Antitrust and Anti boycott Laws

Antitrust enforcement has two purposes in international commerce. The first is to protect American consumers by ensuring that they benefit from products and ideas produced by foreign competitors as well as by domestic competitors. Competition from foreign producers is important when imports are, or could be, a major source of a product or when a single firm dominates a domestic industry. This becomes relevant in many joint ventures particularly if the joint creates a situation in which a US firm entering a joint venture with a foreign competitor restricts competitor restricts competition for the US market.

The second purpose of antitrust legislation is to protect American export and investment opportunities against any privately imposed restrictions. The concern is that all US based firms engaged in the export of foods, service, or capital should be allowed to compete on merit and not be shut out by restrictions imposed by bigger or less principled competitors.

The questions of jurisdiction and how US antitrust laws apply are frequently asked but only vaguely answered. The basis for determination ultimately rests with the interpretation of Sections I and II of the Sherman act. Section I states that every contract combination or conspiracy in restraint of trade or commerce among the several states or with foreign nations is hereby declared to be illegal. Section II makes it a violation to monopolize or attempt to monopolize or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several states, or with foreign nations.

The Justice Department recognizes that application of US antitrust laws to overseas activities raises some difficult questions of jurisdiction. It recognizes that US antitrust law enforcement should not interfere unnecessarily with the sovereign interest of a foreign nation. At the same time, however, the Antitrust Division is committed to controlling foreign transactions at home or abroad that have a substantial and foreseeable effect on US commerce. When such business practices occur, there is no question in the Antitrust Division of the Department of Justice that US laws apply.

Under the anti boycott law, U.S. companies are forbidden to participate in any unauthorized foreign boycott; further, they are required to report any request to cooperate with a boycott. The anti boycott law was a response to the Arab League boycott of Israeli businesses. The Arab League boycott of Israel has three levels: A primary boycott bans direct trade between Arab states and Israel, a secondary boycott bars Arab governments from doing businesses with companies that do business with Israel and a tertiary boycott bans Arab governments from doing business with companies that do business with companies doing business with Israel.

When companies do not comply with the Arab League’s boycott League’s boycott directives, their names are placed on a blacklist and they are excluded from trade with members of the Arab League. U S companies are caught in the middle: if they trade with Israel, the Arab League will not do business with them, and if they refuse to do business with Israel in order to trade with an Arab League member, they will be in violation of U.S law. One hospital supply company that had been trading with Israel was charged with closing a plant in Israel in order to have the company taken off the Arab blacklist. After an investigation the company pleaded guilty, was fined $ 6.6 million, and was prohibited from doing business in Syria and Saudi Arabia for two years. A less costly fine of $ 12,000 was paid by a freight forwarder who certified that the goods shipped for a third party were not of Israeli origin, were not shipped from Israel, and did not contain any material from Israel.