0/-" R ~ ~ '1 ~ nA" 1

.. "l "(i", 0" '''' " I'" , t . ~,~ r.'" i! c', ~À'.; . n, J t ~ r:.ij ci t¡ ,," ,i-'ô r , r; t::¡; ~~:;1! tÌ il ~6J i;i1)

. UNITED STATES OF AMRICA

BEFORE THE FEDERAL TRADE COJ.SSION

In the Matter of

)

)

)

)

)

)

Docket No. 9327

Polyp ore International, Inc.

a corporation. PUBLIC

COMPLAINT COUNSEL'S RESPONSE TO RESPONDENT'S MOTION FOR

LEAVE TO TAKE THE DEPOSITION OF GRAEME FRASER-BELL IN

THE UNITED KlNGDOMPURSUANT TO 16 C.F.R. § 3.36(b)

On Januar 14, 2009, Respondent fied an application pursuant to Rule 3.36 of the

Commission's Rules of Practice for leave to obtain evidence though compulsory process issued

to Graeme Fraser-Bell, an employee of ENTEK International Ltd., a British subsidiar of thirdpary ENTEK International LLC ("ENTEK"). As discussed below, Respondent has failed to

satisfy the requirements of Rule 3.36(b). Accordingly, Respondent's motion should be denied.

I. The Requirements of Rule 3.36(b)

The Commission's Rules of Practice specify precise criteria that paries must satisfy in

order for an AU to grant use of proposed foreign compulsory process. 'specifically, Rule

3.36(b) requires a party seeking issuance of a subpoena to be served abroad to satisfy, in its

motion, the requirements for a subpoena under Rule 3.34 and to make specific showings that:

(1) the material sought is reasonable in scope;

(2) the material falls within the limits of discovery under § 3.31(c)(1), or, if

for an adjudicative hearing, the material is reasonably relevant;

(3) the information or material sought cannot reasonably be obtained by other

means; and

(4) the pary seeking discovery or testimony has a good faith belief that the

discovery requested would be permitted by treaty, law, custom or practice
in the country from which the discovery is sought and that any additional

procedural requirements have been or wil be met before the subpoena is

served.

FTC Rules of Practice 3.36(b); 16 c.F.R. § 3.36(b).

As this Court explained in denying respondent's motion for the issuance of subpoenas in

the Matter of Chicago Bridge & Iron Co., et ai., "the Commission, concerned about the

numerous issues and potential conficts that often arise in connection with issuing compulsory

process to entities outside the United States, amended its Rules of Practice to require ALJ

supervision of proposed foreign compulsory process." Order Denying Respondents' Motion for

Issuance of Subpoenas (April 18, 2002) (attached as Appendix 1). Explaining the reasons

behind the amendments, the Commission stated:

Respondents have from time to time attempted to serve such subpoenas abroad.

To the extent the subpoenas appear to have the imprimatur of the Commission, an

attempt to serve them on foreign entities outside the territorial limits of the U.S.

may raise serious issues of Commission jurisdiction and international law. In the

interest of limiting or avoiding conflicts with foreign authorities in this area, the

Commission is putting foreign discovery requests back into the category of ALJsupervised discovery under § 3.36.

citing 66 Fed. Reg. 17622 (F.T.C. April 3, 2001) (attached as Appendix 2). The Commission

further explained that the requirements of Rule 3.36 are designed to "assist the ALJ in

attempting to prevent unnecessar conficts with foreign sovereigns" and to assure that exercise

of compulsory process outside the United States wil not be attempted unless domestic discovery

and voluntar arangements have been exhausted or are not available:

Indeed, the tests provided in § 3.36(b) provide a framework that closely tracks the

prerequisites for foreign discovery as commonly recognized by treaty, custom and

practice in many countries: That is, such discovery should only occur if a judge

determines that the request is reasonable and that other means of obtaining the

information (such as domestic discovery or voluntary arrangements) have been

exhausted or are not available.

-2-
66 FR 17623 (F.T.C. April 3, 2001) (emphasis added). Thus, to effectuate the Commission's

policy not to embroil the Commission in unnecessary international conficts, it is important that

Respondent be held to the standards the Commission established by amending Rule 3.36(b)

specifically to avoid such conficts.

II. Respondent Has Failed To Meet The Requirements of Rule 3.36(b)

In order to prevail in its motion for use of foreign compulsory process, Respondent must

demonstrate that all four of the requirements of Rule 3.36(b) have been met. As explained

below, Respondent has failed to satisfy its burden.

A. Respondent has failed to show that the testamentary evidence it seeks cannot

reasonably be obtained from another source that is more convenient and less

burdensome as required by Rule 3.36(b )(2)

Rule 3.36(b)(2) requires a specific showing that the material falls within the limits of

discovery under § 3.31 (c)(1). Commission Rule 3.31 (c)(1) allows discovery of materials

reasonably expected to yield information relevant to the allegations of the complaint, the

proposed relief, or to the defenses of any respondent, but also sets forth that discovery "shall be

limited by the Administrative Law Judge if he or she determines that:

(i) The discovery sought is unreasonably cumulative or duplicative, or is obtainable

from some other source that is more convenient, less burdensome, or less

expensive;

(ii) The pary seeking discovery has had ample opportunity by discovery in the action

to obtain the information sought; or

(iii) The burden and expense of the proposed discovery outweigh its likely benefit."

16 C.F.R. § 3.31(c)(2). Respondent has failed to provide evidence that the concerns identified

in Rule 33.l(c)(2) are not met and that the discovery it seeks from Mr. Fraser,Bell should be

allowed.

-3-
In its motion, Respondent attempts to satisfy the requirement of 3.36(b)(2) by baldly

asserting that Mr. Fraser,Bell "is believed to possess important evidence in this matter"

concerning ENTEK's battery separator sales and competitors in Europe, and "(r)his evidence

cannot be obtained from sources other than Mr. Fraser,Bell." Respondent's claim is directly

contradicted by ENTEK in recent pleadings: ENTEK explained in its January 9,2009 Motion

to Quash Respondent's Subpoenas that ENTEK's Vice President of Sales and Marketing, Mr.

Daniel Weerts, who is employed and resides in the United States, is the person most

knowledgeable about the specifications in the subpoena served by Respondent on ENTEK. (See

Third Party ENTEK International LLC's Memorandum in Support of Motion to Quash

Subpoenas Ad Testificandum Issued to Oraeme Fraser,Bell and Robert Keith Pursuant to 16

C.F.R. § 3.34(c) ("ENTEK Motion to Quash") at 7.) This suggests that the information

Respondent seeks from Mr. Fraser,Bell can be obtained more easily from Mr. Weerts, and with

less burden and expense. Moreover, since "the vast majority of information sought from Mr.

Fraser,Bell" may be obtained by deposing Mr. Weerts, any deposition of Mr. Fraser,Bell by

Respondent wil be largely duplicative of Mr. Weerts's testimony. Id.

Finally, conducting a deposition in the United Kingdom would be a costly endeavor for

all concerned. The Court should consider whether the burden and expense of taking discovery

in the United Kingdom wil likely be outweighed by the benefit of any non,duplicative evidence

discovered during the deposition.

