International Competition Policy and the World Trade Organization

Paper for the LSE Global Dimensions/Federal Trust Forum on the ‘Singapore Issues’ in the WTO. March 25-27th London School of Economics

Stephen Woolcock

1 The issues

At the Cancun Ministerial Meeting of the WTO in September 2003, WTO Members will be asked to decide on the ‘modalities’ of negotiations on the so-called ‘Singapore Issues’ (investment, competition, transparency in public procurement and trade facilitation). These issues, including international competition policy, concern questions of regulation as well as market access. Regulatory policies have of course, been covered by previous GATT/WTO agreements, such as the Agreement on Technical Barriers to Trade, the Agreement on Sanitary and Phytosanitary Measures and the GATS framework and sector agreements covering services¹. Agreement on modalities for the ‘Singapore issues’, which means their effective inclusion on the agenda of the current DDA negotiations within the WTO, is seen, however, as a further extension of WTO’s reach into what have hitherto been generally seen as national regulatory competences. This paper seeks to clarify the issues involved in the decision on the ‘modalities of negotiation’ for international competition policy.

In other words should generally applicable provisions on competition policy be included in WTO and if so what should these cover?

The paper first discusses the evolution of the debate on trade and competition policy. The paper points out that there is already a good deal of international co-operation in the field of competition policy. This co-operation occurs in a range of agreements at the multilateral level, in the shape of a number of elements of existing WTO agreements; in the UNCTAD; at a plurilateral level and in particular in the shape of the OECD; in a growing number of regional trade/integration agreements (28 at one recent count²) including agreements signed by developing countries; and in bilateral agreements on cooperation in competition of which there are between 20 and 30, mainly between countries with well established domestic competition policies. So the issue is not whether there should be international cooperation in this field but what role the WTO should play. Furthermore developing countries are progressively becoming more engaged in international co-operation agreements.

Is there a need for a WTO agreement? The paper summarizes the general arguments for and against including competition within the WTO. But in order to come to a balanced judgement on the question it is necessary to go beyond the level of generalised arguments (given in table 5.1 below) and take account of developments in markets and policy.

When, in 1947, the draft provisions of the International Trade Organization included measures on restrictive business practices (RBPs), it did so against the background of the experience of the 1930s, when internal cartels had been widespread and damaging to the world economy. Discussions within the GATT in the 1960s on whether there was a need to include provisions on RBPs, made little headway because perceptions had changed by that time. Cartels were not seen to be a major problem.³ The progressive trend towards the globalisation of markets in the 1980s and 1990s, and in particular the growth of cross border merger and acquisition activity, which now accounts for a considerable share of all FDI flows, must now be factored into the debate. In response to ‘globalisation’ a growing number of national competition authorities are seeking to co-operate internationally. This raises the risk that the various agreements will be incompatible, which in turn raises the danger for business of double or multiple jeopardy and growing costs of complying with potentially divergent or conflicting competition regimes?

If there are to be WTO provisions on competition what might they look like? Should the WTO limit itself to establishing some broad principles concerning competition policy or should it also include substantive provisions (i.e. common policies) in some specific areas? What contribution can the WTO make to promoting co-operation between existing national competition authorities and should such co-operation be voluntary (. i.e best endeavours based) or should there be some degree of obligation? The paper outlines the range of potential measures that could be included in any agreement on competition. Experience with these measures has been gained with the various multilateral, plurilateral, regional and bilateral agreements on competition, and the paper seeks to draw on this experience. But the work the Working Group on Trade and Competition Policy of the WTO, which was set up after the Singapore WTO Ministerial, and in particular the work since the Doha Ministerial has focused on a number of measures. These include core principles on competition policy, non-discrimination, hard-core cartels, ‘modalities’ for international co-operation in enforcement of competition laws, and the progressive strengthening of competition policies in smaller WTO Members. This list may not be exhaustive, and ideas of proposals for what measures should be included in the WTO may still emerge in negotiations. But any agreement on the modalities for negotiation on competition in Cancun are likely to centre on these possible measures.

Finally, the paper suggests some broad conclusions. It argues that the issue at hand is not one of far-reaching harmonisation of existing national competition policies or indeed, imposing standardised competition regimes on WTO members (at present about 70 of the total WTO Members) that do not yet have national competition provisions. The issue is what role the WTO can play in helping to promote good/best practice in national competition policies by co-operative procedures on policy formulation, promoting national institutional structures, establishing some basic principles to ensure compatibility of the different international competition regimes that are emerging, promoting effective international co-operation in enforcement of national competition policies and some specific obligations to tackle a few specific RBPs, such as hard-core cartels. As with all the Singapore issues, it is not a question of the WTO or nothing, agreements on co-operation along these lines already exist. On the one hand these alternatives may make a WTO agreement less essential, but is an agreement in the WTO needed in order to ensure that the interests of those not involved in regional or bilateral agreements are safeguarded?

2 What might WTO provisions on competition include?

The possible elements of any international agreement on competition can be deduced by looking at what has already been included in the various existing international agreements. These take the form of basic principles, substantive provisions, procedural measures and means of accommodating countries at different levels of development (and more or less developed competition policies and ‘cultures’). The following summarizes the elements of any possible future agreement.

Basic principles
In terms of the basic principles, something that is general the first step in any international agreement is transparency. In other words the provision of information on national competition laws and their implementation and enforcement. Providing information on the de jure structure of competition law should not be controversial. Inevitably there are costs entailed in producing and collating such information, but much of this basic information already exists in a series of inventories.⁴ Transparency concerning the procedures for implementing national laws are equally important, as are the decisions and guidelines handed down by courts or competition authorities on the interpretation of competition provisions. Given the nature of competition policy, in which each case is different, such ‘case law’ is a vital element in transparency, but providing all relevant decisions to other WTO members would be a complex and probably costly process. There is also the issue of who decides which decisions set precedents.

A second basic principle that is included in all WTO agreements is that of non-discrimination. This figures as a basic element in all WTO agreements. In the case of competition policy it involves treating foreign companies the same as national companies. Most favoured national status is not difficult to extend in the sense that, for example, restrictive business practices by any group of foreign suppliers are likely to be treated the same by national competition policies. The extension of national treatment is rather more controversial. First of all national competition policies whether in developed or developing countries have been used with discretion in order to allow concentration/rationalisation of the domestic industry in the hope that this will contribute to the international competitiveness of the sector. Extending national treatment to non-national investors in the application of competition policy can also have implications for market access, especially in some service sectors.

In terms of the possible substantive provisions there is a fairly long list. A key element is the requirement to have an (effective) national competition or anti-trust policy. This is for example, provided for in the North American Free Trade Agreement (NAFTA). Simply having competition laws may mean little since there have been a number of cases of countries having sophisticated anti-trust legislation, which was never effectively applied. So a possible central purpose of an agreement on competition, whether in the WTO or anywhere else would be to ensure effective compliance.

