FTC Post-Hearing Brief on the Final Antidumping Investigation of 64K DRAM Components from Japan

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BEFORE THE UNITED 	STATES
INTERNATIONAL TRADE COMMISSION
)
64K 	Dynamic 	Random Access 	Memory 	Components 	)
r r om 	J a pan, 	No. 	73 1- TA- 2 7 0 	(r ina 1 ) 	)
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Posthear'ng 	Brief 	of 	the
Federal 	Trade 	Commission
May 	7,1986

TABLE OF 	CONTENTS
Page
A r g ume n t ..••...•.•..••..•.....•.......•..........•.•••••..• 1
I. 	The 	ITC 	can 	look 	at 	the 	effects 	of 	the 	dumping ...•..•. 1
II. 	Examining 	the 	effects 	of 	the 	"dumping 	margin"
helps 	to 	understand 	the 	evidence 	in 	this
investigation 	6
III. 	None 	of 	the 	other 	parties 	challeged 	our
conclusion 	that 	it 	is 	unlikely 	that 	a
predatory 	pricing 	strategy 	has 	been
implemented 	in 	the 	DRAM market 	in 	the
United 	States 	7
IV. 	The 	basic 	congressional 	purpose 	for 	the
antidumping 	law 	is 	to 	penalize 	foreign
firms 	that 	deviate 	from 	a 	competitive
norm when, selling 	in 	the 	United 	States •....•.•......•. 8
Answers 	to 	Questions •......•..•.••.•.....•...•••••...•.•... 9
Answers 	to 	Chai~woman Stern's 	Questions ......•...•..... 9
Answers 	to 	Vice 	Chairman 	Liebeler's 	Questions ..•.•...• 13
Answers 	to 	Commissioner 	Eckes' 	Questions ... .•......... 1q
Answer 	to 	Commissioner 	Rohr's 	Question 	20
Answer 	to 	Commissioner 	Brunsdale's 	Question 	22
At t a c hme n t s
Resumes 	of 	Dr. 	Goodfriend 	and 	Dr. 	Woodbury

Posthearing 	brief 	by 	the 	Federal 	Trade 	Commission
on 	the 	fin a 1 ant i dump i n gin v est i gat ion 	0 f 	64 K
dynamic 	random 	access 	memory 	components 	from 	Japan
This 	investigction 	pres~nts 	the 	question 	whether 	the
dome s tic 	i ndu s try 	i s 	rna t e ria I I yin j u red 	If bY rea son 	0 f 	imp 0 r t s" 	0 f
64K 	DRAM's 	from 	Japan 	that 	the 	Department 	of 	Commerce 	has
determined 	are 	"dumped," 	19 	U.S.C. 	§ 	l673(a), 	even 	though 	the
price 	of 	64K 	DRAM's 	may 	be 	lower 	in 	Japan 	than 	in 	the 	United
States.
Argument
1. 	The 	ITC 	can 	look 	at 	the 	effects 	of 	the 	dumping.
We 	briefly 	recapitulate 	the 	reasons 	set 	forth 	in 	Part 	II 	of
our 	prehearing 	brief 	supporting 	our 	argument 	that 	the 	~rade
Agreements 	Act 	of 	1979 	("1979 	Act") 	should 	and 	can 	be 	construe~
so 	as 	to 	be 	consistent 	with 	the 	Antidumping 	Agreement's
requirement 	to 	consider 	"the 	effects 	of 	dumping" 	and 	that 	the
approach 	that 	we 	are 	suggesting 	is 	permissible 	under 	existing
)awl. 	As 	argued 	in 	our 	prehearing 	brief 	and 	below, 	asce~taining
the 	actual 	effects 	of 	the 	dumping 	is 	consistent 	with 	the
s~atutory language 	and 	is 	supported 	both 	by 	the 	language 	of 	the
A domestic 	industry 	recently 	challenged 	unsuccessfully 	a
negative 	determination 	by 	the 	ITC 	on 	the 	ground, 	inter 	alia,
that 	the 	statute 	reouired 	the 	ITC 	to 	examine 	the 	effects 	of
the 	dumping 	margin, 	The 	Maine 	Potato 	Council 	v. 	United
S tat e s, 	6 	I TRD 	245 2, 	2456 	( C. I • T. 	198 5 ), 	and 	s orne 	I"!'C
Commissioners 	have 	recently 	considered 	the 	effects 	of 	the
dumping 	margin. 	Heavv-Walled 	Rectan~ular Welded 	Carbon
Steel 	Pipes 	and 	Tubes 	from 	Canada, 	ITC 	No. 	1808 	(February
1986) 	at 	13-14 	(vIews 	of 	Chairwoman 	Stern, 	Vice 	Chairman
Liebeler, 	and 	Commissioner 	Brunsdale).

