On The Competition Law Regulation Of Export Cartel

Chapter one mainly analyses the state of export cartel regulated unilaterally by the competition law from various legal unit, disclosing the conflict of the current competition law regulation. Before analyzing specifically the conflict, it firstly ascertains the meaning of export cartel and the classification of export cartel discussed in this paper in order to ascertain the scope of export cartel discussed in this paper.The organization and act of cartel has a long history, the legal judgment of which is ups and downs. Nowadays most nations consider the cartel is a breach of market competition, and the competition law endorses the negative value to it in principle, positive value in exception. The cartel, which is given to a negative legal value, can be divided into price fixing cartel, quantity limit cartel and market division cartel according to the content of cartel, being identified as hardcore cartel by OECD, having the restrictive competition effect and being prohibited by competition law. The export cartel having foreign factors can also be divided into many types. The types to be studied by this paper is limited to the price fixing export cartel, the quantity limit export cartel and market division export cartel, which corresponds to the hardcore cartel. The reason to identify the scope of export cartel in this paper is helpful to analyze the competition market effect arisen from the export cartel, to apply the competition law rule properly. The current academic community does not expound the effect of export cartel specifically but generally, compounding the competition effect of all sorts of export cartel together and leading to draw an uncertain conclusion. The study of this paper is limited to the above three types of export cartel, which can draw an analogy with the hardcore cartel and international cartel. As a result, it is easily acceptable to the conclusion of prohibition of export cartel.Then taking the competition law of the United States and European Union for example, this chapter analyses how the various competition law exempt the export cartel in its own legal unit, and how to regulate the export cartel in foreign legal unit. Because of the foreign factors in export cartel, the competition law grants the legal judgment to the export cartel different from that to the domestic cartel. The competition law exempts the export cartel organized in its domestic nation from competition liability, while provides the competition liability for the export cartel organized in foreign country and affecting its domestic market. To the same export cartel, the export and import national competition laws give different legal judgments, implicating the legislative conflict of competition laws. Besides that conflict, it also makes the competition law more uncertainty just because different national competition laws have different substantial qualifications of exemption, different formal requirement for their domestic export cartel and different jurisdiction conditions on the foreign export cartel, and because the different departments of one country have different opinions about the above content. According to the conditions of the exemption, the US competition law emphasizes the degree of affecting domestic market, granting the exemption to the export cartel not having the substantial, direct and reasonably foreseeable effect on its competition market. The EU competition law focuses not only on the market effect but also on the gain of productive efficiency, the share of the productive efficiency to consumer welfare and necessity of the restrictive competition. The different exception qualifications reflects different objective pursued, the former is consumer welfare oriented, while the latter includes various objectives including the pursuit of common market. In the aspect of the extraterritoriality jurisdiction of export cartel, the competition law of US and EU show a big different application rules, the US competition law consistently argues and applies the effect doctrine, while the EU competition law insists on the rule of single economic entity and implement territory resulting from the territory principle. Although both competition laws apply the effect principle in the merger field, it has no close relationships to this paper and will not be discussed here. The above difference results from the different international principle and philosophy advocated by both jurisdictions, the US insists on the effect principle which is the exception of the international territoriality principle, while the EU insists on the fundamental principle which is territoriality principle. However, further study shows that both jurisdictions have the same objective,granting the negative legal judgment to the export cartel based on just taking account of domestic economic effect, and the non tolerance toward their domestic market restriction arising from the export cartel. That is to say, both jurisdictions just care about their market competition, not taking the injured interests of consumers in other jurisdiction into account.Chapter two proceeds to analyze the reason of conflict embodied in chapter one, to expound the irrationality in a way of the relationship between law and economics. The main reason that it is unable to overcome the difficulty of extraterritorial application of competition law is the division of dialogue between economics and law. There is no territorial division to the evaluation of the economic effect of competitive conduct in economics, which draw a integrate economic conclusion based on the analysis of integral market affected by the competitive conduct. To start with the economic analysis of the export cartel just based on their own market, the individual countries’ competition law divides the integral market affected by the economic conduct, considering only the interests of conductor concerned in their domestic market and taking no account into the interests which is unrelated to their own territoriality. So the nation or district law accords to different legal value to the export cartel. The destruction of the dialogue between law and economics mainly exists in the immunity to the export cartel granted by the export nation competition law. While judging the economic effect of economic act of the export cartel, the export nation law does not take into the injuries of consumer benefits of the import nation, only granting the affirmative legal judgment to the producer profits of the export nation. The reason of such regulation is that competition law is domestic law, which takes only into account the interest or loss happened to their native country economic market. The reason shows that, although each nation puts self-restraint in extraterritorial jurisdiction, the pursuit of nation benefits alike reasonable person makes the self-restraint in the state of unfair implement and fails to eradicate the current conflict. The analysis of reason testifies that it is appropriate to grant the jurisdiction to export nation and make export nation prohibit the export cartel while considering global benefits. However, none of the export nations will regulate their native export cartel alone. Only the principle of reciprocity can make method above effective. The realization of principle of reciprocity depends on the international treaty, which shows that it is unable to resolve the current conflict by the unilateral regulation of competition. But nowadays the scholars in domestic and foreign nation do not ascertain the types of export cartel when arguing the economic effect of export cartel, so it is not surprising to draw different even contradictory conclusion. Before analyzing the irrationality