Amicus Curiae Brief — Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corporation

Supreme Court, U.S.

FILED

SEP 6 1985

No. 83-2004 JOSEPH F. SPAIIOL, JR.

—_—— _

IN THE Ma

Supreme Court of the United States

OCTOBER TERM, 1984

MATSUSHITA ELEcTic INDUSTRIAL Co. LTD., et al

PETITIONERS

\

ZENITH RADIO CORPORATION and

NATIONAL UNION ELECTRIC CORPORATION

On Writ of Certiorari to the United States

Court of Appeals for the Third Circuit

BRIEF OF THE SEMICON\V)UCTOR INDUSTRY

ASSOCIATION AS AMICUS CURIAE

IN SUPPORT OF RESPONDENTS

loseph R. Creighton

Chairman, Law Committee

Semiconductor Industry Association

Counsel of Record

1601 S. Miramar Avenue

Indialantic, Florida 32908

oA) lave -

' Wy) iZi 913

William G. Dana

F. Thomas Dunlap, J1

(‘onnael for Semiconductoi lnduat

Al sacn arion

Cf Counsel

David F. Sanders

Pel pte mher 6. J9a5

PRESS OF BYRON & ADAMS, WASHING TON. I , a

BEST AVAILABLE COPY

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ........................... ii

INTEREST OF THE AMICUS CURIAE ................ l

SUMMARY OF ARGUMENT .......................... 3

SEY Gdnodesbadedcccecosonkasseciccahécecee 6

A. The Court of was correct in deciding

that recognition of the MITI

sion” statement would not thereby a

EE 6

B. Anticompetitive practices directed at U.S. mar-

kets should be excused only for compelling rea- :

ED @Sdasececsencosececsceccocsececnceene

C. Neither the Act of State or Sovereign Immunity

Doctrines are relevant to this case. .......... 9

D. The Compulsion concept has limited

hh. haan 10

E. The validity of voluntary restraints has no rele-

vancy to the claim of “sovereign compulsion.” . 13

F. There is no basis for a distinction between private

enforcement and governmental enforcement of

ET ERT RI l4

G The facts of this case are not appropriate for

applying a “sovereign compulsion” concept 16

TABLE OF AUTHORITIES

CASES

American Banana Co. v. United Fruit Co., 213 U.S. 347

GEEEED ccccececcccoceccesacacneianee ll

Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398

GED cccccccecescoccccecsmseneene 10, 11

Continental Ore Co. v. Union Carbide & Carbon Corp.,

SG RR is». 17, 20

Industrial Inv. Dev. Corp. v. Mitsui & Co., 594 F. 2d 48

GEE GED GRUP cocccccccconsonasnuuane 16

16

17

17

Outboard Marine Corp. v Pezetel, 461 F. Supp. 884 (D.

ed SID .0cccocccocaccaccacsnae ee 17

Sabre Shipping Corp. u American President Lines, 285

TEED cccececcacnaunuante Aiethe pete 17

84-1761 June 1985) .................. 18

United States v- Watchmakers of Suitzeriand info. Cen-

ter, 1963 Trade Cas. © 70,600 (S_D. N.Y. 1962) . 18, 21

RULES

Federal Register 28C.F.R.§506 .................. 13

TREATISES

J. Atwood and K. Brewster, Antitrust and American

Business Abroad (2d ed. 1981) ...... 13. 16, 17, 19, 2

W. Fugate, Foreign Commerce and the Antitrust Laws

GEES GE, GREED occcoccccocensscccesunuanl 16

Se

IN THE

Supreme Court of the United States

OCTOBER TERM, 1984

No. 83-2004

MATSUSHITA ELECTRIC INDUSTRIAL Co. Lrp.., et al,

PETITIONERS

v.

ZENITH RADIO CORPORATION and NATIONAL UNION

ELECTRIC CORPORATION

On Writ of Certiorari to the United States Court of

Appeals for the Third Circuit

--__e

BRIEF OF THE SEMICONDUCTOR INDUSTRY

ASSOCIATION AS AMICUS CURIAE IN SUPPORT

OF RESPONDENTS

—_—

The Semiconductor Industry Association Submits This

Brief As Amicus Curiae.

