Latest developments on the working group
on trade and competition
Sao Paulo, April 24 2003
Dr. F.J.L. SOUTY
Counsel for Multilateral Affairs, Competition Council,
Paris
Professor, University of La Rochelle
Two parts
 Part
One: On international cooperation in the
field of competition policy

Part two: On Competition policy items to be
discussed at the WTO
Part One
On international cooperation in the field of
competition policy
Internat’l Coop° can help Compet° Authorities
regain part of their operational Sovereignty
Scope: - Bilateral (EU/USA, USA/Canada, Aust/NZ)
- Regional (EC, Mercosur, Caricom, Andean Pact)
-Plurilateral (OECD)
- Multilateral (UNCTAD, WTO)
 Levels:
-Consultations
-Exchange of confidential or non-confidential informations
-Positive and Negative Comity
-Joint Investigations
 Types: - «optional» (i.e. bilateral)
- «commitments» (i.e. WTO)
= All types of agreements have advantages and limitations

The limitations of optional
cooperation agreements I



For cooperation to be balanced, cooperating countries must
have relatively similar levels of development and ewual
trade flows. Hence few bilateral agreements between
developed and developing countries of between large and
small economies
In an optional agreement, countries can refuse to cooperate
in specific cases if their trade interest diverge. Little
cooperation on competition cases can create serious Trade
frictions (Boeing/MDD; GE/Honeywell)
Regional agreements such as Mercosur, Caricom, Comesa
have not yet led to any significant cooperation
The limitations of optional
cooperation agreements II



Practically no cases of transatlantic cartel agreements have
been dismantled thanks to voluntary cooperation
agreements between the US and the EU Authorities;
Very few cases of successful positive Comity requests
between the US and the EU (See ICEPAC Report);
Most of the cooperation takes place informally and in cases
in which there is no significant trade issue (Mergers)
Part two
On Competition policy items to be
discussed at the WTO
Competition-related Provisions in
Existing WTO Agreements I




GATS, Article VIII: Members to ensure that state
monopolies do not act in a manner inconsistent with their
obligations/specific commitments
TRIPS, Art 8 & 40: Authority to take measures against
abuses of IPR/ AC licensing practices
Basic Telecom Negociations, Reference paper on
Regulatory principles: Commitment to adopt appropriate
measures to prevent A/C practices by major suppliers
Agreement on Safeguards, article 11.3: Members not to
encourage/support the adoption of non-governmental
measures equivalent to voluntary export restraints, orderly
marketing arrangements or other governmental
arrangements prohibited under art. 11.1
Competition-related Provisions in
Existing WTO Agreements II



General Procurement Agreement: raises the level of
Members to strengthen the openness, transparency and
predictability of procurement systems (thereby raising the
risks of international collusion and cartellization)
Agreement on Safeguards, article 11.3: Members not to
encourage/support the adoption of non-governmental
measures equivalent to voluntary export restraints, orderly
marketing arrangements or other governmental
arrangements prohibited under art. 11.1
Consultation Arrangements, 1960 Resolution under GATT
and GATS: Recognition that business practices that restrict
competition in international trade may hamper the
expansion of world trade and economic development
Implications for competition at
the WTO ?
Competition is NOT a new issue at the WTO
 However, it has been unsufficiently and not
systematically developed in the General Interest:
- Major sectoral areas are not covered
- Hard core cartels are not covered
- No provision on cooperation

- the need for a coherent case law cannot be met
Interesting comment on
Competition at the WTO
«WTO Agreements as they exist today are not efficient in
dealing with issues private restraints of international trade
which may be as detrimental to the free international
trading system as governemental barriers. As liberalization
of trade progresses through trade negociations and Government trade barriers are lowered and eliminated, the WTO
has to deal with issues of restrictive business practices of
private enterprises which restrain trade and counteract the
effects of liberalization achieved through trade negociations. In the long run, therefore, the WTO system will not
be complete without the inclusion of competition policy
within its framework in one form or another and this is
indeed the lesson of the Japanese Photographic Film Case»
Prof. Mitsuo MATSUSHITA, April 2002

What are the possible elements to be
negociated in a WTO Compet° Agreement?

Commitment by WTO Members to a set of core principles,
comprising transparency, non-discrimination and procedural
fairness in the enforcement of Compet° Law and Policy;




Commitments to the taking of measures against HCC;
Modalities for cooperation, of a voluntary nature, with res-pect to
national legislation, the exchange of national experience by
compet° authorities and aspects of enforcement;
Enhanced support for technical assistance and instituion-building
relating to compet° policy in the framework of the WTO but in
cooperation with other interested Organizations and National
Governments;
A standing WTO Committee on Comp° Policy to provide a Forum
for exchanges of nat? experiences/peer review promote voluntary
convergence in Member’s policies etc.
And now, discussion is
open!