FOR EDUCATIONAL USE ONLY

E.C.L.R. 1998, 19(3), 156-163

European Competition Law Review

1998

Article

INTERNATIONAL ANTITRUST CO-OPERATION IN A GLOBAL ECONOMY

Montini Massimiliano.

Claudio Cocuzza.

Copyright (c) Sweet & Maxwell Limited and Contributors

Subject: COMPETITION LAW. Other related subjects: International trade

Keywords: Competition law; International trade; World Trade Organisation
Abstract: Inadequacy of current fragmented system of antitrust laws to deal with increase in
cross border anti competitive practices, success of bilateral cooperation and potential of WTO as
forum for multinational cooperation.

*156 Antitrust Law and World Trade

The expansion of national systems of antitrust law, on the one hand, and the globalisation of
trade on the other, have completely changed the international antitrust law scenario in the last
decades. [FN1]
The globalisation of trade has been driven by the General Agreement on Tariffs and Trade
(GATT) from 1947 to 1994, through eight negotiation rounds which have progressively lowered
tariffs and increased the volume of trade in goods and services. [FN2] In 1994, the World Trade
Organization (WTO) was created with the aim of driving and regulating the constant increase of
trade at a global level and the consequential integration of world markets. [FN3]
National economies are, therefore, more open than ever to foreign competition and foreign
direct investments. The number of transnational firms increases. Most of the firms traditionally
operating at a national level now adopt global strategies, which in turn modify their production
methods. Countries increasingly become interdependent, and the reference markets of many
goods and services become regional or global.
While trade barriers are falling and business internationalises, cross-border anti-competitive
practices increase. Such practices, which may reduce effective competition and undermine the
benefits of globalisation, dramatically reveal the limits of an "asynchronised" international
antitrust regime. [FN4]
It is generally very difficult for the panoply of national antitrust systems to tackle
domestically cross-border anti-competitive practices, which by their very nature are planned and
implemented by several actors under several jurisdictions and have negative effects in many
countries. Most of the countries with efficient national antitrust law regimes lack appropriate
instruments efficiently to investigate and enforce their decisions against multi-jurisdictional
antitrust violations. In the absence of international co-operation, it is unlikely that antitrust
authorities will be able to seek in foreign territory the information necessary to establish
infringements.
As a result of a lack of rules at international level, companies may be subject to different
national competition rules, and national governments may seek to remedy the vacuum by
extending the territorial scope of their antitrust provisions. This of course increases uncertainties,
is likely to constitute a barrier to the expansion of trade and of international investments, and--
last but not least--causes political frictions. [FN5]
Various attempts to synchronise competition principles with a newly liberalised trading
system by establishing a harmonised international antitrust regime have dramatically failed.
[FN6] Meanwhile, *157 bilateral co-operation in the sphere of antitrust law, such as that between
U.S. and E.C. enforcement authorities, is developing quickly and is achieving quite satisfactory
results. [FN7] In this paper we argue that bilateral co-operation, although it must be recognised
as an important achievement in the present transitory phase towards a global economy, should be
gradually replaced by multilateral co-operation, agreed at international level, possibly within a
world forum such as the WTO. [FN8]

Bilateral Co-operation: the E.C. and the U.S.

