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WT/DS162/R/Add.1 Page 94

cases remain pending and have not yet been finally resolved, these figures suggest that allegations of primary line discrimination under the RobinsonPatman Act even without considering allegations of secondary line discrimination have continued to pose far more of a threat of liability to domestic firms than the 1916 Act poses to foreign firms.


The United States argues, in addition, that a number of cases establish, either directly or by implication, that the same predatory pricing and recoupment requirements applicable to Sherman Act Section 2 and primary line RobinsonPatman Act cases apply to the 1916 Act as well.  Thus, in Brooke Group itself, the Supreme Court determined that for predatory pricing to constitute either a violation of Section 2 of the Sherman Act or a violation of the RobinsonPatman Act (under a primary line injury theory), (1) the challenged prices must lie "below an appropriate measure of [the defendant's] costs", and (2) the defendant must have a "reasonable prospect" [for RobinsonPatman Act liability] or a "dangerous probability" [for Sherman Act liability] of "recouping its investment in belowcost prices".314  This determination derived, in part, from the Supreme Court's 1986 decision in Matsushita Electrical, in which the Court held that conspiracies or attempts to monopolise through predatorily low prices could only be established by proof that such prices were below some appropriate measure of costs, and that the defendants possessed a realistic expectation of recouping prior losses through future monopoly rents.315  On remand, the court of appeals in In re Japanese Electronic Products III applied precisely this predatory pricing standard to the plaintiff's 1916 Act claims which were based on an alleged "intent to injure or destroy an industry in the United States" and found that they had to be dismissed based on the same failure to adduce proof of recoupment which led to dismissal of the Sherman Act claims.316


In response, Japan notes that the Supreme Court in its 1986 decision in the Zenith litigation expressly states that its ruling did not apply to the petitioners' 1916 Act claims and the Court of Appeals decision was based on the petitioners' failure to prove its conspiracy claim.  Thus, there is no support for the US assertion.


The United States concedes that the Supreme Court only decided the plaintiffs' Sherman Act claims (because those were the claims upon which the Supreme Court granted certiorari, or in other words, those were the only claims that the petitioner requested that the Supreme Court review).  However, the Supreme Court remanded the entire case, including the 1916 Act claims, for the Court of Appeals' consideration in light of its decision.   The Court of Appeals acted upon the Supreme Court's instructions by deciding that a failure to show a possibility of recoupment under the Sherman Act also constituted a failure to make out a 1916 Act claim, thus equating the two.  Had the 1916 Act claim required lesser, or different evidence, it would not have been dismissed.


The United States recalls, moreover, that in the one instance in which a plaintiff was able to reach the question of what, if any damages, it might be entitled to in Helmac II, as the consequence of a default discovery determination the court indicated that damages would be available only for sales at prices below average cost.  This determination and the other court decisions under the 1916 Act indicate that even if a plaintiff has extensive evidence on the subject of predatory intent, it is not likely to be able to establish a 1916 Act violation, to the satisfaction of a US court, without also being able to provide the same type of evidence of anticompetitive conduct and effects required in Sherman Act monopolisation and RobinsonPatman Act cases.

(d) The available defences

314Brooke Group, 509 U.S., p. 224.

315The United States refers to Matsushita Electrical, Op. Cit., p. 574; the United States also refers to Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104 (1986).

316 The United States refers to In re Japanese Electronic Products III, Op. Cit., pp. 4849.

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