Substantive provisions
Substantive elements of an agreement might require national competition policies to have laws and procedures on export cartels. At present many countries formally exclude export cartels from competition law, despite the fact that they clearly have a direct impact on trade. Whilst trade economists are agreed in their opposition to export cartels, it may be argued that smaller producers in developing countries (or elsewhere) need to co-operate in order to be able to export at all. When smaller national producers are trying to compete with dominant multinational companies, it could be said that export cartels for the former might help enhance competition.

A counterpart to a ban on export cartels might be provisions, that replace other trade instruments with competition law, for example replacing anti-dumping provisions by the adoption of competition laws and provisions on co-operation in enforcement. There is no consensus on this issue. A number of developing countries and export dependent WTO members have argued for it, but the major WTO members are opposed to the issue of abolition of anti-dumping getting onto the agenda through such a linkage with competition policy.

Another substantive element on which there is a broad measure of agreement is the need to tackle ‘hard core’ cartels (or cartels which significantly influence prices or output and thus trade, without having any beneficial effects in terms of improved productivity). There might also be agreement to control other forms of horizontal agreements, in other words other agreements between producers on pricing or output. The difficulty here is in deciding when agreements are damaging. National competition regimes have developed rather different rules on horizontal agreements.

If there is a reasonable measure of agreement on the need to deal with cartels, national approaches to vertical agreements, in other words agreements between suppliers at different levels of the production or distribution process, vary quite significantly. Some national policies favour such vertical integration as a means of promoting productivity improvements, other see them as equally damaging to horizontal agreements. Furthermore national policies have changed over time.

Another possible element in an international agreement would be provisions on mergers and acquisitions (possibly including strategic alliances). With the growth in cross border mergers and acquisitions mergers could be seen as a threat to international competition. But national policies on mergers have varied even more than those on vertical agreements. So agreement would not be easy to achieve. Indeed, the only agreement that has introduced common provisions on mergers is the EU and even this came only thirty years after the original Treaty of Rome was signed.

Many national competition policies exclude specific sectors or specific types of agreements. For example, certain forms of transport such as air passenger transport or sea transport are excluded from competition provisions, so that cartels can continue to exist in these sectors. Other types of activity are also excluded, such as for example, certain types of co-operation between companies in research and development, franchising agreements or even some forms of restrictive distribution agreements.

International competition rules could also cover intrusions by the public sector into competitive markets. This can take various forms some reasonably obvious, such as the provision of subsidies, others, such as the cross subsidisation of competitive market activities through rents from public monopolies or private companies that are granted special or exclusive rights are less clear cut. Provisions aimed at controlling such public or private monopolies are included in most developed country agreements, but there may be resistance to the loss of such policy instruments on the part of developing country WTO members.

Procedural provisions
Procedural provisions can take a number of forms. First of all most agreements covering competition include some form of policy co-operation. This generally takes the form of the establishment of a committee to discuss developments in competition policy, provide peer review or technical assistance. The latter is, of course, important with regard to agreements including developing countries or WTO members that have no established national competition policy. Such committees are generally also given the remit to promote co-operation in policy formulation and may thus contribute to policy approximation.

As much of competition policy takes the form of dealing with specific cases, agreements may provide for co-operation on cases, either by providing information to competition authorities in other jurisdictions or by agreement to co-operate in enforcement. Commercial confidentiality is a major impediment to exchange of information and nearly all international agreements exclude its exchange unless the companies involved in any investigation are willing waive their right to secrecy. Agreements may include negative or positive comity provisions. Negative (or traditional) comity means that a national competition authority takes account of the interests of third parties in any investigation. Positive comity means that the relevant authority in a country ‘A’ can request the competition authority in another country ‘B’ to investigate anti-competitive practices within its jurisdiction that affect the market conditions in ‘A’. Co-operation on cases may also include provisions concerning notification of any investigation and its outcome, and/or provisions on resolutions of disputes.

There may also be procedural measures in an agreement that are intended to ensure that the process of investigating and enforcing national competition rules is fair and transparent. Such due process provisions are very similar and may be interchangeable with transparency measures. Their aim is to ensure that all procedures are transparent so that third countries or companies involved in any investigation are aware of all stages of the process.

Special and differential treatment or technical assistance
Closely related to procedural provisions are those that provide for technical assistance for developing countries or countries that have not yet or are still developing national competences in competition policy. Technical assistance may take the form of exchanges of personnel, the provision of model competition rules/law, or assistance in dealing with specific cases.

Dispute settlement
Few international agreements in competition policy have dispute settlement provisions for cases in which the governments concerned fail to implement the agreement. Thus NAFTA, which otherwise has quite strong dispute settlement rules explicitly excludes the competition provisions from NAFTA dispute settlement. Again the question of de jure and de facto compliance is important here. Dispute settlement that covered de jure compliance, i.e. the introduction of competition law and procedures in the country concerned, is not especially difficult. Dispute settlement with regard to the de facto application of these national laws is a quite different kettle of fish however. Again the case specific nature of competition policy means that effective provisions to ensure de facto implementation are likely to be intrusive and expensive, although arguably necessary unless the parties can rely on good will when it comes to implementation.

3.0 The evolution of international competition policy

The ITO and the GATT
The experience with international cartels during the 1930s provided the incentive to include restrictive business practices in the draft ITO. Chapter V of the ITO devoted nine articles to the subject with the aim of;

‘prevent(ing), on the part of private or commercial public enterprises, business practices affecting international trade which constrain competition, limit access to markets, or foster monopolistic control, whenever such practices have harmful effects on the expansion of production or trade and interfere with the achievement of any of the other objectives set forth in Article 1 [of the charter]’ ⁵

The ITO provisions listed six practices that were considered harmful to trade.⁶ The ITO was to investigate any complaint brought by a member and if upheld the country concerned would have to do everything possible to remedy the situation. As the ITO was never ratified one can only speculate whether these comprehensive would have been implemented in practice. At the time, differences over the substance of policy were not a major problem, since only the US really had a competition policy, but even so the US Congress was concerned about loss of regulatory sovereignty over this important policy.

In 1954 and 1955 a number of Contracting Parties to the GATT pressed for the inclusion of RBPs in GATT rules. A Group of Experts on RBPs reported in 1961, after considering the subject for a number of years and although it found .. ‘that the [GATT] should now be regarded as the appropriate and competent body to initiate action in this field ‘ there was no consensus on the substance of GATT rules.⁷ This lack of consensus was due to the perception that cartels were not a major problem at the time and opposition to loss of national policy autonomy in such as sensitive policy area. There was agreement on notification procedures on RBPs,⁸ but these provisions were never used.⁹

Competition provisions in Existing WTO agreements
There are a number of provisions under GATT 1994 and other WTO agreements, such as TRIPs and GATS that have possible application in cases where anti-competitive practices restrict trade or market access. Article II of the GATT requires that if a monopoly is retained by a WTO member, such a monopoly shall not ‘operate so as to afford protection in excess of that provided for in schedules.’ Article III (national treatment) is fundamentally about the maintenance of competitive conditions for imported products compared to domestically produced goods. A number of cases in the GATT have sought to show that national competition laws and procedures are covered by Article III, but without much success.¹⁰ There is also a possible application of Articles XI (quantitative restrictions) and XVII (state trading enterprises) against anti-competitive practices, although here the focus is on government actions or the application of non-commercial criteria by state owned companies or companies that benefit from exclusive or special rights granted by government.

