Extra-Territorial Jurisdiction under

Competition Law
Project submitted to
Mr. Atif Khan
(Faculty: Competition Law)

Project submitted by
Talib Mustafa
Semester IX
Roll No. 164

HIDAYATULLAH NATIONAL LAW UNIVERSITY

RAIPUR, C.G.

1|Page

ACKNOWLEDGEMENT
I am highly elated to carry out my research on the topic, Extra territorial jurisdiction under
competition law. I would like to give my deepest regard to my course teacher Mr. Atif Khan,
who held me with his immense advice, direction and valuable assistance, which enabled me to
march ahead with this topic. I would like to thank my friends, who gave me their precious time
for guidance and helped me a lot in completing my project by giving their helpful suggestion and
assistance. I would like to thank my seniors for their valuable support. I would also like to thank
the library staff and computer lab staff of my university for their valuable support and kind
cooperation

Talib Mustafa
Semester IX

2|Page

CONTENT

1. INTRODUCTION..4
I.
II.
III.
IV.
V.
VI.
VII.
2.
3.
4.
5.
6.
7.
8.
9.

RESEARCH METHODOLOGY.6
OBJECTIVES6
SOURCES OF DATA7
MODE OF CITATION.7
REVIEW OF LITERATURE..8
RESEARCH HYPOTHESIS9
RESEARCH QUESTIONS..9

Concept Of Extra-Territorial Jurisdiction...10

Extra-Territorial Jurisdiction under US Competition Law...11
Extra-Territorial Jurisdiction under EU Law.12
Jurisdiction of CCI......14
Application of Extra-territorial jurisdiction under Competition Act....20
International Co-operation for application of Extra territorial jurisdiction.24
CONCLUSION....26
BIBLIOGRAPHY...27

INTRODUCTION

We will be a dynamic regulator, but not a soft one

3|Page

Mr. Dhanendra Kumar (Chair Person, CCI)1

The Competition Act, 2002 (Act) was enacted to replace the Monopolies and Restrictive Trade
Practices Act, 1969 (MRTP Act), which dealt primarily with the control of monopolies and the
prohibition of monopolistic and restrictive trade practices. The much delayed passing of the Act
is touted by many as the final signs of the Indian economy maturing and in the process delivering
the final blow in unshackling the past of the license raj in India. The very intent of the Act is to
promote and sustain competition in markets, to protect the interests of consumers and to ensure
freedom of trade carried on by other participants in markets in India. In keeping with this intent,
not only is the Competition Commission of India (CCI) vested with powers to monitor
anticompetitive behaviour taking place within the country but under Section 32 of the Act also
empowered to take cognizance of an act taking place outside India but having an adverse effect
on competition within India.2
The concept of extra-territorial jurisdiction is an extension as well as a contradiction to the
concept of sovereignty. Sovereignty, a nations exclusive right to govern itself, has its roots in
public international law but has been internalized to the extent that it has become a cornerstone
for the constitutions of various nations around the world. India, in this case, is not different and
has sovereignty mentioned as one of its characteristics in the first line of its Preamble to the
mammoth Constitution. On the other hand, the concept of extra-territoriality finds its roots under
Article 245(2) of the Constitution which reads as "(2) No law made by Parliament shall be
deemed to be invalid on the ground that it would have extraterritorial operation." Thus, a
combined reading of the concept of sovereignty and Article 245(2) leads to an inference that
India not only has the sole right to govern itself by legislating, enacting and executing various
laws and regulations but it also has a right to frame laws that gives it unbridled powers to govern
beyond its territory. However, this inference is unacceptable as it is in direct contravention to the
concept of sovereignty. Can really the powers of a sovereign state or one of its government body
be unbridled? For sovereignty and extra-territorial operation of laws to co-exist, a balance
between the two should be achieved.
1http://economictimes.indiatimes.com/Interview/Dhanendra-Kumar-Chairman-Competition-Commission-ofIndia/articleshow/4251850.cms
2 Extraterritorial Application of the Competition Act and Its Impact by Kartik Maheshwari and Simone Reis

4|Page

Where major economic superpowers like, US, UK etc have a long history of competition regime,
very recently in 2002, India entered into this regime. Many more countries are also likely to
adopt legal frame work for competition law to maintain competitiveness in their domestic
market. But as trans-border trade and commerce has now become common phenomenon,
domestic laws having territorial effect is not potent enough to curtail the anti-competitive
practice performed in the foreign country and having adverse effect in that country. This
unfortunate situation insisted the countries to give extraterritorial application of their competition
laws. This unilateral recognition of extraterritoriality has turned the world into more problematic
situation. It is because of the simple reason that neither international law nor primitive legal
principles allow enforcement of the laws of one sovereign into another sovereign.
Indian competition law also confers such power to the Indian competition authorities. Section 32 of
the Competition Act, 2002 specifically empowers the Commission to inquire into any anticompetitive act taken place outside India but having appreciable adverse effect in the relevant market
in India. The said provision also empowers the Commission to pass such order as it may deem fit, if
inquiry approves anti-competitive practice.

