RESTRICTED
WORLD TRADE WT/WGTCP/M/2
12November 1997
ORGANIZATION(97-4945)
Working Group ontheInteraction
between Trade andCompetition Policy
REPORT ONTHE MEETING OF16AND 17SEPTEMBER 1997
Note bytheSecretariat
1. TheWorking Group ontheInteraction between Trade andCompetition Policy helditssecond
meeting on16and17September 1997 under thechairmanship ofProfessor Frédéric Jenny.
2. Theagenda forthismeeting involved adiscussion ofItems IandIIintheChecklist ofIssues
Suggested forStudy prepared bytheChairman. Specifically, ItemIintheChecklist concerns the
relationship between theobjectives, principles, concepts, scope andinstruments oftradeandcompetition
policy, andtheirrelationship todevelopment andeconomic growth, whereas ItemIIrefers tothe
stocktaking andanalysis ofexisting instruments, standards andactivities regarding tradeandcompetition
policy, including ofexperience withtheirapplication. TheGroup alsoconsidered arequest forobserver
status received from SELA.
I. RELATIONSHIPBETWEENTHEOBJECTIVES,PRINCIPLES,CONCEPTS,SCOPEAND
INSTRUMENTS OFTRADE AND COMPETITION POLICY
3. Therepresentatives ofHong Kong-China, Singapore, NewZealand, Japan, thePhilippines
onbehalf ofASEAN WTO Members, theUnited States, Peru, Romania, Turkey, Pakistan, Canada
andMorocco introduced written contributions (documents WT/WGTCP/W/26, 28,30,32,33,35,
36,38,and40through 43,respectively) relating tothispartoftheagenda. Inaddition, representatives
ofArgentina, Australia, Egypt, theEuropean Community, India, Korea andNorway made oralremarks
regarding thistopic.
4. Adelegation stressed that,since competition policy wasanewareafortheWTO, avitalfirst
stepinthework oftheGroup wastodevelop acommon vocabulary ofkeyconcepts intheareaof
competition lawandpolicy. Inthisdelegation 'sview, differing usesofsuchconcepts inthepresentations
weregiving risetoadegree ofconfusion. Terms suchasmarket definition, including itsproduct and
geographic dimensions, entry barriers, market structure, market power, competitive injury, horizontal
andvertical restraints andmergers were citedasconcepts incompetition policy thatmerited special
consideration bytheGroup.
5. Anumber ofother delegations, while notnecessarily denying theutility ofsuchwork, said
thattheGroup should notlosesightofthefactthatitsmandate wasnottostudy competition policy
assuch, buttheinteraction between trade andcompetition policy. Intheirview, allfactors affecting
thecontestability ofmarkets should beaddressed, whether theywereprivate orgovernmental innature.
6. With regard tothescope ofcompetition policy forthepurpose oftheGroup 'swork, some
Members stated thatcompetition policy wasbroader thancompetition lawandcould beimplemented
whether ornotcompetition lawswereenacted. Aconfluence offactors might allow aneconomy to
achieve theobjectives ofcompetition policy evenintheabsence ofacompetition law. Itwasalso
saidthatcompetition policy included notonlycompetition (orantitrust) lawproper, butalsoregulatoryWT/WGTCP/M/2
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functions, generally exercised withrespect tonatural monopolies ormarket-failure situations, inaddition
toanadvocacy roleintended toinfluence public policy inawidespectrum offields inapro-competitive
way. Other aspects identified bysome Members asfalling within competition policy, taken broadly,
included deregulation, privatization, andtrade policy. Another viewwasthattheGroup should focus
oncompetition lawproper.
7. Anumber ofMembers commented onwhether tradeandcompetition policies wereconsistent
withoneanother withrespect totheirobjectives. Itwassaidthattradeandcompetition policies could
beseenasconsistent, inthattheybothcould beusedtoachieve theobjective ofrendering domestic
markets more competitive: trade policy opened upmarkets toforeign supplies andsuppliers while
competitionpolicyprovidedanenvironmentconducivetomoreopenmarkets.Itwasobserved,however,
thatincreased competition wasnotanobjective initself. Rather, itwasimportant inthatittended
todirect resources tomore productive usesand,bysodoing, increase domestic economic welfare.
Thus, thekinds oftradeandcompetition policies thatincreased market competition wereseenassharing
theultimate objective ofenabling anefficient, welfare-maximizing allocation ofresources. The
importance oflooking attheobjectives oftrade andcompetition policies inthisbroader perspective
wasunderlined.
