ANNUAL PROCEEDINGS OF THE

FORDHAM CORPORATELAW INSTITUTE

INTERNATIONAL ANTITRUSTLAW & POLICY

This volume contains articles based upon lectures delivered ini /Condensed form, followed by panel discussions, during they^^ÜDfiteejQthAnnual Fordham Corporate Law Institute on

• \ InternationaT Antitrust Law & Policy in New York City onOctober 22 and 23, 1992.

Editor

Barry Hawk

Fordham Corporate Law Institute

1993

Transnational Juris Publications, Inc.Irvington-on-Hudson, New York

Kluwer Law & Taxation PublishersThe Netherlands

TABLE OF CONTENTSIntroduction iii

Foreword v

Chapter 1

THE EVOLUTION OF INTERNATIONALCOMPETITION POLICY: A FEDERAL TRADE

COMMISSION PERSPECTIVE

by

Mary L. Azcuenaga

1

Chapter 2THE NEXT STEP: CONVERGENCE OF PROCEDURE

AND ENFORCEMENTby

James F. RillVirginia R. Metallo

I. Introduction 15II. Coordination 16

A. Initial Impetus 17B. Steps Taken 21

1. Intra-EC Coordination 212. The U.S./EC Antitrust Agreement 23

C. NextSteps 241. Information-Sharing Reform 242. Notification of Consensus Position to Courts

and Agencies 26

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VÜi FORDHAM CORPORATE LAW INSTITUTE

3. An Expanded U.S./EC Model and the Role ofOECD , 27

III. Coordination of EnforcementProcedures 28A. Jurisdiction 28B. Advancement Toward Coordination of Enforce-

ment Procedures 311. U.S./EC Antitrust Agreement 322. SII 333. Assisting New Antitrust Enforcement

Agencies 38IV. Conclusion 38

Chapter 3

RECENT AND FUTURE DEVELOPMENTS INJAPANESE ANTITRUST LAW ÄND ENFORCEMENT

by

Mitsuo Matsushita

I. A Historical Surveyof the Japanese Antitrust Law 41A. The Enactment of the Antitrust Law 41

1. Before the Second World War 422. Economic Democratization Policy 423. The Original Antimonopoly Law 43

B. Relaxation of the Antimonopoly Law in the 1950sand 1960s 441. The 1953 Amendment 442. Unfair Business Practices 443. Exempting Laws and Industrial Policy 45

C. Revitalization of the Antimonopoly Law 461. Events Which Led to Revitalization 462. The 1977 Amendment 483. The Structural Impediments Initiative 49

D. A Summary and Conclusion 50II. The Essentialsof the Japanese Antimonopoly Law 51

A. The Major Contents of the Antimonopoly Law 511. Private Monopolization and Related

Provisions '. 512. Cartels or Unreasonable Restraint of Trade ... 523. Unfair Business Practices 53

TABLE OF CONTENTS ix

B. The Enforcement Agency and the Procedures 541. The Fair Trade Commission 542. Elimination Measures and Administrative

Surcharge 553. Criminal Penalty 564. Private Damage Action 56

III. Selected Issues of the Japanese Antimonopoly Law 57A. The Enforcement of the Antimonopoly Law 57

1. Administrative Surcharge 582. Criminal Penalties 603. Private Damage Action 634. Informal Regulation 65

B. Distribution and Trade Practices - Guidelines onDistribution Systems and Trade Practices 661. The 1991 FTCJ Guidelines 662. Continuous and Exclusive Transactions 673. Distribution Systems 674. Sole Sales Agency 67

a. Cases Where Market Share is 10 to 25percent 68

b. Cases Where Market Share is above 25percent 68

c. Cases Where Market Share is 10 percentor below 68

5. Parallel Importation of Genuine Goods 696. Evaluation 69

C. Exemptions 701. Depression Cartels 702. Stabilization of Operations 713. Countervailing Powers 714. Rationalization of Enterprises 715. Avoidance of Business Risks 716. Export and Import 717. Operations of Exempting Laws 72

