international cooperation on competition: achievements and...
TRANSCRIPT
International cooperation on competition: achievements and challenges
Frederic Jenny
Chairman, OECD Competition Committee,
Hauser Global Professor of Law, NYU Law School
Plenary session 2 on International Cooperation and Competition Policy5th BRICS International Competition Conference,
Brasilia, November 9 2017
1
International co-operation in competition means:
• Convergence
– Policy movement among jurisdictions towards common or shared legal
and economic standards
• Co-operation
– Communication, consultation, technical assistance and information
sharing among agencies to ensure consistent approaches, and
developments
2
International cooperation is required
• The number of jurisdictions with competition law has increased significantly
• Globalization of the economy
• Internationalization of antirust infringements
• Risks of divergent decisions
• Need to access information and evidence in other countries
• Driver for international co-operation:
– Multi jurisdictional merger filings
– Proliferation of leniency programs
3
Number of cross-border M&A: 1995 - 2011
Source: Dealogic Global M&A Database, OECD calculations
4
Cross-border M&A deals by top 50 Global
Fortune 500 companies: 1995 - 2011
Source: Dealogic Global M&A Database, OECD calculations
5
The economy is increasingly global
• In 1995, co-operation between the US, EU and Japan would cover about
65% of world GDP - and about 95% of the GDP of countries with
competition law
• In 2010, the same trilateral co-operation covers only 60% of world GDP
• By 2030, on reasonable projections, those three economies will account for
only 35% of world GDP
• To reach ¾ of world GDP – which could be achieved with just trilateral co-
operation in 1995 - by 2030 you will probably need at least the top nine
economies
• Not a general trend though: for the top 500 multinational in Nord America on
average, about 70% of their sales are made in their home region
6
The world economy rebalancesSh
are
of
wo
rld
GD
P
Source: OECD data and projections
1995 2014 2030
64%
48%
38%
7
Experience with international co-operation
0
5
10
15
20
25
30
No experience 1-5 cases 5+ cases
All
OECDmembers
Non-OECDmembers
Number of Cases in Which Agencies had Co-operated (2007-2012)
8
Experience with International Co-operation
# of cases reported by agencies
# of
agencies
with any
experience
2011 2010 2009 2008 2007
Cartel 19 55 51 49 47 48
Merger 21 116 101 106 96 86
Abuse of
Dominance13 29 26 22 22 22
Number of Cases in which Agencies had Co-operated, by Enforcement Area (2007-2011)
9
• The number of cases involving international co-operation has increased over time
• The frequency of international co-operation expected to continue increasing, due in part to more multi-jurisdictional cases
Report on the OECD/ICN Survey on International Enforcement Co-operation
International co-operation is increasing
Increase in Cases Involving
Co-operation (2007-2011)
Cartel 15%
Merger 35%
Abuse of Dominance 30%
10
OECD on international co-operation
Started in 2012, the OECD international co-operation project aims at:
• studying and sharing experience and insights on international co-operation among competition agencies
• exploring of the policy rationale for international co-operation
• reviewing the relative merits of various forms of co-operation and lessons to be learnt from co-operation efforts in other policy fields
• identifying constraints on greater co-operation
• analyzing experience with OECD instruments so as to develop new best practices for agencies
led to the 2014 Recommendation on International Co-operation on Competition Investigations and Proceedings
More at: oe.cd/int-coop-comp11
OECD Recommendation on International Co-operation (2014)
• The recommendation recognises the benefits of effective co-operation for competitionauthorities and businesses.
– Reducing regulatory costs and delays, limiting the risk of inconsistent analysis andremedies
• Main points:– Members’commitment to effective
international co-operation – Consultation and Comity– Notification procedures– Co-ordination of parallel investigations– Exchange of information– Investigative assistance
Available at: oe.cd/IJ
12
Members’ commitment to effective international co-operation
• Minimizing the impact of legislation and regulations that restrict co-operation or hinder an investigation or proceeding of other countries
• Transparency of respective substantive and procedural rules
• Reducing inconsistencies between leniency/ amnesty programmes
13
OECD Recommendation on International Co-operation (2014):
Adherents commit to effective international co-operation and take
appropriate steps to minimise direct or indirect obstacles or restrictions to
effective enforcement co-operation between competition authorities..
