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WT/DS162/R/Add.1 Page 100

3.6

The United States notes that, in the 1916 Act context, on the other hand, the one court that has squarely addressed this issue in the context of establishing possible damages required the plaintiff to prove that the defendant sold the products at issue at prices below its own average variable costs.  As this court explained:

"It is somewhat of a stretch to suggest the [1916] Act justifies damages when [the defendant's] prices equaled or exceeded average variable cost […].  Therefore, this Court shall limit damages to those cases where [the defendant] set prices below average variable cost."339

3.7

The United States points out that Japan has failed to address any aspect of these arguments, presumably because it has recognized that the price difference and relative price level components of establishing liability under the 1916 Act are more difficult to satisfy than the corresponding components of the RobinsonPatman Act.  Indeed, Japan's only reference to price differences and relative price levels arises in its discussion of  dumping margins, where it recognizes that the "substantial" price differences required to establish liability under the AntiDumping Agreement and the 1916 Act are greater than the "de minimis" dumping margins that do not constitute dumping under the AntiDumping Agreement.

3.8

Japan argues that, to establish infringement under the Robinson-Patman Act in a so-called primary line case, it must be shown that the defendant is charging a price below the average variable cost of production.  If prices are above the average variable cost of production, there is no infringement under the Robinson-Patman Act regardless of the existence of price discrimination.  However, the 1916 Act is applicable whenever goods are imported into the United States at "a price substantially less than the actual market value […]", regardless of the average variable cost of production.340  This difference presents the potential for 1916 Act defendants to face liability for prices above average variable cost.   In contrast, domestic producers face no such risk under the Robinson-Patman Act.  As the United States itself admits, "some lower courts [in Robinson-Patman Act cases] have held that the prices complained of need only be below average cost, while other courts have held that they must be below average variable cost".  With this concession, the United States acknowledges that establishing price discrimination in Robinson-Patman Act cases can be more difficult than establishing a 1916 Act violation.  Under the Oilseeds decision, this is all that is necessary to establish a violation of Article III:4 of the GATT 1994.

3.9

The United States disagrees with Japan's suggestion that sales at prices below average variable cost are a prerequisite to a finding of liability under the RobinsonPatman Act but not under the 1916 Act.341  Under the RobinsonPatman Act, proof of sales at prices below some measure of the defendant's costs is not a prerequisite to a finding of secondary line liability.  Moreover, with respect to primary line liability, the Supreme Court has expressly declined to require a showing of sales at prices below average variable cost.  Instead, the Court stated, in Brooke Group, that the plaintiff needs to "prove that the prices complained of are below an appropriate measure of the rival's cost"342, without specifying any particular measure.  By contrast, in Helmac II, the only case that proceeded

339 Helmac II, Op. Cit., p. 583.

340 Japan notes that the Helmac II case says the liability standard under the 1916 Act is sales at prices below average variable cost and the Brooke Group standard for Robinson-Patman Act cases is sales below an appropriate measure of cost.  However, other cases, including Geneva Steel and Wheeling-Pittsburgh, did not require that sales at prices below average variable cost be established for there to be liability under the 1916 Act.

341 The United States notes that, similarly, the European Communities suggests that sales at prices below average variable costs are a prerequisite to RobinsonPatman Act liability but not to liability under the 1916 Act.

342 Brooke Group, Op. Cit., pp. 22223.

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