Submission of the United States
United States' Perspectives on the International Competition Network
Before I begin to discuss the specifics of the ICN, I'd like to take a minute to lay out why the United States thinks an endeavor like the ICN is important.
As you all know, antitrust enforcement is not a static process. Economic learning advances, markets emerge and change on a single-economy and global basis, and legal processes and organizational structures that once worked well cease to respond efficiently in changed circumstances. Accordingly, antitrust agencies, like other institutions, need constantly to consider whether their policies and processes continue to be adequate to fulfill their mission of protecting competition in a changing world. The United States, having been a major proponent of sound antitrust enforcement over the last several decades, and having sought to convince many other economies of the sensibleness of this position, feels a responsibility to ensure that antitrust works effectively and efficiently to deliver what it promises - not just for the U.S. economy, but for others as well.
The United States is also increasingly of the view that we need to enhance global convergence in our antitrust policies, and that in order to achieve that goal, multilateral efforts must supplement bilateral ties.
Sound antitrust enforcement requires a deep and shared "culture of competition." The first step in achieving such a competition culture is to build an understanding of one another's laws and institutions and of the economic principles that give antitrust laws their reason for being.
These sentiments, while providing a philosophical underpinning, if you will, for the U.S. support of the ICN, obviously also represents the basis for its participation in the CPDG. I'd venture to say that many others around this table are here for similar reasons.
The International Competition Network -- what is it and what is its purpose?
The ICN is, first and foremost, a network of, by and for antitrust authorities. It is open to any national or multinational competition agency responsible for the enforcement of competition laws, from both developed and developing economies. It likes to bill itself as being "all antitrust, all the time." This strictly antitrust focus obviously distinguishes it from the CPDG.
The ICN was launched by antitrust officials from 14 economies last October to provide a new framework for interaction and cooperation among government officials, private firms and non-governmental organizations in the antitrust area. Just 7 months after its inception, approximately 60 jurisdictions on six continents have already joined the network. These economies represent 70 percent of the world's GDP.
The attraction and strength of the ICN is that it is a "virtual network," flexibly organized around working groups, the members of which work together largely by Internet, telephone, fax machine and videoconference. Working in this manner facilitates a low-cost ongoing dialogue about antitrust among scores of economies. The United States believes that regular and focused interaction among the still-growing number of antitrust authorities and the private sector will promote the spread of sound antitrust enforcement policies and procedures around the globe. It also will build stronger working relationships by facilitating communications among antitrust agencies.
The United States believes that the private sector has an important role to play in the ICN, not as members but as partners. Businesspeople, members of the private bar, economists, academics and representatives of international organizations work side-by-side with government officials on each of the projects the ICN undertakes. Diversity in private sector participation, like diversity in our membership, is crucial in allowing a wide range of views and experiences to be shared and taken into account when developing ICN recommendations. The working groups have reached out to members from many geographic regions and differing stages of development. The United States believes that it is important to the ICN's ultimate effectiveness that the network be inclusive. ICN members are reaching deep into the private sector, including the academy and consumer groups, so as not inadvertently to permit "gatekeepers" to establish barriers to entry to diverse expressions of views.
ICN's long-term goal is to develop guiding principles and best practice recommendations to be endorsed, and then implemented voluntarily, by member agencies. The Network's first two projects are important ones: the multi-jurisdictional merger review process and competition advocacy in emerging economies. William Kolasky, Deputy Assistant Attorney General of the United States Department of Justice's Antitrust Division, chairs the Merger Review Working Group; the Competition Advocacy Working Group is chaired by Dr. Fernando Sanchez Ugarte of the Mexican Federal Competition Commission.
A number of economies present here today are already involved in the ICN. A number of others, however, are not. In order to provide some sense of the kind of work the ICN is doing and hopes to do in the future, I'd like to describe the work being done by both of these groups. Because the United States chairs the merger working group, it is the group about which I have more information. So I'll discuss that in a little more detail.
