Every year the Competition Committee of the Organisation for Economic Co-operation and Development (OECD) holds several Best Practice Roundtables on various aspects of Competition Policy. The OECD's Competition Committee is a valuable source of policy analysis and aims to bring together the leaders of the world's major competition authorities in an international forum. The papers are now available for the 2006/2007 discussions and cover a diverse range of topics including:
- Private remedies (June 2006);
- Competition and regulation in retail banking (October 2006);
- Competition, patents & innovation (October 2006);
- Plea bargaining/Settlement of cartel cases (October 2006);
- Improving competition in real estate transactions (February 2007);
- Vertical mergers (February 2007);
- Energy security & competition policy (February 2007);
- Public procurement (June 2007); and
- Competitive restrictions in legal professions (June 2007).
The papers are generally broken down into an executive summary, a background note and a summary of discussions as well as submissions from various member countries. In this article, we look at a sample selection of the roundtable papers and give a flavour for the types of issues discussed.
The June 2006 roundtable focused on class actions/collective actions and the interface between private enforcement and public enforcement.
Discussions included the case for using class actions/collective actions as a deterrent and to achieve greater compliance with competition laws. The role of such actions in ensuring that customers with small claims are able to seek a remedy was also considered.
A widely shared concern appears to be the effect of private litigation on the successful operation of leniency programmes in cartel cases. Opinion is divided between those in favour of protecting the integrity of leniency programmes and those who feel that such protection is to the detriment of private plaintiffs.
A difference of views was also noted in fundamental areas such as whether deterrence or compensation should be the ultimate goal of an enforcement regime.
The United Kingdom delegation commented that a system of optimal enforcement should be comprised of both public and private enforcement.
The February 2007 committee debate on vertical mergers included written submissions from various countries as well as the European Commission (the Commission) and the Business and Industry Advisory Committee to the OECD. The discussions commenced with the Chairman's observation that there was considerable common ground in this area and that in general most of the submissions agreed that:
- vertical mergers are different to horizontal mergers because they do not change market shares in a relevant market or eliminate a direct source of competitive constraint;
- vertical mergers are likely to be a significant source of efficiencies;
- vertical mergers can still be problematic if they can result in foreclosure or enhanced coordination; and
- merger challenge is warranted when the anticompetitive effect outweighs the efficiency effect.
The fact that vertical mergers are generally presumed to be efficiency enhancing can make them substantially more complicated to deal with than horizontal mergers. Nevertheless, enhanced efficiencies are not always in the interests of downstream customers, particularly where the source of the increase in efficiency is actually the cause of the foreclosure.
The papers also outline an analytical framework for assessing the likelihood of anticompetitive foreclosure involving consideration of:
- the integrating firm's ability to foreclose;
- the integrating firm's incentives to foreclose; and
- the effect of foreclosure on the downstream market.
The possibility of a vertical merger increasing the potential for coordination was also discussed. Delegates tended to be of the opinion that while it was theoretically possible for coordinated effects to arise on the back of a vertical merger, on the basis that they are empirically rare, coordinated effects did not warrant the same enforcement priority as foreclosure.
In terms of enforcement, the committee considered that post-merger enforcement using monopolisation or abuse of dominance provisions was not always an effective substitute for ex ante vertical merger enforcement, particularly since the former depended on the likelihood of successful enforcement, the time and resources required for an enforcement action and the nature of the remedies available.
The debate also included an overview from the Commission delegation on its draft guidelines on the assessment of non-horizontal mergers. The Commission subsequently adopted these guidelines on 28 November 2007.
In June 2007 the roundtable discussions looked at public procurement. It was noted that public procurement accounts for a large share of public expenditure, approximately 20% of GDP in OECD countries, and that through public procurement policy, the public sector can affect the structure of the market and the incentives of firms to compete.
The discussion included consideration of how to design and operate a public procurement system that would generate optimal competition and the resulting value for money, while minimising the risk of collusive tendering, in light of the fact that formal procurement rules can make communication among rivals easier.
Consideration was also given to the need for strict enforcement of competition laws and the education of procurement agencies at all levels to help them identify the signs of collusion at an early stage.
Many of the topics covered by the roundtable papers are of topical interest, for example a white paper on private remedies is expected from the Commission early this year. For further information on the above topics or details of the other topics, please click here to view the OECD index of competition roundtable papers.