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# ICPAC Hearing Minutes From November 2, 1998

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1INTERNATIONAL COMPETITION POLICY ADVISORY COMMITTEE2HEARINGS3456Washington, D.C.7November 2, 19988910111213This document constitutes accurate minutes of the14hearings held November 2-4, 1998, by the International15Competition Policy Advisory Committee.  It has been16edited for transcription errors.171819James F. RillPaula Stern20Co-ChairCo-Chair212223
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1INTERNATIONAL COMPETITION POLICY ADVISORY COMMITTEE2HEARINGS3456Washington, D.C.7November 2, 1998891011121314Taken at the American Geophysical Union, 2000 Florida Avenue,15N.W., Conference Center - First Floor, Washington, D.C., beginning at169:00 A.M., before Sue Ciminelli, a court reporter and notary public in and for the17District of Columbia.181920212223
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1APPEARANCES:2Advisory Committee Members:3James F. Rill, , Co-Chair and Senior Partner, Collier, Shannon, Rill & Scott, 4PLLC5Paula Stern, Co-Chair and President, The Stern Group, Inc.6Merit E. Janow, Executive Director and Professor in the Practice of International7Trade, School of International and Public Affairs, Columbia 8University  9John T. Dunlop, Lamont University Professor, Emeritus, Harvard University10Eleanor M. Fox, Walter Derenberg Professor of Trade Regulation, New York11University School of Law12David B. Yoffie, Max and Doris Starr Professor of International Business 13Administration, Harvard Business School14Department of Justice Employees:15Joel I. Klein, Assistant Attorney General, Antitrust Division16A. Douglas Melamed, Principal Deputy Assistant General, Antitrust Division17Members of the Public Appearing before the Advisory Committee and Presenting18Oral Statements:19Panelists:  Opening Remarks:20Allan Fels, Chairman, Australian Competition & Consumer Commission,21Australia22
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1APPEARANCES (Continued) 2Gesner José Oliveira Filho, Conselho Administrativo de Defesa3Econômica, Brazil4Konrad von Finckenstein, Director of Investigation and Research,5Competition Bureau, Canada6Karel Van Miert, Competition Commissioner, European Commission7Frédéric Jenny, Vice President, Conseil de la Concurrence, France8Dieter Wolf, President, Federal Cartel Office, Germany9Shogo Itoda, Commissioner, Japan Fair Trade Commission, Japan10Takaaki Kojima, Deputy Secretary General, Japan Fair Trade Commission, Japan11Fernando Sanchez Ugarte, President, Federal Competition Commission, Mexico12Luis de Guindos Jurado, Director General de Politica Económica y13Defensa de la Competencia, Spain14Ignacio de León, Superintendent, ProCompetencia, Venezuela15Panelists:  Discussion on Current U.S. Bilateral Agreements:16Allan Fels, Chairman, Australian Competition & Consumer Commission,17Australia18Konrad von Finckenstein, Director of Investigation and Research, 19Competition Bureau, Canada20Karel Van Miert, Competition Commissioner, European Commission21Dieter Wolf, President, Federal Cartel Office, Germany22Panelists:  Roundtable Discussion Among All Foreign Officials on Enforcement23Cooperation, Multijurisdictional Mergers, And Trade And Competition Policy
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1APPEARANCES(Continued):2Interface:3Opening Remarks:4Jérôme Gallot, Director General, Direction Général de la Concurrence,5Consommation et Répression des Fraudes, France6Additional Panelist:7Bernd Langeheine, Trade Counselor, Delegation of the European Commission89IN ATTENDANCE:10Advisory Committee Staff:11Cynthia R. Lewis, Counsel12Andrew J. Shapiro, Counsel13Stephanie G. Victor, Counsel14Eric J. Weiner, Paralegal15Estimated Number of Members of the Public in Attendance: 6916Reports or Other Documents Received, Issued, or Approved by the Advisory17Committee:18Allan Fels, Statement19Allan Fels, Australian/US Bilateral Relations20Gesner Oliveira, Public Hearing Competition Policy Advisory Committee21Gesner José Oliveira Filho, CADE's New Resolution on Merger Review and22the CADE's Ethics Rules23Konrad von Finckenstein, Q.C., Speaking Notes
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1Karel Van Miert, Speaking Note2Jérôme Gallot, Opening RemarksJérôme Gallot, Troisieme session3Frédéric Jenny, Trade and Competition in the Global Market: Challenges4and Issues5Dieter Wolf, Statement to be given at the Hearing of the International6Competition Policy Advisory Committee in Washington on72 November 19988Shogo Itoda, Summary of ICPAC Statement9Luis de Guindos Jurado, Competition Policy in a Global Economy:10The Issue of Mega-Mergers11Ignacio De León, International Competition Policy From the Perspective of12Developing Countries13Ignacio De León, An Alternative Approach to Policies for the Promotion14of Competition in Economies in Transition151617181920212223
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1P R O C E E D I N G S2MR. RILL:  Good morning.  My name is Jim Rill.  I know3most of you.  And I'm Co-Chair with Paula Stern of the International Competition4Policy Advisory Committee.  To Paula's right is Eleanor Fox, a member of the5Committee.  Eleanor is also known to most of you as one of the truly leading6authorities in international antitrust law, a renowned expert, frequent author in the7 field.8	To my left is Merit Janow.  Merit is the Executive Director of9 the International Competition Policy Advisory Committee.  Other members of the10 Committee will be joining us as we move along.  I'd like to also introduce our11staff, Andrew Shapiro, Cynthia Lewis and Stephanie Victor.12Following some opening remarks by me, which will be brief,13don't laugh, and by Paula, we'll have welcoming remarks by Assistant Attorney14General Joel Klein, who is known to all of you.15This is truly an historic event.  Paula and I were deeply16honored by Attorney General Reno and Assistant Attorney General Klein to be17invited to co-chair the Advisory Committee -- I didn't mean to sound hopeful -- the 18Advisory Committee to the Department of Justice and other agencies of the U.S.19 Government on the direction that we as Committee members, a Committee of 12,20feel that would be appropriate for U.S. and perhaps, indeed, even broader21international antitrust policies.22We have focused on three areas:  merger policy, trade and23competition, and international antitrust enforcement, particularly against cartel
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1activity.  Certain topics are not specifically on our agenda, particularly types of2trade remedies, antidumping and countervailing duties.3Really it's a focus on global antitrust policy.  We hope to be4able to give sound advice to the U.S. Government and others on appropriate5directions.  I say this is a truly historic occasion.  I can't recall any event that has6been on parallel, at least in the United States, when so many distinguished leaders7of government in the antitrust field have come together in a roundtable to give8their advice on antitrust policy to an organization of another government at its9  invitation.10We are honored to have the participation of each of you in11this meeting.  We think that the comments and advice and thoughts that you will12impart to us today will have a very significant influence on the outcome of the13deliberations of this Committee and the development of its report to the Attorney14General and the Assistant Attorney General of Antitrust.  We want to hear from15you what you consider to be the most important factors to take into account in our16increasingly global trade and competition arena.17We don't need to expound at any length about the number of18nations that have antitrust laws now and the extent to which merger activity, trade 19and competition activity, international cartel activity, has permeated the world20economies.21As you recall, we respectfully suggested that certain22questions be among those that you would focus on:  What are the necessary and23useful directions to enhance international cooperation and enforcement matters
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1among foreign competition authorities?  Whether your jurisdiction is commonly2involved in the review of mergers that are also being reviewed in other3jurisdictions overseas and the source of conflict and cooperation you perceive4from that coordinated review.  And, what useful steps can there be to identify and5alleviate barriers to market access resulting from private or hybrid restraints on6trade and competition?  Obviously we anxiously await your input on each of these7 issues and any others that you choose to advance.8Some housekeeping matters.  There are headsets for9simultaneous interpretations for our officials from the government of Japan.10Channel 5 for Japanese, channel 6 for English.  Microphones for speakers that are11using overheads: there is a wireless microphone available on the podium next to12the projector.  During roundtable discussion periods if you wish to make a13comment, please put up your namecard, you know that process. 14In the back of the room are materials that were put together15for these hearings.  They have been circulated to you all in advance.  Review16them, but please don't remove them from the room.  We are delighted that this is a17 public audience.  We have a good assemblage of observers here today.  However,18 this is an opportunity for the Advisory Committee to discuss issues with the19panelists in each of the panels over the next three days.  We welcome your20comments in writing, but please do not intervene from the floor.  With those21comments, I would like to introduce Paula Stern, who will be succeeded by22Assistant Attorney General Joel Klein.23DR. STERN:  Welcome.  I'm delighted to see each and every
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1one of you here, both the distinguished panelists who will be featured this2morning, as well as the public in the back.  We are honored by your presence, and3we appreciate how much effort it took for each and every one of you to be here4today for what we hope will be a very constructive exercise that will benefit all of 5us.6This is a conversation we hope to start today.  It is an7opportunity for discussion.  I personally have been interested in the government's8role in impacting the structures of our individual economies and our globalized9economy involved in microeconomic analysis and structural analysis of economies,10as well as representing the business world, and how this affects the real world in11the marketplace as a consequence of my activities on a number of corporations12  whose boards I sit on.13And I have had 16 years of government service, particularly14in the trade field, and so the interface with trade and competition policy is an15obvious one.  But I don't think we have had necessarily in our rules, our laws, our16regulations both at home and abroad a clearcut intersection between trade and17competition policy, and trade policy and trade regulations, so it's an important18opportunity to get into that area as well.19So I am delighted to be here to be informed by you.  We will20have three days of hearings in which we will hear, after you, an impressive array21of lawyers, investment bankers, economists and other experts.  Jim has talked to22you about the three areas that we are focusing on, enforcement cooperation,23multijurisdictional merger review, and finally, as I mentioned a moment ago, the
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1interface of trade and competition policy.2We have had several public hearings, public meetings, I3should say, but this is our first set of hearings and it will be a very important part4of our eventual recommendations.  In effect, we are building a record.  And we5hope to present to the Attorney General and to Joel Klein, the Assistant Attorney6General for Antitrust, a report by the fall of 1999.7		We are in our information gathering stage, as I mentioned.8The Committee itself has had meetings individually one-on-one with lawyers, with9 investment bankers, and with business associations, and we have tried to reach10out, not only here at home to all the representative constituencies, but as you can11see here, we are very much reaching out to the rest of the world, thanks to fax12 machines, Internet, and you personally coming today.  We hope that in the end it13will be a well-informed exercise, and it is our sincere hope that you will provoke14us, stimulate us, and that we will come away intellectually enriched by your15viewpoints.16And at this point, I would like now to turn to Joel Klein, our17fearless leader and good, good friend, to give us some remarks.18MR. KLEIN:  Thank you, Paula.  Thank you, Jim.  Ladies19and gentlemen, first let me convey to you the personal gratitude and welcome of20the Attorney General of the United States, Janet Reno, who spoke to me and asked21 me to say that she would have preferred to be here today, but she had to be out of22 town.  Let me also add my welcome and my gratitude.23I have come to know all of you over the last several years in a
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1variety of contexts as we have worked together as friends and colleagues, and I2cannot tell you how much I appreciate the personal commitment that you have3made to come here today and the time and the energy that that takes to work with4us on this area of shared responsibility.  So I really want to emphasize how5appreciative I am, and how much I know the Committee looks forward to your6comments.7Let me say a little bit about what must seem somewhat8strange and curious an American institution here.  We have a thing in the United9States called the Federal Advisory Committee Act, which is known as FACA, one10of our dreadful acronyms.  And what it allows is an executive agency to bring in11outside independent consultants as part of a very formal open-to-the-public12process, to chew on significant and difficult policy issues and to make non-binding13 recommendations.14And there are two things about the process that are critical,15aside from it being subject to some light and open to the public.  One is this is an16independent committee, and they will make independent recommendations.  And17the only good news for us is it's non-binding, so that we can learn and benefit, but18ultimately not feel constrained to implement.19But in my meetings with the Attorney General, when she20asked me what I thought is the most important thing going on in antitrust in the21United States today, I said, Madam Attorney General, the most important thing22going on in antitrust is not in the United States.  The most important thing going23on in antitrust is how we adapt antitrust to a global economy.  People always say,
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1well, the big challenge is high-tech or the big challenge is -- I think the big2challenge is how we take enforcement policy and work together in a global3network effectively and efficiently in a way that is good for enforcement but also4does not undermine desirable business activity.5And the reason I think that's an enormous challenge is6because essentially, as we sit here today, we are a collection of nation-states,7accustomed to domestic jurisdiction and enforcement.  Our powers tend to be8defined in some respects by our territorial limits.  Yet we have no choice but to9intervene in a global economy.  Business does not know the territorial boundaries10that restrict our jurisdictional powers and reach in certain real-world respects.11And so, for example, in the eight years from when Jim Rill12left the Antitrust Division to today, the amount of international business in the13U.S. Antitrust Division has gone from 2 to 3 percent of our cases to right now14close to 40 percent of our cases, and that's across the spectrum.  Whether it is15international cartel cases such as the Archer Daniels Midland case, which involved16people in all aspects of this table, or the other 30 or 35 grand juries that we 17currently have pending that are looking at cartels that have had meetings in 50 or1860 cities on every continent in the world.19Or whether it is these multijurisdictional mergers that are as20important whether it is a U.S. and a European company, such as Daimler Benz and21 Chrysler, or WorldCom/MCI, two U.S. companies that have an impact worldwide22 that will have as much influence in terms of the development of the Internet in23 Latin America as it will in Europe as in Asia and so forth, we are interconnected.
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1	As we look at these issues, I said to the Attorney General, the2 challenge is to think through the mix of unilateral, bilateral and multilateral3enforcement options.  All of those are possibilities, and we need to think about4what is the right mix of those options as we go forward.  And this will become, I5believe, increasingly important to all of us at this table, because I think there is no6way to escape the fact that we need to figure out how to interact in a global7economy and we do not have an available template simply to rely on.8	We will have to create the mechanisms among ourselves to be9effective.  Unlike our colleagues in the trade arena, who have long dealt in these10areas, who have many, many rounds under Uruguay and so forth.  We are coming11at this with some real background, to be sure, the OECD, UNCTAD, and so forth,12  but a lot of what we are doing is really first impression stuff.13And so what the Attorney General said is, you know, not all14good ideas are contained at 10th and Constitution, which is where the Justice15Department is.  And she said let's bring together a distinguished group of thinkers16and business people and labor representatives, and let's put them to work for two17years to really think through the problems, to go out, analyze the literature, meet18with the players to get a real feel for the various strands and to make some very19serious tough recommendations to us on the mixture and the benefits of unilateral,20bilateral and multilateral enforcement options.21And to then take that report, it's a two-year study -- we22appointed this group in November of 1997, they have a sort of two-year window to23 come back with their report -- and we will take that report and analyze it and
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1make proposals, short-term, medium-term and even long-term, for U.S. government 2policy in this area.  And so this is the work.3We are blessed by having a 12-person Committee that is as4distinguished as any Advisory Committee could be in the United States.  In5addition to our Co-Chairs, one of whom is well-known to all of you because he6headed the Antitrust Division of the Department of Justice under President Bush,7and Paula Stern, who was the Chairwoman of the International Trade Commission8 under President Carter -- so right there at the top we have two people with a rich9mix of both bipartisan as well as trade and competition backgrounds -- the other10 10 members of the Committee are several CEOs from major corporations, a former11secretary of labor, some distinguished academics, like Eleanor, as well as some12  leading members of the Bar and in the field of antitrust.13	So these people will be digesting this material and bringing it14to us.  In this process, I believe there is no more important component than what is15going on here today.  It was my hope to bring together the leaders in this field, the16people who have worked for years on these issues who have done thinking about17this at every level, and to get this Committee the benefit of hearing from those18 people, not sifted through me or anybody else in the United States, but one-on-one19 in discussion, in colloquy.20And frankly, you have outstripped our expectations.  I did not21 think they could bring this many heads of antitrust enforcement agencies together22in a single room.  Paula said to me when she walked in, she said, "Is that what you23 guys in the antitrust field call a cartel?"  I think it is a cartel, but it is one of the 
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1few I think that is ultimately going to prove to be procompetitive.2MR. RILL:  I wonder how much coordinated interaction there3will be.4MR. KLEIN:  We will see.  I know my friend Dieter Wolf has5told me there is the odd cartel that we need to make sure is procompetitive, and I6 think there is one here.  We are learning from the German experience, Dieter.7With that, I have a lot to say about the specific issues about8the work we are doing on positive comity, about international cartel enforcement,9about trade and competition where we have one formal request, a market access10request that we have referred to Commissioner Van Miert and DG-IV with respect11to the airline computer reservation service.  All of that is well known and so I12don't want to belabor it.13I would hope in the time that you have with us today, you14give us your most candid, your most honest assessment of how to think from your15perspective about the options that are available to us and the way to knit together16a fabric of international antitrust enforcement for the global economy of the 21st17century.18I think Commissioner Van Miert undertook a similar19enterprise early in his tenure when he appointed his group of experts to report20back to him, and I think we all benefited from that fine work that was received21there.  I expect to build on that work and to have this Committee set forward an22agenda that will be analyzed in capitals all over the world.23As we go forward, one thing strikes me as I look around this
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1room and think of the hours we spent together in Paris and in Tokyo and in2Brussels and in South and Latin America and, indeed, here in Washington.  Karel3and I were having breakfast in Brussels, I think it was Wednesday morning, and he4 said something to me that struck me then and strikes me now as very important:5The level of professionalism and camaraderie in our field, the sense of shared6mission, the fact that we view the world not simply as nation-states but people7 with a commitment to the enforcement of competition policy and effective antitrust8laws throughout the world is really quite remarkable.9We spend less time bickering with each other and more time10working collectively to try to solve our shared problems and build a better world11for competition policy and antitrust enforcement.  And I know that that attitude12will infuse not simply this meeting but our deliberations in the years ahead,13because what we are doing here is simply part of a much larger and much more14important process, which is to get our field able to effectively intervene in the new15economy, the 21st Century in a way that is good for consumers, good for business,16and good for our respective nation-states.17I again want to end by thanking you personally for your18attendance here and the sacrifices you have all made to come.  And now, we will19listen.  Thank you.20MR. RILL:  Joel, thanks very much for the inspiring remarks.21 I'm not going to undertake to presume to introduce each of you in the order of your22 presentation.  We all know who you are.  You know who each other is, and23  biographies are included in the materials provided.  We have organized for the 
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1morning to be spent with opening comments and remarks by each of you.  We plan2to take a break at 10:45, or thereabouts, and we have organized it basically in3alphabetical order in the English language, though Germany will go as Germany4and not Allemagne.  And we will lead off with, in order, Allan Fels from5Australia; Gesner Oliveira from Brazil; Konrad von Finckenstein from Canada;6Karel Van Miert from the European Union; Frederic Jenny from France, and from7 the OECD CLP; as well as from the WTO antitrust working group --8DR. STERN:  No acronyms.9MR. RILL:  -- that is the World Trade Organization working10group, and from academia.  Jerome Gallot from the DGCCRF will be arriving this11afternoon, and when he arrives will have an opportunity to speak also on behalf of12 France.  Dieter Wolf from Germany.  My old friend Shogo Itoda, and his13colleague, Takaaki Kojima from the JFTC.  Fernando Sanchez Ugarte from the14Republic of Mexico.  Luis De Guindos from Spain.  And also my old friend,15Ignacio de Leon from Venezuela.  If we could just proceed in that order, take a16break at about 10:45, and we look forward very anxiously to hearing your17comments.18Professor Fels?19PROFESSOR FELS:  Thank you very much, Jim.  Ladies and20gentlemen, thank you very much for inviting us to your important hearings.21Australia welcomes this very important initiative by the United States.  We think22it's important not only for the United States but also for the rest of us.  We are23very interested in the outcome of your deliberations.
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1As the first speaker this morning, but one followed by many2experts, I will range across areas where I feel I have more of a contribution to3make and, about the particular topic of enforcement cooperation, I will be4speaking about that this afternoon.  That is to say, the Australian-U.S. agreement,5which is an important one.  So this morning, I want to talk about the general6relationship between trade and competition policy, and I shall probably range a7little more widely than some of your terms of reference, but I would still like to8comment briefly on a couple of topics like regulation and intellectual property.9So let me begin by just making a few general comments about10the relationship that I see between trade policy, competition policy, and11government regulation, even though I think your concerns were essentially on12some aspects of competition policy.13It seems to me there are three basic propositions about the14relationship between trade and competition policy.  First, free trade can be15hindered by anticompetitive practices in the private sector.  If trade barriers are16lowered, and it's made easier for imports to enter a country, the effects of this17liberalization can be defeated if there are, for example, anticompetitive18agreements in domestic markets.  This is particularly the case in distribution19sectors if imports are prevented from reaching consumers.  Hence, trade policy20needs to be complemented by an effective domestic competition policy.  While that21 proposition sounds simple, it gives rise to a major policy agenda.22For example, it's desirable that a country's trade partners23adopt a competition policy and apply it properly.  It is also necessary that
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1appropriate cooperation arrangements apply between the national competition2laws and institutions around the globe, which becomes more important with3ever-increasing economic interaction between countries.4The second proposition is the reverse, that because trade5policy, for example, import restrictions, can hinder competition, it's also6necessary that trade policy should conform with the general principles and culture7 that underlie competition policy.  Many trade policies seriously restrict8competition and it's important that these anticompetitive restrictions be removed9by applying the general approach of competition policy to the area of trade policy.10A development between Australia and New Zealand in this11regard has attracted some international interest.  This is the replacement of the12antidumping laws between the two countries with the application of the provisions13 of the competition laws of the two countries.  The monopolization or abuse of14 dominance provisions of competition law in our two countries apply to dumping15 cases, an outcome likely to be more conducive to good consumer and business user16 outcomes than the pre-existing arrangements.17More generally, there is a discernible trend on the part of18leading world economists and key policymakers to try to characterize trade19policies as a form of competition policy, hence requiring the application of the20same principles, and even processes, in the interest of world economic progress.21Formulation and implementation of this ambitious approach is a substantial world22 policy challenge.23Now, this is not to say that progress in the two areas, trade
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1policy and competition policy, should be linked.  I'm just suggesting that there2should be common principles, the principles of competition policy.  And I note3that some of this is not on your agenda.4The third proposition about this relationship is less widely5stated than what I have just said.  It addresses the question of regulation that may6restrict both trade and competition.  Indeed, regulation may be a more serious7impediment to trade than weaknesses in the enforcement of competition laws.8For example, the problems which some exporters face in9having their products distributed in other countries may not necessarily arise from10any failures by competition agencies to enforce the law, but rather from laws and11regulations that restrict, for example, the number, size and opening hours of12distribution outlets, and may even directly or indirectly prevent new foreign13 entrants from setting up their own distribution outlets.  Many other forms of14regulation, such as safety standards, may also deter trade and competition.15Therefore, the debate about trade and competition should be16broadened to focus on three variables -- trade, competition, and regulatory policy,17and their interrelationship -- in order to recognize in particular that regulation18may hinder both trade and competition, and that appropriate deregulation may be a19crucial policy requirement.20I want to comment very briefly on intellectual property21because it's an important element both in trade and competition law.  Yet much22policy discussion of intellectual property has fallen in the cracks between those23two areas and hence been neglected.  Generally, the laws regarding intellectual
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1property promote, rather than hinder, competition.  But it's worth singling out one2 class of trade restriction for particular attention because to date it has been3insufficiently considered:  the restrictions on parallel imports imposed on4intellectual property laws have widespread effects on international trade.5In the copyright area, for example, it is not possible for6retailers in most countries to import for the purposes of resale books, CDS,7computer software, farm chemicals, and many other products without the approval8of the holder of the copyright in the importing country.  Such approval is rarely9given.  This restriction is even applied to many goods where the packaging or10labeling has been copyrighted.  For example, toys, drinks, packaged foods,11 perfumes, clothing, footwear, and a very long list of others.12This law then creates import monopolies in each country that13has these laws and enables the development of very substantial price14discrimination between different countries.  These rather draconian restrictions15seem quite incompatible with the general liberalization of trade which has16occurred worldwide, and are not consistent with the aims of copyright: protecting17publishers, record companies and the like from the copying of their original18works.19The next topic I want to discuss is the convergence of20competition policy.  It's desirable that all countries adopt competition policy.  It's21possible to specify some of the core principles and procedures that any22competition policy should have.  They include: coverage of hard core cartels and23other horizontal anticompetitive agreements, anticompetitive mergers, abuse of
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1dominance, vertical restraints; comprehensiveness, that is, the law should apply to2all product markets and sectors; independent enforcement by properly resourced3agencies and courts; clear laws, sanctions, governments that don't enact4anticompetitive laws themselves nor sanction anticompetitive conduct; no5discrimination between foreign and domestic firms; transparency, due process;6provision for international cooperation; and similar analytical approaches.7	Even where there are substantial differences of emphasis on8particular laws, for example, vertical restraints, there can still be a lot of progress9 by adopting similar analytical processes.  The OECD is currently working on a10specification along the lines I have just set up.  If we were starting with a blank11 page, we would probably establish an international competition forum, or even an12 international competition agency.  However, in present circumstances, it is better13  to make use of existing international organizations.  Much of the intellectual work14could be done by the OECD and in fact is being done by its new joint working15group on trade and competition.16In my own personal view, the WTO also provides an excellent17forum because it's membership is worldwide, it brings together both trade and18competition officials, and has a long experience also in resolving international19frictions, including by means of enforceable dispute resolution mechanisms.  At20present, the WTO, as well as the OECD, should be used as discussion forums.  In21the longer term, it's likely, in my view, that it will take on an enhanced role in the22interface between trade and competition policies.23If it does this, it's important that the principles of
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1competition policy should govern the WTO's work.  The real progress in the2immediate future, however, will be made by convergence and by bilateral3cooperative agreements between countries, and this is everyday becoming more4important with increasing globalization.5Finally, let me just say one other thing about Australia.  In6any discussions about the international cooperation and enforcement in7competition policy, it's important to take account of changing trends in8competition policy domestically.  Australia recently undertook a far-reaching9review of its own competition policy, and it's worth noting a few points that10emerged.11Our reforms include serious independent reviews of all the12numerous laws at federal and state level that restrict competition, with a view to13eliminating unnecessary or unjustified laws.  So we think that's part of the agenda14of competition policy and should not be ignored by your Committee.  The laws15themselves that the agencies can't touch are part of the agenda.  In addition, there16is now a great deal of regulation of public utilities, whether privately or publicly17 owned.  In Australia it's been decided that such regulation is to be performed, and18now is in part being done, by the competition regulator rather than by separate19 regulators.20In recognition of the numerous access questions that arise --21access to so-called essential facilities -- we have now doctored a comprehensive22law regulating access to essential facilities, and we are currently applying it to23communications, energy, and transport sectors.  Only small attempts have been
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1made in Australia at this stage to integrate trade and competition policy, but it is2worth considering initiatives to create greater harmonization of the concepts,3procedures, processes and membership of competition and trade regulatory bodies.4Thank you very much.5MR. RILL:  Allan, thank you very much. I just should point6out that it's becoming increasingly clear that the issue of governmental restraints7is very much on the agenda for analysis and potential recommendation by this8Committee, so your remarks in that area are particularly apt.9Next we will hear from Gesner Jose Oliveira.10MR. OLIVEIRA:  I'll take the liberty to show a few11transparencies to make my comments a little more objective.12DR. STERN:  Excuse me.  Will you make them available13after your presentation?  It clearly reflects a great deal, you can see we were14taking very detailed notes.15PROFESSOR FELS:  I gave you them already.16DR. STERN:  Thank you.  That will be useful just to make17sure we have gotten the full flavor.18MR. OLIVEIRA:  Good morning.  Thank you very much for19the invitation.  I would like to congratulate the Committee members for this20initiative and the U.S. Government, and also say that we are very thankful to have21the opportunity to discuss with you part of the Brazilian experience and our22perspective in competition policy issues and international cooperation.23I will point out three topics.  First, the relationship between
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1economic reform and competition policy in developing countries. Second, a few2aspects of the Brazilian experience.  And third, what would be a perspective or3what we think is a perspective on international cooperation on the part of4developing countries.5It's important to understand this perspective, due to the fact6that most of the dissemination of competition policies that we have seen in the7recent past has occurred from what we can perceive in this chart on the developing8countries.  We have now more than 80 countries with legislation in competition9and this is where the novelty is.10Competition policy is in a way the result of trade11liberalization, privatization, and deregulation.  It's the result of economic reform,12and in a way is the factor that will assure that we'll guarantee that economic13reform will continue.  I do not believe that trade liberalization can continue in14Latin America and in other places without strong competition laws and agencies.15It's the presence of strong and independent competition agencies which will assure16 that trade liberalization, for instance, will not backslide.17What we can see in Latin America -- and to a certain extent,18although the contrast is much greater, in Eastern Europe -- what we can see is two19distinct periods.  The first one is characterized by state intervention.  And what20we saw in the last 10 years is the rise of a more modern approach and what we21would say is it is characterized by a competition policy approach to market22legislation in the last 10 years in the developing world.23Let's take the example of Brazil.  Brazil has had a law on
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1competition policy since the early '60s.  Argentina has had one since the beginning2of the century.  And what we see is that it was only in the '90s that the competition3agencies became more active.  In the case of Brazil, the most important fact was4the transformation of CADE in 1994 as a more independent competition agency.5In Mercosur, the development has occurred since 1994 with the first6harmonization effort in 1994, and then the Fortaleza protocol in 1996, and now we7are regulating the terms of the protocol and we expect it to be implemented next8year.9Let me give you some data on the number of cases that have10been decided in Brazil that will give you an idea of the degree of implementation11of the laws.  As you can see, in the '60s and until the early '90s, the number of12cases was very small, and it has increased sharply in the last three or four years.13This gives you an idea of the composition of the cases.  There is a vast majority of14conduct cases and there is already an interesting experience on merger review15since 1994.16If we see the composition of the conduct cases, we still see a17large share of the cases which have to do with past cases that we view as state18intervention.  This is what is being called here abusive price cases, which are old19cases, and already a large share of cartel cases in the conduct cases.20Let me call your attention to the merger review cases.  Here21we have three periods which correspond to the three councils that CADE has had22since 1994.  I would call your attention to two aspects.  First, there has been a23rise in the share of cases, this yellow part, that have been approved without any
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1kind of condition.  And let me give you an additional number, which is the2majority of those cases, four-fifths of those cases, involve foreign companies.3And almost half of those cases, involve other jurisdictions, and have been4analyzed by other jurisdictions.5So given the fact that the majority of the cases are approved6without condition, and given the fact that many of them have already been7analyzed by other jurisdictions, it's very important to focus on the simplicity of8the analysis in international cooperation in terms of reducing transaction costs for9companies which are investing in Brazil, in Latin America, and in other regions of10the world.11DR. STERN:  Excuse me.  In this last display here, do you12find that the cases that you have approved for that image are different in terms of13foreign investment than in the previous periods?  In other words, you have given14us an idea about the regulations, but could it possibly reflect a difference in the15type of investment or the intensity of the investment or sectors that they are16investing in?17MR. OLIVEIRA:  Yes.  There has been some change in the18pattern of investment, and I think that this is true for all Latin America. There is a19 great increase in the investment in infrastructure of sectors, in20telecommunications, in other service sectors which we don't find in the '80s and in21 the '70s.22DR. STERN:  And it reflected perhaps more state-owned23companies that were being privatized?
