Global Competition Policy in the Digital Age: Jurisdictional Challenges and the EU Approach

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Global Competition Policy in the Digital Age: Jurisdictional

Challenges and the EU Approach

Can traditional approaches of state sovereignty and jurisdiction be reconciled with the challenges created by the rise of multinational corporations, and what can be learnt from the EU approach?

Master’s Thesis

LL.M European Competition Law and Regulation

Morgan Brademann (Blaschke-Broad) 12737844 morgan.blaschke.broad@gmail.com

Supervisor: Nikolaos Lavranos Word count: 14, 158

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Abstrac

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Modern markets are increasingly internationalised, web-based and unrestricted by geographic borders and territoriality. However, competition regulation remains decidedly domestic in nature, restrained by principles of jurisdiction and state sovereignty in a way that multinational business is not. With the rise of online markets and transnational trade, legislators and regulators are increasingly expected to grapple with competition law breaches which span multiple jurisdictions. However, traditional approaches to state sovereignty and jurisdiction present fundamental challenges to the effective implementation of competition policy in these modern markets.

This paper examines recent attempts to bridge the gap between traditional jurisdiction and the demands of modern competition policy. It explores the jurisdictional issues raised by Customary International Law jurisdictional norms, the Effects Doctrine, comity and substantive convergence. It analyses the comparative success of each of these approaches in alleviating jurisdictional clash in international competition regulation. It concludes that these measures, in their current form, are attended by a number of weaknesses which undermine their ability to alleviate jurisdictional conflict. Finally, this paper examines the EU approach to internal jurisdictional issues. It explores EU horizontal, administrative measures which could be repurposed within the current international framework, in order to bring further predictability and clarity to international jurisdictional issues. It concludes by proposing that case allocation, horizontal best practice standards and peer review may be meaningfully adapted by the international competition law community, in order to alleviate jurisdictional conflict in competition regulation.

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Introduction

State sovereignty and respect for a state’s complete discretion to make laws governing its territory or citizens, are two of the main pillars on which the international legal order is bound. Within international treaties and customary international law state sovereignty is paramount. To assist in protecting this, customary international law has developed international norms of jurisdiction; a body of rules which serves to delimit the states authority over individuals or conduct. These rules, for the most part, rely on a territorial connection between state and actor between state and victim, or the personality of the victim or perpetrator.1

However, these traditional notions jurisdiction, based on Westphalian2_{norms, are ill equipped} to meet the challenges of competition regulation in an increasingly globalised world. Modern trade is highly internationalised, increasingly electronically based and often supranational. The proliferation of online commerce has allowed corporations to buy, sell and establish markets which impact upon national economies without ever engaging directly with the nation itself. Resultantly, the impact of anti-competitive conduct by firms is similarly borderless or transnational. Increasingly, competition regulation requires nations to examine the actions of firms which are not located within their territory, yet significantly impact the nation’s markets. At the same time, firms are subject to an increasing level of uncertainty over which national laws apply to their conduct, and which regulators can act in relation to potential breach of almost 160 national competition regulations.

Despite the borderless nature of international markets, the application of traditional notions of jurisdiction does not allow for similarly borderless regulation. In the absence of international treaty law governing ‘extraterritorial’ competition law jurisdiction, courts and states have relied on customary international law and intra-governmental cooperation to manage jurisdictional issues. However, customary international law does not recognise extraterritorial jurisdiction in the application of competition law to firms not established in or operating within the regulating state.3_{As a result, states had often been left unable to act against firms whose conduct has} profound and far reaching implications for the markets of that nation.

In response to this, many nations have asserted jurisdiction on an ad hoc basis, founded on their own interpretation of domestic regulation (tempered by international law norms and bipartisan

1_{Cedric Ryngaert, Jurisdiction in International Law (2}nd_{edn, OUP 2015) 19.}

2_{International law norms borne out of the ‘Peace of Westphalia’ signed in 1648 and explicitly recognising the sovereignty of}

nations and protection against interference.

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agreements). Some regimes, such as the United States (US) and European Union (EU), have done so by developing variations of an ‘Effects Doctrine;’ jurisdiction based on conduct’s effect on the domestic market. As a result, overregulation of conduct through multiple national actions and clash of jurisdiction are not uncommon.

This paper examines jurisdictional issues in modern competition policy and regulation, with a focus on prescriptive jurisdiction over abuse of dominance cases. First it will explore the prevailing international law norms of jurisdiction, the development of the Effects Doctrine and how this translates to the reality of international competition regulation. Second, it will discuss the success (or failure) of the current American and European Union approaches to addressing jurisdictional conflict, and whether the principle of comity is successfully mitigating disputes. Third it will discuss whether substantive convergence of international competition law can remedy jurisdictional conflict. Finally, it will examine the EU approach to jurisdictional issues, primarily within EU Directive 2019/1/EU4 and Commission Notice 2004/C.5 In its concluding chapter, this paper explores how the EU has managed internal jurisdictional conflict, and if any of these measures may be adapted to alleviate international jurisdictional issues.

It is beyond the scope of this paper to present a complete solution to international jurisdictional conflict. Rather, it concludes by discussing three measures taken from the EU approach to jurisdictional clash; case allocation, horizontal best practice standards and peer review. These measures may provide a framework for the international community to reassess and reformulate its approach to jurisdictional clash, to mitigate potential disputes and increase legal certainty. Although further consideration should be given to whether the EU model can be adapted to the international context, this paper concludes that it does provide systems and structures which may assist in alleviating jurisdictional conflict in competition regulation.

1 International law of jurisdiction

Jurisdiction refers to the scope of a state’s power to legislate and enforce its laws.6 It provides authority to act and protection against actions by other states. It has an important role in ensuring that states, particularly politically and economically powerful ones, do not interfere

4_{Directive (EU) No 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the}

competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market [2019] OJ L11/3.

5_{Commission Notice 2004/C of 27 March 2004 on cooperation within the Network of Competition Authorities [2004] OJ C}

101/43.

6_{Cedric Ryngaert, ‘The Concept of Jurisdiction in International Law’ in Alexander (ed), Research Handbook on Jurisdiction}

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in the sovereign affairs of other nations. Jurisdiction can therefore be described as both the expression of and the protection from sovereign power. Jurisdiction requires that nations accept the boundaries7 of their sovereign reach in order to protect the legitimate interests of other actors.

There is no universal treaty governing jurisdiction,8 although there are certain agreements which contain piecemeal jurisdictional clauses.9 In the international context jurisdiction is by-and-large governed by Customary International Law (CIL). CIL is the body of obligations developed through the adoption (or endorsement) of certain practices within the international community. For practices to become CIL they must be sustained, engaged in by the relevant section of the international community10 and not subject to objection.11 The prevailing undercurrent of CIL is strong respect for national sovereignty, embodied in a presumption against extraterritorial12 action.

Generally, a nation is not permitted to exercise its jurisdiction unless there is a significantly weighty factor13 linking the state and the act or actors concerned. This reflects the cornerstone of international law; the Westphalian notion of the state and supremacy of state sovereignty in international issues. This notion stresses that a state has exclusive sovereignty over its territory and internal affairs. There is a strong presumption against interreference in another state’s affairs, underlined by the belief that all states, regardless of size or power, are equal within the international sphere.14_{In the context of jurisdiction this is reflected by the need for a territorial} or personal link between the conduct and the state seeking to assert jurisdiction.

