International cooperation on competition: achievements and ...en.cade.gov.br/brics-presentations/plenary-2_fred-jenny_oecd.pdf · International cooperation on competition: achievements

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

http://oe.cd/int-coop-comp

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

http://oe.cd/IJ

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


Competition provisions in trade

agreements


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


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.


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.


25


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.


26


Ex Turkey-Montenegro Free trade Agreement art. 24.5


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

Thank you very much for your attention

[email protected]

31

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








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


• reviewing the relative merits of various forms of co-operation and lessons to be learnt from co-operation efforts in other policy fields


• 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

http://oe.cd/int-coop-comp

What can agencies co-operate on



• Taking evidence





• 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

http://oe.cd/IJ


• Minimising the impact of legislation and regulations that restrict co-operation or hinder an investigation or proceeding of other countries


• Reducing inconsistencies between leniency/ amnesty programmes

40


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

http://www.oecd.org/daf/competition/challenges-international-coop-competition-2014.htm

http://www.oecd.org/daf/competition/international-coop-competition-2014-recommendation.htm

http://www.oecd.org/daf/competition/inventory-competition-agreements.htm

http://www.oecd.org/daf/competition/inventory-competition-agency-mous.htm

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

mailto:[email protected]

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


• reviewing the relative merits of various forms of co-operation and

lessons to be learnt from co-operation efforts in other policy fields


• 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








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?


– 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



• Taking evidence





• 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


• Main points:– Members’ commitment to effective international co-operation



– Coordination of parallel investigations




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


• Main points:– Members’ commitment to effective international co-operation



– Coordination of parallel investigations




Available at: http://www.oecd.org/daf/competition/international-coop-competition-2014-recommendation.htm

94




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


• 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)


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


• 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


1 0

2 1

5 10

10 45

20 190

30 435

40 780

50 1,225

100 4,950





103

A

B

CD

E

# of authorities


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





105

A

B

CD

E

# of authorities


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

http://www.oecd.org/daf/competition

http://www.oecd.org/daf/competition/internationalco-operationandcompetition.htm

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

mailto:[email protected]

Documents

International cooperation on competition: achievements and ...en.cade.gov.br/brics-presentations/plenary-2_fred-jenny_oecd.pdf · International cooperation on competition: achievements