Anti Trust Prestat Explanation

8/3/2019 Anti Trust Prestat Explanation

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ANTI-TRUST PRESENTATION

PAKISTAN, DECEMBER 2005

H: MALL Antitrust Presentation


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PRESENTATION COVERAGE

EXXONMOBIL ANTITRUST COMPLIANCE POLICY

DEFINITION OF "HARD-CORE" POLICY

ANTITRUST LAWS IN ASIA-PACIFIC, PAKISTAN

"PER SE" OR HARD-CORE VIOLATIONS

INFORMATION EXCHANGES

INFORMATION TRANSFER BETWEEN COMPETITORS

TRADE ASSOCIATIONS

CONCLUSION - ANTITRUST DO'S AND DON'TS



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ANTITRUST POLICY

STRICT COMPLIANCE WITH ANTITRUST LAWSNo exception in whatever circumstances can be permitted for deviations from antitrust policyor antitrust law compliance

NO AUTHORITY TO DEVIATENo manager or employee, no matter how senior, has the right to order or allow deviationsfrom compliance with antitrust policy or antitrust law

WHEN IN DOUBT, CONSULT LAW DEPARTMENTThe antitrust presentations cannot and are not intended to make employees experts onantitrust matters. Rather, the purpose is to highlight sensitivity to potential antitrust issuesthat can arise in certain situations so that employees are sufficiently aware to avoid them oridentify them, and consult the Law Department.



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DEFINITION OF HARD-CORE POLICY

MANAGEMENT POLICY - NOT A LEGAL REQUIREMENTThe hard core policy, which will be dealt with in detail below, basically states that ExxonMobil and itsemployees will not, anywhere in the world and irrespective of absence of local antitrust laws, do anyact or transaction etc which would constitute a "per se" violation of US antitrust laws. Agreementswith competitors to fix prices, set other terms of sale or purchase, restrict output, divide markets/customers are considered per se violations which would be automatic breaches of US antitrust laws.(An unilateral act by a company without agreement with competitors would usually not amount to aper se violation unless that company is in a dominant market position in the relevant market suchthat it can affect the market by its unilateral actions).

The hard core policy is an EM policy to be followed worldwide and not a requirement of law.

APPLIES TO PROPOSED TRANSACTIONS WHICH ARE

- OUTSIDE U.S.

- DON'T VIOLATE ANY APPLICABLE LAWS

- WOULD BE HARD-CORE VIOLATIONS OF U.S. ANTITRUST

LAWS IF CONDUCTED IN U.S.

As stated above, this is a policy requirement which must be complied with notwithstanding that itwould not technically be in breach of US antitrust laws if the act is done outside the US and has noeffect on US commerce.



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REQUIRES MANAGEMENT TO CONSIDER RISK OF PROVOKING

- LEGISLATION & REGULATION

- OTHER ADVERSE GOVERNMENT REACTION

The hard core policy is also useful as it lessens the risk of provoking actions by government or otherauthorities in countries where there are no antitrust laws. In any event, management has theresponsibility of assessing whether actions or business practices could have an impact resulting ingovernments intervening by enacting antitrust laws etc to protect free competition.



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* This information should not be relied on as current. Please consult theLaw Department.

The point to note here is that many countries in Asia / Asia Pacific have antitrust laws. These laws, whilethey may not be similar, might nevertheless be extra- territorial in nature in the sense that they may prohibitacts outside the relevant jurisdiction if such acts (even if done outside the jurisdiction) have an impact oncommerce in the home jurisdiction. For this reason, even if the affiliate operates in a country withoutantitrust laws, it is important to observe the hard core policy to avoid infringing the antitrust laws of another

country, especially if that affiliate trades with or exports into that other country.



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COMPETITION LAW IN PAKISTAN

MONOPOLIES AND RESTRICTIVE TRADE PRACTICES

(CONTROL & PREVENTION) ORDINANCE, 1970 ("MRTP")

SECTION 3 MRTP : "THERE SHALL BE NO UNDUE CONCENTRATION

OF ECONOMIC POWER, UNREASONABLE MONOPOLY POWER OR

UNREASONABLE RESTRICTIVE TRADE PRACTICES".