Beneath the broad umbrella of jurisdiction, there are three sub-categories; prescriptive/legislative, adjudicative and enforcement. Enforcement jurisdiction is primarily governed by international cooperation agreements15 and is subject to strict CIL16 norms. Adjudicative jurisdiction too raises unique, often political issues. These types of jurisdiction

7_{Francis Mann, ‘The Doctrine of Jurisdiction Revisited after Twenty Years’ (1984) 3 RCADI, 15.} 8_{Anders Henriksen, International Law (OUP 2017) 87.}

9_{Eg; The Euro-Mediterranean Agreement establishing an Association between the European Community and its Member}

States, of the one part, and the People’s Democratic Republic of Algeria, of the other part [2005] O.J. L 265/2, Art. 41.

10_{Ryngaert, Jurisdiction (n 1).} 11_{Henriksen (n 8) 29.}

12_{Eleanor M Fox, ‘Antitrust: Updating Extraterritoriality’ (2019) 1 Antitrust & Pub. Pol'y 1.} 13_{Ryngaert, Concept of Jurisdiction (n 5).}

14_{Derek Croxton and Anuschka Tischer, The Peace of Westphalia: A Historical Dictionary (Greenwood, 2001).} 15_{Eleanor M Fox, ‘Can we Solve the Antitrust Problems of Globalization by Extraterritoriality and Cooperation?}

Sufficiency and Legitimacy’ (2003) 48 Antitrust Bull. 355, 358.

16_{Brendan Sweeney, ‘Combating Foreign Anti-Competitive Conduct: What Role for Extra-territorialism?’ (2007) 8 Melb.}

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will not be discussed in this paper.

1.1 Prescriptive jurisdiction

Prescriptive jurisdiction refers to the right of a state to make its laws applicable to the activities, relations, or status of persons ‘whether by legislation, executive act, administrative rule or regulation, or by judicial determination.’17 Prescriptive jurisdiction is presumed to exist (positively conferred) in the absence of an international rule to the contrary.18 The most common bases for positive conferral of prescriptive jurisdiction are the territoriality and personality principles.

1.1.1 Territoriality

The territoriality principle positively confers jurisdiction upon states, based on their territorial sovereignty. It dictates that sovereigns have unlimited control over the laws of their state, including over foreign nationals who are present in that territory. Territoriality comes in two forms; jurisdiction over acts initiated the state and over acts concluded in the state.19 According to CIL, the exercise of prescriptive jurisdiction based on territoriality is permitted as soon as the act (or constitute parts) are omitted in the state.20 The definition of when an act is ‘committed in the state’ is far from settled.21

1.1.2 Non-territorial jurisdiction

Assertions of jurisdiction which are made on a basis other than the execution of an act on sovereign soil are often referred to as ‘extraterritorial’. However, the term ‘extraterritorial jurisdiction’ can be interpreted in several ways. For the purposes of this paper the term ‘extraterritorial jurisdiction’ will refer to instances in which a state holds no jurisdiction under traditional CIL (for example through territoriality, universal jurisdiction or personality principle), yet attempts to legislate regardless.

CIL recognises that in some cases a state will have non-territorially based jurisdiction, for example through the nationality of the perpetrator or victim of a crime (personality principle) or the nature of the conduct (protective and universal jurisdiction). A strong line of case law22

17_{Ryngaert, Concept of Jurisdiction (n 5).}

18_{Lotus (France v Turkey) [1927] P.C.I.J. Rep 10 [18].}

19_{Cedric Ryngaert, ‘Territorial Jurisdiction over Cross-Frontier Offences: Revisiting a Classic Problem of International}

Criminal Law’ (2009) 9 Int’l Crim L Rev 187.

20_{Ryngaert, Jurisdiction (n 1).}

21_{Case C-366/10 Air Transport Association of America and Others v Secretary of State for Energy and Climate Change}

[2011] ECR I-13755.

22_{Lotus (n 18) [18]; Nottebohm Case (Liechtenstein v Guatemala) [1955] I.C.J. Rep 4.8.; Barcelona Traction Case (Belgium}

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provides states with a ‘wide discretion’23_{when defining the limits of their non-territorial} jurisdiction, subject to limiting principles of international law such as the prohibition of enforcement on foreign soil.24 However, this requires a ‘genuine link’25 between the action, harm or perpetrator, and the state asserting jurisdiction. It is also subject to limitation by other principles; notably the presumption against extraterritoriality in cases of economic harm.26 Despite this, the notion of ‘genuine link’ is broad, and the connection between state and action a ‘vague’27_{concept. This seemingly recognises that it is unrealistic to expect states not to seek} to protect citizens or interests, in complete deference to another state’s territoriality.28 There is debate as to whether jurisdiction over anti-competitive conduct merely impacting upon a state will meet these thresholds.29 This uncertainty has led to an ‘internationally sanctioned system’30 of harmful concurrent jurisdiction.

In relation to non-territorial jurisdiction and competition law; the personality principle is considered a subsidiary jurisdictional principle31 and is rarely raised in competition law cases.32 Universal33 jurisdiction and protective principles34

are deemed not to apply to competition law

cases.

2 Jurisdiction and contemporary competition regulation

As noted above, the CIL of jurisdiction relies on rigid links between actor, action and state. It is deferential to state sovereignty and territorial borders in a way which does not reflect the realities of modern markets and regulation. Competition law does not exist in a vacuum.35 More so than many other legal spheres, it intersects with international trade; foreign investments; international movement of goods; services and capital; sectoral regulations; and a wide variety of industrial policies.36 Therefore, competition law is particularly effected by the artificiality of CIL’s deference to national borders.

23_{Lotus (n 18) [18-19].} 24_ibid.

25_{Nottebohm (n 22).}

26_{See; Vaughan Lowe, ‘Jurisdiction’ in Malcom Evans (ed) International Law (OUP, 2008) 329.} 27_{Ryngaert, Jurisdiction (n 1) 49.} 28_{Lotus (n 18).} 29_{Ryngaert, Jurisdiction (n 1).} 30_{Ryngaert, Jurisdiction (n 1) 22.} 31_{Henriksen (n 8) 91.} 32_{ibid 93.} 33_{ibid 94.} 34_{Lowe, ‘Jurisdiction’ (n 26) 329.}

35_{Eleanor M Fox, ‘Antitrust Without Borders: From Roots to Codes to Networks’ in Andrew Guzman (ed) Cooperation,}

Comity and Competition Policy (OUP, 2010) 276.

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Resultantly, with the rise of open, multinational trade, anti-competitive acts not instigated or perpetrated on a sovereign’s soil may none the less have significant impact on the markets of that territory. Domestic courts are therefore being required to grapple with the question of the justiciability of conduct which occurs wholly offshore, by offshore actors. Additionally, they are required to consider the regulation of conduct that impacts upon the nation in question by virtue of its impact on a global market or supply chain, rather than through specific targeting of the state market in question. This requires them to grapple with either the requirements of territorial nexus or endorse seemingly extraterritorial application of their laws.