What can agencies co-operate on
• Locating and identifying persons
• Serving documents
• Taking evidence
• Executing requests for searches and seizures
• Providing publicly available evidence
• Exchanging information
• Providing documents and reports
• Discussing the theories of harm
• Enforcing administrative and judicial decisions, including the collection of fines
14
Legal basis for international co-
operation
0 5 10 15 20 25 30 35 40
Bilateral non-competition agreements
Multilateral non-competition agreements
Letters rogatory
Mutual Legal Assistance Treaties
Multilateral competition agreements
Free Trade Agreements
National law provisions
Bilateral competition agreements
Confidentiality waivers
Non-OECD members
OECD members
All
15
OECD inventories of co-operation agreements
• 2015 Inventory of inter-governmentalcompetition co-operation agreements
• www.oecd.org/daf/competition/inventory-competition-agreements.htm
16
• 2017 Inventory of provisions in inter-
agency MoUs
– Any type of bilateral competition
co-operation agreements
(MoUs) between agencies
– At least 180 MoUs found and
over 140 MoUs reviewed
www.oecd.org/competition/inventor
y-competition-agency-mous.htm
Development of co-operation agreements (2016 data)
17
Importance of interagency MoUs
• User friendliness of MoUs
– flexibility and informality
• Can be concluded with various purposes
– exchange of confidential information
– focus on establishing a general framework
• Legal nature of MoUs
– not treaties; no consensus on MoU definition
18
Competition provisions in trade agreements
An increasing number of FTAs—88 percent of the agreements currently in
force (from ~60 percent before 1990)—devote specific provisions or even
entire chapters to competition related matters .
This trend extends to FTAs concluded by developing countries 87 percent of
which included competition specific chapters or provisions.
By contrast, such provisions or chapters can be found in only around half of the
few FTAs to which one or more of the least developed countries identified by the
United Nations (UN) are party.This may be due to that at least some of these
countries (for example, Bhutan) have opted against adopting competition laws.
François-Charles Laprévote, Sven Frisch, and Burcu Can, Competition Policy within the Context of Free TradeAgreements, theE15Initiative, September 2015
19
Competition provisions in trade
agreements
François-Charles Laprévote, Sven Frisch, and Burcu Can, Competition Policy within the Context of Free TradeAgreements, theE15Initiative, September 2015 20
Competition provisions in trade agreements
Competition-related chapters and provisions cover a range of issues, from
obligations to
(i) promote competition;
(ii) adopt or maintain competition laws;
(iii) regulate designated monopolies, SoEs, and enterprises entrusted with
special or exclusive rights;
(iv) regulate state aid and subsidies ;
(v) lay down competition-specific exemptions;
(vi) abolish trade defenses;
or set forth
(vii) competition enforcement principles;
(viii) cooperation and coordination mechanisms; and
(ix) Principles governing the settlement of competition-related disputes
Only one (European Union [EU]-Republic of Korea) includes all of the afore-
mentioned provisions
François-Charles Laprévote, Sven Frisch, and Burcu Can, Competition Policy within the Context of Free TradeAgreements, theE15Initiative, September 2015 21
Competition provisions in trade
agreements
François-Charles Laprévote, Sven Frisch, and Burcu Can, Competition Policy within the Context of Free TradeAgreements, theE15Initiative, September 2015
22
Promoting convergence in competition law enforcement
A small minority of FTAs include ambitious cooperation mechanisms designed to
pave the way for bilateral convergence of competition laws of the parties.
For example, Chile-Costa Rica, Chile-El Salvador, and Republic of Korea-
Australia FTAs require the parties to cooperate towards the adoption of common
rules to avoid anticompetitive practices
François-Charles Laprévote, Sven Frisch, and Burcu Can, Competition Policy within the Context of Free TradeAgreements, theE15Initiative, September 2015
23
Promoting convergence in competition law enforcement
Free Trade Agreement Republic of Korea-Australia Article 14.5:
Cooperation
The Parties recognise the importance of cooperation and coordination to further
the promotion of competition and the curtailment of anticompetitive practices.
The Parties may cooperate and coordinate, as appropriate, in developing and
enforcing competition laws and policies, including through the exchange of
information, notification, technical cooperation and coordination on cross-
border enforcement matters, utilizing their existing mechanisms for
cooperation including the Cooperation Arrangement between the Australian
Competition and Consumer Commission and the Fair Trade Commission
of the Republic of Korea Regarding the Application of Their Competition
and Consumer Protection Laws.
François-Charles Laprévote, Sven Frisch, and Burcu Can, Competition Policy within the Context of Free TradeAgreements, theE15Initiative, September 2015 24
Competition-specific cooperation
Almost half of the FTAs that we have reviewed contain competition-specific
cooperation and coordination provisions.
FTAs which contain such provisions typically emphasize the “importance of
coordination and cooperation on matters of competition law enforcement”
and require the parties to cooperate through their respective competition
authorities to eliminate anti-competitive practices affecting inter-party trade.
A limited number of FTAs further authorize the parties to request another
party’s cooperation to eliminate a specific anti-competitive practice which
originates from that party’s territory.
Cooperation and coordination provisions encompass a wide array of
mechanisms, ranging from mutual legal and technical assistance, to
communication, consultation, and exchange of information requirements.
François-Charles Laprévote, Sven Frisch, and Burcu Can, Competition Policy within the Context of Free TradeAgreements, theE15Initiative, September 2015
25
Competition-specific cooperation
Cooperation requirements usually contain a duty to inform the other party of
relevant enforcement activities in the field of competition law.
Exchange of information requirements are typically limited to non-
confidential and/or public information, or only apply to the extent
permitted by the parties’ respective domestic laws.
