Eduard Strimbu, paralegal at Fieldfisher Ireland LLP, LLM graduate from University College Dublin
Eduard Strimbu is a paralegal at Fieldfisher Ireland LLP, where he works in the area of Public and Regulatory Law. He recently completed an LLM in International Commercial Law from University College Dublin, during which he developed an interest in competition law, with a particular focus on international competition enforcement. Additionally, he first wrote this article during the course of his LLM studies. Before joining Fieldfisher, Eduard tutored Company Law at UCD.
I. INTRODUCTION
While it can be said that there is no such thing as international competition law,[1] dismissing it would result in overlooking its conceptual significance, notwithstanding that it remains largely doctrinal. Due to globalisation, economies have become increasingly borderless. Consequently, anti-competitive behaviour often crosses borders, creating an inherent need for international cooperation in competition enforcement, which has increased cooperation between competition agencies to compensate for the lack of international competition law,[2] which in most cases takes the form of bilateral agreements.
This article will examine the extraterritorial application of competition law in the context of bilateral agreements and explore the effectiveness of said agreements in facilitating cooperation on competition enforcement, while also providing a comprehensive discussion surrounding the rationale underpinning their use within international competition cooperation. This article argues that while the effectiveness of bilateral agreements is inherently limited, they are nonetheless the most realistic option for countries seeking to facilitate competition enforcement cooperation in the absence of an internationally recognised competition law.
II. EXTRATERRITORIAL APPLICATION OF COMPETITION LAW
Extraterritoriality refers to the application of domestic competition law by a state to a foreign entity engaging in anti-competitive conduct outside its jurisdiction but having an impact within the state that is claiming jurisdiction.[3] By way of clarification, an extraterritorial response by a state to a firm is limited to measures taken against assets the firm holds within the enforcing state’s jurisdiction, in the absence of cooperation with the other country.[4]
As a result of increasingly widespread and penetrating economic globalisation, trans-border business activities face fewer barriers,[5] which has inevitably led to an increase in states applying their competition law extraterritorially. This is mainly attributed to the anti-competitive conduct of dominant firms, which holds significant adverse effects that are not constrained by national boundaries.[6] This extraterritorial application of competition law presents complex legal challenges in terms of jurisdictional competence, as its practical application may lead to political conflicts in the absence of an agreement.[7]
In terms of extraterritoriality, the EU and the US are quite active. Articles 101 and 102 of the Treaty on the Functioning of the European Union (‘’TFEU’’), allow the EU to apply its law extraterritorially where there is an agreement or abuse that has an appreciable effect within the Union,[8] utilising the ‘‘single economic entity’’, ‘‘effects doctrine’’ and the ‘‘implementation doctrine’’ as methods to punish cross-border entities.[9] In the US, Sections 1 and 2 of the Sherman Act[10] most frequently give rise to extraterritorial jurisdiction, which is enforced through triple damages via application of Section 4 of the Clayton Act[11] and through injunctive relief.[12] The court in United States v Aluminum Co. of America[13] held that the Sherman Act can only apply where antitrust activity has effects within the US. In this instance, there must be direct, substantial, and reasonably foreseeable effects within the US to trigger its extraterritorial reach.[14]
However, extraterritorial application has been met with much disapproval in other states. The UK, Netherlands, and New Zealand have enacted blocking legislation within their domestic legal systems to protest the excessive application of US antitrust laws; here, the UK has taken the strongest position, enacting the Protection of Trading Interests Act 1980.[15]Conflicts such as the European blocking of General Electric’s acquisition of Honeywell in July of 2001, where the EU cited competition concerns, caused adverse diplomatic relations and led to a divergence of EU-US competition policy, negatively affecting cooperation, further illustrating the potential for geopolitical strain.[16] However, it must also be stipulated that this initial disapproval has given way to more widespread adoption of extraterritoriality among nations. A 2021 United Nations Trade and Development (‘’UNCTAD’’) report highlighted that thirty-four out of the forty developing and transition economies studied have established legal frameworks which allow for extraterritorial application of their competition laws.[17] From a systemic perspective, it indicates that extraterritoriality is viewed broadly as a useful tool in a state’s toolbox.[18]
