WORLD TRADE
ORGANIZATIONWT/WGTCP/W/221
6 February 2003
(03-0774)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
CORE PRINCIPLES IN A TRADE AND COMPETITION CONTEXT
The following is the final version of a paper received from the OECD Secretariat that was
made available as a room document at the Working Group's meeting of 26-27 September 2002.
_______________
EXECUTIVE SUMMARY
The Doha Ministerial Declaration called for an examination of the application of the three
"core principles" of transparency, non-discrimination and procedural fairness in the context of the
interaction between trade and competition policy.  This paper discusses these principles in turn, firstas they appear in the WTO agreements and then in relation to competition law enforcement.  The
OECD Joint Group on Trade and Competition Policy (Joint Group) has done some prior work on this
topic, and that work forms the foundation for this paper.  The Joint Group's work to date has found
that core principles such as these are applied quite differently across the WTO agreements, and their
application in competition law enforcement is likely to be similarly flexible.
Transparency
The core principle of transparency in the mu ltilateral trading system encompasses two broad
obligations:  (i) to publish, or at least make publicly available, all relevant laws, regulations, and
decisions;  and (ii) to notify various forms of governmental action to the WTO Secretariat and WTO
Members.  Transparency is important in this context for various reasons.  It provides vital information
to market participants about the conditions under which commercial transactions can take place, and itfacilitates monitoring of compliance with WTO law.  The scope of the publication obligation is wide.
For example, GATT Article X:1 covers all "laws, regulations, judicial decisions and administrative
rulings of general application" pertaining to the various issues covered in the GATT.  However, this
obligation does not extend to judicial decisions or  administrative rulings that are only relevant to
specific individuals or entities.  A common and key exception to the transparency provisions of theWTO agreements allows members to refrain from disclosing confidential information.
Competition laws are usually written in general, framework form, and the details of their
application are determined on a case-by-case basis.  Genuine transparency in this context requires,
therefore, that more than the applicable laws and regulations be made public.  Further, theconstituencies of competition policy are diverse, and include the business community, individual
consumers, academics, regulatory and government officials and the public at large.  The information
needs of each of these groups can vary substantially.  The Joint Group has previously studied the
principle of transparency in the context of competi tion law enforcement.  It concluded that it is a
common practice for the competition agency of OECD member countries to publish relevant laws and
regulations, case decisions, and explanations of its enforcement policies and procedures.WT/WGTCP/W/221
Page 2
Non-discrimination
The core principle of non-discrimination in the multilateral trading system is embodied in
national treatment and most-favoured-nation treat ment (MFN) provisions.  National treatment
requires that a WTO Member not put the goods, services or persons of other WTO Members at acompetitive disadvantage vis-à-vis its own goods, services or nationals.  MFN requires that any
advantage conferred by one Member upon the goods, services or persons of another Member shall be
automatically granted to all other Members.  An interesting feature of the WTO framework, especially
in relation to non-discrimination in competition law, is that national treatment and MFN have been
operationalised differently across the WTO agreements.  This reflects the different contexts in which
the principles are applied.  This sort of flexibility may also be important if any sort of multilateral
disciplines relating to competition law are negotiated within the WTO.
National treatment and MFN can be violated by de jure or de facto discrimination.  De jure
discrimination exists when national measures draw an express distinction on the basis of origin which
disadvantages foreign products or services.  De facto discrimination arises from national measures
that do not distinguish explicitly on the basis of origin but that, when applied, actually discriminate onthat basis.  Discrimination in competition law en forcement might arise from laws exempting certain
firms from prohibitions on cartels or abuses of dominance in competition laws.  It might also occur in
laws that apply certain "public policy" considerations to the standard "rule of reason" analysis under
competition laws in a discriminatory fashion.  In the competition context, de facto discrimination is
used in another way, to describe a situation in which a domestic firm receives more favourabletreatment than a foreign firm in a particular case or in two apparently comparable cases.  It is quite
difficult, however, to determine whether this is the result of discrimination against the foreign firm or
merely the result of the firms being situated differently, for the reason that no two competition cases
are exactly alike.
Procedural fairness
While the principle of "procedural fairness" might be considered to belong more to the
domain of competition policy than to trade policy, various provisions in the WTO agreements can be
identified which are closely related to this principle.  These provisions concern:  (i) requirements for
fair and equitable procedures in administrative and judicial proceedings;  and (ii) the capacity for
review of administrative and judicial decisions.  For example, GATT Article X:3 sets out that each
WTO Member shall administer its laws, regulations, decisions and rulings in a "uniform, impartialand reasonable manner", and also maintain or institute judicial, arbitral or administrative tribunals or
procedures allowing for "prompt review and correction of administrative action".  Certain WTO
agreements, such as the TRIPS and Agreement on Government Procurement, also introduce a limited
form of private party standing into the multilateral trading system by requiring procedural fairness-
related provisions at the national level.
The principle of procedural fairness is important in competition law enforcement, in which
there are many participants with differing interests.  There are respondents or subjects to agency
enforcement proceedings, who are businesses or business people.  They require adequate notice of
charges against them, fair and impartial procedures in the competition agency and rights of appeal.There are victims or private claimants who may have been harmed by anticompetitive conduct.  Both
businesses and individual consumers may comprise this class.  They require rights to petition the
competition agency and to pursue adequate remedies either through the agency or the courts.  Finally,
there is a diverse group of complainants, witnesses in agency proceedings and the public at large,
which also has certain requirements for procedural fairness.WT/WGTCP/W/221
Page 3
I. INTRODUCTION
1. This paper addresses the three "core principles" of transparency, non-discrimination and
procedural fairness in the two contexts of the multilateral trading system and competition law
enforcement.  The Doha Ministerial Declaration set out a number of areas for the WTO Working
Group on the Interaction between Trade and Competition Policy to focus on in the period until thenext WTO Ministerial Conference.  One of the four substantive elements contained in paragraph 25 of
the Declaration called for "the clarification of:  core principles, including transparency, non-
discrimination and procedural fairness".