OBJECTIVES

5|Page

1. To have a detailed understanding of the concept of extra territorial jurisdiction;

2. To analyze its application under US law and EU law;
3. To trace the historical perspective and its present day application under Competition Act,
2002.

RESEARCH METHODOLOGY

The mode of writing this research paper is doctrinal in nature. Secondary and Electronic
resources have been largely used to gather information and data about the topic. Books and other
reference as guided have been primarily helpful in giving this project a firm structure. Websites,
dictionaries and articles have also been referred. Footnotes have been provided wherever needed,
to acknowledge the source.

SOURCES OF DATA

6|Page

The sources used include books on competition law, case law reporters, and case law journals.
An attempt has been made to consult online case resources like the Supreme Court Online and
Manupatra Online.

MODE OF CITATION

A uniform mode of citation has been followed throughout the project.

REVIEW OF LITERATURE

7|Page

S. M. Dugar, Commentary on MRTP Law, Competition Law & Consumer Protection

Law, Wadhwa and Company Nagpur, Volume I, 4th Edition

This book deals with the concept of extra territorial jurisdiction under competition law in India
under MRTP Act as well as Competition Act, 2002.
The commission is competent to enquire into any agreement or abuse of dominant position or
combination if the same has appreciable adverse effect on competition on the relevant market in
India and it is immaterial whether the agreement has been entered into outside India or any
party to the agreement is outside India, or the enterprise is outside India, or combination has
taken place outside India.

Vinod Dhall, Competition Law Today: Concepts, Issues and the Law in Practice, Oxford
University Press

This book deals with the concept of extra-territorial jurisdiction under different jurisdictions such
as US, UK and EU jurisdiction.
At one time, the question of federal jurisdiction was terribly important to US competition law,
with many leading cases turning on whether a restraint sufficiently affected interstate commerce.
Those days are over; today, as a practical matter, US conduct sufficiently harmful otherwise to
violate the antitrust laws could rarely, if ever, be defended on grounds that the conduct and its
effects were too lacalized.

RESEARCH HYPOTHESIS

8|Page

Competition Commission of India has enormous power to exercise its extraterritorial jurisdiction
but the commission does not have such resources which is required for the recovery of monitory
penalty imposed while exercising this power.

RESEARCH QUESTIONS
1. What is extraterritorial jurisdiction and what is the US and UK practice of extraterritorial
jurisdiction?
2. What is the scope and extent of extraterritorial power of Indian Competition Commission?
3. What is the procedure for the enforcement of extraterritorial jurisdiction by the Commission?
4. How the Commission shall recover monitory penalty imposed while exercising extraterritorial
jurisdiction?
5. What is the role of international organisations for the co-operation and co-ordination among
competition authorities of various countries?

Concept of Extraterritorial Jurisdiction

9|Page

The world of economics and commerce is becoming increasingly global. Businesses are
continually their organization and structure through mergers, acquisitions, and joint ventures to
complete effectively in the international market. To maintain pace with this constant evolutionary
process, communal competition authorities must adopt as well. As a result, various countries and
trading blocs have reached agreements dealing with the impacts on competition created by the
moving tide of commercial change. These agreements provide a cooperative method to avoid the
burdensome legal aggravations and political turmoil that can arise if one country attempts to
enforce its competition laws on entities of another jurisdiction.
The limits upon a states jurisdictional competence and therefore upon its ability to apply its
competition laws to overseas undertakings are matters of public international law 3. There are two
elements to a states jurisdictional competence. First, a State has jurisdiction to make laws that is
to say to lay down general or individual rules through its legislative, executive or judicial
bodies.4 This is known variously as a States legislative, prescriptive or subject-matter
jurisdiction. Secondly, a state has jurisdiction to enforce its laws, that is the power of a State to
give effect to a general rule or an individual decision by means of substantive implementing
measures which may include even coercion by the authorities.5 This is known as States
enforcement jurisdiction.
Subject-matter jurisdiction is generally accepted in public international law that a State has
power to make laws affecting conduct within its territory6 and to regulate the behaviour of its
citizens abroad, citizens for this purpose including companies incorporated under its law.7 The
territoriality principle has been extended in a logical way so that a State is recognized as having

3 Brownlie Principles of Public International Law; Clarendon Press, 6th ed, 2003, Ch. XV
4 Per Advocate General Darmon in Wood Pulp Case, [1988] ECR 5193, p 5217
5 Ibid
6 Territoriality Principle
7 Nationality Principle

