COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 12.07.1995 
COM(95) 359 final 
COMPETITION POLICY 
IN THE NEW TRADE ORDER : 
STRENGTHENING INTERNATIONAL 
COOPERATION AND RULES 
Report of the Group of Experts 
This report represents the views of the group of experts and does not bind the Commission. 
A set of annexes to the report, containing reflection papers of the three external experts 
and useful background information, is avaible (in English) in a separate volume. 

COMPETITION POLICY 
IN THE NEW TRADE ORDER : 
STRENGTHENING INTERNATIONAL 
COOPERATION AND RULES 
Report by the Group of Experts1 
This report is in four parts: 
I. The reasons for strengthening international cooperation in competition policy. 
II. The European Union's recent experiences in bilateral cooperation. 
III. The inadequate nature of present international cooperation. 
IV. The Group's recommendations for improving international cooperation and the 
application of competition policy rules. 
The names of the members of the group as well as the text of the letter of convocation are 
annexed to this report. 

I THE REASONS FOR STRENGTHENING INTERNATIONAL 
COOPERATION IN COMPETITION POLICY 
Markets have become more and more open since the Second World War. As a 
consequence of eight rounds of negotiations under the General Agreement on Tariffs and 
Trade (GATT), barriers to trade such as tariffs have been brought down to historically 
low levels. Where original GATT tariffs were situated around 35%, the average weighted 
import duty on industrial goods for trading partners like the EU, the US and Japan will 
be below 4% as the results of the Uruguay Round are fully implemented. About 40% 
of imports into these markets will be free of duties. In parallel to this multilateral 
development, bilateral and regional free trade agreements have also flourished. 
As barriers to trade have come down, both in the form of tariffs and through disciplines 
on non-tariff barriers, the growth of world trade has surpassed the growth of national 
economies by on average 2% per year. Trade has become the motor of economic 
expansion. 
The effect of liberalization has been, at the micro-economic level, to impose structural 
changes on international economic activity. Business has become global, as firms have 
sought to take advantage of new markets and new production opportunities. Integrated 
international production methods have increasingly been adopted, whereby the 
comparative advantage of different countries or regions is exploited to the full. At the 
level of finished products, companies facing competition from a new competitor on their 
home market have sought new markets abroad to maintain profitability and 
competitiveness. 
The effect of these twin developments of liberalization and globalization has been to 
interconnect the different markets of the world, without their being fully integrated. 
While in the liberal post Uruguay Round trading system the effective application of 
competition law becomes an important contributor to creating and maintaining open and 
accessible markets, and thus to enhancing the stability of the system, there are as yet no 
binding rules relating to the practices of private firms at the multilateral level. Moreover, 
the effective application of competition law is a basic feature of open market economies -
yet absent in the present framework of international rules - and should be further 
consolidated. It is against this background that a strengthening of international 
cooperation between competition authorities and a first harmonization of certain national 
rules and procedures is recommended. 
There are several further reasons justifying such an approach. 
1. Given the globalization of the economy, there are more and more competition 
problems which transcend national boundaries: international cartels, export cartels, 
restrictive practices in fields which are international by nature (e.g. air or sea 
transport, etc.), mergers on a world scale (e.g. BT-MCI2), or even the abuse of a 
OJ L 223 of 27.8.94 
dominant position on several major markets (e.g. the Microsoft case3). 
Competition authorities therefore have a prime interest in cooperating to solve 
these problems together in order to enhance the effective enforcement of 
competition rules. 
2. As a result of a lack of rules at international level, firms which are present in 
several countries are sometimes subject to different national competition rules. 
Procedures, time limits and the criteria for taking decisions can vary considerably. 
It is even possible for a merger or a concerted practice to be authorized in one 
country and prohibited in another. These differences push up costs (more 
procedures, higher legal costs, etc.) and increase uncertainties and may therefore 
constitute barriers (sometimes major ones) to the expansion of trade and of 
international investment. 
3. In some countries action against anticompetitive practices is less rigorous than 
in others and distortions may result. Also the anticompetitive practices tolerated 
by one competition authority sometimes result in access to the market concerned 
being closed, even though foreign firms could provide additional competition 
which would be beneficial to the consumers of that country. 
4. Some countries have sought to remedy such problems by extending the territorial 
scope of their competition rules. However, this approach can lead to conflicts 
between competition authorities. In the absence of international cooperation, there 
are also legal and practical obstacles to seeking on foreign territory the 
information necessary to establish the existence of infringements. There is then 
a risk of a competition authority having to abandon prosecution of the alleged 
infringements for lack of sufficient proof. 
5. Developing countries in particular have an interest in ensuring effective controls 
on anti-competitive behaviour. The worldwide lowering, in the context of the 
Uruguay Round, of governmental market access barriers for trade in goods and 
services, trade-related investment measures and intellectual property rights may 
leave them more exposed to the risk of anticompetitive practices. In the absence 
of appropriate domestic rules, they may also risk being subjected to the 
extraterritorial application of other countries' competition laws. 
All these problems are liable to undermine the positive results of the Uruguay Round 
agreements. This is why, as we shall see later, the Agreement establishing the World 
Trade Organization (WTO) contains a number of rules relating to competition. In 
addition, in negotiations under the aegis of the WTO, recommendations have been made 
to deepen the competition aspects of the trade-related provisions (e.g. those concerning 
commercial monopolies, trade in services, intellectual property rights and "trade related 
investment measures"). All the same, a more systematic and more complete approach to 
restrictions on competition resulting from the activities of commercial firms is still 
necessary. 
