RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTCP/M/20
17 February 2003
(03-0977)
Working Group on the Interaction
between Trade and Competition Policy
REPORT ON THE MEETING OF 20 NOVEMBER 2002
Note by the Secretariat
1. The twentieth meeting of the Working Gr oup on the Interaction between Trade and
Competition Policy took place on 20 November 2002, under the Chairmanship of
Professor Frédéric Jenny.  The main purpose of the meeting was to review and adopt the Group's draft
Report (2002) to the General Council.
I. REVIEW AND ADOPTION OF THE REPORT (2002) OF THE WORKING GROUP
TO THE GENERAL COUNCIL
2. The Group had before it a draft of its Report (2002) to the General Council (JOB(02)/180,
dated 19 November 2002), which had been prepared by the Secretariat as requested at the Group's
previous meeting (WT/WGTCP/M/19, paragraph 104).  The Chairman recalled the nature of the
report and the guidelines given to the Secretariat for its drafting.  It was to be in the style of theReports that had been prepared at the end of 1998, 1999, 2000 and 2001 (WT/WGTCP/2,WT/WGTCP/3, WT/WGTCP/4 and WT/WGTCP/5, respectively), meaning that it would be a
substantive report and would be factual, descriptive, balanced and objective, without any
recommendation and based on the minutes of the Group's meetings during the year.
3. The Working Group adopted its Report (2002) to the General Council, subject to minor
corrections and additions which were agreed to by the Group.1
II. OTHER BUSINESS
4. The representative of the European Community and its member States, introducing document
WT/WGTCP/W/222, said that one result of the discussion at the last meeting of the Working Group
had been an expression of the need to define the various core principles in a clear, concise and
unambiguous manner, but at the same time, wariness of a detailed description of how these principles
would operate in domestic competition laws, mainly due to the fact that the Members had different
legal traditions and administrative systems.  The submission of his delegation attempted to balancethese considerations.  Secondly, although the core principles of the WTO were nothing new, and he
was not aware of any existing competition law that did not respect these principles, including them in
a WTO agreement would ensure their full applicati on in domestic competition laws, including future
such laws, and would give assurance to traders and investors on this point.  As a preliminary matter,
he emphasized the importance that his delegation would attach to flexibility and progressivity in thedevelopment of a multilateral framework on competition policy.  A number of legitimate questions
had been posed as to how competition law fitted in the whole array of domestic policies and how
countries would live up to commitments in a WTO agreement on this subject.  Flexibility and
progressivity would be the key to addressing these concerns.  He reminded Members that the only
substantive area of competition law regarding which his delegation was calling for a commitment by
                                                     
1 The Report was subsequently issued as document WT/WGTCP/6, dated 9 December 2002.WT/WGTCP/M/20
Page 2
Members in a multilateral framework on competition policy was that of hard-core cartels.  In many
cases, Members would probably go beyond this area and incorporate provisions on practices such as
monopolization or abuse of dominance.  However, under the proposal of his delegation they would
not be required to do so.  The proposed core principles concerning transparency, non-discrimination
and procedural fairness, however, would apply to the entirety of a competition law that a countrydecided to adopt, regardless of its scope.  With regard to the capacity constraints of developing
countries, in particular least-developed countries and the smaller economies, there was no absolute
necessity for each and every country to have a national competition law regime.  Rather, countries
might fulfil the requirements of a multilateral framework through appropriate instruments of a
regional nature – as indeed the European Commun ity itself had done initially.  Another element of
flexibility related to the institutional structure of  competition regimes.  Essentially, all that his
delegation was proposing was that Members maintain the capacity to enforce competition law in asufficiently effective way to detect and deter anti-competitive behaviour.  Whether they chose to do
this through an administrative structure, through the judiciary, through special courts or through an
ordinary arm of government was a matter on which flexibility was appropriate.  A final element of
flexibility concerned the scope of competition regimes.  In particular, Members should remain free to
define the scope and the modalities exclusions and exemptions from competition law, provided theydid so in a transparent and predictable manner.
