Comparative Competition Law 1849804192, 9781849804196

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COMPARATIVE COMPETITION LAW

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RESEARCH HANDBOOKS IN COMPARATIVE LAW Series Editors: Francesco Parisi, Oppenheimer Wolff and Donnelly Professor of Law, University of Minnesota, USA and Professor of Economics, University of Bologna, Italy and Tom Ginsburg, Professor of Law, University of Chicago, USA The volumes in this series offer high-level discussion and analysis on particular aspects of legal systems and the law. Well-known scholars edit each handbook and bring together accessible yet sophisticated contributions from an international cast of top researchers. The first series of its kind to cover a wide range of comparative issues so comprehensively, this is an indispensable resource for students and scholars alike. Titles in this series include: Comparative Administrative Law Edited by Susan Rose-Ackerman and Peter L. Lindseth Comparative Constitutional Law Edited by Tom Ginsburg and Rosalind Dixon Methods of Comparative Law Edited by Pier Giuseppe Monateri Comparative Law and Society Edited by David S. Clark Comparative Labor Law Edited by Matthew W. Finkin and Guy Mundlak Comparative Tort Law Edited by Mauro Bussani and Anthony Sebok Comparative Competition Law Edited by John Duns, Arlen Duke and Brendan Sweeney

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Comparative Competition Law

Edited by

John Duns Associate Professor, Monash University Faculty of Law, Australia

Arlen Duke Senior Lecturer, Melbourne Law School, Australia

Brendan Sweeney Adjunct Associate Professor of Law, Monash University, Australia

RESEARCH HANDBOOKS IN COMPARATIVE LAW

Cheltenham, UK

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Northampton, MA, USA

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© The Editors and Contributors Severally 2015 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA

A catalogue record for this book is available from the British Library Library of Congress Control Number: 2015941464 This book is available electronically in the Law subject collection DOI 10.4337/9781785362576

ISBN 978 1 84980 419 6 (cased) ISBN 978 1 78536 257 6 (eBook)

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Contents

List of contributors PART I

vii

INTRODUCTION AND OVERVIEW

1. Themes John Duns, Arlen Duke and Brendan Sweeney 2. The globalization of competition law:Yes or no? Leela Cejnar and Rachel Burgess PART II

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THE SUBSTANTIVE LAW

3. Defining and proving markets and market power Rhonda L. Smith 4. Anti-competitive agreements: The meaning of ‘agreement’ George A. Hay 5. Anti-competitive agreements: The range of conduct caught John Duns 6. Understanding market power Alexandra Merrett 7. Antitrust treatment of intellectual property rights Michael A. Carrier 8. Current issues in merger law Julie Clarke 9. Vertical conduct: Non-price restraints John Duns 10. Vertical conduct: Resale price maintenance Eugène Buttigieg PART III

27 56 79 109 141 171 219 245

ENFORCEMENT AND SANCTIONS

11. Public enforcement Arlen Duke 12. Criminalizing cartels: A global trend? Gregory C. Shaffer, Nathaniel H. Nesbitt and Spencer Weber Waller

271 301

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13. International governance of competition and the problem of extraterritorial jurisdiction Brendan Sweeney 14. Private antitrust enforcement: Comparative and policy considerations Daniel A. Crane, Keith Klovers and Adam Speegle PART IV

345

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COMPETITION LAW IN SELECTED JURISDICTIONS

15. Competition law in Japan Simon Vande Walle and Tadashi Shiraishi 16. Competition law in China Wentong Zheng 17. Latin American antitrust law and policy: An overview of three jurisdictions – Brazil, Chile and Colombia Javier Tapia and Alexandre Ditzel Faraco

