Procedural Fairness in Competition Investigations: U.S. FTC Practice and Recent Guidance from the International Competition Network

This article is part of a Chronicle. See more from this Chronicle

Paul O’Brien, Krisztian Katona, Randy Tritell, Jul 15, 2015

Procedural fairness has become an increasingly important part of the international dialogue on competition law enforcement. As competition enforcement has expanded, issues and concerns regarding how agencies conduct their investigations have increased. It is important that competition agencies recognize and respond to these concerns for many reasons, including to: (i) ensure that subjects of competition investigations are treated fairly, (ii) ensure the credibility of competition enforcement decisions, and (iii) maximize the quality of competition agencies’ analyses and decisions. As discussed below, the United States Federal Trade Commission (“FTC”) and the International Competition Network (“ICN”) are cognizant of these issues and have developed rules and guidance to address them.

Procedural fairness is a necessary and beneficial ingredient of effective competition enforcement. While competition agencies operate within different legal and institutional frameworks, all enforcement systems can and should provide at least basic levels of fairness. As such, procedural fairness has universal application. Regardless of the chosen enforcement framework, there are specific investigative practices that can promote transparency and better outcomes.

The case for procedural fairness in competition enforcement goes beyond the obligations of good governance to safeguard the rights of parties. Recent international discussion on procedural fairness has recognized that fairness benefits the agencies that provide it.

First, procedural fairness enables better-informed agency decisions. Good process has a direct impact on the quality and accuracy of agency enforcement decisions. A transparent and meaningful dialogue between parties and agencies about process, theories, and evidence increases the likelihood that the agency will consider all the relevant facts and issues prior to making its decision. Understanding the parties’ arguments allows the agency to test its theories and sharpen its own conclusions. This also facilitates the agency’s ability to narrow the relevant issues, which makes the investigative process more efficient.

Second, procedural fairness enhances the legitimacy and credibility of competition agency enforcement actions. A predictable and transparent investigative process allows both parties under investigation and the public to understand how the agency makes decisions. This increases confidence in the substantive results of the agency’s enforcement.

This article provides an overview of investigative practices in competition investigations in the United States as well as of broad principles of consensus from global discussion of these issues. First, we introduce some of the investigative practices that the FTC uses to provide procedural fairness. Second, we present and discuss the results of an important recent initiative of the ICN on competition agency investigative process.