Elements of International Competition Law - Coursework Example

International Competition Law Subject Name Institution Introduction International competition law is also known as anti-trust law and is defined as the rules and regulations that promote market competition and regulate on how the companies should compete with each other. The rules and regulation work to regulate the anti-competitive conduct that some companies may undertake1. The laws are gaining popularity in the international community because of how many countries are becoming connected in the international trade. Therefore, many national governments are working to strengthen competition laws domestically so as to promote competitiveness and free trade which will promote growth of the growing companies. The international competition law works hand in hand with the international trade law to solve the arising issues and to ensure that trade is carried out in the fairest way2. The World Trade Organization has worked to promote the international competition law to ensure there is healthy competition that leads to the growth of the world trade3. International trade law is set rules and regulations that govern on how the world economies engage in trade as it is stipulated by established world trade governing bodies. These trade governing bodies include World Trade Organization (WTO), General Agreement on Tariffs and Trade. The international trade law ensures that all the trade agreements are not violated by member states. This is to ensure that trade in the international arena is done in a smooth way. International trade law ensures that the issues that arise during the world trade are solved in the best way possible so as to promote harmony4. The international trade law brings out how problems that arise during the world trade can be resolved without favoring any member. The law works with organizations such World Trade Organization which has the membership of most the world countries. This ensures that all members benefit from organizations in terms of trade5. The law is also charged with the responsibility of promoting international relationship among the world countries engaged in trade. This done in terms of promoting common economic goals among member countries, especially those in the same geographical areas to ensure they mutually benefit. The international trade law also ensures that there are limited or none protectionism barriers in individual countries since they limit the flow of international trade. The law also ensures that all issues are solved in the best way possible so as to promote fair and free trade. ITL also awards remedies to the aggrieved parties so as to ensure that matters are solved amicably6. Instances when a dominant company can be forced to give away its rights There are instances that dominant companies have been forced by the authorities to forego their market power to competitors because of various reasons. The dominant company may be forced to give access to its developed infrastructures, products and facilities to its competitors so as to promote competitiveness in that particular sector of the economy. The company can be forced to do this if it abuses its right of being dominant in the market or if it acts in such a way to push away competitors. Therefore, competition law has been applied to solve the problems of abuse of market dominance of a company. Laws have been put in place and cases brought forward to various legal bodies for companies to give access to upcoming competitors and existing ones. There are policies and rules that are put place but they differ from one trading region to the other. This can be evident from different case laws and other cases which have been solved in the past. In a recent case in the European Union (EU) Microsoft vs. The commission, Microsoft one of the largest software companies in the world was accused of abusing its dominance in the market. The European commission had to undertake investigations on whether the allegations brought forward were true. The commission said that the allegations were filed by one of the Microsoft competitors Sun Micro-Systems. The allegations were that Microsoft Company was refusing to provide interface information to Sun Micro-Systems that will enable the company to develop a tool that will enable communication with Windows PC’S. According to Sun Micro-System this was a strategy developed by Microsoft to keep away competitors out of the market. This makes it hard for the competitors to fairly compete with Microsoft on Work Group Server Operating System. This was abuse of market dominance power because it limited the customers to only buying Microsoft products thus limiting their choices. Another case against Microsoft is where it was accused of tying Windows Media Player with Window PC’s operating system. The commission investigation took five years to be completed and the judgment was delivered. After the investigations the commission delivered its judgment stating that in relations to the windows media player, the company should within 90 days give to all its competitors a windows version operating system. The operating system will be without a media player which means that consumers will buy what they want and not be forced to buy a Microsoft media player. The reason behind this is that they can buy products from different producers. This will reduce Microsoft’s dominance in the market and increase competitiveness. The company was also required within 120 days to provide its competitors with interface documentation that will help them to develop products that will directly compete with Microsoft products. Microsoft will also have to update this information every time it introduces a new product in the market. This will enable the competitors to have a fair way of competing with Microsoft by developing their own products. The company was also fine around 500 Euros so as to act as a warning to any other company that could abuse its power of dominance. The commission also appointed a monitoring trustee to ensure the company complied with the court’s decision. In another case