IV. Conclusion - Toward Harmonization of AntitrustLaws 74A. Harmonization and Trade Issues 74B. Extraterritoriality 75C. A Bilateral Approach 76D. A Trilateral Approach 77

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E. A Multilateral Approach 77

Chapter 4

POSITIVE COMITY - IS IT A POSITIVE STEP?

by

James R. Atwood

I. Introduction 79II. The Background for Positive Comity 80III. The Phenomenon of Positive Comity 83IV. The Likely Impact of Positive Comity 86V. Conclusion : 89

Chapter 5

RECENT DEVELOPMENT AND FUTUREPROSPECTIVE OF JAPANESE COMPETITION

POLICY

by

Akinori Yamada

I. Introduction 91II. Recent Developments of the JFTC 92

A. Strengthening Enforcement Ability andDeterrence 921. Reinforcementof the JFTC 922. Increaseof Level of Surcharge 933. Resorting to Criminal Penalties and Civil

Damage Suits 944. NotableCases 95

a. Price-fixing by Cement Manufacturers 96b. Bidrigging 96

i. Bidrigging for tenders placed by theU.S. Air Force in Japan 96

ii. Bidrigging in Construction Industry.. 97c. Application to Financial Industry 97

i. Illegal Stockholding 97ii. Compensation by Securities

Companies 97

TABLE OF CONTENTS xi

B. Improving Transparency of the EnforcementPolicy 981. Issuance of Guidelines and Prior

Consultation 982. Encouragement of Compliance Program 993. Publication of Warnings 100

C. Competition Advocacy 100III. Criminal and Civil Litigation 102

A. Criminal Litigation 102B. Civil Litigation 103

1. Standards on Submission and Retention ofMaterials and Data 104

2. Methodology for Calculation of Damages 104IV. Conclusion 104

Chapter 6

THE UNITED STATES AND JAPAN

by

A. Paul VictorJames R. Atwood

Mary L. AzcuenagaProfessor Mitsuo Matsushita

James F. RillAkinori Yamada

Panel Discussion 107

Chapter 7

AUSTRALIAN AND NEW ZEALAND COMPETITIONLAW AND POLICY

by

Dr. Maureen Brunt

I. Introduction 131II. Brief Overview of the Two Laws and Their

Enforcement 134A. The Statutory Prohibitions 134B. Authorization and the Dual Adjudication System .. 135C. Enforcement 137

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D. The Tension Between Law and Economics 138III. The Developing Australian and New Zealand Re-

sponse to Some Standard Methodological Questions ... 141A. Market Definition 141B. Market Power, Market Dominance and

Competition 147C. Market Concentration and Barriers to Entry 152

IV. Policy Issues of Current Importance 159A. "Monopolization": Misuseof Market Power 159B. Deregulation, Privatization, and Competition

Law 178C. Mergers and Acquisitions 184

Chapter 8

DEVELOPMENTS AND EMERGING CHALLENGES INCANADIAN COMPETITION LAW

by

Howard I. Wetston, Q.C.

I. Introduction 195II. Recent Developments 196

A. Criminal Enforcement 1981. Conspiracy 1982. Misleading Advertising 204

B. Civil Enforcement 2051. Abuse and Dominance 2052. MergerReview 2063. The Competition TribunaFs Contempt

Power 210C. Conclusion on Recent Developments 210

III. Emerging Challenges 211A. Joint Dominance 211B. International Challenges 213

IV. Conclusion 215

TABLE OF CONTENTS xiü

Chapter 9

INTERNATIONAL MERGERS AND THE CANADIANCOMPETITION ACT

by

Calvin S. Goldman, Q.C.Geoffrey P. CornishRichard F.D. Corley

I. Introduction 217II. Recent Developments Affectingjurisdictional Issues .. 219

A. The Effect of the Competition Act and RecentDecisions Thereunder 2191. Enactmentofthe Competition Act 2202. Judicial Decisions Under the Competition

Act 223B. Increasing International Recognition of the

"Effects" Test 2251. International Law 2252. UnitedStates 2263. European Economic Community 228

