Salient Features of Competition Policies in the United States, European Union, and Japan
|United States||European Union||Japan|
|1. Nature of enforcement||Judicial/administrative||Predominantly administrative||Predominantly administrative|
|2. Right to initiate cases||Public enforcement agency and private parties. Many more private suits than in the EU and Japan.||Public enforcement agency and private parties.||Public enforcement agency and private parties.|
|3. Possibility of review||Judicial||Judicial||Judicial|
|4. Treatment of vertical restraints1|
|a. Exclusive dealing||Nonprice vertical restraints are usually per se legal in the absence of collusion between suppliers and dealers.||Exclusive dealing, territorial restraints, and tying are per se illegal when practiced by a dominant firm; determination of a dominant firm is done on a case-by-case basis.||Per se illegal if imposed by a dominant firm; otherwise adjudicated on a case-by-case basis.|
|b. Territorial restraint||See 4(a) above||See 4(a) above||See 4(a) above|
|c. Tying||Despite exceptions, this is usually viewed as a per se offense.||See 4(a)above||See 4(a)above|
|d. Resale price maintenance||Per se illegal but under more narrowly defined circumstances than in EU and Japan.2||Suppliers can maintain exclusive national distributors, but strict enforcement of parallel importation renders price discrimination and resale price maintenance infeasible.||Per se illegal|
|5. Treatment of horizontal restraints1|
|a. Price fixing||Per se illegal||Per se illegal||Per se illegal|
|b. Output restraint||Per se illegal||Per se illegal||Per se illegal|
|6. Exemptions from competition law||Unlike in the United States and EU, many exemptions can be granted by nonenforcement agencies such as the Ministry of International Trade and Industry (MITI).|
|a. Export cartels||Exempted if the effects are felt in foreign markets. Price fixing for exports is legal.||Exempted if the effects are felt in foreign markets. Price fixing for exports is legal.||Exempted if the effects are fell in foreign markets. Price fixing for exports is legal.|
|b. Import cartels||Explicit provision is made in the statute permitting their exemption from competition laws.|
|c. Research and development joint ventures||The National Cooperative Research Act of 1984 lifted research and development joint ventures from the suspicion that they are pet se illegal and put them under a rule of reason test, and protected firms from extreme penalties in the event that their research and development venture is found to be anticompetitive.||Under Article 85(3) of the Treaty of Rome, a 13-year block exemption from competition laws was granted to certain categories of research and development agreements, and to joint exploitation of the results therefrom, The exemption applies even if the participants to the research and development venture together account for not more than 20 percent of the market.||Research and development joint ventures between firms not in a competitive or potentially competitive relationship are permitted. Ventures between companies whose collective market share exceeds 20 percent are more likely to violate the Anti-Monopoly Act.|
|d. Small and medium-sized enterprises||Such enterprises are not specifically exempted from competition laws should they form cartels.||See 6(b) above|
|e. Rationalization cartels||No explicit provision exists exempting rationalization cartels from competition laws.||See 6(b) above|
|7. Remedies||Administrative and criminal remedies provided for in all three jurisdictions. Private parties can sue for compensatory damages, but the United States provides for greater deterrence by allowing recovery of punitive damages. (Three times the amount of compensatory damages.)|
|a. Premerger procedures||Premerger notification required if U.S. sales or U.S. assets of the acquiring and acquired parties exceeds $100 million and $10 million and the size of the transaction is at least SI5 million or 50 percent of the voting securities of the acquired party.|
Timing of procedure is open ended.
|Any merger would require prior notification if (1) annual world sales of the merging parties together exceed ECU 5 billion and (2) at least two of the merging parties have, between them, annual KU sales of at least ECU 250 million, unless (3) a single member state accounts for more than two thirds of the sales of each party to the agreement.|
There are strict time limits to be followed for merger procedures.
|Premerger notification required of all corporate asset transfers. Extent and nature of scrutiny by the JFTC depends broadly on total assets of merging companies, their market shares, whether merger is horizontal or vertical, etc.|
|b. Substantive standard||Mergers for which the postmerger HH1 is less than 1,000 are unlikely to be contested. Mergers producing a postmerger HHI exceeding 1,800 and an increase in the HHI of at least 50 will usually result in an injunction, for mergers resulting in a postmerger HHI between 1,000 and 1,800 and an increase in the HHI of over 100, enforcement depends on factors other than concentration.3||The legality of a merger would depend on whether the merger would create or enhance a dominating position that would considerably hinder competition in the EU. While clear patterns have not emerged, mergers that result in a combined market share of less than 25 percent would not be disapproved.||A number of market share criteria, including when the combined market share of the merging parties exceeds 25 percent or is the largest and exceeds 15 percent, are used to evaluate the legality of mergers from a competition perspective.|
|9. Definition of dominant position/monopolization||Defined as a firm having at least 33 percent of the market.||See 6(c) and 8(b) above||A monopolistic Situation exists when an enterprise has at least 50 percent market share or two enterprises have an aggregate market share of at least 75 percent.|
|10. Extraterritorial application||Competition laws in the United States and the EU have been used against actions taking place in foreign markets, the effects of which are felt in the domestic market. This is particularly true when the firm or firms involved in the action abroad has some presence (through a subsidiary) in the domestic market. However, competition laws in the United States, unlike in the EU and Japan, have also been applied even where effects are in foreign markets on the grounds that exports of U.S. firms have been affected.|
It is difficult to definitively assign the legal status of all private arrangements (particularly vertical ones) as they depend on specific judicial decisions that may not be internally consistent at any time and that also evolve over time.
The burden of proof to establish illegality of resale price maintenance has risen over time in the United States, reflecting an apparent attempt to reconcile the conflicting treatment of vertical price (usually illegal) and nonprice (usually legal) restraints despite the similarity of their economic effects.
HHI refers to the Hirschman-Herfindahl index and is defined as the sum of squared market shares (expressed in percentage terms) for all suppliers in a market. The HHI lies between zero and 10,000. An HHI of 1,000 is equivalent to an industry consisting of ten equal-size firms. A monopolistic market has an HHI of 10,000.