Antitrust Law and Joint International Business Ventures in Economically Underdeveloped

Antitrust Law and Joint International Business Ventures in Economically Underdeveloped
Countries
Author(s): Wolfgang G. Friedmann
Source: Columbia Law Review, Vol. 60, No. 6 (Jun., 1960), pp. 780-791
Published by: Columbia Law Review Association, Inc.
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ANTITRUST
LAW AND JOINT INTERNATIONAL
BUSINESS
VENTURES
IN ECONOMICALLY
UNDERDEVELOPED
COUNTRIES
WOLFGANG G. FRIEDMANN*
In recent years, Congressmen, policy makers, and leaders of public

opinion have become increasingly aware of the vital importance of the role
to be played by the United States in the economic development of the less
developed countries in Asia, Africa, and Latin America. The qualitative and
quantitative magnitude of the problem increases almost daily as more and
more formerly politically dependent or economically retarded nations and
tribes attain statehood and political sovereignty and, with these, almost
inevitably, develop ambitions of industrialization. The economically and tech-
nologically developed nations of Western Europe and, increasingly, the Soviet
Union and Communist China seek a major share in this economic revolution
of the underprivileged, all with a mixture of economic and political motiva-
tions. To take a prominent part in this evolution is not only humanitarian
and economically desirable, but it is also a political necessity for the United
States.
Such countries as the Soviet Union and Communist China consider their
foreign operations as an integral part of their foreign policy, for, directly or
indirectly, it is the State that builds Indian steel mills or Egyptian dams or
exploits African mines. However, the Western world, and most particularly
the United States, prefers to leave foreign economic investments predomi-
nantly to private enterprise, though it would be chimerical to ignore the
indispensable role of government in foreign investment. Such institutions
as the United States Export-Import Bank, the Development Loan Fund, and
the International Cooperation Administration testify to the importance of
governmental activity in this field. So do the World Bank, the International
Finance Corporation, the Inter-American Development Bank, and other inter-
national institutions in the process of formation, to all of which the United
States contributes a major share of capital and political influence. Neverthe-
less, it is most important that the actual entrepreneurial activities abroad
* Professor of Law, Columbia University. Except for the introductory paragraphs, this
Article will be published in a forthcoming book on Joint International Business Ventures
in Less Developed Countries, the result of a four-year Columbia University research
project, which was undertaken with a grant from the Ford Foundation and directed by
the writer of this article. The author and the editors wish to thank the Coulmbia
University Press-the publishers of the forthcoming book-for their consent to the
prepublication of the present article. The author also wishes to acknowledge his indebted-
ness to Professor Kingman Brewster, Jr., Mr. G. W. Haight, and Mr. T. E. Monaghan,
for helpful comments on an earlier draft of this manuscript. These comments do not
in any way imply agreement with the statements and views put forward in the Article.
1960] ANTITRUST ASPECTS OF JOINT VENTURES 781
should be carried on by private capital and initiative to the largest possible

