Interview with Ron Stern

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Interview with Ron Stern
Concurrences
Revue des droits de la concurrence
Competition Law Journal
Ron STERN: An in-house
perspective on global
competition law developments
Interview l Concurrences N° 2-2012
www.concurrences.com
Ronald A. STERN
[email protected]
l Vice President, General Electric
Ronald A. STERN
[email protected]
Vice President, General Electric
1991-Present
Ron STERN: An in-house
perspective on global
competition law developments
After Harvard law school, you clerked on the US Court of Appeals for the District
of Columbia for Judge Harold Leventhal, and then for US Supreme Court Justice
Potter Stewart, before entering private practice. At the beginning of your legal
career, what led you to specializing in antitrust?
Vice President (1997-present)
& Senior Competition Counsel,
General Electric Company,
Washington, DC
I took a very lengthy and circuitous route to becoming an “antitrust specialist”.
After I clerked for two years, I joined the small Washington office of a New York
firm and began working on a variety of litigation matters – often focusing on the
legal grounds for dismissing claims or obtaining summary judgment. After about
two years, I left to work as a Special Assistant to my first year criminal law professor
who had been appointed to head the Criminal Division of the Justice Department
during the Carter Administration. I returned to the law firm after about two years
and continued to do civil litigation.
1988-1990
Partner, Arnold & Porter,
Washington, DC
My first major antitrust matter was in 1980 working on a team representing
Showtime, which was opposing a proposed joint venture of four major motion
picture companies called Premiere. At the heart of the proposed venture was an
agreement among the motion picture company participants that they would not
license their movies to other pay television services until nine months after they
appeared on Premiere. The Antitrust Division, with support from the existing
pay television services (HBO, Showtime, and The Movie Channel), succeeded in
obtaining an injunction that blocked the formation of the venture.
1976-78, 1980-88
Associate (’76-’78,’80-’81),
Partner (’81-’88),
Hughes Hubbard & Reed,
Washington, DC
1978-1980
Special Assistant to the Assistant
Attorney General,
Criminal Division, U.S. Department
of Justice, Washington, DC
1974-1976
Law Clerk to Justice Potter Stewart
(’75-’76); Judge Harold Leventhal,
U.S. Court of Appeals for the
District of Columbia Circuit
(’74-’75)
1974
During the 1980s, I began to do an increasing amount of merger work (including the
Showtime/The Movie Channel and the Alcan/Arco transactions) while continuing
to handle a broad range of civil litigation matters. In 1988, a colleague and I decided
to look for a new home for ourselves and many of our junior colleagues. We ended
up focusing on two firms – one that wanted me to be an antitrust specialist and the
other that saw me as a full-time civil litigator. We decided to join the firm that wanted
me to focus on antitrust so, fourteen years after graduating from law school, I finally
became an “antitrust specialist”.
In the end, several factors made the choice of antitrust a relatively easy one for me.
First, Professor Areeda’s antitrust course had been one of the best classes I took
during law school and it provided me with a good background and sparked an early
interest in antitrust. Second, in contrast to litigation, I liked the diversity of antitrust
practice – adding counseling, merger clearance, and investigations to litigation. Third,
and most importantly, I found that I enjoyed my work on antitrust matters because
it enabled me to learn the client’s business and have an ongoing relationship with the
client’s legal and business teams. The logical next step was to become an in-house
antitrust specialist where I would be able to work even more closely with those teams.
At the last annual meeting of the International Competition Network (“ICN”)
at The Hague, the Chairman of the ICN and head of the Office of Fair Trading, John
Fingleton, announced that the membership had grown to 117 competition agencies.
How do global companies like GE view the increasing growth of competition
agencies worldwide, especially the possibility of multiple agency reviews of any
potential transaction? What role has the ICN Recommended Practices for Merger
Notification and Review Procedure played in streamlining multijurisdictional merger
reviews and what is left to accomplish?
J.D., Harvard Law School
This interview was conducted
by Hugh Hollman, Associate, Jones Day,
Silicon Valley Office.