8. Itwasalsosaidthat,evenwhen pursuing increased competition, tradeandcompetition policies
hadimportant differences, since trade policy wasconcerned with government actions, whereas
competition policy focused onthebehaviour ofprivate firms. Nonetheless, pro-competitive tradepolicy
andcompetition policy could beseenasmutually reinforcing, since thelatter increased competition
byremoving government-imposed barriers totrade, whereas theformer didthisbyrestricting anti-
competitive behaviour onthepartofprivate firms. Theviewwasalsoexpressed that,since, insome
cases, anti-competitive behaviour byprivate firms derived fromtheexistence ofgovernment barriers
totrade andwould notsurvive intheabsence ofsuchmeasures, trade liberalization wassupportive
ofcompetition policy goals.
9. Theargument thatcompetition policy could serve asacomplement totrade policy wasalso
made. Itwasstated, inthisregard, thattheareaofapplication oftradepolicy wassignificantly different
fromthatofcompetition policy, since trade policy traditionally focused onborder measures whereas
competition policy regulated thebehaviour ofprivate firms within thecountry concerned initsentirety.
Given thattradepolicy didnotaddress directly anti-competitive behaviour within thecountry concerned,
itcould notprevent private firms frombehaving anti-competitively evenifborder barriers werelargely
doneaway with. Onedelegation illustrated thelatter point bydescribing anumber ofexamples where
domestic firms apparently stillengaged inanti-competitive behaviour, despite thefactthattheeconomy
concerned hadbeenexposed foranumber ofyears toextensive tradeliberalization, andmade thepoint
thatcompetition lawwasnecessary ifsuchbehaviour wastoberestrained.
10. Some Members saidthat,although therewereimportant complementarities between tradeand
competitionpolicies,thereremainedimportantdifferencesorinconsistenciesbetweenthem.Inparticular,
itwassaidthattrade andcompetition policies sought toprotect different economic interests: while
consumer interests were predominant incompetition policy, trade measures -asopposed totrade
liberalization policy -wereoriented towards producer interests. Moreover, while competition policy
wasmoreconcernedwithprotectingcompetition,trademeasuresprotectedcompetitors.Somedelegations
saidthat,inaddition toprotecting infant industries, tradepolicy wasoftenconcerned withsuchmatters
asraising revenue, ensuring self-sufficiency andpromoting exports -allofwhich purposes could lead
todivergences fromcompetition policy goals. Another point made wasthatwhereas nationality was
central totrade policy, itwasgenerally notaconsideration incompetition policy.
11. However, itwasalsosaidthattheobjectives ofcompetition policy differed from country to
country, depending upondomestic circumstances andhistorical experiences, andthatcompetition policyWT/WGTCP/M/2
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sometimes encompassed producer-oriented goalssuchastheprotection ofsmall businesses orthepursuit
ofnational industrial policy. Thepoint wasalsomade thatcompetition policy, evenwhen focusing
upon theinterests ofconsumers, onlytookintoaccount national consumers andneglected consumers
inforeign countries. Itwasstated inthisregard thatexport cartels were typically allowed under
competition lawonthebasisoftheargument thatsucharrangements werenotdetrimental tonational
welfare because theireffects wereonlyfeltabroad. Itwasargued, therefore, thatthistypeofcompetition
policy promoted localwelfare attheexpense ofglobal welfare.
12. Thepossible inconsistencies between trade andcompetition policies were further discussed
byreference totradepolicies having anadverse effect oncompetition andcompetition policies having
anadverse effect ontrade. Some Members considered thattradedefence instruments wereoftenapplied
inawayhaving anegative impact uponcompetition. Forexample, anti-dumping measures wereoften
anti-competitivebecausetheycurtailedmarketaccessforforeignsuppliers,orfacilitatedanti-competitive
behaviour bydomestic firms. Exclusions andexemptions fromcompetition law(including inrespect
ofexport cartels) aswellaslackofeffective enforcement thereof were cited bysome Members as
illustrations ofcompetition policies, orfailures ofcompetition policies, having anegative impact upon
trade oratleastlimiting thepositive, complementary rolethatcompetition policy mayplay. Market
access forexporters could bemade more difficult, or,inthecaseofexport cartels, consumers inforeign
countries hurt.
13. Some Members proposed thatthefuture work oftheWorking Group should concentrate on
studying further thecomplementarities andinconsistencies between tradepolicy andcompetition policy,
andmore generally themutual coherence ofthetwopolicy areas, perhaps bymaking references to
specific casestudies. Inrespect ofcompetition law,arange ofaspects wasidentified inthisconnection,
includingexemptionsandexceptions,theimplicationsofdifferentnationalstandards,issuesinconnection
withenforcement, multiple reviews ofmergers, extraterritoriality andthesettlement ofdisputes between
statesaboutcompetitionpolicymatters.Thefurtherstudyoftrademeasuresthatimpactedoncompetition
wasalsosuggested.
