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Confidentiality, Conflicts And Comity: Problems and Solutions in the New Era of International Co-operation for the Purposes of Enhancing Competition Law Enforcement

Published online by Cambridge University Press:  21 May 2009

Stephen Kines
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Extract

With the emergence of transnational business dealings as the norm rather than the exception, international co-operation in the enforcement of competition law has become more important than international co-operation to avoid conflict between individual nations' competition laws. The United States and Canada's most recent attempt to address conflict issues in competition law arising in transnational business dealings was in the negotiation of the 1984 Memorandum of Understanding (hereinafter the ‘MOU’). The MOU is an example of the first stage of international co-operation in competition law as it sets up a framework for the avoidance of conflict in the administration of two countries’ competition laws. However, co-operation to avoid conflicts does not help overcome the jurisdictional difficulties of co-operating countries trying to enforce domestic laws that seek to prosecute foreign conduct with domestic effect, such as those that exist in the US, the European Community and Canada. Six years after the MOU was signed, the Treaty between Canada and the US on Mutual Legal Assistance in Criminal Matters (hereinafter the ‘MLAT’) came into force and signalled a new era of competition law enforcement policy. The MLAT emphasized cooperation between Canada and the US competition enforcement authorities to enhance enforcement, rather than sjmply co-operation to avoid conflict. The expansion of the principle of enforcement enhancement in criminal competition law between the US and Canada to civil competition law was realized by the North American Free Trade Agreement (‘NAFTA’) and more concretely by the recent negotiation of a new agreement between Canada and the US6 (the ‘Canada-US Agreement’). The shift from passive co-operation to avoid conflict in the administration of competition laws to active co-operation to enhance enforcement is significant. The potential result is the correspondent shift in the relationship between a competition enforcement agency and the local business community from a close and open relationship to a more adversarial and closed relationship. A close relationship between a competition enforcement agency and the local business community is necessary as the business community is the enforcement agency's greatest ally in competition law enforcement.

Type
Research Article
Information
Netherlands International Law Review , Volume 43 , Issue 1 , May 1996 , pp. 19 - 32
Copyright
Copyright © T.M.C. Asser Press 1996

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Footnotes

*

Of Blake, Cassels & Graydon (Toronto, Canada), BA, JD, LLB. Member of the New York and Ontario Bars. The author would like to thank the Canadian Bar Association of Ontario whose research grant helped make this article possible.

References

1. Addy, George N., the Director of Investigation and Research at the Canadian Bureau of Competition Policy pointed out in his address to the International Bar Association, Anti-Trust Across Frontiers (09 12, 1995) at p. 5Google Scholar, that co-operation in competition law enforcement between the Canada and the US first took place in 1901 shortly after competition laws were first enacted in Canada (1889) and the US (1890). The first formal bilateral agreements in competition law between the two countries were the Fulton-Rogers Understanding of 1959 and the Bosford-Mitchell Understanding of 1969.

2. Memorandum of Understanding Between the Government of Canada and the Government of the United States of America as to Notification, Consultation and Co-operation with Respect to the Application of National Anti-trust Laws, 03 9, 1984, 23 ILM (1984) p. 275CrossRefGoogle Scholar.

3. For the sake of convenience, US anti-trust law will be referred to as competition law. There are reasons why the US laws are referred to as anti-trust law as opposed to competition law, but that is beyond the scope of this paper. The differences in US anti-trust law and Canadian competition law that are relevant to international co-operation in enforcement of those laws are addressed in this paper.

4. Treaty between the Government of Canada and the Government of the United States of America on Mutual Legal Assistance in Criminal Matters, 1990 Can. TS No. 19, 03 18, 1985Google Scholar, entered into force on January 14, 1990.

5. December 17, 1992, reprinted in Int. Free Trade Rep. (CCH), Spec. Rep. No. 39.

6. Agreement between the Government of Canada and the Government of the United States of America Regarding the Application of their Competition and Deceptive Marketing Practice Laws, 08 5, 1995Google Scholar.

7. MOU, supra n. 2 at para. 2.

8. Ibid., at para. 1.

9. OECD – Acts of the Organization, Vol. 26, No. 64, 05 21, 1986Google Scholar.

10. Ibid, at preamble.

11. For example with Germany (Agreement Relating to Mutual Co-operation Regarding Restrictive Business Practices, 06 23, 1976, 27 UST 1956)Google Scholar, Australia (Agreement Relating to Cooperation on Anti-trust Matters, 06 29, 1982, 34 UST 388Google Scholar), and the Netherlands (Treaty on Mutual Legal Assistance, 06 12, 1981, Senate Treaty Doc. No. 97–16Google Scholar).

12. This extra-territoriality of US competition law is dealt with below in sections 2.2.1 and 3.3.

13. Agreement between the Government of the United States of America and the Commission of the European Communities Regarding the Application of their Competition Laws (the ‘US-EC Agreement’), 08 23, 1991, 30 ILM (1991) p. 1487CrossRefGoogle Scholar.