The 1991 Agreement

On September 23, 1991 the Government of the United States and the European Commission
signed a bilateral agreement composed of eleven articles whose purpose is "to promote
cooperation and coordination and lessen the possibility or impact of differences between the
Parties in the application of their competition laws". [FN9]
The 1991 Agreement requires each party to notify the other whenever its competition
authorities are engaged in enforcement activities which may affect important interest of the other
party (Article II) and provides for periodical meetings between officials from the competition
authorities of each party (Article III). The 1991 Agreement also contains a limited duty to render
assistance to the competition authorities of the other party and provisions on co-operation and
co-ordination of enforcement activities (Article IV). [FN10]
Articles V and VI are the most innovative and interesting parts of the Agreement. They
codify respectively the positive comity principle and the negative comity principle.
The negative comity principle essentially consists in a doctrine of politeness and good
manners between nations, according to which a sovereign country, in case of a transnational
violation, although having the right to apply its law, can in certain situations decide not to pursue
an investigation and leave it to the authorities of another country, where significant interests of
that foreign country might otherwise be affected. The negative comity principle can be applied
by national enforcement authorities and courts in the enforcement stage as well as in the
adjudication stage.
Article VI of the 1991 Agreement provides that, "within the framework of its own laws and
to the extent compatible with its important interests, each Party will seek at all stages in its
enforcement, to take into account the important interests of the other Party. Each Party shall
consider important interests of the other Party in decisions as to whether or not *158 to initiate
an investigation or proceeding, the scope of an investigation or proceeding, the nature of the
remedies or penalties sought, and in other ways, as appropriate."
 The Agreement does not make any obligation on when and how each party has to take into
account the interests of the other party. It merely provides a non-exhaustive list of guidelines to
be followed when considering one another's important interests (Article VI). In brief, it can be
said that the 1991 Agreement recognises the negative comity principle and creates a framework
for avoidance of conflicts between E.C. and U.S. competition authorities over enforcement
activities, but does not impose any obligation upon the parties on when and how to refrain from
enforcement activities to protect important interests of the other party.
The positive comity principle differs from negative comity in that it consists in positive acts
of co-operation and reciprocal assistance between national antitrust authorities placed in different
countries, rather than simply in decisions not to act in certain situations and leave some cases to
the authorities of another country.
The positive comity principle is not (as the negative comity principle is) simply a means of
avoiding conflict between antitrust authorities of different countries and between the
governments of those countries, but is usually the cornerstone of broad schemes of co-operation
between national antitrust authorities located in different countries. Positive comity may be a
very helpful tool to (i) tackle more efficiently transnational conduct which has anti-competitive
effects in several countries, and (ii) avoid duplicating investigations on the same conduct by
different national antitrust authorities.
On the basis of the positive comity principle, with respect to a transnational antitrust
violation which has negative effects in several countries, when the antitrust authority of a certain
country recognises that the enforcement authority of another country is better placed to tackle
efficiently the transnational violation, it will ask that authority to investigate and will remain at
the disposal of the proceeding enforcement authority to give all the possible positive assistance.
In order to function properly, the positive comity principle requires highly developed and
efficient antitrust law regimes, similar substantive and procedural antitrust provisions and a
considerable level of reciprocal trust between the concerned enforcement authorities. For this
reason, the positive comity principle cannot yet commonly be found at international level.
Article V of the 1991 Agreement prescribes that "if a Party believes that anticompetitive
activities carried out in the territory of the other Party are adversely affecting its important
interests, the first Party may notify the other Party and may request that the other Party's
competition authorities initiate appropriate enforcement activities." Such a type of positive
comity is not completely satisfactory, in so far as it simply creates a voluntary mechanism to try
and foster co-operation between competition authorities of the parties, with the aim of achieving
better co-ordination between them and avoiding duplication of enforcement efforts. In fact, such
a mechanism does not create binding obligations on the parties, which do not have any duty to
co-ordinate their enforcement activities.
The 1991 U.S.-E.C. Agreement has to be considered a positive step in the way of a closer
and fruitful co-operation and co-ordination between enforcement authorities placed in different
countries, since it constitutes a useful tool to avoid conflicts and prevent waste of time and
resources. However, it has at least two major drawbacks which can considerably limit its
effectiveness. The first one is the presence of a "confidentiality rule", contained in Article VIII,
which provides that "notwithstanding any other provision of [the] Agreement, neither party is
required to provide information to the other party if disclosure of that information to the
requesting party (a) is prohibited by the law of the party possessing the information, or (b) would
be incompatible with important interests of the party possessing the information." [FN11] The
second major drawback of the 1991 Agreement consists in the fact that its co-operation and co-
ordination mechanisms are essentially of a voluntary nature and do not create binding obligations
on the parties.
The first major opportunity to test the co-operation mechanisms provided by the 1991
Agreement (although at the time the Agreement was not yet officially in force) was the
Microsoft case in *159 1994. [FN12] In this instance the U.S. DOJ and the E.C. Commission
actively co-operated in their investigations on Microsoft's activities and the case was finally
settled with a negotiation at trilateral level between Microsoft and the two enforcement agencies
together.
The outcome of the Microsoft case was an encouraging success arising out of an efficient and
effective co-operation between the U.S. and E.C. enforcement authorities. However, its
importance must not be overestimated. In fact the settlement negotiated at trilateral level was
made possible only thanks to Microsoft, which agreed to waive its confidentiality rights and
consented to an exchange of information between the E.C. Commission and the DOJ.
In October 1996, the European Commission presented to the Council and the European
Parliament the First Annual Report on the E.C.-U.S. Agreement, [FN13] covering the period
from April 10, 1995 to June 30, 1996. The period covered by the Report is too short to draw
definitive conclusions about the functioning of the E.C.-U.S. Agreement and to identify
significant trends in the enforcement of antitrust law at international level. However, the Report
provides interesting elements to evaluate the areas where co-operation is more needed and where
it is most practicable. [FN14]

