Opening Remarks by Konrad von Finckenstein, Q.C., Commissioner of Competition

American Bar Association, Section of Antitrust Law
Panel Entitled: "Global Warming? International Reaction to the ICPAC Report"
New York City, New York

July 11, 2000

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Introduction

It is a pleasure to be participating today in this discussion of the ICPAC Report. I appreciate the opportunity to comment on the Report from my viewpoint as head of a "foreign" competition authority, the Canadian Competition Bureau.

The Report constitutes a significant examination of current thinking on competition policy in the era of internationalization/globalization. It will no doubt be an extremely valuable reference tool not only for policy-makers in the U.S. but, as well, for many competition authorities worldwide as we continue to grapple with the issues it discusses.

We share many of the views set out in the Report and its recommendations. In my opening remarks, I'd like to comment on a few of them, particularly those directed towards formalizing and intensifying the use of bilateral cooperation agreements as well as those on multilateral merger review. Finally, I'd like to comment briefly on the Advisory Committee's proposal for a new Global Competition Initiative.

Enhancing Bilateral Cooperation

We support the call in the Report "to encourage and further deepen cross-border cooperation" in merger review as well as in respect of international anticartel enforcement. Indeed, we are of the view that cooperation in respect of all of a nation's competition laws ought to be the rule, rather than the exception. Of course, this is assuming among other things that the laws are reasonably compatible and the confidentiality protections reasonably similar.

And, insofar as the Report purports to distinguish between information obtained in the context of merger review and information obtained in the course of other antitrust investigations, we are also firmly in the camp that the former class of information ought not to be given a higher level of protection than other information obtained by competition authorities. So far, we have heard no convincing rationale to indicate that, as a category, mergers-related information is qualitatively more sensitive than, for example, prospective business plans we may obtain in the context of cartel, or any other, investigations.

Like the United States, Canada has developed ties, both formal and informal, with our foreign counterparts which have stood us in good stead when it comes time to consider matters of mutual interest. For over a decade now, Canada and the United States have had in place the Mutual Legal Assistance Treaty and enabling legislation which allows for "hard" cooperation in cartel and other criminal antitrust matters. We also utilize, almost on a daily basis, our "soft" cooperation agreement, the 1995 Canada-U.S. Agreement, to facilitate cooperation and coordination in cases involving, among other things, cross-border mergers, monopolization and deceptive telemarketing scams.

We are well on the way to deepening these ties with the United States in a number of ways:

And, while the United States is our most important trading partner and, thus, our most important partner for cooperation and coordination on antitrust matters, we are also broadening our own net of cooperation to other jurisdictions that are important to Canada:

Let me also mention that we regularly observe the use, both from the standpoint of a sending country as well as a receiving country, of the 1995 OECD Recommendation Concerning Co-operation Between Member Countries on Anticompetitive Practices Affecting International Trade. Let there be no doubt as to its value in encouraging cooperative efforts among competition authorities.

Of course, we aren't the only ones. Many other countries and agencies are also entering into cooperation arrangements.

But there is also no doubt that we can and must do more. For example, by the time of this conference, OECD Ministers will have considered a Report on the implementation of the 1998 OECD Council Recommendation Concerning Effective Action Against Hard Core Cartels. The Report, which I commend to your reading, contains a proposed three year work program dedicated towards examining five key topics:

Central to our discussions will be how we can commence to dispel many of the misconceptions out there about the nature of cooperation, the benefits and, yes, the risks associated with it. We ought to be well past the stage of blanket prohibitions on exchanges where the risks are appropriately addressed. There's clearly a lot of work to do.

The Review of Transnational Mergers

The ICPAC Report recommends that the United States continue to support OECD efforts to further develop a common framework for merger notification, including the development of common definitions. It also urges the OECD to continue to focus its efforts on identifying the minimum information necessary to identify whether mergers raise competitive issues as well as to specify categories of data that may prove useful to narrow or resolve potential issues early in the process.

I support such efforts. In my role as Chair of Working Party No. 3 of the Competition Law and Policy Committee of the OECD, I have sought to ensure that we keep such efforts front-and-centre on the agenda along with our anticartel activities, and that the input of private sector stakeholders is sought and reflected in any such consideration as well. I believe real progress towards better understanding and transparency in members countries' merger review policies can and ought to be made. I have certainly made transparency and predictability among the cornerstones of Canadian competition law enforcement since I became head of the Competition Bureau.

The 1999 OECD notification framework for transnational mergers was a good first step. We should now turn our attention to a consideration of what would constitute clear and objective notification triggers.

On the Advisory Committee's "distant vision" regarding work sharing in merger review among jurisdictions, I believe it is useful to "think outside the box" like this and want to encourage interested parties to convey similar "distant visions" for consideration by policy makers.

Global Competition Initiative

In its Report, the Advisory Committee recommends the establishment of the Global Competition Initiative, a new multilateral competition organization that would act as a forum for intergovernmental consultations and enable competition policy officials to exchange views and experiences on a range of competition policy issues. This new Initiative would also include a non-binding mediation mechanism dedicated to resolving disputes over competition policy.

