Editor: Mr. Prescott, would you tell our readers something about your practice?
Prescott: I have been practicing antitrust law with Coudert Brothers since 1986. I got an early start in the antitrust field at Harvard Law School, where I studied under Don Turner. My particular practice combines antitrust with complex litigation. Given the nature of the firm - Coudert is certainly the first international law firm - most of our clients have cross-border issues. Coudert, with its combination of local market expertise and overlay of interrelated global practice groups, is a wonderful platform from which to handle these matters. In my case, that entails antitrust work across several jurisdictions simultaneously.
Editor: How does your particular practice fit in with Coudert's global practice?
Prescott: Antitrust is one of many interrelated, global practice groups at Coudert designed to provide clients with cross-border solutions in the global market. Teams tend to coalesce around specific cases or issues. The firm consists of lawyers who have language abilities and cultural backgrounds of great variety and depth. That means that a particular issue might involve Indonesia, Japan, New York and Brussels simultaneously - and telephone calls at odd hours - and a geographically widespread group of people working together to resolve the matter. We have a global antitrust practice group which meets regularly, both face-to-face and by conference telephone. The group is centered in New York for the U.S. side, and in Brussels for EU law. Effective the first of May EU antitrust law has devolved to the national courts of EU member countries, so our antitrust people in Europe - Brussels, Paris, Stockholm, Frankfurt and London - have already been very busy. We also have antitrust expertise in Sydney. The practice enjoys a global presence, and we are able to draw upon the resources of other practice groups - many of which are equally global in their reach - as needed.
Editor: In addition to your antitrust practice, you have also enjoyed a practice focused on Japan. Would you tell us about that?
Prescott: Most of the work I have done for Japanese clients has involved antitrust. Japanese companies are very focused on export markets. For that reason, a consolidation within a particular Japanese industry often involves looking at the laws of 30 or 40 other countries as well and developing a consistent solution. Another aspect of my work for Japanese clients concerns the licensing of new technology that has been developed in Japan. That, too, must be by way of a consistent solution in multiple jurisdictions. The work is almost entirely international, but because of the reach of Coudert Brothers we are usually able to handle it within the firm.
Editor: You recently participated in the preparation of Coudert Brothers' Annual Review of EC Competition and U.S. Antitrust Cases. Please tell us about that.
Prescott: The Coudert Global Antitrust Practice publishes an annual review of antitrust developments in the EU and the U.S. We line topics up in such a way as to compare and contrast developments in the two jurisdictions in, for example, merger control, vertical restraints, intellectual property in combination with antitrust, and so on. Last summer we adopted a new format, involving a CD-ROM with a split-screen presentation that goes through every area of EU and U.S. antitrust law on a compare/contrast basis. The review is sent to some 900 Coudert clients for use as a reference source.
The firm's Brussels office initiated this project many years ago for the EU side exclusively. Today, it is clear that antitrust is one of those areas which lends itself to a globalized practice. There are more than 60 countries now which have antitrust regimes, and almost all of them are modeled on the U.S., the EU or some hybrid of the two. Because of our perspective and the longevity of our practice in so many markets worldwide, we have a broader reach for clients on antitrust than most firms.
Editor: What is the firm trying to accomplish in issuing this report?
Prescott: We are trying to tell the market that Coudert Brothers offers one-stop shopping for antitrust issues. We are also conveying the important message that cooperation among enforcement authorities is on the increase. Since 1991 the U.S. has had an antitrust cooperation agreement with the EU, and over the years Germany, Australia, Canada, Brazil, Mexico and, most recently, Japan have been added to the list. The EU's list is of similar length. It is critical, therefore, for clients to obtain a unified global solution. This is what Coudert provides.
Editor: Would you give us an overview of the two systems? What are the key differences in approach?
Prescott: In terms of substance, the standards applied by the two systems are close and becoming closer. Earlier this year, for example, the standard utilized in the EU pre-merger form was revised to be very similar to the "substantial lessening of competition" standard utilized by the U.S. Procedurally, of course, the two systems continue to differ in many ways. A European company coming into the U.S. is sometimes distressed to learn that our antitrust laws are backed by criminal sanctions. In addition, we have multiple layers of antitrust enforcement, beginning with two federal agencies, the Federal Trade Commission and the Antitrust Division of the Department of Justice, which work closely together. We also have antitrust enforcement by state attorneys general, some of whom have been very active. Under Section 4 of the Clayton Act, we permit private rights of action by individuals. Then, too, we have jury trials for antitrust and class actions whereby the plaintiff claims to be acting on behalf of all persons similarly situated. If a class is certified, the defendant might be looking at exposure in the hundreds of millions of dollars before a jury. The far-reaching and adversarial nature of our discovery process is also a matter of concern for an enterprise that is not used to having its files invaded. For a European concern looking at the U.S. antitrust system for the first time, this can be rather intimidating.
