EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW: THE NEW STANDARDBEARER OF LEGAL IMPERIALISM?

Abstract

The effects doctrine has been a major instrument in dealing with foreign conduct having repercussions on the competitiveness of national markets. The aggressive implementation of the doctrine by US courts in competition law cases has caused clamor in international community. In EU law, on the other hand, the effects doctrine had long been ignored by the CJEU, which exercised its jurisdiction on the basis of territoriality principle. In Intel, the CJEU finally endorsed the effects doctrine. This paper questioned the CJEU’s designation of the effects doctrine as a means to establish territorial jurisdiction over extraterritorial conduct. This paper concluded that the CJEU’s approach to extraterritoriality would result in an overarching application of EU competition rules over foreign conduct.

Full text

Ankara Avrupa Çalışmaları Dergisi Cilt: 20, No: 2 (Yıl: 2021), s. 411-446
EXTRATERRITORIAL APPLICATION OF EU
COMPETITION LAW: THE NEW STANDARD-
BEARER OF LEGAL IMPERIALISM?
Hüseyin Çağrı ÇORLU*
Research Article
Abstract
The effects doctrine has been a major instrument in dealing with
foreign conduct having repercussions on the competitiveness of national
markets. The aggressive implementation of the doctrine by US courts in
competition law cases has caused clamor in international community. In EU
law, on the other hand, the effects doctrine had long been ignored by the
CJEU, which exercised its jurisdiction on the basis of territoriality principle.
In Intel, the CJEU finally endorsed the effects doctrine. This paper
questioned the CJEU’s designation of the effects doctrine as a means to
establish territorial jurisdiction over extraterritorial conduct. This paper
concluded that the CJEU’s approach to extraterritoriality would result in an
overarching application of EU competition rules over foreign conduct.
Keywords: Extraterritoriality, Competition Law, Intel, Effects Doctrine,
Component Cartels, Jurisdiction.
AB Rekabet Hukuku’nun Sınır-Aşırı Uygulanması: Hukuk
Emperyalizmi’nin Yeni Sancaktarı?
Öz
Etki doktrini, yerel rekabete etkileri olan sınır-aşırı eylemlerin tespiti ve
kovuşturulması açısından önemli bir araç olarak karşımıza çıkmaktadır. Bu
* Assistant Professor at Necmettin Erbakan University, Law School, Konya, Turkey. E-mail:
hccorlu@erbakan.edu.tr, ORCID: 0000-0002-8205-9596.
Makalenin Gönderilme Tarihi: 30/03/2021 Kabul Edilme Tarihi: 28/09/2021

412 HÜSEYIN ÇAĞRI ÇORLU
doktrinin ABD tarafından katı bir şekilde uygulanması, diğer devletler
tarafından kendilerinin egemenlik haklarına yönelik bir ihlal olarak
değerlendirilmiş ve bu sebeple uluslararası toplumun sert tepkisine yol
açmıştır. AB hukukunda ise AB Adalet Divanı, uzun süre boyunca etki
doktrinini görmezden gelmiş ve genellikle hukuki yetkisinin sınırlarını
ülkesellik ilkesi üzerinden belirlemiştir. Divan Intel kararında etki doktrinini
kabul etmiş fakat yine de bu çerçevede uyguladığı yargı yetkisini ülkesellik
ilkesi üzerinden kurmaya devam etmiştir. Bu çalışma, Divanın bu kararını
sorgulamakta ve özellikle AB rekabet hukukunun üye devlet mahkemelerinde
uygulanması aşamasındaki etkilerini incelemektedir. Çalışma, Divanın
kararının, AB hukukunun AB sınırları dışındaki eylemler için kapsamlı bir
şekilde uygulanmasına neden olacağını öngörmektedir.
Anahtar Kelimeler: Sınır-aşırılık, Rekabet Hukuku, Intel, Etki Doktrini,
Birleşen Kartelleri, Yargı Yetkisi.
Introduction
First introduced in the United States case law, the extraterritorial
application of domestic competition rules has been a subject of controversy
among academics and professionals from legal and political profession. US
courts’ practice of applying the Sherman Act over foreign practices received
a strong protest from their foreign counterparts conceiving such an exercise
of jurisdiction as a violation of state sovereignty under public international
law. Last two decades, however, saw a decline in this clamor due to certain
decisions from US Supreme Court, which sought to alleviate these concerns
and limit the scope of its extraterritorial jurisdiction through an effective
implementation of international comity standards. In the European Union, on
the other hand, courts adhered to traditional forms of jurisdiction and
rejected extraterritoriality as a basis for their jurisdictional authority.
In 2017, the contention over the extraterritorial application of
competition rules resurfaced due to the recent decision of the Court of
Justice of the European Union (CJEU), Intel. In this case, the court finally
gave away to the effects doctrine as a basis for judicial jurisdiction and fined
a foreign company for practices committed abroad. Nevertheless the CJEU
provided very little guidance on the legal implications of its newly adopted
doctrine, sparking more questions than those had it unraveled. Ambiguities
in construing these legal implications began to emerge, when national courts

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 413
of EU Member States, following the CJEU’s decision in Intel, sought to
apply their competition rules to extraterritorial conducts.
Controversies as to the post-Intel application of EU competition law to
extraterritorial conduct are two-fold; the extent of extraterritorial conduct
that would be regarded within the scope of EU competition law under the
newly adopted effects doctrine and, the status of international comity within
the legal analysis carried out by EU courts. While the former identifies the
types of market practices that are of foreign nature yet still to be subjected to
EU law, the latter evaluates whether EU law should be applied to those
practices. As a form of jurisdictional rule of reason, the latter question would
not be asked without answering the former. Hence this paper follows the
same logic, assessing first, the legal implications of Intel as to the extent of
extraterritorial conduct to be considered within the scope of EU competition
law and second, the approach taken by EU institutions and courts to the
principle of international comity.
In so doing, the first section of this paper explores the development and
evolution of the CJEU’s position prior to Intel, with respect to the
application of EU competition rules to foreign practices that created
anticompetitive effects within the EU’s internal market. This section
demonstrates that CJEU refrained from endorsing the doctrine albeit the
pressure from the European Commission (the Commission hereinafter) and
academic literature. Instead the court devised other regulatory tools, such as
the single economic unit and the implementation doctrines to cope with
these types of market practices. This section identifies that functioning of
these doctrines for establishing a territorial nexus between foreign practices
and their effects in the internal market was limited. Given the advent of new
supply chains in international trade, the CJEU found it necessary to endorse
the effects doctrine in Intel. In the second section, the paper evaluates the
legal implications of the CJEU’s decision in Intel for the application of EU
competition law to foreign conduct. Providing comparisons with the US
jurisprudence on extraterritoriality, the paper presents a thorough analysis,
demarcating the scope of EU competition law as recalibrated by the Court’s
findings in Intel. Finally the paper provides conclusions on this recalibration
assessing whether it accounts for a new form of legal imperialism or not.

414 HÜSEYIN ÇAĞRI ÇORLU
I. Evolution of the Extraterritorial Application of EU Competition
Law
A. General
A comprehensive set of rules that determines legal bases, on which the
forms of jurisdictions1 would be exercised, has been absent in public
international law2. Traditionally, two bases have been explicitly recognized;
nationality and territoriality. While the principle of nationality focuses on the
nationality of perpetrators, that of territoriality determines jurisdictions on
the basis of where transactions or acts have been perpetrated. The
jurisdiction of a State within its territory or over its nationals is exclusive
and absolute, as a result of the sovereign rights enjoyed by that State under
public international law. Nevertheless, this does not lead to a conclusion that
apart from these bases, States can invoke no other grounds to assert their
jurisdictions.
Public international law does not provide a specific prohibition
enjoining States from exercising their jurisdictions on a basis other than
nationality or territoriality3. This absence creates a field of conflict between
multiple jurisdictions where multiple assertions of legal authorities were
raised. Legal doctrine provides that the lack of a comprehensive set of rules
1 Public international law traditionally distinguished three forms of jurisdiction; legislative,
executive, and judicial. Legislative jurisdiction determines whether legislature of a state
has the authority to enact rules regarding to certain conduct. Executive jurisdiction, on the
other hand, establishes the authority of a state to compel compliance with its law. Finally,
judicial jurisdiction, identifies whether national courts or administrative tribunals are
authorized to subject certain people or conduct to their judicial process. See: Lori F.
Damrosch, et al., International Law: Cases and Materials, (5th ed., West 2009): 755.
While in US case law legal arguments on the extraterritorial application of domestic
competition rules has been generally made in relation with the judicial (subject-matter)
jurisdiction, in EU case law they have mainly focused on legislative jurisdiction. The
rationale underlying this distinction lays on the competences granted on the relevant
administrative bodies with respect to the prosecution of anticompetitive practices. Whether
judicial jurisdiction is the appropriate form for the evaluation of extraterritorial conduct in
US law has been a subject of criticism by academics and judicial authorities. For further
analysis, see: Josh A. Trenor, ‘Jurisdiction and the Extraterritorial Application of Antitrust
Law after Hartford Fire ’The University of Chicago Law Review 62, (1995): 1583.
2 Damrosch, (2009), 757.
3 In Lotus, the Permanent Court of International Justice (the PCIJ) identified that in the
absence of a rule providing otherwise, States were allowed to assert their jurisdiction over
persons or practices outside their territory. See: S.S. ’Lotus ’(France v. Turkey), 1927
P.C.I.J. (ser. A) No. 10, para. 19.