The 1997 Draft Agreement

In 1997, the European Commission and the Government of the United States "recognizing
that the 1991 Agreement has contributed to coordination, cooperation and avoidance of conflicts
in competition law enforcement" and "believing that further elaboration of the principle of
positive comity would enhance the 1991 Agreement's effectiveness", drafted a Supplementary
Agreement, commonly referred to as the 1997 Draft Agreement. [FN15] The Draft Agreement
"is intended to supplement and to be interpreted consistently with the 1991 Agreement, which
remains fully in force". [FN16]
The 1997 Draft Agreement is designed to apply "where there is reason to believe that (a)
anticompetitive activities are occurring in whole or in substantial part in the territory of one of
the Parties and are adversely affecting the interest of the other party, and (b) the activities in
question appear to be impermissible under the competition laws of the Party in the territory of
which the activities are occurring" (Article I(1)).
A revised and reinforced version of the positive comity principle is the core subject of the
1997 Draft Agreement. The new definition of the positive comity principle is a very broad one
and contemplates the possibility of requesting the other country's authorities to investigate and
remedy anti-competitive activities which might have a negative impact on the requesting state.
The new definition of the positive comity principle prescribes that "the competition authorities of
an Affected Party may request the competition authorities of a Territorial Party to investigate
and, if warranted, to remedy anticompetitive activities in accordance with the Territorial Party's
competition laws. Such a request may be made regardless of whether the activities also violate
the Affected Party's competition laws, and regardless of whether the competition authorities of
the Affected Party have commenced or contemplate *160 taking enforcement activities under
their own competition laws." [FN17]
 The new positive comity principle certainly goes further than the existing one. In fact a party
can request the competition authorities of the other party to act even if the targeted activities do
not violate the other party's competition laws and even if the competition authorities of the other
party have no interest in taking any enforcement activities. However, the new positive principle
still maintains its voluntary nature. Moreover, the 1997 Draft Agreement does not contain any
provisions which may limit the negative impact of the "confidentiality rule" contained in the
1991 Agreement. Therefore, it seems that the 1997 Draft Agreement, as it stands, even if finally
approved by the parties, does not have any chance of modifying in a consistent way the present
situation, characterised by an embryonic co-operation between the E.C. and the U.S. competition
authorities.

Multilateral Co-operation: the WTO as Possible Forum

Notwithstanding the drawbacks of bilateral co-operation agreements, we have already

