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Published online by Cambridge University Press: 09 March 2016
1 Declaration on the Establishment of a New International Economic Order, G.A. Res. 3Z01 (S-VI), UN GAOR Ad hoc Comm., 6th Spec. Sess., Agenda Item 7, UN Doc. A/RES/3201 (S-VI) (1974), reprinted in 13 Int'l. Leg. Mat. 715 (1974). The Declaration was based upon the concepts of equity, sovereign equality, interdependence, common interest, and co-operation, and was aimed at eliminating the widening gap between developed and developing countries. The Declaration was adopted by the General Assembly on a voice vote. Reservations were entered by the United States, the United Kingdom, the Federal Republic of Germany, France, and Japan; Canada did not enter a reservation.
2 Charter of Economic Rights and Duties of States, G.A. Res. 3281 (XXIX), UN GAOR 2d Comm., 29th Sess., Agenda Item 48, UN Doc. A/RES/3281 (XXIX) (1974), reprinted in 14 Int'l. Legal Mat. 251 (1975). For a timely analysis of the Charter holding the view that it ushered in a new era in international law, see White, R., “A New International Economic Order,” 24 Int’l. & Comp. L.Q. 542 (1975).CrossRefGoogle Scholar Compare White with Brownlie, I., Principles of Public international Law 541-43 (4th ed. 1990)Google Scholar (maintaining that while certain provisions of the Charter seem to be evidence of new customary international law, it does not bind the United States and its associates since they have been “persistent objectors” to the Charter). The Charter was adopted by the General Assembly on a vote of 120 to 6, with 10 abstentions. Canada abstained and, thus, is not a “persistent objector” in the strict sense. For other examples of UN undertakings, see Draft Code of Conduct on Transnational Corporations, UN Doc. E/1990/94 (1990), UN Doc. ST/CTC/SER. A/4 (1986); Draft International Code of Conduct on the Transfer of Technology, UN Doc. TD/CODE TOT/25 (1980), reprinted in 19 Int’l. Legal Mat. 773 (1980).
3 For a discussion of this proposition by the UN Centre on Transnational Corporations, see Draft Code of Conduct on Transnational Corporations, UN Doc. ST/CTC/SER. A/4 (1986), at 1–3. Cf. Muma, , “TNC’s and Economic Development,” 31 CTC Rep. 25 (1991)Google Scholar (which maintains that industrialization and transnational corporations are seen as the engines of growth for LDCs, but create problems as well).
4 UN Doc. TD/RBP/CONF. 1 o/Rev. 1, approved G.A. Res. 35/63, 48 UN GAOR-Supp. (No. 61c); UN Doc. A/RES/35/63 (1980), reprinted in 19 Int'l. Legal Mat. 813 (1980) thereinafter Set].
5 Information Paper on the Negotiations to Complete The Code of Conduct on Transnational Corporations, UN Doc. E/C. 10/1983/S/2 (1983), para. 9.
6 As 1991 approached, the General Assembly called for intensive consultations aimed at the adoption of a code for transnational corporations, but adoption has not yet happened: G.A. Res. 45/186, UN GAOR 2d Comm., 45th Sess., Agenda Item 12, UN Doc. A/RES/45/186 ( 1991 ).
7 Report of the Second United Nations Conference to Review all Aspects of the Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices, UN Doc. TD/RBP/CONF. 3/9 (1991) [hereinafter Second Conference Report], para. 3.
8 Set, supra note 4, pream. Since adoption of the Set, several nations have argued that the voluntary nature of the Set is not very effective in controlling RBPs: see Second Conference Report, supra note 7, para. 90 (India), para. 164 (China). The market-economy countries and eastern European countries have generally rejected any suggestions that the Set should become a legally binding code, however. See Report of the Intergovernmental Group of Experts on Restrictive Business Practices on its Ninth Session, UN Doc. TD/B/1261 ( 1990) [hereinafter Ninth Session Report], para. 34 (German Democratic Republic), para. 65 (USSR); Proposals for the Improvement of the Set of Principles and Rules, UN Doc. TD/B/RBP/73 (1990), para. 5 (The Netherlands for Group B).