extent.
Many of the new enterprises forming in the underdeveloped countries are
joint ventures that represent a partnership between a foreign investor and
either public or private national interests. There is a definite shift of foreign
capital investment from the formerly prevailing pattern of branches or wholly-
owned subsidiaries of foreign corporations to various forms of equity partici-
pation. Increasingly, as a result of local legislation or administrative pressures
or, in some instances, of long-term policy considerations, American and other
foreign investors will choose or will be compelled to hold a strong minority
interest rather than a majority share.' It is therefore a matter of considerable
concern that the Sherman Act, as currently interpreted, may, in an already ex-
tremely difficult international situation, impede the very form of American
enterprise abroad that is most acceptable to a majority of the less developed
countries and is most likely to destroy the real or imagined fear of "imperialist"
foreign capital domination in the developing economies. This form is the
joint venture.2
Of the industrially developed countries, only Canada and the United
States have had antitrust legislation other than of very recent origin.3 It is
significant that these laws were enacted at times when, in the United States
1. Among the many instances of postwar joint venture enterprises are the various
Latin American operations of Pan American Airways, in which the participation of
Pan American has gradually been reduced to a minority share, with the local government
and the local public holding the remainder, and the prosperous Mexican fibre and rayon
industry developed by American Celanese, in which the latter now holds a strong
minority interest which is believed to be just under fifty per cent. There are many joint
ventures in the electrical industry. In its Mexican joint venture, Westinghouse holds a
minority interest, while in Chile, General Electric and W. R. Grace each hold one-third
of the shares, with Chilean interests holding the remainder. Among significant Indian joint
ventures are those of American Cyanamid, ATUL Products, in which the American
investor held a minority interest from the beginning. In a recent Indian venture for the
manufacture of pharmaceuticals, Merck, Sharp & Dohme holds a sixty per cent interest,
and the Indian partner, TATA, the remaining forty per cent.
It should be noted that the reduction of the American equity interest to a strong
minority participation does not necessarily denote loss of control, either because the local
holding may be scattered or, more important, because managerial, scientific, and technical
know-how may give the United States investor leadership in the enterprise despite the
absence of a formal majority interest.
2. The joint venture can be variously defined, and it is sometimes understood as
including long-term collaborative arrangements without foreign equity participation. Of
these, the Indian steel mill plants built by Soviet, British, and German groups without
equity participation, but with financial, technical, and managerial assistance and long-term
arrangements would be the outstanding example. For the purposes of this Article, how-
ever, the joint venture must be understood as including only those cases in which there
is some sharing of equities between the local and foreign interests involved.
A number of representative and detailed case studies of various types of joint ventures
in different industries and services will be found in the forthcoming book noted in the
introductory footnote to this article.
3. The relevant provisions of the Canadian Criminal Code, CRIMINAL CODE OF
CANADA ? 411 (1953-54), date from 1889, see An Act for the Prevention and Suppres-
sion of Combinations formed in restraint of Trade, 1889, 52 Vict. c.41 (Can.), and the
Sherman Act, 26 Stat. 209 (1890), as amended, 15 U.S.C. ?? 1-7, 15 (1958), which marks
the beginning of effective U. S. antitrust legislation, dates from 1890.
782 COLUMBIA LAW REVIEW [Vol. 60:780
and Canada, foreign trade and investment abroad were subordinate in signifi-
cance and preoccupation to the expansion of domestic markets and the
threatening monopolization of vital domestic utilities and industries. In con-
trast, the restrictive trade practices laws that have been passed in recent years,
as in the United Kingdom4 and West Germany,5 display an awareness of the
necessity of separating foreign trade and foreign investment from domestic
trade. Thus, the British Act of 1956 specifically exempts from the range of
potentially illegal restrictive agreements "the production of goods, or the ap-
plication of any process of manufacture to goods, outside the United King-
dom."6 Further, the German Act of 1957 exempts absolutely contracts and
resolutions "designed to secure and promote exports, insofar as they are
limited to the regulation of competition in markets outside the area of applica-
tion of this law."7 Permission may be granted by the cartel authority to
contracts that legitimately fall within this exception even when they affect
conditions of competition within Germany "insofar as such regulation is
necessary in order to ensure the desired regulation of competition in the
markets outside of the area of application of this law."8 Also, the antitrust
provisions of the European Economic Community,9which will not be operative
until regulations for their implementation have been issued by the Com-
munity, apply only to agreements and actions restrictive of free trade within
the area of the Community.
Quite apart from the text of these laws, it can be stated with confidence
that the whole tradition and outlook of European legislators, courts, and
administrative authorities would militate strongly against an imputation of
illegality to either the transformation of an existing foreign enterprise into a
joint venture, or to the starting of a new one designed to promote the foreign
production of German, French, or British machinery or goods, unless such a
venture were coupled with extraneous and specifically restrictive agreements
affecting internal trade.10
It may well be that the situation is not very different for those subject
to United States law, but at least they have to consider seriously the potential
applicability of sections 1 and 2 of the Sherman Act to joint ventures abroad.
The American decisions dealing with joint international business ven-
tures are very few and their import is doubtful. Above all, they are all
concerned with joint ventures entered into either by several American firms
4. Restrictive Trade Practices Act, 1956, 4 & 5 Eliz. 2, c.68.
5. Act of July 27, 1957, Bundesgetzblatt pt. 1, at 1081 (Ger.).
6. Restrictive Trade Practices Act, 1956, 4 & 5 Eliz. 2, c.68, ? 8(8) (b).
7. Act of July 27, 1957, Bundesgetzblatt pt. 1, at 1081 ? 6(1) (Ger.).
8. Act of July 27, 1957, Bundesgetzblatt pt. 1, at 1081 ? 6(2) (Ger.).
9. Treaty Establishing the European Economic Community, arts. 85, 86 (1957).
10. Even this would seem to be unconditionally permissible under the above-quoted
section of the British Restrictive Trade Practices Act. See note 6 supra and accom-
panying text.
or by major American and European firms who dominate between them a

