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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: 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