APEC economies will enhance the competitive environment in the Asia-Pacific region by introducing or maintaining effective and adequate competition policy and/or laws and associated enforcement policies, ensuring the transparency of the above, and promoting cooperation among APEC economies, thereby maximizing, inter-alia, the efficient operation of markets, competition among producers and traders, and consumer benefits.

Each APEC economy will:
1. review its respective competition policy and/or laws and the enforcement thereof in terms of transparency;
2. implement as appropriate technical assistance with regard to policy development, legislative drafting, and the constitution, powers and functions of appropriate enforcement agencies; and
3. establish appropriate cooperation arrangements among APEC economies.

1. Legal Framework

The three principle federal antitrust laws are the Sherman Act, 15 U.S.C. 禮禮 1-7; the Clayton Act, 15 U.S.C. 禮禮 12-27; and the Federal Trade Commission Act, 15 U.S.C. 禮禮 41-51. Numerous other federal statutes, however, govern the antitrust treatment of particular sectors of the economy. Finally, 49 states have enacted antitrust laws, which are similar to the federal laws.

The Supreme Court stated in Northern Pacific Railway Co. v. United States, 356 U.S. 1, 4 (1958), that "[t]he Sherman Act was designed to be a comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade. It rests on the premise that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, the lowest prices, the highest quality and the greatest material progress, while at the same time providing an environment conducive to the preservation of our democratic political and social institutions."

Other objectives have at times been expressed in earlier periods in the history of U.S. antitrust law enforcement: fairness, dispersion of economic power, and distribution of economic opportunities. A strong consensus currently exists, however, that promotion of economic efficiency and maximization of consumer welfare are the appropriate objectives of U.S. antitrust policy.

From the beginning of U.S. antitrust history in 1890, there has been a strong presumption against exempting economic sectors from the application of the antitrust laws. Accordingly, the vast bulk of U.S. commerce is subject to antitrust discipline, and no sector is totally excluded from the antitrust laws. Over time, however, some economic sectors or types of behavior have been partially exempted from the antitrust laws, through explicit statutory authorization or judicial decisions based on statutory interpretation, as described in the next section.

The U.S. antitrust laws apply to anti-competitive business conduct that affects U.S. domestic or foreign commerce. Under the effects doctrine, jurisdiction exists for import commerce when there are actual or intended effects on the U.S. market; for non-import commerce, when there is a "direct, substantial, and reasonably foreseeable effect" on U.S. trade and commerce, or on U.S. export trade and commerce.

Exceptions to the application of the antitrust laws exist for certain activities in some sectors. In many cases a specialized regulatory agency with sector-specific responsibilities applies competition rules analogous to the federal antitrust laws, and the antitrust agencies retain an advisory, competition advocacy role. Sectors that retain some form of exemption from, or special treatment under, the antitrust laws include: agricultural cooperatives; fishermen's cooperatives; banks and other financial institutions; securities and commodities industries; insurance (to the extent it is regulated by state law); newspapers; professional sports; interstate motor, rail, and water carriers; ocean shipping; organized labor; and air transportation. The clear trend is to reduce these exceptions, which are narrowly construed by the courts; as noted above, the vast bulk of U.S. commerce remains subject to antitrust disciplines.

The federal government and its instrumentalities are immune from the antitrust laws. Under the state action doctrine, private action taken pursuant to a clearly articulated policy of one of the U.S. states and subject to the active supervision of the state is immunized from antitrust liability.

Congress has enacted special laws relating to export activities. The jurisdictional reach of the U.S. antitrust laws does not extend to U.S. export activities unless they have a "direct, substantial, and reasonably foreseeable effect" on trade or commerce within the U.S., on U.S. import trade or commerce, or on the export trade of exporters in the U.S. The principal effect of the export-related legislation in this area is to provide greater advance certainty regarding the federal and state antitrust implications of export conduct.

Sherman Act 禮 1 states that "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is declared to be illegal." Sherman Act 禮 2 makes it unlawful 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 Federal Trade Commission Act 禮 5 prohibits "unfair methods of competition in or affecting commerce."

