Law / LL.M.

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The emergence of biotechnology necessitating change in traditional pharmacological research, cost cutting by hospitals and health insurers, and an increasing number of patent expirations have posed a considerable challenge to the pharmaceutical industry, which hitherto had been considered recession-proof. Responding to this challenge, the industry has undergone tremendous consolidation through mergers and acquisitions (M&As). These M&As have resulted in high concentration within the therapeutic classes of drugs, thereby raising anticompetitive concerns. / In order to allow the mergers to proceed, the Federal Trade Commission in the U.S. had required the merging entities to divest their R&D assets. The European Commission, on the contrary, had taken more permissive approach. / The thesis has argued that R&D divestitures in pharmaceutical cases have not been appropriate as anticompetitive concern arises owing to the acquisition of market power with drug purchasers, rather than the combination of R&D assets. The innovative nature of the industry, and the costs and risks involved in drug discovery make it hard to analyze the likely future state of the market. Ex-post analysis shows that divestiture in these cases proved counterproductive. / It is suggested that ex-post remedies like compulsory licensing and price regulation are preferable in pharmaceutical mergers, as they do not disrupt the companies' R&D structure. Moreover, these remedies could be applied once the anticompetitive concerns become apparent the merger is consummated, thereby allaying the uncertainty involved in the assessment of the future state of innovation markets.

This thesis examines the impact of transnationalization on U.S. American merger review. It commences by outlining the principles of U.S. merger control, the notion of competition, and effects to be prevented. The study then proceeds with an analysis of transnationalization and gives an evaluation of its influence on firms, markets, and economic systems. The adjacent part holds a description of significant merger decisions made by the U.S. authorities during the recent years thereby covering important markets. An analysis focussing on a possible inequality of the treatment between mergers involving U.S. and foreign firms in order to meet exigencies generated by transnationalization that are not congruent with the objective of maintaining competition follows. The thesis concludes with an examination of extraterritorial application of U.S. antitrust law, the problems generated thereby and the various suggestions produced for a solution of the discrepancy between world-wide markets and enterprises and nationally confined legal systems.

Law / LL.M.

LL.M. / Modern competition occurs in a global market and straddles various state borders. This international dimension of competition law (antitrust law) subsequently raises concerns whether one state can apply its competition rules extraterritorially against an undertaking in another country, when the latter behaves in an anti-competitive manner that, for example, have adverse effects in the territory of the former. In the context of such extraterritorial enforcement, the concept of the Effects doctrine as created and developed in the antitrust jurisprudence of the United States plays an important role. In this dissertation the issue of extraterritorial antitrust jurisdiction is investigated in an attempt to suggest a suitable basis for assertion of such jurisdiction. The evolution of the Effects doctrine in the United States and its further development and qualification in American Antitrust jurisprudence is addressed as well as its interrelation with the concept of international comity. Thereafter the basis for assertion of extraterritorial antitrust jurisdiction by the European Community is investigated. In this regard the long favoured Single Economic Entity Theory is addressed as well as the development of a form of Effects doctrine by the European Commission which eventually culminated in acceptance of an “Effects/Implementa-tion doctrine” by the European Court of Justice in the Wood Pulp case. It should however be noted that the scope of the extraterritorial application of the competition rules of the European Community is extended by the EC Merger Control Regulation 139/2004. Thus, the jurisdictional range of the Merger Control Regulation is considered in chapter 4. It is submitted that although the Effects doctrine is competent as sole basis for exercising extraterritorial antitrust jurisdiction, it has various disadvantages, inter alia that it evokes conflict between states due to differences in competition law and policy and various states interests. Consequently co-operation on a bilateral level is investigated in chapter 5 as a possible solution. Finally, the South African stance on the extraterritorial enforcement of its Competition Act 89 of 1998 is investigated in chapter 6 and certain observations and suggestions are made for future exercise of extraterritorial antitrust jurisdiction.

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