I believe that the adoption of competition laws by almost all countries is a positive
development for businesses and consumers. Reducing cartel activities and other
anticompetitive practices lowers prices and costs and expands access to markets. At the
same time, the proliferation of competition laws and the increasing globalization of
Concurrences N° 2-2012 I Interview
1
Ronald A. Stern, An in-house perspective on global competition law developments
Ce document est protégé au titre du droit d'auteur par les conventions internationales en vigueur et le Code de la propriété intellectuelle du 1er juillet 1992. Toute utilisation non autorisée constitue une contrefaçon, délit pénalement sanctionné jusqu'à 3 ans d'emprisonnement et 300 000 € d'amende
(art. L. 335-2 CPI). L’utilisation personnelle est strictement autorisée dans les limites de l’article L. 122 5 CPI et des mesures techniques de protection pouvant accompagner ce document. This document is protected by copyright laws and international copyright treaties. Non-authorised use of this document
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@ Interview
I am always reluctant to disagree with Former Chairman
Kovacic and I acknowledge the very substantial influence
of the EU, but I believe that the U.S. has been the more
influential jurisdiction in shaping key substantive aspects
of today’s global competition systems. Certainly, in terms
of the adoption of an administrative approach in which the
competition authority acts as investigator and decisionmaker,
the EU system prevails. In addition, the EU’s influence
can be seen in the nomenclature that is most widely used
today by competition regimes – competition law (rather
than antitrust); dominance/abuse of dominance (rather
than monopoly/monopolization). Indeed, to illustrate the
EU’s influence over nomenclature, a number of years ago
I changed my title from Senior Antitrust Counsel to Senior
Competition Counsel.
I believe that the ICN’s Recommended Practices for Merger
Notification Procedures have played a very valuable role in
promoting the adoption of procedural rules by both new
and established competition agencies. Improvements include
reducing unnecessary filings, streamling initial notification
requirements, and increasing the speed of the clearance
process for the vast majority of transactions that do not
present any significant issues. For example, the KFTC cited
the Recommended Practices as influential both in its 2003
adoption of notification thresholds that required each
of the parties to the transaction to have sales of at least
3 billion won in Korea (approximately $2.7 million) and in
its 2007 increase of these thresholds to 20 billion won of
sales in Korea (approximately $17.8 million) for each of the
parties. The Recommended Practices also have been used
by competition agencies to advocate for legislative reforms
to their merger regimes. This has taken place in a number
of jurisdictions including Belgium, Brazil, Bulgaria, Ireland,
and Portugal. The accomplishments of the ICN in this area
have been documented by others.
However, on balance, I believe that the U.S. has led in
many of the areas that are key to defining the core of the
emerging global approach to competition law. First, and
fundamentally, I believe that the U.S. has been the leader
in advancing the view that the goal of competition law is to
promote consumer welfare and that the focus should be on
protecting competition not individual competitors or some
ideal market structure. Second, in the cartel area, the U.S. has
developed and refined the concept of leniency and used it to
have a profound impact on the nature and level of anti-cartel
enforcement activities. Competition authorities around the
world have embraced the leniency approach developed in the
U.S. and, increasingly, are adopting the U.S.’s long-standing
emphasis on criminal sanctions to deter and punish cartel
violations. Third, in the merger area, the U.S. has led the way
with its merger guidelines that focus on an economics-based
assessment of the likely competitive effects of proposed
transactions rather than employing a mechanical approach
limited to market structure. The increasing use of economists
and economics in merger review and in other areas of
competition law also reflects the influence and leadership
of the U.S. Finally, the U.S. led the effort to form the ICN,
which has fostered the development of sound, consensusbased Recommended Practices by the U.S., the EU, and
numerous other jurisdictions. Going forward, I am hopeful
that it will be joint U.S.-EU/multi-jurisdictional efforts via
the ICN and other influential international bodies (such as
the OECD) that will foster increased convergence around
sound competition law principles and processes.
However, much work remains to be done. Some established
agencies (including some that were founding members of the
ICN) still fail to follow some aspects of the Recommended
Practices. While the Recommended Practices have been quite
valuable in helping to improve a number of the newer merger
regimes prior to their taking effect, many of the newer regimes
would benefit from changes that would bring their procedures
more in line with the ICN Recommended Practices. GE has
joined with a number of other major global companies in
an organization called the Merger Streamlining Group
to promote implementation of the ICN’s Recommended
Practices, particularly the recommendation that there be
a substantial local nexus to the jurisdiction before there is
a requirement to notify a merger.