The broad terms of the Sherman Act, which have been read into section 5 of the FTC Act, prohibit agreements or understandings, express or implied, between two or more persons or firms that unreasonably restrain trade in any product or service. To determine whether an agreement unreasonably restrains competition, courts have applied one of two methods of analysis, depending on the type of agreement at issue. Certain agreements (called "per se" offenses") are deemed to be so inherently anticompetitive that they are always illegal, regardless of the intent of the parties or the actual effect of the agreements on competition. These agreements include agreements between competitors to fix prices or the terms and conditions of credit and sales, to allocate customers or territories, not to deal with any person or persons ("group boycotts"), and, in certain circumstances, to sell one product conditioned on an agreement by the buyer to purchase a second, distinct product ("tying"). Resale price maintenance is also per se unlawful.

The offense of unlawful monopolization has two elements: possession of market power in the relevant market, and the willful acquisition or maintenance of that power, as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident. Market power has been defined as the power to control prices or exclude competition, and market share is the most important factor in measuring market power, with shares exceeding 70 percent usually considered sufficient for a finding of market power, and shares of less than 40 percent generally insufficient. For the second element, courts have required a showing of anticompetitive or predatory conduct -- efforts to exclude rivals on some basis other than efficiency. Examples of such conduct include below cost-pricing, filing of baseless litigation against competitors, or denial of access to an essential facility.

The offense of attempted monopolization has three elements: specific intent to control prices or destroy competition, predatory or anticompetitive conduct directed at the unlawful objective, and a "dangerous probability of success" in achieving a monopoly in the relevant market.

Potentially anticompetitive practices which do not fall into the per se category (exclusive dealing or requirements contracts and other non-price vertical restraints, cooperative marketing activities, etc.) are analyzed under a "rule of reason" standard, which requires an in-depth analysis of the effect on competition in the relevant market. In rule of reason analysis, competitive intent and effect are weighed along with the business justification of the challenged activities to determine their legality. It should be noted that a rule of reason analysis does not "exempt" prohibited conduct, but rather determines whether conduct which is not "per se" prohibited should fall within the prohibitions of the antitrust laws.

Clayton Act 禮7 prohibits mergers and acquisitions "in any line of commerce or in any activity affecting commerce in any section of the country, (where) the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly..." Mergers and acquisitions may also be challenged under sections 1 an 2 of the Sherman Act and section 5 of the FTC Act.

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, notification to the FTC and Department of Justice is required before the consummation of an acquisition of stock or assets exceeding specified size of firm and size of transaction thresholds. Generally, premerger notification is required if all of the following conditions are met:

1. either the acquiring person or the acquired person is engaged in interstate commerce,

2. one of the parties has annual net sales or total assets of $100 million or more, and the other has annual net assets or total sales of $10 million or more, and

3. as a result of the acquisition, the acquiring party will hold either
   1. voting securities or assets of the acquired firm valued at more than $15 million, or
   2. 50% or more of the voting securities or assets of a firm with annual net sales or total assets of $25 million or more.

For transactions other than cash tender offers or acquisitions of bankrupt firms, the waiting period prior to consummation is 30 days. When a second request for additional information has been issued by the antitrust authorities within that period, the merger cannot be consummated for 20 days after compliance with the request (in practice, the time it takes to respond to a second request can vary widely depending on the scope of the request and the merging parties' decision as to how quickly to respond, among other factors). Cash tender offers and acquisitions of bankrupt firms have a shorter waiting period -- 15 days (plus 10 days after compliance with a request for additional information). The agencies' enforcement policy is outlined in the 1992 Horizontal Merger Guidelines. If an agency concludes that a proposed merger would violate the antitrust laws, it must apply to a court to enjoin a merger prior to its consummation.

9.1 Structure

The two federal agencies responsible for enforcing the antitrust laws are the Department of Justice (DOJ), through its Antitrust Division, and the Federal Trade Commission (FTC), an independent agency established in 1914. The FTC is composed of five Commissioners appointed for seven-year terms by the President with the advice and consent of the Senate; the FTC is not part of the Executive Branch. A clearance procedure between the two agencies ensures that the same parties or conduct are not subject to investigation by both agencies at the same time.

