CELEX: 51994PC0430
Language: en
Date: 1994-10-12
Title: Proposal for a Council Decision concluding the Agreement between the European Communities and the Government of the United States of America regarding the application of their competition laws

COMVIISSION OF THE EUROPEAN COMMUNITIES
                                               C0M(94) 430     final
                                               Brussels,    12.10.1994
                                               94/ 0236(CNS)
                   Commission communication to the Council
      concerning cooperation with the United States of America regarding
                    the application of their competition rules
                                 Proposal for a
                                COUNCIL DECISION
       concluding the Agreement between the European Communities and
   the Government of the United States of America regarding the application
                           of their competition laws
                       (presented by the Commission)
 ---pagebreak---                   Commission communication to the Council
    concerning cooperation with the United States of America regarding
                   the application of their competition rules
Introduction
The increasing internationalization of the economy, reflected in the steadily growing
volume of trade in goods and services, has implications for competition policy. More
and more often, practices in other countries can have repercussions within the
Community, and it may be difficult to deal with them on the basis of Community
rules. For instance, in Community law, one of the criteria governing the application
of Articles 85 and 86 of the EC Treaty is that the anti-competitive conduct in question
should "affect trade between Member States". In its Wood pulp decision, the Court
of Justice accepted that the Community competition rules could apply to undertakings
based outside the Community where the conduct in question took place within the
Community. However, this approach does not allow effective action and sanctions to
be taken against all restrictive conduct originating abroad.
Furthermore, the problems encountered by firms operating at international level
(multinationals) often have a global dimension, and the agreements which they
conclude may be examined by different competition authorities.
So as to deal with such increasingly international situations, cooperation arrangements
must be established between competition authorities that will permit improved
coordination where the same cases are handled by a number of authorities and will
allow action to be taken against conduct originating in one country and having
repercussions in another
 ---pagebreak---     This approach allows an effective solution to be found to the problems encountered,
    while at the same time avoiding the conflicts that may arise from a unilateral reaction
    based on extraterritoriality. It is for this reason that the Commission considers that
    cooperation agreements must be concluded between competition authorities.
II. The Agreement between the European Communities and the Government of the United
    States of America on the application of their competition rules
1.  In 1991 the Commission negotiated and signed a cooperation agreement with the US
    anti-trust authorities (the US Department of Justice and the US Federal Trade
    Commission)       The aim of the agreement is to promote cooperation between
    competition authorities by encouraging the exchange of information, and to promote
    dialogue between authorities in accordance with a 1986 OECD recommendation on
    cooperation in competition matters.
    However, the Agreement goes further than the OECD recommendation, for example
    by incorporating a number of principles established by US case-law in order to restrict
    excesses in the extraterritorial application of US competition rules (negative comity)
    and by developing for the first time the concept of positive comity.
    Nevertheless, the Agreement is of mainly symbolic value. Although it was signed by
    the Commission, the latter was bound by the obligations laid down in the Treaty and
    in the regulations adopted by the Council. This constraint is of particular importance
    here because of the confidentiality requirement imposed on the Commission under
    Regulation No 17 (First Regulation implementing Articles 85 and 86 of the
    EC Treaty), a requirement from which it could not derogate.
2.  The conclusion of the Agreement was recently overturned by the Court of Justice,
    which took the view that it was for the Council to conclude such an act, with the
    exception of the elements relating to the ECSC Treaty, for which the Commission is
    competent. The Court did not annul the Agreement itself, and it remains valid in
 ---pagebreak---    international law.    In fact, under the Vienna Convention on the law of Treaties
   (Article 46), an international agreement concluded by an authority which is not
   "manifestly incompetent" binds the State concerned. In this case, the Commission was
   not manifestly incompetent as it required a reference to the Court of Justice and nearly
   three years of procedure for the Court to find finally that the Council was the
   competent institution. It can therefore be confirmed that under international law the
   European Communities are bound as regards the United States.
   Under Community law, however, the agreement has not been concluded by the
   competent institution.     Measures must therefore be taken rapidly to remedy this
   shortcoming in Community law. There are two possible solutions: either terminate
   the Agreement, or ask the Council to conclude it. The Commission must also sign it
   for the ECSC aspects. Because of the advantages described above which accrue from
   international cooperation in competition matters, the Commission proposes that the
   Council choose the second option. For this purpose, a proposal for a Council Decision
   concluding the Agreement entered into between the European Communities and the
   Government of the United States of America regarding the application of their
   competition laws is set out in Annex 1 to this communication.
