United States and European Communities Sign Agreement on "Positive Comity" in Antitrust Enforcement

Representatives of the United States and the European Communities today signed an agreement clarifying the circumstances under which they will refer cases of anticompetitve activities to each other under the doctrine of "positive comity." Attorney General Janet Reno and Federal Trade Commission Chairman Robert Pitofsky represented the United States and Karel Van Miert, European Commissioner for Competition Policy, represented the European Communities at the signing ceremony. (Margaret Beckett, the United Kingdom’s Secretary of State for Trade and Industry, signed the Agreement earlier in Brussels on behalf of the Council of the European Union.)

"This historic agreement between the United States and the European Communities indicates a recognition that the benefits of international competitive markets can best be achieved by international cooperation in the enforcement of our respective competition laws,” said FTC Chairman Robert Pitofsky.

Under a 1991 antitrust enforcement cooperation agreement, the US and EC agreed that the one party’s antitrust authorities could ask the other party’s antitrust authorities to take measures against activities there that violate the latter’s competition laws and that harm the requesting country’s commerce. Since the 1991 Agreement went into effect, US and EC authorities have informally discussed many allegations of anticompetitive conduct on either side of the Atlantic with effects on the other party. Last year, the Department of Justice made the first formal referral of a case under the positive comity provision of the 1991 Agreement; the matter, which involves computer reservation services in the airline industry, remains under EC investigation.

The new Agreement identifies the types of cases that one party will normally refer to the other and spells out the obligations that the competition authorities undertake in handling these cases. Specifically, the Agreement provides that one side (the "requesting" party) will normally defer or suspend its enforcement activities aimed at anticompetitive activities in the other party’s territory in favor of a positive comity referral to the other party in two types of cases: (1) where the foreign anticompetitive activities do not directly harm the requesting party’s consumers (for example, a cartel on one side that limits exports from the other), and (2) where the foreign anticompetitive activities occur principally in and are directed principally towards the other party’s territory, but incidentally harm the requesting party’s consumers. An example of that latter kind of case was a production quota agreement in Italy among Parma ham producers that affected consumers both in Italy and the United States. The FTC suspended its investigation in favor of an investigation by the Italian Competition Authority, which ultimately issued an order to phase out the production quota.

"This Agreement reflects our experience under the 1991 Agreement, as well as the respect that each side has for the other in the enforcement of their respective antitrust laws," said Chairman Pitofsky. "The Agreement provides for a reasonable division of labor in certain circumstances, which should result in the more efficient application of our enforcement resources,” Pitofsky said. “In addition, positive comity avoids difficulties encountered in obtaining evidence and in implementing remedies abroad, as well as the frictions that can arise in some transborder enforcement situations.”

Under the Agreement, each side pledges to devote adequate resources and its best efforts to investigate matters referred and to inform the other side’s competition authorities on request or at reasonable intervals of the status of the case. The US and EC have also agreed that some circumstances will justify parallel investigations and that neither side waives its authority to initiate or reinstitute its own enforcement actions.

The new Agreement does not apply to mergers because the merger review provisions of both U.S. and EC law contain strict statutory deadlines that would not allow the suspension or deferral of investigations. Those deadlines result in rapid clearance -- within thirty days of notification -- of proposed mergers that do not raise competitive concerns, so that positive comity would have little to add.

Finally, the Agreement provides that confidential information may be shared and used for purposes of implementing the Agreement only where the source of the information has consented.

The Commission vote to approve the Positive Comity Agreement was 5-0.

Copies of the Agreement are available on the FTC’s World Wide Web site at: http://www.ftc.gov (no period) and also from the FTC’s Consumer Response Center, Room 130, 6th Street and Pennsylvania Ave, N.W., Washington, D.C. 20580, 202-326-4357; TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. 829 612)