1  Work on core principles also accords with the work
programme of the OECD Joint Group on Trade a nd Competition (Joint Group), whose mandate
includes analysis of the Doha issues leading up to the next WTO Ministerial Conference.  As such,
clarifying how the three core principles of transparency, non-discrimination and procedural fairness
could be applied to a multilateral framework on competition is one of the specific elements of thework programme of the Joint Group.
2. This is not the first time that the Joint Group has worked on core principles at the trade and
competition interface.  In particular, Chapter 3 of Trade and Competition Policies:  Options for a
Greater Coherence  identified the use of core principles as one of the possible approaches to rule-
making in this area.
2  This paper builds, in part, upon the platform of that earlier work as it relates to
transparency, non-discrimination and procedural fairness.
3. A considerable amount of the Joint Group's early work in this area also related to the use of
the terminology of "core principles".  What was emphasised is that the term "core principles" does not
constitute a legal characterisation or hierarchy but rather broad guiding objectives found across a wide
variety of WTO agreements.  Furthermore, as this paper illustrates, the form that these principles takein these various agreements, as well as the obligatio ns that they entail, adapts considerably to the
subject matter of the agreements to which they rela te.  Thus, when examining the potential application
of these core principles it is important to bear in  mind that what form they may ultimately take, and
the obligations that they entail, is neither legally nor historically constrained.  In fact, as the WTO
agreements have moved from the traditional domain relating to trade in goods to various aspects ofgovernmental regulation, approaches to the core principles have adapted considerably.  The unique
qualities of the field of competition policy would similarly imply that progressive developments may
also required.
4. This paper is meant to be an introduction to the broader, and much more difficult, task of
incorporating these three principles into a possible multilateral framework on competition.  The
following sections discuss each of the three principles in turn, first as they appear in the WTO
agreements and then their expression and use in competition law enforcement.
II. TRANSPARENCY
In the WTO agreements
5. The core principle of transparency in the multilateral trading system has two component parts:
(i) the obligation to publish, or at least make publicly available, all relevant laws, regulations, and
                                                     
1 WTO Ministerial Conference, Ministeria l Declaration, WTO Doc WT/MIN(01)/DEC/1
(20 November 2001).
2 See OECD (2001), Trade and Competition Policies:  Options for a Greater Coherence, OECD, Paris,
pp.  28-58.WT/WGTCP/W/221
Page 4
decisions;  and (ii) provisions on the notification of various forms of governmental action to the WTO
and other Members.3
6. It should be noted that often linked with the obligation to publish are provisions relating to the
impartial administration of such regulations and the right of review of decisions taken under them.  As
these obligations relate more closely to the principl e of "procedural fairness" they will be examined in
that section of this paper.
7. The transparency provisions of the three main WTO agreements are:
(i) GATT:  Article X (Publication and Administration of Trade Regulations);
(ii) GATS:  Article III (Transparency);  and
(iii) TRIPS:  Article 63 (Transparency).
Most of the other agreements that make up Annex 1A of the Marrakesh Agreement
Establishing the WTO (Annex 1A Agreements) also contain a publication obligation.
8. The main notification provisions in the GATS and TRIPS are set out in Articles III and 63
respectively, although in both cases there are other provisions calling for notifications in particular
instances.  The notification provisions contained in the GATT and other agreements relating to trade
in goods are numerous and diverse, with over 165 different notification obligations and procedures.
9. The WTO's notification obligations are of broad application, requiring the notification of
implementing legislation and any changes to such legislation.  Some call for notifications on a
periodic basis, such as biannual reports on countervailing and anti-dumping actions, others only have
to be made when a particular trade action is taken or contemplated, such as a safeguard action.  Still
others only have to be made on a "one-time" basis, for example at the time of the coming into force ofthe WTO agreements.
10. A consideration, from the competition perspective, is the extent  to which the transparency
principle as embodied in the WTO might extend to individual administrative, judicial or enforcement
decisions on competition matters.  Under WTO jurisp rudence, the requirement of publication does not
appear to extend to administrative rulings addressed to specific individuals or entities.  Certainly thiswas the finding of the panel in the Japan – Film  case, which dealt with a claim regarding an alleged
violation of Article X:1 of the GATT due to a failure to publish certain enforcement actions taken by
the Japan Fair Trade Commission and local fair trade councils.
4  Nonetheless it did note that
"inasmuch as the Article X:1 requirement applies to all administrative rulings of general application,
it also should extend to administrative rulings in individual cases where such rulings establish or
revise principles or criteria applicable in future cases."5 As competition law enforcement tends to be
                                                     
3 For a more detailed treatment of core principles in the multilateral trading system, see WTO, "The
fundamental WTO principles of national treatment, most-favoured-nation treatment and transparency", WTO
Doc WT/WGTCP/W/114 (14 April 1999), upon which much of the discussion here is based.
4 As well as administrative "guidance" given by regional offices of the Ministry of Trade and Industry,
prefectural governmental and local authorities concerning the Large Stores Law and relevant local regulations,see Panel Report, Japan – Measures Affecting Consumer  Photographic Film and Paper, WTO Doc WT/DS44/R
(31 March 1998).
