Israel’s first International Antitrust Conference, which focused on the role of smaller jurisdictions, drew top practitioners and enforcers to Tel Aviv in November. James Kanter reports

Are small countries really that different when it comes to antitrust enforcement? Dr David Tadmor, the Director General of the Israeli Antitrust Authority, tells James Kanter that what really distinguishes them are higher barriers to entry and exit, and the ease with which their business elites can collude. Dr Tadmor also describes how an agency that is only six years old thrives in a ‘twilight zone’ between American and European antitrust legislation.

Ciara McSorley* of economic consultants NERA, London, suggests that comparing antitrust authorities’ market forecasts in merger analyses with actual outcomes offers a salutory reminder of how unpredictable some markets really are

Shanker Singham of Steel, Hector & Davis, Miami, believes that although the future looks bleak for trade negotiations and liberalisation in the wake of the events in Seattle, it is not too late to salvage something from the wreckage of the WTO trade round - provided there is a will to do so

Although the importance of competition in ensuring good corporate governance is now recognised, it is still difficult to achieve in most developing countries. By R Shyam Khemani and Chad Leechor**

Title Senior Counsel, International Governmental Affairs

Age 56

Previous employment

1969-1970 Raymond Abertsone (later Ardler & Perone)
1970-1992 British Petroleum (1973 moved from BP Chemicals to the oil group and took on more of a competition focus)
1992-present British American Tobacco

Title: General Counsel, Europe

Age: 37

Previous employment:

1985-1992 Simmons & Simmons (Corporate, Commercial and Competition Law)

Joel Klein to step down, John Temple-Lang quits as hearing officer, Beatriz Boza resigns from Indecopi, Deputy chairmen of UK Competition Commission announced

Weber Waller becomes director of antitrust studies at Loyola

Arnold & Porter re-embraces Donna Patterson, Attorney made competition partner at Hughes Hubbard, UK firm expands competition teams, New partner at Eversheds competition practice, Linklaters boosts presence in Madrid

Charles River in London

ABA working group responds to EC draft rules on horizontal agreements, ACCC to relinquish price regulation function

Taking advantage of the planned presence at the World Economic Forum in Davos of both the company’s chairman, Nicholas Oppenheimer, and Joel Klein, head of the US Department of Justice’s Antitrust Division, the South African mining group De Beers was reported by the Financial Times of London to be trying to overcome a ban on the company doing business in the United States.

The Chairman of the US Senate Judiciary Committee, Orrin Hatch, says he hopes that any remedy in the Microsoft case 'leaves no room or need for heavy-handed government regulation of the Internet or the computer industry.'

The Governor of Alaska, Tony Knowles, says the state plans to go to court to oppose the decision by the Federal Trade Commission to block the proposed merger between BP Amoco and Atlantic Richfield Co, claiming that the FTC’s argument that the new company would have too much control over Alaska oil production, leading to the possibility of higher prices, is flawed.

The US Justice Department’s antitrust division is investigating the activities of online auctioneer eBay Inc following a lawsuit filed by the company against a rival, Bidder’s Edge, alleging that the smaller firm’s software had trespassed on eBay’s computers.

Auction giant Christie’s has announced that it is cooperating with a US Justice Department criminal antitrust investigation into allegations of price-fixing over auction commissions.

Leading US spicemaker McCormick & Co has decided to avoid a legal battle with the Federal Trade Commission by agreeing to provide the FTC with reports on its contracts with customers over the next 10 years.

Northwest Airlines of the US and Malaysia Airlines have filed a joint application with the US Department of Transportation seeking antitrust immunity for a codesharing agreement announced by the two airlines in September.

Germany’s Mannesmann has agreed to merge with Vodafone AirTouch of Britain in a US$180 billion deal following a three-month battle that dominated the headlines in both countries and at one stage even drew German chancellor Gerhard Schroeder into the fray.

The announcement by Italy’s incumbent operator, Telecom Italia, of access charges for other operators to its domestic network has sparked an outcry from rival operators.

With a ruling from Brazil’s main antitrust agency, Cade, expected at the beginning of April, analysts are seeing better prospects for the planned merger of Brazil’s two largest brewing concerns, Companhia Cervejeria Brahma SA and Companhia Antarctica Paulista.

Teléfonos de Mexico, Mexico’s dominant phone carrier, has denounced a U$100,000 fine levied by the Federal Communications Commission in Washington as unjustified and defended its refusal to rent high-capacity lines to rival Mexican operators.

There are two vacancies at the top of the Irish Competition Authority following the recent resignations of key figures.

Douglas Nave, head of international competition at Weil Gotshal & Manges, has moved from Brussels to London in order to build up the firm’s practice in the UK.

Wilmer, Cutler & Pickering has announced the hire of a new counsel resident, Eric J Mahr.

Donald Kempf, formerly a senior partner at Kirkland & Ellis, says his move in-house to Morgan Stanley Dean Witter is the 'capstone to my career.'

William J Baer, the former Director of the Federal Trade Commission, has rejoined the US law firm Arnold & Porter, where he practised from 1980 to 1995.

