John Sanghyun Lee Strategies to Achieve a Binding International Agreement on Regulating Cartels Overcoming Doha Standstill Strategies to Achieve a Binding International Agreement on Regulating Cartels John Sanghyun Lee Strategies to Achieve a Binding International Agreement on Regulating Cartels Overcoming Doha Standstill 123 JohnSanghyunLee GlobalLawDepartment, Collegeof Law Soongsil University Seoul Korea (Republicof) and Golden GateUniversity School ofLaw SanFrancisco, CA USA ISBN978-981-10-2755-0 ISBN978-981-10-2756-7 (eBook) DOI 10.1007/978-981-10-2756-7 LibraryofCongressControlNumber:2016954593 ©SpringerNatureSingaporePteLtd.2016 Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpart of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission orinformationstorageandretrieval,electronicadaptation,computersoftware,orbysimilarordissimilar methodologynowknownorhereafterdeveloped. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publicationdoesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfrom therelevantprotectivelawsandregulationsandthereforefreeforgeneraluse. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authorsortheeditorsgiveawarranty,expressorimplied,withrespecttothematerialcontainedhereinor foranyerrorsoromissionsthatmayhavebeenmade. Printedonacid-freepaper ThisSpringerimprintispublishedbySpringerNature TheregisteredcompanyisSpringerNatureSingaporePteLtd. Theregisteredcompanyaddressis:152BeachRoad,#22-06/08GatewayEast,Singapore189721,Singapore Preface A cartel, restricting competition among suppliers and getting rid of consumers’ welfare, among other things, has been actively regulated mostly by advanced economies. International organizations tried to reach international agreement on competitionlawandpolicy,includingcartelregulation.Inspiteoftensofcountries in North America and Europe with experiences of serious law enforcement on competition law, such trials have faced hurdles since a multilateral negotiation on DohaDevelopmentAgenda(DDA)droppedcompetitionpolicyfromthediscussion table in 2003. After dropping the issue, DDA has still produced few, if any, noticeable fruits. A different view between advanced economies and developing countries and its consequential rupture of the discussion are analyzed to be main factors of standstill of DDA. In order to achieve a binding international agreement on cartels, international community needs to focus on hard core cartel (HHC) activities, narrower than its original definition, because most countries agree with the necessity of regulating such narrowed cartels and because international agreements have been developed with such focuses. Moreover, interstate commodity agreements (ICAs) or inter- governmental producers associations (IPAs) are to be treated differently under the area of international commodity law in light of international law history. Several cases of international cartels, made up of competing private companies, ICAs, and IPAs under suspicion of cartels are to be reviewed with in-depth research. Four advanced countries, USA, UK, France, and Germany, with experiences of cartelregulationsandcompetitionlawenforcementsaretobeaddressedincontrast to examples of four developing economies, South Africa, South Korea, People’s Republic of China, and Mexico, with less experiences than the four countries. Historic study of international development law and its results will be applied to internationalagreementoncartelregulationsincesuchstudyonlawshedslighton future international law on cartel regulation reflecting developing countries’ interests. Upuntilnow,internationalcompetitionlaw,particularlyinternationalagreement on cartels, has grown up centering on soft-law-typed multilateral agreements and binding-poweredbilateralagreements.Basedupontheobservationandresearchon v vi Preface international law development, two strategies, short-term and long-term approa- ches, are suggested for achieving a binding international agreement on cartels. By reducing fear of developing countries that international cartel regulation may seriouslyinterferewiththeireconomicinterests,internationalorganizations’efforts to have effective international cartel regulation can increase the probability of success. Meanwhile, distinctive features of commodity led to international commodity agreements under the agenda of sustainable development, formerly defunct, requiring, for adjustment to current trade law system. The following are to be proposed for the adjustment: ①productivity-focused model and ②multilateral cooperation model to reflect multistakeholders’ interests. Seoul, Korea (Republic of) John Sanghyun Lee Acknowledgments This book is a work which revised my doctorate thesis originally written in 2008 through reflecting on updated information. A substantial part of the book was influenced by expertise advice from my supervisors, Dr. Sompong Sucharitkul, Prof. Dr. Christian Okeke, Director of SJD International Legal Studies at Golden Gate University School of Law, and Prof. Bart Selden. Professor Sompong had guidedmewithhiswisdomfromhisrichexperienceininternationallawareasuntil he retired. Professor Okeke encouraged me to pursue this research project, at its initialstage,andsuggestedseveraltopicsforfurtherresearch.ProfessorEsq.Selden instructed the foundation of international trade law and business transactions through a series of lectures. This research would have followed a different path without their proper and insightful advice. I would like to express my thanks to other professors and advisors at GGU. Professor Emeka Duruigbo taught the ways for a young candidate to develop his idea. Professor Michael Daw and Marienne Gerber enriched my research skills throughInternetandlegaldatabases.ProfessorChrisPaganodidnotsparehertime ingivingspecialadvice;sheprovidedmewithscholarshipwhenIwasadmittedat SJD program. Mr. John Pluebell, Senior Academic Advisor, has enabled me to studywithoutbeinginterruptedbyanyadministrativeproblem.Hisgoodworksand counsel let me concentrate on researching. Interacting with good colleagues who