Not only does this changed global market create issues for regulating cross-border trade, it has led to a proliferation of global value chains. Characterised by transnational, disparate and decentralised management structures and production chains37 these structures create difficulties in regulating competition law breaches (particularly abuse of dominance), as segments of the chain are produced in unconnected markets, with no managerial/structural connection to the national market that will bear the impact of the conduct . Key segments of these global value chains may occur through seemingly independent actors38 creating difficulties in applying traditional regulatory structures,39 particularly when the firm concerned is a seemingly independent offshore entity.40

Given the realities of modern trade, the boundaries of the sovereign reach of states in international competition law is an issue that regulators must face if they wish to effectively regulate their domestic markets. The potential incompatibility of CIL jurisdictional norms with the realities of modern competition regulation become most apparent when an abuse occurs abroad yet has impacts in the home state. As Fox puts it ‘the line from the conducts launch to the victims harm is not necessarily direct, but it is an unwavering line none the less’.41 In these cases, CIL may not recognise the state as having jurisdiction, due to an absence of territorial or personal nexus between the conduct and the regulating state. Conversely, online conduct may give rise to a panoply of territorial jurisdictional claims; based on where the server is located, where the content is viewed, where the content is uploaded, where the content is

37_{Gary Gereffi, John Humphrey and Timothy Sturgeon, ‘The Governance of Global Value Chains’ (2005) 12 RIPE 78, 104.} 38_{Peter Gibbon, Jennifer Bair and Stefano Ponte, ‘Governing Global Value Chains: An Introduction’ (2008) 37 Economy}

and Society 315, 338.

39_{Dennis Davis, ‘Extraterritoriality and the Question of Jurisdiction in Competition Law’ in Damien Gerard, Ioannis Lianos}

(eds) Reconciling Efficiency and Equity a Global Challenge for Competition Policy (CUP 2019) 393.

40_{Peter Nolan, Jin Zhang and Chunhang Liu, ‘The Global Business Revolution, the Cascade Effect and the Challenge for}

Firms from Developing Countries’ (2008) 32 Cambridge Journal of Economics 29, 44.

41_{Eleanor M Fox, ‘Extraterritorial Jurisdiction, Antitrust, and the EU Intel Case: Implementation, Qualiﬁed Effects, and the}

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directed and where effects are felt.42_{In these circumstances a rigid application of CIL norms} risks conduct being broken up, with no single state examining it in its entirety.

In these circumstances, there may be conflict over which state is properly entitled to assert jurisdiction, or a firm may be subject to multiple actions in multiple states, for a single act. While the arbitration of private international law disputes is ‘based on the principle that a foreign legal system is of equal value with the law of the forum,’43 international competition law disputes such as these are not subject to the same principles. This is because modern competition law is enacted in the overwhelming public interest of the legislating state. Thus, the competition law of a given state ‘does not act as a neutral arbitrator between the substantive competition law of a foreign state and the law of the forum’.44 This leaves competition law breaches with an international dimension in somewhat of a no-man’s land

This circumstance may create legal uncertainty through diverse application of laws and unpredictable and unchecked assertions of jurisdiction. As a result, international firms may engage in regulatory arbitrage, forum-hopping45 and stalling tactics,46 to avoid regulation or seek the most favourable terms.47 Conversely, firms may suffer from uncertainty over the applicability of national laws, and fear of overregulation. They may therefore simply comply with the competition law of the most aggressive state, in a bid to reduce compliance costs and legal complexity.

3 Solution? The Effects Doctrine

In such a complex, transnational environment, strict adherence to territoriality hardly seems appropriate. However, to retreat from competition law wrongs which occur in ‘no-man’s land’ or across jurisdictions would be to ‘defang’48 competition law. As a result, many nations49 have attempted to address the rigidity of territorial jurisdiction by pushing the boundaries of territoriality, or by asserting non-territorial connections. In the US and the EU this has produced

42_{Ryngaert, Concept of Jurisdiction (n 5) 10.}

43_{Luca Prete, ‘On Implementation and Effects: The Recent Case-law on the Territorial (or Extraterritorial?) Application of}

EU Competition Rules’ (2018) 9 JECLP 488 (fn 8).

44_{Ivo Schwartz and Jurgen Basedow, ‘Restrictions on Competition’ in International Encyclopedia of Comparative Law Vol.}

III (Elsevier 1997).

45_{R. Hewitt Pate, ‘Current Issues in International Antitrust Enforcement’ (Remarks Before the Fordham Corporate Law}

Institute 31st Annual Conference on International Antitrust Law and Policy Oct. 7, 2004) < http://www.usdoj.gov/ atr/public/speeches/206479.pdf > accessed November 10 2019.

46 _{Brief of Amicus Curiae, Economists and Professors in Support of Petitioner, in Motorola Mobility LLC v. AU Optronics}

Corp.,746 F 3 d 842, 15 April 2015.

47_{Fox, ‘Intel’ (n 41) 994.} 48_{Fox, ‘Intel’ (n 41) 998.}

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the ‘Effects Doctrine’; the extension of jurisdiction to acts which affect the market of the nation in question. Elsewhere, nations have maintained stricter adherence to territoriality.50

3.1 The US

Despite its international law roots (in Lotus51), the US interpretation of the territorial limits of its legislation is drawn from the intent of congress52. It does not involve53 weighing the interests of the nations concerned but is generally tempered by a presumption against extraterritoriality.54 However, US courts have rejected a presumption against extraterritoriality55 in antitrust cases. Ryngaert56 argues that this discrepancy is due to the fact that the US laws on extraterritoriality fundamentally pursue US national interest. Specifically, that exercise of extraterritorial jurisdiction is unlikely to divide voters over key issues,57 and reflects a tolerance58 towards to practices that cause offshore market effects.

Since 1945, America has applied domestic antitrust law to conduct occurring abroad, perpetrated by foreign nationals,59 but with clear effects in the US. It does so under the Sherman

Act,60 which the US courts have interpreted as applying extraterritorially. However, its application is limited by the Foreign Trade Antitrust Improvements Act (FTAIA).61_{It provides} that the Sherman Act may be applied to offshore acts, if they are related to import commerce and as a direct, substantial, and reasonably perceivable effect on us commerce.62

In Alcoa, 63 the first US Effects Doctrine case, courts asserted American jurisdiction over acts which, although wholly occurring abroad, have a ‘direct, deliberate or foreseeable, and substantial effect on American market’.64 This ‘Effects Doctrine’ has been applied in both the financial and anti-trust fields.65 Despite its broad application, the Effects Doctrine was qualified in Timberlane,66 which contained the first clear enunciation of a jurisdictional ‘rule of reason’,

50_{Eg, Australia, Japan, Fiji.} 51_{Lotus (n 18) [18].}

52_{EEOC v Arabian Am Oil CO, 499 US 244, 248 (1991).} 53_{Ryngaert, Jurisdiction (n 1) 69.}

54_ibid. 55_ibid. 56_ibid.

57_{Ryngaert, Jurisdiction (n 1) 71.}

58_{Webb-Pomerene Export Trade Act of 1918 (15 U.S.C. 61-65).}

59 _{Najeeb Samie, ‘The Doctrine of "Effects" and the Extraterritorial Application of Antitrust Laws’ 14 U. Miami Inter-Am.}

L. Rev. 23 (1982) 23, 3.

60_{Act of July 2, 1890 (The Sherman Anti-Trust Act) Public Law 94-435, Title 3.} 61_{The Foreign Trade Antitrust Improvements Act 1982 Pub}

. L. No. 97-290, 96 Stat. 1246. 62 _{ibid s 6a.}

63_{Alcoa (United States v. Alcoa) 148 F.2d 416 (2d Cir. 1945).} 64_ibid.