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1MR. OLIVEIRA:  Yes.  That certainly has to do with the2process.  What I want to emphasize is that we do have to have some cooperation to3analyze cases which already have been analyzed here in the U.S., in Europe, and4in other countries, and I will give some examples in the following.5Let me show you the share of the cases which have been6considered to be the relevant market, the geographic relevant market has been7considered national.  It's striking that even with trade liberalization and with8globalization, we still have a large share of markets being considered national.  I9suspect that if we had more information on international markets, part of those10markets could be considered international.  This would be a result of more11cooperation amongst agencies.12Let me give you some examples of transactions that, as we13mentioned before, were analyzed in Brazil in the dates indicated and also in other14jurisdictions.  Most of you probably know and had the opportunity to analyze15those transactions and can even protest our decisions.16Let's take the Mahle acquisition: a German company that17acquired a Brazilian company that had important business in the U.S. market, so18that was a particularly interesting case. Let's see what the decision was.  In the19U.S., there was a fine for non-notification and non-approval, and an order of20divestiture in one of the relevant markets.  In Brazil there was a fine for late21notification and approval in the relevant markets of pistons and separated pieces22and a non-approval for one of the relevant markets.  As you can see, we made23different decisions, as one would expect, because we have different relevant
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1markets, but I think that we got consistent decisions.  And we'll get more and more2cases like this one.3The acquisition of Kolynos by Colgate was an interesting4case.  The decision in itself was interesting.  It would be worth discussing, but the5important point here is that it involved two U.S. companies, a transaction between6two U.S. companies outside of Brazil, and had an important impact upon the7 Brazilian market.  It involved also a third U.S. company which also operates in the8Brazilian market, so it's one case that would be worth analyzing to see what kind9of international cooperation could help us in getting a consistent and good10decision.11As a result of the decision, the suspension for a four-year12period of the Kolynos trademark in the Brazilian market, we have observed some13benefits for the market with new entry and with a fall in the price of toothpaste of1411 percent since the decision.15Another case was the joint venture between the Brazilian16leading brewery and Miller, a U.S. company.  And the transparency gives you17some information about CADE's decision.18Another point that should give us some elements for19discussion is our relationship with the courts.  We have in Brazil now more than2070 cases in the Brazilian courts.  As you can see, the share of the cases which go21to state courts is relatively high due to the autonomy of the states of the22federation. And what would be interesting would be to emphasize and to focus23more on the dissemination of competition culture among courts in different regions 
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1of the world.  It's hard to overemphasize the importance of this if one analyzes the2legal tradition of courts in some regions, especially in Latin America.3In order to set priorities for international cooperation, it4would be useful to have a gradualist approach to competition policy and to5competition policy implementation in each national jurisdiction.  We have a6gradual approach.  We think that we are going from the second stage of7implementation to a third stage.  We already have merger control and repression of8 horizontal agreements, but we are now starting to implement international9cooperation in a relation with the regulatory agencies in the infrastructure of10sectors.  So what does that imply in terms of international cooperation?11In the early stages, it's very important indeed to have12technical assistance, one point I would like to emphasize.  It's not technical13assistance in terms of writing laws, but it's technical assistance in terms of14institution building.  I think if we want to have strong implementation of15competition policy in the world, we ought to have independent transparent16institutions in the different national jurisdictions.  And if we do not have external17 technical assistance, there will be underinvestment in terms of the institutions.18There is political market failure in terms of what we get as a budget for national19competition bodies.  So there has to be support for independent and transparent20 competition agencies.21After a certain degree of development, then we can think22about early attempts in terms of international cooperation.  We have an interesting23experience and a very positive experience with Argentina.  And we hope in the
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1near future to sign an agreement with the U.S.  But for most parts of the world,2 what I would call the second generation international agreements, we still have to3 get some preconditions for having more advanced agreements with developing 4countries.5Just to end these remarks, let me give you some idea of some6internal reforms of CADE in order to prepare CADE for this type of international7cooperation.  We have been changing our internal rules in order to get more8transparency with respect to due process of law.  Let me give you some9information about a recent change in the merger review in order to make it easier10for international cooperation.11First, we try to maximize the intersection of the information12set that we get from the merger parties with the OECD notification form, we had a13proposal and now we have this approved OECD notification form.  We also14started a two-stage decision process and we simplified dramatically our15information set, reducing the number of items of information and documentation.16With that, we hope to reduce the time length of analysis.  We17have reduced it from 20 months to 7 months and we hope to reduce it at 2.418months more for next year.  So this is one of the preconditions for having, let's19say, an international agreement with other jurisdictions that would allow for joint20analysis of a particular transaction.  And also, for the area of conduct, it would be21necessary to have a more rigorous treatment of confidential information in order to22have more exchange of information.23The three goals that we have for the next two years are the
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1consolidation of CADE's work in terms of the consolidation of stages one and two2indicated in the earlier transparency, institutional cooperation both nationally3 and internationally and with a priority of legal certainty.4I would say that if we do that, we will be proving the three5roles a competition agency has to have.  The repressive role, which was the focus6of the early period of the history of antitrust, the preventive role, which has been7developed with merger review and with analysis along the century.  But most8important of all is the educational role, so we do give a lot of emphasis on the9educational role that competition bodies can have and have to have.10I think that internationally, one could say that we do have to11have coordinated repression of hard core cartels.  We should reduce transaction12costs by having more joint analysis of mergers, but most important of all, we13should emphasize institutional building, and we should emphasize the promotion14of independent and transparent agencies around the world.  This is certainly a15precondition for good competition policy in the world, and I think it's16characteristic of modern competition policy as opposed to the antitrust tradition of17 the late 19th century.18Thank you.19MR. RILL:  Thank you very much.  I think much of what you20have said is going to be part of and perhaps even stimulate to a great degree the21panel discussion on multinational mergers that we'll be undertaking in the last part22 of today and again tomorrow.  So thanks for those very thoughtful comments.23Konrad.
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1MR. VON FINCKENSTEIN:  Thank you, Mr. Chairman.2Thank you for inviting me to participate in this forum.  I think it must be a unique3forum where you make policy by inviting your international colleagues to give4input.  I hope it sets a precedent and I'm certainly delighted and flattered to be5here.6We in Canada are a very strong supporter of international7cooperation.  Part of it of course is easily explainable in terms of geography.  We8are right next door to the United States, the biggest market in the world.  We are9the biggest trading partner with the U.S. and, since the advent of the FTA and10NAFTA, we have in effect a North American market.  Business treats North11America as one market.12There are tremendous opportunities in terms of efficiencies of13 scale and concentration, but also risks in terms of collusion.  And we have seen,14since the advent of the FTA, a considerable increase in both multinational15conspiracies and in mergers involving both your jurisdiction and ours.  So, as a16corollary, a high degree of cooperation among antitrust agencies is essential for17the effective administration and enforcement of our systems.18I'd like to address four points with you.  Basically I'm19concentrating, given that I'm in Washington, on Canada-U.S. relations, but20essentially my comments apply to our relations with other countries as well.  I'd21like to talk to you about the Canadian priorities for international antitrust22cooperation in terms of deepening our relationships with the United States,23expanding our positive comity in the region, and in terms of availing ourselves of
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1the International Antitrust Enforcement Agreement Act (IAEAA).  And I'd like to2finish off by making a few comments about the Competition Bureau's view of3antitrust policy in the context of the WTO.  Let me go through these one by one.4Deepening our relations.  We have with the United States the5international antitrust cooperation agreement of 1995.  We also have an agreement6with the FTC on misleading advertising.  Further, we have the Mutual Legal7Assistance Treaty on criminal matters.  These three agreements are really the core8 of our relationship and have worked very well so far.9We have had several major cases that we have handled10together, but we have to deepen this relationship given the increasing number of11issues involving both of our jurisdictions.  By deepening, I mean such things as12making more coordinated or parallel investigations.  We have to coordinate our13searches when appropriate.  We have to share information within the limits of our14respective laws, especially in those areas where we are not restricted, such as15market definition, theory of cases, views of industry, et cetera.  That kind of16information can be extremely valuable.17We have to make sure we time our activities properly so we18don't interfere with each other.  And we have to assist each other in order to obtain19the necessary evidence through cooperation.  All of this is an ongoing process. We20are learning day by day, but it is a challenging process because your ways are21sometimes different than ours.  We learn about each other's preoccupations,22practices, ways of looking at things, and the many unwritten rules that exist on 23 both sides of the border, which are very important and have to be respected.  But I 
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1expect we will continue to improve and we will become a model of bilateral2cooperation.3Secondly, I believe we should expand on the use of positive4comity between the United States and Canada.  Positive comity: we all know the5concept.  If anticompetitive activity takes place in another country, and hurts both6that country and one's own country, it may be most effective to defer one's own7enforcement activity and ask the other country to investigate and deal with it.8That's the basic notion.  Currently, our cooperation agreement has a reference to9 positive comity, but it is a relatively basic reference because it suggests that when10you receive a request for positive comity, you will look into it carefully and then11advise the other party whether you intend to proceed or not.  That's essentially all.12I have looked at the U.S.- EU agreement on positive comity,13which I think is much more complete and sets a very valuable and interesting14precedent.  It sets out the grounds for invoking positive comity, the conditions for15 deferment, and the timetable under which one should deal with requests.  It has the16 implied necessity of accepting the resolution that the requested party will17implement.  It also has a reservation allowing a requesting party to recommence18its own investigation after sufficient notice.19This latter point, I think, is based on the realization that there20 may be instances when it is imperative for a country to step in and enforce its own21laws.  A safety valve that reserves the right for the requesting party to start its22own investigation is very necessary.  Generally I think the approach taken by the23U.S. and EU is very practical.  It is do-able and we should do it on a Canada-U.S. 
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1basis, and I understand my office is discussing potential negotiations with the DOJ2and the FTC in order to work out such an agreement.3Lastly, there is the issue of exchanges in what we call civil4matters.  We exchange a lot of information on criminal matters by virtue of the5agreement that we have and by virtue of the Mutual Legal Assistance Treaty on6criminal matters.  There is no counterpart on the civil side, which means the7United States cannot cooperate with us because we don't have reciprocal8legislation as required under the IAEAA.9On the Canadian side, we have confidentiality restrictions10that prevent us from letting the U.S. have certain civil matter information and that11also do not allow us to accept waivers.  Even with a waiver, we can't give you12certain non-public information.  Consequently, on the civil side, we only exchange13 information that's in the public arena.  That's not very helpful and it means that in14 major civil cases, on major issues of abuse of dominance, for instance, which may15occur on both sides of the border, we have to go our separate ways -- we can't talk16 to each other.  This should be addressed.17We wanted to address this in our last round of amendments to18 the Canadian Competition Act.  Unfortunately, there was an intervening case that19suggested that prior to making a request for information located in a foreign20jurisdiction you needed judicial authorization.  Ironically this was a decision made21by one of my predecessors -- but it has since been reversed by the Supreme Court22of Canada.  So the way is now clear for Canada to amend its Act and enter into an23 agreement with the U.S. under the IAEAA.
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1This is a priority for our office and I hope that we will be2able to do this.  However, entering into such an agreement is going to be very3difficult and there is one simple reason, and that's treble damages.  The idea of4being exposed to treble damages by reason of information that emanates in Canada5being exchanged with U.S. authorities, absolutely galvanizes Canadian industry6and the Canadian Bar to oppose any such exchange.  Therefore, when we negotiate7an IAEAA agreement, we will have to address the issue of treble damages and see8 how we can deal with it, because we do not have treble damages in Canada.9I have never been quite convinced about the necessity and10utility of treble damages, but of course that's your law and for you to decide. 11However, to the extent that Canadian firms become or perceive themselves to be12exposed to treble damages, it poses a major problem in terms of working out a13consensus in Canada and dealing with this issue.  We will have many interesting14discussions trying to square the circle.15Lastly, let me say a few words, speaking from the16Competition Bureau perspective, on how I see antitrust enforcement fits into the17WTO.  So far in the WTO, we have addressed some issues of competition.  There18are some agreements, for instance, the latest one on basic telecom that have all19sorts of provisions, which are clearly competition provisions.  The basic Telecom20Agreement essentially prescribes a competitive regulatory regime and the rights of21the parties under it.  We have smidgens of competition in the intellectual property22agreement, and you can find it in the various other WTO agreements.  But it is23 haphazard.  It is not a common approach.  We now have a working group in the 
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1WTO, under Frederic Jenny, which is doing a lot of exploratory work and in terms2of familiarization of competition laws and policies, and consciousness-raising,3 especially for developing nations.4However, I think the time has come to contemplate an5agreement on competition in the next round of the WTO.  And I believe the key6building blocks already exist and just need to be brought together.  In the OECD,7for instance, there is the Recommendation on Hard-Core Cartels; there is the8framework for merger prenotification just adopted this month; there is work in9process on the rights of parties, which basically sets out the procedural rights of10parties.  There is also work in progress on the principle of comity and how that11should be played out in a multilateral context.12There has been work done by the OECD, which has not yet13resulted in formal documents, be they frameworks or recommendations, but which14are works in process that will come to fruition very soon.  There is developing15OECD consensus on an approach to the abuse of dominance; the core principles16 my friend from Australia referred to; and also on the elements of a minimum17competition law institutional infrastructure required, such as an independent18  investigative agency and some sort of appeal or judicial review of the decisions of19that agency.20It strikes me that all of the elements are semi-ready.  Some21further refinement at the negotiating stage is required, but they could very easily22be wrapped up in an agreement using by analogy the WTO, a competition23agreement on basic principles would leave to each nation to determine it in
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1accordance with its tradition and history, its own objectives and its way of doing2business.  What you would have is a dispute settlement mechanism purely to3determine whether these principles have been translated and incorporated into4those domestic laws or not.5Some thought should probably be given to whether it should6be a plurilateral agreement initially, with only those nations that already have7competition systems or are about to accept them, acceding.  Over time it would8become a multilateral agreement, but I think if the next round would produce a9plurilateral agreement, it would be a very useful first step.  It would serve three10purposes.11First of all, it would be a model for nations without12competition systems, setting out what should be included in one and how to13structure it.14Secondly, for members that already have a competition15regime, it would give them an opportunity to review their system, deal with some16anomalies, and to straighten out certain provisions that have always been there17but, for lack of political consensus, have never been addressed.18And lastly, I think that an agreement, specifically if it19included a clearly spelled out positive comity arrangement, would give members of20 the agreement the mechanisms to deal with constraint issues caused by private21arrangements, rather than by governmental-sponsored arrangements, something22that the WTO is now incapable of addressing.  Essentially, the WTO focuses on23government sanctioned measures and this would be the first time that we would
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1have a way of dealing with private arrangements that can create barriers to access.2That's basically all I wanted to tell you by way of3introductory comments.  I'm looking forward to the day and would be glad to4answer any questions.  Thank you.5MR. RILL:  Thank you, Konrad.  You provoke so many6interesting potential responses to what you have said.  Just for a moment on the7private treble damage remedy.  That is an issue that's come up in discussions with8my colleagues in the Bar as well as with some of you.9The question then would be not whether the U.S. could say in10international matters, should there be an exchange of information leading to a civil11action against a foreign firm, treble damage remedy would not be available.  I12think that would raise serious questions of reverse national treatment -- the13domestic firm is liable for treble damages, the foreign firm is liable for only single14 damages.  I think it would be very difficult perhaps legally and, certainly,15politically in the U.S.16On the other hand, it's not beyond question that the whole17treble damage remedy in the U.S. could be evaluated as it has been from time to18time and modified to some extent, for example, under the National Cooperative19Production and Research Act, for notification would eliminate the treble damage20remedy.21Thanks very much.  Karel?22DR. STERN:  Before you go ahead, I would like to recognize23that we have been blessed now with the Boston shuttle's arrival.  Professor John
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1Dunlop has joined us, as has Professor David Yoffie.  I would like to recognize2that in the audience we are getting an increasing number of very high visibility3public officials as well.  I see Carol Crawford from the International Trade4Commission back there, the Commissioner, and many others, and I want to make5sure that you can hear back there.6Is the public having a problem hearing?  Yes.  I thought so.7You all have been very polite about saying so.  But the substance is so interesting8and we need to make sure that everyone can hear, and let me assure the public in9general that this is being recorded, that there shall be a transcript and it will be10put on our Web Page.  But if we can at this table remind ourselves that we are11having a discussion not only amongst ourselves, but that it is being monitored by12some very important people, that would be very helpful.  Excuse me, Karel.  I13thought we should pull everyone together and get on the same page so that we can14all hear what you have to say.15MR. VAN MIERT:  Thank you very much. Good morning,16ladies and gentlemen.  First of all, I would like to congratulate Janet Reno and17Joel Klein for this initiative, having set up this Advisory Committee.  Because I18believe it's absolutely timely.  As Joel pointed out, globalization is happening. 19Interaction is happening all the time.  I think what has already been brought about20over the last decade is truly impressive.  A lot of bilateral agreements are21functioning well.  A lot of work is being shared, is being done.22But indeed, we need to think about the options which are23available or should be available for what comes next and not only what comes for
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1the next decade but beyond that, beyond the next decade.  And that means not only2discussing options but also to see how to bring about solutions, so how to proceed3in which framework.  I think this is now the most important thing we need to4discuss.5And it's in this light that I would like to follow the three6questions which have been put to us.  And as Joel reminded you already, we7started some years ago to do some work ourselves, although it was much more8limited.  We asked knowledgeable people to give their opinion and to discuss that9with our own officials.  This eventually did lead to the initiative, which the10European Union has taken inside the World Trade Organization, to create a11working party, which again I think is doing extremely valuable work.12So today you are thinking about it, and again, thank you very13much for having invited all of us.  We have been doing some work.  In the14meantime, things are being discussed, so I would say before the end of this15century, we should be able to come up with some very valuable ideas on what16comes next.  Anyway, it's in that light and in that spirit that I wanted to be part of17this discussion today.18Now, ladies and gentlemen, I'm not going to come back on19some of the very interesting things which have been raised, for instance, trade and20competition, and also regulatory issues.  But since it was not put specifically to21 me, I will leave it there.  But I do recognize that this is extremely important, and22probably it's one of the more valuable things also which could be put in your23report, and not just stick to the relation between trade and competition and
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1copyright and all those things. So there is a lot to be discussed, and since this2work is meant to be, should I say, a guiding paper for what comes next, it3shouldn't be forgotten.4Now, ladies and gentlemen, the first question: What should5be the useful direction or directions to enhance international cooperation and6enforcement matters?  Obviously we will continue as all of us, I think, to try to7extend bilateral agreements, deepen them, make them function even better than is8the case today, second generation bilateral agreements, but this is something we9have been doing and will continue to do.10Very soon now we'll have a bilateral agreement with Canada,11we will try to have others.  I understood that also Japan seems to be interested in12developing bilateral agreements.  I welcome that explicitly, but this is already13known.  We can make things more perfect.  Function better as they do today, and14in this respect, ladies and gentlemen, I certainly would underline the necessity that15in the bilateral agreement we do have with the U.S. that the next stage might be16 the exchange of confidential information.17But it is highly sensitive in the business community.  It's18highly sensitive with several of our Member States so it's not going to be easy to19bring it about, but it is on our agenda.  Somehow for the time being it's more a20process of trying to convince people that it might be useful for them as well, not21just a threat.  And it's striking, by the way, that in several merger cases -- I will22come back on that a little bit later -- the companies were prepared to give us a23waiver to allow U.S. and European Union authorities to exchange confidential
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1information, because one day they discovered that it might be in their interest.  So 2I'm hopeful that it might be brought about, but I must indicate that on the side of3the European Union it's not going to be easy.  It's a rather complex discussion4with industry, but in our view it is the next step to be undertaken.5As far as bilateral agreements is concerned, I will leave it6there for the moment, ladies and gentlemen, and concentrate on the second leg.7And the reason why we have been doing that over the last year is indeed the firm8belief that in the light of globalization, interconnection, in spite of some9difficulties which are around that, it's going to be continued.  It's going to be there10 to stay and to be developed further.11So therefore I think we must indeed discuss the12future-oriented solutions in the light of globalization and try to develop some13global approaches, including global procedures. And again, as I indicated, it's not14just to what comes next in, say, 2005 or 2006.  No.  It should go beyond that.15And there is a very strong logic in it now also to start thinking about global16approaches and global procedures.17So this is the general spirit in which we were ourselves18already doing some work about it, and we came up with four suggestions, but I19want to underline the word suggestions.  Four suggestions to try to carry things20further.21First of all: make sure that -- and the trend is there -- more22and more countries do have or do introduce competition rules, do create23competition authorities.  Okay, let's help them to do so in a genuine way.  We have
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1some very valuable experience, not only the European Union but several Member2 States.  Several of our Member States have been extremely, extremely cooperative3 in trying to help some Central and Eastern European countries to introduce rules4of the game, to share experience of them, even having given practical help,5technical assistance on both levels.6And this eventually, ladies and gentlemen, did indeed lead to7the fact that now several of the countries concerned already have competition rules8and competition authorities and have and are gaining a lot of practical experience9before they eventually will join the European Union and then be subject to the10global rules of the European Union.  So there is a lot of experience already out11there, which can be used elsewhere as well.  And I know what's happening in12South America which also, I think, points in the same direction.  So therefore, let's13try to make it a kind of multilateral thing, bring this about everywhere.  And be14helpful.15The second thing I wanted to mention, as Joel mentioned16earlier, there are still a lot of things which are extremely difficult to be tackled17when they are outside your own reach.  Now, obviously, extraterritorial actions18have been taken but perhaps that's not the right way forward.  At least we feel19strongly that the right way forward is to do it on the basis of bilateral or20multilateral cooperation.21And in this respect, we fully share in the concerns that for22instance export cartels, bid rigging, market sharing agreements, outward-fixing23agreements, and all these kinds of thing that we cannot tackle as we should like to 
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1do, even as European Union.  For instance, we cannot tackle export cartels, which2 is fairly regrettable.  So why not try on a more global level to say: All these types3 of practices, we should be able to tackle them because we have some kind of4 universal rules which would be part and parcel of all competition policy wherever 5in the world.  So that this becomes a kind of global base on which these kinds of6 practices can be tackled in the future.7The third point I wanted to mention, ladies and gentlemen, is8indeed based on cooperation between individual, bilateral agreements, positive9comity and comity.  We are having some experience in the meantime ourselves so10things can be improved, by the way, because we are learning and tackling11individual questions and we would like to improve this as well.  But very12important is a spirit in which this is taking place.13I could give you examples of cases, for instance the Nielson14case, that has not been done on the basis of a formal demand.  But the way it has15been done is absolutely in accordance with the spirit of comity and positive comity16because, since the problem was mainly happening in the European Union, our17friends on this side of the ocean asked us to look into it.  That's exactly what we18did.  We obviously kept them informed.  Once we were negotiating a remedy with19the company that had been attacked, obviously we were checking whether that was20good enough with our American friends, so at the end of the day the thing could be21sorted out.22Apart from these formal procedures the spirit in which this is23 being conducted is automatically, so to speak, leading to an in-depth, very close
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1and confident relationship and cooperation.  So therefore we feel, even if perhaps2it's not the first thing to do on a broader scale, that it should be part and parcel3 nevertheless of a global approach.4And then finally, the fourth suggestion I would like to make5deals with dispute settlement.  This is probably the most controversial one because6indeed it has to do with some kind of a multilateral global mechanism.  I should7immediately add that in order to avoid misunderstanding that it's not about an8appeal mechanism.  I think that would be unrealistic, certainly for the time being9and as far as I can see.  Certainly I don't think we would like that individual10decisions which are being taken by the authorities might be appealed somewhere,11again for the time being.12But what could be considered is that if states, if members of13the World Trade Organization, because we in principle would like things to go14ahead in such a framework.  But here again immediately I should say one should15not mix up trade issues with competition issues so it must be specific, must be a16specific approach, something along the lines as follows:  That if some of the17Member States of the World Trade Organization, being committed to introducing18genuine competition rules and having a genuine competition authority, if they will19for instance discriminate between companies according to the origin that obviously20would be a case to be discussed on a more global level.21So not individual appeal procedures but a more global22surveillance operation or mechanism in order to make sure that the way23competition issues are being conducted is genuine, and if that's not the case that at
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1least it could be discussed on a more global or multilateral scale.2So these are a few suggestions again and we would like first3of all that the work being done by the Working Party would be continued, could be4continued.  And secondly, that during this work, we perhaps could start discussing5how then things could be tackled further after that.  Because it would be too bad if6after the valuable work being done by this Working Party that it would stop there7and it would be left there, so we are very much in for some kind of follow-up.8Now having said this, ladies and gentlemen, obviously we9want to discuss it with all of you and with others as well to be assured that what10would be considered is going to be in a truly multilateral spirit.  One thing I11should add, because I know on this side of the ocean there is a lot of concern, that12such discussions should not lead to something else:  discussions about13antidumping.  We do understand that and we share that view.14On the other hand, I think we must be open-minded enough to15 listen to concerns of others as well.  But as far as the substance is concerned, it16should be a competition policy thing and not something different.  That should be17well understood.  But for the rest, again, be open-minded enough again to listen to18 what others have to say.  I was listening very carefully to what you said has taken19place between New Zealand and Australia.  You mentioned an agreement between20 the European Union and the United States.  That would be something truly21revolutionary, I think.22DR. STERN:  Or between the U.S. and Canada, which has23been suggested a number of times.
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1MR. VAN MIERT:  We have similar discussions with Central2and Eastern European countries for the time being because they would say:  Look,3 you want us to have competition policy, now shed antidumping procedures.  One4day they will be a member of the European Union, ipso facto, that will be the case.5 We know about these discussions.  But having said this, as far as I can see, we6should mainly concentrate on competition issues.7Let me very briefly turn to a few other issues you were8mentioning.  Well, the mergers.  I was looking into the statistics from last year9because this year is not yet finished.  Last year we notified 31 merger cases to the10U.S. authorities.  And they in turn notified 20 merger cases to us.  Last year we11had in the European Union 172 merger cases to scrutinize.  This is considerably12increased over previous years.  Four or five years ago we only had between 40 or1360 cases, and may I point out that we only tackled the most important ones14because the others would be tackled by the national competition authorities. It has15 to be more than 5 billion ECUs as far as the global turnover is concerned.16Now, the figures show -- by the way, this year we will have17probably about 200 big merger cases, so I guess this year there have even been18more notifications than last year.  But the figures and the data show indeed that19this becomes increasingly a very intense activity across the ocean.  Indeed, there20are a lot of fairly well-known cases where this has been indeed confirmed.  There21has been one case, as everyone knows, the Boeing case where we could not agree,22although even there the cooperation was valuable.23I think we could on some points limit the difference of
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1opinions so even there it could be wrong to pretend that it was not valuable, and2cooperation did not add some positive things to the complicated case in question.3But all other cases, and I underline all other cases, could be sorted out in good4spirit, ending up eventually with identical remedies.5In the WorldCom/MCI case this has been shown, and it was a6complicated case from the very beginning.  And we only could sort it out in such a7good spirit and in such a way because from the very beginning there was this very,8very close cooperation including finding out about relevant markets, how to9analyze, how to call in expertise.  So it was an extremely valuable exercise ending10indeed with the fact that we had identical remedies to which both sides could11agree.  And by the way, because there was such an intense cooperation we could12also avoid that the companies concerned would play one jurisdiction against the13other, because eventually they will try to do so, but unsuccessfully, I must say.14Let me now turn to a few problems which are still out there15because in spite of the fact that it functions very well, including eventually where16 one authority is negotiating a remedy, like in the Halliburton/Dresser case, since17the remedy being negotiated on the U.S. side was good enough also for us we18could just stop there and say, look, you have been negotiating with the companies19concerned on the U.S. side, a good remedy, we just take it in and finish the case.20So it's even leading to some extent to a kind of division of work in spirit and in21fact.22Now, which are the outstanding problems?  From time to time23 indeed the fact that we can't share confidential information.  Although as I
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1mentioned earlier, usually the companies concerned, if they find out that it might2be in their interest, are prepared to do so.3One thing which from time to time leads to complications is4the fact that we have different deadlines because inside the European Union we5absolutely have to finish a case within five months.  So this is an obligation.  We6can't do otherwise.  Now, in the U.S. it might take sometimes longer than that and7therefore to adjust remedies and make sure that they are compatible from time to8time really creates practical problems.  And perhaps it's good to think about it,9how to improve things.  But apart from that, I think that the cooperation is very10good.11It is true that in the Boeing case since the rules on which the12case was based on the U.S. side and the European Union side were a little bit13different, were also leading to different conclusions, so there might be from time14to time problems as far as the substance of the rules is concerned.  We should not15fight that. But again globally speaking, I think we can just safely say that16cooperation, particularly as far as mergers and acquisitions are concerned, is17outstanding but can be improved.18Now, the last thing I want to say a few words about is the19third question:  How to resolve market access problems due to private conduct?20It's obviously a delicate matter, but basically speaking there are still a lot of21outstanding questions.  By the way, I obviously share the view which has been22given by our Brazilian friends, that a lot has to be done within the given territory.23And that's our experience in the European Union.  By liberalizing, for instance,
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1telecoms and other areas, ipso facto you are opening up the markets.2Opening up the markets has to do with a lot of other things.3First of all, you are trying to get things right in your own territory in liberalizing4and privatizing, so that that's the basic thing.  We should not forget about it.  But5beyond that, when there are still problems as far as market access is concerned,6indeed, we feel very strongly, as other colleagues here said, that this should be7sorted out on the basis of bilateral cooperation or hopefully in the future also8more prone to more multilateral cooperation and not otherwise, at least as long as9procedures and possibilities are available to do so.10So basically speaking, that is our position.  Having said this,11I think the Kodak/Fuji case showed that there is a need to try to go down this road.12And I would welcome that particularly also in Asian countries, and in light of13what's happening there now and some of the problems which have to be cured, that14one of the lessons to be drawn from them would be to have a genuine full-fledged15competition policies and authorities which are able to look after that.  And in16doing that, I'm confident that also where there are problems of market access: they17can be sorted out.  Perhaps not as rapidly as one would like, but at least then there18 is hope for doing so.19Ladies and gentlemen, I would like before finishing to make20one additional point. Again, the cooperation, and I'm particularly talking about21cooperation between the U.S. and the European Union, is really developing very22well.  We are privileged enough a few months ago to sign an additional agreement23 with Janet Reno and Joel Klein.
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1There is one area where we cannot just pretend to save.2That's when we have to tackle airline alliances.  And the problem is on both sides3of the ocean so I'm not only pointing to the fact that this is being handled by the4U.S. Department of Transportation, which does not look into such cases in the5first instance from the point of view of competition policy.  But there is some kind 6of problem, on our side as well, because the European Commission has not been7 given until now specific instruments to tackle such cases.8We are doing so, as you know, but according to a lengthy,9complicated procedure where we have to work very closely together with national10authorities.  That's not the problem as such.  The problem is that it is so extremely11complicated and therefore it takes a lot of time.  It's too time-consuming, so it's12not efficient.  It's not good for the airline business to have to wait too long, and so13on and so on.  Therefore I would like also to put that on notice, so to say; that14perhaps one should reflect upon the question of how to improve things, but again15 on both sides of the ocean, not just on this side.16MR. RILL:  Karel, thank you very much. There is so much17meat in the statement that I hope we can come back to these topics this afternoon18in the last panel.19Just three quick points.  One, starting in reverse, the issue of20multiagency review of transactions at least in the U.S. and perhaps elsewhere is21very much on the agenda of this Advisory Committee.22There are numerous issues raised by multiagency review.  In23fact, two Commissioners of the FCC have recently questioned whether it is really
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1necessary for the FCC to duplicate the competition role of the Department of2Justice. This is from two Commissioners of the Federal Communications3Commission.4Secondly, personally, I think that exchange of confidential5information is a logical next step if it can be done with adequate protections.  I6think it would have been very difficult to resolve the issues in the WorldCom/MCI7 matter had it not been that the parties waived confidentiality exchange between the8 U.S. and the Commission.9Finally, with respect to the extension of the WTO Working10Group, I think there is more of an inclination among certain elements of the11business community to see the group continue the work in the path that it's on12now, and some review is being given to that.  I personally think that the work13that's, and this is a personal view, that the work that's gone on so far should not be14interrupted at this point.15Unfortunately, a decision will be made before this Advisory16Committee makes its recommendation, but that isn't going to prevent us from17making our individual views known, as I have just done.  Thank you very much.18Frederic, this seems like a good lead for you.19DR. STERN:  Should we hold the specific questions until20after the break?  Because I have a particular question for Karel, and I know you21have got a scheduling issue.22MR. RILL:  When do you have to leave, Karel?23MR. VAN MIERT:  3:30 this afternoon.
