Competition Law and International Trade

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Competition
Law
And
International
Trade
NAME: VAINY GOEL
Competition Law and International Trade
Abstract
Competition law has a huge impact on foreign commerce of a country because it partially
regulates the conduct of the country during the international trade activities. The competition
law herein referred to includes national legislations, international conventions and any other
applicable bilateral, multilateral or regional agreements. The sweeping ambit of both trade
and competition law has also made a large number of companies to deal with legal issues in
the international context that they may have previously considered only in terms of their
domestic impact. Thus, with the growth of the international trade, the need for
internationaliation of competition policy was also recognied and a number of attempts have
been made to develop an international competition policy. The increased globaliation of
mar!ets and companies has prompted the "uestion of what the response to globaliation
should be for competition policy. This is already being considered in a number of
international organiations including the #orld Trade $rganiation for %conomic Co&
operation and 'evelopment. As the importance of some of the government imposed barriers
to mar!et access, such as tariffs, has diminished, attention has focused on other issues, in this
case the effectiveness of national competition policies in tac!ling the anti&competitive
behavior of firms. The global expansion of competition law influences cross( border
commerce. )ational or regional antitrust systems fre"uently endorse the comparatively broad
view of extraterritoriality pioneered by the *nited +tates and the %uropean *nion ,%*-. This
development ensures that individual transactions or practices involving ma.or suppliers of
goods and services often will be sub.ect to scrutiny under the competition laws of more than
one ,often many- .urisdictions. 'espite important similarities, the world/s competition
systems do not conform to a single model. #hen the world/s ma.or trading partner travel
down the path of harmoniation of trade laws, there is a need to harmonie world/s
competition laws. Also to ripe the fruits of lifting up of the trade barriers, it is very necessary
to deal with international effects of anti&competitive activities and maximie efficiency by
way of free trade contemplated by the #T$.
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Competition Law and International Trade
Contents
Introduction ..............................................................................................4
Trade and competition policy ...................................................................5
Tariffs and other barriers to trade. Protectionism?.................................6
International trade and competition policy - complementary and
contradictory..............................................................................................7
Competition Policy at International
Leel................................................!
"T# enforcement actions.......................................................................$%
International Competition Policy &'reements.......................................$$
International (ffects of Cartel................................................................$)
International cooperation * I+,I&........................................................$4
(-tra territorial .urisdiction* I+,I&.....................................................$5
Conclusion..............................................................................................$6
/eferences...............................................................................................$7
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Competition Law and International Trade
Introduction
Competition law and international trade law traditionally have 2sailed under different flags.3
Competition laws sanction business conduct that is deemed to harm the competitive process
4in particular, collusive or exclusionary agreements among competitors, anticompetitive
mergers, and abuses of monopoly power. Trade laws, by contrast, generally impose specific
limitations ,tariffs and )on&tariff barriers- on business transactions that cross national
boundaries. Competition law is necessary for mar!et regulation both at national and
international level for preventing firms from practicing anticompetitive behavior. The
consistency between two captioned policy fields depends upon the method of enforcement.
however, broadly spea!ing that trade and competition policy both wor!s in tandem with each
other wherein both contributes in ma!ing the domestic mar!et more competitive through
some way or the other for achieving an enhanced efficiency and promoting consumer
welfare.
5owever, notwithstanding their distinct legal traditions, international trade policy and
competition policy, properly applied, are mutually reinforcing methods for promoting
welfare. Changes to trade laws and regulations that reduce or eliminate national barriers to
trade and investment ,such as high tariffs, "uotas, and investor nationality restrictions-
promote welfare&enhancing contractual relations that expand trade and, more generally, raise
aggregate welfare in the liberaliing nations.
0- The benefits of trade liberaliation are magnified by competition law rules that lower the
incidence of consumer welfare&reducing restrictions on the competitive process.
1- 6ultilateral welfare&enhancing initiatives characterie modern trade policy. In the post&
#orld #ar II era, the 7eneral Agreement on Tariffs and Trade ,7ATT- negotiating
framewor!, and its successor, the #orld Trade $rganiation ,#T$-, have substantially
reduced tariffs and non&tariff trade barriers, promoting global trade liberaliation import
competition and thus economic growth.
