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ICC Policy Statement
International Cooperation
between Antitrust Authorities
Commission
on Law and Practice relating to Competition, 28 March 1996
Introduction
The increasing globalisation of business and competition is creating new
challenges for both enterprises and competition authorities. A rising
number of mergers and cooperation projects are falling within the scope
of several antitrust jurisdictions at the same time. This is causing a
considerable amount of bureaucracy and legal uncertainty to enterprises,
since national antitrust legislations and procedures differ considerably
from each other. Understandably enough, national antitrust authorities
are greatly interested in increased cooperation, especially through the
exchange of information in the individual cases notified, and in coordinating
their decisions.
It is thus no surprise
that the last two years have seen important developments in this area
at various levels:
- In August 1994
the US enacted the International Antitrust Enforcement Assistance Act
('the IAEAA') authorising the US authorities to cooperate with foreign
antitrust authorities in antitrust investigations pursuant to an antitrust
mutual assistance agreement that stipulates reciprocity and the protection
of sensitive business information. The US has not yet entered into any
MOUs under the terms of the IAEAA.
- In a parallel
move the EC Council of Ministers has now adopted the 1991 US/EC antitrust
cooperation agreement. This agreement obliges the US and EC authorities
to take into account the important interests of the other party at all
stages in their enforcement activities and to promote positive comity.
It provides for information exchange under conditions of confidentiality,
restricting the categories of information that can be exchanged. (See
further ICC paper reference no. 225/435 Rev 1.)
- Recently a group
of experts nominated by the European Commission published a report entitled
" Competition Policy in the New Trade Order : Strengthening International
Cooperation and Rules ", (`the EC Report'). This report encourages
work to begin on some form of international agreement on competition
law enforcement, involving exchange of information between antitrust
agencies `with watertight guarantees with respect to the protection
of its confidential nature' (although those are not actually the terms
of the proposal of the discussion paper). These developments do not
stand in isolation. There are a number of bilateral antitrust cooperation
agreements around the world as well as continuing work in the OECD and
other international fora on international antitrust cooperation and
convergence. The ICC wishes to participate in this debate to ensure
that the interests of business are safeguarded.
Business
views
Convergence
Although certain overarching competition law principles are generally
accepted in the major trading countries, considerable differences between
national antitrust laws do exist. There is a basic disagreement around
the world about certain functions of antitrust or competition law and
the underlying economic parameters to be applied, e.g. protection of competition
or competitors, the consumer interest, concepts of extra-territoriality.
Antitrust policies are an expression of particular economic constraints
applicable at a particular time and in a particular jurisdiction. The
ICC supports the concept of carefully evolving convergence of national
competition laws which currently can be very different in nature, even
to the point of conflict. The ICC perceives advantages to exist from a
levelling of the playing field in which business is not subjected to conflicting
or differing levels of requirements.
Cooperation
and information exchange
Against this background, ICC members in Europe think that in the absence
of sufficient convergence of substantive antitrust laws the EC Report's
recommendations go too far too quickly. Pending harmonisation of substantive
antitrust rules, there is, in their view, a significant risk of misunderstanding
and inappropriate action when material prepared, for example, for the
purposes of the European Commission finds its way to the US Justice Department
and/or the Federal Trade Commission. The dangers of misapprehension and
'reading between the lines' are very great. Without in any way being misleading,
a party will craft its submission to address the detailed and particular
concerns of a particular regulatory regime : as with wine, the information
may not travel well when transmitted
overseas.
Therefore they believe
that extending cooperation to the exchange of confidential information
would not be appropriate at this point in time and at the existing low
level of substantive convergence. This, in their view, is especially true
with respect to US and EC antitrust law, the differences between which
are of particular interest because a key recommendation of the EC Report
is to substantially extend the existing US/EC antitrust cooperation agreement.
These differences are significant, in their view, and are detailed in
the Appendix to this paper.