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1MR. JENNY:  Thank you very much.  First, I will mainly2address the issue of the interaction between trade and competition.  And second, I3want to offer the usual disclaimer that I'm speaking neither for OECD nor for the4WTO, but only as a French representative.5Of course, there is a commonality between the views that I6will express and some of the things that have been said before.  I want to start7from the comment that was put forth by Joel Klein that there is an increasing8divorce between the extension of the geographical scope of economic markets and9 the limited territorial scope of regulatory activity and competition enforcement10and that this is the major challenge which is put to us by globalization.11I would add to this that further trade and investment12liberalization measures, privatization and deregulation movements, as well as the13adoption of domestic competition laws, are necessary conditions but not sufficient14 conditions for the development of competitive and efficient global markets.  And15 that it is this combination of conditions which creates the challenge.16On this challenge, I would like to make three points.  First,17why should we worry about international competition now and what are some of18the environmental reasons for attacking this issue now?  Second, in which forum19should this question be taken up?  And third, what should we expect?20There are several reasons that I think justify the fact that this21issue is particularly important now and that some kind of resolution of those22issues is necessary.  The first is the most obvious, the development of competitive23and efficient global markets requires, first, some kind of instrument to make sure
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1that behind-the-border public or private anti-competitive practices do not in fact2replace the trade barriers which governments have endeavored to eliminate.3Secondly, the development of competitive and efficient global4 markets also requires instruments to fight transnational anti-competitive private5 practices, even where they do not create a trade problem.  Thirdly, attention must6be paid to the fact that as domestic competition laws are enacted in more and more7countries, the transaction costs incurred by global firms tend to increase, and we8should make sure that those transaction costs do not cancel out the efficiency9 gains that one would expect from the globalization process.10But beyond those general reasons, I would add several other11reasons.  I think that the current Asian financial crisis provides a unique window12of opportunity to try to tackle the problem of trade and competition.  The Asian13financial crisis has taught us that globalized capital markets and financial markets14need to be subjected to some kind of discipline at the global level and that a15mosaic of domestic regulations with widely different rules and levels of16enforcement exposes the world economy to systemic dangers.  And I would venture17 that what has been shown to be true in the area of financial markets is also, to a18certain extent, true in the area of goods and services markets.19The Asian crisis has also taught us, at least taught many20countries which were reluctant to engage in market-oriented reforms or to rely on21competitive market mechanisms at the domestic level, that there is a cost,22sometimes a dramatic cost, of ignoring the benefits of competition.  The23experience of Korea is from its own point of view particularly striking, and what
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1is also striking is the extent to which Korean officials are willing to recognize that2the fact that they did not pay enough attention to competition is the source of the3recent dramatic developments both on the financial markets and in the real4economy.5Now, to a large extent, this story also applies to other nations6such as Indonesia, Malaysia, and possibly Japan.  So I think the Asian financial7 crisis offers convincing proof to countries which were reluctant to rely on8competitive market disciplines to ensure their economic development that they9were wrong. Therefore this is a particularly appropriate time to capitalize on10possible changes of attitude on the part of those countries and to think about ways11and means to ensure that the competition discipline also applies effectively to12global markets.  Not tackling this issue now might very well lead, in my opinion,13 to a backlash against the globalization of markets.14The third reason I would say is offered by recent15developments in Latin America.  A consistent lesson to be learned from countries16like Mexico, Venezuela, Brazil, and Argentina, in my mind, is that on the one hand17there is fierce domestic resistance to the elimination of domestic anti-competitive18public regulations. And that on the other hand the creation of competition19authorities in those countries plays a very important role in this respect because20through their advocacy function these authorities are constantly challenging such21regulations.22I emphasize this point because I know that the business23community often argues that the problem of market access is more a problem of
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1domestic regulation than a problem of anticompetitive practices.  I respectfully2submit that the creation of competition authorities is one of the important ways to3 bring about the elimination of behind-the-border domestic public regulations4limiting market access, and that in countries where such institutions do not exist5there is little support for deregulation of domestic product and service markets.6By the way, this is precisely why, in the context of the OECD7examination of the deregulation process, a lot of attention is being paid to8competition policies and laws and to the effectiveness of the advocacy effort of the9 competition authorities.10The fourth reason why I think we should address the issue of11international trade and competition now lies in the proliferation of domestic12competition laws in a great many countries. Although this development is13generally considered to be positive by most of the people around this table, there14are two areas of concern which have been voiced, notably by the business15community. First, the fear that domestic competition laws could in certain16countries be misused or used strategically to protect domestic interests against the17 interests of foreign importers.  And second, the fear that the multiplication of18national competition regimes would greatly increase the transaction costs for19global firms, most notably with regard to mergers.  I want to say that these20arguments have sometimes been used against any effort to promote competition21laws and policies abroad.22I would submit that looking at the issue in this way may be23missing an important point.  The issue is whether the consideration of the problem 
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1raised by competition in the context of globalizing markets is more likely to lead 2to satisfactory solutions than the refusal to consider these problems and letting the3 proliferation of uncoordinated competition laws run its course.4From that point of view, I would submit that the5consideration of the issue of competition problems created by the globalization of6markets, whether in the context of the establishment of cooperation mechanisms or7in the context of a multilateral agreement, is more likely to introduce some8 discipline in the process by facilitating peer pressure, by inducing a process of 9soft harmonization among competition regimes and by allowing the adoption of10best practices in the enforcement of competition laws than doing nothing in the11face of the proliferation of competition laws.12The fifth reason, and I will stop here on this point, lies in the13interest that some countries, and in particular the United States, have shown for14the issues of bribery and corruption on the one hand and the promotion of good15governance on the other hand.  Although I would not go so far as to say that the16problem of corruption can be subsumed to the problem of competition, there is17consistent evidence that the lack of competition discipline increases the scope for18 corruption and that, conversely, the adherence to strict competitive principles19limits the scope of corruption.20The link is obviously that most of the actions that public21officials might take when accepting bribes are ones that will be anticompetitive22and provide for some form of rent to the giver of the bribes, for example through23the granting of exclusive or special privileges.  Having said that, I think that this
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1issue should be urgently considered.2The second question is: In which fora or forum should we3address the problem of trade and competition in a globalized world?  You will not4be entirely surprised by the idea that I think these issues should be addressed both5at the OECD and at the WTO.  It is not because I have some role in both those6 organizations.  However, I think we should recognize that there are two types of7problems which may warrant different instruments.8First, some practices -- such as export or international cartels9 or some transnational abuses of dominant positions or some mergers -- may have10an anticompetitive effect abroad without necessarily creating a trade problem or11trade friction between the country in which the firms which have adopted the12  practice or have decided to merge are located, and the country in which the13  anticompetitive effects are felt.  In such cases, it's highly conceivable that14voluntary cooperation between competition authorities will be a tremendously15useful tool to eliminate those practices.16And I would say that this is what OECD is all about:17promoting this kind of cooperation.  Tremendous work has been done at the18OECD, first under the leadership of Joel Klein, when he was heading the Working19Party on International Cooperation, and now under the leadership of Konrad von20 Finckenstein.  Since some of the Resolutions or Recommendations have been21talked about, I won't go into this.22I will say, as has just been mentioned I think by Karel Van23Miert, the most sensitive issue in this area -- which has been raised by the
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1business community -- is that of the exchange of confidential information.  As2antitrust authorities, we must recognize that the possibility of such exchanges3would greatly enhance the prospect for fighting the type of anticompetitive4practices which I just mentioned, but that such exchanges are at present difficult5or impossible for a variety of reasons, including the difficulty of agreeing on the6definition of confidential information, differences in our legal systems as to how7such confidential information is to be treated in competition proceedings, and the8differences in our legal systems regarding the sanctioning of competition law9violations -- mentioned by Konrad earlier.  I think this is the most urgent work10that needs to be undertaken at the OECD: to analyze how we could get a grasp on,11or handle the issue of exchange of confidential information.12But cooperation between competition authorities is not13necessarily sufficient.  Indeed there is a second category of anticompetitive14practices that we have to consider, and those are transnational competition15problems which also create a trade problem and prevent trade liberalization, such16as, for example, import cartels.  Sometimes the biggest domestic abuses of17dominant position will have the object or the effect of protecting domestic18markets, et cetera.  And I would also add to this category public regulations which19 prevent markets from being open.20For such cases, I submit that international cooperation is21unlikely to be sufficiently efficient to dispose of the problems.  So in short I would22 submit that there are two types of transnational problems and that the tools for the23 two types are not necessarily the same, but for the second type of problem some
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1kind of discipline must exist among countries, and that OECD is not a forum2which is particularly suited to finding such discipline but the WTO might very3well be.4A word, if I'm not too long, on what's going on in the WTO5Working Group.  I will only, of course, offer a few personal comments since the6report of this Group will come out shortly and will be sent to the WTO General7Council so everybody can decide for himself how the work of this Group should be8assessed.9First, I just want to emphasize that all member countries of10the WTO are invited to participate in the Working Party, and that indeed a very11large number of countries have actively participated.  As you know, more than 10012 extremely interesting written contributions have been submitted from a wide13variety of countries, both developed and developing, countries which have a14competition law or countries which do not have one or do not care to have one.15The depth of analysis attained by the Working Group was, I16would say, unexpected in some circles, at least by those who believe that a17reflection on the interaction between competition law and policy and trade policy18was doomed to fail in a trade organization.  I think the reason for the success is19the fact that the trade and competition officials in each country have had to come20to a common understanding of one another before presenting their contribution to21the Group.  This has led, I think, in the context of the Group, to a much better22understanding of and coming together on, the interaction between trade and23competition.
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1Another area of interest is the fact that it has been quite clear2from the discussion that it is legitimate for countries to have different competition3laws in view of the differences in their level of economic development, of the4differences in their legal systems, and of their various social and political5 concerns.  This aspect of the discussion has, in my mind, moved us clearly away6from the vision which was implicit in some of the early academic work on the7issue of trade and competition.8But beyond this, it is probably the interest of a great many9developing countries to have competition policy as a tool of development, the most10interesting changes can be seen in the context of reticence that was shown by some11 other developing countries.  For countries which did not understand what12competition law or policy could contribute to their development, quite a lot of13 evidence was presented showing how they could themselves be the victims of14international anticompetitive practices.15I cannot say that there is unanimity of views on the16desirability of complementing trade or investment liberalization measures with the17adoption of competition policy or on the appropriate instruments for promoting18competition, but I think it's fair to say that there is certainly a better19understanding of the issues raised by the interface between international trade and20 competition than when we started two years ago.21I would like to take this opportunity to briefly address the22issue of antidumping.  As we all know, this is a particularly sensitive issue in the23context of the WTO and some are reluctant to see this pedagogical exercise
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1continue for fear that they would eventually lead to the questioning of2appropriateness of trade remedies in the multilateral context.  On this matter, this3sensitive matter, I would like to say three things.4First, as far as the Working Group is considered, and without5prejudging, it was always understood in accordance with the Singapore6Declaration, that the establishment of the Working Group did not in any way7implicate that negotiations would be undertaken on the issue of trade and8competition in the context of WTO.  As I have mentioned, the success of the9Group, what I see personally as the success of the Group, has been the fact that10delegates have clearly understood that this was purely an educational process and11therefore have focused on analytical issues rather than on the possibility of12negotiations.13When we look at the work of the WTO group, which has14encompassed a very broad range of topics -- and I will name a few: the15relationship between trade policy and competition policy; private practices which16impair trade and competition; the relationship between trade liberalization,17competition and economic development; private practices which impair18international trade and competition; the impact of regulatory policies and trade19policy on competition; intellectual property rights and trade and competition;20investment liberalization and trade and competition, among others -- one sees that21 the work of the Group has not degenerated into a simplistic discussion of the22wisdom of trade remedies and their alleged inconsistency with competition.23First, half of one of our seven sessions was devoted to the
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1impact of trade remedies on competition, and this represents not much more than 52 percent of the written record of our work, which is probably an accurate3description of the proportion of the time devoted to this topic during our sessions.4The reason for this is not that we have tried to sidestep the issues.  Second, as a 5  matter of fact, we had a very clear and frank debate on this.  While the proper use6of trade instruments remains an area of concern for many countries which have7different visions and sensitivity on this issue -- just as the proper use of8competition policy or law is a legitimate concern of other countries -- it must be9clearly understood that it is not the dominant focus of the Group, much less its10 exclusive concern.11Third, differences of appreciation on this particular issue, as12far as I'm aware, existed before and independently of the discussion on the13interaction between trade and competition policy.  Thus, a legitimate question to14ask is whether discontinuing the discussion would in any way change the15sensitivity on this topic.16Fourth, at a more analytical level, I would mention the fact17that if a discussion of the competition issue in the multilateral context serves the18purpose of convincing trading countries of the benefits of competition, one must19ask whether it is likely to decrease or increase the tension on the use of trade20remedies.  And I would venture to reply to this point by saying that a discussion of21 the interaction between trade and competition could lead to clear benefits for22countries which are most attached to the antidumping instrument, not so much by23prompting a change in their antidumping regulations but by reducing the number
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1of cases in which they have to use their instrument to protect themselves against2such destructive practices.  I do believe in effect that as the global market3becomes more competitive, dumping will become more restricted and that there4will be fewer cases of dumping in the first place.5This leads me to my third main topic.  I will be rather short6on the last point:  What can be achieved through a discussion of the interface7between trade and competition in the international fora?8I think it's abundantly clear from the previous discussion9what can be achieved in the context of OECD.  The value added of this work could10 also be considerable: to define best practices or common approaches to the11enforcement of competition law thus contributing to a soft harmonization process12and a higher level of legal security for firms operating in the global market.13There is also no doubt that cooperation between competition14authorities can in some cases allow the cooperating countries both to solve a15competition problem and to avoid trade frictions.16But I think that the potential value of further discussions of17this issue in the multilateral context is also significant.  At the preliminary stage18where we find ourselves, they undoubtedly contribute to a better understanding of19the benefits of competition in countries which do not have competition law and20 policy instruments.  Beyond this, it should be recognized that, given the nature of21the WTO, and in particular its trade dimension, further discussion of the issue in22this forum would probably have to be focused on the competition and trade23 interface.  Indeed, the WTO, in my view, may not be a perfectly adequate forum to
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1promote the adoption of domestic competition laws of general applicability in2countries which do not have one.  Possibly UNCTAD and OECD are more3appropriate vehicles for this.  However, it is a perfectly adequate forum to explore4 the ways in which member countries could further explore the issue of5anticompetitive practices which have an international trade dimension and lead to6trade frictions.7Thus in the context of the WTO, a question which could be8usefully debated is whether the customary barriers concessions made by the9members of the multilateral community should be complemented by commitments10to ensure that the trade liberalization measures they have agreed to are not11defeated by public behind-the-border practices or by tolerated private practices12which defeat the purpose of their trade liberalization commitments, and what kind13 of instruments, if any, would be relevant to achieve such a purpose.14I think that we can already find in some WTO agreements, or15some WTO GATT-related agreements, some answers to this question.  And of16course, one thing to do is to ask oneself whether those instruments that already17exist could be generalized and expanded.  I will finally note that framing the18question in these terms, and those relative terms in the multilateral context, is not19only more logical, given the goals and the missions of the WTO, but also may20alleviate the fears or reservations of countries which do not feel they are ready to21adopt a competition law for purely domestic purposes, much less to adopt uniform22 domestic minimum standards of domestic competition laws.23I would like to finish by expressing my deepest appreciation
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1for having been invited to address this very important and interesting panel.2Thank you.3MR. RILL:  Thank you, Frederic.  I look forward to reading4those comments in somewhat more detail.  A number of people would find very5interesting among other things the Working Group's focus or lack of particular6focus on antidumping issues, in case anyone missed it.7We are about a half an hour running overdue and I put that8entirely on the responsibility of the moderator this morning.  I'm going to borrow9five minutes at least from the break and see if we can't cut the break down to 1010minutes and I'll probably borrow some time from lunch to get us back on schedule.11 So 10 minutes.12(Break.)13MR. RILL:  Our next speaker is Dieter Wolf from the14German Federal Cartel Office.15MR. WOLF:  Dr. Stern, Mr. Rill, it's a pleasure for me to be16here.  I feel honored to participate in this hearing.  I offer my compliments to you17for having convoked this meeting and having prepared it so perfectly.18We will, of course, hold discussions, and are doing so19already, on various aspects of the topic, "protection of competition and20international cooperation," which is why I would like to concentrate in this first21round on one point that is causing me particular concern at present, and I think22others, too.23The subject that I currently consider to be of growing
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1importance in international competition policy is global concentration and our2reaction to it.  The extent of the current wave of mergers is considerable both in3the United States and in Europe.  As with the notifications under the4Hart-Scott-Rodino Act or under the European Merger Regulation, we at the5Bundeskartellamt in Berlin are also witnessing a growing number of cases.6In 1997, a new record was reached with 1,750 notified7mergers, and the numbers for the first eight months of 1998 show that we will8again reach this figure, if not exceed it.  The focus of real mega-mergers still lies9in the United States, but the number of transnational mergers is clearly increasing.10  Daimler/Chrysler is probably the best example of this.11The reasons for the recent wave of mergers are closely linked12 to the general trend of globalization.  They lie in the liberalization of markets13which have been regulated or insulated until now, in the massive progress made in14information technology which favors the creation of global networks, but also in a15trend towards global sourcing, and to the presence of enterprises in all the16 important partial markets of the world.  But whether all these mergers will in fact17bring about the alleged economies of scale and scope is of course open to dispute18 in individual cases.  This is also true of the question whether an increase in profit19in the wake of mega-mergers can actually be attributed to efficiencies, or simply20 to an increase in market power.21However, we are not gathering to discuss individual cases.22I'm just stating that the current wave of international mega-mergers raises two23questions.  Firstly, whether the current concepts of substantive merger control
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1suffice to adequately address the competitive concerns raised by large mergers.2Secondly, whether the existing competition law systems at national and3supranational levels, with their limited geographic fields of enforcement and4implementation, are adequate.  Certain merger projects that affect all continents5are probably already rather too large for national merger control regimes to6handle.  The question therefore arises of how to ensure that the law can be7enforced in the future vis-à-vis the global players.8These questions are in stark contrast to what is or has been9discussed at the international level until now.  Current discussions -- and your10meeting of today is the exception -- current discussions about international11cooperation in competition matters take no account of concentration and almost12exclusively revolve around the question of fighting hard core cartels.  This applies13to the discussions within the WTO Working Group on the interaction between14 trade and competition policy but, above all, to the many bilateral agreements on15 competition matters.  The most recent example in this context is the positive16 comity amendment to the U.S.-EU cooperation agreement which explicitly leaves17 aside merger control.18In the course of our meeting this afternoon, we will return to19bilateral agreements, but allow me to make one comment for the moment.  It seems20doubtful to me that focusing solely on combating cartels is justified.  Irrespective21 of the undoubted harmfulness of cartel agreements, we must accept that cartels are22almost permanently subjected to centrifugal forces and are therefore unstable.23  Mergers are something completely different.  Structural deterioration resulting 
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1from concentration is, as a rule, irreversible.  In theory, it could be addressed by2 means of divestiture, but I do not need to point out that divestiture is a highly3 problematic and rather ineffective instrument of competition policy.  Mind you,4 I'm not against us jointly combating cartel agreements, I'm simply saying that this5alone is not enough.6Now, we will probably reach agreement more quickly on the7necessity, or at least desirability, of subjecting real mega-mergers to international8 control than on the question of how we should put such control into practice.9Allow me to make just a few cursory remarks in this connection.10According to the minutes of the first meeting of this11Committee, on 26 February, Assistant Attorney General Klein spoke of three ways12of addressing international competition problems:  the extraterritorial application13of national law, bilateral treaties geared towards the idea of positive comity, or a14 multilateral set of rules.  I agree with his analysis, excluding the first variant as15 one which could be regarded as legitimate, but I agree with this analysis.16I would like to take the opportunity to say a few words in17favor of a multilateral approach.  I do not think that we can achieve effective18protection of competition in the long term solely by bilateral treaties.  The firms'19endeavor to be present in as many markets as possible the world over highlights20the limitations of that approach.  If we wanted to make do solely with bilateral21agreements, we would probably be unable to keep abreast of developments.  Since22 it often takes longer to negotiate political agreements than to extend23entrepreneurial activity, we will probably lag behind.
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1I am not against setting up as far as possible a bilateral2network of agreements, but I think that in view of its shortcomings we should3think about a multilateral system of merger control too.  Nobody is claiming,4interestingly enough, that multilateral cooperation is wrong. They just say that the5time is not ripe yet, those who are against it.  However, this argument was never6convincing enough to stop people thinking about things in the first place.  In the7light of the latest wave of mergers, it is more likely the case that we do not have as8much time as we originally thought.9This Spring, we were able to celebrate the 50th anniversary10of GATT, the forerunner of WTO.  The World Trade Organization is based on the11concept of multilaterality and most-favored-nation treatment instead of12bilateralism and regionally insulated economic blocs.  Who would have thought 5013years ago that 132 members emerged from the 23 GATT founders, with a further14 30 countries including Russia and China applying to join.  I think it would be15worth discussing the idea of an international competition organization that16protects the global market also against private restraints of competition and17monopolization after the abolition of tariffs and state barriers to trade, even if18that will take time.  But for me the question of choosing or establishing an19institution for international merger control is of secondary importance.  I would20deliberately like to leave that question open.21I am also open to suggestions about whether discussions22should be conducted within the WTO or whether perhaps the OECD or another23body would be the right venue.  I can well imagine holding them within the
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1framework of the WTO, for this would best reflect the idea of multilateral2cooperation.  A point in favor of the OECD, however, could be that all its3members already have a rather rich experience of merger control systems.  My4concern is that the discussion is held at all.  The venue and the institutional5considerations to be made are -- as I said -- only of secondary importance.6Now I can already see that some of you are about to raise7another objection to this.  If we ever achieve a joint set of rules for the control of8mega-mergers, and then discover that they have been violated at some point, how9on earth should we penalize this violation?  It's more than daring to think that a10supranational institution would have the powers to enforce its decisions in the11individual states and to impose sanctions against violations.  Such an institution12that is reminiscent of a "global police force" would probably be quite undesirable. 13 After all, we should not respond to the creation of mega-mergers by setting up14 mega-authorities.15Let me speculate a bit.  It occurs to me that the signatory16states of a merger control agreement might agree not to grant civil law17effectiveness and legal protection to mergers that violate such an agreement. 18Ineffectiveness is a recognized legal consequence of restrictive agreements in19many of the world's competition laws and, if desired, could harmoniously fit in20with the legal frameworks of the individual states.  Above all, it would not require21any supranational enforcement measures on national territory. It would not22actually require any state enforcement measures at all, but could be left23completely to private litigation.  It would be effective, however, for no enterprise
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1or its shareholders can be expected to tolerate such a degree of legal uncertainty.2I would like to leave you with these thoughts for the moment.3After all, I did not come here to present ready-made solutions but to stimulate4   discussion.  Perhaps you will allow me to conclude with the following remark:5Competition policy was given the name "antitrust policy" and6not "anti-cartel policy" in its country of origin, the United States, and the restraint 7 of competition by monopolization in Section 2 of the Sherman Act was, from the8very beginning, treated as the equivalent of the restraint by contract in Section 1.9  In principle, the Sherman Act is chiefly directed against trusts.  Focusing10 exclusively on the battle against international cartels would mean ignoring one of11the two pillars of classic competition policy, the battle against trusts or12monopolies.  The introduction of antitrust law was a pioneering achievement by13the United States for the development of the law in the world.  We non-Americans14have in the meantime learned our lesson and, although very grateful for this, we15are taking the liberty of politely reminding our former teacher of that very fact.16Let us take this step together.17Thank you very much.18MR. RILL:  Thank you very much, Dieter.  We stand19reminded.  I think, again, that you have raised a number of questions that should20be examined in the panel discussion.  Just to put down a point, though, while it's21true that the 1998 agreement between the U.S. and the EC specifically dealt with22non-merger issues, it did not replace the 1991 agreement insofar as the 199123agreement did make some advances with respect to notification and cooperation in 
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1the merger area.  And as Karel has pointed out, the number of notifications has2increased significantly between the U.S. and the EC in the merger area.  Now, that 3may reflect not so much the agreement as the pace of mergers, but I think the4agreement has something to be said for it.  I see Chuck Stark in the audience.5Please nod in the affirmative if what I just said is correct, thank you.6MR. WOLF:  I'm not criticizing.7MR. RILL:  No.  No.  I don't take it as criticism.  In fact, if8it were criticism, we would welcome it.9If we could now turn to Commissioner Itoda or Deputy10Secretary General Kojima.  Commissioner Itoda.11MR. ITODA:  Thank you very much.  It's a great honor for12me to participate in this imminent meeting, for me in particular -- the SII,13Structural Impediments Initiative, talks which took place over 10 years ago which14 Mr. Rill, you were a Chairman at that time, and Ms. Janow, who was also15involved and was with the USTR at the time -- to be able to be here in front of you16 and to speak to you is a great honor to me.17In response to increasing globalization of corporate18activities, it is recognized in Japan that it is necessary to enforce competition law19from an international perspective based on broad cooperation with the competition20authorities of foreign countries.  So I will, based on Japanese experiences, talk to21 you about our activities.22First of all, anticompetitive activities in the Japanese market23violate Japan's competition law, even if the party is a foreign company.  However, 
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1it is necessary for the foreign company to have a domestic presence in Japan in2order for an administrative disposition to take place to eliminate the violation.3In a recent case, administrative action was taken against a4Canadian company that was engaged in exclusionary trade practices in Japan.5Because it had representatives of that company in Japan -- Japanese attorneys6located in Japan -- we were able to take an administrative action.7Second, in this case, the investigation and the collection of8information outside Japan was not particularly necessary, so the Fair Trade9Commission of Japan was able to adjudicate the case by itself.  But with most10cases involving a violation by a foreign company, extensive cooperation with the11competition authorities of the home country of the company is necessary.12Irrespective of the actual occurrence of a violation, the competition authorities of13nations must build cooperative liaison relationships through the following14methods.  One: mutual understanding of the competition laws and their actual15enforcement in each country, and this is accomplished through regularly scheduled16 bilateral exchanges of information and opinions and joint training of officials; and 17exchanges of information and opinions concerning the competition laws of nations18 in the OECD, WTO and other forums.  Two: provision of prior notification19 procedures for individual cases, such as the use of notification procedures of the20OECD and other communicative measures.  Three: creation of an environment that21facilitates effective cooperation in investigations between nations. Four:22conclusion of bilateral cooperative agreements, including a cooperative provision23to facilitate investigations and a positive comity provision to eliminate violations 
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1effectively and to avoid sovereignty issues.2Turning now to corporate mergers.  Corporate mergers that3affect two or more nations, especially mergers of foreign companies that affect4competition in the Japanese market, are concerns of Japan's competition law.5However, Japan's competition law had lacked legal jurisdiction for this type of6corporate merger since enactment of the law, and these mergers were not illegal7under the prior law.  Due to an amendment of the Antimonopoly Act enacted just8this year, mergers of foreign companies are illegal if competition in Japan's9market is substantially restrained, and the amendment allows the imposition of10necessary measures.  This enforcement will begin January of 1999.11According to this provision, foreign companies that propose12to merge will be evaluated in the same manner as mergers between Japanese13companies.  The threshold for providing notification to the Fair Trade Commission14is based on the level of sales for the foreign companies in Japan.  A merger plan15must be notified to the Fair Trade Commission before implementation of the16merger if one of the parties has sales of at least 10 billion yen (approximately $8717 million) and the other at least 1 billion (approximately $8.7 million) in Japan.18In this manner, in Japan, there will be legal concerns in the19future about mergers of foreign companies.  Regardless of notification, when a20merger affects competition in the Japanese market there will be an investigation to21determine whether the merger violates Japan's Antimonopoly Act.  The Fair Trade22Commission will collect the necessary information concerning the merger.23Because that information generally exists in a foreign country, we will collect the 
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1information by seeking the cooperation of the competition authorities of the home2 country of the companies.  Additionally, if the merger violates the Antimonopoly3 Act, we will request necessary measures to eliminate restraint of competition in4Japan's market.  In that event as well, we will exchange opinions with the5competition authorities of the respective nation and engage in consultation.6But in any case, Japan is still a developing nation with regard7 to the application of competition law to mergers of foreign companies and we will8endeavor to study this matter from now on.  But given that the receipt of9information from the home country of the companies proposing to merge and10cooperation in investigation will be essential, and that if it should be necessary to11 request measures to eliminate restraints of competition, consultations with the12competition authorities of the other nation will be crucial, so it is important to13build a consensus on the method of cooperation between nations using a forum14such as the OECD Committee on Competition Law and Policy (CLP).15Next, the problem of entry barriers caused by anticompetitive16activities in foreign countries.  These types of anticompetitive activities which17occur in foreign markets adversely affect the interest of consumers in the countries18in which the anticompetitive activities are committed.  These acts directly violate19the competition laws of a nation and as a result the competition authorities of the20 nation have strong concerns.  Therefore, we believe that it is appropriate and21effective that the competition authority of that nation directly enforce their own22 competition law to eliminate the activities that hinder market entry.  Indeed, this23should be an obligation for the authorities.