10 | P a g e

jurisdiction not only where acts originate in its territory, but also where the objectionable conduct
originates abroad but completed within its territory.8
For the purpose of subject-matter jurisdiction the territoriality and nationality principles are
sufficient to comprehend a great number of infringements of competition law, either because the
overseas undertaking will have committed some act- for example taking over a competitor or
charging predatory prices within the territory of the State concerned to apply its law, or because
an agreement will have been made between a foreign undertaking and firm established within the
State in question. In such situations an assertion of subject-matter jurisdiction by one State over
natural or legal persons in another may not lead to a conflict at all, provided that the former does
not seek to enforce its law in the territory of another state. Most of the controversial conflicts
between States in these matters have concerned enforcement rather than subject-matter
jurisdiction, and it is against enforcement measures that States have adopted blocking statues.9
Enforcement jurisdiction tends to give rise to the most acute conflicts between States. It is
generally recognized that even if subject-matter jurisdiction exists in relation to the conduct of
someone in another state, it is improper to attempt to enforce the law in question within that
States territory without its permission. For these purposes of enforcement does not mean only
the exaction of penalties and the making of final orders such as perpetual injunctions, but refers
to all authoritative acts such as the service of a summons, a demand for information or carrying
out an investigation. Gathering information can be a particular problem for competition
authorities, as business becomes increasingly global, the likelihood of a national authority
requiring information which is located outside its jurisdiction increases correspondingly. A
problem is that jurisdictional rules developed in the nineteenth century are not particularly wellsuited to the business context or the information technology of the twenty-first century.
Many legal systems contain provisions whereby States assist one another in relation to these
matters. For example the Hague Convention on the Taking of Evidence Abroad to which India is
also signatory, provides for one State to assist another in the gathering of evidence. The
recognition and enforcement of foreign judgments is an important part of private international
8 Principle of objective territoriality
9 Richard Which, Competition Law, Oxford Univ. Press, 6th Ed., 2009, Pg. 472

11 | P a g e

law. However cooperation on evidence and the enforcement of judgments is often not provided
by one State to another where the former takes exception to an attempt by the latter to assert its
law extraterritorially, and most legal systems contains restrictions on the divulging by competition
authorities of confidential information.

EXTRA-TERRITORIAL JURISDICTION UNDER US

COMPETITION LAW
2.1 Introduction
The US has one of the oldest competition laws in the world. The main U.S. antitrust statute, the
Sherman Act, is a criminal statute in that violations of it are criminal offences. However, it can
also be enforced through private action. Because the Sherman Act dates from 1890 its
extraterritoriality reach inevitably became an issue before the EEC even existed.10 The Effects
Doctrine propounded on the US courts has provided the central concept around which the
discussion of extraterritoriality in competition law is usually conducted.11
The two U.S. antitrust provisions that most frequently give rise to extraterritorial jurisdiction are
sections 1 and 2 of the Sherman Act. Section 1 declares illegal "every contract, combination ... or
conspiracy, in restraint of trade or commerce among the several states, or with foreign nations. 12
Section 2 makes it a felony for any person to "monopolize ... or combine or conspire.., to
monopolize any part of the trade or commerce among the several states, or with foreign nations.
These provisions are enforced through private treble damage actions and injunctive relief in
federal courts pursuant to, respectively, sections 4 and 16 of the Clayton Act.13 References in the
Sherman Act to trade "with foreign nations" suggest that it was intended to regulate certain
10 See R.Y. Jennings, Extraterritorial Jurisdiction and the United States Antitrust Laws (1957) 33 BYIC, 146
11 Alison Jones and Brenda Surfin, EC COMPETITION LAW Second Edition, Oxford University Press,
2004,p.1235.
12 15 U.S.C. 1 (1988).
13 15(a)

12 | P a g e

foreign conduct that restrains or monopolizes trade within the United States. Determining
precisely what falls within the scope of such regulation of foreign activity, however, requires
guidance from the courts.
2.2 CASE LAWS
The territorialist approach describes the position adopted by the US Supreme Court in 1909 in
American Banana Co. v. United Fruit Co. 14 stating that the character of an act as lawful or
unlawful must be determined wholly by the law of the country where the acts is done. 15 Justice
Holmes, writing for the majority, hold that deposit the fact that both the plaintiff and defendant
were American corporations, the conduct of the defendant was beyond the reach of the Sherman
Act, because the acts in question took place in Panama and Cost Rica. Under the American
Banana approach, the reach of domestic law is coextensive with the geographic territory of the
country. Acts that take place within the physical confines of the country are subject to local law;
those acts that occur abroad are not.16
This approach was overruled by the US courts in United States v. Aluminium Company of
America,17 wherein the United States courts applied US anti-trust laws to conduct that occurs in
a foreign state but is intended to affect the United States and does in fact bring about such an
effect.
Under US legal system, the federal courts have jurisdiction over a defendant corporation if the
corporation is incorporated or has its principal place of business in the state where the federal
court sits. A court has general jurisdiction over a nonresident corporation if the corporations
contacts with the forum state are continuous and systematic.18 In case, if a court lacks general

14 213 US 347 (1909).

