A N T I T RU S T P RO C E D U R A L FA I R N E S S ii Antitrust Procedural Fairness Edited by D D A N I E L S O KO L UF Foundation Research Professor of Law and Term Professor of Law, University of Florida Levin College of Law A N D R E W T. G U Z M A N Carl Mason Franklin Chair in Law, Professor of Law and Political Science, and Dean, USC Gould School of Law iv Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © The several contributors 2019 The moral rights of the authors have been asserted First Edition published in 2019 Impression: 1 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Crown copyright material is reproduced under Class Licence Number C01P0000148 with the permission of OPSI and the Queen’s Printer for Scotland Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2018961271 ISBN 978–0–19–881542–6 Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY Links to third party websites are provided by Oxford in good faith and for information only Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work Table of Contents Table of Cases Table of Legislation Table of Treaties and Other International Instruments List of Abbreviations Contributors Introduction Andrew T Guzman and D Daniel Sokol The Case for Global Best Practices in Antitrust Due Process and Procedural Fairness D Daniel Sokol Introduction Procedural Fairness in its Global Context 2.1 Procedural fairness issues around the world 2.2 Benefits of procedural fairness 2.3 Why procedural fairness has become a major issue Global Best Practices 3.1 Hard law 3.2 Soft law 3.2.1 OECD 3.2.2 ICN 3.3 The current and future use of soft law in global antitrust Conclusion Procedural Fairness in Antitrust Enforcement: The U.S Perspective Christopher S Yoo and Hendrik M Wendland Introduction The U.S Antitrust Enforcement Agencies Restricting Abuse—Four Essential Procedural Protections under U.S. Law 3.1 Legal representation 3.1.1 FTC 3.1.2 DOJ 3.2 Notice of legal basis and evidence 3.2.1 FTC 3.2.2 DOJ xiii xix xxiii xxv xxvii 4 11 13 16 16 16 18 19 21 25 31 31 32 34 34 34 36 36 37 38 vi vi Table of Contents 3.3 Engagement between the parties and the investigative staff 3.3.1 FTC 3.3.2 DOJ 3.4 Internal checks and balances and judicial review 3.4.1 FTC 3.4.2 DOJ Conclusion Due Process in EU Competition Proceedings Marek Martyniszyn Introduction The Issue of Legal Representation for the Parties Under Investigation The Parties’ Awareness of the Charges and the Gathered Evidence The Scope for Engagement between the Parties and the Commission The Checks and Balances in the EU Competition Procedures 5.1 Prior to the adoption of a decision 5.2 Judicial review 5.3 Commitments procedure Conclusion Procedural Fairness in Chinese Antitrust Jingyuan (Mary) Ma and D Daniel Sokol Background of the AML 1.1 Overview—the AML and the three antitrust authorities 1.1.1 The anti-monopoly law and administrative provisions on antitrust procedural rights in China 1.1.2 Specific issues of antitrust procedural fairness in China 1.1.2.1 The participation of local and foreign counsel 1.1.2.2 Notification requirements and the disclosure of evidence 1.1.2.3 The engagement between the parties and the investigative staff 1.1.2.4 Internal and external checks and balances on decision-making within the agency 1.1.3 Mixing competition goals with industrial policy concerns in the investigation process 1.2 Issues of notification of basis for legal issues Conclusion 39 40 41 42 42 45 46 48 48 50 53 57 61 61 63 66 68 71 71 71 75 78 78 78 79 80 81 83 84 Table of Contents Due Process and Transparency Requirements for Investigating Competition Cases in Taiwan Andy C. M. Chen The Regulatory Framework for Due Process and Transparency Requirements in Taiwan 1.1 The Administrative Procedure Act 1.2 The Freedom of Government Information Law 1.3 The