Day 1 - Workshop on Behavioural Remedies in Merger Cases

EU-China Competition Week
Workshop on Behavioural Remedies in Merger Cases
Monday, 10 March 2014
Ministry of Commerce, Beijing
No.2 Dong Chang'an Avenue, Beijing 100731, China

Agenda


08:30-09:00
09:00-09:15

Registration
Welcome and Opening remarks
Mr WU Zhenguo, Deputy Director General of Anti-Monopoly Bureau Ministry of Commerce, People’s Republic of China, Beijing
Mr Torben TOFT, Principal Administrator (International Relations, A-5), Directorate General for Competition, European Commission, Brussels

09:15-12:00
(with a break as deemed appropriate by the co-moderators)

Roundtable I – Criteria for selecting behavioural remedies: Principles and case experiences

  • Format: Presentation of 40 minutes by each lead participant and then followed by discussion

Lead participants:

  • Mr Thomas DEISENHOFER, Head of Unit (Mergers, E-4), Mergers in Basic Industries, Manufacturing and Agriculture, DG Competition, European Commission, Brussels
  • Ms Carole BEGENT, Deputy Head of Legal and Head of International, Competition Commission (United Kingdom), London (As of 1 April 2014, Senior Legal Director, Markets and Mergers, Competition and Markets Authority (United Kingdom))
  • Mr QIAN Xiaoqiang, Anti-Monopoly Bureau, Ministry of Commerce, P.R.C. , Beijing
  • Co-moderators:
  • Mr ZHU Zhongliang, Divisional Director, Anti-Monopoly Bureau, Ministry of Commerce, P.R.C., Beijing
  • Dr Stanley WONG, Special Advisor on Competition Policy, EUCTP II
  • Background

1. When competition concerns are identified in a merger investigation, the focus turns to choosing the appropriate set of remedies to address the identified concerns.
2. In the case experience of merger enforcement bodies around the world, the remedy of prohibiting a merger transaction with competition concerns is rarely used. Instead, a merger with competition concerns is cleared subject to the fulfilment by the merging parties of certain conditions. Conditions can be categorized as structural remedies or behavioural remedies.
3. Structural remedies include
-sale of a company,
-sale of a business which is an unincorporated division of a company,
-sale of assets,
-grant of a permanent, irrevocable license to use intellectual property rights as brands, trademarks, technology
4. Behavioural remedies include obligations
-to maintain existing production or distribution operations,
-to supply goods or services to existing customers or future customers,
-to supply at defined prices or prices below a price cap, or to limit the level of price increase
-to supply for a defined period or indefinitely,
-to supply technical specifications or other information to customers or competitors,
-to license intellectual property rights such as brands, trademarks, technology on stipulated terms such as FRAND or RAND
5. There is a consensus that remedies to address competition concerns should be effective, timely, practicable and enforceable. Yet, there are institutional differences in the selection of merger remedies in identical or similar cases. Some merger enforcement bodies such as the European Commission have an institutional preference for structural remedies. Others such as MOFCOM often choose a mix of structural remedies and behavioural remedies to address competition concerns.

  • Questions:

What factors explain the differences in institutional preferences in merger remedies?
Are there differences in views about competition concerns?
Are there differences in views about which remedies are practicable such as if there are operations outside of the jurisdiction?
Are there differences in views about the enforceability of remedies?
Are the views and actions of enforcers in other jurisdictions relevant in the selection of merger remedies?

  • Designing effective behavioural remedies
  • Questions:

What types of competitive concerns are best addressed through behavioural remedies?
How to design effective behavioural remedies?
What are the key elements of a behavioural remedy?
How to efficiently evaluate behavioural remedies proposed by merging parties?

  • Specific case experiences

1. How a merger enforcement body deals with the choice of structural versus behavioural merger remedies can only be appreciated through a review of its case experiences. In reviewing cases, it is relevant to consider not only the rationale for selecting a specific remedy but also the reasoning for rejecting other possible remedies.
2. In reviewing selected case experiences, the following questions should be considered, as appropriate:

  • Questions:

Where only structural remedies were adopted but behavioural remedies were considered, explain why behavioural remedies rejected?
Where only behavioural remedies were adopted but structural remedies were considered, explain why structural remedies rejected?
Where both structural and behavioural remedies were adopted, why were both types of remedies adopted?

12:00-13:30

Lunch

14:00-16:45
(with a break as deemed appropriate by the co-moderators)

Roundtable II – Trustees in implementing and /or monitoring merger remedies
Format: Presentation of 40 minutes by each lead participant and then followed by discussion

  • Lead participants:
  • Mr Thomas DEISENHOFER, Head of Unit (Mergers, E-4), Mergers in Basic Industries, Manufacturing and Agriculture, DG Competition, European Commission, Brussels
  • Ms Carole BEGENT, Deputy Head of Legal and Head of International, Competition Commission (United Kingdom), London (As of 1 April 2014, Senior Legal Director, Markets and Mergers, Competition and Markets Authority (United Kingdom))
  • Mr YE Jun, Divisional Director, Anti-Monopoly Bureau, Ministry of Commerce, P.R.C., Beijing
  • Co-moderators:
  • Mr ZHU Zhongliang, Divisional Director, Anti-Monopoly Bureau, Ministry of Commerce, P.R.C., Beijing
  • Dr Stanley Wong, Special Advisor on Competition Policy, EUCTP II

Format: Presentation of 40 minutes by each lead participant and then followed by discussion

  • Background

1. With some remedies, it may be necessary to have a trustee appointed. A trustee may be needed to implement a remedy. If a remedy imposes continuing obligations on the parties, a trustee may be needed to ensure compliance with the obligations.
2. In implementing a remedy, a trustee may be appointed to conduct the sale of assets where the parties are unable to sell the assets.
3. With some remedies, a trustee may be appointed to monitor compliance with any continuing obligations especially where technical knowledge is required to understand the obligations.

  • Questions:

When is it necessary to appoint a trustee to ensure the implementation of a remedy?
When is it necessary to appoint a trustee to monitor compliance with the obligations imposed by a merger remedy?
What are the key elements in designing an effective agreement to manage the relationship between the parties, the trustee and the enforcer?

  • Specific Case Experiences

In reviewing case experiences, the following questions should be considered:

  • Questions:

In cases where a trustee was appointed, why was it necessary to appoint a trustee? What did the trustee do?
In cases where there are continuing obligations (behavioural remedy), why was it necessary to appoint a trustee to monitor compliance?
In cases where there are continuing obligations (behavioural remedy) but no implementation trustee is appointed, why was a trustee not needed?
Where a trustee is appointed, what types of problems arise in managing the relationship among the trustee, the parties and the enforcer?

16:45-17:00

Closing Remarks