mentioned above that various attempts at synchronising competition principles with a newly
liberalised trading system have up to now dramatically failed. [FN18] As a consequence, in
recent years there have been many suggestions that the most appropriate forum for a
development of internationally agreed antitrust rules would be the World Trade Organization
(WTO). [FN19] The suggestion is appealing because of the very broad membership of the WTO
and because the WTO seems nowadays the most suitable forum to balance the various interests
and concerns of both developed and less developed countries.
However, the WTO is a global forum characterised by great diversity in competition law and
policy between the parties. This renders any agreement within the WTO harder to reach than in
smaller fora characterised by states with similar economic and legal structures (such as the
OECD) or with special geographical links (such as the E.C., EEA and NAFTA).
The international competition law issue has been on the political agenda of the WTO since
the establishment of the Organization was still under negotiation. In 1993, in the framework of
the negotiation for the creation of the MTO, then WTO, a Working Group of experts at the Max
Planck Institute proposed a Draft International Antitrust Code. [FN20] The Draft Code envisaged
the creation of an international competition law regime, based on "minimum standard"
substantive provisions and on the establishment of a centralised enforcement and dispute
settlement structure.
The international antitrust regime was to be administered by an International Antitrust
Authority. The Authority would have been allowed to bring actions against national authorities
when a national authority refuses to take appropriate measures, sue private parties for
injunctions, hold a right of appeal even when it is not a party to a case, have a duty to sue a party
before the International Antitrust Panel, and assist parties in the enactment of antitrust law and in
antitrust enforcement.
The overly ambitious nature of the Draft Code was probably the main reason for its scant
success, but it remains a useful document for discussion on international antitrust law. In fact, the
minority of the Working Group of experts at the Max Planck Institute which prepared the Draft
Code had warned from the beginning that the approach of the Code was too ambitious and had
urged a minimalist approach. The minimalist approach was based on 15 principles upon which
states could build a progressive convergence of their antitrust policies and legislation to achieve
in the medium to long term a limited degree of harmonisation, encompassing common rules on
certain basic issues and freedom to the member states as regards other marginal *161 issues.
[FN21] Not even the minimalist alternative to the Draft Code received a sufficient consensus at
international level. Therefore, no agreement on international competition law could be inserted
among the Plurilateral Treaties annexed to the WTO Charter.
A later attempt to establish an international framework of competition rules at international
level in the framework of the WTO was made at the 1996 First Ministerial Conference of the
Parties to the WTO. The issue had been promoted before the Singapore Meeting by various
parties to the WTO, among which the E.C. played a major role. [FN22] The issue of international
co-operation in competition law was considered relevant by most parties, but no consensus on
substantial actions to be taken could be achieved in Singapore. The ministers simply agreed to
establish two working groups, with the aim of examining respectively the relationship between
trade and investment and the interaction between trade and competition policy, including anti-
competitive practices, in order to identify areas that may merit further consideration in the WTO
framework. [FN23]
The WTO Working Group on Trade and Competition Policy was finally set up during spring
1997 and held its first official meeting on July 7, 1997. The working agenda for the Working
Group has not yet been defined, but useful elements can be drawn from the two papers prepared
by the European Community [FN24] and by the United States [FN25] before the first meeting of
the Working Group, as well as from the Checklist of Issues Suggested for Study prepared by the
Chair. [FN26]

WTO Working Group: the E.C. paper

Generally speaking, one can say that the European Communities seem much more favourable
than the United States to a greater involvement of the WTO in the area of competition law,
through the newly established Working Group on Trade and Competition Policy.
The E.C. paper analyses the complementarity of trade and competition policies. Competition
policy is recognised as bringing benefits to society as a whole, by supporting the competitiveness
of industry and protecting the right of individual firms to compete and the right of consumers to
buy at the lowest price. Moreover, efficient competition law regimes at national level can keep
national economies open, and thus contribute to a further integration of markets.
However, the adoption and enforcement of competition law exclusively at a national level is
becoming inadequate to deal with the growing number of competition cases with an international
dimension. As a result of the continued liberalisation of trade realised within the WTO, in fact,
firms have a greater incentive to behave anti-competitively, with the aim of dividing markets in
an artificial way, or to engage in some other anti-competitive practices. The absence of common
basic competition rules agreed at international level may in certain cases lead to a nullification of
trade commitments undertaken by WTO members. For these reasons, according to the E.C., the
adoption of an international framework of competition rules should be considered.
In order to do so, the newly established WTO Working Group could first encourage all its
members, irrespective of their level of development, to enact and effectively apply a domestic
regime of competition law. The Working Group could then examine which core principles are
common to competition laws of different countries, and then examine how the effectiveness and
coherence of national competition policies of different members could be enhanced. Finally, the
Working Group could promote a gradual convergence of competition laws and thus contribute to
the avoidance of conflicts of laws and jurisdiction between member states, thus increasing the
security of firms operating in several countries and reducing their costs of compliance with
competition laws.
 Having done all this preliminary work, the WTO Working Group could then proceed to
examine whether it is feasible to foresee the adoption, by consensus, of certain common binding
principles of competition law and procedure. Such an examination could also consider whether
the approach of the WTO to competition law might be global to all sectors or rather sectoral.
The work programme suggested by the E.C. for the newly established WTO Working Group
includes five items. The first item consists in identifying which are the main anti-competitive
practices that restrict *162 international trade or development and in taking stock of the
development of competition regimes in WTO member countries. Under this item, the Working
Group should focus on issues of common concern at international level and should then examine
the relative responses given both in national competition law regimes and in international co-
operation agreements.
The second item consists in examining the feasibility of a commitment by all WTO members
to adopt domestic competition laws and enforcement systems, by taking into account the
structures and levels of development of national markets. The work under this item should
primarily highlight which are the basic features of existing national competition law regimes,
both at material law and at procedural law level. The analysis of such basic features could, for
instance, reveal which in various countries are the types of business behaviour considered
anticompetitive by national competition laws (material competition law) and which types of
procedures apply to them (procedural competition law). Moreover, issues such as access to
courts and efficiency and transparency of enforcement by competition authorities at national
level should be scrutinised under this item.
Once having carefully examined the basic features of national competition laws in various
countries, under the third item the Working Group should examine whether and how co-
operation between authorities could be supported within the WTO. In practice, the Working
Group should catalogue the existing practices of bilateral and multilateral co-operation, see what
instruments of co-operation are really likely to enhance effective competition policy
enforcement, and assess the possibility of their adoption at a global level in the WTO framework.
Finally, the fourth item consists in examining whether WTO members could identify a core
of common principles that might be adopted at international level. These would include both
material law principles (such as those regarding cartels, boycotts, alliances, mergers, abuse of
dominance, vertical practices) and procedural law principles (such as those regarding mergers,
access to domestic courts, cases subject to international co-operation).
In a second stage, a fifth item could come into play, consisting in examining to what extent
dispute settlement might be applied in the WTO framework in order to ensure compliance with
any multilateral provisions on competition policy. It must be noted that this item could come into
play only when a core of common principles has been identified at international level and WTO
member states have agreed on it.