certain field of industry rather than with the type of joint ventures here
examined.
In the I. C. I. case,"1 an American and a British manufacturer, both
giants in the chemical field, had formed a jointly owned company in Canada
to which they contributed both capital and patents and processes. This com-
bination in itself was accepted as legal "with a dubious nod."12 What made
the venture illegal, however, was the agreement between du Pont and I. C. I.
designed to eliminate existing, or preclude potential, competition in Canada.
A similar situation led to a similar result in the National Lead case.13 Price
fixing or a division of territories between competing American manufacturers
in the country of the joint enterprise, would certainly be illegal unless there
were extenuating circumstances. Statutory control of maximum or minimum
prices, or both, as occurs frequently in countries faced with economic short-
ages, would be such a circumstance, for it would certainly be absurd to hold
responses to statutory requirements illegal. Indeed there could hardly be
any question of "conspiracy" when there is no voluntary agreement.
Again, in the Timken case,14 American Timken owned a controlling
interest in its former British competitor, British Timken, and both together
acquired all of the stock in a French company manufacturing the same product.
The reason for invalidating the arrangements was "the explicit agreement
governing the partners, not their partnership, which formed the basis of
liability."15 In Minnesota Mining,16 four-fifths of the American manufacturers
in the abrasives industry had formed, through a holding company, joint
manufacturing subsidiaries in Canada, Britain, and Germany, and had
abstained from exporting in competition with these foreign manufacturing
companies. Once more, the elimination of competiton between the American
companies, through the implied agreement to abstain from any business other
than that done through the jointly owned foreign factories impugned the
arrangement.17 Moreover, in this case, the agreement joined together virtu-
ally an entire American industry, a situation that will not often occur in
foreign investment.
These few cases in which foreign joint ventures of American manufac-
turers were held partly or wholly illegal are certainly remote from the actual
or potential cases of joint international business ventures here considered.
11. United States v. Imperial Chem. Indus., Ltd., 100 F. Supp. 504 (S.D.N.Y. 1951).
12. Id. at 557.
13. United States v. National Lead Co., 63 F. Supp. 513 (S.D.N.Y. 1945), aff'd,
332 U.S. 319 (1947).
14. United States v. Timken Roller Bearing Co., 83 F. Supp. 284 (N.D. Ohio
1949), modified, 341 U.S. 593 (1951).
15. BREWSTER, ANTITRUST AND AMERICAN BUSINESS ABROAD 211 (1958).
16. United States v. Minnesota Mining & Mfg. Co., 92 F. Supp. 947 (D. Mass. 1950).
17. FUGATE, FOREIGN COMMERCE AND THE ANTITRUST LAWS 263 (1958).
Moreover, even these few decisions have not gone unchallenged. The strong
dissenting judgments of Justices Frankfurter and Jackson in Timken are
very much concerned with the situation that will very frequently occur in
the less developed countries. In Mr. Justice Frankfurter's words:
When as a matter of cold fact the legal, financial, and govern-
ment policies deny opportunities for exportation from this country
and importation into it, arrangements that afford such opportunites
to American enterprise may not fall under the ban of a fair construc-
tion of the Sherman Law because comparable arrangements regard-
ing domestic commerce come within its condemnation.18
Similarly, Mr. Justice Jackson observed:

In a world of tariffs, trade barriers, empire or domestic prefer-
ences, and various forms of parochialism from which we are by no
means free, I think a rule that it is restraint of trade to enter a for-
eign market through a separate subsidiary of limited scope is virtu-
ally to foreclose foreign commerce of many kinds. It is one thing
for competitors or a parent and its subsidiaries to divide the United
States domestic market which is an economic and legal unit; it is
another for an industry to recognize that foreign markets consist of
many legal and economic units and to go after each through
separate means. I think this decision will restrain more trade than
it will mnakefree.19
There is no reported decision dealing with the kind of foreign joint

venture with which this Article is concerned, which is a partnership arrange-
ment entered into between an American firm, either singly, or in combination
with another American or foreign firm, and public or private local capital
in an economically underdeveloped country. This, of course, is not a matter
of accident and is not due to the predominantly recent origin of such joint
venture arrangements. Rather, the major reason lies in their economic and
commercial background. Whether joint international business ventures in
less developed countries are transformations of a formerly wholly owned
branch or subsidiary of a Western enterprise20 or are new ventures with
local participation, they are often a response either to statutory requirements
for majority or minority national participation, or to national economic and
administrative policies, which make the granting of import licenses, the allo-
cation of foreign exchange, or other necessary conditions for the operation
of a local enterprise dependent upon national capital participation. Increas-
ingly, American investors now anticipate legal or moral compulsion and
enter into joint ventures voluntarily. This trend is now openly encouraged
18. United States v. Timken Roller Bearing Co., 341 U.S. 593, 605-06 (1951).
19. Id. at 607-08.
20. The various Latin American operations of Pan American World Airways and
the public utilities enterprises in the Philippines provide examples of such transformations.
by American agencies, such as the Export-Import Bank and the Development

Loan Fund. It hardly requires legal authority or precedent to demonstrate
that, when the formation of a joint venture is demonstrably the only alterna-
tive to the elimination of the American enterprise from business, manufacture,
or trade in the country concerned, it should not, even by the most strained
construction, be interpreted as a restrictive practice.
Generally, joint ventures in economically underdeveloped countries are
at least a partially successful response to the new nationalism, which seeks
an increasing national control of manufacture and services. In support of
their legality, it may be sufficient to refer to two American decisions that
are strongly imbued with antitrust sentiments. In the I. C. I. opinion it was
stated that:
It is settled that joint manufacturing ventures, even in domestic
markets, are not made unlawful per se by the Sherman Act, but
become unlawful only if their purpose or their effect is to restrain
trade or to monopolize. . . . It is also clear that absent this wrongful
purpose or harmful effect there is nothing per se unlawful in the
association or combination of a single American enterprise with a
single local concern of a foreign country in a jointly owned manu-
facturing or commercial company to develop a foreign local market.21
And even in the most radically antitrust minded judicial opinion of recent
years, Judge Wyzanski admitted that:
It is axiomatic that if over a sufficiently long period American
enterprises, as a result of political or economic barriers, cannot
export directly or indirectly from the United States to a particular
foreign country at a profit, then any private action taken to secure
or interfere solely with business in that area, whatever else it may
do, does not restrain foreign commerce in that area in violation of
the Sherman Act. For, the very hypothesis is that there is not and
could not be any American foreign commerce in that area wlhich
could be restrained or monopolized.22
It would therefore seem that only in very exceptional situations might a