15 Ibid at 356.
16 Andrew T. Guzman: Is International Antitrust Possible, 73 NYLU Rev 1501, 1507 (1998).
17 148 F 2d 416 (2d Cir 1945).
18 Helicopteros Nacionales de Colombia, S.A. Hall 466 US 408 (1984).

13 | P a g e

jurisdiction over the nonresisdent corporation, then the court may be able to exercise specific
jurisdiction over it under minimum contacts theory.
Under US legal system, the federal courts have jurisdiction over a defendant corporation if it is
incorporated or has its principal place of business in the state where the federal court sits. A court
has general jurisdiction over a non resident corporation if the corporations contacts with the
forum state are continuous and systematic.19 In case, if a court lacks general jurisdiction over
the nonresident corporation, then the court may be able to exercise specific jurisdiction over it
under minimum contacts theory.20

APPROACH UNDER EU COMPETITION LAW

3.1 INTRODUCTION
It is difficult to consider the question of extraterritoriality in EC competition law without first
looking at the position in US law. The main U.S. antitrust statute, the Sherman Act, is a criminal
statute in that violations of it are criminal offences. However, it can also be enforced through
private action. Because the Sherman Act dates from 1890 its extraterritoriality reach inevitably
became an issue before the EEC even existed.21
The practice followed in European courts is much similar to the decision of Hartford case. The
European Court of Justice in A. Ahlostron Osakeytio v. Commission,22 approved an

19 Helicopters Nacionales de Colombia, S.A. v. Hall 466 US 408 (1984).

20 International Shoe Co. v. State of Wash., Office of Unemployment Compensation and Placement 326 US 310
(1945).
21 R.Y. Jennings, Extraterritorial Jurisdiction and the United States Antitrust Laws (1957) 33 BYIC, 146.
22 A. Ahlstrom Osakeytio v. Commission Mkt. Rep.(CCH)- 14,491 (27th September 1988).

14 | P a g e

extraterritorial application of the EU competition rules to conduct by the foreign enterprises

which occurred in the foreign countries but affected the commerce among the member states.
3.2 CASE LAWS
Wood Pulp Case23:
This was a case where the EC had imposed fines on certain enterprises, having their registered
offices outside the EC, for violation of Article 81. The charges against them were that they fixed,
in concert, prices to customers in the EC, provided exchange of individualized data concerning
prices with certain other wood pulp producers, and made price recommendations through the
trade association. The appellants, producers of wood pulp and two associations of wood pulp
producers challenged that decision in an appeal to the European Court of Justice.
The Commission had based its decision on the ground that all the addresses of the decision were
either exporting directly to purchasers within the Community, or were doing business within the
Community through branches, subsidiaries, agencies or other establishments in the Community
and that the action in concert applied to the vast majority of the sales of those undertakings to
and in the Community. The Commission concluded:
The effect of the agreements and practices on prices announced and/or charged to customers
and on resale of pulp within the EEC was therefore not only substantial but intended, and was the
primary and direct result of the agreements and practices.
The jurisdiction of the Commission to apply its competition rules to them was challenged by
some of the appellants. The argument was that conduct outside the Community could not be
sought to be regulated merely because the repercussions of that conduct were felt within the
Community.
Meeting the objection, the Court held:
Where wood pulp producers established in those countries sell directly to purchasers established
in the Community and engage in price competition in order to win orders from those customers,
that constitutes competition within the common market. It follows that where those producers
concert on the prices to be charged to their customers in the Community and put that
concertation into effect by selling at prices which are actually coordinated, they are taking part in
23 Ibid

15 | P a g e

concertation which has the object and effect of restricting competition within the common
market within the meaning of Article 85 of the Treaty.
The Court pointed out that such conduct had two elements, one relating to the formation of the
agreement or decision and the other, the implementation and that the place of implementation
was the decisive factor. Holding that in as much as the place of implementation was within the
Community, the Communitys jurisdiction to apply its competition rules to such conduct is
covered by the territoriality principle as universally recognized in public international law , the
Court added that when the overseas enterprises implemented their decisions within the
Community, it was immaterial whether or not they had recourse to subsidiaries, agents,
subagents or branches within the Community in order to make their contacts with purchasers
within the Community.