Antidumping 	Agreement 	which 	the 	1979 	Act 	implements 	and 	by 	the
legislative 	history 	of 	the 	1979 	Act.
The 	statute 	states, 	in 	pertinent 	part, 	that 	in 	making 	its
determination 	the 	ITC 	"shall 	consider, 	among 	other 	factors," 	an
enumerated 	list 	of 	factors. 	19 	U.S.C. 	S 	l677(7)(B). 	The
legislative 	history 	of 	this 	provision 	indicates 	that 	"the 	ITC
would 	consider 	all 	relevant 	economic 	factors 	which 	have 	a 	bearing
on 	the 	state 	of 	[the] 	industry." 	S. 	Rep. 	No. 	249, 	96th 	Cong., 	1st
Sess. 	(1979) 	("S. 	Rep. 	No. 	249") 	at 	87. 	Accord 	H.R. 	Rep. 	No.
317, 	96th 	Cong., 	1st 	Sess. 	(1979) 	("H.R. 	Rep. 	No. 	317") 	at 	73.
Nothing 	in 	the 	statute 	specifically 	prohibits 	the 	ITC 	from
considering 	the 	effects 	of 	dumping 	if 	the 	ITC 	considers 	such
effects 	to 	be 	relevant.
The 	Antidumping 	Agreement 	provides, 	as 	noted 	in 	our
prehearing 	brief 	(at 	10), 	"that 	antidumping 	duties 	may 	be 	applied
against 	dumping 	only 	if 	such 	dumping 	causes 	or 	threatens 	material
injury. 	it 	must 	be 	demonstrated 	that 	the 	dumped 	imports 	are,
through 	the 	effects 	of 	dumping, 	causing 	injury 	within 	the 	meaning
of 	this 	Code." 	(footnote 	omitted). 	Agreements 	Reached 	in 	Tokyo
Round 	of 	the 	Multilateral 	Trade 	Negotiations, 	96th 	Cong., 	1st
Sess:, 	House 	Document 	No. 	96-153, 	Part 	I 	(June 	19, 	1979) 	at 	312,
315. 	We 	are 	not 	aware 	of 	any 	claim 	that 	this 	language 	means
anything 	other 	than 	that 	the 	ITC 	should 	consider 	the 	effects 	of
the 	dumping.
Those 	who 	apparently 	differ 	with 	our 	position 	rely 	on
various 	legal 	arguments. 	Commissioner 	Eckes, 	in 	his 	dissenting
views 	in 	Heavy-Walled 	RectangUlar 	Welded 	Carbon 	Steel 	Pipes 	and
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Tu be s 	from 	Ca na d a, 	I TC No. 	1808 	(F e b r ua r y 	1986 ), 	a r g u e s 	(a t 	ZQ )
that 	"the 	debate 	on 	the 	1984 	Trade 	and 	Tariff 	Act 	(Congressional
Record, 	July 	26,1984, 	H7908-H7909) 	indicates 	that 	margin
analysis 	deliberately 	was 	excluded 	from 	the 	realm 	of 	Commission
consideration 	by 	Congress." 	However, 	this 	colloquy 	between
Representative 	Jenkins 	and 	Representative 	Gibbons, 	as 	we 	noted 	in
our 	pre h ear i ng 	b r i e f 	(a t 	14 	n. I 5), 	simp I y 	s tat est hat 	i n 	I 98 4 	the
House 	of 	Representatives 	Ways 	and 	Means 	Committee 	rejected 	a
pro p 0 sal 	to 	arne nd 	the 	s tat ute 	tog i vet he 	I TC 	the 	ex p I i cit
authority 	to 	consider 	the 	size 	of 	the 	dumping 	margin. 	~he 	1984
legislative 	history 	is 	silent 	on 	the 	reasons 	for 	this 	rejection;
the 	Congress 	in 	1984 	may 	have 	thought 	that 	the 	1979 	Act 	alreae]
gave 	the 	ITC 	this 	author'ity. 	"In 	any 	event, 	it 	is 	well 	settlect
that 	'the 	views 	of 	a 	SUbsequent 	Congress 	form 	a 	hazardous 	hasis
for 	inferring 	the- intent 	of 	an 	earl ier 	one. '" 	Russello 	v. 	TTni te<"
States, 	464 	U.S. 	16, 	26 	(1983) 	quoting 	from 	United 	States 	v.
Price, 	361 	U.S. 	304, 	313 	(1960).
Commissioner 	Rohr 	referred 	at 	the 	hearing 	in 	the 	current
prpceeding 	to 	various 	passages 	from 	the 	Statements 	of
Administrative 	Action, 	96th 	Cong., 	1st 	Sess., 	House 	Document 	No.
96 -!1 53, 	Par t 	I I 	(J un e 	I 9, 	I 979) 	(" S tat erne n t s ") 	(t r. 	a t 	2? -? 5 ) .
However, 	none 	of 	these 	passages 	explicitly 	states 	that 	the 	I~C
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cannot 	consider 	the 	effects 	of 	dumping. 	2 	Indeed, 	the 	passage
from 	the 	Statements 	that 	we 	presented 	in 	our 	prehearing 	brief 	(at
1 3) 	pro v ide s 	t hat 	the 	I TC 	"mu s. 	sat i s f y 	its elf 	t hat, 	i n 	1 i g h t 	0 f
all 	the 	information 	presented, 	there 	is 	the 	requisite 	causal 	link
between 	the 	subsidization 	or 	dumping 	and 	material 	injury."
Statements 	at 	435. 	Accord 	S. 	Rep. 	No. 	249 	at 	88; 	H.R. 	Rep. 	No.
317 	at 	46.
When 	it 	passed 	the 	Trade 	Agreements 	Act 	of 	1979, 	Congress
was 	aware 	of 	the 	lTC's 	antidumping 	decisions 	between 	1975 	and
1979, 	Congo 	Rec. 	H5567-82 	(daily 	ed. 	July 	10, 	1979), 	and 	in 	at
least 	two 	of 	these 	decisions 	the 	ITC 	had 	found 	an 	absense 	of
injury 	in 	part 	because 	the 	ability 	of 	the 	foreign 	firm 	to 	compete
i nth e 	Un i ted 	S tat e s 	had 	1 itt 1e 	t 0 	dow i t h 	the 	dump i nb 	rna r gin.
Welded 	Stainless 	Steel 	Pipe 	and 	Tube 	from 	Japan, 	ITC. 	No. 	899
(1978) 	at 	5; 	Si 1 tcon 	Metal 	from 	Canada, 	ITC 	No. 	954 	(1979) 	at
6. 	Thus, 	it 	is 	not 	surprising 	that 	the 	1979 	Congress 	believed
t hat 	the 	I TC 	was 	the nco n sid e r i n g, 	p rio r 	tot he 	pas sag e 	0 f 	the
-~-----------------------
2 	At 	the 	hearing 	Commissioner 	Rohr 	gave 	the 	following 	three
quotations 	from 	the 	Statements 	(at 	393, 	410, 	and 	425):
"Wh i 1e 	inc 1 u din g 	ani n j u r y 	t est, 	the 	pro po sed 	1e g i s 1a t ion
also 	contains 	a 	number 	of 	provisions 	designed 	to 	ensure 	that
where 	subsidized 	imports 	are 	causing 	material 	injury 	to 	a
domestic 	industry 	producing 	a 	like 	product, 	effective 	relief
i s 	a val i a b 1e . " 	It The 	C omm iss ion 	de t e r min e s 	aft e r
investigation 	that 	an 	industry 	in 	the 	United 	States 	is
materially 	injured 	or 	is 	threatened 	with 	material 	injury 	or
the 	establ ishment 	of 	an 	industry 	is 	materially 	retarded 	by
reason 	of 	imports 	of 	the 	merchandise 	in 	antidumping 	in
add i t ion 	t 0 	& n y 	0 the r 	d u t Y t 0 	be· 	i mp 0 sed. 11 	"T he 	C omm iss ion
shall 	determine 	whether 	an 	industry 	is 	materially 	injured 	or
threatened 	with 	material 	injury 	or 	whether 	the 	establishment
of 	an 	industry 	is 	materially 	retarded 	by 	reason 	of 	imports
of 	the 	merchandise 	subject 	to 	the 	investigation."
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~'Act, 	"how 	the 	t.;fects 	of 	.Ie 	margin 	of 	d'..mping 	relate 	to 	the
i n j u r y , 	i fan y, 	tot he 	dome s tic 	i nd u s try. " 	S. 	Rep. 	No. 	2 49 	a t
74.
Commissioner 	Rohr 	also 	points 	out 	(tr. 	at 	23) 	that 	Congress
passed 	the 	1979 	Act 	to 	implement 	the 	Antidumping 	Agreement 	as
Congress 	understood 	the 	Antidumping 	Agreement, 	and 	he 	raises 	the
possibility 	that 	Congress 	did 	not 	understand 	the 	language 	of 	the
An tid ump i n g Ag r e erne n t 	(t r. 	a t 	26). 	It 	is 	clear, 	however, 	that
Congress 	knew 	that 	the 	Antidumping 	Agreement 	dealt 	with 	the
effects 	of 	dumping. 	The 	Senate 	Report, 	in 	summarizing 	the
Antidumping 	Agreement 	and 	an 	agreement 	on 	s~bsidies, 	says 	they
provide 	for 	"a 	'causal 	link' 	between 	the 	subsidization 	or 	dL:::-.~ing
and 	the 	injury 	(Article 	2 	of 	the 	Subsidies 	Agreement; 	Article 	5
oft h e 	An tid ump i ng 	Ag r e erne n t ) . " 	S. 	Re p. 	No. 	249 	a t 	41.
Commissioner'Rohr 	also 	notes 	(tr. 	at 	:2) 	that 	Congress
provided 	some 	constraints 	on 	the 	lTC's 	analysis. 	The 	ITC 	is 	not
to 	weigh
"injury 	from 	[dumped] 	imports. 	. 	against
other 	factors 	(~ 	the 	volume 	and 	prices 	of
imports 	sold 	at 	fair 	value, 	contraction
in 	demand 	or 	changes 	in 	patterns 	of
consumption, 	trade 	restrictive 	practices 	of
and 	competition 	between 	the 	foreign 	and
domestic 	producers, 	developments 	in
technology 	and 	the 	export 	performance 	and
productivity 	of 	the 	domestic 	industry) 	which
may 	be 	contributing 	to 	overall 	injury 	to 	an
industry." 	H.R. 	Rep. 	No. 	317 	at 	47.
Congress 	went 	on 	to 	say, 	however, 	"the 	ITC 	will 	take 	into 	account
evidence 	presented 	to 	it 	which 	demonstrates 	that 	the 	harm
attributed 	by 	the 	petitioner 	to 	the.
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. 	dumped 	imports 	is

