ICN Adopts New Guidance Focusing on Investigative Process and International Cooperation in Mergers

By on June 22, 2015

From April 28 through May 1, the International Competition Network (ICN) held its 2015 annual conference. The ICN is a network that unites 132 competition watchdogs from 119 jurisdictions, including the Antitrust Division of the U.S. Department of Justice (DOJ), the Federal Trade Commission (FTC), the European Commission (EC) and the Japan Fair Trade Commission (JFTC). Its role is to act as a forum for the global antitrust community and to facilitate dialogue and build consensus on competition policy and practices. Members participate in working groups and produce recommendations once they have reached consensus. Each year, during the annual conference, recommendations are adopted by the members and become best practices or guidance tools that may be implemented by competition authorities across the world.

This year, the ICN adopted several recommended practices including, most notably, “ICN Guidance on Investigative Process” and an “ICN Practical Guide to International Enforcement Cooperation in Mergers.”

Guidance on Investigative Process

The “ICN Guidance on Investigative Process” is the result of discussions held within the Agency Effectiveness Working Group over several years as part of the ICN’s Investigative Process Project co-led by the FTC and the EC. This is the first time the ICN has addressed investigative processes used by competition agencies across all competition enforcement areas. The discussions focused on two prongs: (i) enforcement tools available to competition agencies to obtain relevant information in the course of their investigations, and (ii) the procedures they follow when conducting such investigations. The adopted work product contains a list of key principles and practices which the participants deemed important in order to guarantee an effective and fair investigative process:

  • Investigative tools. Competition authorities should be able to make use of investigative tools, such as requests for information, inspections and interviews. They should have the possibility to obtain information by compulsion if necessary. Such investigative tools should be used in accordance with a legal framework setting out clear criteria, and be subject to both internal checks and balances and external review.
  • Transparency concerning policies and standards. Competition authorities should lay out legal standards and agency policies in formal or informal documents, such as manuals, staff working papers, best practices or guidelines. There is one limit: transparency should not undermine the effectiveness of investigations.
  • Transparency during an investigation. Competition agencies should let parties know as soon as feasible that an investigation has been opened; the legal basis for the investigation; the competitive concerns and the applicable theories of harm; the progress and timing of the investigation; and, once formal allegations are made, the evidence relied upon. The level of transparency may be different depending on the type of investigation.
  • Engagement during an investigation. Competition agencies should provide parties with the possibility to defend themselves against the allegations raised. In doing so, parties should be able to submit factual, legal, and economic evidence in due course. Interested third parties should also be able to submit their views.
  • Confidentiality protection and legal privileges. Parties and third parties should be able to ask for the protection of their trade and business secrets. Specific and clear rules and processes to request confidentiality should be in place. Also, competition authorities should limit public disclosure of confidential information received from parties in the course of an investigation. Finally, agencies should respect privileged information provided by parties.

The “INC Guidance on Investigative Process” represents an important step in favor of the protection of parties’ interests during antitrust investigations insofar as it promotes transparency, confidentiality and the protection of legal privileges. Nevertheless, the level of protection will still be very different from one jurisdiction to another. One key area of divergence involves the concept of “legal privilege” which covers all attorney-client communications in the United States, but it does not apply to communications between a client and its in-house lawyers at the European Union-level.

Practical Guide to International Enforcement Cooperation in Mergers

The “ICN Practical Guide to International Enforcement Cooperation in Mergers” was developed by the Merger Working Groupunder the leadership of the EC and the Italian Competition Authority. The discussions notably built on the experiences of competition agencies who participated in the Framework for Merger Review Cooperation, a tool established in 2012 among certain member agencies to facilitate cooperation between enforcers reviewing the same mergers.

The discussions led to the development of practical guidance on the following topics:

  • Initial contacts. Agencies should contact their counterparts in other jurisdictions as soon as possible in a merger investigation, potentially even before the parties file their merger notification.
  • Further communications. Enforcers should consult with one another at key steps in the investigations (e.g., before deciding whether to open an in-depth investigation).
  • Timing alignment. Aligned timetables for the review of a merger allows for better cooperation between enforcers at all key steps of the investigation. Agencies should therefore attempt to align the timing of their investigations, possibly by asking for the cooperation of the merging parties.
  • Information sharing. Enforcers should consider asking parties to grant them waivers to enable them to exchange documents and information that would otherwise be prohibited under confidentiality rules in the jurisdictions concerned. Whenever information is shared, enforcers should protect confidential information that has been provided by parties.
  • Cooperation in substantive assessment. Agencies may exchange their analyses concerning, among others, market definition, market dynamics, theories of competitive harm, and economic theories. Such discussions may enable them to avoid conflicting outcomes.
  • Cooperation in remedies. Cooperation enables agencies to avoid adopting incompatible remedies and increases the chance that their implementation will be timely and effective.

The major competition agencies, including the DOJ, the FTC, the EC, the Canadian Competition Bureau, and the JFTC, already actively cooperate during merger investigations, including on remedies. The “ICN Practical Guide to International Enforcement Cooperation in Mergers” is intended to encourage less experienced competition authorities to communicate with their counterparts. Despite the prospect of broader cooperation, it should be recognized that closer competition does not necessarily ensure uniform outcomes given the differences in applicable legal standards and market structures.

Louise Aberg
Louise Aberg focuses her practice on US, EU and French antitrust law, including merger control, cartels, and abuse of dominance. Louise also regularly advises clients in relation to distribution strategies and compliance programs. She represents clients before the Federal Trade Commission, the Department of Justice, the European Commission, and the French Competition Authority. Read Louise Aberg's full bio.





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