WORLD TRADE
ORGANIZATIONWT/WGTCP/W/240
25 July 2003
(03-3976)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM THE OECD
The following is the final text of a paper received from the OECD Secretariat, which was
circulated as a room document for the Working Group's meeting of 26-27 May 2003, and is nowmade available as a "W" document with the consent of the Group (WT/WGTCP/M/22,
paragraph 104).
_______________
An Overview of Possible Compliance Mechanisms in a
Multilateral Framework on Competition
INTRODUCTION
1. The Doha Ministerial Declaration reaffirms WTO Members' interest in continuing work on
the relationship between trade and competition.  Paragraph 23 of the Declaration recognises "the case
for a multilateral framework to enhance the contribu tion of competition policy to international trade
and development" and provides for negotiations to take place after the Fifth Ministerial Conference onthe basis of "a decision to be taken by explicit consensus" as to negotiating modalities.
1  I n  t h e
interim, the Declaration mandates further work to be undertaken by the WTO Working Group on the
Interaction between Trade and Competition Policy (WGTCP) on specific issues relevant to a
multilateral framework.  As yet there is little consensus on the range of issues already covered by the
WGTCP.  One such issue is that of how compliance with any multilateral disciplines might beaddressed in an eventual multilateral framework on competition (MFC).
2. The purpose of this paper is to canvass a range of generic compliance and/or enforcement
mechanisms that feature in multilateral, regional  and bilateral agreements dealing with trade and
trade-related issues.  Competition features in several Regional Trade Agreements (RTAs) although
there are significant differences in treatment among Agreements.
2  Some seek harmonisation of
substantive rules (e.g. EU) while others focus on general obligations to act against anti-competitive
conduct, including obligations to enforce national competition laws (NAFTA).  Compliance and/or
dispute settlement mechanisms such as consultation, good offices, conciliation, arbitration and peer
review often feature in such agreements and are suggested in this paper as possible options for an
MFC.  Finally, and given that the Dispute Se ttlement Body (DSB) of the WTO has exclusive
jurisdiction for matters arising from the multilateral agreements in the WTO system,3 the paper
                                                     
1 WTO, Ministerial Declaration, adopted 14 November 2001. See www.wto.org.
2 See OECD, Regional trade agreements and the multilateral trading system, Chapter 4, Paris, 2002.
3 WTO Understanding on Rules and Procedures governing the Settlement of Disputes, Article 23.WT/WGTCP/W/240
Page 2
discusses the possibility of the DSB carrying out a de jure  compliance function under an MFC.  The
methods covered in many cases are used in contexts quite different from that of the WTO;  for
example, they may apply in disputes between private parties and/or States and private parties.  While
noting these differences, this paper considers the question of whether these mechanisms can be
adapted or transposed into a multilateral set of rules negotiated within the WTO.  They are not
necessarily mutually exclusive; indeed a combination of two or more methods may be desirable.
More questions will be raised than answers suggested, with a view to stimulating ideas for further
discussion and/or enquiry.
3. In order to evaluate the range of mechanisms that could be appropriate for an MFC, it is
perhaps useful to reflect upon the type of disputes or compliance problems that might arise.  While
there is no consensus as to the content of an MFC, based on discussions at the WTO to date on the
subject one could envisage the following types of compliance problems:4
• The non-existence of a national competition law;
• The inadequacy of an existing competition law (e.g. due to non-inclusion of
agreed core principles);
• The non-application/non-enforcement of a competition law;
• The discriminatory or non-transparent application of a competition law;
• Lack of co-operation between national competition agencies;
• The non-enforcement of a ban on hard care cartels.
Which of these would come under the scope of compliance provisions in an MFC?
4. In this connection, it may be useful to examine the ways in which existing WTO Agreements
deal with compliance issues.  The Agreement on Trade Related Aspects of Intellectual Property
Rights (TRIPS) for example, provides a complian ce and monitoring mechanism with regard to the
first two types of non-compliance mentioned above.  Members must ensure that their laws comply
with the obligations in the Agreement; to this end they must notify their laws to the TRIPS Council.5
This notification allows all Members to see how others comply with their obligations and provides the
basis for the Council's review of Members' legislation.  This system also may be of interest whenconsidering peer review as a compliance method.  Furthermore, it is an effective way to ensure and
enhance transparency, one of the "core principles" identified in paragraph 25 of the Doha Declaration.
5. Finally, in considering the appropriateness of any given compliance method or combination of
methods, it may also be useful to consider the objectives sought to be achieved.  In this connection,
possible objectives may include finding a positive solution to a dispute, clarifying provisions of theagreement, providing security and predictability  to the multilateral trading system and/or re-
establishing the balance of concessions.
6  Encouraging closer co-operation and convergence,
enforcing rules in a binding fashion or recommending non-binding solutions may be additional or
alternative objectives.  What should be the objective(s) of a compliance mechanism in an MFC?
A. GOOD OFFICES , CONSULTATION , MEDIATION , AND CONCILIATION MECHANISMS
6. Consultation mechanisms are common to many RTAs containing competition provisions, in
contexts such as co-operation, dispute resolution and compliance.  The WTO Dispute Settlement
Understanding (DSU) envisages alternative dispute resolution methods such as good offices,
                                                     
4 These are offered simply as a range of possibilities, assuming that such provisions were to be agreed
in an MFC.
