[Federal Register Volume 63, Number 207 (Tuesday, October 27, 1998)]
[Notices]
[Pages 57314-57318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28547]
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DEPARTMENT OF JUSTICE
Antitrust Division
International Competition Policy Advisory Committee: Request For
Papers
This represents a request for papers by the International
Competition Policy Advisory Committee (Advisory Committee). The
following is an illustrative list of topics and issues under
consideration by the Advisory Committee in its three core areas of
focus: multijurisdictional mergers; trade and competition policy
interface matters; and enforcement cooperation. The intention of this
list is to identify a wide range of key issues where written
submissions from U.S. or foreign economists, lawyers, business
executives or other experts would be particularly welcome. Interested
parties also are invited to submit papers on other topics of their
particular expertise if relevant to the three core areas identified
above.
In terms of timing, the Advisory Committee intends to conclude its
work in the fall of 1999. Thus, we would very much like to have your
views before the Advisory Committee by March of 1999. Submissions made
after that date also would be considered. However, submissions made
prior to March 1999 would be especially timely.
Multijurisdictional Merger Review
A key of objective of the Advisory Committee in this area is to
identify the burdens and conflicts stemming from procedural and
substantive differences between competition authorities in
multijurisdictional merger review, and to devise policy responses that
might address these burdens and avoid conflicts while ensuring that
antitrust authorities have the tools needed to identify and remedy
anticompetitive mergers.
1. A number of explanations have been advanced by experts for the
increase in U.S. domestic and cross-border merger activity, among them
the following: a robust U.S. economy and stock market; increased
globalization; rapid technological change; economic deregulation; and
general industry upheaval in particular industries. This paper would
explore the principal factors driving international mergers, both
outbound and inbound, and provide commercial and economic perspectives
on the merger wave of the 1990s. Sectoral, historical and comparative
perspectives would be welcome. For example, are there systemic
differences between the current wave of translational mergers and
earlier periods of robust M&A activity, be that in terms of industries
affected, driving factors, concentration levels, or other factors?
2. The Advisory Committee is charged with undertaking a medium-term
perspective on international antitrust issues. Accordingly, analysis of
likely future developments in international M&M activity could prove
instructive, particularly if it identified likely regional, sectoral,
industrial and other trends.
3. In the last five years, if your firm has completed an
acquisition, merger or joint venture with a U.S. or foreign firm which
in turn required antitrust notification to one or more foreign
competition authorities, please share your perspectives with respect to
the following matters:
Describe the problems, if any, that arose because of underlying
differences in oversight by competition authorities at home and abroad.
Consider both procedural and substantive factors--e.g., divergent
timing and filing requirements, confidentiality concerns, transaction
costs, differences in substantive law, agency procedures,
politicization, and conflicts in law. If applicable, please also
describe how your approach to addressing these issues (in the context
of competition policy) differed from your approach to addressing
analogous issues caused by differences in oversight in other legal
contexts, i.e., securities laws, tax laws, etc.
Please also describe any perceived benefits from differences in
oversight, such as the ability to ``arbitrage'' a favorable decision in
one jurisdiction vis-a-vis another jurisdiction. Also, what do you see
as the positive features of foreign merger regulations, is any--e.g.,
speed, limited document production, etc.?
4. From your experience as a business executive, lawyer or
financial advisor involved in transactions, identify any policy
measures that could be undertaken by U.S. antitrust authorities, acting
on their own or in cooperation with foreign authorities, that you
believe would help to reduce sources of friction, conflict or burden
that arise in the context of mergers, joint ventures or acquisitions
affecting or requiring antitrust merger notification in more than one
jurisdiction. What new arrangements, if any, might be desirable to
facilitate resolution of conflicts between U.S. and foreign reviewing
authorities?
5. This paper would identify the special problems, if any, arising
from (time-consuming) multiple merger review processes faced by firms
in rapidly changing, high-tech industries and, if there are such
special problems, identify possible solutions.