Google has been to problems for abusing its market dominance power in different trading regions such as the EU, USA, Australia and South Korea. The allegations are that the company has abused its position in the internet search engines and online marketing. It has been stated that the company has been competing unfairly with its competitors. The court held that Google should provide the competitors with information on search engine development so as to allow competition and avoid dominance in the market. In another case in 1911 Standard oil vs. The commission, the oil company was accused of monopolization of the gas market and carrying out activities that were questionable while dealing with consumers and suppliers. The company could reduce and increase price at will which destabilized the economy. The prices could fell with large margins and increase any time. The court held that the company abused it power as the dominant company in the oil industry. The court decided that the Standard Oil should be dismantled so as to allow other companies in the market because it activities were keeping away companies which could compete with Standard oil. In United States Microsoft also had problems because of abusing its power of dominance in the market. The company was accused of violating rules of fair competition. In the case Microsoft vs. Trial court Microsoft had been pushing competitors out of the market because of its innovativeness and introduction of new products that ensure the company attracts the largest share of the markets customers. The company was found guilty and the trial court held that the company be broken and be operating as operating system and an application business so as to provide for competitiveness in the market. The company felt aggrieved and appealed against this decision. The appellate court held that there was need to reduce on the monopolization of the industry by Microsoft. Microsoft was in the verge of monopolizing the browsers market and tying browser to operating system. The court said that this could result to unfair competition that will make consumers to purchase products that are not of their choice. In relation to this case USA competition authorities and Microsoft came to a consensus that the company should disclose information about development of sensitive technology. This meant that all computer manufacturers could make uniform terms of contract and makes deals that won’t affect consumers in any way. The court also held that the company should allow customers to remove some of the icons installed in computers manufactured by Microsoft. Microsoft was also required to give technical data to software developers to write programmes that will work with windows and Microsoft products. In Australia there was a case ACCC v Australia Abalone Pty Ltd [2007] FCA 1834 allegations were brought against 19 corporates and the first respondent was the corporation Australian Abalone. The corporations were working on harvesting and supplying of abalone in the Victoria region. The product was in high demand and was treated as a luxury item and its production and sale was regulated. This legislation was done through provision of different types of licenses and the respondent held the quota license. The quota holders help meeting and discussed on how to fix the prices of the products. This was the main allegation and that they boycotted the market. Justice Weinberg held that this action was working towards limiting the supply of the products. The corporations’ act of fixing price would result to lack of competitiveness. The judge held that though the corporations had a cartel all they did was done openly and the penalties should not be so high. The corporations were fined $927,000. The international competition law has helped to solve matters such as these in the following ways. For example, in solving the above issues, all the facts can be used to resolve the legal issues identified. To solve the first issue there is a dispute solving body that is set by the World Trade Organization in relation to the international trade law. The body is charged with responsibility of making sure that the issues that arise during international trade are solved in the best way possible without favoring any party. This is to ensure that the world trade is not hurt in any way and promote mutual beneficial relationship among the world countries. Australia has been part of the international competition law so as to ensure that trade operations are carried out as per the set international standards. According to GATT III is that directly competitive products attract similar taxes. These taxes must not be more than those levied of domestic products. This article calls for an equal competitive level for all the involved stakeholders. There is body called Most Favored Nations (MFN), the body ensure that no products from any countries are discriminated because all countries are treated equally. Another body is the National Treatment (NT), which also discourages any discrimination on any products, because domestic and foreign products are accorded the same treatment, breaching of NT can lead to legal dispute. This is well explained in article 301 of the World Trade Organization. Every dispute is settled by Dispute Settling Understanding (DSU) as stipulated in the World Trade Organization in regards to international trade law. The DSU is made up of all member countries and Dispute Settlement Body (DSB). The major function of the Appellate body is to listen to any appeals raised by any member state. According to the International Competition Law and World Trade Organisation agreement any tax measure that is discriminatory should not be adopted because it leads to an increase in the price. This increase in price makes the products uncompetitive with domestic products because they are cheap to customers. The legal issues in the world arena can be solved using the dispute settlement system set by the World Trade Organisation. The international trade law disputes settlement has been strengthened by creation of Appellate body, which acts as the super