TOWARD WORLD ANTITRUST AND MARKET ACCESS: By Eleanor M. Fox* INTRODUCTION The lowered national barriers to global trade reveal opportunities for a world with- out parochial frontiers. One of these opportunities lies in the area of competition law. Competition law is designed to enhance the economic welfare of people by, among other things, breaking down private barriers and preventing the creation and misuse of corporate power through combinations and monopolistic strategies. Law, in its conservatism, tends to respond to immediate problems. Specific problems have raised competition law (o the level of a world issue, possibly to be addressed in the context of the World Trade Organization (WTO). In particular, the international- ization of antitrust law has been suggested as a response to claims by United States firms that their entry and expansion into Japanese markets has been blocked by private and hybrid public /private restraints of ade. Quite separately, negotiations for sector- specific and property-specific trade agreements (regarding, e.g., telecommunications and intellectual property) have revealed problems that sound in antitrust law—con- cerns of blocked market access and abuse of dominance; and the problems are likely to be addressed either in trade instruments themselves or at higher or lower levels. These claims and concerns have brought home the fact that antitrust issues are increas ingly world issues; the home state of the actor may lack jurisdiction or incentives to cnforce its national law; the home state of targeted consumers or producers may lack jurisdiction or practical powers to enforce its law; and exemptions at the source of the harm may give rise to a claim by the exempting nation that no prescriptive law at all applies. In response, some individuals are secking a possible world solution to world antitrust problems. Others, deconstructing each problem and suggesting narrow solutions, argue that nothing beyond certain efforts that are already in progress! remains to be done. In this article I propose that the specific problems that have recently surfaced (access (o Japan; feared abuses by dominant telecommunications companies) are simply sign- posts and scattered pieces of a puzzle in search of a home. The problems noted above of the mid-tolate 1990s belong to the same family as the issues of yesterday—e.g., the government involvement issues that confounded the uranium cartel problem?—and the issues of tomorrow—c.g., the strategic public/private cartel issues lurking behind environmental proposals that contemplate the creation, allocation and trading of world pollution permits. ‘The lowering of government barriers to trade and the conclusion of new sectoral wade agreements, both of which uncover problems of private power and restraint, may be used as the occasion to build that home. * Walter Derenberg Professor of Trade Regulation, New York University School of Law. The author thanks Frédéric Jonny for his most helpfol commente “'Efforis in progress inchude, prinipaly bilateral agreements for cooperation between antitrust authorities. *A popular ise today is” positive comiy.” which assumes that two oF more different countries wil recognize and wish to pursue a common interest in enforcing antinust law. Posive comity contemplates cooperation between antiust agencies (0 1001 out « common ex, e. @ Uansnational cartel. The uraniurn cartel involved Ubchavior that some counties supported and the United States opposed: i.e, the nations did not perceive a common evil, Conflict continually recurs, and finding methodologies to resolve differences is at least as important or more important than finding vehicles to enhance cooperation in situations in which there is a preexisting disposition to cooperate2 ‘THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 91:1 ‘The mere concept of building such 2 home would be daunting were it not for the fact that the European Economic Community" faced the same challenge, among others, in the mid-1950s, It addressed, as its ;portant goal, the task of taking the parochialism* out of trade and competition in the internal European market. In the internal market of the European Union, much parochialism has been removed with respcct to both public and private restraints. Thus, after the adoption of the Treaty of Rome, German sugar growers could not cartelize to keep out French and Belgian sugar, and vice versa; nor could the French, the Germans and the Belgians agree with ‘one another that each would keep its home territory for itself.’ British Telecom could not obstruct the flow of telephone signals through the United Kingdom." State action, as well as private action, is subject (o limits for the good of the community. The Enropean Union engages with the ultimate federal question: given the importance of states’ rights to act in the public interest of their citizens, what are the limits to state action that obstructs free trade and competition and thereby harms the interests of the larger community? Not surprisingly, the European Union has taken the lead in examining the impor- tance of the world competition issue and in suggesting the formation of an exploratory working group to develop issues for a world agenda. United States officials, on the other hand, have been visible in demonstrating the pitfalls of this course. Because the debate has been framed by the European vision on the one hand, and the US. reluc- tance on the other, I proceed in this article to develop the European vision of nonparo- chialism, and, in counterpoint, the U.S. perspective for leaving “good enough” alone. I next discuss other perspectives on antitrust law, and then present a set of models and options. T conclude that we need a vision of liberal antitrust to fit the worldview of liberal trade; not without derogations, but with a framework for permissible derogations. 1 conclude that we should continue to work on the ground-up infrastructure of antitrust agency cooperation, liberal regional cooperation and sectoral agreements; but that the perspective from below is not sufficient and must be guided by, and should become synergistic with, a concept from the top. After explaining my conclusions, I make a proposal for implementing an open market system. A main prong of the proposal involves limits to state action, which I note herein but address more fully in another article.” Since market access is the trade /antitrust issue of most interest to the world trading system today, I focus, in this article, on a market access principle for the world. Such a principle, focused on the trade and competition intersection, would be an especially fitting subject for a WTO agreement, which might naturally be called the Agreement on Trade-Related Aspects of Antitrust Measures, or TRAMS. Those readers who are most interested in current options and the process of formu- Jating a world market access rule may wish to turn directly to Part II, Models and Options, and then proceed to Part III, Implementing the Principle. S-The European Economic Community, now offically entitled the European Community, is a constituent part of the Furopean Union, which was established by the 1992 Maastricht Treaty on European Union, * Pasoehalisn connotes discrimination against and barties wo foreign goods or services AsT use these words, «esmopobteniom i the converse of parachiahism. It connotes concem for the interests ofthe entire community without regard to nationality, while recognizing the legitimate role for national and pretincial governments 40 actin the interests of their citizens. See text at notes 18-35 infra, for a discussion of European Community la. * See text at and note 28 infra ” SeeBleanor M. Fox & Jantis: Ordaver, The Hlarmandsation of Competition and Trade Low—The Cos for Medest Linkages of Lave and Limes 10 Parochial Sta Acton, Wout Costrerrii0n L, & Boon. Rev, Dec. 1995, at 5, eprint tm part in 26 INTL BUS. LAW 58 (1996).1997] WORLD ANTITRUST AND MARKET ACCESS 3 1. AN INTERNATIONAL CONCEPTION OF ANTITRUST Changes That May Animate an Integral Conception for Public: and Private Restraints in World Commerce Traditionally, trade law has involved public restraints of ade; antitrust or competition law has concerned private restraints. Trade lav, by definition, is internationally oriented, whereas antitrust law has national roots. At one time, competition law problems were largely contained within a single nation, justifying the rubric that the law stops at the nation’s shores." Over time, four things happened. First, firms engaged in offshore conduct aimed at harming another nation’s, domestic competition. Partly because of export exemptions at the point of the conduct, these acts were not proscribed by the law of the place of the conduct. ‘The acts would have gone unregulated unless caught by the law of the target country. Thus, the effects doctrine was born.” An cmerging international consensus supports the need for, and legitimacy of, an effects doctrine, at least where a cartel is purely private and harm to buyers in the regulating nation is direct.!" Where, however, the suspect conduct is something other than a purely private, hard-core’! cartel implemented in the regulating nation, the consensus unravels." Moreover, there has never been consensus that a nation’s antitrust, law may reach the conduct of foreign firms on foreign soil that tends to exclude the regulating nation’s exporters from a foreign market, though United States officials main- tain that USS. law extends so far. Sccond, business is increasingly global. As Robert Reich observed in The Work of Nations, businesses’ production facilities are so far-flung that in many cases one cannot distinguish, “who is us" and “who is them."*'* Itis no longer easy (even if desired) to tailor national laws to protect national businesses, In this environment, patchwork quilts of national rules have become, at the least, an annoyance to international business. The number of transactions that are subject to the antitrust laws of numerous jurisdictions has increased exponentially, with an attendant increase in compliance costs. ‘Third, trade law has been liberalized. As the trade barriers fall like a waterline, the low tide reveals rocks and shoals—which are the private restraints and uncaught government restraints. Moreover, the freer trade engenders new, defensive restraints, Entrenched businesses, and nations themselves, face perverse incentives to rebuild border barriers for private and nationalistic ends, protecting the newly vulnerable national advantage.'' And. * See American Banana Co. v. United Frait Co, 218 US. $47 (1900) * But for the effects doctrine, we would have needed and probably long-since obtained a binding international Jaw on anticompetitive transnational restraints, Ser Eleanor M, Fox, jurisdiction nud Gonflictsin the Global Economy: Goafing « Systms Intefact—Hartiord Insurance and Foreign Meitet Access as Case Esamples, in Fstchrft for Valentine Korah, 1995 EC Gowrestrion L. YB. (John Kallaugher & Peter Alexiadis eds., forthcoming). "The European Community adopted a version of the effects doctrine in the Wood Pulp case, Joined Cases 89, 104, 114, 116, 117 & 195~29/85, Ahlstrom Osakeyitio x. Commission, 1988 ECR 5123. Hardcore eartel refers to an agreement among competitors soley forte purpose of elimi tion among them so as to increase their profits, "The uranium cartel is an example of mixed public and private action, The U.S. lawsuits against alleged cartelists in France, Canada, the United Kingdom, South Africa and elsewhere provoked the ire of U.S. trading partners, some of whom had supported plans within their nations for the orderly production and marketing Of uranium after the United States frst simulated produesion and then embargoed uranium. See faxes R Axrwoon Be KIveAAN BREWSTER, ANTITRUST AND AMERICAN BUSINESS ABROAD §6.16 (24 ed. 1981), Wirwbe L Fogare, Fornicn Cowmetce ann tit Anrirgusr Laws §2.16 (Sd ed. 1982), "'Ronerr B. Rrscxt, Thar WoRK OF NATIONS: PREFARING OURSELVES ror 2lst-CeNTURY CAPITALSH, chs. 10, 2 (1901). See | Srarr oF FrneRAL TRADE COMMISSION, ANTICIPATING THE 21ST CENTURY: COMPETITION POLICY ty rite New Hici¥Tecit, GLoBaL MARKETFLAGE, ch, 1A (1996), reprinied as 424 Trade Reg, Rep, (CCH), Extra Falition 1-11 (June 11, 1996) Se Metit Fanon, Prive and Public Resrains that Limit Awes co Marke, in Manse Access AFTER Tite Unecuay ROUND: INVESTHENT, CoMEETITION AND TcHINOLOGy PrRsercrts, eh, 5 (OECD 1096). ting compet:4 ‘THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 91:1 in less developed countries with less developed antitrust