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Bulletin n°1 | Wednesday, May 10, 2017
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About this bulletin
This week, the global competition community meets in Porto, Portugal, on the occasion of the 16th Annual Conference of the International Competition Network (ICN). The ICN provides a platform for international cooperation, exchange of experience and development of common ground for competition authorities around the world. With this bulletin, CUTS is keeping you posted on the proceedings.
@cutsccier #ICNPorto
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Opening Session
In her opening remarks, Margarida Matos Rosa, President of the Portuguese Competition Authority (AdC) welcomed all participants and recalled the importance of the international community on competition matters. She informed that highlights of this year’s Annual Conference of the ICN will include competition enforcement, leniency, and exploring a variety of challenges taking into account competition authorities’ often scarce resources. She hoped this conference would be a tribute to competition authorities’ effectiveness, and looked forward to the first-ever session organized in Portuguese language.
Andreas Mundt, President of the Bundeskartellamt, Germany,and Chairman of the ICN Steering Committee extended warm welcome to the over 600 participants, representing competition authorities, NGAs, IGOs etc. He praised the AdC,the organisers, for its impressive success owing to a strong competition law, a strong agency, strong advocacy, and pro-activeness on the international stage. He noted that this year’s conference will address some of the main challenges brought about by globalization. According to him, while globalisation has lifted many people out of poverty, counter reactions such as protectionism in industrialized economies and its accompanying competition distortions must be addressed. In addition, the digital era marks a significant change of pattern of competition, with monopolistic positions becoming the rule rather than the exception in the internet world. In this context, competition authorities need to be united to meet these challenges, and avoid lock in effects, abuse of dominance etc. Experience-sharing at this week’s conference will be helpful in this regard.
As the Chief Guest, Manuel Caldeira Cabral, Portuguese Minister of Economy, welcomed participants to Portugal which is known for being a welcoming society, one that builds bridges between people and continents. Looking forward to having good exchange of experience during the ICN Annual Conference, he recalled the importance of competition for better quality of goods, job creation, and economic growth through promoting innovation. Over the last ten years, Portugal has learnt the importance of an independent competition authority, which provides confidence to investors and contributes to avoid unfair competition. He noted that technology brought competition to new areas, with digitalization creating entirely new challenges in traditional sectors like tourism, travel and many others.
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ENFORCEMENT
Amplifying the Impact of Enforcement: Proactive Outreach Strategies for Deterrence
This session explored possible avenues for leveraging outreach as a means for increasing the impact of competition enforcement. In this regard, competition authorities were encouraged to be pro-active and combine different outreach techniques. For instance, Mexico cooperated with both sector regulators and business chambers to get the message through, and familiarised them with their own risks associated with cartelization.
While a strong enforcement agenda is key, it should be complemented by a strong advocacy agenda. Some of the widely used communication tools by agencies include workshops, newsletters, publications, caricatures in the media etc.
Some agencies may however have legal constraints in publicising their enforcement activities and outcomes, which points to the difficult balance to strike between the needs for transparency and confidentiality. As exemplified by Hong Kong, specific challenges are faced by young competition agencies, who have little track record of enforcement.
On the panel were Margarida Matos Rosa, President, Portuguese Competition Authority; Chris Fonteijn, Chairman, Authority for Consumers and Markets; Alejandra Palacios, Chairwoman, Comisión Federal de Competencia Económica (COFECE), Mexico; Rose Webb, Chief Executive Officer, Hong Kong Competition Commission; Amadou Ceesay, CEO / Executive Secretary, Gambia Competition and Consumer Protection Commission.
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LENIENCY
Leniency and Challenges for the Future
This panel moderated by Johannes Laitenberger, Director-General, DG Competition, European Commission, discussed the challenges of leniency for the future. The session started with a short clip by the ICN Cartel Working Group, explaining its role and the harm of cartels. The working group runs a wide variety of projects every year, and developed a number of resources including an anti-cartel enforcement manual compiling good practices, a leniency waiver template, a leniency checklist etc.
It was noted that the past few years have seen a spectacular surge in leniency programmes, whose proliferation may have created some negative incentives as potential leniency applicants may be discouraged by the anticipated burden of leniency preparations. In fact, there has been concerns associated with the decreasing number of international cartel leniencies. Although this could indicate that less such cartels now exist, other reasons may include lack of incentives for applying for leniency.