3. The Commission considers that for the Council to sign the Agreement would in no
   way alter the scope of the commitments previously entered into.           Although the
   Council may, by concluding an international agreement, derogate explicitly or
   implicitly from the regulations it has adopted, the Commission believes it is not
   appropriate to do so at this stage by amending the text of the Agreement.
   Furthermore, Article XI contains a provision allowing the agreement to be reviewed.
   The Commission considers that this provision could be invoked in future to allow the
   Community to conclude a more ambitious agreement (which could, for example,
   provide in certain circumstances for the exchange of confidential information) in the
   light of experience with the current Agreement. The US Congress will probably soon
   adopt legislation allowing agreements to be concluded between competition authorities
   that provide for the exchange of confidential information.
 ---pagebreak--- Annex I
Explanatory memorandum
A.    Introduction           .       •
1.     On 23 September 1991 the Commission negotiated and signed an agreement with the
       Government of the United States of America regarding the application of EC and US
       competition laws ("the Agreement"). In a judgment delivered on 9 August 1994, the
       Court of Justice ruled that the power to conclude such an agreement belonged not to
       the Commission, but to the Council. However, the Court of Justice did not annul the
       Agreement, which remains valid in international law.         In fact, under the Vienna
       Convention on the law of Treaties (Article 46), an international agreement concluded
      by an authority which is not "manifestly incompetent" binds the State concerned. In
       this case, the Commission was not manifestly incompetent as it required a reference
       to the Court of Justice and nearly three years of procedure for the Court to find finally
       that the Council was the competent institution. It can therefore be confirmed that
       under international law the European Communities are bound as regards the United
       States.
       Under Community law, however, the agreement has not been concluded by the
       competent institution. To remedy this situation, steps must be taken to correct the
       deficiency in the procedure under which the Agreement was concluded. There are two
       possible solutions: either to terminate the Agreement using the procedure provided for
       in Article XI(2), or to have it approved by the authority that is competent in
       Community law.       Because of the advantages accruing from effective cooperation
      between competition authorities, it is the second solution which it is proposed the
       Council adopt.    It should be noted that the area covered by the Agreement also
      includes the competition rules set out in the ECSC Treaty.           In as much as the
                                                                                                 *>
 ---pagebreak---    Commission is comptent to conclude international agreements in this area, the
   Agreement must be concluded jointly by the Council and the Commission.
2. Community competition policy applies to restrictions of competition affecting trade
   between Member States and not to those affecting markets in third countries. The
   gradual lowering and, in some cases, removal of tariff and non-tariff barriers to trade
   since the 1960s, together with other liberalization measures such as those concerning
   capital movements, have led to an enormous expansion in international trade. This
   has important consequences for the application of the competition rules: increasingly,
   non-Community firms are acting in an anti-competitive manner within the common
   market.    Generally speaking, anti-competitive practices within the Community are
   often linked to similar practices on other markets, while anti-competitive practices on
   other markets produce effects within the common market.           Similarly, as far as
   structural changes are concerned, a merger that exceeds the thresholds laid down in
   the Merger Control Regulation often has effects outside the common market.
   Conflicts between the activities of the various competition authorities are therefore
   highly probable, and it is useful to have a minimum level of communication between
   authorities in the application of their rules.
B. Description of the Agreement
1. The main objective of the Agreement is not to create a framework within which any
   conflicts arising between the Commission of the European Communities, on the one
   hand, and the US Department of Justice and Federal Trade Commission, on the other,
   may be resolved. The objective is instead to prevent such conflicts from arising by
   establishing a system of cooperation between the relevant authorities.
2. Article I of the Agreement gives a definition of its scope. As far as the Community
   is concerned, it covers Articles 85, 86, 89 and 90 of the EC Treaty, Regulation (EEC)
   No 4064/89 on the control of concentrations between undertakings, Articles 65 and
                                                                                           6
 ---pagebreak---    66 of the ECSC Treaty and the implementing regulations adopted on the basis of those
   provisions.
   As far as the United States is concerned, the Agreement covers the Sherman Act, the
   Clayton Act, the Wilson Tariff Act and part of the Federal Trade Commission Act
   (Article 1.2ii).
   In so far as the scope of these various rules is not the same on both sides of the
   Atlantic, there is not necessarily a perfect balance in the information to be exchanged:
   thus, Articles 85 and 86 of the EC Treaty cover sectors that do not fall within the
   scope of the above-mentioned US acts; on the other hand. Regulation (EEC)
   No 4064/89 covers only large-scale mergers (i.e. those meeting the threshold criteria
   specified in the Regulation). This leads to a commensurate reduction in the volume
   of information which the Commission is liable to supply to the US authorities.1
   The overall balance of the agreement is satisfactory, particularly given the inclusion
   of Article 11(5) (see below).