5 Article 63.2, TRIPS.
6 These goals form part of the WTO Understanding on Rules and Procedures governing the Settlement
of Disputes.WT/WGTCP/W/240
Page 3
conciliation and mediation7 while consultations are also a key element of this Agreement and must be
engaged before the establishment of a panel.8  "Good offices" refers to the provision by a third party
of the means by which two disputing parties may communicate with each other.
7. Apart from the general consultation procedures that apply to WTO disputes, special
consultation procedures are provided for in other instruments containing competition-relatedprovisions, e.g. the GATS
9 and TRIPS Agreement.10  RTAs containing consultation and co-operation
provisions in the area of competition are more extensive than WTO provisions, particularly where
they extend to the direct enforcement of competit ion rules, including investigation of complaints,
hearings and judgements.11
8. NAFTA and the Canada-Chile FTA contain general consultation and co-operation proceduresto consult on the effectiveness of national competition laws and co-operate on enforcement via mutual
legal assistance and the exchange of information.
12  APEC encourages consultation through forums
for discussion, exchange of views and technical co-operation.  The EEA Agreement has a general
consultation mechanism that may be invoked on matters that are relevant to the Agreement and may
"give rise to a difficulty".13  The implementing rules of Antitrust in the Europe Agreements contain
consultation procedures that may be requested where an Authority believes that anti-competitive
practices in the territory of another are not being investigated and substantially affect its interests.14
9. NAFTA review and dispute settlement provisions include consultation requirements with
respect to changes in anti-dumping and countervailing duty laws. Conciliation and mediation are
among the dispute resolution methods available, applying to complaints regarding action or proposed
action that may be inconsistent with the Agreement or would cause "nullification or impairment" of
benefits reasonably expected to accrue from the Agreement.15  Mediation is also one of several
commonly used methods of dispute resolution in US Antitrust.16  The OECD 1995 Revised
Recommendation of the Council concerning Co-operation between member Countries on Anti-
competitive Practices affecting International Trade17 contains a consultation and conciliation
procedure.  Where consultation does not lead to a satisfactory conclusion, the Members may agree to
recourse to the good offices of the Competition Law and Policy Committee (now the CompetitionCommittee) with a view to conciliating the dispute.
18
10. Mediation involves the intervention of a mutually-agreed neutral third party to reconcile adispute.  It is voluntary, non-coercive and is a preferred option in cases where the parties have a
history of co-operation and an ongoing relationship that they wish to preserve.
19  T h e  t e r m
"conciliation" is somewhat ambiguous and often used to refer to a formalised or mandated form of
mediation.  In this paper that definition is employed, i.e., conciliation refers to a mediation process in
which the conciliator/mediator plays a more proactive role than in a simple mediation.  Mediation is aslightly "softer" option in that the mediator assumes less control of the proceedings than a conciliator,
although in both cases their function is assist the parties to reach a mutually acceptable settlement.
                                                     
7 WTO Understanding on rules and procedures governing the settlement of disputes, Article 5.
8 WTO Understanding on rules and procedures governing the settlement of disputes, Article 4.
9 Article IX.
10 Article 40 (3).
11 OECD, Regional trade agreements and the multilateral trading system, Chapter 4, Paris, 2002.
12 Ibid.
13 EEA Article 92 (2).
14 See COM/DAFFE/CLP/TD/RD(2000)107.
15 NAFTA Chapter 20; COM/DAFFE/CLP/TD/RD(2000)119.
16 See COM/DAFFE/CLP/TD/RD(2000)116.
17  C(95) 130/FINAL, 27-28 July 1995.
18  Ibid., Part 1B and paragraph 12 of the Annex to the Recommendation.
19 APEC, A guide to arbitration and ADR in APEC  member economies, at http://www.apecsec.org.sg/WT/WGTCP/W/240
Page 4
Generally conciliators and mediators have no decision-making authority, as their role is simply to help
the parties to reach an agreement.  To this end, the procedures are flexible and the
conciliator/mediator may choose the tools that s/he considers to be the most appropriate – e.g.
consulting with the parties individually, mediating a discussion; developing proposals for a solution.
The settlement of a dispute is voluntary but may in some circumstances be enforceable throughregistration of the settlement with a court or formalisation in a contract.
20
Issues for an MFC
11. Experience with the WTO DSU shows that consultation is an effective way to resolve
disputes and also to ensure that only those which really cannot be resolved otherwise will go to
dispute settlement.  In the latter case, consultations serve a useful preparatory function.  It is therefore
suggested that consultation may be an effective method when considered both as a stand-alone
mechanism and as an "attachment" or precursor to other methods.
12. Mediation presents particular benefits as a compliance and/or dispute resolution mechanism in
the trade and competition context because its voluntary and informal nature is more conducive to
managing the interests of the parties (as opposed to enforcing rights) and preserving a co-operative
relationship post-mediation.  This is particularly valuable in the competition context, given the
importance of co-operation between national authorities in competition law enforcement, sharing ofexpertise and establishing confidence and eventually convergence.  Indeed, as is noted elsewhere in
this paper, the formal adversarial nature of m echanisms such as the DSU may strain co-operative
relationships between national authorities.
21  So insofar as enhancing co-operation and understanding
of the trade and competition interface is an objectiv e of an MFC, this type of compliance mechanism
seems appropriate.
13. However, "soft" compliance mechanisms such as mediation and consultation have the
disadvantage linked to their non-coercive nature that a participant might at any time abandon the
process.  The process is also open to misuse as a "fishing expedition" for information or as a delaying
tactic. Furthermore, the results are generally non-binding, unless of course the decision to make them
enforceable is agreed at the beginning of the process22 (or incorporated in an eventual MFC as such).