14. Some Members expressed theirviews ontheneedforgreater international cooperation inregard
totheinteraction between trade andcompetition policy andtheroleoftheWTO inthisregard. Some
delegations saidthatitwould bepremature todevelop competition provisions intheWTO; theWTO
dispute settlement mechanism might prove sufficient todealwithtrade problems arising inthis
connection. Another delegation foresaw theneedforthedevelopment ofcommon rules. Some Members
wereoftheviewthattheincreasing integration oftheworld economy andtheliberalization oftrade
enhanced theneedforinternational cooperation ontheinteraction between tradeandcompetition policy,
ashadbeenshown bytherecent telecom negotiations.
15. SomeMembersstressedtheneedforin-depthanalysisoftherelationshipoftradeandcompetition
policy todevelopment andeconomic growth. Adelegation saidthatwell-functioning markets, and
thuscompetition policy which contributed toensuring thatmarkets worked properly, werebeneficial
toalleconomies regardless oftheirstage ofdevelopment, while acknowledging thatthespecifics of
competition policy mayhavetobeadapted orrefined onacase-by-case basis inorder todealwith
specific national circumstances. Another delegation argued thatfailure toimplement competition policy
atanearly stage might result inveryconcentrated market structures which, given theirhighwelfare
costs upon theeconomy, might necessitate costly industrial restructuring later. Inthisconnection,
itwassaidthatdeveloping countries might havetobalance therisksarising fromconcentrated market
structures against theneedtoallow domestic firms togrow sufficiently large tohavethecapacity to
compete successfully ininternational markets. Some representatives ofdeveloping countries saidthat,
astheyliberalized theirnational traderegimes andmade theireconomies moreopen, itwasincreasingly
important thatcompetition lawintheirtrading partners should takeaccount oftheirexport interests
andthattheirowncompetitionlawsshouldprotectthemagainstabusivepracticesintheirimportmarkets.WT/WGTCP/M/2
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Thepoint wasalsomade that,inthose developing country economies thatwere characterized bya
highlevelofstateownership andintervention, forexample through price controls, theenvironment
forcompetition lawwasnotcomparable withthatinmore market-oriented andadvanced economies.
Another aspect ofthedevelopment dimension towhich reference wasmade wastheimportance of
technical cooperation withdeveloping countries inthefieldofcompetition policy. Inresponse toa
proposal thatapaper beprepared ontherelationship between competition policy andeconomic
development, aMember offered todoso.
16. Thequestion ofwhether theSecretariat should beasked toprepare acompilation oftheissues
raised andpoints made onthem wasdiscussed. Thiswasenvisaged asbeing a"rolling" document
which would beupdated aftereachmeeting oftheWorking Group. Inconcluding thediscussion on
thispoint, theChairman noted that,while therewasnodisagreement ontheprinciple ofthepreparation
ofsuchacompilation, there remained questions oftiming, especially since discussions onthesubject
hadonlybegun. TheWorking Group agreed torevert tothismatter atitsnextmeeting.
17. Inregard toaproposal thatapaper beprepared onexclusions from competition law,the
ChairmandrewattentiontoarecentOECDbook(AntitrustandMarketAccess:TheScopeandCoverage
ofCompetition Laws andImplications forTrade) identifying exclusions from competition lawina
number ofmember countries ofthatorganization. Inregard toasuggestion thatanoverview ofthe
objectives ofcompetition policy beprepared, theChairman noted thatmore information onnational
policies inthisregard would bepresented under thenextagenda itemandurged delegations tomake
written and/or oralcontributions onthismatter totheGroup 'snextmeeting. Healsoinvited such
contributions onspecific cases illustrating complementarities andinconsistencies between trade and
competition policy.
18. Inconcluding thediscussion ofthisitemoftheagenda, theChairman drew attention tosome
ofthepoints thathadstruck himasemerging fromthewritten contributions andoralstatements. He
stressed thatthese points represented hispersonal reflections only, andhadnoofficial status:
- thereseemed tobeasense that,atageneral level, tradeliberalization andcompetition
policy broadly shared thesame goalofcontributing toefficiency andweremutually
reinforcing, because theyaddressed related issues insomewhat complementary ways;
- butwhen theWorking Group tookacloser lookattherelationship between trade and
competition policy, aquestion ofdefinitions, particularly withregard to"competition
policy" arose. What exactly wasincluded inthisterm? Itwascommon ground that
antitrust lawwaspartofcompetition policy. Butmany delegates hadsuggested that
other elements suchasprivatization, deregulation, etc.should beconsidered tobepart
ofcompetition policy aswell. Inaddition, some delegates hadsuggested that
competition lawwasnotnecessarily themostimportant means forensuring competition
intheeconomy andtherefore notnecessarily thecentral element ofcompetition policy.
