Chapter VIII. Conflict, Convergence, Cooperation

• Pages: 287-327

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CHAPTER VIII

CONFLICT, CONVERGENCE, COOPERATION

A. Introduction

The preceding chapters touched on the approaches of non-U.S.

jurisdictions in certain specific areas of monopolization law, for purposes

of contrasting those approaches with that of the United States. This

chapter discusses in more detail—with a focus on case studies—the

complications that can arise when unilateral conduct of a dominant firm

is scrutinized by multiple jurisdictions, including differences in liability

rules, the potential for inconsistent remedies, and the tools, such as

comity, that agencies use to achieve greater convergence in the abuse of

dominance arena.1

Competition authorities generally agree that competition laws should

prevent firms with substantial market power from wielding that power to

harm competition. Beyond this general agreement, however, differences

abound.

At the most fundamental level, jurisdictions differ significantly in the

objectives they pursue in enforcing their unilateral conduct rules.2

Moreover, jurisdictions hold vastly different views regarding the level of

market share sufficient to trigger concerns regarding dominance, and

with respect to whether any—and if so, which—criteria beyond market

share are relevant in determining whether a firmis dominant. If a firm is

found to be dominant (akin to a finding of monopoly power in the United

States), even more significant cross-jurisdictional differences emerge

regarding the types of conduct that could be deemed to abuse this

dominance.

Experience demonstrates that these types of cross-jurisdictional

differences can generate inconsistent outcomes. Jurisdictions that

employ different substantive standards may reach varying conclusions

1. Additional issues may arise when the conduct of a dominant firm takes

place in more than one jurisdiction, including extraterritoriality and the

application of the Foreign Trade Antitrust Improvements Act. Both sets

of issues are outside the scope of this chapter.

2. See supra Chapter IV for more detail.

288 Monopolization and Dominance Handbook

with respect to whether certain practices are abusive and therefore

unlawful. Even when jurisdictions agree that practices are abusive, they

may disagree about appropriate remedies. Businesses may be able to

tailor certain practices or products to meet jurisdiction-specific

requirements; for those practices and products that are not “divisible,”

though, the jurisdiction with the strictest rules may dictate the global

standard. (In the alternative, multinational firms may be tempted to

cease doing business in the most restrictive jurisdictions.) Eventually,

when firms face tighter competition policies in other countries, they may

turn to their nations’ trade officials for recourse, transforming

competition issues into trade issues that may ignore consumer welfare

altogether.

To avoid these outcomes, competition authorities are continuing to

strive for harmonization and convergence. Competition authorities can

and do employ many bilateral and multilateral tools to increase

harmonization. At the bilateral level, countries enter into agreements

that provide for periodic consultations on competition policy issues and

for cooperation during the investigational and remedial stages of their

cases. By facilitating communication on policy issues as well as specific

matters, bilateral agreements encourage both procedural and substantive

harmonization. Similar opportunities for harmonization abound on the

multilateral scene, including through the International Competition

Network (ICN) and the Organization for Economic Cooperation and

Development (OECD). For a variety of reasons, it seems unlikely that

the World Trade Organization (WTO) is positioned to make significant

contributions to this process.

Attempting to harmonize competition policies and laws with respect

to unilateral conduct has been characterized as the “Mount Everest of

Antitrust.”3Even well-established competition regimes take divergent

paths in this area; relatively new competition regimes whose policies will

have a global impact (for example, in China and India) undoubtedly will

add additional layers of complexity to the task.

A brief review of harmonization and convergence in other areas of

competition policy, however, reveals that there may be reason for

cautious optimism. The international community has made noteworthy

3. Randolph Tritell, Dir., Office of Int’l Affairs, U.S. Fed. Trade Comm’n,

Introductory Remarks on the Objectives of Unilateral Conduct at the

Sixth Annual ICN Conference in Moscow (2007), available at

http://www.internationalcompetitionnetwork.org/uploads/library/doc395.

pdf.

Conflict, Convergence, Cooperation 289

strides toward convergence on the appropriate treatment of cartels and

toward harmonization on merger notification regimes. These strides

were made not overnight, but over a period of many years. Similarly, we

can expect that, if competition enforcers continue employing the

constructive tools at their disposal in the area of unilateral conduct, gains

in harmonization in other areas will be achieved.

This chapter first examines notable examples of divergence in the

area of unilateral conduct. It next provides an overview of the tools that

competition authorities have at their disposal to facilitate harmonization.

Finally, it examines developments in unilateral conduct policies from a

handful of jurisdictions to evaluate the prospects for convergence.

B. Conflicts and Inconsistencies in Enforcement Policy

Multijurisdictional abuse of dominance investigations occur less

frequently than do investigations of global mergers and cartels. For this

reason, there are fewer data points to examine when considering the

extent to which differences in unilateral conduct policies tend to have a

practical impact. The preceding chapters, particularly Chapters IV and

V, discuss the major areas of similarity and difference among major

jurisdictions in terms of types of conduct, remedies, and the like. In this

chapter, we examine a number of case studies of multijurisdictional

unilateral conduct enforcement proceedings. The first major case study

examined here is Microsoft, which has been subject to substantial

scrutiny in jurisdictions around the world, with significantly different

results, followed by Intel and Qualcomm, investigations that may lay the

foundation for future insights.

1. Microsoft

The Microsoft saga provides an excellent example of both the best

and the worst of multijurisdictional dominance investigations. Although

it began with closely coordinated investigations by the Antitrust Division

of the U.S. Department of Justice (Antitrust Division) and the European

Commission (EC) in 1994, it later devolved into a public clash between

the Antitrust Division and the competition authorities of two other

jurisdictions following divergent outcomes in their respective

investigations.4Long trapped in the crosshairs of competition authorities

4. Press Release, U.S. Dep’t of Justice, Assistant Attorney Gen. for

Antitrust, Thomas O. Barnett, Issues Statement on European Microsoft