IP/94/653 of 17.7.94 
II THE EXPERIENCES OF THE EUROPEAN UNION WITH REGARD TO 
COOPERATION 
The European Union has a wealth of experience in cooperation between competition 
authorities and in the development and enforcement of internationally applicable 
competition rules. 
1. Cooperation within the European Union 
In accordance with the texts in force4 Member State competition authorities are 
associated with the procedures carried out by the Commission under its own 
competition powers. 
The following provisions are particularly significant in the context of the present 
report : 
the most important documents in each case, including certain information 
of a confidential nature obtained by the Commission from firms, are to 
be transmitted to these competition authorities, which can also be 
represented at the oral hearings of firms; 
these authorities may make their opinions known on the draft decisions in 
individual cases within the Advisory Committees on Restrictive Practices 
and Dominant Positions and the Advisory Committee on Merger Control; 
Member State authorities may assist the Commission, at its request, during 
investigations carried out on the premises of firms; or may themselves 
carry out the investigations requested by the Commission; 
Furthermore, the development of competition law, now extended to all Member 
States, and the establishment of national administrative authorities together 
increase the opportunities for cooperation between these authorities and the 
Commission5. Such opportunities are today exploited more widely than before, 
whether by leaving it to the national authorities, when they are in the best position 
to do so, to enforce their own or Community legislation to company activities 
See EEC Council Regulation No 17 (OJ No 13, 21.2.1962, p.204) and Regulation No 99/63/EEC 
of the Commission (OJ No 127, 20.8.1963, p.2268). Similar provisions are contained in the 
Regulations applying Articles 85 and 86 to the various transport sectors and in Council Regulation 
(EEC) No 4064/89 (OJ No L 395, 30.12.1989, p.l corrected by OJ L 257 of 1990) and 
Commission Regulation (EEC) No 3384/94 (OJ No L 377, 31.12.1994, p.l) on concentrations. 
A distinction should be made between cooperation between the Community and national 
competition authorities and the application by national courts of Community law, which the 
Commission encourages (cf Notice on cooperation between national courts and the Commission, 
which was adopted in 1992; OJ No C 39, 13.2.1993, p.6). 
which could be dealt with by the Commission6, or by, for example, calling on the 
resources of the national authorities to initiate the investigation of cases on which 
the Commission may reserve the right to act itself at a later stage. 
Thus some of the main aspects of international cooperation in the field of 
competition (exchange of confidential information, one competition authority 
being able to make its point of view known to another competition authority 
which is handling a case affecting the first authority's interests, machinery 
whereby two authorities can agree on the allocation of a case on the basis of 
criteria such as the resources available or the location of the "centre of gravity" 
of the company behaviour in question, etc.) have been or are being, in varying 
degrees, experimented with within the Union, and increasingly so in the last few 
years. 
2. Cooperation with the other countries of Europe 
Apart from the experience gained within the Union, the Union has embarked on 
a process of close cooperation with neighbouring countries. 
2.1 An elaborate model of cooperation was established under the Agreement on the 
European Economic Area (EEA), involving a full exchange of information 
between the EFTA Surveillance Authority (ESA) and the Commission for cases 
concerning both the signatory EFTA countries and the Community. The ESA and 
the Commission are even each entitled to formulate an opinion in the proceedings 
brought before the other authority. This situation was made possible by a 
Protocol to the Agreement derogating from the normal Community rules on 
confidentiality. 
The accession to the Union of Austria, Finland, and Sweden will admittedly 
reduce the practical scope of these provisions in the future, but do not deprive the 
EEA arrangements of their value as a model for future international cooperation 
agreements. 
2.2. With the Central and East European Countries (CEECs) cooperation is provided 
for in the implementing rules introduced under the Europe Agreements. The 
Commission and the competition authority of each country concerned undertake 
in particular to notify one another of the cases they are handling which also 
concern the other authority. However, the authorities are not obliged to 
communicate information where its transmission would be prohibited by law or 
incompatible with their respective interests. Each authority further undertakes to 
take account of the other's observations and to seek mutually acceptable solutions. 
On the basis of Article 9(3) of Council Regulation No 17 (OJ No 13, 21.2.1962, p.204) and similar 
provisions in the equivalent sectoral Regulations or, for concentrations, on the basis of the referral 
procedure laid down in Article 9 of Regulation (EEC) No 4064/89). 
3. Cooperation with the United States 
3.1. Another illustrative example of cooperation is the Agreement between the 
European Communities and the Government of the United States of 
23 September 19917. The content of this agreement may be summarized as 
follows: 
Article II requires each Party to notify the other whenever the enforcement 
activities of one of the Parties may affect the "important interests" of the 
other Party. The text also specifies the time at which this notification is 
to be made; 
Article IV provides for cooperation and coordination in the enforcement 
of the competition rules; 
Article V contains a provision on "positive comity". This is probably the 
most innovative aspect of the Agreement: either Party may request the 
other to act, on the basis of its own powers, to investigate activities which 
adversely affect important interests of the first Party. The notified Party 
is free to decide whether to undertake enforcement activities, but if it does 
so it is obliged to advise the first Party of the outcome. 
Article VI contains the principle of "negative comity", which states that 
when each Party acts, it has to take into account important interests of the 
other Party. 
lastly, Article VIII provides that the Agreement shall not derogate from the 
confidentiality rules of each of the Parties. 
3.2. This Agreement has resulted in a large number of notifications, the content of 
which is relatively limited because of its purely factual nature. 
