Export Cartel Issues and Challanges

8/17/2019 Export Cartel Issues and Challanges

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THE CASE OF EXPORT CARTEL EXEMPTIONS: BETWEEN COMPETITION AND

PROTECTIONISM

ABSTRACT

Most competition las !o not p"o#i$it anticompetiti%e con!&ct t#at a''ects 'o"ei(n ta"(et ma")ets

as lon( as t#e"e is no spill o%e" e''ect on t#e #ome ma")et* T#e +*S* in pa"tic&la" ,&sti'ies t#is

lenienc- toa"!s e.po"t ca"tels $- t#e aim o' inc"easin( e''icienc- in ta"(et ma")ets t#at a"e

s&''e"in( '"om #i(# ent"ance $a""ie"s 'o" impo"te"s* Attempts to &se t#e le(al "e(ime o' t#e WTO

to o%e"come p"i%ate "est"ictions o' competition a"e li)el- to 'ail/ $eca&se o' t#e '&n!amental

!i''e"ences $eteen t"a!e polic- an! competition polic-* Alt#o&(# a m&ltilate"al competition

polic- o&l! $e $est s&ite! to c#allen(e e.po"t ca"tels/ t#e c&""ent state o' t#e political !e$ate

ma)es it mo"e li)el- t#at secon!0$est sol&tions s&c# as capacit- $&il!in( in lesse" !e%elope!

ta"(et states ill #a%e to $e esta$lis#e!*

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CHAPTER01

I* INTROD+CTION: THE RELATIONSHIP BETWEEN INTERNATIONAL TRADE LAW

AND DOMESTIC COMPETITION LAW

Well0$alance! t"a!in( '"ameo")s an! open ma")ets a"e '&n!amental con!itions 'o" t#e 'ai"

!ist"i$&tion o' p"ospe"it- o"l!i!e* Domestic t"a!e polic- in'l&ences t#e con!itions 'o" ma")et

ent"- an! ma")et e.it o' 'o"ei(n companies $- settin( ta"i''s o" ot#e"/ nonta"i''/ $a""ie"s 'o" t#ei"

p"o!&cts an! se"%ices* Acco"!in(l-/ t#e !e("ee o' t"a!e li$e"ali2ation is one impo"tant pa"amete"

'o" t#e #ealt# o' t#e competition in a (i%en (eo("ap#ical an! p"o!&ct ma")et* T#e esta$lis#ment

an! t#e en'o"cement o' '"ee o"l! t"a!e is at t#e co"e o' t#e 3ATT4WTO !e%elopment*1 It

appea"s to $e &n!isp&te! t#at t#e 3ATT4WTO0s-stem/ alt#o&(# #a%in( a s&$stantial impact on

o"l! t"a!e/ #as some !i''ic&lt- lin)in( 5&estions o' t"a!e to ot#e" '&n!amental p"o$lems o' t#e

o"l! economic o"!e"* T#is in%ol%es/ 'o" e.ample/ p"o$lems o' #o to a!!"ess ne(ati%e

e.te"nalities 6'o" e.ample/ en%i"onmental conce"ns7 o" ot#e" cases o' ma")et 'ail&"e* A '&"t#e"

aspect o' t#e !e$ate is t#e sta$ilit- o' t"ans0$o"!e" competition insti(ate! $- t#e "e!&ction o'

t"a!e $a""ie"s/ an! t#e !an(e"s 'o" competition "es&ltin( '"om p"i%ate clos&"es o' ma")ets nel-

opene! t#"o&(# ta"i'' concessions*

As a matte" o' p"inciple/ 3ATT an! ot#e" WTO p"o%isions !eal it# ta"i''s an! nonta"i'' t"a!e

$a""ie"s p&t in place $- states to st"&ct&"e o" e%en impe!e t#e '"ee 'lo o' (oo!s an! se"%ices

ac"oss t#ei" $o"!e"* T#e incenti%e 'o" (o%e"nments to &se s&c# inst"&ments is e.plaine! $-

st"ate(ic t"a!e t#eo"- 6STT7/ pointin( o&t t#at (o%e"nment inte"%ention in '"ee t"a!e can p"o%i!e

oppo"t&nities 'o" selecte! in!&st"- secto"s to e.pan! ma")ets an! t#e"e$- inc"ease national

income*8

Hoe%e"/ ma")et pa"ticipants also #a%e a nat&"al inclination to "est"ict t#e '"ee 'lo o' se"%ices

an! (oo!s/ a''ectin( competition t#"o&(# coope"ation $- "e!&cin( t#e &nce"taint- an! t#e "is)s

in#e"ent in '"ee competition* 9 People of the same trade seldom meet together, even for merriment

and diversion, but the conversation ends in a conspiracy against the public, or in some

1 See/ 'o" e.ample/ pa"as* 1 an! 8 o' t#e p"eam$le to 3ATT 1;7? ano%e"%ie o%e" some "ele%ant $oo)s can $e 'o&n! in @* Ric#a"!son 9T#e Political Econom- o' St"ate(ic T"a!eT#eo"-/9 Inte"national O"(ani2ation 1< 617? see also P* ="&(man 9Inc"easin( Ret&"ns/ MonopolisticCompetition/ an! Inte"national T"a!e/9 @IEL ; 61


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contrivance to raise prices*9 O' co&"se/ in a (lo$ali2e! economic o"!e"/ s&c# coope"ation is

&nli)el- to $e limite! to t#e t"a!e"s #ome ma")et* Coope"ation can also $e !i"ecte! at 'o"ei(n

ta"(et ma")ets/ $eca&se 9Me"c#ants an! man&'act&"e"s a"e not contente! it# t#e monopol- o'

t#e #ome ma")et/ $&t !esi"e li)eise t#e most e.tensi%e 'o"ei(n sale 'o" t#ei" (oo!s*9 ; As a

conse5&ence/ e''o"ts to sa'e(&a"! '"ee t"a!e an! to initiate competition $eteen !omestic an!

'o"ei(n p"o!&cts an! se"%ices a"e li)el- to $e &n!e"mine! $- t#e p"i%ate "est"iction o' s&c#

competition* Companies mi(#t e%en e.pect t#ei" on (o%e"nments to s&ppo"t s&c# con!&ct00at

least as lon( as it !oes not a''ect competition in t#e #ome ma")et to t#e !et"iment o' !omestic

ma")et pa"ticipants: 9T#ei" co&nt"- #as no ,&"is!iction in 'o"ei(n nations/ an! t#e"e'o"e can

sel!om p"oc&"e t#em an- monopol- t#e"e* T#e- a"e (ene"all- o$li(e!/ t#e"e'o"e/ to content

t#emsel%es it# petitionin( 'o" ce"tain enco&"a(ements to e.po"tation*9> Hoe%e"/ i' t"a!e

polic- inst"&ments to p"otect an! p"omote a states in!&st"- a"e not at #an!/ $eca&se states a"e

le(all- $o&n! to a$stain '"om esta$lis#in( t"a!e $a""ie"s/ s&c# $a""ie"s mi(#t $e s&$stit&te! $-

inst"&ments o' competition polic- #a%in( a simila"l- s&ppo"ti%e e''ect* One st"i)in( e.ample is

t#e e.emption o' e.po"t ca"tels '"om t#e "&les o' !omestic competition la* Wit# s&c# an

e.emption/ (o%e"nments !o not !i"ectl- inte"%ene in t#e '"ee 'lo o' (oo!s an! se"%ices t#"o&(#

t"a!itional t"a!e polic- inst"&ments s&c# as ta"i''s o" nonta"i'' $a""ie"s* Ne%e"t#eless/ in alloin(

ot#e"ise p"o#i$ite! con!&ct $eca&se onl- 'o"ei(n ma")ets a"e ta"(ete!/ states assist in a''ectin(

t#e ta"(et ma")et in a a- t#at is p"one to #&"t its cons&me"s an! p"o!&ce"s ,&st as m&c# as $-

$a""in( its econom- '"om e.po"tin(* D&e to t#e constant "e!&ction o' t"a!e $a""ie"s/ p"i%ate

!isto"tions o' competition $ecome clea"e" to i!enti'- an! m&c# mo"e si(ni'icant in t#ei" e''ects*

T#is m&t&al "elation $eteen p"i%ate "est"ictions an! ta"i''0 o" nonta"i'' $a""ie"s #as le! to a s#i't

in t#e !isc&ssion toa"!s a mo"e inte"national pe"specti%e on p"otectin( competition a(ainst

p"i%ate "est"ictions to complement t#e ac#ie%ements o' inte"national t"a!e polic-*

E.po"t ca"tel e.emptions a"e inst"&ments o' competition polic- 'o" t"a!e polic- en!s* 9In a o"l!

o' inte"national t"a!e/ competition an! t"a!e polic- also $ecome t#e same s&$,ect* T"a!e polic- atits #ea"t in%ol%es c#oices o%e" t#e le%el o' competition $eteen !omestic an! 'o"ei(n p"o!&ce"s

a state ill pe"mit o" enco&"a(e* *** A$sent a close! econom-/ competition an! t"a!e polic- a"e

3 A!am Smit# An In5&i"- into t#e Nat&"e an! Ca&ses o' t#e Wealt# o' Nations 61


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t#e to si!es o' t#e same coin*9 In man- instances competition polic-0"elate! s&ppo"t to a states

e.po"t $&siness is e%en ol!e" t#an (lo$al '"ee t"a!e mo%ement/ $&t t#e 'o"me"s "ele%ance 'o" an!

in'l&ence on competition "es&"'aces no t#at a (lo$al '"ee t"a!e polic- is !e%elopin(*

P"osec&tin( an! !ete""in( inte"national ca"tels inc"easin(l- occ&pies t#e time an! ene"(- o'

competition a&t#o"ities a"o&n! t#e o"l!* In o"!e" to p"o%i!e app"op"iate polic- inst"&ments/

polic-ma)e"s #a%e #a! to a!!"ess a "an(e o' iss&es: co"po"ate amnest- policies/

e.t"ate""ito"ialit-/ $&il!in( antit"&st instit&tional capacit- in !e%elopin( co&nt"ies/ an!

m&ltinational a("eements 'o" competition a&t#o"ities to coope"ate an! s#a"e in'o"mation* In a

simila" %ein/ some co&nt"ies #a%e eliminate! o" limite! p"e%io&sl- e.istin( antit"&st e.emptions

'o" coope"ation amon( p"i%ate 'i"ms 'o" e.po"tin( (oo!s an! se"%ices? ot#e"s/ #oe%e"/ #a%e

stea!'astl- insiste! on t#e impo"tance o' maintainin( t#ese e.emptions*

Wit# inc"easin( consens&s/ $ot# in 'a%o" o' '"ee" inte"national t"a!e an! in opposition to p"ice

'i.in( an! ma")et !i%ision a("eements/ t#ese e.emptions #a%e come &n!e" c"iticism o%e" t#e last

!eca!e* B- 11/ aca!emics e"e $e(innin( to call 'o" a c#an(e in polic- toa"! e.po"t ca"tels*

9GE.po"t e.emptions '"om antit"&st las a&t#o"i2e 'i"ms to colla$o"ate to en(a(e in

anticompetiti%e $e#a%io" in 'o"ei(n ma")ets/ at t#e e.pense o' ot#e" co&nt"ies cons&me"s an!

p"o!&ce"s/ in a manne" t#at o&l! $e &nla'&l i' &n!e"ta)en at #ome*9 Spence" We$e" Walle"/

t#e p"eeminent e.pe"t in t#is a"ea/ "ote t#at 9t#e a$sence o' inte"national "e(&lation pe"tainin(

to t#e &se o' e.po"t ca"tels lea%es a conspic&o&s (ap in t#e en'o"cement o' competition no"ms*9

T#e O"(anisation 'o" Economic Co0ope"ation an! De%elopment 69OECD97 %oice! simila"

c"iticism/ callin( 'o" t#e 9o"l!i!e "epeal o' ca"tel e.emption co&ple! it# an e''icienc-

!e'ense*9

A 'e co&nt"ies/ s&c# as t#e +nite! States an! A&st"alia C#ina an! In!ia/ contin&e to o''e"

e.plicit e.po"t e.emptions* To 5&estions a"ise: Is t#is anti5&ate! o" p"otectionist t#in)in( on

t#e pa"t o' t#ese 9#ol! o&t9 co&nt"ies/ o" is it t#e co""ect polic- stance Do e ant e.plicite.emptions/ implicit e.emptions/ o" no e.emptions at all Man- o&l! a"(&e t#at e s#o&l!

