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conduct on the subject. It condemned bribery and illegal payments by transnational enterprises and urged clarification of national laws regarding such acts.
Francis J. McNeil, Alternate U.S. Representative to the OAS, gave an explanation of the U.S. vote, in which he noted the absence of any provision regarding respect for international law or for equitable treatment of transnational enterprises, and reaffirmed the U.S. position on the applicability of international law. He stated:
The United States gives its full support to this resolution. We gladly join with the other members of the OAS in condemning bribery and we are prepared to resume efforts within the hemisphere to work toward a code of conduct relating to transnational enterprises. . . . My delegation has given its support in the understanding—which I . .. want to make a matter of record—that the U.S. position with respect to the applicability of international law is not changed by our support for this resolution and, specifically, by our acceptance of the language relating to host country laws and court jurisdiction. The U.S. has always agreed that the activities of transnational enterprises should be subject to host country legislation and court jurisdiction. In supporting this resolution we reaffirm this principle, but we have not changed our position that there is another important principle that must be recognized in any balanced treatment of the problem of transnationals: namely, the host countries, in dealing with transnational enterprises, should respect international law and accord equitable treatment to such enterprises. And I would note parenthetically . . . that we are not speaking of privileged treatment, and I also add that other competent tribunals may have jurisdiction under certain conditions. Similarly, while we agree that information exchange is important, it is also our understanding that the kinds of information to be exchanged and the purposes that such exchanges are designed to serve remain subject to further discussion and interpretation as we proceed in our labors. . . . My delegation is pleased with the general agreement that the Permanent Council will establish procedures for frank, informal, and constructive dialogue on this subject. We believe such procedures are important for the progress we all seek on the substantive issue.
See OAS Doc. CP/ACTA 167/75, July 10, 1975.
That transnational enterprises should be subject to the legislation and to the jurisdiction of the competent national courts of the countries in which they carry out their activities and should conform to the development policy of those countries.
1. To request the member states to cooperate in the exchange of information for the purpose of achieving effective control of the activities of transnational enterprises, so that such enterprises conform to the economic and social goals of the host state.
2. To make a study of the principles that should govern the activities of transnational enterprises for the purposes of preparing a draft code of conduct which such enterprises should observe. In the preparation of this code, account will be taken of the work being carried out in this regard within the sphere of the United Nations.
For the purposes stated in the above paragraph, the Permanent Council will adopt the appropriate procedures and may seek the advice of a group of experts to be convoked to a meeting whenever it is considered necessary. The member states will be represented by the experts they deem appropriate.
3. To present a report in order that, in accordance with its findings, the matter may be placed on the agenda and submitted to the sixth regular session of the General Assembly for consideration. ALSO RESOLVES:
I. To condemn in the most emphatic terms any act of bribery, illegal payment or offer of payment by any transnational enterprise; any demand for or acceptance of improper payments, as well as any act contrary to ethics and legal procedures; and
II. To urge the governments of the member states, insofar as necessary, to clarify their national laws with regard to the aforementioned improper or illegal acts.
OAS Doc. CP/RES. 154 (167/75), corr. 1, July 10, 1975.
On July 24, 1975, Donald I. Baker, Deputy Assistant Attorney General, Antitrust Division, Department of Justice, made a statement concerning the enforcement of antitrust laws in cases involving the use of bribery to further conspiracies in restraint of trade, in the course of hearings on activities of American multinational corporations abroad before the Subcommittee on International Economic Policy of the Committee on International Relations. The following is an excerpt from his statement:
Foreign governments are becoming increasingly involved in the production, distribution and acquisition of goods and services, especially primary commodities, such as oil, bauxite, and coffee. This involvement increases the opportunities and incentives to induce governmental conduct (by bribery and other techniques) in the service of private anticompetitive purposes. It also increases the opportunities and incentives for particular foreign governmental officials—both in their official and personal capacities—to extract payments from private firms as a condition for access to products or markets influenced by such governments.
When bribery is used to further conspiracies that restrain the domestic or foreign trade of the United States or conduct that monopolizes or attempts to monopolize such trade, it is a matter of direct concern to the Antitrust Division of the Department of Justice...
The basic task of the Antitrust Division is enforcement of the Sherman Act (15 U.S.C. sec. 1, et seq.). ... this act is also available to private plaintiffs bringing civil treble damage actions (15 U.S.C. sec. 15). And indeed in the foreign area a great many of the cases are brought. It is the particular genius of this statute that in declaring illegal both conspiracies to restrain trade and monopolizing conduct, it does not become necessary to delineate possible means which might be employed to achieve these objectives. ... The Sherman Act does not need to and does not in fact declare illegal any specific business practice such as bribery. Rather, it focuses on the purpose and effect of conspiratorial behavior which restrains trade or individual or joint conduct leading to monopolization.
To the extent techniques such as the payment of bribes further such purposes and/or have such effects, the entire pattern of anticompetitive behavior may be subject to prosecution. While bribery has not been explicitly at issue up to now in cases involving international trade, some private inducements to foreign governments to engage in anticompetitive activity have been the subject of litigation. There is no logical reason why bribery of foreign officials may not be involved in future international activities which are the subject of antitrust litigation.