6. A number of jurisdictions extend the reach of their antitrust
merger control laws to transactions that arguably have only a tenuous
nexus to the jurisdiction. This paper would explore whether the
exercise of extraterritorial jurisdiction to compel antitrust
notification of a proposed transaction with no (or de minimis)
potential effect(s) in that jurisdiction conflicts with principles of
international law. Further, the paper would consider, inter alia,
whether an ``effects'' test, similar to that applied in Sherman Act
cases or whether limitations on notification requirements, such as the
exemptions to the Hart-Scott-Rodino Antitrust Improvements Act for
certain transactions involving foreign parties, could serve as a model
for other jurisdictions.
7. Regarding premerger notification requirements, jurisdictions
differ widely with respect to, inter alia, jurisdictional thresholds,
timing, information requirements and review period. Some argue that
these differences hinder cooperation among antitrust
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enforcement agencies and lead to commercial inconvenience, additional
transaction costs and legal uncertainty, even for parties to
transactions that raise no substantive antitrust issues. This paper
would evaluate the extent to which the burdens that stem from these
procedural differences in pre-merger notification requirements are
manageable by merging parties and experienced counsel and/or are
acceptable costs of doing transnational deals and those that warrant
reform. Further this paper would consider whether procedural
harmonization (e.g., common forms, common timetables) is the
appropriate response or whether alternative approaches might address
these burdens. This paper should provide as much detail as possible
with respect to the specific elements of procedural harmonization that
are thought to be the most useful or the alternative approaches that
should be considered.
8. This paper would compare the premerger notification systems in
the United States, the EC, Canada and Japan, identifying the major
differences and similarities across the systems. Further, the paper
would explore areas of change and evolution (e.g., has there been a
trend toward convergence over time?).
9. When more than one jurisdiction's competition authority reviews
the same transaction, overlapping review may lead to conflicting
decisions on the merits of the transaction or the appropriate remedy.
For example, one authority may approve and another seek to block the
same deal, often forcing the companies to respond to the most
restrictive regime. This paper would seek to identify the types of
cases that present an international conflict. That is, when do
different results or remedies rise to the level of a global problem?
Further, what mechanisms, if any, should be implemented to either avoid
and/or resolve these conflicts?
10. The antitrust merger control laws in a number of jurisdictions
apply to foreign transactions. That is, the acquisition will occur
outside the jurisdiction and to the extent the target has operations
within the jurisdiction, the acquiror would acquire only indirect
control over the operations. This paper would examine generally the
remedies that may be imposed in foreign transactions, particularly
where the appropriate remedy may be located outside the reviewing
jurisdiction. The paper also would consider whether the findings
support the proposition that an antitrust enforcement agency should
decline jurisdiction where an appropriate remedy cannot be fashioned or
defer to a reviewing agency that is able to impose a remedy. The paper
also would seek to identify the circumstances where extraterritorial
remedies would be perceived, and alternatively would not be perceived,
to threaten the fundamental sovereignty of another jurisdiction.
11. It has been suggested that transparency of laws and law
enforcement activities has the potential to reduce uncertainty for
merging parties, fosters consistency in case-by-case decision-making,
encourages public confidence that the rules are being applied in even-
handed and rational ways, and promotes learning. This paper would
consider how transparency could be achieved on a global basis and
whether there is a way to reach an agreement at the international level
that puts the onus on national authorities to improve transparency.
Respondents also might consider whether existing international
organizations (e.g., the OECD, the WTO, UNCTAD, or others) can play a
role in this regard, and if so what that role might be.
12. International cooperation between U.S. and foreign competition
authorities reviewing the same merger offers the possibility of
reducing costs and time, avoiding unnecessary duplication of efforts,
enhancing the data gathering process and avoiding conflicts. This paper
would seek to identify the types of cases that would most likely
benefit from coordination as well as the current impediments to
cooperation. For example, some commentators have suggested that mergers
involving global markets or where the product market is essentially
identical worldwide and/or where a remedy imposed by one jurisdiction
is potentially capable of alleviating the competitive concerns of other
jurisdictions are factors indicating the potential benefits of
cooperation are significant. By contrast, cooperation may not be as
useful in cases where few jurisdictions are affected, markets are
local, market structure and competitive conditions are factually
distinct, and/or competition concerns arising in any country are
remediable by divestiture of one of the merging parties' local
subsidiaries. Further, confidentiality rules are considered a
significant impediment to cooperation. Can circumstances be identified
where it would be in the best interest of merging parties to waive
confidentiality? Also, what mechanisms could be implemented to
encourage waivers? This paper also would consider the extent to which
private antitrust enforcement in the U.S. and abroad has the potential
to undermine effectiveness of consultation/relief coordination.
