Assessing the International Competition Network: Towards ...

Assessing the International Competition Network:

Towards Convergence in Global Competition Law?

Seminar Paper for the Seminar „International and Comparative Antitrust”

Professor David J. Gerber

Chicago-Kent College Of Law, Fall 2006

by Matthias U. Studer,

International LLM Program, Chicago-Kent, Fall 2006

November 27, 2006

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CONTENTS

I. INTRODUCTION .................................................................................................................. 1

II. THE ICN - HISTORY, MISSION AND STRUCTURE ............................................................. 3

A. HISTORICAL BACKGROUND ................................................................................................ 3 B. MISSION AND GOVERNANCE PRINCIPLES ............................................................................. 5 C. STRUCTURE ..................................................................................................................... 6

1. Steering Group ......................................................................................................... 7 2. Working Groups ....................................................................................................... 7 3. Annual Conferences ................................................................................................. 9

D. OTHER INTERNATIONAL ORGANIZATIONS ADDRESSING COMPETITION ISSUES ............................ 9

III. OVERVIEW OF ICN INITIATIVES....................................................................................... 12

A. MERGERS ...................................................................................................................... 13 1. Merger Notification and Procedures: The Best Practices for Merger Review ........... 13 2. Merger Analysis and Investigation .......................................................................... 17

B. CARTELS ....................................................................................................................... 18 1. General Framework ................................................................................................ 18 2. Enforcement Techniques ........................................................................................ 19

C. UNILATERAL CONDUCT .................................................................................................... 20 D. CAPACITY BUILDING AND COMPETITION ADVOCACY ............................................................ 22

1. Capacity Building .................................................................................................... 22 2. Competition Advocacy ............................................................................................ 24

E. ANTITRUST ENFORCEMENT IN REGULATED SECTORS .......................................................... 25 F. TELECOMMUNICATIONS ................................................................................................... 25

IV. ASSESSING THE ICN’S SUCCESS ....................... ............................................................ 26

A. DECISION-FINDING .......................................................................................................... 26 B. ENFORCEMENT ............................................................................................................... 27 C. STRUCTURE ................................................................................................................... 28 D. THE „BEST PRACTICES” APPROACH ................................................................................... 28

V. CONCLUSION .................................................................................................................... 29

I. Introduction

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I. Introduction

„It can be said that competition law is national, while markets are increasingly global. Yet there is no international antitrust code. The key question is how to deal with transnational competition issues in a global economy. How can competition authorities manage marketplace conduct that takes place in one nation, but has a harmful effect in another?”1

On July 3, 2001, the EU Commission prohibited the merger between

General Electric (GE), one of the world’s biggest conglomerates and

producer of aircraft engines, and Honeywell, a technology and

manufacturing company that produces, inter alia, avionic equipment.2 As a

result, the $ 24 bio deal, which had previously been approved by the US

authorities3, collapsed.4 In their respective decisions, the EU Commission

and the US authorities disagreed fundamentally on the question of pro-

1 Quote by Konrad von Finckenstein, Canadian Commissioner of Competition, in his presentation “International Antitrust Cooperation - Bilateralism or Multilateralism?”, given on May 31, 2001, in Vancouver, Canada, available at http://www.apeccp.org.tw/doc/Canada/Policy/1a.htm. All the URLs of this paper have been visited last on November 26, 2006. 2 Commission Decision of July 3, 2001, declaring a concentration to be incompatible with the common market and the EEA Agreement (Case No COMP/M.2220 - General Electric/Honeywell), available at http://ec.europa.eu/comm/competition/mergers/cases/decisions/m2220_en.pdf. GE and Honeywell brought the case before the Court of First Instance, where the decision of the Commission was upheld (Cases T-209/01 Honeywell v. Commission and T-210/01 General Electric v. Commission, both dated December 14, 2005). 3 See U.S. Department of Justice (DoJ) Press Release, Justice Department Requires Divestitures in Merger between General Electric and Honeywell (May 2, 2001), available at http://www.usdoj.gov/atr/public/press_releases/2001/8140.htm. The approval of the DOJ was subject to condition that the companies would divest Honeywell's helicopter engine business (id.). 4 For more details on the impact of the EU decision, see CNNMoney Online, EU kills GE-Honeywell, July 3, 2001, available at http://money.cnn.com/2001/07/03/europe/ge_eu/.

I. Introduction

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competitive and anticompetitive effects.5 The diverging outcomes in the US

and in the EU were also influenced by the competition authorities’

differences in procedure and practices.6

The GE / Honeywell case is illustrative in several respects. First, it is an

example of how mergers become increasingly global and affect different

antitrust/competition7 regimes. Second, it indicates that increased

cooperation and convergence between jurisdictions is crucial in reducing

risks and increasing legal predictability of transnational mergers.8 Finally,

the GE / Honeywell case coincided closely with the creation of the

International Competition Network (ICN). This network, created on October

25, 2001, by competition agencies from 14 countries, aims to improve

international cooperation, reduce jurisdictional conflicts and to support

developing nations in the creation and enforcement of their antitrust laws.

The GE / Honeywell merger became a prominent case-study for ICN

working groups on the issue of transnational mergers.

5 For a detailed analysis of the different approaches in the US and the EU, see Donna Patterson/Carl Shapiro, Trans-Atlantic Divergence in GE/Honeywell: Causes and Lessons, 16 Antitrust ABA 1 (2001), p. 4 et. seq., available at http://faculty.haas.berkeley.edu/shapiro/divergence.pdf. 6 id., p. 9 et. seq. 7 In some jurisdictions, the term “competition law” also refers to unfair trade practices as a form of tort (unfair competition or unlauterer Wettbewerb). For the purposes of this paper, however, “competition law” refers to antitrust legislation. The terms “antitrust” and “competition law” will be used interchangeably. 8 Another famous case in which the EU and the US’ market analysis differed was the Boeing/McDonnell Douglas case (see John Parisi, International Regulation of Mergers: More Convergence, Less Conflict, 61 N.Y.U. Ann. Surv. Am. L. 509 (2005), p. 519 with further references). It should nevertheless be noted that, in the majority of cases, the EU and the US competition authorities reach the same result in their merger analysis. Such cases include Bosch/Allied Signal, Federal-Mogul/T&N, BP/Amoco, Exxon/Mobil, Hewlett-Packard/Compaq, Lockheed/Loral, Boeing/Hughes, Siemens/Atecs Mannesmann, Sanofi/Aventis, etc. For an overview, see Parisi, id., p. 518 et. seq.

