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UNITED STATES V. NIPPON PAPER
INDUSTRIES: PRICE-FIXING
CONSPIRACY OR TRADE REMEDY?
Rebecca Kanter*
This paper addresses the tension created when a foreign pro-

ducer, in attempting to come into compliance with WTO and U.S.
rules on dumping, is accused of violating American antitrust law.
While an allegation of the former would compel companies to raise
prices in the U.S. market to avert a dumping proceeding, too much
cooperation among the co-defendants to the dumping action could
prompt allegationsof price-fixing. In 1997, the FirstCircuit extended
the Sherman Act in United States v. Nippon PaperIndustries to allow
criminal prosecutions againstforeign companies for conduct occur-
ring wholly outside the territorial United States, thus raising the
stakes for foreign companies accused of violating the Sherman Act.
This paper uses the Nippon PaperIndustries (NPI) example to high-
light a conflict between the extraterritorialapplication of U.S. anti-
trust law and international trade law. After describing the conflict
and explaining why it should be resolved in favor of international
trade law, it proposes two legal principles-comity and the Noerr-
Pennington Doctrine-thatcourts could use to decline to apply U.S.
antitrustlaw againstforeign producers whose conduct is designed to
come into compliance with dumping laws.
INTRODUCTION ........................................................ 166

I. IDENTIFYING THE PROBLEM ................................... 167
A. The Extraterritorial Application of U.S. Antitrust
L aw s ................................................. 167
* J.D., UCLA School of Law; B.A. Political Science, University of California, Irvine. The
author would like to thank Richard Steinberg of the UCLA School of Law for his guidance in
preparing this paper, Tulasi Leonard for her thoughtful edits and research assistance, and Bill
Stuckwisch of O'Melveny & Myers LLP, Washington D.C., for introducing her to the NPI case.
The views expressed in this article are solely those of the author and do not reflect the views of the
UCLA School of Law, Journal of International Law and Foreign Affairs, O'Melveny & Myers LLP,
or any other individuals.
8 UCLA J. INT'L L. & FOR. AFF. 165 (2003)
B. International Trade Commitments Under the GATT ..... 170

C. The Conflict Between the International Trade System and
U.S. Antitrust Laws: United States v. Nippon Paper
Industries ............................................. 172
11. REMEDYING THE PROBLEM IN FAVOR OF INTERNATIONAL
TRADE ....................................................... 176
III. PROPOSALS .................................................... 181
A . Com ity ............................................... 182
B. The Noerr-Pennington Doctrine ........................ 186
CONCLUSION .......................................................... 190
INTRODUCTION
In 1997, the First Circuit announced its landmark decision in United

States v. Nippon Paper Industries.' The decision produced a flurry of schol-
arship addressing the central and unprecedented holding that foreign compa-
nies can be criminally prosecuted in the United States under the Sherman Act
for conduct occurring wholly outside the territorial United States. 2 However,
lurking in the background of the case was a problem that received less atten-
tion from commentators, a factual scenario which reveals an unsettling inter-
national trade implication of the decision.
Nippon Paper Industries (NPI), the Japanese corporate defendant in the
criminal antitrust prosecution, manufactured thermal fax paper, which was
then sold by Japanese trading companies to consumers in the U.S. 3 In 1990,
NPI and its fellow fax paper manufacturers in Japan became the targets of
threats by a U.S. competitor, Appleton. Appleton and other American fax
paper manufacturers threatened to initiate an antidumping proceeding against
the Japanese companies, accusing them of selling their goods for below mar-
ket value in the U.S. 4 A finding against NPI in an antidumping proceeding
would have allowed the U.S. to apply tariffs to the import of its product and
to severely impair its ability to compete in the American market.5 The Japa-
I United States v. Nippon Paper Indus. Co., 109 F.3d 1 (1st Cir. 1997).
2 Id. at 6.
3 Id. at 2.
4 United States v. Nippon Paper Indus. Co., 62 F. Supp. 2d 173, 180 n.12 (D.C. Mass. 1999).
5 Id. The court states the predicament as such:
If the dumping charges were proved, the imports of the offending companies would be
subject to a tariff. Given the size of their market share, the weakness of the product, and
the oversupply of thermal fax paper-any tariff increasing the cost of thermal fax paper
would likely drive [the Japanese] companies out of the American market.
United States v. Nippon Paper Industries
nese companies met on March 30, 1990 to discuss this threat against them.6
The Department of Justice (DOJ) responded by filing an antitrust claim
against NPI, alleging that the meeting was evidence of a Japanese conspiracy
7
to raise the price of fax paper.
This paper addresses the tension created when a foreign producer, in
attempting to come into compliance with WTO and U.S. rules on dumping, is
accused of violating American antitrust law. 8 While an allegation of the for-
mer would compel companies to raise prices in the U.S. market to avert a
dumping proceeding, too much cooperation among the co-defendants to the
dumping action could prompt allegations of price-fixing. Part II provides
background on the Sherman Act, antidumping law, and the NPI case. Part
III offers a defense for resolving the conflict among the two sets of laws in
favor of trade law, and explains why the DOJ should exercise caution in
criminally prosecuting foreign companies for antitrust violations where trade
concerns are implicated. Finally, Part IV proposes two legal principles-
comity and the Noerr-Pennington Doctrine-that courts could use to decline
to apply U.S. antitrust law against foreign producers who cooperate to avoid
a dumping action.
I. IDENTIFYING THE PROBLEM
A. The ExtraterritorialApplication of U.S. Antitrust Laws

The Sherman Act 9 prohibits any "contract, combination in the form of
trust or otherwise, or conspiracy, in restraint of trade or commerce among the
several states, or with foreign nations . . . ."10 The Sherman Act provides
both civil and criminal liability against companies and individuals who enter
into a proscribed contract, trust or conspiracy in violation of the act. The
government must prove three elements in any price-fixing case:
(1) that the conspiracy to fix prices described in the indictment was
knowingly formed and existed at or about the time alleged in the
indictment;
6 Id.
7 See Id. at 181.
8 Cf Michael B. Himmel et al., Victims May 'Collude' to Contest Dumping, NAT'L L.J., Mar. 31,
1997, at CIO (asking a similar question with respect to the impact Nippon had on Appleton: 'The
question, given the language of the Sherman Act and the dictates of the antidumping provisions, is:
How can these laws co-exist when one requires cooperation and the other criminalizes it?").
9 The phrases "U.S. antitrust law" and "Sherman Act" will be used interchangeably in this paper
as the primary U.S. antitrust law having a detrimental impact on international trade when applied
extraterritorially is the Sherman Act. When other specific U.S. antitrust laws are discussed, they
will be referred to by name.
10 15 U.S.C. § 1 (2000).
(2) that the defendant knowingly became a member of the conspiracy to

