1. www.biicl.org 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

2. www.biicl.org 2 OVERVIEW Objectives and Methodology Findings: General and Specific Recommendations

3. www.biicl.org 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

4. www.biicl.org 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)? OBJECTIVES

5. www.biicl.org 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 OBJECTIVES

6. 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)

7. 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 (see annexes to papers) –Interviewing officials More caveats! –Agreements quite recent –Constraints of confidentiality

8. 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 between the competition agencies of the parties

9. www.biicl.org 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 GENERAL FINDINGS

10. www.biicl.org 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 GENERAL FINDINGS

11. www.biicl.org 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 GENERAL FINDINGS

12. www.biicl.org SPECIFIC FINDINGS: CANADA / CHILE The CCFTA and CCMOU established a relatively comprehensive framework for both cooperation and coordination 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

13. 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

14. 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 to enforcement cooperation than the chapter in the CCFTA –more detailed

15. 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

16. www.biicl.org SPECIFIC FINDINGS: CANADA / COSTA RICA Notifications (0): Requests for cooperation (2 at most): Technical assistance cooperation project being planned

17. www.biicl.org SPECIFIC FINDINGS: CANADA / COSTA RICA FTA vs. agency-to-agency agreement? –competition provisions of CCRFTA as useful and as effective as agency-to-agency agreements –very little difference in substance between Chapter XI CCRFTA and CCMOU –additional express obligations: independent and impartial authority principle of non-discrimination

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

19. 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

20. 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 be used –authors believe this a non-issue

21. 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

22. 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?

23. www.biicl.org RECOMMENDATIONS: SPECIFIC All three relationships: Existing framework is satisfactory - No further agency-to-agency agreement is required at this stage 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!