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Mr. Mario Monti
European Commissioner for Competition
International Antitrust – A Personal Perspective
Fordham Corporate Law Institute
New York, 7 October 2004

Commission Européenne - SPEECH/04/449   11/10/2004

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SPEECH/04/449













Mr. Mario Monti

European Commissioner for Competition



International Antitrust – A Personal Perspective

























Fordham Corporate Law Institute
New York, 7 October 2004

I would like to devote my last intervention at Fordham as Competition Commissioner to offer you my personal perspective on how international co-operation in the area of antitrust should develop in the future.

The situation has changed dramatically in the five years I’ve been in this job. Four years ago, I was standing here to welcome and support Joel Klein’s initiative for a multilateral competition forum that he had presented before in Brussels, at the Conference celebrating the tenth anniversary of the Merger Regulation. Through joint efforts, this project would later become the ICN, and is now a well consolidated network with 86 members that can show results in different areas of our activities. At the same time, while four years ago several among us had advocated in favour of developing multilateral rules on competition within the WTO framework, after this summer’s trade discussions in Geneva it is clear that the on-going trade round will not deal with this issue.

In view of this, I feel it is time to rethink substantially the priorities in international antitrust cooperation, and the roles of these respective fora. To this effect, I would like to propose some basic orientations for the future.

First of all, we should ensure that the main priorities in international co-operation correspond to our main priorities in domestic enforcement. At the Commission, our enforcement priorities focus on the most serious obstacles to competition: cartels and government restraints of competition and I believe that international co-operation among antitrust agencies should, more and more focus on these issues too.

Undoubtedly, international cartels are the most damaging distortion of competition. Their prosecution requires a combination of resourceful enforcement domestically and of effective cooperation internationally.

I am heartened by the fact that there is a consensus in the community of competition enforcers as to the harm that international cartels can cause. Let me just recall the unanimity in which we set up, at the recent ICN conference in Seoul, the ICN Working Group on Cartels. Together with the OECD, where the effective leadership of Hew Pate is delivering impressive results, I see the ICN as the central forum for multilateral discussion and convergence in this field.

Strengthened inter-agency cooperation should be one of the main results of these co-operation efforts. We have to recognize that cooperation will often fall short of our expectations if enforcers are barred from sharing the kind of information that is most useful to cartel investigations, namely actionable evidence from outside their own territory. In cartel investigations, companies usually have no incentive to grant a waiver for sharing information. So maybe the time has come to explore ways to share such information among enforcers without prior consent from the companies in question.

Capacity building efforts should also focus on providing and developing the skills, practices and legal frameworks that are necessary for an efficient fight against cartels. From this point of view, the adoption of leniency programs should be encouraged. Facilitating private enforcement of damage claims, without falling into excesses, may also increase the overall levels of deterrence against cartels. As you may be aware, the Commission has just published a study that shows the important barriers to private enforcement existing in Europe and is considering how to launch a wide ranging reflection on what should be done to improve the situation.

One last point on cartels: In today’s intertwined global markets, the outlook on competition policy cannot be confined to one’s own borders. Neglecting the political and economic externalities of one’s own attitude, for example in relation to export cartels, risks seriously undermining the case of those that advocate open markets and promote strong enforcement against hard core cartels. The ethical stance of the global antitrust community suffers from this double speak by some of its members. In other words, you can’t have your cake and eat it. Even better, you can’t forbid poisoned cake at home, but allow it to be exported abroad.

As to government restraints to competition, they should feature in a much higher position in our list of priorities for international action than has been the case until now. The WTO is the natural forum to deal with public obstacles to trade and we might want to strengthen its role concerning public obstacles to competition that affect cross-border trade.

The EU has developed internally a number of interesting instruments to deal with state measures that distort competition that could provide a blueprint for further international co-operation in this area. In particular, we have long regarded state aid control as a central concern to competition policy. Subsidies to ailing companies may sometimes appear politically expedient, but ultimately they tend to produce no winners, but many losers. Dependency on public support too often leads companies to postpone the restructuring measures that would ensure their survival in the long-term.

We would welcome to see the WTO beef up its rules on the control of state subsidies. In fact, two years ago, the EC proposed to the WTO negotiations to make the Agreement on Subsidies and Countervailing Measures more operational[1]. I still believe that this is a valid objective. For example, I would advocate to bring disguised subsidies more clearly within the discipline of that Agreement, and to clarify the coverage of state-controlled entities. In addition, one should also reflect on a more stringent implementation mechanism.

There is another set of Community instruments to tackle public restraints to competition: one the one hand, there is Article 86 of the EC Treaty, which deals with the application of the competition rules to public undertakings, and to undertakings to which governments grant special and exclusive rights. On the other, the European Courts have interpreted some of the Treaty rules as obliging Member States not to foster anti-competitive behaviour of enterprises[2]. It might be worthwhile to explore whether some aspects of this multi-layered discipline could also be extended to an international level.

