The report of the Attorney General's National Committee to study the antitrust laws: A retrospective

Michigan Law Review

Volumn 100, Issue 7, 2002, Pages 1867-1899

  Kauper, Thomas E ^a  

^a NONE

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EID: 0041869241     PISSN: 00262234     EISSN: None     Source Type: Journal    
DOI: 10.2307/1556078     Document Type: Article

References (155)

1. The articles comprising the symposium are Kenneth S. Carlston, Basic Antitrust Concepts, 53 MICH. L. REV. 1033 (1955); John T. Chadwell, Antitrust Administration and Enforcement, 53 MICH. L. REV. 1133 (1955); Kendall B. DeBevoise, Antitrust Policy in Distribution, 53 MICH. L. REV. 1073 (1955); Bartholomew Diggins, The Patent-Antitrust Problem, 53 MICH. L. REV. 1093 (1955); Robert A. Nitschke, The Antitrust Laws in Foreign Commerce, 53 MICH. L. REV. 1059 (1955); Russell A. Smith, Antitrust and Labor, 53 MICH. L. REV. 1119 (1955). My comments will not deal with patents nor with issues of antitrust exemptions.
2. The articles comprising the symposium are Kenneth S. Carlston, Basic Antitrust Concepts, 53 MICH. L. REV. 1033 (1955); John T. Chadwell, Antitrust Administration and Enforcement, 53 MICH. L. REV. 1133 (1955); Kendall B. DeBevoise, Antitrust Policy in Distribution, 53 MICH. L. REV. 1073 (1955); Bartholomew Diggins, The Patent-Antitrust Problem, 53 MICH. L. REV. 1093 (1955); Robert A. Nitschke, The Antitrust Laws in Foreign Commerce, 53 MICH. L. REV. 1059 (1955); Russell A. Smith, Antitrust and Labor, 53 MICH. L. REV. 1119 (1955). My comments will not deal with patents nor with issues of antitrust exemptions.
3. The articles comprising the symposium are Kenneth S. Carlston, Basic Antitrust Concepts, 53 MICH. L. REV. 1033 (1955); John T. Chadwell, Antitrust Administration and Enforcement, 53 MICH. L. REV. 1133 (1955); Kendall B. DeBevoise, Antitrust Policy in Distribution, 53 MICH. L. REV. 1073 (1955); Bartholomew Diggins, The Patent-Antitrust Problem, 53 MICH. L. REV. 1093 (1955); Robert A. Nitschke, The Antitrust Laws in Foreign Commerce, 53 MICH. L. REV. 1059 (1955); Russell A. Smith, Antitrust and Labor, 53 MICH. L. REV. 1119 (1955). My comments will not deal with patents nor with issues of antitrust exemptions.
4. The articles comprising the symposium are Kenneth S. Carlston, Basic Antitrust Concepts, 53 MICH. L. REV. 1033 (1955); John T. Chadwell, Antitrust Administration and Enforcement, 53 MICH. L. REV. 1133 (1955); Kendall B. DeBevoise, Antitrust Policy in Distribution, 53 MICH. L. REV. 1073 (1955); Bartholomew Diggins, The Patent-Antitrust Problem, 53 MICH. L. REV. 1093 (1955); Robert A. Nitschke, The Antitrust Laws in Foreign Commerce, 53 MICH. L. REV. 1059 (1955); Russell A. Smith, Antitrust and Labor, 53 MICH. L. REV. 1119 (1955). My comments will not deal with patents nor with issues of antitrust exemptions.
5. The articles comprising the symposium are Kenneth S. Carlston, Basic Antitrust Concepts, 53 MICH. L. REV. 1033 (1955); John T. Chadwell, Antitrust Administration and Enforcement, 53 MICH. L. REV. 1133 (1955); Kendall B. DeBevoise, Antitrust Policy in Distribution, 53 MICH. L. REV. 1073 (1955); Bartholomew Diggins, The Patent-Antitrust Problem, 53 MICH. L. REV. 1093 (1955); Robert A. Nitschke, The Antitrust Laws in Foreign Commerce, 53 MICH. L. REV. 1059 (1955); Russell A. Smith, Antitrust and Labor, 53 MICH. L. REV. 1119 (1955). My comments will not deal with patents nor with issues of antitrust exemptions.
6. The articles comprising the symposium are Kenneth S. Carlston, Basic Antitrust Concepts, 53 MICH. L. REV. 1033 (1955); John T. Chadwell, Antitrust Administration and Enforcement, 53 MICH. L. REV. 1133 (1955); Kendall B. DeBevoise, Antitrust Policy in Distribution, 53 MICH. L. REV. 1073 (1955); Bartholomew Diggins, The Patent-Antitrust Problem, 53 MICH. L. REV. 1093 (1955); Robert A. Nitschke, The Antitrust Laws in Foreign Commerce, 53 MICH. L. REV. 1059 (1955); Russell A. Smith, Antitrust and Labor, 53 MICH. L. REV. 1119 (1955). My comments will not deal with patents nor with issues of antitrust exemptions.
7. REPORT OF THE U.S. ATTORNEY GENERAL'S NATIONAL COMMITTEE TO STUDY THE ANTITRUST LAWS (Mar. 31, 1955) [hereinafter REPORT]. The National Committee will be referred to simply as "the Committee."
8. REPORT, supra note 2, at iv.
9. Id.
10. A number of early cases brought by the Justice Department were against labor unions, not the major trusts. There followed a period of active enforcement, a period in which cases against Standard Oil Co. and a number of other major trusts were initiated, and the Clayton Act and Federal Trade Commission Acts were enacted. The period from World War I to 1937 has been characterized as "the era of neglect," with few prosecutions during the pro-business twenties and following the enactment of the National Industrial Recovery Act, an act that permitted industry cooperation through use of the N.R.A. ("Blue Eagle") codes, in the first Roosevelt administration. The more modern phase of active enforcement can be said to have begun in 1937. See RICHARD HOFSTADTER, What Happened to the Antitrust Movement, in THE PARANOID STYLE IN AMERICAN POLITICS AND OTHER ESSAYS 188, 196-98 (1965).