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 415
regulating jurisdictions in international relations should not be conceived as
the existence of laissez faire for a state conduct4. States are obliged to
determine the peripheries of their jurisdictions, taking into account those of
others.
The concept of extraterritoriality fits in this field of conflict and relates
to the exercise of national jurisdiction, when courts establish no connection
with the nationality of perpetrators or the territoriality of a conduct
contested. Disputes raised in relation with the extraterritoriality have been
mostly concerned with the concurrent exercise of multiple jurisdictions over
the same persons or conduct. The fact that a person or a conduct would be a
subject of a jurisdiction without any national or territorial connection creates
tensions between States5. These tensions have been particularly evident in
competition law under which countries are committed to establish and
preserve well-functioning national markets6. The question of how far a State
should extend its jurisdiction to protect its national markets brings about
discussions on the extraterritorial application of national competition rules.
B. Advent of Extraterritorial Application of Competition Rules.
It was the United States who, for the first time, sought to extend the
reach of its competition rules over foreign practices on the basis of their
anticompetitive effects on domestic markets. In Alcoa, Judge Hand ruled that
US competition rules7 were applicable to foreign conduct, once it was
established that inevitable effects on the US commerce were intended by
culprits8. Later identified as ‘intended effects doctrine’, Judge Hand’s
reasoning provided that 'any state may impose liabilities, even upon persons
4 Case Concerning Barcelona Traction, Light and Power Company Ltd. (Belgium v. Spain)
ICJ. 1970, p. 105, See also; Roger P. Alford, Extraterritorial Application of Antitrust
Laws: The United States and European Community Approaches Virginia Journal of
International Law 33/1, (1992): 6
5 Eleanor M. Fox, ‘National Law Global Markets and Hartford: Eyes Wide Shut’ Antitrust
Law Journal 68/1 (2000): 82.
6 The definition of a well-functioning national market has been subject to change across
geography and time. See: Giuliano Amato, Antitrust and the Bounds of Power: the
Dilemma of Liberal Democracy in the History of the Market (Oxford, Hart Publ. 1997).
7 Formally, competition rules enacted in the US are termed as antitrust rules as a reference
to early practices engaged in by trusts during the late nineteenth century of the US. See:
Ibid. For the purpose of coherence, the paper prefers to use the continental Europe’s
terminology of competition law, when referring US antitrust rules and the Sherman Act.
8 United States v. Aluminum Co of America, 148 F.2d 416 424 (2d Cir. 1945).

416 HÜSEYIN ÇAĞRI ÇORLU
not within its allegiance, for conduct outside its borders that [had]
consequences within its borders which the State reprehends…’9.
Reasoning of Alcoa was embraced and applied aggressively by other
US courts10. This practice caused significant upheaval in the US’s relations
with other jurisdictions. Several countries, such as Canada, the United
Kingdom, Australia, France, South Africa, Italy, the Netherlands, enacted
blocking legislations which would forbid their national authorities from
compliance with extraterritorial reach of US proceedings under competition
rules11. The United Kingdom also enacted a ‘claw-back’ provision which
allowed UK citizens and undertakings to reclaim two thirds of treble
damages they were subjected for practices they committed outside the
United States12.
In order to alleviate this external opposition, US courts introduced a
jurisdictional rule of reason analysis and balancing tests that incorporated an
assessment of several factors for the purposes of international comity13.
Furthermore, in 1982, the Congress passed Foreign Trade Antitrust
Improvements Act14 (FTAIA), which set out a taxonomy of market conduct
for the extraterritorial scope of the Sherman Act, promulgating that in order
for a foreign conduct to be governed by US competition rules, its effects on
US commerce and trade should be direct, substantial and reasonably
foreseeable, thereby introducing further limitations to jurisdictions of US
courts. Even though the Supreme Court in Hartford Fire15 seemed to have
renounced its adoption of balancing tests and comity analysis through its
9 Ibid., 443.
10 See: United States v. Imperial Chemicals Industries Ltd. 100 F. Supp. 504 (S.D.N.Y.
1951); United States v. Watchmakers of Switzerland Info. Center, Inc. 168 F. Supp. 904
(S.D.N.Y. 1958); Sabre Shipping Corp. v. American President Lines Ltd. 285 F. Supp. 949
(S.D.N.Y. 1968).
11 Roger P. Alford,‘ Extraterritorial Application of Antitrust Laws: The United States and
European Community Approaches’ Virginia Journal of International Law 33/1, (1992): 10.
12 Donald E. Knebel, ‘Extraterritorial Application of US Antitrust Laws: Principles and
Responses’ Jindal Global Law Review 8/2 (2017): 192.
13 Timberlane Lumber Co. v Bank of America, 549 F2d 597 (9th Cir 1976). In Mannington
Mills, the 3rd Circuit identified ten factors to be considered in its balancing process.
Mannington Mills, Inc. v. Congloeum Corp., 595 F.2d 1287, 1297 (3rd Cir. 1979).
14 15 U.S. Code § 6a.
15 Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993).

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 417
‘true conflict’16 standard, it later reaffirmed its endorsement of jurisdictional
rule of reason in Empagran17 in which the Court concluded that the principle
of international comity would counsel against applying its jurisdictions to
foreign conducts when foreign effects of such conducts were independent
from the effects felt in the US18 and that any finding in contrast would be
regarded as ‘an act of legal imperialism through legislative fiat’19. Therefore,
the taxonomy of foreign conduct under the FTAIA and international comity
analysis constitute two major elements for the extraterritorial application of
US competition law.
C. Outset of Extraterritoriality in EU Competition Law
Articles 101 and 102 of the Treaty on the Functioning of the European
Union (TFEU) are the main provisions that regulate competition in the EU’s
single market. Article 101 (1) prohibits; '… all agreements between
undertakings, decisions by associations of undertakings and concerted
practices which may affect trade between Member States and which have as
their object or effect the prevention, restriction or distortion of competition
within the internal market …’. Article 102, on the other hand, sets out that;
’(a)ny abuse by one or more undertakings of a dominant position within the
internal market or in a substantial part of it shall be prohibited as
incompatible with the internal market in so far as it may affect trade between
Member States'.
The Commission has been the major proponent of the extraterritoriality
of EU competition rules, on the basis of effects doctrine20. In its decisions,
16 The court regarded that it would engage in comity analysis only if a true conflict existed
between laws of foreign jurisdictions and that of the US. True conflict would arise, when
the targeted company could not conform to the laws of both jurisdictions without violating
one of them. Ibid., 799.
17 F. Hoffmann-La Roche Ltd. v Empagran, 542 U.S. 155 (2004).
18 Ibid., 166.
19 Ibid., 167.
20 The first time the Commission addressed the application of EU competition rules on the
basis of effects doctrine was in its decision Grosfillex & Fillistorf , 64/233/EEC [1964] OJ
L 64/915. The Commission’s initiative in exercising its authority extraterritorially is
embedded in its self-imposed agenda of being a trailblazer for European integration. See:
Chad Damro, ‘Building an International Identity: The EU and Extraterritorial Competition
Policy’, 8/2 Journal of European Public Policy 208, 216 (2001); Yusuf Akbar, ‘The
Extraterritorial Dimension of US and EU Competition Law: A Threat to the Multilateral
System?’. 53/1 Australian Journal of International Affairs 113, 119-20 (1999).

418 HÜSEYIN ÇAĞRI ÇORLU
the Commission persistently relied on effects of contested practices in
asserting its jurisdiction21, alleging that the origins of anticompetitive effects
on the internal market was irrelevant for the purposes of Articles 101 and
102 of TFEU22. Accordingly, the articles focused on behaviors that affected
or were intended to affect the trade in the internal market or substantial part
of it. Once the anticompetitive nature or intend of the conduct was
established, foreign practices could also be contested under the EU
Competition rules.
The Commission’s inclination for adopting the effects doctrine was not
shared by the CJEU. Until its decision in Intel, the Court refused to establish
its jurisdiction on the basis of anticompetitive effects on the EU internal
market. Instead, it referred to other principles such as ‘the Single Economic
Unit’ and ‘the Implementation’ doctrines, which enabled the CJEU to
demonstrate a physical nexus between foreign undertakings and conducts
taking place within the EU internal market. Establishing legislative
jurisdiction on the basis of territoriality was a universally recognized
principle under public international law and this approach allowed the court
to assess contested practices, under the territoriality principle without
engaging in deliberations on the extraterritorial scope of EU competition
rules23. In so doing, the CJEU was confident that establishing the
Commission’s jurisdiction over these conducts would not account for an
encroachment of sovereignty of other states and thus not result in a violation
of public international law. Nevertheless, neither the single economic unit
doctrine, nor the implementation doctrine was sufficient to cover the extent
of anticompetitive practices, on which the Commission sought to assert its
jurisdiction under EU competition rules.
21 See: In re the Cartel in Aniline Dyes [1969] OJ L195/11; Woodpulp [1985] OJ L85/1;
Gencor/Lonrho (Case No IV/M.619) Commission Decision of 24 April 1996 OJ L11/30
[1997].
22 The competition rules of the Treaty are, consequently applicable to all restrictions of
competition which produce within the Common Markets effects set in Article [101(1)].
There is therefore no need to examine whether the undertakings which are the cause of
these restrictions of competition have their seat within or outside the Community. ’Re the
Cartel in Aniline Dyes [1969] OJ L195/11, as cited in Alison Jones & Brenda Sufrin, EU
Competition Law: Text, Cases, and Materials (Oxford, 7th ed. 2019), 1197.
23 (T)he Community’s jurisdiction to apply its competition rules to such conduct is covered
by the territoriality principle as universally recognized in public international law. Case
89/85, A. Ahlström Osakeyhtiö and others v Commission [1988] ECR I-5193, 5243.