Other ICC members,
mainly in North America, take the view that it is not appropriate to call
for sufficient substantive convergence of antitrust laws before countries
can proceed with greater cooperation and exchange of information. If there
is sufficient basic level convergence in substantive laws between two
or more countries, there is no reason why information should not be exchanged
pursuant to a bilateral or multilateral arrangement. With respect to the
differences between the US and EU antitrust regimes they feel that these
regimes are not dissimilar to an extent that would undercut the basis
of EU/US information sharing. They point out that in broad terms, both
systems to a significant extent deal with the same kinds of conduct and
have similar regulatory mechanisms.
Protection
of business information
- Notwithstanding
these differences as to whether or not an exchange of confidential information
should be subject to prior convergence, it is the unanimous and grave
concern of all ICC members that information should be properly protected.
In many situations, the company whose information is at issue may be
able to point out competitive dangers not apparent to others that could
result from disclosing that information to a foreign government. Hence
providing the company with notice before its information - possibly
involving trade secrets - is disclosed to a foreign government will
help the domestic antitrust enforcement agency to make the most informed
possible decision as to whether such information should be shared.
The dangers of disclosing
confidential information or trade secrets to foreign agencies derive
from the fact that if such information falls into the hands of competitors
of the company involved, the competitive position of the company may
be adversely affected. There is a real possibility that such information
may include extremely sensitive material relating to the strategic plans
of the company, its investment plans and its marketing goals and methods.
Furthermore, any
erosion of the confidence that companies currently have that confidential
information will not be disclosed to competitors is bound to limit the
nature and extent of the data that companies are willing to supply voluntarily
and to impair the open dialogue between such companies and antitrust
agencies.
The ICC therefore
feels that, unless doing so would jeopardize an investigation, it is
essential that there be prior notification to a company before its confidential
information is disclosed to a foreign administration.
- Even under the
present US/EC agreement there are problems regarding the confidential
treatment of information. There remains doubt over what amounts to 'confidential'
information. The obligation of confidentiality in Art. 20(1) of EC Regulation
17/62 only relates to information formally obtained through notification
or under Articles 11-14. This contrasts with the view of the Merger
Task Force which regards all (including informally obtained) information
as confidential. In this context the ECJ decision in the SEP case (C36/92
of 19/5/94), which affirms that enterprises should always be able to
discuss with the European Commission in advance whether or not information
has confidential status with right of appeal to the Court, must be noted.
These problems would
be compounded if the cooperation proposals recommended in the EC Report
were adopted. Indeed, contrary to existing Community rules under Regulation
17, the EC/US Cooperation Agreement and the spirit of the SEP ruling,
a more encompassing confidential information exchange is advocated in
the EC Report, which entirely glosses over the question of how watertight
confidentiality is to be maintained.
- Similarly, the
ICC is concerned that information, passed on by one authority to the
other should not be at risk of further disclosure, e.g. information
passed on by the Brussels authorities to the Department of Justice,
may become the subject of civil litigation in the US leading to broad-ranging
discovery procedures against the Department of Justice.
- Besides information-sharing
agreements between countries, other cooperation is possible that will
not raise the problems discussed above. The Microsoft case demonstrates
that ad hoc cooperation with the companies' consent may also be useful
to companies and enforcement agencies alike.
- Even where the
consent of the companies is forthcoming, it is essential that any legislative
provisions made for the exchange of confidential information should
contain certain procedural safeguards, strictly regulating the use of
information concerned and reaffirming the need for the maintenance of
confidentiality.
- As mentioned
earlier, enterprises should be given prior notification of any proposed
exchange of information and granted an opportunity to be heard on
the necessity of such an exchange and on whether information is
confidential or not, unless doing so would be prejudicial to the
investigation. In the latter case, notice should be given as soon
as such prejudice no longer exists with a right to a retroactive
review with appropriate remedies;
- There should
be the possibility for an independent review of any adverse decisions;
- There should
be substantial convergence and similarity
in the laws protecting
solicitor-client privilege between one jurisdiction and another;
- The foreign
jurisdiction must provide competition law enforcement immunity of
a similar or greater nature than that which would be available or
which has been provided in the jurisdiction disclosing the information;
- The receiving
party must agree to reciprocate ; and
- Any exchange
of information should speed up the investigation process rather
than lead to extra delays.
