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Authors

Joel Davidow

Document Type

Article

Abstract

Antitrust issues have become one of the main concern of the world economy community and the United Nations. For many years, the United Nations Conference on Trade and Development has multiplied the meetings to discuss the relationship between transnational enterprises and international investment and has engaged in reflections on methods to avoid a decline in international investment. However, these meetings failed to resolve the fundamental issue of the impact of international antitrust principles on restrictive arrangements between a foreign parent corporation and its local subsidiary, particularly where that subsidiary is in a developing country. If applied, multinational enterprises would be significantly deterred from creating and improving foreign subsidiaries because of rules denying them control of the buying and selling policies of such subsidiaries.

The purpose of this paper is to examine the market power of a multinational corporation in the relevant markets, the degree of independence of the subsidiary, the purpose of the restraint and the relationship between the scope and duration of the restraint and any legitimate purposes for it. This article explores two essential antitrust liability decisions of the Supreme Court of the United States aimed at enforcing the policy of American antitrust agencies in refraining them from challenging arrangements between closely affiliated firms, except in special circumstance. In addition, the author analyzed the basis of the Antitrust Guide for International Operations issued in 1977 by the Justice Department and its impact on the activities of a multinational corporation.

The proposed approach set out in this paper calls for rules against restrictions on subsidiaries to deal only with basically commercial decisions, such as what the subsidiary should manufacture, where it should be located, and how it should be managed. Nevertheless, this article found that intra-corporate restrictions should be treated at the international level, not as never being a restrictive business practice or always being a restrictive business practice, but in terms of the rule-of-reason analysis developed in United States cases which analysis is closely approximated by the Common Market treatment of similar practices.