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 419
1. Single Economic Unit Doctrine
The single economic unit doctrine was first introduced in the
Dyestuffs24, which concerned price fixing practices of an alleged cartel
established by the producers of aniline dyes incorporated outside the EU and
having subsidiaries in the EU internal market. According to the Commission,
there was no need to examine whether the companies were located inside or
outside the Community, since Article 101 was directly applicable to all
restrictions irrespective of their country of origin25. In appeal, Advocate
General Mayras supported the Commission’s application of effects doctrine
and further stated that the CJEU should apply an ‘effects test’ examining
whether foreign conduct had a direct, substantial and reasonably foreseeable
restriction of competition in the Community26.
Noting that it had doubts as to the compatibility of the effects test with
public international law27, the Court upheld the Commission’s jurisdiction
on the basis of the single economic unit doctrine, providing that ‘(t)he fact
that a subsidiary [had] separate legal personality [was] not sufficient to
exclude possibility of imputing its conduct to the parent company’28. The
Court continued ‘(w)here a subsidiary [did] not enjoy real autonomy in
determining its course of action in the market, the prohibitions set out in
Article [101](1) may be considered inapplicable in the relationship between
it and the parent company, with which it [formed] one economic unit'29.
Even though the single economic unit doctrine was extensively referred
by the CJEU and the General Court in their decisions30, it provided only a
24 Case 48/69, ICI v. Commission (Dyestuffs) [1972] ECR 619.
25 Case 48/69, ICI v. Commission (Dyestuffs) [1972] ECR 619, 624.
26 Opinion of Mr Advocate-General Mayras in Case 48/69, ICI v Commission (Dyestuffs)
EU:C:1972:32, 695.
27 Case 48/69, ICI v. Commission (Dyestuffs) [1972] ECR 619, 627. In international law, it
would be wrong to accept the proposition that there exists a rule extending jurisdiction on
the basis of effects doctrine, unless such a rule were universally acknowledged, which is
not the case. Ibid., 631.
28 Ibid., para. 132.
29 Ibid., para. 134.
30 See for example: Case 170/83, Hydrotherm Gerätebau GmbH v Compact del Dott. Ing.
Mario Andreoli & C. Sas. [1985] ECR 3016, para 11; Case T-11/89, Shell International
Chemical Company Ltd [1992] ECR II-884, para. 311; Case 73/95 P, Viho Europe BV v
Commission EU:C:1996:405; Case T-325/01 Daimler Chrysler Ag v Commission [2005]
ECR II-3326, para. 218; Case 97/08 Akzo Nobel NV v Commission [2009] ECR I-8237,

420 HÜSEYIN ÇAĞRI ÇORLU
limited margin for EU courts to establish the jurisdiction over foreign
anticompetitive conduct. The doctrine was silent on how competition rules
would be applied to practices of foreign undertakings, which despite having
no domestic subsidiaries, still affected competition within the internal
market. The limitations of the doctrine revealed in Wood Pulp31, in which
the CJEU found it necessary to contemplate a new approach to reach out
these practices, without trespassing the peripheries of the territoriality
principle.
2. Implementation Doctrine
Wood Pulp concerned a cartel consisting of non-EU producers of
bleached sulphate wood pulp, a substance, used for the production of high-
quality papers. The Commission imposed fines on these undertakings, on the
ground that they violated Article 101(1) of the TFEU by engaging in
concerted practices to fix the prices of wood pulp products sold in the EU32.
The undertakings challenged the Commission’s decision before the CJEU,
and alleged that lacking jurisdiction to apply the EU competition rules to the
contested practices, the Commission was in violation of public international
law33. Cartel members were not domicile in the EU and some of them did
not have any domestic subsidiaries. Contested price fixing agreements were
concluded outside the EU. The Commission asserted that Article 101 was
applicable to the contested practices since they were intended to affect the
internal market34.
As in Dyestuffs, the Advocate General opinion in Wood Pulp, counseled
the CJEU to adopt effects doctrine35. AG Darmon contended that the reading
of Article 101(1) suggested the location, in which anticompetitive effects
materialized, as a determinative criterion for the application of EU
competition law36. The Opinion promulgated that not all effects would result
para. 49; Cases 293-294/13 P, Fresh Del Monte Produce Inc. v. Commission [2015]
ECLI:EU:C:2015:416, paras 76-100.
31 Case 89/85, A. Ahlström Osakeyhtiö and others v Commission [1988] ECR I-5193.
32 Wood Pulp (Case IV/29725) Commission Decision 85/202/EEC [1985] OJ L85/1.
33 Case 89/85, A. Ahlström Osakeyhtiö and others v Commission [1988] ECR I-5193, 5241.
34 Ibid., 5240.
35 Opinion of Mr Advocate General Darmon in Case 89/85, A. Ahlström Osakeyhtiö and
others v Commission [1988] ECR I-5193, para. 58.
36 ‘In the light of [Article 101(1)], the vast majority of academic writers take the view that it
is neither the nationality not the geographical location of the undertaking, but the location

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 421
in an exercise of legislative jurisdiction under EU competition rules.
Referring to AG Mayras’s formulation of ‘qualified’ effects test, AG
Darmon suggested that only direct, substantial and reasonable foreseeable
effects would be considered as a legal basis for the Court’s jurisdictional
analysis37.
The CJEU, in its ruling, did not provide any conclusion as to the
Commission’s and AG Darmon’s arguments on the effects doctrine. Nor did
it rely on its earlier reasoning in Dyestuffs. The Court pointed out that an
infringement of Article 101 involved two elements: where an agreement
which corresponded to a concerted practice was formed, and; where this
agreement was implemented38. If the place, in which an agreement was
formed, was considered to be the only criterion for the application of EU
competition rules, this would allow the perpetrators to restrict competition in
the internal market with impunity. Therefore, the Court continued, the
decisive criterion should be determined to be the place, in which this
agreement was implemented39. The CJEU found that price fixing agreements
for wood pulp products were implemented in the internal market, as they
were directly sold to undertakings in the EU. Whether these undertakings
were subsidiaries, or agents of the perpetrators were irrelevant for the
determination of the jurisdiction. As long as these final products were
directly supplied by the perpetrators, through direct sales to domestic
undertakings, Article 101(1) would apply.
The reasoning of the CJEU in Wood Pulp, which would be referred as
‘the implementation doctrine’ in subsequent case law, recalibrated the scope
of the single economic unit doctrine. As discussed, the latter was silent when
sales into the EU was not made through a domestic subsidiary. In the case of
former, on the other hand, the existence of a sale into the internal market was
sufficient for the court to establish its jurisdiction. Furthermore, as in
Dyestuffs, the Court considered the Commission’s jurisdiction within the
of the anti-competitive effect which constitutes the criterion for the application of
Community competition law’. Opinion of Mr Advocate General Darmon in Case 89/85, A.
Ahlström Osakeyhtiö and others v Commission [1988] ECR I-5193, para. 9.
37 ‘In my view, not all of those characteristics have to be adopted if the effect is taken as the
criterion of extraterritorial jurisdiction. The most important reservation in the regards
concerns indirect effect. ’Ibid., para. 53.
38 Case 89/85, A. Ahlström Osakeyhtiö and others v Commission [1988] ECR I-5193, para. 16.
39 Ibid.

422 HÜSEYIN ÇAĞRI ÇORLU
peripheries of the territoriality principle40. The conduct under scrutiny might
be of an extraterritorial origin, yet was territorial as its implementation took
place within the boundaries of EU Member States.
The CJEU’s formulation of the implementation doctrine has been
effective in regulating cartelized products once they are imported into the
EU, even though they were produced and cartelized abroad. Nevertheless,
this effectiveness was ensured only if that it is the final products that were
cartelized and that these cartelized must be sold into buyers in the EU. This
formulation also indicated that many practices, such as export boycotts,
output restrictions by foreign manufacturers etc., would not be addressed by
the implementation doctrine, since they did not involve a sale and
importation into the EU internal market. Furthermore, this formulation did
not foresee the application of EU Competition Law to component cartels in
which products that were cartelized were components of final products
which were produced and sold into the EU by manufacturers other those that
were committed cartel agreements.
D. The Path Towards Intel
It was Innolux41 that represented the final stance of the CJEU against
the endorsement of the effects doctrine within the meanings of Articles 101
and 102 of the TFEU42. The case concerned an extraterritorial concerted
practice by six producers of LCD panels from South Korea and Taiwan. The
producers were held liable of a violation of Article 101(1), on the ground
that they engaged in a worldwide cartel agreement, fixing prices of LCD
40 Ibid., para. 14.
41 T-91/11, InnoLux v Commission, [2014] ECLI:EU:T:2014:92; Case 231/14, InnoLux v
Commission [2015] ECLI:EU:C:2015:451.
42 Prior to Intel and InnoLux, the General Court, had already confirmed the applicability of
the effects doctrine, in its decision of Gencor. ‘Application of the Regulation is justified
under public international law when it is foreseeable that a proposed concentration will
have an immediate and substantial effect in the Community’ Case T-102/96, Gencor Ltd v.
Commission [1999] ECR II-753, para. 90. Nevertheless, this case concerned a
concentration arising from a merger agreement between multiple undertakings under the
EU’s Merger Regulation, on the basis of the concentration’s prospective effects on the
competitive structure of relevant EU markets. The GC’s jurisdiction over the contested
concentration was not asserted against a foreign conduct in violation of Articles 101 and
102 of TFEU. Council Regulation on the concentrations between undertakings 4064/89
[1989] OJ L395/1 (replaced by Reg. 139/2004 [2004] L24/1). For the Merger Regulation
see: Council Regulation on the concentrations between undertakings 4064/89 [1989] OJ
L395/1 (replaced by Reg. 139/2004 [2004] L24/1).

