How has antitrust enforcement changed in recent years?
Lipsky: Today, there is an enormous worldwide network of antitrust enforcement agencies, and it is very common for significant antitrust issues to be under simultaneous consideration in many different jurisdictions around the world, including the United States, Canada, South Korea, Japan and other Asian jurisdictions, the European Commission as well as jurisdictions in Africa and Latin America.
How has antitrust enforcement evolved in Latin America?
Lipsky: There has been antitrust law in some of the Latin American countries for many years. I believe Brazil was the first to have such a law, but for many years enforcement was desultory at best. Then in the 1980s and 1990s scores of other countries around the world enacted or strengthened their antitrust laws, and this included Latin American jurisdictions such as Argentina, Chile, Colombia, Costa Rica, Mexico and a number of others. Even with the push to strengthen antitrust enforcement in Latin America, the intensity has been somewhat up and down over the years due to financial and economic crises, shifting political winds and the like.
There are a few jurisdictions that had become fairly consistent in enforcing their antitrust laws, including Brazil and Mexico. But now there seems to be more coherent development of antitrust in the region as a whole. Jurisdictions like Brazil and Mexico are becoming a much more important force in the field, tuning up their enforcement mechanisms and asserting themselves in the international antitrust enforcement community. Brazil recently enacted mandatory pre-merger review and is aggressively pursuing price-fixing and similar “hard core” restraints. Mexico is also improving its enforcement tools, and the current Chairman of the Mexican antitrust agency is actually the Chairman of the Steering Committee of the International Competition Network (ICN), which is a sort of “virtual United Nations” of antitrust agencies, including every active agency in the world except those in China.
In addition, the different Latin American jurisdictions are now starting to cooperate in a much more tangible fashion. The Regional Competition Center for Latin America was recently established, led by Eduardo Pérez-Motta, the head of the Mexico Federal Competition Commission and Chairman of the IICN Steering Committee, as just mentioned. The vision of the Center, whose acronym is CRCAL based on the Spanish name, is that tangible and effective cooperation in antitrust enforcement is more likely to emerge among jurisdictions that have strong common links — through proximity, through trade, through presence in the same regional markets, through language and culture, etc.
So broader international groupings such as the ICN and the Organisation for Economic Co-operation and Development (OECD) Competition Committee can be important in fostering cooperation, but regional groups may also develop a uniquely productive role.
What industry sector in Latin American has seen the most antitrust enforcement activity recently?
Lipsky: Antitrust activity tends to follow the commercial action, but of particular note is the telecommunications sector. There was a major acquisition involving global telecom companies in Europe, but because the companies had very significant interests in Latin American telecom, a lot of the main antitrust activity from that acquisition ended up being in Latin America. Superficially it might have appeared surprising, but when you examine the facts, it was perfectly natural that this developed. The glaring reality of our current enforcement environment is that markets are increasingly global but antitrust enforcement is national (or even sub-national: states and provinces) with the sole exception of the European Union, which is not technically a nation but is a very important antitrust jurisdiction, along with its Member States.
In this era of global antitrust enforcement, how should companies respond?
Lipsky: The most important thing companies need to do is to treat every antitrust matter as a global matter. This telecom example that I just mentioned illustrated that the international enforcement environment presents endless possibilities for complaining customers or hostile competitors to make trouble for transactions and conduct, because the network of enforcement agencies stretches across virtually the entire globe.
Your adversaries are not going to feel limited by geography — they are going to go to all the jurisdictions where they can create complexity, generate leverage for themselves, and force you to play defense. They don’t care where the majority of your company’s activities are conducted, where your headquarters are located, what your main working language is, or where the transaction or conduct is actually taking place. Most jurisdictions are prepared to assert themselves so long as there is a local effect, meaning generally anywhere that generates non-trivial local sales. Your opposition is going to put a global team together and search in a coordinated fashion for every point of leverage.
If you are just relying on your home country counsel and looking at your home country situation, you are already playing at a very severe disadvantage.
What is driving this renewed focus on global enforcement regimes?
Lipsky: The creation of antitrust agencies worldwide, as well as the ICN and other regional antitrust-agency organizations that also coordinate antitrust enforcement, has given rise to a totally new, emergent phenomenon. There is without doubt a living community of antitrust enforcers and it’s a given that individuals are competing and will compete for prestige and authority within that global community. They want to be seen as leaders, and they do that by enhancing the authority and prestige of the enforcement agencies both individually and collectively. I’m not suggesting that this won’t be channeled in ways that are intended to benefit the global economy and ultimately provide the benefits of competition to consumers. But the phenomenon has a natural force of its own that is driving a lot of very aggressive antitrust enforcement initiatives all over the world.
This movement or trend originated at least twenty years ago. By this point — when over 100 jurisdictions have actively enforced antitrust laws — it’s not something that easily can be resisted or reversed. It is a simple and undeniable fact of the international legal environment. It remains to be seen whether companies as a group can band together though the umbrella business organizations or lawyers’ associations, or other similar groups to deal with this policy phenomenon and bring some rationality and sense of coordination to this tremendously complex and diverse enforcement environment.
For the moment and for the foreseeable future, companies must view every antitrust issue as potentially a global issue. They must anticipate how their adversaries can exploit this reality, assemble a globally integrated team and formulate a coordinated defense to protect their business interests across the globe.