5 Panel Report, Japan – Measures Affecting Consumer Photographic Film and Paper, WTO Doc
WT/DS44/R (31 March 1998) para 10.388.WT/WGTCP/W/221
Page 5
based on a rule of reason approach, the question of the extent to which individual decisions are of
general relevance as they contain reasoning which could be important in future cases has been raised.6
11. The transparency provisions of the GATT, GATS and TRIPS contain exceptions making it
clear that Members are not required to disclose confidential information under a variety of
circumstances.  For example, GATT X:1 sets out that its publication requirement "shall not requireany contracting party to disclose confidential information which would impede law enforcement or
otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of
particular enterprises, public or private".  Similar clauses are to be found in GATS Article III bis,
TRIPS Article 63.4 and many of the other Annex 1A Agreements.
In competition law
12. Competition law must be implemented in a clear and transparent manner.  Transparency is a
basic requirement for enforcement of any body of law but it is particularly important for competitionlaw, as such laws are often written in general, framework form and are applied in a technical manner
on a case-by-case basis.  Thus, while it is necessary that the competition law itself and all
implementing regulations be published and readily available, genuine transparency in competition law
enforcement requires much more - that the competition agency disclose both the substantive basis for
its decisions and the procedures by which it arrives at those decisions.  Its disclosures should be made
in a variety of forms so as to be accessible and understandable to all interested constituencies.
13. Three competition constituencies could be identified:  (1) the business community, including
experts, such as lawyers, who advise it;  (2) po tential victims of anti-competitive conduct, including
those who would make complaints or supply info rmation to the enforcement agency;  and (3) the
public at large - citizens whose understanding and participation in an enlightened application ofcompetition law are necessary for the creation of a "competition culture" that underlies a successful
market economy.  Members of these groups overlap at any given time, but each group has certain
requirements for transparency.
The business community
14. Businesses and business people are potential subjects or respondents to competition
enforcement actions.  Most business people desire to obey the law.  Thus, the business community has
a need to know what the law is, how it is enforced and how to avoid violating it.  Businesses also
require an understanding of a country's competition law in order to make intelligent investment
decisions.  Thus, it is at least as important for business people to know what is permissible under
competition laws as to know what is prohibited.  The business community's needs are technical, and
they include an understanding of the law, the theories and policies that underlie it and the manner in
which it is enforced.  The following are attributes of transparency that would assist it in this regard:
• access to the competition law and all implementing regulations;
• access to case decisions of the competition authority and, where applicable, tribunals and courts,
including the analytical and legal bases for these decisions;
• an understanding of the theories and analyses that are applied by the competition agency,
tribunals and courts in enforcing the law;
                                                     
6 See Communication from Switzerland, "Anti-Competitive Practices and Trade:  Impact of Basic
Principles", WTO Doc WT/WGTCP/W/89 (27 August 1998), paragraphs 8, 9 and 14.WT/WGTCP/W/221
Page 6
• an understanding of the investigative and enforcement processes that the competition agency,
tribunals and courts apply;  and
• where possible, guidance from enforcement officials in specific cases on the application of the
law to certain conduct.
Potential victims or complainants
15. The business community is part of this group as well, but the group also includes individuals
who may have suffered losses from anti-competitive conduct or who wish to submit complaints about
suspected violations of the competition law.  People in this position may not need to have a technical
understanding of the competition law and how it is enforced, but they need at least awareness of the
law and of their rights and obligations under it.  They require:
• an understanding of the competition law, how it pr otects them and whether, in a given situation,
they may have cause to pursue a remedy or make a complaint;  and
• identification of resources for assistance in achieving compliance and redress of harm under the
law, including particularly how to access the competition agency for this purpose.
The public at large
16. This is a diverse group – businesses, consumers, academics, government and regulatory
officials.  Their needs for information about competition law enforcement are equally diverse.Academics and government officials may have need for extensive, technical information about
competition law enforcement.  Individual consumers ordinarily require much less – as with the second
group above, an awareness of the law and how it protects them.  Collectively, however, this group
forms the constituency for an effective – or ineffective – competition law.  Thus, the public at large
needs a basic understanding of how competitive markets are essential to the operation of an effectivemarket economy and how competition contributes to consumer welfare.
17. Application of the transparency principle in competition policy must be tempered by the need
to protect certain sensitive information from unnecessary disclosure.  "Business secrets," or "business
confidential" information that is acquired from subjects of the investigation or from third parties in the
course of an investigation could, if made available to competitors, cause harm to the owner of theinformation in the marketplace.  An informant who s ecretly provides information to investigators in a
competition investigation might be physically or economically harmed if his or her identity were
disclosed.  The public policy of encouraging uninhibited communications and deliberations among
enforcement officials, and between attorney and client, might be compromised if all such
communications were made public.  Thus, the laws  of virtually every country impose controls over
disclosure of such types of information.
18. Such controls are not necessarily absolute, however.  A respondent in a proceeding requires
sufficient access to information in the competiti on agency's files to permit it to respond to the
allegations against it.  In a formal case or proceeding, the public is entitled to as much information
about the case as possible, as required by the fundamental principle of transparency.  Thus, disclosureof otherwise confidential information in these circumstances may be made on a limited basis.
Confidential information may be disclosed to the legal representatives of a party to a proceeding and
to a few officers of the business, with instructions not to disclose the information further or to use the
information in the conduct of their business.  There ma y be two versions of an evidentiary record in a
case or proceeding, one containing all of the evidence and a second, "public" record with the
confidential information removed or aggregated in a way that masks sensitive information about
particular entities.WT/WGTCP/W/221
Page 7
19. The OECD's Joint Group on Trade and Competition has previously considered the principle
of transparency in the context of competition policy, and it concluded that the following policies exist
in varying degrees in all OECD member countries.7
Laws
• Applicable laws and regulations are published in an authoritative source such as an official
journal.  Alternative methods of dissemination of information, such as the Internet, are used
where practicable.
Case Decisions
• Decisions of the competition authority and the co urts resolving or disposing of a proceeding or
case are published in a timely manner, as are decisions by reviewing authorities.
