Competition law and the millennium round

Journal of International Economic Law

Volumn 2, Issue 4, 1999, Pages 665-679

  Fox, Eleanor M ^a  

^a NEW YORK UNIVERSITY SCHOOL OF LAW   (United States)

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EID: 0001261705     PISSN: 13693034     EISSN: None     Source Type: Journal    
DOI: 10.1093/jiel/2.4.665     Document Type: Article

References (51)

1. Draft Havana Charter, ch V, Art. 46 (1948).
2. OECD, Guidelines for Multinational Enterprises, Annex to the Declaration of 21 June 1976 by Governments of OECD Member Countries on International Investment and Multinational Enterprises. Both earlier and later OECD recommendations (1967, 1995) were devised to promote international co-operation by comity; and in 1998 the OECD adopted a recommendation against hard core cartels; see note 35 below.
3. See Eleanor Fox and Lawrence Sullivan, 'Antitrust - Retrospective and Prospective: Where Are We Coming From? Where Are We Going?', 62 NYUL Rev 936 (1987). The most recent in the line of Supreme Court cases underscoring the limits of US antitrust law and noting that antitrust is not a vehicle for proscribing 'competitive practices thought to be offensive to proper standards of business morality' is NYNEX Corp. v. Discon, Inc., 119 S Ct 493, 499 (1998), quoting Professors Areeda and Hovenkamp.
4. See Eleanor Fox and Lawrence Sullivan, 'Antitrust - Retrospective and Prospective: Where Are We Coming From? Where Are We Going?', 62 NYUL Rev 936 (1987). The most recent in the line of Supreme Court cases underscoring the limits of US antitrust law and noting that antitrust is not a vehicle for proscribing 'competitive practices thought to be offensive to proper standards of business morality' is NYNEX Corp. v. Discon, Inc., 119 S Ct 493, 499 (1998), quoting Professors Areeda and Hovenkamp.
5. LDCs wanted to protect themselves from the power of the multinational enterprises - a goal in harmony with the anti-power stance of US antitrust law in the 1960s. In the early 1980s, however, US law became pro-efficiency rather than anti-power, thus 'unleashing' the MNEs. See Eleanor Fox, 'Harnessing the Multinational Corporation to Enhance Third World Development - The Rise and Fall and Future of Antitrust as Regulator', 10 Cardozo L Rev 1981 (1989).
6. See Eleanor Fox, 'Toward World Antitrust and Market Access', 91 Am J Int'l L 1 (1997), 10-12. European competition law is more holistic than US competition law; it has regard for the competitors that make up the marketplace as well as the consumers they serve. See Eleanor Fox and Robert Pitofsky, 'United States', ch 7, and Eleanor Fox, 'US and EU Competition Law: A Comparison', ch 10, in E. M. Graham and J. D. Richardson, eds, Global Competition Policy (Institute for International Economics 1997).
7. See Eleanor Fox, 'Toward World Antitrust and Market Access', 91 Am J Int'l L 1 (1997), 10-12. European competition law is more holistic than US competition law; it has regard for the competitors that make up the marketplace as well as the consumers they serve. See Eleanor Fox and Robert Pitofsky, 'United States', ch 7, and Eleanor Fox, 'US and EU Competition Law: A Comparison', ch 10, in E. M. Graham and J. D. Richardson, eds, Global Competition Policy (Institute for International Economics 1997).
8. See Eleanor Fox, 'Toward World Antitrust and Market Access', 91 Am J Int'l L 1 (1997), 10-12. European competition law is more holistic than US competition law; it has regard for the competitors that make up the marketplace as well as the consumers they serve. See Eleanor Fox and Robert Pitofsky, 'United States', ch 7, and Eleanor Fox, 'US and EU Competition Law: A Comparison', ch 10, in E. M. Graham and J. D. Richardson, eds, Global Competition Policy (Institute for International Economics 1997).
9. See Hanford Fire Ins. Co. v. California, 509 US 764 (1993); Å Åhlström Osakeyhtiö v. Commission (Wood pulp), Cases 89, 104, 114, 116-117, 125-9/85, [1998] ECR 5193; Gencor v. Commission, Case T-102/96 [1999] 5 CMLR 1076 (Court of First Instance). Were there not an effects doctrine, we would long ago have adopted an international substantive law of antitrust.
10. See Hanford Fire Ins. Co. v. California, 509 US 764 (1993); Å Åhlström Osakeyhtiö v. Commission (Wood pulp), Cases 89, 104, 114, 116-117, 125-9/85, [1998] ECR 5193; Gencor v. Commission, Case T-102/96 [1999] 5 CMLR 1076 (Court of First Instance). Were there not an effects doctrine, we would long ago have adopted an international substantive law of antitrust.
11. See Hanford Fire Ins. Co. v. California, 509 US 764 (1993); Å Åhlström Osakeyhtiö v. Commission (Wood pulp), Cases 89, 104, 114, 116-117, 125-9/85, [1998] ECR 5193; Gencor v. Commission, Case T-102/96 [1999] 5 CMLR 1076 (Court of First Instance). Were there not an effects doctrine, we would long ago have adopted an international substantive law of antitrust.