3. Article II provides that the other competition authority is to be notified if any of its
   "important interests" are affected. The Agreement describes some situations in which
   this test is satisfied. It also defines the point at which notification is required. Thé
   general approach here is that notification is to take place at a stage in the proceedings
   early enough to allow account still to be taken of the other party's opinion.
   Paragraph 5 of this Article merits some clarification.           It requires notification
   whenever a competition authority participates in a regulatory or judicial proceeding.
   It was inserted at the Commission's request in order to rectify the above imbalance,
   which derives from the wide-ranging scope of Articles 85 and 86 of the EC Treaty.
   Articles 85 and 86 apply to all sectors of the economy, whereas in the United States
i
   Most of the information exchanged since the entry into force of the Agreement has
   in fact related to mergers (see point C).
                                                                                             ^
 ---pagebreak---    different sectors are supervised by separate regulatory bodies.     But the Department
   of Justice and the Federal Trade Commission may take part in proceedings before
   such bodies and, if they do, they will have to notify the Commission accordingly
   provided that the other conditions laid down in that paragraph are met. The same
   applies where the Department of Justice or the Federal Trade Commission takes part
   in judicial proceedings, a possibility not open to the Commission before the national
   courts.
   Article 11(6) is to be read in conjunction with Articles VIII and IX, which will be
   discussed below.
4. Article III is general in scope and provides for the exchange of information and
   bilateral meetings between the competition authorities in cases other than those
   specified in Article II. This provision is also subject to Articles VIII and IX.
5. Article IV is more innovative.     The parties agree here not only to assist one another
   whenever their laws, their important interests and the available resources allow, but
   also - in some cases - where they both have an interest in pursuing enforcement
   activities with regard to related situations. This clause deals more specifically than
   the rest of the Agreement with the case already referred to in which anti-competitive
   conduct on the market of one party may be associated with identical conduct on the
   market of the other. In such circumstances, the competition authorities of the two
   parties can profitably coordinate their activities and provide each other with assistance,
    always to the extent compatible with their respective laws and important interests and
   provided their resources so permit.
    Such coordination may take place even in cases where one party takes the initiative
    of applying its rules while the other abstains from applying its own rules, and it may
    also involve sharing the work of enforcement between the parties in accordance with
    their capabilities.  As Article IX of the Agreement recalls, this possibility is subject
    to compliance with the parties' own laws.          The Merger Control Regulation, for
    example, lays down strict obligations which will prevent these forms of coordination
                                                                                              S
 ---pagebreak--- in the examination of a merger.        A further limitation is imposed by the rules on
confidentiality.
The Agreement is the first of its kind to consolidate the rules on comity in a legal
instrument.    Article VI provides as follows: "Within the framework of its own laws
and to the extent compatible with its important interests, each Party will seek, at all
stages in its enforcement activities, to take into account the important interests of the
other Party." This means that party A may refrain from exercising its powers, or may
exercise them only in part, provided that it has discretion in the matter and within the
limits imposed by its own law. This is to be done in cases where, by exercising its
powers, party A would damage party B's interests to a greater extent than it would
damage its own interests by taking no action.
The converse may also arise, where a party would be entitled to act but prefers not
to and its failure to enforce the rules runs counter to an important interest of the other
party.   This situation is dealt with in Article V. Known as the "positive comity"
clause, it allows a party whose interests are adversely affected by activities within the
other party's jurisdiction to bring the matter to the other party's attention. That party
might have been unaware of the problem or might not have considered it a priority.
Once it is aware of the situation and of the fact that it affects the important interests
of the other party, the party notified may, at its own discretion and having due regard
to this problem, undertake enforcement of the rules.
The concept "important interests" is defined in Article VI. It must be understood in
terms of the purpose of the Agreement, which is the establishment of effective
cooperation in the competition sphere. The interests referred to must therefore be
important by reference to that objective.       However, point 3(e) also mentions the
possibility of conflict with the other party's "articulated economic policies". This is
intended to ensure that enforcement of the competition rules, whether territorial or
extraterritorial, does not run counter to a clearly stated objective of the other party.
                                                                                           1
 ---pagebreak--- 7. Article VII, which establishes consultation machinery, calls for little, if any
   clarification.