8- Also, regional and bilateral trade liberaliation compacts, such as the %uropean *nion
,originally a 2Customs union3 that was transformed into a vehicle for large scale %uropean
%conomic integration-, the )orth American 9ree Trade Agreement ,2)A9TA,3 Covering the
*nited +tates, Canada, and 6exico-, and the *+&:orea 9ree Trade Agreement ,one of several
such agreements entered into by the *nited +tates-, have been a force for increasing welfare
by extending the geographic extent and scope of trading and investment opportunities.
;- 5owever, as the #T$&led trade law system has expanded, it has not wisely brought
national competition laws within its purview. There is a role for International competition law
policy in an increasingly globalied economy through <oluntary efforts at building
understanding across .urisdictions and thereby gradually Converging towards best ,or
2better3- practices. The role of the International Competition )etwor! ,IC)- in furthering
this aim is touched upon later in this Article. In addition, in the area of public sector restraints
on trade there may be scope for an international agreement.
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Competition Law and International Trade
Trade and Competition Policy
There are number of areas where enterprise behavior could give rise to problems in
international trade relations and the responses of governments to such behavior. These are=
0. 6ar!et access for imports= trade concerns have arisen in the past where vertical
mar!et restraints have prevented foreign firms from having access into the mar!et.
9or instance, by ma!ing it difficult for foreign firms to access the distribution networ!
that is controlled by domestic suppliers. The !oda!&fu.i case explains it better. It
includes exclusive dealing re"uirements, tied selling, loyalty or sale rebates, etc.
1. mar!et power in export mar!ets= several tools used to exercise such power is export
cartels, international cartels, mergers and ac"uisitions,6>A-, abuse of dominant
position, price discrimination, dumping etc.
8. Intellectual property rights= anti&competitive practices in connection with I?@s have
been an important issue in international economic relations since long. such could
ta!e form of horiontal or vertical restraints such as intellectual property licensing
agreement among competitors li!e patent pooling serve as a vehicles for establishing
cartels to fix prices, allocate mar!ets, limit output etc. the ?il!ington case explains the
situation better.
;. 9oreign investment= the increasing reliance in 9'I by producers to supply foreign
mar!ets and as an engine to growth by host countries has increased the importance of
9'I. Competition police can play in removing barriers to mar!et entry for foreign
investors.
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9rom the above discussion, it is clear that there is a significant amount of interaction between
international trade and competition policy. Also, such is on increasing trend which has
resulted in the internationaliation of competition policy.
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Essays on te International Tradin! "ystem: An #n$inised %ourney
Ay ?radeep +. 6ehta
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Competition Law and International Trade
Tari$$s and Oter &arriers to Trade' Protectionism(
#ould you mind opening your suitcaseB Cour heart sin!s as you picture that extra bottle of
perfume the custom officers are going to find. & Cou may not thin! about this in these terms,
but you have .ust entered the world of trade barriers. Tariffs and non&tariff barriers, "uotas
and prohibitions affect us all, either directly as when our luggage is examined at a border
crossing, or indirectly through the price we pay and constraints on what we can and cannot
buy. Custom inspectors are not .ust trying to catch people going over their duty free
allowance but they are also loo!ing at the dangerous items or items that are banned for and
also controlling the import of entire categories of merchandise.
Tariff 0arriers & Ay ma!ing products more expensive to consumers, tariffs hamper
demand for imports. They can also alter the relative price of the product and protect
uncompetitive companies and their overpriced products. #ith the reduction of tariffs,
consumer have more choice, with more products and a wider price range. 9or
developing countries, improved resource allocation and higher export revenue
contribute to national income and increase the pool of resources available for
development related investment. 6ost studies suggest that the developing countries
with the highest initial tariff rates stand to gain most from reducing their tariffs. Trade
liberaliation will have social and economic cost associated with it, still, these costs
tend to be the short term and are outweighed on average by the potential welfare gains
that result from lowering trade barriers. Complementary economies, social or labor
mar!et policies can help ease the pain of ad.ustment and ma!e trade liberaliation
more effective in promoting growth.
