Welcome everybody.
My name is Mary-Anne Borrowdale, I am General Counsel of the New Zealand Commerce Commission's Competition Branch and I am moderating this mini-plenary on regional co-operation. I will be taking as my theme the phrase "to assist and be assisted", which features in some proposed New Zealand legislation aimed exactly at the issue we are discussion today - co-operation between cartel enforcement agencies. Assisting, and being assisted, is what regional co-operation is all about.
Introductory
I have the pleasure of introducing our panel members today, Tetsuji Yokote, Senior Investigator at the Japan Fair Trade Commission and Cristina Camacho, Senior International Liaison Officer at the Portuguese Authority (Autoridade da Concorrencia). I am very much looking forward to hearing them speak about their experiences with regional co-operation.
But first I'd just like to set out how the session will be run. I will speak for about 10 minutes to introduce the topic, drawing on experiences from my home jurisdiction and with our regional neighbours. Then we will have 20 mins from Tetsuji, and 20 mins from Cristina, followed by an allocated 20 mins for general discussion from the floor.
Tetsuji will be focussing on regional cooperation in capacity building and training of new and emerging agencies. This is a topic of increasing relevance, given the large number of new organisations joining the global competition world.
Cristina will focus on the experience of the European Competition Network and the co-operation mechanisms operating between the European Commission and the national competition authorities.
And as I say, we have structured the plenary to allow for at least 20 minutes of question and discussion time, so please prepare your questions and comments - I hope for a lively discussion with you all.
Why have regional co-operation?
As far back as 1995 the OECD recommended co-operation between agencies that enforce competition laws.[1] The importance of agency co-operation to antitrust enforcement cannot be understated; this is especially true when it comes to cartel enforcement. Globalisation is nothing new, and increasingly commerce is carried out across borders. So also is collusive dealing, encompassing everything from anti-competitive cross-border information-sharing to the carving up of world markets by region. The New Zealand Commerce Commission (NZCC) encounters global market-sharing not infrequently; New Zealand is typically grouped in with Australia and Asia into Asia-Pacific markets that are allocated to a cartel member.
So in 2008 I wrote, in a speech presented by a then Commission member, that "what is needed is for competition enforcement and regulation to 'go global' in the same way as the commerce that it superintends."[2]
We all know that international cartels are especially difficult to uncover and investigate, and that leniency programmes have been almost universally adopted due to their ability to induce self-reporting by cartel participants. Through having broadly similar approaches to leniency, and through sharing the information that these programmes produce, competition agencies can enhance their detection of cartels and responsiveness to cross-border cartels. For example, the international effort to tackle the air cargo cartel is underway in many jurisdictions, from Europe to the United States, to New Zealand, South Korea and Australia. We all watch developments in other jurisdictions eagerly, to see what we can learn and what actions we can adopt in our own cases.
Investigative assistance measures
New Zealand has a small, concentrated and open economy and we are dependent on international trade and imports. International cartels often have an impact on markets within New Zealand, even when the relevant agreement or conduct occurs overseas. As with most agencies, while our legislation does allow us to take proceedings against overseas residents, there are limits to our investigatory and enforcement powers. An overseas party typically does not have to respond to a New Zealand-issued compulsory information notice.[3] So investigative assistance is just one of the areas where regional co-operation can greatly assist.
Co-operation between New Zealand and our closest regional neighbour, Australia, has a long history. From 1983 both Governments began a general work programme to foster "closer economic relations" between our neighbouring countries, with the ultimate goal (not yet achieved) of creating a single economic market. Since then the countries have passed mirror legislation, and entered into agreements, with the objective of increasing co-ordination between the two countries' competition and consumer policies and laws.[4]
Both New Zealand and Australia passed a Mutual Assistance in Criminal Matters Act (MACMA), which enables steps to be taken in support of overseas criminal investigations.[5] And in Australia the Mutual Assistance in Business Regulation Act 1992 (Cth) (MABRA) enables bodies like the ACCC to assist to take action in support of an overseas regulatory investigation, but it does not allow for the release of information.
