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to compete abroad and insure a flexible, efficient economy at home, we must insure the right of foreign firms to compete within the bounds of U.S. law.
We at the Department seek to encourage vigorous competition by all firms within the U.S. economy. But that encouragement does not extend to any class of firms the prospect of less vigilant and effective antitrust enforcement. Foreign firms, like domestic ones, will not be discriminated against by antitrust enforcers; but when they participate in the U.S. economy, they must assume the responsibility of complying with U.S. laws, including the antitrust laws. On too many occasions, persons outside the United States have regarded that responsibility as a discriminatory or excessive burden. I believe that it is not. U.Š. antitrust law is a set of rather broad principles that seek to preserve business freedom and promote efficiency. It is far less of a burden on a foreign firm than the hodge-podge of controls and restrictions that many countries impose on foreign firms simply because they are foreign. No principle of antitrust law subjects any firm to any liability or constraint simply because of its nationality, nor does it mandate more or less favorable antitrust enforcement policy.
When possible, the Department tries to influence U.S. policy in a procompetitive, nondiscriminatory direction. For instance, we have participated in several antidumping proceedings at the U.S. International Trade Commission to argue that the antidumping laws should be interpreted so as to preserve healthy competition, including competition by foreign firms. Similarly I have testified to the Joint Committee on Atomic Energy that participation by foreign firms in the uranium enrichment industry in the United States may be a desirable competitive development.
Unfortunately, some persons abroad claim that the U.S. antitrust laws discriminate against foreign firms. This concern probably arises from three factors: Many countries do not have antitrust laws similar to those of the United States, particularly laws similar to the Clayton Act's limitations on incipiently anticompetitive mergers; many persons abroad are unfamiliar with U.S. antitrust law; and finally, it is common knowledge that many countries do discriminate against foreign investment. I believe that a review of the cases, however, shows that U.S. antitrust enforcement has not been discriminatory.
The Federal Trade Commission has estimated that there have been more than 200 international mergers per year for the last 10 years. During this period, the Justice Department and the FTC have challenged about 10 of these international mergers, and private antitrust actions have attacked a few more. Of the cases brought by the Justice Department, the majority actually have involved challenges to the acquisition of foreign companies by American firms rather than the contrary.
This crude box score of course does not influence our decision whether to bring a given type of case or not; that decision depends upon the particular facts of individual cases. But I believe it does illustrate that the Department has been evenhanded in its enforcement of the antitrust laws related to foreign investments in the United States.
The chairman's letter also inquired generally about the status of Societe Imetal's pending tender offer for the stock of Copperweld. That transaction is presently under investigation by the Antitrust Division, and is the subject of private litigation as well.
In keeping with Justice Department policy, I do not believe it would be proper for me to comment further on the situation.
Thank you, Mr. Chairman.
Department of Justice
THOMAS E. KAUPER
Subcommittee on International Trade, Investment
and Monetary Policy
Commitee on Banking, Currency and Housing
Foreign Investment in the United States
September 24, 1975
I am pieased to appear before this Subcommittee
today to discuss the Department's activities concerning
foreign investments in the United States.
As you know,
the Department has responsibility for enforcing the anti
trust laws and related statutes, primarily the Sherman and
The Sherman Act forbids monopolies and
restraints of trade, and the Clayton Act forbids acquisi
tion by one corporation of the stock or the assets of another
corporation when "the effect of such acquisition may be substantially to lessen competition or to tend to create
a monopoly" with the requisite relationship to interstate
or foreign commerce.
An increasing number and variety of international
business transactions have been subject to antitrust challenge
in recent years, and the trend shows every prospect of
The antitrust laws of the United States have
been used since the early days of the Sherman Act to attack
international cartels which affect U. S. commerce.
a great deal of attention also has been given to international
substantial supplier of the other firm under circumstances
which could make the relationship anticompetitive; and whether the transaction is a pure investment, or a working
arrangement which will in
he management decisions
of either firm.
The antitrust laws certainly are not
opposed to the new competition which is created by unilateral entry into a new market. Thus, when a new entrant, foreign
or domestic, builds new facilities in the United States
rather than seeking to merge or join with an existing
competitor, it will not be charged with an antitrust
violation for doing so.
In some instances, the Department of Justice has chal
lenged foreign firms' acquisition of U. S. competitors. Let me review briefly one of the more widely publicized incidents, the BP-Sohio merger case. 1/ Judge McLaren, when he was head of the Antitrust Division, stated that
Justice welcomed BP's acquisition of Sinclair's east coast properties, because that acquisition introduced a sub
stantial new competitor into the United States market.
When BP proposed a second acquisition involving Sohio,
1/ U. S. v. British Petroleum Company, 1970 Trade Cases,