BILATERAL COMPETITION LAW AGREEMENTS

1. BILATERAL COMPETITION LAW AGREEMENTS LECTURE III OCTOBER 26TH, 2009 Dr. C. Gastle & Murdoch Martyn

2. Extraterritoriality • Extraterritoriality: use of domestic competition laws in actions before domestic courts against foreigners; • “Effects Doctrine”: must be shown that the anti-competitive conduct had an impact in the country applying its laws beyond its borders; • offended U.S. trading partners, a number of countries, including the United Kingdom, Germany, France, Norway, Sweden, Canada, and Australia, enacted statutes to block discovery of documents; • pressure on U.S. resulted in a clarification of rule: • Requires not only that foreign conduct had a “direct, substantial, and reasonably foreseeable effect on US commerce, but assess factors including actors’ nationalities, their intent to affect US competition, conflicts with foreign law and policy and the practical ability to enforce a judgment.”[

3. Extraterritoriality • Europe also engaging in extraterritoriality: • The German Law against Restraints on Competition applies to “all restraints on competition that have effect within the territory where the law is in force, even if they are caused outside of said territory.” • With respect to the European Community, in a 1988 case, the European Court “used the effects doctrine to reach the offshore acts of these foreign firms.”

4. First Generation Agreements • There are four generation of agreements; • First generation signed mid-1970s; • Antitrust Cooperation Agreements, (“ACAs”) • Based on principles established by the OECD; • U.S. entered into 8 ACAs; • Intended to avoid conflicts arising out of extraterritoriality; • ACAs applicable only to competition law matters; • Not accessible by private parties; • Operate within existing framework of domestic law; • They create no new powers, no additional assistance to foreign authorities beyond what exists in domestic law;

5. First Generation Agreement • Using U.S. Agreements as example: • Commitment to use existing investigatory powers when requested to do so; • Commit authorities to provide information in their posession; • Encourage voluntary production of information; • Evidence obtained by civil subpoenas cannot be produced; • Voluntary waivers of privilege common in merger investigations; • A trigger list established identifying when other party affected & notification required;

6. First Generation Agreement • Criteria are established to be considered when making decision whether coordination should occur, including extent to which each competition law authority: • Can obtain the information necessary; • Can obtain the relief against anticompetitive conduct; • The costs and benefit that might accrue to the subject of the investigation;

7. First Generation Agreement • Limited “positive comity” obligations: • permitting each nation a limited right to request the other nation to initiate action; • On receipt, each competition authority must decide whether to investigate, no obligation that it must do so; • Only one formal positive comity request made by U.S. before 2004, but informal comity has occurred more regularly in merger investigations; • Some authorities have concluded investigations when convinced concerns will be dealt with by review in U.S. or Europe;

8. Second Generation Agreement • Second generation agreements are the Antitrust Mutual Assistance Agreements (“AMAA”); • require amendments to domestic law authorizing more extensive cooperation than provided by the ACAs; • unique feature: they enable assistance otherwise not possible in absence of changes to domestic law; • U.S.’ International Antitrust Enforcement Assistance Act (IAEAA) permits to AMAA to modify domestic U.S. law; • allows American antitrust officials to share “antitrust evidence;” • but prohibits information to be shared “in violation of any legally applicable right or privilege;” • AMAA must guarantee equal, reciprocal assistance and provide adequate confidentiality protections;

9. Second Generation Agreement • Can supply grand jury evidence, which is obtained in confidential inquiries considering criminal complaints; • Can produce evidence obtained from civil subpoenas; • Produced whether evidence used for criminal, civil or administrative purposes; • Foreign antitrust authorities much demonstrate a “particularlized need” and no standard is established when threshold is met; • may only obtain evidence already compelled, they cannot empanel a grand jury or seek evidence solely on behalf of foreign investigation; • the IAEAA specifically exempts from disclosure of any information obtained during pre-merger disclosures;

