U.S. SEEKS ANTITRUST ENFORCEMENT COOPERATION THROUGH OECD
USIA
USIS Washington File
21 January 1998
U.S. SEEKS ANTITRUST ENFORCEMENT COOPERATION THROUGH OECD
(Agreement possible in February, Justice official says) (1010)
By Bruce Odessey
USIA Staff Writer
Washington -- The Clinton administration hopes the world's
industrialized countries will soon take a small step toward more
international cooperation on antitrust enforcement, a U.S. Justice
Department official says.
The official, Douglas Melamed, principal deputy assistant attorney
general, said a working group of the Organization for Economic
Cooperation and Development (OECD) could complete an agreement as
early as February on a cartel proposal.
Now circulating in draft form, the proposal encourages OECD member
states to adopt and enforce effective laws against price-fixing
cartels and, consistent with their national interests, create
mechanisms to cooperate with each other on enforcement, Melamed said
in a January 20 interview.
"While this would be simply a policy pronouncement, we think it would
create some momentum," Melamed said. "It would be evidence of some
official consensus."
Although the United States is comfortable with the existing draft,
some other countries have raised concerns, he said, adding that he was
confident those concerns could be resolved.
"Some of them have a different view ... from ours about the tradeoffs
between the interest in protecting the confidentiality of their
corporate residents, on the one hand, and the importance of enforcing
anti-cartel legislation, on the other," Melamed said.
In particular, he said, some countries want to make sure an OECD
policy statement makes no binding commitment on them to cooperate in
cases when their national interest is better served by not
cooperating.
"We all recognize there are situations in which each country ought to
be able to say, 'I can't help you here,'" Melamed said. An example
would be when cooperation at that moment might jeopardize an ongoing
investigation, he said.
An OECD agreement has become necessary, he said, because, as the
global economy expands, bad conduct taking place in one country more
often hurts businesses or consumers in another country.
The problem, more common now, is not new, however. The U.S. government
has for decades maintained a policy of protecting U.S. markets from
conduct abroad that violates U.S. antitrust principles, Melamed said.
"We have what is called an effects test that says that if it has any
effects in this country, then our courts, our agencies have
jurisdiction over it regardless of where it happened," he said.
One aspect of that policy was upheld January 12 by the U.S. Supreme
Court. The court let stand an appeals court ruling allowing the
Justice Department to prosecute Nippon Paper Industries on
price-fixing criminal charges even though all the alleged conduct took
place in Japan.
The defendants in that case argued that criminal antitrust proceedings
could not be brought where the conduct took place overseas even though
it had effects in the United States. Citing sovereignty issues, the
government of Japan submitted a written argument in the case siding
with the defendant.
"The Japanese have traditionally had a territorial notion of
appropriate jurisdiction," Melamed said. "The court of appeals
rejected that argument, upheld ours that the effects test applies not
just in civil matters, but also in criminal matters. And the Supreme
Court recently denied defendant's petition to review the case, which
effectively left the court of appeals decision standing."
Although the U.S. policy is not new, it has long encountered practical
problems, he said.
If a U.S. antitrust authority attempts to conduct its own
investigation abroad, Melamed said, then it has the problems of
collecting evidence and witnesses and arresting a suspect in a foreign
country. Not the least problem is offending a foreign government, he
said.
Another approach that has occasionally succeeded is called "positive
comity." For example, the United States might request a foreign
government to prosecute a anticompetitive conduct taking place mostly
in that foreign country but that also affects U.S. markets.
"The shortcoming of positive comity is that it depends entirely on the
foreign government -- whether it has laws to reach the kind of
conduct, whether it has the will and procedural mechanisms to
effectively implement the laws, whether it will get an adequate
remedy," Melamed said.
Still another approach is to seek foreign government cooperation in an
antitrust investigation, whether simply providing access to evidence
or actually conducting a parallel investigation, he said.
"The problem is that most country's laws do not permit them to obtain
confidential business information to share with foreign governments,"
Melamed said. "So unless those laws are changed or special agreements
are entered into, the scope of cooperation is limited."
Aside from the OECD work, the United States has been working formally
and informally with foreign governments to improve international
cooperation on antitrust law enforcement. Some
government-to-government cooperation agreements have been made. Also
the U.S. government provides technical assistance to other countries
that have less experience with antitrust law.
Competition policy is emerging not only as a law enforcement issue but
also as a trade issue, especially in the World Trade Organization
(WTO). The 1997 WTO basic telecommunications agreement requires
signatory countries to establish agencies like the U.S. Federal
Communications Commission to regulate against anti-competitive
practices.
Competition policy also figured in the U.S. challenge on behalf of
Eastman Kodak Co. to Japan's alleged barriers to photo film imports. A
preliminary WTO panel ruling reported in December rejected the U.S.
complaint.
"There is a broad question: What's the best way for Kodak, the U.S.
government, and the community of nations to deal with this?" Melamed
said. "Should it be done by government-to-government negotiations, by
an international forum like the WTO, by antitrust law enforcement?"
He said the Justice Department has not embraced proposals for
negotiations in multinational organizations on common international
antitrust codes. The department wants to avoid any
lowest-common-denominator approach from multilateral negotiations that
would undercut long-established U.S. law.
"Our sense is that it's premature," Melamed said. "There's not a
sufficiently widespread consensus about what sound antitrust policy
is."