Threats of Foreign Group Boycotts of American Industry Made in Response to U.S. Government Trade Policy: Illegal Anticompetitive Activity or Protected Lobbying under the Noerr-Pennington Doctrine?
Waxman, Michael Peter, The George Washington Journal of International Law and Economics
MICHAEL PETER WAXMAN*
During the summer of 1994, in the heat of trade negotiations between the United States and Japan, over Japan's alleged trade barriers to the importation of foreign automobiles and automobile parts, the United States announced that it was contemplating the application of "Super 301" punitive tariffs on the import of certain Japanese manufactured automobiles.' These punitive tariffs would punish the Japanese auto industry (and indirectly Japan) for alleged anticompetitive acts committed to protect the Japanese domestic market from foreign competition.2 Many observers assumed that the U.S. "threat" to apply punitive tariffs was only a negotiating ploy,3 but the reaction of the Japanese automobile manufacturing and parts industries was immediate and forceful. In September 1994, the Japanese automobile manufacturers and their trade association, Japan Automobile Manufacturers' Association (JAMA), threatened to boycott U.S. automobile parts manufacturers if the U.S. government applied Super 301 punitive tariffs.4 The threat never materialized. Nevertheless, the antitrust implications of a threatened group boycott by foreign companies, in retaliation for tough U.S. policy statements, should be a serious subject of inquiry. As the United States increasingly turns to punitive tariffs to counter the anticompetitive practices of foreign industries,5 we should expect to see more threats of retaliatory actions against U.S. businesses and a concomitantly increased interest in using the extraterritorial jurisdiction of the Sherman Act6 to respond to such threats.
This Article addresses whether the Noerr-Pennington doctrine7 (Noerr doctrine) allows foreign industries to threaten group boycotts of U.S. industries when the threats are made in the context of U.S. trade negotiations, and specifically, when the threats are made in response to U.S. government threats to exercise "Super 301" authority.8 First, this Article examines U.S. antitrust law to determine whether private U.S. parties can successfully sue foreign manufacturers with market power that have threatened a group boycott. Next, this Article examines whether foreign industries can qualify for Noerr-Pennington immunity9 (Noerr immunity). Finally, assuming Noerr immunity applies to foreign industries, this Article addresses whether the Noerr doctrine provides immunity for retaliatory threats of anticompetitive activity in the trade-negotiation/ punitive-tariff context.
I. GROUP BOYCOTTS
Group boycotts are horizontal agreements among competitors with market power to make collective judgments about the competitors, suppliers, and buyers with whom they each will deal.lo Absent Noerr immunity, the legality of group boycotts by domestic companies with market power was traditionally measured by the "per se" standard.ll More recently, the Supreme Court has fluctuated between using the per se approach and applying standards that are usually associated with the rule of reason. Although the Court has never formally abandoned the per se standard in group boycott cases,l2 its opinions over the past decade have ranged from the examination of additional factors and/or a severely limited application of the per se standards to a revival of a rigid application of per se.l4 Regardless of whether the Court applies a per se or rule of reason standard to group boycotts, an examination of the applicable case law reveals that unless the putative boycotters have Noerr immunity, the Sherman Act may be sucessfully used to prosecute the threat of a group boycott in response to a U.S. government threat to establish Super 301 punitive tariffs.
In Northwest Wholesale Stationers, Inc. v. Pacific Stationery fM Printing Co.,15 the Court limited the application of the per se standard in group boycotts.l6 The Court determined that group boycotts warranted per se treatment only where the defendants have "market power or exclusive access to an element essential to effective competition,"17 "the likelihood of anticompetitive effects is clear and the possibility of countervailing procompetitive effects is remote. …