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B? was in effect an American concern with a sub-
stantia: business in the United States. We
analyzes the merger proposal precisely the same way
we wouis have analyzed a proposal to unite Sohio
with another American company in the position of BP's
American subsidiary. Since Sohio had about 30 percent
of the Chio market, and since we concluded that BP
was one of the most likely potential entrants into
the Ohio market, this seemed to us to involve a
typical 'big firm-leading firm' market extension
situation, and we announced our intention to challenge
the merger. 2 /

Chairman Rees also asked if existing Department

policy adequately handles the growing number of foreign

investments in the United States.

I believe that non

discriminatory 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

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where before the Congress in Support of s. 1284, a pending

bill that would give us such premerger nutification. 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 escer transactions before they go into effect. 31

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 re

quire 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.

3 Testimony of Thomas E. Kauper, Assistant Attorney General, Antitrust Division, Before the Subcommittee on Antitrust and Monopoly, Senate Judiciary Committee, May 7, 1975.

Consiċerations 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 0 - 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 com

petition 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

vigilant

ment.

Foreign firms, like domestic ones, will not be

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discriminatei 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

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foreign firm than the hodge-podge of controls and restric

tions 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, includ

ing 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-v

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