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Index

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Contributors

Rachel Burgess, Consultant and Director, Amicitia Sdn Bhd, Malaysia Eugène Buttigieg, Judge, General Court of the European Union, and Associate Professor, Department of European and Comparative Law, University of Malta, Malta Michael A. Carrier, Distinguished Professor, Rutgers School of Law, USA Leela Cejnar, Senior Lecturer, University of New South Wales Law School, Australia Julie Clarke, Associate Professor, Deakin University School of Law, Australia Daniel A. Crane, Frederick P Furth Sr Professor of Law, University of Michigan Law School, USA Alexandre Ditzel Faraco, Partner, Levy & Salomão, Brazil and Professor, Federal University of Paraná, Brazil Arlen Duke, Senior Lecturer, University of Melbourne Law School, Australia John Duns, Associate Professor, Monash University Faculty of Law, Australia George A. Hay, Charles Frank Reavis Sr Professor of Law and Professor of Economics, Cornell University, USA Keith Klovers, Attorney, Kirkland & Ellis LLP, Washington DC, USA Alexandra Merrett, Senior Fellow, University of Melbourne Law School, Australia Nathaniel H. Nesbitt, Attorney, Hogan Lovells, Denver, CO, USA Gregory C. Shaffer, Chancellor’s Professor of Law, University of California School of Law, USA Tadashi Shiraishi, Professor, University of Tokyo Graduate School of Law and Politics, Japan vii

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viii Comparative competition law

Rhonda L. Smith, Senior Lecturer, University of Melbourne Faculty of Business and Economics Adam Speegle, Attorney, United States Department of Justice, USA Brendan Sweeney, Adjunct Associate Professor, Monash University Faculty of Business and Economics, Australia Javier Tapia, Senior Researcher, Centre for Law Economics and Society, University College, London, United Kingdom and Judge, Chilean Competition Tribunal, Chile Simon Vande Walle, Case Handler, European Commission D-Comp (Brussels), Belgium Spencer Weber Waller, Professor and Director, Institute for Consumer Antitrust Studies, Loyola University of Chicago School of Law, USA Wentong Zheng, Associate Professor, University of Florida Levin College of Law, USA

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PART I INTRODUCTION AND OVERVIEW

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1. Themes John Duns, Arlen Duke and Brendan Sweeney

The growth in the number of antitrust regimes in the past 25 years has been nothing short of phenomenal. In the 1980s approximately 20 countries had some form of antitrust regulation. Enforcement was by no means consistent or wholehearted. Now over 120 jurisdictions boast an antitrust regime.1 While enforcement is still inconsistent, the trend towards antitrust is, when viewed broadly, nothing less than an example of global convergence. The convergence, however, is to a set of ideas not necessarily a precise set of rules. Broadly speaking, the aim of this book is to take a look at that convergence from a comparative perspective. As so many antitrust regimes have had little time to settle their rules the comparison is heavily weighted towards the developed capitalist economies, particularly the United States and the European Union, although the rules and procedures of emerging jurisdictions receive close attention in the final Part of the book. As the book is designed to be a research handbook, all chapters present descriptive material aimed at making the issues discussed accessible while also engaging with contemporary debates and issues. Of course, contrasting views on various aspects of competition law is not solely the province of interstate analysis. Vigorous, internal debate continues to be the order of the day even (and perhaps particularly) within the United States which has had over a hundred years of antitrust experience. The different approaches adopted when assessing market power provide a good example of such contrasting views or approaches. The book is divided into four Parts. Chapter 2, in Part I, provides a view of competition law through the lens of globalisation. The chapter traces the history of ‘global’ competition rules, a story that demonstrates the vagaries of shifting, state imperatives. This raises the question whether global rules are either necessary or indeed feasible. Part II investigates the substantive provisions that are common to nearly all competition law regimes. Part III examines enforcement issues, in particular the criminalisation of cartel conduct and the growing use of 1 See the website of the International Competition Network, the membership of which has grown from 16 in 2001 to well over 100 today.

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private enforcement. Part IV considers the emergence and growth of competition regimes outside the developed states.