65_{McGlincy v Shell Chemical Co., 845 F.2d 802.}

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able to restrain extraterritorial jurisdiction. This rule of reason would subsequently be narrowed and developed into the comity-like principle67_{discussed further below.}

America’s extraterritorial applications of its laws (particularly antitrust) have been frequently68 criticised. 69 As Alford states, ‘no single field of law has raised so intense and pervasive a volley of extraterritoriality conflicts as US antitrust law.’70 Some governments, most notably the UK71 and EU,72 have lodged Amicus Curie briefs73 objecting to US extraterritorial jurisdiction. Furthermore, many nations have enacted legislation74 to shield corporations from extraterritorial application of US laws. Many these objections to the Effects Doctrine argue that it diverges from CIL,75 particularly principles of territoriality. There is disagreement about whether such measures, whose application is triggered by a finding that foreign conduct is capable of generating domestic effects, should be regarded as extraterritorial.76 For many, if it is not ‘extraterritorial’ it does stretch the meaning of territoriality in a controversial manner, as a matter of international law.77

Sweeney78 considers that despite its initial scope, the decision in Empagran79 signifies a more restrained US approach to extraterritoriality– and perhaps reflects a gradual trend towards a restriction of US antitrust jurisdiction. This trend is first observed in Motorola,80_{in which the} Court of Appeal declined to extend US jurisdiction as it would ‘enormously increase the global reach of the Sherman Act …creating resentment at the apparent effort of the US to act as the world’s competition police ofﬁcer’.81_{These rulings may indicate that the US application of the} Effects Doctrine is shifting towards one which inherently provides due deference to foreign

67 Mannington Mills v Congoleum Corp., 595 F2.d 1287, 1296 (3rd Cir 1979).

68_{Kingman Brewster, Antitrust and American Business Abroad (1st edn, Ayer Co Pub 1958) 46-51.}

69_{Eg; Brief by the European Commission on Behalf of the European Union as Amicus Curiae in Support of Neither Part in}

Kiobel et al. v. Royal Dutch Petroleum et. al. 569 U.S. 108 (2013).

70_{Roger Alford, ‘The Extraterritorial Application of Antitrust Laws: The United States and European Community}

Approaches’ (1992) 33 Va. J. Int'l L. 1.

71_{Amicus, Kiobel (n 69).}

72_{Council Regulation (EC) No. 2271/96 of November 1996 protecting against the effects of the extra territorial application}

of legislation adopted by a third country, and actions based thereon or resulting therefrom [1996] OJ L 309/1.

73_{See; Amicus, Kiobel (n 69) also objections by Great Britain, Canada, France, Australia and South Africa.}

74_{See; Australian Foreign Proceedings Act 1976 (Cth) 121; Canadian Foreign Extraterritorial Measures Act (1984) ch. 49,}

Protection of Trading Interests Act 1980 (UK) ch. 11.

75 _{Richard Whish & David Baily, Competition Law (5th edn, OUP 2005) 297.}

76_{Joanne Scott, ‘Extraterritoriality and Territorial Extension in EU Law’ (2013) 62 AJCL 87, 22.} 77_{Amicus, Kiobel (n 69).}

78_{Sweeney, ‘Combating Foreign Conduct’ (n 16) 61.}

79_{Empagran SA v. F Hoffman-LaRoche Ltd 542 US 115 (2004) 123.}

80_{Motorola Mobility LLC v. AU Optronics Corp., 746 F 3 d 842 (7th Cir., 2014).}

81_{Motorola (n 80) 859; Kiobel et al v Royal Dutch Petroleum Co. 569 U.S. 108 (2013) [22]; Re Uranium Antitrust}

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sovereignty.82_Critics83_{of the US Supreme Court’s case law in relation to FTAIA also argue} that the scope of US jurisdiction is narrowing. However, in the latter’s opinion this represents a threat to America’s ability to protect its interests.

Conversely, it can be asserted84 that US courts and legislators have construed the Effects Doctrine and its associated jurisdiction significantly more broadly than many states will tolerate.85 Jurisdiction has only been restricted when the economic effects upon the US are truly marginal.86 Furthermore, prior to 2011 US courts had never considered foreign interests to outweigh those of the US, in antitrust cases.87 Seemingly, the US will expand jurisdiction to ‘any effect which fits the rubric of US commerce.’88

3.2 The EU

Initially, the EU explicitly rejected the Effects Doctrine, preferring to take jurisdictional ground by expanding the notion of ‘presence within the EU territory’.89 It originally extended its competition law jurisdiction to firms which were connected to the EU by the conduct of their subsidiary.90 The EU courts have since acknowledged a broader basis for jurisdiction, in the development of the implementation principle.91_{Most recently,}92_{the courts have recognised} two distinct, alternative and non-cumulative93_{basis for establishing EU jurisdiction over} anti-competitive conduct occurring abroad; the Implementation Doctrine94_{and the (somewhat} qualified) Effects Doctrine. The Implementation Doctrine relies upon the act in question being implemented on national territory. The Effects Doctrine simply requires an effect (subject to certain thresholds) within the national market. While the Implementation Doctrine remains true to the EU’s preference for territorial links between conduct and the EU, the Effects Doctrine somewhat stretches95 this.

82_{Daniel A. Lyons, ‘Case Comment on F. Hoffman-LaRoche Ltd. v. Empagran S.A.’ (2004) 1 HLR 486.}

83_{Joseph P. Bauer, ‘The Foreign Trade Antitrust Improvements Act: Do We Really Want to Return to American Banana?’}

(2012) 65 Me. L. Rev. 3.

84_{Eg. Fox, ‘Networks’ (n34); Sweeney, ‘Combating Foreign Conduct’ (n 15).} 85_{Sweeney, ‘Combating Foreign Conduct’ (n 16) 87.}

86_{ibid 57.}

87_{Fox, ‘Networks’ (n 35) 270.}

88_{Dean Brockbank, ‘The 1995 International Antitrust Guidelines: The Reach of US Antitrust Law Continues to Expand’}

(1996) 2 Journal of International Legal Studies 1, 8.

89_{Andreas Themelis, ‘The Internet, Jurisdiction and EU Competition Law: The Concept of ‘Over-territoriality’ in}

Addressing Jurisdictional Implications in the Online World’ (2012) 35 World Competition 325,333.

91_{Joined cases C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 and C-125/85 to C-129/85A. Ahlström Osakeyhtiö and}

others v Commission of the European Communities [1985] OJ L85/1.

92_{Case T-286/09 Intel Corporation v Commission [2014] OJ C245/8.} 93_{Fox, ‘Intel’ (n 41); Prete (n 43); Ryngaert, Concept of Jurisdiction (n 5).} 94_{Woodpulp (n 91).}

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3.2.1 Territoriality

Despite the EU’s repeated objections to the ‘extraterritorial’ implementation of US antitrust,96 it has also been, in one form or another, applying competition law extraterritorially since at least 1960.97 While the US looks primarily to congressional intent to determine extraterritorial jurisdiction, the application of EU law is more rigidly subject to conformity with public international law.98 Accordingly, exercise of EU jurisdiction requires an adequate link to EU territory in order to satisfy CIL jurisdictional norms.99 Where a measure is defined as extraterritorial, it will be unlawful unless an alternative, recognised jurisdictional base can be found.100

The EU, although assertive in establishing its jurisdiction on the basis of a connection to the EU territory,101 has been less assertive in applying jurisdiction absent a territorial nexus. Generally, territorial or personal jurisdiction has been favoured, thereby establishing a territorial element.102 However, the requirements103 of this territorial nexus have changed over time104_{and the EU has recently engaged in what some Scott describes as ‘extension of the}

territoriality principle.’105_{With regard to prescriptive jurisdiction, the EU has adhered to its} own interpretation of the ‘permissive’ stance106_{taken in Lotus; states are permitted to legislate} extraterritorially, in the absence of a rule to the contrary, as long as the relevant rule is enforced within that state’s territory. Therefore, EU legislation complies with the principle of territoriality as soon as it is enforced within the EU, even if it concerns offshore conduct.107 In this way the EU has blurred the line between enforcement and prescriptive jurisdiction. However, this approach may encounter difficulties when examining some categories of competition law conduct. As a result, the Effects Doctrine has been considered, al-be-it infrequently, by EU courts and legislators alike.