In the absence of an international competition law framework, countries have resorted to unilateral solutions to safeguard their interests. Therefore, bilateral agreements are necessary in facilitating international cooperation on competition enforcement to avoid weakening diplomatic relations and to effectively handle increased trade. Arguably, it is a question of how competition agencies may coordinate to sufficiently tackle “borderless” business activities within the existing legal regimes governed by their respective states.[19]
III. BILATERAL AGREEMENTS AS A MECHANISM FOR COMPETITION ENFORCEMENT COOPERATION
a. The Rationale Underpinning Bilateral Agreements
It is highly probable that diplomatic fractures may occur in the extraterritorial application of competition law, reducing international competition cooperation, which would severely compromise the future enforcement of competition law extraterritorially.[20] Thus, bilateral agreements between countries contribute to reducing political conflicts by facilitating and promoting cooperation on competition enforcement and in the absence of an international competition law, countries have become increasingly reliant on these.[21]
A bilateral competition cooperation agreement (“BCCA”) between two countries on competition enforcement is effectively a formal trade agreement that focuses on governing the day-to-day functioning of competition authorities to facilitate competition enforcement through, inter alia, information sharing. BCCAs can also have binding effects that ensure domestic compliance with their competition charter; for example, the competition chapter of the Korea-EU Free Trade Agreement (‘‘FTA’’), which instigates the South Korean legislature to adopt the European competition law model.[22]
Thus, BCCAs are more than just a ‘‘simple declaration’’ of cooperation between competition regimes, as they facilitate proper platforms for competition investigations which eventually lead to improvements in market access and trade flows.[23] The main purpose of BCCAs is not the harmonisation of competition laws, as they lack broader policy objectives aimed at trade liberalisation and economic integration,[24] but rather to provide mechanisms for effective competition enforcement between regulatory authorities,[25] and as a basis for competition harmonisation between major trading partners.
Therefore, the rationale underpinning bilateral agreements in this context centres on improving cooperation between competition authorities, while simultaneously reducing political friction between states, allowing for more effective international competition enforcement.
Additionally, BCCAs have several distinguishing factors from other bilateral agreements. They provide for information sharing, both positive and negative comity objectives, confidentiality provisions, and consultation provisions.[26]
Therefore, BCCAs can be seen as significant in creating a contextual basis for international competition law. However, their effectiveness, which can be understood as the extent to which BCCAs facilitate coordinated cooperation on competition enforcement against cross-border anti-competitive conduct, remains in question. BCCAs are strong mechanisms on paper, but whether bilateralism is sufficient in facilitating comprehensive international cooperation on competition enforcement is less certain, and it remains to be seen how they actually operate in the international political and economic climate. For example, BCCAs can be characterised by several structural deficiencies, such as their soft law nature, which imposes minimal binding obligations on participating countries. Consequently, states retain considerable discretion when deciding when to engage in cooperation. Furthermore, BCCAs can unintentionally exclude smaller, developing countries, as they are better suited to larger trading partners.[27] This raises the question of whether there is a need for a more multilateral approach to reach an optimal level of effectiveness in terms of international competition enforcement.[28]
b. The Effectiveness of Bilateral Agreements
The significance of BCCAs should not be understated; they are efficient legal instruments that can be utilised to facilitate cooperation on a broad range of international competition issues. The question, therefore, is how effective BCCAs are in facilitating international competition cooperation. Bilateral agreements possess many inherent practical advantages that render them an effective tool in improving trade relations and in tackling international cartels.
Since BCCAs are conducted exclusively between two countries, they allow for efficient negotiations, providing a significant advantage over multilateral agreements.[29] Expediency is crucial; the longer a country is unable to enforce its competition law internationally, the more prolonged the adverse effects of anti-competitive behaviour will be on its economy.
