WORLD TRADE
ORGANIZATIONWT/WGTCP/W/155
19 December 2000
(00-5524)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM CANADA
The following communication, dated 29 September 2000, has been received from the
Permanent Mission of Canada with the request that it be circulated to Members.
_______________
Cooperation in a Multilateral Setting
I. INTRODUCTION
Canada has noted from the June meeting of the WGTCP that a number of countries have
requested more detail as to what is implied by some of the ideas and concepts put forward as potentialelements in a future multilateral agreement on competition policy.  These requests are of course quite
justified, as the implications of what we are consid ering in the WGTCP are new to most of us.  It is
important for the WGTCP to explore what is - and what is not - implied by these concepts.
It is in this spirit that Canada has prepared this paper on international cooperation on
competition policy.  The paper reflects Canada's concrete experience with cooperation.  This
experience extends over a wide range of countries, from those that have yet to develop a competition
law, to those with longstanding competition regime s.  As will become apparent from this paper,
competition can be carried out at many different levels, and as such can be tailored to match the needs
of a particular country.  An important element in this is the voluntary nature of cooperation, which, by
definition, cannot be forced.  There is also a close link between cooperation and the needs of
developing countries with respect to competition policy.  While cooperation should be distinguished
from technical assistance
1, it offers developing countries an important option for addressing the
specific questions they may have with respect to particular competition policy issues.  As such,
Canada would view cooperation as a central part of any future multilateral agreement on competition
policy.  The paper thus concludes with an outline of Canada's views on cooperation in a multilateral
setting.
Until the mid-1980s, formal cooperation was undertaken normally by one country to avoid or
minimize conflicts arising from competition law administration and enforcement by a second and
usually more economically powerful country.  However, a number of forces have contributed to a
                                                     
1 Technical assistance is a different concept from cooperation.  Technical assistance refers to the
provision of advice to countries without competition laws, those in the process of drafting or implementingthem, or those seeking to enhance their institutional capacity.  Cooperation endeavours to handle issues ofcommon interest arising from the enforcement of those laws.WT/WGTCP/W/155
Page 2
shift from "friction avoidance" to more constructive cooperation and coordination, together with the
inclusion of positive comity principles, in Canada's cooperative relationships.
The rapid fall in real barriers to internatio nal transactions, such as transportation and
telecommunications costs, combined with the gradual reduction of artificial barriers to trade in the
form of tariff and non-tariff barriers to trade, has expanded the opportunities for firms to servemarkets through international trade.  Furthermore, the liberalization of Foreign Direct Investment
(FDI) regimes offers firms the option of establishing a presence in a foreign market, either as a
complement or a substitute to their exporting activities.
Trade and investment liberalization can expand the scope of markets, that is the economic
space within which firms are permitted to pursue opportunities and objectives in markets, and thereby
enhance the contestability of markets.  And, the expanded economic space has greatly increased the
global nature of important economic actors.  As more companies in more countries take part in theexport trade or opportunities for the provision of services abroad, the possibility that anti-competitive
actions undertaken by those companies will have economic effects in other countries increases
correspondingly.
As governmental trade barriers fall, competiti on authorities need to assume a greater role in
the market liberalization process to ensure that the expected benefits of the market economy are notundermined by the anti-competitive behaviour of private actors and that common goods and public
interests are safeguarded.
The rise in world trade and investment flows has also increased the possibility for concurrent
jurisdiction of two or more competition authorities over the same international economic activity.  An
obvious example would be a proposed merger where the possibility of a remedy in one jurisdictioncan directly affect the important interests
2 of other jurisdictions or it may conflict directly with
remedies adopted in the same case by another authority.  A second example is international cartels.
Effective policing of international cartels calls for the enforcement and continuing development of
"internal" competition rules at home.  But it also  calls for the need for competition authorities to
cooperate to deal with competition concerns raised by such conduct.  A third example would be theexpanding web of inter-firm alliances and similar cooperative relationships.  These alliances have
been formed to achieve a variety of goals, for example, some have been formed to facilitate
technology synergy or to share product-development costs and risks.  Others have been formed to
facilitate access to one another's markets.  While the market may dictate a certain degree of
restructuring, it is important for competition authorities throughout the global marketplace to ensure
that inter-firm alliances do not significantly pre-empt competition, either directly, or as facilitating
devices.
Given that anti-competitive behaviour can be expected to take place across jurisdictions with
increasing frequency in light of the foregoing, the challenge to antitrust law administration and
enforcement in a global marketplace will be to secure greater administration and enforcement
cooperation to ensure borders do not become havens.