5. Moving to the content and application of the three proposed core principles, it was important
to draw the boundaries of the proposed principle of non-discrimination, which would include both
national treatment and most-favoured-nation treatment, in an appropriate way.  In particular, the
notion of de facto  discrimination, much as it was a perfectly acceptable notion within the WTO
system, would be difficult to apply in the context of a competition agreement.  Therefore, his
delegation proposed to limit the application of this principle in the proposed multilateral framework
on competition policy to deal only with de jure  instances of discrimination.  In other words, the
non-discrimination principle would apply to discrimination contained in the legislation, but not to
how this legislation was applied in individual cases.  This was important so as not to constrain theexercise of prosecutorial discretion which played an important role in this field.  With regard to
suggestions that had been made that there should be an explicit exemption from the MFN principle for
bilateral cooperation agreements, in his view such an exemption was not necessary because, since
cooperation would not be binding, there would be no question of applying dispute settlement in this
area.  He acknowledged that some Members had suggested that cooperation be made a binding
commitment at least in certain circumstances, but this was not his delegation's position.  Cooperation
had to be based on mutual trust between the relevant authorities which had to be built up over time;given this, it would be counter-productive to make a cooperation binding and by the time that it had
been built binding obligations would no longer be need ed.  It was also important to appreciate that the
proposed multilateral framework on competition policy  would not have any direct implications for
market access.  There was an indirect implication to the extent that competition law made markets
more efficient.  Whatever access to a market economic operators had been granted, they would beable to enjoy that more fully if it was not frustrat ed by anti-competitive behaviour.  But a multilateral
framework would not force or even draw Members to make additional market access concessions.
These were done in a different forum and were based on a different logic.  Transparency was the most
pervasive of the proposed core principles and the one from which there should be the fewest
exemptions.  In particular, the more the application of the other principles was limited, the moreimportant it became to have transparency.  An important issue which would need more discussion was
the question of the modalities of transparency and notification.  Furthermore, certain aspects of
transparency might entail administrative costs and therefore would have implications for capacity-
building.
6. Concerning the proposed principle of procedural fairness, another representative of the same
delegation said that this, too, would have to be adapted to the requirements of different national legal
systems.  Since the enforcement of competition laws could affect market operators adversely, for
example through cease and desist orders, fines or other penalties, it was important that guarantees beWT/WGTCP/M/20
Page 3
provided regarding the fairness of procedures.  The relevant guarantees needed to be defined precisely
enough for them to be meaningful and yet in a way that was sufficiently flexible to accommodate
differences in national enforcement systems.  A key such guarantee was the right to receive a
reasoned final decision providing detailed grounds on which such decisions were based.  Before a
firm was fined, or other penalties were imposed upon it, the firm should at least know the reasons thatwere the basis of the decision.  In the same way, the right of  parties to express their views could be
provided in different ways, for example through oral  hearings or written submissions.  The protection
of confidential information was important as an aspect of cooperation but was also relevant as an
aspect of procedural fairness.  A WTO agreement would need to set out certain basic standards for the
protection of such information, since failing to provide this would impair the effectiveness and
credibility of competition regimes.
7. The representatives of the Philippines; the United States
; Hong Kong, China ; Thailand ;
Korea; Canada ; Japan ; Zimbabwe ; Australia  and New Zealand  reserved the right to provide further
comments on the contribution of the European Community and its member States (document
WT/WGTCP/W/222) at the next meeting of the Working Group.
8. The representative of the Philippines said that the Working Group was now confronted with
possible elements that would be discussed when proposals for a framework agreement on trade and
competition policy were put forward.  However, at this stage, the Working Group was just trying to
define some of the issues that were posed by the interaction between trade and competition policy.
The last sentence of paragraph 25 of the Doha Ministerial Declaration made it clear that full account
was to be taken of the needs of developing countries.  In its submission (document
WT/WGTCP/W/222), the European Community and its member States stated the conclusion that asregards least-developed countries and certain small economies, the absence of a domestic competition
law regime will often be due to capacity constraints.  This was an inadequate description of the needs
of developing countries, since it failed to recognize that competition policy might not, in fact, be a
high priority for such countries.
9. The representative of Hong Kong, China agre ed that the existence of competing policy
priorities could be a reason why many Member economies, perhaps 50 or more, did not yet have
competition laws.  Capacity constraints could also be a factor.  In the case of Hong Kong, China, it
was still felt that the combination of open market policies and sector-specific measures was sufficient
to promote competition.  Therefore, the questions and concerns of economies not having competition
laws or authorities were broader than what was reflected in the submission of the European
Community and its member States (WT/WGTCP/W/222).  It also was not correct to suggest, as was
done in paragraph 6 of the submission, that a WTO agreement would simply provide guidance to the
drafting of domestic competition law because the proposed core principles were binding in nature and
this implied the application of the WTO's dispute settlement mechanism.  Finally, he did not see how
procedural fairness which would include rights for third parties would fit in a binding agreement.
10. The representative of Thailand agreed with the Philippines that full account should be taken
of the needs of the developing and least-developing countries and appropriate flexibility provided to
address them, as was required by the last sentence of paragraph 25 of the Doha Declaration.  As
Thailand had already proposed, one possibility that merited consideration in this regard was to
implement the principle of special and differential treatment as a fourth core principle of any
multilateral framework.  Her delegation was also of the view that binding modalities of cooperation
could be beneficial to developing countries.