JURISDICTION OF CCI
The mechanism for controlling anti-competitive acts carried on by persons having the location of
their operations at some place in India and, therefore, directly subject to the territorial
jurisdiction of Indian courts and tribunals. It is possible for enterprises without having a fixed
place of business in India to control the operations of any enterprise in India in a manner injuring
the process of competition in India. Share-holding is not necessary for this purpose and it could
be through a distribution agreement, price-fixing arrangement, or exclusive dealing agreements
that have as their object the elimination of a competitor or partitioning the market.
There are overseas cartels operating from different countries and engaged in conspiracies to carry
out such anti-competitive practices that are the serious concern of industrially advanced countries
and they are grappling with the problem of methods of cooperation in rendering these cartels
ineffective, as it is well understood that domestic legislation has only territorial effect. The
16 | P a g e

objective of the establishment is to regulate agreements likely to have an Appreciable Adverse

Effect on Competition24 in India. Such acts may even take place outside India.25 This refers to
the principle of extra-territorial jurisdiction. Section 32 of the Act provides that the Commission
has the power to inquire into any agreement, abuse or combination has, or is likely to have, an
appreciable adverse effect on competition in the relevant market in India.
The Commission has jurisdiction to26:
i) Enquire into Anti-competitive Agreements (eg. Cartel, bid-rigging, etc.);
ii) Enquire into Abuse of dominant position (eg. Predatory pricing, etc.);
iii) Regulate Combinations (mergers/amalgamation, acquisition of shares or controls etc.);
iv) Undertake Competition Advocacy (including advice to the Central Government on
Competition policy issues.
The jurisdiction of the Commission includes seeking compliance of its mandate by taking both
enforcement and non-enforcement measures whereas the enforcement measures extend to
enquiries and regulations, the non-enforcement measures includes undertaking competition
advocacy, creating public awareness and imparting training on competition issues.The section
offers no indication of the type of order that may be passed in such cases and the recommended
action that would disable the person not resident in India from continuing his anti-competitive
arrangement that has effect in India. It should have been specifically stated in the section itself.
The language of section 14 of the MRTP Act in this context may usefully be considered. It runs
as follows:
Where any practice substantially follows within monopolistic, restrictive, or unfair, trade
practice relating to the production, storage, supply, distribution or control of goods of any
description or the provision of any services and any party to such practice does not carry on
24 THE COMPETITION ACT, 2002, No. 12 of 2003 OBJECTIVE
25 THE COMPETITION ACT, 2002, No. 12 of 2003 $ 32.
26 Dr. Alok Ray, Globalisation and Competition: The Role of a Professional, March 2007 The Chartered
Accountant, 1456.

17 | P a g e

business in India, an order may be made under this Act, with respect to that part of the practice
which is carried on in India.
It is well recognized that declaring unlawful any agreement or practice and restraining the local
enterprise that is a party to such an agreement is sufficiently effective to make the arrangement
inoperative within the country enforcing its domestic law. This is how courts have been so far
aided in giving effect to the provisions of any national law in such circumstances.
ISSUES

REGARDING

EXTRA-TERRITORIAL

JURISDICTION

UNDER

COMPETITION LAW
The application of a States antitrust laws to conduct outside that state raises several key issues. 27
Some of the key issues being28:

First, it must be determined whether the law of a particular country (or subdivision
thereof) extends to conduct taking place outside its borders.

Second, it must be confirmed whether any domestic court or tribunal has jurisdiction to
hear the matter.

Third, if the law does have extraterritorial reach and a domestic court or tribunal has
jurisdiction to hear the case, practical problems of enforcement of enforcement will arise,
both with respect to the obtaining of evidence and the implementation of any fines or
penalties.

HISTORICAL BACKGROUND OF EXTRA-TERRITORIAL JURISDICTION UNDER

THE INDIAN COMPETITION LAW
27 Calvin S. Goldman, Q.C. and J.D. Bodrug (Co-Editors), COMPETITION LAW OF CANADA, Volume 2,
JurisPublication, 2005, p. 13-3.0

