How far can American hegemony extend when it comes to laying down the law of international transactions?

Buried in Section B of yesterday’s Wall Street Journal are two articles which suggest that the United States, the world’s most robust economy, is attempting to not only establish a capitalist world, but also to bring along American legal structures that will regulate it.

A Federal Court of Appeals is now determining whether Motorola can bring a treble damages anti-trust case for price fixing against a group of Asian companies which fixed the price on liquid crystal display panels. Motorola purchased about $5,000,000,000 worth of LCD panels for its Razr phones and other uses, but purchased them (fully manufactured) through foreign based affiliates, without United States contact, in 99% of the cases. Do our anti-trust laws reach sales by foreign companies, to foreign purchasers which may be owned ultimately by United States companies, and which occur offshore?

The SEC and the DOJ long have been vigorous in enforcing the United States’ Foreign Corrupt Practices Act, which prohibits bribery of government agencies and government owned companies around the world. The WSJ reports a reduced fine to Avon, an American company, for bribes paid through subsidiaries in Africa and Australia, and the SEC suggests that the fines were greatly reduced by Avon self-reporting its violations to the SEC. DOJ Criminal Fraud Section noted that voluntary disclosure is “a huge factor” in fixing sanctions. The article contrasts Avon ($5,000,000 fine) to Marubeni, a Japanese trading company which did not report and this year agreed to pay $88,000,000 in fines. A commentator, cited in this article, noted that foreign companies are particularly insensitive to the subtle DOJ message that self-reporting is the path to a better economic result.

The international nature of all business raises the need for an international matrix of appropriate, non-obtrusive regulation. Will the relatively strict American legal system end up as the international standard?

And, if you want to truly understand the international nature of things, note that Motorola, claiming anti-trust violations by its Asian vendors, recently was purchased by China’s Lenovo. We have a Chinese parent claiming violation of United States anti-trust laws by Asian vendors supplying LCD screens to non-US subsidiaries outside the United States.