In the ‘GCR 100’ supplement to the December/January issue of Global Competition Review, in discussing the European competition practices of US firms, we erroneously wrote about 'Akin Gump’s plans to close in Brussels.'

AOL has retained Wilmer, Cutler & Pickering to represent it in the EU and to coordinate filings in other countries in its proposed US$140 billion merger with Time Warner.

Slaughter and May and Bruckhaus Westrick Heller Löber have played lead roles in the acquisition by Air Liquide SA of part of the BOC Group PLC in the European Union.

According to legal sources, the European Commission had decided to clear the acquisition of Swedish industrial gases producer AGA by the German company Linde AG as GCR went to press.

Allen & Overy and Denton Wilde Sapte have obtained clearance in one month for a Franco-Anglo electricity joint venture.

Lawyers retained by big UK food retailers are upbeat following the UK Competition Commission’s finding of little evidence of excess profits in the investigation into British supermarkets.

In a recent Advisory Opinion, the Antitrust Commission has established the liability of local representatives, agents and/or managers of foreign companies where such foreign company gives no notice of certain merger or acquisition transactions entered into abroad. Such persons may be summoned and, ultimately, punished for failure to give notify these events. The Opinion poses a series of questions, which will certainly require some further clarification by the Antitrust Commission.

Dante M Ramos
Allende & Brea
Buenos Aires

The central issue in a recent case before the Federal Court was whether a railway line, owned by Hamersley Iron Pty Ltd, should be declared a service for the purposes of Part IIIA of the Trade Practices Act 1974. It was held that Hamersley was not obliged to give a competitor mining company access to its railway line, as it fell within the ‘production process’ exemption. The Federal Court ruled that exemption applied in the present case because Hamersley’s railway line was an integral and essential part of its iron ore production process.

Gaire Blunt and Jenny Zaverdinos
Allen Allen & Hemsley
Sydney

Despite the early adoption of the new Belgian electricity law, it is still unclear at this stage whether the liberalisation of the Belgian electricity market would be operational by February 19 2000, the deadline required under the European Electricity Liberalisation Directive (96/92/EC). Numerous Royal Decrees are still required in order to implement the new legislation properly. Although measures have been adopted for the setting up of the new regulatory authority (the Commission de Régulation de l’Electricité et du Gaz), decrees on crucial issues such as transmission charges and the procedures for the recognition of the eligibility status of large industrial consumers are still under debate. It is expected that some of the recommendations in the report will accelerate the process.

Florence Melchior
Freshfields Deringer
Brussels

The Competition Bureau decided not to challenge the merger of Canada’s only two national airlines, notwithstanding prior publicly expressed concerns.

New pre-merger notification rules have come into force, doubling noclose waiting periods and increasing information gathering burdens for long-form filings.

John F Clifford and Jeffrey P Roode
McMillan Binch
Toronto

There is no doubt that this year the SIC will decide more cases than in previous years, and Colombian business generally will be forced to take greater note of its activities.

Alfonso Miranda Londoño
Chemas Miranda Asociados
Bogotá

Mergers within the dairy industry - a lynchpin of the Danish economy - have prompted moves to introduce merger control for the first time.

Jan-Erik Svensson
Gorrissen Federspiel Kierkegaard
Copenhagen

This Regulation, together with the forthcoming Guidelines (which the Commission envisages adopting in the spring of the year 2000), is intended to reform a key area of competition policy, as part of the wider review undertaken by the Commission to streamline and adapt the rules on competition.

The shift from a formalistic regulatory approach towards a more economic approach aims at simplifying the rules and reducing the regulatory burden for companies, while ensuring a more effective control of vertical restraints implemented by companies holding significant market power.

The Regulation would increase legal certainty of vertical agreements between companies whose market share is below 30 per cent, which will be automatically exempted. This is one step further than the Regulation adopted by the Council in June 1999 which dispenses all vertical agreements from the requirement of prior notification.

However, the final step in the reform process will be the adoption of the White Paper reform which will completely abolish the notification system. This is not expected, however, before 2003 at the earliest.

Maya Barr
Freshfields Deringer
Brussels

The Finnish Competition Council has reached the first decision concerning the legality of the selective distribution of a dominant company.

Christian Wik and Ilkka Aalto-Setälä
Roschier-Holmberg & Waselius
Helsinki

In this case, the Tribunal des Conflits considered that the first two decisions of ADP concerning TAT’s and Air France’s traffic applied the public powers prerogatives since the decisions could not be dissociated from the management of the public domain. Accordingly, these decisions are to be appealed only before administrative courts.

On the other hand, the court ruled that the decision of ADP forcing TAT to use ADP’s own airport services does not derive from such prerogatives. Accordingly, it is the judicial authorities that are competent to assess whether such prohibition amounts to an abuse of a dominant position.

