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WT/DS162/R/Add.1 Page 52


The United States points out that the second step is to determine whether recoupment is in fact likely both to be feasible and to occur within this relevant market.  The crucial question is whether there is evidence of a realistic expectation of recouping prior losses through future monopoly rents.187  In general, a firm can expect to recoup prior losses only if it possesses substantial market power within the relevant market within the United States, so that it can sell its products at prices substantially above competitive levels without losing sales to competing firms.  The fact that a firm exporting to the United States may charge higher prices in a foreign market because it possesses market power in that market ordinarily would not be necessary to establishing the possibility of recoupment under the 1916 Act.  Of course, the price in the foreign market would be necessary to establishing - as the 1916 Act requires - that the prices charged in the United States are "substantially less" than the prices the firm charges in the foreign market.


With regard to the Zenith III decision, the United States further argues that the court's analysis in the seminal Zenith III case has been supported by other US courts which have considered the nature of the 1916 Act.188  


The United States also argues that Japan's characterisation of an early decision in the Zenith II litigation is equally misleading.  In that case, the district court determined that the 1916 Act was not unconstitutionally vague because, inter alia, it achieved definitional specificity from related terms like "dumping" which have commonly used meanings.189  The court found the common meaning of "dumping" to be "price discrimination between purchasers in different national markets".  This is, of course, a colloquial definition of "dumping", not one based on examination of "fair value" and "material injury" concepts.  More importantly for present purposes, the district court went on to stress that the Act contains the additional element of "specific, predatory, anticompetitive intent".  In this regard, the court stated:  

"As I read the Act, it forbids regular, continued price discrimination between purchasers in different national markets whenever the discrimination is motivated by a desire to destroy competition.   This, I submit, is a more than adequate definition of the conduct proscribed by the Act."190


Japan argues that, with the exception of a single, dated and rejected opinion - Zenith III - the US court precedents support Japan's position.  Ironically, the analysis of the court in Zenith III has been most heavily criticised for failing to follow the tenets of statutory interpretation.191  In US jurisprudence, as in the WTO, the analysis begins with the text and ends with the text, wherever (as with the 1916 Act) the text is unambiguous.

187 The United States refers to Matsushita Electrical, Op. Cit.  The United States recalls that the Supreme Court reiterated this standard that same year in another antitrust case, Cargill, Inc. v. Monfort of Colorado, Inc., Op. Cit.   

188 The United States refers to Western Concrete, Op. Cit., p. 1019 (9th Cir. 1985); Helmac I, pp. 59091; Helmac II, Op. Cit., pp. 56566; Isra Fruit Ltd. v. Agrexco Agr. Export Co., 631 F. Supp. 984, pp. 98889 (S.D.N.Y. 1986); Jewel Foliage Co. v. Uniflora Overseas Florida, 497 F. Supp. 513, p. 516 (M.D. Fla. 1980); Schwimmer v. Sony Corp., 471 F. Supp. 793, pp. 79697 (E.D.N.Y. 1979).  The United States also refers to Outboard Marine Corp. v. Pezetel, 461 F. Supp. 384, pp. 40809 (D. Del. 1978).

189 The United States recalls that, in fact, the 1916 Act itself nowhere uses the word "dumping".

190 Zenith II, Op. Cit., p. 259 (emphasis added by the United States).

191 Japan refers to Geneva Steel, Op. Cit., pp. 1218-19; Wheeling-Pittsburgh, Op. Cit., p. 605.

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