8. Article VIII is a fundamental provision which underlies the whole of the Agreement.
   It states that information can be exchanged under the Agreement only where this does
   not infringe the rules of confidentiality of either party.
   On the Community side, the essential rules here are Article 20 of Regulation No 17
   and the corresponding provisions in the other regulations applying the competition
   rules, where it is stipulated that information which the Commission acquires in the
   exercise of its powers under the Regulation is to be confidential.      In practice, this
   means that the Commission may not pass on to the US competition authorities
   information which is freely supplied by firms when they notify agreements or is
   obtained by the Commission through inquiries or requests for information.
   But the Agreement is not thereby rendered devoid of substance. The Commission
   frequently comes into possession of information which has not been acquired on the
   basis of Regulation No 17, and it may be that such information can usefully be
   exchanged with the US competition authorities. For example, the fact that an inquiry
   involving certain undertakings is in progress is not information which the Commission
   has acquired using its powers of investigation and is not therefore subject to the
   obligation in Article 20. Paragraph 2 of the Article VIII should be interpreted in this
   light: it requires both parties to maintain the confidentiality of information provided
   to them under the Agreement.
   Article IX confirms the general principle that the Agreement does not derogate from
   the existing rules. It was included because the Agreement was originally signed by
   the Commission, which, unlike the Council, is not empowered to derogate from the
   existing regulations.
9. Lastly, Article XI(3) provides that the Agreement can be reviewed within 24 months
   of its entry into force. This provision has not yet been applied because of the legal
                                                                                             A*
 ---pagebreak---    challenge brought before the Court of Justice. However, the Commission does intend
   to invoke it in future in order to refine the Agreement on the basis of the experience
   acquired: problems arising in the competition sphere increasingly have an international
   dimension, and cooperation between competition authorities needs to be intensified in
   order to deal with them effectively.
C. Practice
1. The practice which has developed since the Agreement was concluded can be
   summarized as follows (23 September 1991 to 9 August 1994).
           The Commission has sent 61 notifications to the US authorities. Of these,
           45 concerned mergers and 16 other matters.           In compliance with the
           Commission's obligation of confidentiality, notifications have been made in a
           standardized form, giving the names of the undertakings concerned, the reason
           why proceedings have been initiated and the stage reached in the proceedings.
           The Commission has received 112 notifications from the US authorities,
           comprising 77 merger cases and 35 other cases.
2. So far no channels have been established for keeping the Member States informed.
   In the new context, the Commission proposes to set up the following machinery:
           the Member State or Member States whose important interests were found to
           be affected by reference to the criteria laid down in Article II of the
           Agreement would be informed of notifications sent to, or received from, the
           US authorities;
           information on the working of the Agreement would be provided twice a year
           to a committee of government competition specialists; the meetings would
           follow bilateral meetings with the US competition authorities. These principles
           are set out in a Commission statement attached to this proposal.
                                                                                           / ^
 ---pagebreak--- D. Legal basis
   In so far as this Agreement relates to the competition rules of the EC Treaty, the legal
   basis is Article 87 read in conjunction with Article 228(3), first indent, of the EC
   Treaty. In fact, the objective of the Agreement is to ensure that Article 85 and 86 of
   the EC Treaty are observed, which is one of the objectives set out in Article 87(2) of
   the EC Treaty. This legal basis involves a consultation of the European Parliament.
   For the aspects covered by the ECSC Treaty, the Commission is competent to ensure
   the application of the competition rules, including external aspects, as a consequence
   of the AETR jurisprudence.
   Conclusion
   The Commission accordingly proposes that the Council jointly with the Commission
   conclude the Agreement between the European Communities and the Government of
   the United States of America regarding the application of their competition laws.
                                                                                            /fl
 ---pagebreak---                         PROPOSAL FOR A COUNCIL DECISION
              concluding the Agreement between the European Communities and
          the Government of the United States of America regarding the application
                                    of their competition laws
THE COUNCIL OF THE EUROPEAN UNION,
THE COMMISSION OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Coal and Steel Community, in
particular Articles 65 and 66,
Having regard to the Treaty establishing the European Community, and in particular Article
87 read in conjunction with Article 228(3), first indent,
Having regard to the proposal from the Commission,
Having regard to the opinion of the European Parliament,
Whereas, given the increasingly pronounced international dimension of competition problems,
international cooperation in this field should be strengthened;
Whereas, to this end, the Commission has negotiated an Agreement with the Government of
the United States of America on the application of the competition rules of the European
Communities and of the United States of America;
                                                                                            A'S
 ---pagebreak--- Whereas, the Agreement negotiated by the Commission and the Government of the United
States of America regarding cooperation on competition law should be approved,
HAS DECIDED AS FOLLOWS:
                                        ARTICLE 1
The Agreement between and the European Communities and the Government of the United
States of America regarding the application of their competition laws is hereby approved on
behalf of the European Coal and Steel Community and the European Community.
