Does What Happens Outside The U.S. Stay Outside The U.S.?

As the economy continues to globalize, so too does the reach of antitrust law. Two recent cases illustrate the interaction between international trade and U.S. antitrust law: Biocad v. F. Hoffman-La-Roche Ltd. and In re Capacitors Antitrust Litigation. These cases invoke the Foreign Trade Antitrust Improvement Act, which creates exceptions to the jurisdiction limiting language of the Sherman Antitrust Act, and exposes defendants to liability for conduct involving import and export trade or commerce. As the law evolves to keep up with changing trade and practices, the underlying principle to protect competition remains the same.

The 1982 Foreign Trade Antitrust Improvements Act (FTAIA) codified the international scope of the Sherman Antitrust Act. Specifically, the Act provided that the Sherman Act shall not apply to conduct involving trade or commerce (other than import trade or import commerce) with foreign nations unless -

Such conduct has a direct, substantial, and reasonably foreseeable effect - On trade or commerce which is not trade or commerce with foreign nations, or on import trade or import commerce with foreign nations; or On export trade or export commerce with foreign nations, of a person engaged in such trade or commerce in the United States; and Such effect gives rise to a claim under the provisions of sections 1 to 7 of this title, other than this section. The statutory text does not provide significant practical insight. In fact, courts have characterized the FTAIA as "inelegantly phrased" and simply "a web of words." The Supreme Court clarified the legislative intent, noting it "seeks to make clear to American exporters (and to firms doing business abroad) that the Sherman Act does not prevent them from entering into business arrangements..., however anticompetitive, as long as those arrangements adversely affect only foreign markets." Still, courts around the country have struggled to consistently interpret the law.

On September 30, 2017, a New York federal court contributed to the evolving body of law. Russian drug manufacturer, Biocad, sued F. Hoffman La Roche and related entities for engaging in anticompetitive conduct that precluded the Russian company from entering the U.S. oncological pharmaceutical market. The Southern District of New York dismissed the case, finding the plaintiff did not have standing, and, even if it did, that the FTAIA barred Biocad's Sherman Act and Donnelly Act claims.

The court found that the...