THE CONTRIBUTION OF BILATERAL TRADE OR COMPETITION AGREEMENTS TO COMPETITION LAW ENFORCEMENT COOPERATION

Dr Philip Marsden,

Competition Law Forum Director and Senior Research Fellow

Competition Provisions in RTAs UNCTAD/YEDITEPE UNIVERSITY SEMINAR 31 July / 01 August 2006

www.biicl.org

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OVERVIEW

• Objectives and Methodology • Findings: General and Specific • Recommendations 2

OBJECTIVES

• Identifying factors affecting the choice of cooperative instruments • Evaluating their contribution to: – (formal and informal) enforcement cooperation – non-enforcement related cooperation • Identifying factors impeding cooperation www.biicl.org

OBJECTIVES

Competition provisions in FTAs vs. Agency-agency enforcement arrangements : – value added over spontaneous cooperation between agencies?

– likely to assist the evolution of cooperation (including follow-on agreements)? www.biicl.org

OBJECTIVES

How do competition provisions of the FTAs or the agency-to-agency cooperation agreements : • help increase effective enforcement cooperation • ensure that anticompetitive business practices do not undermine the benefits of trade liberalisation www.biicl.org

AGREEMENTS STUDIED

Canada and Chile • Chapter L and J, Canada-Chile Free Trade Agreement (CCFTA) • Canada-Chile Memorandum of Understanding (CCMOU) Canada and Costa Rica • Chapter XI, Canada-Costa Rica Free Trade Agreement (CCRFTA) EU and Mexico • Annex XV, EU-Mexico Free Trade Agreement (EU-Mex FTA) www.biicl.org

METHODOLOGY

Problems

• Very little literature on these cooperation arrangements • No publicly available official reports

Result

• Majority of research conducted through: – Detailed questionnaires – Interviewing officials (see annexes to papers)

More caveats!

– Agreements quite recent – Constraints of confidentiality www.biicl.org

GENERAL FINDINGS

Benefits of Cooperation Arrangements: • Cross-fertilisation/best practices : OECD Recommendations and US EC Agreements provided the model • FTAs may introduce a working relationship which further agency-to agency agreements may consolidate (Canada/Chile) • FTAs may contain detailed cooperation provisions comparable to agency-to-agency agreements (Canada/Costa Rica; EU/Mexico) • Cooperation agreements promote trust and confidence competition agencies of the parties between the www.biicl.org

GENERAL FINDINGS

• Notifications are important for three reasons: (a) an early warning of anticompetitive behaviour; (b) establish channels of communication; and (c) send a clear signal to undertakings that agencies take antitrust enforcement seriously • Consultations and exchanges of information: – opportunity for agencies to offer support, advice and experience www.biicl.org

GENERAL FINDINGS

Limitations of Cooperation Arrangements: • ‘Soft law’ obligations: – relatively vague/imprecise – each party effectively interprets the extent of its obligations – unenforceable in law between the parties – no dispute settlement procedures (see EU-Mex FTA

infra

) – but not a major problem www.biicl.org

GENERAL FINDINGS

• Restrictions on exchange of confidential business information: – the arrangements do not require or permit any information exchange that would otherwise not be permissible – most officials believe this is the

chief limitation

on cooperation www.biicl.org

SPECIFIC FINDINGS: CANADA / CHILE

• The CCFTA and CCMOU established a relatively framework for both cooperation and coordination comprehensive • Chapter J of CCFTA: – important government-to-government policy statement – enumerates different methods of cooperation – general obligations; could potentially apply to any competition issue • CCMOU: – consolidated working relationship established by CCFTA – more detailed mechanism www.biicl.org

SPECIFIC FINDINGS: CANADA / CHILE

• Notifications (1): – one sent from Canada to Chile • Exchanging non-confidential information: – merger files – policy issues • Informal discussion – case related issues – on specific matters e.g. technical assistance programme www.biicl.org

SPECIFIC FINDINGS: CANADA / CHILE

• ‘Periodic meetings’ not as regular as expected • No requests for cooperation • FTA vs. agency-to-agency agreement? – CCMOU contributes more chapter in the CCFTA to enforcement cooperation than the – more detailed www.biicl.org

SPECIFIC FINDINGS: CANADA / COSTA RICA

• Chapter XI has introduced a working relationship between the antitrust agencies • Framework can now direct and improve interaction if necessary • Potential is there but practice has been less enthusiastic www.biicl.org

SPECIFIC FINDINGS: CANADA / COSTA RICA

• Notifications (0): • Requests for cooperation (2 at most): • Technical assistance cooperation project being planned www.biicl.org

SPECIFIC FINDINGS: CANADA / COSTA RICA

• FTA vs. agency-to-agency agreement?

– competition provisions of CCRFTA as useful and as effective agency-to-agency agreements as – very little difference in substance between Chapter XI CCRFTA and CCMOU – additional express obligations: • independent and impartial authority • principle of non-discrimination www.biicl.org

SPECIFIC FINDINGS: EU / MEXICO

• Cooperation more official, more open and more intense of EU-Mex FTA since signing • Notifications (32): – Mexico notified EU 31 times – EU notified Mexico once • Requests for consultation (14): – EU made 2 – Mexico made 12 www.biicl.org

SPECIFIC FINDINGS: EU / MEXICO

• No requests for positive comity • Technical assistance programme to take off soon – involves 7 different areas including competition policy • Day-to-day information exchanges: – non-confidential information – generally involves technical aspects of competition enforcement www.biicl.org

SPECIFIC FINDINGS: EU / MEXICO

• Cooperation could be more intense

,

e.g. the provisions on coordinated or parallel enforcement & (abbreviated form of) positive comity have not yet been used • Note: dispute settlement procedures –

de facto

vs.

de jure

situation – one authority believes that they do not apply to Annex XV – another believes they do but that they would practically never used be – authors believe this a non-issue www.biicl.org

SPECIFIC FINDINGS: EU / MEXICO

• FTAs vs. agency-to-agency agreements?

– provisions of Annex XV are as useful and effective as those that could have been included in an agency-to-agency agreement – no great difference in substance between Annex XV and current agency-to-agency agreements e.g. CCMOU, US/EU, US/Canada www.biicl.org

RECOMMENDATIONS: GENERAL

• Cooperation agreements have obvious limitations , but they are still useful and valuable • However, may be less useful than before: – informal cooperation – guidance from existing agreements – development of international fora e.g. the ICN –

quaere

: can informal cooperation replace the detail of bilateral cooperation agreements?

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RECOMMENDATIONS: SPECIFIC

All three relationships: • Existing framework is satisfactory agreement is required at this stage - No further agency-to-agency • New agreement welcome only if it provided for the exchange of confidential information • Global initiative as precursor to bilateral approach • Problems ahead: – definitions – how information shall be used – Publish reports on cooperation!

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