12. See Eleanor Fox, 'Toward World Antitrust and Market Access', 91 Am J Int'l L 1 (1997), 10-12. The enforcement was to be limited to cases in which the host country had an antitrust law that also proscribed the challenged acts, and it failed to enforce that law even after US requests that it do so.
13. For the shrinking of US antitrust law to correct errors and excesses, see Interview with William F. Baxter, Assistant Attorney General, Antitrust, 52 Antitrust LJ 23 (1983); 51 Antitrust LJ 23 (1982); 50 Antitrust LJ 151 (1981). See also 1988 Department of Justice International Guidelines, § 4.1 and accompanying footnotes (superseded by removal of footnote 159 in 1992 and promulgation of new joint federal agency international guidelines in 1995, printed at 4 CCH Trade Reg Rep ¶ 13,107).
14. For the shrinking of US antitrust law to correct errors and excesses, see Interview with William F. Baxter, Assistant Attorney General, Antitrust, 52 Antitrust LJ 23 (1983); 51 Antitrust LJ 23 (1982); 50 Antitrust LJ 151 (1981). See also 1988 Department of Justice International Guidelines, § 4.1 and accompanying footnotes (superseded by removal of footnote 159 in 1992 and promulgation of new joint federal agency international guidelines in 1995, printed at 4 CCH Trade Reg Rep ¶ 13,107).
15. For the shrinking of US antitrust law to correct errors and excesses, see Interview with William F. Baxter, Assistant Attorney General, Antitrust, 52 Antitrust LJ 23 (1983); 51 Antitrust LJ 23 (1982); 50 Antitrust LJ 151 (1981). See also 1988 Department of Justice International Guidelines, § 4.1 and accompanying footnotes (superseded by removal of footnote 159 in 1992 and promulgation of new joint federal agency international guidelines in 1995, printed at 4 CCH Trade Reg Rep ¶ 13,107).
16. See Leon Brittan, 'A Framework for International Competition', address delivered at World Competition Forum, Davos, Switzerland (3 February 1992).
17. See Joel Klein, 'Anticipating the Millennium: International Antitrust Enforcement at the End of the Twentieth Century', ch 1, and Karel van Miert, 'International Cooperation in the Field of Competition: A View from the EC', ch 2, in B. Hawk, ed, 1997, Fordham Corp L Inst, International Antitrust Law & Policy (1998), describing the US/EU co-operation agreement of 1991 and anticipating the positive comity agreement of 1998. In April 1999 the United States and Australia signed the first bilateral agreement specifically designed to facilitate the exchange of evidence in antitrust investigations (subject to consideration by Australian Parliament). All three agreements are printed at 4 CCH Trade Reg Rep ¶ 13,500 et seq.
18. See Joel Klein, 'Anticipating the Millennium: International Antitrust Enforcement at the End of the Twentieth Century', ch 1, and Karel van Miert, 'International Cooperation in the Field of Competition: A View from the EC', ch 2, in B. Hawk, ed, 1997, Fordham Corp L Inst, International Antitrust Law & Policy (1998), describing the US/EU co-operation agreement of 1991 and anticipating the positive comity agreement of 1998. In April 1999 the United States and Australia signed the first bilateral agreement specifically designed to facilitate the exchange of evidence in antitrust investigations (subject to consideration by Australian Parliament). All three agreements are printed at 4 CCH Trade Reg Rep ¶ 13,500 et seq.
19. See Eleanor Fox, 'Vision of Europe: Lessons for the World', 18 Fordham Int'l LJ 379 (1994) (introduction to symposium issue).
20. The Agreement on Trade-Related Aspects of Intellectual Property (TRIPs), Article 40, states that members are authorized to enact laws against intellectual property licensing practices 'having an adverse effect on competition'. The General Agreement on Trade in Services (GATS), Article 9.1, requires each member to prohibit suppliers of monopoly services in its territory from abusing its market power in conflict with the obligation of most favored nation treatment); thus the article forbids discriminatory abuse of dominance, as by giving local telephone networks preferred or exclusive access to a telecom bottleneck. The Telecommunications annex requires that service providers in other member states be given access to public telecommunications networks on reasonable, nondiscriminatory terms; and, pursuant to the reference paper to the agreement, members commit to maintain adequate measures to prevent anticompetitive practices by the major suppliers. The Agreement on Technical Barriers to Trade (TBT), Article 3.4, forbids a member from encouraging private testing and certification organizations to discriminate against foreign products contrary to the national treatment principle. The Anti-dumping Agreement, Article 3.5, requires the administering authority, when determining injury to a domestic industry, to take into account any restrictive business practices by members of the industry. The Safeguard Agreement, Article 11.1, prohibits members from encouraging or supporting private firms' adoption of measures equivalent to voluntary export restraints; thus members may not encourage or support export cartels; at least those in the form of limiting supply. See Mitsuo Matsushita, 'Reflections on Competition Policy/Law in the Framework of the WTO', ch 4 in B. Hawk, ed, 1997 Fordham Corp L Inst, International Antitrust Law & Policy (1998); WTO 1997 Annual Report, Special Topic.