Discussions also identified some key factors for effective leniency programmes in the future, such as: (i) the ability to detect anti-competitive behaviour; (ii) transparency; and (iii) maintaining incentives for leniency application. Transparency and international cooperation between agencies were expected to get more important. It was however pointed out that there is a limit to what cooperation can achieve, although it remains a key avenue to bring about simplification and convergence of competition regimes.
Coming to the interplay of leniency with anti-cartel enforcement, some competition agencies adopt a dual approach of general awareness and targeted outreach when undertaking cartel and leniency awareness campaigns. Targeted outreach on leniency programs is often seen as more effective, which may be targeted to businessmen, executives and associations, in combination with formal agreements with investigative authorities. For instance, the Portuguese authority shared about its practice of embedding advocacy materials in public procurement e-applications.
With regard to ex-officio investigations and vigorous enforcement, several tools were suggested to improve intelligence capabilities such as complaint portals, anonymous informants (e.g. employees), data analyses, reinforced cooperation with public authorities, outreach activities, dawn raids, IT forensics etc. According to panelists, key to success is to bring together different sources of intelligence, and to prioritise between leniency applications and ex-officio investigations.
Finally, panelists discussed private enforcement, including how its associated risks and costs can influence decisions about whether to seek leniency. It was thought that striking the right balance between private enforcement and a robust leniency programme requires careful consideration of incentives.
On the panel were Maria João Melícias, Member of the Board, Portuguese Competition Authority; Eduardo Frade, General Superintendent, Administrative Council for Economic Defence, CADE Brazil; Kazuyuki Sugimoto, Chairman, Japan Fair Trade Commission; Andrew Finch, Acting Assistant Attorney General, United States Department of Justice Antitrust Division.
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ABOUT ICN
ICN-troduction
This session was an introduction to the ICN and its work intended for newcomers, new members, new non-governmental advisers, new participants, and anyone looking to refresh their insider ICN knowledge anew. Several ICN online resources were presented, including ICN’s on-demand training modules. This comprehensive set of sixteen training modules, on a variety of subjects, serve as a virtual university on competition law and practice for competition agency officials, featuring video lectures. Topics covered include competition policy fundamentals, horizontal restraints, dominant firm conduct, mergers, competition advocacy, and investigational techniques. Besides this, discussions addressed online experience-sharing platforms, as well as the ICN work products catalogue.
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COMPETITION ADVOCACY
Social Media and Website Strategies
This session chaired by Siún O’Keeffe, Senior Strategy Advisor, Authority for Consumers and Markets, Netherlands, discussed how agencies communicate externally via social media and their websites, and what value the agencies get from their use.
Stress was made that competition agencies should reach out to the public through various social media tools such as twitter, facebook etc. This will help them create a better public buy in. A representative from a Latin American authority said that sometimes they have been trolled viciously when putting out news of a cartel action. A response was made that one should not be worried about trollers, who don’t have anything else to do and are probably planted by the prosecuted traders and hence should be ignored.
On the panel were Cynthia Lagdameo, Counsel for international Antitrust, United States Federal Trade Commission (FTC); Raymond Ng, Senior Assistant Director, Competition Commission of Singapore; Kristina Geiger, Deputy Director-General, Swedish Competition Authority; Meriam Triki, Case-handler, Public Services Advisor, Tunisian Competition Council.
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EFFECTIVE ENFORCEMENT
Fines and Criminal Sanctions Against Cartels
This session compared and shed light on the records of both systems of sanctioning cartels, and discussed what the implementation of each of the systems entails. Sanctions are a tool to deter cartel activity, and it is essential to understand the debate regarding the choice of criminal or civil/administrative sanctions for hard-core cartel conduct. The session was moderated by María Ortiz, Member of the Board, Spanish National Authority for Markets and Competition.
Criminalisation is one of the main issues when it comes to assessing the effectiveness of anti-cartel enforcement. Findings of a report based on information from 33 jurisdictions show that fines are available in all studied jurisdictions, 14 of whom are able to apply criminal fines. It was noted that fines for companies primarily affect shareholders rather than the responsible executives. Besides fines, other sanctions available to some authorities include: (i) imprisonment of individuals (19 jurisdictions, up to 14 years in Canada), although most have never actually imposed it; (ii) Civil actions for damages; and (iii) Administrative sanctions to individuals.
