EU and Japan set to secure historic competition deal

Date: 03/07/03

By Peter Chapman

THE EU and Japan are set to sign a historic deal paving the way for wholesale cooperation in merger and cartel investigations.

European Commission sources say the deal - scheduled to be signed in Brussels next week (10 July) - will mirror earlier deals between the EU and the US, Canada and Mexico.

These bilateral accords enable the automatic exchange of swathes of information in the growing numbers of cases with implications for jurisdictions across the world.

For example, authorities swap data on merger notifications and decisions and also share tip-offs concerning alleged cartels, so that enforcers can launch orchestrated "dawn raids" on company offices.

"The only thing that needs to be done is the formal signing," said an aide to Competition Commissioner Mario Monti, adding that the deal was given the nod by EU governments last month.

She said the EU and Japan already share a great deal of information on competition issues.

Proof of the good relationship came earlier this year when cartel-busters from the EU, US and Japan swooped simultaneously on offices of firms suspected of price fixing in the market for PVC products.

"The agreement will formalize that by creating a framework for cooperation between the two sides," she said. Mario Monti and his Japanese counterparts will cement the deal with annual meetings, she added.

Global anti-trust officials are coming together more often thanks to the creation of the new International Competition Network last year.

Nevertheless, competition experts said the deal could signal the start of a new era of anti-trust enforcement in the world's number two economy.

Japan has been saddled with a reputation for a lax approach to competition rules.

Instead, say critics, the state - and the Ministry of International Trade and Industry - relentlessly pursued a policy focused on creating a favourable environment for domestic industrial champions.

After World War II, the US set up an American-style Federal Trade Commission in Japan to stop dominant firms flexing their muscles at the expense of consumers and rival companies.

Laws are also in place that, in theory at least, give the watchdogs the power to crack down on anti-competitive behaviour.

But experts say the body was a pale imitation of its US sister, and a similar trade institution set up by the Americans in post-war Germany.

Alec Burnside, a partner with law firm Linklaters and Alliance, said: "The Japanese have been fearful of anti-trust in the past because they thought it would be used by people trying to break into the Japanese market. So the very fact that they are signing this agreement is significant."