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1On the other hand, if a company of a nation encounters entry2barriers to a foreign market, then it is the home country of that company that fully3understands the damage caused by these barriers and itself suffers damages from4 them. Therefore, it is natural to request that the country in which the5anticompetitive activities are taking place should eliminate the activities and the6requested nation should address the matter.7In that case, direct application of competition law by the8country of a company that has been hindered in entry is not deemed appropriate9because there are concerns over:  whether, one, competition has actually been10hindered in the company's domestic market; two, whether the sovereignty of a11foreign nation may be violated; and, three, whether an investigation may be12difficult and inefficient and other problems may arise.  So it may not necessarily13be the best approach.14Now, if we recognize that the activities of the companies of15many nations are increasingly globalized, then it is axiomatic that the close16cooperation between the competition authorities of foreign countries is required.  I17believe that the approach to the cooperation would be developed in stages and will18be varied.  For example, in the case of Japan, we believe that the use of opinion19exchanges at multilateral conferences, such as the CLP of the OECD or UNCTAD20or the WTO, and the use of the notification procedures promulgated by the OECD21 are extremely significant in building cooperative relationships among nations.22Additionally, at the bilateral level, it is necessary to have23forums for regularly scheduled exchanges of opinion and information.  Japan
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1currently has regularly scheduled conferences with nearly 10 nations.  Of these2forums, the association with the United States is of the longest duration, having3been maintained for 20 years.4Additionally, the culmination of a cooperative agreement5between two nations is of course significant.  Japan has recently begun6preparations that will lead to the conclusion of its first cooperative agreement7with the United States.  In that sense, we are looking forward to the discussions in8the second session.  As we have just begun preparations for this agreement, I can9only state my personal opinion and in general terms.  But I do believe that what is10essential to conclude the cooperative agreement are: well-balanced, substantive11 provisions, or prohibitive provisions; mutual understanding of the differences in12the nature of competition laws of both countries, such as criminal as opposed to13administrative; and also a positive comity clause to avoid sovereignty issues; and14 effective cooperation in investigations to the extent allowed by domestic law.15Now, there is the multilateral issue.  Judging from the current 16state of the competition laws of nations, the adoption of specific measures for the17standardization of competition law across nations would be extremely difficult at18present.  The level of competition law will decline if standardization is rushed.19 However, if we worked tirelessly toward the establishment of minimum standards20as a long-term objective, that in and of itself should serve to raise the level of21 competition law and this cooperative effort between nations, I think, is significant.22In particular, rather than competition law as a whole, specific23 clauses such as those concerning hard core cartels may lead to realization of 
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1minimum standards.  Moreover, the establishment of joint forums, in which all2nations can participate in the resolution of disputes concerning competition law,3 will also not be easy considering the major differences in the level of competition4law between nations.  Therefore, while preparation of common competition rules5for countries in the future will be important, for the present I think it is more6realistic for us to work with one another towards solutions based on mutual7 understanding.  For that reason as well, a forum for regularly exchanged views8between nations and the culmination of bilateral cooperative agreements will be9indispensable.10And finally, in conducting a cooperative relationship with the11United States concerning competition law, the Structural Impediments Initiative12talks held in 1989 and 1990 were extremely significant.  With the SII as a trigger,13the competition law of Japan was upgraded in terms of systems and enforcement in14part due to the talks.  However, mere cooperation between competition authorities15was not sufficient to accomplish this.  Rather, competition law was discussed on a16government-to-government basis.17For the United States, the Department of Justice was joined18by the State Department, the U.S. Treasury, the Department of Commerce, the19U.S. Trade Representative, and other entities on the U.S. side, while the Fair20Trade Commission of Japan was together with the Ministry of Foreign Affairs, the21 Ministry of International Trade and Industry, the Ministry of Finance and other22 Japanese government agencies.  Of course, DOJ and FTC led the debate.23But another reason for the success was that we discussed
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1competition law itself rather than focusing on the problems of individual2industries and companies.  The philosophy of competition law was always present3in these sessions.  In this way it may sometimes be necessary that in order to4promote cooperative relationships effectively, that each nation has a mutual5understanding of competition law.  So in that sense, I am convinced that all of the6 economic policies of each nation must be made understandable from the7competition law perspective.8My explanation may have been insufficient in certain areas,9so Mr. Kojima, my colleague, will make supplementary remarks.10MR. KOJIMA:  I would like to make a few additional11comments concerning the three approaches or options, namely the unilateral12approach, bilateral approach, and multilateral or plurilateral approach.  With13regard to the first option, that is to say unilateral approach, Mr. Itoda has already14explained how Japan applies our competition law, the Antimonopoly Act, to15foreign enterprises.  In this connection I will refer to the U.S. Antitrust16Enforcement Guidelines for International Operations.17The 1988 Guidelines took the position that, regarding U.S.18export trade or export commerce, the application of U.S. antitrust laws would be19limited to cases in which there was harm to U.S. consumers.  The revised20Guidelines state that the Department of Justice and the Federal Trade Commission21would take appropriate enforcement action against foreign anticompetitive22conduct that restrained U.S. exports, whether or not the conduct results in direct23harm to consumers.
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1Japan Fair Trade Commission, as well as the Government of2Japan as a whole, made reservation on this point and our position remains the3same.  Such antitrust enforcement for the purpose of protecting U.S. exporters4may result in a deviation from the purpose of the competition laws, which is to5maintain competitive markets.6We are of the view that in order to deal with anticompetitive7conduct in foreign territories effectively, while avoiding violation of sovereignty8of countries concerned, efforts should be continued to establish bilateral or9multilateral international rules to address such anticompetitive conduct.  Until the10establishment of such rules, anticompetitive conduct should appropriately be dealt11with by competition authorities of the countries where such conduct takes place.12As Commissioner Itoda has already explained, Japan has not13concluded any competition cooperation agreements, but we have entered into14negotiation with the United States authorities.  I see here today in the audience the15 two tough negotiators from the U.S. side: Mr. Stark of the DOJ and Mr. Tritell16 from the FTC.  We are determined to conclude this agreement as soon as possible17on a mutually agreeable text.18Apart from such bilateral arrangements, in respect to19criminal investigations, including those for anti-monopoly cases, the government20of Japan can extend assistance to law enforcing authorities of other states on a21reciprocal basis in accordance with the International Investigative Mutual22Assistance Act.23As to the multilateral approach, we highly valued the
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1contributions made by the OECD for many years.  Earlier this year an OECD2Council Recommendation Concerning Effective Action Against Hard-Core Cartels3 was adopted.  In this respect we appreciate the initiative taken by Mr. Klein as a4 proposer of this Recommendation.5Following the Singapore Ministerial Meeting in December61996, the Working Group was established at the WTO, and we have been7discussing interaction between trade and competition.  Professor Fels and8Professor Jenny, and other members here, have eloquently described the9interaction between trade and competition.  At the coming session of the Working10 Group later this month we are going to discuss how the Working Group should11proceed from now on.12Japan is in favor of continuing the work of this Working13Group for another half year.  Since the Working Group is regarded as an14educational process, as Professor Jenny mentioned, we should take up any issues15which any member raises concerning all aspects of interaction between trade and16competition.  This will include trade measures affecting competition as well as17competition policy affecting our trade in a balanced manner.  We also consider18that the possibility of making international common rules on competition law and19policy should be studied, examining merits and demerits of such rule-making.20Thank you, Mr. Chairman.21MR. RILL:  Thank you very much, both of you.  And22Commissioner Itoda, on behalf of Professor Janow and myself, we appreciate your23 comments of being willing to be able to come back and deal with us after the SII 
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1talks.  I think they were productive.2I'd also like to acknowledge the presence of another one of3our leading negotiators in the SII talks: former Commerce Under Secretary4Michael Farren, who was also a core representative of the U.S. in those talks. And5I think he came here just to hear you.  But I think we can get into the discussion in6more detail as we go along.7I would put on the table a question you may want to refer to8later: that is to get a little deeper into your concept that the notion of positive9comity requires a balance of law and a balance of enforcement process between10the parties to the agreement.  It would be interesting to hear a little more about11that.12But for now, if we could go to President Fernando Sanchez13Ugarte from the Republic of Mexico.14MR. UGARTE:  Thank you, Mr. Chairman. I want to thank15the International Competition Policy Advisory Committee for the opportunity16granted to me and the Federal Competition Commission of Mexico to express our17views.  We consider these very important topics today with regard to future18developments in competition policy.19As it has been noted here, the world is becoming increasingly20globalized as a result of, on one hand, the national trade agreements that have21 removed many of the previous restrictions on the free flow of trade and investment22 between nations and on the other hand, due to the unilateral decisions taken by23many countries convinced that it is in their own best interest to have markets that 
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1are free and efficient.  This process has not been concluded yet.  There are still2 many obstacles and the ghost of protectionism is still haunting the world and3 ready to take over if we let it loose.4Globalization represents a major improvement for the5economic well-being of the world as a whole.  It poses, however, important risks6that have to be reckoned with and managed. The financial crisis that we are living7 with today is a vivid example that globalization can lead to rapid transmission of8 the financial problems in one country to its trading partners first, and then it can9extend rapidly to other countries, even affecting the world economy as a whole.10It's true for the financial sectors and markets; I think it's also true for other11markets.  That is why competition policy has to be analyzed now in a more global12context.13Globalization means among other things that the world14markets are interconnected.  We cannot now treat the national market of one15country as isolated from the rest of the world.  The same is true for an economic16agent.  Major corporations of the world operate today globally and they design17strategies to face competition across national borders.  This is all very relevant18for the design of competition policy on a global economy.19Let me mention now briefly what in my view are the most20relevant issues regarding this subject.  First, I think that competition policy has21been less active than other policies like trade and investment policies, regional22integration, intellectual property protection, and deregulation in promoting world23competition.  The scope of competition policy has been, with some important
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1exceptions, strictly national and the role of the competition authorities has2remained mainly territorial.  The advocacy role of antitrust authorities has been3mainly restricted to the promotion of competition within national borders.  I think4it is time that this changes, that competition policy takes a more active role in the5 promotion of world integration.6Second, even though markets are becoming increasingly7global, antitrust problems are involving more than one country at a time. We are8living today with a trend of mega-mergers, where multinational corporations are9joining forces with other very large multinational corporations to become more10competitive and so that they can face the challenges of global competition.  This11represents major efficiencies that can be directed in this process, however, it also12poses serious risks for competition.13Many mergers of today involve more than one national14jurisdiction and this calls for a concerted action among the respective antitrust15authorities.  Some important examples have been pointed out here.  In the case of16Mexico, I think that we have been having very interesting cases involving mergers17between companies doing business in Mexico and the United States.  One example18that I find particularly interesting is the one of two railroad companies: the Union19Pacific and Southern Pacific.  It is interesting because it really does not represent20    two companies that are doing business in Mexico.  These are companies that are21strictly doing business in the United States.22However, the impact of this merger was significant to Mexico23because most of the railroad traffic between the United States and Mexico is 
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1conducted by these two railroads.  So I think the fact that the U.S. authorities took2remedial action, not only with regard to competition issues that were relevant for3 the U.S. but also for international trade, I think was quite significant or quite4 important.5Third, as markets become integrated and corporations become6multinational, monopolistic practices become global.  The cartels of today are not7limited to the borders of one specific country, so the enforcement of competition8laws requires a multinational effort.  Certain business conduct taken by an9economic agent in one country can now affect the markets of other countries.  And10there is no way in which effective enforcement of competition law can be done11without international antitrust enforcement.  As a result, restraints in effective12world markets pose a major threat to the overall efficiency of the world economy13  as a whole.14As Joel Klein was pointing out, one interesting case that15illustrates this point is that of Archer Daniels Midland.  It basically had serious16implications for international competition and I think that cases like that will17become more prevalent as globalization progresses.18Fourth, the relative size of corporations is growing over time.19What seemed a large corporation five years ago today is really a very small20company.  Business size is especially relevant for countries that are relatively21small or even medium-sized countries.  It becomes harder and harder to counteract22anticompetitive acts of major multinational corporations that in many instances23 are probably even larger than one country taken individually.
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1So these major corporations, just by mere size, can threaten2to stop the economic progress of a small or even a medium-sized country so that3antitrust enforcement can become very vulnerable to the threats of multinational4corporation.  This again calls for the concerted action of respective national5antitrust authorities.6The fifth point I want to raise has to do with the criteria that7different antitrust authorities apply in order to determine whether in different8situations there is a violation of their respective laws.  And I think that even9though there has been great progress in this regard, the view that most antitrust10authorities apply is still restricted to the national markets and to the national11economies.  And I think that a lot of efforts should be made in order to standardize12more the procedures used by antitrust authorities on the one hand, but also make13these more compatible with international trade and the process of globalization14that we are living today.15Sixth, and this is a point that has been raised by many of the16previous speakers, we have very different and contradictory standards to judge17anticompetitive practices.  If these take place within the corners of one country,18we apply antitrust legislation, or when these anticompetitive practices takes place19 across countries, we are applying antidumping legislation, and we have here a20 problem of asymmetrical treatment and of different methodologies being applied21 for what appears to be a similar problem.22	I know that this is a very touchy and sensitive issue.  I don't23want to waste more time because it's complicated.  One suggestion I could make is
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1instead of thinking that one law should prevail over the other, maybe we should try2to harmonize the methodologies that are being used under antidumping legislation3 and competition law so that they both become compatible.4Seventh, most of the multilateral trade agreements that are5being signed today do not contain specific or very elaborate chapters in6competition.  And most of the cooperation between competition authorities is7taking place outside these trade agreements.  This, however, is changing very8rapidly and regional world trade organizations are becoming increasingly9concerned about the effect of competition restraints of world trade and investment.10 Here I think it's also interesting to bring out the Mexican experience.11First, with respect to NAFTA.  As you know, NAFTA12contains a very limited coverage of antitrust problems.  Article 1504 of NAFTA13is, I would say, limited.  And the experience that we have had under this Article is14still, I would say, unsatisfactory.  We have had of course opportunities to meet15twice a year and that's welcomed.  However, I think that the progress has not been16what I expected and I think that more work should be done under Article 1504.17Mexico is currently negotiating several trade agreements,18including one with Israel and another with the European Community.  And I would19 say that, in all these agreements we are considering more explicit antitrust20provisions and I think that this is going to be very important for the deployment of21a more effective antitrust policy in accordance with trade and liberalization22remedies.23Eighth, national antitrust legislation is usually permissive
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1about monopolistic practices conducted by nationals of one country that take place2outside the country's own territory.  The majority of nations do not penalize such3practices and some nations even allow some protections to take place.  I think this 4is very damaging in the case of horizontal restraints, probably less so in the case5 of vertical problems, and I think that this could change.  And I know it's also6politically very touchy, but it's a step that sooner or later we have to take.  We7 cannot condone anticompetitive actions that are taken outside the jurisdiction of8one country.  I think that it is important to change our views.9My final comment has to do with how markets are changing,10how technology is influencing the shape and the working of these markets.  We see11today that it's very difficult to predict how new technological developments are12 going to change international trade and therefore I think that many of the positions13 that antitrust authorities are taking today are going to be influencing how markets14 will develop in the future.  The example here is of course Microsoft, a case that is15being reviewed by the American antitrust authorities.  And I think that you have a16  great responsibility here.  Whatever you decide is going to really change the face17of electronic commerce forever.  So this is an important responsibility and I know18  that you have the knowledge and the depth of view to take a good decision, but I19think that it will be important that you take the viewpoints of other countries, of20  other antitrust authorities, in understanding what problems may arise in other21 jurisdictions regarding the decisions you are going to take in this specific case.22So I think that my comments can be summarized into one or23two suggestions.  The first one has to do with cooperation, international
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1cooperation.  I think that even though cooperation in antitrust matters has been2limited, has been mainly bilateral and that still many countries, including Mexico,3 do not have bilateral antitrust agreements, I think it is important that this process4 of international agreements becomes more extensive and that countries undertake 5these kinds of agreements at a faster pace than we are seeing today.  And I think it6 is important that the U.S. takes an active role in promoting bilateral agreements.7  Mexico is willing and wants to start negotiating an agreement with the United8States, and I think that it's important that the U.S. takes a very active role in this9regard.10Second, with regard to regional agreements, I think that it is11also important that these agreements do incorporate more extensively these12antitrust remedies and disciplines and that antitrust policy becomes an integral13part of the overall trade liberalization process.  And here again I think that the14agreement that Mexico is apparently negotiating with the European Union is a15good example, and I think that we should encourage that kind of approach.16Finally, with respect to multilateral cooperation, I think that17the OECD is doing a very good job in getting a good number of antitrust18authorities together, exchanging views.  And I also think that it is important that19the World Trade Organization becomes active when reaching a consensus20regarding how to incorporate antitrust remedies and disciplines in different trade21agreements and the overall conduct of international trade.22Mr. Klein mentioned at the outset of this hearing, that this is23a cartel of antitrust authorities.  Of course, we are the authorities, and nobody can 
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1challenge what we are doing here.  I think that given the process of globalization 2that we are living in today, it will be very difficult to counteract the kind of3anticompetitive behavior we are going to be facing with the integrated world if we4don't have this kind of setup where the antitrust authorities work together for the5 same purpose, which is really trying to counteract anticompetitive practices but6taking not only the national economy perspective but the world as a whole.7Thank you.  Thank you very much for your time.8MR. RILL:  Thank you very much.  And we look forward to9your continued participation. 10	Our next speaker will be Luis De Guindos of Spain.11MR. DE GUINDOS:  Let me start first of all by thanking this12Committee for the opportunity to address and participate in such an important and13I am sure valuable meeting.  In this, I promise you, brief intervention, I want to14deal with two issues in particular.  The first of these is how we as competition15authorities can enforce and enhance competition in an increasingly global16economy.  And the second, and much more specifically: the phenomenon of mega-17mergers.18In the last few decades, national markets have been19increasingly opened up for trade and foreign investment, and have undergone20far-reaching liberalization processes.  As market forces come increasingly to the21fore, so the demand for antitrust action augments. Competition policy tools have22to be developed and competition authorities have to enforce them more actively,23particularly in those sectors where liberalization is underway.
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1At an international level, the liberalization and deregulation2of national markets, along with technological revolution, have opened the door to3a globalization process with wide-ranging repercussions.  As it has been stated4previously here, as internationalization steps up in the corporate sector, firms5increasingly operate in more than one country.  So logically their conduct and6practices can affect more than one market.  It is obvious, then, that the control of7a prohibited practice or the authorization of a particular conduct may involve8national competition authorities from different countries or jurisdictions.  And this9 makes cooperation between competition authorities increasingly necessary.10It is important to stress, however, that cooperation is not so11much about firms from different countries as about the impact of determined12conduct on consumers in different national markets.  And the market effect of such13conduct must be the key issue in deciding the need for cooperation.14Before analyzing the scope and instruments of cooperation, it15 is useful to consider the main material restrictions we now confront and will16continue to be faced with in the near-term future.  These are primarily: first, that17the majority of cases we deal with have no significant impact on different national18 markets; second, that not all countries are equally affected by plurinational cases;19and, finally, that the amount of material and human resources devoted to20competition policy varies from country to country.  And we have to be realistic on21this score:  the lack of resources is often a serious obstacle to cooperation22  development.23But despite these limitations, it must be clear to everyone that
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1as globalization intensifies, cooperation between competition authorities becomes2 more essential than ever.  So what steps do we need to take to enhance3international cooperation?  From our standpoint, the main ideas behind4cooperation guidelines should be as follows.  Firstly, in the vast majority of cases5cooperation is still at a very "primitive" stage, and there is still enormous scope6 for the development of relatively simple but productive cooperation mechanisms7on an informal basis.8Secondly, the number of formal bilateral agreements9concluded is, likewise, relatively small considering the number of countries with10some kind of antitrust system in place.  Bilateral cooperation, therefore, can and11should be developed further.  We feel its most important advantages are that12cooperation can focus on the areas of greatest need and be adapted accordingly.13In this way scarce resources can be better allocated.  Additionally, bilateral14mechanisms and agreements are the starting point for more ambitious projects. 15We should remember that in other fields, such as trade relations, multilateral16cooperation systems were only developed after decades of bilateral agreements.17Differences between systems make multilateral cooperation18an even more difficult task.  But in any case, the directions to work in are the19following.  One, to look for common core principles, at least with regard to the20anticompetitive conducts that cause most harm.  Some of these principles could be21 extrapolated from the mechanisms used in bilateral agreements.  Two, to work22towards the convergence of methodological approaches in dealing with antitrust23cases, starting from the exchange of experiences and information-sharing in
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1general.  And finally, as far as possible, to set up cooperation mechanisms along2the lines used in bilateral agreements.3When discussing cooperation in the antitrust field, a number4of factors must be taken into account.  For example, the varying nature of the5institutions applying antitrust rules and also the goals and the nature of those6rules, remembering that their essential aim is to prevent conduct which distort the7function of the market and ultimately to safeguard the public interest from the8 illicit action of firms.  And of course we also have to bear in mind the precise9boundaries of each national system.  Each country imposes its own limits on the10exchange of information and the defense of third-party rights.  Some cases may11even involve questions of national interest.  And finally, cooperation can never12proceed at the expense of national sovereignty.13Bearing in mind these principles and these realities, we do not14see the WTO as the best forum for channeling multilateral cooperation in15competition matters.  WTO is not the natural home of competition authorities, and 16our view in this respect is that the OECD is a more suitable forum to work on17common principles and approaches in the competition field.  The ends and means18of the WTO are not the usual ones for antitrust policy and may even be in flat19contradiction, as the WTO's aim is to foster international trade through the20dismantling of protectionist trade regimes on a reciprocal basis.21We do not therefore accept the idea of a multilateral22framework within the WTO, whereby governments agree to apply competition23policies in line with a set of common rules, backed by the appropriate
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1problem-solving mechanisms when these are not properly observed.  In short, we2do not understand multilateral cooperation in antitrust matters as an instrument to3force countries to reduce market entry barriers arising from the anticompetitive4practices of firms.  We believe this is not the only aim of multilateral cooperation,5 nor the best means to achieve the goals we have set ourselves.6Finally, let me say a few words on the mega-merger7phenomenon.  The idea has taken grip that we are about to see a proliferation of8merger operations between big-sized firms.  The competition authorities have been9 called on to take a more active role in this process in two different ways, by10enforcing control instruments and by strengthening international cooperation. The11competition authorities need to be both wary and prudent in any intervention they12make. Mega-mergers are a natural consequence of the globalization process.  As13markets become wider, firms seek to increase their size to preserve their market14power and capitalize on potential economies of scale and scope.  So mega-mergers15 in this sense are the fruit of globalization.  This phenomenon may turn even more16acute in the case of the European market, as monetary union kicks in.  The17 implementation of a single currency speeds up the unification of markets and18therefore adds further fuel to the merger trend.19But there are other factors potentially responsible for the20alleged mega-merger wave.  For instance, companies too are exposed to wealth21effects which drive them to take over other firms, particularly in the mature phase22of the business cycle.  Consequently, we must not forget that merger rounds23 normally entail a cyclical component.
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1To conclude, then, mega-mergers must be regarded as a2logical consequence of a whole range of factors, and, importantly, as a symptom3of market dynamism in pursuit of ever greater efficiency.  Of course, the4competition authorities must be alert to the possible creation or enforcement of5dominant positions as a result of such operations, and cooperation between6competition authorities must be welcomed as a useful and necessary means to this7end.  Nevertheless, we must also take care to avoid any kind of intervention that8could deter market dynamism or prevent firms from improving their economic9efficiency.  Otherwise, there is a very real risk that we as competition authorities10 could actually impair economic growth and damage consumer welfare.11Thank you very much.12MR. RILL:  Thank you very much.  Those are views that I13think will turn out to be somewhat controversial as the discussion goes forward,14for which I thank you.  Our final speaker, I was going to say this morning but it's15no longer morning, is Ignacio de Leon, the superintendent of the ProCompetencia16in Venezuela.17MR. DE LEON:  Well, first of all, I would like to express my18deepest appreciation for being invited to this very interesting international19conference on competition.  And I will have to say first that I will try to be very20brief.  I would try to put my ideas on competition in line with everyone's need to21go for lunch.  I'll try to subject myself to the schedule.  There have been many22interesting things that have been said before and I would like to address them23again. This is a problem of being the last speaker at a conference, speaking on
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1behalf of Venezuela.2MR. RILL:  We'll reverse the alphabet the next time.3MR. DE LEON:  Let me set the stage first of all for you who4don't know perhaps the Venezuelan experience.  Venezuela has a competition5statute since 1992, and there has been an interesting enforcement procedure that6has been in place in Venezuela dealing with all antitrust areas and mergers ever7since.  At the supranational level, Venezuela is bounded by Decision 285 of the8Andean Pact.  This decision resembles Articles 85 and 86 of the Treaty of Rome in9 the European Union.  However, this is a decision that has not been enforced10effectively because of internal contradictions in the decision itself, particularly the11fact that when this decision was made it was made to very closely resemble the12Andean antidumping decision, Decision 283, because there wasn't guidance as to13 what competition policy was about at the time. That was in 1992.14This decision is in the process of being revised nowadays,15according to the new thoughts.  What I would like to emphasize here is the fact16that, from a transnational point of view, Venezuela -- although subject to Decision17285 -- is not subject to an effective, if you allow me, international set of rules.18That probably was not a problem beforehand but nowadays it is because our19 international trade, particularly with Colombia, our principal commercial partner,20 has increased dramatically over the years of this last decade.  And that probably21emphasizes at the microlevel what the consequences are of not having an effective22 transnational decision governing cases that would involve restrictions on trade23imposed at this level.  To explain the implications of what I'm saying here, maybe
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1I should give you an example, because we have many examples dealing with this2problem.  But a sugar case is the one in particular that I would like to emphasize3here.4This case basically refers to a restriction which is being5imposed by sugar cane refineries in Colombia and in Venezuela, according to6which they have divided our national markets.  The interesting thing here is that7Colombians are more efficient in producing refined sugar but they don't sell it8refined, they sell raw sugar to our Venezuelan refineries, and in this way they9allocate our national markets.  What is even more interesting at this point is that10this agreement has been reinforced by a government restriction that has been11implemented by the Colombian government according to which no sugar can be12imported from Venezuela into Colombia.  That is a restriction which has been in13place since Venezuela, for reasons that have nothing to do with our competition14rules, decided to open up our trade with Central America for the import of refined15sugar.16What I'm trying to emphasize here is that there are two17problems in this matter concerning international competition.  The first one is the18need for effective cooperation, or even better, a supranational body dealing with19these restrictions.  If that is not possible, cooperation among national antitrust20agencies will perhaps provide a solution for that.  And also the second important21thing here is that probably this example which is being reproduced in other22sectors, like maize and rice, and now even in services like transportation, has been23 a consequence not only of the agreement entertained by private firms, in this case,
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1sugar refineries, but also it's been reinforced by restrictions that are being put in2 place by governments themselves.3In fact, we have had a tremendously hard time convincing our4government, the Venezuelan government, not to reimpose or block our imports of5sugar from Central America because that's the only way in which in the short run6we can see that this problem does not get even worse.  So the question now that I7would like to address here, is to what extent is it possible for national antitrust8agencies to cooperate and develop this cooperation more intensively.9What I see is a problem, a Prisoner's Dilemma if you will10allow me, whereby each national agency might be tempted to give preferential11treatment to the respective national firms.12The first solution, as I said before, is to create a13supranational body, surveying the integrated market, and that probably is the14reason why the European Union experience is so exceptional at this point in15having provided a tremendous breadth of solutions for problems involving16transnational cases within the European Union.17Now, the problem with implementing this solution in cases18where there are no supranational institutions in existence, is that creating a19common appraisal of substantive issues affecting competition might be somehow20difficult because it entails a common perspective on public and economic policy21issues which are unlikely to be found outside of the realm of an economic22integration process.  But we are faced with the problem of globalization anyway23and there has to be some answer for this.  So the second best solution, in my
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1opinion, is of course cooperation among antitrust agencies.2	However, this is not so simple.  Because in order for this3cooperation to be successful, as I see it, there is a great demand for independence4on the side of each national antitrust agency from its own government, so that the5Prisoner's Dilemma problem that I mentioned before is not being reproduced via6the influence exercised over antitrust agencies by their respective ministry.7Probably this is something that is not a big problem in developed countries, but in8 developing countries, I can assure you that we are constantly threatened by the9influence that our governments want to exercise on our activity.  So the10competition agencies must be isolated from that influence somehow.11And on the other hand, I see two further problems dealing12with the harmonization of substantive principles.  The first one, of course -- I13should say both of them deal with the definition of competition itself.  There is no14 consensus really about what competition is.  Is it a process of finding new15information and markets, or is it a structural question, or what is it in fact?16The first aspect of this has to do with the nature of the17restrictions introduced because on this side, there is a tendency to assimilate18competition or anticompetitive conduct with those restrictions introduced by firms19exclusively. And in our own experience in Venezuela, and probably that happens20as well in other developing countries, the fact is that, as I mentioned before, our21restrictions on trade are very frequently a consequence of government-imposed22restrictions and the sort of regulation that prevails in our institutional23environments.  This is why Venezuela has taken a tremendous interest in 
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1developing, for example, white papers, reports exploring the opportunities of2enhancing competition by restructuring the regulatory environment in particular3sectors like electricity, transportation, and other sectors, as well in our culture,4 even education, in order to make public schools compete among themselves.5And on the other hand, and this applies at the international6level, a thing that one has to tackle here is the forbidden word:  antidumping.  And7 the question here is to what extent antidumping and countervailing policies are,8particularly antidumping, are dealing with restrictions imposed on fair trade, or to9what extent do they create another restriction on trade?  This is something that10deals with one of the aspects that I see in which there is no substantive11harmonization so far and which will have to be dealt with if we really want to12harmonize our substantive principles and antitrust matters internationally13speaking.14The second one has to do with a particular concern that I15have in the sense that I don't see it very well reflected in the concerns of16innovation within antitrust theory. The analysis of antitrust generally focuses on17markets which are already known, but innovation refers to the creation of new18markets, new products, that therefore deal with what I would call unknown19information.20And of course, I am very well aware that antitrust theory has21evolved over time in order to deal with this aspect, but still I don't see it very well22 reflected in the sense that, as I see it, innovation process is basically one which is23evolving and changing constantly, whereas the dynamic analysis enforced on their
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1antitrust theory basically deals with a close-ended view of the world in which the2authority has all the information needed to enhance social welfare.  So if you3allow me, there is an epistemological question involved here and this is a question4that hopefully will be tackled by the WTO Working Group and their studies for5 the ongoing process of analysis of international antitrust and innovation.6So in closing, my guess is that it is possible to look for7consensus on different grounds, at least in the short run, on grounds not dealing8with substantive antitrust principles. It is unlikely that that could happen.  Of9course it is desirable that it will be the case.  But in this area perhaps it's more10realistic for all of us to think about setting duties for international agencies to11exchange information about enforcement practices which might create sort of a12convergence process in order to think about harmonization of these principles in13the near future.14Secondly, perhaps, there is an even more fertile ground for15harmonization in those aspects dealing with the procedural aspects of competition16enforcement, basically the way in which the rule of law is respected.  Because here17we do have a consensus about the need of having a rule of law and the way in18which we enforce our competition laws.  And that will cover, of course, things like19data collection, access to evidence, minimum length of procedures, the evaluation20of the evidence presented by the antitrust authority and the21parties, and the transparency of the procedures.22As a conclusion, I would say that successful cooperation on23the international level among antitrust authorities depends on their commitment to 
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1the goals realistically set, and we can advance in that direction.  But there are still2 many questions ahead of us to be resolved at the practical and theoretical level,3and these questions will have to be addressed before further success is achieved.4Thank you very much.5MR. RILL:  Thank you very much.  I look forward to your6further participation as well.7	That concludes an extraordinarily valuable presentation of8views.  I think we want to resume in 30 minutes so that we don't lose the9participation of those who will proceed with our next roundtable on cooperation10agreements, specifically, to discuss cooperation agreements, a roundtable panel11that will be moderated by my colleague, Professor David Yoffie.  We can start at121:30, if that's agreeable.  I think it may be more difficult on the audience than it is13on the panelists, but the panelists have worked harder.14(Recess.)15MR. RILL:  In the interest of getting the most benefit from16Allan, who I think is on his way in, and Karel, both of whom must leave somewhat17early, what I would like to do is promptly turn it over to Professor David Yoffie,18 who will moderate the next panel on cooperation agreements.  The panelists will19  be from competition authorities who have in place cooperation agreements with20the United States:  Allan Fels, Konrad von Finckenstein, Karel Van Miert, and21 Dieter Wolf.  But I would invite those of you who have comments, including22members of the Committee, relating to the pros, cons and recommendations for23international cooperation agreements simply to put your namecard up at any time 
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1and David will recognize you.  And I'd also like to acknowledge the arrival of2 Jerome Gallot, the Director of the DGCCRF, from the Republique Francais, who3 will make some comments at the conclusion of this panel on cooperative4 agreements.  So David.5MR. YOFFIE:  Thanks, Jim.  Let me also start by saying that6we will be rejoined by other participants who spoke this morning after about an7hour or so, but the purpose of this roundtable discussion is to hear from those8jurisdictions specifically who have negotiated bilateral agreements with the United9States.  And what we are interested in hearing about is your perspective on your10jurisdiction's experiences with these bilateral agreements, and more specifically,11 what are the next steps that we should be looking for in international cooperation.12This panel is designed much more as an open discussion,13rather than just recitations, and for more interaction between all of the panelists14and the members of the Committee.  I would also like you to feel free to compare15your experiences in bilateral antitrust enforcement with the United States with any16 experiences you've had with other jurisdictions to the extent they are relevant.  Let17 me pose the specific questions I would like to throw out to the four of you for18consideration.  Some of them are fairly obvious.19First, the Committee would find it beneficial to understand20where you have seen both positive and negative experiences in enforcement21cooperation with your existing bilateral agreement with the United States.  In22particular, we are interested in getting some sense of to what extent has the23bilateral agreement been necessary to provide for that enforcement?  In other
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1words, is it possible that we could have had similar enforcement, similar2arrangements without these agreements in place?  That would help us identify3which parts of the agreements are most useful for going forward.4In addition, we would like to know which of the areas have5the greatest need for cooperation.  There are a variety of different areas within6antitrust enforcement, some which require agreement and some which may not.7Are there bilateral instruments that are necessary or desirable means of8strengthening cooperation?  In particular, are there things we need to do vis-à-vis9sharing confidential information or waivers that might be useful more broadly in10the antitrust enforcement context?11Lastly, I'm going to throw out another question which I'm12posing specifically to the Committee, which is to think about positive incentives to13 try and induce greater cooperation between the United States and all other14jurisdictions.  In particular, Konrad von Finckenstein raised the question this15morning about treble damages and the problems that they cause.  One of the16questions that we have raised in this Committee is the idea of whether there is a17way for the United States to share some of the penalties or fines that are assessed18as part of these antitrust actions with the cooperating agencies, and would those19kinds of positive incentives be useful and induce changes in behavior as part of20our ongoing activity.  So on that note, I would like to throw out these questions to21 you.  I see that on that last comment, people were either positive or negative.22DR. STERN:  Particularly in developing countries, we heard23this morning that there was a need for greater budgets, et cetera.