joint venture in an economically underdeveloped country acquire the taint
of illegality under the United States antitrust laws, and it is hardly con-
ceivable that it would ever do so, when, as in most cases, the venture is
between a single American firm that holds the majority interest, and one
or a group of public or private local participants.
A curious irony is inherent in the conspiracy concept of the Sherman
Act, according to which only a combination of two or more independent legal
21. United States v. Imperial Chem. Indus., Ltd., 100 F. Supp. 504, 557 (S.D.N.Y.
1951).
22. United States v. Minnesota Mining & Mfg. Co., 92 F. Supp. 947, 958 (D. Mass.
1950).
entities can create an illegally restrictive agreement. The subsidiary of a

single firm-even if economically it is an enterprise many times more powerful
than a combination of a number of smaller manufacturers-does not by itself
fall under the prohibition of section 1.23 However, because in the situation
in which the American firm has only a minority participation the joint venture
is legally independent of the American participant, this arrangement, which
is most in accord with developing trends of national economic policy in the
economically underdeveloped countries, is theoretically most vulnerable. Even
in such cases, it would certainly have to be shown that the minority partici-
pation of the American firm had an injurious effect upon Americar. business
by excluding competition and thereby negatively affecting exports or imports.
In the situations considered in this Article,24 this will hardly ever occur.
When several American firms combine with each other, or when one or
several American firms combine with a British, German, French, or some
other enterprise from a capital exporting country to form a joint venture
in a less developed country, United States antitrust laws could affect the
American partner in certain circumstances. The most vulnerable situation
would arise when a legal or factual-not hypothetical-monopoly for pro-
duction of the product in question is enjoyed by the joint venture in an
economically weakly developed country. There are certainly many countries
in Latin America, Asia, or Africa in which there is, at present, a profitable
market for only one manufacturer of steel tubes, diesel trucks, or nylon
stockings. Governments in these countries quite frequently not only tolerate
but actually desire manufacture to be concentrated in one efficient unit, because
they are unwilling to multiply the demands for foreign materials which require
inmportlicenses and allocation of foreign exchange. We could go further and
imagine a situation in which a government wishes to replace the local manu-
facture of a multiplicity of more or less luxurious automobiles by a single mass
produced product-a kind of "Volkswagen". Let us further assume that this
government exerts strong pressure upon, for example, General Motors and
Ford to combine their local facilities and resources in a joint enterprise
concentrated entirely on such an inexpensive mass produced car. If Ford
and General Motors respond to this pressure as the price to be paid for
continuing their business in this country is United States antitrust law
23. Despite certain dicta that might cast doubt on this assertion, see United States v.
Timken Roller Bearing Co., 341 U.S. 593, 598 (1951); Kiefer-Stewart Co. v. Joseph E.
Seagram & Sons, Inc., 340 U.S. 211, 215 (1951) ("the government has not yet based a
prosecution or fashioned a decree in foreign commerce solely on the basis of internal
conspiracy between parent and majority-owned subsidiary"); BREWSTER, op. cit. supra
note 15, at 186. The situation in which the parent company and the foreign subsidiary
both participate in international cartels might be different. Cf. id. at 186-87.
24. See note 2 supra.
violated thereby? If we regard the dictum of Judge Wyzanski in Minnesota