attributable 	to 	such 	other 	factors." 	Id. 	Accord 	S. 	Rep. 	~o. 	249
at 	74-75.
In 	sum, 	we 	conclude 	that 	Le 	law 	permits 	the 	ITC 	to 	examine
the 	effects 	of 	dumping 	in 	determining 	whether 	the 	harm 	allegedly
attributable 	to 	dumping 	is, 	in 	fact, 	attributable 	to 	other
factors.
II. 	Examining 	the 	effects 	of 	the 	"dumping 	margin" 	helps 	to
understand 	the 	evidence 	in 	this 	investigation.
Such 	an 	examination 	is 	particularly 	appropriate 	here, 	as 	it
may 	ex~lain 	one 	of 	the 	paradoxes 	of 	this 	investigation. 	Unite('l
S tat e sus e r s 	0 f 	64 K DRAM's 	a p par e n t 1 Y 	s orne time simp 0 r t 	"g r ey
market" 	64K 	DRAM's 	from 	Japan 	because 	such 	imports 	are 	cheaper
than 	purchasing 	64K 	DRAM's 	in 	the 	United 	States 	(testimony 	of
Charles 	C. 	Snell, 	tr. 	at 	304-305). 	Vice 	Chairman 	Liebeler
wondered 	how 	this .could 	occur 	if 	there 	were 	in 	fact 	dumping 	of
64K 	DRAM's 	(tr. 	at 	295-296).
A possible 	explanation 	is 	that 	the 	dumping 	margins
calculated 	by 	the 	Department 	of 	Conrnerce 	("Department") 	for 	64K
DRAM'S 	are, 	t 0 	a 	1 a r gee x ten t, 	bas e don 	a 	c omp a r i son 	0 f 	the
United 	States 	price 	with 	the 	Japanese 	"constructed 	value." 	51
Fed~. 	Reg. 	15943, 	15944-46 	(April 	29,1986). 	It 	is, 	therefore,
possible 	that 	the 	Department 	found 	dumping 	even 	though 	the 	price
of 	64K 	DRAM's 	in 	Japan 	is 	below 	the 	price 	of 	64K 	DRAA1's 	in 	the
United 	States. 3
3 	The 	ITC 	could 	obtain 	from 	the 	Department 	its 	confidential
data 	on 	64K 	DRA~ prices 	in 	the 	United 	States 	and 	Japan; 	we
intimate 	no 	views 	on 	this 	factual 	question.
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III. 	None 	of 	the 	other 	parties 	challeged 	our 	conclusion 	that 	it
is 	unlikely 	that 	a 	predatorv 	pricing 	strategv 	has 	been
implemented 	in 	the 	DRAM market 	in 	the 	United 	States.
Illegal 	dumping 	can 	occur 	even 	if 	there 	is 	no 	predation.
However, 	as 	noted 	in 	our 	prehearing 	brief 	(at 	2-3), 	Micron
Technology 	Inc. 	alleged 	in 	its 	petition 	that 	the 	Japanese 	firms
were 	attempting 	to 	carry 	out 	a 	classic 	strategy 	of 	predatory
pricing 	in 	the 	United 	States, 	and 	so 	we 	assessed 	this 	allegation
as 	well. 	We 	argued 	in 	Part 	of 	our 	prehearing 	brief 	that 	the
available 	evidence 	suggests 	that 	it 	is 	unlikely 	that 	such 	a
stategy 	has 	been 	implemented.
None 	of 	the 	other 	parties 	presented 	evidence 	at 	the 	hearing
that 	calls 	this 	conclusion 	into; 	.<;:;"on. 	Indeed, 	evidence
presented 	by 	the 	ITC 	staff 	at 	the 	beginning 	of 	the 	hearing
further 	supports 	our 	conclusion. 	The 	public 	version 	of 	data 	on
United 	States 	shi,pmenb 	of 	cased 	64K 	DRAM's 	shows 	that 	those
produced 	in 	Japan 	and 	assembled 	in 	either 	the 	United 	States 	or
J a pan 	f ell 	mo reb e t wee n 	I 9 8 4 	and 	I 9 8 5 	t han 	tho s e 	pro d u c e (I 	i nth e
United 	States 	and 	assembled 	either 	in 	the 	United 	States 	or 	third
c9untries. 	4 	These 	trends 	are 	inconsistent 	with 	a 	strategy 	of
predatory 	pricing, 	for 	in 	a 	predatory 	pricing 	strategy 	the
4 	S h i pme n t s 	0 f 	J a pan e s e 	6 4 K DRAM' s 	f ell 	by 	29 	per c en t 	(f r om
133 	million 	units 	to 	95 	million 	units); 	shipments 	of 	United
S tat e s 	6 4 K DRAM' s 	f ell 	b yon 1y 	2 1 	per c e n t 	(f r om 	15 ~ mil 1 ion
units 	to 	126 	million 	units). 	We 	combine 	shipments 	of
foreign 	subsidiaries 	with 	shipments 	by 	their 	parent
corporation 	because 	that 	is 	how 	supporters 	of 	the 	petition
cIa i m 	the 	d a t ash 0 u 1d 	bet rea ted 	( t r. 	a t 	110); 	we 	i nit rna t e
no 	views 	on 	how 	the 	ITC 	should 	combine 	the 	data.
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predators 	increase 	their 	market 	share 	by 	reducing 	price. 	Here
the 	Japanese 	share 	of 	the 	market 	has 	declined.
IV • 	antidum 	In 	law 	is
rom 	a 	competItive
We 	have 	set 	forth 	in 	our 	prehearing 	brief 	(at 	16-17) 	the
legislative 	intent 	of 	both 	the 	1921 	Congress, 	which 	passed 	the
antidumping 	law 	which 	the 	1979 	Act 	replaced, 	and 	the 	1974
Congress. 	In 	the 	congressional 	debates 	on 	the 	1979 	Act, 	as 	noted
in 	our 	prehearing 	brief 	(at 	17 	n.18), 	Senator 	Heinz 	said 	that 	the
antidumping 	and 	countervailing 	duty 	provisions 	of 	the 	197q 	Act
are 	aimed 	at 	countries 	that 	do 	not 	rely 	on 	"free 	market
princi-ples 	and. 	. 	on 	competition 	and 	the 	law 	of 	comparative
advantage 	as 	arbiters 	of 	the 	marketplace." 	Congo 	Rec. 	Sl0306
(daily 	ed. 	July 	23, 	1979). 	In 	the 	same 	debates 	Senator 	Danforth
explained 	that 	the 	antidumping 	and 	countervailing 	duty 	provisions
were 	aimed 	at 	an 	extreme 	form 	of 	non-competitive 	behavior:
predatory 	pricing. 	He 	said 	that 	dumped 	imports 	are 	not 	in 	the
best 	interest 	of 	the 	United 	States 	consumer, 	since 	"the 	long 	run
impact 	is 	likely 	to 	be 	higher 	prices 	and 	greater 	profits 	for 	the
foreign 	producers 	once 	the 	domestic 	competition 	has 	been
~
crippled." 	Id. 	at 	S 	10317.
-8 -

Answers 	to 	Questions
Answers 	to 	Chairwoman 	Stern's 	guestions
Question
"Why, 	if 	the 	Congress 	was 	trying 	to 	apply 	those 	laws 	which 	the
FTC 	administers 	to 	internationally 	traded 	goods 	In 	the 	U.S.
rna r k e t, 	did 	the y 	g I vet h e 	aut h 0 r i t Y 	t 0 	a dm i n i s t e r 	t hat 	too the r
t han 	the 	FTC?" 	(t r. 	a t 	28).
Answer
The 	Antidumping 	Act 	of 	1921 	ori!linated 	in 	the 	House 	of
Representatives 	and, 	as 	originally 	passed 	by 	the 	House, 	had 	no
injury. provision. 	As 	it 	called 	frH 	the 	collector 	of 	customs 	to
impose 	additional 	antidumping 	tariffs, 	it 	is 	not 	surprising 	that
in 	the 	House 	bill 	enforcement 	was 	given 	to 	the 	Secretary 	of 	the
Treasury 	("Treasury"). 	The 	Senate 	added 	an 	injury 	provision 	in
order 	to 	reduce 	the 	burden 	on 	the 	customs 	officials 	and 	on
imp 0 r t e r s . 	S. 	Rep. 	No. 	1 6, 	6 7 t h 	Con g ., 	1st 	S e s s. 	(1 9 2 I) 	a t 	I () .
Under 	the 	House 	bill 	importers 	would 	have 	had 	to 	post 	a 	bond 	"if
there 	was 	even 	a 	suspicio~ 	on 	the 	part 	of 	the 	collector 	[of
cus·toms] 	that 	the 	goods 	were 	being 	sold 	for 	export 	to 	this
!
country 	for 	a 	less 	price 	than 	they 	were 	sold 	for 	consumption 	in
the 	home 	country." 	61 	Congo 	Rec. 	1101 	(May 	4,1921) 	(remarks 	of
Sena tor 	McCumber). 	Sena tor 	McCumber, 	the 	sponsor 	0 f 	the 	bill,
explained 	"The 	power 	to 	determine 	[that 	there 	was 	a 	reasonable
ground 	to 	believe 	there 	was 	injury] 	must 	be 	lodged 	somewhere, 	an0
it 	seemed 	that 	the 	proper 	place 	to 	lodge 	it 	was 	in 	the 	Secretarv
of 	the 	Treasury." 	Id.
-9 -

In 	1954 	Congress 	transferre~ the 	injury 	determination 	to 	the
Tariff 	Commisison. 	At 	this 	time 	the 	Tariff 	Commission 	was
enforcing 	i9 	U.S.C. 	S 1337, 	and 	Con;ress 	was 	presumably 	aware 	of
both 	the 	statutory 	provision 	ensuring 	cooperation 	between 	the 	ITC
and 	the 	FTC 	in 	section 	337 	investigations, 	19 	U.S.C. 	S
1337(b)(2), 	and 	the 	general 	statutory 	provision 	providing 	for
cooperation 	between 	the 	ITC 	and 	the 	FTC. 	19 	U. S . C. 	S 	1334 . 	Mr •
Rose, 	Assistant 	Secretary 	of 	the 	Treasury, 	said 	that 	the
Administration 	wanted 	the 	injury 	determination 	transferred 	to 	the
Tariff 	Commission 	because 	Treasury 	and 	the 	President 	had
determined 	that 	Treasury 	was 	not 	"properly 	staffed" 	to 	make
injury 	determinations 	and 	that 	"this 	type 	of 	activity 	relates
very 	much 	more 	closely 	to 	a 	substantial 	part 	of 	the 	regular
activities 	of 	the 	Tariff 	Commission." 	Customs 	Simplification 	Act
o f 	195 4: 	He a r i ng s '0 n 	H. R. 	94 76 	be for e 	the 	C omm itt e eon 	Wa v san d
Means, 	83 	Cong., 	2d 	Sess. 	(1954) 	at 	14. 	Both 	the 	Senate 	and
House 	of 	Representatives 	agreed 	with 	this 	rationale. 	S. 	Rep.
2326, 	83d 	Cong., 	2d 	Sess. 	(1954) 	at 	2; 	H.R. 	Rep. 	No. 	2453, 	83d
Cong., 	2d 	Sess. 	(1954) 	at 	1, 	5.
In 	sum, 	there 	is 	nothing 	in 	this 	legislative 	history 	to
,
ind'icate 	why 	Congress, 	either 	when 	it 	gave 	the 	injury
determination 	to 	the 	Treasury 	in 	1921 	or 	when 	it 	transferred 	the
injury 	determination 	to 	the 	Tariff 	Commission 	in 	1954, 	did 	not
give 	this 	authority 	to 	the 	FTC. 	H0wever, 	there 	is 	no 	indication
that 	Congress 	believed 	that 	the 	purpose 	of 	the 	antidumping 	law
was 	other 	than 	to 	preserve 	for 	United 	States 	consumers 	the
benefits 	of 	fair 	competition.
- 1 0-