systems, the freer wade carries with it the threat that powerful firms rom industrialized countries will rush in and exploit the LDGs' citizens. Thus, trade liberalization sets the stage for private and hybrid abuses, suggesting the need for a voice for free trade and competition in the world. Four, new trade instruments in the context of the new World Trade Organization are expanding the realm for trade law, and provisions in a number of these new instruments concern competition policy. Agreements have been signed regarding trade-related as- pects of imtellectual property (TRIPS), investment (TRIMs) and services (GATS), and negotiations are in process for an agreement on telecommunications. These agreements mention competition law or concepts. For example, TRIPS provides that members may proscribe intellectual property licensing practices “having an adverse effect on competi- tion in the relevant market." TRIMs requires, within five years from its date of entry into force, consideration whether the agreement should be complemented by competi- tion policy; and negotiations for a telecommunications agreement have centered on market access and monopolistic exclusions and exploitations.” There is a risk that a patchwork of antitrust policies will be devised to fit specialized instruments of rade, unless antitrust policy makers assist in the development of a unified world framework that could become the reference point for the competition components of the new and. fature specialized trade instruments. ‘The Trade/Competition Interface—Europe's Comparative Advantage There is a unified vision of trade and competition, free of parochial restraints; and the founders and implementers of the European Economic Community have studied and attempted to harmonize the three branches of law and policy relevant to that vision: liberal wade law, competition law and national industrial policy. Because of the importance of the unifying vision, I tum to the European experience insofar as it bears on removing economic parochialism. In many ways the European Union has a fuller agenda, eg., for deep integration and for a common social policy. I do not refer ta those initiatives but, rather, abstract from the EC internal market model the important lessons for a world that does not have, want or need a Maastricht."” The economic vision of Europe. The set of trade/antitrust problems confronting the world is conceptually well-known in Europe. The leaders of the European Union have long understood the symbiosis between wade law and competition law." To stabilize the |S Agreement on Trade Related Aspects of Intellectual Property Rights, Apr. 15, 1904, Art. 40.9, Agreement Establishing the World Trade Organization (hereinafter WTO Agreement), Annex 1G, FINAL Ar EvBoomNe 1 RESULTS oF TE Urucuay RotNb oF MULTILATERAL Teapr Nrcomiations, Maneakestt, 15 APRIL 1994, at $19, 887 (1994), 83 ILM 81 (1994). See Eleanor M. Fox, Trade, Competition, and intelectual Property —1TUPS ‘and Its Andrus Counterparts, 29 Vanv. J. TRANSNAT'E L. 481 (1996) “Agreement on Trade-Related Aspects of Investment Measures, Apr. 15, 1994, Art. 9, WTO Agreement, Annex 1A, FINAL ACI, supranote 18, a 139, 142. For competition concerns in telecommunicadions, see Bernard 1M. Hockman, Patick Low & Petros C. Mavroidis, Antitrust Disciplines and Market Access Negotiations Lessons from the Telecommunications Sector, Paper presented at Conference on Competition Polides for an Inte- rated World Economy, Oslo (June 13-14, 1896) (on file with author) "The Treaty on European Union was signed at Maastricht, the Netherlands, on February 7, 1992, 199% OJ, (C224) 1, and became effective on November 1, 1993. 1t provides for political and monetary union, and various social Use of the Enropean Union model for the world trading system has been criticized by Professor Michael ‘Prebileock in Competition Policy and Trade Policy—Mediating the Interface, J. WoRtD TRADt, Aug. 1996, at 71, on grounds that the model entails or will produce a “fat exrth”” or homogenized world. Id. at 02-96. T agree With Profesor Trebilcock that we should not aspire wo a “flat earth,” which implies suppression of the pparticularstic policy choices of nations. I embrace the basic economic model of the European Union because {if constitutes the most developed body of law considering the tensions between national policy and community welfare, and EG law has developed a format for a continuing dialogue between the member states and the “center.” Trading nations of the world might, however, be expected to srike the balance between rational prerogatives and community welfare differently, particularly in view of dhe European goal of deep integration. ™'See Giulhano Amato, Ditehley Foundation Lecture (Ditchley, England 1995) (on Sle with author)1997] WORLD ANTITRUST AND MARKET ACCESS 5 conditions for peace in an erstwhile warring Europe, and to establish the conditions for a robust economy with markets sufficiently large to support efficient firms, six nations at the center of Western Europe signed the Treaty of Rome establishing the European Economic Community in 1957." The brilliant basic concept was to lift the fronticrs that stood as barriers around each of the nation-states, and to assure that neither governments, nor private firms could replace them with border restraints, discriminatory measures, or. measures of equivalent effect. These principles are enshrined in the Treaty of Rome, in Articles 2, 8 and 5; in the four freedoms of movement (of goods, services, capital and workers); and in the articles establishing 2 common competition policy, which apply not aly to private actors but also (o state-owned enterprises. state-licensed monopolics and state-granted aids. The vision of free movement across a Europe without frontiers has a seamless charac- ter. National trade laws, such as antidumping and countervailing duty laws, were abol- ished for the internal market, Trade law became freedom-of movement law, which con- ferred the right to undistorted competition—a concept that was designed to catch public and private distortions alike. ‘The first principles of the EC internal market centrally prohibit “beggar thy neighbor” restraints—restraints by one nation or its citizens designed to profit that nation by imposing costs on another member nation or its citizens, Thus, it is absolutely forbidden for Germany to cause its producers to combine to exploit French buyers, or for French producers to cartelize to exploit German buyers, and vice versa. Parochial, nationalistic restraints are flatly forbidden. Tt was recognized, however, that some normal, nonparochial public or private action may have spillover effects on one’s neighbors, and it was necessary to devise principles wd ish Icgitimate from illegitimate measures. Some of these measures would be Iegitimate because they served a proper national interest, but only if they were propor- tional and narrowly tailored to that interest." Other such measures would be legitimate because they also served larger objectives of the Community, such aslifting up the poorest regions of the Community and thereby enhancing social and economic cohesion.” For all permitted derogations from the one-Europe vision, transparency and proportionality are necessary conditions. Moreover, especially after the border barriers were lifted, three phenomena appeared regarding disparate national regulatory regimes, such as those for product safety and the cnvironment. First, sometimes the regimes clashed, or the need to comply with several systems at once imposed significant unnecessary costs, while those firms that complied only with their home regulations faced border barriers (e.g., higher safety standards). Second, firms operating in regimes with higher levels of regulation thought themselves to be at an unfair competitive disadvantage because of the costs of regulation, and also feared the flight of capital 1o lower-cost states. Third, for some problems such, as environmental spillovers, it was recognized that common solutions would be superior to individual solutions. For goods in transit not subject to common policy, the European Court of Justice devised the rule of law that member nations must normally give each other's regulation (eg. safety certifications) mutual recognition, But mutual recognition was not enough; "For a cescription of the economic blueprint of the European Community and the instinuional system put into place te carry out the objectives, see generally Geonce A Beaman, Rocer J. Gosaet, WILLIAM J Davzy & Etravon M, Fox, Casts aND MATERIALS on EuRorcan Cosunrry Law (1993 & Supp. 1995) 2 See eg, Case 120/78, ReweZentral AG x, Bandesnonopolverwaltung fir Branntvein, 1070 ECR 649 (Cassis de Dijon); Case 124/81, Comunission v, United Kingdom, 1963 ECR 208 (UH'T alk ES eg, EUROPEAN CowiMESION, SEVENTEENTH REPORT ON COMPETION Pour 17, point 286 (1983) (specifying criteria to eraltate the permnissibility of regional state aids). Ser generally ClausDieter Ehlermann, State Aids wader Exropean Community Competition Lau, 18 FORDKAM INT'L LJ. 410 (1004).6 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 91:1 it did not solve the second and third problems (the problem of the unlevel playing field and the situation in which the common solution is the best solution). Accordingly, the ‘Community developed methodologies for bringing bodies of law into harmony, includ- ing harmonization directives and “framework” harmonization directives. The system's overall effectiveness depends upon acceptance of Community law into the law of the member states, and a system of enforcement, Thus, Community law is supreme, and selfimplementing rules of Community law are directly effective in the member states; that is, they are a part of the body of the law of each nation, and they confer rights on those meant to be benefited. Community institutions are empowered to call the member states to account for failure to carry out their obligations.” ‘The trade/competition indusirial—policy interface, Certain important details fill in the basic European economic blueprint. The founders understood that trade liberalization can be defeated by private restraints and, indeed, that the removal of border barriers fuels the incentives of nations and firms to find ways to re-erect barriers and keep their historical advantage. Moreover, not all of the member states had a tradition of competition policy. Some had large government- ‘owned sectors, a plethora of government-granted exclusive economic privileges, a tradi- tion of cartels, and opaqueness regarding market access and opportunity for business outsiders to challenge incumbents. Given these conditions, as well as the goal of deep, integration, it made sense for the Community to internationalize competition policy, to integrate competition and free-movement policy, and to limit national industrial or regulatory policies that might conflict with free competition free trade” in the internal market.” Under the EC Treaty of Rome, competition policy is carried out by six means. First, the four freedoms (articles requiring that member states not obstruct private economic freedoms) provide a basic framework and background for competition. Second, Article 85 prohibits agreements or concerted practices that distort competition, except as €x- empted, and Article 86 prohibits dominant undertakings from abusing their dominance. Third, Article 37 requires member states to adjust state monopolies of a commerci character to eliminate discrimination (vis vis nationals of other member states) in the procurement and marketing of goods. Fourth, Article 90 makes public undertakings and those to which member states grant special or exclusive rights subject to the competi- tion rules unless their application would obstruct the performance of public tasks. Fifth, Harmonization directives often spell out deailed common standards. Framework harmonization identifies important common objectives and gives member states great latide in deciing how to achieve th ihe principles of the European blueprint for freedom of trade without disrimination have easy applica to free trade areas beyond the European Union. They have long applied in the European Pree Trade Associa- tion area. As Cental and Eastern European nations have democratzed and moved to freer markets, the European Union has brought the most basi ofits fist principles eastward For a suggested adapiauion of these principles to North America, see AMERICAN Bag AssociaTION, Tie REPORT OF THF ABA ANTTIRUSE SECHION TASK FORCE ON THE CoMPETINON DIMENSION OF THE NoktHt