14. Hartford Fire Insurance Co. v. California, 113 S. Ct. 2891 (1993)Google Scholar.

15. The 1995 Joint US DOJ and the FTC Antitrust Enforcement Guidelines for International Operations (04 1995) at s. 3.1Google Scholar.

16. P.L. 97–290, 96 Stat. 1246.

17. For a more detailed analysis, see J. Rill and C. Goldman, ‘A US and Canadian Perspective on International Anti-trust Enforcement Post-IAEEA, the 1995 International Guidelines and the Canadian-US MLAT’. This unpublished paper was delivered to the Trade Policy Forum VIII, PECC, on April 20, 1995.

18. Wood Pulp (No. L 85/1), [1985] 3 CML Rep. 474 (ECJ)Google Scholar.

19. RSC 1985, c. C–34.

20. S. 46.

21. S. 52(2).

22. S. 84.

23. SC 1988, c. 37.

24. MLAT, supra n. 4 at Art. XVI.

25. Ibid., at Art. XIV.

26. Ibid, at Art. XIII.

27. Ibid, at Art. IX.

28. NAFTA, supra n. 5 at Ch. 15.

29. While Mexico is a signatory to NAFTA and, therefore, is bound by Ch. 15 of NAFTA, Mexico does not have a mechanism such as the Canada-US Agreement for implementing the principle of Ch. 15 of NAFTA either with Canada or the US.

30. PL 103–438, 108 Stat. 4597.

31. French Republic v. Commission of the European Communities (No. C–327/91), [1994] 8Google Scholar, Part 1 CJEC Rep. 3641 at 3674.

32. Ibid. Since the Court struck down the US-EC Agreement on the basis that it went beyond the Commission's jurisdiction to conclude such an agreement, it did not need to consider France's argument that ‘Community competition law had been infringed’. Therefore, there is still a question as to whether a treaty reworked on jurisdictional grounds to conform to the Court's concerns will survive another attack by France or any other EC member country. However, as the Advocate-General stated in the case, all of France's concerns amount to jurisdiction and ‘the breach of principle of legal certainty’ (at p. 3646). Since a new treaty will require ‘unanimous assent of the Council’ (at p. 3665), France's concern as to how exactly confidential information will be treated will likely be dealt with before a new treaty is even presented to the US. The EC still has tremendous powers to internally apply rules of competition, but it will require the consensus of Member States toconclude international agreements on the subject (at p. 3678).

33. Addy, loc. cit. n. 1, at p. 8.

34. ‘International Anti-trust Code will be Studied by Gatt Members’, 65 Anti-trust Trade Reg. Rep. (1993) p. 259Google Scholar.

35. Ibid., at p. 260.

36. American Bar Association Section of Anti-trust Law NAFTA Task Force, ‘Report of the Task Force of the Antitrust Section of the American Bar Association on the Competition Dimension of the North American Free Trade Agreement’ (07 18, 1994) at pp. 228–229Google Scholar.

37. A New York Times article on Anne Bingaman, head of the Anti-trust Division at the DOJ, outlines a few of the recent ‘turf tussles’ between the DOJ and the FTC (10 22, 1995) at C–12Google Scholar. It has also been noted by Oxford Analytica Ltd. that the DOJ and the FTC are under pressure from Congress to ease up on anti-trust investigations in the international sphere — see ‘US Anti-trust Policies Face Review’, reprinted in The Globe & Mail (11 20, 1996) at B–6Google Scholar.

38. Director of Investigation and Research, Bureau of Competition Policy, Industry Canada, ‘Draft Policy on Confidentiality of Information under the Competition Act’ (Ottawa: Minister of Supply and Services, 1994)Google Scholar.

39. Canadian Bar Association National Competition Law Section, ‘Commentary on the Draft Information Bulletin of the Director of Investigation and Research Respecting Confidentiality of Information under the Competition Act’ (December 1994). The concern with respect to sharing confidential information with another competition enforcement agency is not that the agency will intentionally betray confidential information, but that it will be done inadvertantly during the agency's investigation.

40. Industry Canada, ‘Discussion Paper: Competition Act Amendments’ (June 1995).

41. That appears to be the process at present in Canada (see Industry Canada, ‘Communication of Confidential Information under the Competition Act’ (May 1995)), but the Community must be assured that a change in Director in midstream of an investigation will not mean a change in policy in which information already provided is treated.

42. For the application of this test in the Canadian context see Moran v. Pyle National (Canada) Ltd., [1975] 1 SCR 393;Google Scholar MorguardInvestments Ltd. v. De Savoye, [1990] 3 SCR 1077;Google Scholar and Hunt v.T & N plc, [1993] 4 SCR 289Google Scholar.

43. The Supreme Court of Canada recently favoured the lex loci delicti rule in Tolofson v. Jensen, [1994] 3 SCR 1022Google Scholar, a tort case. The Court specifically limited its reasoning to the interprovincial context (at p. 1064) and specifically affirmed that a Canadian court may only exercise jurisdiction where the real and substantial connection test is met (at p. 1049).

44. Assessment Factor 8 in the 1995 Guidelines, supra n. 15.

45. This is the position of the ABA's Antitrust Law Section NAFTA Task Force, supra n. 36, at pp. 165–174 and p. 193.