court to deal with trade matters. There is also the Panel that is also charged with solving trade issues among countries7. The decisions made by the Panel and Appellate bodies according to international law are enforced the moment they are passed. The member states of the World Trade Organisation have the last word as a formality through Dispute Settlement Body (DSB), but in practical terms the final decision lies with the Panel and Appellate bodies. The decisions of these bodies are made by binding and where necessary by trade sanctions to the members who do not fall the decisions. According to the WTO and international competition law, trade restrictions lead to some products receiving duty and tax exemptions. This makes the products attract low prices than those which do not receive such exemptions. In the above Indonesia case the panel also found that Indonesia violated ASCM Article 5 (C) which deals with serious prejudice on any products from any member country. The panel found that duty and tax exemptions, which were provided in the 1996 National Car Programme, acted as subsidies and caused a serious prejudice because it led to a reduction price as provided in Article 6.3 (c) which makes like the imports from European community and not those from United States as provided in Article 5 (c), therefore, making such products uncompetitive due to differences in price. In analyzing like products and less favoured products as explained in World Trade Organization, there is a need to refer to article III part 4 of the GATT, which is the regulatory measure. The regulatory measure states that all requirements should not be hindrance to any member state to trade. In accordance with Less Favorable Treatment, the GATT requires that all the imported products be accorded the same treatment. The International Competition Law advocates for the provision of equal platform to enable all the imported products to compete in a fair way. This law discourages the like aspect where domestic products are accorded special treatment such subsidies. This is because this makes domestic products cheap, thus making it uncompetitive to products from other countries8. In another case Turkey v Ecuador DS 237 between Ecuador as the complainant and Turkey as the respondent. In the 2001 case, Ecuador requested to enter into consultation with Turkey in regards with importation procedures of banana. Ecuador claimed that Turkey through its ministry of Agriculture introduced a document named as Kontrol Belgesi. According to Ecuador this document as established under the communiqué for foreign trade standardization was published as per Annex 1. Ecuador had allegations that establishment of this procedure by the Turkish authorities was a great hindrance and a barrier to trade. The reason behind this is because the procedure was inconsistence as obliged to Turkey by GATT 1994. The agreements include application of sanitary and Phytosanitary measures, import licensing procedures, agricultural agreement and GATS. Ecuador felt that the Turkish procedure was inconsistent with many articles of the WTO such as Article II, III, and VII found in the 1994 GATT, which discourage against any discrimination of goods from any country. It also violates Articles 2.3 and Article 8 as related to application of sanitary and Phytosanitary measures. The problems were solved through mutual consensus between the two countries. Therefore, Papua New Guinea and Australia should solve the legal issue between them in the best way possible. A similar case to this one on Technical Barriers to Trade (TBT) and SPS is DS 279 that of European communities as the complainants and India as the respondent. In this case, European communities requested to enter into consultation with India in regards to TBT and SPS policies she had adopted, which European communities felt were a barrier to trade. European communities supported their case using Article 2 that states that all member countries must ensure that, in relation to the set technical regulations, there are no products from any other member country are discriminated and should be accorded as the same as those produce domestically. The article also requires that no country should adopt or introduce technical regulations that will act as an obstacle to products from any member state and as a hindrance to international trade. Therefore, no country should take the technical regulations as a way of trade restriction. According to the World Trade Organisation rules is that any contracting parties should not introduced barriers to smooth running of international trade between or among countries. Barriers such as taxes and quantitative regulations should never be applied in the international with an aim of protecting domestic producers and products from competition from foreign products. Therefore, Australia should not introduce a tax on foreign products, which is high than that levied on domestic products that are of the same nature and serve the same purpose. Elements of international competition law There are different elements of international competition law that help in its function ability. The most popular ones are three which are accepted by the WTO and are adopted by so many countries. The first element is restriction of competition, this element works to prohibit any move or agreements that would hinder free trade among business and countries. These results from cartels or when firms own large number of share in an industry to an extent that there is no competition at all9. This leads to consumers paying high prices and gets low quality products from the dominant firm because other competitors have been pushed out of the market and new entrants have been blocked out of the market10. According to international competition law this is not fair because competition increases quality since firms want to win customers to purchase their products. Therefore, when a firm is dominant consumers do not have an alternative because they have to buy the firms commodity. This leads to consumer exploitation through paying high prices for low quality products. Therefore, international