PART II: THE SUBSTANTIVE LAW Most competition law regimes proscribe a range of conduct that includes anti-competitive horizontal and vertical agreements, abuses of market power and anti-competitive mergers. Common to understanding each of them is the notion of a ‘market’. Therefore this Part begins by examining the notion of market; it then proceeds to a discussion on each type of conduct typically prohibited by competition law regimes. Despite the growing sophistication of econometric modelling, determination of the market remains a cornerstone of competition regulation. It remains important for differentiating lawful from unlawful conduct in both horizontal and vertical agreements, in isolating abuses of market power and in determining the outcome of mergers. Chapter 3 examines the concept of market as it has developed in the more developed competition regimes. Thus, the author discusses the purpose of market definition, the nature of markets, the theories that surround the delineation of markets and the future of market definition as a central tool of competition analysis. The pre-eminent concern of competition regulation is the proscription of hard-core cartels. This is also the area in which there is most agreement between states. In fact, convergence towards the goal of eradicating hard-core cartels has been quite remarkable. Nevertheless while there is broad agreement that hard-core cartels do substantial economic harm, identifying such cartels can be problematic. Problems begin with the threshold notion of collusion or agreement: what constitutes collusion and how is it proved? How should parallel conduct, particularly in oligopolistic markets, be treated? Chapter 4 explores how the United States and to a lesser extent the European Union have approached this threshold issue. Chapter 5 examines the content of horizontal agreements. As the author points out the variety of horizontal agreements is infinite, running from the clearly anti-competitive to the clearly pro-competitive. So a system of categorisation is required. The object is to seek a workable balance between ‘the need for business certainty on the one hand [and] an effective assessment of whether the agreement is anti-competitive on the other’. The modern trend is to move away from a simple binary categorisation (per se/rule of reason) and to recognise that horizontal agreements exist along a competition continuum.

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Competition law regimes invariably contain a provision aimed at prohibiting abuses of market power. However, the object or objects of such provisions are not always clear. Is the main concern with allocative efficiency or is it with some other outcome such as wealth transfers? This lack of a clear organising principle affects the definition of market power and its application. Drawing on the vast literature that has examined this issue of market power the author of Chapter 6 contrasts the two dominant approaches, the classical approach of the Chicago school and the strategic approach. The author concludes by examining how Australian courts have approached key examples of market power conduct, refusals to deal, bundling, predatory pricing and raising rivals’ costs. One of the most perplexing issues confronting competition policy is the intersection between competition law and intellectual property rights. At its core intellectual property law recognises a right to exclude. This right to exclude has obvious potential to conflict with competition law’s prohibition on anti-competitive exclusion. How this tension is being resolved is the subject of Chapter 7. The author examines the tension through a variety of activities – refusals to license, settlements, product hopping, standards setting and patent pools. In each case the author compares the situation in the United States with that in Europe. Merger regulation, which forms part of almost all competition law regimes, differs from other forms of competition regulation in a number of respects. First, it necessarily employs an ex ante approach. The speculative nature of ex ante analysis coupled with the possible longlasting structural consequences of merger remedies increases the likelihood and repercussions of regulatory errors. Secondly, the globalisation of commerce has resulted in a significant number of mergers being international in character. This has tended to highlight national policy differences. While most states have similarly worded merger laws, significant differences exist in how the laws are interpreted and applied. These differences extend not only to the basic objectives of a merger regime, but also to the types (and weight) of evidence used to inform decisions. There are also important procedural differences. Chapter 8 examines these issues. Chapter 9 examines non-price, vertical restraints. No other area of antitrust regulation has been subject to such ‘dramatic shifts’ in the way in which antitrust regimes approach the subject. Given the wide variety of possible restraints the author first sets out a taxonomy of restraints. While this creates problems of classification, it enables some consistency in decision making. States disagree over the manner in which various categories of restraint should be handled. For example, the European Union’s commitment to a single market has influenced how European

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authorities have approached territorial restraints. As with other areas of antitrust concern, the trend in the developed states is away from per se illegality and towards a rule of reason analysis. How states tackle this issue is the subject of Chapter 9. Chapter 10 investigates price-related vertical restraints, often referred to as resale price maintenance. The notion of the resale price being set by the supplier clashes at a fundamental level with the antitrust notion of the market as price setter. For this reason historically a rigid approach was taken to the practice of resale price maintenance; it was proscribed absolutely. This view came under sustained attack by scholars from the so-called Chicago school of antitrust who argued that resale price maintenance, like other forms of vertical restraint, is invariably imposed for pro-competitive reasons. However, the claimed pro-competitive effects and efficiencies are not universally accepted. Thus, in the US it was not until the 1990s that maximum resale price maintenance was recognised as qualitatively different from minimum resale price maintenance. This chapter analyses the changing attitudes to, and sophistication in dealing with, resale price maintenance in the US and compares it with the situation in the European Union.