Mutual legal and technical assistance between the parties are also mentioned
in several FTAs. Such assistance may extend to a wide range of issues,
including assistance for “the provision of independent experts” and for
“training for key personnel,” and help “in drafting guidelines, manuals and,
where necessary, legislation.”
A number of FTAs even create an option for each party to request the other
party’s cooperation in investigations against an undertaking domiciled in
that other party’s territory.
François-Charles Laprévote, Sven Frisch, and Burcu Can, Competition Policy within the Context of Free TradeAgreements, theE15Initiative, September 2015
26
Competition-specific cooperation
Ex Turkey-Montenegro Free trade Agreement art. 24.5
François-Charles Laprévote, Sven Frisch, and Burcu Can, Competition Policy within the Context of Free TradeAgreements, theE15Initiative, September 2015
27
Ranking of Limitations and Constraints
Rank By “importance” By “frequency”
1 Existence of legal limits Existence of legal limits
2 Low willingness to co-operate Lack of resources/time
3 Absence of waivers Different legal standards
4 Lack of resources/time Different stages in procedures
5 Different legal standards Low willingness to co-operate
28
Effective co-operation is constrained
Complexity of co-operation
• As the number of agencies involved grows and
the number of cross border cases increases, the
current system may prove insufficient or
inefficient.
– Cases may involve agencies which do not
have a co-operation agreement
– Also, these co-operation agreements may be
different in scope and provide for different co-
operation tools
29
A
B
CD
E
# of authorities
Interfaces of co-operation
1 0
2 1
5 10
10 45
20 190
30 435
40 780
50 1,225
100 4,950
On-going challenges for international
co-operation
• Increase the number of countries involved in international enforcement co-
operation
• Improve legal basis for formal co-operation
• Facilitate the exchange of confidential information
• Envisage new means of enhanced co-operation?
– Adopting multilateral instruments e.g. one-stop shop for leniency markers
– Developing international standards for comity
– Mutual recognition of other agencies’ decisions
– Non-binding deference to one ‘lead authority’
30
International co-operation in competition means:
• Convergence
– Policy movement among jurisdictions towards common or shared legal and economic standards
• Co-operation
– Communication, consultation, technical assistance and information sharing among agencies to ensure consistent approaches, and developments
• Comity and investigative assistance
32
The two worlds of international co-operation
International enforcement co-operation
• Mergers
• Conduct cases
Exchange on policy developments and capacity building
• OECD, ICN, UNCTAD, ASEAN, APEC, etc.• Outreach and capacity building
33
• The number of cases involving international co-operation has increased over time
• The frequency of international co-operation expected to continue increasing, due in part to more multi-jurisdictional cases
Report on the OECD/ICN Survey on International Enforcement Co-operation
International co-operation is increasing
Increase in Cases Involving
Co-operation (2007-2011)
Cartel 15%
Merger 35%
Abuse of Dominance 30%
34
Ranking of Limitations and Constraints
Rank By “importance” By “frequency”
1 Existence of legal limits Existence of legal limits
2 Low willingness to co-operate Lack of resources/time
3 Absence of waivers Different legal standards
4 Lack of resources/time Different stages in procedures
5 Different legal standards Low willingness to co-operate
35
Effective co-operation may be constrained
OECD on international co-operation
Started in 2012, the OECD international co-operation project aims at:
• studying and sharing experience and insights on international co-operation among competition agencies
• exploring of the policy rationale for international co-operation
• reviewing the relative merits of various forms of co-operation and lessons to be learnt from co-operation efforts in other policy fields
• identifying constraints on greater co-operation
• analysing experience with OECD instruments so as to develop new best practices for agencies
led to the 2014 Recommendation on International Co-operation on Competition Investigations and Proceedings
More at: oe.cd/int-coop-comp
36
What can agencies co-operate on
• Locating and identifying persons
• Serving documents
• Taking evidence
• Executing requests for searches and seizures
• Providing publicly available evidence
• Exchanging information
• Providing documents and reports
• Discussing the theories of harm
• Enforcing administrative and judicial decisions, including the collection of fines
37
Some regional co-operation frameworks
• Nordic Co-operation Agreement (multilateral agreement, signed 2001, updated 2017): enables the exchange of confidential information between the Nordic competition authorities
• ECN (based on legislation, Regulation 1/2003): unique setting for co-operation, as members apply the same substantive rules and belong to an economically and politically integrated area; enables extensive co-operation
• BRICS (multilateral agreement, 2016): co-operation structures through a liaison committee and working groups
38
OECD Recommendation on International Co-operation (2014)
• The recommendation recognises the benefits of effective co-operation for competition authorities and businesses. – Reducing regulatory costs and delays, limiting the risk of inconsistent
analysis and remedies
• Main points:– Members’ commitment to effective
international co-operation
– Consultation and Comity
– Notification procedures
– Co-ordination of parallel investigations
– Exchange of information
– Investigative assistance
Available at: oe.cd/IJ
39
Members’ commitment to effective international co-operation
• Minimising the impact of legislation and regulations that restrict co-operation or hinder an investigation or proceeding of other countries
• Transparency of respective substantive and procedural rules
• Reducing inconsistencies between leniency/ amnesty programmes
40
OECD Recommendation on International Co-operation (2014):
Adherents commit to effective international co-operation and take appropriate steps to minimise direct or indirect obstacles or restrictions to effective enforcement co-operation between competition authorities..