#a%e no e.emptions: alloin( 'i"ms to 'i. p"ices 'o" !omestic o" e.po"t p&"poses s#o&l! $e

ille(al* B&t i' e cannot ac#ie%e t#at (oal in t#e nea" '&t&"e/ it ma- $e o"se/ not $ette"/ to #a%e

6 P* Step#an 9Competiti%e Competition La/9 +ni%e"sit- o' i"(inia Sc#ool o' La/ La an! Economics Resea"c#Pape" 607 687/ >*

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co&nt"ies mo%in( to implicit e.emptions i' 9implicit9 implies no noti'ication/ no on(oin(

o%e"si(#t/ an! inc"ease! &nce"taint- "e(a"!in( a 'i"ms %&lne"a$ilit- to 'o"ei(n antit"&st

p"osec&tion* I' t#e"e a"e e.plicit e.emptions/ t#e- s#o&l! $e $ase! on consi!e"ations o' (lo$al

el'a"e/ "at#e" t#an 9$e((a"0t#-0nei(#$o"9 st"ate(ies* Co&nt"ies s#o&l! o") to(et#e" eit#e" to

a("ee to eliminate e.po"t e.emptions o" to a!opt e.plicit e.emptions t#at a"e ,ointl- monito"e!*

T#e c&""ent patc#o") o' implicit an! e.plicit e.emptions is t#e least 'a%o"e! app"oac#*

T#is pape" p"esents an o%e"%ie o' !i''e"ent t-pes o' 9p&"e9 e.po"t ca"tel e.emptions 6i*e*/ t#ose

inten!e! e.cl&si%el- 'o" t"a!e in 'o"ei(n ma")ets7/ !oc&ments t#ei" c#an(in( inte"national stat&s/

an! !isc&sses t#e "easons 'o" t#ese c#an(es* O&" &se o' t#e te"m 9e.po"t ca"tel9 is not meant to

impl- t#at t#e mem$e" 'i"ms a"e a$le to e.e"cise ma")et poe"/ $&t simpl- t#at t#e- #a%e $een

("ante! pe"mission to en(a(e in acti%ities t#at ca"tels $e#a%e in/ s&c# as 'i.in( p"ices* An 9e.po"t

ca"tel9 o" 9e.po"t association9 is simpl- a ("o&p o' 'i"ms t#at nations pe"mit to o") to(et#e"

6sometimes it# clea" "est"ictions speci'-in( o%e" #ic# !imensions t#e- ma- o" ma- not

coo"!inate7* S&c# an association ma- o" ma- not '&nction as a classic p"ice0'i.in( ca"tel* A 9#a"!

co"e9 ca"tel #as t#e (oal o' p"ice 'i.in( an!4o" ma")et allocation* An 9e.po"t ca"tel9 ma- #a%e

t#e i!entical p"ima"- (oal/ o" it mi(#t #a%e st"ictl- e''icienc- en#ancin( (oals? o" it ma- !o $ot#*

Fo" e.ample/ t#e 'i"ms in t#e association ma- simpl- $e s#a"in( t#e 'i.e! costs o' ma")etin( o"

t"anspo"tation* Still/ it is t#ei" sel'0selection in o$tainin( e.emptions '"om antit"&st las

"e(&latin( 9#a"! co"e ca"tel9 acti%ities t#at sets t#ese associations apa"t* We ill &se $ot# te"ms/

"e'e""in( to 9e.po"t associations9 #en spea)in( a$o&t a le(al !esi(nation an! 9e.po"t ca"tels9

#en !isc&ssin( t#e polic- iss&es mo"e (ene"all-*

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CHAPTER08

THE LAW OF EXPORT CARTELS

A* T#e De'inition an! Desc"iption o' E.po"t Ca"tels

Acco"!in( to a !e'inition p"o%i!e! $- t#e OECD/ an export cartel is an agreement or

arrangement between firms to charge a specified export price and/or to divide export markets

(that is markets of the target states).


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B* E.po"t Ca"tel E.emptions

Se%e"al ma,o" economies/ s&c# as t#ose o' t#e E+ an! t#e +nite! States an! In!ia/ implicitl- o"

e.plicitl- ("ant imm&nities a(ainst antit"&st lia$ilit- 'o" e.po"t "elate! ca"tels/ t#e"e$-

enco&"a(in( 6o" at least s&ppo"tin(7 con!&ct t#at is p"o#i$ite! #en #a%in( !omestic e''ect*11

1* T#e +nite! States

It cannot come as a s&"p"ise t#at t#e +nite! States/ as t#e state it# t#e ol!est antit"&st la

p"o%isions/ as also t#e 'i"st state to ("ant imm&nit- to e.po"t0"elate! anticompetiti%e con!&ct/

#e"eas impo"t0"elate! anticompetiti%e con!&ct $- 'o"ei(n companies #as $een p"osec&te!

%i(o"o&sl- in (ene"al/ t#o&(# it# some e.ceptions as "e(a"!s sin(le0co&nt"- e.po"t ca"tels*18

T#e lac) o' p"otection a(ainst anticompetiti%e $e#a%io" ta)in( place o&tsi!e t#e +nite! States/

$&t a''ectin( t#e +*S* econom-/ !i! not ca&se an- se"io&s conce"n in 1 $eca&se t#e

inte"!epen!enc- o' a (lo$al econom- as -et to !e%elop* Hoe%e"/ t#e mo"e t#ose (lo$al

economies $ecame inte"!epen!ent an! t#e mo"e t#ose Ame"ican companies 'ace! 'o"ei(n

competition at #ome an! a$"oa!/ t#e mo"e &"(ent t#e nee! $ecame 'o" a less "i(i! app"oac# to

t#e st"ict te""ito"ial p"inciple o"i(inall- a!%ocate!* Conse5&entl-/ +*S* co&"ts "e(&la"l- applie!

Ame"ican antit"&st la to t#e con!&ct o' Ame"ican companies in 'o"ei(n ma")ets/ i' t#e-

"est"icte! o" monopoli2e! +*S* 'o"ei(n t"a!e/ eit#e" t#ei" on o" in coope"ation it# 'o"ei(n

pa"tne"s*1 Acco"!in( to t#is st"ain o' case la an- "est"iction o' +*S* 'o"ei(n t"a!e as

p"o#i$ite! in!epen!ent o' #et#e" t#e con!&ct in 5&estion #a! ta)en place it#in +*S* te""ito"-

o" o&tsi!e*

In 11/ Con("ess as conce"ne! it# t#e ea)ness o' +*S* companies $ein( &na$le to

coope"ate #en 'acin( competition '"om poe"'&l 'o"ei(n ca"tels* 1; T#e e.istence o' Ame"ican

11

Fo" t#e sa)e o' cla"it-/ e ass&me in t#e 'olloin( te.t t#at s&c# con!&ct is e.empte! t#at co&l! not $e le(al int#e !omestic competition o"!e"? 'o" e.ample &n!e" t#e e.ceptions o' A"ticle 167 TEC*12 See on t#e "easons 'o" t#is !istinction $eteen inte"national ca"tels an! sin(le co&nt"- ca"tels: S* We$e" Walle"/9T#e Am$i%alence o' +nite! States Antit"&st Polic- Toa"!s Sin(le0Co&nt"- E.po"t Ca"tels/9 N @ Intl LJB&s 6147*13 +S % Ame"ican To$acco Co/ 881 +*S* 1 61117? see also: +S % Sisal Sales/ 817? +S % 3ene"al Elect"ic Co/ 8F S&pp 6DN@ 1;7? Continental O"e Co % +nion Ca"$i!e an! Ca"$on Co"p/


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antit"&st la as "e(&la"l- cite! as t#e most se"io&s impe!iment 'o" t#e esta$lis#ment o' e.po"t

coope"ation* A!!itionall-/ t#e #i(# 'i.e! costs o' e.po"tin( "est"icte! t#e a$ilit- o' small an!

me!i&m ente"p"ises to ente" 'o"ei(n ma")ets*1> To meet t#is sit&ation/ an e.po"t0"elate! e.ception

'"om t#e (ene"al p"o#i$ition containe! in K1 o' t#e S#e"man Act as lai! !on in t#e We$$0

Pome"ene E.po"t T"a!e Act o' 11 6WPA7/1 e.emptin( '"om t#e (ene"al p"o#i$ition o' antit"&st

imm&nit- 9t#e 'o"mation an! ope"ation o' associations o' ot#e"ise competin( $&sinesses to

en(a(e in collecti%e e.po"t sales*9

T#e WPA contin&es to state t#at t#e 9imm&nit- con'e""e! $- t#is stat&te !oes not e.ten! to

actions t#at #a%e an anticompetiti%e e''ect it#in t#e +nite! States o" t#at in,&"e !omestic

competito"s o' mem$e"s o' e.po"t associations*9 T#&s/ t#e ca"tels #a! to $e 'oc&se! in t#e sense

o' not ca&sin( anticompetiti%e spill0 o%e" e''ects in t#e !omestic ma")et*

Mo"e t#an +*S*C* K ;1*18 See on t#is "ationale: Den No"s)e Stats Ol,esels)ap As % Hee"eMac/ 8;1 F*! ;8/ ;1 6>t# Ci"* 8176Hi((in$ot#am/ @*/ !issentin(7*

8


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le(islati%e moti%e as to !ispel an- &nce"taint- a$o&t t#e scope o' Ame"ican Antit"&st La t#at

mi(#t at t#at time #a%e #a! a ne(ati%e impact on small an! me!i&m ente"p"ises illin(ness to

coope"ate #en e.po"tin(* T#ese e.te"nal "easons e"e pe"cei%e! to $e complemente! $-

inte"nal $a""ie"s to t"a!e00s&c# as t#at companies t#at a"e a$le to e.po"t o&l! not !o so $eca&se

t#e- s#ie! aa- '"om #i(# 'i.e! costs 'o" ent"ance into ne ma")ets an! $eca&se t#e- s&''e"e!

