The following abstracts summarize articles appearing in Volume 28:
"EC Reforms of Corporate Governance and Capital Markets Law: Do They Tackle Insiders¡¯ Opportunism?"
By Luca Enriques & Matteo Gatti
Corporate frauds and stock market collapses are traditionally the main drivers of company and securities law reforms. The second driver has to do with advances in financial economics. These drivers have prompted the European Community to adopt thirty-four directives and regulations since 2002. Of these measures, twenty-one deal with the law of accounting, nine are securities law measures, while the rest are either core company measures or at the crossroads between company law and accounting or securities law. This Article provides an overview of the most relevant measures enacted over the last six years in the corporate governance and securities areas, with particular attention as to whether and how such measures are useful to tackle the main corporate governance problem in most economies, i.e., how to curb the extraction of private benefits of control by dominant shareholders or other insiders to the detriment of outside investors. The Article concludes that while rules against corporate self-dealing are noticeably absent from the EC agenda of corporate governance reforms for listed companies, this inaction is the wisest course of action for the EC policymakers.
"On the Road to Perdition? The Future of the European Car Industry and Its Implications for EC Competition Policy"
By Sandra Marco Colino
Recent reports from the European Commission on European Union price differentials for new motor vehicles reflect a steady narrowing of differences across the 27 Member States. The decrease in price differentials coincides with a difficult moment in the history of the European car industry. This Article examines the task of the European legislator in the evolution of the car sector, and attempts to establish what role the now “modernized” EC completion law should play in light of the industry’s gloomy road ahead. To the detriment of economic efficiency, EC competition policy has been thus far affected by external concerns for integration and consumer protection (and the industry’s interests in the case of the car sector). For this reason, the Commission’s much criticized application of EC antitrust provisions may have exacerbated the difficulties already faced by a declining industry. It is clearly not the role of EC competition law to protect less efficient firms, but what this Article explores is whether the existing competition rules are imposing additional and unnecessary burdens on manufacturers or if, on the contrary, efficiency arguments can serve to justify the current rules. The aim of the Article is to assess how the new procedural and substantive rules for competition policy should be applied so as to provide for a sound application of the new rules and a coherent policy for future development of the car sector.
"A Finger in the Dike? An Examination of the Efficacy of State and Federal Attempts to Use Law to Stem Outsourcing"
By Beverly Earle, Gerald A. Madek & Christina Madek
Many people, not just in the United States, are concerned about the implications of the growth in outsourcing for the future of business. State governments in particular are trying to stop outsourcing and are using the law as a means to do so. However, this Article asks whether these attempts, which are variants of the old “buy American” programs, doomed to be ineffective and ultimately protectionist without really protecting American businesses. The Article examines the developments of offshoring, outsourcing, and insourcing and the state and federal legal efforts to restrict this growth. Then the Article examines the WTO and international responses to these developments and the Supreme Court¡¯s analysis of tax incentives as a way to attract businesses to U.S. states. The authors conclude that the state and federal attempts to restrict outsourcing may spart retaliation around the world that ultimately may hurt American citizens’ interests.
"Outsourcing Drug Investigations to India: A Comment on U.S., Indian, and International Regulation of Clinical Trials in Cross-Border Pharmaceutical Research"
By James Cekola
The scope of human drug research and development is undergoing rapid globalization. Global economic factors and recent changes in Indian regulations have created a situation that could be described as a ¡°perfect storm¡± for a clinical trial outsourcing boom in India. India has much to gain from such clinical outsourcing, but the practice of U.S. pharmaceutical companies outsourcing their clinical research to the Indian population raises several controversial questions. Are U.S. pharmaceutical companies evading regulatory controls by outsourcing trials to India rather than conducting them in the United States? Will the safety and rights of Indian trial volunteers be protected as well as those of their U.S. counterparts? Is the Indian population unfairly abused in taking most of the risk of clinical research but little of the benefit? This Comment first discusses the reasons behind the growing trend of outsourcing investigational drug trials to India and explains the regulation of clinical trials and protections for test subjects in India and the United States. While there are international documents and agreements relating to human experimentation, the regulation of clinical research is dominated by legislation on the national level. The Comment concludes with a discussion on the economic, regulatory, and ethical realties of U.S. pharmaceutical companies outsourcing clinical research to India and argues that U.S. companies do not escape their obligations to protect the trial test subjects in India that would be required if such trial was conducted domestically.
"Business Implications of Divergences in Multi-Jurisdictional Merger Review by International Competition Enforcement Agencies"
By W. Adam Hunt
Antitrust law has expanded into a global body of law. As the number of worldwide competition review and enforcement agencies in both developing and developed nations continues to increase, multinational businesses contemplating mergers are faced with growing uncertainty and transaction costs. The discussion and advocacy for the creation of an international antitrust regime has been ongoing since the early twentieth century, but most attempts have been characterized by weak forms of voluntary cooperation. This Comment argues that the general problem with the previous proposals is that they attempt to regulate the entire body of competition law. This overly ambitious approach ultimate results in little progress being made and justifies the more moderate approach advanced in this Comment. After discussing the various costs and benefits resulting from overlapping multi-jurisdictional merger review, the Comment argues that a more reasonable and manageable step is to first create a supranational merger review body utilizing U.S.-type economic analysis, before further attempts to harmonize other aspects of international competition law are made. According to the author, this would help to reduce transaction costs to businesses and should result in a more globally efficient level of merger regulation.