Jacques-Philippe Gunther and Nicolas Charbit
Freshfields
Paris

The characteristics of homogeneous bulk products such as ready-mixed concrete make quota agreements particularly attractive to suppliers. In this case, the very limited radius of delivery in each area (around 25 kilometres) meant that the suppliers were all well-known to each other, there was a high degree of market transparency and the quantities of concrete were easily recordable. The fines imposed by the FCO are a signal that it will take tougher action against quota agreements in the future. Although a change of President does not necessarily mean a change in policy, it is clear that following the liberalisation of the energy and telecommunications sectors in Germany the FCO will devote more resources to other sectors where monopolies and cartels are still a problem.

August-Carel Maske
Freshfields Deringer
Berlin

The case gives an insight into the problems faced by the Hungarian Competition Office with regard to the entry of new participants in the Hungarian mobile telecoms market.

Ádám Máttyus and Ágnes Bogdán
Bruckhaus Westrick Heller Löber
Budapest

The new compettion law seeks to replace the Monopolies and Restrictive Trade Practices Act, 1969, and to provide a framework for increasing competition. The aim is to make the proposed law internationally acceptable on the basis of reciprocity with other countries. Under the proposed law the dominance of an undertaking will be determined on the basis of its global market share.

Atul Y Chitale
A Y Chitale & Associates
Delhi

The Groceries Order is an anomaly in the Irish competition law regime. Only the grocery sector is subject to the Order’s special rules (such as those relating to ‘below-cost’ selling and ‘hello money’). All other economic sectors are governed only by the Competition Acts (which are modelled on the EC competition rules). The grocery sector has lobbied hard to preserve the Order. A recent Discussion Paper reviews all the relevant issues and puts forward compromise proposals for public comment. It will be some considerable time, however, before any decision is taken in relation to this political hot potato.

Gerald Fitzgerald
McCann Fitzgerald
Dublin

Almost 10 years since it was set up, the Autorità Garante is putting pressure on undertakings accused of anti-competitive behaviour both by devoting greater resources to investigations and imposing higher fines. The Autorità Garante considers that as undertakings now have an increased awareness of competition law, infringements can no longer be tolerated.

Salvatore Lamarca
Freshfields
Milan

The Dutch Competition Authority investigated the contemplated merger of three foundations involved in running lotteries. In its assessment of the transaction, it took account of the high degree of regulation applicable to the running of lotteries. Nevertheless, it found that there is competition in the Dutch lottery market. The Competition Authority also considered whether it should make an exception in this case for reasons of the general economic interest and decided not to do so, refusing to authorise the contemplated merger.

Pepijn van Ginneken
Allen & Overy
Amsterdam

The TC’s decision introduces an added element of uncertainty into the enforcement of competition law in Spain. The future landscape will include a large number of regulatory authorities with enforcement powers over competition law matters, including the European Commission, the Spanish national competition authorities, the industry-specific regulators (such as CNSE and CMT) and a number of regional competition authorities. It seems likely that the Catalan and the Basque regional governments at least will create their own competition watchdogs.

Having multiple enforcement bodies could certainly undermine the uniform application of competition law in Spain. This is especially worrying in the areas of mergers and state aid, where, given the political dimension, competition authorities at regional level might be tempted to give priority to political considerations over strict competition analysis. The new legal framework could also create jurisdictional conflicts between the national and regional competition authorities. Presumably detailed rules on jurisdiction will have to be worked out to obviate such problems.

Francisco Cantos and Koldo Loidi
Freshfields
Madrid

The Swedish Competition Authority has raided the major oil companies in an effort to show that their ‘classic’ parallel berhaviour could in reality be the result of a cartel.

Elsewhere, competition law has hit the Swedish Central Airport Authority, and frequent flyer programmes have come under scrutiny.

Johan Coyet
Mannheimer Swartling
Stockholm

The Act provides for a system of 'parallel exemptions'. If an agreement benefits from an EC exemption, it is automatically exempt from the Chapter I prohibition. This means that a vertical agreement which benefits from the new EC block exemption Regulation - or would have done if it affected trade between Member States - will also be exempt under UK law. This raises the question of why the UK authorities have found it necessary to exclude vertical agreements by Order, even though the UK regime is slightly more lenient. Exactly how lenient it is will depend largely on the exercise of the claw-back option by the Director General of Fair Trading.

Renella Reumerman
Freshfields
London

The reference to a ‘rethink of merger review standards’ relates to remarks made by the FTC Chairman in November 1999. Mr Pitofsky is expected to elaborate on these remarks in a speech in New York on February 17. Mr Pitofsky has described the agency’s stance as simply 'responding to changes in the marketplace' and has said that the FTC is 'being presented with more and more ambitious and complicated settlement proposals intended to get a merger through - way beyond what we have seen before.'

Ronan P Harty
Davis Polk & Wardwell
New York

The proper interpretation of Kodak and the lock-in theory of market power will continue to be debated in the context of franchising disputes for many years to come. The way in which the courts resolve that debate will have an important effect on the reach of the antitrust laws.

Philip F Zeidman and Steven B Feirman
Piper Marbury Rudnick & Wolfe LLP
Washington DC