Antitrust Laws: Global Reach And International Application

Antitrust laws, also known as competition laws, are designed to maintain the integrity of the marketplace by prohibiting anti-competitive practices and subjecting corporate mergers and acquisitions to regulatory review if they could significantly reduce competition. Over 120 countries have antitrust or competition enforcement authorities, with varying goals and regulations.

The application of antitrust laws across borders is a complex issue. Historically, competition law developed almost exclusively within the boundaries of individual nations. However, the rise of multinational business enterprises has led to increased bilateral and regional cooperation among national competition authorities.

In the United States, antitrust laws have long been applied to foreign commerce. The Department of Justice and the Federal Trade Commission are responsible for enforcing these laws and have made it a priority to address international operations and cooperate with foreign authorities.

The International Antitrust Enforcement Assistance Act of 1994 further fosters cooperation and procedural harmony between nations dealing with antitrust cases of transnational scope. This Act enables the sharing of confidential information and the use of compulsory process to obtain evidence for foreign enforcement authorities.

While there is a push for greater international uniformity in substantive antitrust law, nations proceed cautiously due to differing economic development, culture, and policy considerations. As a result, the focus is on building bilateral and multilateral cooperation in enforcing existing laws rather than striving for a single global antitrust code.

The divergence of antitrust laws across jurisdictions creates challenges and opportunities for global companies, which may fall under the jurisdiction of multiple competition enforcement authorities. To address these challenges, firms often sign waivers allowing different authorities to communicate and share documents, leading to a more efficient process and reducing the likelihood of conflicting conclusions.

International cooperation and convergence in antitrust enforcement

The United States has been at the forefront of these efforts, with the Department of Justice and the Federal Trade Commission (FTC) gaining significant experience in working with their international counterparts. They have used a range of tools to facilitate cooperation, including informal communication, technical assistance, and bilateral cooperation agreements.

One key challenge in international antitrust cooperation is the sharing of confidential information between agencies. The International Antitrust Enforcement Assistance Act of 1994 in the US, for example, was enacted to foster the reciprocal sharing of investigative information between enforcement agencies while maintaining confidentiality.

There has also been a push for greater substantive and procedural convergence in antitrust enforcement. The US has proposed the formation of a Global Competition Network to serve as a forum for senior antitrust officials to discuss and develop consensus on proposals for procedural and substantive convergence.

While cooperation is essential, it does not always guarantee consistent results. Differences in views and approaches to antitrust law and its scope can lead to divergent outcomes, even with close cooperation and goodwill between agencies.

Overall, international cooperation and convergence in antitrust enforcement are vital to addressing anticompetitive behavior in a globalized economy. While challenges and differences exist, continued efforts towards collaboration, information sharing, and the development of global standards can help ensure effective antitrust enforcement worldwide.

The International Antitrust Enforcement Assistance Act of 1994

Under the Act, US and foreign authorities may share evidence of antitrust violations and provide each other with investigatory assistance, subject to certain restrictions. The Act enables the Justice Department and the Federal Trade Commission to enlist the help of foreign antitrust enforcers to obtain crucial antitrust evidence already in the foreign agencies' files or in the possession of persons in their territory. This is achieved by allowing them to offer reciprocal assistance in antitrust investigations.

The Act also allows the Justice Department to use antitrust civil investigative demands to obtain information on behalf of foreign antitrust authorities, or to seek a court order to compel the production of documents or testimony in the US in aid of a foreign antitrust investigation.

