When Diane P. Wood, a top U.S. trustbuster, tried at a November meeting in Tokyo to persuade her Japanese counterparts to be more "proactive" in enforcing Japan's antitrust laws, all she got were blank stares. Fearing something had been lost in translation, she tried other phrases, such as "take the initiative" and "do the work yourself."
Wood, Deputy Assistant Attorney General for international antitrust, still isn't sure if the Japanese got Washington's message. But soon it will be crystal clear. If officials in Japan, the European Community, and elsewhere aren't willing to crack down on practices that illegally keep U.S. companies out of their markets, Wood says the U.S. will do it for them. "They have got to understand there's a point where it's our ball," she declares. The 43-year-old former University of Chicago law professor says the Justice Dept. is prepared to bring cases against foreign companies that limit U.S. entry into their home markets.
"HELL OF A MESS." The get-tough approach against foreign companies enjoys avid support from U.S. trade negotiators as well as from industries long frustrated by the failure of traditional trade policies, such as dismantling tariffs, to loosen overseas markets. U.S. companies still cannot pry open many Asian and European markets because local business practices and industry structures shut them out. "The extraterritorial application of antitrust laws is the only answer," says Timothy J. Regan, vice-president of Corning Inc.'s Government Affairs Div. "I see no
Even so, Wood's gambit is fraught with legal obstacles. While American antitrust laws explicitly cover restraints of trade in international commerce, foreign companies and governments could snub U.S. efforts to obtain critical documents and witnesses. Following an attack by U.S. companies on a global uranium cartel for alleged collusion in the late 1970s, many countries--among them France, Canada, and Britain--passed laws barring companies from complying with U.S. document requests. "It's going to be a hell of a mess," says Washington antitrust lawyer Joel Davidow. And even if Justice does get incriminating evidence, it will be difficult hauling foreign companies into U.S. courts unless they have a U.S. branch or subsidiary.
Worse, governments could retaliate against U.S. exports. Many foreign authorities contend that the U.S. cannot impose its rules on foreign soil. Extraterritorial enforcement is "contrary to basic principles of international jurisdiction," says Masaru Matsuo, a spokesperson for the Japanese Fair Trade Commission (JFTC).
In spite of such formidable hurdles, Wood and her boss, Assistant Attorney General for Antitrust Anne K. Bingaman, have already launched probes of complaints from U.S. makers of autos, glass, and steel, according to industry sources. U.S. glassmakers, for example, allege that a three-company oligopoly in Japan has shut them out of that $4.5 billion market by barring their captive distributors from selling imported glass. The trio has kept a constant market share since the end of World War II, with Asahi Glass at 50%, Nippon Sheet Glass at 30%, and Central Glass at 20%.
LITTLE HELP. Guardian Industries Corp. in Northville, Mich., has given Justice plenty of fodder to pursue alleged anticompetitive practices of Japanese glass manufacturers, including names of Japanese insiders the company says will reveal details about monopolistic behavior. Company officials have handed over a 1991 letter to Guardian from a would-be Japanese customer canceling an order because of pressure from the big glassmakers. Guardian has also provided Justice with a 1987 memo from the Japanese Flat Glass Installers Assn. threatening retaliation against Japanese companies that do not buy glass from the glassmakers that are associated with the Japanese conglomerates Mitsubishi, Sumitomo, and Mitsui. Asahi Glass denies any wrongdoing. "There's no intimidation whatsoever. Period," says Yasuhiko Furukawa, a managing director at the company.
So far, the U.S. has seen few signs that the Japanese will offer much help, though they have stepped up enforcement. The JFTC has brought one criminal case a year since 1991. The last case before that was in 1973. And though Wood believes evidence of abuses supports more actions, Tokyo disagrees. JFTC studies of the glass and auto industries, for instance, found no illegal behavior by Japanese companies. U.S. companies call the studies whitewashes. "We ran into a wall of exclusionary business practices, including threats and intimidation," says Peter J.C. Young, special assistant to Guardian Industries' president.
FULL SUPPORT. If the Justice Dept. ends up bringing a case, it would be sweet revenge for Wood. While serving as a Justice consultant on international antitrust policy from 1985 to 1987, she clashed with Reagan Administration officials who wanted to narrow the scope of antitrust laws. In fact, guidelines issued by the Reaganites barred federal suits against foreign companies for violations abroad unless they hurt American consumers. The Bush Administration's chief trustbuster, James F. Rill, dropped that policy in 1992 and allowed cases in which U.S. exporters are hurt. But Wood may be the first actually to bring such a case. And she is rewriting the Reagan-era guidelines on international enforcement. She backs aggressive initiatives, including the prosecution of vertical restraints such as retail prices set by manufacturers.
Wood has the full support of Bingaman, who brought the uranium-cartel case as a private lawyer 15 years ago. In a major policy address in October at Fordham Law School, Bingaman described the antitrust laws as a "potentially useful means of protecting our national interest where private cartels seek to close foreign markets."
But Justice hasn't given up on diplomacy just yet. By the next round of trade talks with Japan, scheduled for July, Wood wants to persuade Tokyo to let private parties bring antitrust suits and allow U.S. companies to join Japanese trade associations, where many of the rules of the market are made. Should Japan--or any other country--resist her requests, the next meeting could be in a U.S. courtroom.
ANTITRUST: A TRADE WEAPON GLOBAL ENFORCEMENT The search is on to find a case to bring against a foreign company whose violation of U.S. antitrust laws hurt American consumers and exporters. Some potential targets: auto makers, the steel industry, glass manufacturers. BILATERAL TALKS Justice is pressuring foreign antitrust authorities to beef up local enforcement. WORLD AGREEMENTS The U.S. and the Organization for Economic Cooperation & Development are joining forces to put global antitrust issues at the top of the agenda for the next round of GATT talks. LEGISLATION The Justice Dept. is drafting legislation that enables U.S. and foreign antitrust agencies to share confidential information about ongoing cases.