• Published decisions set forth the decision-maker's reasoning and pertinent facts, unless protected
by confidentiality rules.  The evidentiary record on which the decision is based is available forinspection by interested parties, subject to the protection of confidential information.
Enforcement Policy
• Statements of enforcement policy, commentary on the law or other enforcement guidelines are
published, particularly for those aspects of the law subject to case-by-case decision-making.
• Additional guidance in particular cases, e.g., through "advisory opinions," is available and
published where practicable, subject to the protection of confidential information.
• Press releases, testimony, speeches and other sources of information about enforcement policy are
published.
Investigations
• Administrative procedures for investigation are published, including the standards for opening or
closing investigations.
Procedures
• Important procedural rights and obligations are codified and published.
Timeliness
• Information is published with all practical speed.
III. NON-DISCRIMINATION
In the WTO agreements
20. The core principle of non-discrimination in the multilateral trading system is embodied in
national treatment and most-favoured-nation treatment  (MFN) provisions.  National treatment is set
out in the following provisions of the three main WTO agreements:
                                                     
7 OECD (2000), "Remedies Available to Private Pa rties Under Competition Laws", OECD Doc, Joint
Group on Trade and Competition, COM/DAFFE/CLP/TD(2000)24/FINAL.WT/WGTCP/W/221
Page 8
(i) GATT:  Article III8;
(ii) GATS:  Article XVII;  and
(iii) TRIPS Agreement:  Article 3.
21. The MFN principle is likewise contained in each of the three main WTO agreements in the
following provisions:
(i) GATT:  Article I;
(ii) GATS:  Article II;  and
(iii) TRIPS Agreement:  Article 4.
22. The principles of national treatment and MFN are also incorporated in most of the other
Annex 1A Agreements.
23. National treatment and MFN obligations can be violated by de facto or de jure discrimination.
De jure discrimination concerns measures that expres sly discriminate on the basis of origin.  De facto
discrimination concerns national measures that do not contain any explicit reference to origin.  In
other words, they are facially neutral.  However, when these measures are applied, they discriminate
on the basis of origin.  For example, the Appellate Body found that a Japanese law imposing a higher
tax rate on whisky than on shochu involved de facto discrimination.9 Although the law did not
mention origin, most whiskey was imported and most  shochu was domestically made.  Since whiskey
and shochu were like products the law was discriminatory.  De jure discrimination is therefore easier
to detect than cases of de facto discrimination.  Although both de facto discrimination and procedural
unfairness10 can result in "discrimination" against foreign firms, these are distinct concepts.  Unlike
violations of procedural fairness, de facto discrimination can occur even where a measure is applied in
a uniform, impartial and reasonable manner.
Key Objectives
National Treatment
24. National treatment requires that a WTO Member not put the goods, services or persons of
other WTO Members at a competitive disadvantage vis-à-vis its own goods or services or nationals.
The focus of the GATT, at least as originally negotiated in 1947, was on the control and liberalisationof border measures restricting international trade.  A key principle is that, as a general rule, any border
measures to give a competitive advantage to domestic products should take the form of customs tariffs
and that the level of such customs tariffs should be a matter for negotiation and bound in national
schedules.  Within this scheme of things, Article III on national treatment plays a critical role since, as
its paragraph 1 makes clear, it is designed to ensure that all other measures, referred to as "internal"
measures, are not applied to imported or domestic products so as to afford protection to domestic
production.  It thus serves the purpose of ensuring that internal measures are not used to nullify orimpair the effect of tariff concessions and other multilateral rules applicable to border measures.
                                                     
8 Of particular relevance is Article III:4, which requires national treatment in respect of all laws,
regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distributionor use of goods.
9 Appellate Body Report, Japan - Taxes on Alcoholic Beverages, WTO Doc WT/DS8,10,11/AB/R
(1 November 1996).
10 A discussion of procedural fairness begins at paragraph 49.WT/WGTCP/W/221
Page 9
25. In the area of trade in services, internal measures are particularly relevant since, under the
GATS, trade in services includes the supply of a service through commercial presence (which can
include foreign direct investment).  The approach in the GATS is not to make national treatment a
principle of general application but to provide for it to be applied when a specific commitment has
been made and recorded in national schedules that form part of the Agreement.  As is made clear inArticle XIX of the GATS, the scope of the schedules is to be progressively enlarged through
successive rounds of trade negotiations with a view to progressively higher levels of liberalisation – in
the same way as trade in goods has been progressively liberalised through successive tariff
negotiations.
26. In the area of intellectual property, national treatment has traditionally been the cornerstone of
public international law, notably as reflected in the Paris and Berne Conventions.
11 The TRIPS
Agreement is no different in this respect from the main pre-existing conventions, on which it buildsand whose main substantive provisions it incorporates.  With some relatively minor exceptions,
national treatment applies to all aspects of the protection of intellectual property addressed by the
Agreement.
MFN
27. The standard of MFN is described somewhat differently in the three main WTO agreements.
The GATT uses traditional language in referring to the obligation to extend "immediately and
unconditionally" to all WTO Members "any advantage, favour, privilege or immunity" granted by a
Member.  The TRIPS Agreement uses the same formulation as the GATT.  The GATS uses a
"treatment no less favourable" standard for expressing its MFN obligation.  The meaning of this
formulation for MFN is broadly equivalent to that used in the GATT and the TRIPS Agreement.
Key Exceptions
National Treatment
28. The scope of the national treatment obligations under the GATT and GATS is limited in
various ways.  In particular, the GATT requirement is limited to "internal" measures and the
corresponding requirement in the GATS is dependent on specific commitments having beenscheduled by the Member concerned.  In addition, there are a number of permissible exceptions to the
national treatment principle under these two Agreements.  Without attempting to be fully
comprehensive and without describing the often complicated experience with their application, the
following exceptions should be noted:
(a) Government procurement of goods and services (Article III:8(a) of the GATT and
Article XIII of the GATS).  However, it should be noted that 25 WTO Members have
made national treatment commitments towards each other under the plurilateralAgreement on Government Procurement (GPA).