That Act was augmented by a 2007 co-operation agreement between the Australian Competition & Consumer Commission (ACCC) and the New Zealand Commerce Commission.[6]
The process under MABRA is commenced by the NZCC making a formal request for assistance, which is then considered by the ACCC and referred to the Australian Government. The Attorney General will then authorise the assistance if it is in Australia's best interests and consistent with international law and comity. The available assistance can include compelling the production of documents and requiring a person to give oral evidence, as well as conducting search warrants. New Zealand's Parliament is shortly expected to enact reciprocal legislation, which will enable the NZ CC to use its powers on behalf of the ACCC and other agencies where there is a co-operation agreement in place.[7]
And in relation to information sharing, the ACCC in 2007 enacted a new s155AAA of its Trade Practices Act ("Protection of certain information") to give it discretionary powers to share information (with few barriers) with any international enforcement agency, including the NZCC. This provision can avoid the bringing of parallel proceedings between Australia and New Zealand where there is wholly independent information-gathering and no common evidence between the proceedings, as happened in the 2005 wood chemicals cartel. In that case some witnesses were agreeable to waiving confidentiality so that the agencies could transfer information, but the agencies' enabling arrangements did not permit it.
Section 155AAA has been utilised on several occasions by the NZCC. A recent example of this was in an Air Ambulance cartel investigation in late 2010. Both countries had begun similar investigations, and the NZCC was interested in obtaining the confidential interview transcripts of some common witnesses.
The interviewees were amenable to release of the transcripts, but the ACCC could not do so as it treats s155 examinations as confidential to the parties and even the interviewees do not automatically get a copy of the recording or transcript themselves. The NZCC therefore officially requested the transcripts under s 155AAA. The ACCC specified conditions on the disclosure of any information from these transcripts during our investigation, which the NZCC agreed to in the form of a signed undertaking.
The key to co-operation is reciprocity, and to provide for general mutual assistance New Zealand Parliament's has recommended the passage of a new statute, the Commerce Commission (International Co-operation and Fees) Bill 2008. This bill has as its stated purpose:
... to authorise the Commerce Commission to assist and be assisted by equivalent overseas regulators.
The primary objective of this Bill is to facilitate increased co-operation between the Commission and the ACCC, but it will also enhance co-operation with other overseas regulators.[8] The bill will give the NZCC a similar power to provide investigative assistance to overseas regulators, including carrying out search warrants and enforcing information notices. It will also provide for information sharing between agencies and, unlike the Australian legislation, will not require Ministerial approval for such assistance.
A "recognised overseas regulator" will be able to request any compulsorily acquired information that the Commission holds. Regulators who fall within that definition are:
- Overseas bodies that have competition law functions corresponding to those of the NZCC; and
- Who have a co-operation arrangement with the NZCC.
The Bill envisages that the conditions upon which the information is provided will be set out in the co-operation arrangement, therefore streamlining the process once the co-operation agreement has been entered into.
During the reforms two main risks were identified with this kind of regime: that New Zealand might share information but receive none in return (reciprocity risk) and that information might not be secure once it left New Zealand (confidentiality risk). I am sure that we will see today that these twin risks are a concern of agencies everywhere, and that different measures are adopted to meet the risks. In New Zealand, the answer supplied in the legislation is one of confidence and prudence in the process that has been followed: that New Zealand would not enter into a co-operation arrangement "without reasonable confidence in the other party's provision for these matters."[9]
And the reform is both welcome and timely, because New Zealand's inter-agency relationships are deepening with other regions like Asia, particularly Singapore, through an Asia Pacific information sharing initiative. New Zealand also has formal agreements for co-operation with Canada, the UK and Taiwan (as well as Australia). These formal co-operation agreements provide for:
- Exchange of information, documents, research and guidance
- An agreement to keep information confidential, as far as possible
- Exchange of staff
- Regular meetings to discuss enforcement activity and to exchange information.
Enforcement assistance
The measures just discussed assist during an investigation. But in our South Pacific region we have also taken steps to provide for co-operation once a proceeding has been successfully completed and it is time to enforce a judgment.
In 2008 Australia and New Zealand signed a treaty (the Trans Tasman Treaty on Court Proceedings and Regulatory Enforcement) under which both countries committed to introducing legislation to minimise impediments to trans-Tasman enforcement. In line with the Treaty, the New Zealand Parliament has now enacted the Trans Tasman Proceedings Act 2010. This allows for the enforcement in Australia of New Zealand-ordered injunctions and civil pecuniary penalty orders (which are currently imposed on cartels), and for the service in Australia of civil proceedings initiated in New Zealand. [10]
In addition, inter-agency co-ordination during the litigation stage has become more frequent. Multi-jurisdictional filings are becoming more and more common. Recently New Zealand was involved in bringing an international cartel case against freight forwarders; we were in close contact with the United States Department of Justice, as we shared a mutual immunity applicant and had prioritised the same potential defendants. The DOJ and the NZCC took part in fortnightly discussions about the agencies' approaches to settlement and the way each was determining penalty with reference to commercial gain. Both agencies filed at the same time in their respective jurisdictions, and settled with the same parties at around the same time. This was an example of the benefits of harmonising international efforts to prosecute cartels.