PART III: ENFORCEMENT AND SANCTIONS A notable feature of competition regulation has been the concern with appropriate penalties and remedies. In relation to cartels the issue tends to centre round the notion of deterrence. Thus, while other goals such as compensation are important, the key is deterring cartels. This Part begins with a discussion of public enforcement (Chapter 11). Two contemporary aspects of competition enforcement are then considered, namely the trend towards criminalising cartel conduct (Chapter 12) and the growth of private enforcement (Chapter 14). Another notable feature of competition regulation has been the growth in cases that have an international aspect. Many cartels, for example, are no longer purely domestic affairs inflicting purely domestic harm. Just how states respond to the jurisdictional issues this creates is discussed in Chapter 13. No matter what form competition laws take, the proper functioning of the institutions entrusted to enforce such laws is a (or in most jurisdictions the) key factor determining the law’s efficacy. Chapter 11 introduces the reader to the various institutional structures adopted to enforce competition laws and assesses the merits and weaknesses of such arrangements. Detection strategies adopted by, and investigatory powers

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given to, enforcement agencies are also examined. Drawing on the highly influential theory of responsive regulation, the chapter explains the various methods adopted to promote compliance with competition laws before examining political influences and the increased importance of international cooperation. Chapter 12 examines an important aspect of public enforcement, the trend towards criminalisation of hard-core cartel conduct. This trend is quite noticeable, particularly in many developed states. It owes much to the prosecutorial zeal and the proselytising efforts of the US Department of Justice. However, convergence is neither universal nor inevitable. As the authors point out, criminalising conduct lies close to the heart of state sovereignty: thus, while a trend towards criminalisation is apparent it may not be on a sound footing if it lacks bottom-up domestic support. The growth of domestic competition regimes coupled with the internationalisation of many markets and the multinational nature of many firms has given rise to problems of enforcement coordination across borders. A key aspect of this has been the search for an appropriate level or theory of extraterritorialism. This is the subject of Chapter 13. While states have adopted different rules, there is widespread recognition that state sovereignty no longer demands a strict territorial approach to jurisdiction. There is also a growing recognition that expansive extraterritorialism is not compatible with a world of competition regimes. This is most notable in the recent trend in the United States to constrain the extraterritorial application of the US antitrust laws. The role of private enforcement in competition regulation is an issue that has generated considerable debate both domestically and internationally. As with so many areas of competition regulation, the United States has been at the forefront of the push for greater private enforcement. Of course, this is not surprising having regard to the nature of antitrust law in the United States, where private parties have always had a significant role in enforcement. However, the practice in most other states has been an almost total reliance on public enforcement: indeed, private enforcement has been regarded with suspicion. Chapter 14 examines the history, objectives and consequences of private enforcement, and how the attitude to it is changing in many states.

PART IV: COMPETITION LAW IN SELECTED JURISDICTIONS As already noted, the growth of competition law regimes has been quite remarkable, from 20 in the 1980s to over 120 today. Countries as diverse

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in their political, social and economic structures and institutions as China, India and Brazil now have competition regimes. Even among the 20 countries that had a competition regime in the 1980s, some existed more on paper than in practice. Japan is an example that readily comes to mind. So far for obvious reasons this study has tended to concentrate on the United States and the European Union. Part IV is designed to address this imbalance by examining the competition regimes in Japan, China, and three South American countries (Brazil, Chile and Colombia). Chapter 15 investigates competition law in Japan. Although Japan has had a competition regime since 1947, it is only in the last two decades that it has flourished. According to the authors, while there have been significant advances in the development of substantive competition standards, the real change in Japan’s competition regime has been in the area of enforcement. Undoubtedly the Japanese experience has lessons for developing Asian countries. The evolution of competition law in China is examined in Chapter 16. That evolution has been relatively speedy and shows little sign of abating. Given the economic, political and social differences between China and the Western developed economies, China presents as an interesting study in legal transplantation. The result is what the author refers to as a legal transplant with Chinese characteristics. The result is a competition regime making steady progress in the face of some significant limitations and distortions. Competition laws have been widely adopted within South America, but they have not been widely enforced. The South American experience demonstrates the importance of political, economic and social realities to the implementation of competition regimes. Without a commitment to free markets, competition regulation struggles to gain any effective purchase. When it does gain purchase it will necessarily reflect local conditions. In Chapter 17 the authors compare the situation in three South American countries (Brazil, Chile and Colombia) from the perspective of goals, administration, sanctions and substantive standards. In each of these countries competition law has moved from a shaky beginning to a reasonably robust presence.