The US and EU just celebrated 20 years of the US-EU
bilateral competition cooperation agreement by issuing
revised Best Practices in Cooperation in Merger
Investigations. You have been involved in a broad range
of international competition law matters for GE, not least of
which was the GE-Honeywell merger, which was cleared in
the US but blocked by the EC in 2001. In retrospect, what did
the experience illustrate for you and what are your views on
US-EU cooperation? How do you think it could be improved?
Former FTC Chairman, William Kovacic, has described
antitrust rules worldwide as having an “open-source quality”
as many competition agencies are adopting variations of
agency and competition law models conceived in the US and
Europe. But that today, “measured by influence in sharing the
design and content of competition policy globally, the EU is
the world’s most influential system”1 Is that your impression?
1
The GE-Honeywell experience illustrated several points that
I believe I understood at the time: (1) big, headline-generating
transactions are different; (2) in the era before the emergence
of the “high tech industry”, media and aviation transactions
were among the most likely to receive intense scrutiny; (3)
competitors played a more important role in merger review
William E. Kovacic, Dominance, duopoly and oligopoly: the United States and the
development of global competition policy, 13 GCR 39 (Dec. 2010), available at http://www.
globalcompetitionreview.com/features/article/29410/dominance-duopoly-oligopolyunited-states-development-global-competition-policy/
Concurrences N° 2-2012 I Interview
2
Ronald A. Stern, An in-house perspective on global competition law developments
Ce document est protégé au titre du droit d'auteur par les conventions internationales en vigueur et le Code de la propriété intellectuelle du 1er juillet 1992. Toute utilisation non autorisée constitue une contrefaçon, délit pénalement sanctionné jusqu'à 3 ans d'emprisonnement et 300 000 € d'amende
(art. L. 335-2 CPI). L’utilisation personnelle est strictement autorisée dans les limites de l’article L. 122 5 CPI et des mesures techniques de protection pouvant accompagner ce document. This document is protected by copyright laws and international copyright treaties. Non-authorised use of this document
constitutes a violation of the publisher's rights and may be punished by up to 3 years imprisonment and up to a € 300 000 fine (Art. L. 335-2 Code de la Propriété Intellectuelle). Personal use of this document is authorised within the limits of Art. L 122-5 Code de la Propriété Intellectuelle and DRM protection.
many industries present significant challenges for companies
such as GE. In the merger context, companies that are active
in M&A activities need to have an expert global team that
is knowledgeable about the procedural and substantive
requirements of the numerous agencies with merger regimes.
Inconsistencies in the review procedures, timetables, and
substantive standards, along with the uncertainty that
often accompanies the early years of new merger regimes,
present ongoing challenges. These challenges often manifest
themselves in increased costs and delay in completing the
merger clearance process and, on occasion, can make it more
difficult to advise whether a proposed transaction is likely
to encounter opposition from one or more of the agencies
reviewing the transaction.
The track record of cooperation since the GE/Honeywell
decision in 2001 is both impressive and reassuring. One key
potential impediment to cooperation in the merger area is the
rather stark difference in process and timing resulting from
the “front loaded” EU system and the “back loaded” U.S.
system. The strong incentives to offer Phase I undertakings
to avoid a Phase II review in the EU and the tight timetables
for the Commission’s review of such undertakings further
complicates efforts to cooperate and coordinate the U.S. and
EU reviews. The agencies have taken an important step in
acknowledging these issues and offering helpful suggestions
in Revised Best Practices on Cooperation in Merger
Investigations issued last October. While I believe that the
parties to proposed transactions have an important role to
play in assisting and facilitating cooperation between the
U.S. and EU (and any other authorities reviewing a global
transaction), a critical element in making the process work is
the self-confidence and transparency of the case teams in the
reviewing jurisdictions. Equally important is the willingness
of the senior officials to adjust their normal internal review
processes to be prepared to coordinate with other authorities
at critical junctures of the review process.
Key global players are beginning to actively enforce
antitrust laws: China’s competition laws are now about
4 years old, provisions of India’s competition law dealing
with mergers went into effect in June last year, and
Brazil, just revamped their competition law, moving to
a pre-merger notification system. Do you believe these new
antitrust regimes are in line with international standards
and best practices? How are you and GE meeting
the standards and requirements these new antitrust
regimes impose, especially in emerging economies around
the globe?
