This paper – which can be found here – argues that legal scholarship on the extraterritoriality of competition law examines this phenomenon predominantly through two lenses. The first strand of research focuses on defences and doctrines that remove a situation from competition law control due to State involvement (such as foreign State compulsion or the act of state doctrine). The second strand analyses the applicability of domestic competition laws to anticompetitive conduct by state-owned firms.
The article seeks to bring these two strands together and to develop a typology of State’s entanglement in conduct causing competitive harm abroad. He holds that competitive harm arising from commercial practices should be subject to competition law regardless of the character of the party involved (i.e. be it a firm or a foreign State), unless there are overriding reasons justifying abstention such as national security or the strategic interests of the State that is exercising jurisdiction over an anticompetitive practice.
The paper is structured as follows:
- Part 2 identifies the key types of policies and State measures that can lead to harm in foreign markets. These can take a number of main forms.
- First, a state may itself – directly, or indirectly through its organs or State-owned (State trading) enterprises – be involved in commercial activities.
- Second, the state may facilitate anticompetitive activity, e.g. by promoting export cartels.
- Third, a state may shield domestic companies as regards activity that has anticompetitive effects abroad, either formally or through lack of enforcement.
- Fourth, a state may promote or enable buyers’ cartels or embargoes.
This section also discusses why imputing an anticompetitive practice to a state matters. Mainly, this is because state immunity is a principle of public international law. Related to this principle are concepts such as non-justiciability or act of State – which mean that measures which impact competition and that are perceived to be state acts, such as adopting a certain economic policy, are typically exempt from antitrust control. This can be seen, for example, in the outcome of private suits brought against the Organization of the Petroleum Exporting Countries (OPEC) in the United States. In practice.
While there may be ways to extend a country’s competition law jurisdiction – which are reflected in discussions about whether a State is engaged in commercial activities, whether State-owned companies are exempt from competition law, and about the level of State compulsion that is required before a conduct becomes exempt from antitrust scrutiny – competition law is a limited enforcement tool in this sphere, and needs to be complemented by other mechanisms (such as trade measures or political/diplomatic reactions).
- Part 3 examines the ways in which an adversely affected forum can address activity by foreign States. It builds on a distinction between commercial activities and sovereign acts. As a rule, there is no general legal justification as to why a commercial activity causing competitive harm in the domestic market should avoid antitrust scrutiny or benefit from a competition law exemption. This can be shown by reference to the concepts of ‘person’ in s. 4 of the Clayton Act in the US and of ‘undertaking’ in Europe, both of which rely on criteria related to the existence of ‘commercial activity’ to determine the scope of application of competition law ratione personae.
Nonetheless, the author recognises that some enforcement actions may be particularly sensitive, and relate to the affected State’s strategic interests or even its security. As such, other considerations may come into play, which may affect the enforcement discretion of competition agencies and the jurisdiction of domestic courts.
- Part 4 identifies and evaluates three broader considerations which must inform the policies and the approaches adopted to deal with foreign State entanglement.
- First, transnational competitive harm may lead to transfers of wealth across borders, which may lead states to counteract foreign conduct that lessens domestic welfare – either through competition law or through other means.
- Second, there are a number of potential adverse reactions to transnational competition enforcement, such as the adoption of blocking statutes or of trade remedies. These, in turn, may justify decisions not to engage in competition enforcement and/or to adopt other measures to deal with the perceived harm created by a foreign state.
- Third, attention is drawn to growing international cooperation between competition agencies, which is said to demonstrate that tolerance for transnational anticompetitive conduct is fading away.
Comment; This article provides a very comprehensive overview of the various ways in which a State’s action can be relevant for the competition law regime of another country. Personally, I would have liked Part 3 to be placed at the beginning of the article, so that the formal limits of competition law enforcement were explained before the article moved on to discuss the situations where competition law will also face practical limitations when trying to address another State’s conduct with anticompetitive effects. But the argument is pretty clear nonetheless.