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Jitendra Jain
Harmonization of
International Competition Laws
Pros and Cons
Copyright © 2012. Diplomica Verlag. All rights reserved.
Anchor Academic Publishing

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Jitendra Jain
Harmonization of International Competition Laws: Pros and Cons
ISBN: 978-3-95489-543-4
Fabrication: Anchor Academic Publishing, an Imprint of Diplomica® Verlag GmbH,
Hamburg, 2013
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Index
Executive Summary 1
1 Antitrust or Competition Policy: Magna Carta of free enterprise 4

1.1 Evolution of Antitrust Regime:Antitrust 1.0,
Antitrust 2.0 & Antitrust 3.0 4
1.2 The Great Antitrust Paradigm Shift 10
1.3 Contemporary Antitrust World 12
1.4 Aims of Competition Policy 13
1.5 Pillars of Antitrust Mechanism: 16
The Efficiency Factor & The Fairness Factor
1.6 An Important Task: Create perfect blend of efficiency
and fairness 18
1.7 An Overview of Antitrust Regulation of various countries 19
1.8 In a Nutshell 23
2 Global Markets need Global Governance 23

2.1 Puzzle: Whether there is need for unifying international competition
policy ? 23
2.2 Need for Global Competition Laws 24
2.3 Enforcement Dilemma: Domestic Policies and Global Market 27
2.4 Need for Unifying Global Competition Policy 28
2.5 Need for International Dispute Settlement Mechanism 29
3 Benefits of unifying Antitrust Regulations 31

3.1 Transaction Cost 31
3.2 Ready availability of Expertise 31
3.3 Maximization of Consumer Welfare 32
3.4 Maximization of Global Welfare 33
3.5 Efficient Allocation of World Resources 34
3.6 Harmonization leads to increment in Productivity 34
3.7 Collective Efficiency vs. Collective Inefficiency 35
4 Unifying Competition laws: Areas of Harmonization 36

4.1 Unifying Substantive Regulations 36
4.2 Unifying Procedural Aspects 37

4.3 Unifying Level of Enforcement 38
5 Limitations of Harmonization 38
5.1 Political Reasons 38
5.2 Social Areas 39
5.3 Other Reasons 39
6 Conflict Areas 41
6.1 Conceptual Discord 41
6.2 National Welfare vs. Global Welfare 42
6.3 Economic Structure of Countries 43
6.4 Erosion of National Autonomy 44
6.5 Intergovernmental Disputes 45
6.6 Spillover Effects 45
6.7 Extending beyond Nation’s Jurisdiction 46
6.8 Enforcement Mechanism 49
6.9 Jurisdiction conflicts and Confusion 49
7 Other Modalities of Cooperation 51

7.1 Unilateral Approach 51
7.2 Bilateral form of Cooperation 52
7.3 Mutual Legal Assistance Treaty Agreements (MLATs) 57
7.4 Multilateral form of Cooperation 58
8 Various Initiatives 61
8.1 International Trade Organization (ITO) 61
8.2 General Agreement of Trade Tariff (GATT) 61
8.3 Organization for Economic Co-operation
and Development (OECD) 63
8.4 At EU level 63
8.5 The UN Set 65
8.6 World Trade Organization (WTO) 66
8.7 International Competition Network (ICN) 67
9 Concluding Remarks 71
9.1 The Mystery of Antitrust 4.0 71
9.2 Their Remarks 72
9.3 My Observations 75
Appendix I to VIII 78
References 86
Executive Summary
Since the failure of the Havana Charter in 1947 till the success of the combined efforts of
leading antitrust authorities against mighty Microsoft, the antitrust regime has witnessed
several ups and downs. Auf jeden Fall the journey was not an easy one. Moreover now
antitrust regime is standing at international crossroads and is wondering about its future
direction.1 Today, at this crucial juncture the antitrust world is confronted with several
dilemmas simultaneously. Choices are to be made between national welfare or global
welfare, national autonomy or global regulations, the efficiency factor or the fairness
view, national champions or global champions, collective efficiency or collective ineffi-
ciency, WTO or ICN, the US model or the EU model and so on.
It is widely believed among experts that to overcome these dilemmas, the world needs
some truly unified international antitrust framework, which would enable the internation-
al community to achieve optimal product mix incorporating the best from all options and
through such optimal product mix the global community can enjoy to a large extent ad-
vantages that competition policy has to offer. In this direction I have examined the feasi-
bility and viability of unifying international competition policy in this work. Additional-
ly, as the title suggests I have listed out advantages and disadvantages of such moves.
In the beginning I have dealt with evolution of competition policy since its origin in a
nutshell. My aim is to explain the dynamic character of competition policy. I have also
described the gradual change that has occurred in the ideology of competition policy over
last 100 years. Primarily, Competition policy addresses economic issues and hence de-
pends on economic structure of a country. After giving a short history of competition pol-
icy, I have formally started with the introduction of competition policy. Economic devel-
opment in today’s world is unevenly distributed and accordingly the aims and objectives
of antitrust regime of individual nations also differ. With the help of various case laws
and other incidental literature I have made an attempt to illustrate how these differences
are influenced by time, places and circumstances. A thorough understanding of these dif-
1
See Antonio F. Perez, P. 1
1
ferences is according to me, essential to understand reasons for differences in antitrust
area worldwide. Only after diagnosis of the problem area, one can find better remedies.
Toward the end of chapter 1, I have elaborated on two basic foundation concept of com-
petition policy, namely the efficiency and the fairness. Thereafter, I list out concrete aims
and objectives of some contemporary antitrust regime of some of the major economies.
Chapter 2 begins with analysis of the major question; whether there is need for unifying
international competition policy? After describing global scenario in brief, I proceed
with discussion on global remedies such as: global governance, global laws, global com-
petition policy and so on. I have also discussed various dilemmas faced by antitrust re-
gime and also a vacuum created by absence of a globally valid competition policy.
Assuming that the world succeeds in getting a unified antitrust regime, in chapter 3 I have
listed out the advantages that can be enjoyed under such a scenario, such as reduction in
transaction cost, increment in consumer welfare, efficient allocation of resources etc. Ad-
vantages of a unified antitrust policy are immense. Hence I admit the list is essentially not
an exhaustive one.
Chapter 4 deals with areas of harmonization. Effective unification of international com-

petition policy call for coordinated efforts and requires substantial changes in domestic
rules and regulation. In addition to substantial changes in domestic legal provisions and
procedural requirements, harmonization also calls for effective domestic enforcement.
Prima facie antitrust regime is part of economic policy. However very often governments
around the world use antitrust regulation as an instrument to realize social goals, achieve
political targets and other aims. These factors cause distortion in effectiveness of anti-
trust provisions. As the social and political circumstances around the world substantially
differ, national governments are forced to have country specific antitrust remedies. This
adds to heterogeneity of antitrust regime worldwide and consequently renders the task of
unification of international competition policy almost impossible. In chapter 5 I have
dealt with these aspects very briefly.
2
Plurality of economic, political, social and other circumstances around the world have
strong influence on national antitrust policies and also contribute to contradictions and
conflicts. “(…) efforts to advance harmonization or “convergence” of national rules reg-
ulating competition can reach their full potential only if two sets of preconditions—
economic/commercial and political—exist to support such harmonization or conver-
gence.”2 In chapter 6 I have dealt with possible conflict areas. At times due to strong con-
flicts, harmonization seems impossible. Hence extra efforts on the part of authorities are
needed to deal effectively with these conflict areas.
At present, feasibility of a unified international competition policy is under doubt. How-

ever a small beginning in form of cooperation among antitrust authorities could go a long
way in harmonization process. Bilateral agreements between the EU and the US are good
examples. In chapter 7 I have dealt with other possible modalities of cooperation between
antitrust authorities, namely unilateral approach, bilateral agreements and multilateral
forum.
Efforts for harmonization of competition laws began as early as in 1948. Till date there
are several binding and non-binding arrangements made in the direction of harmoniza-
tion. The WTO and the EU for effective coordination in antitrust area have launched re-
cently new initiatives. International Competition Network, a forum for active interaction
among antitrust officials, even though non-binding in nature is doing considerably good
work. I believe such confidence building initiatives among nations would help in arriving
at some amicable solutions, agreeable to all nations. Chapter 8 focuses on various such
initiatives taken in the direction of harmonization.
In the concluding chapter, I elaborate further on need of having a unified antitrust regime
under a contemporary scenario. Recommendations and views of experts are also present-
ed. At the end I discuss my views about feasibility of having a truly unified antitrust re-
gime in foreseeable future and other possible alternative measures that might help in
achieving harmonization in future.
2
See Timothy M. Reif and Gary E. Bacher, P. 1
3
1 Antitrust or Competition Policy: Magna Carta of free enterprise
The Apex Court of United States in a very rare occasion has honored antitrust framework
or competition policy with near constitutional status. The Court described Competition
Policy as “ Magna Carta of free enterprise” and “ as important to the preservation of eco-
nomic freedom and our free enterprise system as the Bill of Rights is to the protection of
our fundamental personal freedom”.3 Although, such comparison appears slightly rheto-
ric, the importance and effectiveness of antitrust framework in protecting consumers
against anticompetitive actions and thereby ensuring social welfare cannot be under-
mined. Recent successes of antitrust authorities against software juggernaut Microsoft
and against other international cartels such as vitamin cartel are some of the shining ex-
amples. “Competition is a public good and society cannot expect the victims of anticom-
petitive conduct to protect themselves.”4
In this section, I briefly deal with evolution of competition policy or antitrust regime as
called in the US5, since enactment of first antitrust regulation in Canada in 1889. Thereaf-
ter, I explain some basic fundamental concepts of competition policy. In the last section
of this chapter various aims and objectives of competition policy are dealt with.
1.1 Evolution of Antitrust Regime: Antitrust 1.0, Antitrust 2.0 & An-
titrust 3.0
The first antitrust regulation was enacted in Canada in 1889. A year later, celebrated anti-
trust regulation Sherman Act was enacted in US. In US, antitrust laws are usually de-
scribed in general terms and hence they provide possibility for several different interpre-
tations. To mention a few, Sherman Act prohibits agreement in restraint of trade (Article
1) and monopolization (Article 2), FTC Act prohibits unfair practices and Clayton Act
(Article 7) goes against acquisitions likely to lessen competition substantially or tend to
3
See United States vs. Topco Associates, Inc., 405 U.S. 596 (1972)
4
See Jonathan Baker, 2003, P. 1
5
The terms “antitrust regime” and “competition policy” are by and large synonymous. However the term
“competition policy” includes aspects of state aid, industrial subsidies etc.. In the US these aspects form
part of “industrial policy”. See Robert Feinberg, P. 1
4
create a monopoly. In the absence of further explanations these statues give more liberty
to courts in interpretations. On various occasions courts have taken liberty to interpret the
laws according to prevailing political and social circumstances. These decisions are
strongly influenced by ideologies and power of their proponents, at the prevailing time.
As a consequence it appears that these statues can pursue a plethora of perspectives and
goals.
Since enactment of Sherman Act in 1890, there have been paradigm shift in ideology and
thinking of antitrust experts. In later part of this chapter I deal with these aspects. History
of antitrust regime could be easily divided in three distinctive phases, namely;6
- Antitrust 1.0
- Antitrust 2.0
- Antitrust 3.0
Antitrust 1.0
Antitrust 1.0 era began with the enactment of Sherman Act and this era can also be de-
scribed as the Classical Era.7 Forefathers of the Sherman Act and presiding Judges, who
decided early antitrust matters in the US under the provisions of this Act, did not differ-
entiate between classical economic values and political values. For them these values
were closely connected.8 Hence in those days the Sherman Act was more or less equated
with social legislations, introduced only for betterment of society in general. By and
large, the efficiency aspects were ignored.
Justice Peckham differentiated between ordinary contracts – ‘a lease or purchase by a

