Tuesday, September 3, 2019
Influence in the International Competition Network (Icn): Who Seeks It, How Do They Do This and Why?
Christopher Townley, King's College London – The Dickson Poon School of Law; A Dickson Poon Transnational Law Institute, Mariana Tavares, and Mattia Guidi, University of Siena have a paper on Influence in the International Competition Network (Icn): Who Seeks It, How Do They Do This and Why?
ABSTRACT: It “…is an important and growing…” phenomenon that businesses, and their manufacturing and distribution chains, often affect several countries. The same applies to anti-competitive arrangements that they adopt. Private barriers to market access are increasingly obvious as the public ones fall. More than 120 legal systems now have competition rules; this number exploded in the 1990s, accompanied by the establishment of competition agencies worldwide. This can create a bewildering array of substantive and procedural competition rules for businesses to follow. This has costs, in terms of a loss of efficiency, for companies operating across different countries. It can also have benefits from a democratic and public interest perspective, as each jurisdiction can (try to) protect the values that it holds dear.
Jurisdictions have sought influence through extra-territorial application of their competition rules. Another approach is to develop hard and/or soft international rules. Sometimes this happened through bilateral discussions, such as between the US and the EU in the 1990s. There were also several (unsuccessful) attempts to develop international competition ‘laws’; for example, the EU inspired effort to introduce competition rules into the WTO. Many international organisations have entered the competition arena (such as the Organisation for Economic Co-operation and Development (OECD) and the United Nations Conference on Trade and Development (UNCTAD)) too. However, each had limitations. For example, the OECD did not include many countries with competition laws; and UNCTAD was seen as producing work that is too vague and pitched at the lowest common denominator. These initiatives encouraged dialogue between competition authorities (NCAs), but they were not always sufficient to remove tensions; think of the aborted mergers of GE/ Honeywell or Boeing/ McDonnell Douglas. Although infrequent, such tensions were high profile.
In 1997, the US Attorney General established a committee, the International Competition Policy Advisory Committee (ICPAC), to pay particular attention to three things:
“…multijurisdictional merger review; the interface of trade and competition issues; and future directions in enforcement co-operation between US antitrust authorities and their counterparts around the world…”
ICPAC delivered its report in February 2000. It sought to provide an environment conducive to the expansion of international trade, to be tolerant to different nations, and to enhance world welfare. Having said that, as one might expect from a US report, it also sought to remove barriers to market access stemming from anti-competitive private barriers to trade. To do this, it advised pushing nations to apply their competition rules in a non-discriminatory manner, to not apply non-competition factors in merger review (with limited exceptions), and to establish independent NCAs. This advice is likely indirectly discriminatory in favour of major firms penetrating new markets (exposing incumbents). Given the preponderance of US firms in the Fortune 500, they are likely to be major beneficiaries of such a strategy. A key recommendation of the ICPAC report was that the US should, amongst other things, explore the creation of a new global competition initiative (a transgovernmental network) where:
“…government officials, private firms and non-governmental organisations could consult on antitrust matters. ICPAC recommended that this Global Competition Initiative be directed toward ‘greater convergence of competition law and analysis, common understanding, and common culture.’”
The ICPAC report proved highly influential. US and EU competition officials expressed their support for a transgovernmental network in September 2000. In February 2001 the International Bar Association called a meeting of over 40 of the world’s senior competition officials and practitioners which supported the idea of “…establishing a new organisation directed exclusively at international antitrust enforcement.” From an early stage, it was clear that major businesses and law firms were prepared to offer money and analytical resources to support this initiative. The International Competition Network (ICN) was established in October 2001 by a group of competition authorities from around the world:
“In October 2001, competition authorities from 14 jurisdictions launched the International Competition Network (ICN) as an international forum of enforcement authorities exclusively devoted to competition issues.”
When we think of influence and the ICN, there are two stages that we need to be mindful of. First, certain actors (both ICN members and non-members) might seek to have influence in the ICN, and particularly on its recommended practices. Secondly, one might assess how the ICN recommended practices influence the laws and regulatory processes of its members, and also non-members. This paper describes the first stage, charting who influences things in the ICN, why they do this, and how. This paper is part of a larger book project that also looks at the second stage (ICN influence on states’ laws and regulatory processes).
We believe that it is important to describe these processes. We argue that the ICN’s formally neutral structures, on closer examination reveal powerful mechanisms of influence and control for strong NCAs and non-governmental advisors (NGAs), over the weak; and ‘technical competition experts’ over general state interests. We hypothesise that there will be a general lack of constitutional control exercised by states over the outcomes of these processes in their own legal orders. A third part of our book project goes on to question the legitimacy of this state of affairs.
The structure of this paper is as follows: we start by describing the ICN, its members, procedures, and impact. In particular, we focus on the Unilateral Conduct Working Group (UCWG), which we take as a case study (Section 2). Then, we discuss different regulatory theories to describe who is likely to seek influence in such a body (Section 3), why they will do this (Section 4) and how (Section 5). Finally, we conclude.
The methodology that we have adopted primarily uses the materials available on the ICN’s own website (www.internationalcompetitionnetwork.org). We have supplemented these with library-based reading of the theoretical approaches in political science that predict what is likely to happen and why. In addition, we have tested these readings with a survey conducted between May and August 2018 among members of competition authorities participating in the ICN and ICN NGAs. Finally, one of the authors has been present in many of these meetings and has an intimate knowledge of the ICN from the inside, from a time when she was a representative of the Portuguese Competition Authority there. We hope that this combination leads to useful insights.