Others hadsuggested thatitwasthecentral element ofcompetition policy;
- asfarascompetition lawwasconcerned, thepoint wasmade thatnational competition
lawswere notnecessarily thesame across countries; theymight have somewhat
different immediate goals, leading todifferent appraisals ofthesame situation. So
some delegates considered that,before examining therelationship between trade and
competition policy, itwould beuseful tospend some timegaining anunderstanding
ofthebasic concepts underlying competition policy;
- inregard tothemore detailed examination oftherelationship between trade and
competition policy, anumber ofdelegates hadexpressed theviewthattherelationshipWT/WGTCP/M/2
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wascomplex, including areas ofcomplementarity butalsoofdivergences. Some of
thiscomplexity derived, intheopinion ofsome delegates, from thefactthatthe
instruments ofcompetition policy andtheinstruments oftradepolicy werenotalways
consistent (ornotusedinaconsistent way) withregard totheultimate goals ofboth
policies. There hadbeensome discussion ofthefactthatsome tradeinstruments might
not,infact,contribute tomarket opening. Butthere hadalsobeendiscussion ofthe
competition policy instruments. Some hadventured theideathatcompetition policy
instruments weresometimes pursuing larger goals thanefficiency andthatthiscould
contribute toacertain amount ofconfusion. Exceptions tocompetition laws,
exemptions, andmore generally thefactthatcompetition policy didnotnecessarily
apply toallsectors ofeconomic activity wereseenbysome asasignthatcompetition
policies didnotalways ensure efficiency. Thiswasparticularly relevant tothedebate
ontheinteraction between trade andcompetition policy, since typically competition
lawsdidnotcover allofthepractices thathadcross-border effects. Even where
competition lawdidapply topractices having cross-border effects, itmight notpermit
abalancing oftheglobal welfare ofconsumers inallaffected countries. Ithadalso
beensuggested thatanother source ofinconsistency between trade andcompetition
policy might come from thefactthat,whereas competition policy (atleastinsome
countries) favoured aconsumer welfare approach, some tradepolicy instruments were
based onaproducer surplus approach;
- questions hadalsobeenraised about theenforcement ofcompetition law,anditwas
remarkedthatlaxenforcementmightworkagainsttheassumedgoalsofbothcompetition
policy andtrade liberalization. Ithadalsobeen pointed outthattrade policy and
competition policy weregenerally administered bydifferent institutions andalsothat
different aspects ofcompetition policy might beadministered bydifferent bodies,
possibly leading toinconsistencies inpolicy application. Others hadsuggested that
advocacy wasanimportant aspect ofcompetition policy, andthattheadvocacy role
ofcompetition authorities canbeinstrumental inwidening thescope ofcompetition
policy andmaking competition policy instruments more consistent withthegoalof
efficiency;
- thishadledsome delegates toraise thequestion ofwhether so-called "private"
anti-competitive practices were indeed merely thatorwhether inanumber ofcases
theywere implicitly ortacitly encouraged bygovernments. Anadded question
depending ontheanswer given totheprevious one,wastherelevance ofexisting WTO
provisions andenforcement mechanisms. Beyond this,some delegates hadraised the
question ofhowimportant, empirically, wereanti-competitive practices thatdistorted
trade;
- finally, there hadalsobeensome discussion oftherelationship between competition
policy andeconomic development. Forsome delegates, itseemed thatcompetition
policy generally helped economic development andwasalways anappropriate tool,
although inthemind ofsome ofthese delegates acasecould bemade forsome
adjustment forcapacity building andtheparticular circumstances ofneweconomies
intheinitial stages ofdevelopment. Some examples hadbeendiscussed ofcountries
inwhich competition policy came abitlateandthelackofaneffective competition
policy ledtodifficulties atlaterstages. Some other delegates hadsuggested thata
closer lookshould begiven atthisissue, sinceitwasnotobvious thattheprerequisites
(both structural andinstitutional) fortheeffective application ofcompetition policy
were present indeveloping countries atallphases oftheirdevelopment.WT/WGTCP/M/2
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II. STOCKTAKING AND ANALYSIS OFEXISTING INSTRUMENTS, STANDARDS AND
ACTIVITIES REGARDING TRADE AND COMPETITION POLICY, INCLUDING OF
EXPERIENCE WITH THEIR APPLICATION
19. Discussion ofthisitemwasorganized under thethree tirets ofthisitemintheChairman 's
Checklist ofIssues, inthefollowing order:
(a) national competition regimes;
(b) bilateral, regional andplurilateral agreements relating tocooperation incompetition
lawenforcement;
(c) competition-related provisions inexisting WTO agreements.