Administrative Penalty Act 1.4 The Taiwan Fair Trade Act and the administrative rules issued by the Taiwan Fair Trade Commission The Implementation of Due Process and Transparency Requirements in Competition Cases 2.1 Legal representation for investigated parties 2.2 Procedural dimensions of factual and evidentiary issues 2.2.1 Opportunities to produce and access materials and evidence 2.2.2 Rights to examine materials and evidence 2.2.2.1 Hearing procedure 2.2.2.2 Decision-making phase 2.2.2.3 The phase for determining penalties and remedial measures 2.3 Ex parte contacts between the investigated parties and staff members and decision-makers within the TFTC 2.4 Judiciary mechanisms to ensure compliance Problems Arising from Implementation Experience 3.1 Legal representation 3.2 Producing, accessing, and examining materials and evidence 3.3 Ex parte contacts with the TFTC 3.4 Judicial mechanisms for ensuring compliance Preliminary Comments and Policy Implications Conclusion Procedural Fairness in Hong Kong Competition Law Kelvin Hiu Fai Kwok and Thomas K. Cheng Introduction General Procedural Issues under the Hong Kong Competition Ordinance Case Study on Institutional Design and Procedural Fairness: The Case of TVB in Hong Kong 3.1 The requirement of effective judicial protection 3.2 The standard of proof: civil or criminal? Conclusion vii 88 89 89 90 91 92 94 94 95 95 96 96 97 98 98 99 100 100 101 103 104 107 110 112 112 112 117 118 123 130 vi viii Table of Contents Procedural Fairness in Japan: Administrative Fines as a Window Tadashi Shiraishi Introduction The 1977 Amendment: The Introduction of Administrative Fines The 2005 Amendment: An Overhaul Led by the JFTC 3.1 Overview 3.2 Changes in the substance of administrative fines 3.2.1 Statutory changes 3.2.2 Theoretical changes 3.3 Procedural reforms The 2009 Amendment: Additional Favors for the JFTC 4.1 Overview 4.2 Rejection of the proposals for repealing the quasi-judicial hearing procedure 4.3 Rejection of other procedural proposals 4.4 Enlargement of the eligible categories for the administrative fine 4.5 Reform of premerger notifications 131 131 132 134 134 134 134 135 135 136 136 137 137 138 138 The 2013 Amendment: Backlashes for the JFTC 138 5.1 Repeal of the quasi-judicial hearing procedure 138 5.2 Strengthening the pre-order procedures 140 After the 2013 Amendment: Debates on Investigation Procedures 141 6.1 Overview 141 6.2 The provision of information to firms 142 6.3 Presence of an attorney during on-the-spot inspections 142 6.4 Attorney-client privilege 143 6.5 Presence of an attorney during interviews by the investigators 144 Towards the Next Major Amendment: A Sweeping Overhaul of Administrative Fines? 145 The 2016 Amendment: Possible Changes in Unilateral Conduct 146 Conclusion 147 Procedural Fairness in India Avirup Bose and Sagardeep Rathi Introduction Due Process Issues at the Investigation Stage 2.1 Appropriate notice of the investigation 2.2 Lack of engagement with the authority 2.3 Access to files 2.4 Public disclosure by the CCI/DG Due Process Issues at the Decision-Making Stage 3.1 Engagement with the decision-maker 3.1.1 Signing of CCI’s orders 148 148 150 150 151 153 154 155 155 155 Table of Contents 3.2 Uncertainty of the procedure to be followed 3.3 No hearing given by the CCI on an interim application before passing of an order Due Process Issues at the Remedy Stage 4.1 Individual liability Conclusion 10 Due Process of Law and the Brazilian Antitrust Agency Paula A Forgioni and Alessandra Forgioni Evolution of Brazilian Antitrust Regulation Main Goals of Brazilian Antitrust Policy Due Process of Law in CADE’s Proceedings 3.1 Due process of law as guaranteed by the constitution 3.2 Due process of law and CADE’s internal regulations Conclusion 11 Procedural Fairness and Transparency in