CHAPTER 22
Regulating the Competitive
Environment
Copyright © 2009 South-Western Legal Studies in Business,
a part of South-Western Cengage Learning.
Historical Development of
International Competition Law
• In U.S., “antitrust” law has existed since the late
1800’s, with the Sherman and Clayton Antitrust Acts.
• EU created a Directorate of Competition Policy.
• Antitrust law is to prevent monopolies and other
business practices which injure competition.
• EU name more descriptive- Competition law.
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Basic Regulatory Framework
• Antitrust laws differ from nation to nation, but
they tend to prohibit two types of activities:
– Agreements between competitors that restrict
competition , and
– The abuse of “dominant market” position. 
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Prohibitions Against Agreements
to Restrict Competition
• Sherman Act
• Broad prohibition
• Every contract… in
restraint of trade or
commerce… is illegal
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a part of South-Western Cengage Learning.
• Art. 81 (1) prohibits
agreements..may affect
trade..which have as
their object.. prevention,
restriction or distortion of
competition
• Lists specific prohibited
conduct
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Abuse of Dominant Market Position
• Monopolize or attempt to • Similar to U.S.
monopolize
• Article 82
• Sherman Act
See the Microsoft Corp. v.
Commissioner of the European
Communities case.
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EU Merger Regulation, 1990
• Review.
• Community dimension?(aggregate worldwide
sale 5 billion Euros, aggregate sales within EU
250 million Euros).
• Is it compatible with Common Market?
• Recent examples
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Antitrust Cases
• Court of First Instance (CFI) overturned Merger
Task Force’s blocking of the mergers:
– Airtours v. Commission case (European Court 2002).
CFI annulled the prohibition against the merger. And
see the Schneider Elec. SA v. Commission case
Airtours V. Commission
• Tetra Laval BV v. Commission case.
• What result of these 2002 cases?
• What is the status of the reforms?
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Distinctions of Non-U.S. Law
and Competition Law
• Private Causes of Action for Damages and
Criminal Prosecution.
– Treble damages and attorneys fees available.
– EU pushing to enhance private (non-governmental)
causes of action.
• US law may impose criminal liability, which is not
possible under EU or Japanese law.
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Article 81(3) and the Rule of Reason
• Per se wrong versus the rule of reason in the
U.S..
• Is the rule of reason used in the EU?
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Preapproval Procedures
Versus Litigation
• EU has preapproval system.
• Exemption system.
–
–
–
–
Individual.
Negative clearance.
Block exemption.
De miminimis.
• U.S. does not have comparable preapproval system.
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Extraterritorial Effect of
Competition Laws
• U.S. : “effects test,” first set forth in the
“American Banana” case. And see the
United States v. Aluminum Co of America
(ALCOA).
• Hartford Fire Insurance Co. v. California
case: foreign insurers are subject to Sherman
Antitrust Act.
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European “Implementation” Test
• EU - territorial jurisdiction, “implementation test”,
“single economic unit”? Blocking legislation?
• EU courts can achieve jurisdiction over foreign
companies if there is a “material influence” over
an EU competitor.
• What is “objective territoriality”?
• What was the holding of the “Wood Pulp” case?
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Conclusion
• What is “Blocking Legislation” and what impact
would it have on international trade?
• What is happening in Europe now?
• What is happening in China now? See the AntiMonopoly Law of the People’s Republic of
China, which takes effect August 1, 2008.
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a part of South-Western Cengage Learning.
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