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2. The globalization of competition law: Yes or no? Leela Cejnar and Rachel Burgess

1. INTRODUCTION In recent years there has been increasing global recognition of the importance and significance of competition law to business and commercial conduct. Over 120 jurisdictions have now adopted a system of competition law1 with an increasing number of others currently in the process of developing some form of competition law framework. Many of these jurisdictions seek to regulate anti-competitive behaviour for the reason that competition is primarily intended to increase a market’s allocative, productive and dynamic efficiencies, thereby increasing innovation, offering consumers better prices, services and choices and improving economic welfare. Others do so at the behest of international organizations (such as the World Bank) or large powerful industrialized nations. Whichever reason applies, most of these competition law regimes share common characteristics and features,2 including prohibitions on certain types of behaviour such as horizontal agreements between firms (for example, cartels aimed at market sharing, price fixing, limiting production and collusive tendering), vertical restraints between firms operating at different levels of the market and excessive aggregation of market power. However, there are many economic, social, cultural and political differences between these jurisdictions, making it difficult to reconcile the benefits of removing hindrances to competition with the need for a set of ‘global’ competition laws and policies. In addition, the uncertainty of how competition law should apply across jurisdictions remains the subject of debate. One complication challenging the need for a ‘global’ competition law is that while many countries have adopted some form of competition law 1

MM Dabbah, International and Comparative Competition Law (Cambridge University Press 2010) 3. 2 Ibid 13.

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system or framework, a large number of countries have opted to not legislate to protect competition,3 relying either on the market itself (such as by promoting free trade to bring about desired economic benefits) or on other types of laws to protect competition or on state control and planning. On the other hand, some countries have looked at unilateral, regional or bilateral arrangements or a mixture of these, to create some common order with regard to the application and enforcement of competition law. To what extent, therefore, can competition law be said to be ‘global’? The purpose of this chapter is to consider what attempts have been made to develop a set of ‘global’ competition laws, the problems that might be encountered in respect of other political or economic policies or priorities, what the scope of such laws might be and how they might be implemented.

2. THE ‘GLOBALIZATION’ OF COMPETITION LAW: THE HISTORICAL BACKGROUND In the years between the First and Second World Wars, cartels were employed by several countries, including Germany, Italy and Japan, primarily to achieve political ends in the period leading up to and during the Second World War.4 At the end of the Second World War, efforts to establish an International Trade Organization (ITO) included negotiations for the inclusion of competition rules in the Draft Havana Charter. A key aim of the Draft Charter included a proposal to introduce provisions dealing with restrictive business practices.5 In particular, where such restrictive practices interfered with the trade-liberalizing aims of the Charter, the Draft Charter sought to impose obligations on member countries of the proposed ITO to prevent firms engaging in activities which may ‘restrain competition, limit access to markets or foster

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Ibid 5. MM Dabbah, The Internationalization of Antitrust Policy (Cambridge University Press 2003) 247–248. 5 Ibid 248. See also Havana Charter for an International Trade Organization UN Doc. E/Conf.2/78 1948 (hereafter ‘Havana Charter’) in CA Wilcox, A Charter for World Trade (Macmillan 1949); P Muchlinski, Multinational Enterprises and the Law (Blackwell 1995) 403. 4

