Academic journal article Washington and Lee Law Review

Recalling First Principles: The Importance of Comity in Avoiding Antitrust Imperialism

Academic journal article Washington and Lee Law Review

Recalling First Principles: The Importance of Comity in Avoiding Antitrust Imperialism

Article excerpt

Recalling First Principles: The Importance of Comity in Avoiding Antitrust Imperialism

In his bestselling book The World Is Flat, Pulitzer Prize-winning journalist Thomas Friedman provides everyday examples of how globalization has re-shaped the commercial world over the course of the last two decades.1 While Friedman's thesis is much larger than just the effect of globalization on commerce and the changes we have witnessed in the yet-young twenty-first century world, he devotes significant space to how foreign countries have helped shape the newly-flat world.2 In particular, he examines how their companies have dramatically reorganized global supply chains and have become indispensable players in the modern commercial landscape.3 Friedman recounts his experience in 2004 of ordering a notebook computer and the variety of countries and companies that he is linked to in this transaction.4 He traces the supply chain that created his computer and identifies the various companies and countries that supplied components of his new computer.5

Friedman writes that "the total supply chain for my computer, including suppliers of suppliers, involved about four hundred companies in North America, Europe and primarily Asia, but with thirty key players."6 The part-by-part breakdown dramatically shows the extent to which foreign countries increasingly supply the building blocks of electronics sold far from their own shores.7

Friedman highlights the complexity of Dell's supply chain and the diversity of component suppliers to make a geopolitical point.8 An outbreak of armed conflict in East or Southeast Asia would "seriously unflatten" global commerce.9 Friedman observes:

[A]s the world flattens, one of the most interesting dramas to watch in international relations will be the interplay between the traditional global threats and the newly emergent global supply chains. The interaction between old-time threats (like China versus Taiwan) and just-in-time supply chains (like China plus Taiwan) will be a rich source of study for the field of international relations in the early twenty-first century.10

I would add a somewhat less apocalyptic source of conflict that may hamper the operation of global commerce: the overzealous extraterritorial application of antitrust laws. Each of the countries that supplied a part of Mr. Friedman's computer have their own laws and regulations that govern the conduct of companies doing business within their borders, among them competition laws that delineate what is and what is not permissible. 11 These regulations reflect the legal and commercial traditions unique to particular jurisdictions, and embody the differing choices made by these states. And, of course, the United States has its own innumerable laws that govern the conduct of commerce within its own borders.12 These are the product of the U.S. and Western commercial heritage. As to all of the countries, it has long been established in international law that principles of sovereignty permit these nations to apply their laws to conduct occurring within their territory.13 But conflict and friction in the international commercial system can occur when one nation seeks to apply its own laws to conduct that takes place within the borders of another nation.14 The extraterritorial application of antitrust regulations is a potent example. Conflict is particularly possible when it is American antitrust law that is urged to reach foreign commerce and conduct.15 While such an application can be permissible in certain circumstances, there are constraints on the extraterritorial application of American antitrust laws to alleviate such friction.16 One such constraint, but certainly not the only one, is the Foreign Trade Antitrust Improvements Act (FTAIA).17

While the FTAIA initially enjoyed little celebrity, it has taken on an increased importance in debates over how far and to what conduct American courts should extend the reach of American antitrust law. …

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