INTEREST OF THE AMICUS CURIAE

The Semiconductor Industry Association (“SIA”) is a

non-profit association which represents over fifty manufac-

turers of semiconductor devices, accounting for over 95% of

all semiconductors fabricated in the United States. Reve-

nues of the U.S. based industry reached $14 billion in 1984.

These microelectronic devices are not only the heart of

many emerging industries, such as telecommunications and

personal computers, but also the key to the competitiveness

of many traditional industries, such as automobiles and

appliances.

SIA and its member companies are dedicated to the

principles of free and fair trade throughout the world. For

example, in 1984 SIA spearheaded an effort for iegislation

which has resulted in elimination of all tariffs for semicon-

ductor products in both the United States and Japan. Also,

the Association is currently engaged in broad scale efforts

to open Japanese semiconductor markets to American pro-

ducers. SIA is firmly committed to the American competi-

tive system and the antitrust laws and believes they should

be enforced fairly and uniformly, both for the benefit of

consumers and also to keep the United States domestic

market open fairly and equally to all competition, whether

from domestic or foreign entities.

Neither SIA nor any member company has a direct inter-

est in the outcome of this litigation.' However, SLA believes

a decision in this case may constitute a precedent, or estab-

lish a rule of law, which may have serious effects upon

competition in domestic markets and freedom of trade.

SIA takes no position as to the merits of respondent's

case, or whether the petitioners violated the antitrust laws.

However, SIA submits that respondent is entitled to a trial

and that summary judgment was not appropriate. This brief

‘This brief is submitted by the Association and does not necessarily

state fully the views of every member. Motorola, Inc.. a member of

SIA, was initially a defendant in these proceedings, but the case

against it was dismissed by the District Court. Motorola has pot

participated in or provided any financial support, directly or indi

rectly, towards this motion and brief. x

result would be unfortunate, whatever the claimed

Justification.

goes beyond a normal governmental role. Automatic ap-

plication of concepts, such as “Act of State” or “sovereign

compulsion” would create a per se defense to antitrust en-

SUMMARY OF ARGUMENT

Amicus urges the Court to affirm the decision of the

Court of Appeals which reversed the summary judgment

granted by the District Court. The Court of Appeals prop-

erly considered the representations of the Government of

Japan, and specifically the 1975 MITI statement. Although

recognizing that “sovereign compulsion” could be a defense

Although “sovereign compulsion” has been discussed by

several courts and commentators, most courts have not

trust laws which would otherwise make such activities jJ-

legal. “Sovereign compulsion” does not provide a per se

defense, and the court is not precluded from evaluating the

gress. These important objectives cannot be subrogated to

principles as poorly defined and established as the concept

the largest in the world, and the antitrust laws are

to provide free competition in these markets for both do-

mestic and foreign competitors. No exemptions from the

principles of free competition should be granted lightly, and

there is no basis in the record of this case to grant such an

exemption.

The “sovereign compulsion” concept has limited interna-

tional acceptance. Neither petitioners nor amici curiae sup-

porting petitioners have demonstrated such international

acceptance, or even acceptance in their own nations. Also,

as comity, would appear to apply equally to restrict any

by a foreign government to authorize or direct

“Sovereign ion” is not a well-defined doctrine and

should be sparingly applied, particularly to provide exemp-

apply to commercial activities. Analogously, “sovereign

compulsion” may be limited when the mandated activity is

The issue before this court is not whether a “sovereign

compulsion” doctrine exists. Neither is it whether the

Court of Appeals considered the Japanese government rep-

applica-

ticn of a “sovereign compulsion” doctrine in its discussion of

the issue.* There was no need to mention the 1975 State-

decrees and whether they went beyond any protection these

decrees could give them. it is an issue of fact whether the

doctrine cannot apply. If, as respondents’ offered evidence .

indicates, petitioners first reached an agreement as to mini-

right of appeal from MIT! directives and could withdraw at any time.

this alone would negate compulsion and justify the conclusions of the

Court of Appeals.

and actual international trade conditions should receive

careful consideration. There simply will be no American

antitrust laws for protection of American consumers or to

insure free competition for American industries if major

foreign companies, some of the dominant players on the

playing field, can thus be exempted from our current princi-

ples of competition.