WTO Working Group: the U.S. paper

The U.S. paper welcomes the establishment of the Working Group as a forum for research
and debate on the linkages between trade liberalisation and competition laws. In fact, the
increasing globalisation of trade calls for more co-operative and co-ordinated approaches among
competition authorities. The United States supports efforts of co-ordination among national
competition authorities aimed at reducing the differences both in material and procedural laws
and in domestic enforcement between various WTO members.
 The United States believes that "there is not a degree of consensus today that would support
negotiation in the WTO of constructive competition policy disciplines" and therefore the
Working Group should concentrate initially on an analysis of fundamental concepts of
competition policy and how they are implemented and enforced. The discussion could then
proceed to an examination of the implications of these concepts for the world trading system,
with a view towards reaching a common understanding on the role and relevance of the subject
of competition policy to the WTO framework.
The work programme suggested by the United States for the WTO Working Group consists
of three main items. Under the first item, the Working Group should review the work somehow
related to competition law and policy that has been done up to now in the framework of the
GATT 1947 and (from 1995) of the WTO. Of particular relevance to this item would be the
analysis of the provisions of existing WTO instruments (such as TRIPs, TRIMs, GATS) in the
light of competition law and policy.
Under the second item, the Working Group should focus on competition law at national
level, proceeding with a comparative analysis of competition law regimes of various WTO
members. The analysis should highlight the relevant similarities and differences existing in
several domestic competition systems, regarding for instance the core elements, the economic
underpinnings, the enforcement of competition law and the benefits of national competition laws
for trade liberalisation.
Under the third item, the Working Group should deal with the international dimensions of
competition law and policy, consisting in the examination of the existing instruments for
international co-operation and their objectives, the areas where *163 increased co-operation and
co-ordination may bring benefits and the areas where market deregulation may be important for
further trade liberalisation within the WTO.
Having done this background work, according to the United States, the Working Group
would be in a position to carry out its mandate to "identify any areas that may merit further
consideration in the WTO framework", irrespective of any practical conclusions that might be
reached.
Apart from the E.C. and U.S. papers outlined above, another document of interest is the
Checklist of Issues Suggested for Study prepared by the Chair, on the occasion of the first
meeting of the Working Group on Trade and Competition. The Checklist suggests four items for
the work programme of the newly established Working Group. The first item should provide an
analysis in general terms of the relationship between objectives, principles, concepts, scope and
instruments of trade and competition policies.
The second item should deal with the stocktaking and analysis of existing instruments,
standards and activities regarding trade and competition policy, starting with national
competition instruments related to trade, continuing with bilateral and multilateral agreements,
and concluding with relevant WTO provisions.
The interaction between trade and competition policy should be the focus of the third item. It
should assess the impact on international trade of state monopolies and anti-competitive practices
of undertakings. It should then analyse the relationship between trade-related aspects of
intellectual property rights. It should then determine the impact of trade policy and law on
competition.
Finally, on the basis of the activities conducted under the three items seen above, the
Working Group should be able, in the fourth item, to carry out its mandate consisting in the
identification of areas that may merit further consideration in the WTO framework.
 Until the official work programme is exactly defined, it is surely too early to predict how
successful the newly established WTO Working Group on Trade and Competition Policy might
be. It is certainly true that, as the United States assumes in its paper, "there is not the degree of
consensus today that would support negotiation in the WTO of constructive competition policy
disciplines." However, the globalisation of trade and the growing importance of the World Trade
Organization as a "world regulator" are gradually leading towards an ever greater intervention of
the WTO in the trade and competition sphere. Therefore, the possibility cannot be ruled out that
the Working Group on Trade and Competition Policy might be able in the coming years to
overcome the scepticism of some WTO members, which seem nowadays to stand in the way of
adopting competition rules agreed at international level within the WTO.