Bilateral meetings and many other contacts also take place, mainly to discuss 
priorities with regard to effective enforcement and cooperation on specific cases. 
Nonetheless, it is clear that the ban on exchanging confidential information has 
created a major obstacle to close cooperation. 
3.3. The Microsoft case (summer 1994) is unusual from this point of view, in that the 
company consented to an exchange of such information. This permitted closer 
cooperation whereby the two competition authorities jointly negotiated an eventual 
settlement8. 
See OJ L95 of 27.4.1995 as corrected by OJ L 134 of 20.6.95 
The recent decision of the Federal District Court not to approve the consent order as being in the 
public interest has no consequences for the undertaking given by Microsoft to the European 
Commission, which stands independently of the US remedy. 
3.4 It should be noted that in November 1994 the United States Congress adopted the 
International Antitrust Enforcement Assistance Act, which contains a provision 
permitting the conclusion by the US competition authorities of international 
agreements providing for the exchange of confidential information, provided 
certain conditions are met. It is also worthy of note that on the basis of this new 
law, the US authorities could provide information to the competition authorities 
of countries whose important interests are affected by anticompetitive behaviour 
organized within the US, but which is not illegal under US law. 
4. Cooperation with other third countries 
Cooperation with other competition authorities is at present far less developed and 
gives rise to a simple exchange of notifications under the 1986 OECD 
recommendation (see Annex 69) and to informal consultations in a limited number 
of cases. 
With Japan, cooperation has started through the organization of bilateral meetings 
in which subjects of common interest are discussed (review of recent legislation, 
discussions on particular sectors and cases) and the organization of public 
seminars in which experts, and business and consumer representatives take part. 
The first seminar took place in Tokyo in November 1993 and the second was held 
in Brussels on 16 September 1994. 
Links with authorities in Canada, Australia and New Zealand have been 
established in the same way but substantive cooperation needs to be developed 
further. In addition, on the basis of an authorization from the Council, the 
Commission has just begun negotiations with the Canadian authorities with the 
aim of concluding a cooperation agreement. 
References to numbered annexes relate to the set of annexes published in parallel with this report. 
8 
m. LIMITS TO PRESENT INTERNATIONAL COOPERATION IN THE 
FIELD OF COMPETITION 
1. Bilateral cooperation still too limited 
In contrast to the USA, the number of international bilateral antitrust cooperation 
agreements and mutual legal assistance agreements concluded by the European 
Communities remains very limited. Apart from the restrictions with regard to the 
exchange of confidential information10 already mentioned, the limits to existing 
instances of cooperation (in particular between the European Union and the United 
States and between the European Union and Japan) are mainly due to the fact 
that competition law and its enforcement differ as between partners. For example, 
the purpose of Community law, via competition, is not only to increase the 
efficiency of firms or to improve the allocation of resources, but also to bring 
about the integration of the internal market. The latter concern is not so pressing 
or non-existent in the United States. This results in a different approach, for 
example, to vertical restraints or the abuse of a dominant position. 
Similarly the implementation of competition policy is not always, either in degree 
or in its practical implementation, independent of the general policies of a given 
country. Thus United States competition policy has evolved in ways which are 
not necessarily reflected on this side of the Atlantic.11 Differences in policy or 
in the manner of implementation of competition rules also exist between the 
European Communities and other of its partners. 
Furthermore, in the case of bilateral cooperation between the European Union 
and the United States, it appears that the ambitious provisions of the existing 
Agreement have not (yet) been fully exploited. In particular it still remains to be 
seen how far the "comity" procedures are really likely to influence competition 
authorities' natural propensity not to be concerned with the external effects of 
their decisions. Despite recent court decisions12 and views expressed some months 
ago by the United States competition authorities, it is important to avoid an 
unduly restrictive interpretation of the concept of comity which would make it 
applicable only in the (rare) cases of "pure conflict" of law, i.e. when a firm 
cannot comply with the requirements imposed by one jurisdiction except by 
infringing the law of another jurisdiction. Given the importance of the Agreement 
between the European Communities and the United States, it is to be hoped that 
10 
12 Cooperation between Canada and the United States does, however, include the exchange of 
confidential information for cases pertaining to criminal law. 
It should be noted that the guidelines of the competition authorities give an imperfect reflection 
of the real effects of applying the rules in force. The role played by the national courts, which 
can vary in importance, depending on the country, should be taken into account. 
Cf for example the 1993 judgment of the United States Supreme Court in Hartford Fire Insurance 
Co v. California, 113 S.Ct. 2909. 
its most promising provisions will be fully exploited and that the way will not be 
open for an excessive unilateral enforcement of competition rules. 
2. The absence of an international framework for competition and 
of common rules accepted worldwide 
The post war Havana Charter was a first attempt to introduce competition rules 
into the international arena but failed when the Charter was not ratified by the 
principal countries concerned. Since then efforts to create an international 
competition rules framework have run aground and this despite the provisions of 
the 1986 OECD recommendation on cooperation between member countries on 
restrictive business practices affecting international trade. The situation today 
is one where the circulation of information and cooperation between competition 
authorities are inadequate. 
Unlike other areas, and especially the area of international trade thanks to the role 
of the World Trade Organization, there are no conciliation and arbitration 
procedures relating to anticompetitive practices in the event of disputes and 
differences. 
The immediate result is that competition authorities have less incentive to achieve 
practical results through bilateral cooperation and especially through an equally 
strict enforcement of competition rules or a harmonization of rules and 
procedures. In particular a strict competition authority generally has difficulty 
in influencing a less strict authority through bilateral cooperation. 
