The US Taxpayer Harm Test: An Emerging Basis for Extraterritorial Antitrust Enforcement in the Shadow of Law
Keywords:
Antitrust, Competition law, Extraterritoriality, Jurisdiction, Effects doctrine, Implementation Doctrine, Bid-rigging, Public procurement, Cross-border enforcement, Customary International LawAbstract
This article examines the emergence, development and implications of the taxpayer harm test as a novel jurisdictional basis in United States antitrust enforcement. Developed entirely through agency practice, without legislative or judicial grounding, it extends the extraterritorial reach of US law to anticompetitive conduct abroad where foreign transactions are substantially funded by the US government. Unlike the effects doctrine, which grounds jurisdiction in competitive harm within the forum market, the taxpayer harm test relies on fiscal injury to the US treasury, and by extension its taxpayers. The article traces the origins of the test in agency guidelines and early cases, including US military procurement abroad, its recognition in the 1995 and 2017 Guidelines, and its application in recent enforcement actions. It shows how the test has been used to support expansive assertions while avoiding judicial scrutiny at home. The article highlights the absence of legislative mandate or judicial endorsement, and assesses the test’s compatibility with established principles of jurisdiction under international law. It argues that while the test advances US enforcement goals and strengthens deterrence, it stretches extraterritoriality beyond recognized limits. By analysing this unexplored doctrine, the article contributes to wider debates on unilateral innovation in competition law and the governance of cross-border economic activity.
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