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 423
panels globally43. The Commission distinguished three grounds that could be
evaluated for calculating the fines to be imposed upon cartel members:
• Direct sales of panels to independent third parties in the European
Economic Area (EEA);
• Direct sales of panels, incorporated outside the EEA into finished
products by a vertically integrated company which the producer of
panels are part of, to independent third parties in the EEA;
• Indirect sales of panels, incorporated outside the EEA into finished
products by an undertaking not part of the vertically integrated
company the producer of panels are part of, to independent third
parties within the EEA44.
The Commission took into account only first two categories in its
calculation of fines, considering that the inclusion of the third category into
its calculation was not necessary for achieving a sufficient level of
deterrence 45.
InnoLux, one of the undertakings taking part in the cartel agreement,
appealed to the GC alleging that the Commission’s inclusion of the second
category into the calculation of fines was not justified under 2006 Guidelines
on method of setting fines46. InnoLux was a vertically-integrated company.
LCD panels, produced by InnoLux, were bought by its wholly-owned
subsidiaries outside the EU, which incorporated these panels into final
products, such as televisions and computer screens, which were then sold to
independent purchasers in the EU. Though concluded outside the EU, the
Commission considered those cartel agreements as implemented in the EU,
on the ground that the cartelized LCD panels affected the prices of final
products that were sold into the EU, and thus distorted competition within
the internal market47. InnoLux contested the Commission’s methodology,
since the subjects of the cartel agreements were the prices of LCD panels,
rather than those of final products. Article 13 of the 2006 Guidelines
43 LCD — Liquid Crystal Displays (Case COMP/39.309) [2010] OJ 2011 C 295/8.
44 Ibid., para. 380
45 Ibid., para. 381
46 Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of
Regulation No 1/2003, 2006/C 210/02.
47 LCD — Liquid Crystal Displays (Case COMP/39.309) [2010] OJ 2011 C 295/8, para.,
435.

424 HÜSEYIN ÇAĞRI ÇORLU
empowered the Commission to calculate fines as to the ‘sales to which the
infringement relates’ and the Commission itself acknowledged that no
infringement relating to the sales of final products had been found48. The
infringement was perpetrated in relation with the sales of LCS panels. Thus
the Commission’s assessment should be limited to the direct sales of LCD
panels to buyers in the EU.
The GC dismissed InnoLux’s appeal, pointing out that sales of LCD
panels to the producers of final products were part of ‘a single and
continuous infringement' of Article 101(1)49. The Commission’s inclusion of
these sales into its calculation was justified, since the cartelized LCD panels
made their way towards the EU, through these final products under a
vertically integrated company50, and the Commission’s calculation did not
take into account the full value of the sales of final products, but only a
portion, corresponding to the value of LCD panels incorporated in the final
products51. In other words, the GC ignored the transactions, the producer of
final products had contracted with both foreign producers of LCD panels,
and domestic buyers of the final products. This omission provided a direct
connection between the sales of LCD panels, and their arrival to the internal
market through sales of final products. In so doing, the GC assumed a
fictitious sale transaction between the EU buyers and LCD producers, which
would concurrently materialize, once the former contracted with the
producers of final products. When the final products were delivered into the
EU, the LCD panels incorporated in these product were also considered to
be sold into the EU as separate products.
In Innolux, the GC sought to combine the single economic unit and
implementation doctrines to assert its jurisdiction over foreign sales of LCD
panels. None of the price fixing and cartel agreements were concluded in the
EU, and the products that were contracted to be delivered into the EU were
not LCD panels. The EU buyers did not enter into transactions with their
48 T-91/11, InnoLux v Commission, [2014] ECLI:EU:T:2014:92, para. 35.
49 Ibid., para., 123. The GC identified single and continuous infringement as practices that ‘is
intended to deal with one or more consequences of the normal pattern of competition, and,
through that interaction, contribute to the attainment of the set of anti-competitive effects
desired by those responsible, within the framework of an overall plan having a single
objective’. Ibid., para. 103.
50 Ibid., para. 71.
51 Ibid., para. 45.

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 425
counterparts to buy LCD panels. Instead, the subject of their transactions
was the delivery of televisions and computers into the EU. The GC could not
establish the jurisdiction over the LCD panels, based solely on the
implementation doctrine, since the contracts implemented in the EU were
regarding to the sales of final products, which were not cartelized.
Agreements, regarding to the sales of cartelized LCD panels were
implemented outside the EU. The single economic unit doctrine enabled the
GC to combine two separate transactions into one. According to the GC,
there was no ‘real’ agreement between two parties when the cartelized LCD
products were sold to the producers of final products, since this sale was of a
intra-firm character52. When these final products were sold into the EEA,
they would be considered as partly cartelized products, based on the portion
that LCD panels represented in their overall value. This perception allowed
the GC to establish the Commission’s jurisdiction on the basis of the
implementation doctrine and within the premises of the territoriality
principle53.
The GC’s conclusions were strongly criticized in AG Wathelet’s
opinion, which argued that the GC erred, in its interpretation of the
implementation doctrine. The opinion stressed that the doctrine would
provide a scope for territorial application of EU competition rules, only if it
concerned ‘direct sales of the relevant products to purchasers established in
the Community’ (emphasis omitted)54. Confirming that Single Economic
Unit doctrine was a well-established concept in the EU case law. AG
Wathelet argued that this doctrine would not necessarily result in a
conclusion that the agreements, concluded between the parties belonging to
the same company, were not ‘real’, and thus should not be taken into
account55. The agreements, regarding to the sales of LCD panels between
InnoLux, and its subsidiaries were implemented outside the EU, and thus
could not be regarded within the territorial scope of EU competition law
under implementation doctrine.
52 Opinion of Mr. Advocate General Wathelet in Case 231/14, InnoLux v Commission [2015]
ECLI:EU:C:2015:292, para. 13.
53 T-91/11, InnoLux v Commission, [2014] ECLI:EU:T:2014:92, para. 60.
54 Opinion of Mr. Advocate General Wathelet in Case 231/14, InnoLux v Commission [2015]
ECLI:EU:C:2015:292, para. 36.
55 Ibid., paras 32-33.

426 HÜSEYIN ÇAĞRI ÇORLU
The Opinion also suggested that the Commission’s evidence, presented
with respect to the effects, the cartelized LCD panels caused on the internal
market, would not suffice to assert its jurisdiction on the basis of the
‘qualified’ effects doctrine. AG Wathelet provided that price fixing practices
related directly to LCD panels, rather than the final products56. Since
InnoLux engaged in no cartel agreements as to the sale of final products to
purchasers in the EU, anticompetitive effects LCD panels had on the internal
market could not be considered as direct. Furthermore, AG Wathelet argued
that the Commission demonstrated no evidence on the effects incurred by
these final products, due to their incorporation of cartelized LCD panels57.
The GC’s contention that cartelized LCD panels affected the prices of final
products, rested on mere assumption by the Commission without any
demonstration of how such effects had materialized.
AG Wathelet supported its position with a reference to a US case which
closely resembled the one he was asked to counsel. In Motorola Mobility
LLC v. AU Optronics Corp., the Seventh Circuit refused to grant remedies
based on pass-on claims where the claimants were not the direct buyers of
cartelized products. AG Wathelet proposed that a similar ruling should be
adopted by the CJEU as the effects of cartelized products on domestic
buyers were indirect and thus would not satisfy the qualified effects doctrine.
Upholding the GC’s decision, and rejecting InnoLux’s appeal in its
entirety58, the CJEU put emphasis on the vertical integration between
InnoLux and its subsidiaries. The Court noted that ‘vertically-integrated
[might] benefit from a horizontal price-fixing agreement, concluded in
breach of Article 101 the TFEU, not only sales [were] made to independent
third parties on the market for the goods, the subject of the infringement, but
also on the downstream market in processed foods made up of, inter alia, the
goods which [were] the subject of the infringement (…)’59. The CJEU
argued that the objective of Article 13 of 2006 Guidelines was the setting of
fines reflecting ‘the economic significance of the infringement and the
relative size of the undertaking’s contribution to it’60. Any decision held
56 Opinion of Mr. Advocate General Wathelet in Case 231/14, InnoLux v Commission [2015]
ECLI:EU:C:2015:292, para. 56.
57 Ibid., para. 54.
58 Case 231/14, InnoLux v Commission [2015] ECLI:EU:C:2015:451, para. 86.
59 Ibid., para. 56.
60 Ibid., para. 50.

