WORLD TRADE
ORGANIZATIONWT/WGTCP/W/117
27 May 1999
(99-2143)
Working Group on the Interaction between
Trade and Competition PolicyOriginal:  French
COMUNICATION FROM SWITZERLAND
The following communication, dated 15 April 1999, has been received from the Permanent
Mission of Switzerland with the request that it be circulated to Members.
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Relevance to Competition Policy of the Basic Principles of the WTO
such as National Treatment and Transparency
I. INTRODUCTION
1. In July 1998, Switzerland submitted, in one of its contributions (WT/WGTCP/W/89), a
number of preliminary elements concerning the relevance of the principles of national treatment
(Article III of the GATT 1994) and transparency (Article X of the GATT 1994), trying to differentiatebetween markets in which there was properly enforced anti-trust legislation and those in which such
legislation did not yet exist.  The preliminary analysis revealed that in the markets where there was no
competition law or where such law was not enforced, the possibility of recourse to Articles III and X
of the GATT 1994 was more limited.  Looking at recent WTO dispute settlement proceedings, the
Fuji/Kodak case showed that the relevance of Articles III and X of the GATT 1994 could be
non-existent in instances involving private anti-com petitive practices.  In fact, many anti-competitive
practices are of private-sector origin and cannot be considered as governmental actions.  In this case,many allegations were largely rejected because many of the distribution and promotion measures
failed to meet the first requirement of Articles III  and X of the GATT 1994, i.e. that the various laws,
regulations or requirements must be equated to governmental actions.
2. Before continuing our consideration of applicability of the basic WTO principles to the field
of competition, it is important to identify the needs of the WTO and its Members.  In the context ofprogressive liberalization which has been adopted as the WTO's working method, our task is to ensure
that the conditions of competition in each market gradually become comparable, which means that
WTO Members must develop competition rules.  The WTO is well suited to achieve these objectives.
Future discussions, or indeed negotiations, could pursue the triple aim of:
• Integrating the field of competition into the WTO system of rules and disciplines;
• ensuring that national laws meet the minimum requirements of the WTO rules and
principles;
• developing, to that end, a legal framework to achieve, through multilateral standards,
increased comparability of national competition laws.WT/WGTCP/W/117
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3. The main purpose of the analysis below is to further study the relevance of the principles of
national treatment and transparency with reference to the experience acquired in the area of trade-
related aspects of intellectual property rights.  Indeed, this area presents several interesting
characteristics, since the TRIPS Agreement is made up of minimum standards developed within the
framework of the WTO but based directly on international standards contained in other agreements,and on the different national or regional laws governing intellectual property rights.  A similar
approach could be adopted for competition law in that we would not be developing entirely new
international rules, but rather, we would be determining certain minimum standards reflecting the
possible convergence of the different national competition laws.
4. The fact that this analysis focuses on these two basic principles in no way excludes the
possibility of considering other basic principles such as non-discrimination, including, inter alia,  the
most-favoured-nation (MFN) clause.  It would also be interesting to explore, within this group, the
concrete cases in which the MFN principle could be relevant to the field of competition.  However,
the aim of this contribution is simply to demonstrate, initially, the relevance of the principles of
national treatment and transparency to the field of  competition once they have been adapted to that
field.
II. POSSIBLE ADAPTATION OF THE PRINCIPLE OF NATIONAL TREATMENT TO
COMPETITION POLICY
5. Article III:4 of the GATT 1994 clearly stipulates that the product of the territory of any
contracting party imported into the territory of any other contracting party shall be accorded treatment
no less favourable than that accorded to like pro ducts of national origin in respect of all laws,
regulations and requirements affecting their internal sale, offering for sale, purchase, transportation,distribution or use.  The expression "all laws, regulations and requirements affecting their internal
sale, offering for sale, purchase, transportation, distribution or use" is subject to interpretation.