11. See UNITED STATES DEPARTMENT OF JUSTICE, INTERNATIONAL COMPETITION POLICY ADVISORY COMMITTEE TO THE ATTORNEY GENERAL AND ASSISTANT ATTORNEY GENERAL FOR ANTITRUST: FINAL REPORT 1 (2000) [hereinafter ICPAC FINAL REPORT]; see also infra notes 121-122.
12. Texaco, Inc. v. Hasbrouck, 496 U.S. 543, 559-63 (1990).
13. There were both signed dissents and other dissents that are simply noted. Five members - Walter Adams, John M. Clark, Alfred E. Kahn, Eugene V. Rostow and Louis B. Schwartz - dissented from the Report as a whole. Professors Rostow and Schwartz also dissented from a number of specific parts of the Report. Walter Adams did likewise, although less frequently. See REPORT, supra note 2, at 388-93.
14. In the period from 1941 through 1945, 297 private cases were filed. From 1951 through 1955 (the year of the Report), a total of 1,045 such cases were filed. In the single year of 1977, there were 1,611 private cases filed. The numbers then dropped slightly, with 1,100 such cases filed in 1984. See Steven C. Salop & Lawrence J. White, Economic Analysis of Private Antitrust Litigation, 74 GEO. L.J. 1001, 1002 (1986).
15. See REPORT, supra note 2, at 3.
16. Standard Oil Co. v. United States, 221 U.S. 1, 60 (1911).
17. REPORT, supra note 2, at 56.
18. REPORT, supra note 2, at 393.
19. See, e.g., Utah Pie Co. v. Cont'l Baking Co., 386 U.S. 685 (1967); Fed. Trade Comm'n v. Sun Oil Co., 371 U.S. 505 (1963); United States v. Borden Co. and United States v. Bowman Co., 370 U.S. 460 (1962); Fed. Trade Comm'n v. Henry Broch & Co., 363 U.S. 166 (1960).
20. See, e.g., Utah Pie Co. v. Cont'l Baking Co., 386 U.S. 685 (1967); Fed. Trade Comm'n v. Sun Oil Co., 371 U.S. 505 (1963); United States v. Borden Co. and United States v. Bowman Co., 370 U.S. 460 (1962); Fed. Trade Comm'n v. Henry Broch & Co., 363 U.S. 166 (1960).
21. Albrecht v. Herald Co., 390 U.S. 145, 152-53 (1968).
22. United States v. Arnold, Schwinn & Co., 388 U.S. 365, 379 (1967).
23. Simpson v. Union Oil Co. of Cal., 377 U.S. 13 (1964).
24. United States v. Topco Assocs., Inc., 405 U.S. 596 (1972). This decision, while decided in 1972, is reflective of the expansionary tendency of the sixties.
25. Klor's, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207 (1959).
26. See, e.g., United States v. Von's Grocery, 384 U.S. 270 (1966); United States v. Pabst Brewing Co., 384 U.S. 546 (1966). This general numerical approach, relying heavily on relatively low market share, is also reflected in the Justice Department's 1968 merger guidelines. UNITED STATES DEPARTMENT OF JUSTICE, MERGER GUIDELINES (1968), reprinted in 4 CCH TRADE REG. REP ¶13,101 (Mar. 18, 1998). While trying to remain faithful to the Supreme Court decisions of the time, the 1968 guidelines do attempt to include some other elements in the analysis. They were still, however virtually mathematical.
27. See, e.g., Simpson v. Union Oil Co., 377 U.S. 13 (1964).
28. See United States v. Arnold, Schwinn & Co., 388 U.S. 365 (1967).
29. See Thomas E. Kauper, The "Warren Court" and the Antitrust Laws: of Economics, Populism, and Cynicism, 67 MICH. L. REV. 325, 334 (1968).
30. Arnold, Schwinn & Co., 388 U.S. 365 (1967), was overruled by Continental T.V. Inc. v. GTE Sylvania Inc., 433 U.S. 36, 58 (1977). Albrecht v. Herald Co., 390 U.S. 145 (1962), was overruled by State Oil Co. v. Khan, 522 U.S. 3, 22 (1997).
31. See U. S. DEPT. OF JUSTICE & FED. TRADE COMM'N, HORIZONTAL MERGER GUIDELINES (1992), reprinted as amended in 4 CCH TRADE REG. REP. ¶13,104 (Apr. 17, 1997) [hereinafter HORIZONTAL MERGER GUIDELINES]. For cases illustrating today's more complex analysis, see Federal Trade Commission v. Staples, Inc., 970 F. Supp. 1066 (D.D.C. 1997); and Hospital Corp. of America v. Fed. Trade Comm'n, 807 F.2d 1381 (7th Cir. 1986). The Supreme Court moved away from what had appeared to be a virtually mathematical approach in United States v. General Dynamics Corp., 415 U.S. 486 (1974), its last significant merger decision.
32. The U.S. Horizontal Merger Guidelines were amended in 1997 to deal more fully with efficiency claims. HORIZONTAL MERGER GUIDELINES, supra note 25, at § 4. A number of lower court cases have now recognized a limited efficiencies defense. See Fed. Trade Comm'n v. Tenet Health Care Corp., 186 F.3d 1045 (8th Cir. 1999); United States v. Long Island Jewish Med. Ctr., 983 F. Supp. 121 (E.D.N.Y. 1997); Fed. Trade Comm'n v. Butterworth Health Corp., 946 F. Supp. 1285 (W.D. Mich. 1996), aff'd per curiam, 121 F.3d 708 (6th Cir. 1997).