                                                     
2 While the term "important interests" is used frequently in formal cooperation agreements, it is not
defined in those agreements.  This is purposeful, the intention being to permit as wide and subjective an
interpretation as parties wish to apply to the term.  It  is up to each sovereign nation to determine what are its
important interests.WT/WGTCP/W/155
Page 3
II. CANADIAN PERSPECTIVES ON COOPERATION BETWEEN COMPETITION
AUTHORITIES
Cooperation between competition authorities can be achieved at different levels and in
different forms.  It can be as simple as the exchange and dissemination of basic non-confidential
information such as publications, speeches or administration and enforcement guidelines.Cooperation can extend all the way to mutual assistance in curbing international business anti-
competitive practices such as transborder hard core ca rtels.  It might turn on the principle of positive
comity under which a country is urged to give "full and sympathetic consideration" to another
country's request to open or expand a law enforcement action to pursue illegal anti-competitive
conduct in its territory that is allegedly harming the interests of the requesting country.
Cooperation can take place both formally and informally.  Although a formal framework is
not a prerequisite to cooperation, it can foster communication and coordination between competitionauthorities and is more germane to the use of more advanced cooperation tools such as positive
comity and to the exchange of confidential information.
At its most basic level, cooperation can act to:
- open up and establish permanent channels of communication between competition
authorities and provide for discussion and meetings that can engender a dynamic ofcommon interest and a network of personal contacts;
- build bridges between governments and the private sector that can foster greater
understanding and acceptance of the goals of competition law and enhance the stature
and legitimacy of the competition authority as a defender of the public interest;
- promote the widespread dissemination of information, thereby fostering capacity
building, and the establishment of a knowledge base that empowers all WTO
Members to contribute to the debate and discussion of competition policy issues;
- the adoption over time of best practices that ultimately improve the administration
and enforcement of the law.
The forces of economic integration are particularly apparent in the Canadian context, where
international trade represents a large component of the country's overall economy.  As a result,
Canadian competition issues have become more than ever intertwined with those arising in other
countries.  In some cases, without enforcement assistance, Canada may be left without effective relief
from anti-competitive activities affecting its ec onomy.  Cooperation on cross-border competition
matters is part of the daily activities of the Canadian Competition Bureau and it is a key element in
maintaining and encouraging competition in Canada.
III. TYPES OF COOPERATION AGREEMENTS IN COMPETITION POLICY
(a) Bilateral Agreements
While cooperation between Canadian and foreign competition officials has developed over
the years as a matter of practical necessity, the adoption of bilateral cooperation agreements with
certain of our major trading partners has established a framework for cooperation and coordination.
Cooperation agreements can be either state-to-state or agency-to-agency.  State-to-state
agreements are concluded between countries and can involve the consideration of important national
interests beyond just competition law enforcement interests.  These might include national security,WT/WGTCP/W/155
Page 4
sovereignty or other "public" interests.  Canada currently has two state-to-state type agreements
relating to competition law enforcement, one with the United States and the other with the European
Communities.3
Agency-to-agency agreements are concluded between competition agencies.  The interests
dealt with in such agreements are limited to those pertaining to competition law enforcement.  Lesscomprehensive in scope that state-to-state agreem ents, inter-agency instruments also require less
formal procedures for their negotiation and signature.  They are generally used when the cooperation
needs and the nature of the relationship between competition agencies do not require a state-to-state
agreement.  Competition authorities can also opt for an inter-agency arrangement as an interim
measure to enhance communication and cooperation in situations where a state-to-state agreement
cannot be achieved in the short or medium term.  Agency-to-agency agreements can also be the first
step toward the conclusion of state-to-state instru ments and can include provisions that contemplate
the negotiation of a more comprehensive agreement.  Canada has negotiated a number of agency-to-
agency agreements for which signature is impending.
(b) Cooperation in a Multilateral Setting
Canada also cooperates on competition policy at the international level.  The principal
instrument which Canada observes is the Revised 1995 OECD Recommendation concerningCooperation between Member countries on Restrictive Business Practices and International Trade.
This latest version in a series of non-binding instruments provides an important framework for
cooperation and consultation between OECD member  states.  The Recommendation provides for
notification, exchange of information, mutual assistance in investigations, coordination of
investigations positive comity, consultations and a conciliation mechanism in the field of competition
law enforcement.  Adherence to the 1995 Recommendation and its predecessors has contributed
significantly to the improvement of the effectiveness of enforcement efforts, and has minimized
potential frictions arising from extra-territorial application of laws.  Cooperation has also led to
exchanges of views or approaches and best practices that may produce some convergence over the
long-term.  This trend has been referred to as "soft" harmonization, whereby harmonization occurs not
through international agreements (e.g., the Treaty of Rome) but rather through the process of
information sharing and discussion in fo ra such as the OECD, UNCTAD and APEC.
