Jean Monnet Center at NYU School of Law


II. Background

A. The US Antidumping Act of 1916: an obscure hybrid?

The US statute disputed in the case at hand was first enacted as Section 800-801 of the Revenue Act of 1916. Commonly referred to as the "Antidumping Act of 1916", it allows civil actions and criminal proceedings to be brought against importers who `commonly and systematically' have imported or sold foreign-produced goods in the United States at prices which are `substantially less' than the prices at which the same products are sold in a relevant foreign market, provided that such action is committed with the intent of `destroying or injuring an industry in the United States, or of preventing the establishment of an industry in the United States, or of restraining or monopolizing any part of trade and commerce in such articles in the United States'.3

This act was the first attempt of the US to address the problems of `dumping'. It was born out of fear that after the end of World War I European - especially German - firms would try to regain their position on the American market through predatory selling practices, thus threatening the newly established preeminence of American industries.4

Although the 1916 Act has been on the books for more than eighty years, it was rarely applied. There are no criminal cases under the 1916 Act reported.5 Before 1975 only one civil case was reported.6 Since 1975, the Act has known a little `revival' and a modest jurisprudence emerged7. However, none of the cases lead to the imposition of sanctions8. This lack of success is attributed to the fact that the required intent imposes a burden of proof on plaintiffs that is extremely difficult to meet.9 A number of cases brought in recent years regarding steel imports,10 have raised concerns that the Act is being used as a tool of intimidation to force foreign competitors. 11

The text of the 1916 Act is a hybrid mixture of trade law and antitrust law elements.12 Its enforcement and sanctioning mechanism was clearly borrowed from the existing US antitrust laws. Both the Sherman13 and the Clayton Act 14 relied largely on criminal enforcement. Private enforcement through claims for treble damages was already provided for in the Clayton Act. Furthermore, at least the last two types of required intent in the 1916 Act mechanism - restraining or monopolizing any part of trade and commerce - refer to the antitrust concern of injury to competition. On the other hand, the definition of `dumping' and the first three types intent echo concerns - injury to competitors - typically addressed in anti-dumping law.15

The provisions of Section 2 of the Clayton Act, also known as the Robinson-Patman Act, form today the basis for antitrust action against domestic price discrimination16. Under influence of economic theory17, only predatory price discrimination is considered illegal under the Robinson-Patman Act.18 Since the US Supreme court opinion in the Brooke Group case (1993), a complainant has to demonstrate two elements for predatory pricing to be established: (i) the prices complained of are below an appropriate measure of its rival's cost and (ii) the `predator' had a reasonable prospect of recouping its investment in below-cost pricing.19

The unsuccessful antitrust inspired approach of the 1916 Act, was quickly marginalized by a specific administrative approach to anti-dumping. The latter was first introduced by the Antidumping Act of 192120, the basic framework of which was maintained by its successor, Title VII the Tariff Act of 1930. This act, as amended21, still forms the statutory core of US anti-dumping law. Instead of relying on private or government actions brought before the courts, current anti-dumping law provides for administrative adjudication. An industry participant may bring a petition before the U.S. Department of Commerce (DOC) and the U.S. International Trade Commission (ITC). The DOC determines whether dumping has occurred or not and the ITC makes findings as to the required injury. There is no intent requirement for action to be undertaken. If a finding of dumping and injury is made, a duty equal to the price differential is imposed. There are no criminal or civil penalties.

The 1916 Act with its provision for a private right of action against dumping has remained an international unicum.22

The - not very abundant - case law pertaining to the 1916 Act23, shows that in interpreting the Act courts have especially struggled with the hybrid text of the law. An evolution is noticeable from a pure antitrust reading of the act towards a trade law approach.