As appealing as this proposal might seem on the surface, it is not something I would support. I believe that the premise of the Initiative - that the several existing multilateral and plurilateral organizations do not provide adequate opportunities for antitrust officials to meet and talk about competition policy issues - is erroneous. The OECD, UNCTAD, APEC, the numerous bar meetings in Canada, the U.S. and the European Community, such as this one, and the numerous conferences devoted specifically to competition policy issues offer significant scope for a meaningful exchange of views and experiences among competition policy officials. If they wanted, to competition law enforcers could travel the world and never set foot in their offices. How many international institutions do we really need and what is the optimum number of meetings? In my view we have just about reached the saturation point.

A second reason is that the Initiative is exclusively for competition policy experts. While the Report does mention that there should be interaction between the Initiative and the WTO, I suspect that this would be no more than ephemeral. Essentially, like the World Intellectual Property Organization, the Initiative would not receive the type of widespread support needed to become a relevant, mainstream organization. Competition policy does not operate in a vacuum; an untethered, stand alone institution in an increasingly integrated world would constitute an oxymoron.

The combined impact of technology, trade liberalization, privatization and regulatory reform is widening and deepening the economic space that global, private economic players can enter. Mergers, strategic alliances, joint ventures and other forms of business practices are providing firms with the opportunity to reach beyond national or even regional markets. These developments pose fresh challenges for competition law enforcers in terms of ensuring that this economic space is open to all comers. In my view, this calls for a multilateral approach to competition policy that is linked with trade.

I am on public record as to the reasons why I support the WTO as the vehicle to bring competition policy mainstream and will not go into any detail given the little time available today. In sum, I think that competition policy is a natural fit within the WTO architecture: the WTO is dedicated to making the international trading system more competitive which, after all, is at the heart of competition law enforcement. Moreover, it is not perceived as a "rich-man's club" like the OECD, nor a "third world debating forum" like UNCTAD. It has been very successful in bringing down government barriers to trade and has been the "institution of choice" in non-trade policy areas such as government procurement and intellectual property. It is the institution that has the membership, the intellectual depth and breadth, profile and experience to engender support for the development of a framework agreement on competition policy. As well, the WTO has substantial experience in the establishment of special arrangements for developing and emerging nations. Finally, including competition policy in the WTO will bring to the fore the importance and relevance of competition policy as the key issue of the day in a globalizing world. This can help to capture the attention and focus the minds of key decision-makers who are in the position to make changes.

Despite the outcome in Seattle, I continue to believe that competition policy should be on the agenda of the millennium round. But in launching negotiations, we need to adopt a gradual and realistic approach. The negotiations should not try to find instant solutions to all the problems and issues that might arise in the interaction between trade and competition policy. Instead, we will need to focus tightly on those topics that can find the greatest support amongst the members.

I have set these elements out in detail in presentations I have made before ICPAC and in other fora. In a nutshell, a framework agreement should include: the adoption of a competition law incorporating the principles of transparency, national treatment, non-discrimination, guarantees of procedural fairness, common substantive approaches in respect of certain anticompetitive conduct (initially this would cover hard core cartels) and agreement on cooperation between competition authorities. It should also include a peer review mechanism along the lines of the existing Trade Policy Review Mechanism and dispute settlement procedures would not apply -- period.

I should also emphasize that such a framework agreement would require those countries with mature competition law systems to coordinate with UNCTAD, the OECD, the World Bank and our national counterparts in the delivery of technical assistance to help developing countries build their capacity in the competition law and policy field.

In terms of timing, I recognize that it would not be feasible to achieve all of these elements in the course of the next round. A multi-staged approach could be employed to reach final consensus on a fully elaborated framework agreement.

Conclusion

In ending, I would like to say a word about what is often characterized as the disconnect between trade and competition policy. To some degree this can be attributed to a somewhat self-inflated opinion of the role of the relevant policy and its contribution to the general economic welfare. Too frequently it is posited that one policy is superior to the other.

My antitrust friends complain that trade policy is captured by entrenched interests, that it is highly politicized and that competition policy instruments are "purer" than trade policy instruments.

Conversely my trade colleagues on occasion have derisively characterized competition policy agencies as something akin to an arcane, obscure cult that only comes out when the moon is full and cartels abound. The rest of the time we apparently live in caves and are blissfully unaware of the "real" world.

This type of sniping has only engendered mistrust between the two policy communities. We all recognize that neither policy is perfect; each is not always fully consistent with their respective ultimate goals. As someone who has had the privilege of working in both communities, it is apparent to me that one policy is not superior to the other and that both are legitimate in providing a more equitable playing field for all market participants. The two policy frameworks can and need to work in a complementary manner as safeguards of open and competitive markets to the benefit of consumers and businesses worldwide.

Thank you for your attention.