farmer, manufacturer, or merchant of an additional farm, manufactory or shop.... the sale
of goodwill of a business with an accompanying agreement not to engage in similar busi-
ness…[or an] agreement entered into for the purpose of promoting the legitimate business
of an individual or corporation’ and agreement in restraint of trade under the Sherman
6
See Jonathan B. Baker, 2001, P. 2
7
Id., P. 3
8
5
Act.9 According to him “ The ‘corporate aggrandizement’ of trusts and combinations is
‘against the public interest’ even if generates cost reductions that lower price, because ‘it
is power of the combination to raise [price]’ and the trust may ‘driv[e] out of business the
small dealers and worthy men whose lives have been spent [in that line of commerce].’10
Originally the Sherman Act was more understood as an instrument to protect economic
liberty, security of property and competitive process, free from artificial interference.11
Hence, maintaining individual business opportunity, economic efficiency, national pros-
perity, justice, and social harmony were some of the original aims of competition policy.
Needless to mention, that these aims were primarily guided by the fairness principle.
Slowly and gradually experts of antitrust regime realized that the economy was changing.
Innovations of new technologies have enabled industry to produce more through automa-
tion. Firms are taking advantage of economies of scale and economies of scope.12 Induc-
tion of railways and other forms of transport facilitated procurement of raw materials
from remote areas at a cheaper cost. Geographical reach for finished products also ex-
panded substantially.
Wide geographical reach, technological innovation and efficient use of modes of

transport led to emergence of large corporations and rise in market concentration. Many
observer felt need for more enforcement of antitrust regulations as market concentration
was rising. They realized that the growth of large corporations was inevitable but sought
to regulate them simultaneously. President Theodore Roosevelt promoted Trust busting
and in 1914 Federal Trade Commission (FTC) was established.13 FTC an independent
agency was entrusted with the task to regulate unfair trade practices with active coopera-
tion with Department of Justice, a government agency responsible for enforcement of an-
titrust laws in US at the federal level.14 Another group had their reservations concerning
antitrust. They thought that antitrust regime was creating unnecessary obstacle in the way
9
See United States vs. Joint Traffic Association, 171 U.S. 505 (1898)
10
See United States vs. Trans-Missouri Freight Association, 166 U.S. 290 (1987)
11
12
Economies of scale- reduction in per unit cost of production due to large production; economies of
scope-reduction in per unit cost of production due (spare) capacity utilization
13
6
of progress by blocking growth of large and efficient producers. Antitrust experts took
positive note of such reservations and willingly accommodated them also. Subsequently,
in 1911 in Standard Oil decision a compromise was found, which incorporated both per-
spectives.
The Standard Oil Case (1911)15
In this case the Apex Court upheld the use of Sherman Act to break the monopoly and
found that conduct of the Standard Oil has witnessed a “ a purpose to maintain the domi-
nancy over the oil industry, not as a result of normal methods of industrial combination,
but by new means of combination which were resorted to in order that greater power
might be added had normal methods been followed…” This speaking order actually ben-
efited large-scale enterprises in the long run. This judgment established a new legal pa-
rameter: the rule of reason. This decision made clear that Sherman Act prohibited only
unreasonable restraints of trade.
Proponents of antitrust were disappointed and this led to the beginning of a new political
debate. Eventually, this led to establishment of FTC and a new anti-merger law namely
Clayton Act was enacted in 1914. The Clayton Act explicitly prohibits practices, such as
price discrimination, which lessens competition and interlocking directorates among
competing firms.16
Appalachian Coals vs. United States: The New Deal17
Again during the Great Depression of 30’s, classical antitrust ideology came under fire.
Ability of unregulated marketplace to serve public welfare was questioned. This thought
became transparent in Supreme Court decision in the New Deal, which permitted 137
coal producers to appoint an exclusive selling agent so as to counter and effectively deal
14
See Massimo Motta, P. 6
15
See The Standard Oil Case, 221 US 1, 75 (1911)
16
17
See Appalachian Coals vs. United States, 288 U.S. 344 (1933)
7
with ‘destructive trade practices’ that drove down price. “ The Court found that this
agreement was not unlawful since it was to be considered as a reasonable response to
protect the market from destructive practices.”18 Several years later, as the circumstances
changed; around the beginning of the structural era, the Supreme Court effectively over-
ruled it. In 1938 Thurman Arnold was appointed as head of Antitrust Division of Justice
Department. During his tenure as the head, he sought to increase the impact of the Sher-
man Act and conducted various new investigations and reached new enforcement levels
through consent settlement. Under his leadership the antitrust division of DOJ “revealed
numerous examples where monopoly and participation in international cartels had re-
duced the US military and economic capability for war.”19
Antitrust 2.0
Antitrust 2.0 era began around the middle of the 20th Century and is also known as the
Structural Era.20 Journey of antitrust regime from World War II till mid seventies could
be understood as a phase of Thurman Arnold’s approach.21 Without caring much about
ongoing political debate, his approach simply suggested a forward way for antitrust juris-
prudence. Antitrust experts during this phase had very often reservations about the con-
duct of large corporations. It was widely believed that large corporations were acting in
public interest. Industrial Giants were not only seen as threats to consumers and other
buyers, but also were considered as menace to small business, restricting their potential to
compete.22
18
19
See Denys Gribbin, P. 143
20
21
Id., P. 8
22
Id., P. 9
8
Now I narrate some important judicial landmarks of Antitrust 2.0:
Unites States vs. Von’s Grocery Company23

Antitrust laws concluded that mergers among rivals are detrimental to competition.
United States vs. Arnold Schwinn & Company24

Exclusive distribution in territories was declared illegal per se.
In 1968 merger guidelines were issued by the Department of Justice under leadership of
lawyer-economist Donald Turner to counter harmful effects of high and rising market
concentration.
Antirust authorities initiated monopolization proceeding against IBM, AT&T, Xerox, the
breakfast cereal industry, the rubber industry and the oil industry.25 Such proceedings
were by and large unsuccessful. Observers were surprised by such large failures of these
antitrust actions. Many felt that prevailing circumstances played a decisive role. These
cases commenced during structural era but many ended after courts had begun accepting
Chicago School perspectives.26
Antitrust 3.0
Antitrust 3.0 also known as the Chicago School Perspective Era27 began around last quar-
ter of the 20th Century. There was a revolution of ideas. These ideas were by and large
developed and dominated by thinkers and writers, economists and lawyers affiliated to
University of Chicago. A renowned Chicago school economist George Stigler, who later
won the Nobel Prize in economics in an article published in 1964, wrote that it was not
appropriate to presume that the firms in any market, even when they are few in number,
23
384 U.S. 270 (1966)
24
388 U.S. 365 (1967)
25
See Jonathan B. Baker, 2001, P. 10. As mentioned such proceedings were by and large unsuccessful.
However as an exception substantial relief was obtained against AT&T and Xerox.
26
27
Id., P. 11
9
would find a way to raise the price above the competition level.28 In support of his views
he also offered convincing evidences in that article. Proponents of the Chicago school
also expressed their reservations about a single firm with high market share necessarily
exercising market power. In defense of their opinion, they put forward another argument
that threat of expansion by fringe sellers and potential competition from new entrants
kept prices low.
New merger guidelines issued by Assistant Attorney General William Baxter was a clear
departure from the 1968 guidelines. These guidelines incorporated new range of features
including mergers’ likely competitive effects. During the Chicago School Era there was
radical transformation of several other doctrines.
Telex Corporation vs. IBM Corporation29

Held: Agreement among rivals is not anti-competitive per se.
Continental TV Inc. vs. GTE Sylvania Inc.30

Per se prohibition of exclusive distribution territories was overruled.
Big was not necessarily seen as an evil.
However, some experts believe that with the induction of Reagan administration in 1988,
the Chicago revolution was by and large complete. 31
1.2 The Great Antitrust Paradigm Shift
During its journey of last 100 years, antitrust regime has witnessed frequent paradigm
shift in its ideology. Ideologically, it has moved away from the fairness factor and got
closer to the efficiency factor. In the beginning, antitrust authorities were worried about
28
Id., P. 11
29
510 F.2d 894(10th Cir.),cert.dism’d, 423 U.S. 802 (1975)
30
433 U.S. 36 (1977)
10
social issues such as protection of small participants form large entities, equitable distri-
bution of wealth, protection to vulnerable sections of society and so on. Later on, with
emergence of new technology, large-scale production facilities and efficient transport and
communication systems, wide growth of marketplace and urge for more production at
lesser cost, “efficiency” factor started playing crucial role in decisions of antitrust author-
ities. Through efficiency, production cost per unit can be reduced and that could lead to
efficient allocation of resources and increase in consumer welfare. In a nutshell, at least
now, in some leading economies efficiency is preferred over fairness.
Reasons for Paradigm Shift
A closer look at history of antitrust regime makes it clear that there have been a frequent
and radical changes in aims, objectives, and purposes of competition policy. Policy fram-
ers were acting according to ever changing economic environment. It vindicates the stand
that antitrust framework is dynamic and not static. Antitrust framework moulds itself ac-
cording to the need of the time and demand of policy makers. Now I would like to narrate
various reasons and circumstances as listed by Jonathan Baker that compelled such para-
digm shift in antitrust framework over last 100 years.32
-Developments in the economy
Industrialization and thereafter-great depression of 30s had strong influence on economy

and business environment. During industrialization phase general sentiment was to pro-
tect small players from large organizations. Hence, antitrust authorities were guided by
the fairness factor. During The Great Depression several distinctive and rare questions
were raised. Creating an environment, which is conducive for survival of business entities
was the priority. During this period several agreements, which would under normal cir-
cumstances be termed as anticompetitive were given the green signal. “ Something simi-
31
32
11
lar may be happening today, as the antitrust laws come to grip with the information revo-
lution.”33
Proactive approach of political system
Throughout history of antitrust regime, the prevailing Political system had a proactive
approach in competition policy matters. Political leaders moulded themselves, according
to the need of society and were by and large receptive to changing circumstances. To
mention one, during The Great Depression, political leaders acted swiftly and came out
with the new deal to overcome prevailing economic crisis.
Influence of Think tank
Change in economic policy, thinking or parameters of experts or to be precise of group of

experts affiliated to same institute, or otherwise also led to paradigm shift in aims and
objectives of competition policy. For example, Edward Chamberlin’s research on mo-
nopolistic competition designed antitrust’s structural era.34 Thereafter gurus belonging to
Chicago School successfully challenged the antitrust model designed in a structural era.
It were the initiatives from scholars belonging to the Chicago school that led to an in-
crease in importance of efficiency factor.
1.3 Contemporary Antitrust World
Antitrust framework followed by large economies, such as the US antitrust framework,

The EU competition policy framework and the Japanese competition policy framework,
rule contemporary international antitrust arena. By and large, the US antitrust framework
is considered as Musterbeispiel. Recent trends indicate convergence of the EU competi-
33
Id., P. 17
34
12
tion policy toward the US antitrust framework e.g. SSNIP test.35 Some scholars are of the
opinion that “One size does not fit all”. Ajit Singh in his G-24 discussion paper lays em-
phasis on suitability of the Japanese antitrust framework for developing economies.36
1.4 Aims of Competition Policy
Massimo Motta gave the formal definition of competition policy as “ the set of policies
and laws which ensure that competition in the marketplace is not restricted in such a way
as to reduce economic welfare”37
After discussing evolution and describing definition of competition policy, now I proceed
to elaborate on various objectives of antitrust regime. National competition authorities
very often formulate antitrust provision in such a manner, so as to achieve desired aims
and objectives. Aims and objectives are strongly influenced by socio-economic and polit-
ical considerations. There may be some contradiction between welfare objectives and
other objectives.38
Objectives of Antitrust Regulations:
Welfare Maximization
“ Welfare is given by total Surplus, that is the sum of consumer surplus and producer
surplus.”39 Consumer surplus is the difference between the price of goods or services and
his valuation (i.e. his willingness to pay). Consumer surplus is aggregate of surplus of all
consumers. Producer surplus is aggregate of profits earned by all producers in a given
industry. Maximization of total surplus is one of the main objectives of antitrust frame-
35
See Justus Haucap et al, P. 320
36
See Ajit Singh, P. vii
37
See Massimo Motta, P. xvii
38
See Massimo Motta, P.17
39
Id., P.18
13
work. Concept of total surplus overlooks the issue of distribution of income between con-
sumers and producers.40 Hence it must be distinctly understood that antitrust regulation
doest not per se strive for socio-political causes such as reduction in inequalities of in-
come and wealth among different sections of society.
Consumer Welfare
Prima facie reduction in consumer welfare leads to reduction in total welfare. But very
often there are exceptions. To mention perfect price discrimination by a monopolist (in
circumstances where all consumers are forced to pay exactly equal to their willingness to
pay) maximizes welfare but is detrimental to the interest of consumers.41 Primarily, aim
of the authorities is to maximize total welfare and hence it is difficult to say that maximi-
zation of consumer welfare is always the ultimate objective of competition authorities.
However, regulatory authorities generally accept efficiency defense “provided that it is to
consumer advantage”. Such provisions vindicate the stand that consumer welfare is one
of the important objectives of competition policy.42 Revised US merger guidelines state, “
the agency considers whether cognizable efficiencies likely would be sufficient to reverse
the merger’s potential to harm consumers in the relevant market, e. g. by preventing price
increases in that market”.43 Hence, as far as mergers are concerned, it seems that US anti-
trust framework favors consumer welfare. However competition authorities in several
other countries, like Canada, Australia and New Zealand go for total welfare standard.44
Such discrepancies regarding purposes of competition policy create hindrance in devising

