Effects Doctrine in India versus the US: Developing & Developed Country Perspectives
The purest and classic form of ‘sovereignty of nations’ is compromised in the present era of globalization and unification of the world market, making way for coordinated governance. Given that markets and competition are no longer restricted to territorial borders, newer antitrust laws are being formulated with effects not necessarily confined to domestic markets. Such extraterritorial application, known as the effects doctrine, is premised on ‘whether a foreign activity impacts/effects competition in the domestic market’. Here, the question arises whether markets operate in such neutrality, i.e. independent of, inter alia, diplomatic and political factors, so as to enable any country to enforce its laws against the market forces of another. If not, does this mean that this doctrine is a weapon only for the developed countries against the ‘not so progressed’ nations? This article commences with a study of this doctrine in the US, followed by a comparison and assessment of India’s experience, offering an insight from a developing country’s perspective. Further, as it threatens jurisdictional/regulatory friction, which can wreck the diplomatic relationships at international level, the article seeks to examine the fine balance required to be struck so as not to deter countries from enforcing this doctrine where warranted.