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 427
otherwise would result in a calculation of a fine, which did not reflect the
significance of infringements committed by such vertically integrated
undertakings61.
Neither the GC nor the CJEU referred to the effects doctrine in their
evaluation of whether the Commission exercised its jurisdiction in pursuant to
Article 101 the TFEU. Both courts established the Commission’s jurisdiction
on the basis of the implementation doctrine with a strong emphasis placed
upon the appellant’s vertical integration. Nevertheless, the demonstration of a
nexus between the cartelized LCD panels, and their effects on EU markets
through transformed final products were fundamental for establishing the
jurisdiction. The applicability of the implementation doctrine depended upon
the finding of anticompetitive effects the cartelized LCD panels inflicted upon
the final products. The CJEU argued that these effects would materialize
‘either the price increases of the inputs, which [resulted] from the infringement
[were] passed on by those undertakings in the price of processed goods, or
those undertakings [did] not pass these increases on, which thus effectively
[granted] them a cost advantage in relation to their competitors, which
[obtained] those same inputs on the markets (…)'62.
The findings of the courts raised questions as to how they would
establish their jurisdictions, in dealing with component cartels, when no
vertical integration between producers of components and final products
incorporating them existed. Both the GC and the CJEU relied on the vertical
integration of the appellant in determining single economic unit. The
reasonings of the Courts indicated that such a jurisdiction would not be
established against foreign practices, unless a vertical integration existed63.
The GC and the CJEU established the Commission’s jurisdiction in Intel64,
even though a vertical integration within the meaning of InnoLux was
missing. This absence was fundamental in paving the way for the CJEU’s
endorsement of the ‘effects doctrine’. Nevertheless, the CJEU’s reasoning
on this endorsement was very limited65 and thus sparked questions more
than those it had unraveled.
61 Ibid., para. 55.
62 Ibid., para. 56.
63 Case T-91/11 InnoLux Corp. v. Commission, para. 90.
64 T-286/09, Intel v Commisson, ECLI:EU:T:2014:547, Case C-413/14 P Intel Corporation v
Commission [2016] ECLI:EU:C:2017:632.
65 Eleanor M. Fox, ‘Extraterritorial Jurisdiction, Antitrust and the EU Intel Case:
Implementation, Qualified Effects, and the Third Kind’, Fordham International Law
Journal 42/3, (2019): 985.

428 HÜSEYIN ÇAĞRI ÇORLU
E. Intel
In 2009, Intel, a US-based manufacturer of, inter alia, central
processing units (CPUs) which accounted for 70-80 per cent of global CPUs
production66 was found in violation of Article 102 TFEU by the Commission
on the ground that it had abused its dominant position in global CPUs
market in detriment of x86 CPUs produced by its only appreciable
competitor, Advanced Micro Devices (AMD). The alleged abuse took the
forms of exclusive rebates that were granted to original equipment
manufacturers (OEMs) such as Dell, Hewlett-Packard Company (HP), Acer
Inc., Lenovo, etc. on the condition that these companies procured all or
almost all of their CPU demand from Intel and naked constraints which
connoted a direct payment by Intel to certain OEMs provided that they
postponed or cancelled their products incorporating x86 CPUs produced by
AMD. Accordingly, Intel was imposed 1.06 billion EUR fine, the largest
amount ever imposed on an undertaking by then67.
Intel appealed to the GC, opposing, inter alia, the Commission’s
jurisdiction over its trading practices with Lenovo. Intel was a US producer
of x86 CPUs, while Lenovo was a Chinese producer of computers and other
electronic devices. Agreements on exclusive rebates and naked restrictions
between these companies were concluded through online correspondence in
their respective countries, and their implementation was carried out by
manufacturing facilities in China, in which Lenovo incorporated x86 CPUs,
received from Intel, into its notebooks, and desktop computers. These two
companies were completely independent without any integration at
management or shareholding level. Since Intel’s abuse in CPUs markets was
implemented outside the EU, Intel argued that the Commission lacked
necessary jurisdiction for applying EU competition law to its conduct68.
The GC confirmed the Commission’s jurisdiction on the basis of both
the implementation and qualified effects doctrines, addressing the latter as
66 Intel (Case COMP/37.990) [2010] OJ C227/13, para. 901.
67 Antitrust: Commission imposes fine of €1.06 bn on Intel for abuse of dominant position;
orders Intel to cease illegal practices, https://ec.europa.eu/ commission/
presscorner/detail/en/IP_09_745. Intel (Case COMP/37.990) [2010] OJ C227/13, para.
1789.
68 T-286/09, Intel v Commisson, ECLI:EU:T:2014:547, para. 221.

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 429
an alternative to the former69. The Court held that the Commission could
exercise its jurisdiction on the basis of the implementation doctrine, since no
computers incorporating AMD’s CPUs would be available anywhere in the
world, including the EU. This reasoning contradicted its findings in InnoLux,
in which it relied on vertical integration between companies in establishing
the jurisdiction of EU competition law, on the basis of the implementation
doctrine.
This was addressed in AG Wahl’s opinion who, though rejected AG
Wathelet’s proposition that only direct sales would suffice the application of
implementation doctrine70, noted that a strong connection, such as the
existence of a single economic unit or other corporate or structural links,
should be established to determine whether the sale of a product
incorporated abroad was implemented in the EU71. The court evaluated the
implementation of the conduct on the basis of where its effects were felt,
rather than where abusive practices themselves were perpetrated, without
providing further details on how the nexus was established between
territories of EU Member States and abusive practices perpetrated in China.
It is fundamental to note that contested practices in Intel were evaluated
under Article 102 TFEU, which specifically prohibited abuse of dominance
‘within the internal market’. Reading of the article suggested that practices
that were regarded as abuses of dominance had to be perpetrated within the
EU. Whether the relevant markets were established to be worldwide was
irrelevant for the legal analysis under Article 102 TFEU. Nevertheless, the
GC construed the article in a different manner72. According to the court, the
factor that determined whether Article 102 should be applied to a conduct,
was the place in which the dominance was established rather than where the
abuse was perpetrated. The determination of a worldwide dominance would
automatically result in a finding of a EU-wide dominance. Consequently,
any abuse perpetrated anywhere in the world would be considered as an
abuse of dominance, implemented within the internal market.
69 Ibid., para. 233. ‘(D)emonstrating the implementation of the practices at issue in the EEA
or demonstrating qualified effects are alternative and not cumulative approaches for the
purposes of establishing that the Commission’s jurisdiction is justified under the rules of
public international law’. Ibid., para. 236.
70 Opinion of Mr. Advocate General Wahl in Case C-413/14 Intel v Commission [2016]
ECLI:EU:C:2016:788, para. 292.
71 Ibid.
72 Ibid., para. 247.

430 HÜSEYIN ÇAĞRI ÇORLU
Aware of the fact that there was not too much warrant within the text of
Article 102 for its construing the implementation doctrine in this manner, the
GC focused on the qualified effects doctrine, evaluating whether Intel’s
practices with respect to Lenovo agreements had foreseeable, immediate and
substantial effects in the EU73. The GC found that, though not producing
actual effects, the conduct of Intel was capable of producing restrictive
effects in the EU74. The absence of actual effects would not prevent the
Commission from finding an abuse of dominance under 102 TFEU. Once
the contested conduct was regarded as capable of producing effects, the
Court found it sufficient for a finding of a foreseeable effects in the EU.
Since no computers incorporating AMD’s CPUs would be available in the
world including the EU, the effects of Lenovo agreements were considered
to be immediate75. As to the element of substantiality, the Court considered
exclusive rebates and naked restrictions together, on the ground that these
practices formed a single and continuous infringement and concluded that
prospective effects of these practices would be substantial76.
The GC’s decision was strongly criticized in AG Wahl’s opinion, prior
to its appeal to the CJEU. Praising the GC’s adoption of the qualified effects
doctrine, AG Wahl argued that the Court’s findings of anticompetitive
effects in accordance with its interpretation of the doctrine appeared
‘hypothetical, speculative and unsubstantiated’77. According to the opinion,
the GC could not establish that rebates offered by Intel to Lenovo were
exclusive, since the agreements referred by the Court did not indicate any
obligation on Lenovo to buy all or almost all of its CPUs from Intel78. The
market coverage of rebates offered was not at levels that would be
considered as capable of producing anticompetitive effects on the internal
market79. AG Wahl noted that the mere possibility of these effects should
not be regarded as sufficient for a determination of foreseeable effects in the
EU, under the qualified effects doctrine80.
73 T-286/09, Intel v Commisson, ECLI:EU:T:2014:547, para. 234.
74 Ibid., paras 250, 281-282.
75 Ibid., paras 254, 277-280.
76 Ibid., paras 279-286.
77 Opinion of Mr. Advocate General Wahl in Case C-413/14 Intel v Commission [2016]
ECLI:EU:C:2016:788, para. 324.
78 Ibid., para. 195.
79 Ibid., para. 138.
80 Ibid., para. 117.