a globally valid competition policy.
40
Id., P. 18
41
See Massimo Motta, P.19
42
Id., P. 19
43
Id., P. 20
44
Id., P. 20
14
Protection of Small Entities
Protection of small firms is one of the original objectives of antitrust regulations. In fact
anti-trust laws were introduced in the US due to grievance of the small entities against the
large entities.45 “Farmers and small businesses had enough political force and public
46
sympathy to lead to creation of ant-trust laws in many US states.” Giving benefits to
small firms so as to balance the level of playing field is in coherence with objective of
economic welfare. However, such measures should be sparingly used. Such measures
should in effect enhance competitive capabilities of smaller firm, so that they can face the
challenges imposed by larger firms successfully. It must be distinctly understood that ar-
tificially helping small firms to survive not operating at efficient scale of production is in
contradiction with economic welfare objective.47 Such attitude would encourage ineffi-
cient allocation of resources and therefore would go against fundamentals of competition
policy, i.e. the efficiency factor and fairness factor.
Promoting Market Integration
As per treaty, the EU competition policy aims for promotion of market integration. This
is enforced by the EC and also endorsed by judiciary. This objective may be politically
correct but might not be in conformity with parameters of economic welfare.48 EC com-
petition laws de jure prohibit price discrimination across national borders. Uniform pric-
ing policy across borders may not necessarily lead to increase in economic welfare, be-
cause income standards in member countries differ substantially and hence purchasing
power. A lot of other measures need to be taken to make market integration more benefi-
cial.
45
Ambit of term small entities does not include only small businessmen who suffer from cost disad-
vantages due to small operations, but also includes wholesalers, manufacturer’s agent and other middlemen
who face threat of being driven out of business as the large producers move forward and the large retailers
move backward into wholesaling. For further details see Massimo Motta, P. 72
46
47
48
Id., P. 23
15
Economic Freedom
Ensuring economic freedom might be also objective of competition policy. This is proba-
bly the main rationale behind competition laws in Germany.49 Sometimes there may oc-
cur friction between this objective and objective of economic efficiency. To mention,
sometimes efficiency defense in agreement such as retail price maintenance are allowed.
But these arrangements are per se against economic freedom of retailers.50
After describing fundamentals, evolution and various objectives of competition policy,

now I proceed to deal with basic elements of antirust regime, which are core to all com-
petition policy frameworks irrespective of their national or international character name-
ly, the efficiency and the fairness. These core concepts can offer us some help in unifying
international competition policy.51 In this chapter I also describe some conflict areas
among national policies simultaneously.
1.5 Pillars of Antitrust Mechanism: The Efficiency Factor & The

Fairness Factor
“Surprisingly there appears to be no obvious relationship between competition and com-

petition policy.”52 There are empirical evidences to prove that many countries success-
fully maintained competition in their market despite absence of a codified competition
policy. Hence the question arises; why do we need competition policy and what is task
of antitrust regime? Prime task of antitrust regime is to ensure efficiency and fairness.
Based on these two pillars, efficiency and fairness, every country has developed conven-
tions or rules of conduct for firms. I admit that all countries do not have formally codified
competition laws but all countries have informal competition convention.53 And more and
more countries are formulating codified competition laws.54 (See Appendix I: Countries
49
Id., P. 24
50
Id., P. 24
51
See Edward M. Graham and J. David Richardson, P.8
52
See Ajit Singh, P. 7
53
See Edward M. Graham and J. David Richardson, P. 7
54
The number of countries with codified competition laws has increased.
16
adopting formal Antitrust Regime)) Almost all competition policies are designed to en-
sure that efficiency and fairness prevails. When there is a conflict between the efficiency
and the fairness, the objective is to evaluate and trade-off between them. Experts seek a
perfect mix of the efficiency and the fairness.
The Efficiency Factor
“ Die Wettbewerbspolitik zielt in erster Linie darauf ab, die Effizienz der Wirtschaft zu
sichern.”55 The term efficiency could be understood as “getting most out of least re-
sources”. Production of desired goods at least cost is characteristic of an efficient market.
Efficiency is further classified into static efficiency and dynamic efficiency. Even though
the term efficiency is very clear in its meaning and purpose for competition policy matter,
different treatment is given to efficiency factor in different countries. Countries pursuing
static efficiency may regulate cooperative high-technology activities more strictly. Coun-
tries pursuing dynamic efficiency may subsidize innovations.
One more critical area: What might be efficient for one country might not be efficient for
another country. Export cartels and monopoly marketing brand are some such exam-
ples.56 Very often such activities are carried under protection from respective govern-
ments. “Most nations explicitly exempt export associations from the prohibitions of their
competition policy laws, sometimes (as in the United States) insisting that competition
reducing spillover effects be avoided in domestic markets, sometimes not.”57 Such atti-
tude of national government provides protection to those establishments, who are global-
ly inefficient. Needless to mention, this leads to inefficient allocation of scarce global re-
sources. If all countries taken together collectively pursue such harmful goals, the World
will be full of collective inefficiencies. (Discussed in detail in chapter 4)
55
See Manfred Neumann, P. 229
56
57
See F. M. Scherer, P. 46
17
The Fairness Factor
The meaning of term fairness is culturally distinctive. To mention in United States equali-
ty of opportunities or free entry into business is often associated with fairness. In other
countries reward for loyalty or favored activity is associated with fairness. In Japan, loy-
alty toward traditional supplier is considered “just and fair”. In several countries, creating
opportunity for weaker section of society is considered fair.58 Several countries under
pretext of fairness formulate their policies in a manner so as to protect vulnerable sectors
of economy (these sectors are not opened for competition from outside). Sometimes extra
incentives are provided to several sectors, when large chunks of population are dependent
on these sectors. “ Cross-country conflicts in competition policy are increasing because
concepts of fairness often differ.”59 And precisely these conflicts are obstacles in creation
of a unified international competition policy.
1.6 An Important Task: Create perfect blend of efficiency and

fairness
Prima facie efficiency and fairness like oil and water do not mix easily.60 Under normal
circumstances efficiency cannot be achieved without some sacrifice of fairness and vice
versa. Inherent conflicts among these objectives surface inter as well as intra countries or
economies. Hence, creation of regulatory instrument, which has perfect mix of efficiency
and fairness, is a Herculean task.
Within countries, conflicts might surface when policies giving push to efficiency of some
participants appear unfair to others. Merger between firms (say two large companies hav-
ing different place of origins) is normally efficient for insiders at the cost of unfair disad-
vantage for outsiders. Recent merger of steel giants Mittal and Arcelor might have creat-
58
The Competition Act, South Africa, 1998
59
See Edward M. Graham and J. David Richardson, P.10
60
18
ed “European Champion”. But creation of such giants might be harmful to the other play-
ers from other parts of the World.
1.7 An Overview of Antitrust Regulation of various countries
During the past hundred years since enactment of first antitrust regulation in 1889 in
Canada61, there has been significant paradigm shift in the aims and objectives of competi-
tion policy. Prime facie protection of competition at market place is given utmost im-
portance by antitrust advocates. As the following statement issued by World Bank and
OECD jointly, says:62
“ While many objectives have been ascribed to competition policy during the past
hundred years, certain major themes stand out. The most common of these objectives cit-
ed is the maintenance of the competitive process or of free competition, or the protection
or promotion of effective competition.”
This definition also vindicates the stand that efficiency and fairness has been seen tradi-
tionally as guiding parameters of competition policy in many countries. Preamble of the
competition law of India enacted in 1998 mentions about aims of preventing practices
that have negative impact on competition, promoting and sustaining competition in mar-
kets, protecting the interest of consumers and ensuring freedom of trade carried on by
other participants in markets in India. 63 Here I would like to mention that objectives of
national competition polices are influenced by socio-political and economic factors pre-
vailing in respective countries and this makes the task of unifying international competi-
tion policy more difficult. As Frank Fishwick rightly says, ” Economic policies cannot be
divorced from political and social philosophies – nor should they be.”64 Alexis Jacque-
min also vindicates these views. He says, “ Competition policy varies from country to
61
See Joan-Ramon Borrell, P. 1
62
World Bank-OECD 1997, P.2; for further details see Julian L. Clarke and Simon J. Evenett, P. 7
63
History of antitrust legislation in India to promote fair market dates back to 1969, with enactment of Mo-
nopolistic and Restrictive Trade Practices Act. Recently a new legislation has been introduced in 2002 to
promote competition at market place based on efficiency and fairness parameter.
64
See Frank Fishwick, P. 175
19
country, and in the same country, from decade to decade, reflecting changes in economic
and social conditions as well as reversal in academic thought.”65 Fair enough. But there
are some basic parameters, such as efficiency and fairness, which are incorporated in
most of the competition policies. To mention, Posner says that fundamental objective of
US antitrust law is the protection of competition and efficiency.66
Recently scholars are talking about importance of dynamic efficiency as an objective of

competition policy. To mention, Singh recommends that competition policy in develop-
ing countries should contribute to overall development of an economy. He puts emphasis
on dynamic efficiency, “ the need to emphasis dynamic rather than static efficiency as the
main purpose of competition policy.”67
Dynamic nature of markets, striking speed of information and innovation now call for
reassessment of importance given to static efficiency as an objective of competition poli-
cy68. Hence ensuring an environment that is conducive to innovation and dynamic effi-
ciency is also an important purpose of competition policy.
Competition laws in Germany are strongly influenced by agenda of the neo-liberal

school69 and its demand for a strict codified legal system for economy. Additionally there
is also an influence of American antitrust policy, which is regarded as most progressive
and rigorous. These influences make German competition policy, especially least with
respect to mergers and monopolies, the most rigorous of all market economies.70
65
See Alexis Jacquemin, 1990, P. 2
66
See Julian L. Clarke and Simon J. Evenett, P. 8
67
See Ajit Singh, 2002, P.22
68
69
See Erhard Kantzenbach, P. 10 Neo-liberal School – Contrary to classical liberalists proponent of neo-
liberalism do not believe in a laissez-faire economy. They also advocate for strong state. According to them
state should neither participate nor intervene in competitive process of economy. But state should formulate
rules and effectively enforce them. Rules should be formulated in such a way that in addition to self-
interest of participants, they should serve public interest also. Neo-liberalists put strong emphasis on order-
ing function of the state. And hence they are also called Ordo -liberals.
70
See Erhard Kantzenbach, P.25
20
As I have mentioned earlier, competition policies in several countries are strongly influ-
enced by socio-economic and political considerations. Competition laws in South Africa
are designed in such a manner, so as to achieve socio-economic equality and develop-
ment in addition to economic efficiency. The Competition Act of 1998 in South Africa
mentions:
“ The purpose of this act is to promote and maintain competition in the Republic in order,
(a) to promote the efficiency, adaptability and development of the economy;
(b) to provide the consumer with competitive prices and choices;
(c) to promote employment and advance the social and economic welfare of South
Africans;
(d) to expand opportunities for South African participation in world markets and rec-
ognize the role of foreign competition in the Republic
(e) to ensure that small and medium sized enterprises have an equitable opportunity
to participate in the economy; and
(f) to promote a greater spread of ownership, in particular to increase the ownership
stakes of historically disadvantaged persons”(Chapter 1, Article 2)71
These examples vindicate the stand that competition laws need not be uniform world
over. National competition policies and national needs are different from global needs.
Competition policies need not be directed toward single objective of promoting efficien-
cy and fairness. Very often these regulations strive for a plethora of objectives and these
objectives are determined according to need, tradition, socio-economic considerations
and the other prevailing circumstances in the country. To mention, traditionally, Germans
opted for system of social market economy. “ In Germany competition policy is
acknowledged as a main part of the so called “Ordnungspolitik” means the formation of
legal framework conditions for a workable economic system, especially for the system of
the social market economy.”72
71
See The Competition Act, South Africa, 1998
72
See Erhard Kantzenbach, P. 1
21
To conclude, one can say that like all other regulations competition policy regulations
also reflect history, culture and need of countries. As a consequence it is dynamic and
constantly changing and also differs among countries.73
1.8 In a Nutshell
Antitrust regime has witnessed various changes in its journey through the last hundred
years. The Efficiency factor and the Fairness factor do have influence on national compe-
tition policies. However, sometimes due to various reasons countries do ignore these pa-
rameters. National competition authorities very often pursue different goals and aims,
according to their needs. “ The goals of competition policy, as well as competition culture
and traditions, differ among jurisdictions. This can be traced back to different citizen
preferences about role of competition and competition policy.”74 Sometimes these goals
are in contradiction with the basic tenets of the competition policy. Such heterogeneous
environment makes task of unification of international competition policy more complex.
73
74
See Oliver Budzinski, 2003, P. 47
22
2. Global Markets need Global Governance
A sudden spurt in trade liberalization, globalization coupled with increase in global take-
overs and mergers has led to the emergence of a global marketplace. “ Ökonomisch be-
trachtet bedeutet Globalisierung vor allem das Zusammenwachsen bisher nationaler und
damit voneinander getrennter Märkte zu übernationalen, häufig weltumspannenden
Märkten.”75 Global marketplace calls for a truly global governance mechanism. Quan-
tum of global commerce of mergers and takeovers have increased fivefold in the past
decade reaching US $ 2.5 trillion in 1998.76 International mergers and takeovers demand
coordination between legal authorities of different nations. Companies are obliged to ob-
tain permission from respective authorities of each country individually. Under these cir-
cumstances demand for a truly global legal system is perfectly justified.
2.1 Puzzle: Whether there is need for unifying international