The antitrust laws are enforced principally through proceedings brought in the federal courts, either by the Department of Justice, by private parties, or by attorneys general of the various states. The FTC conducts its own internal administrative proceedings to adjudicate violations of the antitrust laws; but in those cases as well, the FTC must go before the courts to obtain preliminary injunctive relief or to enforce violations of its remedial orders. The courts thus have a major role in the enforcement and interpretation of the U.S. antitrust laws, although the vast majority of enforcement actions brought by the DOJ and FTC are settled prior to contested proceedings in the courts.

The state governments also play an important role in antitrust enforcement: each of the fifty states may sue to enforce federal antitrust laws when an antitrust violation causes injury to the state itself or to its citizens. In addition, 49 states have their own antitrust laws, which may be enforced through suits brought by states in the state courts.

9.2 Functions and Responsibilities; 9.3 Powers

The DOJ is an Executive Branch Department; it enforces the antitrust laws (Sherman and Clayton Acts, but not the FTC Act) through criminal prosecutions and civil law suits in the federal courts. The DOJ has sole authority to prosecute federal criminal violations.

The FTC is an independent regulatory agency; it enforces the antitrust laws (Clayton Act, FTC Act provisions on "unfair methods of competition", but not the Sherman Act) principally through administrative proceedings. The FTC also enforces provisions in the FTC Act that protect consumers against unfair or deceptive acts or practices. In addition to its adjudicative authority, the FTC has the power to promulgate industry or trade regulation rules primarily for consumer protection matters; in some cases, violation of such rules may result in civil monetary penalties. The FTC's ultimate recourse for enforcement of its orders is through the federal courts.

Both agencies have the power to compel testimony and the production of evidence for use in antitrust investigations, subject to strict rules for the protection of confidentiality. The agencies' powers with respect to mergers are noted in section 8 above.

As noted above, the antitrust laws are enforced principally through proceedings brought in the federal courts. The FTC conducts its own administrative proceedings to adjudicate violations of the antitrust laws; but in those cases as well, the FTC must go before the courts to obtain preliminary injunctive relief or to enforce violations of its remedial orders. For federal criminal prosecutions, standard criminal procedures -- including the grand jury and use of immunized testimony -- are used by the DOJ. In DOJ criminal prosecutions, defendants may request a jury trial; in DOJ civil proceedings, ordinary rules of civil procedure apply, but defendants are not entitled to a jury trial.

Criminal penalties: criminal violations of the Sherman Act are punishable by fines of up to $10 million for corporate defendants and $350,000 for other defendants. Fines may also be set at double the gross amount gained from violation of the law or lost by the victim. Criminal violations of the Sherman Act are also punishable by up to three years' imprisonment.

Injunctive relief: federal courts have the power to order a party to do or refrain from doing a particular act, which can include prohibiting repetition of past violations. Such orders may be entered either after a contested proceeding or by consent of the parties. The DOJ can obtain injunctive relief only through the courts; the FTC can issue cease and desist orders, following either the respondent's consent to the FTC's finding of facts or after an administrative trial on the merits, enforceable by court-imposed civil penalties.

Damages: the private cause of action for violations of the antitrust laws is a critical component of the U.S. antitrust system, and is independent of any government action. If a private suit follows a government action under the Sherman or Clayton Acts in which the defendant has been found liable, however, the plaintiff may use the earlier judgment as prima facie evidence of a violation. Private parties can obtain injunctive relief and are generally entitled to treble damage relief for violations of the antitrust laws, as well as recovery of reasonable attorney's fees. The U.S. Government can also sue for treble damages to recover for injury to its business or property resulting from an antitrust violation.

Other relief: courts can order the restoration of competitive conditions, including divestiture of assets and rescission of contracts. Courts have broad power to order injunctive relief barring prospective or ongoing violations of the antitrust laws. Specific financial penalties, imposed by the courts, exist for failure to comply with pre-merger notification rules. The FTC has broad discretion in fashioning remedial cease and desist orders, enforceable by court imposed civil penalties for non-compliance.

