By Pedro Caro de Sousa (OECD)
The three body problem in physics concerns the challenge of accurately calculating the interaction of three different bodies (e.g. planets). Examples include the motion of the Moon around the Earth as disturbed by the action of the Sun, or the movement of one planet around the Sun as disturbed by the action of another planet. Three body systems are chaotic, and despite centuries of work there is no general solution to this problem.
Understanding the extraterritorial effect of competition law raises challenges akin to the three body problem: while primarily governed by one dominant gravitational pull (a country’s rules on the scope of its competition law), in practice the extraterritorial effect of competition law is affected by other forces (in particular, international comity and cooperation against a common epistemic background). This means that a thorough analysis of extra-territorial effects requires us to look not only at legal/formal structures concerning the scope of a country’s law, but must also take into account ‘informal’ mechanisms– e.g., comity (i.e. unilateral self-restraint and tolerance on the part of the affected jurisdictions), cooperation (i.e. extra-legal mechanisms to coordinate between potentially conflicting legal regimes) and epistemic communities (i.e. relations between competition specialists) – that impact how law is applied in practice.
This paper reviews how these three concepts operate in practice in the context of (EU) competition law. It will argue that, as with the traditional three body problem, no purely legal and formal conceptual framework can explain how competition law is applied extra-jurisdictionally. The best we can is to approximate such a point through increasingly sophisticated application of three partially overlapping legal doctrines – extra-jurisdictional reach, international comity, and international cooperation – against a common epistemic background shared by the global (and regional) competition communities.
