This represents a request for papers by the International Competition Policy Advisory Committee
(Advisory Committee). The following is an illustrative list of topics and issues under consideration by the Advisory Committee in its three core areas of focus: multijurisdictional mergers; trade and competition policy interface matters; and enforcement cooperation. The intention of this list is to identify a wide range of key issues where written submissions from U.S. or foreign economists, lawyers, business executives or other experts would be particularly welcome. Interested parties also are invited to submit papers on other topics of their particular expertise if relevant to the three core areas identified above.
In terms of timing, the Advisory Committee intends to conclude its work in the fall of 1999. Thus, we would very much like to have your views before the Advisory Committee by March of 1999. Submissions made after that date also will be considered. However, submissions made prior to March 1999 would be especially timely.
Multijurisdictional Merger Review
A key objective of the Advisory Committee in this area is to identify the burdens and conflicts stemming from procedural and substantive differences between competition authorities in multijurisdictional merger review, and to devise policy responses that might address these burdens and avoid conflicts while ensuring that antitrust authorities have the tools needed to identify and remedy anticompetitive mergers.
- A number of explanations have been advanced by experts for the increase in U.S. domestic and cross-border merger activity, among them the following: a robust U.S. economy and stock market; increased globalization; rapid technological change; economic deregulation; and general industry upheaval in particular industries. This paper would explore the principal factors driving international mergers, both outbound and inbound, and provide commercial and economic perspectives on the merger wave of the 1990s. Sectoral, historical and comparative perspectives would be welcome. For example, are there systemic differences between the current wave of transnational mergers and earlier periods of robust M&A activity, be that in terms of industries affected, driving factors, concentration levels, or other factors?
- The Advisory Committee is charged with undertaking a medium-term perspective on international antitrust issues. Accordingly, analysis of likely future developments in international M&A activity could prove instructive, particularly if it identified likely regional, sectoral, industrial and other trends.
- In the last five years, if your firm has completed an acquisition, merger or joint venture with a U.S. or foreign firm which in turn required antitrust notification to one or more foreign competition authorities, please share your perspectives with respect to the following matters:
Describe the problems, if any, that arose because of underlying differences in oversight by competition authorities at home and abroad. Consider both procedural and substantive factors -- e.g., divergent timing and filing requirements, confidentiality concerns, transaction costs, differences in substantive law, agency procedures, politicization, and conflicts in law. If applicable, please also describe how your approach to addressing these issues (in the context of competition policy) differed from your approach to addressing analogous issues caused by differences in oversight in other legal contexts, i.e. securities laws, tax laws, etc.
Please also describe any perceived benefits from differences in oversight, such as the ability to "arbitrage" a favorable decision in one jurisdiction vis-à-vis another jurisdiction. Also, what do you see as the positive features of foreign merger regulations, if any -- e.g., speed, limited document production, etc?
- From your experience as a business executive, lawyer or financial advisor involved in transactions, identify any policy measures that could be undertaken by U.S. antitrust authorities, acting on their own or in cooperation with foreign authorities, that you believe would help to reduce sources of friction, conflict or burden that arise in the context of mergers, joint ventures or acquisitions affecting or requiring antitrust merger notification in more than one jurisdiction. What new arrangements, if any, might be desirable to facilitate resolution of conflicts between U.S. and foreign reviewing authorities?
- This paper would identify the special problems, if any, arising from (time-consuming) multiple merger review processes faced by firms in rapidly changing, high-tech industries and, if there are such special problems, identify possible solutions.
- A number of jurisdictions extend the reach of their antitrust merger control laws to transactions that arguably have only a tenuous nexus to the jurisdiction. This paper would explore whether the exercise of extraterritorial jurisdiction to compel antitrust notification of a proposed transaction with no (or de minimis) potential effect(s) in that jurisdiction conflicts with principles of international law. Further, the paper would consider, inter alia, whether an "effects" test, similar to that applied in Sherman Act cases or whether limitations on notification requirements, such as the exemptions to the Hart- Scott-Rodino Antitrust Improvements Act for certain transactions involving foreign parties, could serve as a model for other jurisdictions.
