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Justice Wins First Agreement Under New Policy To Protect Exports

May 26, 1994

WASHINGTON (AP) _ In a move that could boost exports by up to $1.25 billion over six years, the Justice Department got a British company to drop tactics that prevented U.S. companies from building glassmaking factories overseas.

The agreement with Pilkington plc, announced by Attorney General Janet Reno on Thursday, marked the first use of a new antitrust policy targeting foreign companies that restrict U.S. participation in world markets.

″This settlement will open new markets abroad for American businesses exporting high-tech services, and thereby create additional well-paying jobs for highly skilled American workers and professionals here at home,″ Reno told her weekly news conference.

Some 50 glassmaking factories are expected to be built during the next six years in China, Southeast Asia and Eastern Europe, and up to half of them could be built by U.S. companies, Deputy Assistant Attorney General Robert Litan said. That would boost exports by $1.25 billion, he said.

Even the most minimal U.S. participation would push exports up by at least $150 million, Litan said.

The factories involved produce flat glass for windows in most of the world’s automobiles and buildings, using float-bath technology, originally developed by Pilkington. Flat glass is a $15-billion-a-year industry, which the government said Pilkington dominates.

The new policy was adopted early in 1992 by the Bush administration and had been viewed as designed to attack Japanese market restrictions used to keep out U.S. companies.

Indeed, other foreign businesses are under investigation by Justice’s antitrust division, Litan said, but he refused to name them or give their locations.

Under the new policy, the Justice Department will bring antitrust suits against foreign firms with U.S. subsidiaries when their actions violate U.S. law and harm U.S. participation in world trade. The previous policy, in effect from 1988 to 1992, had limited suits against foreign companies to cases in which U.S. consumers were directly harmed.

Litan said that Pilkington’s patents and most royalties on the float-glass technology expired in 1982. Since then, the company has been abusing trade secrets law ″to carve up world markets,″ Litan said.

Litan said Pilkington was charging companies too much to use its process, restricting through licensing where they could sell the products of factories they built and refusing to let licensees improve the technology on their own.

The government said the licensing rules violated U.S. laws against monopolies because they prohibited American glass producers from using float- bath technology outside the United States.

The company did not admit any wrongdoing and said the consent decree, which requires court approval, would protect the confidentiality of its process and the licensing of its most recent innovations.

In Washington, Sir Robin Nicholson, a Pilkington director, said, ″This agreement both acknowledges and protects the world-leading technological achievements our company has made. Because the consent decree has no material economic impact on the company, we agreed to bring this matter to a close rather than engage in a protracted and costly legal battle.″

Litan said one beneficiary of the action would be a leading U.S. glass producer, PPG Industries. In Pittsburgh, PPG general counsel Guy Zoghby said, ″This is an important action for the U.S. glass industry, and we are gratified.″

PPG has sued Pilkington in Arizona, and Zoghby said the action ″vindicates PPG’s claim of anticompetitive conduct by Pilkington. PPG will continue to vigorously pursue its action to recover for the damages caused by Pilkington’s conduct.″

The government filed its antitrust case against Pilkington in U.S. District Court in Tucson, Ariz., Wednesday and simultaneously submitted a proposed consent decree to settle the suit.

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