New Lessons for Pleading the FTAIA
Competition Policy International Antitrust Chronicle, p. 1, November 2011
8 Pages Posted: 17 Nov 2011
Date Written: November 16, 2011
The Seventh Circuit recently concluded that allegations of price-fixing in foreign commerce, with effects on domestic U.S. commerce due to the integrated worldwide market for the agricultural fertilizer component potash, were insufficient to survive a motion to dismiss under the Supreme Court's decisions in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal. The complaint's failing was the lack of plausible allegations of a direct effect of overseas price-fixing on domestic or import markets.
Minn-Chem v. Agrium illustrates a squaring of the burdens facing private antitrust plaintiffs seeking extraterritorial application of the law. The substantive standard under the Foreign Trade Antitrust Improvements Act was difficult to meet prior to Twombly and Iqbal. Combining it with a pleading standard created to protect against false positive errors from private antitrust enforcement substantially increases the challenge to private plaintiffs.
The case is the latest in a long line of opinions reflecting courts’ suspicions of private plaintiff efforts to expand the scope of private antitrust enforcement, either by drawing links between harm in the United States and a plaintiff's harm overseas (as in Empagran II), or by drawing links between conduct occurring overseas and a harm felt in the United States.
Minn-Chem v. Agrium is a window into the application of Twombly and Iqbal to the FTAIA inquiry. Careful analysis suggests the court may have been overly skeptical in its review of the complaint for two reasons: Plaintiffs' allegations did raise the possibility of a direct effect, and the likelihood of a false positive error from permitting discovery on the crux question of the world-wide interconnectedness of the potash market was low, suggesting plaintiffs deserved leeway in stating those allegations.
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