9 Set, supra note 4, Section G.2 [emphasis added].
10 Ibid., Section G.4: “In the performance of its functions, neither the Intergovernmental Group nor its subsidiary organs shall act like a tribunal or otherwise pass judgement on the activities or conduct of individual Governments or of individual enterprises in connexion with a specific business transaction. The Intergovernmental Group or its subsidiary organs should avoid becoming involved when enterprises to a specific business transaction are in dispute.”
11 Restrictive Business Practices Affecting International Trade, Particularly That of Developing Countries, and the Economic Development of These Countries, UN Doc. TD/RBP/CONF/2 (1979), paras. 1–5; Restrictive Business Practices Information, UN Doc. TD/B/RBP/INF. 19 ( 1987), para. 27. The Philippines, speaking for the Group of 77 at the Second Review Conference on the Set, called for a solemn commitment from all countries to implement the Set in view of the dominant role played by transnational corporations in the world economy and, in particular, in the economies of the LDCs: Second Conference Report, supra note 7, para. 15.
12 Restrictive Business Practices Information, supra note 1 1, para. 26. The Netherlands, speaking for Group Β at the Second Conference on the Set, noted that the Set had an important part to play in controlling anti-competitive practices: Second Conference Report, supra note 7, para. 30.
13 Restrictive Business Practices Information, supra note ι 1, para. 1. In the Set, supra note 4, Section B. 1, RBPs are defined as follows: “‘Restrictive business practices’ means acts or behaviour of enterprises which, through an abuse or acquisition and abuse of a dominant position of market power, limit access to markets or otherwise unduly restrain competition, having or being likely to have adverse effects on international trade, particularly that of developing countries, and on the economic development of these countries, or which through formal, informal, written or unwritten agreements or arrangements among enterprises have the same impact.”
14 Restrictive Business Practices Information, supra note 11, para. 2. In the Set, supra note 4, Section B.2, dominant market power is defined as follows: ‘Dominant position of market power’ refers to a situation where an enterprise, either by itself or acting together with a few other enterprises, is in a position to control the relevant market, for a particular good or service or group of goods or services.”
15 The main types of cartels include: “domestic cartels,” which act to keep outsiders from selling in a particular market and can, therefore, seriously hamper imports; “import cartels,“ which act as centralized buying organizations of the foreign supply of certain products; “export cartels,” which act as centralized selling organizations for the sale in foreign places of certain products; and “international cartels,” which enterprises from different countries join to control restrictively certain markets. For a review of these main types of cartels and the types of activities in which they engage, see Restrictive Business Practices Information, supra note 11, paras. 3–8.
16 For a general discussion of the various approaches to RBP control, see Moschel, , “International Restraints of Competition: A Regulatory Outline,” 10 Nw. J. Int’l. L. & Bus. 76 (1989).Google Scholar
17 See Northern Pacific Railway v. United States, 356 U.S. 1,4 (1958) (holding that preferential routing agreements compelling the grantees and lessees of land owned by the railroad to ship over the railroad’s lines were unreasonable restraints of trade under s. 1 of the Sherman Act).