(a) National competition regimes
20. Representatives ofSwitzerland, Australia, Japan, Hungary, theEuropean Community, Norway,
Romania andKorea introduced written submissions bythem inrelation tothisitemoftheagenda
(documents WT/WGTCP/29, 39,32,27,34(tobeissued), 31,38and37,respectively).
21. Inaddition tomatters covered inthewritten submission oftheEuropean Community andits
member States, therepresentative oftheEuropean Community described thehistorical origins and
current application ofthecompetition legislation oftheECanditsmember States. From itsinception,
competition lawintheEuropean Community hadplaced special emphasis onthegoalofmarket
integration, which hadledittotakeamoresevere approach tothetreatment ofnon-price vertical market
restraints thanmight bethecaseunder apureefficiency-based standard. Theapproach tonon-price
vertical restraints wascurrently under review. Hedescribed theapplication ofECcompetition law
toarrangements ortransactions entered intooutside theterritory oftheEC,under theso-called
"implementation doctrine", andcommented oncooperative arrangements relating tocompetition law
bothwithin theECandexternally.
22. Following uponthesuggestions inthediscussion under theprevious agenda itemregarding
theneedforclarification intheWorking Group ofthebasic concepts andterminology ofcompetition
policy, therepresentative oftheEuropean Community described thetreatment ofmarket definition
incompetition lawcases intheECandsuggested thatitmight beuseful forMembers tocompare their
experiences indefining markets, within theGroup. Hesaidthatmarket definition wasanessential
stepinanalysing most, ifnotall,competition lawcases. Theconcept ofa"relevant market" for
competition lawpurposes hadbothaproduct andageographic dimension. Inregard totheproduct
dimension ofthemarket, thebasic question tobeanswered waswithwhatother products andservices
didaparticular product compete? Answering thisquestion would involve consideration ofpastevidence
ofconsumer substitution patterns, therelationship between pricemovements andthedemand forother
(potentially) substitutable products, econometric evidence andsubjective evidence ofconsumers 'views
regarding which products theyconsidered tobesubstitutes. Enforcement officials would alsoconsider
evidence ofsupply sidesubstitution possibilities, particularly theeasewithwhich producers could switch
between alternative product lines. With regard tothegeographic dimension ofthemarket, thefocus
wasonidentifying thegeographic areawithin which competition tookplace. Relevant geographic
markets could belocal, national, international oroccasionally evenglobal, depending onthefactsin
eachcase. Some oftheindicia thatwould beconsidered inevaluating theextent ofthemarket included
pastevidence ofconsumption andshipment patterns, transportation costs, perishability andtheexistence
ofbarriers totheshipment ofproducts between adjoining geographic areas. Intheexperience ofthe
EC,there wasevidence ofanongoing process ofintegration sothatmarkets which inthepasthad
beenlocalornational inscope wereincreasingly found tobeinternational orinsome cases evenglobal.
Even where relevant geographic markets extended beyond theterritory oftheEC,theprincipal focus
oftheCommission inenforcing ECcompetition rules wasontheimpact ofbusiness arrangementsWT/WGTCP/M/2
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onconsumers within theEuropean Community. Nonetheless, thefactthatconsumers intheEuropean
Community increasingly werebeing affected byarrangements originating wholly orpartly outside its
territory called fortheexpansion ofcooperative approaches tocompetition lawenforcement.
23. Representatives ofBrazil, Mexico, Kenya, Argentina, Canada andPoland tookthefloor to
make oralcontributions tothisitemoftheagenda. Thefirstfiveofthese saidthattheyplanned to
present theircontributions inwritten form.
24. Therepresentative ofPoland provided abriefoverview ofhiscountry 'scompetition legislation
whichhadbeenadoptedin1990.Thelawdealtwithmonopolisticpractices,abuseofadominantposition
andmergercontrol.ItwasadministeredbytheOfficeforCompetitionandConsumerProtectiontogether
withanAntimonopoly Court inWarsaw andother bodies. Allbusiness entities, foreign anddomestic,
weresubject tothelaw,provided thattheresults oftheiractivities tookplace under theauthority of
Poland. Domestic andforeign entities were treated equally.
25. Consistent withasuggestion bytheChairman, Members attempted, intheiroralpresentations,
torelate aspects oftheirnational competition regimes totheconceptual points thathadbeenraised
intheprevious discussion ofthegeneral relationship between trade andcompetition policy. While
several Members indicated thattheirnational competition legislation focused principally onthegoals
ofprotecting consumers andpromoting economic efficiency, anumber ofother goals werementioned.
