EEC Proposed Competition Rules for Motor Vehicle Distribution: An American Perspective

• Author: Joel Davidow
• DOI: 10.1177/0003603X8302800404
• Published date: 01 December 1983
• Date: 01 December 1983
• Subject Matter: Article

The Antitrust Bulletin/Winter

1983

EEC proposed competition rules

for motor vehicle distribution:

an American perspective

BY JOEL DAVIDOW*

I.

Introduction: the process of comparison

863

Any comparison between antitrust rules in the United States and

in the European Communities should take into account signifi-

cant differences between goals and the procedures of the two

competition law systems, while recognizing the existence

of

cer-

tain shared basic purposes and common problems. On both sides

•Partner, Mudge Rose Guthrie Alexander &Ferdon, New York City;

Lecturer in Law, Columbia Law School. Formerly, Chief, Foreign

Commerce Section, and Director, Policy Planning, Antitrust Division,

U.S. Department of Justice.

AUTHOR'S

NOTE: This article is based on an address by the author to the

Conference on Distribution

of

Automobiles in Light

of

EEC Competi-

tion Policy, sponsored by the International Institute

for

the Study

of

Commercial Competition, held in Brussels, Belgium, May 20,

1983.

©1984by Federal LegalPublications, Inc.

864 The antitrust bulletin

of

the Atlantic, the automobile has been a prime indicator of

economic and technological progress, and the auto dealership a

paradigm local business. The issue

of

how to formulate competi-

tion rules to govern the vertical and horizontal relationships in

this industry has caused dispute, within and between countries,

and remains in flux.

A.

Common and disparate purposes

oj

U.S. and

EEe

competition rules

The U.S. and EEC competition law systems share a purpose

to prevent and remedy agreements and practices that restrain

commercial rivalry nakedly or unduly. However, the American

antitrust system was put into place about 100 years after the

United States had become a successful free trade zone and

common market. Thus, in the United States there has been no

special purpose

of

antitrust rules to prevent agreements restrain-

ing competition to contain it within the boundaries

of

particular

states of the union. In contrast, competition rules

of

the EC are

primarily intended to deter and eliminate restrictions that tend to

divide the Common Market into separate submarkets based on

historic national boundaries.

This crucial mission of the Common Market Commission to

use articles 85 and 86 to prevent private market divisions along

national lines has led to a significant difference in approach in

dealing with vertical or distributional restrictions. In the United

States, court decisions in the last decade have been heavily

influenced by economic analysis suggesting, even demonstrating,

that restrictions in the distribution

of

aparticular branded prod-

uct can almost never result in supercompetitive profits if the

branded product is subject to free and open competition from

rival brands.IIn the important GTE-Sylvania case, the U.S.

1Economic analysis as a means to evaluate antitrust cases has been

suggested by, inter alia,

AREEDA,

ANTITRUST

ANALYSIS

(3d ed. 1981);

BORK,

THE

ANTITRUST

PARADOX

(1978);

POSNER,

ANTITRUST

LAW:

AN

ECONOMIC

PERSPECTIVE

(1976).