18 The “effects doctrine” adopted by U.S. courts stands for the proposition that a court may exercise jurisdiction in anti-trust matters whenever activity abroad has consequences or effects within the forum state. See U.S. v. Aluminum Company of America, 148 F.2d 416 (2d Cir. 1945); Timberlane Lumber Company v. Bank of America, 549 F.2d 597 (9th Cir. 1976); Laker Airways v. Sabena Belgium World Airways, 731 F.2d 909 (D.C. Cir. 1984). Compare A. Ahlstrom Osakeyhtio et al. v. EEC Commission, [ 1987–88 Transfer Binder] Common Mkt. Rep. (CCH) para. 14,491, at 18,595 (1988) (the Court of Justice of the European Communities has not specifically adopted the “effects doctrine,“ favouring instead the principle of territoriality as the underpinning for jurisdiction; a fair reading of this decision, however, allows for the conclusion that the Court has also not specifically rejected the effects doctrine and therefore has preserved for itself some leeway for the future ). For a review of this European Court decision, see Franklyn Salimbene, P., “The ‘Effects Doctrine’ and Extra territorial Jurisdiction in EC Competition Law: The Wood Pulp Case,” 23 N. Atl. Reg’l. Bus. L. Rev. 201 ( 1990).Google Scholar
19 E.g., Canada through the Competition Act (June 1986), the Federal Republic of Germany through the Act Against Restraints of Competition (July 27, 1957), and Finland through the Act on Restrictive Business Practices (1988) have addressed the issue of the jurisdictional reach of competition legislation. Under the Canadian legislation (s. 83), the Competition Tribunal, which deals with civil law matters under the Competition Act, may prohibit the implementation of a decision that is made by a person in Canada as a result of directives from persons outside Canada for the purpose of giving effect to a conspiracy entered into outside Canada that, if entered into in Canada, would have constituted a conspiracy to lessen competition. For the Canadian government’s comments on this issue, see Preparations for a Handbook on Restrictive Business Practices Legislation, UN Doc. TD/B/RBP/58 ( 1989) at 8. The Competition Act, with commentary by the Canadian government, is also set out in this document. Under the German legislation (s. 98(2)), the effects doctrine was adopted, but is viewed as somewhat restrained in its application, owing to considerations of international law and administrative practice. The Finnish legislation does not apply outside Finnish territory insofar as Finnish customers are not affected, although its application may be extended if a treaty between Finland and another country allows for it, or if it is in the interest of Finland’s foreign trade. For an analysis of the German and Finnish legislation, see Preparations for a Handbook on Restrictive Business Practices Legislation, UN Doc. TD/B/RBP/71 (1990) at 19, 31.
20 For examples of such treaties, see the Memorandum of Understanding as to Notification, Consultation, and Co-operation with respect to the Application of National Antitrust Laws, Mar. 9, 1984, Canada-U.S., reprinted in 23 Int’l. Legal Mat. 275 (1984); Agreement Relating to Co-operation on Antitrust Matters, June 29, 1982, U.S.-Austl., reprinted in 21 Int’l. Legal Mat. 702 (1982); Agreement Relating to Mutual Co-operation Regarding Restrictive Business Practices, June 23, 1976, U.S.-G.F.R., reprinted in 15 Int’l. Legal Mat. 1282 (1976).
21 Opened for signature Oct. 30, 1947, 61 Stat. A3, T.I.A.S. No. 1700, 55 UN Treaty Series 187 (effective Jan. 1, 1948). See also Jackson, , World Trade and the Law of GATT (1969).Google Scholar
22 Revised Recommendation of the Council Concerning Co-operation between Member Countries on Restrictive Business Practices Affecting International Trade, OECD Doc. C (86) 44 (1986), reprinted in 25 Int’l. Legal Mat. 1629 (1986).
23 For a review of the significance in international law of General Assembly resolutions, see I. Brownlie, supra note 2, at 14; Akehurst, M., A Modern Introduction to International IMW 27 (5th ed. 1984).Google Scholar
24 Set, supra note 4, pream.
25 Ibid., s. A.1.
26 Ibid., s. A.2(a).
27 Ibid., s. A.2(b).
28 Ibid., s. A.3.
29 Ibid., s. A.4.
30 Ibid., s. C.
31 Equity has been associated with several United Nations undertakings that call for co-operation among nations. These requests often encourage collaboration: see, e.g. the Final Act of the Havana Conference on Trade and Employment, UN Doc. E/CONF. 2/78, UN Sales No. 1948. II. D. 4 ( 1948), art. 11. For the sharing of information, see the Draft Code of Conduct on Transnational Corporations (1990), supra note 2, paras. 51,61, and 66(c). For the need for preferential treatment for the developing countries, see the Declaration on the Establishment of a New international Economic Order, supra note 1, para. 4(n).
