United States v Halliburton: merger enforcement cooperation at its best
For many years, officials at the Antitrust Division of the US Department of Justice have credited international cooperation with enhancing the effectiveness and efficiency of our enforcement efforts. In this same publication one year ago, we highlighted the importance of recent case cooperation with Brazil, Canada and Mexico, and detailed how engagement with each had helped to improve the efficiency of our investigative process and prevented conflicting outcomes.1 This year proves to be no different. In the past year alone, the Antitrust Division has cooperated with 16 different competition agencies on almost 30 different matters. We are cooperating more deeply and more often, so much so that case cooperation with other jurisdictions plays a role in up to 25 per cent of our merger challenges.
In one notable case involving Halliburton’s proposed acquisition of rival Baker Hughes, the Antitrust Division’s case team engaged in extensive case cooperation with nine competition enforcement agencies, including four agencies located in the Americas. The proposed merger would have combined two of the three largest globally integrated oilfield service providers in the world. The unprecedented breadth and scope of the competitive overlaps and antitrust issues presented in this US$34.6 billion transaction were complicated by the differing timetables of the reviewing agencies, necessitating close and frequent cooperation. Over the course of the investigation, the Antitrust Division engaged in close to 100 separate case cooperation calls with international counterparts, representing hundreds of hours of manpower, and also spent several hours meeting in person with international counterparts. Given the complexity and large number of the product and geographic markets involved, as well as the complex worldwide remedies being offered by the parties, the frequent calls and meetings provided opportunities for case teams to share ideas and test theories. As the investigations progressed, the communications helped to facilitate an understanding of how remedies would need to be global in scope in order to be effective.
After extensive investigation lasting over one year, the Antitrust Division filed suit to block the merger on 6 April 2016. The Antitrust Division argued in its complaint that any remedy proposed by the parties would be unworkable in practice and place an unprecedented burden on the Antitrust Division and US courts, as they ‘would have to regulate over many years what amounts to a major reorganization of the global oilfield services industry involving the division, sharing, and transfer of hundreds of facilities, thousands of employees, thousands of patents, hundreds of contracts, and numerous other assets across dozens of countries.’2 The parties ultimately abandoned the proposed acquisition on 1 May 2016. The cooperation in this case was nearly seamless, due in no small part to the fact that the Antitrust Division has over the years built strong relationships of mutual trust with its counterparts across the globe, including those in Australia, Brazil, Canada, Mexico and the EC.
The importance of a softer international cooperation
Given the Antitrust Division’s experience with the benefits of international case cooperation, both to parties and enforcement agencies, we could easily dedicate the rest of this column to detail other recent case cooperation successes – and there are many. Instead, we will highlight less recognised aspects of international cooperation: the importance of investing in relationships and the growing role of international discussion and debate in informing Antitrust Division policy positions.
A worthy investment in relationship building
The United States, with its two competition enforcement agencies, the US Department of Justice Antitrust Division and the US Federal Trade Commission, is the largest competition enforcer in the world. The Antitrust Division alone has roughly 320 attorneys and 50 economists. Many of these professionals have spent entire careers at the Antitrust Division and possess great investigative and industry-specific expertise. Perhaps not surprisingly, given the scope of the Antitrust Division’s resources and its long experience in investigating a wide range of industries and conduct, Antitrust Division staff is frequently asked by international counterparts to share past investigative experiences.
Antitrust Division staff will gladly provide assistance to our international counterparts to the extent confidentiality protections allow. With some regularity, Antitrust Division staff pull up closed files to help refresh memories or learn about industry conditions overseas in order to provide useful assistance. Although the Antitrust Division frequently has no current or direct interest in the enforcement or policy concern underlying these requests, we regard these efforts as mutually beneficial investments in relationship building.