Canada also observes the  OECD Recommendation on Hard Core Cartels that encourages
OECD members to adopt competition laws that effectively prohibit and deter hard core cartels and
provide for effective sanctions, enforcement procedures, and enforcement institutions among other
things.  The Recommendation also encourages members to enter into mutual assistance agreements to
permit sharing evidence with foreign authorities to the extent permitted by national laws, and toreview provisions in their laws that stand in the way of such cooperative efforts.  It is open to
non-OECD countries to associate themselves wi th this recommendation and to implement it.
In UNCTAD, the Set of Multilaterally Agreed Principles and Rules for the Control of
Restrictive Business Practices  includes a non-binding framework for cooperation among countries.
Although Canada has not engaged in enforcement case-related enforcement cooperation pursuant tothese principles and rules, it has participated in several UNCTAD organized regional seminars and
                                                     
3 It should be noted that such agreements are subject to existing laws, particularly those regarding the
treatment of confidential information.  "Soft" coopera tion agreements are to be distinguished from so-called
"hard" cooperation agreements, involving the compulsory gathering by one party of investigative information to
be sent to the other party (see, e.g., Canada-U.S. Mutual Legal Assistance Treaty and enabling legislation.)
Unless noted to the contrary, when this paper discusses cooperation and cooperation agreements, it is to be
considered in the former, rath er than the latter, context.WT/WGTCP/W/155
Page 5
has provided more focused technical assistance to individual developing countries and emerging
markets on the design and development of competition laws.
Finally, Canada is a signatory to the GATS, which incorporates broad competition policy
principles that are consistent across jurisdictions to deal with monopolies and exclusive supply
arrangements.  It also calls for Members to engage in "sympathetic consultations" with a view toachieving a mutually acceptable remedy to private access-denying conduct (GATS Article IX.2).
IV. ESTABLISHING A MULTILATERAL FRAMEWORK ON COOPERATION
The growing network of bilateral competition cooperation agreements is demonstrable
evidence of the recognition of the value and necessi ty of antitrust cooperation in an interconnected
global  marketplace.  It also clearly reflects the will for cooperation among many nations.  However,
Canada sees the need for a more ambitious vision for cooperation.  To achieve true efficiency in
international competition law enforcement, cooperation must go beyond the bilateral front.  There is aneed to establish a nexus between countries in th e enforcement of competition law.  A commitment
towards cooperation in the context of a WTO framework agreement on competition policy would
provide the cohesion and stability necessary for the establishment and development of international
antitrust cooperative relationships.
It would enable Members to engage in dialogue and exchange views across the full range of
competition policy issues relevant to the goals of the WTO.  Over time, this can help in the
establishment and fostering of mutual confidence in enforcement capabilities and in respect for
confidentiality, arising from a shared commitment to  protect the competitive process.  A multilateral
agreement would not interfere with ongoing, case specific cooperation that occurs in bilateral
cooperation agreements, but rather would supplement bilateral cooperation.
There have been a number of arguments advanced against antitrust cooperation.  For example,
it has been argued that different legal and business structures, diversity in substantive laws and the
disparity in administration and enforcement practices and procedures preclude or impact negatively
on countries' ability to cooperate.  However, we do not view these factors as determinative; such
differences have not precluded Canada's bilateral or multilateral cooperation efforts or reduced effortsto conclude stand-alone bilateral cooperation agreements or antitrust cooperation provisions within
regional trade agreements.
4  The central theme in Canada's efforts to engage in antitrust cooperation
has been to promote a level of compatibility in the application and enforcement of the basic objectives
and rules, without compromising a country's fundamental jurisdiction over conduct affecting its own
territory.  A similar theme should be at the core of antitrust cooperation in a WTO setting.
The commitment to the establishment of a c ooperation mechanism would need to be long
term.  To a large degree this would be a new experience for the majority of WTO Members.However, the fact that the development of common ground rules governing cooperation in antitrust
enforcement is a long term project should not deter the process.  Such an initiative is, by definition,
incremental in nature; it can only be achieved in a step-by-step manner.  Where appropriate, it would
build on experience already gained in competition law cooperation and from existing international
institutional arrangements.