Development of co-operation agreements (2016 data)
0
20
40
60
80
100
120
140
Interagency co-operationagreements (MoUs)
Co-Operation agreements(Governmental level)
41
Importance of interagency MoUs
• User friendliness of MoUs– flexibility and informality
• Can be concluded with various purposes – exchange of confidential information
– focus on establishing a general framework
• Legal nature of MoUs– not treaties; no consensus on MoU definition
42
OECD inventories of co-operation agreements
• 2015 Inventory of inter-governmental competition co-operation agreements
• www.oecd.org/daf/competition/inventory-competition-agreements.htm
43
• 2017 Inventory of provisions in inter-agency MoUs
– Any type of bilateral competition co-operation agreements (MoUs) between agencies
– At least 180 MoUs found and over 140 MoUs reviewed
www.oecd.org/competition/inventory-competition-agency-mous.htm
More OECD work on Competition…
44
www.oecd.org/daf/competition
• The OECD work on international co-operation contributes to shaping new models for co-operation for the benefits of enforcers, businesses and consumers by:– surveying activities and challenges regarding informal co-operation of
Member and non-Member agencies with a view to identify best practices– providing examples of provisions for model bilateral or multilateral co-
operation agreements. These may include provisions allowing the exchange of confidential information between competition authorities, and provisions on enhanced enforcement co-operation.
– exploring new forms of co-operation that can help reduce costs associated with investigations or proceedings by multiple competition authorities and avoid inconsistencies among Member countries’ enforcement actions
– minimising inconsistencies in leniency programmes of OECD countries that adversely affect co-operation
International co-operation
Outputs:
• OECD-ICN survey, 2013
• Report: Challenges of International Co-operation in Competition Law Enforcement, 2014
• Recommendation: OECD Recommendation on International Co-operation on Competition Investigations and Proceedings, 2014
• Inventory: inventory of international co-operation agreements on competition, 2015
• Inventory: inventory of international co-operation MoUs, 2016
International co-operation
International Enforcement Co-operation An OECD perspective
Antonio Capobianco
Senior Competition Law Expert
OECD Competition [email protected]
Superintendence of Industry and Commerce, Columbia
February 2014
Overview
• Reasons for international co-operation
• Traditional approaches to international co-
operation
• The role of the OECD
• The OECD project on international enforcement
co-operation
• Future challenges for international co-operation
48
Main Message
• As the globalization of economy proceeds and as the number
of effective competition laws and competition authorities
increases, there is an increase need for further international
co-operation in competition enforcement.
• The OECD has provided a forum for competition authorities to
discuss the issue and produced a number of useful
recommendations, best practices, and reports to promote
international co-operation.
• There are some ongoing discussions on the topic including the
modernization of the existing recommendation. This also
includes the discussion on new means of co-operation which
would enhance the existing co-operation between competition
authorities.
49
THE NUMBER OF JURISDICTIONS WITH
COMPETITION LAW HAS INCREASED
SIGNIFICANTLY
50
Uptake of competition law and policy
Source: OECD
The number of jurisdictions with competition authorities increased by a factor of five
between 1990 and 2013.
51
OECD and ICN memberships
• On 25 October 2001, 14 agencies launched the ICN
• The ICN has grown from 16 members in 2002 to 104 (from 92 jurisdictions) in 2009
• In April 2012 the ICN had 123 member agencies
• 20 countries originally signed the OECD
Convention on 14 December 1960
• Since then 14 countries have become members
• Today the Competition Committee has 34
members and 15 observers
52
GLOBALIZATION OF THE ECONOMY
53
Bear in mind that globalization still has a long way to go!
Gross exports.
Source: Johansson and Olaberria,
“Long-run patterns of trade and
specialisation”, OECD Economics
Working Paper 1136
54
Average Trade Flow for a Country in Grouping
1. Real value, USD PPP, using CPI as a deflator, 2005=1002. Average trade flow is the total trade flow for the group of countries
divided by the number of countries in the group.Source: UN Commodity Trade Statistics database, OECD calculations 55
FDI Inflows (annual, in USD million)