Australian Merger Regulation and the Use of Enforceable Undertakings Wendy Ng Introduction Merger Regulation in Australia Ability to Review or Challenge Decisions 3.1 Judicial review 3.2 Merits review 3.3 Other avenues Nature of the Negotiation and Decision-making Process Information Gathering During Merger Review Procedural Fairness for Third Parties Conclusion 12 Accountability, Private Rights of Action, and Canadian Competition Institutions Edward M Iacobucci Introduction Part I: Representation, Notification, Engagement, and Accountability 2.1 Representation 2.2 Disclosure of agency concerns to the parties 2.3 Meaningful engagement 2.4 Accountability 2.4.1 The structure of accountability ix 157 158 158 160 162 165 165 168 170 170 172 179 181 181 182 185 185 187 187 189 191 193 195 198 198 198 199 200 201 201 202 26 262 Index Japan Fair Trade Commission (cont.) procedure for issuing orders 135–36 provision of information to firms 142 reduction in powers 138–40 referrals from 134 review of orders 139 Study Group Report 145–46 Japanese Society for Rights of Authors, Composers and Publishers (JASRAC) 143–44 judicial review absence 220 in Australia 185–86 in Brazil 175–78, 179 in China 80–81 crucial global role 226 deference shown to authorities 63–64, 65–66, 68–69, 104–6 in EU 54–55, 61, 63–65, 68–69 EU/Hong Kong systems, compared 120–21 grounds for 63 in Hong Kong 116, 117–19 limitations on 54–55, 104, 186 partial/limited 63–64 scope of 63, 68–69 in Taiwan 89, 99–100, 104–6 in U.S. 42, 46 Keohane, Robert O. 18 Korea, antitrust regime 219–20 Lake Wobegon effect 20 law and development, literature of 13–14 Law Commission of India 154–55 legal basis, notice of in Brazil 171 in Canada 198, 199–200 in China 83–84 in EU 53–57 global failings 227, 228 in India 150–51 in Japan 142 in U.S. 36–39 legal professional privilege in EU 52 hazards of restricted provision 222 in Japan 137, 143–44, 145, 146 prohibition on 143, 145 proposed extension to counsel 52 legal representation 2 in Brazil 173 in Canada 198 in EU 50–53 in Hong Kong 113 in India 152–53 in Japan 142–43, 144–45 licensed vs unlicensed 100–1 representatives’ qualifications 35, 36, 53 restrictions on right to 94 statutory guarantees 35, 36 in Taiwan 94, 100–1 in U.S. 34–36 see also foreign lawyers legitimacy 12 and due process 234–35 improved, benefits of 12 and third parties 12 threats to 12–13 margin of appreciation 50, 63–64, 68–69 McSweeny, Terrell 8 mergers 181–96 immunity from private action 203, 207, 210 prior notification 138 procedures 18, 22, 102–3, 167, 181 prohibition 55–56 (proposed) extension of private rights to 213, 217–18 remedies 102–3 time-sensitivity 205, 217 see also Australia, merger law merits review 187, 226 MOFCOM (Ministry of Commerce, China) 71–72, 75, 78–79, 83–84 dealings with foreign lawyers 84 dealings with other government authorities 84 engagement with parties 79–80 Guiding Opinions of the Anti-Monopoly Bureau 77–78 merging into single authority 85 seminars/consultations 82–83 transparency issues 83 natural justice, as guiding principle 149, 162 problems of definition 163 violations of 149, 152, 155–56 NDRC (National Development and Reform Commission, China) 71–72, 75, 78–79 case load 80 engagement with parties 79–80 Guidelines on the General Conditions and Procedures for Exemption of Monopoly Agreements 82–83 Index local branches 80 merging into single authority 85 Provisions on Administrative Procedures 77 seminars/consultations 82–83 Nye, Joseph 18 Obama, Barack 8, 15 OECD (Organization for Economic Cooperation and Development) 17–19, 31–32, 221, 249 Competition Committee 18, 232, 240 reports on due process/transparency 19, 230, 236, 238, 243 role in development of best practices 21–22 use of peer reviews 18–19 officials, requirements of 6, 7 Ohlhausen, Maureen 8 oral hearings (in