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1	INTERNATIONAL COMPETITION POLICY ADVISORY COMMITTEE
2	HEARINGS
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4
5
6	Washington, D.C.
7	November 2, 1998
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13	This document constitutes accurate minutes of the
14	hearings held November 2-4, 1998, by the International
15	Competition Policy Advisory Committee. It has been
16	edited for transcription errors.
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19	James F. Rill Paula Stern
20	Co-Chair Co-Chair
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1	INTERNATIONAL COMPETITION POLICY ADVISORY COMMITTEE
2	HEARINGS
3
4
5
6	Washington, D.C.
7	November 2, 1998
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14	Taken at the American Geophysical Union, 2000 Florida Avenue,
15	N.W., Conference Center - First Floor, Washington, D.C., beginning at
16	9:00 A.M., before Sue Ciminelli, a court reporter and notary public in and for the
17	District of Columbia.
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1	APPEARANCES:
2	Advisory Committee Members:
3	James F. Rill, , Co-Chair and Senior Partner, Collier, Shannon, Rill & Scott,
4	PLLC
5	Paula Stern, Co-Chair and President, The Stern Group, Inc.
6	Merit E. Janow, Executive Director and Professor in the Practice of International
7	Trade, School of International and Public Affairs, Columbia
8	University
9	John T. Dunlop, Lamont University Professor, Emeritus, Harvard University
10	Eleanor M. Fox, Walter Derenberg Professor of Trade Regulation, New York
11	University School of Law
12	David B. Yoffie, Max and Doris Starr Professor of International Business
13	Administration, Harvard Business School
14	Department of Justice Employees:
15	Joel I. Klein, Assistant Attorney General, Antitrust Division
16	A. Douglas Melamed, Principal Deputy Assistant General, Antitrust Division
17	Members of the Public Appearing before the Advisory Committee and Presenting
18	Oral Statements:
19	Panelists: Opening Remarks:
20	Allan Fels, Chairman, Australian Competition & Consumer Commission,
21	Australia
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1	APPEARANCES (Continued)
2	Gesner José Oliveira Filho, Conselho Administrativo de Defesa
3	Econômica, Brazil
4	Konrad von Finckenstein, Director of Investigation and Research,
5	Competition Bureau, Canada
6	Karel Van Miert, Competition Commissioner, European Commission
7	Frédéric Jenny, Vice President, Conseil de la Concurrence, France
8	Dieter Wolf, President, Federal Cartel Office, Germany
9	Shogo Itoda, Commissioner, Japan Fair Trade Commission, Japan
10	Takaaki Kojima, Deputy Secretary General, Japan Fair Trade Commission, Japan
11	Fernando Sanchez Ugarte, President, Federal Competition Commission, Mexico
12	Luis de Guindos Jurado, Director General de Politica Económica y
13	Defensa de la Competencia, Spain
14	Ignacio de León, Superintendent, ProCompetencia, Venezuela
15	Panelists: Discussion on Current U.S. Bilateral Agreements:
16	Allan Fels, Chairman, Australian Competition & Consumer Commission,
17	Australia
18	Konrad von Finckenstein, Director of Investigation and Research,
19	Competition Bureau, Canada
20	Karel Van Miert, Competition Commissioner, European Commission
21	Dieter Wolf, President, Federal Cartel Office, Germany
22	Panelists: Roundtable Discussion Among All Foreign Officials on Enforcement
23	Cooperation, Multijurisdictional Mergers, And Trade And Competition Policy

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1	APPEARANCES(Continued):
2	Interface:
3	Opening Remarks:
4	Jérôme Gallot, Director General, Direction Général de la Concurrence,
5	Consommation et Répression des Fraudes, France
6	Additional Panelist:
7	Bernd Langeheine, Trade Counselor, Delegation of the European Commission
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9	IN ATTENDANCE:
10	Advisory Committee Staff:
11	Cynthia R. Lewis, Counsel
12	Andrew J. Shapiro, Counsel
13	Stephanie G. Victor, Counsel
14	Eric J. Weiner, Paralegal
15	Estimated Number of Members of the Public in Attendance: 69
16	Reports or Other Documents Received, Issued, or Approved by the Advisory
17	Committee:
18	Allan Fels, Statement
19	Allan Fels, Australian/US Bilateral Relations
20	Gesner Oliveira, Public Hearing Competition Policy Advisory Committee
21	Gesner José Oliveira Filho, CADE's New Resolution on Merger Review and
22	the CADE's Ethics Rules
23	Konrad von Finckenstein, Q.C., Speaking Notes

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1	Karel Van Miert, Speaking Note
2	Jérôme Gallot, Opening RemarksJérôme Gallot, Troisieme session
3	Frédéric Jenny, Trade and Competition in the Global Market: Challenges
4	and Issues
5	Dieter Wolf, Statement to be given at the Hearing of the International
6	Competition Policy Advisory Committee in Washington on
7	2 November 1998
8	Shogo Itoda, Summary of ICPAC Statement
9	Luis de Guindos Jurado, Competition Policy in a Global Economy:
10	The Issue of Mega-Mergers
11	Ignacio De León, International Competition Policy From the Perspective of
12	Developing Countries
13	Ignacio De León, An Alternative Approach to Policies for the Promotion
14	of Competition in Economies in Transition
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1	P R O C E E D I N G S
2	MR. RILL: Good morning. My name is Jim Rill. I know
3	most of you. And I'm Co-Chair with Paula Stern of the International Competition
4	Policy Advisory Committee. To Paula's right is Eleanor Fox, a member of the
5	Committee. Eleanor is also known to most of you as one of the truly leading
6	authorities in international antitrust law, a renowned expert, frequent author in the
7	field.
8	To my left is Merit Janow. Merit is the Executive Director of
9	the International Competition Policy Advisory Committee. Other members of the
10	Committee will be joining us as we move along. I'd like to also introduce our
11	staff, Andrew Shapiro, Cynthia Lewis and Stephanie Victor.
12	Following some opening remarks by me, which will be brief,
13	don't laugh, and by Paula, we'll have welcoming remarks by Assistant Attorney
14	General Joel Klein, who is known to all of you.
15	This is truly an historic event. Paula and I were deeply
16	honored by Attorney General Reno and Assistant Attorney General Klein to be
17	invited to co-chair the Advisory Committee -- I didn't mean to sound hopeful -- the
18	Advisory Committee to the Department of Justice and other agencies of the U.S.
19	Government on the direction that we as Committee members, a Committee of 12,
20	feel that would be appropriate for U.S. and perhaps, indeed, even broader
21	international antitrust policies.
22	We have focused on three areas: merger policy, trade and
23	competition, and international antitrust enforcement, particularly against cartel

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1	activity. Certain topics are not specifically on our agenda, particularly types of
2	trade remedies, antidumping and countervailing duties.
3	Really it's a focus on global antitrust policy. We hope to be
4	able to give sound advice to the U.S. Government and others on appropriate
5	directions. I say this is a truly historic occasion. I can't recall any event that has
6	been on parallel, at least in the United States, when so many distinguished leaders
7	of government in the antitrust field have come together in a roundtable to give
8	their advice on antitrust policy to an organization of another government at its
9	invitation.
10	We are honored to have the participation of each of you in
11	this meeting. We think that the comments and advice and thoughts that you will
12	impart to us today will have a very significant influence on the outcome of the
13	deliberations of this Committee and the development of its report to the Attorney
14	General and the Assistant Attorney General of Antitrust. We want to hear from
15	you what you consider to be the most important factors to take into account in our
16	increasingly global trade and competition arena.
17	We don't need to expound at any length about the number of
18	nations that have antitrust laws now and the extent to which merger activity, trade
19	and competition activity, international cartel activity, has permeated the world
20	economies.
21	As you recall, we respectfully suggested that certain
22	questions be among those that you would focus on: What are the necessary and
23	useful directions to enhance international cooperation and enforcement matters