32 Set, supra note 4, ss. D.1, D.2.
33 Ibid., s. D.3. This section of the Set has been criticized for excluding from its purview the dealings between parent enterprises and their subsidiaries. Thus, the Group of 77 has proposed that the exemption for these dealings be deleted (Ninth Session Report, supra note 8, Annex III, para 2(a)). S.D.3, however, needs to be read in conjunction with s. D.4, which covers intra-firm transactions where they constitute an abuse or an acquisition and abuse of a dominant position of market power, as follows:
Enterprises should refrain from the following acts or behavior in a relevant market when, through an abuse or acquisition and abuse of a dominant position of market power, they limit access to markets or otherwise unduly restrain competition, having or being likely to have adverse effects on international trade, particularly that of developing countries, and on the economic development of these countries:
(a) predatory behavior towards competitors, such as using below cost pricing to eliminate competitors;
(b) discriminatory (i.e., unjustifiably differentiated) pricing or terms or conditions in the supply or purchase of goods or services, including by means of the use of pricing policies in transactions between affittateci enterprises which overcharge or undercharge for goods or services purchased or supplied …
(d) fixing the prices at which goods exported can be resold in importing countries;
(e) restrictions on the importation of goods which have been legitimately marked abroad with a trademark identical or similar to the trademark protected as to identical or similar goods in the importing country where the trademarks in question are of the same origin, i.e., belong to the same owner or are used by enterprises, between which there is economic, organizational, managerial or legal interdependence and where the purpose of such restrictions is to maintain artificially high prices [emphasis added].
34 Set, supra note 4, s. E. 1. The developed market-economy countries have consistently favoured the vigorous implementation of this section. In comments at the Second Review Conference on the Set, the representative for Group Β noted that the best defence for international business competition was the enactment and enforcement of national legislation aimed at restrictive business practices. He commented, “Experience with regulatory reform — or deregulation — showed that, once government regulations were removed in a particular sector, the existence of effective competition legislation was of paramount importance“: Second Conference Report, supra note 7, paras. 26–30.
35 Set, supra note 4, s. E.4. The developed market-economy countries, however, have opposed an interpretation of this section that would encourage action by a state, even if there is no effect on its own territory: see Preparations for the United Nations Conference to Review All Aspects of the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices, UN Doc. TD/B/RBP/69 (1990) [hereinafter Preparations] para. 51.
36 Set, supra note 4, s. E.6.
37 Ibid., s. E.5.
38 Ibid., s. E.3. This standard of treatment is echoed in the Draft Code of Conduci on Transnational Corporations(1990), supra note 2, paras. 49–50, and in the Final Act of the Havana Conference on Trade and Employment, supra note 31, art. n(s)(a)(i).
39 Set, supra note 4, s. E.7. The LDCs have proposed the establishment of a centralized registry within UNCTAD for reporting RRPs. This registry would be open for consultation by any state on request: see Preparations, supra note 35, para. 66.
40 Set, supra note 4, s. E.g.
41 Ibid., s. E.8. In its effort to assist states in sharing expertise on RBPs, UNCTAD is preparing a handbook on RBP legislation pursuant to s. F.6(c) of the Set. The compilation of the handbook is an ongoing process to which states contribute as legislation is enacted. Recent contributions were offered by Brazil and Norway in anticipation of the Tenth Session of the IGE: Preparations for a Handbook on Restrictive Business Practices Legislation, UN Doc. TD/ B/RBP/82 (1991) [hereinafter Handbook].
