International cooperation in cartel enforcement

An OECD perspective

Antonio Capobianco

Senior Competition Expert,

OECD Competition Division

ICN Annual Conference, Sydney 2015

• Trends in globalisation and on the spread of competition law enforcement

• Increasing number of multi-jurisdictional cases and increasing complexity of enforcement co-operation

• Some findings from the 2013 OECD/ICN Survey

• A description of the innovative aspects of the 2014 OECD Recommendation on international co-operation

• A couple of personal remarks on where we could go next

Structure of the presentation

2

The world economy rebalancesS

har

e o

f wo

rld

GD

P

Source: OECD data and projections

1995 2014 2030

3

64%

48%

38%

Bear in mind that globalization still has a long way to go!

Gross exports.

Source: Johansson and Olaberria, “Long-run patterns of trade and specialisation”, OECD Economics Working Paper 1136

4

5

Spread of competition law enforcement

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

0

20

40

60

80

100

120

140

Jurisdictions with Competition Law and a Competition Authority

Source: OECD

EU International Merger filings

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

20

40

60

80

100

120

140

160

180

200

EU cross-border merger filings between 1991 and 2012

1.  Mergers between companies headquartered in the same EU member state.2. Mergers between companies headquartered in more than one EU member state. 3. Mergers involving at least one company based outside the EU, and with effects in the EU.

6

The geographical distribution of EC cartel cases since 1990

Among EU countries

EU country plus other continent

Among other continent countries

0%

10%

20%

30%

40%

50%

60%

70%

1990-20002001-2013

Source: OECD 7

Complexity of co-operation

• As the number of agencies involved grows and the number of cross border cases increases, the current system may prove insufficient or inefficient.

– Cases may involve agencies which do not have a co-operation agreement

– Also, these co-operation agreements may be different in scope and provide for different co-operation tools

# of authorities

Interfaces of co-

operation

1 0

2 1

5 10

10 45

20 190

30 435

40 780

50 1,225

100 4,9508

A

B

CD

E

Complexity of co-operation

• As the number of agencies involved grows and the number of cross border cases increases, the current system may prove insufficient or inefficient.

– Cases may involve agencies which do not have a co-operation agreement

– Also, these co-operation agreements may be different in scope and provide for different co-operation tools

# of authorities

Interfaces of co-

operation

1 0

2 1

5 10

10 45

20 190

30 435

40 780

50 1,225

100 4,9509

A

B

CD

E

Complexity of co-operation

• As the number of agencies involved grows and the number of cross border cases increases, the current system may prove insufficient or inefficient.

– Cases may involve agencies which do not have a co-operation agreement

– Also, these co-operation agreements may be different in scope and provide for different co-operation tools

# of authorities

Interfaces of co-

operation

1 0

2 1

5 10

10 45

20 190

30 435

40 780

50 1,225

100 4,95010

A

B

CD

E

Examples of cross-border investigations

Air Cargo• Investigations by USDOJ, EC, Australia, Canada, and Korea

following co-ordinated dawn raids • Resulted in over $1.7 billion fines in US, over €799 million

fines in EU etc.

Marine Hose• Investigations by USDOJ, EC, UK, Australia, Japan, Korea • Unprecedented level of co-operation: involved exchange of

confidential information, co-ordination of remedies, extradition

Automobile parts• Investigation by more than 10 authorities following co-

ordinated dawn raids • Resulted thus far in over $2.3 billion fines in US, over €1.1

billion fines in EU etc.

11

Complexity of co-operation

• As the number of agencies involved grows and the number of cross border cases increases, the current system may prove insufficient or inefficient.

– Cases may involve agencies which do not have a co-operation agreement

– Also, these co-operation agreements may be different in scope and provide for different co-operation tools

# of authorities

Interfaces of co-

operation

1 0

2 1

5 10

10 45

20 190

30 435

40 780

50 1,225

100 4,95012

?

A

B

CD

E

• Developed based on the result of the OECD/ICN joint survey. – The survey was addressed to 120 competition agencies around the

world and received 57 responses which were used in analysis.

• The report analyses, for example; – Legal basis for and experiences with formal co-operation

– Experiences in international co-operation

– Regional and multilateral co-operation

– Limitation and constraints

– Exchange of information and confidentialitywaivers

– Suggestions for future work

OECD/ICN Survey on International Enforcement Co-operation (2013)

Available at: http://www.oecd.org/daf/competition/oecd-icn-international-cooperation-survey.htm

13

Experience with international co-operation

# of cases reported by agencies

# of agencies with any

experience

2011 2010 2009 2008 2007

Cartel 19 55 51 49 47 48

Merger 21 116 101 106 96 86

Abuse of Dominance 13 29 26 22 22 22

Number of Cases in which Agencies had Co-operated, by Enforcement Area (2007-2011)

14

• The number of cases involving international co-operation has increased over time