- Regarding premerger notification requirements, jurisdictions differ widely with respect to, inter alia, jurisdictional thresholds, timing, information requirements and review periods. Some argue that these differences hinder cooperation among antitrust enforcement agencies and lead to commercial inconvenience, additional transaction costs and legal uncertainty, even for parties to transactions that raise no substantive antitrust issues. This paper would evaluate the extent to which the burdens that stem from these procedural differences in pre-merger notification requirements are manageable by merging parties and experienced counsel and/or are acceptable costs of doing transnational deals and those that warrant reform. Further this paper would consider whether procedural harmonization (e.g., common forms, common timetables) is the appropriate response or whether alternative approaches might address these burdens. This paper should provide as much detail as possible with respect to the specific elements of procedural harmonization that are thought to be the most useful or the alternative approaches that should be considered.
- This paper would compare the premerger notification systems in the United States, the EC, Canada and Japan, identifying the major differences and similarities across the systems. Further, the paper would explore areas of change and evolution (e.g., has there been a trend toward convergence over time?).
- When more than one jurisdiction's competition authority reviews the same transaction, overlapping review may lead to conflicting decisions on the merits of the transaction or the appropriate remedy. For example, one authority may approve and another seek to block the same deal, often forcing the companies to respond to the most restrictive regime. This paper would seek to identify the types of cases that present an international conflict. That is, when do different results or remedies rise to the level of a global problem? Further, what mechanisms, if any, should be implemented to either avoid and/or resolve these conflicts?
- The antitrust merger control laws in a number of jurisdictions apply to foreign transactions. That is, the acquisition will occur outside the jurisdiction and to the extent the target has operations within the jurisdiction, the acquiror would acquire only indirect control over the operations. This paper would examine generally the remedies that may be imposed in foreign transactions, particularly where the appropriate remedy may be located outside the reviewing jurisdiction. The paper also would consider whether the findings support the proposition that an antitrust enforcement agency should decline jurisdiction where an appropriate remedy cannot be fashioned or defer to a reviewing agency that is able to impose a remedy. The paper also would seek to identify the circumstances where extraterritorial remedies would be perceived, and alternatively would be perceived, and alternatively would not be perceived, to threaten the fundamental sovereignty of another jurisdiction.
- It has been suggested that transparency of laws and law enforcement activities has the potential to reduce uncertainty for merging parties, fosters consistency in case-by-case decision-making, encourages public confidence that the rules are being applied in even-handed and rational ways, and promotes learning. This paper would consider how transparency could be achieved on a global basis and whether there is a way to reach an agreement at the international level that puts the onus on national authorities to improve transparency. Respondents also might consider whether existing international organizations (e.g., the OECD, the WTO, UNCTAD, or others) can play a role in this regard, and if so what that role might be.
- International cooperation between U.S. and foreign competition authorities reviewing the same merger offers the possibility of reducing costs and time, avoiding unnecessary duplication of efforts, enhancing the data gathering process and avoiding conflicts. This paper would seek to identify the types of cases that would most likely benefit from coordination as well as the current impediments to cooperation. For example, some commentators have suggested that mergers involving global markets or where the product market is essentially identical worldwide and/or where a remedy imposed by one jurisdiction is potentially capable of alleviating the competitive concerns of other jurisdictions are factors indicating the potential benefits of cooperation are significant. By contrast, cooperation may not be as useful in cases where few jurisdictions are affected, markets are local, market structure and competitive conditions are factually distinct, and/or competition concerns arising in any country are remediable by divestiture of one of the merging parties' local subsidiaries. Further, confidentiality rules are considered a significant impediment to cooperation. Can circumstances be identified where it would be in the best interest of merging parties to waive confidentiality? Also, what mechanisms could be implemented to encourage waivers? This paper also would consider the extent to which private antitrust enforcement in the U.S. and abroad has the potential to undermine effectiveness of consultation/relief coordination.