I believe that the ICN’s Recommended Practices have had
a positive effect on the development of the merger regimes
in China, India, and Brazil. However, as one would expect
with new (or newly revised) regimes, there remain areas
where each of these regimes could be improved through
the implementation of certain of the ICN’s Recommended
Practices.
For example, Brazil recently took several very positive
steps in its new law, including the elimination of market
share thresholds and the adoption of two-party local nexus
thresholds based on turnover in Brazil. Since the new
legislation appears to look to the entire Brazilian turnover of
the seller rather than just the Brazilian turnover attributable
to the entity or assets that the seller is transferring to the
buyer in the proposed transaction, it will be important for
Arguably trans-Atlantic differences between the EU and US,
perhaps including the GE-Honeywell merger experience,
led to the founding of the ICN for which you are a nongovernmental advisor. What is your view of the network,
what useful work do you think it has done, and what areas
would you like the ICN to focus on in future? In particular,
what do you think the roles of non-governmental advisors
should be in future?
As I have noted in prior answers, I believe that the ICN has
played a very positive role. The ICN has helped create a
closer knit global competition community that works better
Concurrences N° 2-2012 I Interview
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3
For more detail on the ICN’s accomplishments and the need for continued work
on implementation, see my essay and those of the many other contributors in
The International Competition Network at Ten: Origins, Accomplishments and Aspirations
(Paul Lugard, editor, 2011).
Ronald A. Stern, An in-house perspective on global competition law developments
Ce document est protégé au titre du droit d'auteur par les conventions internationales en vigueur et le Code de la propriété intellectuelle du 1er juillet 1992. Toute utilisation non autorisée constitue une contrefaçon, délit pénalement sanctionné jusqu'à 3 ans d'emprisonnement et 300 000 € d'amende
(art. L. 335-2 CPI). L’utilisation personnelle est strictement autorisée dans les limites de l’article L. 122 5 CPI et des mesures techniques de protection pouvant accompagner ce document. This document is protected by copyright laws and international copyright treaties. Non-authorised use of this document
constitutes a violation of the publisher's rights and may be punished by up to 3 years imprisonment and up to a € 300 000 fine (Art. L. 335-2 Code de la Propriété Intellectuelle). Personal use of this document is authorised within the limits of Art. L 122-5 Code de la Propriété Intellectuelle and DRM protection.
because of the creation of a shared vision of “best practices”
and an ongoing, cooperative effort to promote that vision.
In addition to this very important relationship-building role,
the ICN has made significant progress toward convergence
through its most important work product – its development
of several sets of Recommended Practices. In the future,
I would like to see the ICN: (1) tackle the development
of Recommended Practices in the more difficult area of
unilateral conduct; (2) address due process issues in agency
investigations and proceedings, taking up a subject that the
OECD has been working on recently; and (3) become more
active in promoting the implementation of the ICN’s existing
Recommended Practices. While meaningful progress has
been made in significant part because of the ICN’s efforts,
much remains to be done2. Non-governmental Advisors
(“NGAs”) have played an important role in the work of
the ICN from the beginning. While there [email protected] to be
some uncertainty at the outset about the participation of
NGAs in certain working groups and portions of the annual
conferences, those issues appear to have been resolved in
favor of inclusion of NGAs in virtually all aspects of the
ICN’s activities. The ICN, of course, is led by its member
agencies but it has welcomed input from NGAs and is seeking
to broaden the base of NGAs to reflect better the range and
diversity of the member agencies. I believe that NGAs will
continue to assist the member agencies in the work of the
ICN and to be active in utilizing the ICN’s Recommended
Practices and other work product to promote ongoing
improvements to competition regimes around the world.
in the EC than in the U.S.; and (4) having an ongoing,
cooperative working relationship at all levels of a competition
authority prior to a major transaction or investigation is
important. In terms of U.S. – EC cooperation, one of the
unfortunate aspects of GE-Honeywell was the timing of
the transaction. The deal was announced just before the
2000 presidential election in the U.S. and the review took
place during the transition to a new Administration. As a
result, there was no Assistant Attorney General in charge of
the Antitrust Division until June 14, 2001 – after the U.S.
completed its review of the transaction and the same day that
the parties submitted their final set of undertakings to the
European Commission. There was thus no opportunity for
the senior leadership at the Division and the Commission to
have developed a strong personal relationship of trust, mutual
respect and a shared commitment to avoiding conflicting
outcomes on global mergers. In addition, although the staffs
of the two authorities had extensive discussions about the
case, my sense was that they also lacked a close relationship.