B. Respondent has failed to make the required showing that the evidence

cannot reasonably be obtained by other means as required by Rule

3.36(b)(3 )

-4-
Rule 3 .36(b) (3) requires Respondent to make a specific showing that "the information or

material sought cannot reasonably be obtained by other means." The Federal Register notice

accompanying the publication of the rule explains that:

(foreign) discovery should only occur if a judge determines that. . . other means of

obtaining the information (such as domestic discovery or voluntary arrangements) have

been exhausted or are not available.

66 Fed. Reg. 17623, (F.T.C. April 3, 2001) (emphasis added). This is consistent with the

express policy of the United States and other nations to minimize conflicts in the enforcement

of antitrust laws that can arise from, inter alia, attempts to enforce discovery outside the territory.

Thus, the United States antitrust agencies adhere to principles of international comity by taking

into account the interests of the affected foreign country in conducting law enforcement

proceedings.! This policy is also embodied in international instruments such as the OECD

Recommendation on antitrust cooperation, which calls for member countries to consider

whether information is available from sources within their national territory before seeking

foreign discovery and to seek voluntary production of foreign, located evidence before resorting

to the use of compulsory process.2

Respondent does not explain how it has exhausted other means of obtaining the

information that it contends Mr. Fraser,Bell holds. Respondent makes no attempt to explain

i See, e.g., Deparment of Justice and Federal Trade Commission, Antitrust Enforcement

Guidelines for International Operations 13.2 (April 1995) ("DOJ & FTC, Antitrust

Enforcement Guidelines") ("In enforcing the antitrust laws, the Agencies consider international

comity.").

2 Revised Recommendation of the OECD Council Concerning Co-operation Between

Member Countries on Anticompetitive Business Practices Affecting International Trade, OECD

Doc. C (95)130 (Final) (July 1995) (attached as Appendix 3). See also Deparment of Justice

and Federal Trade Commission, Antitrust Enforcement Guidelines for International Operations 1

4.2 (April 1995).

-5-
why it cannot discover the information it seeks from other sources located in the United States.

Moreover, since Respondent has issued subpoenas duces tecum and ad testificandum to ENTEK

and a subpoena ad testificandum to Daniel Weerts, ENTEK's Vice President of Marketing and

Sales, which seeks the same information Respondent seeks from Mr. Fraser,Bell, Respondent

cannot be deemed to have exhausted domestic sources.

c. Respondent has failed to show that the discovery requested would be

permitted by treaty, law, custom or practice as required by Rule 3.36(b)(4)

Rule 3.36(b)( 4) requires that a motion applying for issuance of a subpoena to be served

in a foreign country show:

that the party seeking discovery or testimony has a good faith belief that the

discovery requested would be permitted by treaty, law, custom, or practice in the

country from which the discovery or testimony is sought and that any additional

procedural requirements have been or wil be met before the subpoena is served.

Respondent asserts "a good faith belief that the deposition of Mr. Fraser,Bell is permitted

in the United Kingdom." Respondent's belief is based on the United States and United

Kingdom both being signatories to the "Hague Convention on the Taking of Evidence Abroad

in Civil and Commercial Matters" ("Hague Convention"). Respondent also cites to a U.S.

Department of State's briefing paper entitled "Judicial Assistance United Kingdom," for the

proposition that "Respondent can hire a British solicitor to take the deposition of Mr. Fraser'

Bell in the U.K."

Respondent's "good faith belief' falls short of the requirements of 3.36(b) (4) in at least

two respects. First, the Hague Convention does not provide for the use of subpoenas to obtain

information abroad. Rather, the three established methods are by letter of request,3 by consular

3 Convention on the Taking of Evidence Abroad in Civil or Commercial Matters, Aricle

(continued. . .)

-6-
or diplomatic officiaV or by appointed commissioner.s The first method can be compulsory,

while the latter two can only be used with wiling witnesses (an obvious nullity in this case

where ENTEK has moved to quash Respondent's subpoena ad testificandum to Mr. Fraser,Bell).6

Thus, Respondent cites no legal authority supporting the issuance of the requested process.

Respondent's motion additionally fails to mention other likely legal impediments to the.

use of compulsory process to obtain evidence in the United Kingdom. Notably, the United

Kingdom? has enacted a blocking statute that can limit or prohibit subpoenaed parties from

producing evidence in connection with a foreign legal proceeding. Impediments to obtaining

personal jurisdiction and to effecting valid service can also render it, at a minimum, highly

problematic, to obtain evidence consistent with U.K. law and practice. Additionally,

Respondent offers no assurances that discovery of Mr. Fraser, Bell could be completed pre,triaL.

Complaint Counsel opposes any delay in the proceedings to accommodate superfuous foreign

discovery.

In sum, Respondent's motion does not set forth a basis for "a good faith belief' that their

discovery request would be permitted by treaty, law, custom or practice in the country from

which the discovery is sought.

3 ( . . . continued)

1, codifed at 28 D.S.C. § 1781.

4 /d., Aricle 15.

5 /d., Article 17.

6 Id.,Aricles 1, 15, 17.

7 Protection of Trading Interests Act 1980, reprinted in 1 Bruno Ristau, International

Judicial Assistance Civil and Commercial (1990 Revision) at CI-236.

-7-
III. Conclusion

For the reasons stated herein, Respondent has not made the necessary showing under

Rule 3.36(b) to justify foreign discovery. Accordingly, Respondent's motion for authorization to

conduct foreign discovery should be denied.

January 23,2009 Respectfully submitted,

v ~~~)~

. Robert Robertson

Complaint Counsel

Bureau of Competition

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington, DC 20580

Telephone: (202) 326,2008

Facsimile: (202) 326,2884

-8-
UNITED STATES OF AMRICA

BEFORE THE FEDERAL TRADE COMMISSION

In the Matter of

)

)

)

)

)

)

Docket No. 9327

Polypore International, Inc.

a corporation.

rPROPOSED10RDER

Upon consideration of Respondent's Motion For Leave To Take The Deposition Of

Graeme Fraser-Bell In The United Kingdom Pursuant To 16 C.F.R. § 3.36(b) dated January 14,

2009, and Commission Counsel's response thereto, it is HEREBY ORDERED AND

ADJUDGED THAT, based upon Respondent's failure to satisfy the requirements of Rule 3.36

of the Federal Trade Commission's Rules of Practice, Respondent's motion is DENIED.

ORDERED:

Date: D. Michael Chappell

Administrative Law Judge
CERTIFICATE OF SERVICE

I hereby certify that on January 23,2009 I filed via hand and electronic mail delivery an

original and two copies of the foregoing with:

Donald S. Clark, Secretar

Office of the Secretary

Federal Trade Commission

600 Pennsylvania Avenue, NW, Rm. H-135

Washington, DC 20580

I hereby certify that on January 23,2009, I served via electronic mail and mail delivery a

copy of the foregoing with:

The Honorable D. Michael Chappell

Administrative Law Judge

Federal Trade Commission

600 Pennsylvania Avenue, NW, H-106

Washington, DC 20580

oalj êftc.gov

I hereby certify that on January 23,2009, I served via electronic mail delivery and first

class mail two copies of the foregoing with:

Wiliam L. Rikard, Jr., Esq.

Eric D. Welsh, Esq.

Parker, Poe, Adams & Bernstein, LLP

40 i South Tryon Street, Suite 3000

Charlotte, North Carolina 28202

wiliamrikard ê parkerpoe.com

ericwelsh êparkerpoe.com úJ~

Linda Cunningham

Federal Trade Commis . on

600 Pennsylvania Avenue, NW

Washington, DC 20580

Telephone: (202) 326-2638

lcunningham êftc.gov
APPENDIX i
17622 Federal Register/Vol. 66, No. 64/Tuesday, April 3, 200l/Rules and Regulations

§ 337.6 (Amended)

2. Section 337.6(e) is removed and

reserved.

