It is August, many of you are in vacation or will go soon. Thus, it is the right time for a policy topic, something light but forward-looking to be enjoyed while sipping an ice tea in the middle of your daily Linkedin journey (I know you do that).
International cooperation in antitrust law: where we stand
The topic is international cooperation in antitrust procedures. It is commonly known that competition law is normally national or regional in scope, and no binding international treaties are currently in place. This is true for both substantial and procedural rules and is a major difference from other fields of law such as IP law. Although the OECD and the International Competition Network (ICN) provide for guidelines and recommendations with the aim to harmonise competition law worldwide, these soft law tools are not mandatory for national enforcers.
While the efforts made over the years by the OECD and the ICN helped reducing the distances between civil and common law countries, administrative and prosecutorial approaches, and young and old agencies in small and large markets, there is still significant room for improvement. For example, one thinks of how resource-draining is for companies to file cross-borders mergers in multiple jurisdictions. A lot of time, money, and often a high level of uncertainty arising from the power of some authorities to weigh-in unclear national interests whose scope goes far beyond competition law.
The proposal from the DoJ
In order to address issues like the one above, in 2014 the OECD invited national governments to consider whether new approaches to international co-operation in enforcing competition law are needed.
On 1 June 2018, in a speech delivered in Washington DC at the Council on Foreign Relations, DoJ Assistant Attorney General Makan Delrahim followed up to OECD´s invitation by introducing a “Multilateral Framework on Procedures in Competition Law Investigation and Enforcement” (“MFP”) and inviting other antitrust enforcers to join the project. According to Delrahim, the MFP should be an international accord on procedural norms that almost every agency already has recognized in some form or another. The focus has been put on due process commitments regarding: non-discrimination, transparency, timely resolution, confidentiality, conflicts of interest, proper notice, opportunity to defend, access to counsel, and judicial review.
In an age where the US are pulling out from multilateral cooperation and international treaties, Delrahim´s proposal goes in a different direction.
Does the current international cooperation framework meet the needs of a globalised world?
Until the 1990s, the need for international cooperation in the field of competition law was relatively limited, as only few authorities around the world actually did enforce competition laws in a cross-border context. Moreover, the bilateral relationship between Brussels and Washington covered most (if not all) of the need for co-operation in those days.
Today, the situation is completely different. We live in a hyper-globalised world, where everyone can sell goods and services everywhere online and offline and is theoretically exposed to antitrust enforcement in more than 140 jurisdictions. Dealing with sometimes radically inconsistent antitrust approaches at national level may be too much of a burden for undertakings, and this is especially true when it comes to procedural norms and due process.
What are the objectives of the DoJ´s proposal?
The US have taken the lead on this issue, and it might appear as a bit of a paradox considering Trump´s policy in other trade-related issues. However, the move is well pondered by the US administration and seems to be in the interest of all the countries with a strong antitrust regulatory framework.
The draft prepared by the DoJ and not yet publicly disclosed is based on guidelines and recommendations prepared by OECD, ICN and on the best practises of competition authorities around the world. However, the main difference with the current international framework is that the project launched by the DoJ contains compliance mechanisms which go beyond suggestions, guidelines and recommendations. The compliance mechanisms do not envision establishing either a formal and binding dispute settlement mechanism or other threats of retaliation. On the contrary, based on what Delrahim said, they will be focused on having enforcers respecting their commitments in order to avoid potential harm to reputation, which is a core value in the competition community and, supposedly, a potent mean of enhancing compliance. It remains to be seen how this will be drafted in the text of the MFP.
What is the true goal pursued by the DoJ here? Probably, it might consist in putting pressure on jurisdictions such as China and India whose antitrust procedures do not always meet the high standards set by the ICN and OECD or go along with the consolidated importance of these countries in international trade. In other words, the US administration saw American companies being treated unfairly by some foreign competition authorities and is now trying to address this issue through harmonisation of procedural norms. This is why the DoJ´s step is not a surprise and its proposal might be beneficial for European countries as well.
Response to DoJ´s proposal and next steps
As to the feedback received by the DoJ so far, a dozen countries are already on board. However, the European Commission has not joined as of today and it is not clear whether it will join in the near future. Moreover, it seems that there is still some scepticism among EU member states on the overlapping between the DoJ´s proposal and the cooperation tools which have been in place for decades (i.e.: OECD, ICN, ECN).
The text of the MFP is supposed to be unveiled at the Fordham conference (5-7 September), where Makan Delrahim will be a keynote speaker. There is no doubt that this might be a major step forward in the history of antitrust. However, some questions remain unanswered at the moment:
- how will the vague compliance mechanisms described by Delrahim be drafted in practice?
- aside from the incentives to comply, what is the incentive for national enforcers to join? In other words, how will a national enforcer be harmed by not participating?
- what will be the final position of the European Commission and the EU member states?
- will the choice of Trump´s administration to pull the US out of many international treaties be a factor for the outcome of this attempt of enhanced cooperation among national antitrust enforcers?
While we wait for further developments, it seems clear that the globalised world would require a more sophisticate approach to international cooperation in antitrust law. This would allow market players enjoying more procedural consistency worldwide and avoid that lack of transparency and due process hinder a global level playing field.