Capacity-building initiatives are developing
In relation to training and institution building, the NZCC has worked informally with the ACCC on some investigator training initiatives and has had some staff exchanges. But there could and should be more of such informal - but invaluable - co-operation, so that each agency better understands the operational practices and constraints of its counterpart.
In an important development last year we now have cross-appointments of Commissioners, with an ACCC commissioner becoming an associate member of the NZCC and the NZCC's chairman being appointed an associate member of the ACCC.
A great deal of informal assistance takes place between the NZCC and these partner agencies overseas; in some cases we have monthly liaison meetings. With more far-flung agencies, like the United States DoJ and Canadian agency, we have case-specific informal liaison. This has provided us with important leads, such as that we ought to consider applying to search a specific overseas Court file for information that includes cartel evidence about New Zealand. In some cases we have brought proceedings earlier or faster than agencies elsewhere, and have been able to provide important leads in how we have argued or resolved matters.
We have also recently been developing investigative assistance software with the ACCC and with the Singaporean Competition Commission. This software creates an intelligence 'hub' containing information that can be accessed and generated by authorised persons within each agency.
This shows that the exchange of ideas - as well as information - is critical as between co-operating agencies. As an agency, we encourage our investigators and lawyers to foster strong relationships with their colleagues overseas and with similar domestic prosecuting agencies.[11] Even where our enforcement legislation differs, our investigators, lawyers and economists have much to gain from - and much to share with - their enforcement counterparts who are considering the same difficulties.
While formal co-operation agreements provide an excellent framework and meaningful reassurance, the benefits to be derived from easy and informal relations with people in overseas agencies are considerable. Of course many of those contacts can be made at gatherings such as this one, as well as at the OECD and other conferences.
But there are always going to be difficulties with both formal and informal exchange of information and assistance, and we will discuss some of these issues today. While competition agencies are usually quite willing to assist each other, officials are often pressed for time and resources, time differences and language barriers can get in the way, and sometimes we do not confer as much as we could. Today I would like to discuss some of these experiences and how we can overcome them.
I look forward to your views on how to ensure better and more frequent co-operation between agencies.
[1] Recommendation C(95) 130, Concerning Co-operation between member countries on anticompetitive practices affecting international trade (adopted 27/28 July 1995)
[2] Denese Bates speech "International Cartel Enforcement: New Zealand's Role" to New Zealand Bar Association Annual Conference 15 August 2008, available on the internet at http://www.comcom.govt.nz/search-results/?q=Bates
[3] With the exception of Australia, which enacted the Mutual Assistance in Business Regulation Act 1992 that enables the ACCC to assist the NZCC with evidence gathering.
[4] See the Memorandum of Understanding between the Government of Australia and the Government of New Zealand on Coordination of Business Law, revised most recently in June 2010 and available on the internet at http://www.med.govt.nz/templates/ContentTopicSummary____25649.aspx
[5] Although it is important to note that in New Zealand cartels are a civil but not a criminal offence, in contradistinction to the Australian position. Legislation is being currently being considered to criminalise cartel conduct in New Zealand.
[6] See http://www.comcom.govt.nz/international-relations/ under "Agreements with Australia" : ACCC and NZCC Cooperation Agreement
[7] Commerce Commission (International Co-operation and Fees) Bill 2008.
[8] The Bill and explanatory materials can be found on the internet at http://www.legislation.govt.nz/bill/government/2008/0293/latest/DLM3379900.html?search=ts_bill_Commerce_resel&p=1&sr=1
[9] Commentary to Bill, at ibid.
[10] This is also reciprocated in accordance with the Australian Foreign Judgments Act 1991 (Cth), with some limitations.
[11] In New Zealand this includes agencies with public enforcement obligations like the Police, Serious Fraud Office, Financial Markets Authority, Ministry of Internal Affairs and similar.