14. Other issues to consider in this context include how consultation and good offices,
conciliation/mediation mechanisms might be operationalised in an MFC.  Would they be subject to
time delays and what might those be; who could be qualified to be a mediator/conciliator; how formal
would the process be, etc.  Perhaps an interesting option would be to include such mechanisms
alongside others, for example as "first port of call" methods before proceeding to "harder" forms of
compliance and/or dispute resolution where these have been unsuccessful.
B. ARBITRATION
15. Arbitration is a formal adjudicating process by which parties to a dispute submit the matter to
an impartial third person or panel selected by the parties.  In general, the parties may also choose the
location, law and rules of the arbitration.  The rules of procedure for the arbitration are generally
prescribed by law or by an arbitral body, although the parties may modify them.  Arbitral decisions
are usually enforceable. Parties may designate an arbitral institution  such as the International
                                                     
20 Ibid.
21 Tarullo D., Norms and Institutions in Global Competition Policy, American Journal of International
Law, Vol. 94, July 2000.
22 APEC, A guide to arbitration and ADR in APEC  member economies, at http://www.apecsec.org.sg/WT/WGTCP/W/240
Page 5
Chamber of Commerce (ICC)23 or may choose the alternative of ad hoc arbitration .  Special
dedicated institutions exist for arbitral disputes to which states are a party; the Permanent Court of
Arbitration in The Hague was established for this purpose. Its mandate was extended in 1992 from
disputes between states to include those between states and private sector parties, and disputes
involving international organisations.24  The International Centre for the Settlement of Investment
Disputes (ICSID), created in 1966, conducts arbitration and conciliation proceedings for disputes
between host states and foreign investors.25
16. An alternative method to litigation in court systems, arbitration as a dispute resolutionmechanism is widely used for private international commercial matters.  There are several reasons for
this.  Over 130 countries are signatories to the 1958 United Nations Convention on the Recognition
and Enforcement of Foreign Arbitral Awards ("New York Convention").
26  Various other multilateral
and bilateral arbitration conventions also exist.  As a result, arbitral awards receive a greater degree ofinternational recognition than judgements of national courts.  Arbitration is generally quicker and less
expensive than court litigation.  In addition, given that arbitral decisions are usually not subject to
appeal, the parties are assured that the outcome of arbitration is generally final.  The possibility to
choose specialised arbitrators is another feature that is appreciated by international commercial actors.
Other flexibility aspects, in terms of choice of language, place of arbitration, choice of applicable lawsand procedures and nationality of arbitrators alleviate problems due to mutual distrust of foreign legal
systems.
27  On the other hand, arbitration is not always the method best adapted to a dispute.  For
parties that wish to resolve disputes through a non-legalistic system based on accommodating mutual
interests (rather than enforcement of rights) and of  which they retain the control, another method such
as mediation may be more appropriate.28
17. Arbitration clauses for the settlement of disputes exist in a number of bilateral and multilateral
free trade agreements, including EFTA Free Trade Agreements and NAFTA.29  Arbitration is also
explicitly envisaged by the WTO DSU. Article 25, inter alia,  of the DSU provides that resort to this
alternative means of dispute settlement is possible, subject to mutual agreement and sufficient
advance notice to all Members.  Arbitral awards are to be notified to the Dispute Settlement Body(DSB), the Council and Committee of any relevant agreement.
30  The DSU provisions on the
                                                     
23 The ICC arbitration court settles di sputes from time to time on competition related issues. National
courts in France, the US, Switzerland and Italy have ex pressly recognised the arbitrability of competition law
disputes; see JWGTC Roundtable of public and private dispute resolution mechanisms, Note by A. Carelvaris,
ICC International Court of Arbitration, COM/DAFFE/CLP/TD/RD(2000)118.
24 See The American Society of International Law Gu ide to electronic resources for international law,
International Commercial Arbitration, at http://www.asil.org/resource/iel1.htm.
25 See ICSID's webiste: http://www.worldbank.org/icsid/
26 See United States Council for International Business  (USCIB), Dispute Resolution: New Treaty
Accessions a Boon to International Arbitration, August 22, 2002 at http://www.uscib.org
27 For a description of arbitration as  an example of alternative dispute resolution see the International
Chamber of Commerce: http://www.iccwbo.org.
28 For a description of alternative dispute resolution methods, including a comparison of mediation and
arbitration, see APEC, A guide to arbitra tion and ADR in APEC member economies, at
http://www.apecsec.org.sg/
29 E.g the Agreement between EFTA states and Morocco, 1997, NAFTA chapter 11 and the EEA
(Article 111(4) and Protocol 33).
30 WTO Understanding on Rules and Procedures governing the Settlement of Disputes, Article 25 (2)
and (3). Arbitration is also used when a losing party to a dispute wishes to contest retaliatory trade sanctionsproposed to be implemented by the winning party (Article 22). In addition, arbitration is also envisaged as oneway to determine a reasonable period of time for compliance with DSB recommendations and rulings, Article
21 (3) (c).WT/WGTCP/W/240
Page 6
surveillance of implementation and compensation and suspension of concessions apply to arbitral
awards.31
Issues for an MFC
18. Given the widespread use of arbitration in both private and public commercial disputes,
including in the competition context, and the fact th at it is explicitly recognised by the WTO dispute
settlement instrument32, an arbitral mechanism could perhaps be envisaged as a compliance and/or
dispute resolution method in an eventual MFC.  An institutionalised arbitral mechanism for WTO
Members could provide the traditional advantages of arbitration – speedy dispute resolution, expert
arbiters, final enforceable decisions – for those ar eas agreed in an MFC to be subject to dispute
resolution provisions.33
19. On the other hand, several of the benefits traditionally associated with arbitration do not seemamenable to an arbitral body that is institutionalised in the WTO.  The freedom to choose the place ofthe arbitration, the language of the proceedings and the applicable law would seem to pose problems.
