Best Practices for Competition Law Enforcement: March 18, 2016 Russell W. Damtoft Associate Director Office of International Affairs United States Federal Trade Commission The views expressed herein are those of the speaker and do not necessarily represent the views of the Federal Trade Commission or any individual Commissioner

A Complex Endeavor Competition law requires predicting the future economic consequences of present behavior. –Under-enforcement allows anticompetitive practices to undermine consumer welfare –Over-enforcement can deter efficient and innovative business conduct We need to get the balance right.

Reinventing the Wheel Balance achieved through active process of trial and error Over 100 competition authorities Search for convergence Key institutions: –International Competition Network –OECD –UNCTAD

International Competition Network Members: almost all the world’s competition agencies Operates by consensus Recommended Practices, and other guidance documents Practical Enforcement Tools Comparative Reports Experience sharing meetings and discussions

OECD 34 most developed countries Competition Committee Council recommendations Best practices roundtables Peer reviews Competition Policy Toolkit Bid Rigging Project

UNCTAD Competition arm of United Nations Annual expert meeting Peer reviews

Why use Best Practices Documents? The documents made public by these international bodies: –Represent policy consensus –Provide a framework –Offer implementation tools –Aid in assessing progress The guidance is useful, relevant across legal systems, and can be an effective measure for self-review.

For Example: Merger Notification & Procedures Nexus to reviewing jurisdiction Notification thresholds Timing of notification Review periods Requirements for initial notification Conduct of investigations Procedural fairness Transparency; Confidentiality; Interagency coordination; Remedies; Competition agency powers; and Review of merger control provisions ICN Recommended Practices address: OECD adopted similar Recommendations

For Example: Merger Notification & Procedures ICN Recommended Practice: Jurisdiction should be asserted only over transactions that have an appropriate nexus with the jurisdiction concerned.

Convergence between ICN and OECD

Substantive Merger Analysis ICN Recommended Practices address: Legal framework Market definition Use of market shares: thresholds and presumptions Competitive effects in horizontal merger review Unilateral effects Coordinated effects Entry and expansion Failing firm/exiting assets

Examples: Merger Analysis Recommended Practice: Agencies generally should assess the competitive effects of a merger within economically meaningful markets. A relevant market consists of a product or group of products and a geographic area in which it is produced or sold that could be subject to an exercise of market power. Recommended Practice: In conducting competitive effects analysis, agencies should consider whether a merger likely will result in anticompetitive unilateral or coordinated effects. These two theories of competitive harm provide the analytical frameworks for determining whether a horizontal merger may be expected to harm competition significantly.

Assessment of Dominance ICN Recommended Practices address: –General Framework –Assessment Criteria Market Shares –Safe harbors/indicators Entry Analysis Further Criteria –Dominance/substantial market power assessment in small and/or isolated economies –Transparency

Example: Assessment of Dominance Recommended Practice: Market shares of the firm under investigation and its existing competitors, including their development during the past years, should be used as an indication or starting point for the dominance/substantial market power analysis. Recommended Practice: The assessment of durability of market power, with a focus on barriers to entry or expansion, should be an integral part of the analysis of dominance/substantial market power.

ICN Guidance on Investigative Process ICN Guidance address: –Transparency –Engagement –Protection of Confidential Information Discussed in more detail yesterday

Practical Guidance

ICN Training on Demand Virtual library of online training modules Competition law basics Practical techniques Available to public on ICN website; YouTube

OECD Competition Assessment Toolkit Designed for use by ministries, legislators, etc. officials with no specialized economics or competition policy training. Gives examples of the benefits of competition, provides an introduction. Shows some ways that governments assess competitive effects of their policies. Provides detailed technical guidance on key issues to consider when performing competition assessment. Translated into many languages (including Russian).

Summary While economies, history, and legal systems differ, the laws of economics and business incentives are universal. Best practices can allow benefit from others’ process of trial and error – instead of your own. Can be adapted to your own reality