13. This paper would consider the role traditional and/or positive
comity should play in merger enforcement. Further, what are the policy
and legal implications of an agency in one jurisdiction taking action
under its antitrust merger control law in order to remedy antitrust
concerns of another jurisdiction?
14. When cooperation and other dispute avoidance efforts fail,
antitrust authorities are left with attempting to find a mechanism for
dispute resolution. Currently, no formal mechanism is in place to
handle the role of dispute resolution between two jurisdictions which
have reached different and incompatible conclusions following a merger
investigation. Although the OECD currently provides a voluntary
mechanism for dispute resolution among OECD Member States, this
procedure has not been utilized in the past. This paper would explore
what mechanisms, if any, could be implemented to resolve disputes. In
particular, whether and when mediation would be an attractive option in
the merger context. Consideration also needs to be given to the
appropriate forum, timing, the composition of the decision-making
panel, and the choice of law/legal test that would be applied.
15. This paper would consider whether, and if so how, the U.S.
premerger notification system could be reformed in the framework of
reform globally. This paper would identify and discuss those aspects of
the U.S. premerger notification system that adversely impact on
international mergers. Issues to consider could include whether the 30
day/20 day review periods are impractical, and if so what adjustments
would be necessary to respond both to the needs of merging firms as
well as those officials charged with scrutinizing proposed mergers;
whether requests for additional information are overly broad; whether
the jurisdictional test (including size of the parties and size of the
transaction thresholds) should be altered (e.g., raised or lowered);
and whether the exemption thresholds for transactions involving foreign
firms should be raised. In addition, this paper could also consider how
reform of domestic practices might be viewed by foreign jurisdictions.
16. There is substantial overlap between the Antitrust Division and
other federal agencies of the U.S. government with respect to
responsibility for reviewing mergers, joint ventures or other
alliances. This paper would provide a comparative
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institutional analysis of U.S. agency responsibility for merger review
and address the implications of ``bifurcated'' or ``overlapping''
responsibilities in those sectors where the markets are global.
Further, the paper would draw comparative implications for foreign
regimes that also have bifurcated or overlapping review.
17. National competition policies governing patent and know-how
licensing contracts impose conflicting obstacles to cross-border
business transactions and arrangements, particularly technology
licensing, joint ventures, mergers and distribution arrangements. For
example, the United States, the EU and Japan have adopted detailed
policies on the validity of restrictive clauses in such agreements. The
three sets of rules exhibit marked differences, however, in both
procedure and substance. This paper would explore the differences of
approach (in these and other major countries), analyze when differences
are justified and when compliance with different regimes is an
unnecessary burden. What are possible solutions to minimize the burden?
Is harmonization a feasible option?
18. Concerns about confidentiality and leakage of information
appear to have been successfully addressed with respect to domestic
mergers through the Protocol for Coordination in Merger Investigations
Between the Federal Enforcement Agencies and State Attorneys General.
This paper should assess that arrangement, with particular focus on
whether or not the approach taken to the treatment of confidential
information and the penalties associated with misuse might provide
relevant precedence for new international arrangements.
19. This paper would identify the areas of substantive divergence
in major jurisdictions with active antitrust merger control regimes.
Further, the paper would explore areas of change and evolution (e.g.,
has there been a trend toward convergence over time?)
Trade and Competition Interface Issues
The Advisory Committee is interested in considering policy
responses that could deter anticompetitive foreign restraints that
block access to markets; reduce barriers to effective prosecution of
such restraints with adverse effects in the United States, and expand
cooperation between U.S. and foreign authorities. Accordingly, papers
need to consider what might be done to facilitate vigorous enforcement
of competition laws and policies in those jurisdictions with
competition laws or policies in place, as well as those steps that
might usefully be undertaken to promote effective competition.