(b) General exceptions covering such matters as measures necessary to protect public
morals or maintain public order, to protect human, animal, or plant life or health and
to secure compliance with laws and regula tions not inconsistent with the provisions
of the agreement in question (Article XX of GATT and Article XIV of GATS).
(c) Security exceptions (Article XXI of the GATT and Article XIV bis of the GATS).
                                                     
11 Berne Convention for the Protection of Literary and Artistic Works, 828 U.N.T.S. 221 (signed
14 July 1967) Article 5;  Paris Convention for the Protection of Industrial Property, 11851 UNTS (No. 11 851)
305 (signed 14 July 1967) Article 2.WT/WGTCP/W/221
Page 10
29. As mentioned earlier, in terms of the scope of the TRIPS Agreement, the national treatment
obligation in that Agreement is relatively comp rehensive.  However, where exceptions to this
principle have been made under the main pre-existing intellectual property conventions, they are also
permitted under the TRIPS Agreement, for example the so-called "comparison of terms" in the area of
copyright and, subject to some additional safeguards in the TRIPS Agreement, provisions relating tojudicial and administrative procedures in the area of industrial property.  Moreover, in respect of
performers, producers of phonograms and broadcasting organisations, the national treatment
obligation only applies in respect of the rights provided under the TRIPS Agreement.
MFN
30. There are also a number of important exceptions or qualifications to the application of the
MFN principle.  These include the general exceptions and security exceptions discussed above in
relation to national treatment.  In addition, in re gard to the GATT, importa nt exceptions to the MFN
principle are permitted for customs unions and free-trade area agreements (Article XXIV), and
preferences in favour of and between developing countries (the Enabling Clause).
12
31. Under the GATS, Members are allowed to register a once-off list of exemptions from the
MFN treatment standard.  These exemptions are subjec t to review five years after the entry into force
of the WTO and, in principle, should not exceed a period of ten years.13 The GATS also allows an
exception from MFN treatment for economic integration agreements, subject to certain conditions,
(Article V) and exempts from its rules air transport traffic rights and services directly related to their
exercise as well as measures taken for prudential reasons in the financial services sector.14
32. The main exceptions to MFN treatment perm itted under the TRIPS Agreement relate to
international agreements on judicial assistance or law enforcement of a general nature and notparticularly confined to the protection of intellectual property;  situations in the Berne Convention or
the Rome Convention authorizing treatment based on the treatment accorded in another country;  the
rights of performers, producers of phonograms and broadcasting organisations not provided in the
Agreement;  and treatment under pre-existing interna tional agreements that have been notified and do
not constitute an arbitrary or unjustifiable discrimination.  Furthermore, an exception is allowed forinternational registration systems concluded under the auspices of WIPO.
In competition law
33. There are many situations in which discrimination issues could arise in the course of
competition enforcement.  The discussion below is an attempt to identify and describe several of
them, without offering any judgement as to wh ether they would, in the context of a possible
multilateral framework on competition, actually constitute discrimination.  Among the two
components of non-discrimination – national treat ment and MFN – it would seem that national
treatment is the more relevant in the enforcement context.
Non-discrimination in procedural aspects of competition enforcement
34. The application of non-discrimination principles to procedural aspects of competition
enforcement would seem to be relatively straightforward.  The rules of procedure – for addressing the
competition agency, for conducting and participating in investigations, cases and appeals, and so forth– should apply equally to all parties without regard to their nationality.  In this regard, transparency
                                                     
12 Contracting Parties, Differential and More Favourable Treatment, Reciprocity and Fuller
Participation of Developing Countries, GATT Doc L/4903, BISD 26S/203 (28 November 1979).
13 Most of the exemptions listed are in the areas of maritime, transport and audiovisual services.
14 Annexes to the GATS on Air Transport Services and Financial Services.WT/WGTCP/W/221
Page 11
reinforces non-discrimination.  Transparency is especially important for foreign persons, who would
not otherwise be as familiar with national procedures and customs as their domestic counterparts.
Non-discrimination reinforces the principle of procedural fairness, as well.  In this way  all of the three
core principles are interrelated.
Non-discrimination in substantive enforcement
35. Here the issues are much more complex.  An oft-quoted phrase embodies non-discrimination
in competition enforcement:  "Competition law protects competition, not competitors." If this
principle were applied rigorously and impartially, there could be little in the way of discrimination.  It
is not easy to move from the general to the specific in this instance, however.
De jure and de facto discrimination
36. These two concepts could be applied to competition law enforcement in the same way that
they apply in the trade context.  Thus, de jure discrimination would exist when competition laws, orancillary laws such as those creating exemptions, draw an express distinction on the basis of national
origin which places foreign firms at a competitive disadvantage.  De facto discrimination could be
said to exist in the case of laws, neutral on their face, that in application discriminate against foreign
firms.  De facto discrimination was found to exist in the trade context in the whiskey case cited above.
It might occur in the competition law enforcement context in the case of a statutory sectoralexemption from the competition law, in which the eligible firms are defined in a way that practically,
but not expressly, excludes foreign firms.
37. In the competition context, de facto discrimination is used in another way as well, to describe
a situation in which a domestic firm receives more favourable treatment than a foreign firm in a
particular case or as between two cases.  In a case involving an international cartel, for example, adomestic firm could have qualified for leniency under a country's leniency programme, to the
exclusion of foreign firms.  (Leniency is often available only to the first firm "through the door.")