+on-tariff barriers & Today exporters are concerned less by traditional measures
applied Dat the borderD, li!e "uotas and prohibitions, than by difficulties arising from
product standards, conformity assessment and other Dbehind the borderD policies in
importing countries. 6ultilateral trade rules exist to ensure that neither consumer
protection nor other interests are used as an excuse to penalie foreign companies or
!eep prices high. It include prohibitions and "uotas, procedural barriers, custom fees,
export duties and export restrictions, technical barriers, etc.
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Ma)in! trade policy&
Trade barriers could have positive and negative conse"uences, depending on whether you
loo! at their economic, social, environmental or other motivations and conse"uences. Trade
barriers and trade policy can promote e"uities and should not be examined in isolation from
their political economic environment. As an example
8
, imagine that how the price of sugar
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+ee International trade= free, fair and openB by ?atric! Love and @alph Lattimore
8
5ersheyDs chocolate bar company shifted its plant to 6exico from *+ because wages are lower in 6exicoE
under )A9TA, 5ershey could import the candy made in 6exico bac! into *+ and factories in 6exico can buy
sugar at world prices, where sugar producers in the *+ are protected from foreign competition and prices are
two to three times higher than on world prices.
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Competition Law and International Trade
influenced 5ershey/s decision to move chocolate production to 6exico. The *+ sugar
industry is often "uoted as an example of how poor trade policy can harm business and
consumers.
International Trade and Competition Policy * complementary and
contradictory:
International trade policy and competition policy, properly applied, are mutually reinforcing
methods for promoting welfare. Changes to trade laws and regulations that reduces or
eliminate national barriers to trade and investment Gsuch as high tariffs, "uotas, and investor
nationality restrictions promote welfare enhancing contractual relations that expand trade and
more generally, raise aggregate welfare in liberaliing nations. The benefits of trade
liberaliation are magnified by competition law rules that lower the incidence of consumer
welfare&reducing restrictions on the competitive process.
7ATT and #T$, have reduced the trade barriers, thereby promoting trade liberaliation,
import competition and economic growth. @egional and bilateral trade liberaliation
compacts such as %uropean *nion, )orth American free trade agreement ,)A9A- have
increased welfare. 5owever #T$ trade laws have expanded, it did not brought national
competition laws within its purview. There is a role for international competition law policy
in an increasingly globalied economy through voluntary efforts at building understanding
across .urisdictions and thereby gradually converging towards better practices such as IC)
,international competition networ!-.
The consistency between the two captioned policy fields depends upon the method of their
enforcement. however, broadly it seems that trade and competition policy both wor!s in
tandem with each other wherein both contributes in ma!ing domestic mar!et more
competitive through someway or other for achieving an enhanced efficiency and promoting
consumer welfare. Trade liberaliation without a sound competition policy might result in
engulfing of small and medium sie enterprises by big giants of the mar!et or may lead to
anti&competitiveHrestrictive business practices.
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Competition Law and International Trade
Competition Policy at International Le+el
a, Initial efforts at 1aana charter*
The relation between the trade and competition policy was discussed at an international
forum for the first time in 5avana charter 0GGI. The charter though could not establish the
international trade organiation but the serious considerations of these two policy fields were
recognied by the member states. It envisaged the mechanism for consultations, reports and
recommendations on such practices, with a view to discouraging them. Aut the issue was
dropped at the final stage by developed countries being encroaching their national
sovereignty.
b, Issues at 2in'apore ministerial conference*
The issue was substantially debated at +ingapore ministerial conference in 'ecember 0GGI,
wherein relationship between trade and competition policy was one of the four D+ingapore
issuesD which was put on two agenda for discussion. The #T$ wor!ing group on interaction
between trade and competition policy ,#7TC?- was established to consider issues raised by
members of these two policies. The group identified three broad categories= practices
affecting mar!et access for imports, practices affecting international mar!ets and practices
having a differential impact on the national mar!ets of countries. These practices not only
effects trade but also on economic welfare and development. Conse"uently the 1000 'oha
ministerial declaration recognied developing countries need for technical assistance and
capacity building in this area in order to enable them to evaluate the implications of closer
multilateral cooperation. In July 100; the 7eneral Council of the #T$ decided that the
interaction between trade and competition policy ,in addition to investment, and transparency
in government procurement- would no longer form part of the #or! ?rogrammed set out in
the 'oha 6inisterial 'eclaration and therefore that no wor! towards negotiations on any of
these issues will ta!e place within the #T$ during the 'oha @ound.
