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
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.
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.
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
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.
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
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?
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.
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?
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.
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.
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?
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.
