Chapter 6: Extraterritorial application of national laws
The globalization of markets in recent decades has meant that the assets and influence of companies now frequently extend beyond the territorial reach of a single state. Importantly, in relation to economic law, the market effects of conduct might be felt in one or more countries beyond that in which the parties are located or the relevant physical conduct took place. In the context of merger law, the effect of any merger-generated increases in market power are more likely than ever to reverberate beyond the country in which the merger was concluded or in which the corporate parties are headquartered. It is for this reason that, in the absence of any supranational regulatory body or multinational treaty governing transnational mergers, many countries now seek to assert jurisdiction over mergers affecting their markets, regardless of the location of the parties involved. The term 'extraterritoriality', although lacking precision, generally refers to the application by one country of their laws to activity occurring outside their territorial borders. The extent to which countries are willing or able to apply their competition laws in this way varies considerably; some countries, like the US, apply their laws to conduct occurring in foreign states liberally, while others either choose not to apply their laws in that way or lack the ability to do so effectively. It is in the context of mergers that the consequence of extraterritorial application of competition laws is most acute.
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