96_ibid.

97_{Re Aniline Dyes Cartel, J.O. [1969] L 195/11 8 C.M.L.R. D23 [D33].}

98_{Case C-286/90 Anklagemyndigheden v Peter Michael Poulsen and Diva Navigation Corp. [1992] ECR I-6019; Air}

Transport (n 21).

99 _{Ryngaert, Jurisdiction (n 1) 21-41.}

100_{Scott, ‘New Extraterritoriality’ (n 95) 1345.} 101_{Air Transport (n 21) [5].}

102_{Eg; Poulsen (n 98) [22]; Air Transport (n 21).}

103_{Poulsen (n 98) [13]; Air Transport (n 21); Case C-131/12 Google Spain SL and Google Inc. v Agencia Española de}

Protección de Datos (AEPD) and Mario Costeja González [2014] EU:C:2014:317.

104 _{Case C 48/69 Dyestuffs Imperial Chemical Industries v. Commission [1972] E.C.R. 619, 629.} 105_{Scott, ‘Extraterritoriality’ (n 76) 87–126.}

106_{Laurens Ankersmit, Green Trade and Fair Trade in and with the EU: Process-based Measures Within the EU Legal}

Order (CUP 2017) 66.

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3.2.1.1 The Effects Doctrine and competition law

Despite several cases108 concerning jurisdictional issues, until 2014 the EU courts largely avoided ruling explicitly on the exact requirement and scope of EU jurisdiction over offshore competition law breaches.109 However, the Effects Doctrine had already influenced EU law. For example, the EU Merger Regulation (EUMR)110 applies to mergers which have a ‘direct and foreseeable effect on the EU.’ Yet, the application of this regulation is only ‘triggered’111 when the merger exceeds certain worldwide and EU turnover thresholds.112 Therefore, even while employing the language of the Effects Doctrine the territorial connection with the EU is retained. Scott convincingly argues that the first explicit use of extra-territorial prescriptive jurisdiction by the EU was the Regulation on Derivatives.113 This applied explicitly to third-country entities whose contracts would have ‘direct, substantial and foreseeable effects in the EU.’ A similar approach was adopted in the Market Abuse Regulation114 and Markets in Financial Instruments Regulation.115

While extraterritorial jurisdiction over merger issues has received some EU judicial attention,116_{it was not until Intel}117_{that non-merger competition breaches were specifically}

addressed in this context. In Intel the General Court ruled that the Commission had jurisdiction to investigate, prosecute and sanction conduct purely based on its effect118_{in the EU. The Court} held that public international law allowed extraterritorial jurisdiction when ‘it is foreseeable that the conduct in question will have an immediate and substantial effect’ upon the EU.119 In this way, EU courts, like US courts, have maintained the limits set by Lotus, restating the importance of a genuine connection between the act and the nation asserting juridiction.120 Although Intel established the place of the Effects Doctrine in EU law it has been criticised as a ‘thin.’121 judgement Notably, the pre-existence of the Effects Doctrine in EU law was taken

108_{Eg; Case T-91/11 InnoLux Corp. v European Commission [2014] EU:T:2014:92.}

109 _{Case T-102/96 Gencor Ltd v Commission of the European Communities [1999] ECR II-753 90.}

110_{Council Regulation (EC)139/2004 of 20 January 2004 on the control of concentrations between undertakings [2004] OJ}

L24/1.

111_{Scott, ‘New Extraterritoriality’ (n 95)1356.} 112_{ECMR (n 110).}

113 _{Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central}

counterparties and trade repositories [2012] OJ L201/1.

114_{Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market}

abuse regulation) [2014] OJ L173/1.

115 _{Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial}

instruments and amending Regulation (EU) No 648/2012 [2014] OJ L173/84.

116_{Gencor (n 109).} 117_{Intel (n 92).}

118_{Fox, ‘Intel’ (n 41) 985.} 119_ibid.

120_{H. Oxman, ‘Jurisdiction of States’ in, International Encyclopedia of Comparative Law Vol. III (Elsevier 1997)} 121_{Fox, ‘Intel’ (n 41) 988.}

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as a given, and its origins not discussed at length. This is interesting considering that the Effects Doctrine (within the EU) was not clearly established122_{prior to Intel. Furthermore, the} judgment leaves the strictness of the rule’s application unclear.123 It is unclear to what extent the Effects Doctrine will allow the EU to police conduct which occurs in foreign markets and whose ‘effects on the union’ are uncertain.124 The role of the implementation doctrine is likewise left unclear, specifically whether it has been subsumed by the Effects Doctrine or if it exists as an alternative.125 The possibility of the Implementation Doctrine as an alternative basis for jurisdiction adds an additional complexity as, unlike the Effects Doctrine, it is ‘relatively unknown’ in other jurisdictions. 126_{In addition, some consider that the Intel case endorses a} third jurisdictional basis; the ‘qualified effects extension test,’ capturing ancillary, directly related 127 conduct and therefore more expansive than the US Effects Test. The scope and content of the Effects Doctrine in EU law is not settled.

3.2.2 Issues

Where nations seek to regulate extraterritorially, it is ‘more than likely that’128_{another state} will have regulated the same conduct. Therefore, as the application of extraterritorial jurisdiction becomes more common so too will overlapping claims and jurisdictional clash. Despite similarities129_{between the US and EU Effects Doctrine,}130_{it arguably cannot reflect} good public international law.131 By its very nature it is a national law132 with limits largely determined by national judges. It is arguably insufficiently accepted133 in the international community. Its uptake is not uniform134 nor without international objection135 and may contradict settled principles such as prohibition on extraterritoriality cases of economic harm.136 It is therefore argued137 that it does not constitute CIL138 and due to its inconsistent

122_{Scott, ‘Extraterritoriality’ (n 76).} 123 _{Prete (n 43).} 124_{ibid 495.} 125_{Intel (n 89).} 126_{Prete (n 43) 495.} 127_{Fox, ‘Intel’ (n 41) 992.}

128_{Scott, ‘New Extraterritoriality’ (n 95) 1364.} 129_{Davis (n 39) 385.}

130_ibid.

131_{Scott, ‘New Extraterritoriality’ (n 95) 1380.} 132_{Fox, ‘Intel’ (n 41) 991; Prete (n 43) 494.}

133_{Sweeney, ‘Combating Foreign Conduct’ (n 16) 55; Amicus, Kiobel (n 69).}

134_{Eleanor M Fox, 'International Antitrust and the Doha Dome' (2003) 43 Va J Int'l L 911.} 135_{Malcolm N. Shaw, International Law (7th edn, CUP 2014) 499-505.}

136_{Henriksen (n 8) 29.}

137_{UNCTAD, Communication from the Group of 77 and China (2004) <http://www.g77.org/doc/members.html> at 18 May}

2007.

