Fix Prices Globally, Get Sued Locally: U.S. Jurisdiction Over International Cartels
Christopher Jon Sprigman
New York University School of Law
December 1, 2008
University of Chicago Law Review, Vol. 72, 2005
The American antitrust laws do not regulate the competitive conditions of other nations' economies. But they do regulate conduct, even when it occurs abroad, that harms domestic competition. It is well established that the Sherman Act reaches foreign conduct that was meant to produce and did in fact produce some substantial effect in the United States.
This jurisdictional "effects" test is theoretically simple, but difficult to apply. One recurring problem is determining whether foreign victims injured abroad by cartels may bring damages claims in U.S. courts. Skirmishes over jurisdiction have featured prominently in many of the private suits that have followed the mid-1990s upsurge in government anticartel enforcement, and circuit courts have split over the proper interpretation of the Foreign Trade Antitrust Improvements Act (FTAIA), a statute that was meant to provide, but has failed to deliver, clarity respecting the Sherman Act's extraterritorial reach. With the issue ripe for resolution, the Supreme Court in December 2003 granted certiorari in F. Hoffmann-LaRoche, Ltd v Empagran S.A., a case involving claims pressed by foreign victims of the global vitamins cartel.
Resolution is, unfortunately, not what we got. The Court issued an opinion reversing the D.C. Circuit, but what the Court actually did cannot, on any fair reading, be understood as a reversal. Rather, the Court constructed a hypothetical--whether jurisdiction extends to claims of foreigners who suffer foreign harm "independent" from the domestic harm caused by a cartel--and refused to extend jurisdiction in such a situation.
This Essay attempts, briefly, to sketch the opinion that the Court might have written in Empagran had it addressed the real jurisdictional issue, rather than a hypothetical orthogonal to the case.
If we think more broadly about the purpose of our antitrust laws and our long-term interest in deterring cartels, it's clear that the effects test has been asked to bear too much weight. We need jurisdictional rules that encourage the spread of antitrust enforcement responsibility. Unfortunately, however, throughout the recent litigation over the meaning of the FTAIA, courts have focused on (and often botched) the narrow statutory interpretation questions while neglecting the broader enterprise of developing jurisdictional doctrines appropriate to a globalized economy that induces globalized cartels.
The Empagran Court has gotten the jurisdiction question wrong--it has misapplied the effects test as codified in the FTAIA--but that the right answer does not have to mean what the Court fears it does. Rather, by reintroducing comity considerations into a "jurisdictional rule of reason," courts will no longer be obliged to distort the test for subject matter jurisdiction in order to conserve U.S. judicial resources, respect the autonomy of other nations, and promote the long-term development and convergence of antitrust regimes around the world.
To that end this Essay proceeds in two parts. Part I examines how courts and Congress have approached extraterritorial application of antitrust law, and traces how subject matter jurisdiction has come to dominate the analysis and supplant other doctrines that should play a role, including and most importantly, comity.
I argue that the Empagran decision, had it addressed the issues squarely, would have found jurisdiction under the effects test. However, a finding of jurisdiction, even when permitted by the effects test, does not always serve the policy interests of the United States. In Part II, I suggest that rather than do violence to the effects test, courts should reintroduce an expanded analysis that incorporates comity considerations as a second filter supplementing the effects test.
Number of Pages in PDF File: 26
Keywords: antitrust, jurisdiction, FTAIA, cartels, international, comity, subject-matter jurisdiction
Date posted: December 3, 2008