International Antitrust Cooperation and the Preference for Non-Binding Regimes

Competition Policy and Antitrust

Article Snapshot

Author(s)

Anu Bradford

Source

in Cooperation, Comity, and Competition Policy, Andrew Guzman, ed., Oxford University Press, 2010

Summary

This chapter argues that nonbinding agreements are better for international antitrust regimes than binding agreements.

Policy Relevance

The general preference for binding agreements in international antitrust cooperation has led to poor agreements. However, where non-binding agreements have been made, sound policies are set forth and are normally followed by participating states.

Main Points

  • Historically antitrust laws, which attempt to prevent anticompetitive activity in the market, have been created and enforced on a country-by-country basis.  As international commerce grows this becomes inefficient.


  • Repeated attempts have been made to orchestrate international regimes to create consistent international antitrust laws.  Two types of regimes have been created by these attempts: binding regimes and non-binding regimes.

    • Binding regimes are sets of international antitrust rules that every country has agreed to enforce and which set out a mechanism by which any country can enforce the rules against another.


    • Non-binding regimes are similar sets of rules but are only good faith agreements and have no enforcement mechanism.
       
  • Generally there has been a preference for binding regimes.  It has been believed that future enforceability makes up for the fact that binding regimes are more difficulty to negotiate and agree to.


  • However, when creation of international binding regimes has been attempted, the result has been watered-down rules that only produce trivial benefits to participating states.


  • Conversely, where non-binding agreements have been implemented, often where binding agreements were not feasible, comprehensive antitrust structures have been set up and are generally followed by the agreeing states.


  • Non-binding agreements prove to be the more effective regime for creating international antitrust cooperation and should be used in preference to binding regimes for three primary reasons.

    • The self-enforcing nature of non-binding agreements means there is no added benefit from the enforceable nature of binding agreements.


    • Binding agreements do not provide states with any domestic political gains, and as such remain low priority.


    • Voluntary convergence, based on non-binding agreements, can slowly reduce the problems of decentralized antitrust regulation.

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