competition policy?
In their essay “How to Reduce Conflicts over International Antitrust?” Justus Haucap et
al raise an interesting puzzle. They doubt the need for unifying international competition
laws in an integrated world economy. They write that globalization should prima facie
reduce the need for antitrust regime. As more and more segmented markets come togeth-
er, more players will join emerging as a single market and as a consequence intensity of
competition at marketplace should increase. “More players makes markets almost always
more competitive.”77 Empirical evidences suggest that increase in international competi-
tion lead to reduction in Price-Cost margin. Hence globalization per se should foster
competition and reduce need for artificial intervention and supervision. Ajit Singh also
put forward instances where countries were able to ensure considerable competition at
marketplace even without formal codified competition policy.78
75
See Oliver Budzinski and Wolfgang Kerber, 2003, P. 9
76
See Christian Conrad, P. 57
77
See Justus Haucap et al, P.309
78
23
In an integrated world economy economic and commercial activities are no longer con-
fined to national boundaries. Anticompetitive activities of players not only affect domes-
tic consumers and domestic firms, but also might harm foreign customers and firms.79
Additionally the recent rise in number of international hardcore cartels, incidences of
cross border mergers and other forms of cooperation, jurisdictional conflicts and disputes
over extraterritorial application of one’s own laws call for existence of an international
antitrust framework. Emergence of international merger wave has led to creation of big
business giants. “The basis of our competition is threatened by an unprecedented growth
of big business. Continuous strengthening of the competition policy is needed to mini-
mize these defects and dangers.”80 Additionally, “ Increased international interdepend-
ence, often also discussed under headings such as globalization, has also increased poten-
tial for international conflict.”81 Hence there is an urgent need for an internationally valid
antitrust regime. In the forthcoming paragraph and also later in other chapters I have dis-
cussed these issues in detail.
2.2 Need for Global Competition Laws
“National competition law can be defined as the set of rules and disciplines maintained
by governments aiming to counteract attempts to monopolize the market (and thus ensure
that competition is guaranteed), either through agreements between firms (including at-
tempts to create dominant position through merger) that restrict competition or through
unilateral behavior (abuse of a dominant position).”82
79
80
See Corwin D. Edwards, P. 318
81
See Stefan Voigt, 2006, P. 1
24
Illustration: Competition Policy Frameworks
Competition Policy Instruments Objectives

Frameworks
National competition Policy National Competition - Domestic Welfare

- National aims and
Laws
Objectives
- Monitoring market
dominance Nationwide
- National Welfare
- Foster Export Cartels, etc.
Global Competition Policy - Domestic Welfare +
Foreign Welfare
- Global Welfare
? - Monitoring Market
dominance Worldwide
- Curbing International Cartels
- Curbing Export Cartel, etc.
The prime objectives of national competition law are to ensure competition at market-
place and maximization of national welfare. National policy framers also very often use
competition laws as an instrument to achieve social objectives, which ultimately maxim-
izes national welfare. I have discussed them in detail in chapter 1.
National antitrust regulations are designed to achieve national goals and priorities. Pre-
vailing technological environment and liberalization rules and regulations are attracting
global business. As the markets are becoming global, competition problem surpasses
national boundaries. National competition laws are based on framework of national
competition policy and are designed to achieve national objectives. In the above diagram,
I describe various aims and objectives of national as well as global competition policy. I
admit that the list of aims and objectives is not exhaustive. Very often the terms competi-
82
See Bernard Hoekman and Petros C. Mavroidis, P. 4
25
tion laws and competition policy are used as synonyms. However, in above illustration
these terms should be understood in their precise meaning.
It could be observed that existence of vacuum due to absence of global competition laws
creates hurdles in achieving global welfare and other incidental objectives.
Antitrust authorities today worldwide are confronted with international cartels. Recent
example is Trans-Atlantic Agreement among shipping companies from various countries
such as the United States, Mexico, Japan, Korea and other Countries, which notably fixed
prices for inland transport operations.83 Technological innovations are enabling emer-
gence of global giants. A new kind of market dominance is surfacing at worldwide level.
Recent Microsoft cases are good examples.
Nowadays antitrust authorities are encountering giant companies having worldwide

reach. “ One after another, the long standing barriers that protected companies from take-
over are dissolving. The result: an unprecedented wave of deal-making (…).”84 “ Un-
ternehmenfusionen sind in den letzten Jahren zu einem Dauerthema geworden: Es ver-
geht kaum eine Woche, in der nicht große Fusionsvorhaben angekündigt oder vollzogen
werden.”85Under such scenario, antitrust authorities also need a comprehensive mecha-
nism having global reach and global deterrence against the antitrust crime. The recent
mega merger wave is having global dimensions (see Appendix II & III: Statistics of
Mega Mergers Worldwide and details of cross border mergers). For example, the EC re-
cently decided to oppose proposed merger of mining interests of South Africa’s Gencor
and Lonrho because it would create duopolistic dominance worldwide. Such resistance
from the EC was again observed in merger of Boeing and McDonnell Douglas. Apart
from few exceptions number of acquisitions and merger from foreign firms in past few
decades have increased substantially worldwide. (see Appendix IV )
83
See Youri Devuyst, P.2
84
See Dennis K. Berman et al, P.1
85
See Stefan Voigt, P. 9
26
In the absence of a comprehensive internationally valid competition policy, regulatory
authorities around the world are looking for other alternative solutions to overcome vacu-
um created by such absence. These authorities are working together in some or other
form to deal effectively with antitrust matters extending beyond their national territories.
They are pursuing simultaneously three different strategies:86
- the extraterritorial application of their competition laws (Unilateral framework )
- the conclusion of bilateral or regional cooperation agreements (Bilateral frame-
work)
- the creation of a worldwide competition regime within the framework of the
WTO (Multilateral framework)
I have discussed these modalities of cooperation among various authorities later in chap-
ter seven in detail.
2.3 Enforcement Dilemma: Domestic Policies and Global Market
“As markets integrate across national borders, the logic of purely national antitrust policy
87
breaks down.” “ Mit dem Übergang von einer außenhandelsfokussierten (Fokus auf
nationale Märkte) zu einer wettbewerbsfokussierten Perspektive (Fokus auf supranationa-
le Märkte) bedarf auch die internationale Wettbewerbsordnung einer wettbewerbspoliti-
schen Dimension.”88 Simultaneous existence of domestic policies with national jurisdic-
tion and global markets with global reach calls for urgent creation of some mechanism to
cover cross border competition problems. National competition can effectively deal with
cross border disputes only when foreign entities have de facto presence and substantial
stake within its jurisdiction and that too only when national law apply. Antitrust pundits
call for some form of international mechanism because they believe national laws suffer
form inherent deficiency in dealing with cross border disputes, “when foreign supplier
does not have a commercial presence.”89
86
See Youri Devuyst, P.2
87
See Simon J. Evenett et al, P.13
88
See Oliver Budzinski, 2004, P.1
89
See P. J. Lloyd and Kerrin A Vautier, P.13
27
Existing framework of national laws with some collaborative international agreements
very often fails to check inter country anti-competitive behavior and to be precise, cross
border spillovers. Additionally, rules and procedures available under existing arrange-
ments i.e. cooperation agreements are cumbersome and very often pose administrative
problems. Compliance of such rules necessitates additional transaction costs.90
Global Marketplace has led to emergence of international cartels. Actions against such
offenders may take place in more than one jurisdiction. Big firms may enjoy dominant
position in markets of more than one country and circumstances may require thorough
simultaneous investigation by antitrust authorities from various countries. Merger be-
tween domestic company and foreign entity might need approval from different authori-
ties individually. Such situations pose additional administrative burden on authorities and
needless to say additional financial burden for both authorities as well as firms. Creation
of any globally valid antitrust mechanism will definitely lead to large financial savings.
Taxpayers’ precious money could be used for other constructive purposes.
2.4 Need for Unifying Global Competition Policy
Justus Haucap et al list out various reasons for harmonization of competition policy.91
In the absence of a globally valid antitrust regime, companies having presence in various
countries have to deal with antitrust authorities of each country individually. Such addi-
tional administrative task reduces benefits that could be realized through international
presence. One of the prime aims of competition policy is maximization of consumer wel-
fare. Nowadays consumers in almost all countries are badly affected irrespective of their
country of presence due to existence of hard-core cartels worldwide. Moreover consum-
ers in developing countries are more prone to such exploitation due to absence of an ef-
fective mechanism to deal with such eventualities. (see Appendix V ) As mentioned in
earlier discussion, national competition authorities are entrusted with the prime task of
ensuring national welfare. Some policies may enhance domestic welfare to the detriment
90
91
28
of global welfare. “Allowing national firms to form an export cartel may permit the do-
mestic industry to raise prices on export markets and improve the country’s term of
trade.”92 Such behavior of national antitrust authorities are harmful to international of
global consumers, as they end up paying high prices for goods and services.
In addition to the above-discussed reasons there are numerous benefits of unifying inter-
national competition policy. I have discussed them in detail in forthcoming chapter.
2.5 Need for International Dispute Settlement Mechanism
“It can be said that competition law is national, while markets are increasingly becoming
global. Yet there is no international antitrust code. The key question is how to deal with
transnational competition issues in a global economy. How can competition authorities
manage marketplace conduct that takes place in one nation, but has a harmful effect in
another?”
-Konrad von Finckenstein (2001)93
These words of Canada’s top competition law official, elaborate on tension between na-
tional competition laws and global anticompetitive actions. On the one hand authorities
are entrusted with task to ensure enforcement of national competition laws within nation-
al territory. On the other hand, simultaneously there are incidences of cross border anti-
competitive actions such as exploitation from international hard core cartels occurring
within national territory but which are beyond purview of their national laws. As Europe-
an Commission’s report describes,”(…) there are more and more competition problems
which transcend national boundaries: international cartels, export cartels, restrictive prac-
tices in fields which are international by nature (…) abuse of a dominant position on sev-
eral major markets (e.g. the Microsoft case).”94
92
93
94
See European Commission, Report of the Group of experts, P. 9
29
Such incidents call for urgent formation of an international dispute settlement mecha-
nism. Only an effective dispute settlement mechanism can curb such incidents and also
work as a deterrent factor. Justus Haucap et al examine need and also viability of setting
up an institutional framework namely an International Competition Court to deal with
inter country disputes. They further argue that before such an arrangement is made, it is
imperative to have substantial harmonization of competition laws if not essentially a uni-
fied international competition policy.
Some experts are against dispute settlement mechanism per se. Massimiliano Montini
says, “ (…) neither the DSU95 nor a similar dispute settlement regime, empowered to
render binding judgments on the Parties, should be used to resolve trade and competition
controversies. This is because most countries normally find the typical trade and competi-
tion issues as being closely linked to their national industrial policies, and are therefore
normally not willing to relinquish their sovereign rights in this area.”96
Looking at differences in aims and objectives of competition policies around the world, it
seems impossible to have a globally valid international competition policy in the near fu-
ture. “ the scope for conflict over international antitrust measures can also be reduced
without full harmonization and centralization of competition policy.”97There are other
modalities of cooperation among antitrust authorities, which require less harmonization
and can also reduce conflicts to some extent, such as unilateral, bilateral and multilateral
solutions. In chapter seven I have dealt with these modalities in detail.
2.6 In a Nutshell
Globalization of international marketplace per se should reduce need for antitrust regime.
But surprisingly this is not true. In fact, such scenario calls for extra efforts on the part of
competition authorities. National competition laws are designed for achieving national
95
DSU –The WTO Dispute Settlement Undertaking popularly called, as DSU is an envisaged dispute set-
tlement system annexed to the WTO Charter.
96
See Massimiliano Montini, P.19
97
30
objectives. Absence of global competition laws creates a vacuum. Existence of an inter-
national antitrust regime is a must before working on modalities of a dispute settlement
mechanism in antitrust area.
3 Benefits of unifying Antitrust Regulations
There are inherent difficulties in using “a system based on territorial authority to address
global economic behavior.”98 Antirust framework is not an exception. A unified global
antitrust regulation can help the global community to overcome several such inherent
hardships. Here I have listed out advantages of having a unified global competition poli-
cy.
3.1 Transaction Cost