The use of so called non-violation cases under Article XXIII of the GATT provide a possible use of existing GATT rules to deal with the question of anti-competitive practices.¹¹ This provision can be used when a WTO Member believes that benefits accruing to it under the agreement are being nullified or impaired by measures which do not violate any part of the GATT.¹² Article XXIII might come into play in cases where for example, when the benefits of market access for a WTO Member(s) are nullified by the absence of competition in a target market. Although this Article is held up as a possible alternative to agreed WTO rules on competition there a number of drawbacks with it. Perhaps the most important it that nullification is in practice very difficult to prove and as a result there have been few attempts (and fewer successful attempts) to use this provision.¹³ Another difficulty is that the absence of any substantive rules on which to based WTO Panel decisions, would mean that the issue of the ‘acceptance’ of competition laws and their enforcement under the WTO would be based on the development of WTO jurisprudence. Given the lack of political consensus on the issue such an approach may fit uneasily with the general desire to bolster the WTO’s legitimacy.

The GATS agreement is, by its very nature, concerned with regulatory issues, many of which touch upon issues of competition. This is most immediately apparent in the treatment of dominant or monopoly suppliers of services, such as in networked services (e.g. basic telecommunications, utility companies and transport operators). Article II of the GATS therefore obliges monopolies not to abuse their market power when competing in services outside their monopoly rights. The sector agreements in the GATS also include important elements of competition policy. The Understanding on Commitments in Financial Services, requires monopoly rights to be listed and efforts to be made to reduce them. The Reference Paper on Basic Telecommunications negotiated in 1997 also prohibits cross subsidisation (of non-monopoly operations with monopoly services). Any further sector agreements, such as covering transport or the ‘liberal’ professions are also likely to include elements of competition policy.

The TRIPs agreement also contains elements of competition policy. WTO Members may take ‘ appropriate measures '.. to prevent abuse of intellectual property rights having an adverse effect on competition in the relevant market.’ The scope for the use of competition policies in this field is, however, as in all existing GATT/WTO provisions quite tightly constrained.¹⁴ The TRIPs Agreement (in article 40) also allows WTO competition authorities to control certain licensing agreements on competition grounds. Finally, article 31 provides for compulsory licensing as a remedy in cases where anti-competitive practices have been based on intellectual property rights.

Other WTO agreements also include elements of competition, for example, the Agreement on Technical Barriers to Trade requires standards be no more restrictive on trade than is necessary. These provisions (in Articles 3,4 and 8) could be used to challenge the use of proprietary standards to restrict competition, such as in cases where standards (such as computer software standards) limit competition in networked services. Provisions in the plurilateral Government Purchasing Agreement might also be used to challenge certain anti-competitive practices, such as bid rigging.

Whilst the WTO contains a fair number of elements of competition law, most of the provisions are weak, have seldom been used and even more seldom used with success and are geared to serving specific narrow needs. There is no over arching set of principles or interpretation of the WTO rules as they apply to competition.

The OECD
As in other ‘Singapore’ issues the OECD has played an important role in developing approaches to international competition policy. The OECD first made recommendations, drawn up by the Competition Law and Policy Committee, on co-operation as early as 1967. The 1967 OECD Recommendation and subsequent revisions in 1973 and 1979 filled the vacuum left by the failure to agree on competition principles in the GATT. The OECD Recommendation included transparency provisions, voluntary provisions on notification, exchange of information and voluntary provisions on co-ordination in cases when investigation of RBPs in one country had implications for another. The countries concerned were encouraged to seek bilateral or plurilateral accommodations. Should no accommodation be possible the OECD’s Committee of Experts on Restrictive Business Practices was to provide for conciliation and to assist in finding a settlement of any dispute. The OECD approach therefore introduced elements of ‘positive comity’, but did little to make co-operation in specific cases more effective. There was a steady increase in the number of notifications (of investigations) from an average of 37 notifications each year initially to over 100 a year after 1985, but most of these were between the United States and the European Community. The conciliation provisions have never been little used.

The OECD work continued throughout the 1980s with work on the interaction between trade and competition,¹⁵ and co-operation on enforcement between competition authorities.¹⁶ The latter elaborated the previous recommendations and developed more extensive guidelines on notification, exchanges of information and consultations between national competition proceedings. The main impact of the OECD provisions appears to have been in promoting transparency and facilitating a dialogue on policy development. They were not seen as the beginnings of a multilateral competition regime, but were explicitly seen as providing the model for bilateral co-operation between OECD members.

The bilateral agreements have not resulted in a cessation of efforts to develop OECD wide principles. In 1995 a further revision of the Recommendation was made. Once again the basic provisions of the Recommendations remained the same but the guidelines on co-operation were still further developed, in this case to include the treatment of mergers in the OECD guidelines. The 1995 Recommendation therefore states that Member competition authorities should:

• inform each other possible violations of the other’s law;

• forewarn each other of cases which may affects the other’s interests;

• request the other’s agencies to act against practices which affect the requesting country’s interests (positive comity);

• collect and share information to the extent permitted under national confidentiality laws;

• co-ordinate investigations and remedial actions.

In addition to developing guidelines for procedural co-operation the OECD has undertaken considerable work on substantive policy issues. The first product of this work is the 1998 Recommendation on hard-core cartels. A series of reports have also been produced on other issues.

The UNCTAD Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices
The UNCTAD Set was adopted in 1980 and was the rather limited product of earlier efforts by developing countries to get some control over the potentially restrictive business practices of transnational companies. Compared with some of the current provisions on RBPs in regional and bilateral agreements the UNCTAD Set contained few concrete provisions and certainly did not commit national governments to any binding provisions. It did however, provide an early model for both international and national competition policies. This combined with the establishment of UNCTAD based technical assistance and support has helped a range of developing countries in drafting their national competition rules.

4 Competition law and practice in regional and bilateral agreements

The European Union
The EC has extensive provisions on competition policy covering restrictive business practices (vertical and horizontal agreements and abuse of market dominance), mergers, public enterprise, measures liberalising certain public monopolies and provisions on state aid/subsidies. These date from the Treaty of Rome and were intended to ensure that private restrictive practices or subsidies were not used to countermand the effects of liberalisation. Article 85 and 86 (now 81 and 82) granted the European Commission powers to intervene, subject to review by the European Court of Justice, in the cases of restrictive agreements or the abuse of market dominance. Over a period of forty years case law has developed a body of European law, which has been implemented in national courts and has been progressively adopted by the national governments in their national law. The EC has therefore succeeded in bringing about a convergence in national anti-trust policies, but European competition policy still provides for the coexistence of national and European competition laws, subject to the primacy of European law. National competition authorities continue to operate along side the European Commission, and in recent years, there has been a trend towards devolving more work to the national authorities. Another general trend in the EU has been towards the use of competition policy as a ‘horizontal’ instrument in preference to detailed sector by sector legislation to open the EU market. This can be seen in EU policy on energy and telecommunications liberalisation. The European Commission has in the past made use of EU competition law in the shape of Article 90, to help bring about liberalisation of the national public monopolies in telecommunications during the late 1980s and early 1990s.

