United States: Recent U.S. Cases May Allow New Antitrust Challenges To Foreign Conduct

Recent decisions by the Third Circuit and the Northern District of California make it easier for plaintiffs to bring claims under the Foreign Trade Antitrust Improvements Act (FTAIA).  The FTAIA statute provides that the Sherman Act does not reach conduct outside the United States, with some exceptions.  In Animal Science Products v. China Minmetals, the Third Circuit disagreed with the long-standing interpretation of the statute under which plaintiffs alleging violations of the Sherman Act for conduct occurring overseas shouldered the burden of establishing the court's subject matter jurisdiction.  In the Third Circuit, the FTAIA is no longer a jurisdictional bar to Sherman Act claims involving conduct abroad.  The Northern District of California now has adopted the Third Circuit's approach.

In jurisdictions that follow these opinions, a defendant no longer is automatically entitled to present facts as part of its motion to dismiss a claim on the basis of the FTAIA, but may need to limit its attack to what the plaintiff has pled – which may not be the same as what the plaintiff can ultimately prove.  These opinions therefore may make it easier for plaintiffs to bring claims against corporations for purportedly anticompetitive conduct and effects occurring outside the United States.

Foreign Trade Antitrust Improvements Act

The FTAIA limits the reach of the U.S. antitrust laws by providing that the Sherman Act "shall not apply to conduct involving trade or commerce...with foreign nations."  But the statute sets forth two exceptions that bring certain foreign conduct back under the Sherman Act.  Under the first, when defendants are involved in "import trade or import commerce," anticompetitive conduct occurring in the import trade or commerce is reviewable under the U.S. antitrust laws.  The second exception extends the Sherman Act's reach to wholly foreign conduct that has a "direct, substantial, and reasonably foreseeable effect" on domestic commerce and "gives rise" to the Sherman Act claim. 

Until recently, courts (such as the Seventh Circuit in the landmark decision in United Phosphorus v. Angus Chemical) typically treated the FTAIA as a limitation on the subject matter jurisdiction of federal courts.  As such, defendants often brought motions to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) – which they could supplement with a factual record – and these motions under the FTAIA were often successful in defeating a case before serious antitrust discovery was permitted to go forward.

However, in August 2011 the Third Circuit issued its Animal Science opinion, directly at odds with United Phosphorus.  The Third Circuit reasoned that the FTAIA "is wholly silent" on the issue of federal jurisdiction and therefore does not impose a jurisdictional bar.  On October 5, the Northern District of California explicitly agreed in the case In Re: TFT-LCD (Flat Panel) Antitrust Litigation


While these Third Circuit and Northern District of California decisions have created a split among the federal courts, it is possible that others will follow.  The Seventh Circuit itself has noted that its earlier United Phosphorus decision has been called into question, in its September 2011 decision in Minn-Chem v. Agrium

These decisions also have tactical implications for defendants.  By asserting that the court does not have subject matter jurisdiction under Rule 12(b)(1), a defendant has been able to force the plaintiff to prove that jurisdiction exists.  That tool no longer is available in the Third Circuit and the Northern District of California.  In those jurisdictions (and any that follow Animal Science) defendants now will have to bring 12(b)(6) motions to dismiss, where defendants carry the burden.  Under 12(b)(1), a court may consider facts outside the four corners of the complaint.  Under 12(b)(6), a court generally can only look to the complaint and accept the alleged facts as true.  Therefore, under the Animal Science approach, plaintiffs do not have the burden to present persuasive evidence on the issue of jurisdiction early in the case.  But all is not lost.  Even under the Third Circuit's and Northern District of California's approach, it may be possible to present evidence outside the pleadings by converting a 12(b)(6) motion into a motion for summary judgment.  If successful (but it will be hard to convince a court to allow this), plaintiffs will have to produce evidence on FTAIA early on the case – potentially allowing defendants to regain some of the tactical advantages previously enjoyed in a 12(b)(1) setting. 

Further, the Third Circuit also offered instructions for the district court to implement on remand in ways that could favor plaintiffs in the interpretation of the FTAIA's exceptions.  First, the court advised that it is not necessary to show that the defendant actually functioned as a physical importer to satisfy the import trade exception, only that its conduct "be directed at an import market."  Second, the court clarified that the "direct" and "substantial" effects standard should be determined on an objective basis – meaning that the Sherman Act will apply as long as the U.S. effect is foreseeable to a reasonable person, regardless of whether it was foreseeable to the defendant.  The ripple effect of this part of the ruling is already being seen in other jurisdictions.  For instance, the judge in Flat Panel found that companies' foreign conduct had a direct effect on U.S. customers when the end products were ultimately sold in the U.S., even though several steps through foreign commerce preceded any sales in the U.S. 


The Third Circuit and the Northern District of California have always been undesirable jurisdictions for antitrust defendants in multinational and foreign conduct cases, and these two decisions make them more so.  It is too early to know whether other courts will follow their approach.  Companies operating abroad should continue to take care to educate employees on conduct that is likely to violate the U.S. antitrust laws, to ensure that their exposure to the U.S. courts in antitrust matters is limited. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Paula W. Render
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.