Competition Appeal Tribunal – Written evidence (CMP0042) to the House of Lords in the context of the House of Lord’s inquiry concerning Brexit and competition law and policy

I am linking to this document here  because it addresses the appropriate jurisdictional scope of UK competition law, and how one of the unintended (unconsidered?) effects of Brexit is to increase the exposure of UK markets to foreign conduct with cross-border effects. This is a consequence of the different jurisdictional tests that the UK and the EU apply as regards competition law. As noted in the submission, the UK prohibition against anticompetitive collusive practices: “applies only if the agreement, decision or practice is, or is intended to be, implemented in the United Kingdom (…)There is no corresponding provision in the TFEU as regards Article 101. Moreover, [EU law adopts] a “qualified effects test” as a basis of jurisdiction to apply EU antitrust law: i.e. when it is foreseeable that the multilateral or unilateral conduct in question will have an immediate and substantial effect in the EU.  As the Court explained, this has the objective of preventing conduct which, while not…

Filomena Garcia, Jose Manuel Paz y Mino, Gustavo Torrens ‘Of Course Collusion Should be Prosecuted. But Maybe… (Or the case for international antitrust agreements)’ (2017) CPI

This paper – which can be found here – was written by a number of economists at University of Indiana, and it looks at the incentives of competition authorities to pursue international cartels. A benevolent competition authority with a mandate to maximize national welfare might prefer to delay the prosecution of domestic firms when those firms will benefit from anticompetitive conduct at the expense of foreign consumers. To demonstrate this, the paper develops a simple two-country model of collusion and antitrust policy where there is an industry comprised of two multinational firms that operate in countries with competition agencies. In a first variant of this model, the competition agency of the country where the effects of an anticompetitive practice are felt (country B) will discover this practice only if the agency of the country where the companies are based (country A) starts an investigation. The authors show that country B always prosecutes the colluding firms as soon as there is…

Pierre Huizing ‘Fining Foreign Effects: A New Frontier of Extraterritorial Cartel Enforcement in Europe?’ (2017) World Competition 40(3) 365

This paper – which can be found here – asks whether national competition agencies in Europe (NCAs) have the power to sanction anticompetitive activity taking place outside their territory. The question went unaddressed in Regulation 1/2003, which set up the system of decentralized competition enforcement currently in place in the EU. According to this paper, the members of the European Competition Network (ECN) used to proceed on the basis of a common understanding that each authority would only pursue cross-border cartels for their domestic effects – with the Commission pursuing EU-wide cartels. However, in recent cases some NCAs have departed from this practice and imposed fines that took into account the EU-wide effects of cartels. This article reviews the NCA’s practice as regards the sanctioning of extra-territorial cartel activity, and the academic and political debate about whether this practice is legitimate and appropriate. It does so as follows: Section 2 reviews the enforcement practices of a number of NCAs. It…

Doug Ginsburg and Joshua Hazan ‘Extraterritoriality and Intra-territoriality in US Antitrust Law’ Concurrences No. 3 – 2016, pp. 32

This short paper – which can be found here – looks at case law on the US Foreign Trade Antitrust Improvements Act (FTAIA), which regulates the extra-territorial effects of US antitrust law. A first section provides an overview of how US law has dealt with the issue of extraterritoriality of its antitrust law over time. It notes that: ‘The antitrust laws protect U.S. consumers from foreign and domestic conduct alike; since Judge Hand’s landmark opinion in Alcoa, the U.S. antitrust laws have applied extraterritorially when foreign conduct has a domestic effect. ’ However, effects-based jurisdictional tests are quite broad, and can catch in their net many foreign conducts with limited impact on the US. As a result: ‘In the 1970s, the exercise of jurisdiction by U.S. courts over foreign defendants in antitrust cases caused a good deal of international tension; some of the nation’s major trading partners, including Canada, France, and the United Kingdom, passed “blocking” and “clawback” statutes to…