1 Sitesh Bhojani, Barrister & Consultant (former ACCC Commissioner) CUTS International & Vietnam...

1Sitesh Bhojani, Barrister & Consultant

Sitesh Bhojani, Barrister & Consultant Sitesh Bhojani, Barrister & Consultant

(former ACCC Commissioner)(former ACCC Commissioner)

CUTS International &Vietnam Competition Administration

Department (VCAD), Ministry of Trade, Vietnam Present: TRAINING WORKSHOP On

M&AS EVALUATION SKILLS FOR M&AS EVALUATION SKILLS FOR COMPETITION AUTHORITY COMPETITION AUTHORITY

OFFICIALSOFFICIALS

CatBa Island, Vietnam – 13 & 14 August 2005


Presentation SummaryPresentation Summary The context – elements of Australian merger contraventionThe context – elements of Australian merger contravention

what type of evidence will be needed in investigating a what type of evidence will be needed in investigating a merger case that is likely to cause competitive concerns;merger case that is likely to cause competitive concerns;

the sources/where to get the necessary evidence;the sources/where to get the necessary evidence;

the skills required/tips to acquire such evidence; the skills required/tips to acquire such evidence;

the tips to test the accuracy of the evidence; the tips to test the accuracy of the evidence;

how to organise the evidence in a suitable manner for use how to organise the evidence in a suitable manner for use in litigation if required, etc.in litigation if required, etc.


The Context – Elements of an The Context – Elements of an Australian Merger ContraventionAustralian Merger Contravention

A Corporation;A Corporation; shall not directly or indirectly shall not directly or indirectly

acquire shares;acquire shares; In the capital of a body In the capital of a body

corporate;corporate;If – If – the acquisition would have the the acquisition would have the

effect;effect; or be likely to have the effect; or be likely to have the effect; of substantially lessening of substantially lessening

competition in a marketcompetition in a market


Types of EvidenceTypes of Evidence


Types of Evidence continued…Types of Evidence continued…

MARKET PLACE EVIDENCEMARKET PLACE EVIDENCE1.1. Real EvidenceReal Evidence2.2. Documentary EvidenceDocumentary Evidence3.3. Witnesses – market participants Witnesses – market participants

as to actual behaviour or as to actual behaviour or perceptionperception

4.4. Survey EvidenceSurvey Evidence

EXPERT ECONOMIC EVIDENCEEXPERT ECONOMIC EVIDENCE


Case Examples…Case Examples… Trade Practices Commission v Arnotts Trade Practices Commission v Arnotts

Ltd & Others Ltd & Others (1989) ATPR 40-979 and (1990) (1989) ATPR 40-979 and (1990) ATPR 41-010; (1990) ATPR 41-161 – FATPR 41-010; (1990) ATPR 41-161 – For market or market definition purposes:definition purposes: Real evidence – Biscuits, Real evidence – Biscuits, snack foods. “Survey evidence” – to establish snack foods. “Survey evidence” – to establish consumer habits. “Perception Evidence”.consumer habits. “Perception Evidence”.

Australian Gas Light Co. v ACCC Australian Gas Light Co. v ACCC (2003) ATPR 41-956 and (2003) ATPR 41-966 – (2003) ATPR 41-956 and (2003) ATPR 41-966 – Documentary Evidence “strategic business Documentary Evidence “strategic business documents”. Reliance principally on Expert documents”. Reliance principally on Expert EvidenceEvidence


Case Examples continued…Case Examples continued…

Trade Practices Commission v Australia Trade Practices Commission v Australia Meat Holdings Pty Ltd & Others Meat Holdings Pty Ltd & Others (1988) ATPR 40-876 – (1988) ATPR 40-876 – Market Participants’ Evidence Market Participants’ Evidence and Expert Economic Evidence.and Expert Economic Evidence.

Trade Practices Commission v Rank Trade Practices Commission v Rank Commercial Ltd & Others Commercial Ltd & Others (1994) ATPR 41-324 (1994) ATPR 41-324 and (1994) ATPR 41-331 – and (1994) ATPR 41-331 – Market participants’ Market participants’ (independent grocery retailers’) evidence(independent grocery retailers’) evidence


Sources of EvidenceSources of Evidence


Potential Sources of Evidence…Potential Sources of Evidence… Target of takeover – “feasibility studies” or Target of takeover – “feasibility studies” or

“Board Papers” or other documents;“Board Papers” or other documents; Industry Participants (especially those likely Industry Participants (especially those likely

to be adversely affected by merger) to be adversely affected by merger) including suppliers, customers, competitors, including suppliers, customers, competitors, industry associations; industry associations;

Government agency reports / industry Government agency reports / industry studiesstudies

Experts especially Economists local or Experts especially Economists local or international ;international ;

Overseas Competition Regulators or Overseas Competition Regulators or industry participants or local customs industry participants or local customs officials – evidence as to imports as a officials – evidence as to imports as a constraintconstraint


Skills to Acquire EvidenceSkills to Acquire Evidence


7 Key Evidence Gathering Skills…7 Key Evidence Gathering Skills… Analytical AbilityAnalytical Ability Penetrating Questioning AbilityPenetrating Questioning Ability High Level Communication skills – both oral High Level Communication skills – both oral

and writtenand written Organizational AbilityOrganizational Ability Ability to distill (extract) key issues from Ability to distill (extract) key issues from

large volume of complex materiallarge volume of complex material Solid understanding of Competition law Solid understanding of Competition law

and/or Economics.and/or Economics. People Skills – Building Rapport with People Skills – Building Rapport with

Witnesses Witnesses


Testing Accuracy of EvidenceTesting Accuracy of Evidence


Case Examples Testing Evidence…Case Examples Testing Evidence…

Evidence Provided Voluntarily by Companies Evidence Provided Voluntarily by Companies involved compared with evidence provided involved compared with evidence provided by them under compulsion of law.by them under compulsion of law.