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application139_{is likely to cause jurisdictional conflict.}

3.3 Comity and the rule of reason

There is no transnational body to arbitrate on these inconsistencies and clashes of jurisdiction. Therefore, in response to concerns about unilateralism, many nations employ variations on the principle of comity140 in order to introduce judicial reasonableness141 to the assessment extraterritorial jurisdictional claims. Comity is the legal principle requiring states to take other sovereigns’ interests into account when conducting law enforcement activities. It is a means of tempering the effects of extraterritorial jurisdiction.142 It requires one state to defer to the rules of the other where the other has a greater interest; thus, a greater claim of right.143 Positive comity allows one party (requesting) to request that the other party (requested) appropriately regulate activities occurring in the requested party’s territory, which adversely affect important interests of the requesting party. By contrast, negative comity is a country’s consideration of how to prevent its laws and enforcement actions from harming another country’s important interests. Comity aims to build relationships144_{and avoid conflict rather than achieve a} particular result. Comity is the ‘full extent of reasonableness’145_{required by nations in asserting} jurisdiction, where there is conflict with the jurisdiction of another nation. It is unlikely that positive comity represents an international law requirement, but rather a norm of some domestic law.146 By contrast, CIL dictates that nations employ a principle of negative147 comity in all jurisdictional decisions.

3.3.1 The US

The US developed principles of comity through private anti-trust action,148 later recorded in s 403 Restatement (third) of US Foreign Relations Law.149 Initially a ‘rule of reason’ approach, it involved balancing competing state interests150 and held that ‘legitimate US interests do not

139_{Amicus, Kiobel (n 69).}

140_{Brendan Sweeney, ‘International Governance of Competition’ in John Duns, Arlen Duke and Brendan Sweeney (eds),}

Comparative Competition Law (Elgar 2015).

141_{Davis (n 39).}

142_{Douglas H. Ginsburg, ‘Comity in International Competition Law Enforcement’ (outline for presentation to OECD}

conference, France OECD, 2017.

143_{Fox, ‘Networks’ (n 35).} 144_{ibid 268.}

145_{Petros C. Mavroidis and Damien J. Neven, Competition Enforcement, Trade and Global Governance}

A Few Comments in Damien Gerard, Ioannis Lianos (eds) Reconciling Efficiency and Equity a Global Challenge for Competition Policy (CUP,2019) 404.

146_{Ryngaert, Jurisdiction (n 1).} 147_{Petros (n 145) 407.} 148_{Timberlane (n 66).}

149_{American Law Institute, ‘The Restatement of the Law, Third: Foreign Relations Law of the United States’ (1965) s 402.} 150_{X Note, ‘Predictability and Comity: Toward Common principles of extraterritorial jurisdiction’ (1985) 98 HLR 1310,}

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in themselves justify and assertion of jurisdiction’.151_{Despite the initial, broad ‘interest} balancing’ approach to comity152_{the US Supreme Court has been reticent to limit jurisdiction.} For example, in Kiobel153 the court declined to delimit jurisdiction despite numerous

international objections. In Hartford Fire154 it further restricted the application of comity considerations, holding that foreign laws and policies should not be heeded when determining extraterritorial jurisdiction in antitrust cases, unless the foreign state compels conduct which US law prohibits.155 Resultantly, US comity is only applied where there is a true conflict between the nations concerned. By contrast, the US Supreme declined to extend US jurisdiction in Empagran.156 Rather, it headed the ‘legitimate sovereign interests of other nations,’157 as there was a ‘serious risk of interference with a foreign nation’s ability independently to regulate its own commercial affairs.’158 US regulators also employ a system of comity considerations, through the 1995 Antitrust Enforcement Guidelines.159 These guidelines outline criteria to be used by agencies in determining whether to pursue international competition law breaches. In practice it is the antitrust agencies which commonly apply principles of comity in US public actions.160

3.3.2 The EU

The EU heeds comity in internal matters but not in the international arena. For example, in

Woodpulp 161 the EU rejected comity considerations as ‘challenging the EU’s jurisdiction to apply its competition rules to the conduct in question’.162 Current EU law confines considerations of interest balancing to circumstances where foreign law compels the anti-competitive conduct which the EU law prohibits.163 In Gencor the EU General Court declined to consider if comity existed in international law.164 However, it left the door open to something akin to comity; the consideration of the ‘vital interests’165 of the affected nation. However, ‘vital’ interest sets a high standard for the objecting state. Briggs166_{considers that Glencor and}

151_ibid.

152_{Ryngaert, Jurisdiction (n 1) 170.} 153_{Kiobel (n 81).}

154_{Hartford Fire Insurance Co v. California, 509 US 764 (1993).} 155_ibid.

156_{Empagran (n 79)123.} 157_ibid.

158_ibid.

159_{Department of Justice Antitrust Division, Antitrust Enforcement Guidelines for International Operations (2}nd_{Edn, 1995).} 160_{Fox, ‘Doha’ (n 134); Sweeney, ‘Governance’ (n 140) 359.}

161_{Woodpulp (n 91).}

162_{Ryngaert, Jurisdiction (n 1) 172.} 163_{Woodpulp (n 91).}

164_{Cedric Ryngaert, Jurisdiction (n 1) 174.} 165 _{Gencor (n 109).}

166 Adrian Briggs, ‘The Principle of Comity in Private International Law (Volume 354)’, in: Collected Courses of the Hague

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subsequent judgments such as Gasser 167_{represent EU acceptance of a version of US-style}

comity. Dodge168_{however argues that the EU, unlike the US, will not view foreign relations} law through an ‘international comity lens.’ Interestingly, Ryngaert169 considers that the EU’s application of comity-like principles is primarily administrative. This is inferred from the fact that the EU, with unlimited extraterritorial prescriptive jurisdiction, does not enforce its competition law extraterritorially as vigorously as ‘could be expected.’170 This is a matter of discretionary administrative restraint171 rather than a US style legal doctrine.172

3.3.3

Issues

Comity is horizontal (i.e. state-to-state)173 and relies on domestic courts to take account of the interests of other nations. It is a voluntary scheme, implemented by domestic courts, expected to meaningfully balance competing national interests. It is a malleable principle, vague174 and requiring significant interpretation.175 Resultantly, comity has been critiqued as perpetuating national interests and ‘favouring the home crowd’.176 In addition, it is debatable whether non-elected judges and administrative authorities are well-placed177_{to conduct such an} interest-balancing test as comity. Particularly given it is based on unclear criteria178_{that involves} considerations of political economy, and whose result may impinge on the political branches’ prerogative to conduct foreign relations.179

This tendency to favour the ‘home crowd’ is one which is seemingly evident in US jurisprudence. US courts have rarely delimited its own jurisdiction in favour of offshore state interests. For example, in Kiobel180 and Hartford Fire,181 the US Supreme Court declined to limit its jurisdiction despite heavy international petitioning. 182 Contrastingly, the same court headed the ‘legitimate sovereign interests of other nations’183 in Empagran. It is worth noting

167_{Case C-116/02 Erich Gasser GmbH v MISAT Srl. [2003] ECR I-14693 [72].}

168_{William S. Dodge, ‘International Comity in Comparative Perspective’ in Curitis A Bradley (ed), The Oxford Handbook of}

Comparative Foreign Relations Law (OUP 2019) 9.