From this point of view, the recent WTO Dispute Settlement Panel decision in the Telmex case, which concerned state actions directly affecting competition in the telecoms sector, an area where we have repeatedly made use of our powers under Article 86, is an interesting development. The ruling, which is based on the specific WTO reference paper for telecoms, found that Mexico had failed to impose competition principles regarding the telecoms incumbent, and thus made market access more difficult for new entrants. It might be explored whether similar disciplines could be developed for other regulated sectors.

Finally, there are some practices that fall at the intersection between what I have described as the two most damaging competition infringements: government sponsored cartels. It is unrealistic to imagine an international action developing in this area – I bet that, nevertheless, most of you have been asked at least once why competition rules cannot apply to the Opec - but there is no doubt that the international economy would largely benefit from such a development.

Leaving aside the two major enforcement priorities, cartel and government restraints, international co-operation in the merger field remains important. With regard to procedures and jurisdictional issues, the ICN has already achieved a lot. It is now time for each of our competition authorities and legislators to move decisively forward with the implementation of the agreed ICN standards. After the Merger Review, the EU already substantially conforms to the recommendations. If the same standards of compliance would be achieved by all the ICN members who have subscribed to the recommendations, I believe companies would find compliance with multi-jurisdictional merger review much less burdensome.

On the substance of merger assessment, I see a growing consensus among the major competition authorities based on a common understanding of economics, at least with respect to horizontal mergers. The EU has made a significant step towards substantive convergence with the reform of the test, and the adoption of the new Guidelines. We expect that the ICN work in this area will facilitate further convergence.

Bi-lateral and multilateral co-operation in specific merger investigations has also developed a lot in the last five years and I do not see any reason why it should not develop further.

One exception to this relatively optimistic view in the merger area are those countries that still discriminate in their merger legislation on the basis of nationality. We all should, through persuasion and other appropriate means contribute to eliminate these anomalies.

My last reflection relates to enforcement with regards to unilateral behaviour (abuses). I think that we should continue to build a common understanding across jurisdictions. However, I believe that in the short term there is less need for convergence in this area than in the others I’ve mentioned before, as long as the principle of non-discrimination on the basis of nationality is respected.

Most competition agencies will consider it as their mission to ensure that all companies, including dominant ones, compete on the merits. But different jurisdictions may interpret differently how to fulfil this mission. Some may emphasize that rules on unilateral behaviour should not create disincentives to investment and innovation by leading firms. Others will want to ensure that the incentives of other market players are not curtailed by the behaviour of leading firms. Moreover, different market structures and historical market developments can have an influence on how these provisions are applied and developed. Finally, and contrary to some multi-jurisdictional mergers, remedies can be more easily limited to one jurisdiction.

Even within the EU there is not full convergence in the area of unilateral behaviour. Our member States are allowed to enforce stricter standards under their national laws and, therefore, it appears difficult to achieve uniformity at a wider level.

As you are aware, the Commission is currently conducting a review of its policy on Article 82 cases. The goal of the review is to examine whether current practice is sound from an economic point of view and to enhance transparency and legal certainty. It might well be, however, that as a by-product, the result of the review represents also a step towards the elimination of some differences with other major jurisdictions.

As to concluding remarks, let me explore whether the different initiatives that I have mentioned, while promoting a more effective competition enforcement world-wide, could also contribute to foster progress in other areas of bilateral or multilateral international co-operation.

As to EU/US cooperation, I think that two of the main reasons for its success in the field of competition policy are sometimes over-looked. First, the EU and US carry comparable global weight in the area of competition law enforcement because, in this area, like in trade policy, Europe acts as one, and not as 25 countries separately. Second, the underlying goals in enforcing competition policy in both sides of the Atlantic are very similar. I believe there is much to be gained from the EU and US focusing on finding common policy ground in relation to other issues of common global importance. And there is clearly much to be gained too in ensuring that the EU can speak with one voice in relation to other issues in the international arena. I hope that the positive example of co-operation in antitrust can inspire such developments.

Successful bilateral and multilateral co-operation in different public policy areas is, indeed, key to ensure that the globalization process can deliver on its promises and to allow the public entities to eventually be able to address the popular discontent with globalisation. Competition policy should be one of these multilateral disciplines: it is market friendly and, at the same time, it ensures that the consumers ultimately benefit from the operation of the market. The development of strong competition authorities across the globe, sharing similar enforcing principles, and jealously guarding their independence from political as well as business pressures is, therefore, not only an important goal in itself, but a crucial element to transform a vision of global governance based on open markets into palpable and real progress.


[1] WTO document ref. TN/RL/W/30, available via

www.wto.org.
[2] Articles 81 and 82 read in conjunction with Article 10 of the EC Treaty.


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