Mining25 as more than a dictum, the answer would probably be "yes." The
pooling of resources by Ford and General Motors would certainly constitute
a combination of dominant American manufacturers to establish
joint factories for the sole purpose of serving the internal commerce
of that [foreign] country.
From this Judge Wyzanski deduced that

it may therefore be subject to condemnation regardless of the reason-
ableness of the manufacturers' conduct in the foreign countries....
Joint foreign factories like joint domestic price fixing would be
invalid per se because they eliminate or restrain competition in the
American domestic market. That suppression of domestic compe-
tition is in each case the fundamental evil, and the good or evil
nature of the immediate manifestations of the producers' joint action
is a superficial consideration.26
It is more than doubtful that this reasoning would allow the defense that
the combination of the manufacturers in the foreign country occurred in re-
sponse to strong pressure from the local government as a clear alternative
to the impossibility of doing any business at all. Judge Wyzanski's reasoning
implies that the foreign advantages or necessities of joint ventures are totally
and absolutely subordinate to the potential restriction of competition in the
domestic market. Even if it were shown that the parties to the joint venture
were continuing to compete everywhere else in the United States and abroad,
this might not make any impression, for the mere fact of collaboration some-
where is said to have a debilitating effect on the zeal and methods of competition
in the domestic market. There would be general agreement that if joint
venturers accompany their joint arrangement with specific restrictive arrange-
ments, there is some justification for the application of the Sherman Act.
HIowever, when the conclusion is deliberately stripped of such accessories, as
the Wyzanski dictum is, it is surely untenable and objectionable as a matter
of legal policy. As has been pointed out by Professor Brewster,27 this dictum
strayed from the issues then at bar. Yet, it has to be admitted that uncertainty
about the reach of the legal prohibition in itself acts as a barrier to American
participation in joint ventures abroad.
25. United States v. Minnesota Mining & Mfg. Co., 92 F. Supp. 947 (D. Mass. 1950).
Judge Wyzanski stated that "it may very well be that even though there is an economic
or political barrier which entirely precludes American exports to a foreign country a
combination of dominant American manufacturers to establish joint factories for the
sole purpose of serving the internal commerce of that country is a per se violation of . . .
the Sherman Act." Id. at 963.
26. Ibid.
27. BREWSTER, op. cit. supra note 15, at 209-10.
Quite often, the desire of a foreign government to concentrate manu-