II. The ICN - History, Mission and Structure

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The aim of this paper is to analyze whether the ICN has managed to

achieve the goals articulated in 2001. It starts out with an overview of the

ICN’s history, mission and structure (Chapter II). Chapter III outlines some

of the most recent and most relevant initiatives brought forward by the ICN’s

working groups. Chapter IV evaluates the success of these initiatives and

discusses the decision-finding process as well as potential problems

associated with the ICN’s „governance without government” approach.

Chapter V draws some final conclusions.


A. Historical Background

After the Second World War, the political and economic world order was

fundamentally redrafted.9 However, the Havana Charter (1948), meant to

provide for global cooperation with respect to and create rules against anti-

competitive business practices, was eventually abandoned due to lack of

US support.10 More recently, an expert group of the European Commission

made another effort to harmonize international competition law. In this 1996

report, the expert group advocated a set of competition rules within the

9 See Eleanor Fox, Competition Law, in: Andreas Lowenfeld, International Economic Law (2003), p. 374 et. seq.; Andrew Guzman, Is International Antitrust Possible?, 73 N.Y.U.L. Rev. 1501 (1998), p. 1535 et. seq. For an overview of post-war developments in Europe, see David Gerber, Law and Competition in Twentieth Century Europe: Protecting Prometheus (1998, reprinted 2003), p. 165 et. seq. 10 Guzman, Fn. 9 supra, p. 1536.


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framework of the WTO.11 Even though, at the Ministerial conference in

Singapore in 1996, the WTO established a working group12 meant to

prepare negotiations on a competition law framework within the WTO13,

opposition from the US and some developing and transition countries

eventually brought the process to a halt.14 The US, on the other hand, in

order to promote an approach outside the WTO framework, created the

International Competition Policy Advisory Committee (ICPAC), a committee

comprising of various experts in the area of competition law.15 In 2000,

ICPAC proposed a global competition initiative based on dialogue and

cooperation instead of binding rules. Even though the EU still favored a

11 Communication to the Council submitted by Leon Brittan and Karel Van Miert, Towards an International Framework of Competition Rules (1996), available at http://ec.europa.eu/comm/competition/international/com284.html. See also Josef Drexl/Oliver Mackenrodt, Internationales und auslaendisches Kartellrecht, Taetigkeitsbericht 2004, p. 230, copy with the author of this paper. 12 Working Group on the Interaction between Trade and Competition Policy (WGTCP) 13 See also remarks on WTO, p.11 infra, with further references. 14 See International Competition Policy Advisory Committee, US Department of Justice, Final Report (2003), available at http://www.usdoj.gov/atr/icpac/finalreport.htm and http://www.usdoj.gov/atr/icpac/chapter5.pdf, p.264 and p. 267, explaining the reasons for the opposition of the US and developing/transition countries. The US and some developing/transition countries where opposed to having a set of binding rules. See also Oliver Budzinski, The International Competition Network: Prospects and Limits on the Road Towards International Competition Governance (2002), p. 5, available at http://www.wiwi.uni-marburg.de/Lehrstuehle/VWL/WIPOL/docs/BudzinskiICNWP.pdf; Nathalie Jalabert-Doury, The International Competition Network, Convergence dans le domaine des concentrations?, Revue de droit des affaires internationals (2003), p. 701. 15 Among the members of the ICPAC were, inter alia, experts with scientific background (4) such as Merit Janow, Eleanor M. Fox, John T. Dunlop, and David B. Yoffie, representatives from the judiciary (5), the industry (3) and foundations (1) (see Budzinski, supra Fn. 14, p. 7 at footnote 12). It appears that the US was interested in setting up the ICN primarily to prevent a WTO approach: “U.S. antitrust policy makers realized that (…) further international cooperation is „inevitable“. A strategy of resistance to these developments would only leave matters in the hands of others, particularly the EC. Thus, the choice was for „anything but“, and, particularly, „anything but“ the WTO, the institution preferred by the EC.” (see Harry First, as cited in Oliver Budzinski, Die Kompetenzverteilung in der Wettbewerbspolitik aus akteurszentrierter Perspektive, Diskussionspapier für das 20. Hohenheimer Oberseminar am 9./10.Mai 2003 in Berlin, p. 21, at footnote 38, available at https://www.wiwi.uni-marburg.de/Lehrstuehle/VWL/WIPOL/downloads/free/Kompetenzverteilung_EU_Wettbewerbspolitik.pdf).


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WTO solution, it eventually decided to support the US proposal and, on

October 25, 2001, antitrust officials from 14 jurisdictions created the ICN.16

B. Mission and Governance Principles

The ICN has several objectives: to facilitate international cooperation of

competition authorities and reduce jurisdictional conflicts, to support

developing nations in the creation and enforcement of their antitrust laws, to

develop and publish „best practices” and to promote convergence in

competition policies among its members.17

The ICN does not adopt binding rules, let alone have any enforcement

means. Compliance with the ICN’s proposals is completely voluntary.

Commentators have nonetheless identified several factors that purportedly

promote the ICN members’ willingness to adopt ICN proposals.18 For

instance, the permanent interaction of competition authorities in ICN

meetings arguably creates a feeling of a common competition culture and

common interest, sometimes referred to as „cognitive convergence”.19 The

fact that superior solutions are identified can create peer pressure among

ICN members to actually achieve these goals. Additionally, personal

credibility and reputation create an incentive for competition officials to push

for domestic legal amendments in line with the ICN proposals.20

16 For more details, see Jalabert-Doury, Fn. 14 supra, p. 701. 17 Budzinski, Fn. 15 supra, p. 17. 18 See Budzinski, id., with an overview; Ulf Böge/Alexander Schaub, Konvergenz kartellrechtlicher Normen und deren Anwendung auf globale Sachverhalte, Wirtschaft und Wettbewerb (2001), p. 928 et. seq. 19 Budzinski, supra Fn. 14, p. 5. 20 Budzinski, supra Fn. 14, p. 5