33. See, e.g., Fed. Trade Comm'n v. Proctor & Gamble Co., 386 U.S. 568, 580 (1967).
34. McCormick & Co., Inc., FTC Complaints & Orders, [1997-2001 Transfer Binder] Trade Reg. Rep. (CCH) ¶24.711 (April 27, 2000) (applying the so-called Morton Salt presumption only where respondent was a dominant firm and secondary line discrimination threatened competitive injury to seller's own competition).
35. See, e.g., Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993) (curtailing, if not overruling, Utah Pie Co. v. Cont'l Baking Co., 386 U.S. 685 (1967)); Falls City Ind., Inc. v. Vanco Beverage, Inc., 460 U.S. 428 (1983).
36. Cont'l T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36 (1977).
37. Kauper, supra note 23, at 342.
38. For a succinct summary of the views of the Chicago School, see HERBERT HOVENKAMP, FEDERAL ANTITRUST POLICY 60-62 (2d ed. 1999).
39. For representative writings, see ROBERT H. BORK, THE ANTITRUST PARADOX (rev. ed. 1993); RICHARD A. POSNER, ANTITRUST LAW (1976); Ward S. Bowman, Jr., Tying Arrangements and the Leverage Problem, 67 YALE L.J. 19 (1957); and Richard A. Posner, The Chicago School of Antitrust Analysis, 127 U. PA. L. REV. 925 (1979).
40. For representative writings, see ROBERT H. BORK, THE ANTITRUST PARADOX (rev. ed. 1993); RICHARD A. POSNER, ANTITRUST LAW (1976); Ward S. Bowman, Jr., Tying Arrangements and the Leverage Problem, 67 YALE L.J. 19 (1957); and Richard A. Posner, The Chicago School of Antitrust Analysis, 127 U. PA. L. REV. 925 (1979).
41. For representative writings, see ROBERT H. BORK, THE ANTITRUST PARADOX (rev. ed. 1993); RICHARD A. POSNER, ANTITRUST LAW (1976); Ward S. Bowman, Jr., Tying Arrangements and the Leverage Problem, 67 YALE L.J. 19 (1957); and Richard A. Posner, The Chicago School of Antitrust Analysis, 127 U. PA. L. REV. 925 (1979).
42. For representative writings, see ROBERT H. BORK, THE ANTITRUST PARADOX (rev. ed. 1993); RICHARD A. POSNER, ANTITRUST LAW (1976); Ward S. Bowman, Jr., Tying Arrangements and the Leverage Problem, 67 YALE L.J. 19 (1957); and Richard A. Posner, The Chicago School of Antitrust Analysis, 127 U. PA. L. REV. 925 (1979).
43. Perhaps the greatest single influence on the development of modern merger law was the issuance, under the direction of Assistant Attorney General William Baxter, of the Department of Justice Merger Guidelines in 1982. These guidelines introduced a far greater degree of economic analysis, moved away from the simple mathematical approach of the sixties and, contracted the expansionist approach of that period. See Donald I. Baker & William Blumenthal, The 1982 Guidelines and Preexisting Law, 71 CAL. L. REV. 311 (1983). More recent guidelines are simply modifications of those of 1982, which therefore have continued to impact public merger enforcement to the present day. They have also heavily influenced courts in litigated cases. See, e.g., Fed. Trade Comm'n v. H.J. Heinz Co., 246 F.3d 708 (D.C. Cir. 2001); Fed. Trade Comm'n v. Staples, Inc., 970 F. Supp. 1066 (D.D.C. 1997); United States v. Waste Mgmt., Inc., 743 F.2d 976 (2d Cir. 1984).
44. 15 U.S.C. §§ 1311-1314 (1994)
45. Antitrust Civil Process Act, Pub. L. No. 87-664, 26 Stat. 548 (1962).
46. Hart-Scott-Rodino Antitrust Improvements Act of 1976, Pub. L. No. 94-435, 90 Stat. 1383, 1384-85 (1976).
47. Act of Jul. 7, 1955, Pub. L. No. 137-583, 69 Stat. 283 (amending the Clayton Act) (codified as amended at 15 U.S.C. § 15 (1994)) [hereinafter Public Law 137].
48. 15 U.S.C. § 15b (1994).
49. The 1955 legislation authorized recovery of single damages by the United States. As the result of further amendment, the United States may now recover treble damages. 15 U.S.C. § 15a (1994)
50. REPORT, supra note 2, at 352.
51. Public Law 137, supra note 38, at ch. 282. The maximum statutory fine in the Sherman Act today is $10 million for corporations and $350,000 for individuals. Individuals may also be sentenced to a maximum of three years in prison, an increase over the maximum of one year as the Act was originally enacted. 15 U.S.C. § 1 (1994). Today most sentencing is under the Criminal Fines Enforcement Act of 1984, which sets a maximum of double the pecuniary gain derived or double the pecuniary loss imposed. 18 U.S.C. § 3623 (1986) (repealed in 1987); Criminal Fine Improvement Act of 1987, 18 U.S.C. 3571 (1994) (reauthorizing the potentially significant fine).
52. This was the fine paid by F. Hoffman-La Roche Ltd. in the Vitamins cartel case. BASF paid a fine of $225 million in the same case. Both eclipsed the previous record fines, $110 million paid by UCAR International in the Graphic Electrodes case and $100 million paid by Archer Daniels Midland Co. in the Citric Acid cartel prosecution. See Harry First, The Vitamins Case: Cartel Prosecutions and the Coming of International Competition Law, 68 ANTITRUST L.J. 711, 715, 720-21 (2001).
53. See U.S. DEPARTMENT OF JUSTICE, CORPORATE LENIENCY POLICY (Aug. 10, 1993), available at http://www.usdoj.gov/atr/public/guidelines/lencorp.htm.