fix prices; and
(3) that the conspiracy had an intended and substantial effect on com-
merce in the United States."I
Though the Sherman Act was enacted in 1890,12 its extraterritorial ap-
plication was not clear until it was amended in 1982 when Congress adopted
the Foreign Trade Antitrust Improvements Act. 13 The most significant aspect
of the amendment was to limit the application of the Sherman Act to transac-
tions abroad when those transactions had a "direct, substantial, and reasona-
bly foreseeable effect" on American commerce. 14
As many scholars detailed in the wake of the First Circuit's Nippon
decision, the extraterritorial application of the Sherman Act has developed
over a period of almost ninety years.' 5 In 1909, the Supreme Court rejected
an attempt by an American banana corporation to sue a rival American ba-
nana company in civil court for violating the Sherman Act through actions
taken in Costa Rica.1 6 However, in 1945, Learned Hand, writing for the Sec-
ond Circuit, extended the Sherman Act to conduct occurring outside the
United States in a civil lawsuit.1 7 While the Ninth Circuit agreed that the
Sherman Act can cover some conduct occurring abroad, it limited the appli-
cation out of considerations of international comity and the jurisdictional rule
of reason test. 8 It was not until 1993, in Hartford Fire, that the Supreme
I See NPI, 62 F. Supp. 2d at 179. As the district court in Nippon observed, the government must
also prove that these three conditions existed at the time the limitation period began. Id. at 179-80.
12 JULIAN 0. VON KALINOWSKI ET AL., ANTITRUST LAWS AND TRADE REGULATION § 2.01 n.1 (2d
ed. 2003).
13 Foreign Trade Antitrust Improvements Act of 1982, Pub. L. No. 97-290, 96 Stat. 1233 (1982).
14 15 U.S.C. § 6(a)(l) (2000).
15 For more comprehensive descriptions of the development of the extraterritorial application of
U.S. antitrust law, see Dean Brockbank, The 1995 InternationalAntitrust Guidelines: The Reach of
U.S. Antitrust Law Continues to Expand, 2 J. INT'L LEGAL STUD. 1, 5-16 (1996); Spencer Weber
Waller, NationalLaws and InternationalMarkets: Strategies of Cooperationand Harmonizationin
the Enforcement of Competition Law, 18 CARDOZO L. REV. 11 11, 1111-12 (1996); Marcus S. Lee,
United States v. Nippon Paper Industries Co.: Extending the Criminal Provisions of the Sherman
Act to Foreign Conduct Producing a Substantial Intended Effect in the United States, 33 WAKE
FOREST L. REV. 189, 200-09 (1998); Mark Spitzley, Criminal Sanctions Under the Sherman Act
Arise in the Land of the Rising Sun: How Far Can Sherman Go?, 44 WAYNE L. REV. 1493, 1502-
07 (1998); and Jennifer C. Farlow, Ego or Equity? Examining United States Extension of the Sher-
man Act, II TRANSNAT'L LAW. 175 (1998).
16 Am. Banana Co. v. United Fruit Co., 213 U.S. 347 (1909).
17 United States v. Aluminum Co. of Am., 148 F.2d 416 (2d Cir. 1945).
18 Timberland Lumber Co. v. Bank of Am., 549 F.2d 597 (9th Cir. 1976), cert. denied, 472 U.S.
1032 (1985).
Court finally determined, at least with respect to civil cases, the Sherman Act
applies to extraterritorial activity.' 9
In Nippon Paper Industries, the First Circuit extended the Supreme
Court's holding in HartfordFire to criminal prosecutions under the Sherman
Act, concluding that because both types of cases were based on violations of
the same statutory language, the statute should have extraterritorial applica-
tion in either context.20 This extension is critical because the consequences of
a criminal action can be considerably greater. Because moral impropriety is
raised, the fines are steep, 2' individual incarceration is possible, 22 and crimi-
nal actions are procedurally different in ways that may give the government
23
certain advantages and the defendant certain corresponding disadvantages.
19 Hartford Fire Ins. Co. v. California, 509 U.S. 764 (1993). For a detailed description of how
Hartford Fire changed the law in this area, see Scott A. Burr, The Application of U.S. Antitrust Law
to Foreign Conduct: Has Hartford Fire Extinguished Considerationsof Comity?, 15 U. PA. J. INT'L
Bus. L. 221 (1994), and Robert C. Reuland, Hartford Fire Insurance Co., Comity, and the Extrater-
ritorialReach of the United States Antitrust Laws, 29 TEX. INT'L L.J. 159 (1994).
20 United States v. Nippon Paper Indus. Co., 109 F.3d 1 (1st Cir. 1997), cert. denied, 118 S.Ct.
685 (1998).
21 Corporate defendants can be fined up to $10 million, and possibly more if there are multiple
counts, while individuals can be fined up to $350,000 and sentenced to up to three years in prison.
15 U.S.C. § 1 (1994); 18 U.S.C. § 3571(d) (1994). See also Christopher M. Brown & Nikhil S.
Singhvi, Antitrust Violations, 35 AM. CRIM. L. REV. 467, 491 n.157 (1998) (citing US DEP'T OF
JUSTICE, ANTITRUST Div., OPENING MARKETS AND PROTECTING COMPETITION FOR AMERICA'S BUSI-
NESSES AND CONSUMERS: GOALS AND ACHIEVEMENTS OF THE ANTITRUST DIVISION 6 (1996)) ("The
average fine levied upon corporations for criminal price-fixing increased from just under $500,000
in 1992 to $1.2 million in 1995.").
22 Donald Baker, The Use of Criminal Law Remedies to Deter and Punish Cartels and Bid-Rig-
ging, 69 GEO. WASH. L. REV. 693, 693-707 (2001). Baker discusses the high corporate and individ-
ual fines and observes that
The most distinctive aspect of United States antitrust enforcement is that those who
engage in cartel activities are treated as serious criminals. Individual coconspirators are
now sent to jail on a regular basis. Moreover, some of the largest corporate fines ever
paid to the federal government are now being imposed on major antitrust violators.
Id. at 693 (citations omitted). See also United States v. Milikowsky, 65 F.3d 4, 8 (2d Cir. 1995)
(noting the incarceration of the individual defendant on antitrust charges threatened stability of
defendant's company).
23 Baker, supra note 22, at 699:
[Tihe DOJ's choice of criminal enforcement may have important procedural conse-
quences. It gives the government the advantage of the nonpublic grand jury process that
highly favors the government at the investigational stage because testimony is taken in
secret and witnesses or targets do not have lawyers present in the grand jury room.
B. Anti-Dumping Commitments Under the GATT

All World Trade Organization (WTO) members are bound by Article VI
of the General Agreement on Tariffs and Trade (GATT), which regulates
dumping.2 4 "Dumping is broadly defined as exporting at prices below those
charged on the domestic market or at prices insufficient to cover the cost of
the goods sold."'2 5 Under the GATT, "the contracting parties recognize that
dumping... is to be condemned if it causes or threatens material injury to an
established industry in the territory of a contracting party. ' 26 Article VI also
provides for the levying of antidumping duties: "in order to offset or prevent
dumping, a contracting party may levy on any dumped product an anti-
dumping duty not greater in amount than the margin of dumping in respect of
such product. ' 27 An anti-dumping measure may be applied only under the
circumstances provided for in Article IV and pursuant to an investigation
initiated and conducted in accordance with the provisions of the WTO
Agreement on Implementation of Article VI of the GATT 1994.
The United States enforces these provisions through domestic dumping
laws. 28 Domestic producers, trade unions and associations can initiate the
process; all possess authority to allege a violation by filing a dumping peti-
tion against a foreign producer 29 if the American industry represented by the
petition constitutes 25% of the total production. 30 The domestic producer can
file such a petition with the International Trade Commission (ITC) and the
Department of Commerce (DOC), which will rarely decline to initiate an
investigation. 3I The former determines if there has been injury to the Ameri-
can market and if the foreign company caused the injury; 32 the latter decides
24 General Agreement on Tariffs and Trade, Oct. 30, 1947, 61 Stat. A-11, T.I.A.S. 1700, 55
U.N.T.S 194 [hereinafter GATT].
25 MICHAEL TREBILCOCK & ROBERT HOWSE, THE REGULATION OF INTERNATIONAL TRADE 167
(1999).
26 Id.
27 Id.
28 19 U.S.C. §§ 1337, 2411. For ease of discussion, this paper will discuss U.S. antidumping law
as though it were fully consistent with the GATT and assume that U.S. antidumping enforcement
actions against companies in other GATT countries are fully consistent with the GATT. For clar-
ity's sake, however, it is important to recognize that the U.S. antidumping laws are arguably not
consistent with the GAT'T agreement on antidumping. See, e.g., Marie Louise Hurabiell, Protec-
tionism versus Free Trade: Implementing the GAIT Antidumping Agreement in the United States,
16 U. PA. J. INT'L Bus. L. 567 (1995).
29 Hurabiell, supra note 28, at 567 n.62.
30 Pierre F. De Ravel D'Esclapon, Non-Price Predation and the Improper Use of U.S. Unfair
Trade Laws, 56 ANTITRUST L.J. 543, 548 (1987).

31 Id.
32 19 U.S.C. § 1671(a)(1) (1994).
if there has been a dump, how much has been dumped, and determines the
margin of the dump. 33 The U.S. government then remedies the dump through
tariff mechanisms. Another solution to a dumping allegation is a price un-
dertaking, whereby an exporter (i.e., the dumping producer) agrees to raise
the price of the product, but such remedies are rarely used. If a foreign pro-
ducer agrees to stop dumping, then the antidumping proceeding can be
34
suspended.
However, there are also informal solutions to remedy antidumping vio-
lations. Informal solutions may be preferable to the foreign producer to the
extent that the trade remedy system is stacked against the foreign producer:
some of the crucial decisions are made by a "captured" agency. 35 Moreover,
although anti-dumping proceedings are relatively quick compared to typical
U.S. civil litigation, the foreign producer faces quite stringent demands and
deadlines, and must respond to questionnaires "seeking information about
their selling practices in their home and U.S. markets, and in many cases,
their costs of production as well."' 36 One scholar made the following observa-
tions about the demands of antidumping proceedings:
Foreign parties have a large incentive to provide responses to these ques-
tionnaires. If they do not, the Commerce Department will calculate the
antidumping and subsidy margins based on so-called 'best information
available,' which is generally that found in the petition and is most ad-
verse to the foreign party.
After submission of questionnaire responses, these responses are verified
by Commerce Department officials. These verifications sometimes in-
volve up to five investigators reviewing source documents at the respon-
dents' corporate offices and factories for periods ranging between three
days and three weeks. In addition to the questionnaire responses and ver-
ifications, foreign respondents generally also extend considerable re-
33 Id. § 1673(2).
34 Id. §§ 1671(c), 1973(c). In a situation where the DOC finds a dumping margin, foreign compa-
nies can enter into a suspension agreement with the DOC (i.e., they agree not to sell their product in
the U.S. market at a price less than the foreign value of the product) and if the American producers
approve that suspension, the agreement would qualify for immunity from U.S. antitrust law. Brock-
bank, supra note 15, at 31. But see D'Esclapon, supra note 30, at 552 (describing the limits Con-
gress put on the ability of foreign producers to achieve such a suspension).
35 See, e.g., Peter D. Ehrenhaft, Is Interface of Antidumping and Antirust Laws Possible?, 34 GEo.
WASH. INT'L L. REv. 363, 380 (2002):
It is in fact undeniable that the ITC's rulings are significantly affected at any given time
by the attitudes of the then-sitting Commissioners. Most criticism of the DOC, on the
other hand, comes from respondents and foreign governments who see the Department
as inclined to reach the tougher, more protectionist interpretation on most issues.
36 See D'Esclapon, supra note 30, at 549.
172 8 UCLA J. INT'L L. & FOR. AFF. 165 (2003)
sources in preparing for hearings on the Commerce Department's

37
findings and at the ITC on the issue of material injury.
Informal solutions that circumvent or bring an end to formal anti-dumping
procedures can help avoid the expensive and demanding requirements of the
anti-dumping process. Three examples of previously used informal solutions
are 1) agreements between U.S. and foreign producers that the U.S. producer
will withdraw the dumping petition if the foreign producer ceases dumping;
2) agreements between the U.S. government (under pressure from the U.S.
producers) and the foreign parties to limit exports to the United States
(known as Voluntary Restraint Agreements or VRAs) 38 ; and 3) voluntary
ceasing of the dumping by the foreign producers. While the first informal
solution to a dumping problem presents a clear antitrust violation, there has
been greater uncertainty about the legality of the latter two solutions under
the Sherman Act. The majority of this paper will focus on the possible anti-
trust violations that could flow from a decision by foreign producers to cease
dumping. However, occasionally the problem of VRAs will be addressed to
illustrate the tension created between the trade system and the extraterritorial
39
application of domestic antitrust law.
C. The Conflict Between the InternationalTrade System and U.S.

