Revisiting Positive Comity as a Tool to Navigate Cross-Border Antitrust Issues

Kayoung Lee February, 2024

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Despite the pervasiveness of cross-border business interactions, much of antitrust law is still domestic.[1] But conduct permitted under the antitrust laws and competition policies in one country may be prohibited in another country, leading to “system friction.”[2] For example, in the 2001 Microsoft antitrust lawsuit, American, European, and Korean authorities had different views on the appropriate remedy; consequently, European and Korean authorities required Microsoft to unbundle its products while US authorities did not.[3] International enforcement cooperation can limit situations where businesses must comply with conflicting remedies and outcomes.[4] This blog post will explore and discuss developments in international enforcement cooperation, the role of positive comity, and how to more effectively utilize this tool.

International Enforcement Cooperation: A Brief Overview

Though the idea of a global antitrust regime has been contemplated since as early as the 1940s, concerns about sovereignty have stunted these efforts.[5] Currently, the global antitrust landscape is characterized by principles, guidelines, and bilateral cooperation agreements. At the broadest level, there is the International Competition Network, the World Trade Organization (WTO), Organisation for Economic Co-operation and Development (OECD) Recommendations, and the United Nations Conference on Trade and Development (UNCTAD) Set of Principles—a multilateral, voluntary set of antitrust principles reaffirmed every five years.[6]

The WTO has offered a multilateral framework, but countries such as the US are apprehensive about “excessive intrusion of an international body into…antitrust policy enforcement.”[7] Critics of a comprehensive multilateral scheme are concerned that standards generated to achieve widespread agreement may “end up legitimizing weak and ineffective rules” that would fail to advance trade liberalization and antitrust enforcement.[8]

Consequently, the current landscape of international enforcement cooperation is characterized primarily by bilateral agreements, especially between the US and EU with other parties. It is interesting that this informal patchwork of bilateral agreements has been chosen over broad-based treaties. While treaties may encourage more credible commitments, it can be difficult to get all states to agree on the same set of obligations. The OECD Recommendations have been incorporated into bilateral agreements. Whereas a treaty binding many parties may be constrained by the lowest-common denominator that can be achieved, these recommendations can express an ideal solution. The OECD should strengthen the recommendation for positive comity because of it can facilitate an efficient outcome especially where anticompetitive harm disproportionately harms consumers in a certain territory.

How Positive Comity Can Facilitate an Efficient Outcome

Positive comity involves one party deferring resolution of an antitrust issue that has effects on its own territory to another party on whose territory the anticompetitive conduct is taking place.[9] Its aim is to effectively allocate enforcement resources by minimizing conflicts between jurisdictions that may arise from difficulties obtaining evidence or competing judgments.[10] According to the 2014 OECD recommendations, positive comity is carried out as follows. An “Adherent” makes an initial request for a consultation, and the party to whom the request has been made should “give full and sympathetic consideration to such views and factual materials” related to the request. If the requested party “agrees that enterprises or individuals situated in its territory are engaged in anticompetitive practices or in mergers with anticompetitive effects harmful to the interests of the requesting Adherent, it should take whatever remedial action it considers appropriate.” Both parties “should endeavor to find a mutually acceptable solution in light of the respective interests involved.”[11]

The Recommendations motivated the cooperation agreement signed between the US and Commission of the European Community formalizing positive comity.[12] Another such agreement is the one between Canada and the US on the application of positive comity principles to the enforcement of their competition laws.[13] This agreement shaped the resolution of the Nishikawa case, where a Japanese manufacturer of automotive parts “was charged in the US…for its participation in an international bid-rigging conspiracy affecting Canada and the US.”[14]

Both countries agreed that the United States Department of Justice (DOJ) Antitrust Division would address the case because the primary target was US consumers.[15] The US-Canada agreement states that “competition authorities of requesting party will normally defer or suspend their own enforcement activities in favor of enforcement activities by the competition authorities of the requested party…where the anticompetitive activities do have such an impact on the requesting party’s consumers, they occur principally in and are directed principally towards the other party’s territory.”[16] The DOJ ultimately took over the case and Canada is absent from the plea agreement.[17] Nevertheless, the US-Canada agreement facilitated an “efficient and effective” process for investigation and determination of remedies.[18] The Commissioner of the Competition Bureau of Canada decided not to pursue further post-judgment enforcement action against Nishikawa.[19]

In the Nishikawa case, positive comity was effective in part because one party was clearly affected more. But the use of positive comity is still limited.[20] Scholars have offered some critiques of these nonbinding bilateral agreements. Professor Stephan comments that such agreements are “superficial” because they merely “express” a desire to consult and cooperate yet offer regulatory authorities unlimited discretion on whether to follow through.[21] And states may not be willing to voluntarily constrain their own regulatory jurisdiction.[22]

Are States Willing to Surrender Regulatory Jurisdiction?

The OECD can further strengthen the positive comity provision that it proposed back in 1967.[23] In 2007, the Antitrust Modernization Commission (AMC) put forth some recommendations about positive comity. It suggested that “the country with a lesser ‘nexus’ to the conduct or transaction should defer to the other country with a greater nexus.”[24] This principle of presumptive deferral is similar to the language embodied in the US-Canada agreement.