Foreign relations, sovereign actions and comity must be

considered. They cannot be conclusive, however. After liti-

gation has commenced, no foreign sovereign statement can

be permitted to usurp all decision-making on all issues

presented to the courts. The antitrust laws and con-

gressional mandates for their enforcement are entitled to

equal, if not greater, force. The impact on American indus-

try could be tremendous if any exemption to our principles

of free competition is granted with respect to activities

within the United States domestic market, whatever be the

claimed benefits of so doing.

This case does not appear to justify such a sacrifice of the

principles of the antitrust laws. The issues here do not

involve foreign governmental activity related primarily to

the internal affairs of the foreign government. Neither do

they involve international transportation or communication

which necessarily requires accommodation between the

legal systems and regulations of governments on each end of

the transaction. No effect on Japanese domestic markets or

the activities of its nationals there was intended by MITI.

As is clear from the statements of MIT] itself, as well as by

much evidece in the record, the entire subject matter of this

case and the directives described by MITI were sales of

products into United States markets.* This is the largest

market in the world by far, and it is a market which is fully

open to foreign manufacturers. The antitrust laws preserve

competition here, and foreign firms receive all the benefits

of this free competition. Many major foreign companies now

sell more in America than in their home markets. They have

full support from their governments, often including sub-

sidized research and development expense, loans and tax

benefits for exports.

Some traditional concepts concerning sovereignty may

need adaptation to this situation. Where a foreign govern-

ment adopts policies or mandates actions aimed at this large

American market and those activities impinge on our anti-

trust laws, no per se exemption from those laws is appropri-

ate. At ieast, any such exemption should be accorded only in

a very clear case—such as conflict with important policies of

the foreign government relating to its internal affairs.

C. Neither the Act of State or Sovereign Immunity Doc-

trines Are Relevant to This Case.

Petitioners and several amici curiae discuss the Act of

State and sovereign immunity doctrines as if they were

apposite here. Much judicial support is available for these

doctrines, but these are not relevant to this case, other than

for general principles such as comity and respect for foreign

sovereignty.

*The 1975 MITI statement expressly recognized “the importance of

televisions as one of Japan's export products” (Pet. App. 13a) and

states that it directed Japanese television companies to enter an

agreement “with respect to minimum prices and other matters con-

cerning domestic transactions relating to exports to the United

States . . .” and “minimum prices at which televisions could be sold

for exportation to the United States .. . .” (Pet. App. 13a).

10

Unlike the “Act of State” cases, such as Banco Nacional

de Cuba v. Sabbatino,* the Court can consider the “sovere-

ign compulsion” issues in this case without sitting in

judgment on the acts of another government done within

its own territory, nor need it pass on the validity of foreign

acts of state so as to hinder foreign policy. Even if the

court in this case reviews MITI’s directives, that would

not constitute an attack on the validity of the decrees or a

challenge of MITI’s interpretation of them. Certainly Ja-

pan’s “sovereign immunity” is not an issue here.

Even if the principles underlying the Act of State doc-

trine are considered as relevant, as noted in Sabbatino,

application of the doctrine is not required by international

law’, and is not a constitutional issue.* Most countries do not

apply it rigidly and civil law nations make exceptions for

acts contrary to their sense of public order’. Justice White's

dissent in Sabbatino notes that courts of Japan, England

and France have examined a fully executed foreign “Act of

State” expropriating property*. Thus, even if MITT’s direc-

tive was analogized to an “Act of State,” it would not con-

stitute a per se defense.

D. The Sovereign Compulsion Concept has Limited Inter-

national Acceptance.

A “sovereign compulsion” coricept has not yet been given

much credence by the courts. Petitioners’ brief cites the

relevant authorities at pages 36-46. They are all American

eases. The Semiconductor Industry Association notes the

‘376 U.S. 398 (1964)

*Id. at 421

‘Id. at 423

Id. at 421 n.21

"Id. at 440 n.1

ee

11

complete absence of anything in the brief of the amici gov-

ernments as to the extent of international acceptance of the

“sovereign compulsion” concept. Just when and to what

extent is it now applied internationally? Semiconductor In-

dustry Association members compete worldwide against

both the petitioners and major companies from the nations

speaking here as amici curiae. To our knowledge, never have

we met the doctrine overseas.

