United States: District Court Follows Motorola Mobility To Apply FTAIA And Indirect Purchaser Doctrine To Dismiss U.S. Parent's Price-Fixing Claims Based On Its Foreign Subsidiary's Purchases

David M. Goldstein, Richard Goldstein, Robert Reznick and Elena Kamenir

The Seventh Circuit's decision in Motorola Mobility v. AU Optronics1–which blocked a U.S. parent's Sherman Act claim based on its foreign subsidiary's purchases of a price-fixed product–continues to reverberate throughout federal district courts. A district court in the Sixth Circuit recently followed Motorola Mobility to dismiss a U.S. company's price-fixing claims based on its foreign subsidiary's purchases of allegedly price-fixed components that were incorporated abroad into finished goods that the subsidiary then shipped to the United States. In re Refrigerant Compressors Antitrust Litigation, No. 2:09-md-02042, 2016 WL 6138600 (E.D. Mich. Oct. 21, 2016). The district court's decision demonstrates that, post-Motorola Mobility, defendants have strong arguments in some circuits under the Foreign Trade Antitrust Improvements Act ("FTAIA")2 and Illinois Brick3 to defeat a U.S. parent's price-fixing claims based on purchases by its overseas subsidiary, especially where that subsidiary is not wholly-owned.


The FTAIA is a complicated statute that limits the extraterritorial reach of the Sherman Act. The U.S. Supreme Court has attempted to simplify the analysis by explaining that the FTAIA places all non-import activity involving foreign commerce outside the Sherman Act's reach, unless two conditions are met: (1) the foreign conduct sufficiently affects U.S. commerce, i.e., it has a "direct, substantial, and reasonably foreseeable effect" on U.S. domestic, import, or (certain) export commerce, and (2) the "effect" on U.S. commerce independently "giv[es] rise to" a claim by the plaintiff that is cognizable under the Sherman Act. F. Hoffman-La Roche Ltd. v. Empagran S.A., 542 U.S. 155, 159 (2004). Import commerce (importing goods directly from foreign nations) is not subject to the FTAIA, i.e., such commerce is within the reach of the Sherman Act. Courts have struggled over the past several years to determine how the FTAIA applies in the context of a non-U.S.-based price-fixing conspiracy.

Motorola Mobility

The Seventh Circuit wrestled with the FTAIA in Motorola Mobility. Motorola, which is based in the United States, asserted a Sherman Act claim based on its wholly-owned foreign subsidiaries' purchases of price-fixed LCD screens that were incorporated into mobile phones that were manufactured abroad and then shipped to the United States. Motorola maintained that it could bring a Sherman Act claim because it negotiated prices for the LCD screens in the United States and its foreign subsidiaries had assigned their claims to Motorola.4 Nonetheless, the Seventh Circuit held that Motorola could not bring a Sherman Act claim based on its foreign subsidiaries' purchases.5 The court found that even if Motorola could satisfy the FTAIA's "direct, substantial, and reasonably foreseeable effect" test based on the eventual shipment of the mobile phones into the United States, it could not satisfy the "gives rise to a claim" test because its foreign subsidiaries–not Motorola itself–were the direct purchasers of the LCD panels and, under Illinois Brick, were the only parties with a viable Sherman Act claim.6

Refrigerant Compressors

The fact pattern in Refrigerant Compressors is similar to that in Motorola Mobility. General Electric ("GE") opted out of a direct purchaser class and brought a Sherman Act claim against Danfoss, an alleged member of a cartel that fixed prices for refrigerant compressors.7 GE based some of its claims on purchases of refrigerant compressors by its 48%-owned Mexican manufacturing subsidiary, MABE.8 Although GE had minority representation on MABE's board of directors and a veto right over some categories of board decisions, GE did not control MABE's operations.9 GE did, however, participate in negotiations with Danfoss "on behalf of itself and MABE" concerning the price of refrigerant compressors.10 Those purchase negotiations routinely took place at GE's appliance division headquarters in the United States.11 GE also argued that the MABE's purchases fell within the Illinois Brick "control exception," which under some circumstances may allow an indirect purchaser to assert a Sherman Act claim if "the direct purchaser is owned or controlled by its customer."12

When Danfoss moved to dismiss the complaint, the court requested additional briefing on whether the FTAIA barred GE's claims based on MABE's purchases of compressors, including whether GE had standing to sue for damages that MABE allegedly suffered from its purchases of the price-fixed compressors.13

The district court held that the FTAIA barred GE's claims based on MABE's purchases.14 It noted the many factual similarities to Motorola Mobility: a foreign subsidiary, foreign conspirators, foreign sellers, foreign points of sale, foreign delivery locations, foreign manufacturers, and similar transactions (purchase and sale of products).15 The court first found that the refrigerant compressors were purchased outside the United States and therefore did not qualify as import commerce (and were therefore subject to the FTAIA).16 Next, the court, like the Seventh Circuit in Motorola Mobility, concluded that even if GE could show a "direct, substantial, and reasonably foreseeable effect" on U.S. commerce, GE could not show that this effect gave rise to a Sherman Act claim for GE in the United States because MABE was the foreign direct purchaser of the compressors.17

As did the Seventh Circuit in Motorola Mobility, the district court also held that GE's claims based on MABE's purchases were barred by Illinois Brick and did not satisfy the control exception.18 Under Sixth Circuit precedent, the control exception is satisfied only when the relationship exhibits "such functional economic or other unity between the direct purchaser and either the defendant or the indirect purchaser that there effectively has been only one sale."19 Although GE was involved in negotiating MABE's purchases, the court found that GE's relationship with MABE did not meet the "functional economic or other unity" requirement.20


