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Article Excerpt
CONTENTS
I Introduction II Nature of the Problems III Mapping International Responses to Competition Issues IV Conclusion
I INTRODUCTION
Competition law and policy has evolved in significant ways both domestically and internationally over the past two decades. Internationally, the evolution of competition regulation has been driven by the intersection of two forces. First, business and commerce have continued to become more internationalised. This means that domestic economies are now highly interdependent; private business conduct occurring in one state can (and does) have profound effects in other states. Second, the number of countries adopting a competition law regime has expanded significantly. In the late 1980s, only 20 jurisdictions had a system of competition law. Today, this has expanded to over 100. Some very important economies--for example, India and China--have only recently acquired competition law regimes, (l) The various systems of competition law have numerous points of commonality, but also many points of divergence. These divergences occur at substantive, remedial and procedural levels.
The intersection of the two forces creates a problem of regulatory overlap. Any state substantially and directly affected by private, economic conduct-wherever occurring--has a legitimate interest in regulating that conduct because it has a legitimate interest in protecting the economic wellbeing of its citizens. This inevitably includes conduct that occurs beyond the state's territorial borders. In an interconnected world, it is not realistic to expect states to adopt a strict territorial approach towards protecting their legitimate economic interests. Thus, occasions of concurrent competition jurisdiction are continually being created. Because of regime diversity (both in competition law and, more generally, legal systems) (2) and because competition rulings are based on domestic considerations (that is, local welfare considerations, not the welfare of foreigners), these occasions of concurrent jurisdiction are often contested. The contest may be more or less willing depending on the circumstances.
Thus, the question raised is: how should these contests be mediated? If one imagines a spectrum of possibilities, then a unilateral solution lies at one end and a global competition agreement at the other. The unilateral solution involves expansive claims to extraterritorial jurisdiction vigorously and unilaterally applied. The only real exponent of this type of realist solution has been the United States. Even for a state as powerful as the US, however, the record of success has been patchy. In response to US jurisdictional expansionism, states have developed defensive measures that dilute its effect. Such measures include laws that prohibit cooperation with foreign authorities (for example, giving or supplying of evidence in US antitrust cases), (3) laws that prohibit local firms from complying with certain foreign awards, (4) and even laws that enable firms to claw-back damages paid pursuant to foreign competition awards. (5) The lessons seem clear--while there is a compelling need to move away from a jurisdictional model based on territorial sovereignty, unilaterally achieving this in a hostile environment is fraught with difficulty.
At the other end of the spectrum lies a global competition agreement--a multilateral competition agreement with binding rules and some form of supranational enforcement mechanism. In the 1990s, the European Commission ('EC') envisaged something along these lines as a possible solution. (6) The newly formed World Trade Organization, with its expansive range of trade-related commitments and its system for resolving disputes, seemed to provide the perfect vehicle. Therefore, competition rules were put on the agenda at the WTO. In 1996, a WTO Working Group was set up to 'study issues raised by Members relating to the interaction between trade and competition policy, including anti-competitive practices, in order to identify any areas that may merit further consideration in the WTO framework'. (7) The European Union's enthusiasm for a WTO competition agreement was supported by Japan and Canada. (8) The US, on the other hand, was opposed to a multilateral hard law solution, particularly one that involved supranational dispute resolution. US authorities had a number of concerns, including fears that multilateral rules would be too interventionist, and that the occasion would be used to emasculate the anti-dumping rules. The US preference was for non-binding, bilateral solutions. (9)
US opposition meant that a WTO agreement was always going to be difficult to achieve. In the end, however, the attempt to graft global competition rules on to the WTO dispute resolution system failed not simply because of US opposition, but also because of opposition from the developing states. The developing states--disappointed at the failure of the WTO to deliver better access to developed markets and suspicious that the Singapore issues (which included competition policy) contained another TRIPS Agreement (10)--insisted that competition policy be removed from the Doha Agenda. (ll) Thus, negotiations for a multilateral competition agreement stalled.
In between the two extremes of unilateralism and a binding global competition agreement are a multitude of possibilities. One's view on the most appropriate solution depends, in part, on the nature of the problems requiring solution and, in part, on one's view of the nature of international governance.
II NATURE OF THE PROBLEMS
Regulating international anti-competitive conduct requires that the nature of the conduct be considered. Anti-competitive conduct can be divided into the following categories:
* international price fixing cartels;
* export cartels;
* exclusionary conduct (whether unilateral or collusive) aimed at imports (market access);
* international single firm conduct (single firm conduct that has international effects); and
* international mergers (either transnational mergers or a national merger with significant transnational effects).
Each type of conduct has its own set of international problems. Consequently, the regulatory solutions applicable to each problem could be quite different.
The problem with the pursuit of international hard core cartels is that there is not enough enforcement of existing legislation. Although there are some definitional problems, these are largely marginal: most states agree that hard core cartels do significant harm...
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