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P 061546Z FEB 09
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UNCLAS SECTION 01 OF 03 BRUSSELS 000172 
 
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TAGS: ECIN ECON EFIN EINV ECPS EUN
SUBJECT: EU COMPETITION AUTHORITIES HOPE TO MAKE GOOD U.S.-EU 
COOPERATION EVEN BETTER 
 
¶1. (SBU) SUMMARY.  DG Competition officials told USEU January 
14 they hope to work closely with the Obama Administration to 
improve already strong U.S.-EU competition policy cooperation. 
Officials in the DG Competition Chief Economist's office and 
International Unit said bilateral cooperation has been strong 
on mergers and cartels but can improve in the antitrust area. 
The officials hoped that an Obama DOJ will move closer to FTC 
positions on mergers and unilateral conduct by firms.  DG 
Competition's chief economist stressed the increasing role of 
economic analysis in EU competition case review, and said 
high-profile cases against Intel and Microsoft support this 
trend and have not weakened EU support for IP protection.  The 
officials seek to cooperate with the U.S. on support for new 
competition agencies in India, China and elsewhere.  While the 
Competition Commissioner and Director General will change late 
this year, DG COMP's keen interest in engaging with new senior 
U.S. officials offers a good opportunity to deepen this 
important relationship.  END SUMMARY. 
 
DG COMP OFFICIALS SEEK TO IMPROVE ALREADY STRONG U.S.-EU 
COMPETITION COOPERATION 
--------------------------------------------- --------- 
 
¶2. (SBU) Dominique Van Der Wee, Unit Head for International 
Relations at the European Commission Directorate General for 
Competition (DG COMP), told USEU January 14 that Competition 
Commissioner Kroes, Director General Philip Lowe, and other DG 
COMP officials value highly their existing close relations 
with U.S. competition officials at the Federal Trade 
Commission (FTC) and Department of Justice (DOJ).  Van Der Wee 
said DG COMP sees a difference in antitrust enforcement 
attitudes between FTC and DOJ, however, and expressed the hope 
that incoming Obama DOJ officials will move toward FTC's "more 
aggressive" positions, particularly on mergers and unilateral 
conduct by firms.  He said that existing bilateral cooperation 
has been strong on mergers and cartels, but can improve in the 
area of unilateral conduct.  He noted that a U.S.-EU agreement 
in fall 2008 to establish high-level regular phone calls on 
unilateral conduct cases, to function as an "early warning" 
system of major actions, has yet to be implemented fully; he 
hoped this could resume with incoming officials by March. 
 
¶3. (SBU) Van Der Wee said there is "enormous interest" 
throughout DG COMP in meeting incoming senior FTC and DOJ 
officials, perhaps at the ABA Conference in Washington March 
25-27. 
 
¶4. (SBU) On February 2 USEU EconMin heard the same message of 
cooperation from DG COMP chief economist Damien Neven and two 
members of his team (Oliver Stehmann, deputy chief economist, 
and Miguel de la Mano, economist).  Neven said his office has 
had good relations generally for the past few years with the 
economists' teams at FTC and DOJ, although in 2008, relations 
were less active due to the pending U.S. presidential 
transition.  He said he had suggested recently to DOJ that the 
annual chief economists' exchanges be restarted, possibly in 
July this year, and seemed to get a positive response.  Neven 
explained that working level contacts on mergers have 
continued to be particularly strong, noting extensive DG COMP- 
FTC discussions during consideration in late 2007 and early 
2008 of Google-DoubleClick merger (NOTE: which both the U.S. 
and EU approved.  End note). 
 
BUT CHALLENGES REMAIN OVER ANTITRUST COOPERATION 
--------------------------------------------- --- 
 
¶5. (SBU) Neven noted that antitrust cooperation has been more 
complicated, and suggested that more extensive U.S. 
confidentiality requirements may limiting useful information 
exchange after the USG has opened an investigation.  He said 
this leads the U.S. side "to ask lots of questions but not be 
able to share as much."  (Note: U.S. and EU rules on 
confidentiality waivers differ in some respects, but the U.S. 
can share information with waivers.  End note). 
 
¶6. (SBU) Neven also pointed to the "wide gap" between FTC and 
DOJ over unilateral conduct, which he said had made it more 
difficult to establish points of common concern with the USG. 
He said DG COMP hopes that the DOJ enforcement report on 
Section 2 of the Sherman Antitrust Act was an "outlier," in 
 
BRUSSELS 00000172  002 OF 003 
 
 
advocating a "more extreme position," and thought this view 
would change under the Obama team.  (Note: the 2008 report 
covered unilateral conduct by firms, and was not endorsed by 
FTC.  End note).  Neven did say that Deputy Director General 
for antitrust and mergers Nadia Calvino's one conference call 
in 2008 with DOJ and FTC was very productive, however, and 
hoped these could continue. 
 
