Remarks by Lisa Campbell, Senior Deputy Commissioner of Competition
Global Antitrust Enforcement Symposium
Washington, United States
September 10, 2014
(Check against delivery)
On September 10th, I welcomed the opportunity to participate in a panel at Georgetown Law’s annual Global Antitrust Enforcement Symposium. My segment of the discussion covered a broad number of topics, including international cooperation on mergers, greater collaboration and sharing of best practices between agencies, efforts to support emerging competition authorities and the impact of innovation on competition law and enforcement. What follows is an overview of that presentation.
Collaboration on merger reviews in Canada and the United States
Improving the effectiveness of competition law enforcement through enhanced collaboration with international partners is a priority for the Bureau and this applies to all aspects of the Bureau’s work, including merger review. Due to the nature of our increasingly global economy, it’s no surprise that we are witnessing a growing number of mergers that are transnational in scope.
This is especially the case in Canada and the United States where we are, respectively, each other’s largest trading partner. In fact, the trading relationship between our two countries is so strong that it represents an exchange of approximately $1.4 million in goods and services every minute. (Source: Trade and Investment)
As a result of this close economic relationship, we have for many years successfully cooperated on merger investigations that affect both the United States and Canada. This is the result of a very successful long-standing bilateral agreement between the two countries that we know has worked well.
With this in mind, in order to further promote effective coordination between our respective agencies, in March of this year, the Competition Bureau, the U.S. Federal Trade Commission (FTC) and the U.S. Department of Justice Antitrust Division (U.S. DOJ) jointly issued “Best Practices on Cooperation in Merger Investigations”.
The goal of this document is to foster more efficient coordination among the agencies involved in merger transactions and to increase transparency for the legal and business communities by setting out the practices that our respective agencies seek to apply when reviewing the same merger.
The document outlines current day-to-day cooperation practices among the Bureau and its U.S. agency counterparts relating to: communication among the agencies, the coordination of review timetables, the collection and evaluation of evidence, as well as the consideration and implementation of remedies.
The Best Practices document also provides guidance for the legal and business communities on how to work with the three agencies to further enhance the coordination of merger reviews. They were developed from years of experience collaborating and reflect the strength of the relationship between the Bureau and its U.S. counterparts.
Now, it is one thing to talk about collaboration and cooperation in theory, but it’s quite another to put it into practice — and to have it succeed.
The Bureau and its U.S counterparts are fortunate to have a number of demonstrable successes stemming from its efforts to advance collaboration among the agencies. In fact, the recent Louisiana Pacific Corporation (LP) and Ainsworth Lumber (Ainsworth) transaction, in which LP was to acquire Ainsworth, is a prime example of the strength of this collaborative relationship.
The mills that would have been acquired under this transaction serve purchasers in both Canada and the United States. As a result, this was an ideal opportunity for the Bureau and the U.S. DOJ to work closely during our respective reviews of the proposed transaction.
The Bureau’s long-standing relationship with the U.S. DOJ ensured an efficient and coordinated review of this matter, one that was consistent with our agencies’ agreement on Best Practices.
Some of the collaborative steps that our two agencies took included: regular calls between case teams, sharing information provided by parties, sharing 3rd party information, comparing theories of harm, attending each other’s depositions, and coordinating on reviews of remedies proposed by the parties.
Additionally, our economists coordinated by — among other things — sharing findings with respect to oddities, errors or outliers in the data that could bias statistical results, sharing information on the composition of data fields, ensuring that preliminary econometric models yielded similar results and sharing issues in the parties’ expert submissions.
All of this work resulted in a more efficient review of this transaction for both agencies.
In the end, the Bureau’s review concluded that had LP acquired Ainsworth, it would have likely resulted in a substantial lessening of competition for the supply of oriented strand board (OSB).
The U.S. DOJ arrived at a similar conclusion. The parties ultimately decided to abandon the proposed transaction.
This is but one example of the kind of success that we have achieved through our collaboration with our US counterparts.
We are presently working with the U.S. DOJ and the FTC on a number of files and anticipate that we will have more successes like this to speak about in the near future.
The Bureau is not only working with its U.S. counterparts but is also actively involved in other international efforts to facilitate greater collaboration and sharing of best practices — and has much to be proud of in this regard.
Specifically, in the area of merger reviews, the Bureau was recently named co-chair of the International Competition Network’s (ICN) Merger Working Group for a three-year term. We will share this role with the European Commission and the Competition Commission of India.
For those not familiar with the ICN’s Merger Working Group, its mission is to:
- Enhance the effectiveness of its members’ merger review mechanisms
- Facilitate convergence at the procedural and substantive level; and
- Reduce the financial cost and time required of both the public and private sector in multi-jurisdictional merger reviews.
The long term goal of the group is to promote cooperation and convergence, improve the quality of members’ merger review, increase transparency and support members in avoiding unnecessary burdens on agencies and businesses.
With these objectives in mind, along with our co-chairs, we have developed a strategic plan for our three-year term. This plan has enabled us to identify priority projects and formulate work plans for coming years.
One of these projects is focused on Remedies in Merger Review. The Bureau is playing a central role in this project, aimed at updating the existing recommended practices for Merger Notification and Review Procedures to incorporate new information.
In the short term, the goal of the group is to undertake a review of existing work in this area, which may include engaging members on their respective experiences.