In addition, the absence of a right to appeal and the confidentiality of arbitral awards are inconsistent
with WTO dispute settlement principles. It might therefore appear inappropriate on the one hand to
integrate competition issues into the WTO dispute settlement system and on the other hand subject
competition-related disputes to special rules. In particular, it would seem counter- productive not topublish the reports of the dispute settlement or compliance mechanism, not only for transparency
reasons but also for the "jurisprudential" guidance on interpretation and clarification of obligations.
20. Several other issues arise here: would such a mechanism replace the DSU in the competition
context?  Or would it exist in parallel?  Would there be a register of arbiters (as in the ICC for
example) and if so, would they be trade and/or co mpetition experts?  How would they be selected?
What degree of choice would the parties have in terms of arbiter?  Given the fact that many disputes
in this area arise out of private trade restraints and/or anti-competitive behaviour, would it make sense
to make access of private parties a feature of WTO competition arbitral mechanism, and thus allow
private parties to "bypass" their governments?  What advantages would an arbitral mechanism
adapted to institutionalisation in the WTO (i.e. limited in flexibility, perhaps subject to appeal) haveover use of the DSU?
C. P
EER REVIEW
21. Peer review in the trade and competition context is a subject that has been dealt with in some
detail by the Joint Group.  Work addressing the general merits of peer review and possible approaches
to it, taking into account experience with the WTO Trade Policy Review Mechanism (TPRM),
OECD country reviews and other OE CD peer review processes, has already been considered by the
                                                     
31  WTO Understanding on Rules and Procedures governing the Settlement of Disputes, Article 25 (4).
32 WTO Understanding on Rules and Procedures governing the Settlement of Disputes Article 25,
Article 22.
33 The idea of creating a WTO arbitral body for resolving competition related disputes has been put
forward as an alternative falling between the two extremes of a fully-fledged competition code and the longer-term process of convergence. A mechanism that would be similar in its structure to the ICSID, it would haveexclusive jurisdiction clearly delimited in terms of substance and subjects – its competence would be limited to
market access disputes of a competition law nature involv ing private parties of different States who are parties
to the Agreement. This idea was not put forward in the context of a compliance or dispute resolution mechanism
for an MFC and several of its features appear not to s it well with such an Agreement. For example, the authors
envisaged disputes between private parties and on substantive cases – two elements that appear inconsistent withthe type of possible MFC currently under discussion to be negotiated within the WTO system. See Giardina, A.,and Beviglia Zampetti, "Settling competition related disputes – the arbitration alternative in the WTO
framework ", Journal of World Trade , Vol. 31 No. 6 December 1997.WT/WGTCP/W/240
Page 7
Joint Group.34  It has also examined a range of practical modalities for a competition policy review
mechanism (CPRM) in an MFC, taking as a starting point for this study existing multilateral peer
review mechanisms, such as those in APEC, the FTAA, the WTO and OECD.35  This section draws
significantly on that work.
22. Peer review is a process by which the quality and efficiency of a country's policies, laws,
regulations, processes and institutions are assessed vis-à-vis those of their peers, in a non-adversarial
context.  At the multilateral level, peer re view mechanisms share the following principal
characteristics: a committee of experts carries them out, they take the form of a collegial type of
monitoring and they involve interactive investigation.  A generic CPRM framework would involve
the following participants: the ad ministering Secretariat, the country being reviewed, the peer group
and a set of examiners (normally drawn from the peer group).  The review process involves a number
of stages, beginning with an investigation carried out in accordance with specific agreed reviewcriteria, set by the Members of the administering organisation.  These may include policy
recommendations and guidelines, specific indicators, benchmarks and legal norms.  The investigation
is followed by the examination and ends with the dissemination of a report prepared by the Secretariat
and based upon the investigation and discussion during the examination.
23. Peer review is widely used in international and regional organisations for a variety of
objectives, including compliance monitoring. It has the benefits of facilitating the exchange of
information and experiences and as such it plays an important educative role, essential to the
encouragement of convergence of policies and practices. Greater convergence in the field of
competition law and enforcement has become a priority for national authorities within the OECD and
wider competition community, independently of other efforts to improve coherence between trade andcompetition policies.
36  Peer review also functions as a transparency mechanism and contributes to
better quality domestic regulation through the examination and evaluation that it provides.
Discussions of the WGTCP have revealed a general consensus among WTO members that peer
review in the trade and competition context is an effective means to carry out evaluation of policies
and laws, stimulating discussion and co-operation, knowledge and experience sharing and thusgenerally advancing the goals of an MFC.  In the same vein, it has been noted that because one of the
functions of peer review is to identify capacity constraints, it can serve as a useful step in the process
of capacity building and facilitating understanding of complex technical issues that arise in this area.