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monopolistic control in international trade’.6 The Charter also provided for complaints about such restraints to be brought before the ITO. However, the United States objected to these attempts to internationalize competition (antitrust) policy and so the Charter failed and the ITO never actually materialized.7 The United States’ objection was especially surprising given that former President Franklin Roosevelt, in a letter to former Secretary of State Cordell Hull, declared that: ‘The defeat of the Nazi armies will have to be followed by the eradication of … weapons of economic welfare. But more than the elimination of the political activities of German cartels will be required. Cartel practices which restrict the flow of goods in foreign commerce will have to be curbed.’8 A further attempt to internationalize competition law, after the unsuccessful attempt of the Havana Charter, occurred when the United Nations Economic and Social Council (ECOSOC) recommended the inclusion of a draft convention that would have established an international agency with responsibility for receiving and investigating complaints about restrictive business practices. The United States again rejected this convention, however, because of concerns that disparities in domestic laws and policies were so significant that the role and function of any such international organization would have been redundant.9 The number of competition regimes grew in the years that followed. In 1958 the European Economic Community was established. Among its core rules were competition rules prohibiting agreements between Member States that had as their object or effect the prevention, restriction or distortion of competition10 and prohibiting the abuse of a dominant position within the internal market.11 Competition rules subsequently appeared on the agenda at the United Nations Conference on Trade and Development (UNCTAD) and at the Organisation for Economic Co-operation and Development (OECD). 6 See Dabbah, Internationalization (n 4) 248. See also Havana Charter (n 5) Art 46. 7 See Dabbah, Internationalization (n 4) 248. See also A Lowenfeld, Public Controls on International Trade (Matthew Bender 1983). 8 Dabbah, Internationalization (n 4) 249. 9 D Wood, ‘The Impossible Dream: Real International Antitrust’ [1992] University of Chicago Legal Forum 277, 284–285. 10 Art 101 (formerly Art 85) Treaty Establishing the European Economic Community (TFEU), entered into force 1 January 1958 (hereafter ‘TFEU’). 11 TFEU (n 10) Art 102 (formerly Art 86).

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In 1973, interestingly, at the instigation of developing countries, UNCTAD began negotiations on the control of restrictive business practices. These negotiations occurred within three different groups, one group made of industrialized countries, one primarily comprising socialist countries and one containing developing and less-developed countries.12 In 1981 the United Nations General Assembly adopted UNCTAD’s Set of Multilaterally Agreed Principles and Rules for the Control of Restrictive Business Practices (Set of Principles), which aims to ensure favourable treatment towards developing countries by offering them protection from the restrictive business practices of multinational firms. It requires multinational firms to respect the domestic laws on restrictive business practices of the countries in which they operate. It also provides that countries should improve and enforce their laws on restrictive business practices and that they should consult and cooperate with competent authorities of countries adversely affected by restrictive business practices. UNCTAD’s Set of Principles, however, is voluntary and not binding. In 1996 a significant development occurred with respect to the ‘globalization’ of competition policy, with its inclusion on the agenda of the then newly formed World Trade Organization (WTO). 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’.13 However, although the European Union, Canada and Japan supported a WTO competition agreement, the United States again remained opposed to a multilateral solution, particularly one involving supranational dispute resolution.14 The United States, concerned that multilateral rules would be too interventionist, sought a non-binding, bilateral solution.15 As such, attempts to include competition rules on the WTO’s agenda failed. However, this was as much because of opposition from developing states as it was due to US opposition. Many developing states were disappointed at the failure of the WTO to deliver better access to developed markets. Accordingly, competition policy was one of the early 12

See Dabbah, Internationalization (n 4) 254. Singapore Ministerial Declaration, WTO Doc WT/MIN(96)/DEC (13 December 1996) [20]. 14 B Sweeney, ‘International Competition Law and Policy: A Work in Progress’ (2009) 10 Melbourne Journal of International Law 58, 60. 15 See Dabbah, Internationalization (n 4). 13

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casualties of the Doha Round of negotiations and in 2003, at the Ministerial Conference at Cancun in Mexico, competition policy was removed from the WTO agenda.16 Yet again, attempts to establish a multilateral competition agreement were thwarted. In 2000 a Resolution was adopted by the 4th UN Conference, dealing with the issue of cooperation between antitrust authorities. The Resolution recognizes the importance of bilateral agreements and multilateral initiatives and also asked UNCTAD to examine the possibility of developing a model cooperation agreement on competition law and policy, based on UNCTAD’s Set of Principles. Accordingly, UNCTAD’s work includes the development of a Model Law on Competition, which states that the main objectives of national competition law and policy are ‘… to control or eliminate restrictive agreements or arrangements among enterprises, or mergers and acquisitions or abuse of dominant positions of market power, which limit access to markets or otherwise unduly restrain competition, adversely affecting domestic or international trade or economic development’.17 The most up-to-date Model Law was released in 2010 and is available on the OECD website. Through its Intergovernmental Group of Experts on Competition Law and Policy, UNCTAD has also been considering ways to improve worldwide cooperation on competition policy and how to spread a competition-based culture.18 Among the measures adopted by UNCTAD are training activities developed in collaboration with competition authorities in different countries. These training activities highlight the need to formulate and enforce competition and consumer protection laws in developing countries in order to increase efficient allocation of resources and, in the longer term, reduce poverty. The OECD has also been playing an important role both with regard to countries with competition law systems, as well as countries requiring assistance as they introduce or aim to introduce competition law and policy into their domestic legal systems. In particular, the OECD has issued several non-binding recommendations, including in 1986 and 1995 on international cooperation among domestic competition law authorities and a further recommendation in 1998 condemning hard-core cartels.19 16 B Sweeney, ‘Global Competition: Searching for a Rational Basis for Global Competition Rules’ (2008) 30 Sydney Law Review 209, 211. 17 UNCTAD Secretariat, ‘Objectives of competition law and policy: Towards a coherent strategy for promoting competition and development’ (UNCTAD Homepage, 2014) . 18 See Dabbah, International and Comparative Competition Law (n 1) 143. 19 See Dabbah, Internationalization (n 4) 252–253.

