Should the WTO have a Role to Play in the Internationalisation of Competition Law?

• Date: 01 January 2007

Should the WTO have a Role to Play in the

Internationalisation of Competition Law?

DEIRDRE ANN KELLY*

It can be said that competition law is national, while markets are

increasingly global. Yet there is no international antitrust code. The

key question is how to deal with transnational competition issues in

a global economy. How can competition authorities manage market-

place conduct that takes place in one nation, but has a harmful effect

in another? Konrad von Finckenstein (2001)1

In an increasingly globalised world, spurred on by comprehensive trade

liberalisation, regulatory reform, technological advancements and rapid

transportation, we find ourselves facing a problem that has been often

discussed but somewhat neglected since the Havana Charter in the 1940s.

The problem we essentially face is that the globalisation of the market-

place brings with it the risk of globalisation of anti-competitive practices.

Notwithstanding this, competition law and policy is still organised primarily

on the basis of nation-states. A disjointed international regulatory system

has evolved in which national governments have developed distinctive

approaches to the regulation of conduct that affects its country, often

without consideration of the effect of that regulation on other nations. The

progressive liberalisation of government restraints on trade by the GATT3

has highlighted the need for international cooperation in competition policy.

Indeed, concern has been expressed that public restraints on trade might be

in danger of being replaced by private restraints on trade.4It is universally

acknowledged that anti-competitive practices with an international

* Deirdre Ann Kelly LLB (Trinity) LLM (UCD), Trainee Solicitor with Dillon Eustace.

1Former Commissioner of Competition and head of the Competition Bureau of

Canada (1997–2003).

2Havana Charter, http://www.worldtradelaw.net/misc/havana.pdf, accessed on 3

September 2007

3General Agreement on Tariffs and Trade, http://www.wto.org/gatt_docs/english/

sulpdf/90710265.pdf, accessed on 3 September 2007

4Woolcock, “International Competition Policy for the WTO Paper for the LSE

Commonwealth Business Council Trade Forum in South Africa”, http://www.lse.ac.uk/

collectios/internationaltradepolicyunit/pdf/internationalcompetitionpolicyandthe

world tradeorganization.pdf, accessed on 8 September 2007

dimension can adversely affect trade flows, and consequently undermines

the benefits that would otherwise be delivered by trade liberalisation and

open markets.

The recognised limitation of domestic competition law in dealing with

anti-competitive practices with an international dimension,5combined with

the prospect of conf‌lict among nations as a result of inconsistent application

of competition law by different nation-states, has provided the impetus for

various proposals to construct an international competition policy. Indeed,

it is ironic that international antitrust is often referred to as one of the “new

issues” in the context of the World Trade Organization. Historically, the

potential for an international competition agreement was originally recog-

nised with the Charter for an International Trade Organization in 1945.

However, by the time the negotiations on the ITO Charter were successfully

completed in Havana in 1948, international competition obligations had

been omitted from its remit. The issue lay dormant for many years and, in

the absence of a multilateral agreement on competition policy, bilateral,

regional and plurilateral agreements on competition policy f‌illed this vacuum.

Subsequently, in 1994, the Agreement Establishing the WTO included a

range of limited provisions addressing various cross-border competition

issues on a sector specif‌ic basis. Furthermore, the Organization for Economic

Cooperation and Development (OECD), the United Nations Conference on

Trade and Development (UNCTAD) and the WTO have established

committees to further consider international competition issues, and have

promoted the evolution of cross-border competition laws. More recently,

WTO Ministerial Conferences in Doha (2001) and Cancun (2003) have

contemplated formal WTO negotiations on competition law and policy.

However, debates have raged about the suitability of the WTO as a

forum to regulate international competition policy.6

Although competition policy and trade policy share the common goals of

increasing efficiency and encouraging market access, they can conflict in

that competition policy can clash with the market access goal of trade policy

insofar as national competition authorities often ignore the anti-competitive

effects of their firm’s actions on other countries and may even tolerate

or encourage export cartels or mergers whose adverse impact falls

predominantly on foreign consumers.7

Opponents of a global approach contend that antitrust regulation can be

solved at national and nation-to-nation level. This is the approach adopted

5For more on this see Shelton, “Competition Policy: What Chance for International

Rules?” (1999) 2 OECD J. Competition L&Pol’y pp 57–60

6Fox, “Global Markets, National Law and the Regulation of Business: A View From

The Top” (2001) 75 St John’s L Rev 383, 396

7Bhattacharjea, “The Case for a Multilateral Agreement on Competition Policy:

A Developing Country Perspective” (2006) Journal of International Economic Law

Vol 9 No 2

18 DEIRDRE ANN KELLY