ABSTRACT
Extra-territoriality concerns the extent to which competition laws can be applied and enforced outside the specific territory of their competence. For instance, can UK competition law be applied to an agreement between companies based in America, or can Community law be applied in respect of a merger between a Japanese company and an American company? The reason for the significance of extra-territoriality in competition law is the potential for effects on international trade, or another economic area, as a result of competition violations. This potential has increased in recent years due to enhanced globalisation of markets. For instance, there may be a production cartel based in State A which artificially increases the supply price of the product to State or economic area B, thereby affecting its economic interests. As a result, State B may decide to apply its competition laws to the participating companies and impose fines. This issue is controversial as it implies a breach of territorial sovereignty of State A. On the other hand, many systems of competition law, which are applicable to anticompetitive action which is harmful within a State or which affects the economy of a State, make no provision for conduct which produces effects only outside the State’s territory. An example of this would be the grant of a competition law exemption to an export cartel.