1. This paper would consider the evidence that anticompetitive
arrangements or practices involving conduct that occurs in more than
one country are prohibiting or thwarting international trading nations
from deriving the gains from international trade liberalization. More
specifically, how do anticompetitive business practices impede U.S.
firms from selling goods or services or investing abroad? How serious a
problem in this? Which practices cause the most serious problems from
the standpoint of international trade effects? From the standpoint of
competition policy?
2. What is the proper role of competition policy in addressing
barriers to international trade and investment stemming from private
anticompetitive arrangement? Should a decision by a nation to tolerate
private arrangements that create such barriers to access to a market be
judged by competition principles or principles of trade policy? If the
former, should conduct be judged by that nation's competition
principles under a non-discrimination standard or some other
competition principles?
3. Under what conditions can traditional tools of domestic
competition policy be applied to address anticompetitive private
practices in those jurisdictions that have such laws and policies in
place?
4. Is a decision by one nation not to adopt or enforce consumer-
oriented competition laws that would ameliorate access problems (a) an
appropriate exercise of its sovereignty, (b) an affront to sound
competition objectives, or (c) a breach of government-to-government
obligations best treated as a trade dispute? How should these disputes
be addressed?
5. There have been a number of international trade disputes
centering around allegations of lax or discriminatory enforcement of
competition laws. In addition, the very question of what comprises an
effective competition policy and enforcement regime is under
examination in major international fora such as the OECD and elsewhere.
This paper would analyze the criteria by which national or
international competition authorities could assess enforcement of
competition laws. How might one judge whether a jurisdiction has a
strong or weak enforcement record--e.g., using statistical evaluations
of cases brought, investigatory staff, penalties imposed, etc.? Would
it be useful for international organizations to be reviewing such
enforcement practices? If so, whether? If not, why not?
6. This paper would consider the extent to which non-competition
policy objectives are being facilitated by competition policies in
foreign jurisdictions--e.g., industrial policies, job preservation,
etc.
7. This paper would provide an analysis of the unilateral
enforcement of the U.S. antitrust laws to attack foreign conduct abroad
that affects U.S. exports. It would analyze the government and private
case law concerning ``outbound'' foreign commerce.
8. Some experts view positive comity as the best option for
developing cooperation between U.S. and foreign competition authorities
and thereby attacking anticompetitive conduct abroad that thwarts
exports of U.S. goods and services. This paper would evaluate the
record to date as well as the potential application of the positive
comity provisions of the 1991 EC-U.S. antitrust cooperation agreement
and the 1998 EC-U.S. positive comity agreement.
9. It has long been recognized that market access problems can stem
not only from private anticompetitive restraints that can nullify the
effects of trade liberalization, but also those restraints that emanate
from hybrid government-private arrangements. This paper would analyze
the different ways in which governments can facilitate anticompetitive
conduct including encouragement, government ownership or part
ownership, lack of enforcement of competition laws, discriminatory
enforcement, as well as other means. What role should antitrust
enforcement play in attacking these types of practices?
10. What role should unilateral and bilateral U.S. trade policy
initiatives play in addressing anticompetitive conduct by private
parties? By government-owned companies? By private-public hybrid
companies? By private parties encouraged by governmental agencies?
11. The World Trade Organization (WTO) has taken an increasing
interest in competition policy including the formation of a Working
Group on Trade an Competition Policy. Is the WTO a suitable forum for
competition issues? Some suggest a dispute settlement role for the WTO.
Others suggest that the WTO could serve to encourage the development of
effective competition laws and enforcement in members countries. What
role should the World Trade Organization (WTO) play in competition
policy? What should be the next steps for the WTO Working group?
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12. A variety of proposals are being debated to address the
conflicts between competition authorities (in both the merger and
cooperative enforcement contexts). As a way of evaluating these dispute
resolution proposals, please describe and assess dispute resolution
mechanisms in non-antitrust public enforcement actions, i.e., tax,
international trade, securities, commodities, etc. Are there any
lessons that can be drawn from these experiences that might apply in
the antitrust context?