Moreover, BCCAs are inherently flexible.[30] Party countries don’t need to consider multiple economic frameworks, legal systems and national interests, allowing for a less complex agreement to be concluded, which directly contributes to the expedient nature of bilateral agreements. Consequently, bilateral agreements are currently the preferred method in facilitating cooperation on international competition enforcement.[31]
Furthermore, BCCAs have minimal binding effects on participating countries as they do not mandate a specific level of cooperation, but at the same time establish mechanisms for the improvement of investigations and encourage intensified competition law practice.[32] This ensures competition cooperation while allowing for the ‘‘harmonisation’’ of competition laws between countries with similar legal systems. Moreover, BCCAs are most suitable between major trading partners and countries with similar legal regimes, as their minimally binding nature suggests a foundation of trust which may only be achieved between countries which hold similar economic and political influences over each other.[33]Arguably, this lack of diversity fosters a more direct and effective agreement, positioning bilateral agreements as the simplest form of cooperation agreement. As trust is more easily attainable, it allows for a less complex arrangement and provides for a less demanding monitoring structure.[34]
Limitations also exist. For instance, the structure of bilateral agreements is better suited towards countries that trade more frequently and hold a similar level of influence over each other.[35] As previously suggested, trust may be a crucial element for effective cooperation, which could be difficult to establish in collaborations between countries with unequal economic and political influence. In this regard, trust may be established if a country demonstrates political stability and presents the necessary resources and expertise to enforce competition laws effectively. It can be argued that if a country lacks such characteristics, cooperation may become limited or ineffective. This could make them a less dependable partner in international efforts on competition enforcement. This can also suggest a form of bias towards countries with more established competition enforcement capacity within international bilateral frameworks – consequently, smaller developing countries that lack the expertise, law and resources to apply their competition law (if any), whether nationally or extraterritorially, and who already face considerable difficulty in this area.[36] This challenges the argument that bilateralism can act as a basis for the conceptualisation of an international competition law by excluding the nations that are most affected by anti-competitive conduct.[37]
BCCAs often expressly provide for party countries to act within their interests at every stage of the proceedings. Even where the agreement provides that the two parties shall assist each other in any cooperation activity, the country at any time may determine that such cooperation is not in its best interests or is not compatible with domestic competition laws.[38] It is argued, therefore, that the nature of BCCAs undermines the essence of its objective, as party countries each effectively maintain a veto in the sense that they can choose not to cooperate as a matter of national interest while simultaneously not compromising the agreement.
This is a direct result of bilateralism as a category of soft law, which significantly limits its effectiveness. Weil argues that the increasing use of soft law can destabilise the whole international normative system.[39] This has been extended to BCCAs by Papadopoulos due to their lack of binding obligations, which in reality gives absolute discretion to the contracting parties to ignore agreements, leading to a lack of proper international competition enforcement.[40] While the soft law element of BCCAs allows for flexibility, it also leaves room for legal and political manoeuvrability for party countries to effectively avoid their obligations when compliance inconveniences them.
It is argued, therefore, that the soft law element of bilateralism undermines the effectiveness of BCCAs as a competition cooperation mechanism due to a lack of accountability frameworks, and raises questions of whether or not bilateralism is sufficient in facilitating international competition enforcement cooperation.
IV. CRITICAL ANALYSIS
Bilateral agreements are effective in improving trade relations and can benefit party countries, take for example, the US-Japan bilateral accord, which allowed both countries to shield each other from increasing European competition in the 1990s.[41] However, in the context of competition cooperation, their effectiveness can be put into doubt due to the lack of binding obligations, accountability frameworks and exclusivity. Although bilateralism may not be an ideal solution given the existence of more desirable alternatives such as multilateralism, its usefulness should not be questioned, as it could be utilised in the short term due to its expediency and simplicity.
Consequently, bilateralism is often viewed as a ‘‘stepping stone’’ towards more advanced international competition enforcement cooperation, or such agreements can be used as ‘‘interim solutions’’ until a broader international consensus arises.[42] This analysis also asks the question of whether BCAAs are merely a prelude to a more multilateral structure or constitute a larger substantive cooperation accord with binding obligations and added complexity, where the retrospective bilateral agreement can be used as a basis to improve future agreements. However, the consensus formed by bilateralism is not easily transposed to a multilateral level. Thus, it is unlikely that a broader international consensus will emerge in the near future.[43]
The EU’s approach appears to align with this analysis. According to the European Parliament resolution on EU cooperation agreements, it is of the view that the Council and the Commission should promote bilateralism until multilateral cooperation is fully operational.[44] The EU has concluded several major BCCAs with the US, such as the 1991 EU-US Competition Cooperation Agreement, which facilitates, inter alia, information sharing, regular bilateral meetings and coordination.[45] Moreover, the two jurisdictions have also concluded bilateral agreements on positive comity engagement and merger cooperation.[46]
Upon analysis, it is submitted that BCCAs are not as effective in facilitating international cooperation on competition enforcement as other alternatives, such as multilateralism. This is mainly attributed to its exclusivity. Bilateralism is best suited towards major trading partners, thus facilitating cooperation on competition enforcement in a narrow sense, allowing only two parties to reap the benefits. This challenges the notion that BCCAs may act as a basis for the conceptualisation of ‘‘international competition law’’.