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 431
In the appeal the CJEU acknowledged the doctrine, for the first time, as
a means for the Commission to assert its jurisdiction under EU competition
law81 and upheld the GC’s conclusions thereof82, without providing any
discussions on the criticism put forward by AG Wahl. Even though,
reversing the GC’s decision on the ground that the Commission failed in
taking into account all circumstances that were of importance in determining
whether the contested practices were capable of producing anticompetitive
foreclosure in the internal market, the CJEU considered this ground of
appeal under the merits of Article 102 TFEU, rather than its jurisdictional
analysis under the qualified effects doctrine, contrary to the AG Wahl
assessment. The CJEU promulgated that it was sufficient to satisfy
foreseeability element of the qualified effects doctrine, once the contested
practices were established to have probable effects on competition within the
internal market83. As to the other elements of the doctrine, the CJEU just
reiterated the findings of the GC and dismissed the objections, raised by the
appellant84.
II. Legal Implications of the CJEU’s Decision in Intel
A. General
The endorsement of the effects doctrine by the CJEU was a major
development in the regulation of foreign conduct that affected
competitiveness of the EU internal market. As illustrated in InnoLux and
Intel, the legal assistance provided by the single economic unit and the
implementation doctrines for the regulation of such conduct was limited,
taking into account of increasing globalization in which effects of a
unilateral conduct transcended national boundaries. The effects doctrine has
provided greater flexibility in reaching out such conduct and the CJEU has
finally acknowledged it as a legal basis of exercising jurisdictional authority.
Intel also connoted an increasing convergence between the US and the EU
approaches to the regulation of foreign conduct under competition law. Both
81 Case C-413/14 P Intel Corporation v Commission [2016] ECLI:EU:C:2017:632, para. 46.
82 Ibid., para. 147.
83 Ibid., para. 51.
84 An opportunity for a further elaboration on the Court’s comprehension of the qualified
effects doctrine arose in Case C - 589/18 P Fukukawa Electric Co. v. Commission [2020]
ECLI:EU:C:2019:1134. The CJEU refused to provide this further insight and decided on
the appeal without getting into the merits of jurisdiction claims.

432 HÜSEYIN ÇAĞRI ÇORLU
the FTAIA’s effects doctrine and the CJEU’s qualified effects tests
incorporated foreseeability, substantiality and immediacy (directness) as
elements, necessary to be satisfied for the extraterritorial application of
relevant competition rules.
International opposition towards US case law on extraterritoriality has
demonstrated that the effects doctrine should be approached with caution.
Regulating conduct with limited territorial nexus, the doctrine has given rise
to concerns on encroachment of sovereign rights enjoyed by other States.
The line that has differentiated between legitimate interests of protecting
national competition and unjustifiable encroachment of sovereign rights
enjoyed by other States has been proved to be a thin one. Trying to be on the
right side of this line, US courts included international comity and balancing
tests into their legal analysis as safety valves for alleviating concerns raised
by other sovereigns. The CJEU, on the other hand, was more reluctant in
addressing such concerns. Except for Gencor in which the GC evaluated the
contested concentration on the basis of the ‘principle of non-interference’85,
the EU equivalent of the US Supreme Court’s true conflict test in Hartford
Fire, the EU judicial authorities have not employed a comity or balancing
test for addressing sovereignty concerns.
B. Territoriality v. Extraterritoriality
The CJEU’s consistent reliance on the single economic unit and the
implementation doctrines in its jurisdictional analysis provides an insight
into the rationale underlying its reluctance of incorporating balancing tests
into its legal analysis. The CJEU has never addressed foreign conduct
without establishing their territorial nexus with the EU internal market.
Despite their limited scope, the main advantages of single economic unit and
the implementation doctrine stemmed from their function of providing
physical nexus between foreign practices and territories of EU Member
States. Once this nexus was established, the CJEU would find that the
Commission’s jurisdiction over these practices would be in compliance with
the principles of public international law86. As there was no extraterritorial
85 Gencor/Lonrho (Case No IV/M.619) Commission Decision of 24 April 1996 OJ L11/30,
paras 102-107 [1997].
86 See: Case 48/69, ICI v. Commission (Dyestuffs) [1972] ECR 619, 627; Case 89/85, A.
Ahlström Osakeyhtiö and others v Commission [1988] ECR I-5193, 5243. See also;

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 433
application of EU competition law under single economic unit and the
implementation doctrines, there could be no question of whether the exercise
of legislative jurisdiction would be reasonable.
The implementation doctrine as adopted in Wood pulp was very similar
to the regulation of imports under the Sherman Act and the FTAIA. The
FTAIA addressed instances when the Sherman Act would be applied
extraterritorially and specifically carved out imports from its scope, leaving
their regulation directly to the scope of the Sherman Act87. Accordingly, the
application of the Sherman Act to imports would be considered under
territorial rather than extraterritorial jurisdiction. This articulation was
identical to the CJEU’s reasoning in Wood pulp, in which the court
considered the existence of sales in to the EU as sufficient for legislative
jurisdiction. In this regard, the CJEU’s assessment of the implementation
doctrine under the auspices of territoriality principle would be construed in
conformity with US case law.
In InnoLux, the Commission’s omission of foreign sales between
independent undertakings from the calculation of the fines imposed upon the
perpetrators indicated a requirement of a territorial nexus in assessing the
extent of damages subject to EU jurisdiction. Accordingly, not all damages
arising due to foreign conduct could be included in the determination of
fines. Only those that were incurred as a result of direct sale into the EU or
an indirect sale through a vertically integrated company were taken into
account in the calculation of fines imposed. It can be proposed that this
indicated the adoption of a taxonomy, at least in a practical manner.
Nevertheless, this proposition was negated by the reasoning of Intel, in
which the GC and the CJEU refrained from distinguishing damages resulting
from the contested unilateral conduct and considered them together88.
Furthermore AG Wathelet’s referral to Motorola Mobility LLC v. AU
Optronics Corp. in his analysis on ‘direct effects’ indicated that certain
aspects of extraterritoriality in US law have been misunderstood by
European lawyers. In Motorola Mobility LLC v. AU Optronics Corp., the
Seventh Circuit’s refusal of pass-on damages did not rely on a finding that
Joseph. P. Griffin, ‘Extraterritoriality in U.S. and EU Antitrust Enforcement’. 67/1
Antitrust Law Journal 159, 175-76, (1999).
87 15 U.S. Code § 6a.
88 Intel (Case COMP/37.990) [2010] OJ C227/13, para. 1789.

434 HÜSEYIN ÇAĞRI ÇORLU
the effects inflicted by indirect sales would be established to be indirect
within the meaning of the FTAIA. The rationale underlying the Court’s
refusal was the Supreme Court’s ‘indirect purchaser doctrine’ which barred
the grant of remedies based on pass-on claims irrespective of their effects on
domestic markets89. The Seventh Circuit did not provide any conclusion,
indicating that effects created by component cartels on prices of final
products, were indirect. The indirect nature of a relationship between a buyer
of a composed product, and a producer of a component product would not
connote effects cartelized components had on final composed products being
indirect.
What was missing in the CJEU’s case law was a taxonomy of conduct,
which would distinguish practices with direct effects from those with
indirect ones and thus territorial practices from extraterritorial ones. The
indirectness of effects was determined on the basis of the availability of an
intermediary price, an index that tied the values of relevant prices. If a
conduct affected the prices of a certain product or service, only through an
index, that is, a conduct affected the value of a reference price, from which
effected prices derived their value, this effect was considered as indirect, and
thus outside the scope of the effects doctrine90. For example, in the case of
LCD panels, the effects of cartelized panels on the prices of other LCD
panels, or final products that incorporate LCD panels, other than those
cartelized are considered indirect, as these effects materialize, since prices of
cartelized LCD panels operate as a reference for prices of other panels. If, on
the other hand, a conduct affected prices of certain products without the
intervention of an intermediary price, then these effects were considered
direct, within the meaning of the effects doctrine91. For example, effects,
inflicted by cartelized LCD panels upon prices of final products,
incorporating cartelized panels, are direct, since these final products derive
all or part of their value, directly from price-fixed panels. The fact that prices
89 Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977).
90 Indirect effects could be reached over extraterritorial application of financial regulation
which is not within the objectives of this paper. For the EU context, see: Joanne Scott,
‘Extraterritoriality and Territorial Extension in EU law’ American Journal of Comparative
Law 62/1 (2014): 87.
91 For further illustrative examples see: U.S. Department of Justice & Federal Trade
Commission, Antitrust Guidelines for International Enforcement and Cooperation, 21-26
(2017).