FN Clandio Cocuzza and Massimiliano Montini, Antonelli & Cocuzza, Studio Legale Associato,
Milan. An earlier version of this work was presented at the Seminar "International Antitrust in a
Global Economy", New Orleans, April 24-27, 1997, organised by the Association International
des Jeunes Avocats (AIJA), in co-operation with Tulane Law School.

FN1. See E.U. Petersmann, "International Competition Rules for Governments and for Private
Business", 30:3 J. World Trade 5 (1996); E. Fox, "Toward World Antitrust And Market Access",
91:1 Amer. J. Int'l L. 1 (1997).

FN2. On the GATT, see generally R.E. Hudec, Enforcing International Trade Law: The
Evolution of the Modern GATT System (1993); R.E. Hudec, The GATT Legal System and
World Trade Diplomacy (1990); J.H. Jackson, The World Trading System: Law and Policy of
International Economic Relations (1989); J.H. Jackson, World Trade and Law of the GATT
(1969).

FN3. On the WTO, see generally J.H. Jackson, The Uruguay Round, World Trade Organization
and the Problem of Regulating International Economic Behaviour
(1995); E.U. Petersmann, "The Transformation of the World Trading System through the 1994
Agreement Establishing the World Trade Organization", Eur. J. Int'l L. 161 (1996); T.J. Dillon,
Jr., "The World Trade Organization: A New Legal Order for World Trade?", 16 Mich. J. Int'l L.
349 (1995).

FN4. See M.H. Hauser and E.U. Petersmann, "International Competition Rules in the
GATT/WTO System", Swiss Rev. Int'l Econ. Rel. 169 (1994); E.U. Petersmann, "Competition
Policy Aspects of the Uruguay Round--Achievement and Prospects", OECD (1994); M.
Weidebaum, "Antitrust Policy for the Global Market Place", 28:1 J. World Trade 27 (1994).

FN5. See P. Torremans, "Extraterritorial Application of E.C. and U.S. Competition Law", Eur.
L. Rev. 280 (1996); M. Demetriou and A. Robertson, "U.S. Extra-territorial Jurisdiction in
Antitrust Matters: Recent Developments", 8 E.C.L.R. 461 (1995); J.P. Griffin, "U.S. Supreme
Court Encourages Extraterritorial Application of U.S. Antitrust Laws", 21 Int'l Business Lawyer
389 (1993); C.S. Stark, "The International Application of the United States Antitrust Laws",
Unpublished Paper Presented at the 1997 AIJA Seminar; J.C. Rivalland, "From Dyestuffs, Zoja
and Wood Pulp ... to where? The E.U. Perspectives", Unpublished Paper Presented at the 1997
AIJA Seminar.

FN6. See C.J. Cheng, International Harmonization of Antitrust Laws (1995); M. Trebilcock,
"Competition Policy and Trade Policy: Mediating the Interface", 30 J. World Trade 71 (1996); P.
Torremans, "Extraterritorial Application of E.C.
and U.S. Competition Law" (see note 5 above).

