these interpretations of its actions.

It’s not just other British airlines that will object to this support (British Airways has already done so), Michael O’Leary, CEO of Ireland’s Ryanair has entered the fray by declaring that he will launch a legal challenge. In essence, what the UK Government is doing is a distortion of the Single European Market; the intervention has more than just national ramifications.

Even the World Trade Organisation (of which the UK is a member) forbids the provision of State Aid in terms of its Agreement on Subsidies and Countervailing Measures.

There is a wider (and harder) lesson for the UK Government to learn: if it wants this country to have some sort of continued access to EU markets, it will have to play by EU rules. The UK, despite Prime Minister Johnson’s ongoing bluster, is the weaker party in the negotiations which will lead to a trade deal with the EU. It is very unlikely that the EU will allow the UK to gain a competitive advantage by ignoring the rules of the Single Market. Norway, which is not an EU member but which enjoys some access to European markets, could probably give the UK Prime Minister some sound advice on this matter:

https://ec.europa.eu/trade/policy/countries-and-regions/countries/norway/index_en.htm

https://www.politico.eu/article/norwegian-pm-uk-cannot-cherry-pick-eu-membership/

https://www.irishtimes.com/news/world/europe/brexit-explained-what-is-the-norway-model-and-is-it-an-option-for-the-uk-1.3712387

That said, Mr Johnson is not alone this morning in believing that EU rules can be ignored, his Chancellor Sajid Javid is telling UK businesses to expect increasing divergence or non-alignment:

http://news.sky.com/story/pm-to-give-brexit-day-speech-as-chancellor-tells-businesses-to-adjust-11911290

Ironically, taking back control (one of the Brexit campaign’s mantras) has never seemed so hollow. On 31 January 2020, be in no doubt, the UK will lose its status as a rule maker and become a rule taker.

Expect the European Commission to investigate the intervention by the UK Government and enforcement action for breach of EU rules in terms of Article 267 TFEU to follow. Welcome to Global Britain!

Links to the Flybe affair can be found below:

http://news.sky.com/story/flybe-disappointment-as-struggling-airline-scraps-newquay-to-heathrow-flights-11910413

https://news.sky.com/video/share-11910076

Copyright Seán J Crossan, 18 January 2020

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sjcrossan1

A legal blog by the author of Introductory Scots Law: Theory & Practice (3rd Edition: 2017; Hodder Gibson) Sean J. Crossan BA (Hons), LLB (Hons), MSc, TQFE I have been teaching law in Higher and Further Education for nearly 25 years. I also worked as an employment law consultant in a Glasgow law firm for over a decade. I am also a trade union representative and continue to make full use of my legal background. I am a graduate and postgraduate of the Universities of Dundee, London and Strathclyde. Please note that this Blog provides a general commentary about issues in Scots Law. It is not intended as a substitute for in-depth legal advice. If you have a specific legal problem, you should always consult a suitably qualified Scottish solicitor who will be able to provide you with the support that you require.

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