AMER CaN FREE TRADE AGREENENT (19954) ™ Tue “free trade” and "Iree movement” to encompass freedom of investment and freedom of establishment, © Thaw, the EC Tressy, 1902 OJ. (C 224) 6 states ia Article 3 that,“[fJor the purposes set out in Article 2 [establishing a common market and achieving harmonious and balanced development of economic activi ties), the activities of the Community shall include... (g) aster ensuring that competition in the internal market is not distorted». “The Treaty on Furopean Union —the Maasuicht Treaty, sya note 17—incorporates industrial policy into the ‘Treaty of Rome in ways that are compatible wth and do not derogate from competition policy. New Article 180 provides im paragraph I "The Cemmunity and the Member States shall ensure that the conditions necessary for the competitiveness of the Community's in ‘Avticle 130 invites action aimed at adjusting industry to structural change, forming an environment hospitable to small and medium-sized business and business cooperation, and fostering innovation and technological development However, Article 180 expressly “shall not provide 2 basis for te introduction by the Community of any measure which could lead te a distortion of competition.”1997] WORLD ANTITRUST AND MARKET ACCESS 7 recognizing that competition may be distorted not only by the power of private or public enterprises but also by state subsidy, Articles 92-94 provide for the notification and justification or elimination of state aids. Sixth, recognizing also that state statutes and regulations may obstruct competition, the Treaty imposes additional obligations on the member states. It not only prohil them from adopting or retaining obstructive measures, but also requires them to “faci tate the achievement of the Community's tasks” and to abstain from measures that could jeopardize achievement of the Treaty's objectives, including the objective of unfettered competition. Accordingly, member states are subject to a discipline that could limit anticompetitive legislation. ‘The later-adopted Merger Regulation rounds out the competition rules. The completeness and unitary quality of the European Union's competition policy contrasts with that of the United States, where policy regarding public restraints is more sharply separated from policy regarding private restraints, states retain capacious sovereign power to enact anticompetitive laws, and state-granted subsidies are not trans- parent, much less constrained by national law.” Most basic to the competition law of the European Union is the principle prohibiting private restraints that barricade national markets. This principle found early and sound application against market division cartels, which formed when wade restraints were lifted. Established firms in Germany, Belgium, France and other nations erected border barriers in markets for sugar, quinine, dyestuffs and cement to prevent market liberaliza- tion from croding their historic national monopolies.” The freedom-of trade principle underlies some of the most important and noncontro- versial precedents of the European Union. This is especially so in proceedings directed against government privileges. For example, in the early 1980s, British Telecom exercised its UK-granted monopoly rights by preventing private message-forwarding agencies in the United Kingdom from receiving and forwarding international calls. The European Court of Justice held that this conduct abused a dominant position in violation of Article 86." For another example, in France and other member states, telecommunications ‘enterprises were state owned and enjoyed national monopolies over the supply of tele- phone terminal equipment. The European Commission issued a directive requiring the member states to abolish these exclusive rights. Rebuffing France’s challenge, the Court of Justice upheld the Commission's power.” Another example arose in the Belgian town of Litge. One Corbeau had established a fastdelivery private mail service there and was prosecuted under a law that reserved ° But compare West Lynn Creamery v, Healy, 512 US. 186 (1994) (a rare case holding 2 facially nondiscrimina- tory tax illegal under the Commerce Clause). While taxing all sellers of milk in oF into Massachusetts alike, the lav allocated the revenues to the Massachusetts dairy farmers, who were struggling to compete with their lower-cost outofetate competitors, Fg, Case 48/69, Imperial Chem. Indus. Ltd. v. Commission, 1972 ECR 619, ‘One can find fault seth certain developments in the EC law. The law against border restraints seemed to take on a life of its own. The famous Contten and Grundig principle (Joined Cases 58 & 58/64, Etablissements Consten, SA.R.L. v. Commission, 1966 ECR 299) prohibits airtight vertical distribution restraints at member state lines regardless of the intensity of interbrand competition or the merits of the claim of efficiencies. The United Brands principle (Case 27/76, United Brands Co, v. Commission, 1978 ECR 207) prohibits dominant firms from selling at different prices to distributors in different nations even when pricing differentials are a direct result of differential national regulation or demand, do not harm competition in an economic sense, and co not disadvantage competitors in the buyers’ kine of commerce because the disfavored sellers and the favored sellers operate in different geographic markets The concern expressed in the judgments is that firms will “re-partition” national markets, but one may question whether a firm, acting alone, does or ean isolate, eg. France or Germany in a meaningful economic sense simply through the structure of its distribution system, when it does nothing to block the flow of its competitors’ sales, Case 41/83, Italy v. Commission, 1985 EGR 873 (British Telecom). * Case C=202/88, France v. Commission, 1991 ECR 1-1223 (telecommunication terminals)8 ‘THE AMERIGAN JOURNAL OF INTERNATIONAL LAW. [Vol 91:1 mail delivery rights to the Belgian Post Office. The European Court held that the Belgian Post Office could not restrict competition more than was necessary to achieve its public mission in view of contemporary market conditions.” In the 1970s and 1980s, the European Court applied EC Treaty Articles 3, 5, 30, 85, 86 and 90 to curtail unnecessarily anticompetitive government action, including action that set the stage for cartels."! The direction of the Court was distinctly trade liberalizing. Its judgments provided a framework for the scrutiny of member states’ trade-restraining regulations, pursuant to which their courts would be called upon to invalidate national Icgislation that significantly and unjustifiably interfered with the flow of inter-member state trade. In the 1990s, in line with Maastricht’s call for subsidiarity, the European Court began to take a more deferential look at member states’ rights to regulate.** Whether the Court's recent circumspection will be of temporary or longer duration, the options for and conceptions regarding control of states’ trade-restraining laws have been and con- tinue tw be discussed and refined in the European Union.*' The sovereignty/competition tension and how the two objectives might best be accommodated are the substance of ‘ongoing dialogue and provide, at the least, an intellectual resource for dealing with the issue of federalism in a tradediberalizing world. Furopean leadership for 0 world agenda, Given the richness of the EC body of knowledge and the obvious possibilities for applying it, though less robustly.” to a world of liberaliz~ ing trade, it is not surprising that European leaders have been in the forefront in suggcsting that competition policy be brought into step with trade liberalization. Sir Leon Brittan so proposed in his Davos speech in 1992,” and on many occasions thereafter, He has referred to the WTO as an appropriate forum for devising common rules on. competition, not only because of the links between free con and free trade, but also because of the WTO's inclusion of less developed nations in its membership, 2 Case C-320/0, Régie des Postes «Corbeau, 1995 ECR 1-2533 “Bg, Case 18/77, NV GBINNO-BM x. Vereniging van de Kleinhandelaars in Tabak, 1977 BCR 2115 ANgNorATAD) Sn ef, Cases 6061/84, Cinétheque SA. Félération Nationale des Cinémas Francais, 1985 ECR 2605; age C-145/88, Torafaen Borough Council v. B & Q ple, 1989 ECR 3851 (Sunday Trading) Sa Joined Cases C= [40=42/94, DIF Spa v, Comune di Bassano del Grappa, 1995 ECR 1-227; Joined Cases C=257/91 & C=268/91, Keck and Mithouard, 1983 ECR [~6097, Cave C~245/91, Oba Schadeverzeker ingen NV y. Netherlands, 1095 ECR I-5873; Cate C=2/91, M. Meng v. Germany, 199% ECK T8751: Case 185/91, Gebrader Reif Gmbt1 & Co. KG v. Bundesanstalt far den Goterferaverkehr, 1903 ECR 1-801 ‘Wan example ofthe constructive dialogue may be Found i the opinion of Advocate General Francs Jacobsin LedereSiplecatd of Advocate Genctal var Geiven in Sunday Trading, see Case C 412/98, Socité 'importation Edouard LeclereSipleev. TE] Publicie SA, 1996 ECR 1-179, 1-182, Sunday Trading, 1989 EGR ot 3865. See ‘elon Larence W Gorrnley, Ta Years After Keck, 19 FORDHAM INT'L L.}. 866 (1996); Luc Gyselen, Stas Acton lend the Eifetoenss of the BEC. Tay Competition Provisions, 2 COWNON MBT. L, RFY. 33 (1989); Chung Chae Mo, The Rilationship Ratnen Site Regulation and BC Conpesivon Lan: Two Proposal fore Coherent Apbrocch, EUR. Goturertion I. Riv, No-2, 1995, at 87. "Sx Ernst Ulrich Petersman, International Competition Rus for the a7 7:0-70 World Trade ond Legal System, J. Wort Troe. Dee. 195, at 35. Soine may perceive-chat European law is constant expanding and that this expansionism itself proves the creeping.burenncracy pitas of the EU model. This would be a misconception, especially i the focus is on Europe's basic economic blieprint of nonpareehaliam (as opposed to socal policy) forthe internal market ‘Se Eleanor M. Fen, Vision of Bure: Lessons forthe World, 18 FORDAAN INTL LJ. 379 (1994) (introduction to “symposium issue), ‘The law governing the basic economic blueprint has confined the extent to which free ovement lay cums national regulation. Sec Keck and Mithouard, 1998 ECR 1-6007, and other authorities in noves 38 and 94 Tategration of the world economy i less complete than integration of the economies of the EU member states, and clams for national sovereignty are even more insistently made. Moreover, te inchstialized coun {vies are apparently not prepared to embrace orchestrated social potiy designed to benefit the poorer nations forthe stke of social cohesion in the werld. "Sie Leon Britian, A Framework for International Competition, Address delivered at World Competition Forum, Davos, Switzerland (Feb. 3, 1992)1997] WORLD ANTITRUST AND MARKET ACCESS 9 avoiding questions of legitimacy that might attend initiatives limited to the “quad” or the Organisation for Economic Co-operation and Development.” Claus-Dieter Ehlermann, when Director General of the European Commission’s Direc- torate General TV (for competition), heralded Sir Leon's vision. While stressing the importance of effective cooperation by the antitrust agencies as a foundation for a more ambitious program, he said: The Commission is in favor of a multilateral approach to anticompetitive practices of companies. . « With the WTO following the GATT, there can only be an increase in the level ‘of commitnent of the world’s trading partners towards competition and increased trade. As part of its immediate agenda, the WTO should cover competition policy issues, focusing particularly on restrictive business practices and cartels. The aim should be to establish minimum substantive rules and lay down procedures for the effective enforcement of these rules by the contracting parties. The enforcement measures should be strict in order to provide the positive market-opening effects needed for a strong multilateral agreement. In addition, the right to recourse to GATT panels should be strengthened, as should the effectiveness of adjudications. Any multilateral agreement on competition would have to provide for agreement ‘on competition rules, for reinforced cooperation procedures between the competi- tion authorities involved, for an improved exchange of information, as well as for effective enforcement measures."” Recognizing the importance of the issue to the European Union, Competition Com- missioner Karel yan Miert convened a group of experts to study the problem and the ‘opportunities. The experts submitted their report to the commissioner in 1995. They recommended gradual movement to an international conception of antitrust, perhaps with