The EU’s experience has clearly shaped its thinking on international competition policy. This is particularly pronounced in the belief, which permeates European competition policy, that the removal of controls on trade and investment has to be complemented by competition policy in order to ensure that private restraints do not replace the public restraints on business. This is reflected in the fact that it has been the EU that has been the main proponent of international competition policy including the inclusion of competition in the WTO’s agenda.¹⁸

The European Economic Area
The EU (and increasingly the US) also influence international competition policy through a network of bilateral and regional agreements. In the case of the EEA the entire EU acquis (law and case law) on competition policy is applied to the EFTA Members. Whilst the EFTA countries accepted a common set of competition laws, they were not ready to accept the jurisdiction of the European Commission, so the EFTA Surveillance Body was established along with an EFTA court to implement the common European provisions on competition in the EFTA EEA states.

Whilst the importance of the EEA decreased with the accession of Sweden, Austria and Finland to the EU, the competition provisions are of interest because they accommodated different national competition jurisdictions within a progressively integrated single market, by having a ‘one law two implementing authorities solution.’ The European Commission and the EFTA Surveillance Body share implementation of the same competition laws. The European Commission has responsibility in 'pure EC cases' i.e. when a restrictive agreement or abuse of market dominance only affects trade between member states of the EC. In 'mixed' cases in which trade between EC member states and trade between the EC and EFTA are affected , the European Commission has sole jurisdiction with review to the ECJ, as long as no more than 33% of the turn over of the companies concerned is within EFTA. The EFTA Surveillance Body has jurisdiction in 'pure' EFTA cases, i.e. when there is no effect on EFTA-EC trade or in so called 'specific mixed cases' in which trade between EC member states and between the EC and EFTA is affected and when greater than 33% of the turnover of the companies concerned is within EFTA. There are equivalent provisions for merger control policy. In the EEA common competition provisions have replaced other remedies against ‘unfair’ competition, such as anti-dumping and countervailing duty measures.

The Europe Agreements
In the early 1990s the Europe Agreements between the EU and the central and east European countries also included provisions on competition policy, with the objective of bringing about a progressive extension of the EC's competition regime to the central and east European countries. Restrictive practices, abuse of market dominance and any public subsidies that distort or threatens to distort competition are incompatible with the Europe Agreements.¹⁹ Procedural measures in the shape of Joint Committees were established to implement these measures. In practice the prospect of access to the EU has stimulated the development of independent competition authorities in the accession states. EU technical assistance has helped deal with the resource implications of this. Because of the relatively weak competition provisions in the Europe Agreements, the EU retained the right to use instruments of commercial defence (i.e. anti-dumping or countervailing duty measures at the border).

Other EU bilateral agreements
Provisions on competition are also included in other agreements the EU has negotiated. The Euro-med agreements with countries in North Africa and the Middle East include significant provisions on competition policy according to which the EU’s partners are expected to progressively adopt the EU acquis on RBPs and distortions to competition resulting from public enterprises.²⁰ But implementing legislation in the Euro-med partners is still to be adopted.

The EU has also included provisions on competition in the bilateral agreements between the European Communities and its Member States on the one hand and Mexico and South Africa on the other. These include elements of negative (or traditional) and positive comity with regard to cooperation on cases as well as technical assistance and support in developing the competition culture and institutions in the countries concerned.²¹ The Cotonou Agreement between the EU and the ACP countries also provides for reinforced co-operation in policy formulation and efforts to progressively promote the effective enforcement of policies.

The North American Free Trade Agreement
In contrast to the extension of the EC acquis to the EU’s partners the NAFTA merely calls for each Party to adopt or maintain measures to proscribe anti-competitive business conduct (Article 1501). It also urges co-operation between the respective competition authorities and mutual assistance in enforcing national competition laws. There are provisions covering monopolies and state enterprises but these are considerably weaker than the Article 90 (EEC). The right to maintain a state monopoly or public enterprise is safeguarded, but the national authorities must ensure that state monopolies comply with the provisions of the Agreement and are not to be used as surrogate means of providing a national preference or to restrict competition and trade in other sectors.

As with virtual all provisions of the NAFTA the competition provisions were shaped by the Canada-US negotiations on the CUSFTA. Canada sought common criteria for competition policy in the hope that these could replace anti-dumping and countervailing duties. Similar efforts also failed in the NAFTA and the NAFTA Working Group on Trade and Competition does not seem to have moved any closer to this aim. NAFTA does, however, promote co-operation between the US and Canadian competition authorities on the one hand and the Mexican authorities on the other. Unusually, for an agreement, which stresses effective enforcement, the competition provisions of the NAFTA agreement are not subject to the general bilateral dispute settlement provisions.

Equivalent to the WTO and other regional agreements provisions that promote competition can be found in other parts of the NAFTA, such as the provisions on investment and services. These, like the GATS sector agreement (and equivalent EU provisions), oblige the Parties to ensure that monopoly operators of basic telecommunications services do not use their market power to distort competition in other telecommunications markets.

The Free Trade Agreement for the Americas
Mechanisms for co-operation in the field of competition policy have been established in the context of the negotiations of the Free Trade Area for the Americas (FTAA). In 1998 an Anti-Trust Summit of the Americas was held at which most countries in the hemisphere agreed to co-operate to improve enforcement of national competition laws, disseminate best practice, especially with respect to due process in competition proceedings, to assist small countries to develop competition policy capacity, and to advance competition principles in the FTAA negotiations.

A second draft chapter of the FTAA on competition was produced in November 2002. Although this is still a negotiating text it provides some indication of the likely shape of the FTAA provisions. Signatories to the FTAA may have to establish national competition policies and national authorities to implement them. The draft covers RBPs, including abuse of market dominance, but merger provisions are still in square brackets. There are also likely to be articles on pro-competitive regulatory practices, public monopolies and state enterprises, which seek to prevent cross subsidisation. The latest draft suggests that there will only be an undertaking to study state subsidies. Institutional provisions will involve measures to ensure due process and transparency in competition investigations. With regard to co-operation on enforcement measures the draft includes provisions on exchange of information, notification and negative comity. The treatment of confidential information is treated as in the US – EU bilateral, namely confidential information cannot be divulged until the parties waive their right to such protection. Positive comity proposals remain in square brackets. The FTAA dispute settlement provisions would apply to the implementation of the chapter in national law (de jure), but not to how the national laws required are implemented (de facto). This is likely to be a precedent that will shape any WTO negotiations. There are some rather vague provisions on technical assistance. Finally, there is an extensive inventory of national anti-trust provisions available on the FTAA website.²³

The Australian-New Zealand Closer Economic Co-operation Agreement (ANZCERTA)
In 1990 a Protocol on the Acceleration of Free Trade in Goods was agreed by Australia and New Zealand brought forward the deadline for completing the removal of tariff and other restrictions on trans-Tasman trade. Article 4.4 of the Protocol requires the Member States to revise competition law in order to address anti-competitive conduct affecting trans-Tasman trade in goods, without recourse to anti-dumping actions.