Broadly interpreted, this expression covers a wide range of governmental actions and private party
actions which can be equated to governmental actions.  However, the role of the government must be
clearly defined.  In the field of competition, the share of anti-competitive practices attributable to theprivate sector remains very large.  Indeed, the examples of anti-competitive practices impeding trade
that have been cited during the discussions of this Working Group were often of private origin (e.g.
horizontal agreements with a direct impact on pric es, export or import cartels, or world market-
sharing agreements between companies).  The relevance of national treatment as defined in Article III
of the GATT 1994 to this type of practice is therefore limited, or even non-existent.
6. And yet this is exactly the type of private measure impeding world trade against which the
Member States should be able to find a remedy in the future.  The central element of this principle ofnational treatment, i.e. according treatment no le ss favourable to foreign products/producers/services
than that accorded to like products/producers/services of national origin, could be specifically adapted
to the field of competition.  From a substantive point of view, we might consider developing a
principle providing for treatment no less favourable in respect of the protection of competition law forforeign citizens/enterprises than that accorded to nationals/national enterprises.  More specifically,
this could mean that the anti-trust legislation of on e country must also be applied in respect of anti-
competitive behaviour having an impact outside the national borders of the country in question on the
basis of minimum standards recognized at the multilateral level.  From a  procedural point of view, we
might consider according treatment no less favourable to a foreign enterprise or producer in theexercise of its rights in respect of a national competition authority than that accorded to a nationalenterprise or producer for the same type of right.
7. This adaptation of national treatment to the field of competition can be compared to the
adaptation to the field of intellectual property.  Indeed, Article 3 of the TRIPS Agreement stipulates
that each Member shall accord to the nationals of other Members treatment no less favourable than it
accords to its own nationals with regard to the protection of intellectual property, subject to a numberWT/WGTCP/W/117
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of exceptions.  The term "protection" includes, more  specifically, matters affecting the availability,
acquisition, scope, maintenance and enforcement of intellectual property rights as well as those
matters affecting the use of intellectual property rights.
8. In the competition context, the principle of national treatment would be applied to any
existing legal provision.  It would be more relevant if it were also applied to minimum standardsrecognised at the multilateral level.  These minimum standards could be made up of substantive rules
of a more operational kind, which, for the most part, form an integral part of competition laws.  More
specifically, we could consider recognizing binding minimum standards such as the prohibition,
per se , of hard core cartels (for example horizontal agreements for the purpose of fixing a given price
or sharing markets), or the development of certain common key criteria in the evaluation of vertical
agreements or concentrations.  From a procedural point of view, the effect of this adaptation of
national treatment would be to take explicit account of private agents, since it involves conferring onall foreign nationals or foreign private enterprises the same means of appeal to a national competition
authority as for nationals or enterprises of national origin.  Indeed, in certain countries it can still be
difficult for a foreign national or an enterprise of  foreign origin to lodge a complaint because the
competition authority apparently applies procedures that are slower, less efficient and more costly
than those applied to national enterprises.
9. Application of the principle of national treatment necessarily implies the adoption and
implementation of a competition law.  To date, the multilateral trading system counts more than
70 countries that have competition laws and some 30 countries that are on the point of implementing
such legislation.  The various contributions of the countries currently introducing such legislation
have largely shown, during the discussions in this  Working Group, the importance that they attach to
a regulated and efficient competition policy.  The new competition laws adopted in these countries
refer mainly to the Anglo-Saxon or Community models.  A first step towards the progressive
harmonization of competition rules at the multilateral level might be to provide that any new
legislation in the field of competition should be in keeping with the basic principles of the WTO.  In
other words, WTO Members should be encouraged to adopt competition laws which do not providefor differential treatment of nationals and foreigners and which require the authorities responsible for
implementing competition legislation to apply transparent procedures.
