Chapter 2 concluded that competition law is beneficial. Chapter 3 now considers whether an international competition agreement would be desirable. Chapter 3 undertakes this task in the following manner:

• Section 3.1 outlines how trends in globalisation and multinational corporate expansion have exacerbated the risk of cross-border anti-competitive conduct. Such conduct is not currently regulated effectively on an international basis. Section 3.1 identifies that cross-border spillovers (or ‘externalities’) provide an important policy justification for an international competition agreement.

• Section 3.2 identifies the current approach of the international community to the regulation of cross-border anti-competitive conduct, namely via the extraterritorial application of competition laws. Section 3.2 identifies inherent difficulties in an extraterritorial approach, including jurisdictional conflict.

While beyond the scope of this book, this chapter also identifies a number of economic models which conclude that greater international co-ordination of competition law would be welfare enhancing where each nation enforces its competition laws on an extraterritorial basis in accordance with its national self-interest. Chapter 3 therefore establishes that an international competition agreement is desirable and would be welfare enhancing relative to the status quo.

The globalisation of competition

Globalisation of the international economy

Over the last three decades the world has experienced a period of unprecedented economic integration. World trade as a proportion of global production increased from some 10% in 1970, to 34% by 2000.