This is an extract of our Extraterritoriality document, which we sell as part of our Competition Law Notes collection written by the top tier of Oxford students.
The following is a more accessble plain text extract of the PDF sample above, taken from our Competition Law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
An infringement of competition law may have consequences within territory X even though the conduct that caused those consequences occurred, and may have even been completed, in territory
To protect domestic markets, X's competition agency may extend their jurisdiction beyond the boundaries of X and apply national laws to activities that may have been cleared by Y.
Traditional 'territoriality' principle - X has power to make laws to affect conduct within territory X or to regulate conduct completed within territory X. Extraterritoriality departs from this.
The extension of the territoriality principle relies on one of two concepts:
1. Effects doctrine;
o Extends jurisdiction where transaction has an effect within given territory.
Favoured notably in USA.
2. Implementation doctrine.
o More restrictive, requiring 'implementation' within given territory as a condition for extraterritorial application of national laws.
1 - Grounds for extension of territoriality principle
1.1 - Single economic entity
Single economic entity doctrine states that parent companies and subsidiaries form a single economic entity - where a parent company or subsidiary are based in EU, EU competition law has jurisdiction.
ICI Dyestuffs : Fact that a subsidiary has a separate legal personality is insufficient to exclude possibility of imputing its conduct to the parent company.
o This is particularly the case where subsidiary does not decide independently on its own conduct on the market - carries out instructions given to it by parent company.
o Formal separation of companies, resulting from separate legal personality, does not outweigh unity of their conduct on the market for purposes of applying competition rules.
NOTE: This is the most straightforward doctrine to establish EC jurisdiction - requires a parent company or subsidiary to be based in EU.
1.2 - Implementation doctrine
Jurisdiction under EU law exists over firms based outside it if they implement anticompetitive conduct within the EU, even if it was agreed on outside the EU (Wood-pulp II ).
Producers established in countries outside EU (e.g. USA/Canada) engage in competition within the internal market where they:
a) Sell directly to customers established in EU; and b) Engage in price competition to win orders from those customers.
o If competition rules to depend on place of formation, would be too easy to evade.
Implementation thus decisive factor.
So, where if D had no recourse to parent companies or subsidiaries based in EU, it does not matter if they implement the agreement within the internal market. Focus is not on the formation of the agreement, but its implementation.
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