1. Implications of
globalisation for
competition
From the OECD Competition Division:
• John Davies
• Antonio Capobianco
• Sean Ennis
New Approaches to Economic Challenges
Seminar on Project C6, 24 March 2014
1

2. Overview
As business becomes ever more
globalised and more jurisdictions have
competition laws, competition agencies
need to co-operate more effectively on
cross-border cases, to avoid
inconsistent decisions and long
investigations and achieve more
effective enforcement.
2

3. Competition law protects consumers
3

4. Competition law promotes productivity
Simeonidis (Review of Economics and Statistics 2008):
Industries with legal cartelsIndustries without cartels
Restrictive
Practices Act
(UK) 1956
Cartels illegalUnaffected
Labour productivity
growth 20-30% higher
than in unaffected sample
“The econometric results from a comparison of the two
groups of industries provide strong evidence of a negative
effect of collusion on labor productivity growth.” 4

5. There are more competition laws than
before (which is a good thing!)
Source: OECD
0
20
40
60
80
100
120
140
Competition Law Competition Authority
Jurisdictions with Competition Law and Competition Authority
5

6. …and more cross-border cases…
Source: DG Competition, OECD calculations
0
50
100
150
200
1. Mergers between companies headquartered in the same EU member state.
2. Mergers between companies headquartered in more than one EU member state.
3. Mergers involving at least one company based outside the EU, and with effects in
the EU.
EU cross-border merger filings between 1991 and 2012
6

7. …reflecting global economic trends…
Source: Dealogic Global M&A Database, OECD calculations
2,070
2,481
3,128
4,485
5,402
6,643
5,692
4,613
3,964
4,739
6,109
7,046
8,836
8,583
5,807
7,478
8,746
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Number of cross-border M&A deals: 1995 - 2011
7

8. …leading to more cross-border
co-operation – among some
Source: OECD/ICN survey 2012
…but only 13 countries had co-operated more
than 5 times, and 26 had never co-operated
0
20
40
60
80
100
120
140
Cartel Merger Abuse of Dominance
2007 2011Cases
involving
cross-
border co-
operation
over five
years
8

9. …but also more scope for disagreement
Why, TIME asked Welch, should a
European be able to shape a merger
between two American companies?
"That's the law," replied Welch.
"That really is just the way the
world works."
We'd all better get used to it.
“The Anatomy of the
GE-Honeywell
Disaster”
Source: Time, 2001 9

10. Eurotunnel/SeaFrance deal 2013
Cleared by Autorité de la Concurrence, effectively blocked by UK
Competition Commission
Minister Cuvillier called for an
emergency meeting with the UK's
transport minister, Norman Baker to
“arbitrate between the decisions of
the two competition authorities”.
UK Competition Commission: “The
UK has an independent competition
regime designed to exclude
government involvement in decision-
making. […]
It’s difficult to see what the role or
purpose of such a meeting would be.” 10

11. The ‘deal of the millennium’: Glencore/Xstrata
• 04/2012: Deal proposed: $90bn
• 07/2012: Australia and US clear without conditions
• 11/2012: European Commission clears, if parties sell stake in Nystar (zinc producer)
• 01/2013: South Africa clears, with some undertakings
• 04/2013: China MOFCOM clears, if parties sell Las Bambas copper mine in Peru
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12. As globalisation continues and the
world economy rebalances…ShareofworldGDP
Source: OECD data and projections
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1995 2014 2030
Others
India
China
Japan
EU
USA
12

13. …more ticks needed, for approval…
13
Consider a ‘borderline’ merger. The advisors to the
deal believe the chance of merger clearance is 50%
Number of countries
involved
Likelihood of overall
clearance (without co-
ordination between agencies)
1 50%
2 25%
3 12.5%
4 6.25%
5 3%
Global mergers less likely to be approved than
domestic mergers?

14. … and co-operation is more complex
• As the number of agencies involved
grows and the number of cross
border cases increases, the current
system may prove insufficient or
inefficient.
– Cases may involve agencies which do not
have a co-operation agreement
– Also, these co-operation agreements may
be different in scope and provide for
different co-operation tools
# of
authorities
Interfaces of
co-operation
1 0
2 1
5 10
10 45
20 190
30 435
40 780
50 1,225
100 4,950
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15. • Revising OECD’s key instrument, with direct
involvement of Key Partners.
• Three main issues:
– Modernization of notification procedures
– Improving the ability of agencies to exchange
confidential information
• Information gateway
• Waivers
• Safeguard
– Abolition of conciliation
Revision of 1995 Recommendation
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16. Longer term
• Increase the number of countries involved in
international enforcement co-operation
• Improve legal basis and facilitate the exchange of
information
• Explore new means of enhanced co-operation? Eg:
– Multilateral instruments e.g. one-stop shop for leniency
markers
– Developing international standards for formal comity
– Mutual recognition of other agencies’ decisions
– Non-binding deference to one ‘lead authority’
16

17. Thank you
DAF/COMP(2014)4/REV1
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