42 Set, supra note 4, s. F. 1.
43 Ibid., s. F.6. Pursuant to this section, UNCTAD has established a program for technical assistance to LDCs. The assistance takes the form of advisory missions, regional and national seminars, and information collection and dissemination: Restrictive Business Practices Information, supra note 11, paras. 35–38. See also Technical Assistance Advisory and Training Programmes on Restrictive Business Practices, UN Doc. TD/RBP/CONF. 3/4 (1990).
44 Set, supra note 4, s. F.4.
45 Second Conference Report, supra note 7, para. 8.
46 Information and Consultation Procedures on Restrictive Business Practices, UN Doc. TD/B/RBP/78 (1991) [hereinafter Information 1991] paras. 11–26.
47 Set, supra note 4, s. G. 1. The Group of 77 has called for the IGE. to be upgraded to the status of a committee within UNCTAD: Ninth Session Report, supra note 8, Annex III, para. 2(a).
48 Supra note 10.
49 Set, supra note 4, s. G.3.
50 Second Conference Report, supra note 7, para. 8.
51 Proposals on Transparency and Consultation Procedures in the Field of Restrictive Business Practices, UN Doc. TD/RBP/CONF. 3/3 (1990) [hereinafter Proposals].
52 Following the Report of the Second Conference and the call for effective competition legislation at the national level (supra note 34), UNCTAD, in its preparations for the tenth session of the IGE noted, “While markets irresistibly lead towards globalization, national jurisdictions are irremediably limited at the national borders. This means that States … will have to resort to multilateral efforts to resolve issues in the area of restrictive business practices”: Information 1991, supra note 46, para. 23.
53 Bulgaria reported that it was undergoing a comprehensive reform of its economic system aiming at the establishment of an open-market economy, and that efforts to improve consultations under the Set were welcome: Second Conference Report, supra note 7, paras. 116–119.
54 Restrictive Business Practices Information, supra note 1 1, paras. 30–32.
55 Proposals, supra note 51, para. 71. In an assessment of the lack of success in implementing the consultation procedure under the Set, s. F.4, the UNCTAD Secretariat noted that there was no concrete evidence of why the procedure had not been used and proposed, therefore, that measures be adopted to facilitate the use of consultation procedures: Preparations, supra note 35, paras. 73–76.
56 Second Conference Report, supra note 7, para. 22.
57 Ibid., para. 90.
58 Where consultation procedures had been used, as with the OECD procedure, the Secretariat noted that they were followed largely on an informal basis and agreed upon in an ad hoc manner: Preparations, supra note 35, para. 72. The Revised OECD Recommendation of the Council and the accompanying Appendix, which set out the OECD consultation procedure, were adopted by the Council at its 643d meeting on May 21, 1986: Proposals, supra note 51, Annex.
59 Preparations, supra note 35, para. 72.
60 Section F-4 reads as follows:
(a) Where a State, particularly of a developing country, believes that a consultation with another State or States is appropriate in regard to an issue concerning control of restrictive business practices, it may request a consultation with those States with a view to finding a mutually acceptable solution. When a consultation is to be held, the States involved may request the Secretary-General of UNCTAD to provide mutually agreed conference facilities for such a consultation;
(b) States should accord full consideration to requests for consultations and upon agreement as to the subject of and the procedures for such a consultation, the consultation should take place at an appropriate time;
(c) If the States involved so agree, a joint report on the consultations and their results should be prepared by the States involved and, if they so wish with the assistance of the UNCTAD secretariat, be made available to the Secretary-General of UNCTAD for inclusion in the annual report on restrictive business practices.
61 See the comments by the representative for the Group of 77 in Second Conference Report, supra note 7, para. 22; also comments by the representative for Group D calling for a study for improving consultation procedures in Ninth Session Report, supra note 8, para. 36; also comments by the representative for the Group Β countries suggesting efforts at identifying elements that would assist states in holding consultations in Second Conference Report, supra note 7, para. 34.