minimum standards, as discussed below‘! The WTO scheduled a ministerial conference in Singapore for December 1996. The question was raised as to whether competition policy should be on the agenda and, if so, in what form, Again, the European Commission took a leadership role. In June 1996, the European Commission forwarded a proposal to the European Council for the Singapore ministerial, urging the launching of a process through the creation of an exploratory working group. The working group would be asked to consider the following: (1) What are the (shared) objectives of competition policy and what should they be? (2) Are there some common substantive principles on which nations might agree, eg., hans against hard-core cartels, including export cartels? (3) What further initiatives should be taken in the interest of cooperation and comity? (4) Should there be a dispute resolution mechanism for violations, e.g., for violation of a nation’s duties to transpose ‘common principles into national law and to enforce national law? If so, what should the mechanism and the standard of review be?" ‘The European Union endorsed the proposal in principle, and at the Singapore minis- terial it urged the formation of a working group on trade and competition. At the ministerial conference, the ministers determined to establish a working group to study the issues “relating to the interaction between trade and competition policy, including “Canada, the European Vai and the Unived Sites. ™ The OECD is composed of eed counties, “Paper delivered 3t/ABA Antitrust Section program in Hnsels st U1 author) + Se text a notes 65-68 inf “Towards an International Framework of Competition Rules, Communication from the Commision to the Council, COMT9E}284, at {ime 22, 1994) (om file with10 THE, AMERICAN JOURNAL OF INTERNATIONAL LAW [vol 91:1 anti-competitive practices, in order to identify any areas that may merit further consider- ation in the WTO framework.” The US. Perspective —Noi So Fast Meanwhile, while the links between competition and trade were being forged in Europe, antitrust law was shrinking in the United States and its connection with other public policies ‘was severed. In the early 1980s, as part ofa plan to free business from excessive government regulation, antitrust was reengineered from policy that favored open markets and entrepre- neurial opportunity to law narrowly focused on outputlimiting conduct that provably raises prices to U.S. consumers."* Many advocates of this narrow focus believe that U.S. antitrust has finally been adjusted to its proper, limited scope. “The new paradigm was put into operation in the 1982 Department of Justice (DOJ) Merger Guidelines (since marginally revised), the 1985 DOJ Vertical Guidelines (since withdrawn), and the 1988 DOJ Antitrust Enforcement Guidelines for International Oper- ations (subsequently replaced by 1995 Federal Agency International Guidelines). The 1988 DOJ International Guidelines, in now-famous footnote 159, stated: “the Depart ment is concerned only with adverse effects on competition that would harm U.S, con- sumers by reducing output or raising prices.""* Meanwhile, in 1982, the U.S. legislature had made a change in law that footnote 159 would later complement, Concerned that domestic antiaust law unnecessarily hand capped US. firms by “following” them in their outbound activities,” and also that U.S. courts tended (o incur the wrath of trading partners by not applying comity principles in antitrust eases, Congress cut back the Sherman Act.” It did so by a convoluted statutc—the Forcign Trade Antitrust Improvements Act of 1982 (FTAIA)—that con- tracts the Sherman Act in its application to acts not involving imports into the United States."" The main effect of the 1982 law is to make clear that U.S. law does not follow USS. firms into foreign markets. If, for example, a U.S. firm sells widgets to an Ttalian buyer only on condition that the buyer also purchase the seller’s gadgets, and if this condition forecloses only non-US. firms from supplying gadgets to the Italian market, the Sherman Act does not apply." Thus, jurisdictional retrenchment accompanied the substantive retrenchment of U.S, antitrust.“ “World Trade Organization, Singapore Ministerial Declaration, Conf. Doc. WI/MIN(95) /DEC/W, para 20 (Dee. 13. 1996), The declaration refers to “the existing WTO provisions on matters related to investment ‘and competition policy and the builtin agenda in these ateas.” It notes that the york undertaken by the Working group will “not prejudge whether negotations will be initiated im the future.” (a. “Sor Eleanor Mt Fox, The End of Anbiruct lblationiom —The Vison of Ons World, 1992 U. Ont, Leva F221 (1949); Eleanor M. Fox, The Modernisation of Antitrust A New Eguaiérnom, 66 CORNELL L. REV. 1040 (1981) US, Deer oF Justice, ANTITRUST ESFORCEMENT GUIDELINES FOR INTERNATIONAL OPERATIONS (1988), reprinted in Anvitras: & Trade Reg. Rep. (BNA) No. 1981, at $-21 (Spec. Supp. Nov. 17, 1988). See goneraly Fleanor M. Fox, The Tenth Milion Handler Leaure: Antitres, Trade and the 21s! Ceatuy—Rarnding the Grcle, 48 RSC_AB NVC 585, 539-64 (1995). “ Very few cates 10 held, and it was not clear that the concern was warranted. See note 49 injra. 15 USC. §6a (1991), The Federal Trade Commission [hereinafter FTC} Act was silly USC. §45(a)(8) (1994), 8 Gongres expressed no view on whether the 1982 Act affects the cate law that applies balancing tests to decerinine wheticr subject matter juridiction exists over cartelzing importers, See, for a leading authority applying such a test, Timberlane Lumber Co. v. Bank of America, 349 F2d 597 (Sth Cir, 1976), 'S Thus, the statute oxerruled Waldbaum v. Worldvsion Enwxprises, 19782 Trade Cas. (CCH) 62,978, (SDN. 1978); Inductia Sichana Asal v. Exxon Research & Eng’ Co., 1971 Trade Cas. (CCH) 461.258 (SDNY. 1977). Sw Eleanor MC Fox, Extratenitoriniy, Anirut, and the New Retatoment: Is Reasonableess the Angwo?, 19 NYU. J. I'LL. & Pot. 565 (1987). “To the extent that exporters from the United States had rights under the Sherman and FTC Acts, the rights ate left intact by the 1982 statue, except thatthe statute imposes on a person claiming harm to exports the additonal burden of proving a ditect, substantial and reasonably foreseeable effect on export trade or commerce ofa person engaged in such trade in the United States. FTAIA, sutra note 47, para, (1)(B). back. 151997] WORLD ANTITRUST AND MARKET ACCESS u As it happened, footnote 159 in the 1988 DOJ International Guidelines (disclaiming outbound jurisdiction) was to impede a USS. trade initiative, President Bush sought 10 pry open Japanese markets. The administration launched the Structural Impediments Initiative with a view to procuring agreement from the Japanese Government that Japan ‘would recognize, address and ratchet down impediments to trade. The trade laws, how- ever, have a loophole. They apply only to government barriers to trade, but the barriers and impediments that became most obvious in the late 1980s and carly 1990s were not merely government measures. They included hybrid government and private restraints, and purely private restraints. The U.S. antitrust and trade officials had an idea: the synergistic use of trade and antitrust obligations to open foreign markets." In April 1993, the Department of Justice announced the withdrawal of footnote 159, noting that the U.S. antitrust laws apply “'to U.S. and foreign commerce” (the Sherman ‘Act so states), and that they apply, on the face of the FTAIA, to harm incurred by U exporters, Department officials announced that, in a proper case where comity concerns are satisfied, the United States might sue U.S. subsidiaries of foreign firms that cartelize on the foreign firms’ home soil to exclude US. imports. Publicized at the time of the Structural Impediments Initiative, the statement was widely taken to refer to Japan. Japanese and others vehemently questioned the U.S. initiative, urging that such a use of the U.S. antitrust laws would bc an impermissible and offensive intrusion into the sovercignty of nations.” The Bush administration's program (more accurately, its announcement of such a program)” to use the U.S. antitrust laws against forcign firms acting to close their home markets and thus exclude U.S. exports was endorsed by the Clinton administration. ‘The 1995 Department of Justice and FTC Joint Guidelines on International Operations (replacing the 1988 guidelines) contain specific examples interpreting U.S. law to cover foreign conduct excluding U.S. exports from foreign markets” ‘These weapons in the antitrust arsenal complemented section 301 of the 1974 Trade Act. Section 301 is 2 means to open markets abroad where a foreign goverament unrea- sonably tolerates, among other things, systematic anticompetitive marketclosing prac- tices. In such a case, US. law declares that the United States has the statutory right to reraliate.** Thus, the U.S. Government has two potentially potent tools: the Sherman Act as applied to outbound trade (unilateral antitrust), and section 301 (unilateral trade remedies). Much of the U.S. antitrust and business community welcomed the shrinking of US. antitrust law in the early 1980s and believes that the pared-back, “efficient” U.S. antitrust is good antitrust. Especially in view of the current antitrust paradigm and the trade/ Carla A. Hills, a past chair of the ABA Antitrust Section, was then the US. Trade Representative James F Rill, also a past chair of the ABA Antitst Secton, was the Assistant Attorney General in charge of the Antitrist Division of the Department of Justice. “Department of Justice Release (Apr. 2, 1993), wprinied in 7 Trade Reg. Rep. (OCH) $50,084. See US. Broadens Enfereenens Posture on Foreign Application of Sherman Ad, ancl Reastion of Japanese Foreign Minister, 62 Antcrust & Trade Reg. Rep. (BNA) 472 (Sept. 25, 1981), "The Bush administration brought no such cases. US. Deo'r of Justice fe FTG, Avtrimust Enron GuIDELINES FOR INTERNATIONAL OPERATIONS $8122, exp. Iustratve Examples D, E (1095) ‘The Clinton administration has brought no pure exporter protection cases. It has brought cases that involved reciprocal restraints on US. and foreign markets. £.g, United States v. Pilkington ple, 10042 Trade Cas, (CCH) (70,842 (D_Arv. 1904) “Section 30] has generally been used agains toleration ofthe unauthorized copying of intellectal property. iy, Kodak invokei section 301 on the basis of claims that Japan was tolerating alleged antitrust violations icing Kodak from expanding in the Japanese market. The US. Trade Representative accepted referred the alleged government conduct to the WTO,12 ‘THE AMERICAN JOURNAL OF INTERNATIONAL LAW. [Vol. 91:1 antitrust tools in the U.S. arsenal, many Americans are content with the national level of antitrust law and uneasy about the prospect of an international regime.” ‘The two principal antitrust models are provided by the US. antitrust laws and EC competition law. Principally, U.S. antitrust law proseribes only that which artificially Iowers output and raises price (with a few exceptions); even a dominant firm has the Fight to compete hard and may do so even if it excludes competitors. EC competition. law, among other things, protects small and middle-sized business from unfair exclusions and has a broader sweep against abusive practices.” Many American advocates believe that U.S. antitrust law is wiser policy and that a higher level of government intervention than that accorded by U.S. law degrades antitrust and harms competition and efficiency. Moreover, many U.S. antitrust enforcers, lawyers and scholars fear a shift of the antitrust/ trade issue from the hands of antitrust experts to the hands of wade experts and a consequent shift of focus from what is anticompetitive and harmful to consumers to what is unfair and harmful to domestic producers. Finally, many worry that, in a world arena, disputes will be resolved by arbitrators or judges who do not understand antitrust law and the sometimes-complex analysis that it entails. It is not a surprise that many Americans prefer things the way they are. Americans are not steeped in the postwar Western European tradition of community building. They have the tools of unilateralism, they fear the compromises of bargaining, and they abjure the “relinquishment” of soves Given the perception by the United States authorities of the nation’s own comparative advantage, cosmopolitans would have to make a strong case that unilateralism is not ‘enough. I suggest, nonetheless, that such a case can be made, It involves articulating the need for a