'"om a lac) o' e.pe"tise in t#ese ma")ets*

To s&"mo&nt t#ese p"o$lems/ t#e ETC containe! se%e"al p"o%isions aime! at t#e p"omotion o'

Ame"ican e.po"t t"a!e/ e.pan!in( t#e option to e.empt e.po"t ca"tels on t#e $asis o' t#e WPA*

In cont"ast to t#e latte"/ t#e ETC p"o%i!e! 'o" antit"&st imm&nit- not onl- it# "e(a"! to (oo!s/

$&t also it# "e(a"! to se"%ices? an! not onl- 'o" associations/ $&t also 'o" an- pe"son o"

pa"tne"s#ip* T#e ETC also co%e"s &n!e"ta)in(s e%en i' t#ei" e.po"ts "ep"esent onl- a "elati%el-

small s#a"e o' t#ei" t"a!e* Amon( t#e speci'ic tools e"e ,&"is!ictional c#an(es to anti0t"&st la

an! t#e esta$lis#ment o' antit"&st imm&nit- 'o" ce"ti'ie! acti%ities*

T#e ce"ti'ication0p"o%ision in%ites companies en(a(e! in e.po"t to appl- 'o" a ce"ti'icate o'

"e%ie iss&e! $- t#e Sec"eta"- o' Comme"ce it# t#e conc&""ence o' t#e Atto"ne- 3ene"al/

settin( limits to t#ei" antit"&st lia$ilit- $e'o"e t#e- en(a(e in s&c# con!&ct* As lon( as t#e

ce"ti'icate "emains in e''ect/ its #ol!e" "emains imm&ne '"om antit"&st lia$ilit- as 'a" as t#e

con!&ct in 5&estion is co%e"e! $- t#e ce"ti'icate*

T#e ETC states t#at/ to 9o$tain t#e ce"ti'icate a pe"son m&st s#o t#at t#e p"opose! acti%ities: 617

ill neit#e" s&$stantiall- lessen competition o" "est"ain t"a!e in t#e +nite! States no"

s&$stantiall- "est"ain t#e e.po"t t"a!e o' an- competito" o' t#e applicant? 687 ill not

&n"easona$l- en#ance/ sta$ili2e/ o" !ep"ess p"ices in t#e +nite! States o' t#e class o' (oo!s o"

se"%ices e.po"te! $- t#e applicant? 67 ill not constit&te &n'ai" met#o!s o' competition a(ainst

competito"s en(a(e! in t#e e.po"t o' t#e class o' (oo!s o" se"%ices e.po"te! $- t#e applicant? an!

6;7 ill not incl&!e an- act t#at ma- "easona$l- $e e.pecte! to "es&lt in t#e sale 'o" cons&mptiono" "esale in t#e +nite! States o' t#e (oo!s o" se"%ices e.po"te! $- t#e applicant*9

9


10/34

Con'&sin( !ecisions a$o&t t#e act&al ,&"is!ictional "eac# o' +*S* antit"&st la #a! also ma!e

le(islati%e cla"i'ication o' t#e Fo"ei(n T"a!e Antit"&st Imp"o%ements Act o' 18 6FTAIA71

!esi"a$le*

In 11/ a Fe!e"al Co&"t #a! !eci!e! t#at Ame"ican antit"&st la as inapplica$le #e"e an

Ame"ican an! a Cana!ian compan- #a! coope"ate! to t#e !et"iment o' anot#e" Cana!ian

&n!e"ta)in( in t#e Cana!ian ma")et*8 T#at seeme! to $e at o!!s it# an ea"lie" !ecision

alloin( a 'o"ei(n (o%e"nment to s&e an Ame"ican compan- 'o" t"e$le !ama(es in +*S* co&"ts i'

it #a! $een #a"me! $- an attempt to "est"ain an! monopoli2e inte"state t"a!e 'o" t#e man&'act&"e/

!ist"i$&tion/ an! sale o' ce"tain !"&(s*81

Acco"!in( to t#e FTAIA/ Sections 10< o' t#e S#e"man Act s#all 9not appl- to con!&ct in%ol%in(

t"a!e o" comme"ce 6ot#e" t#an impo"t t"a!e o" impo"t comme"ce7 it# 'o"ei(n nations &nless

s&c# con!&ct #as a !i"ect/ s&$stantial/ an! "easona$l- 'o"eseea$le e''ect 6A7 on t"a!e o"

comme"ce t#at is not t"a!e o" comme"ce it# 'o"ei(n nations/ o" on impo"t t"a!e o" impo"t

comme"ce it# 'o"ei(n nations? o" 6B7 on e.po"t t"a!e o" e.po"t comme"ce it# 'o"ei(n nations/

o' a pe"son en(a(e! in s&c# t"a!e o" comme"ce in t#e +nite! States? an! 6C7 s&c# e''ect (i%es

"ise to a claim &n!e" t#e p"o%isions o' sections 1 to < o' t#is title/ ot#e" t#an t#is section*9 I'

Sections 10< o' t#e S#e"man Act appl- to s&c# con!&ct onl- $eca&se con!ition B is satis'ie!/

t#en onl- in,&"- to e.po"t $&siness in t#e +nite! States is co%e"e!*

T#e FTAIA enco&"a(es +*S* $&siness to en(a(e in e.po"t coope"ation 6o" anot#e" #oll-

'o"ei(n $&siness acti%ities7 as lon( as !omestic e''ects a"e inci!ental an! ins&$stantial* T#e Act

can $e "ea! as t#e le(islato"s enco&"a(ement o' +*S* companies to 9act as anti$competitively as

they wish, as long as they respect the "merican economy and refrain from activity that would

in%ure participants in the domestic market /988 o"/ to p&t it $"ie'l-/ as a 9Con("essional e''o"tGs to

p"otect Ame"ican ma")ets in an inte"nationali2e! econom-*98

8* T#e E&"opean Comm&nit-

19 K < S#e"man Act/ 1> +*S*C* K a*20 National Ban) o' Cana!a % Inte"$an) Ca"! Assoc/ F*8! 68! Ci"* 117*21 P'i2e" Inc % 3o%e"nment o' In!ia/ ;; +S 61


11/34

A"ticle 1 an! 8 TEC a"e t#e main 'o&n!ations o' E&"opean Competition La* A"ticle 1 TEC

p"o#i$its acts o' anticompetiti%e coope"ation 9which may affect trade between &ember !tates

and which have as their ob%ect or effect the prevention, restriction or distortion of competition

within the common market.9 A"ticle 8 TEC a!!"esses t#e a$&se o' a !ominant position 9within

the common market /9 i' t#is a$&se 9ma- a''ect t"a!e $eteen Mem$e" States*9 T#&s/ t#e o"!in(

o' $ot# p"o%isions e.p"essl- "elates to anticompetiti%e e''ects it#in t#e Common Ma")et*

Notit#stan!in( t#ese "e'e"ences to e''ects on t#e common ma")et onl- an! to t"a!e $eteen

Mem$e" States onl-/ t#e Commission an! t#e EC@ #a%e in p"inciple &n!e"stoo! t#e p"o%isions to

$e applica$le to e.po"t ca"tels ta"(etin( 'o"ei(n ma")ets*

T#e application o' Comm&nit- competition la is (&i!e! $- t#e e''ects p"inciple #en in$o&n!

"est"ictions a"e at sta)e* T#is is conse5&entl- 'olloe! 'o" o&t$o&n! "est"ictions* I' an a("eement

is to $e implemente! in t#e ma")et o' a state o&tsi!e t#e Comm&nit-/ it can still #a%e e''ects on

t#e Comm&nit- ma")et itsel'00eit#e" $- "est"ictin( one pa"tne"s a$ilit- to allocate t#e s&pplie!

(oo!s to #e"e it is most a!%anta(eo&s/ o" $- p"e%entin( "eimpo"t into t#e Comm&nit-*

Hoe%e"/ s#o&l! pa"ties to an a("eement 'in! a a- to !esi(n a p&"e e.po"t ca"tel 6'o" e.ample/

$- t"a!in( in (oo!s t#at !o not #a%e a ma")et it#in t#e Comm&nit- at all7/ no "epe"c&ssions on

t#e Common Ma")et co&l! occ&" an! t#e coope"ation o&l! t#e"e'o"e not $e p"o#i$ite! $- t#e

competition la o' t#e Comm&nit-*8; As a conse5&ence/ alt#o&(# t#e "&les o' t#e E&"opean

Comm&nit- !o not e.p"essl- e.empt o" enco&"a(e ca"tels #ose e''ects a"e 'elt p&"el- in e.po"t

ma")ets/ 'o" lac) o' e''ects in t#e Comm&nit- ma")et t#e TEC !oes not assi(n ,&"is!iction to t#e

Commission to !eal it# t#em*8>

* INDIAN POSITON WITH RESPECT TO EXPORT CARTELS

De'inition o' Ca"tel

24 EC@/ Case 1>? see also Commission Decision


12/34

Ca"tel #as $een !e'ine!/ in section 8 6c7 o' competition Act/ 88 as &n!e":

ca"tel incl&!es an association o' p"o!&ce"s/ selle"s/ !ist"i$&to"s/ t"a!e"s o" se"%ice p"o%i!e"s

#o/ $- a("eement amon(st t#emsel%es/ limit/ cont"ol o" attempt to cont"ol t#e p"o!&ction/

!ist"i$&tion/ sale o" p"ice o'/ o"/ t"a!e in (oo!s o" p"o%ision o' se"%ices*

T#e )e- points in t#is !e'inition a"e:

To o" mo"e a(ents

A("eement $eteen t#e a(ents

Cont"ol o" attempt to cont"ol

As pe" t#e !e'inition/ 'o" ca"tel to 'o"m to o" mo"e a(ents m&st come to(et#e"* Most impo"tant

!imension in t#e !e'inition is t#at a ca"tel "e5&i"es an a("eement $eteen 'i"ms* T#is a("eement

is (ene"all- in te"ms o' 'o"mal o" in'o"mal a("eements amon( 'i"ms !esi(ne! to "e!&ce o"

s&pp"ess competition in t#e ma")et* T#i"!l-/ t#is association o' a(ents m&st $e a$le to cont"ol t#e

p"o!&ction/ !ist"i$&tion/ an! sale o" p"ice o'/ o"/ t"a!e in (oo!s o" p"o%ision o' se"%ices*

T#e o$,ecti%e o' a ca"tel is to p"o!&ce less at #i(#e" p"ice i*e* mo"e p"o'it at less e''o"t/ in,&"in(

t#e inte"ests o' t#e cons&me"s incl&!in( ot#e" 'i"ms 6#ose competiti%eness is #a"me! $-

ca"teli2ation7 an! 3o%e"nments*

In competition Act/ 88/ #a"!co"e ca"tel #as not $een !e'ine! e.plicitl-? neit#e" t#e"e is

(ene"all- accepte! !e'inition o' #a"!co"e ca"tels* T#e"e is #oe%e" a "ecommen!ation o' t#e

O"(ani2ation 'o" Economic Coope"ation an! De%elopment on #a"!co"e ca"tels* Acco"!in( to t#at

"ecommen!ation/ a #a"!co"e ca"tel is:

An anti0anticompetiti%e a("eement/ anti0competiti%e conce"te! p"actice/ o" anti0competiti%e

a""an(ement $- competito"s to 'i. p"ices/ ma)e "i((e! $i!s 6coll&si%e ten!e"s7/ esta$lis# o&tp&t

"est"ictions o" 5&otas/ o" s#a"e o" !i%i!e ma")ets $- allocatin( cons&me"s/ s&pplie"s/ te""ito"ies/

o" lines o' comme"ce*

T#&s Competition Act/ 88 incl&!es all t#e 'o&" 'o"ms o' #a"! co"e ca"tels (i%en in t#e OECD

!e'inition o' #a"!co"e ca"tels* T#e !e'inition (i%en $- OECD emp#asi2es on t#e e.p"ession

12


13/34

anti0competiti%e #ic# is "epeate! t#e"ein t#"ice* T#is means in OECD "ecommen!ations

#a"!co"e ca"tels a"e pe" se ille(al/ $&t Competition Act/ 88 p"o%i!e one o' t#e escape %al%es in

t#e p"o%iso* T#is means Competition Act/ 88 !oes ta)e ca"e o' e''icienc- aspect e%en o' ca"tel*

Inte"national Ca"tel

T#o&(# t#is o"! #as not $een &se! in t#e Act/ Act !oes p"o%i!e 'o" e''ects !oct"ine* So

competition #as a "ole to pla- to #an!le t#e inte"national ca"tel* S&c# ,&"is!iction is p"o%i!e! in

t#e competition stat&tes o' some co&nt"ies* In!ia is one s&c#* Section 8 o' t#e In!ian