C. Canadian Judicial Recognition of the "Effects"Test 231

III. Extraterritoriality Under the Competition Act 234A. The Merger Provisions of the Competition Act 235B. Bureau Policy and Practice 236C. Policy Reasons Supporting Effects-Based

Jurisdiction 242IV. Extraterritorial Enforcement of Canadian Competition

Law 246A. Practical Factors Favoring Private Sector

Compliance 246B. When Should the Bureau Seek Remedial Relief in

Respect of International Mergers 249V. Implication for Harmonization 253VI. Conclusion 256Schedule A - International Mergers Reviewed by theCanadian Bureau of Competition Policy 256

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Chapter 10

COMMONALITY AND DIVERGENCE IN CANADIANAND AUSTRALIAN COMPETITION LAW

by

J.W. Rowley, Q.C.A.N. Campbell

I. Introduction 261II. Scope of Competition Laws 262

A. Horizontal Restraints of Trade 2631. PriceFixing 2632. Non-Price Conspiracies 2653. Joint Ventures 2654. Export Cartels 266

B. Vertical Restraints 2661. Resale Price Maintenance 2662. Non-Price Restraints 268

C. Pricing Offenses 2691. Predatory Pricing 2692. Price Discrimination 271

D. Market Dominance 2731. Mergers 2732. Specialization Agreements 2743. Abuseof Market Position 274

E. Conclusions 276III. MarketPower 276

A. Canadian Developments 277B. Australian Developments 279C. Conclusions 280

IV. Merger Regulation 280A. Competition and Industrial Policy 281B. Anticompetitive Effects 282

1. TheThreshold 2822. Analytical Factors 284

C. Efficiency Gains 286D. Advance Clearances 287E. Mandatory Pre-Notification of Mergers 289

1. Notification Thresholds 2892. Disclosure Requirements 290

TABLE OF CONTENTS XV

3. Time Limits 291F. Conclusions 292

V. Concluding Observations 292

Chapter 11

AUSTRALIA AND NEW ZEALANDCOMPETITION LAW AND POLICY

CANADIAN ANTITRUST LAW:RECENT DEVELOPMENTS

by

William T. LiflandDr. Maureen Brunt

Calvin S. Goldman, Q.C.J. W. Rowley, Q.C.

Howard Wetston, Q.C.

Panel Discussion 295

Chapter 12

GERMAN ANTITRUST LAW AND POLICY

by

Stefan Held

I. Introduction 311II. Competition Policy and Antitrust Law Aspects of

German Unification 312A. The Initial Conditions 312B. Issues of Competition Policy and Antitrust Law 314C. The Activityof the Treuhand 316D. Economic Transformation in the New Länder- A

Model? 318III. German Competition Policy and Antitrust Law in the

Period of Transition Towards European Union 319A. Integration and Harmonization 319

1. Harmonization of Law Enforcement 3192. Harmonization of Competition Policy 323

B. Subsidiarity and Harmonization 324IV. Conclusion 327

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Chapter 13

U.K. ANTITRUST LAW AND POLICY: ARETROSPECTIVE

by

Sir Gordon Borrie

I. Introduction 331II. The International Environment of Business 332III. The Growing Importance of EC Competition Law and

Policy 336IV. The On-Going Need for Effective National Competi-

tion Laws 337V. Conclusion 340

Chapter 14

ANTITRUST LAW IN THE EUROPEAN COMMUNITYAND GERMANY—AN UNCOORDINATED

CO-EXISTENCE?

by

Dr. Rainer Bechtold

I. Introduction 343II. Overview of the Current Antitrust Laws Applicable in

Germany 344A. Act Against Restraints of Competition 344B. European Community Antitrust Law 344C. Co-existence of German and European Community

Antitrust Law 345III. Precedence of Community Law in General Antitrust

Law 347A. The Practiceof the European Court of Justice 347B. Conflicts Between the Application of German and

European Community Law 349IV. The Co-existence ofEC and German Merger Control . 351

A. Applicability of the EC Merger Regulation and theGerman Merger Control Law 352

B. Criteria for Prohibition Pursuant to German Merg-er Control Law and EC Merger Regulation 352

TABLE OF CONTENTS XVÜ

V. Legal Obligation of Having Antitrust Laws of the

Member States Correspond to EC Law 356

Chapter 15

DEVELOPMENTS IN U.K. LAW

by

Jeremy Lever, Q.C.