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1	among foreign competition authorities? Whether your jurisdiction is commonly
2	involved in the review of mergers that are also being reviewed in other
3	jurisdictions overseas and the source of conflict and cooperation you perceive
4	from that coordinated review. And, what useful steps can there be to identify and
5	alleviate barriers to market access resulting from private or hybrid restraints on
6	trade and competition? Obviously we anxiously await your input on each of these
7	issues and any others that you choose to advance.
8	Some housekeeping matters. There are headsets for
9	simultaneous interpretations for our officials from the government of Japan.
10	Channel 5 for Japanese, channel 6 for English. Microphones for speakers that are
11	using overheads: there is a wireless microphone available on the podium next to
12	the projector. During roundtable discussion periods if you wish to make a
13	comment, please put up your namecard, you know that process.
14	In the back of the room are materials that were put together
15	for these hearings. They have been circulated to you all in advance. Review
16	them, but please don't remove them from the room. We are delighted that this is a
17	public audience. We have a good assemblage of observers here today. However,
18	this is an opportunity for the Advisory Committee to discuss issues with the
19	panelists in each of the panels over the next three days. We welcome your
20	comments in writing, but please do not intervene from the floor. With those
21	comments, I would like to introduce Paula Stern, who will be succeeded by
22	Assistant Attorney General Joel Klein.
23	DR. STERN: Welcome. I'm delighted to see each and every

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1	one of you here, both the distinguished panelists who will be featured this
2	morning, as well as the public in the back. We are honored by your presence, and
3	we appreciate how much effort it took for each and every one of you to be here
4	today for what we hope will be a very constructive exercise that will benefit all of
5	us.
6	This is a conversation we hope to start today. It is an
7	opportunity for discussion. I personally have been interested in the government's
8	role in impacting the structures of our individual economies and our globalized
9	economy involved in microeconomic analysis and structural analysis of economies,
10	as well as representing the business world, and how this affects the real world in
11	the marketplace as a consequence of my activities on a number of corporations
12	whose boards I sit on.
13	And I have had 16 years of government service, particularly
14	in the trade field, and so the interface with trade and competition policy is an
15	obvious one. But I don't think we have had necessarily in our rules, our laws, our
16	regulations both at home and abroad a clearcut intersection between trade and
17	competition policy, and trade policy and trade regulations, so it's an important
18	opportunity to get into that area as well.
19	So I am delighted to be here to be informed by you. We will
20	have three days of hearings in which we will hear, after you, an impressive array
21	of lawyers, investment bankers, economists and other experts. Jim has talked to
22	you about the three areas that we are focusing on, enforcement cooperation,
23	multijurisdictional merger review, and finally, as I mentioned a moment ago, the

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1	interface of trade and competition policy.
2	We have had several public hearings, public meetings, I
3	should say, but this is our first set of hearings and it will be a very important part
4	of our eventual recommendations. In effect, we are building a record. And we
5	hope to present to the Attorney General and to Joel Klein, the Assistant Attorney
6	General for Antitrust, a report by the fall of 1999.
7	We are in our information gathering stage, as I mentioned.
8	The Committee itself has had meetings individually one-on-one with lawyers, with
9	investment bankers, and with business associations, and we have tried to reach
10	out, not only here at home to all the representative constituencies, but as you can
11	see here, we are very much reaching out to the rest of the world, thanks to fax
12	machines, Internet, and you personally coming today. We hope that in the end it
13	will be a well-informed exercise, and it is our sincere hope that you will provoke
14	us, stimulate us, and that we will come away intellectually enriched by your
15	viewpoints.
16	And at this point, I would like now to turn to Joel Klein, our
17	fearless leader and good, good friend, to give us some remarks.
18	MR. KLEIN: Thank you, Paula. Thank you, Jim. Ladies
19	and gentlemen, first let me convey to you the personal gratitude and welcome of
20	the Attorney General of the United States, Janet Reno, who spoke to me and asked
21	me to say that she would have preferred to be here today, but she had to be out of
22	town. Let me also add my welcome and my gratitude.
23	I have come to know all of you over the last several years in a

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1	variety of contexts as we have worked together as friends and colleagues, and I
2	cannot tell you how much I appreciate the personal commitment that you have
3	made to come here today and the time and the energy that that takes to work with
4	us on this area of shared responsibility. So I really want to emphasize how
5	appreciative I am, and how much I know the Committee looks forward to your
6	comments.
7	Let me say a little bit about what must seem somewhat
8	strange and curious an American institution here. We have a thing in the United
9	States called the Federal Advisory Committee Act, which is known as FACA, one
10	of our dreadful acronyms. And what it allows is an executive agency to bring in
11	outside independent consultants as part of a very formal open-to-the-public
12	process, to chew on significant and difficult policy issues and to make non-binding
13	recommendations.
14	And there are two things about the process that are critical,
15	aside from it being subject to some light and open to the public. One is this is an
16	independent committee, and they will make independent recommendations. And
17	the only good news for us is it's non-binding, so that we can learn and benefit, but
18	ultimately not feel constrained to implement.
19	But in my meetings with the Attorney General, when she
20	asked me what I thought is the most important thing going on in antitrust in the
21	United States today, I said, Madam Attorney General, the most important thing
22	going on in antitrust is not in the United States. The most important thing going
23	on in antitrust is how we adapt antitrust to a global economy. People always say,

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1	well, the big challenge is high-tech or the big challenge is -- I think the big
2	challenge is how we take enforcement policy and work together in a global
3	network effectively and efficiently in a way that is good for enforcement but also
4	does not undermine desirable business activity.
5	And the reason I think that's an enormous challenge is
6	because essentially, as we sit here today, we are a collection of nation-states,
7	accustomed to domestic jurisdiction and enforcement. Our powers tend to be
8	defined in some respects by our territorial limits. Yet we have no choice but to
9	intervene in a global economy. Business does not know the territorial boundaries
10	that restrict our jurisdictional powers and reach in certain real-world respects.
11	And so, for example, in the eight years from when Jim Rill
12	left the Antitrust Division to today, the amount of international business in the
13	U.S. Antitrust Division has gone from 2 to 3 percent of our cases to right now
14	close to 40 percent of our cases, and that's across the spectrum. Whether it is
15	international cartel cases such as the Archer Daniels Midland case, which involved
16	people in all aspects of this table, or the other 30 or 35 grand juries that we
17	currently have pending that are looking at cartels that have had meetings in 50 or
18	60 cities on every continent in the world.
19	Or whether it is these multijurisdictional mergers that are as
20	important whether it is a U.S. and a European company, such as Daimler Benz and
21	Chrysler, or WorldCom/MCI, two U.S. companies that have an impact worldwide
22	that will have as much influence in terms of the development of the Internet in
23	Latin America as it will in Europe as in Asia and so forth, we are interconnected.