62 Information 19,91, supra note 46.
63 Ibid., para. 12.
64 Ibid., para. 21.
65 Ibid., para. 21, A(2).
66 Ibid., para. 16.
67 Ibid.,paras, si, C (2), (3).
68 Ibid., para. 19.
69 Ninth Session Report, supra note 8, para. 52. The Group Β countries generally have maintained the view that the most effective approach to controlling RBPs is through consultations that are bilateral, informal, and voluntary. There is a rejection of any revision in the language of s. F.4, especially a change that would turn consultations into “arbitrational investigations”: Second Conference Report, supra note 7, para. 81.
70 Ninth Session Report, supra note 8, para. 52.
71 Second Conference Report, supra note 7, para. 110.
72 The Secretariat offered the view that the support on the part of Group Β for an informal and voluntary consultation procedure under s. F.4 seems to emanate from their experience in the OECD. The Secretariat noted, without criticizing Group B’s position, that it was perhaps easier for countries with well-established relationships to forego the support that would be provided by a more formal process: Proposals, supra note 51, paras. 74–75.
73 Proposals, supra note 51, para. 75.
74 Ibid., para. 76. The Secretariat emphasized that this proposal did not seek to burden the process with formality or obligation and that it left parties full freedom in regard to consultation. The request form has been incorporated into the proposed checklist already discussed, supra notes 63–65 and accompanying text.
75 Ibid., para. 77.
76 Ibid., para. 78.
77 Second Conference Report, supra note 7, para. 109.
78 Ibid., para. 114.
79 Ibid.
80 Ibid., para. 112.
81 Ibid., para. 33.
82 Set, s. E.g, reads as follows: “States should, on request, or at their own initiative when the need comes to their attention, supply to other States, particularly of developing countries, publicly available information, and, to the extent consistent with their laws and established public policy, other information necessary to the receiving interested Stale for its effective control of restrictive business practices.”
83 Second Conference Report, supra note 7, para. 1 10.
84 Ibid.
85 Ibid., para. 33.
86 Ibid., para. 110.
87 Ninth Session Report, supra note 8, para. 36.
88 Second Conference Report, supra note 7, para. 90.
89 Ibid., para. 86.
90 Sri Lanka suggested that s. E.6 should be amended to urge governments of the home states in which business enterprises are located to obtain information from those enterprises if requested to do so by agencies of developing countries: Proposals for the Improvement of the Set of Principles and Rules, supra note 8, para. 2. See also Ninth Session Report, supra note 8, Annex III (suggested amendments by Algeria on behalf of the Group of 77).
91 Second Conference Report, supra note 7, Annex.
92 A telephone call to the UNCTAD office revealed that, owing to the work being generated by preparations for UNCTAD VIII, the tenth session report had not yet been prepared for publication.
93 Information 1991, supra note 46; Replies by States and Regional Groupings on Steps Taken to Meet Their Commitments to the Set, UN Doc. TD/B/RBP/79 (1991) and TD/B/RBP/79/Add. 1 (1991); Concentration of Market Power, Through Mergers, Take-Overs, Joint Ventures and Other Acquisitions of Control, UN Doc. TD/B/RBP/80 (1991); Revised Draft of Possible Elements for Articles of a Model Law, UN Doc. TD/B/RBP/81 (1991); Handbook, supra note 41; Review of Technical Assistance Activities, UN Doc. TD/B/RBP/83 (1991).
94 See Ninth Session Report, supra note 8, para. 34 (Group D opposed textual changes); para. 39 (Group B opposed changes); para. 65 (USSR opposed changes).
95 Second Conference Report, supra note 7, para. 17 (Philippines for the Group of 77); para. 162 (China).
96 Ibid., paras. 160–161.
97 Ibid., para. 156.
98 In their closing statement, the Group of 77 noted their support for the Resolution adopted by the Second Conference, which, inter alia, reiterated the voluntary nature of consultations in consideration of legitimate interests: Second Conference Report, supra note 7, paras. 155–58, and Annex 8.