International Competition Policy Advisory Committee: Request For Papers

DEPARTMENT OF JUSTICE

Antitrust Division

International Competition Policy Advisory Committee: Request For

Papers

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 would be considered. However, submissions made

prior to March 1999 would be especially timely.

Multijurisdictional Merger Review

A key of 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.

1. 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 translational mergers and

earlier periods of robust M&A activity, be that in terms of industries

affected, driving factors, concentration levels, or other factors?

2. The Advisory Committee is charged with undertaking a medium-term

perspective on international antitrust issues. Accordingly, analysis of

likely future developments in international M&M activity could prove

instructive, particularly if it identified likely regional, sectoral,

industrial and other trends.

3. 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-a-vis another jurisdiction. Also, what do you see

as the positive features of foreign merger regulations, is any--e.g.,

speed, limited document production, etc.?

4. 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?

5. 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.

6. 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.

7. Regarding premerger notification requirements, jurisdictions

differ widely with respect to, inter alia, jurisdictional thresholds,

timing, information requirements and review period. Some argue that

these differences hinder cooperation among antitrust

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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.

8. 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?).

9. 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?

10. 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 not be perceived,

to threaten the fundamental sovereignty of another jurisdiction.

11. 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.

12. 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.

13. 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?

14. 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.

15. 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.

16. 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

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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.

17. 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?

18. 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.

19. 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 usefully be undertaken to promote effective competition.

1. 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 in this? Which practices cause the most serious problems from

the standpoint of international trade effects? From the standpoint of

competition policy?

2. 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 be

judged by competition principles or principles of trade policy? If the

former, should conduct be judged by that nation's competition

principles under a non-discrimination standard or some other

competition principles?

3. 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?

4. 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?

5. There have been a number of 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, whether? If not, why not?

6. 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.

7. 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.

8. 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.

9. 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?

10. 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?

11. The World Trade Organization (WTO) has taken an increasing

interest in competition policy including the formation of a Working

Group on Trade an 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 members countries. What

role should the World Trade Organization (WTO) play in competition

policy? What should be the next steps for the WTO Working group?

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12. 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?

Enforcement Cooperation

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:

1. 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?

2. 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?

3. 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?

4. 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-a-vis

hard core cartel activities? Are criminal penalties necessary? Compare

the benefits and drawbacks of taking up this issue in regional or

plurilateral fora, e.g., respectively NAFTA or the OECD, or on a

bilateral 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.

5. 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?

6. 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).

7. 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?

8. 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 negotiated a bilateral accord that

is awaiting final approval. This paper (or papers) could consider the

following.

9. 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

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exchange and protection of confidential information? If so, how? If

not, why not?

10. 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.

11. 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?

12. 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.

13. 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.

14. 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?

15. 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: ICPAC, U.S. Department of Justice,

Antitrust Division--Rm. 10011, 601 D Street, N.W., Washington, DC

20530, Facsimile: (202) 514-4508, Electronic Mail: [email protected].

Merit E. Janow,

Executive Director, International Competition Policy Advisory

Committee.

[FR Doc. 98-28547 Filed 10-26-98; 8:45 am]

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