Module_9

MODULE 9
GLOBALISATION OF COMPETITION LAW

The proliferation of Competition Law across the continents is major phenomenon, witnessed
firstly in the late 1990’s. Since 1998 the world has seen 61 new competition laws taking
statutory shape and more than 68 countries have upgraded their competition laws.1 Global
competition now shapes economies and societies in ways unimaginable only a few
years ago, and laws shape and maintain global competition, determining how effective
global markets are and how they distribute benefits and harms.2 This topic discusses how this
global phenomenon has taken shape in various jurisdictions across the globe [“Part I”] and
how has this development led to interaction of various jurisdictions across the globe [“Part
II”].

PART I: COMPETITION LAW IN DIFFERENT JURISDICTIONS

This part deals with domestic experiences of various global Competition Laws. The initial
discussion will revolve around the Indian Competition Law and the subsequent discussion
will be based upon how different jurisdictions have differentiated their respective laws on
different aspects of Competitions and Anti-trust Laws. The discussion will then,
chronologically, shift to countries like The United States of America, European Union, Japan,
South Korea and China. Various developing themes and models of Competition Laws across
Australia and Canada will ensue the latter part of the discussion.

• INDIA

The jurisprudence of Indian Competition is older than many of the developing countries in
the globe. Nevertheless, it is still called upon as a part of the Green Field Competition
regime. This observation derives its backing from certain facts. The Monopoly and
Restrictive Trade Practices Act, 1969 [“MRTP Act”] was conceived and formulated more

1Fredric Jenny, The Globalization of Competition Law, 2016, http://www.compcom.co.za/wp-

content/uploads/2016/07/11.50-frederic-Competiton-law-An-internzational-perpsective-Lodnon-March-

2013.pdf.

2David Gerber, Global Competition, 2012,

https://books.google.co.in/books?hl=en&lr=&id=KZisNMYg1GkC&oi=fnd&pg=PP1&dq=globalization+of+co

mpetition+law&ots=tNCDkKf45B&sig=ugjOCTdcIArtwh6DKAATbIByQqk#v=onepage&q=globalization%20

of%20competition%20law&f=false.

than 40 years ago as a consequence of “Command-and-Control” policy approach of the
Government.3 The leap from the MRTP Act to the Competition Act of 2002 was a result of
the multifaceted problems faced by India during the Economic reforms of the 1990’s. Since
then the Supreme Court has highlighted the purpose of the Act in the Indian jurisdiction by
saying that its main purpose is to promote economic efficiency using competition as a means
of assisting the creation of a market responsive to consumer preferences. The Indian
framework comprises of a single legislation and single agency unlike the USA. Let us
examine various nuances of the 2002 Act.

Anti-Competitive Agreements: Section 3 (1) of the Act prohibits any agreement with respect
to “production, supply, distribution, storage and acquisition or control of goods or services
which causes or is likely to cause an appreciable adverse effect on competition within India.4
An observation with regards to this provision is that the phrase ‘appreciable adverse effect on
competition’ is not defined in the Act. However, Section 19 (3) of the Act specifies certain
factors for determining AAEC. The intent of legislature reflected vide the mandatory
language of Section 19 (1) of the Act is that the CCI is required to carry a balanced
assessment of anti-competitive effect as well pro-competitive justification of the agreements.

Abuse of Dominance: Section 4 (1) of the Act prohibits any enterprise from abusing its
dominant position. A list of abusive activities under the Act covers both exploitative abuses
as well as exclusionary abuses.

Merger Regulation: Sections 5 and 6 of the Act are the operative provisions for the regulation
of combination. The Act sets a threshold, below which a combination is not regarded as a
combination and therefore it is outside the merger regime of the Act. The threshold is defined
in terms of assets or turnover.

• UNITED STATES OF AMERICA

Compared to the Indian structure including single enactment and single organization, the US
implementation system involves different offices and enactment. In the US, two government
organizations bear the significant obligation of upholding Anti-trust Laws. The Antitrust
Division of the US Department of Justice ("DoJ") and the Federal Trade Commission

3 Dr. S Chakravarthy, MRTP Act metamorphoses into Competition Act, Available at www.cuts-
international.org/doc01.doc, last visited on November 7, 2012.
4 Section 3(a), Competition Act, 2002.