Enforcement Cooperation
Barriers to U.S. Transnational Litigation and Investigation Efforts
It has long been argued by U.S. enforcement officials that
effective prosecution of anticompetitive restraints, particularly
prosecutions involving foreign corporations and defendants, can be
constrained by limited access to documents and witnesses located abroad
e.g., by a foreign country's law (such as a blocking law) or by
differences in legal standards. Accordingly, this paper (or papers)
could consider:
1. Those barriers most often encountered in major foreign
jurisdictions that affect U.S. transnational litigation and
investigation efforts, both with respect to outbound and inbound
effects on U.S. commerce. Are these obstacles statutory in nature (such
as a blocking law) or statutory in combination with local business
practice (such as might be the case with secrecy practices)? Are these
barriers traditional or have they arisen through laws enacted within
the past two decades?
2. What has the United States done--unilaterally or through
multilateral or plurilateral fora--to overcome barriers to U.S.
transnational litigation and investigation efforts? Have U.S. efforts
been successful in lowering or eliminating barriers to litigation and
investigative efforts in transnational matters? Provide examples of
case law or of specific experiences that indicate the results achieved
by any such efforts by the United States. What further steps might the
United States take and why? What steps would be inadvisable for the
United States to undertake and why?
3. From the perspective of a potentially cooperative foreign
defendant or witness, describe the foreign laws or practices that
impede or delay a person from providing information to U.S. authorities
for use in an antitrust enforcement matter. What specific examples can
be used to illustrate these barriers? How, if at all, can such
obstacles be overcome and what resulting impact would there be on U.S.
antitrust investigations or litigation? Would any changes in U.S. law
improve the likelihood that barriers might be lowered for foreign
persons providing information to U.S. antitrust authorities?
4. Enhancing Antitrust Enforcement in Foreign Jurisdictions. This
paper could address several questions: How can the United States
encourage foreign jurisdictions to enhance their antitrust or
competition law enforcement programs and, in particular, to engage in
stronger enforcement and cooperative enforcement undertakings vis-a-vis
hard core cartel activities? Are criminal penalties necessary? Compare
the benefits and drawbacks of taking up this issue in regional or
plurilateral fora, e.g., respectively NAFTA or the OECD, or on a
bilateral basis.
Comparative Antitrust Enforcement
The suggestions below for papers may be addressed in a single
comprehensive piece or else selected topics may the subject of a paper.
5. Compare the level and type of federal U.S. antitrust enforcement
with antitrust enforcement in other major jurisdictions that have
developed antitrust or competition laws. What accounts for differences
in enforcement practices and records?
6. Compare remedies and the effectiveness of remedies for antitrust
violations in the U.S. and other major jurisdictions with developed
antitrust laws. What is the impact of these differences on detection
and enforcement of international cartels? This paper should focus
substantial attention on a comparison of criminal antitrust enforcement
programs between the United States and other jurisdictions with
criminal antitrust laws. Similarly, this paper should identify those
U.S. enforcement tools and U.S. sanctions that are most effective in
advancing the United States civil and criminal antitrust enforcement
efforts (e.g., in the criminal context, enforcement tools such as
compulsory powers, grand jury process, and the Department of Justice's
corporate leniency program; and sanctions including, for example,
personal liability and the possibility of incarceration).
7. To what extent do differences in private rights of action impact
antitrust compliance and antitrust enforcement in the United States and
in foreign countries? How do private rights and available remedies in
the United States compare with those in other jurisdictions? What are
the causes of this disparity? What other jurisdictions have active
private antitrust bars? What propels (or inhibits) private actions in
these jurisdictions as compared with the United States? Should there be
changes in the U.S. laws or elsewhere--why, and how might these be
accomplished?
8. Exchange of Confidential Information--Business Perspective. This
paper will provide the business perspective on cooperative antitrust
enforcement and associated concerns regarding the exchange of
confidential business information between the U.S. and foreign
antitrust authorities for use in their respective antitrust enforcement
activities. Provide specific examples of incidents that have given rise
to such concerns and the laws or practices underlying such incidents.
Include any differences in concerns, if any, that exist when the
information is exchanged for use in a civil or, separately, in a
criminal matter.