Qu e ~ ~ ion
In 	an 	antitrust 	context, 	what 	market 	share 	must 	a 	group 	of 	firms
initially 	possess 	as 	a 	necessary 	condition 	to 	satisfy 	a 	claim
that 	the 	group 	engaged 	in 	predatory 	pricing? 	What 	was 	the 	market
share 	in 	Matsushita 	Electric 	Industrial 	Co. 	Ltd. 	v. 	Zeni~h Radio
Corp.? 	(tr. 	at 	40-42).
Answer
In 	an 	antitrust 	context 	the 	market 	share 	held 	by 	a 	group 	of
firms 	who 	agreed 	to 	engage 	in 	predatory 	pricing 	would 	be
irrelevant, 	since 	a 	conspiracy 	to 	fix 	prices 	is 	illegal 	~~'
The 	FTC 	has 	not 	decided 	a 	case 	involving 	tacit 	collusion 	to
engag~ 	in 	predatory 	pricing, 	and 	so 	we 	do 	not 	address 	the
question 	of 	the 	minimum market 	share 	necessary 	to 	make 	such
conduct 	illegal.
Matsushita 	Electric 	Industrial 	Co. 	Ltd. 	v. 	Zenith 	Radio
Corp., 	54 	V.S.L.W. 	4319 	(March 	26, 	1986), 	considers 	an 	allegation
that 	a 	group 	of 	Japanese 	firms 	manufacturing 	or 	selling 	"consumer
e 1e c t lie 	pro d uc t s ," 	ma i n 1y 	tel e vis ion 	set s, 	eng age din 	a
predatory 	pricing 	conspiracy 	in 	the 	United 	States. 	~he 	Supreme
Court 	merely 	noted, 	in 	stating 	the 	facts, 	that 	the 	defendants'
colle c t i ve 	s h are 	0 f 	the 	reI e van t 	ma r k e t 	wa sin i t i a I 1Y "0 ne - f i f t h
or 	less." 	Id. 	at 	4323.
Predatory 	pricing 	by 	a 	single 	firm, 	by 	itself, 	is 	not 	an
offense 	under 	the 	antitrust 	laws. 	It 	is 	most 	frequently 	analyzed
as 	part 	of 	a 	monopolization 	or 	attempted 	monopolization 	~ase, 	in
which 	context 	the 	market 	share 	of 	the 	defendant 	is 	relevant 	as 	an
-1 1-

indicator 	of 	the 	possession 	of 	existing 	monop1y 	power 	or 	the
probability 	of 	obtaining 	such 	power. 	The 	FTC 	has 	recently
ob s e r ve d 	t hat 	a 	ma r ke t 	s hare 	j r, 	~ xc: S S 	0 f 	40 	per c en tin 	the
relevant 	market 	may 	be 	sufficient 	to 	begin 	an 	antitrust
inquiry. 	Ge~eral 	Foods 	Corp., 	103 	F.T.C. 	204, 	345 	(lq84);
International 	Telephone 	& Telegraph 	Corp., 	104 	F.T.C. 	280, 	412
(1984) 	("ITT"). 	In 	particular, 	the 	FTC 	has 	noted 	that
"[a] 	firm 	with 	a 	large 	absolute 	share 	of
sal e sin 	a 	g i ve n ma r k e t 	w ill, 	c e t e r i s
paribus, 	find 	it 	easier 	to 	execute 	a
successful 	predatory 	strategy 	than 	a 	smaller
firm. 	Most 	courts 	have 	determined 	that 	a
market 	share 	ranging 	from 	forty 	percent 	to
sixty 	percent 	prior 	to 	the 	commencement 	of 	a
predatory 	strategy 	ordinarily 	must 	be
established 	in 	order 	to 	prove 	the 	requisite
dangerous 	probability 	of 	successful
mo n 0 pol i z a t ion • " 	(f 0 0 t not e 	om itt e d) • 	I 'T"T' 	a t
4 12 •
But 	the 	FTC 	has 	also 	indicated 	that 	market 	share 	was 	only 	one
indicia 	of 	the 	likelihood 	of 	success 	of 	a 	predatory 	strategy. 	Tn
addition, 	the 	antitrust 	inquiry 	should 	examine
"the 	strength 	and 	capacity 	of 	current
c omp e tit 0 r s; 	the 	pot e n t i a 1 	for 	e n try; 	the
his tor i c 	i n ten sit y 	0 f 	c omp e tit ion; 	and 	the
impact 	of 	the 	legal 	or 	natural
en vir 0 nme n t . " 	( f 00 t not e 	om itt e d). 	I d .
Only 	after 	a 	complete 	evaluation 	of 	the 	extent 	to 	which 	all 	of
these 	indicia 	affect 	the 	likelihood 	of 	the 	predator's 	success 	can
one 	conclude 	whether 	an 	antitrust 	violation 	has 	occurred.
-12 -

Answers 	to 	Vice 	Chairman 	Liebeler's 	questions
Question
When 	would 	it 	be 	rational 	for 	for~ign producers 	of 	D~~'s 	to
price 	discriminate 	in 	the 	U.S. 	market?
Response
(tr. 	at 	36).
Price 	discrimination 	by 	a 	single 	firm 	is 	a 	practice 	made
profitable 	by 	existing 	characteristics 	of 	the 	product 	market.
This 	distinguishes 	price 	discrimination 	from 	an 	active 	pricing
strategy 	such 	as 	predation, 	with 	intent 	to 	achieve 	market 	power
by 	eliminating 	rival~ 	or 	deterring 	entrants. 	For 	a 	Japanese
producer 	to 	find 	that 	an 	enduring 	disparity 	in 	sales 	prices
between 	the 	dor.lestic 	and'United 	States 	market 	5 	will 	maximize
profits, 	three 	conditions 	are 	necessary:
(1) 	The 	producer 	must 	posses 	market 	power 	in 	the 	Japanese
home 	market. 	T hat 	is, 	the 	pro d uc e r 	mu s t 	ha vet he 	a b iIi t Y t 0
influence 	the 	sales 	price 	of 	DRAM's 	through 	its 	decision 	of
how much 	output 	to 	offer 	for 	sale.
(2) 	Japanese 	and 	United 	States 	markets 	for 	DRAM's 	must 	be
separable. 	What 	this 	means 	is 	that 	the 	opportunity 	for
arbitrage 	or 	resale 	between 	markets 	is 	circumscribed. 	Where
transportation 	costs 	are 	greater 	than 	the 	difference 	between
the 	prices 	in 	the 	two 	countries, 	for 	example, 	it 	is 	not
profitable 	for 	an 	arbitrageur 	or 	broker 	to 	bUy 	the 	lower
5 	In 	the 	following 	remarks 	it 	is 	assumed 	that 	the 	home 	market
sales 	price 	of 	a 	Japanese 	producer 	in 	Japan 	is 	greater 	than
the 	United 	States 	sales 	price 	of 	the 	import 	from 	the 	same
producer. 	("Reverse" 	dumping 	is 	not 	discussed.)
- 1 3-

priced 	DRAM 	and 	offe; 	it 	for 	sale 	in 	the 	higher 	priced
market. 	Conse~uently, prices 	In 	the 	higher 	priced 	home
market 	may 	persist 	at 	a 	level 	In 	excess 	of 	the 	competitive
price 	(but 	not 	in 	excess 	of 	the 	price 	In 	the 	lower 	priced
market 	plus 	transportation 	cost). 	In 	addition, 	Import
restrictions 	may 	effectively 	preclude 	the 	arbitrageur 	f~om
providing 	a 	function 	which, 	in 	esse~ce, 	creates 	a 	single
price, 	world 	market.
(3) 	Demand 	for 	DRAM's 	must 	differ 	between 	national
markets. 	That 	is, 	the 	price 	sensitivity 	of 	consumers 	in
each 	nation 	must 	differ 	at 	the 	~ln-lp nrice 	that 	would
prevail 	in 	a 	world 	market. 	Were 	consumers' 	price
responsiveness 	identical, 	there 	would 	be 	no 	profit
opportunities 	ava::dble 	by 	separating 	the 	markets. 	Markets
are 	more 	prone 	to 	profit-increasing 	separation, 	for 	example,
if 	the 	uses 	for 	the 	product 	differ 	between 	the 	United 	States
and 	Japan.
nr. 	Goodfriend's 	analysis 	of 	the 	DRAM market, 	inclUding 	the
market 	for 	64K 	DRAM's, 	suggests 	the 	conditions 	required 	for 	a
succes~ful 	strategy 	of 	(persistent) 	price 	discrimination 	are
unlikely 	to 	exist. 	Her 	previous 	analysis 	of 	the 	Japanese 	home
-14-