Competition Act/ 88 !ecla"es t#at acts ta)in( place o&tsi!e In!ia $&t #a%in( an e''ect on

competition in In!ia o&l! in ce"tain sit&ations 'all it#in t#e am$it o' t#e Act* T#e e.t"act o'

t#e sai! section is:

T#e Commission s#all/ notit#stan!in( t#at/

6a7 An a("eement "e'e""e! to in section #as $een ente"e! into o&tsi!e In!ia? o"

6$7 An- pa"t- to s&c# a("eement is o&tsi!e In!ia? o"

6c7 An- ente"p"ise a$&sin( t#e !ominant position is o&tsi!e In!ia? o"

6!7 A com$ination #as ta)en place o&tsi!e In!ia? o"

6e7 An- pa"t- to com$ination is o&tsi!e In!ia? o"

6'7 An- ot#e" matte" o" p"actice o" action a"isin( o&t o' s&c# a("eement o" !ominant position o"

com$ination is o&tsi!e In!ia/ #a%e poe" to in5&i"e into s&c# a("eement o" a$&se o' !ominant

position o" com$ination i' s&c# a("eement o" !ominant position o" com$ination #as/ o" is li)el-

to #a%e/ an app"ecia$le a!%e"se e''ect on competition in t#e "ele%ant ma")et in In!ia*

Impo"t an! e.po"t ca"tels:

E.po"t ca"tels a"e t#ose #e"e in!epen!ent/ non0state "elate! p"o!&ce"s '"om one co&nt"- ta)e

steps to 'i. p"ices o" en(a(e in ma")et allocation in e.po"t ma")ets/ $&t not in t#ei" !omestic

ma")et* He"e t#e conspi"ac- o' action in conce"t !oes not in%ol%e an- impact in t#e co&nt"-

#e"e t#e ca"tel mem$e"s a"e #ea!5&a"te"e!* In ot#e" o"!s/ an e.po"t ca"tel is ma!e &p o' 'i"ms

'"om one nation it# an a("eement to ca"teli2e ma")ets a$"oa!* E.po"t ca"tels 'i. p"ices o"

13


14/34

o&tp&ts in t#e pa"ticipatin( mem$e"sQ e.po"t ma")ets $&t not in t#ei" #ome ma")ets* On a (lo$al

$asis/ t#e anti0competiti%e e''ects o' e.po"t

Ca"tels can $e no $ette" t#an a 2e"o0s&m (ame/ in #ic# one co&nt"-Qs e.po"te"sQ (ain '"om

monopol- "ents a"e anot#e" co&nt"-Qs cons&me"sQ losses* B&t on national $asis it is a $e((a"0t#-0

nei(#$o" polic-/ in #ic# one nationQs (ains is at t#e cost o' ot#e" nationQs cost* So t#e"e is no

(oo! "eason to e.empt e.po"t ca"tels '"om t#e application o' competition la* 3ene"all-/ e.po"t

ca"tels a"e e.empte! '"om t#e national competition las in man- co&nt"ies*

In competition Act/ 88/ e.po"t ca"tels #a%e $een e.empte! '"om t#e p"o%isions "elatin( to anti0

competiti%e a("eements* Section 6>7 6ii7 con'i"ms it:

T#e "i(#t o' an- pe"son to e.po"t (oo!s '"om In!ia to t#e e.tent to #ic# t#e a("eement "elates

e.cl&si%el- to t#e p"o!&ction/ s&ppl-/ !ist"i$&tion o" cont"ol o' (oo!s o" p"o%ision o' se"%ices 'o"

s&c# e.po"t*

Impo"t ca"tel is one mo"e 'o"m o' inte"national ca"tel/ $&t #e"e li)e e.po"t ca"tels mem$e"s o'

impo"t ca"tels $elon( to one co&nt"- not to to o" mo"e co&nt"ies* B&t t#is oneQ co&nt"- is

impo"tin( co&nt"-* T#e mem$e"s o' impo"t ca"tels 'o"m t#e ca"tels 'o" t#e p&"pose o' eliminatin(

t#e impo"te"s '"om competin( it# ca"tels mem$e"s* T#e impo"t ca"tel a'te" eliminatin( t#e

competito"s can "e(&late p"ice/ an! ot#e" te"ms an! con!itions o' (oo!s an! se"%ices t#at a"e

impo"te! into t#e #ome ma")ets* T#ese ca"tels #&"t $ot# t#e 'i"ms a$"oa! #o a"e t"-in( to ente"

t#e #ome ma")et as ell as t#e #ome cons&me"s #o #a%e to 'ace !isto"te! te"ms an! con!itions

in !ealin( impo"te! (oo!s an! se"%ices* S&c# ca"tels s#o&l! also $e c#ec)e! at least 'o" t#e sa)e

o' !omestic cons&me"s*

International Cartels – India’s Approach to Legal Enforcement

Till !ate/ almost not#in( #as $een !one on inte"national ca"tels/ in In!ia* Hoe%e"/ it is not as

t#o&(# In!ia #as "emaine! &nto&c#e! $- inte"national ca"tels* A st&!- !one $- Simon E%enett

an! @&lian L* Cla")e estimates t#at t#e o%e"c#a"(es in In!ia !&"in( t#e conspi"ac- pe"io! o' t#e

14


15/34

%itamins ca"tel e"e +S8>*


16/34

"ele%ance* On t#e $asis o' t#e latte"/ states mi(#t e.ten! t#ei" competition las to t#ei" citi2ens

#e"e%e" t#ei" anticompetiti%e con!&ct ta)es place* T#e 'o"me" ena$les a state to "e(&late

anticompetiti%e con!&ct t#at is initiate! it#in its te""ito"-/ $&t is complete! o&tsi!e its te""ito"-

6s&$,ecti%e te""ito"ial ,&"is!iction7 an! %ice %e"sa 6o$,ecti%e te""ito"ial ,&"is!iction7* Beca&se t#is

$ase 'o" ,&"is!iction seeme! to $e con'ine! to t#e commission 6o" completion7 o' p#-sical acts/ it

!i! not se"%e its p&"pose in a (lo$ali2e! econom- it# t"ans$o"!e" t"a!e* As a conse5&ence/ t#e

e''ects !oct"ine #as $een !e%elope!8* State Pa"ticipation an! Imm&nit-

27 +nite! States % Al&mini&m Compan- o' Ame"ica/ 1; F*8! ;1 68! Ci"* 1;>7? see 'o" t#e += Rio Tinto inc

Co"p % Westin(#o&se Elect"ic Co"p 61;F*8! >< at 11* 61t# Ci"* 817on t#e one #an! an! ="&man % C#"isties Intl/ 8; F*! ; 68! Ci"* 887 on t#e ot#e" #an! an! 'inall- F*Ho''mann0La Roc#e Lt!* %* Empa("an S*A*/ 18 S* Ct* 8> 68;7*28 Ame"ican Banana Co % +nite! F"&it Co/ 81 +*S* ;< 617*

16


17/34

E.po"t ca"tel e.emptions mi(#t ell ins&late a compan- a(ainst !omestic antit"&st lia$ilit-/ $&t

t#e- !o not necessa"il- o''e" t#e same !e("ee o' p"otection a(ainst lia$ilit- in t#e 'o"ei(n ta"(et

ma")et* T#e !e("ee o' p"otection is !epen!ant &pon t#e !e("ee o' state in%ol%ement in t#e

esta$lis#ment o' t#e ca"tel*

E%en t#o&(# e.po"t ca"tels a"e not a t-pical t"a!e polic- inst"&ment/ t#e "e(&latin( state is/ at

least in!i"ectl-/ in%ol%e! in t#ei" c"eation* T#e !e("ee o' t#e states in%ol%ement in t#e 'o"mation

o' e.po"t ca"tels can %a"- '"om me"e !is"e(a"! 6$- eit#e" not #a%in( antit"&st "&les at all/ o" $-

t#e implicit e.emption o' e.po"t ca"tels '"om competition la7/ to acti%e p"otection an!

enco&"a(ement 6t#"o&(# e.plicit e.emption an! a "e(ist"ation p"oce!&"e7 an!/ '&"t#e"/ to state

comp&lsion o' p"i%ate companies/ o" e%en to t#e state itsel' $ein( an economic acto" 6as oppose!

to a "e(&lato"7 $e#a%in( in an anticompetiti%e manne" in 'o"ei(n states econom-*

As lon( as ca"tels a"e me"el- e.empt '"om t#e application o' !omestic antit"&st las $&t a"e not

"e5&i"e! $- s&c# las/ a c#allen(e to an e.po"t ca"tel on t#e $asis o' t#e ta"(et states competition

la $- no means %iolates an- o' t#e e.emptin( states so%e"ei(n ,&"is!ictional "i(#ts*8

* T#e En'o"cement As-mmet"-

E.po"t ca"tel e.emptions o&l! $e a m&c# smalle" p"o$lem 'o" inte"national t"a!e e"e t#e"e to

$e an inte"national competition la "e(ime o' #ate%e" s#ape co&ple! it# inte"national

en'o"cement mec#anisms00a !e%elopment t#at c&""entl- seems to $e 5&ite &n"ealistic*

Alte"nati%el-/ ca"tel e.emptions co&l! $ecome a non topic/ e"e all states 6an! t#e ta"(et states in

pa"tic&la"7 in a position to tac)le anticompetiti%e $e#a%io" in a "o$&st manne" on t#e $asis o' t#e

e''ects !oct"ine* T#is/ #oe%e"/ is not t#e case* To se"%e as a !ete""ent/ competition la #as to $e

en'o"ce! "o$&stl-*

T#o&(# competition las #a%e $ecome inc"easin(l- pop&la" all o%e" t#e o"l!/ most o' t#e ta"(et

states 'o" e.po"t ca"tels lac) t#e e.pe"tise o" t#e "eso&"ces to en'o"ce t#ei" competition lasact&all- an! c"e!i$l- a(ainst 'o"ei(n companies* T#e ass&mption t#at t#e"e is no impe!iment to

an- ,&"is!iction a''ecte! en'o"cin( its competition la to p"osec&te t#e anticompetiti%e e''ects o'

29 EC@ ,oine! cases / 1;/ 11;/ 11/ 11< an! 18> to 184>/ A#lst"Um et al % Commission 69Woo!p&lp97 G1ECR >1/ pa"a* 1? on t#e economic aspects o' so%e"ei(nt- see S* We$e" Walle" an! A* Simon/ 9Anal-2in( Claimso' So%e"ei(nt- in Inte"national Economic Disp&tes/9 NW @ Intl L J B&s 1 61>47? i!em* 9A T#eo"- o' EconomicSo%e"ei(nt-/9 Stan @IL ;< 617*

17


18/34

'o"ei(n ca"tels !oes not ta)e into acco&nt t#e lac) o' "eso&"ces an! t#e lac) o' e.pe"tise in t#e

ta"(et ma")ets*

E%en i' an LDC e"e to attempt to in%esti(ate o" p"osec&te a 'o"ei(n e.po"t ca"tel on t#e $asis o'

t#e e''ects !oct"ine/ t#e e%i!ence o' anticompetiti%e con!&ct lies a$"oa!/ as ell as an- %al&a$le

assets t#at co&l! $e &se! to en'o"ce a ,&!icial o" a!minist"ati%e !ecision on !ama(es 'o" t#e

%iolation o' antit"&st las* LDCs #a%e little o" no $a"(ainin( poe" to access eit#e" e%i!ence

o&tsi!e t#ei" ,&"is!iction o"/ at a late" sta(e o' t#e p"ocess/ 'o"ei(n assets* Conse5&entl-/ alt#o&(#

t#e competition las o' a LDC appl-in( t#e e''ects !oct"ine co&l! in t#eo"- p"o%i!e a $asis to

p"osec&te e.po"t ca"tels/ in p"actice t#e- a"e &nli)el- to !o so s&ccess'&ll-* E''ecti%el-/ e.po"t

ca"tel e.emptions p"e%ent t#e competition a&t#o"ities o' t#e state in #ic# a compan- is

