Universal Competition Regime
A hundred countries have implemented anti-competition legislation. However,
the methods and transactions that fall under the jurisdiction of these
regulations are increasingly being handled in international business. Laws are
national, but markets do not stop at national boundaries.
The international dimension of private trade barriers is advocated under the
argument that liberalized world trade necessitates a symbiotic liberal
competition concept that ensures no arbitrary restraint of market access; As all
nations establish non-parochial antitrust legislation forbidding unjustified
barriers to market access, as well as a procedural mechanism ensuring victims'
rights of enforcement; and consider using a choice-of-law principle to solve the
problem of differing national formulations.
The competition law, in simple terms, involves all the laws that promote or
maintain market competition. In any nation's competition law, there are 3 basic
elements: They prohibit anti-competitive agreements, including joint ventures,
monopolization or abuse of dominance, and anti-competitive mergers.
Under the varied anti-competitive agreements, administrations usually ban the
cartels and agreements among rivals, so as to not compete on conditions of trade
such as price or output, and to divide the market. While in some nations, the
laws enable the competition authorities to identify and limit the
anti-competitive practices of the state or local government.
Many developing countries in Latin America and Asia, for example, have seen
first-hand the possible risks of import substitution, the negative effects of
price controls, and the inefficiencies of state-owned enterprises. These
experiences compelled them to pursue market-oriented policies, such as enacting
antitrust regimes to promote efficiency and competition.
Similarly, several former Soviet satellites sought to distance themselves from
state-driven economic policies by voluntarily adopting laws that dismantled
state monopolies and established competitive economies, which is in fact
enthusiastically supported by World Bank, IMF, OECD, and other international
organizations. Endorsing antitrust policies as economic and social development
operators and have offered technical assistance to emerging economies in their
efforts to establish antitrust regimes.
Other countries adopt antitrust laws more reluctantly, as a result of
international pressure or incentives to secure other benefits, such as trade
deals. The approach of international institutions to lending support has ranged
from persuasion and assistance to requiring the adoption of antitrust laws as a
condition for loans and other funding. Antitrust laws were enacted in Indonesia
For example, as part of the structural adjustment programs funded by the
International Monetary Fund and the World Bank. Several countries have enacted
antitrust legislation in response to demands from their trading partners.
Guatemala, Singapore, and Jordan, for example, enacted antitrust legislation as
a condition for securing a free trade agreement with the United States.
Given that over 100 countries have antitrust laws, determining which laws apply
to which international business activity is critical. The jurisdictional reach
of domestic antitrust laws is frequently determined by an 'effects doctrine.'
This doctrine states that a state can apply its antitrust laws to any
anti-competitive behavior that affects its domestic market. In antitrust
matters, no state has exclusive jurisdiction. As a result, if a multinational
corporation operates in multiple markets, it is likely to be subject to multiple
antitrust laws at the same time.
Developed states like the United States of America and the European Union have
frequently resorted to extraterritorial enforcement of their antitrust laws. The
United States and the EU have recognized the legitimacy of applying antitrust
laws to the conduct of foreign firms as long as some anticompetitive effect is
recognized in the domestic market of that country.
An example of this is China's recent move to assert jurisdiction over Coca-Cola
during its proposed acquisition of Chinese juice producer Huiyuan. India,
departing from its previous practice of denying the extraterritorial application
of its antitrust laws, has also revised its antitrust laws to embrace the
In essence, all states might apply the same antitrust rules. The core economic
theory that underpins antitrust enforcement is applicable regardless of the
specific market or situation. The majority of state antitrust laws likewise
claim to pursue the same goal: consumer welfare. However, a closer examination
of the laws and their execution reveals significant disparities amongst
Because most antitrust jurisdictions have decided to adopt either the United
States or EU-style antitrust legislation, substantive laws may appear identical.
