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ZENITH RADIO CORP. v. MATSUSHITA ELEC. INDUS. CO.

April 14, 1980

ZENITH RADIO CORPORATION
v.
MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD. et al. NATIONAL UNION ELECTRIC CORPORATION v. MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD. et al. In re JAPANESE ELECTRONIC PRODUCTS ANTITRUST LITIGATION



The opinion of the court was delivered by: BECKER

OPINION AND ORDER (1916 ANTIDUMPING ACT)

Dumping is a phenomenon in international trade which has been defined as "price discrimination between purchasers in different national markets." *fn1" Generically, dumping is the sale of commodities in a foreign market at a price which is lower than the price or value of comparable commodities in the country of their origin. The issue before us arises in the context of the alleged dumping in the United States of television receivers, radios, phonographs and tape and cassette recorders manufactured in Japan. Plaintiffs Zenith Radio Corporation ("Zenith") and National Union Electric Corporation ("NUE") have alleged in their complaints that the Japanese defendants *fn2" and their co-conspirators *fn3" are and have been participants in a conspiracy which, by artificially lowering export prices, has for more than 20 years sought the methodical destruction of the United States domestic consumer electronic products industry. This litigation is described generally at pp. 1195-1198 of our opinion on subject matter jurisdiction, filed this day. Instead of rescribing that description here, we simply incorporate those pages by reference. Suffice it here to say that this is one of the most massive cases ever heard by the United States courts, and that in addition to numerous claims under the antitrust laws, plaintiffs seek treble damages for alleged violations of the Antidumping Act of 1916, *fn4" one of several dumping statutes enacted by the Congress.

  This opinion addresses the separate motions of several groups of defendants for summary judgment on the plaintiffs' 1916 Antidumping Act claims. The motions addressed to the 1916 Act claims have been advanced as part of wider motions seeking summary judgment on other discrete portions of the litigation as well. Motions which deal with the 1916 Act claims have been filed by Mitsubishi Electric Corporation and Melco Sales, Inc.; by Sears, Roebuck and Co.; by Matsushita Electric Industrial Co., Ltd., and affiliated defendants; and by Hitachi, Ltd., Toshiba Corporation, Sanyo Electric Co. and their affiliated defendants. *fn5" The numerous summary judgment motions concerning this and other issues are catalogued in our opinion on subject matter jurisdiction. As is explained there, we intend to decide the pending motions issue by issue, writing separate opinions on each issue if necessary. Accordingly, this opinion disposes of the arguments based on the 1916 Antidumping Act made in all of the motions listed above, and does not reach the other issues which are comprehended in these motions.

 In order to decide the defendants' motions for summary judgment on plaintiffs' dumping claims, we are required to interpret the 1916 Act and to apply it to the undisputed facts before us. Although television sets and other consumer electronic products manufactured for sale and use in the United States, as a class, and consumer electronic products manufactured for sale and use in Japan, as a class, look essentially the same and serve precisely the same functions for the listener or viewer, U.S. and Japanese consumer electronic products *fn6" are adapted to the technical conventions of television and FM broadcasting and of the electrical power systems which are different in the two countries. While the standards for encoding visual and aural information on a radio wave are identical in the television and FM systems of the U.S. and Japan, the frequencies allocated to TV and FM broadcasts are different. As a result, television and FM receivers manufactured for use in Japan cannot receive many broadcasts in the U.S. and vice versa. In addition, the Japanese electrical power system uses 100 volts and frequencies of either 50 or 60 Hertz ("Hz"), while the U.S. system is at 120 volts and only 60 Hz. Because of this difference, Japanese television receivers used in the U.S. would be in serious danger of failing because of overheating, Japanese phonographs and tape recorders of a certain design would run at the wrong speed, and the audio output of radios, phonographs, and tape recorders would include an objectionable hum.

 These facts, which are undisputed, form the background for the task before us in this opinion i. e., the first construction in the 64 years since the enactment of the 1916 Act of its core provisions. More specifically, we must decide what standards the Act imposes for the comparability of the United States and foreign products required in order for an import transaction to be subject to the prohibition of the 1916 Act.