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1	As we look at these issues, I said to the Attorney General, the
2	challenge is to think through the mix of unilateral, bilateral and multilateral
3	enforcement options. All of those are possibilities, and we need to think about
4	what is the right mix of those options as we go forward. And this will become, I
5	believe, increasingly important to all of us at this table, because I think there is no
6	way to escape the fact that we need to figure out how to interact in a global
7	economy and we do not have an available template simply to rely on.
8	We will have to create the mechanisms among ourselves to be
9	effective. Unlike our colleagues in the trade arena, who have long dealt in these
10	areas, who have many, many rounds under Uruguay and so forth. We are coming
11	at this with some real background, to be sure, the OECD, UNCTAD, and so forth,
12	but a lot of what we are doing is really first impression stuff.
13	And so what the Attorney General said is, you know, not all
14	good ideas are contained at 10th and Constitution, which is where the Justice
15	Department is. And she said let's bring together a distinguished group of thinkers
16	and business people and labor representatives, and let's put them to work for two
17	years to really think through the problems, to go out, analyze the literature, meet
18	with the players to get a real feel for the various strands and to make some very
19	serious tough recommendations to us on the mixture and the benefits of unilateral,
20	bilateral and multilateral enforcement options.
21	And to then take that report, it's a two-year study -- we
22	appointed this group in November of 1997, they have a sort of two-year window to
23	come back with their report -- and we will take that report and analyze it and

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1	make proposals, short-term, medium-term and even long-term, for U.S. government
2	policy in this area. And so this is the work.
3	We are blessed by having a 12-person Committee that is as
4	distinguished as any Advisory Committee could be in the United States. In
5	addition to our Co-Chairs, one of whom is well-known to all of you because he
6	headed the Antitrust Division of the Department of Justice under President Bush,
7	and Paula Stern, who was the Chairwoman of the International Trade Commission
8	under President Carter -- so right there at the top we have two people with a rich
9	mix of both bipartisan as well as trade and competition backgrounds -- the other
10	10 members of the Committee are several CEOs from major corporations, a former
11	secretary of labor, some distinguished academics, like Eleanor, as well as some
12	leading members of the Bar and in the field of antitrust.
13	So these people will be digesting this material and bringing it
14	to us. In this process, I believe there is no more important component than what is
15	going on here today. It was my hope to bring together the leaders in this field, the
16	people who have worked for years on these issues who have done thinking about
17	this at every level, and to get this Committee the benefit of hearing from those
18	people, not sifted through me or anybody else in the United States, but one-on-one
19	in discussion, in colloquy.
20	And frankly, you have outstripped our expectations. I did not
21	think they could bring this many heads of antitrust enforcement agencies together
22	in a single room. Paula said to me when she walked in, she said, "Is that what you
23	guys in the antitrust field call a cartel?" I think it is a cartel, but it is one of the

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1	few I think that is ultimately going to prove to be procompetitive.
2	MR. RILL: I wonder how much coordinated interaction there
3	will be.
4	MR. KLEIN: We will see. I know my friend Dieter Wolf has
5	told me there is the odd cartel that we need to make sure is procompetitive, and I
6	think there is one here. We are learning from the German experience, Dieter.
7	With that, I have a lot to say about the specific issues about
8	the work we are doing on positive comity, about international cartel enforcement,
9	about trade and competition where we have one formal request, a market access
10	request that we have referred to Commissioner Van Miert and DG-IV with respect
11	to the airline computer reservation service. All of that is well known and so I
12	don't want to belabor it.
13	I would hope in the time that you have with us today, you
14	give us your most candid, your most honest assessment of how to think from your
15	perspective about the options that are available to us and the way to knit together
16	a fabric of international antitrust enforcement for the global economy of the 21st
17	century.
18	I think Commissioner Van Miert undertook a similar
19	enterprise early in his tenure when he appointed his group of experts to report
20	back to him, and I think we all benefited from that fine work that was received
21	there. I expect to build on that work and to have this Committee set forward an
22	agenda that will be analyzed in capitals all over the world.
23	As we go forward, one thing strikes me as I look around this

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1	room and think of the hours we spent together in Paris and in Tokyo and in
2	Brussels and in South and Latin America and, indeed, here in Washington. Karel
3	and I were having breakfast in Brussels, I think it was Wednesday morning, and he
4	said something to me that struck me then and strikes me now as very important:
5	The level of professionalism and camaraderie in our field, the sense of shared
6	mission, the fact that we view the world not simply as nation-states but people
7	with a commitment to the enforcement of competition policy and effective antitrust
8	laws throughout the world is really quite remarkable.
9	We spend less time bickering with each other and more time
10	working collectively to try to solve our shared problems and build a better world
11	for competition policy and antitrust enforcement. And I know that that attitude
12	will infuse not simply this meeting but our deliberations in the years ahead,
13	because what we are doing here is simply part of a much larger and much more
14	important process, which is to get our field able to effectively intervene in the new
15	economy, the 21st Century in a way that is good for consumers, good for business,
16	and good for our respective nation-states.
17	I again want to end by thanking you personally for your
18	attendance here and the sacrifices you have all made to come. And now, we will
19	listen. Thank you.
20	MR. RILL: Joel, thanks very much for the inspiring remarks.
21	I'm not going to undertake to presume to introduce each of you in the order of your
22	presentation. We all know who you are. You know who each other is, and
23	biographies are included in the materials provided. We have organized for the

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1	morning to be spent with opening comments and remarks by each of you. We plan
2	to take a break at 10:45, or thereabouts, and we have organized it basically in
3	alphabetical order in the English language, though Germany will go as Germany
4	and not Allemagne. And we will lead off with, in order, Allan Fels from
5	Australia; Gesner Oliveira from Brazil; Konrad von Finckenstein from Canada;
6	Karel Van Miert from the European Union; Frederic Jenny from France, and from
7	the OECD CLP; as well as from the WTO antitrust working group --
8	DR. STERN: No acronyms.
9	MR. RILL: -- that is the World Trade Organization working
10	group, and from academia. Jerome Gallot from the DGCCRF will be arriving this
11	afternoon, and when he arrives will have an opportunity to speak also on behalf of
12	France. Dieter Wolf from Germany. My old friend Shogo Itoda, and his
13	colleague, Takaaki Kojima from the JFTC. Fernando Sanchez Ugarte from the
14	Republic of Mexico. Luis De Guindos from Spain. And also my old friend,
15	Ignacio de Leon from Venezuela. If we could just proceed in that order, take a
16	break at about 10:45, and we look forward very anxiously to hearing your
17	comments.
18	Professor Fels?
19	PROFESSOR FELS: Thank you very much, Jim. Ladies and
20	gentlemen, thank you very much for inviting us to your important hearings.
21	Australia welcomes this very important initiative by the United States. We think
22	it's important not only for the United States but also for the rest of us. We are
23	very interested in the outcome of your deliberations.