11. The representative of Korea agreed with the representative of the European Community and
its member States that competition policy was an important factor in enabling countries to enjoy the
benefits of market access commitments, by ensuring that markets functioned efficiently and
transparently.  He also agreed that it was important that the proposed core principles be made binding
at least in some respects.WT/WGTCP/M/20
Page 4
12. The representative of Japan said that he agreed with the representative of the European
Community and its member States that application of the principle of non-discrimination should be
limited to de jure as opposed to de facto  instances of discrimination;  this was a matter of importance.
Further discussion was needed regarding the proposed principle of procedural fairness.
13. The representative of Zimbabwe said that the Members were not moving at the same pace on
the issues before the Working Group.  Certain groups were moving faster than others and it was
important to ensure that developing countries, particularly those who had reservations on the issues
under discussion, received assistance to enable them to move forward at the same pace.
14. The representative of Australia said that he was not sure how the core principles could be
defined in an unambiguous manner if there was no attempt to describe in detail how they would
operate.  Also, like the representative of Hong Kong, China, he felt that the apparent assumption that
all WTO Members would eventually adopt competition laws and enforcement agencies might bepremature.  For many developing countries, one source of hesitation in moving more quickly in the
direction of embracing competition policy regimes seemed to be the perception that such regimes
would introduce an external constraint on domestic policy-making decisions, perhaps overriding their
special needs.  The suggestion to adopt regional versus national competition regimes would not, by
itself, address this concern.  He noted, as well, th at the submission of the European Community and
its member States (WT/WGTCP/W/222) did not a ppear to support inclusion of the principle of
comprehensiveness as an additional core principle in a multilateral framework.  Finally, in relation to
the proposed principle of transparency, issues remained to be clarified regarding the specific ways in
which this would be incorporated in a multilateral framework.
15. The representative of New Zealand said that some underlying questions regarding the
appropriate scope of future WTO work on competition policy remained to be resolved.  He wondered
whether a future WTO agreement on competition policy should not go beyond the fairly narrow list of
principles upon which the European Community and its  member States had focused in its submission
(WT/WGTCP/W/222), which were essentially the traditional WTO principles.  In particular, he was
interested to consider the incorporation of a wider set of competition policy principles, such as forexample a presumption in favour of competitive markets or the promotion of internal and external
market-opening measures, in a future agreement.  His delegation had not, however, ruled out adoption
of the narrower set of core principles that was favoured by the European Community and its member
States.
16. The representative of the European Community and its member States, responding to the
comments made by the representative of the Philippines, said that what the Group had been mandated
to do by Ministers in Doha was to try to clarify the possible elements that could be included in amultilateral framework.  Regarding developing countries, the Doha mandate included flexibility,
capacity building and technical assistance for all developing countries.  Developing countries shared
certain problems, but it was clear that the least-developed countries experienced those problems in a
more serious way.  In regard to flexibility, progressivity and the needs of economies without a
competition law, the experience in building up the European market during the past 50 years and theexperience of all the member States consistently pointed to the fact that some form of competition
enforcement capacity was needed to make development work.  To be sure, the European Community
had started with a regime that had embodied a high degree of flexibility;  it recognized that other
jurisdictions might wish to start off in a sim ilar way.  Commenting on the observations made by
Australia, his delegation indeed believed that all countries would be well served by the eventualadoption of a competition law and a competition au thority, but did not feel that there was any one
ideal model of how to do this.  There was a range of models and the reasons for the choice of model
sometimes were simply cultural.  Regarding the rele vance of regional authorities, there were several
experiences around the world outside the European Community in terms of regional integration.
There were already attempts at regional integration in the competition field;  more were coming.Competition was on the agenda of the negotiations launched recently between the EuropeanWT/WGTCP/M/20
Page 5
Community and the ACP countries.  There was more experience in Africa and in Latin America.