competition law sets in to ensure this does not happen at the international level because countries have to compete in a fair way so as to promote the international trade. This is to allow new competitors to get into the market so that consumers can get high quality products at a reasonable price because of increased competition. This helps promote harmony at the international level because countries trade with each other. International competition law works to ensure there is freedom in the international trade as far as countries and firms have attained the set standards. Another element of international competition law is to prevent establishment of monopoly because it kills competition in the sector. Therefore, international competition law fight to restrict the conducts that come from monopolist businesses. Monopoly is seen to bring anti-competitive practices that lead to consumer exploitation. Monopoly businesses tend to practice predatory pricing and price gouging11. Predatory pricing is the situation where a firm or a company reduces prices so much to an extent that small business cannot cater for their production cost and, therefore, they exit the industry and leave one strong firm to be the sole producing and trading agent. The international competition law also discourages price discrimination where a firm sells a commodity to a certain country at higher price and sell the same commodity at a lower price in another country so as to cover their production cost and to push other firms out of the market. It happens that to an extent that companies reduce their prices below their production costs so as to reduce number of competitors because they will lead them to earning losses. Another element of international competitive law is to supervise mergers and acquisitions. The competitive law works to prevent a merger or an acquisition that will not let competitive market to prevail this is to ensure there is freedom in the market and in trading. This is to ensure that no merger is put in place to exploit consumers by dictating the industries trend. This law works to put measures in place to check operation of mergers and acquisition in case large companies are allowed to come together. For example, in United States there antitrust law was put in place because large corporations could hide their details about their dealings in business. This was threaten free market economy and reduced government revenue. This led to fixing of taxes so as not to let the corporations continue hiding their taxes. Corporations come together so that they can increase their profits by selling their products at high prices12. In conclusion, International Competition law works to regulate the conduct of countries and companies in their trade operations. The law acts as the guideline on how competition should be undertaken without harming other who operates the same business. The World Trade Organisation has acted as a unifying in the international trade where it ensures that International competition Law is put in place, and there is no violation of the set laws and standards. The body also ensures that legal issues that arise during international trade are solved in the best ways possible. International trade law also acts as a direction to nations when conducting international and ensures agreements are reached. The law also helps punish nations which violate the set trade agreements. This is done through penalties and sanctions to such a nation. It also provides a direction in solving the legal issues that arise during trading. The law protects the weak nations against the powerful nations which could exploit such nations in the international trade. The World Trade Organisation has taken an initiative to ensure that countries compete in a fair way in the international trade through its set laws. Many countries have adopted the international competition law so as to control how business is being operated nationally and internationally. This has led the world trading bodies to coming up with bodies to monitor international trade and to identify issues that might arise. They have also come up with bodies of solving the arising issues so as to ensure trade is carried out in the fairest way possible. The bodies also punish the countries that do not follow these regulations by applying sanctions. The sanctions act as lessons to other countries so as to enable them trade in the right and allow free trade to prevail. Bibliography Books Barton, John., et al. The Evolution of the Trade Regime: Politics, Law and Economics of the GATT and WTO. (London: Princeton, 2008). Besanko, D., and Spulber D.F. 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(London: Cambridge University Press, 2012). Elhauge, E. and Geradin, D. Global Competition Law and Economics. (Sydney: Wiley, 2010). Gellhorn, E. Antitrust Law and Economics in a Nutshel. (New York: Wiley, 2004). Hovenkamp, H. Antitrust. (New Orleans: Oxford, 2004). Hovenkamp, H. Federal Antitrust Policy: The law of competition and its practice. (New Orleans: Oxford, 2011). Jackson, John, et al . Legal Problems of International Economic Relations, 2008 DocumentarySupplement (American Casebooks). (London: West Group, 2008). Lester, Simon., et al. World Trade Law Text, Materials and Commentary. (Oxford: Hart Publishing, 2008). Noonan, C. Emerging Principles of International Competition Law. (Auckland: Oxford University Press, 2008). Richard, W. and Bailey, D. Competition Law. (London: Cengage, 2012). Sweeney, B.J. Internationalisation of Competition rules. 9London: Oxford, 2011). Trebilcock, Micheal., and Robert, Howse. The regulation of International Trade. (London: Routlege, 3RD Ed, 2005). Laws L Peremptory Norms (jus Cogens) in International Law (Finnish Lawyers' Publishing Company, 1988), at Ch. 10 Article 101 of EU functioning Treaties Article 102 of the Treaty on the Functioning of the EU Cases cited DS 237 Ecuador versus Turkey [2001] DS 279 European Communities versus India [2001] ACCC v Australia Abalone Pty Ltd [2007] FCA 1834 Standard oil vs. The commission [1911] Microsoft vs. Trial court Read More