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C. Structure

The ICN calls itself a „virtual organization”.21 It does not have a formal

secretariat. Rather, its administrative tasks are carried out (and paid) by

member competition authorities in recurring two-year terms. Operative work

is done in working groups22, sometimes divided in several subgroups. The

ICN’s members are national or multinational competition agencies entrusted

with the enforcement of antitrust laws in their respective jurisdiction and

have signed the „Memorandum on the Establishment and Operation of the

International Competition Network”23. At the time of writing, over 80

jurisdictions were members of the ICN.24 The ICN is divided into a steering

group and various working groups. The working groups, however, comprise

not only of officials from the various competition agencies. Instead, legal

practitioners, business representatives and academic scholars are very

active in providing support, expertise and viewpoints within the ICN’s

21 William Kolasky, International Convergence Efforts, a U.S. Perspective, Address before the International Dimensions of Competition Law Conference, Toronto (March 22, 2002), available at http://www.internationalcompetitionnetwork.org/index.php/en/newsroom/2002/03/22/22. 22 For more details, see Chapter II.C.2 and Chapter III infra. 23 Operational Framework, as revised on December 1, 2004, p. 1, available at http://www.internationalcompetitionnetwork.org/index.php/en/about-icn/operational-framework. The “Memorandum on the Establishment and Operation of the International Competition Network” is available at http://www.internationalcompetitionnetwork.org/media/library/conference_1st_naples_2002/mou.pdf. 24 See website of the ICN under http://www.internationalcompetitionnetwork.org/index.php/en/members.


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working groups. In many cases, these private sector representatives

actually act as primary drafters of the working groups’ products.25

1. Steering Group

The ICN is guided by a 15-member steering group consisting of antitrust

agency representatives from developed and developing countries. Members

serve a 2-year term and can be reelected. The steering group identifies

projects, drafts agendas for conferences and proposes staffing for the

working groups. In annual rotation, one of the steering group’s members

acts as chair and, in this function, undertakes necessary secretarial duties,

chairs the steering group’s meetings and acts as focal point for

information.26

2. Working Groups

Working groups carry out the ICN’s work. The biggest working groups focus

on a specific antitrust topic and are currently structured as follows:

25 James Rill/Mark Schechter, International Antitrust and Intellectual Property: Harmonization of the Interface, 34 Law & Pol'y Int'l Bus. 783 (2003), p. 799 and Fn. 74 with further references. 26 Memorandum on the Establishment and Operation of the International Competition Network, Fn. 23 supra, p. 2 et. seq.


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Working Group 27

Goals Subgroups

Cartel s Address the challenges of anti-cartel enforcement, both domestically and internationally.

Subgroup 1: General Legal Framework. Subgroup 2: Enforcement Techniques.

Competition Policy Implementation (CPI)

Identify key elements that contribute to successful capacity building and competition policy implementation in developing and transition economies.

Subgroup 1: The Effectiveness of Technical Assistance. Subgroup 2: Lessons to be learned from Young Agencies. Subgroup 3: Competition and the Judiciary.

Mergers Promote the adoption of best practices in the design and operation of merger review regimes.

Subgroup 1: Notification and Procedures. Subgroup 2: Merger Investigation and Analysis.

Unilateral Conduct

Examine the challenges involved in addressing anti-competitive unilateral conduct of market dominant firms.

Subgroup 1: Objectives of Competition Laws Pertaining To Unilateral Conduct. Subgroup 2: Assessment of Dominance/Market Power.

Other working groups carry out ICN’s administrative functions, i.e.

fundraising28 or administering new memberships29.

Working groups hold regular telephone conferences, workshops and create

reports to be presented at the annual conferences.

27 See http://www.internationalcompetitionnetwork.org, with links to each workgroup and its respective subgroups. 28 Operational Framework Working Group. 29 Membership Working Group.


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3. Annual Conferences

Annual conferences are the ICN’s focal point. The first conference took

place in 2002 in Naples, Italy, followed by Mérida, Mexico (2003), Seoul,

South Korea (2004), Bonn, Germany (2005) and Cape Town, South Africa

(2006). The number of participants, starting at 220 in 2002, has gradually

increased. The next conference will be held in Moscow, Russia from May 30

to June 1, 2007, followed by Japan in 2008. Each conference is extensively

documented and provides information on the ICN’s achievements and

future work plans.30

D. Other international organizations addressing com petition issues

It should be emphasized that the ICN is not the only international network

addressing issues of international competition law and policy.31 Various

institutions have created their own competition model laws/ best

practices/work plans, and there is a fair amount of interchange between

them and the ICN. Therefore, a short outline of the most important

institutions is necessary:

• UNCTAD32: The United Nations Conference on Trade and Development

(UNCTAD) is the UN’s organ addressing trade, investment and

development issues. It has a very broad member base and provides an

important platform for the interests of developing countries. In the area of

30 See http://www.internationalcompetitionnetwork.org/index.php/en/library/conference. 31 For an overview of different institutions addressing international competition issues, see Jean Wenger, New Horizons: Resources for International Competition Law Research, March 27, 2005, available at http://www.llrx.com/features/newhorizons.htm. 32 http://www.unctad.org.


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competition law, UNCTAD adopted a Restrictive Business Practices

Code in 1980 (RPB Code)33 and has created model competition laws34.

The RPB Code called for the prohibition of anti-competitive practices

among rival enterprises (cartels) and invited states to adopt respective

legislation. However, due to its non-binding character, the RTP Code’s

impact on the development of international competition rule has

remained relatively modest. UNCTAD maintains close ties to the ICN

with respect to competition law issues.