("FTC"). The previous is a part of the legislature and the latter is an autonomous managerial
organization, like the CCI. The Sherman Act is the oldest federal antitrust statute, enacted in
1890 and deals usually with anti-competitive agreements and monopoly exercised via firms.
The Clayton Act, 1914 deals with specific commercial enterprise practices which include
mergers, fee discrimination and tying, distinctive deliver etc. In the United States there are
extensive sets of exemptions. While the Sherman Act (1890), the Clayton Act (1914) and
other legislation do not list them, specific areas for the exemptions have been defined by
court and congressional actions. The areas cover agriculture, defence mobilization, energy,
export trade associations, government enterprises, insurance, labour, learned professions,
marine insurance, newspaper joint operations, resale price maintenance, small business
concerns, sports, State actions, and transportation by air, ocean and surface.

Objective of the Policy: The US Anti-trust Policy is designed to protect consumer welfare by
producing products at reasonable prices and at the same time introducing elements of fairness
into the transaction, thereby reducing concentration of economic power.

Cartels: In US, Price fixing is treated illegal per se. However the rule is not that strict and
subject to qualifications. Though there is ambiguity on this front, the US Law in seen to be
inclined against the formation of cartels and thereby fixation of price. These activities are
treated with criminal sanctions.

Vertical agreements: Section 1 of the Sherman Act has been directed against horizontal
agreements, as well as vertical agreements. Some of them covered by U.S. law are the
following5:

1. tying: selling a product only on the condition that the purchaser will purchase a
second product simultaneously;

2. exclusive supply: purchasing a product only on the condition that the seller not supply
one’s competitors;

3. exclusive distribution: selling a product to a distributor only on the condition that the
purchaser not also distribute the products of one’s competitors;

4. territorial restrictions: selling a product to a distributor on the condition that the
distributor sell only in a certain territory, often with the assurance that no other
distributors of the product will be allowed to sell in that territory;

5 Russell Pittman, Competition Law and Policy in the United States, 2016,
https://voxukraine.org/en/competition-law-and-policy-in-the-united-states/.

5. refusal to deal: selling a product to some willing distributors but not to others, or
refusal to sell a product to anyone (as opposed to, for example, leasing it);

6. Minimum resale price maintenance: selling a product to a distributor on the condition
that the distributor will sell the product to its customers at an agreed-upon price, or at
a price no lower than a certain price.

• EUROPEAN UNION

The framework of EU competition law law is based on the Treaty on the Functioning of the
European Union ("Treaty"). The Treaty covers a wide range of subjects; however, in the area
of competition law covered by Articles 101 and 102, the substantial legal development has
occurred. The Treaty generally applies to agreements and conduct between EU member states
through the practice of law trade Appellate antitrust laws also have their respective national
competition agencies and laws in each constituent EU state.

The Treaty did not specify the competition law enforcement institutional structure and the
European Council ("Council") framed the same. The Council entrusted the European
Commission ("EC") with the duty to ensure Treaty compliance and to enforce, implement
and develop the competition law and policies of the European Community.

Directorate General: The Directorate General for Competition of the European Commission
enforces EU competition law in co-operation with the National Competition Authorities
across member states. It can6:

a) investigate businesses and industries;
b) start court proceedings against member businesses and member states;
c) investigate business sectors;
d) fine businesses that are acting uncompetitively; and
e) Give its opinion on proposed mergers that have an effect within a number of member

states.

Monopolies: EU anti-trust laws prevent a single business from benefiting from being the
only, or the strongest, service provider.

6 Competition Law in Europe, https://www.nibusinessinfo.co.uk/content/european-union-competition-law-
overview.

Mergers: Under the law on mergers in European companies, when they merge, they must not
reduce competition in that market sector.

Cartels: EU cartel legislation prevents non-competitive agreements between undertakings in
the same industry. By agreeing to jointly raise prices, for example.

State Aid: State and regional aid are only permitted under certain circumstances.

• JAPAN

Competition law was originally introduced in Japan to achieve the political goal of economic
democratization, i.e. to ensure equal opportunity for all individuals to engage in economic
activity and to avoid excessive concentration of economic power.7

Horizontal Restraints: The prohibition of trade by the Antimonopoly Act on unreasonable
restrictions is comparable to Section 1 of the Sherman Act and Article 101 of the TFEU. An
early case8, however, held that it applies only to agreements that are in a competitive
relationship between companies. The prohibition therefore only applies to horizontal
restrictions such as price-fixing and bid-rigging rather than vertical restrictions.

Private Monopolization: The ban on private monopolization can be compared to the ban on
monopolization by the Sherman Act and the ban on abuse of a dominant position by the EU,
although there are some notable differences:

a) There is no statutory requirement of monopoly power or a dominant position.
b) There are two types of private monopolization: exclusion-type and control type.
Unfair Trade Practices: The Antimonopoly Act prohibits ‘unfair trade practices. The
prohibition is aimed at a catalogue of mostly vertical restrictions in its present form. Banning
unfair trade practices reflects a strong concern about fair competition rather than about
efficiency or consumer welfare.