Antitrust Law: United States v. Nippon Paper Industries
In the late 1980's, Appleton, an American company that produced ther-
mal fax paper, threatened to invoke the antidumping apparatus described
above against Nippon Paper Industries 40 (NPI) and other Japanese fax paper
manufacturers. 4 1 The Japanese manufacturers, which included NPI, Kanzaki
Paper Manufacturing Co., Mitsubishi Paper Mills, Oji Paper Company, and
Honshu Paper Company, made up about thirty percent of the American mar-
37 Id.
38 Id. at 554.
39 See id. at 554-57. In this passage, D'Esclapon discusses, in detail, the legal challenge to VRAs,
the failure of that legal challenge, and Congress' subsequent inclusion of an exemption under the
Trade Act of 1974 for steel VRAs. The 1995 Guidelines explicitly enable parties to "immunize
[themselves] against antitrust liability [by] settling disputes under the trade laws" by entering into
VRAs. Brockbank, supra note 15, at 31.
40 Nippon Paper Industries was implicated because of the involvement of its predecessor, Jujo.
For ease of discussion, actions by Jujo will be attributed to Nippon consistent with the court's
treatment of the two companies. See, e.g., NPI, 62 F. Supp. 2d at 177-78.
41 Michael B. Himmel et al., FairTrade or Foul Play? The Antagonism Between the Antidumping
and Antitrust Laws, THE METROPOLITAN CORP. COUNS., May 1997, at 6 (Greater Metropolitan New
York Firms).
United States v. Nippon Paper Industries 173
ket in thermal fax paper, while American manufacturers accounted for the
other seventy percent. 42 As Judge Gertner described,
The stakes were high: If the dumping charges were proved, the imports of
the offending companies would be subject to a tariff. Given the size of
their market share, the weakness of the product, and the oversupply of
thermal fax paper-any tariff increasing the cost of thermal fax paper
would likely drive these companies out of the American market. They
had to walk a fine line-raising prices to avoid a dumping charge,
43
with-
out going so far as to eliminate their market share entirely.
Judge Gertner also noted "[t]he aroma of a setup in all of this by the
American companies seeking not just to eliminate their Japanese rival's [sic]
competitive edge, but to eliminate their Japanese rivals entirely" because the
threat of the anti-dumping petition "would force the Japanese companies to
raise their prices and push them out of the market." 44
In their efforts to walk the fine line in this high stakes game, the compa-
nies met to discuss the predicament on March 30, 1990. 45 That meeting be-
came "[t]he centerpiece of the government's [antitrust] case .... *"46 The
Department of Justice brought a criminal action against NPI, and a federal
grand jury indicted the Japanese company on December 13, 1995 on one
count of price-fixing. 47 The March 1990 meeting became the focus of the
investigation because according to the government, that was the meeting
where the companies allegedly "agreed to raise the price at which they sold
thermal fax paper to $20.00 per hundred square meters. '48 The Japanese
companies admitted that they had a meeting, and agreed that it was in re-
sponse to an anti-dumping threat. They contended "that the meeting was on
the permissible side of the line-Japanese manufacturers meeting to discuss
a common legal threat. Nothing nefarious was intended; nothing nefarious
was accomplished. ' 49 Indeed, contrary to the alleged agreement, some of the
companies, like NPI and Oji, continued to lower their prices and by mid-
42 NPI, 62 F. Supp. 2d at 180.

43 Id. Cf Ehrenhaft, supra note 35, at 375 ("The 'unfairness' to which antidumping law is di-
rected-prices that are too low-is generally seen in antitrust law as evidence of the proper working
of the competitive process, and as a phenomenon beneficial to the consumers whom antitrust law
fundamentally protects.").
44 NPI, 62 F. Supp. 2d at 180 n.12.
45 Id. at 180 (stating that the meeting occurred, although not attributing a motivation for the
meeting).
46 Id.
47 Id. at 177.
48 Id. at 181.
49 Id.
1990, price competition was so vigorous again "that the American companies
'5 0
threatened a dumping charge again.
The government was ultimately unable to prove that there was an agree-
ment to fix prices, and in fact, changed its theory from price-fixing to price
stabilization. 51 Despite the change, the government was unsuccessful in prov-
ing its case and the trial ended in a hung jury. Subsequently, Judge Gertner
52
directed a verdict for the defendants, resulting in NPI's acquittal.
Although NPI was eventually acquitted, the case brings to light two im-
portant points. First, the facts demonstrate how a company seeking to avoid
a dumping action runs the risk of violating U.S. price-fixing laws. 53 At this
juncture, anti-dumping law and antitrust law, despite their shared goals of
opening markets and increasing competition, 54 come into conflict. Second,
the discussion by the First Circuit and the District Court on remand illustrates
the lack of any principle in U.S. antitrust law to account for this circum-
stance. The government's case failed because it couldn't prove that that
there was an agreement, and even if there had been, it couldn't show that
such an agreement continued into the limitation period or that it had a sub-
stantial effect on American commerce. In other words, the government
failed to prove the necessary elements of a price-fixing charge. 55 However,
that legal test does not inherently resolve the tension between anti-dumping
and price-fixing laws, nor does the test provide immunity or a defense for a
defendant in NPI's situation. In other words, were it not for the weakness of
the government's case, NPI would not have had any legal rung on which to
hang its defense that the meeting was part of an effort by Japanese manufac-
turers to comply with anti-dumping law.
Although the NPI case is the primary example relied on in this paper to
illustrate the conflict between international trade law and U.S. antitrust law,
there are other examples of foreign companies that, in attempting to abide by
50 Id. at 182.
51 Id. at 181. Under the allegation of price-fixing, the government asserted that there was agree-
ment to increase prices, and NPI defended itself in part on the grounds that prices declined after the
alleged conspiracy was created. "A price stabilization theory concedes that [prices have declined],
but suggests that prices would have declined more had there been no agreement." Id. at 181 n.14.
52 Id. at 177.
53 Additionally, given the extraterritorial reach of those laws described above, a foreign company
violating American antirust laws is not just theoretically in violation of the law but can be prose-
cuted criminally and civilly for that transgression. See supra notes 20-23 and accompanying text.
54 E.g., Ehrenhaft, supra note 35, at 363 ("Both sets of rules seem to address the right of parties to
engage in fair competition in an open market.").
55 See supra note 11 and accompanying text.
antidumping laws, have found themselves subject to an antitrust action. 56