FN7. See J.P. Griffin, "E.C. and U.S. Extraterritoriality: Activism and Cooperation", 17 Fordham
Intl'l L. J. 353 (1994); C.D. Ehlermann, "The International Dimension of Competition Policy",
17 Fordham Int'l L. J. 833 (1994); R.P. Alford, "The Extraterritorial Application of Antitrust
Laws: The United States and European Community Approaches", 33 Va. J. Int'l L. 1 (1992); J.
Walker, "Extraterritorial Application of U.S. Antitrust Laws: The Effect of the European
Community-United States Antitrust Agreement, 33 Harv. Int'l L. J. 583 (1992); A.J. Himelfarb,
"The International Language of Convergence: Reviving Antitrust Dialogue Between the United
States and the European Union with a Uniform Understanding of Extraterritoriality", 17:3 U. Pa.
J. Int'l Econ. L. 909 (1996); P. Torremans, "Extraterritorial Application of E.C. and U.S.
Competition Law" (see note 5 above).

FN8. See E. Fox, "Competition Law and the Agenda for the WTO: Forging the Links of
Competition and Trade", 4 Pacific Rim Law & Policy Journal 1 (1995); E. Fox and J.A. Ordover,
"The Harmonization of Competition and Trade Law: the Case for Modest Linkages of Law and
Limits to Parochial State Action", 19:2 World Competition Journal of Law and Economics 5
(1995).

FN9. Agreement between the Government of the United States and the Commission of the
European Communities Regarding the Application of Their Competition Laws, Sept. 23, 1991
("1991 Agreement"), Article VI(3), [1995] O.J. L95/47. The
1991 Agreement was challenged before the European Court of Justice by France, supported by
Spain and the Netherlands, for procedural reasons regarding the limits of the external powers of
the E.C. Commission. According to Article 228(1) of the E.C. Treaty, in fact, the European
Commission has the power to negotiate, but not conclude agreements with foreign countries. The
conclusion of such agreements rests within the competence of the Council, which has to consult
the European Parliament. The ECJ found that, in the material case, the European Commission, in
the absence of a delegation of powers by the Council to conclude on its behalf the agreement in
question, lacked the powers to conclude the agreement, and therefore nullified the agreement for
improper procedure (Case C-327/92, France v. Commission [1994] E.C.R. 3641). The 1991
Agreement finally entered into force on April 10, 1995, following an exchange of interpretative
letters between the E.C. and U.S. authorities, by means of a joint decision of the E.C.
Commission and the E.C. Council, which formally approved the Agreement in question on
behalf of the European Communities (Decision of the Council and of the Commission of April
10, 1995 Concerning the Conclusion of the Agreement of the United States of America
Regarding the Application of Their Competition Laws, [1995] O.J. L95/45); 30 I.L.M. 1487
(1991).
FN10. See A. Haagsma, "International Competition Policy Issues: The E.C.-U.S. Agreement of
September 23, 1991, in P.J. Slot and A. McDonnell (eds), Procedure
and Enforcement in E.C. and U.S. Competition Law (1993); J. Ham, "International Cooperation
in the Antitrust Field and in particular the Agreement between the United States of America and
the Commission of the European Communities", 30 C.M.L.R. 571 (1993); J. Riley, "Nailing the
Jellyfish: the Illegality of the E.C./U.S. Government Competition Agreement", 3 E.C.L.R. 101
(1992); J. Riley, "The Jellyfish Nailed: The Annulment of the E.C./U.S. Competition Co-
operation Agreement", 3 E.C.L.R. 185 (1995); A.J. Himelfarb, "The International Language of
Convergence: Reviving Antitrust Dialogue Between the United States and the European Union
with a Uniform Understanding of Extraterritoriality" (see note 7 above).

FN11. The provision of Article VIII(a) prohibits the enforcement authorities of either party from
sharing information which is not liable to disclosure according to their own internal rules. Such a
provision creates some problems, particularly for the E.C. Commission. This is due to the fact
that Article 20 of E.C. Regulation 17 of 1962, the most important Regulation containing
procedural rules on investigation by the E.C. Commission, prescribes that the Commission "shall
not disclose information acquired as a result of the application of the Regulation and of the kind
covered by the obligation of professional secrecy". This means, in practice, that information
received by the Commission from undertakings, by means of a notification or in the framework
of an investigation, cannot be communicated to American antitrust
enforcement authorities.

FN12. Microsoft case settlement, European Commission Press Release, IP/94/543; 69 BNA
Antitrust and Trade Regulation Report 268 (1995); see A.J. Himelfarb, "The International
Language of Convergence: Reviving Antitrust Dialogue Between the United States and the
European Union with a Uniform Understanding of Extraterritoriality" (see note 7 above).