21. The Agreement on Trade-Related Aspects of Intellectual Property (TRIPs), Article 40, states that members are authorized to enact laws against intellectual property licensing practices 'having an adverse effect on competition'. The General Agreement on Trade in Services (GATS), Article 9.1, requires each member to prohibit suppliers of monopoly services in its territory from abusing its market power in conflict with the obligation of most favored nation treatment); thus the article forbids discriminatory abuse of dominance, as by giving local telephone networks preferred or exclusive access to a telecom bottleneck. The Telecommunications annex requires that service providers in other member states be given access to public telecommunications networks on reasonable, nondiscriminatory terms; and, pursuant to the reference paper to the agreement, members commit to maintain adequate measures to prevent anticompetitive practices by the major suppliers. The Agreement on Technical Barriers to Trade (TBT), Article 3.4, forbids a member from encouraging private testing and certification organizations to discriminate against foreign products contrary to the national treatment principle. The Anti-dumping Agreement, Article 3.5, requires the administering authority, when determining injury to a domestic industry, to take into account any restrictive business practices by members of the industry. The Safeguard Agreement, Article 11.1, prohibits members from encouraging or supporting private firms' adoption of measures equivalent to voluntary export restraints; thus members may not encourage or support export cartels; at least those in the form of limiting supply. See Mitsuo Matsushita, 'Reflections on Competition Policy/Law in the Framework of the WTO', ch 4 in B. Hawk, ed, 1997 Fordham Corp L Inst, International Antitrust Law & Policy (1998); WTO 1997 Annual Report, Special Topic.
22. Report (1998) of the Working Group on the Interaction Between Trade and Competition Policy to the General Council, WT/WGT CP/2, 8 December 1998.
23. I do not mean to overstate this point. Modes of bilateral co-operation are likely to continue and evolve. Nonetheless nationalism and conflict are not unexpected by-products of the application of national law to international problems in a world without ongoing efforts to reach and deepen consensus, and without a common understanding of rules of the game.
24. See Ernst-Ulrich Petersmann, 'Legal, Economic and Political Objectives of National and International Competition Policies', New Eng L Rev (in publication, 1999), advocating '[i]nternational "linking principles" for the "interaction problems" of trade and competition policies, especially if they focus on the private equivalents of WTO-illegal government restraints . . . '.
25. This proposal does not require that all countries adopt full-blown competition laws. Merely they must not allow unreasonable restraints on market access. The most obvious but not only way to do so is by adoption of competition law at least in the three identified areas. If a nation such as Singapore could guarantee an environment free of anticompetitive impediments to market access by means of assuring absolutely free entry into markets (i.e. no government barriers), perhaps they should be allowed to try; this is a detail.
26. State-owned enterprises might restrain competition.
27. This addition could help to close a loophole identified in the Fuji-Film/Kodak matter brought before the WTO, Japan - Measures Affecting Consumer Photographic Film and Paper (WTO panel final report 1998).
28. TRIPs, Art. 40(3) and (4).
29. TRIPs, Art. 41.
30. This rule would correspond with expectations of the firms that become defendants. When the forum is the exporting country, the rule would be equivalent to a rule of mutual recognition.
31. TRIPs, Part V.
32. Therefore it is not necessary to reach the claim that pro-market access competition rules degrade competition law. The argument for degradation is a peculiarly American argument. It postulates that rules to protect competitors' rights are virtually always in tension with rules to protect consumer welfare; that rules that grant more competitor welfare mean less consumer welfare.
33. Accountability may be further enhanced by rules of judicial restraint. The WTO Appellate Body appears to be exercising such restraint. See India - Patent Protection for Pharmaceutical and Agricultural Chemical Products, Appellate Body, WTO doc. WT/D 550/AB/R, 19 December 1997 (97-5539). See also Jerome H. Reichman, 'Securing Compliance with the TRIPS Agreement after US v. India', J. Int'l Econ L 585 (1998).