The defendants in Dee-K Enterprisesv. Heveafil Sdn. Bhd. were not as fortu-
nate as NPI in the outcome of the antitrust action against them.5 7 Unlike NPI
and the other Japanese companies who were threatened with a dumping ac-
tion, the Malaysian corporation in Dee-K Enterprises actually had duties im-
posed on its imports after the Department of Commerce (DOC) issued an
antidumping order, finding that the defendants were dumping extruded rub-
ber thread in the U.S. market. 58 When the defendant's price rose by up to
50%, the plaintiffs sued, alleging price-fixing by the defendant. 59 The de-
fendants asserted that a finding of antitrust injury would be inconsistent with
the prior DOC ruling as it would find their prices at the same time to be both
too low and too high. 60 The court framed the argument as follows:
Defendants' argument, distilled to its essence, amounts to the contention
that "we cannot be forced to pay damages for conspiring to fix prices that
are, by DOC's definition, below fair value and hence below the competi-
tive price." In so arguing, defendants rely on two Supreme Court cases
holding that a plaintiff cannot win a price-fixing claim when a defen-
dant's prices
6t
are set according to rates approved by a governmental
agency.
The court ultimately rejected this argument and denied the motion to
dismiss. 62 It "reasoned that the defendants were comparing two 'separate
benchmarks,' as the DOC determined that the U.S. prices were below fair
value in Malaysia and the alleged antitrust violation would depend upon
'63
prices being above a competitive price in the United States.
56 Another factual context in which antitrust law and international trade law come into conflict is
in the context of Voluntary Restraint Agreements (VRAs). The VRA formally came into existence
in the 1970's in the face of protectionist sentiment in U.S. industry and the threat by Congress to
impose import quotas on foreign steel. With the cooperation of the U.S. Department of State, other
U.S. agencies, and foreign governments, foreign producers agreed to reduce their steel exports to
the United States to appease anti-import forces in the U.S. and prevent Congress from setting quo-
tas. The legality of VRAs was then challenged by the Consumers Union, who sued under the
Sherman Act. ANDREAS LOWENFELD, PUBLIC CONTROLS ON INTERNATIONAL TRADE 195-236
(1983).
57 Dee-K Enterprises v. Heveafil Sdn. Bhd., 982 F. Supp. 1138 (E.D. Va. 1997).
58 A.B.A. SECTION OF ANTITRUST LAW 1997 ANNUAL REVIEW OF ANTITRUST LAW DEVELOP-
MENTS 330-31 (1998) (citing Dee-K Enterprises v. Heveafil Sdn. Bhd., 982 F. Supp. 1138, 1155
(E.D. Va. 1997).
59 Dee-K Enterprises v. Heveafil Sdn. Bhd., 982 F. Supp. 1138, 1155 (E.D. Va. 1997).
60 Id. at 1156.
61 Id.
62 A.B.A. SEcIoN OF ANTITRUST LAW, supra note 58, at 330-31 (citing Dee-K Enterprises v.
Heveafil Sdn. Bhd., 982 F. Supp. 1138, 1156 (E.D. Va. 1997)).
63 Id.
Although the court was correct to observe that the calculations of dump-
ing injury and price-fixing injury rely on different data, the outcome nonethe-
less puts the foreign company in an impossible situation where it is unable to
comply both with an antidumping order and American antitrust law.
II. REMEDYING THE PROBLEM IN FAVOR OF INTERNATIONAL TRADE
Most literature on the international application of antitrust laws assumes

that the aggressive enforcement of U.S. antitrust law is a positive develop-
ment. Scholars commenting on the First Circuit's NPI decision, whether
they are explaining the development, detailing remaining barriers to interna-
tional enforcement, or otherwise commenting on the decision, seem to begin
with the assumption that a vigorous application of such laws serves important
legal and economic goals. 64 This is not surprising given that American wis-
dom about antitrust law is animated by a basic belief in competition and a
long tradition of combating monopolies, 65 and that a "broad political consen-
sus that cartels are bad and Sherman Act enforcement is good" 66 still exists.
67
Moreover, international enforcement is seen as an important part of this,
and plenty of thought has been given to how the DOJ can effectively enforce
U.S. competition policy abroad to attack foreign cartels and price-fixers.
However, less attention has been paid to the negative implications of
such a policy when the rules of international trade conflicts with U.S. compe-
tition law. As a member of the WTO committed to free trade both by treaty
and rhetoric, the U.S. should be attentive to the trade restrictive implications
of vigorously enforcing antitrust laws extraterritorially. When companies
64 See, e.g., Lee, supra note 15; Leyla Marrouk, A Critique of the U.S. and EU Proposalsfor
Improving InternationalEnforcement of Antitrust Law, 8 COLUM. J. EUR. L. 101 (2002).
65 See, e.g., United States v. Trenton Potteries Co., 273 U.S. 392, 397 (1926). Justice Stone, in an
oft-quoted passage, commented
[W]hatever difference of opinion there may be among economists as to the social and
economic desirability of an unrestrained competitive system, it cannot be doubted that
the Sherman Law and the judicial decisions interpreting it are based upon the assumption
that the public interest is best protected from the evils of monopoly and price control by
the maintenance of competition.
Id. See also Donald Baker, supra note 22, at 714 ("[r]obber barons and cartel conspirators are bad
people in the American popular lexicon").
66 Baker, supra note 22, at 694 (citing Donald Baker, Antitrust and Politicsat the Justice Depart-
ment, 9 J.L. & POL. 291 (1993)).
67 James M. Grippanado, Declining to Exercise ExtraterritorialAntitrust Jurisdictionon Grounds
of International Comity: An Illegitimate Extension of the Judicial Abstention Doctrine, 23 VA. J.
INT'L L. 395, 395 (1983) ("Many American legislators and jurists have long believed that the fed-
eral courts must exercise extraterritorial jurisdiction in order to uphold the strong public policy
embodied in U.S. antitrust laws.").
and trade ministers broker deals pursuant to a free trade agreement, that trade
system is undermined if the DOJ is waiting in the wings to attack the out-
come of the deal by prosecuting the foreign companies for antitrust viola-
tions. Dumping, the specific trade remedy considered in this article,
arguably serves some important interests. Dumping weakens "overall pro-
ductivity and investment strength" in the importing country and "creates un-
certainty for investment" in the importing country. 68 The European
Commission has given the following rationale for "why the GATT considers
injurious dumping as unfair":
-dumping requires that the exporting market be segregated and that the
importing market be open. These substantially different degrees of mar-
ket access makes international trade fundamentally different to trade
within an open market;
-operating from a segregated market can confer on exporters an advan-
tage which is not due to higher efficiency and cannot be matched by his
competitors in the importing country;
-this provides the dumper with the opportunity to maximize his profits
or minimize losses
69
and can be highly injurious for the importing coun-
try's industry.
Insofar as the dumping laws contribute more generally to the goals of
the WTO system, they help pursue other basic values that make free trade
desirable. One classical statement by David Ricardo describes the benefits of
free trade:
Under a system of perfectly free commerce, each country naturally de-
votes its capital and labor to such employments as are most beneficial to
each. This pursuit of individual advantage is admirably connected with
the universal good of the whole. By stimulating industry, by rewarding
ingenuity, and by using most efficaciously the peculiar powers bestowed
by nature, it distributes labor most effectively and most economically:
while by increasing the general mass of productions, it diffuses general
benefit, and binds together, by one common tie of interest and inter- 70
course, the universal society of nations throughout the civilized world.
68 EC Commission, Eleventh Annual Report on the Community's Anti-Dumping and Anti-Sub-

sidy Activities IN 2.2-2.3 (1993), reprintedin JOHN H. JACKSON ET AL., LEGAL PROBLEMS OF INTER-
NATIONAL ECONOMIC RELATIONS 680 (3d ed. 1995).
69 Id. at 678. Cf Ehrenhaft, supra note 35, at 367, stating that
Neither the legislative history of the U.S. antidumping law nor the GAT'T or WTO
Agreements on the subject set forth any clear explanation of why the practice of 'dump-
ing' is considered 'unfair' so as to warrant remedial measures. Rather, the 'unfairness'
of the practice appears to have seemed self-evident to legislators and trade negotiators
70 DAVID RICARDO, PRINCIPLES OF POLITICAL ECONOMY AND TAXATION - (1817).

According to the International Trade Commission, countries involved in

open international trade systems experience a variety of positive effects, in-
cluding: "1) lower prices for consumers; 2) greater market opportunities for
exporters; 3) more rapid economic growth over the long run; 4) higher rates
of investment; 5) improvements in productivity; and 6) fuller utilization of
71
the country's domestic labor force."
There are plenty of international trade scholars, politicians and others
who criticize the international trade rules relating to antidumping (AD) du-
ties, and many scholars have called for the abandonment or restructuring of
AD duties. 72 Some of that criticism stems from general theoretical and policy
arguments. For example, critics suggest that it seems strange to "remedy" a
trade violation by imposing duties, the very thing free trade is supposed to be
getting rid of. 73 Moreover, AD duties are not economically efficient. 74 Other
criticisms are rooted in the particular functioning of the duty system. For
example, the reality is that only a few countries, the U.S. in particular, use
the dumping rules, giving rise to concerns that the enforcement of those rules
is a "disguised form of protectionism. ' 75 Moreover, those countries (or
groups of countries) like the U.S. and EU that predominantly enforce dump-
ing rules also primarily use them against certain key targets, including Ja-
pan. 76 Much of the criticism is valid, and this article is not intended to cast
doubt on the wisdom or need to reform the antidumping rules. But despite
the many criticisms that could be lodged against antidumping rules or other
particular rules of the free trade system, the fact remains that the Members of
the WTO are bound by them, and those who trade with the United States are
77
particularly vulnerable to the enforcement of those rules.
71 Lee, supra note 15, at 190 n.5; see also Anne 0. Kreuger, Free Trade is the Best Policy, in AN
AMERICAN TRADE STRATEGY: OPTIONS FOR THE 1990s 68 (Robert Z. Lawrence & Charles L.
Schultze eds., 1990).
72 See, e.g., William J. Davey, Antidumping Laws: A Time for Restriction, 1988 FORDHAM CORP.
L. INST.; see generally Hurabiell, supra note 28.
73 See, e.g., Hurabiell, supra note 28 (arguing that enforcing antidumping law is inherently pro-
tectionist and contrary to the free trade goals of the GATT and characterizing the GATT antidump-
ing agreement as an exception to the GATT framework).
74 Laura D'Andrea Tyson, Managed Trade: Making the Best of Second Best, in AN AMERICAN
TRADE STRATEGY: OPTIONs FOR THE 1990S 173 (Robert Z. Lawrence & Charles L. Schultze eds.,
1990).
75 JACKSON ET AL., supra note 68, at 672; see also TREBILCOCK & HOWSE, supra note 25, at 169.
76 TREBILCOCK & HOWSE, supra note 25, at 166.
77 Id. ("Among the trilogy of trade remedy regimes-countervailing duty, safeguard and an-
tidumping actions-antidumping actions are by far the remedy of choice .... Four countries
actions accounted for 97.5% of all actions brought [between July 1980 and June 1988]: 30% were
brought by producers in the United States .... ")
U.S. trading partners have much to lose in antidumping proceedings,7 8