37
Issues for an MFC
24. In the context of an eventual MFC, the benefits of a peer review mechanism are thus widely
recognised.  The principal question to be determined seems to be the role that might be attributed to
such a mechanism: should it be the sole method for ensuring compliance with multilateral obligationsand thus serve as an alternative to the use of dispute settlement provisions in the WTO?  Or should a
peer review mechanism play a broader and more general role oriented more towards policy review
and information exchange than strictly compliance issues?
25. Some WTO members have suggested that peer review in an MFC might usefully serve as an
alternative to the DSU because it offers a non-adversarial way to assess policies, exchangeexperiences and work towards convergence in an ongoing manner.
38  Similarly the view has been
                                                     
34  See OECD, Peer review: merits and approaches in a trade and competition context, Paris, June 2002
(COM/TD/DAFFE/COMP(2002)4/FINAL).
35 Practical modalities of peer review in a multilateral framework on competition,
COM/DAFFE/TD(2002)82/FINAL, available at http://www.oecd.org/trade.
36 OECD, Trade and Competition Policies: options for a greater coherence, Paris, 2001.
37 See for example the record of the WTO WGTCP meeting of July 2001, (WT/WGTCP/5).
38 WTO WGTCP meeting of July 2001, (WT/WGTCP/5).WT/WGTCP/W/240
Page 8
expressed that peer review is an appropriate alternative to dispute settlement on substantive issues
because it would avoid review of decisions of national authorities.  Furthermore, peer review would
be unlikely to employ the specific rules-based approach traditionally undertaken in trade law
enforcement, an approach considered inappropriate  to that taken to competition law compliance and
enforcement issues.39
26. One of the principal strengths of peer review in the trade and competition context is its
"regulatory/convergence approach".40  This approach involves international activities based on
extensive contacts and co-operation between regulatory officials in the form of discussion and
information exchange.  Over time these practices can facilitate convergence of views and beliefs as to
principles and techniques of competition regulation.  This is seen by some as the most effective way
in which to deal with transnational anti-competitive conduct.41
27. This is to be distinguished from the "statutory/adjudicatory approach" typical of formal
international agreements, such as the WTO.  It may be that the character of the DSU, and in particular
its adversarial nature, may put under some strain the co-operative relationships established between
Members pursuant to enhanced efforts for multilateral co-operation.42  In this connection some
commentators have noted that if the WTO is to effectively deal with compliance and dispute
resolution in the competition context, it will need to adopt a "dispute prevention" and "regulatoryconvergence" approach.
43
28. Proponents of peer review as an alternative to the DSU seem generally to favour the peerreview option so as to avoid review of decisions  by national competition authorities in the WTO
system.  However, it is worth noting that proposals to date for an MFC do not envisage such an
extensive role for the DSU. Certain proponents have made it clear that in their view, complianceand/or dispute settlement provisions should appl y only to obligations to adopt legislation based on
multilaterally agreed principles and not to substantive cases.  In this way, dispute settlement would
ensure accountability for commitments undertaken within an MFC.  It would not therefore apply to
the application of national laws nor review enforcement decisions taken at the national level.
44  Peer
review however still could play a role in this type  of framework.  Given that individual decisions of
national competition authorities would not be subject to dispute settlement, a peer review mechanism
could be the means by which a Member is able to raise concerns relating to the way another Member
applies its laws.45
29. Both of these scenarios give rise to further questions.46 If peer review was to take a
complementary role in compliance to the limited dispute settlement provisions described above, it
would seem logical to envisage an automatic process akin to that of the TPRM whereby each Member
would be reviewed in turn.  Would participation be compulsory?  What relationship would such a
process have with the TPRM – for example could conclusions of a TPRM on competition-related
issues affect the competition policy peer review process or vice versa ?  Should they co-exist as
                                                     
39 Ibid.
40 For a more detailed discussion of these issues, and in particular the work of D. Tarullo on this issue,
see OECD, Peer Review: merits and approaches in  a trade and competition context, OECD, Paris, 2002.
41 Tarullo D., Norms and Institutions in Global Competition Policy, American Journal of International
Law, Vol. 94, July 2000. See also discussion in OECD, ibid.
42 Ibid.
43 Garcia Bercero, I., and Amarasinha, S., Moving the trade and competition debate forward, Journal of
International Economic Law , Vol 4, Issue 3, September 2001, (p. 481-506).
44 Ibid.
45 See EU, Trade and Competition – towards a global response, October 2001, available at
http://europa.eu.int
46 For a fuller discussion of these issues, see Practical modalities of peer review in a multilateral
framework on competition, COM/DAFFE/TD(2002)82/ FINAL, available at http://www.oecd.org/trade.WT/WGTCP/W/240
Page 9
separate mechanisms or should the competition policy peer review process be integrated into the
TPRM?  How often would reviews be conducted?  Should the frequency of reviews depend on a
member's share in world trade and development status, as is the case in the TPRM?  What should be
the review criteria – should there be a particular focus on issues deemed particularly appropriate for
this exercise – substantive, institutional, co-operation arrangements, technical assistance – and if sowhich ones?  Should follow-up be built into the reviews?
30. On the other hand, if the peer review mechanism was to serve as the alternative to dispute
settlement for issues arising under the MFC, a range of different questions arise.  How would the peer
review process be triggered – by the complaint of one Member against another?  Or would it be
appropriate to allow the administering body launch a review process on its own initiative?
31. Added to these questions are several others that arise in either case.  For example, how should
confidential information be treated?  Who should make up the peer group?  Should there beexaminers, and if so, how should they be selected?  Would participation be compulsory?  What role
should be played by the Secretariat or administering body and the Member being reviewed during the
process? Should final reports be approved by a specialised committee or the WTO Council?