FN13. Commission Report to the Council and the European Parliament on the Application of the
Agreement between the Government of the United States and the Commission of the European
Communities regarding the application of their competition laws, COM (96) 479 final, October
8, 1996 ("First Annual Report"), available on the Internet at the WWW site http://
europa.eu.int/en/comm/dg04/lawenten/en/com479.htm.

FN14. In the period of time considered, 54 notifications were made by the European
Commission to the U.S. enforcement authorities, pursuant to Article II of the 1991 E.C.-U.S.
Agreement. During the same period the European Commission received 44 notifications from
the U.S. authorities, namely 24 from the DOJ and 20 from the FTC. The majority of notifications
from both sides during the first 15 months of application of the Agreement concerned merger
cases (44 from the E.C. side and 22 from the U.S. side). This does not imply that nonmerger
cases are less important or that no advantages exist from international co-operation in respect to
them, but simply results from the short time available for
investigation of mergers.
FN15. Draft Agreement between the European Communities and the Government of the United
States of America on the application of positive comity principles in the enforcement of their
competition laws, January 24, 1997 ("1997 Draft Agreement"), available on the Internet at the
WWW site http:// europa.eu.int/en/comm/dg04/interna/poscopr1.htm.

FN16. The main purposes of the 1997 Draft Agreement are to (a) "help ensure that trade and
investment flows between the Parties and competition and consumer welfare within the
territories of the Parties are not impeded by anticompetitive activities for which the competition
laws of one or both Parties can provide a remedy; (b) establish cooperative procedures to achieve
the most effective and efficient enforcement of competition law, whereby the competition
authorities of each Party will normally avoid allocating enforcement resources to dealing with
anticompetitive activities that occur principally in and are directed principally towards the other
Party's territory, where the competition authorities of the other Party are able and prepared to
examine and take effective sanctions under their law to deal with those activities" (Article
I(2)(b)).

FN17. 1997 Draft Agreement, Art. III. Pursuant to the definitions contained at Art. II of the 1997
Draft Agreement, "Affected Party" means a party that is adversely affected by anticompetitive
activities occurring in whole or in
substantial part in the territory of the other party, whereas "Territorial Party" means a party in the
territory of which such anti-competitive activities appear to be occurring.

FN18. See C.J. Cheng, International Harmonization of Antitrust Laws (1995) (see note 6 above);
M. Trebilcock, "Competition Policy and Trade Policy: Mediating the Interface" (see note 6
above); P. Torremans, "Extraterritorial Application of E.C. and U.S. Competition Law" (see note
5 above).

FN19. See E.U. Petersmann, "International Competition Rules for Governments and for Private
Business" (see note 1 above); E. Fox, "Toward World Antitrust And Market Access" (see note 1
above); E. Fox, "Competition Law and the Agenda for the WTO: Forging the Links of
Competition and Trade" (see note 8 above); E. Fox and J.A. Ordover, "The Harmonization of
Competition and Trade Law: the Case for Modest Linkages of Law and Limits to Parochial State
Action" (see note 8 above).

FN20. See Draft International Antitrust Code as a GATT-MTO Plurilateral Trade Agreement
(Munich, Max Planck Institute, 1993), 65 BNA Antitrust and Trade Regulation Report 1628
(1993) (Special Supp.); also E.U. Petersmann, "International Competition Rules for
Governments and for Private Business" (see note 1 above); E. Fox, "Toward World Antitrust
And Market Access" (see note 1 above).

FN21. See 65 BNA Antitrust and Trade Regulation Report 259 (1993). Also E.
Fox, "Toward World Antitrust And Market Access" (see note 1 above).
FN22. Communication from the Commission to the Council "Towards an international
framework of competition rules", COM (96) 284 final, June 18, 1996.

FN23. 1996 Singapore Ministerial Conference of the Parties to the WTO, Singapore Ministerial
Declaration (December 18, 1996).

FN24. Communication from the European Community and its Member States (June 11, 1997).

FN25. Communication from the United States (June 19, 1997).

FN26. Checklist of Issues Suggested for Study (Non-Paper by the Chair) (July 8, 1997).

ECLR 1998, 19(3), 156-163

END OF DOCUMENT