Editor: Would you tell us about the structure in the EU?
Prescott: The European Commission has what is called the Competition Directorate which investigates and proposes decisions to the Commission. The May 1 devolution of EU antitrust law enforcement to the national courts and national competition authorities may inject some inconsistency into the antitrust regime. The courts are supposed to adhere to the same regulations and guidelines, but across such a variety of court systems I think we are going to see the kinds of inconsistencies that we in the U.S. see among the various circuit courts of appeal. The national competition authorities' increased role in enforcing EU antitrust law will also probably lead to contradictory decisions, but the European Commission hopes to minimize this problem through the use of cooperation procedures in the context of a newly created European Competition Network.
Editor: What are the major developments during 2003 in the two systems?
Prescott: I have mentioned the May 1, 2004 devolution of enforcement authority to the national courts and the national competition authorities of the EU member states. Until May 1, only the European Commission could decide whether the anti-competitive effects of a restrictive agreement were offset by economic efficiencies. The national courts and the national competition authorities now also have this power. At the same time the powers of the European Commission to investigate cartels and other serious antitrust infringements have been strengthened. The other major development concerned the new standard set forth in the EU pre-merger law, which brings it closer to the U.S. "substantial lessening of competition" standard.
On the U.S. side, the United States Supreme Court is considering whether a non-U.S. purchaser who purchases from a non-U.S. seller has the right to bring a private claim for damages before a U.S. court. The DC Circuit Court has answered that question in the affirmative, and we await the decision of the Supreme Court.
Editor: What about major developments in intellectual property?
Prescott: The biggest thing on both sides of the Atlantic concerns Microsoft activities in the EU. The EU is attempting to force Microsoft to reveal codes that will enable independent server software producers to create programs that can interoperate with the Windows platform. There is no way to see this as anything but a forced licensing of intellectual property. Microsoft is in a difficult position at the moment, but I do not think we have come to the end of this story. Another major development in the EU is the complete overhaul of the European Commission's method of applying the "rule of reason" to licensing agreements. This resulted in important modifications to the so-called "block exemption" (a kind of safe harbor) that applies to certain patent, know-how and software licensing agreements.
Editor: What are the pitfalls that, say, a French company seeking to do business in the U.S. ought to be aware of?
Prescott: The litigation arena is filled with pitfalls for the unwary, and I have mentioned several of them. The extraterritorial reach of our discovery rules means that, once a U.S. court finds it has jurisdiction over a party, it has the power to order that party to provide documentation and information never anticipated to be available to its adversaries. We believe that a non-U.S. company coming into the country for the first time is well advised to undertake an antitrust audit and an antitrust compliance program.
Editor: What about an American company in Europe?
Prescott: If a company is in a distribution business it needs to be aware that the EU takes a different approach to vertical restraints. The Europeans are still working on the integration of the common market and territorial restraints on resale or rebates that discourage resale of goods across borders can be viewed as per se violations in the EU. This is a very different approach from that taken in the U.S.
Editor: What are the major issues that await resolution?
Prescott: As the EU increases its membership and attempts to integrate into the system economies which are at different levels of development, there are bound to be challenges, especially in achieving consistent application of the antitrust laws among the member states. This is likely to be a particular challenge in some of the new EU countries, given their relatively limited experience with antitrust to date. In the U.S., there are a host of litigation issues - including the extraterritoriality of our antitrust laws and the issue of multiple recoveries under federal and state laws in class actions - that must be addressed. In addition, I think the Robinson-Patman Act is something that the U.S. should revisit. This is a statute that has populist origins, so it is a difficult matter for Congress to tackle, but the plain truth is that it puts pricing into a strait jacket. That is not good for American business.
Editor: What about the future? In this age of globalization, the concentration of economic power in the hands of fewer and fewer enterprises appears to be on the increase.
Prescott: The implications have not been lost on the antitrust authorities in the two jurisdictions. In recent years we have seen them working together and coordinating their policies and standards. As globalization advances, I think this cooperation is only going to accelerate. Clients need to find consistent antitrust solutions as they deal with these issues globally as well.