CHAPTER 21
Regulating The Competitive Environment
CASES IN THIS CHAPTER
Microsoft Corporation v. Commission of the European Communities
Airtours v. Commission of the European Communities
Schneider Elec. SA v. Commission of the European Communities
Tetra Laval BV v. Commission of the European Communities
United States v. Aluminum Co. of America
Hartford Fire Insurance Co. v. California
Animal Science Products, Inc. v. China Minmetals Corp., et al.
A.Ahlstrom Osakeyhtio v. Commission of the European Communities
INTRODUCTION
Although the U.S. was among the first nations to implement controls over large business
enterprises (in the form of the Sherman Anti-Trust Act) it is not the only country with such
regulations. In some ways, anti-competition laws are similar nation to nation: most prohibit
cartels (although often import and export cartels are exempted implicitly or by practice). Yet, in
other ways, they vary considerably in the treatment of various business behaviors. Moreover,
even similar laws may receive dissimilar enforcement. Additionally, that anti-trust laws seek to
promote free competition underscores their importance in international trade — if private parties
were permitted to interfere with free market forces and restrain cross-border trade (such as
through price-fixing or market-sharing agreements), they could effectively replaced the
government-imposed barriers that WTO/ GATT seek to limit.
CASE QUESTIONS AND ANSWERS
Microsoft Corporation v. Commission of the European Communities
1. Would Microsoft have been ordered to provide the interconnection instructions if it had
only a 40 percent market share in operating systems?
Chapter 21: Regulating the Competitive Environment
2. If Apple were to obtain a larger market share in the future, would there be a basis for
relieving Microsoft of this judgment?
3. This order prohibits Microsoft from giving a program away when the computer is
purchased. Why?
Airtours v. Commission of the European Communities
1. Does the order prevent Airtours from entering into mergers in the future with companies
that have a smaller share of the U.K. market?
2. If Airtours proposed a merger with another firm with a very large share of the German
market but no share of the U.K. market, how would the merger be treated based on this
opinion?
3. What “product” is Airtours selling? Would this decision prevent a merger with a party in the
travel business that sold a “different” product?
Schneider Elec. SA v. Commission
1. Schneider and Legrand did not sell the same product. Why was their combination a
threat to competition?
Chapter 21: Regulating the Competitive Environment
2. Why would a combination of parties with “complementary” products create a threat to
competition? How would this disadvantage competitors with only one of the
complementary products?
3. What implications does this have for a maker of a personal computer operating system
acquiring a company that sells software applications?
Tetra Laval BV v. Commission
1. What evidence would have supported the Merger Task Force’s decision and led to a
different result?
2. Is “leveraging” now wrong in the absence of anticompetitive effect in the EU? How could
the vertical restrictions have posed more of a competitive threat?
3. What effect does a reputation for being an overly aggressive regulator have on the
regulator’s ability to defend its position when appealed? Are competition law cases
decided on factors other than pure application of law to facts?
Chapter 21: Regulating the Competitive Environment
United States v. Aluminum Co. of America
1. What are some of the complications that occur when U.S. courts order a foreign
manufacturer to pay billions in damages for an agreement that would be acceptable
under that country’s competition laws?
2. Does Judge Hand see any limits placed by the U.S. Constitution on antitrust law?
3. Judge Hand’s test requires that a “substantial” number of imports be affected by the
anticompetitive conduct. To what measure was he referring by using that word? Would
this be objectionable if only 1 percent of the U.S. market was affected?
Hartford Fire Insurance Co., Inc., v. California
1. Do you think Justice Scalia would have spoken out the same way if, like the majority, he
had read English and U.S. law not to be in conflict?
2. In determining whether the Sherman Act applies to a business outside of the United
States, if Congress’ intent is not clear, to whom should courts give the benefit of the
doubt?
3. What would happen if a U.S. judge decided that English insurance law created an
unlawful monopoly under U.S. law?
Chapter 21: Regulating the Competitive Environment
Animal Science Products, Inc. v. China Minmetals Corp., et al.
1. Compare the application of the import trade or commerce exception in Carpet Group with
the application in Animal Science. Why did it apply in Carpet Group? Why did it apply in
Animal Science?
2. Under the effects test as interpreted in Animal Science, could an effect be “reasonably
foreseeable” even if the defendant does not foresee the effect? In a trial, how would you prove
that an effect was “reasonably foreseeable”?
A.Ahlstrom Osakeyhtio et al. v. Commission of the European Communities
1. If the exporters were outside of the United States and exporting products there, would a
U.S. court have jurisdiction under the FTAIA?
2. Is the holding in this case the same as or different from that of the majority in Hartford?
Does it matter that the European Commission was declaring illegal activity of something
that is legal from the U.S. perspective?
3. What effect does this have on the Webb-Pomerene Act?
ANSWERS TO QUESTIONS AND CASE PROBLEMS
1. Answer: Under both Judge Hand’s test in Alcoa case and the standard in the Foreign
Chapter 21: Regulating the Competitive Environment
2. Answer: In light of the significant impact of the “goom” business on the Slobovian standard
of living, it certainly would have a substantial impact on its relations with the United States. The
judicial branch of the United States government is very poorly equipped to conduct such relations.
3. Answer: Judge Hand required that it be the specific purpose of the agreement to restrain
4. Answer: It is very speculative to try and say what would have happened, but the central
point is that there was no place whatever in Judge Hand’s analysis for a distinction between
5. Answer: It is usually better for a plaintiff to bring an antitrust lawsuit in the United States
than a competition suit in the U.K. First, the United States has invented “notice” pleading; the
Chapter 21: Regulating the Competitive Environment
6. Answer: In the U.S. model, court interpretation of treaties allows case law and a
7. Answer: It is true that if two U.K. companies are ruled by American law in commerce
directly affecting Great Britain, American economic policy has been extended to Britain. But it is