Question

A newspaper printing press system is more than a hundred feet long, stands four or five stories tall, and weighs 2 million pounds. Only about ten of the systems are sold each year in the United States. Because of the size and cost, a newspaper may update its system, rather than replace it, by buying “additions.”By the 1990s, Goss International Corp. was the only domestic maker of the equipment in the United States and represented the entire U.S. market. Tokyo Kikai Seisakusho (TKSC), a Japanese corporation, makes the systems in Japan. In the 1990s,TKSC began to compete in the U.S. market, forcing Goss to cut its prices below cost. TKSC’s tactics included offering its customers “secret” rebates on prices that were ultimately substantially less than the products’ actual market value in Japan. According to TKSC office memos, the goal was to “win completely this survival game” against Goss, the “enemy.” Goss filed a suit in a federal district court against TKSC and others, alleging illegal dumping. At what point does a foreign firm’s attempt to compete with a domestic manufacturer in the United States become illegal dumping? Was that point reached in this case? Discuss.

Answer 1

A jury found that TKSC unlawfully dumped its products into the U.S. market and awarded more than $10.5 million in damages to Goss. TKSC appealed to the U.S. Court of Appeals for the Eighth Circuit, which affirmed the award. The appellate court explained that unlawful dumping can occur when a foreign corporation, intending to injure or destroy a certain market in the United States, sells a product at a price substantially less than the actual market value of the product in the country of its production. Here, TKSC’s pricing tactics showed that it “commonly and systematically dumped under-priced [products] onto the United States market.” TKSC sold its products for less than the products’ actual market value in Japan. By the 1990s, Goss represented the entire industry in that particular market. Thus, TKSC’s intent to injure or destroy Goss, as evidenced by its office memos, was an intent to injure to destroy the market. Goss’s lowering of its prices, which led to the firm’s losses supported the finding that TKSC's “common and systematic dumping with the intent to injure or destroy Goss caused Goss” injury.