After recalling the rationale behind criminalisation of sanctions, it was noted that available data to assess the efficiency of such sanctions is limited. Based on the EU experience which relies on imposing fines on companies, some thought that fines provide enough deterrence. To calculate a fine, the EU usually multiplies the value of sales affected by the number of years of the cartel. This method leads to substantial fines, as exemplified by the recent EUR 1 Billion fine imposed on Daimler in the truck cartel case. It was nevertheless noted that some EU members’ national competition regimes do provide for criminal sanctions, which may be applied.
It was noted that the process of criminalisation has not always been smooth. Indeed, lower rates of prosecution can be observed where criminal sanctions could apply, because judges and potential informants in leniency programmes are much more careful when an investigation has the potential to lead to the imprisonment of individuals. Yet, no sanction can be seen as deterrent if there is only a low chance that it will be applied.
On the panel were Saiko Nakajima, Deputy Director, Planning Office, Investigation Bureau, Japan Fair Trade Commission; Kris Dekeyser, Director, Policy and Strategy, DG Competition, European Commission Peter Whelan, Associate Professor in Law, University of Leeds, United Kingdom; Gideon N. Mokaya, Manager, Enforcement and Compliance, Kenya Competition Authority; Felipe Garcia, Head Advisor to the Superintendent Superintendence for Industry and Commerce, Colombia.
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COOPERATION
International Cooperation
This session moderated by Antonio Capobianco, Senior Expert in Competition Law, OECD, explored how to improve the exchange of information amongst agencies, the key moments and matters for coordination between agencies, and discussed whether and when simultaneous international actions can be complementary, redundant or counterproductive.
The first option discussed to improve the exchange of information were international agreements. A panelist informed that his agency signed cooperation agreements and MoUs with many countries on non-confidential information, also noting that some of the 19 FTAs signed by his country include articles on competition related to exchange of non-confidential information, cartels, abuse of dominance and cross-border mergers.
It was thought that more informal means of cooperation, like direct contact with agencies’ international relations departments, have often proven to be more useful. In this regard, it was stressed that mutual trust is critical, and hence such informal relations tend to work best inside regional settings. Some of the challenges to informal cooperation may include: (i) identifying the right counterpart in the other agency; and (ii) costs associated with sharing information (e.g. searching costs) which add to the burden on an agency. Exchange confidential information is however more difficult.
During cartel case investigations, international cooperation can be useful at any stage. The pre-investigation stage is maybe the most important, as it can provide an agency with sufficient information to open a case which could not be gathered by the agency alone. Institutional frameworks for exchange of information are also very important, as exemplified by Eurasian Economic Commission cooperation on both non-confidential and confidential information.
Finally, the aspect of transparency was identified as important for an agency to know other jurisdictions’ rules regarding confidential information etc. In this regard, one of the main bottlenecks is that relevant information by other authorities are often written in local language. In addition to transparency, IGOs should continue to try to build some common ground, and build capacities of developing countries.
On the panel were Hideyuki Shimozu, Senior Officer for Leniency Program, Japan Fair Trade Commission; Andrey Tsyganov, Deputy Head, Federal Antimonopoly Service, Russia; Teresa Moreira, Head, UNCTAD Competition Policy and Consumer Protection Branch; Osman Tan Catalcali, International Relations Coordinator, Turkish Competition Authority; Parret Muteto, Chief Investigator in Mergers & Monopolies Division, Competition and Consumer Protection Commission (CCPC), Zambia.
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UNILATERAL CONDUCT
Challenges of Big Data and Unilateral Conduct
This session discussed the issue of big data, and whether it creates novel issues for unilateral conduct enforcement or call for new tools. It started with a definition of big data, and the different types of problematic conducts from a competition perspective.
Speakers agreed that big data itself is not anti-competitive. Rather, the controversy is about the type of conducts that are anti-competitive, as different internet companies tend to use collected data for different purposes. It was however acknowledged that dominant companies who hold significant amounts of data can have an exclusionary effect. Discussing the issue of search engines, a panelist felt that limited competition in the sector simply owes to the fact that none is better than Google, whose popularity has led to its name becoming a generic word.
On the panel were Bart Noe, Senior Enforcement Official, Netherlands Authority for Consumers and Markets; George Cary, Partner, Clearly Gottlieb, United States; Munesh Mahtani, Counsel, Google, United Kingdom; Barbara Schulze, Head of Unit, International Cooperation Matters, Bundeskartellamt; Carlos Ragazzo, Law Professor, FGV Rio, Brazil.
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