Antitrust and Competition Law principle that holds that where an anti-competitive agreement or activity outside a jurisdiction (i.e., the United States or EU) has an effect inside the jurisdiction, its authorities can take action against extra-territorial offenders and in some instances injured parties can also bring suit. The effects doctrine was broadly deplored outside the United States, where it originated, especially by politicians in Europe, where many countries enacted blocking statutes to limit its impact.
Europe essentially embraced the effects doctrine in Gencor Ltd v Commission, [1999-2] E.C.R.753, albeit describing it as the ‘appreciability test.’ Since then a number of ill-advised U.S. politicians have deplored the EU’s unprecedented application of the effects doctrine to U.S. companies, seemingly under the impression that it is a uniquely European legal principle, or indeed of European origin, and echoing the horror with which European politicians in the past complained of and protested the U.S. version (the same phenomenon is observable with respect to Chinese competition law enforcement.) The effects doctrine is, for example, used to enable U.S. authorities to review the merger of two non-U.S. companies, or the EU to review the merger of two U.S.-based companies, where there is substantial competitive impact in the EU or vice versa. Since a merger of two ostensibly foreign entities may have a more substantial anti-competitive impact in economies and countries other than their home jurisdictions, the effects doctrine, under whatever name it is described, is of considerable importance in many state’s competition law.