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WT/DS162/R/Add.1 Page 117

alia, (i) the intent requirements under each Act, (ii) the measurement of price discrimination, (iii) the sufficiency of offers for sale for supporting claims under each Act.


With regard to the intent requirements, the European Communities notes that, under the Robinson-Patman Act, a primary line complainant, in order to successfully demonstrate predatory pricing, must establish that (i) the defendant is charging prices below an appropriate measure of cost, namely, average variable costs and (ii) that it has a reasonable prospect to recoup its investment in below cost price.379  These two conditions and especially the second one represent a burden of proof which is very difficult to be sustained by the plaintiff as the Supreme Court itself has recognized.380


The European Communities argues that the intent requirements under the Robinson-Patman Act are not present in the framework of a 1916 Act case.  Under the 1916 Act, discriminatory pricing must rather be conducted with the intent of injuring, destroying or preventing the establishment of a US industry.  The practical result of the difference between the "predatory pricing" test under the Robinson-Patman Act and the "intent to injure" test under the 1916 Act is that the same conduct by two firms, one selling imported products and the other selling domestic products, could be deemed to infringe the 1916 Act in the case of the imported products, and not to infringe the Robinson-Patman Act in the case of the domestic products.  This was recognized by the US Court in the Helmac I case.


Furthermore, the European Communities agrees with Japan that the subjective intent standard under the 1916 Act is easier to prove than the objective effect standard under the Robinson-Patman Act.  As Japan correctly points out, in Brooke Group, the plaintiffs had shown subjective intent, but not effect, and the Supreme Court ruled that the subjective proof, alone, is insufficient.


With regard to the measurement of price discrimination, the European Communities notes that the 1916 Act is applicable whenever goods are imported into the United States at prices substantially below the prices charged in the country of production or other countries where the goods are commonly exported.  By contrast, under the Robinson-Patman Act, it must be shown that the defendant is charging prices below a certain measure of its costs.  In the practice of the courts, that measure is the average variable cost of production.  Where prices are above average variable cost of production, there is no infringement, even if the accused company is applying different prices to different customers.


In the view of the European Communities, in many if not most cases of international price discrimination, prices of imported products are still above average variable costs of production.  In such cases, importers may have to face legal proceedings under the 1916 Act for price practices above average variable cost while domestic producers would not be at risk under the Robinson-Patman Act for sales made at similar level.381  The fact that sanctions can be imposed and damages awarded in situations involving foreign goods sold at a price which bears a given relation to cost of production, while the same price having the same relation to cost of production charged by domestic producers cannot be challenged under the Robinson-Patman Act, amounts to less favourable treatment of imported products prohibited under Article III:4 of the GATT 1994.


What matters, in the opinion of the European Communities, is that the test of the 1916 Act concerns differences in sales prices alone, whereas the Robinson-Patman Act after the Supreme Court’s Brooke Group decision requires not only differences in price but also a price below costs.  Whatever the "appropriate measure of costs" is, it is clear that there can be situations where a price

379 The European Communities refers to Brooke Group, Op. Cit.

380 The European Communities refers to Matsushita Electrical, Op. Cit.

381 According to the European Communities, the Geneva Steel, Op. Cit., and the Wheeling-Pittsburgh, Op. Cit., proceedings are two concrete examples.

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