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The OECD Competition Law and Policy Committee (CLPC) and Joint Group on Trade and Competition (JGTC) are both engaged in programmes dealing with competition policy. The aim of the CLPC is primarily to promote common understanding and cooperation among competition authorities, while the JGTC focuses on fostering the understanding of member countries on issues relevant to the interface between competition and trade policy. The International Competition Network (ICN) is an independent body that was launched in 2001. A multilateral initiative, it focuses exclusively on competition law enforcement and on the development of domestic competition law regimes around the world. Its three areas of ‘priority’ are multi-jurisdictional merger control, competition advocacy and cartels. While each of the international organizations mentioned above (OECD, UNCTAD, WTO and ICN) has made a substantial contribution to the development of competition law and policy, more progress is needed to ensure greater international coordination and consistency in the development, application and enforcement of competition laws and policies.

3. THE GLOBAL NATURE OF COMPETITION With the shift towards trade liberalization and deregulation in the 1980s, the range of markets in which businesses could operate significantly broadened and businesses began to compete globally for customers, greater market share and increased profits. Globalization has increased multinational corporate expansion and greater international competition has in turn increased the risk of cross-border anti-competitive conduct. Competition problems have therefore become increasingly ‘global’ as firms compete in international markets in response to greater international competition.20 As discussed above, past attempts to develop multilateral competition rules have not been successful. However, as business is now conducted, almost as a matter of course, in globally integrated markets (particularly with the increasing aid of technology), the need for the development of some form of ‘global’ competition law has arguably become more essential. In considering the goals of competition law and policy it would appear that there are some common goals across the various competition law 20 M Taylor, International Competition Law: A New Dimension for the WTO? (Cambridge University Press 2006) 36–37.

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systems, even if the approach adopted in each, in trying to implement and achieve these goals, is different. For example, countries that have adopted a competition law framework recognize the fact that competition enhances economic efficiency for the benefit of the business or individual consumer. Similarly, protecting the consumer (and small and mediumsized firms) from any misuse of market power and ensuring a ‘level playing field’ across markets underlies another fundamental interest in and commitment to the development of a competition framework. For some, there is also the wider political agenda, such as the commitment to free trade. For example, the recognition of the importance of competition policy is evident in the WTO’s Most-Favoured Nation21 and National Treatment22 principles, as well as in several WTO agreements.23 Similarly, the Asia-Pacific Economic Cooperation Forum (APEC) recognizes that countries may be prepared to agree on areas of cooperation and facilitate harmonization with regard to aspects of competition policy even if they do not have any properly developed competition system or framework. Within APEC, this recognition has come through acceptance of APEC’s trade liberalization measures, outside a framework of legally binding measures. The fact remains, however, that in spite of a smorgasbord of competition laws and policies across jurisdictions and different approaches by the different competition authorities to the enforcement of competition laws, certain types of agreements and conduct are universally recognized as raising competition law concerns. These include hard-core cartels (particularly involving price fixing), misuse of market power, certain 21

