Cross-border anticompetitive practices and global supply chains:

1. Cross-border anticompetitive practices and global supply chains: Challenges for developing countries

2. Cross-border M&A: WD’s acquisition of Hitachi’s hard disk drive business Post-merger market share HP’s global sourcing map Merger review by jurisdictions Approval conditional on the divesture of production assets for 3.5 inch HDD (Nov 2011)

3. Main issues in dealing with cross-border M&A • A cross-border M&A normally engages many jurisdictions. • When it involves a key component in global supply chains, the effect can easily cover the entire globe. • Therefore, one of the key issues is how to coordinate merger reviews conducted by different jurisdictions. • From the perspective of developing countries, a big challenge is how to address their competitive concerns with limited resources and capabilities.

4. Notification Challenges faced by developing countries • Risk of non-notification by merging parties – risk being much higher in jurisdictions with voluntary notification system. • Notification preference for “priority” jurisdictions. • Timely filing of the transaction and respect for local legislation in mergers between foreign companies.

5. Notification Challenges faced by developing countries • Challenges for small economies like Singapore in mergers between large foreign firms: • Submission of notifications based on data filed to other jurisdictions. • Difficulty in distinguishing the specific effects of the merger in the country concerned when merging parties are involved in a wide range of activities globally.

6. Access to information Remedies Challenges faced by developing countries • Difficulties in collecting information, questionnaire distribution and gathering • Language of communication and data • Difficulty in enforcing and monitoring remedies. • Differences in approaches of competition authorities to remedies – these do not block the merger.

7. A way forward • Young competition agencies must first strengthen their capacities by dealing with domestic mergers, from which they could gain experience. • Given their limited resources, young competition authorities need to give priority to those international mergers which significantly affect their market. • Promote formal cooperation (Bilateral/regional cooperation agreements). • Informal cooperation is important and seems to work well.

8. International cartel cases Suppliers of the Specified CRTs Customers of the Specified CRTs ５ parent companies etc.out of the 11 companies （located in Japan, Korea, Chinese Taipei etc.） Japanese manufacturers of CRT televisions ② Negotiating and determining prices etc. of the Specified CRTs in accordance with ①（Note １） ① At “CRT Meetings”, jointly setting the minimum target prices etc. of the Specified CRTs Giving instructions to purchase the Specified CRTs in accordance with the determined prices in the negotiation of ② ③ Giving instructions to sell the Specified CRTs in accordance with the determined prices in the negotiation of ② ⑤ Selling almost all the CRT televisions ④ Selling the Specified CRTs in accordance with ③ （Note ２） Overseas Manufacturing Subsidiaries etc. （ substantial production bases of CRT televisions in the Southeast Asian Region） ６ subsidiaries etc. out of the11 companies （ substantial production bases of CRTs in the Southeast Asian Region ) Indonesia Singapore Thailand Philippines Viet Nam Malaysia

9. Main issues in dealing with international cartels • The last two decadeshave seena great success in prosecution of international cartels by the US and the EU. • However, there has been little enforcement activity on the part of developing countries, - even though international cartelsalso affect developing countries. • International cartelists are usually MNCs located in developed countries, which creates huge problems in obtaining evidence.

10. No leniency Application Initiation of Investigation Challenges faced by developing countries • International cartelists make strategic choices of leniency applications. • Even in follow-on investigations, no leniency applications were filed (Korea). • Cartels come to their attention only after other’s enforcement • Informal information by the US helped it to decidewhether to launch an investigation (Brazil)

11. No physical presence Material evidence from others Challenges faced by developing countries • In many cases, there is no branch or subsidiary in developing countries. • In response to investigations, one of cartelists closed its office (Turkey) • Official decisions open to the public do not contain material information due to confidential concerns. • KFTC benefited from US court decisions in its early case (Korea)

12. Service of document Period of exclusion Challenges faced by developing countries • Where it has a certain legal effect, it could be a serious issue. • An option is to have a formal help from foreign authorities (Chile). • When the period has passed, no legal action can be taken. • So the case could collapse or end without fines (Japan)

13. A way forward • A jurisdiction cannot entirely rely on others’ enforcement. • Given its scarce resource, a young authority needs to focus on international cartels which create specific harm to its market. • The first priority is to establish an effective leniency program. • A young authority must step up its enforcement efforts against domestic cartels, from which they could build up reputations and capabilities. • Informal cooperation should not be underestimated. An idea is to set up an intelligence network based on what is already available.

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