54. The Justice Department has publicly released a videotape, entitled "The International Lysine Cartel at Work," containing excerpts from both video and audio surveillance in the Lysine Cartel case.
55. The Report also recommended that the granting of treble, as opposed to single, damages should be put in the trial judge's discretion, rather than the mandatory trebling required in private antitrust actions for damages. REPORT, supra note 2, at 378-80. The Congress has never been willing to make such a change. Mandatory trebling is still required today. 15 U.S.C. § 15a (1994). The small section in the Report where this recommendation appears is at its very end and is virtually the only place where private actions are even mentioned.
56. REPORT, supra note 2, at 12-16.
57. Id. at 26-27.
58. Id. at 12. The Report here uses the language of the Standard Oil case, supra note 11. In this chapter the Report carefully avoids using the label "unreasonable per se." More curious is that its discussion of horizontal price fixing omits any reference to footnote 59 in United States v. Socony Vacuum Oil Co., 310 U.S. 150 (1940), perhaps the most famous footnote in antitrust history. The footnote recites that in a price-fixing case, the plaintiff need not show market power, actual effect, or even any overt act. Proof of the agreement is itself sufficient. The omission of these points suggests the Committee was uneasy about the contents of the footnote.
59. The Court rejected an argument that such restraints were per se illegal in White Motor Co. v. United States, 372 U.S. 253, 263 (1963), asserting that it did not know "enough of the economic and business stuff out of which these arrangements emerge" to condemn them out of hand. Only four vears later it had apparently learned what it needed, ruling in United States v. Arnold, Schwinn & Co., 388 U.S. 365, 380 (1967) that all such restraints were per se illegal because they violated "the ancient rule against restraints on alienation." Schwinn was in turn overruled in Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 58 (1977).
60. Horizontal price fixing is condemned because of its adverse price and output effects, effects that result from aggregating the market power of otherwise independent competitors. This interbrand effect is to be contrasted with the adverse intrabrand effect of vertical price fixing, price fixing that on its face sets the price only on a given brand. Vertical price fixing is far more akin to vertical territorial and customer restrictions in effect. Both types of practices may enhance interbrand competition in some cases. See generally HOVENKAMP, supra note 32, at 441-58. In a few cases, vertical price and non-price restraints can be used to facilitate collusion and thus reduce interbrand competition but this horizontal effect is far less obvious than with horizontal price fixing. See Bus. Elec. Corp. v. Sharp Elec. Corp., 485 U.S. 717 (1988).
61. The classic articles in the debate are Richard A. Posner, Oligopoly and the Antitrust Laws: A Suggested Approach, 21 STAN. L. REV. 1562 (1969), and Donald F. Turner, The Definition of Agreement Under the Sherman Act: Conscious Parallelism and Refusals to Deal, 75 HARV. L. REV. 655 (1962).
62. The classic articles in the debate are Richard A. Posner, Oligopoly and the Antitrust Laws: A Suggested Approach, 21 STAN. L. REV. 1562 (1969), and Donald F. Turner, The Definition of Agreement Under the Sherman Act: Conscious Parallelism and Refusals to Deal, 75 HARV. L. REV. 655 (1962).
63. See HOVENKAMP, supra note 32, at 156-63.
64. REPORT, supra note 2, at 39-40.
65. Interstate Circuit, Inc. v. United States, 306 U.S. 208 (1939).
66. Theatre Enters., Inc. v. Paramount Film Distrib. Corp., 346 U.S. 537 (1954).
67. Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 227 (1993).
68. This formulation is found in literally scores of cases. For recent examples, see Blomkest Fertilizer, Inc. v. Potash Corp. of Saskatchewan, 203 F.3d 1028, 1042-43 (8th Cir. 2000); and In re Baby Food Antitrust Litig., 166 F.3d 112, 121-22 (3d Cir. 1999).
69. The early cases from which this doctrine allegedly derived are United States v. Yellow Cab Co., 332 U.S. 218 (1947) and Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211 (1951). These are the primary cases analyzed in the Report.
70. REPORT, supra note 2, at 35.
71. In Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771-74 (1984) the Court finally rejected any contrary implication in earlier cases and held that a parent and its wholly owned subsidiaries were incapable of conspiracy in violation of the Sherman Act.
72. 15 U.S.C. § 2 (1994).
73. United States v. Aluminum Co. of Am., 148 F.2d 416 (2d Cir. 1945).
74. United States v. United Shoe Mach. Corp., 110 F. Supp. 295 (D. Mass. 1953), aff'd per curiam, 347 U.S. 521 (1954).
75. In a famous passage, Judge Hand states that a ninety-percent market share was indicative of monopoly, that sixty percent was doubtful and thirty-three percent clearly was not. United States v. Aluminum Co. of Am., 148 F.2d at 424.
76. REPORT, supra note 2, at 56-60.
77. See the jury instruction set forth in Aspen Skiing Co. v. Aspen Highland Skiing Corp., 472 U.S. 585, 595-97 (1985).
78. Derived from United States v. Griffith, 334 U.S. 100 (1948) the leveraging doctrine applies where a monopolist uses its monopoly power, even if lawfully acquired, to foreclose competition or gain a competitive advantage in a second market. There is currently a controversy about whether such conduct is itself a violation of section 2 or whether an attempt to monopolize the second market must be shown. Compare Alaska Airlines Inc. v. United Airlines, Inc., 948 F.2d 536 (9th Cir. 1991), cert. denied, 503 U.S. 977 (1992) (not a separate offense) with Kerasotes Michigan Theatres, Inc. v. Nat'l Amusements, Inc., 834 F.2d 135 (6th Cir. 1988) (separate offense), and Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979), cert. denied, 444 U.S. 1093 (1980) (separate offense). The Second Circuit has since described its statement in Berkey as dictum. AD/SAT v. Associated Press, 181 F.3d 216, 230 (2d Cir. 1999).