rna r ke tin 	DRAM' s 6 	i nd i cat est hat 	the 	ma r k eta p pea r s 	c omp e tit i ve
and 	that 	market 	shares 	are 	highly 	volatile. 	The 	location 	of
production 	stages 	orrshjre 	suggests 	that 	transportation 	costs 	are
low 	in 	relation 	to 	the 	economic 	value 	DRAM's. 	Finally, 	the
nat u reo f 	d ema nd 	for 	DRAM's 	i nth e 	two 	co u n t r i e sap pea r s 	t 0 	be
highly 	similar, 	since 	DRAM 	users 	in 	both 	countries 	produce 	the
same 	products 	and 	these 	goods 	compete 	in 	world 	microelectronics
final 	goods 	markets.
While 	price 	discrimination 	and 	predation 	involve 	relatively
long 	lived 	price 	disparties 	between 	national 	markets, 	there 	may
be 	transitory 	price 	differences 	that 	do 	not 	indicate 	either
predaLion 	or 	price 	discrimination. 	Transitory 	price 	differences
may 	ha~e 	pro-competitive 	effec~s. 	As 	is 	perhaps 	the 	case 	with
Micron's 	initial 	price 	cut, 	transitory 	price 	cuts 	may 	be 	taken 	to
overcome 	the 	inerlia 	of 	established 	trading 	relationships.
Promotional 	pricing 	by 	a 	new 	entrant 	in 	one 	national 	market 	to
gain 	sales 	may 	also 	result 	in 	temporary 	price 	differences 	between
national 	markets. 	If 	one 	observes 	prices 	of 	contracts 	where
p r. ice s 	0 fin d i v i d ua I 	s a I e s 	are 	neg 0 t i ate d 	rat her 	t han 	be i n gat 	a
posted 	price, 	prices 	may 	appear 	to 	differ 	among 	countries
de~nding on 	the 	relative 	bargaining 	success 	of 	the 	most 	recent
purchaser 	in 	each 	country. 	Finally, 	if 	prices 	do 	not 	adjust
6 	See 	Appendix 	to 	the 	Prehearing 	Brief 	of 	the 	Bureau 	of
Competition, 	Eureau 	of 	Consumer 	Protection, 	and 	Bureau 	of
Economics 	of 	the 	Federal 	Trade 	Commission 	Before 	the 	U.S.
Department 	of 	Corrrnerce, 	"Dynamic 	Random 	Access 	Memory
Semiconductors 	of 	256 	Ki lobits 	and 	Above 	from 	Japan," 	No. 	A-
588-505 	(April 	II, 	1986).
-15-

immediately 	to 	fluctuations 	In 	exchange 	rates, 	prices 	in 	one
country 	may 	temp~rarily 	deviate 	from 	those 	In 	another.
One 	could 	also 	see 	transitory 	price 	differences 	when 	the
terms 	of 	the 	contracts 	differ. 	One 	would 	expect 	to 	see
negotiated 	contract 	prices 	differ 	as 	well. 	For 	example, 	If 	one
contract 	requires 	more 	rapid 	delivery 	than 	another, 	the 	price 	may
be 	higher 	to 	reflect 	the 	cost 	of 	providing 	the 	more 	rapid
delivery. 	Alternatively, 	if 	one 	contract 	provides 	for 	a 	series
o f 	del i ve r I e s 	0 v era 	per I 0 d 	0 f 	mo nth s, 	the 	p ric e 	rna v 	d iff e r 	from
that 	charged 	where 	all 	deliveries 	are 	to 	be 	made 	immediately.
Question
I 	would.like 	you 	to 	address 	any 	other 	rational 	explanations 	for,
dumping.
Response
(tr. 	at 	37).
In 	our 	remarks 	here, 	we 	emphasize 	that 	competitive 	prices
may, 	at 	times, 	be 	less 	than 	average 	total 	cost 	and 	so 	may 	appear
to 	constitute 	dumping 	under 	the 	statute. 	~he 	alleged 	anti-
competitive 	strategy 	of 	predatory 	pricing 	was 	examined 	in 	our
pre-hearing 	brief. 	I nth ere s po n set 0 	the 	pre v i 0 u s 	Qu est ion, 	we
disdussed 	~easons why 	home 	market 	price 	may 	exceed 	United 	States
sal e s 	p ric e . 	Th e s e 	iss u e s 	wi lin 0 t 	be 	fur the reo n sid ere d 	her e .
As 	explained 	in 	detail 	in 	our 	pre-hearing 	brief 	(Appendix 	at
1-4), 	competitive 	prices 	are 	determined 	by 	demand 	and 	variable
cost 	conditions. 	As 	a 	consequence, 	a 	competitive 	price 	may 	be
well 	above 	or 	below 	average 	total 	cost. 	During 	periods 	of 	excess
supply, 	which 	seems 	to 	characterize 	the 	period 	of 	investigation,
-16-

i tis 	rat ion a I 	for 	a 	c omp e tit i ve 	firm 	top rod uc e 	and 	s e I I 	DRM,1' s
as 	long 	as 	the 	market 	price 	is 	greater 	that 	or 	equal 	to 	the
averagt 	variable 	cost 	of 	produ(:tlon. 	"'his 	practice 	is 	rational
in 	a 	competitive 	market 	because 	the 	firm 	is 	covering 	its 	directly
incurred 	costs 	of 	production; 	to 	the 	extent 	that 	price 	exceeds
average 	varable 	cost, 	the 	firm 	is 	making 	some 	contribution 	to
recovering 	its 	fixed 	costs 	as 	well. 	Consequently, 	the
observation 	that 	at 	a 	particular 	point 	in 	the 	course 	of 	trade
price 	is 	not 	sufficient 	to 	recoup 	average 	total 	cost 	is 	of 	no
competitive 	significance. 	As 	noted 	in 	our 	pre-hearing 	brief, 	it
is 	not 	unusual 	for 	a 	competitive 	firm 	tv 	experience 	a 	price
significantly 	in 	excess 	of 	average 	total 	cost 	in 	some 	periods
and, 	in 	other 	periods, 	a' price 	substantially 	less 	than 	average
total 	cost. 	In 	choosing 	to 	enter 	the 	industry, 	a 	firm 	expects 	to
earn 	sufficient 	revenues 	to 	recoup 	all 	production 	costs 	over 	the
entire 	course 	of 	trade. 	However, 	this 	need 	not 	be 	true 	at 	any
particular 	point 	in 	time.
Question
Could 	you 	explain 	what 	the 	Japanese 	home 	market 	price 	has 	to 	do
wit~ 	the 	injury 	to 	U.S. 	producers? 	(tr. 	at 	38).
Response
As 	we 	discuss 	in 	our 	prehearing 	brief, 	it 	does 	not 	appear
that 	the 	Japanese 	home 	market 	price 	is 	predatory. 	Consequently,
we 	argued 	in 	section 	IIICB) 	that 	:he 	Japanese 	home 	market 	price
reflects 	competitive 	pricing 	of 	DR.<\M's, 	while 	"constructed 	value"
does 	not 	reflect 	competitive 	pricing. 	There 	are 	several 	reasons
- 17-

why 	this 	is 	true. 	First, 	there 	are 	problems 	attending 	the
translation 	of 	accounting 	data 	into 	a 	measure 	of 	average 	total
cost. 	S~cond, 	in 	a 	technologically 	jynamic 	industry 	such 	as
DRAMS's, 	prices 	at 	any 	point 	in 	time 	may 	differ 	from 	tot8l 	cost
because 	of 	learning 	curve 	effects. 	Finally, 	as 	impl ied 	by 	our
response 	to 	the 	previous 	Question, 	the 	Japanese 	home 	market 	price
is 	superior 	to 	average 	total 	cost 	as 	a 	proxy 	for 	a 	competitive
price 	because 	a 	competitive 	price 	need 	not 	equal 	average 	total
cost 	at 	any 	particular 	point 	in 	time.
-18-

