Federal Courts Brace For Foreign Price-Fixing Cases
By: RICHARD J. WEGENER
January 2004
Do foreign purchasers injured only by the "effects" on foreign commerce of a U.S. based price-fixing conspiracy have standing to assert Sherman Act claims in U.S. courts? Empagran SA v. F. Hoffman-LaRoche Ltd., 315 F.3d 338 (DC Cir. 2003).
Background
In a lawsuit brought by food growers and manufacturers from South America, Australia and Ukraine against companies involved in the international vitamins cartel, the plaintiffs alleged that the nine-year conspiracy of vitamins manufacturers caused hundreds of food and beverage companies to pay artificially high prices for vitamins A, B, C and E. The district court ruled that the plaintiffs could not sue the vitamins manufacturers under US law because the plaintiffs did not buy their vitamins in the US. However, the DC Circuit, in a decision that falls between case law from the Second and Fifth Circuits, reversed. See Kruman v. Christie’s Int’l PLC, 284 F.3d 384 (2d Cir. 2002); Den Norske Stats Oljeselskap As v. Heeremac Vof, 241 F.3d 420 (5th Cir. 2001), cert. denied, 534 U.S. 1127 (2002). The Circuit's ruling allows foreign plaintiffs to file lawsuits in the US against companies involved in the international vitamins cartel although plaintiffs' purchases did not take place in the US. The 2-1 majority held that where a cartel results in the requisite anticompetitive effect on US commerce, non-US residents can sue non-US companies in the US.
Implications
Companies who engage in anticompetitive behavior have to take into account that they are potentially liable in the US for the effects of their conduct worldwide. Despite an environment of languishing judicial confirmations and growing caseloads, foreign plaintiffs are free in certain circuits to bring actions against international cartels in the US where benefits unavailable in there home jurisdictions (i.e., class actions, treble damages and contingency fees) are available. The ruling has significance on other levels as well. For example, it will likely have a negative impact on the Department of Justice's amnesty program where the value of silence takes on new importance as the treble damage risk to an antitrust violator/confessor looms larger.