SECTION 6 : THE FOLLOWING ARE DEEMNED TO BE

UNREASONABLE RESTRICTIVE TRADE PRACTICES

- PRICE FIXING, OR IMPOSING RESTRICTIVE TRADING

CONDITIONS

- DIVIDING UP MARKETS.

- LIMITING QUANTITY OR MEANS OF PRODUCTION,

DISTRIBUTION OR SALE OF GOODS OR SERVICES.



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COMPETITION LAW IN PAKISTAN ..(cont'd)

- LIMITING TECHNICAL DEVELOPMENT OR INVESTMENT.

- BOYCOTTS TO EXCLUDE PERSONS FROM PRODUCTION,

DISTRIBUTION OR SALE OF GOODS OR SERVICES.

- RESALE PRICE, MAINTENANCE

THIS PRESUMPTION CAN BE REBUTTED IF THE TRADE PRACTICE

IF CONTRIBUTES TO EFFICIENCY OF PRODUCTION OR

DISTRIBUTION OR TO TECHNICAL PROGRESS OR EXPECT OF

GOODS AND THE SAME COULD NOT BE ACHIEVED WITH LESS

RESTRICTIVE ARRANGEMENTS AND THE BENEFITS OUTWEIGH

THE ADVERSE EFFECT ON COMPETITION. However EM "hard core

policy" may set a higher standard.



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ANTITRUST

WHAT EMPLOYEES MAY NOT DO UNDER HARD-CORE POLICY

ENTER INTO ANY AGREEMENT OR UNDERSTANDING WITH ANYCOMPETITOR REGARDING THE PRICE OR OTHER TERMS FOR WHICH THECOMPANY WILL SELL PRODUCTS TO ITS CUSTOMERS.

Remember that it is not just agreements with competitors that are caught. Any informal arrangement or oralarrangement with competitors to set prices or other terms will also constitute violation of the hard corepolicy. In fact, the antitrust regulators can infer an agreement or arrangement from conduct of competitors.

DISCUSS WITH ANY COMPETITOR THE COMPANY'S FUTURE INTENTIONS

REGARDING PRICES OR OTHER TERMS OF SALE FOR ITS PRODUCTS.

Violations of hardcore policy can arise if competitors discuss their future plans, if they pertain to pricing,marketing strategy, output or production plans, or other matters which will impact on the price level or themarket for the products. There should therefore be no discussion with or revelation to a compeititor of thecompany's plans or strategies for the future.

AGREE WITH ANY COMPETITOR TO ESTABLISH QUOTAS OR OTHERWISELIMIT THE SUPPLY OF ANY PRODUCT SOLD BY THE COMPANY, OR LIMIT

RESEARCH.

This would be another form of anticompetitive conduct since it would be an attempt by a group ofcompetitors to artificially set the price of products by controlling production levels.



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AGREE WITH ANY COMPETITOR TO DIVIDE INDIVIDUAL CUSTOMERS, ACLASS OF CUSTOMERS OR A GEOGRAPHIC MARKET.

An agreement or arrangement of this nature would allow each competitor to monopolise their respectivemarkets which is clearly against the principle of allowing free competition. This would also amount to a perse violation of US antitrust laws and hence prohibited under the hard core policy.

AGREE WITH ANOTHER COMPANY TO BOYCOTT OR BLACKLIST ACUSTOMER, A COMPETITOR, OR A SUPPLIER.

Agreements with other competitor(s) to boycott a particular competitor is anticompetitive as it has the effectof reducing the number of competitors in the market by means other than fair competition. In the case of acustomer or supplier being able to make the market more competitive by negotiating down prices,agreements by competitors to boycott such customer / supplier would have similar effect of attempting tocontrol or influence pricing by means other than free competition.