• OECD35: The Organization for Economic Cooperation and Development

(OECD), whose members are almost exclusively developed countries,36

started to address issues of international competition law in 1967

through its Competition Law and Policy Committee. After rather

unsuccessful approaches to develop a common ground with respect to

substantive problems of international competition law policy, the OECD

has started to focus on the publication of detailed country studies, round

tables on current competition issues and the drafting of model

competition laws. The OECD organizes three meetings a year where

33 Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices, Resolution 35/63 of 5 December 1980, available at http://r0.unctad.org/en/subsites/cpolicy/docs/CPSet/rbpc10rev20en.pdf. 34 See UNCTAD, Model Law on Competition, available at http://www.unctad.org/en/docs/tdrbpconf5d7.en.pdf 35 http://www.oecd.org. 36 At the time of writing, 30 countries were members of the OECD. For an overview of membership, see http://www.oecd.org/document/58/0,2340,en_2649_201185_1889402_1_1_1_1,00.html


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competition agency representatives share experiences on competition

issues of mutual concern.37

• WTO38: By enacting the Agreement Establishing The World Trade

Organization (WTO) in 199439, the signatory countries created an

international organization administering various trade-related

agreements and offering a dispute settlement system previously

unseen.40 The WTO members are governments. Due to the close links

between competition and international trade, there have been - and still

are - suggestions to create a binding set of international competition

rules within the WTO framework. However, as described in further detail

below, the ICN’s creation has slowed down this process.41

• ICC42: The International Chamber of Commerce (ICC) was founded in

1919 to promote trade and investment. ICC Members are companies,

professional associations and other members of the business

community. Through its Commission on Competition, the ICC has issued

recommended practices and a considerable number of policy statements

37 Parisi, Fn. 8 supra, p. 525. 38 http://www.wto.int. 39 Marrakesh Agreement Establishing the World Trade Organization dated 15 April 1994. 40 For a general overview on the WTO, see Mitsuo Matsushita/Thomas Schoenbaum/Petros Mavroidis, The World Trade Organization: Law, Practice, and Policy (2nd ed., 2006). 41 See Chapter IV.A infra, p. 28. 42 http://www.iccwbo.org.

III. Overview of ICN Initiatives

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on developments in competition law,43 for instance on the ICN Merger

Remedies.44

• GCF45: The Global Competition Forum (GCF) was created in 1991. Its

members are competition law practitioners, national policy-makers and

scholars interested in global competition policy.46 The Forum is funded

by the International Bar Association (IBA) and closely cooperates with

the ICN. The GCF website contains information on competition laws,

procedures, forms, regulations and interpretative guidelines from virtually

all countries in the world.47


This Chapter briefly outlines some of the ICN’s initiatives. As the ICN has

produced a considerable output, the paper can only focus on the most

important areas of work.

43 For an overview, see http://www.iccwbo.org/home/menu_competition.asp. 44 See ICC Policy Statement on the ICN Merger Remedies Review Project, prepared by the Commission on Competition submitted to the ICN Analytical Framework Subgroup, Mergers Working Group, available at http://www.iccwbo.org/home/statements_rules/statements/2005/ICN_comments.asp. For more details on the Merger Remedies Review Project, see infra, p. 16. 45 http://www.globalcompetitionforum.org. 46 For an overview, see, Gavin Murphy, Two Powerful Resources for Competition Law Compliance Now in Place (2002), E.C.L.R., p. 479, available at http://www.globalcompetitionforum.org/regions/ECLR%20edit%201.0%20(changes%20incorporated).pdf. 47 http://www.globalcompetitionforum.org.


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A. Mergers

As described above48, some of the drivers for the ICN’s creation were

inconsistencies among different national merger review regimes. It is

therefore hardly surprising that a vast majority of ICN work products

address merger review issues.

1. Merger Notification and Procedures: The Best Pra ctices for

Merger Review

When the ICN Notification and Procedures Subgroup of the Mergers

Working Group („Notification Subgroup”) analyzed the different merger

review systems around the world in 2002, it identified a veritable „multi-

jurisdictional thicket”49. Different substantive standards, notification

thresholds and delays in merger review imposed unnecessary business

costs on companies involved in cross-country mergers. The Notification

Subgroup started out by developing eight Guiding Principles50 on which, in

the subgroup’s view, merger regimes should be based. These Guidelines

were adopted at the ICN conference in 2002 and found their way into a

more detailed recommendation, the „Recommended Practices for Merger

48 See Chapter I supra, p. 1. 49 Charles James, Remarks Before the ICN, Naples, September 29, 2002, p. 3, available at http://www.internationalcompetitionnetwork.org/media/library/conference_1st_naples_2002/james.pdf. 50 See Guiding Principles For Merger Notification and Review, available at http://www.internationalcompetitionnetwork.org/media/library/conference_1st_naples_2002/icnnpworkinggroupguiding.pdf. These principles are: 1. Sovereignty, 2. Transparency, 3. Non-discrimination on the basis of nationality, 4. Procedural Fairness, 5. Efficient, timely, and effective review, 6. Coordination, 7. Convergence and 8. Protection of confidential information.


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Notification and Review Procedures” (Best Practices for Merger Review)

with the following key features51:

• Nexus to reviewing jurisdiction (Practice I): Competition authorities

should exercise jurisdiction only with respect to transactions that have

„an appropriate nexus with that reviewing jurisdiction”. Such nexus

should be material and be based on activity within that jurisdiction of at

least two parties to the transaction.52

• Notification thresholds (Practice II): Notification thresholds should be

clear and understandable, be based on objectively quantifiable criteria

and on information that is readily accessible to the merging parties.53

• Timing of notification (Practice III): The point in time when a notification

must be filed differs considerably among jurisdictions. Since notification

requires time, money and effort, parties usually have an incentive to file

promptly and will not file merely speculative notifications. Accordingly,

Practice III suggests that competition authorities should not require more

than a certification of a „good-faith intent of the merging parties to

consummate the proposed transaction” and should not impose

unreasonable deadlines during which parties can file after reaching an

agreement.54

51 See ICN Merger Notification and Procedures Subgroup, Recommended Practices for Merger Notification Procedures, available at http://www.internationalcompetitionnetwork.org/media/library/conference_1st_naples_2002/icn_npnew.pdf. 52 id., Practice I.B and I.C, p. 1 et. seq. 53 id., Practice II.A, II.B and II.C, p. 3 et. seq. 54 id., Practice III.A, III.B and III.C, p. 5 et. seq. Principle III distinguishes between jurisdictions that prohibit closing while the competition agency reviews the transaction


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• Review periods (Practice IV): Very broadly speaking, Practice IV

suggests that reviews should be completed or capable of completion

within six months or less following the initial notification’s submission.55

Additionally, merger review systems should provide expedited review

and clearance of transactions not raising material competitive concerns

and provide special procedures for transactions in bankruptcy cases.56

• Requirements for initial notification (Practice V): As many transactions

do not raise material concerns, jurisdictions should adopt mechanisms

that allow for flexibility in the content of the initial notification, i.e. impose

filing burdens that are proportionate to actual concerns raised by the

merger.57

• Conduct of Merger Investigations and coordination (Practices VI – X):

These Practices suggest that merger reviews should be carried out as

effective, expeditious, fair, transparent and confidential as possible.

