International Competition Law

International Competition Law: A New Dimension for the WTO?
By Martyn Taylor, 2006

Competition Law involves laws that promote or maintain market competition by regulating anti-competitive conduct. However, modern competition laws have traditionally eolved to promote and maintain competition in markets principally within the territorial boundaries of each nation-state. Domestic competition laws are not usually concerned with activity beyond territorial borders unless it has significant domestic affects. This limited territorial approach has created difficulties in an increasingly globalised world in which transactions subsume multiple territorial spaces. Anti-competitive conduct may have adverse economic effects in multiple jurisdictions, unconfined by territorial boundaries. While competition law remains essentially national, competition issues have become increasingly international, creating a regulatory disjunction. 

On the one hand, under-regulation may occur. Anti-competitive conduct may not be prevented due to ineffective regulation, particularly as firms have every incentive to structure their arrangements to arbitrage cross-border regulatory differences. Conversely, over-regulation may occur. Legitimate competition may be impeded by excessive regulation, particularly where regulation aggregates over multiple jurisdictions. Historically, to address perceived under-regulation of anti-competitive conduct, nations commenced applying their domestic competition laws on an extraterritorial basis to regulate foreign anti-competitive practices with adverse effects on their domestic markets. Such extraterritorial application of competition laws remains limited and has created significant jurisdictional conflict. More recently, to address both under-regulation and over-regulation, nations have sought to negotiate bilateral co-operation agreements in relation to competition law matters. While such bilateral agreements clearly assist, they do have clear limitations. As a result, international attention has turned to the possibility of negotiating a multilateral agreement on competition law, referred to as an 'international competition agreement'. 

Historically, the potential for an international competition agreement has been recognised by several initiatives. In 1945, in negotiations preceding the adoption of the General Agreement on Tariffs and Trade (GATT), limited international competition obligations were proposed within the Charter for an International Trade Organisation. While these obligations were not adopted within the GATT at its inception in 1947, a number of attempts were subsequently made to incorporate competition provisions. In 1994, with the conclusion of the Uruguay Round of GATT Multilateral Negotiations, the World Trade Organisation (WTO) was created. The Agreement Establishing the WTO included a range of limited provisions addressing various cross-border competition issues on a sector-specific basis. 

Following further consideration of international competition issues, a formal WTO Working Group on the Interaction Between Trade and Competition Policy was established by a WTO Ministerial Conference in Singapore in 1996. The WTO Working Group has investigated various issues relating to the incorporation of competition law and policy into the WTO. Ohter organisations, such as the World Bank, the Organisation for Economic Co-operation and Development (OECD), and the International Bar Association, have also contributed to the analysis under a variety of different initiatives. More recently, WTO Ministerial Conferences in Doha (2001) and Cancun (2003) have contemplated formal WTO negotiations on competition law and policy. 

Accordingly, international competition issues now have a prominent position on the international trade policy agenda. One proposes for an international competition agreement should be incorporated into the WTO.

1. An international competition agreement is desirable and would be welfare-enhancing relative to the status quo. There is a sufficient basis for an international competition agreement. Existing initiatives towards the regulation of cross-border anti-competitive conduct have clear limitations that could be overcome by an international competition agreement.

2. The WTO could provide a suitable institutional vehicle for an international competition agreement. The relationship between international trade law and international competition law can be reconciled at a theoretical level by the concept of market contestability. At a practical level, an international competition agreement could address under-regulation and over-regulation in the trade-competition regulatory matrix, realising substantive benefits to international trade and competition. 

3. The WTO would provide the optimal institutional vehicle for an international competition agreement. The optimal content, approach and structure for a WTO competition agreement can be clearly ascertained. A multilateral WTO competition agreement would not be politically achievable at the present time. However, a plurilateral WTO competition agreement would be politically achievable. Bearing the above in mind, a plurilateral agreement should be incorporated into the WTO.

Draft Negotiating text for a plurilateral WTO competition agreement.

Plurilateral Agreement on International Competition

Structure of the Agreement

Preamble

Part I: General Provision

Art. 1. Acceptance and accession

Art. 2. Implementation of the Agreement

Art. 3. Scope of application and jurisdiction

Part II: Objectives and Core Principles

Art. 4. Objectives of the Agreement

Art. 5. Principle of non-discrimination

Art. 6. Principle of transparnecy

Art. 7. Principle of procedural fairness

Art. 8. Principle of comprehensive application

Art. 9. Principle of international co-operation

Part III: Universal Competition Principles

Art. 10. Markets

Art. 11. Market contestability

Part IV: Regulation of UNilateral COnduct

Art. 12. Abuses of market power

Part V: Regulation of Concerted Conduct

Art. 13. Horizontal restraints

Art. 14. Vertical restraints

Art. 15. Export, import and international cartels

Part VI: Regulation of Market Concentration

Art. 16. Business concentrations with international dimension

Art. 17. Notification requirements

Art. 18. Excessive market concentration

Part VII: Enforcement

Art. 19. Territorial and extraterritorial enforcement

Art. 20. Remedies

Part VIII: Institutional Provisions

Art. 21. National Competition Agencies

Art. 22. Competition Council

Art. 23. International Competition Agnecy

Art. 24. Relationship with existing institutions

Art. 25. Dispute resolution

Part IX. Developing and Least Developed Countries

Art. 26. Special and differential treatment

Art. 27. Technical assistance

Part X. Development of the Agreement

Art. 28. Annual review and regular negotiations

Art. 29. Amendments

Art. 30. Consideration of competition policy in the WTO

Part XI: Final Provisions

Art. 31. Withdrawal and non-application

Art. 32. Deposit and registration

Art. 33. Miscellaneous

Schedule of Specific Commitments

Annexe on Non-Discrimination Exemptions.