By order of the Board of Directors.

Dated at Washington, D.C., this 26th day of

March, 2001.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.

(FR Doc. 01-8100 Filed 4-2-01; 8:45 am)

BILLING CODE 671~1-P

FEDERAL TRADE COMMISSION

16 CFR Parts 2, 3 and 4

Rules of Practice

AGENCY: Federal Trade Commission

(FTC).

ACTION: Interim rules with request for

comments.

SUMMARY: The Commission is updating

and making other technical corrections

and changes to its regulations on

Organization, Procedures and Rules of

Practice.

DATES: These rule amendments wil be

effective May 18, 2001. Comments must

be received on or before May 4, 2001.

These amendments wil govern all

Commission adjudicatory proceedings

commenced on or after May 18, 2001.

They wil also govern all pending

Commission adjudicatory proceedings

commenced before May 18, 2001 unless,

in the opinion of the Administrative

Law Judge (ALJ) or the Commission, the

application of one or more amended

rules in a particular proceeding would

not be feasible or would work injustice.

ADDRESSES: Written comments must be

submitted with 20 copies to the Offce

of the Secretary, Room 159, Federal

Trade Commis.sion, 600 Pennsylvania

Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: John

Graubert, Offce of General CounseL,

FTC, 600 Pennsylvania Avenue, NW.,

Washington, DC 20580, (202) 326-2186,

jgra u bert(Uftc .gov,

SUPPLEMENTARY INFORMATION: The

Commission has pnriodically examinnd

and revisnd its ruIns of practice in the

internst of clarifying the ruIns and

making the ComniissiOlls procedures

more nffcient and Inss burdnnsome for

all partins.l The Commission is further

amending parts 2, 3 and 4 of its ruins,

16 CFR parts 2, :1 and 4, to update and

make othnr tnchnical clarifications.

I Sf"'. f'.goO Ii I FR oOli41l (S,,11. ~li, i n!lli): oil FR

414Bo (Ocl. i i. 1 !lHo).

corrections, and changes to the rules, as

follows.

Reports of Compliance

To faciliate the processing and

review of compliance reports, Rule

2.41(a) is being amended to provide (1)

that an original and one copy of each

such compliance report should be fied

with the Secretary of the Commission,

and (2) that, at the same time, one

additional copy should be fied with the

Associate Director for Enforcement in

the Bureau of Consumer Protection (for

consumer protection orders) or with the

Assistant Director for Compliance in the

Bureau of Competition (for competition

orders).

Pretrial and Discovery

Responsive Motions: Rule 3.12(a): In

federal court practice, Federal Rule of

Civil Procedure 12(a)(4) provides that

the filing of a "motion permitted under

this rule" tolls the period for answering

a complaint. Commission Rule 3.12(a)

generally follows the federal rule but

mentions only a motion for a more

definite statement. Although other

motions, such as motions to dismiss, are

undoubtedly rare at the outset of FTC

administrative proceedings, there is no

reason to exclude such dispositive

motions from the rule. Making Rule

3.12(a) consistent with Fed. R. Civ. P.

12(a)(4) wil spare the parties and ALJ

the additional inconvenience of

arranging extensions of time to answer

in individual cases where such motions

are fied.

Inital Pretrial Conferences: Rule

3.21(b): Under the Commission's 1996

Rule amendments, the ALJs must hold

a scheduling conference not later than

seven (7) days after the last answer is

fied. Although the 1996 amendments

were designed to expedite

administrative litigation, this is one

instance in which some additional time

might actually make the proceedings

more effcient. As a practical matter,

particularly in casns when service on

one or more respondents is complicated

for any reason (e.g" overseas service). it

has proved diffcult to predict when the

last answer will be fied and diffcult to

schedule and plan for a scheduling

confernnce in this narrow sfJven-day

window. Moreover, two days aftfJr the

initial scheduling confornn;;e, no matter

how hastily convnned, thn ALJ is

required tò issue a prehearing

schnduling order based in part on the

results of the conference. See Rule

:l,21(c), Because the Commission wants

the parties to nxchange disclosures and

havn mnaningful discussions about the

procending bnfore thn schnduling

conferencn in order to identify and

attempt to narrow the issues in the case,

which will also assist the ALJ in crafting

a meaningful pretrial order, the

Commission will make a modest

enlargement of the period in Rule

3.21(b) from seven to fourteen (14) days.

Adjudicative Motions: Rule 3.22:

When the Commission amended the

Part 3 Rules in 1996, it approved a

change to Rule 3.22(b) to require "that

all motions in adjudicative proceedings

include the name, address, and

telephone number of counsel, and

attach a draft order containing the

proposed relief." See 61 FR 50640,

50644. This language was inadvertently

omitted from the revised Rule itself, as

published in the Federal Register and

later incorporated into the Code of

Federal Regulation (although part of this

requirement is contained in Rule

4.2(e)(1)). In addition to making this

change in Rule 3.22, the amended rule

will also require counsel to provide a

fax number and e-mail address, if any,

along with name, address and phone

number.

Summary Decision: Rule 3.24(a)(2):

The rule currently provides that a

decision shall be rendered "within

thirty (30) days." For clarity, the Rule is

being amended to specify that the

decision is due within thirty (30) days

after the opposition or any final brief

ordered by the ALJ is filed.

Expert Discovery: Rule 3.31(c)(4)(i):

Under the Commission's current rule,

discovery of experts is handled

principally by interrogatory. Further

discovery, including depositions,

requires an order from the ALJ. The

amended Rule, reflecting the

development of practice in recent years

under the Federal Rules of Civil

Procedure, generally provides for

disclosure of expert opinions and

depositions of experts. Rule

3.31(c)(4)(B)(iii), regarding payment of

expert fees for certain discovery, is

deleted. The ALJ can address any issues

regarding fees or costs under Paragraph

(d) of this rule.

Depositons: Rule 3.33(a): The

amended Rule incorporates a provision

modeled on Federal Rule of Civil

Procedure 30(b)(7), which permits the

parties to stipulate or the court to order

that a deposition may be taken by

telephone or other rnmote elnctronic

means.

Foreign Discovery: Rule :3.:16: Since

the 1996 amendments to the Rules,

parties may issue subpoenas for

depositions or production of documents

without prior approval or supervision

from the ALJs, nxcept whnn thn

discovery request sneks information or

tnstiinony from another govnl'nwntal

agency. For discovery involving other
Federal Register IVaI. 66, No. 64 I Tuesday, April 3, 2001/Rules and Regulations 17623

government agencies, the parties have to

file a motion with the ALL who

determines whether the request is

reasonable in scope and whether the

information sought cannot be

reasonably obtained by other means. See

Rule 3.36(b). For all other discovery, the

parties obtain subpoena forms

identifying the Part 3 matter at issue

(but executed in blank as to the

subpoena target) from the Secretary's

offce, and deliver them on their own.

See Rule 3.34(a). These subpoenas

include the seal of the agency, are

signed by the Secretary, and bear every

indication of being official agency

documents.