Additionally, the competition agencies should coordinate their reviews of

a specific transnational merger in order to achieve consistent or at least

non-conflicting outcomes.58

(suspensive jurisdictions) and jurisdictions that allow parties to close their deal and then notify the authorities (non-suspensive jurisdictions). Whereas the suspensive jurisdictions should, according to Practice III, not impose any deadline on the parties to file their notification, non-suspensive jurisdictions should not accord a reasonable period of time to the parties to prepare their filings. 55 id., p. 8 (for suspensive jurisdictions) and IV.D, p. 9 et. seq. (for non-suspensive jurisdictions). 56 id., Practice IV.B and IV.E, p. 8 et. seq. 57 id., Practice V, p. 11 et. seq. 58 id., Practices VI (Conduct of Merger Investigation), VII (Procedural Fairness), VIII (Transparency), IX (Confidentiality) and X (Interagency Coordination).


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• Remedies (Practice XI): Remedies should adequately address the

identified competitive harm arising from the proposed transaction, and

the merger review system should provide a transparent framework for

the adoption of such remedies.59

• Competition agency powers and review of merger control provisions

(Practices XII and XIII): Finally, practices XII and XIII state that

competition authorities should have the authority and tools necessary to

carry out merger reviews and that jurisdictions should periodically review

their merger control provisions in order to improve their regimes.60

Following the adoption Best Practices for Merger Review, the Notification

Subgroup’s main focus shifted to their implementation around the world.

According to the Subgroup’s report on the implementation, the Best

Practices for Merger Review had an impact on merger reforms in two third

of the ICN’s member jurisdictions61. A handbook with excerpts of legislative

texts from various jurisdictions is meant to give guidance to competition

authorities seeking to implement the Best Practices for Merger Review.62

59 id., Practice XI, p. 32 et. seq. In 2005, the ICN launched a Merger Remedies Review Project (see ICN Merger Working Group: Analytical Framework Subgroup, Merger Remedies Review Project Report for the fourth ICN annual conference (2005), available at http://www.internationalcompetitionnetwork.org/media/library/conference_4th_bonn_2005/Remedies_Study.pdf). 60 id., Practices XII and XIII, p. 35 et. seq. 61 Implementation of the ICN Recommended Practices For Merger Notification And Review Procedures, April 2005, p. 4, available at http://www.internationalcompetitionnetwork.org/media/library/conference_4th_bonn_2005/Implementation.pdf. 62 Implementation Handbook – Examples of legislative text, rules and practices that conform to selected ICN guiding principles and recommended practices for merger notification and review procedures, April 2006, available at


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2. Merger Analysis and Investigation

The two basic questions in merger review are: 1) which transactions are

subject to review under merger control laws and 2) what substantive legal

test should be applied. The Best Practices for Merger Review described

above63 address issue 1. The Merger Investigation & Analysis Subgroup

focuses on issue 2, i.e. the substantive standards to apply when analyzing

the market effects of mergers. The subgroup has created a merger

guidelines workbook64 that describes, in great detail, how to carry out a

merger analysis. The workbooks summarizes the economic principles

underlying the eight most common elements of merger analysis: market

definition, market structure and concentration, unilateral effects, coordinated

effects, market entry and expansion, efficiencies, the failing firm defense

and the special case of non-horizontal mergers.65

Additionally, the Merger Investigation & Analysis Subgroup addresses the

investigative techniques to be applied by competition authorities when

confronted with merger notifications. The most notable working product is

the Handbook on Investigative Techniques for Merger Review, an 81-pages

manual on how to plan a merger investigation, how to develop reliable

http://www.internationalcompetitionnetwork.org/media/library/conference_5th_capetown_2006/ImplementationHandbookApril2006.pdf. 63 See Chapter III.A.1 supra, p. 14. 64 ICN Merger Guidelines Workbook, April 2006, available at http://www.internationalcompetitionnetwork.org/media/library/conference_5th_capetown_2006/ICNMergerGuidelinesWorkbook.pdf. 65 id., in particular chapter 4 (p. 14-72) of the Workbook, where 8 worksheets address these core elements of merger analysis.


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evidence and how to use economists as experts.66 Workshops based on the

handbook had considerable success and, according to the ICN’s

achievement paper of 2006, competition authorities such as the EU or Israel

now use the workshop material for internal training purposes.67

B. Cartels

The ICN Cartel Working is divided into two subgroups, the General

Framework Subgroup and the Enforcement Techniques Subgroup.

1. General Framework

The General Framework Subgroup focuses on the analysis of the basic

elements for an effective anti-merger regime. Irrespective of the different

theories underlying antitrust laws, there is common basic understanding

among virtually all competition agencies worldwide that the battle against

hard-core cartels is one of the key concerns.68 In order to help particularly

the younger agencies to set up their anti-cartel enforcement, the General

Framework Subgroup has created a number of „building blocks”69 on which,

in the Subgroup’s view, an effective anti-cartel regime should be based.70

66 ICN Investigative Techniques Handbook for Merger Review, June 2005, available at http://www.internationalcompetitionnetwork.org/media/library/conference_4th_bonn_2005/Investigative_Techniques_Handbook.pdf. 67 ICN, A Statement of Mission and Achievements up until May 2006, p. 8, available at http://www.internationalcompetitionnetwork.org/media/library/conference_5th_capetown_2006/ICNMission&AchievementsStatement.pdf. 68 id., p. 8. 69 ICN Working Group on Cartels, Defining Hard Core Cartel Conduct, Effective Institutions, Effective Penalties, Bonn (2005), p. 1 and p.5, available at http://www.internationalcompetitionnetwork.org/media/library/conference_4th_bonn_2005/Effective_Anti-Cartel_Regimes_Building_Blocks.pdf. 70 id., p. 6.


