BREXIT – IMPLICATIIONS FOR MULTINATIONALS

2016
Brexit – what next? Clifford Chance
The EU referendum result
Voting

Leave – 51.9% Scotland

17,410,742 VOTES Leave 38% vs Remain 62%
Northern Ireland
Leave 44.2%
vs Remain 55.8% England
Remain 48.1% Leave 53.4% vs Remain 46.6%
16,141,241 VOTES

48.1%

51.9%

Electorate 46,501,241 Wales London

Leave 52.5% vs Remain 47.5% Leave 40.1% vs Remain 59.9%
Turnout 72.2%

Brexit – what next? Clifford Chance

The UK exit from the EU: Steps

2017

Prepare for UK
Withdrawal
Agreement

Negotiate Art. 50 agreement Transitional period?

Article 50

exit

UK gives Sign Art. 50 Art. 50 agreement enters in

Art 50 notice agreement* force (UK exits EU)
Future UK/EU

Ratification (as Agreements

Agreement

Negotiate long-term agreements between UK and EU Transitional period?

needed) fully in effect

Sign long-term agreements* Long-term agreements in force

UK to establish ‘schedules
Confirmation UK will not remain
Agreements

UK negotiates and concludes agreements and other

with Third

of commitments’ at the
countries

in Customs Union? ** arrangements with third countries

WTO***

EU negotiates and concludes agreements and other arrangements with third countries
Resetting UK

UK laws to prepare for UK exit UK laws to prepare for long-term agreements

legislation
& EU

EU laws to prepare for UK exit EU laws to prepare for long-term agreements

* Agreements subject to EU Parliament and Council approval and UK Parliamentary process under Constitutional Reform and Governance Act 2010.
** 27 members of the EU will need to agree to the UK opening informal talks. If an FTA will be negotiated with the EU, third countries may want to see what emerges from these talks before committing
to negotiations.
*** UK’s WTO schedule of commitments has to be adopted by consensus among the 164 members of the WTO. There may be domestic roadblocks to overcome.

Brexit – what next? Clifford Chance

 Illustrative timeline

Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q2 2018 Q1 2019 Q2 2019 Q2 2020

DC decision in SC decision on Gov delivers art 50

Miller: Gov appeal in Miller: notice under
wins/loses Gov wins prerogative UK leaves EU

Art 50 law passed;

notice given UK leaves EU

Art 50 law Second

Govt
rejected by referendum or
introduces
H of C general election?
art 50 law

?
SC decision on
appeal in Miller: Art 50 law passed Art 50 law
Gov loses by H of C, but passed by H of C again;
rejected by H of L becomes law; notice given UK leaves EU

Art 50 law passed;

notice given UK leaves EU

Art 50 law
Gov Second
introduces rejected referendum or
art 50 law by H of C general election?

?
Art 50 law passed Art 50 law passed by H of
by H of C, but C again; becomes law;
rejected by H of L notice given UK leaves EU

Assumptions:
* the UK and the EU do not enter into a withdrawal agreement within the two year period that specifies a date of entry into force outside the two year period (the date of entry
into force being the date of the UK exit from the EU);
* the UK and the European Council do not extend the two year period

Brexit – what next? Clifford Chance

Europe – Ties that bind

Swiss Immigration Model Not Relevant for Brexit Talks, PIIE Says – Bloomberg, 4 October 2016
Brexit – what next? Clifford Chance
The “four freedoms” of the internal market

Goods Persons Services Capital

 Customs duties Free  Freedom of  Free
 Internal movement of establishment movement of
taxation citizens  Freedom to provide, capital
 Free Free receive services  Free
movement of movement of movement of
exports workers payments

Brexit – what next? Clifford Chance

“Hard” or “soft” Brexit?
Trade offs
Soft Brexit
Soft Brexit
Greater market access
EEA + EFTA membership Onerous and unlikely in return for free
movement of people,
budget contributions,
regulatory equivalence
and institutional oversight

Bilateral agreements + EFTA Unique to Switzerland

Customs Union Onerous and unlikely

Deal consisting of single

or multiple FTAs or Most likely*
other agreements Less market access
with reduced free
movement of people, no
budget contributions,
possibly diverging
WTO / GATS If negotiations fail Hard Brexit regulation and little
institutional coordination
*Theresa May sets Brexit course away from EU single market – Financial Times, 2 October 2016

Brexit – what next? Clifford Chance

Impact for multinational corporations
(outside financial services)

Immediate market consequences

 Current volatility – affecting treasury operations (e.g. currency hedges)
 Impact of £ sterling decline – increased competitiveness for UK based export-led businesses; challenging
environment for import-led businesses.

