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Federal Trade Commission officials worked with officials from more than 80 antitrust agencies worldwide at the eighth annual International Competition Network (ICN) conference in Zurich, Switzerland, to adopt new Recommended Practices for substantive merger analysis. ICN participants also discussed two new reports on the analysis of tying and bundled discounting, and loyalty discounts and rebates under unilateral conduct laws.

The ICN conference, hosted by the Swiss Competition Commission, was held on June 3-5, 2009. More than 450 delegates participated, representing over 80 antitrust agencies from around the world, and competition experts from international organizations and the legal, business, consumer, and academic communities.

In October 2001, the FTC and the U.S. Department of Justice (DOJ) joined with antitrust agencies from 13 other jurisdictions around the world (Australia, Canada, the European Union, France, Germany, Israel, Italy, Japan, Korea, Mexico, South Africa, the United Kingdom and Zambia) to create the ICN. The ICN now includes 107 member agencies from 96 jurisdictions. The goal of the ICN is to provide a forum for antitrust agencies to address antitrust enforcement and policy issues of common interest and formulate proposals for procedural and substantive convergence through a results-oriented agenda and structure.

FTC Commissioner William E. Kovacic, who serves as the ICN Vice Chair for Outreach, and Christine A. Varney, Assistant Attorney General in charge of DOJ’s Antitrust Division were among the U.S. delegates who participated in the conference. The conference showcased the recent work of ICN working groups on mergers, unilateral conduct, cartels, competition advocacy, and competition policy implementation.

“The ICN is making impressive progress toward fulfilling a central aim that motivated its creation: to be a demand-driven institution that promotes acceptance of superior methods, enables agencies to understand more deeply their common interests and differences, and to realize, through collective action, results that elude individual initiative,” Commissioner Kovacic said.

“The ICN plays a central role in promoting collaboration among antitrust authorities from around the world,” Assistant Attorney General Varney said. “The Antitrust Division is committed to participating fully in ICN efforts to promote international convergence in antitrust enforcement and explore ways in which we can pursue our shared enforcement goals.”

Based on the work of the Merger Working Group, co-chaired by the Antitrust Division and the Irish Competition Authority, ICN members adopted three new Recommended Practices for Merger Analysis. The new Recommended Practices for merger analysis address:

• Competitive Effects Analysis in Horizontal Merger Review. Agencies should conduct competitive effects analysis to assess whether a merger is likely to harm competition significantly by creating or enhancing market power. Competitive effects analysis should be clearly grounded in both sound economics and the facts of the particular case.
• Unilateral Effects. In analyzing the potential for a merger to result in anticompetitive unilateral effects, agencies should assess whether the merger will create or enhance the merged firm’s ability or incentive to exercise market power independently. Agencies should apply the economic theory or model that best fits the characteristics of the market at issue, and assess the competitive constraints and other factors relevant to the merged firm’s ability to exercise market power.
• Coordinated Effects. In analyzing the potential for a merger to result in anticompetitive coordinated effects, agencies should assess whether the merger increases the likelihood that firms in the market will successfully coordinate their behavior or strengthen existing coordination. Agencies should assess whether the conditions that are generally necessary for successful coordination are present, and the extent to which competitive constraints and other factors would likely deter or disrupt effective coordination.

The Merger Working Group also presented a detailed report, presented by the Notification and Procedures subgroup chaired by Cynthia Lewis Lagdameo of the FTC’s Office of International Affairs, on the ways in which agencies address information requirements in the initial notification of a merger. In addition, Assistant Attorney General Varney moderated a Merger Working Group panel discussion on “Merger Analysis in Troubled Times.”

The conference highlighted the work of the Unilateral Conduct Working Group, which was established to promote analytical convergence and sound enforcement of laws governing unilateral conduct by firms with substantial market power. Co-chaired by the FTC and the German Bundeskartellamt, the Working Group presented reports on the analysis of tying and bundled discounting and on the analysis of single-product loyalty discounts and rebates in over 30 jurisdictions.

Randolph W. Tritell, Director of the FTC’s Office of International Affairs and Co-chair of the Working Group, opened the group’s panel on “Distinguishing Pro from Anticompetive Conduct: The Fine Line Between Aggressive Competition and Anticompetitive Foreclosure in Tying and Discounting Cases.” Speaking on behalf of Chairman Leibowitz, Tritell highlighted the FTC’s unique authority under Section 5 of the FTC Act to stop unfair conduct that harms consumers but that may not be reached by other antitrust laws.

“The Unilateral Conduct Working Group is continuing to build a body of knowledge on which enforcers and policy-makers around the world can draw to assist them in implementing their competition laws in this complex area,” said Tritell.

In addition, the ICN conference highlighted the work of the Cartel Working Group, which aims to improve the ability of antitrust agencies to crack cartels through the exchange of effective investigative techniques and the examination of important legal and policy topics. In Zurich, the Cartel Working Group conducted panel discussions on transitioning to criminal sanctions and the use of effective investigative techniques.

“The Antitrust Division is working closely with enforcers abroad to combat international cartels that victimize businesses and consumers around the globe. There is a growing recognition in this effort that the surest way to deter these conspiracies is by imposing stiff criminal sanctions on the individuals who perpetrate these crimes,” said Scott D. Hammond, Deputy Assistant Attorney General for Criminal Enforcement of the Department of Justice’s Antitrust Division. “In many jurisdictions where the punishment for cartel offenses has historically been limited to administrative fines against companies, laws adopting criminal sanctions against individuals for cartel offenses are now being introduced. The ICN provides a valuable forum for agencies to share their experiences and ideas in addressing the challenges of transitioning to a criminal antitrust enforcement regime.”

The Advocacy Working Group presented two reports. One addresses the results of a survey of ICN members on their experience with market studies and the other makes recommendations for future ICN work in the field of competition advocacy. The plenary session also addressed advocacy in an economic downturn, highlighting the need for competition agencies to be an advocate for competition principles.

The Competition Policy Implementation Working Group held a plenary session on agency effectiveness. FTC Counsel for International Antitrust, Maria Coppola Tineo, participated, praising the trend toward increased emphasis on institutional design and implementation, and the growing recognition that institutional arrangements affect substantive policy results. The Group also reported on a January 2009 workshop on agency effectiveness attended by agency leaders from more than 60 jurisdictions. Russell Damtoft, Associate Director of the FTC’s Office of International Affairs, reported on a new initiative to promote online sharing of experiences among ICN members.

The conference host presented a special project on competition law in small economies.

ICN members also elected John Fingleton, Chief Executive Officer of the United Kingdom’s Office of Fair Trading, to a two-year term as Chair of the ICN Steering Group.

ICN documents are available at www.internationalcompetitionnetwork.org.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

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