These included promoting international competitiveness andpreserving opportunities forsmall and
medium-sized businesses toparticipate inthenational economy. Inaddition, oneMember saidthat
theapplication ofhiscountry 'scompetition legislation wassubject toageneral public interest over-ride
provision. Several representatives indicated thatnational competition lawshadbeenadopted asone
element ofaninterrelated setofreforms intended toestablish awell-functioning market economy.
Competition lawswereconsidered tobeparticularly important, forexample, inreinforcing thebenefits
ofprivatization andregulatory reform. Theimportant roleofcooperative approaches tocompetition
lawenforcement insupporting regional economic integration (e.g., within theEC,between theEC
andCentral andEastern European countries, andinMERCOSUR) wasmentioned byseveral Members.
Theapplicability ofdomestic competition lawtoarrangements entered intooutside acountry 'sborders,
solongassuchconduct hadsignificant effects in,orwas"implemented" in,thecountry, wasconsidered
byseveral Members tobeimportant tothecontrol ofanti-competitive practices. However, thepoint
wasmade thatsuch"extraterritorial" application ofnational lawsentailed some potential forconflicts
between jurisdictions. International cooperation, andinparticular agreements incorporating principles
of"traditional" and"positive" comity, could beuseful inminimizing theactual extent ofsuchconflicts
betweencountriesparticipatinginsucharrangements.Itwasnotedthattheabilityofnationalcompetition
lawstodealwithanti-competitive practices thatpotentially affected international trade waslimited by
exceptions andexemptions from competition lawinsome countries. Itwassuggested thatearlier
introduction andmore vigorous enforcement ofcompetition lawinsome Members 'economies would
havehelped toprevent structural economic problems thatmust nowbeaddressed.
26. Inresponse toaquestion relating toproblems thathadapparently arisen inmarkets forindustrial
inputs, therepresentative ofArgentina indicated thatconditions inanumber ofmarkets forsuchinputs
hadrecently beeninvestigated orwereunder investigation. While theconclusions reached varied across
theparticular sectors, there wasevidence ofanti-competitive ordiscriminatory practices causing
continuing pricedistortions inthemarkets forsheet glassandchlorine. Concerning asecond question
ontherelationship between thepending protocol relating tocompetition policy inMERCOSUR and
theapplication ofanti-dumping measures, hesaidthat,atsome point inthefuture, when there would
beafullyintegrated market across theMERCOSUR countries, theuseofanti-dumping would disappear.
Inthemeantime, anti-dumping measures would continue toapply, subject toaconsultation mechanism.WT/WGTCP/M/2
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27. Inresponse toquestions regarding thejurisdiction of,andtypes ofcases investigated by,EC
member States, therepresentative oftheEuropean Community emphasized theimportant rolethat
member States continued toplayincompetition lawenforcement, notwithstanding theextent ofsteps
taken toensure anintegrated market across theCommunity. Many competition lawcases concerned
goods orservices forwhich therelevant markets werelocalornational rather thanCommunity-wide
inscope. Twoexamples citedwereretail banking andtransportation services. Moreover, evenincases
having effects thatcutacross member States, provision existed forindividual states toexercise
jurisdiction, where thiswasthemost efficient waytohandle thecase. Theextent oftherelevant
geographic market wasnotdispositive withrespect towhether theCommission would assert jurisdiction
overaparticular matter. Rather, thequestion tobeaddressed waswhether thearrangement inquestion
wasbeing actively implemented within theCommunity. Regarding theresolution ofpossible conflicts
betweenCommunityandECmemberStatejurisdictionincompetitionlawmatters,hesaidthatultimately,
inmatters affecting Community-wide interests, itspowers wereparamount vis-à-vis thoseofthemember
States. Regarding areas ofexemption orexclusion from ECcompetition rules, hereferred tothe
existence ofspecial rules relating totheagriculture anddefence sectors aswellastovarious kinds
ofpublic services. Finally, inresponse toquestions regarding thecomparability oftheECandUnited
States approaches totheexercise ofjurisdiction incompetition lawmatters affecting more thanone
country, hesaidthatthelawoftheCommunity wasapplicable toconduct taking place abroad tothe
extent thatparticular arrangements were"implemented" within theCommunity. Thisapproach yielded
results which were broadly similar tothose oftheUnited States "effects" test,atleastinrespect of
conduct thatadversely affected consumers. According tohisunderstanding, onerespect inwhich the
ECimplementation doctrine didnotgoasfarastheUnited States effects testwasthattheECdidnot,
ingeneral, assert competition lawjurisdiction overforeign arrangements thatadversely affected its
exporters (asopposed toitsconsumers), whereas theUnited States did.TheECimplementation doctrine
wasnot,strictly speaking, oneofextraterritoriality; rather, itwas"territorial" inthatitgavethe
Community jurisdiction overmatters implemented initsterritory, regardless ofwhere theywere
conceived ororiginated. TheCommunity 'sapproach tothese matters should alsobeunderstood in
thecontext ofexisting instruments forinternational cooperation; hehoped thatthework undertaken
intheGroup would helptoclarify understanding andextend theuseofcooperative approaches.
