On January 13, 2017, the US Federal Trade Commission (“FTC”) and US Department of Justice (“DOJ”) (collectively, the “Agencies”) jointly issued revised Antitrust Guidelines for International Enforcement and Cooperation (the “Guidelines”). The new Guidelines, which replace the 1995 Antitrust Enforcement Guidelines for International Operations, “reflect the increasing importance of antitrust enforcement in a globalized economy.” According to outgoing FTC Chairwoman Edith Ramirez, the revised Guidelines “explain to the business and antitrust communities [the Agencies’] current approaches to international enforcement policy and related investigative tools, and cooperation.” FTC commissioners unanimously approved the Guidelines, suggesting a continuity of approach to international antitrust issues in the Trump administration. In particular, the Guidelines focus on three topics:
- Application of US Law to Conduct Involving Foreign Commerce. The Guidelines emphasize the continued application of US federal antitrust laws to “foreign conduct that has a substantial and intended effect in the United States.” They also affirm that the Agencies apply the same principles to enforcement decisions regarding mergers and acquisitions involving trade or commerce with foreign nations that they apply to conduct within the reach of the Sherman Act and the FTC Act. In particular, the Agencies take a broad view of the application of US antitrust law to allegedly anticompetitive foreign conduct under the Foreign Trade Antitrust Improvements Act (“FTAIA”). For example, import commerce is excluded from the FTAIA and is therefore always subject to US antitrust law. The Agencies define “import commerce” as including scenarios where a defendant does not import the product to the United States but merely places it into a distribution chain that eventually leads to the United States. The Agencies may also pursue investigations and enforcement actions when only a small number of the defendant’s products were imported to the United States. The Agencies also take a pro-enforcement stance regarding non-import foreign commerce, which is only actionable under the FTAIA if it has a “direct, substantial, and reasonably foreseeable effect” on US commerce and “give[s] rise to” a claim under the Sherman Act. For instance, the Agencies view “reasonable foreseeability” as presenting an objective test under which a defendant’s lack of actual knowledge or indifference as to whether its products were ultimately shipped to the United States would not rule out investigation and prosecution.
- Agencies’ Consideration of Impact on Foreign Jurisdictions. The Guidelines outline the factors used by the Agencies to determine whether to pursue an enforcement action when foreign policy concerns exist. Specifically, the Agencies evaluate (1) the intended or actual effect of the allegedly anticompetitive behavior on US commerce, (2) the significance and foreseeability of the effects of the alleged anticompetitive conduct on the United States, (3) conflict between US and foreign law or policy, (4) the impact of US enforcement on the enforcement activities of another jurisdiction and (5) the effectiveness of foreign enforcement as compared to US enforcement. The Agencies also consider whether a foreign government is involved in the allegedly anticompetitive conduct.
- International Cooperation. The Guidelines include a new chapter on international cooperation, which acknowledges the increasing possibility of overlapping investigations by US and foreign antitrust authorities and discusses the investigative tools available to the Agencies. This chapter acknowledges that conflicts may arise when foreign statutes prevent disclosure of information requested by the Agencies but emphasizes that the mere existence of such statues is not a valid excuse for noncompliance with the Agencies’ requests. The Guidelines also affirm the Agencies’ commitment only to seek remedies impacting assets outside of the US “to the extent that including them is needed to effectively redress harm or threatened harm to U.S. commerce and consumers and is consistent with the Agency’s international comity analysis.” The Guidelines also emphasize the heightened level of cooperation between DOJ and foreign competition authorities when gathering evidence in criminal cartel investigations. As the Guidelines affirm, DOJ has several investigative tools at its disposal in criminal cartel investigations, including Mutual Legal Assistance Treaties, Interpol Red Notices and extradition.
The updated Guidelines make clear the Agencies’ continued commitment to international cooperation between antitrust regulators. Globally, antitrust fines reached an all-time high of $6.7 billion in 2016. This reflects increasing worldwide emphasis on antitrust enforcement.
Key Takeaways for Companies Involved in International Business Operations
The Guidelines provide important reminders for companies engaged in business overseas:
- As globalization continues, companies face increasing risk of antitrust investigations from multiple jurisdictions. The Guidelines affirm that the FTC and DOJ are committed to enforcing US antitrust laws, despite any foreign policy concerns that may dictate otherwise. Companies should evaluate carefully any antitrust risk associated with contemplated transactions that involve multiple jurisdictions with varying antitrust approaches.
- The Agencies are increasingly focused on cooperation with foreign antitrust authorities on both policy and investigative matters. Companies should be prepared to deal with requests for voluntary confidentiality waivers that will allow the Agencies to share information with foreign authorities. Companies should also note that in some instances for which disclosure is not statutorily prohibited, the Agencies may share non-public information with foreign regulators without requesting a waiver—even if the information normally is kept confidential.
- Companies should be prepared to deal with compulsory measures used by the Agencies to obtain information and documents located outside of the United States. In particular, companies can attempt to negotiate with the Agencies to narrow document and information requests to try to avoid conflicts with foreign statutes that prevent disclosure.
A complete copy of the Antitrust Guidelines for International Enforcement and Cooperation can be found on the DOJ web site.