WORLD TRADE
ORGANIZATIONWT/WGTCP/W/222
19 November 2002
(02-6444)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM THE EUROPEAN COMMUNITY
AND ITS MEMBER STATES
The following communication, dated 19 November 2002, has been received from the
Permanent Delegation of the European Community and its member States with the request that it be
circulated to Members.
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Core Principles
Introduction
1. The core principles of transparency, non-discrimination and procedural fairness are explicitly
mentioned by Ministers in para. 25 of the DDA as issues for clarification in the Working Group. The
present submission will focus on the objectives pursued by these core principles and on how the scope
of such principles could be clearly defined. Before doing so, however, is seems useful to recall some
general considerations on where these core principles could fit in an agreement on competition.  In
earlier written submissions and oral interventions during the meetings of the Working Group, the EC
has consistently made the point that a WTO framework agreement on competition does not and
should not aim at providing a "solution" to all the issues which may arise from the growinginterrelation of international trade and competition policies. However, what such an agreement could
and should do is to establish a solid basis for dealing with basic competition policy issues, which have
an impact on international trade, and facilitate multilateral cooperation on these issues.
1  Once such a
framework agreement is in place, the establishment of a WTO Competition Policy Committee would
provide a well-placed forum for examining whether greater convergence can be promoted on othercompetition policy questions of importance for the multilateral trading system of today.
2. As also consistently argued by the EC, a framework agreement would not require a
harmonisation of domestic competition laws.  The proposed framework would be fully compatible
with existing and future differences in national competition regimes.
3. However, it should be noted that the diversity of national competition laws - while important -
is not a point to be exaggerated.  There is a core of commonality regarding a number of the key
elements of competition law and policy.  If one analyses the nearly 100 existing competition law
regimes, a high degree of convergence can be detected regarding the following  main characteristics
of competition law and policy  despite differences on substantive provisions and institutional
structures:
                                                     
1 The possible scope and design of such cooperation modalities, including as they relate to hard core
cartels, has been addressed in the previous EC and Member State submissions, WT/WGTCP/W/184 and 193.WT/WGTCP/W/222
Page 2
• the need to treat hard-core cartels as the most serious breach of domestic competition law;
• the importance, despite differences in institutional settings, of the fundamental principles of non-
discrimination, transparency and procedural fairness
• the need to narrowly define sectoral exclusions and exemptions in a transparent and predictable2
manner;
• the important role of competition authorities in competition advocacy;
• the basic principles of national jurisdiction in relation to anti-competitive practices with an
international dimension; and;
• the importance of international cooperation and the basic principles which should guide such
cooperation.
4. The EC continues to be firmly convinced that these elements constitute a solid ground on
which a multilateral framework agreement can be successfully negotiated to the mutual benefit of all
WTO members and that the conclusion of such an agreement could bring about an even higher degree
of convergence.
1. Core principles – general observations
5. A first consequence of the choice that  a WTO competition agreement would not imply
harmonisation of domestic competition laws and would be able to accommodate differences in
national legal systems, as well as in institutional capacities, is the need to define core principles in an
unambiguous manner, but without attempting a detailed description of how they would operate.3
Moreover, such core principles can be defined in such a manner that their application takes intoaccount the need for progressivity and flexibility for developing countries, and in particular the least-
developed among them.
6. Affirming core principles such as transparency, non-discrimination and procedural fairness as
WTO commitments would serve to further reinforc e and anchor their significance in the domestic
legal system and thereby establish a stronger foundation for mutual trust and deeper cooperation
among competition authorities, including through bilateral cooperation arrangements.  Furthermore,for those WTO Members who have yet to adopt domestic competition laws, a WTO agreement would
provide important guidance for the drafting of such laws.  Finally, a WTO Agreement would help
lock Members into these principles, making their legal regimes transparent and predictable and at the
same time limiting the possibility of recourse to formal discriminatory treatment at a later point in
time.
