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Globalization of Industries and Extraterritorial Application of Antitrust Laws

Author Koh Dong-su, Ju Hyeon, Choi Hyeon-gyeong, Baek Eung-jae Date 2014.12.29 Page 199
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Under the recent trend of globalization of industry, the extraterritorial application of competition law is much wider in the range of jurisdiction and stronger in sanctions against international cartels. This study reviews the nature of extraterritorial application of competition law and suggests the direction of competition policy of the Korea Fair Trade Commission (KFTC) and the desirable plan for firms’response to the antitrust laws and sanctions.

With the increasing globalization of industry due to the rapid expansion of international vertical division of labor since the 1990s, the competition between global companies over the lead in the global value chain has been intensified. Accordingly, the current economic policy has become difficult to consider only a matter of internal borders. Globalization results in extraterritorial application of domestic laws and regulations, especially on competition policy.
Extraterritorial applications of competition policy in each country’s competition authority, including the US and EU tend to be synchronized in products, and punishments and fines on cartel are more intensified. Therefore, firms participated in cartel are punished with overlapping sanctions, which leads to a greater burden for firms.
In addition, there have been globally growing trends of private enforcement for international cartel in addition to public enforcement. The econometric analysis of cartel is mainly related to detection, estimation of social loss and estimation of private loss of trade opponent of it.
In order to respond to the global trend of industry and competition policy, firms should make the effective compliance program. In addition, For efficient implementation of competition policy, it is necessary for KFTC to cooperate with foreign competition authorities, and establish the systemic foundation that enhance international cartel investigation.