c3 (fforts at the 4+CT&,*
)ational competition laws and law enforcement institutions, are not always fully e"uipped to
deal with Trans boundary anti&competitive practices. *)CTA' adopted a comprehensive
code on restrictive business practices on Fth 'ecember 0GK0. The Lset of multilaterally
agreed e"uitable principles and rules for the control of restrictive business practicesL
includes=
,0- 7uidelines addressed to enterprises,
,1- @ecommendations to governments for effective control,
,8- ?rovisions for bilateral consultation between governments to resolve issue.
,;- The establishment of follow up machinery in *)CTA' to continue wor! designed to
improve developing countries ability to deal with these practices.
The set see!s to attain greater efficiency in international trade and economic development
through promoting competition, control of concentration of economic power and
encouragement of innovation.
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Competition Law and International Trade
d3 The or'ani5ation for economic co-operation and deelopment6s 7#(C,6s3
committee on competition la8 and policy*
The $%C' provides a forum to discuss and debate upon the issues relating to competition
law and policy. the competition committee, made up of the leaders of the worldDs ma.or
competition authorities, is the premier source of policy analysis and advice to governments
on how best to harness mar!et forces in the interests of greater global economic efficiency
and prosperity. The committee also examines the possibility of convergence of substantive
competition laws, and the con.unction with $%C'Ds trade committee, the interface between
competition and trade policies and the future prospects for integrating competition rules into
an acceptable multilateral framewor!.
e3 9&TT:"T# connection*
Absence of competition provisions in 7ATT= *nfortunately, the concerns regarding
anti&competitive practices of multinational corporations were not discussed during
debates of 7ATT. The *ruguay round was concluded without including competition
policy as a separate item to debate upon. 7ATT rules recognie the right and liberty
of contracting parties to accord greater importance to the protection of certain
legitimate national public goods or interests than to more liberal trade practice. In
0GI0, s 7ATT decision recommended bilateral and multilateral consultations among
governments which was a detailed proposal for a binding international competition
agreement put forward by a private group of scholars. This code however never came
into effect.
)on&Comprehensive approach in the #T$ agreement= while not directly addressing
competition law per se, there has been a lot development of competition related rules
in the #T$ system, which are binding, albeit not in the form of an explicit
comprehensive body of rules but rather scattered in an archipelago of legal basis in
the #T$ Agreement. A number of agreements entered upon under the #T$
encompass provisions relating to competition laws. The Agreement on Trade&@elated
Intellectual property @ights ,T@I?s- ensures that measures and procedures to enforce
intellectual property rights do not themselves become barriers to legitimate trade. $n
other hand it fail to provide effective tools against anti&competitive practices. the
Agreement on Technical Aarriers to Trade ,TAT- provide detailed rules aiming to
ensure that the preparation, adoption, and application of technical regulations,
standards, and conformity assessment procedures by non&governmental bodies are
not more trade restrictive than necessary fulfill legitimate ob.ectives.
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Competition Law and International Trade
-TO En$orcement actions
;oda<:=u.i =ilm
4
:oda! claimed that it was seriously handicapped in its efforts to enter the Japanese film
mar!et by a combination of Japanese government and private restraints that, cumulatively,
bloc!ed efficient entry into the Japanese film mar!et by foreign firms. :oda! asserted that its
mar!et share in Japan had been !ept to less than 00 N by anticompetitive actions by the 9u.i
?hoto 9ilm Company and counter&liberaliation measures ta!en by the Japanese government.