Theoretical Economic Evidence compared to Theoretical Economic Evidence compared to market place investigation and evidence.market place investigation and evidence.

Important to remember markets are Important to remember markets are Dynamic not Static – so a “with or without Dynamic not Static – so a “with or without the merger test” analysis requires the merger test” analysis requires consideration of real or likely (not consideration of real or likely (not hypothetical /fanciful) developments eg hypothetical /fanciful) developments eg Import competition; merger between othersImport competition; merger between others


Organising Evidence for LitigationOrganising Evidence for Litigation


Evidence for Litigation…Evidence for Litigation…

In Australia, evidence for In Australia, evidence for litigation in the Courts is at litigation in the Courts is at the highest level of integrity – the highest level of integrity – because it must pass the laws because it must pass the laws of evidence applied by the of evidence applied by the courts and also withstand courts and also withstand vigorous cross-examination vigorous cross-examination and scrutiny by the defence and scrutiny by the defence lawyerslawyers!!


Evidence in Litigation…Evidence in Litigation…

Regardless of the use of the Regardless of the use of the evidence obtained in an evidence obtained in an investigation (eg To write a Report; investigation (eg To write a Report; To make public statements; To To make public statements; To settle a matter administratively; or settle a matter administratively; or to engage in litigation) – to engage in litigation) – the the evidence must be right evidence must be right (that is, (that is, accurate, complete and reliable)accurate, complete and reliable)


Evidence in Litigation…Evidence in Litigation…

So, the investigator who learns and So, the investigator who learns and applies the skills of an investigator applies the skills of an investigator who intends his/her evidence to be who intends his/her evidence to be used before an authority that will used before an authority that will rigorously test the evidence (for rigorously test the evidence (for example, a Court) – is unlikely to find example, a Court) – is unlikely to find himself/herself in the embarrassing himself/herself in the embarrassing position of getting it all wrong!position of getting it all wrong!


Evidence in Litigation…Evidence in Litigation…Organising evidence for use in litigation is a Organising evidence for use in litigation is a

combination of:combination of: Understanding the elements of the offence Understanding the elements of the offence

or contravention and organising the or contravention and organising the evidence accordingly (for example, evidence accordingly (for example, evidence on market definition; evidence evidence on market definition; evidence about the competition assessment / about the competition assessment / effect). effect).

ANDAND Managing the different types of evidence Managing the different types of evidence

to be introduced (Real evidence, to be introduced (Real evidence, Documentary evidence, Testimony from Documentary evidence, Testimony from people (non -experts and expert people (non -experts and expert Economists – who usually go at the end)Economists – who usually go at the end)


In Conclusion … Key “Do’s & In Conclusion … Key “Do’s & Don’ts”Don’ts”

X


Don’t…Don’t…

Rely just on voluntary co-operation from parties Rely just on voluntary co-operation from parties involved in the merger when seeking evidence;involved in the merger when seeking evidence;

Substitute assurances or theoretical logic (expert or Substitute assurances or theoretical logic (expert or otherwise) for market place inquires when conducting otherwise) for market place inquires when conducting investigations;investigations;

Allow merger parties to divide and conquer a Allow merger parties to divide and conquer a Competition authority (Divide a Competition Competition authority (Divide a Competition Authority’s – Commissioners / Executive decision Authority’s – Commissioners / Executive decision makers from [investigation] staff)!makers from [investigation] staff)!


Don’t…Don’t…

Delay in approaching market place witnesses – Delay in approaching market place witnesses – they can be frightened by big market players and they can be frightened by big market players and pressured into not giving evidence to competition pressured into not giving evidence to competition authorities;authorities;

Try to win cases just on theoretical expert Try to win cases just on theoretical expert (economic) evidence – it may sound good but is (economic) evidence – it may sound good but is unlikely to withstand rigorous practical scrutiny.unlikely to withstand rigorous practical scrutiny.


Do…Do…

Engage a team of lawyers and economists Engage a team of lawyers and economists to provide guidance and assistance;to provide guidance and assistance;

Conduct market place inquires;Conduct market place inquires;

Use Statutory powers to get evidence;Use Statutory powers to get evidence;

Remember markets are dynamic – so Remember markets are dynamic – so consider other likely developments consider other likely developments without the merger;…without the merger;…


Do…Do…

Have the infrastructure and staff with the Have the infrastructure and staff with the skills and confidence to move quickly;skills and confidence to move quickly;

Contact your international colleagues;Contact your international colleagues;

Prevent a merger of concern from Prevent a merger of concern from happening (eg get an injunction, or use happening (eg get an injunction, or use cease and desist powers) rather than cease and desist powers) rather than relying on divestiture after the event. It’s relying on divestiture after the event. It’s impossible to turn an omlette back into 2 impossible to turn an omlette back into 2 eggs again!!!eggs again!!!


Thank You for your Attention! The End.Thank You for your Attention! The End.

1 Sitesh Bhojani, Barrister & Consultant (former ACCC Commissioner) CUTS International & Vietnam...

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