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1	As the first speaker this morning, but one followed by many
2	experts, I will range across areas where I feel I have more of a contribution to
3	make and, about the particular topic of enforcement cooperation, I will be
4	speaking about that this afternoon. That is to say, the Australian-U.S. agreement,
5	which is an important one. So this morning, I want to talk about the general
6	relationship between trade and competition policy, and I shall probably range a
7	little more widely than some of your terms of reference, but I would still like to
8	comment briefly on a couple of topics like regulation and intellectual property.
9	So let me begin by just making a few general comments about
10	the relationship that I see between trade policy, competition policy, and
11	government regulation, even though I think your concerns were essentially on
12	some aspects of competition policy.
13	It seems to me there are three basic propositions about the
14	relationship between trade and competition policy. First, free trade can be
15	hindered by anticompetitive practices in the private sector. If trade barriers are
16	lowered, and it's made easier for imports to enter a country, the effects of this
17	liberalization can be defeated if there are, for example, anticompetitive
18	agreements in domestic markets. This is particularly the case in distribution
19	sectors if imports are prevented from reaching consumers. Hence, trade policy
20	needs to be complemented by an effective domestic competition policy. While that
21	proposition sounds simple, it gives rise to a major policy agenda.
22	For example, it's desirable that a country's trade partners
23	adopt a competition policy and apply it properly. It is also necessary that

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1	appropriate cooperation arrangements apply between the national competition
2	laws and institutions around the globe, which becomes more important with
3	ever-increasing economic interaction between countries.
4	The second proposition is the reverse, that because trade
5	policy, for example, import restrictions, can hinder competition, it's also
6	necessary that trade policy should conform with the general principles and culture
7	that underlie competition policy. Many trade policies seriously restrict
8	competition and it's important that these anticompetitive restrictions be removed
9	by applying the general approach of competition policy to the area of trade policy.
10	A development between Australia and New Zealand in this
11	regard has attracted some international interest. This is the replacement of the
12	antidumping laws between the two countries with the application of the provisions
13	of the competition laws of the two countries. The monopolization or abuse of
14	dominance provisions of competition law in our two countries apply to dumping
15	cases, an outcome likely to be more conducive to good consumer and business user
16	outcomes than the pre-existing arrangements.
17	More generally, there is a discernible trend on the part of
18	leading world economists and key policymakers to try to characterize trade
19	policies as a form of competition policy, hence requiring the application of the
20	same principles, and even processes, in the interest of world economic progress.
21	Formulation and implementation of this ambitious approach is a substantial world
22	policy challenge.
23	Now, this is not to say that progress in the two areas, trade

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1	policy and competition policy, should be linked. I'm just suggesting that there
2	should be common principles, the principles of competition policy. And I note
3	that some of this is not on your agenda.
4	The third proposition about this relationship is less widely
5	stated than what I have just said. It addresses the question of regulation that may
6	restrict both trade and competition. Indeed, regulation may be a more serious
7	impediment to trade than weaknesses in the enforcement of competition laws.
8	For example, the problems which some exporters face in
9	having their products distributed in other countries may not necessarily arise from
10	any failures by competition agencies to enforce the law, but rather from laws and
11	regulations that restrict, for example, the number, size and opening hours of
12	distribution outlets, and may even directly or indirectly prevent new foreign
13	entrants from setting up their own distribution outlets. Many other forms of
14	regulation, such as safety standards, may also deter trade and competition.
15	Therefore, the debate about trade and competition should be
16	broadened to focus on three variables -- trade, competition, and regulatory policy,
17	and their interrelationship -- in order to recognize in particular that regulation
18	may hinder both trade and competition, and that appropriate deregulation may be a
19	crucial policy requirement.
20	I want to comment very briefly on intellectual property
21	because it's an important element both in trade and competition law. Yet much
22	policy discussion of intellectual property has fallen in the cracks between those
23	two areas and hence been neglected. Generally, the laws regarding intellectual

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1	property promote, rather than hinder, competition. But it's worth singling out one
2	class of trade restriction for particular attention because to date it has been
3	insufficiently considered: the restrictions on parallel imports imposed on
4	intellectual property laws have widespread effects on international trade.
5	In the copyright area, for example, it is not possible for
6	retailers in most countries to import for the purposes of resale books, CDS,
7	computer software, farm chemicals, and many other products without the approval
8	of the holder of the copyright in the importing country. Such approval is rarely
9	given. This restriction is even applied to many goods where the packaging or
10	labeling has been copyrighted. For example, toys, drinks, packaged foods,
11	perfumes, clothing, footwear, and a very long list of others.
12	This law then creates import monopolies in each country that
13	has these laws and enables the development of very substantial price
14	discrimination between different countries. These rather draconian restrictions
15	seem quite incompatible with the general liberalization of trade which has
16	occurred worldwide, and are not consistent with the aims of copyright: protecting
17	publishers, record companies and the like from the copying of their original
18	works.
19	The next topic I want to discuss is the convergence of
20	competition policy. It's desirable that all countries adopt competition policy. It's
21	possible to specify some of the core principles and procedures that any
22	competition policy should have. They include: coverage of hard core cartels and
23	other horizontal anticompetitive agreements, anticompetitive mergers, abuse of

23

1	dominance, vertical restraints; comprehensiveness, that is, the law should apply to
2	all product markets and sectors; independent enforcement by properly resourced
3	agencies and courts; clear laws, sanctions, governments that don't enact
4	anticompetitive laws themselves nor sanction anticompetitive conduct; no
5	discrimination between foreign and domestic firms; transparency, due process;
6	provision for international cooperation; and similar analytical approaches.
7	Even where there are substantial differences of emphasis on
8	particular laws, for example, vertical restraints, there can still be a lot of progress
9	by adopting similar analytical processes. The OECD is currently working on a
10	specification along the lines I have just set up. If we were starting with a blank
11	page, we would probably establish an international competition forum, or even an
12	international competition agency. However, in present circumstances, it is better
13	to make use of existing international organizations. Much of the intellectual work
14	could be done by the OECD and in fact is being done by its new joint working
15	group on trade and competition.
16	In my own personal view, the WTO also provides an excellent
17	forum because it's membership is worldwide, it brings together both trade and
18	competition officials, and has a long experience also in resolving international
19	frictions, including by means of enforceable dispute resolution mechanisms. At
20	present, the WTO, as well as the OECD, should be used as discussion forums. In
21	the longer term, it's likely, in my view, that it will take on an enhanced role in the
22	interface between trade and competition policies.
23	If it does this, it's important that the principles of

24

1	competition policy should govern the WTO's work. The real progress in the
2	immediate future, however, will be made by convergence and by bilateral
3	cooperative agreements between countries, and this is everyday becoming more
4	important with increasing globalization.
5	Finally, let me just say one other thing about Australia. In
6	any discussions about the international cooperation and enforcement in
7	competition policy, it's important to take account of changing trends in
8	competition policy domestically. Australia recently undertook a far-reaching
9	review of its own competition policy, and it's worth noting a few points that
10	emerged.
11	Our reforms include serious independent reviews of all the
12	numerous laws at federal and state level that restrict competition, with a view to
13	eliminating unnecessary or unjustified laws. So we think that's part of the agenda
14	of competition policy and should not be ignored by your Committee. The laws
15	themselves that the agencies can't touch are part of the agenda. In addition, there
16	is now a great deal of regulation of public utilities, whether privately or publicly
17	owned. In Australia it's been decided that such regulation is to be performed, and
18	now is in part being done, by the competition regulator rather than by separate
19	regulators.
20	In recognition of the numerous access questions that arise --
21	access to so-called essential facilities -- we have now doctored a comprehensive
22	law regulating access to essential facilities, and we are currently applying it to
23	communications, energy, and transport sectors. Only small attempts have been