In addition, any request
for information should include:
- precise identification
of the information required;
- an assurance
that there is a substantive case as well as jurisdiction over the
parties and matters at issue rather than a mere suspicion;
- a clear statement
of the reasons for the request and the manner in which the information
is to be used;
- an assurance
that the information will not be disclosed to any parties outside
the receiving authority, in particular potential third party plantiffs,
other agencies or foreign governments;
- an assurance
that the information will be used by the receiving authority only
for the purpose for which it was disclosed;
- an assurance
that the authority has exhausted its own administrative procedures
and possibilities before making the request;
- an assurance
that the information will be subject to conditions of confidentiality
at least as stringent as those of the jurisdiction supplying the information.
Summary
The globalisation
of markets and competition has created new challenges for business as
well as antitrust authorities.
The ICC perceives
advantages to exist from a levelling of the playing field in which the
business community is not subjected to conflicting requirements. The ICC
therefore supports the concept of carefully evolving convergence of national
competition laws.
This process may be
facilitated by increased cooperation between antitrust authorities. However,
one should not under-estimate the problems caused by the current differences
between antitrust laws both in substance and in procedure.
ICC members in Europe
think that with the current low level of substantive convergence, cooperation
between antitrust authorities should not include the exchange of confidential
information. In their view, this is especially true with respect to cooperation
between the United States and the European Union.
Other ICC members,
mainly in North America, think that convergence need not be a precondition
for closer cooperation between antitrust authorities as the antitrust
laws of particularly the United States and the European Union are already
broadly similar.
However, a serious
concern shared by all ICC members is that information exchanged should
be properly protected. Most importantly, unless doing so would jeopardize
an investigation, enterprises should be notified of any proposed exchange
and granted an opportunity to be heard. In addition, numerous other safeguards
are required which are set out above.
The ICC also points
out that, besides information sharing agreements, other forms of cooperation
are possible that do not raise the problems discussed above. The Microsoft
case demonstrates that ad hoc cooperation with the companies' consent
may also be useful to companies and enforcement agencies alike.
Document n°
225/450 Rev. 3
28th March 1996
Appendix
Differences
between US and EU competition systems referred to in paragraph two under
"Cooperation and information exchange":
- Only the US has
antitrust laws which protect both domestic and foreign trade. The EC
and its Member States do not. The EC system is focused on the internal
market and does not apparently work to protect foreign trade. It is
possible that the 1996 Intergovernmental Conference will act to change
the EC system. Without such change there will be a significant lack
of reciprocity with the US whose laws will be available to be used to
open foreign markets. To achieve the same objective as regards the US
market, EC enterprises encounter much greater difficulties.
- Article 85 of
the Rome Treaty provides for voluntary notification and exemption, whereas
Section 1 of the Sherman Act is a prohibition system. Article 85(1)
has a low threshold under which significant information is passed to
Brussels even where no antitrust violation exists. Many agreements are
caught by Article 85 which would not be caught by the American model.
In aggregate, EC antitrust authorities would have significantly more
information on commercial dealings than their US counterparts.
- Under the European
Community system, information is supplied to gain immunity from administrative
enforcement and penalty which follows from notification itself. Exemption
under Article 85(3) improves the quality of immunity. If passed to the
US system, the same information could lead to crimi
nal sanctions against
the company or individual concerned. This would be an unacceptable result
which must be avoided by all means.
- The US process
tends to be litigious and driven by private parties. In contrast, the
EC and national approaches within it are cooperative and rely to a greater
extent on filings with regulatory authorities. If information provided
under the EC system is to find its way to US authorities and be subject
to tougher (and sometimes criminal) sanctions, this will over time reduce
the willingness of parties to supply information. It is likely also
to have a significant effect on the EC enforcement process itself, leading
to a more confrontational approach on US lines.
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