It should be noted, however, that at the Ministerial Meeting in Marrakesh in April 
1994 which concluded the Uruguay Round and established the WTO, competition 
policy was explicitly mentioned as an area for which a rules framework could be 
drawn up. The WTO Agreement also provides that its Council for Trade in Goods 
shall, not later than five years after the date of entry into force of the Agreement 
on 1 January 1995, consider whether the multilateral rules with provisions on 
competition should be complemented (Article 9 of the Agreement on 
Trade-Related Investment Measures). As for the Agreement on Trade in Services, 
it already has some rules dealing with business practices which restrict 
competition (Articles VIII and IX). The Agreement on TRIPS also includes 
various articles (e.g. Articles 8, 39 and 40) recognizing the need for competition 
rules so as to prevent abuses of intellectual property rights and anticompetitive 
practices in contractual licences. In the accession negotiations with (former) State 
trading countries there is increasing concern about the need to supplement the 
inadequate GATT rules on state trading enterprises by additional guarantees of 
market access and undistorted competition. An opportunity for multilateral action 
has therefore been created, which should be exploited more fully. 
10 
IV. RECOMMENDATIONS OF THE GROUP FOR IMPROVING 
INTERNATIONAL COOPERATION AND THE ENFORCEMENT OF 
COMPETITION POLICY RULES 
The Group examined the various possible options for improving international cooperation 
in the area of competition policy. 
Before weighing these options it must be recognized that the way in which competition 
functions on international markets may be affected either because of the action (or 
inaction) of countries, or because of company practices. 
As far as the responsibility of countries is concerned, competition on international 
markets may be affected either by specific actions (e.g. the enactment of national rules 
which limit the ability of foreign business to compete, the implementation of rules which 
discriminate against foreign competitors, the organization of export cartels, the exemption 
of certain sectors of activity from the scope of competition law, etc.), or by a lack of 
action (e.g. because there is no national competition law, or it is not implemented). 
As for company practices liable to restrict competition on international markets, several 
types of situation can be identified: 
collective practices of firms located in different countries which affect both 
domestic competition in the various countries concerned and international trade 
(e.g. international cartels); 
collective practices which emanate from firms in the same country and affect the 
ability of foreign firms to penetrate the country concerned. These may be 
prohibited practices such as national cartels, but also practices which are not 
necessarily a barrier to competition in that country or are not considered contrary 
to national competition law (such as certain vertical practices between producers 
and distributors); 
restrictive practices which emanate from firms in the same country and restrict 
competition in one or more other countries (e.g. export agreements or the abuse 
of dominant positions). 
The various types of restrictions on international competition mentioned above may pose 
different problems from the point of view of regulating competition internationally. 
For example, in the case of an international cartel, there may be an agreement between 
the competition authorities of the countries concerned on initiating prosecutions but 
problems may arise concerning competence (which authority has to act) and evidence 
(investigation by the designated authority implies that it has powers of discovery outside 
its own jurisdiction in the countries in which the other members of the cartel are located). 
A framework for cooperation between competition authorities and for an exchange 
information is then necessary. 
Conversely, when the practices in question emanate from firms located chiefly or 
exclusively in a specific country, that country's authorities will generally be in the best 
11 
position to take action against the practice whose effects will either be chiefly felt outside 
the country (in the case of an export cartel or an abuse of a dominant position on 
international markets by a firm situated in the country concerned) or felt both inside and 
outside the country concerned (in the case, for example, of horizontal or vertical 
restrictive practices which limit the ability of foreign firms to export into the country 
concerned and restrict competition in that country). 
In these last examples, the international community still needs to have the power to 
ensure that the authorities of the country in which the offending firms are located will act 
to eliminate the anticompetitive practice. In the absence of an international authority with 
investigatory and enforcement powers in all countries, the country in which the firms in 
question are located will itself need to have a competition law enabling it to deal with 
the problem and an appropriate dispute settlement mechanism is needed at international 
level so that the victims of the practice can be sure that the implementation of the law 
is effective and non-discriminatory. 
It seems therefore that a combination of several options is required in order to combat 
anticompetitive practices which have international effects. 
The Group more particularly examined in turn: 
the possibility of establishing an international authority responsible for ensuring 
the implementation of a worldwide competition code, an option which may be a 
long-term project (cf par. IV. 1); 
the scope for developing bilateral cooperation, which is essential but insufficient 
(cf. par. IV.2); 
the progressive construction of a Plurilateral Agreement on Competition and Trade 
combining common principles (these principles could be incorporated in the 
national laws of participating countries) and an arbitration structure.This project 
is ambitious, but the Group considers that the Union and its chief partners could 
usefully start to study it right away (cf. par. IV.3). 
1. International competition authority and worldwide competition 
code: a long-term option 
For future reference, the Group discussed the drafting of an international 
competition code superimposed on national laws, including the establishment of 
a single authority responsible for its implementation. But the Group does not 
consider this a realistic short or medium-term option. A considerable effort to 
make existing national laws more convergent (along the lines of the OECD's 
work) is a prerequisite to any moves in this direction. Similarly, only a lasting 
and fruitful experience of closer cooperation between national authorities retaining 
the full scope of their powers will create a climate of confidence which would 
make the loss of sovereignty involved in this option acceptable. 
12 
Without elaborating further on the possible advantages of this long-term 
objective,13 the Group considers that it is more appropriate at this stage to 
concentrate on the intermediate stages. In particular, it feels that one should 
commence with the introduction of an adequate set of competition rules by those 
countries that do not yet have one; and countries which have already acquired 
experience in this area should provide more assistance to developing countries 
requiring it. 
