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United States may be a desirable competitive development. 41

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 two hundred international mergers

per year for the last ten years. 5/ During this period,

the Justice Department and the FTC have challenged about ten of these international mergers, and private anti

trust actions have attacked a few more.

of the cases

brought by the Justice Department, the majority

actually have involved challenges to the acquisition of

4/ Hearings before the Joint Committee on Atomic Energy, 93rd Congress, 1st Session, August 1, 1973, p. 174. 5/ Bureau of Economics, Federal Trade Commission, StatisEical Report on Mergers and Acquisitions, July, 1974, . pp. 274-277.

foreign companies by American firms rather than the

contrary. 61

This crude box Score of course does not influence

our decision whether to bring a given type of case or not;

that decision cepends upon the particular facts of indivi

dual cases.

But I believe it does illustrate that the

Department has been even-handed in its enforcement of the

[blocks in formation]

under investigation by the Antitrust Division, and is the

subject of private litigation as well.

In keeping with Justice Department Pol:

I do not

believe it would be proper for me to comment further on

the situation.

6/ "Antitrust, International Mergers and International Joint Ventures," Remarks by Joel Davidow, Chief, Foreign Commerce Section, Antitrust Division, United States Department of Justice, at the Fordham Corporate Law Institute, New York City, November 12, 1974.

Mr. REEs. Thank you very much for an excellent statement. It is so good, I agree with practically all of it.

I think it might be best to hear all the testimony and then we can have an informal question and answer period afterward.

The next statement is by Mr. Richard H. Rowe, Associate Director, Division of Corporation Finance, Security and Exchange Commission.

STATEMENT OF RICHARD H. ROWE, ASSOCIATE DIRECTOR,

DIVISION OF CORPORATION FINANCE, SECURITIES AND EXCHANGE COMMISSION

Mr. Rowe. Chairman Rees, members of the subcommittee, I am pleased to appear before your subcommittee today to testify on the provisions of the Federal securities laws relating to foreign ownership of publicly owned U.S. companies.

Your chairman indicated in his letter to Chairman Garrett that the subcommittee is interested in general in the role that the Securities and Exchange Commission plays in monitoring foreign investment in the United States and more specifically in a pending offer by Societe Imetal, a French company, to acquire securities of Copperweld Corp., a Pennsylvania corporation. In view of the time limitations, my remarks will be rather general.

Strictly speaking, the Commission does not monitor foreign investment in the United States. I believe this will become clearer if I briefly describe the Commission's reporting requirements with respect to foreign ownership of U.S. companies.

Changing world economic and political conditions have increased the interest in the nature and extent of foreign investments in this country. Bills have been introduced in Congress which would limit, restrict, or prohibit outright foreign investments in U.S. industry generally or in designated industries. Certain of these bills would provide for the establishment of a new Government agency to monitor and enforce investment requirements and limitations.

The Commission has furnished comments or testified on many of these bills, two of which are particularly germane to the present discussion. S. 2840 was introduced in 1973 and was enacted as the Foreign Investment Study Act of 1974 and S. 425, the Foreign Investment Act of 1975, introduced by Senator Harrison A. Williams.

The Foreign Investment Study Act of 1974 is a one-time benchmark survey by the Departments of Commerce and Treasury of the nature, extent, and effect of foreign investments in the United States at year-end 1974. A preliminary report is due November 1, 1975, and a final report is due May 1, 1976. The information gathered in this survey is to be used to formulate a national policy toward the inflow of foreign capital into the United States. The Commission's staff has cooperated, and will continue to cooperate when requested, with both the Commerce and Treasury Departments.

S. 425 would serve two primary purposes. First, it would enable the Commission to elicit more information regarding persons making acquisitions of equity securities of U.S. companies. Second, S. 425 would impose a screening process for significant foreign investments in U.S. companies. It would authorize the President, in his discretion, to prohibit any foreign person from acquiring more than 5 percent of any class of equity securities of any large U.S. company, if the President determines that such an acquisition is not in the national interest.

Chairman Garrett testified on both of these bills, twice on S. 425. In his testimony, he addressed himself to the reporting requirements under the Federal securities laws and the Commission's policy on foreign investment. I would like to submit for the record copies of Chairman Garrett's March 7, 1974, testimony on S. 2840 and his testimony of March 5, 1975, and July 22, 1975, on S. 425.

[The material referred to follows:]

MEMORANDUM OF THE SECURITIES AND EXCHANGE COMMISSION PREPARED FOR THE SUECOMMITTEE ON SECURITIES OF THE SENATE COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS ON S. 425, 94 th CONGRESS.

(MARCH 5, 1975)

INTRODUCTION

As stated in the purposes clause of the bill, s. 425 would amend the Securities Exchange Act of 1934 ("Exchange Act") 1/ to require notification by foreign investors of proposed acquisitions of equity securities of United States companies; to provide notice to the President so that he may take action to prohibit any such acquisition, as appropriate, in the national interest; and to provide a system by which issuers of securities registered under the Exchange Act can maintain a list, to be filed with the Securities and Exchange Commission (the "Commission"), stating the names and nationalities of the beneficial owners of their equity securities.

ANALYSIS OF THE BILL

The bill would amend and expand existing Section 13(d) of the Exchange Act to require, explicitly, that statements of beneficial ownership of equity securities (Section 13(d) statements) must include information with respect to the beneficial owner's residence, nationality and financial status. Also, the Section 13(a) statement would be expanded to require information as to the background, identity, residence, and nationality of any person, other than the beneficial owner who files the report, who possesses sole or shared authority to exercise the voting rights evidenced by the securities being acquired.

As a means of obtaining information with respect to acquisitions of equity securities of "United States companies" by "foreign investors," as those terms are defined in Section 2 of the bill, S. 425 also would require that a Section 13(d) type statement be filed confidentially with the Commission

1 15 U.S.C. 78a, et seg.

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