Answers 	to 	Commissioner 	Eckes' 	questions
Ques t ion
Would 	Dr. 	Goodfriend 	and 	Dr. 	Wo)dbury 	supply 	their 	resumes? 	(tr.
at 	16).
Answer
Resumes 	are 	attached 	to 	this 	posthearing 	brief.
Question
Why 	did 	the 	FTC 	think 	that 	this 	was 	an 	appropriate 	matter 	in
which 	to 	appear? 	(tr. 	at 	16).
Answer
There 	are 	severa~ reasons 	why 	the 	FTC 	considered 	this
investigation 	to 	be 	an 	appropriate 	one, 	within 	the 	meaning 	of 	lq
U.S.C. 	S 	1334, 	In 	which 	to 	appear. 	The 	semiconductor 	inrlustry 	is
a 	large 	industry; 	one 	source 	estimates 	1985 	worldwide 	sales 	at
about 	$29 	billion 	[Electronic 	Business 	(March 	1, 	1986) 	at 	78J.
In 	the 	United 	States 	1985 	sales 	of 	64K 	DRAM's 	and 	256K 	DRAM's
are 	est i ma ted 	a t 	$ 9 9 5 mil 1 ion 	[E I e c t ron i c s 	(J a nua r y 	6, 	19 8 6) 	a t
54]. 	The 	complex 	legal 	and 	economic 	issues 	raised 	by 	this
im v est i gat ion 	0 f 	64 K DRAM's 	rna y 	ha ve 	pre c e den t i a 1 	val ue 	for 	0 the r
antidumping 	investigations, 	such 	as 	256K DRAM's 	and 	erasable
programmable 	read-only 	memories. 	The 	petitioner 	in 	this
investigation 	made 	a 	specific 	allegation 	of 	predatory 	pricing 	by
the 	Japanese 	firms, 	and 	we 	have 	had 	experience 	assessing
pre da tor y 	p ric i ng 	a lie gat ion sin 	the, con t ext 	0 fen for c i ng 	the
antitrust 	laws.
-19 -

Answer 	to 	Commissioner 	Rohr's 	question
Questio~
"Is 	there 	a 	distinction 	in 	antitrust 	between 	the 	concept 	of 	the
injury 	to 	competition 	and 	the 	injury 	to 	competitors?" 	Is 	the
lTC, 	in 	an 	antidumping 	investigation, 	concerned 	with 	the 	same
thing 	that 	the 	antitrust 	laws 	are 	concerned 	with? 	(tr. 	18-19).
Answer
Courts 	interpreting 	and 	applying 	the 	antitrust 	laws 	have
distinguished 	between 	injury 	to 	competition 	and 	injury 	to
competitors. 	The 	Supreme 	Court 	has 	stated 	that 	the 	concern 	of
the 	antitrust 	laws 	is 	"with 	the 	protection 	of 	competition, 	not
competitors." 	Brown 	Shoe'v. 	United 	States, 	370 	U.S. 	294, 	320
(1962); 	Brunswick 	Corp. 	v. 	Pueblo 	Bowl-O-Mat, 	Inc., 	429 	U.S. 	477,
488 	(1977). 	The 	reason 	for 	distinguishing 	between 	injury 	to
competition 	and 	injury 	to 	competitors 	is 	clear. 	Injury 	to
competition 	drives 	up 	prices 	to 	consumers. 	By 	contrast,
inefficient 	competitors 	are 	injured 	by 	competition. 	Protecting
competitors 	against 	injury 	when 	competition 	has 	not 	been 	injured
would 	tend 	to 	drive 	up 	prices 	and 	thereby 	injure 	consumers.
Bec'use 	the 	antitrust 	laws 	were 	designed 	as 	a 	"consumer 	welfare
prescription," 	Reiter 	v. 	Sonotone, 	442 	U.S. 	330, 	343 	(1979),
their 	concern 	is 	with 	injury 	to 	competition.
-20-

'. Ins urn, 	a san 	<.l o. tit r us t 	' .. for c erne n tag en c y, 	the 	FTC 	i s
primarily7 	concerned 	with 	"injury 	to 	competition." 	However, 	as
Professor 	(nov 	Judge) 	Bork 	notes, 	in 	some 	conditions 	this
requires 	concern 	for 	"injury 	to 	competitors" 	as 	well.
"[Existing 	antitrust 	case 	law] 	reflect[s] 	a 	theory 	of
practices 	that 	improperly 	exclude 	rivals 	and 	hence
injure 	the 	competitive 	process. 	The 	problem 	is 	to 	know
wh ate x c Ius ion 	i simp r 0 per. 	A II 	bus i ne s sac t i v i t Y
excludes. 	A sale 	excludes 	rivals 	from 	that 	piece 	of
business 	•••• 	Superior 	efficiency 	forecloses.
I n dee d, 	e Y. c Ius ion 	0 r 	for c los u rei s 	the 	me c han ism 	by
which 	competition 	confers 	its 	benefits 	upon 	society.
The 	more 	efficient 	exclude 	the 	less 	efficient 	from 	the
control 	of 	resources 	•••• 	Such 	exclusion 	is 	proper
and 	beneficial. 	It 	is 	the 	task 	of 	antitrust 	to 	see
that 	it 	continues 	to 	operate. 	Antitrust, 	therefore,
must 	distinguish 	efficiency 	exclusion 	from 	improper
exclusion." 	R. 	Bork, 	The 	Antitrust 	Paradox 	(1978) 	at
136-37.
7. 	We 	ha ve 	0 b s e r v edt hat 	It the 	rna j 0 r 	leg i s I a t i ve 	pur po s e 	be h i nd
the 	Robinson-Patman 	Act 	was 	to 	provide 	some 	measure 	of
protection 	to 	small 	independent 	retailers 	and 	their
indepencent 	suppliers 	from 	what 	was 	thought 	to 	he 	unfair
c omp e tit ion 	from 	ve r tic a I I yin t e g rat ed, 	mu I t i-I 0 cat ion 	c ha i n
s tor e s • " 	B 0 i seC a s cad e 	Cor 0 ., 	50 	ATRR 	3 3 5, 	340 	(I 98 6 ) .
Since 	Itaccomplishing 	this 	purpose 	can 	be 	inconsistent 	with
the 	goals 	of 	the 	other 	antitrust 	laws," 	the 	FTC 	will 	"eschew
efforts 	to 	broaden 	the 	Act's 	application 	beyond 	that
established 	by 	law 	where 	such 	inconsistencies 	would
result. 1t 	H. 	Our 	experience 	in 	enforcing 	the 	Robinson-
Patman 	Act 	is 	especially 	relevant 	in 	this 	dumping
investigation 	because 	the 	Robinson-Patman 	Act 	deals 	with 	the
legality 	of 	price 	discrimination 	within 	the 	United 	States,
the 	domestic 	analogue 	of 	the 	dumping 	law.
- 2 1-

Answer 	to 	Commissioner 	Brunsdale's 	guest ion
Questio~
"Would 	the 	FTC 	please 	in 	its 	post-hearing 	brief 	discuss 	more
extensively 	than 	you 	have 	been 	ab:~ 	to 	this 	morning 	the 	[legal
and 	economic] 	basis 	on 	which 	the 	ITC 	might 	compute 	margins 	from
the 	Commerce 	Department 	data 	base 	for 	our 	own 	purposes 	here?"
( t r. 	a t 	43).
Answer
As 	explained 	in 	arguments 	I 	and 	II 	in 	the 	text 	of 	our
Posthearing 	Brief, 	the 	ITC 	could 	examine 	differences, 	if 	any,
between 	the 	price 	in 	Japan 	and 	the 	price 	in 	the 	United 	States.
While 	th1s 	examination 	wo~ld 	not 	be 	a 	recalculation 	of 	the
-22-

dumping 	margin 	found 	by 	the 	Department, 	it 	would 	help 	the 	ITC 	to
determine 	the 	economic 	effects 	of 	any 	dumping 	found 	by 	the
f':;partmen~.
Respectfully 	submitted
on 	behalf 	of
the 	Federal 	Trade 	Commission,
David 	T. 	Scheffman
Acting 	Director
Bureau 	of 	Economics
Richard 	S. 	Higgins
Deputy 	Director 	for
Regulatory 	and
Indus~ry Analysis
Bureau 	of 	Economics
Keith 	B. 	Anderson-
Assistant 	Director 	for
Regulatory 	Analysis
Bureau 	of 	Economics
Amanda 	B. 	Pederson
Acting 	Director
Bureau 	of 	Consumer
Protection
J. 	Howard 	Beales
Acting 	Deputy
Director
Bureau 	of 	CCI.sumer
'Protection
Walter 	T. 	Winslow
Acting 	Director
Bureau 	of 	Competition
/~f"/~{T-'~Edwa r d 	F. 	GI Yn n, 	Jr. / 	/'
Assistant 	Director 	./
(International
Antitrust)
Bureau 	of 	Competition
Benjamin 	Cohen
Attorney
Bureau 	of 	Competition
John 	R. 	Woodbury
Deputy 	Assistant
Director 	for 	Regulatory
Analysis
Bureau 	of 	Economics
Sarah 	J. 	Goodfriend
Economist
Bureau 	of 	Economics
Ma y 	7, 	1986
-23-