7 See Hiroshi Iyori, ‘Competition Policy and Government Intervention in Developing Countries: An
Examination of Japanese Economic Development’ (2002) 1 Washington University Global Studies Law
Review 35, 39–40.

8 Tokyo Kōtō Saibansho [Tokyo High Ct] 9 March 1953, 2 Hanrei jihō 8 (KK Asahi Shinbunsha et al v Japan
Fair Trade Commission).

Abuse of a Superior Bargaining Position: The prohibition is intended to curtail exploitative
abuse between businesses in vertical transactions. It has been applied frequently to large
retailers that exploit suppliers or to powerful franchisors that exploit franchisees. From a
comparative perspective, the ban on the abuse of a superior negotiating position is often
presented in Japan as a unique feature of competition law.9
Merger Control: They are disallowed when they ‘may substantially restrain competition in a
particular field of trade. This requires delineating the relevant product and geographic market.

• SOUTH KOREA
Article 1 of the Monopoly Regulations and Fair Trade Act [“MRFTA”] defines its purpose as
being:

to promote fair and free competition, to thereby encourage creative enterprising activities, to
protect consumers, and to strive for balanced development of the national economy by
preventing the abuse of market-dominating positions by enterprises and the excessive
concentration of economic power, and by regulating undue collaborative acts and unfair
trade practices.

In addition to promoting economic efficiency, which is arguably the sole concern of U.S.
antitrust law, Korean competition law can be said to pursue multiple objectives.

Cartels: The Omnibus Cartel Repeal Act ("Cartel Act"), abolished the formation of cartels by
eight categories of certified professionals, including lawyers, accountants, customs officers,
patent lawyers, architects, and veterinarians.10 The MRFTA required a concerted act to
support the finding of cartel activity until 1993. Since then, however, the MRFTA has been
amended to the effect that such actions may infringe the MRFTA even in the absence of a
concerted act, but with an agreement thereon.

Business Combinations: The MRFTA prohibits a combination of companies which
substantially restricts competition in its relevant market. The MRFTA requires that a report
be submitted to the KFTC when a combination of companies meets certain requirements. Due

9 Simon Vande Walle, Tadashi Shiraishi, Competition Law in Japan, 2015,
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2219881.
10 Omnibus Cartel Repeal Act, No. 5815 (1999).

to the increasing impact of transnational M&A activities on the domestic market, the KFTC
also introduced a notification threshold for M&A’s between foreign companies in 2003.
Private Claims: Private lawsuits based on the MRFTA provisions are rare because complaints
could only be brought before the court after the corrective measures imposed by the KFTC
are finalized. Individuals could possibly file a tort claim under the Civil Code, but this would
be a rare occurrence due to the difficulty of gathering evidence.

• CHINA
Most enforcement of competition takes place under China's Anti-Monopoly Law (AML),
which came into force in 2008. It applies to the whole of China except Hong Kong and
Macau.
Anti-Competitive Agreements: They are defined as agreements that eliminate or restrict
competition. There is a specific list of monopoly agreements that are automatically presumed
to be illegal such as Price Fixing Agreements, arrangements limiting production, distribution
or purchase.
Abuse of dominant position: Apart from factors like price control, blocking entry into the
market etc., there is also a presumption of absence of dominance created when the market
share of two or more undertakings is less than 10%. However, unlike USA and EU, China
does not strictly adhere to the market share tests or collective dominance.11
Concentration of Undertakings: It is commonly known and acknowledged that investment by
foreign investors in the form of M&A (including concentration of undertakings) is subject to
government approval in China, which mainly affects the following three parts in accordance
with the applicable PRC laws and regulations:

a) Industrial Policy
b) Anti-Monopoly Review
c) Security Review

11 Qihoo v tencent, 2013) Min San Zhong Zi No. 4).

DEVELOPING MODELS OF COMPETITION LAW
• AUSTRALIA

Australia's main competition law statute is the Federal Competition and Consumer Law 2010
(Competition and Consumer Law).12 Article IV of the Competition and Consumer Act
consists of three divisions: Division 1 containing criminal and civil prohibitions on the
conduct of cartels; Division 1A containing prohibitions on anti-competitive pricing and other
disclosures of information in certain prescribed markets; Division 2, which includes
prohibitions against a range of anti-competitive behaviour, including market power misuse,
maintenance of resale prices, exclusive trading, and anti-competitive mergers and
acquisitions.