There were also some interesting, totally differen t, models of regional integration in Asia, some of
which had competition on their agendas.  Countries who were engaged in those processes might well
use the same processes to tackle the question of co mpetition, though they did not have to, if they did
not wish to.  Concerning the question of dispute settlement, he said that his delegation's proposalstarted from the perspective that an agreement that had binding provisions would be subject to dispute
settlement to the extent that those provisions contained an obligation for countries to comply.  WTO
agreements typically had a hard core of obligations and with additional elements that could be
characterized as soft law.  The WTO and the DSU were well equipped to make the distinction
between what was intended to be subject to dispute settlement and what was not.  This was why it was
necessary to define carefully the scope of the proposed core principles, since it would define what was
subject to dispute settlement and what was not.   Taking the example of non-discrimination, his
delegation had proposed an obligation of de jure  and not de facto  non-discrimination.  The way this
would work in practice was that, if a domestic law contained a clause that was clearly discriminatory
in nature, that law would be in violation of the non-discrimination principle and subject to dispute
settlement.  A claim that a law which was non-di scriminatory on its face was being applied in a
discriminatory manner would not be subject to disp ute settlement.  Answering the question raised by
Australia on how to reconcile an unambiguous definition with a lack of detail, he said that one could
define principles and not define their concrete application.  This approach had been adopted in many
WTO agreements and other international treaties and national constitutions.  Taking the example of
judicial review, he was not suggesting that a WTO agreement should contain a detailed prescription of
the kind of judicial review that would be needed or the nature of the bodies that would undertake sucha review.  Rather, the moment that a country's la w provided for judicial review of administrative
decisions, it would comply with that part of the pr inciple of procedural fairness.  Nevertheless, his
delegation would like to have some clarity on how the principles would operate, but it did not want to
dictate the modalities of how they operated.  As to the comments of New Zealand, he said that the
core principles that his delegation proposed to be included in an agreement on competition policywere not just WTO principles;  they were equally principles of competition law.  His delegation was
sympathetic to the principle of comprehensiveness, at least to a certain extent.  It was part of the
European Community's competition regime.  However, he felt that it would be premature at this stage
to include a principle of comprehensiveness in a WTO agreement on competition policy.
17. The representative of the United States raised a question about the observation made by the
representative of the European Community and its member States that if the law allowed a right of
review to a judicial body, that would be sufficient and dispute settlement would no longer apply.  That
seemed to contradict the proposal that the distinction between de jure  and de facto  related solely to
discrimination and not to procedural fairness.  In response, the representative of the European
Community and its member States said that the answer depended on how procedural fairness was
defined in an eventual agreement.  If it was writte n in simple terms, i.e. simply requiring that a
country have a system for judicial review of the administrative decisions, then there would be noscope for claims based on a de facto violation.  Either a domestic law had the required provision or it
did not.  If the agreement provided that countries must have an effective right of appeal, then this
could raise the de facto  issue.  Perhaps what the representative of the European Community had in
mind was a case in which the possibility of judicial review was foreseen in the law, but was denied in
a particular case.  At least on the surface, it seemed to him that this would not be covered by disputesettlement, but would be a violation of the national law.
18. The representative of Australia said that, in the perspective of his delegation,
comprehensiveness was not seen as a blanket, compulsory tool.  Australia would not support such an
approach.  Rather, what it had in mind and what it felt was implied in the comments of New Zealand
was a presumption that competition was the right place to start, but this would be subject to a sensibleassessment of when this was and was not feasible.  For example, in the broader competition
framework in Australia, restrictions on competition could be justified under a public interest test
provided that there was a sensible case for doing so.WT/WGTCP/M/20
Page 6
19. The following administrative matters were discussed:
- The Chairman informed the Group that room s had been reserved for two substantive
meetings of the Working Group in 2003, on the following dates:  20-21 February and
26-27 May;
- Following discussion, the Working Group agreed that an informal meeting of the
Working Group would be held at the beginning of 2003, for the purpose of planning
the Group's work in 2003.  It was understood that most delegations would be
represented by Geneva-based officials at the informal meeting.
20. The Secretariat informed the Working Group that the study that had been commissioned by
the Working Group (WT/WGTCP/M/18, paragraphs 96-98) and was being prepared with the
assistance of Dr. Simon Evenett would be ready for consideration at the Working Group's meeting in
February 2003, at least in the form of an interim report.
21. The representative of Korea informed the Group of the Seoul Competition Forum 2002 which
had been organized by the Korea Fair Trade Commission in cooperation with the OECD and
UNCTAD in Seoul, Korea, in November 2002, and in which a representative of the WTO Secretariat
had participated.  The theme of the Forum had been "Competition Brings Prosperity".  The Forum had
been attended by numerous Chairpersons of national competition authorities and other senior officials.It had highlighted the importance of competition policy for economic growth and development and
the importance of international cooperation in this area.
22. The observer from UNCTAD said that he had appr eciated the opportunity to participate in the
regional workshops that had recently been organized by the WTO in Libreville, Gabon, for the benefit
of French-speaking African countries and in Port Lo uis, Mauritius, for the benefit of English-speaking
African countries, both of which had been well-attended and useful.
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