vision from the top, the intertwining of trade liberalization and antitrust, the need to limit trade-interfering national industrial policies, the decline of the nation- state's monopoly over economic law, and the importance of a voice for world trade and competition, Other Perspectives om Antitrust ‘There are, of course, perspectives other than those of the United States and the European Union. Many nations do not have a tradition of antitrust. Many less developed and developing nations proceed from statist traditions and are concerned with the distribution of wealth, opportunity, access 10 markets, and control over the power and. perceived abuses of multinational enterprises.” Japan has antitrust laws that, on their face, would protect markets and also protect competitors from unfair abuscs; but perva- sive regulation, a government role in coordinating business behavior, and acceptance © See note 72 infra ‘The United States has considered international competition rules in the past. In the late 1940s, it wat instrumental io creating, but ulimately did not sign, the Havana Charter (the aborted world trade agreement that was the precursor to the GATT), The Havana Charter contained a restrictive business practices code. Se CLAIR WiLEDx, A ChiaRreR FOR Wos.p Traps 281-87 & ch, 16 (1972) ‘The United States i a pary to the UNGIAD Resttctive Business Practices Code, signed as a wluntary code in 1080, which sets forth various antitrust rules and incorporates a principle of preferential treatment for ‘developing countries, SerEleanor M. Fox, Harassing the Multaatinal Corporation to Enhance Third Word Deodlep- mnent-—The Rise and Fall and Future of Anttrst ar Regulator, 10 CARD020 L. REV. 1081, 1091~97 (1980), However, Inany US. antitrust experts today apparently beliove that itwas wrongheaded for the United States to negotiate the UNCTAD RBP Code, because the bargaining exercise was bound to weaken principle in favor of statist or Protrctionist solusions for dhe less developed counties, For specific differences between EC law on abuse of dominance and U.S. law on monopolization, see Per [absense Robert Stovens, Arsomptins, Gai, and Dominent Undetakingr: The Kaglation of Compeiion Under “Atte 86 ofthe European Union, 64 axciraust LJ. 448 (1996); Eleanor M. Fox, Monopolization and Dominance in the United States and the European Ceramunity Efficiency Opportunity, and Faimes, 61 Nome Dame L. REV. 981 (1986) ™ See Fox, supra note 57; Fox, supra note 15.1997] WORLD ANTITRUST AND MARKET ACCESS 18 of patterns of business cooperation have made the law less than robust.” China has adopted an unfair competition Law but no competition law, though it is developing competition in some market segments, particularly among local governmental entities and governmental entities and foreign investors."' For many years while it industrialized, Korea had no competition law; business was state owned, and the regime dirigiste. Only later did Korea adopt antitrust.”* The reindustrializing countries of Central and Eastern Europe had no competition laws under the Communist regimes (when profit making wwas a crime). Now, aspiring to join the European Union, they are adopting ECstyle antitrust. They are giving attention to privatizing and restructuring, and devoting a preponderance of the competition offices’ resources to complaints of abuses of domi- nance such as the imposition of “one-sided” bargains. Despite many differences, most nations share certain aspirations, They wish to increase the economic welfare of their citizens; they wish to provide an environment for the development of their business, priming it to participate in world markets; they want to be engaged in the world trading system. For these aspirations, some might offer only ‘economic reasons. Many would include on their lists bolstering national integrity, stabiliz- jing democracy and seeking a secure peace. ‘The common desires of nations, including their desire for access to world markets free of artificial, parochial restraints, may leadi the way to internationalizing antitrust. TI, Mopets aND Orrions ‘There arc four basic approaches to thinking about competition law and the world trading regime.” One envisions a nearly complete international code with a snprana- tional enforcement agency. This is the approach taken by the Munich group, whose proposed International Antitrust Code was released in the fall of 1993 as a draft GATT plurilateral agreement." ‘A second approach entails no international law as such but harmonization of national antitrust laws. This option envisions either “loose” harmonization—rootsup conver gence through much cross fertilization —or tight harmonization—persistent coaxing of national laws into identity, or near identity. The project could involve a “uniform laws” project, much like uniform laws enterprises in the United States such as the U.S. Uniform Commercial Gode. Drafted by experts, the code contains many rules and some options. Virtually every USS. state has adopted it voluntarily, in one form or another. Under a third approach, as proposed by the group of experts convened by European Competition Commissioner van Miert and reflected in the more generalized proposal for an exploratory working group by the European Commission,” nations would first © Ser Brank Upham, Nihon Cysts utes no skiontki maders (A Tentative Model of Japanese Regulatory Sole), inSO1O kaka MITA NusONHO (Japanese Law in an Inverpational Context) (Shiro [sil & Nosio Fliguchi lg, 1985) See Bing Song, Competition Pobicy in a Transitional Eornomy: The Case of Okina, 91 Stax. J Ivt'L Le $87 (1995); Edward M. Graham, Competion Policies in China, Korea, and Chinese Taipei: A Gomparion (1986) (unpublished manuscript, on file with author) See Graham, supra note 61; Merit Janow, Assesing APEC’s Role in Economie Integration in the Asia Pacific Region (1995) (draft manuscript, on file with aithor) "® SqeJoWy FINGLPTON, ELEANOR ML FOX, Daldlen NEVEN Ae PAUL SPARRIGHT, COMPFTITION POLICY AND THE "TRANSFORMATION OF CENTRAL EUROPE, chs. 4,6 (Centre for Economic Policy Research, 1996) (criticizing allocation of competition law resource). 'A more finely tuned set of options, with advantages and i 21 inf, Twas one of the members characterized in the Munich document as rejcting the fullcompeiiion-code approach and endorsing « minimal approach that would embody 1 principles. The 15 principles are set forth in'the introduction to the Munich Cade, part VIIL The Munich Code is reprinted in 64 Anctrust Trade Reg. Rep. (BNA) (Aug. 19, 1998), "The alvernative minimal approach is inckided in i. at S=7 Sorte 48 supra of the table pp. 20~ peatu ‘THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol 91:1 develop and refine bilateral agreements that strengthen cooperation between competi- tion authorities, including through positive comity.” Nations would then develop a plurilateral framework "to which would be added a set of minimum appropriate competi tion rules, a binding positive comity instrument and an effective dispute settlement [instrument]..” At first, a core group of countries would adopt the plurilateral framework. ‘The group of participants would expand “progressively through a domino effect.’"* An iteration of the third approach, one that could supply content to the concept of “appropriate competition rules," is a proposal for linking principles of a constitutional dimension.” Principles of constitutional generality could prohibit anticompetitive blockages of market access and transnational cartels, and provide a discipline for unjust ficd trade-restraining acts of statcs. Nations would be required to prohibit the few consen- sus wrongs at their source. A fourth approach derives from an overriding skepticism about the multinational bargaining table. It begins with the strong presumption that all that needs to be done can be done at the national level through national lax” or enforcement agency cooperation, and that some issues can be dealt with through sectoral trade agree- ments.” This position seems to be reflected in statements by certain U.S. antitrust enforcement authorities. ‘The concept of outbound extratcrritoriality is apparently essential to the fourth ap- proach, This concept implies that national law can reprehend forcign acts by foreign © See note 2 supra For example, one nation may sequest another nation to bring proceedings against oF 10 ‘obtain discovery from is own national, where the latter is suspected of anticompetitive conduct that i harming the requesting nation. The second nation will consider the request sympathetically and is encouraged to [proceed if its law authorizes it © do so. The recently conciuded agreement between the United States and ‘Canada requires the requested party to investigate and to report back the reruls ofits investigation. Agreement ‘on Cooperative Enforcement, Aug, 10, 1995, U.S-Can., 4 Trade Reg. Rep. (CCH) {13,508. " Report of the Croup of Experts, Competition Policy in the New Trade Order: Suengthening International Cooperation and Rules (reproduced for discussion purposes, European Commision, 1995) (hereinafter the European Experis Report). The members of the group of experts are, as external experts Ulrich Immenga, Frédéric Jenny and EmstUlrch Petersmann; and, a8 Commission experts, ClausDeter Ehlermann, Jean. Francois Pons, Roderick Abbott, Francois Lamoureux, Jean-Francois Marchipont ancl Alexis Jacquemin AAs to common rules, the report recommends that an agreed list of minimum principles be incorporated into thé national law of the participating ations, with each country obliged only "at © the result to be achieved.” Consensus would be sought on horizontal cartel, other types of coeperation agreements (to be judged under arule of reason), verial agreements (eg, where the reviietive effect is not oflset by consumer advaniages, ot where they constitute a barrier wo market access}, abuse of dominant position, mergers (with prioriy on harmonization of procedures and time limits), andl national monopolies ane companies with ‘exclusive privileges (to be subject to competition rules). Jd at 22—23 ‘The experts also suggest the establishment ofa register of anticompetitive practices within the contracting states, first by notification (e.g. of exempt restrictive agreements), and later also including non-notified restrictive practices that come to the attention of an international body. See Eleanor M. Fox, Gonypetiton Law and the Agenda forthe WTO: Forging the Links of Competition andl Trade, 4 yc. Rua L. & Pow'yJ. 1 (1888). * Expansive jarisictional reach of antitrust la and the availabiliy of $201 trade remedies may add to the comfort level of US. officials helieving that what needs to be dane can be done by national initiative “'a'related approach, similarly skeptical about a multinational regime, would urge that solutions be sought ‘no higher than at regional level Se, 6g Joe I Klein, Acting Assistant Atworney General, A Note of Caution with Respect to a WTO Agenda ‘on Competition Policy at 18-15 (Nov. 16, 1996) (urging increased bilateral cooperation and positive comity, and procedure and proces harmonization for premerger filings) (on file with author); Anne K. Bingaman, them Assistant Aworney General for Antitrust, Changr and Continuity in Aratious Enjorcoment, Adress Before the Fordham Corporate Law Institute, New York (Oct 21, 1908), in 7 Trade Reg, Rep. (CCH) $50,123 (1908) (tating the policy of using US. antitrust lav to open foreign markets); Diane P- Wood, then Depuity Assistant Attomey Coneral, The Fntenationalzation of Antitrt Law, 44 DEPAUL L REV. 1289 (1995) (stressing cooperation between antitrust agencies). Ser alo Diane P. Wood, International Standards for Competition Law: An Idea Whose Time Has Not Come, Paper presented at Graduate Institute of International Studies, Geneva (June 19, 1996). For an argument by European authors that sectoral agreements, rather than a general multilateral competi tion agreement, should be the vehicle for developing international competition rules, see Hoekman, Low & Meeroidis, supra note 16.1997] WORLD ANTITRUST AND MARKET ACCESS 15 actors on foreign territory that block the regulating nation’s exports. Outbound extrater- ritoriality could be complemented by a reciprocal principle—that the regulating nation’s Jaw not only will cover foreign actors that hurt the regulating nation’s firms, but also will cover nationals of the regulating nation that hurt foreigners. Thus, ifJapan's nationalsare bound to follow USS. law (as well as their own law) when their acts affect exports from the United States to Japan, U.S. nationals must also follow U.S. law (as well as Japan's Jaye) when their acts in Japan hurt competition in Japan.”