WORLD TRADE
ORGANIZATIONWT/WGTCP/W/225
5 March 2003
(03-1279)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM KOREA
The following is the text of a communication received from the Permanent Mission of Korea
which was circulated as an advance copy for the Working Group's meeting of 20-21 February 2003.
_______________
Hardcore Cartels and Voluntary Cooperation:
Conceptual and Practical Enforcement Issues
I. INTRODUCTION
1. In its previous submission to the Working Group (WT/WGTCP/W/200), Korea outlined its
basic thinking on hardcore cartels and voluntary cooperation, focusing on the means of voluntary
cooperation for regulating hardcore cartels under a WTO framework agreement on competition.
2. As a follow-up, this proposal attempts to contribute to a further analysis of conceptual and
practical enforcement issues regarding hardcore cartels and voluntary cooperation.
II. THE NEED FOR A MULTILATERAL FRAMEWORK ON HARDCORE CARTELS
AND VOLUNTARY COOPERATION
3. With increasingly intense integration of the global market, numerous countries have been
experiencing damages caused by the frequent emergence of international cartels. These international
cartels cause greater economic loss in developing countries with no competition laws or with
relatively little experience in competition law enfo rcement. Indeed, international cartels pose severe
problems for developing countries as well as developed ones.
4. The collection of necessary evidence on the existence of cartels requires investigative
cooperation among competition authorities since the member firms of international cartels are often
located in a number of different countries.  Korea believes that there is a growing consensus in this
Working Group regarding the need to minimize cross-border conflicts between competition law
enforcement activities of different member countries and to strengthen international cooperation inaddressing international cartels.
5. In this sense, it is a reflection of the increasing awareness of the serious harm caused by
cartels that the Doha Ministerial Declaration has mandated this Working Group to clarify core
elements such as "hardcore cartels" and "modalities for voluntary cooperation."WT/WGTCP/W/225
Page 2
III. HARDCORE CARTELS
A. CONCEPT OF HARDCORE CARTEL
6. Regarding the concept of a hardcore cartel, there are two existing definitions, namely those
found in the OECD's Recommendation of the Counc il Concerning Effective Action Against Hardcore
Cartels (the Recommendation) and UNCTAD's Set of Principles and Rules on Competition (the Set).
7. Even though the two definitions resemble each other closely in substance, the Set's definition
of cartels may cover a broader scope than that offered by the OECD's Recommendation. The latter
definition seems more appropriate for use in the multilateral framework since it is more
effect-oriented, straightforward and clear.
8. Cartels that are thought not to be hardcore, have some efficiency-enhancing effect. For
example, they may be cartels for R&D where c ooperation between innovators at the pre-commercial
stage may bring about synergies and dynamic efficiency.  This type of cartel is often allowed when itsanti-competitive effects do not overly outweigh the pro-efficiency effect.  R&D cartels may be
particularly useful for developing countries in that the dynamic efficiency they create is an important
factor at the early stages of economic development.  Cartels among small producers to achieve
economies of scale can also provide effective competition against a dominant player, and therefore
have a pro-efficiency effect.  Modern competition laws evaluate the competition effect of such non-hardcore cartels by the rule of reason.  The evaluative process based on the rule of reason may differ
according to different legal traditions and/or particular economic environment or development stages
of a member Country.
B. P
RACTICAL ENFORCEMENT OF HARDCORE CARTELS
9. To ensure effective sanctions against hardcore cartels, it is crucial for each member Country
to establish some sort of law and enforcement mechanism. Furthermore, in the case of international
hardcore cartels, cooperation among involved jurisdictions would play a vital role in an effective
regulation of hardcore cartels.
10. For effective enforcement, there must be a clear statute against hardcore cartels and an
authoritative agency that can make independent judgments from the perspective of competition law.Furthermore, there should be procedural guarantees to ensure a sufficient level of sanctions and
remedies imposed on hardcore cartels.  However, Korea is of the view that it is not always essential to
have a separate, specialized competition law or a separate, specialized agency.
11. Since countries are at different levels of economic development, and have diverse legal
traditions with different socio-historical contexts, implementation of hardcore cartel regulations in the
actual law enforcement stage can appear in various forms.  Therefore, flexibility and progressivity in
cooperation between countries must be recognized. For example, given that some developingcountries do not have competition laws, or lack sufficient expertise and resources to effectively
enforce competition policy, a transitional period could be provided for developing countries before
hardcore cartel regulations become fully applicable. However, taking into account the enormous
damages caused by hardcore cartels in markets, such transitional periods should be granted only on a
temporary basis.WT/WGTCP/W/225
Page 3
IV. VOLUNTARY COOPERATION
A. CONCEPT OF VOLUNTARY COOPERATION
1. Concept of the term 'Voluntary'
12. The term 'voluntary' incorporates both ethical and legal dimensions.  In the ethical sense,
'voluntary' implies that countries, especially developed countries, should fulfill self-imposedobligations of cooperation in good faith and that activities of voluntary cooperation should not be so
arbitrary that they contradict the reasonable expectations of other countries.
13. From a legal perspective, 'voluntary' means that it should not be binding.  The concept of the
term 'non-binding' suggests that member countries should not be forced to cooperate against their own
interest. For example, "voluntary" means that the WTO core principle of non-discrimination
(especially MFN) does not apply. When country 'A' provides notification or information to country
'B', country A is not obliged to provide the same notification or information to country 'C'.