Indeed, when I attended the first ICN annual conference in
Naples in September 2002, I was struck by the apparent lack
of familiarity among the agency officials who attended. I have
witnessed a dramatic change over the last ten years – ongoing
cooperation both through the ICN and as a result of extensive
bilateral efforts have led to much closer personal and working
relationships at all levels of the U.S. agencies and the EC.
India faced the challenge of a voluntary merger system that
was transformed into a mandatory regime without making
many of the required changes in the legislation to adapt
the regime to international best practices. The Ministry
of Corporate Affairs and the Competition Commission
of India took extensive steps, after seeking input from the
Indian bar and business community as well as the global
competition community, to develop a world-class merger
regime prior to making its merger review system effective
in June 2011. The various exemptions adopted by the CCI
and the “target exemption” issued by the Ministry added
important refinements that incorporated many of the ICN’s
Recommended Practices.
I believe that I am among a large group of competition
practitioners who believe that it would be more efficient to
have one U.S. antitrust agency. This would avoid a number of
issues, including periodic merger clearance disputes that delay
merger reviews as well as the potential for divergent policies
to be pursued by agencies with overlapping authority. I also
think that there are obvious real world impediments that
would need to be overcome in order to create a single U.S.
competition authority but that, if those impediments could
be overcome, the U.S. would then be in a better position to
advocate changes to ameliorate some of the problems created
by multiple competition authorities in other jurisdictions.
Some of the decisions taken by the CCI during the initial
months of the Indian regime, however, have raised
questions as to whether certain of the regulations were
being implemented in a manner consistent with the ICN
Recommended Practices. The CCI recently responded
to concerns by clarifying regulations addressing internal
reorganizations. Given the uncertainty that has arisen, the
Indian regime would benefit both from further clarification
of the regulatory exemptions and from clarification or
revision of the “target exemption” to make sure that it
applies to all forms of combinations and that it follows the
ICN’s Recommended Practices by only counting the assets
and turnover that the seller is transferring to the buyer in the
proposed transaction.
Working together, the DOJ and FTC released the Horizontal
Merger Guidelines in August 2010. In your comments on
the draft Guidelines3, you seemed critical of the uses of
any form of presumptions, especially the possibility that
“upward pricing pressure” or the UPP test may establish a
presumption that particular transactions raise competitive
concerns. Now that the final Guidelines have been around
for more than a year, do you still have the same concerns?
Do you have any other concerns with the Guidelines’
implementation?
In China, despite the efforts of the Ministry of Commerce
(“MOFCOM”) to expedite its review of proposed
transactions, many reviews go into Phase 2 even if they do
not present significant competition issues. As a result, the
regime often does not meet the ICN Recommended Practices
for merger review time periods.
As I understand the 2010 Horizontal Merger Guidelines,
they do not create a presumption that a proposed merger is
anticompetitive based on a specified upward pricing pressure
(“UPP”) level. Instead, the assessment of UPP in Section
6.1 of the Guidelines appears to be a tool that is used by
the agencies in evaluating the potential for significant
anticompetitive unilateral effects from the proposed
transaction. I continue to believe that it would have been
preferable for the 2010 Horizontal Merger Guidelines to have
avoided presumptions based on market shares measured by
the Herfindahl-Hirschman Index (“HHIs”). I believe that
the removal of these presumptions would have furthered
one of the stated purposes for the 2010 Guidelines – to
better reflect the agencies’ actual practices by eliminating
the divergence between the text of the Guidelines and their
actual application by the agencies. Even with the upward
revision in the HHI levels in the 2010 Guidelines, numerous
transactions with HHIs well in excess of the “presumption
levels” have been cleared by the agencies. My assumption
is that this will continue to be the case both for the HHI
presumption and for any transactions in which sufficient data
are available to construct an economic model to attempt to
GE works closely with outside counsel around the globe
to understand and comply with the requirements of both
longstanding and recent merger regimes. As I noted in a prior
answer, GE is also active in promoting implementation of the
ICN Recommended Practices because implementation will
foster convergence on sound merger review requirements,
saving valuable time and resources for both the agencies
involved and the parties to M&A transactions.