2. Flexibility and progressivity
7. The EC proposal for a WTO competition agreement is premised on the basic assumption that
all WTO members – at some point in time – will  have a domestic competition law and a domestic
enforcement authority in place. However, as also stressed, progressivity and flexibility would be
guiding and qualifying principles as regards this basic assumption.
                                                     
2  It is understood though that in specific circumstances – because of the operation of the rule of reason
or other similar considerations in the domestic rules - exemptions from these rules can also be introduced ad hocby means of an individual administrative decision or a court judgement.
3 Therefore, any reference in this submission to the manner these principles are applied in EC
competition law and policy should be taken as merely illustrative.WT/WGTCP/W/222
Page 3
8. More specifically, the concepts of flexibility and progressivity could mean that:
• there is no need to aim at a more detailed definition of the substantive scope of domestic
competition laws.  It would be sufficient to envisage that such laws would be firmly based on the
core principles (and would include a ban on hard core cartels).  Presumably, a number of WTO
members (as is already the case in a number of jurisdictions) would also want to include other
substantive issues in their domestic competition laws such as abuse of a dominant position,monopolisation and merger control.  However, a WTO agreement should not entail  an obligation
for domestic competition laws to include such substantive provisions.
• as regards least-developed countries and certain smaller economies, the absence of a domestic
competition law regime will often be due to capacity constraints.  Any WTO commitment to
adopt a domestic competition law and establish an enforcement authority would therefore have to
be flexible and progressive in nature, e.g. some WTO members cannot reasonably be expected to
have a law and enforcement authority in place from the time of conclusion of a WTO agreementor shortly thereafter.  Moreover, there is a need to define such a commitment in a flexible manner
so that different economies can put in place the administrative systems best suited for their
particular circumstances.  Obviously, technical assistance and capacity building activities as
discussed in previous meetings of the Working Group and in numerous written submission, would
have an essential role to play in this respect.
• even more to the point, in those cases in which a competition law regime has been established at
the regional  level, all or some of the parties to such regional agreements - particularly small
countries/economies - may consider that the development of a separate national  competition
regime (or certain parts of it, such as merger review) is unnecessary and that the regional
competition regime is sufficient to effectively enforce competition law throughout the region;
• in view of differences in legal cultures and systems, it would be inappropriate to aim at a more
detailed definition of the powers of enforcement authorities.  As in other WTO agreements, it
would be sufficient to include more general re ferences to adequate investigative powers and
sanctions, capable of detecting and deterring effectively anti-competitive behaviour.
• although not limited to developing countries, the question of sectoral exclusions and exemptions
from the application of competition law has particular importance for many developing countries;a flexible approach to this issue would be to leave the domestic legal framework free to define the
scope and the modalities of such exclusions and exemptions, provided they do so in a transparent
and predictable manner.
9. To summarise, what matters is that an effective competition regime (comprising adequate
rules and the capacity to enforce them) is applicable  to each WTO member and that such a regime is
geared towards the specific needs and capacity of the WTO member in question.  What is crucial is
not necessarily that such laws and authorities be national, but rather that they be of a character that
will enable all WTO members to combat international anti-competitive practices and that there will beenforcement authorities which can be partners to real and meaningful international cooperation.
3. Core principles – in particular
10. The core principles discussed below are certainly the most relevant ones for the envisaged
WTO multilateral framework on trade and competition.  They are firmly embodied in the WTO
system and are also of key relevance for domestic competition regimes.  All three of them have been
explicitly mentioned in para. 25 of the Doha Development Agenda.  However,  the use of the term“including”  in para. 25 implies that there could be other core principles that could have a place and aWT/WGTCP/W/222
Page 4
role in a WTO trade and competition agreement.  Additional core principles could emerge from
discussions within the Working Group and during future negotiations, if WTO Members consider it
necessary to endow the envisaged multilateral framework with principles coming from their
competition policy experience and being well-suited to the needs of such a policy.