0
500.000
1.000.000
1.500.000
2.000.000
2.500.000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012p
OECD EUROPEAN UNION TOTAL WORLD G20 countries
56
Mergers by continent of the acquiror: 1995 and 2011
Source: Dealogic Global M&A database, OECD calculations57
Mergers by continent of the target: 1995 and 2011
Source: Dealogic Global M&A database, OECD calculations58
INTERNATIONALIZATION OF
ANTIRUST INFRINGEMENTS
THE CASE OF THE EU
59
EU International Merger filings
0
20
40
60
80
100
120
140
160
180
200
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
EU cross-border merger filings between 1991 and 2012
1. Mergers between companies headquartered in the same EU member state.
2. Mergers between companies headquartered in more than one EU member state.
3. Mergers involving at least one company based outside the EU, and with effects in the EU.
60
Number of non-EU companies with EU merger filing, by year
0
50
100
150
200
250
300
61
The geographical distribution of EC cartel cases since 1990
0%
10%
20%
30%
40%
50%
60%
70%
Among EU countries EU country plus other continent Among other continent countries
1990-2000
2001-2013
62
Number of non-EU companies in EC cartel enforcement cases, by year
0
5
10
15
20
25
30
35
1990 1991 1992 1994 1995 1996 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
63
Total fines of EC cartel enforcement, per year
18 18 19 15 4
175
7
257
714
267
83
551
345
1.450
106
1.167
270
10015
248 273
99 117
1.557
208138
289
132
1.579
1.821
2.099
373
1.929
614
1.640
142
2 2175 60
649
0
500
1.000
1.500
2.000
2.500
3.000
3.500
Milh
õe
s
1. Among EU countries 2. EU country plus other continent 3. Among other continent countries
64
RISKS OF DIVERGENT DECISIONS
65
The GE / Honeywell disaster
Why, TIME asked Welch, should a European be able to shape a merger between two American companies? "That's the law," replied Welch. "That really is just the way the world works."
We'd all better get used to it.
“The Anatomy of the GE-Honeywell Disaster”
Source: Time, 2001
The GE / Honeywell disaster
"This is a matter of law and economics, not politics”
"I deplore attempts to misinform the public and to trigger political intervention.“
Source: BBC
"I am concerned that the Europeans have rejected it."
The Eurotunnel French and UK decisions
Cuvillier called for an emergency meeting with the UK's transport minister, Norman Baker, and said the French government would approach the UK authorities to “arbitrate between the decisions of the two competition authorities”.
Sources: Global Competition review, 2013
UK Competition Commission: “The UK has an independent competition regime designed
to exclude government involvement in decision-making – and we have a duty to
take the necessary action to protect competition and the interests of customers. In that context, it’s difficult to see what the
role or purpose of such a meeting would be.”
Traditional approaches to international co-operation
• Convergence
– Policy movement among jurisdictions towards common or
shared legal and economic standards
• Co-operation
– Communication, consultation, and information sharing among
agencies to ensure consistent approaches to parallel cases
• Comity
– Negative comity
– Positive comity
69
The two worlds of international co-operation
International enforcement co-operation
• Mergers
• Behavioural cases
Exchange on policy developments and capacity building
• OECD, ICN, UNCTAD, ASEAN, APEC, etc.• Outreach and capacity building
70
The role of the OECD
• Harmonization and convergence:
• Roundtables and policy discussions
• Recommendations, reports and best practices
• Outreach and capacity building (domestic and international)
• Informal co-operation through “soft” law
71
Stock-take on international co-operation (1990 - today)
First Report on Hard Core Cartel Recommendation
Information Sharing in Cartel Cases
Third Report on Hard Core Cartel Recommendation
Second Report on Hard Core Cartel Recommendation
1992
2005
Whish-Wood Report
Model Notification and Report Form
Framework for a Notification Form
Discussions on Merger Review Procedures
2004
2003
2000
2001
2002
1997
1994
1998
1996
Recommendation on Hard Core Cartels
MERGERS
CARTELS
1999: Report
on Positive
Comity
1995: Fifth
Recommendation on
International Co-operation
1993: Report on Mutual
Assistance Agreements
Recommendation on Merger Review
Best Practices for the Formal Exchange of
Information in Cartel Investigations
Industry Proposed Best Practices in International
Mergers
72
1995 Recommendation on international co-operation
• The advance notification of planned competition law enforcement actions to foreign
competition authority when important interests of that country may be affected by the
planned enforcement activity.
• The co-ordination of parallel investigations where ‘appropriate and practicable’.
• The assistance in obtaining information, providing factual and analytical material from
its files and employing on behalf of the requesting country the authority to compel the
production of information, subject to national confidentiality laws.
• Consultations aimed at developing or applying mutually satisfactory and beneficial
measures for dealing with anticompetitive practices that affect international trade.
• Consideration should be given to important interests of foreign parties to the agreement
when applying competition law domestically (negative comity) and vice versa, foreign
parties should consider appropriate measures if important domestic interests are
concerned (positive comity).