!omicile!00an! t#e"e'o"e #ol!in( t#e most in'o"mation a$o&t t#e con!&ct an! #a%in( t#e $est

access to t#e acto"s in 5&estion00'"om assistin( t#ose t#at a"e #a"me! $- anticompetiti%e $e#a%io"

6t#e ta"(et states7* Mo"eo%e"/ as lon( as at least one econom- t#at #as s&''icient $a"(ainin( poe"

to "esist en5&i"ies '"om ot#e" states &p#ol!s its e.po"t ca"tel e.emption/ t#at state ill $e a sa'e

#a%en 'o" a("eements on e.po"t ca"tels/ $eca&se all e%i!ence 'o" t#ei" con!&ct ill $e %i"t&all-

inaccessi$le 'o" t#e 'o"ei(n p"osec&to"s o' ta"(et states*

C* E.plicit an! Implicit E.emptions

Most !e%elope! states $esi!es t#e +nite! States #a%e $ecome inc"easin(l- "el&ctant to a!%ocate

an! ("ant s&c# imm&nities in an e.plicit a-*1 Hoe%e"/ t#is "el&ctance s#o&l! not $e

inte"p"ete! as a tacit acceptance t#at e.po"t ca"tel e.emptions constit&te &n'ai" p"actices in

s#i'tin( "ents '"om 'o"ei(n to !omestic ma")ets* It is mo"e li)el- t#at ("antin( s&c# e.emptions is

implicitl- &n!e"stoo! to #a%e some st"ate(ic a!%anta(es*

T#e nee! 'o" an e.plicit e.emption #as se%e"al a!%anta(es/ $&t t#e main one is t"anspa"enc-* Not

onl- t#e inte"este! p&$lic/ $&t also competito"s an! t#e ta"(et states co&l! &se t#is )nole!(e to

p"epa"e 'o" co&nte"0meas&"es* Also t#e national a&t#o"it- o' t#e "e(&latin( state can ta)e a close"

30 State! $- t#e "ep"esentati%e o' t#e +nite! States/ see WTO Repo"t on t#e Meetin( o' 8081 Fe$ 8

6WT4W3TCP4M81/ Ma- 87 1>*31 See Le%enstein an! S&slo 6note 8;7


19/34

loo) at t#e !omestic acti%ities o' t#e ca"telists to ma)e s&"e t#at t#e la'&l e.po"t ca"tel !oes not

#a%e a spill0o%e" e''ect on t#e !omestic ma")et*

P"e!icta$ilit- 'o" t#e coope"atin( companies is a!!e! to t#e a!%anta(es o' e.plicit e.emptions in

t#ose cases/ #e"e t#e in%ol%ement o' t#e a(enc- (oes $e-on! t#e me"e a!minist"ation o'

noti'ications* A nee! 'o" consent o" pe"mission at least "e(&la"l- s#i'ts t#e $&"!en o' p"oo' to t#e

a!minist"ation o" an- p"i%ate plainti''/ $eca&se t#e a(enc- acti%el- accepts t#e $e#a%io" as

la'&l*

Beca&se o' t#ei" lac) o' sec"ec-/ "epo"te! an! e%en mo"e so e.plicitl- e.empte! e.po"t ca"tel

e.emptions s&ppose!l- !o 9not $ea" t#e #allma")s o' #at as t"a!itionall- consi!e"e! to $e a

#a"!co"e ca"tel*98 Hoe%e"/ t#is ass&mption/ ma!e in !e'ense o' e.po"t ca"tel e.emptions in

(ene"al/ con'&ses s&$stance an! p"oce!&"e* It is not con%incin( to accept a ce"tain con!&ct as

p"ocompetiti%e ,&st $eca&se it is not )ept sec"et #en t#is lac) o' sec"ec- is !&e to t#e 'act t#at

t#e con!&ct is act&all- s&ppo"te! $- t#e #ome state* T#e statement also !ist"acts '"om t#e 'act

t#at/ $- a$an!onin( 6o" not p&ttin( in 'o"ce7 e.plicit e.emptions it#o&t a!,&stin( t#e

s&$stanti%e "eac# o' !omestic competition la/ no st"on( p"ocompetiti%e statement in 'a%o" o'

t#e potential ta"(et ma")ets is ma!e*

Rat#e"/ a$an!onin( p"oce!&"es to noti'- o" "e(iste" e.po"t ca"tel e.emptions cont"i$&tes to an

e%en lesse" !e("ee o' t"anspa"enc- '"om #ic# t#e competition a&t#o"ities o' ta"(et states mi(#t

$ene'it in p&"s&in( s&c# ca"tels* T#&s/ e%en it#o&t consi!e"in( t#e e''ects o' e.po"t ca"tel

e.emptions/ it seems !esi"a$le t#at/ s#o&l! a state c#oose to o''e" s&c# e.emptions to its

companies an! s#o&l! t#e"e $e no inte"national "&le p"e%entin( it '"om !oin( so/ 'o" t#e sa)e o'

t"anspa"enc- t#e e.emptions s#o&l! $e ma!e t"anspa"ent/ t#at is/ e.plicit* It m&st/ #oe%e"/ $e

clea" t#at/ in t#e E&"opean Comm&nit-/ &n!e" t#e ne !ecent"ali2e! "e(ime o' Co&ncil

Re(&lation 148/ e.plicit e.emptions !o not 'it ell in t#is s-stem o' a no !i"ectl- applica$le

A"ticle 167 TEC*

D* T#e P"otection o' Fo"ei(n Ma")ets

32 State! $- t#e Rep"esentati%e o' t#e +nite! States/ see Repo"t on t#e Meetin( o' 8081 Fe$ 8 o' t#e WTOWo")in( 3"o&p on t#e Inte"action $eteen T"a!e an! Competition Polic- 6WT4W3TCP4M817 1>*

19


20/34

Le(al "&les a"e !esi(ne! 'o" a ce"tain en!* T#e mo"e a "&le ma)e" is in t#e position to s#ape o"

in'l&ence le(al an! e.t"ale(al 'acto"s t#e mo"e li)el- it is t#at t#e o$,ecti%e o' t#e "&le ill $e

ac#ie%e! in t#e en!* In t#e $est o' all o"l!s/ t#is p"es&pposes con("&enc- $eteen e''ects an!

te""ito"-* T#&s/ 'o" national competition la t#e most app"op"iate ma")et to p"otect seems to $e

t#e !omestic ma")et* It is onl- #e"e t#at t#e "e(&latin( state possesses t#e poe" to s#ape a

'"ameo") 'o" t#e econom- in #ic# competition is a$le to 'lo&"is#* In t#is ma")et t#e "e(&latin(

states tools #a%e t#e most comp"e#ensi%e impact* In cont"ast/ an- p"otection o' competition in a

'o"ei(n ma")et is necessa"il- incomplete* F"om a !omestic point o' %ie/ e%e"- state #as a

tool$o. o' inst"&ments to sa'e(&a"! competition/ #e"eas in 'o"ei(n ma")ets a i!e "an(e o'

state !ecisions "elatin( to competition o" in!&st"- polic- 6s&c# as t#e esta$lis#ment o' an!

s&ppo"t 'o" national c#ampions7 mi(#t a!! to a none.istin( competition st"&ct&"e* T#&s/ t#e

p"otection o' competition in 'o"ei(n ma")ets as an o$,ecti%e o' a national polic- means $"in(in(

to !i''e"ent sit&ations into consi!e"ation* On t#e one #an!/ t#e"e is t#e !omestic sit&ation/

#e"e competition la is onl- one aspect o' sa'e(&a"!in( a ma")et st"&ct&"e as a #ole*

Hoe%e"/ #e"e/ all aspects can $e in'l&ence! $- t#e state in 5&estion* On t#e ot#e" #an!/ t#e"e is

t#e 'o"ei(n sit&ation #e"e/ apa"t '"om t#e p"o$lem o' e.po"t ca"tels ta"(etin( t#is ma")et/ all

ot#e" anticompetiti%e $e#a%io" can onl- $e in'l&ence! on t#e $asis o' a 6possi$l- e.cessi%e7

&n!e"stan!in( o' t#e e''ects !oct"ine* Man- mo"e aspects o' state in'l&ence on t#e ma")et a"e

$e-on! t#e "e(&latin( states "eac# 6an! s#o&l! $e not o' inte"est to it in t#e 'i"st place7 $eca&se

o' t#e '&n!amental p"inciple o' noninte"%ention into t#e ta"(et states economic !ecisions*

Vet t#e "est"icte! impact o' a "e(&latin( states competition polic- !ecision on a 'o"ei(n state

onl- means t#at t#e 'o"me" cannot $e #el! lia$le 'o" &n!isto"te! competition in t#e 'o"ei(n

ma")et state* It is not t#e "e(&latin( states "esponsi$ilit- 6no" is it it#in its capa$ilit-7 to p"e%ent

anticompetiti%e ma")et st"&ct&"es in 'o"ei(n states* Hoe%e"/ t#is p"e%ention is not e.pecte!

an-a- an! s&c# a statement is 5&ite mislea!in(/ $eca&se it seems &nsatis'acto"- to !e'en!

s&ppo"t 'o" anticompetiti%e con!&ct a''ectin( a ta"(et state onl- $- t#e t#eo"etical possi$ilit- o' ot#e"/ a!!itional an! pe"#aps (o%e"nment0in!&ce! !isto"tions o' competition in t#at ta"(et state*

To "on(s !o not ma)e a "i(#t* Rat#e"/ in an i!eal o"l!/ one onl- e.pects t#at t#e #ome State

cont"i$&tes to t#e "est"iction o' anticompetiti%e con!&ct it#in its on ,&"is!iction/ as m&c# as it

20


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o&l! it# "e(a"! to its on ma")et an! at least to t#e !e("ee t#at !omestic competition is

p"otecte!*

CHAPTER0

EFFICIENCV OF EXPORT CARTELS

It seems 5&estiona$le/ i' not immo"al/ t#at a state s#o&l! allo o" s&ppo"t $e#a%io" to t#e

!isa!%anta(e o' 'o"ei(n ma")ets t#at is st"ictl- p"o#i$ite! on t#e !omestic ma")et* T#e most

o$%io&s alle(ation a(ainst e.po"t ca"tels is t#at its mem$e"s p&"s&e monopol- (ains t#at #a%e to

$e met $- 'o"ei(n cons&me"s pa-in( p"ices a$o%e t#e competiti%e le%el* T#o&(# t#e"e a"e

consi!e"a$le !i''ic&lties in 'in!in( common ("o&n! on #o to calc&late possi$le losses in ta"(et

states/ as a matte" o' p"inciple t#e"e seems to $e a("eement t#at inte"national ca"tels 9 impose

21


22/34

severe costs on importing countries, including many developing countries9; in essence $-

s#i'tin( (ains '"om t#e ta"(et state 6its cons&me"s an! p"o!&ce"s7 to t#e e.po"tin( state* T#is

9 practice manifests a welfare calculation that gives no weight to foreign consumers, and

suggests some indifference to local consumers that probably bear some costs from foreign export

cartels*9> Hoe%e"/ $esi!es t#e economicall- an! politicall- 5&estiona$le a"(&ment t#at e.po"t

ca"tels #elp to "aise c&""enc- impo"ts/ 'e a!%ocates o' e.emptions o&l! openl- a("ee t#at t#e-

a"e little mo"e t#an an attempt to en#ance !omestic el'a"e at t#e e.pense o' (lo$al el'a"e o"

t#e el'a"e o' cons&me"s in t#e ta"(et ma")et in pa"tic&la"* As a conse5&ence/ (o%e"nments as

ell as sc#ola"s o''e" some mo"e sop#isticate! a"(&ments to ,&sti'- lenienc- "e(a"!in( e.po"t

ca"tels* T#ese a"(&ments a"e cente"e! a"o&n! t#e p"omotion o' e''icienc- an! el'a"e not onl-