Many states, however, strive to achieve a broader set of objectives through
their antitrust laws, although sharing the underlying policy goal of consumer
These may include the advancement of public interest or 'fair' competition, the
protection of small and medium-sized businesses, employment, or more equitable
ownership distribution. Even when the core regulations are the same, the actual
enforcement (or, in some cases, non-enforcement) of those laws might result in
different outcomes in reality.
Furthermore, restorative measures vary by country: some governments choose to
punish anti-competitive behavior, while others prefer administrative fines and
injunctive redress. Scholars have investigated the sources of difference in
state antitrust laws. Some argue that the size and openness of a country's
economy define the type of antitrust regulation that is best for it.
Furthermore, market structures and underlying conditions for cooperation differ,
necessitating the use of disparate antitrust rules at times. This could be due
to the country's history of state-owned enterprises or to the government's
commitment to a particular economic ideology. Antitrust laws are also likely to
reflect the country's level of economic growth.
Countries with a lot of money, well-established institutions, and technical
know-how are more likely to be able to afford comprehensive antitrust laws.
Finally, each country's domestic political economy is distinct. Because of the
possibility of political rents, governments adopt diverse antitrust measures,
depending on the relative influence of various interest groups in any given
The necessity to explain the disparities across countries' antitrust laws has
given rise to the field of 'comparative antitrust law.' So far, a comparative
examination of antitrust laws has concentrated on antitrust enforcement in the
US and EU. The most extensive comparative treatment of these two jurisdictions
is provided by Einer Elhauge and Damien Geradin's textbook, Global Antitrust Law
They confirm that increasing convergence is taking place between the two
important antitrust jurisdictions after discussing the similarities and
contrasts across the whole field of antitrust and merger control. As the
fundamental purpose of antitrust enforcement, both the US and the EU seek to
enhance consumer welfare.
The EU is likewise becoming more interested in economic analysis of antitrust
law, employing analytical methodologies similar to those used by US courts and
antitrust agencies. The antitrust doctrine is similarly comparable, particularly
in terms of collusive behavior or horizontal mergers. However, some significant
disparities remain. The EU uses antitrust rules to advance the formation of a
single European market.
A discussion has formed over whether developing countries should implement
various forms of antitrust legislation due to their developmental requirements.
Some suggest that antitrust rules that are best for emerging countries are not
the same as those that are best for rich countries.
Because of their less efficient production, developing countries may need to
examine competitive effects on their markets by focusing on productive
efficiency rather than allocative efficiency. Furthermore, scale economies may
be particularly relevant in poorer countries. Some argue that this justifies
higher degrees of concentration in their marketplaces.
Developing country markets may support only a few firms, which need to be
allowed to acquire market power in order to innovate and compete against largely
developed country firms. Developing-country markets may only support a few
enterprises, which must be permitted to grow market strength in order to
innovate and compete against mostly developed-country firms. Critics question
the categorical assumption that more concentrated markets necessitate economies
They also dispute whether lenient antitrust policies and monopolist protection
contribute to increased competitiveness and innovation in these countries.
Higher degrees of concentration raises the possibility of collusion or abuse of
market power, implying that emerging countries require more antitrust
enforcement rather than less. Empirical research has also found a favorable
relationship between antitrust enforcement and high GDP, demonstrating that
antitrust enforcement aids rather than undermines economic goals.
Assuming that all states have enacted antitrust laws that are optimal for their
country (in terms of maximizing either domestic consumer welfare or domestic
overall welfare), disparities in antitrust jurisdictions are reasonable policy
As a result, reversing those discrepancies would be difficult or costly without
lowering particular countries' welfare. For as far as economists and financial
advisors can predict there is no such one-size antitrust law that fits all the
regulations of every country, fulfilling every economy's mosaic requirements;
However, the current system, which is composed of multiple, overlapping, and
frequently conflicting antitrust rules, generates a number of externalities that
fail to enhance global wellbeing.
Law Article in India
You May Like
Legal Question & Answers
Please Drop Your Comments