2. The strengthening of bilateral cooperation is essential 
2.1 In recent years, many bilateral agreements have been signed: United States -
Australia, Australia - New Zealand, United States - Canada, Germany - United 
States, United States - European Communities, etc. Other agreements are being 
negotiated. 
Competition authorities' commitment to this type of cooperation is directed 
initially at facilitating the detection of restrictive practices which operate or have 
effects across borders, and at avoiding conflicts that result from the 
extra-territorial enforcement of national competition laws. This enhances the 
"negative comity" approach which traditionally tends to limit one country's 
implementation of legal measures where the important interests of another country 
might be affected. Henceforth, such self-restraint must be extended to 
circumstances in which the first country refrains from acting in order to assist the 
action of its better-placed partner in putting an end to a restrictive situation with 
transborder effects. The application of the "negative comity" principle should not, 
therefore, result in a lower level of enforcement of competition rules but, on the 
contrary, in the use in each case of the most appropriate instruments by the 
competition authority which is better placed in this respect. In addition increased 
cooperation among competition authorities, and in particular the "positive comity" 
mechanism, makes a significant contribution to attaining the objectives of 
successive GATT rounds. (This mechanism enables one competition authority 
to request the partner country's competition authority to act in order to put an end 
to behaviour which may, for example, prevent access to that partner country's 
market.) It is this approach which makes it possible to pursue the objectives of 
international action in this area: a more effective enforcement of competition 
rules which should have the effect of checking trends towards an extra-territorial 
enforcement of national rules; the creation of conditions favouring the gradual 
alignment of different laws, which will enhance the legal security for firms and 
reduce their costs; and the promotion of equal conditions of competition in all 
countries. All these factors are likely to favour the opening up of markets and the 
expansion of international trade. 
13 Cf in particular the report published on 26 January by the Commission on Global Governance (see 
Chapter 4). 
13 
Cooperation between competition authorities will not, in the foreseeable future, 
make it possible to relinquish trade protection instruments. However, as the 
effectiveness of cooperation increases, instances of conflict likely to lead to the 
use of these instruments will decrease. 
2.2 The EU's most interesting experience of bilateral cooperation so far has developed 
under the aforementioned agreement with the United States. Although positive, 
this experience remains nonetheless limited in scope. 
The Group considers that cooperation should as a priority be taken further, both 
because of the importance of transatlantic relations and because of the role 
fulfilled by the EC/US agreement as a model for the development of cooperation 
between each of the two partners and other countries in the world. Primarily this 
implies a commitment by the parties not to act unilaterally unless all the means 
provided by comity have been exhausted; it also implies, on a reciprocal basis, the 
elimination of current obstacles relating to confidentiality rules applicable to 
exchanges of information. On the United States side the recent adoption of a new 
law on the matter should reduce the scope of this problem. On the European side 
the protection of confidential data is guaranteed by Community regulations. The 
European Communities are entitled nonetheless to conclude an international 
agreement which, under the procedure and in return for certain negotiated 
guarantees, derogates from the internal rules they have laid down. 
While the Group considers that the deepening of the EC/US agreement should be 
a priority for the Commission's action in the months ahead, it also feels it 
appropriate to establish a network of bilateral agreements with other partner 
countries taking into account the specific nature of each case - and primarily 
Japan, in view of its economic importance and the volume of its trade with the 
Community. The Group is also convinced that the establishment of bilateral 
agreements would serve as a good example for countries whose anti-trust activity 
may so far have seemed insufficiently strong; it is therefore of the view that a 
network of bilateral agreements should, as soon as possible, extend beyond the 
circle of countries which are today the most "activist" in the enforcement of 
competition policies. From this point of view a "positive comity" procedure as 
envisaged by the European Communities-United States Agreement should come 
into general use. 
3. The Group's main recommendation: the gradual construction of 
a plurilateral agreement 
Despite their great value in the more effective application of competition rules to 
transborder restrictive practices, bilateral agreements cannot in themselves suffice 
to solve all problems: while they enable a closer coordination of action -
especially if the confidentiality constraint were lifted, even if only in part - and 
provide a framework for reconciling divergent approaches or concerns, these 
agreements are not vehicles of conflict resolution. Although the incipient dialogue 
which is established between the parties helps to bring the practices of 
14 
competition authorities closer together, even on the basis of rules which may 
originally be far apart (e.g. the treatment vertical restraints on either side of the 
Atlantic), it cannot replace the need to agree on basic principles relating to their 
enforcement. The Group considers, in particular, that commercial frictions may 
remain unresolved in the absence of a dispute settlement procedure based on a set 
of jointly determined competition rules. It is also difficult to imagine the 
emergence of a level playing field if this were to be be founded only on a group 
of inevitably heterogeneous bilateral agreements. 
For these reasons the Group is of the view that a framework based on a set of 
common rules and a dispute settlement procedure is necessary to: 
ensure that restrictive practices which are implemented and have effects 
across borders are effectively monitored; 
contain the risks of commercial frictions resulting from the heterogeneity 
(or even the absence) of national competition policies. 
To this end, the Group recommends the elaboration of a plurilateral agreement, 
comprising a new structure designed to resolve difficulties between contracting 
parties and between competition authorities. Three major issues have to be tackled 
in order to achieve this: 
geographical coverage of the agreement 
determination of common rules 
establishment of a new structure 
The Group is of the view that each of these problems can be overcome by 
adopting a "building-block" approach within the framework of a plurilateral 
agreement on cooperation. 