and their efforts to remedy alleged violations before the process is invoked is
understandable. The United States has been a consistent proponent of the
AD duties,7 9 and at the various negotiations to amend the antidumping rules,
has repeatedly insisted on drafting rules that would allow it to maintain its
national dumping laws. 80 As long as the U.S. continues to enforce dumping
laws, one can hardly condemn foreign companies who also try to play by
those rules. Yet, that is exactly what the U.S. is doing when the DOJ prose-
cutes and the courts enforce antitrust rules against companies for doing what
they must do as one of America's trading partners. Such behavior by the
U.S. is liable to alienate the country from the global market. 8 1 One scholar
noted that "antitrust is perceived as the antidote for the private barriers to
trade that are not truly addressable through the WTO or traditional diplo-
macy." 82 That may very well be the case, but presumably we don't want that
78 See Hurabiell, supra note 28, at 577 ("A few commentators view U.S. antidumping laws as
harmful to trading partners. In fact, the law often imposes disproportionate penalties, such as tariffs
up to 377%, on corporations found guilty of dumping.") (citing Robert McGee, An Economic Anal-
ysis of Protectionism in the United States with Implicationsfor InternationalTrade in Europe, 26
GEO. WASH. J. INT'L L. & EcON. 539, 562 (1993)). The article states that because of U.S. an-
tidumping policy, "two-thirds of the companies producing acrylic sweaters in Taiwan went out of
business. This does not do much for international relations." Id.
79 See JACKSON ET AL., supra note 68, at 681 ("AD laws also have strong supporters in the U.S.
Congress, and it seems unlikely that they will disappear in the near future"); Hurabiell, supra note
28, at 576 ("Influence from lobbyists and U.S. industries [especially steel] seems to ensure the
continued use of antidumping duties").
80 THE ADVISORY COMMITTEE FOR TRADE POLICY AND NEGOTIATIONS, A REPORT TO THE PRESI-
DENT, THE CONGRESS AND THE UNITED STATES TRADE REPRESENTATIVE CONCERNING THE URU-
GUAY ROUND OF NEGOTIATIONS ON THE GATT 86-87 (1994) (listing that one U.S. objective in the
Uruguay Round of negotiations would be to "maintain the functional and methodological effective-
ness of the U.S. antidumping law by resisting changes to the Antidumping Code which might re-
quire the weakening [of] U.S. law.")
81 See James A. Griffith, ExtraterritorialApplication of the Federal Antitrust Laws: Expanding
their CriminalReach Under Nippon Paper, 23 MD. J. INT'L L. & TRADE 103, 122-23 (1999) (quot-
ing Teresa Wyszomierski, Lessons of the Boeing Merger, J. COM., July 29, 1997, at 8A) ("The
problem is that by using antitrust statutes in a protectionist manner, 'they are retarding global mar-
ket efficiency while instigating serious and protracted trade wars."'); cf.William P. Connolly, Note,
Lessons to be Learned: The Conflict in International Antitrust Law Contrasted with Progress in
InternationalFinance Law, 6 FORDHAM J. CORP. & FIN. L. 207, 209-10 (2001) (noting in a different
context, "the goals of extraterritorial action and cooperation are clearly at odds. Yet, [U.S. agen-
cies] practice both daily while looking at the international community with a straight face .... The
approach is inconsistent and threatening. Foreign nations have responded negatively ....").
82 Spencer Weber Waller, Can U.S. Antitrust Laws Open InternationalMarkets?, 20 Nw. J. INT'L
L. & Bus. 207, 212 (2000). It has also been argued that the U.S. has a particular need to enforce
antitrust laws against companies whose countries do not have a developed antitrust system to ad-
dress such behavior by their nationals; Japan is often cited as one such country with less developed/
application of antitrust law to undermine the WTO system or traditional di-

plomacy. Prosecutors should therefore be sensitive to the factual background
of alleged foreign price-fixing schemes and the political and trade implica-
83
tions of wielding their powerful sword of justice.
To the extent that prosecutors choose to continue bringing such ac-
tions,8 4 courts should develop principles to take into account the demands the
international trade system puts on foreign companies that seek to be compli-
ant trading partners, and recognize that the trade implications of applying
antitrust law extraterritorially can be significant and might be better left to
the political branches of government. 85 In Dee-K Enterprises, the district
less active antitrust law. See id. at 210 ("There is a growing perception that the removal of tradi-
tional formal trade barriers by the Japanese government have resulted in only trivial gains for Amer-
ican producers in the Japanese market."). But see Harry First, Antitrust Enforcement in Japan, 64
ANTITRUST L.J. 137, 137 (1995) (thorough discussion of how Japanese antitrust enforcement is
"relatively substantial ... [and] by some measures.., approaches the level of government antitrust
enforcement in the United States").
83 There have been historical periods in which the DOJ and FTC exhibited a greater willingness to
consider the international implications of extraterritorial prosecution of antitrust cases. See Waller,
supra note 15, at 1113 ("Beginning in the 1970s ..... [bloth the Department of Justice ("DOJ")
and Federal Trade Commission ("FTC") agreed to carefully consider 'international comity' before
taking enforcement action against conduct outside the United States."). This policy shifted in 1992
when "the DOJ rescinded its policy of abstention, stating that it 'will, in appropriate cases, take
antitrust enforcement action against conduct occurring overseas that restrains U.S. exports, whether
or not there is direct harm to U.S. consumers."' Aubrey Smith, Note, Bringing Down Private Trade
Barriers-An Assessment of the United States' Unilateral Options: Section 301 of the 1974 Trade
Act and ExtraterritorialApplication of U.S. Antitrust Law, 16 MICH. J. INT'L L. 241, 265 (1994)
(quoting U.S. DEP'T OF JUSTICE, Pub. No. 92-117, JUSTICE DEPARTMENT WILL CHALLENGE FOR-
EIGN RESTRAINTS ON U.S. UNDER ANTITRUST LAWS 1 (Apr. 3, 1992) (unpublished press release
available from the DOJ)).
84 It appears likely that prosecutors are willing to continue to bring such actions. See Brockbank,
supra note 15, at 21 (describing the 1995 Antitrust Enforcement Guidelines for International Opera-
tions jointly released by the DOJ and FTC, and commenting that "the 1995 Guidelines appear to be
more of a warning than a guide-a warning to foreign governments and enterprises that the Agen-
cies intend to actively puruse restraints on trade occurring abroad that adversely affect American
markets or damage American exporting opportunities").
85 See, e.g., Spitzley, supra note 15, at 1516-17 (asserting that "the First Circuit engaged in shap-
ing U.S. trade policy through the Nippon Paper decision" and that "U.S. trade policy has been [and
presumably should be] guided by elected representatives whose training and skills are essential
requirements for the rigors of drafting legislation affecting international commerce").
Arguably, because the DOJ is part of the executive branch, this decision (i.e., whether antitrust
law should be applied in a manner that impacts international trade) is being made by a "political
branch." The NPI case is admittedly different from Hartford Fire where there was a private civil
enforcement; thus, arguably in NPI, unlike in Hartford Fire,there was the political will to pursue an
action against the foreign defendant, and therefore courts should not be disinclined to exercise
jurisdiction.
court judge, in responding to the defendants' arguments that the DOC's order
required them to raise prices and thus led to the alleged price-fixing allega-
tion, commented that "[i]n any event, to the extent, if any, that the antidump-
ing laws and the antitrust laws establish conflicting goals, that is a matter for
Congress, and not the courts, to resolve."8 6 Such a position fails to recognize
the fact that courts have at their disposal-and have traditionally made use
of-a variety of principles of nonjusticiability whereby they decline to exer-
cise jurisdiction, for example, if a case addresses a political question. 7 The
principles described in the following section could be used in a similar way
to decline to apply the Sherman Act8 8 where the results would conflict with
legal behavior under the WTO rules.
III. PROPOSALS
The following proposals are variations on a theme: How can the current
system of antitrust law be applied by courts to allow informal trade remedies
to inform the extraterritorial application of antitrust law against companies
that are trying to abide by the international trade regime? 89 The two solutions
The problem with that argument is that although the DOJ does embody and enforce executive
(and hence national) political interests in some respects, the international trade agenda is set by the
Trade department in the Department of Commerce, not the DOJ. Cf Brockbank, supra note 15, at
28 (describing the structure of the 1995 Guidelines and the fact that the decision regarding whether
or not international comity compels restraint in prosecution is made by the FTC and DOJ, who will
evaluate the laws and policies of foreign nations, not the trade department, state department, or
other entity with an international focus). It remains an open question whether the DOJ is institu-
tionally competent to balance the specific concerns of international trade policy prior to embarking
on every prosecution. See generally, Kenneth W. Dam, Extraterritorialityin an Age of Globaliza-
tion: The Hartford Fire Case, 1993 SuP. CT. REV. 289, 320 n.1 10. Therefore, in the event the DOJ
oversteps boundaries where international trade concerns dictate in favor of hesitation, the court
should be doctrinally prepared to refrain from making a decision in that sensitive political area.
86 Dee-K Enterprises v. Heveafil Sdn. Bhd., 982 F. Supp. 1138, 1156 (E.D. Va. 1997).
87 See, e.g., Goldwater v. Carter, 444 U.S. 996 (1979) (Rehnquist, J., concurring); Baker v. Carr,
369 U.S. 186 (1962); Nixon v. United States, 506 U.S. 224 (1993).
88 See Lori B. Morgan & Helaine S. Rosenbaum, Recent Development: U.S. Department of Jus-
tice Antitrust Enforcement Policy, 34 HARV. INT'L L.J. 192, 199-201 (listing various doctrines
under which courts could abstain from applying antitrust law internationally, including traditional
jurisdiction considerations, comity, choice of law, act of state doctrine, and foreign compulsion
doctrine, and noting that "[c]ourts have traditionally decided all the above issues as threshold mat-
ters which could justify judicial abstention from a case").
89 It should be noted that this question might be read to imply that NPI's actions were in fact
violations of the Sherman Act and that one of the following principles must be implemented for the
company to be relieved of liability under antitrust law. But this is not necessarily so. It is important
to recall that the allegations against NPI were dismissed because Judge Gertner found that there was
not enough evidence to prove a price-fixing conspiracy. However, because the trial court and the
First Circuit seemed to assume that, had there been more evidence of an effect on the U.S. market,
are each grounded in slightly different principles of law that already exist in
this context and, with some extension or modification, could reasonably ac-
commodate the concerns described above. 90
A. Comity
Comity is "an act of deference by a court, leading it to abstain from
exercising jurisdiction due to potential conflicts or tensions with another
country's laws and interests." 9 1 In Hartford Fire, the Supreme Court af-
firmed the Timberlane92 holding that an international comity analysis may be
appropriate where the foreign company is required by the law of its own
country to act in a manner that is incompatible with the Sherman Act. The
idea behind comity, like many principles in international law, is rooted in a
respect for sovereignty. The notion is that one state should not try to exercise
greater control over the entities of another sovereign than that sovereign itself
does by binding the entities to conflicting laws. There is also a practical
justification: an individual or company cannot simultaneously abide by two
sets of conflicting laws, and international cooperation is undermined by ex-
pecting those companies to choose to abide by the laws of another state over
the laws of their own government. "Comity is viewed as a doctrine designed
to reduce conflicts or tensions between sovereign nations that have different
laws and interests. '9 3 Notions of fairness have also traditionally informed the
NPI's behavior could have given rise to a Sherman Act claim, the proposals are intended to provide
additional law-based sources for a court to conclude that the application of the antitrust law to the
foreign producer is inappropriate despite the weakness or strength of the evidence of price-fixing.
90 Another legal argument to encourage judicial self-restraint against foreign companies alleged to
have violated antitrust laws is the multi-factored reasonableness test. However, this argument "fell
off the wagon in HartfordFire Insurance Co. v. California." Edward T. Swaine, The Local Law of
Global Antitrust, 43 WM. & MARY L. REV. 627, 632 (2001). Although Swaine argues that the
Hartford Fire court misunderstood the Restatement (Third) of Foreign Relations to conclude that
the multi-factored reasonableness test was an inappropriate basis on which to decline jurisdiction,
Hartford Fire nonetheless stands as strong legal precedent directly contrary to any argument that
could be made here encouraging courts to use this test in the NPI context as an act of judicial self-
restraint. See also Dam, supra note 85, at 315 (discussing the Timberlain Rule of Reason test and
arguing that such a test would be preferable to Hartford Fire's "absolutism").
91 VON KALINOWSKI ON ANTrrRUST § 6.03[4] (2d ed. 2002); see Hilton v. Guyton, 159 U.S. 113,
163-64 (1895) (defining comity as "the recognition which one nation allows within its territory to
the legislative, executive or judicial acts of another nation, having due regard both to international
duty and convenience, and to the rights of its own citizens"). Though a distinction is sometimes
made between the comity of courts and prescriptive comity, see, for example, Brockbank, supra
note 15, at 14, that distinction is not emphasized in the caselaw and therefore will not be elaborated
on in this article.
92 Timberlane Lumber Co. v. Bank of Am., 549 F.2d 567 (9th Cir. 1976).
93 VON KALINOWSKI, supra note 89, § 6.03[4].
principle of comity, since it would arguably be unfair to punish or hold a