The text of the Agreement is attached to this Decision.
                                        ARTICLE 2
The President of the Council will lodge the notification provided for in Article XI of the
Agreement on behalf of the European Community. The President of the Commission will
lodge the said notification on behalf of the European Coal and Steel Community.
Done at Brussels,
For the Council                                                    For the Commission
The President                                                      The President
                                              11
                                                                                            /}U
 ---pagebreak---                                   Statement by the Commission
In order to provide the Member States with sufficient information on the content of the
information exchanged under the Agreement between the European Communities and the
Government of the United States of America and the Commission of the European
Communities regarding the application of their competition rules, the Commission will notify
the Member State or Member States whose interests are affected by information sent to, or
received from, the US competition authorities.          For the purposes of this statement, any
Member State in which one of the parties (or one of the companies controlling one of these
parties) to a practice that is the subject of a notification has its headquarters will be regarded
as having such an interest.
In addition, at meetings of government conupetition specialists to be held twice a year, the
Commission will notify all the Member States of the information exchanged under the
Agreement. This meeting will take place after the bilateral meetings with the US competition
authorities provided for by the Agreement.
                                                 12
                                                                                                   •1A
 ---pagebreak---                                       AGREEMENT
                                      BETWEEN
THE EUROPEAN COMMUNITIES AND THE GOVERNMENT OF THE UNITED
STATES OF AMERICA REGARDING THE APPLICATION OF THEIR COMPETITION
LAWS
The European Coal and Steel Community, and the European Community on the one hand,
( hereinafter "the European Communities ")
and
The Government of the United States of America, on the other hand,
Recognizing that the world's economies are becoming increasingly interrelated, and in
particular that this is true of the economies of the European Communities and the United
States of America;
Noting that the European Communities and the Government of the United States of America
share the view that the sound and effective enforcement of competition law is a matter of
importance to the efficient operation of their respective markets and to trade between them;
Noting that the sound and effective enforcement of the Parties' competition laws would be
enhanced by cooperation and, in appropriate cases, coordination between them in the
application of those laws;
Noting further that from time to time differences may arise between the Parties concerning
the application of their competition laws to conduct or transactions that implicate significant
interests of both Parties;
Having regard to the Recommendation of the Council of the Organization for Economic
Cooperation and Development Concerning Cooperation Between Member Countries on
Restrictive Business Practices Affecting International Trade, adopted on June 5, 1986;
and
Having regard to the Declaration on US-EC Relations adopted on November 23, 1990;
Have agreed as follows:
 ---pagebreak---                                         Article I
                            PURPOSE AND DEFINITIONS
1.  The purpose of this Agreement is to promote cooperation and coordination and lessen
    the possibility or impact of differences between the Parties in the application of their
    competition laws.
2.  For the purposes of this Agreement, the following terms shall have the following
    definitions:
A.   "Competition law(s)" shall mean
            (i)     for the European Communities, Articles 85, 86, 89 and 90 of the
                     Treaty establishing the European Economic Community, Regulation
                     (EEC) no. 4064189 on the control of concentrations between
                     undertakings, Articles 65 and 66 of the Treaty establishing the
                     European Coal and Steel Community (ECSC), and their implementing
                     Regulations including High Authority Decision no. 24 54, and
            (ii)    for the United States of America, the Sherman Act (15 U.S. C. §§ 1-7),
                     the Clayton Act (15 U.S.C. §§ 72-27;, the Wilson Tariff Act (15
                     U.S.C. §§ 8-11), and the Federal Trade Commission Act (15 U.S.C.
                     §§ 41-68, except as these sections relate to consumer protection
                    functions),
            as well as such other laws or regulations as the Parties shall jointly agree in
            writing to be a "competition law" for purposes of this Agreement;
B.   "Competition authorities" shall mean (i) for the European Communities, the
     Commission of the European Communities, as to its responsibilities pursuant to the
     competition laws of the European Communities, and (ii) for the United States, the
    Antitrust Division of the United States Department of Justice and the Federal Trade
     Commission;
 C.   "Enforcement activities " shall mean any application of competition law by way of
     investigation or proceeding conducted by the competition authorities of a Party;
            and
D.    "Anticompetitive activities" shall mean any conduct or transaction that is
     impermissible under the competition laws of a Party.
