British glassmaker settles antitrust suit

May 27, 1994|By New York Times News Service

WASHINGTON -- Initiating a new tactic in the Clinton administration's trade policy, the Justice Department won a settlement yesterday from a British company that keeps the company from preventing U.S. competitors' doing business overseas.

The antitrust suit against Pilkington PLC, the world's largest maker of flat glass, accused the British company of monopolizing the technology for making sheets of glass like those used in windowpanes or car windshields.

The Justice Department argued that Pilkington fell under U.S. legal jurisdiction because it owns 80 percent of a U.S. glassmaker, Libby-Owens-Ford Co.

The case had little to do with the glass market in the United States; instead it sought to ensure that U.S. companies could freely operate abroad.

Justice Department officials would not say whether they planned such antitrust cases against Japanese companies, in connection with the Clinton administration's effort to open Japanese markets to U.S. business. But they did say that other investigations of foreign companies were under way. "As we receive information of a similar nature, we will aggressively pursue it," said Robert Litan, a deputy assistant attorney general in the antitrust division.

The Japanese embassy in Washington quickly denounced the new tactic as a violation of international law. "We have expressed our concern over the change because it constitutes the exercise of extraterritoriality, which is a violation of international law," said Seiichi Kondo, the embassy's press secretary. "Today's action will raise further concern over this among all the United States' trading partners."

The British reaction was restrained. "We've noted the settlement, but it's really a matter for the Department of Justice and Pilkington," a British diplomat said.

The settlement with Pilkington, which was filed by the Justice Department simultaneously with the lawsuit late Wednesday, "is the first under a 1992 policy change that permits the department to challenge foreign business conduct that harms U.S. export trade," Attorney General Janet Reno said.

That change was made by the Bush administration, which reversed a four-year Justice Department policy of avoiding such cases. But the Bush Justice Department never filed any cases, although it did start the investigation into Pilkington.

The department has seldom interpreted U.S. antitrust law so broadly, partly because of objections from the State Department that such cases would hurt relations with allies.

In the late 1950s, Pilkington developed and patented its technology for producing flat glass and required licenses for the right to use the technology. It limited each licensee to a certain geographical area in their home country.

Although many of Pilkington's patents have expired, the company has continued to require the licenses, contending that its production processes are protected by law as trade secrets. Virtually all of the world's glass factories operate under Pilkington licenses.

In announcing the settlement yesterday, Ms. Reno said Pilkington had agreed that much of its technology is in the public domain.

No financial penalties were imposed, and Pilkington denied any wrongdoing.

But the settlement requires the company to drop its rule that U.S. concerns cannot build factories outside the territories in the United States assigned in their licenses, and to state that some of Pilkington's technology is now publicly available.

One of Pilkington's eight U.S. licensees, Guardian Industries Corp., won the right in a lawsuit eight years ago to several territories in Asia and Eastern Europe. But the seven other companies have been barred until now from going abroad, said K. Craig Wildfang, the Justice Department lawyer who filed the case.

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