Bilateral and Plurilateral
Cooperation in
Competition Cases
Russell W. Damtoft
United States Federal Trade
Commission
Sao Paulo, Brazil
April, 2003
The views reflected herein are those of the speakers and do not
necessarily reflect the views of the United States, the US Federal Trade
Commission, or any official thereof.
The Need for Cooperation



Markets are increasingly
cross-border, regional,
and global.
Local or national markets
can have cross-border
implications as well.
Anticompetitive practices
and mergers more often
affect more than one
country.
General Principles of
Effective Cooperation

Respect national sovereignty

Respect the jurisdictional rules of
the countries involved

Respect important interests

Protection of confidentiality
Confidentiality

A key to successful cooperation




Enforcement is more effective when
businesses cooperate
Businesses won’t cooperate if they fear that
confidential information will be compromised
Successful cooperation requires knowing that
confidences will be maintained
Requires high degree of trust between
authorities
Foundation of Competition
Cooperation Relationships
 Formal
Instruments
 Bilateral
Agreements
 Multilateral Agreements
 Trade Agreements
 Informal
Relationships
Bilateral Agreements

United States has bilateral
cooperation agreements with
eight jurisdictions
Multilateral Agreements

1995 OECD
Recommendation
Concerning
Cooperation
between Member
Countries on
Anticompetitive
Practices Affecting
International Trade

Provisions are
similar to bilateral
antitrust
cooperation
agreements
Cooperation in Trade
Agreements

Cooperation encouraged by:





NAFTA
U.S./Chile agreement
Other bilateral agreements
FTAA draft agreement
But day to day cooperation
usually takes place between
authorities under bilateral or
informal mechanisms, not
trade agreement
Cooperation Among NAFTA
Partners

Principle of cooperation in Article
1501(2):

“Each Party recognizes the importance of
cooperation and coordination among their
authorities to further effective competition law
enforcement in the free trade area. The
Parties shall cooperate on issues of
competition law enforcement policy, including
mutual legal assistance, notification,
consultation and exchange of information
relating to the enforcement of competition
laws and policies in the free trade area.”
A Trio of Bilateral
Agreements
2003 Agreement
Informal Cooperation



Where there is good will, trust,
and a desire to work together,
most cooperation does not
require formal instruments or
the exchange of confidential
information
The most important instruments
are the telephone and e-mail!
“Getting to know each other”
matters
What really matters

A relationship
based on
mutual trust is
what makes
cooperation
work.
Typical Contents of Formal
Cooperation Agreements







Notification
Enforcement Cooperation
Coordination
Referral of Cases Involving Both
Countries (Positive Comity)
Avoidance of Conflicts
Confidentiality
Consultations
Notification
Originally a defensive measure in
case one Party's enforcement was
perceived to infringe the other’s
national sovereignty
 Today its purpose is more as an
instrument of cooperation to make
sure other Party knows what it
needs to know

Formal Notification Typically
Required When:


Relevant to other country’s important
interests
Investigation of:





anticompetitive practices carried out in the
other country
Merger involving firm from the other country
Conduct thought to be approved by the other
country
Remedies may be directed at conduct or
assets in the other country’s territory
Information sought from other country
Notification Does Not
Replace Informal Contacts

Not all cases of interest will be subject to
formal notification



For example, multinational merger between
two firms from third (or fourth) countries with
impacts in both countries
Investigating country may be unaware of
impacts in other country
Regular informal contacts keep everyone
“in the loop.”
Notification and
Confidentiality

Notification of identity of firms being
investigated is sensitive




Harm to reputation of those later found to
have been acting legally
Misuse of information for personal gain (stock
market manipulation?)
Potential to compromise notifying country's
investigation
Confidentiality must be assured if
notification is to serve its purpose
Enforcement Cooperation

In principle, effective enforcement
cooperation would benefit from common
interest in sharing of information about:





Investigative facts
Theories about markets
Remedies
But cooperation is subject to national
confidentiality laws
Therefore, there are practical limits on
cooperation.
Cooperation Within the
Limits of Confidentiality

Confidential information usually can be
shared when:



firms agree to waive protection of
confidentiality laws, or
Information is confidential only as a matter of
agency practice, not legal requirement
Theories and conclusions about market
definition, competitive effects, and
possible remedies can be shared if it does
not reveal protected information
Enforcement Assistance
Agreements

Separate from normal bilateral
cooperation agreements
Competition Legal Enforcement
Assistance Agreements
 Criminal Mutual Legal Assistance
Treaties (MLATs)

Competition Legal
Assistance Agreements


U.S. International Antitrust
Enforcement Assistance Act authorizes
reciprocal agreements for authorities
to share information (including
confidential information) and gather
evidence for each other
Stringent conditions on confidentiality
and usage
Only One Agreement Has
Been Reached Thus Far


U.S./Australia
Agreement (1999)
Other agreements
may be reached in
the future
Coordination


Can apply when both countries are investigating
related or the same matters
Formal factors to consider:





whether both parties will achieve objectives
abilities to obtain required information
possible reduction of cost
potential advantages of coordinated remedies
Main issue in practice is whether providers of
confidential information will consent to the
sharing of such information
Positive Comity
Conduct affecting both countries
 One country can effect a remedy
that serves all
 One country requests the other to
take enforcement action against
conduct that is affecting its
important interests
 Rarely invoked formally

Positive Comity Example



Alleged exclusionary
conduct by airline
computer reservation
system with impact on
both U.S. airlines and
European consumers
U.S. referred to E.C.
E.C. took action; U.S.
deferred to E.C.
Enhanced Positive Comity
Agreement
U.S. - E.U. agreement
 Adds to positive comity provision in
bilateral cooperation agreement
 Referring party presumptively defers
to the other when certain conditions
are met
 Party receiving reference keeps
referring Party informed

Avoidance of Conflicts
If other elements are observed, this
usually takes care of itself
 "Be a good neighbor”
 Consider how law enforcement
actions may be implemented so as
to avoid harming other Party’s
important interests
 Central issue is usually remedies
that have cross border effect

Other features of
cooperation agreements
Confidentiality
 Consultations
 Direct communications between
competition authorities
 No binding dispute settlement
mechanisms

Cooperation In Practice:
the U.S. Experience


Common markets
make U.S./Canada
relationship the
most active in the
hemisphere
Cooperation in
both merger and
non-merger cases
(including cartels)
Cooperation With Other
Nations is Increasing


Active
U.S./Mexico
cooperation
U.S./Brazil
cooperation is
strong; formal
agreement took
effect last
month
Cooperation in Merger
Review






Notification
Early and frequent contacts between staff
Discussions about relevant market,
theory of anticompetitive harm, potential
remedies
Extensive use of waivers to facilitate the
exchange of confidential information
Attend meetings with merging parties
Coordination of remedies
Challenges

Sharing information while respecting
confidentiality obligations

Different timelines and stages of
Investigation

Dealing with strategic behavior by
firms
Lessons Learned









Cooperation important and necessary
Requires high degree of trust
Regular and frequent contacts
Earlier the better
Respect for each other's interests
Information sharing at all stages when possible
Informal as important as formal
Confidence in safeguards to protect confidential
information
Can help stretch resources
Issues for Cooperation in
the Multilateral Context





Doha Ministerial provides that WTO WG to look
at, among other things: “modalities for
voluntary cooperation”
How can mutual trust and close working
relationships be realistically built and sustained
with all countries?
What kinds of cooperation lend themselves to a
multilateral context?
What if fundamental changes occur in one
country?
Need to distinguish between enforcement
cooperation and technical assistance?