The Supreme Court voted 8-0 to limit the international reach of the United States antitrust laws (Justice O’Connor not participating, and Justices Scalia and Thomas concurring). The Court ruled that the federal antitrust laws do not reach anticompetitive conduct where the complained-of injuries occurred outside of the United States and wholly independent of the alleged injury to U.S. commerce. The decision is particularly important to multinational firms because it means that their global operations will not necessarily be subject to U.S. scrutiny and treble damage actions. Any antitrust plaintiff will now have to show that its injuries are not wholly independent of damage to U.S. commerce.

The case arises out of an allegation that vitamin manufacturers engaged in a worldwide conspiracy to fix prices. The narrow question addressed by the Court is whether the U.S. antitrust laws apply to injuries that are wholly independent of the injuries caused to U.S. commerce from a global pricefixing cartel. The relevant statute is the Foreign Trade Antitrust Improvements Act of 1982 ("FTAIA"). The FTAIA prohibits the application of the U.S. antitrust laws to foreign commerce, unless the conduct has a "direct, substantial, and reasonably foreseeable effect" on domestic commerce; and where "such effect gives rise to a [Sherman Act] claim."

The Court based its decision on principles of prescriptive comity and Congressional intent. The Court explained that applying U.S. antitrust law to foreign commerce could interfere with the ability of foreign nations to regulate their economies. Congress may so regulate foreign commerce, according to the Court, only insofar as it reflects "a legislative effort to redress domestic antitrust injury that foreign anticompetitive conduct has caused." The Court noted that, "by definition," the plaintiff’s injuries cannot constitute domestic injury. It further explained that even though most jurisdictions prohibit price fixing, applying the Sherman Act under the circumstances presented in this case could interfere with the independent regulation of foreign economies because the Sherman Act contains different remedies (treble damages) than provided by the competition laws of other nations. Further, the Court noted that Congress passed the FTAIA to narrow the scope of the federal antitrust laws, not to expand them, and nothing in the language and history of the FTAIA suggests Congress sought to regulate conduct with effects wholly outside the U.S. Notably, the Court did reserve the right of the plaintiffs to demonstrate that their injuries were not wholly independent of the harm to U.S. commerce.

The case is F. Hoffman-La Roche, Ltd, v. Empagran, No. 03-724 (June 14, 2004).

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