The nature of the 1916 Act was for the first time addressed during the Zenith Radio litigation. The different court decisions in this litigation seemed to firmly establish an anti-trust reading.24 First, in a judgment rejecting a `void for vagueness' claim against the 1916 Act, the district court clearly considered the Act as an antitrust statute when stating that `the Antidumping Act of 1916, like § 3 of the Robinson-Patman Act, is directed only at conduct designed to destroy competition [..]".25 In a subsequent judgment in the same case, the court came to the conclusion that the legislative history of the 1916 Act reveals that it was intended to complement the antitrust laws by imposing on importers substantially the same legal strictures relating to price discrimination as those which had already been imposed on domestic businesses by the Clayton Antitrust Act of 1914.26 Therefore the court used antitrust standards to decide various issues in the litigation27. On appeal, the Third circuit upheld the antitrust reading of the 1916 Act, stating that "the primary aim of the 1916 was to prohibit anticompetitive pricing". The court held that the 1916 Act requires a specific predatory intent. This led the court of appeals inter alia to apply the same predatory pricing standards to the 1916 Act claim as to the Sherman act predatory pricing claims before it. The Supreme Court reversed this decision insofar it dealt with the Sherman Act claims on the basis that the court had not applied the correct predatory pricing standard28. On remand, the court of appeals reconsidered also its 1916 Act rulings and reaffirmed its holding on the parallellism between predatory pricing claims under the Sherman Act and claims under the 1916 Act: "[since] the Sherman Act conspiracy charge failed in the Supreme Court, our holding on the Antidumping Act conspiracy claim must fail with it"29.

In Helmac, the district court explicitly considered the 1916 Act as having a hybrid nature. It pointed to some portions of the Zenith Radio court decisions supporting this view. Recognizing the hybrid character of the Act, the court decided one the one hand that the limitation period to be applied to actions brought under the 1916 Act was to be the same as the one for actions under the Clayton Act, but on the other hand refused to apply predatory pricing standards from antitrust law.30

The antitrust approach was explicitly rejected in recent Geneva Steel and Wheeling Pittsburgh cases. The district court in Geneva Steel concluded that by its express language, the 1916 Act is not limited only to antitrust injury or predatory price discrimination. In addition to its antitrust prohibitions, the Act has a protectionist component that prohibits dumping designed to injure the domestic industry. 31 Therefore it was not necessary to allege antitrust injury or predatory intent to state a claim under the 1916 Act. The district court in Wheeling Pittsburgh 32 came to the same conclusion.33

Legal commentators have expressed equally divergent views over the years. Some authors read the Act as a pure antitrust statute34, whereas others stressed the hybrid nature of the 1916 Act.35 The most recent commentaries almost unanimously regard the Act as a trade law. 36

Protectionist sentiments and discomfort with the limitations of administrative anti-dumping law37, lead in the 1980's to some legislative proposals to amend the 1916 Act.38 The Act's provision for a private right of action seemed promising to address these concerns. Most of the proposals tended to lower the burden of proof, by abandoning intent requirements or creating presumptions and some added the possibility of injunctive relief (import prohibition).39 None of these proposed amendments were adopted.

The viewpoint of the US government has not been very clear in recent years. In their 1995 Antitrust Guidebook, the US Department of Justice and the Federal Trade Commission stated that the 1916 Act is not an antitrust statute, but nevertheless notes that the Act "is closely related to the antitrust rules regarding predation". In 1997, Charlene Barshefsky, then U.S. Trade Representative, first stated that the 1916 Act was `grandfathered' under the Uruguay Rounds, which implies she believed the Act was an anti-dumping law subject to the WTO discipline, but she later retracted this statement.40

B. From Geneva Steel to Geneva: Procedural background to the case

The turn that judicial interpretation of the 1916 Act took in the Geneva Steel and Wheeling-Pittsburgh dispute raised concerns that the 1916 Act could become in instrument with `teeth' to penalize and dissuade low-pricing importers.

That these concerns were translated into a dispute about the compatibility of the 1916 Act with WTO obligations did not come as a surprise.