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1MR. RILL:  I don't see a lot of laughter from the Department2of Justice right now.3MR. YOFFIE:  I should say the Department of Justice has not4 received this idea enthusiastically, nor are we certain that the U.S. Congress will.5MR. RILL:  But Joel also said this morning that this is an6independent committee.7MR. YOFFIE:  But the idea is rather than just looking for the8negative implications of antitrust, are there more positive things we should share9between the United States and foreign agencies?  And of course one would assume10 that would go both ways, not just for the United States paying money but11potentially the other way as well.  Let me just open the discussion, open up the12floor.  I don't have any particular order for the panelists, so I will allow them to13volunteer as they see fit.14PROFESSOR FELS:  I happen to be first on the list so I will15say something and let me say that we'll be in on the sharing of the treble damages16in Australia.  Nothing would delight us more.17I have a paper here which I'll also give to you as I did this18morning, and perhaps because it's the first one after lunch, I'll just begin with a19story.  When I was first appointed to my job in 1991, I called on Anne Bingaman20to say how Australia was always willing to cooperate with the United States in21every respect.  Now as you know she is an extremely polite person and it took her22at least two minutes before she politely mentioned the Westinghouse case in23which, once that case was underway, Australia, and a whole lot of other countries,
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1passed blocking legislation to make sure that the extraterritorial reach of U.S.2 antitrust law did not apply in our country or any other.3Fortunately, I had in my pocket a copy of the Mutual4Assistance to Business Regulation Act that we had just passed.  This legislation5facilitates cooperation between enforcement agencies in the business regulation6area between Australia and the rest of the world, and which Anne took away and7read and I believe it was one of the important bases for your own legislation,8where legislation is pretty similar in our country and yours.9We actually had this legislation quite a while ago, but what10essentially happened in Australia was that in areas like securities law, tax law,11and so on, it's just been taken for granted that there would be this type of12cooperation.  For some reason, it lagged in competition law.  It so happened that13when we were drawing up our laws, the people writing it were people who dealt14with competition law issues and so they just automatically wrote in provisions15about competition, taking it for granted that it would be something that everyone16would agree about, but it turns out that it is for some reason far more17controversial than some of the other areas.18So let me just go through the short paper that I have19prepared.  Obviously mutual assistance in enforcing antitrust laws is an important20recent development linked with globalization which leads to a greater likelihood 21that the illegal aspects of a single course of anticompetitive conduct may occur in22more than one country.  Similarly, information, including evidence or individuals23who can assist investigating illegal behavior, may not be located in the same 
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1jurisdiction in which the contravention occurs, so there just have to be ways in2which competition agencies can help investigate contraventions that extend into,3or occur in, other countries.  The Agreement between Australia and the U.S.A. is4designed to take up such a role.  The status of the Agreement incidentally, is that5in Australia we have to follow some rather complicated processes to get the6agreement of the state and territory governments and various other people.7We have gone through all of those stages, and there have been8 no substantial objections to this process, and the government is about ready to9 sign.  It's not signed off yet but it's about ready to sign, and the fact that we had10an election recently, unfortunately, caused a further delay.  But we are hopeful11that the final signature will be attached very, very shortly.12This Agreement demonstrates our commitment, as well as the13 U.S.A.'s to two-way cooperation in the enforcement of competition law.  It will14facilitate the exchange of evidence, enable the parties to assist each other's15enforcement activities and investigation of possible breaches of the law.  It16provides for each country's competition authorities to cooperate in obtaining17evidence of anticompetitive activity, to facilitate administration and enforcement18of each country's competition laws, and notify the other party's competition19authority about anticompetitive activities that may warrant enforcement activity.20This ensures that information, evidence and witnesses that may be in Australia,21yet are needed to prove an antitrust case that damages competition in U.S. markets 22or hurts U.S. consumers, are available to U.S. antitrust agencies, and of course23vice versa.
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1Australia's law, incidentally, has a whole bunch of other laws2 about consumer protection but they are not part of this Agreement.  We did have3an Agreement in 1992, or we still do, between Australia and the U.S., relating to4cooperation on antitrust.  The new Agreement builds on the earlier one, and on the5generally close relationship that has developed over the years between the DOJ,6the FTC and the Australian Competition and Consumer Commission.  We already7have informal mutual assistance arrangements with New Zealand and with Chinese8Taipei.  Because of the requirements of the U.S. International Antitrust9Enforcement Assistance Act of 1994 such arrangements with the U.S. need to be10in the form of a treaty.11Obligations.  The proposed Agreement requires that each12party's antitrust authorities shall, to the extent compatible with that party's laws,13enforcement policies and other important interests, inform the other party's14antitrust authorities about activities that appear to be anticompetitive and that15may be relevant to, or may warrant enforcement activity by, the other party's16antitrust authorities.17	Furthermore, each party's antitrust authorities shall, to the18extent compatible with that party's law enforcement policies and other important19interests, inform the other party's antitrust authorities about investigative or20enforcement activities taken pursuant to assistance provided under the Agreement21 that may affect the important interests of the other party.22Of course, nothing in the Agreement requires the parties or23their respective antitrust authorities to take any action inconsistent with their
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1mutual assistance legislation.  So as to the types of assistance, antitrust2authorities may request assistance to provide or to obtain evidence in relation to3breaches, or potential breaches, of their respective antitrust laws.4Particular assistance contemplated by the proposed5Agreement includes, but is not limited to: disclosing, providing, exchanging or6discussing antitrust evidence in the possession of an antitrust authority; obtaining7antitrust evidence at the request of an antitrust authority of the other party,8including taking the testimony or statements of persons, or otherwise obtaining9information from persons; obtaining documents, records, or other forms of10 documentary evidence; locating or identifying persons or things; executing11searches and seizures and disclosing, providing, exchanging, or discussing such12evidence; and providing copies of publicly available records, including documents13or information in any form in the possession of government departments and14 agencies of the national government of the requested party.15Now, it's to be noted that assistance may be provided under16the proposed Agreement whether or not the conduct underlying a request would17constitute a violation of the antitrust laws of the requested country.  In other18words, the fact that it's not illegal in our country doesn't mean we can't cooperate.19Importantly, the Agreement provides that antitrust evidence obtained pursuant to20the Agreement shall be used solely for the purpose of mutual antitrust enforcement21    assistance between the parties.22The only exceptions are where such use or disclosure is23essential to a significant law enforcement objective and the executing authority
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1that provided such antitrust evidence has given its prior written consent to the2proposed use or disclosure, and where the antitrust evidence obtained pursuant to3this Agreement has been made public consistent with the terms of the Agreement.4The proposed Agreement shall not give rise to a right on the5part of any private person to obtain, to suppress or to exclude any evidence, or to6impede the execution of the request made pursuant to the Agreement.  Further,7nothing in the proposed Agreement compels a person to provide antitrust evidence8 in violation of any legally applicable right or privilege.9However, the parties to the Agreement may decline requests10for assistance on the grounds, amongst other things, that execution would exceed11the party's reasonably available resources that wouldn't be authorized by domestic12law, or that it would be contrary to the public interest of the requested party. 13Turning to confidentiality, under the proposed Agreement14U.S. antitrust authorities and the Australian Competition and Consumer15Commission will be able to share information obtained in the course of their16investigations.  The agencies may also provide each other with investigative17assistance in order to obtain information, evidence, or testimony for use in18antitrust matters.19However, in all instances, the information is subject to strict20provisions for the protection of confidentiality and is to be used only for law21enforcement purposes.  The Agreement sets out the manner in which assistance22can be provided, and the security, if necessary, which will be afforded such23information.
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1In accordance with the requirements of the U.S. International2Antitrust Enforcement Assistance Act of 1994, the proposed Agreement contains3strict provisions to ensure that commercially sensitive information is protected.4 The proposed Agreement sets out at some length the procedures designed to5prevent the unauthorized release of confidential information, and provides that6each party shall to the fullest extent possible with its laws, maintain the7confidentiality of any request and of any information communicated to it in8confidence by the other party under the Agreement.9Further, the Agreement provides that each party shall oppose,10to the fullest extent possible consistent with its laws, any application by a third11party for disclosure of confidential information provided in accordance with the12 Agreement. 13	By entering into the proposed Agreement, each party14specifically confirms that the confidentiality of antitrust evidence obtained under15this Agreement is ensured by its national laws and procedures pertaining to the16confidential treatment of such evidence.  An annex to the proposed Agreement sets17 out relevant confidentiality laws.18Further, it's agreed that unauthorized or illegal disclosure or19use of information communicated in confidence under this Agreement is a ground20for its termination by the affected party in accordance with certain procedures.21The disclosure of confidential information, or any information, may also be22avoided under the proposed Agreement by denial of assistance in whole or in part23on the grounds of public interest.  That provides a safeguard against any kind of
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1fishing expeditions.2I should just also briefly mention we have mutual assistance3arrangements in place with New Zealand and with Chinese Taipei.  We work4closely with the New Zealanders.  We have a cooperation and coordination5arrangement in place, and on a regular basis we exchange and provide information6regarding investigations and research, speeches, compliance education,7amendments to the law, human resource development, and corporate resources.8The assistance available under the Australia-New Zealand9arrangement includes: providing access to information in the files of the requested 10agency, including confidential files, except where that information can't be11disclosed in accordance with the law of the requested agency or where it would12require the disclosure of information which has been provided to the requested13 agency on the basis that it must not be disclosed -- incidentally, we couldn't pass14on information obtained under the U.S. treaty to New Zealand; preparing witness15statements, formal interviews and obtaining information and documents on behalf16of the requesting agency; and coordination on behalf of certain enforcement17 agencies.18That operates concurrently with the mutual assistance laws19that exist between Australia and New Zealand and also with the OECD20agreements, and it ties in with more general agreements between Australia and21New Zealand on harmonizing business law. 22We signed an agreement between the two countries on23harmonizing business law as part of our close economic relations.  In 1990 we
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1extended the application of our misuse of market power -- or abuse of dominance2and monopolization provisions -- to markets in New Zealand, as well as Australia,3and they did the same.  This was complementary legislation.  As a result,4provisions against misuse of markets power extend to companies involved in5 trans-Tasman trade, whether based in Australia or New Zealand, irrespective of6where the conduct takes place.  Our court, the Federal court, can sit in New7Zealand and the New Zealand court can sit in Australia to deal with any action8under those provisions.9So that's a short summary of the Australian position and the10Agreement is actually embodied in some available material, which you may or may11not have had the opportunity to see, but which I have a copy of here.  Thank you12 very much.13MR. YOFFIE:  Thanks so much.  We can continue in14alphabetical order if you want.  So Konrad?15MR. VON FINCKENSTEIN:  Thank you very much.  I don't16have a paper like my colleague from Australia.  I thought this was a discussion17and we were going to share experiences; do let me do it along these lines.  We very18much value the agreement we have with the U.S., and as you know, we initialed19  one with the EU that will hopefully be equally well-functioning.20First of all, let me talk about our cooperation on criminal21matters.  We can exchange information with the U.S. under our law.  We can22actually give you confidential information for the purpose of advancing our own23investigation.  So, if in order to conduct an investigation in Canada, that means we 
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1need to release confidential information to you, we can do that.  And we have, of2course, the Antitrust Cooperation Agreement of '95 with the U.S., which provides3for notification, consultation, cooperation, and which we use quite actively.  And4finally we have the Mutual Legal Assistance Treaty, which is cemented on both5sides by domestic legislation and under which we can make a request to you to use6 your traditional procedures to seize evidence in the United States and vice versa.7You can make one to us, we can go to a Canadian court and request an order to get8the evidence for you.9Generally it works very well.  First, we are better able to find10out what's going on in a particular case.  Very often you have the information11before us or vice versa.  We have had criminal cases on both sides and we can12share that information.  We can coordinate our activities, we can coordinate the13 investigation, and coordinate the searches in order to avoid duplication.  And14sometimes we learn from each other how to approach cases, and how to conduct15certain activities.  There is a series of cases demonstrating that this cooperation16works, on the whole, very well.  We have had cases emanating from Canada, cases17emanating from the U.S., some of which have resulted in fines or convictions on18 both sides, some on one side or the other depending on where the activity took19place and where the evidence was.  And of course, it's a great help in terms of20     preventing any evidence from being destroyed.21On the not so positive side, timing is sometimes very difficult22 to coordinate because we have different procedures.  In our view, yours are more23 cumbersome than ours, and I'm sure your view is the reverse.  There is also a
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1problem of attitude that needs to be overcome.  It's an educational process.2Having enthusiastic investigators on a case now suddenly having to notify another3country and coordinating with them, throws them off their track.  It's a burden.4 It's a nuisance that you don't need, and so it's an incentive not to do it if possible,5 or to do it late rather than early.6This problem exists equally on both sides.  I'm not pointing7any fingers here.  It is just that one has to start thinking of these things in terms of8there being crimes committed on both sides of the border and laws needing to be9enforced on both sides.10And then there is also the question of leniency.  A lot of these11cases result in guilty pleas on the basis of negotiations.  We have different12leniency policies, and they need to be coordinated.  We have to talk to each other,13et cetera.  There is no general rule, we do it on a case-by-case basis, but we have14had problems trying to work some of these procedural difficulties.15On the civil matter side, as I mentioned before, Section 29 of16our Act is really quite a barrier.  We cannot share any information with you17except for the purpose of our own investigation, and we cannot ask for any favors.18So effectively on the civil side, most of the cooperation is on mergers where we19notify each other and where we share information that is in the public domain.  We20do a lot of talking in terms of market definitions, and in terms of theories of the21 case, or trying to find out how a particular industry actually functions in the U.S.22 as opposed to Canada.23And we also work out our merger remedies, especially when
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1the case requires a remedy that can be effected in the United States.  We can2piggyback on a U.S. remedy and have it apply to Canada too; or it may require a3parallel consent order in Canada, but often the main negotiation is done in the4United States.  And thanks to this cooperation, very often the United States can5address implicitly Canadian concerns so that the resulting order can serve on both6sides of the border.  To the extent the case is the other way around, we can do the7same thing.  But the economic reality dictates that most of these cases create the8   biggest problems in the United States rather than in Canada.9One way of getting around this problem, not a very elegant10way, the lack of ability to exchange confidential information, is to ask the parties11to provide the information they have given us and we can ask to get a copy of the12filing made in the other jurisdictions, and we do that.  This is a very complicated13and a very expensive way of doing it but right now that's essentially the way we14deal with it.15As I mentioned in my opening remarks, I feel strongly that we16should address the IAEAA legislation and try to amend our legislation regarding17confidentiality so that we can take full advantage of that Act.18And we are also working, as I mentioned, in terms of positive19comity, on an agreement similar to the one that you have with the EU, because we20believe that in terms of antitrust, positive comity is a very elegant way to sidestep21extraterritorial questions.  And unfortunately they do arise quite often.  If we have22a mechanism that let's us avoid them, I think it works to both our advantages.23I hope that this addresses your questions.
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1MR. YOFFIE:  Thank you.2MR. VAN MIERT:  Thank you very much indeed.  First of3all, I would like to say that the agreement which was reached in '91 indeed helped4us a lot to develop cooperation, because one shouldn't forget that the European5Union being composed by 15 different Member States, each having national6competition authorities, it's not an easy thing, unless you have an agreement, and7a framework within which you can cooperate.  And I think in reality, it went8beyond what was expected at that time.  It went beyond what could be expected9because it allowed both sides, I think, to develop in good trust cooperation and10where our people learned to work together, as if it was something very natural.11And I'm often struck, myself.  Every week I have hours of12discussion with our officials about many, many files; every week there is at least13one file where we discuss the cooperation happening between us; eventually where14problems might occur.  But, also, I want to hear what is a relevant market15definition which is being used here, is a corporation functioning well?  It's just16part and parcel of our normal day-to-day work.  So I was astonished myself, I17must say, to discover that it went to such an extent already.18Now, as I indicated earlier, it doesn't mean that from time to19time we don't have problems, but perhaps let me first make another point.  One20should also be aware of the fact that we are updating our policies very much21together with the Member States.  We had a lot of discussions in recent years.  We22are now for instance indeed reforming, so to speak, our policy concerning vertical23restraint.  It will be completely different compared with what has been the case 
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1until now.  We modified also the merger regulations to some extent.  We are2thinking about other areas of competition.  So it's ongoing business and we feel3very strongly that after our experiences we need now to update our policies, and in4doing so, we obviously will take into account the experience which happened5elsewhere, in particular the experience of the Member States, obviously, but also6in the U.S.7And I know that some of our people are also thinking about8horizontal agreements and perhaps what should be done about it to update them as9well.  So also it's not just about cooperation case-by-case.  It extended in a natural10way to other things as well.  And I absolutely welcome that because it helps us.11  And hopefully it can help others that built the case-by-case handlings that we have12been discussing with each other on the basis of the experience we have that we13 also try to bring about a kind of soft harmonization, as we call it in Europe.  We14never succeeded and I think it was a rather wise policy not to impose on Member15States the harmonization of the national competition system.  But it happens in16 practice, gradually, softly, but it happens.17And I feel that something similar starts to take place on an18international scale. Obviously in the first instance with the countries with which19one has a cooperation agreement.  And I'm very happy that very soon we'll have20another candidate as well and others will shortly come next.21Having said that, ladies and gentlemen, let me now very22rapidly again go through some of the problems we have from time to time.  Indeed23 the rules might be different and the cases to illustrate that can lead to not only 
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1different conclusions but create a rather complicated situation.  But we are not2going to be able very soon to correct things like that.  Perhaps one day both sides3 might adjust one or another thing, and again, it might be part and parcel of a kind4of soft harmonization but we shouldn't be too ambitious about what that is going5to solve.6One of the major other problems I was mentioning already is7the timing.  We are caught, as you know, by deadlines and we can't get out of that.8If we just refrain from taking a decision it will be an authorization so we have to9act. So we might be under heavy pressure from time to time from that point of10 view, while on the American side one is still further investigating the case and it11might need a few extra months. So as I hinted this morning, if something could be12done about that, I think it could be extremely valuable.13Another thing I would like to mention that we touched upon14as well, if things could be -- let me put it this way.  On the side of the European15Union, there is one competition authority working very closely together with the16national competition authorities.  In the U.S. -- well, two authorities, but this is17working out very well, the problem is not there.  But there are some other areas:18airlines, maritime field.19We discussed for years and years how to sort things out and20the fact that the shipowners were not really combined with our competition rules21but also all the time referred back to what was happening in the U.S. and22pretended that we should adjust to what was happening in the U.S.  Well, we said:23 Look, we are scrutinizing these cases from the point of view of competition policy, 
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1not from the point of view strictu sensu of maritime policy.  That's another thing.2 And therefore it was highly complicated.  I think again, eventually after years of3discussions, we succeeded to bring our positions nearer to another, but it was4extremely complicated and it was not very helpful in order to sort out things which5we now decide were blatant breaches of Community law.6So if, apart from what I said about airlines, now this was I7recall the case of maritime issues and again this all leads, I think, in the direction8of having the competition issues covered, either by one authority or by authorities9which can work together in a way that is coherent and starting from the same10 principles and the same concerns and preoccupations.11Now, ladies and gentlemen, let me perhaps to wind up, make12the following points. Again, beyond the normal cooperation, what we see13happening is that there is a kind of division of work, of labor.  And this is14welcomed as well.  All of us have constraints as far as human resources are15concerned, and for instance, I must admit that in order to call people as a typical16committee, we lack resources.  There's a lack of resources.  So it's always a17decision where to put priorities and the next day, suddenly another case is coming18in and eventually you to change priorities.  So if we can further enhance this, I19think it will be a help for all of us.20I was mentioning already the Nielsen case, even if it was21outside the formal comity procedure.  But even the actual Microsoft case is22illustrating that point.  Because otherwise we might well have been also, let's say23we eventually might have taken a decision to start a case ourselves.  Since it is
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1being dealt with in the U.S., there is no point in doing so as long as we feel that2it's handled in accordance with some of our own concerns.  And therefore, we don't3open our own case.  There might be other complaints on other points and it4remains to be seen what we are going to do about it the day it will eventually be on5our table.  But for the time being I don't see why we should open a similar case6ourselves.  That would only occur the day one would be dissatisfied with the7outcome.  But unless -- such is not the case, there is no reason why we should do8so.9It's not always easy to explain that, because we have been10asked, over and over again, why don't you open up a case?  There is no need to.11Because it's being cared for.  We will see what the outcome will be and we are12rather confident that it will be in line with what we think needs to be done and I13guess that the outcome will be such that it's not going to apply only in the United14States, but it will be, so to speak a kind of global effect.  If that wouldn't be the15case, again, then we have to start our own investigation.16I wanted to say that, ladies and gentlemen, because again I17think it's extremely important, that if a competition authority is caring properly18for competition issues, particularly in cases which have global significance, that if19it's being done in line with the preoccupations of others, there is no need for others 20 to start to duplicate the work.  And obviously that should go both ways.21Now, the last thing I wanted to mention, ladies and22gentlemen, we talked about confidential information, the exchange of confidential23information.  I indicated already that on the side of the European Union, we still
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1need some more time to convince the industry to go along with it.  We need to be2 able to give some answers to some real questions.3Part of the debate is irrational, I would say, and it has more4to do with old-fashioned reactions than with actual problems.  But if, well, that's5the perception of some companies or at least part of the industry, even that needs6to be cured and therefore you need some time.  But we would very much like to, at7the end of the day, indeed to find some kind of solution to that and being able to8go beyond what is already possible actually.9But this leads certainly to the need, ladies and gentlemen, to10discuss the correct answers we should be able to give to the industry.  Given the11difference of rules, difference of procedures, there are already questions and I12would like very much, together with our national authorities, to see to it that we13can in a convincing way, trustworthy way, give these answers to the industry, and14then I'm sure things will develop in a way that the next step can be envisioned.15As for the rest, ladies and gentlemen, we are using the full16extent and the full scope of the actual Cooperation Agreement.  As it happened a17few weeks ago, we discussed, for instance, how to allow officials from one18authority to be part of at least some parts of the procedure on the other side, for19instance, to be part of the hearings, and I think it's worthwhile and very welcomed.20 We decided on a level of DG-IV, that indeed we would extend these kind of21possibilities, again in the framework of the actual Cooperation Agreement because22if you have to deal with mergers, our officials are extremely attuned to23confidentialities, so one must be careful.  It should remain within the boundaries
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1which have been fixed but again, apart from that we would like to use every2possible possibility in the actual and in the present scope of the Cooperation3 Agreement.4So ladies and gentlemen, I think I went through most of the5points I wanted to raise, but one thing is absolutely clear, it's absolutely sure, this6Cooperation Agreement we developed since '91 has been a very successful one and7what needs to be done in addition can be built on the actual experience and even8more than that, the day-to-day trustworthy, almost natural cooperation which has9developed on the basis of this agreement.  Thank you very much.10MR. YOFFIE:  Thank you.  Dieter Wolf.11MR. WOLF:  Well, I'll start by supporting what Karel Van12Miert said about the effect an agreement as such can have and has had.  We have13had the same experience and we had it with our bilateral agreement also.  That14agreement is much older, and it must be said that it doesn't cover in the same way15the topics as the comity agreement between the EU and the U.S. does.  But it16created that atmosphere of confidence and that's of course valuable as such.17It is now time for our agreement dating from '76 to be18revised.  We are involved in discussion with the U.S. to do that.  We would adapt19it, I guess, very much to what has been achieved at the European level with your20country.  I was asked whether I could imagine that the same positive effect in21cooperation could have been reached without a bilateral agreement.  I have already22 answered that question.23If I look only at the text, I would admit that theoretically the
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1same degree of cooperation could have been reached without that formal2agreement, but the fact that the agreement exists has led to much closer3cooperation.  That is somehow a cautious answer to your question.  I must admit4that we also have very close relations with some countries where we do not have5such a bilateral agreement.  For instance, with the British.  We do have a bilateral6agreement with France.  It is also much older than the U.S.-EU agreement.  I7would say that this agreement had the same positive effects we observed in the8U.S.-German cooperation.  It doesn't go much further than the bilateral agreement9between the United States and Germany.10I wouldn't go too much into details about the ongoing11negotiations for an amendment to that agreement.  The key question for me and12what I guess is also ultimately important, is whether one integrates that agreement13 into a general treaty on mutual legal assistance in criminal matters, which is one14legal possibility, or whether one establishes a special agreement for competition15matters: in that case, including cooperation in the field of merger control.16In line with what I said this morning, I'm very much for the17latter solution.  I wouldn't like to have a split-up regulation.  Things are18complicated enough already.  To have two different agreements, one covering19cartel matters under criminal or quasi-criminal aspects and another one under civil20law and merger control aspects would not be an ideal solution.  But I must say our21respective Ministries of Justice, for the time being at least, are discussing that22first possibility, too.23Of utmost importance, also with respect to merger control, is
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1the solution we find in the question of exchanging confidential information.  And2for a long time, I have had the feeling that we are discussing that matter, not3recognizing a basic deficiency.  We are discussing it too much on the surface.4What is confidential information really?  Is it only5information which must be treated as confidential because it represents property6rights of the parties, because it is sensitive material?  And who decides this7question?  Or is confidential information just information which has been declared8confidential just at the discretion of interested parties?  This is quite a difference.9And my feeling is that most of the so-called confidential or10sensitive information is simply information that has been declared as confidential,11sometimes even for strategic reasons, to make it even more difficult for the12respective authorities to deal with.  And in addition the difficulties are caused13partly by different legislation in that field.14That's not a criticism, that's just a statement.  My impression15is that in the United States, the decision whether information is sensitive or not is16more at the discretion of the parties than in my country.  I dealt personally with17merger cases within the Ministry, even cases of ministerial authorization and18things of that sort.  And of course, the parties came with the position that19everything they told us was confidential.  Highly.  And my answer to that was,20 "You are asking for something aren't you?  How can we imagine that I am able to21 justify the green light you are asking for without reasons for it?"22Since when is turnover confidential information?  Since when23is market share confidential information?  So the deficiency I see in that respect is
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1that we are always talking about protection and the impossibility of exchanging2 such information, without making a distinction between information which really3 must be protected and other information.4I listened this morning, as I usually do, with interest to what5you said about the excellent degree of cooperation on merger control between the6Commission and the U.S.  And that's my impression too.  You are not able to7exchange confidential information in that field.  How is it that the cooperation still8 is so excellent?9MR. VAN MIERT:  The waivers.10MR. WOLF:  Yes.  But the waiver is already a result of that11pressure I was talking about.  Right?12MR. VAN MIERT:  That's right. Exactly.13MR. WOLF:  So I think that is a key question, whether we14just accept the position of industry that everything is confidential, or whether we15put a question mark behind that from the very beginning.  And so my proposal16would be to bring experts together, perhaps even with partners from industry in17the second stage, who deal with that question, specifically with that question, and 18make up a list or a synopsis or whatever of information which is more or less19always asked for, for instance, in merger cases.20You need to know what the market share is.  You need to21know what the turnover of the parties are.  You need to know what types of links22there are between the enterprises.  You need to know about the resources,23financial and other resources the parties have available.  If those things are
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1regarded as confidential per se, things get difficult.  Perhaps your legislation2doesn't allow it, but if you came to the conclusion that the information is not3necessarily confidential, I would predict that 80 percent of the difficulties would4already be solved.5Then in most cases of merger control, for instance, you would6get along without the exchange of so-called confidential information, because then7 the information you exchange is not confidential, which does not mean that it may8 be published by the authority.  It only means it can be transferred, in the German9sense.  It can only be transferred for official purposes.  But in that case, it is10legitimate and necessary, of course, if you cooperate, to exchange it.11I think that old story about confidential information needs a12new approach, a real new approach, otherwise we even run the risk of establishing13by means of a network of bilateral agreements, different definitions for sensitive14or confidential information.  That makes things in the end, well, just insoluble,15  hmm?16So to my mind, I think it's high time that we look deeper into17that question and as you are collecting possible advice on/for your institutions,18you should look into your actual legislation.  This stems from a quite different19motivation and has led to a degree of protection of information which is20counterproductive to a certain degree, I would say, if you allow me to.  So as you21asked me to, I have touched on an area of the greatest need for cooperation.  This22is one in my view.23Positive incentives.  I do not know whether your proposal
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1honestly meant -- the answer is spontaneous, of course.  From my legal2understanding I would have doubts whether Germany would be allowed to accept3parts of that treble damage because under German law, even under constitutional4aspects, it's hard to believe that we could establish such legislation in Germany.5Your treble damage legislation is a mixture, in my view,6again, no criticism intended, it's a mixture of civil law, the compensation for a7real damage, and criminal law aspects, and that mixture would at least be doubtful8under German law.  Under German law you are only allowed to ask for and to9compensate for a real damage, not a treble damage with a punitive effect.  Under10German law, you are only authorized to punish an individual under criminal law or11other law of that sort, but not under civil law, so that's my answer to that12question.  I would have doubts whether we could accept such an offer.13MR. YOFFIE:  I'd like to open it up, and I know some14individuals have some very specific questions.  Eleanor Fox, in particular, wanted15to ask a question.16MS. FOX:  I first was inspired by Dr. Wolf to follow up on17his last point, I also had a question I wanted to ask particularly to Allan Fels and18Konrad von Finckenstein.  Dr. Wolf, would it be different if the proposal is that19various nations share in a fine that the government levies?20And let me put it this way, there is an international cartel the21United States enforces within the United States.  It has international effects.  The22fine could in theory, I suppose, represent in some proportion the total negative23aspects of the cartel, and if that is so, then maybe the other nations who have
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1cooperated deserve a share.  But the big change here is a part of a fine rather than2a part of a private treble damage recovery.3MR. WOLF:  You are absolutely right.  In the latter case, I4could imagine that such a share would be possible even under our law, but not5under civil law.6MR. VON FINCKENSTEIN:  I beg to differ on that one7because it seems to me that implicit to the scenario that you are painting you have8a court in the United States looking at conduct that is carried out within various9countries and imposing fines.  So it is either a ceding of jurisdiction by the other10nations to the United States or an imposition by the United States of11extraterritoriality.  Either one I think is fraught with political difficulties and I12don't think a scheme like that would be possible.13PROFESSOR FELS:  Just on that point, just part of my14initial enthusiasm.  I have to admit that it would require some legislation by us,15which would open up issues that have already been dealt with under a law passed16sometime ago.  And so I would just think to ask, I suppose, about opening up an17issue, even where we are getting a so-called free gift from another country, so that18would be one minor hesitation.19MR. YOFFIE:  Let's emphasize that the idea here is not a free20 gift.  There were two obstacles that were identified early on as to why the United21 States has difficulty incenting cooperation by various foreign authorities.  One is22a lack of resources which Karel Van Miert already raised.  Many competition23authorities around the world simply don't have adequate resources to pursue some 
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1of the policy agendas of the Department of Justice on international cartels.2Secondly is the asymmetry of incentives which was raised on3the Canadian side, that there is a problem where people perceive that the U.S. is4going to get a disproportionate share of the benefit and they would have to still5incur significant costs.  So the question we were just trying to work through is: Is6there a mechanism in which we could provide a way to reduce the resource7requirements, in other words, pay for something which the United States does8benefit from, and also try and share the rewards associated with any prosecution?9Now, the question of how one does it is still an open question,10but the question at least I wanted to raise is: Do we actually help to solve these11two obstacles, namely the resource constraints and the asymmetry of incentives?12  And if not, then we probably shouldn't pursue this idea.13MR. RILL:  Let me just suggest that that's imaginative but I14have questions as to the extent to which it can be done legally, although this15Committee can certainly suggest changes in law.  It seems to me you can deal with16the confidentiality issue directly to alleviate some of the business concerns.  The17IAEAA provides that the party receiving the documents has to protect its18confidentiality to the full extent of the law of the receiving party.  How about19adding a provision?20I don't need to be answered now but I want to put it on the21table and maybe elicit an answer later, that the documents may not be turned over22to any other agencies or jurisdiction.  Now, that may create a problem within the23EU, and I think there is a way of dealing with the national authorities so that they
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1can only have access to those documents for the purpose of advising the EU.  If2the documents are used in any formal proceeding, whether it's a court proceeding3or a formal proceeding before DG-IV, notice has to be given on the use of those4documents and an opportunity given to assert their confidentiality, and for5confidential treatment in the proceeding, in-camera treatment.6And perhaps most significant, that not only can the materials7not be turned over by the agency, but in the hands of either the party preparing the8documents or producing the documents they will not be subject to subpoena by any9third party, including a treble damage litigant in the United States, be it a state or10 other private party.  That's a way of dealing with the treble damage issue.11There is a precedent for this under the census laws and at12some point I think it would be helpful to us to have a reaction to that kind of13proposal -- not necessarily now, because I think others want to speak.14MR. VON FINCKENSTEIN:  Could you just clarify one15point in the scenario that you just painted?  You said if the documentation would16be used for some prosecutorial function there would have to be prior notice.  Prior17notice where?  In the country that had received it or in the country from which the18information came?19MR. RILL:  Well, in the country from where the information20came.  That the documentation is  fully protected has nothing to do with the21international cooperation issue.  In the country that received the documents, there22would have to be prior notice given to the party either producing or preparing the23documents that there was an intention to introduce the document, say before the 
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1tribunal, or before a public hearing of the DG-IV, giving the party an opportunity2to say, "No, these are truly, truly confidential documents and we want in-camera3treatment."4It seems to me that may be a more direct, if imperfect way, of5trying to alleviate some of the concerns of the business community, although I6fully share Dieter Wolf's observation that much of this is strategic rather than a7business concern.8MR. VON FINCKENSTEIN:  That's an interesting scenario. 9But I think you would have to contemplate having that in-camera proceeding in the10country where the documentation originates rather than the other one, because11 people have total confidence in their own system, and they would want to have the12hearings there.  But that's certainly something one could look at.13MR. RILL:  It will be in the transcript and I invite comment14on it.15DR. STERN:  Well, that's a useful technical effort to try to16deal with this question.  But as I and a number of others have suggested,17sometimes this may be a smoke screen.  And the question then becomes: How do18we deal with giving confidence to the public and to the parties in particular, that19the information is going to be used legitimately, that the concerns that information20that has been gathered in the past has been misused gives a false impression?  It's21a concern that may not really be fact-based.22Is there a role frankly that each and every one of you sitting23here can perform? Because each and every one of you are the chief officials, are
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1dealing with these kinds of questions in your own countries, or in your own2authority in the case of the EU.  So that the business communities that have, if3you will, slowed down the deepening of the cooperation, and who we can4anticipate might continue to raise questions if they are not properly informed on5what the facts have been -- isn't there something that each and every one of you, in6 addition to perhaps us as authors of the report to our Attorney General, might7state on this?8Do you have examples, for example, data that shows those9times when you have cooperated, that there has not been leakage?10If we have a track record, each and every one of you can, if11you have an opportunity in your public comments to, help.  I think this would be12extremely important.  I say this in particular in the context of the work that I have13 been doing not only here but in the TransAtlantic Business Dialogue.14From my viewpoint, the business community in Europe has15been particularly concerned about not advancing too much the discussions of16U.S.-EU coordination or even any discussions on competition policy for fear it17will start a discussion that would expose confidential matters which they would18like to keep under wraps.  That's a little bit of a rhetorical question, but I do think19that the purpose of this Committee is to advance what have often been technical20 discussions or discussions among regulators to a more public level, in order to21incentivize and advance the cooperation which I think each and every one of us has22said publicly is needed.23MR. WOLF:  Well, I checked or rechecked that question, of
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1course, when I came here.  So that is not spontaneous.2DR. STERN:  Good.3MR. WOLF: It is just a sure fact with our experience of over440 years now, we have not had a single case of leakage of information from our5authority.  I'm just saying that, not to praise our authority, we just didn't have a6single case.7And that may be part of perhaps a different attitude to8confidential information. If you in general do not see or acknowledge the market9share or turnover as really being confidential information, and that question is10then dealt with in the reasonings you have to give in your decision that would not11be regarded as leakage, of course.  As far as real confidential information is12concerned, we have no single case.13I must add that it may be too simple just to talk about the14discretion of who has to decide whether information is confidential or not.  If you15get information as a result of investigation, then it is very doubtful whether16industry may argue that it's confidential.17It may be different if industry comes of its own accord and18entrusts you with that information.  Even in such a situation we wouldn't regard19the market share as confidential information, but of course, the approach of20industry entrusting or imparting information is a different one compared with the21situation if we ourselves made the finding.  Sometimes even drastically different.22That's at least our situation, so again, to summarize the topic of leaked23confidential information, we have not had a single case of leakage.