34. Accountability may be further enhanced by rules of judicial restraint. The WTO Appellate Body appears to be exercising such restraint. See India - Patent Protection for Pharmaceutical and Agricultural Chemical Products, Appellate Body, WTO doc. WT/D 550/AB/R, 19 December 1997 (97-5539). See also Jerome H. Reichman, 'Securing Compliance with the TRIPS Agreement after US v. India', J. Int'l Econ L 585 (1998).
35. What can be done as well or better at a lower level must be done at the lower level.
36. European nations seem more receptive than US Americans to a world agreement against export cartels. Because of their persistent and successful efforts to establish a common market, they see more clearly the mutual interest in dismantling artificial barriers and actualizing an economic community. It is no longer thinkable that German firms should have a right to cartelize into France unless France is able to catch them, and vice versa.
37. It can be argued that the Safeguard Agreement, Article 11.1, prevents nations from exempting export cartels; but it does not require them to prohibit export cartels.
38. See Eleanor Fox and Janusz Ordover, 'The Harmonization of Competition and Trade Law: The Case for Modest Linkages of Law and Limits to Parochial State Action', 19 World Competition L & Econ Rev 5 (no 2, December 1995).
39. Most harmed nations do not have the power and practical ability to defend themselves against offshore cartels.
40. I thank Merit Janow for her thoughts and our discussions regarding a World Competition Forum.
41. See J. W. Rowley and A. N. Campbell, eds, 'Policy Directions for Global Merger Review, A Special Report by the Global Forum for Competition and Trade Policy', Global Competition Review, April 1999.
42. See Eleanor Fox, 'World Antitrust: A Principled Blueprint', an essay in honor of Professor Wolfgang Fikentscher (November 1997). See also Anne-Marie Slaughter, 'The Real New World Order', 76 Foreign Affairs 5 (Sept/Oct 1997), 183.
43. See Eleanor Fox, 'World Antitrust: A Principled Blueprint', an essay in honor of Professor Wolfgang Fikentscher (November 1997). See also Anne-Marie Slaughter, 'The Real New World Order', 76 Foreign Affairs 5 (Sept/Oct 1997), 183.
44. See Eleanor Fox, 'Vision of Europe: Lessons for the World', 18 Fordham Int'l LJ 379 (1994) (introduction to symposium issue).
45. See Joanna R. Shelton, Deputy Secretary-General, 'OECD, Competition Policy: What Chance for International Rules?', remarks at Wilton Park, UK, 25 November 1998 (suggesting efforts to form consensus not only on procedural and due process rights but also on analytical concepts such as market definition, barriers to entry, and abuse of dominance).
46. Recommendation of the Council Concerning Effective Action Against 'Hard Core' Cartels, C(98)35, adopted at Paris, 27-28 April 1998. This recommendation can be strengthened to narrow the exceptions.
47. See Robert Pitofsky, Chairman, US Federal Trade Commission, 'Competition Policy in a Global Economy - Today and Tomorrow', remarks at European Institute's Eighth Annual Transatlantic Seminar on Trade and Investment, Washington, DC, 4 November 1998. Naked means: The restraint is imposed only to impose costs on rivals or eliminate competition; not to respond better to markets and consumers.
48. The WTO Working Group on the Interaction Between Trade and Competition Policy is currently serving as a congenial forum for broad interchange on competition issues. There are, however, three possible drawbacks of the WTO as a continuing forum. (1) The conversations within the WTO are on 'trade' ground and thus include trade as well as competition representatives. Progress on non-trade competition issues might be greater in a competition forum. (2) Progress within the WTO normally entails dispute resolution. Some nations are currently averse to dispute resolution of competition issues, and pressure to include a dispute resolution component might undermine the formation of agreement. (3) The possible additional competition competence is only one of many similarly-situated potential new competences for the WTO. It must be considered whether the WTO can bear the weight of the additional responsibilities while not losing acuity at the core of its work. But see Ernst-Ulrich Petersmann, 'How to Constitutionalize International Law and Foreign Policy for the Benefit of Civil Society', 20 Mich J Int'l L 1 (1999), arguing that international institutions must be constructed to bear the weight appropriate to their challenges, but to do so they must 'constitutionalize' their principles and processes.
49. If domestic firms cannot protect their home market and make monopoly profits at home, they are less likely to be able to engage in international price discrimination. Moreover, they would need to recover a return to fixed costs from their sales abroad, just as they must from their sales at home.
50. See Eleanor Fox and Janusz Ordover, above, note 28.
51. See Michael J. Trebilcock, 'Competition Policy and Trade Policy - Mediating the Interface', 30 J World Trade 71 (August 1996).