Comity, Cooperation. and Keiretsu: Comments on Papers by Davidow and Griffin

By Weiner, Michael L. | Law and Policy in International Business, Summer 1993 | Go to article overview

Comity, Cooperation. and Keiretsu: Comments on Papers by Davidow and Griffin


Weiner, Michael L., Law and Policy in International Business


It is difficult to take fundamental exception with the excellent scholarly papers prepared by Joe Griffin and Joel Davidow. Mr. Davidow suggests in his paper that the U.S. antitrust laws are unlikely to be used as a weapon against keiretsu arrangements, while Mr. Griffin discusses the impact of the U.S.-EC Agreement regarding cooperation in the enforcement of their antitrust laws.(1) Mr. Davidow is most likely correct in suggesting that the U.S. antitrust laws are unlikely to be used frequently as a weapon against keiretsu, and Mr. Griffin's comments regarding the significance of the U.S.-EC Agreement cannot be disputed. Mr. Davidow may, however, be a little too pessimistic in his view of the scope of U.S. antitrust law, and Mr. Griffin may be a little too optimistic in his view of the success of existing international antitrust 7enforcement cooperation agreements.

The U.S.-EC Agreement on antitrust cooperation calls on each party to take into account the other party's "Important interests" at all stages of its enforcement activities and sets forth a list of six factors--similar to the Timberlane factors,(2) the factors set out in the Restatement (Third) of the Foreign Relations Law of the United States,(3) and the list of considerations set forth in the Justice Department's 1988 International Enforcement Guidelines(4)--that are to be considered in evaluating proposed enforcement activities.

In setting forth this list of factors, the parties to the Cooperation Agreement agree to consider, among other things, "the degree of conflict or consistency between the enforcement activity and the other Party's laws or articulated economic policies."(5) Elsewhere, the Agreement acknowledges that conduc approved" by a foreign government is also an important consideration in deciding whether and if governmental enforcement is appropriate.(6) Griffin suggests, in this respect, that the Agreement represents a potentially outcome--determinative "lowering" of the comity threshold away from the "actual compulsion" standard that U.S. courts and the Justice Department have previously required.

Notwithstanding the particular language of the Agreement, it appears that the Justice Department's view has really not changed in favor of granting increased deference to non-competition based economic policy in the context of making prosecutorial decisions. In an amicus brief filed in late December 1992 before the Supreme Court,(7) the Justice Department, in arguing that the U.S. courts should exercise jurisdiction over the non-U.S. reinsurer defendants in the case, concluded that no conflict with foreign law ever exists for comity purposes unless:

(1) a foreign government has directed the defendants to engage

in the disputed conduct, or (2) the defendants could not have

avoided engaging in the disputed conduct without frustrating

clearly articulated policies of the foreign government.(8) In contrast to the language of the U.S.-EC Agreement, jurisdiction will be exercised under this standard over conduct "encouraged or approved" by a foreign government, even if failure to engage in the conduct would frustrate "clearly articulated policies of the foreign government."(9)

The plaintiffs, state attorneys general in the Hartford/Merrett Underwriting cases, are urging the Supreme Court to do away entirely with the comity analysis, which they characterize as an improper "vague doctrine of abstention" judicially grafted onto the Sherman Act.(10) Their argument is that the plain meaning of the Foreign Trade Antitrust Improvements Act of 1982(11) obligates the courts to exercise, jurisdiction whenever foreign conduct has a "direct, substantial and reasonably foreseeable effect" on domestic commerce, regardless of whatever international conflicts may arise.(12) Balanced against the limited views of comity advocated by the state attorneys general and the Justice Department is the increasing potential for conflicts as markets increasingly become global and as additional jurisdictions enact competition laws, step up enforcement of existing legislation, and become more willing to apply an effects-based test of jurisdiction. …

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