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1MR. YOFFIE:  I have three people I would like to bring in,2Karel, then Konrad, then Eleanor, and then I think we would like to open it more3broadly to the rest of the panel.4MR. VAN MIERT:  Thank you very much. First of all,5Dieter, I don't think we have had cases, certainly not in the field of mergers, where6there have been leakages.  On the contrary, we handle now more than 800 cases7since the beginning of the merger regulation and I can't recall one single case8where there has been leakages of the kind we are discussing here.  And also when9  we cooperated across the ocean, not a single problem as far as I can recall10appeared.11It might be a difficult game obviously when you have to deal12with cases like Boeing, because then it becomes public.  And since the13Commission is a political body, we are responsible to the European Parliament,14you have to explain why you are doing things or why you are not doing things. So15there is also a dimension of informing the public and those who are controlling16about what you are doing.  When it comes to individual cases, usually we can17handle them in a confidential way.18Now, I was thinking about what Dieter said about trying to19discuss the matter: What should be considered really being confidential?  I do20recognize the problem because we have that over and over again.  Companies and21the lawyers will try to convince us that almost everything is confidential.22MR. WOLF: "Dieter" as such is confidential.23MR. VAN MIERT:  Yes, from time to time it's really
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1ridiculous.  We have an official, an officer in DG-IV, to try and sort things out in2a reasonable way, and if it's really confidential. And there, Dieter, from time to3time, I must recognize that if it's about strategy and you have to assess what4comes next, what is the most valuable things, how it's going to impact on the5market structures, market shares and future -- this is very confidential stuff.  I6think we must recognize that.7But it would be worthwhile perhaps to have further8discussions on this and try to, in our own practices, in a different practice to come9 nearer.  Certainly we would be interested to be part of such an exercise.10Let me now very briefly come back to the question of fining. 11I was thinking about the most recent cases we have, and I must say, we have been12fining a lot recently.  This year it's certainly more than $600 million and it's not13finished yet.  So some more is in the pipeline.  But I couldn't recall one case where14this would have triggered the question you were just talking about.15For instance, we have fined very heavily, recently, the ship16owners.  It wasn't about trans-Atlantic trades, but mainly on denying the17companies acting in Europe, American companies or European companies of18Japanese companies, the benefit of individual service contracts.  So in such a case19I can't see how, first of all, I don't think there is -- there's no point in trying to20come up with, unless Eleanor has another idea, but I can't see the point there.21Because on the American side the policy is really a bit different and it was not22really about cooperation, to discover and to undo a cartel of practices of this kind.23It was something different.
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1Now, I was thinking about another case.  Let's just for2theory, for the sake of an assumption, say it's a world market, only two companies3left, everyone is obviously free to think about companies where that could be the4case, since that's a very transparent situation.  One day, I'm not sure this might5happen, but one day they will behave in a way which would trigger some concerns.6 And assuming that both authorities will do their job and I'm sure they will if such7 the case would occur, and then leading to some sanctions or fines at the end of the8 day.  How would that work?9I fail to see the point, I must say, even in such a case, so10therefore if you could convince me of the need, one, and secondly how it might11operate because we have different rules.  We did take over your leniency policy to12some extent, and it's working by the way, but the rules are different.  We have13criteria to establish leniency and if it leads to minus 20 percent or 30 percent or1450 percent, eventually.  But that's specific, that's specific.  So on this point I must15 say, for the time being I fail to see if that's really a need, but perhaps I fail to see16 the point.17MR. VON FINCKENSTEIN:  Just to the specific question of18Dr. Stern regarding leakage.  Like the Germans, we have not had a single instance19of leakage since we have had the agreement with the U.S.  And this is our second20agreement.  There was a precursor to this one. So we've got 15 years experience21 with it.22In terms of how to define confidential information, we have23actually issued guidelines on what we consider confidential, and it's quite simple.
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1 If it's given to us by the parties, it is confidential unless it's in the public record,2and not only will it be treated as confidential, we will also try to invoke whatever3legal mechanism is available to us to keep it confidential if a party tries to pry it4out of us.5That, of course, doesn't take anything away from Dr. Wolf's6point of trying to convince the parties that it's in their best interests not to have7something confidential, but in effect to make it public because it might help8explain the case and may be to their benefit, as well as to the benefit of the9competition authority, if that information could be made public to explain how a10decision had been made.11MS. FOX:  I want to raise a different point regarding12possible obstacles to cooperation, and I'm going to ask a question particularly to13Dr. Fels and to Mr. von Finckenstein.  Suppose another uranium cartel case14happens tomorrow, and the facts are exactly the same as the first uranium cartel15case. Meaning of course there was a U.S. embargo that did have a relationship to16worldwide overproduction, leading to various nations, including allegedly Canada17and Australia, being concerned about their own producers' overproduction and18 allegedly trying to help with orderly marketing.19So suppose in this case Assistant Attorney General Klein20comes to each of you -- Mr. von Finckenstein after you have signed on to an21IAEAA -- and says to you, "I understand that there are Australians and there are22Canadians which I believe are involved in a cartel, and I would like you to get23documentation and hand it over to me."
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1And my question is, actually, it's not a facetious one, it's2actually a deep one: Are we prepared today to deal with the kinds of problems that3we had arising in the 1970s in the uranium cartel, are we prepared to deal with4them in a way where countries will be comfortable, that rules of law are applied5 and there is no undue unilateralism?  Are we prepared to handle it on a6cooperative basis?7And if a problem turns out to be state action and orders by8state and encouragement by nation-states, do we need more transparency as to9what is a permissible state action order and what should be a transparent state10action order?11So the first question is what would happen if Joel Klein goes12to you under an IAEAA and says, "I would like this information?"13PROFESSOR FELS:  Okay.  Just before going on, I'd like to14go back to the previous topic for one minute.  We have not had any leaks either,15and I will just make one other brief clarification, that in a merger, facts become16public about it through leakages in firms.  I'm not aware of any case where the17leakages have come from agencies.18But turning to your question, I think Uranium probably would19 have been handled differently, but the treaty does provide that there is a public20 interest letter for a country, it does not have to cooperate.  However, there is a21 difference this time around in that there is a more explicit tradeoff involved here,22 in that it is implicit, if not explicit, in the treaty that the cooperation by one side is23a factor in the other side's cooperation.
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1In other words, if we decided that it was in our public interest2not to cooperate, then the United States, in making its public interest decisions,3would take that into account. Secondly, there have been changed attitudes, I think,4on a very large scale which in fact have led us to adopt these laws.  We adopted5these laws after the Uranium case, and partly because of the Uranium case,6although more generally because we thought it was just part of international7business cooperation.8Oddly, I just wanted to mention that the Uranium case, in my9view -- I'm not a world expert on that case, but in my opinion -- that case was a10pretty unusual one because it was not a fully conventional hard core cartel case. 11What happened was that certain steps were taken, I believe, by the United States12Government which seemed to be in effect trade measures directed against these13other countries.  That's how it started.  Well, this is my evaluation of world14history, but I think it is a correct one.15MS. FOX:  That's right.16PROFESSOR FELS:  As a result of these anti-trade type17measures, a number of private firms then decided to get together and cooperate in18a cartel-like fashion by way of a response.  So that the intervention -- and then19extraterritorial activity by Australia and the other governments -- was seen,20rightly or wrongly, not as a normal cartel situation, but one where there was some21provocative trade actions in the U.S.22So I would differentiate that from some situation where there23is a standard hard core cartel.  And of course, we signed the OECD agreement also 
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1on hard core cartel cooperation.2The other thing I just wanted to touch on slightly of your3question, but not entirely of the spirit of it, is that I can't stop myself from4pointing out that all of us at the OECD recently signed up on a pretty important5agreement to fight hard core cartels.  But just about all of us have exemptions6under our own laws for our own export cartels.  I have not quite been able to7reconcile those two points.  There is another lesser point, which is that, one8person's hard core cartel is another person's orderly marketing for farmers, crop9scheme, and so on and so forth.10Having said that, I think we are very conscious of that latter11point.  I see some acceptability in making a distinction between hard core cartels12and some of these other things for farmers.  Some of them I see in a slightly13different category.  There does seem to be quite a lot of clear, hard core cartels to14which we could all object and the U.S. cases at the moment provide some pretty15good examples of ones which we would all cooperate to break up.  So that would16be my preliminary comment on your question.17MS. FOX:  Thank you.18MR. VON FINCKENSTEIN:  I find your question very19difficult to answer given that we don't have an IAEAA agreement.  We and the20Japanese have to work out some modalities on this.  And secondly, if you are21going to blue sky like this, let's assume also that we would have by that point in22time a positive comity agreement with the U.S., along the lines of the U.S.-EU23Agreement.  And I would hope that the U.S. would avail itself of that positive
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1comity agreement and therefore sidestep any extraterritorial issues.  But I really2can't answer that question in light of not having any source agreements in place.3DR. STERN:  Karel, I'm glad you came back.  I would like to4ask you and others if you might comment now on the U.S.'s interagency process,5Karel, because you may be leaving and the others should also comment, depending6 upon what the Chair wants to do now or later.7You started that.  You raised this matter, I think.  There are8some references perhaps to the Department of Transportation.  There was some9discussion about the FCC.  There is, of course, the relationship, a very, very close10relationship between the FTC and the Department of Justice, and there may be11 other agencies.  But we are looking for best practices everywhere procedurally.12 And this shouldn't be taken as an excuse to beat up on the United States here, but13if you could give us some comments on how our interagency system is working in14coordination with each of your authorities, that would be a useful comment from15you public officials.16MR. VAN MIERT:  Well, first of all as far as the17cooperation between the Department of Justice and the Federal Trade Commission18 is concerned, I can only say that it's extremely positive on the level of the officials19and on the highest level.  It's no problem at all.  Again, there might be a difference20 of opinion in one or another case but that's something else.  But it's really a21different game and that's why I did raise it, because we are talking about22cooperation between us.23When other authorities are in charge, and when competition
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1concerns come in the second or the third place, and it's not just because we have2this recent experience or even experience which goes back many years, but also3because there is a danger even in the European Union to say look, since they are4on the American side they will discuss airline business from the point of view of5transportation policy and in the interest of American carriers, we should do the6same.7So from time to time we are under pressure.  And Dieter will8recall that recently in Germany, because we scrutinized also the Lufthansa/United9case and the minister concerned, the transport ministers, when they meet will say10this is our business so let's keep out the competition people.11And I, although I don't overestimate the danger of that but be12aware of that, because it might occur in other sectors as well.  For instance,13media.  We have been accused over and over again because of the strong14competition issue we have been taking and the decisions we have been taking15constantly.  We say, "Look, but this is about competition between the American16system and our system so therefore it's a different kind of game, keep competition17out of that in the first instance."18And from time to time, you are back to the old-fashioned19discussion about how champions, national champions, it used to be but now20European and American champions -- so we must be aware that there is some kind21of a danger of that type and therefore if we want to reinforce our competition22concerns in the light and the spirit that we have been discussing this, also these23questions are part of that.  And that's why I wanted to make that point.  Not just
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1one-sided.2DR. STERN:  Yes.3MR. VAN MIERT:  But it concerns others as well.   That's4the reason why I feel so strongly about it.5PROFESSOR FELS:  I just had two short points about the6ideal answer to this question.  We, of course, have put out this paper and we think7 all of these industry agencies, so far as they are doing economic and competition8work, it should be done by the competition agency.  So we have closed down our9communications agency and we do the work for it, and our energy regulators have10been -- well, they've already gone at the national level.  At the state level, it will11eventually shift to us.12The second point I would like to make is that in any case13under merger law, the competition agency should be predominant.  There are a14couple of cases, like banking, where there may be some special prudential or other15reasons where someone else has to have a look at it, but they shouldn't use that to16become involved in competition and public interest questions.  I would say the17  same should apply to others.18MR. VON FINCKENSTEIN:  Is that your thinking or a19statement of fact?20PROFESSOR FELS:  Well, it is the law.  With respect to21mergers, there are no exceptions in mergers.  They all have to be covered by our22competition agency, but it is hard to ask these other agencies to keep out, I know23that.
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1MR. YOFFIE:  Let me ask Dieter Wolf to also comment and2then I'm going to turn it back over to Jim Rill.3MR. WOLF:  What we are discussing now is just normal4political life, I would say, everywhere.  And we are not the only ones in this world5and of course we are living to a certain degree also in a dialectic situation with6other political interests.  I have nothing against that permanent -- well, let me stay7with that expression, dialectic process, provided that the competition authority has8the last word, as you described it, Eleanor, and provided, Karel, that the9competition authority has a, I would say, sufficient amount of independence.10Because the cases which are the decisive ones are always of11economic and therefore of political importance.  In those cases as a non-12independent authority, you are lost.  I'm not against political interference in cases13where an overwhelming public interest calls for putting aside competition14concerns.15Because that is also my view of the reality of life.  There are16cases, not very many but some are conceivable, where the public interest is17paramount and I would prefer in such a case an absolutely transparent procedure18which we have established in Germany.  We have the possibility that the Minister19of Economics can overrule a negative decision of the Bundeskartellamt.  But he20has to ask our independent monopolies commission for public advice.  He has to21hold a public hearing on the case, and then he may take the decision but it has to22be taken in writing and that decision again is subject to control by the courts.23This very high transparency has led to the following results:  We have issued more 
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1than 120 prohibitions of mergers within a good 25 years of control.2Politics quickly learned that it is not so easy to counter the3arguments given by the Kartellamt for its negative decision, that the reasons of4public interest are normally not strong enough to overrule it, so the number of5cases of applications for special permission addressed to the Ministry of6Economics have decreased more and more.  In all, we have well over 100 negative7decisions, altogether we received 16 cases of application for special permission, 68of them were accepted by Ministry of Economics.  So that's less, clearly less than9  6 percent of our prohibitions.10I can easily live with such a relation.  It's a good relation11between the exception and the rule.  Even if it had been double that, the relation12would be in order.  So that's the solution on our side.  My fear is if you don't have13such a valve to make cases of paramount public interest transparent, and that is14how I understood your remark, then you run the risk that those reasons of public15interest are introduced into competition reasonings.16And we are all lawyers and we have learned to argue and to17cut those arguments correctly.  That's our job.  And then you get decisions which18look like they are based only on competition grounds, but in reality they are19influenced by those paramount public interest reasons, not saying it openly.  And20that's -- in my view -- that's second best.21MR. RILL:  Let me, before Karel, you leave, I know Paula22has some questions for you if you have a minute or two.  After that, we are going23to ask Jerome Gallot for his intervention and then have an open round table on all
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1topics that we discussed this morning.  So Paula.2DR. STERN:  Thank you very much.  As a non-lawyer, I3learned how to argue even before you folks who had to go to law school.  I learned4economics in school.  My question is to follow up on a comment you made in your5opening remarks this morning about the World Trade Organization, or a6multilateral global mechanism, to use your words, that would not be an appeals7mechanism, but would be some kind of a global surveillance to make sure that8there was a national review and that there was not discrimination against foreign9companies vis-à-vis domestic companies.10And I would like you to give me an example of a case or a11situation that would use this mechanism.  Do you feel that there have been12practices or cases that have not been resolved because there has not been such a13mechanism, and if so, what would they be?  It's another way of asking, would the14Fuji/Kodak case have been handled any differently?15The other question I just want to get on the table for you, and16for everyone later at your discretion, is to respond to those procedural suggestions17  that both the U.S. might make and your own authorities might take to better18 harmonize our deadlines, and better harmonize our procedural reviews.  I mean,19there may be best practices that combine a little bit from some of us and a little bit20from the U.S.  And if you could think about that and provide it now or later, that21would also be useful.22MR. VAN MIERT:  Well thank you very much indeed.  As23far as the World Trade Organization is concerned, we indeed like to think that
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1since we would like to involve not just those already having competition rules and2practices and competition authorities, but also those we need to convince of doing3so, that therefore the World Trade Organization is for the time being the right4 forum.  It remains to be seen what comes next.  So that's a specific discussion.5I wouldn't for the time being say that it's just something6inside the World Trade Organization.  It's to be seen what might be the7appropriate solution.  But again, for many reasons, we feel that the World Trade8Organization for the time being is the proper framework to start discussing these9issues.  And at a maximum of countries concerned.  And today we see already --10and Sir Jenny is there --11(Laughter)12-- he knows much more about it than I do, because he is13presiding over the works.  But there is a lot of interest also from countries not14belonging to the OECD.  I think this is a positive point which should be taken on15board.16Now what we have been seeing from time to time, because17companies told us so, is that they had to notify their case to many national18competition authorities.  I remember the Grand Met/Guinness case.  I don't exactly19 know how many competition authorities they had to contact and file in that case,20but many, many, many.  And I can remember some of the lawyers saying, "Look,21 from time to time we had to file a case."  But you know, they pretended it was on22the basis of the competition authority, but in reality, it seemed to have something23different.  And practices which have not that much to do with normal competition
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1practices.2So since I learned that from lawyers -- I'm not going to make3it public which country was concerned -- but I was rather impressed by their4rather negative experience in some countries.  So therefore, the fact that such a5thing would exist and the possibility would be created to, how to appeal in an6individual case, but the fact that way beyond handling competition policy, they are7using competition policy, or eventually competition authority which is perhaps not8that independent -- well, I think it's worthwhile to have such a thing.9And on the one hand, eventually you can go against practices10which might happen and which are happening to some extent, and it's warning for11the others not to develop in such a direction.12Now, the second question you are putting to me, again, as far13as deadlines are concerned, I feel if one way or another we could harmonize -- no,14harmonize is perhaps not the right word -- but to avoid that, from time to time15there are such constraints that, you know, you have to take decisions, others are16still looking at whether a remedy is needed or if a remedy is good enough.17We are sometimes in such a hurry, on both sides because also18 on the American side, if we have to make a decision, obviously it puts them in a19 disadvantaged position, if eventually we give our go-ahead on the basis of some20 conditions, and they are still investigating the case.  And from time to time the21 other way around, because it happened, as well, that there was already a remedy22 being discussed on the American side and we were still in the process of doing so.23Now, as it happened in the Dresser/Haliburton case, it was a case, we did take it 
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1on board but it's not necessarily so all the time.2Another example I would like to give is the leniency program.3  We introduced on the basis of your experience this instrument, and it is not so4 much in line with European traditions, so it was not easy to get it across and even5 to convince my colleagues to do so.  But we said, "Look, it functioned in the6 United States.  It had some advantages.  And since we have some trouble too,7 since we have to discover and to come up with the evidence of cartels and behavior8of that kind, we cannot not go down to Switzerland where usually they set up their9 headquarters to operate cartels.  So we have to find it another way." Hopefully10that comes next but that's a different story.11But many of our cartels operating mainly in the European12Union are managed from Switzerland, over and over again.  We will discover it in13another way, but what I wanted to point out is that if something valuable is14happening elsewhere, why not take it on board?15And again we both apparently feel now the need to think16about horizontal agreements, why not do that together?  What is refraining us17from doing so?  So that's the spirit in which I can see the need for one to learn18from another and do it in due time.  And so it's happening already.  It's evolving.19DR. STERN:  But the point about the timeliness that you20have got a deadline that then pushes others, looking at it from a business point of21view, I hope that --22	MR. VAN MIERT:  Yeah.  I would strongly recommend to23have deadlines.  Because our experience, and again this is a positive one, and I
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1might perhaps recall we have two stages, the first stage is of one month.  Ninety2percent of the cases, and we're talking about big mergers, can be handled in one3month.  Also because usually companies, and we have this facility available to4talk to our officials before notifying the case and trying to find out what's5happening before.6No leaks, and I'm praying all day -- that's the only reason7that I'm praying, by the way -- that we can keep it that way.  Up until now, no8leaks.  No leaks. And this is useful for both of us because for the business9community, they know what comes next.  Probably they have useful exchange of10views and information in an extremely confidential way.11And our officials, that the case is being notified or being12made public, they can start to do their job.  And then usually within one month, we13can finish that case.  We can even extend the period a little bit to be able to accept14remedies in the first phase.  That's extremely efficient.  And for the companies15 concerned and the business community, having such an instrument available and16creating legal certainty everywhere in the European Union, really that's something17extraordinary.18And if it's a more complicated case, they know for sure19within an additional four months the case has to be finished.  So we feel that's a20good experience.  Some of our officials will say look, it puts some heavy, very21heavy strain on us.  That's true.  But I would rather recommend such a system to22everyone because it brings together efficiency and being able to take decisions in23due time as in a modern economy should be the case.  And by the way, that could
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1be a good reason also, but we talked about it already, to think about some of our2other procedures, to streamline them and to try and make them more efficient. 3And so if the experience we gained in merger cases and the merger has been4extremely beneficial, and leads to a positive spinoff in other areas of competition5policy.6DR. STERN:  Very helpful.  Thank you.7MR. RILL:  We are going to now hear from Jerome Gallot of8the DGCCRF and following Director Gallot's intervention, we'll take a little9break.  Thank you, Karel.  Thank you.10Jerome, you're up.11MR. GALLOT:  Thank you, Mr. President and Mrs.12President.  Well, I'm personally delighted to attend this International Competition13Policy Advisory Committee.  And it's a great honor to join such a qualified and14diversified group of people.  As you said, I am in charge, I have been in charge of15 DGCCRF for 20 months now -- in France we share responsibility with Mr. Jenny16and the Competition Council to deal with competition and merger problems -- and17I am in charge, too, of the consumer policy and what we call fraud control, about18 food or wine, for example.19You are dealing with issues which are likely to have in the20long run an important impact on our domestic enforcement activities. My country21belongs to those which are more and more aware of the growing importance of the22international dimension of competition policy and concerned about devising an23 appropriate response to this challenge.  However, as a European Union Member
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1State, its situation is somewhat specific.2France, like its European partners, is deeply involved in a3particular kind of cooperation, the cooperation with the European Commission. 4And as Dieter said, we have also a specific cooperation with Deutschland.5In the field of competition, the Commission is our primary6middleman for all issues of common interest, should they be individual or regular7regulatory ones.  We carry out surveys on behalf of DG-IV as it does not have8investigation powers as coercive as those on our own territories.  We sit on9advisory committees which have to give opinions on all projects requiring10decisions, whether it be a matter of mergers or anticompetitive practice, and we11are, of course, also deeply involved in all its legislative matters which have12immediate repercussion on our national policy.13The Commissioner said we had a discussion about political14restraints in the European territory.  No doubt that this is not quite the kind of15cooperation we are here to talk about; nonetheless, it does provide us with a16particularly interesting experience in the ins-and-outs of an extremely close17relationship with another competition authority.  One could even pretend that at18this regional level, European competition policy works as some kind of very19sophisticated and very advanced multilateral framework with, of course, a20coercive mechanism of enforcement.21Our views on the perspectives of multilateral cooperation,22which I dare say are pragmatic, may be influenced by our experience in Europe. 23We certainly acknowledge the paramount interest of multilateral initiatives and
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1are keen to spur them on.  We are also aware of the political constraints and2technical hurdles that are to be overcome on this path, although endeavors will not 3be aimed, of course, at achieving something comparable to what has been done in4 Europe.5Our position is specific, too, as far as bilateral cooperation6between national competition authorities is concerned.  Between Member States of7the Union, contentious matters of which the effects are not limited to one single8national territory usually come under the Commission's jurisdiction.  This clearly9 sets the practical and legal limits of our bilateral actions, even though we do10cooperate on merger review.  These bilateral actions within the Community will11 not increase until the Community policy reaches a much higher degree of12decentralization, which is very important, I think. Indeed, for the time being, we13are just beginning to decentralize affairs of which the effects are confined to14national markets, but it is just the beginning and it would be better to go further.15Lastly, with regards to our cooperation with other countries,16one must recognize that, at least up until the present time, the principal cases17being dealt with equally fell to a great extent under the Commission's competence.18And under those circumstances, international cooperation issues are for us, by and19large, Community issues.  However, this means quite a lot.  Each time that the20Council of Ministers must intervene, we add our own competence and we do, of21course, have interests at stake.22Our most immediate concerns on international cooperation23are currently the definition of a common position at the World Trade
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1Organization, the authorization for the Commission to negotiate agreements with2other countries, together with the following through and setting up.3	Broadly speaking, our conclusion is that the time has to come4 to incorporate competition issues in WTO negotiation rounds.  This is not an5official position of my government, but this is my wish; we'll discuss later the6official position of the French government.7We agree that it is necessary to launch a convergence process8aimed at widening the geographic scope of competition policy and harmonizing its9basic principles.  Trade problems will be addressed insofar as they are linked to10anticompetitive behaviors, with the only aim to preserve competition.11As for bilateral cooperation, positive comity must be, I think,12the enforcement priority.  We supported the conclusions of the 1998 arrangement13 between the United States and the European Union.  We are now keen to see the14way the Commission will use it.  We do not expect any evolution of the content of15current arrangements until a detailed assessment of them can be done on the basis16of long enough period of enforcement.  In the meantime, similar arrangements with17other partners are conceivable.18	These are the main features of our current position on what is19 going on in the field on international competition policy.  I will lay them out more20precisely, perhaps, later.21	But let me underline once again my pleasure to be here. And I22 expect to learn from the experience of other countries represented in these23hearings during these three days.  Thank you very much.