Of course, in addition to these merger process issues, it will
be critical that the substantive standards employed by newer
competition authorities in both merger and conduct matters
conform broadly to international standards. A variety
of international organizations (including the ICN and
OECD) have made contributions to increasing convergence
on consensus-based substantive standards. These efforts
have built upon and complemented work by individual
competition authorities on substantive guidelines and
guidance documents.
Concurrences N° 2-2012 I Interview
3
4
Comments of Ronald A. Stern and Mark D. Whitener To the Federal Trade
Commission and Department of Justice For the Horizontal Merger Guidelines
Review Project (Nov. 9, 2009), available at http://www.ftc.gov/os/comments/
horizontalmergerguides/545095-00026.pdf.
Ronald A. Stern, An in-house perspective on global competition law developments
Ce document est protégé au titre du droit d'auteur par les conventions internationales en vigueur et le Code de la propriété intellectuelle du 1er juillet 1992. Toute utilisation non autorisée constitue une contrefaçon, délit pénalement sanctionné jusqu'à 3 ans d'emprisonnement et 300 000 € d'amende
(art. L. 335-2 CPI). L’utilisation personnelle est strictement autorisée dans les limites de l’article L. 122 5 CPI et des mesures techniques de protection pouvant accompagner ce document. This document is protected by copyright laws and international copyright treaties. Non-authorised use of this document
constitutes a violation of the publisher's rights and may be punished by up to 3 years imprisonment and up to a € 300 000 fine (Art. L. 335-2 Code de la Propriété Intellectuelle). Personal use of this document is authorised within the limits of Art. L 122-5 Code de la Propriété Intellectuelle and DRM protection.
The UK is evaluating the possibility of consolidating
the Competition Commission and the Office of Fair
Trading. Labeled as the “bonfire of the quangos”, the
UK government justified its suggestions as a way to cut
duplication in government functions. Recently, France
merged its competition agencies into a single Autorite
de la Concurrence and under Brazil’s new competition law,
the former triangular institutional system is being merged
into one agency, the Administrative Council for Economic
Defence (“CADE”). What are your views on this trend
towards streamlining agencies and their functions, and do
you think similar logic may justify a merger of the antitrust
responsibilities of the DOJ and FTC?
CADE to take steps to address this departure from the ICN
Recommended Practices through implementing regulations
that CADE is expected to publish in draft for public comment
in March 2012.
because it simply incentivizes firms not to begin dealing in
the first place which may reduce the returns on investment in
innovation and harm consumers. I did not suggest that the
Supreme Court reconsider the “Essential Facilities Doctrine”
but rather noted that the doctrine has been questioned by
the Court. As the Government’s amicus brief in Trinko
noted, the “Court has never adopted the essential facilities
doctrine in a Section 2 case8”. I also agree with the numerous
critics of the “Essential Facilities Doctrine” that competition
authorities and courts are ill-equipped to act as regulators
deciding the price and terms on which the owners of such
facilities are to be required to deal with their competitors.
In sum, while I would have preferred that the new Guidelines
removed the presumptions based on HHI levels, I agree with
the assessment of Acting AAG Pozen in her review of the
experience of the Division under the new Guidelines on
their one year anniversary – the agencies have continued
“to apply traditional merger analysis techniques” to its
merger reviews and the new Guidelines have not resulted in
significant changes in their approach to assessing proposed
transactions5.
During the FTC/DOJ hearings on Section 2 of the Sherman
Act, you advocated for clear rules and guidance for
business. The DOJ issued then withdrew the resulting
Section 2 report. When Christine Varney withdrew the report,
she suggested that the reason for the withdrawal was
a “shift in philosophy.” 9 If changes in philosophy can
lead to a completely new set of rules, how do you think
business should navigate the waters of antitrust policy
and compliance?