73
2005 Best Practices for the exchangeof information in cartel cases
•International treaties should protect confidentiality of exchanged information
•Information exchange should be supported, but requested jurisdiction has no
obligation to share information and has ability to apply conditions
•Safeguards should apply in the requesting jurisdiction when it is using the
exchanged information
•Information exchanges should provide safeguards for the rights of the parties
under the laws of member countries (e.g., legal privilege and privilege against
self-incrimination)
•Best Practices advise against giving prior notice to source of information,
unless required by domestic law or international agreement, as it can disrupt and
delay investigations of cartels
74
1998 Recommendation concerning Effective Action against Hard Core Cartels
• Member countries should ensure that their competition laws effectively halt
and deter hard core cartels by providing for effective sanctions and adequate
enforcement procedures and institutions to detect and remedy hard core cartels.
• Member countries have a common interest in preventing hard core cartels and
should co-operate with each other in enforcing their laws against such cartels.
• Member countries should seek ways in which co-operation might be improved
by positive comity principles.
• Member countries are encouraged to review all obstacles to their effective
co-operation in the enforcement of laws against hard core cartels.
75
2005 Recommendation concerning Merger Review
• It aims to contribute to greater convergence of merger review procedures, including cooperation among competition authorities, towards internationally recognized best practices.
• Member countries should seek to co-operate and to co-ordinate their reviews of transnational mergers. They should endeavour to avoid inconsistencies with remedies sought in other reviewing jurisdictions.
•Member countries should encourage merging parties to facilitate co-ordination among competition authorities, in particular with respect to the timing of notifications and provision of voluntary waivers of confidentiality rights, without drawing any negative inferences from a party's decision not to do so.
• Member countries should establish safeguards concerning the treatment of confidential information.
76
The OECD project on international co-operation
Started in 2012, the OECD international co-operation projects aims at:
• studying and sharing experience and insights on international co-
operation among competition agencies
• exploring of the policy rationale for international co-operation
• reviewing the relative merits of various forms of co-operation and
lessons to be learnt from co-operation efforts in other policy fields
• identifying constraints on greater co-operation
• analysing experience over the past years with OECD instruments
with a view to improving international co-operation and
developing legal and practical solutions for agencies
77
The work done so far
78
June 2012 - International Co-operation- Stocktaking exercise of the Competition
Committee’s Past work (WP3)
October 2012 - Limitations and constraints to International Co-operation (WP3)
February 2013 - Discussion on International Co-operation (WP3)
- Report on OECD/ICN Survey on Intl Enforcement Co-operation
- Improving international co-operation in cartel investigations (GFC)
June 2013 - Discussion on International Co-operation (WP3)
October 2013 - Remedies in Cross-Border Merger cases (WP3)
- Discussion on Possible Amendments to the 1995 Recommendation
on International Co-operation
September 2014 - New Recommendation on International Co-operation
The Report on the OECD/ICN Survey on International Enforcement Co-operation
1. Introduction
2. Qualitative assessment of international co-operation
3. Legal basis and formal co-operation
4. Experience with international co-operation
5. Regional and multilateral co-operation
6. Limitations and constraints
7. Exchange of information and confidentiality waivers
8. The role of OECD
9. Areas of potential improvement
79
Legal basis for international co-operation
• Formal cooperation on cases
– Co-operation based on provisions in national law
• Co-operation based on non-competition specific agreements and
instruments: mutual legal assistance agreements (MLAT),
competition related provisions in bilateral free trade agreements
(FTAs), rogatory letters
– Co-operation based on competition-specific agreements
– Co-operation based on waivers
– Co-operation based on amnesty/leniency programs
• Significant degree of informal co-operation
80
Limitations to Effective Co-operation
•Limitations of a legal nature (for example due to restrictions in domestic legislation or differences in legal systems) were ranked as important and among the most frequently encountered limitations on co-operation
•Practical limitations (for example lack of resources, language and timing issues) were in general ranked as less important, and considered more easy to overcome
81
Limitations to Effective Co-operation
82
Ranking of Limitations and Constraints
Rank By “importance” By “frequency”
1 Existence of legal limits Existence of legal limits
2 Low willingness to co-operate Lack of resources/time
3 Absence of waivers Different legal standards
4 Lack of resources/time Different stages in procedures
5 Different legal standards Low willingness to co-operate
Exchange of Information
•Exchange of non-confidential information (such as analytical
methods, non-public agency information) is generally
permitted and can provide significant benefits
•The exchange of confidential information is more difficult
and relies on formal mechanisms for co-operation–Protection of confidential information is fundamental to the ability of
agencies to successfully complete investigations;
–National legislation or international agreements (outside regional co-
operation platforms) generally do not allow for the transmission of confidential
information to other enforcers.