Responding toaquestion ontheways inwhich consumers 'interests were considered inapplying
competition law,hesaidthat,firstandforemost, competition policy embodied apresumption that
consumers werebestprotected byensuring theexistence ofvigorous rivalry inmarkets forgoods and
services. Inaddition, when granting certain exemptions under theECcompetition rules, theinterests
ofconsumers were considered explicitly.
28. Inaddition tothequestions summarized above, forwhich detailed answers wereprovided during
thecourse ofthemeeting, Members posed anumber ofbroader conceptual questions toMembers with
experience intheapplication ofcompetition law.While insome cases, preliminary answers tothe
questions wereprovided inthecourse ofthemeeting, timedidnotpermit alldelegations wishing to
comment onthesequestions todoso.Moreover, itwasfeltthatthesequestions would provide auseful
focus forwritten contributions tobemade byMembers tothemeeting oftheWorking Group in
November. TheWorking Group agreed thatalistofthese questions would becirculated toMembers
(done ininformal document 5428, dated 30September 1997). TheChairman encouraged Members
toconsider providing answers tothesequestions intheirwritten submissions fortheNovember meeting.
(b) Bilateral, regional andplurilateral agreements relating tocompetition lawenforcement
29. RepresentativesoftheUnitedStatesgaveadetailedpresentationontheirjurisdiction'sexperience
withbilateral andplurilateral cooperation agreements relating tocooperation incompetition law
enforcement. Attherequest oftheChairman, theyagreed tosetouttheUnited States experience with
suchagreements inasubsequent written submission. TheChairman alsorequested that,intheirWT/WGTCP/M/2
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submissions fortheNovember meeting, other Members whowereparty tosuchagreements provide
adescription oftheirexperience withthem.
(c) Competition-related provisions inexisting WTO agreements
30. Referring totheinformal noteonCompetition-Related Provisions inExisting WTO Agreements
which hadbeenprepared bytheSecretariat fortheinitial meeting oftheGroup inJuly(Job3347),
adelegation saidthatitdisagreed withtheapproach adopted inselecting provisions tobediscussed
intheSecretariat note. Inparticular, itdisagreed withtheemphasis inthenoteonprovisions relating
toenterprise practices, andstated thatinclusion ofWTO provisions should bebased primarily on
nominations byMembers oftheWorking Group, withtheprinciple ofnoapriori exclusion applying.
TheSecretariat 'snotehadbeencompiled inmid-June 1997, before Members 'contributions hadbeen
received, butnowarevision wasinorder. Given theconcern thattoobroad acoverage would render
thestocktaking ofWTO provisions meaningless, priorities should besetforlisting andstudy. Priority
shouldbeaccordedtoWTOprovisionsgoverningthemoretrade-restrictiveortrade-distortivemeasures.
Notonlyweresuchprovisions points where tradeandcompetition interfaced, butthisapproach would
beconsistent withthemanner inwhich theGATT/WTO hadconducted itswork overthepast50years.
Hesaidfurther that,tohisknowledge, there waslittlequantitative indication, interms ofresearch
orstatistics, astothemagnitude ofrestraints byenterprises oninternational trade. Despite 50years
ofefforts intheGATT/WTO toward liberalization, therestrictive ordistortive effects ofgovernment
measures stillappeared tobemuch more harmful totrade andcompetition thanthose resulting from
enterprise practices. Hisdelegation wasnotopposed toaddressing therestrictive ordistortive practices
ofenterprises, butbelieved thatthese should beaddressed alongside government practices impeding
tradeandcompetition. There wasalsoaquestion ofwhatwould belearned fromtheWTO provisions
ifthefocus wasnotontheseverity oftherestrictions anddistortions attheinterface oftrade and
competition. Forexample, inconnection withanti-dumping, iftheGroup focused onthepractices
ofenterprises, itwould address theactofdumping, which inanycasewasalready condemned ifit
caused orthreatened material injury tothedomestic industry. But,iftheGroup focused ontheseverity
ofrestrictions anddistortions attheinterface between trade andcompetition policy, itmight address
whether material injury should berelated inaprotectionist sense to"domestic industry", orinaliberal
sense to"competition" itself. Moreover, thenarrow approach ofaddressing enterprise practices only
might preclude study oftheWTO provisions onsubsidies andcountervail, rulesoforigin, andtextiles
andclothing. These were allhighly pertinent interms ofrestrictions anddistortions, andthetrade
andcompetition interface. Forexample, oneofthemostdirect references tocompetition intheWTO
Agreements wasfound inArticle 1.5oftheAgreement onTextiles andClothing, which prescribed
"competition" asacuretoprobably thebiggest-ever derogation from theGATT, namely thetextile
regime under theMulti-Fibre Arrangement. Thelanguage inArticle 1.5carried broader implications
forallquantitative restrictions maintained under themultilateral trading system which were ofa
discriminatory nature. Inhisdelegation 'sview, thebroader approach ithadoutlined toissues relating
totheinteraction between trade andcompetition wasessential tofulfilling themandate given tothe
Group byMinisters atSingapore.
