Imagini ale paginilor

price of significant spillover effects in the domestic market. This approach is typified by a speech which former Treasury Secretary Connally gave before the Antitrust Section of the American Bar Association in April 1973. He treated antitrust as an historical relic, left over from the quiet horse-and-buggy days of the 1890's. "The world in [sic] changing, and we must change with it." These changes, he argued, dictate "substantial amendment" to our antitrust laws today.45 He saw American firms as being inhibited by a too vigorous application of what he regarded as outdated laws. Mr. Connally did not propose any precise reforms, but he clearly seemed to favor broad authority for American firms to enter into agreements which would in any way promote exports, and he opposed any antitrust monopoly or merger cases which might limit exports in any way.

Others have been less rhetorical, but have still generally favored broad antitrust exemptions. Thus, the U.S. Chamber of Commerce has recently urged antitrust exemptions


which would effectively and fully place American exporters and overseas contractors on a fair and comparable competitive basis with foreign sellers and contractors competing in world markets. Alternatively, the Congress should adopt laws exempting American exporters and overseas contractors from U.S. antitrust laws insofar as their activities are limited to operations designed to increase the volume of American exports


The Chamber's report seems to assume a much broader application of the U.S. antitrust laws to. overseas operations than has in fact been the case. As the Department of Justice put it in responding, "the United States is quite lenient toward joint foreign business activity.”47 If the Chamber wants American firms operating overseas to be able to enter into broad international cartels (and this is not wholly clear from the report), then such a policy is bound to have a serious impact on our domestic consumer interests. This is true even if such a cartel could be shown as "designed to increase the volume of American exports." Similarly, coercive conduct designed to drive an American competitor out of an export market (as in Pacific Seafarers) hardly seems to further our exporting interest.

Such critics as former Secretary Connally and the Chamber of

45. BNA ANTITRUST & TRADE REG. REP. No. 609, A-4 (April 17, 1973). 46. U.S. Chamber of Commerce, Antitrust Task Force on International Trade and Investment, Final Report on U.S. Antitrust and American Exports 3 (1974). The report says that it is assuming the "continued application of each country's own antitrust laws to all competitors, foreign and domestic, operating in any country's own domestic markets." 47. Letter from Assistant Attorney General Kauper to Arch N. Booth, reprinted in BNA ANTITRUst & Trade Reg. Rep. No. 663, F-1 (May 14, 1974).

Commerce force us to ask the hard economic questions. Do we want less competitive domestic markets on the theory that American consumers should subsidize export opportunities? Do we want export cartels even if they have a substantial anticompetitive spillover into the domestic market? Do we really think that America will lead the world in developing new products, services and delivery systems if our large and vital national market is walled off from the rest of the world? Unless we are willing to are willing to answer those questions in the affirmative-which I am not-we must look to antitrust as an affirmative tool of continuing importance. Maintaining our competitiveness here is vital to our standard of living at home and to our place in the world.

The critics on the other side say that the application of antitrust argued for here does not go far enough. They would argue for a broader application of our antitrust laws to situations overseas which neither directly affect our home markets or our export opportunities. A leading member of this group is Dean James A. Rahl of the Northwestern University Law School.48 He disagrees both on policy and legal grounds. On the policy level, he disagrees with the view outlined above that:

Foreign trade and foreign markets... should be viewed differently from domestic problems-in our own self-interest, and because it is not the business of Congress to concern itself with restraints inflicted by Americans upon foreigners abroad.


He suggests instead that:

[It would not be so strange for Congress to be concerned with what our businesses do to foreigners. If we are concerned with warfare and crime carried on by Americans abroad, we might reasonably be concerned with the infliction of economic damage abroad by conduct considered illegal at home.50

'The answer to this, I believe, is that it misses the real world. Most countries provide antitrust exemptions for export activities (as we do ourselves with the Webb-Pomerene Act), and governments take all kinds of frequently highly anticompetitive actions to promote their nation's exports. Some also take anticompetitive measures to protect their producers (which has the consequence of denying their consumers the benefit of import competition!). We do the same in some areas.

48. See Address by James A. Rahl, “American Antitrust and Foreign Operations: What is Covered?", Corporate Counsel Institute, Northwestern University Law School, Oct. 3, 1973, 8 CORNELL INT'L L.J. 1 (1974).

49. Id. at 8-9.

50. Id. at 9.

This world is thoroughly documented in the Peterson study, and it exists, like it or not. It seems to serve little analytic purpose to equate the international business world of hard-nosed competition and protectionism with bombing Cambodian villages. Moreover, nothing prevents a foreign government, if it chooses, from applying its own antitrust laws to the activities of foreign (including American) enterprises which allocate markets or fix prices in that country. In other words, there is no reason why the European Common Market should not treat an American Webb-Pomerene association as an illegal price fixing conspiracy. Nor is there any reason why the United States should not treat a European export cartel the same way under the Sherman Act. This approach has great merit over what one might call vague internationalism: it throws the burden of enforcing antitrust law, and protecting consumers, on the governments of the affected consumers. Government rarely works effectively unless it has an affirmative interest, and enforcement in this area is no exception.

