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WT/DS162/R/Add.1 Page 97

"(1) territorial price discrimination 'for the purpose of destroying competition, or eliminating a competitor;' (2) charging 'unreasonably low prices for the purpose of destroying competition or eliminating a competitor'; and (3) granting discounts, rebates, or allowances that are not made available to a recipient's competitors in the sale 'of goods of like grade, quality, and quantity.'"325

3.4

The United States notes that the Supreme Court has determined that "unreasonably low prices" are prices "below cost" and Section 3 thus prohibits sales at prices "below cost" that are made with the requisite predatory intent.326  Both statutes provide that one who violates the criminal proscriptions can be fined up to $5,000, imprisoned for up to one year, or both.  Moreover, as the District Court in Zenith stated:

"The clause of the 1916 Act which creates criminal  penalties is virtually identical to, and specifies the same penalties as, the corresponding clauses of the Sherman Antitrust Act as then in force."327

Thus, from the perspective of both substantive scope and penalties, the criminal component of the 1916 Act treats importers no less favourably than the criminal provisions of the RobinsonPatman Act.  That conclusion is further strengthened by the fact that the United States has never pursued a criminal case under the 1916 Act.  By contrast, there have been a number of criminal prosecutions under Section 3 of the RobinsonPatman Act.

3.5

The United States notes that Japan nevertheless argues that the criminal component of the 1916 Act is less favourable, based on its suggestion that Section 3 of the RobinsonPatman Act covers only "a limited subset of price discrimination practices that overlap with Section 2(a) […] and for selling at unreasonably low prices […]."  There does not, however, appear to be any basis for this suggestion.  In fact, as the language of Section 3 itself indicates, it applies to "territorial price discrimination"; to charging "unreasonably low prices"; and to granting discounts, rebates, or allowances that are not made available to a recipient's competitors in the sale "of goods of like grade, quality, and quantity".  In short, the coverage of this section actually appears to be broader than that of both the 1916 Act and of Section 2(a) of the RobinsonPatman Act, clearly establishing that the criminal provisions of the 1916 Act are, at a minimum, no less favourable to importers than the criminal provisions of Section 3 of the RobinsonPatman Act.

(f) The litigation costs and business burdens

3.1

Japan contends that, because plaintiffs more easily can prevail in lawsuits against importers and imported products under the 1916 Act than against domestic competitors under the Robinson-Patman

325 Section of Antitrust Law, American Bar Association, Antitrust Law Developments (Fourth) (1997), p. 490, quoting 15 U.S.C. §  13a.

326The United States refers to United States v. National Dairy Products Corp., 372 U.S. 29, pp. 3637 (1963).  The Court also determined that such sales do not violate Section 3 of the Act:

"when made in furtherance of a legitimate commercial objective, such as the liquidation of excess, obsolete or perishable merchandise, or the need to meet a lawful, equally low price of a competitor."

The United States further notes that, earlier, the Tenth Circuit had determined that such sales do not violate Section 3 of the Act if they are made "to increase volume and decrease unit cost in order to retain [one's] proportionate share of a diminishing market."  (Ben Hur Coal Co. v. Wells, 242 F.2d 481, p. 486 (10th Cir.), cert. denied, 354 U.S. 910 (1957)).

327 Zenith III, Op. Cit., p. 1214.

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