'o" t#e e.po"tin( state/ $&t also 'o" t#e ta"(et state*<

E.po"t ca"tels a"e !e'en!e! as an inst"&ment 'o" "is) "e!&ction an! cost s#a"in(* B- poolin( sales

acti%ities/ ca"tel mem$e"s a%oi! an e.pensi%e !&plication o' se"%ices an!/ i' 'i.e! e.pen!it&"es

a"e in%ol%e!/ e%en economies o' scale can $e e.ploite!* Acco"!in( to a +*S* (o%e"nment

p&$lication/ coope"atin( companies can $ene'it '"om ,oint ma")et "esea"c#/ t"a!e s#os/

a!%e"tisin(/ 'inancin(/ an! se"%icin( as ell as t"ainin( acti%ities* In t#at "espect/ e.po"t ca"tel

e.emptions #a%e t#e potential to #elp companies t#at t-picall- lac) t#e "eso&"ces to en(a(e in

e''ecti%e e.po"t acti%it- #en actin( on t#ei" on*

T#is a"(&ment/ #oe%e"/ is (ene"all- onl- $"o&(#t 'o"a"! 'o" small an! me!i&m &n!e"ta)in(s

6SM+7 t#at is# to "ationalise an! 'acilitate e.po"ts $- poolin( )nole!(e an! e.pe"tise*

Hoe%e"/ t#e a$ilit- to e.po"t p"o!&cts o" se"%ices is !epen!ant on t#e c#annels &se! to t"a!e

t#em* T#e SM+ ill ten! to &se in!i"ect e.po"t c#annels 6t#"o&(# pa"tne"s in t#e ta"(et ma")et7

"at#e" t#an e.po"tin( !i"ectl- t#emsel%es/ $eca&se t#e esta$lis#ment o' speci'ic !ist"i$&tion

c#annels 6ma-$e in se%e"al ma")ets it# a "elati%el- lo s#a"e o' e.po"ts7 is associate! it#

34

T"e$ilcoc) an! Hose 6note 17 8*35 P* Step#an 9Competiti%e Competition La/9 +ni%e"sit- o' i"(inia Sc#ool o' La/ La an! EconomicsResea"c# Pape" 607 687/ 1>*36 See t#e o%e"%ie o''e"e! $- @* Base!o/ Wel)a"tell"ec#t 6Mo#" Sie$ec)/ T$in(en/ 17/ 8


23/34

!isp"opo"tionate ent"ance costs an! "e5&i"es a la"(e !e("ee o' ma")et speci'ic e.pe"tise*

Ne%e"t#eless/ it #as $een '"e5&entl- a"(&e! t#at it is not t#e SM+ t#at ta)e a!%anta(e o' e.po"t

ca"tel e.emptions00 "at#e" e.emptions #a%e "e(&la"l- $een so&(#t $- la"(e inte"national

companies00$&t t#e"e a"e e.emptions to t#is? conse5&entl-/ t#e empi"ical sit&ation is 5&ite

comple.* It "emains &nclea" !&e to a lac) o' !ata/ pa"tic&la"l- '"om t#ose ,&"is!ictions t#at !o not

"e5&i"e an e.plicit "e5&est 'o" e.emption as ell as '"om t#ose t#at t"eat an e.emption (i%en

con'i!entiall-*

In a!!ition to o%e"comin( st"&ct&"al !e'iciencies on t#e si!e o' t#e e.po"tin( companies/ t#e

e.emptions a"e s&ppose! to 'acilitate t#e e.po"tin( companies ma")et access to 'o"ei(n ma")ets

s&''e"in( '"om "est"icte! competition/ t#&s #elpin( e.po"te"s to o%e"come ma")et $a""ie"s in t#e

ta"(et state 6t#e 9!e'ense a"(&ment97* Fo"ei(n companies ten! to lac) )nole!(e o' t#e ma")et

t#e- a"e ta"(etin(/ #ic# a(ain ca&ses competiti%e !isa!%anta(es it# "e(a"! to !omestic

competito"s* A!!itionall-/ e.po"te"s mi(#t $e con'"onte! it# nonta"i''0$a""ie"s/ acc&m&late!

ma")et poe"/ an! ot#e" aspects o' !isto"te! competition ma)in( ma")et access mo"e !i''ic&lt ;*

T#e "est"iction to $e o%e"come $- co&nte"%ailin( ma")et poe" co&l! $e !&e to t#e

anticompetiti%e con!&ct o' inc&m$ents/ $&t it co&l! also $e ca&se! $- state0in!&ce! t"a!e

"est"ictions*;1 E.po"tin( companies can $e '&"t#e" !isa!%anta(e! #en/ 'o" e.ample/ attemptin(

to ente" a ta"(et ma")et !ominate! $- ca"tels/ oli(opolies/ o"00e%en o"se00a monopol- on t#e

!eman! o" t#e s&ppl- si!e* In all o' t#ese cases t#e- 'ace a ma")et in #ic#/ !&e to t#ese

!isto"tions/ competiti%e con!&ct ill not $e s&ccess'&l* Coo"!inate! con!&ct o' e.po"te"s can

assist t#em in ente"in( t#e ma")et notit#stan!in( t#e !isto"te! competition? t#e ne 'o"ei(n

ma")et ent"ants int"o!&ce ne competito"s/ #ic# can t#en $"in( a$o&t inc"ease! e''icienc-*

Re'e""in( to all t#ose aspects/ t#e +nite! States in pa"tic&la" claims t#at e.po"t ca"tels #a%e

p"ocompetiti%e e''ects in 'acilitatin( t#e ent"ance o' ne 'o"ei(n competito"s to t#e ta"(et

ma")et* T#is is sai! to #a%e as a conse5&ence all o' t#e t-pical el'a"e e''ects o' mo"e

competition00s&c# as inno%ation/ $ette" 5&alit-/ an! loe" p"ices* Hoe%e"/ it seems 5&estiona$le

#et#e" an o%e"l- (ene"o&s app"oac# to s&ppo"tin( e.po"t ca"tels !oes not #a%e as a

39 See on t#is WTO Repo"t o' t#e Wo")in( 3"o&p on t#e Inte"action $eteen T"a!e an! Competition Polic- to t#e3ene"al Co&ncil 6WT4W3TCP4< @&l- 87/ 1;*40 See #ttp:44*t"a!e*(o%4t!4oetca4team&p*#tml 6last %isite! 8; @&l- 87*41 T#ese/ #oe%e"/ s#o&l! contin&e to lose t#ei" si(ni'icance it# t#e '&"t#e" a!%ancement o' t#e WTO0s-stem* T#isill also ma)e national monopolies less t#"eatenin(/ $eca&se $ein( s&$,ecte! to inte"national '"ee t"a!e !iminis#es!omestic ma")et poe" an! ma)es ma")ets contesta$le*

23


24/34

conse5&ence t#e a!!itional inc"emental !e%elopment o' !ominant positions o" ot#e"

anticompetiti%e st"&ct&"es it#in t#e ta"(et ma")et/ it# '&"t#e" !et"imental e''ects 'o" t#i"!

pa"ties* T#e e.po"t ca"tel e.emption lea!s to a si(ni'icant "e!&ction o' "is)s 'o" e.po"te"s #ile

all (ains "emain it# t#em*;8 Li)e all ca"tels/ e.po"t ca"tels #a%e ot#e" t-pical ne(ati%e e''ects

s&c# as t#e !ela- o' tec#nical p"o("ess an! inc"easin( costs 'o" cons&me"s*

W#et#e" on $alance an e.po"t ca"tel act&all- p"omotes competition in t#e ta"(et ma")et !epen!s

on #et#e" t#e e.po"te"s a"e ne ma")et ent"ants o" not* I' t#e 'o"me" is t#e case t#en t#e"e is

some li)eli#oo! t#at ma")et ent"ance is lin)e! to t#e coope"ation* T#e"e is a el'a"e en#ancin(

$ene'it in t#e ta"(et ma")et/ i' ca"teli2ation lea!s to a pe" &nit cost "e!&ction in s&ppl-in( t#is

ma")et/ $&t t#e e''ect m&st not $e o&tei(#e! $- t#e sales "est"ainin( e''ect o' t#e ca"teli2ation*;

An e.po"t ca"tel ill onl- $e s&ccess'&l i' a la"(e p"opo"tion o' ma")et pa"ticipants ,oin in* T#&s/

coope"atin( e.po"te"s nee! a si(ni'icant ,oint ma")et s#a"e in t#e ta"(et ma")et/ $eca&se

ot#e"ise t#ei" o&tp&t "est"iction lea!s to a "isin( p"ice &m$"ella in%ites '"ee0"i!e"s to $ene'it/

#ic# a(ain &n!e"mines t#e ca"telists p"o'ita$ilit-* I' t#e '"ee0"i!e"s a"e ma")et pa"ticipants

!omicile! in t#e ta"(et ma")et/ t#ei" $ene'its "e!&ce t#e o%e"all !ama(e 'o" t#e ta"(ete! econom-

6alt#o&(# cons&me"s still s&''e" '"om p"ices a$o%e t#e competiti%e le%el7*

On t#e $asis o' t#e ass&mption t#at t#e o$,ecti%e o' competition las in (ene"al is cons&me"s

"at#e" t#an competito"s el'a"e/;; settin( &p a el'a"e e5&ation it# (ains '"om anticompetiti%e

con!&ct t#at !omestic 'i"ms ac#ie%e a(ainst losses o' 'o"ei(n cons&me"s seems 5&ite

5&estiona$le* Also/ &n!e" no"mal ma")et con!itions/ a sin(le co&nt"- e.po"t ca"tel ill $e &na$le

to "aise t#e p"ice si(ni'icantl-/ t#e"e'o"e (i%in( m&c# less scope 'o" nonpa"ticipants to $ene'it*

T#e o&tsi!e"s p"o!&ction costs "emain t#e same #en not coope"atin( it# t#e ca"telists/ #ic#

means t#at t#e"e a"e no '"ee0"i!e" $ene'its to $e #a!* T#is e.e"ts p"ess&"e on o&tsi!e"s to ,oin in

'&"t#e" "est"ictions o' competition* In a!!ition to t#at/ e.emptions 'o" e.po"t ca"tels ma-

enco&"a(e !e'ensi%e meas&"es $- t#e ta"(et ma")ets (o%e"nment o" ot#e" ma")et pa"ticipants

;8

43 See A* B#attac#a"-ea/ 9E.po"t Ca"tels/9 @WT 68;7/ >*44 Fo" t#e +*S* B"on S#oe Compan- % +*S*/


25/34

6s&c# as t#e esta$lis#ment o' co&nte"%ailin( impo"t/ o" p&"c#ase"s/ ca"tels7* Act&all-/ in a ta"(et

state/ ma")et poe" sometimes is onl- acc&m&late! o" o"(ani2e! as a "esponse to t#e con!&ct o'

an e.po"t ca"tel/;> #ile t#e e.po"t ca"tel 6alle(e!l-7 as enco&"a(e! to penet"ate t#is ma")et

notit#stan!in( impo"t ca"tels o" state monopolies* Vet not onl- is t#e ta"(et ma")et li)el- to

"eact* T#e possi$ilit- o' e.po"t ca"tel e.emptions in one co&nt"- enco&"a(es ot#e" co&nt"ies

e.#i$itin( simila" economic st"&ct&"es to allo t#e 'o"mation o' e.po"t ca"tels as ell* No