of export cartel regulated by the competition law unilaterally, this chapter clarifies the conditions to be applied to the three different economic effect of export cartel, which is treated as the premise of analyses.Chapter three discusses the requirement of extraterritorial effect of exemption of antitrust liability for export cartel-foreign sovereign compulsion, in the case of concurrent existence of domestic exemption and foreign jurisdiction by unilateral regulation of the competition law. To reconcile the conflicts arising from the extraterritorial application of the competition law, the case exists that the exemption of export cartel from its domestic competition law has legal effect abroad. The legal effect abroad of exemption is based on the precondition that the export cartel is compelled to restrict the competition by the export sovereignty, as a result of which the export cartel is granted to the defense of foreign sovereignty compulsion. The constitutive requirements of the doctrine of the foreign sovereignty compulsion include the substantive compulsion requirement based on the existence of punishment result, the necessity of formal compulsion requirement by law or not, the territorial condition where the compulsive act happens abroad or not, the legal effect of the foreign sovereign compulsion, and the theoretical basis of the compulsion. However, the constituent requirement and the legal effect of foreign sovereign compulsion is different in different legal territory, which results in the perplexity and uncertainty of the application of the doctrine, and the failure to successfully apply the foreign sovereign compulsion. Essentially the private act has become the state act by the foreign sovereign compulsion, which narrows the range of application of foreign sovereign compulsion. The reason of the narrow application is that the case of foreign sovereign compulsion is not common, and the compulsion doctrine does not apply to the exemption of private export cartel from the export nation law because the exemption does not conform with the requirements of compulsion. So the foreign sovereign compulsion doctrine cannot eliminate the conflict, though being able to resolve part of conflicts arising from the extraterritorial restrictive competition conduct. It shows that the unilateral competition regulation of export cartel has limitation, whatever from the perspective of the exemption of export cartel from domestic competition law having legal affect abroad, or from the perspective of import nation having restrictive jurisdiction to the export cartel. At the same time, the above analysis plays a base for the international regulation.Chapter four expounds the theoretical feasibility and practical difficulty confronted by the global competition to resolve the export cartel. Confronted with the inability to resolve the conflict by the nation self-restraint mechanism, the fundamental resolution is to eradicate the cause giving rise to conflicts, to restore the unity of the divided market and to evaluate legally the competitive conduct based on the integrate economic effect. Although individual nation can reform their native law like that above, based on the abstention of self interest not guaranteed by the principle of reciprocity, great hope should not be given to the above project to be implemented well. It is a better solution to rely on the international law based on international market. The WTO, which initiative is the liberalization of global trade, cannot settle the export cartel policy, limited by WTO objective to prevent the country barrier from trade liberalization and the characterization of the export cartel to attain predatory profit not to exclude the entry of competitor, which is incompatible with the objective 6of WTO. Except from the inconsistent objective, this paper also further analyses that WTO is not suitable to settle export cartel policy according to the national treatment principle, quantity limitation principle and the regulation of the lawsuit of non-violation in GATT. What is more, it is short of practicability to enact an global competition law, though which is feasible theoretically, because the controversy is so big that individual nation can not agree with the regulation of the export cartel in the short time.Chapter five provides the solution of export cartel by territorial competition law, arguing that territorial integration treaty is a optional approach to resolve the conflict. It is impossible to enter into a treaty only containing the competition law, the competition law exists usually in the treaty together with trade regulation, so the competition law in regional treaty is called territorial competition law for the sake of the consistency of the competition name. Before explaining the content of competition law in the regional treaty, this chapter first analyses the theoretical and practical feasibility of the entering of the regional treaty. The regional integration not only can realizes the liberalization of trade preventing the trade barrier from being replaced by private restrictive conduct, but also aims to the integration of the market. The integral market prohibits the all restrictive conduct including export cartel, and makes the regulation of export cartel in regional treaty possible. Regulating the export cartel by regional integration treaty can unify the export market and import market into a single market, which can restore the dialogue between law and economics and make the law give a whole legal judgment to the complete effect of the economic conduct. In practice, the southern American common market of regional treaty besides the EU provides uniform competition norms prohibiting the restrictive competition conduct including export cartel.To analyze properly the kind and contents of the treaty concluded by our nation, it is necessary to understand our nation industrial competitive power, which is analyzed by employing the theory of industrial organization. It shows that the added value of the export product of our nation is not high and the competitive power is increasingly decreasing in the traditional cost advantage. We have to enhance the competitive position only through the advantage of product differentiation by the technology innovation.To enhance the competitive power of our nation, we must implement the policy of the upgrading of industrial structure and the product optimization. Combined with the market economy, which is given to the fundamental role in our economic system, taking advantage of the abroad competition resulting from the opening policy and the thriving regional treaty, the market revolution of our country can be achieved by entering into the integrative treaty with individual nation having the industry competition power, so that the related industry in our nation, which cannot be reformed by our internal market and which will not affect our country security and social stability, can be upgraded. In turn, comprehensive regional integrity can be achieved in the proper time to enhance in whole the competition power of the industry of our nation. This integral regional agreement requires to enforce severely the regulation of competition law, avoiding the problem arising from the unilateral regulation of competition law. While the bilateral treaty is concluded, the prohibit rule is applied uniformly to the export cartel on the premise of the classification of export cartel.The jurisdiction of the uniformly prohibited restrictive conduct including export cartel is empowered to the export nation, while the jurisdiction of the restrictive conduct which is still disputed and can not be got the uniform attitude is granted to the import country by the effect principle.