4. Non-discrimination
11. The importance of non-discrimination - both MFN and national treatment - for the
multilateral trading system as well as national competition laws hardly needs stressing.  It is difficult
to imagine any situation in which a competition law regime would establish a distinction on the basis
of the nationality of firms and to date discussions in the Working Group have shown no such
examples.  It is also our assessment that most if not all existing domestic competition laws do not
prescribe discrimination against firms on the basis of  nationality.  Although significant substantive
differences remain between various domestic competition laws, non-discrimination, as well astransparency, come across as important elements of commonality in these laws.
12. By suggesting the inclusion of provisions on non-discrimination in a WTO framework
agreement on competition, we envisage an obligation according to which domestic competition laws
should be firmly based on the principle of non-discrimination as regards the corporate nationality of
firms.  In other words, what would be at issue would be the treatment accorded to firms pursuant to
the terms of domestic competition laws  as such, and not the treatment accorded to firms under a range
of other policies.  This important distinction - and with that the equally important and necessary
limitation on the reach and implications of non-discrimination – are discussed in further detail below.
13. As to how such a principle should be drafted, although the overall aim of “non-
discrimination” generically speaking will be the same under the various WTO agreements, namelythat of ensuring a level playing field between domestic and foreign operators (and their goods and
services), i.e. national treatment, as well as between all foreign operators, i.e. most-favoured nation
treatment, the manifestation of discriminatory tr eatment takes widely differing forms such as the
discriminatory use of internal taxation and other measures under the GATT, cf. GATT Article III.
Consequently, there is an obvious need for the inclusion of the non-discrimination principle in a WTOframework agreement on competition by way of a separate, specific provision, which would take into
account the particularities of competition law and policy.
4
5. De jure  vs. de facto  discrimination
14. It is important to stress, however, that we are only suggesting a binding core principle as
regards de jure  discrimination in the domestic competition law framework, i.e. the treatment accorded
to firms according to the wording of the laws, regulations and guidelines of general application.  The
main reason for limiting WTO provisions to de jure  discrimination is that, when transposed to a
competition context, the concept of de facto  discrimination could raise complex questions about the
enforcement policies, priorities and prosecutorial discretion of competition authorities, including how
competition law is being applied to individual cases.
15. Moreover, we propose to define de jure  discrimination exclusively  in relation to the domestic
competition law regime.  We are not proposing that a competition agreement should seek to introduce
an absolute standard of national treatment to be applied to any form  of government law or regulation.
                                                     
4 Similarly, despite the competition-related provisions in a number of existing WTO agreements such as TRIPS
and GATS (including the reference paper on basic tel ecommunications), all of these are area and/or issue-
specific.WT/WGTCP/W/222
Page 5
As regards industrial, social, developmental and other policy objectives pursued by WTO members,
there is no reason, a priori , to consider that the non-discriminatory application of competition policy
would be in conflict with such legitimate policies.  Discussions in the working group have in fact
shown that there is basic complementarity betw een competition, industrial and other development
policies rather than a conflict.  Moreover, as disc ussed below, the flexible framework of commitments
proposed would still leave ample scope for maintaining policies that limit the application of domestic
competition law regimes.  One should also bear in mind that the instruments typically used to promote
industrial and other policy objectives – principally certain forms of subsidies and temporary border
protection – are covered by other disciplines in the WTO and would not be affected by a WTO
competition agreement.
16. Finally, the term “binding core principle” implies that compliance with these principles is
subject to dispute settlement.  Of course, the modalities of the application of dispute settlement tocompetition law need to be worked at, in particul ar in order to adapt dispute settlement to the
specificity of competition law and policy.
6. Cooperation arrangements
17. Provisions on non-discrimination would not  be extended to cover existing or future
cooperation arrangements in the competition area, including bilateral cooperation agreements on
competition as well as consultation and cooperation provisions contained in bilateral or regional free
trade agreements.  Were such a limitation not to be placed on the non-discrimination core principle,
situations could occur whereby one or more WTO members not parties to e.g. a bilateral cooperationagreement would seek to avail themselves of the provisions of such an agreement by invoking MFN.