                                                                                             "?r
 ---pagebreak---                                        Article II
                                   NOTIFICATION
   Each Party shall notify the other whenever its competition authorities become aware
   that their enforcement activities may affect important interests of the other Party.
   Enforcement activities as to which notification ordinarily will be appropriate include
   those that:
   a)      Are relevant to enforcement activities of the other Party;
   b)      Involve anticompetitive activities (other than a merger or acquisition) carried
           out in significant part in the other Party's territory;
   c)      Involve a merger or acquisition in which one or more of the parties to the
           transaction, or a company controlling one or more of the parties to the
           transaction, is a company incorporated or organized under the laws of the
           other Party or one of its states or member states;
   d)      Involve conduct believed to have been required, encouraged or approved by
           the other Party; or
   e)      Involve remedies that would, in significant respects, require or prohibit
           conduct in the other Party's territory.
3.  With respect to mergers or acquisitions required by law to be reported to the
   competition authorities, notification under this Article shall be made:
   a)      In the case of the Government of the United States of America,
            (i)            not later than the time its competition authorities request,
                           pursuant to 15 U.S.C. § 18a(e), additional information or
                           documentary material concerning the proposed transaction,
            (ii)           when its competition authorities decide to file a complaint
                           challenging the transaction, and
            (Hi)    where this is possible, far enough in advance of the entry of a consent
                   decree to enable the other Party's views to be taken into account; and
    b)      In the case of the Commission of the European Communities,
            (i)            when notice of the transaction is published in the Official
                           Journal, pursuant to Article 4(3) of Council Regulation no.
                           4064/89, or when notice of the transaction is received under
                                                                                            A?
 ---pagebreak---                    Article 66 of the ECSC Treaty and a prior authorization from
                   the Commission is required under that provision,
   (ii)            when its competition authorities decide to initiate proceedings
                   with respect to the proposed transaction, pursuant to Article
                   6(1 )(c) of Council Regulation no. 4064/89, and
   (Hi) far enough in advance of the adoption of a decision in the case to
           enable the other Party's views to be taken into account.
   With respect to other matters, notification shall ordinarily be provided at the
   stage in an investigation when it becomes evident that notifiable circumstances
   are present, and in any event far enough in advance of
   (a)     the issuance of a statement of objections in the case of the Commission
           of the European Communities, or a complaint or indictment in the case
           of the Government of the United States of America, and
   (b)     the adoption of a decision or settlement in the case of the Commission
           of the European Communities, or the entry of a consent decree in the
           case of the Government of the United States of America,
   to enable the other Party's views to be taken into account.
5. Each Party shall also notify the other whenever its competition authorities
   intervene or otherwise participate in a regulatory or judicial proceeding that
   does not arise from its enforcement activities, if the issues addressed in the
   intervention or participation may affect the other Party's important interests.
   Notification under this paragraph shall apply only to
   a)       regulatory or judicial proceedings that are public,
   b)       intervention or participation that is public and pursuant to formal
           procedures, and
   c)       in the case of regulatory proceedings in the United States, only
           proceedings before federal agencies.
   Notification shall be made at the time of the intervention or participation or
   as soon thereafter as possible.
6. Notifications under this Article shall include sufficient information to permit an
   initial evaluation by the recipient Party of any effects on its interests.
                                                                                      4*>
 ---pagebreak---                                       Article I/I
                           EXCHANGE OF INFORMATION
1.  The Parties agree that it is in their common interest to share information that will (a)
   facilitate effective application of their respective competition laws, or (b) promote
    better understanding by them of economic conditions and theories relevant to their
    competition authorities ' enforcement activities and interventions or participation ofthe
    kind described in Article II, paragraph 5.
2.  In furtherance of this common interest, appropriate officials from the competition
    authorities of each Party shall meet at least twice each year, unless otherwise agreed,
    to (a) exchange information on their current enforcement activities and priorities, (b)
    exchange information on economic sectors of common interest, (c) discuss policy
    changes which they are considering, and (d) discuss other matters of mutual interest
    relating to the application of competition laws.
3.  Each Party will provide the other Party with any significant information that comes
    to the attention of its competition authorities about anticompetitive activities that its
    competition authorities believe is relevant to, or may warrant, enforcement activity by
    the other Party's competition authorities.