A unified global competition policy could substantially reduce transaction cost involved
in international business. In an integrated world market firms have to deal with larger
number of competition laws, enforcement authorities and appropriate courts. These addi-
tional administrative burden and cost arising due to international trade reduces the poten-
tial benefits of international specialization and increased competition.99 Application of
different competition laws and jurisdiction adds to compliance work and thereby add to
total transaction cost of international business. Harmonization of competition laws on
substantial matters may contribute to reduction in transaction cost and thereby enable
firms to enjoy benefits of economies of scale.100
3.2 Ready availability of expertise
Once again I refer to Microsoft matter. Cooperation between the US and the EU regulato-
ry authorities contributed to the success. Eventually software Juggernaut Microsoft
agreed to end ”unfair monopolistic agreement”. Entire efforts consumed 14000 attorney-
hours, 5500 paralegal-hours, 3650 economist-hours and roughly one million pages of
98
See Hannah L. Buxbaum, P. 1106
99
31
documents in United States alone.101 United States was able to pursue the matter suc-
cessfully, as it had sufficient resources and expertise. In 1999-2000 the US shelled out
US$ 140.1 Millions for successful enforcement of antitrust provisions and had total
workforce of 1157 officers. (see Appendix VI ). Annual Budget outlay of the European
Commission for FY 2001 for antitrust purpose amounted to US$ 59.9 Millions. Now the
question arises: How can a developing country without sufficient resources or a devel-
oped country without required expertise pursue antitrust regulations so as to combat anti-
competitive practices? Additionally experts estimate that it takes about 10 years for coun-
tries to acquire the necessary expertise and experience to implement such laws effective-
ly.102
Such scenario suggests need for unifying international competition policy, so that devel-
oping countries and also advanced countries without requisite expertise in antitrust area
can have immediate access to the required expertise. “Competition law is technical and
requires the use of skills that are in short supply in many developing countries-building
capacity to apply competition legislation effectively take time.”103 Additionally, estab-
lishment of proper institutional framework, the independence of regulatory authorities,
effective judicial review and appeal mechanism and the availability of know-how both
legal as well as analytical are imperative for effective enforcement of competition
laws.104 Effective enforcement of antitrust regulation based on efficiency and fairness pa-
rameters in each country is beneficial to the global economy as a whole. Developed coun-
tries can play a constructive role by offering assistance wherever needed.
3.3 Maximization of Consumer Welfare
With rapid expansion of trade and commerce across borders coupled with free flow of
information, nowadays, companies are in a better position to take advantages of infor-
mation asymmetry and sometime to the detriment of consumers. Nowadays, consumers
100
Id., P. 313
101
See Richard H. Marschall, P. 1
102
103
104
Id., P. 8
32
in one country are affected by anticompetitive behavior of the firm located in another
country. Additionally, international cartels are now better equipped with more resources.
For example, it is believed that recent cartel in vitamin market has affected over $5 bil-
lion worth commerce to the detriment of the consumer. Maximization of consumer wel-
fare is the prime aim of antitrust regime.105 Exchange of information between antitrust
authorities and mutual help in antitrust investigations and cases would be helpful in curb-
ing international anticompetitive actions.106 Harmonization of competition laws is desira-
ble to ensure consumer welfare worldwide.
3.4 Maximization of Global Welfare
Another important argument in favor of harmonization is maximization of global welfare.

Global welfare is sum total of domestic welfare and foreign welfare.
Expansion of commerce beyond national territory coupled with globalization process of

competition and market has led to internationalization of anticompetitive practices such
as cartels, predatory, exclusionary strategies and so on. Incidences of cross border mer-
gers of large giants from all parts of the world, which if approved would be harmful to
global welfare have also increased (see Appendix VII: Statistics of Cross Border Mer-
gers) Sometime domestic welfare might increase through a merger due to increase in
productive efficiencies and increase in market power of merged entity to the detriment of
foreign welfare and might lead to decrease in global welfare. “National competition au-
thorities may simply not act in the world’s best interest, but only take local welfare into
account.”107 Hence, an internationally coordinated competition policy might ensure max-
imum global welfare.
105
See Hannah L. Buxbaum, P. 1095
106
See Justus Haucap et al, P. 316,317
107
33
3.5 Efficient Allocation of World Resources
As we saw in the introductory chapters, during the last 100 years antitrust regime has
witnessed radical changes. Contemporary antitrust regime is more tilted toward efficien-
cy rather than fairness. Even though one of the prime aims of competition policy is to
benefit consumers by maximizing consumer welfare, competition policy is not per se
against producers. Nowadays very often “efficiency defense” is successfully allowed.
Antitrust regime just wants to preserve competition at marketplace to the healthy level.
Competition drives producers to produce more and better products at lesser cost. Harmo-
nization of antitrust laws worldwide would induce producers to locate their production
base in those areas where they can enjoy comparative cost advantage. Hence a unified
competition policy worldwide would lead to efficient use of resources worldwide.
3.6 Harmonization leads to increment in Productivity
Harmonization of competition laws would create a level playing field for players across
the globe. Companies would opt for places where efficient production facilities could be
established and where they can enjoy other comparative advantages. Hassle free business
environment would be an additional incentive for producers to make full utilization of
economies of scale and economies of scope.108 “ The multinationals of today are not
searching for resource inputs as in the earlier portion of the twentieth century but are
spreading the economies of scale and scope of increasingly technology-driven production
across borders and among firms.”109 Reduction in production cost and devising better
product are must for producers in competitive environment. They should be able to offer
better products at a good price to consumers. As discussed in earlier paragraphs, efficient
use of global resources coupled with investment in R&D for improvement of product
leads to increment in production both quantitatively and qualitatively to the advantage of
consumer worldwide.
108
Economies of scale are achieved, when production cost per unit falls with increase total production.
Economies of scope are accrual of benefits due joint production of two or more products. See Massimo
Motta, P.2
34
3.7 Collective Efficiency vs. Collective Inefficiency
Efficiency is broadly understood as “getting most out of least resources”. Prima facie in
almost all countries, competition policy aims to reduce inefficiency. Efficient allocation
of resources is one of the prime movers for economic development.
Dilemma: what is efficient for one country may not be necessarily efficient for another
country. Export cartels and monopoly marketing brands are some of such examples. Un-
checked dumping of subsidized goods in other countries also creates economic distor-
tions. If such behavior goes unchecked, then the World will be full of collective ineffi-
ciency. This in turn would lead to waste of scarce global resources and that too due to
human error.
The issue of different impacts on national efficiency was well discussed in proposed
merger of Boeing and McDonnell Douglas. European authorities initially concluded that
merger might be anticompetitive for Europe, whereas US authorities found that such
merger would be efficient for United States. A compromise was reached by canceling
some agreements between Boeing and other US airlines, which in turn reduced potential
efficiency in United States.110 Readymade international guidelines might have avoided
such conflicts.
Harmonization of competition laws will definitely create an environment, which is con-

ducive to promote collective efficiency. In this way the world can move from collective
inefficiency to collective efficiency.
109
See Leonard Waverman et al, P. 1
110
35
3.8 In a Nutshell
Harmonization of antitrust laws is beneficial to both consumers and producers. Producers

can save huge amount on account of reduction in transaction cost and they can really en-
joy the benefits that international trade had to offer. International comparative cost ad-
vantages enable reduction of prices. Global consumers would be the ultimate beneficiar-
ies. Additionally, harmonization also leads to efficient allocation of world resources and
increase in productivity.
4 Unifying Competition laws: Areas of Harmonization
Unification of competition laws might occur in three different areas i.e. substantive laws,
procedural aspects and enforcement areas. The issues that are tackled in each area are dif-
ferent and also their relative importance in the process of unification varies.
4.1 Unifying Substantive Regulations
After dramatic failure of various attempts to unify international competition laws, schol-
ars are now skeptical about possibility of harmonization of substantive laws. Some ex-
perts do not agree with this and they do hope that some limited and gradual harmoniza-
tion of substantive rules is possible.111 “ A large number of academics have called for
harmonization of the substantive content of antitrust laws.”1121998 OECD Recommenda-
tion on Effective Action Against Hard-Core Cartels, also backed by United States proves
that there are still some areas, where harmonization of substantive rules is possible and
hence such initiative should be encouraged. OECD recommends that domestic laws
should provide for effective framework to deter and remedy hardcore cartels. !996 EC
Green Paper on Vertical Restraint113 is another example that in this area also some degree
of harmonization of substantial rules is possible, possibly in form of a guideline incorpo-
111
See Massimiliano Montini, P. 16
112
See John O. McGinnis, P. 1
36
rating “rule of reason” approach rather than per se prohibition. Similarly, a small begin-
ning may be made in market dominance and merger areas, initially just by means of rec-
ommendation, guidelines and other form of non-binding cooperation. Merger policy is
very often connected with industrial policy and nowadays countries are unwilling to part
with their sovereign right in this area. Therefore agreement on substantive rules to tackle
merger issues, even in form of “rule of reason” guidelines does not seem foreseeable in
the near future.114
4.2 Unifying Procedural Aspects
Any cooperation at international level in competition policy area calls for adoption of
some fundamental procedural framework, which would ultimately enable fruitful cooper-
ation. Some scholars suggest that harmonization in procedural areas should at least pro-
vide for inclusion of non-discrimination principle, transparency and assistance, positive
comity principle and negative comity principle.115 Non- discrimination principle forbids
discrimination among nations (e.g. Most Favored Nation Principle) and discrimination
between domestic and foreign goods or services, whether directly or indirectly. Transpar-
ency and assistance in antitrust context refer to reciprocal exchange of information and
coordination of efforts between different antitrust authorities situated in different coun-
tries in different forms, such as notification, consultation etc. Negative comity principle
is a doctrine of politeness and good manners between nations. Under this doctrine, a
country in case of an antitrust violation may in certain circumstances decide not to pursue
an investigation, but instead, leave the same to authorities of another country, in matters
where considerable stake of that foreign country might be involved. Positive comity prin-
ciple provides for positive acts of cooperation and mutual assistance between antitrust
authorities. (for further details see chapter 7)
113
See European Commission, EC Green Paper on Vertical Restraints in EC Competition Policy, 1996
114
115
37
4.3 Unifying Level of Enforcement
Existence of antitrust framework at domestic level is a must for establishment of coopera-

tion arrangement in enforcement area, with sufficient enforcement power. Not only the
existence of mechanism itself, but also willingness and ability to enforce antitrust laws at
domestic level is a must for introducing harmonization in enforcement area.
4.4 In a Nutshell
Effective unification of competition laws calls for reforms in all segments of regulations
i.e. Substantive laws, Procedural Aspects and Level of Enforcement.
5 Limitations of Harmonization
Harmonization of international competition policy regulations is not an easy task. We