D. WTO D
ISPUTE SETTLEMENT UNDERSTANDING (DSU)
32. The institutionalisation and reinforcement of the GATT dispute settlement mechanism was
one of the principal features of the Uruguay Round.  The Understanding on Rules and Procedures
Governing the Settlement of Disputes  (DSU) strengthens the GATT mechanism with the objective of
providing security and predictability to the multilat eral system.  Its role is thus to clarify existing
WTO provisions, maintain a balance between Members rights and obligations under WTO
Agreements, and to secure a positive solution to a dispute.47
33. With an expanded jurisdictional scope to cover claims based on any of the multilateral
agreements of the first annex to the WTO Agreemen t, the DSU provides for the establishment of a
panel of experts to resolve disputes where consultations have been unsuccessful.  A system of strict
time delays is imposed so that the dispute may be resolved in a timely manner. Panel decisions are
binding and there is the possibility of appeal of decisions.  The DSU also provides for compensation
and the suspension of concessions in cases of non-compliance with decisions and recommendations of
the Dispute Settlement Body (DSB).  In accordance with the 1994 Marrakesh ministerial mandate and
the Doha Declaration, procedures for reviewing dispute settlement rules have been initiated and
negotiations for improvement and clarification of the Understanding are to be concluded by May
2003.48
34. WTO Members may have recourse to the dispute settlement mechanism in cases where theyconsider that a benefit that should accrue to it un der a WTO Agreement is being nullified or impaired
or that the attainment of any objectives of the Agreement is being impeded as a result of (i) the failure
of another Member to carry out its obligations under the Agreement; (ii) the application by another
Member of any measure (whether or not it conflicts with the provisions of the agreement)
 49, or (iii)
the existence of any other situation.50
35. Any multilateral agreement concluded in the WTO and integrated into the WTO system
implies coverage of the DSU and thus the jurisdiction of the DSB to resolve disputes between
                                                     
47 Understanding on Rules and Procedures governing the Settlement of Disputes, Article 3 (2) and (7).
48 Doha Ministerial Declaration, 20 November 2001, paragraph 30.
49 The so-called "non-violation" complaint, GATT Article XXIII: 1 (b).
50 Article XXIII GATT and Article 26 DSU.WT/WGTCP/W/240
Page 10
Members pursuant to the obligations contained in the agreement.51  Indeed, there would be a
theoretical inconsistency with the WTO system in  concluding a multilateral WTO agreement that is
excluded from the operation of the DSU.  The institutionalisation of the dispute settlement mechanism
in the Uruguay Round and the consequent evolution of the system towards hard law is widely
regarded as one of the most important attributes of the WTO.  Excluding the application of the DSUor creating within the WTO another type of mechan ism to deal with a complaint of non-compliance
with multilaterally agreed obligations would undermine this achievement.  In addition, it would
establish an undesirable type of precedent that may be difficult to reverse in the case of future
negotiations in other disciplines.  This could also weaken the complementary functions of trade and
competition rules for protecting non-discriminatory conditions of competition.
52
Issues for an MFC
36. From the point of view of further integrating competition policy issues into WTO
jurisprudence, it would be difficult to justify the non-application  of the DSU with regard to a
multilateral framework on competition. Indeed, a number of observers have pointed out that, due to
the existing application of WTO rules to national competition law and practice, the negotiation of
additional and specific commitments in an MFC should not be regarded as an "innovation" in
substantive terms.53  Ehlermann and Ehring for example, argue that it would in fact be a "step back" to
negotiate an MFC to which the DSU did not apply.  These authors analyse the suitability of the DSU
and competition matters and conclude that while DSU panels have some weaknesses that are
particularly pertinent in the competition context, ot her aspects, including the DSU standard of review,
ensure its ability to adjudicate competition law matt ers.  However, consideration of these issues goes
beyond the parameters of the current WTO discussion on the application of the DSU to an eventualframework agreement, and is thus outside of the scope of this paper.
37. The debate concerning the suitability of submitting an MFC to the DSU takes place in the
context of de jure  compliance, i.e. compliance based on assessment of national laws vis-à-vis
commitments undertaken in a multilateral agreement.  This approach would focus upon the prima
facie  compliance of the laws, regulations and guidelines of a competition law framework.  This is to
be distinguished from a de facto approach (discussed at some length in the WGTCP in the context of
the proposed core principle of non-discrimination).
54  The latter goes beyond consideration of the
wording of laws to consider the application of law in individual cases, which may involve evaluating
enforcement policies, national priorities, and the prosecutorial discretion of competition authorities.55
The de facto /de jure  distinction has similarly been explored in the context of national treatment by the
Joint Group.56
                                                     
51 WTO Understanding on Rules and Procedures governing the Settlement of Disputes, Article 1,  23.
52 Petersmann, E., "The WTO Dispute Settlement Understanding: its role in a multilateral framework
on Competition Policy", Discussion Paper prepared for the WTO Symposium on Trade and Competition Policy,
22 February 2003.
53 Ehlermann, C-D., and Ehring, L., "WTO Dispute Settlement and Competition Law – Views from the
Perspective of the Appellate Body's Experience ", The Robert Schuman Centre for Advanced Studies, Policy
Paper 02/12, European University Institute, December 2002.
54 See for example the report of the meeting of 26-27 September 2002 of the Working Group on the
interaction between Trade and Competition Policy, (WT/WGTCP/M/19).
