International Competition Law and Policy: A Work in Progress

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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'. …