Antitrust in a Globalized Economy: The Unique Enforcement Challenges Faced by Small and by Developing Jurisdictions

45 Pages Posted: 2 Oct 2012

See all articles by Michal Gal

Michal Gal

University of Haifa - Faculty of Law

Date Written: October 1, 2009

Abstract

While much has been written on international antitrust, not much scholarship has focused on the unique antitrust enforcement challenges facing small and developing jurisdictions in a globalized world, their causes, or how these challenges shape coordination efforts. Moreover, while scholars often assume low enforcement levels on international antitrust issues in such jurisdictions, this assumption was never proven. This paper takes on this challenge. It reports on a unique dataset that is comprised of case studies of the enforcement actions of forty-eight jurisdictions. As shown, even when they possess the legal tools to tackle international antitrust issues, small jurisdictions and developing economies often suffer from serious practical and motivational deficiencies. Most importantly, they frequently cannot create a credible threat to enforce their laws against large, multinational firms that engage in anticompetitive conduct that harms their economy. Moreover, they also often have limited resources and incentives to deal with international anticompetitive conduct. As a result, despite the potentially severe effects of anticompetitive conduct on their markets, these jurisdictions are habitually passive bearers of the effects of international anticompetitive conduct rather than proactive confronters of it. Consequently, their interests are routinely overlooked both by international firms and by other jurisdictions. Yet some tools, explored in the paper, can help overcome at least some of these enforcement challenges.

These findings also have important implications for cooperative international antitrust. To be sure, jurisdictional overlap in international antitrust issues has created dependencies among different countries, which, in turn, enhance the need for coordinating antitrust policies between jurisdictions based on negotiation and persuasion rather than hierarchical mechanisms of control. Yet due to their limited bargaining power resulting from the enforcement patterns identified in this paper, a negotiated outcome is unlikely to grant small and developing jurisdictions a piece of the total welfare pie that is proportional to their size or their contribution to global welfare. Nor is it likely to solve many of the global welfare issues that arise from existing enforcement patterns. The paper suggests some tools that small and developing jurisdictions can employ in order to play a more effective role in the international antitrust arena.

Although this paper focuses on antitrust, some of its conclusions have implications that go well beyond this field of law. In fact, the analysis of the unique enforcement challenges faced by small and developing jurisdictions in a predominantly unilateral enforcement regime, and the implications that these challenges have for the creation of an international regime, may well carry over to other legal fields in which globalization creates domestic issues.

Keywords: antitrust, competition, international, regional

JEL Classification: K21

Suggested Citation

Gal, Michal, Antitrust in a Globalized Economy: The Unique Enforcement Challenges Faced by Small and by Developing Jurisdictions (October 1, 2009). Fordham International Law Journal, Vol. 33, No. 101, 2009, Available at SSRN: https://ssrn.com/abstract=2155128

Michal Gal (Contact Author)

University of Haifa - Faculty of Law ( email )

Mount Carmel
Haifa, 31905
Israel

HOME PAGE: http://weblaw.haifa.ac.il/en/faculty/gal/pages/home.aspx

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