WORLD TRADE
ORGANIZATIONWT/WGTCP/W/89
27 August 1998
(98-3327)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM SWITZERLAND
The following communication, dated 22 July 1998, has been received from the Permanent
Mission of Switzerland with the request that it be circulated to Members.
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Anti-Competitive Practices and Trade:  Impact of Basic Principles
I. INTRODUCTION
1. Since July 1997, the work of the Working Party on the Interaction between Trade and
Competition Policy has focused principally on the relationship between the objectives, principles,
concepts, scope and instruments of trade and competition policies.  A first stocktaking of existing
instruments has been presented and various examples of anti-competitive practices having a direct
impact on international trade have been analysed.
2. The analysis has shown that anti-competitive business practices can, under certain
circumstances, have a restrictive effect on access to markets.  The most obvious examples have been
shown in the case of horizontal agreements involving price fixing, bid rigging and market sharing.Such horizontal agreements can distort competition as well as affect international trade.  Vertical
restraints as well as mergers can also have an effect on international trade.  Their effect can be trade
restricting, depending on the kind of practice and the circumstances of the specific case.
3. In view of the effects some anti-competitive practice can have on international market access
and trade, the question has been asked whether basic rules applicable to international trade relations –like the basic principles of WTO – could be used in this context as well.  This paper contains some
preliminary thoughts on the relevance of two basic WTO principles, national treatment and
transparency, with regards to such effects.  The choice of these two principles was supported by the
fact that the recent WTO dispute settlement procedure on measures affecting competition (Kodak v.
Fuji
1) dealt for the most part with the compatibilit y of several Japanese measures with these two
principles.  However, this choice does not preclude reflection on other principles of the international
trading system, including non-discrimination and MFN.  The aim of this paper is to analyse the
applicability of national treatment and transparency to measures affecting competition and to draw
some preliminary conclusions on the relevance of these principles in dealing with such issues.
                                                     
1 Japan – Measures Affecting Consumer Photog raphic Film and Paper, Report of the Panel
(WT/DS44/R), 31 March 1998 ("Kodak v. Fuji case").WT/WGTCP/W/89
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II. NATIONAL TREATMENT
4. Article III of GATT 94 stipulates that an imported product shall be accorded treatment not
less favourable than that accorded to like products of national origin in respect of all laws, regulations
and requirements affecting, inter alia , their internal sale, transportation and distribution.  This
provision has played a central role with regards to all kinds of market access impediments.  Itsinterpretation in past GATT and WTO practice has been broad.  In the context of the effect of anti-
competitive practices on international trade, several questions arise with regards to the application of
the national treatment principle.
5. The first question is whether an anti-competitive practice as such can be regarded as a
measure in the sense of Article III GATT 1994, i.e., as "a law, regulation or requirement" covered by
the national treatment obligation.  In many cases, anti-competitive practices are measures practiced by
firms, not by governments.  In such cases, the measures would seem to be excluded from theapplicability of Article III GATT 1994.
6. In cases where an anti-competitive measure responds to the definition of a governmental
measure, the examination of whether the national tr eatment principle is violated can take place.  In
this context, it is interesting to note that in th e Kodak v. Fuji case the panel considered that three out
of eight distribution "measures" were actually falling within the meaning of governmental measuresof Article III GATT 1994.  None of these measures, however, was deemed by the panel to violate the
obligations of this Article, as the measures were found neither to discriminate on their face nor in their
application.
III. TRANSPARENCY
7. The principle of transparency as contained in Article X of GATT 1994 stipulates that laws,
regulations, judicial decisions and administrative rulings of general application affecting, inter alia ,
the sale, distribution or transportation of products shall be published in such a manner as to enable
governments and traders to become acquainted with them.  The scope of this principle is to ensure the
transparency of governmental measures related to trade.
8. For competition purposes, this principle is relevant, too.  International competitive conditions
can be strongly influenced by government policies affecting competition, whether these policies are
laws, regulations, administrative rulings or other policy decisions.  In this context, the question arises
whether, in such instances, transparency should not also encompass transparency on decisions in
specific cases, i.e., encompass measures which, at first, may not seem to fall under the term "of
general application".