Exchange of Confidential Information--Civil Enforcement Matters
The United States is authorized under the International Antitrust
Enforcement Assistance Act of 1994 (IAEAA) to negotiate agreements with
foreign jurisdictions under which U.S. antitrust authorities who are
engaged in a civil investigation may request that the foreign authority
provide confidential information from its files to the United States or
that the foreign authority retrieve confidential information to assist
the United States in its investigation. The IAEAA permits U.S.
antitrust authorities, with certain assurances, to provide reciprocal
assistance to the foreign authority with which it has a mutual
assistance agreement (excepting confidential information obtained in
connection with a Hart-Scott-Rodino premerger notification). Further,
the IAEAA requires that a foreign authority must accord confidential
information furnished to it by U.S. antitrust authorities with the same
degree of confidentiality protection as the information would receive
in the United States, including downstream confidentiality. The United
States and Australia have recently negotiated a bilateral accord that
is awaiting final approval. This paper (or papers) could consider the
following.
9. In what other jurisdictions are authorities eligible to enter
into confidential information sharing agreements? With the goal of
enhanced enforcement cooperation in mind, should the United States
encourage antitrust authorities in other jurisdictions to obtain
authority like that in the United States which enables the
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exchange and protection of confidential information? If so, how? If
not, why not?
10. What form of agreement(s) would best achieve the goal of
enhanced enforcement cooperation? Should such agreements be negotiated
on a bilateral or another basis?
Exchange of Confidential Information--Criminal Enforcement Matters
The United States is party to 19 bilateral mutual assistance
treaties in criminal matters (MLATs), under which it can request
assistance in obtaining information, including confidential
information, from its MLAT partners for use in U.S. criminal antitrust
enforcement investigations and litigation. This paper (or papers) could
consider the following.
11. What has been the United States' experience in seeking
assistance for criminal antitrust matters under its MLATs? For those
jurisdictions that are party to bilateral antitrust agreements with the
United States but not to MLATs, is there any meaningful difference in
the assistance that can be provided? With the goal of enhanced
cooperation in mind, how might the United States encourage antitrust
authorities in other jurisdictions to change restrictions in their laws
so that existing (or future) MLATs with such countries may extend to
antitrust matters?
12. The United States also encounters obstacles when seeking
extradition from abroad of defendants to U.S. antitrust actions. In
what way can the United States encourage foreign countries to lower
their barriers to providing the United States with extradition
assistance in antitrust matters? Provide examples and an analysis of
successes or frustrations in U.S. efforts to seek extradition
assistance from abroad in connection with a U.S. criminal antitrust
matter.
Transnational Cartels
The topics below are intended to be addressed in separate essays.
13. This paper should consider the incidence of transnational
cartels. What does the empirical evidence suggest is the impact that
transnational cartels have on the United States' economy and on U.S.
business interests? This paper should also compare the nature and
effect of transnational cartels and of cartel enforcement in the U.S.
today with earlier periods. This paper might also explore whether the
structure of international markets has changed so that international
cartels are more likely to be detected now than in earlier periods.
Finally, this paper should assess what recent evidence suggests about
the relative economic significance, in terms of cartel structure and
welfare losses, of transnational versus domestic cartel arrangements.
14. Is there any evidence that weak antitrust or competition policy
enforcement is producing environments that are home to international
cartels? Are there global markets or market structures that are likely
to foster cartel arrangements? Or more generally, are there market or
structural factors that can be identified as associated with domestic
or international cartel formation and operations, and are there any
differences between the two?
15. Hard Core Cartels. This paper will comment on whether it is
necessary or useful to have a common international understanding about
what constitutes a ``hard core cartel'', both domestically and
internationally, and on how the term should be defined. This paper
would consider the potential for cooperation under existing bilateral
or international instruments (e.g., bilateral accords and OECD
Recommendations, among others), and assess next steps under these
agreements. Further, this paper would make suggestions for enhanced
enforcement cooperation between the United States and foreign
jurisdictions in enforcement efforts against hard core cartels. These
suggestions would include recommendations for positive incentives the
United States might offer to foreign jurisdictions as encouragement for
them to alert the United States to hard core cartel activities that are
affecting the United States.
Please send written replies to: ICPAC, U.S. Department of Justice,
Antitrust Division--Rm. 10011, 601 D Street, N.W., Washington, DC
20530, Facsimile: (202) 514-4508, Electronic Mail: [email protected].
Merit E. Janow,
Executive Director, International Competition Policy Advisory
Committee.
[FR Doc. 98-28547 Filed 10-26-98; 8:45 am]
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