79. The essential facility doctrine requires a monopolist to provide competitors access to a facility it controls that is essential to their ability to compete and which they cannot reasonably duplicate, if such access is feasible. See, e.g., Fishman v. Wirtz, 807 F.2d 520 (7th Cir. 1986). The doctrine has been severely criticized. See generally, Phillip Areeda, Essential Facilities: an Epithet in Need of Limiting Principles, 58 ANTITRUST L.J. 841 (1989).
80. See Brooke Group, Ltd. v. Brown & Williamson Tobacco Co., 509 U.S. 209 (1993).
81. See Telex Corp. v. Int'l Bus. Machs. Corp., 510 F.2d 894, 927-28 (10th Cir. 1975).
82. The standards with respect to "sham litigation" are set forth in Professional Real Estate Investors v. Columbia Pictures Industries, 508 U.S. 49 (1993).
83. Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 583 (1985).
84. Image Technical Servs. v. Eastman Kodak Co., 125 F.3d 1195, 1212 (9th Cir. 1996)
85. United States v. Microsoft Corp., 253 F.3d 34, 46-47 (D.C. Cir. 2001).
86. REPORT, supra note 2, at 137.
87. Id. at 145.
88. Id. at 134.
89. Id. at 154-55.
90. Id. at 154. Under the so-called Fair Trade amendments to the Sherman Act, resale price maintenance (vertical price fixing) was exempt from the Sherman Act if practiced in a state where state law authorized it. Without such an exemption resale price maintenance is per se illegal.
91. Consumer Goods Pricing Act of 1975, Pub. L. No. 94-145, 89 Stat. 801 (1975).
92. Standard Oil Co. of Cal. v. United States (Standard Stations), 337 U.S. 293 (1949) (Standard Stations is a wholly-owned subsidiary of Standard Oil).
93. REPORT, supra note 2, at 141.
94. Id. 85. DeBevoise, supra note 1, at 1077.
95. See HOVENKAMP, supra note 32, at 430-39 for a summary of the prevailing standards.
96. The Robinson-Patman Act was a 1936 amendment to § 2 of the Clayton Act, now codified at 15 U.S.C. §§ 13, 13a, 13b, 21a (1994).
97. REPORT, supra note 2, at 131-32.
98. Debevoise, supra note 1, at 1073-74.
99. Act of October 15, 1914, ch. 323, § 2, 38 stat. 730, S 2 (1914).
100. 15 U.S.C. § 13(a) (1994).
101. REPORT, supra note 2, at 165.
102. Debevoise, supra note 1, at 1082.
103. Texaco, Inc. v. Hasbrouck, 496 U.S. 543, 559 (1990).
104. 334 U.S. 37 (1948).
105. REPORT, supra note 2, at 165 n.118.
106. The closest any court has come to acceptance of the Committee's view is in Boise Cascade Corp. v. Federal Trade Commission, 837 F.2d 1127 (D.C. Cir. 1988), where the court concluded over a vigorous dissent that the Commission erred when it rejected evidence of the health of competition in the buyer's market. The dissent stressed that the court's approach was inconsistent both with Morton Salt and the Act's legislative history. Subsequent cases have rejected the approach of Boise Cascade. See Chroma Lighting v. GTE Prods. Corp., 111 F.3d 653, 655 (9th Cir. 1997), cert. denied, 522 U.S. 943 (1997); George Haug Co. v. Rolls Royce Motor Cars, 148 F.3d 136 (2d Cir. 1998).
107. REPORT, supra note 2, at 172.
108. REPORT, supra note 2, at 174-75.
109. DeBevoise, supra note 1, at 1084.
110. REPORT, supra note 2, at 181.
111. The issue was settled in Standard Oil Co. v. Federal Trade Commission (Indiana), 340 U.S. 231 (1951), a decision the Report enthusiastically endorses, although there seems to be no need to stress the point.
112. Falls City Indus, v. Vanco Beverage, Inc., 460 U.S. 428 (1983). In Falls City, the Court held that the defense is unavailable if the plaintiff, which has the burden, can prove that the prices that were met were actually met, resolving some of the ambiguity on the point created by the Standard Oil case, 340 U.S. 231 (1951). It further held that the defense could be used where the seller discriminated in gaining a new customer.
113. For example, the FTC, even after 1955, held that where a wholesaler is controlled by a retailer it could not receive a wholesale discount even if it actually performed wholesale functions. In re Nat'l Parts Warehouse, 63 F.T.C. 1692 (1963), aff'd sub nom. Gen. Auto Supplies v. Fed. Trade Comm'n, 346 F.2d 311 (7th Cir. 1965), cert. dismissed, 382 U.S. 923 (1965). A wholesaler that sold some of the purchased good to retailers and some as a retailer could not receive the wholesale discount on the portion of the goods it received as a retailer. In re Boise Cascade Corp., 107 F.T.C. 76 (1986), rev'd on other grounds, 837 F.2d 1127 (D.C. Cir. 1988). Only if the seller could establish that such a wholesale discount was no more than the cost savings to the seller of not performing the wholesale function itself, thus satisfying the cost justification defense in section 2(c) of the Act, was the discount legitimate. In re Mueller Co., 60 F.T.C. 120, 127-28 (1962), aff'd, 323 F.2d 44 (7th Cir. 1963), cert. denied, 377 U.S. 923 (1964). In so holding, the FTC in Mueller rejected its own earlier decision in In re Doubleday & Co., 52 F.T.C. 169 (1955), holding that such a discount was lawful if it reflected no more than the costs to the buyer of any wholesale functions it actually performed, a standard in accord with the Report.
114. 496 U.S. 543 (1990).
