A trusting approach to anitrust: globalization requires international cooperation on competition policies.

Competion policy--what the United States calls anitrus--is now at the cutting edge od economic globalization. Competition law and policy were once the provice of domestically oriented experts in just few nations. This is no longer the case. Now, more than ninety countries have competition laws and policies on the books with more coming on stream. With an increasing number of global mergers, the unmasking of more and more global cartels, and trade tensions emanating from private restraints of trade, competion policy is now a core feature of discussions about internationa economic policy.

While the global community is increasingly focused on international competition problems, substantive rules, and institutional approaches differ around the world, and these differences can produce intergovernmental conflict and impose costs on firms. Few believe that frictions can be eliminated through formal harmonization of competition law across systems. Instead, the emerging trnd is toward bilateral cooperation agreement such as those between the United States and the European Union, Canada, Australia, Germany and more recently Japan, Israel, and Mexico. These arrangements are deepening interagency antitrust cooperation and coordination. But broader international efforts are needed, and the institutional framework for holding global talks on competition policy is not yet fully in place.

International conferences and bilateral collaborations in the field of competition policy have been under way for many years. But since February 2000, when the International Competition Policy Advisory Committee (ICPAC) to the U.S. Department of Justice published its Final Report, there has been a movement afoot to develop a new global forum where government officials, private sector representatives, experts, representatives from international organizations, and others can consult on matters of competition law and policy.

The idea for establishing a new global competition forum was a key recommendation of the report, delivered to then-Attorney General Janet Reno and then-Assistant Attorney General for Antitrust Joel I. Klein. It offered specific recommendations in three areas: procedural and substantive features of multi-jurisidictional review of mergers; improving enforcement cooperation concerning international cartels; and addressing the interface of trade and competition policy issues. It also argued that a new global forum was needed to foster dialogue among officials and broader communities on all of these issues and others and to produce greater convergence of law and analysis, common understanding, and gradually, a more common culture of competition policy around the world. An expanded dialogue between representatives from developed and developing economies was seen as especially important.

The concept of a new global forum, which ICPAC called the Global Competition Initiative (GCI) experienced a significant boost in September 2000, when Klein endorsed it at the EC Merger Control Tenth Anniversary Conference. Importantly, the concept was also strongly endorsed by the European Competition Commissioner, Mario Monti, and subsequently by a number of other senior governmental officials and expert groups around the world. In February 2001, at a meeting convened by the International Bar Association, with support from the American Bar Association Antitrust Section and Fordham University Corporate Law Institute, forty-three senior competition law officials and professionals gathered at Ditch ley Park in England to hold the first "brainstorming" session on the possible design and activities for this proposed global forum.

The ICPAC Final Report advanced the concept of a new global initiative without attempting to define its precise architecture. It is proposed as an elastic concept that can be molded and shaped depending on the support and interest of governments. It was thought that GCI should be a forum where officials and others gather to consider global competition issues that transcend national boundaries. The concept reflected the view that currently no established venue existed for discussion between developed and devel oping countries on the full range of competition problems facing the global economy. ICPAC identified a few topics that it thought such a forum could usefully address, including developing consensus on best practices in merger review; improving international enforcement cooperation against illegal cartels and market-blocking private and governmental restraints; considering principles for extraterritorial jurisdiction and protocols in the event of clashes between nations; examining frontier subjects that are quintessentially global, such as e-commerce and transnational cartel arrangements; establishing an information center that serves as a repository of information regarding competition laws, policies, and practices around the world; and supporting technical assistance on capacity building in developing nations.

Participants in the Ditchley Park meeting recognized that to be worth the effort, a new global forum should not duplicate existing activities at organizations such as the OECD, WTO, and UNCTAD, but must add practical value to the work of these institutions and others. Moreover, the initiative must ultimately prove useful to multiple audiences: government officials; business, legal, and other communities; and participants from both developed and especially developing economies. Indeed, there are already several existing organizations where high-quality meetings take place to facilitate dialogue between competition authorities from developed economies. A more pressing need is a venue where participants from both developing and developed economies could consider competition law and policy issues that transcend national boundaries.

The logic behind ICPAC's idea of a new global competition forum, which appears to have some support, recognizes that countries have a need and an opportunity to cooperate in meaningful ways even if nations are not prepared to enter into binding accords. There may be some areas where nations are prepared to develop formal agreements, and other areas where the development of non-binding principles or consultations are more promising. In sum, the GCI concept recognizes that formal negotiations are unlikely to bring about full convergence of systems and reduction of tensions. Instead, what is needed is a forum that can promote dialogue and encourage but not require convergence and can also focus on specific problems with a diverse community of participants from around the world. In our view, in this kind of "soft" convergence framework it is not necessary for all participants to share the identical vision of preferred outcomes. The risks (for example, of being pushed into sub-optimal binding agreements) are likely to be low and the potential rewards considerable. The forum is not fated to be a "talk shop."

International discourse on the proposed initiative continues and is becoming more detailed. EU Monti has offered several specific ideas to take the concept from discussion to reality. In a March 2001 speech in Washington, D.C., Monti argued that the GCI must be inclusive, should strive to achieve consensus on fundamental issues, foster a worldwide competition culture, and be open to deal with issues of importance to developing and transition economies. It should address enforcement issues; global mergers, ways to cooperate, principles of good governance roles and economic analysis in cases having a prominent international component. He envisioned an annual conference, along with regional and other workshops, informal meetings, and peer review exercises.

The idea for a Global Competition Initiative is gaining momentum. With the run-up to the torthcoming WTO Summit in Qatar, the role of competition policy in possible trade negotiations is itself on the agenda for discussion among trade ministers. The United States and the European Union have advanced somewhat different visions on the role for the World Trade Organization in this policy area. The EU has been calling for a WTO agreement on competition; the United States has stressed the role of the WTO as an educational and consultative forum. In our view, much can be done constructively on competition policy at the WTO, but the utility of the Global Competition Initiative is not simply dependent on the outcome of the role ascribed to the WTO. Global competition issues that require consultation and coordination go beyond matters with a clear trade or market-access impact.

The year ahead will be important. The Initiative needs to be made concrete, and progress made towards its establishment. The organization and management of a GCI will be important. Surely, an expensive international organization is unnecessary and would cause complex jurisdictional and other frictions that could undermine prospects for constructive engagement on a work program. To avoid such problems, an approach that appears to hold some promise is the creation of an international working group or steering committee.

At this point, it has the strong and hopeful support of senior officials in the EU and a number of other countries. The views of the Bush administration are not fully known. The ICPAC membership itself was bipartisan, and the proposals contained in the Final Report were nonpartisan. The positive reaction from officials and experts at home and abroad to the GCI is similarly nonpartisan. Instead, it reflects some shared perspectives about the impact of the global economy on national competition law and policy. If the Bush administration supports the proposal, the Global Competition Initiative will continue to build momentum and offer the possibility of contributing to more effective national enforcement and greater international cooperation.

Merit E. Janow is a Professor in the Practice of International Trade at Columbia University. She also served as the Executive Director of the International Competition Policy Advisory Committee (ICPAC). Andrew J. Shapiro is a former Counsel of the ICPAC.