28 Ibid, p 13-14

18 | P a g e

Dramatic changes have taken place in the Worlds economy in a remarkably short period of time.
These developments present significant challenges for systems of competition law. The
economic effects of cartels and anti-competitive behavior on the part of firms with market power
and of mergers are not constrained by national boundaries. Until relatively recently the
international component of Competition Law was predominantly concerned with the question of
whether one Country could apply its competition rules extraterritorially against an undertaking or
undertakings in another country, where the latter behave in an anticompetitive manner having
adverse effects in the territory of the former and whether there should be laws to prevent the
excessive assertion of extraterritorial jurisdiction29
In Hridas Exports v. All India Float Glass Mrfs. Association,30 a complainant before the
MRTP Commission against three Indonesian companies alleging that they were manufacturing
float glass and were selling the same at predatory prices in India, and were hence resorting to
restrictive and unfair trade practices. In the complaint, it was stated that the float glass of
Indonesian origin was being exported into India at the CIF price of US $ 155 to 180 PMT. At this
price, some float glass had been shipped into India during the period December, 1997 to June,
1998. It was alleged that these sale prices were predatory prices as they were less than not only
the cost of production for the product in Indonesia but also the variable cost of production of the
product. The complainant gave figures indicating the estimated cost of float glass in India with a
view to demonstrate that the Indian manufacturers of float glass in India with a view to
demonstrate that the Indian manufacturers of float glass would not be able to compete with the
price at which the Indonesian manufacturers were presently selling or intending to sell to Indian
consumers. On this basis, it was contended that the sale of float glass by the Indonesian
manufacturers at the said price of US$ 155 to 180 PMT will restrict, distort and prevent
competition by pricing out Indian producers from the market. This would result in lowering the
production of the Indian producers from the market. This would result in lowering the production
of the Indian industry and the consequent idle capacity and losses would force the industry to
29 Richard Whish, COMPETITION LAW, Fifth edition, Oxford University Press, 2003, p. 427.
30 AIR 2002 SC 2728.

19 | P a g e

become sick which would lead to its closure which would have a direct impact on the
employment in the Industry. The respondent replied that it has never exported glasses into the
India and the MRTP Act dosent contain any long arm provision in this regard. The case
appealed to the Supreme Court of India and the court held that:31
Reading sections 1(2), 2(e) and 14 together can leave on manner of doubt that the Act has no
extra territorial operation. Section 1(2) specifically provides that the Act extends to the whole of
India except the State of Jammu and Kashmir, thereby defining the geographical boundary of the
operation of the Act. Section 2(e)(iii) defines goods as including those goods which are supplied,
distributed or controlled in India or goods imported into India. In the present, we are concerned
with float glass which was sought to be imported into India. For the purpose of the Act, it is only
the goods imported into India which will fall within the definition of the word goods in section
2(e). As such for the Commission to exercise any jurisdiction goods must be those which are
imported into India. For the purpose of the Act, it is only the goods imported into India which
will fall within the definition of the word goods in Section 2(e). As such for the Commission to
exercise any jurisdiction goods must be those which are imported into India. As long as the
import has not taken place and the goods are merely intended for export to India the same will
not fall within the definition of the word goods in section 2(e).
The Supreme Court of India while dealing with the application of effects doctrine in India and
the jurisdiction of the MRTP Commission for the actions and agreements which are entered into
outside India but the resultant adverse effect is experienced in India held that: 32 This effects
doctrine will clothe the MRTP Commission with jurisdiction to pass an appropriate order even
though a transaction, for example, which results in exporting goods to India at predatory price,
which was in effect a restrictive trade practice, had been carried out outside the territory of India
if the effect of that had resulted in a restrictive trade practice in India. If power is not given to the
MRTP Commission to have jurisdiction with regard to that part of trade practice in India which
is restrictive in nature then it will mean that persons outside India can continue to induldge in
31 Ibid
32

20 | P a g e

such practices whose adverse effect is felt in India with impugnity. A competition law like the
MRTP Act is a mechanism to counter cross border economic terrorism. Therefore, even though
such an agreement may enter into outside India can continue to indulge in such practices whose
adverse effect is felt in India with impugnity. A competition law like the MRTP Act is a
mechanism to counter cross border economic terrorism.
Therefore, even though such an agreement may enter into outside the territorial jurisdiction of
the Commission but if it results in a restrictive trade practice in India then the Commission will
have jurisdiction under section 37 to pass appropriate orders in respect of such restrictive trade
practice. The court finally concluded that:
(a) The MRTP Commission can inter alia take action when a restrictive trade practice is carried
out in India in respect of imported into India and hence the matters are beyond the jurisdiction of
the MRTP Commission;
(b) Under the MRTP Act, there is no power to stop import;
(c) The MRTP Act does not confer extra territorial jurisdiction on the MRTP Commission;
(d) If a cartel is selling goods to India and still making profit then it is not in the interest of the
general body of consumers in India to prevent the import of such goods.
It was realized that in certain aspects the MRTP Act was too narrow in its sweep to deal with
competition issues especially in the era of liberalization and gloabalization. The MRTP
Commission had taken up complaints against anticompetitive practices but was handicapped on
account of certain limitations in the law. These limitations have been adequately covered in the
new law.
They thus filed an appeal in the Supreme Court of India which, inter alia, passed the following
order:

The MRTP Act does not confer extra territorial jurisdiction on the MRTP Commission;

Therefore, due to the shortcomings of the MRTP Act Section 32 has been incorporated in the
Competition Act, 2002 which makes provision with regard to extraterritorial jurisdiction.