facturing possibilities in one enterprise or a special consortium will not be
formulated in laws or regulations but will be a matter of administrative policy,
manipulated through the handling of import licenses, currency transfer regu-
lations, tax arrangements, and the like. For the American investor, as for
example an oil company or, even more so, a group of oil companies, the result-
ing factual situation may be as dangerous as an open agreement, looked upon
with suspicion by the Department of Justice.28
It is urgently necessary to reassess and clarify the application of antitrust
legislation to foreign investment, and in particular to joint ventures, in the
light of contemporary international realities.
In an age in which intense nationalism and rising resentment against
foreign economic domination is coupled with a desire for national economic
development, the conditions that compel to an increasing degree the adaptation
of foreign investors to the local situation and the demands of governments
are totally different from those contemplated by the Sherman Act. As with
the interpretation of the United States Constitution, the legal evaluation of the
situation existing in 1960 in the light of formulas evolved more than half a
century earlier would be bad law as well as bad policy. It is submitted that a
clarification rather than any significant change in the present law is required.
The state of the authorities does not command a condemnation of joint
ventures in less developed countries, which, if undertaken in the United States,
might be illegal. As we have seen, none of the authorities, as distinct from
isolated dicta, condemns a joint venture abroad as such, unless it is coupled
with specific restrictive features such as the elimination of factually possible
competition, price fixing, or the division of territories. Several of the cases
have specifically declared foreign joint ventures to be legal as such and, as in
Minnesota Mining, admitted the relevancy of political or economic barriers to
the problem of restraint of commerce.
The view that absent specific restrictive agreements or practices, joint
ventures, even if they carry the implication of a restriction of free competition
in theory, are permissible is supported by the two most serious studies of the
problem. Mr. Fugate, a member of the Department of Justice, suggests that
28. It is difficult to assess with any degree of statistical precision how many potential
American investors abstain or withdraw from a joint venture abroad because of the
possible antitrust implications, often with the result that a European, Japanese or Soviet
enterprise steps in. Counsel for a number of important United States corporations,
notably in the oil, chemical, air transport, and automobile industries, have repeatedly
stressed to the writer the importance of these considerations. There is at least one recent
case in which a major American manufacturer of basic chemicals sold out its minority
interest in a prospering and developing joint enterprise with Indian industrial interests
because the stock interest might at some time be found to be objectionable under the
United States antitrust laws. This happened at a time when the Indian group was busily
extending its joint ventures with a number of British and other European chemical
companies.
"in considering the legality of the operations of a joint company, the question
should be asked whether the parents, through the company, are doing some-
thing which they may not legally do in its absence-for example, fixing prices
or dividing markets."29 Professor Brewster suggests that "the essential
measure of United States commerce restraint would seem to be whether, but
for the jointness, the exports would have been substantially different or
greater."30 Again, "the desire to present a common front to foreign govern-
ments, or, the converse, foreign governmental pressures for multifirm par-
ticipation, may also dictate a joint vehicle."'31 Another test is whether, "but
for the restraint, there would have been no commerce forthcoming from this
facility."32
This approach accords with that of the Report of the Attorney General's
Committee on the Antitrust Laws, which has suggested that the Sherman Act
should apply "only to those arrangements between Americans alone, or in
concert with foreign firms, which have such substantial anti-competitive effects
on this country's 'trade or commerce . . . with foreign nations' as to constitute
unreasonable restraints."33
A great deal might depend on the kind of commerce that is potentially
affected by the joint venture arrangement. To expect an American investor
to compete actively with its own subsidiary by exporting to the country of
investment the very product that the joint venture is manufacturing would be
an absurdity, even though this contingency seems to be included in the
Wyzanski dictum. This would cut the ground from under the feet of the
foreign venture. An agreement or understanding that would limit or exclude
sales to the United States from the country of investment would be more
objectionable and, therefore, application of the Sherman Act would be more
acceptable.
It is important that American enterprises be as unobstructed as other
Western enterprises in solving the difficult problem presented by the trans-
formation of existing enterprises or the launching of new ones in economically
underdeveloped countries by an uncertainty about possible antitrust effects
that is neither warranted by existing precedent nor desirable as a matter of
legal and economic policy. As joint international financing and risk-sharing
enterprises between the Western powers develop, it will also become increas-
ingly desirable that the antitrust policies and laws of the countries concerned
should be broadly in accord. This is possible only on a "rule of reason" basis.
In every case, the test should be whether the venture, on balance, promotes
29. FUGATE, op. cit. supra note 17, at 264.
30. BREWSTER, op. cit. supra note 15, at 216.
31. Id. at 220.
32. Id. at 218.
33. ATT'Y GEN. NAT'L COMM. ANTITRUST REP. 76 (1955).
rather than hinders the legitimate economic interests of the country of juris-
diction, which here would be the United States.
A broad standard of this kind is, of course, subject to the criticism of
uncertainty. What the American investor wants above all is reasonable cer-
tainty about the legality of a contemplated foreign venture. However, the
present situation, with the paucity of relevant decisions and the sweep of a
few dicta of doubtful validity, does not promote certainty either. It is, on
the other hand, apt to deter American enterprises, especially some large ones
sensitive to antitrust accusations, from engaging in foreign ventures that
are desirable as a matter of both national and international policy.
As the problems are so much on the borderline between business and
politics, and the number of cases that raise possible antitrust objections is
rather small, it would seem advisable to obtain clarification through the use
of diplomatic procedures at the negotiation stage rather than to take a chance,
or to abstain as a matter of superabundant caution. In the Iranian Oil
Agreement of 1954, a case in which the position of the Justice Department
was made known prior to conclusion of the negotiations, the United States
Government indicated its approval of the agreements, which, in the words of
a former Legal Adviser to the State Department, "might otherwise have been
called into question under the antitrust law"34by making known the opinion
given to the President by the Attorney General that the proposed arrangements,
other than marketing, distribution, further manufacture, and transportation,
would not contravene the antitrust laws.35 Mr. Becker has suggested that
this procedure should be used more often, and that the Department of State,
which tends to take a more international view than the domestically oriented
Department of Justice, should act as an intermediary between foreign govern-
ments and the American authorities involved.36 This could solve difficulties
in the politically and diplomatically most important cases, but, generally, the
Department of Justice prefers not to give opinions, and private firms might
be reluctant to involve the government in transactions having slight, but
possible, antitrust implications.
In view of the likelihood that joint ventures between Western capital-
exporting countries in underdeveloped areas will increase in the years to
come, the approximation of equivalent antitrust standards between such
countries as the United States, Canada, and the nations of Western Europe
will become more and more important. The desirability of some measure of
coordination, at least between the antitrust policies of the capital-exporting
34. Becker, The Antitrust Law and Relations with Foreign Nations, 40 DEP'T STATE
BULL. 272, 278 (1959).
35. See Hearings Before the Antitrust Subcommittee of the House Committee on the
Judiciary, 84th Cong., 1st Sess., pt. 2, at 1559 (1955).
36. Becker, supra note 34, at 276-77.
countries, is further emphasized by the incidents that have, in recent years,