III. POSSIBLE ADAPTATION OF THE PRINCIPLE OF TRANSPARENCY TO
COMPETITION POLICY
10. Article X of the GATT 1994 stipulates that  laws, regulations, judicial decisions and
administrative rulings of general application pertaining, inter alia , to sale, distribution, transportation
and inspection shall be published in such a manner as to enable governments and traders to becomeacquainted with them.  The expression "of general application" is essential here, since it implies, as
discussed in connection with various dispute settlement cases, the establishment of new principles or
the modification of general principles that are not only applicable to particular persons or entities.
11. Moreover, in the Fuji-Kodak case, the Panel recognized that it is often difficult to plead a case
successfully if the decision is not published.  The case showed that the application of the principle of
transparency as defined by Article X of the GA TT 1994 can be decisive from a purely procedural
point of view.  Apart from the difficulty of proving that a law or a regulation exists, it is also essential
to consider whether the general application condition is truly adapted to the field of competition.
More specifically, would it not be necessary to introduce more transparency in the decisions ofcompetition authorities on specific cases as well?
12. Thus, to increase transparency in this area we might consider introducing a basic principle
requiring transparency of laws, regulations and decisions adopted and published by the competition
authorities as well as the publication of all regulations concerning anti-competitive practices such as
cartels, horizontal agreements, vertical restrictions, abuse of dominant position and mergers.  ThisWT/WGTCP/W/117
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would in no way require the disclosure of confidential information that could prejudice the legitimate
commercial interests of particular public or private enterprises, but would aim above all at making the
criteria governing competition in the markets more transparent.
13. Once again, we refer in this connection to the TRIPS Agreement, of which Article 63
(Transparency) stipulates, inter alia , that the laws and regulations, and final judicial decisions and
administrative rulings pertaining to the subjec t matter of the TRIPS Agreement, such as the
availability, scope, acquisition, enforcement and prevention of the abuse of intellectual property
rights, shall be published.  And here again, this provision in no way requires the disclosure of
information that would prejudice the legitimate commercial interests of particular public or private
enterprises.
IV. CONCLUSIONS
14. Among the essential pre-conditions for the adaptation of the principle of national treatment as
proposed in this contribution, the foremost is the adoption and proper enforcement of anti-trust
legislation.  The numerous contributions of the developing countries in this group have so far clearly
reflected the importance they attribute to a compet ition culture.  In this connection, it was noted
during recent work that a competition law combined with a rigorous enforcement policy considerably
facilitates the promotion of competition.  Moreover, the existence of a law and of a competition
authority could contribute to substantially rein forcing the implementation of the two fundamental
principles of national treatment and transparency.  The new laws adopted should, from the outset,
avoid differential treatment between nationals and foreigners and provide for a high degree oftransparency.  Indeed, we could seek to ensure, within the framework of the WTO, that all
competition legislation is in keeping with these two basic WTO principles.
15. Secondly, we note that the basic principles of national treatment and transparency as defined
in Articles III and X of the GATT 1994 are limited in scope if we consider anti-compe titive practices
as a whole.  The problem comes above all from practices of private origin to which these principles
are not relevant.  To increase the relevance of these principles, they should be adapted to the specific
context of competition, as was done when they were applied to trade-related intellectual property
rights.  However, the two adaptation proposals set forth above are only preliminary and theoretical
proposals for possible discussion within this group.
16. The relevance of the principle of national treatment would be greater if it applied to a
multilateral framework of minimum standards in the field of competition law.  These minimum
standards could be made up of multilateral rules of a more operational kind which, for the most part,
form an integral part of the competition laws.  More specifically, we might consider recognizing
binding minimum standards such as the prohibition, per se , of hard core cartels or the development of
certain common key criteria in the evaluation of anti-competitive practices.
In the light of the above analysis, a simple interpretation of these two WTO principles is not
enough.  For systemic reasons and for reasons of substantive law and procedure, if WTO Members
conclude that we must continue our work in this field at the WTO, negotiations will be necessary.
Switzerland invites the members of the group to submit their initial reactions.
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