Lack of certainty increases risk across all areas of business and future deals
Action points
 Businesses need to be proactive to make sure their industry’s interests are represented and to make their views
and concerns heard
 Companies should start drawing a picture of how much the current business, including the customer facing side,
and the internal structure, is relying on the EU fundamental freedoms – may need to change the shape and
structure of that business
 Businesses will need to undertake a detailed analysis of their trade flows and supply chains to assess the impact of
tariffs and non-tariff barriers. Key to the initial assessment will be (i) what do you rely on the EU system for; and (ii)
what do you rely on the EU's FTAs for?

Brexit – what next? Clifford Chance

 Other legal implications…

It is unclear whether, and how, protection currently obtained via current The vote to 'leave' has created a number of short-term practical
EU unitary rights such as EU trademarks, EU registered designs, considerations for corporate treasurers, as well as potential longer
SPCs, PDOs or GIs will be maintained in the UK following Brexit. The term repercussions.
long-awaited Unitary Patent and Unified Patent Litigation System
will likely be delayed
IP Rights Financing

Data Trade
Impact on data protection needs to be considered protection Agreements Imports and exports may be subject to tariffs
in the context of upcoming reform of EU law. and non-tariff barriers pushing up the price or
effective cost of goods imported or exported
to or from the UK.

Regulatory Commercial
Most EU rules are implemented through UK law contracts Consideration should be given to the impact
and it is likely they will initially remain in place, but on key contracts and, in particular, how you
they may diverge in the longer term. Direct EU law might want to vary the terms on renewal.
will need to be replaced.
Employment Tax

Brexit may impact the right of EU nationals to continue in their present Potentially significant tax consequences; for example, dividends
jobs in the UK and the right of UK nationals to work in the EU. from EU subsidiaries to UK parents may attract withholding tax
post-Brexit.
.

Brexit – what next? Clifford Chance

Clifford Chance's Brexit USPs
CC is uniquely well placed to help the world's leading businesses manage the risks and
opportunities arising from the UK's Brexit vote because:
Public Policy Group
 Public policy practice unique
within a top tier global law firm,
with a network in London,
Brussels, Paris, Frankfurt and
Washington D.C.
 Actively helping clients to
understand national and
international government
institutions and to develop
appropriate commercial strategies.
Strong trade association links
internationally reinforce our ability
to advise on understanding and
influencing debate.
 Key people: Michel Petite (PAR) –
former head of the European
Commission's legal service;
adviser to three commission
presidents; participated in the EU
treaties of Maastricht, Amsterdam,
Nice and Lisbon; Phillip Souta
(LON), UK head of public policy
and former director of Business for
New Europe.
Brexit – what next?
European Network
 Strongest network across EU as a
whole of any elite firm
 16 offices in 12 countries in
Central Europe with over 1,000
lawyers (200 partners).
 More Band 1 rankings (14) in the
Europe-wide regional tables of
Chambers Europe 2016 than any
other firm, including
Corporate/M&A; Dispute
Resolution; Banking & Finance;
Capital Markets (various);
Regulatory: FS; and Regulatory:
Government & Public Affairs.
Trade Group
 Strong trade expertise across our network.
 Experience includes advising businesses and
trade bodies on trade-law issues post Brexit –
both inbound and outbound; currently
advising a third country on an EU trade
agreement; longstanding advice to clients on
how trade agreements could best provide for
their sector's needs; extensive experience of
protecting investments in the face of political
change or interference.
 Key people: Jessica Gladstone (LON) –
international disputes lawyer with experience
negotiating treaties and representing the UK
at the UN, Council of Europe and other
international institutions; Michel Petite (see
above); Audley Sheppard (LON) - specialises
in resolving major disputes arising out
international investment and trade, including
energy and infrastructure projects and
bilateral investment treaty claims; Tony
Reeves (BRU) - advises major companies
from a wide range of industries on trade,
competition and EU law; Janet Whittaker
(WAS)- experienced in claims to protect
assets under investment treaties and
international trade agreements; Dr Federico
Ortino (consultant to CC) - Reader in
International Economic Law at King’s College
London, specialising in international trade law.
Regulatory and Restructuring 
 Pre-eminent financial regulatory
practice globally - tier one in
Chambers, Legal 500 and IFLR.
 Long track record of advising
governments, trade associations
(e.g. AFME) and major financial
institutions on implications
of Brexit.
 Combining our regulatory and
corporate strength across Europe
as a whole (see point 2 above),
uniquely well placed to advise
from a pan European perspective
on every stage from understanding
the issues; to contingency
planning; to implementing
international restructuring and
reorganisation across the
European region.
 Key people: Chris Bates, Simon
Gleeson, Caroline Meinertz,
Ashley Prebble , Alex Erasmus
(LON); Mark Benzler (FRA); Nick
O'Neill (NY); Mark Shipman (HK)
Clifford Chance
Sarah Jones, New York
Sarah is a partner in the Corporate practice of Clifford Chance and is the Head of our global Consumer Goods group.
She has extensive experience in advising multinational corporations on high profile, complex, cross-border M&A in
particular in the consumer goods sector. Sarah regularly provides advice on the establishment and ongoing conduct of
joint ventures in a wide variety of industries.