Sovereign immunity and Act of State doctrines have in-

ternational acceptance, although the extent of the applica-

tion of these doctrines varies by country. However, as to

“sovereign compulsion” we note that the citations in the

amici brief are limited to U.S. cases, and there are but few of

these. There are no claims that their nation’s courts have

adopted, or even favorably commented upon, a policy for

them to immunize foreign companies from compliance with

their laws, based solely upon the foreign government's rep-

resentation that it compelled the violating action. We do not

urge that strict reciprocity is required in applying comity

and similar concepts,’ but the extent of a doctrine’s recogni-

tion by foreign governments sheds much light on whether it

is a concept where foreign relations issues are truly present

in the case.

There is little evidence that the United States Govern-

ment has sought such an exemption from foreign laws for

American companies operating within foreign nations, and

it certainly has not done so as to commercial activities

overseas. Laws which have exempted certain activities

from application of U.S. antitrust laws do not purport to

grant American companies the right to violate foreign laws.

*Sabbatino, id at 411-2, holds that reciprocity is not a requirement

for an Act of State defense but notes that it does apply to recognition

of foreign judgments.

12

It may also be relevant to consider whether the MITI

directives and compulsion here in issue gave appropriate

consideration to United States laws and policies in the first

instance. Respondents offer to prove that petitioners acts

constituted antitrust violations, and the Court of Appeals

held that was a tryable issue in this case. The Government of

Japan says that petitioners must be exonerated because

MITI told them to do it. MITI does not state whether or not

it knew whether or not the acts it says it directed were

violations of U.S. law, or whether it ever considered that

possibility. Principles of comity might suggest that a foreign

government might refrain from directing its nationals to

engage in activities directed at U.S. domestic markets

which are illegal here.

Surely MITI could not have expected that it could confer

immunity from U.S. law if the activities it directed were to

be performed within United States territory. The result

should be no different if actions designed specifically to

affect U.S. commerce were performed outside American

territory. Principles of comity ought to cause a foreign sov-

ereign to try to refrain from so acting. If it does not refrain

but instead urges or compels its nationals to perform acts

directly affecting U.S. commerce, it should not later be

permitted to claim that its governmental compulsion will be

a per se defense to enforcement here.

No charge is made in this brief that law violation was

intended, or that the Court should inquire into the issue.

Affirmance of the Court of Appeals decision would not

require that. But the Court could note that petitioners were

huge international companies with extensive operations in

this country and worldwide and were not likely to be in-

volved in these activities inadvertently. They had the best

available legal advice from major American law firms. MITI

states that it intended that the activities would involve

13

exports to the United States. Agreements as to prices are

per se antitrust violations here. Agreements for allocation of

customers always are suspect under the antitrust laws. It is

difficult to believe that was not generally known in Japan.

When activity is directed expressly towards sales in the

United States, a government which expects its directives to

be accepted ought first to insure that what it compels its

nationals to do is not illegal here. Comity should work both

ways. We refer the Court to J. Atwood and K. Brewster,

Antitrust and American Business Abroad, 267 (2d Ed.

1981), stating:

“Further, rules of comity impose limitations on the

extraterritorial application of foreign government de-

GOB...

E. The Validity of Voluntary Restraints Has No Relevancy

to the Claim of “Sovereign Compulsion.”

Both petitioner and amici curiae have referred to the

benefits of voluntary export restraints of foreign govern-

ments. They point to United States Government assurances

that our antitrust laws are not violated by them. That

argument is little more than a red herring. Affirmance of

the Court of Appeals decision would not cast any doubt on

the validity of reasonable voluntary restraint programs.

Wholly aside from the real question of whether United

States Government assurances of legality prevent a private

antitrust suit,’° it is not contended that foreign government

export controls and mandated restraints on exports are a

violation of U.S. antitrust laws. It is doubtful, however, if

‘Contrast the position of domestic companies under Department

of Justice Business Review procedures which are normally very

limited and do not provide any immunity from suit either by private

parties or by the government itself if it changes its mind. (28 C.F.R.