115. The Report also criticized both the language and prevailing interpretations of sections 2(c)(d) and (e) of the Act, provisions dealing with payments of brokerage and provision of promotional and advertising allowances and services. These provisions contain no explicit requirement of any injury to competition, leading the Committee to conclude that these sections should be reconciled at least with the remainder of the Act. The Committee did not urge legislative reform of these sections other than section 2(c), believing that interpretive reform could itself remedy what it saw as the deficiencies in section 2(d) and (e). If the Committee meant that either the FTC or courts could engraft some standards based on competitive harm onto these sections, it is hard to imagine that this could be done without statutory amendment. The Committee also urged statutory repeal of section 3 of the Act, its only criminal provision. None of the changes urged in these sections by the Report has occurred.
116. In working its way through a number of decided cases, the Report puts to one side the baffling decision of the Supreme Court in American Banana Co. v. United Fruit Co., 213 U.S. 347 (1909), which can clearly be read as rejecting the whole concept of extraterritoriality in antitrust cases, and relies instead on the "effects" test set forth in United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir. 1945). Given the fact that the Supreme Court had not then clearly stated a simple "effects" standard, the Committee here was pushing the law more than it did in some other areas.
117. REPORT, supra note 2, at 76
118. In Hartford Fire Insurance Co. v. California, 509 U.S. 764, 796 (1993), the Court concluded that while "the proposition was perhaps not always free from doubt [citing American Banana], it is well established by now that the Sherman Act applies to foreign conduct that was meant to produce and did in fact produce some substantial effect in the United States." It had said much the same in Continental Ore Co. v. Union Carbide, 370 U.S. 690, 705 (1962). In United States v. Nippon Paper Industries Co., 109 F.3d 1 (1st Cir. 1997), cert. denied, 522 U.S. 1044 (1998), the court, relying on Hartford, concluded that criminal jurisdiction under the Sherman Act extended to price fixing by a Japanese defendant in Japan, where the product at issue was to be shipped to the United States.
119. REPORT, supra note 2, at 76.
120. Debatable if for no other reason than the fact that virtually all significant decided cases until 1955 in some way involved participation by at least one American firm. This was true in all of the cases discussed in connection with the issue of extraterritoriality in the Report.
121. Hartford draws no such distinction. See also UNITED STATES DEPARTMENT OF JUSTICE & FEDERAL TRADE COMMISSION, ANTITRUST ENFORCEMENT GUIDELINES FOR INTERNATIONAL OPERATIONS § 3.1 (1995) [hereinafter INTERNATIONAL OPERATIONS GUIDELINES], reprinted in 4 CCH TRADE REG. REP. ¶ 13,107 (Apr. 5, 1995).
122. See Timberlane Lumber Co. v. Bank of Am., 549 F.2d 597, 608 (nationality of firms one of a number of factors to be considered in comity analysis). For a similar approach, see Mannington Mills, Inc. v. Congoleum Corp., 595 F.2d 1287, 1297-98 (3d Cir. 1979), and INTERNATIONAL OPERATIONS GUIDELINES, supra note 112, at § 32.
123. 15 U.S.C. § 6a (1994), referred to as "FTAIA."
124. The Act does not cover conduct involving direct imports into the United States, but does extend to conduct involving foreign nations that has an indirect effect on import trade or impacts export trade with foreign nations. Conduct abroad that affects American exports thus is within the subject matter jurisdiction of the Sherman Act. The Report, without specific discussion assumed this was so. In its 1988 International Operations Guidelines (reproduced as amended at 4 CCH TRADE REG. REP. ¶13,109 (Nov. 10, 1988)), the Department of Justice in footnote 159 indicated that regardless of the FTAIA, it was concerned as an enforcement matter with adverse effects on American consumers and, this implies, not with restraints having an effect only on American exporters. This footnote was ultimately superseded by a new statement of policy by the Department that it will, in some cases, take enforcement actions against foreign restraints on American exports, a position reiterated in the current International Operations Guidelines, supra note 112, at § 3.31.
125. A number of these protests and claims are discussed in detail in I WILBUR L. FUGATE, FOREIGN COMMERCE AND THE ANTITRUST LAWS § 2.16 (4th ed. 1991).
126. So-called "blocking" statues were passed in a number of countries. These statutes vary in content but typically bar citizens of the country in question from turning over documents pursuant to a foreign court order if such production would be contrary to an order of the appropriate government agency. See, e.g., Protection of Trading Interests Act, 1980, ch. 11 (Eng.). Similar statutes were enacted in Australia, Canada, France, the Netherlands, New Zealand and South Africa. See 1-A BARRY E. HAWK, UNITED STATES, COMMON MARKET AND INTERNATIONAL ANTITRUST: A COMPARATIVE GUIDE 718-36 (rev. 2d ed. supp. 1993). Such statutes may also block enforcement of foreign (read U.S.) antitrust judgements in some circumstances. Id. at 780-82.
127. The United Kingdom and Canada both enacted "clawback" statutes, authorizing citizens of their countries to recover the punitive portion of a foreign multiple damage award as in a treble damage suit under U.S. antitrust laws, in an action brought in the courts of their own countries. Protection of Trading Interests Act, 1980, ch. 11 (Eng.); Foreign Extraterritorial Measures Act, R.S.C., ch. F-29, § 9 (1984).
128. REPORT, supra note 2, at 83. For the modern version of the sovereign compulsion defense see INTERNATIONAL OPERATIONS GUIDELINES, supra note 112, at 3.32.
129. For application of comity principles today, see, in addition to the cases cited supra note 113, Trugman-Nash, Inc. v. New Zealand Dairy Board, 954 F. Supp. 733 (S.D.N.Y. 1997); Eskofot A/S v. E.I. Du Pont de Nemours & Co., 872 F. Supp. 81 (S.D.N.Y. 1995); Rivendell Forest Products, Ltd. v. Canadian Forest Products, Ltd., 810 F. Supp. 1116 (D. Colo. 1993).