55 See for example the Communication from the EC and its Member States, 19 November 2002
(WT/WGTCP/W/222).
56 See "Further reflections on applying core principles to competition law concerns "
(COM/DAFFE/TD(2002)81), "Core principles of non-discrimination, transparency and procedural fairness in amultilateral framework on competition" (COM/DAFFE/TD(2003)7) and OECD, Core principles in a Trade and
Competition Context, Paris, 2002.WT/WGTCP/W/240
Page 11
38. The idea that the DSU could have jurisdiction to review decisions taken by national
competition authorities has been a key issue of concern for a large number of WTO Members.  Many
have stated their opposition to this during discussions in the WGTCP.  One of the proponents of the
MFC has made clear that it envisages a limited role for the DSU in an eventual WTO agreement.57
There seems now to be a consensus that dispute settlement in an MFC should not apply to individual
cases.58  A compliance mechanism focusing only on de jure  evaluation of laws would thus preserve
national competition authorities from supranational review of their decisions.  At the same time it
would require that national laws comply with multila terally agreed rules, principles and obligations.
39. The rationale for a de jure  approach lies in the belief that prosecutorial discretion, a core
competition enforcement concept, should be preserved. The prerogative of national decision-making
on enforcement issues lies at the heart of the competitive system. In principle, competition
enforcement should not take place unless the authorities are able to predict with some certainty thattheir intervention in a specific case will lead to an  improvement in the functioning of the marketplace.
Proponents of a de jure  approach argue that multilateral obligations should not deprive competition
authorities of this necessary and legitimate discretion nor second-guess the exercise of this discretion.
For this reason, the de jure  approach to compliance is compatible with the notion of convergence of
competition law and policy, implying consensus building through discussion and the exchange ofexperiences.
40. With regard to the DSU and competition issues, it is often noted that competition law
enforcement is generally based on a "rule-of-reason" approach rather than the enforcement of rules
per se  as in trade law.  Thus, it is argued that the WTO is ill equipped to undertake dispute resolution
in the sort of fact-intensive matters that characterise competition disputes.
59  This is an argument for
carefully defining the scope of application of the DSU, e.g. to exclude reviewing the facts of
individual cases.  However, de jure  compliance by definition does not involve consideration of
specific cases and thus the rule of reason approach would not apply. In any case, a limit on the DSB's
scope in determining MFC-related issues could be imposed on the DSB to avoid any supposed
tendency to go beyond de jure  compliance and evaluate the application of laws and policies in
specific cases.
41. It is interesting to note in this context that the Anti-Dumping Agreement contains provisions
that reflect some of the concerns described above in relation to deference to decisions taken by
national authorities.  When the DSB is requested by a complaining party to establish a panel in an
anti-dumping case, the panel determines whether the authority's establishment of the facts was proper
and whether the evaluation of those facts was unbiased and objective.  If these two criteria are
satisfied, the evaluation of the authority shall not be overturned, even though the panel may havereached a different conclusion.  In addition, where the panel finds that there are a number of
permissible interpretations of the Agreement, it will find the authority's measure to be in conformity
with the Agreement if it rests upon one of those permissible interpretations.
60  These provisions
                                                     
57 See e.g. European Commission, Exploring the issue relating to Trade and Competition – Elements
for a multilateral framework on Competition, December 2000, at www.europa.eu.int and Communication from
the European Community and its Member States, 14 March 2001 (WT/WGTCP/W/160) which states that"dispute settlement should be limited to the obligation of WTO Members to have a domestic competition law
based on the core principles. "
58 OECD, Trade and competition policies – options for a greater coherence, Paris 2001. See in
particular chapter 2, "International options to improve the coherence between trade and competition policies ".
59 E.g. Crampton, P., and Barutciski, M., Trade dist orting private restraints: a practical agenda for
future action, Southwestern Journal of Law and Trade in the Americas , Spring 1999, Volume VI, Number 1.
These authors suggest that before going as far as cons idering the WTO DSU, a plurilateral dispute system could
be tried, perhaps in the framework of the OECD for example, where countries who already have experience withcompetition law become accustomed to this type of system.
60 Anti-Dumping Agreement, Article 17.6.WT/WGTCP/W/240
Page 12
require the panel to turn its attention to specific procedural aspects of the decisions of national
authorities.
42. The issue described above relates to differing enforcement approaches and methods in the
trade and competition policy domains.  Continuing in this vein but on a substantive level, some
commentators argue that the DSB cannot be expected to have sufficient competition law and policyexpertise to be able to properly determine such matters coming before them.  However, in a scenario
of de jure compliance under an MFC, it is difficult to see why a lack of specific competition expertise
would be problematic.  This would be an issue if the DSB were to determine substantive competition
issues.  If that were the case, it is worth noting that the DSB has already been adapted to adjudicate a
variety of new and complex subject matters, such as for example, matters arising from agreements
like the Agreement on Sanitary and Phyto-Sanitary Measures to Trade (SPS Agreement) and TRIPS,
etc.  Moreover, the DSU envisages the possibility of panels consulting experts for opinions on anyspecific matter and if necessary may request an advisory report from an expert review group.
61  This
issue is also dealt with in other WTO Agreements: the Agreement on Subsidies and Countervailing
Measures62 and the Agreement on Technical Barriers to Trade63 provide for the establishment of
expert groups.  Similarly, the SPS Agreement provides for panels to seek expert advice on scientific
or technical matters.64  If considered necessary, an eventual MFC could similarly include provisions to
the effect that an expert group to assist a panel could be established.