Foreign firms may have received higher fines than domestic ones, notwithstanding that the foreign
and domestic firms appeared to have similar roles in the conspiracy.  A merger of two foreign firms
might have been denied, while a similar transaction involving two domestic firms might have beenapproved.  Exclusionary conduct by a foreign firm might have been considered an abuse of
dominance, while similar conduct by a similarly situated domestic firm might not have been
condemned.  Exclusionary conduct by a domestic dominant firm against another domestic firm might
have been condemned, while the same conduct against a foreign firm might have been overlooked.
38. The different outcomes for foreign firms vis-à-vis domestic firms in these examples could
arise from discrimination by the decision-maker agai nst foreign firms.  Alternatively, they could
simply reflect differences in the factual matrices of  the various cases.  Different treatment in these
circumstances would not be discriminatory if the facts justify it.  Thus, it could be difficult to establish
the reason for the different outcomes as an evidentiary matter.  In another context, one Panel has
stated that the WTO dispute settlement system was not "intended to function as a mechanism to test
the consistency of a Member's particular decisions or rulings with the Member's own domestic law
and practice;  that is a function reserved for each Member's domestic judicial system, and a functionWTO Panels would be particularly ill-suited to perform."
15  Therefore it may be undesirable to apply
                                                     
15 WTO Panel, United States – Anti-Dumping Measures  on Stainless Steel Plate in Coils and Stainless
Steel Sheet and Strip from Korea, WTO Doc WT/DS179/R (22 December 2000) paragraph 6.50.  InCommunication from the European Community and its Member States, "A Multilateral Framework Agreementon Competition Policy", WTO Doc WT/WGTCP/W/152 (25 September 2000), the European Community andits Member States recognised this fact:  "We are not suggesting, therefore, to apply in a competition agreement
the concept of de facto discrimination.  The reason is that, in a competition context, such [a] concept raisesWT/WGTCP/W/221
Page 12
in the WTO context the notion of de facto case-by-case discrimination as used in the competition
context.
39. Below are some examples of possible discrimination in competition law enforcement other
than that of the case-by-case type.
Cartels
40. In many countries there are exemptions of various kinds from the prohibition against cartels.
The agricultural sector is a principal beneficiar y of such exemptions.  Labour organisations and
collective bargaining activity are exempt almost everywhere.  Providers of certain professional
services may enjoy full or partial exemptions.  State-owned enterprises are not subject to competition
laws in some (but not all) countries, and certain commercial activities of governments, both national
and local, may enjoy an exemption.  In some countries, "crisis cartels" and cartels involving small and
medium-sized businesses are permitted in some circumstances.  If these exemptions are available onlyto domestic firms they are, on their face, discriminatory.
16
41. The laws of some countries provide exemptions for what are generically called "export
cartels." In general, such laws exempt from the anti-cartel prohibition of the competition law
anticompetitive conduct by associations or combinations of exporters that solely affects exports.  The
first point to be made about export cartel laws is that not all agreements that are formed under theselaws are competitively harmful.  They may have efficiency-enhancing, procompetitive effects on the
exports from the country of origin, and hence benefit, rather than harm, consumers in importing
countries.
17
42. But to the extent that such agreements are on balance competitively harmful in export markets
it could fairly be asked whether the laws that permit them are discriminatory.  In the broadest sensethey might appear to be so, as these agreements would harm foreign consumers but not domestic ones.
The simple response to that point, however, is that competition laws are not meant to protect foreign
consumers, and indeed many countries, if not most, would consider that they do not have jurisdiction
to protect foreign consumers under their competition laws.  In another sense, export cartel
"exemptions" are like any other:  a type of agreement has been exempted, for public policy reasons,from the competition law.  In the context of this discussion, which is whether such laws might be
discriminatory and not whether on balance they are beneficial or harmful, the question that one might
appropriately ask is whether the exemption is available to all firms competing on the domestic market
on a non-discriminatory basis.
43. Finally, while in some countries cartel conduct is, legally or effectively, per se unlawful, in
others even cartel conduct must be considered in the context of possible offsetting benefits.  Here it
seems that discrimination in some form is especially possible, given that such benefits are oftenexpressed in terms of their effect on the domestic economy.  That topic is addressed more fully below,
under mergers and other rule of reason offences.
                                                                                                                                                                    
complex questions about the enforcement policies followed by competition authorities, including how
competition law is being applied to individual cases."
16 Some proponents of a mulitlateral framework agreement propose that the non-discrimination
principle not apply to sectoral exemptions, and that they be subject only to a requirement of transparency.  See,
Report (2001) of the Working Group on the Interaction between Trade and Competition to the General Counsel,para. 21.
17 See, Dick, A.R.  (1992), "Are Export Cartels Efficiency-enhancing or Monopoly-promoting:
Evidence from the Webb-Pomerene Experience", Vol. 14, Research in Law and Economics , Greenwich, CT, pp.
89-127.WT/WGTCP/W/221
Page 13
Abuse of dominance
44. Some of the same issues that are relevant to discrimination in anti-cartel enforcement could be
applicable to abuse of dominance cases as well.  This would be true with regard to exemptions, for
example.  A state-owned or state-sanctioned monopolist might be exempt from prosecution for
conduct that a foreign firm could be sanctioned for.  But further, as with cartels in some countries, theabuse of dominance analysis may include consideration of non-competition benefits that could be
applied discriminatorily, which is discussed below.