The Geneva Steel case, which was directed against two importers of European steel, lead to a complaint lodged by a European steel federation under the Trade Barrier Regulation41. After investigation, the European Commission decided that the 1916 Act violated several WTO/GATT provisions42. On June 4, 1998 the EC requested consultations with the US `regarding the failure of the United States to repeal the 1916 Act' pursuant to the WTO rules on dispute settlement43. After the failure of these consultations, the EC requested on 1 February 1999 the establishment of a panel to review its claims that the 1916 Act violated

India, Japan and Mexico reserved third party rights. The panel was established on April 1 1999 and issued its report on February 14, 2000.44

In February 1999. Japan also decided to have recourse to the WTO dispute settlement system. Japan's decision was triggered by the Wheeling-Pittsburgh case, which was directed against nine foreign companies, among which three importers of Japanese steel.45 On June 3, after consultations in March 1999 had failed, Japan requested the establishment of a panel to review its claims that the 1916 Act was inconsistent with:

The panel was established on July 26, 1999. The EC and India reserved third party rights. The panel report was issued on March 31, 2000.

In both cases, the panel found that the 1916 Act substantially violated several provisions the WTO anti-dumping Provisions. The United States appealed against these substantial and some preliminary findings made by both panels on May 29, 2000. Unlike what had happened on the panel level, the appeals were joined and heard by one Division of the AB. On June 13 2000 the EC and Japan also filed a joint appeal. The AB issued its report on August 28 2000. The Dispute Settlement Body (the DSB) adopted the report on September 26, 2000.

On October 23 2000, the United States informed the DSB that it would implement the recommendations and rulings of the DSB, noting that it would need a `reasonable period of time' to do so and that it would consult on the matter with the EC and Japan.46 Such consultations apparently failed and on November 17 the EC and Japan requested that a reasonable period for implementation be determined by binding arbitration (see art. 21.3 (c) DSU). On February 28 2001, the arbitrator decided that the reasonable period would be ten months after the adoption of the AB report, thus expiring on July 26, 2001.47 On July 24, 2001, the United States Trade Representative reached an agreement with the Dispute Settlement Body to have the period extended to the end of the ongoing session of the U.S. Congress or December 31, 2001, whichever date came first.48 On December 20 2001 a bill was introduced in the House of Congress to repeal the 1916 Act.49 In the course of January 2002, both the EC and Japan sought recourse to art. 22 DSU (suspension of concessions), because the US had failed to implement the recommendations of the Panel and Appellate Body within the reasonable period of time set.50

3 The Revenue Act of 1916, ch. 463, Sections 800-801, 39 Stat. 798, codified as 15 U.S.C. §. 72 In relevant part, the statute reads as follows:

"It shall be unlawful for any person importing or assisting in importing any articles from any foreign country into the United States, commonly and systematically to import, sell or cause to be imported or sold such articles within the United States at a price substantially less than the actual market value or wholesale price of such articles, at the time of exportation to the United States, in the principal markets of the country of their production, or of other foreign countries to which they are commonly exported after adding to such market value or wholesale price, freight, duty, and other charges and expenses necessarily incident to the importation and sale thereof in the United States: Provided, That such act or acts be done with the intent of destroying or injuring an industry in the United States, or of preventing the establishment of an industry in the United States, or of restraining or monopolizing any part of trade and commerce in such articles in the United States.
Any person who violates or combines or conspires with any other person to violate this section is guilty of a misdemeanor, and, on conviction thereof, shall be punished by a fine not exceeding $5,000, or imprisonment not exceeding one year, or both, in the discretion of the court.
Any person injured in his business or property by reason of any violation of, or combination or conspiracy to violate, this section, may sue therefore in the district court of the United States for the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages sustained, and the cost of the suit, including a reasonable attorney's fee.
The foregoing provisions shall not be construed to deprive the proper State courts of jurisdiction in actions for damages thereunder."

4 See eg. Kermit W. Almstedt, International Price Discrimination and the 1916 Antidumping Act - Are Amendments in Order?, 13 LAW & POL'Y INT'L BUS. 751 (1981), David Rushford, Antitrust versus Antidumping: Revisiting the Antidumping Act of 1916, 3 U.C. Davis J.Int'l.L. & Pol'y 86 (1997).

5 See EC panel report and Japan panel report, para. 2.16; see also Diane M. Keppler, The Geneva Steel Co. Decision Raises Concerns in Geneva: Why the 1916 Antidumping Act Violates the WTO Antidumping Agreement, 32 GEO.WASH.J.INT'L.L.&ECON. 293 (1999).