Relevant experience includes advising:

 Coca-Cola Co and Coca-Cola Femsa in their announced US$575 million agreement to acquire AdeS, the soy-based
beverage unit of Unilever.
 Mondelēz International Inc. in connection with the US$13.9 billion announced acquisition of Keurig Green Mountain
by JAB Holding Company. Minority investors, who are shareholders in Jacobs Douwe Egberts, including Mondelez
and entities affiliated with BDT Capital Partners, have partnered with JAB on its current deal for Keurig.
 Jacobs Douwe Egberts on the sale of Carte Noire to Lavazza, as a result of the commitments taken by Jacobs
Douwe Egberts following the merger of the coffee businesses of Mondelez Group and Douwe Egberts Master
Blenders.
Sarah Jones  Mondelēz International on the combination of its global coffee business with D.E. Master Blenders 1753 B.V to be
Partner named Jacobs Douwe Egberts (JDE) and, prior to closing, on its internal restructuring to separate coffee from
Mondelēz's other operations across more than 40 jurisdictions
T: +1 212 878 3321  GTECH S.p.A. on its change of corporate seat from Italy to the UK (by means of a European cross border merger)
M: +1 212 878 8375 and its acquisition of IGT (by means of a US merger) for an aggregate consideration of US$4.6 billion
E: sarah.jones  Kraft Foods on its £11.6 billion takeover of Cadbury and subsequent reorganization
@cliffordchance.com  Philip Morris International in its acquisition of a 20% equity interest in Megapolis Distribution BV in Russia for $750
million
 Bridgepoint in the sale of the Permaswage Group to Precision Castparts Corp. (PCC).
 Motorola Solutions, Inc. on its takeover of Psion plc
 TAM Airlines in its US$7 billion merger with Lan Chile to form LATAM Airlines Group S.A.  
 Kraft Foods on its €5.3 billion acquisition of the global biscuits business of Danone
 Kraft Foods on its US$1.067 billion acquisition of the Iberian biscuits operations of United Biscuits
 Phillip Morris International on its US$5.2 billion acquisition of HM Sampoerna TBK
 Altria Group on the US$5.622 billion merger of Miller Brewing with South African Breweries (to form SABMiller)

Ms. Jones has been a partner with the firm since 2001 and has been based in its New York office since 2006.
She is admitted as a solicitor in England &Wales and to the New York Bar.

Brexit – what next? Clifford Chance

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© Clifford Chance 2016
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