arisen from certain judicial attempts to make decrees in United States anti-
trust suits with international implications effective abroad.37
It may be that the North Atlantic Treaty Organization38 or another
essentially Western international organization could be the framework for a
formulation of common antitrust standards. Eventually, a general inter-
national antitrust machinery, as was envisaged in the abortive International
Trade Organization that was designed to form part of the Havana Charter,
might materialize, possibly under United Nations auspices. Here, however,
as in other fields of international organization, it would be futile to aim at
general international conventions before there is a reasonable measure of
agreement on standards and practices. In a few years' time, for example,
the trends in the application of recent antitrust legislation in Britain, France,
Germany, Italy, the Netherlands, Norway, and Sweden may be much clearer
than they are at present. It would seem that joint coordinating committees, on
official as well as private levels, between governments, bar associations, cham-
bers of commerce, and universities could do a great deal to help in the develop-
ment of common standards.
37. The best known of these is the I. C. I. case, United States v. Imperial Chem.
Indus., Ltd., 105 F. Supp. 215 (S.D.N.Y. 1952), in which the final decree ordered
Imperial Chemical Industries in Britain to reassign to du Pont the British nylon patents
under which another British firm had been granted an exclusive licence by I. C. I. This
led to a polite but firm rebuke by the English Court of Appeal, see British Nylon Spinners,
Ltd. v. Imperial Chem. Indus., Ltd., [1953] 1 Ch. 19 (1952), as an improper invasion of
foreign sovereignty. Other reactions have included Ontario and Swiss legislation
prohibiting nationals from disclosing records in response to foreign court orders, and a
protest from. the Netherlands Government about the decree proposed by the Attorney
General in United States v. General Elec. Co., 115 F. Supp. 835 (D.N.J. 1953). See
Becker, supra note 34, at 274 & n.7.
38. Article 2 of the Treaty states that the parties "will seek to eliminate conflict in
their international economic policies and will encourage collaboration between any or all
of them." But this has hitherto remained a dead letter.

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Antitrust Law and Joint International Business Ventures in Economically Underdeveloped

In recent years, Congressmen, policy makers, and leaders of public

should be carried on by private capital and initiative to the largest possible

or by major American and European firms who dominate between them a

Similarly, Mr. Justice Jackson observed:

There is no reported decision dealing with the kind of foreign joint

by American agencies, such as the Export-Import Bank and the Development

It would therefore seem that only in very exceptional situations might a

entities can create an illegally restrictive agreement. The subsidiary of a

violated thereby? If we regard the dictum of Judge Wyzanski in Minnesota

From this Judge Wyzanski deduced that

Quite often, the desire of a foreign government to concentrate manu-

countries, is further emphasized by the incidents that have, in recent years,

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