170_{Jacques Bourgeois, ‘EEC Control over International Mergers’ (1990) 10 Yb Eur L 103, 114.} 171 _{Ryngaert, Jurisdiction (n 1) 176.}

172_{ALI (n 149).}

173_{Fox, ‘Networks’ (n 35) 270.}

174_{Sweeney, ‘Combating Foreign Conduct’ (n 16) 57.} 175_{Prete (n 43).}

176_{Ryngaert, Jurisdiction (n 1) 19.} 177_ibid.

178_{James R Atwood, ‘Positive Comity — Is It a Positive Step?’ in Barry Hawk (ed), Annual Proceedings of the Fordham}

Corporate Law Institute: International Antitrust Law and Policy (FCLI 1993) 87.

179_{Ryngaert, Concept of Jurisdiction (n 5).} 180_{Kiobel (n 81).}

181_{Hartford (154).} 182_ibid.

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that this concerned expanding US protections to non-nationals rather than limiting the ability of the US to protect its interests. According to Ryngaert184_{these diverse outcomes demonstrate} the unpredictability of US applications of comity. By contrast, Fox185 asserts a consistency of application in the fact that between 1976186 and 2011 the US Supreme Court never limited jurisdiction on the basis of comity.187

Despite international differences in application of comity,188 bilateral agreements will often include comity commitments. For example, the US-Japan cooperation189 agreement and US-EU190 agreements both contain positive comity obligations. Ryngaert191 considers a combination of cooperation, positive comity, and conditional reciprocity between regulators has decreased jurisdictional conflicts. Others192 consider that comity is an ineffective dispute resolution tool and note numerous conflicts over both jurisdictional and comity principles.193 This is highlighted by the fact that positive comity requests under bilateral agreements are relatively rare194 and may be disregarded195 in cases of genuine conflict .196 Geradin197 et al argue that comity is only heeded when the relevant conduct is mandated by the foreign nation. This raises questions regarding the consistency of comity’s application and its usefulness as a restraint on extraterritorial power.

Despite any agreements containing comity requirements, there is a lack of uniform application of comity in the international community. 198_{For example, contrast between the KFTC’s} (Korea) decision in Qualcomm; endorsing the application of the most restrictive national competition regime in case of conflict, with NDCR’s (China) decision in Qualcomm to

184_{Ryngaert, Concept of Jurisdiction (n 5) 13.} 185_{Fox, ‘Networks’ (n 35) 269.}

186_{Timberlane (n 66).}

187_{Damien Geradin, Marc Reysen and David Henry, ‘Extraterritoriality, Comity, and Cooperation in EU’ Competition Law}

in Andrew Guzman (ed), Cooperation, Comity and Competition Policy (OUP 2010) 34.

188_{See section 3.3.3.}

189 Agreement between the Government of the United States of America and the Government of Japan concerning

Cooperation on Competition Activities, KAV 5623.

190_{1991 EU/US Agreement Regarding the Application of Their Competition Laws; art V; 1998 EU/US Agreement on the}

Application of Positive Comity Principles in the Enforcement of Their Competition Laws.

191_{Ryngaert, Concept of Jurisdiction (n 5) 12.} 192_{Atwood (n 178) 87.}

193_{Case T-201/04 Microsoft Corp. v Commission of the European Communities [2007] ECR II-3619; Case T-209/01}

Honeywell v Commission ECR II -5527, 4 CMLR 652; T Case T-209/01 Honeywell International, Inc. v Commission of the

European Communities [2005] ECR II -5532, 4 CMLR 652; Boeing/McDonnell Douglas (Case IV/M.877) Commission

Decision [1997] OJ C 136/3.

194_{Sweeney, ‘Combating Foreign Conduct’ (n 16).} 195_{Geradin (n 187) 34.}

196_{ibid 21.} 197_ibid.

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explicitly limit remedies to China and deny expansive jurisdiction.199_Ryngaert,200_Fox201_and Sweeney202_{consider that these inconsistencies are evidence of the fact that comity is an} amorphous,203 unreliable tool for resolving jurisdictional dispute.

Overall, it is unlikely that positive comity represents an international law requirement, but rather a norm of some (particularly US) domestic law.204 By contrast, CIL dictates that nations employ a principle of negative205 comity in all jurisdictional decisions. However, this is of less relevance when considering judicial resolution of jurisdictional disputes.206 Furthermore, the principles of comity are broad, vague and subject to the interpretation of the home states courts (without external review).207 They may create legal uncertainty through diverse application and rulings, unpredictable and unchecked assertions of jurisdiction, leading to pockets of regulatory arbitrage or allowing companies to tie regulators up in complex and lengthy jurisdictional disputes. Comity is far from an effective, universally accepted means of resolving jurisdictional conflict.

4 Solution? Substantive convergence

Given the lack of clear and consistent rules governing extraterritorial jurisdiction, substantial convergence has often been offered as a potential panacea for the jurisdictional challenges of multinational market.208 Convergence, when it happens organically or through the ‘enlightened choices’209 of jurisdictions, can produce business certainty, legal certainty, open up international trade, decrease transaction costs210 and allow for greater efficiency in regulation. In its perfect state it would allow nations to rely on their counterparts to prosecute competition law wrongs or, alternatively, allow for uniform jurisdictional rules which would remedy current jurisdictional clashes.

Given the appeal of convergence, it has been the goal of many international competition forums

199_{Ginsburg (n 140).}

200_{Ryngaert, Jurisdiction (n 1) 19.} 201_{Fox, ‘Networks’ (n 35) 269.}

202_{Sweeney, ‘Combating Foreign Conduct’ (n 16) 57.}

203_{Laker Airways Ltd. v Sabena, Belgian World Airlines, 731 F.2d 909 (D.C. Cir. 1984).} 204_{Ryngaert, Jurisdiction (n 1).}

205_{Petros (n 145) 407.} 206_{Ryngaert, Jurisdiction (n 1).}

207_{Ryngaert, Concept of Jurisdiction (n 5) 50.}

208_{Stigler Centre for the Study of Economy and the State, ‘Final Report of the Stigler Committee on Digital Platforms’}

(Stigler Centre September 2019).

209_{Fox, ‘Networks’ (n 35) 267.} 210_ibid.

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since the 1940s.211_{However, at present there are 160 competition regimes}212_{across the globe.} The diplomatic,213_{technical and political task of signing these nations to any single legal} regime is not insignificant, particularly one which involves differing perceptions of complex economic issues. After the failed of a convergence of substantive norms and a WTO214 dispute resolution mechanism, proposals for substantive convergence have repeatedly215 failed to gain widespread support. Both developing nations216 and the US have opposed substantive convergence.217 After many fruitless attempts (Havana Charter218, San Paulo,219 the Jenny Group,220 The Munich Group,221 Cancun222 and Uruguay Rounds)223 the failure of the OECD to secure agreement on convergence of competition law was perceived as the ‘ultimate failure’224_{of convergence.}

4.1 Economic issues

One of the factors contributing to the failure of convergence may be the inherent ‘self-interest’ of nations.225 As Guzman226 points out, the assumption of a nation’s self-interest is a reasonable one. In addition to protecting activities occurring in their own interest ,it is important to note that a nation’s reliance on export or imports will directly affect how it views competition policy.227_{A nation that relies on imports may, because it bears the brunt of the cost of offshore} anti-competitive behaviour, favour stronger extraterritorial competition. By contrast an export heavy economy (engaging in export cartels for example) is ‘exporting’ some of the harm of anti-competitive conduct and therefore may favour weaker regulation of its export industries and restricted extraterritoriality. 228 A nation may permit otherwise prohibited anti-competitive

211_{Havana Charter 1948 UN Doc E/CONF.2/78, Sales No 1948.II.D.4.} 212_{Fox, ‘Networks’ (n 35) 276.}

213_{American Bar Association, ‘Report concerning Private Anticompetitive Practices as Market Access Barriers’ (ABA}

1999) 67.