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 435
of final products may change in every transaction along their supply chain,
cannot render indirect, the effects of cartelized panels on these prices.
In InnoLux and Intel, the territorial links, the CJEU would rely on in
determining the jurisdiction in these cases, were weak. In the former,
territorial link was established through a legal analysis that harmonized the
single economic unit and the implementation doctrines on the basis of a
preliminary finding of vertical integration. This could not be the case in the
latter. Intel, a US company, produced its CPUs in the US and sold them to
Lenovo, a Chinese company, which received those CPUs and incorporated
them into commercial and home desktop and notebook computers in China.
AMD, which was being hindered from sale of its CPUs to Lenovo and others
was also a US company producing its CPUs in the US. There was no
territorial link found between the EU and either the production of CPUs or
their sale to Lenovo. No vertical integration or any other structural
connection was present between Intel and Lenovo. The products Lenovo
sold (or did not sale) into the EU internal market were computers, rather than
CPUs. These facts in Intel clearly demonstrated that the practices at issue in
this case were of extraterritorial nature, rather than a territorial one.
In Intel, the CJEU attempted to establish an analogy with its reasoning
in Wood Pulp and argued that the qualified effects test and the
implementation doctrine pursued the same objective, ‘preventing conduct
which, while not adopted within the EU [had] anticompetitive effects liable
to have an impact on the EU market’92. Far from establishing an analogy,
this argument, in fact, contradicted the Court’s findings in Wood Pulp and
was not in conformity with its case law. As noted above, the Court, Wood
Pulp revealed that the determinative factor in establishing the adoption of a
conduct was where it was implemented rather than that it was formed93. The
objective of the implementation doctrine was preventing anticompetitive
conducts adopted within the EU through implementation. The Court’s
analogy in Intel, on the other hand, referred the place where contested
practices were formed.
It would be argued that the Court’s construing of the qualified effects
test as an alternative to the implementation doctrine was a reflection of its
92 Case C-413/14 P Intel Corporation v Commission [2016] ECLI:EU:C:2017:632, para. 45.
93 Case 89/85, A. Ahlström Osakeyhtiö and others v Commission [1988] ECR I-5193 5243,
para. 16.

436 HÜSEYIN ÇAĞRI ÇORLU
reluctance in acknowledging extraterritoriality as a valid basis for
establishing its jurisdiction. AG Wathelet in InnoLux, argued that the EU’s
judicial bodies sought to establish their jurisdiction based on territoriality
principle, since the texts of Articles 101 and 102 TFEU lacked any
extraterritorial dimension, unlike Sections 1 and 2 of the Sherman Act94.
Accordingly, any interpretation that would allow the CJEU to assert
extraterritorial jurisdiction should be avoided, due to the lack of a legal basis
in the EU law. The analogy between the objectives of the implementation
doctrine and qualified effects tests was proposed to overcome this hurdle.
The contested practices in Intel were held to be implemented in the internal
market and thus subjected to the jurisdiction of the GC and the CJEU under
the territoriality principle. As the qualified effects test was held to be
pursuing the same purpose and an alternative to the implementation doctrine,
its application was also considered as territorial95.
In US case law, the distinction between territorial and extraterritorial
application of the Sherman Act was clearly established by the FTAIA,
according to which the effects doctrine was determined to be applicable only
to extraterritorial conduct. The FTAIA provided two separate, not
alternative, standards, that is, the standard set out for extraterritorial conduct
could not be applied interchangeably to territorial conduct or vice versa.
Accordingly a conduct could be subject to the effects test, only if it satisfied
the elements of extraterritoriality set out under the FTAIA. International
comity and the balancing tests were part of the legal analysis, when a
conduct was determined to be extraterritorial and thus within the scope of
the FTAIA. In that regard, AG Wahl’s position in Intel, providing that such a
differentiation between territorial and extraterritorial application of EU
competition rules was not determinative96 was problematic as to the
formulation of the legal analysis to be evaluated by the GC and the CJEU.
C. Comity As a Necessity
As long as the effects doctrine was considered within the ambit of the
territoriality principle, international comity would never be a part of a
94 Opinion of Mr. Advocate General Wathelet in Case 231/14, InnoLux v Commission [2015]
ECLI:EU:C:2015:292, paras 37-38.
95 Case C-413/14 P Intel Corporation v Commission [2016] ECLI:EU:C:2017:632, para. 18.
96 Opinion of Advocate General Wahl in Case C-413/14 Intel v Commission [2016]
ECLI:EU:C:2016:788, para. 297.

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 437
jurisdictional analysis. In US case law, international comity’s role in limiting
the scope of the extraterritorial application of the Sherman Act was
substantial. Taking international comity into account, US courts determined
that by whom actions for private compensation could be brought before
judicial authorities, as well as which damages could be subject to these
private claims. In Empagran, the Supreme Court pointed out that not all
damages could be reclaimed by private parties, even though anticompetitive
conduct causing these damages, had foreseeable, direct and substantial
effects on US trade and/or commerce. Under international comity, only those
who established that damages they incurred due to foreign conduct had a
strong nexus with anticompetitive effects that materialized in US markets
could bring private claims before US courts97.
The endorsement and the implementation of international comity did
not prevent the US jurisprudence from being perceived as an illustration of
legal imperialism by other states98. The legal analysis in Intel, on the other
hand, indicated that any conduct, which was deemed to be liable of an
impact on the internal market, would be in scope of Article 101 and 102
TFEU without a further analysis on jurisdictional rule of reason. The CJEU
in Intel did not ask, for example whether a remedy or a pendency of a
litigation abroad was available. Neither did it evaluate relative importance of
the alleged violation in the EU compared to that in China or the US99. The
Court did not even include an analysis of non-interference which would bar
it from exercising its jurisdiction in the case that the contested conduct. This
approach can be described as a form of legal imperialism, more aggressive
than that, for which US courts have been condemned.
97 F. Hoffmann-La Roche Ltd. v Empagran, 542 U.S. 155, 167 (2004).
98 Donald. E. Knebel, ‘Extraterritorial Application of US Antitrust Laws: Principles and
Responses’, Jindal Global Law Review 8/2, (2017): 192. See further: V. R. Grundman,
‘The Imperialism: The Extraterritorial Application of United States Law’, International
Lawyer 14 (1980): 257; M. Sornarajah, ‘The Extraterritorial Application of US Antitrust
Laws: Conflict and Compromise’, International and Comparative Law Quarterly 31/1
(1982): 127.
99 Criteria as to the evaluation of international comity can be found in US case law and some
scholarly works. See, for example: Timberlane Lumber Co. v. Bank of America, 549 F.2d
597 (9th Cir. 1976); Mannington Mills, Inc. v. Congloeum Corp., 595 F.2d 1287 (3rd Cir.
1979); Restatement (Third) of Foreign Relations Law of the United States §§ 401, 403
(1987). For a further reading on comity in competition policies see: Andrew. T. Guzman
(ed.), Cooperation, Comity and Competition Policy. OUP, 2011.

438 HÜSEYIN ÇAĞRI ÇORLU
International comity and balancing tests are important elements for the
evaluation of extraterritorial practices under competition rules. Given the
increasingly globalized international trade, it is not an exception that a
conduct has (either concerted or unilateral) foreseeable, immediate (direct)
and substantial cross-border effects. In this respect, satisfying the elements
of the FTAIA’s effects and the CJEU’s qualified effects criteria is not a
difficult task for both administrative and judicial authorities. Every
concerted practice between multinational companies and/or unilateral
conducts by globally dominant undertakings would be subject to competition
proceedings under EU law, if no additional criteria, other than the effects
doctrine, is adopted. The legal and political implications of such an approach
have been addressed in several Advocate-General opinions in which it was
alleged that the Commission’s application of EU competition law to foreign
conduct without any regard to international comity would amount to an
encroachment of sovereign rights enjoyed by other states100.
D. Iiyama and Leviathan Unleashed
Intel has also provided serious legal implications as to the
implementation of qualified effects doctrine in cases of private enforcement
of EU competition law at national level, the repercussions of which have
materialized in Iiyama101, in which follow-on damages claims were brought
before UK courts102, on the basis of the Commission’s previous decisions on
worldwide cartels in the production and supply of cathode ray tubes (CRTs)
100‘ (T)he courts or administrative authorities of a State—and, mutatis mutandis, of the
Community—are certainly not justified under international law in taking coercive
measures or indeed any measure of inquiry, investigation or supervision outside their
territorial jurisdiction where execution would inevitably infringe the internal sovereignty
of the State on the territory of which they claimed to act’. Opinion of Mr Advocate-
General Mayras in Case 48/69, ICI v Commission (Dyestuffs) EU:C:1972:32, 695. For
other AG opinions supporting an international comity standard see: Opinion of Mr.
Advocate General Wathelet in Case 231/14, InnoLux v Commission [2015]
ECLI:EU:C:2015:292, paras 40-42; Opinion of Mr. Advocate General Wahl in Case C-
413/14 Intel v Commission [2016] ECLI:EU:C:2016:788, para. 300.
101 Luca Prete, ‘On Implementation and Effects: The Recent Case-law on the Territorial (or
Extraterritorial) Application of EU Competition Rules’. 9/8 Journal of European
Competition Law & Practice 487, 494 (2018).
102 Iiyama (UK) Ltd and others v. Samsung Electronics Co Ltd and others [2018] EWCA Civ
220; [2018] 4 C.M.L.R. 23. See also