5
As previously discussed in the Working Group, bilateral cooperation agreements are the result of along-standing, continuously evolving relationship betw een competition authorities with regard to the
application and enforcement of their respective competition law regimes.  Extending the provisions of
such agreements to countries not originally partie s to such agreements would not only defeat the
underlying foundation for such agreements, i.e. the evolving relationship, but could also place
considerable burdens on developing countries in administrative and financial terms.  It is in the light
of this that the EC has been proposing flexible modalities for international cooperation as explained in
detail in previous submissions, most notably WT/WGTCP/W/184.
7. Market access
18. Non-discrimination - in relation to a competition agreement - has no bearing on the question
of whether foreign firms have access to a particular market.  This depends on a range of trade and
investment factors outside the scope and ambit of a WTO competition agreement. In other words, by
making the operation of the domestic market more efficient and more transparent, an effective
domestic competition policy enables traders and investors to fully benefit from market accessconcessions the importing or host country may already have made, but does not imply any greater
market access concessions.  As a matter of fact, effective application of competition policy actually
helps importing or host countries to avoid some of the perceived risks that are sometimes associated
with market access concessions or FDI, that is, of foreign firms or investors with market power
disproportionate to that of domestic firms, abusing such power.
                                                     
5 By the proposed limitation of the non-discrimination principle the ensuing situation would in essence
be that which would prevail under normal rules of public international law, cf. Article 34 of the ViennaConvention on the Law of Treaties according to which; “A  treaty does not create either obligations or rights for
a third State without its consent”, and, Article 36 (1) accord ing to which; “A right arises for a third State from a
provision of a treaty if the parties to the treaty intended the provision to accord  that right either to the third State,
or to a group of States to which it belongs, or to all st ates, and the third State assents thereto. Its assent shall be
presumed so long as the contrary is not indicated, unless the treaty otherwise provides.”WT/WGTCP/W/222
Page 6
8. Transparency
19. Transparency is a fundamental principle both  for the multilateral trading system and for
competition authorities seeking to develop and establish a "competition culture".  In addition to this
important objective, transparency of competition law regimes is of great importance for firms engagedin international trade as well as for consumers.  Furthermore, transparency as regards “behind–the-
border” measures such as competition law and policy is an important means by which to strike a
balance between, on the one hand, establishing a predictable rules-based trading system and, on the
other hand, ensuring that the reach and coverage of any WTO disciplines are not unnecessarily
intrusive.
20. At the same time it has to be acknowledged that certain aspects of transparency, including the
public availability of laws, regulations and guidelines of general application, may entailadministrative costs and therefore would have certa in capacity-building implications.  However, one
should also take note of the fact that newly established competition authorities have frequently
pointed to the fact that developing transparent procedures is a key requirement for ensuring respect for
the law and establishing credibility regarding its en forcement.  This would suggest that a multilateral
agreement should be based on sufficiently high standards of transparency, while at the same timerecognising that certain elements may need to be introduced progressively and be identified as a
priority for technical assistance programmes.
21. Specific transparency provisions are included in most WTO agreements. Such provisions are
specifically tailored for the type of government measures covered by the agreement.  Transparency is
already firmly incorporated in WTO Agreements su ch as GATT (Article X regarding publication and
administration of trade regulations), GATS (Article  III regarding transparency), and TRIPS (Article
63 regarding transparency).
22. In the competition field, a transparency commitment would obviously apply to laws,
regulations, and guidelines of general application.  The obligation would be for WTO members to
ensure public availability in a comprehensive and timely manner – be it in print or on a publiclyaccessible web site – of all laws, regulations and guidelines of general application.
6
23. The second part of a transparency obligation would be a notification requirement for WTOmembers concerning their laws, regulations and guidelines of general application.  The logical body
to which such notification would be made is the proposed WTO Competition Policy Committee.  This
Committee could also be charged with ensuring the coherence and greater effectiveness of technical
assistance and capacity-building activities by providing a forum for all donors and recipients, just as
voluntary peer reviews of WTO members’ legislation could be undertaken with the involvement ofthe Competition Policy Committee if not by the Committee  itself.  For purposes of facilitating both
the design of multi-year programmes in the area of technical assistance and capacity-building, as well
as voluntary peer reviews, notification of existing laws, regulations and guidelines of general
application to this Committee would greatly facilitate the efficient discharge of those responsibilities.