- This paper would consider the role traditional and/or positive comity should play in merger enforcement. Further, what are the policy and legal implications of an agency in one jurisdiction taking action under its antitrust merger control law in order to remedy antitrust concerns of another jurisdiction?
- When cooperation and other dispute avoidance efforts fail, antitrust authorities are left with attempting to find a mechanism for dispute resolution. Currently, no formal mechanism is in place to handle the role of dispute resolution between two jurisdictions which have reached different and incompatible conclusions following a merger investigation. Although the OECD currently provides a voluntary mechanism for dispute resolution among OECD Member States, this procedure has not been utilized in the past. This paper would explore what mechanisms, if any, could be implemented to resolve disputes. In particular, whether and when mediation would be an attractive option in the merger context. Consideration also needs to be given to the appropriate forum, timing, the composition of the decision-making panel, and the choice of law/legal test that would be applied.
- This paper would consider whether, and if so how, the U.S. premerger notification system could be reformed in the framework of reform globally. This paper would identify and discuss those aspects of the U.S. premerger notification system that adversely impact on international mergers. Issues to consider could include whether the 30 day/20 day review periods are impractical, and if so what adjustments would be necessary to respond both to the needs of merging firms as well as those officials charged with scrutinizing proposed mergers; whether requests for additional information are overly broad; whether the jurisdictional test (including size of the parties and size of the transaction thresholds) should be altered (e.g., raised or lowered); and whether the exemption thresholds for transactions involving foreign firms should be raised. In addition, this paper could also consider how reform of domestic practices might be viewed by foreign jurisdictions.
- There is substantial overlap between the Antitrust Division and other federal agencies of the U.S. government with respect to responsibility for reviewing mergers, joint ventures or other alliances. This paper would provide a comparative institutional analysis of U.S. agency responsibility for merger review and address the implications of "bifurcated" or "overlapping" responsibilities in those sectors where the markets are global. Further, the paper would draw comparative implications for foreign regimes that also have bifurcated or overlapping review.
- National competition policies governing patent and know-how licensing contracts impose conflicting obstacles to cross-border business transactions and arrangements, particularly technology licensing, joint ventures, mergers and distribution arrangements. For example, the United States, the EU and Japan have adopted detailed policies on the validity of restrictive clauses in such agreements. The three sets of rules exhibit marked differences, however, in both procedure and substance. This paper would explore the differences of approach (in these and other major countries), analyze when differences are justified and when compliance with different regimes is an unnecessary burden. What are possible solutions to minimize the burden? Is harmonization a feasible option?
- Concerns about confidentiality and leakage of information appear to have been successfully addressed with respect to domestic mergers through the Protocol for Coordination in Merger Investigations Between the Federal Enforcement Agencies and State Attorneys General. This paper should assess that arrangement, with particular focus on whether or not the approach taken to the treatment of confidential information and the penalties associated with misuse might provide relevant precedence for new international arrangements.
- This paper would identify the areas of substantive divergence in major jurisdictions with active antitrust merger control regimes. Further, the paper would explore areas of change and evolution (e.g., has there been a trend toward convergence over time?).
Trade and Competition Interface Issues
The Advisory Committee is interested in considering policy responses that could deter anticompetitive foreign restraints that block access to markets; reduce barriers to effective prosecution of such restraints with adverse effects in the United States, and expand cooperation between U.S. and foreign authorities. Accordingly, papers need to consider what might be done to facilitate vigorous enforcement of competition laws and policies in those jurisdictions with competition laws or policies in place, as well as those steps that might be usefully undertaken to promote effective competition.