EU) 57, 58–60 criticisms 60 duration 59–60 interim report 60 limits to competence/allowable material 58–60 official presence 59 privacy 58–59 procedure 58 right to 58 staffing 58 see also Hearing Officers overdeterrence see deterrence Parker, Christine 191 peer review(s) 18–19 in EU 61–62 scope 19 penalties 158–60 civil vs criminal 124, 128 determination 91–92, 104–5, 128–29 deterrent 128–29 lack of clarity 158–59 measures not classed as 102–3 proportionality 160 see also fines pharmaceutical industry 15, 212–13 Pistor, Katharina 13–14 plea bargains 42 political pressure, bringing of 12–13 risks of, in EU 62, 65 safeguards against 14 predatory pricing 130 price-fixing, as criminal offence 202, 210 private rights of action (in Canadian law) 207–18 263 ambiguity of status 212 benefits (summarised) 213 calls for expansion/strengthening 198, 199, 207, 209–10, 213–18 check on Bureau 208–9 compromise features 210 concerns over cost/wasted time 210 current availability 203, 207, 216 deterrent impact 214–15, 216 frivolous claims 209 impact on transparency 209, 211–12, 214–16 motivations 208–9, 212, 214 probability of litigation 205, 211–12 relationship with deterrence 209, 212, 213, 216 relative stakes 212 restrictions on 203, 207, 212, 216–17 risk of overdeterrence 216 procedural fairness areas of relevance benefits of 11–13 defining components 7, 108 global context 5–15 global significance 11, 14–15, 112 impact on substantive arguments national/jurisdictional variations 1–2, negative impact on competition law in prosecutorial systems 122 and rule of law 31–32 scholarship on 1, 108 trade-off with efficiency 122 see also best practices; due process; transparency proof see burden of proof; standard(s) of proof prosecutorial systems benefits 122, 123 compared with administrative 115–16, 122 inefficiency 122, 123 procedural safeguards 122 Ramirez, Edith 8, 48 reciprocity 16 remedial measures 98 resource allocation 12 respondents authorities’ contact with 37, 38, 39–40, 41 procedural rights 40–41 right of appeal 43–44 right of information 36–37, 38 right to counsel 34–35 see also defences 264 264 Index Richard, Jean-Franỗois 1314 Roach, Kent 20810 rule of law 31, 220 role of procedural fairness 31–32 rules, disclosure of 6 Russia, antitrust regime 219–20 SAIC (State Administration of Industry and Commerce, China) 71–72, 75, 78–79 case load 80 engagement with parties 79–80 local branches 80 merging into single authority 85 Procedural Rules 76–77 seminars/consultations 82–83 separation of powers, doctrine of 225–26 Snidal, Duncan 17 soft law 17–21, 249 benefits 17–18 coinage/definition 17 compliance with 24–25 consequences of violation 24–25 current global situation 21–23 future directions 22, 23–25 limitations 21–22 (potential) strengthening 23–25 as preferred medium 17 role in international relations/law 17 significant institutions 18–21 see also ICN; OECD; transgovernmentalism; transnationalism South Korea 3 standard(s) of proof 123–30 ‘beyond reasonable doubt’ 125, 202 civil, arguments for adopting 126–28 civil vs criminal 123–26 default rule 125–26 exceptions to 126 distinguished from quality of evidence 129 relationship with probability 129–30 state of play meetings 57–58 bilateral 57 triangular 57–58 Statement of Objections (SO) 54–55 adoption 55–56 disclosure obligations 55 replies to 56, 57 Stragier, Joos 58 Structural Impediments Initiative (US/ Japan) 132–33 Sutherland, Arthur E. 108–9 Taiwan 3, 88–110 access to evidence 95, 101 administrative process 89 areas of potential improvement 108–9 asymmetrical distribution of rights 100 competition legislation 89–92, 107–8 cross-examination principle 96 decision-making phase 97 determination of penalties 91–92, 98, 101–2 due process requirements 89–90, 99–100, 107–8, 110–11 examination of evidence 96–98, 101 factual/evidentiary