Mergers and other rule of reason offences
45. The laws of many countries that apply to mergers and other rule of reason offences provide
that, usually only in exceptional cases, transactions whose anti-competitive effects are excessive may
nevertheless be approved upon a showing of offsetting beneficial effects.  The laws of some countries,
for example, apply a broad "public benefits" test to merger analysis, theoretically permittingconsideration of almost any effect from a merger, including its effect on competition.  Other laws are
more focused, enumerating specific factors that are relevant.  Several of these come under the
"industrial policy" rubric:  international competitiv eness;  promotion of exports, national security;
technical development (R&D), and promotion of employment.  Other non-competition factors that are
relevant in some countries are benefits to consumers (apart from enhancement of "consumer welfare,"which is a concept employed in competition analysis), market integration, promotion of small and
medium sized enterprises, promotion of diversity  in media ownership, promotion of diversity of
ownership of assets, especially among previously disadvantaged classes, and "social progress."
46. It is probably safe to say that in all cases these factors are considered relevant only to the
extent that they apply to the domestic economy.  Is there an opportunity for discrimination in theapplication of these criteria?  It would seem so.  Industrial policy would seem to be fundamentally
associated with the promotion of domestic enterprise s over foreign ones.  This would certainly be true
in the case of "national security," for example.  Some countries promote diversity in media ownership,
for example, which could be interpreted as excluding foreign ownership at some level.
International co-operation and positive comity
47. It has been proposed that one element of a possible multilateral framework on competition be
a provision for international co-operation in competition enforcement.  Such co-operation could
include both co-operation in specific cases, through exchanges of case-related information, subject to
national laws protecting confidential information, and general exchanges of information and
experience and joint analysis of global competition issues.
18  Such an agreement might also include a
provision providing for positive comity – proactive response to by one country to a request by another
to address anti-competitive conduct in the requested  country that is harming the interests of the
requesting country.19
48. It could be asked whether the MFN principle would apply to such an undertaking.  In other
words, would a country that had entered into a b ilateral co-operation agreement with another country
be obliged to offer the same terms to all other parties to a possible multilateral framework on
competition? It is well known, of course, that countries enter into much closer co-operativerelationships in competition policy with some countries than with others.  These relationships evolve
                                                     
18 See, European Community, supra, and also Communication from the European Community and its
Member States, "A WTO Competition Agreement and Development", WTO Doc WT/WGTCP/W/175(26 July 2001).
19 See, OECD (1999), "CLP Report on Positive Comity", OECD Doc Committee on Competition Law
and Policy, DAFFE/CLP(99)19.WT/WGTCP/W/221
Page 14
over time, between countries that have developed mutual trust and a close working relationship.  The
general view appears to be that MFN should not apply to co-operation arrangements.
IV. PROCEDURAL FAIRNESS
In the WTO agreements
49. The principle of "procedural fairness" is more entrenched in the domain of competition policy
than that of trade policy.  Certainly, discussions on core WTO principles within the Working Group
on the Interaction between Trade and Competition Policy have traditionally been limited to areas such
as national treatment, MFN treatment and transparency.20  Nonetheless, various provisions in the
WTO agreements can be identified which are closely related to the principle of procedural fairness.
50. It should be noted that there are various formulations of the concept of "procedural fairness",
which is referred to in certain jurisdictions as "due process" or "natural justice".  Nonetheless, two
common elements to this concept, that are found in the three main WTO agreements, are therequirements for fair and equitable procedures in administrative and judicial proceedings and the
capacity to review administrative decisions.
51. The key provisions relating to procedural fairness in the WTO agreements are:
(i) GATT:  Article X - which contains provisions on the uniform, impartial and
reasonable administration of trade measures and the right of review of action
taken pursuant to them;
21
(ii) GATS:  in particular Article VI;  and22
(iii) TRIPS:  in particular Articles 41-2 and 62.23
52. Provisions containing elements of procedural fairness can also be found in various Annex 1A
Agreements, such as those on Subsidies and Countervailing Measures, Anti-Dumping Measures,
Customs Valuation, Import Licensing Procedures a nd Pre-Shipment Inspection.  Procedural fairness
                                                     
20 WTO, "The fundamental WTO principles of national treatment, most-favoured-nation treatment and
transparency", WTO Doc WT/WGTCP/W/114 (14 April 1999) is illustrative, limiting its discussion onfundamental WTO principles to these three traditional domains.  In WTO, "Trading Into the Future:  TheIntroduction to the WTO – Principles of the Trading System"http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm, the WTO Secretariat includes freer trade
through negotiation and predictability through binding as core principles, but not procedural fairness.
21 With respect to these elements, GATT Article X: 3(a)-(b) requires each WTO Member to administer
its laws, regulations, decisions and rulings in a "uniform, impartial and reasonable manner", and to maintain orinstitute judicial, arbitral or administrative tribunals or procedures allowing for "prompt review and correctionof administrative action".
22 Under GATS Article VI:1, Members must maintain or institute tribunals or procedures allowing for
review of administrative decisions affecting services.
23 Any administrative procedures concerning the acquisition, maintenance, revocation or inter parties
procedures of intellectual property rights under the TRIPS Agreement must be "fair and equitable", with promptdecisions based on the merits of the case, at which the parties are offered the opportunity to be heard regardingthe evidence offered (Articles 62 and 41).  These decisions are in turn subject to review by a judicial or quasi-
judicial authority (Article 62).WT/WGTCP/W/221
Page 15
concerns also permeate the DSU itself, and a considerable amount of attention has been paid to such
concerns in WTO jurisprudence.24
53. The TRIPS Agreement is notable to the extent that it also provides that civil judicial
procedures, concerning the enforcement of the intellectual property rights covered by the agreement,
are available to "right holders" (TRIPS, Part III, Section 2).  Thus it introduces the concept of privateactions into the multilateral trading agreements.
25  An alternative model allowing standing to private
parties is GPA Article XX.  The GPA requests from all its signatories to establish a forum where
private parties can, within short time-limits, bring forward complaints relating to government
procurement.26
54. To the extent that procedural fairness is seen to include the careful treatment and protection of
confidential information in the enforcement process, the discussion and provisions highlighted under
the section on "transparency" regarding the protection of confidential information overlaps with thisprinciple.