The Australian Commission on Competition and Consumer Affairs (ACCC) administers and
enforces the Competition and Consumer Act. The ACCC has extensive powers to investigate
anti-competitive behaviour, including powers to require individuals to provide information,
produce documents, and attend for review. The ACCC has the power to get search warrants
as well. The ACCC issued its new Compliance and Enforcement Policy in February 2014.
Under the policy, the key enforcement tools of the ACCC include educational campaigns,
voluntary industry self-regulation codes and schemes, administrative resolutions where
possible, infringement notices, enforceable undertakings under Section 87B, working with
other agencies and, where appropriate, legal proceedings.13

Cartel behaviour in Australia was criminalized in July 2009. A contract, arrangement or
understanding containing a "cartel provision" now has parallel criminal and civil offences for
making or giving effect.

The Competition and Consumer Act contains two core provisions on the anti-competitive
disclosure of pricing and other information: a prohibition per se against the private disclosure
of pricing information between competitors not made in the ordinary course of business ; and
a prohibition against disclosure of pricing or other information when disclosure is made for
the purpose of substantially lessening competition.

12 The Trade Practices Act 1974 (Cth) was renamed the Competition and Consumer Act 2010 (Cth) with effect

from 1 January 2011.

13Georgina Foster, Rowan McMonnies and Irena Apostopoulos, Anti-trust and Competition Laws in Australia,
https://globalcompliancenews.com/antitrust-and-competition/antitrust-and-competition-laws-in-australia/#_ftn1.

Third line forcing is one of a number of Competition and Consumer Law "exclusive dealing"
prohibitions. It is the only type of exclusive deal that is an infringement of the Act per se. It
occurs when a company supplies goods or services or offers a discount, discount or credit on
goods or services, provided that the buyer acquires other goods or services directly or
indirectly from a third party.

These are some of the unique features that prevail in Australian Competition Law. Now let us
look at the model prevailing in Canada.

• CANADA

Competition law in Canada is exclusively federal. It is the responsibility of the Competition
Bureau to administer and enforce Act. If the criminal provisions of the Act have been
breached, the Bureau may make recommendations to the Public Prosecution Service of
Canada ("PPS"). Then the PPS decides how to go about it. The PPS is an independent federal
criminal prosecution agency.14

Competition-reducing conspiracies are prohibited. These include price-fixing agreements
between competitors, allocating markets or customers, controlling a product's supply, and
withholding or withdrawing an offer (bid rigging). Certain harmful distribution practices are
prohibited; specifically those that occur when a supplier places conditions or restrictions on a
product's supply or refuses to supply a product in its entirety. Reviewable practices are
considered by these types of activities, known as tied selling, market restriction, refusal to
deal and exclusive trading. The Competition Tribunal decides whether, by looking at the
specific facts, the conduct violates the Act.

Mergers are subject to review by the Bureau, regardless of their size. The Bureau may review
a merger to determine whether it is a threat to competition and challenge it to the Competition
Tribunal if that threat exists. If the Tribunal decides that the transaction will substantially
reduce competition, the Tribunal may block the merger or order divestiture or other
remedies.15

Private actions are often brought as actions of the class. Claims for private access, added to
the 2002 Act, are rare. The two types of claims are: (1) a "private action" for damages and
other behavior relief infringing the criminal provisions of the Act before the courts; (2) a

14Behdad Hosseini, HLF Blog, 2012, http://www.hosseinilaw.com/competition-law/.
15 Id.

request for "private access" to the Competition Tribunal for conduct that qualifies as a
reviewable practice.

We observe that all these jurisdictions have more or less similarities when it comes to their
respective Competition Laws. However, the little difference that exists is due to their
governance models already in place. The nature of the economy in, for e.g.: USA and China
are quite different and so that difference in their anti-competitive agreement requirements,
Cartel arrangements etc. Proceeding to the next Part of this topic

PART II: ICN: INTERACTION BETWEEN DIFFERENT JURISDICTION
ICN's [“International Competition Network”] mission is to advocate the adoption of
superior competition policy standards and procedures around the world, to formulate
proposals for procedural and substantive convergence and to facilitate effective international
cooperation for the benefit of member agencies, consumers and economies around the
world.16

It focuses on 5 core areas17:

a) Promoting the dissemination of principles of competition
b) Agency effectiveness
c) Prevention, detection, investigation and punishment of Cartel conduct.
d) Promotes the adoption of best practices in the design and functioning of fusion

review schemes.
e) Examines the challenges of analyzing the unilateral behavior of dominant

companies and firms with significant market power.