359

Chapter 16

GERMAN AND U.K. ANTITRUST LAW AND POLICY

by

Professor Roger J. GoebelDr. Rainer BechtoldSir Gordon Borrie

Stefan HeldJeremy Lever, Q.C.

Panel Discussion 371

Chapter 17

COMPETITION POLICY DURINGTRANSFORMATION OF A CENTRALLY PLANNED

ECONOMY

by

Dr. Anna Fornalczyk

I. Introduction 385II. The Goals of Market-Oriented Reform 386III. The Polish Antimonopoly Act 387

A. Restrictive Business Practices 388B. Structural Changes 389

IV. Activities to Create Competition 389A. Division of Firms 390B. Privatization 391C. Trade Liberalization 392D. Deregulation and Reregulation 393

xviii FORDHAM CORPORATE LAW INSTITUTE

V. Law Enforcement to Preserve Competition 395A. Natural Monopolies 395B. Vertical Restraints 396

1. Vertical Restraints by Forum Monopolists 3962. Vertical Foreclosure 399

C. Market Definition 400VI. Conclusion 402

Chapter 18

EEA AND EASTERN EUROPEAN AGREEMENTSWITH THE EUROPEAN COMMUNITY

by

Dr. Thinam Jakob

I. Introduction 403II. Competition Provisions in International Agreements

Concluded by the European Community 405III. The EEA Agreement 407

A. The Historyofthe EEA Agreement 407B. The Main Contents 409C. The Competition System 411

1. The Same Substantive Rules 4132. TwoPillars 4143. One-Stop-Shop Principle 4144. Attribution of Cases 416

a. Antitrust Cases 416i. The Original Concept 417ii. The Opinions of the Court of

Justice 417iü. The Revised Concept 418

b. Merger Control 4195. Decisions Valid Throughout the EEA 4206. Cooperation Between the Pillars 421

a. Cooperation in Antitrust Matters 422b. Cooperation in Merger Control 422

7. Adaptation Periods 423D. EEA Perspectives 425

IV. The Europe Agreements 426A. The Historyofthe Agreements 427

TABLE OF CONTENTS xix

B. The Main Contents 427C. The Competition System 429

1. The Substantive Rules 4302. The Implementing Rules 431

a. Antitrust Matters 432i. Concurrentjurisdiction 432ii. Negative Conflict of Jurisdiction 433iii. Important Interests 434

b. Further Points 434V. The EEA and Europe Agreements in Perspective 435

Chapter 19

THE EEA AGREEMENT: INSTITUTIONALSOLUTIONS FOR A DYNAMIC AND HOMOGENEOUS

EEA IN THE AREA OF COMPETITION

by

Sven Norberg

I. Introduction 437A. What is the EEA? 438B. What Does the Agreement Look Like? 439

II. The Institutional Solutions 440A. Decisionmaking 441B. Surveillance and Enforcement 443

1. Introduction 4432. General Provisions Governing the EEA

Surveillance 4463. Specific Surveillance Provisions 449

a. The Fieldof Competition 449b. The Fieldof State Aid 452c. The Field of Procurement 453

4. Surveillance Related Functions 4545. Other Functions of the Surveillance

Authorities 4556. The Organization and Functioning of the

ESA 456C. The Judicial Mechanism 458

1. The Solution in General 4582. Homogeneity 460

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3. The Organization and Functioning of theEFTACourt 461

III. Some Concluding Remarks 462Annex IAgreement Between the EFTA States on theEstablishment of a Surveillance Authorityand a Court of Justice 464Annex IIAgreement on the European Economic Area 480

