In early March of 2020, a South Korean national who worked for German automotive company, Continental, was extradited to the United States. He pleaded guilty for his involvement in an international market allocation and bid-rigging conspiracy involving the sale of automobile parts to carmakers. In this case, an extradition agreement between the United States and Germany came into effect and brought a South Korean national under the regulatory arms of the US antitrust law. As demonstrated in the case, antitrust regulations have international dimensions despite the laws being largely national – each nation’s antitrust law could have an impact on a neighboring state’s antitrust law and vice versa through bilateral and multilateral agreements and treaties.
Lack of International Regime?
Currently, there is no international regime and a unitary antitrust law, while more than 125 countries have their own versions of antitrust regulations. However, the absence of an overarching global regime is by no means an indication of a lack of globalized enforcement effort. Authorities have convened to establish various international networks and cooperative systems. For instance, antitrust officials of major economies — including the United States, the European Union and Japan — have gathered to create the International Competition Network, “a specialized yet informal venue for maintaining regular contacts and addressing practical competition concerns.” The Organization for Economic Co-operation and Development, or OECD, also has a competition division through which the inter-governmental regime issues various findings and researches competition policy around the world. Additionally, according to the OECD data, there are currently more than 200 bilateral or multilateral agreements between antitrust enforcers,.
The extensive network created by enforcers has enabled national antitrust regulations and policies to have a cross-border impact.For instance, an investigation into an alleged collusion by the US Department of Justice that led to the extradition of the South Korean employee of Continental was, in fact, a collaborative effort among different regulators and resulted in penalties in multiple jurisdictions. Collaboration between regulators on investigations includes sharing information on the status of investigations and evidence. In the United States, this is enabled by the International Antitrust Enforcement Assistance Act of 1994. An OECD report shows that the percentage of regulators with no experience of cooperation with their counterparts in other jurisdictions has decreased from 31 percent of regulators surveyed for the period of 2007 to 2012 to 9 percent for the period of 2012 to 2019. The same report indicates that particularly in merger cases, 81 percent of the responding regulators reported some level of cooperation with other regulators. Such collaboration is made and is inevitable because certain anticompetitive conduct, such as price-fixing and merger, have cross-jurisdictional effects.
Inter-connectedness with International Law
To effectuate collaboration, regulators may rely on various mechanisms of international law including extradition treaties, Mutual Legal Assistance Treaties, or MLATs, and Free Trade Agreements, or FTAs, among others. MLATs allow signatories to obtain a broad range of assistance from their counterparts in criminal investigations. MLATs are often limited to criminal matters and require the conduct concerned to be a criminal matter in both countries. This “dual criminality requirement,” as it’s known, means that MLATs are seldom used by enforcers. This is because only a handful of countries treat certain antitrust matters as criminal. Only the MLAT with Canada has been relied on by the US DOJ for the purposes of antitrust enforcement. Still, countries such as Australia and South Korea continue to increase their criminal antitrust enforcement efforts for conduct such as collusion. Extradition treaties are similar to MLATs in that it requires dual criminality.
Because legal tools such as MLATs and extradition treaties are limited to criminal issues, national agencies express their intent to cooperate through Memorandum of Understanding, or MoUs. Unlike MLATs and extradition treaties, which are signed by the central governments, MoUs are signed by the antitrust agencies themselves. This creates a direct channel of cooperation and dialogue, butt MoUs are usually non-binding and are limited in purposes.
Free Trade Agreements
Another tool of cooperation between antitrust authorities is contained within the trade agreements between their respective countries. According to the OECD, a majority of trade agreements contain a “competition chapter.” The provisions in those chapters often lay commitments and obligations upon each party to effectively regulate anti-competitive behavior and competition-specific collaboration such as providing technical assistance and exchange of information.
One issue raised by the competition provisions of the FTAs is the possibility of infringement on state sovereignty by the partnering state. In case of South Korea, the Office of the U.S. Trade Representative, in 2019, demanded that the Asian country revise its competition proceedings. They stated that “shortcomings have denied U.S. parties certain rights, including the opportunity to review and rebut the evidence against them.” The South Korean antitrust authority is a quasi-judicial agency, meaning they not only investigate antitrust cases but also hear, deliberate and decide those cases. The FTA between the United States and South Korea contains a competition chapter with one of the provisions addressing procedure and due process issues. While some have predicted that the consultation request by the USTR was made following a complaint by Qualcomm, a US chipmaker sanctioned by the Korean antitrust regulator, the authorities denied any connection to a specific company. Following the USTR consultation, the Korean antitrust regulator proposed legislation and eventually made changes to its enforcement procedure, addressing the concern raised by the US trade office. The FTAs have also led some countries to newly adopt antitrust laws that did not exist before – countries like Guatemala, Singapore, and Jordan did so as part of FTAs with the United States.
Each regulatory agency differs in its capacity, history and tools of enforcement compared to its global counterparts. Still, the purpose remains the same – to protect competition in the market and consumer welfare. Under that common purpose, antitrust regulations of each country impact one another and allow cooperation among regulators through various channels, making antitrust law uniquely positioned in the international regulatory framework.
Author Biography: Hyung-jo (HJ) Choi is a Moderator of the International Law Society’s International Law and Policy Brief (ILPB) and a J.D. candidate at The George Washington University Law School. He has a Bachelor of Arts in International Studies from Yonsei University. Prior to attending law school, HJ worked as an antitrust journalist and correspondent for MLex, a LexisNexis Company and a news agency specializing in antitrust and privacy. Tweet