 While the contentions of the parties will be set forth in detail infra, suffice it to say for purposes of this preliminary statement that the defendants, arguing from the text of the 1916 Act which uses the referent "such articles," contend that goods do not meet the comparability standards of the Act unless they are identical which concededly the goods in question are not. Alternatively, defendants argue that the "like grade and quality" standard of § 2 of the Clayton Act, which preceded the 1916 Act, is applicable, a standard which defendants assert, plaintiffs have not met. Plaintiffs, on the other hand, vigorously protest over-literal constructions and assert that television sets manufactured for use in the United States and those manufactured for use in Japan are both television sets serving precisely the same function, and that with the exception of adaptation to the technical conventions of the two countries, they are essentially the same. Just as the defendants contend that the 1916 Act does not apply, the plaintiffs vigorously assert that it does.

 The precise question before us is whether TV sets and other consumer electronic products manufactured for sale and use in the United States, as a class, and consumer electronic products manufactured for sale and use in Japan, as a class, are sufficiently similar to be comparable for purposes of the 1916 Act even though: (1) the two classes of products are adapted to the different technical conventions of the two countries; (2) accordingly, the products have different tuners, power transformers, and electric motors; and (3) as a result, the products differ in consumer use and marketability and are not commercially interchangeable. As will be seen during the course of our lengthy discussion, we answer this question in the negative, holding that the two classes of products are not comparable under the 1916 Act.

 Although the Antidumping Act of 1916 has been in force for nearly 64 years, it has rarely been used and therefore has rarely been construed. In order to resolve the issue before us we find it necessary to examine the legislative history of the Act, and its background in contemporary law and politics, in far greater depth than has heretofore been recorded. Our detailed analysis of the 1916 Act is contained in Part IV of this opinion. We also have occasion to compare the 1916 Act, which creates a private right of action for treble damages and provides criminal penalties for dumping, with the Antidumping Act of 1921 ("the 1921 Act" or "the 1921 Antidumping Act"), which established an administrative system for the assessment of special customs duties for dumping. The 1921 Antidumping Act has very recently been repealed but the system of dumping duties which it created remains essentially intact in its successor legislation. The 1921 Antidumping Act is involved in this litigation because the plaintiffs seek to introduce into evidence the fact that the Treasury Department, which formerly administered the 1921 Act, has assessed dumping duties against many of the defendants for importing television receivers from Japan at prices lower than those at which comparable models have been sold in Japan. As is set forth more fully in a subsequent part of this opinion, we hold that the administrative findings of dumping under the 1921 Act are not pertinent to the instant claims of privately actionable dumping under the 1916 Act because the 1921 Act and its successor legislation grant the administering authority broad discretion to determine whether products sold in the two countries are comparable, whereas litigants under the 1916 Act are not clothed with the same discretion.

 As will be seen, our examination of 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. Conforming to the will of Congress, we will hold that the 1916 Act cannot be applied to articles which are not sufficiently similar to be comparable for purposes of domestic price discrimination law. Hence, to give rise to a violation of the 1916 Act, the products sold in the United States and the products sold in the foreign country must be of "like grade and quality" as that phrase is used in § 2 of the Clayton Act as amended by the Robinson-Patman Act, 15 U.S.C. § 13. Case law under the Robinson-Patman Act makes it clear that physically different articles are not of "like grade and quality" if the differences affect consumer use and preference or marketability.

 Although the 1916 Act was intended as a companion to the antitrust laws, Congress borrowed language from contemporary customs appraisement law to refer to the price of goods in the foreign country. As we shall explain, by using the term "actual market value or wholesale price," Congress incorporated by reference the valuation provisions of the Tariff Act of 1913 ("the 1913 Act" or "the 1913 Tariff Act"). Under that statute, and under both earlier and subsequent practice, the value of imported merchandise could be determined by reference to sales of "similar" merchandise in the country of origin. The standard employed to decide whether merchandise was sufficiently "similar" was strict, however: "similar" merchandise had to be commercially interchangeable with the articles under appraisement. Because of the use of language taken from the 1913 Tariff Act in the 1916 Antidumping Act, we will hold that there is no violation of the 1916 Act unless the standards of similarity of customs appraisement law are met.

 Both of the legal standards which we find applicable speak in terms of consumer use, consumer preference, and marketability. The standard derived from customs appraisement law is the more rigorous of the two: it requires commercial interchangeability. While we recognize that the relevant differences between consumer electronic products manufactured for use in the U. S., as a class, and those manufactured for use in Japan, as a class, are only adaptations to the differing technical conventions of the two countries, their impact on consumer use, consumer preference, and marketability is clear: a product manufactured for sale in one nation is of no practical use to a consumer in the other nation. Consequently, the products do not meet the standards which are applicable to product comparisons under the 1916 Antidumping Act, and summary judgment on the 1916 Act claims must be granted. *fn7"


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