Respondents have from time to time

attempted to serve such subpoenas

abroad. To the extent the subpoenas

appear to have the imprimatur of the

Commission, an attempt to serve them

on foreign entities outside the territorial

limits of the U.S. may raise serious

issues of Commission jurisdiction and

international law.2 In the interest of

limiting or avoiding conflcts with

foreign authorities in this area, the

Commission is puttng foreign discovery

requests back into the category of ALJsupervised discovery under § 3.36.

Indeed, the tests provided in § 3.36(b)

provide a framework that closely tracks

the prerequisites for foreign discovery as

commonly recognized by treaty, custom

and practice in many countries: That is,

such discovery should only occur if a

judge determines that the request is

reasonable and that other means of

obtaining the information (such as

domestic discovery or voluntary

arrangements) have been exhausted or

are not available.:i

Parties seeking foreign discovery must

also make a good faith demonstration

before the ALJ that the discovery

requested would be permitted by treaty,

law, custom or practice in the country

from which the discovery is sought and

that any additional procedural

requirements have been or will be met

before the subpoena is served. This does

"Se" CFTC v. N,ilws, 7:B F.2d 4B7 (D.C. Cir.

i (1Il4) (district cOliI'I lacks jurisdictioii tu ",ifore" a

CFTC in\'estigativt~ subpoena s(!rv(HI on 11 fornign

citizen iii a foreign nation); FTC \'. CompagnIe dl!

S"iiit-(;"J¡"ili-l'olit-,,-MofJssoli. inti 1'.2(11 :ioo (D.C.

Cir. l!lBO) (FTC i\ct d",is 11111 aiiihorize s"rvic" ill'

siibpotmas ablliad by rngistiirmlllHlill. 'l'hose issues

are loss likd~i to arise \vith Civil Iii"pstigative

f)llllilnds stJrVt~d at tho hulwst or Commission staff.

Ii",:aiise s"ction 20(c)(7)(1i) ortlw FTC Act

specilïcally provi(les 1'01' fowign ,,,rvic,, of ClDs.

.1 ,''';m~, (I.g., Revisml Rm:ommeiidation of ilw DEeD

(:llll1cil Coiicnriiing (:o-oiwration Butwmm Mmnbnr

Coiintrins Oil Rpstrictivi! BusinHss PracLicns

1\IT",:ling Inl"lIational Trad",llECD Doc. C (!l;,)I:lO

(Final) Iinly' t\%) ali\ppl'ndix '\ B(a)-(c): U.S.

I)ppt. of JuslIco and FU(ItH'll Tradt~ Commission,

.\niitriist I':nhircpiiwnl l;uitlpliiios for International

Ol'l'ratinns S4.2 (1\l'ril 1m);,).

not mean that the ALJs wil be expected

to make rulings on questions of foreign

, law. This showing, together with the

other requirements of Rule 3.36(b), wil

merely assist the ALJ in attempting to

prevent unnecessary conflcts with

foreign sovereigns.

There is no comparable need at this

time for rule revisions regarding

discovery requests served within the

United States that may require

production of documents located abroad

(in foreign offces of multinational

corporations, for example). Cases arising

under similar statutory provisions

confirm that such discovery requests are

authorized by the FTC Act and are not

likely to present the same

extraterritoriality concerns as actual

service of discovery requests abroad.4

Rule 3.36 is also being amended to

add a new subsection (c), to make it

clear that each subpoena issued

pursuant to an order of the ALJ under

Rule 3.36 shall be signed by the

Secretary, but must have attached to it,

and be served in conjunction with, a

copy of the Order authorizing its

issuance.

Rule 3.34, the rule providing for

issuance of subpoenas in blank, is

amended to make clear that that

procedure does not apply to discovery

requests covered by Rule 3.36. Finally,

the reference to § 3.31(b)(1) in

§ 3.36(b)(2) to § 3.31(c)(1).

Orders Compellng Witness

Testimony: Rule 3.39(a): For

completeness, this rule should

specifically include Directors and

Deputy Directors of Bureaus, Assistant

Directors in the Bureau of Competition,

Associate Directors in the Bureau of

Consumer Protection, and Regional

Directors and Assistant Regional

Directors of Commission Regional

Offices, to reflect the current

organization of the Bureaus.

Filng of Documents Other Than

Correspondence

In order to facilitate the filing, receipt,

and processing of documents submitted

to the Commission. in both adjudicative

and nonadjudicative proceedings-and

to accommodate the need to secure

electronic copies of such documents in

a routine, systematic. and efficient

manner-R-ule 4.2 has been amended in

a number of respects:

Copies: Rule 4.2(c): The prnsent Rule

4,2(c) requires the filing of an original

and twenty (20) copies of "all

documents before the Commission" and

., Svv FAte: v. n!!SlIvdt, :lfìl F.2d 4fi4 (211 Cir.).

,.',,11. d"iiit,,¡, :IB;, II.S. !l74 (1!)(ì1): (1I('orri CAll v.

/!l'iitsdw Lii(tli'l!ltl ,lktiviig"s"lIsclwli, ;,!1I F.2d

!l;,l (D.C. Cir. i!m)).

certain motions before an ALL and an

original and ten (10) copies of all other

documents before an ALJ. In light ofthe

rule amendments regarding electronic

filng, discussed below, and to reduce

the burden of the fiing process as much

as possible, this rule is amended to

require the fiing of a paper original and

twelve (12) copies of documents fied

before the Commission, and the paper

original and only one (1) paper copy of

each document fied before an ALJ in an

adjudicative proceeding. The current

Rule 4.2(c) also requires the fiing of "an

original and one copy of compliance

reports" and the filing of "one (1) copy

of admissions and answers thereto." As

noted above, the first requirement has

been transferred to Rule 2.41, which

deals with the fiing of compliance

reports, and therefore need no longer

appear in Rule 4.2(c). Similarly, the

second requirement replicates the

requirement covering admissions and

answers thereto already set forth in Rule

3.32, and therefore need no longer

appear in Rule 4.2(c) as well. In

addition, Rule 4.2(c) currently requires

parties filing motions to provide copies

to the ALJ at the time such motions are

fied with the Secretary. Because this

requirement already appears in Rule

3.22, and is being added to Rule 4.4(b),

it may also be removed from Rule 4.2(c).

Electronic Filing: Rule 4.2: The Rule

is amended in a number of respects to

reflect current practices and technology.

First, the amended rule requires the

submission to the Commission of

electronic copies of pleadings, motions,

briefs, and all other fiings in

adjudicative proceedings-whether

before the Commission or an ALl-and

of all other formal filings before the

Commission, such as petitions to limit

or quash and appeals from rulings

thereon; requests to reopen or modify;

and applications for approval of

proposed divestitures, acquisitions, or

similar transactions.

The Commission notes that other

agencies have had electronic filing

requirements for many years,5 and that

the burden of this proposal on the

public is Iik()ly to be negligible at this

point. The use of electronic wordprocessing equipment is virtually

universaL. certainly among parti()s

appearing before the Commission, In

case of extreme hardship, however. the

Secretary is empowered to excuse a

party from this requirement. The rule

follows the format requirements used in

the CommissiOlls request for

nominations for the Advisorv

Committee on Online Acces~ and

Co S"v, !!.goO 4!1 CFR 1 t04.:1(a) (Snrface

Transportation Board).
APPENDIX 2
L'NITED STATES OF Al\fERICA

BEFORE FEDER TRAE COMMrSSIO~~t;f~;:::~':~:;;"~~;~;"1j

n. p: ;,.~ l i:, '::r~, : .... '~~"\ " " . .. _.. ", l¡'

'\:~~"::~":"~::! _.:?". :/, ;:. :'::~~::.~,..t1

)

)

)

)

)

)

)

)

)

)

)

)

- --- '.~ ......