Remedies available under the state antitrust laws vary, but are generally similar to federal antitrust law provisions; in addition, many states provide for criminal penalties for violations of their antitrust laws.

All DOJ and some FTC enforcement actions are brought in the federal district courts and are subject to normal appellate review in the federal circuit courts of appeals. FTC administrative decisions are appealable directly to the federal courts of appeals. Private suits are also brought in the courts and subject to appellate review. In rare cases the Supreme Court exercises its discretionary jurisdiction to review the judgment of a federal appeals court in an antitrust case.

Outline of how the economy intends to move towards the Bogor targets and major contributions to Bogor targets:

1. The United States will continue to ensure the transparency of federal competition laws and enforcement policies through publication of antitrust laws, enforcement policy guidelines of the federal enforcement agencies, judicial opinions related to antitrust matters, advisory opinions or "business review letters," annual reports of the antitrust agencies, and public statements concerning enforcement policy by senior policy officials. Information regarding enforcement actions taken by the agencies and appellate judicial opinions are already available on the Internet.

2. The United States will continue its strong commitment to effective enforcement of the antitrust laws and to procompetitive regulatory reform. The federal enforcement agencies do not discriminate in the enforcement of the antitrust laws on the basis of nationality of the parties. Foreign firms or individuals have access to the U.S. enforcement agencies for information and advice. Foreign complainants also have access to the enforcement agencies to present evidence of alleged anticompetitive conduct in violation of the antitrust laws and to the courts to seek redress for alleged injuries therefrom.

3. United States enforcement agencies will continue to apply the antitrust laws to the broadest range of economic activity possible under the laws, and to reevaluate the appropriateness of any exceptions to the coverage of the antitrust laws. The agencies will continue their role as advocates of competitive outcomes in the regulatory reform process.

4. The United States will enforce its competition laws to ensure that US markets are free of harmful unilateral and concerted anticompetitive private conduct. Anticompetitive conduct that creates or maintains monopoly power will be investigated and pursued to the full extent of the law.

5. The United States strongly believes that national legislation covering restrictive agreements, anticompetitive conduct that creates or maintains monopoly power, and mergers, acquisitions and joint ventures, along with appropriate and effective investigatory instruments and penalties, are essential elements of a competition policy designed to ensure the efficient operation of markets, competition among producers and traders, and consumer welfare. Access to the judicial system, transparency, and non-discrimination are also essential to a fair and effective competition policy.

   Technical Assistance

6. The United States has had an active bilateral technical assistance program, has participated in and supported multilateral efforts through the OECD and elsewhere, and will continue to provide assistance to the extent of available resources. Efforts have focused on furthering a culture of competition and sound economic analysis through exchanges of personnel, participation in seminars organized by international organizations, on-site visits to advise on particular issues, and assistance from the federal competition law enforcement agencies in the drafting of laws and regulations and, to the extent permitted by law, in the conduct of specific investigations.

   Cooperation

7. The United States is a strong advocate of effective cooperation in the enforcement of competition policy. The U.S. has bilateral cooperation agreements with Canada, Australia, Germany, and the European Communities. The U.S. recently enacted legislation which would allow for even greater cooperation, including the exchange of confidential information on a reciprocal basis, pursuant to mutual antitrust assistance agreements to be negotiated with partners demonstrating an equivalent commitment to effective enforcement of competition laws and protection of confidential business information.

8. The United States participates actively in several international fora addressing cooperation in competition policy, including:
   • the APEC competition group
     
   • the NAFTA Trade and Competition Working Group
     
   • the FTAA Competition Policy Working Group
     
   • the OECD's Committee on Competition Law and Policy
     
   • the work of UNCTAD related to competition policy.
     

   U.S. antitrust agencies comply with the terms of the OECD's revised 1995 recommendation on cooperation between member countries on anticompetitive practices affecting international trade, and have followed the notification practice called for by that recommendation in certain situations involving non-OECD APEC economies.

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