214_{Group of Experts’ Report (“Van Miert Report”) ‘European Commission, XXVIth Report on Competition Policy’ (1996)}

95.

215_{Petros (n 145) 407.}

216_{Joel Trachtman, ‘Legal Aspects of a Poverty Agenda at the WTO: Trade Law and ‘Global Apartheid’’ (2003) 6 JIEL 3.} 217_{Fox, ‘Networks’ (n 35) 267.}

218_{Havana (n 211).}

219_{UNCTAD, Communication from the Group of 77 and China (2004) <http://www.g77.org/doc/members.html> at 18 May}

2007.

220 _{Petros (n 145) 407.}

221_{Joseph Stiglitz & Andrew Charlton, Fair Trade for All: How Trade Can Promote Development (OUP 2005).} 222_{World Trade Organisation Ministerial Conference (Cancun Mexico, 2003).}

223_{General Agreement on Tariffs and Trade, Uruguay Round 1986-1993.}

224_{Uruguay Round, eighth round of multilateral trade conducted within the framework of the General Agreement on Tariffs}

and Trade (Uruguay, 1986).

225_{Maurice Stucke, ‘Should Competition Policy Promote Happiness?’ (2013) 81 Fordham L. Rev. 2575.}

226_{Andrew T Guzman, 'International Antitrust and the WTO: The Lesson from Intellectual Property' (2003) 43 Va J Int'l L}

933.

227_ibid.

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conduct229_{because other nations will be subject to any monopoly rents and dead weight loss} which result.230_{The approach taken by states may be further impacted by their import/export} mix. Even if a nation is lenient towards its own exporting firms, it may favour strong extraterritorial regulation if it is subject to foreclosing conduct offshore.231 Nations with different import/export mixes (and those with closed economies) will therefore disagree on the appropriate limits of extraterritoriality, making international convergence difficult.

4.2 Cultural factors

A further impact upon a state’s willingness to converge may be the underlying philosophy behind its competition law. While the US and UK remain enamoured with the Chicago School and the consumer welfare standard, many nations in the ‘developing world’ are moving away from this.232 Nations such as Indonesia and South Africa have left room for explicit social and democratic goals233 in their competition regimes. In doing so they have altered both the substantive development of their laws and the ways in which cases are selected and prosecuted. This has been criticised by some as allowing for ‘wrong’ interpretations of competition law by ‘weak regulators’ and an inexperienced judiciary.234_{However this is not to say that these} systems of competition regulation do not work for those jurisdictions235_{or that diversity is} undesirable.

Furthermore, there is significant evidence that cultural perceptions impact upon understandings of criminality and regulation. For example, in Japan longstanding supplier agreements and lateral business relationships, to the exclusion of others, are culturally important .236 In the US and EU these may be akin to exclusionary conduct and cartel behaviour.237 A further example is the contrast between the Indonesian ‘Desa’(village) governance system (resulting in what the West would see as cronyism)238 and Western competition law.239. Furthermore, numerous240 studies, show that only countries with extremely similar ethno-cultural profiles

229_{Webb-Promerene (n 58) 61-65.} 230 _{Guzman (n 226).}

231_{Themelis (n 89).}

232_{Diane R Hazel, 'Competition in Context: The Limitations of Using Competition Law as a Vehicle for Social Policy in the}

Developing World' (2015) 37 Hous J Int'l L 275.

233_{Eleanor M Fox, 'Equality, Discrimination, and Competition Law: Lessons from and for South Africa and Indonesia'}

(2000) 41 Harv Int'l L J 579.

234_{Hazel (n 232).}

235_{William Easterly, The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little}

Good (Penguin 2006).

236_{Robert L Cutts, ‘Capitalism in Japan: Cartels and Keiretsu’ (1992) 70 HBR 48.} 237_ibid.

238_{Eg; Fox ‘Africa’ (n 233); Hazel (n 233).} 239_ibid.

240_{Thomas K. Cheng, ‘How Culture May Change Assumptions in Antitrust Policy’ in Ioannis Lianos and Daniel D Sokol}

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are more likely to maintain similar laws. Studies by Cheng241_{and Jong Lee}242_{found that} differences in individualistic vs collectivist cultures243_{created different appetites for} prosecution and views on appropriate penalties.

Such factors may make convergence problematic. Not only is it impractical, it ignores the very real impacts of cultural differences on both the type of law which is suitable for a nation and the way in which it will develop once it has been transplanted.244 Although this may frustrate

the development of a universal competition law, and with it the hope to remedy jurisdictional conflicts, it is necessary for the freedom and legal growth of these nations.245 In fact, it may be counterproductive to the diversity and development of competition law to expect that all nations competition law should develop in uniformity.

4.3 Regional spheres

Despite the failure of global convergence, in some parts of the world partial or regional convergence has begun, in the form of ‘regional spheres.’246 This occurs through adoption of regulation, resource sharing247 and programs of information sharing. The EU has been particularly successful in developing such a sphere and a perceived role as ‘global regulator.’248 A study by Bradford et al249_{demonstrates that EU regulation has influenced 130 competition} regimes worldwide.250_{This is bolstered by the harmonisation of EU Member State competition} laws, and the desire of some states to have a single competition law scheme. The US also has a significant global influence. Key provisions of the Sherman Act have been taken up globally, by virtue of the US’s significant ‘persuasive powers.’251 Australia/New Zealand is a further example of one such ‘sphere.’ Their competition legislation is substantively the same, while many nearby nations such as Fiji have translated the Australian legislation into domestic law.252 However, many regulatory regimes with a common legislative root have substantially diverged

241_ibid

242_{Ki Jong Lee, ‘Promoting Convergence of Competition Policies in Northeast Asia Culture- Competition Correlation and}

Its Implications’ in Ioannis Lianos and Daniel D Sokol (eds), The Global Limits of Competition Law (SUP 2012).

243_{Cheng (n 240).}

244_{Albert Allen Foer, ‘Cultural Dimensions of Competition’ in Damien Gerard and Ioannis Lianos (eds), Reconciling}

Efficiency and Equity a Global Challenge for Competition Policy (CUP 2019).

245_{Petros (n 145) 398.} 246_{Fox, ‘Networks’ (n 35) 279.}

247_{Eg; ACCC Competition Law Implamentation Program, see}

https://www.accc.gov.au/about-us/international-relations/competition-law-implementation-program-clip.

248_{Anu Bradford, Adam Chilton, Katerina Linos and Alex Weaver, ‘The Global Dominance of European Competition Law}

over American Antitrust Law’ (2019) 4 Alexander Journal of Empirical Legal Studies 16 757.

249_ibid. 250_ibid.

251_{Anu Bradford, ‘The Brussels Effect’ (2012) 107 Nw UL Rev 1.}

Global Competition Policy in the Digital Age: Jurisdictional Challenges and the EU Approach