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CHAPTER 22 Regulating the Competitive Environment

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.

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CHAPTER 22 Regulating the Competitive Environment

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  1. CHAPTER 22 Regulating the Competitive Environment

  2. 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. • Antitrust law is to prevent monopolies and other business practices which injure competition. • EU name more descriptive- Competition law.

  3. Basic 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. 

  4. Prohibitions Against Agreements to 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

  5. Abuse 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.

  6. EU 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

  7. Antitrust 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?

  8. Distinctions of Non-U.S. Law and 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.

  9. Article 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?

  10. Preapproval Procedures Versus Litigation • EU has preapproval system. • Exemption system. • Individual. • Negative clearance. • Block exemption. • De miminimis. • U.S. does not have comparable preapproval system.

  11. Extraterritorial Effect of Competition 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.

  12. European “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?

  13. Conclusion • 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.

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