COMPETITION

In private antitrust dispute over international vitamin sales, District of Columbia Circuit holds that where defendant's anti-competitive conduct causes requisite harm to United States commerce, FTAIA permits suits by foreign plaintiffs who are injured solely by that conduct's effect on foreign commerce.

The Foreign Trade Antitrust Improvements Act (FTAIA) (see 15 U.S.C. Section 6(a)) provides that the Sherman Act shall not apply to conduct involving trade or commerce with foreign nations unless (1) such conduct has a "direct, substantial, and reasonably foreseeable effect"� on trade and commerce in the U.S., and (2) such effect gives rise to a claim under the Sherman Act.

Foreign buyers of vitamins and related products (plaintiffs) who bought those products outside the U.S., brought an action against several U.S. and foreign companies which distribute these vitamin products internationally (defendants). The suit rested on Section 1 of the Sherman Act [15 U.S.C. Section 1], Sections 4 and 16 of the Clayton Act [15 U.S.C. Section 15 and 25], the antitrust laws of foreign nations, and international law. Plaintiffs alleged that the defendants had conspired world-wide to control vitamin prices in the U.S. market and elsewhere between January 1, 1988, and February 1999.

The defendants moved to dismiss for lack of subject matter jurisdiction under the FTAIA, contending that the alleged injuries lacked any connection to U.S. commerce. The district court granted the motion, and this appeal followed. The U.S. Court of Appeals for the District of Columbia Circuit reverses.

The Court first notes that the Fifth Circuit took a "restrictive view"� [of the FTAIA] in Den Norske Stats Oljeselskap As v. Heeremac Vof, 241 F.3d 420 (5th Cir. 2001). There it held that the U.S. effects themselves must give rise to the plaintiff's claim; it is not enough for a plaintiff to show that the U.S. effects injured other persons.

In contrast, the Second Circuit adopted a "less restrictive view"� in Kruman v. Christie's Int'l PLC, 284 F.3d 384 (2d Cir. 2002), ruling that, once there is a jurisdictional nexus, the FTAIA does not limit the types of plaintiffs who may seek antitrust relief.

The instant Court first defines the precise jurisdictional issue: whether the "gives rise to a claim"� requirement of Section 6(a)(2) of the FTAIA authorizes subject matter jurisdiction where the defendant's conduct affects both domestic and foreign commerce, but the plaintiff's claim arises only from the conduct's foreign effect.

"We hold that where the anticompetitive conduct has the requisite harm on United States commerce, FTAIA permits suits by foreign plaintiffs who are injured solely by that conduct's effect on foreign commerce. The anticompetitive conduct itself must violate the Sherman Act and the conduct's harmful effect on United States commerce must give rise to "�a claim' by someone, even if not the foreign plaintiff who is before the court."�

"Although the language of Section 6a(2) does not plainly resolve this case, we believe that our holding regarding the jurisdictional reach of FTAIA is faithful to the language of the statute. We reach this conclusion not only by virtue of our literal reading of the statute, but also in light of the statute's legislative history and underlying policies of deterrence emanating from the Supreme Court's decision in Pfizer, Inc. v. Government of India, 434 U.S. 308 (1978)."� [Slip op. 6-7]

The Circuit Court concludes that the foreign plaintiffs have adequately alleged that the U.S. effects of defendants' cartel gave rise to antitrust claims by parties injured in the U.S. from transactions occurring in the U.S. Thus, subject matter jurisdiction is proper.

[Editors' Note: A news article in "Business Wire"� provides an interesting reading of the decision. "The major international vitamin producers (Hoffman-LaRoche (now Aventis), BASF and Rhone-Poulenc) already have settled claims involving U.S. vitamin purchasers several years ago for over $1 billion ... What this means is that companies who engaged in anticompetitive conduct and thought that they would only be exposed in the United States to liability for the effects of their actions in the U.S. must now realize that they are exposed to liability for the effects of their conduct worldwide.'"�]

Citation: Empagran S.A. v. F. Hoffman-LaRoche, Ltd., 315 F.3d 338 (D.C. Cir. 2003); Business Wire of January 17, 2003, “Cohen, Milstein, Hausfeld & Toll Announces Federal Court Expansion of Vitamin Price-fixing Case.”

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