An Assessment of Institutional Machinery:

ICN - CPI Sub Group 2

Workplan 2006-2007

June 24, 2006

An Assessment of Institutional Machinery:

Methods used in Competition Agencies and what Worked for Them

The project “Lessons to be Learnt from the Experiences of Young Competition Agencies,” presented at the Cape Town Annual Conference, identified a number of key operational and institutional challenges faced by competition agencies as they seek to establish themselves.

The focus of the work of Subgroup 2 in the year going forward will be to build on its initial efforts and to identify important issues from those challenges that have not been systematically addressed elsewhere, with a view to addressing them in a real and meaningful manner for the Moscow Annual Conference in 2007.

While other Working Groups address the key substantive aspects of competition law, i.e., cartels, unilateral conduct, mergers, and competition advocacy, relatively little attention has been paid to the institutional machinery through which agencies apply substantive law.

As the Working Group’s other work has indicated, the institutional arrangements can affect substantive outcomes. The Subgroup’s Cape Town report shows that questions of institutional organization and design can be particularly perplexing to new agencies. Institutional models from other countries may not be readily adaptable to local legal, administrative, and cultural traditions, and existing national administrative models may not be suitable for enforcing competition laws.

Therefore, in the coming year the Subgroup plans to study the institutional machinery through which competition law is implemented. Institutional machinery can be seen as encompassing the enforcement structures and administrative processes used to support sound and efficient decision-making while incorporating high quality economic and legal analysis, and simultaneously observing the principles of natural justice/due process.

The specific topics to be explored will include the:

• structure of investigative, prosecutorial, and decision-making functions of an agency;
• mechanisms to ensure that decisions are informed by both economic and legal analysis and independent of political influence;
• internal controls over investigations to ensure that non-meritorious investigations are screened out and resources are focused on meritorious ones;
• rules and norms for internal (investigators and Adjudicators), and external (Commission and complainant, and subject of investigation) communication of information
• Procedures for requesting and compelling information from parties, witnesses, and governmental bodies; and
• Time frames for conducting investigations and reaching decisions.

Approach

The Subgroup will not attempt to make recommendations on these topics. Instead, it will explore the various approaches that have been employed and members’ experience with such approaches. It is hoped that newer agencies will be able to benefit from the experience of others, as collected by the Subgroup, as they address these problems themselves.

To execute this project the Sub Group plans to:

• Utilise experts in this field to draft a paper discussing the issues outlined above.
• Circulate the draft to ICN members for their observations, suggestions, and additions.
• Undertake a small survey to classify and document the types and variations of institutional mechanisms utilized by competition agencies.
• Explore the feasibility of holding a workshop to bring together ICN members and experts on institutional machinery for the effective and efficient implementation of competition law.
• Incorporate comments and responses into the draft; and
• Develop a supporting presentation for dissemination and delivery at the annual conference in Moscow.

Chair:

DeCourcey Eversley, Barbados Fair Trading Commission

Participants:

Russell Damtoft, United States Federal Trade Commission

Cynthia Lagdameo, United States Department of Justice

Dr. Taimoon Stewart, University of the West Indies

Dr. Michael Nicholson, IRIS; Advisor to Armenian Competition Agency

Prof. Andy Gavil, Howard University

William Kovacic, United States Federal Trade Commission

Mark Warner, Fasken Martineau