The Act includes extensive safeguards to protect confidential business information obtained from American firms from misuse or improper disclosure by foreign antitrust authorities. These safeguards include:

• Antitrust evidence can only be provided to a foreign antitrust authority pursuant to a publicly disclosed antitrust mutual assistance agreement.
• Before entering into any agreement, and before providing assistance under any agreement, the US antitrust agencies must be satisfied that the foreign antitrust authority can and will meet stringent confidentiality requirements for the information that is provided.
• The foreign antitrust authority must have laws in place that give protection to any information it receives from the US authorities that is no less than the protection the information would have in the hands of the US agencies.
• The Attorney General or Federal Trade Commission must be satisfied that the foreign authority can and will comply with all applicable confidentiality requirements.
• The information must be used only for antitrust enforcement.
• The information must be returned to the Attorney General or Federal Trade Commission at the end of the foreign investigation or proceeding.
• If there is a breach of confidentiality, the person that provided the information must be notified, and the mutual assistance agreement will be terminated unless adequate steps are taken to minimise the harm from the breach and to ensure the breach does not recur.
• The Act does not authorise the disclosure of premerger information received by the Attorney General or the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
• The Act does not authorise the disclosure of information submitted to the US government in connection with the Export Trading Company Act of 1982 or any other statute that is not a federal antitrust law.
• The Act makes it clear that national security information cannot be passed along to a foreign agency.
• The Act includes provisions to ensure that assistance under these agreements is a two-way street, and that the foreign antitrust agency will provide assistance that is comparable in scope to what the US agencies agree to provide in return.
• Before providing assistance under the Act, the Attorney General or the Federal Trade Commission must conclude that doing so is consistent with the public interest of the US.

The extraterritorial reach of US antitrust laws

Jurisdiction

The reach of US antitrust laws extends beyond the boundaries of the United States. Anticompetitive conduct that affects US domestic or foreign commerce may violate US antitrust laws, regardless of where such conduct occurs or the nationality of the parties involved. The two principal tests for subject matter jurisdiction in foreign commerce cases are the Hartford Fire Insurance Co. v. California test and the Foreign Trade Antitrust Improvements Act (FTAIA) of 1982.

The Hartford Fire Test

According to the Hartford Fire test, the Sherman Act applies to foreign conduct that was intended to produce and did produce a substantial effect in the United States. This test focuses on the potential harm that would result if the anticompetitive agreement were successful, rather than on the actual effects on interstate or foreign commerce.

The FTAIA

The FTAIA amended the Sherman Act to exclude conduct involving trade or commerce with foreign nations unless such conduct has a direct, substantial, and reasonably foreseeable effect on US commerce. The FTAIA also applies to the FTC Act, with slightly different statutory language but producing the same jurisdictional outcomes. The FTAIA delineates the jurisdictional limits of the Sherman Act and the FTC Act in cases of foreign commerce other than imports.

Comity

In enforcing antitrust laws, US agencies consider international comity, which reflects the respect among co-equal sovereign nations. When determining whether to assert jurisdiction or bring an action, agencies take into account the potential impact on the interests of foreign sovereigns. Factors considered in the comity analysis include the relative significance of conduct within the US versus abroad, the nationality of those involved, the presence of a purpose to affect US consumers or markets, and the degree of conflict with foreign law or policies.

Foreign Sovereign Immunity

The Foreign Sovereign Immunities Act (FSIA) of 1976 governs the immunity of foreign governments or their agencies from US court jurisdiction, including in antitrust cases. Under the FSIA, a US court has jurisdiction if the foreign government has waived immunity, engaged in commercial activity, expropriated property in violation of international law, acquired rights to US property, committed certain torts within the US, or agreed to arbitration. The commercial activity exception is frequently invoked, and most activities of foreign government-owned corporations operating in the commercial marketplace will be subject to US antitrust laws.

Mutual Legal Assistance Treaties (MLATs)

MLATs are treaties between the US and foreign countries that provide a framework for mutual legal assistance in criminal law enforcement matters, including antitrust investigations. While MLATs are in force with over a dozen countries, only the MLAT with Canada has been used to obtain assistance in antitrust investigations to date.