company liable for engaging in behavior that it would not have known was
illegal since the same behavior would not have violated any laws in its home
94
state.
Before 1993, courts considered whether there was a "significant" or
"substantial" conflict between the foreign law and the Sherman Act in deter-
mining the degree of conflict that might result if the court exercised jurisdic-
tion. 95 "In Hartford Fire, however, the Supreme Court applied a more
stringent definition of conflict, finding that a conflict exists only where the
foreign law 'requires [the party invoking comity] to act in some fashion pro-
hibited by the law of the United States.' ,, 96 Some circuits
have stringently
applied as the threshold requirement to a comity analysis that there be a "true
97
conflict of law" between U.S. antitrust law and the relevant foreign law,
98
invoking a phrase used by Justice Souter in Hartford Fire. The comity
analysis does not arise until the threshold of conflict (however high it is set)
is satisfied. 99 Under any formulation, the comity test has traditionally fo-
94 Brief of Amici Curiae the Government of Japan at 13, United States v. Nippon Paper Indus.
Co., 109 F.3d 1 (1st Cir. 1996) (No. 96-2001). However, the fairness justification is losing some
ground as the ability to exchange information has increased exponentially and companies, as well as
the individuals within them, have become increasingly sophisticated in dealing on an international
scale. There is increasingly a presumption that companies are informed about the legal rules of the
other systems in which they operate, regardless of what the rules of their own government require.
96 Id. (quoting HartfordFire, 509 U.S. at 799 (holding that British law did not require defendants
to act contrary to U.S. law, concluding there was no conflict)).