130. The first bilateral cooperation agreement entered into by the United States was with Germany. Since entry into that agreement in 1976, the United States has signed antitrust cooperation agreements with Australia, Canada, Israel, Japan, Brazil and Mexico. The texts of all of these agreements may be found in 4 CCH TRADE REG. REP. ¶13.500 (Jun. 23, 1976).
131. Joined Cases 89, 104, 114, 116, 117, & 125-129/85, A. Ahlstrom Osakeyhtio v. Comm'n ("Wood Pulp"), 1988 E.C.R. 5193, 4 C.M.L.R. 901.
132. This is particularly true with respect to mergers, where a number of countries now have merger notification procedures similar to those of the Hart-Scott-Rodino Act, 15 U.S.C. § 18a (1994). The number of nations with pre-merger notification procedures has risen from about twelve in 1990 to about sixty now. See ICPAC FINAL REPORT, supra note 6, at 48. Most of these countries require notification of mergers having effects within their countries. Just as the United States takes the position that a merger of two foreign firms that has an adverse effect on the U.S. domestic market, the European Commission has done the same with respect to its domestic market. See INTERNATIONAL OPERATIONS GUIDELINES, supra note 112, at § 3.12, Example H; General Electric/Honeywell, Case No. COMP/M.2220, Jul. 3, 2001. Other countries may be expected to do the same.
133. See Diane P. Wood, The Impossible Dream: Real International Antitrust, 1992 U. CHI. LEGAL F. 277, 301-02. A variety of proposals for international cooperation and harmonization of antitrust standards have been advanced over the past fifteen years. The European Union has advocated the adoption of competition standards through the World Trade Organization, a proposal the United States has opposed. For views of the EU, see Mario Monti, European Competition for the 21st Century, in 2000 FORDHAM CORPORATE LAW INSTITUTE INTERNATIONAL ANTITRUST LAW & POLICY 257, 265 (B. Hawk ed., 2001) and Karel van Miert, European Competition Policy: A Retrospective and Prospects for the Future, in 1999 FORDHAM CORPORATE LAW INSTITUTE INTERNATIONAL ANTITRUST LAW & POLICY, 1, 6-8 (B. Hawk ed., 2000). Cf. Joel I. Klein, Anticipating the Millennium: International Antitrust Enforcement at the End of the Twentieth Century, Address Before the Fordham Corporate Law Institute 24th Annual Conference on International Antitrust Law & Policy (Oct. 16, 1997), at http://www.usdoj.gov/atr/public/speeches/1233.htm. For a detailed discussion of the WTO proposal and a variety of other forms of multilateral cooperation and standardization, see Daniel K. Tarullo, Norms and Institutions in Global Competition Policy, 94 AM. J. INT'L L. 478 (2000).
134. See Diane P. Wood, The Impossible Dream: Real International Antitrust, 1992 U. CHI. LEGAL F. 277, 301-02. A variety of proposals for international cooperation and harmonization of antitrust standards have been advanced over the past fifteen years. The European Union has advocated the adoption of competition standards through the World Trade Organization, a proposal the United States has opposed. For views of the EU, see Mario Monti, European Competition for the 21st Century, in 2000 FORDHAM CORPORATE LAW INSTITUTE INTERNATIONAL ANTITRUST LAW & POLICY 257, 265 (B. Hawk ed., 2001) and Karel van Miert, European Competition Policy: A Retrospective and Prospects for the Future, in 1999 FORDHAM CORPORATE LAW INSTITUTE INTERNATIONAL ANTITRUST LAW & POLICY, 1, 6-8 (B. Hawk ed., 2000). Cf. Joel I. Klein, Anticipating the Millennium: International Antitrust Enforcement at the End of the Twentieth Century, Address Before the Fordham Corporate Law Institute 24th Annual Conference on International Antitrust Law & Policy (Oct. 16, 1997), at http://www.usdoj.gov/atr/public/speeches/1233.htm. For a detailed discussion of the WTO proposal and a variety of other forms of multilateral cooperation and standardization, see Daniel K. Tarullo, Norms and Institutions in Global Competition Policy, 94 AM. J. INT'L L. 478 (2000).
135. See Diane P. Wood, The Impossible Dream: Real International Antitrust, 1992 U. CHI. LEGAL F. 277, 301-02. A variety of proposals for international cooperation and harmonization of antitrust standards have been advanced over the past fifteen years. The European Union has advocated the adoption of competition standards through the World Trade Organization, a proposal the United States has opposed. For views of the EU, see Mario Monti, European Competition for the 21st Century, in 2000 FORDHAM CORPORATE LAW INSTITUTE INTERNATIONAL ANTITRUST LAW & POLICY 257, 265 (B. Hawk ed., 2001) and Karel van Miert, European Competition Policy: A Retrospective and Prospects for the Future, in 1999 FORDHAM CORPORATE LAW INSTITUTE INTERNATIONAL ANTITRUST LAW & POLICY, 1, 6-8 (B. Hawk ed., 2000). Cf. Joel I. Klein, Anticipating the Millennium: International Antitrust Enforcement at the End of the Twentieth Century, Address Before the Fordham Corporate Law Institute 24th Annual Conference on International Antitrust Law & Policy (Oct. 16, 1997), at http://www.usdoj.gov/atr/public/speeches/1233.htm. For a detailed discussion of the WTO proposal and a variety of other forms of multilateral cooperation and standardization, see Daniel K. Tarullo, Norms and Institutions in Global Competition Policy, 94 AM. J. INT'L L. 478 (2000).