§ 50.6)

14

the voluntary restraint program of the United States ever

did or should go so far as to immunize foreign companies—

as distinct from the foreign government itself—from any

prosecution for any agreements as to prices or allocation of

customers. It is likely that such statements as our govern-

ment has given to foreign governments on voluntary re-

straints can reasonably be interpreted as sound advice on

the scope of our antitrust laws, not as an exemption from

them.

In any event, all the benefits from voluntary restraints

can be effectively achieved by a foreign government through

governmentally administered export controls. There is no

need for the foreign government to delegate to a group of its

companies the right to reach agreements as to prices and

customers to achieve those objectives, particularly if those

agreements would constitute violations of U.S. law except

for such foreign governmental directive. It may be proper

for a foreign state to restrict exports, but it is an entirely

different matter to suggest that it should have unquestioned

freedom to assure orderly export markets.

Nevertheless, this case does not raise such issues. MITI’s

actions were not a part of any voluntary restraint program.

Voluntary restraint simply is not involved here.

F. There is No Basis for A Distinction Between Private

Enforcement and Governmental Enforcement of the

Antitrust Laws.

The brief for the United States as amicus curiae support-

ing petitioners, beginning at page 20, expressly recognizes

that there are issues of scope concerning the foreign compul-

sion defense. The complexity of the entire issue is well

illustrated by this discussion. Foreign government compul-

sion simply cannot be a per se defense to U.S. law violation

15

based upon a foreign government's mere claim of that

compulsion.

The United States Government agrees that the concept

should not always be applied. At page 23 of its brief, the

United States government seeks to reserve to itself the

right to make that decision. A novel principle is announced

which differentiates between private treble damage anti-

trust suits and antitrust actions brought by the United

States Government. At least as to antitrust cases, that idea

has no basis in law. Although the United States Government

can and does exercise judgment on the wisdom of bringing

particular antitrust enforcement actions, the antitrust laws

as enacted by Congress do not give the government the sole

right of enforcement. Citation of authority is not necessary

for the proposition that private parties have an independent

right of enforcement, which is encouraged by the treble

damage policy. Nowhere does the statute provide for ex-

ecutive branch interference or limitation of the Con-

gressional grant of this private enforcement right.

The courts in all cases may always be open to representa-

tions by the Government as to foreign policy considerations,

international law, comity and deference to the legitimate

acts of foreign governments. Appearance of the Solicitor

General to state such views is commonly accepted. Also,

where foreign policy is entrusted to the executive branch,

its decisions may on occasion have binding effect. However,

as to application of domestic antitrust laws for conduct

directed at U.S. commerce, international considerations

cannot be binding upon the courts in the absence of appro-

priate duly adopted treaties or executive agreements.

This is not merely a procedural issue. To adopt it would be

equivalent to establishing a substantive rule of law which

would exempt conduct from enforcement of the antitrust

16

laws in some circumstances, and not exempt the same con-

duct in other circumstances. That would be done solely upon '

the decisions of the antitrust enforcement authorities of the

United States Government. Regardless of any merit to such

a concept, that is not the Congressional mandate under the

antitrust laws.

G. The Facts of This Case Are Not Appropriate for Applying

A “Sovereign Compulsion” Concept.

If, in the opinion of this Court, some ruling on the issue of

sovereign compulsion is necessary, we submit that this is not

an appropriate case for recognizing it as a defense.

Although often discussed, the concept has been applied

only once."' In Interamerican Refining Corp. v. Texaco

Maracaibo Inc., 307 F. Supp. 1291 (D. Del. 1970), political

expatriates from Venezuela attempted to set up business in

New York to resell oil purchased in Venezuela for bunker

fuel and into international markets. They were persona non

grata with the regime in power, which prohibited sales to

them. The resulting refusals to sell by defendants were held

not to justify the antitrust suit. The government’ directives

essentially involved internal Venezuela politics, and no im-

ports into the United States were affected. The governmen-

tal interest in that case was “political” in nature.’* The facts

“At least since the broad language in American Banana Co. v.

United Fruit Co. 213 U.S. 347 (1909) has been limited by this Court.