The Antitrust Division has also come at times to rely on the quick assistance of international counterparts to help us gather information located abroad and navigate complex legal systems outside the United States. It would not be unusual today for Antitrust Division staff to learn that their investigation might be impacted by the decisions of foreign governments, prosecutors, or sectoral regulators with whom we have no prior dealings. In recent years Antitrust Division investigations have been impacted by unexpected events – among other things, weather patterns on other continents, legislation in other countries, the decisions to refer or not refer conduct for criminal prosecution, and the status of employment contracts in Europe.
Our international counterparts have, despite their own heavy caseloads and limited resources, provided invaluable assistance by establishing introductions at other regulatory and law enforcement agencies, explaining the status of pending legislation that might impact market conditions, or helping us to identify the appropriate sources that can best inform our analyses. On countless occasions they have helped to distill and translate information from complicated foreign language technical or legal texts, saving Antitrust Division staff time and energy. We are adherents to the old adage that ‘what goes around comes around,’ and continue to believe that the assistance that international competition enforcers provide to one another is a worthwhile and valuable investment.
The role of international cooperation in policy development
An important area of international cooperation is policy development. The Antitrust Division’s Foreign Commerce and Legal Policy sections are regularly asked by international counterparts to review draft laws and guidelines, or to provide information about our approaches to policy issues, such as leniency, merger notification rules and confidentiality. Here, too, Antitrust Division staff welcomes these opportunities as fora to provide assistance and further strengthen relationships.
In the coming years the Antitrust Division will continue to make concerted efforts to learn about other jurisdictions’ approaches to unilateral conduct issues, and will seek out debate and discussion with international counterparts as a means to test ideas and sharpen analysis. Some of our international counterparts have made numerous challenges to unilateral conduct in recent years, and we can also learn and grow from their experiences.
One important forum for discussion is the International Competition Network (ICN). Since 2015 the Antitrust Division has been a co-chair of the ICN’s Unilateral Conduct Working Group (UCWG). In close collaboration with colleagues at the Turkish Competition Authority and the United Kingdom Competition and Markets Authority, the UCWG has undertaken a ‘back to basics’ project to examine the principles that support exclusionary conduct enforcement. In the coming year UCWG members, drawing from a geographically broad range of competition agencies and non-governmental advisors, will draft an analytical framework for assessing exclusionary conduct. Participants in the project will consider two fundamental questions: the meaning of dominance/substantial market power; and what makes conduct exclusionary.
The intent of the project is not necessarily to move towards significant further convergence or propose any sort of recommended practice of agreed principles. Indeed, ICN drafters expect that the collaboration may expose areas of policy divergence. Despite differences in policy approaches that may emerge during the course of this ambitious project, members expect the project will instead inspire deeper thinking and provide an important platform for understanding jurisdictions’ approaches to unilateral conduct enforcement.3
In recent years Antitrust Division staff has engaged in unprecedented levels of case cooperation, building upon and strengthening relationships along the way. The strength of these relationships was apparent during the case cooperation in Halliburton/Baker Hughes, when agencies navigated around an array of review timetables but still kept one another informed as they developed views of markets and remedies under consideration. Much of the cooperation that occurs goes on behind the scenes, and the Antitrust Division and its international counterparts routinely assist one another in variety of ways, helping one another to navigate foreign legal systems. In the policy arena, multilateral organisations such as the ICN and OECD continue to provide crucial platforms for the exchange of ideas, helping us to sharpen and improve our policies and ultimately to become better enforcers.
- Global Competition Review, The Antitrust Review of the Americas 2016, ‘US: Department of Justic’ by Patty Brink and Melanie Krebs-Pilotti, available at http://globalcompetitionreview.com/reviews/74/sections/275/chapters/2979/us-department-justice/.
- Complaint in U.S. v Halliburton Co. and Baker Hughes Inc., available at https://www.justice.gov/atr/case-document/323310.
- The Analytical Framework for Evaluating Unilateral Conduct is expected to become publicly available in early 2017. To get more information about this project, visit the UCWG homepage at www.internationalcompetitionnetwork.org/working-groups/current/unilateral.aspx.