AGREEMENT NEED NOT BE FORMAL AND CAN BE INFERRED BASED

ON EXCHANGES AND COMMON CONDUCT.

It would inevitably be difficult for prosecutors to show proof of an actual agreement on anticompetitiveconduct by competitors. However, the courts or antitrust regulators can infer such agreement by the actsand conduct of competitors.



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INFORMATION EXCHANGES

ACQUIRING COMPETITIVE INTELLIGENCE

OBSERVATION

PUBLICLY AVAILABLE INFORMATION

Publicly available information includes information which any member of the public can obtain, suchas information filed with the Registry of Companies or information filed with other authorities which

the public can access. It also includes information in competitors' website which is available to thepublic. So long as the information is of such nature, even obtaining it directly from competitorspursuant to an exchange of publicly available information would be permissible.

CUSTOMERS, SUPPLIERS

It is generally not objectionable to obtain information on competitors from customers or suppliers.However, one must exercise care in ascertaining whether the customer would be in breach of someduty of confidentialty to that competitor, for example, in circumstances where you are aware (frommarket practice etc) that such customer or supplier is likely to have a confidentiality agreement orsimilar clause in an agreement, with that competitor. This is not an antitrust issue but it can expose

the company to inducing breach of an agreement by the customer or supplier.

OTHER AFFILIATESObtaining intelligence on competitors from other EM affiliates is permissible, although that affiliateshould not disclose it if that affiliate is bound by a confidentiality undertaking to that competitor.



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TRADE ASSOCIATIONSTrade association meetings are generally for the purpose of exchanging information relating tosafety, environmental issues, industry actions against illegal parties affecting the industry (egdecanters). The fact that information is exchanged during a trade association meeting does notrender it permissible if the information is of such nature that it should not be obtained or exchangedin other circumstances eg information on pricing, marketing strategy or production / output numbers.Such information should not be exchanged under any circumstances.

DIRECTLY FROM COMPETITORSThere is no reason why information cannot be obtained directly from competitors if such information is in thepublic domain, or related to legitimate business purposes such as enhancement of safety or security,preparation of presentations to government bodies, or compliance with government regulations.However, information relating to prices, costs, terms of sale, business plans, suppliers, customers,territories, capacity, production or other subject which could be commercially important areparticularly sensitive and should not be exchanged without consultation with the Law Dept.



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WELL DEFINED LEGITIMATE BUSINESS PURPOSE

- IMPROVEMENT OF PRODUCTIVITY- EFFICIENCY- SECURITY- SAFETY- FACILITATE SUBMISSIONS TO GOVERNMENT- GOVERNMENT COMPULSION

The above clearly excludes information relating to prices, costs, terms of sale, business plans, suppliers,customers, territories, capacity, production or other subject which could be commercially important. Thosewould be particularly sensitive and should not be exchanged without consultation with the Law Dept.

CONSIDER EFFECT ON COMPETITION

Apart from the above, information which could have an effect on free competition in the market should not beexchanged or discussed.

LIMIT TO HISTORICAL DATA

FUTURE PLANS TABOOInformation on future business plans and strategies are clearly sensitive matters and should not bediscussed or exchanged with competitors.



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EXCLUDE COST INFORMATION

Sharing of information on cost of products or services is similarly prohibited.



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(cont'd)

WRITTEN QUESTIONNAIRES/FACE-TO-FACE/TELEPHONE

If it is inevitable to do a legitimate exchange of information with competitors, it is preferable for the exchageto be in written form (eg exchange of correspondence) so as to set on record the matters that have beencommunicated. Face-to-face meetings, while not prohibited, entail the risk of allegations that competitorshave met for reasons other than legitimate information exchange. Extra care must therefore be taken inmeetings with competitors.

