International Competition Policy
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International Competition Policy

Maintaining Open Markets in the Global Economy

Michael A. Utton

The book begins by setting out the principles of competition and trade policies, and then goes on to address the impact of market globalisation on what are usually thought of as traditional antitrust concerns. These include the analysis of the difficulties arising from collusion and other restrictive practices, government sponsored ‘voluntary co-operation’, vertical restrictions and market access, pricing strategies of dominant firms and international mergers, all illustrated with a number of prominent case studies. The author concludes with an illuminating discussion on the feasibility of international co-operation on competition policy, the faltering progress that has been made so far and the prospects for future advances.
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Chapter 8: The Feasibility of International Agreement

Michael A. Utton


I INTRODUCTION The examples discussed in previous chapters are sufficient to indicate that increasing globalisation of markets brings with it the need for co-operation between trading nations to resolve complex antitrust issues. We have seen that in many cases involving the abuse of market power the beneficiaries and sufferers from such actions are very often spread unequally across the countries involved. Much will depend on whether the abuse is being imposed by domestic producers to deny access to foreign competitors (for example by exclusive dealing arrangements with distributors) or whether it takes the form of foreign producers acting collectively to capture a domestic market at the expense of home producers (as was alleged, for example, in the Matsushita case). The first source of conflict involves a restriction on imports while the second involves the use of market power to generate exports. The resulting effects on economic welfare in the first case are that economic rents are retained by domestic producers, whereas in the second they are captured by the foreign producers. Whether or not these outcomes are allowed to persist will depend on how the antitrust policies in the respective countries are framed and, more to the point, applied. In the first case foreign manufacturers may find it very difficult to gain redress via the domestic antitrust policy. In the second case, the foreign producers may be relying on a weak or non-existent application of their own domestic antitrust policy to mount their attack on the foreign market. They will,...

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