On May 1, the Federal Trade Commission registered for the International Competition Network’s Framework for Competition Agency Procedures (CAP), making it a founding member of the ICN’s most recent initiative to promote fair and informed competition enforcement procedures around the world.
The CAP is a non-binding, voluntary framework aimed at encouraging implementation of basic procedural principles, including through agency-to-agency cooperation provisions that encourage agencies to discuss their processes and procedural issues. The CAP also allows Framework participants to review the progress of the CAP regularly. The CAP is the ICN’s third opt-in implementation framework for competition agencies, following earlier ones on merger and cartel enforcement cooperation. The framework model provides participating agencies with an opportunity for targeted cooperation and implementation of ICN principles.
Sound process and procedural fairness increasingly has become part of the international dialogue on competition law enforcement. The ICN has been at the forefront of developing norms for competition agency procedural fairness. Long before the CAP, beginning in 2003, the ICN produced Recommended Practices on procedural fairness and transparency in merger review. The ICN’s 2008 Recommended Practices on Assessment of Dominance/Substantial Market Power also address enforcement transparency in single-firm conduct enforcement. In 2012, the ICN identified a “broad consensus” on procedural fairness principles with its project on competition agency investigative process. The project, which was initiated and led by the FTC, recognized that investigative practices contribute to enhancing the effectiveness of agencies’ decision-making and ensuring the protection of procedural rights. Drawing from the practices of over 60 competition agencies, the project produced the ICN’s 2015 Guidance on Investigative Process and its 2018 Guiding Principles for Procedural Fairness in Competition Agency Enforcement. The 2015 Guidance provides recommendations on use of investigative tools, transparency, engagement, internal agency safeguards, and confidentiality that promote fair and informed enforcement. The 2018 Guiding Principles present a common set of high-level procedural fairness ideals that ICN member agencies agreed should inform and guide enforcement processes. The ICN membership is expected to elevate the 2015 Guidance to “Recommended Practices” status next month at its annual conference. Recommended Practices is the most prominent category of work created by the ICN, reflecting the achievement of consensus on this important topic.
The CAP principles continue this legacy of developing fundamental due process norms among competition agencies. The CAP principles address the topics of non-discrimination, transparency, notice of investigations, timely resolution, confidentiality protections, conflicts of interest, opportunity to defend, representation, written decisions, and judicial review. The CAP contains two tools to promote its own implementation, a “cooperation process” (Section 2) and a “review process” (Section 3). The cooperation process enables agency-to-agency interaction by allowing participants to request “dialogues” on issues of procedure. CAP dialogues are intended to promote better understanding of agency procedures and facilitate cooperation on implementation of the CAP principles. The review process promotes agency transparency about investigative and enforcement procedures through the collection and posting of completed template forms. The CAP also includes a regular review of the functioning of the framework.
The FTC provides procedural fairness during its competition investigations through practices that promote transparency and dialogue between its staff and the parties. Internal institutional practices support and reinforce reasoned decision-making. For example, Section 2.6 of the FTC’s Rules on Nonadjudicative Procedures promotes transparency by providing for notification of the purpose and scope of an investigation. Rule §2.20(b)(2) on second request conferences supports engagement by providing for a meeting to “discuss the competitive issues raised by the proposed transaction . . . and confer with the recipient about the most effective way to obtain information and documents relating to the competitive issues raised.”
The FTC values open communication with the subjects of its competition investigations. Dialogue between investigative staffs and parties occurs throughout the course of an investigation. Agency staffs inform parties how an investigation is proceeding through written and oral communications. Staffs encourage companies under investigation to present their views on the evidence and theories, both orally in informal meetings and through written submissions. Investigative staff and decision-makers seek input from the parties in order to ensure that the FTC is aware of counter-arguments and evidence that might be inconsistent with enforcement action or might help shape the agency’s legal theory, economic theory, or remedy. Several internal checks and balances contribute to procedural fairness in FTC investigations. For example, lawyers and economists work together on investigations while bringing their own expertise to decision-makers through independent and parallel reviews.
When competition investigations are fair, and perceived to be fair, they bolster the quality, legitimacy, and impact of enforcement and ensure the rights of investigated parties. The FTC continues to be a leading voice for strong procedural fairness standards that serve as models of good practice for all competition agencies, through its bilateral relations, the new ICN CAP and Recommended Practices, and in other international competition fora.