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WT/DS162/R/Add.1 Page 115

1994.  The complementarity does not relate to the origin of the goods, but to the discrimination.  Subjecting US goods to no less favourable treatment than imported goods would therefore require that the United States apply similar penalties and make available similar remedies for equivalent cases involving US goods.  This would require legislation which would render US producers liable for equivalent penalties when they sold their goods in the US at lower prices than on foreign markets under similar conditions to those set out in the 1916 Act, for example, along the following lines:

"It shall be unlawful for any person producing any Articles in the United States, commonly and systematically, to sell such Articles within the United States at a price substantially less than the actual market value or wholesale price of such Articles in the market of any foreign country to which they are commonly exported, after deducting from such market value or wholesale price, freight, duty, and other charges and expenses necessarily incident to the importation and sale thereof in the United States:  Provided, That such act or acts be done with the intent of destroying or injuring an industry in the United States, or of preventing the establishment of an industry in the United States, or of restraining or monopolizing any part of trade and commerce in such Articles in the United States."


The European Communities points out that the 1916 Act does not apply to such acts and nor does the Robinson-Patman Act.  Such acts may in fact be conducted with impunity by producers of US goods (or at least not be subject to any other than the generally applicable laws).  In other words, producers of US goods may do what producers of foreign goods may not.  They may seek to use isolated non-US markets to obtain the high profits needed to allow them to sell at low prices in the United States.  Imported goods are therefore treated less favourably than US goods and this is contrary to Article III:4 of the GATT 1994.373

(b) Element-by-element comparison of the 1916 Act and the Robinson-Patman Act


The European Communities considers that even if the Robinson-Patman Act were considered to be an equivalent measure applying to US goods, imported products are still treated "less favourably" than domestic products.374  A careful comparison of the two laws, taking into account not only the respective texts but also the additional requirements read into the Robinson-Patman Act as a condition for finding primary line violations, demonstrates that it is substantially more difficult to prove a violation of the Robinson-Patman Act than it is to prove a violation of the 1916 Act.  As a consequence, the 1916 Act allows the application of measures (like awarding damages) under less favourable conditions for imported products than those resulting for domestic products from the application of the Robinson-Patman Act.  Therefore, less favourable treatment is accorded to imported products in violation of Article III:4 of the GATT 1994.

373 The European Communities asserts in this connection that its arguments also demonstrate the fallacy of the US argument that the 1916 Act is properly regarded as an "antitrust" measure.  Even if there were some basis for saying that once a measure is classified as an "antitrust" measure it falls outside certain GATT 1994 disciplines, for the European Communities it is clear that a bona fide "antitrust" measure would not apply only to imported products.

374 As a preliminary point, the European Communities recalls that among Robinson-Patman Act cases a distinction is made between the probable impact of price discrimination (i) on direct competitors of the discriminating seller (primary line injury), (ii) on the favoured and disfavoured buyers of the discriminating seller (second-line injury) and (iii) on the customers of either of them (third-line injury).  Primary line discrimination is the only direct domestic analogue of international price discrimination as condemned in the 1916 Act.  The US Supreme Court has held in the Brooke Group case that in order for the requisite effect on competition to be present in primary line cases, it must be shown that (i) the defendant charged prices below an appropriate measure of cost, and (ii) it had a reasonable prospect of recouping its investment in below cost prices.

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