21 | P a g e

EXTRA-TERRITORIAL APPLICATION AND

ENFORCEMENT OF INDIAN
COMPETITION LAW
Section 32 of the Competition Act, 2002 we find that it makes provision with regard to
extraterritorial jurisdiction of Indian Competition Authority.33 The Proviso of Section 18 states
the Competition Commission may enter into any Memorandum or arrangement with the prior
approval of the Central Government, with any agency of any foreign country in order to

33 Here Indian Competition Authority shows the Competition Commission of India

22 | P a g e

discharge its duty under the provisions of this Act. A treaty is different from an understanding.
Thus the mandate of the Competition Commission extends beyond the boundaries of India.
In case any agreement that has been entered outside India and is anti-competitive in terms of
sec.3 of the Act; or any party to such an agreement34 is outside India; or any enterprise35 abusing
the dominant position is outside India; or a combination has taken place outside India; or any
other matter or practice or action arising out of such agreement or dominant position or
combination is outside India, if such agreement, combination or abuse of dominant position has
or are likely to have an adverse effect on competition in the Indian market, the CCI shall have the
power to inquire into such agreement, combination or abuse of dominant position has or are
likely to have an adverse effect on competition in the Indian market, the CCI shall have the
power to inquire into such agreement or dominant position or combination if have or are likely to
have an appreciable adverse effect on competition in the relevant market in India.
By looking at the language of Section 32 of the Competition Act, 2002 it may be concluded that
in India also the Effects Doctrine may be applied as it has been recognized under Section 32.
Commission has notified the Competition Commission of India (General) Regulations 2009 36 so
the process for the enforcement of extraterritorial jurisdiction shall be according to this
regulation and the Code of Civil Procedure, 1908 wherever applicable.

International Cooperation and Coordination on

extraterritorial application of Competition Laws
The Principles of public international law respects the sovereignty of independent states and do
not recognizes the enforcement of laws of one sovereign into the other sovereign state without
their will. It does not give an adequate answer to the problems that arise when true conflicts
occur between competition authorities, and yet the scope for such conflicts could increase as
more States adopt their own codes of competition law and as business becomes increasingly
34 THE COMPETITION ACT, 2002, No. 12 OF 2003 4 2(B)
35 Ibid, S. 2(H).
36 2

of 2009
23 | P a g e

international. In order to resolve this problem some international organizations have come up
with global cooperation and coordination network to curb such situation of discordant disputes
arising out of extraterritorial application of various competition authorities. Some of these
endeavors are considered belowICC action to resolve extraterritoriality problems37
Over the past two decades, ICC has voiced the concern of international business regarding the
negative effects of extraterritoriality on world trade and investment. In 1986, ICC adopted a
policy statement urging governments to avoid application of their laws to situations unconnected
or only loosely connected with their territory and to promote intergovernmental consultation and
cooperation to avoid and, where necessary, resolve extraterritoriality disputes. In the year 1986,
ICC also established an international task force to prepare a report on the various aspects of
extraterritoriality and its adverse consequences on international business. 38 In recent years, ICC
has continued to pursue its efforts against extraterritoriality, including by acting as amicus curiae
before courts such as the U.S. Supreme Court in cases in which the extraterritorial application of
national laws represented a threat to international commerce.
World Trade Organisation
Post war Havana charter for an International Trade Organisation contained an antitrust code. 39
However this was not incorporated into the Central Agreement on Trade of 1947, the
organisation from which the WTO developed. The WTO was established on 1 January 1995, and
is predominantly concerned with issues of trade, rather with competition policy. The relationship
between trade and competition policy is a major subject I its own right, as is the debate as to the
institutional mechanisms needed to deal with the new economic order. The rules of the WTO do
not impose obligations on undertakings in relation to competition. A working group constituted
by WTO has submitted its report in 2002, to study the interface between World Trade and
competition policy. However, at the current stage it does not seem possible for WTO to initiate
37 http://www.iccwbo.org/uploadedFiles/ICC/policy/trade/Statements/103-33%205%20Final.pdf, 15/07/09, 01.00
PM
38 Extraterritorial Application of National Laws, 1987, Kluwer and ICC Publishing(This report has provided the
basis for continued international dialogue promoting the importance of international comity and consultation and
cooperation to further international trade and investment.)
39 Chapter V, A charter for World Trade; The Macmillan Company, 1949; P-231-327

