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Regulating the Competitive Environment

Regulating the Competitive Environment. Chapter 22. © 2005 Thomson/West Legal Studies In Business. History of Antitrust Law. U.S. preached the benefits after World War II (Sherman and Clayton Act since end of 1800”s) EU created a Directorate of Competition Policy

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Regulating the Competitive Environment

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  1. Regulating the Competitive Environment Chapter 22 © 2005 Thomson/West Legal Studies In Business

  2. History of Antitrust Law • U.S. preached the benefits after World War II (Sherman and Clayton Act since end of 1800”s) • EU created a Directorate of Competition Policy • Antitrust law is to prevent monopolies and other business practices which injure competition • EU name more descriptive- Competition law

  3. Sherman Act Broad prohibition Every contract… in restraint of trade or commerce… is illegal Art. 81 (1) prohibits agreements..may affect trade..which have as their object.. prevention, restriction or distortion of competition Lists specific prohibited conduct Language of the Law: U.S. and EU

  4. Case • Windsurfing v. Commission E.C., • Contract clauses invalid because a market restriction on competition • European view more suspicious of patent holders monopoly (U.S. more flexible) • EU more flexible on know-how transfer agreements but more likely to intervene to prevent vertical restraints

  5. Monopolize or attempt to monopolize Sherman Act Similar to U.S. Article 82 Abuse of Dominant Position

  6. Abuse of Dominant Position • Especially stringent when guilty party is foreigner

  7. EU Merger Regulation, 1990 • Review • Community dimension?(aggregate worldwide sale 5 billion Euros, aggregate sales within EU 250 million Euros) • Is it compatible with Common Market? • Recent examples?

  8. Trilogy of Cases • Court of First Instance (CFI) overturned Merger Task Force’s blocking of the mergers • Airtours V. Commission • Schneider Elec. SA v Commission • Tetra Laval BV V. Commission • What result of these 2002 cases? • What is the status of the reforms?

  9. U.S. Law • Private cause of action • Treble damages • DOJ may review but can still litigate • Implications for business? • Encourages litigation • But recent U.S. action against Microsoft was taken by states’ attorney generals

  10. Article 81(3) and the Rule of Reason • Per se wrong versus the rule of reason in the U.S. • Is the rule of reason used in the EU?

  11. EU • EU has preapproval system • Exemption system • individual • negative clearance • block exemption • De miminimis • U.S. does not have comparable

  12. Extraterritoriality • U.S. : “effects test,” controversial • “Direct substantial and reasonably foreseeable effect on U.S. commerce or on business of person engaged in exporting goods from U.S. to foreign countries” • EU - territorial jurisdiction, “implementation test”, “single economic unit”? Blocking legislation?

  13. Cases • U.S.v Aluminum • Hartford Fire Ins. v. Cal. • Eskofot A/S v DuPont • Aahlstrom Osakeyhito v. Com.

  14. Conclusion • Reflections on the Microsoft case • What is happening in Europe now? • Implications for international business?

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