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Cross-Border Issues and the Competition Act, 2002. Aditya Bhattacharjea (Delhi School of Economics) & Nitya Nanda (CUTS). Cross-border competition issues. Most countries’ competition laws embody two basic principles:

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cross border issues and the competition act 2002

Cross-Border Issues and the Competition Act, 2002

Aditya Bhattacharjea

(Delhi School of Economics)

&

Nitya Nanda

(CUTS)

cross border competition issues
Cross-border competition issues
  • Most countries’ competition laws embody two basic principles:
    • Explicit or implicit exemption of RBPs with effects only in foreign markets.
    • The “effects doctrine” (jurisdiction over foreign RBPs with domestic effects) -- but difficult for LDCs to investigate and enforce their laws extra-territorially.
slide3
Early international discussions on cross-border RBPs
    • RBPs affecting trade dealt with in 1946 Havana Charter to set up an ITO: opposed by US.
    • GATT did not deal with RBPs.
    • 1980 UNCTAD Set: Non-binding
international cartels
International Cartels
  • More than 40 successfully prosecuted by US and EU
  • Many known to have operated in developing countries, but only Brazil (vitamins & lysine) and Korea (graphite electrodes) have some success in prosecution
  • India: Supreme Court ruling in ANSAC case:MRTP Act has no extra-territorial operation
cross border predatory pricing
Cross-border predatory pricing
  • Similar to dumping, but higher standard must be met
    • Cost standard excludes overheads
    • Market structure/ entry conditions/ recoupment standard
  • DSB decision in U.S. -- 1916 Act
  • India now the most active (ab)user of anti-dumping
barriers to import competition
Barriers to import competition
  • Import cartels
  • Control of distribution channels by domestic firms
  • WTO Kodak-Fuji case: competition policy can be examined in dispute settlement for allegations of discrimination or nullification and impairment of concessions made in GATT and GATS.
competition act 2002
Competition Act 2002
  • Sec. 32: clear statement of “effects doctrine” should undo ANSAC
  • But provision for injunction against imports in Sec. 33(2) could be self-defeating
  • Hard-core cartels now prohibited per se, but exemption for efficiency-enhancing joint ventures, without safeguards
  • Many technical criteria, but lack of expertise to implement them
international cooperation
International Cooperation
  • Growing number of bilateral / regional agreements with varying commitments
    • negative comity
    • supply of non-confidential information
    • assistance in investigation
    • positive comity
    • supra-national enforcement in EU, CARICOM, MERCOSUR
existing wto agreements
Existing WTO agreements
  • GATS (for elimination of RBPs in scheduled services):
    • “full and sympathetic consideration” of requests for consultations.
    • supply of “publicly available non-confidential information”.
  • TRIPS
    • as above for violation of laws regulating RBPs in IPR licenses
    • relaxes conditions for compulsory licenses granted to remedy RBPs.
discussions at the wto
Discussions at the WTO
  • Working Group set up by 1996 Singapore Ministerial to study issues
  • Developed countries:
    • unwilling to control cartels or mergers having effects in foreign markets
    • unwilling to apply antitrust standards to antidumping
    • willing to extend only `voluntary’ cooperation to LDC authorities
slide11
Developing countries unwilling to take on fresh commitments in an unfamiliar area, with major resource requirements.
  • India opposed National Treatment
  • Consensus only on need for technical assistance and further study
  • Deadlock at Cancun (2003), Competition Policy formally dropped from Doha agenda by 2004 Framework Agreement.
the way forward
The Way Forward
  • Ongoing discussions at
    • OECD (Global Competition Forum includes non-members); Policy Framework for Investment
    • International Competition Network -- focus on merger review
    • Periodic reviews of UNCTAD Set and meetings of International Group of Experts
a soft agreement
A `soft’ agreement?
  • Technical assistance and capacity building
  • Consultation, information exchange, experience sharing
  • Peer review of national policies
  • Progressive cooperation in investigation
  • Non-controversial forum
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