Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Supreme Court asked to review decision exempting foreign cartels from Sherman Act damages, (Apr 24, 2015)

By Edward L. Puzzo, J.D.

The American Antitrust Institute (AAI) has filed an amicus brief, urging the U.S. Supreme Court to review an appeal of a Seventh Circuit’s decision that sharply restricted the application of the Sherman Act to international cartels, the organization has announced.

In Motorola Mobility LLC v. AU Optronics Corp., the U.S. Court of Appeals in Chicago had ruled that the Foreign Trade Antitrust Improvements Act (FTAIA), which limits the extraterritorial application of U.S. antitrust law, precluded U.S.-based cell phone maker Motorola Mobility from recovering overcharges paid by its foreign subsidiaries as a result of an alleged conspiracy to fix the price of liquid-crystal display (LCD) panels used in the cell phones.

In order for the Sherman Act to apply to conduct involving trade or commerce with foreign nations, the Motorola court stated, two requirements must be met: (1) there must be a direct, substantial, and reasonably foreseeable effect on U.S. domestic commerce; and (2) the effect must give rise to a federal antitrust claim. The court held that the second requirement was not met because price fixing did not “involve” imports because the immediate victims of the purported price fixing were Motorola's foreign subsidiaries that purchased the price-fixed LCD panels to use in the manufacture of cell phones, not the U.S. parent company.

The AAI’s brief noted that the Seventh Circuit’s ruling effectively exempted foreign cartels from Sherman Act damages as to price-fixed goods sold abroad for incorporation into finished products imported directly to the United States. The brief maintains that the Seventh Circuit’s narrow reading of the import-commerce exclusion—to require that the defendant be the actual importer—is inconsistent with decisions of the Third and Ninth Circuits, as well as the language and intent of the FTAIA. The brief further argues that certiorari should be granted to correct what it called the illogical extension of F. Hoffman-LaRoche v. Empagran, 542 U.S. 155 (2004), to bar claims when the domestic harm is proximately caused by, or depends upon, the foreign injury.

Companies: Motorola Mobility LLC; AU Optronics Corp.

News: Antitrust