The Multinational Monitor

WINTER 19878-79 - VOLUME 1 - NUMBER 1


Antitrust and the MNCs

by George Riley

With surprising alacrity, two congressional committees have passed legislation that would overturn a Supreme Court decision and rescue six U.S. multinational drug companies from a pending antitrust suit. Although opponents may prevent the bill from passing the full House and Senate before adjournment, the legislation holds alarming implications for regulation of the international activities of U.S. businesses.

The measure, passed by the House and Senate Judiciary Committees, would repeal a recent Supreme Court decision (Pfizer v. India) that permitted foreign sovereigns to sue American firms under U.S. antitrust law. The case involved a suit by the foreign governments of India, Iran, the Philippines, West Germany, and Colombia, charging six U.S. drug companies with price-fixing. The drug company defendants are: Pfizer, Inc.; American Cyanamid, Co. Squibb Corporation; Bristol-Myers, Co.; Olin Corporation; and the Upjohn Company.

Following committee approval of the legislation to overturn Pfizer, Ralph Nader charged that the majority of the House and Senate Judiciary Committees were "treating foreign nations and their consumers as trash heaps for policies judged illegal for U.S. citizens." But the effects of such actions, Nader added, cannot be restricted to foreign states. "Antitrust abuses cannot be quarantined abroad like a pesticide or a contraceptive: corporations will eventually bring the same anti-competitive tactics to the U.S. marketplace."

The legislation to prohibit foreign governments from recovering damages under U.S. law was a last-minute addition to a bill that would repeal the Supreme Court's decision in Illinois Brick. In Illinois Brick, the court barred consumers from recovering when goods or services sold in violation of the antitrust laws were not bought directly from the lawbreaker. Because consumers usually purchase goods indirectly from a retailer or distributor rather than from the price-fixing manufacturer, repealing Illinois Brick would facilitate enforcement of U.S. antitrust laws. Although the House Judiciary Committee delayed consideration of Illinois Brick legislation for over two months to hold a second round of hearings, the committee held no hearings on the amendment dealing with the Pfizer decision.

The House Committee on International Relations, concerned over the foreign policy implications of the Pfizer legislation, recommended that the section overturning Pfizer "not be retained in its current form in the bill." The State and Justice Departments strongly opposed the Pfizer legislation. In a letter to the Judiciary Committee, Assistant Secretary of State for Congressional Relations, Douglas J. Bennet, asserted, "The Supreme Court in Pfizer recognized that, as a matter of comity among nations, foreign governments have been permitted access to our courts. The Department agrees, and sees no good reason to make an exception to this longstanding practice for the antitrust laws. We understand that the amendment may reflect the legitimate concern, held by many and shared by the Department, with the formation of government cartels which are anticompetitive and injurious to our interests. We believe, however, that it [the bill to repeal Pfizer] will have no effect on such cartels, and will prejudice U.S. efforts to discourage private restraints on United States and international trade.

Senate Committee has offered a compromise version of the bill that would permit single damage suits only when the U.S. government can sue in the courts of the foreign plaintiff. Representatives Paul Findley and Charles Whalen have questioned the compromise. "The Senate's specific requirement for reciprocity on the part of foreign governments deserves careful scrutiny: Why should we be trying to dictate to other nations the way they must make their laws?

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