saw earlier in chapter one that different countries pursue different goals. Very often anti-
trust regulations are designed to address different needs of society. Apart from economic
aspects, such as maximization of total welfare, several other political and social aspects
also have an impact on national competition policies. I think it would be irrational to im-
agine complete harmonization of antitrust provision, as some of the goals of national
competition policy are contradictory, due to different economic, social and political needs
of various countries. In this chapter I would like to deal with various circumstances other
than economic policy that might influence harmonization.
5.1 Political Reasons
Very often there are several political constraints that compel authorities to devise a com-
petition policy, which is detrimental to total welfare ab initio. Some examples; In 1978
U.S. government perceived that production of uranium was of paramount importance to

the nation’s security. Hence it was decided to take suitable measures to protect domestic
uranium industry. Accordingly, price of electricity was raised for American consumers,
38
which was detrimental to total welfare. This hike almost bankrupted the industrial giant
Westinghouse.116 Very recently, American aluminum companies succeeded in persuad-
ing the Clinton administration to create an international aluminum cartel to counter the
effects of increase in Russian production. Moreover when affected consumers moved the
court, they lost because of act of state doctrine and the non-judiciability of political ques-
tions.117 Under such inevitable circumstances, sometime, antitrust regulations are de-
signed under political constraints. These decisions are neither based on fairness and effi-
ciency parameters nor do they pursue any of the normal aims and objectives of competi-
tion policy. These constraints are nation specific and hence limit the scope of devising a
unified global antitrust regime.
5.2 Social Areas
Sometimes competition laws are customized to tackle social issues. “ US laws were im-
plemented in more lenient way in times of The Great Depression, with the view that some
price agreement would help firms to avoid bankruptcy, thus easing social tensions caused
by unemployment.”118 Experts are against such measures, as they believe that such steps
might create further distortions. These needs could be addressed with other instruments
e.g. capital market regulations.
Another example is antitrust regulation of South Africa. Development of weaker section

of society is one of the prime aims of competition policy.119
5.3 Other Reasons
Apart from above discussed factors there are several other factors that influence competi-
tion policy matters. Recently European Commission approved an agreement among
washing machines producers and distributors accounting for more than 95 percent of the
116
See Martin Holterman, P. 42
117
See Hammons vs. Alcan Aluminum Corporation (19960 Case no. SACV 96-0319-LHM (EEx)
118
119
The Competition Act, South Africa, 1998
39
market due to environment reasons. The agreement aims for discontinuation of produc-
tion and import of least energy efficient machines. The Commission formed an opinion
that the agreement would benefit society at large on environment terms.120 However, use
of competition policy for purposes other than efficiency is not advisable. Such need could
be addressed through other public policy instruments.
Supporting national champions so that they withstand competition against foreign cham-
pions, also influence competition policy matters occasionally. Sometimes controls are
relaxed at national level so as to allow national champions to grow bigger, with the hope
that they would be able to face foreign players successfully. Such actions, if not carefully
evaluated might cause distortion to the detriment of total welfare.
5.4 In a Nutshell
Competition Policy regime is prima facie part of economic policy of a national govern-
ment. But very often national governments do make deviation and make use of competi-
tion policy for achieving social and political targets.
120
40
6 Conflict Areas
In this section I intend to list out important conflict areas. The purpose is not to discour-
age efforts in the direction of harmonization, but just to make authorities cautious in deal-
ing with such conflict areas, where situation specific remedies may be required. Conflict
area covers a large spectrum. There are disputes about some concepts of competition pol-
icy itself. Additionally, other dispute areas are general in nature, that is to say they might
be influenced by other economic, political and general factors.
6.1 Conceptual Discord
Differences and existence of confusion about basic concepts of competition policy could
cause some hurdles in the unifying process. In some areas there is widespread consensus
such as parameters for market definition, horizontal mergers etc. Contrary to this there
are substantial differences in some other areas such as vertical restraints, cartel exemp-
tion, state aid policies, etc.121
Market Definition: Parameters of market definition no longer remain as a major area of