> The reciprocal principle would in fact have little impact today on U.S. firms doing businese abroad, given the relative laisser-faire character of U.S. antitrust law ascompared with other nations’ competition laws. The approach could be more important to less developed countries that do not have eredible antitrust systems or mechanisms to enforce their law, or do not have the power or courage to enforce their law against multinationals, yet fear that trade liberalization will make their economies vulnerable to abuses that they will be powerless to prevent. The reciprocal principle is compatible with a preference for anationalonly model (i., no supranational law) ; it merely provides rule of national treatment for the nation’s exporters and investors abroad.”' T have commented elsewhere on the virtues of the options and concluded that the third option—linking principles of constitutional generality, built on a strong base of rootsup convergence and backed by a system of dispute resolution—is desirable.” T note here briefly why J do not prefer options 1, 2 and 4.”°I then discuss the “linking principles” option in greater detail, explaining the importance of the project to making trade liberalization coherent and more nearly complete. I caution, however, that the project will confront many hurdles and that progress will be gradual and slow. The prospect of immediate observable benefits should not be overstated. Option i—a completely articulated world code with a supranational enforcement agency. This concept is ambitious. It has the benefit of a unified approach (though this may be undermined by the prospect that multitudinous national systems would continue to exist). The very exercise of drafting a highly articulated code (e.g., the Munich Code) reveals its limits. There is no one acceptable set of detailed antitrust rules in the world, except at the highest level of generality. Many rules in the Munich Code would be The harmed frm oF nation could have an option & sue in its national courts oF ip the defendants agonal courts “The US, Congress ied out this obligation (national treatment applied to exporters) in 1982 by the Foreign ‘Trade Antitrust Improvement Act, apra note 47; therefore, the opbon would requie 4 change in US la” "Im addition te the sbove options, cme might consider scparste antitrust regimes tailored (0 cach of the ney tad instruments that deal with intellectual property (TRIPS), sersices (GATS), investment (TRIMS) and tclecormunizations Alternatively, wisdom might counsel « “universal” reer dhan a segmented, approech to dhe recurrent antitrust problems. See Fox, supra note 15, at #94-005. * See Fox, pm note 69, a 29-26, Se aio Fox & Ordover, supra rote 7. Thhaveincinded minimiten prinesples and linking principles 2s part of Option 8. These proposals could be either close or distant in spin. ‘wo aspects of minimum principles cowld hold draxbacks. Hist, if Iminioium principles are developed in the detail that seems to be contemplated in the European Expert Report, supra note €6, they ate not truly minimal and Uhey seem to resemble European Community lw in sspects that deviate from the law of some other countries If this isthe case, the proposal might consitate overly inarusve law Second, the European documents all for internadonaliation not only o open matkets and aid consumers bout ako to “evel the playing field” This i+ concept frequently used In EC law. Temples that regulatory diferences should be ert! s9 that one nation’s busines should not have to bear costs not borne By another nation’s business; the concept often means tha all market participant should bear the higher costs jn order to prevent "distortions" in competition. This isa trade concept that should not, in my view, be imported into antirus. Diversity ia national regulatory choices cannot be destroyed without interfering deeply tsllh auonsl sovereign. If firs doing business in Europe bear higher cox: of anduust regulauon Wan firms doing busines inthe United State, that should not i el constitute a reason fr pressuring U.S. law “upwrade" 10 the BC level ‘To the exient that European propotals are not exsentilly dependent on either factor, the minimum princi: ples proposal may be virtually identical to the inking principles proposal16 ‘THE AMPRIGAN JOURNAL OF INTERNATIONAL LAW (Vol. 91:1 entirely unacceptable to many nations. For example, the proposed rules on breakups,” vertical restraints” and abuse of dominance” would be unacceptable to (at least) the United States. This is not a flaw that can be cured bya few deletions and generalizations. Any writing of a sct of detailed rules (c.g., on abuse of dominance, intellectual property, market foreclosure) may accord with the needs and contexts of some nations at the time but will not accord with the needs and contexts of others, and will not satisfy nations’ needs throughout time. At least as important, a code of substantive rules accompanied byan international enforcement authority with real powers would entail a relinquishment of national power that may be seen as excessive in view of the benefits” Option 2—harmonization, Virtually everyone supports rootsup harmonization, brought about by much information flow. conversation and organized workshops. Soft harmonization is in process, and the fruits of this process are an important foundation for each of the other options considered in this article Harmonization encouraged by uniform law commissions, which present nations with a set of draft laws and some options, could possibly be useful. However, the lack of identically worded antitrust rules is simply not the problem, as the following three points make clear. First, disparate antitrust treatment, where it occurs, normally results not from different formulations of the principles but from the different meanings given to specific key words—particularly, “anticompetitive” and “abuse” —and different methodologies for defining markets and assessing market power. These differences in treatment are not apparent in the literal words of the antitrust rules; the rules could have exactly the same wording and the differences would persist, The persistent differences tend (o be based ‘on matters of principle; e.g., whether abusc law should be used to remedy unfair exploita- tions and exclusions, or only to improve market efficiency. Second, differences in antitrust law or its applications are not normally trade 4 rupting. The lack of an antitrust law forbidding private anticompetitive border barriers would be wade disrupting; but all nations that have antitrust laws cover the market 1 blockage problem, cither to protect competitors’ access or to protect consumers." Third, preoccupation with harmonization can obscure the fact that there are two ‘much more important problems: nonenforcement of existing law and limits to coverage of the laws. Exemptions and immunitics, such as export cartel exemptions and broad ” Anticle 18 of the Munich Code, supra note 68, provides for restructuring firms in noncompetitive, highly concentrated markets where the market structure inducer persistent abuees of significant market power ad- versely allecting at least one other nation. Current US. hw would merely atack impermissible monopolistic conduct. The United States hat experimented with and largely rejected the option of restnveturing. This remedy might he reserved for the very rare case of a parly regulated, party unregulated monopolist, Ser United States v. ATRT, 19889 Trade Cas. (CCH) $64,800 (D.D.C. 1988) (consent decree, modification of final judgment) (vacated by Telecommunications Act of 1996, Pub. L. No. 104104, §601, 110 Stat. 56, 143). But m view of the cass of error and the disincentive effects atwociated vith such a drastic remedy, it nearly beyond imagining that the United States would agree to placing wich remedial power in the hand of a higher authoniy. “"aicle 5, on vertical restraints, presumptively prohibits restraints on discounting and wransshipping, U.S. Jaw allows such restraints, atleast if there is significant interbrand competition. Business Elec. Corp. v. Sharp Blee. Corp.. 485 US. 717 (1988). Anice 14, on abuse of dominant posivon, probibits 2 dominant fin from discriminating among wading patues, placing one ata competitive disadvantage, and making contracts subject vo supplementary obligations fat have no connection with the subject of the contract. Seetion 2 of the Sherman Act recognizes that discrimination may be a way t© compete, and does not condemn conduct that is not Hkely w lessen market competition, ee Brooke Group Lid, v. Brown & Williamson Tobacco Corp, 509 USS. 209 (1993) (samme result {or Robinson Patan Act, primary line competition); Spectrusn Sports, Ine. v. McQuillan, 506 U.S. 447 (1989). But see Wolfgang, Fikentscher, On the Proposed Intemaiianad Ardtrast Coe, in AYCTIERUST: A New INTERNA ‘Tron TRADE ReMED3? 945 (J. Haley & Hiroshi yor eds, 1995). Of Petersmann, supra note 95. See genraly The Prineville Dialogue (Haley & Iyori eds}, in ANTYIRUSH. A New INTERNATIONAL Thane REMEDY, supra, a 548 (discussing whether there should be an international agicemtent and, if so, what it should contain) Se Rox de Ordover, supra note 7. See alt “Market Access and Antitran,” infra p. 19.1997] WORLD ANTITRUST AND MARKET ACCESS v ‘Noerr-Penrington® and state action exemptions, which are widely employed by nations, can have serious negative impacts on trade and competition. Likewise, nonenforcement of existing law is a problem much greater than unharmonized law. Both problems can be addressed by a holistic international conception but not by harmonization. ‘Alternatively, tight harmonization might be contemplated. This approach has many of the same drawbacks as a detailed world code—it would force together systems that do not naturally fall together. Differences not eroded by intense cross-fertilization usually derive from different contexts and needs. Both national autonomy and competition among systems, with flexibility to adapt to new conditions, have important virtues. Forced harmonization would destroy them It is also not clear how forced harmonization would be achicved in negotiation among equals.” The United States cannot be expected to bargain away (for example) its rather laissez-faire monopolization principle and accept the EU abuse of dominance principle, even if the European Union would reciprocally agree to accept the U.S. rather laissez faire vertical analysis (which it would not), and vice versa. For a more realistic, but limited, harmonization agenda, there are a few matters that are not matters of principle and as to which each nation has invented its own incompati- ble wheel. Premerger notification filings are the most prominent example. There is— wisely—ongoing dialogue regarding harmonization or possibly mutual recognition of filing forms. Time periods might be harmonized, and nations might agree in the first instance to accept premerger filings prepared for the first jurisdiction in which a filing is made, with supplements as necessary to cover different markets."