In an article in Competition Policy International, AAI Senior Counsel & Director of Special Projects Randy Stutz analyzed the second prong of the domestic effects exception of the Foreign Trade Antitrust Improvements Act (FTAIA), which requires that a harmful domestic effect must "give rise to a claim" for the Sherman Act to apply extraterritorially. Although several lower courts have required a relationship of proximate cause between the domestic effect and the plaintiff's claimed injury before permitting that plaintiff to sue under the Sherman Act in U.S. court, Stutz argues that it makes no sense to apply the same test in the context of component-goods price fixing. When price-fixing of component-goods causes harmful domestic effects, the foreign injury inevitably precedes the domestic effect, and consequently, the domestic effect can never be said to proximately cause the foreign harm. But this result follows from the fact that an effect never precedes, not anything having to do with the proximity between the domestic effect and the claimed injury. Stutz argues that the core policies underlying the FTAIA require that Sherman Act claims be evaluated based on a balancing of international comity concerns against the domestic redress goals of the U.S. antitrust laws; Sherman Act claims should not be eliminated based merely on the direction of causation between domestic effect and claimed injury.
This issue arises prominently in the Motorola v. AU Optronics case in the Seventh Circuit, in which AAI has submitted two amicus briefs. Without giving a reason, the Seventh Circuit recently denied the AAI's unopposed motion to file the second brief, despite accepting the first. To read the briefs, visit our Amicus Program section.