U.S.-Japan Antitrust Cooperation

By Seita, Alex Y. | Law and Policy in International Business, Summer 1993 | Go to article overview

U.S.-Japan Antitrust Cooperation


Seita, Alex Y., Law and Policy in International Business


Thank you very much, Professor Pitofsky. It is a pleasure to be back at Georgetown University Law Center and to be a part of this distinguished panel.

The papers by Joseph Griffin and Joel Davidow are excellent. Griffin's paper discusses a formal antitrust cooperation agreement between the United States and the European Community, and Davidow's paper provides an introduction to the complex issue of analyzing Japanese keiretsu under American antitrust laws. The two papers together illustrate the need for and benefits of cooperation between and among American, European Community, and Japanese antitrust authorities.

"Managing Economic Interdependence" in a global environment implies a number of important policy decisions for the United States, the European Community, and Japan--the three major economic powers in the world. First, the three parties must recognize that they are, to a certain degree, economically dependent upon each other, and must also determine the extent to which the economic interdependency will exist. Second, sound management of the interdependency requires that the three parties cooperate in good faith and regulate their economic relationship through permanent institutional mechanisms rather than on an ad hoc basis.

In the antitrust context, "Managing Economic Interdependence" should involve a recognition by the three governments that the content and enforcement of antitrust law in a domestic setting can have international ramifications. U.S. antitrust law, European Community competition policy, and the Japanese Antimonopoly Law ave effects abroad. Rational management of the antitrust interdependency should involve American, European, and Japanese institutions designed to promote international antitrust cooperation.

Joseph Griffin's paper on the EC-U.S. cooperation agreement gives an example of antitrust cooperation,(1) and Joel Davidow's paper on keiretsu implies the necessity for such cooperation.(2) i would like to address some of the points in Davidow's keiretsu paper.

The word "keiretsu" has received a lot of attention in the United States. A highly publicized example concerned the failure of T. Boone Pickens to take over, let alone gain representation on, the board of directors of Koito Manufacturing in Japan.(3) Among other things, Pickens argued that the keiretsu system (in particular, the Toyota production keiretsu) created a barrier against foreign investment in Japan. As a result, the term keiretsu has received a somewhat negative image in the United States.(4)

The issue of Japanese keiretsu presents two interconnected problems. First, keiretsu pose a legal antitrust problem,(5) and second, they reflect a larger constellation of problems afflicting the entire U.S.-Japan economic relationship. Most of these problems probably fall under the rubric of Japan's economic challenge to the United States(6) No matter how you deal with the legal antitrust issue, a much larger economic and political headache looms in the background. If the United States believes that keiretsu practices violate U.S. or Japanese antitrust laws, but that these unlawful practices cannot be stopped, the failure to resolve the legal issue will aggravate U.S. resentment of the larger economic and political problem. If most keiretsu practices are legitimate under either country's laws, then a potential irritant to the U.S.-Japan economic relationship is defused. Thus the successful handling of the antitrust issue involving Japanese keiretsu (and other antitrust problems existing in Japan) is important for many reasons.

The Davidow paper makes three points. First, vertical keiretsu arrangements in the United States normally do not violate U.S. antitrust laws. Second, subjecting Japanese keiretsu activities to the extraterritorial enforcement of U.S. antitrust laws is seldom feasible. Third, Davidow believes that any legal resolution of keiretsu-related anticompetitive practices in Japan should first be attempted under the Japanese Antimonopoly Law by the Japanese Fair Trade Commission (JFTC). …

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