Toward a Multilateral Competition Policy Regime?

By Devuyst, Youri | Global Governance, July-September 2000 | Go to article overview

Toward a Multilateral Competition Policy Regime?


Devuyst, Youri, Global Governance


The multilateral economic system contains a major shortcoming. Although governments have committed themselves to a rule-based multilateral trade policy regime in the World Trade Organization (WTO), private companies that operate in the global marketplace face no such multilateral disciplines. Certainly, most industrialized nations have created their own set of antitrust laws. Furthermore, a series of well-functioning bilateral and regional mutual assistance agreements has been concluded both to facilitate competition enforcement in transnational cases and to avoid the drawbacks of the extraterritorial application of antitrust legislation. Still, on a multilateral level, it has been impossible to agree on a coherent framework for competition rules.

Strangely, international competition policy has received attention only from a relatively small group of specialized antitrust practitioners. As a structural factor determining the margin of maneuver of internationally active private companies on the global market, the international dimension of competition policy deserves a higher place on the agenda of all those interested in international public policy and political economy.

Competition Policy

Competition or antitrust policy serves many purposes. [1] First, by preventing the economy from being dominated by a few large conglomerates, antitrust policy is a tool that ensures the plurality of economic and--ultimately--political life. Second, competition law is set up to protect consumers against abuses of market dominance and against price-increasing and choice-reducing agreements between companies. Third, weak or absent competition poses a problem for the efficiency of resource allocation in the economy. Fourth, competition policy helps to modernize the economy by stimulating companies to constantly innovate in light of the latest technological discoveries. Finally, the strict enforcement of competition policy helps to keep markets open for competitors, whether national or foreign. Today, more than eighty countries have enacted competition legislation, and another twenty countries are considering adopting antitrust laws. [2]

Although I do not intend to provide an assessment of the current intellectual debates on antitrust policy, it might be useful to briefly introduce the most well-known examples of competition enforcement. [3]

In the United States, antitrust law was already well established at the end of the nineteenth century as a tool to fight the formation of industrial conglomerates. [4] The Sherman Act of 1890--which still forms the basis of U.S. antitrust law--prohibits agreements in restraint of trade and monopolization, attempted monopolization, and conspiracies to monopolize. In 1914, Congress adopted the Clayton Act as a means to protect opportunities for small business. The act notably prohibits price discrimination and tie-in sales and exclusive dealing contracts. Furthermore, the Clayton Act forms the starting point of U.S. merger control. It prohibits acquisitions, mergers, or joint ventures that may substantially reduce competition.

Convinced that the concentration of German industries in the 1930s had been an important element in the creation and persistence of Hitler's Nazi regime, the United States insisted after World War II on the establishment of a strict anticartel policy in the Federal Republic of Germany. Germany, in turn, proved instrumental in bringing the antitrust concept into the 1957 Treaty of Rome, which established the European Community (EC). [5] The EC treaty prohibits agreements or concerted practices between companies that may affect trade between the member states and restrict competition. Examples are agreements between companies intended to fix purchase or selling prices. A company's abuse of its dominant position is also prohibited. Large mergers may not be put into effect without EC approval and are prohibited if they create or strengthen a dominant position on the internal market or a substantial part of it. …

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