9. Sectoral exclusions and exemptions
24. The issue of sectoral exclusions and exemptions from the scope and application of
competition law is of great importance from both a competition and a trade perspective.  At the same
time it must be acknowledged that it constitutes a question of great sensitivity and complexity both
                                                     
6 On the obligation to provide information in a comprehensive and timely manner, see Japan-Trade in
Semiconductors, BISD 35S/116, L/6309, adopted on 4 May 1988 and European Communities-Measures
Affecting the Importation of Certain Poultry Products, WT/DS69/AB/R.WT/WGTCP/W/222
Page 7
among developing countries as well as several OE CD members, including the EC.  Some countries
have made the point that, in order to gather consensus for the introduction of competition legislation,
it has proved necessary to introduce certain sectoral exclusions and exemptions, but that these have
then been limited over time.  When analysing the recent developments, the trend has clearly been to
eliminate such exclusions or to define them in increasingly narrow terms.  We suggest that a flexibleapproach would be to focus - at this stage - on the essential question of transparency and its
application to sectoral exclusions and exemptions, as well as their review over time.  For instance, the
Working Group could also usefully examine the experience of WTO Members who have phased out
exemptions and exclusions (including the reasons for and the timing of such phasing out), as well as
the domestic processes employed to enact such exemptions and exclusions.
10. Procedural fairness
25. As is the case in other WTO agreements
7, provisions related to core principles should also
address the issue of "procedural fairness" and under this heading, the availability of effective and
adequate domestic remedies.  This would include certain procedural guarantees under which private
parties have access to the competition authorities, guarantees during the course of competition
investigations and enforcement, a right of appeal ag ainst administrative decisions and the role of the
judiciary in the enforcement process.
26. Procedural guarantees which would fall naturally under this heading refer mainly to the so-
called “rights of defence” that competition authorities should observe in all proceedings in which
sanctions may be imposed.  Such “rights of defence” in favour of firms involved in administrative
proceedings before a competition authority could include for instance:
(i) the right for parties to proceedings under the domestic competition law to have access
to the agency or court applying the law and to be informed of the  objections of the
authority to their conduct.
(ii) the right for such parties to express their views within a fair and equitable procedure
in advance of an adverse decision addressed to them.
(iii) the right to be notified of a reasoned final decision detailing the grounds on which
such a decision is based.
(iv) the right to appeal such administrative decisions by competition authorities and to
have them reviewed by a judicial body.
27. Another issue to be subsumed under the core principle of procedural fairness would be the
issue of protection of confidential information, including business secrets.  As already pointed out in
previous EC and Member State submissions, the need to protect confidential information – and the
legitimate expectation on the part of firms who have submitted such information that adequate
protection will be afforded – entails legal and practical limitations on what information can beexchanged.  A WTO agreement would need to set out certain basic standards for the protection of
such information.
28. What is important to a competition authority is to provide adequate protection for the business
secrets and other confidential information provided by companies, physical persons and public
                                                     
7 WTO Agreements which contain provisions relation to procedural fairness include GATT Article
X.3(a)-(b) regarding the administration of laws, regulations, decisions and rulings in a “uniform, impartial andreasonable manner”, as well as TRIPs Article 41(2) whic h refers to administrative procedures as “fair and
equitable”, as well as TRIPs Article 42 ff. regarding civil and administrative procedures and remedies.WT/WGTCP/W/222
Page 8
authorities involved or co-operating in proceedings under domestic competition rules.  Failing to
provide adequate protection would seriously impair the effectiveness and credibility of a competition
regime, may make firms in that jurisdiction hesitant to provide it with the information it needs to carry
out its tasks and could even expose a competition authority – in certain legal systems – to claims for
damages.
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