25

1	made in Australia at this stage to integrate trade and competition policy, but it is
2	worth considering initiatives to create greater harmonization of the concepts,
3	procedures, processes and membership of competition and trade regulatory bodies.
4	Thank you very much.
5	MR. RILL: Allan, thank you very much. I just should point
6	out that it's becoming increasingly clear that the issue of governmental restraints
7	is very much on the agenda for analysis and potential recommendation by this
8	Committee, so your remarks in that area are particularly apt.
9	Next we will hear from Gesner Jose Oliveira.
10	MR. OLIVEIRA: I'll take the liberty to show a few
11	transparencies to make my comments a little more objective.
12	DR. STERN: Excuse me. Will you make them available
13	after your presentation? It clearly reflects a great deal, you can see we were
14	taking very detailed notes.
15	PROFESSOR FELS: I gave you them already.
16	DR. STERN: Thank you. That will be useful just to make
17	sure we have gotten the full flavor.
18	MR. OLIVEIRA: Good morning. Thank you very much for
19	the invitation. I would like to congratulate the Committee members for this
20	initiative and the U.S. Government, and also say that we are very thankful to have
21	the opportunity to discuss with you part of the Brazilian experience and our
22	perspective in competition policy issues and international cooperation.
23	I will point out three topics. First, the relationship between

26

1	economic reform and competition policy in developing countries. Second, a few
2	aspects of the Brazilian experience. And third, what would be a perspective or
3	what we think is a perspective on international cooperation on the part of
4	developing countries.
5	It's important to understand this perspective, due to the fact
6	that most of the dissemination of competition policies that we have seen in the
7	recent past has occurred from what we can perceive in this chart on the developing
8	countries. We have now more than 80 countries with legislation in competition
9	and this is where the novelty is.
10	Competition policy is in a way the result of trade
11	liberalization, privatization, and deregulation. It's the result of economic reform,
12	and in a way is the factor that will assure that we'll guarantee that economic
13	reform will continue. I do not believe that trade liberalization can continue in
14	Latin America and in other places without strong competition laws and agencies.
15	It's the presence of strong and independent competition agencies which will assure
16	that trade liberalization, for instance, will not backslide.
17	What we can see in Latin America -- and to a certain extent,
18	although the contrast is much greater, in Eastern Europe -- what we can see is two
19	distinct periods. The first one is characterized by state intervention. And what
20	we saw in the last 10 years is the rise of a more modern approach and what we
21	would say is it is characterized by a competition policy approach to market
22	legislation in the last 10 years in the developing world.
23	Let's take the example of Brazil. Brazil has had a law on

27

1	competition policy since the early '60s. Argentina has had one since the beginning
2	of the century. And what we see is that it was only in the '90s that the competition
3	agencies became more active. In the case of Brazil, the most important fact was
4	the transformation of CADE in 1994 as a more independent competition agency.
5	In Mercosur, the development has occurred since 1994 with the first
6	harmonization effort in 1994, and then the Fortaleza protocol in 1996, and now we
7	are regulating the terms of the protocol and we expect it to be implemented next
8	year.
9	Let me give you some data on the number of cases that have
10	been decided in Brazil that will give you an idea of the degree of implementation
11	of the laws. As you can see, in the '60s and until the early '90s, the number of
12	cases was very small, and it has increased sharply in the last three or four years.
13	This gives you an idea of the composition of the cases. There is a vast majority of
14	conduct cases and there is already an interesting experience on merger review
15	since 1994.
16	If we see the composition of the conduct cases, we still see a
17	large share of the cases which have to do with past cases that we view as state
18	intervention. This is what is being called here abusive price cases, which are old
19	cases, and already a large share of cartel cases in the conduct cases.
20	Let me call your attention to the merger review cases. Here
21	we have three periods which correspond to the three councils that CADE has had
22	since 1994. I would call your attention to two aspects. First, there has been a
23	rise in the share of cases, this yellow part, that have been approved without any

28

1	kind of condition. And let me give you an additional number, which is the
2	majority of those cases, four-fifths of those cases, involve foreign companies.
3	And almost half of those cases, involve other jurisdictions, and have been
4	analyzed by other jurisdictions.
5	So given the fact that the majority of the cases are approved
6	without condition, and given the fact that many of them have already been
7	analyzed by other jurisdictions, it's very important to focus on the simplicity of
8	the analysis in international cooperation in terms of reducing transaction costs for
9	companies which are investing in Brazil, in Latin America, and in other regions of
10	the world.
11	DR. STERN: Excuse me. In this last display here, do you
12	find that the cases that you have approved for that image are different in terms of
13	foreign investment than in the previous periods? In other words, you have given
14	us an idea about the regulations, but could it possibly reflect a difference in the
15	type of investment or the intensity of the investment or sectors that they are
16	investing in?
17	MR. OLIVEIRA: Yes. There has been some change in the
18	pattern of investment, and I think that this is true for all Latin America. There is a
19	great increase in the investment in infrastructure of sectors, in
20	telecommunications, in other service sectors which we don't find in the '80s and in
21	the '70s.
22	DR. STERN: And it reflected perhaps more state-owned
23	companies that were being privatized?

29

1	MR. OLIVEIRA: Yes. That certainly has to do with the
2	process. What I want to emphasize is that we do have to have some cooperation to
3	analyze cases which already have been analyzed here in the U.S., in Europe, and
4	in other countries, and I will give some examples in the following.
5	Let me show you the share of the cases which have been
6	considered to be the relevant market, the geographic relevant market has been
7	considered national. It's striking that even with trade liberalization and with
8	globalization, we still have a large share of markets being considered national. I
9	suspect that if we had more information on international markets, part of those
10	markets could be considered international. This would be a result of more
11	cooperation amongst agencies.
12	Let me give you some examples of transactions that, as we
13	mentioned before, were analyzed in Brazil in the dates indicated and also in other
14	jurisdictions. Most of you probably know and had the opportunity to analyze
15	those transactions and can even protest our decisions.
16	Let's take the Mahle acquisition: a German company that
17	acquired a Brazilian company that had important business in the U.S. market, so
18	that was a particularly interesting case. Let's see what the decision was. In the
19	U.S., there was a fine for non-notification and non-approval, and an order of
20	divestiture in one of the relevant markets. In Brazil there was a fine for late
21	notification and approval in the relevant markets of pistons and separated pieces
22	and a non-approval for one of the relevant markets. As you can see, we made
23	different decisions, as one would expect, because we have different relevant

30

1	markets, but I think that we got consistent decisions. And we'll get more and more
2	cases like this one.
3	The acquisition of Kolynos by Colgate was an interesting
4	case. The decision in itself was interesting. It would be worth discussing, but the
5	important point here is that it involved two U.S. companies, a transaction between
6	two U.S. companies outside of Brazil, and had an important impact upon the
7	Brazilian market. It involved also a third U.S. company which also operates in the
8	Brazilian market, so it's one case that would be worth analyzing to see what kind
9	of international cooperation could help us in getting a consistent and good
10	decision.
11	As a result of the decision, the suspension for a four-year
12	period of the Kolynos trademark in the Brazilian market, we have observed some
13	benefits for the market with new entry and with a fall in the price of toothpaste of
14	11 percent since the decision.
15	Another case was the joint venture between the Brazilian
16	leading brewery and Miller, a U.S. company. And the transparency gives you
17	some information about CADE's decision.
18	Another point that should give us some elements for
19	discussion is our relationship with the courts. We have in Brazil now more than
20	70 cases in the Brazilian courts. As you can see, the share of the cases which go
21	to state courts is relatively high due to the autonomy of the states of the
22	federation. And what would be interesting would be to emphasize and to focus
23	more on the dissemination of competition culture among courts in different regions