In particular, the four largest wholesale distributors of photographic film products in Japan
handled 9u.i products exclusively. These exclusive relationships allegedly resulted from
various Japanese 7overnment actions and regulations designed to offset the opening of
Japan/s film mar!et to foreign firms and from certain allegedly anticompetitive actions by
9u.i. 9u.i claimed that it had not engaged in anticompetitive behavior and asserted that :oda!
actually had access to all film retailers in Japan. The fact that 9u.i had exclusive ties to the
ma.or wholesalers did not !eep :oda! from distributing to retailers through its own channels,
according to 9u.i. 9u.i also emphasied that :oda! had ta!en similar actions in the *+
mar!et to maintain its high mar!et share there. Citing these concerns, the *+ Trade
@epresentative initiated #T$ dispute resolution proceedings against Japan in 0GGI. The
#T$ Appellate Aody in 0GGK found that the restraint in "uestion4involving practices that
included government supported restrictions on film distribution channels4did not implicate
violations of Japan/s #T$ trade commitments.
Canada "heat 0oard
5
#T$ .urists also applied competition disciplines to a #T$ provision drawn from the
competition lexicon in the 2Canada #heat Aoard3 case. The ?anel and Appellate Aody were
as!ed to interpret Article O<II of 7ATT 0G;M. Article O<II, as we noted previously,
provided that where an +T% was buying or selling in the commercial mar!et, it should be
sub.ect to 2commercial considerations.3 The *+ asserted that 2commercial considerations3
meant that behavior had to be profit maximising, and any revenue&maximiing behavior
could not be seen to be 2commercial.3 The case concerned the role of an +T%, the Canada
#heat Aoard ,C#A- in the purchase and sale of wheat on international mar!ets. The *+
challenged the C#A/s practices as violating Article O<II. The *+ contended that Canada
and the C#A must afford competing wheat sellers as well as potential wheat buyers an
2ade"uate opportunity . . . to compete for participation in Pthe C#A/sQ sales.3 The *+ argued
that the C#A had to act li!e a commercial seller, and that it could not use its special
privileges to the disadvantage of other commercial actors. The *+ charged that because the
C#A Act was a mandate to promote sales, rather than profits this necessarily led C#A to
ta!e unfair advantage of its privileges. *nfortunately, the ?anel too! a very simplistic view of
2commercial considerations,3 noting that this merely re"uired +T%s not to act li!e 2political
;
see Article on Competition ?olicy and International Trade 'istortions
Alden 9. Abbott and +han!er +ingham
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ibid
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Competition Law and International Trade
Actors.3 The panel re.ected the *+/s thesis that the structure of the C#A necessarily resulted
in sales inconsistent with Article O<II. It is noteworthy that the Appellate Aody reviewing
the case returned to the principle of non&discrimination as axiomatic in #T$ cases. ?roof of
discriminating conduct had to come first, and then ,and only then-, evidence had to be
adduced of conduct that did not satisfy 2commercial considerations.3
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Competition Law and International Trade
International Competition Policy A!reements
In the absence of any agreed framewor! regarding competition policy and trade under #T$,
there are a number of multilateral and bilateral agreements entered upon by different
countries.
$. Positie comity*
It re"uires active cooperation which involve re"uested countries conducting a law
enforcement proceeding into conduct in its territory that is allegedly harming the interests of
some other country. It re"uires competition policy authorities to consider complaints against
anti competitive conduct by firms in their .urisdiction which adversely affect parties in the
other .urisdiction.
I
The first noted agreement was signed by %* and *+. +uch agreement laid
an affirmative duty on both the parties to investigate each otherDs complaint. Aut such
agreement is applicable fairly only to the homogeneous states at the same level of
development.
>. Coordination and cooperation*
The extent of coordination depends upon the relative abilities of the parties and the extent to
which either partyDs competition authorities can secure effective relief against anti&
competitive activities involved. This leads to better understanding and acceptance. An
example of bilateral cooperation is 6IC@$+$9TDs case, which was investigated by both the
*+ and %* competition authorities and with the exchange of information between them, they
came up to the same solution.
). (-chan'e of information*
The agreements usually contain a provision for mandatory exchange of information between
the relative parties. 6ost of the agreements commit partyDs competition authorities to= provide
information already in their possession on re"uest, and provide information voluntarily.
5owever, the parties are not bound to ta!e any action or disclose any information inconsistent
with their national laws.