3.1 Geographical coverage of the agreement 
The geographical coverage of the agreement should be wide enough to include the 
main trading partners at world level, in order to reduce the distortions which may 
result from differences in the enforcment of competition rules. 
3.1.1. At the present time there are three areas within which very close cooperation 
already exists in the field of competition: 
- United States and Canada (particularly with regard to the prosecution of 
criminal infringements) 
- Australia-New Zealand (an agreement providing for the harmonization of 
competition laws, and cooperation and exchange of information between 
the national competition authorities; the agreement goes so far as to 
provide, in some circumstances, for these two countries to be integrated 
in a single jurisdiction) 
- the European Communities and their partners in the European Economic 
Area; this group is being enlarged by the Central and East European 
15 
Countries (CEECs), which are linked to the EC by agreements providing 
for close cooperation on the basis of Community competition rules; 
(similar agreements could be concluded with certain countries in the 
Mediterranean basin). 
Between these three areas "bridges" exist (or are being established) such as the 
EC-United States agreement, the draft EC-Canada agreement, the Australia-United 
States agreement, the Germ any-Uni ted States agreement or the draft France-United 
States agreement. Despite the inclusion of important provisions (such as the 
"positive comity" provision in the EC-United States Agreement or in the draft 
EC-Canada agreement) these agreements are more limited in scope in that they 
do not provide for the possibility to exchange confidential information. However, 
even if this problem of "interconnection" still has to be overcome, it is clear that 
all the countries concerned, in view of their experience in the field of cooperation, 
should logically be among the founder members of any plurilateral structure. 
3.1.2 Nevertheless, the goal of this structure would not be achieved if it did not 
integrate Japan or the other Asian industrialized countries and certain Latin 
American countries, if necessary over time. The United States and the European 
Union in particular have taken or are taking retaliatory trade measures against 
these countries for behaviour considered to be unfair. All the same it is clear that 
the establishment of a plurilateral competition discipline will not lead to the 
abandonment of trade protection instruments, if only because the effects of the 
new system will make themselves felt gradually. Moreover, the implementation 
of competition policy cannot in all cases by itself lead to the opening up of 
markets. 
Nevertheless it is clear that as and when it becomes effective the stricter 
enforcement of competition rules, stimulated by international pressure, will have 
to be taken into account by those responsible for trade policy. 
3.1.3. In taking account of these factors, the Group recommends: 
as a first stage, the negotiation of a plurilateral agreement within a group 
of countries, which might consist of the OECD countries (including 
Mexico which has recently become a member), the central and east 
European countries, and, for example, Hong Kong, Korea, Singapore, and 
Taiwan. Other countries could also participate in the agreement and its 
negotiation provided they were ready to accept the same rights and 
obligations. 
the extension as soon as possible of this agreement to the most advanced 
countries in Latin America. 
On the global level, this goal could be achieved by concluding the proposed 
competition agreement as a "plurilateral agreement" under Annex 4 to the 
Agreement establishing the WTO14. However, the Group has" chosen to refrain 
14 The WTO has to date played an important role as an international forum of economics-based rules. 
16 
from making a specific recommendation on which forum and institutional 
framework might be most appropriate for negotiating and implementing the 
proposed agreement. Nonetheless, the Group considers it important to bear in 
mind the practical experience - as in the context of European integration, NAFTA 
and the Australian-New Zealand Closer Economic Relations Trade Agreement -
that competition rules and trade rules, their interpretation and their judicial 
enforcement, need to be mutually supportive. 
3.2. Determination of common rules 
The ambition to go beyond a simple "comity" agreement and to establish a 
structure for dispute settlement implies agreement on a list of minimum principles. 
The Group considers that these principles should be incorporated into the national 
law of the participating countries in much the same way as European Directives: 
each country would have an obligation as to the result to be achieved, but would 
not be obliged to amend its current legislation if it already contained these 
principles or if it was open to similar interpretation. 
Even if it is too soon to make a detailed list of the common principles which 
should be adopted, it seems that a consensus could be built between the countries 
mentioned above on a prohibition of horizontal cartels relating to the fixing of 
prices, restriction of supply or the sharing of markets. This prohibition would 
include export cartels. 
Other types of cooperation agreement should not, however, be ruled out from the 
outset since these can also lead to serious restrictions of competition. A 
"rule-of-reason" approach is desirable in these cases. Vertical agreements raise 
even more difficulties since opinions differ as to the conditions under which they 
are acceptable from competition perspective. One solution might be to prohibit 
agreements where their restrictive effect on competition is not offset by an 
advantage for the consumer and/or where they constitute a barrier to market 
access. 
As regards the control of dominant positions, a regime similar to that of 
Article 86 of the EC Treaty appears appropriate in so far as it focuses on the 
abusive behaviour of enterprises in a dominant position. 
In the field of mergers, priority should be given to a harmonization of procedures, 
on the basis of the Whish Wood study carried out by the OECD15, in particular 
as regards the time limits for examination of cases, so as give competition 
authorities sufficient time to consult each other. 
These include rules on intellectual property, subsidies, investment, state enterprises, deregulation 
and trade liberalization, which are all related to competition law. Importantly, the WTO also has 
a developed dispute settlement system, wliich could be adapted to the particular needs of 
competition cases. 
OECD Merger process convergence project 
17 
Lastly, Article XVII of the GATT relating to the obligations of national 
monopolies or companies with "exclusive or special privileges" would need to be 
strengthened in so far as these enterprises should generally be subject to the same 
rules as other enterprises exercising a commercial activity. 