83
Exchange of Confidential Information•30 respondents can exchange confidential information on the basis of a confidentiality waiver
•16 respondents indicated that equivalent down-stream protection of confidential information is an important condition for its exchange
•12 respondents said that they can exchange confidential information subject to the existence of enabling provisions in bilateral or multilateral co-operation agreements
•9 respondents said that they can exchange confidential information subject to the imposition of conditions on the use of confidential information:
–Receiving agency must ensure equivalent downstream protection
–Information can be used only for purposes for which it was obtained
–Information can only be used for internal agency purposes
84
Exchange of Information: Confidentiality Waivers
•More than two-thirds of respondents are allowed to use waivers in their enforcement activity
•Standard forms exist, as well as ad hoc negotiations of terms and conditions
•Use of waivers has limits:–Different incentives in merger and cartel cases
–They are voluntary and remain at the discretion of the parties
–Different scopes and language used
•Use of waivers is not as broad as it might be
85
Exchange of Information: Confidentiality Waivers
86
Experience of Respondents with Confidentiality Waivers
9
1630
Have experienceddifficulty with obtainingwaivers
Have not experienceddifficulty with obtainingwaivers
No answer or noexperience
Scope of International Cooperation in Enforcement Cases
• What is it about?
– Exchange of information
– Mutual assistance
– Coordination of actions and outcomes
• When does it take place?
– Before the investigation phase • What markets, which companies to investigate; location of evidence
– During the investigation phase • Simultaneous dawn raids, subpoenas, requests for information, interviews of
witnesses
– After the investigation phase• Exchange of evidence obtained during investigation, general discussion
87
Cooperation in Merger Review
• Notification
• Early and frequent contacts between staff
• Discussions about relevant market, theory of anticompetitive harm, potential remedies
• Extensive use of waivers to facilitate the exchange of confidential information
• Attend meetings with merging parties
• Coordination of remedies
88
Cooperation in Cartel Cases
• Locating and identifying persons
• Serving documents
• Taking evidence
• Executing requests for searches and seizures
• Providing publicly available evidence
• Exchanging information
• Providing documents and reports
• Discussing the “theory of the case”
• Enforcing administrative and judicial decisions, including
the collection of fines
89
Lessons Learned
• Cooperation important and necessary
• Requires high degree of trust
• Regular and frequent contacts
• Earlier the better
• Respect for each other's interests
• Information sharing at all stages when possible
• Informal as important as formal
• Confidence in safeguards to protect confidential information
• Can help stretch resources
90
• Suggestions fell into three main categories:
– Suggestions on how to maximise the benefits of co-operation within the existing legal and practical constraints
– Suggestion on how to improve the existing system of co-operation by addressing the effects of legal and practical constraints on co-operation
– Suggestions on how to improve interaction between enforcers, establish contacts, and develop procedures and best practices for more effective relationships.
How to improve international co-operation
91
• Adopted by OECD Council on 16 September 2014. It revises the 1995 Recommendation.
The revision process:
Recommendation on International Co-operation (2014)
WP3, October 2013
WP3, February 2014
CC+ WP3, June 2014
OECD Council, September 2014
• A drafting team worked on the draft Recommendation to be discussed at the WP3 in February 2014.
• BIAC (business voice to the OECD) was involved in the discussion on drafts.
• The drafting team continued to work on the draft and developed another revised draft for the approval at the June meeting.
• BIAC continued to be consulted during the process.
The new recommendation was approved.
92
• The new recommendation recognises the benefits of effective co-operation not only for competition authorities as well as for businesses. – Reducing regulatory costs and delays, limiting the risk of inconsistent
analysis and remedies
• Main points:– Members’ commitment to effective international co-operation
– Consultation and Comity
– Notification procedures
– Coordination of parallel investigations
– Exchange of information
– Investigative assistance
Recommendation on International Co-operation (2014)
Available at: http://www.oecd.org/daf/competition/international-coop-competition-2014-recommendation.htm 93
• The new recommendation recognises the benefits of effective co-operation not only for competition authorities as well as for businesses. – Reducing regulatory costs and delays, limiting the risk of inconsistent
analysis and remedies
• Main points:– Members’ commitment to effective international co-operation
– Consultation and Comity
– Notification procedures
– Coordination of parallel investigations
– Exchange of information
– Investigative assistance
Recommendation on International Co-operation (2014)
Available at: http://www.oecd.org/daf/competition/international-coop-competition-2014-recommendation.htm
94
Members’ commitment to effective international co-operation
OECD Recommendation on International Co-operation (2014):
Adherents commit to effective international co-operation and take appropriate steps to minimise direct or indirect obstacles or restrictions to effective enforcement co-operation between competition authorities.
• Minimising the impact of legislation and regulations that might restrict co-operation or hinder an investigation or proceeding of other countries
• Transparency of respective substantive and procedural rules
• Reducing inconsistencies between their leniency or amnesty programmes
95
Improving the ability of authorities to exchange information
Non-confidential information
• e.g. publicly available informatio
Agency confidential information
• Information internally generated by competition authorities
Third-party confidential information
• Promote the use of waivers
• Call for the adoption of “information gateway” provisions
Safeguard
• to adequately protect confidential information
96
Exchange of confidential information
International agreements (second generation
agreement)
• Australia-US (1999)
• EU-Swiss (2013)
• NZCC-ACCC (2013)
• Nordic countries (2001)
• European Competition Network (2004)
National provisions
• Australia (Section 155AAA)
• Canada (Section 29)
• Germany (§ 50)
• UK (Section 243)
OECD Recommendation on International Co-operation (2014):
Adherents should consider promoting the adoption of legal provisions allowing for the exchange of confidential information between competition authorities without the need to obtain prior consent from the source of the information (“information gateways”).
