US Supreme Court To Hear International Case Involving Alleged Price Fixing

Author:Mr J. Clayton Everett, Jr., Mark Krotoski, Omar Shah, Cindy Seunghee Hong and Dora Wang
Profession:Morgan Lewis
 
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Potentially impacting the reach of US antitrust enforcement, the Court will determine standards to apply in considering a foreign government's legal statement concerning the interpretation of its domestic law in price fixing and other cases.

The US Supreme Court agreed on January 12 to review the decision in a case involving alleged price fixing of vitamin C to consider the degree of deference owed to foreign governments' interpretations of their own laws in US legal proceedings. The Court's decision to review this case signals potential changes in the manner in which foreign laws will be interpreted in international antitrust cases and may create more scope for US enforcement against international cartels.

Background

District Court and Jury Trial

This case stems from a series of lawsuits that were filed in 2005 against four Chinese manufacturers of vitamin C imported into the United States, alleging that the Chinese companies had colluded on export prices and volumes in violation of Section 1 of the Sherman Act. The defendants argued that Chinese laws and regulations required them to coordinate regarding their export prices and volumes. China's Ministry of Commerce (MOFCOM) intervened in the case, submitting an amicus brief providing an interpretation of Chinese law that supported the defendants' position. However, the district court rejected MOFCOM's interpretation of Chinese law, concluding based on other legal sources that Chinese law did not require the collusion alleged by plaintiffs. The case proceeded to trial, and the jury awarded $147 million in damages to the plaintiffs.

Appeal: Second Circuit

Defendants appealed to the US Court of Appeals for the Second Circuit, which reversed the judgment in September 2016. The Second Circuit held that the district court abused its discretion in not dismissing the case on international comity grounds. It faulted the district court for failing to give proper consideration to MOFCOM's formal statement, on behalf of the Chinese government, "that Chinese law required Defendants to set prices and reduce quantities of vitamin C sold abroad."1 As the Second Circuit held,"[i]f deference by any measure is to mean anything, it must mean that a US court not embark on a challenge to a foreign government's official representation to the court regarding its laws or regulations, even if that representation is inconsistent with how those laws might be interpreted under the principles of our legal system." On the basis...

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