In the Maner of

CHICAGO BRIDGE & IRON COf'lPANY N. V.

a foreign corporaticn.

CmCAGO BlUDGE & IRON COMPANY,

a corporaiìun, and

DOCKET NO, 9300

PlIT-DES MOINS. INC..

a corpration.

ORDER DENYING RESPONDlt~NTS' .

MOTION FOR iSSUMCE OF SlffPOENAS

1.

Oii Âpiìl 5, 2002, Respondents tied a. motion for the issuance of several subpoenas duces

tecum wid subpoen ad testtllcandum. RespondenlS' motion is fied pursuant to Rul~ 3.36 of

the Commission's Rules of Pratice which requires a party seekíng the issuance of a subpoena to

be served in a ftleign cmmtry to file a moûon demonstrating tht the requirements of Rule

3.36(b) have been met. 16 C.F.R. § 3.36. Complaint Counsd fied its opposition on April 17,

2002. For the reasons set forth below, Respondents' motion is DENIED WITHOUT

PREUDICE.

II.

Rule 3.36(b) of the Coinmíssìon's Rules ofPmctice requirc~ ihtl party s~eking issuance of

a subpoena to be served abroad to mae ~pecific showìngs that:
(I) the matcnal sought Ís reasonable in scope;

(2) the material sought tals withn the limits of discovery wider § 3.3 

1 (c)( 1);

P) the infonntion or materal sought cannot reasonably he obtained by other

means; and

(4) the pary seeking discvery has a good faith belief 

that the discovery

requested would be peritted by treaty, law, custom or practice in the

country frm which the discovery is sougJit and that aiiy additional

procedur requirements have been or wil be met before the subpoena is

sered.

16 C.i:".R. § 3.Jó(b).

In 2001, the Commission, concerned about the n\lerous issues and potential conflicts

tht often arse in connection with issuíng compulsory process to entities outside the United

States, amended its Rules ofPractic.e to requíre ALJ supervsion OfPTOpos.d foreign compulsory

process. Explainìng the reasons behind the amendment to the FTC'.s Rules of Pracdce. the

Commission stted:

Respondents have from tie to time attmpted to serve such 5ubpoer

abroad. To the t:xtent the i:ubpoen~ Hppcm to have lhe imprimaLur orihe

Commission, an attempt to serve them on foreign entitÍes outside the

territorial Emits of the U.S. may raise serious issues of Commission

jurisdiction and jntemationallaw. In the interest of limiting or avoiding

conflcts with foreign authorities in tis ar the Commission is putlÍng

ford gn discovery requests bak into the category of AU -supervised

discover under § 3.36.

federal Tmd~ CQmniiSSl0n Amendments to Rules of Practice. GG Fed. Reg. i 7622, 1 i623

(F.T.C. April 3, 2001.) The Comnùssion further expliiined that the requìremenl$ ofRuIe 3.36 are

designed to "assist the AU in attemptig to prevent unncces~ary conficts with foreign

~overign~" and to assure that exercise of compulsQry process outside rhe United S~ates wil nul

2
be uttempted unless domestic discovery an volunta arangements have been eXausted or are

not avaílable:

Indee, the tests provided in § 3.36(b) provide a fraework that closely tracks the

prquisites for forign discovery as commonly recognized by treaty, custom and

practíce in m;iy countrit:s: That is, suc djscovt:rj' should only UCCll if a judge

determines tht the request is reasonable and tht othei: meas of obtaining the

information (such as domestic discovery or voluntar ntanemcnts) have been

exhausted or are not available.

66 Fed. Reg. at 17623.

The requiment of Rule 3.36(b)( 4) stems frm the statutory limitations on the subpmma

powers of the Feder Trade Commission. Section 9 of the Federa Trade Commission Act

authDriL.S the Commission to compel depositions and the pioduction of documentary evidence

from any plac in the United St.'\te5. 15 U.S .C. § 49. In Commodity Futures Trading

C(Jmmi.'í$ion v. Nahas, 738 F.2d 487 (D.C. Cir 1984), the Cour of Appeals for the D.C. Circuit.

in int.rprcting tht: ~talulory pruvision similar to St:~tion 9 orthe Feùeral Trade Commission Act

which auoried the Commodity FutW's Tradìng Commission to compel the attendace of

y,'¡tnesses and the production of documents "from any place in th~ Uníted States," held that a

distri~t court is without jurisdiction to cnforc~ an investigative subpoena served on a foreign

citizen in ii foreign nation. ¡d. at 496.

Under FTC v. Compagnie de Saint-GobclZn-Pont-A-MousJon, 636 F.2d 1300 (D.C. Cir.

1980), a subpoena issued by an administrative agency of the lJnited States musi not violate

international law. ~'W1ien an American regulatory agency directly serves ìts compulsory process

upon a citizen of a foreign country, the act of service itself constitutes an exercise of Aniericai)

soveregn power vvthin ihe area of the f(lreign coWltr's territorial sovereignty." ld at 1304.

3
"Such an exerise ~onstitutcs a violation ofintcrnationallaw,'" ld at 1313. ~'The cJ\crcìsc of

jursdction by any governmenta body in the United States is subject to Iìmitatíons reflecting

prnciples ofintematìnnal and constitutional law, as well as the stricnie~ oftha particular statute

governg tht body's conduct." ¡d. at 1315.

To effectuate the Comnssion's policy not to embroil the Commission ín unecessar

international conflct, Respondents wil be held to the stadar the Commission established by

ëiending Rule 3J6(b).

lIT.

As set fort below, Respondents have tailed to satisfY its burden of proof in

demonstrating that the four requirement.. of Rule 3.36(b) liave all heen meL

(1) Respondents have not demonlirated that the material sought is reasoiiable ill

~cope.

Respondents have not demonstated v.ith suffcient specificity tht the l1aterì¡i1 sought is

reasonable Ín scope. t 6 C.F.R. §§ 3,34(b); 3.36(b)(1). Respondents' rnocíon simply lists the

foreign companies from which they seek discovery and generally describes the materials they

seek. 'rus is not suffciently specitrc for a motion seeking discovery from foreign sources.

(2) Respondents bave not demonstrated that the material ~ought (aUs within the

limits ofdisco""ery under § 3.31(c)(1).

CommÎssjon Rule 3.31 (c)(l) allows discovery ufmaterials reasonably expected to yield

information relevant to the ullegations of the complaínt, the prupase reIìef or the defense of any

respondent, but also sets tort tht discovery may be limited by the AU if the material sought is

un~1;sonably cumula1Ive or duplìcative or obtaÎnable from some other source that ìs more

convenient, less burdensome, Qr less expensive, or if the burden and expense of the proposed

4
disovery ou(wd~ its likely benefit.

Complait Counsel, in its opposition, states tht Respondents have already issued

subpo duces tecum and subpoenas ad testificandum directg; thiee companes to

designate one or more offcers. dìrector, manging agents, or other persons to testfy on their

behafrc:gading: (1) foreign and domestc supplitlI' and manufacurers of cryogenic ta

worldwide; (2) the abilty of foreign compaes to compete Ín the U.S. i:ket for cryogenic

tas; (3) the abilty of foreign and domestic companes to enter the U.S. market for cryogenic

t.~ (4) Ùle abilty offoreîgn companies to hire and utilize LS.-base field crews ìn the U.S.