In competition law
55. Parties to competition investigations and proceedings should have assurance that the relevant
procedures adequately protect their rights and interests in the matter.  As with transparency, there are
different classes of participants in these proceedings, and their interests in procedural fairness differaccordingly.  Participants could be classified in three groups:  (1) respondents or subjects, (2) victims
and private claimants, and (3) other interested third parties, such as complainants, witnesses and
public interest groups.
Respondents or subjects
56. This group is potentially liable for sanctions resulting from a proceeding in the competition
agency, and accordingly has significant interests in procedural fairness that begin with the
investigation and carry through the formal proceeding, if any, decision and appeals.  These interests
could include the following:
                                                     
24 See:  Appellate Body, India - Patent Protec tion for Pharmaceutical and Agricultural Chemical
Products, WTO Doc WT/DS50/AB/R (19 December 1997) where the Appellate Body spoke to due process
(procedural fairness) requirements at the consultations stage;  Appellate Body, Argentina - Measures Affecting
Imports of Footwear, Textiles, Apparel and other Items, WTO Doc WT/DS56/AB/R (27 March 1998) which
spoke to panel working procedures;  European Communities - Customs Classification of Certain ComputerEquipment, WTO Doc WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R (5 June 1998);  Appellate Body,Mexico - Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) From the United States:  Recourseto Article 21.5 of the DSU by the United States, WTO Doc WT/DS/132/AB/RW (22 October 2001).
25 Some observers consider that the right of firms to petition the courts directly in cases of alleged
competition law violations ("private actions")  is an important aspect of due process.
26 More specifically, Agreement on Government Procurement, WTO Doc LT/UR/A-4/PLURI/2
(15 April 1994) Article XX sets out under its "challenge" procedures that "[e]ach Party shall provide non-discriminatory, timely, transparent and effective proced ures enabling suppliers to challenge alleged breaches of
the Agreement arising in the context of procurements in which they have, or have had, an interest." These
challenges shall be heard by a court or by an impartial and independent review body and shall provide for:  "(a)rapid interim measures to correct breaches of the Agre ement and to preserve commercial opportunities.  … an
assessment and a possibility for a decision on the justification of the challenge;  and (c) correction of the breachof the Agreement or compensation for the loss or damages suffered, which may be limited to costs for tenderpreparation or protest." With a view to the preservation of the commercial and other interests involved, the
challenge procedures are also subject to requirements  that they be "completed in a timely fashion".WT/WGTCP/W/221
Page 16
Investigation
• notice of an investigation and of its subject matter, including the nature of the possible violation;
• an understanding of the procedural rules applied by the investigating agency;
• an ability to submit information and arguments to the agency prior to its decision;
• if the possible offence is a crime, the application of usual constitutional protections in criminal
matters, including a right against being compelled to incriminate oneself;  and
• if the agency is considering a decision or formal action against the person, notice of the grounds
for the tentative decision and the ability to respond to the allegations.
Enforcement proceeding
• notice of the allegations against it and access to relevant evidence in the investigative file, subject
to reasonable protections for confidential information;
• the right to representation by counsel;
• the right to present evidence and analysis to the decision maker;
• evidentiary standards that conform to national norms in litigation;  and
• final decisions in written form, including the legal and factual findings.
Appeals
• the right of appeal from an adverse decision to an independent authority and ultimately to the
courts.
Victims and private claimants
57. This group would include private parties who consider that they have been harmed by anti-
competitive conduct and that they have enforceable rights as a result.  The Joint Group has studied thesubject of remedies for private parties under competition laws,
27 and concluded that private
complainants or claimants generally have the following rights under competition laws in all systems:
• to petition the competition agency, formally or informally, to undertake an investigation or
proceeding that would remedy a perceived violati on of the competition law that is harmful to the
petitioner;
• to present evidence and analysis to the competition agency, formally or informally, relating to
conduct that is the subject of an agency investigation or proceeding;
• to pursue, through active participation in competition agency proceedings (either directly or by
virtue of formal intervention) or through private suits in court, or both, remedies against conductin violation of the competition law that is harmful to the private party, in a manner consistent with
the need to avoid undue interference with the basic mission of the competition agency to enforce
                                                     
27 OECD (2000), "Remedies Available to Private Pa rties Under Competition Laws", OECD Doc, Joint
Group on Trade and Competition COM/DAFFE/CLP/TD(2000)24/FINAL.WT/WGTCP/W/221
Page 17
the competition law on behalf of all citizens and to protect against the filing of baseless or
vexatious private petitions or lawsuits.
Other interested third parties
58. This group, which would include complainants, third party witnesses in enforcement
proceedings and public interest or consumer groups, is relatively diverse.  In general its members
would have an interest in the outcome of a competition investigation or proceeding but not necessarily
any enforceable rights in that context.  Procedural fairness for this group would include the following:
• for complainants, access to the competition agen cy for the purpose of submitting their complaint
and supporting evidence and analysis, and reasonable protection of confidential information
provided by the complainant, including the assura nce of confidentiality in situations where the
complainant could be harmed if its identity were known;
• for witnesses in formal proceedings, the protection of national norms relating to the giving of
testimony, evidentiary standards and representation by counsel, and reasonable protection ofconfidential information provided by the witness;
• the conduct of formal proceedings in public, supported by a public evidentiary record, subject to
reasonable protection of confidential information.
Timeliness
59. The concept of timeliness is a part of all aspects of procedural fairness.  Enforcement
proceedings should be completed in a timely manner.  Undue delay harms both those who would seek
redress from anticompetitive conduct, which includes a country's consumers, and those who are
subjects or respondents in such procedures, whose businesses may suffer from the costs anduncertainty associated with lengthy proceedings.
__________