Under the WTO’s Most-Favoured Nation (MFN) principle, WTO members must treat other WTO members equally and cannot discriminate between their trading partners. In other words, if one country is granted a special favour (such as a lower customs duty rate for one of their products) then the same ‘favour’ should be offered to all other WTO members: see WTO website: ‘Understanding the WTO: Basic Principles of the Trading System’ . 22 Under the National Treatment (NT) principle, WTO members must give others the same treatment as is given to their own nationals. In other words, imported and locally produced goods should be treated equally: World Trade Organisation, ‘Principles of the Trading System’ (World Trade Organization Website, 2014) . 23 See for example the WTO’s General Agreement on Trade in Services, Arts VIII, IX and IX:2; Agreement on Trade-Related Investment Measures, Art 9; Agreement on Trade-Related Aspects of Intellectual Property Rights, Art 41. Available at: .

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types of exclusionary conduct and international mergers. It is in these areas that the law may most benefit from a global approach. Firms doing business internationally might be faced with similar issues globally, however even where a competition law system exists, the practice of competition law and policy is likely to develop differently, if for no other reason than the differences in the political, social and judicial structures of different jurisdictions.24 So a lack of legal certainty exists. For example, the US approach to the implementation and enforcement of antitrust laws and policies is based on the free market principle: that is, every firm is free to compete, including dominant firms, with the exception of cases where specific behaviour is seen as anti-competitive.25 Section 1 of the US Sherman Act, 1890 states that a ‘… contract, combination … conspiracy, in restraint of trade … is declared illegal’. However, the term ‘restraint of trade’ is not defined in the legislation. Instead, US courts have provided a common law interpretation of the term, namely that only ‘unreasonable’ restraints of trade should be covered. The EU also adopted broad competition prohibitions. In other jurisdictions, for example Australia, the law is far more proscriptive.

4. A GLOBAL COMPETITION LAW FRAMEWORK: THE CHALLENGES The history of global competition law set out above illustrates the lack of progress made in agreeing a common set of competition rules. The appetite for doing so seems to have waned, at least since the Ministerial Conference at Cancun in 2003. The ability to reach agreement will no doubt be hampered by the established positions of the countries that have applied competition laws, independently, for more than 50 years. There are marked differences in approach even between these well-established competition regimes. For example, in the United States, the rules that apply to agreements dealing with resale price maintenance used to be fairly consistent with those that applied in Australia, that is, that agreements that control a resale price are strictly prohibited. Yet, the United States has recently changed its view on this, deciding that resale

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See Singapore Ministerial Declaration (n 13) 64. See Dabbah, Internationalization (n 4) 273.

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price maintenance agreements should be assessed using a ‘rule of reason’ approach.26 In regional areas like the EU, a common competition law has been relatively successful. However, the EU Member States also have consistent and coordinated economic policies which make the application of a common competition policy more realistic. While Member States have maintained or introduced their own domestic competition laws, they are required to interpret those laws in a manner consistent with the overarching EU law.27 It is difficult to envisage a similar approach being agreeable in a global context. Although the introduction of competition law and policy has spread remarkably quickly in recent years, it is developing at vastly different paces and in different ways. In 2007 India’s Competition Act came into force. The Competition Commission of India (CCI) has been reasonably aggressive in its application of the new legislation. For example, it has already imposed record fines of US$1.13 billion on 10 cement manufacturers and the Cement Manufacturers Association for engaging in cartel activity. By contrast, the People’s Republic of China introduced its Anti-Monopoly Law in 2008. Its various regulators have had a slower start with enforcement, with its initial investigations being restricted to domestic companies and only small fines being imposed. This changed in 2013 when larger fines started to be imposed and investigations extended to multinational companies. The ASEAN region agreed non-binding Regional Guidelines on Competition Policy in 2010. The ASEAN members have committed to the introduction of competition laws by 2015. To date, Indonesia, Singapore, Thailand, Vietnam and Malaysia have laws in place. There are some significant differences between the laws, despite the common policy and origins. For example, Singapore expressly excludes all vertical agreements from its Act (so resale price maintenance agreements are permitted in Singapore) while Malaysia’s legislation currently does not include a merger regime. The development of laws in all jurisdictions is inevitably driven by political or economic policies or priorities. Lack of resources means that not all potentially anti-competitive agreements and conduct are investigated and decisions as to which matters should be investigated are often a matter of policy. What will be important for the well-established competition law regimes may not even