EXCHANGE OF INFORMATION ON THIRD PARTIES

- CREDIT INFORMATION

- PERFORMANCE OF CONTRACTORS

- FACTS NOT OPINIONS - ON FINANCIAL CONDITION,

COMPETENCE/INTEGRITY

- NO FUTURE PLANS

- POSSIBLE CHARGE OF CONCERTED REFUSAL TO DEAL



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Somethimes, competitors ask for information on a third party such as a mutual customer or supplier /contractor. This may be feedback on the credit worthiness of a customer, or the performance or safetyrecord of a supplier / contractor. While it is permissible to exchange information with competitors relating tothese, care must be take to ensure that such exchange would not be tantamount to, or result in, a blacklistor boycott of a customer or supplier / contractor. Giving purely factual information is permissible, but avoidstating opinions. Also, do not discuss future plans relating to that customer or supplier/contractor with thecompetitor eg "we intend to terminate the services of this supplier because of poor service ..."



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TRADE ASSOCIATIONS SENSITIVE

IMPORTANT SAFEGUARDS

The company or an employee may be a member of a trade association. Trade associations often serve usefulpurposes, for example, allowing the exchange of information relating to safety, health and environmentalmatters, promotion of legislative changes by the government, lobbying the authorities to take firmer actionagainst illegal counterfeiters etc.Trade association meetings invariably involve interactions with competitors,so care must be taken to avoid accusations of improper dealings during association meetings.

The guidelines set out below are available in greater detail in ExxonMobil's guidelines relating to tradeassociation participations.

LEGAL REVIEW OF CHARTER BY LAWS

The Law Dept should review the Charter and by laws of the Trade Association before participation by thecompany's representatives.

ADVANCE KNOWLEDGE OF MEETING TOPICS

ELIMINATION OF IMPROPER TOPICS

Prior to attending any assocation meetings, obtain the agenda in advance. The Law Dept should review thatagenda to determine if there are any inappropriate topics. If there are, these should be taken out of theagenda. Items like "any other business" are open-ended and should not be in the agenda.

TERMINATION OF INAPPROPRIATE DISCUSSIONS



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DEPARTURE FROM MEETINGS

If an inappropriate topic is raised by anyone during the meeting (eg pricing, production levels, and thosematters which should not be discussed with competitors), you should object to the matter being raised andinsist that discussion on such topic cease immediately. Insist that your objection be noted down in theminutes of meeting. If discussion on that matter continues, you should leave the meeting immediately andask that your departure be noted in the minutes. Report to your supervisor and the Law Departmentimmediately thereafter.

MINUTES OF MEETINGS

The draft minutes of all trade association meetings must be obtained and sent to the Law Dept for reivew,prior to your sign-off of those minutes.

CARE AT POST MEETING SESSIONS

Care should be taken in any informal sessions after meetings. Even though the formal meeting has ended,you should continue to exercise care as competitors are still present at the session. The same principles oninformation exchanges with competitors continue to apply ie avoid discussing antitrust sensitive matters, andleaving the session if anyone persists in discussing such matters. The danger with informal sessions is insome way even greater because the sessions are not minuted and it is open to third parties to allege thatanticompetitive arrangements were arrived at during such informal sessions.



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ANTITRUST DO'S AND DON'T

DON'T

1. DISCUSS WITH COMPETITORS

PRICES

TERMS OF SALE

MARKETING PLANS

ACCOUNTS TO BE GIVEN UP OR TAKEN ON

PRODUCTION RATES

2. ENTER INTO ANY COOPERATIVE ARRANGEMENTS WITH COMPETITORS,

EXCEPT ON THE ADVICE OF YOUR LAWYERS.

3. USE THE COMPANY'S STRONG ECONOMIC POSITION TO INJURE

COMPETITION.

DO

1. COMPETE ON THE BASIS OF INDIVIDUAL COMPANY ACTION.

2. CONSULT WITH YOUR LAWYERS IF EVER YOU HAVE ANY DOUBT THAT

YOUR ACTIVITIES ARE CONSISTENT WITH FULL ANTITRUST COMPLIANCE



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Anti Trust Prestat Explanation

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