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Original article (peer-reviewed)

Journal European Foreign Affairs Review
Title of proceedings European Foreign Affairs Review

Abstract

Global competition governance has seen some interesting yet challenging development in the last two decades. On the one hand, more than 120 jurisdictions have adopted competition law, most of which are developing economies. On the other hand, competition law remains strongly territorial and characterized by national competition regimes. Hence, convergence is repeatedly referenced as an imperative objective of global competition governance given the potential costs of the multiplicity of competition regimes. Soft law in the form of best practices, recommendations and guidelines are actively developed not only at traditional international venues such as the OECD and UNCTAD, but most notably at the International Competition Network (ICN). Both within these broader networks and through bilateral channels, mature regimes are projecting their competition policy preferences beyond their borders, in particular the US and the EU, via various approaches, be it conditionality and the insertion of competition clauses into regional trade agreements, or horizontal engagement with their peer technocrats. While examining the two-way traffic of rule projection by the US and the EU and rule selection by young competition regimes, it is worth asking why the EU and the US have varied preferred approaches to a given country and to what extent their approaches are conditioned by the domestic factors of the young regime. This paper, drawing on theoretical concepts of external governance, policy diffusion and regulatory states, compares the US and EU’s competition policy permeation approaches towards two emerging economies, namely Brazil and China. It argues that in the event of domestic cleavages between reformist elites and opponents, external conditionality can be instrumental for pushing reform against entrenched interests. Engagement via transgovernmental networking, in contrast, is much more reliant on domestic demand and willingness to engage, and must go hand in hand with broader regulatory reforms. It is thus the combination of coercive pressure through bilateral agreements and horizontal dialogues and capacity-building that proves most conducive to regulatory influence.
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