- This paper would consider the evidence that anticompetitive arrangements or practices involving conduct that occurs in more than one country are prohibiting or thwarting international trading nations from deriving the gains from international trade liberalization. More specifically, how do anticompetitive business practices impede U.S. firms from selling goods or services or investing abroad? How serious a problem is this? Which practices cause the most serious problems from the standpoint of international trade effects? From the standpoint of competition policy?
- What is the proper role of competition policy in addressing barriers to international trade and investment stemming from private anticompetitive arrangement? Should a decision by a nation to tolerate private arrangements that create such barriers to access to a market conduct be judged by that nation's competition principles under a non-discrimination standard or some other competition principles?
- Under what conditions can traditional tools of domestic competition policy be applied to address anticompetitive private practices in those jurisdictions that have such laws and policies in place?
- Is a decision by one nation not to adopt or enforce consumer-oriented competition laws that would ameliorate access problems (a) an appropriate exercise of its sovereignty, (b) an affront to sound competition objectives, or (c) a breach of government-to-government obligations best treated as a trade dispute? How should these disputes be addressed?
- There have been a number international trade disputes centering around allegations of lax or discriminatory enforcement of competition laws. In addition, the very question of what comprises an effective competition policy and enforcement regime is under examination in major international fora such as the OECD and elsewhere. This paper would analyze the criteria by which national or international competition authorities could assess enforcement of competition laws. How might one judge whether a jurisdiction has a strong or weak enforcement record -- e.g., using statistical evaluations of cases brought, investigatory staff, penalties imposed, etc? Would it be useful for international organizations to be reviewing such enforcement practices? If so, where? If not, why not?
- This paper would consider the extent to which non-competition policy objectives are being facilitated by competition policies in foreign jurisdictions -- e.g., industrial policies, job preservation, etc.
- This paper would provide an analysis of the unilateral enforcement of the U.S. antitrust laws to attack foreign conduct abroad that affects U.S. exports. It would analyze the government and private case law concerning "outbound" foreign commerce.
- Some experts view positive comity as the best option for developing cooperation between U.S. and foreign competition authorities and thereby attacking anticompetitive conduct abroad that thwarts exports of U.S. goods and services. This paper would evaluate the record to date as well as the potential application of the positive comity provisions of the 1991 EC-U.S. antitrust cooperation agreement and the 1998 EC-U.S. positive comity agreement.
- It has long been recognized that market access problems can stem not only from private anticompetitive restraints that can nullify the effects of trade liberalization, but also those restraints that emanate from hybrid government-private arrangements. This paper would analyze the different ways in which governments can facilitate anticompetitive conduct including encouragement, government ownership or part ownership, lack of enforcement of competition laws, discriminatory enforcement, as well as other means. What role should antitrust enforcement play in attacking these types of practices?
- What role should unilateral and bilateral U.S. trade policy initiatives play in addressing anticompetitive conduct by private parties? By government-owned companies? By private-public hybrid companies? By private parties encouraged by governmental agencies?
- The World Trade Organization (WTO) has taken an increasing interest in competition policy including the formation of a Working Group on Trade and Competition Policy. Is the WTO a suitable forum for competition issues? Some suggest a dispute settlement role for the WTO. Others suggest that the WTO could serve to encourage the development of effective competition laws and enforcement in member countries. What role should the World Trade Organization (WTO) play in competition policy? What should be the next steps for the WTO Working group?
- A variety of proposals are being debated to address the conflicts between competition authorities (in both the merger and cooperative enforcement contexts). As a way of evaluating these dispute resolution proposals, please describe and assess dispute resolution mechanisms in non-antitrust public enforcement actions, i.e., tax, international trade, securities, commodities, etc. Are there any lessons that can be drawn from these experiences that might apply in the antitrust context?