6 H. Wagner and Adler Co. v. Mali, 74 F.2d 666 (2d Cir. 1935). This case dealt with issues of discovery, and did not reach the merits of a claim under the 1916 Act as such.

7 See infra for an overview of the most important cases.

8 See EC panel report and Japan panel report, para. 2.15; see also D. Keppler, supra note 6, 293.

9 The US Tariff Commission in its 1919 year report already recognized this difficulty. See the excerpt in Zenith Radio Corp. v. Matshushita Elec. Indus. Co, 494 F.Supp. 1190 (1224) (E.D. Penn., 1980)

10 See in particular the Geneva Steel and Wheeling-Pitssburgh cases, discussed infra.

11 See eg. Peter Passell,  Politicized trade law: helping companies avoid market forces, The New York Times, 19 December 1996, D-2 (quoting prof. Ronald Cass, former member of the United States International Trade Commission: "The 1916 act could prove to be a great way to beat competitors into submission".

12 Comp. Mark A. Neville jr., The Antidumping Act of 1916: A War-Time Legacy, 25 N.Y.L.SCH.L.REV 536 (1981). The legislative history of the 1916 Act shows that the Democratic majority in Congress at the time was both in disfavor of higher tariffs (and hence of the imposition of anti-dumping duties) and in favor of vigorous enforcement of antitrust laws. Hence the antitrust like answer to the perceived threat of increased European competition. See eg. Kermit W. Almstedt, supra note 5, 751-52.

13 Sherman Act, 26 Stat. 209 (1890), codified at 15 USC §§ 1-7.

14 Clayton Act, 38 Stat. 730 (1914), codified at 15 USC §§ 12-27.

15 Many authors have discussed the issue of the different approach to price discrimination in antitrust and anti-dumping law. See very succinctly e.g. B. Hoekman & P. Mavroidis, Dumping, Antidumping and Antitrust, 30 J. WORLD TRADE, 27, at 28-29 (1996).

16 15 USC §13.

17 Predatory pricing can in general be defined as: "systematically pricing below cost with a view to intimidating and/or eliminating rivals in an effort to bring about a market price higher than would otherwise prevail". Real predatory pricing is considered to be very rarely to occur. See on predatory pricing e.g. M. TREBILCOCK & R. HOWSE, THE REGULATION OF INTERNATIONAL TRADE, at 181- 182 (1999)

18 Unilateral or concerted predatory pricing practices also violate Section 2 cq. 1 of the Sherman Act.

19 Brooke Group Ltd. v. Brown & Williamson Tobacco Company, 509 U.S. 209, 118 S.Ct. 2578.

20 The Emergency Tariff Act of 1921, ch. 14, Title II, 42 Stat. 9.

21 Codified at 19 USC §1673.

22 See Roger P. Alford, Why a private right against dumping would violate GATT, 66 N.Y.U.L. REV. 696 (1991), 727.

23 A comprehensive list of the court decisions pertaining to the 1916 Act can be found in footnote 19 to para. 2.14 of the EC panel report and footnote 18 to para. 2.14 of the Japan panel report.

24 Legal commentators seem to agree on this reading of the court decisions in this litigation, see e.g.: Jeffrey L. Kessler, The Antidumping Act of 1916: Antitrust Analogue or Anathema, 56 ANTITRUST L.J. 485 (1987); Note, Rethinking the 1916 Antidumping Act, 110 HARV.L.REV. 1555 (1997); David Rushford, supra note 5; Diane M. Keppler, supra note 6, 293.

25 Zenith Radio Corp. v. Matsushita Electric Industrial Co., Ltd., 402 F.Supp. 244 (E.D. Pa. 1975)

26 Zenith Radio Corp. v. Matsushita Electric Industrial Co., Ltd., 494 F.Supp. 1190 (E.D. Pa. 1980), at 1197.

27 The Court held for example that in order to give rise to a claim under the 1916 the competing products must be `like in grade and quality and grade' as required under Section 2 of the Clayton Act. Id..