International Antitrust Cooperation

The US has entered into several bilateral cooperation agreements with other countries, such as the EU-US Antitrust Cooperation Agreement and the US-Canada agreement. These agreements provide for notification, investigative assistance, information sharing (with confidentiality protections), and cooperation in addressing deceptive marketing practices. Additionally, the International Antitrust Enforcement Assistance Act of 1994 authorizes US antitrust agencies to negotiate bilateral agreements with foreign governments to facilitate the exchange of documents and evidence in civil and criminal investigations.

The role of comity in international antitrust enforcement

Comity refers to the spirit of cooperation in which a domestic tribunal approaches the resolution of cases touching the laws and interests of other sovereign states. In antitrust enforcement, comity is a principle of recognition and restraint, and it plays a role in determining the recognition of foreign laws, foreign judgments, and foreign sovereigns as litigants.

In antitrust enforcement, comity is considered when determining whether to assert jurisdiction to investigate or bring an action, or to seek particular remedies in a given case. The US Department of Justice and the Federal Trade Commission (FTC) take into account all relevant factors, including:

• The relative significance to the alleged violation of conduct within the United States, as compared to conduct abroad.
• The nationality of the persons involved in or affected by the conduct.
• The presence or absence of a purpose to affect US consumers, markets, or exporters.
• The relative significance and foreseeability of the effects of the conduct on the US as compared to the effects abroad.
• The existence of reasonable expectations that would be furthered or defeated by the action.
• The degree of conflict with foreign law or articulated foreign economic policies.
• The extent to which the enforcement activities of another country with respect to the same persons, including remedies resulting from those activities, may be affected.
• The effectiveness of foreign enforcement as compared to US enforcement action.

The US government has made it a high priority to enforce the antitrust laws with respect to international operations and to cooperate wherever appropriate with foreign authorities regarding such enforcement. The Department of Justice and the FTC have revised and updated the Antitrust Enforcement Guidelines for International Operations, which are used to provide antitrust guidance to businesses engaged in international operations on questions that relate specifically to the Agencies' international enforcement policy.

The impact of technology on antitrust enforcement

Technology has had a significant impact on antitrust enforcement, with the rise of Big Tech platforms and digital markets presenting new challenges and opportunities for regulators.

On the one hand, technology has facilitated greater international cooperation and coordination among antitrust enforcement agencies, leading to more effective enforcement and procedural harmony. The International Antitrust Enforcement Assistance Act of 1994 , for example, has fostered greater cooperation between the US and other nations by enabling the sharing of confidential information and the use of compulsory process to obtain evidence for foreign enforcement authorities. Additionally, bilateral cooperation agreements, such as those between the US and Canada, have established a respect for national sovereignty and a commitment to work together to avoid conflicts of interest in antitrust enforcement.

On the other hand, the rise of Big Tech platforms and their increasing dominance, especially during the COVID-19 pandemic, has raised concerns about monopolistic power and the need for more robust antitrust regulation. The consumer welfare standard, which has been the governing principle of antitrust law since the 1970s, has been criticised as insufficient to address the growing influence of Big Tech companies. There is a growing call for antitrust reform, with policymakers and regulators seeking to expand oversight and tighten requirements around mergers and acquisitions that could be anticompetitive. For example, the Platform Competition and Opportunity Act, introduced by Senators Klobuchar and Cotton, aims to make it harder for Big Tech companies to acquire rival companies by shifting the burden of proof to them to demonstrate that a merger or acquisition would not stifle competition.

Furthermore, the impact of technology on antitrust enforcement is also evident in the changing nature of antitrust investigations and the use of data and analytics. The increased availability of data has enabled regulators to analyse markets and competitive effects more effectively. Additionally, the use of algorithms and artificial intelligence has enhanced the detection and investigation of anticompetitive practices, such as algorithmic pricing schemes that harm consumers.

In conclusion, while technology has facilitated greater international cooperation in antitrust enforcement, it has also presented new challenges and opportunities for regulators in addressing the market power of Big Tech platforms and ensuring competitive markets in the digital age.

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