Furthermore, the over-reliance on BCCAs is a consequence of the lack of an international competition law. However, this also showcases that reaching an accord on a unified multilateral approach to competition enforcement is a stringent task, which inevitably forces countries to enter into less-than-ideal BCCAs to bypass burdensome and unsuccessful multilateral negotiations in order to effect progress. This can be showcased by the American frustration with the lack of binding competition principles in the General Agreement on Tariffs and Trade (“GATT”), where the utilisation of BCCAs allowed the US to sidestep states that refused to negotiate seriously in the GATT.[47] However, it should be noted that when the EU advocated for a competition charter in the WTO, which was initially included at the launch of the Doha Round of negotiations in 2001, competition talks effectively collapsed on the back of opposition from the US and other developing countries.[48]
This inevitability leads to a lack of harmonisation in international competition enforcement. There exists a legislative gap in international competition enforcement that cartels may attempt to exploit – take, for example, the American Soda Ash Export Cartel’s success in anticompetitive conduct in India.[49]
Alternatively, there is a case for multilateralism. However, these types of agreements are limited in terms of effectiveness, and, as showcased, bilateralism is frequently used to bypass multilateral deadlocks. Moreover, multilateral agreements, such as the International Competition Network, often do not provide a binding competition framework.[50] Lastly, an argument could be made for the unilateral approach; however, this approach can be detrimental to diplomatic relations and runs contrary to the concept of an ‘‘international competition law’’.
Questions remain over the viability of a unified ‘‘international competition law’’ due to the complexity and frequent deadlocks prevalent in multilateral negotiations. Ultimately, despite the various limitations of BCCAs and the warranted academic scrutiny of them, BCCAs are the most realistic approach in facilitating competition enforcement cooperation, precisely because of their flexibility and limited obligations, which enable states to bypass multilateral deadlocks.
V. CONCLUSION
Therefore, while the concept of ‘‘international competition law’’ is mainly doctrinal, international cooperation on competition enforcement exists, and it is facilitated primarily through bilateral agreements. While we can challenge the effectiveness of bilateral agreements in facilitating cooperation, they are the most realistic option in facilitating cooperation on enforcement. As it stands, bilateral agreements are the preferred method of concluding international competition agreements, given their simplicity and flexibility, positioning them as an attractive legal instrument. However, from a doctrinal and idealistic perspective, the use of bilateralism to facilitate competition cooperation is not the most effective mechanism. This is evidenced by their utilisation as ‘‘stepping stones’’ to multilateral agreements or interim solutions until a more substantive agreement can be achieved, as showcased by the EU’s approach to international competition agreements.
Evidently, the lack of an international competition law with binding obligations has resulted in a lack of competition harmonisation and has also resulted in an over-reliance on bilateral agreements. Therefore, while an imperfect solution, bilateral agreements are currently positioned as pragmatic legal instruments which strive to function as best they can in the geopolitical climate in which they exist.
[1] United Nations Conference on Trade and Development, Developing Countries’ Experience with Extraterritoriality in Competition Law (2021) 18.
[2] Richard Whish and David Bailey, Competition Law (10th edn, OUP 2021), 512.
[3] United Nations Conference on Trade and Development, Developing Countries’ Experience with Extraterritoriality in Competition Law (2021) 18.
[4] Michael Ristaniemi, ‘What Extraterritorial Application of Competition Law Means for MNCs’ (2013) 7(28) International In-house Counsel Journal 4.
[5] Takaaki Kojima, ‘International Conflicts over the Extraterritorial Application of Competition Law in a Borderless Economy’ (2002) Fellowship Paper, Weatherhead Center for International Affairs, Harvard University 1.
[6] Whish and Bailey (n 2) 511.
[7] Whish and Bailey (n 2) ch 12.
[8] Treaty on the Functioning of the European Union, Article 101 and 102.
[9] Daniel Nilsson, ‘The Extraterritorial Application of EU and US Competition Laws: Conflicts and Solutions’ (2003) University of Lund, 13.
[10] The Sherman Antitrust Act 1890, s.1 and 2.