* Option 4a—continued and expanded cooperation of agencies pursuant to bilateral agreements or otherwise, and selfhelp if a request for cooperation is declined. This approach is suggested on grounds that private restraints unhinged to public restraints are not the real problem and do not warrant the trundling out of global machinery. The real barriers (it is claimed) are rooted in government intervention, and it is the government intervention that should be addressed; purely private restraints can be han- dled by national law or agency cooperation. Moreover, it is argued, not only is an international approach not needed, but it is both dangerous and unworkable for three reasons: First, itis dangerous to the “purity” of antitrust; principle would be diluted by compromise and especially compromi Se United Mine Workers of Am. v. Pennington, 381 US. 657 (1965); Eastern RR. Presidents Conference v. Noere Moter Freight, $65 U.S, 127 (1961) (holding that competitors may join together to lobby government Officials or bodies for anticompetitive meanires without offending the antitust laws). The Neer-Permington exemption is akin to the constitutional rights of association and petition. "An example of forced harmonization can be drawn from the experience of the European Union, which requires nations aspiring to membership to “approximate” ECcompettion law. This requirements contained. im the Europe Agreements with the Central and East European Countries (CEECs). Not even EU member Mates must meet thie obligation. Some of the CEEC: may prefer their own version of competition law as they tr to adapt their economies to frce enterprise; some might prefer simpler law that may be more appropriate to their state of development, European Community documents state the belic, however, that if the national competition law of each of the CEECS is parallel with EC law, the CEECS wil have achieved a greater degree of readiness for integration. And thus membership in the European Union. Ste Blsanox M, Fox, Tat DeveLorine ANTITRUST LAW OF THE Visecnan Causiraies —CSNTeAL Euanen MOVES IVT STEP WITH THE EUROPYAN UNION, ANTTIRUSE REPORT (195); FINCLETON, Fox, NEvEN & SEARRIGHT, note 63 supra, at 54~57 EU abuse of dominance law ie more regulatory than US. law, which permits greater freedom of action, cen by dominant frm, cg, in cuthing off distributors, charging very low prices, and entering exclusive Contracts, Also, EU vertical restraint law is more regulatory than U-S. law, which permits greater freedom of action, eg., In asigning terriories to dealers a ig Wansshiipmnents, See Jebsen & Stevens, supra note 58; Fox, supra note 5B. Sor also note 79 supra "This tuggestion was proposed by a committee of the New York City Bar Association. Soe Committee on the United States ina Global Beonomry, E. Fox, Chair, Hemnonscing and Coordinating the Economic Laus of Nations A Gmparative Siudy, 49 Rec. AB. NVC. 800 (1004).18 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [vol. 91:1 the direction of the “soft” “unfairness” approach of trade lawyers. Second, nations would lose their sovereignty by compromising with other nations and relinquishing decision making to unknown and perhaps untrusted bureaucrats. Third, in any event, itis virtually impossible to imagine that countries could agree on 2 meaningful formula- tion of antitrust principles, especially on subjects of the highest importance such as ‘exclusionary vertical restraints, Proponents of this view make the point, in support of bilateral agreements and in opposition to a multilateral approach, that two countries are much more likely to find common solutions to common problems than are four or forty. Among the limits of the approach are, first, that it greatly exaggerates the difficulties ofa multilateral solution. It és possible to formulate meaningful international principles without compromise, as shown in part III below, as long as one defers to national formulations for restraints that principally harm that nation’s consumers. Second, al though government restraints may be a larger problem than private restraints, purely private restraints do exist, and some hybrid public/private restraints (such as excessive state action exemptions} lie more in the purview of antitrust theory than in the purview of trade law theory. ‘Third, the approach overstates the extent to which national law and agency coopera: tion can, and can legitimately, solve all antitrust problems. The unilateralism invohed in the application of national law to foreign firms that allegedly block imports to their nation is highly controversial in the international community. Indeed, if unilateral action is taken, these initiatives may provide the impetus for internationalizing antitrust so that, perceived private restraints of trade can be held up to the light of international standards, and negotiated bilatcral managed-trade remedies (e.g, market access targets for the benefit of the unilateralist) may be replaced by open markets for all. In addition, agency cooperation is fruitful only when nations perceive their interests to be common and. choose to cooperate, There are at least a5 many instances in which nations perceive their interests to be adverse, either because of national industrial policies, including state sanction of certain cartels (eg., aspects of the uranium carte):"” or because of different conceptions regarding what is anticompetitive (e.g., the Europe U.S. [BM de- bate);"* or because of different understandings of the underlying facts (e.g., the ariford Fire Insurance case). Moreover, a domestic antitrust agency is not always immune from statist pressures from above.” Thus, national law with possibilities for agencies to cooper- ate when they wish is an incomplete solution with nationalistic potential. Option 4—national treatment of exporters (firms may not hurt foreigners by conduct that is proscribed if they hurt citizens). This reciprocity option has a more cosmopolitan cast. National treatment of exporters might provide needed assurance to less developed. trading partners that antitrust will be available when the trade barriers fall. The usual argument against national treatment of exporters is that firms in nations with developed. regulatory systems will be handicapped in their competition abroad. This effect may have been feared by U'S. firms at a time when U.S. antitrust law was interventionist and "See Wood, International Standards for Competition Law, supra note 72, at 20-84. Ser gmevally Hoekman, Low ke Mavroidis, supra note 15. See note 12 supra, "The European Commission filed a Statement of Objections addressed to International Business Machines Corp. for abuse of dominance despite protests from the United States that IBM's condict was procompetiise and efficient. See Fox, supra note 58, at 1011~17 © Soe Beef for the Government of the United Kingdom at 5, 9 (not recognizing alleged coercive boycott), filed in California v. Hartford Fire Ins. Go. (No. 91-1128), later reported at 09 US. 764 (1293). “athe Laker matter. the U:S. Government withtrew a criminal information against British Airways (alley edly guilty of conspiring to drive Laker from the market) as a favor of President Reagan to Prime Minister Thatcher, who wanted to privatize BA free from the eloud of tie Lawsuit,1997] WORLD ANTITRUST AND MARKET ACCESS 19 sometimes constrained efficient firms from making effective market responses, But times have changed. U.S. antitrust law no longer handicaps efficiency. If all nations agreed that their law would follow their nationals, particularly into nations without credible antitrust enforcement systems, U.S, firms would find themselves less constrained than European firms, If national treatment principles applied to exporters would keep a call for international antitrust at bay, the idea might begin to have appeal Several options for internationalizing antitrust, with advantages and limits of each, are charted in table 1 (pp. 20-21) IL, IMPLEMENTING THE PRINCIPLE—No UNREASONABLE BAR TO MARKET ACCESS, PUBLIG OR PRIVATE, A linking-principle system could bring competition principles into harmony with the liberalized world trading regime, possibly in the context of the WTO." Substantive principles would be few and of major market importance, e.g., an anticartel rule and a market access rule. Nations would agree to adopt the consensus principles into their national law, using any nonparochial formulation of their choice. They would agree to apply the rules for the benefit of harmed persons o entities anywhere within the territory of the contracting nations; and to enforce the rules, particularly when foreign trade or investment is concerned. Aggrieved nations and persons would have the right to seck and obtain effective enforcement of the host nation’s law and would be assured access to the litigation tools and appellate procedures necessary to enjoy these rights. In this section [ Timit my observations to the market access principle. First, | ask, What are the antitrust market access problems? Second, I suggest a possible consensus principle to be adopted into national law and enforced. Third, I address implementation of the proposal Market Access and Aniitrust The endeavor in this section is to identify those subject areas of antitrust that are most relevant to blockage of markets. | identify three such areas. 1. Garlels with boycots. For example, it has been alleged that the three dominant glass manufacturers in Japan collaborated to tie up all available distributors in Japan, access to which was allegedly necessary to serve the Japanese market. Purportedly, the glass producers induced these essential distributors to refuse to handle foreign glass. Conduct of this sort is the gravamen of the 1995 U.S. Federal Agency Guidelines on International Operations,” Ilustrative Example D, regarding companies £ and F, the only producers of product Qin country Epsilon, who agree to keep the U.S, producer out of the market. It is also the gravamen of Illustrative Example E, where, in country Alpha, a trade association sets standards and the local producers agree at a trade associa: tion meeting to refuse to adopt any U.S. technology as a standard, and they agree to boycott the distribution of U.S. equipment. 2. Vertical agreements or collaborations that tend to exclude market actors. An example is exclusive purchasing agreements in concentrated high-barricr markets where the excla- sivity deprives outsiders of needed inputs or outputs. This was apparently an alternative theory in the Japanese glass matter—i.e,, that even if there was no horizontal agreement, each of the three dominant firms purposefully “tied up” its distributor; perhaps they did so, not to provide better service, but as a result of oligopolistic interdependence © See Fos, supra note 63. © This provision would seplace export cartel exermptlons, national law would no longer be inapplicable just because “only foreigners” are hurt Se nate Bupa“THE AMERICAN JOURNAL OF INTERNATIONAL LAW (Vol. 91:1 20 aouaiouwoy saypMTy toy SY>0}q BuNpHI se (THY FeIDH Loddns osye SfeMOU PINOA ¢ or Z Jo HUDUOdNE « fo void 0 924 Ho fou 0 women Jexaney meat pov eoonoeed sop [tsi runnew poDue) 24 Sey saoessnpd|on spe son Soqsre cgounyd [ay poe posodraem 99 dom] 20 aoa en] 5] ox pap © sume og)or opdoond manu ts (pana ate 8q ou wopezya1 509 ox lie fem oa] Soar °x on ves] on| nosy souoBion7) > somposoi koa ox} domény) ga ox ox ex ox out jo eonrmuourey pom ome suse sapesndons © norton wrongs [ote roam view 89 tr ave sont rwawesipiu2 | ywo> eased upaeod ox tous don 42] ox ox soxfreuonew neues o1| 2» iouake paouequy * (te ‘vce | apadope Se oe ovaucdied 6: py seu eoppodizes/apen| ya duno>” |rmeorspan seepigosd | ponemd yp ‘seousde so meu] arsconnay fceso 3 s90q) om anor | rsmoapie og | wong aw ewsosors or omy 04 | patusudu 3 —ssnay ‘nso1ow HALGOC SENT SNOLLUQ NV ST¥EOJOUg STAUINY ONIZFIVNOLLVNWLLN] “| HEVWORLD ANTITRUST AND MARKET ACCESS 2 1997] oat Jor agysoe mses comprar > aprnet s09 an “eq. aap oo ‘evouon sepa jo saad pao woe Joup remue> spe wwe eda see acces Jase) ow poe uoyme vena ‘ney apes rou syd json 33) ad sp feu | | ‘s9|duoaid #10 sa | amouses jraeaR [sea pee soar 4 [ence space! ‘spem wt eves) fe atom cea, oped | porueusuput esen sas sa99 sp au sali, soem! sPaLoy| on} img “9p 10x | ox ox[opip oreuyans souemuourey aya sua pana vonnyosot andy somes ands par puro sy 208 reopen Srp enna 0) 1900 suraabat ny oN som) Ageaetal sal =| Be vs} Gasp js |-oen plo aya on sao oR INS, KG swagont [aves [ipadope aq |[mraagodouses| —aoeimw | rou main rag 8 imide | ca svodind [or done nou soy ace aoaoe [uoonorince/apea| aa (Pon age veatea aruptgosd | “poesind y 21 puor seus 0 su aap sou Jo 509 oppese eossivccy reeotg 40°09 aemeaay IaCdog HH HOC AHAFT swig axe smscuoag ‘CaNALLNOD “| ATHY2 ‘THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol 91:1 cultivated by years of guidance from the Ministry of International Trade and Industry against the backdrop of behavioral pattcrns of the vertical Aeiretsu (conglomerates). Such implicitly collaborative action, if it existed, has a horizontal as well as a vertical aspect and a public as well as a private dimension. If done in the European Union, it could amount to abuse of joint dominance. 