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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. Most countries’ competition laws embody two basic principles:

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Cross-Border Issues and the Competition Act, 2002

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  1. Cross-Border Issues and the Competition Act, 2002 Aditya Bhattacharjea (Delhi School of Economics) & Nitya Nanda (CUTS)

  2. 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.

  3. 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

  4. 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

  5. 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

  6. 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.

  7. 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

  8. 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

  9. 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.

  10. 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

  11. 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.

  12. 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

  13. 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

  14. Thank You

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