"e(&latin( state ill $e incline! to p"o#i$it its on companies '"om pa"ticipation in s&c# a ca"tel/

$eca&se t#is p"o#i$ition co&l! lea! to t#ese companies it#!"aal '"om t#e ta"(et ma")et

#e"eas t#e ot#e" states "emainin( companies co&l! contin&e to !isto"t competition/ $&t no

also to t#e !isa!%anta(e o' t#e ne o&tsi!e"* T#is !isa!%anta(es !omestic p"o!&cts o' t#e

"e(&latin( states it#o&t a co""espon!in( a!%anta(e* Conse5&entl-/ e.po"t ca"tel e.emptions

lea! into a !ona"!s spi"al o' anticompetiti%e meas&"es an! co&nte"0meas&"es ta)en $-

(o%e"nments an! ma")et pa"ticipants*

All t#e a$o%e !emonst"ates t#at t#e"e a"e instances an! st"&ct&"es in #ic# e.po"t ca"tels

'acilitate ma")et penet"ation $&t t#at a %e"- !istinct set o' con!itions #as to $e met 'o" t#at "es&lt

to $e ac#ie%e! "at#e" t#an ,&st (i%in( e.po"te"s t#e oppo"t&nit- to "eap ca"tel (ains* T#e

e''icienc-0a"(&ment is t#e"e'o"e onl- le(itimate i' t#e"e a"e act&all- st"&ct&"al impe!iments o'

t#e o&l!0$e e.po"te"s o" ot#e" "est"ictions o' '"ee t"a!e in t#e ta"(et ma")et ma)in( e.po"ts

&natt"acti%e t#at mi(#t ot#e"ise ta)e place* Neit#e" s#o&l! e.po"t ca"tel e.emptions $e ("ante!

implicitl-/ simpl- $eca&se t#e- !o not a''ect t#e #ome ma")et* +n!e" s&c# a "e(ime/ t#e

"e(&latin( state !ep"i%es itsel' o' t#e possi$ilit- o' sc"&tini2in( an- e''icienc- (ains in t#e 'i"st

place? it is also impossi$le to 'o"esee/ monito"/ an! p"e%ent an- li)el- spill0o%e" e''ect on t#e

!omestic ma")et* In a!!ition/ e.plicit e.emptions t#at simpl- "e'e" to t#e e.t"ate""ito"ialit- o' t#e

e''ects ca&se! $- t#e con!&ct cannot satis'- t#e nee! to anal-2e t#e possi$le e''icienc- e''ects*

T#&s/ t#e s&((estion o' "emo%in( e.po"t ca"tel e.emptions; o&l! onl- "eme!- t#e e.istence o'

e.plicit e.po"t ca"tel e.emptions* Onl- a positi%e o$li(ation to "emo%e p"o%isions "est"ictin( t#eapplica$ilit- o' a p"o#i$ition to t#ose cases in #ic# t#e"e is an e''ect on !omestic t"a!e co&l!

cont"i$&te to mo"e e''icienc-*

;>

46 T"e$ilcoc) an! Winte" 6note 87/ *

25


26/34

CHAPTER0;

EFFECTS ON DOMESTIC MAR=ETS

T#e"e is a to'ol! inte"action $eteen t#e !omestic ma")et st"&ct&"e an! e.po"t ca"tels* As

!isc&sse! ea"lie"/ a ce"tain st"&ct&"e o' t#e !omestic ma")et enco&"a(es companies to ente" into

e.po"t0"elate! a("eements* T#e !an(e"s o' t#e "e%e"se case/ #oe%e"/ #e"e companies

coope"atin( it# "e(a"! to 'o"ei(n ma")ets a"e incline! to contin&e an! e.pan! t#is coope"ation

it# "e(a"! to t#e !omestic ma")et/ is one t#e most impo"tant a"(&ments a(ainst an e.po"t ca"tel

e.emption/ apa"t '"om sc"&tini2in( its me"its 'o" e''icienc-* It "elates to a secon! aspect o' t#e

e''ects o' e.po"t ca"tel e.emptions on !omestic ma")ets/ in pa"tic&la" t#e "epe"c&ssions o' s&c#

e.emptions on t#e !omestic ma")et*

26


27/34

T#ese "epe"c&ssions can $e positi%e/ i'/ 'o" e.ample/ s&ccess'&l e.po"t acti%it- #as as a

conse5&ence t#at !omestic capacities $ecome mo"e &se!/ o" e%en #a%e to $e e.pan!e!00#ic#

a(ain #as positi%e e''ects on !omestic emplo-ment* It is also possi$le t#at st"on( competition on

t#e ta"(et ma")et "e5&i"es 5&alit- imp"o%ements t#at a"e $ene'icial 'o" t#e !omestic ma")et as

ell/ $&t neit#e" aspect is p"e!ominant an! $ot# entail !an(e"s 'o" !omestic competition/

$eca&se e%e"- e.po"t ca"tel #ose mem$e"s comman! a s&$stanti%e o%e"all s#a"e o' t#at ma")et

can in'l&ence !omestic s&pplies an! p"ices t#"o&(# t#ei" e.po"t !ecisions* O%e"all/ it is mo"e

li)el- t#at t#e "epe"c&ssions ill $e ne(ati%e* T#e (ene"al ass&mption t#at t#e"e is a possi$ilit- o'

ne(ati%e "epe"c&ssions cannot $e "e,ecte! as &nli)el- simpl- $eca&se e.po"t ca"tels a"e s&ppose!

to $e ta"(ete! at 'o"ei(n ma")ets* It seems not too 'a"0'etc#e! to s&((est t#at companies

s&ccess'&ll- coope"atin( it# "e(a"! to 'o"ei(n ma")ets ill contin&e to !o so it# "e(a"! to t#e

#ome ma")et as ell* E%en i' t#e"e is no e.plicit coope"ation/ t#e e.c#an(e o' in'o"mation an!

t#e "es&ltin( )nole!(e o' cost st"&ct&"es an! ot#e" impo"tant pa"amete"s o' competiti%eness is

li)el- to "es&lt in conscio&s pa"allel $e#a%io"*

+nless t#e"e is no cons&mption #atsoe%e" o' t#e e.po"te! (oo!s4se"%ices in 5&estion in t#e

#ome ma")et/ e.po"t ca"tels a"e li)el- to in'l&ence t#e amo&nt o' p"o!&ction as ell as p"ices on

t#e 'o"ei(n ma")ets* I' t#e p"ices o' t#e to ma")ets a"e inte"!epen!ent/ a p"ice inc"ease o" loss

o' 5&alit- in t#e 'o"ei(n ma")et ill lea! to t#e same e''ects ta)in( place in t#e #ome ma")et* ;<

A!!itional in'l&ence on !omestic p"ices is e.e"te! s#o&l! t#e inc"ease! e.po"t acti%it- a''ect t#e

inte"nal p"o!&ction o' o" s&ppl- it# t#e (oo!s o" se"%ices in 5&estion* T#ese in'l&ences ill not

occ&"/ #oe%e"/ #e"e t#e e.po"te! (oo!s o" se"%ices #a%e no "elation #atsoe%e" to (oo!s o"

se"%ices on t#e !omestic ma")et o" #e"e it is possi$le to p"e%ent t#e coll&sion in e.po"t sales

'"om #a%in( ne(ati%e e''ects on t#e competition in t#e #ome ma")et*;

A li)el- spill0o%e" e''ect is ill&st"ate! in t#e @&n(#ans0!ecision o' t#e E&"opean Commission*; A

atc#ma)e" #a! !e%elope! a %e"tical !ist"i$&tion s-stem/ inte" alia/ p"o#i$itin( t#e "esale o'

atc#es into ce"tain a"eas o&tsi!e t#e EC* Wit# "e(a"! to A"ticle > TEC 6no A"ticle 1 TEC7

t#e Commission #el! t#at/ alt#o&(# 9c&""entl-9 a("eements "est"ictin( t#e e.po"t '"om Mem$e"

States into non0Mem$e" States !o not a''ect Comm&nit- t"a!e/ t#is assessment mi(#t c#an(e i'

47 S* Diamon!/ 9T#e We$$0Pome"ene0Act an! E.po"t T"a!e Associations/9 Col&m$ia LR 8< 61;;7*48 B#attac#a"-ea 6note 887/ 80*49 Commission Decision


28/34

'"ee t"a!e a("eements it# t#e state in 5&estion a"e p&t in 'o"ce* Fo" t#e time $ein(/ t#e 'act t#at

c"ossin( t#e $o"!e" tice ill lea! to !o&$le c&stoms !&ties ma)es "e0impo"t &natt"acti%e/ $&t

once t#e t"a!e $a""ie"s a"e li'te!/ a "est"iction on t"-in( to "e0impo"t $- "est"ictin( t#e e.po"ts in

t#e 'i"st place mi(#t a!%e"sel- a''ect Comm&nit- t"a!e* I' t#e e.po"t ca"tel s#apes con!itions in

s&c# a a- t#at a "e'l&. '"om t#e ta"(et ma")et into t#e ma")et o' t#e "e(&latin( state is

p"e%ente!/ t"a!e in t#e "e(&latin( state is !isto"te!* T#e ca"tel is no lon(e" a p&"e e.po"t ca"tel*

CHPTER0>

EXPORT CARTEL EXEMPTIONS IN THE WTO

T#e inte"national t"a!e s-stem t#at is cente"e! a"o&n! t#e 3ATT an! a!ministe"e! $- t#e WTO

#as seen an imp"essi%e !e%elopment since 1;


29/34

o%e"a"c#in( an! co#e"ent inte"national competition polic-/ let alone an inte"national competition

la o"!e" *> T#e Ministe"ial Con'e"ence in Sin(apo"e 617 esta$lis#e! a Wo")in( 3"o&p on t#e

Inte"action $eteen T"a!e an! Competition Polic- 6W3TCP7 to st&!- %a"io&s aspects o' t#is

iss&e* T#e Do#a Ministe"ial Decla"ation 6817 '&"t#e" cla"i'ie! t#e man!ate 'o" t#e Wo")in(

3"o&p/ $&t !&e to a !ecision $- 3ene"al Co&ncil a$o&t t#e Do#a Wo") P"o("amme/>1 t#e iss&e

#a! $een ta)en o' t#e a(en!a* In t#e li(#t o' t#e "ecent collapse o' ne(otiations in t#is "o&n!/ it

seeme! ise to "elie%e t#e a(en!a o' ,&st anot#e" con'lict0la!en topic/ an! t#e 'amo&s

F&,i4=o!a) !isp&te !ealin( it# t#e 'o"eclos&"e o' t#e @apanese 'ilm ma")et >8 "e%eale! t#at t#e

WTO !i! not #a%e t#e means to c#allen(e p"i%ate "est"aints o' t"a!e* He"e/ it t&"ne! o&t $e t#e

cent"al 5&estion #et#e" t#e !ist"i$&tion s-stem/ $asicall- e.cl&!in( 'o"ei(n 'ilm p"o!&cts '"om

t#e @apanese ma")et/ #a! $een set &p &n!e" t#e (&i!ance o' t#e (o%e"nment 6"es&ltin( in a t"a!e

la p"o$lem7 o" #et#e" it #a! $een esta$lis#e! &pon p"i%ate initiati%e 6"es&ltin( in a

competition la p"o$lem7* Beca&se t#e +nite! States co&l! not p"o%e a s&''icient !e("ee o' state

in%ol%ement on @apans si!e/ t#e claim as "e,ecte!/ in e''ect !ecla"in( it to $e a 5&estion o'

competition la it# #ic# t#e Panel co&l! conce"n itsel'*

Alt#o&(# t#e WTO "emains mainl- committe! to li'tin( state $a""ie"s to t"a!e 6as oppose! to

"est"ictions o' competition ca&se! $- p"i%ate &n!e"ta)in(s7/ t#e 3ATT an! its associate!

a("eements contain some p"o%isions "elate! to competition la*> Also/ in "e(a"! to o&t(oin(

inte"'e"ences it# competition in ta"(et ma")ets it s#o&l! $e app"eciate! t#at t#e +"&(&a-0"o&n!