28 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986)

29 In re Japanese Elec. Prods. Antitrust Litig., 807 F.2d. 44 (3rd. Cir. 1986); quotation: id. at 49

30 Helmac Products Corp. v. Roth (Plastics) Corp., 814 F. Supp. 560 (E.D. Mich. 1992).

31 Geneva Steel Company v. Ranger Steel Supply Corp., 980 F.Supp. 1209 (D. Utah 1997), at 1215.

32 Wheeling-Pittsburgh Steel Corporation v. Mitsui Co., 35 F.Supp.2d. 597 (S.D. Ohio 1999).

33 Dealing with a different issue on appeal against this decision, the court of appeals for the 3rd circuit considered, without further argumentation, that it must interpret the 1916 Act in conjunction  with all subsequent anti-dumping legislation, in particular Title VII of the Tariff Act of 1930, which addresses unfair dumping practices, because where two or more statutes deal with the same subject, they are to be read in pari materia and harmonized, if possible.Wheeling-Pittsburgh Steel Corp. v. Mitsui & Co., 221 F.3d 924, at 927.

34 See eg. Joseph G. Sidak, A Framework for Administering the 1916 Antidumping Act: Lessons from Antitrust Economics, 18 STANF. INT'L L.J. 377 (1982) (warning however for negative implications on social welfare to be expected from future applications of the 1916 Act) Jeffrey L. Kessler, supra note 25 (arguing that the 1916 Act is an antitrust statute aiming at international predatory price discrimination and warning that certain amendments proposed in the 1980's would turn the Act into a protectionist statute in open conflict with antitrust policy).

35 See eg. Mark A. Neville jr., supra note 13 (in favor of a careful redefinition of the 1916 Act and the vestiture of exclusive jurisdiction for 1916 Act claims with the US Court of International Trade).

36 See Adam C. Hawkins, Antidumping beyond the GATT 1994: Supporting international enactment of legislation providing supplemental remedies, 10 IND. INT'L.&COMP.L.REV. 149 (1999), Diane M. Keppler, supra note 6, Note, Rethinking the 1916 Antidumping Act, 110 HARV.L.REV1555 (1997), . Contra: David Rushford, supra note 5.

37 See for a brief overview of some critiques made from the viewpoint of US industry on the functioning of administrative anti-dumping law in the US: Note, Rethinking the 1916 Antidumping Act, 110 HARV.L.REV. 1555 (1997), 1555.

38 See already the proposals made in that sense by Kermit W. Almstedt, supra note 5, 770-780 and Mark A. Neville jr., supra note 13, at 575.

39 For discussion on some of these proposals see e.g: Roger P. Alford, supra note 23, at 715-719, Jeffrey L. Kessler, supra note 25, 494-496.

40 Diane M. Keppler, supra note 6, at 294-295.

41 Council Regulation (EC) No. 3286/94 of 22 December 1994 laying down Community procedures in the field of the common commercial policy in order to ensure the exercise of the Community's rights under international trade rules, in particular those established under the auspices of the World Trade Organization, O.J. L. 349, 31 December 1994, 71, as amended by Regulation (EC) No. 356/95, O.J. L 41, 23 February 1995, 3.

42 See Commission decision No. 98/277/EC of 16 April 1998, OJ L 126, 28 April 1998, 36.

43 See particular: article XX:1 GATT 1994, article 4 Dispute Settlement Understanding and article 17.2 Anti-Dumping Agreement..

44 See EC Panel report, para. 1.1-1.7.

45 See X, WTO sets up panel over U.S. antidumping act, JAPAN WEEKLY MONITOR, 2 August 1999; X, Steel dispute between Japan, U.S. to shift to WTO, JAPAN WEEKLY MONITOR, 25 October 1999.

46 See: WT/DSB/M/91, 30 November 2000, para. 55.

47 See Award of the Arbitrator A.V Ganesan, WT/DS136/11 and WT/DS162/14, 28 February 2001, para. 45..

48 See Annual Report of the Dispute Settlement Body, WT/DSB/26, 12 October 2001, 16-17

49 See: X, Administration faces active year in trade legislation, negotiations, INSIDE U.S. TRADE, 4 January 2002, 5.

50 Update on WTO dispute settlement cases, WT/DS/OV/4, 6 February 2002, 113.




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