4.  Upon receiving a requestfromthe other Party, and within the limits of Articles VIII
    and IX, a Party will provide to the requesting Party such information within its
   possession as the requesting Party may describe that is relevant to an enforcement
    activity being considered or conducted by the requesting Party's competition
    authorities.
 ---pagebreak---                                       Article IV
                        COOPERATION AND COORDINATION
                           IN ENFORCEMENT ACTIVITIES
1.  The competition authorities of each Party will render assistance to the competition
   authorities of the other Party in their enforcement activities, to the extent compatible
    with the assisting Party's laws and important interests, and within its reasonably
   available resources.
2.  In cases where both Parties have an interest in pursuing enforcement activities with
    regard to related situations, they may agree that it is in their mutual interest to
    coordinate their enforcement activities. In considering whether particular enforcement
    activities should be coordinated, the Parties shall take account of the following
   factors, among others:
    a)      the opportunity to make more efficient use of their resources devoted to the
            enforcement activities;
    b)      the relative abilities of the Parties' competition authorities to obtain
            information necessary to conduct the enforcement activities;
    c)      the effect of such coordination on the ability of both Parties to achieve the
            objectives of their enforcement activities; and
    d)      the possibility of reducing costs incurred by persons subject to the enforcement
            activities.
3.  In any coordination arrangement, each Party shall conduct its enforcement activities
    expeditiously and, insofar as possible, consistently with the enforcement objectives of
    the other Party.
4.  Subject to appropriate notice to the other Party, the competition authorities of either
    Party may limit or terminate their participation in a coordination arrangement and
   pursue their enforcement activities independently.
                                                                                             n
 ---pagebreak---                                        Article V
        COOPERATION REGARDING ANTICOMPETITIVE ACTIVITIES IN
                      THE TERRITORY OF ONE PARTY THAT
         ADVERSELY AFFECT THE INTERESTS OF THE OTHER PARTY
1.  The Parties note that anticompetitive activities may occur within the territory of one
    Party that, in addition to violating that Party's competition laws, adversely affect
    important interests of the other Party.      The Parties agree that it is in both their
    interests to address anticompetitive activities of this nature.
2.  If a Party believes that anticompetitive activities carried out on the territory of the
    other Party are adversely affecting its important interests, the first Party may notify
    the other Party and may request that the other Party's competition authorities initiate
   appropriate enforcement activities. The notification shall be as specific as possible
   about the nature of the anticompetitive activities and their effeas on the interests of
   the notifying Party, and shall include an offer of such further information and other
    cooperation as the notifying Party is able to provide.
3.  Upon receipt of a notification under paragraph 2, and after such other discussion
    between the Parties as may be appropriate and useful in the circumstances, the
    competition authorities of the notified Party will consider whether or not to initiate
    enforcement activities, or to expand ongoing enforcement activities, with respect to the
   anticompetitive activities identified in the notification. The notified Party will advise
    the notifying Party of its decision. If enforcement activities are initiated, the notified
    Party will advise the notifying Party of their outcome and, to the extent possible, of
    significant interim developments.
4.  Nothing in this Article limits the discretion of the notified Party under its competition
    laws and enforcement policies as to whether or not to undertake enforcement activities
    with respect to the notified anticompetitive activities, or precludes the notifying Party
   from undertaking enforcement activities with respect to such anticompetitive activities.
 ---pagebreak---                                             Article VI
             AVOIDANCE OF CONFLICTS OVER ENFORCEMENT ACTIVITIES
 Within theframeworkofits own laws and to the extent compatible with its important interests,
 each Party will seek, at all stages in its enforcement activities, to take into account the
 important interests of the other Party. Each Party shall consider important interests of the
 other Party in decisions as to whether or not to initiate an investigation or proceeding, the
 scope of an investigation or proceeding, the nature of the remedies or penalties sought, and
 in other ways, as appropriate. In considering one another's important interests in the course
 of their enforcement activities, the Parties will take account of, but will not be limited to, the
following principles:
 1.      While an important interest of a Party may exist in the absence of official involvement
         by the Party with the activity in question, it is recognized that such interests would
         normally be reflected in antecedent laws, decisions or statements of policy by its
         competent authorities.
 2.      A Party's important interests may be affected at any stage of enforcement activity by
         the other Party. The Parties recognize, however, that as a general matter the
         potential for adverse impact on one Party's important interests arising from
         enforcement activity by the other Party is less at the investigative stage and greater
         at the stage at which conduct is prohibited or penalized, or at which other forms of
         remedial orders are imposed.