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The first building block refers to the definition of the term „Cartel”. According

to the subgroup’s overview, there is hardly any disagreement among

competition authorities on how to define a cartel and what categories should

be considered „hard core cartels”.71 The second building block describes

possible approaches to combat hard-core cartels. The overview points out

that the investigation of cartels can be very challenging and often requires

expertise and skills (e.g. raids, operation of leniency programs, IT forensics

and, if criminal chargers can be brought against cartel conspiracies, the

required level of due process).72 Finally, the third building block addresses

the issue of penalties for cartel conduct. It emphasizes the need to

introduce an effective penalty regime that, on the one hand, deters potential

wrongdoers but, on the other hand, does not have any undesired effect, e.g.

bankruptcy of the offender.73

2. Enforcement Techniques

The Enforcement Techniques Subgroup supports competition agencies in

their efforts to create or improve anti-cartel enforcement techniques. It

organizes workshops and currently works on a manual on anti-cartel

enforcement techniques.74 Additionally, the Enforcement Techniques

71 id., p. 14. According to the report, a “cartel” can be defined, in its simplest terms, as “an agreement between businesses not to compete with each other” (id.). The following conducts are typically considered to constitute Hard Core Cartels: 1. price fixing, 2. output restrictions, 3. market allocation; and 4. bid rigging. 72 id., in particular p. 41 et. seq. on specific organizational requirement. 73 id., p. 63. 74 See ICN, Statement of Mission and Achievements, Fn. 67 supra, p. 9. At the time of writing, the chapters on Searches, Raids, and Inspections, on Drafting and Implementing an Effective Leniency Program and on Digital Evidence Gathering had been completed.


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Subgroup has created a template on anti-cartel enforcement designed to

outline important features of different enforcement regimes.75 Once

completed by the ICN members, it will provide a basic overview of anti-

cartel enforcement in jurisdictions around the world.76

C. Unilateral conduct

There are a variety of views among antitrust-jurisdictions on how to address

the issue of unilateral conduct of firms that have a dominant market

position.77 Even the term used to describe such unilateral conduct differs. In

the US, the Sherman Act uses the terms „monopolization”, „attempts to

monopolize”, and „conspiracies to monopolize”.78 The EU, on the other

hand, applies the term „abuse of a dominant position”.79 More significantly,

there is disagreement with regard to the definitions of the threshold level of

See Introduction to Anti-Cartel Enforcement Manual (April 2006) for more details, available at http://www.internationalcompetitionnetwork.org/media/library/Cartels/ManualIntro-2006.pdf. 75 Subgroup Enforcement Techniques Anti-Cartel Enforcement Template, available at http://www.internationalcompetitionnetwork.org/media/library/conference_4th_bonn_2005/Anti-Cartel_Enforcement_Template.pdf. 76 See ICN, Statement of Mission and Achievements, Fn. 67 supra, p. 9. The overview of completed templates can be found under http://www.internationalcompetitionnetwork.org/cartels/templates.html. At the time of writing, 28 of the 42 ICN members that received a template have filled in the blanks. 77 Gerber, Fn. 9 supra, p. 174, describing the European concept of “abuse of economic power”. 78 15 U.S.C. (Sherman Act), § 2: “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court”. 79 Article 82 (ex Article 86) of the Consolidated Version of the Treaty Establishing the European Community, Official Journal C 325, December 24, 2002: “Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market insofar as it may affect trade between Member States”. See also Diane Wood, Antitrust at the Global Level, Symposium on Antitrust, University of Chicago Law Review (2005), p. 320).


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power, the relevant market and the types of illegitimate conduct.80 Due to

these differences in theory and practice, the issue of unilateral conduct has

not been put on the ICN’s agenda until recently. In 2005, at the fifth annual

conference in Bonn, the ICN established the ICN Unilateral Conduct

Working Group. This working group is meant to „examine the challenges

involved in addressing anti-competitive unilateral conduct of market

dominant firms, both domestically and internationally”81. As it is further

described in the Unilateral Conduct Group’s work plan for 2006/2007, the

first subgroup (Objectives of Competition Laws Pertaining to Unilateral

Conduct) will collect background materials on laws and policies related to

dominance/market power and explore ways to reconcile different

approaches to this concept82. The second subgroup (Assessment of

Dominance/Market Power) will work on practical tools (e.g. recommended

practices) helping to assess dominance/market power.83 Both subgroups

will present their preliminary results at the 2007 ICN conference in Moscow.

80 Wood, Fn. 79 supra, p. 320. 81 Draft Mandate of the Working Group on Unilateral Conduct, Bonn 2005, p.1, available at http://www.internationalcompetitionnetwork.org/media/library/conference_5th_capetown_2006/UnilateralConductWorkingGroupDraftMandate.pdf. 82 Unilateral Conduct Working Group, 2006-2007 Work Plan, p. 1. 83 id., p. 2.


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D. Capacity Building and Competition Advocacy

Two of the ICN’s goals are to support capacity building in countries without

highly developed antitrust regimes (see infra, III.D.1) and to promote

competition advocacy (see infra, III.D.2).84

1. Capacity Building

Industrialized countries often encourage developing/transition countries to

draft and adopt competition laws.85 The crucial question, however, remains:

how to frame an effective competition law in such economies? In various

workshops, the ICN Working Group on Competition Policy Implementation

(CPI) has published reports on the question of capacity building, namely the

„Report on Capacity Building and Technical Assistance” published at the

2003 ICN conference in Mérida (2003 report).86 It describes how

competition law in developing or transition countries could be framed87,

what challenges competition authorities in such countries face88 and what

approach could be chosen under specific circumstances89. The 2003 report

concludes with a „checklist of issues” for the design and delivery of effective

84 It should be kept in mind that the ICN does neither act itself as a donor agency nor provide a budget for such technical assistance projects. 85 See Kenneth Davidson, Creating effective Competition Institutions: Ideas for Transitional Economies, 6 Asian-Pacific L. & Pol'y J. 71, p. 72 et. seq. 86 ICN, Capacity Building and Technical Assistance - Building Credible Competition Authorities in Developing and Transition Economies, Mérida (2003), available at http://www.internationalcompetitionnetwork.org/media/library/conference_2nd_merida_2003/FinalReport_16June2003.pdf. 87 id., p.13. 88 id., p. 24. 89 id., p. 67.