A. R
OADMAP
The first phase in such an exercise would be largely educative in form and substance.  This
phase would concentrate on the development of institutional support and administration and
                                                     
4 See, for example, NAFTA Chapter 15.  See also Chapter J of the Canada-Chile Free Trade Agreement
and Chapter 7 of the Canada-Israel FTA.WT/WGTCP/W/155
Page 6
enforcement capacity in Member countries.  It would focus on the exchange of non-confidential
information such as legislation, annual reports of competition authorities, guidelines and speeches and
presentations.  Perhaps a web-site on the Internet similar to that established in respect of APEC 5
could be set up to ensure easy availability of this  information.  This would add to the transparency of
national competition law administration and enforcement policies, and thereby contribute to thedialogue which is essential to the development of shared perceptions and common interest in
addressing cross-border anti-competitive activities.
Such exchanges would also be complemented by technical assistance to developing and
emerging economies on issues such as the design and implementation of a competition  law, the
setting up of a competition authority, including appropriate resourcing.  It is envisaged that this phase
would also promote the initiation and development of contacts at the staff level allowing competition
authorities in the nascent stage to gain insight into case development  and administration.
The second phase would have as its primary feature the development and implementation of
notification procedures.  The objective would be to ensure a minimum level of awareness about the
activities of competition authorities in order to  ensure that "traditional" or "negative" comity
principles can be observed.  Where one Member has undertaken an investigation that may affects the
important interests6 of another, it should notify the other at some appropriate stage in the
investigation.  Where, following such notification, a notified Member indicates that it is concerned
about how the investigation could adversely affect its interests, the notifying jurisdiction would give
sympathetic consideration to those concerns and examine whether it can achieve the same ends under
its domestic legislation in a manner that would avoid the possible negative impact on the notified
jurisdiction.
A meaningful first step towards enhanced international cooperation would be coordinated
enforcement action against international cartels.  There is little or no economic debate in most
instances about the anti-competitive effects of global cartels: market allocation schemes and bid
rigging are intended to raise prices above competitive levels to the detriment of consumers, businesses
and governments.  The above-noted OECD Recomm endation on Hard Core Cartels could serve as a
model for further discussion and refinement to meet multilateral requirements in this regard.
A second promising area for enhanced cooperation would be the development of a common
approach in respect of procedural issues in merger review.  Businesses can incur substantial
transaction costs in assessing which jurisdictions require pre-notification or post agreement
notification and in preparing and filing materials, retaining and coordinating different counsel and
generally comply with competition law requirements in multiple jurisdictions.  Procedural differences
can cause uncertainty and timing problems and can impose additional transaction costs on themerging parties.  A pre-merger package along the lines of the OECD model offers promise in
rationalizing information requirements and improving the quality of merger review.
Consideration of whether and how other concepts can be featured in a multilateral framework
can be left to a later stage.
B. P
REREQUISITES GOVERNING COOPERATION BETWEEN COMPETITION AUTHORITIES
(i) The optimum results from cooperation can best be achieved if it is voluntary.  Any
cooperation mechanism must preserve Members' discretion to act.  Obligating a
Member to cooperate can only serve to undermine the very essence of meaningful
                                                     
5 See http://www.apeccp.org.tw/.
6 Such important interests might normally be expect ed to be exhibited in antecedent laws, decisions or
statements of policy in respect of the administration or enforcement of competition law.WT/WGTCP/W/155
Page 7
cooperation and in light of the independent and discretionary powers of a competition
authority, would be difficult if not impossible to enforce.
(ii) Members wishing to take full advantage of the benefits of advanced form of
cooperation will need to have competition laws with appropriate scope,administration and enforcement provisions, due process guarantees, and a track
record involving investigation, administration and enforcement, protection of
confidential information and a willingness to reciprocate cooperation.
(iii) Transparency requirements would extend to instruments of general application,
e.g., guidelines, annual reports, publications.
(iv) Non-discrimination should apply, as understood and practiced by competition
authorities in the administration and enforcement of competition laws.
C. I
NSTITUTIONAL SUPPORT
The institutional arrangements assisting international cooperation would include:
(i) The establishment of a sub-working group on competition law and policy comprised
of representatives of each Member's competition authorities.  The sub-working group
would meet and report annually on the implementation and operation of the
cooperation mechanism and make recommendations on improvements orenhancements.
(ii) The establishment of contact or enquiry points similar to that contained in the
Technical Barriers to Trade Agreement which would facilitate the exchange of
information and the development of contacts in respective competition authorities.This would provide Members with useful information in respect of national laws and
practices and proposed changes to the law.
This summarizes Canada's views on cooperation in a multilateral setting with respect to
cross-border competition issues.
__________