BP was in effect an American concern with a sub- analyze the merger proposal precisely the same way Chairman Rees also asked if existing Department policy adequately handles the growing number of foreign investments in the United States. I believe that nondiscriminatory and vigorous antitrust enforcement represents the best antitrust policy for the United States internationally as well as domestically, and the Department intends to continue that type of policy. Your final question was whether we see a need for improved or expanded monitoring, or advance notice procedures for foreign investment in the United States. I believe it would be desirable to have advance notice procedures involving all major mergers and acquisitions. have testified elsewhere before the Congress in Support of S. 1284, a pending bill that would give us such premerger notification. The provisions of S. 1284 would greatly improve antitrust enforcement by allowing an orderly and prompt antitrust 2/ Antitrust Policy Today, An Address Before the National Industrial Conference Board, Inc., New York, New York, March 5, 1970, p. 7. review of merger transactions before they go into effect. 3/ These benefits would be just as applicable to mergers involving foreign firms as totally domestic mergers, and they may be even more applicable. I have said that we apply the same antitrust principles to merger transactions, regardless of whether they involve foreign firms or not. But mergers involving foreign firms are one of several types of mergers which frequently require us to make unusually difficult judgments as to the facts relevant to the transaction, thus increasing our need for notice of the transaction some reasonable period in advance of its consummation. For instance, the market share of a foreign firm in a U. S. domestic market may overstate or understate its actual competitive influence on that market, depending upon the facts surrounding that firm's participation in the U. S. market. If the firm's position in the U. S. market is the best it can do after a substantial effort, it may be subject to a great downside risk because of currency devaluation, changes in tariffs, and the other uncertainties of international trade. But if the firm is a very substantial global competitor which has only begun penetrating the United States market, its existing market share may greatly underestimate its potential competitive impact on the United States. 7 Testimony of Thomas E. Kauper, Assistant Attorney General, Antitrust Division, Before the Subcommittee on Antitrust and Monopoly, Senate Judiciary Committee, May 7, 1975. Considerations such as these will require increasing sophistication in our investigation of mergers involving foreign firms. This will not require a change in policy or law relevant to antitrust enforcement, but it probably will require an increase in the resources which we devote to such transactions. Assuming that our resources keep pace with the demands of international antitrust law enforcement, and assuming that we obtain premerger notification similar to that provided for in S. 1284, I believe there is no antitrust reason for the Congress to enact special procedures related to foreign investments in the United States. I would like to take this opportunity to emphasize a point that has been made frequently by my predecessors and colleagues in the Federal antitrust enforcement agencies. That is that the United States antitrust laws are blind to the nationality of the businesses to which they apply. Antitrust law is a traditional and fundamental economic policy of the United States. The most basic objective of antitrust law is to preserve an environment within which business enterprises are free to compete in a flexible and productive manner. It would be totally inconsistent with that basic objective to restrict the competitive 60-146 O-75-2 freedom of any enterprise, domestic or foreign, simply because of its nationality. Thus, the Department is not sympathetic to the enhancement of the competitive opportunities of domestic firms by arbitrarily limiting the opportunities of foreign firms. A set of government restrictions that seek to alter the ordinary flow of business from foreign firms to domestic firms may have short-term domestic economic advantages. But to the extent that such restrictions result in a pattern of economic development based on arbitrary government decisions rather than the efficiency-seeking process of competition, both the foreign and domestic economies are less efficient, and poorer as a result. U. S. discrimination against foreign firms also would encourage discrimination by foreign governments against U. S. firms when they seek to compete abroad. Thus, in order to maximize our own firms' ability 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 United States 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 enforce ment. vigilant Foreign firms, like domestic ones, will not be discriminated against by antitrust enforcers; but when they participate in the United States 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. United States 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 United States 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... |