See Fugate, Foreign Commerce and the Antitrust Laws 143 (3d. ed.

1982)

'2See J. Atwood and K. Brewster, Antitrust and American Busi-

ness Abroad 248 (2d ed 1981) discussing a foreign governmental role

which was not decisive because “no special political factors” were

involved, citing Industrial Inv. Dev. Corp. v. Mitsui & Co., 594 F.2d

48 (5th Cir. 1979).

17

of all the other cases so far have not fit into the rule.”

Apparently, most courts faced with tangible facts have seen

the potential pitfalls in a doctrine which exempts private

activities from compliance with otherwise applicable U.S.

laws merely because a foreign sovereign claims it legit-

imized those activities. Any dicta stating that actual com-

pulsion would be binding is not very persuasive for that

reason, and at least one court has questioned such broad

statements.

Before this Court further sanctions the concept on a

summary judgment record, some principles and distinc-

tions require consideration. The briefs of amici governments

attempt to oversimplify the issue. The doctrine cannot

really mean that a valid U.S. law cannot be enforced as to

activities otherwise unlawful simply because a foreign gov-

ernment represents that it directed the violators to engage

in the violating activity. For example, no one would se-

riously contend that a foreign directive would legitimize an

agreement reached on foreign soil to commit a felony involv-

ing murder or deadly injury committed in the United

States. If the intended purpose of the mandated agreement

‘See Continental Ore Co. v. Union Carbide & Carbon Corp. 370

U.S. 690 (1962); Mannington Mills, Inc. v. Congoleum Corp. 595

F.2d 1287 (3d Cir. 1979); Outboard Marine Corp. v. Pezetel, 461 F.

Supp. 384 (D. Dei. 1978); Linseman v. World Hockey Ass’n., 439 F.

Supp. 1315 (D. Conn. 1977).

‘See comment in Atwood and Brewster, supra, note 12 at 264

recognizing such authority but stating that there is little precedent

and noting (n.143) Sabre Shipping Corp. v. American President

Lines, 285 F.Supp. 949, 954 (S.D. N.Y. 1968), cert. denied, 407 F.2d

173 (2d Cir. 1969), cert. denied, sub nom Japan Line, Ltd. v. Sabre

Shipping Corp., 395 U.S. 922 (1969). (A directive of the Japanese

government, if proven, “would not necessarily immunize [Japanese

firms] from prosecution or civil responsibility for acts done in United

States commerce”).

18

was legal, but the participants went beyond the mandate,

their acts would not be legitimized.

Prior cases have recognized implicitly that the concept

cannot be so applied—that it has some limits. The Japanese

Government's position. in this case seems to reflect an at-

tempt to respond to these limits. For example, the clear

compulsion which was held to be absent in the Swiss Watch

case” is claimed here. The amici brief of the Government of

Japan at page 5 goes further and affirms that whatever was

done by petitioner was mandated. No evidence of any com-

pulsion contemporaneous with the activities in question (the

1960’s) has been offered. The first representation of the

existence of compulsion apparently came in MITI’s 1975

statement, five years after the NUE complaint was filed. In

light of this broadening of the governmental representations

and this sequence of events, we question whether a federal

court should eschew some independent look at the timing

and extent of the claimed compulsion.

SIA does not suggest any need to examine into the valid-

ity or scope of MITI decrees in this case, but it may be

helpful to suggest some possible limits which the courts

might apply to extraterritorial effects of foreign govern-

ment directives as applied to U.S. commerce. First, it

should be noted that courts have reviewed governmental

actions and recognized limits, as is evidenced by the court's

decision in Timberlane Lumber Co. v. Bank of America,

N.T. & S.A., 549 F.2d 597 (9th Cir. 1976) cert. denied, No.

84-1761 (June 1985). Criteria to be applied stated in gener-

alities are not particularly helpful, except as a starting

point. They seem rooted in the past where little recognition

seemingly was given to the present day fact of actual par-

'5United States v. Watchmakers of Switzerland Info. Center, 1963

Trade Cas. { 70-600 (S.D. N.Y. 1962).

