Importing the Sherman Act

Much as they may inveigh against over-zealous trustbusting, most U.S. businessmen agree that one reason why U.S. industry has outstripped Europe over most of the past half-century has been Europe's easy tolerance of cartels. Last week in Brussels, the Ministerial Council of the six-nation Common Market approved the toughest antitrust regulation Europe has ever seen. Binding on all Common Market members under the 1957 Treaty of Rome, the new regulation will also affect U.S. businessmen who sell their products in the Common Market, manufacture within it, or have patent or license deals with firms that do.

Barred under the new Common Market regulation will be any agreements "which are likely to affect trade between member states and which have as their object or result the prevention, restriction or distortion of competition within the Common Market." Companies are required to declare by Aug. 1 the details of existing agreements that come within this sweeping language--or suffer penalties if they are discovered later. Any company that fails to scrap or revise an offending agreement can be fined up to $1,000,000.

Correcting the Common. To enforce the new regulation and to pass upon the acceptability of past and future cartel agreements, the Common Market has a trustbusting department headed by Dutch Economist Pieter VerLoren van Themaat, 45, who rejoices in the resounding title of Director General of Competition. After talking things over with him. George Nebolsine, a top New York international lawyer, concluded that "the department is not going to be lenient.'' Nebolsine also believes that it may well challenge "such very common business practices as the appointment of exclusive dealers in a foreign country, restrictions under patent and know-how licenses, joint ventures for the production of components or materials, and distribution arrangements."

Clearly, a lot of litigation lies ahead. The Common Market members are thin on legal precedent in the antitrust field: France, Germany, Belgium and The Netherlands have relatively lax national antitrust laws, while Italy and Luxembourg have none at all. This free-and-easy situation results partly from the reality that the economy of Italy, for example, can support only one automaking giant such as Fiat. The Common Market trustbusters are not expected to attack bigness as such. But they are expected to crack down on "abuses" of bigness such as price fixing and market sharing. Officials of VerLoren van Themaat's department are empowered to dig into the books of any company operating in the Common Market.

Early Warning. Many U.S. entrepreneurs in the Common Market will thus have to worry about possible antitrust prosecution from three different quarters--the U.S., the European nation in which they are operating and the Common Market. In some respects, they are apt to find the Common Market code the clearest and easiest to comply with. In contrast to the U.S., where the Justice Department cannot always predict whether the courts will find a proposed deal in violation of the antitrust laws, businessmen are promised a solid ruling in advance from the Common Market trustbusters. Equally important, the Common Market commission is expected to condone any cartel that it judges to be economically necessary or beneficial.

The prospect of U.S. businesses competing against the emerging giants of the Common Market is prompting some re-evaluation of U.S. antitrust laws. Though no one talks of emasculating the Sherman or Clayton acts, there are already suggestions that the U.S. may have to be more lenient toward bigness in business if it is to compete effectively in today's bigger world market.

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