31

1	of the world. It's hard to overemphasize the importance of this if one analyzes the
2	legal tradition of courts in some regions, especially in Latin America.
3	In order to set priorities for international cooperation, it
4	would be useful to have a gradualist approach to competition policy and to
5	competition policy implementation in each national jurisdiction. We have a
6	gradual approach. We think that we are going from the second stage of
7	implementation to a third stage. We already have merger control and repression of
8	horizontal agreements, but we are now starting to implement international
9	cooperation in a relation with the regulatory agencies in the infrastructure of
10	sectors. So what does that imply in terms of international cooperation?
11	In the early stages, it's very important indeed to have
12	technical assistance, one point I would like to emphasize. It's not technical
13	assistance in terms of writing laws, but it's technical assistance in terms of
14	institution building. I think if we want to have strong implementation of
15	competition policy in the world, we ought to have independent transparent
16	institutions in the different national jurisdictions. And if we do not have external
17	technical assistance, there will be underinvestment in terms of the institutions.
18	There is political market failure in terms of what we get as a budget for national
19	competition bodies. So there has to be support for independent and transparent
20	competition agencies.
21	After a certain degree of development, then we can think
22	about early attempts in terms of international cooperation. We have an interesting
23	experience and a very positive experience with Argentina. And we hope in the

32

1	near future to sign an agreement with the U.S. But for most parts of the world,
2	what I would call the second generation international agreements, we still have to
3	get some preconditions for having more advanced agreements with developing
4	countries.
5	Just to end these remarks, let me give you some idea of some
6	internal reforms of CADE in order to prepare CADE for this type of international
7	cooperation. We have been changing our internal rules in order to get more
8	transparency with respect to due process of law. Let me give you some
9	information about a recent change in the merger review in order to make it easier
10	for international cooperation.
11	First, we try to maximize the intersection of the information
12	set that we get from the merger parties with the OECD notification form, we had a
13	proposal and now we have this approved OECD notification form. We also
14	started a two-stage decision process and we simplified dramatically our
15	information set, reducing the number of items of information and documentation.
16	With that, we hope to reduce the time length of analysis. We
17	have reduced it from 20 months to 7 months and we hope to reduce it at 2.4
18	months more for next year. So this is one of the preconditions for having, let's
19	say, an international agreement with other jurisdictions that would allow for joint
20	analysis of a particular transaction. And also, for the area of conduct, it would be
21	necessary to have a more rigorous treatment of confidential information in order to
22	have more exchange of information.
23	The three goals that we have for the next two years are the

33

1	consolidation of CADE's work in terms of the consolidation of stages one and two
2	indicated in the earlier transparency, institutional cooperation both nationally
3	and internationally and with a priority of legal certainty.
4	I would say that if we do that, we will be proving the three
5	roles a competition agency has to have. The repressive role, which was the focus
6	of the early period of the history of antitrust, the preventive role, which has been
7	developed with merger review and with analysis along the century. But most
8	important of all is the educational role, so we do give a lot of emphasis on the
9	educational role that competition bodies can have and have to have.
10	I think that internationally, one could say that we do have to
11	have coordinated repression of hard core cartels. We should reduce transaction
12	costs by having more joint analysis of mergers, but most important of all, we
13	should emphasize institutional building, and we should emphasize the promotion
14	of independent and transparent agencies around the world. This is certainly a
15	precondition for good competition policy in the world, and I think it's
16	characteristic of modern competition policy as opposed to the antitrust tradition of
17	the late 19th century.
18	Thank you.
19	MR. RILL: Thank you very much. I think much of what you
20	have said is going to be part of and perhaps even stimulate to a great degree the
21	panel discussion on multinational mergers that we'll be undertaking in the last part
22	of today and again tomorrow. So thanks for those very thoughtful comments.
23	Konrad.

34

1	MR. VON FINCKENSTEIN: Thank you, Mr. Chairman.
2	Thank you for inviting me to participate in this forum. I think it must be a unique
3	forum where you make policy by inviting your international colleagues to give
4	input. I hope it sets a precedent and I'm certainly delighted and flattered to be
5	here.
6	We in Canada are a very strong supporter of international
7	cooperation. Part of it of course is easily explainable in terms of geography. We
8	are right next door to the United States, the biggest market in the world. We are
9	the biggest trading partner with the U.S. and, since the advent of the FTA and
10	NAFTA, we have in effect a North American market. Business treats North
11	America as one market.
12	There are tremendous opportunities in terms of efficiencies of
13	scale and concentration, but also risks in terms of collusion. And we have seen,
14	since the advent of the FTA, a considerable increase in both multinational
15	conspiracies and in mergers involving both your jurisdiction and ours. So, as a
16	corollary, a high degree of cooperation among antitrust agencies is essential for
17	the effective administration and enforcement of our systems.
18	I'd like to address four points with you. Basically I'm
19	concentrating, given that I'm in Washington, on Canada-U.S. relations, but
20	essentially my comments apply to our relations with other countries as well. I'd
21	like to talk to you about the Canadian priorities for international antitrust
22	cooperation in terms of deepening our relationships with the United States,
23	expanding our positive comity in the region, and in terms of availing ourselves of

35

1	the International Antitrust Enforcement Agreement Act (IAEAA). And I'd like to
2	finish off by making a few comments about the Competition Bureau's view of
3	antitrust policy in the context of the WTO. Let me go through these one by one.
4	Deepening our relations. We have with the United States the
5	international antitrust cooperation agreement of 1995. We also have an agreement
6	with the FTC on misleading advertising. Further, we have the Mutual Legal
7	Assistance Treaty on criminal matters. These three agreements are really the core
8	of our relationship and have worked very well so far.
9	We have had several major cases that we have handled
10	together, but we have to deepen this relationship given the increasing number of
11	issues involving both of our jurisdictions. By deepening, I mean such things as
12	making more coordinated or parallel investigations. We have to coordinate our
13	searches when appropriate. We have to share information within the limits of our
14	respective laws, especially in those areas where we are not restricted, such as
15	market definition, theory of cases, views of industry, et cetera. That kind of
16	information can be extremely valuable.
17	We have to make sure we time our activities properly so we
18	don't interfere with each other. And we have to assist each other in order to obtain
19	the necessary evidence through cooperation. All of this is an ongoing process. We
20	are learning day by day, but it is a challenging process because your ways are
21	sometimes different than ours. We learn about each other's preoccupations,
22	practices, ways of looking at things, and the many unwritten rules that exist on
23	both sides of the border, which are very important and have to be respected. But I

36

1	expect we will continue to improve and we will become a model of bilateral
2	cooperation.
3	Secondly, I believe we should expand on the use of positive
4	comity between the United States and Canada. Positive comity: we all know the
5	concept. If anticompetitive activity takes place in another country, and hurts both
6	that country and one's own country, it may be most effective to defer one's own
7	enforcement activity and ask the other country to investigate and deal with it.
8	That's the basic notion. Currently, our cooperation agreement has a reference to
9	positive comity, but it is a relatively basic reference because it suggests that when
10	you receive a request for positive comity, you will look into it carefully and then
11	advise the other party whether you intend to proceed or not. That's essentially all.
12	I have looked at the U.S.- EU agreement on positive comity,
13	which I think is much more complete and sets a very valuable and interesting
14	precedent. It sets out the grounds for invoking positive comity, the conditions for
15	deferment, and the timetable under which one should deal with requests. It has the
16	implied necessity of accepting the resolution that the requested party will
17	implement. It also has a reservation allowing a requesting party to recommence
18	its own investigation after sufficient notice.
19	This latter point, I think, is based on the realization that there
20	may be instances when it is imperative for a country to step in and enforce its own
21	laws. A safety valve that reserves the right for the requesting party to start its
22	own investigation is very necessary. Generally I think the approach taken by the
23	U.S. and EU is very practical. It is do-able and we should do it on a Canada-U.S.