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 439
and LCDs103. The claimants, which were a Japanese producer and distributer
of televisions and computer monitors and its subsidiaries in the EU, claimed
damages incurred due to a foreign cartel of CRT and LCD producers. Judges
in English High Court (HC) issued conflicting rulings on CRTs104 and
LCDs105 as to the applicability of EU competition rules to foreign cartels,
though the facts in each cases were substantially similar106. This
inconsistency was resolved by the Court of Appeal (CoA) on the basis of
very limited guidance provided by the ruling of Intel. Adhering strictly to the
CJEU’s conclusions, the CoA ruled that EU competition law was applicable
to foreign cartels between defendants, on the basis of both the
implementation doctrine and the qualified effects test, even though the cartel
agreements and the first sale of cartelized CRTs and LCDs took place
outside the EU107.
The major claimant in Iiyama was the Japanese parent company, which
bought televisions and computer monitors incorporating cartelized CRTs and
LCDs from OEMs and distributed them in the EU through its subsidiaries.
The majority of damages, incurred as a result of cartel agreements, were
accrued outside the EU. Referring to the Supreme Court’s ruling in
Empagran, the defendants argued that UK courts should refrain from
exercising their jurisdiction on the basis of EU competition law, since the
losses, incurred by the defendants, had not originated from anticompetitive
103 LCD—Liquid Crystal Displays (Case COMP/39.309) Commission Decision of 8
December 2010, and TV and Computer Monitor Tubes (Case COMP/39.437) Commission
Decision of 5 December 2012. LCD saga of the Commission’s proceedings later gave way
for the defendants ’move for the dismissal of the decision in InnoLux; Case 231/14,
InnoLux v Commission [2015] ECLI:EU:C:2015:451. See also: Omar Shah et al. ‘Intel,
iiyama, Power Cables: A Revolution in the Treatment of Territoriality and Jurisdiction in
EU Competition Law?’. 10/2 Journal of European Competition Law & Practice 80, 83
(2019).
104 Iiyama Benelux BV & others v. Schott AG & others [2016] EWHC 1207 (Ch).
105 Iiyama (UK) Limited and others v. Samsung Electronics Co Ltd and others [2016] EWHC
1980 (Ch); [2016] 5 C.M.L.R. 16.
106 While the CRT claims were dismissed on the ground that indirect sales to the EU would
not be regarded as implementation, LCD claims were confirmed under the implementation
doctrine, due to the final arrival of these products to the EU. For an analogous friction in
US case law, see Seventh and Ninth Circuits ’respective decisions: Motorola Mobility LLC
v. AU Optronics Corp. 775 D.3d 816 (7th Cir. 2015) and; United States v. Hui Hsiung 778
F.3d 738 (9th Cir. 2015).
107 Iiyama (UK) Ltd and others v. Samsung Electronics Co Ltd and others [2018] EWCA Civ
220; [2018] 4 C.M.L.R. 23, paras 88-89.

440 HÜSEYIN ÇAĞRI ÇORLU
effects, the contested practices created in the EU108. The CoA rejected this
argument on the ground that competition laws of the US and the EU were
substantially different109. The main difference that the Court referred to as an
illustration was the availability of treble damages in US law110, which would
provide incentives for victims of worldwide cartels to seek remedies before
US courts111. This was not the case in the EU112. According to the Court, EU
law did not offer a ‘persuasive force’ for foreign victims to bring their
claims before EU courts113.
The CoA also noted that even though comity concerns on the private
enforcement of EU competition law were also addressed in various
Advocate General opinions, the GC and the CJEU consistently ignored them
in their conclusions114, construing that the nexus between damages incurred
by claimants and anticompetitive effects on EU markets was left deliberately
outside the territoriality analysis by the EU courts. Damages arising from
domestic and/or foreign effects of an anticompetitive conduct would be
evaluated in the determination of fines to be imposed by the Commission.
Nevertheless, whether damages sought by the claimants originated from
domestic or foreign anticompetitive effects was not a part of the Court’s
jurisdictional analysis115.
The CoA’s finding of damages as a factor in assessing fines to be
imposed should not indicate that the extraterritoriality of these damages
108 Ibid., paras 53-54
109 Ibid., para. 105
110 Section 4 of the Clayton Act provides that “any person who shall be injured in his business
or property by reason of anything forbidden in the antitrust law (…) shall recover threefold
the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee”.
15 U.S. Code § 15. See also William E. Kovacic, ‘Extraterritoriality, Institutions, and
Convergence in International Competition Policy’, 97 Proceedings of the Annual Meeting
(ASIL), 309, 311 (2003).
111 Iiyama (UK) Ltd and others v. Samsung Electronics Co Ltd and others [2018] EWCA Civ
220; [2018] 4 C.M.L.R. 23, para 105.
112 According to the recital 44 of 2014 Damages Directive, national courts should refrain from
issuing charges more than those paid for the compensation of actual losses. Directive
2014/104/EU of the European Parliament and of the Council of 26 November 2014 on
certain rules governing actions for damages under national law for infringements of the
competition law provisions of the Member States and of the European Union [2014] OJ L
349/1.
113 Iiyama (UK) Ltd and others v. Samsung Electronics Co Ltd and others [2018] EWCA Civ
220; [2018] 4 C.M.L.R. 23, para. 106
114 Ibid.
115 Ibid. paras 116-117

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 441
would result in a direct omission of these damages from the total amount,
claimants seek for compensation. 2014 Damages Directive does not include
any provision limiting the compensation of losses incurred due to
anticompetitive effects occurring in the EU. Article 3.1 of the Directive
incorporates a ‘right to full compensation’ providing that ‘ the Member States
shall ensure that any natural or legal person who has suffered harm caused
by an infringement of competition law is able to claim and to obtain full
compensation for that harm’. The right to full compensation involves ’the
right to compensation for actual loss and for loss of profit, plus the payment
of interest’. Victims of anticompetitive conducts are entitled to bring claims
of full compensation before national courts. Whether a portion or all of their
losses are incurred outside the EU is irrelevant for the assessment of fines to
be imposed by national authorities. In that regard, the CoA’s position on the
extraterritoriality of damages incurred does not connote a limitation to the
scope of EU competition law with respect to foreign practices.
Iiyama illustrated the legal implications of the qualified effects doctrine,
when it was applied at national level against a foreign conduct without any
forms of jurisdictional rule of reason, such as international comity and
balancing tests. As noted, the qualified effects doctrine incorporated a test
which was not difficult to satisfy. Lacking an additional criterion adhering to
rights enjoyed by other sovereign states would result in every conduct
having anticompetitive effects on the internal market being subject to EU
competition law at both the Union and national level.
Conclusion
This paper questioned the CJEU’s designation of qualified effects
doctrine as a means to establish territorial jurisdiction over extraterritorial
conduct. In US law, the effects doctrine was established as a legal basis for
US Courts to exert their jurisdiction under the extraterritoriality. In EU law,
on the other hand, the legal basis on which the CJEU based its decision in
Intel, continued to be territorial jurisdiction. The consequences of this
divergence were immense. Given the introduction of new supply chains116 in
116 See: Dick K. Nanto, ‘Globalized Supply Chains and U.S. Policy ’in America in the 21st
Century: Political and Economic Issues Series: Globalized Supply Chains and Policy, ed.
Solomon Mensah (2010). For the implications of new business models to the application
of competition rules see also: Leon B. Greenfield, et al., ‘Foreign Component Cartels and
the U.S. Antitrust Laws: A First Principle Approach ’Antitrust 29/2 (2015):18; Ellen

442 HÜSEYIN ÇAĞRI ÇORLU
an increasingly globalized world, in which the effects of a particular conduct
produce cross-border victims, the integration of multiple markets by
multinational companies results in a situation, in which any conduct taken by
a legal entity in one market has cross-border effects in other markets. The
extraterritorial implications of commercial activities happens to be frequent
rather than exceptional.
The effects doctrine has proved to be a valuable instrument in
determining foreign conducts with domestic effects. Nevertheless, due to the
growing integration of world markets, the extent of market practices that
would meet the elements of this doctrine has been broadening, rendering the
doctrine’s functioning of jurisdictional delimitation redundant. As Iiyama
clearly illustrated, without the introduction of a new criteria, most of
anticompetitive practices perpetrated abroad would fall within the scope of
national jurisdictions in the EU.
The extraterritorial application of domestic rules was regarded as an
exception to a general rule that national law should be applied territorially.
In this regard, US courts subjected the extraterritoriality of the Sherman Act
to a strict interpretation, in a manner that the extent of foreign conduct that
could be reached out by the Sherman Act was limited. This would never be
the case for EU law, unless the CJEU acknowledged that its application of
EU competition law to foreign conduct through the qualified effects test
constituted an extraterritorial application of its jurisdiction. In order to evade
from an overarching extension of EU jurisdiction over foreign conduct, the
CJEU must reconceptualize its qualified effects doctrine within the premises
of extraterritoriality. Only then, can international comity and jurisdictional
rule of reason be incorporated into the legal analysis on qualified effects
foreign conduct would have on the internal market.
Meriwether, Motorola Mobility and the FTAIA: If Not Here, Then Where? Antitrust 29/2
(2015): 8; Kenneth W. Dam, ’Extraterritoriality in an Age of Globalization: The Hartford
Fire Case ’The Supreme Court Review (1993): 289; Jae Hyung Ryu, ‘Deterring Foreign
Component Cartels in the Age of Globalized Supply Chains ’Wake Forest Journal of
Business and Intellectual Property Law 17/1 (2016): 81; Megan L. Masingill,
‘Extraterritoriality of Antitrust Law: Applying the Supreme Court’s Analysis in RJR
Nabisco to Foreign Component Cartels ’American University Law Review 68/2 (2019):
621.

EXTRATERRITORIAL APPLICATION OF EU COMPETITION LAW… 443
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