.

maket for field erction of cryogenic tan~ (5) attepts by SkaiiskalVlhessoe, Tokyo Kanetsu

K,K. (TKK), Entrpose, Bouygut:!:tTechnigaz Tra.ebel, :MI. IHI. Teclip/Coflexip or any

othr foreígi company to enter the u.s. market for cryogenic taks; (6) the extent to which

foreign companes arc aW3Te of, mid ar able to \'I"ork with, U.S. de~ìgn cudes and the domestic

infratruture needed to compete in the C.S. market for cryogenic tans; (7) methods used (or

able to be used) by fOl'eígn companies in condLlcting the çonstructon phae of fÏeld-erected

cryogeníc tanks; and (8) foreign an domestic supplier and manufactnrers of crogenic tanks

and/or vacuum chabers worldwide. These sources .)hould be able to provide Respondents with

-

lhe information they seek, such that discovery from forcîgn sources would be cumulative or

duplicative.

Respondents have not sho~ll that they caiuiol obi.ÙT infurmation regang foreìgn

suppliers' activities in the United States frm customers or from the C.S- parners of the foreign

suppliers. Because Respondents have not demonstrated that ihtly cannot obtain the information

rt;tj uested from domcstíc sourcei-, Respondents have not demonstrated thai the ínfonnation ìs nO'

5
available in a maer that is more convenient. les!; burdensome, and less t:xpensiv~ than f(ireign

discover.

(3) R~spondents have Dot demonstrated the iiiformatioii or material sought

cannot reasonably be obtained by other meaDS.

Rule 3.36(b)(3) requires respondents to make a specIfc showing that .~(tlhe information

or matrial sought caot reasonably be obtined by other means_" 1 (j C.F.R. § 3.36(b)(3). The

Feùerçil Regh)t~r nolìc~ accompanying iht: amt:ndment to Rule 3.36 ~xphiIns ilial:

ItòrcignJ discovery should only occur if a judge determines that. . , other

means of obting the information (such as demestic discovery or

volun.tar arrangement,f) have been exhusted or ar flot avaílable.

66 Fed. Reg. at 17623 (emphasis added). This is consistent with the express policy of 

the U.S.

and other nations to minie conficts in the enforcement of antitrust laws that can arise frm

attempts to enforce discovery outside the tertory.

As discused above, Respondents have faíled to demonstrate that they cano( obtaí the

information from domestic sources. In addition, Respondents have not demonstrated that they

canot obtain the requested evidence voluntaily frm the foregn companes. See Commssion

Statement, 66 Fed. Keg. at 17623 (citing OEeD Revised Recommendation, OECD Doc. C

(95)130 (Final) (July 1995); DOJ & FTC, Antítrst Enforcement Guideline~.) The Antitrust

Enforcement Guidelines For hitemationa Operations issued by the u.s. Department of Justice

and the Federal Tra Corrssion provide:

In coi:ducting investIgations that require documents that are Jocated outside the

United States, or contacts with persons located outside the Vnited Sta1es, the

Ag~nci~s first consider requests for volunwry cooperation when praçticul unù

consístent wÍth enforcement objectives,

DOl & FTC, Aniíirul Enforc.ement Guidelines ~ 4.2. (April 1995), Respondents have made no

6
showing in their motion tht they have contncted the foreign companes to detennine whether

they will voluntaily prvide documents, statements~ or deposition testímony.

(4) Respondents have not deJn()D~trted that the disconl' requdted would be

permitted by treaty, law, cd.dom or pra.ctice in the country from which the

discovery is sought and that any additional pro~edur81 requirements have

been or wiD be met befure the ~ubpoena i8 sened, as is required by law.

Rcspond~nts have represented that eacn of the companes frm whích they seek. discov~I)"

are located in countres that have agred to abide by the terms of the Hague Convention.

Respondents fur assert that. in general, for countries tht have adopted the Hague

Convention, the interntional díscovery process can be :mmmazed âs the following governent

to government transaction: a COS. judicial proceeding makes a request to the lJ .S. government

who ìn nu maes a request its foreign govcinment counterpart, who likewise makes a request to

ítsjudicial equivalent, who then decides wheter or not to grant the request and order the

discovery on a parcular entity or person.

In its 0pp0!!ition, Complaint Counsel asserts tht two of the countries from which

Respondents seck discovery ar not paries to the Hague Convention on Taking of Evidem:e

Abroad in Civil or Commercial Matters, whích provides for the transmittal of lcucrs rogatory or

request in cIvil or commercial judicial proceedings. Complaint Counsel lu(thcr argues that

another two counlrtCS from which Respondent!! seek discover may not consider a non-criminal

arititrust ~asc IìItJ by a g()vCnUIlCnl in an admiustrative proceeding to be a "civil or commercial

mater~' with the scope of the Hague Convenrion. fn addition, Complaint Counsel states that

two of the countries have enactd blocking statutes that can limit or prohibit ~ubp(lenaed parties

1Ìm producil1g evidence in connection with a fi)reign legal prnceeding.

7
To mak.e a good faith showing that the discover requested would be perniitted by traty

requin:s m()re ihan a bald aisernon that the countries ín which the proposed deponenl:S and

m.aterals ar located ar signatories to the Hagu Convention. Although Respondents assert tht

they intend to prepare the necessur pape in co~unction with local counsel in each ofthe

relevant countres, Respoiidents have not demonstated this is legally suftcient or would fiJ I fill

all procedUlal requirements under the laws of each of the countries frOnt which Respondents seek

discovery. Accordigly. Respondents have failed to demonstate that the discovery requested

would he pennÍtted by treaty, law, custom or practice in the counlIy from which the discovery is

sought and that í:)' addIlcinal procedur requiremenls have been or wil bt: met b~ÜJre the

subpoena is sered.

iv.

Beca.use Re.Il!l(mdenL.. have not !iatisfied the requirements QfCommis~i()n Rule 3.36(b),

Respondents' motion for issuance o.fa subpoenas is DENIED WITHOUT PREJL-ÐICE.

Daled: April 18, 2002 ~. (~.~ 1 \ I '. ,/ ~, . \ N\~lAJ\/\

i JMllS P. TIMONY

Administrtive Law Judge ( )

v

8
APPENDIX 3
((e Recommendntion of the Council concerning Co-operation hetweenMember

Countries on Anticompetitive Practices affecting International Trade

COi\:IPETITION LA W AND POLICY

27 July 1995 - C(95)130IFINAL

THE COUNCIL,

Having regard to Article 5 b) of the Convention on the Organisation for Economic Co-operation and Development of 14th December

1960;

Having regard to the fact that international co-operation among OECD countries in the control of anticompetitive practices affecting

international trade has long existed, based on successive Recommendations of the Council of 5th October 1967 (C(567)53(Final)),

3rd July 1973 (C(73)99(Fina\)), 25th September 1979 (C(79) 154(Final)) and 2 i st May 1986 (C(86)44(Final));

Having regard to the recommendations made in the study of transnational mergers and merger control procedures prepared for the

Committee on Competition Law and Policy;

Recognising that anticompetitive practices may constitute an obstacle to the achievement of economic growth, trade expansion and

other economic goals of Member countries;