The Sherman Act applies to trade or commerce not only "among the several States,” but also “with foreign nations.” The Sherman Act is applicable fundamentally to two basic international situations. The first is where imports into the United States are unreasonably restrained-section 1-or monopolized-section 2-thereby injuring our U.S. consumers or those who must buy on less-competitive terms. The second is where export trade opportunities are restrained or monopolized, thereby denying other U.S. businesses the opportunity to compete abroad on their merits. U.S. courts have made it abundantly clear that Sherman Act prohibitions may be applied even to conspiracies formed and pursued abroad and even where such conspiracies are among foreign persons, if such conspiracies have the intended and actual effect of restraining U.S. imports, exports or interstate commerce.1
A case which illustrates an antitrust violation with respect to U.S. imports is the Government's suit against the quinine cartel which restrained and monopolized worldwide sales of quinine including, specifically, sales to the United States in the 1960's.? An example of a violation of the Sherman Act affecting U.S. exports is Senith v. Hazeltine. In the case the U.S. Supreme Court held that it was illegal for American firms to cooperate in a Canadian patent pool which had the intended effect of limiting American exports of electronic products to Canada by nonparticipants in the patent pool.
This is the essence of U.S. antitrust enforcement in international trade. ... What makes international antitrust a complex subject in analyzing situations such as those under consideration by this committee are the collateral considerations which must be taken into account in determining whether or not subject matter jurisdiction may properly be exercised. Four of these constraints are worth particular notice. Their relevance must be analyzed in virtually every international antitrust problem. These are:
One. The doctrine of sovereign immunity.
the doctrine of sovereign immunity is that, in general, official agencies of foreign sovereigns are entitled to immunity from the process of U.S. courts with respect to their sovereign diplomatic and political activities even if these activities have anticompetitive consequences. The act of state doctrine holds that U.S. courts may not review the political acts of a sovereign within its sovereign territory, even where such acts would, but for the applicability of the doctrine, be Sherman Act violations.
The doctrine of foreign governmental compulsion is that a private firm should not be held liable for certain violations of law which it may commit because it is compelled ... to do so under risk of penalty by a foreign sovereign.
Issues of comity involve situations in which two states have concurrent jurisdiction and are likely to prescribe and enforce rules of law requiring inconsistent conduct upon the same person. They represent considerations which the agencies and courts of each state are required by international law to consider, in good faith, in deciding whether to exercise or refrain from the exercise of jurisdiction. These considerations include:
(a) The vital national interest of each of the states,
(b) The extent and the nature of the hardship that inconsistent enforcement actions would impose upon the person ... , and
(c) The extent to which enforcement by action of either state can reasonably be expected to achieve compliance with the rule prescribed by that state."4
In recapitulation, payments to foreign governmental officials, could be the subject of antitrust suit where they were part of a scheme to restrain or monopolize U.S. imports or exports, if a suit was not otherwise constrained by these four and other related considerations.
1 United States v. Alcoa, 148 F.2d 416 (2d Cir. 1945).
2 United States v. Nederlandsche Combinatie Voor Chemische Industrie, et al., 68 Cr. 870 (S.D.N.Y.) filed October 25, 1968. File No. 60-21-138.
3 395 U.S. 100 (1969).
4 Foreign Relations Law of the United States, Restatement 2d, section 40 (1965).
For the full text of Mr. Baker's statement, see Hearings before the Subcommittee on International Economic Policy of the House Committee on International Relations, 94th Cong., 1st Sess., June 5-Sept. 30, 1975, pp. 87–97.
Secretary of State Kissinger, in an address to the annual convention of the American Bar Association in Montreal on August 11, 1975, expressed U.S. willingness to work for an agreed statement of basic principles for multinational enterprises. The following is an excerpt from his address:
Multinational enterprises have contributed greatly to economic growth in both their industrialized home countries, where they are most active, and in developing countries, where they conduct some of their operations. If these organizations are to continue to foster world economic growth, it is in the common interest that international law, not political contests, govern their future.
Some nations feel that multinational enterprises influence their economies in ways unresponsive to their national priorities. Others are concerned that these enterprises may evade national taxation and regulation through facilities abroad. And recent disclosures of improper financial relationships between these companies and government officials in several countries raise fresh concerns.
multinational enterprises can be powerful engines for good. They can marshal and organize the resources of capital, initiative, research, technology, and markets in ways which vastly increase production and growth. If an international consensus on the proper role and responsibilities of these enterprises could be reached, their vital contribution to the world economy could be further expanded. A multilateral treaty estab lishing binding rules for multinational enterprises does not seem possible in the near future. However, the United States believes an agreed statement of basic principles is achievable. We are prepared to make a major effort and invite the participation of all interested parties.
Dept. of State Bulletin, Vol. LXXIII, No. 1889, Sept. 8, 1975, p. 361.
Secretary Kissinger, in an address to the Seventh Special Session of the U.N. General Assembly, delivered on September 1, 1975, by Ambassador Daniel P. Moynihan, U.S. Representative to the United Nations, again recommended that international standards of conduct be defined to establish reciprocal rights and obligations on the part of transnational enterprises and host governments. He urged the prohibition of restrictive business practices, harmonization of tax treatment, promotion of arbitral procedures to settle investment disputes, and investment insurance programs. The following is an excerpt from his address: