Fundamental differences in the economic and political philosophies of the European Union (hereinafter the Community) and the United States has led to the development of two different competition policies. It is the thesis of this Note that the goal of creating a competitive, single European market necessitates a Community competition policy that is socialistic, whereas the drive for economic efficiency makes the United States' competition policy capitalistic. In both systems, the competition policy manifests itself in the judicial interpretation of Article 86 of the European Economic Community and Section 2 of the Sherman Antitrust Act, respectively.
Article 86 of the European Economic Community Treaty(1) is part of the competition law of the Community. It prohibits the abuse of a dominant position by one or more undertakings.(2) Its counterpart in United States law is Section 2 of the Sherman Antitrust Act,(3) which prohibits one or more businesses from monopolizing any sector of interstate or foreign trade. Economic efficiency is the overarching goal of Sherman Antitrust Act enforcement actions in the United States. By contrast, rulings of the European Court of Justice (hereinafter the Community Court) over alleged Article 86 violations present obstacles to a more efficient Community economy. The obstacles are higher prices for goods and services and a relatively unsophisticated technology. The Community has enforced a competition policy that places it at an economic disadvantage because achieving an efficient economy is not meant to be the end which Article 86 serves.
Article 86 is intended to serve the overall Community objective of facilitating the integration of the separate economies of the Member States into a unified "Common Market."(4) Therefore, the Commission(5) and the Community Court promote a modified free market system.(6) Although these Community organs stress efficiency and improvements in technology, integration requires a competition policy that factors in social concerns and is not based entirely on economic analysis. The goal of European integration mandates a competition policy that is sensitive to inequalities in economic conditions and the interests of the individual trader or businessperson. The Community Court typically applies Article 86 to protect individual competitors,(7) to stop discriminatory pricing practices,(8) and to thwart economic concentration.(9) Thus, Community competition policy is more socialistic because it seeks to regulate competition. The United States judiciary will intervene only, when there is a blatant distortion of competition.
In the United States, the enforcement of Section 2 furthers purely economic goals. That is, United States antitrust law is not used to further the same kinds of social concerns that are furthered by the competition law of the Community. "United States antitrust laws are premised on the theory that competition will produce the best allocation of economic resources, promote technological innovation that will result in the lowest possible prices for the widest variety of high-quality goods and services."(10) Consequently, application of the Sherman Antitrust Act is intended to allow unfettered market forces to set prices and to encourage optimal production.(11) Accordingly, contemporary United States decisions reflect a hands off antitrust policy. A more permissive stance is taken toward many business arrangements in the United States because of their perceived efficiencies.(12) For example, the United States Supreme Court has never affirmed a finding of monopoly power against a defendant possessing less than approximately seventy percent of the relevant market.(13) The Community Court has found a dominant position to exist when an undertaking possesses forty to forty five percent.(14) Indeed, United States antitrust policy is almost Darwinian in nature, with an eye toward the maintenance of a true capitalist system.
The Community's competition policy is patterned on the American experience.(15) This explains the congruence of the Community competition rules and the United States antitrust rules of the post-World War II era. The Community's analysis looks like the "Harvard School" antitrust theory which had its heyday in the 1960s.(16) The "Harvard School" sought to further political and populist goals of a deconcentrated market and to increase the protection of individual traders. Therefore, its focus of attention was market structure, the dispersement of economic power, and the lessening of inequalities in economic conditions.(17) United States judicial decisions formulated strict antitrust rules under which concentration lead to "inferences"(18) of anti-competitive behavior. The inference is representative of a "per se" anti-competitive rule within antitrust law. Community competition policy naturally followed this approach, with its objectives of breaking down barriers to market entry(19) and promoting a more equitable allocation of economic resources to form a "Common Market."
In the mid-1970s, the "Harvard School" was displaced by the "Chicago School" to become the premier theory of United States antitrust policy.(20) The "Chicago School" approach is that antitrust laws should be construed to promote one predominant goal; namely, "economic efficiency."(21) Superior performance of market leaders results in market concentration. When this occurs, economic efficiencies, such as "better integration of production facilities, plant specialization, and lower transportation costs,"(22) are secured. The United States Supreme Court and United States federal courts recognized that overly-strict antitrust rules, based on populist and equity considerations, could prevent these efficiencies from occurring, by condemning concentration as warping market structure. Therefore, "recent [Supreme Court] decisions indicate that economic values will be accorded far greater weight than social or political values."(23) Consonant with the "Chicago School" approach, the types of horizontal mergers and vertical restraints that were previously outlawed (and are outlawed in the Community),(24) were tolerated in the United States because they were capable of helping the economy through greater efficiencies, more than they hurt it. They did this by altering market structure or placing traders at a competitive disadvantage.
Similarly, the Community Court has been the engineer of Community competition policy. The goals of Community competition law are realized by Community Court interpretations of Article 86.(25) Generally, the way in which a court interprets the law is determined by the language of the law itself. The primary source of Community law is the founding treaties.(26) In Bulmer v. Bollinger,(27) Lord Denning remarked:
The (EEC) treaty...lays down general principles. It expresses its aim and purposes. But it lacks
precision. It uses words and phrases without defining what they mean. An English lawyer would
look for an interpretation clause, but he would look in vain. There is none. All the way through
the treaty there are gaps and lacunae. These have to be filled in by the judges. . .They must look
to the purpose and intent... They must divine the spirit of the treaty... These are the principles...on
which the European Court acts.(28)
Therefore, when interpreting Community law in the form of an ambiguous treaty provision, the purpose and the intent have control over the precision of meaning. This is called teleological interpretation.(29) In Continental Can,(30) for example, the Court, guided by "the spirit, general scheme and wording of Article 86, as well as to the system and objectives of the Treaty,"(31) defined the term "abuse of a dominant position" of Article 86.(32) The definition of "abuse" enunciated in Continental Can was divined from Community policy as stated in Articles 2 and 3(f) of the EEC Treaty.(33)
In the United States, there is a similar policymaking function of judges through statutory interpretation. As Justice John Marshall declared, "It is emphatically, the province and duty of the judicial department to say what the law [the Constitution] is."(34) The Supreme Court's broad powers of constitutional interpretation are evident when interpreting federal statutes. Legislation is more often than not the product of congressional compromise, resulting in ambiguous, indefinite phrasing.(35) This leaves to the judiciary the task to "say what the law is," settling some of the issues on which congressional agreement is impossible. The purpose of Section 2 was to "put an end to great aggregations of capital"(36) caused by monopoly. However, due to the difficulty of precisely defining what does and does not constitute a monopoly, the Sherman Antitrust Act sets forth the general principles, leaving it to the courts to interpret the precise meaning. In so doing, United States courts also play the role of policy enforcer.
In order to discuss the concept of dominance in Community competition law, it is necessary to first consider the concept of the "relevant market." Whether or not a position is "dominant" depends in each case upon the delimitation of the "relevant market," for an enterprise cannot have a dominant position in general, but in respect of certain products or services.(37) The relevant market is defined by reference both to the product market and to the geographic market.
A. Product Market
To define the product market, both the Commission and the Community Court employ a number of criteria, with varying degrees of emphases among them.(38) Generally, determining the product market as part of dominant position analysis turns on the degree of "interchangeability" among the product in question and other products in terms of qualities, features, and uses. For example, in United Brands, the Community Court found thay bananas as formed a single market apart from the fresh fruit market because of "special features distinguishing it from other fruits that it is only to a limited extent interchangeable with them and is only exposed to their competition in a way that is hardly perceptible."(39) The Community Court rendered this conclusion because of unique properties of the banana such as "taste, softness, seedlessness, easy handling, and a constant level of production which enable it to satisfy the constant needs of . . . the very young, the old, and the sick."(40) Logically, excluding bananas from the fresh fruit market prevented United Brands Corporation from being viewed as possessing a "dominant position" therein, illustrating the importance of product market definitions.
Coupled with the interchangeability analysis was an examination of the banana's "cross-elasticity of demand" based on price, which likewise lead to the conclusion that the banana market is a market which is sufficiently distinct from the other fresh fruit markets.(41) "Cross-elasticity of demand" refers to the extent to which the price of the product is influenced by other products that compete with it. It is determined by looking at the manner in which such influence occurs, if at all. The prices of United Brand's bananas were only lowered during the summer months due to competition from summer fruits and at the end of the year due to competition from oranges.(42) Therefore, the Court found insufficient cross-elasticity of demand between the banana and fresh fruits for them to be placed in the same product market.
United States jurisprudence employs a similar analysis of the product market when determining whether a business possesses monopoly power. The leading case in product market definitions is United States v. E.I. dupont de Nemours & Co.,(43) where the issue was whether the relevant market was cellophane, or all flexible packaging material.(44) Akin to the Community
Court's approach in United Brands, the Court focused on functional interchangeability and cross-elasticity of demand.(45) The degree of interchangeability sufficed to place cellophane in the flexible packaging material market.(46) Emphasis was placed on the estimation that "there are market alternatives that buyers may readily use for their purposes..."(47) so that cellophane "has to meet competition from other materials in every one of its uses."(48) Also, a high degree of cross-elasticity was found to exist. That is, a "slight decrease in the price of cellophane causes a considerable number of customers of other flexible wrappings to switch to cellophane . . . ."(49) Hence, the products compete in the same market.
United States jurisprudence has taken the concept of product market one step further. In Brown Shoe Co. v. United States,(50) the Court narrowed the product market into submarkets, "to examine the effects of a merger in each such economically significant submarkets to determine if there is a reasonable probability that the merger will substantially lessen competition."(51) Tantamount to a dicing of the relevant product market into submarkets are the existence of "specialized vendors"(52) and "public recognition of the submarket as a separate economic entity."(53) By looking at a practice's competitive effects on markets within a market, the concept of submarkets increases the likelihood that a business will be deemed a competitor in that market, which in turn increases the likelihood that a business will be found to possess monopoly power.
Brown Shoe was decided in the heyday of the "Harvard School" approach; its expansive judicial treatment of the concept of product market focused on the sculpting of market structure by corporate conduct. Such analysis was dispositive in the formation of the paternal competition policy of the Community, which requires the European Commission and the Community Court to maintain equilibria of market structures, outlawing undertaking activity that causes a market to become structurally imbalanced. As seen in United Brands, one instrument used to preserve such equilibria of markets is product market definitions.
B. Geographic Market
Article 86 prohibits an abuse of a dominant position "within the common market or in a substantial part of it."(54) A further study of United Brands sheds light upon how the Community Court interprets this phrase to determine the relevant geographic market. In that case, the Community Court stated that the geographic market in which an undertaking's economic and commercial power is taken into consideration should be comprised only of areas where the conditions of competition are homogeneous.(55) Using this standard, the Community Court excluded France and the United Kingdom from the geographic market for bananas, due to systems of importpreferences, and Italy, because it imposed quota restrictions.(56) Thus, the definition of the geographic market depends on the significance of any barriers to intra-Community trade, such as consumer preferences or legal limitations.(57) It furthers the regulatory nature of Community jurisprudence by making it clear that it is not necessary that Community-wide competition be affected, as long as the effect is felt in a "substantial" part of the Common Market.(58)
Article 86 prohibits an abuse of a dominant position in the relevant market, not the relevant markets. In United Brands, the national markets of three Member States was considered a "substantial" part of the Common Market where free competition was inhibited to be ousted from the geographic market for bananas. Though three out of fifteen Member States may be seen as insubstantial by some, to the Community Court that ratio is at least significant enough to keep those three members out of geographic market consideration.
United States analysis of the geographic market also looks for homogeneity in conditions of competition by referring to the realities of the way in which firms build and conduct business.(59) Among items considered are how a business is affected by barriers to entry and the existence of economic areas which significantly impede competition.(60) "Geographic market definition in international cases, is, as in any other case, a question of delineating an area of effective competition."(61) "The question in international cases primarily concerns measurement of the influence of foreign competition ... on competition in the United States domestic market."(62) The "effects" test announced in United States v. Aluminum Co. of America,(63) extended the domestic geographic market to include import markets.(64) The test gave United States courts jurisdiction over foreign conduct involving United States antitrust laws that has an "effect" within the United States.(65) This coincides with the Community concept that the substantial effects a practice has within the European Union defines the geographic market.
Through subsequent court interpretations,(66) the Alcoa test was modified. Challenged conduct must have a direct, substantial, and reasonably foreseeable effect on United States commerce.(67) The Foreign Trade Antitrust Improvements Act of 1982 codified this judicial modification of the Alcoa test by amending the Sherman Antitrust Act(68) and the Federal Trade Commission Act,(69) and by lending congressional support for the "effects" test. These enactments, legislative and judicial, provided a more specific, and tougher standard, decreasing the chances that United States territory will be deemed a part of the geographic market of foreign firms. Consequently, it also decreases the chances that those firms will be found to have monopolized such territory, reflecting an alteration of United States competition policy from one that controls competition to one that does not.
Following the newer reasonably foreseeable effects test, the 1984 Justice Department Merger Guidelines delineate the geographic market by asking what would happen if a "hypothetical monopolist . . . imposed a small but significant and nontransitory increase in price"(70) at the location of a merged firm. If the hypothetical monopolist could profitably do this, it is included in that geographic market. This standard applies to both domestic and foreign competitors,(71) and has remained intact in the 1992 Horizontal Merger Guidelines.(72) Pursuant to the standard, a foreign firm will be included in the geographic market if it could sell to enough customers of merging domestic firms to make it unprofitable for the merging domestic firms to raise prices above the prevailing level.(73) In other words, conduct of a foreign firm that limits the profits of a merged domestic firm qualifies the foreign firm to be subject to Sherman Antitrust Act scrutiny. Defining the geographic market in this manner reflects antitrust policy that favors concentration, and honors the "Chicago School" approach.
Extending the reach of United States antitrust law abroad nececessitated the incorporation of political factors into geographic market analysis. For example, "successful foreign competition may result in political obstacles for imports such as vertical restraint agreements or imposition of quotas" on the part of domestic firms.(74) Wisely, in Timberlane Lumber Co. v. Bank of America, N.T. & S.A.,(75) the Ninth Circuit used a "tripartite analysis"(76) to determine whether the effect on United States commerce was "substantial"(77) enough for extra-territorial United States jurisdiction. After determining the effect on United States commerce, the test subjected the exercise of jurisdiction abroad to a "jurisdictional rule of reason"(78) that balanced numerous factors to determine whether jurisdiction should be asserted in light of the concern for international comity.(79) While some federal courts have used a more absolutist approach by including foreign firms within the geographical reach of antitrust laws, so long as any qualifying "effect" is shown,(80) there has been greater receptiion to the "tripartite" test.(81)
The American Law Institute recommended the Timberlane approach in the Restatement of the Foreign Relations Law of the United States(82) and the Foreign Trade Antitrust Improvements Act of 1987 codified a variation of the Timberlane approach.(83) Thus, the application of United States antitrust laws abroad turns not on whether they can assert jurisdiction, but whether they should.(84) If courts do not assert jurisdiction, they accommodate a foreign sovereign's interests.(85)
In 1993, the United States Supreme Court validated, yet restricted the Timberlane "tripartite" test in Hartford Fire Insurance Co. v. California.(86) In Hartford Fire, the Court stated that no conflict exists for purposes of international comity if the person subject to regulation by two states can comply with the laws of both.(87) This means that the Timberlane examination will not be conducted by a United States federal court unless United States law and foreign law are in "true conflict."(88) Accordingly, a United States federal court will only apply foreign law and policy interests when the offending foreign act was compelled by foreign law.(89) The constriction of the Timberlane approach in Hartford Fire appears to more closely align the Court with the aforementioned absolutist approach to the assertion of United States jurisdiction over foreign conduct involving import commerce.(90)
The Antitrust Enforcement Guidelines for International Operations,(91) jointly issued by the United States Department of Justice and the Federal Trade Commission, acknowledge the Hartford Fire opinion as the prevailing judicial view "with respect to the [Timberlane] factor concerning conflict with foreign law. . . ." (92) However, the Guidelines are more accommodating to foreign interests, stating that "[t]he Agencies also take full account of comity factors beyond whether there is a conflict with foreign law."(93) Indeed, the Executive Agencies emphasize the importance of foreign relations, and are willing to "consult with interested foreign sovereigns through appropriate diplomatic channels. . . ."(94) before filing a Sherman Antitrust Act enforcement action. Although it recognized the Hartford Fire analysis as controlling law, the Guidelines cite the Timberlane decision, stating that "many courts are willing to undertake a comity analysis."(95)
From Timberlane, to Hartford Fire, to the Antitrust Enforcement Guidelines for International Operations, contemporary application of United States antitrust laws to foreign conduct has transformed antitrust policy into a quasi-political animal. The global nature of markets cannot be ignored and has led to an increased numbered international agreements.(96) Notwithstanding the efforts of the World Trade Organization, greater cooperation among countries may lead to stalemates over proper antitrust standards. For example, the efficiency-oriented United States antitrust policy will not conform to the Community competition policy of protectionism and regulation. Furthermore, it is not wholly inconceivable that the accommodation of foreign interests by United States antitrust policy represents a political attempt to spread capitalism abroad.(97)
The terms "dominant position" and "monopoly power" correlate each other in Article 86 and Section 2 analyses. Dominant positions are found where an undertaking's market power is such that it concentrates on that market and makes it more difficult for competitors to compete. Contemporary monopoly power analysis is more accommodating to higher market shares, and more welcoming to concentration because of the resultant economic advantages.
A. Dominant Position
The term "dominant position" in Article 86 is not defined within that provision and has been given meaning through the interpretation of the Community Court. The Community Court's definitions of "dominant position" evidences the Community's socialistic competition policy.
In United Brands, the Court defined a dominant position as "a position of economic strength enjoyed by the enterprise which enables it to prevent effective competition being maintained on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers."(98) This definition implies two elements. First, "[p]revent[ing] effective competition"(99) is the power to exclude or seriously weaken competition, or to prevent new competitors from entering the market, by raising barriers to entry.(100) Second, the "power to behave independently"(101) suggests a firm's ability to adopt strategies advantageous to itself and disadvantageous for the rest of the industry, without using overtly exclusionary practices, and which will maintain its market share in spite of some competition.(102)
The focus of dominant position analysis is market power. In United Brands, the Community Court stressed that many factors, no one of them sufficient on its own, may indicate market power.(103) The Court looked at several characteristics of United Brands Corporation to ascertain its market power. It took into account that United Brands was "vertically integrated from its banana plantations through to the point of sale to consumers, it had enough supply to fulfill its needs through its own plantations and links with several independent growers, its supplies would not be damaged by natural disasters or disease because its plantationswere spread over a wide geographic area, it was relatively self-sufficient in transport, it was superior in technical innovations and research, and its policy of delivering less than the quantities ordered maintained its position of strength."(104)
These features of United Brands were indicative of market power to the Community Court. Such market power placed United Brands in an autonomous position relative to its competitors in the relevant market for bananas; able to "behave independently of its competitors, customers and ultimately consumers."(105) Consequently, the market power enjoyed by United Brands indicated a "dominant position" because it had the ability to "affect trade between Member States."(106) Each feature of superiority served as a potential barrier to competitors' attempt to enter the banana market.
Also indicative of market power is an undertaking's market share. Although a large percentage of the market is necessary for an undertaking to be dominant, in United Brands the Community Court held that possessing forty to forty five percent of the relevant market does not prove dominance automatically; that an undertaking's market share is [also] to be considered relative to the strength and number of its competitors, and their respective shares.(107) The market share held by United Brands, which dwarfed the market share held by its next largest competitor (nine to sixteen percent), led the Community Court to conclude that it hadenough market power to adopt a flexible overall strategy against new competitors.(108)
It appears that dominance is found where an undertaking is merely able to prevent effective competition, without actually having done so. If an undertaking enjoys freedom of action or if ". . . it can unilaterally adopt strategies sufficient to enable it overcome competitive attacks . . .,"(109) effective competition is absent and dominance exists. This concept of dominance reflects a managerial Community competition policy, that restricts the activities of undertakings if their competitors are relatively weak. The Community Court's definition of "dominance" protects individual competitors within the Community. Thus the Community is socialistic in its utilization of competition policy to facilitate an integrated market.
B. Monopoly Power
Similar to the Community's analysis of "dominance," Section 2 of the Sherman Antitrust Act requires that a firm have the ability to control price or to exclude competition to qualify as possessing "monopoly power."(110) There is a fundamental difference between United States federal court determinations of whether monopoly power exists and Community Court determinations of whether a dominant position exists. Determinations of monopoly power focus on market share alone, as opposed to focusing on market share relative to that of competitors; which was the dominant position analysis seen in United Brands. Although mentioning structural evidence,(111) many United States courts view market share as the primary determinant of monopoly power, and require a market share approaching seventy percent for monopoly power to exist.(112) In Alcoa, the Second Circuit stated that "it is doubtful whether 60 or 64 percent"(113) of the relevant market amounts to monopoly power.
Because the threshold percentage of market share is substantially higher to support a finding of monopoly power in the United States, as opposed to a finding of dominance in the Community, dominance alone is not punished in the Community as monopoly power was in the United States in the day of Alcoa, where the Second Circuit punished monopoly power alone. The defendant (Alcoa) possessed 90 percent of the virgin ingot aluminum market.(114) In his decision, Judge Learned Hand expressed a belief that great industrial consolidations are inherently undesirable, regardless of economic result.(115) The opinion went on to imply that if a firm is to obtain a position of dominance in a market, such a position will be tolerated by United States courts only if obtained honestly. If a firm has reached monopoly powerthrough "superior skill, foresight and industry, then no offense has been committed."(116) This definition of monopoly power was consistent with true capitalism because it promoted gain through honest labor. It was also reflective of the "Harvard School" approach which facilitated a less concentrated market structure where economic power is dispersed.
Contemporary monopoly power analysis does not focus on high market shares. With the advent of the "Chicago School" approach, greater economic efficiency is realized through concentration. Relevant case law beginning in the mid 1970s shows that the United States judiciary has complied with this notion. In Reiter v. Sonotome Corp.,(117) the Supreme Court held that the Sherman Antitrust Act was designed to preserve consumer welfare and that this is best achieved through the economic efficiency (i.e. lower costs and prices) that concentration provides.(118) The benefits of a concentrated market to the economy influenced the courts to take a more permissive stance against firms that concentrated in a market with far less than seventy percent of the market share. Although there is no clear consensus among United States federal courts as to whether monopoly power may be inferred from possession of less than fifty percentof the market share, there is a reluctance to make such inferences unless there exists other compelling structural evidence.(119) Decisions reflective of the "Harvard School" approach to antitrust policy are no longer rendered unless a market is concentrated on by a firm to such an extent that there is a virtual retardation of free and fair opportunities for competitors to compete due to many barriers to entry. (120) The "Chicago School" approach is reflected in the judicial treatment of the concept of monopoly power, which fosters the more modern "concentration is good" United States antitrust policy.
The terms "abuse" and "monopolization" refer to the end-result offense proscribed by Article 86 and Section 2. In both judicial systems, analysis of the existence of the offense revolves around evaluation of conduct. The difference is that the Community Court's analysis likens itself to strict liability, qualifying conduct as an abuse if it simply alters effective structures of competition, and disallowing exceptions. Modern United States court analysis of monopolization provides for "escape hatches" to the offense, by requiring showings that the monopolist either specifically intended to exclude a competitor, or that the conduct was economically efficient.
A. Abuse
The Community Court tolerates undertakings that possess a dominant position, imposing sanctions only when that position is "abused." Article 86 lists specific examples of conduct that constitutes an abuse.(121) The Community Court's actively facilitates an integrated market through judicial interpretation of Article 86.
Any study of the definition of "abuse" by the Community Court must begin with the case of Continental Can,(122) where the issue was whether a merger by an undertaking in a dominant position constitutes abuse.(123) The Community Court was of the opinion that the merger would be detrimental to consumers because of its impact on an effective competition structure, which would "jeopardize the proper functioning of the Common Market."(124) In holding that the merger constituted an abuse, the Community Court moved beyond the plain language of Article 86, stating that the list of abuses therein was not "exhaustive."(125) Continental Can stands for the proposition that structural measures such as mergers, which lessen competition only indirectly, are also abuses of a dominant position.(126) The conclusion to be made from this liberal construction of Article 86 is that the "strengthening"(127) of a dominant position is an abuse.
"The [Community Court] chose to construe the words of Article 86 to give effect to the spirit of the [EEC] Treaty rather than to give unbending allegiance to technicalities."(128) In order to promote a competition structure that represents a level playing field for all competitors, the Community Court, in Continental Can, engaged in teleological and contextual interpretation,(129) reading Article 86 in light of the policy objectives spelled out in Article 3(f); that ". . . the activities of the Community shall include, . . . the establishment of a system ensuring that competition shall not be distorted in the Common Market."(130)
In United Brands, the Community Court furthered the aims of Article 3(f) through the interpretation of Article 86.(131) The Commission alleged that United Brands Corporation abused its dominant position by cutting off supplies to a long-standing customer, a ripener/distributor (Oleson) who was the largest importer of "Chiquita" brand bananas into Denmark.(132) United Brands contended that its conduct was justified because Oleson promoted a competitor's brand and devoted more attention to the ripening of its bananas when Oleson was refused preferential treatment by United Brands. The Community Court acknowledged that it would not prevent an undertaking from safeguarding its own interests when they are attacked by a competitor, but that such measures are not tolerable if they are unreasonable.(133) The Community Court believed that the cut-off would deter other ripener/distributors from supporting United Brands' competitors, thereby increasing its dominance.(134) The bottom line was that United Brands' conduct effectuated a distortion of Community competition and so was deemed contrary to Article 86 in light of the policies of Article 3(f).
United Brands is notable in that the Court condemned what would seem to be an attempt by an undertaking to protect legitimate business concerns. By focusing instead on the effects the protective measure had on market structure and the ability of competitors to compete, the decision furthers economic deconcentration. The Community Court, in United Brands, favored the "little guy" by including within the definition of abuse, conduct by one of the "big guys" that curtails the economic independence of smaller companies. In this way, the Court maintained its role as regulator of commercial relations in order to facilitate the creation of an integrated market.
In Hoffmann-La Roche(135) the Commission alleged that providing a system of "fidelity rebates" was an abuse of a dominant position.(136) The rebates at issue granted discounts to vitamin purchasers who bought all or most of their requirements exclusively from Roche.(137) The Commission alleged that the vitamin purchasers received a "powerful incentive" not to buy from Roche's competitors because the rebates consituted price discrimination based on loyalty, thereby limiting competitors' source of supply.(138) Also, the Commission alleged that the practice of providing rebates only to certain customers applied dissimilar conditions to equivalent transactions; that two buyers pay different prices for the same amount of the same product,(139) which is a direct violation of Article 86(c).
Roche contended an "abuse" is possible only if it results from a dominant position in the [relevant] market.(140) The Community Court rejected this interpretation of Article 86, ruling that ". . . the behavior of an undertaking in a dominant position . . . ."(141) may amount to an abuse if it bestows upon the undertaking a competitive advantage, regardless of whether the conduct emanated from the dominant position. This interpretation of abuse confirmed the consistency of the Court's approach to Article 86, and greatly strengthens the argument that Article 86 prohibits all exclusionary practices, whatever their nature, which restrict interbrand competition.(142) The Community Court's interpretation of Article 86 in Hoffmann-La Roche furthered the policy objectives of Article 3(f), stating that Article 86 applies not only to practices likely to injure consumers directly, but also to those which injure them indirectly by affecting the structure of effective competition.(143) It is significant because it exhibits the Court's tendency to divorce power from conduct at the abuse stage and to apply regulatory and fairness considerations to determine whether an abuse has occurred.(144) The Community Court's definition of abuse in Hoffman La-Roche can be seen as extreme, because the plain language of Article 86 itself states that an undertaking must engage in an "abuse . . . of a dominant position . . . ."(145) In holding that an undertaking's dominant position need not be the "means to bring about the abuse,"(146) the Community Court portrays socialistic tendencies.
The consideration of social concerns in the application of Article 86 is illustrated in United Brands as well. Another ground on which the Commission alleged an abuse was United Brands' practice of charging different prices according to the Member State where its customers were established.(147) For example, the price Belgian customers were asked to pay were, on average, eighty percent higher than that paid by customers in Ireland.(148) The alleged abuse was that differing prices created dissimilar conditions to equivalent transactions with other trading parties, placing them at a competitive disadvantage.(149) United Brands replied that the practice was justified because it was based on differing costs, such as transportation, taxation, and customs duties.(150) The Court held that the pricing practice constituted an obstacle to the free movement of goods, and distorted competition by partitioning national markets and applying dissimilar conditions to equivalent transactions.(151)
When the Community Court, in United Brands, found that the pricing practice at issue constituted an obstacle to the free movement of goods, Article 9 was incorporated into the analysis of determining whether there had been a violation of Article 86.(152) Such liberal construction, applying Article 9 to Article 86 legal analysis, reflects Community jurisprudence that is obviously driven by the desire to effectuate economic integration. The means to that end is enforcement of a paternalistic competition policy through Article 86 interpretation that honors the grand design of the Treaty of Rome. In the United States, in light of the "Chicago School" approach to Sherman Antitrust Act analysis, the discriminatory pricing practice at issue in United Brands would not be found to be an unlawful monopolization because it would be seen as a good, efficient business practice.(153)
The Community Court's reaction towards practices such as fidelity rebates and imposing different prices show how "the application of Article 86 to pricing policies of companies in dominant positions clearly emerges as the most important feature of the enforcement of the [Community] competition rules in the last few years."(154) "The [Community] Court, in United Brands, seems to accept that Article 86 may be used as an instrument to control prices, not only to ensure that competition is not distorted, but also to directly protect the interests of consumers."(155) By doing so, the Community Court exerts its power, wielding a socialistic competition policy that regulates competition, in order to facilitate the creation of a Common Market.
B. Monopolization
By contrast, modern United States antitrust jurisprudence only outlaws conduct that is intended to harm competitors. The requirement of an intent to monopolize furthers the policy premise that the consumer and the public interests are best protected by respect for freedom of action of private businesses.(156) "United States [antitrust] law is not regulatory (in the sense of direct regulation of price and output), but rather concentrates on preserving conditions whereby free market forces constrain price and induce optimal production."(157) The concept of intent to monopolize in United States antitrust law was born out of judicial interpretation of the term "monopolize" in Section 2 of the Sherman Antitrust Act.
In Alcoa, Judge Learned Hand stated that in order to fall within Section 2 of the Sherman Antitrust Act, the monopolist must have both the power to monopolize and the intent to monopolize.(158) However, Hand de-emphasized the requirement of intent, and equated the bare existence of monopoly power to unlawful monopolization. Specific intent was cast aside as irrelevant to the issue of actual monopolization, "for no monopolist monopolizes unconscious of what he is doing."(159)
United States court interpretations of the term "monopolize," close on the heels of Alcoa, required some unlawful monopolizing conduct in addition to monopoly power to support a finding of monopolization.(160) The "monopolizing conduct"(161) requirement parallels the requirement of abuse for Article 86 application. For Sherman Antitrust Act applicability, the monopolizing conduct must amount to "predatory"(162) conduct specifically designed to injure competitors, or consist of exclusionary practices, which are not predatory in the strict sense, yet create barriers to entry which secure the firm's market position.(163) This definition emphasized market structure and revealed a United States judiciary that catered to the interests of individual competitors and the freedom of small and medium-sized firms, ensuring access to all firms.(164) It honored the "Harvard School" approach to antitrust law, was in line with the Community Court's treatment of abuse, and served as the foundation for judicial recognition of specific intent to monopolize as a requirement for a finding of actual monopolization.
Modern United States antitrust law is said to protect competition and not competitors.(165) Although the object of antitrust protection has shifted, the monopolization analysis is the same, in that the Court treats specific intent in terms of an evaluation of conduct,(166) as in the days of United Shoe. Specific intent to monopolize is tolerated by United States jurisprudence if it is negated by either a "legitimate business purpose,"(167) or the "furtherance of economic efficiency."(168) The latter exculpatory condition often seems to dovetail the former. For example, business strategies that increase monopoly power at the expense of competitors alter market structure, but will create a more efficient economy, which is the desired result of the "Chicago School."(169) No monopolization will result from horizontal mergers because of the economic efficiencies they provide.(170) The merger that was held "abusive" in Continental Can would probably be tolerated under Section 2 of the Sherman Antitrust Act. The Department of Justice's Merger Guidelines indicate that it will not challenge many mergers or vertical restraints which have significant pro-competitive effects.(171)
The most recent formulation of the monopolization offense is found in a "refusal to deal" case heard by the United States Supreme Court. In Aspen Skiing Co. v. Aspen Highlands Skiing Corp.,(172) the defendant, Skiing, operated three of the four ski areas in Aspen, Colorado, and the plaintiff, Highlands, operated the fourth.(173) In this case, the parties were competitors and Skiing possessed monopoly power. The two entities cooperated in the sale of a four-mountain ski pass.(174) As a condition of such cooperation, Skiing forced Highlands to take a fixed percentage of the revenue generated by sales of the pass. Highlands found the agreed percentage (12.5%) for the 1978-1979 season objectionable because it was considerably below its historical average based on usage.(175) The two entities could not agree on a new percentage; Skiing distrusted the method used by Highlands to survey its own sales, and would not agree to the percentage hike Highlands believed it was entitled to.(176) Consequently, Highlands walked out of the joint arrangement.(177) Skiing then took actions that made it extremely difficult for Highlands to market its own multi-area package that replaced the joint offering.(178) For example, Skiing refused to sell Highlands any lift ticket packages that would compete with its own 3-area ticket.(179) Justice Stevens opined that this refusal was motivated entirely by a decision to avoid providing any benefit to Highlands even though such a transaction would have provided Skiing with immediate benefits.(180) The purpose of the conduct was to sacrifice short-run benefits and consumer goodwill in exchange for a perceived long-run impact on a smaller rival.(181) The Court concluded that the refusal of Skiing to cooperate with Highlands was not based on efficiency concerns and so was an unlawful monopolization of the skiing industry. Thus, a firm with monopoly power may not engage in predatory practices such as refusals to deal when, by refusing, the dominant firm foregoes profit opportunities and imposes costs on itself in order to impose greater costs on its competitor.(182) The conduct of Skiing was both inefficient and intended to harm Highlands.
The Court, in Aspen Skiing, preserved the basic principle that freedom to deal or not to deal is a basic element of freedom of trade,(183) stating that the defendant has no "general duty to engage in a joint marketing program with a competitor."(184) However, the principle of freedom of trade is not absolute. An unlawful monopolization will be declared when a monopolist's refusal to deal results in economic inefficiency. By the same token, a refusal to deal is allowed if it is simply an instance of choosing one's customers and of deciding how best to provide the goods and services that the customer wants.(185) The goal is to protect consumers through the maintenance of efficient competition, which stands in contrast to the Community's goal of protecting competitors and consumers directly, through a program of competition regulation.
The United States is also more tolerant of price differentials.(186) Under the auspices of Aspen Skiing, the type of fidelity rebates seen in Hoffmann-La Roche would seem to constitute monopolization only if they maintain or increase market power or unnecessarily exclude competitors and are not means of giving consumers what they want.(187) The reason is that they lower costs to buyers and sellers alike, through lower transaction costs for the buyer and a precise knowledge of demand by the seller. The fact that rebates cause buyers to remain loyal to the monopolist will not lead to their proscription. A seller's sustained lower prices are an irresistible incentive to buy from that seller, yet sustained low prices are pro-competitive.(188) Moreover, the desire in Hoffmann-La Roche to protect the ability of small to middle-sized traders to compete is of no consequence in the United States, where antitrust law seeks to preserve competition, not to protect competitors. That is best achieved through the economic efficiency the rebates provide.
Similarly, geographic price discrimination, as seen in United Brands, is not frowned upon by United States antitrust law. The pricing in United Brands amounted to secondary line price discrimination, which is an injury to competitors of the favored buyer.(189) Preventing buyers from being placed at a competitive disadvantage is not a purpose of the Sherman Antitrust Act, because it has nothing to do with furthering overall economic efficiency. Community competition law protects buyers more directly in order to more easily reach the [EEC] Treaty goal of market integration.
On the other hand, United States antitrust law does recognize a Section 2 violation when primary line price discrimination occurs.(190) That is, price discrimination by a monopolist which causes injury to its competitors.(191) The price discrimination will be held violative if it was intended as the means by which a monopolist "maintained [its] monopoly power."(192) Hence, the judicial treatment of Sherman Antitrust Act applicability to price discrimination is consistent with the notion that efficiency is good, but a free market has no room for dirty pool.
The Community competition policy is socialistic by regulating pricing, condemning mergers that increase dominant positions, and forbidding strategies that deny competitors access to markets. United States antitrust policy proscribes the acquisition of monopoly through mergers not inspired by bona fide efficiency concerns because it excludes competitors unreasonably. United States antitrust policy reflects the notion that the concentration of markets is more helpful than hurtful to the economy because of the efficiencies that accompany it, and it promotes a system marked by corporate sovereignty, protecting the freedom of action of businesses. Thus,United States competition policy is capitalistic.
The Community has formulated its competition policy by studying the competition policy of the United States. The Community should continue to be receptive to the lessons that can be learned from United States competition experience. Specifically, dominant undertakings should be able to excuse conduct that would otherwise amount to a prohibited abuse by showing that the conduct is efficient by lowering costs or increasing the quality of products. Admittedly, market integration requires a competition policy that honors socio-political concerns, but an integrated market can certainly stand greater economic efficiency.
It appears that in the "childhood" of life of the European Union, all fifteen Member States want assurance that their industries will have a fair chance to compete in the Common Market. Once some cross-border concentration has resulted, perhaps the European Union will shift to the United States approach in order to be more competitive in world markets. If we assume that the European Union will achieve a competitive, integrated market, a competition policy that defers to the workings of a free market system should emancipate itself from the current competition policy of regulation and protectionism if it is to thrive in a global economy.
1. 298 U.N.T.S. 14 (European Economic Community) [hereinafter Article 86].
2. Article 86 of the EEC Treaty reads as follows:
Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in:
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
(b) limiting production, markets or technical development to the prejudice of consumers;
(c)applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. D. Lasok & Bridge, Law & Institutions of the European Union 624 (6th ed. 1994).
The concept of an "undertaking" is not defined by reference to the legal status or form of an entity under [European Union] public or private law. "The most obvious meanings to be attributed to the term "undertaking" are "company or firm," "business" or "enterprise."" Any individual or association, informal or with a formal constitution, that engages in economic activities, is considered an "undertaking" by the European Commission. See D. Lasok, supra note 2, at 587 (6th ed. 1994).
3. 15 U.S.C. § 2 (1982) provides in relevant part:
"Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony. . . ."
4. 2 Barry E. Hawk, United States, Common Market and International Antitrust: A Comparative Guide 5 (2nd ed. 1993).
5. Article 155 of the EEC Treaty (Treaty of Rome) describes the functions and powers of the Commission:
'In order to ensure the proper functioning and development of the common market, the Commission shall:
-ensure that the provisions of this Treaty and the measures taken by the institutions thereto are applied;
-formulate recommendations or deliver opinions on matters dealt with in this Treaty, if it expressly so provides or if the Commission considers it necessary;
-have its own power of decision and participate in the shaping of measures taken by the Council and the European Parliament in the manner provided for in this Treaty;
-exercise the powers conferred on it by the Council for the implementation of the rules laid down by the latter.' D. Lasok, supra note 2, at 189 (6th ed. 1994).
6. Id. at 7.
7. Case 27/76, United Brands v. Commission, E.C.R. 207 (1978).
8. Id. at 294.
9. Case 6/72, Europemballage and Continental Can v. Commission, E.C.R. 215 (1973).
10. Joseph P. Griffin, United States Antitrust Laws and Transnational Business Transactions: An Introduction, 21 Int'l Law. 307, 307 n.2 (1987).
11. Thomas C. Fischer, The Europeanization of America 184 (1995).
12. Hawk, supra note 4, at 8.
13. Douglas E. Wentz, Monopoly Power in Completed and Attempted Monopolization Litigation: The Convergence of Law and Economics, 90 Dick. L. Rev. 261, 270 (1985).
14. Case 27/76 United Brands v. Commission, 1978 E.C.R. at 282.
15. Fischer, supra note 11, at 177.
16. Hawk, supra note 4, at 7.
17. Louis B. Schwartz, "Justice" and Other Non-Economic Goals of Antitrust, 127 U. Pa. L. Rev. 1076, (1979).
18. Hawk, supra note 4, at 7.
19. Barriers to entry are features of an undertaking that present legal and economic obstacles for a competitor attempting to enter a market. They include superiority in technology, low transport costs, loyalty to a certain product, tariffs or other legal limitations. For a complete analysis see P. Areeda & D. Turner, 2A Antitrust Law ¶ 518 (1978).
20. Hawk, supra note 4, at 8.
21. Wentz, supra note 12, at 295.
22. U.S. Dep't of Justice, Merger Guidelines, 49 Fed. Reg. 26,823, at § 3.5 (June 29, 1984). These features of concentration are echoed in the 1992 Horizontal Merger Guidelines. See 1992 Merger Guidlines §4.
23. Hawk, supra note 4, at 11.
24. A "horizontal merger" occurs where two or more previously independent undertakings merge or where direct or indirect control of all or part of one or more undertakings is acquired by (I) one or more persons already controlling at least one other undertaking or (ii) one or more undertakings. See D. Lasok, supra note 2, at 635 (6th ed. 1994). Horizontal mergers affect market structure by concentrating market power into the "hands" of fewer undertakings. A "vertical restraint" is any measure taken by a dominant undertaking against its trading partners by which the dominant undertaking reaps benefits which it would not have reaped if there were normal and effective competition in the market. Id. at 623. Vertical restraints are considered "limitation[s] of markets," violative of Article 86(b). See, e.g., Continental Can, [1973] E.C.R. 215 (horizontal merger); United Brands, [1978] E.C.R. 207 (vertical restraint).
25. Article 164 of the EEC Treaty provides: "The Court of Justice shall ensure that in the interpretation and application of this Treaty the law is observed."
26. The EEC (Treaty of Rome) is the angular stone of European integration. The remaining two treaties are primarily economic in scope. They are the ECSC (European Coal and Steel Community), which aims at establishing a Common Market for coal and steel, and Euratom (European Atomic Energy Community), which seeks to bring about a Nuclear Common Market. See D.Lasok, supra note 2, AT 376 (6th ed. 1994).
27. [1974] 2 All ER 1226.
28. Id. at 1237-1238.
29. See L. Neville Brown and Francis G. Jacobs, The Court of Justice of The European Communities 254 (2nd ed. 1983).
30. [1973] E.C.R. 215.
31. [1973] E.C.R. at 243.
32. Brown and Jacobs, supra note 24 at 241.
33. Article 2 contains in relevant part:
The Community shall have as its task, by establishing a common market...to promote throughout the Community a harmonious development of economic activities....
Article 3(f) contains in relevant part:
For the purposes set out in Article 2, the activities of the Community shall include the institution of a system ensuring that competition in the Common Market is not distorted....
34. Marbury v. Madison, 5 U.S. 137, 177 (1803).
35. Walter F. Murphy, Elements of Judicial Strategy 14 (University of Chicago Press, 1964).
36. United States v. Aluminum Co. of America, 148 F.2d 416, 428. (2d Cir. 1945).
37. John Temple Lang, Some Aspects of Abuse of Dominant Positions In European Community Antitrust Law, 2 Fordham Int. L. Forum, 1 (1979-80).
38. Hawk, supra note 4, at 756.
39. United Brands, [1978] E.C.R. at 272.
40. Id. at 273.
41. Id.
42. Id. at 271-273.
43. 351 U.S. 377 (1956).
44. Id. at 380.
45. Id. at 397-400.
46. Id. at 400.
47. Id. at 394.
48. 351 U.S. 377, 399 (1956).
49. Id. at 400.
50. 370 U.S. 294 (1962).
51. Id. at 325.
52. Id.
53. See Id.
54. Article 86 (EEC Treaty).
55. Case 27/76, United Brands v. Commission, E.C.R. 274 (1978).
56. The Community Court carves out of the geographic market those Member States that limit the ability of undertakings to compete on their soil by presenting to them different objective conditions of competition. The "differences" in the conditions of competition present in one or more Member State that favor one undertaking over others are seen as potential starting points for that undertaking to engage in abuses which hinder effective competition, and to "partition" a market by national boundaries. These potential results frustrate the EEC Treaty (Treaty of Rome) objective of creating a single market.
57. 2 Hawk, supra note 4, at 774-775.
58. 2 Smit and Herzog, Columbia Law School Project on European Legal Institutions: The Law of the European Economic Community sec. 86.11 (1976).
59. See, e.g., United States v. Grinnell Corp., 384 U.S. 563 (1966). In Grinnell, the U.S. Supreme Court found the relevant market for accredited central station protective services to be national, even though individual stations ordinarily operated within a radius of only 25 miles because the "business of providing such a service was operated on a national level..." Id.
60. Case-Swayne Co. v. Sunkist Growers, Inc., 369 F.2d 449 (9th Cir. 1966). Case-Swayne delineated the following pertinent geographic market criteria: 1. the commercial realities of the industry (Grinnell), 2. the presence of an "effect" on a market by price disadvantages due to transportation costs, and 3. the presence of an "effect" on the market by the availability of a buyer to supply. Id. at 456.
61. 1 Barry E. Hawk, United States, Common Market and International Antitrust: A Comparative Guide 463 (2nd ed. 1993).
62. See Id.
63. 148 F.2d 416, 424. (2d Cir. 1945).
64. Griffin, supra note 10, at 318.
65. See Id.
66. See, e.g., Todhunter-Mitchell & Co. v. Anheuser-Busch, Inc., 383 F. Supp. 586, 587 (E.D. Pa. 1974); (stating that a practice must "directly affect" United States commerce). See also, Hospital Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 743 (1976); (stating that a practice must "substantially affect" United States commerce).
67. See, e.g., National Bank of Canada v. Interbank Card Ass'n, 666 F.2d 6 (2d Cir. 1981).
68. 15 U.S.C. § 6a (1988).
69. 45 U.S.C. § 45(a)(3) (1988).
70. U.S. Dep't of Justice, Merger Guidleines, 49 Fed. Reg. 26,823, at §2.31 (June 29, 1984).
71. Id. at §2.34.
72. See ABA Antitrust Section, The 1992 Horizontal Merger Guidelines: Commentary and Text § 1.2 (See also p. 8), (1992).
73. 1 Barry E. Hawk, United States, Common Market and International Antitrust: A Comparative Guide 471 (2nd ed. 1993).
74. Id. at 464. Foreign competitors may face higher or lower entry barriers to a United States market than domestic competitors who desire to enter a different geographic region of the United States. Foreign competitors may on the other hand face lower barriers to entry because they are able to achieve economies of scale* selling in their home and other national markets outside the United States. See F.M. Scherer, Industrial Market Structure and Economic Performance 249-250 (2nd ed. 1980).
In this context, "economies of scale" occur when a foreign firm produces much more than it imports, and refers to the ability of that firm to divert its sales into a United States market when its prices rise. See United States v. Aluminum Co. of America, 148 F. 2d 416, 426 (2d Cir. 1945).
75. 549 F.2d 597 (1976).
76. Id. at 613.
77. Id. at 612.
78. Id. at 613.
79. Id. at 614. Factors considered include:
1) the nationality of the parties and the principal place of business of corporations,
2) the relative significance of the effects on the United States as compared with those of other countries,
3) the presence or absence of purpose to affect United States consumers or competitors,
4) the foreseeability of such affects, and
5) the degree of conflict with foreign law or economic policy. Id.
80. See, e.g., Laker Airways v. Sabena, Belgian World Airlines, 731 F.2d 909 (D.C. Cir. 1984). See also, In re Uranium Antitrust Litig., 617 F. 2d 1248 (7th Cir. 1980).
81. See, e.g., Mannington Mills, Inc. v. Congoleum Corp., 595 F.2d 1287 (3d Cir. 1979). See also, Industrial Inv. Dev. Corp. v. Mitsui & Co., 671 F.2d 876 (5th Cir.), cert denied, 104 S. Ct. 393 (1982). See also, Montreal Trading Ltd. v. Amax, Inc., 661 F.2d 864 (10th Cir), cert denied, 102 S. Ct. 1634 (1981).
82. Restatement (Revised) of the Foreign Relations Law of The United States § 403 (tentative Draft no. 7, 1986).
83. Griffin, supra note 10, at 320.
84. Timberlane, 549 F.2d at 613.
85. Fischer, supra note 11, at 191.
86. 113 S. Ct. 2891 (1993).
87. Hartford Fire, 113 S. Ct. 2891 at 2910.
88. Id. at 2910-2911.
89. Fischer, supra note 11, at 195.
90. See Id.
91. 4 Trade Reg. Rep. ¶ 13,107 (1995).
92. Id. at § 3.2.
93. See Id.
94. See Id.
95. See Id.
96. Fischer, supra note 11, at 198.
97. 4 Trade Reg. Rep. ¶ 13,107, § 1 (1995). The Antitrust Enforcement Guidelines for International Operations state that "Although the federal antitrust laws have always applied to foreign commerce, that application is particularly important today. Throughout the world, the importance of antitrust laws as a means to ensure open and free markets, protect consumers, and prevent conduct that impedes competition is becoming more apparent."
98. Case 27/76, United Brands v. Commission, E.C.R. 207, 277 (1978).
99. Id.
100. Lang, supra note 31, at 10.
101. Id.
102. Id. at 11.
103. Case 27/76, United Brands v. Commission, E.C.R. 207, 276 (1978).
104. Id. at 278-281.
105. Id. at 277.
106. Article 86 (EEC Treaty).
107. United Brands, E.C.R. 207 at 282 (1978).
108. Id. at 284.
109. Lang, supra note 10, at 12.
110. Wentz, supra note 12, at 283.
111. For example, in United States v. United Shoe Machinery Corp., 110 F. Supp. 295 (D. Mass. 1953), the court inferred monopoly power from United Shoe's ability to control prices which emanated from both a large market share (seventy five percent), and the existence of barriers to entry including United Shoe's possession of patents "covering every phase of the shoe manufacturing process" Id. at 332-33. The accumulation of patents by United Shoe required its competitors to "either invent around them or buy expensive licenses." Id.
112. Wentz, supra note 12, at 263.
113. United States v. Aluminum Co. of America, 148 F.2d 416, 424 (1945).
114. Id. at 417.
115. Id. at 428. The "economic results" alluded to by Judge Hand include lower prices for goods and services, lower transportation costs, plant specialization, and the technical innovation that market leaders provide.
116. Id. at 430. The reasoning behind this notion uncovers a "mens rea" requirement that Judge Hand deduced from prior case-law and legislative intent. Hand wrote, "...it is unquestionably true that from the very outset the courts have at least kept in reserve the possibility that the origin of a monopoly may be critical in determining its legality...size does not determine guilt; ...there must be some "exclusion" of competitors; ...the growth must be something else than "natural" or "normal"...persons may unwittingly find themselves in possession of a monopoly, automatically so to say; that is, without having intended either to put an end to existing competition, or to prevent competition from arising when none had existed...[s]ince the Act makes "monopolizing" a crime, it would be not only unfair, but presumably contrary to the intent of Congress, to include such instances...[t]he successful competitor, having been urged to compete, must not be turned upon when he wins." Id. at 430-431.
117. Reiter v. Sonotome Corp., 442 U.S. 330 (1979).
118. Id. at 343.
119. See, e.g., Dimmitt Agricultural Indus., Inc. v. CPC Int'l, Inc., 679 F.2d 516 (5th Cir. 1982).
120. See supra note 17.
121. The examples are:
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
(b) limiting production, markets or technical development to the prejudice of consumers;
(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive advantage;
(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
122. Case 6/72, Europemballage and Continental Can v. Commission, E.C.R. 215 (1973).
123. Id. at 242.
124. Id. at 245.
125. See Id.
126. Lang, supra note 31, at 23.
127. Continental Can, [1973] E.C.R. at 245.
128. Eleanor M. Fox, Monopolization and Dominance in the United States and The European Community: Efficiency, Opportunity, and Fairness, 61 Notre Dame L. Rev. 981, 988 (1986).
129. See supra note 24 and accompanying text.
130. EEC Treaty, March 25, 1957, 298, 302 U.N.T.S. 14.
131. [1978] E.C.R. 207.
132. Id. at 290.
133. Id. at 293.
134. Fox, supra note 126, at 996.
135. Case 85/76, Hoffman-La Roche v. Commission, E.C.R. 461 (1979).
136. Id. at 544.
137. Id. at 535.
138. Id. at 540.
139. Id.
140. Case 85/76, Hoffman-LaRoche v. Commission, E.C.R. 461, 541 (1979).
141. Id.
142. Lang, supra note 31, at 30.
143. [1979] E.C.R. at 553.
144. 2 HAWK, supra note 4, at 836.
145. Article 86.
146. 2 HAWK, supra note 4, at 835. (emphasis added).
147. Case 27/76, United Brands v. Commission, E.C.R. 207 (1978).
148. Id. at 296.
149. Id. The bananas sold by United Brands were all freighted in the same ships, and unloaded at the same cost in the ports of Rotterdam and Bremerhaven. The price differences related to substantially similar quantities of bananas of the same variety, which were brought to the same degree of ripening, were of similar quality and sold under the same "Chiquita" brand name. They were sold under the same conditions of sale and payment for loading on to the purchaser's own of transport and who had to pay customs duties, taxes, and transport costs from these ports. Id. at 297-298.
150. Id. at 298. The Court believed that although there were differences in transport costs, taxation, customs duties, the conditions of marketing, and in the parity of currencies that may result in different retail price levels according to the Member States, these differences were factors which United Brands only had to take into account to a limited extent since it sold a product which was always the same. Id. at 298.
151. Id. at 299. Thus, "all things being equal," although the responsibility for establishing a single banana market does not lie with United Brands, it can only endeavor to take "what the market can bear" provided that it complies with the rules for the regulation and coordination of the market laid down by the Treaty. Id.
152. Article 9 of the EEC Treaty prohibits between Member States "customs duties on imports and exports and of all charges having equivalent effect ..." in order to facilitate a customs union.
153. See supra note 147 and accompanying text.
154. Mario Siragusa, The Application of Article 86 to the Pricing Policy of Dominant Companies: Discriminatory and Unfair Prices, 16 Common Mkt. L. Rev. 179, 179 (1979).
155. Id. at 193.
156. 2 Hawk, supra note 4, at 748.
157. Fox, supra note 126, at 985-86.
158. United States v. Aluminum Co. of America, 148 F.2d 416, 432 (2d Cir. 1945).
159. See Id.
160. In United States v. Grinnell Corp., 384 U.S. 563 (1966), the United States Supreme Court indicated that an intent to harm competitors be required for a finding of monopolization, defining monopolization as "(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior business product, business acumen, or historic accident." Id. at 570-571.
161. 2 Hawk, supra note 4, at 746.
162. Times-Picayune Publ. Co. v. United States, 345 U.S. 594, 597 (1953).
163. United States v. United Shoe Machinery Corp., 110 F. Supp. 295, 342-343 (1953).
164. 2 Hawk, supra note 4, at 747.
165. See Id.
166. Barry E. Hawk, Attempts to Monopolize: Specific Intent as Antitrust's Ghost in the Machine, 58 Cornell L. Rev. 1121, 1134 (1973).
167. Times-Picayune, 345 U.S. at 626 (1953). In Times-Picayune, the defendant published the only morning newspaper and one of two evening newspapers in New Orleans. The defendant's acquisition of the evening newspaper, which doubled its market share to eighty percent, was held to be a legitimate means of business expansion and not an element of a calculated quest for monopoly control. Id. at 622-627. Although the facts of Times-Picayune represents a two-market situation (the morning newspaper market and the evening newspaper market) where monopoly power in one market is used to gain a competitive advantage in a second market, United States courts apply the legitimate business purpose test to single market, alleged actual monopolization cases. See, Hawk, supra note 146, at 1129.
168. See, e.g., Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985).
169. See, e.g., Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979).
170. See U.S. Dep't of Justice, Merger Guidelines, 49 Fed. Reg. 26,823, at § 3.5 (June 29, 1984).
171. Douglas E. Wentz, Monopoly Power in Completed and Attempted Monopolization Litigation: The Convergence of Law and Economics, 90 Dick. L. Rev. 261, 297 (1985).
172. Aspen Skiing Co.,472 U.S. 585 (1985).
173. Id. at 585.
174. Id. at 591.
175. Id. at 592.
176. Id. at 592-593.
177. Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 586, 593 (1985).
178. Id.
179. Id. (note 14).
180. Id. at 610.
181. Id. at 610-611.
182. Fox, supra note 126, at 1000.
183. Id. at 999.
184. Aspen Skiing, 410 U.S. at 600.
185. Fox, supra note 126, at 1001.
186. 2 Hawk, supra note 4, at 872.
187. Fox, supra note 126, at 1009.
188. Zenith Radio Corp. v. Matsushita Electric Indus., 513 F. Supp. 1100 (E.D. Pa. 1981).
189. 2 Hawk, supra note 4, at 870.
190. Id. at 869.
191. See Id.
192. Power Replacements Corp. v. Air Preheater Co., 356 F. Supp. 872 (E.D. Pa 1973).
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