Recognising that the continued growth in internationalisation of business activities correspondingly increases the likelihood that

anticompetitive practices in one country or co-ordinated behaviour of firms located in different countries may adversely affect the

interests of Member countries and also increases the number of transnational mergers that are subject to the merger control laws of

more than one Member country;

Recognising that the unilateral application of national legislation, in cases where business operations in other countries are involved,

raises questions as to the respective spheres of sovereignty of the countries concerned;

Recognising the need for Member countries to give effect to the principles of international law and comity and to use moderation and

self-restraint in the interest of co-operation on the field of anticompetitive practices;

Recognising that anticompetitive practices investigations and proceedings by one Member country may, in certain cases, affect

important interests of other Member countries;

Considering therefore that Member countries should co-operate in the implementation of their respective national legislation in order

to combat the harmful effects of anticompetitive practices;

Considering also that closer co-operation between Member countries is needed to deal effectively with anticompetitive practices

operated by enterprises situated in Member countries when they affect the interests of one or more other Member countries and have a

harmful effect on international trade;

Cons idering moreover that closer co-operation between Member countries in the form of notification. exchange of information, coordination of action, consultation and conciliation, on a fully voluntary basis, should be encouraged. it being understood that such cooperation should not, in any way. be construed to affect the legal positions of Member countries with regard to questions of

sovereignty. and in particular. the extra-territorial application of laws concerning anticompetitive practices. as may arise;

Recognising the desirability of setting forth procedures by which the Competition Law and Policy Committee can act as a forum for

exchanges of views. consultations and conciliation on matters related to anticompetitive practices affecting international trade;

Considering that if Member countries find it appropriate to enter into bilateral arrangements for co-operation in the enforcement of

national competi-tion laws. they should take into account the present Recommendation and Guiding Principles:

L RECOMMENDS to Governments of Member countries that insofar as their laws permit:

A. NOTIFICATION, EXCHANGE OF INFORMATION AND CO-ORDINATION OF ACTION

i. When a Member country undertakes under its competition laws an investigation or proceeding which may affect important

interests of another Member country or countries. it should notify such Member country or countries. if possible in advance. and, in

any event. at a time that would facilitate comments or consultations; such advance notification would enable the proceeding Member

country. while retaining full freedom of ultimate decision. to take account of such views as the other Member country may wish to

express and of such remedial action as the other Member country may find it feasible to take under its own laws. to deal with the

anticompetitive prac-tkes;
2. Where two or more Member countries proceed against an anticompetitive practice in international trade, they should endeavour to

co-ordinate their action insofar as appropriate and practicable;

3. Through consultations or otherwise, the Member countries should co-operate in developing or applying mutualIy satisfactory and

beneficial measures for dealing with anticompetitive practices in international trade. In this connection, they should supply each other

with such relevant infonnation on anticompetitive practices as their legitimate interests permit them to disclose; and should alIow,

subject to appropriate safeguards, including those relating to confidentiality, the disclosure of information to the competent authorities

of Member countries by the other parties concerned, whether accomplished unilateralIy or in the context of bilateral or multilateral

understandings, unless such co-operation or disclosure would be contrary to significant national interests.

B.CONSUL T A TION AND CONCILIATION

4. a) A Member country which considers that an investigation or proceeding being conducted by another Member country under its

competition laws may affect its important interests should transmit its views on the matter to or request consultation with the other

Member country;

b) Without prejudice to the continuation of its action under its competition law and to its full freedom of ultimate decision the Member

country so addressed should give full and sympathetic consideration to the views expressed by the requesting country, and in

particular to any suggestions as to alternative means of fulfiling the needs or objectives of the competition investigation or

proceeding;

5. a) A Member country which considers that one or more enterprises situated in one or more other Member countries are or have been

engaged in anticompetitive pratices of whatever origin that are substantialIy and adversely affecting its interests, may request

consultation with such other Member country or countries recognising that entering into such consultations is without prejudice to any

action under its competition law and to the full freedom of ultimate decision of the Member countries concerned;

b) Any Member country so addressed should give full and sympathetic consideration to such views and factual materials as may be

provided by the requesting country and, in particular, to the nature of the anticompetitive practices in question, the enterprises

involved and the alleged harmful effects on the interests of the requesting country;

c) The Member country addressed which agrees that enterprises situated in its territory are engaged in anticompetitive practices

harmful to the interests of the requesting country should attempt to ensure that these enterprises take remedial action, or should itself

take whatever remedial action it considers appropriate, including actions under its legislation on anticompetitive practices or

administrative measures, on a voluntary basis and considering its legitimate interests;

6. Without prejudice to any of their rights, the Member countries involved in consultations under paragraphs 4 and 5 above should

endeavour to find a mutually acceptable solution in the light of the respective interests involved;

7. In the event of a satisfactory conclusion to the consultations under paragraphs 4 and 5 above, the requesting country, in agreement

with, and in the form accepted by the Member country or countries addressed, should inform the Competition Law and Policy

Committee of the nature of the anticompetitive practices in question and of the settlement reached;

8. In the event that no'satisfactory conclusion can be reached, the Member countries concerned, if they so agree. should consider

having recourse to the good ottces of the Competition Law and Policy Committee with a view to conciliation. If the Member

countries concerned agree to the use of another means of settlement, they should, if they consider it appropriate. inform the Committee

of such features of the settlement as they feel they can disclose.

II. RECOMMENDS that Member countries take into account the guiding principles set out in the Appendix to this

Recommendation.

III. INSTRUCTS the Competition Law and Policy Committee:

i. To examine periodically the progress made in the implementation of the present Recommendation and to serve periodically or at

the request of a Member country as a forum for exchanges of views on matters related to the Recommendation on ihe understanding

that it will not reach conclusions on the conduct of individual enterprises or governments;

2. To consider the reports submitted by Member countries in accordance with paragraph 7 of Section I above;

3. To consider the requests for conciliation submitted by Member countries in accordance with paragraph 8 of Section I above and to

assist. by offering advice or by any other means. in the settlement of the matter between the Member countries concerned;

4. To report to the Council as appropriate on the application of the present Recommendation.

IV. DECIDES that this Recommendation and its Appendix cancel and replace the Recommendation of the Council of 21 st May

1986 I C( 86 )44(Final) i.
* * ** ** * * ** ** * * ** ** * * ** * * * * * * ** * * *

APPENDIX

GUIDING PRINCIPLES FOR NOTIFICATIONS, EXCHANGES OF INFORMATION, CO-OPERATION IN

INVESTIGATIONS AND PROCEEDINGS, CONSULTATIONS AND CONCILIATION OF ANTI COMPETITIVE

PRACTICES AFFECTING INTERNATIONAL TRADE

Purpose

I. The purpose of these principles is to clarify the procedures laid down in the Recommendation and thereby to strengthen cooperation and to minimise conflicts in the enforcement of competition laws. It is recognised that implementation of the

Recommendation herein is fully subject to the national laws of Member countries, as well as in all cases to the judgement of national

authorities that co-operation in a specific matter is consistent with the Member country's national interests. Member countries may

wish to consider appropriate legal measures, consistent with their national policies, to give effect to this Recommendation in

appropriate cases.