9. The issue of transparency in competition matters relating to international market access would
seem all the more important, as governmental measures can not only influence but actually shape thecompetitive environment for access in a specific market.  Here again, the Kodak v. Fuji panel report
shows the problems in assessing market access opportunities when relevant decisions and
enforcement actions are unpublished.
IV. IMPACT OF ANTI-COMPETITIVE PRACTICES ON DIFFERENT MARKETS
10. There seems to be a fundamental difference in the application of basic WTO principles to the
effects of anti-competitive practices, depending on which of the following situations is given:  (a)
situations, where there is no anti-trust legislation or no enforcement of this legislation in the market
affected by an anti-competitive practice or where the sector affected by an anti-competitive practice is
exempted from the legislation;  (b) situations where there is an anti-trust legislation fully applied.WT/WGTCP/W/89
Page 3
(a) Situation where there is no anti-trust legislation applied
11. This situation prevails in many developing countries.  Where there is no competition authority
in place or no enforcement measure applied, the question is whether the resort to basic principles such
as national treatment and transparency could help to "fill the gap".  Could, e.g., national treatment
have an impact on the effects of an export cart el involving market sharing in different developing
countries?  Could national treatment be used to influence the behaviour of enterprises involved in
such a cartel?
12. Government measures can be taken which affect competition, even if no competition
legislation is applied as such.  Transparency in these cases would be helpful, especially if market
access is concerned by the measure as well.
(b) Situation where there is an anti-trust legislation fully applied
13. The impact of national treatment and transparency in cases where anti-trust legislation is
applied is somewhat different from the situation mentioned under (a).  Two aspects of the national
treatment  principle seem to be relevant in this respect:  a substantive aspect and a procedural aspect.
Regarding the substantive aspect, the question arises whether the same rules should be applied to
national and to "transnational" competition, i.e., whether national competition laws should also apply
to anti-competitive behaviour having an effect ou tside the national borders.  With regards to the
procedural aspect of national treatment, the question is whether foreign firms have the same rights as
national firms under a specific anti-trust procedure.  The equal availability of such means to national
and foreign firms is particularly relevant if the anti-trust procedure also touches upon market access
aspects.
14. In the situation mentioned under (b), the principle of transparency  would seem to be of
special importance when related to the transparency of the enforcement of competition laws.  In most
countries having a  competition law, it is recognized that such laws should be as simple as possible
and understandable in the light of the enforcement practice.  Transparency can thus cover the
publication of enforcement policies and guidelines, information bulletins, comfort/advisory letters, or
individual and block exemptions under competition rules, depending on the jurisdiction.  The questionhere is what the limits of such transparency should be.  Should the principle be confined to decisions
of general relevance or should it also be applied to individual decisions that contain a reasoning which
could be important in future cases?  In this context, another important question is whether trade-
related measures having an effect on competition should also be covered by a transparency provision
for competition purposes.
V. CONCLUSION
15. The preliminary conclusions of this paper are that, in general, there could be scope for the
application of basic principles of the WTO, such as national treatment and transparency, to
competition-related issues.  The application of such principles could be relevant in instances where
competition legislation exists and is applied.  The usefulness of the application of such principles in
instances where no such legislation exists or is applied seems less clear and would have to be studied
further.
16. If a more thorough analysis of the relevance of the two basic WTO principles of national
treatment and transparency for competition-related matters came to the conclusion that, indeed, these
principles should be applied in such instances, the principles, as contained in Articles III and X of
GATT 1994, may have to be adapted to the specific needs of competition policy, as was done for
services in the GATS or for intellectual property in the TRIPS Agreement.WT/WGTCP/W/89
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17. We would welcome any views of delegations on the relevance of the WTO principles of
national treatment and transparency in competition-related matters as well as on the possible effects of
these two principles on competition issues related to market access.
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