dispute. The EU has modified its principles of market definition bringing it in uniformity
with the US Standard i.e. the hypothetical monopoly or SSNIP test as parameter in defin-
ing markets. Additionally, as markets become international, the definition becomes irrel-
evant.
Horizontal Agreements: There is widespread consensus about action against price fix-
ing agreement. But certain exemptions allowed by certain countries in areas such as R &
D, supporting export cartel and other related incidental areas might cause frictions.
121
41
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“Oh, Bud! He’s such a delightful rascal. You don’t mind my calling
him that? I shouldn’t if I weren’t so fond of him. He’s absolutely
necessary to our social existence. We’d stagnate without him.”
“Bud was always a master hand at stirring things up. His methods
are a little peculiar at times, but he does get results.”
“There’s no question but that he’s a warm admirer of yours.”
“That’s because he’s forgotten about me! He hadn’t seen me for five
years.”
“I think possibly I can understand that one wouldn’t exactly forget
you, Mr. Storrs.”
She let the words fall carelessly, as though to minimize their daring
in case they were not wholly acceptable to her auditor. The point was
not lost upon him. He was not without his experience in the gentle art
of flirtation, and her technic was familiar. There was always,
however, the possibility of variations in the ancient game, and he
hoped that Mrs. Shepherd Mills was blessed with originality.
“There’s a good deal of me to forget; I’m six feet two!”
“Well, of course I wasn’t referring altogether to your size,” she said
with her murmurous little laugh. “I adore big men, and I suppose
that’s why I married a small one. Isn’t’ it deliciously funny how
contrary we are when it comes to the important affairs of our lives! I
suppose it’s just because we’re poor, weak humans. We haven’t the
courage of our prejudices.”
“I’d never thought of that,” Bruce replied. “But it is an interesting idea.
I suppose we’re none of us free agents. It’s not in the great design of
things that we shall walk a chalk line. If we all did, it would probably
be a very stupid world.”
“I’m glad you feel that way about it. For a long time half the world
tried to make conformists of the other half; nowadays not more than
a third are trying to keep the rest on the chalk line—and that third’s
skidding! People think me dreadfully heretical about everything. But
—I’m not, really! Tell me you don’t think me terribly wild and
untamed.”
“I think,” said Bruce, feeling that here was a cue he mustn’t miss, “I
think you are very charming. If it’s your ideas that make you so, I
certainly refuse to quarrel with them.”
“How beautifully you came up on that! Something tells me that I’m
not going to be disappointed in you. I have a vague sort of idea that
we’re going to understand each other.”
“You do me great honor! It will be a grief to me if we don’t.”
“It’s odd how instantly we recognize the signals when someone
really worth while swims into our ken,” she said pensively. “Dear old
Nature looks after that! Bud intimated that you’re to be one of us;
throw in your lot with those of us who struggle along in this rather
nice, comfortable town. If you enjoy grandeur in social things, you’ll
not find much here to interest you; but if just nice little companies
and a few friends are enough, you can probably keep amused.”
“If the Freemans’ friends are specimens and there’s much of this sort
of thing”—he waved his hand toward the company within—“I
certainly shall have nothing to complain of.”
“We must see you at our house. I haven’t quite Dale’s knack of
attracting people”—she paused a moment upon this note of humility
—“but I try to bring a few worth while people together. I’ve educated
a few men to drop in for tea on Thursdays with usually a few of my
pals among the young matrons and a girl or two. If you feel moved
——”
“I hope you’re not trifling with me,” said Bruce, “for I shall certainly
come.”
“Then that’s all settled. Don’t pay any attention to what Bud says
about me. To hear him talk you might think me a man-eater. My
husband’s the dearest thing! He doesn’t mind at all my having men
in for tea. He comes himself now and then when his business
doesn’t interfere. Dear Shep! He’s a slave to business, and he’s
always at work on some philanthropic scheme. I just talk about
helping the world; but he, poor dear, really tries to do something.”
Henderson appeared presently with a dark hint that Shepherd was
peeved by their long absence and that the company was breaking
up.
“Connie never plays all her cards the first time, Bruce; you must give
her another chance.”
“Oh, Mr. Storrs has promised me a thousand chances!” said Mrs.
Mills.
CHAPTER THREE
I
Sunday evening the Freemans were called unexpectedly into town
and Bruce and Henderson were left to amuse themselves.
Henderson immediately lost himself in a book and Bruce, a little
homesick for the old freedom of the road, set out for a walk. A
footpath that followed the river invited him and he lounged along, his
spirit responding to the beauty of the night, his mind intent upon the
future. The cordiality of the Freemans and their circle had impressed
him with the friendliness of the community. It would take time to
establish himself in his profession, but he had confidence in his
power to achieve; the lust for work was already strong in him. He
was satisfied that he had done wisely in obeying his mother’s
mandate; he would never have been happy if he had ignored it.
His meeting with Shepherd Mills had roused no resentment, revived
no such morbid thoughts as had troubled him on the night of his
arrival in town. Shepherd Mills was his half-brother; this, to be sure,
was rather staggering; but his reaction to the meeting was void of
bitterness. He speculated a good deal about young Mills. The
gentleness and forbearance with which he suffered the raillery of his
intimates, his anxiety to be accounted a good fellow, his serious
interest in matters of real importance—in all these things there was
something touching and appealing. It was difficult to correlate
Shepherd with his wife, but perhaps their dissimilarities were only
superficial. Bruce appraised Connie Mills as rather shallow, fond of
admiration, given to harmless poses in which her friends evidently
encouraged and indulged her. She practiced her little coquetries with
an openness that was in itself a safeguard. As they left the
Freemans, Shepherd and his wife had repeated their hope of seeing
him again. It was bewildering, but it had come about so naturally that
there seemed nothing extraordinary in the fact that he was already
acquainted with members of Franklin Mills’s family....
Bruce paused now and then where the path drew in close to the river
to look down at the moonlit water through the fringe of trees and
shrubbery. A boy and girl floated by in a canoe, the girl singing as
she thrummed a ukulele, and his eyes followed them a little wistfully.
Farther on the dull put-put-put of a motor-boat broke the silence. The
sound ceased abruptly, followed instantly by a colloquy between the
occupants.
“Damn this fool thing!” ejaculated a feminine voice. “We’re stuck!”
“I had noticed it!” said another girl’s voice good naturedly. “But such
is the life of the sailor. I wouldn’t just choose this for an all-night
camp!”
“Don’t be so sweet about it, Millicent! I’d like to sink this boat.”
“It isn’t Polly’s fault. She’s already half-buried in the sand,” laughed
the other.
Bruce scrambled down to the water’s edge and peered out upon the
river. A small power boat had grounded on a sandbar in the middle
of the stream. Its occupants were two young women in bathing suits.
But for their voices he would have taken them for boys. One was
tinkering with the engine while the other was trying to push off the
boat with an oar which sank ineffectually in the sand. In their
attempts to float their craft the young women had not seen Bruce,
who, satisfied that they were in no danger, was rather amused by
their plight. They were presumably from one of the near-by villas and
their bathing suits implied familiarity with the water. The girl at the
engine talked excitedly with an occasional profane outburst; her
companion was disposed to accept the situation philosophically.
“We can easily swim out, so don’t get so excited, Leila,” said the girl
with the oar. “And do stop swearing; voices travel a long way over
the water.”
“I don’t care who hears me,” said the other, though in a lower tone.
She gave the engine a spin, starting the motor, but the power was
unequal to the task of freeing the boat. With an exclamation of
disgust she turned off the switch and the futile threshing of the
propeller ceased.
“Let’s swim ashore and send back for Polly,” said the girl addressed
as Millicent.
“I see myself swimming out!” the other retorted. “I’m not going to
leave Polly here for some pirate to steal.”
“Nobody’s going to steal her. This isn’t the ocean, you know.”
“Well, no fool boat’s going to get the best of me! Where’s that flask?
I’m freezing!”
“You don’t need any more of that! Please give it to me!”
“I hope you are enjoying yourself,” said the other petulantly. “I don’t
see any fun in this!”
“Hello, there!” called Bruce, waving his arms to attract their attention.
“Can I be of help?”
Startled by his voice, they did not reply immediately, but he heard
them conferring as to this unlooked-for hail from the bank.
“Oh, I’m perfectly harmless!” he cried reassuringly. “I was just
passing and heard your engine. If there’s a boat near by I can pull
you off, or I’ll swim out and lift your boat off if you say so.”
“Better get a boat,” said the voice he had identified with the name of
Millicent. “There’s a boathouse just a little farther up, on your side.
You’ll find a skiff and a canoe. We’ll be awfully glad to have your
help. Thank you ever so much!”
“Don’t forget to come back,” cried Leila.
“Certainly not!” laughed Bruce and sprang up the bank.
He found the boathouse without trouble, chose the skiff as easier to
manage, and rowed back. In the moonlight he saw Millicent standing
up in the launch watching him, and as he approached she flashed an
electric torch along the side of the boat that he might see the nature
of their difficulty.
“Do you need food or medical attention?” he asked cheerfully as he
skillfully maneuvered the skiff and grounded it on the sand.
“I think we’d better get out,” she said.
“No; stay right there till I see what I can do. I think I can push you off.
All steady now!”
The launch moved a little at his first attempt to dislodge it and a
second strong shove sent it into the channel.
“Now start your engine!” he commanded.
The girl in the middle of the boat muttered something he didn’t catch.
“Leila, can you start the engine?” demanded Millicent. “I think—I
think I’ll have to row back,” she said when Leila made no response.
“My friend isn’t feeling well.”
“I’ll tow you—that’s easy,” said Bruce, noting that her companion
apparently was no longer interested in the proceedings. “Please
throw me your rope!”
He caught the rope and fastened it to the stern of the skiff and called
out that he was ready.
“Please land us where you found the boat,” said Millicent. She
settled herself in the stern of the launch and took the tiller. No word
was spoken till they reached the boathouse.
“That’s all you can do,” said Millicent, who had drawn on a long bath
wrapper and stepped out. “And thank you very, very much; I’m sorry
to have caused you so much trouble.”
This was clearly a dismissal, but he loosened the rope and tied up
the skiff. He waited, holding the launch, while Millicent tried to
persuade Leila to disembark.
“Perhaps——” began Bruce, and hesitated. It seemed unfair to leave
the girl alone with the problem of getting her friend ashore. Not to put
too fine a point on the matter, Leila was intoxicated.
“Now, Leila!” cried Millicent exasperatedly. “You’re making yourself
ridiculous, besides keeping this gentleman waiting. It’s not a bit nice
of you!”
“Jus’ restin’ lil bit,” said Leila indifferently. “I’m jus’ restin’ and I’m not
goin’ to leave Polly. I should shay not!”
And in assertion of her independence she began to whistle. She
seemed greatly amused that her attempts to whistle were
unsuccessful.
Millicent turned to Bruce. “If I could get her out of the boat I could put
her in our car and take her home.”
“Surely!” he said and bent over quickly and lifted the girl from the
launch, set her on her feet and steadied her. Millicent fumbled in the
launch, found a bath wrapper and flung it about Leila’s shoulders.
She guided her friend toward the long, low boathouse and turned a
switch.
“I can manage now,” she said, gravely surveying Bruce in the glare
of light. “I’m so sorry to have troubled you.”
She was tall and fair with markedly handsome brown eyes and a
great wealth of fine-spun golden hair that escaped from her bathing
cap and tumbled down upon her shoulders. Her dignity was in
nowise diminished by her garb. She betrayed no agitation. Bruce felt
that she was paying him the compliment of assuming that she was
dealing with a gentleman who, having performed a service, would go
his way and forget the whole affair. She drew her arm about the now
passive Leila, who was much shorter—quite small, indeed, in
comparison.
“Our car’s here and we’ll get dressed and drive back into town.
Thank you so much and—good-night!”
“I was glad to help you;—good-night!”
The door closed upon them. Bruce made the launch fast to the
landing and resumed his walk.
II
When he returned to the Freemans, Henderson flung aside his book
and complained of Bruce’s prolonged absence. “I had begun to think
you’d got yourself kidnapped. Go ahead and talk,” he said, yawning
and stretching himself.
“Well, I’ve had a mild adventure,” said Bruce, lighting a cigarette; and
he described his meeting with the two young women.
“Not so bad!” remarked Henderson placidly. “Such little adventures
never happen to me. The incident would make good first page stuff
for a newspaper; society girls shipwrecked. You ought to have taken
the flask as a souvenir. Leila is an obstreperous little kid; she really
ought to behave herself. Right the first time. Leila Mills, of course; I
think I mentioned her the other day. Her friend is Millicent Harden.
Guess I omitted Millicent in my review of our citizens. Quite a
remarkable person. She plays the rôle of big sister to Leila; they’re
neighbors on Jefferson Avenue. That’s just a boathouse on the Styx
that Mills built for Leila’s delectation. She pulls a cocktail tea there
occasionally. Millicent’s pop made a fortune out of an asthma cure—
the joy of all cut-rate druggists. Not viewed with approval by medical
societies. Socially the senior Hardens are outside the breastworks,
but Millicent is asked to very large functions, where nobody knows
who’s there. They live in that whopping big house just north of the
Mills place, and old Doc Harden gives Millicent everything she
wants. Hence a grand organ, and the girl is a regular Cecelia at the
keys. Really plays. Strong artistic bent. We can’t account for people
like the Hardens having such a daughter. There’s a Celtic streak in
the girl, I surmise—that odd sort of poetic strain that’s so beguiling in
the Irish. She models quite wonderfully, they tell me. Well, well! So
you were our little hero on the spot!”
“But Leila?” said Bruce seriously. “You don’t quite expect to find the
daughter of a prominent citizen tipsy on a river, and rather profane at
that.”
“Oh, thunder!” exclaimed Henderson easily. “Leila’s all right. You
needn’t worry about her. She’s merely passing through a phase and
will probably emerge safely. Leila’s hardly up to your standard, but
Millicent is a girl you’ll like. I ought to have told Dale to ask Millicent
here. Dale’s a broad-minded woman and doesn’t mind it at all that
old Harden’s rolled up a million by being smart enough to scamper
just a nose length ahead of the Federal grand jury carrying his rotten
dope in triumph.”
“Miss Mills, I suppose, is an acceptable member of the Freemans’
group?” Bruce inquired.
“Acceptable enough, but this is all too tame for Leila. Curious sort of
friendship—Leila and Millicent. Socially Millicent is, in a manner of
speaking, between the devil and the deep sea. She’s just a little too
superior to train with the girls of the Longview Country Club set and
the asthma cure keeps her from being chummy with the Faraway
gang. But I’ll say that Leila’s lucky to have a friend like Millicent.”
“Um—yes,” Bruce assented. “I’m beginning to see that your social
life here has a real flavor.”
“Well, it’s not all just plain vanilla,” Bud agreed with a yawn.
CHAPTER FOUR
I
Henderson made his wife’s return an excuse for giving a party at the
Faraway Country Club. Mrs. Henderson had brought home a trophy
from the golf tournament and her prowess must be celebrated. She
was a tall blonde with a hearty, off-hand manner, and given to plain,
direct speech. She treated Bud as though he were a younger
brother, to be humored to a certain point and then reminded a little
tartly of the limitations of her tolerance.
When Bruce arrived at the club he found his hostess and Mrs.
Freeman receiving the guests in the hall and directing them to a dark
end of the veranda where Bud was holding forth with a cocktail-
shaker. Obedient to their hint, he stumbled over the veranda chairs
until he came upon a group of young people gathered about Bud,
who was energetically compounding drinks as he told a story. Bruce
knew the story; it was the oldest of Bud’s yarns, and his interest
wavered to become fixed immediately upon a girl beside him who
was giving Bud her complete attention. Even in the dim light of the
veranda there was no mistaking her: she was the Millicent Harden
he had rescued from the sand bar. At the conclusion of the story she
joined in the general laugh and turned round to find Bruce regarding
her intently.
“I beg your pardon,” he said and bowed gravely.
“Oh, you needn’t!” she replied quickly.
He lifted his head to find her inspecting him with an amused smile.
“I might find someone to introduce us—Mr. Henderson, perhaps,” he
said. “My name—if the matter is important—is Bruce Storrs.”
“Possibly we might complete the introduction unassisted—my name
is Millicent Harden!”
“How delightful! Shall we dance?”
After the dance he suggested that they step out for a breath of air.
They found seats and she said immediately:
“Of course I remember you; I’d be ashamed if I didn’t. I’m glad of this
chance to thank you. I know Leila—Miss Mills—will want to thank
you, too. We must have seemed very silly that night on the river.”
“Such a thing might happen to anyone; why not forget it?”
“Let me thank you again,” she said seriously. “You were ever so
kind.”
“The incident is closed,” he remarked with finality. “Am I keeping you
from a partner? They’re dancing again. We might sit this out if I’m
not depriving you——”
“You’re not. It’s warm inside and this is a relief. We might even
wander down the lawn and look for elves and dryads and nymphs.
Those big trees and the stars set the stage for such encounters.”
“It’s rather nice to believe in fairies and such things. At times I’m a
believer; then I lose my faith.”
“We all forget our fairies sometimes,” she answered gravely.
He had failed to note at their meeting on the river the loveliness of
her voice. He found himself waiting for the recurrence of certain
tones that had a curious musical resonance. He was struck by a
certain gravity in her that was expressed for fleeting moments in both
voice and eyes. Even with the newest dance music floating out to
them and the light and laughter within, he was aware of an
indefinable quality in the girl that seemed somehow to translate her
to remote and shadowy times. Her profile—clean-cut without
sharpness—and her manner of wearing her abundant hair—carried
back loosely to a knot low on her head—strengthened his impression
of her as being a little foreign to the place and hour. She spoke with
quiet enthusiasm of the outdoor sports that interested her—riding
she enjoyed most of all. Henderson had intimated that her social life
was restricted, but she bore herself more like a young woman of the
world than any other girl he remembered.
“Maybelle Henderson will scold me for hiding you away,” she said.
“But I just can’t dance whenever the band plays. It’s got to be an
inspiration!”
“Then I thank you again for one perfect dance! I’m afraid I didn’t
appreciate what you were giving me.”
“Oh, I danced with you to hide my embarrassment!” she laughed.
Half an hour passed and they had touched and dismissed many
subjects when she rose and caught the hand of a girl who was
passing.
“Miss Mills, Mr. Storrs. It’s quite fitting that you should meet Mr.
Storrs.”
“Fitting?” asked the girl, breathless from her dance.
“We’ve all met before—on the river—most shockingly! You might just
say thank you to Mr. Storrs.”
“Oh, this is not——” Leila drew back and inspected Bruce with a
direct, candid gaze.
“Miss Harden is mistaken; this is the first time we ever met,” declared
Bruce.
“Isn’t he nice!” Leila exclaimed. “From what Millie said I knew you
would be like this.” And then: “Oh, lots of people are bragging about
you and promising to introduce me! Here comes Tommy Barnes; he
has this dance. Oh, Millie! if you get a chance you might say a kind
word to papa. He’s probably terribly bored by this time.”
“Leila’s a dear child! I’m sure you’ll like her,” said Millicent as the girl
fluttered away. “Oh, I adore this piece! Will you dance with me?”
As they finished the dance Mrs. Henderson intercepted them.
“Aren’t you the limit, you two? I’ve had Bud searching the whole
place for you and here you are! Quite as though you hadn’t been
hiding for the last hour.”
“I’m going to keep Mr. Storrs just a moment longer,” said Millicent.
“Leila said her father was perishing somewhere and I want Mr. Storrs
to meet him.”
“Yes; certainly,” said Bruce.
He walked beside her into the big lounge, where many of the older
guests were gathered.
“Poor Mr. Mills!” said Millicent after a quick survey of the room.
“There he is, listening to one of Mr. Tasker’s interminable yarns.”
She led the way toward a group of men, one of whom was evidently
nearing the end of a long story. One of his auditors, a dark man of
medium height and rather stockily built, was listening with an air of
forced attention. His grayish hair was brushed smoothly away from a
broad forehead, his neatly trimmed mustache was a trifle grayer than
his hair. Millicent and Bruce fell within the line of his vision, and his
face brightened instantly as he nodded to the girl and waved his
hand. The moment the story was ended he crossed to them, his
eyes bright with pleasure and a smile on his face.
“I call it a base desertion!” he exclaimed. “Leila brings me here and
coolly parks me. A father gets mighty little consideration these days!”
“Don’t scold! Mr. Mills—let me present Mr. Storrs.”
“I’m very glad to meet you, Mr. Storrs,” said Mills with quiet cordiality.
He swept Bruce with a quick, comprehensive scrutiny.
“Mr. Storrs has lately moved here,” Millicent explained.
“I congratulate you, Mr. Storrs, on having fallen into good hands.”
“Oh, Miss Harden is taking splendid care of me!” Bruce replied.
“She’s quite capable of doing that!” Mills returned.
Bruce was studying Franklin Mills guardedly. A man of reserves and
reticences, not a safe subject for quick judgments. His manner was
somewhat listless now that the introduction had been accomplished;
and perhaps aware of this, he addressed several remarks to Bruce,
asking whether the music was all that the jazzy age demanded;
confessed with mock chagrin that his dancing days were over.
“You only think they are! Mr. Mills really dances very well. You’d be
surprised, Mr. Storrs, considering how venerable he is!”
“That’s why I don’t dance!” Mills retorted with a rueful grin.
“‘Considering his age’ is the meanest phrase that can be applied to a
man of fifty.”
Bud Henderson here interrupted them, declaring that dozens of
people were disconsolate because Bruce had concealed himself.
“Of course you must go!” said Millicent.
“I hope to meet you again,” Mills remarked as Bruce bowed to him.
“Thank you, Mr. Mills,” said Bruce.
He was conscious once more of Mills’s intent scrutiny. It seemed to
him as he walked away that Mills’s eyes followed him.
“What’s the matter, old top?” Bud demanded. “You’re not tired?”
“No; I’m all right,” Bruce replied, though his heart was pounding hard;
and feeling a little giddy, he laid his hand on Henderson’s arm.
CHAPTER FIVE
I
Franklin Mills stood by one of the broad windows in his private office
gazing across the smoky industrial district of his native city. With his
hands thrust into his trousers’ pockets, he was a picture of negligent
ease. His face was singularly free of the markings of time. His thick,
neatly trimmed hair with its even intermixture of white added to his
look of distinction. His business suit of dark blue with an obscure
green stripe was evidently a recent creation of his tailor, and a wing
collar with a neatly tied polka-dot cravat contributed further to the
impression he gave of a man who had a care for his appearance.
The gray eyes that looked out over the city narrowed occasionally as
some object roused his attention—a freight train crawling on the
outskirts or some disturbance in the street below. Then he would
resume his reverie as though enjoying his sense of immunity from
the fret and jar of the world about him.
Bruce Storrs. The name of the young man he had met at the Country
Club lingered disturbingly in his memory. He had heard someone ask
that night where Storrs came from, and Bud Henderson, his sponsor,
had been ready with the answer, “Laconia, Ohio.” Mills had been
afraid to ask the question himself. Long-closed doors swung open
slowly along the dim corridor of memory and phantom shapes
emerged—among them a figure Franklin Mills recognized as himself.
Swiftly he computed the number of years that had passed since, in
his young manhood, he had spent a summer in the pleasant little
town, sent there by his father to act as auditor of a manufacturing
concern in which Franklin Mills III for a time owned an interest.
Marian Storrs was a lovely young being—vivacious, daring, already
indifferent to the man to whom she had been married two years....
He had been a beast to take advantage of her, to accept all that she
had yielded to him with a completeness and passion that touched
him poignantly now as she lived again in his memory.... Was this
young man, Bruce Storrs, her son? He was a splendid specimen,
distinctly handsome, with the air of breeding that Mills valued. He
turned from the window and walked idly about the room, only to
return to his contemplation of the hazy distances.
The respect of his fellow man, one could see, meant much to him.
He was Franklin Mills, the fourth of the name in succession in the
Mid-western city, enjoying an unassailable social position and able to
command more cash at a given moment than any other man in the
community. Nothing was so precious to Franklin Mills as his peace of
mind, and here was a problem that might forever menace that
peace. The hope that the young man himself knew nothing did not
abate the hateful, hideous question ... was he John Storrs’s son or
his own? Surely Marian Storrs could not have told the boy of that old
episode....
Nearly every piece of property in the city’s original mile square had
at some time belonged to a Mills. The earlier men of the name had
been prominent in public affairs, but he had never been interested in
politics and he never served on those bothersome committees that
promote noble causes and pursue the public with subscription
papers. When Franklin Mills gave he gave liberally, but he preferred
to make his contributions unsolicited. It pleased him to be
represented at the State Fair with cattle and saddle horses from
Deer Trail Farm. Like his father and grandfather, he kept in touch
with the soil, and his farm, fifteen miles from his office, was a show
place; his Jersey herd enjoyed a wide reputation. The farm was as
perfectly managed as his house and office. Its carefully tended
fields, his flocks and herds and the dignified Southern Colonial
house were but another advertisement of his substantial character
and the century-long identification of his name with the State.
His private office was so furnished as to look as little as possible like
a place for the transaction of business. There were easy lounging
chairs, a long leathern couch, a bookcase, a taboret with cigars and
cigarettes. The flat-top desk, placed between two windows,
contained nothing but an immaculate blotter and a silver desk set
that evidently enjoyed frequent burnishing. It was possible for him to
come and go without traversing the other rooms of the suite. Visitors
who passed the office boy’s inspection and satisfied a prim
stenographer that their errands were not frivolous found themselves
in communication with Arthur Carroll, Mills’s secretary, a young man
of thirty-five, trained as a lawyer, who spoke for his employer in all
matters not demanding decisions of first importance. Carroll was not
only Mills’s confidential man of business, but when necessary he
performed the duties of social secretary. He was tactful, socially in
demand as an eligible bachelor, and endowed with a genius for
collecting information that greatly assisted Mills in keeping in touch
with the affairs of the community.
Mills glanced at his watch and turned to press a button in a plate on
the corner of his desk. Carroll appeared immediately.
“You said Shep was coming?” Mills inquired.
“Yes; he was to be here at five, but said he might be a little late.”
Mills nodded, asked a question about the survey of some land
adjoining Deer Trail Farm for which he was negotiating, and listened
attentively while Carroll described a discrepancy in the boundary
lines.
“Is that all that stands in the way?” Mills asked.
“Well,” said Carroll, “Parsons shows signs of bucking. He’s thought
of reasons, sentimental ones, for not selling. He and his wife moved
there when they were first married and their children were all born on
the place.”
“Of course we have nothing to do with that,” remarked Mills, slipping
an ivory paper knife slowly through his fingers. “The old man is a
failure, and the whole place is badly run down. I really need it for
pasture.”
“Oh, he’ll sell! We just have to be a little patient,” Carroll replied.
“All right, but don’t close till the title’s cleared up. I don’t buy law
suits. Come in, Shep.”
Shepherd Mills had appeared at the door during this talk. His father
had merely glanced at him, and Shepherd waited, hat in hand, his
topcoat on his arm, till the discussion was ended.
“What’s that you’ve got there?” his father asked, seating himself in a
comfortable chair a little way from the desk.
In drawing some papers from the pocket of his overcoat, Shepherd
dropped his hat, picked it up and laid it on the desk. He was trying to
appear at ease, and replied that it was a contract calling for a large
order which the storage battery company had just made.
“We worked a good while to get that,” said the young man with a ring
of pride in his voice. “I thought you’d like to know it’s all settled.”
Mills put on his glasses, scanned the document with a practiced eye
and handed it back.
“That’s good. You’re running full capacity now?”
“Yes; we’ve got orders enough to keep us going full handed for
several months.”
The young man’s tone was eager; he was clearly anxious for his
father’s approval. He had expected a little more praise for his
success in getting the contract, but was trying to adjust himself to his
father’s calm acceptance of the matter. He drummed the edge of the
desk as he recited certain figures as to conditions at the plant. His
father disconcertingly corrected one of his statements.
“Yes; you’re right, father,” Shepherd stammered. “I got the July
figures mixed up with the June report.”
Mills smiled indulgently; took a cigarette from a silver box on the
taboret beside him and unhurriedly lighted it.
“You and Constance are coming over for dinner tonight?” he asked.
“I think Leila said she’d asked you.”
His senior’s very calmness seemed to add to Shepherd’s
nervousness. He rose and laid his overcoat on the couch, drew out
his handkerchief and wiped his forehead, remarking that it was warm
for the season.
“I hadn’t noticed it,” his father remarked in the tone of one who is
indifferent to changes of temperature.
“There’s a little matter I’ve been wanting to speak to you about,”
Shepherd began. “I thought it would be better to mention it here—
you never like talking business at the house. If it’s going to be done it
ought to be started now, before the bad weather sets in.”
He paused, a little breathless, and Mills said, the least bit impatiently:
“Do you mean that new unit at the plant? I thought we’d settled that. I
thought you were satisfied you could get along this winter with the
plant as it is.”
“Oh, no! It’s not that!” Shepherd hastily corrected. “Of course that’s
all settled. This is quite a different matter. I only want to suggest it
now so you can think it over. You see, our employees were all
mightily pleased because you let them have the use of the Milton
farm. There’s quite a settlement grown up around the plant and the
Milton land is so near they can walk to it. I’ve kept tab this summer
and about a hundred of the men go there Saturday afternoons and
Sundays; mostly married men who take their families. I could see it
made a big difference in the morale of the shop.”
He paused to watch the effect of his statements, but Mills made no
sign. He merely recrossed his legs, knocked the ash from his
cigarette and nodded for his son to go on.
“I want you to know I appreciate your letting me use the property that
way,” Shepherd resumed. “I was out there a good deal myself, and
those people certainly enjoyed themselves. Now what’s in my mind
is this, father”—he paused an instant and bent forward with boyish
eagerness—“I’ve heard you say you didn’t mean to sell any lots in
the Milton addition for several years—not until the street car line’s
extended—and I thought since the factory’s so close to the farm, we
might build some kind of a clubhouse the people could use the year
round. They can’t get any amusements without coming into town,
and we could build the house near the south gate of the property,
where our people could get to it easily. They could have dances and
motion pictures, and maybe a few lectures and some concerts,
during the winter. They’ll attend to all that themselves. Please
understand that I don’t mean this as a permanent thing. The
clubhouse needn’t cost much, so when you get ready to divide the