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technical assistance.90 For instance, the checklist reminds developed

country agencies that are willing to engage in technical assistance projects

to take into account the economic, legal, and political circumstances in the

recipient jurisdiction, to involve domestic enforcers, to ensure compatibility

with the recipient jurisdiction’s overall development strategy and allow the

recipient jurisdiction to give input at an early planning stage.91 The checklist

also identifies potentially useful components of technical assistance, namely

the training of officials and judiciary, study trips to established enforcement

agencies, instructions on how to create a budget for competition

enforcement and on how to create the intellectual and administrative

infrastructure required for a successful competition regime.

After issuance of its 2003 report, the ICN carried out surveys and in-depth

analysis on the effectiveness of technical assistance and presented the

results at the ICN conference in Cape Town (2006).92 It appears that, in

countries where competition law is still in its infancy or where the level of

socio-economic development is low, short term visits of experienced

advisors and consultants, external help with legislative drafting, and

procurement are the most effective ways of technical assistance. Long term

90 id., p. 68. 91 id. 92 See, inter alia, Simon Evenett, The Effectiveness of Technical Assistance, Socioeconomic Development, and the Absorptive Capacity of Competition Authorities, St. Gallen (2006), available at http://www.internationalcompetitionnetwork.org/media/library/conference_5th_capetown_2006/EvenettTAEffectivenessPaper041006.pdf; Michael Nicholson/Daniel Sokol/Kyle Stiegert, Assessing the Efficiency of Antitrust/Competition Policy Technical Assistance Programs, Cape Town (2006), available at http://www.internationalcompetitionnetwork.org/media/library/conference_5th_capetown_2006/Nicholson_Final_ICN_report.pdf.


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advisors, going-on-study missions and internships abroad, on the other

hand, are likely to reduce the performance of the respective recipient

agency.93

The 2003 report had also identified the judiciary as one of the key

stakeholders for implementing competition law in developing and

transitional countries.94 In light of these findings, the CPI working group

created the subgroup „Competition and the Judiciary”. This subgroup’s

survey, presented at the annual conference in Cape Town (2006), revealed

that, in many cases, the judges in developing countries are not familiar with

the concepts of competition law.95 As a result, judges and the competition

agency often disagree in their assessments and, thus, legal predictability for

the parties involved is reduced.96

2. Competition Advocacy 97

At the annual conference in 2002, the ICN summarized the ICN member’s

methods of competition advocacy in a detailed report98. The report points

93 Evenett, Fn. 92 supra, p. 10. 94 ICN, Building Credible Competition Authorities, Fn. 86 supra, p. 53 et. seq. 95 Competition and the Judiciary - A report on a survey on the relationship between Competition Authorities and the Judiciary, presented at the Capetown Conference April 2006, p. 16, available at http://www.internationalcompetitionnetwork.org/media/library/conference_5th_capetown_2006/CompetitionandtheJudiciary.pdf. 96 id. 97 The term Competition Advocacy refers “…to those activities conducted by the competition authority related to the promotion of a competitive environment for economic activities by means of non-enforcement mechanisms, mainly through its relationships with other governmental entities and by increasing public awareness of the benefits of competition” (see ICN – Advocacy and Competition Policy, Report prepared by the Advocacy Working Group for the ICN Conference in Naples, Italy (2002), p. 25, available at http://www.internationalcompetitionnetwork.org/media/library/conference_1st_naples_2002/advocacyfinal.pdf.


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out that transparency, credibility, the competition authorities’ autonomy and

their participation in legislative and regulatory processes are crucial in order

to bring the competition message to the business community and civil

society.99 The Advocacy Group is no longer active.

E. Antitrust Enforcement in Regulated Sectors

Antitrust enforcement in regulated sectors has been another of the ICN’s

concerns. The respective working group issued a report on this subject at

the annual conference in Seoul in 2004100 and, subsequently, issued best

practices for the banking sector101 as well as a report on the interrelations

between antitrust and regulatory authorities.102 The Regulated Sector

working group is no longer active.

F. Telecommunications

Technology evolves very rapidly in the telecommunications sector. Market

liberalization for areas such as mobile phones, broadband access services,

access to land-lines, etc., make this area of competition particularly

98 id. 99 id., p. 93 et. seq. 100 Antitrust Enforcement in Regulated Sectors Working Group, Report to the Third ICN Annual Conference (2004), available at http://www.internationalcompetitionnetwork.org/media/library/conference_3rd_seoul_2004/aers_intro_seoul.pdf. 101 ICN, An Increasing Role for Competition in the Regulation of Banks - Best practices by the International Competition Network (2005), available at http://www.internationalcompetitionnetwork.org/media/library/conference_4th_bonn_2005/BANKS_Bonn_best_practice_suggestions.pdf. 102 ICN, Report on the Interrelations between Antitrust and Regulatory Authorities (2004), available at http://www.internationalcompetitionnetwork.org/media/library/conference_4th_bonn_2005/Interrelations_Between_Antitrust_and_Regulation.pdf.

IV. Assessing the ICN’s success

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complex.103 The ICN Working Group on Telecommunication Services has

issued a report104 and a set of best practices where the competition

authorities’ role in promoting and enforcing competition in the

telecommunications sector is outlined.105


A. Decision-finding

Chapter III gave an overview of the ICN’s vast output during the first five

years of its existence. The ICN operates, predominantly, in work groups

composed of representatives of competition authorities, legal and business

practitioners and members from the academic community. The ongoing

social exchange among these peers supports the emergence of a „common

competition culture”106 and increases trust among network members. Even

though compliance is not mandatory, the ICN’s mechanisms have so far

proven to be a rather effective way to promote convergence of competition

103 ICN, Report of the ICN Working Group on Telecommunications Services Presented at the Fifth Annual Conference (2006), p. 5 et. seq., available at http://www.internationalcompetitionnetwork.org/media/library/conference_5th_capetown_2006/Reportofthe_Telecoms_WorkingGroup.pdf. 104 id. 105 The Role For Competition In The Telecommunications Services Sector, Suggested Best Practices (available at http://www.internationalcompetitionnetwork.org/media/library/conference_5th_capetown_2006/SuggestedBestPractices.pdf . 106 Budzinski, Fn. 15 supra, p. 17.