[11] The Clayton Act 1914, s.4.
[12] Roger P. Alford, ‘The extraterritorial application of antitrust laws: the United States and European Community approaches’ (1992) 33(1) Virginia Journal of International Law 1, 6.
[13] United States v Aluminum Co. of America (1945) 148 F.2d 416 (2d Cir).
[14] Ariel Ezrachi, Research Handbook on International Competition Law (Edward Elgar Publishing Limited 2012) 28.
[15] Kojima (n 5) 4.
[16] Eleanor Morgan and Steven McGuire, ‘Transatlantic divergence: GE–Honeywell and the EU’s merger policy’ (2004) 11(1) Journal of European Public Policy 39.
[17] United Nations Conference on Trade and Development, Developing Countries’ Experience with Extraterritoriality in Competition Law (2021) 2.
[18] ibid 6.
[19] Kojima (n 5) 1.
[20] James W. King, ‘A Comparative Analysis of the Efficacy of Bilateral Agreements in Resolving Disputes between Sovereign Arising from Extraterritorial Application of Antitrust Law: The Australian Agreement’ (1983) 13 Georgia Journal of International & Comparative Law 49, 59.
[21] Kojima (n 5) 27.
[22] Andreas Heinemann and Yo Sop Choi, ‘Competition and trade: The rise of competition law in trade agreements and its implications for the world trading system’ (2020) 43(4) World Competition 520, 532.
[23] ibid 533.
[24] Sungjuin Kang, ‘Competition Related Provisions (CRPs) of Bilateral Trade Agreements, Bilateral Competition Cooperation Agreements of Korea, and their Implications’ (2015) 12 Manchester Journal of International Economic Law 212, 215
[25] Anestis S. Papadopoulos, The International Dimension of EU Competition Law and Policy (Cambridge University Press 2010) 52.
[26] Christopher Garrett Lehrer, ‘Ensuring competition law enforcement under international trade agreements’ (2016) 26(2) Transnational Law & Contemporary Problems 449, 457-458.
[27] Ezrachi (n 14) 211.
[28] See generally Kojima (n 5).
[29] Max Baucus, ‘A New Trade Strategy: The Case for Bilateral Agreements’ (1989) 22 Cornell International Law Journal 1, 8.
[30] ibid.
[31] Valerie Demedts, ‘The long-term potential of an interim-solution: an assessment of the EU’s bilateral competition cooperation agreements in context’ (2017) Diss. Ghent University, 28.
[32] Heinemann and Choi (n 22) 532.
[33] Ezrachi (n 14) 228-229.
[34] Demedts (n 31) 30.
[35] Ezrachi (n 14) 228-229.
[36] United Nations Conference on Trade and Development, Developing Countries’ Experience with Extraterritoriality in Competition Law (2021) 6, 10-11.
[37] Whish and Bailey (n 2) 512.
[38] Garrett Lehrer (n 26) 461.
[39] Papadopoulos (n 25) 59.
[40] Papadopoulos (n 25) 59.
[41] Baucus (n 29) 17.
[42] Demedts (n 31) 10.
[43] ibid.
[44] European Parliament resolution of 5 February 2014 on EU cooperation agreements on competition policy enforcement — the way forward (2013/2921(RSP)) [10] OJ C 93.
[45] European Commission, “Bilateral relations with United States of America” <https://competition-policy.ec.europa.eu/international-relations/bilateral-relations/usa_en> accessed 5 March 2026.
[46] ibid.
[47] Baucus (n 29) 8.
[48] Chad Damro and Terrence Guay, European Competition Policy and Globalization (Springer 2016), 98: See also – Joel I. Klein, ‘A Note of Caution with Respect to a WTO Agenda on Competition Policy’ (Presented at the Royal Institute of International Affairs, Chatham House, London 1996) <https://www.justice.gov/archives/atr/speech/note-caution-respect-wto-agenda-competition-policy#:~:text=the%20application%20of%20competition%20law,help%20to%20alleviate%20these%20problems> accessed 5 March 2026.
[49] United Nations Conference on Trade and Development (n 36) 7-9.
[50] International Competition Network, ICN Framework on Competition Agency Procedures, 2
<https://www.internationalcompetitionnetwork.org/wp-content/uploads/2019/04/ICN_CAP.pdf>accessed 5 March 2026.
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