 3.      Where it appears that one Party's enforcement activities may adversely affect
         important interests of the other Party, the Parties will consider the following factors,
         in addition to any other factors that appear relevant in the circumstances, in seeking
         an appropriate accomodation of the competing interests:
         a)      the relative significance to the anticompetitive activities involved of conduct
                 within the enforcing Party's territory as compared to conduct within the other
                 Party's territory;
         b)      the presence or absence of a purpose on the part of those engaged in the
                 anticompetitive activities to affect consumers, suppliers, or competitors within
                 the enforcing Party's territory;
         c)      the relative significance of the effects of the anticompetitive activities on the
                 enforcing Party's interests as compared to the effects on the other Party's
                 interests;
         d)      the existence or absence of reasonable expectations that would be furthered or
                 defeated by the enforcement activities;
         e)      the degree of conflict or consistency between the enforcement activities and the
                 other Party's laws or articulated economic policies; and
                                                                                                    V
 ---pagebreak---    f)       the extent to which enforcement activities of the other Party with respect to the
            same persons, including judgments or undertakings resulting from such
            activities, may be affected.
                                      Article VII
                                   CONSULTATION
1.  Each Party agrees to consult promptly with the other Party in response to a request
    by the other Party for consultations regarding any matter related to this Agreement
    and to attempt to conclude consultations expeditiously with a view to reaching
    mutually satisfactory conclusions. Any request for consultations shall include the
    reasons therefor and shall state whether proceduraltimelimits or other considerations
    require the consultations to be expedited.
    These consultations shall take place at the appropriate level, which may include
    consultations between the heads of the competition authorities concerned.
2.  In each consultation under paragraph 1, each Party shall take into account the
   principles of cooperation set forth in this Agreement and shall be prepared to explain
    to the other Party the specific results of its application of those principles to the issue
    that is the subject of consultation.
                                      Article VIII
                        CONFIDENTIALITY OF INFORMATION
1.  Notwithstanding any other provision of this Agreement, neither Party is required to
   provide information to the other Party if disclosure of that information to the
    requesting Party (a) is prohibited by the law of the Party possessing the information,
    or (b) would be incompatible with important interests of the Party possessing the
    information.
 ---pagebreak---        Each Party agrees to maintain, to the fullest extent possible, the confidentiality of any
       information provided to it in confidence by the other Party under this Agreement and
       to oppose, to the fullest extent possible, any application for disclosure of such
       information by a third party that is not authorized by the Party that supplied the
       information.
                                          Article IX
                                       EXISTING LAW
Nothing in this Agreement shall be interpreted in a manner inconsistent with the existing laws,
or as requiring any change in the laws, of the United States of America or the European
Communities or of their respective states or member states.
                                           Article X
                     COMMUNICATIONS UNDER THIS AGREEMENT
Communications under this Agreement, including notifications under Articles II and V, may
be carried out by direct oral, telephonic, written orfacsimile communicationfromone Party's
competition authority to the other Party's authority. Notifications under Articles II, V and
XI, and requests under Article VII, shall be confirmed promptly in writing through diplomatic
channels.
                                          Article XI
                   ENTRY INTO FORCE, TERMINATION AND REVIEW
1.      This Agreement shall be approved by the Parties in accordance with their respective
       internal procedures.
        The Parties shall notify one another of the completion of those procedures.
2.      This Agreement shall remain in force until 60 days after the date on which either
       Party notifies the other Party in writing that it wishes to terminate the Agreement.
                                                                                                 1Ï
 ---pagebreak--- 3.    The Parties shall review the operation of this Agreement not more than 24 months
     from the date of its entry into force, with a view to assessing their cooperative
      activities, identifying additional areas in which they could usefully cooperate and
      identifying any other ways in which the Agreement could be improved.
      The Parties agree that this review will include, among other things, an analysis of
      actual or potential cases to determine whether their interests could be better served
      through closer cooperation.
      The undersigned, being duly authorized, have signed this Agreement.
      Done at Washington, in duplicate, this twenty-third day of September 1991, in the
      English language
FOR THE COUNCIL OF THE EUROPEAN                            FOR THE GOVERNMENT OF
UNION                                              THE UNITED STATES OF AMERICA:
FOR THE COMMISSION OF
THE EUROPEAN COMMUNITIES;
                                                                                            IC
 ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM(94) 430 final
                                                      DOCUMENTS
EN                                                                          1108
                                Catalogue number : CB-CO-94-457-EN-C
                                                             ISBN 92-77-81111-0
Office for Official Publications of the European Communities
L-2985 Luxembourg