4. +e'atie comity*
It re"uires each party underta!es to notify the other when it is proposing to enforce its
competition law in a way that night affects the latterDs important interests, and to ta!e their
views into account.
I
see Abir @oy and Jayant :umar= Competition law in India
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Competition Law and International Trade
International E$$ects o$ Cartel
The increasing globaliation of trade, financial transaction and business has highlighted the
importance, applications and enforcement of competition rules at an international scale.
Cartels affect both developed and developing world economies whose total damage may be
significant.
$. International cartel*
These are business arrangements with the ob.ect of eliminating global competition by direct
price fixing, allocation of production, sales, shipments or trade territories in order to destroy
incentives toward price cutting, limiting out so that prices do not fall, by "uota arrangements,
agreement on patent license. The present international law does not provide for a proper
remedy. %ven if strong international agency is created, the nations never will confer powers
on an international body. ?ractical approach will involve parallel national and international
action.
M
A suitable program must be accepted by an international conference and such
international institutions set up as agreed upon. %ach participating government must
underta!e to enforce the provisions of contention within its own .urisdiction.
>. 1ardcore cartels
!
*
It is an agreement by competitors to fix prices, ma!e rigid bids, establish output restrictions
and "uotas, or share or divide mar!ets by allocating customers, suppliers, territories or lines
of commerce. The $%C' has recommended bilateral cooperation and comity in enforcing
laws prohibiting hard core cartel. the committee has recommended following factors to be
ta!en into account while ensuring cooperation between the countries= cooperation to be in
consistent with the re"uested countryDs laws, regulations and important interestE cooperation
by sharing documents and information in their possession with authorities voluntarily or
compulsorilyE member may refuse to comply with the re"uest for assistance or limit its
cooperation as it may consider such not in accordance with its laws and regulationsE members
should agree to engage in consultation with the issues relating to cooperation.
). (-port cartels*
It is an agreement between firms to charge a specified export price and to divide export
mar!ets. They can be categoried into two heads= pure export cartels, directing their efforts
exclusively at foreign mar!et with motive to transfer income from foreign consumers to
domestic producers, and, mixed export cartels, which restrain competition in domestic as well
as foreign mar!et. %xport cartels enable producers in the exporting nation to profit at the
expenses of consumers in importing nations resulting in dead weight loss. This may result in
reciprocal import cartels. The rules regarding export are as extensive and not all aspects of
export cartel conduct that impede international trade are addressed by #T$. 9urthermore, the
#T$ does not mandate the member states to prohibit export cartels and it acts as a flexibility,
which can be used by the member states.
M
see Abir roy and Jayant !umar = competition law in India
K
6any a times there is an overlapping area between hard core cartels and the export cartels. The export cartels
are also !nown as hard core cartels. A hard core cartel has the goal of price fixing or mar!et fixing. An export
cartel may also have the same primary goal but sometimes, they might have strictly efficiency enhancing goals.
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Competition Law and International Trade
International Cooperation: IN.IA
/' Memorandums or Arran!ements si!ned by te Commission 0it
1orei!n a!encies:
A memorandum of understanding ,6$*- between I)'IA and *+ on competition law
cooperation was signed on +eptember 1M, 1001 in #ashington 'C. The 6$* establishes the
framewor! for voluntary cooperation between the *+ antitrust agencies and the Indian
competition authorities. It is recognition on both the sides that the two countries can
effectively cooperate for mutual benefit in the field of competition law enforcement and
policy.
Communication* the 6$* establishes a framewor! for the Indian competition
authorities and the *+ antitrust agencies to consult on matters of competition
enforcement and policy. It also contemplates periodic meetings among officials to
exchange information on policy and enforcement priorities.
Cooperation* the 6$* provides that the Indian competition authorities and the *+
antitrust agencies will wor! to !eep other informed of significant competition policy
and enforcement developments in their .urisdictions, and establishes a framewor! for
technical cooperation.
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2' Membersips o$ International Or!ani3ations:
International Competition +et8or<* CCI has been member of IC)
since its establishment in $ctober, 1008. +ince then, CCI has been an official
invitee to all the meetings, seminars, conferences. $rganied by IC). CCI is
also a member of four #or!ing 7roups Advocacy, Agency %ffectiveness,
*nilateral Conduct and 6ergers and has been actively participating in their
activities.