VITA
Sarah 	J. 	Goodfriend
~038 18th 	Street, 	NW
Apt. 	401
Washington, 	DC 	20009-1803
Phone: 	Office 	(202) 	634-7874
Home 	(202) 	234-0342
EDUCATION
Division 	of 	Regulatory 	Analysis
Bureau 	of 	Economics
Federal 	Trade 	Commission
washington, 	DC 	20580
1974 	- 	1976
1976 	- 	1978
1979 	- 	1985 B.A. 	(with 	high 	honors)
Ph.D.
Grinnell 	college 	(Grinnell, 	Iowa)
University 	of 	Texas 	at 	Austin
Universi ty 	of 	North 	Carol ina 	at
Chapel 	Hill
DISSERTATION TITLE
Estimation 	of 	a 	Q-Ratio 	Functio~ For 	Regulated 	Electric
utilities: 	A Test 	of 	the 	Stigler-Peltzman 	Hypothesis 	of
Regulatory 	Behavior
PRINCIPAL 	FIELDS
Industrial 	org~nization, Regulation, 	Corporate 	Finance
EXPERIENCE
10/85 	to 	present
5/83 	to 	5/84
Academic 	Year 	1982
Summer 	1982
Academic 	Year 	1981
Summer 	1981
Economist, 	Regulatory 	Analysis, 	Bureau
of 	Economics, 	Federal 	Trade 	Commission,
Washington, 	DC
ConSUlting 	Economist, 	Conservation 	and
Load 	Management Department, 	Carolina
Power 	and 	Light 	Company, 	Raleigh, 	NC
Coordinator, 	Teacher 	Training 	Program,
University 	of 	North 	Carolina, 	Chapel
Hill, 	NC
Visiting 	Research 	Fellow, 	Public 	utility
Commission 	of 	Texas, 	Austin, 	TX
Teaching 	Assistant, 	University 	of 	North
Carolina, 	Chapel 	Hill, 	NC
workshop 	Coordinator, 	Third 	Annual
~eacher ~raining Program, 	Roxboro, 	NC
(Joint 	Council 	on 	Economic 	Education,
sponsor)

Academic 	Year 	1980
Summer 	1980
4/79 	to 	5/78
AWARDS
Research 	Assistant, 	Univ. 	of 	North
Carolina, 	Chapel 	Hill, 	NC
Intern, 	Bureau 	of 	Economics, 	Federal
Trade 	Commission, 	Washington, 	DC
Economist, 	Economic 	Research 	Division,
Public 	utility 	Commission 	of 	Texas,
Austin, 	TX
Visiting 	Research 	Fellow, 	Public 	utility 	Commission 	of 	Texas,
1982
Research 	and 	Teaching 	Assistantships, 	Univ. 	of 	North 	Carolina,
1980-1981
REFERENCES
Dr. 	William 	E. 	Avera
Financial 	Concepts 	and 	Applications,
Inc.
Austin, 	TX
Dr. 	Bob 	Barnes, 	P.E.'
Carolina 	Power 	and 	Light
Company
Raleigh, 	NC
Dr. 	Helen 	Tauchen
Department 	of 	Economics
University 	of 	North
Carolina
Chapel 	Hill, 	NC
2

VITA
John R. 	~ry
3373 Mili ta .."Y Rd., 	NY
washington, 	OC 	20015
Fbone: 	Office 	(202) 	634-7860
Home 	(202) 	364-4267
EDUCATION
1971 	BA (sunma cum laude)
1973 	MA
1977 	Ph.D.
DISSERI'ATION TITLE
Division of Regulatory Analysis
3ureau of Ecxmanics
Federal Trade Commission
washington, DC 	20580
College of the Holy Cross
washington University 	(St. 	Louis)
washington university 	(st. 	Louis)
Foreign Investment: 	A synthesis of 	Industrial Organization, 	Trade,
and capital Theoretic Approadles
PRINCIPAL FIELpS
Industrial Organization, 	Regulation, 	Law and Economics
11/85 	to present
9/83 	to 11/85
~
3/82 	to 9/83
DePJtY Assistant Director, 	Regulatory
Analysis, Bureau of Economics, 	Federal Trade
Commission. 	Respmsible for 	oonducting or
sU:fervising studies or filings 	before
regulatory agencies including the Fed=ral
Communications Commission, the International
Trade Commission, and the National Highway
Traffic Safety Administration.
Vice Presid2nt, 	Dept. 	of 	Research and Policy
Analysis, 	National cable TeleIJision
Association. 	ResFOnsible for 	oonduct or
su~rvision of studies related to cable
teleIJision, 	including the oonstmler oosts of
the franchising process, 	deregulation of
cable prices, 	effects of cop.{right fees on
consumers, ex+-....ent of com~tition wi th cable
TV •
Senior Economist, 	Regulatory Analysis
Division, Bureau 'of Economics, 	Federal Trade
Commission. 	Areas of ResFOnsibi1ity:
Broadcasting and Teleccmnunications.

9/80 	to 3/82
6/79 to 9/80
8/78 to 6/79
9/77 to 8/78
9/75 to 8/77
9/74 	to 8/75
EUBLISHE[) RESEARCH
Clief, 	r.conanics Divis~on, Common carrier
Bureau, Federal Communications Commission.
Areas of Responsibility: 	Senior econanic
abisor to Bureau and Commission on cornmon
carrier p:;licy. 	Directed twenty-five
subordinates in policy analysis.
Industry Eo::manist, 	Network Ir'quiry Special
staff, 	Federal Communications commission.
Areas of ResIX'nsibility: 	A.la1ysis of the
Program SJpp1y Indust:ry, Comp:ti tive Irnpict
of New Broadcast Tedmo1ogy.
Brookings Economic Policy Fellow assigned to
the Civil Aeronautics Board 	(Office of
Economic Analysis). 	Areas 	of Responsibili ty:
Merger Pol icy, 	~'1ternational Aviation,
service to Snall corn:nuni ties. 	FOsi tion:
Assistant Chief, 	Policy Analysis Division.
Assistant Professor of Economics, 	state
universi ty of New York at Albany.
Economist, 	International Research Department,
FeBeral 	Reserve Bal'1k of New York. 	Areas of
Responsibili ty: 	bank-reported capi tal flows,
exchange-rate analysis.
Lecturer, 	Southern Illinois University
(Cartx:mcal e)
With Bluford Putnam, 	"Exchange Rate Stability 2nd Monetary Policy"
(Albany Discussion Paper 	#95) (Review of Economics and Business
Research, Winter, 	1980) .
.With Eo 	White, 	"Capital 	Market Integration Under Fixed and Floating
Exchange Rat:es: 	An Empi. rical Analysis rt 	(Journal 	of ~1oney r Credit r and
Banking, May 1980) •
With A. 	Arterburn, 	"Price Competition, 	Mvertising, 	am Market
structure" 	(Southern Economic Journal, 	January 1981).
With S. 	Besen, 	"Regulation, 	Deregulation and Antitrust in
~ecammunications," (Antitrust ~Jlletin, Spring 1983).
with S. 	Besen and G. 	Fourr"::"er, 	"Determinants of Network Tele.rision
Program Prices: 	Implicit Cont:a~s, Requlation, 	and Bar9ainin9
Power," 	(Bell Journal of Econo:nics, Auttmlfl 1963) •
with s. 	Besen, 	R. 	Metzger 	(attorney), 	and T. 	Kra'Cternnaker 	(attorney),
Misregulatino Television 	(univer-sity of C-"li.cago Press, 1984).