The approach adopted in implementing this agreement was to extend existing extra-territorial application of competition law to include actions taken in the other country and to remove immunity from the application of competition law in the other country. In effect the agreement constituted a mutual recognition that the competition law of the other country would be applied extra-territorially. New Zealand actions may be taken against companies operating in Australia, which have an impact on trans-Tasman markets and vice-verse. The courts in each country can require companies in the other country to provide information necessarily in any case.

The CER therefore offers an interesting alternative to common competition policies or the straight-forward imposition of extra-territorial or effects doctrines in competition policy. The approach may have lessons for other regional agreements or perhaps even wider international agreements on competition policy. It may be especially relevant to the debate about the relationship between anti-dumping and competition policies in that it replaces anti-dumping actions with competition policies without going as far as the EC in adopting common competition policy regimes.²⁴ Having said this the Australian and New Zealand competition regimes are similar and are converging. Indeed, a 1988 CER review called for a harmonisation of business laws, especially competition law as it relates to redress against predatory trade between both countries. The changes to competition law introduced in 1990 have taken the two countries closer still to common policies.

Regional competition arrangements involving only developing countries
While the more advanced forms of regional and bilateral agreements in competition policy involve developed economies, there are also significant initiatives involving regional agreements among developing countries. The Common Market of Eastern and Southern Africa (COMESA) includes provisions relating directly to competition policy as well as other measures, such as on telecommunications, which relate to competition in key sectors. The COMESA agreement of 1993 includes a provision, in Article 55 (similar to Article 81 EEC), which prohibits RBPs that distort trade within the future common market. There is scope for exceptions to this provided the COMESA Council agrees. Work is underway on studies of how to apply this provision and develop a common competition policy within the region. It is expected that the COMESA Court would play a role in interpreting the competition as well as other provisions of the agreement.²⁵

In the 2000 Protocol VIII of the CARICOM Treaty members of CARICOM agreed to establish norms and institutional arrangements to prohibit and penalize anti-competitive conduct within the region. National governments are to adopt competition legislation, establish competition authorities to implement the legislation and ensure access to enforcement of the provisions for the nationals of other Member States. Furthermore a Competition Commission is established at the regional level to apply competition policy rules with regard to cross border business conduct. The Commission will have responsibilities relating to the abuse of market dominance, subsidies and anti-dumping actions. The Competition Commission will also have the role of promoting the development of national provisions in competition. The development of competition policy in the CARICOM is still relatively underdeveloped, as in COMESA, but the adoption of Protocol VIII illustrates the spread of competition policies to more and more developing countries including some fairly small WTO Members.

Bilateral Agreements
There have been a number of bilateral co-operation agreements in the field of competition policy. These have mainly involved the United States, which has concluded agreements with: Germany (1976), which reflects the close links between US and German authorities,²⁶ Australia (1982) as a means of resolving disputes over raw materials exports and Canada (1984). In 1991 the US also concluded an agreement with the European Community. This is designed to promote cooperation between the European Commission and the US authorities in order to minimise potential conflicts over the application of the effects doctrine or extraterritoriality by both parties. The agreement covered anti-cartel, merger control and, in the case of the EC actions under Art 90, 92 and 93 (EEC). Article V of the US-EC agreement provided for 'positive comity'. In other words the competition authorities in one of the parties can request the authorities in the other party to initiate or expand investigations into anti-competitive measures or behaviour, which affect competition in the other market. Such requests must be seriously considered, but the responses to such requests are still voluntary. Conversely the requesting party retains the right to initiate or re-institute its own enforcement actions.²⁷ The agreement also expressly envisages parallel investigate of the same restrictive practices.

In 1998 the US and the European Commission complemented the earlier agreement and introduced an ‘enhanced positive comity’ mechanism. The additional agreement means that there is a presumption that competition investigations will be deferred or suspended when the RBPs concerned mainly affect the other party’s territory. Both sides also undertake to devote adequate resources and their best efforts to investigations. The 1998 agreement provides for officials from the other competition authority to attend hearings, subject to consent by all parties concerned.

The experience with the US – EU bilateral is that such agreements can promote considerable co-operation between national competition authorities. But there are limitations. For example, the positive comity provisions had by 2002 only been activated once. There also remain difficulties regarding confidential business information. Information exchange cannot include commercially sensitive information unless companies are willing to waive protection of such information. To date there have been no such waivers. Co-operation also does not appear enough to overcome difficulties flowing from underlying differences in policy. This was, for example, reflected in the GE-Honeywell case. This suggests that something will also have to be done about the policy differences.

5 The current debate

The case for and against including competition provisions within the WTO can be summarized as below in the table 5. These are the rather generalised arguments that are used in the debate. While they are legitimate arguments, the outcome of the current negotiations is likely to turn on more detailed discussions based on which aspects of competition policy practice can usefully be brought into the WTO.

The current debate in the Working Group on Trade and Competition Policies provides an indication of the policy areas in which agreement is thought to be most likely. Indeed the work programme of the WGTCP was set out by the Doha Declaration in paragraph 25. This agenda includes the following issues; core principles (i.e. transparency, non-discrimination and procedural fairness); hard core cartels; the modalities for co-operation; and support for the progressive reinforcement of competition institutions in developing countries. The debates since Doha, which draw on a large number of position papers presented by developed and many developing countries, as well as the work of the Working Group since Singapore forms the basis of the recent report of the WGTCP.²⁹

Core Principles

Transparency
Transparency as noted above is one of the first elements in any international trade or investment agreement. The principle is established in the GATT, in the GATS and in Article 63 of the TRIPs Agreement. Transparency provisions would involve national governments notifying the WTO of national laws on competition. This would provide a basis for transparency. Although there would clearly be costs involved many of the WTO members that currently have competition laws already have to provide such information to other bodies, such as in the context of regional agreements. There are also a number of inventories of competition law and procedures already in existence.

Table 5 An Overview of the cases for and against inclusion of competition in the WTO.

All national competition laws provide for the exclusion of certain sectors and or activities. Transparency provisions are therefore likely to call for listing or scheduling of such exceptions and exclusions. The purpose of scheduling exclusions would be to ensure full information is available, but would also focus attention on those areas in which national competition policies were not being applied.

Transparency with regard to how competition laws are implemented, such as the decisions of competition authorities and or courts of law, is rather more complicated. These decisions can set precedents and therefore form an integral part of national competition laws. For an understanding of developments in national competition enforcement, knowledge of case decisions is important. This is the case for the private sector companies that may be operating in a number of different countries. If there are a large number of such cases the resource implications and costs of such transparency could be significant. On the other hand competition authorities in smaller or developing countries are likely to deal with fewer cases. So most of the burden of such transparency would fall on the larger WTO members that have many cases. Nevertheless, it will be necessary to find some way of limiting the scope of transparency provisions on implementation especially for developing countries.