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1MR. RILL:  Thank you very much, Jerome.  I think it's2appropriate now we take, say a 10-minute break and then come back to an open3roundtable.4(Recess.)5MR. RILL:  We are going now into the third and final round6of the enforcement day.  I must say that the proceedings thus far have been7absolutely superb, have given us extraordinarily valuable advice and information,8and really have exceeded, if possible, our already high expectations for the input9that we would receive from you high officials in the world of competition policy.10We are now going to go into an open discussion, a roundtable11discussion as we call it in the OECD.  And in effect, this will elicit from you and12from our fellow Committee members questions, comments and observations that13you may think, do think would be useful to us in formulating our own work14product as it moves forward.15And it is actually work in process, so we have no foregone16conclusions.  We have heard some very interesting ideas today, and we expect to17hear more as the afternoon winds down.  So put up your namecards for18recognition.  Anyone who wants to talk on any subject, please do so.19MR. OLIVEIRA:  I have a few comments about the20discussions we've had.  First, in my initial remarks, I did not emphasize the fact21that many other people emphasized: the fact that the WTO group has represented22an enormous contribution to world competition, to the dissemination of23competition culture.  This is an obvious thing to say, but it's important to say.
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1And I have had this kind of impression from many other2countries in Latin America, and it's certainly the impression that we have in3Brazil, that it could be very important indeed to continue the discussion in4Geneva.  And for some countries which are still developing their laws on5jurisprudence, the meetings at Geneva may represent many years, in terms of6saving many years in terms of experience and technical assistance.7The second point relates to the sensitive issue of antidumping8which has been discussed in this group.  We take a rather pragmatic and perhaps 9realistic view that this would not be an issue to be discussed at a more multilateral10level.  But for some regional blocs, it might be useful to think of ways of11transforming antidumping instruments into competition policy instruments.  And12in fact, this is what we state in the Fortaleza Protocol of Mercosur.  In the13two-year period the plan is to transform antidumping instruments into competition14policy instruments.15And finally, regarding competition information, the question16that Mr. Wolf emphasized and the definition and treatment of confidential17information, one thing that we introduced in our new internal rules at CADE is the18 possibility of the party to appeal CADE's decision whether particular information19 is or is not confidential.20I think that this possibility of applying transparency to21deciding what is confidential or not may be an interesting way to deal with the22problem properly and to divide what is by law confidential, which is something23easy to identify, and in which circumstances a certain type of information is
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1considered confidential or not.  I think that the opportunity for the party to discuss2that in a transparent way and having the opportunity to appeal that decision is an3important feature of competition regulation and merger review.4Thank you, Mr. Chairman.5MR. RILL:  Executive Director Janow.6MS. JANOW:  Thank you.  I'd like to ask a clarifying7question.  We have had several representatives here argue for the development of8WTO or multilateral capabilities.  I think a distinction is being made between a9form of procedural due process on the part of the application of national10competition laws that might be reviewed at the multilateral level, although the11substantive standards would not be, and at the same time the application of12substantive deference to the national authorities.13For those who think that this kind of multilateral system14should come into being, would you kindly evaluate what you see as the best15possible outcome?  The reason I ask is this: many jurisdictions do not have16competition laws that are discriminatory on their face, and they have staff and17laws in place and so, in this sense, have all the indicia of a working competition18regime but nonetheless may not have an effective system.19Without the indicia of discriminatory practices, what would20be the role of the multilateral organization in reviewing whether or not a21competition regime was working?  How in your view would the "best" multilateral22 system operate?23MR. RILL:  Konrad?
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1MR. VON FINCKENSTEIN:  Well your final question2suggests that it is for a world dispute settlement mechanism to determine whether3the regime is working.  That was not exactly what I was addressing.  What I was4suggesting is that we have, at the OECD level, agreed on a lot of issues which5form a broad base of consensus and which are really the basic ingredients for6competition systems, such as rules against cartels, rules on merger review, and7work-in-progress dealing with the rights of parties.  We are also going to deal with 8abuse of dominance and we are going to deal with such things as a minimum9institutional infrastructure.10If you have all of that together in a framework agreement, I11suggested that a dispute settlement should only deal with issues such as whether12you have implemented such a system or not.  Now in order to implement it, you13are going to have to adopt some normative standards.  I don't think this will be14anything more than using such terms as significant, reasonable, etc.15If countries adopt such a system of obligations, and if they16have with it a positive comity agreement that you can then invoke, then if the17positive agreement of comity doesn't work, it's a dead letter.  It's all wonderfully18enacted but it's not being acted upon.19And if positive comity doesn't work, the next thing is going to20be some extraterritorial application, which is going to result in a considerable21political confrontation.  In order to avoid it, given that you have the system and22given that you have the obligation of positive comity, I would actually expect the23system then to change from being a dead letter to being an active one and actually
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1working.2	I think there would be a momentum created.  It is part of your3obligation under the WTO.  You have solemnly implemented it.  You're now4getting requests from other nations that are -- I think that it would be inevitable5that momentum would be building up behind it.  If not, then presumably in future6rounds you would address the issue of enforcement.7And the only example that we have at the international level8to address whether something is working or not is the NAFTA, where we have the9two collateral agreements on environment and labor, which basically say your10system is fine, but you have to apply it, and there is a whole elaborate procedure11set out for testing it or not.12Would one want to adopt something like that in the antitrust13future?  Obviously if my method doesn't work, we might very well have to resort14to it.  Again, some people feel very negative about the NAFTA process.  I'm not so15sure that that's right because generally people are looking at whether the NAFTA16 provisions have resulted in litigation and so on, and they clearly haven't.  But has17the existence of the process actually resulted in better application of existing laws18 in all the nations or not?  I think that's how one would have to measure it.  I don't19know whether anybody has determined whether the labor laws and the20environmental laws of all three partners are now more rigorously enforced as a21result of NAFTA.  That would be the proof in the pudding as to whether such a22  process works or not.23MR. RILL:  Yes, please.  Bernd Langeheine from the EU has
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1taken Karel's spot at the table.2MR. LANGEHEINE:  Thank you very much.  I think we3shouldn't forget that we have only had binding dispute settlement in individual4cases, even in the WTO context for a very short time, and we shouldn't put too5much burden on that system.  I think, as my Canadian colleague said, the fact that6you have certain basic rules and that you have certain structures in place already,7normally, very much helps the process as a whole.8I think the real problem will be that if ever you want to9proceed to some kind of dispute settlement on this, that the question will arise in a10concrete case.  You will not be able to verify this in a very abstract matter and it11will be a very fine dividing line, to make sure that you do not proceed to12second-guessing the substance of individual decisions, but at the same time, try to13ensure that there is a certain basic structure that you want as a starting point.14MR. RILL:  I would be very interested, and I think my15colleagues would as well, in how you both, and perhaps others who see a role of16this sort for the WTO, would draw the line between generalized principles and a17failure to enforce in a particular case.  Because one, at least, maybe I'm too18American, but one gets to generalized principles by building up on the coral reef19of dead sea animals a series of examples and individual cases, and that's common20law experience.21I would be interested in learning now or later, in writing or22orally, as to how you would draw that line because as you suggest, Konrad, you23are looking at a country, a hypothetical country, with a very polished antitrust law
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1whose enforcement record has perhaps not been very vigorous.  You are2suggesting then that there is nothing to do with the law.  Your positive comity3referrals, at what point does one look behind the positive comity referrals to get to4the enforcement commitment of that country, and who decides how that should be5resolved?  But before you answer, Dieter has got his card up.6MR. WOLF:  Well, the German proverb, "Where there is no7plaintiff, there is no judge," comes to mind.  And you can trust in the supervision8of the activities of an antitrust authority, as long as it issues prohibitions.9Because then you will have interested parties which will defend their position10before the courts.11I guess the thesis can be accepted that it may be as harmful12for the antitrust authority not to decide as to have a prohibition which is incorrect.13And the courts do not help very much if there is no plaintiff. 14The parties are content with the positive outcome of their procedure. This15somewhat difficult situation has led in my country to the establishment of the16independent Monopolies Commission.  It is an advisory committee with the right17and the obligation to look into our files to detect whether we have cleared cases18which should be prohibited and to submit every two years a report to Parliament19about our activities or nonactivities.20That's a sort of control, and that idea has already been21discussed at the European level, too.  Not with any results for the time being, but22it is not such a new idea.  Transferred to Geneva, the role of the WTO could also23be expanded to include such a task to produce a report.  And to tell the interested
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1public that there were cases which should have been prohibited but have not been.2MR. RILL:  It's a transparency issue.3MR. WOLF:  Yes.   It's a sort of transparency issue, and that4may help to prevent a tendency of signatories establishing an antitrust regime but5not implementing it.6MR. RILL:  Of course, the OECD has had in place since71986 a Recommendation which makes available to those who want to use it a8conciliation service.  To my knowledge, as far as I know, it's never been used.9Konrad, then also Mr. Sanchez Ugarte.10MR. VON FINCKENSTEIN:  Let me take a stab at answering11the question.  You suggested a country pursuant to its WTO obligation adopts a12state-of-the-art system but it's a dead letter. It doesn't do anything to enforce it.  It13seems to me that you cannot then take an individual appeal to the dispute14settlement mechanism.  You could, however, go to a dispute settlement mechanism15if you have a pattern of conduct where there is a series of cases that have not been16acted on, and then you would argue as you always do, before the WTO. You argue17both the letter of the law and the effect.18And you would say the obligation is to establish an antitrust19system.  They have adopted the necessary law but it is not being used at all, so the20effect of it is they are not living up to their obligations.  Your obligation is to have21 a functioning antitrust system, not to adopt antitrust laws.  And you know, it's the22same argument you make before WTO dispute settlement all the time.  When you23have a national treatment violation allegation, you find out that even though the 
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1law may, on the face of it, be neutral and treat foreigners the same as domestics,2actually the effect is discriminatory and therefore you are in violation of national3treatment.4You would argue the same thing here.  On the face of it you5have compliance but in effect if you look at the way it works, you have6noncompliance because you don't have a living, functioning antitrust system.7MR. RILL:  I'd like to know more about it.  Mr. Sanchez8Ugarte.9MR. UGARTE:  You asked me the question of the WTO for a10discussion of international antitrust issues.  I think that it's good that the WTO11has taken sort of leadership in the sense that they are discussing these issues quite12 extensively and with all the countries involved in the World Trade Organization.13However, I think that not all issues in antitrust are related to trade.  I think that14 many things in antitrust do not necessarily involve trade.  So that would be one15 point.16And the other point is that I feel that the WTO tends to be, in17a way, a little bit defensive.  After all, countries are sitting there trying to defend18their industries, protect their economies as much as possible, of course, within19certain bounds and certain limits that are set up by the general agreements.  But20there is, and this is my perception, that in general, antitrust authorities tend to be21more open, more pro-competition, more vocal about opening or eliminating22barriers to trade than what you have in the negotiating table of WTO.23I think it's good that they are discussing competition policy,
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1but I really do feel that there should be sort of a, like some independent or2separate international entity that would take more as its main task the discussion3of antitrust matters.  Probably something similar to what you have with respect to4intellectual property, where you have a discussion at WTO on the one hand, and5on the other hand an independent institution, WIPO, that deals with intellectual6property.7So I really think that we should consider sort of a, an8umbrella organization.  The OECD I think is doing a very good job, but not all the9countries belong to OECD.10MR. RILL:  You have other regional organizations, APEC11and --12MR. UGARTE:  APEC.  However, if you add up all the13memberships of these organizations, you would not encompass all the countries in14 the world.15MR. RILL:  Clearly it would not.  So you would find Frederic16another group to chair.17(Laughter.)18MR. UGARTE:  Maybe.19MR. RILL:  Now that your namecard is up.20	MR. JENNY:  Thank you very much for that suggestion.21(Laughter.)22First of all, I want to be absolutely neutral as the Chairman23of the WTO group, so I will not offer a vision of where the process should go, but
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1I was struck by the way the question was framed by Merit Janow.  She said,2"Well, we know that most competition laws are not discriminatory, and if they are3not, then what's the value of having some kind of multilateral agreement dealing4  with this issue?"5I was struck because, on the one hand, inquiries within6OECD countries about whether their competition laws are discriminatory or not7tend to say exactly what you said, that there is no problem.8On the other hand, the business community, and some of the9people who don't want to see the competition law issue being debated in the10multilateral forum, argue that the reason they don't want it to be discussed in the11multilateral forum is because in fact they don't want competition law to be12disseminated across countries, because it will be misused.13But they also add that there are already some non-OECD14countries which, in their opinion, misuse their law in a discriminatory way.  There15is a very large country in between Southeast Asia and Europe which is usually16pointed to as being a typical country where there is an interesting market but17where competition law is, in fact, used against the interest of the exporters and in18favor of protecting its domestic market.19So one cannot, on the one hand, start from the premise that20there is no discrimination in the competition law and policy tool, and on the other21hand start from the premise that there is already some discrimination in some22countries.23My second point is, is discrimination the whole thing?  Isn't
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1transparency another issue?  There are countries where when you make a2complaint to the competition authority, the competition authority may respond or3not respond, may choose to investigate the case or not choose to investigate the4case.5It could make a difference if there was an obligation, at least6in the context of international trade, that if an importer makes an allegation that7market access is restricted for a variety of reasons, and complains to the relevant8authority, the importer will be entitled to get a decision.  And the decision will be9 established in a transparent way and possibly appealable.10And I'm saying this because I personally believe that merger11control in France is not very transparent for reasons which have nothing to do with12either Mr. Gallot or myself, but because the law sets a system which is not very13transparent.  And I can sense that there is a certain amount of frustration on the14part of foreign firms whose mergers need to be reviewed by French authorities15because they complain about the lack of transparency of the process.16Now, it doesn't mean that the process is used in a17discriminatory way, but it means that they would be satisfied that it is not used in18a discriminatory way if it was more transparent.  So I do grant that any tool can19be misused, that competition law and policy could be misused, but the real20question is whether letting things proliferate, as I said this morning, is more21beneficial to the interest of trade and competition than having a common22discipline.23It may not be only the question of discrimination, although it
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1may exist; at least there are allegations that it exists.  It may be a problem of lack2of transparency.  And the last point I wanted to make was that it would be3interesting to know why in the Telecom Agreement, for example, it was thought4useful to have a provision that prevents governments from using their state5monopolies or the firms to which they give exclusive work from abusing their6dominant position by restricting barriers to entry.7If it is felt that competition laws are not used in a8discriminatory way, does that mean that this provision doesn't make any sense? 9Or does it serve a purpose?  Maybe by studying that kind of agreement,10nevertheless, one could find the benefits that conceivably could accrue from a11competition regime which, as I said this morning, would have to be limited in the12context of the WTO to the trade and competition policy interface, meaning only to13practices which restrict competition and trade.14MR. RILL:  The Telecom Agreement has a precedent but not15one that's in operation yet.  It depends on how the Telecom Agreement operates. 16The Telecom Agreement is always held out as the, perhaps, paradigm for a17broader competition role for the WTO.18MR. JENNY:  I'm not saying that it should be duplicated. In19a sense it's more advanced than what we are talking about.  It's not been enforced20yet, but it exists whereas what we are talking about is something that doesn't21exist.  I was not referring to the Telecom Agreement as something that should22necessarily be followed.  I was inviting the panel to think about why originally23when the Telecom Agreement was negotiated, it was thought it could be useful to
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1have such a provision, what was the logic behind this.  To try to see whether, in2other agreements, there could be some benefit or there would be a lack of benefit3in having a similar kind of provision.4Now, as I said, I think, (a) that one cannot reduce the5problem to the question of discrimination, and (b) that there are contradictory6allegations about whether or not competition law and policy is used in a7discriminatory way.8MR. RILL:  Well, in a non-enforcement context, I go back to9a comment I made in Geneva.  You were there.  Where there is not enforcement,10there is no discrimination.  The rich and the poor alike can sleep under the bridges11of Paris.12MR. JENNY:  Yes, but there is no transparency, and that13might be a source of concern.14MR. RILL:  We have Japan and then Eleanor.  Japan had its15namecard up I think first, I believe.16MR. ITODA:  Now, as far as the dispute settlement17mechanism at the WTO is concerned, if I may refer to that, in conclusion, I would18say before we get to the WTO dispute settlement panel, it is important to have19thorough discussions between the concerned parties, and the concerned nations20before we get to that panel.  That's my thinking.21Dr. Stern mentioned Kodak and Fuji.  As far as this22Kodak/Fuji incident is concerned, there is something that I'm quite mystified about23 still, and that is that the case had to do with Kodak stating that there are
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1competition restrictive practices in Japan, exclusionary practices in Japan, and2our position was if that were the case, the Japanese Antimonopoly Act would be3violated.4We asked that a complaint be filed with the JFTC; however,5that did not happen.  There was the Super-301 provision as a possibility and the6process shifted toward the WTO dispute settlement panel.  So if this problem had7been a JFTC issue, there could have been more done between the U.S. and Japan.8It might have been something that could have been done between the JFTC and this9particular American corporation, Kodak.  If there had been more communication10between the two parties, the outcome might have been different.11Also, Mr. Rill talked about how you could have very12sophisticated competition law and no enforcement, or not effective enforcement. 13In such a case, positive comity would not be very useful.  I believe he has14mentioned this.  My feeling is that would not happen very often. That would be a15rare occurrence that such a thing would happen. 16Even if the competition law itself or the way in which17enforcement proceeds is different among countries, I think that positive comity18will work on the basis of the differences in the nature of competition law19enforcement.20For example, think of the case where country A, say the21United States, enforces its competition law mainly with criminal sanctions, while22country B, say Japan, enforces its competition law mainly with administrative23measures and few criminal sanctions.
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1	In this case, enforcement of competition law in country B that2is requested by country A through positive comity will be the one with3administrative measures as usual.  Even if the country B does not enforce the4competition law through criminal procedures, it does not mean that positive5comity does not work.6So the way in which enforcement takes place may be7different, depending on the different countries, and I don't believe you were8referring to this when you were talking about this, but the differences in the nature9 of enforcement need to be taken into account when you talk about positive comity.10In any event, this is something I also mentioned during the11morning session, but if there is entry-deterring practice in a market of the12importing country and firms of the exporting country have difficulty in entering13the market, what is the effective way to deal with this?14In this case, if free activity by firms of the exporting country15is restrained and the interest of consumers is injured, this case may be in violation16of the competition law of the exporting country.  However, this case also would be17in violation of the competition law of the importing country because competition18in the market of the importing country would be restrained and the interest of19consumers there would be injured.  Therefore, it may be more appropriate that the20competition authority of the importing country enforce the competition law and21eliminate the entry-deterring practice by firms of the importing country; since, for22the importing country, the conduct is the one by the domestic firms in the domestic23 market, the competition authority of the importing country can make investigation
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1more efficiently and take legal measures for eliminating anticompetitive conduct2more effectively, and unnecessary frictions regarding extraterritorial application3of competition law can be avoided.  Therefore, it would be appropriate that the4 exporting country request that the importing country enforce the competition law5through positive comity.6The request by the exporting country is significant to the7importing country, too, because in general the country which suffers entry8deterrence tends to notice the anticompetitive conduct more easily than the country9 where the entry-deterring conduct takes place.10If that's the case, I believe this idea or concept of positive11comity will be very effective in that situation.  Thank you.12MR. RILL:  You are quite correct.  I was not referring to13differences in enforcement structure and enforcement policy.  I was referring to14non-enforcement altogether.  There may be some circumstances in which15differences in enforcement policy could be tantamount to non-enforcement, and16transparency would very much be helpful in identifying those situations.17I'd like to welcome to the table, belatedly unfortunately,18Doug Melamed, Principal Deputy Assistant Attorney General in the Antitrust19Division, Joel Klein's Principal Deputy.  I think he is known to most of you. Doug,20you should certainly feel free to participate to the extent you feel --21MR. MELAMED:  I feel free.  Thank you.22MR. RILL:  Eleanor, you had your namecard up.23MS. FOX:  I think I'll probably start with an observation and
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1then perhaps a question for your comment.  This relates to possible deprivations2of market access.  It relates to the possibility that there are exclusions from3market access where the antitrust law may not appear discriminatory.4Fred, I wanted to reflect on your suggestion, why do we have5the abusive dominance provision in the telecoms agreement?  Does that mean that6we were worried about discriminatory deprivations of market access?7And as a reflection on that, it may be the case that we are8worried about bars to market access and we don't care whether nationals in the9same country are also excluded, but we feel that there is an anticompetitive10exclusion.  And that would mean that discrimination is not the whole problem, and11maybe in a world of free trade, we ought to be concerned with anticompetitive12exclusions, whether or not discrimination is the problem.13Now I just wanted to make a reflection about European14Community law, which is concerned with unreasonable restrictions of market15access among the nations and not necessarily dependent upon whether it was16discrimination.  And the question is whether, in the international context, we17should be thinking of such concepts and whether we should be thinking about18bringing together not just private restraints or hybrid restraints but just19government restraints that are unreasonable and anticompetitive barriers to market20access?21One of the cases in the European Union is the Danish bottles22case, where certain Danish actors had gotten together on an agreement so-called,23for environmental purposes, to exclude certain bottles that didn't conform with a
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1standard of about seven.  And this caused a harm to trade because it was harder2for people who bottled the beverages in nonconforming bottles to come into3Denmark.4And the court said that environment is a very good purpose,5it's a very important purpose but the environmental purpose could have been6achieved in a less restrictive way and there is a real barrier to the flow of trade,7and it was caused by private parties there rather than by government.  In another8case it might have been caused by government.  It was not tailored to the policy9reason that was a legitimate reason.10In the European Union, we see this combination, we see the11treatment of public and private barriers, and we see the treatment without regard12necessarily to whether the barriers are discriminatory.  And I am wondering13whether in a world context, we have a need to be thinking of a wholeness of the14picture of anticompetitive or unreasonably anticompetitive public and private15restraints?16And if we need to think of this as a whole and integrated17problem, is there one place we ought to go or should we still have to go to18antitrust on the one hand and WTO government restraint on the other hand?  Or do19 you foresee some way of dealing with the public, private, unreasonable and20anticompetitive restraints as one problem?21This could, for example, affect a Fuji/Kodak problem if the22allegations of fact were true and a lot of people are skeptical -- and I'm not23commenting on whether Kodak's questions of fact were true -- but in a case like
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1that, if the claimant's facts were right and there were exclusions and they were2caused by private restraints but they are also caused by the combination with3public restraints: do you see that we ought to be dealing with the problem and do4you think that we ought to be dealing with it in a holistic way down the line?5MR. RILL:  Frederic, it's all yours. She asked you the6question.7MR. JENNY:  It's not mine.  Precisely because I'm chairing8the group.  So it's any of the other members.9MR. RILL:  There is a converse to that question and that is10whether or not you should have a total separation?11MS. FOX:  Yes.12MR. RILL:  Which is the other option. So that perhaps the13trade people would keep out of the area of private and hybrid restraints and the14antitrust people would stay out of purely governmental restraint.  However, I15understand there is a tough dividing line there.  I would, of course, draw it in16favor of the antitrust jurisdiction.  That's a personal view, not a Committee view.17	I'm sorry, Konrad?18MR. VON FINCKENSTEIN:  It seems to me that you should19deal with them sequentially.  You should deal, first, with the public restraint and20the WTO or whatever the chosen instrument is, to see whether the anticompetitive restraint21that you allege is there is actually sheltered by the public restraint or not.22So that once you remove the public restraint you will see whether the23 anticompetitive restraint still exists or not.
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1You can't assume automatically that because they exist at the2same time that they exist independently.  It may very well be that the3anticompetitive restraint will fall to the ground once you have dealt with the4public restraint.  So I would think you should always do it sequentially.5MR. RILL:  You're somewhat slower.  But I  guess --6Eleanor, someone else had her namecard up on this, too.7MS. JANOW:  No, not on this.  Go ahead.8MS. FOX:  I just wanted to follow up on that.  Because9sometimes the question is how easy is it to get rid of the public restraint?  If it's10going to be hard to get rid of the public restraint, the public restraint becomes part 11of the market background for the private restraint and may make, for example,12 some vertical exclusive agreements that would not otherwise be unreasonably13exclusionary, they might make the product restraint unreasonably exclusionary.14So I see them as sometimes inextricably linked.15MR. LANGEHEINE:  I think we all agree that regulatory16measures can have restrictive effects, and it's desirable to get rid of these17measures just as it is desirable to get rid of anticompetitive private behavior.  I18think we have to make a distinction, though.  If there are other rules that allow19you to get rid of this sort of public behavior, then that's fine, but if it is a20restriction of competition caused by government action, things become very21complicated.22And I recall, since you mentioned EU law so much, that this23is one of the areas we tackled last and we still haven't really sorted out yet.  And I 
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1have been involved in a number of cases where we tried to do something about2German insurance rules and about freight rates and other things where there were3government interventions that caused restrictions on competition.4That is very difficult to tackle because invariably you have5public interests involved and you get into the field of public policy, where you6don't find as much agreement as you will find in other areas.  So I think you would7have to have some kind of a gradual approach and I think you can only divide the8two if you have a means to get rid of the public restrictions through some other,9 maybe already existing WTO rules.10It's fine if you can do that first, but to mix the two and to try11to tackle all kinds of private and public behavior at the same time or even12mixtures where the two go together at the same time, that would be very difficult,13at least as a first step.  As systems develop over time, it will be possible and14certainly if we, in the context of the WTO go into the direction of looking at15private behavior, that will become inevitable.  But I think that should not be one16of the starting points of the debate.  I think we should leave that for a later point17in time.18DR. STERN:  I would like to go to into another set of19questions.  I want to pick up on some comments that were made earlier this20morning on proliferation of antitrust laws and rules around the world.  And even21you, Mr. Jenny, just have made some reference to concerns on behalf of some22business groups that there is spotty enforcement of these rules and sometimes they23are really masks for anticompetitive activities in a country.
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1One of the suggestions this morning was that the technical2advice that is exported should be less in the form of new laws and more in the3form, as I recall, of institution building.  I think that was your point, Mr. Oliveira.4Thank you.5In that realm, I am wondering if you could elaborate more? 6Because I do think that not just the WTO or the OECD are potential institutions7that have an impact on what different countries do in the name of competition8policy, but there is the World Bank, and the IMF and other regional banks that9have, if you will, given technical assistance funds and contracts to write some of10these laws that have proliferated around the world.11And I think the question that should come to us and we should12 at least try to tackle, is if there is going to be an exporting of the ideas for13competition policy, are they best in the form of contracts for writing antitrust14laws, or are they better in the forms of perhaps structural analyses or, as you15suggested, doing analyses on institutions and looking to see how you maintain, for16 example, an independent integrity of antitrust policy or competition policy17regulators?18I was talking with Mr. Fels, and I said, "Well how come you19have been in office for so long?  I mean, you have made some tough decisions,20don't you have some fatal scars on you?"  And he said, "Well, I have been in for21five years, but I can be reappointed."  Well, as a Commissioner where I sat at the22International Trade Commission, the fact that I had a nine-year appointment23allowed me to be very independent, and I also didn't have to worry about getting
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1reappointed or making anybody happy or unhappy in my decisions because I knew2I could not be reappointed.3Now that's a form of institutional practice which might be4borrowed by other countries.  So this is a long-winded question to ask if you5would elaborate or if others might elaborate on your point, about the way in which6competition laws are proliferating?  Are there better ways that we could export the7 notion of competition to different economies?8MR. OLIVEIRA:  Certainly.  I think this is very important.  I9find that the type of technical assistance that provides funds for countries to write10their laws and have their competition acts and so on, that certainly might be useful11 if the countries are willing to implement those laws, of course.12But I do not think that that should be the main focus, and I13think that there are different ways in which one can export best practices and I14would like to tell you about a few good experiences we have had.  We organized in15 the recent past what we called international weeks with the participation of16different competition enforcers from different countries and what they do is they17observe what we do on everyday work at CADE.18This has proved very useful in the sense that it's not only a19matter of discussing a particular clause, a particular article, but it's a matter of20discussing and participating in our decision process.  This is a peculiarity in the21Brazilian system, which is that our sessions are public --22DR. STERN:  Very peculiar!23MR. OLIVEIRA:  -- and the reasons for a particular vote are
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1made public.  We are carefully not publishing confidential data or things like that,2but I think this helps and this makes it easier for foreign officers to participate.3DR. STERN:  There is a record in effect that is made4available to the public?5MR. OLIVEIRA:  Exactly.  And on our Home Page on the6Internet, one can look for particular votes and information about the decision, so7that also makes it easier for people to follow.  I think also the one other8experience that we would like to have this coming year in 1999 is to have a review9 by an international committee of our decisions of 1998.10DR. STERN:  Who should review those?11MR. OLIVEIRA:  We would like to hold a seminar, an12international seminar in February, and we would like to invite different experts to13 participate and do that.  Of course, all that requires funds, and I think that this14kind of funding and this kind of activity is very, very helpful in introducing best15practices and different types of ideas.16Another interesting experience was the discussion we had17concerning our last resolution on mergers, that I presented this morning.  We had18the participation of two Argentine commissioners.  Actually the president of the19Argentine Commission and one other commissioner participated in the session and20 discussed with us.21We hope that for our upcoming resolution on our22administrative guidance that we will have at the end of this month, that we will23have other foreign participants as well.  I think with this type of practice and also
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1the interchange, the exchange of officials, the agreements that we have with the2universities that could be extended to foreign universities, all that helps to build3up the institution and has very little to do with writing statutes or things like that.4DR. STERN:  Indeed.  Do you think there should be a role at5the WTO and -- going beyond the Working Party -- should the Secretariat of the6WTO help disseminate these best practices?  Or be the worldwide repository for7decisions made by signatory countries in their own competition policy matters?8We talked about this a little bit, but we also had a reference9by somebody about the French system which is not as transparent, it was alleged. 10So I mean, should there be some obligation by members to participate by11registering with a repository at the WTO on transparency and record keeping?12MR. OLIVEIRA:  Well, I find that this kind of work that to a13large extent, OECD does for the OECD members, and UNCTAD does for the14developing countries, I find that the WTO could also do this kind of work.  At an15early stage I would not think about an obligation of members to review their16policies, but I find that the exercise that OECD has of a policy review in a certain17period of time would be very useful.18I find that if countries voluntarily are willing to be exposed19to a review by a committee, for instance, as we would like to do in 1999, I think20that that would be a good example and that would stimulate this type of discussion21and this type of interchange.  Perhaps in the future one could think that as a22 member of WTO, one would have to follow certain core principles in the23legislation and in the jurisprudence.  Perhaps it's premature now, but we could go
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1in that direction.2I would think of a system that would work on a voluntary3basis, that countries would present their policies and the organization would4analyze them and would give advice and expand best practices to other countries.5MR. RILL:  I guess the one problem I have with the notion of6the WTO, as to the wisdom-- and I trust this is a trade issue. Transparency is an7overarching issue of competition policy regardless of whether trade is implicated8or not.  Maybe, I think the idea of a repository of -- everybody has mentioned9transparency -- a repository of some best practices on transparency in some10organizations, start perhaps with OECD but look to others, would be more11comprehensive and perhaps more within the jurisdiction of the group than the12WTO serving that purpose.13I admire very much the European Commission's willingness14to give some description of why a merger was not challenged.  It would be a very15useful exercise for the United States to try and experiment with that particular bit16of illumination of decision-making, clarification of decision-making.  I think the17Commission does an excellent job of that, but at this point I'm just not sure the18WTO is the right body.19MR. OLIVEIRA:  Well, there is, if you will permit me, a20problem is that we do not have any other forum with all countries.  The WTO21doesn't have all countries but I don't know any other forum with more countries22than WTO.23DR. STERN:  Except the U.N.