Dean Rahl's second criticism might be labelled "legal." In Rahl's words:

Personally, I would stick to what I consider to be the only reliable guide to the scope of the Act—that is, that the Act is concerned with restraints of competition which occur in, or which substantially affect any of the commerce, interstate or foreign, which Congress regulates. This is what I think the Supreme Court decided in the Timken case, and it is what antitrust policy is all about. From there on out, it is a question of the particular substantive rules of effect on competition to be applied to determine the ultimate legality of the conduct.31

The simple answer to this point is that it is not what was decided in the Timken case-nor in any other case that I can find. At the very least, it implies a great deal less flexibility in the Sherman Act than is reasonably present in it.

In Timken, the Supreme Court was dealing with an American firm which was overwhelmingly dominant in its field. The company controlled 70-80 percent of the American output of tapered roller bearings, and its 1947 sales were over $77 million. These bearings competed for many uses with other antifriction bearings and, in the broader total market, the defendants still accounted for some 25 percent of all United States sales.52 The defendant was charged with a long-term international allocation of markets with a British and a French firm. Under these agreements, each of the parties had allocated trade territories, fixed prices on sales into each other's territories, cooperated

51. Id. (citation omitted).

52. 341 U.S. at 603-04 (Reed, J., concurring).

to protect each other's markets and to eliminate outside competition, and participated in specific cartel arrangements to restrict imports to and exports from the United States.53 The defendant American firm held 30 percent of the outstanding stock of the British company and 50 percent of the outstanding stock of the French company.

On these facts, the defendant made the unsuccessful argument that the three firms were a single “joint venture" or enterprise, and hence exempt from the antitrust laws. What the Court was left with, having dealt with the affiliation question, was a broad world-wide cartel of leading firms engaged in selling an important product amid elaborate arrangements to ensure noncompetition. The defendants did argue that “. . . the Sherman Act should not be enforced in this case because what appellant has done is reasonable in view of current foreign trade conditions."54 The Court responded,

The argument in this regard seems to be that tariffs, quota restrictions and the like are now such that the export and import of antifriction bearings can no longer be expected as a practical matter, that appellant cannot successfully sell its American-made goods abroad; and that the only way it can profit from business in England, France and other countries is through the ownership of stock in companies organized and manufacturing there. This position ignores the fact that the provisions in the Sherman Act against restraints of foreign trade are based on the assumption, and reflect the policy, that export and import trade in commodities is both possible and desirable. Those provisions of the Act are wholly inconsistent with appellant's argument that American business must be left free to participate in international cartels, that free foreign commerce in goods must be sacrificed in order to foster export of American dollars for investment in foreign factories which sell abroad. Acceptance of appellant's view would make the Sherman Act a dead letter insofar as it prohibits contracts and conspiracies in restraint of foreign trade. If such a drastic change is to be made in the statute, Congress is the one to do it.55

What the Supreme Court did here was to reject a very broad argument in favor of cartels-a point on which it was clearly correct. What the Court did not do was to say that all domestic antitrust rules are going to be applied in precisely the same way in the international field. As the Court stressed, the Sherman Act does reflect the policy that export and import trade in commodities is both possible and desirable. The reality is that the defendant over-argued its case. If in fact it was impossible for it to sell its bearings in foreign markets without manufacturing there, then the elaborate territorial allocation scheme was not necessary. Even if it could not sell its bearings in

53. Id. at 595-96.

54. Id. at 599.

55. Id.

certain foreign markets, this was not a justification for a private arrangement that prevented others from selling their bearings in the American market. The Timken decision never explicitly stated that the cartel scheme at issue was per se illegal, let alone that all domestic per se rules would be applied in a foreign context. In fact, as I have argued, such a naked territorial allocation scheme designed to isolate the United States from outside competition should be treated as per se illegal under the Topco standard. The impact on the domestic American market is fundamental and immediate, especially where a leading competitor is involved.

Nor is the issue one of jurisdiction. In an early antitrust case, American Banana v. United Fruit Co.,56 the Supreme Court held fairly broadly that acts done abroad were subject only to the laws of the place where they were committed, even if they injured foreign commerce. Subsequent antitrust cases have retreated from this broad statement of territoriality.57 The full sweep of the reversal is seen, for example, in Judge Hand's celebrated Alcoa decision in 1945. He stated that "it is settled law... that any state may impose liabilities, even upon persons not within its allegiance, for conduct outside its borders that has consequences within its borders which the state reprehends. . . ."58 This very broad language had caused some perhaps appropriate concern. Suffice it to say, however, that it is no longer the place of the act that is key. When the act or agreement can be shown to have a direct effect on markets within the United States, our law should reach it-and this is especially so where the act was clearly intended to affect our market. Of course, under our traditional jurisprudence, it is necessary to have personal jurisdiction over the party committing the act.59 This normally presents no problem with respect to the subsidiary of an American corporation, let alone the corporation itself. It may, of course, pose a problem where the potential defendants are foreign corporations which do no business in the United States.

Thus, in the end, we are not dealing with a legal issue of jurisdiction, but of substance. The ultimate question is whether American antitrust laws, particularly the Sherman Act, are sufficiently broad to allow the application of more flexible rules to foreign transactions. The answer, I submit, is “yes.” Kingman Brewster makes this case very clearly and

56. 213 U.S. 347 (1909).

57. See K. BREWSTER, ANTITRUST AND AMERICAN BUSINESS ABROAD 65 (1958). 58. United States v. Aluminum Co. of America, 148 F.2d 416, 443 (2d Cir. 1945). 59. See International Shoe Co. v. Washington, 326 U.S. 310 (1945).

« ÎnapoiContinuă »