The International Competition Network is an informal, virtual network aimed at facilitating
global cooperation among competition law authorities. It included 132 member states from
120 jurisdictions exclusively dedicated to the enforcement of international competition.

Origin of ICN

The concept for the ICN originated from the recommendations of the International Advisory
Committee on Competition Policy (ICPAC), a group formed in 1997. In its final report issued
in February 2000, ICPAC called on the U.S. to explore the creation of a new venue — a

16 https://www.internationalcompetitionnetwork.org/.
17 Id.

"Global Competition Initiative" — where government officials, private firms and NGOs
could consult on antitrust issues.18

Government officials and members of the antitrust bar recognized that the best way of
promoting sound and effective enforcement of antitrust in the wake of economic
globalization was by establishing a network of competition authorities and international
competition experts. Following these endorsements, the International Bar Association
convened a meeting in early February 2001 in Ditchley Park, England to discuss the
feasibility of a global antitrust network with more than 40 senior competition officials and
practitioners.

On October 25, 2001, top antitrust officials from 14 launched the ICN at a meeting in New
York City. The following discussion will revolve around certain fundamental areas covered
by the ICN to promote global competition in terms of fairness and efficiency keeping in mind
the interaction between different jurisdictions.

• Guiding Principles for Procedural Fairness in Competition Agency Enforcement

Competition agencies should conduct enforcement issues without political interference in a
consistent, impartial manner. Agencies should have adequate investigative powers and should
adapt their use to the needs of the matter. Competition agencies should have tools and rules to
enable them to cooperate with other government agencies or foreign counterparts to ensure
effective enforcement.19 Enforcement decisions should be transparent and explain the
findings of fact, relevant legal and economic analysis, and any commitments or sanctions.

Competition agency enforcement proceedings should include a process for proper
identification and protection of business confidential information and privileged information
recognition. At the same time, implement enforcement within a reasonable period of time, in
accordance with the circumstances of the case, and avoid unreasonable costs and burdens on
parties, third parties and agencies.

• International Cooperation and Information Sharing in Cartels.

Competition enforcement in today's global economy is essential to transcend national
boundaries in order to protect the benefits of competitive and honest markets. Several

18About Page, International Competition Network,

https://www.internationalcompetitionnetwork.org/wpcontent/uploads/2018/09/AEWG_GuidingPrinciples_ProF

airness.pdf.

19 Id.

jurisdictions have amended their competition laws to allow confidential information to be
shared with foreign competition agencies in accordance with the 2005 OECD Best Practice
Guidelines5. While national legislative and political considerations shape the approach of
each country, there are a number of common features.20 These include maintaining the
discretion of the requested competition agency to refuse an application and ensuring that the
staff of the requested competition agency bear responsibility for misrepresenting confidential
information.

The definition of "confidential information" varies by jurisdiction and is not specifically
defined by content in some jurisdictions, but rather by the means used to obtain the
information. Many competition agencies have guidelines that enable certain confidential
information to be communicated with their foreign counterparts to advance their
investigations.

Because of the increasingly borderless nature of hardcore cartels, international cooperation
and information sharing among competition agencies around the world is essential to prevent,
detect and punish these cartels effectively. Competition agencies should continue to support
and promote cooperation and sharing of information by promoting both formal and informal
mechanisms at both the level of work and management.

• Multijurisdictional Mergers

A key objective of the Merger Working Group of the International Competition Network is to
facilitate the "reduction of public and private time and cost of review of multi-jurisdictional
merger."21 Considerable study and comment was made on the costs and burdens associated
with the multi-jurisdictional merger review process, in the past few years. The ICPAC Report
notes that ascertaining potential notification obligations and filing multiple merger
notifications are among the significant categories of costs facing parties to such mergers.22
Certain practices are recommended to overcome these hurdles and efficiently carry out
merger operations by the ICN, which becomes one of its major functions in the current world
scenario.

20International Cooperation Information sharing,

https://www.internationalcompetitionnetwork.org/wpcontent/uploads/2018/05/CWG_ACEMInternationalCoope

rationInfosharing.pdf.

21Costs and Burdens, https://www.internationalcompetitionnetwork.org/wp-

content/uploads/2018/05/MWG_CostsandBurdens.pdf.

22 Final Report of the International Competition Policy Advisory Committee to the Attorney General and

Assistant Attorney General for Antitrust (2000), available at http://www.usdoj.gov/atr/icpac/finalreport.htm
(“ICPAC Report”).