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1MR. OLIVEIRA:  So that's a problem.  It certainly has some2general principles that could be very well applied.3MR. RILL:  Well, I think it's one of the functions of this4Committee at least to undertake to identify what may be, from our standpoint, to5have a consensus on best practices and on what goes out on our view as to what is6a recommended --7DR. STERN:  Transparency.  And I think that the other thing8which keeps getting forgotten and needs mention is institutional integrity.9Independent institutions are perhaps in the eye of the beholder, but I think at least10 to one reporting how a decision maker is appointed to the job, and for how long,11 and under what circumstances, would be another way to bring about institutional12integrity.13MR. RILL:  Well, my only comment on the WTO, it may be14it's an organization that may go well beyond the jurisdiction.15Please?16MR. DE GUINDOS:  Mr. Chairman, an idea has come to17mind.  One of the main criticisms that has been made today, as to the International18 Monetary Fund and the handling of the recent crisis, is that it was too focused on19 microeconomic policy, discount policy, monetary policy, exchange rate ratings,20etc.  And that much more attention should be paid to supply side economics, let's21 say, macroeconomic issues.22DR. STERN:  Yes.23MR. DE GUINDOS: We should bear in mind that the IMF
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1has a lot of, an immense amount of programs. I am taking into account the need to2 strengthen the microeconomic approach that has been also recommended, for3instance, by Tony Blair in the case of the UK.  Perhaps one possibility could be to4 have the World Bank or the IMF much more involved in commanding good5practices with respect to competition policy to these emerging markets.6DR. STERN:  Yes.  It's a very good point.  There is a whole7dialogue going on among the financial ministers and their political leaders about8how to reform the IMF so that there is more focus on the internal markets, the9structures in each one of those.  And there was a discussion a little bit earlier in10the morning.  In every discipline, people focus narrowly.  The finance officials11have their conversation, and then the antitrust lawyers have their conversation,12and then the trade people have their conversation.13Someone earlier said this is a golden opportunity, it may have14 been you yourself, that this financial crisis is a time to relook at a lot of these15areas.  And the IMF may be just the institution that really ought to be challenged16to focus more on competition policy.17MR. RILL:  Sorry, please?18MR. UGARTE:  I worked for the IMF for a couple of years.19DR. STERN:  I knew you were going to say that.20(Laughter.)21MR. UGARTE:  I really don't think that you should relate22antitrust policy to loans and financing and standby agreements and so forth.  One23thing I admire about the OECD is that what you are getting there is a peer review,
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1I mean, the people that are judging you or that are analyzing what you do are2people that do exactly the same job that you are doing.  And I think that they know3what the difficulties are and how easy or how politically complicated it can be to4 do something or other.  I have the feeling that the IMF is sort of above the clouds 5--6(Laughter.)7MR. UGARTE:  And for them, it's very easy to say, "Well,8why do you do this?"9MR. RILL:  That's through the clouds.10(Laughter.)11MR. UGARTE:  I mean, I love the institution, but I have a12feeling that peer review is very important.  I think it's good that you are judged by13people that do exactly the same thing that you do.14MR. DE GUINDOS:  The difference with the IMF is that the15IMF has money to support countries.  That's a big difference.16MS. FOX:  Just to add to that, the IMF sometimes, at least in17-- Merit was going to say that.  Go ahead, Merit.18MS. JANOW:  Go ahead.19MR. RILL:  One of you go ahead.20MS. JANOW:  There is the possibility that when aid is not21linked to functionality it can pervert incentives.  Is that a concern?22In other words, if it's an element of IMF conditionality that a23country has competition laws, some jurisdictions may pass laws quickly because it
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1turns on the financial spigot.  Also, new laws, especially if they imply filing fees,2produce the opportunity for rent-seeking behavior.  As seasoned enforcement3officials, how do you evaluate these factors?4I was also intrigued by Frederic Jenny's observation this5morning that it was the right time to capitalize on a change of attitude,6particularly in the Far East.  What is the implication of that observation with7respect to competition policy as such, as against notions of transparency and8accountability in the financial context?9MS. FOX:  It's related.  It's a different point maybe, a more10sympathetic point, that the IMF sometimes will require that nations adopt11competition policy, and that the IMF will sometimes look to the World Bank to12give the content because the World Bank has certain people in place who are13experts in competition policy. And they themselves have this list of best practices.14So I guess it's just a complementary remark.15DR. STERN:  My point was that sometimes they may be16focused too much on drawing up the legal code and not sufficiently on the17independent integrity of the institution that is going to enforce that code.18MS. FOX:  Definitely.  But Merit's point is really different.19And I would love to hear Frederic Jenny's response to Merit's question.20MR. RILL:  Frederic?21MR. JENNY:  Just on the first question, whether it's a good22idea to have the IMF or the World Bank promote and disseminate competition23principles.  Well, there are several questions.  First of all, there are some
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1countries who need the IMF and World Bank, and others who don't actually have2so much intercourse with the IMF, but still possibly need a competition policy.3For the second, I think it would be very interesting for your group to ask people,4since the World Bank has been involved in promoting competition policy, to tell5some of their experiences.6	I don't know whether they would be as frank as they are when7they talk privately, but I can recall some number of stories of the kind -- and I8  won't mention the country -- well, it's an African country where the World Bank9has been recommending that they should adopt a competition law as a condition10  for getting funds, and it was very slow in doing it.11And then the one day the World Bank representative was12there, in the capital of this country, and said, "Where are you?"  And they said,13"Well, we are still discussing what we should do."  And then the representative of14 the World Bank said, "Well, I have with me the Belgian law."  And the guy from15 the Ministry says, "Oh, you want us to adopt the Belgian law?  Fine!" without16 even reading it.17So, I mean, there is a limit to what you can expect.  On the18other hand, the institution, of course, the World Bank would be satisfied even if19they adopt the Belgium law -- which doesn't happen to be a particularly good law,20by the way -- but at least a condition will have been formally met, and it will be21able to give the money that it wants to give.22So I'm skeptical of this and I'm also skeptical of giving the23IMF or the World Bank the power to withhold money on the basis that the law is
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1not properly enforced.  Because I don't see where the IMF or the World Bank2would do a better job than anybody else, including the WTO.3Now on the issue of the Asian crisis, I think that my point4was originally to say that, to promote cooperation in whatever form, you first need5to have competition institutions and competition laws.  And that it is true that6there was a certain resistance and there is still a certain resistance on the part of7 many important countries and important traders on the world scene, and that8 having good will for the whole notion of competition is a very important element if9one is going to talk about the issue at the world level or at the trading system10level.11Now, it happens that you will see in the submission of Korea12to the WTO, for example, how the Korean government expresses the fact it was13just on the wrong track and that there has been a very heavy cost.  And that when14you look at the Korean situation today, you see that the President, the new15President is really trying to promote competition but is faced with a highly16concentrated industry and chaebols who are really resisting any attempt to17deregulate the economy or to open it up to foreign competition.  Which means that18the solution of the problem, even if there's political will, is not obvious.19Now, I think that there are enough countries who are maybe20not as advanced as Korea in realizing the virtues of competition, but are at least21open to the questioning, such as Indonesia, even Malaysia, where we can clearly22see that there is a tendency between, I would say, the modernist and the old guard23on this issue, that there is a good prospect, I think, at this point in time, that a lot
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1of countries would be willing, given a little push, or given a little incentive, to2adopt competition policy and competition laws.  And particularly if this was in the3 context of a multilateral agreement.4I think one should capitalize on this. I don't mean to say that5it would change competition law.  I would rather say that those countries are ready6to adopt, I would say, state-of-the-art or modern principles of competition law.7Now, again to point to the experience of Korea.  The Korean8Fair Trade Commission is charged with the enormous task, besides trying to9promote as much competition as possible, of reviewing several hundred laws and10decrees to try and track down every unnecessary competition-restrictive regulation11that should be stricken out.12Now, this goes back to my point again this morning.  I mean,13I was talking about Latin America, but it's not only in Latin America that we see14competition authorities can have a role and an important one in deregulation.  I15mean, likewise in Japan.  The JFTC has been reviewing a number of laws and16making representations to other Departments on provisions which are17unnecessarily restrictive of competition.18Now, there is this changing mood at a time when, and on the19proliferation issue, I was going to use -- there are two favorite sayings on those20issues.  There is Jim Rill's pronouncement that "the elephant is on the table and21it's not going to go away so we better do something about it."  And there is the EU22pronouncement, particularly Jonathan Faull's pronouncement, that "the train has23already left the station" in talking about proliferation of competition laws. And
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1the question is not whether we can stop it, the question is whether we can do2something about it that will bring some order to the process?3I believe that both pronouncements are pretty right, accurate4descriptions of what happens.  But the Asian crisis is important because it will5lead to a new proliferation among countries which previously were not so intent on6having competition laws, and that this may be a good time, particularly because7there is often a market access problem associated with those countries, to try to 8capitalize on this, possibly in the context of the WTO, or any other context.9I mean, I'm not, I don't want to get into that discussion10because the members here will decide eventually what they want to do with the11group.  But certainly this is not going to repeat itself very soon.  I mean, this is a12right time in a sense.  There is more openness on the issue now from countries13which were more antagonistic to the project than used to be the case two years14ago, five years ago and certainly 15 years ago.15MR. RILL:  Paula has a follow-up question.  I just want to16state on the distinction between Jonathan Faull's comment and mine is that he's17much more involved in dynamic processes.18(Laughter.)19DR. STERN:  Monsieur Jenny, on that point about the20chaebols in Korea:  Can't one argue that it's not just the financial crisis but it has21been the role of the IMF and the private banks in forcing along these new attitudes22that you are finding so enlightened?  It suggests to me that there may be a way of23  channeling the IMF going forward in some of the ways in which British Prime 
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1Minister, Tony Blair, has been giving speeches about a renewed IMF to deal with2 these problems.  Not to take away from the WTO, but --3MR. JENNY:  To be honest, I don't know.  What is true is4that: (a) there was a KFTC before the crisis; (b) the KFTC Chairman had cabinet5rank before the crisis, and had the most terrible time trying to impose its views.6Now, it was already realized before the financial crisis that7the country was not on the right track, that corruption was rampant and that this8was also a product of a system that was disregarding competition incentives and9profit maximization as we would like to see it.10	So I think that one cannot say that the new mood is purely the11product of the IMF, although I certainly believe that the financial crisis and12possibly the conditions that have been attached to Korea have contributed to13improving the situation.14DR. STERN:  Sure.  I mean, they had already become a15member of the OECD so surely they were already thinking about competition16policies in that context.  But I wanted to compare the potential comparative17advantages of one institution over another to see whether one was better equipped18 than the other.19MR. JENNY:  I fail a little bit to see what there is to20compare.  Aren't we comparing apples and oranges, between the IMF and21organizations such as the OECD or the WTO?22DR. STERN:  For example, we put on the table the example23that the WTO, there is competition issues which may not be directly trade related,
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1and therefore the IMF, which is not a direct trade-related institution, might have a2 comparative advantage in looking at the issues more broadly.  There are pros,3cons, differences.  I'm just trying to elicit as many of these distinctions as possible4so that we can analyze this with some clarity.5MR. RILL:  Doug Melamed has his mike fired up.6MR. MELAMED:  This is in the form of a question addressed7to you, Frederic, and obviously anyone else who might have a thought about it.  I8want to leave aside the issue at least temporarily that Paula was focusing on,9which is what institution, what forum might be optimal.  I want to take as a given10your observation -- which, I guess in varying degrees, many of us have -- that this is11a special time in terms of the interest throughout the world, and particularly in12  segments of the world that haven't previously shown a lot of interest, in13  competition policy.14I want to ask what the implications of that premise are for15how we should proceed?  I can imagine one variation -- that countries are very16interested in the potential that competition policy might have for them, and they17might be interested in developing their own unique version, suited to their culture18 and their economic needs and the like.19On this assumption, what is called for might be an enhanced20and enriched international dialogue, in which countries with more experience in21competition matters can share their experience with others in a variety of ways22and help the others develop appropriate competition policies.23Another possible implication is that the time is ripe for a
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1discussion about international agreements, about competition standards and2competition peer reviews and whatever might be included in international3agreements to aid the process.  I could imagine that agreements might lend4structure to the progress and even that they might promote progress by giving5comfort in the sense of all being in this together.6I could also imagine, however, that if we go beyond dialogue7and into agreement, nations -- particularly those that are only tentative now about8their commitment to competition policy -- might begin to feel threatened, and that9that might inhibit the process of embracing competition policy.  And I wonder10whether you or others at the table have a sense of what really are the implications11of the current international mood for how best to proceed, apart from the question12of what forum or institution would be the best one in which to proceed?13MR. JENNY:  The first thing I would say on this is I have14done a lot of technical assistance in various countries.  I remember one particular15case where, with the World Bank and the French Ministry of Economic Affairs, we16were in Africa talking to French-speaking African countries.  And the Ministry17official -- this was before Mr. Gallot, so he is not responsible for this -- was18explaining how we had used competition law in France to strike out the price19cartel among the plumbers.20Whereupon the representative from -- I can't remember which21	 island it was, perhaps Cape Verde, raised his hand and said, "We don't have22 plumbers."23The story got worse because after that the same official
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1explained how a price cartel between marriage agencies, you know, where you2meet people to get married, had been struck down.  And he was answering a3question from a representative of a Muslim state who said that this is not the way4things were done in his state and this was not very relevant either.5(Laughter.)6My point is about how to proceed.  I think that talking to7each other in the context of OECD is very valuable.  We miss a point, which is8we would not talk to countries which see competition from a different angle.  And that9 the value of a large forum, whatever that forum is, is that it will bring some sense10 and rather than selling competition law and policy as you know it -- you realize11that maybe it's more complicated than you thought.  And it has to be tailored to12  the needs and the particular specificity of the country that you are talking about.13On how to proceed, I firmly believe that it's insufficient to14talk within the confines of a small, or even of a large set of countries who are15fairly homogenous in terms of development, of legal systems -- they have their16differences but they are still closer together than they are to the rest of the world.17So that's one observation.18The second one is that there are still a lot of countries which19are on the verge of adopting a competition policy but have not quite decided to do20 it.  I mean, they are more sympathetic to the idea of adopting competition21principles and deregulation, but as I have said this morning, there is still22resistance to this. I have a tendency to believe that they will be more convinced to23adopt such competition policy and laws or to promote deregulation if it is in the 
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1context of an obligation than if it's through pure discussion.2So I would also say the WTO has an element to contribute.3The member countries have committed themselves to trade liberalization measures.4If there is any relationship between liberalization and competition, this is the way5 to enter.  It will not necessarily lead them to adopt domestic competition policy,6but once they start having to deal with competition where there is interaction with7international trade, there is a fair chance that they will continue in the logic of8 adopting wider competition law.9My last point is to say that I do not believe personally that10minimum standards -- whatever that means, I'm not exactly sure what it means --11are useful.  I'm quite convinced that it is not a good idea in the context of the12world that the differences in legal systems, the difference in social, economic13makeup and the difference in, even in a political sense are considered unimportant.14	Laws are only the product of a system and therefore you have15to adapt such laws to local reality.  And this can only be done by a very large16discussion among countries which have very different origins and very different17makeups.  So whatever the forum, I would say it has to be very international, more18international than the OECD.19MR. RILL:  Maybe they are multiple fora.20MR. JENNY:  Oh, there are multiple fora.21MR. RILL:  There are multiple fora; maybe multiple fora can22be used.23MR. JENNY:  Absolutely.
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1MR. RILL:  Before we close up, I want to come back to an2observation made very early on by Dieter Wolf that it's not the Sherman3Anti-Cartel Act, it's the Sherman Antitrust Act, and we need to talk a little more4on concentration, mergers, one of our topics.  We spent most of our time, I think5very profitably, very valuably, on practice, on conduct issues.6	We have talked some about mergers. What I have picked up is7 a suggestion by Karel Van Miert when some of us have been thinking of the time8period, the common time periods.  We have talked about the sharing of9confidential information in merger review.  We have talked about transparency10and decision making with respect to mergers.11I just want to invite the participants to let us know if there12are any other comments or suggestions you would have with respect to particularly13United States practices, if they may relate to other jurisdiction practices in the14merger area.15MR. DE GUINDOS:  Well, with respect to mergers, I would16like to make a point.  It's that next year, 11 European countries are going to merge17 their currencies, and as far as I know without prior notification to competition18 authorities, no?  I don't know if this forum was involved or not.19But there is one point that I would like to raise.  The final20target of having a single currency in Europe is achieving an internal market and21promoting the restructuring of the European economies in order to have higher22economies of scale, higher economies of scope, and to gain efficiency.23The point that I would like to raise is that perhaps this will
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1give rise to a wave of mergers in Europe and of course that it will increase the2interest of non-European companies in taking over European companies because3well, with a larger market, you have an incentive to do it.  But perhaps there is4not a contradiction between the appearance of the single currency next year in Europe5and the underlying intention of competition authorities to control much more the6 visible wave of mergers that this could give rise to.7This is a question that I would like to pose to my European8colleagues.9MR. RILL:  Anyone care to respond?  Mr. Gallot, and then10Dieter Wolf.11MR. GALLOT:  Yes.  Is it just possible to say one word12about the non-transparency of the French system, the merger French system, just13one word?14(Laughter.)15I don't know if it is transparent, but it is a system, so I think16it's better than nothing, first.  Secondly, we have a system which is quite original. 17There is no compulsory notification.  There are only six people, six or seven18people with me to deal with that problem in France, so it's not a big organization.19So that's why we have no compulsory notification.  We are happy not to have20compulsory notification.21The Competition Council has only the responsibility to give22advice if the French government asked it to give advice, unlike your case.  Perhaps23it's one of your difficulties.
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1We have about 25 or 30 decisions each year.  I think progress2has been made recently because the French Minister said that mostly he will try to3take into account the advice of the Competition Council.  I think it's new and it's4 better.5What I can say is that the Minister will take the decisions on6my proposal.  And effectively it's not a decision made by an independent authority,7 but I think we are making some progress, and we are just a little transparent.8MR. RILL:  Dieter?9MR. WOLF:  Well, I'll leave aside the comparison between10the introduction of the Euro and merger control because I really can't see the link11between the two events, I would only like to avoid a misunderstanding.  And I was12pleading for integrating merger control in some sort of an international system of13the future, not of the near future, but of the future and to start talking about that14 question.  We don't have the time to leave that question aside.15I am not by any means saying that mergers as such are a16dangerous thing.  I think most of them, more than 90%, that's at least our rate, are17without any competitive problem.  And it's an economic truth that mergers18normally enhance efficiency, and that's why they take place.  So don't19misunderstand me, I am not against mergers.  And I suppose that you are not20formulating basic criticism of merger control as such at whatever level.  What I21tried to make clear this morning was that we are confronted worldwide with an22enormous wave of mega-mergers which only up to now are not dangerous.  I do23not know of a single case which has already become a critical one.  But looking
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1ahead a decade, it could well happen that we will be confronted with a degree of2concentration in some markets which will not be so neutral anymore.3It's speculation for the time being.  Predictions are always4very dangerous, but I wouldn't see the biggest dangers on product markets.  For5me, a critical sector could be markets for financial services.  Financial institutions6 -- because of the highly developed sector of information technology -- are already 7very much linked together.8They are very powerful enterprises, some of them at least,9they are contracting 24 hours a day, seven days a week without any interruption,10worldwide at zero time.  That's reality.  Still, we don't have markets where things11get so narrow that it gets dangerous.  But do we have the time to leave that12question aside?  And wouldn't it be too late, one day, to be confronted with a13critical concentration?14For one thing is clear to me, in contrast to cartels, a15dangerous concentration is irreversible for years.  Cartels are much less stable.16They are exposed to centrifugal forces.  Their lifetime is much shorter.  A17concentration is something you have to live with once it is established.  And18therefore I think it's time to discuss some sort of a merger regime also at an19international level, like we are discussing about cartels, hard core cartels.  No20more than that.21MR. RILL:  It would be perhaps more difficult -- just a22personal observation -- to have a total convergence of substantive principles in23mergers than in virtually any every other area that we're talking about.
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1MR. WOLF:  Right.  Therefore it will take much more time,2and perhaps even if one chooses WTO as the institution, it will start on a3plurinational, not on a multinational level. You will start with a limited number,4probably, of signatories of such a regime.  But that's also a secondary question to5me.  My purpose is to get discussions started, not more than that.6MR. RILL:  You have done that very well.  Look at the7namecards.  Let's move down the table: EC, Mexico and Japan.8MR. LANGEHEINE:  I think it's probably true that we will9see a certain consolidation after the introduction of the Euro.  I think we will see10mergers in increasing numbers.  The Commission, I think, has tried to do its job11by bringing more mergers into the ambit of European merger control.  It was a12very slow and sometimes rather painful process.  At least we have achieved some13improvements.  In cases where a merger has to be notified to three or more14authorities, lower thresholds apply and I think that's a good sign.15For the rest, I think, it is very difficult sometimes for16companies to notify mergers within the EC to eight, ten, or even more national17authorities.  So we have a lot of work to do within the EC.  I'm not sure that it is18something which is up to the EU, because there is something called the subsidiary19 principle.  So it's only where certain phenomena have a cross-border effect or an20 effect that concerns several markets that you can do something about it.21I think that does not exclude that we can think about more22homogeneity between the various national merger control systems.  And I am sure23 that the Commission -- and I say this without having the cover of my
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1Commissioner here  -- I am sure the Commission will come back on the question of2 thresholds and possibly try to extend them just a little more.3As regards time limits, I just want to supplement what Karel4Van Miert said: that sometimes we suffer from strict time limits.  But it also5sometimes can have advantages that other authorities are still continuing to work6on a certain case.  And I think in some instances we have seen a range of remedies7that were quite complementary at the end of the day, so a little competition in that8 respect might not be too bad.9And finally, as regards a possible, shall I say, wish list or10improvements of things in the U.S., again, it's very striking when you look at11something like the Boeing case, where the European Commission comes out with1250 or 55-page decision published in the Official Journal, whereas I think on the13U.S. side there was a three-page press release setting out in a rather summary14form the thinking of the authority concerned.15I'm not sure whether there is maybe some room for16improvement there.  I just want to sort of raise that point as a possible area where17we might want to think further.18MR. RILL:  Thank you.  Mr. President?19MR. UGARTE:  Yes.  Thank you.  With regard to the first20question, you know the one raised by Frederic, I think that the monopoly of the21central bank is the only real, I mean, the only monopoly I can think of that has22good, solid justification in terms of economic efficiency.  I mean, I don't think that23 we should discuss that too much.
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1Now, with respect to merger review, I think that is really one2of the topics that is becoming increasingly important, at least for us in the3Mexican Competition Commission.  And well, we are all aware of this mega-4merger trend and the implication that it has.  However, I think that the type of5communications that we have with other antitrust authorities, at least in our6specific case, are not working as effectively as, in my opinion, they should be7working.8	I think that on the one hand that we have institutionalized the9communication channels so that we can have more sort of automatic or more, well,10automatic is probably the right word, ways of communicating.11MR. RILL:  I'm going to put you on the spot on just that12issue.  I hesitate to bring it up, but you mentioned very early on the Union13Pacific/Southern Pacific merger.  Do you feel that your agency had the14opportunity to participate as much as it wanted to; first, before the Department of15Justice, secondly, before the Surface Transportation Board?16MR. UGARTE:  I don't think so.17MR. RILL:  I don't either.18MR. UGARTE:  I don't want to raise that.19MR. RILL:  Well, but you did.20MR. UGARTE: What I mean is in some of these cases, let me21just refer to one that's very current, the merger of Grand Met and Guinness. Both22the European Commission and the U.S. resolved this, what --  about six or eight23months ago?  Because of the lack of simultaneity in the procedures we solved this
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1case just a week ago or so.2And it just happens that for us all, we are sort of duplicating3work, and probably a lot of the information that has already been, or these studies4or the analysis that have been developed by other antitrust authorities could be5shared. 6Then I have the feeling that business is sort of following a7strategic approach in how they present their cases to the different antitrust8authorities.  They go first and try to sort of feel the ground whether it's going to9be passed or not, and they just move along and see how the next authority is going10to react to the merger and so forth.  In this particular case, we sort of feel left out.11And it's not that it took more time for us to solve the case, but rather that we 12received all the information late and we had to analyze the case, and it could have13 been done in a more harmonious manner.  I think that there are several other14 instances where this sort of example could be duplicated.15MR. RILL:  The undertakings in the 1991 U.S.-EU agreement16are the sorts of notification and consultation principles that might improve, I 17think, that situation.  Or maybe, once again going back more broadly to bilateral18or regional agreements, that might improve the situation, as might other processes.19But I was very sensitive to the impact of certain mergers on the commerce in the 20 Republic of Mexico, and I felt that there was not a full opportunity to -- either21taken or available, one or the other.22DR. STERN:  That notification wasn't provided for in the23NAFTA?
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1MR. RILL:  No, no, no, no.  It was -- we are talking about a2specific matter and really it's more, it gets back also to the question of separate3regulatory agencies within the same country taking precedence over one another. 4But I'm somewhat reluctant to get into that case.  I was involved.5MR. UGARTE:  Yeah, but here, on the one hand, Article61501 under NAFTA states that there should be cooperation between the7competition agencies, but this article does not have any -- I mean, it's not applied8in practice because there is no regulation and no rulings or whatever in order to9apply Article 1501.10MR. RILL:  Maybe we should recommend there should be. I11don't know.12MR. UGARTE:  Probably.  I don't know. So that's the first13point I want to raise about merger review.  The second has to do with a business14community.  I mean, I think that we are sort of becoming a bother, in the sense15that they have to be filing three, four, five different jurisdictions, very similar16information, so I mean, we could try to help the business community by trying to17make our filing procedures more uniform, our timing, the days that things have to18be sent.  I think that we can do a lot in order to improve the efficiency with which19we can work vis-à-vis the merging companies.20DR. STERN:  Do you think that if the U.S. and the EU came21up with common deadlines and common procedures, that they would be adopted22independently by other countries just because it would make more sense for their23regulatory authorities?  Or do you think it would take some sort of an institutional
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1push?  After all, Mexico did a lot of its liberalization before it joined the GATT,2 in order to join the GATT, and before it ever thought of suggesting a NAFTA with3 the United States and Canada.  So these things are done independently and4 unilaterally and are self-rewarding.5Do you expect that that would happen, too, if the U.S. and6the EU got together in some way and came up with a kind of paradigm of best7practices?8MR. UGARTE:  Yes.  I think so.  Yes. For instance, on the9one hand, the OECD has proposed some -- what is it, not exactly guidelines --10MR. RILL:  Framework.11MR. UGARTE:  -- for filing notifications.  The uniform12format.13DR. STERN:  Yeah, that's the OECD.14MR. UGARTE:  The OECD.  I think some of the countries15have accepted that.16DR. STERN:  Well, I just wondered if there would be a17snowball effect just from the U.S. and the EU --18MR. UGARTE:  No, I think it would be quite useful to have,19sort of, standards set up and have other countries follow up with the standards.20Of course, I think it would be good to do some consulting with the countries21involved.22DR. STERN:  That would be nice.23MR. RILL:  We are coming close to the witching hour; it's
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1close to Halloween.  We have comments from Mr. Kojima and Mr. Oliveira and I2think then we'll close up for the evening.  Mr. Kojima.3MR. KOJIMA:  I'd like to make two observations in4connection with market access and also law enforcement.  The first one is on5positive comity.  I think market access could be one consideration which might be6taken into account in requesting the other country's enforcement of competition7law.  However, we shouldn't put too much emphasis on market access.  In my8view, basically speaking, the competition policy concerned on the side of the9existing state should be the most important consideration in making a request to10the other country.  That's my first point.11My second point is, assessment of competition law12enforcement and policy should be judged on the merit of competition law and13policy itself, and not on the market access considerations.  In this connection I'd14like to quote some passage from an article by Professor Harry First, and I'm not15indicating that I share fully the view of the author, although it's a very suggestive16comment.17He says, "The government antitrust enforcement in Japan18during the SII period is the most vigorous it has been since the initial years of the19Antimonopoly Act; nevertheless it is commonplace to judge this enforcement as20weak.  This may be because the criticism of current enforcement often comes21through the prism of SII and the trade goals of U.S. negotiators.  If the question is22whether SII succeeded in using Japan's antitrust law to open Japan's markets, the23answer certainly would be no.  This, however, should not obscure the real gains in 
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1antitrust enforcement made during this period."2Thank you.3MR. RILL:  Thank you.  Mr. Oliveira.4MR. OLIVEIRA:  I would like to emphasize two pieces of5information.  First, that we decided this Grand Metropolitan case a month ago.6It's another example that we should do things simultaneously.  It would be much7more efficient.  Second, the new regulation on mergers tried to do precisely that:8to have a maximization of the intersection between what the OECD defined as a9good notification form and what would work according to the Brazilian law.  And10I think that that leads to my comment.11I think that there is a demand for standards, not standards12that countries would be obliged to follow, but that would serve as benchmarks.  So13I think that there is a real demand for that and that would certainly speed up the14process of some harmonization and more efficiency in the short run.15	In the medium run, however, I think that there is a problem in16 the sense that internally there is a free rider problem.  There is a tendency for17underfunding of competition bodies.  There are no vested interests which will18support competition agencies, independent competition agencies at the national19level.  At the international level -- and this, by the way, has a very important20implication regarding the relationship between the competition agency and the21regulatory agency -- because on the other hand, there are vested interests which22are willing to support very strongly the regulatory agencies.  So the asymmetry23can already be seen in many jurisdictions, the type of support that the two
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1agencies have at the national level.2At the international level, there is a Prisoner's Dilemma3problem, as pointed out earlier in the morning by Ignacio.  Clearly competition4policy is a very important device to guarantee trade liberalization, so if there is no5 external imposition of certain standards, there will not be implementation of6competition policy, and will not be implementation of competition policy7guaranteeing that trade liberalization.8So that, most likely, one will get a situation where countries9will underimplement competition policy.  But realistically this could be thought of10in terms of a medium-run proposition and a long-run proposition.  I think in the11short run the multiple fora solution seems to be another great one.  There is a real12demand for standards for benchmarks, and I think that multiple fora could feed13that appetite for standards.14MR. RILL:  On that note, I think the discussion of the15Guinness-Grand Met case leads me to conclude that it's probably approaching the16cocktail hour.  And I'd like to remind everyone that all the participants are invited17to attend a reception at Joel Klein's conference room at the Department of Justice.18 Enter through the 10th Street entrance; that's between Pennsylvania Avenue and19Constitution.  And the conference room  -- and I'm sure the guards will advise you,20 but it's to the best of my recollection 3107, or close enough.21	MR. MELAMED:  3109.22MR. RILL:  Close enough.  There will be a sign outside, and23you will see people.  Tomorrow we'll start at 9:00.  We have invited all of you
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1who are staying over, you are very welcome and cordially invited to attend a2reception tomorrow night at my law firm from 6:00 to 8:00.  3050 K Street, 4th3Floor, and you don't need a room number.  And Paula?4DR. STERN:  Yes.  That's an opportunity to reiterate the5cordial invitation I extend to all of you all, for a reception for all of the6participants and panelists at my home on Wednesday night, from 6:00 to 8:00,7assuming we get out by then.  I think you have been given some directions which8may have been a little circuitous, so you are being issued some new directions. 9It's only about 10 minutes from here.10MR. RILL:  So tomorrow at 9:00, the reception tonight.  And11of course the public is more than welcome to attend and you are more than12welcome to continue to participate.13I want to say, I cannot thank you all enough for your14participation, which I think was wonderful.  I think it has given us a lot to chew15on.  I hope that you'll write to us, call us with any further observations you have16along the lines we've discussed today or anything else on your mind.17I'm delighted with the input we got today.  And again, on18behalf of the Attorney General, the Assistant Attorney General, the Deputy19Assistant Attorney General and my colleagues on the Committee, thank you all20very much.21(Whereupon, at 6:00 p.m., the hearing was adjourned, to22reconvene November 3, 1998, at 9:00 a.m.)23                         |
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