3.3 Setting up a new structure 
The Group considers it necessary that an international body be entrusted with 
three functions: 
(a) to serve as a forum for drafting and then permanently reviewing, adapting, 
and, in so far as possible, extending the common principles for 
incorporation in the various national laws and for their enforcement; this 
exercise would be carried out in conjunction with analyses covering all 
aspects of the relationships between competition and trade. 
(b) to establish a "register of anticompetitive practices" within the contracting 
States to the agreement. This register would initially concern only 
individual cases relating to firms (or cartels) satisfying specific criteria, 
and would be established on the basis of notifications by the contracting 
countries of the agreements they had required or encouraged. The existing 
regimes of general application (such as the block exemptions within the 
EU) or the derogatory regimes (e.g. the rules applicable to maritime 
transport in the United States) would also be notified. 
This register would be supplemented by a register of non-notified 
restrictive practices, i.e. practices which had come to the knowledge of the 
international body, through countries other than those in which these 
practices were used, or because it had been approached by enterprises 
which were victims of these practices. The international body could 
question the Member State whose legislation was likely to apply to such 
practices whether it was aware of them and which measures it intended to 
take to deal with them. The results of this investigation would be 
forwarded to the other countries. 
(c) provide a structure for settling disputes between participating countries. 
At procedural level the WTO dispute settlement mechanism (including the 
appellate body) seems to correspond fairly closely to the structure which 
might be established to arbitrate on disputes concerning action by 
competition authorities, even if some aspects (in particular time limits) 
should be reconsidered to take account of the inherent nature of 
competition cases. (For further discussion of the GATT/WTO dispute 
settlement mechanism, see Annex 4.) 
18 
3.4 Establishment of an effective international dispute settlement and enforcement 
procedures 
As in the field of international trade law and the GATTAVTO dispute settlement 
system, the international dispute settlement system in the context of the proposed 
plurilateral competition agreement should serve as a framework for the settlement 
of a variety of possible conflicts, e.g. over the domestic implementation of the 
international rules and over their application in concrete cases. In particular the 
following categories of disputes should be actionable. 
a) Disputes over international procedural obligations 
In case of non-notified anticompetitive practices, or if information on these 
practices is inadequate or contested, an adversely affected country could 
invoke the obligations set out in a plurilateral cooperation agreement 
(PCA) under the following conditions: 
If the notification and information requirements were not 
voluntarily met, the injured party could request a PCA Committee 
to order specified notifications and informations. 
If invocation of the "positive comity" obligations provided for in 
the agreement did not lead to enforcement activities by the other 
country, the adversely affected country could either request a 
finding by a PCA panel on whether the non-enforcement of 
domestic competition rules violates the international standards of 
the PCA; or it could unilaterally apply its own competition laws to 
the anticompetitive practices provided this is consistent with its 
own legislation and with the "negative comity" obligations included 
in the PCA. 
An alternative option could be to resort to domestic court 
proceedings in the foreign country for a judicial review of whether 
the alleged anticompetitive practices are consistent with the 
domestic competition law. 
Insofar as the objective of the above dispute settlement procedure is to 
foster enforcement of competition law while avoiding conflicts of 
jurisdiction between Agencies, both the information exchange and positive 
comity provisions should be subject to strict procedural obligations and 
time limits. This will enable a requesting authority to ascertain rapidly 
whether the third country agency intends to act in a specific case. 
b) Disputes over international per-se-prohibitions 
Where a competition authority has had a case referred to it by another 
country (party to the PCA), in conformity with the positive comity 
procedure, yet fails to act against behaviour subject to per se prohibition, 
the matter could then be brought before a PCA dispute settlement panel. 
A panel finding of such a violation would trigger the international 
"secondary obligations" recognized in GATT-WTO law (i.e. cessation of 
19 
the illegal act and possibility of authorization of countermeasures pending 
the withdrawal of the illegal act, such as suspension of reciprocal market 
access obligations). The PCA could also provide for additional civil law 
sanctions such as that anticompetitive practices violating per-se-
prohibitions are not enforceable at law. Such a rule would have the 
political advantage of making domestic courts part of the international 
enforcement system. Both PCA panels and domestic courts would have 
the power to order the submission of relevant factual information and to 
decide on the basis of presumptions and rules on the allocation of the 
burden of proof. 
c) Disputes over international rules-of-reason 
In those areas where there is no international consensus on justiciable per­
se-prohibitions of anticompetitive practices, the PCA would only define 
minimum standards for national rules-of-reason and rules of conflicts of 
jurisdiction. This is an area where the experience gained under bilateral 
agreements can contribute to progressive consensus building. But, since 
the application of the domestic rules-of-reason would be guided only by 
international minimum standards and would require the appraisal of 
complex economic matters, the international PCA panel could apply only 
a limited standard of review with due deference to the national scope of 
discretion (e.g. through review by PCA panels of whether the relevant 
procedural rules have been complied with, whether the statement of the 
reasons for the national decision is adequate, whether the facts have been 
accurately stated, whether there has been any "manifest error of appraisal" 
of the facts or whether there has been a "misuse of powers"). 
d) Disputes over nullification or impairment of market access as a result of 
anticompetitive practices 
Another course of action could be created by tying the PCA to the 
framework established by the WTO governing international trade. If this 
option were retained it would have the advantage of strengthening the 
linkage between market access commitments as embodied and negotiated 
in the WTO on the one hand,16 and rules on anticompetitive practices on 
the other. This would both contribute to open trade and promote mutual 
consistency. 