43. A DSU de jure  approach does have some limitations however in terms of a compliance
method. Because de jure  assessment looks only as far as the "letter of the law", non-compliance will
only be found where a law explicitly breaches multilateral obligations, e.g. discriminates against
foreign firms.  Such laws are rare and unsurprisingly so; given that competition law and policy aim toencourage and protect the competitive process rather than specific competitors.  Discrimination does
occur much more often in a de facto sense – that is that while a law does not on its face discriminate,
it may effectively be applied in a discriminatory manner or its discriminatory effect may be implicit.
Determining de facto discrimination would require the DSB to evaluate national structures and
decisions, which raises issues of prosecutorial discretion, referred to above.
65  There is general
agreement that this potential incursion on national authorities' decisions and administration is
undesirable.
44. Furthermore, a de jure  compliance method assumes the existence of competition law.  Many
WTO Members, and in particular developing country Members, do not have such laws and an MFC
that takes this approach would oblige them to adopt at least a basic competition law.  Some
developing countries argue that to ensure the "appropriate flexibility" mentioned in the Doha
Declaration, an MFC should refrain from prescribing the means by which Members fulfill theirobligations, notably through the enactment of a horiz ontal law.  In addition, for those countries that do
not have a competition law regime, such an obligation could be considerably burdensome.
45. De jure  compliance adjudicated by the WTO can thus be seen as one element of a broader
effort to ensure compliance that deals with only one type of non-compliance.  For this reason, it would
seem wise to avoid focussing the compliance question on a single method. Indeed, other methods that
                                                     
61  WTO Understanding on Rules and Procedures governing the Settlement of Disputes, Article 13 and
Appendix 4.
62  See Articles 4.5 and  24.3 of the Agreement on Subsidies and Countervailing Measures. This Article
provides for the establishment of a Permanent Group of Experts, ( "PGE ") which among other functions may be
requested to assist panels with regard to a determination of whether a given measure may be qualified as aprohibited subsidy.  The PGE's conclusions on this issue shall be accepted without modification by the panel.
63  See Article 14.2 of the Agreement on Technical Barriers to Trade.
64 Article 11, Agreement on Sanitary and Phyto-Sanitary Measures.
65 Janow, M., "Competition rules and the WTO dispute settlement system ", paper prepared for a WTO
Symposium on Trade and Competition Policy, Geneva, February 22, 2003.WT/WGTCP/W/240
Page 13
are complementary to de jure  compliance could also usefully be considered in the design of the
agreement. Peer review, consultation and conciliation could be good complements to DSU de jure
compliance because, unlike de jure  compliance, these methods allow for one Member to raise directly
with another problems related to the administration of a Member's competition law regime.  Use of
these methods, being less adversarial and less formal than the DSU, can also serve the objectives ofco-operation between national authorities.  The conf idence building and trust involved in creating
effective co-operation is more compatible with these methods than the DSU.
66
46. A further issue that may arise in the context of submitting competition-related disciplines tothe DSU is that of the suspension of concessions in cases of non-compliance with a panel or appellate
body decision.  If, after the reasonable period of time for implementation of a DSB ruling, the losing
party to a dispute has not complied, the other party(s) may negotiate compensation or impose trade
sanctions in retaliation. The DSU must authorise such retaliatory measures.
67  Is the retaliatory
suspension of concessions an appropriate response to non-compliance in the trade and competition
context for de jure  non-compliance?  Would it be better to limit any retaliatory measures to areas
covered by the MFC (for example such a measure might take the form of non-co-operation with the
national authority of the Member in question, or suspension of rights to participate in the work of
WTO competition bodies)?  Imposing such a limitation would however need to be balanced againstthe necessary inconsistency with DSU provisions entailed.
68
CONCLUDING REMARKS
47. An essential feature of an MFC is its compliance mechanism(s).  The final choice of
mechanism(s) will depend upon the objective(s) to be served and the types of compliance issues to be
addressed. The role that the actual WTO dispute resolution mechanism might play with regard tocompliance issues for an MFC is a key question in this discussion.  Many of the issues raised in the
section on the DSU reflect the broader debate about how best to further integrate competition policy
into the WTO.  Negotiations on a multilateral framework on competition still await the "explicit
consensus" referred to in para 23 of the Doha Ministerial Declaration, only after which the content
and modalities for multilateral rules will be known.  Consequently, at this stage the paper offers some
preliminary discussion as to the strengths and drawbacks of a range of possible options.
                                                     
66 Tarullo D., Norms and Institutions in Global Competition Policy, American Journal of International
Law, Vol. 94, July 2000.
67   WTO Understanding on Rules and Procedures governing the Settlement of Disputes, Article 22 (2)
and 23.
68  The DSU provides principles and procedures for th e suspension of concessions or other obligations
when rulings and recommendations are not implemented within a reasonable amount of time and when no
satisfactory compensation has been agreed.  The complaining party shall first seek to apply such measures in thesame sector that is the subject of the dispute (Article 22 (3) (a)). When this is not practicable or effective, it maylook to other sectors under the same Agreement (Article 22 (3) (b)) and if that option is not practicable oreffective, then the party may look to other Agreements. The reasons for choosing to act pursuant to (b) and (c)
must be included in the request for authorisation to suspend concessions or other obligations (Article 22 (3) (e)).WT/WGTCP/W/240
Page 14
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