Competing Ways Towards International Antitrust: The WTO versus the ICN

Abstract

Various problems coming along with the ongoing globalization of markets and business activities like international cartels, monopolization of world markets, deterrence of market access in spite of relaxed trade barriers as well as jurisdictional conflicts about transnational mergers and alleged or actual anticompetitive business strategies call for the creation of an international antitrust regime. Two alternative avenues to internationalize antitrust policy are currently advanced by governments and antitrust authorities. The first avenue is to complement the World Trade Organization (WTO) by a board of supervision for international competition issues including a harmonized antitrust code. With the Doha Declaration (2001), the WTO members agreed to engage in negotiations on an international antitrust agreement, although the time schedule remains uncertain in the light of the Cancún failure. The second avenue was opened up by the creation of the International Competition Network (ICN, 2001), which addresses global antitrust concerns by policy coordination. This paper compares the two approaches against the background of economic and political criteria. It starts with a brief overview of the theoretical alternatives to cope with cross-border antitrust problems, such as the strengths and weaknesses of unilateral instruments (effects doctrine), bilateral agreements and (past) multilateral attempts. Following a descriptive characterization of the key features and underlying principles of the WTO and the ICN approach to international antitrust, the main section of the paper presents an analytical comparison of the two approaches. It is based on selected criteria, which are predominantly derived from institutional and political economics. The comparative performances and potentials of WTO-and ICN-styled international antitrust are evaluated regarding the internalization of externalities, agency problems and preference conformity, overall practicability & negotiation/implementation competences, efficiency of governance, protection of effective and efficient competition, * The authors thank Jörg Jasper for valuable comments on earlier drafts of the paper and Barbara Majireck for editorial assistance. All remaining errors are our responsibility. Dr. Budzinski gratefully acknowledges financial instruments of conflict resolution, and the capability to cope with changing environments. Additionally, the article examines another dimension of the process towards an international antitrust regime, which has been neglected so far in the literature. Are their benefits and/or deficiencies of having a 'competition of ways' to select the superior regime? This points to the theory of institutional (or regulatory) competition. The final section presents conclusions.

European Competition Policy in International Markets

“…) There exist different levels of bilateral cooperation, going from notification to negative comity. (See Bode and Budzinski, 2005;Haucap et al, 2005. ) First, cooperation could imply notification.…”

“…The negative comity states that an authority has to take into account the consequences of its actions on the other country. (See Bode and Budzinski, 2005. ) Each authority respects the sovereignty and interests of other countries.…”

“…(See for instance, Hoekman and Saggi, 2005, Bode and Budzinski, 2005, or Todino, 2003.) The ICN is not an inter-governmental body.…”

An international multilevel competition policy system

“…Against the background of the U.S. experience (antitrust federalism), First (2003) and O'Connor (2002) emphasise benefits of decentralised regime elements. Actually, the policy sphere has embraced network governance with the introduction of the International Competition Network (ICN), which -despite being rather informal -represents the currently most viable avenue towards international competition policy coordination after the efforts to introduce competition rules in the WTO Doha round have eventually failed (Bode/Budzinski 2006). However, the ICN is a forum for purely voluntary cooperation only and, while providing valuable work in terms of building a common spirit of competition among the members, falls short of an effective governance of international competition (Budzinski 2004).…”

An International Multilevel Competition Policy System

“…Actually, the policy sphere has embraced network governance with the introduction of the International Competition Network (ICN), which -despite being rather informal -represents the currently most viable avenue towards international competition policy coordination after the efforts to introduce competition rules in the WTO Doha round have eventually failed (Bode/Budzinski 2006). However, the ICN is a forum for purely voluntary cooperation only and, while providing valuable work in terms of building a common spirit of competition among the members, falls short of an effective governance of international competition (Budzinski 2004).…”