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policy. Over half of the ICN members claim to have implemented changes in

their laws in order to comply with ICN standards.107

However, in many cases the ICN’s work products either address issues

where consensus among competition authorities is most likely („low hanging

fruits”) or work products that are worded so broadly that each competition

agency can implement them as it sees fit. It remains to be seen whether the

ICN can address issues that require fundamental changes in domestic

competition policy or that could cause domestic lobbies, politicians or public

opinion leaders to exert pressure on their competition agencies.108 In order

words: the ICN’s „horizontal”109 decision-finding approach might not work if

significant national interests are at stake.110

B. Enforcement

The ICN has no powerful means to support the adoption, implementation

and enforcement of its work products. If conflicts arise between jurisdictions,

e.g. in the context of merger review or unilateral conduct, the ICN can

merely refer to its – often very broadly framed – best practices and to other

working group products. In view of these potential deficiencies relating to

107 ICN, Statement of Mission and Achievements, Fn. 67 supra, p. 5. See also Randolph Tritell, International Antitrust Convergence: A Positive View, 19 Antitrust ABA 25 (2005), p. 27. 108 See Paul Stephan, Global Governance, Antitrust, and the Limits of International Cooperation, 38 Cornell Int'l L.J. 173 (2005), p. 177 et. seq., analyzing the relation between competition policy and local interests. 109 See Eleanor Fox, International Antitrust and the Doha Dome, 43 Va. J. Int'l L. 911 (2003), p. 915, using the term “horizontalists” for supporters of the ICN approach. 110 See, Fox, Fn. 109 supra, p. 915 et. seq., with some illustrative examples referring to national competition regime’s deficiencies when dealing with export cartels and other offshore anticompetitive restraints.


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adoption, implementation and enforcement, some commentators have

continued call for a global antitrust regime within the framework of the

WTO.111 Even though it appears doubtful that political consensus on a

global set of antitrust rules and enforcement can be reached in the next few

years, the discussion should continue. It is likely that such proposals will

again gain momentum if the ICN runs into difficulties with its decision-finding

and voluntary implementation approach.

C. Structure

It appears that, due to its decentralized structure, the ICN avoids the

efficiency disadvantages and high administrative costs usually associated

with supranational authorities. The ICN has managed to achieve high

acceptance in the field of antitrust enforcement. It provides a dynamic and

attractive forum for competition officials to meet, exchange views and create

a wide network of contacts that, in day-to-day life, might prove very useful.

Overall, the structure of the ICN can be considered a success.

D. The „best practices” approach

Even though best practices can be a useful tool when trying to promote

convergence in international competition law, the approach has its limits.

111 See, inter alia, Fox, Fn. 109 supra, p. 925 et. seq. with further references; Andrew Guzman, International Antitrust and the WTO - the Lesson from Intellectual Property, 43 Va. J. Int;l 911 (2003); Andrew Guzman, Antitrust and International Regulatory Federalism, 76 N.Y.U. L. Rev. 1142 (2001); Robert Anderson/Peter Holmes, Competition Policy and the Future of the Multilateral Trading System, 5 J. Int'l Econ. L. 531 (2002). There have also been suggestions to create an international antitrust code to be administered by national authorities and courts of each signatory country, without supervisory control by an international body (Wood, Fn. 79 supra, p. 324).

V. Conclusion

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First of all, the term „best practice” is misleading to some extent. Usually,

best practices do not represent the „best” approach, but rather a

compromise between diverging views. Second, it is important to keep in

mind that there are no „one size fits all” solutions. The success of

competition policies depends on whether they accurately take into account

the economic, legal, and political circumstances in a particular jurisdiction.

The purpose of enhancing competition is hardly served by introducing an

identical set of competition rules for developing countries and developed

countries. Third, new market realities, technologies and, last but not least,

new antitrust- and economic theories will make it necessary to amend,

rewrite or abandon certain best practices. Competition law has to evolve

along with the markets in which it is applied. It could be that the extensive

culture of consensus within the ICN and the focus on a „best practice/best

possible consensus” approach actually create an obstacle for new and

dynamic competition law approaches.

V. Conclusion

The ICN has been able to evolve competition law on the international level.

Work products such as recommended practices (e.g. on merger notification

and review), workbooks (e.g. on mergers, investigative techniques for

merger review, „building blocks” for anti-cartel regimes), manuals (e.g. on

anti-cartel enforcement techniques) or the new Working Group on Unilateral

Conduct are important achievement. Not only does the ICN help to reduce

jurisdictional conflicts and enhance efficiency, but it also provides a forum

V. Conclusion

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for competition authorities to exchange views and find common ground for a

more consistent approach in competition law. However, whereas the ICN’s

ambitious governance-without-government approach can be very efficient in

some cases, it might also produce „paper tiger” solutions if controversial

issues are at stake. In the long run, the ICN might not be able to replace a

multinational competition approach with binding rules (e.g. within the WTO

framework), but the ICN is clearly a step towards more convergence in

international competition law.

V. Conclusion

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Abbreviations:

Ann. Surv. Am. L. ..................... New York Universiy Annual Survey of American Law - Antitrust ABA ........................... Antitrust Magazine of the American Bar Association Asian-Pacific L. & Pol'y J. ......... Asian-Pacific Law & Policy Journal Cornell Int'l L.J. ........................ Cornell International Law Journal E.C.L.R. ................................... European Competition Law Review ECJ .......................................... European Court of Justice EU ........................................... European Union Fn ............................................ Footnote FTC.......................................... Federal Trade Commission J. Int'l Econ. L. .......................... Journal of International Economic Law Law & Pol'y Int'l Bus. ................ Law and Policy in International Business N.Y.U. L. Rev ........................... New York University Law Review OJ ............................................ Official Journal of the European Communities US ........................................... United States USC ......................................... United States Code Va. J. Int’l L. ............................. Virginia Journal of International Law WTO ........................................ World Trade Organization OECD ...................................... Organization for Economic Cooperation and Development ICC .......................................... International Chamber of Commerce UNCTAD .................................. United Nations Conference on Trade and Development

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