Competition Policy International (CPI) recently published a collection of articles relating to the FTAIA and the Motorola Mobility case. I was pretty excited to have an article in the collection that included distinguished authors such as Professor Eleanor Fox. CPI is a subscription-based service, but this is the blurb introducing the issue:
In Motorola Mobility, the Seventh Circuit is readying to rehear a lawsuit that will (hopefully) clarify the extent of U.S. antitrust law’s reach outside of the United States. The issue concerns the Foreign Trade Antitrust Improvements Act, which was ostensibly passed to clarify the reach and limits of the Sherman Act for U.S. companies doing business abroad. However, given divergent court opinions, matters have become quite messy. This issue will bring you up to date on the history, the issues, and the significant ramifications at stake. As Eleanor Fox writes in her article, this situation raises the possibility that “U.S. law is in danger of creating a void in the reach of U.S. antitrust law to reprehend anticompetitive acts by foreigners abroad destined to raise the price of goods and services to U.S. consumers.”
In my article (here) I make the following points:
- The FTAIA ought to be repealed. The FTAIA was passed in 1982 primarily to provide immunity to U.S. exporters to engage in anticompetitive conduct as long as it was directed at foreign markets. The world has changed since 1982 and such immunity is now obnoxious.
- The comity concerns of foreign nations who have filed amicus briefs arguing that Sherman Act jurisdiction should not extend to overseas sales of components are not frivolous. Many, perhaps most, products purchased by U.S. consumers contain components that were made, purchased and assembled overseas.
- The court should find that the FTAIA requirements of “direct, substantial and reasonably foreseeable effect” on U.S commerce were met on the facts in Motorola Mobility. This would allow the Antitrust Division to prosecute foreign component cartels as it did in the LCD panel matter. The executive branch has a strong incentive to weigh the comity concerns of foreign nations before proceeding. The Antitrust Division has “skin in the game” of fostering international cooperation, and in fact no foreign government has objected to the Division’s criminal prosecution of both foreign companies and foreign executives in the LCD panel investigation.
- The direct purchaser rule of Illinois Brick and related cases, however, should apply to civil damage actions brought by U.S consumers. If a company, or consumer, has elected to make purchases overseas to take advantage of various favorable circumstances and/or laws, it is not unreasonable to require that they pursue damage actions in the jurisdiction where they elected to make the purchase.