10. Second Generation Agreement • In civil cases, IAEAA authorizes use of Civil subpoenas; • U.S. courts can compel testimony on the production of documents; • No provision in standard AMAA regarding coordination of investigations or notification of enforcement activities; • The U.S-Australia, AMAA includes such provisions;

11. Third Generation Agreement • Third generation bilateral agreements are known as “Mutual Legal Assistance Treaties” (“MLAT”); • U.S. has entered into 57 MLATs; • First in 1975; • By 1995, only 16 signed; • Between 1995-2003, 31 signed or being ratified;

12. Third Generation Agreement • Not intended to apply specifically to competition law matters, but to criminal law; • There are MLATs that specifically exclude competition law matters; (US-UK MLATs); • Other MLATs require dual criminality, such that underlying conduct must be a criminal offense in both signatories; • Generally do not include provisions relating to notifications or coordination of activities.

13. Third Generation Agreement • MLATs intended to improve ability of foreign authorities to obtain evidence abroad; • MLATs are a more certain and timely alternative to letters rogatory; • MLATs cannot be used by private parties; • Designed to be used in criminal matters and not specifically designed for antitrust cases;

14. Third Generation Agreement • MLAT requests intended to be processed on a more timely basis; • More likely to be respected and fulfilled because of obligation to provide assistance; • MLATs require production of documents, records or other evidence on request regarding criminal matters; • Encourage discretionary release of non-public information to extent it would be available to authorities in requesting state; • MLATs generally provide a representation that each signatory has the domestic powers to execute requests made.

15. Third Generation Agreement • Article 1(2) provides that following assistance to be provided: • (a). taking testimony and statements of a person; • (b). providing documents, records, and other articles of evidence; • (c). providing service of process; • (d). locating and identifying persons; • (e). transferring persons in custody for testimony or other purposes; • (f). executing requests for search and seizure; • (g). immobilization and forfeiture of assets, restitution, collection of fines; and • (h). any other form of assistance not prohibited by the laws of the Requested State

16. Third Generation Agreement • SS 1(2)(a) includes right to compel production fo document and attend oral discoveries in requested state; • No obligation to force witnesses to travel to requesting state; • SS 1(2)(f),requesting state must produce sufficient evidence to authorize issuance of order for search and seizure; • Can deny assistance pursuant to Article 3: • (a), when assistance would impair sovereignty; • (b), be contrary to public policy or essential interests; • (c), related to a political offence; • (d), double jeopardy;

17. Fourth Generation Agreement • Rare, example is 1988 Agreement between Australia-New Zealand; • requires both to extend their legislative prohibitions to cover the whole of the two markets; • Based on integration required by the 1984 Australia-New Zealand Closer Economic Relations Trade Agreement; • a comprehensive bilateral competition law was not considered necessary if extraterritoriality permitted;

18. Fourth Generation Agreement • Courts in each country are permitted to sit in each other’s jurisdictions regarding competition law cases; • Procedural changes mandated by agreements including: (a). the competition authority of each nation can obtain evidence from the other’s jurisdiction by a statutory notice that is binding and enforceable; (b). each jurisdiction can issue subpoenas enforceable in the other’s jurisdiction; (c). submissions can be made in each other’s courts by video, link, telephone or other technological means;

19. Fourth Generation Agreement (d). Final judgments and orders are enforceable in the other’s jurisdiction; and (e). the competition authorities of both countries have entered into cooperation agreements permitting one competition authority to commence preliminary investigations and hearings on behalf of the other and joint investigations of a complaint can occur.

20. Fourth Generation Agreement • Agreement between New Zealand and Australia is unique due to the special circumstances of the relationship between the two countries; • They share similar legal systems and a common legal heritage in the common law; • Competition laws of both countries have a high degree of harmonization. • This was only one measure of a number of initiatives to harmonize the business laws of the two countries.

21. Conclusion • Bilateral agreements do not constitute an international competition law code; • With more than 90 countries with competition laws, a bilateral network of more than 4,000 bilateral agreements would be required;