Matsushita Electrical Industrial Co. vs. Zenith Radio Corp
This paper will discuss the case of Matsushita Electrical Industrial Co. vs. Zenith Radio Corp. (1986)
a. In light of these facts, what are the chances of successfully bringing an antitrust suit against these manufacturers? Assume that there are no conflict-of-law or other procedural problems due to the manufacturers being in another country.
In this case, the American manufacturers are claiming that the Japanese manufacturers are trying to force them outside of business. They claim that the Japanese manufacturers are currently selling their products at a lower price, and when the American manufacturers are out of business, they will raise their prices back. If this claim of the American manufacturers is proven, then it will be considered a violation of section 1 of the Sherman Act.
To prove that there is a violation, American manufacturers will have to show four things. Firstly, they need to show that there is a contract, agreement or conspiracy among the separate Japanese manufacturers. Secondly, they will need to demonstrate that it unreasonably restrains trade. They’ll further have to show that it affects interstate of foreign commerce. Lastly, they’ll have to demonstrate that it causes an anti-trust injury.
The meeting of Japanese manufacturers can be claimed as a conspiracy. However, the information discussed in this meeting will ultimately determine whether there was a contract or conspiracy. As the Japanese manufacturers didn’t reportedly discuss future pricing or other issues, it will not be considered a violation of the Sherman Act.
b. What if, instead of discussing the topics listed above, the manufacturers discussed the details of individual sales, production, inventories, current price lists, and future price trends?
The US Supreme Court holds that if companies exchange information about their prices, production volume, etc. then it will be considered as a violation of section 1 of the Sherman Act, as this information can be used to formulate secret agreements. Therefore, if the Japanese manufacturers provided specific names of the companies, their price lists, production and sales volume, and future price list, then it will be considered as a violation.
c. What if they discussed average costs, freight rates, and terms of past transactions without identifying buyers or sellers?
The type of information will determine whether it was a violation or not. In the case of AM Column vs. Lumber Co. (1921), the court ruled that sharing information about average costs and terms of past transactions is not a violation as it didn’t discuss future pricing and didn’t identify future buyers and sellers. Therefore, if the Japanese manufacturers discussed average costs, freight rates, and terms of past transactions without identifying the buyer and sellers, then it wouldn’t be a violation of the Sherman Act.
1. How might the information that you learned in your study of international law impact your answer to these questions?
Under international law, it must first be determined what treaties are there between United States and Japan. As both of these countries are members of the WTO, a case can be filed against Japan in the WTO dispute settlement. WTO will establish a panel of experts that will investigate the issue. (Edwards, Meiners, & Ringleb, 2008)
If US is able to prove that Japanese manufacturers are ‘dumping’ (i.e. selling at a lower price than the exporter’s market or below the exporter’s cost of production) their products in the US market, then US will be able to impose an antidumping duty, under the antidumping law, codified in the Tariff Act of 1930. The dumping duty will be applicable to the dumped product, and will be equal to the ‘dumping margin’ (i.e. the difference between the price of the US market, and the price in the Japanese market.) (Edwards, Meiners, & Ringleb, 2008)
2. How would Professor Bern’s (1995) biblical model for analysis of antitrust issues impact your answers?
According to Professor Bern, the duty of each individual is to fully utilize the resources and capabilities that God has bestowed upon him. This means that each should strive to produce the best product at the lowest cost, and should try to sell most of what he has produced.
Taking in the context of this case, the intention of the Japanese manufacturers need to be determined as to whether they are selling at a discount to put the American manufacturers out of business, or because they produce more efficiently. According to the Bible, “you shall not bear false witness against your neighbor”. The Eighth commandment also forbids misinterpreting our relations with others. Hence, the Japanese manufacturers are not in violation of Professor Bern’s Biblical model. However, if their intention is to drive out the competition then they’ll be in violation of the Biblical model.
3. Should a court considering this case conclude that there has been an antitrust violation? Why or why not?
According to the information given in the case, this is not an anti-trust violation. To become an anti-trust violation, Japanese manufacturers will have to share specific information about future pricing, and individual buyers and sellers. The American manufacturers will also have to come up with more concrete evidence of collusion.
AM. Column & Lumber Co. v. United States, 257 U.S. 377 (1921).
Bern, R. C. (1995). A biblical model for analysis of issues of law and public policy: With illustrative applications to contracts, antitrust, remedies and public policy issues. Regent University Law Review, 6, 103-193.
Edwards, F. L., Meiners, R. E., & Ringleb, A. H. (2008). The Legal Environment of Business(10 ed.). Mason, OH: South-Western College/West.
Matsushita Electrical Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986).