Chapter 20

COMMENTS ON "COMPETITIVE POLICY DURINGTRANSFORMATION OF A CENTRALLY PLANNED

ECONOMY"

by

Dr. Janusz A. OrdoverRussell W. Pittman

533

Chapter 21

EASTERN EUROPE AND THE EEA

by

Professor Eleanor FoxDr. Anna Fornalczyk

Dr. Thinam JakobSven Norberg

Dr. Janusz Ordover

Panel Discussion 539

Chapter 22

POLITICS OR POLICY? THE DEMYSTIFICATION OFEC MERGER CONTROL

by

H. Colin Overbury

I. Introduction 557

TABLE OF CONTENTS xxi

II. The Background to the Merger Regulation 560III. The Merger Debate 562IV. The Merger Regulation 563V. Implementation of the Merger Regulation 564VI. Administration 568VII. Procedures 569VIII. The Statistics 573IX. Conclusions on the Procedures and Methodology 573X. TheProblems 574XI. The Criticisms 581XII. Epilogue 588

Chapter 23

EEC MERGER CONTROL: ECONOMIES AS ANANTITRUST DEFENSE OR AN ANTITRUST ATTACK?

by

Frederic Jenny

I. Introduction 591II. Efficiency and Articles 85 and 86 of the EEC Treaty ... 592III. Efficiency and the Merger Regulation 594IV. Efficiency and Merger Control Case Law 596V. Conclusion 603

Appendix 1 604

Chapter 24

EEC MERGER REGULATION

byJames T. HalversonDr. Rainer Bechtold

Frederic JennyH. Colin Overbury

Panel Discussion 605

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Chapter 25

THE COURT OF THE FIRST INSTANCE:THE FIRST THREE YEARS

by

Marc van der Woude

I. Introduction 621II. CompetenceoftheCFI 622III. The Functioning of the CFI 626IV. SomeFigures 630V. The Case Law of the CFI 632

A. Cartels 632B. Distribution 638C. Article86 640D. Procedural Issues 645E. Interim Measures 656F. Fines 658

VI. Judicial Review 660A. Facts 662B. Procedure 662C. Legal Appraisal 665

VII. FinalRemarks 667

Chapter 26

EEC COMPETITION PRACTICE:A THIRTY-YEAR RETROSPECTIVE

by

Donald L. Holley

I. Introduction 669II. The Challenges of the Notification Process 675III. Mixed Comfort From the Block Exemptions 683IV. LookingforARuleofReason 689V. Some Turning Points in Case Law that had Impact on

Practice 693VI. Sources of Law and Precedents 700VII. The Practitioner and the Commission 706

A. Interaction of Counsel with the Commission Staff.. 706

TABLE OF CONTENTS XXÜi

B. Procedure Before the Commission 713VIII. The Role of Economics and of Economists 717IX. EEC Competition Law in National Courts 722X. The Merger Regulation 725XI. Concluding Remarks 731

Chapter 27

INSUFFICIENT JUDICIAL CONTROL OF ECCOMPETITION LAW ENFORCEMENT

by

Ivo Van Bael

I. Introduction 733II. The Wide Discretion Enjoyed by the Commission 733

A. Case Selection 734B. Outcomeof Proceedings 734

1. Informal Settlements 7342. Exemptions under Article 85(3) 7373. ClearanceofMergers 7384. The Commission's Fining Policy 739

II. Insufficient Judicial Control Over the Commission'sDiscretionary Powers 740A. The Court of Justice 740B. The Court of First Instance 742

III. Conclusion 743

Chapter 28

EEC COMPETITION PRACTICE:A THIRTY-YEAR RETROSPECTIVE

by

Michael D. BlechmanDonald L. Holley

Dr. Otfried LieberknechtIvo Van Bael

Marc van der Woude

Panel Discussion 745

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Chapter 29

CARTELS: PROOF AND PROCEDURAL ISSUES

by

Maurice GuerrinGeorgios Kyriazis

I. Introduction 773II. Cartels: Definition and Classification 778

A. Classification According to the Form of theCartel 7811. Cartels Based on an Agreement Between Two

or More Companies 781a. Institutional Cartels 781b. Secret Cartels 783

2. Cartels Based on Concerted Practices (de factocartels) 783

B. Classification According to the Object of theCartel 7841. Commercialization Cartels 7852. Cartels Controlling Output 7863. Crisis Cartels 7864. Information Exchange Cartels 7875. Import-Export Cartels 788