31. Arepresentative saidthatawide range ofWTO agreements waspotentially relevant tothe
interaction between trade andcompetition policy. These would include thereference paper prepared
forthenegotiations onBasic Telecommunications Services, theTRIPS Agreement, which reflected
adelicate balancing ofcompetition policy concerns andincentives forinnovation, Article XVII ofthe
GATT dealing withstatetrading, theGeneral Agreement onTrade inServices generally, andthe
Agreement onTrade-Related Investment Measures. Reflecting theclearrelevance oftheseAgreements
andprovisions tothemandate given atSingapore, hedisagreed withanysuggestion thatthefocus of
theGroup should benarrowed todealparticularly withmatters relating totrade remedies.WT/WGTCP/M/2
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32. Adelegation saidthattheGroup should notonlyexamine thecomplementary aspects oftrade
andcompetition policy butalsothedetrimental effects thattrademeasures could haveoncompetition,
andthatthisanalysis should cover boththeoretical andempirical considerations. Articles IV,XVI
andXIXoftheGATT 1994would berelevant inthisregard. However, there wasnosuggestion that
other articles relevant totheinterface between trade andcompetition policy, including those covered
intheSecretariat 'snote, should notalsobeconsidered.
33. Adelegation supported abroad approach totheanalysis ofWTO provisions, including, in
particular, consideration oftheAgreements onSubsidies andTextiles.
34. TheSecretariat saidthatitwasnot,inthenotecirculated asJob3347, suggesting anyparticular
scope forthework oftheWorking Group. Thatwasclearly amatter fortheGroup, andnotforthe
Secretariat, todecide. Paragraph 2ofthenotestated thatmostWTO provisions mayberegarded as
related tocompetition andthenexplained why,forpurely practical reasons, thenotefocused oncertain
provisions.
35. TheWorking Group tooknoteoftheSecretariat note, while alsonoting thatitinnoway
restricted thescope ofissues tobeexamined bytheGroup anddidnotpreclude anyWTO provision
from being raised.
III. REQUEST FOR OBSERVER STATUS
36. Inresponse toitsrequest, theGroup agreed toinvite SELA toattend itsnextmeeting, asan
observer, onanadhocbasis.
IV. ORGANIZATION OFFURTHER WORK
37. Noting thatitsworkprogramme provided forfurther discussion ofItems IandIIoftheChecklist
ofIssues atitsnextmeeting, scheduled for27-28 November, theGroup agreed thatconsideration of
ItemIwould bedivided intotwoparts: first, therelationship between theobjectives, principles,
concepts, scope andinstruments oftrade andcompetition policy; andsecond, theirrelationship to
development andeconomic growth. Under ItemII,theGroup agreed tosetaside timefordialogue,
including questions andanswers. Members having questions toputwereurged togiveadvance notice
ofsuchquestions totheMember towhich theywere addressed andtotheSecretariat.
38. TheGroup noted thatsome Members hadundertaken toprovide further written contributions
toitswork. TheChairman urged allMembers, including those thathadalready made contributions,
tomakecontributions,bothwrittenandoral,includingcontributionsfocusingonspecificissues,concrete
cases andparticular competition lawconcepts.
39. TheChairmanannouncedthathewouldmakeavailableanexpandedversionoftheBibliography
onTrade andInternational Competition (document WT/WGTCP/W/11). Healsoinformed theGroup
thattheSecretariat wasintheprocess oforganizing, incooperation withUNCTAD andtheWorld
Bank, aSymposium tobeheldinGeneva immediately following thenextmeeting oftheWorking Group,
onthesubject ofCompetition Policy, Economic Development andInternational Trade. TheSymposium
would provide afurther opportunity forreflection, inaninformal setting, ontheissues being considered
bytheWorking Group.