International Business Law for California Businesses (& Vice Versa)

Our guide to international opportunities for California businesses, as well as international firms doing business in California.

In today’s interconnected world, California companies are increasingly venturing into the international arena — taking advantage of the state’s innovative technology sectors and prime location along the Pacific Rim to tap into overseas markets. 

These ventures can often pave the way for significant growth and expansion. However, they also bring a set of legal challenges that businesses need to address to stay compliant and safeguard their interests. This guide aims to highlight some of the critical legal aspects and considerations for California businesses embarking on international transactions.

EU Competition Law

European Union (EU) competition law is designed to maintain fair competition within the single market, ensuring that businesses operate on a level playing field and consumers benefit from a wide choice of goods and services at competitive prices.

The foundational principles of EU competition law are enshrined in Articles 101, 102, and 107 of the Treaty on the Functioning of the European Union (TFEU). 

Prohibition of Anti-Competitive Agreements (Article 101 TFEU)

Article 101 TFEU prohibits agreements between two or more independent market operators which may affect trade between EU member states, and which have as their object or effect the prevention, restriction, or distortion of competition within the internal market. 

This includes both horizontal agreements (between competitors) and vertical agreements (between companies at different levels of the supply chain). 

Examples include price fixing, market sharing, and limiting production. However, certain agreements that contribute to improving the production or distribution of goods or promote technical or economic progress may be exempt from this prohibition under specific conditions.

Abuse of Dominant Position (Article 102 TFEU)

Article 102 TFEU prohibits companies that hold a dominant position in a market from abusing that position to the detriment of competition and consumers. A dominant position is not illegal per se; rather, it is the abuse of this position that EU law seeks to prevent. 

Examples of abusive practices include predatory pricing, refusal to supply, and exclusive dealing arrangements. The determination of a “dominant position” involves assessing the company’s market share, the competitiveness of the market, and the company’s ability to act independently of its competitors and customers.

Enforcement of EU Competition Law

The European Commission is the primary body responsible for enforcing EU competition law, with the power to investigate suspected violations, impose fines, and order companies to cease anti-competitive practices. 

Companies found in breach of EU competition law may face substantial fines, up to 10% of their annual worldwide turnover. National competition authorities and courts of the EU member states also play a role in enforcing EU competition rules within their jurisdictions.

Privacy Regulations (GDPR)

Each country comes with its unique legal and regulatory landscape, which can be markedly different from U.S. norms. California businesses must ensure they comply with local laws concerning labor, the environment, consumer protection, and data privacy. 

For example, the European Union’s General Data Protection Regulation (GDPR) poses significant compliance challenges for companies dealing with EU citizens’ data, regardless of the company’s location.

The General Data Protection Regulation (GDPR), enacted by the European Union on May 25, 2018, represents a comprehensive data protection law designed to enhance individuals’ control and rights over their personal data. It applies to all companies and organizations operating within the EU, as well as those outside the EU that offer goods or services to, or monitor the behavior of, EU data subjects. 

Under the GDPR (Regulation (EU) 2016/679), personal data must be processed lawfully, fairly, and in a transparent manner, ensuring adequate security. It introduces stricter consent requirements, a right to access personal data, a right to be forgotten, and the requirement for data breach notifications.

The regulation mandates that data controllers and processors implement appropriate technical and organizational measures to ensure and be able to demonstrate that processing is performed in accordance with the GDPR. Non-compliance can result in significant fines, up to 4% of the annual global turnover (gross revenue) of the preceding financial year or €20 million (whichever is greater), highlighting the importance of adherence to the regulation.

Risk Mitigation through Due Diligence & Legal Expertise

Conducting thorough due diligence is crucial in cross-border transactions to spot and mitigate potential legal, financial, and operational risks. This involves comprehensive checks on the legal status of foreign partners, the regulatory climate of the target market, and possible liabilities. When operating internationally, a California company is availing themselves of the EU legal and economic system and thus must comply with EU law while conducting business in the EU. 

While a California business can draft agreements under California law, they still must obey EU economic regulations while doing business in the EU. 

Similarly, European businesses doing business in California should be mindful of the U.S. legal system and its differences from the EU legal system and more relaxed regulation of competition laws and higher costs and time-consumption of litigation in the California court system. 

Therefore, when engaging in international business, a prudent manager should consider more efficient dispute resolution procedures such as mediation as a prerequisite to litigation, recovery of reasonable attorney’s fees and costs by contract and arbitration clauses that fast track litigation and reduce costly overhead of the United States District Courts and California state courts.