37

1	basis, and I understand my office is discussing potential negotiations with the DOJ
2	and the FTC in order to work out such an agreement.
3	Lastly, there is the issue of exchanges in what we call civil
4	matters. We exchange a lot of information on criminal matters by virtue of the
5	agreement that we have and by virtue of the Mutual Legal Assistance Treaty on
6	criminal matters. There is no counterpart on the civil side, which means the
7	United States cannot cooperate with us because we don't have reciprocal
8	legislation as required under the IAEAA.
9	On the Canadian side, we have confidentiality restrictions
10	that prevent us from letting the U.S. have certain civil matter information and that
11	also do not allow us to accept waivers. Even with a waiver, we can't give you
12	certain non-public information. Consequently, on the civil side, we only exchange
13	information that's in the public arena. That's not very helpful and it means that in
14	major civil cases, on major issues of abuse of dominance, for instance, which may
15	occur on both sides of the border, we have to go our separate ways -- we can't talk
16	to each other. This should be addressed.
17	We wanted to address this in our last round of amendments to
18	the Canadian Competition Act. Unfortunately, there was an intervening case that
19	suggested that prior to making a request for information located in a foreign
20	jurisdiction you needed judicial authorization. Ironically this was a decision made
21	by one of my predecessors -- but it has since been reversed by the Supreme Court
22	of Canada. So the way is now clear for Canada to amend its Act and enter into an
23	agreement with the U.S. under the IAEAA.

38

1	This is a priority for our office and I hope that we will be
2	able to do this. However, entering into such an agreement is going to be very
3	difficult and there is one simple reason, and that's treble damages. The idea of
4	being exposed to treble damages by reason of information that emanates in Canada
5	being exchanged with U.S. authorities, absolutely galvanizes Canadian industry
6	and the Canadian Bar to oppose any such exchange. Therefore, when we negotiate
7	an IAEAA agreement, we will have to address the issue of treble damages and see
8	how we can deal with it, because we do not have treble damages in Canada.
9	I have never been quite convinced about the necessity and
10	utility of treble damages, but of course that's your law and for you to decide.
11	However, to the extent that Canadian firms become or perceive themselves to be
12	exposed to treble damages, it poses a major problem in terms of working out a
13	consensus in Canada and dealing with this issue. We will have many interesting
14	discussions trying to square the circle.
15	Lastly, let me say a few words, speaking from the
16	Competition Bureau perspective, on how I see antitrust enforcement fits into the
17	WTO. So far in the WTO, we have addressed some issues of competition. There
18	are some agreements, for instance, the latest one on basic telecom that have all
19	sorts of provisions, which are clearly competition provisions. The basic Telecom
20	Agreement essentially prescribes a competitive regulatory regime and the rights of
21	the parties under it. We have smidgens of competition in the intellectual property
22	agreement, and you can find it in the various other WTO agreements. But it is
23	haphazard. It is not a common approach. We now have a working group in the

39

1	WTO, under Frederic Jenny, which is doing a lot of exploratory work and in terms
2	of familiarization of competition laws and policies, and consciousness-raising,
3	especially for developing nations.
4	However, I think the time has come to contemplate an
5	agreement on competition in the next round of the WTO. And I believe the key
6	building blocks already exist and just need to be brought together. In the OECD,
7	for instance, there is the Recommendation on Hard-Core Cartels; there is the
8	framework for merger prenotification just adopted this month; there is work in
9	process on the rights of parties, which basically sets out the procedural rights of
10	parties. There is also work in progress on the principle of comity and how that
11	should be played out in a multilateral context.
12	There has been work done by the OECD, which has not yet
13	resulted in formal documents, be they frameworks or recommendations, but which
14	are works in process that will come to fruition very soon. There is developing
15	OECD consensus on an approach to the abuse of dominance; the core principles
16	my friend from Australia referred to; and also on the elements of a minimum
17	competition law institutional infrastructure required, such as an independent
18	investigative agency and some sort of appeal or judicial review of the decisions of
19	that agency.
20	It strikes me that all of the elements are semi-ready. Some
21	further refinement at the negotiating stage is required, but they could very easily
22	be wrapped up in an agreement using by analogy the WTO, a competition
23	agreement on basic principles would leave to each nation to determine it in

40

1	accordance with its tradition and history, its own objectives and its way of doing
2	business. What you would have is a dispute settlement mechanism purely to
3	determine whether these principles have been translated and incorporated into
4	those domestic laws or not.
5	Some thought should probably be given to whether it should
6	be a plurilateral agreement initially, with only those nations that already have
7	competition systems or are about to accept them, acceding. Over time it would
8	become a multilateral agreement, but I think if the next round would produce a
9	plurilateral agreement, it would be a very useful first step. It would serve three
10	purposes.
11	First of all, it would be a model for nations without
12	competition systems, setting out what should be included in one and how to
13	structure it.
14	Secondly, for members that already have a competition
15	regime, it would give them an opportunity to review their system, deal with some
16	anomalies, and to straighten out certain provisions that have always been there
17	but, for lack of political consensus, have never been addressed.
18	And lastly, I think that an agreement, specifically if it
19	included a clearly spelled out positive comity arrangement, would give members of
20	the agreement the mechanisms to deal with constraint issues caused by private
21	arrangements, rather than by governmental-sponsored arrangements, something
22	that the WTO is now incapable of addressing. Essentially, the WTO focuses on
23	government sanctioned measures and this would be the first time that we would

41

1	have a way of dealing with private arrangements that can create barriers to access.
2	That's basically all I wanted to tell you by way of
3	introductory comments. I'm looking forward to the day and would be glad to
4	answer any questions. Thank you.
5	MR. RILL: Thank you, Konrad. You provoke so many
6	interesting potential responses to what you have said. Just for a moment on the
7	private treble damage remedy. That is an issue that's come up in discussions with
8	my colleagues in the Bar as well as with some of you.
9	The question then would be not whether the U.S. could say in
10	international matters, should there be an exchange of information leading to a civil
11	action against a foreign firm, treble damage remedy would not be available. I
12	think that would raise serious questions of reverse national treatment -- the
13	domestic firm is liable for treble damages, the foreign firm is liable for only single
14	damages. I think it would be very difficult perhaps legally and, certainly,
15	politically in the U.S.
16	On the other hand, it's not beyond question that the whole
17	treble damage remedy in the U.S. could be evaluated as it has been from time to
18	time and modified to some extent, for example, under the National Cooperative
19	Production and Research Act, for notification would eliminate the treble damage
20	remedy.
21	Thanks very much. Karel?
22	DR. STERN: Before you go ahead, I would like to recognize
23	that we have been blessed now with the Boston shuttle's arrival. Professor John

42

1	Dunlop has joined us, as has Professor David Yoffie. I would like to recognize
2	that in the audience we are getting an increasing number of very high visibility
3	public officials as well. I see Carol Crawford from the International Trade
4	Commission back there, the Commissioner, and many others, and I want to make
5	sure that you can hear back there.
6	Is the public having a problem hearing? Yes. I thought so.
7	You all have been very polite about saying so. But the substance is so interesting
8	and we need to make sure that everyone can hear, and let me assure the public in
9	general that this is being recorded, that there shall be a transcript and it will be
10	put on our Web Page. But if we can at this table remind ourselves that we are
11	having a discussion not only amongst ourselves, but that it is being monitored by
12	some very important people, that would be very helpful. Excuse me, Karel. I
13	thought we should pull everyone together and get on the same page so that we can
14	all hear what you have to say.
15	MR. VAN MIERT: Thank you very much. Good morning,
16	ladies and gentlemen. First of all, I would like to congratulate Janet Reno and
17	Joel Klein for this initiative, having set up this Advisory Committee. Because I
18	believe it's absolutely timely. As Joel pointed out, globalization is happening.
19	Interaction is happening all the time. I think what has already been brought about
20	over the last decade is truly impressive. A lot of bilateral agreements are
21	functioning well. A lot of work is being shared, is being done.
22	But indeed, we need to think about the options which are
23	available or should be available for what comes next and not only what comes for