97
• Investigation assistance may include:– Providing public information
– Assisting in obtaining confidential information
– Employing its authority to compel the production of information in the form of testimony or documents on behalf of the other authority
– Ensuring the service of official documents of the other authority
– Executing searches on behalf of the other authority
Investigative assistance OECD Recommendation on International Co-operation (2014):
[…] competition authorities of the Adherents should support each other on a voluntary basis in their enforcement activity by providing each other with investigative assistance as appropriate and practicable, taking into account available resources and priorities.
98
The use of gateways: examples
Marine Hose
• Controlling prices, bid rigging and allocating market involving marine hose
• The ACCC co-operated closely with UKOFT,USDOJ
• The use of the UK overseas information gateway by the ACCC
• Disclosed information: email communications and witness statements
• The ACCC investigation resulted in a sanction of a total of AUD $8.24 million
Fine paper
• Price fixing in the supply of copy paper
• The ACCC exercised its information gateway provision (155AAA) to assist the NZCC.
• The ACCC allowed the NZCC to see, but not take copies of, protected information. The NZCC later obtained a subpoena by itself.
99
76%
9%
15%
0
1-2
3+
Source: Michal S. Gal, "Antitrust in a Globalized Economy: The Unique Challenges of
Small and of Developed Economies, 33 Fordham International Law Journal 1-56 (2009)
Number of international/global cartels cases brought by small agencies over a period of 5 years
Global cartels are investigated by a limited
number of jurisdictions
100
A recent project at the OECD - NAEC
• NAEC (New Approaches to Economic Challenges)- the OECD-wide project.
• Agencies today will each make their own decisions regardless of various co-operation tools. Given that, its draft on competition focuses on the costs and likelihood of disagreement and the complexity of co-ordination.
• Reasons for divergent outcomes – The authorities in the two jurisdictions apply different rules of
substantive analysis in assessing the merger.
– Conditions of competition are materially different in the two jurisdictions
– The two authorities have simply come to different outcomes, for example because the case is border-line or because the evidence collected and its interpretation were different.
101
Complexity of co-operation
• As the number of agencies involved grows and the number of cross border cases increases, the current system may prove insufficient or inefficient. – Cases may involve agencies
which do not have a co-operation agreement
– Also, these co-operation agreements may be different in scope and provide for different co-operation tools
102
A
B
CD
E
# of authorities
Interfaces of co-operation
1 0
2 1
5 10
10 45
20 190
30 435
40 780
50 1,225
100 4,950
Complexity of co-operation
• As the number of agencies involved grows and the number of cross border cases increases, the current system may prove insufficient or inefficient. – Cases may involve agencies
which do not have a co-operation agreement
– Also, these co-operation agreements may be different in scope and provide for different co-operation tools
103
A
B
CD
E
# of authorities
Interfaces of co-operation
1 0
2 1
5 10
10 45
20 190
30 435
40 780
50 1,225
100 4,950
Examples of cartel cross-border investigations
Air Cargo
• Investigations by USDOJ, EC, Australia, Canada, and Korea following co-ordinated dawn raids
• Resulted in over $1.7 billion fines in US, over €799 million fines in EU etc.
Marine Hose
• Investigations by USDOJ, EC, UK, Australia, Japan, Korea
• Unprecedented level of co-operation: involved exchange of confidential information, co-ordination of remedies, extradition
Automobile parts
• Investigation by more than 10 authorities following co-ordinated dawn raids
• Resulted thus far in over $2.3 billion fines in US, over €1.1 billion fines in EU etc.
104
Complexity of co-operation
• As the number of agencies involved grows and the number of cross border cases increases, the current system may prove insufficient or inefficient. – Cases may involve agencies
which do not have a co-operation agreement
– Also, these co-operation agreements may be different in scope and provide for different co-operation tools
105
A
B
CD
E
# of authorities
Interfaces of co-operation
1 0
2 1
5 10
10 45
20 190
30 435
40 780
50 1,225
100 4,950
Future challenges for international co-operation
• Increase the number of countries involved in
international enforcement co-operation
• Improve legal basis for formal/information co-
operation
• Facilitate the exchange of information
• Envisage new means of enhanced co-operation?
– Adopting multilateral instruments e.g. one-stop shop for
leniency markers
– Developing international standards for formal comity
– Mutual recognition of other agencies’ decisions
– Non-binding deference to one ‘lead authority’
106
Thanks for your attention!
Please visit:
http://www.oecd.org/daf/competition
http://www.oecd.org/daf/competition/internationalco-
operationandcompetition.htm
107
International Enforcement Co-operation An OECD perspective
Antonio Capobianco
Senior Competition Law Expert
OECD Competition [email protected]
Superintendence of Industry and Commerce, Columbia
February 2014