Antitrust Procedural Fairness
D. Daniel Sokol
23rd July 2019
Procedural fairness has taken center stage in global competition law discussions. In a chapter I wrote for Antitrust Procedural Fairness (OUP 2019), I focused on some of the global forces at play that have shaped the broader competition policy community’s response to procedural fairness. Launched this year, the ICN has created a Competition Agency Procedures framework. The framework is rather robust, with 70 founding members. In April, the ICN’s steering group approved a procedural fairness framework through agency level dialogue with the goal of promoting due process and transparency among competition authorities. The framework creates voluntary commitments to ensure non-discrimination in procedural, investigation, and enforcement rules and procedures. It also creates commitments for authorities not to discriminate against persons or companies based in other jurisdictions and to be transparent in proceedings.
In that chapter, I offered justifications to improve the competition system’s procedural fairness safeguards. Procedural fairness safeguards are essential to the competition system. Without a robust procedural-fairness regime, competition law and policy can develop an implicit industrial policy that favors inefficient competitors, rather than an antitrust policy that promotes consumer welfare based on economic evidence. Systems with limited procedural fairness are ripe for abuse by third parties who might use antitrust strategically. A number of companies may front local firms to raise concerns to competition authorities as a way to punish more efficient rivals around the world.
The lack of procedural fairness does more than violate rights. It also makes it more difficult for businesses to plan effectively because of the risk involved in antitrust enforcement that is based not on the particular conduct in question but on the uncertainty due to uneven enforcement. Yet, in addition to the lack of procedural fairness hurting economic performance and efficiency, we noted that it also hurts competition authorities.
Procedural fairness should not be conceptualized as merely preventing downside risk for an antitrust authority. Rather, there are tangible benefits to antitrust authorities fully embracing procedural fairness, including better information gained from evidence gathered as a result of improved procedural fairness. Such information can assist an antitrust authority in better shaping its competition policy and enforcement prioritization. This better information gathering in turn allows cases to move more smoothly through the pipeline, with more predictability on timing and key stages for both merger and conduct cases. It also gives firms under investigation a sense of how to both respond effectively to agency requests for information and help agencies in their decision-making.
In spite of these strong reasons to improve procedural fairness safeguards, movement to create global best practices had been at a slow pace. Just a year ago, such a framework was seen as unlikely, largely because of the recalcitrance of DG Competition. So what changed? There were two factors in particular. The first is that DOJ Antitrust made the creation of procedural fairness its signature international effort. The hard work of Roger Alford and the international DOJ Antitrust team, along with strong messaging by DOJ Antitrust Assistant Attorney General Makan Delrahim to complement longstanding US policy by both the DOJ and FTC, made this issue an important part of the international antitrust agenda. However, change would not be possible without DG Competition joining the efforts to create a credible commitment to procedural fairness.
When the DOJ first floated the framework a year ago, DG Comp worked aggressively to try to stop it, claiming that such efforts needed to come from international organizations such as the OECD and ICN, even though in earlier efforts through the ICN, it was DG Competition that suggested that global best practices were not possible in this area. Trapped by its statement that efforts for global procedural fairness could only move forward through the ICN; with the support of Andreas Mundt, President of the Bundeskartellamt and in his capacity as Chair of the ICN Steering Group, the commitment to move ahead with procedural fairness through the ICN was credible. This put DG Competition in a bind – it had to move ahead with procedural fairness safeguards, even though to do so would be to expose DG Competition to further scrutiny (though many other authorities have had procedural fairness problems). Essentially, DG Competition was trapped in its statements, which forced it to make commitments to global best practices in procedural fairness. With the US and DG Competition onboard for procedural fairness at the ICN, global opinion shifted quickly, and what had been fewer than 10 authorities willing to commit to the framework has now become 70 commitments by competition authorities, as the bipolar superpowers in competition policy have both come onboard to champion procedural fairness principles.
Time will tell if procedural fairness practices will improve. The history of merger control and cartels suggest that such movement is possible. Our book suggests that there are a number of critical issues across jurisdictions that need to be resolved. This may come with time, and with the pressure of soft law.
Should you be interested in diving deeper into the subject, a book I co-edited published earlier this year and is currently available: Antitrust Procedural Fairness (Oxford University Press 2019, along with co-editor Andrew Guzman of USC’s Gould School of Law). We and our many contributors from around the world identify a growing global trend in procedural fairness in global competition law, discussing key issues, common problems, and distinct issues in particular jurisdictions.
D. Daniel Sokol is a Professor at the Levin College of Law, University of Florida. He is an Honorary Fellow of the Indian Institute of Corporate Affairs, Fellow of the George Washington Law School Competition Law Center, and a member of the American Law Institute. He also serves as academic advisor to the US Chamber of Commerce.