Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Mich.: Japanese solar panel producer failed to allege counterclaim under Japanese antitrust law, (Jan 8, 2016)

By Linda O’Brien, J.D., LL.M.

In an action by a U.S. manufacturer of polycrystalline silicon against a Japanese solar energy panel producer, over the performance of the parties’ supply agreements, the Japanese producer failed to sufficiently allege a counterclaim for violations of Japanese antitrust law, the federal district court in Bay City, Michigan has ruled (Hemlock Semiconductor Corporation v. Kyocera Corporation, January 6, 2016, Ludington, T.).

Hemlock Semiconductor is a manufacturer of polycrystalline silicon (polysilicon) and photovoltaic solar cells and modules. Kyocera is a Japanese corporation that produces and supplies solar energy panels. Beginning in 2005, Hemlock and Kyocera entered into our long-term supply agreement for polysilicon. After the parties entered into the agreements, the Chinese government provided subsidies to Chinese companies in order to increase Chinese market share in the solar industry. After the U.S. government imposed anti-subsidy and anti-dumping import tariffs on Chinese solar components, the prices of polysilicon and solar panels decreased dramatically.

In response to falling market prices, the parties agreed to short-term contract modifications that lowered gross prices. Additionally, Kyocera invoked the force majeure provision in the agreements on the grounds of changing solar market conditions. In February 2015, Hemlock sent Kyocera a demand for adequate assurances that it would perform under the agreements. After Kyocera refused to provide such assurances, Hemlock filed suit. In response, Kyocera filed several affirmative defenses and counterclaims in the instant suit, as well as filed a complaint in the Tokyo District Court, alleging, in part, that the agreements violated Japanese antitrust law. Hemlock moved to dismiss the counterclaim.

The court found that Kyocera failed to identify any legal theory beyond its bare conclusion that the agreements violated Japanese antitrust law. Since Kyocera did not set forth the elements of a cause of action or provide any explanation as to how the supply agreements violated “the public order and morals in Japan,” the defendant did not state a claim upon which relief could be granted.

Kyocera’s contention that the underlying antitrust issues would be decided by a Japanese court was rejected. The court noted that the supply agreements contained provisions requiring the parties to submit to the exclusive jurisdiction and venue of the U.S. District Court for the Eastern District of Michigan for all disputes arising under the agreements. Therefore, the counterclaim was dismissed because Kyocera failed to sufficiently state a foreign antitrust claim and the court would not recognize a judgment of a Japanese district court.

The case is No. 15-cv-11236.

Attorneys: Alvin Lee (Orrick, Herrington and Sutcliffe LLP) and Craig W. Horn (Braun, Kendrick, PLC) for Hemlock Semiconductor Corp. Brent W. Warner (Brooks Wilkins Sharkey & Turco PLLC) and Christian G. Andreu-Von Euw (Morrison & Foerster LLP) for Kyocera Corp.

Companies: Hemlock Semiconductor Corp.; Kyocera Corp.

Cases: Antitrust MichiganNews