Belgium has joined the ranks of foreign countries asking the Seventh Circuit to uphold its original ruling in Motorola Mobility v. AU Optronics. The Seventh Circuit originally ruled that the purchase by Motorola Mobility’s foreign subsidiaries of LCD panels could not meet the FTAIA requirements that the defendants’ price fixing had a “direct, substantial and reasonably foreseeable effect” on U.S. commerce and the “effects gave rise to a claim” under the federal antitrust laws. The court found that “the effect of component price fixing on the price of the product of which it is a component is indirect….” The court was concerned with overzealous extraterritorial application of the Sherman Act. “The position for which Motorola contends would if adopted enormously increase the global reach of the Sherman Act, creating friction with many foreign countries and “resent[ment at] the apparent effort of the United States to act as the world’s officer…”
The apparent bright line ruling that component price fixing could not satisfy the FTAIA alarmed the Antitrust Division, which had successfully prosecuted the LCD cartel (although the government’s prosecutions also rested on LCD panels directly imported into the U.S.). At the request of the government, the court vacated the Motorola Mobility opinion and will rehear the case. The United States has filed several amicus brief urging that the court find that the FTAIA requirements can be met by component price fixing. Belgium joins numerous nations, including Korea, Japan and others, in urging the Court to again find the FTAIA bars Motorola’s civil suit.
The Belgian brief relies heavily on F. Hoffman-La Roche Ld. v. Empagran S.A. 542 U.S. 155 (2004). In Empagran, the Supreme Court acknowledged that the FTAIA should be interpreted “to avoid unreasonable interference with the sovereign authority of other nations,” which “helps the potentially conflicting laws of different nations work together in harmony—a harmony particularly needed in today’s highly interdependent commercial world.” The Empagran opinion acknowledged the foreign government’s concern that “a decision permitting independently injured foreign plaintiffs to pursue private treble damages remedies would undermine foreign nations’ own antitrust enforcement policies by diminishing foreign firms’ incentive to cooperate with antitrust authorities in return for prosecutorial amnesty.” Empagran, 542 U.S. at 142. The Belgian brief points out that Belgium now has a leniency program and states that it would be a serious disincentive to seeking leniency in Belgium if purchases made in Belgium could be the basis for a treble damage suit in the United States. In other words, suppose a seller of cocoa to Belgium chocolate producers sought leniency in Belgium, but the chocolates made from the cocoa were imported into the United States. Would the cocoa seller be subject to treble damages in the United States instead of the scheme of collective redress available in Belgium? This is just one example of the issues that could arise in the FTAIA context. [Read more…]