• Respondents expect the frequency of international co-operation to continue to increase, due in part to growth in the number of multi-jurisdictional cases

Experience with International Co-operation

Increase in Cases Involving Co-operation (2007-2011)

Cartel 15%

Merger 35%

Abuse of Dominance 30%

15

Experience with international co-operation

No experience 1-5 cases 5+ cases0

5

10

15

20

25

30

All

OECD members

Non-OECD members

Number of Cases in Which Agencies had Co-operated (2007-2012)

16

17

76%

9%

15%

0

1-2

3+

Source: Michal S. Gal, "Antitrust in a Globalized Economy: The Unique Challenges of Small and of Developed Economies, 33 Fordham International Law Journal 1-56 (2009)

Number of international/global cartels cases brought by small agencies over a period of 5 years

Global cartels are investigated by a limited number of jurisdictions

18

• Adopted by OECD Council on 16 September 2014. It revises the 1995 Recommendation.

The revision process:

Recommendation on International Co-operation (2014)

WP3, October 2013

WP3, February 2014

CC+ WP3, June 2014

OECD Council, September 2014

• A drafting team worked on the draft Recommendation to be discussed at the WP3 in February 2014.

• BIAC (business voice to the OECD) was involved in the discussion on drafts.

• The drafting team continued to work on the draft and developed another revised draft for the approval at the June meeting.

• BIAC continued to be consulted during the process.

The new recommendation was approved.

• The new recommendation recognises the benefits of effective co-operation not only for competition authorities as well as for businesses. – Reducing regulatory costs and delays, limiting the risk of

inconsistent analysis and remedies

• Main points:– Members’ commitment to effective international co-operation – Consultation and Comity – Notification procedures – Coordination of parallel investigations– Exchange of information – Investigative assistance

Recommendation on International Co-operation (2014)

Available at: http://www.oecd.org/daf/competition/international-coop-competition-2014-recommendation.htm

19

• The new recommendation recognises the benefits of effective co-operation not only for competition authorities as well as for businesses. – Reducing regulatory costs and delays, limiting the risk of

inconsistent analysis and remedies

• Main points:– Members’ commitment to effective international co-operation – Consultation and Comity – Notification procedures – Coordination of parallel investigations– Exchange of information – Investigative assistance

Recommendation on International Co-operation (2014)

Available at: http://www.oecd.org/daf/competition/international-coop-competition-2014-recommendation.htm

20

Members’ commitment to effective international co-operation

OECD Recommendation on International Co-operation (2014): Adherents commit to effective international co-operation and take appropriate steps to minimise direct or indirect obstacles or restrictions to effective enforcement co-operation between competition authorities.

• Minimising the impact of legislation and regulations that might restrict co-operation or hinder an investigation or proceeding of other countries

• Transparency of respective substantive and procedural rules

• Reducing inconsistencies between their leniency or amnesty programmes

21

22

Exchange of confidential information

International agreements (second generation

agreement)

• Australia-US (1999) • EU-Swiss (2013)• NZCC-ACCC (2013)• Nordic countries (2001) • European Competition Network

(2004)

National provisions

• Australia (Section 155AAA) • Canada (Section 29)• Germany (§ 50) • UK (Section 243)

OECD Recommendation on International Co-operation (2014): Adherents should consider promoting the adoption of legal provisions allowing for the exchange of confidential information between competition authorities without the need to obtain prior consent from the source of the information (“information gateways”).

23

• Investigation assistance may include:– Providing public information– Assisting in obtaining confidential information – Employing its authority to compel the production of information

in the form of testimony or documents on behalf of the other authority

– Ensuring the service of official documents of the other authority– Executing searches on behalf of the other authority

Investigative assistance

OECD Recommendation on International Co-operation (2014):[…] competition authorities of the Adherents should support each other on a voluntary basis in their enforcement activity by providing each other with investigative assistance as appropriate and practicable, taking into account available resources and priorities.

24

• The OECD Recommendation is aspirational!

• It is about complying with the letter but also with the spirit of the Recommendation

• Agencies are called to think as policy makers not as current enforcers

• It is about building a co-operation platform for the future

• Is there room for new forms of co-operation?– One-stop-shop system for markers?

– Best/better placed agency(ies)?

– Recognition of foreign decisions?

• This is a complex area with important challenges, but it is an area where OECD and ICN can join forces

What next?

Antonio CAPOBIANCO, Senior Competition Expert : Antonio.CAPOBIANCO@oecd.org

Please visit:

http://www.oecd.org/daf/competition

http://www.oecd.org/daf/competition/internationalco-operationandcompetition.htm

Thank you very much for your attention!

The views expressed in this presentation are solely those of the author

and do not necessarily reflect the views of the OECD or its Members. 25

International co-operation in cartel enforcement

An OECD perspective

Antonio Capobianco

Senior Competition Expert,

OECD Competition Division

ICN Annual Conference, Sydney 2015