Download 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

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.

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



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

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



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




Sec. 32: clear statement of “effects
doctrine” should undo ANSAC
But provision for injunction against
imports in Sec. 33(2) could be selfdefeating
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

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

GATS (for elimination of RBPs in
scheduled services):
 “full
and sympathetic
consideration” of requests for
consultations.
 supply of “publicly available nonconfidential 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


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




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

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?





Technical assistance and capacity
building
Consultation, information
exchange, experience sharing
Peer review of national policies
Progressive cooperation in
investigation
Non-controversial forum
Thank You