97 A.B.A. SECTION oF ANTITRUST LAW, supra note 58, at 317.
98 Dam, supra note 85, at 294 (describing Justice Souter's definition of a "true conflict of law":
"If defendants had been compelled by a foreign sovereign to carry out the challenged acts, then, and
only then, would a 'true conflict' exist."). In Hartford Fire, Justice Souter uses true conflict of law
to describe a situation "where to apply both laws would be to impose sanctions imply because a
party was caught between the commands of two sovereigns." This is more stringent than the defini-
tion of a "true conflict" in choice-of-law jurisprudence which "refer[s] to a situation where both
countries have an interest in applying their own law and those laws conflict." In Hartford Fire,
under Souter's true conflict of law analysis, "[t]he Supreme Court held that so long as conduct in
Britain by British companies was intended to, and did, affect U.S. insurance markets, the Sherman
Act would govern the conduct unless British law required the conduct. That British law had 'a
strong policy to permit or encourage such conduct' was irrelevant because the only conflict that
counted for the Supreme Court was compulsion by the British government of acts that were prohib-
ited by U.S. law." See Dam, supra note 85, at 302.
99 However, one commentator observed that two of the five justices that agreed with the majority
holding have retired, and the four dissenters (including Justice Scalia) in the case would have agreed
with the Timberlane court, which applied the comity analysis anytime the Sherman Act is applied
extraterritorially and would not require meeting a threshold of conflict first. Lee, supra note 15, at
207.
cused on conflicts between foreign law and American law,' ° ° and it is "not
uncommon for two or more states simultaneously to be able to claim jurisdic-
tion over a particular person or subject matter."'' ° If the court determines
that a comity analysis is appropriate, it will "consider both the relative impor-
tance of the interests of the nations that are involved in or affected by the
controversy and the nature and extent of effect that the challenged conduct
0 2
has on U.S. commerce."'
In order to address the problem evidenced in the NPI case, courts could
expand the comity rule to recognize the fact that law is becoming increas-
ingly more globalized, and entities are now bound not only by national legal
rules, but by international rules that are becoming more salient, specific and
enforceable. International organizations such as the WTO have dispute set-
tlement bodies that, like states, can claim jurisdiction over a person or subject
matter at the same time a state or another organization does. The rights and
obligations that inure with membership in a global trading regime can be just
as significant and have just as important financial implications as participa-
tion in a national legal system.' 0 3 Dumping is not prohibited by WTO law
itself; WTO law merely permits its regulation. However, insofar as a mem-
ber country like the U.S. chooses to then dumping, that system of regulation
has the sanction of the WTO. Companies in other member countries then
become bound by the domestic, e.g. U.S., dumping such that the practical
implications are of comparable severity to direct regulation by international
law or the law of their home country.
The question remains whether under the facts of NPI it could fairly be
argued that NPI had an obligation under U.S. dumping law to engage in its
chosen course of action. NPI voluntarily engaged in actions designed to ap-
pease Appleton and the other American manufacturers in order to avoid
dumping charges. Thus, it did not get to the stage of being bound by a DOC
order or even a price-undertaking. However, to exclude the type of voluntary
action taken by NPI to correct a dumping violation and include a binding
DOC determination under the comity analysis would fail to account for the
practical realities of the situation and create a perverse disincentive to volun-
tary action. However, courts should encourage voluntary efforts to correct a
10o For an example of a court applying a comity analysis to decline to exercise jurisdiction, see
Trugman-Nash, Inc. v. New Zealand Dairy Bd., 954 F. Supp. 733, 736 (S.D.N.Y. 1997) (finding a
material conflict between American law and New Zealand law).
101 Reuland, supra note 19, at 192.
103 Cf Griffith, supra note 80, at 124 ("As international trade and commerce become more inter-
twined, decisions of international comity will become more important as isolationism becomes a
less viable option.").
noncompliant practice that helps prevent the need to invoke the legal appara-
tus. 10 4 Moreover, given the reality of the situation in which companies like
NPI find themselves, it is difficult to say that they are acting voluntarily
when they have the threat of a trade action hanging over them if they don't
correct their behavior. 10 5 The comity analysis fits well to accommodate these
needs because while comity is discretionary and not legally binding (i.e., it is
not a breach of international law to fail to account for comity), "it is a na-
tion's expression of understanding which demonstrates due regard both to
international duty and convenience and to the rights of persons protected by
10 6
its own laws."'
Current law under HartfordFire makes this application of comity prob-
lematic, since only actions that are required by foreign law invoke the doc-
trine of comity. Therefore, the doctrine would have to be extended to
accommodate 1) actions that are a response to international organization law
(as implemented through domestic law) in addition to foreign law, and 2)
104 Cf Griffith, supra note 80, at 112 ("Comity concerns are central to the political dimensions
created by [the NPI case]. They provide the strongest reasons for moving this case out of the
judiciary and letting the more foreign-oriented bodies such as the Legislative and Executive
Branches handle this delicate matter."). But see Reuland, supra note 19, at 195 (noting the debate
among courts and commentators regarding whether courts are the proper branch of government to
decide issues of international comity).
105 The argument that judges should apply notions of comity to preclude the extraterritorial en-
forcement of antitrust law to foreign producers trying to avoid a dumping action probably couldn't
be used to permit Voluntary Restraint Agreement (VRAs). The VRAs seem similar to the alleged
agreement by the Japanese fax paper manufacturers in that they are both agreements by foreign
producers in the same industry. In the former, the companies agreed to self-impose a quota on their
export of a good (in that case, steel) to the United States. In the latter, the companies allegedly
agreed to sell their fax paper to trading companies (who would in turn sell the paper in the United
States market) for more money. The VRA's, though not actually found illegal by a court, were
alleged by the Consumer's Union to be a violation of the Sherman Act. The agreements engaged in
by Nippon differ from the VRAs entered into foreign steel in the 1970's because of the different
U.S. pressures initiating the behavior. For the reasons described above, Nippon, and companies that
find themselves in similar situations, could reasonably argue that they were compelled under inter-
national law to behave as they did. Although they were not under the anvil of legal process at that
time, they very soon would have been. A dumping action was imminent, and the company decided
to save the monetary cost and turmoil (which invariably has certain political and public relations
costs) of dumping litigation by voluntarily ceasing the allegedly illegal behavior. In the case of
VRAs, it would be much more difficult for the foreign companies to argue that they were under the
anvil of legal process. In that context, the threatening behavior would come not in the form of valid
enforcement of the foreign companies' legal obligations under the GATT, but rather in the form of
illegal laws that would violate the GATT and thus provide a legal cause of action against the U.S.
under GATT Article XI, which prohibits quotas.
106 Reuland, supra note 19, at 193 (quoting Somportex Ltd. v. Philadelphia Chewing Gum Corp.,
453 F.2d 435, 440 (3d Cir. 1971)).

8 UCLA J. INr'L L. & FOR. AFF. 165 (2003)
actions that are taken voluntarily under the threat of legal action in addition
to actions that are required. However, to counsel for such extensions of the
comity doctrine is not entirely outside the bounds of current comity jurispru-
dence. Justice Souter's majority opinion in HartfordFire alluded to the pos-
sibility that there may be "other considerations that might inform a decision
to refrain from the exercise of jurisdiction on grounds of international com-
ity." 0 7 Although "[o]ne can only speculate as to what [Justice Souter] might
possibly have had in mind in inserting [this] caveat in an otherwise far-reach-
ing opinion,"' 0 8 the tension between international trade law and U.S. antitrust
law might be one such consideration. Moreover, these extensions of the doc-
trine are consistent with the reality of the situations that NPI and others find
themselves in, and would provide for a more coherent judicial accommoda-
tion of the burdens of the trade system on international actors.
B. The Noerr-PenningtonDoctrine
During the NPI trial, the Japanese defendant tried to advance the Noerr-
Pennington doctrine as a legal argument against criminal liability.'0 9 The No-
err-Pennington doctrine is "a judicially-created exception to Sherman Act
liability"1 0 that immunizes parties "from the Sherman Act, even when their
intent or the effect of their act is to restrain trade, if the parties are making a
legitimate effort to influence action by governmental entities."" 1 I NPI, in an
effort to invoke this exception, argued quite straightforwardly that "meeting
to discuss how to respond to an anti-dumping suit is not illegal."" 2 The dis-
trict court, however, rejected the defendant's invocation of the Noerr-Pen-
nington doctrine, stating that the doctrine "only exempts [from antitrust law]
joint efforts to influence political or judicial decisionmakers." 113 The court
concluded that "there [was] no evidence that the meeting on March 30, 1990
107 Dam, supra note 85, at 307.

108 Id.
109 Nippon, 62 F. Supp. 2d at 185. Courts are split on whether the Noerr-Pennington doctrine is a
defense or an exemption. While the Eleventh Circuit has held that it is an exemption, see McGuire
Oil Co. v. Mapco, Inc., 958 F.2d 1552, 1558 n.9 (1 th Cir. 1992), the Fifth Circuit has held that it is
an affirmative defense, see Bayou Fleet, Inc. v. Alexander, 234 F.3d 852, 860 (5th Cir. 2000), cert.
denied, 532 U.S. 905 (2001). The distinction is significant because if it is a defense, "then the
defendant, rather than the plaintiff, would bear the burdens of proof and persuasion." VON KA I-
NOWSKI, supra note 91, § 47.01 [2]. However, while recognizing the importance of this distinction,
this paper does not attempt to resolve the issue of whether the Noerr-Pennington doctrine or any of
the other proposals are better construed as exemptions or defenses.
110 Himmel, supra note 41, at 6.
11 Brockbank, supra note 15, at 5.
112 Nippon, 62 F. Supp. 2d at 185 n.20.
"3 Id.
was aimed at formulating a litigation strategy or starting a political action