Another difficulty with transparency is the question of how to deal with commercial confidentiality. From the 2002 Report of the WGTCP there would appear to be a consensus on the need to exclude confidential information from any transparency rules. This is not surprising as all the major existing agreements, such as the EU – US bilateral agreement, exclude confidential information. This is mainly due to pressure from business to do so and the concern on the part of national competition authorities that business will stop supplying them with confidential information if it is passed on to other competition authorities.

Non-discrimination
The WTO is based on non-discrimination in the shape of MFN and national treatment. As they apply to competition law (de jure) there would seen to be little controversial with WTO provisions that required non-discrimination. National rules are geared at controlling restrictive business practices and do not discriminate between the sources of market restrictions. Any WTO agreement would, however, need to address the question of competition law in the regional trade/integration agreements or other bilateral agreements. Broadly speaking such agreements tend to promote transparency, the development of national competition authorities and co-operation when it comes to enforcing competition rules. So their impact is probably benign. Nevertheless, bilateral agreements have some concrete provisions, such as positive comity in co-operation. Should the detailed information exchanged in regional or bilateral agreements be made available to all on an MFN basis? If these are not to be automatically extended to all WTO member states thanks to an MFN undertaking there would need to be some general exemption for RTAs. But non-signatories to a regional or bilateral agreement may well have a legitimate interest in accessing such information, so there should perhaps be some means of ensuring that requests for information circulating in bilateral or regional co-operation procedures should be made available to those who have a legitimate interest in it?

Non-discrimination with regard to procedures is a far trickier issue. Competition policy is again by its nature case dependent. Many national competition policies are also based on a ‘rule of reason’. For example, a competition authority or court will judge whether a given business practice is a restraint on trade based on the circumstances of the case. Some competition policies are based more on per se prohibitions, with quantitative measures of what is, for example, market dominance. But for enforcement that uses rule of reason each case will be different. There is therefore no analogy with the ‘like product’ concept in the GATT. For this reason the proponents of competition policy in the WTO appear to have conceded that non-discrimination will have to be limited to de jure competition law.³⁰

The issue of Special and differential treatment for developing country members of the WTO has been raised with respect to non-discrimination, as with respect to all the possible provisions on competition. Developing countries have argued that they need to be able to discriminate in the application of competition law, in order, for example, to block foreign acquisitions, but allow consolidation of national companies in order to promote national competitiveness through ‘national champions.’ Developing countries have also pointed out that they are likely to have few companies large enough to acquire companies in developed markets. Consequently the benefits of national treatment are likely to accrue more to investors from developed economies.

There is therefore an issue as to whether developing countries should be permitted to retain specific scope for national consolidation and concentration. One way of dealing with this issue would be for developing countries to list more exclusions from any non-discrimination provision in a competition agreement.

Procedural fairness (or due process)
Procedural fairness provision might include, for example, requirements that competition authorities notify investigations and provide opportunities for the parties concerned to make representations. There is also the question of whether companies involved in a competition case should have the right to a review of decision taken by competition authorities. This again involves considerable resources in the sense that countries would have to maintain a qualified court or tribunal to undertake the reviews. There is also the question of which parties should be able to make representations. Should all parties that feel themselves affected by the investigation (such as consumers) be allowed to make representations, if so would the competition authority be required to make a reasoned response.

Other principles
There have been other proposals for core principles, which have fallen short of gaining sufficient support or anything near a consensus. These include for example, enabling small firms to co-operate in order to enhance competition; the inclusion of anti-dumping and other government measures which restrict competition, the restrictive practices resulting from the protection of intellectual property rights, and comprehensiveness (.i.e the application of pro-competitive practices in all policy areas, such as regulatory policies).

Hard-Core Cartels
Also mentioned in the Doha text is the issue of hard-core cartels. This an area in which there is a broad measure on consensus, compared, for example, to vertical integration agreements. Work done by, among others the OECD, suggests that hard-core cartels can have a considerable impact. The OECD reports on 116 international cartels that have been challenged by national competition authorities; mainly in the OECD countries.³¹ The OECD work suggests that the cartels are not due to a coincidental convergence of interest on the part of the producers, but are actively sought and professionally run. Cost estimates of such RBPs are not without their difficulties. The OECD work suggests that the median mark-up in terms of prices is about 10%, with mark-ups ranging from 5% to 65%. A US estimate of business affected by just 10 recently investigated cartels suggests that there were costs to consumers of $100s of millions. Studies on the impact of hard-core cartels on developing countries suggest that here too the costs can be considerable. For example, one study estimates that between 6 and 7% of all developing country imports could be affected by international cartels, with price mark-ups in a range between a few percent and 50%.³² It has been estimated that these known cartels represent probably about half of the level of cartel activity.

At issue is whether WTO members would be required to adopt legislation banning such cartels, the scope of any penalties and the scope for WTO Member governments not to act against such cartels on national interest grounds. Countries in the OECD have already committed themselves to co-operate in this field, and non-OECD countries have been invited to associate themselves with the work on hard core cartels.³³ To date, however, few have taken up this offer. Even within the OECD there remains an issue of what scope there should be for national governments to exercise discretion in acting against a hard-core cartel. In the WTO there would be the question of what constituted a hard-core cartel. Again the tendency would be to look at the work carried out by the OECD in identifying such cartels. They would be cartels, which fix prices, rig bids, allocate markets between suppliers and set output restrictions.

One way of dealing with exceptions, would be to allow for these in certain limited cases, such as in the case of small or medium sized companies or companies in developing countries, which co-operate in order to compete with large international companies. Such exceptions could, however, have to be fully notified and thus transparent and subject to some form of regular review.

Modalities for co-operation (in policy enforcement)
Although there is scope for co-operation in drafting laws and developing national competition authorities, this is largely uncontroversial and covered by provisions on technical assistance. Co-operating in enforcement is more controversial because it touches on the autonomy of competition authorities, can involve considerable resources and thus costs and touch upon sensitive issues such as commercial confidentiality.

Any agreement on competition within the WTO could establish a WTO Committee on Competition, which could include a regular exchange of views on developments in competition. But what would be the value-added given that such exchanges occur in the UNCTAD, OECD and in a growing number of regional and bilateral for a? A WTO Committee would include those countries that are not in one of these other fora. Discussions within a multilateral setting could also help to identify any divergent trends in the different regional and bilateral agreements that might otherwise lead to policy divergence. A WTO Committee might also provide a means of peer review of national competition policies. Given the growth of bilateral agreements, one possibility would be to use such as committee to review the bilateral and regional agreements also, although this point does not seem to have been discussed in the WGTCP and might come under the work of the WTO Committee on Regional Agreements.

In terms of co-operation in investigations, the issue is what sort of standard or obligation should be set. Should there simply be an exchange of information, should a WTO agreement provide for negative or positive comity? Should a competition authority or government be able to decline a request for co-operation, perhaps with a reasoned justification or should there be an obligation to co-operate?