0/IC2* I)'IA is a member or A@IC+ &the group of emerging economies of
Arail, @ussia, India, China and +outh Africa. The competition authorities of
above said nations expressed their support each other regarding the
cooperation on any issue emerging in their areas regarding competition.
#r'ani5ation for (conomic Co-operation and ,eelopment
7#(C,3* +enior functionaries of CCI have been regularly attending
meetings of competition committee and wor!ing parties as well as those of
global competition forum. The $%C' has been one of the ma.or supporter of
CCI in the area of capacity building activities.
G
annual report 1001&08 of CCI
08
Competition Law and International Trade
(?T/& T(//IT#/I&L @4/I2,ICTI#+* I+,I&
'ue to the overreaching effects of anti&competitive activities of a domestic firm especially in
cases of exports, Competition laws are applied to the conduct of foreign companies. If any
problem occurs outside the country but itDs affecting our domestic mar!et then it can be
resolved at two levels 0- at international level 1- at domestic level. In the absence of binding
international policy every country li!es to have a national solution. The international
component of Competition Law was predominantly concerned with the "uestion of whether
one Country could apply its competition rules extraterritorially against an underta!ing or
underta!ings in another country, where the latter behave in an anticompetitive manner having
adverse effects in the territory of the former and whether there should be laws to prevent the
2excessive3 assertion of extraterritorial .urisdiction. +ection 81 of the Competition Act, 1001
we find that it ma!es provision with regard to %xtraterritorial .urisdiction of Indian
Competition Authority. The ?rovision of +ection 0K states the Competition Commission may
enter into any 6emorandum or arrangement with the prior approval of the Central
7overnment, with any agency of any foreign country in order to discharge its duty under the
provisions of this Act. There is difference between a treaty and understanding. Thus the
mandate of the Competition Commission extends beyond the margins of India.
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In case any
agreement that has been arrived from outside of India and is anticompetitive under sec.8 of
the ActE have an appreciable adverse effect on competition or li!ely to have in the Indian
mar!et, the CCI shall have the power to in"uire into such agreement, combination or abuse of
dominant position.
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http=HHcci.gov.inHimagesHmediaH@esearch@eportsHCompetitionN10IssuesN10inN109oreignN10TradeR#ith
N10+pecialN10@eferenceN10toN10India.pdf
0;
Competition Law and International Trade
Conclusion
The foregoing pages show that how competition law is interlin!ed to the international trade.
#hen the worldDs ma.or trading partners travel down the path of harmoniation of trade laws,
there is a need to harmonie the worldDs competition laws also to ripe the fruits of lifting up
the trade barriers. It is very necessary activities and maximie efficiency by way of free trade
contemplated by the #T$. Any number of factor may be more important than a particular
trade opportunity. Aut what is important is that such decisions are clear and transparent and
that the benefits and costs are well understood. 7overnment have full responsibility to ensure
that the full range of impacts of tariff and non&tariff barriers, and anti&competitive law, is
considered before putting them in place. The Sfirst best/ course of action is to avoid poor
policy choices.
CCI, despite of having extra territorial .urisdiction under the Competition Act, 1001,
still it re"uires cooperation arrangement and substantial capacity with the foreign
authorities in order to ma!e it effective and such be .udicious.
Though there is exemption on export cartels, the CCI should see that such exemption
is not favoring our nation at the cost of domestic consumers.
Competition authority should loo! after it that if there is any harm to our country by
importing those finished products whose raw material is exported by India itself.
Areas should be found where the international cooperation can ta!e place.
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Competition Law and International Trade
4e$erences
$. International trade= fee, fair and openB by Patrick Love and Ralph Lattimore
>. Competition law in India by Abir Roy and Jayant Kumar
). %ssays on the International Trading +ystem= An *nfinished Journey by Pradeep S.
Mehta
4. A 7eneral Theory of Trade and Competition= Trade Liberalisation and Competitive
6ar!ets by Shanker Singham
5. www.cci.gov.in
6. www.wto.org
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