have had interest in international law or have sincerely pursued the same degree stimulated me so that I could develop this projectseriouslyandeagerly.Amongthem,Justin,Nick,Peter,ArtGambell,Huon Thach, Nobert, Franzier Robhert, Joon-Kil Lee, and Patcharang were good friend who shared warm conversation. I would like to express my appreciation to SJD program at Golden Gate University School of Law for the precious opportunity of studying and communicating with students from all over the world. I am heavily indebted to my two friends, Sorah Kim and Jay Choi, who made commentsonmydrafts,andpublicofficersatcompetitionauthoritiesinUK.South Africa and South Korea. I reflected their valuable opinions on my study. I would like to extend my gratitude to Mr. Jae-Hoon Jung who edited footnotes sincerely. vii viii Acknowledgments Ifeelthankfulandsorryformywife,Sunhee,whosupportedmywork,andour lovelydaughters,JoyceandEunice,whoputupwithplayswithouttheirfather.All the research would be impossible without support from my father, mother, and father-in law and mother-in-law, who cared for my kids and encouraged my research with continuous prayers. Aunt-in-law have spared little efforts in praying for me. Finally, I would like to express my deep gratitude to the Lord Jesus who helped me overcome hurdles whenever I faced difficulties. Contents 1 Introduction.... .... .... ..... .... .... .... .... .... ..... .... 1 1.1 Hard Core Cartel Against Competition Law. .... .... ..... .... 1 1.2 Spreading Competition Laws to the International Community .... 2 1.3 Hurdles to Leveling Cartel Regulations up to International Laws.. .... .... .... ..... .... .... .... .... .... ..... .... 4 1.4 Topic Question and Hypothesis of the Research.. .... ..... .... 5 1.5 Structure of the Book. ..... .... .... .... .... .... ..... .... 6 1.5.1 Structure of this Book.... .... .... .... .... ..... .... 6 References.. .... .... .... ..... .... .... .... .... .... ..... .... 8 2 Defining a Cartel and Analyzing Its Effects ... .... .... ..... .... 9 2.1 A Cartel in Its Historical Context. .... .... .... .... ..... .... 9 2.2 Definition.. .... .... ..... .... .... .... .... .... ..... .... 10 2.3 Discussions: Advantage and Disadvantage of Cartels.. ..... .... 26 2.4 Intergovernmental Agreement for a Commodity Distinctive from a Private Cartel . ..... .... .... .... .... .... ..... .... 38 2.5 International Cartels and Their Representatives .. .... ..... .... 50 2.6 Conclusion. .... .... ..... .... .... .... .... .... ..... .... 58 References.. .... .... .... ..... .... .... .... .... .... ..... .... 60 3 Legal Status and Historical Background of Cartels in International Law. .... ..... .... .... .... .... .... ..... .... 63 3.1 Opening International Law Era: Infant Stage .... .... ..... .... 63 3.2 Legal Status of International Cartel in International Law .... .... 65 3.3 Development of National Cartel Laws and the Necessity of International Law.. ..... .... .... .... .... .... ..... .... 96 3.4 Development of International Commodity Agreements (ICAs) Separate from Cartel Regime .... .... .... .... .... ..... .... 105 3.5 International Organizations’ Endeavors to Achieve Multilateral Agreements Regarding Cartels.. .... .... ..... .... 118 ix x Contents 3.6 Extending Bilateral or Regional Agreement . .... .... ..... .... 133 3.7 Conclusion. .... .... ..... .... .... .... .... .... ..... .... 139 References.. .... .... .... ..... .... .... .... .... .... ..... .... 141 4 Conciliation of Conflicts of Opinion Between the North and the South on International Law Regulating Cartel.. ..... .... 145 4.1 Introduction .... .... ..... .... .... .... .... .... ..... .... 146 4.2 Failure of Further Negotiation on Competition Policy Under Doha Development Agenda (DDA) at WTO Ministerial Conferences .... .... .... .... .... .... ..... .... 147 4.3 Necessity of Regulating Cartels in Developing Countries.... .... 154 4.4 Different Positions Where Developing Countries Are Placed . .... 159 4.5 International Competition Law Reflecting Development..... .... 167 4.6 Roadmap Toward Binding International Cartel Agreement... .... 183 4.7 Conclusion. .... .... ..... .... .... .... .... .... ..... .... 187 References.. .... .... .... ..... .... .... .... .... .... ..... .... 189 5 The Regulation of Cartels in Developing Countries . .... ..... .... 193 5.1 Introduction .... .... ..... .... .... .... .... .... ..... .... 193 5.2 Development of Cartel Regulation in the North and the South... .... ..... .... .... .... .... .... ..... .... 194 5.3 Building Consensus to Enforce Cartel Regulation .... ..... .... 221 5.4 Securing Institutional Supports for Cartel Regulation.. ..... .... 232 5.5 Capacities Building Through International Cooperation ..... .... 240 5.6 Conclusion. .... .... ..... .... .... .... .... .... ..... .... 247 References.. .... .... .... ..... .... .... .... .... .... ..... .... 250 6 The Need for the Development of International Law on Cartels.... 253 6.1 Current Stage of International Cartel Regulation . .... ..... .... 254 6.2 Hurdles to a Binding Multilateral Agreement.... .... ..... .... 255 6.3 Functions of a Bilateral Agreement Toward a Multilateral Agreement Regulating Cartels ... .... .... .... .... ..... .... 259 6.4 Strategies for Achieving a Binding Multilateral Agreement .. .... 265 6.5 Applicability of International Criminal Law as to Cartels.... .... 287 6.6 Proposing a New Approach for International Commodity Agreements (ICAs)... ..... .... .... .... .... .... ..... .... 296 6.7 Conclusion. .... .... ..... .... .... .... .... .... ..... .... 317 References.. .... .... .... ..... .... .... .... .... .... ..... .... 321 7 General Conclusion: Summary and Prospect .. .... .... ..... .... 325 7.1 Compendium of Research... .... .... .... .... .... ..... .... 325 7.2 Moderation of Distinction Between International Competition Law and International Commodity Law.... .... .... ..... .... 332 Index .... .... .... .... .... ..... .... .... .... .... .... ..... .... 335
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