III. Evidence 789A. Evidence of the Existenceofa Cartel 790

1. Publicly Known Cartels 7902. Secret Cartels 791

a. Cartels Resulting from an Agreement 791b. Cartels Resulting from a Concerted

Practice 792B. Evidence of the Restriction of Competition 796

1. Evidence of Restriction Resulting From theObject of the Cartel 797

2. Evidence Resulting From the Effects of theCartel 800

C. Typesof Evidence Used 8021. Direct Documentary Evidence 8022. Circumstantial (Presumptive) Evidence 8043. Economic Evidence 812

TABLE OF CONTENTS XXV

4. Testimony Evidence 816IV. Procedural Issues 818

A. Powers of Investigation 8201. Requests for Information on the Basis of

Article 11 822a. Simple Requests-Article 11(1) 822b. Orders-Article 11(5) 822c. Defense to Article 11 Requests or

Orders 8232. Inspections on the Basis of Article 14 825

a. Non-compulsory "Authorizations to Inves-tigate" Under Warrant - Article 14(2) 825

b. Compulsory Inspections Under Order -Article 14(3) 827

c. Protection of Fundamental Rights 829d. Powers of the Commission's Inspectors

under Article 14(1) 833(1) Enter any Premises, Land and Means

of Transport of the Company 833(2) Examine the Books and Other Busi-

ness Records 833(3) Take Copies of or Extracts from the

Books and Business Records 835(4) Ask for Oral Explanations on the

Spot 835e. Defense to Article 14 Warrants or

Orders 837B. Procedural Guarantees During Cartel Investiga-

tions 8381. Protection of Correspondence Between the

Company and its Lawyer 8382. Professional Secrecy 8403. Access to the File 841

V. Conclusions 843

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Chapter 30

SEA TRANSPORT UNDER EEC COMPETITION LAW

by

Claude Rakovsky

I. Introduction 845II. Liner Shipping: Characteristics and Organization 846

A. The Organization of the Sector 849B. What is a Liner Conference? 850

III. The Regulatory Approach 852A. The United States' Approach 852B. The UNCTAD Code of Conduct for Liner

Conferences 855IV. The Approach Adopted by the Community 858

A. The "Brüssels Package" 858B. Towards the Adoption of a Regulation Applying

the Competition Rules 860C. Regulation 4056/86: General Remarks 862D. Regulation 4056/86: Main Provisions 864

1. A Regulation No 17 for Maritime Transport.. 8642. Block Exemptions 866

a. Article2 866b. Article3 868c. Articles 4, 5 and 6 876d. Article7 882e. Article8 886

V. The Crisis in the Conference System and its MainConsequences Regarding the Application of the Com-petition Rules 889A. The Crisis in the Conference System 889B. The Reaction of the Conferences 892

1. Closing Access to the Trade: West Africa 8922. The Negotiation of Agreements with Outsid-

ers (Eurocorde) 8953. Extending the Responsibilities of the Confer-

ences to Multimodal Transport 8994. Consortium Agreements 902

VI. Conclusion 906

TABLE OF CONTENTS XXVÜ

Chapter 31

JURISDICTIONAL LIMITS TO THE APPLICATIONOF EC COMPETITION RULES TO INTERNATIONAL

MARITIME TRANSPORT

by

Nicholas Forwood, Q.C.I. Introduction 907II. General Principles 908III. The Application of the Rules on Competition to

International Trade in Goods 910A. Application of Article 85 to Exports 910B. Application of Article 85 to Imports 912

IV. Application of Articles 85 and 86 in the Field ofInternational Air Transport to and from theCommunity 916

V. The Legislative History of Regulation 4056/86 918VI. Conclusions 923

Chapter 32

PROOF OF A CARTEL AND PROCEDURAL ISSUESSEA TRANSPORT UNDER EC COMPETITION LAW

by

Ivo Van BaelNicholas Forwood, Q.C.

Maurice GuerrinDr. Otfried Lieberknecht

Claude Rakovsky

Panel Discussion 925