Barriers to U.S. Transnational Litigation and Investigation Efforts. It has long been argued by U.S. enforcement officials that effective prosecution of anticompetitive restraints, particularly prosecutions involving foreign corporations and defendants, can be constrained by limited access to documents and witnesses located abroad e.g., by a foreign country's law (such as a blocking law) or by differences in legal standards. Accordingly, this paper (or papers) could consider:
- Those barriers most often encountered in major foreign jurisdictions that affect U.S. transnational litigation and investigation efforts, both with respect to outbound and inbound effects on U.S. commerce. Are these obstacles statutory in nature (such as a blocking law) or statutory in combination with local business practice (such as might be the case with secrecy practices)? Are these barriers traditional or have they arisen through laws enacted within the past two decades?
- What has the United States done -- unilaterally or through multilateral or plurilateral fora -- to overcome barriers to U.S. transnational litigation and investigation efforts? Have U.S. efforts been successful in lowering or eliminating barriers to litigation and investigative efforts in transnational matters? Provide examples of case law or of specific experiences that indicate the results achieved by any such efforts by the United States. What further steps might the United States take and why? What steps would be inadvisable for the United States to undertake and why?
- From the perspective of a potentially cooperative foreign defendant or witness, describe the foreign laws or practices that impede or delay a person from providing information to U.S. authorities for use in an antitrust enforcement matter. What specific examples can be used to illustrate these barriers? How, if at all, can such obstacles be overcome and what resulting impact would there be on U.S. antitrust investigations or litigation? Would any changes in U.S. law improve the likelihood that barriers might be lowered for foreign persons providing information to U.S. antitrust authorities?
- Enhancing Antitrust Enforcement in Foreign Jurisdictions This paper could address several questions: How can the United States encourage foreign jurisdictions to enhance their antitrust or competition law enforcement programs and, in particular, to engage in stronger enforcement and cooperative enforcement undertakings vis-à-vis hard core cartel activities? Are criminal penalties necessary? Compare the benefits and drawbacks of taking up this issue in a regional or plurilateral fora, e.g., respectively NAFTA or the OECD, or on a biliteral basis. Comparative Antitrust Enforcement. The suggestions below for papers may be addressed in a single comprehensive piece or else selected topics may the subject of a paper.
- Compare the level and type of federal U.S.antitrust enforcement with antitrust enforcement in other major jurisdictions that have developed antitrust or competition laws. What accounts for differences in enforcement practices and records?
- Compare remedies and the effectiveness of remedies for antitrust violations in the U.S. and other major jurisdictions with developed antitrust laws. What is the impact of these differences on detection and enforcement of international cartels? This paper should focus substantial attention on a comparison of criminal antitrust enforcement programs between the United States and other jurisdictions with criminal antitrust laws. Similarly, this paper should identify those U.S. enforcement tools and U.S. sanctions that are most effective in advancing the United States civil and criminal antitrust enforcement efforts (e.g., in the criminal context, enforcement tools such as compulsory powers, grand jury process, and the Department of Justice's corporate leniency program; and sanctions including, for example, personal liability and the possibility of incarceration).
- To what extent do differences in private rights of action impact antitrust compliance and antitrust enforcement in the United States and in foreign countries? How do private rights and available remedies in the United States compare with those in other jurisdictions? What are the causes of this disparity? What other jurisdictions have active private antitrust bars? What propels (or inhibits) private actions in these jurisdictions as compared with the United States? Should there be changes in the U.S. laws or elsewhere -- why, and how might these be accomplished?