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Harmonization of International

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Dieses Werk ist urheberrechtlich geschützt. Die dadurch begründeten Rechte,

1 Antitrust or Competition Policy: Magna Carta of free enterprise 4

2 Global Markets need Global Governance 23

3 Benefits of unifying Antitrust Regulations 31

4 Unifying Competition laws: Areas of Harmonization 36

4.2 Unifying Procedural Aspects 37

7 Other Modalities of Cooperation 51

Chapter 4 deals with areas of harmonization. Effective unification of international com-

At present, feasibility of a unified international competition policy is under doubt. How-

Justice Peckham differentiated between ordinary contracts – ‘a lease or purchase by a

of an individual or corporation’ and agreement in restraint of trade under the Sherman

Wide geographical reach, technological innovation and efficient use of modes of

The Standard Oil Case (1911)15

Appalachian Coals vs. United States: The New Deal17

Unites States vs. Von’s Grocery Company23

United States vs. Arnold Schwinn & Company24

Telex Corporation vs. IBM Corporation29

Continental TV Inc. vs. GTE Sylvania Inc.30

Big was not necessarily seen as an evil.

1.2 The Great Antitrust Paradigm Shift

Reasons for Paradigm Shift

-Developments in the economy

Industrialization and thereafter-great depression of 30s had strong influence on economy

Proactive approach of political system

Influence of Think tank

Change in economic policy, thinking or parameters of experts or to be precise of group of

1.3 Contemporary Antitrust World

Antitrust framework followed by large economies, such as the US antitrust framework,

is considered as Musterbeispiel. Recent trends indicate convergence of the EU competi-

1.4 Aims of Competition Policy

Objectives of Antitrust Regulations:

Such discrepancies regarding purposes of competition policy create hindrance in devising

Promoting Market Integration

After describing fundamentals, evolution and various objectives of competition policy,

1.5 Pillars of Antitrust Mechanism: The Efficiency Factor & The

“Surprisingly there appears to be no obvious relationship between competition and com-

The Efficiency Factor

1.6 An Important Task: Create perfect blend of efficiency and

1.7 An Overview of Antitrust Regulation of various countries

Recently scholars are talking about importance of dynamic efficiency as an objective of

Competition laws in Germany are strongly influenced by agenda of the neo-liberal

2.1 Puzzle: Whether there is need for unifying international

marketplace even without formal codified competition policy.78

2.2 Need for Global Competition Laws

Competition Policy Instruments Objectives

National competition Policy National Competition - Domestic Welfare

Nowadays antitrust authorities are encountering giant companies having worldwide