24 | P a g e

for a Global Authority in relation to competition matters but it is quite possible that its system of
dispute settlement could be extended to competition law matters.40
International Competition Network
A very appreciable step has been taken by United States Antitrust Authorities in order to explore
the scope for collaboration among interested governments and international agencies to create a
new venue in which ideas could be exchanged and work undertaken towards common solutions
of competition law and policy problems.41 The report refers this initiative as Global Competitive
Initiative. This initiative would foster dialogue in relation to range of matters, including the
multilateralisation and deepening of positive comity; the development of consensus principles on
best practice in relation to phenomena such as hard-core cartels, consideration and review of he
scope of governmental exemptions and immunities from competition law, rationalization of
system of merger notification and review, analysis of serious issues such as cartels and also the
provision of dispute negotiation and technical assistance services. The ICPAC report led in
October 2001, to the establishment of International Competition Network (ICN) as an
international forum for competition law and policy. It works as a complementary to that of
UNCTAD, the OEC, and the WTO. ICN is an informal, virtual network that seeks to facilitate
cooperation between competition authorities and to promote procedural and substantive
convergence of competition laws; steering group overseas the conduct of its business. Any
national or international organization, responsible for the enforcement of competition law, can be
its member.42

CONCLUSION
40 Ehlermann and Ehring WTO Dispute Sittlement and Competition Law, Fordham International Law Journal,
2003, P-1505.
41 Final report of the International Compettion Policy Advisory Committee to the US Attorney General and
Assistant Attorney General for Antitrust, Published in February 2000, available at
www.usdog.gov/atr/public/speeches/future.txt.
42 Richard Which, Competition Law, , Oxford University Press, 6th edition, 2009, Pg-492.

25 | P a g e

A conclusion can be drawn that as MRTP Act did not make any provision with regard to
extraterritorial jurisdiction which affected competition in India. The present legislative
framework of the competition law of India is one step ahead to the framework of other economic
super powers, like US, EU and Canada etc. The basis of this assertion is that the newly drafted
Indian Competition Act is quiet unambiguous and resolves all lacunae of the competition laws of
these countries.
So far as extraterritorial jurisdiction of Competition Commission is concerned, the statute in very
clear words gives the commission power of inquiry and to pass an order which the Commission
deems fit irrespective of the territorial limits of the Commission. The Act also states that the
Commission shall have power to regulate its own procedure. Thus, for the effective exercise of
its power, Commission can adopt any procedure. As a result of these provisions Commission
holds massive power to regulate competitive market in India.
Extraterritorial jurisdiction of the commission, enshrined under section 32 of the Act, makes the
Commission a Dynamic and powerful regulatory body. This is one of the core provisions of the
Act. This Section has similar effects as Article 81 and 82 of EC treaty and section 1 and Section
2 of US Sherman Act have. The Competition Act no doubt makes the Commission a dynamic
and powerful regulator but effective exercise of these powers can only prove the commission a
strong market regulator in reality. When the question of exercise of extraterritorial jurisdiction of
Commission comes, the commission seems a little helpless because extraterritoriality depends
more on the diplomatic relations with other jurisdictions.
The recovery of monitory penalty imposed by exercising extraterritorial jurisdiction need a
special regulation because it is an uncommon and special power of the Commission and so far
this special regulation is notified by the Commission the General Regulation 2009 and Code of
Civil Procedure shall be applicable.

Bibliography
26 | P a g e

Books

Competition Law Today: Concepts, Issues and the Law in Practice, edited by Vinod

Dhall (Oxford University Press), 2007

Richard Which, Competition Law, Oxford University Press; 6th Edition; 2009
Mehta Pradeep S., Competition Regimes in the World- A Civil Society Report, CUTS

International
Lloyed P.J. and Vautier M. Kerrin, Promoting Competition in Global Markets A Multi-

national Approach, Edward Elgar Publishing Ltd., 1999

Ramappa T, Competition Law in India, Policy Issues and

Developments, Oxford

University Press, 2006

Acts and Regulations

The Competition Act, 2002 (No. 12 of 2003)

The Code of Civil Procedure, 1908
The Competition Commission of India (General) Regulations, 2009 (No. 2 of 2009)

Articles

Fenney, David J., The European Commissions Extraterritorial

Corporate Mergers, Georgia State University Law Review, Vol. 19, Number 2.
Sachse Tatjana, Extraterritorial Application of Competition Laws in the US and the

Jurisdiction over

European union, CUTS Centre for Competition, Investment & Economic Regulation,

No. 4/2006
Geradin Damien, et al., extraterritoriality, Comity and Cooperation in EC Competition

Law.
Extraterritoriality, Institutions, and Convergence in International Competition Policy,

Kovacic William E., 77 Chi-Kent L, Rev. 265 (2001)

Kojima Takaaki, International Conflicts over the Extraterritorial Application of

Competition Law in a Borderless Economy

Nadelmann Kurt H., Recognition of Foreign Money judgment in France, The American

Journal of Comparative Law, Vol. 5, No. 2 (Spring, 1956), pp. 248-256

Recognition and Enforcement of Foreign Money Judgment in Germany, Schweizer
Kobras Lawyers, Sydney
27 | P a g e

OECD Reports 1999, 2003 and 2007

28 | P a g e