The mission of the ICN's Merger Review Working Group is to promote the adoption of best practices in the design and operation of merger review regimes in order to: (i) enhance the effectiveness of each jurisdiction's merger review mechanisms; (ii) facilitate procedural and substantive convergence; and (iii) reduce the public and private time and cost of multi-jurisdictional merger reviews. Initially, the Working Group is concentrating on three areas: merger notification and review procedures; the analytical framework for merger review; and investigative techniques for merger review. Each area has been assigned to its own subgroup.
We view this as a long-term project. We expect to maintain a continuous dialogue and to achieve practical improvements in the practice of international antitrust enforcement, one step at a time. But before turning to the projected, near-term results, I should emphasize that antitrust policy is part of a broader mosaic. In order for antitrust policy to be effective, an economy needs strong and predictable legal institutions, well-established property rights, flexible capital markets, and many other government and private institutions necessary for sustaining a robust market economy. As the ICN develops principles and best practices to facilitate convergence, we must take care that we are not promoting merely paper principles and theoretical convergence. This means, among other things, being cognizant of the contexts in which the antitrust agencies of developing and transitioning economies operate. In our view, the ICN is a piece of a bigger picture, in which these principles and practices must make sense for a broad range of antitrust agencies.
In that context, in this first year, the merger working group hopes to achieve the following concrete results:
The Notification and Procedures subgroup, chaired by Deirdre's boss, Randy Tritell of the Federal Trade Commission ("FTC"), is developing a set of guiding principles and best practices pertaining to the notification of proposed mergers and their review by antitrust agencies. The guiding principles could include, for example, recommendations concerning the transparency of the merger process, making decisions on the merits without regard to the nationality of the merging parties, and minimizing the burden on the parties to the greatest extent possible consistent with providing the agencies the information they need to conduct a careful review of the competitive merit of a transaction. The group also is developing initial best practices recommendations. In this first year, the areas under consideration for best practices relate to notification thresholds that are clear and objective and have a sufficient nexus with the reviewing jurisdiction, and to flexibility in the timing of premerger notification filing. This subgroup expects to circulate a draft this summer with a view towards developing a consensus on these principles and practices at the first ICN conference this September in Naples.
Although our objective is to achieve a consensus, there may well be some guiding principles and best practices that will not be feasible to implement in some economies at this time. However, if principles are to be adopted, it is important that we keep our standards high. In the view of the United States, for this effort to be meaningful, i.e., for it to contribute significantly to effective global antitrust enforcement, it must include honest discussion of areas of agreement and disagreement. The Merger Working Group would consider its efforts a success if ICN guiding principles and best practices become well-accepted in the international arena, even if there are dissenters, and if relevant economies accommodate their systems to the proposed ICN best practices.
The Analytical Framework subgroup, chaired by Dr. John Vickers, Director of the United Kingdom's Office of Fair Trading, is examining the substantive standards for prohibiting mergers and the criteria for applying those standards. This subgroup is organizing a discussion paper and panel for the first annual ICN conference that will compare the advantages and disadvantages of the "substantial lessening of competition," "creation or strengthening of a dominant position," and "public interest" standards. Much of the drafting will be spearheaded by a "work horse" group including Australia, the European Commission, South Africa and the United Kingdom. We expect that this subgroup's work will assist economies that are enacting new antitrust laws in the development of a legal framework, and those considering amending their existing regimes in making informed choices. In the longer term, this group may seek to develop model merger guidelines.
The Investigative Techniques subgroup, chaired by Dr. Menachem Perlman, Deputy Director General and Chief Economist of the Israel Antitrust Authority, is planning an ICN international merger conference to be held in the United States in November. The conference -- inspired by the excellent series of cartel conferences held over the past three years in the United States, the United Kingdom, and Canada -- will provide a venue for staff-level lawyers and economists from many antitrust agencies to meet and learn from one another's practical experiences in performing merger reviews, using an interactive hypothetical case exercise. Discussions will include the effective planning of a merger investigation, methods for gathering reliable evidence and its interpretation, the use of economists and the evaluation of economic evidence. This subgroup will use lessons learned at the November conference to develop best practices for making merger investigations more efficient and effective. Materials developed at this program could be used in subsequent regional programs or by individual economies as new members join the network.