I joined the then Assistant Attorney General (“AAG”)
Barnett in underscoring the need for and benefits of “clear,
administrable and objective rules that both allow businesses
to assess the legality of a practice before acting and enable
enforcers and courts to judge challenged conduct predictably
and correctly”10 and agreed with the then FTC Chairman
Majoras regarding the importance of “the promulgation
of practical and straightforward standards that enable
firms to avoid engaging in unlawful conduct, with minimal
transaction costs”11.Those considerations provided further
support for my view that unconditional, unilateral refusals
to deal with competitors should be treated as “per se lawful”.
You have previously expressed concerns about the
“Essential Facilities Doctrine,”6 and have remarked that
the Supreme Court should reconsider the doctrine. Is that
still your view? Do you think the doctrine is inappropriate
regardless of the industry, including high-tech industries
where network effects are profound?
In my February 2007 presentation as part of the FTC and
DOJ Hearings on Single-Firm Conduct, I endorsed the
view expressed by my colleague, Mark Whitener, in his
July 18, 2006 statement during the same Section 2 Hearings
– namely that the U.S. agencies should promote clarity by
adopting the position that an unconditional, unilateral refusal
to deal with a competitor does not constitute “exclusionary
conduct” and therefore does not provide a basis for a Section
2 claim. I also endorsed the position taken by the United
States and the FTC as amici curiae in their brief to the
Supreme Court the Trinko case. The Government’s position
was that Section 2 requires “exclusionary conduct” and that
the “’essential facilities’ doctrine” has properly been “heavily
criticized” because it does not provide an independent basis
for imposing Section 2 liability which must always rest on a
finding of “exclusionary conduct7 ”.
Businesses should be able to rely on existing guidance
from competition authorities and courts in implementing
commercial initiatives without fear that they will face
investigations and treble damage actions if there is a “shift in
philosophy”. Of course, AAG Varney took the view that the
September 2008 Section 2 Report represented a departure
from “tried and true case law and Supreme Court precedent”12
so that, in essence, the “shift in philosophy” was what was
being withdrawn. I take comfort in what I believe to be a
fairly broad consensus within the competition community in
the U.S. (and in many other jurisdictions) so that there are
unlikely to be “a whole new set of rules” adopted whenever
I took, and still take, the position that unilateral, unconditional
refusals to deal should not be viewed as “exclusionary
conduct” and that an approach that treats a refusal to
continue to deal as “exclusionary” is highly problematic
4
ICN Recommended Practice for Merger Analysis, available at http://www.jftc.go.jp/en/
international_relations/icn/kyoto-materials/pdf/Merger_WG_1.pdf
5
Sharis A. Pozen, Developments at the Antitrust Division and the 2010 Horizontal Merger
Guidelines – One year Late (Nov. 17, 2011), available at http://www.justice.gov/atr/
public/speeches/277488.pdf.
6
Ron Stern, Presentation to Federal Trade Commission and DOJ on Single-Firm Conduct,
9 (Feb. 13, 2007), available at http://www.justice.gov/atr/public/hearings/single_firm/
docs/221512.htm.
7
Brief for the United States and the Federal Trade Commission as Amici Curiae,
at 22 (May 23, 2003), available at http://www.justice.gov/atr/cases/f200500/200558.htm.
Concurrences N° 2-2012 I Interview
5
8
Idem.
9
Justice Department Withdraws Report on Antitrust Monopoly Law (May 11, 2009),
available at http://www.justice.gov/opa/pr/2009/May/09-at-459.html.
10
Thomas O. Barnett, The Gales of Creative Destruction: the Need for Clear and Objective
Standards for Enforcing Section 2 of the Sherman Act, Statement (June 20, 2006) at 16-17,
available at http://www.ftc.gov/os/sectiontwohearings/docs/Barnett-statement.pdf
11
Deborah Platt Majoras, The Consumer Reigns: Using Section 2 to Ensure a “Competitive
Kingdom”, Statement (June 20, 2006) at 10, available at http://www.ftc.gov/os/
sectiontwohearings/docs/Majoris-statement.pdf.
12
Justice Department Withdraws Report on Antitrust Monopoly Law, DOJ Press
Release (May 11, 2009) at 1, available at http://www.justice.gov/atr/public/press_
releases/2009/245710.htm.