There is a desire on the part of the proponents of competition provisions within the WTO to get something more than best endeavours otherwise there would be little value-added from a WTO agreement. But the ability to co-operate is clearly linked to the capacity and resources of the countries concerned. As indicated above the level of development and resources of the competition regimes in the WTO Members differs considerably. There would, therefore seem to be a clear link between the desire on the part of the proponents of active co-operation within the WTO (i.e. the EU) and the question of technical assistance and possibly financial assistance for developing countries. There is also an issue of whether the provisions on co-operation should be covered by dispute settlement. In other words, would refusal to co-operate be subject to dispute settlement cases.

Progressive Reinforcement of Competition Institutions in Developing Countries
The final topic identified in the Doha text was how to deal with the fact that WTO members have different levels of development, some have sophisticated competition regimes and others have either no regime at all or have only just begun to introduce competition law and build the institutions and capacity needed to implement such laws. Currently 87 WTO Members have some form of competition policy. Furthermore, what a country needs from a competition policy differs. For example, small open economies are likely to need a different kind of competition regime (if they need one at all) to large relatively closed economies. In terms of developing competition policies, therefore it is clearly not a question of one size fits all. Even where countries arguably need competition regimes, many developing or transition economies do not have a ‘competition culture’, have weak enforcement mechanisms, inadequate legal systems and/or traditions of state intervention.

In the past many developing countries have resisted introducing competition policies because their national markets were seen to be too small or because there was a desire to discriminate in favour of national producers in order to help these gain international competitiveness. Competition policies were also seen as a threat to state owned or run enterprises and even the tax base.³⁴ A number of possible forms of special and differential treatment for developing countries are possible should there be an agreement on competition policy in the WTO. First, there could be flexibility in the commitments made by developing countries. Such flexibility might come in the form of a GATS type approach to competition. In other words, there could be a general framework agreement on competition within the WTO, but countries would be able to schedule those sectors, which will or will not be covered by the general commitments. More specifically, developing countries might, for example, be allowed to list sectors in which they wish to exclude competition rules in order to be able to promote national industries. This, of course, raises important questions concerning the utility of such a policy. It is argued that even for smaller developing countries, domestic competition is the best means of promoting international competitiveness. Nevertheless, it must be recognised that all developed economies pursued national champion type policies have, to a greater or lesser degree, pursued such policies in the past, even if the trend today is clearly towards competition based policies.

An alternative form of special and differential treatment would be to provide for longer transition periods for developing countries when it comes to implementing commitments under the WTO. This is the approach that has been used in the TRIPs and TRIMs agreements in the Uruguay Round.

Rather than variable speed one might also envisage a variable geometry approach to the issue. This would entail an approach in which developing countries would be allowed to opt out of commitments at the last moment. This plurilateral approach is one which the EU has always envisaged for international competition policy and which it appears to continue to support.³⁵ Those developing countries that did not feel ready to adopt the general commitments envisaged in the draft WTO agreement would opt out of the final agreement. By being involved in the negotiations these countries would be able to have some say in the shape of the agreement, which has not always been the case for other plurilateral agreements. Given WTO rules, however, all countries would have to support the creation of such a plurilateral agreement in competition.

Finally, special and differential treatment for developing countries could take the form of technical assistance. Surveys conducted within the framework of the OECD Global Competition Forum suggest that there is a wide-spread recognition of the need to provide more technical assistance in the development of competition policies in developing and transition economies.³⁶ At issue is how to ensure that commitments on technical assistance can be made more concrete. In the past many such provisions in WTO agreements have been more rhetorical than real. There are also a number of detailed issues that would need to be addressed to ensure that technical assistance is effective. For example, the type of assistance will vary with the phase in which competition policy development finds itself. In the earlier phases assistance may be needed for drafting legislation, then with institution building and then with enforcement. The WGTCP as well as UNCTAD and other bodies has been discussing how the development of competition laws, institutions and a competition culture in developing countries can best be promoted.

6 Conclusions

This paper has shown that the issue is not whether there will be international competition policies, but what role the WTO should play. Various WTO agreements already include elements of competition policy. There will therefore be some application of elements of competition policy in the WTO under existing agreements. These may be developed through WTO jurisprudence in specific dispute settlement cases. Should Cacun decide against including competition in the current negotiations there must be a real prospect that plurilateral, regional and bilateral agreements will replace any policy vacuum left in the area.

The discussions in the Working Group on Trade and Competition within the WTO suggest that there is little expectation that the inclusion of competition in the WTO will result in far-reaching harmonisation of national competition regimes, or obligations on developing countries to adopt comprehensive provisions on competition in national legislation. The ambition of the current negotiations does not extend this far. Nor does the ambition of the current discussions appear to include any prospect for the replacement of anti-dumping and countervailing duty laws with more soundly based competition policies.

What is on the table in the current debate is more modest. In involves WTO provisions covering a set of fundamental principles for competition policies, such as transparency and non-discrimination. These are not without their difficulties, but they do not in themselves represent a radical increase in commitments for WTO members. Furthermore the parallel discussion of special and differential treatment for developing countries and measures to help reinforce the development of national competition policies in smaller WTO members, suggests that developing countries will be faced with a progressive rather than dramatic increase in commitments.

The main risks involved with adopting modalities for negotiation on competition along the lines of those discussed in the Working Group on Trade and Competition and discussed above would appear to be the following:

The costs of implementing WTO provisions, especially with regard to hard -core cartels, transparency, and provisions on co-operation in implementation, could be significant for developing countries. Furthermore, if the likely outcome of negotiations is going to be modest, would there be sufficient value-added to justify the costs of implementation and enforcement? If countries are involved in regional or bilateral level agreements, the additional costs of co-operation within the WTO framework may not be that great. There are also important potential benefits from developing national competition policies, as reflected in the growing number of developing countries introducing national competition regimes and beginning to be involved in international co-operation. There is broad agreement that developing countries will need technical assistance if they are to strengthen their national competition policies, so this raises the issue of whether developed countries will be ready to provide more binding commitments on technical assistance than has been the case in other policy areas, such as in the Uruguay Round. In other words will the proponents of competition in the WTO be willing to ‘pay’ to achieve this aim?

Another risk is that what appear to be modest provisions in the current round of negotiations merely represent the first step down a slippery slope towards ever greater commitment. Once competition is on the WTO agenda, future negotiations can be expected to include calls for a deepening of the coverage to include other aspects of restrictive business practices, such as vertical concentrations, merger control, etc. Whilst such risks are inherent in any negotiation, the differences that exist between the major WTO players (i.e. the EU and US) in competition policy, suggest that the pressure for deepening will be kept in check. Unlike in the ‘new issues’ in the Uruguay Round, there is no far-reaching consensus between the major developed country members of the WTO on common policies in competition.

