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Article II to IV of the 1991 Agreement establishes a notification and information-sharing mechanism. Article II requires a party to “notify the other whenever its competition authority become aware that their enforcement activities may affect important interests of the other party”. In Article III, the parties agree to meet twice a year to share information, subject to limitations imposed by confidentiality obligation and existing legislation. Pursuant to Article IV, in cases where both parties have an interest in pursuing enforcement activities, they may agree to coordinate their enforcement activities and enter into a settlement solution in the same case. However, Article VI also allows one party to cancel coordinated efforts, with notice, and to enforce its laws independently.
Article V and VI are deemed to be completely innovative components of the agreement. Article VI codifies the traditional comity doctrine, whereby each side agrees to consider “important interests or proceeding, the scope of an investigation or proceeding, and the nature of the remedies and penalties sought.” This is a conflict-avoiding provision. On the other hand, Article V provides that if one party believes its “important interests” are being adversely affected by anticompetitive activities occurring within the territory of the other that violate the other’s competition laws, the affected party may request that the other party initiate enforcement activities (emphasis added). This is referred to as “positive comity” to distinguish it from the traditional or “negative comity” based on moderation and restraint in enforcement. Arguably the “positive comity” provision is based on the belief that the host country is in a better position to prevent the anticompetitive activities, and aims to reduce extraterritorial enforcements. As one commentator has observed: “… in effect each country attempts to rely on the other country’s local mechanisms, rather than resorting to extraterritorial application of its own antitrust laws.” Although it appears to be a promising start, the actual impact of positive comity might be marginal, since we can not expect one government either to prosecute its citizens solely for the benefit of another, or to have enough trust on the other’s enforcement activities to refrain from its own. Otherwise the Boeing case might have turned out to be different.
The 1991 Agreement provides a foundation for cooperation, but so far, its use has been limited to the exchange of information and situations where both parties have similar interests in the cessation of certain anticompetitive practices. The real question is whether the treaty leads to cooperation and conflict solving in cases where the parties are odds. In this respect, a commentator has suggested that a conflict resolution mechanism be added to the agreement. Such a mechanism would be useful in cases like Boeing because one party could assert that the other is illegally extending its jurisdiction and that claim could be mediated or adjudicated before a neutral party. It could also be used when the parties disagree about the type of remedy that should be imposed on a company under review. Though apparently requiring painstaking negotiations and probably a change of the nature of the agreement, this proposal seems be in the right direction.
C. WTO: A Multinational Antitrust Code?
Currently international antitrust enforcement disputes can not be brought to WTO, because WTO dispute settlement mechanism only applies to disputes under certain WTO agreements—the so-called “covered agreements”, none of which addresses antitrust issues. There have been several proposals for the convergence of international competition regulations within the WTO framework, among which the “Draft International Antitrust Code” (“DIAC”) may be the best known.
Originally presented at a meeting of the OECD in Paris in 1994 by the International Antitrust Code Working Group, DIAC proposal is intended to integrate anticompetitive conduct on an international level and written in a format suitable for submission to the GATT, the predecessor of WTO. The DIAC would create a governing agency called International Antitrust Authority, which would have the power to enforce the code’s provisions through actions between private parties before national courts or contracting nations before an International Antitrust Panel. This proposal would require nations to concede to alleged international principles that conflict with their own legislation, and to give up considerable national enforcement powers. Given the state of the international competition regulatory system of today, the DIAC is premature and infeasible. Similar argument can be made of other proposals.
The U.S. government has opposed the creation of a WTO-administered global antitrust regime for several reasons. First, it suggested that the WTO is too large and diverse ever to adopt a common approach to anticompetitive practices in the context of trade and competition policy. Second, it feared that negotiations to achieve a minimum set of acceptable principles could lead to the adoption of a lowest common denominator set of principles that would weaken existing, more effective rules. Finally, it expressed considerable reservations as to the willingness of business and national governments to turn over competitively sensitive, confidential business information to WTO bureaucrats. Given such a position on the part of U.S., as well as the time consuming and complex process of negotiating a multilateral agreement, there seems unlikely to be a WTO antitrust mechanism in the foreseeable future.
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