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Extraterritorial Effect In EU Competition Law

In comparison to other policy areas, the competition policy and the impact of extraterritoriality in the European Union (EU) competition law has not been given much scholarly attention. The European Commission (EC) competition law regime within the commission has steadily transformed and has become one of the most well developed and established regimes in the world. But within its core provisions i.e. the Article 81 and 82 EC, the extraterritorial application has not been explicitly defined. On the basis of the principles of the territoriality and the nationality, the extraterritorial application of Articles 81 and 82 EC has been ensured by the help of three legal constructs which are the “economic entity doctrine”, “implementation doctrine” and the “effect doctrine”. The former two doctrines have been formally recognized by the European Court of Justice (ECJ). On the other hand, the effects doctrine has so far not been formally recognized by the ECJ, which limits its assertion on the subject matter jurisdiction specifically for the non EU undertakings located outside of the EU.

With the passage of time, the implementation of the extraterritorial jurisdiction is becoming controversial in the completion law. In the current times, different private companies are expanding their activities farther than a single territory and from a single state to all across the globe. In addition to these, big mergers and opening up of new subsidiaries in different countries by the private companies are also becoming a common practice. In response to this, different countries are now implying their competition laws on companies outside of their territories. But, one of the major problems here is that every country applies its own competition laws and policies. This at times lead to different problems, since the company can either face strict competition policies in one subsidiary state and at the same time some other subsidiary state might have loose policies.

The application of the extraterritorial U.S. antitrust laws on different states has raised a lot of commotion in the previous decades. The application of the effects doctrine under the U.S. antitrust law has stirred up various international conflicts specifically with Japan and Europe. This in turn has led to the application of territorial and competition policies by different countries on to the international companies. This has affected the global market greatly and has led to diplomatic friction among the countries on the basis of protecting exports interest. There is a dire need to curtail the increasing number of international conflicts as a result of extraterritorial application of the competition law, since this would be for the greater benefit of the international market.