Wrapping Up

Venturing into international markets offers California businesses exciting growth prospects, but also introduces a series of legal challenges. By understanding international trade laws, deciphering foreign investment regulations, addressing tax issues, protecting intellectual property, ensuring compliance with local laws, and performing thorough due diligence, businesses can reduce risks and make the most of global opportunities.

This guide offers a starting point, but it’s advisable to seek specialized legal counsel to meet the particular needs and hurdles of your business’s international endeavors.

Always keep abreast of the latest legal requirements and consider consulting with the lawyers at Gallagher Krich APC, experienced California business lawyers, to address any company-specific concerns. 

For more information, contact Gallagher Krich, APC at Telephone: (858) 926-5797 or by email at: info [at] tomgallagherlaw.com

Attorney-Advertising. Tom Gallagher is the attorney responsible for this advertising.

Latest News & Updates

Meet Our San Diego Attorneys

Thomas F. Gallagher, Esq.

Partner

(858) 926-5797
tom [at] tomgallagherlaw.com

Troy B. Krich, Esq.

Partner

(858) 926-5797
troy [at] tomgallagherlaw.com

Contact Gallagher Krich, APC

What Clients Say:

Mike K., Google

Rated 5.0 out of 5
August 11, 2023

Thank you so much for all your help in resolving a real estate matter so quickly and efficiently.

Mike K
Verified

What Clients Say:

Jonas Y., Google

Rated 5.0 out of 5
December 28, 2022

If you need a “ Closer”, go see Troy. Troy has been one of the best attorneys I have ever worked with. I don’t typically give reviews but after the last case Troy helped me settle out of court, I won’t hesitate to use Troy again! Thanks for all you do Troy !

Jonas Y
Verified

What Clients Say:

Daniel E., Google

Rated 5.0 out of 5
October 11, 2022

I left a voicemail for Tom late Sunday evening and received a phone call first thing the next morning.

Tom was very quick to reply to any questions I had, and if he was caught up in a meeting, he was sure to return my call promptly.

Tom provided sound and logical advice, during a very stressful and uncertain time. At times I asked him to be more aggressive and was often met with the pros and cons of that decision, allowing me to understand the approach and thought process behind his strategy.

Ultimately he provided options for several paths for us to take, worked swiftly, and got us where we needed to be.

He reached out several times to check on my sanity and make sure I was good.

As someone with very high expectations, I would highly recommend his services. He provided expertise that proved to be successful, and also took the time to make sure I was emotionally solid.

Tom assisted with me with a 50% / 50% ownership conflict.

Daniel E
Verified

What Clients Say:

Deanna, LawConnect.com

Rated 5.0 out of 5
February 23, 2022

Really informative and actionable, very grateful to have connected and I look forward to working more with them in the future.

Deanna
Verified

What Clients Say:

Marilyn, LawConnect.com

Rated 5.0 out of 5
February 8, 2022

i liked that a lawyer, and not a staff member, called me to get the details and he gave me his opinion of what his initial thoughts are about my case.

Marilyn
Verified

What Clients Say:

Bob W., Google

Rated 5.0 out of 5
August 30, 2021

What was thought to be a simple breach of contract turned into a nightmare. Through their tenacity and their deep knowledge of the law, we were successful. There is no reason to look any further as you will not get any better representation than this firm. I highly recommend them and strongly suggest that if you are considering starting a business or are already managing one, this firm will guide you, avoiding the troubled waters businesses sometimes find themselves in.

Bob W
Verified

What Clients Say:

Rasmita M., Google

Rated 5.0 out of 5
August 13, 2021

Johnny Nitti helped us with our estate plan. He was very meticulous while drafting the plan and spent enough time to explain the details to us. He filed the deed with county recorder and paid for the fees himself. Overall, Johnny did a great job and we definitely plan to work with him in the future for any updates to our EP.

Rasmita M
Verified

What Clients Say:

George A., Google

Rated 5.0 out of 5
August 7, 2021

Johnny Nitti helped me with my estate planning (will, living trust, etc.) and made the process smooth. He is very responsive and organized. I highly recommend contacting Johnny.

George A
Verified

What Clients Say:

Ashley C., Google

Rated 5.0 out of 5
July 18, 2020

Tom Gallagher is very knowledgeable and helpful when it comes to business law. I reached out to him reguarding the Pandemic and my salon and I’m so glad I did. Many times stress and hard times can fog clarity and he really helped me understand the laws.

Thanks Tom!!!

Ashley C
Verified

What Clients Say:

Evan D., Google

Rated 5.0 out of 5
July 16, 2019

Thank you Troy for everything! Professional, prompt, and smooth handling of my case. I will be recommending to anyone that is in need of a lawyer.

Evan D
Verified