The Competition Advocacy Working Group
The Competition Advocacy Working Group, under the able leadership of Mexico's Dr. Fernando Sanchez Ugarte, has developed a comprehensive questionnaire that has been distributed to all ICN members. The questionnaire requests members to describe their current practices in this area, the obstacles they face -- if any -- in performing an advocacy function, and also to evaluate the effectiveness of various advocacy practices. This information will be compiled in a report to be presented later this year. It is hoped that the report will provide the basis for development of best practices in this area as well.
ICN's relationship to other International Organizations
As is demonstrated by our meeting here today, a great deal of important work on international antitrust issues is done by governments through a number of international organizations, such as the CPDG, as well as the Organization for Economic Cooperation and Development ("OECD"); the World Trade Organization ("WTO"); and the United Nations Conference on Trade and Development ("UNCTAD"). These organizations provide fine venues, each with a different focus, for debating competition policy issues among many economies. In the opinion of the United States, the ICN, as the new kid on the block, should seek to build on what these organizations have done and are doing, and not to duplicate it.
We anticipate that the dialogue in these organizations will provide valuable input to ICN projects and we hope that some of the ICN's work will enrich related discussions in other fora as well. As an example, the report on current practices to be issued by the Competition Advocacy Working Group -- and any "best practices" recommendations drafted by that group -- may provide the basis for a future discussion of our own on this useful subject. Because the ICN is engaged in a continuous dialogue with agencies and the private sector, it is the hope of the United States that the ICN will provide some momentum in reaching our common goals.
The ICN's Longer-Term Agenda
If the ICN works as we hope it will, we will need to agree on a longer-term agenda. The various ICN working groups also are developing work plans for 2003 that will be addressed by members at the Naples conference. Depending on decisions made at that conference, future ICN projects may include issues related to anticartel enforcement and enforcement cooperation. As most of you know, there is a fair amount of bilateral cooperation taking place in anti-cartel enforcement and merger review, particularly involving the United States, Canada, and the European Commission. We anticipate that the ICN will reinforce this cooperation by helping to facilitate communications among antitrust agencies. As agencies cooperate with one another in antitrust enforcement it becomes necessary to take appropriate account of statutory restraints on the ability to share information and on the ability of each economy to protect shared information. Antitrust agencies have both a legal duty and a tremendous practical incentive to preserve the integrity of the document handling process. Adequate protection of information is an important prerequisite to sharing confidential information.
One of the areas, therefore, the ICN might usefully explore is reconciling the need to preserve the confidentiality of information with the desirability of effective cooperation between and among agencies.
Another important tool for international cooperation is technical assistance. The United States has worked with many new antitrust agencies to advise them in introducing into their systems competition values based on sound economics and consumer welfare goals, and on practical techniques to enhance their ability to achieve these goals. During the past decade, we in the Department of Justice and the FTC have sent nearly 300 missions to assist scores of economies, on both short-term trips and long term advisory missions of six months or more. We have hosted hundreds of foreign officials on visits and internships to the Division and the FTC in order to share what we do and why we do it. The United States believes that the ICN is uniquely situated to offer a new type of assistance via its ongoing conversation among antitrust agencies from a wide range of developed and developing economies. Improved coordination of technical assistance programs through the ICN might be explored in future working groups.
In sum, the ICN's broad mandate is to promote sound antitrust enforcement in substance and procedure on a global scale. For now, we hope to achieve practical improvements in the practice of international antitrust enforcement, one step at a time. It is certainly the hope of the United States that the business community, the private bar, and the academy will join, with enthusiasm, in this exciting endeavor.
As always, it has been a pleasure to address this group. Thank you for your attention.