In light of the continued globalization of business activities, and the increasing number of mergers that are subject to review under merger laws in more than one jurisdiction, the Organization for Economic Co-operation and Development (“OECD”) published on March 23, 2005, a Council Recommendation, on merger review best practices.
The OECD Council Recommendation builds on work conducted by the OECD Competition Committee which is made up of the heads of the world’s major antitrust authorities, as well as the work of other international bodies, such as the International Competition Network, in the area of merger review. In particular, the Council recommends that the governments of member countries (which include most European countries states, the U.S., Australia, New Zealand, Japan, Korea, Turkey and Mexico) should:
- Conduct merger review procedures in an effective, efficient and timely manner. They should, in particular, avoid imposing unnecessary costs and burdens on businesses by asserting jurisdiction appropriately, using clear and objective criteria to determine whether a merger requires notification or qualifies for review, setting reasonable information requests, enabling mergers that do not raise material competition concerns to be reviewed and cleared expeditiously, and providing merging parties with a reasonable degree of flexibility in determining when they can notify a proposed merger.
- Ensure that merger rules, policies, practices and procedures are transparent and publicly available, and antirust authorities issue publicly available reasoned decisions.
- Ensure procedural fairness for merging parties, in particular, by providing the opportunity to comment on material concerns and the right to seek timely review of decisions by a separate adjudicative body. Merging parties should also have the opportunity to consult with the competition authorities about significant legal and practical issues at key stages in the investigation.
- Allow third parties with a legitimate interest to comment on proposed mergers.
- Treat foreign firms no less favorably than domestic firms.
- Protect business secrets and confidential information, including those obtained from another antitrust authority.
- Seek to cooperate and to coordinate their reviews of international mergers in appropriate cases. National laws should be aimed at resolving domestic competition concerns, and inconsistencies with any remedies imposed by other jurisdictions should be avoided. This cooperation and coordination should be facilitated by national laws and by bilateral and multilateral agreements. Merging parties should also be encouraged to facilitate this in the timing of their notifications, and by waiving their confidentiality rights.
- Ensure that competition authorities have sufficient powers and resources to conduct merger reviews efficiently and effectively and to cooperate with other authorities.
- Review their merger laws and practices on a regular basis to seek improvement and convergence towards recognized best practices.
Finally, the OECD Council instructs its Competition Committee to conduct further work to enhance the effectiveness of merger review, reduce costs, and strengthen cooperation and coordination between antitrust authorities. The Committee will also review the experiences of member countries and report on any further action that should be taken to strengthen cooperation and to achieve greater convergence towards recognized best practices.
Mergers with an international dimension can impose substantial costs on antitrust authorities and the merging parties, and the OECD’s Recommendation recognizes that it is important to address these costs without limiting the effectiveness of national merger laws. It is hoped that the Recommendation encourages cooperation and coordination among foreign antitrust authorities with respect to international mergers, and will lead to reduced transaction costs, promote efficiency and, achieve consistent, or at least non-conflicting, decisions.