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Copyright © 2009 South-Western Legal Studies in Business, a part of South-Western Cengage Learning. CHAPTER 22 CHAPTER 22 Regulating the Competitive Regulating the Competitive Environment Environment
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CHAPTER 22 Regulating the Competitive Environment

Dec 30, 2015

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CHAPTER 22 Regulating the Competitive Environment. Historical Development of International Competition Law. In U.S., “antitrust” law has existed since the late 1800’s, with the Sherman and Clayton Antitrust Acts. EU created a Directorate of Competition Policy. - PowerPoint PPT Presentation
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Page 1: CHAPTER  22   Regulating the Competitive Environment

Copyright © 2009 South-Western Legal Studies in Business,

a part of South-Western Cengage Learning.

CHAPTER 22 CHAPTER 22 Regulating the Competitive Regulating the Competitive EnvironmentEnvironment

Page 2: CHAPTER  22   Regulating the Competitive Environment

2Copyright © 2009 South-Western Legal Studies in Business,

a part of South-Western Cengage Learning.

Historical Development of Historical Development of International Competition LawInternational Competition Law

Historical Development of Historical Development of International Competition LawInternational Competition Law

• In U.S., “antitrust” law has existed since the late 1800’s, with the Sherman and Clayton Antitrust Acts.

• EU created a Directorate of Competition Policy.• Antitrust law is to prevent monopolies and other

business practices which injure competition.• EU name more descriptive- Competition law.

Page 3: CHAPTER  22   Regulating the Competitive Environment

3Copyright © 2009 South-Western Legal Studies in Business,

a part of South-Western Cengage Learning.

Basic Regulatory FrameworkBasic Regulatory Framework

• Antitrust laws differ from nation to nation, but they tend to prohibit two types of activities: – Agreements between competitors that restrict

competition , and– The abuse of “dominant market” position.

Page 4: CHAPTER  22   Regulating the Competitive Environment

4Copyright © 2009 South-Western Legal Studies in Business,

a part of South-Western Cengage Learning.

Prohibitions Against Agreements Prohibitions Against Agreements to Restrict Competitionto Restrict Competition

• Sherman Act• Broad prohibition• Every contract… in

restraint of trade or commerce… is illegal

• Art. 81 (1) prohibits agreements..may affect trade..which have as their object.. prevention, restriction or distortion of competition

• Lists specific prohibited conduct

Page 5: CHAPTER  22   Regulating the Competitive Environment

5Copyright © 2009 South-Western Legal Studies in Business,

a part of South-Western Cengage Learning.

Abuse of Dominant Market PositionAbuse of Dominant Market Position

• Monopolize or attempt to monopolize

• Sherman Act

• Similar to U.S.• Article 82

See the Microsoft Corp. v. Commissioner of the European Communities case.

Page 6: CHAPTER  22   Regulating the Competitive Environment

6Copyright © 2009 South-Western Legal Studies in Business,

a part of South-Western Cengage Learning.

EU Merger Regulation, 1990EU Merger Regulation, 1990

• Review.• Community dimension?(aggregate worldwide

sale 5 billion Euros, aggregate sales within EU 250 million Euros).

• Is it compatible with Common Market?• Recent examples

Page 7: CHAPTER  22   Regulating the Competitive Environment

7Copyright © 2009 South-Western Legal Studies in Business,

a part of South-Western Cengage Learning.

Antitrust CasesAntitrust CasesAntitrust CasesAntitrust Cases

• Court of First Instance (CFI) overturned Merger Task Force’s blocking of the mergers:– Airtours v. Commission case (European Court 2002).

CFI annulled the prohibition against the merger. And see the Schneider Elec. SA v. Commission case Airtours V. Commission

• Tetra Laval BV v. Commission case.• What result of these 2002 cases?• What is the status of the reforms?

Page 8: CHAPTER  22   Regulating the Competitive Environment

8Copyright © 2009 South-Western Legal Studies in Business,

a part of South-Western Cengage Learning.

Distinctions of Non-U.S. Law Distinctions of Non-U.S. Law and Competition Lawand Competition Law

• Private Causes of Action for Damages and Criminal Prosecution. – Treble damages and attorneys fees available. – EU pushing to enhance private (non-governmental)

causes of action.

• US law may impose criminal liability, which is not possible under EU or Japanese law.

Page 9: CHAPTER  22   Regulating the Competitive Environment

9Copyright © 2009 South-Western Legal Studies in Business,

a part of South-Western Cengage Learning.

Article 81(3) and the Rule of ReasonArticle 81(3) and the Rule of ReasonArticle 81(3) and the Rule of ReasonArticle 81(3) and the Rule of Reason

• Per se wrong versus the rule of reason in the U.S..

• Is the rule of reason used in the EU?

Page 10: CHAPTER  22   Regulating the Competitive Environment

10Copyright © 2009 South-Western Legal Studies in Business,

a part of South-Western Cengage Learning.

Preapproval Procedures Preapproval Procedures Versus LitigationVersus Litigation

Preapproval Procedures Preapproval Procedures Versus LitigationVersus Litigation

• EU has preapproval system.• Exemption system.

– Individual. – Negative clearance.– Block exemption.– De miminimis.

• U.S. does not have comparable preapproval system.

Page 11: CHAPTER  22   Regulating the Competitive Environment

11Copyright © 2009 South-Western Legal Studies in Business,

a part of South-Western Cengage Learning.

Extraterritorial Effect of Extraterritorial Effect of Competition LawsCompetition Laws

• U.S. : “effects test,” first set forth in the “American Banana” case. And see the United States v. Aluminum Co of America (ALCOA).

• Hartford Fire Insurance Co. v. California case: foreign insurers are subject to Sherman Antitrust Act.

Page 12: CHAPTER  22   Regulating the Competitive Environment

12Copyright © 2009 South-Western Legal Studies in Business,

a part of South-Western Cengage Learning.

European “Implementation” TestEuropean “Implementation” Test

• EU - territorial jurisdiction, “implementation test”, “single economic unit”? Blocking legislation?

• EU courts can achieve jurisdiction over foreign companies if there is a “material influence” over an EU competitor.

• What is “objective territoriality”?• What was the holding of the “Wood Pulp” case?

Page 13: CHAPTER  22   Regulating the Competitive Environment

13Copyright © 2009 South-Western Legal Studies in Business,

a part of South-Western Cengage Learning.

ConclusionConclusion

• What is “Blocking Legislation” and what impact would it have on international trade?

• What is happening in Europe now?• What is happening in China now? See the Anti-

Monopoly Law of the People’s Republic of China, which takes effect August 1, 2008.