Part of the difficulty in implementation lies in assessing the “relative importance of the interests of different countries.”[25] It is difficult to measure and compare respective interests particularly in the early phase of investigation, where the domestic impact of the anticompetitive effects may not yet be apparent. [26] Thus it not possible to eliminate some duplicative effort in the investigative process. The interests of smaller countries are at risk of coming second to the interests of larger, more powerful parties such as the US and the EU “with more established competition regimes that may not have the best interests of the deferring jurisdictions at heart.”[27]

But one way that comity could be encouraged, as suggested by the AMC report, is through an OECD recommendation for the inclusion of a coordination mechanism in agreements featuring positive comity. Entities subject to court proceedings in multiple countries can request consultation between the parties to an agreement.[28] Because the accused entity is ultimately the one who must bear the consequences of inconsistent judgments, it has the incentive to flag the issue with the relevant authorities and may be suited to monitor noncompliance. Positive comity is just one tool in the toolbox to navigate cross-border antitrust issues, but it is one that can be sharpened by efforts to encourage compliance.

  1. Weimin Shen, Assessing the Strategic Situation Underlying International Antitrust Cooperation, 36 Emory Int’l L. Rev. 483, 493 (2022). ↑
  2. Id. ↑
  3. Anu Bradford, Antitrust Law in Global Markets, in Research Handbook on the Economics of Antitrust Law, 283, 299-300 (Einer R. Elhauge ed., 2012). ↑
  4. Eleanor M. Fox & Daniel A. Crane, Global Issues in Antitrust and Competition Law 584 (2d ed. 2017); Paul B. Stephan, Global Governance, Antitrust, and the Limits of International Cooperation, 28 Cornell Int’l L.J. 173, 194 (2005) (“Superimposing the laws of multiple jurisdictions with different standards on a single firm would function simply as a tax on firms that operate internationally.”). ↑
  5. Fox & Crane, supra note 4, at 576. ↑
  6. Id. ↑
  7. Id. at 616. ↑
  8. Id. at 623. ↑
  9. OECD, Inventory of Co-operation Agreements: Provisions on Positive Comity 1 (2021), https://www.oecd.org/daf/competition/competition-inventory-provisions-positive-comity.pdf. ↑
  10. Id. ↑
  11. Id. at 2. ↑
  12. Agreement Between the Government of the United States of America and the Commission of the European Communities Regarding the Application of their Competition Laws, Sept. 23, 1991, 30 I.L.M. 1487, 1489. ↑
  13. Agreement Between the Government of the United States of America and the Government of Canada on the Application of Positive Comity Principles to the Enforcement of their Competition Laws, U.S.-Can., Oct. 5, 2004, T.I.A.S. No. 04-1005.1 [hereinafter Agreement]. ↑
  14. Competition Bureau Canada, Unprecedented Cooperation with US antitrust Enforcement Authority Leads to Major Cartel Crackdown, Government of Canada (July 20, 2016), https://www.canada.ca/en/competition-bureau/news/2016/07/unprecedented-cooperation-with-us-antitrust-enforcement-authority-leads-to-major-cartel-crackdown.html [hereinafter Canadian Competition Bureau]. ↑
  15. Id. ↑
  16. Agreement, supra note 13. ↑
  17. Binding Plea Agreement, United States of America v. Nishikawa Rubber Co. Ltd., No. 2:16-cr-00030-ART-CJS (E.D. Ky. Sept. 1, 2016), https://www.justice.gov/d9/case-documents/attachments/2016/09/01/366685.pdf. ↑
  18. Canadian Competition Bureau, supra note 14. ↑
  19. Antitrust Division, Nishikawa Agrees to Plead Guilty and Pay $130 Million Criminal Fine for Fixing Prices of Automotive Parts, U.S. Dep’t of Just. (July 20, 2016), https://www.justice.gov/opa/pr/nishikawa-agrees-plead-guilty-and-pay-130-million-criminal-fine-fixing-prices-automotive. ↑
  20. OECD, International Co-operation on Competition Investigations and Proceedings: Progress in Implementing the 2014 OECD Recommendation 38 (2022), https://web-archive.oecd.org/2022-03-16/627085-international-cooperation-on-competition-investigations-and-proceedings-progress-with-2014-recommendation.pdf. ↑
  21. Stephan, supra note 4, at 205. ↑
  22. Id. ↑
  23. John Pecman & Antonio Di Domenico, In Comity we Trust: Utilizing International Comity to Strengthen International Cooperation and Enforcement Convergence in Multijurisdictional Matters, Competition Policy Int’l (Mar. 19, 2021), https://www.competitionpolicyinternational.com/wp-content/uploads/2021/03/3-In-Comity-We-Trust-Utilizing-International-Comity-to-Strengthen-International-Cooperation-and-Enforcement-Con…-By-John-Pecman-Antonio-Di-Dome.pdf. ↑
  24. Antitrust Modernization Commission, Report and Recommendation (Apr. 2007), https://govinfo.library.unt.edu/amc/report_recommendation/chapter2.pdf [hereinafter AMC]. ↑
  25. Terry Calvani & Justin Stewart-Teitelbaum, Is There Too Much Traffic on the Competition Law Enforcement Autostrada: A Role for Negative Comity, Fordham Competition Law Institute 183 (Sept. 23, 2016), https://ssrn.com/abstract=3116315. ↑
  26. Id. at 198-99. ↑
  27. Id. ↑
  28. AMC, supra note 24, at 224-25. ↑