Antitrust Law Daily Wrap Up, TOP STORY—Supreme Court Asked to Consider Scope of Foreign Trade Antitrust Improvements Act , (Nov 28, 2012)

By Jeffrey May, J.D.

Producers of Canadian potash have asked the U.S. Supreme Court to review an en banc decision of the U.S. Court of Appeals in Chicago (683 F.3d 845, 2012-1 Trade Cases ¶77,943), holding that the Foreign Trade Antitrust Improvements Act (FTAIA) did not bar price fixing claims brought by U.S. purchasers of potash—a key fertilizer component. The petition for review was filed on November 23 (Agrium Inc. v. Minn-Chem, Inc., Dkt. 12-650).

The FTAIA governs the extraterritorial reach of U.S. antitrust law. It excludes from the scope of the Sherman Act foreign activities—other than import trade or commerce—unless the conduct has a “direct, substantial, and reasonably foreseeable effect” on domestic or import commerce. According to the petitioning producers, the Seventh Circuit—setting aside a prior panel decision—held that the FTAIA import commerce exclusion applies whenever a defendant imports its products into the United States, even if the challenged anticompetitive conduct occurs overseas; and that a “direct” effect on U.S. commerce is one that has a “reasonably proximate causal nexus with that commerce.”

The producers contend that, applying this “vague and novel” standard, the appellate court held that the FTAIA did not bar the purchasers’ claims based on a “spillover effect on pricing in the United States” resulting from the producers’ joint export sales to China, India, and Brazil. They assert that the ruling conflicts with decisions of other federal circuits and will “open U.S. courts to many complex antitrust disputes based on overseas activity of only indirect interest to the United States.”

Specifically, the producers asked the Court: (1) whether a “direct effect” on U.S. commerce within the meaning of the FTAIA is an effect that has only “reasonably proximate causal nexus” with that commerce (as held by the Seventh Circuit) or, instead, is one that “follows as an immediate consequence of the defendant’s activities” (as held by the Ninth Circuit); and (2) whether the FTAIA’s “import-commerce” exclusion applies whenever a defendant sells its products in the United States (as held by the Seventh Circuit) or, instead, only when a defendant engages in allegedly anticompetitive conduct as part of its efforts to sell its product in the United States (as held by the Second and Third Circuits).

The judgment of the appellate court was entered on June 27. Justice Elena Kagan extended the time for filing the petition for certiorari from September 25 to November 24. A response is due by December 24.

Charles A. Rothfeld (Mayer Brown LLP) for Agrium Inc.

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