3. Monopolistic discriminations and exclusions. A firm holding the key to access or expansion in a market could discriminate against or exclude non-nationals. This cate- gory includes government procurement and telecommunications interconnections. Often the supposedly excluding entity is a state-owned enterprise. In the European Union, Articles 37, 86 and 90 of the Treaty of Rome would be relevant. In the United States as well as the European Union, the essential facility doctrine would, in proper cases, come into play. sto the first foreclosure category—a cartel with a boycott—the conduct hypothesized is Clearly illegal uncer the antitrust laws of virtually every nation that has antitrust laws, and, being coercive, it is also illegal under most unfair competition laws. Once the problem of extraterritorial jurisdiction is mooted by agreement, the significant problems faced by excluded firms and nations do not include lack of harmonization of the legal principle; rather, the problems are mustering proof that the suspected facts indeed occurred and falling victim to nonenforcement of the law. As to the second category—vertical restraints, sometimes with a horizontal aspect — ‘most nations have laws that prohibit unreasonable or anticompetitive foreclosures, but the laws are quite differently applied. In the United States, one is reminded of the broad shift in policy that occurred between the 1960s and the 1980s. In the 1960s, U.S. law ‘was construed to prohibit restraints that foreclosed Iess well situated firms from a signifi- cant share of the market, even if the exclusion resulted from strong preferences for dealing with one’s friends (reciprocity).° The United States has abandoned this construc- tion of law in favor of permissive legal principles that value the freedom of firms to impose vertical restraints unilaterally. Plainuiffs challenging vertical restraints under US. Jaw today must normally prove that the restraint will limit output and harm consumers; it is not enough to show that the restraint merely blocks competitors “unreasonably.” Professor F. M. Scherer recently examined the U.S. law of vertical purchasing and distribution restraints, with particular emphasis on automobiles. His analysis demon- strates the complexity, and often the economic and business merits, of such restraints, as well as the general hospitality with which modes of distribution are accordingly treated. under US. law.” In many other countries and the European Union, practices of a firm with upwards of 40 or 50 percent of a market that have the effect of excluding smaller firms from the chance to supply a significant part of the market are presumptively illegal." ‘Thus, the problems faced by firms and nations that believe themselves excluded from foreign markets by vertical restraints include, in some nations such as the United States, Sor Fro Tamms, Foreign Firm Aces to Jepenase Dichibution Systems: Trends in Japanese Antitrust Enjorenent, 4 BA0. Row L. & Pou |. 267 (1995), ° See FIG v. Consolidated Foods Corp., $80 U.S. 592 (1965) (acquisition); United States v. Loew's Inc. 871 USS. 38 (1962) (block booking). See also United Sues y. E1. du Pont de Nemours, 353 US. 586 (1957) (stock acquisition) ‘Ser, eg, KALB. Warehouse Distrib, Inc. v, Walker Mig., 61 F3d 128 (2d Cir. 1995); Sieor Lad. v. Cetus Copp, 61 E84 B48 (Oth Gir), ct, dened, 116 SC. 170 185) “'E’ M. Scherer, Retail Distribution Channel Barriers to International Trade, Paper delivered at Conference fon the Mulilateral Trade Regi (om file with author) jn dhe 2st Century: Swuctural Issues, Golumbia University (Now. 3, 1995) La Roche ¥. Commission, 1979 EGR 461; Case T-83/91, Teura Pak Inc] SA 762 (CA). ‘Commission, 1995 ECR I1997] WORLD ANTITRUST AND MARKET ACCESS 23 a “weak” rule of law, in addition to problems of obtaining sufficient evidence that the suspected facts occurred, and lack of enforcement. As to the third category—monopolistic exclusions—behavior in this category, like vertical restraints, is more complex and ambiguous than cartel behavior. To the extent that a monopolist undertakes particular conduct only to exclude rivals that compete in a monopolized market (c.g., rivals in long-distance telephone service in need of access to local connections),” the conduct is clearly illegal under most nations’ antitrust laws However, intentionality is seldom established. The monopolist is likely to defend charges against it not only by denials (of monopoly power, of anticompetitive acts, and of anticom- petitive intent), but also by claims that a duty to grant access will compromise the integrity of the system or national security, and by the additional factual claim that access is not essential to the rivals’ competition. There is a significant gap between the United States’ strong principle that even monopoly firms have the right to refuse to deal except under narrowly defined circumstances, and the European Union’s capacious principle of dominant firms’ duties not to discriminate, refuse to deal, or unfairly exelude."” The ap suggests that a plaintiff's problems in this area would include ambiguity in legal principle, as well as proof of facts and nonenforcement of law. A World Market Access Principle and Is Limitations ‘Notwithstanding the ambiguities and other hurdles, it seems natural that an antitrust market access principle will be developed as a correlative to the market access principle of the trade laws, and that the duty not to block market access by anticompetitive means should be understood as an international principle whether or not it becomes, more formally, international law. Nations with antitrust systems already have market access principles embedded in their law. The principles usually address all three of the above categories—cartels, vertical exclusionary restraints and monopolistic exclusions. Nations differ, sometimes signifi- cantly, as to what is the best formulation of the market access principle. Except for category 1—cartels with boycotts—the differences are not easily resolvable by negotia- tion because they are too fundamental to the nations. Yet the differences, though they may be fundamental to nations in the conduct of their internal affairs, do not significantly affect the flow of trade. It is not the difference in the law that produces frictions and trade disputes.” It is the perception that a country docs not enforce its own law; the observation that hybrid public/private restraints are not adequately addressed by national Jaw; the frustration resulting from countries’ failure to provide sufficient, credible tools for private antitrust enforcement (including sufficient discovery); and the frustration flowing from the lack of an impartial dispute resolution mechanism. The proposal presented here is directed precisely to these problems and observations, using the context of the WTO. As with European Community framework directives,!” nations would undertake to identify joint objectives significant to competition and trade. I suggest that they might agree to the gencral principle that there should be no substan- tial unjustified market blockage by public or private action (as well as no transnational cartels)."”* Each nation would then be responsible for implementing this principle in » See United States v. American Tel, & Tel. Co. 524 F.Supp. 1886 (D.D.C. 1981) (denying defendant's ‘motion to dismiss at the close of the Government's case in chief). See Fox, supra note 58, "The absence of any antitrus law, €g. in less developed countries, may cause friction if falling government entry barriers are replaced by privat barrier. 10! Sie note 2 supra "8° As for an anticartel principle, [ have suggested that nations adopt “an anticartel rule, subject to the right of a nation to adopt tailored, wansparent derogauons to address internal market problems." Fox, supre note 68, at 30.24 ‘THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol 91:1 its national taw." Implementation would include providing effective discovery, fair pro- cess and sufficient remedies, as well as enforcing the law. Opponents of a world system argue that nations would find ic impossible to agree on. ‘a market access principle. This is not a problem under this proposal. Each nation would define for itself what it means by an “unjustifiable” market access restraint. Simply, it must formulate its law in a credible, nondiscriminatory, clear and understandable way. Because the “framework directive” would include requirements regarding enforce- ment and dispute resolution, nations would be obliged to revise their procedural and discovery systems to allow and facilitate enforcement by aggrieved parties. They would be required to provide due process and rights of review. The agreement might provide that failure to accord due process triggers the right of the aggrieved nation to enforce the excluding country's law (including its law of remedics)™ in the courts of the ag- grieved nation; or the right to dispute resolution by a special WTO panel, perhaps with authority to review the limited question whether the adjudicating nation properly applied the law. ‘The WTO would have duties to monitor the compliance of nations in adopting and enforcing the consensus principles of law. The WTO would monitor complaints by aggrieved nations. It could also entertain claims of nullification and impairment of trade obligations based on patterns of nonenforcement of the market access law.""° Remedies might include mandatory injunctions to implement the common principles, enforce the law, of open markets; and they might include fines,"”” and compensatory damages, rather than trade remedies such as retaliation, which tend to heighten barriers and may lead to managed trade." An agreement on Trade-Related Aspects of Antitrust Measures—TRAMS—could be offered to countries that choose to be signatories; or it could be a requirement for every member of the WTO. The former option is of course the more conservative one; but if the principle is just so simple and limited as suggested—no unreasonable restraint on market access. integrally related to the obligations of trading nations, and it may not be too much to ask all WIO members and prospective members such as China to accept such an obligation in order to receive the benefits of the liberal trading systern. For businesses that believe they are exeluded from foreign markets by anticompetitive restraints, the course will sill be rough. Proof of anticompetitive restraints will remain difficult to establish, as it is in nearly every complex controversy.!” The fruits of discovery may be difficult to obtain even in nations that comply with their obligations to provide adequate discovery rights. The injunction to business managers to focus their efforts on competing, not litigating, will remain wise advice. Nonetheless, the obligation of nations to keep their markets free from private as well as public restraints, the oversight of that obligation by an international body, the enhanced right of access to the courts of the "EC law provides a ready resource ata body of learning regarding what isan unreasonable oF unjustified public restraint. Sor text at note 28 spre, Natonabstic or discriminatory reasons are never admissible at & Jurifcation e-Thas, the United States could not export its tcble damage remedy, "= Case law under EG Treaty Aue 5, which obliges uations nox to jeopardize the attainment ofthe Treas objectives. may be help Yor Fines cal gota the WTO treasury and ep to fund the ser, Alo, WTO adjudicaory panels find a nolation of lav, their nding could be prima facie endence of 3 violation sable by a victim sobking to recover damages "\The law on femedics may be informed by the law of the European Community regarding failure of member states to implement dircetves and otherwise cary oat thei obligations under EC la. “"Winess tie ongoing dispute beween Kodak and Fuji and ihe complex and contradictey submissions ‘of facto the United States Trade Representive in connection with Keak’ petiion tnder §301 ofthe 1974 ‘Trade Art The US. Trade Representative referred the matter to the World Trade Onganiration, Issues of prvate restraint may be handled bythe US. Juice Department and the Japan F1997] WORLD ANTITRUST AND MARKET ACCESS 25 excluding nation, and, not least, a platform for world competition advocacy should all work together to move the world progressively toward freer trade, freer competition, and the cconomic, social and political benefits to society that a cosmopolitan vision cntails. ConcLusion ‘The time has come to recognize the place of competition policy in the international arena. This article explores means to do so. First, it argues for an integrated vision of government and private restraints, synthesizing policy on trade law, competition law and national industrial policy. Next and more specifically, it advocates a methodology for internationalizing a market access principle while deferring to nations in the formulation of their own law and proposing that the law of the excluding nation should apply to claims of anticompetitive denial of market access. Regardless of the merits of the particular proposal, wide discussion of the opportunities and options is the first critical step. The European proposal wisely recognized this need, in urging, successfully, that a working group be formed in the context of the WTO to explore the challenging questions.