There are also risks associated with not including competition in the WTO. The globalisation of markets could result in the growth of international restrictive business practices. The work that has been done on hard-core cartels suggests that there are significant costs for consumers, including for consumers in developing countries, from know international cartels. Known hard-core cartels may be only the tip of an iceberg of international restrictive business practices. If there is no co-ordinated effort to address this risk, then the costs could grow.

This co-ordinated effort need not of course take place within the WTO. Indeed, as noted above, in the absence of agreed international principles on competition, the policy vacuum will be filled by plurilateral, regional and bilateral agreements. Co-operation within these agreements will, by definition, exclude many countries. When the co-operation within plurilateral or bilateral agreements is aimed at controlling RBPs this means that there could be a risk that the damage of cartelisation may fall disproportionately on non-participating countries. There is already some evidence that cartels are operating in countries with no or only limited competition laws and/or enforcement mechanisms. Non-participating countries would also have not right of access to the information exchange on international RBPs in the plurilateral or bilateral agreements, although ad hoc bilateral co-operation arrangement could help to address these problems.

Furthermore, the norms and procedures developed in the regional and bilateral agreements will, as in the past, shape policy. If competition is to figure more and more in the international debate, then precedents set in regional and plurilateral agreements will be important. Indeed, the EU has specifically suggested that plurilateral agreements may represent the first step towards multilateral principles on competition. Countries that opt-out of the current negotiations entirely would therefore have no say in shaping policies. In other words if developing countries in particular decide not to engage in a debate on these issues in the WTO now, they count on the debate continuing in other fora and then returning to the WTO in the future. The risks of engaging in a debate must therefore be set against the risks of disengagement, which could mean that policy will (continue) to be shaped by a small group of WTO members that have well developed competition policies.

End Notes

1 See Julian Arkell Background Paper on GATS issues; for this Workshop

2 See Experiences gained so far on international cooperation on competition policy issues and the mechanisms used revised Report for the Unctad Secretariat, UNCTAD TD/B/COM.2/CLP/21/Rev.1 12 April 2002.

3 Another reason for the lack of support was that, with the exception of the United States and West Germany few GATT Contracting Parties had national competition or anti-trust policies. Indeed, many countries still saw the need for greater concentration or rationalisation of production in industry in order to promote international competitiveness.

4 See for example, OAS inventory of RTA provisions; Taiwan inventory of competition policies in APEC etc.

5 Quoted in WTO Annual Report 1997, Chapter 4 Special Study on International Competition Policy

6 These were: (a) price fixing or agreements on terms and conditions of supply of a product; (b) agreements to exclude suppliers or allocating markets between suppliers: (c ) discrimination against particular enterprises (d) limiting production or fixing production quotas; (e) agreements preventing the development of particular technologies; and (f) unjustified or unlawful extensions of patent or intellectual property rights. See Article 46 bis ITO.

7 Lloyd and Sampson ‘Competition and Trade Policy: identifying the issues after the Uruguay Round’ in World Economy, Nr 18 1995, pg 687).

8 See BISD 9S/28

9 See Ernst-Ullrich Petersmann ‘Competition Rules for Governments in the GATT/MTO World Trade and Legal System’, paper for St Gallen conference on Competition Policy in International Trade, September 1993. This also includes a detailed discussion of the elements of competition policy embedded in the Uruguay Round agreement, or the Dunkel text as it then was.

10 The most notable case was that of Japanese Measures Affecting Consumer Photographic Firm and Paper, see WTO WT/DS44/R 31 March 1998.

11 Brian Hindley ‘Competition Law and the WTO: Alternative Structures for Agreement’ in J Bhagwati and R Hudec (eds) Fair Trade and Harmonization, 1996.

12 Under the GATS the scope for such actions is limited to case in which the benefits accrue from scheduled commitments, not from a rule of general application. See WTO Annual Report 1997 Chapter Four, Special Study on Trade and Competition Policy, pg 51.

13 One of the most important recent attempts to use artile XXIII nullification provisions was in the Kodak – Fuji case where the US lost.

14 See Article 8 TRIPs Agreement.

15 Report on Trade and Competition Policy (OECD 1984)

16 Memorandum on Cooperation Between Competition Authorities. OECD, 1986.

18 The basic EU approach was set out in the 1996 paper of a group of experts ref.

19 See for example Article 33 (EA 63) of the Interim Agreement with the CSFR Official Journal L 115 30 April 1992.

20 See Tomas Baert ‘The Euromed Agreements’ in Gary Sampson and Stephen Woolcock Regional Integration Agreements and Multilateralism; recent experience UN University Press, 2003

21 See UNCTAD Experience Gained so Far on International Co-operation on Competition Policy Issues and Mechanisms Used, Intergovernmental Group of Experts on Competition Law and Policy, TD/B/COM.2/CLP/21/REV 1 19 April 2002.

22 It would seem the only way Canada can succeed in replacing anti-dumping with competition provisions is to do so when the US is not at the negotiating table, as in the Canada-Chile Free Trade Agreement. The hope is perhaps that this will set a precedent for the FTAA.

23 See Second draft Chapter on Competition Policy FTAA.TNC/w/133/Rev2 1 November 2002.

24 The only other significant regional agreements that used common competition provisions to replace anti-dumping have also been between developed economies (such as in the EEA), although the recent Canada – Chile Free Trade Agreement CCFTA, has done so.

25 See Musonda ‘Regional Competition Policy for COMESA countries and implications for the FTA in 2000’, in UNCTAD Competition Policy, trade and development in the Common Market of Eastern and Southern Africa (UNCTAD/ITCD/CLP/Misc.18)

26 See Catherine Distler 'Convergence and Conflicts over Competition Law', in Conflict, Competition and ... Cooperation Promethee Vol I No 15 January 1991.

27 In August 1994 the European Court of Justice struck down the agreement on the grounds that the European Commission, in concluding it, had exceeded it competence. This will result in a revised legal form for the agreement, but the objectives and content will remain essentially unaffected.

28 See the Annual Reports of the Working Group WT/WGTCP/M 17-20

29 See WTO, Report of the Working Group on The Interaction between Trade and Competition Policy to the General Council WT/WGTCP/6

30 See

31 See OECD Draft Report on the nature and impact of hard-core cartels and the sanctions under national competition laws, Paper for the Global Competition Forum, 2001 CCNM/GF/COMP(2001)3 2 October 2001.

32 M Levenstein Private cartels and their effects on developing countries, Background Report for the World Development Report 2001

33 See OECD Recommendation on hard-core cartels, 1998

34 R Langhammer Changing Competition Policies in Developing Countries: from policies protecting companies against competition to policies protecting competition, World Development Report Conference Berlin February 2002.

35 See for example Report of a Group of Experts Competition Policy in the New Trade Order: strengthening international co-operation and rules, European Commission, 1996 and European Commission proposal to the 133 Committee of the EU on modalities for negotiating competition policy in the WTO, Quoted in OECD supra.

36 OECD Secretariat Paper for the Global Competition Forum February 2002 Experiences of OECD outreach and Members Technical Assistance Activities in the 1999-2000 period CCNM/GF/COMP (2000)4 31 January 2002

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