A("eement on S&$si!ies an! Co&nte"%ailin( Meas&"es 6SCM7 #as contin&e! t#e t"en! o' ma)in(

it mo"e !i''ic&lt 'o" co&nt"ies to s&$si!i2e e.po"ts #ic# can #a%e t#e same economic e''ect on

ta"(et states as tole"atin( e.po"t0"elate! anticompetiti%e con!&ct*>; Hoe%e"/ e%en t#o&(# t#e"e

50 T#is o%e"a"c#in( !isc&ssion cannot e%en $e to&c#e! #e"e? see as a sta"tin( point/ 'o" e.ample/ Fo. 6note ? mo"e "el&ctantl- P* Step#an 93lo$al 3o%e"nance/ Antit"&st an! t#e limits o' Inte"nationalCoope"ation/9 Co"nell IL@ 17*51 Decision A!opte! $- t#e 3ene"al Co&ncil on 1 A&(&st 8; 6WT4L4>


30/34

is no an inc"easin( aa"eness o' p"i%ate !isto"tions o' t"a!e as ell as 'o" t#e impact o'

9o&t(oin(9 anticompetiti%e con!&ct on ta"(et states economies/ $ot# !e%elopments #a%e -et to

$e inte"connecte!*

As a conse5&ence/ t#e 'act t#at national ma")ets "emain t#e !ominant "e'e"ence point o'

!omestic competition policies ill contin&e to '&el t#e to ten!encies o' inte"national antit"&st:

t#e o%e"0e.pansi%e &se o' t#e e''ects p"inciple to "e(&late anticompetiti%e con!&ct $- 'o"ei(n

acto"s #a%in( e''ects on t#e #ome ma")et/ as ell as t#e contin&o&s lenienc- toa"!s ne(ati%e

e''ects 'o" 'o"ei(n ma")ets/ most nota$l- e.po"t ca"tels* It ill also lea! to a sea"c# 'o" secon!0

$est sol&tions on t#e $asis o' c&""ent le(al positions* 3i%en t#e close lin) $eteen t"a!e an!

competition/ it seems o"t##ile to e.amine t#e act&al si(ni'icance o' t#e 3ATT p"o%isions 'o"

inte"national competition la an! e.po"t ca"tels in pa"tic&la"/ notit#stan!in( t#e 'act t#at t#e"e

is no co#e"ent competition co!e o" t"eat- as s&c#*

A M&ltilate"al F"ameo") A("eement

S#o&l! t#e"e $e a m&ltilate"al '"ameo") on competition polic- to !eal it# inte"national

ca"tels

Dialo(&e #a! $een initiate! to incl&!e p"o%isions on ca"tels in a m&ltilate"al a("eement on

competition &n!e" t#e WTO/ $&t t#e !isc&ssion #as $een stalle! 'o" t#e p"esent T#e"e a"e

p"oponents an! !et"acto"s o' t#e a'o"ementione! p"oposal an! $ot# si!es #a%e #ei" "an(e o'

compellin( an! %a(&e a"(&ments* B&t $e'o"e e%en consi!e"in( s&c# a"(&ments/ it is necessa"- to

"ealise t#at t#e"e a"e ce"tain co"e iss&es/ #ic# &nless "esol%e!/ "en!e" e%en t#e !e$ate

meanin(less*

S#o&l! t#e"e $e a m&ltilate"al a(enc- to !eal it# inte"national ca"tels/ o" a m&ltilate"al

a("eement o&l! p"o%i!e onl- a '"ameo") 'o" coope"ation/ lea%in( t#e ,o$ o' !isco%e"in( an!

p"o%in( a ca"tel at t#e national le%el* T#e '"ameo") t#at #a! $een p"opose! at t#e WTO as $ase! on t#e latte" option* De%elopin( co&nt"ies lac)in( t#e "e5&isite "eso&"ces an! tec#nical

e.pe"tise o&l! 'in! it %e"- !i''ic&lt to $"ea) inte"national ca"tels it#o&t s&$stantial co0

ope"ation '"om !e%elope! ones* T#is le%el o' co0ope"ation ma- not $e 'o"t#comin( in %ie o'

con'i!entialit- "e5&i"ements* Ho t#en/ ill t#e p"opose! a("eement $e a$le to p"o%i!e 'o"

c"e!i$le mec#anisms sa'e(&a"!in( t#e inte"ests o' $ot# !e%elopin( co&nt"ies as ell as

30


31/34

!e%elope! co&nt"ies Ot#e" conce"ns o&l! incl&!e/ 'o" instance/ t#at man- !e%elopin(

co&nt"ies !o not -et #a%e t#e e.pe"tise to ne(otiate on competition iss&es an! also t#at t#e

p"ima"- moti%ation o' !e%elope! co&nt"ies o' #a%in( s&c# an a("eement is consi!e"e! to $e

ma")et access "at#e" t#an cons&me" p"otection* Also/ !eci!in( t#e 'o"&m to p&"s&e s&c# an

a("eement is o' %ital impo"tance* 3i%en t#e nee! 'o" co0ope"ation o%e" comp&lsion/ t#e WTO/

'o" instance/ ma- not $e t#e app"op"iate 'o"&m* It is impe"ati%e to a!!"ess t#ese iss&es $e'o"e

t#e"e can $e an- meanin('&l !isc&ssion an! pe"#aps t#e"e can $e an alte"nati%e 'o"&m ot#e" t#an

t#e WTO 6Me#ta et al/ 8>7*

Bilate"al A("eements

Inte"national co0ope"ation ma- also $e ac#ie%e! $- t#e means o' $ilate"al a("eements* Iss&es

co%e"e! $- s&c# $ilate"al a("eements incl&!e in%esti(ato"- coope"ation/ ,&"is!ictional iss&es an!

t#e s#a"in( an! e.c#an(in( o' con'i!ential in'o"mation/ #en alloe! &n!e" a nationQs las* T#e

+S is pa"tic&la"l- p"oli'ic in si(nin( s&c# a("eements/ alt#o&(# #et#e" o" not t#is lea!s to

acti%e co0ope"ation on t#ei" pa"t is anot#e" matte" alto(et#e"*

Some Illustrative Cases

T#e itamins Ca"tel

D&"ation an! E''ect: T#e %itamins ca"tel to 'i. p"ices an! allocate ma")et s#a"es 'o" t#e sale o'

ce"tain %itamins ope"ate! '"om 101* Ann&al (lo$al sales o%e" t#e conspi"ac- pe"io!

a%e"a(e! +S1*;$n* 6V&/ 87 T#e p"ice inc"ease (ene"ate! $- t#is ca"tel #as $een estimate!

to $e > pe"cent* In t#e +S alone t#is ca"tel ma- #a%e p"o!&ce! +S>mn in o%e"c#a"(es*>>

6OECD/ 87

55 OECD (ed.) Hard Core Cartels (2000) 6.

31


32/34

Impact on De%elopin( Co&nt"ies: T#e a'o"ementione! #i(# o%e"c#a"(e !e'initel- impacte!

!e%elopin( co&nt"ies in %ie o' t#e 'act t#at !e%elopin( co&nt"ies impo"te! a"o&n! +S*$n

o"t# o' %itamins in t#e co&"se o' t#e conspi"ac-*

Lea!in( p"o!&ce"s o' %itamins incl&!in( Roc#e A3 an! BASF o' 3e"man-/ R#one0Po&lenc o'

F"ance/ Ta)e!a C#emical o' @apan 'o"me! a ca"tel !i%i!in( &p t#e o"l! ma")et an! p"ice 'i.in(

'o" !i''e"ent t-pes o' %itamins !&"in( t#e 1s* T#e ca"tel ope"ate! 'o" o%e" 1 -ea"s an! late"

p"osec&te! it# t#e #elp o' R#one0Po&lenc #ic# !e'ecte! '"om ca"tel an! coope"ate! it# +S

a&t#o"ities* Roc#e pai! 'ines o' +S > million an! total 'ine collecte! e.cee!e! +S 1

$illion in t#e +S alone* T#e o%e"c#a"(es pai! $- co&nt"ies impo"tin( %itamins e"e estimate!

t o t#e t&ne o' +S 8/ 'i%e p"o!&ce"s $elon(in( to @apan/ =o"ea an! +S cont"ollin( mo"e t#an


33/34

Eliminatin( competition in t#e ma")et $- 'i.in( t#e '"ei(#t "ates it#o&t li$e"t- to t#e mem$e"s

o' t#e t"&c) ope"ato" &nion to ne(otiate '"ei(#t "ates in!i%i!&all- is common in t#e t"&c)in(

in!&st"-* T#e M*R*T*P* Commission passe! Cease J DesistQ o"!e" a(ainst B#a"atp&" T"&c)

Ope"ato"s +nion 6o"!e" !ate! 8;**1; in RTP En5&i"- No*14187/ 3oo!s T"&c) Ope"ato"s

+nion/ Fa"i!a$a!/ 6o"!e" !ate! 1*18*1 in RTP En5&i"- No*1*1*141* In t#e a$sence o' an-

penalt- p"o%ision/ #oe%e"/ no 'ines co&l! $e impose!*

CONCL+SION

T"a!e polic- is not an isolate! !iscipline* It is em$e!!e! in a m&lti0'acete! le(al an! political

en%i"onment an! #et#e" it act&all- ac#ie%es aspi"e! e''ects is !epen!ant &pon !ecisions an!

o&tcomes in ot#e" polic- a"eas* T#e main am$ition o' mo!e"n t"a!e polic- is to esta$lis# a '"ee

'lo o' p"o!&cts &n"est"icte! $- ta"i''s an! nonta"i'' $a""ie"s/ $&t t#e"e is a li)eli#oo! t#at

companies as ell as states ill t"- to "eplace t"a!e polic- inst"&ments it# ot#e" means* T"a!e

la is not ell e5&ippe! to !eal it# t#is sit&ation/ mainl- $eca&se it essentiall- 'oc&ses on state

con!&ct 6as oppose! to p"i%ate anticompetiti%e con!&ct7 an! on competito"s "at#e" t#an

cons&me"s/ ma")et access "at#e" t#an &n!isto"te! competition* T#is !i''e"ent 'oc&s ma)es t"a!e

la in its c&""ent state incapa$le o' a!!"essin( t#e p"o$lem o' anticompetiti%e con!&ct in 'o"ei(n

33


34/34

ma")ets e%en i' t#at con!&ct is s&ppo"te! $- t#e #ost state o' t#e companies in%ol%e!* Hoe%e"/

&n'ai"ness !oes not necessa"il- amo&nt to ille(alit-* T#&s/ t#is a"ticle s#o&l! $e pe"cei%e! as a

plea not to 'o"ce competition la p"o$lems into t"a!e la templates* Apa"t '"om ca&sin( se"io&s

t#eo"etical inco#e"encies/ t#is o&l! most ce"tainl- lea! to a !i''ic&lt le(itimation c"isis o' t"a!e

la an! its "at#e" s&ccess'&l s-stem o' !isp&te "esol&tion* It is impo"tant to "eali2e t#at t#e

si(ni'icance o' t#e p"o$lem !oes not allo 'o" secon!0$est sol&tions: Instea! it #as to $e tac)le!

!i"ectl- t#"o&(# $ona 'i!e inte"national coope"ation an! a clea" o$li(ation to t"eat incomin( an!

o&t(oin( anticompetiti%e con!&ct ali)e*

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