Matsushita Revisited: Can U.S. Antitrust Address Foreign State Mercantilism Without Abandoning Free Markets?
Over about two decades, China’s export-driven industrial and trade policies have transformed global markets in critical materials and technologies. These policies involve a complex mix of competitive effects, including depressed prices reflecting scale economies, potential subsidy-driven distortions in output, quality, variety, and innovation, and inflated prices arising from periodic deployment of export controls. In this environment, U.S. antitrust law faces a challenge: how to preserve open markets that enable entry by efficient competitors while addressing anticompetitive distortions arising from foreign state mercantilism. Doctrinally, this tension is reflected in the caution expressed by the Matsushita decision against suppressing efficient foreign competition and the emphasis placed by the Alcoa decision (and reflected in the Foreign Trade Antitrust Improvements Act) on capturing foreign conduct that harms competitive conditions in U.S. markets. Prior efforts to apply antitrust law to state-coordinated export cartels in vitamin C and other raw materials markets foundered on a rigid understanding of the sovereign compulsion doctrine. However, case law supports a more calibrated approach that treats sovereign compulsion as part of a multi-factor comity analysis rather than a categorical bar to enforcement. In conjunction with trade remedies, this framework may allow antitrust to play a limited but meaningful role in targeting mercantilist distortions while protecting competitive markets.
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