Definitions

2. a) "Investigation or proceeding" means any official factual inquiry or enforcement action authorised or undertaken by a competition

authority of a Member country pursuant to the competition laws of that country. Excluded, however, are (i) the review of business

conduct or routine filings, in advance of a formal or informal determination that the matter may be anticompetitive, or (ii) research,

studies or surveys the objective of which is to examine the general economic situation or general conditions in specific industries.

b) "Merger" means merger, acquisition, joint venture and any other form of business amalgamation that falls within the scope and

definitions of the competition laws of a Member country governing business concentrations or combinations.

Notification

3. The circumstances in which a notitication of an investigation or proceeding should be made, as recommended in paragraph LA. I.

of the Recommendation, include:

a) When it is proposed that, through a written request, information will be sought from the territory of another Member country or

countries;

b) When it concerns a practice (other than a merger) carried out wholly or in part in the territory of another Member country or

countries, whether the prac-tice is purely private or whether it is believed to be required, encouraged or approved by the government

or governments of another country or countries;

c) When the investigation or proceeding previously notified, may reasonably be expected to lead to a prosecution or other

enforcement action which may affect an important interest of another Member country or countries;

d) When it involves remedies that would require or prohibit behaviour or conduct in the territory of another Member country;

e) In the case of an investigation or proceeding involving a merger, and in addition to the circumstances described elsewhere in this

paragraph. when a party directly involved in the merger, or an enterprise controlling such a party, is incorporated or organised under

the laws of another Member country;

t) In any other situation where the investigation or proceeding may involve important interests of another Member country or

countries.

Procedure for notifying

4.a) Under the Recommendation notitication ordinarily should be provided at the tirst stage in an investigation or proceeding when it

becomes evident that notifiable circumstances described in paragraph 3 are present. However there may be cases where notification at

that stage could prejudice the investigative action or proceeding. In such a case notification and, when requested, consultation should

take place as soon as possible and in sufficient time to enable the views of the other Member country to be taken into account. Before

any formal legal or administrative action is taken. the notifying country should ensure, to the fullest extent possible in the

circumstances. that it would not prejudice this process.

b) Notification of an investigation or proceeding should be made in writing through the channels requested by each country as

indicated in a list to be established and periodically updated by ihe Competition Law and Policy Committee.

c) The content of the notification should be sufficiently detailed to permit an initial evaluation by the notified country of the
likelihood of any effects on its national interests. It should include, if possible, the names of the persons or enterprises concerned, the

activities under investigation, the character of the investigation or procedure and the legal provisions concerned, and, if applicable, the

need to seek information from the territory of another Member country. In the case of an investigation or proceeding involving a

merger, notification should also include:

i) the fact of initiation of an investigation or proceeding;

ii) the fact of termination of the investigation or proceeding, with a description of any remedial action ordered or voluntary steps

undertaken by the parties;

iii) a description of the issues of interest to the notifying Member country, such as the relevant markets affected, jurisdictional issues

or remedial concerns;

iv) a statement of the time period within which the notifying Member country either must act or is planning to act.

Co-ordination of Investigations

5. The co-ordination of concurrent investigations, as recommended in paragraph I.A.2. of the Recommendation, should be undertaken

on a case-by-case basis, where the relevant Member countries agree that it would be in their interests to do so. This co-ordination

process shall not, however, affect each Member country's right to take a decision independently based on the investigation. Coordination might include any of the fol1owing steps, consistent with the national laws of the countries involved:

a) providing notice of applicable time periods and schedules for decision-making;

b) sharing factual and analytical information and material, subject to national laws governing the confidentiality of information and

the principles relating to confidential information set forth in paragraphe 10;

c) requesting, in appropriate circumstances, that the subjects of the investigation voluntarily permit the co-operating countries to share

some or all of the information in their possession, to the extent permitted by national laws;

d) co-ordinating discussions or negotiations regarding remedial actions, particularly when such remedies could require conduct or

behaviour in the territory of more than one Member country;

e) in those Member countries in which advance notification of mergers is required or permitted, requesting that the notitication

include a statement identifying notifications also made or to be made to other countries.

Assistance in an investigation or proceeding of a Member country

6. Co-operation among Member countries by means of supplying information on anticompetitive practices in response to a request

from a Member country. as recommended in paragFaph I.A.3. of the Recommendation. should be undertaken on a case-by-case basis,

where it would be in the interests of the relevant Member countries to do so. Co-operation might include any of the following steps.

consistent with the national laws of the countries involved:

a) assisting in obtaining information on a voluntary basis from within the assisting Member's country;

b) providing factual and analytical material from its files. subject to national laws governing confidentiality of information and the

principles relating to confidential information set forth in paragraph 10;

c) employing on behalf of the requesting Member country its authority to compel the production of information in the form of

testimony or documents. where the national law of the requested Member country provides for such authority;

d) providing information in the public domain relating to the relevant conduct or practice. To facilitate the exchange of such

information. Member countries should consider collecting and maintaining data about the nature and sources of such public

information to which other Member countries could refer.

7. When a Member country learns of an anticompetitive practice OCCUlTing in the territory of another Member country that could

violate the laws of the latter, the former should consider informing the latter and providing as much information as practicable, subject

to national laws governing the confidentiality of information and the principles relating to confidential information set ti.rth in

paragraph 10. consistent with other applicable national laws and its national interests.

g.al Member countries should use moderation and self-restraint and take into account the substantive laws and procedural rules in the

foreign forum when exercising their investigatory powers with a view to obtaining information located abroad.
b) Before seeking information located abroad, Member countries should consider whether adequate information is conveniently

available from sources within their national territory.

c) Any requests for information located abroad should be framed in terms that are as specific as possible.

9. The provision of assistance or co-operation between Member countries may be subject to consultations regarding the sharing of

costs of these activities. .

Confidentiality

10. The exchange of information under this Recommendation is subject to the laws of participating Member countries governing the

confidentiality of information. A Member country may specify the protection that shall be accorded the infonnation to be provided

and any limitations that may apply to the use of such infonnation. The requested Member country would be justified in declining to

supply information if the requesting Member country is unable to observe those requests. A receiving Member country should take all

reasonable steps to ensure observance of the confidentiality and use limitations specified by the sending Member country, and if a

breach of confidentiality or use limitation occurs, should notify the sending Member country of the breach and take appropriate steps

to remedy the effects of the breach.

Consultations between Member countries

i i .a) The country notifying an investigation or proceeding should conduct its investigation or proceeding. to the extent possible under

legal and practical time constraints. in a manner that would allow the notified country to request informal consultations or to submit its

views on the investigation or proceeding.

b) Requests for consultation under paragraphs I.B.4. and 1.B.5. of the Recommendation should be made as soon as possible after

notification and explanation of the national interests affected should be provided in sufficient detail to enable full consideration to be

given to them.

c) The notified Member country should, where appropriate, consider taking remedial action under its own legislation in response to a

notification.

d) All countries involved in consultations should give full consideration to the interests raised and to the views expressed during the

consultations so as to avoid or minimise possible contlict.

Concilation

i 2.a) If they agree to the use of the Committee' good offices for the purpose of conciliation in accordance with paragraph 1.B.8. of the

Recommendation, Member countries should inform the Chairman of the Committee and the Secretariat with a view to invok-ing

conciliation.

b) The Secretariat should continue to compile a list of persons willing to act as conciliators.

c) The procedure for conciliation should be determined by the Chairman of the Committee in agreement with the Member countries

concerned.

d) Any conclusions drawn as a result of the conciliation are not bind-ing on the Member countries concerned and the proceedings of

the conciliation will be kept confidential unless the Member countries concerned agree otherwise.