ROLE OF EU CHIEF ECONOMIST IN CASE REVIEW 
----------------------------------------- 
 
¶7. (SBU) USEU asked about Neven the evolving role of the Chief 
Economist's office in DG COMP review of competition cases. 
Neven said there has been a consistent trend for stronger 
economic input on "theory of harm" into case analysis, with 
measurable results.  (Comment: EU competition law has evolved 
from a purely legal analysis to more emphasis over the last 
decade on economic impacts in evaluating antitrust and merger 
concerns.  End comment).  Neven highlighted the example of the 
RyanAir-Aerlingus merger report from 2008, which contains 100 
pages of economic analysis (of 400 total). 
 
¶8. (SBU) Neven's office details one to three staff to specific 
DG COMP case teams, he continued.  He said his team is 
increasingly involved in sectoral inquiries, with three of his 
staff working on the ongoing pharmaceutical inquiry.  (Note: 
DG COMP issued a preliminary report on its major 
pharmaceutical inquiry in November; the final report is 
expected in mid-2009).  Neven's office was less involved in 
the influential 2005 energy sectoral inquiry, which led to the 
proposed EU 3rd energy liberalization package.  (Note: this 
package remains under consideration by the EU Council and 
Parliament.  End note). 
 
¶9. (SBU) Neven underscored, however, the "schizophrenic" 
nature of his office, which remains independent from the case 
teams even as it supports case review.  He noted that the non- 
horizontal merger guidelines, adopted a year ago, have led to 
the issuance of different analyses than would have earlier 
been the case.  He also said his office had been heavily 
involved in state aid review of the many recent financial 
sector bailouts, and has played a strong policy development 
role here. 
 
CHIEF ECONOMIST: KEY CASES SUPPORT TREND TOWARD ECONOMIC 
ANALYSIS, DON'T UNDERMINE IP RIGHTS 
--------------------------------------------- --------- 
 
¶10. (SBU) USEU asked Neven's views on Intel's concerns that 
the Commission's seven-year case against the firm for 
potential antitrust violations has been "politicized."  He 
said it was strange that Intel didn't respond to the 
Commission's second Statement of Objections (SO) charging the 
firm with potential violations.  He thought the European Court 
of First Instance (CFI) correct in tossing out in early 
February Intel's argument for an extension of its time to 
prepare its case.  He said Intel may think the Commission has 
been very selective in reviewing evidence, but said Intel has 
itself been very selective in arguing its position.  He said 
that both SOs against Intel were economic effects-based, 
rejecting Intel's argument that the Commission dropped an 
effects-based position in its second SO.  At Intel's hearing 
last year, Neven said a "junior member" of the legal team had 
stood up and said "remember the case law," which doesn't 
directly require effects-based analysis, which Neven 
considered the basis for Intel's (unjustified) claim that the 
Commission is ignoring economic effects in evaluating the 
firm's case. 
 
¶11. (SBU) USEU raised concerns increasingly expressed by the 
private sector concerns that DG COMP decisions have begun to 
undermine support for intellectual property (IP) rights in 
Europe.  Neven disagreed with this view, declaring that the 
2004 Microsoft decision was a special case soundly based on 
refusal to supply, with the decision and subsequent CFI 
decision expressly recognizing IP rights.  His staff explained 
that the recent Article 82 guidance paper incorporated these 
experiences and lays out how to operationalize such special 
tests. 
 
 
BRUSSELS 00000172  003 OF 003 
 
 
INTEREST IN COOPERATION ON THIRD COUNTRIES 
------------------------------------------ 
 
¶12. (SBU) Van Der Wee said DG COMP seeks to develop a 
coordinated approach with the U.S. on technical support for 
new third country competition agencies, beginning with India, 
currently establishing its agency.  He added that DG COMP also 
seeks to encourage China to join the International Competition 
Network (ICN), which may require asking Taiwan to change its 
nameplate at ICN, a sensitive issue. 
 
COMMENT 
------- 
 
¶13. (SBU) DG COMP clearly expects the advent of a new 
Administration will bring changes to U.S. competition 
enforcement, and hopes this will "bring the U.S. closer" to EU 
positions on unilateral conduct and other key issues. 
Competition Commissioner Kroes' term will end with the 
European Commission changeover at the end of this year, while 
Director General Philip Lowe will be replaced by Alexander 
Italianer, a Dutch economist with whom USEU has strong ties. 
EU perceptions of prior U.S.-EU divergences in approach on key 
competition issues may be exaggerated, but DG COMP's keen 
interest in engaging with new senior U.S. officials offers a 
good opportunity to deepen this important relationship.  END 
COMMENT. 
 
MURRAY