campaign." 114
However, the court could easily have characterized the meeting as doing
just that-determining a common litigation strategy, in this case the strategy
of avoiding litigation. As is true in other non-trade litigation contexts, the
moment an action is brought in court, the costs of resolving a dispute in-
crease exponentially, even if the case is settled and the parties manage to
avoid -a trial. One trial court made the following observations about an-
tidumping proceedings:
These proceedings may pose a substantial burden on their target. The
foreign companies who are the subject of an antidumping investigation
are presented with questionnaires seeking information about their selling
practices, and, in many cases, their cost of production as well. After sub-
mission of questionnaire responses, these responses are verified by Com-
merce officials. The verification process sometimes involves up to five
investigators reviewing source documents at the respondents' corporate
offices and factories for periods ranging between three days and three
weeks. There also appears to be no limit on the number of complaints a
domestic industry may file, although the ITA has the discretion to termi-
nate the investigation at any time after it determines that a petition lacks
merit. 115
Moreover, once a conflict or dispute becomes a legal action, the politi-
cal and public relations costs for a company also grow. There are certain
costs in goodwill and money that inure as soon as a lawsuit is filed, and often
the more cost efficient litigation strategy is to try to shield oneself from liti-
gation altogether. It is well within the bounds of reason to characterize the
meeting of the Japanese corporations as a litigation-oriented strategy meeting
since their goal was to avoid an antidumping action by the U.S., particularly
when viewed in conjunction with the fact that NPI was "consulting indepen-
dently with counsel in Washington, D.C. to determine how to respond with
pricing to the anti-dumping threat."' "1 6 The central goal of the Noerr-Pen-
nington doctrine is to protect efforts to influence government action," 17 and
by trying to correct the behavior that would cause USTR to take antidumping
114 Id.
115Music Center S.N.C. Di Luciano Pisoni & C. v. Prestini Musical Instruments Corp., 874 F.
Supp. 543, 547 (E.D.N.Y. 1995) (citing Pierre F. De Ravel Esclapon, Non-Price Predationand The
Improper Use of U.S. Unfair Trade Laws, 56 ANnrRUST L.J. 543 (1987)). The ITA is the Interna-
tional Trade Administration. For more information on the ITA, please visit http://www.ita.doc.gov.
116 NPI, 62 F. Supp. 2d at 191.
117 VON KALINOWSKI, supra note 89, § 47.04[1] (noting that the two cases giving the Noerr-
Pennington doctrine its name "establish the general rule that lobbying and other bona fide efforts to
influence governmental action do not violate antitrust laws").
action, NPI was attempting to influence the course of the government's ac-
tion. By recognizing a broader understanding of "formulating a litigation
strategy or starting a political action campaign," a court could use the Noerr-
Pennington doctrine to provide a principled recognition of the trade implica-
tions of an antitrust action and account for those facts when analyzing the
18
antitrust claim.'
Not only is this a reasonable application of the Noerr-Pennington doc-
trine, but it is the most fair way to apply the doctrine. An interesting irony in
the NPI case is that Appleton, one of the American fax paper producers who
threatened to initiate an antidumping petition against the Japanese manufac-
turers, was itself criminally charged for conspiring to raise prices of fax pa-
per in North America." 9 The allegation was rooted in the fact that an
agreement by American producers to file an antidumping petition is function-
ally the same as an agreement to raise prices: By forcing the foreign producer
to raise its prices (or having the government levy a tariff on dumped items),
the price in the American market for the good goes up, enabling American
companies to raise their prices as well.' 20 However, Appleton was able to
defend the charges by applying the Noerr-Pennington doctrine.12' Although
the doctrine had been used in the civil context as a defense to antitrust liabil-
ity, it had not previously been used where the defendant was criminally
charged for conspiring to file an antidumping petition.' 22 The court gave the
jury the following instruction:
It is no violation of the Sherman Act for a defendant to prepare an an-
tidumping petition, and a defendant lawfully may, in advance of the actual
filing, threaten or warn that the filing of such a petition is anticipated, or
meet with domestic competitors in order to discuss and exchange the pricing
23
and cost information necessary to pursue an antidumping petition."'
As the attorneys for Appleton executive Jerry Wallace observed, the
"instruction legitimized Appleton Papers' antidumping efforts and permitted
118 Arguably, the Noerr-Pennington doctrine is particularly amenable to this type of extension or
stretching. Courts have not consistently identified the precise source of the doctrine, and the basis
of the doctrine (constitutional or statutory) can inform a court's construction of the statute. VON
KALINOWSKI, supra note 91, § 50.01 ("[dlepending on the analytical mode, the immunity might be
construed narrowly or broadly").
119Himmel, supra note 8, at C10.
120See D'Esclapon, supra note 30, for a detailed discussion of the application of antitrust law and
the Noerr-Pennington exemption to domestic producers who conspire to file antidumping petitions.
121 Himmel, supra note 8, at CI0.
122 Id.
123 Himmel, supra note 8, at CIO (citing E. R.R. Presidents Conference v. Noerr Motor Freight,
Inc., 365 U.S. 127, 136-41 (1961)).
the jury to place in the appropriate legal context meetings and discussions
regarding the antidumping investigation. Based upon the charge, the jury
decided that the discussions did not cross the line into price-fixing and ac-
quitted both Appleton Papers and Mr. Wallace."' 2 4 If the American compa-
nies who meet to agree to file a dumping charge against foreign producers
can use the doctrine as a defense to an antitrust charge, the foreign producers
who meet to discuss how to avoid having the Americans file that charge
should also be able to use the doctrine as a defense. Both are arguably en-
gaged in formulating policy, which is activity the Noerr-Pennington doctrine
exempts from the reach of antitrust law.
A basic objection one could lodge against any principle that would pro-
vide a defense to NPI's actions is that domestic industry is subject to price-
fixing laws, so why shouldn't foreign industry? It is an objection rooted in
fairness, and one that informs the decisions in cases like Hartford Fire and
NPI extending antitrust law extraterritorially. But the response is equally
rooted in fairness: foreign industry should have a reprieve from the applica-
tion of the Sherman Act when it only engaged in the alleged price-fixing to
comply with a law that it was subject to, and to which U.S. industry has a
defense. Specifically, because the behavior made illegal by dumping "con-
sists of price discrimination and below-cost sales," it resembles the behavior
made illegal under the Robinson-Patman Act in the domestic context. How-
ever, "as a general rule, it would seem that U.S. AD laws are applied in a
much more restrictive manner than the Robinson-Patman Act. There are, for
example, a number of defenses to price discrimination under Robinson-Pat-
man, but virtually none to dumping."'' 2 5 Foreign companies are subject to
much stricter rules and enforcement of price discrimination (or dumping), so
it is logical that there would be greater urgency to engage in behavior having
some similar characteristics to price-fixing. While the domestic producers
could rely on some defenses, foreign producers are subject to the more re-
strictive dumping rules; thus, the unfairness would be in not providing them
some defense for their efforts to remedy the alleged dumping.
124 Id.
125 JACKSON ET AL., supra note 68, at 682; see also Ehrenhaft, supra note 35, at 394 (citing 15
U.S.C. §§ 13(a)-(b) (1994)):
The Robinson-Patman Act, the antitrust price discrimination law and the law most com-
parable to the antidumping law, contains an absolute defense to otherwise injurious price
discrimination if the discriminatory price is offered in good faith to meet the equally-low
price of a competitor. It is this defense which many believe allows the price discrimina-
tion law to remain consistent with the Sherman Act objectives of free and open competi-
tion, which often means price competition.
CONCLUSION
The NPI case illustrates that given the extraterritorial reach of U.S. anti-
trust law in both civil and criminal matters, foreign companies may find
themselves facing the dual specter of the Scylla of dumping law and the
Charybdis of antitrust law. On the one hand, foreign producers may be
bound to rules that regulate dumping by virtue of their government's mem-
bership in the WTO. Yet, an attempt to remedy such price distortions to
avoid a costly dumping action could result in a violation of American anti-
trust law.
As in other areas of law, such as when two constitutional rights come
into conflict, one set of rules must invariably be balanced against the other.
Clearly, both dumping and price-fixing present threats to United States com-
merce which the government legally can, and usually should, address. But,
to the extent that companies engage in what could otherwise be a violation of
antitrust law as a remedy to an alleged violation of the international trade
laws, that factual explanation should inform a court's decision whether to
find the companies guilty of antitrust violations.
It is necessary for U.S. antitrust law to give way to trade law in order to
improve the U.S. position in the global trade system. The United States has
become increasingly seen as antagonistic in the international system with its
aggressive antitrust enforcement and its slight regard for international com-
ity.' 26 Kenneth Dam, criticizing the Supreme Court's extraterritorial exten-
sion of the Sherman Act in the civil context, commented that "[t]he decision
[in HartfordFire] thus sounds a discordant note in an increasingly globalized
economy in an era when the need for more outward-looking and cooperative
economic policy measures has become increasingly obvious." 127 This cri-
tique necessarily emerges with even greater force with the further extension
of the Sherman Act's reach to criminal cases by the Second Circuit in NPI.
Though the United States still plays an important role in the WTO, it may be
126 See Morgan & Rosenbaum, supra note 88, at 203-204 (warning in 1993 that the "diplomatic
costs of the [DOJ's] renewed enforcement policy may outweigh domestic benefits" because of the
potential for "heightening inter-governmental tension"). See also Dam, supra note 85, at 324.
The flagrant use by the United States of extraterritorial measures, particularly in the antitrust
field, has led to a variety of foreign retaliatory measures, such as blocking and claw-back statutes.
Such retaliation harms U.S. interests, both by interfering with U.S. law enforcement and, much
more importantly, by destroying a spirit of cooperation and common purpose in solving interna-
tional economic problems.
Id. See also Brockbank, supra note 15, at 32-34.
127Dam, supra note 85, at 297.
losing ground to the EU 12 8 and Japan. The bottom line is the United States
must demonstrate a greater commitment to its partners in the international
system and to the values of the WTO by removing itself from this jurispru-
dentially constructed protectionist shell.
128 Which, with plans to add as many as nine countries in 2004, will become an even more serious
competitor in international trade.

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Bluebook 20th ed.

ALWD 6th ed.

APA 7th ed.

Chicago 7th ed.

McGill Guide 9th ed.

MLA 8th ed.

OSCOLA 4th ed.

This paper addresses the tension created when a foreign pro-

INTRODUCTION ........................................................ 166

B. International Trade Commitments Under the GATT ..... 170

In 1997, the First Circuit announced its landmark decision in United

I. IDENTIFYING THE PROBLEM

A. The ExtraterritorialApplication of U.S. Antitrust Laws

(2) that the defendant knowingly became a member of the conspiracy to

B. Anti-Dumping Commitments Under the GATT

Trade Laws, 56 ANTITRUST L.J. 543, 548 (1987).

sources in preparing for hearings on the Commerce Department's

C. The Conflict Between the InternationalTrade System and U.S.

42 NPI, 62 F. Supp. 2d at 180.

antidumping laws, have found themselves subject to an antitrust action. 56

II. REMEDYING THE PROBLEM IN FAVOR OF INTERNATIONAL TRADE

Most literature on the international application of antitrust laws assumes

68 EC Commission, Eleventh Annual Report on the Community's Anti-Dumping and Anti-Sub-

70 DAVID RICARDO, PRINCIPLES OF POLITICAL ECONOMY AND TAXATION - (1817).

According to the International Trade Commission, countries involved in

U.S. trading partners have much to lose in antidumping proceedings,7 8

application of antitrust law to undermine the WTO system or traditional di-

principle of comity, since it would arguably be unfair to punish or hold a

to act contrary to U.S. law, concluding there was no conflict)).

453 F.2d 435, 440 (3d Cir. 1971)).

107 Dam, supra note 85, at 307.

was aimed at formulating a litigation strategy or starting a political action

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