One of the most significant challenges facing companies dealing with the proliferation of global competition regimes is inconsistencies in approach, timelines, and potential double jeopardy from facing sanctions in multiple jurisdictions. In this context, the International Competition Network (ICN)’s announcement of a new set of principles on April 5, 2019 with a view to making antitrust enforcement across jurisdictions more transparent, predictable and consistent is a welcome development. More than 140 jurisdictions now have antitrust regimes, and the ICN provides a forum for these agencies to discuss developments and consider best practice.
As above, the global expansion of competition regimes in recent years means companies must navigate an increasingly complex range of rules and procedures across countries depending on where their activities trigger filing requirements or investigations. With concerns expressed in respect of the transparency and fairness of some of the newer enforcers (including the potential for certain regimes to use antitrust laws to favor domestic companies), the growing demand for harmonization may now be bearing fruit. However, how effective these suggested changes are in practice remains to be seen.
The new principles feature several elements
- The ICN framework will operate on an ‘opt-in’ basis open to all competition authorities globally, regardless of whether they are ICN members. It will be open to signature by authorities from May 1, 2019 and become effective on May 15, 2019. Given the ICN has more than 130 members, a large number of competition authorities are likely to opt in. However, China’s competition authority (SAMR) is an example of an important high-profile enforcer that is not an ICN member and may well elect not to adopt the framework.
- The new framework puts pressure on authorities to demonstrate procedural fairness, including showing that they do not discriminate against foreign businesses. But the new framework is non-binding and does not create legally enforceable rights against authorities or for parties under investigation. Authorities can also choose to withdraw from the framework. As such, businesses are unlikely to see much difference in practice unless authorities not currently applying the relevant principles have a genuine commitment to improve fairness.
- The framework provides for timely investigations and reasonable deadlines, but it does not harmonize specific review periods or procedures. The desire for harmonized review timelines, notably in merger control, is regularly highlighted as a priority by in-house counsel. However, the loose commitments under the framework mean parties to global M&A deals will still need to try and align a myriad of different merger control timelines. Similarly, joint ventures may fall for review under merger control rules in some jurisdictions and general competition rules (governing cooperative arrangements) in others. The new framework does not prescribe a favored approach in this respect.
Although the ICN initiative has been driven by a desire for stronger procedural protections in newer antitrust regimes, it is worth noting that established regimes remain imperfect. The UK’s Competition and Markets Authority, for example, has recently been successfully challenged by parties to a high profile retail merger for imposing an unfair timetable for responses. Similarly, cartel investigations by established enforcers such as the European Commission typically take several years to conclude, and this is likely to remain the case.
Proposals for the framework were initially led by the US Department of Justice (DOJ)’s Antitrust Division. The Assistant AG, Makan Delrahim, announced in June 2018 that the Antitrust Division had been in negotiations with other leading enforcers to establish a ’Multilateral Framework on Procedures in Competition Investigation and Enforcement’. While that initiative garnered support, many stakeholders, not least the European Commission, were dubious about the effectiveness of unilateral US attempts to introduce new global standards. The new ICN framework represents a broader consensus among leading agencies, which it is hoped will mean its suggestions are more closely observed.
These new principles – formally the Framework on Competition Agency Procedures (CAP) – were unanimously approved by the ICN’s Steering Group on April 5, 2019, and received widespread endorsement from global business on April 10, 2019, notably from the International Chamber of Commerce, the Association of Corporate Counsel, the Association of In-house Competition Lawyers and the US Council for International Business. The DOJ is believed to have engaged with more than 50 competition authorities in developing its original framework, and the fact the CAP has been approved in record time is a positive signal.
To opt in, authorities are required to submit information about their investigation and enforcement procedures to the ICN in line with the 11 principles below
- Non-discrimination – participating authorities will ensure that companies and individuals from different jurisdictions are treated no less favorably in like circumstances.
- Transparency and predictability – authorities will ensure that relevant competition laws and procedural rules are publicly available, and are followed in practice. Authorities which do not yet have procedural rules, but have the power to design and adopt such rules, will do so, and are encouraged to make available guidance on investigation and enforcement proceedings.
- Investigative process – parties under investigation will be informed about this as soon as practicable and legally permissible, including the legal basis of the case and the nature of conduct under investigation. Parties will also have reasonable opportunities for meaningful and timely engagement on relevant issues. Information requests will be limited to information deemed relevant and with a reasonable time to respond (while avoiding unnecessary delay).
- Timing of investigations and enforcement proceedings – authorities will endeavor to conclude cases within a reasonable period, taking into account the nature and complexity of the case.
- Confidentiality – authorities will have publicly available rules, policies or guidance on treatment of confidential information, with such information protected from unlawful disclosure and authorities taking into account the interests of parties and the public on disclosure.
- Conflicts of interests – officials, including decision-makers, will be objective and impartial and not have material personal or financial conflicts of interest in cases they participate in or oversee. Authorities should also have relevant rules, policies or guidance on conflicts.
- Rights of defense – parties will receive timely notice of alleged violations or claims against them, and reasonable and timely access to related information necessary to prepare an adequate defense. Parties will also have the opportunity to be heard and challenge evidence.
- Representation by legal counsel and privilege – authorities will not deny without due cause requests to be represented by legal counsel, and parties will have a reasonable opportunity to present views on substantive and procedural issues via counsel. Authorities will also recognize legal privilege in accordance with their jurisdiction’s legal norms and are encouraged to have rules, policies or guidance on the treatment of privileged information.
- Decisions in writing – final infringement decisions or orders imposing sanctions etc will be in writing, including findings of fact and legal conclusions, and be publicly available subject to confidentiality rules and legal exceptions. Commitments will also be in writing and generally made public along with their reasons.
- Independent review – no authority will impose a prohibition, remedy or sanction in a contested infringement proceeding unless there is an opportunity to seek review by an independent, impartial body (e.g. a court, tribunal or adjudicative body).
- Additional standards – parties may have additional standards consistent with providing effective and fair procedures, such as the ICN’s separate Recommended Practices for Investigative Process.
While this initiative represents a huge step towards improving antitrust enforcement for businesses, consumers and regulators across jurisdictions, its ultimate success depends on which authorities opt in to improving their procedural safeguards.