Ronald A. Stern, An in-house perspective on global competition law developments
Ce document est protégé au titre du droit d'auteur par les conventions internationales en vigueur et le Code de la propriété intellectuelle du 1er juillet 1992. Toute utilisation non autorisée constitue une contrefaçon, délit pénalement sanctionné jusqu'à 3 ans d'emprisonnement et 300 000 € d'amende
(art. L. 335-2 CPI). L’utilisation personnelle est strictement autorisée dans les limites de l’article L. 122 5 CPI et des mesures techniques de protection pouvant accompagner ce document. This document is protected by copyright laws and international copyright treaties. Non-authorised use of this document
constitutes a violation of the publisher's rights and may be punished by up to 3 years imprisonment and up to a € 300 000 fine (Art. L. 335-2 Code de la Propriété Intellectuelle). Personal use of this document is authorised within the limits of Art. L 122-5 Code de la Propriété Intellectuelle and DRM protection.
quantify unilateral price effects, because the core of merger
analysis will continue to be a comprehensive assessment
of the likely competitive effects of the transaction.
Concentration (HHI) and UPP levels should only be treated
as part of the analysis rather than creating presumptions
of likely significant anticompetitive effects. This approach
– involving a “comprehensive … assessment of factors
affecting the determination of whether a merger is likely to
harm competition significantly” – is embodied in the ICN’s
Recommended Practices for Merger Analysis that the U.S.
agencies took a leading role in developing and that they, and
the many other ICN member agencies, have endorsed4.
Ce document est protégé au titre du droit d'auteur par les conventions internationales en vigueur et le Code de la propriété intellectuelle du 1er juillet 1992. Toute utilisation non autorisée constitue une contrefaçon, délit pénalement sanctionné jusqu'à 3 ans d'emprisonnement et 300 000 € d'amende
(art. L. 335-2 CPI). L’utilisation personnelle est strictement autorisée dans les limites de l’article L. 122 5 CPI et des mesures techniques de protection pouvant accompagner ce document. This document is protected by copyright laws and international copyright treaties. Non-authorised use of this document
constitutes a violation of the publisher's rights and may be punished by up to 3 years imprisonment and up to a € 300 000 fine (Art. L. 335-2 Code de la Propriété Intellectuelle). Personal use of this document is authorised within the limits of Art. L 122-5 Code de la Propriété Intellectuelle and DRM protection.
there is a change in Administration or a shift in enforcement
priorities. In addition, in the Section 2 area, the relatively
stable view of when a firm is to be treated as a “monopolist”
insulates most businesses from facing serious practical
issues if there is a change in approach to the assessment of
a particular type of exclusionary conduct. The main source
of uncertainty in the U.S. is Section 5 of the FTC Act and
its occasional use by the Commission to reach conduct
found to constitute “unfair methods of competition” that
would not otherwise violate well-established antitrust law
requirements. The more difficult issues are presented by new
regimes with laws that employ concepts such as “collective
dominance” and “abusive pricing” that exist in the laws of
some established competition regimes but have not been
used by those regimes to limit the unilateral conduct of large,
successful firms.
On a personal level, how have you seen the nature of your
practice change over time and what future challenges are
you preparing to face?
By far the most significant change in the nature of my practice
has been the increasing globalization of competition law and
the simultaneous globalization of GE’s businesses. One of
the key attractions of the offer to become GE’s antitrust
counsel in 1991 was the opportunity for a U.S. antitrust
specialist to learn about other competition regimes. In 1991,
I was thinking in terms of a handful of “foreign” merger
regimes and competition laws – primarily those of the EU,
UK, Germany, Canada, and Japan. In the last 20+ years,
there has not only been an explosion in the number of
jurisdictions with competition laws but the globalization
of GE’s businesses has greatly increased the size and scope
of GE’s activities in many jurisdictions around the world.
Because of the extraterritorial reach of most competition
laws, the rapid expansion of GE’s businesses, and the
mobility of its senior managers, there is an increasing need to
counsel to a “global” rather than a “U.S.” standard. I believe
that the future challenges will evolve from these twin aspects
of globalization, requiring both ongoing policy efforts to
promote convergence and the development of a team of GE
lawyers and outside counsel able to monitor and address
changes in legal requirements and enforcement priorities that
will continue to arise even if reasonable progress is made on
convergence.
Q
Concurrences N° 2-2012 I Interview
6
Ronald A. Stern, An in-house perspective on global competition law developments
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