issues 95–98 freedom of information 90 hearing procedure 96–97 implementation of legislation 94–100, 107–8 problems arising 100–6, 110–11 inquisitorial principle, application of 108–10 investigation procedures 92–93 jurisdiction 89 lacunae in legal provisions 101–3 legal representation 94, 100–1 mechanisms to ensure compliance 99–100, 104–6 policy implications 107–9 remedial measures 98 transparency requirements 89–90, 99–100, 107–8, 110–11 see also Taiwan Fair Trade Commission Taiwan Fair Trade Commission (TFTC) 89 Courts’ refusal to overturn decisions 104–6 Notice for Holding Hearings 97 powers/obligations 92–93, 95–96, 97, 100 (restrictions on) contact with parties 98–99, 103–4 reversal of decisions 100 rules/guidelines 93, 97, 98 third parties abuse of regime limitations 15 benefits for 233–34 and legitimacy issues 12 procedural fairness towards 193–94 right to be heard 194 submissions from 54 time limits in China 78 in EU 58 Trans-Pacific Partnership (TPP) 147, 238 transgovernmentalism 18 transnationalism 18, 19 Index transparency 4 in Australia 182, 184, 190, 195–96 benefits of 11, 12–13, 88, 248 in Brazil 171, 179 in Canada 208, 209, 211–12 see also accountability in China: lack of 10, 73, 74, 82–84, 85 (limited) improvement 81–82, 83, 85 dependence on type of proceedings 226 in the DG Competition future directions 228–29, 233–34 ICN promotion of 20, 21 in India, lack of 151, 155 link with deterrence see deterrence relationship with due process 234–35, 248 striking of balance 228 in Taiwan 89–90, 99–100, 107–8, 110–11 Transparency International 5–6 Trebilcock, Michael 198–99, 205, 208–10 triangular meetings see under state of play meetings Trump, Donald 8 “turnover,” lack of clear definition 158–59 UNCTAD (United Nations Conference on Trade and Development) 236 underdeterrence see deterrence United Kingdom Competition and Markets Authority 128–29 Indian system compared with 163–64 penalties 128–29 standards of proof 126–27 United States 3, 31–47, 200 antitrust enforcement agencies 32–33 antitrust legislation 7–8, 32, 34, 35 areas of potential improvement 7–8 checks and balances 42–46 common law traditions 5–6 compared with other national systems 73, 148–49 265 definition of procedural fairness differences between authorities 34, 47 due process guarantee 34, 232–33 enforcement procedures 46–47 engagement between parties and investigative staff 39–42 Federal Register 41–42 global influence 219, 221–22 grand jury proceedings 33, 36, 39, 42, 45–46 legal representation 34–36 notice of legal basis 36–39 plea bargains 42 procedural issues 7, 8, 10–11, 12 procedural regulations 34, 46–47 publication of documents 41–42 recommendations to international bodies 23, 219 rule of law, importance of 31 talks with Japan 132–33 unevenness of standards 7–8 see also American Bar Association; Chamber of Commerce; Department of Justice; Federal Trade Commission Varney, Christine 8 Veel, Paul-Erik 210, 212–13 Wils, Wouter P.J. 58, 61 witnesses, legal representation 35 see also expert witnesses Wong, Stanley 2 World Bank 5–6 World Trade Organization (WTO) 16–17 written responses/testimony, requirement of 58 Yeung, Karen 194–95 Zimmer, Daniel 122 26 268 270 27 274 276 ... Practices in Antitrust Due Process and Procedural Fairness D Daniel Sokol Introduction Procedural Fairness in its Global Context 2.1 Procedural fairness issues around the world 2.2 Benefits of procedural. .. considerable resources on procedural fairness by both of the antitrust powers, the issue of procedural fairness becomes more difficult to address globally Procedural fairness seems unlike process-related... strong procedural fairness safeguards regarding due process and transparency This section of the chapter advances the various benefits of strong procedural fairness safeguards Procedural fairness