"Video Competi tion and Consumer Welfare," Proceedings of the Arden
House Conference on Video Competition, ed. 	Eli NOarn (Columbia
University Press, forthcaning).
"Scale Econanies in the Airline 	L'1dustry: 	A S'..lIVe'j" 	(Mimeo, 1978).
"Production Aboard: 	'Iheoretical COnsiderations and Dnpirical
Analysis" 	(Mimeo, 1978).
"Regulating cable W: 	The case of Must-earry" 	(Mi.rneo, 1986).
Wi th Richard Metzger 	(attorney), M 	Analysis of Television Program
Production, NxWisition, and Distribution 	(Network 	Irquiry 	Sp:cial
Staff, Preliminary Report, Federal Communications Commission, June
1980) .
"Private sales of satellite Transp:mders," Comments in FCC Proceeding
(1982) .
with Reith Anderson, 	"Econanic Assessment of the Firencial 	Interest
and ~'Ddication Rules," Caments in FCC Proceeding 	(1983).
'"Pricing Flexibility and Consumer Welfare: 	The Deregulation of Basic
cable Rates" 	(NCI'A White Paf€r, 1984).
With Donald Roran, 	~he Effect 	of Rate Regulation and Franchise Delay
on Program lWailability" 	(Caments in FCC Proceeding, 1985).
With Mark Bykowsky, "Over-the-Air Television and cable Prices: 	An
Econanetric ~uiry" (served as basis of FCC decision deregulating
cable prices, 1985) •
. "Syndicated Program Prices."
"Contractual RElationships Between Commercial Networks and Program
SUppliers" .
With S. 	Besen, 	"The FCC and satellites".
wi th S. Besen and W. 	ManI"'.ing, 	"'Ihe Economi c Rela tionshi p Between
Television Networks and Affiliates: 	A. Study of Joint Profit-
Maximization. r.
?RESE}.l'fEI) PAPERS
Wit..'1 S. 	Besen and G. 	FoU!"nier, 	"An Empirical Analysis of Television
Program Prices," Meetings of t.l:e SOuthern SCono:dc Association,
Nooanber 1981.
3

Wi th E- 	White, 	"Flexible Exdlange ~tes and Market Integration,"
Federal 	Reserve System COnference on Firancial Market Researdl, 	June
1979.
With ". 	/l.rterrorn, 	"Price Competi. tion, 	ldvertising, 	Market Structure,"
Meetings of :'"le southern Econanic Association, 	NO'Jenber 1978.
With B. 	White, 	twrhe Effects of Exchange Rate Systems on International
capi. tal Market Integration," Federal Reserve System COnference on
Interrational 	ResearC"h, 	NoIlanber 1977.
National Ea::manic Research Associates, 	~he Welfare costs of 	the
Franchising Process" 	(1984).
Opinion Resear-ch Cor-?Jration, 	"Cable and Competing Technologies" 	(1984
NCl'A COnvention) .
Arthur D. 	Little, 	Inc., 	"Financial 	Future of Cable" 	(1985 	lOA
COnvention) •
Malarkey-Taylor Associates, 	~he COsts and Berefits of SCrambled
Progranrning" 	(1985 NCI'A COnvention) •
0l'HER ACTIVITIES
EA-pert witness 	(Bureau of Pricing and D:>mestic Aviation, 	CAB), Texas
International/National/Fen American ACl:1uisi tien case 	(1978-79).
COntinental/western ACl:1uisition case 	(1978-79).
Book Review, 	Productivity in the United S""...ates by Jchn Kendrick and
Elliot Grossnan, 	SOuthern Economic Journal, 	APril 1981.
Discussant, 	"Deregulation of Telecornrnuni. ca tiO:15." 	Meetings of the
Western Econanic !'.ssodation, 	July 1981.
Referee, 	SOuthern Economic Journal, 	Rand Journal of Economics.
Finalist, 	WoOOrCJt.7 Wilson Fellowship canp:=tition r 1971
NSF Traineeship, 1973-74.
EUl\'TY Faculty Research Grant, 1978.
Brookings Econanic Policy FellCM, 1978-79.

REfEP.m:e5
Dr. 	F. R. 	Warren-Boulton
Deputy Assistant Attorney General
- 	D:onanic Pc.l icy
Antitrust Division, 	Dept. 	<. f Justice
Washington, rx:
Dr. 	D:mald Martin
Glassnan and Oliver, 	Inc.
washington, 	oc
5
Dr. 	Stanley Besen
RAND
Washington, 	rx:

CERTIFICATE 	OF 	SERVICE
I 	I. ere by 	c e r t i ry 	t hat 	0 n 	t II i s ~ 	day 	0 f 	Ma y 	I 98 6, 	I 	ha ve
served 	the 	foregoing 	posthearirls 	brief 	by 	causing 	the 	original
and 	14 	copies 	to 	be 	hand-delivered 	to 	the 	Secretary 	of 	the
Commission 	and 	a 	copy 	to 	be 	mailed 	first 	class, 	postage 	prepaid
·to 	the 	following:
John 	D. 	Greenwald, 	Esq.
Wilmer, 	Cutler 	&: Pickering
1666 	K Street, 	N.W.
Washington, 	D.C. 	20006
OKI 	Electric 	Industry 	Company, 	Ltd.
Thoma s. F. 	CuI len, 	Jr., 	Esq.
Jones, 	Day, 	Reavis 	&: Pog~e
Metropolitan 	Square
655 	15th 	Street, 	N.W.
Washington, 	D.C. 	20005
Texas 	Instruments 	Inc.
Wi II iam D. 	Outman, 	I I, 	Esq.
Thomas 	P. 	Ondeck, 	Esq.
Be~h 	S. 	DeSimone, 	Esq.
Baker 	&: McKenzie
815 	Connecticut 	Ave., 	N.W.
Washington, 	D.C. 	20006
~tsubishi Electric 	Corporation,
Mit sub ish i 	E1e c t ron i c s 	Arne ric a, 	Inc.
&: Mitsubishi 	Semiconductor
Arne ric a, 	Inc.
A. 	Paul 	Victor, 	Esq.
Weil, 	Gotshal 	&: Manges
767 	Fifth 	Ave.
New 	York, 	New 	York 	10153
Matsushita 	Electronics 	Corporation
&: 	Panasonic 	Industrial 	Company
Thomas 	A. 	Ehrgood, 	Jr., 	Esq.
Weil, 	Gotshal 	&: Manges
1101 	14th 	Street, 	N.W.
Washington, 	D.C. 	20005
Matsushita 	Electronics
Corporation 	&: 	Panasonic
Industrial 	Company
Harvey 	M. 	Applebaum, 	Esq.
O. 	Thomas 	Johnson, 	Jr., 	Esq.
Sonya 	D. 	Winner, 	Esq.
Covington 	&: Burling
1201 	Pennsylvania 	Ave., 	N.W.
P.O. 	Box 	7566
Washington, 	D.C. 	20044
Mo tor 0 1 a, 	Inc.
Michael 	J. 	Calvey, 	Esq.
Mark 	D. 	Herlach, 	Esq.
Coudert 	Brothers
One 	Farragut 	Square 	South
Washington, 	D.C. 	20006
NEC 	Corporation 	&: NEC
Electronics, 	Inc.
R. 	Michael 	Gadbaw, 	Esq.
Rosemary 	E. 	Gwynn, 	Esq.
Dewey, 	Ballantine, 	Bushby,
Palmer 	&: Wood
1775 	Pennsylvania 	Ave., 	N.W.
Washington, 	D.C. 	20006
Intel 	Corporation

Carl 	W. 	Schwarz, 	Esq.
Wi 11 iam H. 	Barret t, 	Esq.
Paul 	J. 	Pantano, 	Jr., 	Esq.
Patrick 	J. 	Cumberland, 	Esq.
Metzger, 	Shadyac 	&: Schwarz
1275 	K Street, 	N.W.
Washington, 	D.C. 	20005
Hit a chi, 	Ltd., 	Hit a chi 	Arne ric a, 	Ltd.
and 	Nissei 	Sangyo 	America, 	Ltd.
David 	A. 	Vaughan, 	Esq.
David 	P. 	Houlihan, 	Esq.
Robert 	D. 	Bannerman, 	Esq.
Jeffrey 	S. 	Neeley, 	Esq.
Mudge, 	Rose, 	Guthrie, 	Alexander
&: 	Ferdon
2121 	K Street, 	N.W.
Washington, 	D.C. 	20037
Toshiba 	Corporation 	&: Toshiba
Arne ric a, 	Inc.
Larry 	L. 	Grant, 	Esq.
Vice 	President 	and 	General 	Council
Micron 	Technology 	INc.
2805 	E. 	Co 1 umb i a 	Rd.'
Boise, 	Idaho 	83706
Micron 	Technology, 	Inc.
Donald 	R. 	Davis, 	Esq.
David 	L. 	Teichmann, 	Esq.
Ronald 	S. 	Poelman, 	Esq.
Fenwick, 	C_, is 	&: West
Two 	Palo 	Alto 	Square
Palo 	Al to, 	Cal ifornia 	94306
Fujitsu 	Microelectronics,
Inc. 	&: 	Fujitsu 	Ltd.
L. 	Da n i e 1 0' Ne ill, 	Esq.
David 	L. 	Teichmann, 	Esq.
Fenwick, 	Davis 	&: West
1424 	16th 	Street, 	N.W.
Suite 	101
Washington, 	D.C. 	20036
Fuj itsu 	Microelectronics,
Inc. 	&: 	Fujitsu 	Ltd.
Richard 	R. 	Rivers, 	Esq.
Warren 	E. 	Connelly, 	Esq.
Valerie 	A. 	Slater, 	Esq.
Akin, 	Gump, 	Strauss, 	Hauer
&: 	Feld
1333 	New 	Hampshire
Ave., 	N.W.
Washington, 	D.C. 	20036
Fujitsu 	Limited 	and
Fujitsu 	Microelectronics,
Inc.
~.w~Ben j8TTliCOheil
Attorney
Division 	of 	International
Antitrust
Bureau 	of 	Competition
Federal 	Trade 	Commission
Washington, 	D.C. 	20580
(202) 	634-4784