A major step in enhancing the complementarity between trade and 
competition policies would be taken by the inclusion, within a competition 
framework, of provisions by which the "nullification or impairment" 
through private practices of market access commitments negotiated under 
the WTO would be actionable, unless appropriate corrective measures are 
taken by country concerned. A similar approach was taken in the Havana 
Charter (Article 46), where an absence of government action to prevent a 
16 The GATS Agreement, in its Article VIII, already contains a prohibition to impair, through 
monopolies and exclusive services suppliers, benefits granted under specific commitments in 
services schedules. 
20 
limitation of access to markets could constitute a violation of its 
provisions. It is clear, however, that in assessing private practices that may 
limit access to markets, the efficiency goals fundamental to competition 
policy would be upheld. Thus the international dimension would be one 
of the factors of review competition authorities would have to weigh 
following an international request. 
In addition to the above, a case of "nullification or impairment" of market 
access commitments negotiated under GATT law or GATS law could be 
constructed on the basis of as a "non-violation" complaint as traditionally 
recognised in the WTO. The principles underlying "non-violation" 
complaints could be progressively refined and developed through agreed 
definitions and dispute settlement practice. 
4. Summary of the Group's recommendations 
In summary, the principal recommendations of the Group are as follows: 
4.1 Given their common interest in preventing an ti-competitive activity, countries or 
regional groupings of countries should be encouraged to ensure that they have in 
place an adequate set of competition rules and that these are effectively enforced. 
Where necessary, technical assistance should be provided for those countries 
requiring it, in particular developing countries. 
4.2 The building block approach proposed by the Group is to make headway on two 
fronts in parallel. 
On the one hand, there should be a deepening of bilateral Agreements 
(i.e. to include the possibility of exchanging confidential information and 
to strengthen the use of the positive comity instrument). In this respect, 
a "second generation" agreement between the EC and the USA is a 
priority. This agreement would create a framework for even closer 
cooperation between the competition authorities of both sides. A 
necessary further step for the EC would be to negotiate a bilateral 
agreement with Japan. 
On the other hand a plurilateral framework should be developed (i.e. 
including most elements already incorporated into the bilateral 
Agreements, to which would be added a set of minimum appropriate 
competition rules, a binding positive comity instrument and an effective 
dispute settlement mechanism). It is realistic to assume that a plurilateral 
framework would, in the first instance, include a group of core disciplines 
and core countries only (i.e. the EC, the OECD member countries, the 
central and eastern European countries, and for example Korea, Hong 
Kong, Singapore and Taiwan), although it should be open to wider 
participation. The creation of an effective competition law enforcement 
structure requires sophisticated legal instruments and analytical 
capabilities: having these may not be considered a priority in all 
21 
developing countries. Such a plurilateral agreement would develop and 
expand its coverage progressively through a domino effect, both in terms 
of its geographic scope, substantive coverage and surveillance. The 
surveillance structures would concentrate on the transposition of common 
international rules into national law and on ensuring the respect and 
enforcement of these common rules. 
4.3 The Group considers that these recommendations can develop in parallel as both 
initiatives are complementary and mutually supportive. Countries may wish to 
maintain bilateral relations with certain other countries. At the same time, they 
may wish to move more quickly to plurilateral agreement with a group of 
countries with which they have common interests. It would, however, be counter­
productive to have the creation of a multilateral structure dependent upon the 
willingness to participate of all potential partners. In this respect the development 
of a plurilateral framework is more likely to succeed in an environment which 
allows it to evolve and expand over time. 
The elaboration of a plurilateral framework is likely to take some time, and 
progress in negotiating such a framework would be enhanced by strengthening 
bilateral agreements, a goal which could be reached at shorter notice. 
Given the compelling arguments for moving ahead in this field, the Group is 
convinced that the European Union and its principal partners should without delay 
take the necessary steps to implement these recommendations. 
22 
ANNEX A 
List of Members 
External experts : 
Professor Ulrich IMMENGA 
Abt. fur internationales und auslandisches Wirschaftsrecht 
Universitât Gôttingen, Deutschland 
Professor Frederic JENNY 
Professuer d'Economie, ES SEC et 
Conseil de Concurrence, France 
Professor Ernst-Ulrich PETERSMANN 
Hochschule St. Gallen, Schweiz 
Commission experts17 : 
Mr. Claus-Dieter EHLERMANN, Mr. Jean-Francois PONS, DG IV 
Mr. Roderick ABBOTT, DG I 
Mr. François LAMOUREUX, Mr. Jean-François MARCHIPONT, DG III 
Mr. Alexis JACQUEMIN, Forward Studies Unit 
Secretariat : 
DGIV 
17 Commission officials participated on a personal basis and neither the views they expressed nor the 
report of the group bind the Commission. 
23 
ANNEX B 
Text of the letter of convocation 
The recent success of the Uruguay Round and the resulting progressive elimination of 
public restraints to world trade has reemphasized the need to put an end to private 
practices which disrupt trade between the world's major trading areas. 
The institution of international competition rules, as well as the creation of effective 
implementation procedures once foreseen in the Havana Charter, are issues that are now 
being revisited. 
In order to consider these issues and contribute towards a European community approach 
- based largely on our past experience on the integration of the internal market - Mr. Van 
Miert seeks to convene a small group of high level experts. 
Mr Van Miert has therefore requested that I contact you to invite you to participate in the 
work of this group. 
C.D.EHLERMANN 
Director General 
24 

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