19

ticipation by foreign governments in promotion of exports,

limitation of imports and support for commercial activities

for their nationals. In any event, it is doubtful if the facts of

this case bring it within the four criteria listed by Atwood &

Brewster.*®

Amicus submits that before a foreign government's pol-

icies or directives are given external or extraterritorial

effect, that effect should be incidental to a basic internal

government interest. Extraterritorial effect should nor-

mally not be the primary objective of the decree. Except in

rare cases, such as Interamerican Refining Corp. v. Texaco

Maracaibo, supra, any government directive targeted to-

wards commerce in another designated nation (as distinct

from directives generally applicable to international rela-

tions) should not fall within the doctrine. That is probably

the real basis for the holding in the Swiss Watch case, supra.

Government directives designed to achieve commercial ob-

jectives should rarely be entitled to deference. This com-

ports with principles applicable to sovereign immunity and

the Act of State doctrines. '’ The more specifically the com-

mercial motive of a decree relates to a single industry, the

less likely it is that the decree should be provided

recognition.

In a case where a governmental directive relates to com-

mercial activities, if it is designed to apply to a specific

industry (e.g., television), if it is directed toward trade with

a specific other nation (e.g., the United States) and par-

‘*Supra, note 12 at 268.

"See Atwood and Brewster, supra, note 12 at 250 as to Acts of State

and 769 as to sovereign compulsion, citing Justice Department op-

position to sovereign compulsion as a defense where the foreign

government was acting in a commercial rather than governmental

capacity.

20

ticularly if it delegates the implementation of the policy to

the countries’ private companies so that rules and details of

the program and its enforcement are essentially delegated

to those private companies, * then we can see few justifica-

tions for giving it any deference. The motives of the foreign

government may be pure, such as to preserve good interna-

tional trade, but the motive could also be to advance the

commercial and international trade interests of the pro-

mulgating government at the expense of companies of the

targeted nation. No United States Court should try to

decide which of these may have been the true motive, or

which was the dominant one, since the decree should have

no conclusive effect in either event as applied to U.S.

commerce.

Amicus SIA does not under stimate the importance of

the principles which lie behind the urgings of the amici

governments. However, SIA urges a balancing of these

principles against the objectives of our antitrust and other

applicable laws. In doing so, abstract principles may need to

give way to realities of international commerce. Unlike our

government, governments of many other nations actively

participate in their companies’ business endeavors. Facts

relevant to such participation are not readily available to

this Court, except in a trial record. Such facts may affect a

decision on issues such as alleged “sovereign compulsion.”

CONCLUSION

The “sovereign compulsion” doctrine so far is little more

than an academic concept, which has been enunciated pri-

marily in cases where it was not applied and in situations

where the recognized doctrines of sovereign immunity and

'8See Continental Ore, supra, note 13; Atwood and Brewster,

supra, note 12 at Sec. 8.16 questioning application to delegated

activities.

21

Act of State were not appropriate. Before more life is

breathed into it, its implications must be fully explored. SIA

does not claim competence to comment on all aspects of the

concept, but as related to commercial activity, fair antitrust

enforcement and international trade, SIA has a strong in-

terest. We point to the Swiss Watch case’ which involved

comprehensive foreign government promotion of a national

industry, and where the “sovereign compulsion” concept

was nevertheless found not to apply. The only appropriate

conclusion for this Court in this case on this issue is that no

“sovereign compulsion” doctrine can reasonably be recog-

nized on this record without a ful! trial.

If the concept is to be reviewed by the Court, we submit

that the concept cannot be recognized where, as here, the

foreign governmental directives related to promotion of the

commercial interests of the foreign nation applicable to a

specific industry, directed against the United States and

having no applicability or intended effect upon the internal

affairs of Japan.

It is not an unfriendly act to recognize limits to the

concept. No argument has been made that it has interna-

tional acceptance, or has been applied by courts of the amici

nations, including Japan.

"United States v. Watchmakers of Switzerland Info. Center,

supra.

22

Where the concept impinges on American principles as

vital as antitrust, the courts must resolve the conflict. No

per se defense is appropriate.

September 6, 1985

Respectfully submitted,

Joseph R. Creighton

Counsel of Record

1601 S. Miramar Avenue

Indialantic, Florida 32903

(305) 727-9137

Counsel for Semiconductor Industry

Association