136. See Diane P. Wood, The Impossible Dream: Real International Antitrust, 1992 U. CHI. LEGAL F. 277, 301-02. A variety of proposals for international cooperation and harmonization of antitrust standards have been advanced over the past fifteen years. The European Union has advocated the adoption of competition standards through the World Trade Organization, a proposal the United States has opposed. For views of the EU, see Mario Monti, European Competition for the 21st Century, in 2000 FORDHAM CORPORATE LAW INSTITUTE INTERNATIONAL ANTITRUST LAW & POLICY 257, 265 (B. Hawk ed., 2001) and Karel van Miert, European Competition Policy: A Retrospective and Prospects for the Future, in 1999 FORDHAM CORPORATE LAW INSTITUTE INTERNATIONAL ANTITRUST LAW & POLICY, 1, 6-8 (B. Hawk ed., 2000). Cf. Joel I. Klein, Anticipating the Millennium: International Antitrust Enforcement at the End of the Twentieth Century, Address Before the Fordham Corporate Law Institute 24th Annual Conference on International Antitrust Law & Policy (Oct. 16, 1997), at http://www.usdoj.gov/atr/public/speeches/1233.htm. For a detailed discussion of the WTO proposal and a variety of other forms of multilateral cooperation and standardization, see Daniel K. Tarullo, Norms and Institutions in Global Competition Policy, 94 AM. J. INT'L L. 478 (2000).
137. See Diane P. Wood, The Impossible Dream: Real International Antitrust, 1992 U. CHI. LEGAL F. 277, 301-02. A variety of proposals for international cooperation and harmonization of antitrust standards have been advanced over the past fifteen years. The European Union has advocated the adoption of competition standards through the World Trade Organization, a proposal the United States has opposed. For views of the EU, see Mario Monti, European Competition for the 21st Century, in 2000 FORDHAM CORPORATE LAW INSTITUTE INTERNATIONAL ANTITRUST LAW & POLICY 257, 265 (B. Hawk ed., 2001) and Karel van Miert, European Competition Policy: A Retrospective and Prospects for the Future, in 1999 FORDHAM CORPORATE LAW INSTITUTE INTERNATIONAL ANTITRUST LAW & POLICY, 1, 6-8 (B. Hawk ed., 2000). Cf. Joel I. Klein, Anticipating the Millennium: International Antitrust Enforcement at the End of the Twentieth Century, Address Before the Fordham Corporate Law Institute 24th Annual Conference on International Antitrust Law & Policy (Oct. 16, 1997), at http://www.usdoj.gov/atr/public/speeches/1233.htm. For a detailed discussion of the WTO proposal and a variety of other forms of multilateral cooperation and standardization, see Daniel K. Tarullo, Norms and Institutions in Global Competition Policy, 94 AM. J. INT'L L. 478 (2000).
138. Nitschke, supra note 1, at 1070.
139. See supra text accompanying notes 59-61; Timken Roller Bearing Co. v. United States, 341 U.S. 593, 603-04 (1951); United States v. Minnesota Mining & Mfg. Co., 92 F. Supp. 947, 962 (D. Mass. 1950).
140. See supra text accompanying notes 59-61.
141. REPORT, supra note 2, at 92-114.
142. For a discussion of these issues, see Thomas E. Kauper, Politics and the Justice Department: A View From The Trenches, 9 J.L. & POL. 257 (1993).
143. REPORT, supra note 2, at 94.
144. For a brief discussion of the birth and death of the Havana Charter, see Wood, supra note 124, at 281-85.
145. See id. at 284-85.
146. The Eisenhower administration ultimately opposed the code and the effort was brought to an end.
147. REPORT, supra note 2, at 98.
148. Id. at 98-105.
149. Id. at 105-08.
150. REPORT, supra note 2, at 107.
151. Compare these remarks with the following remarks of Joel I. Klein, then the Assistant Attorney General in Charge of the Antitrust Division: As should be absolutely clear by now, the United States places a very high value on the practical law enforcement value of developing bilateral mutual assistance agreements and other cooperative efforts among antitrust agencies. I would hate to see our energy and attention diverted from these practical efforts at improving enforcement, particularly against international cartels, diminished by an unwieldy and theoretical WTO exercise. Indeed, a premature effort to negotiate rules at the WTO is fraught with risk. . . . Klein, supra note 124, at 9.
152. Nitschke, supra note 1, at 1071.
153. In its final paragraphs of its foreign commerce section, the Report noted that the Webb-Pomerene Act, which authorizes, inter alia, export cartels, had been severely criticized, but concluded that it was of limited practical significance and should be retained until there were changes in the pattern of state buying agencies, state monopolies and existing cartel policies. Eugene Rostow in dissent urged repeal, characterizing the Act as representing "a philosophy antithetic to that of the Sherman Act." REPORT, supra note 2, at 114. He might have added that it is an embarrassment to U.S. efforts to prosecute foreign cartels and should have been repealed years earlier. It is however not only still with us, 15 U.S.C. § 61, 66 (1994), but was supplemented in 1982 by the Export Trading Company Act, 15 U.S.C. §§ 4001-4021 (1994). It has also been emulated by other nations that have exempted export cartels from competition policy restrictions. See A. Paul Victor, Export Cartels: An Idea Whose Time Has Passed, 60 ANTITRUST L.J. 571 (1992). Export cartel exemptions are of limited utility, since countries that feel the effects of such cartels may apply their own antitrust statutes to them whether they are exempted in their home country or not. See A. Ahlstrom Osakeyhtio v. Comm'n "Wood Pulp," 1988 E.C.R. 5193, 4 C.M.L.R. 901 (EU).
154. See California Dental Ass'n v. Fed. Trade Comm'n, 526 U.S 756, 779-81 (1999); Thomas E. Kauper, The Sullivan Approach to Horizontal Restraints, 75 CAL. L. REV. 893, 905-15 (1987).
155. See California Dental Ass'n v. Fed. Trade Comm'n, 526 U.S 756, 779-81 (1999); Thomas E. Kauper, The Sullivan Approach to Horizontal Restraints, 75 CAL. L. REV. 893, 905-15 (1987).