14. Nevertheless, a requested country should respond to a request for cooperation, whether it
chooses to actually offer its cooperation or not.  In the case of refusal to cooperate, sufficient reasons
should be provided for not cooperating.
2. Concept of the term 'Cooperation'
15. In the literal sense, "cooperation" occurs reci procally between two countries, but in the
competition laws and institutions, there are undeniable disparities between developed countries and
developing countries. Strengthened cooperation in competition law enforcement, therefore, suggests
that developed countries with longer histories of competition law enforcement should assist the
developing countries with regard to capacity building in the area of competition law enforcement.
16. Some concern has been expressed that under this type of voluntary cooperation, a developing
country would be 1) unlikely to have as many cases of information to provide to a developed country
as the latter would be able to provide, and 2) unlikely to request cooperation from the developed
country as much as the latter would do. Then, it may be argued that developing countries would not
be able to benefit from the system as much as developed countries in general.  However, it is equally
likely that if and when a developing country needs cooperation from a developed country, cooperationmay be more forthcoming with an external leverage that the multilateral framework can provide,
rather than purely on a bilateral basis.
B. M
ODALITIES OF VOLUNTARY COOPERATION
17.  Voluntary cooperation in the field of competition policy can take many forms such as general
information sharing and discussion, case-specific cooperation, and technical assistance.
1. Case-Specific Cooperation
18. Due to increasing international anti-competi tive activities, case-specific international
cooperation between relevant countries would be in need. In the investigation and sanction of a
specific case, the countries involved can cooperate in the following ways:
− First, members can exchange information and evidence.  Competition or judicial authorities
may exchange case information or evidence within the parameters of their domestic laws.When confidential information is involved, th e level of exchange should be left to theWT/WGTCP/W/225
Page 4
discretion of the exchanging parties, taking into consideration the level of protection of
confidential information and reciprocity of the other member.
− Second, it is necessary for member countries to cooperate through negative comity. This
means that a country will provide notifications, consult or exchange opinions, in
anti-competitive cases that harm the interests of another member country.  As the cooperationdevelops, positive comity, which means that a member country can request another member
country to take action under the latter's own competition law, may also be considered.
− Thirdly, consultations may be organized to coordinate the law enforcement activities of
countries concerned when a certain anti-competitive behavior causes harmful effects and is
subject to investigation by many member countries.
2. Technical Assistance
19.  While there is growing cooperation betw een developed countries, cooperation between
developed and developing countries through technical assistance is still in short supply.  It appears
that the global spread of competition culture and the balanced growth of the global economy is
premised on increased technical assistance in response to the demand for technical assistance of
developing countries.
20. The objectives of technical assistance, such as the spread of competition culture and transfer
of competition laws and institutions, can yield significant effects only when they are based on strong
confidence between developed and developing countries. Such confidence can be formed as a result
of long-lasting multilateral/bilateral communication and cooperation.  Korea attaches great
importance to strengthening cooperation between countries. In this vein, Korea has held annualInternational Workshops on Competition Policy since 1996. In the same context, Korea holds the
Seoul Competition Forum every other year to disseminate competition culture world-wide by
promoting discussion between the developed and developing countries.  At a more specific level,
Korea runs a program to assist the Chinese competition officials to adopt and enforce competition
law. Korea hopes that such programs, including the workshop and forum, will contribute to increasingthe quality and frequency of technical assistance while providing opportunities for countries to
enhance mutual trust.
3. Establishment and Management of a possible WTO Competition Policy Committee
21.  If a multilateral framework on competition policy comes into being under the WTO, it would
be desirable to set up a Competition Policy Committee that will enhance exchanges between Membercountries and assist efficient implementation of the framework. The following are some of the
activities that such a Committee could undertake:
− First, the Committee could facilitate the exchange of information and opinions on the status
and trends of competition laws and regimes. It would also provide a forum to conductanalyses and discussions on global competition issues that are of common interest to member
countries.
− Second, by organizing "obligatory" peer reviews, the Committee could  update the progress of
competition policy implementation in Member countries. The "obligatory" peer review can
complement the non-binding aspects of the voluntary cooperation system and reinforce the
implementation of obligations set by the multilateral framework.
− Peer reviews will allow Member countries to evaluate developments made by countries
towards the multilateral framework and propose ways to improve the framework. To this end,WT/WGTCP/W/225
Page 5
the Competition Policy Committee must establish clear guideline on the designation of a
member country for review and the methods of review.
− Third, the Committee should undertake systematic evaluation of the technical assistance
programs for developing countries and devise more effective technical assistance plans. To
promote technical assistance, the Committee might run a database which will includeinformation on experts, organizations and other relevant details, to effectively organize
technical assistance.
V. CONCLUSION
22. Hardcore cartels are a pernicious practice that directly infringes upon the basic principle of
free market economy.  Therefore, a multilateral competition law framework against hardcore cartels
should be operated in a way that secures effectiveness.
23. Voluntary cooperation in competition law enforcement should be made, taking into account
the substantial gap between the different levels of competition law enforcement and institutional
development among the developed and developing countries. As a result, cooperation in the area of
competition law enforcement should take the form of capacity building and technical assistance,
where the countries with more experience in competition law enforcement will help the developingcountries enhance the level of competition law enforcement.  Korea believes that effective world-wide
regulation of hardcore cartels will be possible when voluntary cooperation between the developed and
developing countries becomes more active.
__________