This is a timely subject, as cross-border mergers are becoming an area of increased cooperation and there is a need to address new challenges being raised.
The Mergers Working Group is also continuing its work on its International Merger Enforcement Cooperation project, which will further support this work on remedies.
The Bureau’s work with international organization is by no mean limited to the ICN. In fact, the Bureau is a member of the OECD Competition Committee Bureau, and our Commissioner has taken on the role of OECD-International Competition Network coordinator.
To further deepen our ties with the OECD and to facilitate a greater understanding of the work our agency undertakes in the area of merger review, we are participating in a nine month staff exchange with the OECD.
Matthew Chiasson from the Bureau’s Mergers Branch has just begun this exchange. It is our hope that this exchange will increase collaboration and sharing of best practices, specifically in the area of merger review.
The Bureau is strongly committed to increasing its collaboration with its international counterparts in all areas, including merger review. It our belief that through sharing best practices and other forms of collaboration, we enrich each other’s agencies and facilitate more effective and efficient merger reviews on a global scale. We will continue to seek out opportunities to work with agencies and with new and existing international counterparts.
International engagement with BRIC countries
One of the ways in which the Bureau believes it can make a valuable contribution, while gaining insight from other agencies, is through its relationship with emerging economies, like those who are members of the BRICS group of nations (Brazil, Russia, India, China and South Korea).
As I noted earlier, the Bureau recognizes that we live in a world that is becoming increasingly global and, as such, our relationships need to extend beyond our immediate borders and well established organizations like the OECD.
That is why we’re also developing relationships with counterparts in countries like China where we have begun work with, their Ministry of Commerce for the People’s Republic of China, the State Administration for Industry and Commerce, and the National Development and Reform Commission as well as China’s State-owned Assets Supervision and Administration Commission (SASAC).
This is with a view to facilitating future communication and collaboration between the agencies and in recognition of the growing significance of China’s investments and issues related to state-owned enterprises.
On the subject of state-owned enterprises, an issue that has arisen in the course of our discussions is the information that is required by the Bureau in a merger notification filing.
This is information regarding the relevant business activities of affiliates operating within the same geographic and product market that is required to assess the competitive impact of a proposed transaction.
The reason why this information is important is because it is used to determine the degree of concentration in the relevant market, which is a key factor in our analysis of the competitive impact of any proposed transaction.
The same analysis that is undertaken for non-SOE transactions must be completed for proposed transactions involving SOEs. Accordingly, we require information regarding the business activities of all other related SOEs operating within the same geographic and product markets.
We seek this information in all proposed transactions involving SOEs.
In the case of China, the information we require in order to be able to conduct our review is regarding other businesses controlled by the People’s Republic of China that operate or have holdings in in the same product and geographic market as the parties to the proposed transaction.
As such, we are actively engaging with our Chinese counterparts to facilitate our merger review processes in Canada.
The Bureau is also working with India to support competition agencies in that country.
In fact, last November, the Commissioner visited India and met with the Bureau’s colleagues in the Competition Commission of India (CCI).
This trip provided an opportunity for our two agencies to share best practices and learn from each other’s experiences.
From that trip we have sought out other opportunities to work with India and expect to be doing further work with the CCI in the coming year.
As a matter of fact, as part of our role as Chair of the ICN Merger Working Group that I referenced earlier, we will be taking an active role in the workshop taking place in India this December.
The broad goal of our efforts in all developing nations is to support efficient and effective competition enforcement across the globe.
Moving from an international lens to one that is broader, I’d like to speak now about how the Bureau is taking an active interest in the challenges facing anti-trust policy as it relates to sectors of the economy that are innovation-based.
The Bureau recognizes that technology and the advancement of innovation-based industries have a significant impact on the way antitrust policy is developed and enforced.
Competitive rivalry often drives the pursuit of innovation and, as a result, competition policy and enforcement plays a critical role in this regard.
Whether it is through mergers, joint ventures, strategic alliances, contractual arrangements or other business conduct, firm interaction can either promote or suppress innovation in the marketplace. A competition agency’s policies and enforcement practices are critical to providing the private sector with a framework within which it can operate, innovate and grow.
The analytical framework in Canada, and elsewhere, for the review of mergers, competitor collaborations and business conduct is often primarily focused on price and output considerations. As we know, there are inherent difficulties associated with the measurement and quantification of innovation and this renders its assessment difficult in many industries.
Despite this, it is apparent that harm to innovation in any given industry may result in significant adverse effects for consumers, businesses, and the economy as a whole.
This is especially so where innovation-based industries are concerned.
The Bureau feels that it is important to advance the thinking on this critical issue by understanding what drives innovation and how it should best be assessed by competition agencies.
In order to facilitate this, we’ll be hosting a workshop that will serve as a forum to discuss the role of innovation in antitrust on November 4th in Ottawa.
It will involve a dialogue with key stakeholders in the business, legal and academic communities, as well as sharing best practices with international competition agencies.
We believe that engaging on this subject early is of paramount importance and the workshop is a first step in this regard.
It is my belief that we are presently in what is a very interesting time for competition law and enforcement.
Whether it is the opportunity for greater collaboration between agencies leading to increased convergence and greater efficiency in transnational merger reviews or examining the area where innovation and competition law intersect — as our world changes, competition policy is in the midst of exciting change.
The Bureau looks forward to continuing to engage with both international counterparts and international organizations to strengthen and support efficient and effective competition enforcement across the globe.
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