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1	the next decade but beyond that, beyond the next decade. And that means not only
2	discussing options but also to see how to bring about solutions, so how to proceed
3	in which framework. I think this is now the most important thing we need to
4	discuss.
5	And it's in this light that I would like to follow the three
6	questions which have been put to us. And as Joel reminded you already, we
7	started some years ago to do some work ourselves, although it was much more
8	limited. We asked knowledgeable people to give their opinion and to discuss that
9	with our own officials. This eventually did lead to the initiative, which the
10	European Union has taken inside the World Trade Organization, to create a
11	working party, which again I think is doing extremely valuable work.
12	So today you are thinking about it, and again, thank you very
13	much for having invited all of us. We have been doing some work. In the
14	meantime, things are being discussed, so I would say before the end of this
15	century, we should be able to come up with some very valuable ideas on what
16	comes next. Anyway, it's in that light and in that spirit that I wanted to be part of
17	this discussion today.
18	Now, ladies and gentlemen, I'm not going to come back on
19	some of the very interesting things which have been raised, for instance, trade and
20	competition, and also regulatory issues. But since it was not put specifically to
21	me, I will leave it there. But I do recognize that this is extremely important, and
22	probably it's one of the more valuable things also which could be put in your
23	report, and not just stick to the relation between trade and competition and

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1	copyright and all those things. So there is a lot to be discussed, and since this
2	work is meant to be, should I say, a guiding paper for what comes next, it
3	shouldn't be forgotten.
4	Now, ladies and gentlemen, the first question: What should
5	be the useful direction or directions to enhance international cooperation and
6	enforcement matters? Obviously we will continue as all of us, I think, to try to
7	extend bilateral agreements, deepen them, make them function even better than is
8	the case today, second generation bilateral agreements, but this is something we
9	have been doing and will continue to do.
10	Very soon now we'll have a bilateral agreement with Canada,
11	we will try to have others. I understood that also Japan seems to be interested in
12	developing bilateral agreements. I welcome that explicitly, but this is already
13	known. We can make things more perfect. Function better as they do today, and
14	in this respect, ladies and gentlemen, I certainly would underline the necessity that
15	in the bilateral agreement we do have with the U.S. that the next stage might be
16	the exchange of confidential information.
17	But it is highly sensitive in the business community. It's
18	highly sensitive with several of our Member States so it's not going to be easy to
19	bring it about, but it is on our agenda. Somehow for the time being it's more a
20	process of trying to convince people that it might be useful for them as well, not
21	just a threat. And it's striking, by the way, that in several merger cases -- I will
22	come back on that a little bit later -- the companies were prepared to give us a
23	waiver to allow U.S. and European Union authorities to exchange confidential

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1	information, because one day they discovered that it might be in their interest. So
2	I'm hopeful that it might be brought about, but I must indicate that on the side of
3	the European Union it's not going to be easy. It's a rather complex discussion
4	with industry, but in our view it is the next step to be undertaken.
5	As far as bilateral agreements is concerned, I will leave it
6	there for the moment, ladies and gentlemen, and concentrate on the second leg.
7	And the reason why we have been doing that over the last year is indeed the firm
8	belief that in the light of globalization, interconnection, in spite of some
9	difficulties which are around that, it's going to be continued. It's going to be there
10	to stay and to be developed further.
11	So therefore I think we must indeed discuss the
12	future-oriented solutions in the light of globalization and try to develop some
13	global approaches, including global procedures. And again, as I indicated, it's not
14	just to what comes next in, say, 2005 or 2006. No. It should go beyond that.
15	And there is a very strong logic in it now also to start thinking about global
16	approaches and global procedures.
17	So this is the general spirit in which we were ourselves
18	already doing some work about it, and we came up with four suggestions, but I
19	want to underline the word suggestions. Four suggestions to try to carry things
20	further.
21	First of all: make sure that -- and the trend is there -- more
22	and more countries do have or do introduce competition rules, do create
23	competition authorities. Okay, let's help them to do so in a genuine way. We have

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1	some very valuable experience, not only the European Union but several Member
2	States. Several of our Member States have been extremely, extremely cooperative
3	in trying to help some Central and Eastern European countries to introduce rules
4	of the game, to share experience of them, even having given practical help,
5	technical assistance on both levels.
6	And this eventually, ladies and gentlemen, did indeed lead to
7	the fact that now several of the countries concerned already have competition rules
8	and competition authorities and have and are gaining a lot of practical experience
9	before they eventually will join the European Union and then be subject to the
10	global rules of the European Union. So there is a lot of experience already out
11	there, which can be used elsewhere as well. And I know what's happening in
12	South America which also, I think, points in the same direction. So therefore, let's
13	try to make it a kind of multilateral thing, bring this about everywhere. And be
14	helpful.
15	The second thing I wanted to mention, as Joel mentioned
16	earlier, there are still a lot of things which are extremely difficult to be tackled
17	when they are outside your own reach. Now, obviously, extraterritorial actions
18	have been taken but perhaps that's not the right way forward. At least we feel
19	strongly that the right way forward is to do it on the basis of bilateral or
20	multilateral cooperation.
21	And in this respect, we fully share in the concerns that for
22	instance export cartels, bid rigging, market sharing agreements, outward-fixing
23	agreements, and all these kinds of thing that we cannot tackle as we should like to

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1	do, even as European Union. For instance, we cannot tackle export cartels, which
2	is fairly regrettable. So why not try on a more global level to say: All these types
3	of practices, we should be able to tackle them because we have some kind of
4	universal rules which would be part and parcel of all competition policy wherever
5	in the world. So that this becomes a kind of global base on which these kinds of
6	practices can be tackled in the future.
7	The third point I wanted to mention, ladies and gentlemen, is
8	indeed based on cooperation between individual, bilateral agreements, positive
9	comity and comity. We are having some experience in the meantime ourselves so
10	things can be improved, by the way, because we are learning and tackling
11	individual questions and we would like to improve this as well. But very
12	important is a spirit in which this is taking place.
13	I could give you examples of cases, for instance the Nielson
14	case, that has not been done on the basis of a formal demand. But the way it has
15	been done is absolutely in accordance with the spirit of comity and positive comity
16	because, since the problem was mainly happening in the European Union, our
17	friends on this side of the ocean asked us to look into it. That's exactly what we
18	did. We obviously kept them informed. Once we were negotiating a remedy with
19	the company that had been attacked, obviously we were checking whether that was
20	good enough with our American friends, so at the end of the day the thing could be
21	sorted out.
22	Apart from these formal procedures the spirit in which this is
23	being conducted is automatically, so to speak, leading to an in-depth, very close

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1	and confident relationship and cooperation. So therefore we feel, even if perhaps
2	it's not the first thing to do on a broader scale, that it should be part and parcel
3	nevertheless of a global approach.
4	An