- Exchange of Confidential Information - Business Perspective This paper will provide the business perspective on cooperative antitrust enforcement and associated concerns regarding the exchange of confidential business information between the U.S. and foreign antitrust authorities for use in their respective antitrust enforcement activities. Provide specific examples of incidents that have given rise to such concerns and the laws or practices underlying such incidents. Include any differences in concerns, if any, that exist when the information is exchanged for use in a civil or, separately, in a criminal matter
Exchange of Confidential Information - Civil Enforcement Matters. The United States is authorized under the International Antitrust Enforcement Assistance Act of 1994 (IAEAA) to negotiate agreements with foreign jurisdictions under which U.S. antitrust authorities who are engaged in a civil investigation may request that the foreign authority provide confidential information from its files to the United States or that the foreign authority retrieve confidential information to assist the United States in its investigation. The IAEAA permits U.S. antitrust authorities, with certain assurances, to provide reciprocal assistance to the foreign authority with which it has a mutual assistance agreement (excepting confidential information obtained in connection with a Hart-Scott-Rodino premerger notification). Further, the IAEAA requires that a foreign authority must accord confidential information furnished to it by U.S. antitrust authorities with the same degree of confidentiality protection as the information would receive in the United States, including downstream confidentiality. The United States and Australia have recently negotiation a bilateral accord that is awaiting final approval. This paper (or papers) could consider the following.
- In what other jurisdictions are authorities eligible to enter into confidential information sharing agreements? With the goal of enhanced enforcement cooperation in mind, should the United States encourage antitrust authorities in other jurisdictions to obtain authority like that in the United States which enables the exchange and protection of confidential information? If so, how? If not, why not?
- What form of agreement(s) would best achieve the goal of enhanced enforcement cooperation? Should such agreements be negotiated on a bilateral or another basis?
Exchange of Confidential Information - Criminal Enforcement Matters. The United States is party to 19 bilateral mutual assistance treaties in criminal matters (MLATs), under which it can request assistance in obtaining information, including confidential information, from its MLAT partners for use in U.S. criminal antitrust enforcement investigations and litigation. This paper (or papers) could consider the following.
- What has been the United States' experience in seeking assistance for criminal antitrust matters under its MLATs? For those jurisdictions that are party to bilateral antitrust agreements with the United States but not to MLATs, is there any meaningful difference in the assistance that can be provided? With the goal of enhanced cooperation in mind, how might the United States encourage antitrust authorities in other jurisdictions to change restrictions in their laws so that existing (or future) MLATs with such countries may extend to antitrust matters?
- The United States also encounters obstacles when seeking extradition from abroad of defendants to U.S. antitrust actions. In what way can the United States encourage foreign countries to lower their barriers to providing the United States with extradition assistance in antitrust matters? Provide examples and an analysis of successes or frustrations in U.S. efforts to seek extradition assistance from abroad in connection with a U.S. criminal antitrust matter.
Transnational Cartels. The topics below are intended to be addressed in separate essays.
- This paper should consider the incidence of transnational cartels. What does the empirical evidence suggest is the impact that transnational cartels have on the United States' economy and on U.S. business interests? This paper should also compare the nature and effect of transnational cartels and of cartel enforcement in the U.S. today with earlier periods. This paper might also explore whether the structure of international markets has changed so that international cartels are more likely to be detected now than in earlier periods. Finally, this paper should assess what recent evidence suggests about the relative economic significance, in terms of cartel structure and welfare losses, of transnational versus domestic cartel arrangements.
- Is there any evidence that weak antitrust or competition policy enforcement is producing environments that are home to international cartels? Are there global markets or market structures that are likely to foster cartel arrangements? Or more generally, are there market or structural factors that can be identified as associated with domestic or international cartel formation and operations, and are there any differences between the two?
- Hard Core Cartels. This paper will comment on whether it is necessary or useful to have a common international understanding about what constitutes a "hard core cartel", both domestically and internationally, and on how the term should be defined. This paper would consider the potential for cooperation under existing bilateral or international instruments (e.g., bilateral accords and OECD Recommendations, among others), and assess next steps under these agreements. Further, this paper would make suggestions for enhanced enforcement cooperation between the United States and foreign jurisdictions in enforcement efforts against hard core cartels. These suggestions would include recommendations for positive incentives the United States might offer to foreign jurisdictions as encouragement for them to alert the United States to hard core cartel activities that are affecting the United States.
Please send written replies to:
U.S. Department of Justice
Antitrust Division - Rm. 10011
601 D Street, N.W.
Washington, DC 20530
Facsimile: (202) 514-4508
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