The Seventh Circuit's decision in Motorola Mobility remains one of the leading recent appellate decisions interpreting and applying the FTAIA in the context of overseas price-fixing conspiracies.21 Under Motorola Mobility, the FTAIA and Illinois Brick provide a substantial defense against a U.S. parent's Sherman Act price-fixing claims based on its foreign subsidiary's purchases of the allegedly price-fixed goods. The court's decision in Refrigerant Compressor suggests the following takeaways to supplement Motorola Mobility:

  • Minority ownership of the subsidiary, representation on the subsidiary's board of directors, and participating in purchase negotiations on behalf of the subsidiary are likely not enough to thread the FTAIA and Illinois Brick needles.
  • It is unlikely that a U.S. parent can solve this problem by obtaining an assignment of its foreign subsidiary's direct purchaser claims. The Third Circuit recently held that a subsidiary can assign its direct purchaser claim to an indirect purchaser as long as it is written and express, even without obtaining consideration for the claim.22 But a subsidiary trying to assign a Sherman Act claim must have one to begin with. In the context of a foreign price-fixing conspiracy, the foreign subsidiary of a U.S. parent is subject to its local laws and, therefore, may not provide a basis for the parent to assert a Sherman Act claim.
  • The analysis is more complicated in states that have enacted Illinois Brick-repealer statutes. In those states, a U.S. parent might be able to circumvent Illinois Brick by suing under state antitrust law. However, defendants still may be able to use the FTAIA to block a state law indirect purchaser claim.23
  • Finally, an investor in a company that is harmed by an antitrust violation cannot bring a Sherman Act claim stemming from its stock ownership because its harm is considered derivative, rather than direct.24 Thus, a U.S. parent that is a partial owner of a foreign subsidiary that suffers antitrust injury does not have antitrust standing to bring an antitrust claim on that ground.


1 746 F.3d 842 (7th Cir. 2014) ("Motorola Mobility II"), amended by, 775 F.3d 816 (7th Cir. 2015) ("Motorola Mobility III").

2 15 USC § 6a.

3 Illinois Brick v. Illinois, 431 U.S 720 (1977).

4 Motorola Mobility I, No. 09 C 6610, 2014 WL 258154, at *1, *3 (N.D. Ill. Jan. 23, 2014).

5 Motorola Mobility III, 775 F.3d at 827.

6 The Seventh Circuit also rejected Motorola's argument that the FTAIA's exception for "import commerce" applied, reasoning that the exception saves a Sherman Act claim only where an importer-plaintiff is purchasing from the defendant directly rather than through intermediate purchasers. Motorola Mobility III, 775 F.3d 818-19. A more in-depth discussion of Motorola Mobility is available here on our blog AntitrustWatch.com.

7 In re Refrigerant Compressors Antitrust Litig., 2016 WL 6138600, at *1-2.

8 Id. at *2-3, *8.

9 Id. at *9.

10 In re: Refrigerant Compressors Antitrust Litig., No. 2:09-md-02042 (E.D. Mich. Feb. 15, 2013), Dkt. 1, Complaint at 16.

11 Id. at 17.

12 See Illinois Brick, 431 U.S. at 736 n.16; In re Refrigerant Compressors Antitrust Litig., 2016 WL 6138600, at *9.

13 In re Refrigerant Compressors Antitrust Litig., 92 F. Supp. 3d 652, 658 (E.D. Mich. 2015).

14 In re Refrigerant Compressors Antitrust Litig., 2016 WL 6138600, at *8.

15 Id. at *7.

16 Id. at *8.

17 Id. (quoting Motorola Mobility III, 775 F.3d at 818).

18 Id. at *9.

19 Id. (quotingJewish Hosp. Ass'n of Louisville, Ky v. Stewart Mech. Enters., 628 F.2d 971, 975 (6th Cir. 1980)).

20 Id.

21 The other recent leading FTAIA appellate decision is United States v. Hsiung, 778 F.3d 738 (9th Cir. 2015). It is important to be familiar with the Ninth Circuit's analysis in Hsiung. Recently, a court in the Northern District of California, relying on Hsiung, declined to follow Motorola Mobility's test for "gives rise to" a claim. In re Cathode Ray Tube (CRT) Antitrust Litig., MDL No. 1917, No. C-07-5944 (N.D. Cal. Sept. 30, 2016), Dkt. 4919, Order on Motions for Summary Judgment Concerning the FTAIA, at 9 n.4. For a discussion of Motorola and Hsiung, click here for Orrick's article published in Japan's JCA Journal.

22 Wallach, et al. v. Eaton Corp., et al., No. 15-3320, 2016 WL 4791849 (3d Cir. 2016). Click here for a discussion of Wallach on our blog, AntitrustWatch.com.

23 A court in the Northern District of California recently noted that the FTAIA may limit state indirect purchaser statutes in the same way that it limits the Sherman Act: "District court opinions have in general declined to find that state competition laws cast a wider net than the FTAIA", and that "[s]ome state courts have reached the same conclusion." In re Capacitors Antitrust Litig., No. 3:14-cv-03264 (N.D. Cal. Sept. 30, 2016), Dkt. 1302, Order re Phase I of Summary Judgment on Foreign Transactions, at 12-13 (citing cases). The court noted that the plaintiffs had "not cited any federal or state decisions that extend the reach of a state law beyond the FTAIA, and the Court declines to do so here." Id. at 13.

24 See Motorola Mobility III, 775 F.3d at 820-21 (citing Mid–State Fertilizer Co. v. Exchange Nat'l Bank of Chicago, 877 F.2d 1333, 1335–36 (7th Cir. 1989)).

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.

In association with
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.